Cornell epee Library
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Cornell Law Srhoul Library
HUBBELL, TAYLOR, GOODWIN. NIXON & HARGRAVE
31 EXCHANGE ST.,
ROCHESTER, N, Y.

THE LAW AND PRACTICE

 

BY aor

* ORLANDO F. BUMP
“

——-o + —__

REVISED AND ADAPTED TO THE BANKRUPTCY ACT OF
JULY 1, 1898,

BY

EUGENE WILLIAMS, B. L.

MEMBER OF THE BAR OF THE SUPREME CourT OF THE UNITED STATES AND. OF
THE SUPREME CourT OF TEXAS.

ELEVENTH EDITION.

WASHINGTON, D. C.
W. H. LOWDERMILK & CO.
1808.
BIGGS

Entered according to Act of Congress in the year eighteen hundred and ninety-eight
BY
SARAH E. BUMP, SARAH E. BUMP, Guarp1an; anp CHARLES W. BUMP,

In the Office of the Librarian of Congress.
PREFACE TO THE ELEVENTH EDITION.

This revision contains references to all cases reported construing
provisions in former laws so far as they are analogous to those of the
act of July 1, 1898.

Mr. Bump’s comments upon the law of March 2, 1867, and
amendments thereto, have been expunged, as in many instances
they would be misleading when applied to the present law.

No editorial construction has been attempted explanatory of the
existing statute, in recognition of the fact that since Mr. Bump
wrote, lawyers have been less and less inclined to regard opinions of
text-writers on acts: of Congress except when supported by judicial
construction.

No claim is made for this work other than that it states the
entire law of bankruptcy as it now exists, and as it has existed from
time to time since the first act was passed in 1800, and that it cites
every decision rendered by the bankruptcy courts of the United
States and many from other courts which would assist the practi-
tioner in forming an accurate conception of the true meaning of the
law now in force.

The preface of Mr. Bump to his tenth edition will apply with
greater force to this revision, since nothing of importance to the
law of 1898 has been taken from — though much has been added
to — the main body of his work, adapting it to the law and practice
under that act. e

The reviser respectfully requests judges, referees and lawyers
to extend the same consideration in calling his attention to defects
and errors in the work for which Mr. Bump, with reference to
former editions, took opportunity to return his thanks.

EUGENE WILLIAMS.

Waco, Texas, August 1, 1898.
PREFACE TO THE TENTH. EDITION.

This edition contains references to all cases reported to
September 1, 1877. The whole work has been carefully
revised so as to correspond with the late important de-
cisions. The references have also been carefully veritied so as
to eliminate ail errors that may have crept in from inadvertence or
from inistakes incident to successive editions. Inaccuracies in
language and conclusions not drawn with sufficient care, have been
corrected. In fine, no pains have been spared to make the work
worthy of the approbation which the profession have thus far ac-
corded to it. The aim has been to make a practical, not a theo-
retical work, to show what is established, not what may be decided,
to follow rather than anticipate decisions, to furnish a practical
guide rather than brilliant theories. This plan, though not as
tempting as others that might have been pursued, has stood the
test of trial and met with approbation.

In this edition, all the cases decided under the acts of 1800 and
1841, so far as they are applicable, have been cited, and the work
now contairs references to all which are of any value that have
ever been decided in this country. In this particular it is superior
to any former edition. The greater part of that which has been
added pertains not to the practice in bankruptcy, but to collateral
questions arising out of bankrupt cases, such as constitutional law,
the rights of the assignee, suits to recover choses in action, the
limitation of two years, and the effect of a discharge — in a word,
the very questions which are now arising in the State courts. A
glance at the topics indicated will at once show the fullness of the
citations and the value of the additions.
vi PREFACE TO TENTH EDITION.

In this edition the citations from the Bankrupt Register are all
taken from the octavo volumes, and the references are accordingly
made to the reprint and not to the original quarto volumes. The
Bankrupt Register has taken its place among the regular reports,
and the author has deemed it best to refer to that edition which
will hereafter be most frequently used.

The author takes the opportunity to return his thanks to those
judges, registers and lawyers who have called his attention to new
decisions and to defects or errors in his work, and to request
similar favors from the profession generally. Those who examine
only one particular point, will, from the very nature of the case
discover defects, which others taking a survey of the whole field
would not perceive. It is only by the combined efforts of all that
a harmonious and symmetrical system can be developed.

ORLANDO F. BUMP.
BatrimorE, September 1 1877.
ABBREVIATIONS USED IN THIS WORK.

MGGH Tis eerste oan dhieeas hans oar 6

Abbott’s United States Reports.
Albany Law Journal.
American Law Register.
American Law Review.
American Law Times.
Benedict’s Reports.

© Bissell’s Reports.
Bankrupt Register.
Baltimore Law Transcript.
Cincinnati Law Bulletin.
Chicago Legal News.
Central Law Journal.
Internal Revenue Record.
Lansing (N. Y.).
Legal Intelligencer.
Louisiana Law Journal.
Law Times Bankrupt Reports.
Michigan Lawyer.
Montana.
New York Superior Court Reports.
New York Supreme Court Reports.
Pacific Law Reporter.
Pittsburgh Legal Journal.
Sweeny (N. Y.).
Same Case.
Western Jurist.
Weekly Notes.
Woolworth.
THIS TABLE
ConTAINS A List OF THE BANKRUPTCY Laws SHOWING THE TIME
oF REPEAL AND THE PART OF THE REVISED STATUTES WHERE
AN ANALOGOUS PROVISION MAY NOW BE FOUND.

 

 

 

 

 

ORIGINAL STATUTE. REPEALED. REVISED STATUTES.
Date. Chap. Sec. Vol. Page. Date. Chap. Sec. Vol. Page.
April 4,1800 19 1 2 19] Dec. 19,1808 6 1 2 248 | 5021, 5023.
se ae 19 2 2 21 te sh 6 1 2 248 | 5021, 5023.
se ea 19 3 2 22 ws Me 6 1 2 248 | 5024, 5025, 5026.
- i 19 4 2 2% - . 6 1 2 248 | 5024.
a ‘ 19 5 2 28 oe te 6 1 2 248 | 5028.
es Me 19 6 2 28 # ce 6 1 2 248 ea 5034, 5044,
i .
ie es 19 % 2 28 et oe 6 1 2 248
eS ee 19 8 2 28 ee ne 6 1 2 248 | 5039, 5043,
es = 19 9 2 24 fs Se 6 1 2 248 ! 5048.
se we 19 10 2 24 ee ie 6 1 2 248 | 5044.
a RS 19 11 2 24 i ne 6 1 2 248 | 5044, 5054.
fs ne 19 12 2 2 ee Me 6 1 2 248} 5066.
es ee 19 18 2 25 RY ee 6 1 2 248 | 5046, 5047.
ss ee 19 14 2 2% st te 6 1 2 248 | £006, 5087.
ee te 19 15 2 2% ee es 6 1 2 248 | 5005.
te ie 19 16 2 2% tg ee 6 1 2 248 | 5081.
‘ 19 17 2 26 ee re 6 1 2 248 | 5046.
es 19 18 2 26 ne i 6 1 2 248 | 5044, 5045, 5086, 5089.
se re 19 19 2 2 so We 6 1 2 248
xe te 19 20 2 2 se ee 6 1 2 48) 5046,
se ee 19 21 2 2 ae a 6 1 2 248] 5104.
se te 19 22 2 27 ce “ 6 1 2 248 | 5107.
ee ie 19 23 2 28 a a 6 1 2&2 248 | 5086, 5132,
of et 19 24 2 28 a * 6 1 2 248 | 5088.
se ee 19 2 2 28 Gr Ks 6 1 2 248 | 5006.
$e ts 19 26 2 28 Y oe 6 1 2 248
cy tH 19 27 2 28 oe fe 6 1 2 248] 5044.
ts ne 19 28 2 28 He oe 6 1 2 248 | 5128.
oe He 19 29 2 29 ss Se 6 1 2 248 | 5092, 5099, 5102.
ee Me 19 30 2 29 se th 6 1- 2 248 | 5008.
ie st 19 31 2 380 ce ee 6 1 2 248 } 5091,
ce ek 19 32 2 30 is Ma 6 1 2 248 | 5058.
ae ee 19 83 2 30 cc re 6 1 2 248 | 5104.
as ee 19 2 80 * ee 6 1 2 248 | 5045, 5118, 5119, 5120.
ae #e 19 8 2 31 - 6 1 2 248 5.
ae ee 19 86 2 31 re ae 6 1 2 248 | 5110, 5113,
ss “ 19 387 2 81 Ae ee 6 1 2 248 | 5110.
se ue 19 88 2 32 ie es 6 1 2 248 | 5107.
ee ee 19 89 2 32 ee re 6 1 2 248 | 5067, 5068.
ne ee 19 40 2 32 fh ie 6 1 2 248
s ee 19 41 2 32 th et 6 1 2 248
a os 19 42 2 38 Se te 6 1 2 248 | 5073.
se ue 19 2 383 tt es 6 1 2 248 | 5061.
st a 19 44 2 38 ee ae 6 1 2 248 | 5046, 5062.
os a 1% 45 2 33 we me 6 1 2 248 | 5090.
o ee 19 46 2 33 ee te € 1 2 248 | 5124
ee oe 19 47 2 3838 es ee 6 1 2 248 | 5124
ee s 19 48 2 33 ne ee 6 1 2 248
se us 19 49 2 84 oe oS 6 1 2 248] 5056.
os ee 19 50 2 34 fe se 6 1 2 8 | 5044,
$ os 19 51 2 34 ee “ 6 1 2 248) 4992
es ee 19 52 2 84 ee “ 6 1 2 248 | 5086
ef oe 19 58 2 34 as te 6 1 2 248 | 5045
Re ce 19 54 2 34 He as 6 1 2 248] 5059
Me et 19 5 2 35 se os 6 1 2 248
ee fe 19 56 2 35 fe ie 6 1 2 248 | 5049
cs ee 19 57 2 35 ne . 6 1 2 248 | 5116
“ oh 19 B68 2 35 ee oe 6 1 2 246} 4984.
ee se 19 59 2 35 ve te 6 1 2 248 5062.
 

 

 

 

 

x TABLE OF BANKRUPTCY Laws.
ORIGINAL STATUTE, REPEALED. REVISED STATUTES.
, Date. Chap. Sec. Vol. Page Date. Chap. Sec, Vol. Page.
April 4,1800 19 60 2 85] Dec, 19,1803 6 1 2 248 | 5107.
+e “ 19 61 2 36 “e 6 6 a 2 248
us ts 19 62 2 s6] * wy 6 1 2 248] 5101.
- te 19 68 2 g6] * ¥ 6 1 8 248 Ae
th +6 19 64 2 86 7 te 6 1 2 * %-
Aug. 19,1841 9 1 5 440] March 83,1843 82 1 5 614 ees ee ed
“ “ 9 2 5° 442 “ “ g2 1B OB14 | 5075, 5128, 5129.
“ te “ “ g2 1 5 614 | 5039, 5044, 5045, 5046
Lae BB BLOB” st si
“ 6c 4“ vs 82 1 5 614 | 50 5
i 5111, 5114, 5118, 5119,
5120.
ut 9 5 “p21 C614. | 4993, 5067, 5068, 5069,
Be aes 5070, 5071, 5073, 5076,
es 5081, 5091, 5101,
510
bo us 9 6 5B 445 st “  g2 4B 14 | 4972, 4978, 4975, 4986,
4990, 5068. ;
* ee 9 7 ##B 446 He “ g2 «4B 14. | 5003, 5014, 5019, 5021,
5076, 5392.
i 9 8 5 446 te “ g2 «1B CB14 | 4979, 5057.
et 9 9 5 447 ue 92 1 5 614 | 5036, 5059, 5062.
ee ss 9 10 5 447 i “ 92 1 «5 «614 | 5092, 5097.
ey xe 9 11 5 447 ty “B20 «15 «614 | 5061, 5068.
be ee 9 12 5 447 i “  g2 1 5 614 | 5116.
ee et 9 18 5 448 fe “ 92 1 «#5 614 | 4992, 5124,
He us 9 14 5 448 ee “82 2:11:25 614. | 5121.
ee s 9 15 5 448 ue “  g2 «1 BCG 14 | 5049.
ts et 9 16 5 448 ee “82 «1B SOG 14 | 4977, 4978.
eure iv 9 17 #5 449 Bs “  g2 1 #5 614) 0.P.
March 2, 1867 176 1 5 4517/ June 22, 1874 Revised Statutes SO Sore, 4974, 4975,
333.
ut ss 1766-2 ~=«65 OBB | “ “ 4979, 4986, 5057.
i te 17% 06 8)COCOBHsSC«*i'B]| “ “ 4993, 4994, 4995,
i ee 176064 «5 «65BI9] “ “ 4996, 4998. 4999, 5000,
5007, 5008, 5009.
te te 17%60O«&HCOCHsSC*“iCD YT “ “ 4998, 4997, '5001, 5002,
5004, 5125.
ts ue 17% 66 «65 O20] t 7 5010, 5011.
st ee 176 7 «614 «BRO “ 5005, 5006, 5392.
ee ae 17% 68 «614 «2520 |] ‘s ze 4980, 4981, 4982, 4983.
a i 17% 69 «614 «6520] « “ “ 4989.
& “e 176 10 14 521 “ “ “ F 4990.
ue is 17% «11 14 «4521 “ “ “ 5014, 5015, 5016, ae
5018, 5019, 5033
te “ 176 12 #14 «5apz} + “ oo 5033.
ee as 176 138 #14 «5e2} “ “ 5034, 5036.
te 176 14 #14 522) «+ te “ 5044’ 5045, 5046, 5047,
5048, 5049, 5050, 5051,
ee 5058, 5054, 5056,
ee 17% 15 «414 «54 ] io “ 5055, 5058, 5062.
ts a 176 16 #414 #524] * a “ 5047, 5048, 5049
ts ee 176 17 «+14 «5th ] Of ae “ 5059, 5060, 5061, 5094,
5099
te e 176 18 «#14 «525 ] sg a 5085, 5087, 5088, 5039,
5040, 5041, 5042, 5043.
ag e 178 19 14 #525} & a oc 5067, 5068, 5069,” 5070,
1, ;
“ ae 176 20 14 «526; 6 " 5073, BOS ie
st s 176 21 «14 #526] * te ee 5074, 5105, 5106.
we o 17% 22 «14 «O5e7] “ “ 5076, Burt. 5072, 5079,
5080, 5
at os 176 28) «14 5eB] es se 50!
st ee 176 24 14 528] es Ke d088 as es,
ue ve 176 25 «614 Ba] “ a 5063; 5065.
ty en 176 26 «14 «529] i “ 5020, 5086, 5087, 5088,
5089, 5104, 5107.
a s 176 27 «14 «Beg ]| 509
“ wy 176 28 «14 #580] * et ie 506r oe Pio Sia
5098, 5100, 5101, 1
nf ‘ 176 29 «14 «581 “ 33 “ :
“ 4 478 80 14 Bae | « 5108, 5108, 5110.
“ ts 17% 81 «#414 «BBB ] ee ue ai
a ot 176 82 14 «582] “* . “

5114, 5°15,
TABLE OF BANKRUPTCY Laws.

 

 

ORIGINAL STATUTE.

REPEALED.

RevIseD STATUTES.

 

Date.

March 2, 1867 ie 33 «14

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os
“
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a

J une
July
June
Feb.
June
Feb.

July
Feb.

Sept.

July

30, 1870
14, 1870
8, 1872

18, 1873
March 3, 1873
22, 18

Chap. Sec. Vol. Page.

533,
583
534
584
535
176 384 «14 (585
586
536
587
537

2
a
<)
Mem we WR WH
a

,
18, 1875
26, 1876
27, 1877
1 1878
1698

 

J une 22, 1814 Revised _Statutes

Date.

“
“
“
4
“
“
t

“
“
a
“
“
“
“
“

“
“
a
“
“
“
“
“
Ts
4“

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rey
“
7
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“

 

5112, 5117, 5118.
5119, 5120.

5128, 5120, 5130,
B12".

5122.

4991, 4992, 5008,
5021, 5023.

5024, 5025.

5026, 5027.
eh aes 5029, 5030,

5419.

5124, 5126, 5127.

5013.

4977, 4978, 4988.

0.P.

5112.

5021, 5080, 5047, 5076,

5124

5004, 5076.
4978, 4987,

4979, 4986.
5123,
5045.

 

 
CONTENTS.

PREFACE TO ELEVENTH EDITION ............. cc cece eeeeee iii
PREFACE TO TENTH EDITION....... v, vi
ABBREVIATIONS 2 a ttiicacatdierre wad Odin ddgaeawes eae edad imemmnede vii
TABLE OF COMPARISON OF BANKRUPTCY ACTS........... ix—xi
INDWX ‘TO-CASES CIPE Dinzs caiancaials oos-cadsicia canes Gee uaa res xxi
INTRODUCTION ¢ <eaccsamedeea. scams ccakiaamelans ar aon oe weeme 1
Bankruptcy in United States 0... 0.0... ccc cc cece eee ee cee tees 1
BankEuptey in) Ho gland® onc nc ed cw pee aries shee PO Ooe ROT oases Seems 2
Source: of Bankruptey Laws veces cos cn soe seed es seer near Rees 3
MEH OA Tine ssi cine So jaast Rae eG aie Ae alah gpeein ler doo wa es tnes d Realestate anata oane se 3
Act of March 2; 186Ticnaccwaneci naw ves we ces em daeiueeeea sian ee 3
(Che Modern, Walw sci3 ge-enagu oeone a Satiabae eas an Raes naar eae ees 4
Congress has Supreme Jurisdiction. Boda carte edn a a Ae Pa 4
Barkiuptey Law ist be UnifOttisss as ceacot cee coer eeaeed ore Gas 5
Insolvent Law Suspended by Bankruptcy Act.........cce cece eeee 7
Bankruptey and Insolvent Laws....2.c00 sigan ccd ee baw one ieecnerered “9
Voluntary and Involuntary Barkruptcy........ cee eee e eee eee 9
States may Pass Insolvent Laws.......... eee e cee e eee cree n eens 10
Who may be Bankrupts under Law of 1867......... 05... eee ee eee 11
Who may be Bankrupts under Law of 1898. .......... ee eee ee eeee 13
Husband and Wife under Law of 1867........ 00s cece eee cere e eee 13
Insolvency and Bankruptcy Contrasted........-.. cee cece eee eee 14
Involuntary Bankruptcy Prerequisites under Law of 1867.........- 16
Courts of Bankruptcy, Act of 1867. ....... eee cee ee eee tenes 19
Courts of Bankruptcy, Act of 1898. .... 0... cece ee eee nee 20
Definitions, Act Of 1808. .... 0... ccc ee ete cee teen eee nn nee 20
RELCrCCS. paced gwd wee a Mead Ge RNa CAS BE Gee ee EQS 21
THUStEES: «i aps a bade denn edae ee RES Mew DS REE PEERS ee EM ORES 21
Creditors 2. ccc cc ccc ce eee ee ee eee eee ee ee een eee tenet eee ee eees 21
WOStAtOS: oc ssen gop ientiavic dan Gaver Hide guage ale auares TRa RG ae aS Geet et Rie greet 21
Possession of Property... .... cece cece ee cee e eee nent ent e en en ns 22
Title to Property. ...... cece eee eee cence eee eee n nee ne erences 22
When Act of 1898 took Effect... 0.0... cece ee ener eee en ene nee 22
TITLE I.
THE LAW AND PRACTICE IN BANKRUPTCY:
Act of April 4, 1800... 0.00.0 ese c eee cere e teen etn e eens teens 23
Act of February 18, 1801... 0.6.0 e ee cece eee tenn teense 47
Act of April 29, 1802. ...... 0. eee eee e eter e ee entree neers i.

Act of December 19, 1808... 0... ce cece eee e eee eee ee nese gic’
xiv ConrENTS.

T

TITLE II. PAGE.
THE LAW AND PRACTICE IN BANKRUPTCY:

Act of August 19; T8415 idea paced Moves s RWS LOS eR LE SOS
Act of March 8, US843cc004 2.004 00 cee coe dnes wae seinen eeew eae s

TITLE III.

HP LAW AND PRACTICE IN BANKRUPTCY:
Act: Of JULY DT US98 ons cece ee dean d sewe soe Sealey aha gidielaeonseG WOH e Hee

Chap: 1s. Definitions: ss cscs uieenisadnes Cok Gee bbe EE ROE ROR eS
Chap. 2. Creation of Courts of Bankruptcy, and their Jurisdiction...
Chap. 3. Bankrupts .. 1... cece ce ce eet te eee eee eee te nn anee
Acts of Bankruptcy. Who may Become Bankrupts. Partners.
Exemptions of Bankrupts. Duties of Bankrupts. Death or Insanity
of Bankrupts. Protection and Detention of Bankrupts. Extradition
of Bankrupts. Suits by and against Bankrupts. Compositions; when
Confirmed. Compositions; when Set Aside. Discharges; when
Granted. Discharges; when Revoked. Co-Debtors of Bankrupts.
Debts not Affected by a Discharge. e
Chap. 4. Courts, and Procedure Therein. 24 ..cecs cane cece ene eae eee
Process, Pleadings and Adjudications. Jury Trials. Oaths, Affirma-
tions. Evidence. Reference of Cases after Adjudication. Jurisdic-
tion of United States and State Courts. Jurisdiction of Appellate
Courts. Appeals and Writs of Error. Arbitration of Controversies.
Compromises. Designation of Newspapers. Offenses. Rules, Forms
and Orders. Computation of Time. Transfer of Cases.
Chap. 5. Officers: Their Duties and Compensation.................5
Creation of Two Offices. Appointment, Removal and Districts of
Referees. Qualifications of Referees. Oaths of Office of Referees.
Number of Referees. Jurisdiction of Referees. Duties of Referees.
Compensation of Referees. Contempts before Referees. Records of
Referees. Referee’s Absence or Disability. Appointment of Trus-
tees. Qualifications of Trustees. Death or Removal of Trustees.
Duties of Trustees. Compensation of Trustees. Accounts and Papers
of Trustees. Bonds of Referees and Trustees. Duties of Clerks.
Compensation of Clerks and Marshals. Duties of Attorney-General.
Statistics of Bankruptcy Proceedings.
CHADS Gx “Cred torsin a sd gina WA ere See Re AS How aS BRR a Be ads Slants
Meetings of Creditors. Voters at Meetings of Creditors. Proof and
Allowance of Claims. Notice to Creditors. Who may File and Dis-
miss Petitions. Preferred Creditors.
That. Te eS s. 4 wee bs aw ony dager he 64 R EH oo Hs CODES RRO OLEH ELS eG
Depositories for Money. Expenses of Administering Estates. Debts
which may be Proved. Debts which have Priority. Declaration and
Payment of Dividends. Unclaimed Dividends. Liens, Set-offs and
Counterclaims. Possession of Property. Title to Property. The
Time when this Act shall go into Effect. Insolvency Proceedings
Commenced Prior to this Act not Affected by it.

71

76

87
CONTENTS. XV

TITLE Iv. as
THE LAW AND PRACTICE IN RANKRUPTCY ANNOTATED.
Constitution of the United States............0..c0cc cee cee eeees OF
Phe: Act of Puly Lj W98io00ias aoves wang sia enus saern ws accuacnenesarnns 94
The Act of March 2, 1867, and Amendments.............. sseaee 4
TITLE V.
COURT AND COURTS OF BANKRUPTCY............. 000000000 103

Synopsis of Quotations from Act of 1898.
Definitions. Jurisdiction of United States and State Courts. Jury
Trials.
Synopsis of Quotations from Act of 1867.
Original Jurisdiction. Mode of Trial. Mode of Trial in Circuit
Courts. Jurisdiction Exclusive.

TITLE VI.

COURTS OF BANKRUPTCY; THEIR JURISDICTION, ORGAN-
IZATION AND POWBDRS jes oseess saw eaes ponecoeee whe See 118

Synopsis of Quotations from Act of 1898.

Definition. Creation of Courts of Bankruptcy, and their Jurisdic-
tion. Court’s Jurisdiction in Chambers and Term. Contempts.
Courts of Bankruptcy in Districts and Territories. Appeals and Writs
of Error. Appeals; how Taken. Jurisdiction of Appellate Courts.
Rules, Forms, and Orders. Commencement of Proceedings. Creation
of ‘I'wo Offices. Appointment, Removal and Districts of Referees.
Number of Referees. Qualifications of Referees.. Officer. Oaths of
Office of Referees. Bond of Referees. Duties of Referees. Removal
of Referees. Jurisdiction of Referees. Duties of Referees. Referee’s
Absence or Disability. Contempts before Referees. Reference of
Cases after Adjudication. Records of Referees. Clerk. Evidence.
Transfer of Cases. Compensation of Referees. Trials by Referees.
Meaning of Words and Phrases. ,

Synopsis of Quotations from Act of 1867.

Scope of the Jurisdiction of Courts of Bankruptcy. Authgrity of
District Courts and Judges. Sessions of the District Courts. Powers
of District Courts to Compel Obedience. Powers of Circuit Judge dur-
ing Absence, Sickness, or Disability of District Judge. Powers of the
Supreme Court for the ‘vistrict of Columbia. Powers of the District
Courts for the Territories. Clerks of Supreme Courts to Transmit
Papers to District Courts. Jurisdiction after Transmission of Papers.
Jurisdiction of Actions between Assignees and Persons Claiming Ad-
verse Interest. Appeals to Circuit Court; How Taken; How Entered.
Waiver of Appeal. Appeal from Decision Rejecting. Costs. Power
of General Superintendence Conferred on Circuit Court. Superin-
tendence by Supreme Courts of Territories. Power of a District Judge
in a District not within any Organized Circuit. Appeal and Writ of
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"SINTLNOQ TAX
CoNnTENTS.

and Papers of Trustees. Death or Removal of Trustees. Exemp-
tions of Bankrupts. Duties of Trustees to Set Apart Exemptions,
Title to Property. Duties of ‘Trustees. Depositories for Money.
Death or Removal of Trustees. Evidence. Certified Copy of Order
Approving Trustee’s Bond. Duties of Bankrupt. Liens. Depositories
for Money. Duties of Trustees. Arbitration of Controversies. Com-
‘promises. Appraisement. Debt. Rights of Individual Sureties. Set-
offs and Counterclaims. ‘Two Partnership, or Individual and Partner-
ship Estates. Voters at Meetings of Creditors. Proof and Allowance
of Secured Claims. Value of Securities. Secured Creditor. Proof
and Allowance of Unsecured Claims. Rejection of Claims. Duties
of Bankrupts. Objections to Claims. Withdrawal of Original Claim.
Objections Heard, when. Preferences Surrendered. Allowance of
Claims. Duties of Bankrupts. Contempts. Death or Insanity of
Bankrupts. Meetings of Creditors. Declaration and Payment of
Dividends. Meetings. Dividends. Duties of Trustees. Effect of
Subsequent Claim. Compensation of Trustees. Debts which may be
Proved. Debts which have Priority. Duties of Referees. Unclaimed
Dividends. Composition; when Confirmed; when Set Aside.

Synopsis of Quotations from Act of 1867.

Contents of Notice to Creditors. Marshal’s Return. Choice of As-
signee. Who are Disqualified. Bond of Assignee. Assignee Liable
for Contempt. Resignation of the Trust. Removal of Assignee. Et-
fect of Resignation or Removal. Filling Vacancies. Vesting Estate
in Remaining Assignee. Former Assignee to Execute Instruments.
Assignment. Exemptions. What Property Vests in Assignee. Right
of Action of Assignee. No Abatement by Death or Removal. Copy
of Assignment Conclusive Evidence of Title. Books of Account.
Debtor Must Execute Instruments. Chattel Mortgages. Trust Prop-
erty. Notice of Appointment of Assignee and Record of Assignment.
Assignee to Demand and Receive all Assigned Estate. Notice Prior
to Suit against Assignee. Time of Commencing Suits. To Keep
Money and Goods Separate and Distinct. Temporary Investment of
Money. Arbitration. Assignee to Sell Property. Continuance of the
Business. Mode of Selling. Sale of Disputed Property. Sale of
Uncollectible Assets. Sale of Perishable Property. Discharge of
Liens. Provable Debts. Contingent Debts. Liability of Bankrupt as
Surety. Sureties for Bankrupt. Debts Falling Due at Stated Periods.

XVlL

No Other Debts Provable. Set-off. Distinct Liabilities. Secured.

Debts. Taking Proof of Debts. Notaries May Take Proof. Notaries
May Take Depositions and Acknowledgments. Creditor’s Oath. By
Whom Oath May be Made. Before Whom Oath May be Taken.
Proof to be Sent to Assignee. Examination by Court into Proof of
Claim. Withdrawal of Papers. Postponement of Proof. Surrender
of Preference. Allowance and List of Debts. Examination of Bank-
rupt. Parties May be Witnesses. Examination of Witness. HExami-
nation of Bankrupt’s Wife. Examination of Imprisoned or Disabled
Xvili CoNnTENTS.

Bankrupt. No Abatement upon Death of Debtor. Distribution of
Bankrupt’s Estate. Second Meeting of Creditors. Third Meeting of
Creditors. Notice of Meecings. Creditor May Act by Attorney.
Settlement of Assignee’s Account. Dividend not to be Disturbed.
Omission of Assignee to Call Meetings. Compensation of Assignee.
Commissions. Debts Entitled to Priority. Notice of Dividend to Each
Creditor. Settlement of Banxrupt’s Estate by Trustees. Composition.

TITLE X.
DUTIES, PROTECTION AND DISCHARGE OF BANKRUPTS...

Synopsis of Quotations from Act of 1898.

Duties of Bankrupts. Suits by and against Bankrupts. Protection
and Detention of Bankrupts. Discharges; when Granted. Procedure
to Secure Discharge. Applicant Entitled to Discharge. Contesting
Discharge. Discharges; when Granted. Debts not Affected by a
Discharge. Codebtors of Bankrupts. Discharges; when Revoked.

Synopsis of Quotations from Act of 1867.

Bankrupt Subject to Order of Court. Waiver of Suit by Proof.
Stay of Suits. Exemption from Arrest. Application for Discharge.
Notice to Creditors. Grounds for Opposing Discharge. Specifications
of Grounds of Opposition. Assets Equal to Thirty per cent. Required.
Not Required of Involuntary Bankrupts. Final Oath of Bankrupt.
Court to Grant Discharge. Form of Certificate of Discharge. Second
Bankruptcy. Debts not Released. Liability of Other Persons not
Released. Effect of Discharge. Application to Annul Discharge.

. TITLE XI.
PARTNERSHIPS AND CORPORATIONS ...........c cece eeeeee

Synopsis of Quotations from Act of 1898.
Partners. Corporations: Meaning of; Punishment of.

Synopsis of Quotations from Act of 1867.
Bankruptcy of Partnerships; Of Corporations and Joint-Stock Com-
panies. Authority of State Courts Proceeding against Corporations.

TITLE AII.
FEES, COSTS AND ATTORNEY-GENERAL’S STATISTICS......

Synopsis of Quotations from Act of 1898.
Compensation of Referees. Compensation of Trustees; and Duties
of Clerks with Reference Thereto. Compensation of Clerks and
Marshals. Expenses of Administering Estate. Duties of Attorney-
General. Statistics of Bankruptey Proceedings.

Synopsis of Quotations from Act of 1867.
Fees. Traveling and Incidental Expenses. Marshal’s Fees. Jus-
tices of the Supreme Court May Change Tariff for Fees. Reduction
of Fees. Returns.

PAGE,

626

733
CONTENTS.

xix
TITLE XIII. van
PROHIBITED AND FRAUDULENT TRANSFERS............005 780

Synopsis of Quotations from Act of 1898.

Preferred Creditors. Definition. Insolvency, what is? Liens.
Avoiding Transfers. Mxtradition of Bankrupts. Affirmation. Of-
fenses. Rules, Forms and Orders. The Time when This Act Shall
go into Effect.

Synopsis of Quotations from Act of 1867.
Preferences by Insolvent. Transfers of Property to Defeat the Act.
Presumptive Evidence of Ifraud. Limitations in Involuntary Bank-
ruptey. Fraudulent Agreements. Penalties against Fraudulent
Bankrupts.
INDEX TO CASES CITED,

Abbe, Warren C., 742.

Abrahams, Aaron, 211.

Adams, James M., 319. |

Adams, Julius L., 185, 212, 556, 557.

Adams, R. A., 658.

Adams vy. Boston, Hartford & Erie R.
R. Co., 11, 178, 206, 757, 765.

Adams vy. Meyers, 346, 348.

Adams v. Storey, 28, 96.

Adams et al. v. Waite, 186.

Adler Brothers, 173.

Ahl et al. v. Thorner, 793, 820.

Aiken v. Edrington, 344.

Akin v. Oakley, 746.

Alabama & Chattanooga R. R. Co.,
206, 215, 216, 265.

Alabama & Chattanooga R. R. Co. v.
Jones, 6, 12, 141, 142, 152, 172,
173, 177, 178, 179, 257, 282, 293,
577, 758.

Alabama & Florida R. R. Co., 514.

Albrecht, 697.

Aleott v. Avery, 711.

Alden, H. O., 46.

Alden v. Boston, Hartford & Erie R.
R. Co., 114.

Alderdice v. State Bank, 812, 817.

Alexander, Alex., 336, 572, 769, 774,
776.

Alexander, John, 145, 146, 162, 167,
171, 174, 176.

Alexander, W. B., et al., 238, 273, 274,
278.

Alexander y. Gibson, 96.

Alexander v. McCullough, 427.

Allen, 610.

Allen, Abner H., 837, 422, 498, 513.

Allen, Horatio N., 627, 628.

Allen v. Binswanger, 147.

Allen vy. Ferguson, 717.

Allen v. Massey et al., 359, 403, 406.

Allen vy. Montgomery, 403, 404.

Allen v. Soldiers’ Business Messenger
& Dispatch Co., 632, 760.

Allen v. Ward, 683.

Allen v. Whittemore, 353.

Alling v. Egan, 708.

Alsabrook v. Cates, 404.

Alsberg, Martin, 641, 691.

Alston v. Robinett, 730.

Alston v. Wingfield, 639.

Altenheim, Eliza, 321.

Alter v. Nelson, 708.

Amblard v. Heard, 150.

American Glass Ins. Co., 472.

American Waterproof Cloth Co., 604,

Ames v. Gilman, 421.

Amoskeag Manuf. Co. v. Barnes, 695,

Amsinck v. Bean, 358, 403, 748.

Amsterdam Tire Ins. Co., 248.

Ancker v. Levy, 748, 804.

Anderson, 496.

Anderson, George W., 111, 140, 338,
687.

Anderson v. Miller, 344, 446.

Anderson y. Strasburger, 824.

Andrews v. Dole, 441.

Andrews v. Graves, 834, 835, 841, 842,

Andrews & Jones, 598.

Angell, Fred’k E., 268.

Angier, 497.

Ankrim, 677.

Anon., 211, 218, 218, 219, 220, 223,
253, 266, 271, 319, 325, 336, 376,
887, 422, 516, 541, 594, 600, 628,
651, 680, 702, 770, 774, 775, 776,
788, 817, 835.

Anshutz v. Fitzsimmons, 746.

Ansonia B. & C. Co. v. Babbitt,
128, 527, 542, 631.

Ansonia B. & C. Co. v. Pratt, 117,
159, 830.

Ansonia Brass Co. v. New Lamp
Chimney Co., 632, 758, 759..

Antisdel, 647, 648, 784.

Antrim v. Kelly, 408.

Apperson y. Stuart, 716, 718.

Appling v. Bailey, 416.

Appold, B. F., 6, 382, 383, 480, 482,
584, 770.

Archenbraun, Wm., 319, 636, 655, 669,
670, 701.

Archenbrown, 367.

Archer v. Duval, 437, 438.

Arledge, G. H., 835.

Armstrong, 783, 828.

Armstrong vy. Rickey Bros., 506, 507,

509, 807.

Arnold, Noah §., 18, 281, 786, 809.

Arnold y. Leonard, 445, 448.

Arnold v. Maynard, 241, 251, 252, 793.

114,
Xxii

Ashby v. Steere, 241, 798, 800, 803.

Ashley vy. Robinson, 220, 408, 410, 661,
731, 782.

Askew, D. R., 385, 839.

Aspinwall, 663, 666, 684.

Aspinwall, James 8., 566.

Asten, B. C., 621, 623.

Atkins vy. Spear, 821.

Atkinson, R., 126, 143.

Atkinson y. Farmers’ Bank, 241, 787,
798, 808, 804.

Atkinson y. Fortinberry, 723.

Atkinson & Kellogg, 7538.

Atkinson y. Purdy, 117, 125, 804.

Atlantic Mut. Life Ins. Co., 196.

Atwood v. Kittell, 397.

Augenstein, Moritz, 730, 732.

Augsbury v. Crossman, 98.

Augustine v. McFarland, 515.

Austill v. Crawford, 698, 694.

Austin, Tomlinson & Webster, 210

Austin v. Markham, 727, 844.

Austin y. O’Reilly, 479.

Avery v. Hackley, 822.

Avery v. Ryerson, 415, 493.

Ayer v. Brastow, 745, 746.

Ayers, C. B., 553.

B. & M. Ins. Co. v. Davenport, 120,
373.

Babbitt v. Burgess, 148, 154, 156, 165,
339, 745, 841.

Babbitt v. Walbrun & Co., 148, 281,
833, 834, 841, 842, 843.

Babcock, Sam’l H., 496, 497, 584.

Bach v. Cohn, 718.

Bachman, 763.

Bachman y. Packard, 146, 147.

Badenheim, H. & Co., 372.

Badger v. Story, 404, 447.

Baer, Anthony, 384.

Bailey, John, 660, 667.

Bailey, John W., 528.

Bailey, Tatnall, 12, 216.

Bailey v. Comings, 874.

Bailey v. Loeb, 479, 480, 482.

Bailey v. Moore, 703.

Bailey v. Nichols et al., 467.

Bailey & Pond, 618, 620.

Bailey vy. Smith, 424.

Bailey v. Whitfield, 172.

Bailey v. Wier, 4387, 440.

Bairlie, 497.

Baker, Jerome E., 806.

Baker v. Vasse, 704.

Baker vy. Vining, 446, 447.

Bakewell, 606.

Balch, John T., 297.

Baldwin, Theodore H., 545,

Baldwin y. Raplee, 167.

INDEX TO CASES CITED.

Baldwin v. Rosseau, 238, 256, 263.

Baldwin v. Wilder, 258.

Ballantine v. Haight, 96.

Ballard & Parsons, 265.

Ballin v. Ferst, 217, 864, 365, 422, 752.

Ballou, L. S., 187, 147.

Ballou v. Minard, 805.

Baltimore County Dairy Ass’n, 759.

Bamberg v. Stern, 650.

Bangs v. Strong, 726.

Bank of Commerce v. Russell, 350,
432.

Bank of Madison, 189, 349, 350.

Bank of North Carolina, 456, 601.

Bank of Pittsburgh v. Brady’s Bend
Iron Co., 261, 264, 288.

Bank v. Cooper, 151, 174, 179, 181.

Bank vy. Franciscus, 711.

Bank vy. Onion, 728.

Bank v. Overstreet, 362.

Banks, Mark, 499, 512, 656, 668, 670,
671.

Banks v. Ogden, 348, 440.

Banning v. Bleakley, 694.

Barber v. Rogers, 100.

Barber v. Sterling, 690.

Barber v. Terrell, 404.

Barclay v. Carson, 417, 427, 488.

Barker v. Smith, 359.

Barman, Abram, 800.

Barnard vy. N. & W. R. R. Co., 511,
513.

Barnes’ Appeal, 480.

Barnes, Brother & Herron, 554, 584.

Barnes, H. F., 539, 577.

Barnes vy. Billington, 25, 236, 245, 508.

Barnes v. Moore, 702, 731.

Barnes v. Rettew, 105, 159, 836, 837.

Barnes v. U. 8., 468, 469.

Barnett, 337.

Barnett v. Hightower, 268, 278.

Barnett vy. Pool, 340. _

Barney v. Patterson, 186.

Barnwell v. Jones, 745, 819, 836.

Barrett, Joseph, 326, 328, 329, 538,
576, 646. :

Barron v. Benedict, 716.

Barron vy. Morris, 167, 406, 511, 800.

Barron vy. Newberry, 337, 524.

Barrow, R. H. (re Loeb, Simon & Co.,
re Winter), 110, 514.

Barstow v. Adams, 105, 416, 427.

Barstow y. Hansen, 721.

Barstow vy. Peckham, 133, 137.

Bartenbach, George A., 456, 498,

Bartholomew vy. West, 378, 386, 391.

Bartholow v. Bean, 817, 821.

Bartlett v. Peck, 717.

Bartlett v. Russell, 178, 489, 880.

Bartusch, 322, 549,
InpDEX TO Cases CITED.

Bashford, Henry W., G54.

Bass, Miles, 378.

Bassett vy. Baird, 480, 493.

Batchelder, C. W., 251, 665, 671, 672,
798, 815.

Batchelder vy. Low, 731.

Batchelder vy. Putnam, 372.

Bates \. Tappan, 369, 714.

Bates vy. West, 703.

Baum, Adolph, 556, 675.

Baum y. Stern, 116.

Baxter & Ralston, 589,

Bayle v. Zacharie, 10.

Beach vy. Miller, 651, 701, 715.

Beacon v. Howard, 419.

Beal, Joseph H., 220, 348. 657

Beall v, Harrell, 412.

Beals, 14, 1.1.

Beals v. Quinn, 788, 811.

Bean, Levi, 540.

Bean v. Brookmire & Rankin, 18, 19,
150, 281, 358, 791, 832.

Bean y. Laflin, 820.

Bear & Steinberg, 355.

Beardsley, Alfred, 220, 655, 656, 678.

Beardsley vy. Hall, 781.

Bearns, 485.

Beattie v. Gardner et al.,
806, 820.

Beatty, R. W., et al.,

Bechet, Alphonse, 624.

Beck, 18.

Beck v. Parker, 8, 100, 412, 835.

Beckerkorb, 6, 383, 390.

Beckler v. Hambrecht, 632.

Beebe v. Pyle, 609, 624.

Beecher v. Binninger, 153, 158.

Beecher v. Stevens, 489.

Beekman v. Wilson, 731.

Beers, John, et al., 744.

Beers et al. v. Place & Co. et al., 150,
369.

Belcher, W. K., 12, 216.

Belden, Francis C., 662.

Belden, W., 640.

Belden v. Edwards, 187.

Belden & Hooker, 540, 556, 565, 676.

Belden v. Smith, 829, 830.

Belis & Milligan, 566, 568, 668, 672,
678.

Bell v. Leggett, 844, 845.

Bellamy, John, 193, 434, 559, 579, 646,
651, 675, 685, 686, 687.

Bellamy v. Woodson, 712.

Bellows & ‘Peck, 118, 117, 130, 131,
362, 369.

Benham, A., 2¥7.

Benjamin v. Graham, 158.

Benjamin v. Hart, 166.

Benjamin v. Prieur, 514.

737, 738, 851.

795, 803,
656.

XX1il

Bennet, 336, 886.

Bennctt, 218, 220.

Bennett et al, 739.

Bennett, J. 8S. IX., 512.

Bennett v. Alexander, 699,

Bennett v. Bartlett, 704.

Bennett vy. Everett, 717, 718, 720.

Bennett v. Goldthwait, 631.

Benson, 395.

Bentley v. Wells, 528, 801, 839, 840.

Benton, 229.

Benton, A. & Bro., 246.

Bergeron, John B., 272, 306.

Berghaus vy. Alter, 187.

Bernstein, H., 129, 180, 507.

Berrian, J. M., et al., 753, 754.

Berry v. Gillis, 361, 417, 420.

Berthelon v. Betts, 101, 36.

Betts, 378, 522.

Betts v. Bagley, 96.

Biddle’s Appeal, 116.

Bidwell, 742.

Biesenthal, Solomon, 838.

Biesenthal v. Henschel, 831.

Bigelow, Edw., et al., 14, 462, 499,
521, 538, 584, 598, 744.

Bill v. Beckwith et al., 186, 138, 171,
176, 452, 824.

Binford, 480.

Bingham vy. Frost, 280, 551, 804.

Bingham y. Richmond, 280, 551, 812.

Binninger, Abm., et al., 173, 175, 176,
265, 575.

Binninger & Clark, 331.

Binns, Leonidas, 285.

Binswanger, 190, 192.

Birch vy. Tillotson, 418, 420.

Bird v. Hempstead, 416.

Bishop v. Loewen, 97, 643.

Bissell v. Couchane, 694.

Bissell v. Post, 108.

Bivens v. Newcomb, 725.

Bjornstad, 375.

Black v. Blazo, 731.

Black, Currier & Osgood, 548.

Black v. McClelland, 110, 469.

Black & Secor, 15, 17, 233, 241, 245,
248, 267, 509,’786, 805, 820.

Black vy. Zacharie, 51.

Blackburn vy. Stannard, 284.

Blackman Bros., 599.

Blackwell v. Claywell, 446.

Blair v. Allen, 164, 821.

Blaisdell, A., et al., 331, 651.

Blake, Alex’r, 565.

Blake v. Alabama & Chattanooga R.
R. Co., 152.

Blake v. Bigelow, 508, 707.

Blanchard v. Russell, 96.

Blandin, E. G., 169, 462.
Xxiv

Blane v. Banks, 716.

Blasdel v. Fowler, 614, 844.

Bledsoe, 517.

Blight, Peter, 602.

Blight v. Ashley, 26, 443.

Blin v. Pierce, 343, 350, 418.

Bliss, E. G., 326, 327.

Bloch, 609, 611.

Blodgett & Sandford, 332, 333, 386.

Bloom, 827. :

Bloss, C. E., 288, 285, 455, 535.

Blue Ridge R. R. Co., 517.

Blum y. Ellis, 525, 714.

Blum vy. Ricks, 701.

Blumenthal, 648, 736.

Blythe v. Johns, 186.

Boas v. Hetzel, 726.

Bodenheim & Adler, 646.

Boese _ v. King, 10.

Bogert & Evans, 1938, 541.

Bogert & Ockley, 327.

Bolander et al. v. Gentry, 361.

Bolton, H. C., 3828.

Bond, A. F., 561.

Bond v. Baldwin, 337.

Bond vy. Gardner, 716.

Bonesteel, J. N., 137, 147, 176, 563.

Bonnett v. James, 245, 298.

Book, Samuel, 11, 211, 214, 674, 692.

Booker v. Adkins, 638, 639.

Boone vy. Hall, 139, 403, 405.

Boone vy. Revis, 117, 718.

Boone vy. Stone, 417, 419.

Booth, John K., 585.

Booth v. Clark, 341, 446.

Booth vy. Meyer, 748.

Booth v. Neely, 796, 819.

Booth v. Storrs, 696.

Boothroyd & Gibbs, 378, 386, 390, 839.

Borden & Geary, 683.

Borland v. Phillips, 840.

Borst, John B., 684.

Bosler v. Kuhn, 705.

Bostick vy. Jordan, 497.

Boston, Hartford & Erie R. R. Co.,
179, 235, 297, 298, 307, 328.

Bostwick v. Dodge, 728.

Bostwick v. Foster, 431.

Bosworth v. Pomeroy, 372.

Botts v. Patton, 489, 715.

Bouie v. Puckett, 695.

Bound, 668.

Bousfield & Poole Mfg. Co., 448, 590,
592, 782.

Boutelle, 674.

Bowery National Bank, 888.

Bowery Savings Bank v. Clinton, 699.

Bowie, T. F., 126, 129, 131, 150, 519,
523.

Bowman y. Harding, 369, 370, 714.

InpEx To CasEs CITED.

Bowne & Ten Eyck, 480, 481.

Boyd, Hamilton, 489, 587.

Boyd, W., 354.

Boyd y. Parker, 839, 844.

Boyd v. Vanderkamp, 469, 698.

Boylan, J. A., 741, 755.

Boyst, 641, 642.

Bracken y. Johnson, 371.

Bradford v. Rice, 468, 709.

Bradley, 744.

Bradley v. Farwell, 791.

Bradley y. Frost, 371.

Bradley v. Healey, 135.

Bradley v. Hunter, 564, 681.

Bradshaw v. Klein, 150, 356, 403, 404.

Brady v. Otis, 436.

Bragg, Maynard, 560, 680.

Braley v. Boomer, 368.

Branch Bank vy. Boykin, 717.

Brand, 362, 499, 532, 535, 536, 598.

Brandon Manuf. Co. v. Frazer, 631.

Brandon Nat. Bk. v. Hatch, 641.

Brandt, Ernst, 355.

Brandt, George, 194, 195, 556, 557,
559, 563.

Bratton v. Anderson, 636.

Bray, 204.

las & Schermerhorn, 201, 203, 482,
483.

Breit v. Osner, 719.

Brenneman, Henry, 6, 96, 241, 251,
253.

Brent, 666, 684.

Brereton v. Hull, 656, 664.

Brett v. Carter, 406, 513, 800.

Bridges v. Armour, 709.

Bridgman, 8. D., 521, 538, 534, 602.

Briggs, Dexter M., 287.

Briggs v. Stephens, 112, 183, 585.

Brigham v. Claflin, 140.

Brightman, Wm. C., 645.

Brinkman, Henry, 515, 518.

Brisco, 321, 675.

Bristol v. Sandford, 358, 571.

Britton v. Payen & Brennan, 795.
805.

Broadhead, James, 674.

Broadnax v. Bradford, 691, 698.

Brock vy. Hoppock, 236, 303, 304.

Brock v. Terrell, 110, 118, 359, 482,
499, 793, 815, 824, 825.

Brockway, W. E., 672.

Broich, Hugo, 272, 273,.456, 496.

Bromley & Co., 283, 558, 559, 560,
HG62, O27, Gan,

Bromley v. Goodrich, 140, 361.

Bromley v. Smith et al., 138, 353, 515.

Brooke v. McCracken, 148, 819.

oagte v. Scoggins, 845, 787, 793, 812,
INDEX To CasEs CITED.

Brookmire v. Bean, 464.

Brooks, 564, 847.

Brooks, S. W., 502.

Brooks vy. D’Orville, 413.

Brooks v. Harris, 424.

Broome, James E., 405, 410, 885.

Brown, George, 220, 654.

Brown, James B., 377, 382, 387.

Brown, John, 270, 271.

Brown, Orrin, 500.

Brown, Stephen, 468, 599.

Brown y. Branch Bank, 711.

Brown y. Broach, 689, 691, 6938, 725.

Brown y. Collier, 718.

Brown v. Cumming, 488.

Brown v. Farmers’ Bank, 491

Brown vy. Gibbons, 524.

rown vy. Patrick, 424.

Brown y. Rebb, 701.

Browne v. Insurance Co., 421.

Bruce, Cosmore G., 458, 477, 546.

Bruce, Wm., 395.

Bruner v. Sherley, 498.

Brunquest, Wm., 503.

Bryan, G., 502.

Bryan v. Whitsett, 447.

Buchanan, William, 296, 309, 311.

Buchanan v. Smith, 111, 805, 809, 810,
815, 817, 820.

Buchstein, 160, 730.

Buckhause & Gough, 744.

Buckingham v. McLean, 110, 118, 125,
128, 139, 153, 156, 157, 183, 241,
336, 356, 794, 807.

Bucknam y. Dunn, 121, 402, 494.

Bucknam y. Goss, 819, 822.

Buckner v. Calcote, 632, 746, 747, 752.

Buckner & Company, 752.

Buckner y. Jewell, 138, 584.

Buckner v. Street, 464.

Bucyrus Machine Co., 744.

Buffington v. Harvey, 160, 401.

Bugbee, Oliver, 456, 457, 462.

Buler, Francis J., 307.

Bullock, Benj., 274.

Bullymore v. Cooper, 377.

Bunster, H. B., 646.

Burbank v. Bigelow, 107, 141, 146.

Burch, Thomas F., 273.

Burdick v. Jackson, 352, 799.

Burgess, Joseph H., 664, 665, 672, 679.

Burk, J., 654, 655, 662, 674, 678, 679.

Burk v. Winters, 427.

Burke, Peter N., 451.

Burkholder vy. Stump, 837, 838.

Burlinghame v. Parce, 105.

Burnett, 359.

Burnhisel v. Firman, 801, 822.

Burns, S. & M., 114, 117, 126, 504.

Burns y, Harris, 386.

XXV

Burnside v. Brigham, 701.

Burpee v. National Bank, 155, 156,
790, 804, 809.

Burpee y. Sparhawk, 702.

Burr v. Hopkins, 552, 554.

Burrill v. Lawry, 830.

Burrus v. Wilkinson, 704.

Burt, 258, 258.

Burt, Edw., et al.,

Burton v. Lockert, Is

Burton v. Watson, 121, 210, 226.

Buse, 501.

Bush, L., 297, 306, 307.

Bush’s Appeal, 111.

Bush v. Cooper, 704, 716.

Bush v. Crawford, 460.

Bush v. Lester, 379, 383.

Bushey, M. N., 575, 687.

Butcher v. Forman, 477.

‘Butler, 18, 19, 791, 835.

Butler, H. L., 480, 482.

Butler v. Merchants’ Ins. Co., 354.

Butler v. Morgan, 1138, 714.

Butterfield, D. C., 269, 678.

Butterfield & Burr, 528.

Buxbaum, Joseph, 677.

Byrne, O., 570, 750, 751.

464, 499.
340.

Cake v. Lewis, 476.

Calendar, R. & L., 284, 311, 312.

California Pacific R. R. Co., 95, 106,
269, 270, 273, 284, 292, 758.

Camack v. Bisquay, 418, 446.

Cambridge Inst’n v. Littlefield, 718.

Camden Rolling Mill Co., 309, 311.

Cameron v. Canieo & Co., 755.

Camp v. Gifford, 696, 724.

Campbell, Hugh, 114, 116, 121, 122,
126, 129, 288, 504, 507.

Campbell v. Perkins, 701, 705, 724.

Campbell v. Waite, 785.

Canby v. McLear, 462.

Canfield, Philemon, 305.

Cannaday, Benjamin F., 646.

Cannon v. Welford, 421, 747, 755.

Cantrell, Samuel, 406.

Capelle v. Hall, 460.

Capelle v. Trinity Church, 458, 465,
466.

Cardwell v. Republic Fire Ins. Co.,
473.

Carey v. Esty, 659.

Carey v. Nagel et al., 349.

Carlin v. Carlin, 694.

Carlisle v. Soule, 373.

Carlisle v. Wilkins, 715.

Carlton, Moses, 130, 182.

Carow, 193.

Carpenter, Josiah, 628.

Carpenter vy, Turrell, 367, 698.
Xxvi

Carr vy. Fearington, 405.

Carr v. Gale, 148, 149, 159, 338, 403,
427,

Carr v. Hilton, 403, 440, 441,

Carr v. Lord, 418, 439.

Carr v. Whittaker, 286.

Carrier & Baum, 268.

Carson, James, 3825.

Carson & Hard, 563.

Carson v. Osborn, 720.

Carter, William, 259, ~v0, 263.

Carter v. Goodrich, 710.

Caryl v. Russell, 673. y

Casey, Edward A., 184, 137, 154, 163,
174, 177.

Cassard v. Kroner, 8, 101.

Castle v. Lee, 814.

Catlin et al. v. Foster et al.,
484, 487, 490, 541, 824.

Catlin v. Hoffman, 801, 805, 808.

Caylus et al., 484.

Cease, Hezekiah, 654.

Central Bank, 189, 585.

Cerf, Louis, 682.

Chadwick y. Starrett, 704, 731.

Chamberlain et al., 239, 208, 549, 592.

Chamberlain v. Huguenot Manuf. Co.,

168, 459,

Chamberlain v. Perkins, 101.

Chamberlaines, 483.

Chamberlin v. Griggs, 673.

Chambers v. Neale, 711, 781.

Champneys v. Lyle, 600.

Chan v. Chan, 809.

Chandler, 255, 256, 259, 260, 261

Chandler, George, 5y5.

Chandler, P. K., 464.

Chandler y. Siddle, 10, 99.

Chandler v. Winship, 458, 700.

Chapman v. Forsyth, 50, 654, 694, 695.

Chappel, 245, 263.

Chase, Ephraim, 665.

Chemung Canal Bank v. Judson, 108,
132, 140, 151, 488.

Cheney, Jonathan H., 643, 644,

Chilton y. Cabiness, 342.

Christman v. Haynes, 824.

Christy, William, 120, 121, 125, 126,

129, 145, 181, 182, 514, 629.

Chubb v. Upton, 226, 399, 630.

Church vy. Winkley, 717.

Citizens’ Bank v. Ober, 445.

Citizens’ Nat. Bank v. Cass, 736.

Citizens’ National Bank v. Leaming

et al., 696.

Citizens’ Savings Bank, 129.

City Bank, 489, 490.

City Bank v. Banks, 659.

City Bank v. Walton, 524, 715.

Claflin et al. v. Cogan et al., 698.

Claflin v. Houseman, 140.

InDEX TO CasES CITED.

Claflin v. Torlina, 845.

Clairmont, Jules, 326, 327, 328.

Clancy, John, 479.

Clapp, W. D., 363, 623.

Clarion Bank v. Jones, 790, 796, 798,
et 807, 808, 824.

Clark, A. B., et al., 114, 176, 420, 428,
io

Clark, Abraham B., 194, 573, 597.

Clark, Isaac, 770.

Clark, Samuel D., 646.

Clark & Binninger, 203, 536, 573.

Clark v. Binninger, 106, 114, 115, 126,
158, 420, 428, 499, 765.

Clark v. Clark, 153, 342, 343, 441,
446, 524.

Clark & Daughtrey, 511, 551, 789, 809,
812, 814.

Clark v. Foss, 590.

Clark v. Hackett, 440, 441.

Clark v. Iselin, 163, 164, 490, 501, 786,
797, 801, 806, 807, 813, 840.

Clark v. Marx, 532.

Clark v. Rist, 117, 498.

Ciark v. Rowling, 709.

Clark vy. Skilton, 800.

Clark v. Sparhawk, 491.

Clark, West et al., 563.

Clark v. Wilson, 394.

Clarke, Sarah C., 654.

Clarke v. Piet, 805.

Clarke v. Porter, +71.
Clarke v. Ray, 101.

Clarke v. Rosenda, 115, 515.
Clason y. Morris, 504.

Classen v. Schoeneman, 689, 691, 721.

Clayton v. Hamilton, 186.

Clayton v. Seibert, 186.

Clemens, John, 259, 260.

Clement v. Hayden, 727.

Clerk’s Office v. Bank, 356.

Cleveland v. Boerum, 422, 488, 439.

Clifford, George, 345.

Clifton et al. v. Foster et al., 113, 502.

Clinton vy. Mayo, 278, 298, 302.

Clopton v. Spratt, 699.

Clough, O. H., 470.

Coan & Ten Broeke Mfg. Co., 483.

Coates vy. Blush, 673.

Coates v. Simmons, 728.

Cobb, V. B., 380, 381, 882, 385.

Coburn y. Ware, 724.

Cockrill v. Jones, 524.

Cocks, John F., 669.

Codwise v. Gelston, 4183.

Coe v. Whitbeck, 747.

Cogburn y. Spence, 713.

Cogdell vy. Exum, 189, 489.

Coggeshall v. Potter et al.,
429, 786, 789, 791, 833.

179, 359,
InpEx to Cases Crrip.

Cogswell, M. C., 325.

Cohen, Albert, 384.

Cohn, B., 240, 258.

Cohn, J. S., 835, 837, 838.

Coit v. Robinson, 162, 163, 168, 171,
175, 176, 180, 181.

Colby v. Ledden, 128.

Cole y. Duncan, 524.

Cole v. Roach, 469.

Coleman, Columbus C., 165.

Coleman v. Davies, 695.

Colie v. Jameson, 809, 602.

Collier v. Hunter, 424.

Collier, Taylor & Co., 748, 749, 750.

Collins, Charles S., 359.

Collins, Harriet E., 211.

Collins, J. C., 561.

Collins et al. v. Bell et al., 131, 815.

Collins v. Gray, 19, 280, 281, 791, 825.

Collins v. Hood, 748, 751, 804.

Collins v. Marshall, 426.

Colman, C. C., 281, 541, 813, 818.

Columbian Metal Works, 514.

Colwell, 185, 573, 580, 581, 582.

Comegys v. McCord, 487.

Comegys v. Vasse, 24, 340, 342.

Comfort v. Eisenbeis, 718.

Comins y. Coe, 545.

Commercial Bank vy. Buckner, 631,
* 694, 781.

Commonwealth v. Erisman, 708.

Commonwealth v. Huber, 699, 710.

Commonwealth v. Hutchinson, 703.

Commonwealth v. O’Hara, 7, 97.

Commonwealth vy. Walker, 849.

Comstock, E. D., 381.

Comstock, Edson, 642, 708.

Comstock, Eugene, et al., 595, 596,
774.

Comstock & Co., 203, 268, 468, 565,
567, 801, 804.

Comstock v. Grout, 644, 708.

Comstock v. Wheeler, 544.

Comstock & Young, 597.

Conant, Frederick J., 437, 440.

Cone v. Purcell, 427.

Connell, F. E., Jr., 220, 223, 657, 687.

Conner vy. Southern Express Co., 579.

Connor v. Gupton, 701.

Connor & Hart, 665, 799.

Conover v. Dumahaut, 649, 828, 831.

Conrad, 466.

Conrad v. Prieur, 514, 518.

Converse v. Sorley, 423, 447.

Cook, Enoch, 363.

Cook v. Coyle, 631.

Cook v. Farrington, 535.

Cook & Gleason, 112, 118, 502, 503,
751, 753.

Xxvii

Cook v. Lansing, 417.

Cook v. Moore, 660.

Cook v. Rogers, 101, 838.

Cook vy. Tullis, 352, 433, 792, 802, 840.

Cook v. Whipple, 109, 121, 140, 357,
505, 804.

cay Company, Jay, 606, 607, 633,
752.

Cookingham y. Ferguson, 410.

Cookingham v. Morgan, 815, 821, 825,
835.

Coons, W. S., 387.

Cooper, 123.

Cordes, 391.

Corey v. Perry, 647.

Corey et al. v. Ripley, 730.

Corliss v. Shepherd, 719.

Cornell v. Dakin, 728.

Corner v. Mallory, 362, 363.

Corner v. Miller et al., 97, 362.

Corn Hxchange Bank, 540, 599.

Cornwall, D., 179, 237, 277, 299, 300,
463, 465, 466, 544, 704.

Cornwall v. Cornwall, 277.

Cornwell’s Appeal, 835.

Corpening v. Grinnell, 722.

Corse, Barney, 106, 681.

Cote, 669. ‘

Cotton, Samuel S8., 211, 708.

Cottrell v. Mann, 421.

Coulter, J. M., 502.

Court, 208.

Cowing v. Altman, 585.

Cowles, W. C., 287, 238, 255, 258.

Cox v. Wilder, 378, 409.

Coxe vy. Hale, 276, 551, 801, 813.

Cozart, William B., 504, 506.

Craft, Asa W., 15, 16, 176, 241, 243,
244, 245, 246, 278, 279.

Crafts v. Mott, 476, 478.

Cragin v. Carmichael, 149, 360, 404,

792.

Cragin v. Thompson, 164, 835, 837.

Craig, 563.

Craig, Daniel, 568, 569.

Cram, N. O., 323, 474, 496.

Cramer, 282, 551.

Crane, J., & Co., 567.

Crane v. Morrison, 397, 749.

Crawford, F., 456, 468, 474.

Crawford v. Points, 181, 183.

Crayton v. Hamilton, 419.

Creditors v. Cozzens & Hall et al.,
148, 284, 286.

Creditors v. Williams, 677, 687.

Cretiew, 653, 655, 663, 667, 673.

Crocket et al. v. Jewett, 220, 403, 738,
739.

Croft Bros., 229, 374.

Crompton y, Conkling, 703.
XXVii

Cromwell vy. Comegys, 602.

Cronan vy. Cutting, 693.

Crooker y. Trevett, 657.

Crosby v. Wentworth, 714.

Cross, 647.

Crossette & Graves, 209.

Crouch v. Gridley, 707, 708.

Crowley v. Hoblitzell, 278, 279.

Crowley v. Hyde, 451.

Crump v. Chapman, 154, 811, 819.

Culver v. Calender, 276.

Cumming vy. Clegg, 379.

Cunningham v. Cady, 270, 271.

Curran v. Munger, 15, 248, 248, 253,
255, 303.

Currier, J. R., 272, 278.

Curtis v. Slosson, 711. ‘

Cushman, John, 687.

Cutter v. Dingee, 422.

Cutter v. Evans, 368.

Cutter v. Folsom, 95, 211, 722, 723,
724, 725.

Cutter v. Taylor, 660.

Daggett et al., 740, 741.

Daggett v. Cook, 369, 370.

Dallas v. Flues & Co., 547.

Dalrymple v. Hillenbrand, 782, 844,
845.

Dambmann v. White, 140, 415, 416,
427.

Danforth, 566.

Daniels, John H., 499.

Darby, John F., 606.

Darley vy. Lucas, 15.

Darsey v. Mumpford, 374, 690.

Davenport, J. W., 517, 522, 582, 586,
595.

Davenport vy. Tilton, 362, 869.

David vy. Ferrand, 340.

Davidson, Charles A., 276, 281, 551,

805, 806.
Davidson, George J. G., 186, 187, 139.
Davis & Green vy. Armstrong, 18, 234,
263, 265, 815.
Davis & Son, 323.

Davis, Assignee of Bittel et al., 112,
150, 497, 520, 521, 529, 582.

Davis, Irwin, 429, 382.

Davis, John, 240, 264, 265.

Davis v. Anderson et al., 112, 435,
4389, 533.

Davis v. Fairclough, 446.

Davis v. Railroad Co., 114, 179, 180,

758, 759.
Day v. Bardwell et al., 96, 101, 221,
702.
Day v. Laflin, 425,
Deadrick v. Armour, 337, 361, 440.
Dean, Calloway, 505, 521, 558.

InWEX TO CasEs CITED.

Dean, John W., 185, 211, 331, 555,
560, 572, 579, 580, 586, 600, 687,
769, 770, 773, T74.

Dean & Garrett, 234, 238, 285, 293,
813. Y

Dean v. Speakman, 471.

Dearing v. Moffit, 717, 719.

Deckert, Daniel, 6, 3838, 388.

Decoster v. Livermore, 602.

De Ford, 192.

De Ford v. Hewlett, 650.

De Forrest, R. A., 306.

Delavan, Charles H., 659, 667, 668.

Delavergne v. Farrand, 634.

Den v. Wright, 187, 427, 447.

Dennet v. Mitchell, 241, 791, 798.

Derby, 11.

Derby, James C., 682.

Derby, Walter, 235, 298, 307, B08.

Derry Mills, 472.

Detert, 378, 553.

Detroit Car Works, 274.

Devlin & Hagan, 318, 319.

Devoe, James R., 642, 648, 692.

Devore, Abraham A., 456, 517.

Dewey, 333.

Dewey vy. Kelton, 431.

Dewey v. Moyer, 200, 320, 402, 440,
579, 629, 689, 706.

Dey, James R., 502.

Dibblee, Henry E., et al., 15, 16, 18,
238, 242, 248, 244, 245, 247, 248,
251, 448, 596, 646, 679, 680, T87.

Dick v. Powell, 709, 715, 725.

Dickerson v. Spaulding, 364, 365.

Dickey v. Harmon, 350.

Dickinson v. Adams, 829.

Diggs v. Prieur, 715.

Dillard, George W., 6, 129, 378, 383,
384

Dillard v. Collins, 402.

Dingee v. Becker, 631, 632, 640.

Doan v. Compton & Doan, 241, 251,
2638, 265, 304.

Dobbins, 609.

Dodge, A. P., 587.

Dodge, Oliver W., 645.

Dodge vy. Sheldon, 833.

Doe, 327.

Doe vy. Childress, 117, 370.

Doggett v. Emerson, 706, 722.

Dole, Nathaniel, 558, 561, 562, 644.

Dole v. Warren, 477, 707.

Doll v. Harlow, 453.

Dolson y. Kerr, 229, 784, 886.

Donahue et al., 714, 715, 776.

Donaldson, 114, 128, 131, 646.

Donaldson v. Farwell, 345.

Donnell v. Swaim, 719.

Doody, 654.
InpEX TO Cases CITED.

Doremus vy. Walker, 114, 508.

Dormire v. Cogly, 426.

Dorn vy. O’Neil, 697.

Dorsey v. Maury, 726.

Doty, 587.

Douglass v. St. Louis Zine Co., 118,
519.

Dow et al., 19, 486, 496.

Dow v. Sargent, 786.

Downer vy. Brackett, 362, 495, 496.

Downer v. Chamberlin, 722, 724.

Downer v. Dana, 701.

Downer vy. Rowell, 681, 701, 709, 726,
731.

Downing, William, 464, 582, 696, 749,
750.

Downing vy. Traders’ Bank, 477, 478.

Doyle, Lewis J., 2538, 664.

Doyle, Philip A., 659, 679.

Doyle y. Sharp, 288.

Drake, Priscilla G., 582.

Drake v. Jones, 731.

Drake y. Rollo, 487, 489, 491.

Dresser, E. K., 662.

Dresser y. Brooks, 95, 656, 709, 724,
727.

Dreyer, Frederick A., 678.

Driggs v. Moore, Foote & Co., 15,
242, 789, 794, 797, 814, 843.

Driggs v. Russell et al., 14, 409.

Drisko, P. C., 212, 681.

Drummond, John T., 18, 287, 248, 255,
267, 551, 787.

Drury v. Vannevar, 417.

Ducros vy. Fortin, 514, 515.

Dudley, 120, 125, 126, 213, 336, 507.

Duerson, George T., 383, 389.

Duffield v. Horton, 373, 831.

Dumahaut & Co., 123.

Dumont, Edward, 517.

Dunbar vy. Baker, 638.

Dunean, William B., 294, 404, 634.

Duncan y. Hargrove, 708.

Dundore v. Coates, 308.

Dunham, Henry M., 518.

Dunham & Hawks, 479, 482, 585.

Dunham & Orr, 236, 239, 250, 299,
302.

Dunkerson & Co., 496.

Dunkerson, Robt., & Co., 499.

Dunkerson, Robt. K., & Co., 152.

Dunkle, 18.

Dunkle & Driesbach, 460, 787, 806.

Dunn et al., 199, 306.

Dunn, James H., 547.

Dunn v. Sparks, 476, 477.

Dunning v. Perkins, 817.

Dupee, 731.

Dupuy v. Harris, 186.

Xxx

,

Durant v. Mass. Hosp. L. Ins. Co.,
341, 397.
Duryea, 104, 494.

ae v. Murgatroyd, 25, 469, 705,

06.

Dusenbury vy. Hoyt, 716, 720, 730.

Dutcher yv. Importers & ‘Traders’
Bank, 354,

Dutcher v. Marine Nat'l. Bank, 354.

Dutcher v. Wright, 104, 783, 785, 828.
Dutton v. Freeman, 297, 298, 532.
Dwight v. Simon, 98.

Dwinel y. Perley, 447, 451.

Dyer v. Cleveland, 475, 697, 724.
Dyke & Marr, 481.

Dyson v. Harper, 116.

Eames, Lucius, 10, 97, 113.

Earle, Mortimer L., 566.

Eastburn y. Yardley, 128.

Eastman v. Hibbard, 707.

Ebersole vy. Adams, 100.

Ecfort & Petring v. Greely, 237, 273,
278.

Ecker vy. Bohn, 846.

Ecker vy. McAllister, 209, 782, 785.

Eckler v. Galbraith, 719.

Edgar v. McArn, 661.

Edith, 504, 514.

Edmonson v. Hyde, 164, 359, 403, 406,
409, 429.

BWdwards, Leroy T., 382.

Edwards v. Coleman, 404.

Edwards v. Gibbs, 657.

Feles, William, 233, 256.

Egbert v. McMichael, 720.

Hidom, J. D., 201, 654, 657, 661. 678,
679, 680.

Elder, George, 530, 532, 537, 545, 547.

Eldred, Elisha, 14, 409.

Eldridge & Co., 466.

Eldridge, Spencer, 511, 517, 799.

Ellerhorst et al., 127, 516.

Ellerhorst & Co., 476.

Elliott, Barrit R., 654.

Elliott v. Booth, 713.

Elliott Felting Mills, 474.

Ellis, 362, 367, 377.

Ellis, Joel A. H., 752.

Ellis v. Boston & Hartford R. R. Co.,
512.

Bllis v. Ham, 478, 705, 707, 709.

Hly, Abner 8., 340.

Emery v. Canal National Bank, 492,
744.

Emison, David, 536, 548.

Erben, 220, 386.

Erwin & Hardy, 505, 570.

Ess & Clarendon, 263, 265.
XXX

Hthridge v. Jackson, 415,
Ettinger, 543.

Eureka Manuf’g. Co., 458.

Evans, H. S., 180, 133, 187.
Evans, Thomas C., 280, 459, 841. -
Evans v. Carey, 717, 718.

Evans v. Gallantine, 650.

Evans & Hamrick, 342.

Everett, Jared, 378, 383, 384.
Everett v. Derby, 263, 304, 629.

Everett v. Stone, 241, 362, 664, 793,

821, 837.
Ewing & Co., 613.
Ewing v. Peck, 709.
Exchange Bank v. Knox, 727.
Eyster v. Gaff, 140, 422.

Faires v. Metoyer, 427.
Fales v. ‘Thompson, 416.
Falkner, F. A., 736.
Falkner v. Hunt, 721.
Fallon, James W., 522, 640.
Farish, John W., 387.
Farmer et al., 787.

Farmer v. Taylor, 385.
Farmers’ Bank v. Smith, 96.

Farmers’ & Drovers’ Savings Bank vy.

Publishing Co., 349.
Farnsworth, 501.
Farnsworth, Brown & Co., 486.
Farnum, Peter, 744.
Farrar v. Walker, 762.
Farrell, J. W., 212, 646. °

Farrin v. Crawford, 16, 176, 289, 244,

249,
Farrington v. Farrington, 187.
Faxon v. Folvey, 432.

Fay, G. B. & B. W., 566.

Feely, Martin W., 380, 382, 385.

Feeny, 286.

Fehley v. Barr, 114, 186, 879, 385,
388.

Feinberg, Robt., et al.,
Fellows v. Hall, 422, 721, 722.

Fendley, J. J., 131, 153, 155, 283, 284.

Fenlon v. Lonergan, 140.
Fenton vy. Collerd, 154, 157.
Ferguson, 689.

Ferguson v. Peckham, 133.
Fernberg, Robert, 331.
Ferris, Josiah S., 319.
Fetherston, 378.

Fetter v. Cirode, 405, 498, 715
Fickett v. Durham, 3870.
Field v. Baker, 345, 806.
Field’s Estate, 719.

Files v. Harbison, 427,
Filley, Chauncey J., 677.
Fillingin v. Thornton, 110.
Findlay, Alexander, 299, 303.

565, 567, 577.

InpEx To Cases CITED.

Finn, Michael, 662, 665.

Fireman’s Insurance Co., 472, 473.

First National Bank v. Haire, 801.

First Nat’l. Bank of Baltimore v. Jag-
gers, 370.

First Nat'l. Bank of Mount Joy v.
Wilson, 350, 353, 802.

Fish v. Montgomery, 7.

Fisher v. Currier, 246, 267, 681.

Tisher vy. Foss, 710.

Tisher vy. Henderson, 482.

Fisher v. Vose, 365.

Fisk v. Montgomery, J8.

Fiske v. Hunt, 344, 363.

Flagg v. Ely, 694.

Flagg v. Tyler, 362, 699.

Flanagan y. Cary, 692.

Flanagan vy. Pearson, 639, 692, 695.

Flanders vy. Abbey, 151, 821.

Flannagan, In re, 226.

Fletcher v. Morey, 352, 518, 514.

Fletcher v. Neally, 716.

Flournoy v. Newton, 678, 680.

Fogerty & Gerrity, 265, 306.

Fogg v. Stickney, 475.

Folsom v. Clemence, 792.

Foote, Norman B., 345, 752, 801.

Forbes, William D., 406, 553, 554.

Forbes v. Howe, 18, 786, 798, 796,
798, 804, 810, 811, 812.

Ford v. Belmont, 348.

Ford & Co., 448, 485, 529, 588.

Ford v. Keys, 806.

Foreman y. Bigelow, 400, 630.

Forsaith v. Merritt et al., T48, 793.

bi & Murtha, 14, 460, 553, 554,
555, 788, 793, 810.

Forsyth v. Woods, 450.

Fortune, James, 3865, 866, 538, 541,
583.

Foster, in re, 229.

Foster, Benjamin N., 664.

Foster, Elisha, 217, 738.

Foster, John S8., 118, 131, 562, 366.

Foster, Dwight, et al. v. Ames et al.,
136, 146, 150, +49, 452, 454, 514,
515, 516, 519, 5s4.

Foster v. Hackley & Sons, 18, 148,
149, 255, 344, 256, 358, 407, 786,
793. TI8, 809, 815, 820.

Foster y. Hinckley, 728.
Foster v. Inglee, 371.
Foster vy. Lowell, 346.
Foster v. Remick, 304.
Foster vy. Rhodes, 512.
Foster v. Wylie, 418.
Fourth Nat'l. Bank y.
Bank, 350.

Fowler, James L., 214.
Fowler y. Dillon, 125.

City Nat'l.
InpDEX TO CasEs CITED.

Fowler v. Hart, 125, 516, 521.

Fowler v. Kendall, 695, 707.

Fowles v. Treadwell, 463, 694.

Fox v. Eckstein, 236, 278, 458.

Fox vy. Gardner, 823, 840.

Fox v. Paine, 673, 701.

Fox vy. Weed, 728.

Fox y. Woodruff, 709.

Foxall v. Levi, 644.

Fraley v. Kelly, 717, 719.

Francis & Buchanan, 276.

Francis v. Ogden, 711.

Francke, Charles J., 682.

Frank, M., 328, 588, 577.

Frank vy. Houston, 105, 142, 186.

Frank v. Tolman, 133.

Franklin Fund Saving Society, 134,
443.

Frazer v. Hollowell, 489.

Frazier v. Banks, 622, 724.

Frear, Alexander, 459, 750.

Fredenberg, Michael ” W.,
565, 567, 577

Frederick, 682, 683,

Freedley & Wood, 311, 312.

Freelander v. Holloman, 404, 438, 439.

Freeman, Robert H., 221, 656, 664,
673.

Freeman v. Deming, 837.

Freeman vy. Fort, 114.

Freeman v. Warren, 721.

202, 203,

Freeman’s Nat’l. Bank v. Smith, 759.

Freeny v. Ware, 525.

French v. Carr, 340, 341.

French v. Hirst National Bank, 156.

French vy. Morse, 470, 472.

French v. O’Brien, 100.

Frentress vy. Markle, 471.

Krenzel v. Miller, $22.

Frisbie, Frank, 274.

Frisbie, James W., 557, 560.

Fritsch v. Van Mittledorfer, 114, 425.

Frizelle, S. F., 558.

Frizelle et al., 676, 685.

Frost, Jacob, 273.

Frost, Richard H., et al.,

Frost v. Hotchkiss, 139.

Frost v. Tibbetts, 725.

Frostman v. Hicks, 638.

Fuller, Henry W., 341.

Fuller, Price, a ly, 129, 233, 285,
412, 505, 7

Fulweiler v. oa +19,

Fulwood vy. Bushfield, 476, 707.

Funkenstein, J., 294.

Funkenstein & Co., 326.

461.

Gaffney v. Signaigo, 407, 835.
Gage v. Gates, 109, 309. :
Gainey, liza, 387, 392.

XXXi

Galbraith, Cromwell & Co., 748.
Gale y. Vernon, 424.

Gallinger, A. B., 245, 246, 279.
Gallison et al., 468, 646, 675.
Garduer vy. Cook, 365, 867.
Garnett v. Roper, 697.

Garrett, Edward, 387, 708.
Garrett v. Carow, 634.

Garrison, Edward, 669, 672.
Garrison v. Markley, 151, 153, 567.
Garwood, George M., 666, 754.
Gary v. Bates, 416.

Gassett v. Morse, 251.

Gates v. Winooski Lumber Co., 398.
Gattman v. Honea, 799, 819.

Gay, Benjamin C., 14, 664, 669, ee

TS8.
Gaytes v: American, 148.
Gebhardt, 296, 299, 302.
Geery’s Appeal, 98, 402.

George & Proctor, 670, 671, 679, 754,

798, 794.
Gettleson, Henry, 195, 651.
Geward v. Dunbar, 724.
Ghiradelli & Co., 634.
Gibson v. Dobie, 802.
Gibson v. Green, 370, 725.°
Gibson v. Lewis, 457, 607.

Gibson v. Warden, 359, 510, 792, 833.

Giddings v. Dodd, 794, 798.
Gies, R. Frederick, 594.
Gifford, Haviland, 685.

Gilbert, Joseph F., 557, 558, 560, 568.

Gilbert v. Bradford, 661, 680.
Gilbert v. Crawford, 140.
Gilbert & Lamphier, 754.
Gilbert v. Priest, 140.

Gilday, John B., 619.

Gile, John, 213.

Gillenwaters v. Miller, 839.
Gillespie v. McI<night, 407.
Gillies et al. v. Cone et al., 264, 265.
Gilmore vy. Bangs, 420.
Givens v. Robbins, 634, 635.

Glaser, Louis, 11, 120, 185, 194, 641,

642, 643.
Glaser, Samuel, 200.
Glenn v. Johnson, 410.

Glendon Company v. Townsend, 525.

Glenham Manuf’g. Co., 314.

Globe Insurance Co. v. Cleveland Ins.
Co., 105, 165, 253.

Glyn, Charles H., 456.

Goddard v. Weaver, 113, 114.

Goedde & Co., 750.

Gold Mountain Mining Co., 507.

Golden v. Prince, 10, 25, 96.

Goldschmidt, Abm., 237, 239, 253, 673,
674.

Goldsmith v. Hapgood, 348.

’
XXxli

Goldstein, Isidor, 632.

Golson v. Neihoff, 807, 812, 817.

Goodall v. Tuttle, 6, 96, 107, 109, 155,
142, 145.

Goodfellow, Joseph, 11, 12, 138, 211,
212, 217, 653, 657, 666, 702.

Goodman, Rachel, 301, 468.

Goodrich v. Dobson, 488.

Goodrich y. Hunton, 712.

Goodrich v. Remington, 348.

Goodrich y. Wilson, 125, 140, 790, 811,
841.

Goodridge, George H., 657, 659.

Goodwin v. Sharkey, 404, 480.

Goodwin y. Stark, 699.

Gordon, MeMillan & Co. v. Scott &
Allen, 308, 559, 594, 679.

Gorham, 736.

Goss v. Coffin, 396.

Goss v. Gibson, 477.

Gove v. Lawrence, 667.

Grady, John W., 742.

Graham, 378, 381, 382, 391.

Graham, William H., 683.

Graham v. Hunt, 719.

Graham vy. Pierson, 457, 711.

Graham y. Stark et al., 14, 788, 790,
795, 798, 803, 809, 813, 815, 817,
821.

Granger & Sabin, 474, 535.

Grant, Benjamin B., 132, 338, 355,
356, 382, 514, 584.

Grant, John C., 326.

Grant, Assignee, v. First Nat’l. Bk.,
784.

Graves, Alexander, 211, 325.

Graves, John, 448, 451, 454.

Graves v. Winter, 235, 236.

.Gray v. Farran, 694.

Gray v. Heslep, 451.

Gray v. Rollo, 487, 488.

cs est. Telegraph Co., 179, 306,

Greely v. Scott, 389.

Green, John, 464.

Greenfield, Thompson, 646, 742, 755.

Greenleaf v. Maher, 707.

Green Pond R. R. Co., 235, 273.

Greenville & Columbia R. R. Co., 260,
758.

Grefe, Henry M., 677.

Gregz, 794, 796, 817, 820.

Gregg, Thomas B., 338, 583.

Gregg v. Hilsen, 100.

Gregg v. Wilson, 541.

Griffen, William, 567, 568.

Griffin, Jesse H., 377.

Griffith & Wundrum, 735.

Griffiths, 682.

InpEX TO CasEs CITED.

Griffiths, Charles W., 359, 429, 511.
Grinnell, George B., 520, 521.
Grinnell & Co., 520.

Griswold v. McMillan, 416.
Griswold v. Pratt, ete

Grover v. Clinton, ‘i

Grow v. Ballard & Hall, 805, 825.
Guild, Moses, 680.

Guild v. Butler, 697.

Gulick v. McIver, 602.

Gunther et al. v. Greenfield et al., 421,
Gupton v. Connor, 701, 731.

Gurney, Thomas C., 359.

Haake, J. C., 388, 456, 512.

Haas v. O’Brien, 829, 836.

Haas & Sampson, 327.

Haber v. Klauberg, 367.

Hadley, Joseph 8., 240, 257, 264, 267,
269, 271, 272, 279, 286.

Hafer & Bro., 376.

Hafer & Bro., in re Beck, 18, 131,
506, 787, 796, 813.

Hagan, Edward, 602.

Haggerty v. Amory, 710.

Haggerty v. Morrison, 728.

Hahnlen, Jacob F., 515.

Haines v. Stauffer, 718.

Haldeman v. Michael, 806.

Hale, 641.

Hale & Wiggins, 594, 596.

Haley, Leonidas B., 526.

Hall, 168, 258, 265.

Hall, Erie L., 222, 223, 318, 319, 686.

Hall, Horace, 217, 741, 755.

Hall, Jack, 385.

Hall, Robert L., 268, 272.

Hall v. Allen, 180.

Hall v. Bliss, 522, 523.

Hall v. Cooley, 255, 256.
Hall v. Cushing, 334.

Hall vy. Deshler, 105.

Hall v. Fowler, 697, 724.
Hall v. Hayner, 19, 791.
Hall v. Scovel, 441, 446, 502.
Hall v. Wager, 15.

Hallam vy. Maxwell, 436, 605.

Halle, Abraham, 536.

ae & Bro. v. Tritch, 401, 783,

Halliburton vy. Carter, 694.

Halsey v. Norton, 747.

Hambright, Abner, 340, 376, 497, 517,
522, 595.

Hamburger & Frankel, 483.

Hamilton v. Bryant, 370.

Hamilton vy. National Loan Bank, 351,
829.

Hamlin, Wx parte, ete., 401, 614,

Hamlin, Hale & Co., 289, 735.
INDEX TO CASES CITED.

Hamlin v. Hamlin, 631.

Hamlin v. Pettibone, 281, 306, 819.

Hammond & Coolidge, 658, 668, 668,
671, 672, 674.

Hammond v. Rice, 421.

Hampton v. Rouse, 336.

Handell, Richard, 599.

Handlin & Venny, 3886.

Hanibel, John R., 241, 269, 270, 271.

Hanna, Samuel, 328, 515, 534.

Hannah, 193.

Hanson, Hans J., 678.

Hanson v. Herrick, 361.

Hapgood et al., 248, 484.

Harbaugh, Mathias & Co., 213.

Harden, Herman P., 218, 465, 704.

Hardin v. Osborne, 351.

Hardison, John, 654.

Hardy et al. v. Binninger et al., 15,
242, 247, 252, 254, 265, 278, 280,
304.

Hardy v. Carter, 476, 703.

Hardy et al. y. Clark et al., 11, 14,
218, 242, 247, 252, 254, 303.

Hare, Uttely, 775.

Hargroves v. Cloud, 660, 661.

Harlow, 501.

Harmanson vy. Bain, 151, 155.

Harmon v. Jameson, 366.

Harper, John B., 664, 667.

Harrington v. Fish, +51.

Harrington v. McNaughton, 709.

Harris, Ex parte, 529, 555, 587. °

Harris, Jabez, 686.

Harris, Samuel, 213, 336.

Harris, William, 308.

Harris v. Collins, 489, 441.

Harris v. Peck, 717, 718.

Harris, Rice & Co., 765.

Harrison v. McLaren, 789, 817, 825.

Harrison v. Sterry, 24, 362, 367, 598,
745.

Harrod v. Burgess, 364.

Hart Mfg. Co., Lucius, 590.

Hart v. Strode, 187.

Hartel, J., 509.

Harthill, Alexander, 287, 288.

Harthorn, 599.

Hartough v. Hayden et al., 739.

Hartz, Mark, 789.

Harvey v. Crane, 359, 360, 406, 513,
798.

Harwood, 536.

Hasbrouck, Abraham E., 193.

Haskell, Stephen V., 204, 205, 617,
620, 622.

Haskell v. Ingalls, 806, 814.

Haskill v. Fry, 792.

Haskins vy. Warren, 187.

Hastings v. Belknap, 309.

Xxxiii

Hastings v. Fowler, 6, 95, 189, 415.

Hatch v. Seely, 862, 372, 585, 536.

Hatcher vy. Jones, 379.

Hathaway v. Brown, 111, 362, 822.

Hathaway v. Quimby, 347.

Hathorn v. Batchelor, 740, 7438,

Hatje, 298, 303, 365, 464.

Hatten v. Speyer, 705.

Haughey vy. Albin, 18, 148, 255, 507,
786, 789, 793, 796, 805, 820.

a Joseph, 15, 248, 245, 278,
79.

Haughton y. Eustis, 362, 496.

Havens, James W., 328.

Havens y. National City Bank, 110.

Hawkeye Smelting Co., 299, 303.

Hawkins vy. Dean, 18.

Hawkins, Geo. A., et al., 8, 100, 835.

Hawkins v. First National Bank of
Hastings, 167, 406, 510.

Hawkins v. Garrett, 18.

Hawkins vy. Learned, 100.

Haworth v. Travis, 879, 504.

Haxtun y. Corse, 339, 631.

Hay, Ira, 382.

Hayden, J. P., 286.

Hayes v. Dickinson, 5138.

Hayes v. Flowers, 728, 724, 725.

Hayes v. Ford, 108, 696, 722.

Hayman v. Pond, 694.

Haynes, David, 324, 601, 602.

Hazard v. Boykin, 731.

Hazleton, 717.

Hazleton v. Valentine, 648, 644.

Heard v. Arnold, 702.

Heard v. Jones, 525.

Heard vy. Patton, 714, 726.

Heath v. Hughes, 558.

Hecht v. Wassell, 365.

Heffren v. Jayne, 695.

Heffren v. Leroy, 695.

Heffron, P. H., 309.

Heirschberg, Louisa, 594.

Heller, 245.

Heller, B., 2238, 224.

Heller Brothers & Co., 221.

Hendricks vy. Judah, 705.

Henkel, William, 387, 390, 404.

Henkelman et al. v. Smith, 363.

Henly v. Lanier, 417, 716.

Hennocksburg & Block, 455, 469, 636.

Henry, Curran & Cc., 608, 614, 627.

Hercules Mutual Life Ins. Co., 208,
259, 261, 262.

Herman, 614, 649.

Herman, A. H. & H., 821, 547, 548,
549, 550.

Herndon v. Givens, 716.

Herndon v. Howard, 427.

Herpich, August, 807.
XXX1V

Herrick, Charles K., 732.
Herrick, Hugh T., 494, 608, 744.
Hersey v. Elliott, 596.

Hertzog, 589.

Hervey v. Devereux, G04.
Hester, John H., 376, 497.
Hester v. Baldwin, 461.
Heusted, 298, 558.

Hewitt v. Norton, 115, 420, 802.
Heydette, Frank, 299.

Heyes, Julius, 223, 317.
Hezekiah, 385.

High, Wm. C., et al., 323, 520, 521,
522.

Hill, Joseph M., 307.

Hill, M. W., 129.

Hill, William D., 218, 219, 222, 318,
321, 577, 657, 659, 674, 675, 678,
679.

Hill v. Bonaffon, 156.

Hill v. Bowers, 497.

Hill v. Fleming, 111.

Hill v. Robbins, 702, 716, 719.

Hill & Van Valkenburgh, 186, 266,

270, 278.
Hilton v. Telegraph Co., 246, 247.
Hinds, J. A., et al., 356, 463, 505, 508,
752.
Hinsdale, Richard H., 122, 607, 612.
Hirsch, Francis A., 107, 148, 639.
Hiscock v. Green, 497, 586, 748, 749.
Hislop v. Hoover, 791.
Hitcheock v. Rollo, 487, 490, 491.
Hitchings, 447.
Hoadley v. Cawood, 535.
Hoagland, 593.
Hobart v. Haskell, 422.
Hobson v. Markson, 307, 835.
Hodges, Joseph H., 559, 560.
Hogendobler v. Lyon, 635.
Holbrook v. Brenner, 439, 446, 451.
Holbrook v. Coney, 340, 435, 444.
Holbrook v. Dickinson, 485.
Holbrook v. Foss, 710.
Holden v. Sherwood, 629.
Holland, D. G., 554.
Holland, Jr., George B., 287.
Holland v. Martin, 590.
Holland v. Seaver, 425.
Holleman v. Dewey, 457, 464.
Hollenshade, Jacob W., 662.
Hollis, J. A., et al., 259, 264, 265.
Hollister v. Abbott, 709.
Holloman y. White, 388.
Holmes, Charles W., 7, 10, 367, 666,
673, 835.
Holmes, D. K., 646.
Holmes & Lissburger, 617, 618, 619.
Holt, Asa, Jr., 561.
Holyoke vy. Adams, 367, 698, 721.

InDEX TO CasES CITED.

“Home,” he, 431.

Home Insurance Co. v. Hollis, 424.:

Hood et al. y. Karper et al., 552, 807,
815.

Hood v. Spencer, 346, 701.

Hook, Leonard L., 458.

Hoover vy. Robinson, 139.

Hoover v. Wise, 818.

Hope Mining Co., 502, 508, 536, 595.

Hopkins v. Carpenter et al., 121, 736.

Horner v. Speed, 219, 717, 718, 719,
720.

Horner v. Spelman, 692, 721.

Hornthal v. McRae, 719.

Horter v. Harlan, 131, 648.

Horton, Eli, 98.

Horton, Joseph H., 553, 800.

Hosie, Robert, 482.

Hoskins, 6438.

Hoskins y. Wall, 690.

Hosmer v. Jewett, 482.

Hotchkiss, 482.

Hough v. First Nat’l. Bank, 801.

Houghton, Charles P., 211, 667, 684.

Houghton, S. 8., 676, 677.

Houghton et al., 481.

Housberger, Doris, et al., 364, 366.

House, Samuel A., 249.

House vy. Swanson, 363.

Houston v. City Bank, 514, 516.

Houston vy. State, 724.

Hovey v. Home Insurance Co., 490.

Flow, 627. p

Howard, Cole & Co., 463, 478, 744.

Howard Nat. Bk., Ex parte, 484.

Howard v. Prince, 407.

Howe v. Insurance Co., 363.

Howes & Macy, 313.

Howland, Cornelia M., 18, 301.

Howland v. Carson, 587, 730.

Hoyt, 503.

Hoyt, A. W., 600, 602, 603.

Hoyt, Rufus, 256, 819.

Hoyt et al. v. Freel et al., 535,
635.

Hubbard, E., 536.

Hubbard v. Allaire Works, 19,
791, 833.

Hubbell & Chappel, 574.

Hubbell vy. Cramp, 701.

Huber v. Ely, 711, 712.

Hubert vy. Morter, 100.

Hudgins y. Lane, 703.

Hudson vy. Adams, 831.

Hudson v. Bingham; 219, 730.

Hudson vy. Schwab, 104.

Hufnagel, Peter, 129, 479, 482,
508.

Hughes, William H., 201, 580,
645, 646, G6S6.

631,

281,

507,
586,
InpEx To Cases CITED.

Hughes v. Oliver, 705, 706.
Hughes & Son, 507, 508,
Hughes & Teague, 374.
Hull, Arthur A., 831.
Hull, John W., 274, 743.
Hulst, William W., 288, 428, 565.
Hulverson y. Hutchinson, 524.
Humble et al. vy. Carson, 711.
Humumitsh, 220, 660.
Humphreys vy. Blight, 23, 27, 458, 491,
5388.
Humphreys vy. Sweet, 701.
Hunt, 18, 809.
Hunt, C., 378, 392.
Hunt, Josiah D., 186, 452, 777,
787, 843.
Hunt, W. R., 493.
Hunt v. Holmes, 486, 488.
Hunt & Hornell, 277, 551.
Hunt et al. v. Pooke et al., 234,
269, 297, 569.
Hunt v. Taylor, TO4.
Hurst, James T., 623, 624.
Hurst v. Teft, 1838, 177.
Hussmann, Earnest, 220, 358,
411, 657, 658, 662.
Hutchings v. Muzzy Iron Works,
513.
Hutchins v. Taylor, 241.
Hutto, Solomon, 377, 390, 502.
Hyde v. Baker, 747.
Hyde v. Bancroft, 126, 130, 132.
Hyde v. Cohen, 410.
Hyde v. Corrigan, 796, 797, 812, 815.
v
v
v

786,

241,

407,
112,

Hyde v. Ely, 439.

Hyde v. Findlay, 347.

Hyde v. Sontag, 403.

Hyde v. Woods, 800.

Hyman, 612.

Hyman, Louis, 195, 577.

Hymes, Jacob, 271, 272, 278.
Hynson vy. Burton, 348, +23, 424,
Hyslop v. Hoppock, 147, 148, 158.

Independent Insurance Co., 99, 235,
457.

Indianapolis R. R. Co., 310.

Ingalls, William, 748, 750.

Ingalls vy. Savage, 715.

Ingersoll v. Rhoades, 710, 718, 719.

Ingraham v. Phillips, 362, 369, 714.

Innes yv. Carpenter, 260. ;

Insurance Co. y. Comstock, 161, 164,
168, 183, 298.

Insurance Co. v. Ketterlinus, 700.

Iron Mountain Co., 129, 528, 524.

Irons & Coon, 589.

Tronsides, The, 113, 503.

Irving, 737.

Irving et al. Mary, 286, 422.

XXXV

>

Irving v. Hughes, 126, 181, 146, 267
288, 284,
Irwine, 95, 96.

Isaacs & Cohn, 749.

Isett v. Stuart, 104, 121.

Isidor & Blumenthal, 558.

Israel, M. C., 273.

Israel vy. Ayer, 791.

Ives et al., 768.

Ives v. Tregent, 445.

Jack, Francis M., 261, 298.

Jackson, Alfred, 201.

Jackson, George, et al., 325, 329, 539,
549, 550.

Jackson y. Allen, 379.

Jackson Iron Manuf’g. Co., 799.

Jackson v. McCulloch, 836.

Jackson v. Miller, 602.

Jackson & Pearce, 387, 392.

Jacobs, 611.

Jacobson v. Horne, 471, 725.

Jacoby, 549, 638.

Jacoby, Henry, 328.

James, B. F., 601, 770.

James v. Atlantic Delaine Co., 236,
304, 457.

Janes v. Beach, 365, 419.

Janeway, John L., 432, 483.

Jaycox & Green, 169, 322, 357, 464,
495, 496, 531, 582, 534, 535, 504.

Jefferson Insurance Co., 759.

Jelsh & Dunnebacke, 303, 304, 306.

Jemison v. Blowers, 471, 472, 704.

Jenkins v. Armour, 487.

Jenkins.v. Mayer, 411, 510, 817.

Jenkins vy. Stanley, 725.

Jenks, H. EB. P., 367.

Jenks v. Opp, 697.

Jerome v. McCarter, 154, 422, 499,
500, 501, 517, 521.

Jersey City Window Glass Co., 265.

Jervis vy. Smith, 533.

Jewett, Frederick, 750, 754.

Jewett, S. A., 285, 267.

Jewett & Co., 755. -

Jewett v. Preston, 340, 358, 510.

Jobbins v. Montague, 107, 120, 182,
146, 147.

Johann, 273.

Johnson, 266.

Johnson, Ralph, 246, 269, 743.

Johnson v. Ball, 722, 723, 725.
Johnson y. Bishop, 364, 371.
Johnson y. Collins, 369, 370.
Johnson vy. Fitzhugh, 422, 709.
Johnson v. Geisriter, 337.
Johnson v. May, 3874.

Johnson v. Patterson, 359, 406.
Johnson v. Poag, 525.
XXXVI

Johnson y. Price, 146.

Johnson y. Rogers, 498, 500, 506.
Johnson vy. Worden, 195, 694.
Johnston, John J., 199.

Johnston & Hall, 185.

Joliet Iron & Steel Co., 267, 293.
Jonas, 209.

Jones, 837, 385, 388, 391, 581, 596.

Jones’ Appeal, 753.

Jones, B. F., 302.

Jones, David W., 159, 462.

Jones, Decatur, 218, 223, 321, 387,
544, 549, 604.

Jones, G. C., 558.
Jones, Oliver L., 666, 667.

Jones v. Clark, 691, 692.
Jones v. Clifton, 394, 395.
Jones v. Coker, 689.
Jones v. Emerson, 644.

v
v
v
Jones v. Howland, 241, 793, 797.
Jones & Hoyt, 679, 682.
Jones v. Kinney, 837.
Jones v. Knox, 471, 695, 702, 726.
Jones v. Leach, 110, 111, 112, 113,
126, 180, 131, 150, 506, 520, 661.
Jones v. Lellyett, 714.
Jones y. Milbank, 680.
Jones v. Miller, 399.
Jones v. Russell, 694, 697.
Jones v
248.
Jones v. State, 703.
Jordan, 6, 383.
Jordan, James, 511, 554.
Jordan, William B., 509.
Jordan, Willis A., 388.
Jordan v. Aldrich, 8.
Jordan v. Downey, 140, 809.
Jordan v. Hall, 99.
Jorey & Son, 667, 669, 670, 671.
Joseph, Adolph, 175, 544.
Joslyn et al., 369, 480.
Joy v. Berdell, 447, 451.
Judd, Bela, 98.
Judd v. Ives, 98.
Judson, Curtis, 561.
Judson v. Kelty et al., 84, 8438.
Judson v. Lathrop, 489, 447, 448, 747.
me et al., 405, 406, 515, 688, 753,
22,
Kaiser v. Richardson, 372.
KXallish, 655.
Kane v. Jenkinson, 345.
Kane vy. Pilcher, 339, 422, 439.
Kane v. Rice, 357, 360, 800.
Kansas City Manf. Co., 351, 353,
459, 554, 793, 823.
Kappner v. St. Louis & St. J. R. R.
Co., 546,

356,

. Sleeper, 233, 234, 245, 246,

InDEX TO CasES CITED.

Karr v. Whittaker, 307, 570.

Kasson, Chester S., 355, 381.

Keach, William, 669, 670.

Kean et al., 376, 383, 384, 385, 387.

Keating v. "Arthur, 635.

Keating v. Keefer, 14, 378, 408, 409,
413.

Keefer, Henry M., 655, 667, 673.

Keeler, James R., 268, 293.

IKeenan v. Shannon, 128, 157, 158.

Keene v. Mould, 6, 95, 96, 722, 725.

Kehr v. Smith, 408, 409.

Keiler, 105, 124, 610, 612, 630.

Keime v. Graff & Co., 690, 691.

Keller v. Denmead, 502,

Keller & Goodhue, 609, 610, 612.

Kellogg v. Russell, 130, 153.

Kellogg v. Schuyler, 708, 709.

Kelly v. Holdship, 419.

Kelly v. Scott, 352, 746.

Kelly v. Smith, 125, 188.

Kelly vy. Strange, 387, 389, 518.

Kemmerer v. Tool, 140, 801.

Kempner, 193.

Kempner, David, 507, 509.

Kennedy et al., 315, 594.

Kennedy v. Rust, 524.

Kent v. Downing, 364.

IXenyon & Fenton, 251, 256, 259, 297.

Kerlin, John, 128.

Kerosene Oil Co., 110, 112, 113, 133,
186, 137, 14%, 176, 520.

Kerr, W. W., 504, 506, 507, 805, 818.

Kerr v. Hamilton, 706.

Kerr & Roach, 383, 384.

Kimball, 229, 828.

Kimball, Géorge W., 561, 643.

Kimball, John H., 176, 642, 644, 694,
700.

King, 682.

King, Brown, 195, 675.

King, Dwight B., 246.

King, John G., 595.

King, Robert G., 306.

King, Samuel, 255, 274.

King et al., 461.

King v. Bowman, 323, 518, 519, 534,
536.

King v. Central Bank, 697.

King v. Dietz, 361, 657, 726.

King v. Loudon, 364.

King v. Morrison, 4238, 424,

Kingley v. Cousins, 719.

Kingon, James, 14.

Kingsbury et al. 18, 554, 786, 795,
813, 820.

Kingsland v. Spalding, 694.

Kingsley, 548.

Kingsley, Daniel P., 218, 465, 704.
INDEX TO CasES CITED.

Kingsley, Norman W., 562.

Kingsley v. Prentiss, 705.

Kingston v. Wharton, 472, 716.

Kinkead, 18, 246, 751.

Kinsman, Israel, 215.

Kintner, J. M., 30z.

Kintzing, 253, 284. .

Kinzie v. Winston, 340, 343.

Kinzing v. Bartholew, 790.

Kipp, Joseph M., 552.

Kirby v. Garrison, ov9, 724.

Kirkland, Chase & Co., 504, 598.

Kirtland, Frederick S., 135, 516.

Kittredge v. Emerson, 362, 365, 369,
870.

Kittridge v. McLaughlin, 346.

Kittridge v. Warren, 6, 96, 362, 369.

Klancke, Julius, 372.

Klein, Edward, 94, 95, 96, 97.

Kline v. Bauendahl, 416.

Knabe v. Hayes, 701.

Knapp v. Anderson, 697.

Knickerbocker Ins. Co. v. Comstock,
250, 311, 312.

Knight, 624, 750.

Knight v. Cheney, 183, 146, 147, 161,
162, 171, 181, 453.

Knoepfel, William H., 328, 531, 576.

Knott, Rooney & Dibest, 445.

Knowlton v. Moseley, 408, 411, 567.

Knox et al. v. Exchange Bank, 425,
427.

Koch, Jacob A., 560, 562, 564.
Kohlsaa* et al., 613.
Kohlsaat v. Hoguet et al., 805.

Krogman, P. H., 488.

Krueger et al., 260.

Krum, Uriah, .805.

Krumbaar v. Burt, 27, 355.
Kunzler v. Kohaus, 6, 94, 96, 722.
Kurth, in re, 229.

Kyle v. Bostwick, 476.

Kyler, Morris, 167, 545, 547.

Labron v. Woram, 728.

Lacey, Downs & Co., 309, 311, 312.

Lachemeyer, 590.

Lacy, W. Y., 518.

Lacy v. Rockett, 421, 424, 425.

Lady Bryan Mining Co., 11, 127, 284,
758, 759.

Lain v. Gaither, 339.

Lains, George, 457, 592, 835.

Laird v. waird, 112.

Lake, Ex parte, 475, 591.

Lake, J. J., 888, 339.

Lake Superior Ship, Canal, Railroad
& Iron Co., 321, 322, 324, 532, 550.

Lakin v. First Nat’l. Bank, 155, 789.

Lalor v. Wattles, 6, 95.

XXXvii

Lamb vy. Brown, 702.

Lamb vy. Damron, 146.

Lamb v. Lamb, 761, 762.

Lambert, Hugh G., 376, 877, 519.

Lammer, 388.

Lamprey y. Leavitt, 372.

Lane, Joseph M., 194.

Lane, G. H., & Co., 752, 791, 7938.

Lane, Brett & Co., 490.

Laner, P., 262.

Lang, George, 260.

Lang, J. B. H., 206.

Langdon, 622.

Lanier, 195, 556, 557, 559, 560.

Lansing v. Manton, 449.

Lapsley, 536.

Large v. Bosler, 472, 705, 714.

Larrabee v. Talbot, 98.

Lathrop, Robt., et al., 465, 467, 540,
544, 545, 546, 602, 603.

Lathrop, Cady & burtis, 565.

Lathrop, Luddington & Co., 679.

Lathrop v. Drake, 107, 145, 146, 155,
487, 822.

Lathrop v. Stewart, 701, 723, 725,
731.

Lathrop v. Stuart, 222, 722.

La Tourette v. Price, 718, 720.

Latting v. Fassman, 630.

uwaurie, Blood & Hammond, 482, 584.

Lavender y. Gosnell, 98, 102, 715.

Lawrence, 210, 229,

Lawson, James H., 328, 382, 386, 678,
679.

Lazear v. Porter, 569.

Leach v. Greene, 418.

Leachman, Stephen B., 560.

Leavenworth Savings Bank, 274,

Leavitt v. Baldwin, 709,

Lee, John F., 551, 554, 819.

Lee, Thomas D., 558.

Lee v. Franklin Ave. German Savings
Institution, 150, 520.

Lee y. Phillips, 710, 711.

Leeds, William, 246, 265.

Lefler v. Hunt, 420.

Lehman v. Strassberger, 164, 308, 464.

Lehmer v. Smith, 467.

Leibenstein et al., 637, 642.

Leighton, J., 265, 654.

Leighton vy. Atkins, 707.

Leighton v. Harwood, 436, 453.

Leighton v. Kelsey et al., 115, 369,
714.

Leipziger, Assignment of, 650.

Leiter vy. Payson, 308, 759.

Leland, Simeon, 281, 346, 356, 552,
553.

Leland, S., et al., 161, 344, 360.

Leland & Leland, 742.
XXXVili

Lemcke v. Booth, 694.

Lemoins v. Bank, 460.

Lenihan v. Haman, 422.

Leonard, 279, 283, 303.

Leroy v. Crowninshield, 25.

Levin, Lewis, 677.

Levy, Sam’l W., et al., 202, 204, 337,
560, 561, 568, 565, 674, 696.

Levy v. Haake, 495.

Lewis, A. T., 753.

Lewis, Henry, 567, 741.

Lewis, Adolph, et al., 664.

Lewis v. Fisk, 114, 115.

Lewis v. Gibson, 147.

Lewis v. Hawkins, 713.

Lewis v. Sloan, 140, 787, 820.

Lewis v. U. S., 146, 500, 598, 748.

Lewis v. Webber, 367.

Leszynski, 639.

Lightner v. National Bank, 502.

Lincoln & Cherry, 683.

Linforth, Kellogg & Co., 398.

Lingan v. Bailey, 644.

Linkman v. Wilcox, 794, 805.

Linn vy. Hamilton, 698, 712.

Linn et al. v. Smith, 274.

Linthicum v. Fenley, 100, 420, 518.

Linton v. Stanton, 651, 701, 717.

Lipscomb v. Grace, 707.

Litchfield, E. C., 570.

Little, William H., 12, 216, 224, 654,
742,

Little v. Alexander, 806.

Littlefield, Hiram, 434, 560, 572, 668,
672, 686, 687, 768.

Littlefield v. Delaware & Hudson
Canal Co., 171, 172, 173, 174, 176,
177, 178.

Livermore, George, 675.

Livermore v. Bagley, 105, 236.

Livermore v. Swazey, 427.

Livingston v. Bruce, 801, 837.

Livingston v. Livingston, 504.

Lizardi v. Cohen, 713.

Lloyd, Wm. M., 272, 273, 274, 496,
502, 553.

Lloyd v. Hoo Lue, 415.

Lloyd v. Strobridge, 781, 783, 828.

Locke, Worthington S., 16, 2383, 664,
665.

Locke v. Winning, 820.

Lockett v. Hill, 154, 522) 523.

Loder, Benj. H., 474, 541, 684.

Loder, Lewis B., 328, 684.

Loder Brothers, 532, 586, 770.

Lomax y. Spear, 714.

Lonergan v. Fenlon, 156, 241.

Long, William H., 194, 348, 407, 462,
558, 659, 662, 678.

INDEX TO CAsESs CITED.

Long, Walter P., et al., 748, 749, 751.

Long v. Conner, 391, 098.

Long v. Converse, 341.

Long v. Rogers, 523.

Longacre v. Myers, 700.

Longfellow, 414.

Longis v. Creditors, 98.

Longley v. Swayne, 728.

Longstreth v. Pennock, 480.

Loome v. Kintzing, 635,

Lord, 561.

Lord, IF. C., 807.

Lord, Horace, 694.

Loring v. Kendall, 475, 477, 707, 7z3.

Loucheim v. Henzey, 784, 807, 828.

Loud v. Pierce, 95, 96, 657, 659, 679.

Loudon vy. Blanford, 115, 364, 365, 422,
480, 504, 506, 765.

Loudon v. First Nat’l. Bank, 806, 818,
819.

Loudon vy. King, 365, 366.

Louis, Solomon, 623.

Love vy. Love, 245, 255, 260, 787, 807,
817.

Lovett v. Cutter, 427.

Lowe & Richards, 751.

Lowenstein, 646.

Lowenstein, Sam’l, et al., 259, 265,
308, 774.

Loweree, James M., 536, 537.

Lowry v. Morrison, 715.

Lucas v. Morris, 24, 26, 139, 334.

Ludeling v. Felton, 689.

Ludlow, Edward H., 355, 880, 381,
882.

Lummus y. Fairfield, 700.

Lumpkin v. Eason, sd9-

Lutgens, J. H. C., 411, 658, 662, 673.

Lyall v. Miller, 446.

Lynch, Robert V., 540.

Lynch & Bernstein, 479, 482.

Lyon, 560.

Lyon, J. H., 344.

Lyon v. Isett, 721.

Lyon v. Marshall, 673, 701.

Lyons, Julia, 236, 301.

Lytle, J. L., & Co., 624.

Mabry vy. Herndon, 695.
Macdonald v. Moore, 887, 838.
Mace v. Wells, 476, 707.

Macy vy. Jordan, 703.

Machad, John A., 685.
Macintire, James, 201, 559, 769, 770.
Mackey et al., 672.

Magee, George R., 810, 634.
Magie, William H., 12, 216, 770,
Magoon v. Warfield, 701, 723.
Main v. Mills, 763.
INDEX TO CasEs CITED.

Major, William, 184, 325, 329, 451,
452.

Malcolm, Robert, 219.

Mallory, 127, 130, 327, 329, 332, 333,
841.

Mallory, E., 131.

Maltbie v. Hotchkiss, 8, 100, 102, 835.

Manly, T. M., 406, 407, 412.

Mann, Henry A., 268.

Mannheim, William, 261, 262.

Manning v. Hunt, 425.

Manning v. Keyes, 692.

Mansfield, A. 8., 468,

Mansfield, Join, 597.

Manwarring v. Kouns, 710, 711, 721.

Many & Marshall, 588.

Maples v. Burnside, 725.

Marcer, 277.

March v. Heaton et al., 150, 452, 661.

Marionneaux, A. P., 732.

Maris v. Duren, 114, 421.

Marks, Isaac, 130, 136, 140, 287.

Marks v. Barker, 26, 159, 486, 489.

Markson v. Heaney, 106, 107, 118,
145, 176, 178, 4538, 515, 526.

Markson vy. Hobson, 15, 790, 812, 815,
818.

Marrett v. Atterbury, 546.

Marrett v. Murphy, 752.

Marsh, Daniel, 175, 176.

Marsh vy. Armstrong, 133, 140, 287,
413, 454.

Marshall, 668.

Marshall vy. Knox, 1138, 128, 133, 136,
146, 157, 177, 477.

Marston, Wm. H., 663, 669.

Marston v. Stickney, 372.

Marter, Charles J., 253, 283.

Martin, Anson, 646.

Martin, Henry, 741.

Martin, James, 107, 108, 130.

Martin, Nicholas, 647.

Martin v. Berry, 7, 97, 98, 101.

Martin yv. Kilbourn, 68.

Martin v. Smith et al., 405.

Marvin, 301.

Marvin v. Chambers, 511.

Marwick, Albert, 750.

Mason & Hamlin Organ Co. v. Ban-
croft, 625.

Mason vy. Hughart, 718, 719, 720.

Mason v. Lawrason, 726.

Mason y. Nash, 96.

Mason v. Warthens, 363, 637.

Massachusetts Brick Co., 260, 305.

Mastbaum, 391.

Masterson, John, 133, 137, 147, 438.

Masterson v. Herndon et al., 182.

Mathers & Moffett, 609.

Matteson v. Kellogg, 694.

XXxix

Matot, E. L., & Co., 208, 228, 294,
780, 735.

Maurer vy. Frantz et al., 791.

Maus v. McKellip et al., 512.

Mawson, George S., 204, 561, 567, 656,
673, 675, 678, 679.

Maxim v. Morse, 716, 720, 721.

Maxwell et al. v. Faxton, 635.

Maxwell & McCune, 379.

May, Henry, 386, 390.

May & Co., 588, 738.

May v. Courtney, 369.

May v. Harper, 271.

May v. Merwin, 479, 483.

Maybin, J. W., 466, 468, 537, 706.

Maybin v. Raymond, 175, 387, 352,
579, 581.

Mayer v. Gimbel, 724.

Mayer v. Hermann, 812, 816, 817, 818.

Mayer v. Hillman, 100, 836.

Mays v. Fritton, 525, 787.

Mays vy. Manufacturers’
Bank, 337, 338.

McAdoo v. Lummis, 695.

McAllister v. Richards, 814.

McBride, 770.

McBrien, Charles, 557, 563.

McCabe vy. Cooney, 3389, 725.

McCabe v. Winship, 485.

McCance v. Taylor, 525, 714.

McCarty, John Q., 657, 659, 680.

McCausland v. Waller, 699.

McClellan, J., 514, 515, 518.

McConnell, William, 536, 599.

McCormick v. Buckner, 807.

McCormick v. Pickering, 95, 96, 722,
723.

McCullough v. Caldwell, 714. -

McDermott Patent Bolt Mfg. Co., 259.

McDonald, David A., 677, 685, 696.

McDonald, John V., 570.

McDonald v. Ingraham, 709.

McDougald v. Reid, 711.

McDowell & Co., 623.

McDuffee, 528.

McEwen & Sons, 150, 752.

McF aden, James, 331.

McFarland & Co., 158, 739.

McFarland v. Goodman, 378.

McGie (Fitch et al. v. McGie, Ex
parte Sanger), 805, 818.

McGilton et al., 172, 519, 525.

McGrath & Hunt, 584.

McGready v. Harris, 5238.

McHenry v. La Société Frangaise,
104, 494.

McIntire, Charles H., 651, 731.

Mcintosh, Milton, 504, 506, 536.

McIver & Moore, 419.

McIver vy. Wilson, 488.

National
xl

McKay & Aldus, 347, 795, 797, 798,
799, 839.

McKay v. Funk, 524, 636, 637.

McKeon, Thomas, 310, 628, 624.

McKercher & Pettigrew, 382, 386,
388.

McKibben, James A., 268, 271, 279,
286.

McKiernan vy. Fletcher, 446.

McKiernan v. King, 140.

McKinley, John H., 294.

McKinley v. O’Keson, 718.

McKinsey et al. v. Harding, 504, 535,
540, 546.

McLean, Archibald, 388.

McLean, John, & Son, 461, 752.

McLean et al. v. Brown, Weber &
Co., 261.

McLean v. Cadwallader, 352.

McLean v. Ihmsen, 746, 835.

McLean vy. Johnson, 535, 837.

McLean v. Klein, 481.

McLean vy. Lafayette Bank, 10, 147,
150, 151, 153, 154, 157.

McLean v. Meline, 835, 838.

McLean v. Rockey, 111, 386, 507.

McMechen v. Grundy, 798, 799.

McMenomy v. Ferrers, 350.

McMenomy v. Murray, 7138.

MeMillan v. Love, 426.

MeMinn y. Allen, 695.

McMullen vy. Bank, 458, 476.

McNab & Harlin Mfg. Co., 611, 612.

McNair, Neal A., 548, 560.

McNaughton, Moses A., 261, 269, 296,
299.

McNeil vy. Knott, 474, 475, 722.

McNulty v. Frame, 701, 726.

McSpedon v. Bouton, 426.

McVey, W. C., 655, 676, 677, 678.

Mead & Co., 308, 595, 596.

Mead v. National Bank of Fayette-
ville et al., 748, 744.

Mead v. Thompson, 180.

Meador v. Everett, 509.

Meador v. Sharp, 694.

ilealy, Stephen A., 201.

Mebane, John A., 506, 515, 518, 519.

eae a Bank y. Lawrence, 711,

2.

Medbury v. Swan, 721.

Meekins, Kelly & Co. v. Their Cred-
itors, 7, 98.

Meeks v. Whatley, 516, 518.

Melick, Isaac C., 276, .297, 748.

Mellor & Co., 336.

Melvin & Fox, 875.

Melvin v. Clark, 638.

Mendelsohn, S., 250, 298.

Mendenhall, 3038, 309, 311, 312, 558,

INDEX To CASES CITED.

Mendenhall, Richard J., 459.

Mendenhall v. Carter, 258, 259, 260.

Mercantile Ins. Co., 11.

Merchants’ Insurance Co., 8, 99, 235,
247, 251, 573, 758.

Merchants’ Nat’l. Bank v. Comstock,
535.

Merchants’ Nat’l. Bank v. Cook, 782,
783.

Merchants’ Nat’l. Bank v. Truax, 14,
788, 809.

Merkle, George, 300.

Merrick, W. B., 526, 527, 530.

Merrifield, Truman, 482, 584.

Merrill, BE. C., 529, 541.

Merrill, William G., 235.

Merriman’s Estate, 649, 650.

Merritt y. Glidden et al., 639.

Metcalf & Duncan, 633, 634, 638, 639.

Metz, Joseph, 488.

Metz v. Buffalo, Corry & P. R. R. Co.,
448, 760.

Metzger, Jacob, 356, 403.

Metzler & Cowperthwaite, 284, 285,
454.

Meyer, Edward, 813, 817.

Meyer v. Aurora Ins. Co., 636.

Meyers, Louis, 403,404, 407, 638.

Meyers y. Valley Na?’l. Bk., 785.

Michaels v. Post, 108, 277.

Michener v. Payson, 187, 761, 762.

Mifflin, 642, 643.

Migel, Solomon, 631, 634, 642.

Milhous v. Aicardi, 711, 731.

Miller, Edmund H., 601, 744

Miller, Joseph, 592

Miller, S. S., 287.

Miller, William D., 310.

Miller v. Black, 222, 336.

Miller v. Bowles, 115, 363.

Miller vy. Chandler, 200.

Miller v. Gillespie, 699.

Miller v. Jones, 164, 357, 360, 406,
511.

Miller y.

Miller v.

Keys, 15, 244, 248, 464.

Mackenzie, 363.

Miller vy. O’Brien, 339, 370.

Miller v. Parker, 351.

Mills, William, 574, 576, 750, 751.

Mills vy. Davis, 129, 808.

Milner, Jonathan J., 464.

Milner v. Meek, 170, 430.

Miltenberger v. Phillips, 440.

Milwain, Elijah, 549.

Mims vy. Swartz, 418, 419, 444.

Minon vy. Van Nostrand et al.,
648.

Minot v. Brickett, 423, 728,

Minot v. Thacher, 716.

Mitchell, Ex parte Sherwin, 592.

636,
InpEX To Cases CITED.

Mitchell, J. C., 499, 583.

Mitchell, T. P., et al., 740.

Mitchell v. Manufacturing Co., 6, 96,
120, 121, 125, 189, 147, 151.

ae es vy. McKibbin, 148, 149, 407,
408.

Mitchell v. Singletary, 701.

Mitchell v. Winslow, 352, 406, 513.

Mittledorfer, Moses and Charles, 555,
595, 596.

Mitzel, 301.

Mixer y. Excelsior Co., 362, 368..

Moffit v. Cruise, 425.

Mollison v. Eaton, 288.

Monroe vy. Upton, 468, 469, 709, 711.

Montgomery, Henry B., 281, 468, 477,
537, 551, 596, 597, 751.

Montgomery v. Bucyrus Mach. Co.,
352.

Mooney, Joseph, 179, 627.

Moore, Chauncey W., 667.

Moore, Rufus E., 741.

Moore y. Jones, 107, 108, 354.

Moore v. Nat’l. Exchange Bank of Co-
lumbus, 304, 466.

Moore v. Rosenberger, 220, 343.

Moore v. Voss, 425.

Moore v. Waller, 696, 699.

Moore v. Walton, 257.

Moore v. Young, 351, 359, 429.

Moore & Bro. v. Harley, 270.

Moran v. Bogert, 195, 448, 583.

Moran v. Schnugg, 500, 516.

Morford, Charles A., 223.

Morgan v. Campbell, 362, 480, 482.

Morgan et al. y. Thornhill et al., 145,
146, 162, 171, 175, 180, 181.

Morgan, Root & Co. v. Mastick, 15,
241, 251.

Morganthal, John, 318, 325.

Moritz & Pinner, 739, 741, 742, 743.

Morrill, George P., 403, 406, 429, 477.

Morris, 268, 270, 279, 531, 617, 618,
622,

Morris, Ex parte, 697.

Morris, Robert, 106, 138, 310, 466.

Morris v. Davidson, 116.

Moris v. First Nat’l. Bank, 352.

Morris v. French, 347.

Morrison, Thomas, 499, 501, 801.

Morrison ,v. Woolson, 701, 722,
724.

Morrow, J. H., 348.

Morse, 332, 333.

Morse, Edward P., 748, 749, 750.

Morse & Co., 469, 477.

Morse v. Cloyes, 726.

Morse v. Godfrey, 241, 793, 823.

Morse v. Grittman, 419.

Morse vy. Hovey, 6, 94, 95, 96, 476.

723,

xli

Morse v. Hutchins, 692,

Morse v. Lowell, 536, 694.

Morse vy. Presby, 108, 651, 702, 710.

Mosby vy. Steele, 634.

Moseley, Wells & Co., 885.

Moses, S. J., 286.

Mott, Jacob H., 446.

Mott v. Maris, 27, 600.

Moulton et al., 805.

Muirhead v. Aldridge, 410.

Muller, 16.

Muller & Brentano, 131, 233, 266, 274,
283, 284, 285, 287, 293.

Muller v. Erich, 416.

Munger & Champlin, 255.

Munn, 237, 262, 268, 303.

Munson v. B. H,. & E. R. R. Co., 369,
372.

Murdock, George A., 5388, 658, 674.

Murphy, Alonzo, 308.

Murphy v. Smith, 712.

Murphy vy. Young, 629.

Murray, 465.

Murray v. De Rottenham, 105, 477,

483, 702, 705, 713.

Murray v. Jones, 412, 447.

Murray v. Marsh, 187.

Murray v. Murray, 745, 746, 747.

Murray v. Riggs, 484.

Mutual Life Ins. Co. v. Cameron, 710.

Mutual Savings Bank, 434.

Myer v. Crystal Spring Pickling &
Pres’g. Co., 115.

Myers vy. Seeley, 760.

Myrick, Benj. H., 220, 537, 577.

Napier v. Server, 409.

Nassau v. Parker, 708.

National Bank v. Conway, 359.

National Bank of Leavenworth v.
Hunt, 359.

National Bank v. Taylor, 634, 721.

National Life Ins. Co., 235, 765.

National Iron Co., 514.

Nat*Mt. Wollaston Bk. v. Porter, 649.

Nazro v. Cragin, 107.

Neal v. Scruggs, 691.

Neale, Charles E., 336, 435.

Nebe, Henry, 527.

Nedenzahl & Marx, 613.

Needham, Otis A., 655.

Neilson, J., 307.

Nelms v. Pugh, 240.

Nelson, M. J., 830.

Nelson v. Carland, 49, 178, 180.

Nesbit v. Greaves, 100.

Newcomb v. Launtz, 398, 401, 415.

Newcomer, 543.

Newhall, 336, 341.

Newhall et al. v. Lynn Say. Bank, 498.
xlii

New Lamp Chimney Co., 594.

New Lamp Chimney Co. v. Ansonia
Brass & Copper Co., 108, 681, 756.

Newland, Frank, 456, 498, 534.

Newman, Abraham, 669, 670, 671.

Newman v. Fisher, 759.
New York Mail Steamship Co., 332,
459, 500, 575, 582, 595, 596, 597.
Nicholas v. Murray, 104, 122, 402, 589,
730.

Nichols v. Bellows, 354.

Nichols v. Eaton, 341.

Nickodemus, Peter, 16, 18, 233, 234,
237, 259, 260, 297, 474.

Nightingale, John, 235.

Nims & Long, 787.

Noakes, Thomas, 379, 380, 436, 453,
580.

Noble, George W., 321, 549.

Noble v. Scofield, 844.

Noesen, Theodore, 373.

Noonan, Joseph A., 739, 740.

Noonan & Connolly, 672, 679.

Noonan vy. Orton, 402, 415, 421.

Norcross, Nicholas G., 219.

Norris, James W., 106, 133, 147.

Norris y. Goss, 710.

North American Ins. Co. v. Graham,
673.

North v. House, 813, 818, 819, 824.

Northern Bk. of Ky. v. Cooke, 697,
784.

Northern Iron Co., 322, 328, 530, 531,
532, 550.

Northman v. Insurance Co., 424.

Norton, C. H., 321, 325.

Norton v. Barker, 489.

Norton v. Boyd, 51, 114, 129.

Norton v. De la Villebeuve, 487, 440.

Norton vy. Switzer, 423, 425, 640.

Nounnan & Co., 306, 463, 584, 583.

Noyes, B. B., 580, 581.

Noyes, G. N., 201.

Nudd v. Burrows, 802, 804.

Nudd v. Montanze, 822. .

O’Bannon, 220, 669.

O’Brien, Mary A., 11, 138, 162, 163,
236.

O’Brien v. Weld, 133.

O’Connor v. Parker, 844.

O’Donohue, John, 566.

O’Dowd, Michael, 348.

O’Fallon, 445.

O’Farrell et al., 569, 685,

O’Hara, 595.

O’Hara v. Dilworth, 432.

eS vy. MacConnell, 158, 159, 183,
84,

O’Hara y. Stone, 807.

InpEx TO Cases CITED.

O’Mara, Michael, 642.

O’Neale, A. G., 342.

O’Neil, 456, 547, 620.

O'Neil v. Dougherty, 426.

Oakey v. Bennett, 340.

Oakey v. Corry, 338, 4385, 444.

Oakey v. Gardner, 360, 361. "

Oakley, Charles, 223.

Oates v. Parrish, 730.

Obear, 268.

Oberhoffer, 593.

Ocean Nat. Bank v. Olcott, 411, 730.

Odell, 122, 611.

Odell v. Wooten, 698, 727.

Ogden v. Cowley, 491.

Ogden vy. Jackson, 801.

Ogden v. Redd, 690.

Ogden v. Saunders, 10.

Okell, William, 560, 679.

Olcott, Cornelius, 131.

Olcott v. Maclean, 120, 802.

Oldens v. Hallet, 96.

Olds, M., et al., 680.

Oliver v. Smith, 111, 600.

Olmstead, 312.

Onion v. Clark, 340.

Ontario Bank v. Mumford, 343, 418,
422.

Orcutt, 668.

Oregon Bulletin Printing & Publish-
ing Co., 175, 180, 248, 249, 252,
274, 277, 301, 308, 352.

Oregon Iron Works, 123, 180, 399,
414.

Orem & Son v. Harley, 264, 266, 297.

Ormsby v. Dearborn, 459.

Orne, Freeman, 218, 220, 223, 456,
490, 547, 548, 686.

Osage Valley & Southern Kansas R.
R. Co., 801.

Osborn v. Baxter, 451.

Osborn v. McBride, 348, 748.

Otis v. Gazlin, 719, 720.

cage Hadley, 140, 790, 809, 811,

Ouimette, L. H., 274, 275, 277, 299,
800, 302, 819.

Overman v. Quick, 590.

Overton, W., 328.

Owen & Murrin, 337.

Owens, John, 377, 390.

Owens vy. Grimsley, 727.

Owesley v. Cobia, 694.

Oxford Iron Co. y. Slafter, 803, 819.

Packard, D. C., 841.

Paddock, S., 465, 544, 547.
Paget, 675.

Paige vy. Loring, 790, 803, 809.
Paine v. Caldwell, 107, 147, 148.
InDEX TO CasEs CITED.

Palmer, 813.

Palmer, Charles N., 577, 675, 677.

Palmer, Ei. V., 673.

Palmer, James M., 265.

Palmer v. Merrill et al., 637.

Palmer v. Preston, 693.

Pardee v. Leitch, 116.

Paret v. Ticknor, 649.

Parham & Dunn, 548.

Park vy. Casey, 710, 721.

Parker, Renslow S., 656.

Parker v. Atwood, 730.

Parker v. Bradford, 690.

Parker & Morris, 375, 829.

Parker v. Muggridge, 352, 513, 514,
(46, TAT.

Parker & Peck, 558, 599, 654.

Parkes, J. F. & C. R., 323, 386, 391,
534, 536.

Parks v. Goodwin, 728.

Parks v. Sheldon, 367.

Parsons y. Topliff, 367, 803.

Partridge v. Dearborn, 805, 808.

Patrick v. Bank, 802.

Patterson, Charles G., 185, 202, 208,
211, 212, 217, 337, 426, 455, 529,
544, 556, 561, 562, 563, 642, 643.

Pattison & Co. v. Wilbur, 701, 702,
713.

Paulson, 745.

Payne, 830.

Payne et al. vy. Able et al., 696, 698,
701, 715, 725.

Payne v. Solomon, 249.

Payson vy. Brooke, 187, 760, 761.

Payson v. Dietz, 140, 141.

Payson v. Payson, 362.

Payson vy. Stoever, 348, 763.

Payson y. Withers, 762, 763.

Peabody, 122, 192, 374, 415, 592.

Pearce, Alonzo, 657, 659, 666, 673.

Pearce vy. Foreman, 718.

Pearsall v. McCartney, 680.

Pearson, George W., 823, 324, 325.

Pease, R. S., 748, 749.

Pease et al., 539.

Pease v. Bennett, 547.

Peck, Bronson, 204.

Peck, J. Q. A., 369, 828.

Peck v. Jenness, 128, 362, 369, 420,
497, 713.

Peckham v. Burrows, 793, 810, 815.

Peebles, Lemuel, 499.

Peel v. Ringgold, 418, 747.

Pegues, P. A., 582.

Peiper v. Harmer, 139, 437.

Peltasohn, 627.

Penn, Jno. R., et al., 214, 654, 656,
680, 702, 741, 755.

Penn y, Edwards, 423.

xiii

Pennell v. Percival, 687, 726.

Penniman vy. Norton, 422, 423.

Pennington v. Lowenstein, 126, 130,
150, 362.

Pennington y. Sale & Phelan et al.,
110, 111, 118, 126, 130, 150, 506.

Penny v. Taylor, 378, 688, 718.

People v. Brennan, 133.

People v. Brooks, 644.

People vy. Duncan, 348.

‘People’s Mail Steamship Co., 110,
112, 113, 136, 520. 7

People’s Safe Dep., etc., Inst., 589.

Perdue, Lindsay, 377, 392, 502.

Perkins, 179, 332, 333, 682.

Perkins v. Gay, 730.

Perley, Daniel J., 659.

Perley v. Dole, 338, 347.

Perrear & La Croix, 593.

Perrin & Gaff Mfg. Co., 209.

Perrin & Hance, 359, 406, 799.

Perry, John S., 218, 228, 317, 3384.

Perry & Allen, 664, 671.

Perry v. Ghandler, 361, 362.

Perry v. Longley, 7, 18, 97, 176, 234,
237, 238, 239, 252, 253, 305.
Perry v. Lorillard Fire Ins. Co., 849.

Perry v. Somerly et al., 369.

Perryman y. Allen, 845.

Pesoa v. Passmore, 687, 700.

Peterson v. Speer, 657, 667.

Petrie, H., 490.

Pettis, Julius R., 642, 6438.

Petty v. Walker, 660, 661.

Pfromm, 324, 329.

Phelan, Assignee, v. Iron Mt. Bk., 396,
781.

Phelps, 475, 476.

Phelps, Caldwell & Co., 321, 324, 577,
743.

Phelps v. Classen, 164, 274, 299,

Phelps v. Curts, 408, 415, 630,
721, 828.

Phelps v. McDonald, 842, 395,
448, 627, 648.

Phelps v. Sellick, 127, 150, 489,
525.

Phelps v. Stern et al., 281.

hiladelphia Axle Works, 270,

309. )

Phillips, William W., 527, 528.

Phillips v. Bowdoin, 714.

Phillips v. Helmbold, 111, 485, 488.

Phillips v. Russell, 694.

Phillips v. Solomon, 699.

Phipps v. Sedgwick, 394, 403, 829.

Phoenix v. Ingraham, 156, 159, 798,
812.

Pickering, William J., 268.

Pickett v. McGavick, 731.

304.
690,

445,
522,

272,
xliv

Picton, 179, 237.

Pierce v. Evans, 15, 790, 816.

Pierce & Holbrook, 219, 253, 254, 674,
687, 835, 837.

Pierce v. Phillips, 524.

Pierce & Whaling, 134.

Pierce v. Wilcox, 524, 715.

Pierson, William H., 220, 336, 646,
655, 661, 663, 664, 670, 672, 673,
687.

Pike v. Crehore, 187, 420.

Pike v. Lowell, 438.

Pike v. McDonald, 707, 710.

Pillow vy. Langtree, 341.

Pindell v. Vimont, 425, 512.

Pioneer Paper Co., 559, 567.

Piper v. Brady, 801, 807, 817.

Pitt, Charles S., 235, 279.

Pittock,; Robert, 455, 466, 546.

Place et al., 165, 169, 176.

Place & Sparkman, 164, 166.

Planters’ Bank v. Conger, 420.

Platt, John H., 836. ;

Platt v. Archer, 8, 99, 157, 292, 296,
605, 765.

Platt v. Parker, 702.

Platt v. Stewart, 163, 359, 481, 583,
788, 805, 809.

Player v. Lippincott, 781.

Plimpton, Horace, 219, 223.

Plumb, 689, 690, 735, 738.

Pogue v. Joyner, 707.

Poleman, William C., 385, 386.

Pollard, 591.

Pollock v. Pratt, 27, 600.

Pomeroy, C. W., 220, 660.

Pool v. McDonald, 617, 621.

Porter v. Douglass, 403, 657, 667.

Porter v. Porter, 717, 718.

Port Huron Dry Dock Co., 456, 527,
530, 581, 541.

Portsmouth Savings Fund Society,
597.

Post v. Corbin, 156, 799, 812.

Post v. Rouse, 141.

Potter v. Coggeshall, 15, 18, 19.

Potter v. Wright, 605.

Potts & Garwood, 239, 251, 304, 305.

Powell, Allen F., 327, 828, 329.

Powell v. Knox, 508, 660, 661.

Prankard, F. T., et al., 741, 742. ,

Pratt, Charles C., 386, 387.

Pratt, D., 211.

Pratt, Edward D., 262.

Pratt, Jr., v. Curtis et al., 150, 154,
408, 408.

Pratt v. Russell, 717, 719, 720.

Pray v. Torr, 681.

Prentiss v. Kingsley, 705,

Prescott, Martin, 455, 466.

InpEx To CasEs CITED.

Preston, Alvin B., 223,

Preston, Charles H., 185, 364, 365,
8366, 367, 377, 378, 392.

Preston v. Simons, 722, 724.

Preston vy. Speer, 659.

Prewett v. Caruthers, 718.

‘Price, 338.

Price, J. 8S. & J., 386.

Price v. Bray, 722, 724, 725.

Price v. Miller, 283, 303.

Price v. Philips, 488.

Princeton, Thomas, 281.

Prior, Richard, 392, 454.

Pritchard v. Chandler, 147, 440, 441.

Providence Co. Savings Bank v.
Frost, 458, 466.

Puffer, Jonas, 675.

Pugh v. Bussell, 96.

Pugh vy. York, 721.

Pullman vy. Upton, 415.

Pulver, Eugene, 685, 686.

Pulver, John, 202, 204, 218, 222, 223,
818, 319.

Pupke, G. & H., 302.

Purcell, 485, 610.

Purcell & Robinson, 522.

Purviance v. Union Nat’l. Bank, 350.

Purvis, James J., 323, 324, 576.

Pusey, A., 344, 8389.

Pusey v. Bradley, 109.

Quackenboss, John M., 674.
Quinike, 569, 685.

Rado, Peter, 277.
Raffauf, Jacob, 268.
Rahilly v. Wilson, 346, 842.

_Rainsford, D. A., 409, 656, 658, 731.

Rand v. Upham, 731.

Randall, 15.

Randall & Co. v. McLain, 364.

Randall & Reed, 213.

Randall & Sunderland, 237, 239, 243,
2538, 264, 266, 297, 303.

Randall y. Sutton, 701.

Randolph v. Canby, 350.

Rank, 99, 648, 644.

Rankin & Pullan v. Florida, Atlantic
& G. oO. R. R. Co.,. 251, 455, 756.

Rankin y. Third Nat'l. Bank, 815, 816.

Rarguel v. Gerson, 700.

Ratcliffe, Robert, 228, 318, 325, 334.

Rathbone, Robert ©., 654, 655, 656,
657, 659, 678.

Rathbone v. Blackford, 217, 483.

Ray, James T., 218, 465, 545, 556, 704.

Ray v. Norseworthy, 516, 518, 520.

Ray v. Wight, 637.

Rayl v. Lapham, 731.

Raynor, Jacob, 258, 269,
INDEX TO CasrEs CITED.

Reade v. Waterhouse, 420, 425.

Reakirt, John, 561.

Reavis v. Garner, 4038, 447.

Redfield, 218, 687.

Redman v. Gould, 187, 416.

Redmond & Martin, 266, 267, 297.

Reece & Brother, 551.

Reed, C. W., 465.

Reed, Horatio, 688.

Reed, J. K. P., 671.

Reed, John M., 163, 176, 177. a2

Reed, Timothy, 666.

Reed y. Bullington, 525, 714, 730.

Reed v. Emory, 706.

Reed vy. Pierce, 704.

Reed et al. v. Taylor, 8, 97, 102, 835.

Reed v. Vaughan, 6, 95, 108, 701, 725.

Reed v. Vaughn, 722.

Rees v. Butler, 710.

Reeser v. Johnson, 838.

Regan v. Regan, 726.

Reid v. Martin, 692.

Reiman & Friedlander, 6, 95, 96, 272,

_ 814,-616, 617, 621, 622, 623, 624.

Rein, Philip, 185, 202.

Reitz v. People, 689, 691.

Repplier v. Bloodgood, 8038, 844.

Republic Insurance Co., 473, 538, 760,
761, 762.

Reynolds, 5, 8, 97, 99.

Reynolds, ‘Alfred P., 618.

Reynolds, Wm. P., 395, 475, 829.

Rhoades v. Blackiston, 343, 417.

Rhodes, 514.

Rice, George, 749, 750.

Rice v. Grafton, 795, 804.

Rice v. Maxwell, 844.

Rice v. Melendy, 287, 786.

Richards, 200, 529.

Richards, Andrew J., 563.

Richards v. Maryland Ins.
334, 440.

Richards v. Nixon, 701, 722.

Richardson, Clementina T., 202.

Richardson, Henrietta, et al., 107, 145,
640.

Richardson, S. H., & Co., 386.

Richter’s Estate, 551, 554, 786.

Riggin v. Maguire, 471.

Riggs, Lechtenberg & Co., 466.

Riggs v. White, 728.

Riker, 209.

Riordon, John, 282, 553.

Rison v. Knapp, 14, 788, 789, 794, 796,
818, 815, 817, 823, 843.

Rison v. Powell, 140.

Rix vy. Capitol Bank, 376, 385, 387,
392, 802.

Robb v. Powers, 642.

Roberts v. Woods, 715.

Co., 24,

.

xlv

Robertson, David II., 219, 657, 668.
Robinson, Jessie H., 185, 769, 770,
Robinson, Julius A., 596.

Kobinson, Ward E, 176, 631, 642,
676.

Robinson & Chamberlain, 558, 655.

Robinson y. Elliott, 406, 412, 799.

Robinson v. Wisconsin M. & F. Ins.
Co. Bk., 485, 782.

Robinson ct al. v. Pesant et al.,
483, 704.

Robinson v. Wadsworth, 660.

Robinson v. Wilson, 367.

Roche et al. v. Fox, 208, 209.

Rockford, Rock Island & St. Louis
R. R. Co. v. McKay & Aldus, 353.

Roddin & Hamilton, 744,

Roden v. Jaco, 523, 710, 713.

Rodger et al., 124, 612.

Rodgers v. Coryell, 242.

Rogers, Davis, 186, 283.

Rogers, W. M., 654, 661, 669.

Rogers v. Stevenson, 415, 427.

Rogers vy. West. Insurance Co.,
703, 709.

Rogers v. Winsor, 133, 428.

Rohrer’s Appeal, 809, 823.

Rollins v. Twitchell, 490.

Rooney, C. J., 280, 303.

Roosevelt v. Mark, 105, 458, 462,

Roseberry, 429.

Rosenberg, Israel M., 520.

Rosenberg, Myron, 110, 594, 631,
634, 638, 700.

Rosenfield, Isaac, 337, 560, 563,
661, 662, 668, 664, 668, 678,
841.

Rosenfields, 269, 270.

Rosenthal, H. & M., 268.

Rosey, Louis, 583.

Rosey, Louis H., 468, 469,

Roswig v. Seymour, 644.

Rowan vy. Holcomb, 6, 95,

Rowe et al., 440.

Rowe v. Page, 97, 101, 141, 372,

Rowell, Christopher C., 666, 678,

Rucknam vy. Cowell, 108, 710,
727.

Ruddick v. Billings, 161, 163, 164,
117.

Rudge v. Rundle, 694, 710.

Ruehle, Ferdinand, 521, 522, 532,

Rugan v. West, 186, 427.

Rugely v. Robinson, 112, 337,
417, 659, 715.

Rundle & Jones, 458, 640.

Rupp, 386.

Rushin v. Gause, 389.

Russell, Ex parte, 587.

Russell v. Cheatham, 6, 96, 525,

471,

702,

463.

633,

654,
679,

598.
725.
436.

680.
718,

573,
722,

171,

533.
360,

702.
xlvi

Russell v. McCord, 431, 736.
Russell vy. Owen, 139, 491.

Rust, Elam, 887, 356, 507.

Ruth, David, 379, 380, 381, 382, 383,
‘Thomas, 237, 288, 243, 301,
Ryan & Griffin, 444.

Ryerss vy. Farwell, 361.

Sabin, Philo R., 121, 187, 502, 526.

Sacchi, 332, 512, 586.

Sackett v. Andross, 94, 96, 723, 724,
725.

Safe Deposit & Savings Institution,
302

Safford v. Burgess, 396. .

Sage, Jr., v. Wynkoop, 781, 783, 828,
830.

Salkey & Gerson, 558, 562, 627.

Sallee, William A., 219.

Salmons, L. T., 514.

Samson v. Blake, 110, 134, 188, 163,
172, 177, 179.

Samson v. Burton et al., 115, 129, 369,
3870, 420, 428, 632, 634, 638, 794,
808.

Samson v. Clarke, 127, 134, 1388, 139,
159, 163, 179, 370.

Samuel v. Cravens, 718.

Sendford, 237.

Sandford vy. Lackland, 342.

Sandford v. Sinclair, 728, 729.

Sands’ Ale Brewing Co., 518.

Sands, Comfort, 334.

Sands, George E., 381, 334.

Sands v. Codwise, 404, 405, 413.

Sandusky, 831.

Sandusky v. First National Bank, 141,
142, 181.

Sanford v. Huxford, 735, 845.

Sanford v. Sanford, 425, 457.

Sanger & Scott, 596.

Sanger v. Upton, 760, 761.

Sargent, Edward, 269, 270, 271, 309.

Saunders v. Commonwealth, 695, 703.

Ssunders, Wm. A., 531, 539, 5538.

Sauthoff & Olsen, 374, 379, 500, 735.

Savage, 588, 736.

Savage v. Best, 50, 113.

Savings Bank v. Webster, 710.

Savory v. Stocking, 705.

Sawtelle v. Rollins, 423.

Sawyer, James M., 573, 580, 598, 598,
599, 622.

Sawyer v. Hoag, 357, 484, 487.

Sawyer et al. v. Turpin et al. 14,
359, 788, 793, 798, 800, 802.

Scammon, J. Young, 267, 278, 293.

InpEx TO Cases CITED.

Scammon v. Cole et al., 14, 18, 150,
159, 786, 788, 790, 795, 810, 811,
$13, 815, 816, 821, 843.

Scammon vy. Kimball, 487.

Schapter, Samuel, 445.

Scheiffer & Garrett, 324, 326, 328,
334, 335, 743.

Schenck, 646.

Schepeler, J. F., et al., 319, 633.

Schick, Julius, 18, 238, 255, 787.

Shlichter, Cathn. H., et al., 13, 301,
463.

Schlitz v. Schatz, 802.

Schuepf, F., 114, 126, 504, 507, 514,

661, 818.
Schoenenberger, Jos., 282, 552.
Schofield, D. G., et al., 656, 662,
Schofield v. Moorehead, 201.”
Schonberg, J. A., 568.
Schoo, 258, 679.
Schuhardt, Frederick, 469, 470.
Schulenberg v. Kabureck, 164,
842.
Schulze v. Bolting, 430.
Schuman v. Fleckenstein, 148, 823,
Schumpert, 342, 670, 671.
Schuyler, S. D., 185, 305,
680.
Schwab, Julius, 595.
Schwab, Samuel, 104.
Schwartz, M. T., 390.
Schwarz, Henry, 469,
Scott, 504.
Scott, Dwight, 503.
Scott, Samuel 8., 634.
Scott, Collins & Co., 617,
620, 621, 624.
Scott & McCarty, 281, 551.
Scott v. Kelly, 525.
Scott v. Wilkie, 420.
Scrafford, C. G., 273, 298.
Scudder, Wilcox. & Ogden,
Scull, Isaac, 246, 267, 268,
Scully v. Kirkpatrick, 100.
Seabury, James M., 676, 677, 678.
Seaman v. Stoughton, 340, 838.
Seaver v. Spink, 792.
Seckendorf, J., 567, 676.
Second Nat'l. Bank y. Hunt, 798.
Second Nat'l. Bank yv. State Nat’l.
Bank, 499, 518, 715.
Sedgwick v. Cascy, 489.
Sedgwick v. Fridenberg,
Sedgwick v. Lynch, 834.
Sedgwick v. Millward, 824.
Sedgewick v. Minck et al., 114, 405,
Scdgwick v. Place et al., 408, 412, 574,
835.
Sedgwick
Sedgwick

TBA.

834,

654, 679,

634.

618, 619,

303.
293, 296.

167.

v. Sheffield,
v. Wormser,

795, 809.
842, 843.
InpEX To Cases CITED.

Seibel v. Simeon, 117, 519.

Seiling v. Gunderman, 417.

Selby v. Gibson, 660.

Selaner v. Smith, 698.

Selfridge v. Gill, 602.

Selfridge v. Lithgow, 708.

Selig, M., 568.

Serra 6 Hijo v. Hoffman, 170, 629, 630.

Sessions v. Johnson, 430, 785.

Severy v. Bartlett, 687.

Seymour, J. W., 684, 642, 648, 644,
693, 694.

Seymour v. Browning, 721.

Seymour vy. Street, 716, 730.

Shackleford v. Collier, 14, 3858, 410.

Shafer & Hamilton, 193.

Shafer & Wesselhoefft, 123, 648.

Shaffer v. Fritchery & Thomas, 133,
150, 806. 817, 825.

Shaffer vy. McMaken, 362.

Shanahan & West, 745.

Sharman & Howell, 114.

Shaw v. Mitchell, 354.

Shawhan v. Wherritt, 427, 701, 789,
805, 806, 819.

Shay vy. Sessaman, 354.

Shea et al., 259, 265.

Shearman et al. v. Bingham et al.,
96, 107, 120, 142, 145, 174, 791.

Shearon v. Henderson, 370.

Shears vy. Solhinger, 8, 9, 97, 99.

Sheehan, Daniel, 267, 273, 276, 288,
289, 300, 308, 470, 601.

Sheffer, 209, 210.

Shelden, George H., 682.

Shellington v. Howland, 632, 633, 637.

Shelley v. Elliston, 831.

Shelton v. Pease, 470, 472, 701, 703,
731.

Shepard, Thomas §., 739, 748, 793.

Shepardson’s Appeal, 8, 101.

Sheppard, L., 328, 465, 526, 540,
674, TO4.

Sherburne, 309.

Srerman v. Hobart, 718.

Sherry, 302.

Sherwood, B., 194, 197, 204, 769,
773.

Sherwood v. Mitchell, 696.

Shields, 616.

Shields, D., 368, 391.

Shields v. Niagara Bank, 542:

Siipman, 6, 383.

Shippen’s Appeal, 355.

Shoemaker, Robert H., 655, 674,

Shomo v. Zeigler, 186.

Shouse, J. A. & H. W., 250, 251,
267, 272, 804.

Shryock v. Bashore, 99, 101, 102, 838.

Shuey, William H., 128, 157.

541,

770,

678.
266,

xlvii

Shulze v. Fleischer, 648.

Shuman v. Strauss, 693, 720.

Siturtleff v. Thompson, 710.

Sidener v. Klier, 791.

eam, J. W., 470, 655, 660, 665, 708,
41,

Sigsby v. Willis, 275, 455, 461, 477.

Silverman, Charles A., 5,°16, 94, 95,
238, 248, 249, 302.

Sime, John, & Co., 542.

Sine & Co., 174.

Sisumons, Solomon, 268, 269, 270.

Simpson, Marcus, 643.

Simpson v. Savings Bank, 100.

Sims, 828.

Sims v. Jacobson, 364.

Sims v. Ross, 420, 425.

Sinclair v. Smyth, 702.

Singer v. Sloan, 819.

Skelley, William H., 277, 308, 308.

Skoll, Jacob, 123, 283.

SJafter v. Sugar Refining Co., 819.

Sleek vy. Turner, 807.

Sloan, Franklin A., 646.

Sloan v. Lewis, 108, 277, 456.

Smalley v. Taylor, 423.

Smith, 6, 16, 656, 657.

Sinith et al., 114, 641, 690.

Smith, B. K., 601.

Smith, Charles, 498.

Smith, Charles A., 349.

Smith, Elijah E., 750.

Smith, Elmer C., 565.

Smith, E. M., 396.

Smith, G. W., 489.

Smith, John Harper, 130, 285.

Smith, John O., 1386, 137, 138, 197,
821, 324, 326, 521, 544.

Smith, John P. & James, 505, 507,
508, 597.

Smith, John W., 383, 384.

Smith, John W. A., 383.
Smith, Moses C., 755.
Smith, 8S. T., 244, 252, 253, 300, 302.
Smith, W. Fleming, 470.
Smith & Bickford, 655, 664, 674, 677,
678.
Smith v.
Smith y.
Smith v.
Smith v.
Smith v.
Smith vy.
Smith v.
Smith v.
Smith v.
Smith v.
428.
Smith v. Krauskopf, 650.

, 336, 339.

Auerbach, 155.

Babcock, 706, 722.
Brinckerhoff, 222, 491.
Brown, 368.

Crawford, 489.

Dispatch Co., 631, 632.
Ely, 406, 510, 674, 799, 833.
Engle, 363, 623, 624, 625.
Gordon, 360, 3861, 405, 422,

 
xlviii

Sniith v. Lawton, 364.

Smith v. Little, 157, 800.

Smith v. Manufacturers’ Nat’l. Bank,
758.

Smith v. Mason, 133, 136, 147, 171,
181, 183.

Smith v. McLean, 406, 789, 816, 843.

Smith v. Ramsay, 730.

Smith v. Scholtz, 396, 400, 401.

Smith et al. v. Teutonia Insurance Co.,
11, 251, 253.

Smoot v. Morehouse, 339.

Snedaker, J. M., 112, 113, 534.

Snedaker, M. J., 512, 520.

Snew, George W., 134, 188, 355.

Société D’Espargnes v. McHenry, 524.

Soldiers’ Business Messenger & Dis-
patch Co., 509.

Solis, Andrew J., 556, 558, 645.

Soiocmon, 669, 670, 671, 672.

Sclomon, Joseph, 388.

Scn, Nathan A., 572, 678.

Senneborn v. Stewart, 312.

Sorden v. Gatewood, 525, 725,

Southern v. Fisher, 104, 630.

Southern Express Co. v. Connor, 421.

Southern Minnesota R. R. Co., 238,
459, 757.

South Side R. R. Co., 182, 148.

Spades, Michael H., 617, 618, 619, 620.

Spalding v. Dixon, 472.

Spalding v. New York, 703.

Sperhawk v. Broome, 704.

Sperhawk vy. Cochran, 354.

Sparhawk v. Drexel, 352, 486, 835.

Sparhawk y. Richards, 799.

Spuulding v. Dixon, 836.

Spaulding v. McGovern, 140, 154, 156.

Speake v. Kinard, 446.

Spencer, 609.

Speyer, F. & A., 198.

Spicer et al. v. Ward et al., 253, 305.

Spillman, Benjamin, 617, 620.

Spilman y. Johnson, 448, 493, 525.

Spooner v. Russell, 716.

Springer v. Vanderpoel, 421,

Staff, John J., 194.

Stafford v. Grout, 542.

Stenley vy. Sutherland, 362, 452, 788,
790.

Stansell, 273, 535.

Stansfield, 590, 689.

Stoplin, 262.

Stark v. Stinson, 718.

Starkweather y. Cleveland Ins.
137, 349.

State Bank v. Wilborn, 6, 95,

State v. Bethune, 657, G59.

State v. Ferris, 337.

Co.,

InpDEX To CasESs CITED.

State v. Pike, 564.

State v. Rollins, 187, 641.

State of Louisiana v. Recorder, 513.

State of North Carolina y. Trustees of
University, 139, 147.

State Savings Association v. Kellogg,
760.

Steadman, Enoch, 111, 661.

Steadman y. Jones, 412.

Steadman v. Taylor, 400.

Stebbins vy. Sherman, 719.

Steel, Roscoe R., 373.

Steele v. Moody, 374, 448, 627, 630.

Steele v. Towne, 417.

Steelman v. Mattix, 99, 100.

Steene v. Aylesworth, 346, 602, 659.

Steevens v. Earles, 343, 602.

Stein, 543, 782.

Steiner, 599.

Steinman, Louis E., 278.

Steinmetz vy. Ainslie, 705.

Stemmons y. Burford, 525.

Stephens, E. R., 582, 545, 551, 552.

Stephens v. Brown, 730.

Stephens v. Ely, 723.

Stepp v. Stahl, 101.

Stern, 310.

Stern v. Nussbaum, 701, 717.

Stetson, Charles A., 318.

Stevens, Ezra M., 322, 468, 549.

Stevens, R., 259, 260, 696, 740

Stevens, W. S., 366,°377, 378, 385.

Stevens v. Earles, 343, 444, 602.

Stevens v. Hauser, 437, 440, 444, 448.

Stevens v. Mechanics’ Savings Bank,
139, 338.

Stevens v. Palmer, 444, 451.

Stevenson v. Jackson, 743.

Stevenson v. Mclaren, 287.

Stewart, R. R., 305.

Stewart, Taylor R., 514, 521.

Stewart v. Anderson, 715, 716.

Stewart v. Colwell, 708.

Stewart v. Emerson, 692,

Stewart v. Green, 712, 721.

Stewart v. Hargrove, 341, 508, 656,
711, 731.

Stewart v. Isidor et al., 404, 405, 534.

Stewart v. Nat. Union Bank, 342,

Stewart & Newton, 386.

Stewart v. Reckless, 716,

Stewart v. Sonneborn, 305.

Stewart v. Warden, 370.

St. Helens’ Mill Co., 510.

ea vy. Wilt, 151, 163, 171, 181,

Stiles v. Lay, 215, 702,

Stillwell, J. R., 323.

Stillw ell, William, 604.

Stilwell vy. Coope, 718, 719.

693.

717.

725.
INDEX TO CASES CITED.

Stillwell vy. Walker, 104.

Stunson v. McMurray, 638, 639.

Stobaugh v. Mills, 884, 837.

Stockwell et al., 831.

Stockwell v. Silloway, 8, 100, 369, 648,
703.

Stoddard v. Locke, 369.

Stokes, Edward S., 332, 654.

Stokes v. Mason, 691, 693.

Stokes v. State, 516, 598.

Stoll vy. Wilson, 722, 723, 724.

Stone v. Miller, 475.

Stone v. National Bank, 687, 688.

Storer v. Haynes, 831.

Storm v. Davenport, 422.

Storm v. Waddell, 405, 495, 498.

Storms & Co., 467.

Story v. Nowlan, 248.

Stetesbury v. Cadwallader, 151.

Stow v. Parks, 102, 723, 725.

Stowe, 822.

Stowers, J. R., et al., 739.

Strachan, 456, 457, 686.

Strachan, William S., 539.

Strader vy. Lloyd, 726.

Strain v. Gourdin, 164, 792, 804, 825.

Stranahan v. Gregory & Co., 817.

Strauss, Bernard, 185, 526, 530.

Streeper v. McIXee, 495.

Street v. Dawson, 18, 149, 162, 786,
824.

Streeter v. Sumner, 360, 361.

Strong v. Clawson, 447, 701.

Stuart v. Aumueller et al., 293.

Stuart v. Hines, 111, 217, 298, 435.

Stubbs, 837.

Sturgeon, Edward T., 204.

Sturgis v. Crowninshield, 5, 9, 10, 24,
94. 96, 97.

Sturgis, 649.

Sturgis v. Colby, 589.

Stuyvesant Bank, 326, 328, 497, 565,
567, 599, C05.

Sullivan v. Bridge, 416.

Sullivan v. Hicskill, 100, 838.

Summers, C. M., 390.

Sutherland, Israel, 344.

Sutherland, Robert, 245, 246, 248, 298,
299, 301, 469.

Sutherland, Robert A., 245, 676, 677,
679, 685.

Sutherland v. Davis, 420.

Sutherland v. Kellogg et al.,
177, 178.

Sutherland v. Lake Soest Canal
Co., 128, 152, 514.

Sutro v. Hoile, 345.

Suydam v. Walker, 657, 660.

Swain v. Barber, 477.

174, 176,

xlix

Swan v. Littlefield, 673.

Swearinger & Lamar, 374.

Sweatt v. Boston, Hartford & Erie R.
R. Co., 11, 174, 177, 206, 757, 758.

Sweet et al., 582.

Swepson v. Rouse, 419, 421, 431.

Switzer v. Zeller, 423.

Swope et al. v. Arnold, Assignee, 508.

ee W., 259, 260, 261, 262, .

Symonds v. Barnes, 701.

Talbert v. Melton, 525.

Talbot, John, 774, 776.

Talcott, 479.

Talcott v. Dudley, 352, 745, 746.
Talcott v. Goodwin, 419. ,
Tallman, Darus, 564, G76.

Tanner, Edward P., 560, 561.
Tappan v. Norvell, 726.

Taylor, 599.

Taylor, Samuel. T., 113, 642, 6Xy, 695.
Tevlor, William, 389.

Taylor, William N., & Co., 268.
Tavlor v. Bonnett, 116.

Taylor v. Nixon, 718.

Taylor v. Rasch, 151, 461, 758.
Yaylor v. Renn, 692, 721.
Yaylor v. Whitthorn, 798.
Tehbets, John C., 218, 654,
Tebbetts v. Torr, 356.
Temple, 735, 828.

Ten Eyck & Choate, 482.
Tenney et al. v. Collins, 732.
Venth Nat. Bank vy. Sanger, 126.
Tenth Nat'l. Bank v. Warren, 782.
Terry, Lyman, 286, 325.

Terry & Cleaver, 796, 807.
Tertelling, 323, 391.

Tesson, BH. P. & E. M., 744.
Thames v. Miller, 111, 129, i174.
Thiell, W. H., 880, 381, 392. 393.
Thomas, James 8., 308.

Thomas, Veeder G., 639.

Thomas & Sivyer, 494, 737.
Thomas v. Cruttenden, 448.
Thomas v. Hunter, 731.

Thomas v. Jones, 702.

Thomas v. Shaw, 711, 712.
Thompson, 683.

'hompson, James, 387, 382, 662.
Thompson, John, 676.

Thompson v. Alger, 6, 95.
Thompson v. Hewitt, 709, 711.
Thompson & McClallen, 257, 261.
Thompson v. Moses. 114.
Thompson v. Spittle, 754.
Thompson v. Wiley, 726.

Thoms y. Thoms, 704.

655. 675.
l InpDEX TO CasEs CITED.

Thornburgh v. Madren, 727.

Thornhill et al. v. Bank of Louisiana
et al., 7, 8, 99, 176, 177, 178, 183,
235, 764.

Thornhill v. Link, 238, 280.

Thornton, Alvin G., 382.

Thornton v. Hogan, 317, 702.

Thorp, Stillman, 442.

Thrall vy. Crampton, 429.

Thrasher vy. Bentley, 835.

Thurmond vy. Andrews, 404, 702.

Tichenor v. Allen, 440, 523.

Viernan v. Woodruff, 698.

Tiffany vy. Boatman’s Savings Inst’n,
151, 157, 353, 801, 825, 834, 839,
841.

Tiffany v. Lucas, 790, 8384, 839, 840,
843.

Tiffany v. Morrison, 782, 783.

Tifft, 124, 608, 609, 610, 631.

Tills & May, 357, 508, 509.

Timothy v. Reed, 679.

Tinker v. Van Dyke, 804, 819.

Tinkum v. O’Neale, 635.

Tivoli Brewing Co., 264.

Tobias v. Rogers, 477, 707.

Tobin v. Trump, 8, 101.

Todd v. Barton, 639.

Tompkins vy. Bennett, 702, 726, 731.

Tonkin & Trewartha, 17, 238, 280,
551, 786.

Tonne, D. H., 380, 386.

Toof et al. v. Martin, 14, 18, 786, 788,
794, 809, 817, 819.

Tvoker, Samuel B., 624.

Toombs v. Palmer, 447.

Tower, Julius, 278.

Towle v. Davenport, 399, 630.

Towle v. Robinson, 699.

Town et al., 465.

Town, R. M. & S. R., 602.

Townsend, William E., 651.

Townsend v. Leonard, 128.

Tracy, Wm. W., et al., 654.

Traders’ Nat’l. Bank v. Campbell, 152
154, 245, 420, 794, 796, 806, 814,
824, ,

Trafton, 619.

Traphagen, 675.

Trask, Benjamin J. H., 566.

Treadwell v. Holloway, 694.

Treadwell v. Mardin, 690.

Treat, 607,

Tremont Nail Co., 827.

Tremont Nat. Bk.. Ex parte, 820.

Trim et al., 479, 480.

Trimble vy. Williamson, 341, 505.

Trinountain, The, 584.

Triplett v. Hanley, 596, 597, S41.

Trowbridge, 606, 607.

Tioy Woolen Co., 165, 167, 175, 445,
459, 490.

Thuitt v. Truitt, 715.

Tubbs v. Williams, 476.

Tucker v. Daly, 353.

Tucker et al. v. Opelousas & Great
Western R. R. Co., 15, 244, 260,
57.

Tucker v. Oxley, 23, 105, 484, 486,
488, 601, 750.

Tuesley v. Robinson, 377.

Tulley, Riley, 582.

Tunno v. Bethune, 476, 489.

Turnbull Jr., v. Payson, 200, 399.

‘'urner v. Esselman, 477.

Turner v. Gatewood, 634, 639.

Turner v. Shenkmeyer, 339.

Turner v. The Skylark, 114.

Tuttle v. Truax, 813, 822.

Tyler, 669, 670.

T'yler, Assignee, v. Brock, 784.

Txrell, Daniel, 678.

Udall v. District, 418.

Ulrich, Isaac, et al., 136, 187, 577.

Ulrich, Isaac, 127, 131, 184.

Underwood v. Eastman, 718, 719.

Ungewitter v. Von Sachs et al., 348,
458, 817.

Union Canal Co. v. Woodside, 487,
438.

Union Pacific R. R. Co., 248.

Upton v. Burnham, 761, 762, 763.

Upton v. Englehart, 762.

Upton v. Hansbrough, 159, 357, 760,
761, 762.

.Uran v. Houdlette, 710.

Usher vy.
U.S. v.
U. 8. v. Black,
4 . Clark,

Pease, 289.

Bayer, 850, 851.

564, 848.

194, 222, 848, 849,

mM

AntAdgAAAAAAAAn AAAS SY

oO

. Davis, 703.

. Deming, 221.

. Dobbins, 641,

. Fisher, 598.

. Frank, 849.
Geary, 849.

. Herron, 600, 703.
King, 708.

. Latorre, 848.

. Mackoy, 116.

. Nikols, 221.

. Passmore, 25.

. Penn, 849, 850.

. Prescott, 564, 848,
. Pusey, 851.

- Rob Roy, 471, 692, 708, 706.
. Smith, 847, 850.

. Thomas, 849, 851.

dcidedcddccdeddddda ¢

ALLLLLALARNRNNDANND

<a
Inpex to Cases CITED. li

U. S. v. Throckmorton, 471, 703.
U. S. Trust Co. v. Sedgwick, 401.

Vairin v. Edmonson, +24, 425.

Valentine, William H., 530.

Valentine v. Holloman, 221, 428.

Valk, Abm., et al., 642.

Valley Nat'l. Bk. v. Meyers, 588.

Valliquette, 258.

Van Alstyne vy. Crare, 280.

Van Anken, Aaron, 620, 622.

Vanderheyden v. Mallory, 458, 704.

Vanderhood v. Bank, 15.

Van Dyke vy. Tinker, 149, 281.

Van Hein v. Elkus, 101.

Van Kleeck v. Thurber, 245, 304.

Van Nostrand y. Carr, 7, 97, 98.

Van Reimsdyke v. Kane ex., 25.

Var Riper, G. & J. J., 683.

Van Tuyl, Andrew P., 558, 563, 568,
687.

Venuxem vy. Hazlehursts, 96.

Varnum vy. Wheeler, 723.

Versilius v. Versilius, 152, 154, 155.

Vetterlein, Bernhard T., 556, 559.

Vetterlein, Theodore H., 468, 469, 605,
752.

Vickery, Jonathan J., 468.

Vidal v. Ocean Ins. Co., 111.

Viele v. Blanchard, 723.

Viele v. Ogilvie, 718.

Vila, James, 454.

Vinton, 683.

Vieseca v. Weed, 728.

Vogel, Henry, 110, 186, 453, 520, 557,
563, 564.

Vogle v. Lathrop, 156, 806, 807, 808,
818.

Vogel & Reynolds, 210.

Vogler, E. A., 382, 384, 388.

Voight v. Lewis, 433.

Von Sachs v. Kretz, 488, 637.

Voorhees v. Bonesteel, 154, 410.

Voorhees v. Frisbie, 140.

Vorbeck, 646.

Vyrd v. Harrold et al., 122.

Waddell, W. C. H., 110, 336, 495, 498.

Wadsworth v. Tyler, 14, 17, 148, 149,
233, 786, 788, 816, 839.

Wager v. Hall, 553, 788, 789, 795, 796,
797, 809, 810, 812, 815, 819.

Waggoner, Samuel D., 678.

Waite & Crocker, 248, 266, 278, 279,
298, 595, 597, 739.

Waite, W. H., et al., 15, 237, 250.

Waitzfelder et al., 402.

Wakeman vy. Hoyt, 256, 820.

Walbridge vy. Harroon, 719.

Walbrun v. Babbitt, 164, 815, 834.

Wald & Achle, 619.

Wales v. Lyon, 701, 731.

Walker, in re, 12, 18, 229, 395.

Walker, Andrew J., 222.

Walker, William A., 6438.

Walker, William S., 215.

Walker v. Barton, 479, 480, 482, 584.

Walker vy. Seigel, 350.

Walker v. Towner, 630.

Wallace, 110, 118, 131, 186, 188, 661.

Wallace v. Conrad, 535.

Wallace & Newton, 742.

Waller v. Edwards, 7138.

Walshe, Blaney T., 621, 623.

Walther, Pius, et al., 530, 587.

Wulton, F. E., et al., 328, 482,
541, 544, 549, 551, 584, 788,

Walton, J. J. & C. W., 281.

Ward, George S., 366, 367, 585,

Ward v. Barber, 709.

Ward v. Jenkins, 189. -

Wardwell v. Foster, 719.

Warner, J. H., et al., 275.

Warner, S. P., 664, 666, 795, 797.

Warner v. Cronkhite, 692.

Warren, Henry, 745.

Warren v. Delaware, L. & West. R.
R. Co., 817, 819.

Warren y. Garber, 819.

Warren v. Homestead, 444, 447, 451.

Warren v. Miller, 489.

Warren Savings Bank v. Palmer, 267.

Warren v. Syme, 448.

Woerren vy. Tenth National Bank, 130,
151, 175, 790, 794, 795, 817, 818.

Warshing, J. & S., 582.

Wartmough v. Gilliams, 475.

Washburn, 584.

Washington Marine Ins. Co., 235, 247,
292. :

Waterman v. Robinson, 187.

Watrous, Martin, et al., 539.

Watkins vy. Pinkney, 116, 498.

Watson, 12, 214, 266.

Watson, John, 390.

Watson v. Citizens’
110, 127, 764, 765.

Watson v. Poague, 821.

Watson & Reynolds, 646.

Watson vy. Taylor, 807.

Watts, Henry M., 203, 204, 224.

Waurer v. Frantz, 19.

Way v. Howe, 730.

Way v. Sperry, 719.

Weakley v. Miller, 140, 436.

Weamer, David, 128.

Weaver, Christopher, 248, 255, 260.

Webb, 727.

530,
815.

596.

Savings Bank,
lik

Webb, J. C., & Co., 479, 480, 482.

Webb v. Sachs, 788, 793, 794, 798,
806, 809, 819.

Webb & Taylor, 683.

Webb, Wm. D., & Co., 744.

Weber Furniture Co., 616, 619, 621.

Webster v. Upton, 1760, 762, 763.

Webster v. Woolbridge, 508.

Weeks, Charles R., 507.

Weeks, George S., 467, 501.

Weikert et al., 257, 263.

Weiner v. Farnum, 835.

Weisenfeld v. Mispelborn, 111.

Weitzel, 235.

Welch, William, 382, 509.

Weld vy. O’Brien, 116.

Welles, 610.

Wells et al., Ex parte H. B. Claflin
& Co., 15, 289, 245, 252, 253, 257,
301.

Wells, J. L., 248.

Wells v. Brackett, 108, 186.

Wells v. Brander, 362, 365.

Wells v. Dalrymple, 179.

Wells v. Lamprey, 648.

Wente v. Young, 105.

West v. Creditors, 98.

West Phila. Bk. v. Dickson, 784.

Westbrook Mfg. Co. v. Grant, 363.

Westcott, Charles S8., 259, 261, 262.

Westenberger v. Wheaton, 712.

Western Ins. Co., 349.

Western S. & T. Co., 209, 267, 270,
274, 280, 289. ;

Wetmore & Bro. 124.

Weyhausen, Wm., et al., 296.

Wheeler & Lang, 768, 828, 831.

Wheeler v. Reading, 114.

Wheelock y. Lee, 354, 399, 415.

Whetmore, 679.

Whipple, 622.

Whipple, R. M., 114.

Whipps vy. Hllis, 821.

Whitaker v. Chapman, 694.

White et al., 647, 782.

White, William F., 671, 672.

White v. Cushing, 719.

White v. Griffing, 768.

White v. How, 722.

White v. Jones, 156, 483.

White & May, 444.

White vy. Platt, 695.

White v. Raftery, 233, 809, 824.

White v. Roperty, 16.

Whitehead, John B., 377, 389, 595.

Whitehouse, C. H., 648, 692.

Whithed y. Pillsbury, 363, 872, 412,
496.

Whiting, Chester M., 634.

Whitman v. Butler, 1138, 180, 522.

InpEX TO CasES CITED.

Whitney, 629.

Whitney et al., 673.

Whitney v. Crafts, 700.

Whitney v. Lodge, 111.

Whitridge v. Taylor, 524.

Whittaker, 532.

Whyte, William, 539.

Wickham y. Valle, 354.

Wicks & Co. v. Perkins, 518, 524.

Wiener, 537.

Wierlaski, Jacob, 212.

Wiggers, 643, 692.

Wilbur, Jeremiah G., 114, 129, 181.

Wilbur v. Wilson, 370.

Wilbur v. Stockholders, 399, 400, 485,
486.

Wild, 467.

Wiley, William H., 501, 751.

Wilkins v. Davis, 354.

Wilkins v. Warren, 709.

Wilkinson’s Appeal, 798, 806.

Wilkinson, Joseph L., 686.

Wilkinson vy. Dobbie, 155, 158.

Wilkinson v. Wait, 379, 388.

Williams, Daniel, 595.

Williams, David B., 362, 366, 468,
585, 605.

Williams, Elias G., 298, 305.

Williams, Henry B., 748.

Williams, Ziba, 380, 381, 392.

Williams v. Atkinson, 367, 698.

Williams v. Butcher, 701.

Williams & Co., 236, 238, 242, 254,
266, 277, 738, 787.

Williams v. Harkins, 472, 703.

Williams v. Merritt, 373.

Williams & McPheeters, 280, 642.

Williams v. Miller, 417.

Williams vy. Robbins, 716.

Williams v. Vermeule, 447.

Williams v. Whiting, 634.

Williamson yv. Colcord, 351, 352.

Williamson v.* Dickens, 695, 705, 706.

Willis v. Carpenter, 165, 546.

Wills v. Claflin, 187.

Wilmott, Justus B., 646.

Wilson, George, 656.

Wilson, Guy, 261, 262.

Wilson, W. F., 682.

Wilson v. Brinkman et al., 130, 150,
798, 806, 824.

Wilson v. Capuro, 632.

Wilson v. City Bank of St. Paul, 234,
241, 789, 794, 798, 805, 806, 817.

Wilson & Greig, 609, 611, 612.

Wilson v. Harper, 187.

Wilson v. Stoddard, 138, 813.

Wilson v. Turpin, 516.

Wilt v. Stickney, 437, 440.

Winkens, Daniel, 742.
InpEx To Casrs Crrep.

Winn, Elijah E., 507, 522, 532.

Winship, Edwin K., 562.

Winship v. Phillips, 715.

Winslow y. Bliss, 490, 802.

Winslow v. Clark, 524, 525, 787, 803,
825.

Winsor, 648, 659.

Winsor v. Kendall, 241, 344, 803, 814.

Winsor v. McLellan, 352, 359.

Winter (In re Barrow, re Loeb, Simon
& Co., re Winter), 110.

Winters vy. Claitor, 395, 828.

Winter v. Iowa M. & North Pacific
R. R. Co., 250, 255, 258, 758.

Winternitz, David, 8, 101.

Winthrop, Greville T., 642.

Wise v. Decker, 421.

Wiswall vy. Campbell, 180. :

Withrow v. Fowler, 748, 793.

Witkowski, 558.

Witt v. Hereth, 806.

Wolcott v. Hodge, 695.

Wolfe v. Bate, 706.

Wood, Edward T., 224.

Wood, J. P., 799.

Wood v. Bailey, 166.

Wood v. Boyd, 351.

Wood v. Grundy, 186.

Wood v. Hazen, 682.

Wood M. & R. Co. v. Brooke, 133,
346, 433.

Wood v. Owings, 25, 792.

Woodall v. Holliday, 421.

Woodard v. Herbert, 471, 475.

Woodbury v. Perkins, 709.

Woodford v. Chamberlain, 272.

Woodin v. Frazee, 349.

Woods, Thomas, 246, 256, 303.

Woods v. Buckwell, 173.

Woods v. Forsyth, 146.

Woods v. Oakman, 344.

Woodward, George & Julius C., 565.

Woodward, Wm. S., 197, 565.

Woolfolk v. Gunn, 116.

Woolfolk v. Murray, 389.

Woolfolk vy. Plant, 698.

Woolford, Staats D., 568.

Woolsey vy. Cade, 694.

litt

Woolums, B. W. & J. H., 645.

Wooten v. Clark, 405.

Work, MeCough & Co., 174, 755.

World Company v. Brooks, 636.

Worthington, 134, 504.

Wright, Charles R., et al., 654.

Wright, George C., 387.

Wright, John S., 14, 219, 466, 564,

603, 631, 700.
Wright, Joseph B., 247, 788, 805, 807,
809, 818.

Wright, J. W., 204.

Wright v. Filley, 245.

Wright v. Foster, 488.

Wright v. Johnson, 149, 335.

Wright v. Nat’l. Bk., 399.

Wright vy. Watkins, 108, 701.

Wronkow & Hogan, 609, 611, 612.

Wrisley, 398.

Wyatt, W., 655, 656.

Wylie, William H., 335, 378, 383, 384.

Wylie v. Breck, 479, 482.

Wynne, Charles H., 18, 118, 358, 403,
429, 479, 482, 497, 511, 786, 791, 792.

Yarborough v. Wood, 491.

Yates v. Hollingsworth, 716, 718.

Yeatman v. N. O. Sav. Bk., 402, 480.

Yeaton, R. F., 481, 482.

York & Hoover, 141, 162, 165, 172,
176, 206, 510, 511, 522.

Young, B. F. & J. M., 386, 390.

Young, Levi H., 654.

Young, W. C., 390.

Young v. Ridenbaugh, 685.

Yoxtheimer y, Keyser, 717.

Zahm v. Fry, 121, 152, 552, 807, 815,
822.

Zantzinger v. Ribble, 836, 419, 427.
Zarega, Augustus, 713.

Zeiber v. Hill, 366, 367.

Zeigler v. Shomo, 336, 485, 517.
Ziegenfuss, John, 97, 336.

Zimmer v. Schleehauf, 470, 636.
Zinn et al., 605, 606.

Zollar v. Janvrin, 368, 722.

Zug & Co., 160, 543, 737.
INTRODUCTION.

BANKRUPTCY LAWS.

I. Bankruptcy in the United States.— Since the adoption of the
Constitution of the United States, providing that “Congress shall have
power to establish uniform laws on the subject of bankruptcies”, and-
prior to the recent act of 1898, establishing such system, three other
enactments on the subject have been passed by Congress; the first,
during the administration of John Adams, on April 4, 1800, repealed
December 19, 1803; the second, during the administration of John
Quincy Adams, on August 19, 1841, repealed March 3, 1843, by the
same Congress which enacted it; and the third, during the adminis-
tration of Andrew Johnson, on March 2, 1867, (and amendments
thereof) repealed by the act of June 7, 1878, which by its terms did not
take effect until September 1, 1878.

While in force, the law of 1867 was amended by the acts of

July 27, 1868 (15 Stat. 227);

June 30, 1870 (16 Stat. 173);

July 14, 1870 (16 Stat. 276);

June 8, 1872 (17 Stat. 334), being declaratory of the true intent
and meaning of section 2 of the law of 1867;

February 13, 1873 (17 Stat. 436);

March 3, 1873 (17 Stat. 577), being also declaratory in its pur-
pose;

And (the most important) June 22, 1874;

Act February 18, 1875 (18 Stat. 320);

)

The act of July 26, 1876 (19 Stat.
February 27, 1877 (19 Stat. 252).

Included in the repealing act which took effect September 1, 1878,
were the acts of June 22, 1874, and the seven others amendatory of
the law of March 2, 1867; thus erasing from the books all bankruptcy
statutes of federal origin. Since this time, until the enactment of
the late law, state laws then existing but until then suspended, together
with those afterward enacted, have prescribed the rights of, and
practice concerning, insolvents.

The present act took effect July 1, 1898, and marks a new period in
the history of this interesting subject, interesting alike to the public,

 
2 INTRODUCTION.

the creditor and the bankrupt; to which latter class the past seventeen
years of new business methods and speculative tendencies have con-
signed many honest men, whose return to their accustomed avocations
will prove beneficent not alone to themselves, but to their former
creditors and the country at large.

This work will present the law as it now is, quoting freely from the
law of 1867 and the decisions of courts of bankruptcy, construing its
provisions so far as they tend to elucidate the act of 1898.

Il. Bankruptcy in England.— Numerous early statutes were passed
by the Parliament of England relating to bankruptcy, among the most
important being the act ,of 6 George IV, chapter 16, of date
the 2nd of May, 1825, which consolidated the law into one act,
and repealed the following statutes:—

34 and 35 Henry VIII, chapter 4;
13 Elizabeth, chapter 7;
1 James I, chapter 15;
21 James I, chapter 19;
13 and 14 Charles II, chapter 24;
10 Anne, chapter 15;
% George I, chapter 31;
5 George II, chapter 30;
19 George II, chapter 32;
24 George II, chapter 57;
4 George III, chapter 33;
36 George ITI, chapter 90;
37 George III, chapter 124;
45 George III, chapter 124;
46 George III, chapter 135;
56 George III, chapter 137;
1 George IV, chapter 115;
3 George IV, chapter 74;
3 George IV, chapter 81;
5 George IV, chapter 98.

The act of 6 George IV, chapter 16, remained in force until modi-
fied by statutes 1 and 2 William IV, chapter 56; and until 5 and 6
Victoria repealed all laws inconsistent with this later act.

By statutes 1 and 2 William IV, chapter 56, and letters-patent pur-
suant thereto, a Court of Bankruptcy was established, consisting at
first of a chief judge and three associates, and six commissioners,
INTRODUCTION. 3

though the number of judges was afterward reduced by statutes 3
and 4 William IV, chapter 47, section 7; and 5 and 6 William IV,
chapter 29, section 21.

Previous to the establishment of this Court of Bankruptcy, the
Bankruptcy Law in England was administered by commissioners ap-
pointed by the Lord Chancellor, under the great seal, as provided by
13 Elizabeth, chapter 7.

In 1842 there were established seven district courts under 5 and 6
Victoria, chapter 122, located, by an order in council, at Manchester,
Leeds, Liverpool, Birmingham, Bristol, Exeter and Newcastle. By
subsequent acts these were reduced; and finally, by the bankruptcy act
of 1869, those remaining were abolished, and the business assigned in
part to the registrars of each court, and the residue to the London
Bankruptcy Court or a county court.

Act of March 2, 1867. — Just previous to this period in the Eng-
lish law, our act of March 2, 1867, was passed; and a comparison of
the two statutes discovers many provisions of a similar nature.

The scope of this work will not permit even a hurried presentation
of the English system; but a recital of the act of 1867, as amended, will
become necessary, that the adjudications of our bankruptcy courts may
be collated; thereby anticipating the probable construction which will
be placed by judicial opinion upon like provisions of the act of 1898.

Source of Bankruptcy Laws. — This hasty retrospect of the laws of
bankruptcy discloses their source in the early English statutes, and a
series of parliamentary acts, until that of 6 George IV gave form to a
more thorough revision and repeal of all preceding laws.

In the United States, originating with the act of 1800, as previously
stated, four laws have been passed, the enforcement and construction
of the first three and the existence of the last creating the history of
American jurisprudence on this important branch of the law pertain-
ing to insolvents.

Whilst all laws of bankruptcy have been of statutory origin, there
have been evolved general rules to which brief refetence may be profit-
ably made before turning to the act of 1898 for the purpose of its
detailed exposition.

The Old Law.—A bankrupt, by the old law, is defined to be a trader,
who secretes himself, or does certain other acts tending to defraud
4 INTRODUCTION.

his creditors, or demonstrating, at least, an inability to pay his debts.
The relief afforded and penalties denounced, applied to traders; and to
this class alone were proceedings in bankruptcy available in England at
the date of the adoption of the Constitution of the United States,—
the law holding it to be at that time an unjustifiable practice for any
person other than a trader to encumber himself with debts to any con-
siderable amount.

Creditors enjoyed the right of forcing the remedy upon the debtor,
to whom no privilege was given of originating the procedure, in
England, until 1842, when for the first time it arose by statute whereby
the debtor was permitted to become a voluntary bankrupt.

Guided in our jurisprudence, at the adoption of the Constitution
in 1789, by the law of England, it has been contended that the power
conferred upon Congress to establish uniform laws on this subject
was limited to an exercise of the power which gave relief to traders
only, this being the class in England then alone embraced within the
bankruptcy laws. The Supreme Court of the United States declined
to so decide, and it is now well settled that such laws may embrace
all classes of debtors, and grant them the privileges of voluntary, or
inflict the coercion of involuntary, bankruptcy.

The restriction to persons in trade continued in the law of 1841,
since therein the distinction was maintained by confining its pro-
visions to “all ‘persons being merchants, or using the trade of mer-
chandise, all retailers of merchandise, and all bankers, factors, brokers,
underwriters, or marine insurers, owing debts,” these being dependent
largely upon their credit for the conduct of their affairs; whereas pro-
fessional men, farmers and other laborers, need not incur indebted-
ness and risk in the prosecution of their business.

The Modern Law.— A bankrupt, within the modern law, may be
any debtor resident within the United States— and by the law of
1898 (§ 55a) any foreign debtor — who, owing the amount and fol-
lowing the forms prescribed, will or may be compelled to surrender to:
his creditors all his property except that exempt from execution. The
old notion that traders only should suffer the penalties and enjoy
the relief afforded by the bankruptcy law has been discarded for this
more liberal doctrine.

Congress Has Supreme Jurisdiction— The Constitution of the
United States empowers Congress “to establish uniform laws on the
INTRODUCTION. 5

subject of bankruptcies.” This gives jurisdiction over the entire sub-
ject, and does not confine Congress to the re-enactment of the laws
in force in England in 1789, when the Constitution of the United
States was adopted, but confers full control, with authority to devise
from time to time systems best suited to the needs of the country.?

Within the limit of uniformity, Congress is independent of restraint,
and may act freely, enjoying the power to prescribe terms upon which
the insolvent may secure his release from the unpaid balance of his
indebtedness.

The modern practice in bankruptcies may ‘be comprised within the
terms — Distribution of the assets and discharge of the person of the
insolvent debtor; both being peculiarly within the legislative discre-
tion of Congress under the Constitution.

The law must be uniform throughout the United States, and must
prescribe the same rule in all the districts of the United States, subject
to a liberal construction of the term.

j
Bankruptcy Law Must be Uniform— The only restriction im-

posed upon Congress by the Constitution being that the law passed
on the subject of bankruptcies shall be uniform, the system may pro-
vide for voluntary or involuntary bankruptcy, and apply to traders
only or to all persons, to corporations as well as natural persons; fix
the amount of the debtor’s liability to which it will give relief, or
leave the amount unlimited; designate the courts to which its execu-
tion ‘will be committed; prescribe the means of administering it, ‘and
the modes of procedure, and define the property of the debtor which
shall be exempt from the demands of the creditor; avoid assignments

1See constitutional provision, art.
I, § 8 (4).

Discretion of Congress to prescribe
the manner of distributing the assets
and discharge of the person of the
insolvent debtor. In re Silverman, 4
B. R. 178; id. 18 I. R. R. 52; id.
2 Abb. (U. S.) 248; In re Reynolds,
8 R. I. 485.

In 1789, when the United States
Constitution was adopted — includ-
ing this bankruptcy clause — traders
alone could become bankrupts, and
they not voluntary. Yet this clause
has since the first act of 1800 per-

mitted voluntary bankruptcy to all
persons; and so it is construed now.
Sturgis v. Crowninshield, 4 Wheat.
122; s. c. 2 Kent, 390; s. c. 2 Story .
Const. 1111.

For the law of 1800 and its repeal,
see 1 Story Laws of U. 8. 782; 2
Story Laws of U. 8. 909; 1 Statem.
Man. 135, 242.

For the law of 1841 and its repeal,
see 5 Story Laws of U. S. 2829,
2978; 2 Statem. Man. 1407, 1422.

For the law of 1867, see Rev.
Stat. U. 8. 969, § 4972; 14 U.S. Stat.
517.
6 INTRODUCTION.

under state laws, and legislate upon any right necessarily incident to
the subject.

+ The only restriction is that the law must be uniform throughout
the United States. So that if the law prescribes one rule for one
district and a different rule for other districts, such a law is not
uniform.”

| Some difficulty ‘has arisen in construing the provision usually found
in Bankruptcy Laws exempting from its operation all property not
subject to forced sale under the state laws. These exemptions are
not the same in every state; and by the adoption of this mode of pro-
viding for the family of the insolvent it is seen a lack of uniformity
is introduced in the federal law.?

| Such provisions, however, are held not to conflict with the con-
stitutional power vested in Congress to establish only uniform laws
upon the subject of bankruptcies.*

r 1Implications are favored extend-
ing the power of Congress over
bankruptcy. Russell v. Cheatham,
16 Miss. 703.

May be voluntary or involuntary.
Kunsler v. Kohaus, 5 Hill (N. Y.)
317; Lalor v. Wattles, 8 Ill. 255;
Morse v. Hovey, 1 Sandf. Ch. (N. Y.)
187; Thompson v, Alger, 53 .Mass.
482; State Bank v. Wilborn, 6 Ark.
35; Keene v. Mould, 16 Ohio, 12;
Rowan y. Holcomb, 16 Ohio, 463;
Hastings v. Fowler, 2 Ind. 216;
Reed v. Vaughan, 15 Mo. 137.

Procedure prescribed by Congress.
Goodal v. Tuttle, 3 Biss. (CO. C.) 219;
Mitchell v. Mfg. Co., 2 Story (C. C.)
648.

May fix property to be exempt. In
re Reiman and Friedlander, 11 B.
R. 21; id. 18 B. R. 128; id. 7 Ben.
(D. ©.) 445; id. 12 Blatch. (C. ©.)
562.

May avoid an assignment. In re
Brenneman, Crabbe (U. 8.), 456.

2The law must be uniform, and
not provide different rules for dif-
ferent districts. Kittridge v. War-
ren, 14 N. H. 509; Morse v. Hovey,
1 Sandf. (N. Y.) 187.

3 Yet exemptions made as provided
by state law are uniform, though dif-
ferent in every state. In re Appold,
6 Phila. 469; In re Smith, 2 Woods,
458; s. c. 14 B. R. 29535 s. ec. 2 N.Y.
Week. Dig. 532.

4 And such exemptions according to
state law are valid. In re Becker-
korb, 1 Dill. 45; s. c. 10 Am. L. Reg.
57; In re Jordan, 8 B. R. 180.

And this, too, without regard to
time debt was contracted. In re Jor-
dan, 10 B. R. 427.

Even though such exemption had
been held invalid by state courts. In
re Smith, 2 Woods, 458; s. c. 14 B.
R. 295.

But the law will be so construed as
to give it uniform operation if pos-
sible. A. & C. R. R. Co. v. Jones,
5 B. R. 97,

The declaratory act of 1873 uncon-
stitutional as to exemptions, be-
cause not uniform. In re Deckert, 10
B. R. 1; s. ec. 3 Am. L. R. 965 s. ce. 1
Cent. L. J. 116, 320. Compare In re
Shipman, 11 B. R. 570. See also 8
B. R. 1; In re Dillard, 9 B. R. 8.
Also 6 Am. L. T. 490.
INTRODUCTION, Y

This view of the exemption clause will be hereinafter more fully
treated under its proper analytical subdivision. .

Insolvent Laws Suspended by Bankruptcy Act.— The federal
bankruptcy acts operate to suspend the state insolvent laws in force
at the passage of the former, so far as they concern new actions there-
under relating to the same subject-matter and the same persons treated
of by such bankruptcy statute.1

Laws originating from different sources relating to the same sub-
ject-matter, the same persons and the same conditions, to be admin-
istered by independent tribunals, must often conflict; to avoid such
conflict the federal bankruptcy statutes suspend the state insolvent
laws as to all cases begun after their taking effect.

Cases to which the jurisdiction of the state courts has attached,
are not affected, and the state court may continue to apply the state
Insolvent Law thereto, and proceed to final administration of the
insolvent’s estate. This jurisdiction attaches from the moment the
state court has made any order assuming to control the corpus of the
property of the insolvent or protect it from ‘his creditors.? A suit
begun, wherein no order has been taken extending the jurisdiction of
the court over the property itself, will be suspended by the federal
act.3

As will be hereafter seen, the same rule has heretofore obtained with
reference to insolvent corporations whose estates are subject to ad-
ministration under the state law. The state law is suspended ipso
facto as to the estate of the corporation under the law of 1867, though
its charter may still have been forfeited by the courts of the state

1 The Bankruptcy Law suspends R. 126; id. 19 La. An. 497; Bank-
the state Insolvent Law. Thornhill v. ruptcy Act of 1898, § 70, second a.
Bank of La., 3 B. R.110;id.5 B. R. Jurisdiction of state court at-
367; Commonwealth v. O’Hara, B. R. taches when order is made. Martin
Sup. 19; id. 6 A. L. Reg. 765; Perry v. v. Berry, 2 B, R. 188; id. 37 Cal. 208;
Longley, 1 B. R. 155; id. 1 L. T. B. id. 2 A. L. T. 180; Meekins v. Cred-
34; id. 7 A. L. Keg. 429; Van Nostrand itors, 3 B. KR. 126; id. 19 La, An.
vy. Carr, 2 B. R. 154; id. 30 Md. 128; 497; In re Holmes, 1 N. Y. Leg. Obs.
id. 1 B. L. ‘Ll. 154; Martin vy. Berry, 211.
2B. R. 188; id. 87 Cal. 208; id. 2 A. %But not till then. Wish v, Mont-
L. T, 180; Meekins v. Creditors, 3 B. gomery, 21 La. An. 447.
8 INTRODUCTION.

under quo warranto or other appropriate remedy; this having no rela-
tion to the proceeding in bankruptcy.

So, likewise, the state law may be invoked in those commonwealths
permitting imprisonment for debt to release the person of the debtor,
notwithstanding the federal jurisdiction has assumed control of his
estate.”

On the other hand, the bankruptcy act will not suspend proceed-
ings to punish the fraud of the insolvent debtor; nor the right of the
insolvent to be discharged under the poor debtor acts in those states
where such laws prevail; nor laws prescribing merely the mode of
administering estates assigned by debtors as at common law, subject
to ‘be enforced, like other trusts, by ‘a court of equity; nor state laws
affecting debts created by fraud, and other debts not released by dis-
charge in bankruptcy; nor to indebtedness too small to permit bank-

ruptcy proceedings, as if less than $300, under the law of 1867.3

1State laws as to insolvent cor-
poration suspended, but not laws to
forteit charter. ‘I‘nornhill v. Loui-
siana, 3 B. R. 110; id. 5 B. R. 367; In
re Merchants Insurance Co., 6 B. R.
43; id. 4 C. L. N. 73.

The assets of insolvent corpora-
tion must be administered by federal
Bankruptcy Court, though the state
eourt retain control of the corpo-
rate franchises. Platt v. Archer, 6
B. R. 465; id. 9 Blatch. 559.

2Tn like manner the state law may
discharge a natural person from im-
prisonment for debt, pending the
bankruptcy. Shears v. Solhinger, 10
Abb. Pr. (N. Y.) 287; In re Reynolds,
8 R. I. 485.

8 Fraud of insolvent may be pun-
ished under state law. Stockwell
vy. Silloway, 100 Mass. 287.

And debtor may claim benefit of
the poor debtor’s act. Stockwell vy.
Silloway, 100 Mass. 287; Jordan vY.
Aldrich, 1 A. L. J. 240.

And release under common-law as-
signments. In re Hawkins, 2 B. R.

122; id. 8 A. L. Reg. 205; id. 34 Conn.
548; Beck v. Parker, 18 Pitts. L. J.
14; id. 65 Penn. 262; Maltbie v.
Hotchkiss, 5 B. R. 485; id. 38 Conn.
80.

State law not suspended as to debts
created by fraud, and other debts not
released by discharge. In re Win-
ternitz, 4 B. R. 127; id. 18 Pitts. L.
J. 61.

The state law is suspended as be
tween citizens of same state. Cas-
sard v. Kroner, 4 B. R. 185; id. 2
B. L. T. 308.

And as to attachments authorizing
involuntary bankruptcy. Tobin v.
Trump, 3 Brewst. 288.

But not in case of indebtedness less
than $300 under the act of 1867.
Shepardson’s Appeal, 36 Conn. 23.

Nor to settlements by consent un-
der the state laws. Yet if the issue
is raised the state court must yield.
Maltbie v. Hotchkiss, 5 B. R. 485; id.

38 Conn. 80; Reed y. Taylor, 32 Iowa,
209,
INTRODUCTION. 9

Voluntary and Involuntary Bankruptcy Bankruptcy may be
voluntary or involuntary; voluntary, when the debtor, ‘acting for him-
self, files his petition in bankruptcy; and involuntary, when the debtor,
having committed certain acts indicating an inability or unwillingness
to pay his debts, is forced by one or more of his creditors to surrender
his property through proceedings begun by such creditor or creditors
filing such petition, with or without his consent.

In England vntil 1842 voluntary bankruptcy was not permitted,
the laws having been framed prior thereto for the benefit of the
creditor primarily, and only secondarily granting that relief to the
debtor which, incidentally, removed his financial embarrassment by
methods best adapted to the distribution of his estate in the interest
of his creditors, having little or no consideration for the debtor’s future
status.

Bankruptcy and Insolvent Laws.—Bankruptcy and insolvent
laws relate to similar conditions of creditor and debtor; the one de-
manding payment of obligations incurred by the other; such lother
being unable to satisfy the demands.

The present policy of bankruptcy laws is: First, to benefit the
creditor by securing means to constrain the failing debtor to suffer
liquidation, and to punish fraudulent debtors; second, to benefit the
public by releasing useful and honest men embarrassed, according to
the earlier doctrine by enterprises necessarily perilous, but according

to the later doctrine by any character of enterprise or misfortune; and, |
third, incidentally, to benefit the debtor himself by relieving him from
the diligence of creditors, that he may begin anew his business career. ri

Insolvent laws, on the contrary, were designed to relieve the debtor |
from the rigors of imprisonment for debt upon his surrendering all,
his property to the individual creditor at whose complaint he suffers;
but no discharge from any other debt, nor even from the debt then |
being pressed, followed such surrender, further than the assets 80 |
applied may have passed a credit to, or have satisfied, this particular |

demand.?

1 The three purposes of the Bank- 2 Policy of insolvent laws. 2 Kent,
ruptcy Law; to benefit, first the cred- 890; 2 Story Const., § 1111; Sturgis
itor; second the public, and third v. Crowninshield, 4 Wheat. 122;
the debtor. 2 Bl. 472, Skears v. Solbinger, 10 Abb. Pr. (N.

Y.) 287.
10. INTRODUCTION.

By the early English law, imprisonment continued until the debt
was paid, unless the creditor, relenting, discharged the debror; where-
upon the law discharged the debt.1

This rigor has been relaxed in England by succeeding statutes, until
the “ Lords act ” permitted debtors, in execution, for amounts of £100
or less, to discharge the debt by surrendering all their property, except
wearing apparel, implements of trade and the like, not to exceed in
value £10; and in 1861 the benefit of the Bankruptcy Law was extended
to all insolvent debtors.?

States May Pass Insolvent Laws.— Notwithstanding the effect
of the federal Bankruptcy Law is to suspend the state Insolvent
Law when in conflict therewith, no restriction is placed upon the
states, and they may pass insolvent, or even bankruptcy, laws, giv-
ing full effect to their legislative discretion, limited only by the pro-
visions of the federal Constitution granting to Congress the power
to establish uniform laws on the subject of ‘bankruptcies and denying
to the states power to impair the obligations of contracts.3

at will
note 6;
“ Lords
1759; 3

1Imprisonment indefinite,
of creditor. 3 Bl. 415, and
Bac. Abr. Execution C. 3;
Act,” 82 Geo. II, chap. 23,
Bl. 416.

leaving power with the states to
pass bankruptcy and insolvent laws
when not exercised. Sturgis v.
Crowninshield, 4 Wheat. 122, 196.
Contra, Golden vy. Prince, 3 Wash.

See for similar modification of the

early law of imprisonment for debt,
Stat. 58 Geo. LII, chap. 102; Stats.
1 and 2 Victoria, chap. 110.
” 2AI1 insolvents in England allowed
benefit of the Bankruptcy Law in
1861. 3 Bl. 416, and note 7; 2 Bl. 484;
2 Steph. Com. 214; Williams Personal
Property, 149; Stats. 24 and 25; Vic-
toria, 1861.

3 The state law is suspended if in
conflict with the federal bankruptcy
act, and is void if retroactive ‘in its
effect. 2 Kent, 389; 2 Story Const.
1105; Ogden v. Saunders, 12 Wheat.
213, 369; Bayle v. Zacharie, 6 Pitt.
348,

The grant to Congress is not ex-
elusive, denying power to the states,
but is Superior only when exercised,

3138; McLean v. Bank of Lafayette,
3 McLean, 185; Chandler vy. Siddle, 10
B. R. 236.

Nor did the law of 1800, excepting
State laws in force, validate the
unconstitutional laws impairing obli-
gations of contracts. Sturgis v.
Crowninshield, 4 Wheat. 122.

While federal Bankruptcy Law in
force, debtor cannot be discharged
under state law. Boese v. King, 2
Sup. Ct. Rep. 765, 76.

And federal court can enjoin state
court from proceecing. Ex parte
Eames, 2 Story, 322; id. 1 N. Y. Leg.
Obs. 212,

Unless state jurisdiction has al-
ready attached. In re Holmes, 1 N.
XY. Leg. Obs. 211.
INTRODUCTION. 1

It follows that in all things the states may legislate relative to
future insolvencies, whereby contracts then existing may not be im-
paired; provided, such legislation will be suspended if in conflict with
any act of Congress, then existing or afterward passed, establishing a
uniform system of bankruptcies.

Who May be Bankrupts.— The law of 1867 applied to all resi-
dent debtors, including traders, those not so engaged, corporations,
resident aliens, femes sole, femes covert, and minors. Partners and
private corporations engaged in pursuit of gain were subject, to or
could enjoy the protection of that law.t Municipal, literary and chari-
table corporations were not included. To become a voluntary bank-
tupt, the law of 1867 prescribed $300 as the minimum of proy-
able indebtedness. Debtors owing less could not become voluntary
bankrupts. Although requiring a domicile in the United States,
temporary non-residence did not deprive the debtor of its benefits or its
application. The debtor must have been unable to pay his debts; and
by this is meant legal insolvency. Oorporations could act only through
officers authorized by vote of a majority of corporators at a legal meet-
ing called for the express purpose of considering the question of
going into bankruptcy; and by corporators was meant stockholders.”
A subsequent ratification was not sufficient. The directors or trus-
tees had no right to give such authority unless they were also the
corporators. Some authorities hold the contrary, but there can be
no question of the correctness of the rule above stated.

The debtor must have filed his petition in the District Court of that
district in which he had resided six months, or in which he had carried

1 All classes of debtors included in Smith y. Teutonia Ins. Co., 4 C. L.
the Bankruptcy Law. Act March 2, N. 130. Contrast Law 1898, § 55a.
1867; James B. L. 24; Rev. Stat. U. Temporary nonresidence. Good-
S. 977, § 5023. fellow’s case, 3 B. R. 114.

Aliens. Goodfellow’s case, 3 B. Legal insolvency. Hardy v. Clark,

R. 114; id. L. T. B. 69; id. Lowell, 3 B. R. 99.
510. Corporators, not directors of a cor-

Femes covert. O’Brien’s case, B. R. poration, must authorize the officers
Sup. 38. Minors. Book’s case,3 Mc- to file petition in bankruptcy.
Lean, 317; Derby’s case, 6 A. L. J. Glaser’s case, 1 B. R. 73.

422. 3 Subsequent ratification not suffi-
2Corporations. Sweatt v. Ry., 5 cient. Lady Bryan Mining Co. case,

B. R. 234; Adams v. Ry., 4 B. R. 99; 4 B. R. 36, 131.

Mercantile Ins. Co. case, 6 B. R. 43;
12: INTRODUCTION.

on business during that time, next preceding his application, or in
which he had resided or carried on business for the longest period
during that time; so that if he had resided in one district and carried
on business in another, his petition may have been filed in either.. By
residence, it has been held, is meant domicile; and if this be correct
it must be determined by the definition of that term as found in the
state law.t On the contrary, it has been held that his residence, in
the meaning of the bankruptcy act, was his place of abode, irrespective
of his domicile. This holding is the better doctrine, and is conducive
to an uniform? construction of that most commendable provision of
the Constitution authorizing uniform laws on the subject of bank-
ruptcy.

By the expression “ carried on business” is implied a defined busi-
ness carried on by the debtor. The vocation of a minister, a clerk,
an operative, a superintendent for another, not using his own capital,
or capital borrowed in his own name,— none of these carry on busi-
ness in the sense used in the bankruptcy act. These could not apply
in the districts where employed, but must have applied in the district
of the longest residence during the preceding six months. One carry-
ing on a defined business may be engaged in other matters in another
district, but these collateral engagements do not confer jurisdiction
on the ground that the debtor was carrying on business in such other
district.3

If the debtor had resided or carried on business in several districts.
during the preceding six months, the proper district in which to
make application was the one in which he so resided or carried on
business for the longest period during the next preceding six months,—
though this may not have been the period immediately next preceding
the date of the application. Nor is any period too short, if no longer
period has been passed in another district; as where a residence within

1 Residence is held in some in- Magie’s case, 1 B. R. 138. Contra
stances to mean domicile. Good- holding, Bailey’s case, 1 B. R. 177;
fellow’s case, 8 B. R, 114; Walker’s Belcher’s case, 1 B. R. 202.
case, 1 B. R. 90. Collateral engagements in another

2By the better rule, residence district do not confer jurisdiction
means actual abode, not domicile. to apply in such district. Alabama
Watson’s case, 4 B. R. 197. R. R. case, 6 B. R. 107.

3 What is meant by “carried on
business.” Little’s case, 2 B. R. Y7;
INTRODUCTION. * 13
the United States has been enjoyed for but a single day before appli-
cation, no residence in another district having been longer.

Unless the court to which application was made had jurisdiction,
the proceedings were void, and subject to discontinuance at the prayer
of a creditor, or the application for discharge might be prevented, or,
if made, defeated, or, if granted, its effect annulled, by plea to the
jurisdiction of the court in which such discharge was given.”

Who May be Bankrupts under the Law of 1898.— Any person
who owes debts, except a corporation, may be a voluntary bankrupt.

Certain classes of debtors are relieved from involuntary bankruptcy:
(1) A wage-earner at a compensation of not exceeding $1,500 per an~
num; (2) a person engaged chiefly in farming or the tillage of the
soil; (3) all corporations, save those engaged principally in manu-
facturing, trading, printing, publishing, or mercantile pursuits; and
(4) debtors owing less than $1,000.

The above five classes of corporations may be forced into involun-
tary bankruptcy, but cannot become voluntary bankrupts. No other
classes of corporations. can be either voluntary or involuntary bank-
rupts.

Private — but neither state nor national — banks may be adjudged
involuntary bankrupts.

Husband and Wife under Law of 1867.— A feme covert may
become a voluntary bankrupt, but may plead coverture to the debt
upon which it is attempted to proceed against her by way of forcing
involuntary bankruptcy upon her; and by such plea she may defeat
the proceeding, unless it appears that she had contracted a debt bind-
ing upon her separate estate, or otherwise chargeable against her; and
so a firm of which a married woman is a member may be forced into
involuntary bankruptcy.*

May plead coverture to the debt
if not binding upon -her, and defeat
involuntary bankruptcy. Schlich-
ter’s case, 3 B. RK. 107; Howland’s
case, 2 B, R. 114.

‘But if the debt is binding on her

1 Longest period. Joster’s case,
3 B. R. 57.

One day may have been the long-
est period. Goodfellow’s case, 3 B.

R. 114.

2 Jurisdiction necessary to a valid

discharge. Walker’s case, 1 B. RK.
90; Goodfellow’s case, 3 B. R. 114.
3 Act of 1898, chap. 3, § 4.
4 Feme covert may become a vol-
untary bankrupt. O’Brien’s case,
B. R. Sup. 38.

or her separate estate she cannot
thus defeat the proceeding. Schlich-
ter’s case, 3 B. R. 107; Howland’s
case, 2 B. R. 114.

A member of firm, she may be de-

clared a bankrupt. Kinkead’s case,
7 B. R. 439; O’Brien’s case, B. R.

Sup. 38.
14 ‘INTRODUCTION.

In those states where she may own property and carry on business
in her own name, the bankruptcy of the husband cannot affect her,
and she may employ him in the conduct of her business.1

At common law, her earnings and all her personal property become
his at the marriage, or as soon as acquired.?

Property acquired and paid for by him, if at the time he was solvent
and so intended, would become the property of the wife, and might
be retained by her upon his bankruptcy; and such a purchase by her
in his name, without agreement as to reconveyance, has been held
conclusive evidence of a gift to him which passed to his creditors upon
his becoming bankrupt. If, however, money is deposited with the
husband by the wife, as a loan and not as a gift, she will be protected
as a creditor; nor can gifts from the husband to the wife be offset
against the debt.?

Insolvency and Bankruptcy Contrasted.— Insolvency of the debtor
generally means that he has not sufficient assets to satisfy his lia-
bilities.* As applied to merchants the term means an inability to pay
debts as they mature. No definition has been given by statute, until
the law of 1898,° and the distinction above noted may be applied to

the several classes of debtors.

1 May employ her husband, and
not subject her property to his debts
in states where she is allowed to
do business in her own name, EI-
dred’s case, 3 B. RK. 61; Driggs v.
Russell, 3 B. R. 39.

The rule is, however, that the pro-
ceeds of the labor of husband or
wife are subject to his debts,
though the proceeds of necessary
labor bestowed on her separate es-
tate are not. Shackelford v. Collier,
6 Bush, 149.

2At common law, a wife’s earn-
ings belong to her husband, and
her payment of the purchase price
of property out of her separate es-
tate has been held a gift to him;
and a purchase by the husband in
a wife’s name a gift to her. Keat-
ing v. Keefer, 5 B. R. 133.

3 Money loaned by the wife to

the husband, a debt. Bigelow’s
case, 2 B. R. 170.
4Insolvency, what is? Toof v.

Martin, 6 B. R. 49; id. 13 Wall. 40.

5 Merchants, when insolvent?
Sawyer v. Turpin, 5 B. R. 389; Wil-
liams’ case, 8 B. R. 74; Merchants’
Nat'l. Bk. v. Truax, 1 B. R. 146;
Gay’s case, 2 B. R. 114; Wright’s
case, 2 B. R. 155; Wadsworth vy. Ty-
ler, 2 B. R. 101; Graham y. Stark,
3 B. R. 92; Scammon y. Cole, 3 B.
R. 100; Rison v. Knapp, 4 B. R. 114;
Forsyth’s case, 7 B. R. 174; Hardy
v. Clark, 3 B. R. 99.

6See post, Act of 1898, index In-
solvency.

Danger of insolvency only will not
avoid a transfer. Beals v. Quinn,
101 Mass, 262,
\

INTRODUCTION. 15

Those engaged in commercial pursuits are practically insolvent when
they fail to meet their debts as they mature in the ordinary course of
business; whereas debtors not so engaged are not held in business to
so strict an accountability, and may be solvent although their obliga-
tions have long since matured; provided their assets are sufficient to
discharge their liabilities.

The state of insolvency is one of fact, and not to be clearly defined.!
What is insolvency in one locality may not be such elsewhere. It is
evident the strict rule of the exchanges in large cities should not be
applied to the farmer in the country; and between these extremes are
many modifications of the two views ‘above presented.

The rule applied to merchants in the larger cities would not fairly
guide to just conclusions when the financial standing of the country
merchant is under consideration.” ,

Insolvency alone would not subject the debtor to the pains of invol-
untary bankruptcy,— nor are the terms insolvency and bankruptcy
synonymous. Insolvency means an inability to pay debts. Bank-
ruptcy means that this inability, coupled with the procedure ending
in a decree discharging his liabilities, has created a legal status wherein
he stands free of debt. This procedure, under the act of 1867, may

1Insolvency to be decided by the
facts of each case. Miller v. Keys,
3 B. R. 54; Driggs v. Moore, 3 B. R.
149; Hall v. Wager, 5 B. R. 181; Pot-
ter v. Coggeshall, 4 B. R. 19; Vander-
hood y. Bank, 5 B. R. 270; Darley
v. Lucas, 5 B. R. 437; Markson v.
Hobson, 4 C. L. N. 75.

2The question is one for the jury.
Pierce v. Hvans, 61 Penn. 415.

3Insolvency and bankruptcy dis-
tinguished. Black’s case, 1 B. R.
81; Craft’s case, 2 B. R. 44; Morgan
v. Mastick, 2 B. R. 163. A single
note protested does not render a
merchant insolvent. Hardy v. Ben-
ninger, 4 B. R. 77..

An inability to pay one debt in due
course of business is sufticient to
render a merchant insolvent. Dib-
lee’s case, 2 B. R. 185; Delner v.
Moore, 3 B. R. 149.

If the debts due cannot be paid,

or made by execution, as they be-
come due, the debtor is insolvent.
Wells’ case, 3 B. R. 95; Randall’s
case, 38 B. R. 4.

In this condition the debtor can-
not prefer a creditor. Curran v.
Munger, 6 B. R. 33.

And his acts may justify presump-
tion that he contemplates insol-
vency. Waite’s case, 1 B. R. 84.

Acts of bankruptcy must have
been alleged and proved by the
creditor seeking to force his debtor
into involuntary bankruptcy. Craft's
ease, 1 B. R. 89; Haughton’s case,
1 B. R. 121.

A warrant of attorney to confess
judgment raises no presumption of
insolvency. Diblee’s case, 2 B. R.
185.

Nor that railway bonds have only
a nominal value. Tucker v. Ope-
lousas R. R., 3 B. R. 31.
16 INTRODUCTION.

have taken the form of a voluntary application by the debtor, or that
of an application by a creditor or creditors. In the latter case, acts
of bankruptcy must have been alleged and proved, in addition to the
state of insolvency, on the part of the debtor. But it is immaterial
whether the debtor knew or did not know of his condition? If in-
solvent, the law presumes he knew the fact, though it does not follow
he will be charged with knowledge of the legal definition of the term
insolvency.2 Yet the debtor must have done the act of bankruptcy
charged with the intent prescribed by law, ‘and at the time he must
have been insolvent or in contemplation of insolvency. These acts,
intents and financial conditions must concur to subject the debtor to
involuntary bankruptcy.®

Involuntary Bankruptcy; Prerequisites—Any debtor permitted
by law to become a voluntary bankrupt may have been subjected, un-
der the law of 1867, to involuntary bankruptey by creditors having
the qualifications hereafter to be noted.4 The debtor, however, must
have been guilty of some act of bankruptcy prescribed by the statute,
and this must have been some act beyond the meré inability or refusal
to pay debts, and the act alleged and complained of must have been
one clearly defined and denounced by the law, when liberally con-
strued as a ‘highly remedial enactment.

By section 39 of the act of 1867,5 no debtor could have been sub-
jected to involuntary bankruptcy unless he had departed from the
state, district or territory of which he was an inhabitant, with intent

1 Debtor’s knowledge of his insol-
vency immaterial. Farrin v. Craw-
ford, 2 B. R. 181.

2It will not be presumed the
debtor knew the definition of the
term insolvency. Smith’s case, 3
B. R. 98

3 Involuntary bankruptcy, the act,
intent and financial condition must
concur. Craft's case, 1 B. R. 8.

Actual insolvency not necessary,
put contemplation thereof, sutticient.
Diblee’s case, 2 B. R. 185.

4 Acts of bankruptcy are defined in
section 39, law of 1867.
Fraudulent preferences and con-

veyances are defined and declared
void in section 35 of said act.

Compare these two sections in con-
nection with Nicodemus’ case, 3 B.
R. 55, and Muller’s case, 3 B. R. 86.

5 Section 39 of the act liberally
construed according to fair import
of the terms used. Locke’s case, 2
B. R. 123; Muller’s case, 3 B. R. 86;
Silverman’s case, 4 B. R. 173.

And is intended to distribute the
estate of the bankrupt impartially.
Diblee’s case, 2 B. R. 185; Locke’s
case, 2 B. R. 123; White v. Roperty,
3 B. R. 53.

Preferences prohibited.
of 1867.

§ 35, Act
INTRODUCTION. 1%

to defraud his creditors, or, being absent, with such intent remained
absent; or concealed himself to avoid the service of legal process in
any action for the recovery of a debt or demand provable under the
act; or concealed or removed any of his property to avoid its being
taken on legal process; or made an assignment, gift or transfer of his
property, either within or without the United States, with intent to
hinder, delay or defraud his creditors; or was arrested and held in
custody for seven days, as provided in the act of 1867; or was actually
imprisoned for more than seven days in a civil action founded on
contract for the sum of $100 or. upwards; or, being bankrupt
or insolvent, or in contemplation thereof, gave a preference
to one or more creditors, or to any person or persons liable to him
as indorsers, bail, sureties, or otherwise, with intent to defeat or delay
the operation of the act, as therein provided; or being a banker, broker,
merchant, trader, manufacturer or miner, fraudulently stopped and
did not resume payment of his commercial paper within fourteen days.

Within six months after the commission of any one or more of such
acts by such debtor, his creditor or creditors, possessing the prerecni-
sites hereinafter defined, could file his or their petition to subject him
to involuntary bankruptcy.

Unless guilty of one or more of such acts, the debtor could defeat
the application by his creditors seeking to force him into involuntary
bankruptcy.

These clauses, defining what constituted acts of bankruptcy, are
closely allied to those provisions of the law wherein are denounced
preferences to creditors, or transfers of property by debtors then in-
solvent or contemplating insolvency.

Such preferences to creditors within four months, and such trans-
fers to other persons within six months, before the filing of the peti-
tion by or against the debtor were void, if the person or creditor re-
ceiving the same had reasonable cause to believe the debtor insolvent
or acting in contemplation of insolvency, and with intent to evade the
Bankruptcy Law.

It does not follow that evidence sufficient to have entitled the cred-
itor to his remedy, by way of forcing the insolvent debtor into involun-

1 Acts of bankruptcy, § 39, Act to section 39. Tonkin’s case, 4 B. R.
of 1867. 13; Black’s case, 1 B. R. 81; Wads-
Qualifications prescribed by sec- worth v. Tyler, 2 B. R. 101.
tion 35, when not inconsistent, apply
18 INTRODUCTION.
tary bankruptcy, would have been sufficient to avoid preferences or
transfers made by the debtor previous to the filing of the petition.

To avoid the preference or transfer, the debtor must have been
insolvent, the transfer must have been made with a view to give a
preference, ihe transferee must have had reasonable cause to believe
the debtor insolvent and that the transfer was in fraud of the bank-
ruptcy act, and the preference or transfer must have been within the
time, fixed by the act, previous to the filing of the petition by or
against the debtor.

The creditor who attempted to, secure his debt during the pendency
of the law of 1867, did so at his peril, and was subject to attack by
other creditors within four months thereafter, upon the ground that
the debtor was insolvent, and known so to be to the creditor taking

such security.?

1 Sufficient evidence of act of bank-
ruptcy may not be sufficient to avoid
a conveyance charged to be fraudu-
lent as a preference. Nicodemus’
ease, 3 B. R. 55; Fuller’s case, 4 B.
R. 29.

Though such conveyance is held
evidence of fraud in Perry v. Long-
ley, 1 B. R. 155; Hawkins v. Dean
and Hawkins v. Garrett, 2 B. R. 29;
Davis v. Armstrong, 3 B. R. 29.

For difference between the debtor’s
intent, denounced by Laws of 1841
and 1867, see Arnold’s case, 2 B. R.
61; Haughey vy. Albin, 2 B. R. 129;
Foster v. Hackley, 2 B. R. 131;
Kingsbury’s case, 3 B. R. 84.

Valid transfers upheld. Wynne’s
case, 4 B. R. 5; Potter v. Coggeshall,
4B. R. 19.

To be void, the preference or trans-
fer must come within the express
terms of the law. Toof v. Martin, 6
B. R. 49; id. 13 Wall. 40; Foster y.
Hackley, 2 B. R. 131; Hunt’s case, 2
B. R. 166; Street v. Dawson, 4 B. R.
60; Haughey v. Albin, 2 B. R. 129;
Scammon v. Cole, 4 B. R. 257; Forbes
v. Howe, 102 Mass. 427.

2 The burden was on the party at-
tacking the preference to prove that
the law had been violated. Hunt’s
case, 2 B. R. 166; Beck’s case and
Hafer’s case, 1 B. R. 163.

The proceedings against the debtor
by the creditor to force involuntary
bankruptcy were independent of the
proceedings against the preferred

creditor. Drummond’s case, 1 B. R.
10; Diblee’s case, 2 B. R. 185;
Schick’s case, B. R. Sup. 38;

Dunkle’s case, 7 B. R. 72.

And did not affect the title trans-
ferred. Williams’ case, 83 B. R.
74,

If the preference was made more
than four months prior to the begin-
ning of the proceedings under the
bankruptcy act, whether for volun-
tary or involuntary bankruptcy, the
other creditors cannot attack it for
insolvency on part of the debtor and
knowledge thereof on part of the
creditor. Bean v. Brookmire, 4 B. R.
57.

But the preference will be held
valid, whether the proceeding be
voluntary or involuntary bank-
INTRODUCTION. 19

But if the four months in case of creditor, and six months in case
of any other person, had transpired, the preference or transfer could
not be questioned, if otherwise fair and honest.

This provision of the bankruptcy act in nowise prevented the avoid-
ance of the conveyance creating the preference, on the ground of
fraud.

Courts of Bankruptcy, Act of 1867.— Under the act of March 2,
1867, the District Courts of the United States were charged with the
administration of the bankrupt’s estate and empowered to order his
final discharge, having original jurisdiction in their respective districts
in all matters and proceedings in bankruptcy, being authorized to hear
and adjudicate upon these matters according to the provisions of that
act. These courts were always open for the transaction of business,
exercising the powers thereby granted and conferred in vacation as
well as in term time, the judge sitting in chambers having the same
power and jurisdiction — including the power of keeping order and
punishing for contempt — as when sitting in court; the jurisdiction
conferred being extended to all cases and controversies arising between
the Lankrupt and any creditor or creditors who claimed any debt or
demand under the bankruptcy; to the collection of all the assets of
the Lankrupt; to the ascertainment and liquidation of the liens ‘and
other specific claims thereon; to the adjustment of the various priori-
ties and conflicting interests of all parties; and to the marshaling and
disposition of the different funds and assets so as to secure the rights
of all parties and due distribution of the assets among all the creditors;
and to all acts, matters and things to be done under and by virtue of
the bankruptcy until the final distribution and settlement of the estate
of the bankrupt and the close of the proceedings in bankruptcy.
These courts ‘had full authority to compel obedience to all orders and
decrees passed by them in bankruptcy, and could sit for the transac- -
tion of business in bankruptcy at any place in the district, after due
notice given at such place, ‘as well as at the places designated by the
law for holding such courts.

ruptey. Potter v. Coggeshall, 4 B. R. 91; Waurer v. Frantz, 4 B. R.
R. 19. 142; Hubbard vy. Allaire, 7 Blatch.

See Wynne’s case, 4 B. R. 5; Ful- 284; Dow’s case, 4 B. R. 10: Hall v.
ler’s case, 4 B. R. 29; Bean v. Brook- Hayner, 8 C. L. N. 402; Collins v.
mire, 4 B. R. 57; Butler’s case, 4B. Gray, 8 Blatch, 483.
20 INTRODUCTION...

The Supreme Court of the District of Columbia and of the terri-
tories, and the justices of the latter while holding District Court, exer-
cised jurisdiction, under the law of 1867, over bankruptcies in their
respective jurisdictions.

Courts of Bankruptcy, Act of 1898.— “Courts of Bankruptcy,”
under chapter 2, section 2, of the law of 1898, include the District
Courts of the United States in the several states and territories, the
Supreme Court of the District of Columbia, and the United States
Court of the District of Alaska and the Indian Territory.

Under chapter 4, section 23, of the act of 1898, the United States
Circuit Courts have jurisdiction of all controversies at law and in
equity, as distinguished from proceedings in bankruptcy, between
trustees, as such, and adverse claimants, concerning the property
claimed or acquired by the trustee, in the same manner and to the
same extent only as though bankruptcy proceedings had not been
instituted, and such controversies had been between the bankrupt and
such adverse claimant; and have concurrent jurisdiction with the
courts of bankruptcy, within their respective territorial limits, of the
offenses enumerated in this act.

Under section 24, the Supreme Court of the United States, the Cir-
cuit Courts of Appeal of the United States, and the Supreme Courts
of the Territories, in vacation and in chambers and during their
respective terms, as now, or as they may be hereafter held, are in-
vested with appellate jurisdiction of controversies arising in bank-
tuptcy proceedings from the courts of bankruptcy over which they
have appellate jurisdiction in other cases. The Supreme Court of the
United States exercises a like jurisdiction from courts of bankruptcy
not within any organized circuit of the United States and from the
Supreme Court of the District of Columbia.

Definitions, Act of 1898.— The act of 1898 seeks to avoid vexa-
tious issues, such as arose under the act of 1867, by defining clearly
many terms rendered necessarily technical by their use in bankruptcy
legislation. This precaution will simplify the language of bankruptcy
practice.

To illustrate: A distinction is drawn between the word “ court”
and the expression “courts of bankruptcy;” the former including
the referee, the latter excluding him, A careful reading of the chap-
INTRODUCTION. 21

ter on definitions will reward the student and render the practitioner
accurate in expression.}

Referees.— These officers are appointed by the courts of bank-
ruptcy within the territorial limits of which these courts respectively
have jurisdiction. Referees hold office two years, subject to removal
by these courts in their discretion. The limits of the referee’s district
may be changed by these courts, provided there shall not be less than
one referee in each county where the services of a referee are needed.”

Trustees.— These officers are appointed by the creditors of the
bankrupt at their first meeting after the adjudication, or after a
vacancy has occurred, or after an estate has been reopened, or after
a composition has been set aside or a discharge revoked, or if there is a
vacancy in the office of trustee. If the creditors do not appoint a
trustee the court shall do so.3

Creditors.— The court shall cause the creditors to hold their first
meeting not less than ten nor more than thirty days after the adjudi-
cation, or as soon thereafter as may be, at which the judge or referee
shall preside, may allow or disallow claims there presented, and ex-
amine the bankrupt or cause him to be examined, appoint a trustee,
or not more than three trustees, and take other steps which may be
pertinent and necessary for the promotion of the best interests of the
estate.*

Estates.— Depositories for money shall be designated by order of
the courts of bankruptcy.> Actual and necessary expenses of officers
must be reported in detail under oath, and be examined and approved
or disapproved by the court, and, if approved, paid out of the estate
in which they were incurred;® debts of the bankrupt of certain
classes may be approved and allowed and priorities ordered;’ divi-
dends declared and paid;§ liens adjudicated;® set-offs and counter-
claims adjusted;!° and the amounts due upon claims determined.

1 Act of 1898, chap. 1, § 1. 6 Act of 1898, chap. 7, § 62.

2 Act of 1898, chap. 5, § 34. 7 Act of 1898, chap. 7, §§ 63, 64.
3 Act of 1898, chap. 5, § 14. 8 Act of 1898, chap. 7, § 65.

4 Act of 1898, chap. 6, § 55. 9 Act of 1898, chap. 7, § 67.

5 Act of 1898, chap. 7, § 61. 10 Act of 1898, chap. 7, § 68.
22 INTRODUCTION.

Possession of Property.— The title and possession of property
belonging to the bankrupt remains with him until after adjudication
and the appointment and qualification of the trustee; provided, the
judge may, upon satisfactory proof, by affidavit, that the bankrupt
against whom an involuntary petition has been filed and is pending
has committed an act of bankruptcy, or has neglected, or is neglecting,
or is about to so neglect, his property so that it has thereby deterio-
rated, or is thereby deteriorating, or is about thereby to deteriorate, in
value, issue a warrant to the marshal to seize and hold it subject
to further orders. In this event the petitioner must first enter into
bond in an amount to be fixed by the judge, with such sureties as he
shall approve, conditioned to indemnify such bankrupt for such dam-
ages as he shall sustain in the event such assignee shall prove to have
been wrongfully obtained. The bankrupt may file a bond and retain
the property.+

Title to Property— With exceptions unnecessary to mention at
this time, the trustee, upon his qualification, takes title to the bank-
rupt’s property as of the date of the adjudication. It shall be ap-
praised by three appraisers appointed by the court.?

When Act of 1898 Took Effect.— This act took effect on July 1,
1898, having been on that day approved by the President; providing
however, that no petition for voluntary bankruptcy shall be filed
within one month, and no petition for involuntary bankruptcy shall
be filed within four months of the passage thereof.3

1 Act of 1898, § 69. 3 Act of 1898, last section.
2 Act of 1898, § 70.
TITLEI,
‘THE LAW AND PRACTICE IN BANKRUPTCY.

BaNnKRuptcy Act oF APRIL 4, 1800.

An Act to establish an uniform System of Bankruptcy throughout
the United States.

(Repealed by act of December 19, 1803, chap. 6.)

Section 1. Be it. enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That from
and after the first day of June next, if any merchant or other person
residing within the United States, actually using the trade of merchan-
dise, by buying and selling in gross, or by retail, or dealing in ex-
change, or as ‘a banker, broker, factor, underwriter, or marine insurer,
shall, with intent unlawfully to delay or defraud his or her creditors,
depart from the State in which such person usually resides, or remain

1 Decisions on the Bankruptcy
Law of the United States, 1800.—
The holder of a promissory note,
drawn before, but transferred after
a commission of bankruptcy had is-
sued against the drawer, is entitled
to prove his debt under the commis-
sion, and to receive a dividend.
Humphreys vy. Blight’s Assignees, 4
Dall. 370.

In the case of negotiable paper,
the assignee takes it discharged of
all the equity as between the original
parties, of which he had no notice.
But wherever the assignee has no-
tice of such equity, either positively
ov constructively, he takes the as-
signment at his peril. A commis-
sion of bankruptcy is legal notice
that wherever mutual debts sub-
sisted between the bankrupt and his
creditors, the right of set-off at-

taches. When the negotiable paper
was assigned after the commission
of bankruptcy, the party takes it
subject to any set-off as between the
drawer and payee. Ibid.

Under the Bankruptcy Law of the
United ‘States, a joint debt may be
set off against the separate claim of
the assignee of one of the partners;
but such set-off could not have been
made at law, independent of the
Bankruptcy Law. Tucker v. Oxley,
5 Cranch, 84; id. 2 Cond. Rep. 182.

A joint debt may be proved under
a separate commission, and a full
dividend received; it is equity alone
which can restrain the joint creditor
from receiving his full dividend un-
til the joint effects are exhausted.
Ibid.

Wherever the terms in which a
power is granted by the Gonstitution
§1

absent therefrom, or conceal him or herself therein, or keep his or
her house, so that he or she cannot be taken, or served with process,
or willingly or fraudulently procure him or herself to be arrested, or
his or ‘her lands, goods, money or chattels to be attached, sequestered
or taken in execution, or make or cause to be made any fraudulent
conveyance of his or her lands, or chattels, or make or admit any
false or fraudulent security or evidence of debt, or being arrested for
debt, or having surrendered him or herself in discharge of bail, shall

24 Tur Bankruptcy Law.

to Congress, or wherever the nature
of the power itself requires that it
shall be exclusively exercised by
Congress, the subject is completely
taken away from state legislatures,
as if they had been forbidden to act
upon it. The power granted to Con-
gress of establishing uniform laws
on the subject of bankruptcy is not
of this description. Sturgis v.
Crowninshield, 4 Wheat. 122; id. 4
Cond. Rep. 409.

In the distribution of a bankrupt’s
effects in this country, the United
States are entitled to a preference,
although the debt was contracted
by a foreigner in a foreign country;
and although the United States had
proved their debt under the commis-
sion of bankruptcy, and had voted
for an assignee. Harrison v. Sterry
et al, 5 Cranch, 289; id. 2 Cond.
Rep. 260.

A conveyance on the eve of bank-
ruptecy, to give a preference to a
particular class of creditors, is a
fraud on the Bankruptcy Law, and
void. Ibid.

Such assignment may be valid to
secure money actually advanced on
the credit of it, and subsequent to
its date. Ibid.

Under a separate commission of
bankruptcy, against one partner
only, his private property and his
interest in the funds of the company
passes. Ibid.

The right to compensation from
Spain, held under an abandonment
made to underwriters, and accepted
by them for damages and injuries
which were to be satisfied under the
treaty by the United States, passed
to the assignees of the bankrupt,
who held such rights by the pro-
visions of the Bankruptcy Law of
the United States, passed April 4,
1800. Comegys v. Vasse, 1 Peters,
193.

The Circuit Courts of the United
States have jurisdiction of matters
arising under the Bankruptcy Law ot
the United States, as they have of
any other subject, where the Con-
stitution and laws of the United
States give jurisdiction; but the Dis-
trict Courts have not the same juris-
diction in cases of bankruptcy as the
chancellor of England has. Lucas
et al. v. Morris et al., 1 Paine’s C. OC.
R. 396.

The Districts Courts of the United
States have not, like the chancellor
in England, exclusive jurisdiction
over the entire execution of the
Bankruptcy Law. They cannot re-
move assignees, nor compel them to
account. Ibid.

Upon the death of an assignee, un-
der the Bankruptcy Law of the
United States, the right of action for
a debt due to the bankrupt vested in
the executor of the assignee. Rich-
ards et al., Assignees, ete, v. Mary-
§ 1

Act oF 1800.

25

remain in prison two months or more, or escape therefrom, or whose
lands or effects being attached by process issuing out of, or returnable
to, any court of common law, shall not, within two months after
written notice thereof, enter special bail and dissolve the same, or
in districts in which attachments are not dissolved by the entry of
special bail, being ‘arrested for debt after his or her lands and effects,
or any part thereof, have been attached for a debt or debts amount-
ing to one thousand dollars or upwards, shall not, upon notice of such

land Ins. Co., 8 OCranch, 84; id. 3
Cond. Rep. 45.

Where the original grouud of ac-
tion is founded on contract, but the
immediate cause arises ex delicto,
and the claim is for damages, un-
liquidated by any express agreement,
or such as the law will not imply an
agreement to pay, the certificate of
bankruptcy is no bar; because such
claim could not have been proved
under the commission. Dusar v.
Murgatroyd, 1 Wash. ©. C. R. 18.

But if the agreement were to pay
a particular sum, on failure to per-
form the contract; or if the case was
such that the plaintiff has his elec-
tion to bring either trespass or case
for money had and received, and
waives the former by bringing the
latter; the damages become a debt,
which the law implies a promise to
pay, and the certificate is a bar.
Ibid.

In an action brought against the
owner of a vessel for damages for an
injury sustained on board a ship by
the neglect of the master, a cer-
tificate of bankruptcy cannot be
pleaded in bar. Ibid.

One guilty of perjury in proceed-
ings under the Bankruptcy Law, can-
not be prosecuted for the offense
after the repeal of the law. United
States v. Passmore, 4 Dall. 3872.

A deed executed before the ist of
June, 1800, although acknowledged

after, is not within the first section
of the Bankruptcy Act of April 4,
1800, chapter 19. Wood v. Owings, 1
‘Cranch, 239; id. 1 Cond. Rep. 302.

A certificated bankrupt or insol-
vent, discharged from the particular
contract, need not be made a party
to the bill on the contract. Van
Reimsdyke v. Kane, Ex’r, 1 Gall. C.
CG. R. 371.

The power given to Congress to
pass uniform laws relative to bank-
ruptcy is exclusive of such power in
the state governments; and this,
whether the former has thought
proper to exercise it or not. Golden
v. Prince, 3 Wash. C. C. R. 313.

A discharge from a debt under the
bankruptcy laws of the place of con-
tract is good in every other place
where pleaded, as an extinguishment
of the debt. But a like discharge
where the contract is not made has -
no effect. Le Roy v. Crowninshield,
2 Mason’s ©. C. R. 151.

A debtor concealing himself from,
and being denied to, his creditors
does not constitute an act of bank-
ruptey under the laws of the United
States, unless the service of process
is thereby prevented. Barnes et al.
y. Billington, 1 Wash. C. C. R. 29.

If the debtor order himself to be
denied to creditors and others, and
is in consequence thereof denied to
an officer who comes to serve a pro-
cess, it is an act of bankruptcy, pro-
26

THe BANKRUPTCY Law.

gl

attachment, give sufficient security for the payment of what may
be recovered in the suit in which he or she shall be arrested, at or
before the return-day of the same, to be approved by the judge of

the district, or some judge of the court out of which the process
issued upon which he is arrested, or to which the same shall be re-
turnable, every such person shall be deemed and adjudged a bankrupt:

Provided, that no person shall be

liable to a commission of bankruptcy

if the petition be not preferred, in manner hereinafter directed,
within six months after the act of bankruptcy committed,

vided the officer comes to serve the
process and not on any other busi-
ness, and the denial has taken place
within six months of the issuing of
the commission. Ibid.

Giving a bond, with warrant to
confess judgment to one creditor
upon the eve and in contemplation
of bankruptcy, does not constitute a
bankruptcy, unless the judgmert en-
tered on the bond and the issuing of
the execution was at the instance or
by the procurement of the debtor.
Such a bond would be a fraud on
the general creditors. Ibid.

Where two of three assignees of a
bankrupt enter into an agreement
in the absence of the third, the con-
tract is not binding on the absent as-
signee, unless he had _ previously
given authority to make it, or sub-
stantially recognize and acknowl-
edge it. Aliter, among partners.
Blight v. Ashley et al., 1 Peters’ C.
c. R. 16.

The agreement of the assignees of
a bankrupt to give a preference to
a particular creditor is not valid
without the assent of the commis-
sioners and a certain portion of the
creditors. Ibid.

Denial to an officer, whereby he is
prevented serving process, must be
really adversary, and not by con-
cert between the creditor and the

debtor, to bring about an act of
bankruptey. Ibid.

No debt but such as is due and
owing at the time of the bankruptcy
can be proved under the commis-
sion; and, consequently, an indorser
or acceptor of a bill of exchange,
drawn by the bankrupt, who has not
paid it before the bankruptcy, can-
not prove the debt. Marks et al.
Assignees, v. Barker et al., 1 Wash.
Cc. C. R. 178.

The acceptor or indorser of a bill
of exchange, who pays the bill after
the bankruptcy of the drawer, may
offset the same against the bank-
rupt’s assignees; but he must show
the debt to be a subsisting one in
him at the time the action was
brought, for this is a case of mutual
credit given before the bankruptcy,
although the money was not paid
until after. Ibid.

The District Courts of the United
States have not power in bankruptcy
cases to remove assignees, or compel
them to account. Lucas v. Morris,
Paine’s C. C. R. 396.

The holder of the negotiable paper,
payable ‘“ without defalcation”’ un-
der the laws of Pennsylvania, as-
signed after a commission of bank-
ruptcy has issued, may come in
under the commission; allowing all
just offsets existing at the time of
§ 2

Act or 1800.

27

§ 2. And be it further enacted, That the judge of the district court
of the United States, for the district where the debtor resides, or
usually resided at the time of committing the act of bankruptcy,
upon petition in writing against such person or persons being bank-
rupt, to him to be exhibited by any one creditor; or by a greater
number, being partners, whose single debt shall amount to one thou-

sand dollars, or by two creditors
thousand, five hundred dollars, or

the bankruptcy, and which would
have been admitted if the assign~
ment had not been made. Hum-
phreys v. Blight’s Assignees, 1 Wash.
c.c. R. 44.

The purchaser of a _ negotiable
note, who becomes so after a com-
mission of bankruptcy has issued,
may prove under the commission;
and he holds the note subject to all
legal offsets. Ibid.

The sixty-fifth section of the
Bankruptcy Law of the United
States, passed the 2d of March, 1799,
does not repeal the provisions of the
laws of the United States which give
to the surety who pays bonds for
duties a preference over the cred-
itors. Mott v. The Assignees of
Maris, 2 Wash. C. C. R. 196.

The provisions of the Bankruptcy
Law except from its general opera-
tion, not only the preference of the
United States, but also the right of
preference for satisfaction of debts
due to the United States. Ibid.

P. paid a sum of money to the
United States, as surety of S., ina
bond for duties. S. became insol-
vent, and assigned his effects to
Baker, who received $4,000 un-
der the assignment, mixed the
same with his own funds and
afterward became bankrupt, and
the defendants were appointed
his assignees, but no _ effects
known to be part of the estate of S.

whose debts shall amount to one
by more than two creditors whose

came into their hands. The plain-
tiff claimed to have a preference and
priority over the general creditors of
Baker. By the Court.— Although the
United States might, under the
sixty-fifth section of the law to
regulate the collection of duties, be
entitled to claim of the defendants
to the amount which came into the
hands of B., as the assignee of S.,
the provisions of the law do not ex-
tend to the surety who has paid the
bond the same rights and privileges.
Pollock v. Pratt & Harvey, 2 Wash.
Cc. O. R. 490.

A. H. devised an estate to G S.
for life; and after the death of C. 8S.
he directed that the estate should
be sold and divided among the
grandchildren of the testator’ who
should be living at the death of C. S.
B. married one of the grandchildren,
and after the death of C. S., B. be-
came bankrupt. B. and wife, after
the decease of ©. S., sold the prop-
erty claimed under the will of A. H.,
and the plaintiff claimed under this
conveyance. By the Court.— The de-
cisions of the English courts abund-
antly prove that a possibility,
whether belonging to the husband
or the wife, would not pass to the
assignees of the husband, on his be-
coming bankrupt, if it were not for
the strong language of the statutes
of bankruptcy. Krumbaar v. Burt
2 Wash, C, C. R. 406.
28 §3
debts shall amount to two thousand dollars, shall have power, by
commission under his hand and seal, to appoint such good and sub-
stantial persons, being citizens of the United States, and resident in
such district, as such judge shall deem proper, not exceeding three,
to be commissioners of the said bankrupt, and in case of vacancy or
refusal to act, to appoint others from time to time as occasion may re-
quire: Provided always, that before any commission shall issue, the
creditor or creditors petitioning shall make affidavit or solemn affirma-
tion before the said judge of the truth of his, her or their debts,
and give bond, to be taken by the said judge, in the name and for
the benefit of the said party so charged as a bankrupt, and in such
penalty, and with such surety, as he shall require, to be conditioned
for the proving of his, her or their debts, as well before the com-
missioners as upon a trial at law, in case the due issuing forth of the
said commission shall be contested, and also for proving the party a
bankrupt, and to proceed on such commission in the manner herein
prescribed. And if such debt shall not be really due, or after such
commission taken out it cannot be proved that the party was a bank-
rupt, then the said judge shall upon the petition of the party ag-
grieved, in case there be occasion, deliver such bond to the said party,
who may sue thereon, and recover such damages under the penalty of
the same, as, upon trial at law, he shall make appear he has sustained,
by reason of any breach of the condition thereof.

§ 3. And be it further enacted, That before the commissioners shall
be capable of acting, they shall respectively take and subscribe the
following oath or affirmation, which shall be administered by the
judge issuing the commission, or by any of the judges of the Supreme
Court of the United States, or any judge, justice or chancellor of
any State court, and filed in the office of the clerk of the district
court: “TI, A. B., do swear, or affirm, that I will faithfully, impar-

Toe Bankruptcy Law.

The possibility held by B. under
the will of A. H. formed no part of
his estate to which he was entitled
in law or equity, of which the com-
missions could take possession un-
der the fifth section of the Bank-
ruptey Law of the United States;
and, therefore, they could not trans-
fer it to the assignees of the bank-
rupt, under the provisions of the
sixth section. Ibid.

The provisions of the English
Bankruptcy Laws, and those of the
Bankruptcy Law of the United
States, differ in relation to the con-
tingent interests of the bankrupt;

and it is clear that by the most lib-
eral construction of the law the in-
terest of the husband in the estate
of his wife, under the will of A. H.,
did not pass to the assignees. Ibid.

So exclusively have bankrupt laws
operated on traders, that it may well
be doubted whether an act of Con-
gress subjecting to such a law
every description of persons within
the United States would comport
with the spirit of the powers vested
in them in relation thereto. Per
Livingston, J., in Adams v. Storey,
Paine’s C. C. R. 79.
§§ 4,5 Act oF 1800. 29

tially and honestly, according to the best of my skill and knowledge,
execute the several powers and trusts reposed in me, as a commis-
sioner, in a commission of bankruptcy against » and
that without favor or affection, prejudice or malice.” And the com-
missioners, who shall be sworn as aforesaid, shall proceed, as soon
as may be, to execute the same; and upon due examination, and suffi-
cient cause appearing against the party charged, shall and may
declare him or her to be a bankrupt: Provided, that before such
examination be had, reasonable notice thereof, in writing, shall be
delivered to the person charged as a bankrupt; or if he or she be not
found at his or her usual place of abode, to some person of the family
above the age of twelve years, or if no such person appear, shall be
fixed at the front or other public door of the house in which he or
she usually resides, and thereupon it shall be in the power of such
person, so charged as aforesaid, to demand before, or at the time ap-
pointed for such examination, that a jury be empanelled to inquire into
the fact or facts alleged as the causes for issuing the commission, and
on such demand being made the inquiry shall be had before the judge
granting the commission, at such time as he may direct, and in that
case such person shall not be declared bankrupt, unless, by the verdict
of the jury, he or she shall be found to ‘be within the description
of this act, and shall be convicted of some one of the acts described
in the first section of this act: Provided also, that any commission
which shall be taken out as aforesaid, and which shall not be proceeded
in as aforesaid, within thirty days thereafter, may be superseded by
the said judge who shall have granted the same, upon the application
of the party thereby charged as a bankrupt, or of any creditor of
such person, unless the delay shall have been unavoidable, or upon
a just occasion.

§ 4. And be it further enacted, That the commissioners so to be
appointed shall have power forthwith, after they have declared such
person a bankrupt, to cause to be apprehended, by warrant under
their hands and seals, the ‘body of such bankrupt, wheresoever to he
found within the United States: Provided, they shall think that
there is reason to apprehend that the said bankrupt intends to ab-
second or conceal ‘him or herself, and in case it be necessary in order
to take the body of said bankrupt, shall have power to cause the doors
of the dwelling-house of such bankrupt to be ‘broken, or the doors
of any other house in which he or she shall be found.

§ 5. And be it further enacted, That it shall be the duty of the
commissioners so to be appointed, forthwith, after they have declared
such person a bankrupt, and they shall have power to take into their
possession all the estate, real and personal, of every nature and de-
scription, to which the said bankrupt may be entitled, either in law
or equity, in any manner whatsoever, and cause the same to be in-
ventoried and appraised to the best value, (his or her necessary wear-
ing apparel, and the necessary wearing apparel of the wife and
30 Tur Bangruptcy Law. §§ 6, 7

children, and necessary beds and bedding of such bankrupt only ex-
cepted) and also to take into their possession, and secure, all deeds
and books of account, papers and writings belonging to such bank-
rupt; and shall cause the same to be safely kept, until assignees shall
be chosen or appointed, in manner hereafter provided.

§ 6. And be it further enacted, That the said commissioners shall
forthwith, after they have declared such person a bankrupt, cause
due and sufficient public notice thereof to be given, and in such
notice shall appoint some convenient time and place for the creditors
to meet, in order to choose an assignee or assignees of the said bank-
rupt’s estate and effects; at which meeting the said commissioners
shall admit the creditors of such bankrupt to prove their debts; and
where any creditor shall reside at a distance from the place of such
meeting, shall allow the debt of such creditor to be proved by oath
or affirmation, made before some competent authority, and duly cerli-
fied, and shall permit any person duly authorized by letter of at-
torney from such creditor, due proof of the execution of such letter
of attorney being first made, to vote in the choice of an assignee or
assignees of such bankrupt’s estate and effects in the place and stead
of such creditor: and the said commissioners shall assign, transfer or
deliver over, all and singular, the said bankrupt’s estate and effects,
aforesaid, with all muniments and evidences thereof, to such person
or persons as the major part in value of such creditors, according to
the several debts then proved, shall choose as aforesaid: Provided
always, That in such choice, no vote shall be given by, or in behalf
of, any creditor whose debt shall not amount to two ‘hundred dollars.

§ 7. Provided always, and be it further enacted, That it shall be
lawful for the said commissioners, as often as they shall see cause,
for the better preserving and securing of the bankrupt’s estate, before
assignees shall be chosen as aforesaid, immediately to appoint one or
more assignee or assignees of the estate and effects aforesaid, or any
part thereof; which assignee or assignees aforesaid, or any of them,
may be removed at the meeting of the creditors, so to be appointed
as aforesaid, for the choice of assignees, is such creditors, entitled to
vote as aforesaid, or the major part in value of them, shall think fit;
and such assignee or assignees as shall be so removed, shall deliver up
all the estate and effects of such bankrupt which shall have come
to ‘his or their hands or possession, unto such other assignee or as-
signees as shall be chosen by the creditors as aforesaid; and all such
estate and effects shall be, to all intents and purposes, as effectually
and legally vested in ‘such new assignee or assignees as if the first
assignment had been made to him or them by the said commissioners;
and if such first assignee or assignees shall refuse or neglect, for the
space of ten days next after notice, in writing, from such new assignee
or assignees of their appointment, as aforesaid, to deliver over as
aforesaid, all the estate and effects ‘as aforesaid, every such assignee
or assignees shall, respectively, forfeit a sum not exceeding five thou-
§§ 8-10 Act oF 1800. 31

sand dollars, for the use of the creditors, and shall moreover be liable
for the property so detained.

§ 8. And be it further enacted, That at. any time previous to the
closing of the accounts of the said assignee or assignees so chosen as
aforesaid, it shall be lawful for such creditors of the bankrupt as are
hereby authorized to vote in the choice of assignees, or the inajor part
of them in value, at a regular meeting of the said creditors, to be
called for that purpose by the said commissioners, or by one-fourth
in value of such creditors, to remove all or any of the assignees
chosen as aforesaid, and to choose one or more in his or their place
and stead; and such assignee or assignees as shall be so removed shall
deliver up all the estate and effects of such bankrupt which shall
have come into his or their hands or possession, unto such new as-
signee or assignees as shall be chosen by the creditors at such meeting;
and all such estate and effects shall be, to all intents and purposes,
as effectually and legally vested in such new assignee or assignees as
if the first assignment had been made to him or them by the said
commissioners: and if such former assignee or assignees hall refuse
or neglect, for the space of ten days next after notice, in writing,
from such new assignee or assignees of their appointment, as afore-
said, to deliver over, as aforesaid, all the estate and effects aforesaid,
every such former assignee or assignees shall respectively forfeit a
sum not exceeding five thousand dollars, for the use of the creditors,
and moreover shall be liable for the property so detained.

§ 9. And be it further enacted, That whenever a new assignee or
assignees shall be chosen as aforesaid, no suit at law or in equity shall
be thereby abated; but it shall and may be lawful for the court in
which any suit may depend, upon the suggestion of the removal of a
former assignee or assignees, and of the appointment of a new as-
signee or assignees, to allow the name of such new assignee or assignees,
to be substituted in place of the name or names of the former assignee
or assignees, and thereupon the suit shall be prosecuted in the name
or names of the new assignee or assignees, in the same manner as if
he or they had originally commenced the suit in his or their own
names.

§ 10. And be it further enacted, That the assignment or assign-"
ments of the commissioners of the bankrupt’s estate und effects as
aforesaid, made as aforesaid, shall be good at law or in equity against
the bankrupt, and all persons claiming by, from or under such bank-
rupt, by any act done at the time, or after, he shall have committed
the act of bankruptcy upon which the commission issued: Provided
always, that in case of a bona-fide purchase made before the issuing
of the commission from or under such bankrupt, for a valuable con-
sideration, by any person having no knowledge, information or notice
of any act of bankruptcy committed, such purchase shall not be in-
validated or impeached.
32 ‘ae Bankruptcy Law. §§ 11-13

§ 11. And be it further enacted, That the said commissioners shall

have power, by deed or deeds, under their hands and seals, to ussign
and convey to the assignee or assignees to be appointed or chosen as
aforesaid, any lands, tenements or hereditaments which such bank-
rupt shall be seized of-or entitled to, in fee tail, at law, or in equity,
in possession, remainder or reversion, for the benefit of the creditors;
and all such deeds being duly executed and recorded, according to the
laws of the State within which such lands, tenements or heredita-
ments may be situated, ‘shall be good and effectual against all persons
whom the said bankrupt, by common recovery, or other means, might
or could bar of any estate, right, title of or in the said lands, tenements
or hereditaments.
, § 12. And be it further enacted, That if any bankrupt shall have
conveyed or assured any lands, goods or estate, unto any person, upon
condition or power of redemption, by payment of money or otherwise,
it shall be lawful for the commissioners, or for any person by them
duly authorized for that purpose, by writing, under their hands and
seals, to make tender of money or other performance according to the
nature of such condition, as fully as the bankrupt might have done;
and the commissioners, after such performance or tender, shall have
power to assign such lands, goods and estate for the benefit of the
creditors, as fully and effectually as any other part of the estate of
such bankrupt.

§ 13. And be it further enacted, That the commissioners aforesaid
shall have power to assign, for the use aforesaid, all the debts due to
such bankrupt, or to any other person for his or her use on benefit;
which assignment shall vest the property and right thereof in the
assignee or assignees of such bankrupt, as fully as if the bond, judg-
ment, contract or claim had originally belonged or been made to the
said assignees; and after the said assignment, neither the said bank-
rupt nor any person acting as trustee for him or her, shall have power
‘to recover or discharge the same, nor shall the. same be aitached as
the debt of the said bankrupt; but the assignee or assignees afore-
said shall have such remedy to recover the same, in his or their
own name or names, as such bankrupt might or could have had if
no commission of ‘bankruptcy had issued. And when any action in
the name of such bankrupt shall ‘have been commenced, and shall be
pending for the recovery of any debt or effects of such bankrupt,
which shall be assigned, or shall or might become vested in the as-
signee or assignees of such bankrupt as aforesaid, then such assignee
or assignees may claim to be, and shall be thereupon, admitted to
prosecute such action in his or their name, for the use and benefit of
the creditors of such bankrupt; and the same judgment shall be
rendered in such action, and all attachments and other security taken
therein shall tbe in like manner holden and liable, as if the said action
had been originally commenced in the name of said assignee or as-
signees, after the original plaintiff therein had become a bankrupt
§§ 14-16 Act or 1800. 33

as aforesaid: Provided, that where a debtor shall have, bona-fide, paid
his debt to any ‘bankrupt, without notice that such person was bank-
rupt, he or she shall not be liable to pay the same to the assignee or
assignees,

§ 14. And be it further enacted, That if complaint shall be made
or information given to the commissioners, or if they shall have good
reason to believe or suspect, that any of the property, goods, chattels,
or debts, of the bankrupt are in the possession of any other person,
or that any person is indebted to or for the use of the bankrupt,
then the said commissioners shall have power to summon, or to
cause to be summoned, by their attorney or other person duly au-
thorized by them, all such persons before them, or the judge of the
district where such person shall reside, by such process, or other
means, as they shall think convenient, and upon their appearance to
examine them by parole or by interrogatories, in writing, on oath or
affirmation, which oath or affirmation they are hereby empowered to
administer, respecting the knowledge of all such property, goods,
chattels and debts; and if such person shall refuse to ‘be sworn or
affirmed, and to make answer to such: questions or interrogatories as
shall be administered, and to subscribe the said answers, or upon ex-
amination shall not declare the whole truth touching the subject-
matter of such examination, then it shall be lawful for the commis-
sioners or judge to commit such person to prison, there to be detained
until they shall submit themselves to be examined in manner afore-
said, and they shall, moreover, forfeit double the value of all the
property, goods, chattels and debts by them concealed.

§ 15. And be it further enacted, That if any of the aforesaid per-
sons shall, after legal summons to appear before the commissioners or
judge, to be examined, refuse to attend, or shall not attend at the
time appointed, having no such impediment as shall be allowed of
by the commissioners or judge it shall be lawful for the said com-
missioners or judge to direct their warrants to such person or per-
sons as by them shall be thought proper, to apprehend such persons
as shall refuse to appear, and to bring them before the commis-
sioners or judge to be examined, and upon their refusal to come, to
commit them to prison, until they shall submit themselves to be
examined according to the directions of this act: Provided, that
such witnesses as shall be so sent for shall be allowed such compen-
sation as the commissioners or judge shall think fit, to be ratably
borne by the creditors; and if any person, other than the bankrupt,
either by subornation of others, or by his or her own act, shall
wilfully or corruptly commit perjury, shall on conviction thereof be
fined not exceeding four thousand dollars and imprisoned not ex-
ceeding two years, and moreover shall, in either case, be rendered
incapable of being a witness in any court of record.

§ 16. And be it further enacted, That if any person or persons
shall fraudulently or collusively claim any debts, or claim or detain
34 Tur Bankruptcy Law. §§ 17, 18

any real or personal estate of the bankrupt, every such person shall
forfeit double the value thereof, to and for the use of the creditors. —

§ 17. And be it further enacted, That if any person, prior to his
or her becoming a bankrupt, shall convey to any of his or her children,
or other persons, any lands or goods, or transfer his or her debts or
demands into other persons’ names, with intent to defraud his or her
creditors, the commissioners shall have power to assign the same in
as effectual a manner as if the bankrupt had been actually seized
or possessed thereof.

§ 18. And be it further enacted, That if any person or persons
who shall become bankrupt within the intent and meaning of this
act, and against whom a commission of bankruptcy shall be duly
issued, upon which commission such person or persons shall be de-
clared bankrupt, shall not, within forty-two days after notice thereof,
in writing, to be left at the usual place of abode of such person or
persons, or personal notice in case such person or persons be then in
prison, and notice given in some gazette, that such commission hath
been issued, and of the time and place of meeting of the commissioners,
surrender him or herself to the said commissioners, and sign or
subscribe such surrender, and submit to be examined, from time to
time, upon oath or solemn affirmation, by and before such commis-
sioners, and in all things conform to the provisions of this act, and
also upon such his or her examination fully and truly disclose and
discover all his or her effects and estate, real and personal, and how
and in what manner, to whom and upon what consideration, and at
what time or times, he or she hath disposed of, assigned or transferred,
any of his or her goods, wares or merchandise, fnonies or other effects
and estate, and of all books, papers and writings relating thereunto
of which he or she was possessed, or in or to. which he or she was in
any way interested or entitled, or which any person or persons shall
then have, or shall ihave had in trust for him or her, or for his or
her use, at any time before or after the issuing of the said commission,
or whereby such bankrupt, or his or her family, then hath or may have
or expect any profit, possibility of profit, benefit or advantage what-
soever, except only such part of his or her estate and effects as shall
have been really and bona-fide before sold and disposed of in the way of
his or her trade and dealings, and except such sums of money as shall
have been laid out in the ordinary expenses of his or her family, and
also upon such examination, execute in due form of law such convey-
ance, assurance and assignment of his or her estate, whatsoever and
wheresoever, as shall be devised and directed by the commissioners, to
vest the same in the assignees, their heirs, executors, administrators
and assigns for ever, in trust, for the use of all and every the creditors
of such bankrupt, who shall come in and prove their debts under the
commission; and deliver up unto the commissioners all such part
of his or her, the said hankrupt’s goods, wares, merchandise, money,
effects and estate, and all books, papers and writing thereunto re-
§§ 19-21 Act oF 1800. 35

lating, as at the time of such examination shall be in his or her pos-
session, custody or power, ‘his or her necessary wearing apparel, and
the necessary wearing apparel of the wife and children, and neces-
sary beds and bedding of such bankrupt only excepted, then he
or she the said bankrupt, upon the conviction of any wilful de-
fault or omission in any of the matters or things aforesaid, shall be
adjudged a fraudulent bankrupt, and shall suffer imprisonment for a
term not less than twelve months, nor exceeding ten years, and shall
not at any time after be entitled to the benefits of this act: Provided
always, that in case any bankrupt shall be in prison or custody at
the time of issuing such commission, and is willing to surrender and
submit to be examined according to the directions of this act, and
can be brought before the said commissioners and creditors for that
purpose, the expense thereof shall be paid out of the said bankrupt’s
effects, and in casa such bankrupt is in execution, or cannot be
brought before the commissioners, that then the said commissioners,
or some one of them, shall from time to time attend the said bank-
rupt in prison or custody, and take his or her discovery as in other
cases, and the assignees or one of them, or some person appointed by
them, shall attend such bankrupt in prison or custody, and produce
his or her books, papers and writings, in order! to enable him or her
to prepare his or her discovery; a copy whereof the said assignees shall
apply for, and the said bankrupt shall deliver to them or their order
within a reasonable time after the same shall have been required.

§ 19. And be it further enacted, That the said commissioners shall
appoint, within the said forty-two days, so limited as aforesaid, for
the bankrupt to surrender and conform as aforesaid, not less than
three several meetings for the purposes aforesaid, the third of which
meetings shall be on the last of the said forty-two days: Provided
always, that the judge of the district within which such commission
issues shall have power to enlarge the time so limited as aforesaid,
for the purposes aforesaid, as he shall think fit, not exceeding fifty
days, to be computed from the end of the said forty-two days, so as
such order for enlarging the time be made at least six days before the
expiration of said term.

§ 20. And be it further enacted, That it shall be lawful for the
commissioners, or any other person or officers by them to be appointed,
by their warrant, under their hands and seals, to break open in the
day time the houses, chambers, shops, warehouses, doors, trunks or
chests, of the bankrupt, where any of his or her goods or estate,
deeds, books of account or writings, shall be, and to take possession
of the goods, money and other estate, deeds, books of account. or
writings of such bankrupt.

§ 21. And be it further enacted, That if the bankrupt shall refuse
to be examined, or to answer fully, or to subscribe his or her examina-
tion as aforesaid, it shall be lawful for the, commissioners to commit
the offender to close imprisonment until he or she shall conform him
or herself; and if the said bankrupt shall submit to be examined,
36 Tue Bankruptcy Law. §§ 22-26

and upon his or her examination it shall appear that he or she hath
committed wilful or corrupt perjury, he or she may be indicted there-
for, and being thereof convicted shall suffer imprisonment for a term
not less than two years, nor exceeding ten years. ;

§ 22. And be it further enacted, That every bankrupt having sur-
rendered, shall, at all seasonable times before the expiration of the
said forty-two days, as aforesaid, or of such further time as shall be
allowed to finish his or her examination, be at liberty to inspect his
or her books and writings, in the presence of some person to be ap-
pointed by the commissioners, and to bring with him or her, for his
or her assistance, such persons as he or she shall think fit, not exceed-
ing two at one time, and to make extracts and copies to enable him
or her to make a full discovery of his or her effects; and the said
bankrupt shall be free from arrests, in coming to surrender, and after
having surrendered to the said commissioners for the said forty-two
days, or such farther time as shall be allowed for the finishing his or
her examination; and in case such bankrupt shall be arrested for debt,
or taken on any escape warrant or execution, coming to surrender,
or after his or her surrender within the time before mentioned, then on
producing such summons or notice under the hands of the commis-
sioners, and giving the officer a copy thereof, he or she shall be dis-
charged; and in case any officer shall afterwards detain such bankrupt,
such officer shall forfeit to such bankrupt, for his or her own use,
ten dollars for every day he shall detain the bankrupt.

§ 23. And be it further enacted, That every person who shall
knowingly or wilfully receive or keep concealed any bankrupt so as
aforesaid summoned to appear, or who shall assist such bankrupt in
concealing him or herself, or in absconding, shall suffer such im-
prisonment, not exceeding twelve months, or pay such fine to the
United States, not exceeding one thousand dollars, as upon conviction
thereof shall be adjudged.

§ 24. And be it further enacted, That the said commissioners shall
have power to examine, upon oath or affirmation, the wife of any
person lawfully declared a bankrupt, for the discovery of such part of
his estate as may be concealed or disposed of by such wife, or by any
other person; and the wife shall incur such penalties for not appearing
before the said commissioners, or refusing to be sworn or affirmed
or examined, and to subscribe her examination, or for not disclosing
the truth, as by this act is provided against any other person in like
cases,

§ 25. And be it further enacted, That in case any person shall be
committed by the commissioners for refusing to answer, or for not
fully answering any question, or for any other cause, the commis-
sioners shall in their warrant specify such question or other cause
of commitment.

§ 26. And be it further enacted, That if after the bankrupt shall
have finished his or her final examination, any other person or persons
88 27-29 Act oF 1800. 37

shall voluntarily make discovery of any part of such bankrupt’s estate,
before unknown to the commissioners, such person or persons shall
be entitled to five per cent. out of the effects so discovered, and such
further reward as the commissioners shall think proper; and any
trustee having notice of the bankruptcy, wilfully concealing the estate
of any ‘bankrupt for the space of ten days after the bankrupt shall
have finished his final examination, as aforesaid, shall forfeit double
the value of the estate so concealed, for the benefit of the creditors.

§ 27. And be it further enacted, That if any bankrupt, after the
issuing any commission against him or her, pay to the person who
sued out the same, or give or deliver to such, person, goods, or any
other satisfaction or security for his or her debt, whereby such person
shall privately have and receive a greater proportion of his or her
debt than the other creditors, such preference shall be a new act of
bankruptcy, and on good proof thereof such commission may end shall
be superseded, and it shall and may be lawful for either of the judges
having authority to grant the commission as aforesaid, to award any
creditor petitioning another commission, and such person, so taking
such undue satisfaction as aforesaid, shall forfeit and lose, as well his
or ‘her whole debts, as the whole he or she shall have taken «nd, re-
ceived, and shall pay back or deliver up the same, or the full value
thereof, to the assignee or assignees who shall be appointed or chosen
under such commission, in manner aforesaid, in trust. for, and to
be divided among, the other creditors of the said bankrupt, in pro-
portion to their respective debts.

§ 28. And be it further enacted, That if any bankrupt, after the
issuing any commission against him or her, pay to the person who sued
out the same, or give or deliver to such person, goods, or any other
satisfaction or security, for his or her debt, whereby such person shall
privately have and receive a greater proportion of his or her debt
than the other creditors, such preference shall be a new act of bank-
ruptcy, and on good proof thereof, such commission shall and may
be superseded, and it shall and may be lawful for either of the judges,
having authority to grant the commission as aforesaid, to award any
creditor petitioning another commission; and such person, so taking
such undue satisfaction as aforesaid, shall forfeit and lose, as well his
or her whole debts, as the whole he or she shall have taken and re-
ceived, and shall pay back, or deliver up the same, or the full. value
thereof, to the assignee or assignees who shall be appointed or chosen
under such commission, in manner aforesaid, in trust for, and to be
divided amongst, the other creditors of the said bankrupt, in pro-
portion to their respective debts.

§ 29. And be it further enacted, That every person who shall be
chosen assignee of the estate and effects of a bankrupt shall, at some
time after the expiration of four months, and within twelve months
from the time of issuing the commission, cause at least thirty days
public notice to be given of the time and place the commissioners and
38 Tur Bankruptcy Law. § 30

assignees intend to meet, to make a dividend or distribution of the
bankrupt’s estate and effects; at which time the creditors who have not
before proved their debts shall be at liberty to prove the same;
and upon every such meeting the assignee or assignees shall produce
to the commissioners and creditors then present fair and just accounts
of all his or their receipts and payments, touching the bankrupt’s
estate and effects, and of what shall remain outstanding, and the
particulars thereof, and shall, if the creditors then present, or a major
part of them, require the same, be examined upon oath or sol-
emn affirmation before the same commissioners, touching the truth
of such accounts; and in such accounts the said assignee or assignees
shall be allowed and retain all such sum and sums of money ¢s they
shall have paid or expended in suing out and prosecuting the com-
mission, and all other just allowances on account of or by reason
or means of their being assignee or assignees; and the said commis-
sioners shall order such part of the net produce of the said bankrupt’s
estate as by such accounts or otherwise shall appear to be in the
hands of the said assignees, as they shall think fit, to be forthwith
divided among such of the bankrupt’s creditors as have duly proved
their debts under such commission, in proportion to their several and
respective debts; and the commissioners shall make such their order
for a dividend in writing, under their hands, and shall cause one part
of such order to be filed amongst the proceedings under the said com-
mission, and shall deliver to each of the assignees under such com-
mission a duplicate of such their order, which order of distribution
shall contain an account of the time and place of making such order,
and the sum total or quantum of all the debts proved under the com-
mission, and the sum total of the money remaining in the hands of
the assignee or assignees to be divided, and how many per cent. in
particular is there ordered to be paid to every creditor of his debt;
and the said assignee or assignees, in pursuance of such order, and
without any deed or deeds of distribution to be made for the purpose,
shall forthwith make such dividend and distribution accordingly, and
shall take receipts in a book to be kept for the purpose, from each
creditor, for the part or share of such dividend or distribution which
he or they shall make and pay to each creditor respectively; and such
order and receipt shall be a full and effectual discharge to such assignee
for so much as he shall fairly pay, pursuant to such order as aforesaid.

§ 380. And be it further enacted, That within eighteen months next
after the issuing of the commission the assignee or assignees shall
make a second dividend of the bankrupt’s estate and effects, in case
the same were not wholly divided upon the first dividend, end shall
cause due public notice to be given of the time and place the said
commissioners intend to meet to make a second distribution of the
bankrupt’s estate and effects, and for the creditors who shall not before
have proved their debts to come in and prove the same; and at said
meeting the said assignees shall produce, on oath or solemn affirma-
§§ 31-34 Act oF 1800. 39

tion as aforesaid, their account of the bankrupt’s estate and effects,
and what upon the balance thereof shall appear to be in their hands
shall, by like order of the commissioners, be forthwith divided amongst
such of the bankrupt’s creditors as shall have made due proof of their
debts, in proportion to their several and respective debts, which second
dividend shall be final, unless any suit at law or in equity be pend-
ing, or any part of the estate standing out that could not have been dis-
posed of, or that the major part of the creditors shall not have agreed
to be sold or disposed of, or unless some other or future estate or
effects of the bankrupt shall afterwards come to or vest in the said
assignees, in which cases the said assignees shall, as soon as may be,
convert such future or other estate and effects into money, and shall
within two months after the same be converted into money, by like
order of the commissioners, divide the same among such bankrupt’s
creditors as shall have made due proof of their debt under such com-
mission.

§ 31. And be it further enacted, That in the distribution of the
bankrupt’s effects there shall be paid to every one of the creditors a
portion-rate according to the amount of their respective debts, so that
every creditor having security for his debt by judgment, statute,
recognizance, or specialty, or having an attachment under any of
the laws of the individual States, or of the United States, on ihe estate
of such bankrupt, (Provided, there be no execution executed upon
any of the real or personal estate of such bankrupt before the time
he or she became bankrupts) shall not be relieved upon any such
judgment, statute, recognizance, specialty or attachment, for more
than a ratable part of his debt, with the other creditors of the
bankrupt.

§ 32. And be it further enacted, That the assignees shall keep one
or more distinct book or books' of account, wherein he or they shall
duly enter all sums of money or effects which he or they shall have
received or got into his or their possession, of the said hankrupt’s es-
tate, to which books of account every creditor who shall have proved
his or her debt shall, at all reasonable times, have free resort and in-
spect the same as often as he or she shall think fit.

§ 33. And be it further enacted, That every bankrupt, not heing
in prison or custody, shall at all times after his surrender be bound
to attend the assignees upon every reasonable aotice, in writing, for
that purpose, given or left at the usual place of his or her abode, in
order to assist in making out the accounts of the said bankrupt’s
estate and effects, and to attend any court of record, to be examined
touching the same, or such other. business as the said essignee shall
judge necessary, for which he shall receive three dollars per day.

§ 34. And be it further enacted, That all and every person and
persons who shall become bankrupt as aforesaid, and who shall within
the time limited by this act surrender him or herself to the commis-
sioners, and in all.things conform as in and by this act is directed,
40 Toe Bankruptcy Law. §§ 35, 36

shall be allowed five per cent. upon the net produce of all the estate
that shall be recovered in and received, which shall be paid unto
him or her by the assignee or assignees, in case the net produce of
such estate, after such allowance made, shall be sufficient to pay the
creditors of said bankrupt who shall have proved their debts under
such commission the amount of fifty per cent. on their said debts, re-
spectively, and so as the said five per cent. shall not exceed, in the
whole, the sum of five hundred dollars; and in case the net produce
of the said estate shall, over and above the allowance hereafter men-
tioned, be sufficient to pay the said creditors seventy-five per cent.
on the amount of their said debts, respectively, that then the said
bankrupt shall be allowed ten per cent. on the amount of such net
produce, to be paid as aforesaid, so as such ten per cent. shall not,
in the whole, exceed the sum of eight hundred dollars; and every
such bankrupt shall be discharged from all debts by him cr her due
or owing at the time he or she became bankrupt, and all which were
or might have been proved under the said commission; and in case
any such bankrupt shall afterwards be arrested or prosecuted or im-
pleaded, for or on account of any of the said debts, such bankrupt
may appear without bail, and may plead the general issue, and give
this act and the special matter in evidence. And the certificate of
such bankrupt’s conforming, and the allowance thereof, according to
the directions of this act, shall be, and shall be allowed to be, sufficient
evidence, prima facie, of the party’s being a bankrupt within the
meaning of this act, and of the commission and other proceedings
precedent to the obtaining such certificate, and a verdict shall there-
upon pass for the defendant, unless the plaintiff in such action can
prove the said certificate was obtained unfairly and by fraud, or unless
he can make appear any concealment of estate or effects by such bank-
rupt to the value of one hundred dollars. Provided, That no such
discharge of a bankrupt shall release or discharge any person who
was a partner with such bankrupt at the time he or she became
bankrupt, or who was then jointly held or bound with such bankrupt
for the same debt or debts from which such bankrupt was discharged
as aforesaid.

§ 35. Provided always, and be it further enacted, That if the met
proceeds of the bankrupt’s estate, so to be discovered, recovered and
received, shall not amount to so much as will pay all and every of the
creditors of the said bankrupt who shall have proved their debts under
the said commission, the amount of fifty per cent. on their debts re-
spectively, after all charges first deducted, that then and in such
ease the bankrupt shall not be allowed five per centum on such
estate as shall be recovered in, but shall have and be paid by the
assignees so much money as the commissioners shall think {it to allow,
not more than three hundred dollars, nor exceediny three per centum
on the net proceeds of the said bankrupt’s estate. _

§ 36. Provided also, and be it further enacted,-That no person be-
coming a bankrupt according to the intent and provisions of this act
8§ 37, 38 Act oF 1800. 41

shall ‘be entitled to a certificate of discharge, or to any of the benefits
of the act, unless the commissioners shall certify under their hands to
the judge of the district within which such commission issues that
such bankrupt hath made a full discovery of his or her estate and
effects, and in all things conformed him or herself to the directions
of this act, and that there doth not appear to them any reason to
doubt of the truth of such discovery, or that the same was not a full
discovery of the said bankrupt’s estate and effects, and in all things
conformed him or herself to the directions of this act, and that there
doth not appear to them any reason to doubt of the truth of such
discovery, or that the same was not a full discovery of the said bank-
rupt’s estate and effects; or unless the said judge should be of opinion
that the said certificate was unreasonably denied by the commissioners;
and unless two-thirds, in number and in value, of the creditors of
the bankrupt, who shall be creditors for not less than fifty dollars re-
spectively, and who shall have duly proved their debts under the said
commission, shall sign such certificate to the judge, and testify their
consent to the allowance of a certificate of discharge in pursuance
of this act; which signing and consent shall be also certified by the
commissioners; but the said commissioners shall not certify the same
till they have proof by affidavit or affirmation, in writing, of such
creditors, or of the persons respectively authorized for that pur-
pose signing the said certificate; which affidavit or affirmation, to-
gether with the letter or power of attorney to sign, shall be laid before
the judge of the district within which such commission issues, in
order for the allowing the certificate of discharge, and the said cer-
tificate shall not be allowed unless the bankrupt make oath or affirma-
tion in writing that the certificate of the commissioners and consent
of the creditors thereunto were obtained fairly and without fraud;
and any of the creditors of the said bankrupt are allowed to be heard,
if they shall think fit, before the respective persons aforesaid, against
the making or allowing of such certificates by the commissioners or
judge.

637. And be it further enacted, That if any creditor, or pretended
creditor, of any bankrupt shall exhibit to the commissioners any
fictitious or false debt or demand, with intent to defraud the real
creditors of such ‘bankrupt, and the bankrupt shall refuse to make
discovery thereof and suffer the fair creditors to be imposed upon, he
shall lose all title to the allowance upon the amount of his effects
and to a certificate of discharge as aforesaid, nor shall he be entitled
to the said allowance or certificate df:he has lost at any one time fifty
dollars, or in the whole three hundred dollars, after the passing of
this act and within twelve months:before he became a bankrupt, by
any manner of gaming or wagering whatever.

§ 38. And be it further enacted, That if any bankrupt who shall
have obtained his certificate shall be taken in execution or detained in
prison on account of any debts owing before he became a bankrupt,
42 Toe Bankruptcy Law. §§ 39-41

by reason that judgment was obtained before such certificate was
allowed, it shall be lawful for any of the judges of the court wherein
judgment was so obtained, or for any court, judge or justice, within
the district in which such bankrupt shall be detained, having powers
to award or allow the writ of habeas corpus, on such bankrupt pro-
ducing /his certificate so as aforesaid allowed, to order any sheriff or
gaoler who shall have such bankrupt in custody to discharge such
bankrupt without fee or charge, first giving reasonable notice to the
plaintiff, or his attorney, of the motion for such discharge.

§ 39. And be it further enacted, That every person who shall have
bona-fide given credit to or taken securities, payable at future days,
from persons who are or shall become bankrupts, not due at the time
of such persons becoming bankrupt, shall be admitted to prove their
debts «and contracts as if they were payable presently, and shall have
a dividend in proportion to the other creditors, discounting, where
no interest is payable, at the rate of so much per centum per annum,
as is equal to the lawful interest of the State where the debt was
payable, and the obligee of any bottomry or respondentia bond, and
the assured in any policy of insurance, shall be admitted to claim, and
after the contingency or loss to prove the debt thereon, in like manner
as if the same had happened before issuing the commission; and the
bankrupt shall be discharged from such securities as if such money
had been due and payable before the time of his or her becoming
bankrupt; and such creditors may petition for a commission, or join
in petitioning. :

§ 40. And be it further enacted, That in case any person com-
mitted by the commissioners’ warrant shall obtain a habeas corpus, in
order to be discharged, and there shall appear any insufficiency in the
form of the warrant, it shall be lawful for the court or judge before
whom such party shall be ‘brought by habeas corpus, by rule or war-
rant, to commit such persons to the same prison, there to remain
until he shall conform as aforesaid, unless it shall be made to appear
that he had fully answered all lawful questions put to him by the
commissioners; or in case such person was committed for not signing
his examination, unless it shall appear that the party had good reason
for refusing to sign the same, or that the commissioners had exceeded
their authority in making such commitment; dnd in case the gaoler
to whom such person shall be committed shall wilfully or negligently
suffer such person to escape, or go without the doors or walls of the
prison, such gaoler shall for such offense, being convicted thereof,
forfeit a sum not exceeding thiree thousand dollars, for the use of
the creditors. ibn

§ 41. And be it further enacted, That the gaoler shall, upon the
request of any creditor having proved his debt and showing a cer-
tificate thereof under the hands of the commissioners, which the com-
missioners shall give without fee or reward, produce the person so
committed; and in case such gaoler shall refuse to show such person
$§ 42-46 Act oF 1800. 43

to such creditor requesting the same, such person shall be considered
as having escaped, and the gaoler or sheriff so refusing shall be liable
as for a wilful escape.

§ 42. And be it further enacted, That where it shall appear to the
said commissioners that there hath been mutual credit given by the
bankrupt and any other person, or mutual debts between them at any
time before such person became bankrupt, the assignee or assignees
of the estate shall state the account between them, and one debt may
be set off against the other, and what shall appear to be due on either
side on the balance of such account after such set off, and no more,
shall be claimed or paid on either side respectively.

§ 43. And be it further enacted, That it shall and may be lawful
to and for the assignee or assignees of any bankrupt’s estate and ef-
fects, under the direction of the commissioners, and by and with the
consent of the major part in value of such of the said bankrupt’s
creditors as shall have duly proved their debts under the commis-
sion, and shall be present at any meeting of the said creditors, to be
held in pursuance of due and public notice for that purpose given,
to submit any difference or dispute for, on account of, or by reason
or means of, any matter, cause, or thing whatsoever, relating to such
bankrupt, or to his or her estate or effects, to the final end and de-
termination of arbitrators: to be chosen by the said commissioners,
and the major part in value of such creditors as shall be present at~
such meeting as aforesaid, in such manner as the said assignee or
assignees, under the direction and with the consent aforesaid, shall
think fit and can agree; and the same shall be binding on the several
creditors of the said bankrupt, and the said assignee or assignees are
hereby indemnified for what they shall fairly do, according to the
directions aforesaid.

§ 44. And be it further enacted, That the assignees shall be, and
hereby are, vested with full power to dispose of all the bankrupt’s
estate, real and personal, at public auction or vendue, without being
subject to any tax, duty, imposition, or restriction, any law to the
contrary notwithstanding.

§ 45. And be it further enacted, That if after any commission of
bankruptcy sued forth, the bankrupt happen to die before the com-
missioners shall have distributed the effects, or any part thereof, the
commissioners shall nevertheless proceed to execute the commission
as fully as they might have done if the party were living.

§ 46. And be it further enacted, That where any commission of
bankruptcy shall be delivered to the commissioners therein named, to
be executed, it shall and may be lawful for them before they take
the oath or affirmation of qualification, to demand and take from
the creditor or creditors prosectiting such commission a bond with
one good security, if required, in the penalty of one thousand dollars,
conditioned for the payment of the costs, charges and expenses which
shall arise and accrue upon the prosecution of the said commission:
44 “Tuer Bankruptcy Law. 8§ 47-52

Provided always, that the expenses so as aforesaid to be secured and
paid by the petitioning creditor or creditors shall be repaid to him
or them by the commissioner or assignees out of the first monies
arising from the bankrupt’s estate or effects, if so much be received
therefrom. ‘

§ 47. And be it further enacted, That the district judges in each
district. respectively shall fix a rate of allowance to be made to the
commissioners of bankruptcy, as compensation of services to be ren-
‘dered under the commission, and it shall be lawful for any creditor,
by petition to the district judge, to except to any charge contained
in the account of the commissioners: and the said judge; after hear-
ing the commissioners, may in a summary way decide upon the
validity of such exception.

§ 48. And be it further enacted, That all penalties given by this
act for the benefit of the creditors shall be recovered by the assignee
or assignees by action of debt, and the money so ‘recovered, the
charges of suit being deducted, shall be distributed towards pay-
ment of the creditors.

§ 49. And be it further enacted, That if any action shall be brought
against any commissioner, or assignee or other person, having au-
thority under the commission, for anything done and performed hy
force of this act, the defendant may plead: the general issue, and give
this act and the special matter in evidence; and in case of a non-suit,
discontinuance, or verdict or judgment for him, he shall recover double
costs.

§ 50. And be it further enacted, That if any estate, real or per-
sonal, shall descend, revert to, or become vested in any person after
he or she shall be declared a bankrupt, and before he or she shall
obtain a certificate signed by the judge as aforesaid, all such estate
shall, by virtue of this act, be vested in the said commissioners, and
shall be by them assigned and conveyed to the assignee or assignees
in fee simple or otherwise, in like manner as above directed, with the
estate of the said bankrupt, at the time of the bankruptcy, and the
proceeds thereof shall be divided among the creditors.

§ 51. And be it further enacted, That the said commissioners shall,
once in every year, carefully file in the clerk’s office of the district
court all the proceedings had in every case before them, and which
shall have been finished, including the commissions, examinations,
dividends, entries and other determinations of the said commissioners,
in which office the final certificate of the said bankrupt may also be
recorded; all which proceedings shall remain of record in the said
office, and certified copies thereof shall be admitted as evidence in all
courts, in like manner as the copies of the proceedings of the said
district court are admitted in other tases.

§ 52. And be it further enacted, That it shall and may be lawful
for any creditor of such bankrupt to attend all or any of the examina-
tions of said bankrupt, and the allowance of the final certificate, if he
3§ 53-57 AcT oF 1800. 45

shall think proper, and then and there to propose interrogatories to
be put by the judge or commissioners to the said bankrupt and others,
and also to produce and examine witnesses and documents before such
judge or commissioners, relative to the subject-matter before them.
And in case either the bankrupt or creditor shall think him or herself
aggrieved by the determination of the said judge or commissioners,
relative to any material fact in the commencement or progress of the
said proceedings, or in the allowance of the certificate aforesaid, it
shall and may be lawful for either party to petition the said judge,
setting forth such facts and the determination thereon, with the com-
plaint of the party, and a prayer for trial by jury to determine the
same, and the said judge shall, in his discretion, make order thereon,
and reward a venire facias to the marshal of the district, returnable
within fifteen days before him, for the trial of the facts mentioned
in the said petition, notice whereof shall be given to the commis-
sioners and creditors concerned in the same; at which; time the trial
shall be had, unless, on good cause:‘shown, the judge shall give farther
time, and judgment being entered on the verdict. of the jury shall be
final on the said facts, and the judge or commissioners shall proceed
agreeably thereto.

§ 53. And be it further enacted, That the commissioners before
the appointment of assignees, and the assignees after such appoint-
ment, may from time to time make such allowance out of the bank-
tupt’s estate until he shall have obtained his final discharge, as in
their opinion may be requisite for the necessary support of the said
bankrupt and his family.

§ 54. And be it further enacted, That it shall be lawful for the
major part in value of the creditors, before they proceed to the choice
of assignees, to direct in what manner, with whom and where, the
monies arising by and to be received from time to time out of the
bankrupt’s estate shall be lodged, until the same shall be divided
among the creditors, as herein provided; to which direction every such
assignee and assignees shall conform as often as three hundred dollars
shall be received.

§ 55. And be it further enacted, That every matter and thing by
this act required to be done by the commissioners of any bankrupt
shall be valid to all intents and purposes, if performed by a majority
of them.

§ 56. And be it further enacted, That in all cases where the as-
signee shall prosecute any debtor of the bankrupt for any debt, duty
or demand, the commission, or a certified copy thereof, and the as-
signment of the commissioners of the bankrupt’s estate, shall be con-
clusive evidence of the issuing the commission and of the person
named therein being a trader and bankrupt at the time mentioned
therein.

§ 57. And be it further enacted, That every person obtaining a
discharge from his debts, by certificate as aforesaid, granted under a
46° Tar Bankruptcy Law. §§ 58-60

commission of bankruptcy, shall not on any future commission be
entitled to any other certificate than a discharge of his person only;
unless the net proceeds of the estate and effects of such person so
becoming bankrupt a second time shall be sufficient to pay seventy-
five per cent. to his or her creditors on the amount of their debts
respectively. =

§ 58. And be it further enacted, That any creditor of a person
against whom a commission of bankruptcy shall have been sued forth,
and who shall lay his claim before the commissioners appointed in
pursuance of this act, may at the same time declare his unwillingness
to submit the same to the judgment of the said commissioners, and his
wish that a jury may be impanelled to decide thereon: And in like
manner the assignee or assignees of such bankrupt may object to the
consideration of any particular claim by the commissioners, and re-
quire that the same should be referred to a jury. In either case such
objection and request shall be entered on the books of the commis-
sioners, and thereupon an issue shall be made up between the parties,
and a jury shall be impanneled, as in other cases, to try the same in
the circuit court for the district in which such bankrupt has usually
resided. The verdict of such jury shall be subject to the control of
the court, as in suits originally instituted in the said court, and when
rendered, if not set aside by the said court, shall be certified, to the
commssioners, and shall ascertain the amount of any such claim,
and such creditor or creditors shall be considered in all respects as
having proved their debts under the commission. :

§ 59. And be it further enacted, That the lands and effects of any
person becoming bankrupt may be sold on such credit, and on such
security, as a major part in value of the creditors may direct: Pro-
vided, nothing herein contained shall be allowed so to operate as to
retard the granting the bankrupt’s certificate.

§ 60. And be it further enacted, That if any person becoming hank-
rupt shall be in prison, it shall be lawful for any creditor or creditors,
at whose suit he or she shall be in execution, to discharge him or her
from custody, or if such creditor or creditors shall refuse to do so, the
prisoner may petition, the commissioners to liberate him or her, and
thereupon, if in the opinion of the commissioners the conduct of such
bankrupt shall have been fair, so as to entitle him or her in their
opinion to a certificate, when by law such certificate might be given,
it shall be lawful for them to direct the discharge of such prisoner,
and to enter the same in their books, which being notified to the
keeper of the gaol in which such prisoner may be confined shall be a
sufficient authority for his or her discharge: Provided, that in either
case, such discharge shall be no bar to another execution, if a cer-
tificate shall be refused to such bankrupt: And provided also, that
it shall be no bar to a subsequent imprisonment of such bankrupt
by eo of the commissioners, in conformity with the provisions of

is act.
Act oF 1801. "47

§ 61. And be it further enacted, That this act shall not repeal or
annul, or be construed to repeal or annul, the laws of any
State now in force, or which may be hereafter enacted, for
the relief of insolvent debtors, except so far as the same may
respect persons who are or may be clearly within the purview of
this act, and whose debts shall amount in the cases specified in the
second section thereof to the sums herein mentioned. And if any
person within the purview of this act shall be imprisoned for the
space of three months, for any debt or upon any contract, unless the
creditors of such prisoner shall proceed to prosecute a commission of
bankruptcy against him or her, agreeably to the provisions of this
act, such debtor may and shall be entitled to relief, under any such
laws for the relief of insolvent debtors, this act notwithstanding.

§ 62. And be it further enacted, That nothing contained in this law
shall. in any manner affect the right of preference to prior satisfaction
of debts due to the United States as secured or provided by any law
heretofore passed, nor shall -be construed to lessen or impair any right
to, or security for, money due to the United States or to any of them.

§ 63. And be it further enacted, That nothing contained in this
act shall be taken or construed to invalidate or impair any lien exist-
ing at the date of this act upon the lands or chattels of any person
who may have become a bankrupt. ;

§ 64. And be it further enacted, That this act shall continue in
force during the term of five years, and from thence to the end of
the next session of congress thereafter, and no longer: Provided,
that the expiration of this act shall not prevent the complete execution
of any commission which may have been previously thereto issued.

Approved, April 4, 1800.

Act OF FEBRUARY 13, 1801.

An Act to provide for the more convenient organization of the Courts
of the United States.
(Repealed by Act of March 8, 1802, chap. 8.)

§ 12. [Being the only part of said act relating to the subject of
bankruptcy.] The said circuit courts respectively shall have cog-
nizance, concurrently with the district courts, of all cases which shall
arise, within their respective circuits, under the act to establish an
uniform system of bankruptcy throughout the United States; and
each circuit judge, within his respective circuit, shall and may per-
form, all and singular, the duties enjoined by the said act upon a
judge of a district court: and the proceedings under a commission of
bankruptcy which shall issue from a circuit judge shall, in all re-
spects, be conformable to the proceedings under a commission of bank-
ruptcy which shall issue from a district judge, mutatis mutandis,
48 Tue Banxguptcy Law.

Act or APRIL 29, 1802.
An Act to amend the judicial system of the United States.

§ 11. [Being the only part of said act relating to the subject of
bankruptcy.] In all cases in which proceedings shall, on the said
first day of July next, be pending under a commission of bankruptcy
issued in pursuance of the aforesaid act, entitled “An act to provide
for the more convenient organization of the courts of the United
States,” the cognizance of the same shall be, and hereby is, trans-
ferred to, and vested in, the district judge of the district within which
such commission shall have issued, who is hereby empowered to pro-
ceed therein in the same manner and to the same effect as if such
‘commission of bankruptcy ‘had been issued by his order.

Act oF DECEMBER 19, 1803.

An Act to repeal an act entitled “An act to establish an uniform system
of bankruptcy throughout the United States.”

. Be it enacted by the Senate and House of Representatives of the
United States of America, in Congress assembled, That the act of
Congress passed on the fourth day of April, one thousand, eight hun-
dred, entitled “An act to establish an uniform system of bankruptcy
throughout the United States,” shall be, and the same is hereby, re-
pealed. Provided, nevertheless, that the repeal of the said act shall
in no wise affect the execution of any commission of bankruptcy which
may have been issued prior to the passing of this act, but every such
commission may and shall be proceeded on and fully executed as
though this act had not passed.

Approved, December 19, 1803,
TITLE II.
THE LAW AND PRACTICE OF BANKRUPTCY.

BANERuUpPtcoy Act or AuGcusT 19, 1841.

An Act to establish a uniform System of Bankruptcy throughout the
United States.
(Repealed, March 3, 1843, chap. 82.)

Section 1. Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, That
there be, and hereby is, established throughout the United States a
uniform system of bankruptcy, as follows: All persons whatsoever,
residing in any State, District or Territory of the United States,
owing debts which shall not have been created in consequence
of a defalcation as a public officer; or as executor, administrator,
guardian or trustee, or while acting in any other fiduciary capac-
ity, who shall, by petition, setting forth to the best of his knowl-
edge and belief a list of his or their creditors, their respective places
of residence, and the amount due to each, together with an accurate
inventory of his or their property, rights and credits, of every name,

Decisions ON Laws oF 1841.
1See notes of the decisions of the
courts of the United States on the

bankruptey act of April 4, 1800.

In the case of Nelson, a petitioner
in bankruptcy in the Kentucky dis-
trict, and Carland, an opposing cred-
itor, several points were adjourned
by the District to the Circuit Court.
Upon the hearing of the case in the
Circuit Court, the district judge, as
well as the justices of the Supreme
Court, sat in the case; and, being
opposed in opinion upon questions
adjourned from the District Court,
they were certified to the Supreme
Court on the motion of the counsel
of the petitioner. Held; that the dis-
trict judge cannot sit as a member

4

of the circuit Court, under the “ Act
to establish a uniform system of
bankruptcy throughout the United
States.” Consequently, the points
adjourned could not be brought be-
fore the Supreme Court on a certifi-
cate of division. Nelson v. Carland,
17 Pet. 181; id. 1 How. 265.

An appeal or writ of error will
not lie from the decision of the Cir-
cuit Court, in a case of bankruptcy
adjourned from the District Court.
The decision of the Circuit Court is
conclusive on the district judge.
Ibid.

Under the late bankruptcy act of
the United States, the existence of
a fiduciary debt contracted before
the passage of the act constitutes
no objection to the discharge of the
50 THe Bankruptcy Law.

kind and description, and the location and situation of each and
every parcel and portion thereof, verified by oath, or, if conscientiously
scrupulous of taking an oath, by solemn affirmation, apply to the
proper court, as hereinafter mentioned, for the benefit of this act, and
therein declare themselves to be unable to meet their debts and en-
gagements, shall be deemed bankrupts within the purview of this
act, and may be so declared accordingly by a decree of such court. All
persons, being merchants, or using the trade of merchandise, all, re-
‘tailers of merchandise, and all bankers, factors, brokers, underwriters:
‘or marine insurers, owing debts to the amount of not less than two
thousand dollars, shall be liable to become bankrupts within the true
intent and meaning of this act, and may, upon the petition of one or

debtor from other debts. Chapman This court has no revising power

v. Forsyth, 2 How. 202.

A factor who receives the money
of his principal is not a fiductary,
within the meaning of the act. Ibid.

A bankrupt is bound to state upon
‘his schedule the nature of a debt if
it be a fiduciary one. Should he
‘omit to do so he would be guilty of
a fraud, and his discharge will not
avail him; but if a creditor, in such
‘case, proves his debt and receives a
‘dividend from the estate, he is es-
topped from afterward saying that
his debt was not within the law.
Ibid.

But if the fiduciary creditor does
not prove his debt, he may recover it
afterward from the discharged
bankrupt by showing that it was
within the exceptions of the act.
Ibid.

In Kentucky, the creditor obtains a
dien upon the property of his debtor
by the delivery of a fi. fa. to the
‘sheriff; and this lien is as absolute
before the levy as it is afterward.
Savage’s Assignee v. Best, 3 How.
111.

Therefore a creditor is not de-
prived of this lien by an act of bank-
ruptey on the part of the debtor
committed before the levy is made,
but after the execution is in the
hands of the sheriff. Ibid.

‘over the decrees of the District
Court sitting in bankruptcy; nor is
it authorized to issue a writ of pro-
hibition to it in any case, except
where the District Court is proceed-
ing as a court of admiralty and
maritime jurisdiction. Ex parte
Christy, 3 How. 292.

The District Court, when sitting in
bankruptcy, has jurisdiction over
liens and mortgages existing tpon
the property of a bankrupt, so as to
inquire into their validity and ex-
tent, and grant the same relief
which the state courts might or
ought to grant. Ibid.

The control of the District Court
over proceedings in the state courts
upon such liens is exercised, not over
the state courts themselves, but upon
the parties, through an injunction or
other appropriate proceeding in
equity. Ibid.

The design of the bankruptey act
was to secure a prompt and effect-
ual administration of the estate of
all bankrupts, worked out by the
courts of the United States with-
out the assistance of state tribunals.
Ibid.

The phrase in the sixth section,
“any creditor or creditors who shall
claim any debt or demand under the
bankruptcy,” does not mean only
Act oF 1841. 51

more of their creditors, to whom they owe debts amounting in the
whole to not less than five hundred dollars, to the appropriate court,
be so declared accordingly, in the following cases, to wit: whenever
such person, being a merchant, or actually using the trade of mer-
chandise, or being a retailer of merchandise, or being a banker, factor,
broker, underwriter, or marine insurer, shall depart from the State,
District or Territory, of which he is an inhabitant, with intent to
defraud his creditors; or shall conceal ‘himself to avoid being arrested,
or shall willingly and fraudulently procure himself to be arrested,
or his goods and chattels, lands or tenements, to be attached, dis-
trained, sequestered, or taken in execution; or shall remove his goods,
chattels and effects, or conceal them to prevent their being levied
upon or taken in execution, or by other process; or make any fraudu-
lent conveyance, assignment, sale, gift or other transfer of his lands,
tenements, goods or chattels, credits or evidence of debt: Provided,
however, That any person so declared a bankrupt, at the instance of
a creditor, may, at his election, by petition to such court within ten
days after its decree, be entitled to a trial by jury before such court,
to ascertain the fact of such bankruptcy; or if such person shall re-
side at a great-distance from the place of holding such court, the
said judge, in his discretion, may direct such trial by jury to be had
in the county of such person’s residence, in such manner and under
such directions as the court may prescribe and give; and all such
decrees passed by such court, and not so re-examined, shall be deemed
final and conclusive as to the subject-matter thereof.

§ 2. And be it further enacted, That all future payments, securities,
conveyances, or transfers of property, or agreement made or given

such creditors who come in and
prove their debts, but all creditors
who have a present, subsisting claim
upon the bankrupt’s estate, whether
they have a security or mortgage
therefor or not. Ibid.

Such creditors have a right to
ask that the property mortgaged
shall be sold, and the proceeds ap-
plied toward the payment of their
debts; and the assignee, on the other
hand, may contest their claims.
Tbid.

In the case of a contested claim,
the District Court has jurisdiction,
if resort be had to a formal bill in
equity or other plenary proceeding;
and also jurisdiction to proceed sum-
marily. Ibid.

The principles established in the
ease of Ex parte the City Bank of

New Orleans, In the Matter of
Christy, Assignee of Walden, re-
viewed and confirmed. Ibid.

But this court does not decide
whether or not the jurisdiction of the
District Court over all the property
of a bankrupt, mortgaged or other-
wise, is exclusive, so as to take it
away from the state courts in such
cases. Norton’s Assignee v. Boyd,
3 How. 426.

Where the defendant below be-
came a bankrupt, the Supreme
Court will not award a supersedeas
to stay an execution, because the as-
signee of the bankrupt has his rem-
edy in the Circuit Court. Black v.
Zacharie, 3 How. 483.

(For bankruptcy act of March 2,
1867, and its amendments, with an-
notations, see pages 94 et seq.)
52 Tue Bankruptcy Law.

®

by any bankrupt in contemplation of bankruptcy, and for the purpose
of giving any creditor, indorser, surety, or other person, any prefer-
ence or priority over the general creditors of such bankrupts; and
all other payments, securities, conveyances, or transfers of property,
or agreements made or given by such bankrupt in contemplation of
bankruptcy, to any person or persons whatever, not being a bona-fide
creditor or purchaser, for a valuable consideration, without notice,
shall be deemed utterly void, and a fraud upon this act; and the as-
signee under the bankruptcy shall be entitled to claim, sue for, re-
cover, and receive, the same as part of the assets of the bankruptcy;
and the person making such unlawful preferences and payments
shall receive no discharge under the provisions of this act: Provided,
That all dealings and transactions by and with any bankrupt, bona-
fide made and entered into more than two months before the petition
filed against him or by him, shall not be invalidated or affected by
this act: Provided, That the other party to any such dealings or
transactions had no notice of a prior act of bankruptcy, or of the
intention of the bankrupt to take the benefit of this act. And in
case it shall be made to appear to the court, in the course of the
proceedings in bankruptcy, that the bankrupt, his application being
voluntary, has, subsequent to the first day of January last, or at any
other time, in contemplation of the passage of a bankrupt law, by
assignments or otherwise, given or secured any preference to one
creditor over another, he shall not receive a discharge unless the
same be assented to by a majority in interest of those of his cred-
itors who have not been so preferred: And provided also, That
nothing in this act contained shall be construed to annul, destroy or
impair, any lawful rights of married women, or minors, or any liens,
mortgages, or other securities, on property, real or personal, which
may be valid by the laws of the States respectively, and which are
not inconsistent with the provisions of the second and fifth sections
of this act.

§ 3. And be it further enacted, That all the property, and rights
of property, of every name and nature, and whether real, personal
or mixed, of every bankrupt, except as is hereinafter provided, who
shall, by a decree of the proper court, be declared to be a bankrupt
within this act, shall, by mere operation of law, ipso facto, from the
time of such decree, be deemed to be divested out of such bankrupt,
without any other act, assignment or other conveyance whatsoever;
and the same shall be vested, by force of the same decree, in such
assignee as from time to time shall be appointed by the proper court
for this purpose, which power of appointment and removal such court
may exercise at its discretion, toties quoties; and the assignee so ap-
pointed shall be vested with all the rights, titles, powers and author-
ities to sell, manage and dispose of the same, and to sue for and de-
fend the same, subject to the orders and directions of such court, as
fully, to all intents and purposes, as if the same were vested in or
might be exercised by such bankrupt before or at the time of his
ACT OF 1841. 53

bankruptcy declared as aforesaid; and all suits in law or in equity then
pending, in which such bankrupt is a party, may be prosecuted and
defended by such assignee to its final conclusion, in the same way
and with the same effect as they might have been by such bankrupt;
and no suit commenced by or against any assignee shall be abated
by his death or removal from office, but the same may be prosecuted
or defended by his successor in the same office: Provided, however,
That there shall be excepted from the operation of the provisions
of this section the necessary household and kitchen furniture, and
such other articles and necessaries of such bankrupt as the said as-
signee shall designate and set apart, having reference in the amount
to the family, condition and circumstances of the bankrupt, but alto-
gether not to exceed in value, in any case, the sum of three hundred
dollars; and, also, the wearing apparel of such bankrupt, and that of
his wife and children; and the determination of the assignee in the
matter shall, on exception taken, be subject to the final decision of
said court.

§ 4. And be it further enacted, That every bankrupt who shall
bona-fide surrender all his property, and rights of property, with the
exception before mentioned, for the benefit of his creditors, and shall
fully comply with and obey all the orders and directions which may
from time to time be passed by the proper court, and shall otherwise
conform to all the requisitions of this act, shall (unless a majority
in number and value of his creditors who have proved their debts
shall file their written dissent thereto) be entitled to a full discharge
from all his debts, to be decreed and allowed by the court which has
declared him a bankrupt, and a certificate thereof granted him by
such court accordingly, upon his petition filed for such purpose; such
discharge and certificate not, however, to be granted until after
seventy days’ notice in some public newspaper, designated by such
court, to all creditors who have proved their debts, and other persons
in interest, to appear at a particular time and place, to show cause
why such discharge and certificate shall not be granted; at which
time and place any such creditors, or other persons in interest, may
appear and contest the right of the bankrupt thereto: Provided,
That in all. cases where the residence of the creditor is known, a ser-
vice on him personally, or by letter addressed to him at his known
usual place of residence, shall be prescribed by the court, as in
their discretion shall seem proper, having regard to the distance at
which the creditor resides from such court. And if any such bank-
rupt shall be guilty of any fraud or wilful concealment of his prop-
erty or rights of property, or shall have preferred any of his cred-
itors contrary to the provisions of this act, or shall wilfully omit or
refuse to comply with any orders or directions of such ‘court, or to
conform to any other requisites of this act, or shall, in the proceed-
ings under this act, admit a false or fictitious debt against his estate,
he shall not be entitled to any such discharge or certificate; nor shall
any person, being a merchant, banker, factor, underwriter, broker, or
54 THe Bankruptcy Law.

marine insurer, be entitled to any such discharge or certificate, who
shall become bankrupt, and who shall not have kept proper books
of account, after the passing of this act; nor any person who, after
the passing of this act, shall apply trust funds to his own use: Pro-
vided, That no discharge of any bankrupt under this act shall re-
lease or discharge any person who may be liable for the same debt
as a partner, joint contractor, indorser, surety, or otherwise, for or
with the bankrupt.. And such bankrupt shall at all times be subject
to examination, orally, or upon written interrogatories, in and before
such court, or any commission appointed by the court therefor, on
oath, or, if conscientiously scrupulous of taking an oath, upon his
solemn affirmation, in all matters relating to such bankruptcy, and his
acts and doings, and his property and rights of property, which, in
the judgment of such court, are necessary and proper for the pur-
poses of justice; and if, in any such examination, he shall wilfully
and corruptly answer, or swear, or affirm, falsely, he shall be deemed
guilty of perjury, and shall be punishable therefor in like manner
as the crime of perjury is now punishable by the laws of the United
States; and such discharge and cerfificate, when duly granted, shall ‘n
all courts of justice be deemed a full and complete discharge of all
debts, contracts and other engagements of such bankrupt which are
provable under this act, and shall be and may be pleaded as a full
and complete bar to all suits brought in any court of judicature what-
ever, and the same shall be conclusive evidence of itself in favor of
such bankrupt, unless the same shall be impeached for some fraud
or wilful concealment by him of his property or rights of property,
as aforesaid, contrary to the provisions of this act, on prior reasonable
notice specifying in writing such fraud or concealment; and if, in
any case of bankruptcy, a majority in number and value of the
creditors who shall have proved their debts at the time of hearing
of the petition of the bankrupt for a discharge, as hereinbefore pro-
vided, shall at such hearing file ‘their written dissent to the allow-
ance of a discharge and certificate to such bankrupt, or if, upon such
hearing, a discharge shall not be decreed to him, the bankrupt may
demand a trial by jury upon a proper issue to be directed by the
court, at such time and plage and in such manner as the court may
order; or he may appeal from that decision at any time within ten
days thereafter to the circuit court next to be held for the same
district, by simply entering in the district court, or with the cherk
thereof, upon record, his prayer for an appeal. The appeal shall be
tried at the first term of the circuit court after it be taken, unless,
for sufficient reason, a continuance be granted; and it may be heard
and determined by said court summarily, or by a jury, at the option
‘of the bankrupt; and the creditors may appear and object against a
decree of discharge and the allowance of the certificate, as hereinbe-
fore provided, And if, upon a full hearing of the parties, it shall
appear to the satisfaction of the court, or the jury shall find, that
the bankrupt has made a full disclosure and surrender of all his
Act oF 1841. 55

estate, as by this act required, and has in all things conformed to the
directions thereof, the court shall make a decree of discharge, and
grant a certificate, as provided in this act.

§ 5. And be it further enacted, That all creditors coming and
proving their debts under such bankruptcy, in the manner herein-
after prescribed, the same being bona-fide debts, shall be entitled to
share in the bankrupt’s property and effects, pro rata, without any
priority or preference whatsoever, except only for debts due by such
bankrupt to the United States, and for all debts due by him to
persons who, by the laws of the United States, have a preference, in
consequence of having paid monies as his sureties, which shall be
first paid out of the assets; and any person who shall have performed
any labor as an operative in the service of any bankrupt shall be
entitled to receive the full amount of the wages due to him for such
labor, not exceeding twenty-five dollars: Provided, That such labor
shall have been performed within six months next before the bank-
ruptcy of his employer; and all creditors whose debts are not due
and payable until a future day, all annuitants, holders of bottomry
and respondentia bonds, holders of policies of insurances, sureties, in-
dorsers, bail, or other persons, having uncertain or contingent de-
mands against such bankrupt, shall be permitted to come in and
prove such debts or claims under this act, and shall have a right,
when their debts and claims become absolute, to have the same al-
lowed them; and such annuitants and holders of debts payable in
future may have the present -value thereof ascertained, under the
direction of such court, and allowed them accordingly, as debts in
presenti; and no creditor or other person coming in and proving his
debt or other claim shall be allowed to maintain any suit at law or in
equity therefor, but shall be deemed thereby to have waived all right
of action and suit against such bankrupt; and all proceedings already
commenced, and all unsatisfied judgments already obtained thereon,
shall be deemed to be surrendered thereby; and in all.cases where
there are mutual debts or mutual credits between the parties, the
balance only shall be deemed the true debt or claim between them,
and the residue shall be deemed adjusted by the set-off; all such proof
of debts shall be made before the court decreeing the bankruptcy,
or before some commissioner appointed by the court for that pur-
pose; but such court shall have full power to disallow and set aside
any debt, upon proof that such debt is founded in fraud, imposition,
illegality, or mistake; and corporations to whom any debts are due
may make proof thereof by their president, cashier, treasurer, or other
officer, who may be specially appointed for that purpose; and in ap-
pointing commissioners to receive proof of debts, and perform other
duties under the provisions of this act, the said court shall appoint
such persons as have their residence in the county in which such
bankrupt lives.

§ 6. And be it further enacted, That the district court in every
district shall have jurisdiction in all matters and proceedings in bank-
56 THe Bankruptcy Law.

ruptcy arising under this act, and any other act which may hereafter
be passed upon the subject of bankruptcy; the said jurisdiction to be
exercised summarily, in the nature of summary proceedings in
equity; and for this purpose the said district court shall be deemed
always open. And the district judge may adjourn any point or
question arising in any case in bankruptcy into the circuit court for
the district, in his discretion, to be there heard and determined; and
for this purpose the circuit court of such district shall also be deemed
always open. And the jurisdiction hereby conferred on the district
court shall extend to all cases and controversies in bankruptcy aris-
ing between the ‘bankrupt and any creditor or creditors who shall
claim any debt or demand under the bankruptcy; to all cases and
controversies between such creditor or creditors and the assignee
of the estate, whether in office or removed; to all cases and con-
troversies between such assignee and the bankrupt, and to all acts,
matters and things to be done under and in virtue of the bankruptcy,
until the final distribution and settlement of the estate of the bank-
rupt, and the close of the proceedings in bankruptcy. And the said
courts shall have full authority and jurisdiction to compel obedience
to all orders and decrees passed by them in bankruptcy, by process
of contempt and other remedial process, to the same extent the cir-
cwit courts may now do in any suit pending therein in equity. And
it shall be the duty of the district court in each district, from time
to time, to prescribe suitable rules and regulations, and forms of
proceedings, in all matters of bankruptcy; which rules, regulations
and forms, shall be subject to be altered, added to, revised, or an-
nulled, by the circuit court of the same district, and other rules and
regulations and forms substituted therefor; and in all such rules,
regulations and forms it shall be the duty of the said courts to make
them as simple and brief as practicable, to the end to avoid all un-
necessary expenses, and to facilitate the use thereof by the public
at large. And the said courts shall, from time to time, prescribe a
tariff or table of fees and charges to be taxed by the officers of the
court or other persons for services under this act, or any other on the
subject of bankruptcy; which fees shall be as low as practicable, with
reference to the nature and character of such services.

§ 7. And be it further enacted, That all petitions by any bankrupt
for the benefit of this act, and all petitions by a creditor against any
bankrupt under this act, and all proceedings in the case to the close
thereof, shall be had in the district court within and for the district
in which the person supposed to be a bankrupt shall reside, or have
his place of business, at the time when such petition is filed, except
where otherwise provided in this act. And upon every such petition,
notice thereof shall be published in one or more public newspapers
printed in such district, to be designated by such court, at least
twenty days before the hearing thereof; and all persons interested
may appear at the time and place where such hearing is thus to be
had, and show cause, if any they have, why the prayer of the said
Act oF 1841. 57

petitioner should not be granted; all evidence by witnesses to be used
in all hearings before such court shall be under oath, or solemn
affirmation, when the party is conscientiously scrupulous of taking
an oath, and may be oral or by deposition, taken before such court,
or before any commissioner appointed by such court, or before any
disinterested State judge of the State in which the deposition is
taken; and all proof of debts or other claims, by creditors entitled to
prove the same under this act, shall be under oath or solemn affirma-

tions, as aforesaid, before such court or commissioner appointed --

thereby, or before some disinterested State judge of the State where
the creditors live, in such form as may be prescribed by the rules and
regulations hereinbefore authorized to be made and established by
the courts having jurisdiction in bankruptcy. But all such proofs
of debts and other claims shall be open to contestation in the proper
court having jurisdiction over the proceedings in the particular case
in bankruptcy; and as well the assignee as the creditor shall have a
right to a trial by jury upon an issue to be directed by such court,
to ascertain the validity and amount of such debts or other claims;
and the result therein, unless a new trial shall be granted, if in
favor of the claims, shall be evidence of the validity and amount of
such debts or other claims. And if any person or persons shall falsely
and corruptly answer, swear or affirm, in any hearing or on trial of
any matter, or in any proceeding in such court in bankruptcy, or
before any commissioner, he and they shall be deemed guilty of per-
jury, and punishable therefor in the manner and to the extent pro-
vided by law for other cases.

8. And be it further enacted, That the cireuit court within and
for the district where the decree of bankruptcy is passed shall have
‘concurrent jurisdiction with the district court of the same district
‘of all suits at law and in equity which may and shall be brought by
any assignee of the bankrupt against any person or persons claiming
an adverse interest, or by such person against such assignee, touch-
ing any property or rights of property of said bankrupt transferable
to, or vested in, such assignee; and no suit at law or in equity shall,
in anv case, be maintainable by or against such assignee or bv or
against any person or persons claiming an adverse interest touching
the prcperty and rights of property aforesaid, in any court whatso-
ever unless the same shall be brought within two years after the dec-
laration and decree of bankruptcy, or after the cause of suit shall
first have accrued.

§ 9. And be it further enacted, That all sales, transfers and other
conveyances of the assignee of the bankrupt’s property and rights of
‘property shall be made at such times and in such manner as shall be
ordered and appointed by the court in bankruptcy; and all assets re-
ceived by the assignee in money shall, within sixty days afterwards,
be paid into the court, subject to its order respecting its future safe-
keeping and disposition; ‘and the covirt may require of such assignee
a bond, with at least two sureties, in such sum as it may deem proper,
58 Tor Bankruptcy Law.

conditioned for the due and faithful discharge of all his duties, and
his compliance with the orders and directions of the court; which bond
shall be taken in the name of the United States, and shall, if there
be any breach thereof, be sued and suable, under the order of such
court, for the benefit of the creditors and other persons in interest.

§ 10. And be it further enacted, That in order to ensure a speedy
settlement and close of the proceedings in each case in bankrupicy,
it shall be the duty of the court to order and direct a collection of the
assets and a reduction of the same to money, and a distribution
thereof at as early periods as practicable, consistently with a due
regard to the interests of the creditors; and a dividend and distribution
of such assets as shall be collected and reduced to money, or so much
thereof as can be safely disposed of, consistently with the rights and
interests of third persons having adverse claims thereto, shall be
made among the creditors who have proved their debts, as often as
once in six months from the time of the decree declaring the bank-
ruptcy; notice of such dividends and distribution to be given in some
newspaper or newspapers in the district, designated by the court, ten
days at least before the order therefor is passed; and the pendency of
any suit at law or in equity, by or against such third persons, -shall
not postpone such division and distribution, except so far as the as-
sets may be necessary to satisfy the same; and in all the proceedings
in bankruptcy in each case shall, if practicable, be finally adjusted,
settled and brought to a close by the court, within two years after
the decree declaring the bankruptcy. And where any creditor shall
not have proved his debt until a dividend or distribution shall have
been made and declared, he shall be entitled to be paid the same
amount, pro rata, out of the remaining dividends or distributions
thereafter made, as the other creditors have already received, before
the latter shall be entitled to any portion thereof.

§ 11. And be it further enacted, That the assignee shall have full
authority, by and under the order and direction of the proper court
in bankruptcy, to redeem and discharge any mortgage or other pledge,
or deposit, or lien upon any property, real or personal, whether pay-
able in presenti or at a future day, and to.tender a due performance
of the conditions thereof. And such assignee shall also have au-
thority, by and under the order and direction of the proper court in
bankruptcy, to compound any debts or other claims, or securities
due or belonging to the estate of the bankrupt; but no such order or
direction shall be made until notice of the application is. given in
some public newspaper in the district, to be designated by the court,
ten days at least before the hearing, so that all creditors and other
persons in interest may appear and show cause, if any they have,
at the hearing, why the order or direction should not be passed.

§ 12. And be it further enacted, That if any person who shall have
been discharged under this act, shall afterward become bankrupt, he
shall not again he entitled to a discharge under this act, unless his
estate shall produce (after all charges) sufficient to pay every cred-
Act oF 1841. 59

itor seventy-five per cent. on the amount of the debt which shall have
been allowed to each creditor.

§ 13. And be it further enacted, That the proceedings in all cases
in bankruptcy shall be deemed matters of record; but the same shall
not be required to be recorded at large, but shall be carefully filed,
kept and numbered in the office of the said court, and a docket only,
or short memorandum thereof, with the numbers, kept in a book
by the clerk of the court; and the clerk of the court, for affixing his
name and the seal of the court to any form, or certifying a copy
thereof, when required thereto, shall be entitled to receive, as com-
pensation, the sum of twenty-five cents, and no more. And no officer
of the court, or commissioner, shall be allowed by the court more than
one dollar for taking the proof of any debt or other claim of any
ereditor or other person against the estate of the bankrupt; but he
may be allowed, in addition, his actual travel expenses for that
purpose.

§ 14. And be it further enacted, That where two or more persons,
who are partners in trade, become insolvent, an order may be made
in the manner provided in this act, either on the petition of such
partners, or any one of them, or on the petition of any creditor of
the partners, upon which order all the joint stock and property of
the company, and also all the separate estate of each of the partners,
shall be taken, excepting such parts thereof as are herein exempted;
and all the creditors of the company, and the separate creditors of
each partner, shall be allowed to prove their respective debts; and
the assignees shall also keep separate accounts of the joint stock or
property of the company, and of the separate estate of each inember
thereof; and after deducting out of the whole amount received by
such assignees the whole of the expenses and disbursements paid by
them, the net proceeds of the joint stock shall be appropriated to
pay the creditors of the company, and the net proceeds of the sepa-
tate estate of each partner shall be appropriated to pay his separate
creditors; and if there shall be any balance of the separate estate of
any partner, after the payment of his separate debts, such balance
shall be added to the joint stock, for the payment of the joint cred-
itors; and if there shall be any balance. of the joint stock, after pay-
ment of the joint debts, such balance shall be divided and appropriated
to and among the separate estates of the several partners, according
to their respective rights and interests therein, and as it would have
been if the partnership had been dissolved without any bankruptey;
and the sum so appropriated to the separate estate of each partner
shall be applied to the payment of his separate debts; and the cer-
tificate of discharge shall be granted or refused to each partner, as
the same would or ought to be if the proceedings had been against
him alone under this act; and in all other respects the proceedings
against partners shall be conducted in the like manner as if they
had been commenced and prosecuted against one person alone.
60 Tur Bankruptcy Law.

§ 15. And be it further enacted, That a copy of any decree of
bankruptcy, and the appointment of assignees, as directed by the
third section of this act, shall be recited in every deed of lands be-
longing to the bankrupt, sold and conveyed by any assignees under
and by virtue of this act; and that such recital, together with certified
copy of such order, shall be full and complete evidence both of the
bankruptcy and assignment therein recited, and supersede the neces-
sity of any other proof of such bankruptcy and assignment to validate
the said deed; and all deeds containing such recital, and supported
by such proof, shall be as effectual to pass the title of the bankrunt,
of, in and to, the lands therein mentioned and described, to the pur-
chaser, as fully to all intents and purposes, as if made by such bank-
rupt himself immediately before such order.

§ 16. And be it further enacted, That all jurisdiction, power and
authority, conferred upon and vested in the district court of the
United States by this act, in-cases in bankruptcy, are hereby con-
ferred upon and vested in the circuit court of the United States for
the District of Columbia, and in and upon the supreme or superior
courts of any of the Territories of the United States, in cases in
bankruptcy, where the bankrupt resides in the said District of Colum-
bia, or in either of the said Territories.

§ 17. And be it further enacted, That this act shall take effect
from and after the first day of February next.

Approved, August 19, 1841.

Act oF Marcu 3, 1843.
An Act to Repeal the Bankrupt Act.

Be it enacted by the Senate and House of Representatives of the
United States of America, in Congress assembled, That the act entitled
“An act to establish a uniform system of bankruptcy throughout the
United States,” approved on the nineteenth day of August, eighteen
hundred and forty-one, be, and the same is hereby repealed: Pro-
vided, That this act shall not affect any case or proceeding in bank-
tuptcy commenced before the passage of this act, or any pains,
penalties or forfeitures incurred under the said act; but every such
proceeding may be continued to its final consummation in like manner
as if this act had not been passed.

Approved, March 3, 1843.
TITLE III.
THE LAW AND PRACTICE IN BANKRUPTCY.

BaNKRuptTcy Act oF JuLy 1, 1898.
(For index, see General Index, ‘“‘ Law of 1898,’’ post.)

(Marginal figures refer to pages of this work on which pertinent decisions
are noted.)

An Act To establish a uniform system of bankruptcy throughout the
United States.

Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,

CHAPTER I. Bankruptcy.
DEFINITIONS. Definitions.

SEcTION 1. MEANING oF WorDs AND PHRASES.— a The words
and phrases used in this Act and in proceedings pursuant hereto
shall, unless the same be inconsistent with the context, be con- ane ee
strued as follows: (1) “A person against whom a petition has a petition has
been filed” shall include a person who has filed a voluntary >" 4.
petition; (2) “adjudication ” shall mean the date of the entry —«adjudica-
of a decree that the defendant, in a bankruptcy proceeding, is tio.”

a bankrupt, or if such decree is appealed from, then the date 225

when such decree is finally confirmed; (3) “appellate courts ” —« appellate
shall include the circuit courts of appeals of the United States, courts.”

the supreme courts of the Territories, and the Supreme Court 123

of the United States; (4) “bankrupt” shall include a person —* bankrupt.”
against whom an involuntary petition or an application to set 194

a composition aside or to revoke a discharge has been filed, or

who has filed a voluntary petition, or who has been adjudged a

bankrupt; (5) “ clerk ” shall mean the clerk of a court of bank-—*«clerk.”
ruptcy; (6) “ corporations ” shall mean all bodies having any of 7°4..nora-
the powers and privileges of private corporations not possessed tions.”

by individuals or partnerships, and shall include limited or other 94, 205, 755
partnership associations organized under laws making the capital
subscribed alone responsible for the debts of the association;

(7) “court” shall mean the court of bankruptcy in which the ae core”
proceedings are pending, and may include the referee; (8) —*courts ot
“courts of bankruptcy” shall include the district courts of bankruptey.”
the United States and of the Territories, the supreme court of 94

the District of Columbia, and the United States court of the

184, 205
62 THe BanKkruptcy Law.

-“‘creditor." Indian Territory, and of Alaska; (9) “ creditor” shall include
205, 316 anyone who owns a demand or claim provable in bankruptcy,

and may include his duly authorized agent, attorney, or proxy;
bank tey:» (10) “date of bankruptcy,” or “ time of bankruptcy,” or “ com-
“bankruptcy,” mencement of proceedings,” or “bankruptcy,” with reference
35 to time, shall mean the date when the petition was filed; (11)
—‘“debt.” “debt” shall include any debt, demand, or claim provable in
—‘‘discharge.” bankruptcy; (12) “ discharge ” shall mean the release of a bank-
mate ae ,rupt from all of his debts which are provable in bankruptcy,
207 " except such as are excepted by this Act; (13) “ document ” shall
zorcliday.” include any book, deed, or instrument in writing; (14) “ holiday ”

shall include Christmas, the Fourth of July, the Twenty-second

of February, and any day appointed by the President of the

United States or the Congress of the United States as a holiday

Feened ingol OF 28 a day of public fasting or thanksgiving; (15) a person shall
yout." ay be deemed insolvent within the provisions of this Act whenever

the aggregate of his property, exclusive of any property which
he may have conveyed, transferred, concealed, or removed, or
permitted to be concealed or removed, with intent to defraud,
hinder or delay his creditors, shall not, at a fair valuation, be
—‘judge.” sufficient in amount to pay his debts; (16) “judge” shall mean
ath,” a judge of a court of bankruptcy, not including the referee; (17)
295 “oath ” shall include affirmation; (18) “ officer” shall include
clerk, marshal, receiver, referee, and trustee, and the imposing
of a duty upon or the forbidding of an act by any officer shall
include his successor and any person authorized by law to per-
— persons.” form the duties of such officer; (19) “ persons” shall include
206-21 corporations, except where otherwise specified, and officers,
partnerships, and women, and when used with reference to the
commission of acts which are herein forbidden shall include
persons who are participants in the forbidden acts, and the
agents, officers, and members of the board of directors or trus-
aopon” bees, OF other similar controlling bodies of corporations; (20)
“ petition ” shall mean a paper filed in a court of bankruptcy
or with a clerk or deputy clerk by a debtor praying for the bene-
fits of this Act, or by creditors alleging the commission of an
—“referee.” act of bankruptcy by a debtor therein named; (21) “ referee ”
shall mean the referee who has jurisdiction of the case or to
whom the case has been referred, or anyone acting in his stead;
—‘“eonceal.” (22) “ conceal” shall include secrete, falsify, and mutilate; (23)
—‘secured “secured creditor” shall include a creditor who has security
Seton. for his debt upon the property of the bankrupt of a nature to
493 be assignable under this Act, or who owns such a debt for which
some indorser, surety, or other persons secondarily liable for the
—"States.” bankrupt has such security upon the bankrupt’s assets; (24)
—‘transfer.” “States” shall include the Territories, the Indian Territory,
ao Alaska, and the District of Columbia; (25) “ transfer” shall in-

—‘‘ officer.”
205
ACT OF 1898. 63

clude the sale and every other and different mode of disposing

of or parting with property, or the possession of property, ab-

solutely or conditionally, as a payment, pledge, mortgage, gift,

or security; (26) “trustee ” shall include all of the trustees of —“ trustee.”
an estate; (27) “wage-earner” shall mean an individual who —*‘wage-
works for wages, salary, or hire, at a rate of compensation not $35"
exceeding one thousand five hundred dollars per year; (28) words Words in mas-
importing the masculine gender may be applied to and include gue" 2°00
corporations, partnerships, and women; (29) words importing —importing,
the plural number may be applied to and mean only a single?"
person or thing; (30) words importing the singular number —importing,
may be applied to and mean several persons or things. aon

CHAPTER II.

CREATION OF COURTS OF BANKRUPTCY AND THEIR JURISDICTION, Courts of
bankruptcy.

§ 2. That the courts of bankruptcy as hereinbefore defined, —U. S. district
viz., the district courts of the United States in the several States, oo
the supreme court of the District of Columbia, the district courts —supreme
of the several Territories, and the United States courts in the eee
Indian Territory and the District of Alaska, are hereby made courts.
courts of bankruptcy, and are hereby invested, within their
respective territorial limits as now established, or as they may
be hereafter changed, with such jurisdiction at law and in Jurisdiction.
equity as will enable them to exercise original jurisdiction in
bankruptcy proceedings, in vacation in chambers and during
their respective terms, as they are now or may be hereafter
held, to (1) adjudge persons bankrupt who have had their prin-
cipal place of business, resided, or had their domicile within
their respective territorial jurisdictions for the preceding six
months, or the greater portion thereof, or who do not have their
principal place of business, reside, or have their domicile within
the United States, but have property within their jurisdictions,
or who have heen adjudged bankrupts by courts of competent
jurisdiction without the United States and have property within
their jurisdiction; (2) allow claims, disallow claims, reconsider [allow and
allowed or disallowed claims, and allow or disallow them against claims, etc.
bankrupt estates; (3) appoint receivers or the marshals, upon ~appoint re-
application of parties in interest, in case the courts shall find 119, 785 ~
it absolutely necessary, for the preservation of estates, to take
charge of the property of bankrupts after the filing of the peti-
‘tion and until it is dismissed or the trustee is qualified; (4) <try and pun-

. : pts,

arraign, try, and punish bankrupts, officers, and other persons, ete.
and the agents, officers, members of the board of directors or **% 7°°
trustees, or other similar controlling bodies, of corporations
for violations of this Act, in accordance with the laws of pro-
cedure of the United States now in force, or such as may be

—to adjudge
bankrupt.
64 Tue Bankruptcy Law.

hereafter enacted, regulating trials for the alleged violation
—topermit of laws of the United States; (5) authorize the business of bank-
See eection of Tupts to be conducted for limited periods by receivers, the mar-
business. —_ghals, or trustees, if necessary in the best interests of the estates;
additional per. (6) bring in and substitute additional persons or parties in pro-
Eee ceedings in bankruptcy when necessary for the complete deter-
—tocollectand mination of a matter in controversy; (7) cause the estates of
distribute —_pankrupts to be collected, reduced to money and distributed,
and determine controversies in relation thereto, except as herein
ee otherwise provided; (8) close estates, whenever it appears that
they have been fully administered, by approving the final ac-
counts and discharging the trustees, and reopen them whenever
—to confirm or it appears they were closed before being fully administered; (9)
reject compo- : eats :
sitions. confirm or reject compositions between debtors and their cred-
—to modify, itors, and set aside compositions and reinstate the cases; (10)
etc., referees Z : . :
findings. consider and confirm, modify or overrule, or return, with in-
structions for further proceedings, records and findings certified
oe to them by referees; (11) determine all claims of bankrupts to
—discharge their exemptions; (12) discharge or refuse to discharge bank-
bankrupts,etc. rupts and set aside discharges and reinstate the cases; (13)
eee enforce obedience by bankrupts, officers, and other persons to
extradite 2! lawful orders, by fine or imprisonment or fine and imprison-
bankrupts. ment; (14) extradite bankrupts from their respective districts
—make orders. to other districts; (15) make such orders, issue such process, and
enter such judgments in addition to those specifically provided
for as may be necessary for the enforcement of the provisions
oo of this Act; (16) punish persons for contempts committed before
—appoint referees; (17) pursuant to the recommendation of creditors, or
trustees: when they neglect to recommend the appointment of trustees,
appoint trustees, and upon complaints of creditors, remove trus-
—taxecosts. tees for cause upon hearings and after notices to them; (18) tax
costs, whenever they are allowed by law, and render judgments
therefor against the unsuccessful party, or the successful party
for cause, or in part against each of the parties, and against
—transfer estates, in proceedings in bankruptcy; and (19) transfer cases
ries to other courts of bankruptcy.
Unspecified Nothing in this section contained shall be construed to de-
ait prive a court of bankruptcy of any power it would possess were

certain specific powers not herein enumerated.

CHapter ITT.

Bankrupts. BANKRUPTS.

225

Actsof bank- § 3. Acts or Bankruptcy.— a Acts of bankruptcy by a per-
ruptey. son shall consist of his having (1) conveyed, transferred, con-
—of what to : 2:
Goneist: cealed, or removed, or permitted to be concealed or removed,

any part of his property with intent to hinder, delay, or defraud
.

Act oF 1898, 65

his creditors, or any of them; or (2) transferred, while insolvent,
any portion of his property to one or more of his creditors with
intent to prefer such creditors over his other creditors; or (3)
suffered or permitted, while insolvent, any creditor to obtain

a preference through legal proceedings, and not having at least
tae days before a sale or final disposition of any property af-
fected by such preference vacated or discharged such ‘preference;
or (+) made a general assignment for the benefit of his creditors;
or (5) admitted in writing his inability to pay his debts and
his willingness to be adjudged a bankrupt on that ground.

b A petition may be filed against a person who is insolvent Petition to be
and who has committed an act of bankruptcy within four months focr mont
after the commission of such act. Such time shall not
expire until four months after (1) the date of the record- from when
ing or registering of the transfer or assignment when theza7y ~
act consists in having made a transfer of any of his prop-
erty with intent to ‘hinder, delay, or defraud his creditors
or for the purpose of giving a preference as hereinbefore
provided, or a general assignment for the benefit of his
creditors, if by law such recording or registering is required or
permitted, or, if it is not, from the date when the beneficiary
takes notorious, exclusive, or continuous possession of the prop-
erty unless the petitioning creditors have received actual notice
of such transfer or assignment.

cIt shall be a complete defense to any proceedings in bank- Defense ot
ruptcy instituted under the first subdivision of this section to :
allege and prove that the party proceeded against was not in-
solvent as defined in this Act at the time of the filing the peti-
tion against him, and if solvency at such date is proved by the
alleged bankrupt the proceedings shall be dismissed, and under
said subdivision one the burden of proving solvency shall tea
on the alleged bankrupt.

d Whenever a person against whom a petition has been filed as
hereinbefore provided under the second and third subdivisions
of this section takes issue with and denies the allegation of his Person deny-
insolvency, it shall be his duty to appear in court on Hie tea
ing, with his books, papers, and accounts, and submit to an ex-
amination, and give testimony as to all matters tending to estab- —to testify.
lish solvency or insolvency, and in case of his failure to so at-
tend and submit to examination the burden of proving his solv- pee
ency shall rest upon him.

e Whenever a petition is filed by any person for the purpose
of having another adjudged a bankrupt, and an application is
made to take charge of and hold the property of the alleged
bankrupt, or any part of the same, prior to the adjudication
and pending a hearing on the petition, the petitioner pr appli- Petitioner to
cant shall file in the same court a bond with at least two goo

5
66

-—liability for
‘costs, etc.

—allowance of
costs, etc.

Counsel fees,
etc., to be fixed
by court.

228

Who may
b ‘come bank-
rupts.

—voluntary.
—involuntary.

Partnership.
226, 734

—administra-
tion of estate.

—jurisdiction
over one part-
mer sufficient.

—trustee’s
duty.

—expenses,
26, 733

—payment of
artuership
ebts.

—payment of
individual
debts.

Tue BANKRUPTCY Law.

and sufficient sureties who shall reside within the jurisdiction
of said court, to be approved by the court or a judge thereof,
in such sum as the court shall direct, conditioned for the pay-
ment, in case such petition is dismissed, to the respondent, his
or her personal representatives, all costs, expenses, and dam-
ages occasioned by such seizure, taking, and detention of the
property of the alleged bankrupt.

If such petition be dismissed by the court or withdrawn by
the petitioner, the respondent or respondents shall be allowed
all costs, counsel fees, expenses, and damages occasioned by such
seizure, taking, or detention of such property. Counsel fees,
costs, expenses, and damages shall be fixed and allowed by the
court, and paid by the obligors in such bond.

§ 4. WHo May Become Bangrupts.—a Any person who
owes debts, except a corporation, shall be entitled to the bene-
fits of this Act as a voluntary bankrupt. |

b Any natural person, except a wage-earner or a person en-
gaged chiefly in farming or the tillage of the soil, any unin-
corporated company, and any corporation engaged principally
in manufacturing, trading, printing, publishing, or mercantile
pursuits, owing debts to the amount of one thousand dollars
or over, may be adjudged an involuntary bankrupt upon default
or an impartial trial, and shall be subject to the provisions and
entitled to the benefits of this Act. Private bankers, but not
national banks or banks incorporated under State or Terri-
torial laws, may be adjudged involuntary bankrupts.

§ 5. Partners.—a A partnership, during the continuation
of the partnership business, or after its dissolution and before
the final settlement thereof, may be adjudged a bankrupt.

b The creditors of the partnership shall appoint the trustee;
in other respects so far as possible the estate shall be adminis-
tered as herein provided for other estates.

c The court of bankruptcy which has jurisdiction of one of
the partners may have jurisdiction of all the partners and of the
administration of the partnership and individual property.

d The trustee shall keep separate accounts of the partnership
property and of the property belonging to the individual
partners. :

c'The expenses shall be paid from the partnership property
and the individual property in such proportions as the court
shall determine.

f The net proceeds of the partnership property shall be ap-
propriated to the payment of the partnership debts, and the net
proceeds of the individual estate of each partner to the payment
of his individual debts. Should any surplus remain of the
property, of any partner after paying his individual debts, such
surplus shall be added to the partnership assets and be applied
Act oF 1898. 67

to the payment of the partnership debts. Should any surplus —surplus of
of the partnership property remain after paying the partner- espe”?
ship debts, such surplus shall be added to the assets of the
individual partners in the proportion of their respective inter-

ests in the partnership.

g The court may permit the proof of the claim of the part- Claimsof part-
nership estate against the individual estates, and vice versa, pea leey lial:
and may marshal the assets of the partnership estate and in- Yidual estates,
dividual estates so as lo prevent preferences and secure the
equitable distribution of the property of the several estates.

hk In the event of one or more but not all of the members of Administra-
a partnership being adjudged bankrupt, the partnership prop- wapraall pares
erty shall not be administered in bankruptcy, unless by consent fenkrapt
of the partner or partners not adjudged bankrupt; but such 374
partner or partners not adjudged bankrupt shall settle the part-
nership business as expeditiously as its nature will permit, and
account for the interest of the partner or partners adjudged
bankrupt.

§ 6. Exremprions oF Banxruprs.—a This Act shall not af- Exemption of
fect the allowance to bankrupts of the exemptions which are =
prescribed by the State laws in force at the time of the filing
of the petition in the State wherein they have had their domi-
cile for the six months or the greater portion thereof immedi-
ately preceding the filing of the petition. —

§ 7. Duries or Banxrupts.— a The bankrupt-shall (1) at- Duties ot bank-
tend the first meeting of his creditors, if directed by the court fea’ epee
or a judge thereof to do so, and the hearing upon his application 243: 82%
for a discharge, if filed; (2) comply with all lawful orders of the
court; (3) examine the correctness of all proofs of claims filed
against his estate; (4) execute and deliver such papers as shall
be ordered by the court; (5) execute to his trustee transfers of
all his property in foreign countries; (6) immediately inform
-his trustee of any attempt, by his creditors or other persons, to
evade the provisions of this Act, coming to his knowledge; (7)
in case of any person having to his knowledge proved a false
claim against his estate, disclose that fact immediately to his
trustee; (8) prepare, make oath to, and file in court within ten
days, unless further time is granted, after the adjudication, if
an involuntary bankrupt, and with the petition if a voluntary
bankrupt, a schedule of his property, showing the amount and
kind of property, the location thereof, its money value in detail,
and a list of his creditors, showing their residences, if known,
if unknown, that fact to be stated, the amounts due each of
them, the consideration thereof, the security held by them, if
any; and a claim for such exemptions as he may be entitled to,
all in triplicate, one copy of each for the clerk, one for the ref-
eree, and one for the trustee; and (9) when present at the first
68 Tur Bankruptcy Law.

meeting of his creditors, and at such other times as the court
shall order, submit to an examination concerning the conduct-
ing of his business, the cause of his bankruptcy, his dealings
with his creditors and other persons, the amount, kind, and
whereabouts of his property, and, in addition, all matters which
may affect the administration and settlement of his estate; but
no testimony given by him shall be offered in evidence against
him in any criminal proceeding.
Bankrupt, ,. Provided, however, That he shall. not be required to attend
pelled to at- a meeting of his creditors, or at or for an examination at a place
aa3 °° more than one hundred and fifty miles distant from his home
—examine or principal place of business, or to examine claims except when
oe presented to him, unless ordered by the court, or a judge thereof,
Expenses for for cause shown, and the bankrupt shall be paid his actual ex-
meats penses from the estate when examined or required to attend
at any place other than the city, town, or village of his residence.
Death orinsan~ § 8. DEATH OR INSANITY oF BANKRUPTS.— a The death or

rept insanity of a bankrupt shall not abate the proceedings, but the
569 same shall be conducted and concluded in the same manner,

procestings” 80 far as possible, as though he had not died or become insane:

—widow enti- Provided, That in case of death the widow and children shall

ete. °°" he entitled to all rights of dower and allowance fixed by the laws
of the State of the bankrupt’s residence.

Protection and =§ 9. PROTECTION AND DETENTION oF BaNKRUPTS—aA

etention of oe

bankrupts. bankrupt shall be exempt from arrest upon civil process except

ot in the following cases: (1) When issued from a court of bank-
ruptcy for contempt or disobedience of its lawful orders; (2)
when issued from a State court having jurisdiction, and served
within such State, upon a debt or claim from which his dis-
charge in bankruptcy would not be a release, and in such case

Exemption he shall be exempt from such arrest when in attendance upon

‘om arrest. :
a court of bankruptcy or engaged in the performance of a duty
imposed by this Act.

petention for 6 The judge may, at any time after the filing of a petition

examination. by or against a person, and before the expiration of one month
after the qualification of the trustee, upon satisfactory proof
by the affidavits of at least two persons that such bankrupt is
about to leave the district in which he resides or has his prin-
cipal place of business to avoid examination, and that his de-
parture will defeat the proceedings in bankruptcy, issue a war-
rant to the marshal, directing him to bring such bankrupt forth-

ay Pexertin with before the court for examination. If upon hearing the

days, etc. evidence of the parties it shall appear to the court or a judge
thereof that the allegations are true and that it is necessary,
he shall order such marshal to keep such bankrupt in custody
not exceeding ten days, but not imprison him, until he shall be
examined and released or give bail conditioned for his appear-

ance for examination, from time to time, not exceeding in all
AcT oF 1898. 69.

ten days, as required by the court, and for his obedience to all
lawful orders made in reference thereto.

§ 10. Exrrapirion or BANKRUpTs.— a Whenever a warrant Extradition of
for the apprehension of a bankrupt shall have been issued, and bankrupts.
he shall have been found within the jurisdiction of a court other
than the one issuing the warrant, he may be extradited in the
same manner in which persons under indictment are now ex-
tradited from one district within which a district court has
jurisdiction to another.

§ 11. Surrs By AND AaGaINst BanKRupts.—a A suit which Suits by ane
is founded upon a claim from which a discharge would be arapts
release, and which is pending against a person at the time of §*®
the filing of a petition against him, shall be stayed until after ate
an adjudication or the dismissal of the petition; if such person * 7" *"°™
is adjudged a bankrupt, such action may be further stayed until —further stay
twelve menths after the date of such adjudication, or, if within
that time such person applies for a discharge, then until the
question of such discharge is determined.

b The court may order the trustee to enter his appearance and To
defend any pending suit against the bankrupt. o

c A trustee may, with the approval of the court, be permitted —opeenenced
to prosecute as trustee any suit commenced by the bankrupt Gication
prior to the adjudication, with like force and effect as though
it had been commenced by him.

d Suits shall not be brought by or against a trustee of a bank- pees
rupt estate subsequent to two years after the estate has been against trus-
closed. tees;

§ 12. ComposITIons, WHEN ConFIRMED.— a A bankrupt may compositions.
offer terms of composition to his creditors after, but not before, 9° .. eine
he has been examined in open court or at a meeting of his crecl- be offered.
itors and filed in court the schedule of his property and list of
his creditors, required to be filed by bankrupts.

b An application for the confirmation of a composition may 7 application
be filed in the court of bankruptcy after, but not before, it has ing.
been accepted in writing by a majority in number of all cred- 6%
itors whose claims have been allowed, which number must rep-
resent a majority in amount of such claims, and the considera-
tion to be paid by the bankrupt to his creditors, and the money
necessary to pay all debts which have priority and the cost of
the proceedings, have been deposited in such place as shall be
designated by and subject to the order of the judge.

c A date and place, with reference to the convenience of the 4.4, ote, gor
parties in interest, shall be fixed for the hearing upon each ap- hearing. ”
plication for the confirmation of a composition, and such ob-
jections as may be made to its confirmation.

d The judge shall confirm a composition if satisfied that (1) oontlivions of
it is for the best interests of the creditors; (2) the bankrupt has :
not been guiltv of any of the acts or failed to perform any of
70

distribution
of considera-
tion.
610

—may be set
aside,

- upon prac-
tice of fraud.

Discharges.

—application
for.
645

"hearing of
application.

Tur Bankruptcy Law.

the duties which would be a bar to his discharge; and (3) the
offer and its acceptance are in good faith and have not been
made or procured except as herein provided, or by any means,
promises, or acts herein forbidden.

e Upon the confirmation of a composition, the consideration
shall be distributed as the judge shall direct, and the case dis-
missed. Whenever a composition is not confirmed, the estate
shall be administered in bankruptcy as herein provided.

§ 13. Compositions, WHEN Sut AstpE.—a The judge may,
upon the application of parties in interest filed at any time
within six months after a composition has been confirmed, set
the same aside and reinstate the case if it shall be made to
appear upon a trial that fraud was practiced in the procuring
of such composition, and that the knowledge thereof has come
to the petitioners since the confirmation of such composition.

§ 14. DiscHarGEs, WHEN GRANTED.— a Any person may,
after the expiration of one month and within the next twelve
months subsequent to being adjudged a bankrupt, file an appli-
cation for a discharge in the court of bankruptcy in which the
proceedings are pending; if it shall be made to appear to the
judge that the bankrupt was unavoidably prevented from filing
it within such time, it may-be filed within but not after the
expiration of the next six months.

b The judge shall hear the application for a discharge, and

647, 651, 685 Such proofs and pleas as may be made in opposition thereto by

Confirmation
discharges
from debts.

Discharges,
when revoked.
730

Co-debtors’
Hability not
affected by
bankrupt’s
discharge, etc.
696

parties in interest, at such time as will give parties in interest
a reasonable opportunity to be fully heard, and investigate the
merits of the application and discharge the applicant unless he
has (1) committed an offense punishable by imprisonment as
hercin provided; or (2) with fraudulent intent to conceal his
true financial condition and in contemplation of bankruptcy,
destroyed, concealed, or failed to keep books of account or rec-
ords from which his true condition might be ascertained.

e The confirmation of a composition shall discharge the bank-
rupt from his debts, other than those agreed to be paid by the
terms of the composition and those not affected by a discharge.

§ 15. Discuarcrs, wHEN REvoKepD—aThe judge may,
upon the application of the parties in interest who have not been
guilty of undue laches, filed at any time within one year after
a discharge shall have been granted, revoke it upon a trial if it
shall be made to appear that it was obtained through the fraud
of the bankrupt, and that the knowledge of the fraud has come
to the petitioners since the granting of the discharge, and that
the actual facts did not warrant the discharge.

§ 16. Co-DEBrors or BANKRuptTS.— a The liability of a per-
son who is a co-debtor with, or guarantor or in any manner a
surety for, a bankrupt shall not be altered by the discharge of
such bankrupt.
AcT oP 1898. 71

§ 1%. Depts Not AFFECIED By A DiscHARar.— a A discharge Debts not
in bankruptcy shall release a bankrupt from all of his provable dischae: *
debts, except such as (1) are due as a tax levied by the United -v.s. ana
States, the State, county, district, or municipality in which gute @**s-
he resides; (2) are judgments in actions for frauds, or obtaining —judgmentsin
property by false pretenses or false representations, or for will- ff8u¢ actions,
ful and malicious injuries to the person or property of another;
(3) have not been duly scheduled in time for proof and allow-—claims not
ance, with the name of the creditor if known to the bankrupt, Be nabedets
unless such creditor had notice or actual knowledge of the pro-
ceedings in bankruptcy; or (4) were created by his fraud, embez- —created by

. F meas: : . . fraud, etc.

ziement, misappropriation, or defalcation while acting as an

officer or in any fiduciary capacity.

CHAPTER IV.

Courts and
COURTS AND PROCEDURE THEREIN. procedure,

§ 18. Process, PLEADINGS, AND ADJUDICATIONS.— a Upon service of
the filing of a petition for involuntary bankruptcy, service Peiien. =
thereof, with a writ of subpoena, shall be made upon the person bankrupicy.
therein named as defendant in the same manner that service
of such process is now had upon the commencement of a suit
in equity in the courts of the United States, except that it shall
be returnable within fifteen days, unless the judge shall for—returnable in
cause fix a longer time; but in case personal service can not be ©)
made, then notice shall be given by publication in the same man-
ner and for the same time as provided by law for notice by pub- [by publica-
lication in suits in equity in courts of the United States. a,

b The bankrupt, or any creditor, may appear and plead to Pleading
the petition within ten days after the return day, or within such “°°
further time as the court may allow.

c All pleadings setting up matters of fact shall be verified —verification.
under oath.

d If the bankrupt, or any of his creditors, shall appear, within Court to deter-
the time limited, and controvert the facts alleged in the peti- when facts
tion, the judge shall determine, as soon as may be, the issues comtroverted.
presented by the pleadings, without the intervention of a jury,
except in cases where a jury trial is given by this Act, and
makes [sic] the adjudication or dismiss the petition.

e If on the last day within which pleadings may be filed none Decision where
are filed by the bankrupt or any of his creditors, the judge shall pieatinss not
on the next day, if present, or as soon thereafter as practicable, #96
make the adjudication or dismiss the petition.

f If the judge is absent from the district, or the division of If judge
the district in which the petition is pending, on the next day be referred to

after the last day on which pleadings may be filed, and none 493"
72

Hearing on
filing volun-
tary petition.
—absence of
judge.

Jury trials.
294

—person
against whom
involuntary
petition filed,
entitled.

—right waived.

Attendance of
jury, ete.

Laws as to jury

trials appli-
cable.

Oaths, by
whom admin-
istered.

Affirmations.
295, 845

Evidence.
Compulsory
attendance of
witnesses.
200

Depositions,
laws govern-
ing.

Toe Bankruptcy Law.

have been filed by the bankrupt or any of his creditors, the
‘clerk shall forthwith refer the case to the referee.

g Upon the filing of a voluntary petition the judge shall hear
the petition and make the adjudication or dismiss the petition.
If the judge is absent from the district, or the division of the
district in which the petition is filed at the time of the filing,
the clerk shall forthwith refer the case to the referee.

§ 19. Jury Triats.—a A person against whom an involun-
tary petition has been filed shall be entitled to have a trial by
jury, in respect to the question of his insolvency, except as
herein otherwise provided, and any act of bankruptcy alleged
in such petition to have been committed, upon filing a written
application therefor at or before the time within which an
answer may be filed. If such application is not filed within such
time, a trial by jury shall be deemed to have been waived.

bIf a jury is not in attendance upon the court, one may be
specially summoned for the trial, or the case may be postponed,
or, if the case is pending in one of the district courts within
the jurisdiction of a circuit court of the United States, it may be
certified for trial to the circuit court sitting at the same place,
or by consent of parties when sitting at any other place in the
same district, if such circuit court has or is to have a jury first
in attendance.

c The right to submit matters in controversy, or an alleged
offense under this Act, to a jury shall be determined and en-
joyed, except as provided by this Act, according to the United
States laws now in force or such as may be hereafter enacted
in relation to trials by jury.

§ 20. Oatus, AFFIRMATIONS.— a-Oaths required by this Act,
except upon hearings in court, may be administered by (1) ref-
erees; (2) officers authorized to administer oaths in proceed-
ings before the courts of the United States, or under the laws
of the State where the same are to be taken; and (3) diplomatic
or consular officers of the United States in any foreign country.

b Any person conscientiously opposed to taking an oath may,
in lieu thereof, affirm. Any person who shall affirm falsely
shall be punished as for the making of a false oath.

§ 21. Eyipencr.— a A court of bankruptcy may, upon appli-
cation of any officer, bankrupt, or creditor, by order require
any designated person, including the bankrupt, who is a com-
petent witness under the laws of the State in which the pro-
ceedings are pending, to appear in court or before a referee
or the judge of any State court, to be examined concerning the
acts, conduct, or property of a bankrupt whose estate is in pro-
cess of administration under this Act.

b The right to take depositions in proceedings under this Act
shall be determined and enjoyed according to the United States
Act oF 1898. "3

laws now in force, or such as may be hereafter enacted relating
to the taking of depositions, except as herein provided.

c Notice of the taking of depositions shall be filed with the a acteet
referee in every case. When depositions are to be taken in’
opposition to the allowance of a claim notice shall also be served
upon the claimant, and when in opposition to a discharge notice
shall also be served upon the bankrupt.

d Certified copies of proceedings before a referee, or of papers, Certified
when issued by the clerk or referee, shall be admitted as evi- pedis bri
dence with like force and effect as certified copies of the records 25°
of district courts of the United States are now or may hereafter
be admitted as evidence.

e A certified copy of the order approving the bond of a trustee ~of pret Ae
shall constitute conclusive evidence of the vesting in him of the tees’ bond.
title to the property of the bankrupt, and if recorded shall 19% 477
impart the same notice that a deed from the bankrupt to the
trustee if recorded would have imparted had not bankruptcy
proceedings intervened.

f A certified copy of an order confirming or setting aside apf pe eo
composition, or granting or setting aside a discharge, not re- position, ete.
voked, shall be evidence of the jurisdiction of the court, the *%®
regularity of the proceedings, and of the fact that the order was
made.

g A certified copy of an order confirming a composition shall eee of
constitute evidence of the revesting of the title of his property title in bank-
in the bankrupt, and if recorded shall impart the same notice ™?*
that a deed from the trustee to the bankrupt if recorded would
impart.

§ 22. REFERENCE OF CASES AFTER ADJUDICATION.— a After Reference of
a person has been adjudged a bankrupt the judge may cause fages,ayter ae
the trustee to proceed with the administration of the estate, or 196
refer it (1) generally to the referee or specially with only lim-
ited authority to act in the premises or to consider and report
upon specified issues; or (2) to any referee within the territorial
jurisdiction of the court, if the convenience of parties in inter-
est will be served thereby, or for cause, or if the bankrupt does
not do business, reside, or have his domicile in the district.

b The judge may, at any time, for the convenience of parties Transfer of
or for cause, transfer a case from one referee to another. paeretarse

§ 23. JURISDICTION OF UNITED STATES AND STATE CoURTS.— Jurisdiction of
a The Uuited States cireuit-courts shall have jurisdiction of all ce alae
controversies at law and in equity, as distinguished from pro- courts.
ecedings in bankruptcy, between trustees as such and adverse ”
claimants concerning the property acquired or claimed by the 1°
trustees, in the same manner and to the same extent only as
though bankruptcy proceedings had not been instituted and
such controversies had been between the bankrupts and such

adverse claimants.
74 Tue Bankruptcy Law.

Suits by trus-  ) Suits by the trustee shall only be brought or prosecuted in
ieee the courts where the bankrupt, whose estate is being admin-
istered by such trustee, might have brought’ or prosecuted them
if proceedings in bankruptcy had not been instituted, unless
Concurrent bY consent of the proposed defendant.
jurisdiction in ¢ The United States circuit courts shall have concurrent juris-
andcoutsof diction with the courts of bankruptcy, within their respective
bankruptcy. territorial limits, of the offenses enumerated in this Act.
Appellate _ § 24. JURISDICTION OF APPELLATE CourtTs.— a The Supreme
sourts, Juris- Court of the United States, the circuit courts of appeals of the
United States, and the supreme courts of the Territories, in
vacation in chambers and during their respective terms, as now
or as they inay be hereafter held, are hereby invested with ap-
pellate jurisdiction of controversies arising in bankruptcy pro-
ceedings from the courts of bankruptcy from which they have
cobpeals from appellate jurisdiction in other cases. The Supreme Court of
organized cir- the United States shall exercise a like jurisdiction from courts
ae Ge bankruptcy not within any organized circuit of the United
Columbia. § States and from the supreme court of the District of Columbia.
Jurisdiction of b The several circuit courts of appeal shall have jurisdiction
Gf appeals in equity, either interlocutory or final, to superintend and revise
in matter of law the proceedings of the several inferior courts of
bankruptcy within their jurisdiction. Such power shall be exer-
cised on due notice and petition by any party aggrieved.
Appeals. § 25. APPEALS anD Writs or Error.—a That appeals, as
aS in equity cases, may be taken in bankruptcy proceedings from
the courts of bankruptcy to the circuit court of appeals of the
United States, and to the supreme court of the Territories, in
—when taken. the following cases, to wit, (1) from a judgment adjudging or
refusing to adjudge the defendant a bankrupt; (2) from a
judgment granting or denying a discharge; and (3) from a
judgment allowing or rejecting a debt or claim of five hundred
—to be within dollars or over. Such appeal shall be taken within ten days
10 days. after the judgment appealed from has been rendered, and may
—hearing. | be heard and determined by the appellate court in term or vaca-
tion, as the case may be.

Appealtou.s, © From any final decision of a court of appeals, allowing or

pine rejecting a claim under this Act, an appeal may be had under
162 such rules and within such time as may be prescribed by the
Supreme Court of the United States, in the following cases and
no other:
“ere 1. Where the amount in controversy exceeds the sum of two
areas go00, thousand dollars, and the question involved is one which might
ete. have been taken on appeal or writ of error from the highest

—where ques- Court of a State to the Supreme Court of the United States; or

Hon contiued 2. Where some Justice of the Supreme Court of the United
ourt Justice, States shall certify that in his opinion the determination of the
Act oF 1898. - 45

question or questions involved in the allowance or rejection of
such claim is essential to a uniform construction of this Act
throughout the United States.

c Trustees shall not be required to give bond when they take —trustees not
appeals or sue out writs of error. Beis Bond,

d Controversies may be certified to the Supreme Court of the —certification
United States from other courts of the United States, and the GomPryr”
former court may exercise jurisdiction thereof and issue writs a
of certiorari pursuant to the provisions of the United States laws
now in force or such as may be hereafter enacted.

§ 26. ARBITRATION OF CoNTROVERSIES.—a The trustee may, Arbitration of
pursuant to the direction of the court, submit to arbitration any ia in akon
controversy arising in the settlement of the estate. submit to.

b Three arbitrators shall be chosen by mutual consent, or one Selection of
by the trustee, one by the other party to the controversy, and 2*>itrators.
the third by the two so chosen, or if they fail to agree in five
days after their appointment the court shall appoint the third
arbitrator.

e The written finding of the arbitrators, or a majority of Findings of
them, as to the issues presented, may be filed in court and shall SpPitrators.
have like force and effect as the verdict of a jury. /

§ 27. Compromises.— a The trustee may, with the approval Lome ies
of the court, compromise any controversy arising in the adminis- 443.
tration of the estate upon such terms as he may.deem for the
best interests of the estate.

§ 28. DEsIGNATION oF NEWSPAPERS.—a Courts of bank- Designation xe
ruptcy shall by order designate a newspaper published within publish =
their respective territorial districts, and in the county in which 39%e*
the bankrupt resides or the major part of his property is situ-
ated, in which notices required to be published by this Act and
orders which the court may direct to be published shall be in-
serted. Any court may in a particular case, for the convenience
of parties in interest, designate some additional newspaper in
which notices and orders in such case shall be published.

§ 29. OrrENSES.—a A person shall be punished, by im- Penalty.
prisonment for a period not to exceed five years, upon conviction °47
of the offense of having knowingly and fraudulently appropri-—tfor misap-
ated to his own use, embezzled, spent, or unlawfully transferred iol
any property or secreted or destroyed any document belonging
to a bankrupt estate which came into his charge as trustee.

b A person shall be punished, by imprisonment for a period — concealing
not to exceed two years, upon conviction of the offense of having P°P°"™
knowingly and fraudulently (1) concealed while a bankrupt, or
after his discharge, from his trustee any of the property belong-
ing to his estate in bankruptcy; or (2) made a false oath or —false oath or
account in, or in relation to, any proceeding in bankruptcy; (3) pe ae
presented under oath any false claim for proof against the estate false claim.
of a bankrupt, or used any such claim in composition personally
76 Tur Bankruptcy Law.

or by agent, proxy, or attorney, or as agent, proxy, or attorney;
T receiving or (4) received any material amount of property from a bank-
fankrupt. " rupt after the filing of the petition, with intent to defeat this
—extorting Act; or (5) extorted or attempted to extort any money or prop-
forbexrine to erty from any person as a consideration for acting or forbearing
Cu OuGs to act in bankruptcy proceedings.

c A person shall be punished by fine, not to exceed five hun-
dred dollars, and forfeit his office, and the same shall thereupon
become vacant, upon conviction of the offense of having know-

- acting as ref- ingly (1) acted as a referee in a case in which he is directly or
aoe indirectly interested; or (2) purchased, while a referee, directly
—purechasing or indirectly, any property of the estate in bankruptcy of which
“4 aren ion he is referee; or (3) refused, while a referee or trustee, to permit

permit inspec-a reasonable opportunity for the inspection of the accounts re-
tion of ac-

counts. lating to the affairs of, and the papers and records of, estates in
his charge by parties in interest when directed by the court so
to do.

Prosecutions  @ A person shall not be prosecuted for any offense arising
scar 'none under this Act unless the indictment is found or the informa-
tion is filed in court within one year after the commission of the
offense.
United States § 30. RuLEs, Forms, anD OrDERS.—a All necessary rules,
ater Eris forms, and orders as to procedure and for carrying this Act into
rules, etc. force and effect shall be prescribed, and may be amended from
time to time, by the Supreme Court of the United States.
Computation  § 31. Computation oF TimE.— a Whenever time is enumer-
ea ated by days in this Act, or in any proceeding in bankruptcy,
the number of days shall be computed by excluding the first and
including the last, unless the last fall on a Sunday or holiday, in
which event the day last included shall be the next day there-
after which is not a Sunday or a legal holiday.
‘Transfer of § 32. Transrrr or Cases.—a In the event petitions are
meneed indif- filed against the same person, or against different members of a
ferent courts. partnership, in different courts of bankruptcy each of which has
jurisdiction, the cases shall be transferred, by order of the courts
relinquishing jurisdiction, to and be consolidated by the one cf
such courts which can proceed with the same for the greatest
convenience of parties in interest.

CHAPTER V.
Officers. OFFICERS, THEIR DUTIES AND COMPENSATION.

Offices of ref. = § 33. CREATION or Two Orricrs.—a The offices of referee
eree and trus- i

tee created. and trustee are hereby created.

Referees, ap- § 34. ArPoINTMENT, REMOVAL, AND DIstRIcTs oF REFEREES.
Poa REO a Courts of bankruptcy shall, within the territorial limits of

which they respectively have jurisdiction, (1) appoint referees,
AcT oF 1898, U7

each for a term of two years, and may, in their discretion, re-

move them because their services are not needed or for other

cause; and (2) designate, and from time to time change, the Z‘esignation
limits of the districts of referees, so that each county, where the
services of a referee are needed, may constitute at least one

district.

§ 35. QUALIFICATIONS OF REFEREES.— a Individuals shall qealites-
not be eligible to appointment as referees unless they are re-188—
spectively (1) competent to perform the duties of that office; (2)
not holding any office of profit or emolument under the laws of
the United States or of any State other than commissioners of
deeds, justices of the peace, masters in chancery, or notaries
public; (3) not related by consanguinity or affinity, within the
third degree as determined by the common law, to any of the
judges of the courts of bankruptcy or circuit courts of the
United States, or of the justices or judges of the appellate courts
of the districts wherein they may be appointed; and (4) resi-
dents of, or have their offices in, the territorial districts for
which they are to be appointed. .

§ 36. Oarus or Orrice or REFEREES.—a Referees shall take 729 take oath.
tke same oath of office as that prescribed for judges of United
States courts.

§ 37. NumBer oF RererEEs.—a Such number of referees —number of
shall be appointed as may be necessary to assist in expeditiously
transacting the bankruptcy business pending in the various
courts of bankruptcy.

§ 38. JURISDICTION oF REFEREES.— a Referees respectively Jurisdiction of
are hereby invested, subject always to a review by the judge, i190
within the limits of their districts as established from time to
time, with jurisdiction to (1) consider all petitions referred to = te consider
them by the clerks and make the adjudications or dismiss the P°'"'°"*
petitions; (2) exercise the powers vested in courts of bank- [Administer
tuptey for the administering of oaths to and the examination of ine witnesses,
persons as witnesses and for requiring the production of docu-~”*
ments in proceedings before them, except the power of commit-
ment; (3) exercise the powers of the judge for the taking qiake posses-
possession and releasing of the property of the bankrupt in the lease property,
event of the issuance by the clerk of a certificate showing the **
absence of a judge from the judicial district, or the division of
the district, or his sickness, or inability to act; (4) perform such -perform cer-
part of the duties, except as to questions arising out of, the ap- bankruptcy
plications of bankrupts for compositions or discharges, as are °°"
by this Act conferred on courts of bankruptcy and as shall be
prescribed by rules or orders of the courts of bankruptcy of their
respective districts, except as herein otherwise provided; and
(5) upon the application of the trustee during the examination _,tnorize
of the bankrupts, or other proceedings, authorize the employ- employment

£ ste \-
ment of stenographers at the expense of the estates at a com-phers ~
78

Referees’
duties.
—declare divi-
dends.

191, 600
—examine
schedules, etc.

—furnish in-
formation, etc.

—give notices.
191, 600

— prepare rec-
ords, etc.

191

—prepare
schedules, etc.

—preserve
records, etc.

—transmit
papers to
¢lerks, etc.

—preserve
evidence, etc.

—obtain r
apers, etc.
Pon

—not to act if
interested.

Compensation
of referees.
201, 766

—on transfer
from one to
another.
200, 766

Tor BanKRuptTcy Law.

pensation not to exceed ten cents per folio for reporting and
transcribing the proceedings.

§ 39. Dutres or RErEREEs.— a Referees shall (1) declare divi-
dends and prepare and deliver to trustees dividend sheets show-
ing the dividends declared and to whom payable; (2) examine
all schedules of property and lists of creditors filed by bank-
rupts and cause such as are incomplete or defective to be
amended; (3) furnish such information concerning the estates
in process of administration before them as may be requested by’
the parties in interest; (4) give notices to creditors as herein pro-
vided; (5) make up records embodying the evidence, or the sub-
stance thereof, as agreed upon by the parties in all contested
matters arising before them, whenever requested to do so by
either of the parties thereto, together with their findings therein,
and transmit them to the judges; (6) prepare and file the
schedules of property and lists of creditors required to be filed
by the bankrupts, or cause the same to be done, when the bank-
rupts fail, refuse, or neglect to do so; (7) safely keep, perfect,
and transmit to the clerks the records, herein required to be kept
by them, when the cases are concluded; (8) transmit to the clerks
such papers as may be on file before them whenever the same are
needed in any proceedings in courts, and in like manner secure
the return of such papers after they have been used, or, if it be
impracticable to transmit the original papers, transmit certified
copies thereof by mail; (9) upon application of any party in in-
terest, preserve the evidence taken or the substance thereof as
agreed upon by the parties before them when a stenographer is
not in attendance; and (10) whenever their respective offices are
in the same cities or towns where the courts of bankruptcy con-
vene, cal] upon and receive from the clerks all papers filed in
courts of bankruptcy which have been referred to them.

b Referees shall not (1) act in cases in which they are directly
or indirectly interested; (2) practice as attorneys and counselors
at law in any bankruptcy proceedings; or (3) purchase, directly
or indirectly, any property of an estate in bankruptcy.

§ 40. CompENSATION OF REFEREES.— a Referees shall receive
as full compensation for their services, payable after they are
rendered, a fee of ten dollars deposited with the clerk at the time
the petition is filed in each case, except when a fee is not re-
quired from a voluntary bankrupt, and from estates which have
been administered before them one per centum commissions on
sums to be paid as dividends and commissions, or one half of one
per centum on the amount to be paid to creditors upon the con-
firmation of a composition.

b Whenever a case is transferred from one referee to another
the judge shall determine the proportion in which the fee and
commissions therefor shall be divided between the referees.
Act oF 1898. "9

c In the event of the reference of a case being revoked before [where refter-
it is concluded, and when the case is specially referred, the judge ;
shall determine what part of the fee and commissions shall be
paid to the referee.

§ 41. ConTEMPTS BEFORE REFEREES.— a A person shall not, in Contersptiue-
proceedings before a referee, (1) disobey or resist any lawful as
order, process, or writ; (2) misbehave during a hearing or so near
the place thereof as to obstruct the same; (3) neglect to produce,
after having been ordered to do so, any pertinent document; or
(4) refuse to appear after having been subpcenaed, or, upon ap-
pearing, refuse to take the oath as a witness, or, after having
taken the oath, refuse to be examined according to law:

Provided, That no person shall be required to attend as a wit- Whes winees
ness before a referee at a place outside of the State of his resi- to attend.
dence, and more than one hundred miles from such place of

residence, and only in case his lawful mileage and fee for one

day’s attendance shall be first paid or tendered to him.

b The referee shall certify the facts to the judge, if any per-
son shall do any of the things forbidden in this section. The
judge shall thereupon, in a summary manner, hear the evidence Contempt pro-
as to the acts complained of, and, if it is such as to warrant him °°edimes
in so doing, punish such person in the same manner and to the —penalty.
same extent as for a contempt committed before the court of
bankruptcy, or commit such person upon the same conditions as
if the doing of the forbidden act had occurred with reference to
the process of, or in the presence of, the court.

§ 42. Recorps or Rererers.—a The records of all proceed- records of
ings in each case before a referee shall be kept as nearly as may "*ferees-
be in the same manner as records are now kept in equity cases in ;manner of
circuit courts of the United States. 196.

b A record of the proceedings in each case shall be kept in a
separate book or books, and shall, together with the papers on
file, constitute the records of the case.

c The book or books containing a record of the proceedings
shall, when the case is concluded before the referee, be certified
to by him, and, together with such papers as are on file before
him, be transmitted to the court of bankruptey and shall there
remain as a part of the records of the court.

§ 43. REFEREE’s ABSENCE OR DISABILITY.— a Whenever the Referee’s'ab-
office of a referee is vacant, or its occupant is absent or disquali- abitity.. als
fied to act, the judge may act, or may appoint another referee, —flling va-
or another referee holding an appointment under the same court $95"
may, by order of the judge, temporarily fill the vacancy.

§ 44. AproINTMENT oF TRUSTEES.—a The creditors of .a Trustees.
bankrupt estate shall, at their first meeting after the adjudica-**°
tion or after a vacancy has occurred in the office of trustee, or
after an estate has been reopened, or after a composition has
been set aside or a discharge revoked, or if there is a vacancy in
80

—appoint-
ment.

—qualifica-
tions.
320

—death or re-
moval.

332

—suits not to
abate, etc.

—duties speci-
fied.

413
578

—concurrence
of two out of
three neces-
sary.

414

THE BANKRUPTCY Law.

the office of trustee, appoint one trustee or three trustees of such
estate. If the creditors do not appoint a trustee or trustees as
herein provided, the court shall do so.

§ 45. QuALIFIcaTIONS oF TRUSTEES.—a Trustees may be
(1) individuals who are respectively competent to perform the
duties of that office, and reside or have an office in the judicial
district within which they are appointed, or (2) corporations
authorized by their charters or by law to act in such capacity
and having an office in the judicial district within which they
are appointed.

§ 46. DEaTH oR Removal oF Trusrezs.—a The death or
removal of a trustee shall not abate any suit or proceeding which
he is prosecuting or defending at the time of his death or re-
moval, but the same may be proceeded with or defended by his
joint trustee or successor in the same manner as though the same
had been commenced or was being defended by such joint
trustee alone or by such successor.

§ 47. DutiEs or TrustErs.—a Trustees shall respectively
(1) account for and pay over to the estates under their control all
interest received by them upon property of such estates; (2) col-
lect and reduce to money the property of the estates for which
they are trustees, under the direction of the court, and close
up the estate as expeditiously as is compatible with the best
interests of the parties in interest; (3) deposit all money received
by them in one of the designated depositories; (4) disburse
money only by check or draft on the depositories in which it has
been deposited; (5) furnish such information concerning the
estates of which they are trustees and their administration as
may be requested by parties in interest; (6) keep regular ac-
counts showing all amounts received and from what sources and
all amounts expended and on what accounts; (7) lay before the
final meeting of the creditors detailed statements of the adminis-
tration of the estates; (8) make final reports and file final ac-
counts with the courts fifteen days before the days fixed for the
final meetings of the creditors; (9) pay dividends within ten days
after they are declared by the referees; (10) report to the courts,
in writing, the condition of the estates and the amounts of

.money on hand, and such other details as may be required by

the courts, within the first month after their appointment and
every two months thereafter, unless otherwise ordered by the
courts; and (11) set apart the bankrupt’s exemptions and report
the items and estimated value thereof to the court as soon as
practicable after their appointment.

b Whenever three trustees have been appointed for an estate,
the concurrence of at least two of them shall be necesssary to the
validity of their every act concerning the administration of the
estate.
Act oF 1898. 81

§ 48. Compensation or TrUsTEES.—a Trustees shall re- Trustees’ com-
ceive, as full compensation for their services, payable after they
are rendered, a fee of five dollars deposited with the clerk at the a
time the petition is filed in each case, except when a fee is not *®
required from a voluntary bankrupt, and from estates which
they have administered, such commissions on sums to be paid = se aneile:
as dividends and commissions as may be allowed by the courts, 585,766
not to exceed three per centum on the first five thousand dollars
or less, two per centum on the second five thousand dollars or
part thereof, and one per centum on such sums in excess of ten
thousand dollars.

b In the event of an estate being administered by three trus- —apportion-
tees instead of one trustee or by successive trustees, the court more than one.
shall apportion the fees and commissions between them accord-
ing to the services actually rendered, so that there shall not be
paid to trustees for the administering of any estate a greater
amount than one trustee would be entitled to.

c The court may, in its discretion, withhold all compensa- [withholding
tion from any trustee who has been removed for cause.

§ 49. Accounts aND Papers or TrusTEES—a The ac- Trustees’ ac-
counts and papers of trustees shall be open to the inspection of penete,
officers and all parties in interest.

§ 50. Bonns or REFEREES AND ,TRUSTEES.— a Referees, be- Bonds of ret-
fore assuming the duties of their. offices, and within such time 189
as the district courts of the United States having jurisdiction
shall prescribe, shall respectively qualify by entering into bond
to the United States in such sum as shall be fixed by such courts,
not to-exceed five thousand dollars, with such sureties as shall be
approved by such courts, conditioned for the faithful perform-
ance of their official duties.

b Trustees, before entering upon the performance of their jf trustees.
official duties, and within ten days after their appointment, or
within such further time, not to exceed five days, as the court
may permit, shall respectively qualify by entering into bond to
the United States, with such sureties as shall be approved by the
eee conditioned for the faithful performance of their official

uties

c The creditors of a bankrupt estate, at their first meeting [of new trus-
after the adjudication, or after a vacancy has occurred in the '
office of trustee, or after an estate has been reopened, or after a
composition has been set aside or a discharge revoked, if there
is a vacancy in the office of trustee, shall fix the amount of the
bond of the trustee; they may at any time increase the amount of [amount may
the bond. If the creditors do not fix the amount of the bond of
the trustee as herein provided the court shall do so.

d The court shall require evidence as to the actual value of erty. value.
the property of sureties. en

e There shall be at least two sureties upon each bond. a

6

5, 766
B2 Tue Bankruptcy Law.

Rte f The actual value of the property of the sureties, over and

ee " above their liabilities and exemptions, on each bond shall equal
at least the amount of such bond.

_—corpora- g Corporations organized for the purpose of becoming sure-

tions may be. ties upon bonds, or authorized by law to do so, may be accepted
as sureties upon the bonds of referees and trustees whenever the
courts are satisfied that the rights of all parties in interest will
be thereby amply protected.

Pune h Bonds of referees, trustees, and designated depositories shall

‘ be filed of record in the office of the clerk of the court and

may be sued upon in the name of the United States for the use
of any person injured by a breach of their conditions.

Bond, trus. | 4 Trustees shall not be liable, personally or on their bonds, to

fee's Habilit¥." the United States, for any penalties or forfeitures incurred by

the bankrupts under this Act, of whose estates they are respect-

‘ ively trustees.
—joint. j Joint trustees may give joint or several bonds.
—failure to k If any referee or trustee shall fail to give bond, as herein
exon provided and within the time limited, he shall be deemed to have
declined his appointment, and such failure shall create a vacancy
in his office.

—suits upon 1 Suits upon referees’ bonds shall not be brought subsequent
referees —_to two years after the alleged breach of the bond. :
—suits upon m Suits upon trustees’ bonds shall not be brought subsequent
a to two years after the estate has been closed.
‘Clerks’ duties. § 51. Dutizs or CLERKS.—a Clerks shall respectively (1)
JF anecwae acount for, as for other fees received by them, the clerk’s fee
paid in each case and such other fees as may be received for cer-
tified copies of records which may be prepared for persons other
—collect‘fees, than officers; (2) collect the fees of the clerk, referee, and trustee
vat in each case instituted before filing the petition, except the
petition of a proposed voluntary bankrupt which is accompanied
by an affidavit stating that the petitioner is without, and can not
ea obtain, the money with which to pay such fees; (3) deliver to
referee,etc. the referees upon application all papers which may be referred
to them, or, if the offices of such referees are not in the same
cities or towns as the offices of such clerks, transmit such papers
by mail, and in like manner return papers which were received
—pay referee. from such referees after they have been used; (4) and within ten
days after each case has been closed pay to the referee, if the
case was referred, the fee collected for him, and to the trustee
‘the fee collected for him at the time of filing the petition.
Compensation § 52. COMPENSATION OF CLERKS AND MArsHaLs.—a Clerks
R67" shall respectively receive as full compensation for their service
‘toceach estate, a filing fee of ten dollars, except when a fee is not
required from a voluntary bankrupt.
wet marshals. b Marshals shall respectively receive from the estate where an

adjudication im bankruptcy is made, except as herein otherwise
Act oF 1898. 83

provided, for the performance of their services in proceedings in
bankruptcy, the same fees, and account for them in the same
way, as they are entitled to receive for the performance of the
same or similar services in other cases in accordance with laws
now, in force, or such as may be hereafter enacted, fixing the
compensation of marshals.

§ 53. Durlzs oF ATTORNEY-GENERAL.— a The Attorney- Attorney-Gen-
General shall annually lay before Congress statistical tables ee
showing for the whole country, and by States, the number of 777
cases during the year of voluntary and involuntary bankruptcy;
the amount of the property of the estates; the dividends paid
and the expenses of administering such estates; and such other
like information as he may deem important.

§ 54. Stavistics or Bankruptcy ProceEDinas.— a Officers p statistical
shall furnish in writing and transmit by mail such information for.
as is within their knowledge, and as may be shown by the records
and papers in their possession, to the Attorney-General, for
statistical purposes, within ten days after being requested by him
to do so.

CHAPTER VI.
CREDITORS. Creditors.

§ 55. MEErtInes oF CREDITORS.— a The court shall cause the — place and
first meeting of the creditors of a bankrupt to be held, not less ine * ™e™
than ten nor more than thirty days after the adjudication, at3?6 574
the county seat of the county in which the bankrupt has had his
principal place of business, resided, or had his domicile; or if
that place would be manifestly inconvenient as a place of meet-
ing for the parties in interest, or if the bankrupt is one who does
not do business, reside, or have his domicile within the United
States, the court shall fix a place for the meeting which is the
most convenient for parties in interest. If such meeting should
by any mischance not be held within such time, the court shall
fix the date, as soon as may be thereafter, when it shall be held.

b At the first meeting of creditors the judge or referee shall ee
preside, and, before proceeding with the other business, may 318, 571 —
allow or disallow the claims of creditors there presented, and
may publicly examine the bankrupt or cause him to be examined
at the instance of any creditor.

c The creditors shall at each meeting take such steps as may creaitors?
be pertinent and necessary for the promotion of the best inter- duty.
ests of the estate and the enforcement of this Act.

d A meeting of creditors, subsequent. to the first one, may be —subsequent
held at any time and place when all of the creditors who have ™eetings of
secured the allowance of their claims sign a written consent to

hold a meeting at such time and place.
84

—call of meet-
ing by court.
671

—final meet-
ing.

Voting at
creditors’
meetings.
492

—holders of
secured
claims, not
entitled, etc.

Proof of
claims.

—of what to
consist.

—when
founded upon
a writing.
548

—after proved,
may be filed.
555

—allowance of
claims, etc.

Claims of
secured
creditors, etc.
493

Tut Bankruptcy Law.

e The court shall call a meeting of creditors whenever one-
fourth or more in number of those who have proven their claims
shall file a written request to that effect; if such request is signed
by a majority of- such creditors, which number represents a
‘majority in amount of such claims, and contains a request for
such meeting to be held at a designated place, the court shall
call such ineeting at such place within thirty days after the date
of the filing of the request.

*# Whenever the affairs of the estate are ready to be closed a
final meeting of creditors shall be ordered.

§ 56. Voters at Mernrtines or Crepitors.—a Creditors
shall pass upon matters submitted to them at their meetings by
a majority vote in number and amount of claims of all creditors
whose claims have been allowed and are present, except as herein
otherwise provided.

b Creditors holding claims which are secured or have priority
shall not, in respect to such claims, be entitled to vote at
creditors’ meetings, nor shall such claims be counted in com-
puting either the number of creditors or the amount of their
claims, unless the amounts of such claims exceed the values of
such securities or priorities, and then only for such excess.

§ 57. Proor AND ALLOWANCE OF CLAIMS.—a Proof of
claims shall consist of a statement under oath, in writing, signed
by a creditor setting forth the claim, the consideration therefor,
and whether any, and, if so what, securities are held therefor,
and whether any, and, if so what, payments have been made
thereon, and that the sum claimed is justly owing from the
bankrupt to the creditor.

b Whenever a claim is founded upon an instrument of writing,
such instrument, unless lost or destroyed, shall be filed with the
proof of claim. If such instrument is lost or destroyed, a state-
ment of such fact and of the circumstances of such loss or de-
struction shall be filed under oath with the claim. After the
claim is allowed or disallowed, such instrument may be with-
drawn by permission of the court, upon leaving a copy thereof
on file with the claim.

c Claims after being proved may, for the purpose of allowance,
be filed by the claimants in the court where the proceedings are
pending or before the referee if the case has been referred.

d Claims which have been duly proved shall be allowed, upon
receipt by or upon presentation to the court, unless objection to
their allowance shall be made by parties in interest, or their con-
sideration be continued for cause by the court upon its own
motion.

e Claims of secured creditors and those who have priority may
be allowed to enable such creditors to participate in the pro-
ceedings at creditors’ meetings held prior to the determination
of the value of their securities or priorities, but shall be allowed
Act oF 1898. 85

for such sums only as to the courts seem to be owing over and
above the value of their securities or priorities.

f Objections to claims shall be heard and determined as soon Claims, hear-
as the convenience of the court and the best interests of the Bg weggho"®
estates and the claimants will permit.

g The claims of creditors who have received preferences shall Preferred
not be allowed unless such creditors shall surrender their prefer- aime.
ences.

h The value of securities held by secured creditors shall be vaiue ot
determined by converting the same into money according to the fecurities held
terms of the agreement pursuant to which such securities were creditors, ete.
delivered to such creditors or by such creditors and the trustee, *
by agreement, arbitration, compromise, or litigation, as the court
may direct, and the amount of such value shall be credited upon
such claims, and a dividend shall be paid only on the unpaid
balance.

« Whenever a creditor, whose claim against a bankrupt estate pa ecenced
is secured by the individual undertaking of any person, fails to undertaking.
prove such claim, such person may do so in the creditor’s name, #77
and if he discharge such undertaking in whole or in part he
shall be subrogated to that extent to the rights of the creditor.

j Debts owing to the United States, a State, a county, a dis- pore dye ths
trict, or a municipality as a penalty or forfeiture shall not be allowance of.’
allowed, except for the amount of the pecuniary loss sustained °**
by the act, transaction, or proceeding out of which the penalty
or forfeiture arose, with reasonable and actual costs occasioned.
thereby and such interest as may have accrued thereon according
to law.

k Claims which have been allowed may be reconsidered for ree aa ee
cause and reallowed or rejected in whole or in part, according to 54 :
the equities of the case, before but not after the estate has been
closed.

1 Whenever a claim shall have been reconsidered and rejected, dividend.”
in whole or in part, upon which a dividend has been paid, the ***
trustee may recover from the creditor the amount of the divi-
dend received upon the claim if rejected in whole, or the pro-
portional part thereof if rejected only in part.

m The claim of any estate which is being administered in Claims of one

bankruptcy against any like estate may be proved by the trustee aeainet
and allowed by the court in the same manner and upon like ges"
terms as the claims of other creditors.

# Claims shall not be proved against a bankrupt estate sub- Time for
sequent to one year after the adjudication; or if they are liqui- aims”
dated by litigation and the final judgment therein is rendered
within thirty days before or after the expiration of such time,
then within sixty days after the rendition of such judgment: _.

a infants,

Provided, That the right of infants and insane persons without ete.
86

Notice to
creditors.
316

—unless
waived, etc.
316

—of first
meeting.

—other
notices.

—to referee.

Petition, who
may file.
207

—as voluntary
bankrupt.

involuntary,

—to be in
duplicate.

Notice to cred-
itors not
joined in
petition.

—hearing of
case, etc.

—when dis-
missed,

Tue Bankruptcy Law.

guardians, without notice of the proceedings, may continue six
months longer.

§ 58. Novices To CrepiTors.— a Creditors shall have at least
ten days’ notice by mail, to their respective addresses as they

ppear in the list of creditors of the bankrupt, or as afterwards
filed with the papers in the case by the creditors, unless they
waive notice in writing, of (1) all examinations of the bankrupt;
(2) all hearings upon applications for the confirmation of compo-
sitions or the discharge of bankrupts; (3) all meetings of cred-
itors; (4) all proposed sales of property; (5) the declaration and
time of payment gf dividends; (6) the filing of the final accounts
of the trustee, and the time when and the place where they will
be examined and passed upon; (7) the proposed compromise of
any controversy, and (8) the proposed dismissal of the proceed-
ings.

b Notice to creditors of the first meeting shall be published at
least once and may be published such number of additional
times as the court may direct; the last publication shall be at
least one week prior to the date fixed for the meeting. Other
notices may be published as the court shall direct.

c All notices shall be given by the referee, unless otherwise
ordered by the judge.

§ 59. Woo May Fitz anp Dismiss Petirions.—a Any
qualified person may file a petition to be adjudged a voluntary
bankrupt.

b Three or more creditors who have provable claims against
any person which amount in the aggregate, in excess of the value
of securities held by them, if any, to five hundred dollars or
over; or if all of the creditors of such person are less than
twelve in number, then one of such creditors whose claim equals
such amount may file a petition to have him adjudged a bank-
rupt. s
c Petitions shall be filed in duplicate, one copy for the clerk
and one for service on the bankrupt.

d If it be averred in the petition that the creditors of the
bankrupt are less than twelve in number, and less than three
creditors have joined as petitioners therein, and the answer avers
the existence of a larger number of creditors, there shall be filed
with the answer a list under oath of all the creditors, with their
addresses, and thereupon the court shall cause all such creditors
to be notified of the pendency of such petition and shall delay
the hearing upon such petition for a reasonable time, to the end
that parties in interest shall have an opportunity to be heard; if
upon such hearing it shall appear that a sufficient number have
joined in such petition, or if prior to or during such hearing a
sufficient number shall join therein, the case may be proceeded
with, but otherwise it shall be dismissed.
ACT OF 1898, 87

¢ In computing the number of creditors of a bankrupt for the Creditors,
purpose of determining how many creditors must join in the Campane
petition, such creditors as were employed by him at the time of #08
the filing of the petition or are related to him by consanguinity
or affinity within the third degree, as determined by the com-
mon law, and have not joined in the petition, shall not be
counted.

f Creditors other than original petitioners may at any time —appearance
enter their appearance and join in the petition, or file an answer °"
and be heard in opposition to the prayer of the petition. _

g A voluntary or involuntary petition shall not be dismissed Notice of dis-
by the petitioner or petitioners or for want of prosecution or by ™*" -
consent of parties until after notice to the creditors.

§ 60. PREFERRED CREDITORS.— a A person shall be deemed Poteet
to have given a preference if, being insolvent,-he has procured or 780.
suffered a judgment to be entered against himself in favor of
any person, or made a transfer of any of his property, and the
effect of the enforcement of such judgment or transfer will be
to enable any one of his creditors to obtain a greater percentage
of his debt than any other of such creditors of the same class.

-6 If a bankrupt shall have given a preference within four Preference,
months before the filing of a petition, or after the filing of the "
petition and before the adjudication, and the person receiving
it, or to be benefited thereby, or his agent acting therein, shall
have had reasonable cause to believe that it was intended thereby
to give a preference, it shall be voidable by the trustee, and he —voidable.
may recover the property or its value from such person.

c If a creditor has been preferred, and afterwards in good Fretted
faith gives the debtor further credit without security of any kind further eredite
for property which becomes a part of the debtor’s estates, the °¢
amount of such new credit remaining unpaid at the time of the
adjudication in bankruptcy may be set off against the amount -~set off of new
which would otherwise be recoverable from him.’ i

d Ifa debtor shall, directly or indirectly, in contemplation of Passes i
the filing of a petition by or against him, pay money or transfer 780
property to an attorney and counselor at law, solicitor in equity,
or proctor in admiralty for services to be rendered, the transac-
tion shall be re-examined by the court on petition of the trustee anes
or any creditor and shall only be held valid to the extent of a :
reasonable amount to be determined by the court, and the excess
may be recovered by the trustee for the benefit of the estate.

Cuaprer VII.

ESTATES, Estates:

§ 61. Depostrorizs For Monry.—a Courts of bankruptcy Depositories:.
shall designate, by order, banking institutions as depositories for Ph pone
88

—bond.

Expenses of
admunistering
estates.

167

—report and
approval.

Debts proved.
586

—fixed liabil-

ity.
536

—costs of suit
due, etc.

—costs in-
curred before
filing petition.

—on open
account.

--judgments,
etc.

Allowance of
unliquidated
claims.

587

Debts having
priority.
—taxes.

—order of pay-
ment.

591

—cost of pre-
serving estate.
—filing fees.

Tue Bankruptcy Law.

the money of bankrupt estates, as convenient as may be to the
residences of trustees, and shall require bonds to the United
States, subject to their approval, to be given by such banking in-
stitutions, and may from time to time as occasion may require,
by like order increase the number of depositories or the amount
of any bond or change such depositories.

§ 62. Exprensus or ADMINISTERING Estates.— a The actual
and necessary expenses incurred by officers in the administration
of estates shall, except where other provisions are made for their
payment, be reported in detail, under oath, and examined and
approved or disapproved by the court. If approved, they shall
be paid or allowed out of the estates in which they were incurred.

§ 63. DEBrS WHICH MAY BE Provep.— a Debts of the bank-
tupt may be proved and allowed against his estate which are (1)
a fixed liability, as evidenced by a judgment or an instrument in
writing, absolutely owing at the time of the filing of the petition
against him, whether then payable or not, with any interest
thereon which would have been recoverable at that date or with
a rebate of interest upon such as were not then payable and did
not bear interest; (2) due as costs taxable against an involuntary
bankrupt who was at the time of the filing of the petition against
him plaintiff in a cause of action which would pass to the
trustee and which the trustee declines to prosecute after notice;
(8) founded upon a claim for taxable costs incurred in good
faith by a creditor before the filing of the petition in an action
to recover a provable debt; (4) founded upon an open account,
or upon a contract express or implied; and (5) founded upon
provable debts reduced to judgments after the filing of the peti-
tion and before the consideration of the bankrupt’s application
for a discharge, less costs incurred and interests accrued after the
filing of the petition and up to the time of the entry of such
judgments. :

b Unliquidated claims against the bankrupt may, pursuant to
application to the court, be liquidated in such manner as it shall
direct, and may thereafter be proved and allowed against his
estate.

§ 64. DeBrs wHicH Have PrRioriry.—a The court shall
order the trustee to pay all taxes legally due and owing by the
bankrupt to the United States, State, county, district, or
municipality in advance of the payment of dividends to creditors,
and upon filing the receipts of the proper public officers for such
payment he shall be credited with the amount thereof, and in
case any question arises as to the amount or legality of any such
tax the same shall be heard and determined by the court.

b The debts to have priority, except as herein provided, and
to be paid in full out of bankrupt estates, and the order of
payment shall be (1) the actual and necessary cost of preserving
the estate subsequent to filing the petition; (2) the filing fees
Act oF 1898. 89

paid by creditors in involuntary cases; (3) the cost of adminis- est of ad-
tration, including the fees and mileage payable to witnesses as etc. ;
now or hereafter provided by the laws of the United States, and

one reasonable attorney’s fee, for the professional services actu-

ally rendered, irrespective of the number of attorneys employed,

to the petitioning creditors in involuntary cases, to the bankrupt

in involuntary cases while performing the duties herein pre-

scribed, and to the bankrupt in voluntary cases, as the court

may allow; (4) wages due to workmen, clerks, or servants which worlsnen ete.
have been earned within three months before the date of the
commencement of proceedings, not to exceed three hundred

dollars to each claimant; and (5) debts owing to any person who ,,0Wing to per-

by the laws of the States or the United States is entitled to priority, ete.
priority.

c In the event of the confirmation of a composition being set F2yment of
aside, or a discharge revoked, the property acquired by the bank- ing ee
rupt in addition to his estate at the time the composition was discharge.
confirmed or the adjudication was made shall be applied to the "evoked: ete.
payment in full of the claims of creditors for property sold to
him on credit, in good faith, while such composition or dis-
charge was in force, and the residue, if any, shall be applied to
the payment of the debts which were owing at the time of the
adjudication.

§ 65. DECLARATION AND Payment or DivipenpDs.— a Divi- Di
dends of an equal per centum shall be declared and paid on all claims.
allowed claims, except such as have priority or are secured. ae

b The first dividend shall be declared within thirty days after — declaration
the adjudication, if the money of the estate in excess of the :
amount necessary to pay the debts which have priority and such
claims as have not been, but probably will be, allowed equals five
per centum or more of such allowed claims. Dividends subse--—subsequent.
quent to the first shall be declared upon like terms as the first
and as often as the amount shall equal ten per centum or more
and upon closing the estate. Dividends may be declared oftener
and in smaller proportions if the judge shall so order.

c The rights of creditors who have received dividends, or in ~reditors re-

whose favor final dividends have been declared, shall not be creat be
affected by the proof and allowance of claims subsequent to the Pe
date of such payment or declarations of dividends; but the ete,
creditors proving and securing the allowance of such claims
shall be paid dividends equal in amount to those already re-
ceived by the other creditors if the estate equals so much before
such other creditors are paid any further dividends.

d Whenever a person shall have been adjudged a bankrupt by ~ preference
a court without the United States and also by a court of bank- creditors.
tuptey, creditors residing within the United States shall first be

paid a dividend equal to that received in the ccurt without the
Limit to claim-

THe Bankruptcy Law. \

United States by other creditors before creditors who have re-
ceived a dividend in such courts shall be paid any amounts.

e A claimant shall not be entitled to collect from a bankrupt
estate any greater amount than shall accrue pursuant to the
provisions of this Act.

§ 66. UnctarmeD DivipEnps.— a Dividends which remain
unclaimed for six months after the final dividend has been de-
clared shall be paid by the trustee into court.

b Dividends remaining unclaimed for one year shall, under
the direction of the court, be distributed to the creditors whose
claims have been allowed but not paid in full, and after such
claims have been paid in full the balance shall be paid to the
bankrupt: Provided, That in case unclaimed dividends belong
to minors such minors may have one year after arriving at
majority to claim such dividends.

§ 67. Lrens.—a Claims which for want of record or for
other reasons would not have been valid lens as against the
claims of the creditors of the bankrupt shall not be liens against
his estate.

b Whenever a creditor is prevented from enforcing his rights
as against a lien created, or attempted to be created, by his
debtor, who afterwards becomes a bankrupt, the trustee of the
estate of such bankrupt shall be subrogated to and may enforce
such rights of such creditor for the benefit of the estate.

c A lien created by or obtained in or pursuant to any suit or

"Slade proceeding at law or in equity, including an attachment upon

mesne process or a judgment by confession, which was begun
against a person within four months before the filing of a peti-
tion in bankruptcy by or against such person shall be dissolved
by the adjudication of such person to be a bankrupt if (1) it
appears that said lien was obtained and permitted while the de-
fendant was insolvent and that its existence and enforcement
will work a preference, or (2) the party or parties to be benefited
thereby had reasonable cause to believe the defendant was in-
solvent and in contemplation of bankruptcy, or (3) that such
lien was sought and permitted in fraud of the provisions of this
Act; or if the dissolution of such lien would militate against the
best interests of the estate of such person the same shall not be
dissolved, but the trustee of the estate of such person, for the
benefit of the estate, shall be subrogated to the rights of the
holder of such lien and empowered to perfect and enforce the
same in his name as trustee with like force and effect as such
holder might have done had not bankruptcy proceedings inter-
vened.

d Liens given or accepted in good faith and not in contempla-
tion of or in fraud upon this Act, and for a present considera-
tion, which have been recorded according to law, if record
Act oF 1898. 91

thereof was necessary in order to impart notice, shall not be
affected by this Act.

e That all conveyances, transfers, assignments, or incum- Conveyances,
brances of his property, or any part thereof, made or given by a quent to sct
person adjudged ‘a bankrupt under the provisions of this Act 4nd within 4
subsequent to the passage of this Act and within four months petition.
prior to the filing of the petition, with the intent and purpose on 7
his part to hinder, delay, or defraud his creditors, or any of —to defraud,
them, shall be null and void as against the creditors of such“? %%*
debtor, except as to purchasers in good faith and for a present
fair consideration; and all property of the debtor conveyed, —property
transferred, assigned, or encumbered as aforesaid shall, if he be ae
adjudged a bankrupt, and the same is not exempt from execu-
tion and liability for debts by the law of his domicile, be and
remain a part of the assets and estate of the bankrupt and shall
pass to his said trustee, whose duty it shall be to recover and re- :
claim the same by legal proceedings or otherwise for the benefit
of the creditors. And all conveyances, transfers, or incum- Popvevancess
brances qf his property made by a debtor at any time within four months of
months prior to the filing of the petition against him, and while Petition:
insolvent, which are held null and void as against the creditors —void under
of such debtor by the laws of the State, Territory, or District in Site ws.
which such property is situate, shall be deemed null and void > void under
under this Act against the creditors of such debtor if he be ad- .
judged a bankrupt, and such property shall pass to the assignee
and be by him reclaimed and recovered for the benefit of the
creditors of the bankrupt.

f That all levies, judgments, attachments, or other liens, ob- Liens, ete.,
tained through legal proceedings against a person who is insol- through legab
vent, at any time within four months prior to the filing of a gygeedines.
petition in bankruptcy against him, shall be deemed null and
void in case he is adjudged a bankrupt, and the property affected —¥!4 ete.
by the levy, judgment, attachment, or other lien shall be deemed
wholly discharged and released from the same, and shall pass to | Rroper'y
the trustee as a part of the estate of the bankrupt, unless the trustee.
court shall, on due notice, order that the right under such levy,
judgment, attachment, or other lien shall be preserved for the
benefit of the estate; and thereupon the same may pass to and
shall be preserved by the trustee for the benefit of the estate as
aforesaid. And the court may order such conveyance as shall Court may
be necessary to carry the purposes of this section into effect: ances
Provided, That nothing herein contained shall have the effect to purchaser fcr
destroy or impair the title obtained by such levy, judgment, at- value:
tachment, or other lien, of a bona fide purchaser for value who
shall have acquired the same without notice or reasonable cause
for inquiry.

§ 68. Srr-Orrs anD CounTrERcLAIms.— a In all cases of mu- Set-offs and

tual debts or mutual credits between the estate of a bankrupt oe
92

—allowed.

—not allowed.
483

Possession of
property.
229

—when bank-
rupts may be
seized.

—bond to
indemnify.

—released on
giving bond.

Title to
property.
393

—vested in
trustee.
393

—documents.
—patents, etc.

—certain
powers.

—transferred
in fraud.

Tue BankRuptcy Law.

and a creditor the account shall be stated and one debt shall be
set off against the other, and the balance only shall be allowed or
aid.

b A set-off or counterclaim shall not be allowed in favor of
any debtor of the bankrupt which (1) is not provable against the
estate; or (2) was purchased by or transferred to him after the
filing of the petition, or within four months before such filing,
with a view to such-use and with knowledge or notice that such
bankrupt was insolvent, or had committed an act of bankruptcy.

§ 69. Possession oF PRoperty.— a A judge may, upon satis-
factory proof, by affidavit, that a bankrupt against whom an in-
voluntary petition has been filed and is pending has committed
4n act of bankruptcy, or has neglected or is neglecting, or is
about to so neglect his property that it has thereby deteriorated
or is thereby deteriorating or is about thereby to deteriorate in
value, issue a warrant to the marshal to seize and hold it subject
to further orders. Before such warrant is issued the petitioners
applying therefor shall enter into a bond in such an amount as
the judge shall fix, with such sureties as he shall approve, condi-
tioned to indemnify such bankrupt for such damages as he shall
sustain in the event such seizure shall prove to have been wrong-
fully obtained. Such property shall be released, if such bank-
rupt shall give bond in a sum which shall be fixed by the judge,
with such sureties as he shall approve, conditioned to turn over
such property, or pay the value thereof in money to the trustee,
in the event he is adjudged a bankrupt pursuant to such petition.

§ 70. Trrte to Property.—a The trustee of the estate of a
bankrupt, upon his appointment and qualification, and his
successor or successors, if he shall have one or more, upon his or
their appointment and qualification, shall in turn be vested by
operation of law with the title of the bankrupt, as.of the date he
was adjudged a bankrupt, except in so far as it is to property
which is exempt, to all (1) documents relating to his property;
(2) interests in patents, patent rights, copyrights, and trade-
marks; (3) powers which he might have exercised for his own
benefit, but not those which he might have exercised for some
other person; (4) property transferred by him in fraud of his
creditors; (5) property which prior to the filing of the petition
he could by any means have transferred or which might have

—which might heen levied upon and sold under judicial process against him:

have been
transferred,

ete.
—policy of
insurance.

Provided, That when any bankrupt shally have any insurance
policy which has a cash surrender value payable to himself, his
estate, or personal representatives, he may, within thirty days
after the cash surrender value has been ascertained and stated to
the trustee by the company issuing the same, pay or secure to the
trustee the sum so ascertained and stated, and continue to hold,
own, and carry such policy free from the claims of the credit-
ors participating in the distribution of his estate under the
Act oF 1898. 93

bankruptcy proceedings, otherwise the policy shall pass to the
trustee as assets; and (6) rights of action arising upon contracts —rights ot
or from the unlawful taking or detention of, or injury to, his uenoR™"

property. abs

b All real and personal property belonging to bankrupt
estates shall be appraised by three disinterested appraisers; they
shall be appointed by, and report to, the court. Real and per- Appraisal of
sonal property shall, when practicable, be sold subject to the 39s
approval of the court; it shall not be sold otherwise than subject —*#!*
to the approval of the court for less than seventy-five per centum
of its appraised value.

c The title to property of a bankrupt estate which has been 7opevee te.
sold, as herein provided, shall be conveyed to the purchaser by
the trustee.

d Whenever a composition shall be set aside, or discharge re- —vesting title
voked, the trustee shall, upon his appointment and qualification, °”
be vested as herein provided with the title to all of the property aa teraet:
of the bankrupt as of the date of the final decree setting aside position aside.
the composition or revoking the discharge. BOT

e The trustee may avoid any transfer by the bankrupt of his ee ea:
-~property which any creditor of such bankrupt might have fers, ete.
avoided, and may recover the property so transferred, or its aie of
value, from the person to whom it was transferred.unless he was
a bona fide holder for value prior to the date of the adjudica-
tion. Such property may be recovered or its value collected
from whoever may have received it, except a bona fide holder for
value.

f Upon the confirmation of a composition offered by a bank- Title revested

n firmi
rupt, the title to his property shall thereupon revest in him. composition.

THE TIME WHEN THIS ACT SHALL GO INTO EFFECT.
Force and

§ 71. a This Act shall go into full force and effect upon its $29"
passage: Provided, however, That no petition for voluntary 7] caae
bankruptcy shall be filed within one month of the passage bankruptcy.
thereof, and no petition for involuntary bankruptcy shall be —involuntary.
filed within four months of the passage thereof. :

b Proceedings commenced under State insolvency laws before C28e8 pending

the passage of this Act shall not be affected by it. aye
Approved, July 1, 1898.
TITLE IV.

THE LAW AND PRACTICE IN BANKRUPTCY
. ANNOTATED.

THE CONSTITUTION OF THE UNITED STATES.
Tue Act oF Juty 1, 1898. ;
Tue Act or Marcu 2, 1867, AND AMENDMENTS.

(The section numbers of the law of 1867 refer to sections in the
Revised Statutes of the United States. ]

CONSTITUTION OF THE UNITED STATES.

Art. I, Src. 8— “The Congress shall have power * * * to es-

tablish * * * uniform laws on the subject of bankruptcies through-
out the United Stateb.”

Extent of the power.— The subject is divisible in its nature into bank-
ruptcy and insolvent laws, though the line of partition between them is not
so distinctly marked as to enable any person to say with positive precision
what belongs exclusively to one and not to the other class of laws. The
dificulty of discriminating with any accuracy between insolvent and
bankruptcy laws would lead to the opinion that a bankruptcy law may
contain those regulations which are generally found in insolvent laws, and
that an insolvent law may contain those which are common to a bank-
ruptcy law. Sturgis v. Crowninshield, 4 Wheat. 122.

The word bankruptcy is employed in the Constitution in the plural nnd
as part of an expression ‘‘the subject of bankruptcies.” The ideas at-
tached to the word in this connection are numerous and complicated. They
form a subject of extensive and complicated legislation. Of this subject
Congress has general jurisdiction. In re Edward Klein, 1 How. 277, note;
8.c.2N. Y. Leg. Obs. 185; in re Silverman, 4 B. R. 523; s.'c. 1 Saw. 410; s. ¢.
2 Abb. C. C. 248.

Bankruptcy bears a meaning co-extensive with insolvency, and is equiy-
alent to that word in the Constitution. Kunzler v. Kohaus, 5 Hill, 317;
Sackett vy. Andross, 5 Hill, 327; Morse v. Hovey, 1 Barb. Ch. 404; 5. c. 1
Sandf. Ch. 187.

The grant is a grant of plenary power over the “subject of bankrupt-
cies.” The subject of bankruptcies includes the distribution of the prop-
erty of the fraudulent or insolvent debtor among his creditors, and the
discharge of the debtor from his contracts and legal liabilities, as well as
all the Intermediate and incidental matters tending to the accomplishment
CONSTITUTION OF THE UNITED STATES, 95

or promotion of these two principal ends. Congress is given full power
over this subject, with the one qualification, that its laws thereon shall be
uniform throughout the United States. In re Silverman, 4 B. R. 523; 8. ¢.
1 Saw. 410; s. c. 2 Abb. C. C. 243; in re Reiman & Friedlander, 11 B. R. 21;
s. c. 138 B. R. 128; s. c. 7 Ben. 455; s. c. 12 Blatch. 562.

The power of Congress extends to all cases where the law causes the
property of a debtor to be distributed among his creditors. This is its
least limit. Its greatest is a discharge of the debtor from his contracts.
All interinediate legislation affecting substance and form, but tending to
further the great end of the subject — distribution and discharge -- is in
the competency and discretion of Congress. In re Edward Klein, 1 How.
277, note: s. c. 2 N. Y. Leg. Obs. 185; in re Silverman, 4 B. R. 523;'s. ¢c 1
Saw. 410; s. c. 2 Abb. C. C. 248.

To this power there is no limitation, and consequently it is competent to
Congress to act on the whole subject of bankruptcy with a plenary discre-
tion. In re Irwine, 1 Penn. L. J. 291.

The power conferred is without restriction, save in its uniformity. It is
plenary, and in reference to its subject may be exercised with the same
latitude as the like power has been and may be by the British Parllanrent.
Kunzler v. Kohaus, 5 Hill, 317; in re Edward Klein, 1 How. 277, note; s. ¢.
2N. Y. Leg. Obs. 185.

Congress in passing laws on the subject of bankruptcies is not restricted
to laws with such scope only as the English bankruptcy laws had when the
Constitution was adopted. The power is general, unlimited, and unre-
stricted over the subject. In re Silverman, 4 B. R. 523; s. c. 1 Saw. 410;
s. c. 2 Abb. C. C. 248; in re Reiman & Friedlander, 11 B. R. 21; s. c. 13
B. R. 128; s. c. T Ben. 455; s. ec. 12 Blatch. 562; Thompson v. Alger, 53 Mass.
428,

The framers of the Constitution did not intend to limit the power to any
particular class of persons. Morse v. Hovey, 1 Sandf. Ch. 187; s. c. 1 Barb.
Ch. 404; in re Edward Klein, 1 How. 277, note; s. c. 2 N. Y. Leg. Obs. 185;
Kunzler vy. Kohaus, 5 Hill, 317; in re California Pacific R. R. Co., 11 B. R.
193; 8. c. 8 Suw. 240; in re Silverman, 4 B. R. 523; s. c. 1 Saw. 410; 8. ¢c. 2
Abb. GC. C. 242.

It is not necessary that a bankruptcy law shall provide for the debtor’s
discharge. In re California Pacific R. R. Co., 11 B. R. 198; s. c. 3 Saw. 240.

Congress may establish a system of voluntary as well as involuntary
bankruptcy. Loud v. Pierce, 25 Me, 233; Lalor v. Wattles, 8 IIL. 225; Kunz-
ler v. Kohaus, 5 Hill, 317; in re Edward Klein, 1 How. 277, note; 8. c. 2
N. Y. Leg. Obs. 185; Morse v. Hovey, 1 Sandf. Ch. 187; s. c. 1 Barb. Ch.
404; Thompson y. Alger, 53 Mass. 428; State Bank v. Wilborn, 6 Ark. 35;
Keene v. Mould, 16 Ohio, 12; Cutter v. Folsom, 17°'N. H. 189; McCormick v.
Pickering, 4 N. ¥. 276; Rowan v. Holcomb, 16 Ohio, 463; Dresser v. Brooks,
3 Barb. 429; Hastings v. Fowler, 2 Ind. 216; Reed v. Vaughan, 15 Mo. 137;
in re Irwine, 1 Penn. L. J. 291.

The directly granted power over bankruptcies carries the incidental au-
thority to modify the obligation of contracts so far as the modification may
result from a legitimate exercise of the delegated power. A discharge
may therefore be granted releasing the debtor from contract subsisting at
96 Tur Bankruptcy Law.

the time when the law was passed. Kunzler v. Kohaus, 5 Hill, 317; Sackett
y. Andross, 5 Hill, 327; in re Edward Klein, 1 How. 277, note; s. c. 2 N. Y.
Leg. Obs. 185; Morse v. Hovey, 1 Sandf: Ch. 187; s. c. 1 Barb. Ch. 404;
Loud v. Pierce, 25 Me. 233; Keene v. Mould, 16 Ohio, 12; McCormick v.
Pickering, 4 N. Y. 276; in re Irwine, 1 Penn. L. J. 291.

Congress may pass a law which will have the effect to make void an
assignment which is valid under the State laws. In re Henry Brenne-
man, Crabbe, 456.

The power to enact a bankruptcy law implies the power to make it effi-
cient. The end implies the means. Russell v. Cheatham, 16 Miss, 7u3.

Congress las the power not only to establish uniform laws on the sub-
ject of bankrupicies, but also to commit the execution of the systein to
such }'ederal courts as it may see fit, and to prescribe such modes of pro-
cedure, and means of administering the system as it may deem best suited
to carry the law into successful operation. Shearman v. Bingham, 5 B. R.
34; s. c. 7 B. R. 490; s. c. 8 C. L. N. 258; Goodall vy. Tuttle, 7 B. R. 193;
s. c. 3 Biss. 219; Mitchell vy. Manuf. Co. 2 Story, 648.

Cougress lias the power to define what and how much of the debtor’s
property shall be exempt from the claims of his creditors. In re Reiman
& Friedlander, 11 B. R. 21; s. ¢. 138 B. R. 128; s. c. 7 Ben. 455; s. ec. 12
Blatch, 562. .

To come within the constitutional provision, a bankruptcy law must be
a uniform law throughout the United States. A law which prescribes one
rule in one district and a. different one in another can not be regarded
as a uniforin law. Wittredge v. Warren, 14 N. H. 509.

The laws established by Congress on the subject of bankruptcies under
the power conferred by the Constitution, must, indeed, be uniform through-
out the United States. But the extent to which this power shall be
exercised rests in the discretion of Congress. Uniformity is required in
the national legislation only, and the laws of the several States may be
left in force so long and to such extent as Congress may see fit. Day v.
Bardwell, 3 B. R. 455; s. c« 97 Mass. 246.

State Insolvent Laws.— The power granted by Congress may be exer-
cised or declined as the wisdom of that body shall decide. If, in the opin-
fon of Congress. uniform laws concerning bankruptcies ought not to be
established, it does not follow that partial laws may not exist or that
State legislation on the subject must cease. It fs not the mere existence
of the power, but its exercise which is incompatible with the exercise
of the same power by the States. It is not the right to establish these
uniforin laws, but their actual establishment which is inconsistent with
the partial acts of the States. Sturgis v. Crowninshield, 4 Wheat. 122;
Blanchard vy. Russell, 18 Mass. 1; Farmers’ Bank v. Smith, 3 8S. & R. 63;
Betts v. Bagley, 29 Mass. 572; Adams v. Storey, 1 Paine, 79; Pugh v.
Bussel, 2 Blackf. 294; Alexander v. Gibson, 1 N. & McO. 480. Contra,
Vanuxem v. Hazelhursts, 4 N. J. 192; Oldens y. Hallet, 5 N. J. 466; Golden
vy. Prince, 3 Wash. 313; Mason v. Nash, 1 Breese, 16; Ballantine v. Haight,
16 N. J. 196,
VONSTITUTION OF THE UNITED STATES. 97

One prominent reason why the power was given to Congress was to
secure to the people of the United States, as one people, a uniform law
by which a debtor might be discharged from his previous engagements,
and his future acquisitions exempted from his previous engagements.
The rights of debtor and creditor equally entered into the minds of the
framers of the Constitution. The great object was to deprive the States
of the dangerous power to abolish debts. In re Edward Klein, 1 How.
277, note; s. c, 2 N. Y. Leg. Obs. 185.

The peculiar terms of the grant deserve notice. Congress is not au-
thorized merely to pass laws the operation of which shall be uniform,
but to establish uniform laws on the subject throughout the United States.
This establishment of uniformity is perhaps incompatible with State legis-
lation on that part of the subject to which the acts of Congress may ex-
tend. Sturgis vy. Crowninshield, 4 Wheat. 122.

The right of the States to pass a bankruptcy law is not extinguished but
merely suspended by the enactment of a general bankruptcy law. The re-
peal of that law can not confer the power on the States, but it removes
a disability to its exercise, which was created by the act of Congress.
Tbid.

The bankruptcy act, as soon as it took effect, ipso facto, suspended all
action upon future cases arising under the insolvent laws of the State,
where the insolvent laws act upon the same subject-matter and the same
persons as the bankruptcy act; and all proceedings upon such cases com-
menced under the State laws after that time are null and void. Common-
wealth v. O'Hara, 1 B. R. 86; s. c. 6 Phila. 402; s. c. 6 A. L. Reg. 765;
Perry v. Langley, 1 B. R. 559; 8s.a 1D. T. B. 34; 8. ¢. 7 A. L. Reg. 429;
Van Nostrand v. Carr, 2 B. R. 485; s. ce. 30 Md. 128; Martin v. Berry, 2
B. R. 629; s. c. 87 Cal. 208; s. ec. 2 L. T. B. 180; Corner v. Miller et al., 1
B. R. 403; Shears v. Solhinger, 10 Abb. Pr. (N. 8.) 287; in re Reynolds,
9 B. R. 50; s. c. 8 R. I. 485; in.re Lucius Eames, 2 Story, 322; Bishop v.
Loewen, 2 Penn. L. J. 364; Griswold v. Pratt, 49 Mass. 16; Rowe v. Page,
13 B. R. 366; s. ec. 54 N. H. 190.

The State insolvent laws are not entirely abrogated. They exist and
operate witl full vigor until the bankruptcy law attaches upon the person
and property of the debtor. In re John Ziegenfuss, 2 Ired. 468; Reed v.
Taylor, 4 B. R. 710; s. c. 82 Iowa, 209.

Two statutes having the same general object, and acting upon the same
persons and the same cases, by different modes and in different jurisdic-
tions, must be in conflict with each other. Though the modes by which
the remedy is administered may vary, yet, where the bankruptcy act and
the State insolvent law have substantially the same scope and object,
and act upon the same persons and cases. the State insolvent law is sus-
pended. The act of Congress is both a bankruptcy act and an insolvent
act. Martin v. Berry, 2 B. R. 629; s. c. 37 Cal. 208; s.c. 2 L. T. B. 180;
Van Nostrand v. Carr, 2 B. R. 485; s. ec. 30 Md. 128.

The jurisdiction of the bankruptcy act does not depend upon the right
of the debtor to ultimately obtain a discharge. If his case comes within
the provisions of the bankruptcy act, he can not obtain a discharge under

7
98 Tur Bankruptcy Law.

the State insolvent law, even though his assets are not sufficient to pay
thirty per centum on the claims that may be proved against his estate.
Van Nostrand v. Carr, 2 B. R. 485; s. c. 30 Md. 128.

If the debtor has not committed an act of bankruptcy, and declines
to go into yoluntary bankruptcy, a creditor may proceed against him
under the State insolvent law, where such proceedings are in harmony
with the purpose of the bankruptcy law, for the State insolvent law re-
mains in full force in respect to all persons and matters over which the
bankruptcy law declines to take jurisdiction. Geery’s Appeal, 43 Conn.
289.

The State insolvent laws were not suspended until the 1st day of June,
1867. Augsbury v. Crossman, 17 N. Y. Supr. 387.

State Insolvency Laws.— Act or 1898, Cu. 7, Suc. 71. * * *

b Proceedings commenced under State msolvency laws before the
passage of this act shall not be affected by it.

Jurisdiction.— If a State court has acquired jurisdiction, under a State
law, of a case in insolvency, and is engaged in settling the debts and
distributing the assets of the insolvent before or at the date at which the
act of Congress upon the same subject takes effect, the State court may,
nevertheless, proceed with the case to its final conclusion, and its action
in the matter will be as valid as if no law upon the subject had been
passed by Congress. Martin v. Berry, 2 B. R. 629; s. c. 37 Cal. 308; s. ec.
2 L. T. B. 180; Meekins, Kelly & Co. v. Creditors, 3 B. R. 511; s. c. 19
La. An. 497; in re Eli Horton, 5 Law Rep. 462; in re Bela Judd, 5 Law
Rep. 328; West v. Creditors, 5 Rob. (La.) 261; s. ec. 8 Rob. (La.) 123; Dwight
v. Simon, 4 La. An. 490; Larrabee v. Talbot, 5 Gill, 426; Lavender v.
Gosnell, 12 B. R. 282; s. c. 48 Md. 153; Longis v. Creditors, 20 La. An. 15.

If the debtor was divested of his property under the State insolvent law
at tbe time of the adoption of the bankruptcy law, the jurisdiction of the
State court is not affected thereby. Judd v. Ives, 45 Mass. 401.

All proceedings on a petition to compel an insolvent debtor to surrender
his property, which are pending at the time when the proceedings in
bankruptcy were commenced, should be stayed until an assignee is ap-
pointed. West v. Creditors, 4 Rob. (La.) 88; s. ec. 8 Rob. (La.) 123.

The jurisdiction of the State court attaches from the moment when
it makes the order staying the creditors from all interference with the
property of the debtor. From that time the State court has the legal
custody and control of his estate. Martin v. Berry, 2 B. R. 629; s. «
37 Cal. 208; s. c. 2 L. T. B. 180; Meekins, Kelly & Co. v. Creditors, 3 B. R.
511; s. c. 19 La. An. 497.

A suit to compel a new surrender is a new suit, and not a continuation
of the suit in insolvency previously pending. The suspension of the State
insolvent law by the enactment of the bankruptcy law before the surrender
was ordered, divested the State court of its jurisdiction over cases pre-
viously instituted, and no further proceedings can be had therein. Fisk
v. Montgomery, 21 La. An. 446.
State INsoLvENcY Laws. 99

The State laws relating to insolvent corporations were superseded. The
State courts have jurisdiction as far as the forfeiture of the charter of
a corporation for insolvency is concerned; but with the decree of for-
feiture their jurisdiction ends. They can not go on and administer upon
the property of a corporation as the property of an insolvent corporation,
for the insolvent laws of a State touching corporations are no longer in
force. Thornhill et al. v. Bank of Louisiana et al., 3 B. R. 485; s. «. 5
B. R. 367; s. ec. 1 Woods, 11; s.c.1L. T. B. 156; s. a 3 L. T. B. 38; in re
Merchants’ Ins. Co., 6 B. R. 48; s. c. 3 Biss. 162; s. c. 2 L. T. B. 243.

The treatment which a corporation may receive at the hands of the
State court can not avail to sustain that court’s control over the assets.
If the fact of insolvency exists, and the corporation is within the pro-
visions of the bankruptcy law, the Federal courts sitting in bankruptcy have
exclusive jurisdiction of the property, and the fact that a State law does
not purport or attempt to relieve the debtor frum his debts can not be
urged as a reason why the State court should hold the assets and admin-
ister them after proper proceedings in bankruptcy have been instituted
in the Federal courts. So far as a State law attempts to administer on
the effects of an insolvent debtor, and distribute them among creditors,
it is, to all intents and purposes, an insolvent law, although it may not
authorize the discharge of the debtor from further liability. If the fact
of insolvency does not exist, the State court may probably have the right
to administer the assets as an incident to a proceeding for the dissolution
of the corporation, but when insolvency intervenes so as to make the
debtor a proper subject for the operation of the bankruptcy law, the ex-
clusive jurisdiction of the bankruptcy court attaches, and the State court,
and those acting under its mandates, must surrender the control of the
assets, whatever may be the final decree in,regard to the continuance of
the corporation. In re Merchants’ Ins. Co., 6 B. R. 43; s. ¢c. 3 Biss. 162;
s.¢c. 2 L. T. B. 248; Thornhill et al. v. Bank of Louisiana et aL, 3: Bo
435; s. c. 5 B. R. 367; s. c. 1 Woods, 11; s.c.1L. T. B. 156; s. ¢c 3 L. T.
B. 38; in re Independent Ins. Co., 6 B. R. 169, 260; s. c. 1 Holmes, 103;
Platt v. Archer, 6 B. R. 465; s. c. 9 Blatch. 559; Shryock v. Bashore, 13
B. R. 481; s. c. 15 B. R. 283; 8. c. 82 Penn. 159.

A proceeding in bankruptcy is not the exclusive method of winding up
insolvent corporations. The bankruptcy act does not ipso facto suspend
State laws for the collection of debts. Chandler v. Siddle, 10 B. R. 236;
8. @ 3 Dillon, 477.

A. State law to abolish imprisonment on civil process in certain cases,
which is limited to the single instance of involuntary confinement, and
whose aim and purpose is simply to liberate the person, is not superseded.
Steelman v. Mattix, 36 N. J. 344; Shears vy. Solhinger, 10 Abb. Pr. (N. 8.)
287; in re Reynolds, 9 B. R. 50; s. c. 8 R. I. 485; Jordan v. Hall, 9 R. I.
218; in re Rank, Crabbe, 4938.

If the distribution of the property is merely incidental to the release
of the person from imprisonment, and the debt is not discharged, the
proceeding is not a proceeding in bankruptcy. Steelman y. Mattix, 36
N. J. 344,
100 Tur Bankruptcy Law.

The bankruptcy act can not affect the determination of a debtor’s right
to be discharged by taking the poor debtor’s oath, and of his liabulty
to imprisonment by way of punishment for fraud, upon proceedings which
were commenced hefore the act took effect. Stockwell v. Silloway, 100
Mass. 287.

In an action on a bond given on the arrest of the debtor, and con-
ditioned that he will apply for the benefit of the State insolvent laws, a
plea that he has since obtained a discharge under the bankruptcy law is
a valid plea, unless the debt is one that is not released by a discharge.
Hubert v. Horter, 14 B. R. 430; s. a. 24 Pitts. L. J. 19; Barber v. Rogers,
71 Penn. 362; Nesbit v. Greaves, 6 W. & S. 120.

A bond to apply for the benefit of the State insolvent laws, and if he
fails to be discharged to surrender himself to the sheriff is valid. The
undertaking is in the alternative, either to obtain a discharge or to re-
turn to the condition from which he was released. If he can not apply
for the benefit of the State insolvent laws because they are suspended,
he must perform the other alternative of the condition. Steelman y.
Mattix, 36 N. J. 344.

A State insolvent law which merely protects the person from imprison-
ment, without affecting contracts, is not superseded, although it also pro-
vides for the distribution of the debtor’s property. Sullivan v. Hieskill,
Crabbe, 525; s. ec. 4 Penn. L. J. 171.

A Stale law providing for the arrest and punishment of fraudulent
debtors is not suspended by the bankruptcy law. Scully v. Kirkpatrick,
79 Penn. 324.

The bankruptcy law does not supersede the State laws relating to the
sett!ement of the insolvent estate of lunatics, spendthrifts, ur deceased
persons. Hawkins v. Learned, 54 N. H. 338.

A. State law which makes a transfer by an insolvent with intent to give
a preference operate as an assignment for the benefit of all creditors is
not an insolvent law, and is not superseded by the bankruptcy law. Eber-
sole v. Adams, 18 B. R. 141; s. c. 10 Bush, 83; Linthicum vy. Fenley; 11
Bush, 1381.

The bankruptcy law does not supersede a State law regulating assign-
ments for the benefit of creditors. Mayer vy. Hillman, 13 B. R. 440; s. «
91 U. S. 496; in re Hawkins et al., 2 B. R. 378; s. c. 834 Conn. 548; Beck v.
Parker, 65 Penn. 262; Maltbie v. Hotchkiss, 5 B. R. 485; s. ce. 38 Conn.
80.

A State law which provides a mode of apportioning the losses of a sav-
ings bank among the depositors is valid, although it was passed while the
bankruptcy law was in force. Simpson y. Savings Bank, 15 B. R. 385; s. c
56 N. H. 466.

A provision in State law which prohibits an insolvent corporation from
transferring its property with the intention to give a preference is super-
seded. French vy. O’Brien, 52 How. Pr. 394.

An act which provides for the arrest of a debtor who removes or dis-
poses of his property with the intent. to defraud his creditors is not super-
seded. Gregg v. Hilsen, 34 Leg. Int. 20.
State INsoLveNcy Laws.

  

The law allowing assignments for the benefit of creditors is not a part
of the insolvent laws, and is not superseded by the bankruptcy law. Cook
vy. Rogers, 18 B. R. 97; s. ec. 81 Mich. 891; 5. c. 14 A. L. Reg. 633; Van Hein
vy. Elkus, 15 B. R. 195; s. ¢«. 15 N. Y. Supr. 516.

An assignment made as a part of the machinery of a State insolvent
law, and deriving all its validity and efficacy from the statute is void.
Shryock v. Bashore, 18 B. R. 481; s. c. 15 B. R. 283; s. « 82 Penn. 159;
Rowe v. Page, 13 B. R. 366; s. c. 54 N. H. 190,

Whether an assignment in proceedings under a State insolvent law is
void, is a question that may be raised in a collateral action. Shryock v.
Bashore, 13 B. R. 481; s. c. 15 B. R. 288; s. c. 82 Penn. 158.

The insolvent laws are no further suspended than they seek upon notori-
ous grounds to seize and distribute the effects of the debtor among his
ereditors generally. A statute for the more effectual appropriation of a
debtor’s property to satisfy an individual debt is not suspended. Berthelon
v. Betts, 4 Hill, 577.

The State insolvent laws were not suspended until June 1, 1867. Day
v. Bardwell et al., 3 B. R. 455; s. c. 97 Mass. 246; Martin v. Berry, 2 B. R.
629; s. ec. 87 Cal. 208; s. c. 2 L. T. B. 180; Chamberlain vy. Perkins, 51 N. H.
336.

The State laws are operative to some extent and for some purposes.
They are clearly operative in all cases which are not within the provisions
of the bankruptcy law. Shepardson’s Appeal, 36 Conn. 23; Clarke v. Ray,
1H. & J. 318; in re Winternitz, 4 B. R. (quarto) 127; s. c. 18 Pitts. L. J. 61.

The bankruptcy law applies only to cases where the debtor owes debts
provable under the act exceeding the amount of three hundred dollars.
When the debts do not exceed that amount, the qase is not within the
purview of the act. Before proceedings under the State law can be held
to be erroneous, it must affirmatively appear that the debts are more
than that amount. Until then, there is no conflict of laws, and courts
will not presume that the debts are more or less than that amount. Shep-
ardson’s Appeal, 36 Conn. 23.

The State insolvent laws are still in force so far as they affect debts
that will not be released by a discharge under the bankruptcy act, such as
debts created by the fraud of the bankrupt. Where the bankruptcy act
expressly excepts a class of cases, it must have been the intention of
Congress not to interfere, in such specified class, with the laws of the sev-
eral States. A party imprisoned under a judgment founded upon a fraud-
ulent debt, may take the benefit of the State insolvent laws for the pur-
pose of obtaining a release and discharge from that debt. In re Winter-
nitz, 4 B. R. (quarto) 127; s. ce. 18 Pitts. L. J. 61; Stepp v. Stahl, 2 W.
N. 80.

The State insolvent laws are suspended even as between citizens of
the same State. Cassard et al. v. Kroner, 4 B. R. 569.

An attachment law which permits a writ of attachment to issue for
the causes which would be sufficient to authorize the institution of pro-
ceedings in involuntary bankruptcy, and authorizes the distribution of
the property equally among all*the creditors, is superseded. Tobin v.
Trump, 3 Brewst. 288; s. c. 7 Phila. 123.
102 Tue Bankruptcy Law.

Whether a State insolvent law is unconstitutional, is a question that
can not be raised by the defendant in an action by an insolvent trustee to
recover a debt due to the estate. Shryock v. Bashore, 13 B. R. 48; s. c.
15 B. R. 283; s. ec. 82 Penn. 159.

There is a material distinction between discharging a debtor and distrib-
uting his assets among his creditors. The bankruptcy act was demanded
and passed mainly for the former. The latter is in its nature incidental
to the former, which is the principal thing. There probably existed in
every State, at the time of the passage of the bankruptcy law, some stat-
utory provisions for the distribution of the effects of insolvent debtors
among their creditors, and it can hardly be supposed that Congress in-
tended to repeal or suspend those State laws, except so far as was neces-
sary for the accomplishment of the main object in view, and that neces-
sity may well be limited to those cases over which the Federal courts
actually assert their jurisdiction within the time limited for that purpose.
An assignment under the State law is good unless attacked within six
months. If all the parties concerned desire that the estate may be settled
in the State courts, it can be done. Should a case arise in which there
will be an actual conflict of jurisdiction, the State courts must yield to
the Federal courts, and when the bankruptcy court, within the time lim-
ited, asserts its jurisdiction, the proceedings in the State court are thereby
superseded. Should the State courts attempt to grant a certificate of dis-
charge to an insolvent debtor, no court would give any effect to it. Malt-
bie v. Hotchkiss, 5 B. R. 485; s. c. 38’ Conn. 80; Reed v. Taylor, 4 B. R.
710; s. c. 82 Iowa, 209.

As a bankruptcy law merely suspends State insolvent laws without re-
pealing them, they revive and are in force on the repeal of the bankruptcy
law, and need not be re-enacted. Lavender v. Gosnell, 12 B. R. 282; s. «
43 Md. 153.

The bankruptcy law must prevail in cases where it conflicts with the
ordinance of 1787. Stow v. Parks, 1 Chand. 60. ,
TITLE V.
COURT AND COURTS OF BANKRUPTCY.

Act oF 1898, Cu. 1, § 1a. Definitions.— (24) “ States” shall include
the territories, the Indian Territory, Alaska, and the District of
Columbia; (7) “court” shall mean the court of bankruptcy in which
the proceedings are pending, and may include the referee; (8) “ courts
of bankruptcy ” shall include the district courts of the United States
and of the Territories, the supreme court of the District of Columbia,
and the United States court of the Indian Territory, and of Alaska;
and (3) “appellate courts ” shall include the circuit courts of appeals
of the United States, the supreme courts of the Territories, and the
Supreme Court of the United States.

§ 2. That the courts of bankruptcy, as hereinbefore defined,
viz., the district courts of the United States in the several States, the
supreme court of the District of Columbia, the district courts of
the several Territories, and the United States courts in the Indian
Territory and the District of Alaska, are hereby made courts of
bankruptcy.

§ 23. Jurisdiction of United States and State Courts.— (a)
The United States circuit courts shall have jurisdiction of all con-
troversies at law and in equity, as distinguished from proceedings in
bankruptcy, between trustees as such and adverse claimants concern-
ing the property acquired or claimed by the trustees, in the same
manner and to the same extent only as though bankruptcy proceed-
ings had not been instituted and such controversies had been between
the bankrupts and such adverse claimants.

(b) Suits by the trustee shall only be brought or prosecuted in the
courts where the bankrupt, whose estate is being administered by
such trustee, might have brought or prosecuted them if proceedings
in bankruptcy had not been instituted, unless by consent of the pro-
posed defendant.
104 Tue Bankruptcy Law.

(c) The United States circuit courts shall have concurrent jurisdic-
tion with the courts of bankruptcy, within their respective territorial
limits, of the offenses enumerated in this Act.

Act oF 186%, § 563—ighteenth,h * * * The district
courts are constituted courts of bankruptcy, and shall have in their
respective districts original jurisdiction in all matters and proceedings
in bankruptcy.

Statute revised — March 2, 1867, ch. 176, § 1, 14 Stat. 517. Prior Stat-
utes — April 4, 1800, ch. 19, 2 Stat. 19; Aug. 19, 1841, ch. 9, § 6, 5 Stat.
441,

Where a question arises involving right of national banks to make
loans of a particular ‘character upon mortgage, the assignee should be
permitted to litigate such questions in the Federal courts, and should
not be sent to State courts to try it upon the distribution of surplus mon-
eys in a foreclosure suit; or in a suit brought by the party holding the
alleged invalid mortgage. In re Duryea, 17 B. R. 495.

As to bankrupt and his wife, the bankruptcy proceedings do not divest
the State court of jurisdiction of an action to foreclose a mortgage given
by them. McHenry v. La Société Frangaise, 16 B. R. 385.

A State court has no jurisdiction of an action brought against a trustee
or assignee in bankruptcy to enjoin the collection of the assets of the
bankrupt. Southern et al. v. Fisher, 16 B. R. 414.

Where assignee has a defense to a judgment which is available in
equity, but not at law, it should be asserted by an independent suit on
the equitable side of the court. Stillwell v. Walker, Assignee, 17 B. R.
569. :

Under the law of 1867, upon a bill filed bly an assignee in bankruptcy,
the Circuit Court has power to enjoin the prosecution of an action of
trover in a State court against the marshal for seizing the property of
a third person under his warrant in bankruptcy. Hudson v. Schwab et al.
18 B. R. 480.

Where an injunction was granted in a cause over which the court had
clear jurisdiction, a writ of mandamus would not lie to vacate it, and
the remedy was by appeal from the first decree. Ex parte Schwab, 18
B. R. 507.

An objection to a bill in which the complainant describes himself as
an assignee, that he is not legally such assignee, must be made by plea
and not demurrer. Nicholas v. Murray, 18 B. R. 469.

Assignees may sue to recover assets of the bankrupt in courts of a
district other than that in which decree of bankruptcy was entered.
Dutcher v. Wright, 16 B. R. 331.

State courts have jurisdiction of actions brought by an assignee in
bankruptcy to set aside mortgages alleged to have been made in fraud
of the bankruptcy act. Isett v. Stuart, 16 B. R. 191.

Section 711 of the United States Revised Statutes, which gives ex-
clusive jurisdiction to the Federal courts over “all matters and proceed-
JURISDICTION OF CouRTS. 105

ings in bankruptcy,” does not extend to actions brought by assignees to
collect the assets of bankrupts. Wente v. Young, 17 B. R. 90; Kidder v
Horrobin, 18 B. R. 146.

Concurrent jurisdiction in State and Iederal courts over actions brought
to collect assets of bankrupt, whether legal or equitable or of whatever
amount, Ibid.

A State court has jurisdiction of an action brought by an assignee in
bankruptcy to foreclose a mortgage belonging | to the estate. Burling-
hame, Assignee, v. Parce, 17 B. R. 246.

Acts of State courts done in the due exercise of their jurisdiction, not
conflicting with the proper decrees and jurisdiction of the Federal courts,
are valid and binding on the Federal courts. In re Keiler et al., 18 B. R.
10.

Rule of Interpretation.— The words of the bankruptcy act were, in
most parts of it, wisely taken from the English statutes of 1849 and 1851,
and from the insolvent law of Massachusetts. In applying the. rule that
the interpretation of a law forms a part of it, the construction of a stat-
ute by the courts of the country whose legislature enacted it, is adopted.
The Supreme Court has more than once applied this rule where an Amer-
ican statute has been taken from a prior English one, and has followed
its English construction where the meaning might otherwise have been
doubtful. Barnes v. Rettew, 8 Phila. 133.

Ex antecedentibus et consequentibus fit optima interpretatio, is one of
the most important canons of construction. Every part of a statute
should be brought into action in order to collect from the whole one uni-
form and consistent sense, if that may be done; or, in other words, the
construction must be made upon the entire statute, and not merely upon
disjointed parts of it. Hall v. Deshler, 71 Penn. 299.

In the construction of the law the principle of uniformity must not be
out of sight, for such construction ought to be put on a statute as may
best answer the intention the makers had in view. Barstow v. Adams,
2 Day, 70.

While a construction of a Federal law by the Federal courts other than
Supreme, is not conclusive, it is entitled to careful consideration in: the
State courts. Frank vy. Houston, 9 Kans. 406.

The English decisions properly apply as rules of construction. Roose-
velt v. Mark, 6 Johns. Ch. 266; Livermore v. Bagley, 3 Mass. 487; Murray
v. De Rottenham, 6 Johns. Ch. 52; Tucker v. Oxley, 5 Cranch, 34; s. ¢.
1 Cranch C. ©. 419; Globe Ins. Co. v. Cleveland Ins. Co., 14 B. R. 811;
3. ec 8 C. L. N. 258.

Character of the Jurisdiction.— Courts of bankruptcy, as they existed
in England at the time the act was passed, were, and still are, separate,
distinct organizations, with powers and jurisdiction separate and distinct
from all other courts, and it is undoubtedly in this sense that the words
are used in the act; that is, courts possessing power and jurisdiction pe-
culiar to themselves. The only difference is, that here, instead of creat-
ing a new organization, an organization already existing, known as the
district court, is taken up and made use of in lieu of such new organiza-
106 Tue Bankruptcy Law.

tion. But the district court, when acting as a court of bankruptcy, is
none the less a separate and distinct court, exercising powers and juris-
diction separate and distinct from its powers and jurisdiction as a dis-
trict court, than if it were such separate and distinct organization. In re
Norris, 4 B. R. 85; s. c. 1 Abb. C. C. 514; 5. c. 1 Ll. T. B. 227.

Congress, in passing the act, in pursuance of its constitutional power,
not only intended to make it uniform, but operative, throughout the United
States. It does not stop at State lines. Property, wherever situate, which
is not exempted from the operation of the act, passes to the assignee. This
is equally true of property under mortgage, as of that which is unincum-
bered. Debts, whenever payable, and creditors, wherever residing within
the United States, are within the operation of the act. The bankruptcy
court is invested with this jurisdiction over the bankrupt and his estate,
and over creditors who are brought involuntarily into it, in order to ad-
minister the estate for the benefit of all the creditors according to their
respective rights. Thus, it is plain beyond controversy, that the prop-
erty of the bankrupt, though situate in another State, and though mort-
gaged by the bankrupt, prior to the institution of proceedings in bank-
ruptcy, is within the jurisdiction and under the control of the bankruptcy
court. Markson et al. v. Heaney, 4 B. R. 510; 3. c. 1 Dillon, 497.

The district court, as a court of bankruptcy, is the creature of statute,
and has no powers except those conferred upon it, either expressly or by
necessary implication, for the just and full execution of the law. In re
Robert Morris, Crabbe, 70; Clark v. Binninger, 3 B. R. 518; s. c. 388 How.
Pr. 341; s. ec. 3 L. T. B. 49.

In administering the statute, the functions of the district court, as a
court, are employed; and the jurisdiction is not a jurisdiction conferred
on the judge, as a commissioner, in the nature of the appointment by
which the chancellor formerly executed the bankruptcy law in England.
In re Barney Corse, 1 N. Y. Leg. Obs. 231.

The strict rule of construction, which is applied in cases where a statute
gives to a court power to do a particular thing, has no application to the
bankruptcy law, where full and complete jurisdiction over an extensive
subject is given to a court constituted for the purpose. In re California
Pacific R. R. Co., 11 B. R. 193; s. c. 3 Saw. 240.

In enjoining upon the district court to take cognizance of, and admin-
ister the bankruptcy law, Congress must be accepted to intend that, in
every particular not otherwise designated by the statute, those courts
should proceed with the new jurisdiction upon the principles appropriate
to like proceedings under any other branch of their power. The law-
giver, in adding to the range of their employment, must be supposed to
contemplate that they will continue the use of their eustomary powers,
unless he specially limits and restricts that use. In re Barney Corse,
1N. Y. Leg. Obs. 231; in re California Pacific R. R. Co., 11 B. R. 193; 6. ¢.
3 Saw. 240.

The district court has jurisdiction of two distinct kinds: 1st. As a court
of bankruptcy, over the proceedings in bankruptcy initiated by the peti-
tion and ending in the distribution of assets among the creditors, and the
JURISDICTION OF CouRTs. 107

discharge or refusal of a discharge to the bankrupt; 2d. As an ordinary
court over suits at law or in equity, brought by or against the assignee
in reference to alleged property of the bankrupt, or to claims alleged to
be due to or from him. Lathrop vy. Drake, 13 B. R. 472; s. c. 91 U.S. 516.

The jurisdiction of the district courts extends to all matters and pro-
ceedings in bankruptcy, without limit. When the act says that they
shall have jurisdiction in their respective districts, it means that the juris-
diction is to be exercised in their respective districts. Each court within
its own district may exercise the powers conferred, but those powers
extend to all matters of bankruptcy without limitation. Lathrop v. Drake,
13 B. R. 472; s. c. 91 U. S. 516; Burbank v. Bigelow, 14 B. R. 445; s. «.
92 U. S. 179.

The words, “in their respective districts,’ must receive their usual
ordinary signification, and manifest a purpose and intent in Congress to
restrict and limit the authority and jurisdiction of the district courts in
bankruptey within their own districts, in accordance with the practice
as it then was, and not to confer upon them a jurisdiction throughout
the United States, in utter conflict with all prior legislation and the
settled policy of Congress. While their authority does extend to all mat-
fers in bankruptcy, and there is no limit to the subject-matter over which
the court has jurisdiction, yet they are expressly confined and restricted
in its exercise to the limits of their own territory, and enjoy no other or
greater power or authority outside of their own districts than they had
before the bankruptcy act was passed. They can not summon parties
before them from without their districts. Paine v. Caldwell, 6 B. R. 558;
s. c. 29 Leg. Int. 284; in re Hirsch, 2 B. R. 3; s. ec. 2 Ben. 498; 8. c. 1 L.
T. B. 92; Markson et al. vy. Heaney, 4 B. R. 510; s. ec. 1 Dillon, 497, 511,
note.

An assignee can not proceed by attachment against a party in a district
where the latter neither resides nor is found at the time of serving the
writ. Nazro v. Cragin, 3 Dillon, 474.

The whole tenor of the bankruptcy act shows that Congress intended
to provide for the complete administration of the bankrupt system in the
Federal courts, and through the instrumentality of Federal officers. This.
section does not contain any words which justify the conclusion that the
jurisdiction conferred by it is limited to the district court for the district
in which the proceedings’ in bankruptcy are pending. District courts
should be naturally auxiliary to each other to perfect and accomplish the
object of the act. An assignee elected in one district may institute pro-
ceedings in the district court of another district to recover money paid
by the bankrupt to a preferred creditor contrary to the provisions of the
act. Shearman v. Bingham, 5 B. R. 34; s.¢c. 7 B. R. 490;85c.3 0. LN.
258; Goodall v. Tuttle, 7 B. R. 198; s. c. 3 Biss. 219; in re James Martin,
5 Law Rep. 158; Moore v. Jones, 23 Vt. 739. Contra, Jobbins v. Mon-
tague, 6 B. R. 509; in re Richardson, 2 B. R. 202; s. c. 2 Ben. 517; s. « 2
L. T. B. 20; Markson v. Heaney, 4 B. R. 510; s. c. 1 Dillon, 497.

The petitioning creditor who has filed a petition against the debtor in
one district, may apply to the district court of another district to restrain
108 Tur Banxruprcey Law.

parties from interfering with the debtor's property. In re James Martin,
5 Law Rep. 158.

If the bankrupt sues on a demand which passed to his assignee, and re-
covers judgment, the district court may arrest the payment of the money
to the bankrupt, and order it to be paid over to the assignee. Moore v.
Jones, 23 Vt. 739.

If the assignee claims the benefit of a judgment recovered by the bank-
rupt in his own name, he must take it subject not only to such charges
as are legally taxable and recoverable as costs, but also to all other reason-
able charges and expenses incurred in obtaining the judgment. Ibid.

The attorney for the bankrupt can not be allowed for services rendered
in opposition to a motion made by the assignee in a State court for leave
to appear and prosecute the suit in his own name. Ibid.

A State court, in a collateral action, may inquire into the jurisdiction of
the district court as a court of bankruptcy. Chemung Canal Bank v. Jud-
son, 8 N. Y. 254.

A State court may inquire into the jurisdiction of the district court, and
declare its decree void, where the decree was rendered without authority
of law. Wells v. Brackett, 30 Me. 61. ‘

The district court, although a court of limited jurisdiction, is not an
inferior court in the technical sense of that term, and its jurisdiction need
not appear on the face of the proceedings. Chemung Canal Bank v. Jud-
son, 8 N. Y. 254; Rucknam v. Cowell, 1 N. Y. 505; Reed v. Vaughn, 10 Mo.
447; Hayes v. Ford, 15 B. R. 569. Vide Morse v. Presby, 25 N. H. 299.

An adjudication is in the nature of a decree in rem as respects the
status of the debtor, and can not be impeached in a collateral action if
the record shows that the court making it had jurisdiction over his person
and the subject-matter. Michaels v. Post, 12 B. R. 152; s. c. 21 Wall. 398;
Bissell v. Post, 4 Day, 79; Sloan v. Lewis, 12 B. R. 173; s. e. 22 Wall. 150.

A decree adjudging a corporation bankrupt is in the nature of a decree
in rem as respects the status of the corporation, and if the court render-
ing it has jurisdiction, can only be assailed by a direct proceeding in a
competent court, unless it appears that the decree is void in form, or
that due notice of the petition was never given. New Lamp Chimney
Co. v. Ansonia Brass and Copper Co., 10 B. R. 355; s. c. 18 B. R. 385; s. «
64 Barb. 435; s. c. 538 N. Y. 123; s. c. 91 U. S. 656.

A creditor can not impeach an adjudication in a collateral action on the
ground that it was procured by fraud. Michaels v. Post, 12 B. R. 152;
s. c. 21 Wall. 398.

Although the record does not show affirmatively that the district court
acquired jurisdiction of the person of the bankrupt, that fact will be pre-
sumed. Chemung Canal Bank v. Judson, 8 N. Y. 254; Wright v. Watkins,
2 Greene (Iowa), 547.

Where a court has jurisdiction to hear and determine a question either
at law or in equity, it must of necessity have the power of determining
in which form the remedy shall be administered; and an error of judg-
ment on that point can not be urged as a defect of jurisdiction in a col-
lateral action. Chemung Canal Bank v. Judson, 8 N. Y. 254.
Jury TRIALS. 109

Where an involuntary proceeding is dismissed, and then reinstated with-
out further notice to or appearance by the debtor, the adjudication is void,
and a payment to an assignee, under an order of the district court, will
not protect the party making such payment. Gage v. Gates, 15 B. R.
145; s. ce. 62 Mo. 412.

Act or 1898, Cu. 4, § 19. Jury Trials.— See post, p. 294.

Acts oF 1867 and 1874, § 566. The trial of issues of fact
in the district court, in all causes except in cases in equity and cases’
of admiralty and maritime jurisdiction, and except as otherwise pro-
vided in proceedings in bankruptcy, shall be by jury. * * *

Statutes revised — Sept. 24, 1789, ch. 20, § 9, 1 Stat. 76; Feb. 26, 1845,
ch. 20, 5 Stat. 726.

§ 648. The trial of issues of fact in the circuit courts shall
be by jury, except in cases of equity and of admiralty and maritime
jurisdiction, and except as otherwise provided in proceedings in bank-
ruptey. * * #*

Statute revised — Sept. 24, 1789, ch. 20, § 12, 1 Stat. 79.

§ 711. The jurisdiction vested in the courts of the United
States, in the cases and proceedings hereinafter mentioned, shall be
exclusive of the courts of the several States. * * *

Sixth. Of all matters and proceedings in bankruptcy.

The jurisdiction thus given depends wholly upon the act, and is neces-
sarily exclusive, because independently of it there is no jurisdiction in
any tribunal over any such proceedings, and no original jurisdiction is
given to any other. This includes all proceedings for adjudging any one
a bankrupt, thereby vesting title to his property in an assignee appointed
pursuant to the act. Cook v. Whipple, 9 B. R. 155; s. c. 55 N. Y. 150.

By the proceedings and adjudication, jurisdiction is obtained of the
bankrupt and his creditors, and the court making the adjudication is the
only one that can deal with the bankrupt and his creditors, and settle
all conflicting claims, equities and controversies arising between them.
All such matters are exclusively within the jurisdiction of the court
where the proceedings are pending. Goodall v. Tuttle, 7 B. R. 193; s. ¢.
3 Biss. 219.

A State court, on the application of the debtor, may enjoin the petition-
ing creditor from prosecuting a fraudulent and oppressive petition in bank-
ruptcy against him, especially if the latter invoked the jurisdiction of
the State court to enforce his claim before filing the petition. Pusey v.
Bradley, 1 N. Y. Supr. 661; s. ec. 46 How. Pr. 255.
110 Tue Bankruptcy Law.

No State court can by any process prevent a party from applying to
the district court for the benefit of the provisions of the bankruptcy law.
Watson v. Citizens’ Savings Bank, 11 B. R. 161; Fillingin v. Thornton,
12 B. R. 92; s. c. 49 Ga. 384.

The district court will not prevent a seizure of the bankrupt’s property
on execution, or a delivery to a receiver before an adjudication in a volun-
tary qase, for it has no exclusive power over the property until there is
an adjudication. In re W. O. H. Waddel, 1 N. Y. Leg. Obs. 53.

The jurisdiction of a district court of the United States, sitting as a
court of bankruptcy, is superior and exclusive in all matters arising under
the statute. The estate surrendered is placed in the custody of the court
so sitting in bankruptcy, and the officer appointed to manage it is ac-
countable to the court appointing him, and to that court alone. Ne court
of an independent State jurisdiction can withdraw the property surren-
dered, or determine in any degree the manner of its disposition. In re
Barrow, re Loeb, Simon & Co., re Winter, 1 B: R. 481; s. ¢c. 1 lL. T. B. 63;
in re Vogel, 2 B. R. 427; s. c. 3 B. R. 198; s. c. 7 Blatch. 18; s. c. 2 L. T.
B. 154; in re People’s Mail Steamship Co., 2 B. R. 553; s. ¢. 3 Ben. 226;
in re Kerosene Oil Co., 2 B. R. 528; s. c. 3 Ben. 35; s. c. 2 L. T. B. 79;
Brock v. Terrel, 2 B. R. 648; Pennington v. Sale & Phelan et al., 1 B. R.
572; Jones v. Leach et al., 1 B. R. 595; in re Wallace, 2 B. R. 184; s. «
1 Deady, 433; Buckingham v. McLean, 83 McLean, 185; s. ec. 18 How. 151;
Watson y. Citizens’ Savings Bank, 11 B. R. 161.

Any interference with the property, while so in the custody of the court,
is liable to be punished as a contempt. In re Vogel, 2 B. R. 427; s. ¢«. 3
B. R. 198; s. ec. 7 Blatch. 18; s. c. 2 L. T. B. 154.

From the time of the filing of the bankrupt’s petition, the property is in
the custody of the bankruptcy court, and at least from the time of the ap-
pointment of the assignee, the possession of it by the bankrupt is, in law,
the possession of it by the assignee. In re J. M. Rosenberg, 3 B. R. 180;
8s. c. 3 Ben. 366.

The district court would fail in its duty if it were to suffer the posses-
sion of the assignee to be forcibly displaced by a third person, although
using the form of the process of a State court, in a suit to which the as-
signee is not a party, and in which the title of the assignee is not in ques-
tion, but where the property would be subjected to such a fate as a con-
test beween two strangers to the proceedings in bankruptcy might involve.
Samson v. Blake, 6 B. R. 410; s. ec. 9 Blatch. 879.

The district court has the power to protect the possession of the assignee
against interference, except by a resort to a proper legal proceeding, to
which he is a party; and if the property is taken from his possession with-
out such proceeding, may compel its return. Ibid.

A party who holds a claim that is not provable need not apply to the dis-
trict court for leave to issue an execution. Black v. McClelland, 12 B. R.
481; s.¢c.7C. L. N. 420.

A State court has no jurisdiction to direct a depositary of the bankrupt
court to pay a judgment against the assignee out of the funds of the
estate deposited with it. Havens v. Nat'l. City Bank, 13 B. R. 95; s. «. 6
N. Y. Supr. 346,
JuRY TRIALS. 111

The appointment of the assignee in bankruptcy relates back, and gives
to him title to all the estate, real and personal, legal and equitable rights,
interests and things in action which belonged to the debtor on the presen-
tation of the petition. From and after the filing of the petition, therefore,
creditors can acquire no interest by receivership, or otherwise, in the prop-
erty of the debtor which the decree in bankruptcy will not displace or
annul. Buchanan y. Smith, 4 B. R. 397; sc. 7 B. R. 513; s. c. 8 Blatch.
153; s. c. 16 Wall. 277; Stuart v. Hines, 6 B. R. 416; s. c. 833 Iowa, 60: s. c.
5 L. T. B. 46; Vidal v. Ocean Ins. Co., 5 Rob. (La.) 68; Pennington v. Sale &
Phelan et al., 1 B. R. 572; Jones v. Leach et al., 1 B. R. 595; in re Geo. W.
Anderson, 9 B. R. 360; McLean vy. Rockey, 8 McLean, 235; Thames v.
Miller, 2 Woods, 564.

The levy of an attachment after the commencement of proceedings in
bankruptcy is absolutely void. Stuart v. Hines, 6 B. R. 416; s. c. 33 Iowa,
60; s.c.5 L. T. B. 46; Weisenfeld v. Mispelhorn, 5 W. Va. 46; Oliver v.
Smith, 5 Mass. 183; Whitney v. Lodge 1 W. N. 170.

The title of the assignee will prevail over an attachment issued after the
commencement of the proceedings in bankruptcy, but before the adjudi-
eation. Phillips v. Helmbold, 26 N. J. Eq. 202.

The issuing of an injunction out of the district court, restraining a pur-
chaser and the sheriff from disposing of goods, does not confer such ex-
clusive jurisdiction over the subject as to prevent the purchaser from insti-
tuting an action against the sheriff. Hathaway v. Brown, 18 Minn. 414.

When money is raised upon an execution, and paid into court for distri-
bution, a party who sets up a title adverse to the proceedings can not
come in and claim any share. Thus, if the goods of A. are sold upon an
execution against B., A. can not be heard to urge his rights to the pro-
ceeds, however clear and indisputable may be his title to the goods. An
assignee of the debtor, by a transfer prior to the levy, is an adverse claim-
ant. If a levy is made after the commencement of proceedings in bank-
ruptcy, the assignee can not claim the proceeds of the sale. His remedy
is by an action against the sheriff’s vendee or the sheriff himself. Bush’s
Appeal, 65 Penn. 363.

If the bankrupt is a tenant in possession of land, the landlord can not
eject him by summary proceedings instituted in a State court under a stat-
ute relating to tenants holding over after the expiration of their terms. In
re Enoch Steadman, 8 B. R. 319.

The omission of the bankrupt to apply for an injunction to prevent any
interference with the property will not justify or excuse the parties who
are guilty of such interference. Ibid.

When the assignee in bankruptcy finds property in the possession of the
bankrupt, and takes it into his custody, he becomes possessed of it in the
course of his official duties, and can not be deprived of it by a summary
proceeding in a State court, under whose fi. fa. the sheriff had made a levy
previously to the commencement of proceedings in bankruptcy. The sher-
iff has his remedy by an action of trover, or he may institute the proper
proceedings in the bankruptcy court, to which the assignee is amenable.
Hill vy, Fleming, 39 Ga. 662.
112 Tue Bankruptcy Law.

A creditor may proceed in a State court to reach property of the bank-
rupt which the assignee has abandoned as being a burden rather than a
benefit. Rugely vy. Robinson, 19 Ala. 404.

A bankrupt who has received a discharge is not entitled to file an objec-
tion to the ratification of a sheriff’s sale made after the commencement of
the proceedings in bankruptcy, for he has no interest in the fund or in
the land. All reasonable presumption is against the existence of any sur-
plus from his estate after the payment of his debts. Laird v. Laird, 3
Penn. L. J. 474.

When the assignee has lawfully sold the property, the district court is
not authorized to interfere at the instance of the purchaser, to vindicate his
title. If another sees fit to contest his title, the controversy, like others of
a like nature, is to be determined by the State tribunals. Briggs v. Ste-
phens, 7 Law Rep. 281.

Claims against the property of the bankrupt, so long as it remains in the
possession of the bankruptcy court, can only beenforced in the district court
sitting as a court of bankruptcy. In re People’s Mail Steamship Co., 2 B.
R. 553; s. c. 3 Ben. 226; Jones v. Leach et al., 1 B. R. 595; Davis, Assignee
of Bittel et al., 2 B. R. 392; in re Kerosene Oil Co., 2 B. R. 528; s. «. 3 B. R.
125; s. c. 3 Ben. 35; s. ec. 6 Blatch. 521; s. c. 2 L. T. B. 79; in re Snedaker, 3
B. R. 629. .

If a party has a claim, lien, or interest in the property in the hands of
an assignee in bankruptcy he should apply to the bankruptcy court for re-
lief, and that court may grant the relief or allow a suit to be brought
either in the district court or the State courts, to determine the same; but
without such consent, parties have no right to sue, and are guilty of a
contempt of the authority of the bankruptcy court if they do sue. Thebank-
ruptcy court will insist upon its right to administer and distribute the prop-
erty. Parties should understand that they have no right te commence
suits against an assignee to affect the property, for as he is accountable to
the bankruptcy court for the property, it is the duty of the court to protect
him in the possession. The Federal courts sedulously avoid all interfer-
ence with property held by the State courts or their officers, and they, with
equal solicitude and firmness, maintain their right to hold property which
is in their possession or in the custody of their officers, against the process
of any State court, and will net permit persons, through process issuing
from State courts, to interfere with impunity with property so in the posses-
sion of the Federal courts or their officers. In re Cook & Gleason, 3 Biss.
116.

A mortgagee has no right to take possession of the mortgaged premises
after the commencement of proceedings in bankruptcy. Hutchings v.
Muzzy Iron Works, 8 B. R. 458; s. c. 6 OG L. N. 27.

A subsequent sale, whether under judgment or mortgage, without the
consent of the bankruptcy court, is subject to be set aside by that court.
Davis v. Anderson, 6 B. R. 145.

Costs incurred in the prosecution of a suit to enforce a lien commenced
after the filing of the petition can not be allowed. The creditor who insti-
tutes such a suit must give it up before he can be paid the amount of his
claim by the bankruptcy court. In re Cook & Gleason, 3 Biss. 116.
JURY TRIALS. 113

A creditor having a mechanic's lien upon the property of the bankrupt
may file a petition to enforce it in a State court, even after the commence-
nent of proceedings in bankruptcy, when such filing may be necessary in
order to keep the lien alive. Pending the bankruptcy proceedings, no order
can be m.ade on this petition for the sale of the property to satisfy the lien
of the petitioner. The rights of the creditor will be preserved, and all
Interference with the custody or jurisdiction of the bankruptcy court
avoided by ordering the petition to stand continued in the State court to
await the result of the action of the district court in the proceedings in
bankruptcy. Clifton et al. v. Foster et al., 3 B. R. 656; s. c. 103 Mass. 233;
in re Cook & Gleason, 3 Biss. 116; Douglass v. St. Louis Zine Co., 56 Mo.
388.

Although a creditor has obtained a lien on the personal property of the
bankrupt, yet he can not proceed to examine the bankrupt in a State court
to discover such property. In re Samuel T. Taylor, 16 B. R. 40.

The following proceedings, instituted after the commencement of pro-
ceedings in bankruptcy, have been enjoined by the district court, to-wit:

The sale of property by the sheriff, under an execution issued from a
State court upon a levy made after the petition in bankruptcy was filed.
Pennington v. Sale & Phelan et al., 1 B. R. 572; Jones v. Leach et al., 1 B.
R. 595; in re Wallace, 2 B. R. 184; s. c. 1 Deady, 438; in re John S. Fos-
ter, 2 Story, 131; in re Bellows & Peck, 3 Story, 428.

Proceedings by a mortgagee to foreclose a mortgage on the property of
the bankrupt. In re Kerosene Oil Co., 2 B. R. 528; s. c. 3 B. R. 125; s. c.
3 Ben. 35; s. c. 6 Blatch. 521; s.c.2 L. T. B. 79; tn re Snedaker, 3 B. R. 629;
Markson v. Heaney, 4 B. R. 510; s. ec. 1 Dillon, 497; Whitman v. Butler, 8
B. R. 487; Buckingham v. McLean, 3 McLean, 185; s. c. 138 How. 151.

A libel in rem, brought to enforce a lien against a vessel. In re People’s
Mail Steamship Co., 2 B. R. 553; s. c. 2 Ben. 226. Contra, The Ironsides, 4
Biss. 518. :

Proceedings on the part of a landlord to collect rent by distraint. Brock
v. Terrel, 2 B. R. 648; in re Wynne, 4 B. R. 23; s. c. Chase, 227; 5. ce. 2 L. T.
B. 116; s. c. 9 A. L. Reg. 627. Vide Butler v. Morgan, 8 W. & S. 53.

Proceedings under a State insolvent law. In re Eames, 2 Story, 322.

The assignee of a bankrupt is not the assignee of his creditors, nor of all
the judgments, executions, liens and mortgages outstanding against his
property. He takes only the bankrupt’s interest in property, nor has he
the right, title or interest, which other parties have therein, nor any
control over the same, further than is given expressly by the bankruptcy
act, as auxiliary for the preservation of the bankrupt’s interest for the
benefit of his general creditors. It would be absurd to contend that the
assignee becomes ipso facto seized in entirety as trustee of every article of
property in which the bankrupt has any interest or share. Goddard v.
Weaver, 6 B. R. 440; s. ec. 1 Woods, 257.

Where the levy of an execution is made before the commencement of the
proceedings in bankruptcy the possession of the sheriff can not be dis-
turbed by the assignee. The latter in such case is only entitled to such
residue as may remain after the debt for which the execution issued has
been satisfied. Marshall v. Knox, 8 B. R. 97; s. c. 16 Wall. 551; Savage v.

8
lid Tur Bankruptcy Law.

Best, 3 How. 111; Norton v. Boyd, 3 How. 426; Doremus v. Walker, 8 Ala.
194; Fritsch v. Van Mittledorfer, 2 Cinn. 261; Fehley v. Barr, 66 Penn.
196; Thompson v. Moses, 43 Ga. 383; Goddard v. Weaver, 6 B. R. 440; s. ¢.
1 Woods, 257; Maris v. Duren, 1 Brewst. 428; s. c. 6 Phila. 327; in re Don-
aldson, 1 B. R. 181; s. c.1L. T. B. 5; 8. ¢c. 7 A. L. Reg. 213; s. c. 6 Phila.
143; in re Smith et al., 1 B. R. 599; s. c. 2 Ben. 432; s.¢c.1 L. T. B. 112; in
re Wilbur, 3 B. R. 276; s. c. 1 Ben. 527; s. c. 2 L. T. B. 171; in re Campbell,
1B. R. 165; s. c. 1 Abb. O. O. 185; s.¢c. 1 L. T. B. 30; s. c. 6 Phila. 445; in
re Burns, 1 B. R. 174; s. c. 7 A. L. Reg. 105; s. c. 6 Phila. 448. Vide Turner
v. The Skylark, 4 Biss. 388; in re Schnepf, 1 B. R. 190; s. c. 2 Ben. 72;
Lewis v. Fisk, 6 Rob. (La.) 159.

The sheriff must proceed to sell the property, unless he is prevented by
some proceeding instituted in the bankruptcy court for the purpose of liqui-
dating the lien and adjusting all claims and equities. Sharman v.. Howell,
40 Ga. 257; Wheeler vy. Redding, 55 Ga. 87.

The sheriff is liable to the execution creditor if he relinquishes the cus-
tody of the property upon the mere demand of the marshal and exhibition
of the warrant. Ansonia B. & C. Co. v. Babbitt, 15 N. Y. Supr. 157.

When a receiver, appointed by a State court before the commencement of
proceedings in bankruptcy, has taken possession of the property which be-
longed to the bankrupt, and the jurisdiction of the State court over the
subject-matter of the suit thereon, and over the parties thereto when it
was instituted and the receiver was appointed, and its jurisdiction to
appoint such receiver are in no manner impeached or questioned, the
district court can not compel the receiver to give up the possession of
such property without its being shown that such possession of the prop-
erty by the State court is void or invalid by reason of the provisions of
the bankruptcy act. In re Clark et al., 3 B. R. 491; s. c. 4 Ben. 88; Clark v.
Binninger, 3 B. R. 518; s. c. 88 How. Pr. 341; s. c. 38 L. T. B. 49; Sedgwick
v. Minck et al., 1 B. R. 675; s. c. 6 Blatch. 156; Alden v. Boston, Hartford
& Erie R. R. Co., 5 B. R. 230; Davis v. Railroad Co., 18 B. R. 258; s. a 1
Woods, 661.

Proceedings in bankruptcy supersede all other proceedings for the ad-
ministration of the assets of the debtor, subject only to the priorities which
have been obtained by any creditor by the use of diligence. In re R. M.
Whipple, 138 B. R. 873; s. ce. 6 Biss. 516.

A creditor who has filed a creditor’s bill in the State court and obtained
the appointment of a receiver, prior to the commencement of the pro-
ceedings in bankruptcy, may be enjoined from proceeding further in the
State court. Ibid. ;

When a State court has acquired jurisdiction over the parties to a ered-
itor’s bill and appointed a receiver, before the commencement of the pro-
ceedings in bankruptcy, it will not on a mere motion direct a delivery
of the property to the assignee. Freeman, v. Fort, 14 B. R. 46; s. c. 52
Ga. 871.

If a receiver is appointed by a State court in a suit by stockholders
against a corporation, the court will not at the instance of creditors, on
the subsequent bankruptcy of the corporation, discharge the receiver and
JURY TRIALS. 115

turn the property over to the assignee. Myer v. Crystal Works, 14 B. R.
9; s.¢c. 8 C. L. N. 197.

Where a receiver has been appointed by a State court in a proceeding for
the dissolution of a partnership prior to the commencement of proceed-
ings in bankruptcy against the firm, the court has the right to finish its
proceedings before being interfered with by any other court. If the as-
signee has rights, or is entitled to the fund, his right and title can be
and will be disposed of by the State court as the law shall direct. Miller
v. Bowles, 9 B. R. 354; s. c. 10 B. R. 515; s. c. 2 N. Y. Supr. 568; s. ¢. 58
N. Y. 258; Clark v. Binninger, 39 How. Pr. 363.

The plaintiff in such a suit for a dissolution of partnership can not have
the decree appointing a receiver rescinded and the property turned over
to an assignee. Miller v. Bowles, 9 B. R. 354; s. c. 10 B. R, 515; 5. c. 2 N.
Y. Supr. 568; s. c. 58 N. Y. 253.

If the assignee has filed a bill to set aside a sale made by a receiver,
he must elect whether he will proceed with it or claim the fund. He can
not go upon the property and the fund both. Loudon v. Blanford, 56
Ga. 150.

If a receiver has been appointed, the State court will retain control
of the property until it shall be applied to the partnership debts, although
the assignee of the partnership property, who has been subrogated to the
rights of both the plaintiff and defendant, asks that the suit may be dis-
continued, and the property delivered to him, Clark v. Binninger, 39
How. Pr. 363.

Parties in a State court may be enjoined from obtaining a writ of
sequestration to take. property from the possession of the assignee, al-
though the suit was instituted before the commencement of the proceed-
ings in bankruptcy. Hewitt v. Norton, 13 B. R. 276; s. c. 1 Woods, 68.

The district court has no authority to withdraw cases instituted in a
State court before the commencement of proceedings in bankruptcy from
the State courts, and proceed to settle and adjust the claims of the par-
ties thereto. Congress could, no doubt, have made adjudication in bank-
ruptey operate proprio vigore to withdraw all cases in which the bankrupt
should be a party pending in the State courts in the district at the time
of the filing of the petition, from those tribunals, and transfer them into
the district court. It has not, however, done so. It not only has not de-
prived the State courts of jurisdiction over such causes, but it has pro-
vided for their prosecution and defense in those courts by the assignee.
Samson v. Burton et al., 4 B. R. 1; s. ¢ 5 Ben. 325. Vide Clarke v. Rosenda,
5 Rob. (La.) 27; Lewis v. Fish, 6 Rob. (La.) 159.

Full force and efficacy may be given to that clause in the bankruptcy
act which confers on the district courts of the United States jurisdiction
over the ascertainment and liquidation of liens, without taking from the
courts under whose process they exist the power of rendering special
judgments necessary to complete them. Leighton v. Kelsey et al., 4 B.
R. 471; s. c. 57 Me. 85.

Proceedings to enforce the lien of a creditor pending at the commence-
ment of proceedings in bankruptcy are not affected thereby, but the cred-
116 Tue BanKRuptoy Law.

itor may proceed to obtain satisfaction of his lien. Baum v. Stern, 1
Rich. (N. S.) 415. Contra, Taylor v. Bonnett, 38 Tex. 521.

The jurisdiction of the district court over proceedings for the condemna-
tion of property under the internal revenue laws is not divested by the
commencement of proceedings in bankruptcy against the distiller. U. 8.
y. Mackoy, 2 Dillon, 299.

The State court may distribute the money which the sheriff holds on
process which was issued to him before the filing of the petition. Weld
v. O’Brien, 4 A. L. J. 364; In re Campbell, 1 B. R. 165; s. c. 1 Abb. C. C.
185; s.c. 1 L. T. B. 80; s. c. 6 Phila. 445.

When the State court has jurisdiction to enforce a lien and sell the
property, it may distribute any surplus that may remain after the payment
of the lien among subsequent lien creditors. The power to enforce the
lien gives the right to decree a distribution. In re Biddle’s Appeal, 9 B.
R. 144; s. ce. 68 Penn. 13.

The assignee takes the rights of the debtor in the same plight and
condition as the debtor himself possessed them, and the purchaser from
him will be bound by a decree for a partition rendered before the filing
of the petition. Baum v. Stern, 1 Rich. (N. S.) 415.

The assignee of the judgment debtor is the proper party to move to set
aside sales made under an execution issued thereon when the same are
irregular aud void. Pardee v. Leitch, 6 Lans. 303.

The court where a judgment is rendered is the proper, and, indeed, the
only court where a motion can be made to amend it, and such amend-
ment may be made, although the defendant has been declared a bank-
rupt, and the proceedings in bankruptcy are pending at the time when the
motion is made. Woolfolk v. Gunn, 10 B. R. 526; s. c. 45 Ga. 117.

Although a fi. fa. is issued prior to the commencement of proceedings in
‘bankruptcy, yet if the property taken thereunder is, by the consent of the
creditor, the debtor and the sheriff, sold after that time, the proceeds must
be turned over to the assignee, for they do not come into the State court by
‘final process. Morris v. Davidson, 11 B. R. 454; s c. 49 Ga. 361.

Where a sheriff who is selling the goods at private sale with the con-
sent of the mortgagor and mortgagee, under a mortgage fi. fa. receives a
general fi. fa. before the commencement of the proceedings in bank-
ruptcy, the proceeds arising from private sales, after that time, are before
the State court, as money raised on final process, and may be distributed
to the judgment creditor and not to the assignee. Dyson vy. Harper, 54
Ga. 282.

The filing of a petition in bankruptcy, and the execution of an assign-
ment to the assignee after the filing of a bill in equity is a sufficient ex-
cuse for not making an assignment to a receiver appointed by the State
eourt. Watkins v. Pinkney, 3 Edw. Ch. 533.

The mere filing of the petition in bankruptcy is no ground for refusing
to execute an assignment to a receiver appointed in a suit instituted prior
to that time, for the debtor may withdraw his petition, and thus defeat
the jurisdiction of both courts. Tbid.

If a creditor prior to the commencement of proceedings in pankruptcy
has filed a bill in a State court to reach the equitable assets of the debtor,
JURY TRIALS. 117

and has thereby obtained a lien thereon, he may continue the suit. Clark
v. Rist, 3 McLean, 494.

The jurisdiction of a State court over a pending action to enforce a
mechanic’s lien is not divested by proceedings in bankruptcy. Seibel v.
Simeon, 62 Mo. 255. :

A State court is not divested of jurisdiction over a pending action to
enforce a vendor’s lien by the bankruptcy of the vendee. Boone v. Revis,
44 Tex. 384.

The district court will not allow a creditor to avail himself of any
unjust and unlawful advantage merely because his suit is depending in a
State court, for the laws of the United States are to the extent of the
constitutional limits paramount to the authority of those of the States.
In re Bellows & Peck, 3 Story, 428. :

Where the power of a State court to proceed in a suit is subject to be
impeached, it can not be done. except upon, an intervention by the as-
signee, who must state the facts and make the proof necessary to
terminate such jurisdiction. Doe v. Childress, 11 B. R. 317; s. c. 21 Wall.
643.

The district court can not entertain an action brought by the assignee
against a sheriff to recover the money received on a sale under an execu-
tion issued on a judgment which is void under the bankruptcy law.
Atkinson v. Purdy, Crabbe, 551.

If the property of the bankrupt has been sold under an execution is-
sued upon a judgment which is void under the bankruptcy law, the
assignee should apply to the State court. Atkinson v. Purdy, Crabbe,
£51; in re Burns, 1 B. R. 174; s. ec. 7 A. L. Reg. 105; s. c. 6 Phila. 448.

If the assignee receives property which the marshal has taken from
the possession of the sheriff and sells it, the judgment creditor can not
maintain an action in a State court for the amount of his judgment, for
a State court has no jurisdiction to liquidate a lien. Ansonia B. & C.
Co. v. Pratt, 17 N. Y. Supr. 443.
TITLE VI.

COURTS OF BANKRUPTCY, THEIR JURISDICTION,
ORGANIZATION AND POWERS.

Act or 1898, Cu. 1, Szec. 1. * * * (16) Definition — Judge
shall mean a judge of a court of bankruptcy, not including the referee.

Cu. 2,§ 2 * * * Oreation of Courts of Bankruptcy
and Their Jurisdiction—That the courts of bankruptcy as here-
inbefore defined, viz., the district courts of the United States in the
several States, the supreme court of the District of Columbia, the
district courts of the several Territories, and the United States courts
in the Indian Territory and the District of Alaska, are hereby made
courts of bankruptcy, and are hereby invested, within their respective
territorial limits as now established, or as they may be hereafter
changed, with such jurisdiction at law and in equity as will enable
them to exercise original jurisdiction in bankruptcy proceedings, in
vacation in chambers and during their respective terms, as they are
now or may be hereafter held, to (1) adjudge persons bankrupt who
have had their principal place of business, resided, or had their domi-
cile within their, respective territorial jurisdictions for the preceding
six months, or the greater portion thereof, or who do not have their
principal place of business, reside, or have their domicile within the
United States, but have property within their jurisdictions, or who
have been adjudged bankrupts by courts of competent jurisdiction
without the United States and have property within their jurisdic-
tions; (2) allow claims, disallow claims, reconsider allowed or dis-
allowed claims, and allow or disallow them against bankrupt estates;
(8) appoint receivers or the marshals, upon application of parties
in interest, in case the courts shall find it absolutely necessary, for
the preservation of estates, to take charge of the property of bank-
rupts after the filing of the petition and until it is dismissed or the
trustee is qualified; (4) arraign, try, and punish bankrupts, officers,
and other persons, and the agents, officers, members of the board of
directors or trustees, or other similar controlling bodies, of corpora-
tions for violations of this Act, in accordance with the laws of pro-
Courts oF BANKRUPTCY. 119

cedure of the United States now in force, or such as may be hereafter
enacted, regulating trials for the alleged violation of laws of the
United States; (5) authorize the business of bankrupts to be con-
ducted for limited periods by receivers, the marshals, or trustees, if
necessary in the best interests of the estates; (6) bring in and substi-
tute additional persons or parties in proceedings in bankruptcy when
necessary for the complete determination of a matter in controversy;
(7%) cause the estates 6f bankrupts to be collected, reduced to money
and distributed, and determine controversies in relation thereto, ex-
cept as herein otherwise provided; (8) close estates, whenever it ap-
pears that they have been fully administered, by approving the final
accounts and discharging the trustees, and reopen them whenever it
appears they were closed before being fully administered; (9) confirm
or reject compositions between debtors and their creditors, and set
aside compositions and reinstate the cases; (10) consider and confirm,
modify or overrule, or return, with instructions for further proceed-
ings, records and findings certified to them by referees; (11) deter-
mine all claims of bankrupts to their exemptions; (12) discharge or
refuse to discharge bankrupts and set aside discharges and reinstate
the cases; (13) enforce obedience by bankrupts, officers, and other
persons to all lawful orders, by fine or imprisonment or fine and
imprisonment; (14) extradite bankrupts from their respective districts
to other ‘districts; (15) make such orders, issue such process, and
enter such judgments in addition to those specifically provided for
as may be necessary for the enforcement of the provisions of this
Act; (16) punish persons for contempts committed before referees;
(17) pursuant to the recommendation of creditors, or when they neg-
lect to recommend the appointment of trustees, appoint trustees, and
upon complaints of creditors, remove trustees for cause upon hearings
and after notices to them; (18) tax costs, whenever they are allowed
by law, and render judgments therefor against the unsuccessful party,
or the successful party for cause, or in part against each of the par-
ties, and against estates, in proceedings in bankruptcy; and (19) trans-
fer cases to other courts of bankruptcy.

Nothing in this section contained shall be construed to deprive a
court of bankruptcy of any power it would possess were certain spe-
cifie powers not herein enumerated.

Act oF 1867, § 4972.— The jurisdiction conferred upon the district
courts as courts of bankruptcy shall extend— ,

First. To all cases and controversies arising between the bankrupt
120 Tue Bankruptcy Law.

and any creditor or creditors who shall claim any debt or demand
under the bankruptcy.

Second. To the collection of all the assets of the bankrupt.

Third. To the ascertainment and liquidation of the liens and other
specific claims thereon.

Fourth. To the adjustment of the various priorities and conflicting
interest of all parties.

Fifth. To the marshaling and disposition of the different funds and
assets, so as to secure the rights of all parties and due distribution
of the assets among all the creditors.

Sixth. To all acts, matters, and things to be done under and in
virtue of the bankruptcy, until the final distribution and settlement
of the estate of the bankrupt, and the close of the proceedings in
bankruptcy. Provided, That the court having charge of the estate
of any bankrupt may direct that any of the legal assets or debts of
the bankrupt, as contradistinguished from equitable demands, shall,
when such debt does not exceed five hundred dollars, be collected in
the courts of the State where such bankrupt resides, having juris-
diction of claims of such nature and amount.

Statute revised — March 2, 1867, ch. 176, § 1, 14 Stat. 517. Prior
Statutes — Aug. 19, 1841, ch. 9, § 6, 5 Stat. 445.

An assignee can not maintain an action in a State court to recover the
value of property exceeding $500 transferred to the defendant in viola-
tion of the bankruptcy law. Olcott v. Maclean, 16 B. R. 79; s. e. 17
N. Y. Supr. 277.

If the assignee and another claim a fund, the holder may file a bill of
interpleader in a State court, for the proceeding is not an action.to collect
the assets. B. & M. Ins. Co. v. Davenport, 17 N. Y. Supr. 264.

Construction.— In order to avoid all doubt, the section goes on to
enumerate certain specific classes of cases to which the jurisdiction shall
be deemed to extend, not by way of limitation, but in explanation and
illustration of the generality of the preceding language. In re William
Christy, 3 How. 292; In re Dudley, 1 Penn. L. J. 302; Mitchell v. Manuf.
Co., 2 Story, 648; in re L. Glaser, 1 B. R. 336; s. c. 2 Ben. 180; s. ca. 1 L.
T. B. 57.

It is more logical to construe this section throughout as giving the most
ample powers to the district courts to conduct and settle the proceedings
in bankruptcy, but as not relating to suits at law or in equity between the
assignee and third persons, which are regulated by the second section.
Shearman et al. v. Bingham et al, 5 B. R. 384: s.¢c. 7B. R. 490; 3 «
3 C0. L. N. 258; Jobbins v. Montague, 6 B. R. 509.

 

1 So amended by act of June 22, 1874, ch. 390, § 2,18 Stat. 178.
Courts oF BANKRUPTCY. 121

Congress meant to provide a system capable of entire self-execution by
the national tribunals without the assistance or co-operation of the States,
if the parties interested should choose to rely on the national courts. The
jurisdiction given to the district courts is ample for all such purposes.
Mitchell v. Manuf. Co., 2 Story, 648; Zahm y. Fry, 9 B. R. 546;-s. ¢. 21
Pitts. L. J. 155; s. ec. 31 Leg. Int. 197.

In the absence of this clause, it might well be doubted whether the
district court would have had jurisdiction of an action brought by the
assignee for the recovery of a debt due, or property belonging to the
bankrupt, when both parties were citizens of the same Siate. To remove
such doubt was the purpose of the clause, and not at all to deprive State
courts of jurisdiction of such actions, when vested in them by the laws
and Constitutions of the States. Cook v. Whipple, 9 B. R. 135; s. c. 55
N.Y. 150.

The last clause of this section is manifestly added in order to prevent
the force of any arguiuent that the specific enumeration of the particular
classes of cases ought to be construed as excluding all others not enumer-
ated. In re William Christy, 3 How. 292. ‘

Jurisdiction of a bankruptcy court may be impeached in collateral ac-
tions. Isett v. Stuart, 16 B. R. 191.

Residence, or carrying on business, in the district for six months is a
jurisdictional fact, and the petition must contain an allegation showing
it. But, upon application for discharge, the creditors may show that
the alleged ground of jurisdiction did not exist. In re Beals, 17 B. R. 107.

Under law of 1867, court had no power in voluntary proceedings to
adjudicate any person a bankrupt. who was not a citizen of the United
States at time of filing petition, though doing business within the district.
In re Burton & Watson, 17 B. R. 212.

Where want of jurisdiction appears upon the petition in bankruptcy
the consent of parties can not give jurisdiction, and the court, of its own
motion, should take notice of the point. In re Hopkins v. Carpenter et
al., 18 B. R. 339.

Where the bankruptcy court has adjudged a claim to be a lien upon
property of the bankrupt, it has jurisdiction of an action to enforce such
lien against third parties who have purchased said property subject to the
‘lien at a sale by the assignee. Bucknam v. Dunn et al., 16 B. R. 470.

Bankruptcy court has full jurisdiction over the wife’s “ specific claim ”
to a settlement out of the bankrupt estate; and her coming voluntarily
into the bankruptcy court, by petition, to assert that claim gives the court
jurisdiction, personally as to herself, to ascertain and liquidate that claim.
In re Campbell, 17 B. R. 4.

The district court has jurisdiction of a controversy as to the ownership
of a fund in the hands or under the control of the assignee in bankruptcy
without regard to residence of the parties in interest. In re Sabin, 18
B. R. 151.

Where such controversy is pending, the court will detain such fund until
the rights of the parties thereto have been determined by such suit. Ibid.
122 Tue Bankruptcy Law.

Where a wife’s separate estate has been changed from one form of
investment to another, by agreement between herself and her husband,
and before the title to the property newly acquired had been made to her,
the husband becomes bankrupt, the bankruptcy court, as a court of equity,
will treat that as done which ought to be done, and decree a settlement
upon the wife of property acquired with her separate means, In re Camp-
bell, 17 B. R. 4.

On application by assignee for his discharge any misconduct on his
part in respect to estate is a proper subject for examination. In re Pea-
body, 16 B. R. 248.

District court not deprived of jurisdiction to entertain proceedings for
a composition by the fact that petition to review an order refusing to dis-
charge the bankrupt is pending in Circuit Court (Law of 1867). In re
Odell, 16 B. R. 501.

In such case bankrupt should be required to pay opposing creditor ex-
penuses and disbursements, other than counsel fees, incurred in opposing
the discharge, as a condition of and prior to confirmation of the composi-
tion. Ibid.

The district court which granted’ a discharge alone has jurisdiction of
a proceeding to annul it. Nicholas v. Murray, 18 B. R. 469.

A suit by an assignee to set aside a fraudulent conveyance made by
the bankrupt, after his discharge, of property concealed prior thereto is
not a suit to annul such bankrupt’s discharge, and may, therefore, be
brought in the Circuit Court. Ibid.

Bankruptcy court has a right to and will, on application, enjoin creditors
from harassing the debtor as long as his composition vroceeding is pend-
ing. In re Richard H. Hinsdale, 16 B. R. 530.

A general provision in a resolution of composition, under law of 1867,
that payment of so much money at such time or times, etc., shall be ac-
cepted by the creditors in satisfaction of the debts due them, is not, as re-
spects the creditors, an executing provision which the court is authorized
to enforce. A tender of the money according to the terms of such composi-
tion is equivalent to payment, but the court can not imprison the cred-
itor for contempt to compel him to physically take the offered money.
Ibid.

The moment a voluntary petition is filed, all the property of a bankrupt
in possession or in action which is included in the inventory and schedules
comes into the prehensory power of the court as fully as if it were in the
actual and visible presence of the court, and consequently is under its
protection and within its exclusive control. Vyrd v. Harrold et al., 18
B. R. 433.

The bankrupt had given certain mortgages upon his exempt property,
in which he had waived all his exemption rights under the State Constitu-
tion and laws, and under the bankruptcy act, in and to the property mort-
gaged, and also his right to a discharge in bankruptcy.’ The assignee
left the property in the hands of the bankrupt, as custodian, until he could
procure the schedules and proceed to administer the estate. The mort-
gages were afterward foreclosed, and the executions levied on the mort-
Courts oF BANKRUPTCY 123

gaged property which had been returned in the schedules, The assignee
never had actual possession of the property levied on. Held, that the
waiver could not be enforced until the property was designated and al-
lotted to the bankrupt; that the levy was a positive contempt of the juris-
diction of the court, and was not justified by the ignorance of the mort-
gagees and the sheriff as to the bankruptcy of the mortgagor and the ap-
pointment of the assignee, as they might easily have obtained knowledge
of these facts. Ibid.

Upon institution of proceedings in bankruptcy an assignee in bank-
ruptcy may be enjoined from interfering with the debtor’s assets before
an adjudication has been had. In re Jacob Skoll, 16 B. R. 175.

Where the assignee sold property incumbered by a chatte! mortgage,
without an order of court, and the mortgagee brought trover against the
purchaser in a State court, in a county where the parties and their wit-
nesses resided: Held, that even if the district court had jurisdiction to
restrain the prosecution of such suit it ought not to do so under the cir-
cumstances of the case. In re Cooper, 16 B. R. 178.

An injunction to restrain the prosecution of an action against the bank-
rupt in the State court, during the pendency of a composition, is proper
where installments of the composition have been tendered to the creditors,
and the bankrupt is not permitted to plead the composition as a bar to the
action. In re Shafer & Wesselhoefft, 17 B. R. 116.

Where the party in possession claims title to the property, the inability
of the assignee to give the requisite bonds in an action of replevin will not
entitle him to an injunction to prevent its removal. In re The Oregon
Tron Works, 17 B. R. 404.

Where a voluntary assignment for the benefit of creditors has been
executed by the bankrupts less than three months before the commence-
ment of proceedings; and where pending the proceedings and pending a
proposed composition, and before the election of an assignee, a creditor
had brought suit in the State court to compel the voluntary assignee to
account, and had obtained the appointment of a receiver; and where an
assignee in bankruptcy was subsequently elected, and the composition
was subsequently amended so as to provide that the assignee in bank-
ruptcy should take possession of the estate in the hands of the voluntary
assignee; and where a reference had been ordered by the bankruptcy
court to determine how much, if anything, should be allowed to the cred-
itor who had brought the suit toward reimbursing his expenses in such
suit: Held, that such creditor would not be allowed to apply to the
State court for an order directing the payment out of the estate in the
hands of the voluntary assignee of the referee’s fees incurred in such ac-
tion (Law of 1867.) In re Dumahaut & Co., 17 B. R. 517.

It is within ‘the power and duty of the court to set aside summarily
any process obtained by fraud and deception practiced upon itself; the
exercise of this power is essential to the administration of justice. Where
verified petitions are presented, and the petitioners know facts sufficient
to put them on inquiry, and such verifications are false, the petitions will
be summarily dismissed, and all concerned in preparing and presenting
124 Tur BanKRuUPTcY Law.

them will be subject. to the grave consequences which result from the
practice of fraud and deception on the court. In re Keiler, 17 B. R. 10.

Copetitioners can not be held innocent of and not privy to the fraud
and falsehood practiced in their name by their copetitioners, unless their
innocence clearly appears. Petitions in bankruptcy proceedings are to
be considered as the joint act of all the petitioners. Ibid.

The injunction order issued on a creditor’s petition should conform
to the language of the statute. Ibid.

Under the law of 1867, the debtor filed a voluntary petition in bank-
ruptey, but objected to being adjudged bankrupt thereon, and no adjudica-
tion was ever made. At the time of filing such petition, he also filed a
petition for composition, which was adopted and confirmed by the requisite
number of creditors. Prior to the conclusion of the creditor’s meeting, an
opposing creditor commenced action on a provable debt described in the
debtor’s statement, and levied an attachment upon his goods. On ap-
plication for an injunction to restrain such action pending the proceedings
in composition: Held, that the debtor is in no position to appeal to the
court for protection as long as he objects to being a bankrupt, and declines
1o surrender himself to the court. In re Tifft, 18 B. R. 78.

In pursuance of the terms of a resolution of composition, under the law
of 1867, as amended, an ex parte order was obtained from the State court
discharging the voluntary assignee in so far as the decree confirming the
composition affected the rights of creditors, and the assignee thereupon de-
livered the property and books to the debtors. Subsequently a creditor
who had refused to accept the composition notes and whose debt had been
contracted by fraud on the part of one of the debtors, moved in the State
court for an inspection of the books and to vacate the order discharging
the assignee. Held, that the action of the creditor was a violation of
the composition-agreement, and under the power given the bankruptcy
court to enforce the agreement such action must be enjoined. In re
Rodger, 18 B. R. 381.

Where assignee chosen had been for several years bookkeeper of one
of the bankrupts, and said bankrupt and his attorney endeavored to con-
trol action of meeting in electing him, and both voted for him on powers
of attorney, confirmation was refused, although election was almost
unanimous; as it appeared that a large number of creditors were not and
could not under the law be represented at the meeting. In re Wetmore
& Bro., 16 B. R. 514.

The judge is bound to see that rights of minority are protected and to
refuse confirmation when he has good reason to suspect the assignee has
been chosen in interest of bankrupt, or if circumstances are such as to
indicate that the election was not a fair one. Ibid.

When creditors are spoken of “who claim a debt or*demand under
the bankruptcy,” the meaning is that they are creditors of the bankrupt, ;
and that their debts constitute present subsisting claims upon the bank-
rupt’s estate, unextinguished in fact or in law, and capable of being as-
serted under the bankruptcy in any manner and form, whether they have
a security by way of pledge or mortgage therefor, or not. The clause is
Courts oF BANKRUPTCY. 125

not Hmited to creditors who prove their debts. In re William Christy, 3
How. 292.

This clause does not confer jurisdiction on any subject not pointed out
in the statute as a part of the proceedings in bankruptcy from its incep-
tion to its close. It refers to matters and proceedings as the successive
steps to be taken in the progress of the application according to the di-
rections of the statute, over all which it gives plenary jurisdiction; yet it
does not give jurisdiction over all persons and things which may be af-
fected by the proceedings in bankruptcy. In re Dudley, 1 Penn. L. J. 302.

The object of these clauses is to give the district court complete juris-
diction to accomplish of itself all the purposes of the law, and to enable
it, independently of any other jurisdiction, to begin, continue and end all
such proceedings as may be necessary and proper to accomplish the entire
settlement and final distribution of the bankrupt’s estate. Mitchell v.
Manuf. Co., 2 Story, 648; in re William Christy, 3 How. 292.

The jurisdiction vested in the district court is ample, and reaches every
possible controversy which can arise in the collection and distribution of
the effects of a bankrupt. Buckingham vy. McLean, 3 McLean, 185; s. ¢.
18 How. 151.

The district court is vested with full chancery and common-law powers
to act in all cases arising under the bankruptcy law. Ibid.

This section confers jurisdiction to entertain suits for the adjustment
of all adverse claims and the collection of outstanding debts. Mitchell
v. Manuf. Co., 2 Story, 648.

The district court has jurisdiction of an action at law to collect a debt
due to the bankrupt’s estate. Kelly v. Smith, 1 Blatch. 290; Atkinson v.
Purdy, Crabbe, 551.

The jurisdiction does not depend on the parties to the suit, but on the
subject-matter. Ibid.

The district court has jurisdiction to entertain a bill filed by a mort-
gagee against an assignee of the mortgagor to reform a mortgage which
by mistake does not conform to the intention of the parties. Fowler v.
Hart, 13 How. 373.

Subsequent mortgagees, as well as the assignee, should be made parties
to a bill to reform a mortgage. Fowler v. Hart, 13 How. 373.

The bankruptcy court has precisely the same powers in equity over judg-
ments of State courts affecting the bankrupt’s estate, as a State court of
equity would have under a general creditor’s bill, if the debtor were not a
bankrupt. Fowler v. Dillon, 12 B. R. 308.

The bankruptcy court has the power to reduce the amount of a judg-
ment at law rendered on Confederate contracts to its equivalent in legal
money. Ibid.

The bankruptcy court may require the abatement of war interest em-
braced in a judgment. Ibid.

This clause does not confer or take away jurisdiction of the State courts,
but simply allows the Federal courts to decline to entertain actions at
common law to which the assignee is a party in which the debt demanded
is less than $500. Goodrich v. Wilson, 14 B. R. 555; s. c. 119 Mass. 429.
126 Tue Bankruptcy Law.

Injunctions from District Courts.— The district court can not restrain
the State courts, but it can restrain parties litigant in the State courts,
whenever it becomes necessary in order to give force and effect to the
jurisdiction and powers conferred upon it by the bankruptcy act. In re
William Christy, 3 How. 292; Irving v. Hughes, 2 B. R. 62; s. ¢c. 7 A. L.
Reg. 209; s. c. 6 Phila. 451; Jones v. Leach et al., 1 B. R. 595; Hyde v.
Bancroft, 8 B. R. 24; s. ec. 6 Ben. 392; Pennington v. Sale & Phelan et al.,
1 B. R. 572; Pennington v. Lowenstein et al., 1 B. R. 570; in re Schnepf,
1B. R. 190; s. ec. 2 Ben. 72; in re Bowie, 1 B. R. 628; s.c. 1 L. T. B. 97; 5. ¢.
15 Pitts. L. J. 448; in re R. R. Atkinson, 7 B. R. 1438; 5. ¢.5 L. T. B. 320;
s.c.4 C, L. N. 359; 8. ec. 19 Pitts. L. J. 188. Contra, In re Campbell, 1 B. R.
165; s.c. 1 Abb. C. C. 185; 5. ec. 1 L. T. B. 30; s. c. 6 Phila. 445; in re Burns,
1B. R. 174; 8s. « 7 A. L. Reg. 105; s. @ 6 Phila. 448; Clark v. Binninger,
3 B. R. 518; s. ec. 388 How. Pr. 341; s. c. 3 L. T. B. 49; Tenth Nat’l Bank
vy. Sanger. 42 How. Pr. 179; in re Dudley, 1 Penn. L. J. 302.

Such a course is very familiar in courts of chancery in cases where a
creditor’s bill is filed for the administration of the estate of a deceased
person, and it becomes necessary or proper to take the whole assets into
the hands of the court for the purpose of collecting and marshaling the
assets, ascertaining and adjusting conflicting priorities and claims, and
accomplishing a due and equitable distribution among all the parties in
interest in the estate. In re William Christy, 3 How. 292.

Congress, in the enactment of laws upon the subject of bankruptcies,
has complete and plenary power, unrestricted save as to uniformity. It
has, in legislating upon tue subject, power to take from State courts the
administration of remedies for the enforcement of liens. The bankruptcy
law is, then, the supreme law of the land, binding alike upon Federal and
State tribunals, and wherever, by express words or by necessary implica-
tion, it affects State laws, the power of State courts or the remedies of
suitors therein, it is paramount. When Congress delegated to the dis-
trict courts the equitable jurisdiction in bankruptcy over the property of
the debtor, it by necessary implication also delegated at the same time the
power to administer such remedies known to the law as are absolutely in-
dispensable to the complete exercise of the jurisdiction expressly conferred.
One power directly given is the power to collect all the assets. The means
by which this result is to be reached are not enumerated, but power to
accomplish the result is given and the right to employ the proper legal
process fur affecting the result must follow by necessary implication.
Clesely connected with the power of collecting the assets is that of ascer-
taining and liquidating the liens which may be claimed to exist upon those
assets. A proceeding to ascertain or liquidate a lien would be idle, unless
the court has the power to restrain the parties from liquidating their liens
without its intervention, and to preserve the property by restraining its
sale until the lien is ascertained to be good or void. The bankruptcy law
is highly remedial, and ought to have a liberal construction for the pur-
pose of affecting its aim and policy. It gives the bankruptcy conrt an
exclusive and original jurisdiction over all the parties to the bankruptcy
proceedings, all the assets, and all the liens thereon. The express grant
INJUNCTIONS From District Courts. 127

* of power to enjoin in proceedings in invitum is not a denial of such power
in voluntary proceedings, upon the maxim expressio unius exclusio
alterius. The district court is clothed at once, in voluntary cases, with
jurisdiction over the debtor and his property; but where the proceeding is
involuntary, the debtor is not adjudged a bankrupt until the return and
hearing of the order to show cause. There is, therefore, good reason for giv-
ing the court power to enjoin between the time of filing the creditor’s peti-
tion and the return of the order to show cause, as there is in these cases no
voluntary surrender of the property. In re Mallory, 6 B. R. 22; 5. c. 1 Saw.
88; s.c.2 L. T. B. 247; in re Lady Bryan Mining Co., 6 B. R. 252; Samson
y. Clarke, 6 B. R. 403; s.-c. 9 Blatch. 872; in re Ulrich et al., 8 B. R. 15;
s. ¢. 6 Ben. 483.

It makes no difference with the power of the court over the subject that
the lien, or alleged lien, is inchoate and incapable of execution until the
amount secured thereby is ascertained and settled. Ascertainment and
liquidation are expressly authorized, and the subsequent provisions of
the act show how fully the whole administration of the estate is confided
to the court. Samson vy. Clarke, 6 B. R. 403; s. ec. 9 Blatch. 372.

All the creditors of the bankrupt, secured as well as unsecured, become,
and are at once, by virtue of the bankruptcy, parties to the proceedings,
and they and their debts are thereby brought under and are subject to
the sole and exclusive jurisdiction and control of the bankruptcy court.
Such jurisdiction and control exist and may be enforced as well before
as after proof of debt. Phelps v. Sellick, 8 B. R. 390; Watson v. Citizens’
Savings Bank, 11 B. R. 161.

It does not necessarily follow that the district court must in all cases
prohibit any proceeding in a State court for the benefit of a creditor hav-
ing a lien. Often it is quite convenient, and ordinarily it may be quite
desirable to permit pending actions to proceed so far as to ascertain the
amount due. In one case a foreclosure of a mortgage in the State court
was permitted, though begun after petition filed in the district court.
Samson y. Clarke, 6 B. R. 403; s. c. 9 Blatch. 372.

The power to control creditors in respect to the liquidation of liens is
clearly given. Two considerations illustrate the importance of the power
which are especially applicable to liens by attachment: 1st. Without such
power there is no adequate protection to the other creditors against col-
lusion between the bankrupt and the claimant, not even aided by the
authority given to the assignee to defend. 2d. The early settlement of the
estate may sometimes require that the court in bankruptcy should take
the determination of claims which are in dispute into its own hands.
Ibid.

The power to liquidate the liens upon the assets necessarily includes
the power to ascertain what liens there are, their amount, and to pay them
off, and as an incident to payment and distribution, a power of sale for
their conversion into cash in order that the liens may be liquidated or
paid, and the surplus carried to the general fund. In re Ellerhorst et al.,
7B. R. 49; s. ¢c.. 2 Saw. 219.
128 Tur Bankruptcy Law.

Where the property of the bankrupt is invested in the name of a party,
he may be restrained from transferring or disposing of the same. Jxeenan
v. Shannon, 9 so. R. 441; s, ec. 81 Leg. Int. 85.

Where a levy has been made before the commencenient of proceedings
in bankruptcy, the possession of the sheriff can not be disturbed by the
assignee. The latter, in such case, is only entitled to such residue as may
remain in the sheriff’s hands after the debt for which the execution is-
sued has been satisfied. In re David Weamer, 8 B. R. 527; s. c. 21 Pitts.
L. J. 17; 80 Leg. Int. 321; 6 C. L. N. 27; Marshall v. Knox, 8 B. R. 97; s. ¢.
16 Wall. 551; Peck v. Jenness, 7 How. 612; Colby v. Ledden, 7 How. 626;
in re John Kserlin, 3 How. 326.

This doctrine, however, has no application where the pending suits are
in the Federal tribunals. There no comity is violated. Sutherland v.
Lake Superior Canal Co., 9 B. R. 298; s. c. 1 Cent. L. J. 127.

If the execution creditor has security on real estate as well as on per-
sonal property, he may be enjoined for a brief period, to allow the cred-
itors to pay him and obtain a transfer of his judgment, or to enable them
to obtain such other equitable relief as may not impair his rights. Tast-
burn v. Yardley, 8 Pac. L. R. 127; 1s. c. 80 Leg. Int. 404.

Where the judgment was obtained in fraud of the bankruptcy law, the
bankruptcy court may enjoin a sale under an execution issued thereon.
Sutherland v. Lake Superior Canal Co., 9 B. R. 298; s. c. 1 Cent. L. J.
127; in re Wm. H. Shuey, 9 B. R. 526; s.c 6 C. L. N. 248; Buckingham v.
McLean, 3 McLean, 185; s. c. 18 How. 151. Contra, Townsend vy. Leonard,
3 Dillon, 370. ,

The district court can not order the property to be taken out of the
hands of the sheriff until the levy under the execution is set aside on ac-
count of fraud, or for the reason that it is in violation of the bankruptcy
law. The assignee has no right to the immediate possession of the prop-
erty seized before the judgment is satisfied. In re Wm. H. Shuey, 9 B.R.
526; s. c. 6 C. L. N. 248.

The lien under an execution is prima facie valid. Ibid.

An injunction which merely restrains the sheriff from disposing of the
bankrupt’s property does not prevent a sale of property levied on before
that time, for such property is not the bankrupt’s property in law except
so far as the surplus is concerned. Ansonia B. & C. Co. v. Babbitt, 15
N. Y. Supr. 157.

If an injunction merely restrains the sheriff from disposing of the prop-
erty, this does not justify him in releasing it from the levy. Ibid.

The court may, in its discretion, before granting an injunction against
a judgment creditor who has a lien, require the general creditors to
indemnify the judgment creditor. In re Donaldson, 1 B. R. 181; s. «1
L. T. B. 5; 8. ¢ 7 A. L. Reg. 218; s..c. 6 Phila. 143.

After the process of the State court has been executed, and the prop-
erty sold thereon, it is too late to interfere. The purchaser at such sale
acquires a good title, and this is so even if the judgment is fraudulent,
provided the purchaser is an innocent one. For this reason, as well as
upon general principles, the district court can not set aside a sale upon
INJUNCTIONS FROM DistTRICT CouRTS. 129

the process of a State court, and order the property resold, however ap-
parent it may be that it was sold much below its real value. The remedy
is in the State court, upon objections to the confirmation of the sale.
In re Fuller, 4 B. R. 115; s. c. 1 Saw. 248; Thames v. Miller, 2 Woods,
564.

If several executions are levied upon the same property, an agreement
among the execution creditors to bid the property in for their joint bene-
fit will not render the sale fraudulent if it were fairly conducted and the
property brought all it was reasonably worth. Thames vy. Miller, 2 Woods,
564.

Where property of the bankrupt has been sold by the sheriff under an
execution issued upon a valid judgment in a State court, the injunction
will not be granted. The sheriff will be allowed to use the proceeds to
satisfy the judgment and all costs thereon, and will only be required to
account for the balance to the proper officer of the bankruptcy court. In
re Campbell, 1 B. R. 165; s. c. 1 Abb. OC. C. 185; s. c. 1 L. T. B. 30; 8. ¢.
6 Phila. 445; in re Bernstein, 1 B. R. 199; s. c. 2 Ben. 44.

If an injunction is served on the sheriff, the State court will not direct
him to pay the money over to the execution creditor. Mills v. Davis,
10 B. R. 340; s. c. 35 N. Y. Supr. 355.

Where an insolvent corporation files a petition in bankruptcy after
the filing of a complaint in a State court, but before the appointment of
a receiver, and surrenders its assets to the register under an order of the
bankruptcy court, the district court may enjoin the complainant in the
State court from prosecuting his suit, if the State court, notwithstanding
a return of the facts, insists upon proceeding with the suit. In re Citi-
zens’ Savings Bank, 9 B. R. 152.

When a creditor who is prosecuting a suit in a State court bas ob-
tained an agreement by which he will obtain an improper advantage,
he may be enjoined from prosecuting his suit. Sampson y. Burton, 5 B.
R. 459.

When the creditors of the bankrupt will not be benefited, and the party
to be enjoined may be materially injured, the injunction will not be
granted. In re Bowie, 1 B. R. 628; s.c.1L. T. B. 97; 5. ¢ 15 Pitts. L. J.
448; in re Donaldson, 1 B. R. 181; s.c.1L. T. B. 5; 8. ¢ 7 A. L. Reg.
213: s. c. 6 Phila. 143; in re Wilbur, 3 B. R. 276; s. c. 1 Ben. 527; s. c. 2
L. T. B. 171; in re Iron Mountain Co., 4 B. R. 645; s. ¢. 9 Blatch. 320; in re
Irwin Davis, 4 B. R. 716; s. c. 8 B. R. 167; s. c. 1 Saw. 260; in re Geo.
W. Dillard, 9 B. R. 8; s. ¢. 6 L. T. B. 490; in re William Christy, 3 How.
292; Norton v. Boyd, 3 How. 426; in re Peter Hufnagel, 12 B. R. 554.

The fact that steps have been taken to enforce the lien makes no dif-
ference. It is not a question of jurisdiction or of right, but of discretion.
In re Geo. W. Dillard, 9 B. R. 8; 8. ¢. 6 L. T. B. 490.

Proceedings in the State court to punish a party for contempt will not
be enjoined. In re M. W. Hill, 2 B. R. 140.

An injunction will not be granted to stay proceedings on a suit insti-
tuted in a State court against the marshal, for taking possession of prop-
erty which did not belong to the debtor, under a warrant in involuntary

9
130 Tur Bankruptcy Law.

bankruptcy. In re Marks, 2 B. R. 575; s. ec. 1 C. L. N. 245; 8. ¢. 16 Pitts.
L. J. 12.

The district court can not enjoin a suit in the State court by a party
who claims under a bill of sale voidable by creditors, against a sheriff
who has levied an attachment upon the property, and subsequently turned
it over to the assignee, because the sheriff has a valid defense which the
State courts are ready to uphold. There is no jurisdiction in the district
court to try a case between an attaching officer and a stranger to the
bankruptey, or to enjoin such an action in the court which has jurisdic-
tion of it. In re H. 8S. Evans, Lowell, 525.

If the property which was transferred fraudulently has been seized by
the marshal and turned over to the assignee, the circuit court may, as
an incident to the relief, restrain the fraudulent grantee from prosecuting
suits in the State courts against the assignee and the marshal for such
seizure. Kellogg v. Russell, 11 B. R. 121; s. ¢. 11 Blatch. 519.

The sheriff of the State court may be made a party to the proceedings
for an injunction. In re Bernstein, 1 B. R. 199; s. c. 2 Ben. 44; Jones v.
Leach et al., 1 B. R. 595; Pennington vy. Sale & Phelan ct al., 1 B. R. 572;
Pennington v. Lowenstein et al., 1 B. R. 570; Wilson v. Brinkman et al.,
2B. R. 468; s. c. 1 C. L. N. 1938; in re Mallory, 6 B. R. 22; s. c. 1 Saw.
88; s. c. 2 L. 'T. B. 247; Warren v. Tenth Nat’l. Bank, 7 B. R. 481; s. c. 10
Blatch. 493; in re Bellows & Peck, 3 Story, 428.

If purchasers are reluctant to take the title, on account of the cloud cast
upon it by the pendency of proceedings in bankruptcy, this is a sufficient
reason for granting an injunction. Whitman vy. Butler, 8 B. R. 487.

If the mortgagee, prior to the commencement of proceedings in bank-
ruptcy, sold the property by.virtue of a power contained in the mort-
gage, but the purchaser refused to accept the title, the bankruptcy court
may enjoin the mortgagee from attempting to resell after the commence-
ment of proceedings in bankruptcy, the same as if no sale had ever been
made. Ibid.

If the party in possession claims a right to the property, the assignee
is not entitled to an injunction to prevent a removal thereof, upon the
mere ground that he is unable to give the bond requisite in an action of
replevin. In re Oregon Iron Works, 13 Pac. L. R. 50.

An injunction will lie against a party within the jurisdiction of the
court to stay proceedings in any court beyond its territorial limits. In re
James Martin, 5 Law Rep. 158; Hyde v. Bancroft, 8 B. R. 24; s. c. 6 Ben.
392.

If the party in whose name the legal proceedings sought to be enjoined
are conducted does not reside within the district, the injunction may be
issued against him, his agents and attorneys within the district, and in
such a case the service of the injunction upon such agents or attorneys
will be a service upon the principal, and bind him as well as them per-
sonally. In re Bellows & Peck, 3 Story, 428.

The district court may, in its discretion, direct notice to be given to the
adverse party before the granting of an injunction. In re Moses Carlton,
1 N. Y. Leg. Obs. 291; s. c. 5 Law Rep. 120; in re John Harper Smith,
INJUNCTIONS FROM DistRICT CouRTS. 131

1N. Y. Leg. Obs. 291; Irving v. Wlughes, 2 B. R. 62; s. c. 7 A. L. Reg.
209; s. c. 6 Phila. 451; in re Wallace, 2 B. R. 134; s. c. 1 Deady, 482; in re
Muller & Brentano, 3 B. R. 329; s. c. 1 Deady, 513; s. c. 2 L. T. B. 33.

Before the appointment of an assignee, proceedings for an injunction to
protect the property of the bankrupt may be instituted by the bankrupt,

or the petitioning creditors. Irving v. Hughes, 2 B. R. 62; s.¢« 7A. I.
Reg. 209; s. c. 6 Phila. 451; Jones v. Leach, 1 B. R. 595; in re Donaldson,
1B. R.181;s.c.1L. T. B.5;s.¢. 7 A. L. Reg. 213; s. ec. 6 Phila. 142; in re
Bowie, 1 B. R. 628; s. c. 1 L. T. B. 97; s. c. 15 Pitts. L. J. 448; in re Isaac
Ulrich, 8 B. R. 15; s. « 6 Ben. 483; in re John S. Foster, 2 Story, 181; in
re Bellows & Veck, 3 Story, 428.

As soon as the assignee is appointed, he should be made a party to the
proceedings by a supplemental bill. Irving v. Hughes, 2 B. R. 62; s. ec.

TA. L, Reg. 209; s. c. 6 Phila. 451.

Where an injunction is obtained upon a petition filed in the cause
pending in bankruptcy, it may be dissolved on a motion, without resorting
to the formality of a demurrer. In re Wallace, 2 B. R. 134; s. c. 1 Deady,
433; in re E. Mallory, 6 B. R. 22; s. c. 1 Saw. 88; s. c. 2 L. T. B. 247.

An execution creditor, who has been delayed by an injunction, is en-
titled to a prompt adjudication of the validity of his judgment as soon as
an assignee is appointed. The question, however, can not be determined
on ex parte affidavits. In re Hafer & Bros. (in re Beck), 1 B. R. 586; s. ¢.
6 Phila. 474.

When the assignee, after his appointment, does not take possession
of property levied on by virtue of an execution issued upon a valid judg-
ment, nor make application for leave to discharge the levy by paying -
the judgment, and there is no evidence that any advantage will be gained
by continuing the injunction, it will be dissolved. In re Wilbur, 3 B. R.
276; s. c. 1 Ben. 527; s. c. 2 L. T. B. 171; in re J. J. Fendley, 10 B. R. 250;
8c. 1 Cent. L. J. 433.

When it does not appear that the proceedings under an execution will
affect the interests of any party entitled to the protection of the district
court under the bankruptcy act, the injunction will be dissolved. When
the bankrupt claims that the property held under an execution belongs ©
to his wife, and the assignee does not assert any claim thereto, the in-
junction will not be continued. In re Olcott, 2 Ben. 443.

When, in a case in equity in the district court, the weight of evidence
is rather with the defendants, and there is no suggestion that they are
not abundantly responsible pecuniarily, or that the assets are in peril,
the injunction will, on motion, be dissolved, and the case will then go to
a final hearing on proofs. Collins v. Bell, 3 B. R. 587.

A decree enjoining a judgment creditor and the maker of a note from
enforcing a judgment against the bankrupt, does not restrain the maker
of the note upon which the judgment was rendered from proceeding ex
delicto, at law against the bankrupt for his fraud in disposing of the
note. Horter v. Harlan, 7 B. R. 238; s. c. 9 Phila. 63.

A party who.is served with an injunction restraining him from prose-
cuting a suit must affirmatively take steps adequate to prevent such pro-.
132 THe BanKRupPtcy Law.

ceedings. It is a grave error to suppose that if he personally takes no
steps to go on, he can refrain from taking any reasonably adequate meas-
ures to stop the proceedings, and leave it in the power of his» employees
to go on in his name, and yet escape the consequence of disobeying the
injunction. Hyde v. Bancroft, 8 B. R. 24; s. c. 6 Ben. 392.

A party who has violated an injunction may be compelled to pay ex-
penses of the proceeding to punish him for contempt, together with a
proper fee for the counsel for the complainant. Ibid.

If an injunction prohibiting an application for a receiver is served on an
attorney while he is engaged before the State court in making the applica-
tion, he violates it by handing the motion papers with a draft order for the
appointment of a receiver to the judge, if the application is granted and a
receiver appointed. In re South Side R. R. Co., 10 B. R. 274; s. c. 7 Ben.
891. % 3

Proceedings in the District Court Sitting as a Court of Bankruptcy.—
An appearance and answer do not waive any question affecting the juris-
diction of the court, for no voluntary act of the defendant can give juris-
diction, and it is never too late, at any stage of the cause, to consider it.
Jobbins v. Montague, 6 B. R. 509.

Courts of bankruptcy are mere creatures of the statute, and derive all
their life and vigor from it. Jurisdiction is only given “ in their respective
districts.” The fair legal inference from these words is that jurisdiction
was meant to be withheld outside of those districts. Ibid.

The case in bankruptcy includes all the summary proceedings. Chemung
Canal Bank v. Judson, 8 N. Y. 254.

The whole proceedings in bankruptcy are on the equity side of the
court, and whatever a court of equity may do in the exercise of its gen-
eral jurisdiction over subjects requiring a like interposition, may properly
be done by the district court in cases in bankruptcy. In re Benjamin B.
Grant, 5 Law Rep. 303; in re Moses Carlton, 1 N. ¥. Leg. Obs. 291; s. ¢. 5
Law Rep. 120. 7

Power and jurisdiction in all matters and proceedings in bankruptcy are
conferred upon the district courts, and these courts, as courts of bank-
ruptcy, are authorized to hear and adjudicate upon the same, according
to the provisions of the bankruptcy act. Hxamined separately, the clause
which provides that the powers and jurisdiction therein granted and con-
ferred may be exercised as well in vacation as in term time, and that a
judge sitting in chambers shall have the same powers and jurisdiction as
when sitting in court, would seem to afford some support to the view that
all the powers and jurisdiction of the district courts when sitting as courts
in bankruptcy may be exercised in a summary way as by rule to show
cause. Most matters and proceedings in bankruptcy may doubtless be
heard and adjudicated by the district court in that way, but this general
clause must be considered in connection with all the other provisions of
the bankruptcy act. Superadded to the general clause, and as an exposition
of the same, is another and more important clause, in which is given 4
specific enumeration of the cases and controversies to which that general
jurisdiction extends, and it is plain that the enumeration does not includé
PROCEEDINGS IN THE District Court. 133

“suits at law or in equity which may or shall be brought by the assignee
in bankruptcy against any person claiming an adverse interest, or by such
person against such assignee, touching any property or rights of property
of said bankrupt transferable to or vested in such assignee.” Cases of that
kind fall directly within section 4997, and must be determined by a suit in
equity, or an action at law, as the case may be. Smith v. Mason, 6 B. R. 1;
s. c. 14 Wall. 419; s. c. 5 L. T. B. 7; Marshall v. Knox, 8 B. R. 97; s. c. 16
Wall. 551; Knight v. Cheney, 5 B. R. 305; s. c« 2 L. T. B. 205; Barstow v.
Peckham, 5 B. R. 72; in re Kerosene Oil Co., 3 B. R. 125; s. c. 6 Blatch. 521;
Rogers v. Winsor, 6 B. R. 246; in re Masterson, 4 B. R. 553; Shaffer v.
Fritchery, 4 B. R. 548; in re H. S. Evans, Lowell, 525; Briggs v. Stephens,
7 Law Rep. 281. Contra, in re Norris, 4 B. R. 85; s. c. 1 Abb. C. C. 514;
s.c 1 L. T. B. 227. ?

The district court has no jurisdiction or control over a person who is not
before the court, and upon whom no process has been served. Such a per-
son is not a party to the proceedings in bankruptcy. Marshall v. Inox, 8
B. R. 97; 8. c. 16 Wall. 551.

The only parties to the proceedings in bankruptcy are the debtor, his as-
signee and his creditors. Other persons are not affected by them. Marsh
y. Armstrong, 11 B. R. 125; s. c. 20 Minn. 81.

Consent can not confer jurisdiction to adjudicate the question of title to
property in a summary proceeding. Marsh v. Armstrong, 11 B. R. 125; s. ¢.
20 Minn. 81.

If a stranger to the proceedings appears in answer to a summary peti-
tion, and consents to a reference of the case to a register, he can not im-
peach the decision of the court, in a collateral action, for want of
jurisdiction. People v. Brennan, 12 B. R. 567; s. c.6 N. Y. Supr. 120; s..¢.
10 N. Y. Supr. (Hun) 66.

If the execution creditor, who is restrained on a summary petition, ap-
pears and asks for an order directing the sheriff to sell the property and
bring the proceeds into the bankruptcy court, he can not maintain an ac-
tion against the sheriff to recover the proceeds after the latter has com-
plied with this order. O’Brien v. Weld, 15 B. R. 405; 92 U. S. 81.

If a creditor claims that a sale of his claim is void, on account of fraud,
the controversy may be determined by the bankruptcy court that has
control of the fund. Frank v. Tolman, 75 Ill. 648.

The assignee, who is an officer of the bankruptcy court, may be pro-
ceeded against by summary petition in respect to any funds in his hands
if the opposing party chooses to proceed in that way, though the assignee
himself has no right to take similar action against third persons. In re
H. S. Evans, Lowell, 525; Ferguson v. Peckham, 6 B. R. 569; s. c. 29 Leg,
Int. 285.

The court can not deprive the assignee of the possession of the property
of the bankrupt without due process of law, which in general means a trial
by jury unless the parties consent to a trial by the court. Wood M. & R.
Co. v. Brooke, 9 B. R. 395.

When the assignee denies the validity of the claim, and asserts title to
the property, the claimant can not proceed by a summary petition. Hurst
v. Teft, 18 B. R. 108; s. c. 12 Blatch. 217.
134 Tur Bankruptcy Law.

Where the bankrupt holds property to secure him for indorsements and
notes, made by him for the owner, the holder of one of these notes is rot
entitled to a summary order, directing the payment of his claim out of the
property. Ibid.

Whatever powers are given by this section are designed to be exercised
summarily. When the property affected by a lien is confessedly the prop-
erty of the bankrupt, and has passed to the assignee, and it only remains
to ascertain and liquidate the alleged lien, the summary jurisdiction of the
district court is entirely adequate. Samson v. Clarke, 6 B. R. 403; 5. c. 9
Blatch. 872; in re Isaac Ulrich, 8 B. R. 15; 5. c. 6 Ben. 483.

When the claimant of property in the possession of the assignee invokes
the controlling power of the court over the assignee as its officer, and
submits to a trial of the question which he asks the court to determine, no
question can be raised whether a more formal suit would or would not
have been proper. Samson vy. Blake, 6 B. R. 410; s. c. 9 Blatch. 379.

When a party voluntarily appears, and moves for the enforcement of a
pretended lien, the district court thereby acquires jurisdiction to proceed
and dispose of the whole matter in a summary way. In re Worthington,
14 B. R. 388; s.c. 8 C. L. N. 862; s. c. 3 Cent. L. J. 526; s.c.9C. L. N. 346.

The district court is legislatively made a court of summary equitable
jurisdiction over the assignee and over his trust. Therefore, independently
of any special provisions of the bankruptcy act, the court can, by way of
direction to him, decide any question of legal or equitable right which can
be contentiously discussed for opposing interests. In re Franklin Fund
Saving Society, 31 Leg. Int. 178.

A petition to have an order for a sale of property declared null and void,
should make the purchaser and those claiming under him parties to the
proceeding. In re Wm. Major, 14 B. R. 71.

The assignee may proceed by a summary petition, to have an order for a
sale of property declared null and void. Ibid.

The power to issue an injunction to prevent parties from interfering
with the property of the bankrupt, may be exercised summarily without a
formal suit. In re Isaac Ulrich, 8 B. R. 15; s. c. 6 Ben. 483.

If the wife for a debt due to her take a note payable to her husband or
bearer, the court will not, in a summary and incidental manner, interfere
with the assignee’s right to the possession of the property. In re George
W. Snow, 1 N. Y. Leg. Obs. 264; s. c. 5 Law Rep. 369.

Jurisdiction to order a foreclosure in favor of an alleged mortgagee
claiming adversely to the assignee and adversely to another mortgagee,
where the title of the applicant is disputed, the amount claimed to be due
is denied, and where it is insisted that he has already released the lien, is
not embraced in the summary jurisdiction. {m re Edward A. Casey, 8 B.
R. 71; s. c. 10 Blatch. 376.

Jurisdiction to foreclose mortgages upon the estate of the bankrupt is not
included in the powers to be exercised summarily. Ibid.

The bankruptcy court has jurisdiction over a summary petition to compel
the bankrupt to deliver property in the joint possession of himself and wife
to the assignee, unless it is shown that she has an adverse interest in the
property. In re Pierce & Whaling, 15 B. R. 449; s.¢. 9 CG. L. N. 300.
PROCEEDINGS IN THE District Court. 135

The bankruptcy court has no jurisdiction to entertain a summary peti-
tion by a creditor against the assignee for a sale of property not in the pos-
session of the assignee but in the possession of another claiming title and
not a party to the petition. Bradley v. Healey, 1 Holmes, 451.

When a bill in equity is pending between the parties in which a right to
a set-off is at issue, the proceedings on a petition of a creditor against the
assignee for the ascertainment of his claim, may be stayed to abide the
event of that suit. Ibid.

The court in a summary proceeding may direct the sale of gett free
from all incumbrances, although the assignee disputes the validity of a
mortgage thereon. The right of the mortgagee is not affected thereby.
His lien, if any he has, is transferred to the fund, and must be asserted,
and, if contested, settled in an appropriate proceeding to be subsequently
taken. In re Frederick S. Kirtland, 10 Blatch. 515.

If the attorney of the mortgagee appears and answers the petition, the
court has jurisdiction to direct a sale of the property free from incum-
brances. Ibid.

The grant of jurisdiction to collect the assets impliedly confers upon
the courts of bankruptcy the right to adopt such form of proceeding
as may be necessary and appropriate to give practical efficiency to such
grant. This is a universal rule of construction, and without such a rule,
many rights would go unredressed; for it is not unusual for legislative
bodies to leave with the courts the power to devise and adopt a remedy
commensurate with the exigencies of the case, in the execution of the
authority conferred; the restriction being that they must not be such as
are in violation of the provisions of the fundamental law, or in derogation
of the constitutional rights of the citizen. Goodall v. Tuttle, 7 B. R. 193;
8. ¢c. 3 Biss. 219.

Jurisdiction over the debtors and adverse claimants is not obtained
by the bankruptcy proceedings, and they can not be treated as parties to
the proceedings like creditors. The power to collect the assets is, there-
fore, necessarily an additional and independent authority. Ibid.

The fullest and most comprehensive authority is given to the district
court in respect to all matters relating to a proceeding in bankruptcy.
The power is in its nature an equity power, and may be exercised by pro-
ceedings in the nature of equity proceedings. It is undoubtedly the ob-
ject and policy of the bankruptcy act, that proceedings under it shall
be summary; that matters shall be settled as speedily as possible. In no
other way can the bankruptcy system be put into operation without inter-
minable doubts, controversies, embarrassments, and difficulties, or in
such a manner as to achieve the true end and design thereof. Its suc-
cess is dependent upon the national machinery being made adequate to
all the exigencies of the act. Prompt and ready action can be safely
relied on where the whole jurisdiction is confided to a single court: in
the collection of assets; in the ascertainment and liquidation of liens and
other specific claims thereon; in adjusting the various priorities and con-
flicting interests; in marshaling the different funds and assets; in direct-
ing the sales at such times and in such manner as shall best subserve
136 Tue Bankruptcy Law.

the interests of all concerned; in preventing, by injunction or otherwise,
any particular creditor or person having an adverse interest, from obtain-
ing an unjust and inequitable preference over the general creditors by
an improper use of his rights or remedies in the State tribunals; and,
finally, in making a due distribution of the assets, and bringing to a
close within a reasonable time the whole proceedings in bankruptcy.
Bill v. Beckwitb, 2 B. R. 241; in re Wallace, 2 B. R. 134; s. c. 1 Deady,
433; in re Kerosene Oil Co., 2 B. R. 528; s. « 3 Ben. 35; 8. c. 2 L. T. B.
79; in re J. O. Smith, 2 B. R. 297; in re Marks, 2 B. R. 575; s. ce. 1 C. L. N.
245; s. c. 16 Pitts. L. J. 12; in re People’s Mail Steamship Co., 2 B. R.
553; s. c. 8 Ben. 226; in re Geo. J. G. Davidson, 2 B. R. 114; s. c. 2 Ben.
506; in re Vogel, 2 B. R. 427; s. c. 3 B. R. 198; s. c. 7 Blatch. 18; s. ¢. 2
L. T. B. 154; Foster v. Ames, 2 B. R. 455; s. c. Lowell, 313; in re Josiah
D. Hunt, 2 B. R. 539; s.c.1 Cc. L. N. 169.

This power is not a wanton power. It is not a power to order this
or that because it may. It is a judicial discretion to be carefully exercised
in view of the rights of all; to be exercised so far as may be in accord-
ance with sound precedent, and is so to mold itself to, and meet the nec-
essarily new questions, not of practice alone, but of right, as they arise,
that while, on the one hand, it administers the law in the true intent
and spirit of its enactment, so as to effectuate the really equitable and
beneficial ends it seeks to attain, it does not, on the other, abrogate those
useful and striking analogies so well known to the professiou, nor those
rules of practice and judicial procedure now so interwoven with our
system of jurisprudence as to have become an almost inherent and
essential part thereof. Hence, in its discretion, the court may require
parties to resort to more formal proceedings, where no loss or detriment
will be occasioned thereby. In re Josiah D. Hunt, 2 B. R. 539; s. ec. 1 C. L.
N. 169; Bill v. Beckwith, 2 B. R. 241; in re Betts, 15 B. R. 586; s. c. + Cent.
L. J. 558; s. c. 18 Pac. L. R. 203.

Strangers to the proceedings in bankruptcy, not served with process, and
who have not voluntarily appeared and become parties to such litigation,
can not be compelled to come into court, under a petition for a rule to show
cause. Smith v. Mason, 6 B. R.1;s. c. 14 Wall. 419; s.¢c.5 L. T. B. 7; Mar-
shall v. Knox, 8 B. R. 97; s. c. 16 Wall. 551.

An appearance by attorney is effective to give jurisdiction over a party,
even though there has been no previous service of process upon him. The
object of process in a suit in personam is to secure the appearance of the
party, and his general appearance waives all irregularities in the service
of such process, and cenfers jurisdiction so far as the person is concerned.
That jurisdiction, when once thus conferred, can not be withdrawn by the
act of the party who has so appeared, without the consent of the court or
of the prosecuting party. If the right to withdraw depends upon ques-
tions of fact, the court will pass upon the existence and pertinence of the
facts, and allow or refuse the withdrawal on previous notice to the prose-
cuting party. In re Ulrich et al, 3 B. R. 133; s. ¢. 3 Ben. 355.

When property is sold under an agreement that the proceeds shall be
brought into court, they are paid into the registry, and the court is its
PROCEEDINGS IN THE District Court. 137

legal and only custodian. The fund is lodged in court without prejudice
to the rights of any of the parties, and it is an essential part of the agree-
ment between the parties in legal intendment that their claims shall be
adjudicated by the court according to the law and usage of the court in
cases of deposits in its registry. Hither party can, at any time, by petition
or motion, prefer his claim to it, whereupon it will become the court's
duty, causing proper notice to be given to whomsoever it may deem proper,
to act u.pou such petition or motion. The dismissal of it will not necessar-
ily establish the title of any contesting party. The court may well adjudge
that one petitioner has failed to establish his right, and dismiss his peti-
tion, retaining custcdy of the fund until some other petitioner, it may be
a second or it may be a fiftieth, shall establish his right satisfactorily to
the court. In re Misiterson, 4 B. R. 553.

An application to the summary jurisdiction of the court to be exer-
cised by an order to show cause, as upon a motion, is not a suit, and can
not be treated as a suit. In re Edward A. Casey, 8 B. R. 71; s. c. 10 Blatch.

76.

The objection that the proceeding should be by a bill in equity, or an
action at law, may be taken at the hearing, or in the appellate court. In re
Bonesteel, 3 B. R. 517; s. c. 7 Blatch. 175; in re Ballou, 3 B. R. 717; 8. c. 4
Ben. 185. Contra, in re Ulrich et al., 3 B. R. 138; s. c. 3 Ben. 355.

The petition may be converted into a bill in equity, but the only advan-
tage to be gained by so doing will be a saving of the service of a new sub-
poena, as the answers filed and the testimony taken, if any, can, not be
used, except by cousent, in the prosecution of the suit in its amended form.
In re Kerosene Oil Co., 3 B. R. 125; s. c. 6 Blatch. 521; Barstow v. Peck-
ham, 5 B. R. 72; Stsrkweather v. Cleveland Ins. Co., 4 B. R. 341; s. c. 2
Abb. C. G. 67; in re H. S. Evans, Lowell, 525.

When a party has made a mistake in selecting his remedy, the summary
petition may, in the discretion of the court, be dismissed without costs to
either party, with leave to the petitioner to pursue the appropriate remedy.
In re Bonesteel, 3 B. R. 517; 8. c. 7 Blatch. 175; in re Ballou, 3 B. R. 717;
s. c. 4 Ken. 135.

The summary jurisdiction may be exercised upon the ordinary processes,
orders to show cause, notices of motions, etce., therein, or upon petitions
where special aid or relief is sought in any matter embraced in that
jurisdiction. In re Edward A. Casey, 8 B. R. 71; s. ¢. 10 Blatch. 376.

A party seeking relief in the bankruptcy court should come in by peti-
tion and not by motion. The petitioner should sign and verify the peti-
tion. Coming into court as he does, in an original manner, seeking af-
firmative relief, and not brought in by another party, he must come in
in person in the first instance, and not by an attorney. In re J. O. Smith,
2 B. R. 297; in re Davidson, 2 B. R. 114; s. ec. 2 Ben. 506; in re Philo R.
Sabin, 9 B. R. 383.

The oath to a petition must be administered by the same officers and
in the same manner as oaths in other cases to be used in the courts of
the United States. In re Philo R. Sabin, 9 B. R. 383.
138 Toe Bankruptcy Law.

When the oath is administered by a notary public, the signature and
notarial seal of the notary constitute a sufficient authentication. When
not accompanied by such seal, the signature and official character of the
notary must be authenticated in the usual manner. Ibid.

It is not necessary or proper that resort should be had to the formal
and plenary proceedings common to suits in equity in the circuit court.
A petition stating the facts relied on for relief, and praying for the order,
relief, or proceeding sought for, is sufficient. In re Wallace, 2 B. R. 134;
8. @ 1 Deady, 433; in re J. O. Smith, 2 B. R. 297.

When the uistrict court has jurisdiction of the subject-matter and of
the question at issue, and both parties submit themselves to its exercise
and invoke it in the form of a summary proceeding, the court is not
called upon to consider whether the determination of the question should
have been sought. by a summary proceeding or by a proceeding more
formally commenced. Samson vy. Blake, 6 B. R. 410; s. ec. 9 Blatch. 379.

If the adverse party goes to a hearing without objecting to the right
or interest of the petitioner, this is a waiver of the form of filing a new
petition to set up an interest subsequently acquired. In re Robert Morris,
Crabbe, 70.

A summary petition is not like a suit at common law, in which the
party must have his right of action when he commences it. If he subse-
quently acquires an interest, he may file a new petition. Ibid

If the assignee is not chargeable with a personal knowledge of the sub-
ject, his omission to deny an averment will not enable the petitioner to
use it as if admitted. In re George W. Snow, 1 N. Y. Leg. Obs. 264;
s. c. 5 Law Rep. 369.

A party who acquiesces in a reference to an auditor, and appears
before him and contests the claim, waives the right to a jury trial. Kelly
v. Smith, 1 Blatch. 290.

If the district judge shall be satisfied, in conducting such a proceeding,
‘that justice will be subserved by a jury trial, he can direct the issue
to be so tried. Bill v. Beckwith, 2 B. R. 241.

When a petition is filed claiming rent for possession of premises by
the assignee after the commencement of the proceedings in bankruptcy.
a jury trial may be allowed. Buckner v. Jewell, 14 B. R. 286; s. ce. 2
Woods, 220.

The testimony may be taken ore tenus at the hearing. Wilson v. Stod-
dard, 4 B. R. 254; s. ¢.2 C. U. N. 161.

If the mortgagee is dead, the mortgagor can not testify in favor of
his assignee in a proceeding against the executors of the mortgagee.
Bromley v. Smith, 5 B. R. 152; s. ec. 2 Biss. 511.

The declarations of the bankrupt in aid and in partial execution of a
transfer which is impeached, are admissible as the declarations of a co-
conspirator and as a part of the res gestae. Samson v. Clarke, 6 B. R.
410; s. ec. 9 Blatch. 379.

Even in a formal suit in equity the court may qualify the decree so that
it shall not operate to prevent a new sult, and nothing is more common
in disposing of motions than to give leave to renew or apply upon new
JURISDICTION OF STATE CouRTS. 139

and further evidence for additional relief. The highly equitable and reme-
dial powers conferred upon the court in bankruptcy are not less free
from restriction, nor are they hampered by such technical rules as will
prevent the doing of what is just and for the protection of the estate, even
if it required the revocation of an order once made. An order dismissing
a petition with leave to renew the application upon the discovery of ad-
ditional facts, is not final and conclusive as res adjudicata. Samson y.
Clarke, 6 B. R. 403; s. c. 9 Blatch. 372.

Where property has been delivered to the plaintiff in a replevin suit
brought in a State court, and has been subsequently taken from the pos-
session of the plaintiff by the marshal, there is no conflict or interfer-
ence on the part of the marshal with the officers of the State court. In
re Geo, J. G. Davidson, 2 B. R. 114; s. ¢ 2 Ben. 506.

Where a petition assumes the form of a regular suit or proceeding, and
testimony is introduced as upon an ordinary trial, a docket fee of twenty
dollars may be taxed in favor of the attorney for the assignee when the
petition is dismissed. In re Bank of Madison, 9 B. R. 184; s. c. 5 Biss.
515.

Jurisdiction of State Courts over Suits by Assignees.— Tne jurisdic-
tion of the district court is not exclusive over the entire execution of the
law. Lucas vy. Morris, 1 Paine, 396.

Congress has no right to require that the State courts shall entertain
suits for the purpose of carrying out the provisions of the bankruptcy
law. The States in providing their own judicial tribunals have a right
to limit, control and restrict their judicial functions and jurisdiction ac-
cording to their own mere pleasure. Mitchell v. Manuf. Co., 2 Story, 648;
Buckingham v. McLean, 3 McLean, 185; s. c. 13 How. 151.

An assignee under the bankruptcy law of the United States may sue in
his own name in the State courts to enforce the rights of property vested
in him by the assignment in bankruptcy, and the courts of the United
States have not exclusive jurisdiction of such actions. Stevens v. Me-
chanics’ Savings Bank, 101 Mass. 109; Peiper v. Harmer, 5 B. R. 252%
s. c. 8 Phila. 100; s. c. 4 L. T. B. (C. R.) 166; Boone v. Hall, 7 Bush, 66;
State v. Trustees, 5 B. R. 466; in re Central Bank, 6 B. R. 207; Cogdell vy.
Exum, 10 B. R. 327; s. c. 69 N. C. 464; Hoover v. Robinson, 3 Neb. 437;
Mitchell v. Manuf. Co., 2 Story, 648; Hastings v. Fowler, 2 Ind. 216; Ward
v. Jenkins, 51 Mass. 588; Russell v. Owen, 15 B. R. 322; s. c. 61 Mo.
185. Contra, Frost v. Hotchkiss, 14 B. R. 443; s. ¢. 1 Abb. N. ©. 27.

In an action brought by an assignee, the defendant may deny the
jurisdiction of the district court over the bankrupt in the proceedings in
which the assignee was appointed. Stuart v. Aumueller, 8 B. R. 541.

The State courts have jurisdiction of questions arising between per-
sons within their jurisdiction, whether they arise under the laws of any
other State or any foreign nation. If they arise under tle law of the
United States, they have the same jurisdiction, unless deprived of it by
some competent authority. The fact that the Federal courts may have
jurisdiction of the same question, does not deprive the State courts of
jurisdiction. The Iederal and State courts may and do have concurrent
140 Tur Bankruptcy Law.

jurisdiction of various questions. When, however, the right of action
is created by an act of Congress, it being a matter within the power
conferred upon the Federal government, Congress may prescribe, 11 the
exercise of its rightful powers, the manner and the tribunal in which alone
that right may be enforced. Congress may confer exclusive jurisdiction
in these cases upon the Federal courts; but when it does not prescribe the
tribunal in which alone they are to be prosecuted, the Federal and State
courts have concurrent jurisdiction over them. The fact that Congress
confers jurisdiction upon the Federal courts, is no evidence that Congress
intended to clothe them with exclusive jurisdiction, because they have
no jurisdiction except such as is conferred upon them by Congress. Cook
v. Whipple, 9 B. R. 155; s. c. 55 N. Y. 150; Gilbert v. Priest, 8 B. R. 159;
8. ¢c. 63 Barb. 339; s. c. 65 Barb. 444; s. c. 14 Abb. Pr. (N. 8S.) 165; Gilbert v.
Crawford, 46 How. Pr. 222; Jordan v. Downey, 12 B. R. 427; s. ec. 40 Md.
401; Lewis v. Sloan, 68 N. C. 557; Dambmann v. White, 12 B. R. 488; s. ¢.
48 Cal. 489; Kemmerer v. Tool, 12 B. R. 334; s. c. 78 Penn. 147; Otis vy.
Hadley, 112 Mass. 100; Rison v. Powell, 28 Ark. 427; Claflin v. Houseman,
15 B. R. 49; s. ce. 98 U. S. 180; Goodrich v. Wilson, 14 B. R. 555; s. c. 119
Mass. 429; McKiernan v. King, 2 Mont. 72. Contra, Bromley v. Goodrich,
15 B. R. 289; s. c. 40 Wis. 181; Voorhees v. Frisbie, 8 B. R. 152; s. c. 25
Mich. 476; s.c.6 L. T. B. 85; Brigham v. Claflin, 7 B. R. 412; s. ¢. 31 Wis.
‘607; Fenlon v. Lonergan, .29 Penn. 471.

If the State courts have jurisdiction, it is not in their discretion whether
or not to exercise it. It is their duty to do so when called upon in the
mode prescribed by law. Cook v. Whipple, 9 B. R. 155; s. c. 55 N. Y. 150.

If Congress had intended by this section of the act to make the jurisdic-
tion of the district courts exclusive in the collection of assets, and to de-
prive all other courts of jurisdiction over any action by or against assignees
in bankruptcy, it would have been as easy as it would have been natural to
employ language to express this purpose. But it will be observed that the
word exclusive, as descriptive of the jurisdiction, is not only not used, but
seems to have been carefully avoided. Payson v. Dietz, 8 B. R. 1938; s. ¢. 2
Dillon, 504.

A bankrupt is not a necessary party to a suit brought to enjoin a judg-
ment fraudulently recovered by him. Weakly v. Miller, 1 Tenn. Ch. 523.

The assignee can properly institute a suit in a State court only under the
direction of the district court. Chemung Canal Bank v. Judson, 8 N. Y.
254.

The jurisdiction of the circuit and district courts over controversies with
a debtor of the bankrupt or a person who disputes the right to real or
personal property with him is concurrent with and does not divest that of
the State courts. Eyster v. Gaff, 13 B. R. 546; s. ¢. 91 U. S. 521; s. ¢. 2 Col.
‘28. Vide in re Geo. W. Anderson, 9 B. R. 360.

A person whose property has been seized under a warrant, may sue the
marshal in a State court. Marsh v. Armstrong, 11 B. R. 125; s. c. 20
Minn. 81; in re Isaac Marks, 2 B. R. 575; s. c. 1 ©. L. N. 245; s. @. 16 Pitts.
dea dice 12.

Whenever State courts have jurisdiction over controversies between the
‘assignee and third parties, the circuit courts have it independent of the
Courts’ JURISDICTION. 141

bankruptcy law if the proper citizenship of the parties exist. Burbank vy.
Bigelow, 14 B. R. 445; s. c. 92 U. S. 179.

An assignee who is a citizen of one State may maintain an action in the
circuit court of another State against a party who is a citizen of that State,
to enforce a right which may be enforced at common law or in equity.
The jurisdiction is conferred by the judiciary act, and is not taken away by
mere affirmative legislation conferring like jurisdiction upon another court.
The mere grant of jurisdiction to a particular court bas never been held
to oust any other court of the powers which it before possessed. Payson
v. Dietz, 8 B. R. 193; s. c. 2 Dillon, 504; Spaulding v. McGovern, 10 B. R.
188; Burbank vy. Bigelow, 14 B. R. 445; s. c. 92 U. S. 179; Post v. Rouse, 1
W.N. 39.

lf an assignee appears in a State court in an action brought to enforce
a lien against the bankrupt’s estate, execution may be stayed in order
to give the parties an opportunity to apply to the district court. Rowe
v. Page, 13 B. R. 366; s. c. 54 N. H. 190.

Act oF 1898, Cu. 2, § 2. Courts’ Jurisdiction in Chambers and
Term.— Courts of bankruptcy are invested within their respective
territorial limits as now established or as may be hereafter changed
with such jurisdiction at law and in equity as will enable them to
exercise original jurisdiction in bankruptcy proceedings in vacation
in chambers and during their respective terms, as they are now or
may be hereafter held.

Act oF 1867, § 4973. The district courts shall be always open for
the transaction of business in the exercise of their jurisdiction as courts
of bankruptcy; and their powers and jurisdiction as such courts shall
be exercised as well in vacation as in term time; and a judge sitting
at chambers shall have the same powers and jurisdiction, including
the power of keeping order and of punishing any contempt of his
authority, as when sitting in court.

Statute revised — March 2, 1867,.ch. 176, § 1, 14 Stat. 517. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 6, 5 Stat. 445.

A proceeding in bankruptcy, from the time of its commencement until
the final settlement of the estate, is, but one suit. Sandusky v. First
Nat’] Bank, 12 B. R. 176; s. ¢. 23 Wall, 289; in re York & Hoover, 4 B. R.
479; s. c. 1 Abb. C. C. 508; s. c. 1 L. T. B. 290; Alabama R. R. Co. v.
Jones, 5 B. R. 97.

The district court, for all the purposes of its bankruptcy jurisdiction,
is always open. It has no separate terms. The statute provides that
“the courts shall be always open for the transaction of business,” so that
from the beginning of a proceeding in bankruptcy to its termination
there is but one term. Sandusky vy. Nat’l. Bank, 12 B. R. 176; s. c. 23
Wall. 289; Ala. & Chat. R. R. Co. v. Jones, 7 B. R. 145.
142 Tur BANKRUPTCY Law.

Its proceedings in any pending suit are at all times open for re-exam-
ination upon application therefor in an appropriate form. Any order made
in the progress of the cause may be subsequently set aside and vacated
upon proper showing made, provided rights have not become vested
under it which will-be disturbed by its vacation. Application for such
re-examination may be made by motion or petition, according to the cir-
cumstances of the case. Such a motion or petition will not have the effect
of a uew suit, but of a proceeding in the old one. Sandusky v. Nat'l.
Bank, 12 B. R. 176; s. c. 23 Wall. 289.

Every court has power to alter and amend its records so as to con-
form to the truth, during the term to which the record relates. During
the pendency of proceedings in a particular case, the court, upon the rep-
resentation of the clerk that he had omitted to file-mark a particular paper,
or had filed it of a wrong date, and upon being satisfied of the truth of
the representation, may order him to file the paper as of the date when
lodged in his office. Ala. & Chat. R. R. Co. v. Jones, 7 B. R. 145.

The bankruptcy court may be a movable court. It is said the clerk’s
office and the clerk follow the court, but for the transaction of other
than bankruptcy business, the clerk’s office is stationary at the place
desigrated by law. But the holding of court necessitates the filing of
papers and the issue of process. The one can make little progress with-
out the other. Hence it appears that Congress contemplated the neces-
sity of filing papers otherwise than by delivering them to the clerk at
his stationary office, although it provided that such office should be their
final place of custody. A petition presented to the judge at chambers,
and acted upon by him, will be deemed to be filed on the day of its pre-
sentation, although not actually deposited in the clerk’s office until a sub-
sequent day. Frank v. Houston, 9 Kans, 406.

District courts, in the exercise of their exclusive original jurisdiction,
may act in administrative matters, or matters of mere discretion, as well
in vacation as in term time, and a judge sitting at chambers in such
matters has the same power and jurisdiction as when sitting in court.
Shearman v. Bingham, 5 B. R. 34; s. c«. 7 B. R. 490; s. ec. 3 C. L. N. 258;
Goodall v. Tuttle, 7 B. R. 193; s. c. 3 Biss. 219.

Actions at law or suits in equity can not be heard and determined by
the district court at chambers, or in vacation. Shearman v. Bingham,
5 B. R. 34; 8. ce. 7 B. R. 49038. a3 C. L. N. 258.

§ 4974. A district court may sit for the transaction of business in
bankruptcy, at any place within the district, of which place and of
the time of commencing session the court shall have given notice,
as well as at the places designated by law for holding sessions of
such court.

Statute revised — March 2, 1867, ch. 176, § 1, 14 Stat. 517.

Act oF 1898, Cu. 2, § 2. Contempts— Courts of bankruptcy
may (13) enforce obedience by bankrupts, officers and other persons
Courts oF BANKRUPTCY. 143

to all lawful orders by fine or imprisonment or fine and imprison-
ment * * * and (16) punish persons for contempts committed
before referees.

Act or 186%, § 4975. The district courts as courts of bankruptcy
shall have full authority to compel obedience to all orders and decrees
passed by them in bankruptcy, by process of contempt and other
remedial process, to the same extent that the circuit courts now have
in any suit pending therein in equity.

Statute revised — March 2, 1867, ch. 176, § 1, 14 Stat. 517. Prior Statute
— Aug. 19, 1841, ch. 9, § 6, 5 Stat. 445.

The proceedings to punish a party for contempt in violating an injunc-
tion issued in a case of involuntary bankruptcy must be separate and dis-
tinct from those against the bankrupt. Creditors v. Cozzens & Hall, 3 B.
R. 281; s. c. 2 W. J. 349; s. c. 16 Pitts. L. J. 236.

Where a firm is enjoined, one party will not be liable to punishment for
a violation of the injunction by his copartner. In re South Side R. R. Co.,
10 B. R. 274; s. ce. 7 Ben. 391.

When the action does not tend to enforce any demand against the bank-
rupt, nor deprive the assignee of any property or right, there is no con-
tempt. In re Hirsch, 2 B. R. 3; s. c. 2 Ben. 493; s. c. 1 L. T. B. 92.

It is not a sufficient justification for the violation of an injunction that
the party was acting under a fi. fa. issued upon a judgment rendered in a
State court. In re R. Atkinson, 7 B. R. 143; 5. ¢c.5 L. T. B. 820; sc. 4
©. L. N. 359; s. ce. 19 Pitts. L. J. 188.

Act oF 1867, § 4976. In case of a vacancy in the office of district
judge in any district, or in case any district judge shall, from sickness,
absence, or other disability, be unable to act, the circuit judge of the
circuit in which such district is included may make, during such
disability or vacancy, all necessary rules and orders preparatory to
the final hearing of all causes in bankruptcy, and cause the same to
be entered or issued, as the case may require, by the clerk of the
district court.

Statute revised — June 30, 1870, ch. 177, § 2, 16 Stat. 174.

Act or 1898, Cx. 2, § 2. Courts of Bankruptcy in Districts and
Territories— This section of the law of 1898 provides, as herein-
before shown, that the supreme court of the District of Columbia,
the district courts of the several Territories and the United States
courts in the Indian Territory and the district court of Alaska are
made courts of bankruptcy.
144 Tur Bankruptcy Law.

Act oF 1867, § 4977. The same jurisdiction, power, and authority
which are hereby conferred upon the district courts in cases in bank-
ruptcy are also conferred upon the supreme court of the District of
Columbia, when the bankrupt resides in that district.

Statute revised — March 2, 1867, ch. 176, § 49, 14 Stat. 541. Prior Statute
— Aug. 19, 1841, ch. 9, § 16, 5 Stat. 448.

§ 4978. The same jurisdiction, power, and authority which, are
hereby conferred upon the district courts in cases in bankruptcy are
also conferred upon the! district courts of the several Territories,’
subject to the general superintendence and jurisdiction conferred
upon circuit courts by section four thousand nine hundred and eighty-
six [two], when the bankrupt resides in either of the Territories.
This jurisdiction may be exercised, upon petitions regularly filed in
such courts, by either of the justices thereof while holding the dis-
trict court in the district in which the petitioner or the alleged bank-
rupt resides.

Statutes revised — March 2, 1867, ch. 176, § 49, 14 Stat. 541; June 30,
1870, ch. 177, § 1, 16 Stat. 173. Prior Statute — Aug. 19, 1841, ch. 9, § 16, 5
Stat. 448.

§ 4978 a (Act of April 14, 1876, § 1, 19 Stat. 33). Be it enacted
by the Senate and House of Representatives of the United States
of America in Congress assembled, That in all cases in bankruptcy
commenced in the supreme courts of any of the Territories of the
United States prior to the twenty-second day of June, Anno Domini
eighteen hundred and seventy-four, and now undetermined therein,
the clerks of the said several courts shall immediately transmit to
the clerks of the district courts of the several districts of said Terri-
tories, all the papers in, and a certified transcript of, all the proceed-
ings had in each of said cases; and the said clerks of the district
courts shall immediately file the said papers and transcripts as papers
and transcripts in the said district courts.

§ 4978 B (Act of April 14, 1876, § 2, 19 Stat. 33). That the
clerks of the said several supreme courts shall transmit the papers
and transcripts provided for in section one of this act, in each case,
to the clerk of the district court of the district wherein the bankrupt
or bankrupts, or some one of them, resided at the time of the filing
of the petition in bankruptcy in said case; and as soon as the said

180 amended by act of June 22, 1874, ch. 890, § 16, 18 Stat. 182.

 
CONSTRUCTION. 145:

‘

papers and transcript in any case shall have been transmitted and
filed, as herein provided, the district court in which the same shall
have been so filed shall have jurisdiction of the said case, to hear
and determine all questions arising therein, and to finally adjudicate
and determine the same in all respects as contemplated in other
bankruptcy cases by the act entitled “An act to establish a uniform
system of bankruptcy throughout the United States,” and approved
March second, eighteen hundred and sixty-seven, and amendments
thereto.

§ 4979. The several circuit courts shall have, within each district,
concurrent jurisdiction with the district court of 1 any district, whether
the powers and jurisdiction of a circuit court have been conferred
on such district court or not, of all suits at law or in equity brought
by an assignee in bankruptcy against any person claiming an adverse
interest,’ or owing any debt to such bankrupt, or by any such person

against an assignee, touching any property or rights of the bankrupt,
transferable to or vested in such assignee.

Statutes revised — March 2, 1867, ch. 176, § 2, 14 Stat. 518; June 8, 1872,
ch. 340; 17 Stat. 334. Prior Statute — Aug. 19, 1841, ch. 9, § 8, 5 Stat. 446. .

Construction.— No jurisdiction of cases at law or in equity relating to:
the estate, rights or liabilities of the bankrupt is expressly given to the
district court elsewhere than by this clause, though the jurisdiction may
be well enough held to be included in the general grant of section 4972.
In re John Alexander, 3 B. R. 29; s. c. Chase, 295; s. c. 2 L. T. B. 81; in re:
William Christy, 3 How. 292.

Independent of the bankruptcy act the district courts possess no equity
jurisdiction whatever. Whatever jurisdiction they possess in that behalf
is wholly derived from the bankruptcy act now in force. Morgan v. Thorn-
hill, 5 B. R. 1; s. ec. 11 Wall. 65; in re William Christy, 3 How. 292.

The jurisdiction of the district court over suits at law or in equity is:
conferred by the general grant of power to collect all the assets of the-
bankrupt. Goodall v. Tuttle, 7 B. R. 193; s. c. 3 Biss. 219; Shearman v.
Bingham, 5 B. R. 34; s. c. 7 B. R. 490; s. c. 8 C. L. N. 258.

Congress in framing the bankruptcy law intended to provide Federal'
instrumentalities for its complete execution, and such as are sufficient to.
carry it into full effect. Jurisdiction over an action brought by an assignee:
to collect a debt due to the estate is not limited to the district court where
the proceedings in bankruptcy are pending, but is conferred upon all the-
district courts. Shearman v. Bingham, 5 B. R. 34; s. c. 7 B. R. 490; s.c. 7
0. L. N. 258; Goodall v. Tuttle, 7 B. R. 193; s. c. 3 Biss. 219; Lathrop v.
Drake, 18 B. R. 472; s. ec. 91 U.S. 516. Contra, in re H. Richardson, 2 B.
R. 202; s. ec. 2 Ben. 517; s. c. 2 L. T. B. 20; Markson v. Heaney, 4 B. R. 510;

1So amended by act of June 22, 1874, ch. 390, § 3, 18 Stat. 178.
10
146 Ture Bankruptcy Law.

sc. 1 Dillon, 497; Jobbins v. Montague, 6 B. R. 509; Lamb v. Damron, 7
B. R. 509; s.c. 5 C. L. N. 290.

Controversies, in order that they may be cognizable under this clause,
upon the ground of an adverse interest, either in the circuit or district
court, must have respect to some property or rights of the bankrupt, trans-
ferable to or vested in the assignee; and the suit, whether it be a suit
at law or in equity, must be in the name of one of the two parties
described in this clause, and against the other. All three of these con-
ditions must concur to give the jurisdiction. The jurisdiction conferred
by this clause is other and different from the special jurisdiction and
superintendence described in section 4986. Morgan vy. Thornhill, 5 B. R.
1; s. ec. 11 Wall. 65; Knight v. Cheney, 5 B. R. 305; s. qa 2 L. T. B. 205;
Woods vy. Forsyth, 2 W. J. 348; s. c. 16 Pitts. L. J. 234; Bachman v. Pack-
ard, 7 B. R. 353; s. «. 2 Saw. 264; in re John Alexander, 3 B. R. 29; s. ¢.
Chase, 295; s. c. 2 L. T. B. 81.

The term interest, as used in this section, signifies an estate, share or
part, and a suit to be maintained in the circuit court by or against an
assignee must be concerning some property or right of property derived
from the bankrupt, and in which it must appear that one party or the
other claims an interest adversely to — that is, against —the other. Bach-
man v. Packard, 7 B. R. 353; s. c. 2 Saw. 264.

A claim of a lien and to possession by way of pledge under the lien is
adverse to the assignee. The claim to the right of possession may be
just as absolute and just as essential to the interest of the claimant as
the right of property in the thing itself, and is in fact a species of prop-
erty in the thing just as much the subject of litigation as the thing itself.
Marshall v. Knox, 8 B. R. 97; s. c. 16 Wall. 551.

Where a party claims a right to part of the proceeds of a judgment,
and the assignee denies this claim, this is a controversy over which the
circuit court has jurisdiction under the bankruptcy law. Burbank vy.
Bigelow, 14 B. R. 445; s. ec. 92 U. S. 179.

The jurisdiction over controversies between an assignee and adverse
claimants may be exercised by any circuit court having jurisdiction of
the parties, and is not confined to the circuit court of the district in which
the decree of bankruptcy was made. Burbank v. Bigelow, 14 B. R. 445:
s. c. 92 U. S. 179; Lathrop v. Drake, 13 B. R. 472; s. ec. 91 U. 8. 516.

The United States may file a bill in the circuit court to obtain payment
out of a trust fund held by a trustee appointed in proceedings in bank-
ruptcy. Lewis v. U. S., 13 B. R. 33; s. ec 14 B. R. 64; s. « 92 UL S.
618.

The circuit court has no jurisdiction of a bill in equity filed by a
creditor before the appointment of an assignee, to restrain a mortgagee
from disposing of the goods of the bankrupt covered by the mortgage.
Johnson v. Price, 13 B. R. 523. Contra, Irving v. Hughes, 2 B. R. 62;
s.c. 7 A. L. Reg. 209; s. ce. 6 Phila, 451.

The circuit court may entertain a bill brought to obtain an injunction
against parties who are interfering with the bankrupt’s estate under a
claim adverse to that of the assignee. Foster v. Ames, 2 B. R. 455; s. e.
Lowell, 318.
SUBPOENA. 14%

The circuit court has jurisdiction of an action to collect a debt due
to the bankrupt. Mitchell vy. Manuf. Co., 2 Story, 648; Pritchard vy.
Chandler, 2 Curt. 488; McLean v. Lafayette Bank, 3 McLean, 185; Allen
v. Binswanger, 2 Cent. L. J. 724. Contra, Bachman y. Packard, 7 B. R.
358; s. c. 2 Saw. 2U4.

In all cases where an assignee may pursue the remedies provided by
this section, a fair interpretation requires that he shall do so. We can
not adopt another remedy, as, for instance, summary proceedings. Sinith
v. Mason, 6 B. R. 1; s. c. 14 Wall. 419;5.05L. TB. 7; Knight v. Cheney,
5 B. R. 305; s. c. 2 L. T. B. 205; in re Kerosene Oil Co., 3 B. R. 125; s. e.
6 Blatch. 521; in re Bonesteel, 3 B. R. 517; s. c. 7 Blatch. 175; in re Bailou,
3 B. R. 717; s. c. 4 Ben. 135; in re Masterson, + B. R. 553. Conira, in re
Norris, 4 B. R. 35; s. ¢c. 1 Abb. C. ©. 5l4;5.c1L. T. B. 227,

A State can not bring a suit in the circuit court. State v. Trustees,
5 B. R. 466.

Subpoena.— The conferring of the jurisdiction on the two courts con-
currently by this section, in the same terms, indicates plainly that one
of them can not exercise such jurisdiction to an extent or in a maagner
different from the other. The jurisdiction conferred on both courts is a
regular jurisdiction between party and party, of the same character
as that conferred on the circuit courts by section 629, and is to be pursued
as to forms and modes of process under the same rules which obtain as to
suits brought in the circuit court in pursuance of that section. There is
nothing in the bankruptcy act indicating an intention on the part of Con-
gress that process in the suits specified in this section shall be served or
made effective in any different manner from that required in suits brought
in a circuit court under the jurisdiction in ‘“ suits of a civil nature at
common law or in equity,’’ conferred on such court by section 629. There .
is nothing in the acts of Congress, or in the rules in bankruptcy, or in the
rules in equity prescribed by the supreme court which authorizes a mar-
shal to serve a subpoena to appear and answer in an equity suit at a place
outside of the territorial limits of the district for which he is appointed.
Jobbins v. Montague, 6 B. R. 117; s. c. 5 Ben. 422; Paine v. Caldwell, 6 B.
R. 558; s. c. 29 Leg. Int. 284; Lewis v. Gibson, 32 Leg. Int. 22.

Rule 18 in equity does not permit the service to be made by leav-
ing the subpoena at the last place of abode or at the last usual place of
abode, but the subpoena is to be left at the existing present dwelling-
house or the existing present usual customary place of abode. Although
the party may have fled from the jurisdiction of the court to avoid the con-
sequences of frauds committed by him on the creditors, yet the district
court does not acquire jurisdiction over him by means of a subpoena left
at a place which is not his actual abode, though it may be his last place of
abode. Hyslop v. Hoppock, 6 B. R. 552; s. c. 5 Ben. 447.

The whole subject of the service of a subpoena in a suit in equity is
regulated by act of Congress and by the rules in equity established by
the supreme court. If a party is not an inhabitant of the district, and is
not found within the district, the district court can not obtain jurisdiction
over his person by any service of process made otherwise than in accord-
148 THE BANKRUPTCY Law.

ance with rule 13 in equity. No order can be passed for the service
of process by publication, or by a substituted service on a receiver of rents.
Hyslop v. Hoppock, 6 B. R. 557; s. c. 5 Ben. 533.

The recovery of an inequitable judgment in the State court by a citizen
of another State does not confer jurisdiction over him upon the Federal
courts of the district where the judgment is recovered, with authority to
sustain a Dill in equity against him by service of a subpoena upon the
attorney who acted for him in obtaining the judgment. Paine v. Caldwell,
6 B. R. 558; s. ce. 29 Leg. Int. 284.

Where a new term of the district court in equity is held on the first
Tuesday of each month, a subpoena may be made returnable on the first
Tuesday instead of the first Monday of the month. Hyslop v. Hoppock,
6 B. R. 552; s. c. 5 Ben. 447.

Where the defendants in a bill for an injunction reside in different dis-
tricts in the same State they may be served with process (§ 740) in their
respective districts. Babbitt v. Burgess, 7 B. R. 561; s. c. 2 Dillon, 169.

Actions at law.—Parties seeking redress in the district court in matters
relating to bankruptcy, have used the following remedies, to-wit:

Replevin: brought by an assignee against a sheriff to recover property
held under executions issued upon judgments obtained contrary to the
bankruptcy act. Haughey v. Albin, 2 B. R. 399; s. c. 2 Bond, 244; s. ce. 2
L. T. B. 47.

Trover: brought by an assignee to recover the value of property trans-
ferred by the bankrupt to a creditor contrary to the bankruptcy act. Fos-
ter v. Hackley & Sons, 2 B. R. 406; s.c. 2 L. T. B. 8;s.c.1C. L. N. 187;
Wadsworth v. Tyler, 2 B. R. 316; s. c. 2 L. T. B. 28; Babbitt v. Walbrun &
Co., 4 B. R. 121; s. ec. 6 B. R. 359; s. ec. 1 Dillon, 19; Mitchell v. McKibbin,
8 B. R. 548; s. ec, 29 Leg. Int. 412; Brooke v. McCracken, 10 B. R. 461; s. ¢.
7C. L. N. 10; 8s. c. 8 Pac. L. R..102. Contra, Gayles vy. American, 14 B. R
141; s. c. 5 Biss. 86. :

The assignee may bring trover to recover the value of property of
the bankrupt converted by another to his use. Carr v. Gale, 3 W. & M.
388; 3. c. 2 Ware, 330.

A demand and refusal of the value of the property is not sufficient,
Schuman y. Fleckenstein, 9 C. L. N. 174.

Before the assignee can recover the value, he must show a demand and
refusal to deliver the property. Schuman y. Fleckenstein, 15 B. R. 224;
8.09 C. lL. N. 174.

A complaint in an action to recover the value of property transferred
as a preference, must allege a demand and refusal to deliver the same.
Ibid.

If the bankrupt co-operates in trying to secure the adverse claims of
third persons by removing the property from the reach of his creditors,
‘he may be made a party defendant with them in an action for the tort.
Carr v. Gale, 3 W. & M. 38; s. c. 2 Ware, 330.

An agent who attempts to aid his principal in enforcing a tortious
claim against the bankrupt’s goods, claims an adverse interest. Ibid.

If the bankrupt aids another in converting his goods to the latter’s use
TroveR —ASSUMPSIT. 149

he is liable, not in his capacity as a bankrupt, but as a person, and may
be sued by the assignee like any other person for a tort in his private and
individual capacity. Ibid.

If the title to the property was in the bankrupt, and the pretense of
title in a third person was fraudulent, then the removal of the property
to another place by the bankrupt and such third party, as if it belonged
to the latter, isa conversion. Ibid.

If the assignee, in an action of trover, chooses to set out the manner
in which he acquired title, his declaration must show that the proceedings
are such as make the transfer.to him legal and valid. An omission to
allege an adjudication of bankruptcy renders the declaration defective,
Wright v. Johnson, + B. R. 627; s. c. 8 Blatch. 150.

If a person sell property, to a part of which he is entitled, and makes
no distinct appropriation of either part, the assignee may elect for which
he will sue. An action of trover is such an election when the conversion
occurs before the suit and after the time to which his Title relates.
Mitchell v. Mclibbin, 8 B. R. 548; s. c. 29 Leg. Int. 412.

Trover is not the proper form of action to recover money that may be
due under a contract made by the bankrupt with a third party. Foster
v. Hackley & Sons, 2 B. R. 406; s. c. 2 L. T. B. 83 3. ec. 1 C. L. N. 187;
Wadsworth y. Tyler, 2 B. R. 316; 5s. c. 2 L. T. B. 28.

If a party in possession of property, claiming an exclusive right in
himself to the whole of it, sells it with an existing intent to appropriate
the whole avails to his own exclusive use, the sale is a wrongful con-
version of the part to which he is not entitled. Mitchell v. McKibbin,
8 B. R. 548; s. ce. 29 Leg. Int. 412.

The assignee can not recover in an action of trover any more than the
value of the corporeal movable effects. He can not recover the profits
received from a business, or the value of the good will. Ibid.

Where one count of the answer is a general denial, a special affirmative
defense set up in the answer can not be relied on as a separate ground of
recovery when no such ground is alleged in the petition. Cragin v. Car-
michael, 11 B. R. 511; s. c. 2 Dillon, 519.

The assignee can only recover upon the allegations contained in his pe-
tition. If he assails a transfer as void under the bankruptcy law, he can
not recover upon the ground that the transfer is void under the State law,
Ibid.

Assumpsit: brought by an assignee to recover the money received by a
preferred creditor upon a judgment given contrary to the bankruptcy act.
Street v. Dawson, 4 B. R. 207.

The absence of the counsel originally retained is no ground for a new
trial where no postponement was asked on that ground. Van Dyke vy,
Tinker, 11 B. R. 308.

The nonjoinder of the copartners where the preference was given to the
firm, can not be raised at the trial on the merits. Ibid.

A new trial will not be granted to let in testimony which is merely cumu-
lative. Ibid.

To a writ of scire facias to have execution of a judgment rendered
150 Tue Bankruptcy Law.

against the assignee, the defendant may plead that he has no effects. The
judgment for costs in the original suit might have been entered against the
assignee personally, and not against the effects of the bankrupt in his
hands. Amblard v. Heard, 9 Mass. 489.

Suits in Equity.— The district court has full and adequate jurisdiction
over all matters relating to the settlement of the bankrupt estate, either at
law or in equity, by way of petition or bill. Whenever a case is presented
which shows that the relief sought is absolutely necessary to protect the
interests of the general creditors, such relief will be granted. In re
Bowie, 1 B. R. 628; s. c. 1 L. T. B. 97; s. c 15 Pitts. L. J. 448; Jones v.
Leach, 1 B. R. 595; Pennington v. Sale & Phelan, 1 B. R. 572; March vy.
Heaton, 2 B. R. 180; s. c. Lowell, 278; Foster v. Ames, 2 B. R. 455; s. c.
Lowell, 313; Wilson v. Brinkman, 2 B. R. 468; s. c.1 O. L. N. 198; Davis,
Assignee of Bittel et al., 2 B. R. 392.

A bill in equity has been used for the following purposes, to-wit:

To enjoin proceedings upon executions issued upon judgments rendered
in a State court. In re Bowie, 1 B. R. 628; s. ¢c. 1 L. T. B. 97; s. c. 15
Pitts. L. J. 448; Pennington v. Lowenstein et al., 1 B. R. 570; Pennington v.
Sale & Phelan, 1 B. R. 572; Jones v. Leach, 1 B. R. 595.

To set aside a sale of the bankrupt’s property on the ground of fraud.
March v. Heaton, 2 B. R. 180; s. c. Lowell, 278.

To review and set aside a sale, made after the commencement of proceed-
ings in bankruptcy, by virtue of a deed of trust executed to secure a
creditor. Davis, Assignee of Bittel et al., 2 B. R..392; Lee v. Franklin Av.
S. Inst., 3 B. R. 218; s. ec. 1 C. L. N. 370; Phelps v. Sellick, 8 B. R. 390.

To recover property conveyed by the bankrupt in fraud of creditors.
Bradshaw vy. Klein, 1 B. R. 542; s. c. 2 Bliss. 20; s.c. 1 L. T. B. 72; Pratt
y. Curtis, 6 B. R. 139.

To recover money obtained upon a judgment given contrary to the bank-
ruptey act. Wilson v. Brinkman, 2 B. R. 468; s.c 1 C. I. N. 193.

To enforce a right of redemption in mortgaged property. Foster v.
Ames, 2 B. R. 455; s. c. Lowell, 313.

To recover money paid secretly by the debtor to a creditor, to induce
him to sign a compromise agreement in fraud of the rights of other cred-
itors. Bean v. Brookmire, 7 B. R. 568; s. ce. 1 Dillon, 151; s. ¢ 2 Dillon,
108; s.c. 6 L. T. B. 114.

To set aside a mortgage on the property of the bankrupt made by him
with intent to prefer a creditor. Scammon y. Cole, 3 B. R. 593; s. ¢c. 2
L. T. B. 103; McLean v. Lafayette Bank, 3 McLean, 415.

To remove a cloud on the title of the assignee arising from official acts
done by an officer, under color of law and in the execution of legal pro-
cess. Beers v. Place & Co., 4 B. R. 459; s. c. 36 Conn. 579; s.c.1L. T. B.
162.

To ascertain what liens exist, and pass upon their validity, although an
order has been previously passed by the bankruptcy court for the sale
of the property. Shaffer v. Fritchery, 4 B. R. 548.

To recover the amount demanded by a corporation as interest upon a
loan above what its charter allowed it to receive, when the collaterals
Suits In Equiry. 151

have been sold by it and applied to the debt. Tiffany v. Boatman’s Sav-
ings Inst., 4 B. R. 601; s. c. 9 B. R. 245; s. ec. 1 Dillon, 14; s. c. 18 Wall,
376.

To recover the value of property transferred by one partner in fraud
of the partnership. Taylor v. Rasch, 5 B. R. 399.

To discharge incumbrances and ascertain their amount and priority.
McLean v. Lafayette Bank, 3 McLean, 415.

For an account brought by an assignee against the bankrupt’s prin-
cipal. Mitchell v. Manuf. Co., 2 Story, 648.

To set aside an assignment anf reach dividends paid to a creditor
thereunder. Chemung Canal Bank v. Judson, 8 N. Y. 254.

To set aside a pretended lien upon the bankrupt’s estate. Stickney v.
Wilt, 11 B. R. 97; s. ¢. 23 Wall. 150.

To recover money paid by the bankrupt to the defendant as a pref-
erence. Flanders v. Abbey, 6 Biss. 16; Harmanson v. Bain, 15 B. R. 173.

A bill in equity is the most convenient and effectual remedy to remove
the lien of an execution or judgment. It enables the court to settle the
rights of all the parties in one suit, and not leave the sheriff to a further
litigation with the judgment creditor. The sheriff ought not to be pro-
ceeded against or called upon to settle the question in conflict on his own
responsibility, nor without such a proceeding as will, by concluding the
execution creditor, protect nim in delivering the property levied upon to
the assignee. Warren v. Tenth Nat’l. Bank, 7 B. R. 481; s. c 10 Blatch.
493.

Where an assignee has a claim in part as a beneficiary to the proceeds
of property placed in the hands of an agent, and in part as a creditor,
but can not ascertain the exact limits of each claim without a discovery,
he may file a bill asserting both claims, and make it a general creditor’s
bill. Stotesbury v. Cadwallader, 31 Leg. Int. 229.

If an assignee with knowledge or with reason to believe that one claim-
ing to be a creditor of the bankrupt has proved a debt against the estate
which has no existence, or which is tainted with fraud, neglects or re-
fuses to contest the allowance of such debt, other creditors who have
proved their debts may seek the aid of a court of equity to annul the
allowance. Bank v. Cooper, 9 B. R. 529; s. c. 20 Wall. 171.

A creditor can not maintain a bill in equity to have the claim of another
ereditor disallowed, without averring more than that the district court
drew a wrong conclusion from the evidence. Ibid.

After two trials on all the evidence that can be produced, the assignee
is not bound to enter an appeal to the circuit court, nor to allow an appeal
in his name. Ibid.

A bill in equity can not be maintained to set aside a transfer on the
ground of preference, when the remedy at law is plain, adequate, and com-
plete. Garrison v. Markley, 7 B. R. 246.

Even if the complainant could get a larger and more satisfactory meas-
ure of relief, that would not justify the circuit court in an interference
with the jurisdiction and proceedings of another court of concurrent
power. No case can be found where a court of chancery has undertaken to
152 Tur Bankruptcy Law.

wrest property from another court of chancery of concurrent jurisdiction,
because it thought its own power better fitted to give complete and ample
relief. Blake v. Ala. & Chat. R. R. Co., 6 B. R. 331.

The fact that the complainant raises questions in the circuit court which
are not raised in a suit in. another court, does not authorize the circuit
court to take from the latter the property which it has under its control.
The circuit court may pass upon questions not raised in the other court,
even between the same parties, and relating to the same; but no case can
be found authorizing the circuit court to interfere with property in the
possession of another court of concurrent jurisdiction. Ala. & Chat. R. R.
Co. v. Jones, 7 B. R. 145.

The fact that the receiver appointed by another court is not doing his
‘duty, or has in any degree abandoned the preperty, does not authorize the
circuit court to interfere. The receiver is responsible to the court which
appointed him, and to that court alone. Appeals should be made to the
court which appointed him, and any redress for his misconduct must be
sought there. Ibid.

The jurisdiction of another court can not be questioned in the circuit
court, so as to deprive the former of the custody of property. That ques-
tion should be first made to the court exercising jurisdiction. Ibid.

Where a bill in equity has been filed prior to the commencement of pro-
eeedings in bankruptcy, by a prior mortgagee, to which subsequent mort-
gagees are made parties, the assignee, upon his appointment, should not
file an original bill to sell the property free from all incumbrances, where
the subsequent mortgages cover some property not included in the prior
mortgage; but he should file a cross-bill in the suit in equity. Sutherland
vy. Lake Superior Canal Co., 9 B. R. 298; s.c. 1 Cent. L. J. 127.

After the proceeds of property sold upon an execution are in the hands
of the sheriff, the assignee who is pursuing the assets of the bankrupt in
the hands of a third party, is not bound to resort to the State court. He
has a right to proceed against the party directly in the Federal courts for
the proceeds, and is not obliged to resort to the State court, where the mat-
ter is substantially ended, for relief. Traders’ Nat'l. Bank vy. Campbell, 3
B. R. 498; s. ec. 6 B. R. 353; 8. c. 2 Biss. 423; s. c. 14 Wall. 87; Zahn v. Fry,
9 B. R. 546; s. c. 21 Pitts. L. J. 155; s. ¢. 31 Leg. Int. 197.

Independent of the question whether the assignee may not always, if he
sees fit, seek the aid of a court of chancery to set aside a fraudulent con-
veyance or illegal transfer, the right to call for an account is not question-
able. Verselius v. Verselits, 9 Blatch. 189.

The assignee has the right, as ancillary to relief by an account, to have a
discovery from the defendant to supply the deficiency in his own knowl-
edge, and his ignorance of the particulars sought not only entitles him to
a discovery, but excuses the want of more precise specification of the par-
ticular fraud alleged. Ibid.

There is no ground for proceeding in the circuit court by a bill in equity
against the bankrupt himself, to obtain affirmative relief by injunction
or otherwise. The summary jurisdiction of the district court embraces
ample power to compel obedience by him to all orders and decrees neces-
PARTIES. 153

sary to enforce the surrender and appropriation of his property. Beecher
vy. Binninger, 7 Blatch. 170.

The claim to relief on the grounds of the right to a discovery can not
be waintained when the complainant knows that the property transferred
consists in a stock of merchandise, for this constitutes data amply sufli-
cient to enable a competent pleader to frame a declaration at iaw, with
all the particularity necessary in such a case. It would, no doubt, be
convenient to know the exact items and quantities and numbers of each
kind, but this is not necessary, because the pleader may cover the whole
range of items of each kind, and may state the numbers, quantities, alld
values broadly enough to cover any possible proofs that may be made.
Garrison v. Markley, 7 B. R. 246.

The assignee, by an examination of the grantee, may obtain all the
information which he could possibly obtain by an answer to a bill in
equity. Ibid.

Since the law has been changed, so as to allow parties to be called
and examined as witnesses in trials at law, bills for discovery in aid of
trials at law, or to enforce purely legal rights, have become entirely un-
necessary — have, in fact, fallen into disuse, and may be considered prac-
tically obsolete. Ibid.

A bill for discovery should allege that the facts can not be proven by
any other witness, and this allegation can not be truthfully made in the
ease of a transfer by the bankrupt, for the bankrupt is a competent wit-
ness. Ibid...

A mortgagee may file a bill to foreclose a mortgage in the circuit
court. Buckingham v. McLean, 3 Mclean, 185; s. c. 13 How. 151.

The assignee may file a bill to vacate a transfer of property, although
he is in possession thereof. Kellogg v. Russell, 11 B. R. 121; s. c 11
Blatch. 519. ,

Parties.— Prior to the adjudication, the petitioning creditor may file
a bill in equity in the district court to enjoin a preferred creditor from
disposing of the property. In re J. J. Fendley, 10 B. R. 250; s. c. 1 Cent,
L. J. 488.

If the assignee is dead, and no one has been appointed in his stead, a
creditor has a right to file a bill to detain property of the bankrupt, to
be administered by an assignee subsequently appointed. Clark v. Clark,
17 How. 315.

It is immaterial whether the creditor who files the bill has proved his
debt or not, for he may subsequently prove it. Ibid.

The assignee has the right to file a bill in the circuit court against all
the incumbrancers claiming liens on a piece of property, to test the
validity, priority, and amount of their claims. McLean y. Lafayette
Bank, 3 McLean, 415.

Where the bill alleges preferences, several creditors claiming by dis-
tinct conveyances may be joined if they have a common interest in one
or more leading facts in the bill, though in some other things there is

_Do common interest. Ibid.
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: PLEADINGS. 155

When the bill seeks to set aside a preference, all the persons connected
with the transaction should be made parties. Harmanson v. Bain, 15
B. R. 173.

A bill to set aside a preference should pray in terms for a recovery of
the property, or should allege the value and pray in terms for the recovery
of the value. Ibid.

An assignee in his bill need not allege the details of the facts by which
he becomes entitled to maintain the suit. Lakin v. First Nat’l Bank,
15 B. R. 476; sc. 13 Blatch. 83.

When fraud is a necessary part of a complainant’s case, the facts con-
stituting the fraud should be set forth so that the opposite party may be
advised of the case he has to meet. Smith v.. Auerbach, 2 Mont. 348,

An allegation that a transfer is void under the bankruptcy law is not
sufficiently specific. The pleading should set forth the clause under which
it is void, and state the necessary facts. Ibid. ;

A charge of fraud or illegality in the alternative is sufficient. Verselius
v. Verselius, 9 Blatch. 189.

If the bankrupt, being the owner of a vessel, transferred a part thereof,
an action to set aside the transfer can not be united with an action
for the appointment of a receiver, on the ground that there is an irrecon-
cilable difference between the assignee and transferee, because they pro-
ceed on entirely different grounds, and are repugnant to each other.
Wilkinson vy. Dobbie, 12 Blatch. 298.

A bill in equity may be verified by the oath of the agent or attorney
in fact of the petitioning creditor. In re J. J. Fendley, 10 B. R. 250; s. ce.
1 Cent. L. J. 433. .

If the bill alleges the consideration for a transfer, the respondent should,
if the allegation is not true, deny it positively, and set up the real con-
sideration. Burpee v. Nat'l] Bank, 9 B. R. 314; s. c. 5 Biss. 405.

A general denial of fraud in an answer is equivalent to nothing more
than a denial of a conclusion of law. Lathrop v. Drake, 13 B. R. 472; s. ¢.
91 U. S. 516.

If a respondent, on information and belief, denies an allegation of mat-
ters which may be, or can be, assumed to be within his personal knowl-
edge, the allegation will be taken to be true. Burpee v. Nat'l Bank, 9 B.
R. 314; s. c. 5 Biss. 405.

The rule that a respondent can not deny on information and belief
those matters which may be, or can be, assumed to be within his personal
knowledge, applies ac a corporation. Ibid.

Any informality in the answer may be overlooked on final hearing, if
the answer denies the material allegations of the bill in such a manner
as to constitute an issue within the established rules of equity pleading.
Ibid. ‘

A denial on information and belief, of matters that are within the
personal knowledge of the respondent, does not meet the charge in the
bill. If he does not know anything on the subject he should say so

directly. Ibid.
If the respondent may not know, or can not be assumed to know, the
156 THE BanKRuptcy Law.

matters charged in the bill, he may answer on information and belief.
Ibid.

The rule in chancery pleading is not that every allegation of a bill be
taken as true, simply because it is not denied in the answer. If any allega-
tion is to be taken as true, simply because it is not denied, it is only an
allegation of some fact which is presumed to be within the knowledge
of the party answering. White v. Jones, 6 B. R. 175.

When the answer denies certain allegations of the bill. and the plain
tiff does not contest the denial by a replication, the truth of the denial]
is to be taken as admitted, and the denied allegations as entirely un-
sustained. Vogle v. Lathrop et al., 4 B. R. 489; s. c 4 Brewst. 253.

No defendant is bound to answer any interrogatories, except such as by
the note at the foot of the bill he is required to answer. French v. First
Nat'l. Bank, 11 B. R. 189; s. c. 7 Ben. 488.

A corporation must answer a bill under its common seal, and not on
oath; but the answer must be stated therein to be according to the knowl.
edge, information and belief of its officers, ascertained from all proper
sources of information. Ibid.

The officers and agents of a corporation can not be compelied to answer
the interrogatories in a bill unless they are parties to the cause. Ibid.

If a party in his answer lays no daim to the property in controversy,
he in effect makes none in the cause, and can not complain of a decree for
not awarding to him what he did not claim. Buckingham v. McLean,
13 How. 151; s. ec. 3 McLean, 185.

An answer by a creditor in respect to a debtor’s state of mind, though
responsive to the bill, is entitled to but little weight, unless the reasons
for the belief are given. Ibid.

An answer which is responsive to the bill, must prevail, unless it is
overcome by the testimony of two witnesses to the substantial facts, or
at least by one witness and other attending circumstances. Lonergan v.
Fenlon, 7 Pitts. L. J. 266.

The answer of one defendant is not evidence against his codefendant.
Phoenix v. Ingraham, 5 Johns. 412-

A demurrer for the misjoinder of parties defendants can only be taken
by those who are improperly joined. Spaulding v. McGovern, 10 B. R. 188.

A plea to the jurisdiction averring that the cause of action occurred out
of the district, and that the defendant resided out of the district, is bad
where the cause of action is not local, unless it avers that the defendant
was not found and served in the district. Babbitt v. Burgess, 7 B. R. 561;
8. ce. 2 Dillon, 169.

An objection that the complainant has a complete remedy at law can
not be taken at the hearing. It can only be taken by demurrer, or by way
of answer. Post v. Corbin, 5 B. R. 11.

if an assignee files a bill for a satisfaction of a mortgage given to two
parties, and a reconveyance from one of them, who took an absolute deed
of a portion of the property as security for a debt, when both debts are
paid, the party who took the absolute deed can not demur on the ground
of multifariousness. Hill v. Bonaffon, 2 W. N. 356.
’

PRACTICE. 157

Practice.— If the answer sets up a title to certain property which the as-

, Signee seeks to reach by his bill, and no evidence is introduced by either

party, his claim can not be allowed. Buckingham v. McLean, 13 How.
151; s. c. 3 McLean, 185.

Where there is a coassignee who is not made a party complainant, and
the complainant absconds, the bill will not be dismissed until proper pro-
ceedings are taken on notice to the coassignee to bring him in and compel
him to elect whether he will or not be made a party complainant. Fenton
vy. Collerd, 11 B. R. 535.

If the loan on which a corporation reserved a greater rate of interest
than was allowed by its charter, has been repaid, the assignee of the
borrower in a court of equity can only recover the excess. Tiffany v.
Boatman’s Sav. Inst., 4 B. R. 601; s. c. 9 B. R. 245; s. c. 1 Dillon, 14; 8. ¢.
18 Wall. 376.

A contract whereby a corporation reserves a greater interest than is
permitted by its charter, is void, and can not be enforced in a court of
justice. Tiffany v. Boatman’s Say. Inst., 4 B. R. 601; s. c. 9 B. R. 245;
gs. c. 1 Dillon, 14; s. c. 18 Wall. 376.

If the execution creditor consents, the sheriff may be allowed to sell the
property and deposit the proceeds, less the amount of his fees, in the
district court, to abide the result of the litigation to determine the validity
of his lien. In re William H. Shuey, 9 B. R. 526; s. c.6 C0. L. N. 248.

When the creditors have requested the assignee to contest the validity
of a levy under an execution, an injunction granted upon the petition of
a creditor will be continued until the assignee can file a bill in equity.
Tbid.

If the court decides that the assignee has no title to the property, it
will dismiss the bill, and not retain it to decide controversies between
other parties to the cause. Smith vy. Little, 9 B. R. 111; s. e 5 Biss. 269.

If the assignee, acting under an order of the district court in a case
where it had no jurisdiction, takes possession of goods and sells them, the
claimant, under a bill in equity, is entitled to recover the full value of the
goods, clear of all expenses, whether the assignee realized that full value
or not. Marshall v. Knox, 8 B. R. 97; s. c. 16 Wall. 551.

A receiver may be appointed where the apparent titles to property
are such on their face that the marshal can not act efficiently under the
usual warrant. He will be limited to collecting rents and the interest on
securities. Keenan v. Shannon, 9 B. R. 441; s. c 31 Leg. Int. 85.

No notice of a motion for the appointment of a receiver is necessary
where the parties to be affected by the appointment are in court repre-
sented by counsel who appear to resist the motion. McLean v. Lafayette
Bank, 3 McLean, 503.

A receiver may be appointed when such appointment is proper and
necessary. Sedgwick v. Place, 3 B. R. 189; s. c. 3 Ben. 360; McLean vy.
‘Lafayette Bank, 3 McLean, 503.

A receiver may be appointed to take charge of property in the hands of
a receiver appointed by a State court, in a proceeding against an insolvent
corporation, Platt v. Archer, 6 B. R. 465; s. ¢. 9 Blatch, 559.
158 Tur Bankruptcy Law.

If the party alleged to hold the property adversely to the complainant
ig not served with process, a receiver will not be appointed. Hyslop v.
Hoppock, 6 B. R. 552; s. c. 5 Ben. 447.

A receiver will not be appointed where, upon the hearing of the motion,
it is not apparent that the ultimate determination of the suit in favor of
the complainants is probable. Wilkinson v. Dobbie, 12 Blatch. 298.

The opinion of a portion of the creditors in regard to the management
of the estate may be disregarded, unless they offer to indemnify the other
creditors. There may be a class of creditors willing to assume risks which
they have no right to ask others to incur. The former class can not
dictate to the latter. Keenan v. Shannon, 9 B. R. 441; s. c. 31 Leg. Int. 85.

An order may be passed requiring the defendant to account before a
master for the moneys, notes, and other property received by him. Ben-
jamin v. Graham, 4 B. R. 391.

Courts, in collateral actions, will not listen to any argument which
proceeds upon the allegation that the adjudication of bankruptcy was
erroneous in fact or in law; but will, on the contrary, presume tbat the
decree is correct. Beecher v. Binninger, 7 Blatch. 170; Clark v. Binninger,
39 How. Pr. 363.

Where the assignee proceeds, by bill in equity, against parties claiming
an adverse interest, his suit is subject to the ordinary rules governing
courts of equity, and regulating its discretion in other cases. Therefore,
on an application for an injunction and a receivership in the first instance,
where the plaintiff insists that it be granted before the merits of the con-
troversy shall be examined and considered, on the proofs of both parties,
on all the questions of law and fact, he must not only show a cause of
adverse and conflicting claims, and that the case is one of equitable
cognizance, but he must show some emergency, some peril of loss, which
the court will be unable completely to redress; and the danger must be
clear. and the right, in general, free from reasonable doubt. Beecher v
Binninger, 7 Blatch. 170.

In cases of voluntary assignments, it is by no means of course to make,
on motion, an order for a preliminary injunction before the filing of the
answer. Cases have occurred in which the voluntary assignment pro-
tected equities which, without it, could not be protected under the bank-
ruptcy law itself. In one case, a judgment binding the debtor’s land had,
by due course of law, been obtained against him between the execution
of the voluntary assignment and the commencement of the proceedings
in bankruptcy. In another case, the bankrupt’s father had, with his own
concurrence, been expressly excluded from the benefit of the voluntary
assignment, which had created a trust for all the other creditors, In each
case, the voluntary assignment was an act of bankruptcy; but the assignee,
asking the aid of equity, was not in either case at liberty to disregard
the palpable existing equities, which could not be made available without
the aid of the prior assignment. In such cases, if the trustee is not an
unworthy person, his trust may be usefully administered in his own
name until the final decree. Of course, it can not be administered without
the permission of the circuit court, or independently of Supervision by
APPEALS AND WRITS oF ERROR. 159

the assignee. Where disposal by him is allowed, but distribution pro-
hibited, he ordinarily receives his reasonable charges, including an equi-
table proportion, usually one-half, of the commission which woul@ other-
wise be chargeable. Barnes vy. Rettew, 8 Phila. 133.

Where the bill on its face shows that the defendant is a minor and a
feme covert, a guardian ad litem must be appointed before a decree pro
confesso can be entered against her for failure to appear and auswer.
O’Hara v. MacConnell, 93 U. S. 150.

A decree pro confesso for failure to appear and answer can not be
made until the term next succeeding the day of default. Ibid.

Evidence.— Proof of false and fraudulent statements in regard to the
condition of the company at the time of subscribing for stock is not ad-
missible in a suit by the assignee against the subscriber to recover the
amount unpaid under such subscription. Upton v. Hansbrough, 10 B. R.
369; 8. c. 3 Biss. 417.

The burden of proof rests upon the complainant. Scammon v. Cole, 5
B. R. 257.

The rules in equity of the supreme court have not taken away the
power which the district court bas as a court of equity to have the testi-
mony of witnesses taken in open court. That power is expressly re-
served in the 78th rule, which implies its existence and its perpetuation.
It is there left to the discretion of the court. Samsonev. Clarke, 6 B. R.
403; s. c. 9 Blatch. 872.

The exclusion of husband and wife as witnesses for each other in civil
suits is not based solely on interest, but rests on principles of public
policy, and as the statute only removes the ground of interest, the ground
of public policy still renders them incompetent. In re David W. Jones,
9 B. R. 56; s. c. 6 Biss. 68.

The bankrupt’s schedule is not admissible in favor of a fraudulent
grantee to establish the validity of his title. Carr v. Gale, 2 Ware, 330;
s.c. 3 W. & M. 38.

An admission made by the bankrupt before the commencement of the
proceedings in bankruptcy is competent evidence against his assignee.
Marks v. Barker, 1 Wash. 178.

The declarations of a party to a Sale or transfer, going to destroy and
take away the vested rights of another, are not competent evidence
against the vendee or assignee, when made after such sale or transfer.
Phoenix y. Ingraham, 5 Johns. 412.

The subsequent acts of a party to a sale or transfer are not competent
evidence. Ibid.

A judgment creditor has not such title in property taken under an exe-
cution as will enable him to maintain an action for conversion against
the assignee to whom it has been delivered by the marshal after taking it
from the sheriff. Ansonia B. & C. Co. v. Pratt, 17 N. Y. Supr. 448.

Act or 1898, Cu. 4, § 25. Appeals and Writs of Error.— (a)
That appeals, as in equity cases, may be taken in bankruptcy pro-
ceedings from the courts of bankruptcy to the circuit court of ap-
160 Tue BanKkRupreoy Law.

peals of the United States, and to the supreme court of the Terri-
tories, in the following cases, to-wit, (1) from a judgment adjudging
or refusing to adjudge the defendant a bankrupt; (2) from a judg-
ment granting or denying a discharge; and (3) from a judgment
allowing or rejecting a debt or claim of five hundred dollars or over.
Such appeal shall be taken within ten days after the judgment ap-
pealed from has been rendered, and may be heard and determined
by the appellate court in term or vacation, as the case may be.

(b) From any final decision of a court of appeals, allowing or re-
jecting a claim under this Act, an appeal may be had under such
rules and within such time as may be prescribed by the Supreme
Court of the United States, in the following cases and no other:

1. Where the amount in controversy exceeds the sum of two thou-
sand dollars, and the question involved is one which might have
been taken on appeal or writ of error from the highest court of a
State to the Supreme Court of the United States; or

2. Where some Justice of the Supreme Court of the United States
shall certify that in his opinion the determination of the question
or questions involved in the allowance or rejection of such claim is
essential to a uniform construction of this Act throughout the United
States.

(c) Trustees shall not be required to give bond when they take
appeals or sue out writs of error.

(d) Controversies may be certified to the Supreme Court of the
United States from other courts of the United States, and the former
court may exercise jurisdiction thereof and issue writs of certiorari
pursuant to the provisions of the United States laws now in force
or such as may be hereafter enacted.

Where specifications filed in opposition to discharge have been over-
looked, and a discharge granted, such error or irregularity is one which
is subject to review by the circuit court. Law of 1867. In re Buchstein,
17 B. R. 1.

Appeal in suit in equity allowed only upon final decree, where the
sum in controversy exceeds $500. In re Zug & Co., 16 B. R. 280.

Granting of a rehearing, or granting or dissolving a temporary injunc-
tion, is always within the sound discretion of the court, and, therefore,
furnishes no ground of appeal. Buffington v. Harvey, Assignee, 17 B. R.
474,

Appeal from the order or decision of district court against a creditor’s
claim. A prior adjudication by the court had been made in a proceeding
to distribute a particular fund that securities were preferential. Held,
that such prior adjudication was conclusive upon the creditors; that,
CONSTRUCTION. ° 161

although the decision of the court rejecting proof of the claim against
the estate was vacated by the appeal, the grounds of their decision were
not vacated, but were available against the creditor. In re Leland, 16
B. R. 505.

Act oF 186%, § 4980. Appeals may be taken from the district to
the circuit courts, in all cases in equity, and writs of error from the
circuit courts to the district courts may be allowed in cases at law
arising under or authorized by this Title, when the debt or damages
claimed amount to more than five hundred. dollars; and any supposed
creditor whose claim is wholly or in part rejected, or an assignee
who is dissatisfied with the allowance of a claim, may appeal from
the decision of the district court to the circuit court for the same
district.

Statute revised — March 2, 1867, ch. 176, § 8, 14 Stat. 520.

Construction.— Under this section, when the matter decided is of an
equitable character, and is, therefore, one which is usually reviewed
in the Federal courts by appeal, it may be carried to the circuit court
by that mode of transferring cases. When it is a question which, by
the system of I"ederal jurisprudence, is treated as a question of law,
it may be carried to the circuit court by a writ of error; but, in either
ease, the debt or damages claimed must amount to more than $500.
Ruddick v. Billings, 3 B. R. 61; s. ec. 1 Wool. 330.

Quaere, How are the words “debts or damages claimed,” to be con-
strued? Ibid.

Judgments in actions at law rendered in the district court, if founded
upon the verdict of a jury, can never be reversed in a summary way, as
the Constitution provides that ‘ no fact tried by a jury shall be otherwise
re-examined in any court of the United States than according to the
rule of the common law.” Two modes only were known to the common
law to re-examine such facts, to-wit, the granting of a new trial by the
court where the issue was tried or to which the record was returnable;
or, secondly, by the award of a venire facias de novo by an appellate
court for some error of law, which intervened in the proceeding. Congress
could not provide that a judgment of the district court, founded upon the
verdict of a jury in a civil action, whether for a less or greater sum
than $500, should be revised in the circuit court in a summary way,
and inasmuch as suits in equity are placed in the same category as
actions at law, no provision for an appeal is made where the debt or
damage claimed does not exceed $500, and the decrees of the district
court in such case are final and conclusive. Knight v. Cheney, 5 B. R.
305; s. c. 2 L. T. B. 205; Ins. Co. v. Comstock, 8 B. BR. 145; s. c. 16 Wall.
258.

Appellate jurisdiction of decisions of the district court is conferred upon
the circuit court in four classes of cases; 1st. By appeal in cases in equity

11
162 Tue Bankruptcy Law.

decided in the district court under the jurisdiction created by the act;
zd. By writs of error in cases at law decided in the exercise of that juris-
diction; 8d. By appeal from decisions rejecting wholly or in part the
claims of supposed creditors; and 4th. By appeal from decisions. allowing
such claims. In the first two classes of cases, the appeal or writ of error
is given to the unsuccessful party to the suit, whether in equity or at law;
in the third class it is given to the dissatisfied creditor; in the fourth to the
dissatisfied assignee. The suits belonging to the first two classes of
cases are those of which concurrent jurisdiction is given to the circuit and
district courts by section 4979, and hence the appellate jurisdiction in
such cases, by appeal or writ of error, is limited to suits at law or in
equity by assignees against persons claiming an adverse interest, or owing
a debt to the bankrupt, er by such persons against assignees. In re John
Alexander, 3 B. R. 29; s. c. Chase, 295; s. c. 2 L. T. B. 81; in re O’Brien,
1 B. R. 176; Street v. Dawson, 4 B. R. 207; in re York & Hoover, 4 B. R.
479; s. c. 1 Abb. C. C. 508; s. c. 1 L. T. B. 290; Morgan v. 'Thornhill, 5 B.
R. 1; s. c. 11 Wall. 65; Knight v. Cheney, 5 B. R. 305; s. c. 2 L. T. B. 205.

The judgments or decrees of the district court rendered in the exercise
of the regular jurisdiction between party and party can not be reviewed>
or revised in any other manner than that provided in the twenty-second
section of the judiciary act and subsequent acts. Coit v. Robinson, 9 B.
R. 289; s. c. 19 Wall. 274.

The removal of such cases into the circuit court must be effected under
the regulations prescribed in the twenty-second section of the judiciary
act and subsequent acts. Ibid. ,

Mere questions are not re-examinable under those regulations, nor will
any judgment or decree be regarded as a regular final judgment or decree
for such a purpose, unless it is rendered in term time when the court is
in session. Ibid.

Appeals.— The phrase “ case in equity,” means a suit in equity. Courts
of law frequently pass upon questions purely equitable on motion or rule,
but the nature of the question has never been held to make such motion
or rule a case in equity. It is a very common practice for courts of law,
on motion, to set aside sales made by a sheriff on execution, on account
of some fraud or unfairness on the part of the sheriff or purchaser, yet
he would be a bold man who would insist that such a motion was a case
in equity. When money is brought into court — the proceeds of a sale on
execution — courts of law do not hesitate, on motion, to direct how the
money shall be distributed, assuming to pass upon the priorities of claim-
ants to the fund; yet, it has never been supposed that, by so doing, they
were rendering a decree in chancery, or that the motion to distribute the
fund according to the rights of the parties made a case in equity. When
the district court passes upon the validity of a sale, and directs the dis-
tribution of the fund arising therefrom, on motion or rule to show cause,
the motion is not a case in equity, nor the ruling of the court a decree
in equity. It is the simple exercise of a power incident to courts of law
as well as equity, to regulate the proceedings in a case pending before it,
to control its own process and to distribute funds brought into court. In
re York & Hoover, 4 B. R. 479; s. c. 1 Abb. ©. C. 503; s. c.1 L. T. B. 290.
APPEALS. 163

Summary proceedings in the district court can not be revised by an
appeal to the circuit court. Samson v. Blake, 6 B. R. 401; Samson vy.
Clarke, 6 B. R. 403; s. ¢. 9 Blatch. 372.

An appeal can not be taken to revise a decision on a questioa relating
to the bankrupt’s discharge. In re J. M. Reed, 2 B. R. 9; Ruddick v.
Billings, 3 B. R. 61; s. c. 1 Wool. 380; Coit v. Robinson, 9 B. R. 289; s. ¢
19 Wall. 27:

An appeal “yell not lie from a decision in a case of involuntary bank-
ruptcy declaring the debtor a bankrupt. In re O’Brien, 1 B. R. 176.

An appeal to the circuit court does not lie by the petitioning creditor
from an order of the district court vacating an order adjudicating the
debtor a bankrupt at the instance of another creditor. The remedy of the
petitioning creditor in such a case is under section 4986. In re Hall, 1
Dillon, 586.

The appeal in cases in equity must be from the final decree, and from
that only. The language of the section plainly indicates that it is to be
from a decree, and not from any and every order in the progress of the
cause. Clark y. Iselin, 9 Blatch. 196; Platt v. Stewart, 47 How. Pr. 206.

This section provides for an appeal in two classes of cases, namely, in
“cases in equity”? and on a “decision” allowing or rejecting a claim.
It is, therefore, appropriate to use the expression ‘“ decree or decision ap-
pealed from.” The language refers to and is apt to describe each class,
and only indicates that in cases in equity a decree may be the subject
of appeal, and that where a claim is allowed or rejected, the appeal is
to be taken within ten days after the “decision” referring to the im-
mediately preceding language, giving an appeal “from the decision” of
the district court allowing or rejecting such claim. Clark v. Iselin, 9
Blatch. 196.

An order which directs the ascertainment of the amount due under a
mortgage, without fixing the terms and conditions of the foreclosure of
the equity of redemption, or the time at which the foreclosure shall be
final and operative, is interlocutory merely, and not a final decree. In re
Edward A. Casey, 8 B. R. 71; s. c. 10 Blatch. 376.

A decree which merely declares a conveyance void, but directs a refer-
ence to the master to take an account of the rents and profits, and to
make allowances affecting the rights of the parties, is not a final decree.
Platt v. Stewart, 47 How. Pr. 206.

The decree must be final as to all parties, and as to all rights claimed
in the litigation sought to be reviewed. If the decree is not final as to
one party, the appeal of others will not be entertained. Ibid.

Where the omission to take the appeal in time arose from a mistake in
the selection of the remedy, the district court may grant a review of the
decree so that a regular appeal may be taken. Stickney V. Wilt, 11 B.
R. 97; 8. c. 23 Wall. 150.

When an appeal is taken to revise summary proceedings, the decree
may be affirmed if the circuit court finds it to be correct upon the facts
of the case. Samson v. Blake, 6 B. R. 401.
164 Tue BANKRUPTCY Law.

When the question raised on an appeal is doubtful, no costs will be
allowed. Clark vy. Iselin, 9 Blatch. 196; in re Place & Sparkman, 9 Blatch.
3869.

Writ of error.— It is the right of the excepting party in a case of in-
voluntary bankruptcy, which is tried before a jury, to have the questions
arising during the trial, if duly presented by a bill of exceptions, re-
examined by the circuit court on a writ of error. Ins. Co. v. Comstock,
8 B. R. 145; s. c. 16 Wall. 258; Phelps v. Classen, 3 B. R. 87; s. c. 1 Wool.
204; Lehman y. Strassberger, 2 Woods, 554.

A writ of error lies in a case of involuntary bankruptcy, although the
case was tried before a jury during a vacation. Lehman v. Strassberger,
2 Woods, 554.

No.writ of error lies from the circuit court to the district court, where
the case is tried before the court without the intervention of a jury.
Blair v. Allen, 3 Dillon, 101.

A bill of exceptions which on its face does not appear to have been
taken at the trial is insufficient. Strain v. Gourdin, 11 B. R. 156; s. c«.
2 Woods, 380.

A. bill of exceptions to the rejection of certain evidence is insufficient
if it does not set out the evidence so rejected. Ibid.

A. petition for a writ of error which is not made a part of the bill of
exceptions forms no part of the record, although it purports to set out all
the evidence in the case. Ibid.

If the errors in the instruction did not materially affect the merits of
the action, and the court could have properly told the jury to find the ver-
dict as they did, the judgment will be affirmed. Schulenberg v. Kabureck,
2 Dillon, 132; Walbrun v. Babbitt, 6 B. R. 589; s. c. 9 B. R. 1; s. e 16
Wall. 577.

A denial of a motion for a nonsuit is net reviewable in error. Miller v.
Jones, 15 B. R. 150.

Questions of fact can not be re-examined on a writ of error. It may be
necessary, to enable the court to see the principle of law that was decided,
to make the facts, to some extent, a part of the record by Dill of ex-
ceptions, but it is always the law decided that is subject to review, and
not the facts. Ruddick v. Billings, 3 B. R. 61; s. c. 1 Wool. 330; Cragin v.
Thompson, 12 B. R. 81; s. ¢. 2 Dillon, 513.

It is no ground for reversing a judgment that it is rendered payable
in gold coin, without finding any such state of facts as would justify that
kind of judgment. It would be the regular mode in the absence of a
stipulation by the parties to find the value in currency, but this would
only involve the necessity of ascertaining the difference in value be-
tween coin and currency, and adding it to the coin value. The result
would practically be the same, for the amount of currency would be in-
creased so as to equal the value as actually found in coin. The party
would be required to pay exactly the same value, although the number of
dollars in currency would be greater. He is. therefore, in no way injured
by the judgment for coin. Edmondson v. Hyde, 7 B. R. 1; s. c. 2 Saw.
205; 8. c. 5 L. T, B. 380.
Proor or CLarms. 165

If a case is tried without a jury, the circuit court can not, on a writ of
error, go behind the general finding for the party to inquire into the
weight or sufficiency of the evidence. Babbitt v. Burgess, 7 B. R. 561; s. ¢,
2 Dillon, 169.

Parties litigant should, if they so desire, interpose their technical ob-
jections in the district court, and if they do not, they ought not to be
heard for the first time in the appellate court upon such points, especially
where it is obvious that the judgment was such as the law and facts de-
manded. ‘Technical and formal defects should be assailed in order that
they may be corrected in the court of original jurisdiction. Such defects
are no ground for the reversal of a judgment in the appellate court.
Ibid.

Objection to the pleadings can not be entertained in the circuit court
(§ 954), unless they were raised by a special demurrer in the district
court. Ibid.

A motion to dismiss a writ of error will be overruled if it be made before
the day on which the writ is returnable. Globe Ins. Co. v. Cleveland Ins.
Co., 21 I. R. R. 14.

Instructions are entitled to a reasonable construction, and if correct
when applied to the facts submitted to the jury, they will be sustained in
an appellate court, even though if standing alone or without any ex-
planation they would be incomplete in respect to some matter suificiently
explained in the evidence. Willis v. Carpenter et al., 14 B. R. 521.

Proof of claims.— A decision that the claim of one creditor is not entitled
to priority, and the claim of another is, is not a rejection of the first claim.
A creditor’s claim is the debt due from the bankrupt to him, and the ques-
tion of priority of payment is one totally distinct from the question of the
allowance or rejection of the claim or debt. There is a distinction le-
tween the claim of a debt or demand aganst the bankrupt, and the
claim of priority as to other creditors. A claim of priority is not a claim
asserted against the bankrupt, but a right asserted against other cred-
itors. In re York & Hoover, 4 B. R. 479; s.c. 1 Abb. C. CL 503; s.c. 1 L.
T. B. 290.

When an investigation has been had and a decision as to the validity of
a claim has been made by the district court, the right of an objecting
creditor to contest the claim ceases, and any further proceedings to're-
view the decision must be taken by the assignee. In re Troy Woolen Co.,
9B. R. 329; s. c. 9 Blatch. 191.

If the appellant does not file his appeal in the office of the clerk of the
circuit court, at the term which is held next after the expiration of ten
days from the time of claiming the same, and does not set forth a state-
ment, in writing, of his claim, to which the assignee can plead or answer,
and thereby form an issue to be tried, the appeal will be dismissed, al-
though he claimed an appeal within the proper time, and pave due
notice thereof to the clerk of the district court and the opposite party,
In re Coleman, 2 B. R. 671; s. c. 7 Blatch. 192; in re Place et al, 4 B. R,

541; s. c. 8 Blatch. 302.
A decree rejecting a claim, and directing that the assignee recover costs
166 THE BANKRUPTCY Law.

against the claimant, to be taxed by the clerk, and have execution there-
for, is final in such a sense that an appeal will lie therefrom. It settles the
rights of the parties, finally rejects the claim, and awards a recovery of
costs and execution therefor. No act of the court is necessary to the
full and final effect of its order. The ten days begin to run from the
entry of the decree, and not from the taxation of the costs. In re Place
& Sparkman, 9 Blatch. 369.

An objection which goes to the jurisdiction of the court does not rest in
discretion. Ibid.

If no bond is given within the required ten days, no appeal can be
allowed. Still, if the bond is in proper form, and properly executed, and
is in a proper amount, and the sureties are sufficient, the judge of the
district court may approve it as a bond which would be a proper one if
given in time, leaving it to the appellee to move the appellate court to
dismiss the appeal if such a course shall seem proper to him. The bond
must clearly and accurately state by what court the decree appealed
from was rendered. Benjamin v. Hart, 4 B. R. 408.

Act or 1898, Cu. 4, § 25. Appeals, how taken.— Appeals may
be taken when allowable as in equity cases, within ten days after
the judgment appealed from has been rendered, and may be heard
and determined by the appellate court in term or vacation, as the case
may be.

From any final decision of a court of appeals an appeal, when
allowable, may be had under such rules and within such time as may
be prescribed by the Supreme Court of the United States.

Act oF 1867, § 4981. No appeal shall be allowed in any case from
the district to the circuit court unless it is claimed, and notice given
thereof to the clerk of the district court, to be entered with the
record of the proceedings, and also to the assignee or creditor, as the
case may be, or to the defeated party in equity, within ten days after
the entry of the decree or decision appealed from; nor unless the
appellant at the time of claiming the same shall give bond in the
manner required in cases of appeals in suits in equity; nor shall any
writ of error be allowed unless the party claiming it shall comply
with the provisions of law regulating the granting of such writs.

Statute revised — March 2, 1867, ch. 176, § 8, 14 Stat. 520.

The failure to give notice to the adverse party within ten days, whether
claimant or assignee, is equally fatal to the appeal as the failure to give
the notice to the clerk that the appeal is claimed. Wood v. Bailey, 12
B. R. 132; s. c. 21 Wall. 640.

The words ‘defeated party” must he construed as “ opposite party.”
or “successful party,” or “adverse party.’ Wood vy. Bailey, 12 B. R.
182; s. ce. 21 Wall, 640.
ENTRY OF APPEAL. 167

Act oF 1867, § 4982. Such appeal shall be entered at the term
of the circuit court which shall be held within the district next after
the expiration of ten days from the time of claiming the same.

Statute revised — March 2, 1867, ch. 176, § 8,14 Stat. 520.

The right of appeal, as given by the statute, can neither be enlarged nor
restricted by the district or circuit court. The regulation of appeals is
a regulation of jurisdiction. The circuit court has no jurisdiction of any
appeal in any case under the bankruptcy act from the district court, un-
less it is claimed, and bend is filed at the time it is claimed, and notice
of it given, as required by this section, within ten days after the entry
of the decree or decision appealed from; and unless it is entered at the
term of the circuit court first held within and for the proper district next
after the expiration of ten days from the time it was claimed. In re John
Alexander, 3 B. R. 29; s. c. Chase, 295; s. c. 2 L. T. B. 81; in re Kyler,
3 B. R. 46; s. c. 6 Blatch. 514; Hawkins v. Hastings Nat’l Bank, 1 Dillon,
453; Sedgwick v. Fridenberg 11 Blatch. 77.

Although the circuit court will not and can not get any jurisdiction of
the appeal if the same is not taken in ten days, yet by the filing and
serving of the notice of the appeal the court does obtain jurisdiction, and
the words which refer to the entering of the appeal at the next circuit
are merely directory, and the time for filing the transmiss may be en-
larged by agreement. Baldwin v. Rapplee, 5 B. R. 19; Barron v. Morris,
14 B. R. 3871; s. c. 2 Woods, 354.

The district judge or a circuit judge may, in a proper case, enlarge the
time for entering an appeal, and an application for that purpose should
be made as soon as the parties are apprehensive that they will not have
time sufficient to prepare proper pleadings. Barron y. Morris, 14 B. R.
871; s. ec. 2 Woeds, 354.

Athough the rule in regard to entering the appeal is merely directory,
still, if it is disregarded, the appellee has a prima facie ground of dis-
“missal. Ibid.

What is required to be filed in the circuit court within ten days from
the time of taking the appeal, is the appeal containing a statement of the
appellant’s claim, and a brief account of what has been done in the dis-
trict court, and the grounds of appeal. It is not necessary that the
transcript of the proceedings in the district court shall be filed within ten
days. Ibid.

When an appeal has not been properly taken, a motion for a reargu-
ment, so that an appeal may be taken from the decree when re-entered,
will not be granted, unless the case is one of unquestionable mistake,
evincing perfect good faith, and is meritorious; and even then, to grant
such relief is going to the extreme verge of judicial decisions. A court
should not do indirectly what it has no power to do directly, except, per-
haps in such extraordinary and extreme cases as ought to be considered
as exceptions to an almost inflexible and absolute general rule. In re
Troy Woolen Co., 6 B. R. 16; 8. ¢. 5 Ben. 413.
168 THE Bankruptcy Law.

Taken literally, the ten days’ limitation does not extend to writs of
error, but the better opinion is in view of the fact that writs of error and
appeals are associated together in the preceding sections, that the word
appeal in this section means the same as review or revision, and that it
was intended to include the writ of error as well as appeal, as the whole
section seems to contemplate a more expeditious disposition of the cause
in the appellate court than that prescribed in the judiciary act or the act
to amend the judiciary system. Ins. Co. v. Comstock, 8 B. R. 145; s. ¢. 16
Wall, 258; Coit y. Robinson, 9 B. R. 289; s. c, 19 Wall. 274.

Act or 1867, § 4983. If the appellant in writing waives his appeal
before any decision thereon, proceedings may be had in the district
court as if no appeal had been taken.

Statute revised — March 2, 1867, ch. 176, § 8, 14 Stat. 520.

Act or 1867, § 4984. A supposed creditor who takes an appeal
to the circuit court from the decision of the district court, rejecting
his claim in whole or in part, shall, upon entering his appeal in the
circuit court, file in the clerk’s office thereof, a statement in writing
of his claim, setting forth the same, substantially, as in a declaration
for the same cause of action at law, and the assignee shall plead or
answer thereto in like manner, and like proceedings shall thereupon
be had in the pleadings, trial and determination of the cause, as in
actions at law commenced and prosecuted, in the usual manner, in
the courts of the United States, except that no execution shall be
awarded against the assignee for the amount of a debt found due to
the creditor.

Statute revised — March 2, 1867, ch. 176, § 24, 14 Stat. 528. Prior’
Statute — April 4, 1800, ch. 19, § 58, 2 Stat. 35.

A creditor can not demand payment of his debt until he makes and
presents to the assignee the proper proof. This provision is analogous in
purpose and proceeding to the probate of the debts against the estate of
a decedent before being presented to or allowed by an administrator.
When this is done, parties interested may object to the claim, and the
court — the district judge without a jury in a summary manner — may
reject the claim as not being duly proved, or as being founded in fraud,
illegality, or mistake. Then, and not before, the supposed creditor may
bring an action in the circuit court against the assignee, and have his
right to payment regularly tried. But this action can only be maintained
by the creditor’s first taking an appeal from the order rejecting his claim.
This appeal must be taken within a limited time, in a particular manner,
and to a particular court. The right to sue the assignee is postponed and
limited to the happening and performance of these precedent circum-
JURISDICTION OF APPELLATE Courts. 169

stances and conditions. But they are not adjudications, but only proceed-
ings preliminary of adjudication. Catlin y. Foster, 3 B. R. 540; 8. «@ 1
Saw. 37; s.¢c. 1 L. T. B. 192.

The statement must be in form and substance a declaration of the
supposed cause of action, to which the adverse party can plead and go to
trial. In re Place et al., 4 B. R. 541; s. c. 8 Blatch. 302.

The provisions of this section seem to be made for ordinary debts, and
if taken literally, the case of an equitable debt is overlooked. But the
cireuit court has full appellate power, and may make such order in re-
lation to appeals, not fully provided for in this section, as may be neces-
sary to conform the proceedings to the nature of the case. In re Blandin,
5 B. R. 39; s. ce. Lowell, 543; s. c. 2 L. T. B. 198.

The circuit court has no original jurisdiction to receive and allow debts
against the estate of a bankrupt. The claims of creditors must first be
presented in the district court. It is not proper to present one claim in
the district court and under cover of an appeal transform the claim into
a new and distinct cause of action. In other words, the circuit court on
appeal ought not to be called upon to decide questions either of law or
of fact that were not raised and involved in the decision of the district
court. The same cause of action is to be pursued, though it may happen
that new or further proofs in support of that cause of action may es-
tablish facts not proved below, and new questions of law may arise there-
upon. In re Jaycox & Green, 7 B. R. 578; s. c. 138 B. R. 122; 8. c. 12
Blatch. 209; s. c. 18 Blatch. 70.

Where the proof in the district court is on a note, the creditor can not
in the circuit court rely on a claim for money loaned. In re Jaycox &
Green, 7 B. R. 578; s. c. 18 B. R. 122; s. c. 12 Blatch. 209; s. ce. 138 Blatch. 70.

Act oF 1867, § 4985. The final judgment of the circuit court,
rendered upon any appeal provided for in the preceding section, shall
be conclusive, and the lists of debts shall, if necessary, be altered to
conform thereto. The party prevailing in the suit shall be entitled
to costs against the adverse party, to be taxed and recovered as in
suits at law; if recovered against the assignee, they shall be allowed
out of the estate.

Statute revised — March 2, 1867, ch. 176, § 24, 14 Stat. 528.

Act or 1898, Cu. 4, § 24. Jurisdiction of Appellate Courts.—
(a) The Supreme Court of the United States, the circuit courts of
appeals of the United States, and the supreme courts of the Terri-
tories, in vacation in chambers and during their respective terms,
‘as now or as they may be hereafter held, are hereby invested with
appellate jurisdiction of controversies arising in bankruptcy proceed-
ings from the courts of bankruptcy from which they have appellate
170 THe Bankruptcy Law.

jurisdiction in other cases. The Supreme Court of the United States
shall exercise a like jurisdiction from courts of bankruptcy not within
any organized circuit of the United States and from the supreme
court of the District of Columbia.

(b) The several circuit courts of appeal shall have jurisdiction in
equity, either interlocutory or final, to superintend and revise in
matter of law the proceedings of the several inferior courts of bank-
ruptcy within their jurisdiction. Such power shall be exercised on
due notice and petition by any party aggrieved.

Act or 1867, § 4986. The circuit court for each district shall
have a general superintendence and jurisdiction of all cases and ques-
tions arising in the district court for such district when sitting as a
court of bankruptcy, whether the powers and jurisdiction of a circuit
court have been conferred on such district court or not; and except
when special provision is otherwise made, may, upon bill, petition,
or other proper process, of any party aggrieved, hear and determine
the case as in a court of equity; and the powers and jurisdiction
hereby granted may be exercised either by the court in term time,
or, in vacation, by the circuit justice or by the circuit judge of the
circuit.

Statutes revised — March 2, 1867, ch. 176, § 2, 14 Stat. 518; June 8, 1872,
ch. 340, 17 Stat. 334. Prior Statute — August 19, 1841, ch. 9, § 6, 5 Stat.
445.

An appellate tribunal will take cognizance only of matters appearing
upon record of court below. A discharge pending the appeal can not’ be
pleaded in the appellate court. Serra é Hijo v. Hoffman, 17 B. R. 124.

An appeal lay under act of 1867 to United States Supreme Court from a
decree of circuit court while exercising its supervisory jurisdiction under
the bankruptcy law, where the proceedings in the district court were to
be treated as a suit in equity. Milner v. Meek, 17 B. R. 82.

Under act of 1867, a proceeding by an assignee upon a petition praying
for an adjustment of liens upon a bankrupt’s real estate, for an order to
sell, and for ‘ such other relief as may be proper,” is in substance a suit
in equity, and will be treated as such, where all the parties have appeared,
presented their claims by answer or cross-petition, waived all errors of
form, proceeded to a final hearing, and appealed it to the circuit court.
Ibid.

Where an appeal is taken by one of the lien-creditors, the other lien-
creditors are not necessary parties to such appeal. Ibid.

Construction.— It would be difficult to use language capable of confer-
ring a more complete supervision over all the proceedings of the district
court in bankruptcy. There is not only a general superintendence; but,
lest that word might not include everything, there is a general jurisdiction
CONSTRUCTION. 171

conferred. This extends not only to all cases, but to all questions arising
under the act. In other words, the circuit court may review the whole
case and decide on it, or it may assume jurisdiction of any particular
question arising in the progress of the case. This jurisdiction can only be
exercised over proceedings in bankruptcy already pending in the district
court. Ruddick v. Billings, 3 B. R. 61; s. c. 1 Wool. 330; in re John Alex-
ander, 3 B. R. 29; s. c. Chase, 295; s. c. 2 L. T. B. 81; Bill v. Beckwith, 2 B.
R. 241; Littlefield v. Del. & Hudson Canal Co., 4 B. R. 257.

The revision contemplated by this clause is evidently of a special and
summary character, substantially the same as that given in the prior
bankruptcy act, as sufficiently appears from the words “ general superin-
tendence”’ preceding and qualifying the word jurisdiction, and more
clearly, from the fact that the jurisdiction extends to mere questions, as
contradistinguished from judgments or decrees, as well as to cases, show-
ing that it includes the latter as well as the former and that the jurisdic-
tion may be exercised in chambers as well as in court, and in vacation as
well asin term time. Morgan v. Thornhill, 5 B. R. 1; s. c. 11 Wall. 65; Coit
vy. Robinson, 9 B. R. 289; s. c. 19 Wall. 274.

The only construction, which gives due effect to all parts of the act
relating to revisory jurisdiction, is that which, on the one hand, excludes
from the category of general superintendence and jurisdiction of the cir-
cuit court, the appellate jurisdiction defined by section 4980; and, on the
other, brings within that category all decisions of the district court, or
the district judge at chambers which can not be reviewed upon appeal or
writ of error under the provisions of that section. In re John Alexander,
8 B. R. 29; s. c. Chase, 295; s. c. 2 L. T. B. 81.

Power to revise all cases and questions which arise in the district courts
in a proceeding in bankruptcy, ‘‘ except when special provision is otherwise
made,” is conferred upon the circuit courts; but this power does not ex-
tend to any case where special provision for the revision of the case is
otherwise made,.as where it is provided that an appeal will lie from the
district court to the circuit court, or where a writ of error will lie from
the circuit court to the district court, in the manner provided in the laws of
Congress allowing appeals and writs of error. Smith v. Mason, 6 B. R. 1;
s. c. 14 Wall. 419; 5. c. 5 L. T. B. 7; Knight v. Cheney, 5 B. R. 305; s. c.
21. T. B. 205; Stickney v. Wilt, 11 B. R. 97; sc. 23 Wall. 150.

The proceeding in bankruptcy, from the filing of the petition to the dis-
charge of the bankrupt and the final dividend, is a single statutory case or
proceeding. In the conduct of the case a large number of questions may
arise. Before the assets of the bankrupt can be collected and distributed,
it will frequently occur that the assignee or a creditor will be driven to a
regular bill in equity or an action at law. In these cases, the circuit
court has no supervisory jurisdiction, nor has it where the claim of a
supposed creditor has been rejected in whole or in part, or where the
assignee is dissatisfied with the allowance of a claim. These classes of
cases may be taken up on writ of error or appeal. But all other cases and
questions arising in the progress of a case of bankruptcy through the
bankrupt court, whether the matter is of legal or equitable cognizance, and
172 THE BANKRUPTCY Law.

when the matter is not the subject of a regular suit in equity or at law,
or the allowance or disallowance of a claim, fall within the supervisory
jurisdiction, and may upon Dill, petition or other proper process of any
party aggrieved, be heard and determined in the circuit court as a court
of equity. In re York & Hoover, 4 B. R. 479; s. c. 1 Abb. G. C. 503; s. «
1L. T. B. 290.

Jurisdiction is conferred upon “the circuit court within the district
where the proceedings shall be pending,” but the meaning of Congress, in
employing that language, is to describe the particular circuit court
in which the jurisdiction shall be exercised, and not the state of
the matter to be revised, as it was clearly the intention of Congress that
all such matters should be subject to revision in the circuit court, whether
interlocutory or final. Revision must be sought in the circuit court of
the district where the proceedings took place which the petitioner asks to
have revised; but he is not deprived of a remedy because the decree is in
its nature final. It was the intention of Congress to subject every ruling,
order and decree of the district court, in bankruptcy cases, to the examina-
tion and revision of the circuit court. Littlefield v. Del. & Hudson Canal
Co., 4 B. R. 257.

It is not every proceeding in a bankrupt case that the circuit ccurt is
authorized to review. The circuit court is not empowered to pass upon
the doings and actings of the registers, or assignees, or creditors. Tha
case or question presented for revision must be a case or question fairly
presented to and passed upon by the bankruptcy court. That is the
court of first resort. To that court first must the question and proofs be
presented, and if that court errs upon the question presented, then, and
then only, can resort be had to the circuit court. A party can not go
into the circuit court in the first instance to make his case or question.
Ala. & Chat. R. R. Co. v. Jones, 7 B. R. 145.

The circuit court will not set aside an alleged fraudulent sale of real
estate ordered by the bankruptcy court and made by the assignee, unless
the motion is first presented to the bankruptcy court, because it can
only review the action of the court, and not the action of the assignee.
Bailey v. Whitfield, 7 B. R. 173.

There is no warrant for limiting the jurisdiction of the circuit court
to review summary proceedings in bankruptcy by any measure of ‘the
value of the property involved. Samson v. Blake, 6 B. R. 410; 5. « 9
Blatch. 379.

If there is nothing in the record to show that the district court found
anything upon a particular point, the circuit court can not consider that
as a question properly before it for revision. In re McGilton et al., 7 B. R.
294; s. c. 3 Biss. 144.

The bankruptcy act does not contemplate the bringing of cases relating
to the election of an assignee, and the qualifications of voters before the
circuit court for review. To decide upon the legality of the votes or
qualifications of creditors involves no principle of equity unless fraud in
the election is alleged. The district courts are vested with large dis-
cretionary powers in reference to the appointment and approval of as-
CONSTRUCTION. 178

signees, and the circuit courts will decline to interfere with them. Woods
v. Buckwell, 7 B. R. 405; s. c. 2 Dillon, 38; in re Adler Brothers, 2 Woods,
571.

The action of the district court in removing an assignee or consent-
ing to a removal by a vote of the creditors is not subject to review under
this section. In re Adler Brothers, 2 Woods, 571. '

The circuit court has jurisdiction to revise the proceedings of the dis-
trict court for the middle district of Alabama. Alabama R. R. Co. v.
Jones, 5 B. R. 97.

Decrees of the district court are final, in the constitutional sense, al-
thgugh they are rendered under an act of Congress which makes them
subject to revision by the circuit court, and consequently the right of
such revision is not inconsistent with the interest which the opposite
party acquires in the decree. Rendered as the decree is, subject to re-
vision in the circuit court, no party acquires or can acquire any interest
in the decree to defeat the right of such revision. Littlefield v. Del. &
Hudson Canal Co., 4 B. R. 257.

The superintendence and jurisdiction conferred by this clause are re-
visory of cases and questions arising in the district court, and contem-
plate a review of what is presented to that court for consideration and
decision. They may include the power which, in a special and perhaps
more restricted form, was given in the sixth section of the bankruptcy act
of 1841, wherein authority was given to adjourn any point or question
arising in any case in bankruptcy, into the circuit court, to be there
heard and determined; and it may be that, under the present act, the
presentation of such questions, and the jurisdiction of the circuit court
over them, does not, as in the former, depend upon the discretion of the
district court. But, in either view, the question, or cas2s presenting
such questions, must arise in the district court; and their determina-
tion in the circuit court is either for the guidance or control of the dis-
trict court. This is not a jurisdiction to assume the conduct of the pro-
ceedings, or to specifically enforce or execute the orders or decrees of
that court. For that purpose the district court has ample and exclusive
power. The act does not blend or confound the two courts in the admin-
istration of the bankruptcy law. The courts are distinct under that act,
as under all others, and exercise a separate jurisdiction, each in its own
sphere. The proceedings for a review of the decree of the distcict court
bring the decree, and whatever orders are involved therein, before the
circuit court; but do not operate to transfer the entire proceedings in
bankruptcy into the circuit court, to be there continued as in a court of
first instance. If the decree is affirmed, it stands as the decree of the
district court, and not of the circuit court; and is to he carried into
due execution by the former, and not the latter. In re Binniucer et al.,
3 B. R. 487; s. c. 7 Blatch. 159; s. c. 1 L. T. B. 183; in re Binninger et al.,
3 B. R. 489; s. c. 7 Blatch. 165; s. c. 1 L. T. B. 186.

The exercise of this jurisdiction is not placed by the act under specific
regulations and restrictions like the proceeding by appeal or writ of error,
nor has the supreme court prescribed any rule concerning it. It must
1%4 THE Bankruptcy Law.

depend on the sound discretion of the court. Unreasonable delay in in-
voking the superintending jurisdiction should not be allowed, nor should
such excessive rigor be exercised that the ends of justice will probab'y
be defeated. In re John Alexander, 3 B. R. 29; s, c, Chase, 295; 8. ¢. 2
L. T. B. 81; Littlefield v. Del. & Hudson Canal Co., 4 B. R. 257; Suther-
land vy. Kellogg, 2 Biss. 405; in re Work, McCough & Co., 30 Leg. Int.
361; Bank v. Cooper, 9 B. R. 529; s. ¢. 20 Wall. 171.

What is a reasonable time depends on the circumstances of each case.
Generally it should be fixed in analogy to the period designated within
which appeals must be taken. Bank vy. Cooper, 9 B. R. 529; s. c. 20 Wall.
171. .

A review may be applied for at any time before the supposed erroneous
order is carried into execution. In re Edward A. Casey, 8 B. R. 71; 8. ¢.
10 Blatch. 376.

If a party delays unreasonably to file the petition for a review, he may
be required to pay the costs which have been incurred in executing the
decree. Thames v. Miller, 2 Woods, 564.

Power to make rules for the orderly conducting of business in court
is vested in the circuit court as well as in the supreme court, provided such
rules are not repugnant to the laws of the United States, and are not in-
consistent with the rules relating to the same subject established by the
supreme court. Sweatt v. Boston R. R. Co, 5 B. R. 284; s.c 1 L. T. B.
273.

The jurisdiction conferred by this clause can only be exercised within
and for the district ‘ where the proceedings in bankruptcy shall be pend-
ing.’ Shearman v. Bingham, 5 B, R. 34; s. c. 7 B. R. 490; 8. ec. 3 C. LN,
258.

If the judge was a creditor at the time when the proceedings were
commenced, and has since assigned his claim, he is not legally disqualified
to act in the case, and, being qualified, he is not at liberty, upon a matter
of mere personal feeling or preference, to decline the responsibility thrown
upon him by official position. In re Sime & Co., 7 B. R. 407; s. ec. 5 Pac.
L. R. 217.

This section does not declare in terms that the party aggrieved, or any
party, shall have the right to invoke that superintendence and jurisdic-
tion; but that is necessarily implied. A court of justice is not at liberty
to disown its jurisdiction, or to refuse to entertain parties who apply
in due form for its exercise. Where the jurisdiction is itself discretion-
ary, it may be declined; and where parties do not apply in the legal or
prescribed manner, or in due Season, or are otherwise in fault in the
matter of the review sought, doubtless the court may dismiss their applica-
tion. And the control of the court over frivolous and vexatious appeals
of any kind is not questionable. But the court can not impose compul-
sory dismissal as a penalty or consequence of alleged or supposed miscon-
duct elsewhere, which has no effect to delay or impede the exercise of the
power of the court in the matter of the relief sought. It will not compel
a party to elect whether he will further prosecute his petition of review
or an action commenced in a State court against the appellee to restrain
CONSTRUCTION. 1%5

him from prosecuting the proceedings in bankruptcy. In re Binninger et
al, 3 B. R. 489; s. ¢. 7 Blatch. 168; s. c. 1 L. T. B. 187.

There is one class of cases where, by the provisions of the bankruptcy
act, issues may be framed and tried by a jury, to-wit, where the debtor op-
poses the petition that he may be adjudged a bankrupt. Such cases, when
tried by a jury, if the circuit court has any jurisdiction upon the subject,
must be removed into the circuit court by a writ of error, as they, when
tried by a jury, are excluded from the special jurisdiction conferred under
this clause by the very words of the clause. Where “special provision is
otherwise made,” the case is excluded from the general superintendence
and jurisdiction of the circuit court by the exception introduced as a paren-
thesis into the body of this part of the section. Special provision is made
in such cases within the meaning of that exception when the case is tried
by a jury, and there is not a word in the act having the slightest tendency
to show that Congress intended that a fact found by a jury in a district
court should be re-examined in a summary way by the circuit court. Such
cases may be tried by the district court without a jury, and in that event
no doubt is entertained that the case is within the supervisory jurisdiction
of the circuit court. Morgan y. Thornhill, 5 B. R. 1; s. c. 11 Wall. 65.

Special provision is not otherwise made for the re-examination by the
circuit court of the decision of the district court in granting or refusing a
discharge, and hence it can only be done under the power conferred by
this clause. Coit v. Robinson, 9 B. R. 289; s. c. 19 Wall. 274.

If a claim is allowed in spite of the opposition of a contesting creditor,
he may take the question to the circuit court by a revisory petition. In re
Adolph Joseph, 2 Woods, 390. Contra, in re Troy Woolen Co., 9 B. R. 329;
s. ec. 9 Blatch. 191.

If an assignee appeals from the allowance of a claim and an opposing
creditor files a petition of review, the circuit court may determine which
form of proceeding shall be retained. In re Adolph Joseph, 2 Woods, 390.

If a fund recovered in an action instituted before the commencement of
the proceedings in bankruptcy is deposited in the registry of the district
court, an order upon a petition of the bankrupt, praying that a certain part
thereof be awarded to him and his attorney, is reviewable by a supervis-
ory petition. Maybin v. Raymond, 15 B. R. 353; 4 A. L. T. (N. 8.) 21.

Even if the circuit court can review an interlocutory order made by the
district court in a suit in equity before a final decree has been made in
the cause, the review can only be had by means of an appeal, anid not by
means of a petition of review. Warren v. Tenth Nat’l Bank, 9 Blatch. 193.

Questions of law which arise in the progress of a proceeding in involun-
tary bankruptcy, where a jury trial has been demanded, can only be re-
viewed by a writ of error after a final adjudication. In re Oregon B. P. &
P. Co., 14 B. R. 3894; s. c. 3 Saw. 529.

The granting or refusing of a motion for a new trial is a matter resting
in the sound discretion of the district court, under all the cireumstances
of the case, and can not be revised by the circuit court, and the statute in-
tended to provide for the revision of questions of law and not questions
of discretion. In re Daniel Marsh, 6 Law Rep. 67.
176 Tor Bankruptcy Law.

The circuit court will not decide whether a new trial ought to be granted
or not, unless all the evidence which was given at the trial and all the
circumstances of the whole case are brought before it by a complete
report. Ibid. 3

It has been decided that the following proceedings may be reviewed
in this way, to-wit:

Proceedings in involuntary bankruptcy to have a debtor declared a
bankrupt, where there is no tria] by a jury. Perry v. Langley, 2 B. R.
596; s. c« 8 A. L. Reg. 427; Farrin v. Crawford, 2 B. R. 602; in re Craft,
1B. R. 878; s. c. 2 B. R. 111; s. ce. 6 Blatch. 177; s. c. 2 Ben. 214; Suther-
land v. Kellogg, 2 Biss. 405; Thornhill v. Bank, 5 B. R. 367; s. c. 1 Woods,
1; in re Picton, 11 B. R, 420; s. c 2 Dillon, 548.

Proceedings on the bankrupt’s application for a discharge. In re J. M.
Reed, 2 B. R. 9; Ruddick v. Billings, 3 B. R. 61; s. ec. 1 Wool. 330; Little-
field v. Del. & Hudson Canal Co., 4 B. R. 257; Coit v. Robinson, 9 B. R.
289; s. c. 19 Wall. 274.

A decision refusing to stay proceedings on a suit in a State court against
the bankrupt. In re W. E. Robinson, 2 B. R. 342; s. c. 6 Blatch. 233;
s. c. 86 How. Pr. 176; s. ¢c. 2 L. T. B. 18.

Proceedings instituted by an assignee to sell propcriy belonging to
the bankrupt’s estate. In re John Alexander, 3 B. R. 29; s. ¢. Chase, 295;
s.c. 2 L. T. B. 81; Markson v. Heaney, 1 Dillon, 511, note.

Proceedings on a summary petition filed in the cause in bankruptcy
to recover property held contrary to the bankruptcy act. Bill v. Beckwith,
2 B. R. 241; in re Kerosene Oil Co., 3 B. R. 125; s. c. 6 Blatch. 521.

Proceedings upon a petition for release from arrest. In re J. H. Kim-
ball, 2 B. R. 354; s. ce. 6 Blatch. 292; s. c. 2 Ben. 55-4.

Proceedings for the purpose of ascertaining and liquidating liens. In
re York & Hoover, 4 B. R. 479; s. c. 1 Abb. C. C. 503; sc 1 LL. T. BL
290.

But a decision allowing or disallowing a claim can not be reviewed.
In re Place et al., 4 B. R. 541; s. ce. 8 Blatch. 302.

When the proceedings in the district court are founded on a bill in
equity, they can only be reviewed and revised by an appeal wider sec-
tion 4980, and not by a petition under this section. In re Bonesteel, 3 B.
R. 517; s. c. 7 Blatch. 175.

The circuit court will not issue a writ of prohibition to a State court,
prohibiting it from entertaining suits instituted by persons who are
parties to the proceedings in bankruptcy when such suits do not
interfere with the exercise of its own jurisdiction. In re Binniager et al.,
3B. R. 487; s. c. 7 Blatch. 159; s.c.1L. T. B. 183.

The circuit court will not, during the pendency of proceedings to re-
view the decree of the district court, direct ihe maishal to take posses-
sion of the property of the bankrupt, nor proceed to ascertain and liquidate
the assets. The circuit court can not assume the primary exercise of the
sulumary jurisdiction conferred upon the district court. Clark et al., 3
B. R. 489; s. c. 7 Blatch. 165; s. c. 1 L. T. B. 186.

Proceedings for Review.— The only way in which the circuit court can
PROCEEDINGS FoR RrEvirw. 177

exercise its supervisory jurisdiction in such cases is. by a petition ad-
dressed to the circuit court, stating clearly and specifically the point
or question decided in the district court, charging that the petitioner is
aggrieved thereby, and praying the circuit court to review and reverse the
decision of the court below. The adverse party should be duly notified of
the pendency and prayer of the petition, and of the day assigned for
hearing the same. The circuit court will hear and act upon such petition
in chambers or elsewhere. In re J. M. Reed, 2 B. R. 9; Ruddick v. Billings,
3 B. R. 61; s. ec. 1 Wool. 330; in re Edward A. Casey, 8 B. R. 71; s. ¢.
10 Blatch. 376.

The revisory jurisdiction of the circuit court may be exercised by bill as
well as by petition. If a regular bill in equity seeks to review the pro-
ceedings and decision of the district court, it is a proper proceeding, and
ought to be entertained by the circuit court. Marshall y. Knox, 8 B. R. 97;
s. c. 16 Wall. 551.

A bill of review may be treated as a petition for review. Hurst v. Teft,
13 B. R. 108; s. ce. 12 Blatch. 217.

A notice of appeal is not a proper process for invoking a review of a sum-
mary proceeding. In re Edward A. Casey, 8 B. R. 71; s. c. 10 Blatch. 376.

A creditor may file a bill to revise an adjudication of bankruptcy ren-
dered upon the petition of another creditor. Sweatt v. Boston R. R. Co.,
5 B. R. 234; s.¢c.1L. T. B. 278. Contra, Ala. & Chat. R. R. Co. v. Jones,
7B. R. 145.

Commissioners appointed by a State court in a proceeding to forfeit the
charter of a corporation do not represent the corporation, and have no
right or authority to interfere in a proceeding against the corporation.
Thornhill vy. Bank, 5 B. R. 367; s. c. 1 Woods, L

An allegation by the petitioner that he is aggrieved is not sufficient, un-
less it is also alleged in what the error consists, whether of law or of fact,
and the nature of the error should be distinctly stated for the information
of the appellate court, and as a matter of notice to the opposite party.
Appellate courts, even in appeals, proceed upon the ground that the decree
in the subordinate court was correct, and the burden to show error is upon
the appellant. Matters of fact, as well as matters of law, may, doubtless,
be revised in the circuit court, but it was not the intention of Congress in
this form of proceeding to give a party a second trial merely as such, but
to secure to him an appellate tribunal for the re-examination and revision
of the rulings, orders, and decrees of the district courts, and for the
reversal of the same in case they are found to be erroneous. Littlefield
v. Del. & Hudson Canal Co., 4 B. R. 257; Sutherland v. Kellogg, 2 Biss. 405;
Samson v. Blake, 6 B. R. 410; s. c. 9 Blatch. 379; in re Edward A. Casey,
8 B. R. 71; s. ec. 10 Blatch. 376.

In ordinary cases, it may be sufficient if a statement is made by counsel,
under the direction of the judge of the district court, setting forth the
order or ruling complained of, and sufficient facts to enable the appellate
court to form ap opinion upon the point. This, verified by the judge or
clerk, would form the basis of the petition or bill in the circuit court. The

12
178 Tue Bankruptcy Law.

whole case may also be brought up by bill of exceptions, or otherwise.
Sutherland v. Kellogg, 2 Biss. 405.

Appeals in equity suits and in causes of admiralty and maritime juris-
diction, vacate the respective decrees in the subordinate courts, and re-
move the whole record into the court of paramount jurisdiction, but
nothing of the kind is done in a proceeding by petition under this section.
Littlefield v. Del. & Hudson Canal Co., 4 B. R. 257.

The filing of a petition for the exercise of the revisory power of the
circuit court does not ordinarily operate as a stay of the proceedings in
the subordinate court. Adams v. Railroad Co., 4 B. R. 314; s. ec. 1 Holmes,
5; s. c. 6 A. L. Rev. 365.

If the district court decides that a creditor is entitled to a lien, the
assignee may file a petition for review. Bartlett v. Russell, 34 Pitts. L. J.
206; s.¢c. 9 CO, L. N. 377.

The petition may be amended. Littlefield v. Del. & Hudson Canal Co.,
4 B. R. 257; Sutherland v. Kellogg, 2 Biss. 405.

The statement of an attorney that he is duly anthorized by the peti-
tioner to institute and prosecute the proceeding, is conclusive evidence
of the fact, unless some proof to the contrary is shown. Ala. & Chat.
R, R. Co, vy. Jones, 5 B. R. 97.

A service of the petition upon the person who acted as counsel for the
appellee in the original proceeding is sufficient. The proceeding in re
view is a part of the original case, and for the purpose of the review the
parties are still in court. The proceeding in review is intended to be
speedy and summary, and a reasonable notice to counsel accomplishes
the ends of justice. Ibid.

If the service of the petition is defective, it is cured by an appearance
and the filing of an answer. Ibid.

The respondent may demur to the petition. Objections available under
a general demurrer are open to a party under a special demurrer, as every
special demurrer is also a general demurrer, and it is a universal rule
that a demurrer, whether special or general, admits only what is well
pleaded. Littlefield v. Del. & Hudson Canal Co., 4 B. R. 257.

Objections to the answer for insufficiency may be taken by an excep-
tion. Sutherland v. Kellogg, 2 Biss. 405.

The circuit court has territorial jurisdiction to hear the petition in
review in chambers at any place within the district. Thornhill v. Bank,
5 B. R. 867; s. c. 1 Woods, 1. ;

The district judge can not sit as a member of the circuit court in the
exercise of its revisory powers. Nelson v. Carland, 1 How. 265.

The circuit judge has power in vacation at his chambers, though out-
side of the district, to entertain and act upon the petition of review.
Markson v. Heaney, 1 Dillon, 511, note.

When the revisory jurisdiction of the circuit court is invoked over the
decision of the district court, upon a question of fact, the burden is on
the petitioner for review to show error in the decision. It is not suffi-
cient merely to show such a condition of the testimony in the case, that,
different minds, with equal fairness, might possibly arrive at different
PROCEEDINGS FOR REVIEW. 179

conclusions; but to show more nearly in analogy to the case of a motion
for a new trial that the evidence can not support the finding. Coggeshall
v. Potter, 4 B. R. 738; s. « 6 B. R. 10; s. c. 1 Holmes, 75; Wells v. Dal-
rymple, 15 I. R. R. 59; in re Joseph Mooney, 15 B. R. 456.

A finding of fact upon an examination of witnesses in the presence of
the district court, where the opportunity for judging correctly of the
credibility of the witnesses and weight of the testimony is better than
can ordinarily be afforded by an inspection of the testimony when re
duced to writing, should not be reversed without a very clear and de-
c.ded conviction that it is erroneous. Samson vy. Clarke, 6 B. R. 403; s. @&
9 Blatch. 372; in re Cornwall, 6 B. R. 305; s. c. 9 Blatch. 114; in re Picton,
11 B. R. 420; s. ¢. 2 Dillon, 548.

When it appears from the record that an amendment of the record
was made upon proofs satisfactory to the district court, the cireuit court
is bound to presume that the evidence offered in support of the amend-
ment was legal and sufficient. It must presume that the bankruptcy
eourt acted in good faith. The amended record can not be impeached
in a circuit court. Ala. & Chat. R. R. Co. v. Jones, 7 B. R. 145.

The circuit court sits as a court of equity, and on an inquiry into ques-
tions of fact, is not bound to reverse upon strictly legal grounds, if sat-
isfied that the facts are correctly found, and that no injustice has been
done. Samson v. Blake, 6 B. R. 410; s. ec. 9 Blateh. 379.

The jurisdiction conferred upon the circuit court is summary in its
nature, and is not to be hampered by technical rules. The court has
ample power to permit subsequent occurrences to be brought before it,.
so as to deal with the case as it exists at the time of hearing. In re
Boston R. R. Co., 6 B. R. 209; s. c. 9 Blatch. 101.

The circuit court, in cases presented for review, is not a court of orig-
inal jurisdiction, and can not act as if it had original jurisdiction de facto.
Its only power over proceedings in the district court is that of superin-
tendence and revision simply. No additional evidence can be produced
in the circuit court. In re Great West. Tel. Co., 5 Biss. 359.

The statute does not make it obligatory upon the circuit court to retry
every decision of the district court which a creditor, supposing himself’
aggrieved, may ask the court to retry. The circuit court, in its dis-
cretionary power, may properly conclude that no sufficient case is pre-
sented calling for a retrial of the facts. Bank v. Cooper, 9 B. R. 529; s. ¢.
20 Wall. 171.

If the question relates to the removal of an assignee, the circuit court
can not appoint an assignee if it decides in favor of a removal, but must
remit the matter to the district court, requiring that court to remove the
assignee and to appoint another in his place. In re Perkins, 8 B. I. 56;
8. ec. 5 Biss. 254,

If a sale is made free from incumbrances in a case where the district
court had no jurisdiction over the party holding the incumbrance, the
money will be returned to the purchaser if the sale is set aside. Davis
vy. Railroad Co., 13 B. R. 258; s. c. 1 Woods, 661.

Where property is unlawfully taken from the possession of a receiver

«
180 Tue Bankruproy Law.

and sold, the circuit court, on reversing the decree of the district court,
will declare the sale void. Ibid.

The power to stay proceedings in the district court pending a review
is a matter in the discretion of the court, and ought not to be exercised
unless it is shown that the plaintiff in the review will otherwise be pleju-
diced or seriously endangered in his rights. In re Oregon B. P. & P. Co.,
14 B. R. 394; s. c. 8 Saw. 529.

Acts oF 1867, 1874, § 4987. The several supreme courts of the
Territories shall have the same general superintendence and jurisdic-
tion over the acts and decisions of the justices thereof in cases of
bankruptcy as is conferred on the circuit courts over proceedings
in the district courts.t

Statute revised — June 30, 1870, ch. 177, § 1, 16 Stat. 173.

Acts oF 1867, 1874, § 4988. In districts which are not within
any organized circuit of the United States, the powers and jurisdiction
of a circuit court in bankruptcy may be exercised by the district judge.

Statute revised — March 2, 1867, § 49, 14 Stat. 541.

§ 4989. No appeal or writ of error shall be allowed in any case
arising under this Title from the circuit courts to the supreme court,
unless the matter in dispute in such case exceeds? five thousand
dollars.

Statute revised — March 2, 1867, ch. 176, § 9, 14 Stat. 520.

Decrees in equity, in order that they may be re-examined in the su-
preme court, must be final decrees rendered in term time as contradis-
tinguished from mere interlocutory decrees or orders which may be en-
tered at chambers, or, if entered in court, are still subject to revision at
the final hearing. No appeal lies to the supreme court from a decree of
the circuit court rendered in the exercise of its special supervisory juris-
diction. Morgan v. Thornhill, 5 B. R. 1; s. c. 11 Wall. 65; Hall v. Allen, 9
B. R. 6; 8s. ¢, 12 Wall. 452; Mead v. Thompson, 8 B. R. 529; s. ec. 15 Wall.
685; Coit v. Robinson, 9 B. R. 289; s. c. 19 Wall. 274; Nelson v. Carland, I
Hew. 265.

The judgment of the circuit court in allowing or rejecting a claim is
final, and no appeal lies therefrom. Wiswall vy. Campbell, 5 B. R. 421; 8. ¢.
93 U. 8. 347.

 

1 Vide § 4978. 2 So amended by act of Feb. 16, 1875, ch. 77, § 3, 18 Stat. 316.
APPEAL. 181

An appeal does not lie from a decision of the circuit court affirming a
decision of the district court upon a motion to set aside an adjudication.
Sandusky v. National Bank, 12 B. R. 176; s. c. 23 Wall. 289.

If the circuit court decides that it has no jurisdiction to entertain a Dill
of review, the supreme court may entertain an appeal from such decision,
not for the purpose of reviewing, but for the purpose of correcting an er-
roneous decision respecting the power of the circuit court, and enabling the
party to be heard on his application. Bank vy. Cooper, 9 B. R. 529; s. c. 20
Wall. 171.

Concurrent jurisdiction with the district courts of all suits at law or in
equity, are the words of section 4979, showing conclusively that the juris-
diction intended to be conferred upon the district courts is the regular
jurisdiction between party and party, as described in the judiciary act
and the third article of the Constitution. Cases arising under that clause,
where the amount is sufficient, are plainly within the section, and may be
removed to the supreme court for re-examination. The jurisdiction is of
the same character as that conferred upon the circuit courts by the
eleventh section of the judiciary act, and it follows that final judgments
in civil actions and final decrees in suits in equity may be re-examined in
the supreme court, under this section, when properly removed by writ of
error or appeal, as required by existing laws. Morgan v. Thornhill, 5 B. R.
1; s. ¢. 11 Wall. 65; Coit v. Robinson, 9 B. R. 289; s. ec. 19 Wall. 274.

In all cases where concurrent jurisdiction is vested in the circuit and
district courts, either party, where the proceeding is correct, may remove
the cause in a proper case, when it has proceeded to final judgment or
decree, into the supreme court for re-examination, as provided in other con-
troversies outside of the bankruptcy act. Smith v. Mason, 6 B. R. 1; s. ¢.
14 Wall. 419; s.¢c.5 L. T. B. 7; Knight v. Cheney, 5 B. R. 305; s.c. 2. L. T.
B. 205; Morgan v. Thornhill, 5 B. R. 1; s. c. 11 Wall. 65.

Suits in equity, as well as actions at law, may be commenced and main-
tained in the district courts, and final decrees in such suits in equity, as
well as final judgments in such civil actions, where the debt or damage
as claimed amounts to more than $500, may be re-examined in
the circuit courts, and the final decrees and judgments rendered in the
circuit courts in such cases, where the sum or value exceeds $5,000,
may be reexamined in the supreme court, by appeal or writ of er-
ror, as provided in the judiciary act, and the act allowing appeals in cases
of equity, and of admiralty and maritime jurisdiction. Knight v. Cheney,
5 B. R. 805; s. c. 2 L. T. B. 205; Stickney v. Wilt, 11 B. R. 97; 5. c. 23
Wall. 150.

The supreme court can rot entertain an appeal from the district court,
although there is no circuit court for the district. Crawford v. Points,
13 How. 11.

The supreme court possesses no revising power over the decrees of the
district court sitting in bankruptcy. In re William Christy, 3 How. 292;
Crawford v. ‘Points, 13 How. 11.

On an application for a prohibition against the district court, allega-
tions of facts, not found in the proceedings of the district court, can not
182 Tue Banrruptcy Law.

be considered, for the application must be made on the ground that the
district court has transcended its jurisdiction in entertaining those pro-
ceedings, and whether it has or not must depend, not upon facts stated
dehors the record, but upon those stated in the record upon which the
district court was called to act, and by which alone it could regulate its
judgment. In re William Christy, 3 How. 292.

When the judgment is joint, all the parties against whom it is rendered
must join in the writ of error, and in chancery cases all the parties against
whom a joint decree is rendered must join in the appeal. The remedy
by summons and severance, when one party refuses to join in a writ of
error, has fallen into disuse in modern practice, but formerly it was al-
lowed generally, When more than one person was interested jointly in a
cause of action or other proceeding, and one of them refused to partici-
pate in the legal assertion of the joint rights. In such case the other
party issued a writ of summons, by which the one who refused to proceed
was brought before the court, and if he still refused, an order of judg-
ment of severance was made by the court, whereby the party who wished
to do so could sue alone. This remedy was applied to writs of error, when
one of the plaintiffs refused to join in assigning errors, and, in principle,
is applicable to cases where there is a refusal to join in an appeal. No
importance is attached to the technical mode of proceeding called sum-
mons and severance. It is sufficient if it appears in any way by the
record. that the other party has in any way been notified in writing to
appear, and that he has failed to appear, or if appearing, has refused to
join. The record must show a written notice and due service, or his
appearance and refusal, and that the court, on that ground, granted an
appeal to the party who prayed for it as to his own interest. Masterson
v. Herndon, 5 B. R. 1380; s. a 10 Wall. 416.

It is evident that section 1007, so far as it affects a supersedeas and
stay of execution, can not be literally complied with in cases of appeal.
Only the spirit of the act can in many particulars be carried out. In cases
of appeal, the appeal may be taken orally in court. No written applica-
tion need be made either in court or to the judge. In such a case a copy
of the writ of error, or a copy of anything like a writ of error, or analogous
to it can not be filed. But it is evident that something must be done by
the appellant within sixty days, in order to comply with the spirit of
the act — that is, he must take his appeal, and present his bond to the
court or judge within that time, and he must file in the clerk’s office, either
the bond or some other paper, or an entry must be made upon the min-
utes of the court, or something else must be done to show that the ap-
peal has been taken within sixty days. The allowance of the appeal
relates back to the time when the original application was made for an
appeal. The appeal suspends the operation of the judgment of the cir-
cuit court rendered on an appeal from the district court, and consequently
holds the matter in statu quo, as if the judge of the circuit court were
holding the matter under advisement, and had not made any order in the
case. This is the effect of the appeal as a supersedens; consequently all
facts made or done by either court, after the appeal has been applied for,
APPEAL. 183

are vacated by an allowance of the appeal. Thornhill vy. Bank, 5 B. R.
377; 8. c. 1 L. T. B. 287.

The object of a citation is to give notice of the 1emoval of the cause, and
such notice may be waived by entering a general appearance by counsel.
Where an appearance is entered, the objection that notice has not been
given is a mere technicality, and the party availing himself of it should,
at the first term as he appears, give notice of the motion to dismiss, and
that his appearance is entered for that purpose. After the lapse of the
term the motion is too late. Buckingham v. McLean, 13 How. 151; s. ¢.
8 McLean, 185.

Want of notice of an appeal comes too late after a general appearance.
Smith vy. Mason, 6 B. R. 1; s. c. 14 Wall. 419: s.¢.5 L. T. B. 7.

No appeal lies unless the decree is final, and a decree which directs an
account to be taken of certain rents and profits is not final. Crawford v.
Points, 18 How. 11.

A case can not be properly taken to the supreme court until a final de-
cree is entered as between all the parties. Buckingham v. McLean, 13
How. 151; s. ¢. 83 McLean, 185.

Where a portion of the evidence has been lost, and is not inserted in
the record, the supreme court will decide the case upon what remains.
Ibid.

If the circuit court renders a judgment or decree in favor of the party
instituting the suit, in a case where it is without jurisdiction, the su-
preme court will reverse the judgment or decree and remand the cause
with directions to dismiss the suit. Stickney v. Wilt, 11 B. R. 97; s. c. 28
Wall. 150.

If the circuit court dismiss a writ of error for want of jurisdiction, a
writ of error will not lie from the supreme court to the circuit court. Ap-
pellate courts under such circumstances do not determine the questions
presented in the bill of exceptions filed in the district court, as those ques-
tions have not been re-examined in the circuit court, and the supreme
court is not inclined to re-examine any such questions coming up from the
district court until they have first been passed upon by the circuit court.
Consequently the question whether a writ of error will lie from the su-
preme court to the circuit court to examine the rulings of the circuit
court, in a case removed into that court from the district court, does not
arise, as the record shows that the circuit court never passed upon the
questions as to the correctness or incorrectness of the rulings of the dis-
trict court. Ins. Co. v. Comstock, 8 B. R. 145; s. c. 16*Wall. 258.

If the circuit court dismisses a writ of error for want of jurisdiction, a
writ of mandamus is the proper remedy, and a writ of error will not lie.
Tbid.

A defendant may appeal, although he has complied with the decree, by
executing a deed as he was thereby directed to do. O’Hara v. Mac-
Connell, 98 U. S. 150.

A deed executed after a decree and apart from it, is no bar to an appeal,
although it gives the appellee the same right as the decree. Ibid.

If no order, decree or action is had on a petition and answer filed after
184 Tue Bankruptcy Law.

the decree, but before the entry of the appeal, they can not be considered
on appeal. Ibid.

Act oF 1898, Cu. 4, § 30. Rules, Forms, and Orders.— (a) All
necessary rules, forms, and orders as to procedure and for carrying
this Act into force and effect shall be prescribed, and may be amended
from time to time, by the Supreme Court of the United States.

Act oF 1867, § 4990. The general orders in bankruptcy heretofore
adopted by the justices of the supreme court, as now existing, may
be followed in proceedings under this Title; and the justices may,
from time to time, subject to the provisions of this Title, rescind
and vary any of those general orders, and may frame, rescind, or
vary other general orders for the following purposes:

First. For regulating the practice and procedure of the district
courts in bankruptcy, and the forms of petitions, orders, and other
proceedings to be used in such courts in all matters under this Title.

Second. For regulating the duties of the various officers of such
courts.

Third. For regulating the fees payable and the charges and costs
to be allowed,! with respect to all proceedings in bankruptcy before
such courts, not exceeding the rate of fees now allowed by law for
similar services in other proceedings.

Fourth. For regulating the practice and procedure upon appeals.

Fifth. For regulating the filing, custody and inspection of records.

Sixth. And generally for carrying the provisions of this Title into
effect.

All such general orders shall from time to time be reported to
Congress, with such suggestions as the justices may think proper.

1And said justices shall have power under said sections, by gen-
eral regulations, to simplify, and so far as in their judgment will
conduce to the benefit of creditors, to consolidate the duties of the
register, assignee, marshal, and clerk, and to reduce fees, costs, and
charges, to the end that prolixity, delay, and unnecessary expense
may be avoided.

Statute revised — March 2, 1867, ch. 176, § 10, 14 Stat. 521. Prior Stat-
ute -— August 19, 1841, ch. 9, § 6, 5 Stat. 445.

Practice in Bankruptcy.— A court of bankruptcy is sui generis in its
nature, and its practice is controlled hy the laws which created it, aided

 

180 amended by act of June 22, 1874, ch. 390, § 18, 18 Stat. 184.
CoMMENCEMENT OF PROCEEDINGS. 185

by such light as may be thrown upon them by the reported decisions
under similar statutes. In re Strauss, 2 B. R. 48; in re Julius L. Adams,
2B. R. 95; s. c. 36 How. Pr. 51; s. c. 2 Ben. 5038.

. Proceedings in the bankruptcy case proper are regarded as proceedings
in equity, and are to be governed by the rules and analogies of equity
jurisprudence. In re Schuyler, 2 B. R. 549; s. c. 3 Ben. 200; s. c. 2 L. T. B.
85.

The justices of the supreme court are required, subject to the provisions
of the act, to frame general orders for carrying the provisions of the act
into effect, but they are not authorized to extend their operation beyond
the limits prescribed by the act itself. In re L. Glaser, 1 B. R. 336; 5. ¢.
2 Ben, 180; s.c. 1 L. T. B. 57.

This section does not confer on the justices the power to create or cause
to be created a new office and to confer upon such officer powers which
by the letter of the act are expressly conferred upon officers created
thereby. In re Philip Rein, 49 How. Tr. 301.

Establishment of Fees.— The justices can not allow larger fees than
those now given for similar services in other proceedings. In re John W.
Dean, 1 B. R. 249; s. c. 1 L. T. B. 9; in re J. H. Robinson, 1 B. R. 285;
s. c. 2 Ben. 145; s.c.1L. T. B. 25.

The power of the justices of the supreme court to prescribe fees, commis-
sions, charges, and allowances for the officers, agents, marshals, messen-
gers, assignees, and registers in cases of bankruptcy is plenary, with the
limitation that the fees can not exceed the rate allowed by law at the time
of the enactment of the revised statutes for similar service in other pro-
ceedings. In re Johnson & Hall, 12 B. R. 345.

The supreme court can not regulate the reasonable compensation to
be allowed to the assignee for his services. In re Colwell, 15 B. R. 92.

Act oF 1898, Cu. 1, § 1. Commencement of Proceedings.— (10)
“Date of bankruptcy,” or “time of bankruptcy,” or “ commencement
of proceedings,” or “bankruptcy,” with reference to time, shall
mean the date when the petition was filed.

Act oF 1867, § 4991. The filing of the petition for an adjudica-
tion in bankruptcy, either by a debtor in his own behalf, or by any
creditor against a debtor, shall be deemed to be the commencement
of proceedings in bankruptcy.

Statute revised — March 2, 1867, ch. 176, § 38, 14 Stat. 535.

The order referred to in this provision must mean the order adjudicating
the debtor a bankrupt. In re Patterson, 1 B. R. 125; s. c. 1 Ben. 508.

The filing of the petition is the commencement of the proceedings. The
deposit of $50 to secure the register’s fees, is merely an act preliminary
to the issue of the warrant. In re C. H. Preston, 6 B. R. 545.

The proceedings in bankruptcy are not commenced until the petition
is actually filed. although it was previously made, signed, and verified.
186 Tue Bankruptcy Law.

Wells v. Brackett, 30 Me. 61; in re Hill & Van Valkenberg, 5 Law Rep.
326.

Where the petition in involuntary bankruptcy is presented to the judge,
and the orders signed by him on one day, but are not actually deposited
in the clerk’s office until the following day, when the papers are marked
as filed upon the preceding day, it will be deemed to have been filed on
such preceding day. Frank v. Houston, 9 Kans. 406.

It is not the filing of every petition that is deemed the commencement,
of proceedings, but the filing of a petition upon which an order of ad-
judication may be made by the court. In re Davis Rogers, 10 B. R. 444;
s. c. 1 Cent. L. J. 470.

The filing of a petition in involuntary bankruptcy, unsupported by any
proof of the act of bankruptcy or of the creditor’s claim, does not con-
stitute the commencement of proceedings in bankruptcy. Ibid.

§ 4992. The proceedings in all cases of bankruptcy shall be deemed
matters of record, but the same shall not be required to be recorded
at large, but shall be carefully filed, kept, and numbered in the office
of the clerk of the court, and a docket only, or short memorandum
thereof, kept in books to be provided for that purpose, which shall
be open to public inspection. Copies of such records, duly certified
under the seal of the court, shall in all cases be presumptive evidence
of the facts stated therein.

Statute revised — March 2, 1867, ch, 176, § 38, 14 Stat. 535. Prior Stat-
utes— April 4, 1800, ch. 19, § 51, 2 Stat. 34; Aug. 19, 1841, ch. 9, § 13,
5 Stat. 448.

A copy of an order of adjudication certified to by a register is not
properly authenticated, and is not admissible as evidence in a collateral
action. Adams v. Wait, 42 Vt. 16.

A copy of the record is only prima facie and not conclusive evidence of a
fact, and may be contradicted by parol or any other competent testimony.
Frehley v. Barr, 66 Penn. 196; Rugan v. West, 1 Binn. 263; Blythe v. Johns,
5 Binn. 247. Vide Wood v. Grundy, 3 H. & J. 13: Barney y. Patterson, 6
. & J. 182.

The original papers in proceedings in bankruptcy are admissible in evi-
dence for the purpose of proving the declarations of the bankrupt. Clay-
ton v. Siebert, Brewst. 176.

The certificate may be made by the clerk of the court. ceo vy. Ham-
ilton, 87 Tex. 269.

Where all the papers given in evidence during the trial of the cause, ex-
cept depositions, are sent out with the jury, the record of the proceedings
in bankruptcy may be sent out, although it contains depositions, for the
record can not be divided. Shomo y. Zeigler, 78 Penn. 357.

A duly certified copy of the inventory is competent evidence against the
hankrupt, without the production of the entire record. Dupuy v. Harris,
6 B. Mon. 534,
CREATION OF TWO OFFICES. 187

The transcript of the proceedings in bankruptcy, under the seal of the
district court and attested by the clerk, and accompanied by a certificate
of the district judge that the attestation is in due form, is admissible as
evidence in the courts of another State. Redman v. Gould, 7 Blackf. 361.

A copy of the docket entries is. competent evidence, for the short memo-
randum is the recording required by the statute, and, consequently, is the
documentary evidence of the proceedings. Berghaus y. Alter, 5 Penn. 507.

A copy of the record which purports to give a full record of everything
which had transpired in the court up to its date, is admissible in evidence,
although the proceedings are not finished, where the only object of the
record is to prove the time of the filing of the petition. State v. Rollins,
18 Mo. 179.

If a fraudulent vendee sells the goods to a third person, his subsequent
petition and adjudication are not competent evidence against such pur-
chaser. Haskins v. Warren, 115 Mass. 514.

The record of the proceedings in bankruptcy, attested by the clerk of the
district court, without any certificate of the presiding judge, is sufficient.
Murray vy. Marsh, 2 Hay (N. C.), 290.

In actions depending upon the bankruptcy of a stranger, there must be
proof of the proceedings in bankruptcy, the act of bankruptcy, and the
petitioning creditor’s debt. Waterman vy. Robinson, 5 Mass. 303; Belden
v. Edwards, 2 Day, 246; Farrington v. Farrington, + Mass. 237.

The proceedings in bankruptcy do not constitute an integral record, but
a copy of any portion thereof, duly authenticated as a separate record, is
prima facie evidence of the facts stated therein. Michener v. Payson, 13
B. KR. 49; s.¢.8C. L. N. 17; 8. 2 W. N. 339.

A copy of part of the record is not competent evidence against a person
who was not a party to the record. Wilson v. Harper, 5 Rich. (N. 8.) 294.

To prove an order in a particular proceeding in a bankruptcy case, it is
not necessary to produce the whole record of that case, but only the whole
record of that particular proceeding. Payson v. Brooke, 1 W. N. 89:

A copy of a bankrupt’s schedule containing an admission of his liability
on a note is not competent evidence against a joint obligor. Wilson v.
Harper, 5 Rich. (N. 8.) 294.

To establish the bankruptcy of the debtor, the production of the proceed-
ings against him as a bankrupt is not alone sufficient. Proof of his being
a trader, of the act of bankruptcy, and of the petitioning creditor’s debt
is also necessary. Hart v. Strode, 2 A. K. Marsh. 115; Den v. Wright, Pet.
C. C. G4.

When an adjudication of bankruptcy is proved, the party who alleges
that the proceedings have been dismissed, must prove the time of dis-
missal. Wills v. Claflin, 13 B. R. 437; s. c. 92 U. 8. 135.

If several papers are attached to the clerk’s certificate by ordinary tape,
without any mark by which their identity can be established, the tran-
script is not admissible. Pike v. Crehore, 40 Me. 503.

Act oF 1898, Cu. 5, § 33. Creation of Two Offices.— (a) The
offices of referee and trustee are hereby created.

s
188 THE Bankruptcy Law. ,

Act or 1898, Cu. 5, § 34. Appointment, Removal, and Districts
of Refereess—~ (a) Courts of bankruptcy shall, within the territorial
limits of which they respectively have jurisdiction, (1) appoint refer-
ees, each for a term of two years, and may, in their discretion, remove
them because their services are not needed or for other cause; and
(2) designate, and from time to time change, the limits of the districts
of referees, so that each county, where the services of a referee are
needed, may constitute at least one district.

§ 37. Number of Referees (a) Such number of referees shall
be appointed as may be necessary to assist in expeditiously transacting
the bankruptcy business pending in the various courts of bankruptcy.

Act or 1867, § 4993. Each district judge shall appoint upon the
nomination and recommendation of the Chief Justice of the supreme
court, one or more registers in bankruptcy when any vacancy occurs
in such office, to assist him in the performance of his duties under
this Title, unless he shall deem the continuance of the particular
office unnecessary.

Statute revised — March 2, 1867, ch. 176, § 3, 14 Stat. 518. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 5, 5 Stat. 444.

Act or 1898, Cu. 5, § 35. Qualifications of Referees.— (a\ Indi-
viduals shall not be eligible to appointment as referees unless they
are respectively (1) competent to perform the duties of that office;
(2) not holding any office of profit or emolument under the laws of
the United States or of any State other than commissioners of deeds,
justices of the peace, masters in chancery, or notaries public; (3) not
related by consanguinity or affinity, within the third degree as deter-
mined by the common law, to any of the judges of the courts of
bankruptcy or circuit courts of the United States, or of the justices
or judges of the appellate courts of the districts wherein they may
be appointed; and (4) residents of, or have their offices in, the terri-
torial districts for which they are to be appointed.

Act or 1867, § 4994. No person shall be eligible for appointment
as Tegister in bankruptcy, unless he is a counsellor of the district court
for the district in which he is appointed, or of some one of the courts
of record of the State in which he resides.

Statute revised — March 2, 1867, ch. 176, § 8, 14 Stat. 518.

Act or 1898, CH.1,81. * * * Officer. (18) “ Officer ” shall
include clerk, marshal, receiver, referee, and trustee, and the imposing

’
Dutizs or REFEREES. 189

of a duty upon or the forbidding of an act by any officer shall include
his successor and any person authorized by law to perform the duties
of such officer. * * * (21) “Referee” shall mean the referee
who has jurisdiction of the case or to whom the case has been referred,
or anyone acting in his. stead.

Cu. 5, § 36. Oaths of Office of Referees— (a) Referees shall,
take the same oath of office as that prescribed for judges of United
States courts.

§ 50. Bond of Referees.—(a) Referees, before assuming the duties
of their offices, and within such time as the district courts of the
United States having jurisdiction shall prescribe, shall respectively
qualify by entering into bond to the United States in such sum as
shall be fixed by such courts, not to exceed five thousand dollars, with
such sureties as shall be approved by such courts, conditioned for
the faithful performance of their official duties.

Act oF 1867, § 4995. Before entering upon the duties of his
office, every person appointed a register in bankruptcy shall give a
bond to the United States, for the faithful discharge of the duties
of ‘his office, in a sum not less than one thousand dollars, to be fixed
by the district judge, with sureties satisfactory to such judge; and
he shall, in open court, take and subscribe the oath prescribed in
section seventeen hundred and fifty-six, Title PROVISIONS APPLICABLE
TO SEVERAL CLASSES OF OFFICERS, and also an oath that he will not,
during his continuance in office, be, directly or indirectly, interested
in or benefited by the fees or emoluments arising from any suit or
matter pending in bankruptcy, in either the district or circuit court
in his district.

Statute revised — March 2, 1867, ch. 176, § 3, 14 Stat. 518.

Act or 1898, Cu. 5, § 39. Duties of Referees— * * * (b)
Referees shall not (1) act in cases in which they are directly or indi-
rectly interested; (2) practice as attorneys and counselors at law in
any bankruptcy proceedings; or (3) purchase, directly or indirectly,
any property of an estate in bankruptcy.

Act or 1867, § 4996.1— No register or clerk of court, or any
partner or clerk of such register or clerk of court, or any person

 

1So amended by act of June 22, 1874, ch. 390, § 18, 18 Stat. 184.
190 Tue Bankruptcy Law.

having any interest with either in any fees or emoluments in bank-
ruptcy, or with whom such register or clerk of court shall have any
interest in respect to any matter in bankruptcy, shall be of counsel,
solicitor, or attorney, either in or out of court, in any suit or matter
pending in bankruptcy in either the circuit or district court of his
district, or in an appeal therefrom. Nor shall they or either of them,
be executor, administrator, guardian, commissioner, appraisor, divider,
or assignee of, or upon any estate within the jurisdiction of either
of said courts of bankruptcy; nor be interested, directly or indirectly,
in the fees or emoluments arising from either of said trusts.

Statute revised — March 2, 1867, ch. 176, § 4, 14 Stat. 519.

The formal receipting for a dividend check, or the filing of the ‘planks
in a case of involuntary bankruptcy, when done gratuitously as a favor
to a friend, is not within the spirit of this provision. Ex parte Binswanger,
BH. D. Mo.

A register may purchase property at a sale by an assignee. Ibid.

Act or 1898, Cu. 5, § 34, Removal of Referees Courts of
bankruptcy may in their discretion remove referees because their
services are not needed or for other cause.

Act or 1867, § 4997. Registers are subject to removal from office
by the judge of the district court.

Statute revised — March 2, 1867, ch. 176, § 5, 14 Stat. 518

On the suggestion of a credible person, that any officer of the court
whom the court has power to remove, has been guilty of offenses either of
omission or commission, it is necessary that an inquiry should be made,
so that the purity of judicial administration shall be maintained. Or-
dinarily, investigations instituted for public ends, as in criminal cases,
are conducted at public expense. But if a party who institutes a private
complaint fails to sustain it, he must pay the costs. Ex parte Binswanger,
E. D. Mo.

It is impossible to prescribe a standard of official courtesy. It¢eis only
when a register is unfitted by temper or otherwise to observe the man-
ners and bearing due his office, or fails to observe them, that his official
conduct calls for review. Ibid.

There is no objection to a register’s employing a short-hand reporter
to reduce examinations to writing when he pays him out of his own
fees. Ibid.

Act or 1898, Cu. 5, § 38. Jurisdiction of Referees.—(a) Refer-
ees respectively are hereby invested, subject always to a review by
Duties oF REFEREES, 191

the judge, within the limits of their districts as established from
time to time, with jurisdiction to (1) consider all petitions referred
to them by the clerks and make the adjudications or dismiss the
petitions; {2) exercise the powers vested in courts of bankruptcy for
the administering of oaths to and the examination of persons as
witnesses and for requiring the production of documents in pro-
ceedings before them, except the power of commitment; (3) exercise
the powers of the judge for the taking possession and releasing of
the property of the bankrupt in the event of the issuance by the
clerk of a certificate showing the absence of a judge from the judicial
district, or the division of the district, or his sickness, or’ inability
to act; (4) perform such part of the duties, except as to questions
arising out of the applications of bankrupts for compositions or dis-
charges, as are by this Act conferred on courts of bankruptcy and
as shall be prescribed by rules or orders of the courts of bankruptcy
of their respective districts, except as herein otherwise provided; and
(5) upon the application of the trustee during the examination of the
bankrupts, or other proceedings, authorize the employment of stenog-
raphers at the expense of the estates at a compensation not to exceed
ten cents per folio for reporting and transcribing the proceedings.

§ 39. Duties of Referees.— (a) Referees shall (1) declare divi-
dends and prepare and deliver to trustees dividend sheets showing
the dividends declared and to whom payable; (2) examine all sched-
ules of property and lists of creditors filed by bankrupts and cause
such as are incomplete or defective to be amended; (3) furnish such
information concerning the estates in process of administration be-
fore them as may be requested by the parties in interest; (4) give
notices to creditors as herein provided; (5) make up records embody-
ing the evidence, or the substance thereof, as agreed upon by the
parties in all contested matters arising before them, whenever re-
quested to do so by either of the parties thereto, together with their
findings therein, and transmit them to the judges; (6) prepare and
file the schedules of property and lists of creditors required to be
filed by the bankrupts, or cause the same to be done, when the bank-
rupts fail, refuse, or neglect to do so; (7) safely keep, perfect, and
transmit to the clerks the records, herein required to be kept by
them, when the cases are concluded; (8) transmit to the clerks such
papers as may be on file before them- whenever the same are needed
in any proceedings in courts, and in like manner secure the return
of such papers after they have been used, or, if it be impracticable
192 Tue Bankruptcy Law.

to transmit the original papers, transmit certified copies thereof by
mail; (9) upon application of any party in interest, preserve the evi-
dence taken or the substance thereof as agreed upon by the parties
before them when a stenographer is not in attendance; and (10)
whenever their respective offices are in the same cities or towns
where the courts of bankruptcy convene, call upon and receive from
the clerks all papers filed in courts of bankruptcy which have been
referred to them.

The register, under the law of 1867, had power to make a valid adjudica-
tion in an involuntary case where the alleged bankrupt has made default.
In re Deford, 18 B. R. 554.

Under the law of 1867, it was held that a register had no authority to set
off exempt property to the bankrupt, nor to direct the assignee in the
matter. In re Peabody, 16 B. R. 243.

Acts oF 1867 and 1874, § 4998. Every register in bankruptcy
has power: (a)

First. To make adjudication of bankruptcy in cases unopposed.

Second. To receive the surrender (b) of any bankrupt.

, Third. To administer oaths in all proceedings before him.

Fourth. To hold and preside at meetings of creditors.

Fifth. To take proof of debts.

Sixth. To make all computations of dividends, and all orders of
distribution.

Seventh. To furnish the assignee with a certified copy of such
orders, and of the schedules of creditors and assets filed in each case.

Highth. To audit (c) and pass accounts of assignees.

Ninth. To grant protection.(d)

Tenth. To pass the last examination (e) of any bankrupt in cases
whenever the assignee or a creditor do not oppose.

Eleventh. To sit in chambers and dispatch there such part (f) of
the administrative business of the court and such uncontested matters
as shall be defined in general rules and orders, or as the district
judge shall in any particular matter direct.

Statute revised — March 2, 1867, ch. 176, § 4, 14 Stat. 518,

(a) A register can not delegate to his clerk any authority to take and
pass upon proofs, or to determine the sufficiency of schedules, or to do any
other act than such as is purely clerical. Ex parte Binswanger, E. D. Mo.

(b) After passing the order of adjudication, the register, in voluntary
cases, upon the request of the bankrupt, is authorized and required to re-
Duti&s oF REFEREES. 193

ceive the surrender of the property, and keep it safely until it can be
turned over to the assignee. In re Hasbrouck, 1 B. R. 75; s. ¢c. 1 Ben. 402.

The fact that the bankrupt has a prospect of effecting a settlement with
his creditors, is not a sufficient reason for delaying to make a surrender
of his property. The court may, in a proper case, order such surrender to
be made. In re Shafer & Hamilton, 2 B. R. 586.

In proper cases the register may appoint a watchman to take charge of
the property. In re Bogert & Evans, 2 B. R. 585; in re Shafer & Hamilton,
2B. R. 586.

The register may pass an order directing the bankrupt to deliver all
cash on hand to the custodian appointed by him, and in case of refusal,
the court will enforce it by an attachment for contempt. In re F. & A.
Speyer, 6 B. R. 255; s. c. 42 How. Pr. 397; in re Kempner, 6 B. R. 521.

If the marshal has property in his possession ana actual custody as the
property of the bankrupt, it is proper that it should be insured in such
sums and for such time as shall seem proper to the register, and an order
of the court will, upon application, be passed for that purpose. In re
Carow, 4+ B. R. 543; s. c. 41 How. Pr. 112.

The register, by special order, may be directed to sell property and exe
cute a conveyance therefor. A sale may also be made by authority of the
court under a disputed judgment, and the deed may be made by the ref-
eree. In re Hannah, 5 B. R. 292.

(c) Under the power conferred by this clause and Rule V, the register
{s authorized to pass an order requiring the assignee to make his return.
In re Bellamy, 1 B. R. 64; s. c. 1 Ben. 390; s. c.1 L. T. B. 22.

The duty enjoined upon the register is to audit, not simply to adjudicate
— to hear and examine, not on one side only, but on both sides. The duty
is not only judicial, but ministerial, administrative. There is no statute
or judicial writing in which the word “audit” is applied to the action of
a court. Ex vi termini it implies executive as well as judicial action. If
the act of auditing implied only judicial action, no more would be re-
quired of the register than that he take such evidence as the parties see fit
to submit, and pass upon the same, basing his decision upon such evidence
alone. But an auditing officer proceeds to examine an account for the pur-
pose of ascertaining in any way he may be able, without regard to estab-
lished forms or technical rules, what sum ought in fairness be allowed.
This is the course universally pursued by the auditing officers of cerpora-
tions, civil or municipal, and it has grown into an established usage or
custom. The word, as used in the act and rules, is used in this accepted
sense as there is no other established sense in which it can be used. The
court, as its first act, seizes upon the estate of the debtor, brings the same
within its jurisdiction and control, and thereby charges itself with the
duty of a just, full, and complete administration of the estate in the inter-
ests of all concerned. The duties executive in their character devolve
upon the courts in bankruptcy. To relieve the judge of the variant and
sometimes apparently conflicting duties of a judicial and ministerial offi-
cer, a new class of officers is called into being, who are especially charged
with the administrative duties of the court. These officers are deprived of

13
194 Tue Banxruprey Law.

the strict judicial function of deciding an issue duly framed, but upon
them are devolved only those quasi judicial functions which the act calls
“administrative duties.’ Auditing the accounts of an assignee is among
those administrative acts which pertain thus peculiarly to the register.
In auditing an account, the register may, therefore, cross-examine all wit-
nesses. and summon such other witnesses as he may deem proper. In re
John J. Staff, 43 How. Pr. 110; s. ec. 5 Ben. 574; in re Abraham B. Clark,
9 B. R. 67.

An account to which a witness refers in his testimony may properly
be regarded as evidence of the items of alleged services and disburse-
ments, but the items must be explained as to the occasion and necessity
and value of the services, and the occasion and necessity and amount of
the disbursements, and how they came to be rendered and made, and
whether they are in any part proper items for the account, or whether
they ought to be compensated through some other form of proceeding.
In re John J. Staff, 48 How. Pr. 110; s. c. 5 Ben. 574.

Quaere, Can an attorney for the assignee retain moneys collected by
him until his fees are paid? In re John J. Staff, 42 How. Fr. 414.

The register should proceed to audit the accounts without first requir-
ing that moneys in dispute shall be deposited in bank. When the ac-
counts are audited, such order may be made aS may seem necessary.
Ibid.

When no reason is shown why an assignee should make an amend-
ment to his return, how such an amendment is proper or necessary, or
what particular object is to be subserved by his making it, or what in-
terest of the bankrupt is to be promoted by making it, or to be injured
by not making it, he will not be required to make it. In re Kingon, 3
B. R. 446; s. ec. 88 How. Pr. 392.

The register has the power to order the payment of fees and expenses
incurred in the proceedings, out of furds in the hands of the assignee.
In re Lane, 2 B. R. 309; s. c. 3 Ben. 98.

(d) This undoubtedly means protection to the bankrupt from being ar-
rested in cases where he is not liable to arrest. In re L. Glaser, 1 B. R.
336; s. c. 2 Ben. 180; s. c. 1 L. T. B. 57.

(e) In some districts it is the practice of the registers, where no party
demands the examination of the bankrupt, to examine him of their own
accord. For a specimen of such an examination, vide 1 B. R. 135. In re
Sherwood (note), 1 B. R. 344; s. c. 6 Phila. 461. Vide, also, Rule VII; in
re Brandt, 2 B. R. 215; in re Wm. H. Long, 3 B. R. (quarto) 66.

When the bankrupt asks to be discharged, he must submit himself, if
required, to be examined, with a view to show whether he has made a
full and fair surrender. In re Brandt, 2 B. R. 215.

There is no last examination in bankruptcy, nor any examination at
all, unless specially ordered. U. 8. v. Clark, 4 B. R. 59; 5. ce 1 L. T. B.
237;s.¢c.3 L. T. B. 223. ;

(f) Under this clause and Form No. 4, the register to whom a case is
referred has all the powers of the district court, except to commit for con-
tempt, or decide any question concerning the allowance of a discharge,
CoONTEMPTS BEFORE REFEREES. 195

unless an issue of law or fact is raised and contested by a party to the
proceedings. In re Gettleson, 1 B. R. 604; in re Lanier, 2 B. R. 154; in re
Brandt, 2 B. R. 215.

The proceedings before a register are to be conducted by him with the
exercise of proper legal discretion, and, subject to that rule, are entirely
within his control. If a party refuses to proceed, the case must proceed
without him. No general inflexible law can be laid down in respect to
adjournments or postpcnements. Every case must be treated on its own
merits, and according to the best judgment of the register. In re Hyman,
2B. R. 338; s. c. 86 How. Pr. 282; s. c. 3 Ben. 28.

When a matter i§ specifically referred to the register for examination,
he can not inquire into the capacity of the parties to litigate. His duty
is to take the proofs under the order of reference, and he is bound to con-
sider that every question as to the competency of the party to present the
objections, and of regularity in their reception and reference, has been
acted on and disposed of by the court. In re Brown King, 1 N. Y. Leg.
Obs. 22; s. c. 4 Law Rep. 320

If the bankrupt is a party to a submission of a controversy to a register,
he is bound by the decision in a collateral action. Johnson vy. Worden,
13 B. R. 385; s. ec. 47 Vt. 457.

If a register determines the amount due on a claim without hearing
the claimant, or appointing a time for hearing, his determination is not
conclusive, although the claimant and the assignee agreed to leave it to
him for adjustment. Moran v. Bogert, 14 B. R. 393; s. c. 16 Abb. Pr.
(N. S.) 303; s. ec. 10 N. Y. Supr. 603.

Act or 1898, Cu. 5, * * * § 48. Referee’s Absence or
Disability (a) Whenever the office of a referee is vacant, or its
occupant is absent or disqualified to act, the judge may act, or may
appoint another referee, or another referee holding an appointment
under the same court may, by order of the judge, temporarily fill
the vacancy.

Act or 1898, Cu. 4, * * * § 41. Contempts before Ref-
erees.— (a) A person shall not, in proceedings before a referee, (1)
disobey or resist any lawful order, process, or writ; (2) misbehave
during a hearing or so near the place thereof as to obstruct the same;
(3) neglect to produce, after having been ordered to do so, any perti-
nent document; or (4) refuse to appear after having been subpeenaed,
or, upon appearing, refuse to take the oath as a witness, or, after
having’ taken the oath, refuse to be examined according to law:
Provided, That no person shall be required to attend as a witness
before a referee at a place outside of the State of his residence, and
tnore than one hundred miles from such place of residence, and only
in case his lawful mileage and fee for one day’s attendance shall be
first paid or tendered to him.
196 Tur Bankruprcy Law.

(b) The referee shall certify the facts to the judge, if any person
shall do any of the things forbidden in this section. The judge shall
thereupon, in a summary manner, hear the evidence as to the acts
complained of, and, if it is such as to warrant him in so doing,
punish such person in the same manner and to the same extent as
for a contempt committed before the court of bankruptcy, or commit
such person upon the same conditions as if the doing of the for-
bidden act had occurred with reference to the process of, or in the
presence of, the court.

Where an order is, in effect, a final order for payment of money, whether
the proceeding in which it is made is of equitable or legal cognizance,
it can not be enforced by imprisonment upon the theory of a contempt.
In re The Atlantic Mut. Life Ins. Co., 17 B. R. 368.

AcT oF 1898, CH. 4, § 22. Reference of Cases after Adjudica-
tion.— (a) After a person has been adjudged a bankrupt the judge
may cause the trustee to proceed with the administration of the
estate, or refer it (1) generally to the referee or specially with only
limited authority to act in the premises or to consider and report
upon specified issues; or (2) to any referee within the territorial
jurisdiction of the court, if the convenience of parties in interest
will be served thereby, or for cause, or if the bankrupt does not do
business, reside, or have his domicile in the district.

(b) The judge may, at any time, for the convenience of parties
or for cause, transfer a case from one referee to another.

Act oF 1867, § 4999. No register shall have power to commit for
contempt, or to make adjudication of bankruptcy when opposed; or
to decide upon the allowance or suspension of an order of discharge.

Statute revised — March 2, 1867, ch. 176, § 4, 14 Stat. 519.

Act or 1898, Cu. 5, § 42. Records of Referees.— (a) The records
of all proceedings in each case before a referee shall be kept as nearly -
as may be in the same manner as records are now kept in equity
cases in circuit courts of the United States.

(b) A record of the proceedings in each case shall be kept int
a separate book or books, and shall, together with the papers on
file, constitute the records of the case.

(c) The book or books containing a record of the proceedings
shall, when the case 1s concluded before the referee, be certified to
CLERK. 197

by him, and, together with such papers as are on file before him,
be transmitted to the court of bankruptcy and shall there remain as
a part of the records of the court.

Act oF 1898, Cu. 1, * * * Clerk—(5) “Clerk” shall mean
the clerk of a court of bankruptcy.

Act or 1867, § 5000. Every register shall make short memoranda
of his proceedings in each case in which he acts, in a docket to be
kept by him for that purpose, and shall forthwith, as the proceedings
are taken, forward to the clerk of the district court a certified copy
of these memoranda, which shall be entered by the clerk in a proper
minute-book to be kept in his office.

Statute revised — March 2, 1867, ch. 176, § 4, 14 Stat. 519.

Act oF 186%, § 5001. The judge of a district court may direct a
register to attend at any place within the district for the purpose
of hearing such voluntary applications under this Title as may not
be opposed, of attending any meeting of creditors, or receiving any
proof of debt, and generally, for the prosecution of any proceedings
under this Title.

Statute revised — March 2, 1867, ch. 176, § 5, 14 Stat, 519,

The register can not fulfill the requirements of his official duty by hold-
ing occasional monthly sessions in a county of his district in which he does.
not reside, on days of his own appointment. He should have an office,
attended by himself or resident clerk, where the docket, minutes, and
papers of every bankruptcy in such county are securely kept, and are al-
ways open during the hours of business to the inspection of those inter-
ested. In re Sherwood, 1 B. R. 344; s. c. 6 Phila. 461.

For improper conduct a case may be transferred from one register to
another, Inre J, O. Smith, 1 B. R, 243; s, c, 2 Ben, 113.

Act oF 1867, § 5002. Every register, so acting, shall have and
exercise all powers, except the power of commitment, vested in the
district court for the summoning and examination of persons or wit-
nesses, and for requiring the production of books, papers, and docu-
ments.

Statute revised — March 2, 1867, ch. 176, § 5, 14 Stat. 519.

A witness is bound to attend although the summons is served on him in
another district, if he does not live more than one hundred miles from the
place where the register requires him to attend. In re Wm. S. Woodward,
12 B. R. 297; s. c. 10 Pac. L. R. 214.
198 Tue Bankruptcy Law.

Act oF 1898, Cu. 4, § 21. Evidence.—(a) A court of bank-
ruptcy may, upon application of any officer, bankrupt, or creditor,
by order require any designated person, including the bankrupt, who
is a competent witness under the laws of the Stdte in which the
proceedings are pending, to appear in court or before a referee or
the judge of any State court, to be examined concerning the acts,
conduct, or property of a bankrupt whose estate is in process of
administration under this Act.

(b) The right to take depositions in proceedings under this Act
shall be determined and enjoyed according to the United States
laws now in force, or such as may be hereafter enacted relating to
the taking of depositions, except as herein provided.

(c) Notice of the taking of depositions shall be filed with the
referee in every case. When depositions are to be taken in opposi-
tion to the allowance of a claim notice shall also be served upon the
claimant, and when in opposition to a discharge notice shall also
be served upon the bankrupt.

(d) Certified copies of proceedings before a referee, or of papers,
when issued by the clerk or referee, shall be admitted as evidence
with like force and effect as certified copies of the records of district
courts of the United States are now or may hereafter be admitted
as evidence.

(e) A certified copy of the order approving the bond of a trustee
shall constitute conclusive evidence of the vesting in him of the
title to the property of the bankrupt, and if recorded shall impart
the same notice that a deed from the bankrupt to the trustee if
recorded would have ‘imparted had not bankruptcy proceedings in-
tervened.

(f) A certified copy of an order confirming or setting aside a
composition, or granting or setting aside a discharge, not revoked,
shall be evidence of the jurisdiction of the court, the regularity of
the proceedings, and of the fact that the order was made.

(g) A certified copy of an order confirming a composition shall
constitute evidence of the revesting of the title of his property in
the bankrupt, and if recorded shall impart the same notice that a
deed from the trustee to the bankrupt if recorded would impart.

Act or 186%, § 5003. Evidence or examination in any of the pro-
ceedings under this Title may be taken before the court, or a register
in bankruptey, viva voce or in writing, before a commissioner of
the circuit court, or by affidavit, or on commission, and the court
EVIDENCE. 199

may direct a reference to a register in bankruptcy, or other suitable
person, to take and certify such examination, and may compel the
attendance of witnesses, the production of books and papers, and
the giving of testimony in the same manner as in suits in equity
in the circuit court,

Statute revised — March 2, 1867, ch. 176, § 38, 14 Stat. 535. Prior Stat-
ute — August 19, 1841, ch. 9, § 7, 5 Stat. 446.

The provisions of this section in regard to the taking of testimony, regu-
late the proceedings with such minute detail that they must be held ex-
clusive. Testimony to be used in a case of involuntary bankruptcy can
not be taken on mere notice, but must be taken on commission. In re
Dunn et al., 9 B. R. 487; s. ec. 12 Blatch. 42,

A commission may, on the application of the assignee, be issued to take
the examination of a witness in another State, and if the witness refuses
to testify, the circuit court for that State may punish him for a refusal to
testify. In re John J. Johnston, 14 B. R. 569; s. c. 18 Pac. L. R. 54.

Acts oF 1867 and 1874, § 5004. All depositions of persons and
witnesses taken before a register, and all acts done by him, shall
be reduced to writing, and be signed by him, and shall be filed in
the clerk’s office as part of the proceedings. He shall have power
to administer oaths in all cases, and in relation to all matters in
which oaths may be administered by commissioners of circuit courts.

Statute revised — March 2, 1867, ch. 176, § 5, 14 Stat. 519.

§ 5005. Parties and witnesses summoned before a register shall
be bound to attend in pursuance of such summons at the place and
time designated therein, and shall be entitled to protection, and be
liable to process of contempt in like manner as parties and witnesses
are now liable thereto in case of default in attendance under any
writ of subpoena.

Statute revised — March 2, 1867, ch. 176, § 7, 14 Stat. 520. Prior Statute
— April 4, 1800, ch. 19, § 15, 2 Stat. 25.

§ 5006. Whenever any person examined before a register refuses
or declines to answer, or to swear to or sign his examination when
taken, the register shall refer the matter to the judge, who shall
have power to order the person so acting to pay the costs thereby
occasioned, and te punish him for contempt, if such person be com-
200 Tue Bankruptcy Law.

pellable by law to answer such question or to sign such examination.
See ante, Act of 1898, ch. 5, § 41.

Statute revised — March 2, 1867, ch. 176, § 7, 14 Stat. 520. Prior Statute
— April 4, 1800, ch. 19, §§ 14, 25, 2 Stat. 25, 28.

Where a commission issued by another court is not accompanied by in-
terrogatories, and does not furnish any information as to what the inquiry
is to which the examination of the witness is to be directed, it is impos-
sible to determine whether the questions which the witness refuses to an-
swer are or are not pertinent to the inquiry, and an attachment can not be
granted. In re 8. Glaser, 2 B. R. 398.

A creditor, though the wife of the bankrupt, is a competent witness. In
re Richards, 17 B. R. 562.

Bankruptcy proceedings are matters: of record, though not required to
be recorded at large. Copies duly certified by the clerk, under seal of the
court, are in all cases and in all courts of the country prima facie evidence
of the facts stated therein. Turnbull, Jr. v. Payson, Assignee, 16 B. R.

440.

Act of Congress of 1790, in relation to authentication of records, does not
relate to proceedings in the Federal courts. Miller v. Chandler, 17 B. R.
251.

A certificate of discharge signed by the judge, and attested under the
seal of the court, is not only sufficiently authenticated, but is precisely tle
means by which the bankrupt is to prove and to have the benefit of his
discharge. (Law of 1867.) Ibid.

While a certificate of discharge is conclusive evidence, in favor of the
bankrupt, of the regularity of such discharge, it is not so in favor of other
parties who seek to use it. Dewey v. Moyer, 18 B. R. 114.

AcT oF 1898, Cu. 4, § 24, Transfer of Cases.— (b) The judge
may at any time for the convenience of parties, or for cause, transfer
a case from one referee to another.

Act or 1867, § 5007. Any register may act in the place of any
other register appointed by and for the same district court.

Statute revised — March 2, 1867, ch. 176, § 4, 14 Stat. 519.

Act or 1898, Cu. 5, § 40. Compensation of Referees.— (a)
Referees shall receive as full compensation for their services, pay-
able after they are rendered, a fee of ten dollars deposited with
the clerk at the time the petition is filed in each case, except when
a fee is not required from a voluntary bankrupt, and from estates
which have been administered before them one per centum com-
missions on sums to be paid as dividends and commissions, or one
COMPENSATION OF REFEREES. 201

half of one per centum on the amount to be paid to creditors upon
the confirmation of a composition.

(b) Whenever a case is transferred from one referee to another
the judge shall determine the proportion in which the fee and
commissions therefor shall be divided between the referees.

(c) In the event of the reference of a case being revoked before
it is concluded, and when the case is specially referred, the judge
shall determine what part of the fee and commissions shall be paid
to the referee.

Act oF 1867, § 5008. The fees of registers, as established by law
or by rules and orders framed pursuant to law, shall be paid to
them by the parties for whom the services may be rendered.

Statute revised — March 2, 1867, ch. 176, § 4, 14 Stat. 519.

Under the provisions of this section and Rule XXIX, where the as-
signee examines the bankrupt before the register, the assignee must pay
the fees of the register for such examination, whether he has. any assets
of the estate or not. In re Hughes, 1 B. R. 226; s. c. 2 Ben. 85; 5. a 1
I. T. B. 45; in re Eidom, 3 B. R. 160.

Parties who call for the examination of the bankrupt or other witnesses,
can only be required to pay the fees and expenses for the direct examind-
tion. Those who cross-examine the witnesses must pay the fees and ex-
penses of the cross-examination. The rule applies to the matter only as
between the register and the parties for whom he renders the services.
The court, in the final disposition of the case, will pass such an order in
regard to costs as equity shall demand. Schofield v. Moorehead, 2 B. R.
1; in re Mealy, 2 B. R. 128; in re Hidom, 3 B. R. 160.

The fees for the cross-examination, so far as it may be necessary to
explain or qualify any matters brought out on the direct examination,
which may seem to bear unfavorably upon his conduct or dealings, or
which are obscure, must be paid by the party seeking the examination.
In re G. N. Noyes, 11 B. R. 111.

If the bankrupt makes further statements after the close of his direct
examination, he does so as a witness in his own behalf, and must pay the
expenses incurred thereby. In re Mealy, 2 B. R. 128. Contra, in re
Macintire, 1 B. R. 11; s. ¢. 1 Ben. 277.

If a creditor desires that a final examination shall be reduced to writing
by the register, he must pay for the services. In re Alfred Jackson, 8 B.
R. 424,

The fees to be paid by a creditor for a final examination made at his
request, will not embrace the per diem compensation to the register, nor
his fee for administering the final oath, or for the certificate of con-
formity, as these are required to be performed if no creditor appears.
Ibid.

A register has a lien for fees on the fund in court which has been
awarded to the party for whom the services were rendered. In re Breck
& Schermerhorn, 13 B. R. 216.
202 Tur Bankruptcy Law.

If the register improperly refuses to countersign a check, he is not en-
titled to a lien on the fund for the services rendered in making up the
certificate which the party is thus compelled to take. In re Philip Rein,

13 B. R. 551.
The fees of the register for the services under a reference procured

by the bankrupt before the appointment of an assignee, for the purpose
of contesting a claim offered for proof, may be paid out of the estate.
In re Clementina T, Richardson, 7 Ben. 155.

Act oF 1898, Cu. 4, § 18. Trials by Referee—(f) If the judge
is absent from the district, or the division of the district in which
the petition is pending, on the next day after the last day on which
pleadings may be filed, and none have been filed by the bankrupt
or any of his creditors, the clerk shall forthwith refer the case to
the referee.

(g) Upon the filing of a voluntary petition the judge shall hear
the petition and make the adjudication or dismiss the petition. If
the judge is absent from the district, or the division of the district
in which the petition is filed at the time of the filing, the clerk shall
forthwith refer the case to the referee.

Act or 1867, § 5009. In all matters where an issue of fact or of
law is raised and contested by any party to the proceedings before
any register, he shall cause the question or issue to be stated by
the opposing parties in writing, and he shall adjourn the same into
court for deeision by the judge.

Statute revised — March 2, 1867, ch. 176, § 4, 14 Stat. 519.

The issue of fact or law must be an issue actually raised and existing,
and one which has arisen out of proceedings which have taken place,
and not an issue likely to arise, or which may be raised thereafter. In re
J. Pulver, 1 B. R. 46; s. c. 1 Ben. 381.

It is the duty of the register to adjourn the issue into court without any
request to that effect by a contesting party. But still such an adjourn-
ment is a proceeding which a contesting party may waive, and where he
does waive it, by submitting the decision#of the issue to the register,
he can not, after finding that the question is decided against him, then
ask leave to have it adjourned into court. In re Patterson, 1 B. R. 100;
s. c. 1 Ben. 448. .

The ground of objection should be stated, otherwise no point or ques-
tion or issue is presented or raised. In re Levy et al. 1 B. R. 136; s. ¢.
1 Ben. 496; in re Fredenburg, 1 B. R. 268; s. ec. 2 Ben. 133.

An objection to a question or answer, in the course of an examination
before a register, does not raise a question or issue of law which can be
adjourned into court. In re Levy et al, 1 B. R. 136; s. ¢. 1 Ben. 496.
TRIALS BY REFEREE. 203

As the application by a bankrupt for leave to amend can not be opposed,
no issue of fact or law within this section can be raised or contested in
regard to it. In re Watts, 2 B. R. 447; s. c. 3 Ben. 166; 5s. c, 2 L. T. B. 74.

An objection to an application for the examination of the bankrupt
raises an issue of law which should be adjourned. In re Patterson, 1
B. R. 100; s. ce. 1 Ben. 448.

An issue of fact or of law raised upon testimony taken in opposition
to the proof of a debt, must be adjourned into court. In re Clark & Bin-
ninger, 6 B. R. 202.

A party who seeks to review the act of a register must do su in a re-
spectful manner, and if he makes a wanton attack upon his character,
ke is liable to be punished for contempt. In re Breck & Schermerhorn,
13 B. R. 216.

é '

Acts oF 1867 and 1874, § 5010. Any party shall, during the
proceedings before a register, be at liberty to take the opinion of the
district judge upon any point or matter arising in the course of such
proceedings, or upon the result of such proceedings, which shall be
stated by the register in the shape of a short certificate to the judge,
who shall sign the same if he approve thereof; and such certificate
so signed, shall be binding on all the parties to the proceeding; but
every such certificate may be discharged or varied by the judge at
chambers or in open court.

Statute revised — March 2, 1867, ch. 176, § 6, 14 Stat. 520.

It is only a party to the proceedings who can take the opinion of the dis
trict judge on a certificate of the register. The word “ party” means the
bankrupt or a creditor. It does not mean a witness who is not the bank-
rupt or a creditor. In re Fredenburg, 1 B. R. 268; s. c. 2 Ben. 183; in re
Comstock & Co., 13 B. R. 198; s. c. 3 Saw. 517.

The act only contemplates the certifying of questions which actually
arise. The questions which can be certified are: 1. Any issue of fact or of
law raised and contested by any party to the proceedings; but it must be an
issue actually raised and existing, and one which has arisen out of the
proceedings which have taken place, and not an issue likely to arise or
which may be raised thereafter. 2. Any point or matter arising in the
course of the proceedings, or upon the result of the proceedings; but it
must be a point or matter which has arisen in the course of the proceed-
ings which have taken place, or a point or matter which has arisen upon
and after the result of the proceedings which have taken place, and not a
point or matter likely to arlse or which may be raised thereafter, or after
a result shall have been arrived at. 3. Any question stated by consent of
the parties concerned in a special case; but it must be a question to which
there are two parties, and one which has arisen out of the proceedings
which have taken place. Nothing is to be certified or decided except what
is necessary to be decided to enable the case to progress properly. Ques-
tions which thus necessarily arise are to be decided as and when they thus
204 ; Tue Bankruptcy Law.

arise, and are not to be anticipated. In re J. Pulver, 1 B. R. 46; s. ce. 1
Ben. 381; in re J. W. Wright, 1 B. R. 398; in re Sturgeon, 1 B. R. 498; in
re Bray, 2 B. R. 139; in re Levy et al, 1 B. R. 136; s ¢. 1 Ben. 496.

Objections to questions and answers in the course of an examination,
when put in proper form, may be certified. In re Levy et al., 1 B. R. 136;
s. c. 1 Ben. 496.

Where the register desires to receive instructions as to his official duty,
or in regard to matters pending before him, there is no objection to his
adopting a course analagous to that prescribed by this section. In re
Sherwood, 1 B. R. 344; s. c« 6 Phila. 461.

If a register improperly refuse au application for leave to amend, the
bankrupt can, under this section, take the opinion of the judge on the
question, by means of a certificate from the register. In re Watts, 2 B. R.
447; 8. c. 3 Ben. 166; s. c. 2 L. T. B..74.

No opinion will be given un a question improperly certified. In re Stur-
geon, 1 B. R. 498; in re J. W. Wright, 1 B. R. 398; in re Bray, 2 B. R.
139.

It has been decided that the following questions can not be certified un-
der this section.

No question concerning the right of a bankrupt to his discharge. In re
Mawson, 1 B. R. 265; s. c. 2 Ben. 122.

No question concerning the effect of a discharge to release a particular
debt. In re Bray, 2 B. R. 189.

No question as to the disposition that an assignee shall make of certain
property before his application for a settlement of bis final accounts. In
re Sturgeon, 1 B. R. 498.

No question concerning the title to property not arising in a proceeding
concerning such property, or in which the assignee is a party. In re J. W.
Wright, 1 B. R. 393.

No question concerning the duty of a creditor, claiming security, who
has proved his claim as unsecured, not arising on a motion or proceeding
before the register. In re Peck, 3 B. R. 157.

No question as to whether it is necessary for a secured creditor to
prove his claim before making application to have the security sold; the se-
cured debt not having been proved. In re Stephen VY. Haskell, 4 B. R. 558.

Act oF 1867, § 5011. In any proceedings within the jurisdiction
of the court, under this Title, the parties concerned, or submitting
to such jurisdiction, may, at any stage of the proceedings, by con-
sent, state any questions in a special case for the opinion of the
court, and the judgment of the court shall be final unless it is agreed
and stated in the special case that either party may appeal, if, in
such case, an appeal is allowed by this Title. The parties may also,
if they think fit, agree, that upon the questions raised by such special
case being finally decided, a sum of money, fixed by the parties, or
to be ascertained by the court, or in such manner as the court may
direct, or any property, or the amount of any disputed debt or claim,
MEANING oF Worbs AND Purasgs. 205

shall be paid, delivered, or transferred by one of such parties to the
other of them, either with or without costs.

Statute revised — March 2, 1867, ch. 176, § 6, 14 Stat. 520.

Questions agreed upon and stated do not of themselves make a special
case within the meaning of this section. This is not the proviso of the
section. It is not that parties may make a special case, but it is that they
may ‘state any question or questions in a special case.” There must, of
course, be, first, parties; and second, a case in which questions can arise
and be stated. Questions are to be decided only when they necessarily
arise, and are not to be anticipated. In re Stephen V. Haskell, 4 B. R. 558.

Act or 1867, § 5012. If any judge, register, clerk, marshal, mes-
senger, assignee, or any other officer of the several courts of bank-
ruptcy shall, for anything done or pretended to be done under this
Title, or under color of doing anything thereunder, willfully demand
or take, or appoint or allow any person whatever to take for him
or on his account, or for or on account of any other person, or in
trust for him or for any other person, any fee, emolument, gratuity,
sum of money, or anything of value whatever, other than is allowed
by law, such person shall forfeit and pay a sum not less than three
hundred dollars and not more than five hundred dollars, and be
imprisoned not exceeding three years.

Statute revised — March 2, 1867, ch. 176, § 45, 14 Stat. 539.

Act oF 1898, Cu. 1, § 1. Meaning of Words and Phrases.—
(a) The words and phrases used in this Act and in proceedings pur-
suant hereto shall, unless the same be inconsistent with the context,
be construed as follows: (1) “A person against whom a petition has
been filed ” shall include a person who has filed a voluntary petition;
(6) “corporations” shall mean all bodies having any of the powers
and privileges of private corporations not possessed by individuals
or partnerships, and shall include limited or other partnership asso-
ciations organized under laws making the capital subscribed alone
responsible for the debts of the association; (9) “ creditor” shall in-
clude anyone who owns a demand or claim provable in bankruptcy,
and may include his duly authorized agent, attorney, or proxy; (14)
“holiday ” shall include Christmas, the Fourth of July, the Twenty-
second of February, and any day appointed by the President of the
United States or the Congress of the United States as a holiday or
as a day of public fasting or thanksgiving; (17) “oath” shall include
affirmation; (18) “ officer” shall include clerk, marshal, receiver,
referee, and trustee, and the imposing of a duty upon or the for-
bidding of an act by any officer shall include his successor and any
206 Tue Banrruptcy Law.

person authorized by law to perform the duties of such officer; (19)
‘persons ” shall include corporations, except where otherwise speci-
fied, and officers, partnerships, and women, and when used with
reference to the commission of acts which are herein forbidden shall
include persons who are participants in the forbidden acts, and the
agents, officers, and members of the board of directors or trustees,
or other similar controlling bodies of corporations; (28) words import-
ing the masculine gender may be applied to and include corpora-
tions, partnerships, and women; (29) words importing the plural
number may be applied to and mean only a single person or thing;
(30) words importing the singular number may be applied to and
mean several persons or things.

Act or 1867, § 5013. In this Title the word “ assignee,” and the
word “creditor,” shall include the plural also; and the word “ mes-
senger ” shall include his assistant or assistants, except in the pro-
vision for the fees of that officer. The word “marshal” shall in-
clude the marshal’s deputies; the word “ person” (a) shall also in-
clude “ corporation; ” and the word “ oath” shall include “ affirma-
tion.” And in all cases in which any particular number of days is
prescribed ‘by this Title, or shall be mentioned in any rule or order
of court or general order which shall at any time be made under
this Title, for the doing of any act, or for any other purpose, the
same shall be reckoned, in the absence of any expression to the
contrary, exclusive of the first and inclusive of the last day, unless
the last day shall fall on a Sunday, (b) Christmas day, or on any
day appointed by the President of the United States as a day of
public fast or thanksgiving, or on the Fourth of July, in which
case the time shall be reckoned exclusive of that “day also.

Statute revised — March 2, 1867, ch. 176, § 48, 14 Stat. 540.

(a) This section is not to be construed as applying the word person to
include any other corporations as subject to the provisions of the act
than those described in section 5122. Adams v. Railroad Co. 4
B. R. 314; 8. c. 6 A. L. Rev. 365; s. c. 1 Holmes, 30; Sweatt v. Boston R. R.
Co, 5 B. R. 234; s. ec. 1 L. T. B. 273; in re Ala. & Chat. R. R. Co.,
6 B. R. 107; s. c. 9 Blatch. 391;5.¢.5 L. T. B. 76.

(b) Unless Sundays are especially excepted in the statute, they are to
be counted. The fair and unavoidable inference from this clause is, that
when Sunday is not the last day, it is not to be excluded. -In re York &
Hoover, 4 B. R. 479; s. ¢. 1 Abb. C. C. 508; s. ec. 1 L. T. B. 290.

Adjudication of bankruptcy made November 26, 1867. Application filed
November 27, 1868. Held to be in time, as being within the equity and
fair construction of section 5018. In re Lang, 2 B. R. 480.
TITLE VII.
VOLUNTARY BANKRUPTCY.

Act oF 1898, Cu. 1, § 1. Bankrupt, Definition of— (4)
“Bankrupt” shall include a person against whom an involuntary
petition or an application to set a composition aside or to revoke
a discharge has been filed, or who has filed a voluntary petition, or
who has been adjudged a bankrupt.

Cu. 3, § 4. Who May Become Bankrupts.— (a) Any person
who owes debts, except a corporation, shall be entitled to the bene-
fits of this Act as a voluntary bankrupt.

Cu. 4,§ 18. * * * Judge or Referee May Hear the Pe-
tition — Upon the filing of a voluntary petition the judge shall hear
the petition and make the adjudication or dismiss the petition. If
the judge is absent from the district, or the division of the district
in which the petition is filed at the time of the filing, the clerk
shall forthwith refer the case to the referee.

CH. 1,8 1. * * * Petition— (20) “Petition” shall mean
a paper filed in a court of bankruptcy or with a clerk or deputy
clerk by a debtor praying for the benefits of this Act, or by creditors
alleging the commission of an act of bankruptcy by a debtor therein
named.

Document.— (13) “ Document ” shall include any book, deed or in-
strument in writing.

§ 59. Who May File and Dismiss Petitions—(a) Any quali-
fied person may file a petition to be adjudged a voluntary bankrupt.

(b) Three or more creditors who have provable claims against any
person which amount in the aggregate, in excess of the value of
securities held by them, if any, to five hundred dollars or over; or
if all of the creditors of such person are less than twelve in number,
then one of such creditors whose claim equals such amount may
file a petition to have him adjudged a bankrupt.

(c) Petitions shall be filed in duplicate, one copy for the clerk
and one for service on the bankrupt.
208 Tue Bankruptcy Law.

(d) If it be averred in the petition that the creditors of the bank-
rupt are less than twelve in number, and less than three creditors have
joined as petitioners therein, and the answer avers the existence of a
larger number of creditors, there shall be filed with the answer a list
under oath of all the creditors, with their addresses, and thereupon
the court shall cause all such creditors to be notified of the pendency
of such petition and shall delay the hearing upon such petition for
a reasonable time, to the end that parties in interest shall have an
opportunity to be heard; if upon such hearing it shall appear that
a sufficient number have joined in such petition, or if prior to or
during such hearing a sufficient number shall join therein, the case
may be proceeded with, but otherwise it shall be dismissed.

(e) In computing the number of creditors of a bankrupt for the
purpose of determining how many creditors must join in the petition,
such creditors as were employed by him at the time of the filing of
the petition or are related to him by consanguinity or affinity within
the third degree, as determined by the common law, and have not.
joined in the petition, shall not be counted.

(f) Creditors other than original petitioners may at any time enter
their appearance and join in the petition, or file an answer and
be heard in opposition to the prayer of the petition.

(g) A voluntary or involuntary petition shall not be dismissed
by the petitioner or petitioners or for want of prosecution or by
consent of parties until after notice to the creditors.

A partner who joined in a voluntary petition participated actively in
the proceedings, and after a lapse of five months moved to set aside
the adjudication on the ground that he was induced to join in the peti-
tion by fraudulent representations of his copartners; that the firm was
not in fact insolvent, ete. Held, that substantial justice does not re-
quire that creditors whose rights have become fixed should be subjected
to the expense and delay of such investigation, because he might be able
to prove the fraud alleged. In re Court, 17 B. R. 555.

An adjudication will not be set aside on ground that the petition, which
was signed by requisite number of creditors, was procured to be filed by
the bankrupt. This is not fraudulent unless followed by a discharge
that could not be had on voluntary proceedings. In re EB. L. Matot &
Co., 16 B. R. 485.

Petition in bankruptcy held defective in not setting out the special
authority of the president of a bank, who is one of the petitioning cred-
itors, to sign and verify same on behalf of the bank, his general au-
thority as an officer not being sufficient. In re Roche et al. v. Fox, 16
B. R. 461.
Wao May FILe anp Dismiss PETITIONS. 209

Bankruptcy court has jurisdiction to allow an amendment to remedy
the defect, where mistakes have been made in setting forth the number
of creditors and amount of their claims. Ibid.

No creditor who has received a preference, having at the time reason-
able cause to believe his debtor insolvent, is authorized to institute pro-
ceedings in bankruptcy. Ecker v. McAllister, 17 B. R. 42.

So long as a creditor holds ample security on property of debtor, and
does not release same, he is not counted as a debtor having a provabla
debt. In re Orossette & Graves, 17 B. R. 208.

But he may at any time release his security as to whole or part of
tho debt, and if he does so seasonably, before the hearing and decision
as to quorum of creditors and debts, he is entitled to be ranked as a
creditor having a provable debt and admitted as such in determining
whether the requisite number and amount have joined the petition. Ibid.

Allegation of indebtedness in an involuntary petition must show that
the petitioner is the owner of the claim; that he was still a creditor
at the time of filing the petition. In re The Western Sav. & Trust Co.,
17 B. R. 413.

Where the original petition was ordered dismissed unless the peti-
tiover, in conjunction with other creditors, should file an amended peti-
tion within a specified time, which has been done, and it appears that
in the interval the petitioner has assigned his demand, the petition must.
be dismissed. Ibid.

Where name of creditor is stated in petition, asserting a claim by a
proper averment, but omitting the amount, the claim may be amended
by adding the amount, if done in good faith. Ibid. _

An indorser of the bankrupt’s paper, who has before the filing of the
petition become absolutefy liable to the holders, by due notice of its
dishonor, is not a creditor of the bankrupt at the time of such filing,
as his claim is only provable in case of neglect of holder to prove. In re
Riker, 18 B. R. 393.

Where motion to dismiss has been denied, and the petitioning creditors
omit or decline to proceed, any other creditor to the required amount
may continue the proceeding. In re Sheffer, 17 B. R. 369.

A merchant is under obligation to his creditors to exhibit a statement
of his accounts, when demanded, and if he fails to do so he can not com-
Plain of proceedings commenced against him without the requisite num-
ber of creditors joining in the petition, provided a sufficient number join
before trial. Perrin & Gaff Mfg. Co. v. Peale, 17 B. R. 377.

Petition should contain averment that petitioners believe that they
constitute proper number, and that the proper amount is due them. It
is not required that they should know such to be the fact. Ibid.

Any creditor whose interests are directly affected by the proceedings
may intervene and contest the allegations of the petition with regard to
acts of bankruptcy, notwithstanding the debtor fails to appear on return
day. In re Jonas, 16 B. R. 452.

A general, unsecured creditor is entitled to intervene and contest a

14
210 Tur Banxruptcy Law.

petition in involuntary proceedings. In re Austin, Tomlinson & Webster,
16 B. R. 518.

A. creditor who prior to filing of petition has obtained a lien upon the
property of alleged bankrupt, by process of mesne attachment, is entitled
to intervene and oppose an adjudication. In re Burton & Watson, 17 B.
R. 212.

Where upon return of order to show cause, or upon the adjourned day,
the petitioning creditors fail to appear or to proceed, any other creditors,
to the required amount, may intervene and pray an adjudication upon the
original petition. Such intervening creditor or creditors need not consti-
tute the required number or value of all the creditors. (Laws of 1867.) In
re Sheffer, 17 B. R. 369.

Certain creditors who had, since the filing of petition, prosecuted to
judgment actions against the alleged bankrupts, and made levies under
their executions, moved for leave to intervene and contest the adjudica-
tion, on the ground that the voluntary assignment which was alleged as
the act of bankruptcy, was void, having been executed by only three of
five partners, and in the firm name by one of the partners signing as
attorney-in-fact for the firm; whereas it was alleged the partner so sign-
ing for the firm never held any power of attorney for that purpose. Held,
that the motion must be denied; that the facts stated do not make a
case of fraud or collusion to procure an adjudication, to which the petition-
ing creditors are not in fact entitled, and that the fact that the moving
creditors have made levies on the property since the filing of the petition
gives them no rights as against the petitioning creditors different from
that of creditors at large. In re Lawrence et al., 18 B. R. 516.

A petitioning creditor will not be allowed to withdraw where rights
of his copetitioners will be injured thereby, though he has been induced
to join in petition by a misrepresentation of one of the debtors, where
same was not as to any matter of substance, nor intentionally false. In
re Vogel & Reynolds, 18 B. R. 165.

Permission to withdraw will be withheld whenever the object and pol-
icy of the act would otherwise be defeated. In re Sheffer, 17 B. R. 369.

Act oF 1867, § 5014. If any person residing within the juris-
diction of the United States, and owing debts provable in bank-
ruptcy exceeding the amount of three hundred dollars, shall apply
by petition addressed to the judge of the judicial district in which
such debtor has resided or carried on business for the six months next
preceding the time of filing such petition, or for the longest period
during such six months, setting forth his place of residence, his
inability to pay all his debts in full, his willingness to surrender all
his estate and effects for the benefit of his creditors, and his desire
to obtain his discharge from his debts, and shall annex to his peti-
tion a schedule, and inventory’ and valuation, in compliance with

 

1So amended by act of June 22, 1874, ch. 390, § 15, 18 Stat. 182.
PETITIONS IN VOLUNTARY BANKRUPTCY. 211

’

the next two sections, the filing of such petition shall be an act of
bankruptcy, and such petitioner shall be adjudged a bankrupt.

Statute revised — March 2, 1867, ch. 176, § 11, 14 Stat. 521. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 7, 5 Stat. 446.

Who may File a Petition.— Resident aliens may take the benefit of the
act. This section makes every person residing within the jurisdiction of
the United States, who owes a certain amount of debts, subject to the act,
and it is not denied that resident aliens are here included. If confirma-
tion were needed, it is found in the latter part of the section, which pre-
scribes a special form of oath for citizens of the United States; clearly
showing that some others than citizens are capable of becoming petitioners.
In re Goodfellow, 3 B. R. 452; s. ¢. Lowell, 510; s. c. 1 L. T. B. 179; s. ¢
3 L. T. B. 69.

A person who is a partner in a foreign firm may apply for the benefit of
the bankruptcy law. Cutter v. Folsom, 17 N. H. 139.

The statute embraces not merely those who resided in the United States
at the time when the bankruptcy law was passed, but such as at any sub-
Sequent period become resident in the United States. Ipbid.

An infant may file a petition in his own name. In re Samuel Book, 3
McLean, 317; in re Samuel S. Cotton, 2 N. Y. Leg. Obs. 370.

If a person, while sane, has committed an act of bankruptcy, he may be
made bankrupt after he has become lunatic. The rights of the bankrupt
will be fully protected by his guardian. In re D. Pratt, 6 B. R. 276.

A feme covert who is a sole trader may apply for the benefit of the bank-
ruptey law. In re Harriet E. Collins, 10 B. R. 335; s. c. 3 Biss. 415.

The making of a fraudulent conveyance does not prevent the debtor
from filing a voluntary petition. In re Chas. P. Houghton, 4 Law Rep.
48».

Petitions in Voluntary Bankruptcy.— An illegible petition will not be
allowed to be filed. Anon. 1 B. R. 215; s. ¢. 15 Pitts. L. J. 81.

A petition containing the required averments, and having a sworn sched-
ule of debts and sworn inventory of property annexed to it, constitutes the
petition required by the act. In re Patterson, 1 B. R. 125; s. c. 1 Ben. 508,

The petition is sufficient although the jurat does not specify the particu-
lar day on which the oath was taken, if it gives the month and year. In
re Chas. P. Houghton, 4 Law Rep. 482.

The petition need not be presented to the court simultaneously with its
attestation. The lapse of nine days between the taking of the oath and
the filing of the petition is no bar to the proceedings. In re Aaron Abra-
hams, 5 Law Rep. 328. ‘

No provision is made by the bankruptcy act enabling parties to conduct
proceedings in forma pauperis, and the act evidently contemplates that
they shall discharge all expenses incident to the prosecution of their ap-
Plication. In re Alexander Graves, 1 N. Y. Leg. Obs. 213: s. ¢. 3 Law Rep,
25.

The petition and schedules are three papers. In re John W. Dean, 1
B. R. 249; s.c.1L. T. B. 9.
R12 Tur Bankruptcy Law.
a

The provisions of the act and the rules serve to show that the petition is
filed once for all in any case; that if it is amended, such amendment does
wot alter the date of its filing, or postpone the effective vigor of such filing
to the time the amendment to it is filed; or that any petition or schedule
that is amended is merely amended, leaving the original that is amended
to stand, so far as the question of jurisdiction or commencement of the
proceedings is concerned, in regard to the time when it was filed, the same
as if it were not amended. In re Patterson, 1 B. R. 125; s. c. 1 Ben. 508.

The commencement of proceedings in bankruptcy on the part of the peti-
tioner, is the commencement of a suit in the district court by the peti-
tioner against his creditors, in which action the petitioner is plaintiff and
the creditors defendants; the petitioner asking the court for a judgment
against his creditors, the defendants, discharging him from his indebted-
ness to them. The defendants have their day in court, are entitled to be
heard at all stages of the proceedings, and when the bankrupt files his ap-
plication for a discharge from the payment of his debts, any single cred-
itor may make opposition thereto, by entering his appearance and putting
on file specifications against the discharge. Every defendant has the right
to appear separately and put in a separate plea or answer. In re Julias
L. Adams, 2 B. R. 272; s. c. 36 How. Pr. 270; s. ec. 3 Ben. 7; in re Farrell,
5 B. R. 125.

While one petition is still pending, without any discharge or any discon-
tinuance, a stay will be entered of all proceedings upon another petition
subsequently filed, setting forth the same debts and the same creditors.
In re Wierlaski, 4 B. R. 390; s. c. 4 Ben. 468.

When the discharge is refused, because the bankrupt did not apply
within the prescribed time, the result in principle is the same as where
the plaintiff in a suit at law is noh prossed; he has the costs of the first
proceedings to pay, but is allowed to commence again and to continue un-
til he reaches a judgment upon the merits of his case. In re Farrell, 5 B.
R. 125.

A voluntary bankrupt who has contracted new debts since the filing
of his petition, may file a new petition in bankruptcy. In re P. C. Drisko,
18 B. R. 112; s. c. 14 B. R. 551.

The petition is conclusive evidence that the debtor is insolvent, and
desires to take the benetit of the act, and perhaps the fact that he owes
$300 may be conclusively found by the adjudication; but upon a fact
which goes to defeat the jurisdiction of the court over the supposed bank-
rupt, it can not be so. Such a fact as that may be shown by plea and
proof in any court by a person not estopped to show it, and it can not
be that the only exception is of the court in which the void proceedings
themselves are pending, nor is the adjudication binding as a judicial de-
cree which must be impeached, if at all, in a higher court. It is made
ex parte without notice to creditors, and is entirely under the control of
the court, upon proof that it ought to be annulled, at least before the
first meeting of creditors. In re Goodfellow, 3 B. R. 452; s. c. Lowell,
510;s. a1L. T. B. 17938. ce. 3 L. T. B. 69.

If several persons, alleging themselves to be partners, file a voluntary
PETITIONS IN VOLUNTARY BANKRUPTCY. 213

petition, the creditors can not compel them to amend it by joining other
persons who are also alleged to be partners. In re Harbaugh, Matthias
& Co., 15 Pitts. L. J. 246; s. ¢. 24 Pitts. L. J. 100.

If several persons file a voluntary petition as partners, without joining
others who are also partners, the court, on the motion of any creditor,
can annul the adjudication at any time up to the first meeting of creditors,
and perhaps at any time until the effects of the firm have become so fixed
that the estate can not be put in statu quo. Ibid.

The bankrupt by filing his petition submits himself personally to the
jurisdiction of the court, and he becomes bound to obey its orders and di-
rections in the matter of his petition as well before as after an adjudica-
tion. The mere filing of his petition in conformity with the statute con-
stitutes him a bankrupt, within the purview of the act, before the adjudica-
tion or any action on his petition by the court. This jurisdiction is
exercised on the ground that other persons besides the bankrupt have an
interest in the matter at this stage of the proceedings. In re Samuel
Harris, 38 N. Y. Leg. Obs. 152. 3

A voluntary bankrupt can not withdraw his petition at his own pleasure,
but must show good reason for doing so. In all cases, a party coming as
a volunteer into court in a matter where others may have an interest
must move for liberty to discontinue, and when other parties have ac-
quired an interest in the proceedings, the court will either grant the liberty
on terms or refuse it altogether as justice may require. The creditors
have an interest in the proceedings from the moment that the petition is
filed. Ibid.

The dismissal of the petition prior to an adjudication is in the nature
of a supersedeas, and is ordinarily a matter of sound discretion in the
court. In re Randall & Reed, 1 N. Y. Leg. Obs. 199; s. ec. 5 Law Rep. 115.

A voluntary bankrupt may, for good reasons, be allowed to withdraw
his petition at any time before adjudication. In re Bennet, 1 Penn. L. J.
145; in re Randall & Reed, 1 N. Y. Leg. Obs, 199; s. c. 5 Law Rep. 115; in
re Anon., 1 Penn. L. J. 323; in re Dudley, 1 Penn. L. J. 202; in re John Gile,
1 N. Y. Leg. Obs. 87; 5 Law Rep. 224.

If the debtor has made a compromise and composition of all his debts.
the petition may be dismissed on payment of costs. In re Randall & Reed.
1N. Y. Leg. Obs. 199; s. c. 5 Law Rep. 115.

If the debtor does not choose to proceed with his petition, but lets it
remain in suspense, with his property locked up from his creditors, they
may intervene for their own interest by a motion for an adjudication,
or for any other matter necessary for the protection of their rights. In
re Samuel Harris, 3 N. Y. Leg. Obs. 152.

If the assignee refuses to consent to a dismissal of the proceedings, the
court, with the consent of the creditors, may order the adjudication ta
be vacated, and all further proceedings stayed, on notice to him to show
cause against the motion. In re John Gile, 1 N. Y. Leg. Obs. 87; s. ¢
5 Law Rep. 224.

After an adjudication, the petition can not be dismissed without the
concurrence and consent of all the creditors. Ibid.
214 Tur Bankruptcy Law.

Formal pleading in opposition to a petition is not usual or necessary.
Objection to the person of the petitioner may be made by a plea in abate-
ment, but the plea will be treated merely as a written objection. In re
Samuel Book, 3 McLean, 317.

The district court has power to hear and decide all contested questions,
and to stay proceedings improvidently begun. The act contemplates that
voluntary petitions may sometimes be contested, for it provides that the
register may make adjudication if there be no opposing party. But it is
not the intent of the act that the court shall inquire whether the petitioner
is insolvent or not. When the debtor swears that he is unable to pay
his debts in full, and files the requisite petition and schedules, he has com-
mitted an act of bankruptcy, and any creditor may then carry on the
proceedings if the debtor shall fail to do so. His act is for the benefit of
all persons interested, and can not be retracted on the application of only
one of them, with or without the debtor’s consent. No notice is required
to creditors before adjudication, and the judge or register is only to in-
quire whether the debtor owes $300. That he is unable to pay his debt
in full, and is willing to surrender all his property is conclusively proved
by his petition so far as a decree of bankruptcy is concerned. The only
questions open upon a voluntary petition are those which go to the juris-
diction, such as residence, and a sum total of provable debts of $309.
In re James L. Fowler, 1 B. R. 681; s. c. Lowell, 161.

A creditor can not prevent an adjudication by proving that the debtor
is able to pay his debts, and that the only object in filing the petition is to
delay the collection of certain executions. Ibid.

A motion to set aside the adjudication on account of the absence of
certain jurisdictional averments in the petition can not be entertained.
The proper way to raise such a question as to the jurisdiction of the
court is by specifications against the discharge of the bankrupt. In re
Penn et al., 3B. R. 582; s. c. 4 Ben. 99.

In what District Petitions must be Filed.— The bankruptcy act uses the
term “residence” specifically, as contradistinguished from ‘ domicile,”
s0 as to free cases under it from the difficult and embarrassing presump-
tions and circumstances upon which the distinctions between “ domicile ”
and “residence” rest. Congress, as if ex industria designing to escape
that region of dispute, used a legal term, about which there is no difficulty,
either as to its accurate meaning, or as to the facilities of proof con-
nected with it. ‘‘ Residence” is a fact easily ascertained; “ domicile,” a
question difficult of proof. It is true that the two terms are often used
as synonymous, but in law they have distinct meanings. Proceedings in
bankruptcy should be instituted with reference to the actual residence of
the party, or his place of business, and not with reference to his domicile.
lf a party has actually resided in one State during the greater part of
the six months next immediately preceding the filing of the petition, the
petition must be filed in the district court for that State, although his
family may have resided in another State during the whole period. In re
Watson, 4 B. R. 613.

The residence of the bankrupt is the place where his family reside, al-
In wHat District Petitions Must BE FILep. 215.

though he may make a temporary sojourn in another state. Stiles v, Lay,.
9 Ala. 795.

Residence denotes an actual domicile or inhabitancy, in contradistinction
to a mere temporary abode in lodging. In re Israel Kinsman, 1 N. Y. Leg.
Obs. 309.

Upon the hearing of a petition filed by a creditor to vacate the whole
proceedings in bankruptcy, for want of jurisdiction, it was held that where
a person leaves a foreign domicile, with the intention of returning to his
native domicile, and does so return, his residence in his native domicile
dates from the day on which he left the foreign domicile. In re W. S.
Walker, 1 B. R. 386; s. c. Lowell, 237; s. c. 1 L. T. B. 38.

A corporation can have no residence out of a State hy whose laws it
was created, and therefore, in virtue of residence, no jurisdiction can be
acquired by any district court outside of such State. In re Ala. & Chat.
R. R. Co., 6 B. R. 107; s. ¢. 9 Blatch. 391; s.¢c.5 L. 'T. B. 76.

In a certain sense, the place of the most transient stoppage, a mere
purchase, a bargain made by a man on his transit through a place would
render it for the time being his place of business. Persons resorting to
market towns to dispose of produce or make purchases would have, in a
literal acceptation, their places of business there in conducting such trans-
actions. It can not, however, satisfy this provision of the law to prove
the fact that the bankrupt is doing some kind of business at the place
where he makes his application, if his legal residence is in a different dis-
trict. More must be shown. It must appear distinctly that he has a
fixed and notorious employment, pursued by him in such manner as to
denote a place of business established by him distinct froth his place of
residence. A fugitive or equivocal occupation that may continue for a
long period or may terminate instantaneously, without any outward change
or indications calculated to mark its continuance or character, will not be
sufficient to satisfy this provision of the law. In re Israel Kinsman, 1 N.
Y. Leg. Obs. 209.

An agent who is merely temporarily executing his agency in a district
does not have a place of business in the district. Ibid. ;

Tn its broadest sense, the term “ business ” includes nearly all the affairs
in which either an individual or a corporation can be actors. Indulgence
.in pleasure, participation in domestic enjoyment, and engagement in the

offices of merely personal religion may be exceptions in the case of an
individual, but the employment of means to secure or provide for these
would, to him, be business, and to a corporation these exceptions can have.
no application. The conduct of any and all of the affairs of a corporation
is business. The term, carrying on business, has not the same meaning
as transacting any of the debtor’s business. There are in the carrying on
of a business many affairs which are merely incidental and which may
be, and often are, transacted elsewhere than at the place where the busi-
ness— that which is the real design and purpose or object in view —
is located, and such transactions may be of such frequent and even daily
occurrence as to require an agency of considerable duration. Such transac-
tions are not a carrying on of business in the sense of the law. i Carrying
216 Tur Bankruptcy Law.

on business” looks to the scheme and purpose to which such transactions
tend, and not to the incidental transactions themselves. The debtor may
find it necessary or expedient, in aid of his business, to employ agents or
agencies in other places than those in which his business is carried on,
but the transactions of such agents are only collateral or incidental. They
do not, in a just sense, constitute the business of the debtor. It was not
intended, by reason of such transactions, to subject the debtor to pro-
ceedings in bankruptcy where those agencies are maintained, whether
these are conducted by agents under one name or another, either officers
or clerks, or by whatever name or official relation designated. In re Ala,
& Chat. R. R. Co., 6 B. R. 107; s. c. 9 Blatch. 391; s.c.5 L. T. B. 76.

A person who resides in orie district, where he was formerly a member
of a firm that has failed, and has an office in another district where he
receives letters, and is engaged in winding up the business of the firm,
does not carry on business, in the sense of the bankruptcy act, in the
latter district, and can only apply in the district where he resides. In re
Little, 2 B. R. 294; s. ec. 38 Ben. 25,

A person who has been employed as a clerk for more than a year in
one district, but has resided in another district, can not apply in the dis-
trict where he has been employed, but must apply in the district where
he has resided. It can hardly be said that a bookkeeper carries on busi-
ness in a way that will give such publicity to his occupation or person
as is contemplated by the act. In re Wm. H. Magie, 1 B. R. 522; s. ec. 2
Ben. 369.

But where the petitioner is well known to be doing business as the
agent of anotlier party, he may apply in the district where he transacts
his business. In re Bailey, 1 B. R. 613; s. c. 2 Ben. 437; in re Belcher, 1
B. R. 666; s. c. 2 Ben. 468.

The debtor may file his petition in the district in which he has resided
or carried on business for the six months next immediately preceding the
filing of the petition, or for the longest period during or within such six
months that he has resided or carried on business in any district. ‘The
object of the provision is to bring within the operation of the act every
debtor who has resided or carried on business in any district for any
length of time. provided the proceedings are instituted in the district in
which his residence or carrying on of business has continued so long as to
cover the longest space of time that he has resided or carried on business
in any district during the six months next immediately preceding the time
of filing the petition. Thus, during or within such six months, the debtor
may have resided or carried on business in one district for two months,
in another for one month and three-quarters, in another for one month and
one-quarter, and in another for one month. In such case, the proper dis-
trict in which to file the petition is the one in which the debtor has resided
for two months. The fact that he has carried on business in another
district for as long a period during the six months as he carried it on in
the district in which he has filed his petition, does not deprive the court
for the latter district of jurisdiction over the case, it not appearing that
he carried on business in the former district for a longer period during the
SCHEDULES AND PETITIONS, al?

six months than he carried it on in the latter. In re Elisha Foster, 3 B.
R. 236; s. c. 3 Ben. 386; s. c. 1 L. T. B. 127; in re Goodfellow, 3 B. R. 452;
s. c. Lowell, 510; s.c. 1 L. T. B. 179; 8, ¢. 3 L. T. B. 69.

When one partner proceeds against his copartner, an averment that the
petitioner for the six months next preceding the application has been a
resident of the judicial district in which the petition is filed, and that he
and his copartner, within said time, were partners in trade in said dis-
trict, is sufficient to sustain the jurisdiction of the court, if the proceed-
ings are brought in question collaterally, when it does not appear that the
firm did business for a longer period in any other district. Stuart v. Hines,
6 B. R. 416; s. c. 33 Lowa, 60; s.a 5 L. T. B. 46.

The statute provides, in the alternative, that the debtor may be declared
bankrupt either in the district in which he resides or carries on business.
When once proceedings have been commenced in either district, it is a
necessary consequence that the like proceedings can not be had in the
other, and the jurisdiction is exclusive in that court where the jurisdiction
first attaches. In re Horace Hall, 5 Law Rep. 269.

Adjudication.— The adjudication of bankruptcy ought not to be post-
poned until the register has examined the petition and schedules, and certi-
fied them to be correct. In re Patterson, 1 B. R. 125; s. ec. 1 Ben. 508.

The adjudication of bankruptcy is merely a certificate or order made
by an authorized officer, to the effect that the debtor has become a bank-
rupt. It is nothing but a judicial finding of the fact that an act of bank-
ruptey was committed at some period prior to the time the adjudication
is made. Ibid.

The register is to declare the party a bankrupt, but has no authority to
ascertain the day of his becoming so. If he names the day, it is competent
for a party in a collateral action to controvert the act of the register, so
far as it respects the fixing of the day when the bankrupt becomes such,
and to say that it was not till long afterward. Rathbone v. Blackford,
1 Caines, 588.

An adjudication which recites the act of March 2, 1867, as authority for
the proceeding, is neither irregular nor void. Ballin y, Ferst, 65 Ga, 546.

Act oF 1898, Cu. 3, § 7. Schedules and Petitions— (8). See
post, p. 314. For practice in voluntary bankruptcy, see correspond-
ing provisions governing involuntary bankruptcy.

Act oF 1867, § 5015. The said schedule must contain a full and
true statement of all his debts, exhibiting, as far as possible, to whom
each debt is due, the place of residence of each creditor, if known
to the debtor, and if not known, the fact that it is not known; also
the sum due to each creditor; the nature of each debt or demand,
whether founded on written security, obligation, or contract, or other-
wise; the true cause and consideration of the indebtedness in each
case, and the place where such indebtedness accrued; and also a
218 Tue Bankruptcy Law.

statement of any existing mortgage, pledge, lien, judgment, or col-
lateral or other security given for the payment of the same.

Statute revised — March 2, 1867, ch. 176, § 11, 14 Stat. 521. Prior Stat-
ute — August 19, 1841, ch. 9, § 1, 5 Stat. 440.

Petitions in bankruptcy must be full, and be true in point of fact, other-
wise no discharge will be granted. In re Redfield, 2 Ben. 72.

The inability to pay debts, mentioned in this section, is the same thing
as the insolvency mentioned in section 5021. It means the inability of
the debtor, then and there, to pay accruing debts as they mature in the
ordinary way, in the usual course of business or trade, in that which is
made by the law of the United States a lawful tender in the payment of
debts. Hardy v. Clark, 3 B. R. 385; s.c.1 L. T. B. 151; s.¢c.3 L. T, B. 11;
s. ¢. 17 Pitts. L. J. 61; s. c. 2.C. L. N. 121.

The name of a creditor who has a lien on the land of the petitioner
should be placed on schedule A, No. 2. In re Decatur Jones, 2 B. R. 59.

Wherever the sum and the date of the debt are given, the statement is
sufficient. In ré W. D. Hill, 1 B. R. 16: s. e. 1 Ben, 321.

Where the petitioner owes a debt to a newspaper he should give the
names of the proprietors. Anon., 2 B. R. 141.

Where the petitioner owes a debt to a firm, it is safest to return the
partnership debt as due to the firm, without naming the partners. Anon.,
1B. R. 128. :

If the petitioner, as administrator, has spent the funds belonging to the
estate, it is sufficient to state the debts as due to the estate, and not to the
creditors of that estate, although a dividend has been declared. In re
John C. Tebbets, 5 Law Rep. 259.

The abode and the post-office address should be both stated, so that
personal service may be ordered at the former, or service by mail at the
latter. In re J. Pulver, 1 B. R. 46; s. c 1 Ben. 381.

In view of this section of the act, and of Form No. 1, and of Rule
XXXIII, wherever a debtor states that the residence of a creditor is not
known, he should show in the schedule, or in a separate affidavit, what
efforts he has made to ascertain the present residence of the creditor. The
debtor must make efforts to ascertain the present residence of his creditors;
and he can not satisfy the law by reposing on the information at hand,
and the belief which he may possess, without making any efforts to as-
certain such present residences. Ibid.

It is necessary to state in the schedules whether or not any note has
been given or judgment rendered, and whether any person is liable with
the debtor as partner or joint contractor. In re Orne, 1 B. R. 79; s.¢c. 1
Ben. 420.

Debts barred by the statute of limitations should be placed on the
schedules. In re John §, Perry, 1 B. R. 220;s.c.1L. T. B. 4.

The placing of a debt barred by the statute of limitations upon the
schedules will not revive the debt. In re Ray, 1 B. R. 208; s. c. 2 Ben.
253; in re Danl. P. Kingsley, 1 B. R. 329; s. ¢. Lowell, 216; in re Harden,
ScHEDULES AND Petitions. 219

1B. BR. 395; s. c. 1 L. T. B. 48; in re John S. Wright, 6 Biss. 317. Contra,
Horner v. Speed, 2 Pat. & H. 616.

Absolute accuracy is not required, for it is to be done as far as practi-
eable. The provisions of this section show that all the crediters, so far as
known, are to be made parties by actual notice, and the publication is
clearly intended to those not known or whose residence is not known.
Hudson vy. Bingham, 8 B. R. 494; s.c. 6 L. T. B. 826; s. c. 12 A. L. Reg. 637.

§ 5016. The said inventory must contain an accurate statement
of all the petitioner’s estate, both real and personal, assignable under
this Title, describing the same and stating where it is situated, and
whether there are any, and if so, what incumbrances thereon.

Statute revised — March 22, 1867, ch. 176, § 11, 14 Stat. 521. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 1, 5 Stat. 440.

The schedules must set forth the separate items of the petitioner’s es-
tate. In re W. D. Hill, 1 B. R. 16; s. ec. 1 Ben. 821. Vide in re Robert
Malcolm, 4 Law Rep. 488.

It is not necessary that the petitioner shall set forth a perfect and com-
plete exhibit of every article; but the schedule must be so explicit that
the assignee may be enabled to find the property, if necessary. It is not
necessary that every article of clothing shall be set out. The wearing
apparel should be so set forth that the assignee may be enabled to ascer-
tain whether he can claim it or not. In re Robert Malcolm, 4 Law Rep.
488; in re Horace Plimpton, 4 Law Rep. 488.

Property conveyed by the petitioner in trust, for the benefit of his
creditors, must be set forth, as far as possible, under one of the heads of
schedule B. In re Pierce & Holbrook, 3 B. R. 258; s. c. 16 Pitts. L. J. 204.

Judgments in favor of the petitioner should be set forth in schedule B,
No. 2b. In re Sallee, 2 B. R. 228.

The statute, though framed in the most comprehensive terms, has ref-
erence to some right or interest inherent in the bankrupt. Whatever that
may be, however contingent or valueless, he must name it, and point
it out to his creditors. He is not permitted to exercise his own judgment
as to its worth to them. In re David H. Robertson, 1 N. Y. Leg. Obs. 20.

The petitioner should state the proportion of his interest in the property
of a firm of which he is a member, but need not enumerate the effects in
detail. In re Nicholas G. Norcross, 1 N. Y. Leg. Obs. 100; s. a 5 Law
Rep. 124.

The petitioner is not restricted to the letters printed on the schedule.
He may exhaust the alphabet, and use other marks, if he can thereby set
forth his property more lucidly. In re Sallee, 2 B. R. 228.

The petitioner is only required to use such of the forms as are ap-
-propriate to and descriptive of the debts and property he is required to
list. It would be absurd to require him to file in addition thereto a large
mass of forms, all of which are simply blanks. He should state, however,
the reason why these were omitted. ‘Anon., 1 B. R. 123.

(The practice in this particular is generally regulated by the rules of
court for each district. Blatchford’s Rules, No. 4— Ed.)

i

a

we
220 Tur Bankruptcy Law.

The term assets has been held to include the following things, to-wit:

A claim for unliquidated damages. In re Orne, 1 B. R. 57; s. c. 1 Ben.
361.

Property conveyed to the petitioner in fraud of the creditors of the
grantor. In re O’Bannon, 2 B. R. 15. :

A vested interest expectant on the termination of a life estate. In re
Bennett, 2 B. R. 181; 5s. ec. 8 A. L. Reg. 34; s. ce, 25 Pitts. L. J. 316.

An insurance on the petitioner’s life, for the benefit of the petitioner’s
wife, whereon premiums have been paid by the petitioner after his in-
solvency. In re Erben, 2 B. R. 181; s.¢. 8 A. L. Reg. 34.

Property in the possession of the petitioner, which belongs to a firm of
which he has been a member. In re Beal, 2 B. R. 587; s. c. Lowell, 323;
s.ca2L. T. B. 95.

The interest of the petitioner in the rights of action, and credits of a
firm of which he was a member, although his interest in the firm has been
levied upon and sold. Moore v. Rosenberger, 7 Phila. 576.

Property conveyed by the petitioner in fraud of his creditors. In re
Hussmann, 2 B. R. 487; s.c.2 L. T. B. 58; s.c.1C. L. N. 177.

Property in the possession of the petitioner covered by a fraudulent
assignment to which the creditors have never assented. Ashley y. Robin-
son, 29 Ala. 112.

Property held de facto, though by a defeasible title. In ré Beal, 2 B.
R. 587; 8. c. Lowell, 323; s. a 2 L. T. B. 95.

The money advanced by the petitioner as security for fees to the register,
the clerk, and the marshal. Anon., 1 B. R. 123.

The husband’s share in property left to him in trust, for the sole and
separate use of his wife, during her life, and after her death to be equally
divided between the husband and her children, share and share alike, even
though there is a provision in the will that the property shall not be liable
to the payment of the debts of any present or future husband. This latter
provision must be construed to be limited by and to apply only during the
life of the wife. In re Myrick, 3 B. R. 154.

The interest of the bankrupt under a will in an estate in expectancy.
In re Connell, Jr., 3 B. R. 443.

The term assets has been held not to include the following things, to-wit:

The right to a share in the net profits of a business conducted in the
name of the petitioner, allowed as a compensation for services. In re
Beardsley, 1 B. R. 304; in re Wm. H. Pierson, 10 B. R. 107; in re George
Brown, 5 Law Rep. 121.

Property held by a trustee for the benefit of the petitioner’s wife,
wherein the petitioner’s equitable interest had been sold under execu-
tion. In re Pomeroy, 2 B. R. 14; in re Hummitsh, 2 B. R. 12; s. c. 15 Pitts,
L. J. 494.

Money invested in the name of the petitioner’s wife, which has been
earned by her. In re Hummitsh, 2 B. R. 12; s. ¢. 15 Pitts. L. J. 494.

A claim against a person for falsely recommending another as worthy
of trust. Crockett v. Jewett, 2 B. R. 208; s. c. 2 Ben. 514; s. c. 2 L. T. B.
‘21,
SCHEDULES AND PETITIONS. 221

Property which, at the time of the filing of the petition, is vested in a
receiver appointed by a State court. In re Freeman, 4 B. R. 64; 8. c
4 Ben. 245. ;

A chose in action on which suit has been brought, but which has been
assigned in good faith for a full and valuable consideration. Valentine v.
Holloman, 68 N. C. 475.

An assignment made under the State insolvent laws, when they were
in force, was the act of the law, and not of the party; and the confirmatory
instruments which the debtor might be required by the assignee and
ordered by the judge to execute were equally made by legal authority and
direction. Property included in such an assignment, made before the
commencement of proceedings in bankruptcy, no longer belongs to the
debtor, and constitutes no part of the assets of the bankrupt. Day v.
Bardwell, 3 B. R. 455; s. c. 97 Mass. 246,

Act or 1867, § 5017. The schedule and inventory must be verified
by the oath of the petitioner, which may be taken either before the
district judge, or before a register, or before a commissioner of the
circuit court.

Statute revised — March 2, 1867, ch. 176, § 11, 14 Stat. 521. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 1, 5 Stat. 440.-

A petition in involuntary bankruptcy can not be verified before a notary
public. In re Heller Bros. & Co., 82 Leg. Int. 136; s. c. 22 Pitts. L. J. 140.

An indictment for perjury need not set out the petition substantially or
otherwise. A mere reference to its character and object is sufficient.
U.S. v. Deming, 4 McLean, 3; U. 8S. v. Nikols, 4 McLean, 23.

An indictment for perjury, which describes the petition as made to “a
judge sitting as a bankruptcy court,” is sufficient, for no judge can sit in
bankruptcy except the district judge. U.S. v. Deming, 4 McLean, 3.

Acts oF 1867 and 1874, § 5018. Every citizen of the United States
petitioning to be declared bankrupt, shall, on filing his petition,
and before any proceedings thereon, take and subscribe an oath of
allegiance and fidelity to the United States, which oath may be
taken before either of the officers mentioned in the preceding sec-
tion, and shall be filed and recorded with the proceedings in bank-
Tuptey.

Statute revised — March 2, 1867, ch. 176, § 11, 14 Stat. 521.

Although the prescribed form contemplates that the oath of allegiance
shall be annexed to the petition, yet it can not be doubted that, by the very
terms of the statute, it may be lawfully filed at any time afterward, and
222 Tur Bankruptcy Law.

with precisely the same effect as if annexed. U. S. v. Clark, 4 B. R. 59;
s.c.1L. T. B. 237;5s.¢c 3 L. T. B. 223; in re A. J. Walker, 1 B. R. 335.

Act oF 1867, § 5019. Upon the filing of such petition, schedule,
and inventory, the judge or register shall forthwith, if he is satisfied
that the debts due from the petitioner exceed three hundred dollars,
issue a warrant, to be signed by such judge or register, directed to
the marshal for the district, authorizing him forthwith, as messenger,
to publish notices in such newspapers+ as the marshal shall select,
not exceeding two; to serve written or printed notice, by mail or
personally, on all creditors upon the schedule filed with the debtor’s
petition, or whose names may be given to him in addition by the
debtor; and to give such personal or other notice to any persons con-
cerned as the warrant specifies;+ but whenever the creditors of the
bankrupt are so numerous as to make any notice now required by law
to them, by mail or otherwise, a great and disproportionate expense
to the estate, the court may, in lieu thereof, in its discretion, order
such notice to be given by publication in a newspaper, or newspapers,
to all such creditors, whose claims, as reported, do not exceed the
sums, respectively, of fifty dollars.

Statute revised — March 2, 1867, ch. 176, § 11, 14 Stat. 521. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 7, 5 Stat. 446.

The proceedings in bankruptcy are in no just sense ex parte in their
character, for notice is required to be given to the creditors either per-
sonally or by publication. Lathrop v. Stuart, 5 McLean, 167.

After the public notice required by the statute has been given, cred-
itors must be treated as having notice of the proceedings. Smith v.
Brinckerhoff, 6 N. Y. 305; s. c. 8 Barb. 519. Contra, Miller v. Black, 1
Penn. 420.

The warrant should contain a list of the bankrupt’s creditors, with
their respective places of residence, and the amount of their respective
debts. In re Erie L. Hall, 2 B. R. 192; s. c. 16 Pitts. L. J. 52.

The omission to publish the notice in one of the newspapers designated
by the warrant, is such a defect as will make all proceedings founded
thereon, and subsequent thereto, irregular and voidable. Ibid.

The marshal should insert in the notices served on the creditors the
exact language of the warrant, but an immaterial variance will be disre-
garded. In re J. Pulver, 1 B. R. 46; s. c. 1 Ben. 381; in re W. D. Hill, 1
B. R. 16; s. ¢. 1 Ben. 321. a

The notice to be served on the bankrupt’s creditors should contain a list
of all the creditors, with their respective places of residence, and the

 

1 So amended by act of June 29, 1874, ch. 390, § 5, 18 Stat. 179.
SCHEDULES AND PETITIONS. 223

amount due to each. In re Decatur Jones, 2 B. R. 59; in re John 8. Perry,
1B. R. 220; s. ec. 1 L. T. B. 4; in re Erie L. Hall, 2 B. R. 192; 5. c. 16
Pitts. L. J. 52. :

The marshal should insert in the notice to be published and served,
the exact language of the warrant, but an immaterial variance will be
disregarded. In re J. Pulver, 1 B. R. 46; s. c. 1 Ben. 381.

The marshal has no discretion, but must serve all notices by mail, unless
directed by the warrant to serve the notices personally on the parties
therein specified by name. Anon., 1B. R. 216.

The notice must be served on foreign creditors, as well as those who
reside in the United States. In re Heyes, 1 B. R. 21; 8. c. 1 Ben. 333; s. ¢.
36 How. Pr. 249.

Act oF 1867, § 5020. Every bankrupt shall be at liberty, from
time! to time, upon oath, to amend and correct his schedule of
ereditors and property, so that the same shall conform to the facts.

Statute revised — March 2, 1867, ch. 176, § 26, 14 Stat. 529.

For the purpose of allowing amendments where they are uncontested,
the register is the court, and has the power to allow them on a ‘direct
application to him. The co-ordinate power of allowing them exists in the
judge. The original amendments permitted to be made should be filed
with the clerk. In re Morford, 1 B. R. 211; s. c« 1 Ben. 264; in re B.
Heller, 5 B. R. 46; s. «@ 41 How. Pr. 213.

The register can, of his own motion, order amendments at any stage
of the proceedings. Such an order ought to specify particularly the points
in which the petition and schedules are defective. In re Orne, 1 B. R.
79; 8. c. 1 Ben. 420; in re Horace Plimpton, 4 Law Rep. 488.

The register may order an amendment upon the petition of a creditor.
In re Decatur Jones, 2 B. R. 59.

The register may refuse to allow amendments, except upon such con-
ditions as will prevent injustice. In re Ratcliff, 1 B. R. 400; in re Perry,
1B. R. 220;8.c.1L. T. B. 4.

The bankrupt may make an application for leave to amend his schedules
at any stage of the proceedings before the register has returned the cause
to the court, and the filing of specifications does not prejudice him in or
deprive him of the right. In re B. Heller, 5 B. R. 46; s. c. 41 How. Pr.
213; in re Chas. Oakley, 5 Law Rep. 827.

When it appears, on the hearing of the specifications against the dis-
charge of the bankrupt, that he has innocently omitted some property
from his schedules, the case will be referred back to the register with
leave to the bankrupt to amend his schedules. In re Connell, 3 B. R. 4438;
in re A. B. Preston, 3 B. R. 103.

The application for leave to amend is ex parte, and no notice is neces-
Sary. No creditor has a right to oppose the application. The allowance

 

1So0 amended by act of Feb. 27, 1877, ch. 69, 19 Stat. 252.
224 THe Bankruptcy Law.

of an amendment does not prejudice the rights of a creditor. He is not
a party to the proceeding, and is not estopped by the order. In ré Watts,
2B. R. 447; s. c. 3 Ben. 166; s.c. 2 L. T. B. 74; in re B. Heller,-5 B. R. 46;
8. ec. 41 How. Pr. 218.

The better practice in order to bring the question fully before the court,
is to allow the assignee and creditors opposing the discharge to oppose the
application for leave to amend, and to require due notice of such appli-
cation to be given to them. In re B. Heller, 5 B. R. 46; s. c. 41 How. Pr.
213.

The bankrupt has the right to amend his schedules by striking out the
names of persons who have been improperly and inadvertently inserted
as creditors. Ibid.

The bankrupt may amend his petition so as to bring in his copartner.
In re Little, 1 B. R. 341; s. c. 2 Ben. 186.

If the petition merely alleges, that the bankrupt had a place of business
within the district, he may be allowed to amend upon showing why the
petition was not originally made in proper form, and accounting for the
delay in applying for leave to amend. *In re Edward T. Wood, 13 B. R.
96; 8. c. 6 Ben. 339,
TITLE VIII.
INVOLUNTARY BANKRUPTCY.

Act oF 1898, Cu. 1, § 1. Definitions— (4) “Bankrupt” shall
include a person against whom an involuntary petition or an applica-
tion to set a composition aside or to revoke a discharge has been
filed, or who has filed a voluntary petition, or who has been adjudged
a bankrupt; (2) “adjudication” shall mean the date of the entry
of a decree that the defendant, in a bankruptcy proceeding, is a bank-
rupt, or if such decree is appealed from, then the date when such
decree is finally confirmed; (12) “discharge ” shall mean the release
of a bankrupt from all of his debts which are provable in bankruptcy,
except such as are excepted by this Act; (15) a person shall be deemed
insolvent within the provisions of this Act whenever the aggregate
of this property, exclusive of any property which he may have con-
veyed, transferred, concealed, or removed, or permitted to be con-
cealed or removed, with intent to defraud, hinder or delay his credit-
ors, shall not, at a fair valuation, be sufficient in amount to pay his
debts; (19) “ persons ” shall include corporations, except where other-
wise specified, and officers, partnerships, and women, and when used
with reference to the commission of acts which are herein forbidden
shall include persons who are participants in the forbidden acts, and
the agents, officers, and members of the board of directors or trustees,
or other similar controlling bodies of corporations; (20) “ petition ”
shall mean a paper filed in a court of bankruptcy or with a clerk or
deputy clerk by a debtor praying for the benefits of this Act, or
by creditors alleging the commission of an act of bankruptcy by a
debtor therein named; (27) “ wage-earner ” shall mean an individual
who works for wages, salary, or hire, at a rate of compensation not
exceeding one thousand five hundred dollars per year.

Act or 1898, Cu. 3, § 4. Who May Become Bankrupts.—
(a) Any person who owes debts except a corporation shall be entitled
to the benefits of this Act as a voluntary bankrupt.

(b) Any natural person, except a wage-earner or a person engaged
chiefly in farming or the tillage of the soil, any unincorporated

15
226 Tur Bankruptcy Law.

company, and any corporation engaged principally in manufacturing,
trading, printing, publishing, or mercantile pursuits, owing debts to
the amount of one thousand dollars or over, may be adjudged an
involuntary bankrupt upon default or an impartial trial, and shall
be subject to the provisions and entitled to the benefits of this
Act. Private bankers, but not national banks or banks incorporated
under State or Territorial laws, may be adjudged involuntary bank-
rupts.

The pendency of a petition to set aside a composition in an involuntary
proceeding, no adjudication having been made therein, was no bar to the
right of voluntary petition secured by the act to the debtor. Troceed-
ings should be continued in the case in which an adjudication was made,
and proceedings in the involuntary case should be stayed. In re Flanna-
gan, 18 B. R. 439,

Under the bankruptcy law of 1867, the court had no power in involun-
tary proceedings to adjudicate any person a bankrupt who was not a
citizen of the United States at time of filing of petition, though such
person may have carried on business within the district for the rejuisite
period. In re Burton & Watson, 17 B. R. 212. 2

Assignee of a corporation appointed under the bankruptcy laws repre-
sents both the corporation and its creditors, and the defense of irregular
organization can not be urged against him. Chubb y. Upton, 16 B. R, 5387.

Act oF 1898, Cu. 3, § 5. Partners.— (a) A partnership, during
the continuation of the partnership business, or after its dissolution
and before the final settlement thereof, may be adjudged a bankrupt.

(b) The creditors of the partnership shall appoint the trustee;
in other respects so far as possible the estate shall be administered
as herein provided for other estates.

(c) The court of bankruptcy which has jurisdiction of one of the
partners may have jurisdiction of all the partners and of the ad-
ministration of the partnership and individual property.

(d) The trustee shall keep separate accounts of the partnership
property and of the property belonging to the individual partners.

(e) The expenses shall be paid from the partnership property and
the individual property in such proportions as the court. shall deter-
mine.

(f) The net proceeds of the partnership property shall be appro-
priated to the payment of the partnership debts, and the net pro-
ceeds of the individual estate of each partner to the payment of his
individual debts. Should any surplus remain of the property of
Partners — Acts or BANKRUPTCY. 227

any partner after paying his individual debts, such surplus shall be
added to the partnership assets and be applied to the payment of
the partnership debts. Should any surplus of the partnership prop-
erty remain after paying the partnership debts, such surplus shall
be added to the assets of the individual partners in the proportion
of their respective interests in the partnership.

(g) The court may permit the proof of the claim of the vache
ship estate against the individual estates, and vice versa, and may
marshal the assets of the partnership estate and individual estates
so as to prevent preferences and secure the equitable distribution
of the property of the several estates.

(h) In the event of one or more but not all of the members of a
partnership being adjudged bankrupt, the partnership property shall
not be administered in bankruptcy, unless ‘by consent of the partner
or partners not adjudged bankrupt; but such partner or partners
not adjudged bankrupt shall settle the partnership business as ex-
peditiously as its nature will permit, and account for the interest
of the partner or partners adjudged bankrupt.

Act oF 1898, Cu. 3, § 3. Acts of Bankruptcy.—(a) Acts of
bankruptcy by a person shall consist of his having (1) conveyed,
transferred, concealed or removed, or permitted to be concealed or
removed, any part of his property with intent to hinder, delay, or
defraud his creditors, or any of them; or (2) transferred, while in-
solvent, any portion of his property to one or more of his creditors
with intent to prefer such creditors over his other creditors; or (3)
suffered or permitted, while insolvent, any creditor to obtain a prefer-
ence through legal proceedings, and not having at least five days
before a sale or final disposition of any ‘property affected by such
preference vacated or discharged such preference; or (4) made a
general assignment for the benefit of his creditors; or (5) admitted
in writing his inability to pay his debts and his willingness to be
adjudged a bankrupt on that ground.

(b) A petition may be filed against a person who is insolvent and
who has committed an act of bankruptcy within four months after
the commission of such act. Such time shall not expire until four
months after (1) the date of the recording or registering. of the
transfer or assignment when the act consists in having made a trans-
fer of any of his property with intent to hinder, delay, or. defraud
his creditors or for the purpose of giving a preference as hereinbefore
provided, or a general assignment for the benefit of his creditors, if
228 THE Banxrvrtcy Law.

by law such recording or registering is required or permitted, or,
if it is not, from the date when the beneficiary takes notorious, exclu-
sive, or continuous possession of the property unless the petitioning
creditors have received actual notice of such transfer or assignment.

(c) It shall be a complete defense to any proceedings in bank-
ruptcy instituted under the first subdivision of this section to allege
and prove that the party proceeded against was not insolvent as defined.
in this Act at the time of the filing the petition against him, and
if solvency at such date is proved by the alleged bankrupt the pro-
ceedings shall be dismissed, and under said subdivision one the burden
of proving solvency shall be on the alleged bankrupt.

(d) Whenever a person against whom a petition has been filed
as hereinbefore provided under the second and third subdivisions of
this section takes issue with and denies the allegation of his insol-
vency, it shall be his duty to appear in court on the hearing, with
his books, papers, and accounts, and submit to an examination, and
give testimony as to all matters tending to establish solvency or
“insolvency, and in case of his failure to so attend and submit to
examination the burden of proving his solvency shall rest upon him.

(e) Whenever a petition is filed by any person for the purpose
of having another adjudged a bankrupt, and an application is made
to take charge of and hold the property of the alleged bankrupt,
or any part of the same, prior to the adjudication and pending a
hearing on the petition, the petitioner or applicant shall file in the
same court a bond with at least two good and sufficient sureties who
shall reside within the jurisdiction of said court, to be approved by
the court or a judge thereof, in such sum as the court shall direct,
conditioned for the payment, in case such petition is dismissed, to
the respondent, his or her personal representatives, all costs, expenses,
and damages occasioned by such seizure, taking, and detention of
the property of the alleged bankrupt.

If such petition be dismissed by the court or withdrawn by the
petitioner, the respondent or respondents shall be allowed all costs,
counsel fees, expenses, and damages occasioned by such seizure, tak-
ing, or detention of such property. Counsel fees, costs, expenses,
and damages shall be fixed and allowed by the court, and paid by
the obligors in such bond.

Paying individual debt with partnership property, though each partner
liable for such debt, is an act of bankruptcy. In re E. L. Matot & Co.,
16 B. R, 485,
PossEssion or Property. 229

On the 11th January, 1878, the bankrupt, a druggist, executed a chattel
mortgage on all his stock of drugs, etc., constituting his stock in trade,
to his father-in-law, to secure him as surety on a note given by the bank-
rupt. The mortgage was taken with the understanding that the bank-
rupt was to go on and sell at retail in the ordinary way, which he ac-
cordingly did. On the 20th of May the mortgagee, having become
dissatisfied with the way in which the business was being conducted,
took possession of the property under the mortgage. On the 4th of June
the petition in this case was filed. Held, that the mortgage and the
seizure of the property thereunder were both acts of bankruptcy, the
first as being a fraudulent conveyance, and the second as operating as an
unlawful preference. In re Foster, 18 B. R. 64. °

Carrying a message by a member of insolvent firm, at request of cred-
itor, to attorney, directing entry of judgment, held a procuring of such
judgment. In re Benton, 16 B. R. 65.

A voluntary general assignment is an act of bankruptcy of itself. In
re Croft Bros., 17 B. R. 324.

Defective execution of a voluntary assignment for the benefit of cred-
itors does not prevent its being an act of bankruptcy. In re Lawrence,
18 B. R. 516.

Where a voluntary assignment made in good faith for benefit of cred-
itors is set aside by subsequent proceedings in bankruptcy, the assignee
will be allowed the necessary expenses of administering the estate while
in his hands, but no compensation for his own services unless the court
can see clearly that the estate will not be subjected to a duplication of
charges. In re Kurth, 17 B. R. 57h

A general assignment without giving priority is superseded by pro-
ceedings in bankruptcy. Dolson v. Kerr, 16 B. R. 405.

Delivery of schedules not necessary to validity of an assignment for
benefit of creditors. In re Kimball et al., 16 B. R. 188,

None of the following facts rendered a deed of assignment void as
to any other person than the. assignee in bankruptcy, viz.: First, that it
was made to a trustee, who was the clerk of the bankrupt; second, that
it was made to a trustee of little or no property, but of excellent char-
acter, without requiring bond; third, that it required a sale of the goods
for cash, but permitted a sale on credit of not exceeding thirty days, :f
trustee deemed this best; and, fourth, a subsequent proposition of the
bankrupt to pay a certain amount to his creditors, coupled with a threat
of bankruptcy. In re Walker, 18 B. R. 56.

Aot or 1898, Cu. 7, * * * § 69. Possession of Property.—
(a) A judge may, upon satisfactory proof, by affidavit, that a bank-
rupt against whom an involuntary petition has been filed and is
pending has committed an act of bankruptcy, or has neglected or is
neglecting, or is about to so neglect his property that it has thereby
deteriorated or is thereby deteriorating or is about thereby to de-
230 THE Bankruptcy Law.

teriorate in value, issue a warrant to the marshal to seize and hold
it subject to further orders. Before such warrant is issued the peti-
tioners applying therefor shall enter into a bond in such an amount
as the judge shall fix, with such sureties as he shall approve, condi-
tioned to indemnify such bankrupt for such damages as he shall
sustain in the event such seizure shall prove to have been wrong-
fully obtained. Such property shall be released, if such bankrupt
shall give bond in a sum which shall be fixed by the judge, with
such sureties as he shall approve, conditioned to turn over such
property, or pay the value thereof in money to the trustee, in the
event he is adjudged a bankrupt pursuant to such petition.

Act oF 1867, § 5021.1 That any person residing, and owing (a)
debts, as aforesaid, who, after the passage of this act, shall depart
from the State, District, or Territory of which he is an inhabitant,
with intent to defraud his creditors; or, being absent, shall, with
such intent, remain absent; or shall conceal (b) himself to avoid
the service of legal process in any action for the recovery of a debt
or demand provable under this act; or shall conceal (c) or remove
any of his property to avoid its being attached, taken or sequestered
on legal process; or shall make any assignment, gift, sale, convey-
ance, or transfer of his estate, property, rights, or credits, either
within the United States or elsewhere, with intent (d) to delay,
defraud or hinder his creditors; or who has been arrested (e) and
held in custody under or by virtue of mesne process or execution,
issued out of any court of the United States, or of any State, District,
or Territory within which such debtor resides or has property, founded
upon a demand in its nature provable against a bankrupt’s estate
under this act, and for a sum exceeding one hundred dollars, and
such process is remaining in force and not discharged by payment,
or in any other manner provided by the law of the United States, or
of such State, District, or Territory, applicable thereto, for a period
of twenty days; or has been actually imprisoned for more than twenty
days in a civil action founded on contract for the sum of one hundred
dollars or upward; or who, being bankrupt or insolvent, (f) or in
contemplation of bankruptcy or insolvency, shall make any payment,
gift, grant, sale, conveyance, or transfer of money or other property,
estate rights, or credits, or confess judgment, or give any warrant to
confess judgment, or procure his property to be taken on legal process,

1So amended by act of June 22, 1874, ch. 390, § 12, 18 Stat. 180.

 
PossEssIoN oF PROPERTY. 231

with intent to give a preference (g) to one or more of his creditors,
or to any person or’persons who are or may be liable for him as
indorsers, bail, sureties, or otherwise, or with the intent, by such
disposition of his property, to defeat (h) or delay the operation of
this act; or who, being a bank, banker, broker, merchant, trader,
(j) manufacturer, or miner, has fraudulently stopped payment, or
who, being a bank, banker, broker, merchant, trader, manufacturer,
or miner, has stopped, or suspended and not resumed payment, within
a period of forty days, of his commercial paper (made or passed in
the course of his business as such), or who, being a bank or banker,
shall fail for forty days to pay any depositor upon demand of pay-
ment lawfully made, shall be deemed to have committed an act of
bankruptcy, and, subject to the conditions hereinafter prescribed,
shall be adjudged a bankrupt on the petition (k) of one or ‘more of
his creditors, who shall constitute one-fourth thereof, at least, in
number, and the aggregate of whose debts (1) provable under this
ast amounts to at least one-third of the debts so provable: Provided, —
That such petition is brought within six months after such act of
bankruptcy shall have been committed:1 Provided also, That no vol-
untary assignment by a debtor or debtors of all his or their property,
heretofore or hereafter made in good faith for the benefit of all his
or their creditors, ratably and without creating any preference, and
valid according to the law of the State where made, shall of itself,
in the event of his or their being subsequently adjudicated bankrupts
in a proceeding of involuntary bankruptcy, be a bar to the discharge
of such debtor or debtors. And the provisions of this section shall
apply to all cases of compulsory or involuntary bankruptcy com-
menced since the first day of December, eighteen hundred and sev-
enty-three, as well as to those commenced hereafter. And in all
cases commenced since the first day of December, eighteen hundred
and seventy-three, and prior to the passage of this act, as well as
those commenced hereafter, the court shall, if such allegation as to
the number or amount of petitioning creditors be denied by the
debtor, by a statement in writing to that effect, require him to file
in court forthwith a full list of his creditors, with their places of
residence and the sums due them respectively, and shall ascertain,
upon reasonable notice to the creditors, whether one-fourth in number
and one-third in amount thereof, as aforesaid, have petitioned that

 

1So0 amended by act of July 26, 1878, ch. 234, § 1, 19 Stat. 102.
232 Tue Bankruptcy Law.

the debtor be adjudged a bankrupt. But if such debtor shall, on
the filing of the petition, admit in writing that the requisite number
and amount of creditors have petitioned, the court (if satisfied that
the admission was made in good faith), shall so adjudge, which judg-
ment shall be final, and the matter proceed without further steps
on that subject. And if it shall appear that such number and amount
have not so petitioned, the court shall grant reasonable time, not
exceeding in cases heretofore commenced, twenty days, and, in cases
hereafter commenced, ten days, within which other creditors may
join in such petition. And if, at the expiration of such time so
limited, the number and amount shall comply with the requirements
of this section, the matter of bankruptcy may proceed; but if, at
the expiration of such limited time, such number and amount shall
not answer the requirements of this section, the proceedings shall
be dismissed, and, in cases hereafter commenced, with costs. And
if such person shall be adjudged a bankrupt, the assignee may recover
back the money (m) or property so paid, conveyed, sold, assigned,
or transferred contrary to this act: Provided, That the person receiv-
ing such payment or conveyance had reasonable cause to believe that
the debtor was insolvent, and knew that a fraud on this act was in-
tended; and such person, if a creditor, shall not, in cases of actual
fraud on his part, be allowed to prove for more than a moiety of
his debt; and this limitation on the proof of debts shall apply to
cases of voluntary as well as involuntary bankruptcy. And the peti-
tion of creditors under this section may be sufficiently verified by
the oaths of the first five signers thereof, if so many there be. And
if any of said first five signers shall not reside in the district in
which such petition is to be filed, the same may be signed and verified
by the oath or oaths of the attorney or attorneys, agent or agents,
of such signers. And in computing the number of creditors, as
aforesaid, who shall join in such petition, creditors whose respective
debts do not exceed two hundred and fifty dollars shall not be
reckoned. But if there be no creditors whose debts exceed said sum
of two hundred and fifty dollars, or if the requisite number of cred-
itors holding debts exceeding two hundred and fifty dollars fail to
sign the petition, the creditors having debts of a less amount shall
be reckoned for the purpose aforesaid.

Statutes revised — March 2, 1867, ch. 176, § 39, 14 Stat. 536; July 27,
1868, ch. 258, § 2, 15 Stat. 228. Prior Statutes — April 4, 1800, ch. 19,
§§ 1, 2, 2 Stat. 19, 21; Aug. 19, 1841, ch. 9, § 7, 5 Stat. 446,
PRINCIPLES OF CONSTRUCTION. 233

Principles of Construction.— This section is highly remedial, and should
be liberally construed. It is not to be construed Strictly, as if it were an
obscure or special penal enactment. The act establishes a system, and
regulates in all their details the relative rights and duties of debtor and
creditor. It does not attempt to punish the bankrupt, but to distribute
his property fairly and impartially among his creditors to whom in
justice it belongs. It is remedial, and seeks to protect the honest cred-
itor from being overreached and defrauded by the unscrupulous. It is
intended to relieve the honest but unfortunate debtor from the burden of
liabilities which he can not discharge, and allow him to commence the
business of life anew. Such an act must be construed according to the
fair import of its terms, with a view to effect its objects and to promote
justice. In re Locke, 2 B. R. 382; s. c. Lowell, 293; in re Muller & Brentano,
3 B. R. 329; s. c. 1 Deady, 513; s. c. 2 L. T. B. 33; in re Silverman, 4
B. R. 523; s. c. 2 Abb. C. C. 243; s. c. 1 Saw. 410; in re Wm. Eeles, 1 N.
Y. Leg. Obs. 84; s. c. 5 Law Rep. 273.

Its scope and purpose are to oblige insolvent traders to take the benefit
of the bankruptcy act, and thus to insure an equal distribution of their
estate under its carefully framed provisions. In re Dibblee et al. 2 B. R.
617;.s. c. 3 Ben. 283; in re Locke, 2 B. R. 382; s. c Lowell, 298; White v.
Raftery, 3 B. R. 221; s. c. 1 0. L. N. 361; s. @ 16 Pitts. L. J. 110.

That part of the statute which enumerates the acts of bankruptcy is in
the nature of a penal statute, and to be construed strictly. It can not be
enlarged by construction to include acts that are within the reason of the
law, or the mischiefs intended to be provided against, but which are not
within the words of the statute according to their reasonable construction.
Jones v. Sleeper, 2 N. Y. Leg. Obs. 131.

Sections 5128 and 5021 are very nearly related to each other in their
provisions, and must be construed together in pari materia. Section 5128,
in express language, applies equally to voluntary and involuntary cases.
Therefore all the qualifications and conditions prescribed by section 5128,
not inconsistent with the provisions of section 5021, will apply to proceed-
ings under the latter section, and all the qualifications, conditions, and
prohibitions of section 5021, so far as they relate to the same class of
matters provided for by section 5128, and are not inconsistent with its
provisions, will apply to proceedings under section 5128. In re Tonkin
& Trewartha, 4 B. R. 52;s.c1 L. T. B. 232; 8. ¢c. 3 L. T. B. 221; in re
Black & Secor, 1 B. R. 353; s. c. 2 Ben. 196; s. c. 1 L. T. B. 39; Wadsworth
v. Tyler, 2 B. R. 316; 5. c. 2 L. T. B. 28.

Section 5128 does not relate to or affect the question, what is an act
of bankruptcy? By section 5021 alone that question must be answered.
It is quite clear that facts which are entirely sufficient for adjudicating
a debtor bankrupt on petition of his creditor, may be, and generally are,
wholly insufficient to justify a decree declaring void a transfer of prop-
erty, or preference given to a creditor. In re Nickodemus, 3 B. R. 230;
8%§c14L. T. B. 140; 58. ¢c 20. L. N. 49; s. c. 16 Pitts, L. J. 233; in re
Price Fuller, 4 B. R. 115; s. c. 1 Saw. 243.
234 Tue Bankruptcy Law.

Section 5130 throws light upon the intention of Congress in the enact-
ment of the 5021st section, and shows that any assignment or transfer of
property by a failing debtor, not in the usual and ordinary course of
business, is not only void, but evidence of fraud. Perry V. Longley, 1
B, R. 559; 8s. c.1 L. T. B. 34; 5, ¢. 7 A. L. Reg. 429; in re Dean & Garrett,
2B. R. 89; Davis & Green v. Armstrong, 3 B. R. 84; s.c. 2 L. T. B. 188.

The act makes a discrimination between cases of voluntary and in-
voluntary bankruptcy. The debtor upon filing a petition with the proper
averments is declared a bankrupt by the court. The allegation can not
be traversed, nor is any issue or inquiry as to its truth permitted. While
the debtor may, on this broad basis, call on the court to administer his
estate, the creditor who desires to do the same thing is limited to a few
facts or circumstances, the existence of which is essential to his right to
appeal to the court. When any one of these facts is set forth in a petition
to the court by the creditor, the truth of the allegation may be denied by
the debtor, and on the issue thus found, he may demand the verdict of a
jury. The reason for the wide difference in the proceedings in the two
cases is obvious. When a man is himself willing to refer his embarrassed
condition to the proper court, with a full surrender of all his property, no
harm can come to any one but himself, and there can be no solid objection
to the course he pursues; but when a person claims to take from another
all control of his property, to arrest him in the exercise of his occupation,
and to impair his standing as a business man — in short, to place him ina
position which may ruin him in the midst of a prosperous career, the
precise circumstances or facts on which he is authorized to do this, should
not only be well defined in the law, but clearly established in the court.
Wilson v. City Bank, 5 B. R. 270; s. c. 9 B. R. 97; s. ce. 1 Dillon, 476; s. ¢.
17 Wall. 489; Jones v. Sleeper, 2 N. Y. Leg. Obs. 131.

What Sum a Debtor Must Owe.— (a) The language, “ owing debts as
aforesaid,” has reference to the following words of section 5014, viz.:
“owing debts provable in bankruptcy exceeding the amount of three
hundred dollars.’ From this the following conclusions must be deduced:

1. The foundation of voluntary proceeding is indebtedness due and
payable under the act against the debtor.

2. Whatever debts may be proved in a voluntary, may be proved in
an involuntary case.

3. Whenever an indorser’s liability has become fixed, such liability
constitutes a debt, due and payable from the indorser, which may be
made the foundation of involuntary as well as voluntary proceedings in:
bankruptcy.

Of course there must be shown in an involuntary case, in addition to
such indebtedness, at least one of the acts of bankruptcy enumerated in
this section. In re Nickodemus, 3 B. R. 230; s. c.1 L. T. B. 140; 5. @
20. L. N. 49; s. c. 16 Pitts. L. J. 233.

A petition may be filed against a firm, although one of the partners
has been previously declared a bankrupt on a petition filed against him
alone. Hunt v. Pooke, 5 B. R. 161.
Amount A Destor Must Owe. 235

Persons who have been adjudged bankrupts as partners in one firm, may
be subsequently declared bankrupts as partners with another in another .
firm. InreS. A. Jewett, 15 B. R. 126; s. ¢. 16 B. R. 48; 5. ¢. 9 C, L. N. 345.

A certificate that the special partner has contributed a certain sum in
cash and a certain sum in goods does not comply with the statutes of New
York relating to limited partnerships, and the parties may be proceeded
against in bankruptcy as general partners. In re William G. Merrill, 13
B. R. 91; 8s. c. 12 Blatch. 221.

A firm can not be adjudged bankrupt on an involuntary petition, unless
all the partners are parties to the proceeding. In re Chas. 8. Pitt, 14 B.
R. 59.

A consolidated railroad corporation, existing under charters from sev-
eral States, but having one name, one set of stockholders and officers, the
same assets, and the same creditors, if thrown into bankruptcy in one of
these States, can not be afterward adjudicated a bankrupt upon another
petition by another creditor, Urought in another State and district. The
court first acquiring jurisdiction ought to retain it exclusively so far as
an adjudication is concerned, and the assignment under the first adjudica-
tion will carry all corporate assets in the hands of the assignee. In re
Boston, Hartford & Erie R. R. Co., 6 B. R. 209; s. c. 9 Blatch. 101.

Infants, as subjects of either voluntary or involuntary bankruptcy, are
not in respect to their general contracts within the provisions of the
bankruptcy law. In re Walter S. Derby, 8 B. R. 106; s. ¢. G Ben. 232.

A party who is under guardianship as a lunatic may be proceeded
against in involuntary bankruptcy in opposition to the wish of his guard-
jan. In re Weitzel, 14 B. R. 466; s. c. 3 Cent. L. J. 557.

The fact that a receiver has been appointed by a State court to take
charge of the assets of a corporation in a proceeding under a State law
relating to the distribution of the assets of insolvent corporations, is no
ground for refusing to adjudicate such corporation bankrupt. In re Green
Pond R. R. Co., 18 B. R. 118, in re National Life Ins. Co., 6 Biss. 35.

The decree of a State court dissolving a corporation on account of a
forfeiture of its charter does not prevent proceedings against it in bank-
ruptcy. A corporation, however it may be dissolved, still exists for the
purpose of paying its debts and of dividing its surplus, if any, among its
shareholders, or of baving this done by a court of equity acting on its
property. A petition in bankruptcy is an equitable sequestration. In re
Independent Ins. Co., 6 B. R. 169; s. c. 6 B. R. 260; s. c. 1 Holmes, 103;
Thornhill y. Rank, 5 B. R. 377; s. c. 3 B. R. 485; s.c. 1 L. 'T. B. 287; 8. ¢.
3L. T. B. 38; s. c. 2 C. L. N. 157; in re Merchants’ Ins. Co., 6 B. R. 48;
s. c. 3 Biss. 162; s.c. 2 L. T. B. 248; in re Washington Marine Ins. Co., 2
B. R. 648; s. c. 2 Ben. 292.

The bankruptcy law does vot in general embrace trustees as executors,
administrators, guardians, and others acting strictly in a fiduciary capac-
ity. Graves v. Winter, 9 B. R. 357; s. c. 7 Pac. L. R. 165.

The executor of banker who is merely authorized by the will to con-
tinue the business so long as may be necessary to a fair liquidation and
236 Tur BANKRUPTCY Law.

settlement thereof, and has no power that does not tend to the object, can
not be declared a bankrupt as such. Ibid.

A feme covert who is authorized by the laws of the State to carry on
business as a sole trader, and incur liabilities, may be declared a bank-
rupt. In re Kinkead, 7 B. R. 439; ». ¢. 3 Biss. 405; in re O’Brien, 1 B. R.
176; in re Julia Lyons, 2 Saw. 524; 8. ¢.1 A. L. T. (N. 8.) 167.

A court of bankruptcy is clothed with all the powers of a court of equity,
and if a feme covert, with the consent of her husband, can enter into
copartnership with him or any other person, then she may be declared a
bankrupt on the petition of creditors, or, at least, the firm, as a business
entity, may be so adjudged for the purpose of distributing the assets
among creditors. In re Kinkead, 7 B. R. 439; s. ¢. 3 Biss. 405.

The directors and stockholders can not be adjudged bankrupts on ac-
count of an act of bankruptcy committed by the corporation, although
they are jointly and severally liable for its debts, for joint debtors are not
affected by an act of bankruptcy committed by one of them. James Vv.
Atlantic Delaine Co., 11 B. R. 390.

(b) An order for the examination of a debtor upon proceedings supple-
mental to an execution is a legal process within the meaning of the act.
Brock v. Hoppock, 2 B. R. 7; s. c. 2 Ben. 478.

If the concealment is a concerted measure between the debtor and some
of his creditors, it is not an act of bankruptcy as against creditors not
privy to the plot. Barnes v. Billington, 1 Wash. C. C. 29; s. c. 4 Day,
81, note.

Concealment from or denial to creditors is not an act of bankruptcy if
it does not prevent the service of process. Ibid.

It is not an act of bankruptcy for a special partner to procure a general
partner to leave the State. In re Lyman Terry, 5 Biss. 110.

(ec) Procuring an attachment upon a fictitious debt. in order to prevent
an attachment by a creditor, comes fairly within the language of this
clause, because the words mean not only the physical removal or conceal-
ment, but the concealment of the actual title and position of property of
whatever kind. In re Williams & Co., 3 B. R. 286; s. ec. Lowell, 496; s. ¢.
21. T. B. 100.

An allegation that the debtor concealed money with intent to prevent
its being taken on legal process, which he knew was about to issue at
the suit of one or more of his creditors, is suflicient. It is not necessary
to state that there was any legal process in existence. Fox vy. Eckstein, 4
B. R. 373.

The secrecy and concealment of goods, which constitutes an act of
bankruptcy distinct from a fraudulent conveyance of them, must be an
actual, not a constructive concealment of them by the bankrupt himself,
or by his procurement, while they continue, in his intention, his own goods.
Livermore v. Bagley, 3 Mass. 487.

Fraudulent Conveyances.— (d) It is not an element of this act of bank-
ruptcy that the debtor shall be, at the time of committing it, bankrupt or
insolvent, or in contemplation of bankruptcy or insolvency, nor is any
allegation to that effect necessary. In re Dunham & Orr, 2 B. R. 17; 8. ¢
FRAUDULENT CONVEYANCES. Q37

2 Ben, 488: s. ec, 1 L. T. B. 89; in re Randall & Sunderland, 3 B. R. 18; s.
¢c. 1 Deady, 557; s. c. 2 L. T. B. 69; in re Nickodemus, 3 B. R. 2380; s. « 1
L. T. B. 140; 8. ¢. 2 C. L. N. 49; s.¢.16 Pitts, L. J. 233; in re Thomas Ryan,
2 Saw. 411.

The inteut means an actual design in ihe mind, and must be proved
as a question of fact. In re Drummond, 1 B. R. 231; 5. ci L. T. B. Tt
in re Cowles, 1 B. R. 280; s. ¢. 1 W. J. 867; Perry v. Longley, 2 B. R. 596;
8,c. 8 A, L. Reg. 427; in re Goldschmidt, 3 B. R. 165; s, c. 3 Ben. 379.

The intent need exist only on the part of the person making the trans-
fer. If that exist, the debtor clearly commits an act of bankruptcy, how-
ever innocent the intent of the preferred creditor or the person to whom
the transfer is made. In re Drummond, 1 B. R. 231; s. c. 1 L. T. B. 7.

The question of intent to hinder, delay, or defraud creditors must be
sulved by looking at what the debtor says and does, and the effect thereof.
Ecfort & Petring v. Greely, 6 B. R. 483; s. c. 4 C. L. N. 209; in re Thomas
Ryan, 2 Saw. 411.

A mortgage given for a present consideration, which is used to relieve
the mortgagor’s stock from an attachment, and to pay the only overdue
paper of the debtor known to the mortgagee, is not a transfer with the
intent to delay creditors. In re Sandford, 7 B. R. 351.

A conveyance by a person whose property exceeds in value all that he
owes, in consideration of an agreement that the grantee shall pay all the
grantor’s debts, and support him during the residue of his days, is not
per se fraudulent and void as against creditors. In re Cornwall, 6 B. R.
305; s. c. 9 Blatch. 114; 8. c. 2 L. T. B. 220.

If an insolvent firm is dissolved and the assets transferred to one of
the partners who immediately executes a mortgage to secure a separate
debt, the mortgage may be charged as a conveyance to hinder and delay
creditors. In re Waite et al., Lowell, 407.

A transfer of the firm property by one partner to his copartner is not
a conveyance to hinder or delay the firm creditors. In re Munn, 7 B. R.
408; 8. c. 3 Biss. 442.

A transfer of the warehouse receipts and bills of lading of goods pur-
chased for cash on delivery, to a banker to keep the bank account good,
and putting off the vendor on various grounds, is legally, if not inten-
tionally, fraudulent, in that it hinders, delays, and defrauds the vendor,
although the vendee is induced thus to act by the stress of his circum-
stances, and may hope ultimately to pay the vendor. In re Picton, 11
B. R. 420; 8. ¢. 2 Dillon, 548.

The conveyance of the whole property of a debtor affords a very violent
presumption of a fraudulent intent, so far as existing creditors are con-
eerned. When the effect necessarily is to delay creditors, the intent
ought to be presumed. When the defense is that the property was con-
veyed in pursuance of a secret trust, under which it was held, and parol
evidence, by the statute of frauds, can not be admitted to prove such
trust, so that, in case of attachment or bankruptcy before the conveyance
Was made, the conveyance would be conclusively held to be in the debtor,
it is questionable whether he ought to be admitted to show this alleged
238 Tur Bankruptcy Law.

trust even on the question of intent. When the petitioner is a witness,
the fact that he has acted in a harsh and oppressive manner toward the
debtor may be shown in evidence for the purpose of affecting his credi-
bility. In re W. B. Alexander et al. 4 B. R. 178; s. c. Lowell, 470; s. c.
2L. T. B. 238; Thornhill v. Link, 8 B. R. 521.

Allowing property to be taken on a false and fictitious judgment is a
transfer with intent to hinder, delay, and defraud creditors. ‘ln re Schick,
1B. R. 177; s. ec. 2 Ben. 555. c.1 L. T. B. 28.

When a party has given a fictitious note, and procured an attachment
thereon for the purpose of preventing an attachment by a real creditor,
it is no defense that the real object of thus withdrawing the fund was
not to defeat creditors generally but only that one particular creditor,
and that it was the purpose of the debtor to use the money to pay other
creditors. The immediate result was to give the debtor the secret control
of the fund under the guise of an adverse attachment. It is impossible
for the court to go beyond that result and determine upon doubtful evi-
dence, or any evidence, that the parties intended, when the fund was il-
legally withdrawn from the ordinary reach of the law, to apply it more
beneficially than the law itself would apply it. This is a fundamental
principle of the law of fraudulent conveyances. In re Williams & Co.,
3B. R. 286; s. ec. Lowell, 406; s. ec. 2 L. T. B. 100.

A debtor has the right to mortgage his property or a portion of it for
the purpose of raising money to pay his debts, but a mortgage given for
the purpose and with the manifest design of so incumbering his avail-
able means that creditors will be hindered and delayed in the collection
of their demands, is fraudulent. In re Cowles, 1 B. R. 280; s. c. 1 W. J.
367; Baldwin v. Rosseau, 1 N. Y. Leg. Obs. 391.

A sale of all the debtor’s property for a small portion in cash and the
balance in long notes does to that extent delay creditors. In re Dean &
Garrett, 2 B. R. 89.

The insertion of a power in a mortgage to enter and sell whenever the
mortgagee may deem himself unsafe, is a suspicious circumstance. In re
Thomas Ryan, 2 Saw. 411.

If the value of the property largely exceeds the mortgage debt, this is
a& hadge of fraud. Baldwin vy. Rosseau, 1 N. Y. Leg. Obs. 391.

The retention of possession by the mortgagor is a badge of fraud. Ibid.

‘Where the right to transfer a franchise is conferred by the Legislature,
an assignment thereof may be made with intent to delay, hinder, or de-
fraud creditors. In re Southern Minn. R. R. Co., 10 B. R. 86.

Assignment for the Benefit of Creditors.— To make a general assign-
ment for the benefit of creditors an act of bankruptcy within the mean-
ing of this clause, it must be made with the intent to delay, defraud, or
hinder creditors within the meaning of the statute of 13th Elizabeth, as
exemplified in Twyne’s Case and other subsequent decisions following
it. It becomes a question of fact. The innocence or guilt of the act de-
pends on the mind of him who did it, and it is not a fraud within the
meaning of the bankruptcy act unless it was meant to be so. Perry v.
Longley, 1 B. R. 559; s. c 2 B. R. 596;s.a1L. TB. 34;8.¢c 8 A. L.
ASSIGNMENT — ARREST OF DEBTOR. 239

Reg. 427; s. c. 7 A. L. Reg. 429; Farrin vy. Crawford et al. 2 B. R. 602;
Wells et al. (ex parte H. B. Claflin & Co.), 1 B. R. 171;83 .1L. LB.
20; 8. ¢. 7 A. L. Reg. 163; in re Potts & Garwood, Crabbe, 469.

An assignment is to be subjected to the sharpest scrutiny, and any badge
of fraud that attaches itself in the light of extraneous circumstances will,
unless fully and satisfactorily explained, be fatal to its validity, and the
arm of the bankruptcy law will sweep it away, and subject the person
and estate of the debtor to its own provisions. When the assignor, through
the agency of the assignee himself, retains a portion of the estate and
converts it to his own use, to an amount much greater than he could hold
under the exemption laws of the State, the assignment is fraudulent. Far-
rin v. Crawford, 2 B. R. 602; in re Chamberlain et al., 3 B. k. 710.

An assignment by a solvent person for the benefit of creditors, with or
without preferences, is void under the statute of frauds, because the
necessary consequence of it is to delay and defraud creditors, by prevent-
ing them from subjecting the debtor's property, by the ordinary legal pro-
ceedings and process, to the satisfaction of their claims. An assignment
which authorizes the assignee to sell on credit, or in any manner to pro-
long his possession of the property beyond the time reasonably necessary
to convert it into cash and distribute it among the creditors, is fraudulent.
In re Randall & Sunderland, 3 B. R. 18; s. c. 1 Deady, 557; s. ¢. 2 L. T.
B. 69.

An assignment made with the intent to prevent creditors who are press-
ing suits to judgment from obtaining preference over other creditors, is
not an act of bankruptcy. Perry v. Longley, 1 B. R. 559; s. c. 2 B. R. 596;
5.c.1L. T. B. 34; 5. ¢ 8 A. L. Reg. 427; s.c 7 A. L. Reg. 429; Wells et al.
(ex parte H. B. Claflin & Co.), 1 B. R. 171; s.:c.1 L. T. B. 20; 8s. ¢. 7 A. L.
Reg. 163.

Contra. The fact that the debtor made the assignment without intent to
defraud any creditor, is of no consequence, provided that he had the in-
tent to delay or hinder his creditors. An assignment made for the pur-
pose of preventing creditors who have sued him from, appropriating the
assigned property toward the payment of their claims, is made to hinder
and delay such creditors. In re Goldschmidt, 3 B. R. 165; s. c. 3 Ben. 379.

An intent to hinder, delay, or defraud one creditor, is such an intent as
the bankruptcy act contemplates. Perry v. Longley, 1 B. R. 559; s. ¢. 1
L. T. B. 34:8. ¢. 7 A. L. Reg. 429. Contra, in re Dunham & Ort, 2 B. R. 17;
8. c. 2 Ben. 488; 5. c. 1 L. T. B. 89.

An application to have the security of the assignee’s bond increased is
not such an assent to the assignment as will estop the creditor from urging
it as an act of bankruptcy. Perry v. Longley, 1 B. R. 559; s. c. 1 L. T. B.
384; 8s.¢c.7 A. L. Reg. 429.

Arrest of Debtor.— (e) A debtor who has not beea actually imprisoned
for more than twenty days, on an order of arrest issued against him in a
civil action founded upon a contract, can not be adjudged a bankrupt on
account of such arrest. The statute evidently intends to draw a distine-
tion between being actually imprisoned for more than twenty days, and
being held in custody for a period of twenty days. It confines the former
240 Ture Bankruptcy Law.

to a civil action founded on contract, while it extends the latter to any
demand in its nature provable against a bankrupt’s estate. There are
claims or demands which would fall within the first clause and
not within the second clause. The first clause, has, therefore, a
field for operation over which the second clause does not extend.
This being so, and there being a distinction evidently intended
by the statute between actual imprisonment and mere arresting
and holding in custody — a person actually imprisoned being held in cus-
tody, although a person held in custody is not necessarily actually im-
prisoned — full effect must be given to the second clause. This can not be
done if it be held that a person arrested in a civil action, founded on
contract, may be adjudged bankrupt, although he has not been actually
imprisoned for more than twenty days. If it be so held on the ground
that a claim founded on a contract is a demand in its nature provable
against a bankrupt’s estate under the act, and that it is sufficient, under
the first clause, that the debtor be arrested and held in custody, under
mesne process founded on such claims, for a period of twenty days, then
no cases exist which would not fall within the first clause, and the sec-
ond clause would become inoperative, and might as well have been left
out of the statute. A statute must be so construed, if possible, without
doing violence to the language, as to give force, meaning, and effect to
every part of it. There is no affirmative repugnancy between the two
clauses, and sound principles of construction require that it shall be held
to be the intention of Congress that cases falling within the second clause
shall be governed wholly by the second clause, although, if the second
clause had been omitted from the section, they would fall under the first
clause. Even if the two clauses were repugnant to each other in a
broader sense than they are, the second clause would control as being the
later expression of the will of the law makers. In re John Davis, 3 B. R.
339; s. c. 3 Ben. 482.

The arrest and imprisonment are both necessary to constitute the act
of bankruptcy. Either alone is not sufficient. Both do not exist until
the term of imprisonment limited for that purpose has expired. Nelms
v. Pugh, 1 Murph. 149.

If the capias upon which the arrest is made is not void, but voidable,
the arrest is legal until it is set aside. If the debtor voluntarily submits
to an arrest good upon its face for the period of twenty days, he com-
mits an act of bankruptcy. If he is not insolvent, the law presumes that
twenty days is long enough for him either to pay the debt, or procure
bail to the action; or if he deem the arrest unlawful, to have its unlaw-
fulness tested before the proper tribunal. If he neglects or delays within
that time to obtain his discharge from duress in either of these ways, he
commits the act of bankruptcy defined by the statute, and it is no de-
fense that the order of arrest was subsequently set aside, and discharge
granted to him upon giving common bail. In re B. Cohn, 7 B. R. 313
a. c. 29 Leg. Int. 309; s. c.5 C. L. N. 14.

An imprisonment commencing on the forenoon of September 8, 1870,
and terminating before noon on the 28th of that month, was held not
INSOLVENCY. 241

to be sufficient. In legal contemplation, the debtor was in prison nineteen
entire days and portions of other two days, and the first day being ex-
cluded, this made only twenty days. Hunt v. Pooke, 5 B. R. 161.

Insolvency.— (f) Mere insolvency is not, of itself, ground for involun-
tary bankruptcy: for a man, actually insolvent, may continue his business
for years by renewals and extensions and indulgences on the part of his
creditors, and ultimately not only pay all indebtedness with interest, but
achieve success. Doan v. Compton & Doan, 2 B. R. 607.

The act is not intended to cover all cases of insolvency to the exclusion
of other judicial proceedings. It is very liberal in the class of insolvents
which it does include, and needs no extension in this direction by im-
plication. But it still leaves in a great majority of cases parties who
are really insolvent to the chances that their energy, care and prudence
in business may enable them finally to recover without disastrous failure
or positive bankruptcy. All experience shows both the wisdom and
justice of this policy. Many find themselves with ample means, good
credit, and large business, totally insolvent, that is, unable to meet their
current obligations as fast as they mature. But by forbearance of cred-
itors, by meeting only such debts as are pressed, and even by the submis-
sion of some of their property to be seized on execution, they are finally
able to pay all and save their commercial character and much of their
property. If creditors are not satisfied with this, and the parties have
committed an act of bankruptcy, any creditor can institute proceedings
in a bankruptcy court. But until this is done, their honest struggle to
meet their debts and to avoid the breaking up of all their business is
_ not of itself to be construed into an act of bankruptcy or a fraud on the

act. Wilson v. City Bank, 5 B. R. 270; s. c. 9 B. R. 97; s. c. 1 Dillon, 476;
8. c. 17 Wall. 489. 2

The words “ insolvent ” and “insolvency” are not synonymous with the
words “bankrupt” and ‘ bankruptcy.” Insolvency means an inability
to pay debts in the ordinary course of business; bankruptcy means a par-
ticular legal status, to be ascertained by a judicial decree. In re Black
& Secor, 1 B. R. 353; s. ec. 2 Ben. 196; s. c. 1 L. T. B. 39; in re Craft, 2
B. R. 111; s. « 6 Blatch. 177; Morgan, Root & Co. v. Mastick, 2 B. R.
521; Buckingham v. McLean, 13 How. 151; s. c. 8 McLean, 185; Jones v.
Howland, 49 Mass. 377; Lonergan v. Fenlon, 7 Pitts. L. J. 266. Contra,
in re Henry Brenneman, ‘Crabbe, 456; Arnold v. Maynard, 2 Story, 349;
Morse y. Godfrey, 3 Story, 364; Everett v. Stone, 3 Story, 446; Winsor
v. Kendall, 3 Story, 507; Ashby v. Steere, 2 W. & M. 347; Atkinson v.
Farmers’ Bank, Crabbe, 529; Dennett v. Mitchell, 6 Law Rep. 16; s. ¢.
1N. Y. Leg. Obs. 356; Hutchins v. Taylor, 5 Law Rep. 289.

The words “in contemplation of bankruptcy,” mean in contemplation
of committing what is made by the act an act of bankruptcy, or of vol-
untarily applying to be decreed a bankrupt. In re Craft, 1 B. R. 378; s. ¢.
2 Ben. 214.

‘An allegation that the debtor was insolvent or in contemplation of bank-
ruptcy, is insufficient, as it is inipossible to say which is to be relied on.
In re John R. Hanibel, 15 B. R. 238; s. c. 9 C. L. N. 165.

16
242 Tue Bankruptcy Law.

Insolvency means an inability to pay debts, as they mature and become
dve and payable, in the ordinary course of business, as persons earrying
on trade usually do, in that which is made, by the laws of the United
States. lawful money and a legal tender to be used in the payment of
debts, without reference to the amount of the debtor’s property, and
without reference to the possibility or probability or even certainty that
at a future time, on the settlement and winding up of all his affairs, his
debts will be paid in full out of his property. Nothing else is a legal
tender in payment of debts but that which is declared by the law of the
United States a lawful money and a legal tender in the payment of debts.
Property is not a lawful tender in payment of debts, and a debtor has
no right to psy a debt with property of any kind. Therefore, the amount
of the trader’s property is of no consequence, if such inability to pay
matured debts in such lawful money exists. Hardy v. Clark, 3 B. R. 385;
sc1L. T.B.151;s.c.3L. T. B11; 8s. ¢ 17 Pitts. L. J. 64;5.02060. L
N. 121; in re Williams & Co., 3 B. R. 286: s. ec. Lowell, 406; s. c. 2 L. T. B.
100; in re Rodgers & Coryell, 2 B. R. 397.

This is the only construction which is adapted to give effect to the bank-
ruptey act for the beneficial purposes for which it was designed. With-
out this, the trader’s property may be wasted, preferences among cred-
itors be given, and other transfers of his property be effected, wholly
inconsistent with the intent of the act. To hold that the probability that,
if the estate should be judiciously managed, it would, after the lapse of
some indefinite time, at prices corresponding with its then estimated value,
produce enough to pay the creditors, if they also would wait, and not
force sales by judgments and executions, is to constitute proof of solvency
within the meaning of the law, would be neither sensible nor just. But
insolvency is not to be inferred in every instance of temporary want of
money to pay notes coming to maturity. This would be tantamount to
holding that, whenever a trader suffers a note to go to protest for want
of funds in hand wherewith to pay, he can thereupon be adjudged in-
solvent. This would be an extreme view. Hardy v. Binninger, 4 B. R.
262; s. c. 7 Blatch. 262.

Inability to pay one debt in the ordinary course of business is suffi-
cient. The ordinary “course of business’? does not mean an ability to
turn out goods, or bills receivable, or assets or securities to pay that one
particular debt, at the same time leaving other debts which are certain
to become due, unprovided for, and not leaving sufficient assets in the
hands of the debtor to meet them when they become due. That is an
extraordinary course of Lusiness. In re Dibblee et al.. 2 B. R. 617; 8. ¢
3 Ben. 283; Driggs v. Moore, Foote & Co., 3 B. R. G02; s. c. 1 Abb. G. C.
440.

A. solyent man is ore that is able to pay all his debts in full at once,
or as they become due. Insolvency is merely the opposite of solvency.
A man who is unable to pay his debts out of his own means, or whose
debts can not be collected out of such means by legal process is insolvent;
and this although it may be morally certain that, with indulgence from
his creditors, in point of time, he may be ultimately able to satisfy his
INSOLVENCY. 243

engagements in full. The term insolvency imports a present inability to
pay. The probable or improbable future condition of the party in this
respect does not affect the question. If a man’s debts can not be made
in full out of his property by levy and sale on execution, he is insolvent
within the primary and ordinary meaning of the word, and particularly
in the sense in which the word is used in the bankruptcy act. In re
Wells, 3 B. R. 371; s. c. 2 C. L. N, 49; in re Randall & Sunderland, 3 B. R.
18; s. c. 1 Deady, 557; s. c. 2 L. T. B. 69; in re Oregon B. Printing Co., 13
B. R. 503; s. ec. 11 Pac. L. R. 282; 8. ¢«. 3 Cent. L. J. 515.

if the debtor is unable to pay his debts as they become due, the burden
of proving that his property is sufficient to pay his debts rests upon him.
In re Thomas Ryan, 2 Saw. 411.

The act has far less reference to the condition of mind of the insolvent
debtor than to the condition of insolvency as a fact. When a debtor
knows that he is insolvent, he must wait, before he gives a preference,
until he knows that his condition is changed, or that his creditors consent
to the preference. It is a general principle, to which there are no excep-
tions, that, where the parties know the insolvency, they must act at their
peril if they appropriate the trust fund which the law devotes to the equal
payment of all, before they also know that creditors have ceased to be
such, or that they consent, after the most full and fair-disclosures, to the
discrimination which is made. Without this it is an act of bankruptcy.
It is an irrelevant fact that they erroneously supposed that creditors had
consented. Their careless, rash, or interested conclusions give them no
power over the statutory vested rights of innocent and nonconcurring
creditors. Curran v. Munger, 4 B. R. 295; s. c. 6 B. R. 33.

A petitioning creditor is not required to make full and complete proof
of the debtor’s insolvency, but may offer evidence tending to show his in-
solvency, and the debtor must then explain the evidence if possible, for
he is best acquainted with the condition of his own affairs. In re. Oregon
B. Printing Co., 13 B. R. 503; s. c. 11 Pac. L. R. 233; s. ec. 3 Cent. L. J. 515.

A debtor admitting insolvency by his acts is conclusively presumed
to contemplate insolvency. In re Waite & Crocker, 1 B. R. 273; s. ec. Lowell,
207.

Where there is no proof that the acts were done in contemplation of
bankruptcy, the petition should aver that the debtor was insolvent or in
contemplation of insolvency, and this is the only averment that should be
made. in re Craft, 1 B. R. 378; s. c. 2 B. R. 111; s. c. 2 Ben. 214; s. ce. 6
Blatch. 177; in re Haughton, 1 B. R. 460.

The giving as security of a warrant of attorney to confess judgment, on
which the creditor may enter judgment at any time, by no means, of it-
self, raises any presumption of insolvency. In re Dibblee et al., 2 B. R.
617; s. c. 3 Ben. 283.

A voluntary contribution received by a debtor does not constitute a debt
due by him. In re Oregon B. Printing Co., 13 B. R. 503; s. c. 11 Pac. L. R.
233; s. c. 8 Cent. L. J. 515. :

The fact that the bonds of a railroad corporation are at a mere nominal
244. THe Bankruptcy Law.

value does not make the corporation insolvent. Tucker v. Opelousas & Gt.
Western R. R. Co., 3 B. R. (quarto) 31.

Whether a debtor knows that he is insolvent, or purposely and willfully
refuses to know by shutting his eyes to the facts before him, the result
is the same. In one case, the fact of knowledge; in the othes, an unavoid-
able legal inference. Farrin v. Crawford et al., 2 B. R. 602.

When a party is in fact insolvent, but denies insolvency under oath,
it wifl be presumed that he was ignorant of the legal definition of the
term insolvency, and that such ignorance led to such denial. In re 8. T.
Smith, 3 B. R. 377; s. c. 4 Ben. 1; s.¢c.1L. T. B. 147.

A trader. unable to pay his debts in the ordinary course of business is
insolvent prima facie, and it is incumbent on him to show that he is not
so in fact. The rule does not apply with the same strictness to farmers,
and as to them the rule is reversed. The petitioning creditor must take
the onus of showing actual insolvency. Miller v. Keys, 3 B. R. 224.

It will not do to say that the act of making a transfer of property, .or of
procuring or suffering property to be taken on legal process, with the in-
tent named, is an act of bankruptcy, whether the debtor is or is not other-
wise shown to be bankrupt or insolvent, or to be contemplating bank-
ruptcy or insolvency, on the idea that the act becomes ipso facto one in
contemplation of bankruptcy, because, it being an act of bankruptcy, and
thus being bankruptcy, the doing of it must have been in contemplation
of bankruptcy. This is reasoning in a circle, and such a view would not
require that the debtor should even be insolvent, or contemplate insol-
vency, and would yirtually strike those words out of the section; for if
it were shown that the debtor had done the act named with the intent
named, the fact that he had done it in contemplation of bankruptcy would
follow as an inevitable legal conclusion, and insolvency, or the contemr
plation of it, would never become an operative prerequisite. ‘The debtor
must be shown, aside from the mere doing of the act named with the
intent named, to have done it when bankrupt or insolvent, or in the con-
templation of bankruptcy or insolvency. In re Craft, 1 B. R. 378; s. ¢.
2 Ben. 214.

If, at the time of committing the act named, the debtor, in his own
mind, from a view of the state of things which surround him, contem-
plated that he would not be, and continue to be, from that time thence-
forth, able to pay his debts, as such debts should mature in the ordinary
course of his business, then he contemplated insolvency; and, if he contem-
plated insolvency, that puts the case in precisely the same predicament
as though he were insolvent. A debtor has no more right to do the for-
bidden act when he contemplates that in view of the existing aspect of
his affairs, he will not be able to pay his debts in the ordinary course
of his business, than he would have if he were actually insolvent at the
time. In re Dibblee et al, 2 B. R. 617; s. c. 3 Ben. 283.

Preferences.— (g) In an act of bankruptcy under this clause, there are
the following ingredients, to-wit:

ist. The debtor must either be insolvent, or contemplate insolvency.
LEGAL PRocgss. 245

2d. He must make a conveyance or transfer of money or property, or he
must procure his property to be taken on legal process.

3d. He must do this with intent, on his own part, to give a preference
to the creditor; or with the intent, on his own part, to defeat or delay
the operation of the act. Ibid.

Legal Process.— An allegation which does not set forth any specified
day on which the property was taken on legal process, simply charging
that the act of bankruptcy was committed on the blank day of blank,
1860, and in which the only other allegation of the timie of its commis-
sion is, that it was committed within six months next preceding the date
of the petition, which is not dated, but which was sworn to three days
before it was filed, is defective. In re Chappel, 4 B. R. 540.

There is a clearly recognized distinction between procuring and suffer-
ing. The word “suffer” is different from the word “ procure.” “ Suffer”
implies a passive condition, so to speak, as to allow, to permit; not a
demonstrative, active course, like the word “ procure.” In re Black & Se-
cor, 1 B. R. 353; s. c. 2 Ben. 196; s. c. 1 L. T. B. 39; in re Craft, 1 B. R.
378; s. c. 2 Ben. 214; in re Sutherland, 1 B. R. 531; s. ce. 1 Deady, 344; in re
Dibblee et al., 2 B. R. 617; s. c. 3 Ben. 288; in re Haughton, 1 B. R. 460; in
re Heller, 3 Biss. 153; in re A. B. Gallinger, 4 B. R. 729; s. c. 1 Saw. 224;
Traders’ Nat’l Bank v. Campbell, 3 B. R. 498; s. c. 6 B. R. 353; s. c. 2 Biss.
423; s. c. 14 Wall. 87.

Mere honest inaction, when a creditor seeks to make a just debt by

law, is not itself an act of bankruptcy. The debtor’s failure through ina-
bility to go into voluntary bankruptcy when he was sued, is not of itself an
act of bankruptcy. Wright v. Filley, 4 B. R. 611; s. c. 1 Dillon, 171; Love
y. Love, 21 Pitts. L. J. 101. Contra, in re Black & Secor, 1 B. R. 353; s. ¢.
2 Ben. 196; s. c. 1 L. T. B. 39; in re Heller, 3 Biss. 153; in re Wells, 3 B. R.
871; s.c. 20. L. N. 49; in re A. B. Gallinger, 4 B. R. 729; s. c. 1 Saw. 224;
Bonnett v. James, 1 N. Y. Leg. Obs. 310.
” It is not enough that the debtor is passive, and does nothing to prevent
a creditor from taking his goods on execution. The words of the act can
be satisfied with nothing short of a positive agency, an active co-operation.
To be passive merely and to do nothing, is not to procure an act to be
done. It is not to aid, co-operate, or advise. Jones v. Sleeper, 2N. Y.
Leg. Obs. 131. y

If the issuing of an execution on a judgment confessed under a power
of attorney is not done at the request of the debtor, and was not agreed
upon at the time of the execution of the power, it is not an act. of procure-
ment. Barnes v. Billington, 1 Wash. C. C. 29; s. ¢. 4 Day, 81, note.

If a suit is commenced with the debtor’s knowledge or assent, express
or implied and in consequence of information which he voluntarily commu-
nicated to the creditor for the express purpose of having measures taken
to secure the debt, he procures his property to be taken. Van Kleeck v.
Thurber, 1 Penn. L. J. 402. -

An agreement by the debtor that a default may be taken against him at
a time when it could have been entered according to the usual course of
R46 THe Bankruptcy Law.

the court without that agreement, is not a procurement of the taking of
his property on legal process. Jones v. Sleeper, 2 N. Y. Leg. Obs. 131.

If a debtor voluntarily aids his creditor in taking his property on a

writ of attachment, or in perfecting an attachment previously incomplete,
he procures it to be taken. Fisher v. Currier, 5 Law Rep. 217; s. c. 1 Penn.
L. J. 217.
‘If the debtor instructs the attorney who holds a judgment note to
enter up judgment and issue execution, he procures the issuing of the
execution although he does so at the request of the creditor. In re <A.
Benton & Bro., 3 W. N. 547.

It is not an act of bankruptcy for a debtor to suffer his property to be
taken on legal process with intent to give a preference, or to defeat or
delay the operation of the act. In re Isaac Scull, 10 B. A. 165; s. c. 7 Ben.
871; 8. a1 A. L. T. (N. S.) 416.

A, debtor who confesses judgment in favor of a creditor procures his
property to be taken on legal process. In re Craft, 1 B. R. 378; s. c. 2 Ben.
214; in re Sutherland, 1 B. R. 531; s. c. 1 Deady, 344; in re A. B. Gallinger,
4B. R. 729; s. ¢. 1 Saw. 224,

The mere admission of service of the summons does not amount to a
procuring of his property to be taken on legal process, where it is only
done at the instance of the creditor’s attorney, and without any collusion
or complicity between the parties. In re Dwight B. King, 10 B. R. 103.

An execution is the legal purpose of a judgment, its end and fruit. The
motive and intention of a man can orly be judged from the tendency
of his acts. A man generally designs to do that to which his acts tend.
Every ordinary person knows that a judgment is regularly followed by
an execution—in other words, that the tendency of procuring a judg-
ment is that the execution shall follow. It is not an absolute legal infer-
ence that a man who procures a judgment to be obtained against him-
self intends that an execution shall follow, but a question of fact. In re
Thomas Woods, 7 B. R. 126; s. c. 29 Leg. Int. 236; 20 Pitts. L. J. 21.

.The question is whether the debtor willfully facilitated, either directly
or indirectly, the taking of his property on execution. Ibid.

The confession of a judgment by an insolvent debtor, with the intent
to enable,a creditor to secure his debt by converting his lien by attach--
ment into a lien by judgment, execution, and levy, is an act of bank-
ruptey. In re A. B. Gallinger, 4 B. R. 729; s. ¢. 1 Saw. 224.

The nature of the debtor’s business and the course of his dealings
will be regarded in deciding whether the giving of a warrant to con-
fess judgment is an act of bankruptcy. In re Leeds, 1 B. R. 521; s. c
7 A. L. Reg. 693; s.c. 1 L. T. B. 78; in re Ralph Johnson, 1 N. Y. Leg. Obs.
166; s. ec. 5 Law Rep. 318.

Where ihe judgment is confessed under a warrant of attorney, it should
be clearly established that the warrant was given by the proper authority.
Hilton v. Telegraph Co., 1 Cent. L, J. 75.

Where the alleged act of bankruptcy consists in suffering property to
be taken on legal process, the district court should give the debtor a reason-
LEGAL PRocEss. 247

able time to contest the validity of the judgment in the State court.
Ibid.

Allowing property to be taken on legal process issued upon a judg-
ment confessed, under a warrant of attorney given at a time when the
debtor was not insolvent, is an act of bankruptcy when the other ele-
ments of such an act coexist. In re Dibblee et al., 2 B. R. 617; 8. «. 3
Ben. 283. Contra, J. B. Wright, 2 B. R. 490.

The petition should aver that the property was taken on the day of the
levy, and not on the day of the giving of the warrant of attorney. In re
Dibblee et al., 2 B. R. 617; s. c. 3 Ben. 283.

When a State court has permitted a judgment to be entered up, and
execution to be issued, the district court must presume that this was
done in the legal and proper way. It must treat the record of the State
court as being in due form. Irregularities can not be considered in a
collateral proceeding. Ibid.

The term legal process, as used in the bankruptcy act, is not to be con-
fined to any particular form of writ, execution or attachment. An order
of sale to be executed by a master of chancery is, in a just and proper
sense, legal process; though in a technical sense, writs, executions, attach-
ments, and the like, running in the name of the people, and addressed
to the sheriff, or like officer, are usually meant by that term. The writ,
mandate, or order of a court taking hold of the property, and withdraw-
ing it from the possession and control of the debtor, and from the or-
dinary reach of creditors for the payment of what is due to them, are
each and either of them within the intent and true meaning of the term
legal process, as employed in this section. Hardy v. Binninger, 4 B. R.
262; 8. c. 7 Blatch. 262.

The fact that the bankruptcy act makes, in broad terms, the procuring of
property to be taken on legal process, with certain attendant circum-
stances, an act of bankruptcy, shows that the circumstance that the
property is taken on legal process issued out of a State court furnishes no
ground for withholding an adjudication of bankruptcy. On the contrary,
in view of the well-known fact that the mass of civil legal process is is-
sued out of the courts of the States all over the United States, and that
the amount of property taken on civil legal process issued out of the
Federal courts is comparatively very small, it is evident that Congress
intended to say that the taking of property on legal process issued out of
a State court is an act of bankruptcy, when accompanied by the other
conditions specified in this section. Hardy v. Clark, 3 B. R. 385; s. c.1 L.
T. B.151;s.c.3L. T. B. 11; s. ¢. 17 Pitts, L. J. 61; s.c. 2 C. L. N. 121.

Procuring property to be taken under an order appointing a receiver,
passed in an action instituted by the attorney-general of the State for the
purpose of obtaining a dissolution of the corporation, is procuring it to be
taken on legal process. In re Washington Marine Ins. Co., 2 B. R. 648;
s. ¢. 2 Ben. 292; in re Merchants’ Ins. Co., 6 B. R. 43; s. ¢. 3 Biss. 162; s. c.
2L. T. B. 243.

The collection of a claim by a receiver is not a taking of the property
on legal process in the sense of the statute, for the property was so taken
248 Tue Bankruptcy Law.

by the appointment and not the subsequent collection. In re Amsterdam
Fire Ins. Co., 6 Ben. 368.

Intent to Prefer.— An allegation of a preference should give the name
of the preferred creditor. In re Joseph 8S. Hadley, 12 B. R. 366.

An allegation of a preference need not charge that it was in fraud of
the provisions of the bankruptcy law. Ibid.

The property of an insolvent represents, in whole or in part, the credit
given to him by his creditors, and therefore, in good morals, belongs to
them and not to him. Strictly and truthfully speaking, an insolvent has
no property, and, therefore, has no natural right to dispose of the property
in his possession otherwise than with the consent of the real owners —
his creditors. In re Silverman, 4 B. R. 523; s. c. 2 Abb. C. C. 248; 8. ¢. 1
Saw. 410; Story v. Nowlan, 1 Mont. 350.

The definition of a preference is a payment or transfer to one creditor
which will give him an advantage over the others, or which may possibly
do so. In re Hapgood et al., 7 A. L. Rev. 664; Miller v. Keys, 3 B. R. 224,

If a debtor effects a compromise with a portion of his creditors, of such
a character that when they are paid, he is left undoubtedly and abund-
antly solvent, such payment is not an act of bankruptcy. In re Hapgood
et.al, 7 A. L. Rev. 664.

A mortgage by a railroad company of all its property, to secure all its
creditors equally out of its earnings, or to pay such as refuse the security
their ratable proportion of the proceeds, is not an act of bankruptcy. In
re Union Pacific Railroad Co., 10 B. R. 178; s. c. 8 A. L. Rey. 779; s. c. 6
©. L. N. 355; s. ¢. 31 Leg. Int. 261.

A mortgage given in lieu of a mechanic’s lien claim is not a preference,
for the creditor gains no advantage. In re Christopher Weaver, 9 B. R.
1382.

The intent is an element of the objectionable transaction according to
the letter of the law, and though a person is presumed to intend the
natural results of his acts, the intent is essential, and must be shown by
his acts and the circumstances. Miller v. Keys, 3 B. R. 224.

This intent must be an intent on the part of the debtor; and, unless
the debtor at the time knew that he was insolvent, or contemplated in-
solvency, he could have no intent to give a preference to one creditor over
another. Ifa person, while paying one creditor, honestly supposes that he
is able to pay every creditor, there can be no intent to give a preference.
In re Dibblee et al., 2 B. R. 617; s. c. 3 Ben. 283.

Where the probable consequence of an act is to give a preference, the
debtor will be conclusively presumed to have intended to give such pref-
erence. In re Drummond, 1 B. R. 231; s. ¢. 1 L. T. B. 7; in re Black &
Secor, 1 B. R. 358; s. c. 2 Ben. 196; s. ¢. 1 L. T. B. 39: in re Sutherland,
1B. R. 531; s. c. 1 Deady, 344; in re Dibblee et al, 2 B. R. G17; s. «3
Ben. 2838; in re Wells, 3 B. R. 371; s. c. 2 C. L. N. 49; Curran v. Munger,
6 B. R. 33; Jones v. Sleeper, 2 N. Y. Leg. Obs. 131.

When a debtor is insolvent, and knows it, any payments then made by
him to any creditor in full, are with the intent to prefer. The giving of
a preference is a necessary consequence of the payment by an insolvent
INTENT TO PREFER. 249

debtor of one of his creditors. The creditor is preferred because he has
received his debt, and the other creditors have not. The debtor being in-
solvent has not the means to pay them, and by paying one in full has
defrauded the others of their just proportion of his estate. Other mo-
tives may have actuated the debtor, but that makes the payment none
the less a preference. Indeed, he may expect to become able in time to
pay all his creditors in full, and may intend to do so as soon as he can;
but this does not affect the question. The creditor whose debt is paid is
nevertheless preferred. He has his money, but they must depend upon the
often double uncertainty whether their debtor will in time become both
able and willing to pay their debts in full. Farrin v. Crawford, 2 B. R.
602; in re Silverman, 4 B. R. 523; s. c. 2 Abb. C. C. 243; s. ec. 1 Saw. 410.

If a debtor is insolvent at the time of making a payment, he is pre-
sumed to know it until the contrary appears. In re Silverman, 4 B. Rh
523; s. c. 2 Abb. C. C. 248; s. ce. 1 Saw. 410; in re Samuel A. House, 1
N. Y. Leg. Obs. 348.

The law will not presume an intent to prefer when the debtor is not
aware of his insolvency, but it is incumbent on him to show it. In re
Oregon -B. Printing Co., 13 B. R. 503; s. c. 11 Pac. L. R. 233; s. c. 3 Cent.
L. J. 515.

No particular or specific evidence of an intent to prefer is necessary
when a payment is made by an insolvent debtor, for the act itself is
sufficient evidence of the intent. Ibid.

A payment by an insolvent debtor is an act of bankruptcy, although
it is made in the usual course of business. Ibid.

Where the defense is that the securities belonged to the creditor on
account of an alleged fraud, the burden of proof is on the debtor to estab-
lish the fraud and the identity of the securities by a fair preponderance
of evidence. Payne v. Solomon, 14 B. R. 162.

If a debtor purchases gold certificates by means of an overdraft on a
bank, under an agreement that the proceeds of all overdrafts of his
shall be the property of the bank, or with the preconceived idea of never
paying back the money obtained by the overdraft, but of defrauding the
bank, a transfer of the certificates to the bank is not an act of bank-
ruptey. Ibid.

There is a distinction between an agreement that securities purchased
with the proceeds of an overdraft shall all the time be considered the
property of the bank, and an agreement to turn over the title as a future
aet. Ibid. :

If a bank merely certifies the check of a debtor in advance, relying on
his promise to make his account good during the day, such an overdraft,
in the absence of fraud, creates simply the relation of debtor and cred-
itor, and the payment of such a debt after insolvency occurs, is an act
of bankruptey. Ibid.

A mere agreement by a debtor that, in a certain event, he will deliver
to the bank such securities as he may purchase with the proceeds of over-
drafts, will not vest a title to the securities in the bank, so that a transfer
of {bem will not be a preference. Ibid.
250 Tue Bankruptcy Law.

A mortgage of the whole stock in trade to a pre-existing creditor is
prima facie a preference. It is very strong evidence, because it is out of
the ordinary course of business, and is of itself enough, if duly recorded,
to destroy the credit of any trader; and, therefore, would not be resorted to
by any one who had readier means of paying the debt. In re Waite et al.,
Lowell, 407.

If a dissolution is a mere cover to conceal either actual or legal fraud, or
with intent to give a preference to a separate creditor over those of the
partnership, or to bring him on an equality with them in the distribution
of the assets of the firm, there is such a fraud on the partnership creditors
as will make it an act of bankruptcy. Inre J. A. & H. W. Shouse, Crabbe,
482.

If an insolvent firm is dissolved, and all its assets transferred to one
partner, who immediately executes a mortgage to secure a separate debt,
the act is voidable by the joint creditors, and they may rely on the
mortgage, or on the dissolution of the firm, or on both, for the dissolution
itself works a preference to the separate creditors. In re Waite et al.,
Lowell, 407; in re J. A. & H. W. Shouse, Crabbe, 482.

An unexecuted agreement by a company to transfer certificates of its
stock is not an act for which it can be forced into bankruptcy. Winter v.
R. R. Co., 7 B. R. 289; s. c. 2 Dillon, 487.

A conveyance attempted to be made by an instrument void for «vant of
a stamp is not an act of bankruptcy. In re Dunham & Orr, 2 B. R. 17; s.
c. 2 Ben. 488; s. ce 1 L. T. B. 89. :

The intent of a debtor to prefer, coupled with an attempt to do it, is an
act of bankruptcy, although the instrument is so defective as to be void.
In re 8S. Mendelsohn, 12 B. R. 533; s. ec. 3 Saw. 348.

The giving of a mortgage during solvency to secure an existing bona
fide debt is not an act of bankruptcy, although made with the intent to
prefer the mortgage creditor. In re Dunham & Orr, 2 B. R. 17; s. ¢. 2 Ben.
488; s.c.1L. T. B. 89.

The return of unearned premiums upon the cancellation of the policy
does not constitute an act of bankruptcy where the parties believe they
have the legal right to receive and pay these sums. Knickerbocker Ins.
Co. v. Comstock, 9 B. R. 484; s.c. 6 C. L. N. 142.

Where a payment which is alleged to have been a preference, was made
by an officer of the corporation, evidence must be given to show that it
was the act of the corporation. Ibid.

Though insolvency in fact exists, yet if the debtor honestly believes
he shall be able to go on in his business, and, with such belief, pays a
just debt, without a design to give a preference, such payment is not
fraudulent, though bankruptcy should afterward ensue. And, on the
other hand, if the debtor, being insclvent and knowing his situation, and
expecting to stop payment, shall then make a payment, or give a security
to a creditor for a just debt, with a view to give him a preference over
the general creditors, such payment or giving security is fraudulent as
against the creditors. It rests upon the intent with which the act was
done; and the intent is to be proved as.a fact, either by direct evideace,
or as the necessary and certain consequence of other facts clearly proved.
INTENT TO PREFER. 251

Morgan, Root & Co. vy. Mastick, 2 B. R. 521; Doan v. Compton & Doan,
2B. R. 607,

An insolvent debtor has the right to pay out money or make changes
in his property before an actual adjudication of bankruptcy, if he does it
in good faith, without injury to the right of his creditors, and especially
when he saves property and increases his assets. A payment of rent
may be made to prevent a forfeiture of the lease. Smith v. Teutonia
Ins. Co., 4 C. L. N. 180. Contra, in re Merchants’ Ins. Co., 6 B. R. 43;
s. ce. 3 Biss. 162; 5. c. 2L. T. B. 248.

Agents may retain the money in their hands for the payment of their
salaries. A. check drawn by the secretary for his own monthly salary,
and that of the clerks in the office, upon the bank where the company
account is kept, he being the only person who can sign checks, is not an
act of bankruptcy when it is drawn without the sanction or approval of
the officers. Smith v. Teutonia Ins. Co., 4 C. L. N. 130.

A mortgage of partnership property made by one partner to his co-
partner is not an act of bankruptcy as against the firm creditors, for the
property is not put out of the firm. In re Kenyon & Fenton, 6 B. R.
238; s. c. 1 Utah Ter. 47. .

A preference to an employee is an act of bankruptcy. The law gives
to an employee a priority to the amount of $50, but this must be secured,
if at all, by and through the proceedings in bankruptcy, and not outside
of them, or independent of or in spite of this act. Ibid.

The return of a piano bought to fill a special order, and refused by the
party for whom it was designed on its arrival, is not a preference. Doan
v. Compton & Doan, 2 B. R. 607.

The fact that the debt is a fiduciary debt is of no consequence. The
debtor has no more right to pay it than any other debt. There is no dis-
tinction’ between giving a preference when the creditor asks for it, and
giving a preference when the creditor does not ask for it. In re Dibblee
et al, 2 B. R. 617; s. c. 3 Ben. 283; in re Batchelder, 3 B. R. 150; s. ¢.
Lowell, 373.

Neither a sale which contemplates a higher degree of solvency, nor a
sale from inability to resist, constitutes an act of bankruptcy, when no
preference is given nor creditors delayed in the prosecution of their
claims. Rankin & Pullan v. Florida, Atlantic & G. C. Railway Company,
1B. R. 647; s.c. 1 L. T. B. 85.

Evidence that an assignment of a bill of lading was made in trust for
all the creditors is admissible, for the act is of an uncertain and doubtful
character. In re Potts & Garwood, Crabbe, 469.

If there is a preference, it is an act of bankruptcy, no matter how
small the amount or meritorious the creditor. In re J. A. & H. W. Shouse,
Crabbe, 482,

A security given at the time of receiving a loan is not a preference.
Tbid. :

A preference is an act of bankruptcy, although it is given under pres-
sure. Gassett v. Morse, 21 Vt. 627; in re Henry Brenneman, Crabbe, 456;
Arnold vy. Maynard, 2 Story, 349.
252 Tue Bankruptcy Law.

A preference is an act of bankruptcy, although it is given in pursuance
of a promise made at the time of contracting the debt. Arnold v. Maynard,
2 Story, 349.

The knowledge or motive of the preferred creditor is immaterial in an
involuntary proceeding. In re Oregon B. Printing Co., 13 B. K. 503; s. ¢.
11 Pac. L. R. 233; s. c. 3 Cent. L. J. 515.

Intent to Defeat the Operation of the Bankruptcy Act.— (h) The ques-
tion of intent is a question of fact. The innocence or guilt of the act
depends upon the mind of him who did it, and is not a fraud within the
meaning of the bankruptcy act, unless it was meant to be so. Perry v.
Longley, 1 B. R. 559; s. c. 2 B. R. 596; s.c. 1 L. T. B. 345 s.¢. 7 A. L. Reg,
429; s.¢. 8 A. L. Reg. 427; Wells et al. (ex parte H. B. Claflin & Co.), 1 B. R.
171;s.a1L. T. B. 20; 8. ¢. 7 A. L. Reg. 163.

Every person of a sound mind is presumed to intend the necessary natu-
ral or legal consequences of his deliberate act. The legal presumption
may be either conclusive or disputable, depending upon the nature of the
act and the character of the intention. And when, by law, the consequen-
ces must necessarily follow the act done, the presumption is ordinarily
conclusive, and can not be rebutted by any evidence of a want of such in-
tention. In such a case, the oath of the defendant is not sufficient to
destroy such legal presumption, even in a suit which is brought to a hear-
ing upon bill and answer without the filing of any replication. When the
result which necessarily and inevitably follows an act is to defeat the ope-
ration of the bankruptcy act, the law conclusively presumes that the
party intended to accomplish that result, and his denial of such an intent
is of no consequence. In re 8. T. Smith, 3 B. R. 877; s. c. 4 Ben. 1; 3. ¢
1 LL. T. B. 147; Hardy v. Clark, 3 B. R. 385; s.c.3 L. T. B. 11; s.c1L.
J. B. 151; s. c. 17 Pitts. L. J. 61; s.,c. 2 C. L. N. 121.

The motives of the debtor in committing the act are immaterial. It is
no defense that other considerations were the moving cause. Motive
should not be confounded with intent. When he intends to do the thing
which necessarily hinders and defeats the act, he, in judgment of law,
knows when he does it that it will have that effect. Knowing the effect,
he must intend to produce it when he voluntarily chooses to do the act.
Whatever his motive is, he acts voluntarily in choosing, and therefore in
intending all the legal results which flow from his action in the matter.
Hardy v. Binninger, 4 B. R. 262; s. c. 7 Blatch. 262.

An assignment for the equal benefit of all creditors is in contravention of
the spirit and policy of the bankruptcy act, even when made in good faith.
The intention of the act clearly is, that when a failing debtor is conscious
of his inability to prosecute his business, and pay his debts, he should at
once subject his property to such a disposition as the bankruptcy act has
provided for. The property then becomes a sacred trust for the benefit of
creditors, who have a right to insist that it shall be administered, not ac-
cording to the wish or preference of the insolvent, or in accordance with
the insolvent laws of a State, but according to the provisions of the na-
tional bankruptcy act. Practically an assignment defeats or delays the
operation of the act. It deprives creditors of a legal right under the stat-
Intent To DEFEAT. 253

ute, and is clearly in contravention of its spirit and its letter, It commits
the disposition and the distribution of the property to an assignee selected
by the debtor, and deprives his creditors of the right given them by ihe
bankruptcy act to choose an assignee for that purpose; it takes from the
courts of bankruptcy the legal supervision and control — the legal and
equitable jurisdiction — which they, under the act, are to exercise in re-
spect to such property, and the hostile claims and adverse interests of the
creditors, and the marshaling of the debtor’s assets, as well as in respect
to his conduct, property, and person; and it also defeats its operation in
many other respects, by preventing the property assigned from being
brought within the operation and protection of numerous minor provisions
of the act, and within the protection of other provisions of great import-
ance, the infraction of which is punished as a heinous crime. Such an as-
signment necessarily and’ absolutely defeats the operation of the bank-
ruptey act. The provisions of the statute fully authorize, if they do not
absolutely require, this construction. Perry v. Longley, 1 B. R. 559; s.
1L. T. B. 34; 8. c 7 A. L. Reg. 429; in re S. T. Smith, 3 B. R. 377; s. «.
4 Ben. 1; s. c.1L. T. B. 147; Anon., 3 B. R. 78; Spicer v. Ward, 3 B. R.
512; Curran v. Munger, 6 B. R. 33; in re Goldschmidt, 3 B. R. 165; s. c. 3
Ben. 379; in re Pierce & Holbrook, 3 B. R. 258; s. ¢. 16 Pitts. L. J. 204;
in re Randall & Sunderland, 3 B. R. 18; s. c. 1 Deady, 557; s. c. 2 L. T. B.
69; in re Wells et al. (ex parte H. B. Claflin & Co.), 1 B. R. 171; 8s. a 1
L. T. B. 20; s. c. 7 A. L.. Reg. 163; in re Burt, 1 Dillon, 439; in re Henry
Brenneman, Crabbe, 456; Globe Ins. Co. v., Cleveland Ins, Co., 14 B. R.
811; s.¢c 8 C. L. N. 258. Contra, Perry v. Longley, 2 B. R. 596; s. c 8
A. L. Reg. 427; in re Kintzing, 3 B. R. 217; Smith v. Teutonia Ins. Co.,
4 C. L. N. 180; in re Charles J. Marter, 12 B. R. 185.

When an insolvent debtor has given preferences, by means of chattel
mortgages, and then subsequently made an assignment, the preferences
can not be set aside, unless the creditors can proceed in bankruptcy, and
have the assignment declared void. In re 8. T. Smith, 3 B. R. 877; s. ¢.
4 Ben. 1; s.c.1 L. T. B. 147.

A mortgage which stipulates for the payment of all the debts of the
mortgagor at the end of six months, and secures to the debtor the right,
with the consent of a party selected by himself, to continue his business,
including the purchase of more goods, until a breach of the condition of
the mortgage, sets creditors at defiance for six months, and necessarily
delays and defeats the operation of the bankruptcy act. If the debtor can
do this legally for six months, it is difficult to see how, in principle, he
can be restrained from securing like immunity for six years by the same
method. In re Chamberlain et al., 3 B. R. 710; in re L. J. Doyle, 3 B. R.
640; s. c. 1 Holmes, 61.

The requirements of the bankruptcy act are plain. When a merchant
or trader is insolvent — that is, unable to pay his debts as they mature

.in the ordinary course of business —it is his duty to go at once into a
court of bankruptcy, under the protection of the law, and submit his
property to that court for adjudication and distribution; and a mode is
provided by the act for bringing in his copartner who will not come in
254 Tue Bankruptcy Law.

voluntarily. An insolvent firm that allows its property to be taken by a
receiver, under an order of a State court, thereby commits an act that
necessarily delays and defeats the operation of the bankruptcy act. In
the first, place, it absolutely defeats the operation of the bankruptcy act
by withdrawing the property from any administration under it. Whether
some other administration, either through a receiver or a voluntary as-
signee, is wiser and better or not — whether the end will be the same if
those modes are carried into honest and faithful execution or not —the
operation of the bankruptcy act is equally defeated. For the statute
does not say with intent to defeat or prevent the result which the bank-
ruptey law is intended ultimately to accomplish, viz.: the appropriation
of the property to the payment of the debts; but it does say with intent
to defeat or delay the operation of the act; and withdrawing the property
from the reach of the law, and the means which it provides to secure
the intended result, does effectually, in respect to that, property, defeat
the operation of the act. The design and purpose of the bankruptcy act
are that the property of insolvents shall be secured to the creditors in
the very mode pointed out thereby, with all the facilities for its appro-
priation, all the security for its administration, all the safeguards against
fraud, all its protection against devices to establish false claims, fic-
titious debts, and illegal or inequitable preferences which that act pro-
vides, and in the summary manner in which the proceedings may be
conducted. It is not, therefore, for the debtors, or for the debtors and
some of the creditors, to say that they can devise a better or safer, or
more economical mode of reaching the same final result. If it were true,
it would be only saying that they will resort to an expedient to defeat
the bankruptcy law, and that their reason therefor is because they think
their plan is wiser and better than that which Congress has devised. In
the second place, ‘such taking of the property by a receiver delays the
operation of the act, for it can not reach the property at all, as to the part-
nership debts; and as to individual creditors, if it should turn out that
there is anything for them, they must wait the termination of the entire
proceedings under the receivership before the assignee appointed for them
can reach it. A proceeding which must pass through all the ordinary
forms of litigation, and which is susceptible of almost indefinite protrac-
tion through orders, appeals, rehearings, ete., is substituted for the sum-
mary proceedings which the act provides. Hardy vy. Clark, 3 B. R. 385;
s.c.1L. T. B. 151;8.¢c 3 L. T. B. 11; s. ¢. 17 Pitts. L. J. 614; 5.¢c. 26. L.
N. 121; Hardy v. Binninger, 4 B. R. 262; 5. ¢. 7 Blatch. 262.

It has always been the law and practice, under the insolvent statute of
Massachusetts, to consider all partial settlements by insolvents as, in
themselves, acts of bankruptcy; and it is well understood that, if a single
creditor stands out, no arrangement can be made except through the
bankruptcy court. In re Williams & Co., 3 B. R. 286; s. c. Lowell, 406;
8s. c.2 L. T. B. 100; in re Pierce & Holbrook, 3 B. R. 258; s e@ 16 Pitts,
I. J. 204.

The onus probandi rests upon the debtor when there have been secret
preferences in a composition. It is never necessary to prove affirmatively
CoMMERCIAL PAPER. 255

that a man has not assented to that which is to his disadvantage. The
presumption of law is that he has not. Curran v. Munger, 6 B. R. 33.

The sale of goods by an insolvent debtor from his store to customers
in the ordinary course of trade, at a time when he is endeavoring to com-
promise with his creditors, does not raise a presumption of an intent to
defeat the operation of the bankruptcy act. His efforts to settle with his
creditors without going through bankruptcy in court, are entirely legiti-
mate, and not prohibited by any provision of the bankruptcy act; and con-
tinuing to sell goods in the usual way of trade pending such negotiations,
is entirely proper and justifiable, and what he ought to do so. long as his
intentions are not fraudulent. In re Munger & Champlin, 4 B. R. 295.

If a solvent partner takes all the assets on the dissolution of the firm,
for the purpose of selling them with the consent of the creditors, a sale
so made is not an act of bankruptcy. In re Christopher Weaver, 9 B. R.
132.

The rights of stockholders are always subordinate to the rights of cred-
itors, and it is difficult to see how the issue at par of tlie stock of the
company, not before issued, in payment of the bona fide debt of the com-
pany, can operate to the prejudice of creditors, or work a fraud upon
them. If, however, the stock is owned by the company as paid-up stock,
it might be regarded as ordinary property, and if disposed of by the au-
thorized act of the corporation to creditors, under circumstances to give
them an illegal preference, no reason is perceived why it would not be
an act for which the corporation could be proceeded against under the
bankruptcy law. Winter v. R. R. Co., 7 B. R. 289; s. ce. 2 Dillon, 487.

Allowing property to be taken on an execution issued upon a fictitious
and fraudulent judgment is an act of bankruptcy, since it delays and.
defeats the operation of the bankruptcy act. In re Schick, 1 B. R. 177;
s. ec. 2 Ben. 558. c) 1 L. T. B. 28,

It is immaterial whether the debtor had in contemplation the pro-
visions of the bankruptcy act or not. Foster v. Hackley & Sons, 2 B. R.
406; s.c.2 L. T. B. 8;s. c.1C. L. N. 187; Haughey v. Albin, 2 B. R. 399;
8. c. 2 Bond, 244; 5. c. 2 L. T. B. 47. Contra, in re Drummond, 1 B. R. 231;
s.c1L. T. B. 7.

Commercial Paper.— (j) The commercial definition of a trader is one
who makes it his business to buy and sell merchandise or other things
ordinarily the subject of traffic and commerce. In re Cowles, 1 B. R.
280; 8. c. 1 W. J. 367; Love v. Love, 21 Pitts. L. J. 101.

In order to be a trader, the person must buy as well as sell. Hall v.
Cooley, 3 N. Y. Leg. Obs. 282; in re Chandler, 4 B. R. 218; s. c. Lowell,
478; s.¢c,2 L. T. B. 170.

If he merely makes tfp the product of his own land, he is not a trader.
In re Chandler, 4 B. R. 213; s. c. Lowell, 478; s. c. 2 L. T. B. 170; in re
Samuel King, 1 N. Y. Leg. Obs. 276.

The keeper of a livery stable is not a trader. Hall v. Cooley, 3 N. Y.
Leg. Obs. 282.

A sale of surplus commodities not purchased with a view to sale is not
such a dealing as will render the party a trader. Ibid.
256 Tur Bankruptcy Law.

The occasional sale by the keeper of a livery stable of horses and car-
riages that have become unfit for use, is but a necessary incident to the
main business of letting for hire, and does not render him a trader. Ibid.

The keeper of a livery stable, who only sells horses occasionally, without
holding himself out as a dealer in horses, is not a trader, for this is only
auxiliary to his main business. Ibid.

A manufacturer and vendor of sleighs, carriages, and other: vehicles, is
a trader. In re Rufus Hoyt, 1 N. Y. Leg. Obs. 182; Wakeman v. Hoyt, 5
Law Rep. 309.

A person who carries on the business of a distiller, and also buys cattle,
which he fattens and sells, is a trader. In re William Eeles, 1 N. Y. Leg.
Obs. 84; s. c. 5 Law Rep. 273.

If a person is engaged in a business requiring the purchase of articles
to be sold again, either in the same or in an improved state, he must.
be regarded as “using the trade of merchandise.” In re Rufus Hoyt, 1
N. Y. Leg. Obs. 132; Baldwin v. Rosseau, 1 N. Y. Leg. Obs. 391; Wakeman
v. Hoyt, 5 Law Rep. 309.

When a person sells the mere produce of his own labor, he is only a
seller and not a trader. In re Rufus Hoyt, 1 N. Y. Leg. Obs. 1382; Wake-
man vy. Hoyt, 5 Law Rep. 309. .

A person who owns and leases oil lands, and receives a part of the
products as rent, is not a trader as respects his dealings in the products of
his lands in a crude state. The word-‘ trader” is to be interpreted ac-
cording to its meaning in the English bankruptcy law, and when the inter-
pretation of the word in this respect was established, lands were not
liable to be sold for the owner’s debts, and the products of land were not
considered the subjects of trade. The intervention of a factor, and the
commercial disposal of the products by him, and the accommodations
which he may have extended as a banker will not in such a case make the
principal a trader. In re Thomas Woods, 7 B. R. 126; s. c. 29 Leg. Int. 236;
s. ¢. 20 Pitts. L. J. 21.

The publishers of a newspaper, who also conduct a book and iob
printing office connected therewith, are manufacturers. In re Kenyon &
Fenton, 6 B. R. 238; s. ec. 1 Utah Ter. 47.

The printing and publishing of a daily newspaper is manufacturing in
the strict sense of the law. A newspaper publication is as much the result
of manufacture as that of books or cards or billheads. Ibid.

A person who works up lumber is a manufacturer. The fact that he
buys the land as well as the material does not appear to be material. It is
not like the case of a farmer making cider or cheese. These products,
when made by the farmer, exclusively from his own farm, are not usually
made on so large a scale as to be called a manufacture, as the word is
how commonly used; and the making is merely incidental to the cul-
tivation of his land. But in the case of lumber, the land may be almost
said to be incidental to the lumber, which usually forms its chief value,
and the manufacture itself is the main source of profit, independently of
any cultivation or other use of the land. In re Chandler, 4 B. R. 213: 8. ¢.
Lowell, 478; s, c. 2 L, T, B, 170; Hall v. Cooley, 3 N. Y. Leg. Obs. 282.
CoMMERCIAL PAPER. 257

The powers of a corporation must be determined by its charter. A
corporation is an artificial person, the creature of law. It has no powers
except what are given by its incorporating act, vither expressly or as
incidental to its existence and express powers. The mere power does not
make the company a manufacturer unless it actually engages in the busi-
ness of manufacturing. The business must also be carried on for the
purpose of selling the products manufactured, and not for the exclusive
use of the company, to make it a manufacturer within the meaning of
the bankruptcy law. Ala. & Chat. R. It. Co. v. Jones, 5 B. R. 97.

The involuntary feature of the bankruptcy law is punitive in its char-
acter and effect, and as such should only be applied to those who do some
act forbidden by the law, or who failed to do some act required by it.
It is not the contracting the debt only that constitutes the act of bank-
ruptcy, but it is something that is done, or neglected to be done afterward,
and contemplates the power in each individual to refrain from doing the
thing forbidden, or having the power to do the thing required. This every
partner is presumed to possess, but one who has only lent his credit to the
firm by holding himself out as a partner, and thereby liable to those who
gave credit on that account, having no interest in the business and hav-
ing no voice in the control over its affairs, has not such power, and is
not, therefore, subject to be declared a bankrupt for an act of bankruptcy
committed by the firm. Moore v. Walton, 9 B. R. 402.

A loan of money to be used in business under an agreement whereby
the lender reserves the option to share in the profits if the business is
successful, or, if not successful, then to receive back the amount ad-
vanced with interest, does not make the parties partners inter se with-
out an election to share in the profits. Ibid.

Any person who has fraudulently stopped payment of his debts gen-
erally may be adjudicated a bankrupt. In re Joseph 8S. Hadley, 12 B. R.
366.

What will constitute a stoppage of payment is usually easy to deter-
mine. The closing of the doors of a banking-house, a general assignment
for the benefit of creditors or any other act which in common parlance
is termed a failure is evidence of such stoppage. Ibid.

The provision in relation to commercial paper embraces two cases: the
one of an original fraudulent stoppage of payment, in which proceedings
may be instituted at once; and the other of a suspension of payment not
fraudulent, and not per se an act of bankruptcy, but which, if continued
for more than forty days, becomes an act of bankruptcy by its contin-
uance. Congress seems to have taken up the whole subject of the stoppage
of payment of debts as an act of bankruptcy, and enacted that banks,
bankers, brokers, merchants, traders, manufacturers, and miners shall,
if they fraudulently stop payment of their debts, be liable to be adjudged
bankrupts at once, and if they stop or suspend payment of their com-
mercial paper, and do not resume payment of it within a period of forty
days, they shall then be liable to be adjudged bankrupts. Wells et al.
(ex parte H. B. Claflin & Co.), 1 B. R. 171; s.c. 1 L. T. B. 20; 5s. 7 A.
L. Reg. 163; in re Weikert et al., 3 B. R. 27; s. c. 1 Ben. 397; in re Thomp-

17
258 Tue Bankruptcy Law.

son & McClallen, 3 B. R. 185; s. c. 2 Biss. 166; s. a. 1 L. T. B. 187; in re
Cowles, 1 B. R. 280; s. c. 1 W. J. 367; in re Schoo, 3 B. R. 215; Baldwin
v. Wilder, 6 B. R. 85; in re Burt, 1 Dillon, 439; in re Hall, 1 Dillon, 586;
in re Hercules Ins. Co., 6 B. R. 888; s. c. 6 Ben. 35; s. a 5 L. T. B. 400;
Mendenhall y. Carter, 7 B. R. 320; Winter v. R. R. Co., 7 B. R. 289; 8. ¢.
1 Dillion, 487; in re Valliquette, 4 B. R. 307; in re B. Cohn, 7 B. R. 31; 8. ¢@
5 Cc. L. N. 14; s. c. 29 Leg. Int. 309.

The words “stopped or suspended” are sometimes used to denote not
only the act of stopping, but also the not resuming payment, and if they
were the only words used in the statute they would express both ideas.
If the debtor stopped payment before the passage of the statute, the sub-
sequent nonresumption of payment of his commercial paper does not
constitute an act of bankruptcy. The words “stopped” and “not re-
sumed ” have distinct significations. There can not be a condition of non-
resumption without a previous stopping of payment, but the words, as
‘used, have a different relation as to time in the transaction. A fraudu-
lent stopping of payment is an immediate act of bankruptcy, and no
subsequent resumption will free the fraudulent debtor from an adjudica-
tion of bankruptcy, if proceedings are commenced within six months. In
this clause of the statute the word “ stopped ”’ refers to the time of the im-
mediate act, and the question of nonresumption does not arise, and the
words “ not resumed” are not used. In the subsequent clause, where a
stopping of payment which is not fraudulent is provided for, the words
“stopped ” and “not resumed” are both used, one with reference to the
time when the paper was dishonored, and the other with reference to the
forty days of grace allowed by the bankruptcy law. In this case stopping
is an inchoate act of bankruptcy, which is completed by a failure to make
payment for forty days. Mendenhall v. Carter, 7 B. R. 320.

The nonpayment of commercial paper at maturity, and the continued
suspension and neglect of payment, are a continuous act of bankruptcy.
The debtor, in such case, is in a state of suspension and nonresumption of ,
payment. His duty to pay is just as definite on any day after the day on
which his commercial paper is by its terms payable, as it is on that day,
and on any such day he is in the very position, as between him and the
creditors, of neglecting his duty, suspending, keeping in suspense, and net
resuming payment. Whether his continued suspension and nonresumption
of payment be termed a continuous act of bankruptcy, or be regarded as
daily successive acts of bankruptcy, is not material. So long as it con-
tinues, the creditors may avail themselves of it as an act of bankruptcy,
committed as truly within the preceding six months as on the day on
which the debtor first violated his commercial obligation. In re Jacob
Raynor, 7 B. R. 527; s. c. 11 Blatch. 48; Baldwin v. Wilder, 6 B. R. 85.
Contra, Mendenhall v. Carter, 7 B. R. 320. :

An express authority is not in general indispensable to confer upon 2
corporation the right to borrow money or to become a party to negotiable
paper. A corporation, in order to attain its legitimate objects, may deal
precisely as an individual may who seeks to accomplish the same ends,
and this includes the power to borrow money for use in its legitimate busi-
ComMMERCIAL Paprr. 259

ness, and the power to give a time engagement to pay the debt in any
form not prohibited by statute. In re Hercules Ins. Co., 6 B. R. 338; s. ¢.
6 Ben. 35; s. ce. 5 L. T. B. 400.

The term commercial paper is used in the bankruptcy act to denote bills
of exchange, promissory notes, and negotiable bank checks — paper gov-
erned by those rules which have their origin in and are established upon
the custom of merchants in their commercial transactions known as the
law merchant. Such paper is usually denominated commercial paper, and
it should be presumed that Congress used the term in its common aecep-
tation rather than in a more restricted sense. In re Nickodemus, 3 B. R.
230; s.c. 1 L. T. B. 140; sc. 2 C. L. N. 49; 8. c. 16 Pitts. L. J. 233; in re
Hollis et al., 3 B. R. 310; in re Chandler, 4 B. R. 213; s. c. Lowell, 478; s. ¢.
2L. T. B. 170; in re R. Stevens, 5 B. R. 112; s. c. 1 Saw. 397; in re Carter,
6B, R. 299; s. ¢. 3 Biss. 195; in re Kenyon & Fenton, 6 B. R. 238; in re Her-
cules Ins. Co., 6 B. R. 338; s. c. 6 Ben. 35; s. c. 5 L. T. B. 400; in re James
W. Sykes, 5 Biss. 118. Vide in re Lowenstein et al., 2 B. R. 306; in re Mc-
Dermott Patent Bolt Manuf. Co., 3 B. R. 128; s. c. 3 Ben. 369; in re Ulem-
ens, 8 B. R. 279; s. c. 9 B. R. 57; s. ec. 2 Dillon, 534.

Negotiable paper stands, by usage and by statute, upon the custom of
merchants, and is controlled and regulated by such custom; and these
regulations are always treated as part of the law merchant. In saying
that any person belonging to one of certain designated classes should be
deemed a bankrupt if he failed to pay his commercial paper, Congress
simply referred to a well known and very exclusive test of insolvency.
If a trader allows his paper to go to protest, he is said to have failed or
suspended. ‘The expressions are used as equivalent. It is like the closing
of the counting-room and denying one’s self to creditors according to the
old English law, and it will be observed that, while Congress has not
thought fit to say that every insolvent person may be made bankrupt
against his will, yet any one who has shown by certain conclusive acts
or neglects, like avoiding process, being imprisoned, and suffering his
paper to remain dishonored, that he can not hope to pay his debts, may be
proceeded against. In re Chandler, 4 B. R. 213; s. c. Lowell, 478; s. ¢.
2L. T. B. 170.

A note given merely as a voucher or memorandum in exchange for a
note of like amount, simultaneously given by the petitioner to the debtor,
though in form negotiable, can not in any proper sense be called the com-
mercial paper of the maker as between him and the petitioner. In re
Charles S. Westcott et al., 7 B. R. 285; s. c. 6 Ben. 135.

Although Confederate currency was the only medium of exchange at
the time of the execution of a note, yet it is commercial paper if it is
payable in money. Mendenhall v. Carter, 7 B. R. 320.

When the lex loci contractus places notes on the same footing as inland
bills of exchange, a note is commercial paper. In the absence of evidence
to the contrary, the presumption is that it was executed at the place
where it is dated. In re Shea et al., 3 B. R. 187; s. c. 2 Biss. 156; s. c. 1
L. T. B. 107; in re Nickodemus, 3 B. R. 230; s. c.1L. T. B. 140; s. ¢. 2
260 Tur Bankruptcy Law.

Cc. L. N. 49; s. ¢, 16 Pitts. L. J. 283; in re Carter, 6 B. R. 299; s. c. 3 Biss.
195; Mendenhall vy. Carter, 7 B. R. 820.

The fact that a manufacturing firm has been dissolved by the death
of one of the partners, and the survivor is engaged in settling its affairs,
and closing up its business at the time of giving the draft does not divest
the latter of his character of manufacturer, especially when the debt
which forms the consideration of the draft is a debt contracted by the
firm in the course of its manufacturing business. In re R. Stevens, 5
B. R. 112; s. « 1 Saw. 397.

The bonds and coupons of a railroad corporation are not commercial
paper. Tucker v. Opelousas & Great Western R. R. Co., 3 B. R. (quarto)
31.

Interest coupons severed from the bonds are commercial paper when is-
sued by a railroad corporation. In re Greenville & Col. R. R. Co, 5 C,
L. N. 124; s.¢ 6 A. L. J. 422.

A note given by one partner upon the dissolution of the firm on final
settlement at the close of mercantile business, is not commercial paper.
In re Christopher Weaver, 9 B. R. 182.

An accommodation note which is indorsed by the payee, but taken up
by the maker within forty days after the suspension of its payment, is
not an act of bankruptcy on the part of the payee. In re Massachusetts
Brick Co., 6 B. R. 408; s. c. 4 L. T. B. 220.

A. retiring partner who authorizes his former partners to use his name
in their business, is responsible as a partner in respect to a note given
by them, and must answer to all who rely upon the firm name, whether
old customers or not. In re Krueger et al., 5 B. R. 439.

A judgment note is not commercial paper. Love v. Love, 21 Pitts. L.
J. 101.

To be the debtor’s commercial paper, the debt which the paper rep-
resents must have been incurred by the debtor in his character of bank,
banker, broker, merchant or trader, manufacturer or miner. This being
so, it matters not whether the note, bill, or check was given for a loan of
money; for goods purchased, or otherwise; nor whether the debtor is liable
thereon as maker, acceptor, or indorser — whether as principal debtor or
otherwise. It must be commercial paper, and the debtor must be a party
thereto with a fixed liability; and it must be a debt incurred in his char-
acter of banker, merchant or trader. In re Nickodemus, 3 B. R. 230; s. ¢.
1L. T. B. 140; s. ¢ 2 C. L. N. 49; s. c. 16 Pitts. L J. 233; in re James W.
Sykes, 5 Biss. 113.

The accommodation indorsement of the note of another does not make
it within the meaning of this clause the commercial paper of the accommo-
dation indorser. In re Clemens, 8 B. R. 279; s. ec. 9 B. R. 57: s. @ 2 Dillon,
534; in re Nickodemus, 3 B. R. 230; s.c.1 L. T. B. 140: s. ec. 2 G. L. N. 49;
s. c. 16 Pitts. L..J. 233; Innes v. Carpenter, 4 B. R. 412. Contra, in re
Chandler, 4 B. R. 218; s. c. Lowell, 478; s. c. 2 L. T. B. 170.

A, person who had ceased to be a trader at the time when he gave the
note: does not commit an act of bankruptcy by suspending payment
thereof, although the debt for which the note was given was contracted
CoMMERCIAL PaprEr. 261
¥
while he was a trader. The language of the section clearly indicates that
the making of the note must have been done while the party was a trader.
In re Francis M. Jack, 13 B. R. 296; s. c. 1 Woods, 549.

A note given by one partner, on a settlement of a- partnership business as
manufacturers, to pay for the interest of the copartner in the business, and
to settle the balance appearing against him, is not the commercial paper
of a manufacturer issued in the course of his business as such. In re
George Lang, 14 B. R. 159.

It is not necessary that the nonpayment for the given period shall be
general. The statute has not declared that suspension of payment on any
particular number of notes or bills of exchange shall constitute an act of
bankruptcy, but the language is “his commercial paper.” In re Guy
Wilson, 8 B. R. 396; s. ¢. 5 Biss. 887; McLean v. Brown, Weber & Co.,
4B. R. 585; s. ce. 2 L. T. B. 169. :

An allegation of the suspension of one piece of commercial paper makes
out a prima facie case, and is sufficient. If there is any legal reason for
the nonpayment, it is for the debtor to show it before the court. The
petitioner need not, therefore, set forth by negative allegations all the
particular circumstances which by possibility might show the nonpay-
ment to be within the meaning of the law. It is sufficient that a prima
facie case is made upon the petition. In re Guy Wilsun, 8 B. R. 396; s. ¢.
5 Biss. 387; in re Moses A. McNaughton, 8 B. R.-44.

If a man declines to pay solely because he is not liable to pay, or because
le has a valid claim against the paper, or a set-off, that is not a stoppage
or suspension within the meaning of the bankruptcy act. In re Thompson
& McClallen, 3 B. R. 185; s. c. 2 ‘Biss. 166; s. c. 1 L. T. B. 137; in re
Chandler, + B. R. 213; s. c. Lowell, 478; s. ¢. 2 L. T. B. 170; Bank v. Iron
Co., 5 B. R. 491; s.¢.1 L. T. B. 272; s. c. 19 Pitts. L. J.5;8.¢c.3 C6. L. N.
4(2; s. c. 8 Phila. 171; in re Charles S. Westcott, 7 B. R. 285; s. ec. 6 Ben.
135; in re Mannheim, 7 B. R. 342; s. c. 6 Ben. 270; 5. ¢. 6 L. T. B. 94; in
re James W. Sykes, 5 Biss, 113.

The court of bankruptcy will not sit to try the validity of the reasons
for the nonpayment of the note or bill. It is not a court for the mere
collection of debts, and each case must be considered by itself in con-
nection with the circumstances surrounding it. The nonpayment of one
piece of paper is not of itself suspension, for there may be a good reason
for it. But when he fails to pay for want of means, and continues unable
to pay, he has suspended within the meaning of the act, although but a
single check is shown to have laid over unpaid for forty days. McLean
v. Brown, Weber & Co., 4 B. R. 585; s. c. 2 L. T. B. 169; in re Hercules
Ins. Co., 6 B. R. 338; s. c. 6 Ben. 35; s. c. 5 L. T. B. 400.

The clause ought not to be used to enable a creditor to collect an or-
dinary debt on commercial paper, where the circumstances show that, al-
though the paper is not paid though due, there has been no stoppage or
suspension of payment of the commercial paper of the debtor within the
meaning of the clause. In such case, the ordinary remedy furnished
through a suit to collect the paper is all that the creditor is entitled to.
The court, however, must guard against being imposed upon by a denial
262 Tur Bankruptcy Law.

of liability whicb is altogether a sham, and not made in good faith. The
denial of liability may, nevertheless, be founded on reasons which are not
valid, and which would fail in a direct action on the paper, and yet be
made in good faith, in such wise that the nonpayment can not be re-
garded as a stoppage or suspension within the act. In re Hercules Ins.
Co., 6 B. R. 338; s. c. 6 Ben. 35; s. c. 5 L. T. B. 400.

It is not sufficient to defeat the operation of the bankruptcy law to
simply deny liability upon the commercial paper. The party must satisfy
the court that he has good reasons for disputing his liability, and that
his liability is involved in doubt, at least, before a bankruptcy court will
refuse to proceed. In re Munn, 7 B. R. 468; s. c. 3 Biss. 442; in re James.
W. Sykes, 5 Biss. 113. .

It is not enough for a debtor to show as a reason why a aged in
bankruptcy should not go agaiust him that he is insolvent, and because of
spite, or caprice, or some other similar cause he does not choose to pay his
commercial paper. The reason which alone can prevent the nonpayment
of commercial paper, and its continuance for forty days from constituting
an act of bankruptcy must be a legal reason, such as to enable the court
to say that it is not within the scope and meaning of tne bankruptcy law.
In re Guy Wilson, 8 B. R. 396; s. c. 5 Biss. 387.

It is enough that the alleged debtor could and did honestly entertain
the belief that he was not legally bound to pay the paper till it should be
sO adjudged. Such a case is not one for an adjudication of bankruptcy,
but for a suit on the paper in a proper tribunal. In re Charles S. Westcott,
7 B. R. 285; s. « 6 Ben. 135; in re Hercules Ins. Co., 6 B. R. 338; s. ¢. 6
Ben. 35; s. c. 5 L. T. B. 400; in re Mannheim, 7 B. R. 342; s. c. 6 Ben. 270;
s.c.6L. T. B. 94.

The refusal to pay commercial paper on the ground that it is tainted
with usury, and that the full sum named therein is not for this reason due,
is not an act of bankruptcy. In re Staplin, 9 B. R. 142.

A suspension which has taken place on account of an injunction against.
the debter, restraining him from making any transfer or disposition of
his property, is not an act of bankruptcy. In re Edward D. Pratt, 9 B. R.
47; s. c. 6 Ben. 165. ;

The fact that a State court has obtained jurisdiction of the property
and assets of the debtor, under an assignment for the benefit of cred-
ltors, does not prevent the bankruptcy court from entertaining a proceed-
ing against the debtor. In re P. Laner, 9 B. R. 494.

The suspension continues, aithough the debtor makes an assignment
for the benefit of the creditors before the expiration of the forty days,
and when the time expires is a complete act of bankruptcy. Ibid.

Evidence that the debtor is a man of means, and has met his otber
paper as it became due, may tend to rebut the presumption of insolvency,
and to show that the failure to pay the note was from other causes not
making him amenable to the bankruptcy act. In re James W. Sykes, 5
Biss. 113.

The suspension of payment of commercial paper for forty days is an
act of bankruptcy of which any creditor may avail himself. The act of
CoMMERCIAL PAPER. 263

suspension raises a presumption of insolvency, and makes the party.
guilty thereor a proper subject for proceedings in bankruptcy. This act
of bankruptcy is not condoned or defeated by the mere payment of the
suspended paper, so as to prevent any other creditor from availing
himself thereof. It is not enough that the debtor shall pay his suspended
paper alone. He must pay or settle all his debts, and satisty all his
creditors, if he would wipe out the offense against his commercial standing
committed by the suspension. In re Ess & Clarendon, 7 B. R. 133; s. c.
3 Biss. 301.

The dissolution of a partnership. and the assumption of the partner-
ship debts by one partner, does not make any differeuce with the duty
and liability of the retired partner to meet the partnership paper. He
should pay the debt, and look to his late partner for reimbursement.
In re Weikert et al., 3 B. R. 27; s, c. 1 Ben. 897.

It is no defense that the debter was not a banker, merchant, or trader
at the time of suspension. If the maker of the paper was a banker,
merchant, or trader at the time of its execution, he beconies liable to meet
it in the time specified by the law, no matter what his occupation may
then be. Davis & Green vy. Amstrong, 3 B. R. 34; s. ¢c. 2 L. T. B. 188; Bald-
win v. Rosseau, 1 N. Y. Leg. Obs. 391; Everett v. Derby, 5 Law Rep. 225.

When a man enters the commercial community as a merchant, trader,
banker, or otherwise, he assumes all the responsibilities which attach to
his calling. One of these is the obligation to take care of all his com-
mercial paper, whether made before or after he commenced business.
Consequently he may be declared a bankrupt for suspending the pay-
ment of commercial paper issued by him prior to the time of entering
such business. In re Carter, 6 B. R. 299; s. c. 3 Biss. 195.

The principle upon which the liability as secret partner rests is es-
sentially different from that of a known or open partner, whose name
appears in the business. A secret partner is liable, not because credit is
supposed to have been given to the firm by reason of his connection with
it, but because he is one of the contracting parties, and benefited by the
profits of the contract; so that, in order to charge a secret partner for debts
contracted in the name of the firm of which he is a dormant partner,
it is necessary to show that such debts were contracted in the name and
business of the firm, or that the secret partner had an interest in the
contract or profits. In re Munn, 7 B. R. 468; s, c. 3 Biss. 442.

Suspension and nonresumption, during the pendency of negotiation for
extensions and renewals with all the creditors, do not constitute an act
of bankruptcy. Doan v. Compton & Doan, 2 B. R. 607.

An allegation of stoppage and suspension on a certain day, upon com-
mercial paper which was made and dated within the six months next
preceding the actual filing of the petition, connected with the allegation
that payment of the commercial paper, which consisted of a due-bill,
payable on demand, had been demanded at different times, and that the
debtor had failed to make payment, is equivalent to an allegation of
demand on that day. In re Chappel, 4 B. R. 540.
264. THe Bankruptcy Law. r

The petition should state, as nearly as possible, the date of the promis-
sory note or bill of exchange, to whom made, and for what amount, and
when payable, and whether the debtor was liable thereon as maker or
indorsez, and by whom the same was held when payment was neglected
or refused. In re Randall & Sunderland, 8 B. R. 18; s. c. 1 Deady, 557;
s.¢c.2L. T. B. 69; Orem & Son vy. Harley, 3 B. R. 263.

If the forty days have not expired at the time of the filing of the peti-
tion, the suspension can not be relied on to support it, although the forty
days elapse before the hearing. In re Tivoli Brewing Co., 11 B. R. 470.

When fraud is averred, the petition should set forth the acts that
make the suspension and nonresumption fraudulent. Gullies v. Cone, 2
B. R. 21; 8s. ¢« 2 Ben. 502, ;

If the allegation sufficiently describes the paper to identify it and pre-
vent the party from being misled, it need not give the date thereof. In
re Joseph S. Hadley, 12 B. R. 366. :

An allegation that the paper was the commercial paper of the debtor,
and made by him as a merchant, etc, need not be averred except in
general language. Ibid.

It is not necessary that the facts constituting the fraud in the suspen-
sion of the paper shall be set forth in the petition. Ibid.

A fraudulent stopping of payment is not an act heretofore known or
defined, and it is not easy of definition. As to fraud, a mere oversight,
or a vis major, or a fraud practiced upon the debtor himself, or an honest
defense to the particular paper refused—if these reasons, or such as
these, occasion the refusal to pay — would take the case out of the statute.
And this would be so though the word fraudulently were omitted from
the statute, because such an accident or refusal could not fairly be called
a stopping of payment. Fraudulently means knowingly, and without just
excuse applicable to the paper itself. In re Hollis et al., 3 B. R. 310; Bank
y. Iron Co., 5 B. R. 491; 5 @ 1 L. T. B. 272; 5.0c3C. L. N. 402; 5s. «@
19 Pitts. L. J. 5; 8. c. 8 Phila. 171.

Something must be shown from which the court can draw the con-
clusion that the stoppage or suspension of payment of the paper was
fraudulent. The mere nonpayment does not warrant such conclusion. It
is for the creditor to show that the stoppage, or suspension, was fraudulent.
That is not shown by proving nothing but stoppage, or suspension, and
such proof alone does not even make out a prima facie case of fraud.
There may be many reasons for stoppage falling short of fraud. In re
John Davis, 3 B. R. 339; s. «. 3 Ben. 482.

When a merchant engages in business, and purchases his stock, or any
part thereof, on credit, there is an implied promise that the proceeds of
its sale shall be applied to the payment of such debts. The merchant com-
mits a fraud upon his creditors if Le appropriates the proceeds to any
other purpose until the obligation is discharged; indeed, his whole capital
stock is virtually pledged for the payment of such commercial liabilities
as he may incur in such business; he is further pledged to give to his
business his best skill and attention; and a failure to comply with these
requisitions is a fraud on the rights of those who have given him credit
INVOLUNATARY PETITION. 265

in his business, and whose demands remain unsatisfied. Davis & Green
v. Armstrong, 3 B. R. 34; s. ec. 2 L. T. B: 1388.

A solvent debtor, who has the means wherewith to pay commercial
paper, and does not pay it, is guilty of fraud. In re Lowenstein et al.,
2B. R. 806; Hardy v. Binninger, 4 B. R. 262; s. c. 7 Blatch. 262.

Suspension and nonresumption, with the assent of the bolder of the
suspended paper, is not fraudulent. In re Lowenstein et al., 2 B. R. 306.

In the following cases it was held, prior to the amendment, that sus-
pension and nonresumption were prima facie evidence of fraud. In re
Jersey City Window Glass Co., 1B. R. 420; s.¢c.1L. T. B. 61; 5.0 7 A. L.
keg. 419; in re Ballard & Parsons, 2 B. R. 250; in re Lowenstein et al., 2
B. R. 306; Doan v. Compton & Doan, 2 B. R. 607; Davis & Green vy. Arm-
strong, 3 B. R. 34; s. c. 2 L. T. B. 188; in re Shea et al., 3 B. R. 187; s. ¢.
2 Biss. 156; s. c. 2 L. T. B. 107; in re Hollis et al., 3 B. R. 310.

In the following cases it was held that mere suspension and nonre-
sumption were not sufficient, but that fraud must be proved. In re Leeds,
1B. R. 521; s.¢.1L. T. B. 78; s.¢. 7 A. L. Reg. 693; Gillies v. Cone, 2 B.
R, 21; s. c. 2 Ben. 502; in re John Davis, 3 B. R. 339; s. c. 3 Ben. 482,

A creditor whose claim is not evidenced by commercial paper, but
rests in open account, may file a petition against his debtor, and charge
that he has suspended and failed to resume payment of his commercial
paper for the prescribed period. In re Hall, 1 Dillon, 586; in re Ess &
Clarendon, 7 B. R. 183; s. c. 3 Biss. 301.

The Involuntary Petition.— (k) Proceedings in bankruptcy can not be
initiated in the circuit court. For that purpose the jurisdiction of the dis-
trict court is plainly exclusive. In re Binninger et al., 3 B. R. 487; s. ¢
7 Blatch. 159; s. c 1 L. T. B. 183.

This section does not designate the district judge to whom the petition
of the creditor shall be addressed. It seems not only reasonable, but most
in accordance with other provisions of the act, to hold that proceedings
against a debtor, to procure an adjudication of involuntary bankruptcy,
are, like those instituted by himself to obtain adjudication of voluntary
bankruptcy, to be had in the court of the district in which he has resided
or carried on business for the preceding six months, or for the longest
period thereof. The assent of the debtor to the proceeding will not make
it valid, for consent can not give jurisdiction. The petition must be ad-
dressed to the court authorized by law to take cognizance of the case, and
to none other. In re Fogerty & Gerrity, 4 B. R. 451; s. c. 1 Saw. 2333 s. ¢.
21. T. B. 174; in re Ala. & Chat. R. R. Co., 6 B. R. 107; s. ¢. 9 Blatch. 391;
8% a5 L. LT. B. 76.

The petition can not be filed in the district where the debtor neither
resides nor carries on business. In re J. M. Palmer, 1 B. R. 2138; in re
Fogerty & Gerrity, 4 B. R. 451; s. c. 1 Saw. 238; s.¢c. 2 L. T. B. 174.

The restrictions in section 5014 as to the judge to whom the petition is
to be addressed apply to proceedings under this section. The debtor can
not be adjudged a bankrupt in a district in which he has not resided for
the longest period of the six months next immediately preceding the
filing of the petition. In re Leighton, 5 B. R. 95.
266 Tue Bankruptcy Law.

Proceedings in bankruptcy should be instituted with reference to the
actual residence of the party, or his place of business, and not with ref-
erence to his domicile. If a party has actually resided in one State during
the greater part of the six months next immediately preceding the filing
of the petition, the petition must be filed in the district court for that
State, although his family may have resided in another State during the
whole period. In re Watson, 4 B. R. 613.

The district court of any district in which the debtor may actually re-
side and do business at the time of the filing of the petition against him
has jurisdiction to hear the cause and make an adjudication of bank-
ruptey. In re Johnson, 1 Cent. L. J. 223.

If the name of the judge is given, it must be correct. A petition mis-
naming the judge can not be filed. Anon., 3 B. R. 128.

The petition should name facts with certainty and detail, so as to in-
form the debtor of what he must meet and resist. The various statements
of acts of bankruptcy, given in Form No. 54, are mere outlines or skeleton
statements, to be filled in with the particular circumstances of each case,
and such is the direction given in the nota bene near the end. In re
Randall & Sunderland, 3 B. R. 18; s. «. 1 Deady, 557; s. c. 2 L. T. B. 69.

The allegations of the petition must be positive and unqualified. There
is nothing in the act, or in the rules and forms, or the nature of the pro-
ceedings which requires that the allegations, either as to the debt, or as to
the act of bankruptcy, should be made on the personal knowledge of the
petitioner. The petition must be made by the creditor, and in most in-
stances can be made upon information and belief alone. In addition to
the petition, there must be a deposition to the debt, and to the act of
bankruptcy. In these it may be proper tbat the witness should speak
from his own knowledge, or at least disclose the grounds of his belief
or the sources of his information. Much will depend upon the circum-
stances of the particular case. In re Muller & Brentano, 3 B. R. 329; s. c
1 Deady, 513; s. c.2 L. T. B. 33; Orem & Son y. Harley, 3 B. R. 263.

A petition to have a partnership declared bankrupt must set forth
acts of bankruptcy on the part of the partnership. An averment of an
act of bankruptcy on the part of one of the members is not sufficient. In
re Waite & Crocker, 1 B. R. 373; s. c. Lowell, 207; in re Redmond & Martin,
9 B. R. 408.

A petition against partners must allege that the act of bankruptcy
was committed during the continuance of the partnership. in re Hill &
Van Valkenburgh, 5 Law Rep. 326.

A fraudulent dissolution and transfer of the firm property to one partner
is the act of all the partners. In re J. A. & H. W. Shouse, Crabbe, 482.

When a transfer of property is charged as an act of bankruptcy against
a firm, the petition should distinctly allege that the property transferred
belonged to the firm. In re Williams & Co., 3 B. R. 286; s. ¢. Lowell, 406;
s.c. 2 L, T. B. 100.

A. transfer of firm property by one member of the firm, without the
privity or consent of his copartners, is an act of bankruptcy on the part
of thé firm when accompanied by the other conditions prescribed by the
INVOLUNATARY PETITION. 207

act. In re Black & Secor, 1 B. R. 353; s. c. 2 Ben. 196; s.c. 1 L. T. B. 39;
Fisher vy. Currier, 5 Law Rep. 217; 8. c. 1 Penn. L. J. 217.

In order to render a party liable on the ground that he has been held
out as partner, he must have had no notice of his being so held out or
there must be circumstances from which notice can be presumed. In re
8. A. Jewett, 15 B. R. 126; s. c. 16 B. R. 48; s.c. 9 C. L. N. 345.

When a party permits another to hold him out as partner and thereby
procure credit on the strength of his supposed relation, neither community
of interest nor participation in the profits is necessary to render him liable
as partner. Ibid.

It is never good pleading to make averments in the alternative. When
two distinct matters, each of which contains a good cause of action or
defense, are alleged conjunctively, it is enough that either of them be
satisfactorily proved. In re Drummond, 1 B. R. 231; s.c.1L. T. B. 7;
Irving v. Ilughes, 2 B. R. 62; s.¢ 7 A. L. Reg. 209; s. ec. 6 Phila. 451.

Where one of the alternatives will support the pleadings and the other
not, the construction will be against the pleading, and it will be held bad
on demurrer. In re Redmond & Martin, 9 B. R. 408.

Where it is immaterial which one of the alternatives is true, a pleading
in the alternative will not be held bad on demurrer. Ibid.

It is not necessary in the first instance for a petitioning creditor to
show that there are other creditors. Ordinarily, bankruptcy proceedings
may be instituted and maintained where there are no other creditors. If,
however, that fact becomes material in any case, the burden is on the
debtor to show it. In re Daniel Sheehan, 8 B. R. 345.

A careful pleader in stating the nature of the demand will allege that
the obligation was contracted by the alleged debtor; but where the de-
mand has already been averred to be against the alleged debtor, an omis-
sion to so charge in the description of the claim will not render the
petition bad on demurrer. In re Redmond & Martin, 9 B. R. 408. Vide
in re J. A. & H. W. Shouse, Crabbe, 482.

The demand need not be stated in detail, but it should be so far stated
that the court may see that it is a provable debt. In re Joseph S. Hadley,
12 B. R. 366.

An allegation which does not show that the debt is due to the petitioning
creditor is not sufficient. In re Western S. & T. Co., 183 Pac. L. R. 66.

The allegation must show that the creditor was still a creditor at the
time of the filing of the petition. Ibid.

The petition must affirmatively show that the requisite number of
creditors in number and amount have united therein. This allegation
need not necessarily be so positive that the party can be prosecuted for
perjury on it, but it may be stated on information and belief. In re J.
Young Scammon, 10 B. R. 66; s. ¢. 6 Biss. 180; in re Joliet Iron & Steel
Co., 10 B. R. 60; s.¢c.1 A. L. T. (N. 8.) 872; 8. c 10 A. L. J. 29; 8. «. 6 CL
L. N. 828; 5, e 21 Pitts. L. J. 207; in re Isaac Scull, 10 B. R. 165; s. c. 7
Ben, 871; s. c. 1 A. L. T. (N. S.) 416; Warren Savings Bank v. Palmer, 10
B. R, 289; s. c. 6 C. L, N. 366; s. c. 81 Leg. Int. 261; s. @ 8 Pac. L. R. 44;
268 Tue Bankruptcy Law.

21 Pitts. L. J. 193; in re James R. Keeler, 10 B. R. 419; s. c. 20 I. R. R.
82;s.c.1 A. L. T. (N. 8.) 422.

An allegation upon belief without charging either information or knowl-
edge that the petitioners constitute the requisite proportion of creditors
is sufficient. In re Henry A. Mann, 14 B. R. 572; s. c. 18 Blatch. 401; s. ce
51 How. Pr. 174.

The requirement of the statute is not met by an allegation that the
petitioners constitute the requisite proportion of the creditors when two
of them hold claims for less than $250. In re James A. McKibben, 12 B.
R. 97.

An allegation that the petitioners constitute at least one-fourth in
number of the creditors of the debtor, and that the aggregate of their
debts provable under the act amounts to at least one-third of the debts
so provable, is sufficient although some of the claims are under $250. In
re Robert L. Hall, 15 B. R. 31.

It is not necessary to amend the petition when there has been an ad-
judication before the amended act took effect. The judgment of adjudica-
tion based upon a petition conforming to the provisions of the law in force
when made is valid, and as binding upon the debtor as if the amended
act had not been passed. The adjudication removes the case beyond the
domain of legislative control. In re Jacob Raffauf, 10 B. R. 69; s. ¢.
G6 Biss. 150; in re Frederick E. Angell, 10 B. R. 73; s. ce. 31 Leg. Int. 254; s. ¢.
21 Pitts. L. J. 206; s.¢c. 6 C. L. N. 841; s. ¢. 1 Cent. L. J. 368; in re H. & M.
Rosenthal, 10 B. R. 191; s. ce. 81 Leg. Int. 254; s. «. 6 C. L. N. 342; in re
Obear, 10 B. R. 151; s. ec. 3 Dillon, 37; in re C. B. Comstock & Co., 10 B. R.
451; s. ¢. 8 Saw. 128; Barnett v. Hightower, 10 B. R. 157; in re Wm. J.
Pickering, 10 B. R. 208; s. ec. 1 Cent. L. J. 371.

An adjudication made on the 22d day of June, 1874, may be set aside
if the proper proportion of creditors did not joint in the petition. In
re Carrier & Baum, 13 B. R. 208.

If an adjudication has been made upon a petition not signed by a suffi-
cient number of creditors, the court, upon the filing of a petition signed
by the requisite proportion of creditors praying for a confirmation of the
proceedings, may make a new adjudication. In re Wm. N. Taylor & Ca.
1 W.N. 16.

The Verification.— If there are five or less signers. all must verify the
petition by oath; but if there are more than five signers it is sufficient if
the first five of them so verify it. This necessarily implies that there may
be more signers than those who verify the petition by oath, and also
that those who are petitioners must sign the petition. In re Isaac Scull,
10 B. R. 165; s. ¢ 7 Ben. S71;s.c 1 A. L. T. ON. 8.) 416.

Where several petitioners join in the petition in the same right, a
verification by one is sufficient. But the case of petitioners joining in
separate and distinct rights is different, and it is necessary that there
should be a verification by or on behalf of every petitioner. In re Solomon
Simmons, 10 B, R. 253; s. ec. 1 Cent. L. J. 440.

The petition may be signed in the name of the firm and verified by @
member of the firm. In re Morris, 11 B. R. 448.
VERIFICATION. 269

When an agent is clothed with full authority, and is able to present
the proper authentication of the petition required by the forms, the pe-
tition should be entertained, although the petitioning creditor does not in
person sign or swear io the petition. The act does not in terms say that
the petition shall be signed or verified at all. It should be construed as
similar language is in the whole field of legislation, and in the terminol-
ogy of courts; and there the maxim, “ qui facit per alium, facit per se,”
is of almost universal application. The blanks in the forms may be filled
by the name of the attorney or agent of the petitioner, or with the name
of the petitioner, “ by A. B., his attorney and agent.” In re Jacob Raynor,
7B. R. 527; s. ec. 11 Blatch. 48. Contra, Hunt v. Pooke, 5 B. R. 161;
in re D. O. Butterfield, 6 B. R. 257.

No officer of a corporation has authority, by virtue of his office, to sign
and verify a petition for adjudication of bankruptcy against a debtor of
the corporation, unless specially authorized by some statute, by-law, or
resolution of the board of directors. Such authority being special, must
in all cases be made to appear by the oath of the person signing and verify-
ing the petition, or other competent evidence. In re Moses A. McNaugh-
ton, 8 B. R. 44; in re Ralph Johnson, 1 N. Y. Leg. Obs. 166; s. c. 5 Law
Rep. 313.

Whether a corporation is a resident of the district or not, it may verify
the petition by its agent. In re John R. Hanibel, 15 B. R. 2838; s. ¢. 9 C.
L. N. 165.

The agent to verify the petition need not be an officer of the corporation.
Ibid.

When the petition is signed and certified by an agent there must be
proof of his authority, either by his oath or otherwise. In re Rosenfields,
11 B. R. 86; s. c. 1 Cent. L. J. 583; in re Joseph S. Hadley, 12 B. R. 366;
in re Edward Sargent, 13 B. R. 144; in re John R. Hanibel, 15 B. R. 233;
gsc. 9 CU, L. N, 165.

If the petition is signed by an agent of the petitioning creditor, it need
not set forth the authority under which the agent acts. In re California
Pacific R. R. Co., 11 B. R. 193; s. ¢. 3 Saw. 240.

If there is no proof of the authority of the agent, the court may re-
ceive supplementary affidavits tending to prove the authority of the agent
at the time when he signed and veritied the petition. In re Rosenfields,
11 B. R, 86; s. ec. 1 Cent. L. J. 583.

All creditors who are absent from the district may sign the petition by
attorney. In re California Pacific R. R. Co., 11 B. R. 193; s. ¢. 8 Saw. 240.

If the petition is verified by an agent, where there are more than five
petitioning creditors, the fact of nonresidence should be stated and sworn
to in the affidavit. In re Solomon Simmons, 10 B. R. 253; s. c. 1 Cent. Lu.
J. 440; in re Joseph S. Hadley, 12 B. R. 366.

Where there are less than five petitioning creditors, the fact of non-
residence need not be stated in the affidavit when it is made by an agent.
In re Solomon Simmons, 10 B. R. 253; s. c. 1 Cent. L. J. 440.

If the name of the agent who acts for one of the first five signers is not
contained in the body of the verification, the petition is not sufficiently
270 Tue Bankruptcy Law.

verified, although the name is appended to the verification. In re Rosen-
tields, 11 B. R. 86; s. c. 1 Cent, L. J. 583,

When an agent verifies the petition, he should do so on behalf of his
principals. In re Solomon Simmons, 10 B. R. 253; s. c. 1 Cent. L. J. 440.

If the petition purports to be signed by the agent of a creditor who never
in fact consented thereto, it must be dismissed, where it merely alleges
that all the petitioners constitute the requisite number, for no amendment
in such case can be allowed. In re Rosenfields, 11 B. R. 86; s. c. 1 Cent.
L. J. 583.

If the verification is made by an agent, it should state that the allega-
tions are true to the best of the knowledge and belief of the principal, and
not to the best of his own knowledge and belief. In re John Brown, 15
B. R. 416; s. c. 9 C. L. N. 191; s. c. 18 Pac. L. R. 205.

The jurat subscribed by the register need not contain a venue when it
ean be sufficiently collected from the deposition itself that the oath wag
administered where the officer resides. In re Hill & Van Valkenburgh,
5 Law Rep. 326.

The affidavit as well as the petition should be subscribed by the pe
titioner. The omission to subscribe the affidavit is an incurable defect.
The petition is not a petition in propria forma, such as can be amended.
Moore & Bro. v. Harley, 4 B. R. 242; s.c. 2 L. T. B. 666.

The verification is no part of the petition. It is necessary that it should
accompany the petition only in order to predicate upon it certain pre-
scribed action in furtherance of the jurisdiction acquired by the filing of
the petition. A defective verification may, therefore, be amended. In
re Solomon Simmons, 10 B. R. 253; s. c. 1 Cent. L. J. 440; in re California
Pacific R, R. Co., 11 B. R. 193; s. c. 3 Saw. 240; in re Edward Sargent, 13
B. R. 144.

An objection to a defective verification may be waived by the debtor.
In re Morris, 11 B. R. 443.

The Depositions.— It is not necessary for each creditor joining in the
petition to file a proof of his claim. That is required only of the first
five signers. In re Philadelphia Axle Works, 1 W. N. 126.

The proof of debt should be according to Form 55, and not Form 22.
In re Jobn Brown, 15 B. R. 416; s.c. 9 C. L. N. 191; s. c. 13 Pac. L. R. 205.

The proof of debt must show that the creditor is still a creditor. In re
Western S. & T. Co., 18 Pac. L. R. 66.

A deposition in proof of the debt should state whether the claim is
secured or not. Cunningham v. Cady, 13 B. R. 525; s.¢. 8 ©. L. N. 165.

The deposition of acts of bankruptcy must be such as constitutes legal
testimony. Its statements must be of facts, and not the mere conclusions
of the witness, and as a general rule they must be of the witness’ own
knowledge and not mere hearsay. They must be stated with such clear-
ness as to leave no doubt as to their meaning. In re Rosenfields, 11 B.
R. 86; 8. c. 1 Cent. L, J. 583.

A deposition setting forth a transfer of property should give the time

when it was made. In re John R. Hanibel, 15 B. R. 238;8.c. 90 LN.
165.
AMOUNT. 271

A single member of a firm who are the petitioning creditors, is compe-
tent to depose to the act of bankruptcy. Anon., 1 Cent. L. J. 182.

A deposition to an act of bankruptcy should be made upon the personal
knowledge of the deponent. In re Joseph 8S. Hadley, 12 B. R. 366.

If any fact in a deposition to an act of bankruptcy is stated on informa-
tion and belief, it should be stated with such particularity and details that
the court may see from whom the information was derived, the circum-
stances under which it was acquired, and the weight that should be
attached to it. Ibid.

A. deposition to an act of bankruptcy, consisting of fraudulent con-
veyance, must allege or show the fraudulent intent of the debtor in making
the conveyance. Cunningham y. Cady, 13 B. R. 525; s. «. 8 ©. L. N. 165.

When a petition is amended by charging a new act of bankruptcy,
a new deposition should be filed. In re John R. Hanibel, 15 B. R. 233;
s.¢c. 9 C. L. N. 165.

If a deposition to an act of bankruptcy is defective through mistake
or inadvertence, it may be amended. Ibid.

When the depositions are defective, the order to show cause may be
stricken out. Ibid.

If no deposition to the act of bankruptcy is filed, the petition will
be dismissed. In re John Brown, 15 B. R. 416; s.c.9C. L. N. 191; s. ¢
18 Pac. L. R. 205,

A petition will not be dismissed because the depositions in support
thereof are defective, but the petitioning creditor on motion will be al-
lowed to file supplemental depositions. Cunningham v. Cady, 18 B. R.
525; s. c. 8 C. L. N. 165; in re Joseph S. Hadley, 12 B. R. 366. Contra,
May v. Harper et al., 4 B. R. 478; s. c. 4 Brewst. 253; s.c. 2 L. T. B. 181.

When depositions are defective, the order to show cause will be set aside,
but a new order will be issued on supplemental depositions. Cunningham
v. Cady, 18 B. R. 525; s. c. 8 C. L. N. 165.

If the officer who took the deposition omits to sign the jurat, he may
be allowed to sign it after the deposition is filed. In re James A. Mc-
Kibben, 12 B. R. 97.

A deposition to an act of bankruptcy can not be taken before a notary
public. Ibid.

The Amount.—- The object of notice to the creditors named in the list
is to enable the petitioning creditors and others of the named creditors to
show that the list ig incorrect. The proper course to be pursued is to
enter an order referring the case to the clerk or register to ascertain and
report whether the requisite number of creditors have joined in the pe-
tition. In re Hymes, 10 B. R. 483; s. c. 7 Ben. 427; in re Edward Sargent,
18 B. R. 144.

The affirmative of the allegation and denial on the reference is with
the petitioning creditors. In re Hymes, 10 B. R. 433; s. c. 7 Ben. 427.

Written or printed notice should be given by the clerk by mail, postage
prepaid, to all of the creditors named in the list, at the addresses named
in the list, of the time and place of reference and its object. Such notice
272 Tue Bankruptcy Law.

should contain a copy of the list with its names, places of residence and
amounts. Ibid.

The debtor should attend on the reference and submit to an examination,
if desired by the petitioning creditors, as to the matters embraced in the
list or covered by the issue. Ibid.

The petitioning creditors are to be ‘one or more” in number; but
whether one will suffice, or if more are necessary how many there must
be, is to be determined by certain tests prescribed by the section. Ibid.

The creditors may elect to obtain one-fourth in number of the chief cred-
itors, or one-fourth of all the creditors, provided that one-third in amount
of all the debts are represented in the petition. In re J. R. Currier, 13
B. R. 68; in re Robert L. Hall, 15 B. R. 31; in re William M. Lloyd, 15 B. R.
257; 8. c, 24 Pitts. L. J. 113.

It is not necessary that the chief creditors shall have been asked to
sign and have refused. In re J. R. Currier, 13 B. R. 68.

Creditors whose claims are under $250 are not to be counted in estimat-
ing the numbers, if one-fourth of the creditors above that sum join in the
petition. If such number do not join, then creditors below $250 may be
counted to obtain the necessary number. In re Woodford & Chamberlain,
13 B. R. 575; s. c. 1 Cent. L. J. 87; in re Reiman & Friedlander, 11 B. R.
21; s. c. 7 Ben. 455; s. c. 138 B. R. 128; s. c. 12 Blatch. 562; ‘in re John B.
Bergeron, 12 B. R. 385; s. ¢. 10 Pac. L. R. 259; s. c. 2 Cent. L. J. 507; in re
Philadelphia Axle Works, 1 W. N. 126.

In computing the amount, the aggregate of the petitioning creditor's
debts must be equal to one-third of all the debts, irrespective of amount,
provable against the estate. In re Joseph S. Hadley, 12 B. R. 366; in re
John B. Bergeron, 12 B. R. 385; s. c. 10 Pac. L. R. 259; s. « 2 Cent. L. J.
507; in re J. R. Currier, 13 B. R. 68; in re Woodford & Chamberlain, 13
B. R. 575; s. c. 1 Cent. L. J. 37; in re Hugo Broich, 15 B. R. 11; in re
William M. Lloyd, 15 B. R. 257; s. c. 24 Pitts. L. J. 113. Contra, in re
Hymes, 10 B. R. 433; s. a 7 Ben. 427.

A party has the right to purchase a claim in good faith, with a view
to erable himself to join in a petition in order to make up the necessary
number. In re Woodford & Chamberlain, 13 B. R. 575; s. ec. 1 Cent. L. J.
37; in re J. A. & H. W. Shouse, Crabbe, 482.

Where a sale of a claim is void for fraud or want of consideration, and
is set aside for that reason, the claim in the court is to be deemed to
belong to the assignor. In re Woodford & Chamberlain, 13 B. R. 575; 5s. ¢
1 Cent. L. J. 87.

An indorsee who accepts payment from the indorser while the proceed-
ings are pending, can not join in the petition, although the claim was
proved but not filed before the payment. In re Hugo Broich, 15 B. R. J1.

The claim of a firm of which the debtor is a partner can not be counted.
In re William M. Lioyd, 15 B. R. 257; s. c. 24 Pitts. L. J. 113.

If the debtor is a member of two different firms, the claim of one firm
against the other can not be counted. Ibid.

In order to put a person into bankruptcy individually who is a member
of a firm, one-fourth in number of all his creditors, both individual and
AMOUNT. 273

partnership, must unite in the petition, and the aggregate of the debts of
the petitioning creditors must amount to one-third of all the debts both
individual and partnership. Ibid.

A creditor who has issued an attachment within four months before the
comirencement of the proceedings in bankruptcy can not be reckoned in
computing the proportion of creditors who must unite in the petition.
{n re C. G. Scrafford, 14 B. R. 184; s. c. 15 B. R. 104; s. ec. 4 Cent. L. J.
19. Contra, in re Hugo Broich, 15 B. R. 11.

A debt barred by the statute of limitations in Wisconsin is not provable,
and can not be reckoned in computing the number who must join in an
involuntary petition filed in that State. In re Theodore Noesen, 12 B. R.
422; s. c. 6 Biss. 443.

A petition by creditors who are entitled to petition alone is not affected
by the joining of another creditor whose debt is insufficient. In re Tower,
1N. Y. Leg. Obs. 8; s. c. 5 Law Rep. 214; s. c. 1 Penn. L. J. 209.

Creditors who have received and still hold fraudulent preferences are
not counted in determining whether the requisite number of creditors, as
to value, have joined in the petition. In re M. C. Israel, 12 B. R. 204; 8. e.
3 Dillon, 511; Clinton v. Mayo, 12 B. R. 39; in re J. R. Currier, 13 B. R. 68

A secured creditor may be a petitioning creditor, but the amount at
which his debt is to be reckoned is to be ascertained by deducting the
value of the security. In re California Pacific R. R. Co., 11 B. R. 193;
s. c. 3 Saw. 240; in re Stansell, 6 B. R. 183; in re Daniel Sheehan, 8 B. R.
845; in re W. B. Alexander, 4 B. R. 178; s. c. Lowell, 470; s. c. 2 L. T. B.
238; Ecfort v. Greely, 6 B. R. 433; s. c. 4 C. L. N. 209; in re Hugo Broich,
15 #.R.11. Contra, in re Johann, 3 B. R. 144; s. c. 4 B. R. 434; 8. ¢c. 2 Biss.
139; s. c. 2 L. T. B. 92; in re Jacob Frost, 11 B. R. 69; s. c. 6 Biss. 213; in
re Green Pond R. R. Co., 13 B. R. 118.

If a secured creditor joins in an involuntary petition without referring
to his security, he thereby waives it, and his claim should be counted. In
re Hugo Broich, 15 B. R. 11.

If the petitioning creditors do not constitute one-fourth in number, and
there is no allegation to that effect, the petition will be dismissed without
allowing any time for other creditors to unite therein. In re Thomas F.
Burch, 10 B. R. 150.

The petitioning creditors must be held to good faith, and can not reck-
lessly file a petition for the purpose of making the respondent file a state-
ment of his creditors. Such a fishing petition can not be entertained. If
it appears to the court by affidavit or otherwise, that at the time of filing
the petition the creditors joining in it knew that they did not constitute
the requisite number, the petition should be dismissed. The matter may
be. brought before the court by a motion. In re J. Young Scammon, 11
B, R. 280; s. c. 6 Biss. 145, 195.

If the petitioning creditors deny that the list of creditors filed by the
debtor is true, either as to the nature or amount of the debts, the case may
be referred to a repister to take proof and report as to the correctness of
the list. In re Jacob Frost, 11 B. R. 69; s. c. 6 Biss. 213, ;

18
274 Tue Bankruptcy Law.

The same nuniber and amount of creditors must join in a proceeding to
force a corporation into bankruptcy as is required in the case of an in-
dividual. In re Leavenworth Savings Bank, 14 B. R. 82, 92; in re Detroit
Car Works, 14 B. R. 243; in re Oregon B. Printing Co., 14 B. R. 394; 8. ¢

3B. KR. 199; s. ¢«. 14 B. R. 405; s. c. 3 Saw. 529, 614.

If there is no refereuce for the purpose of ascertaining whether suffi-
‘cient creditors have joined in the petition, other creditors may unite in the
proceedings. Ju re rank Frisbie, 15 B. R. 522. ;

While the investigation of the list of creditors is pending, the court may
provisionally limit the period within which other creditors may join in
the petition, and sucb time will not be enlarged, except for sutticient
cause. In re Benjamin Bullock, 1 W. N. 22.

The register’s report should contain a list of the claims counted and of
those rejected. In re William M. Lloyd, 15 B. R. 257; s. ¢. 24 Pitts. L.
J. 118.

If an order is entered dismissing a case — unless an amended petition is
filed, a creditor who transferred his debt after the filing of the original
petition can not unite in the amended petition. In re Western S&S & T.
Co., 13 Pac. L. R. 66.

The Petitioner’s Debt.— (1) It is not necessary that the debt should have
existed at the time the act of bankruptcy was committed. The creditor
who can file a petition for involuntary bankruptcy is one whose debt is
provable under the act. Section 5067 declares that all debts due and pay-
able at the time of the adjudication of bankruptcy, and all debts then
existing but not payable until a future day, may be proved against the
estate of a bankrupt. A debt existing at the time the petition is filed,
if a valid one, is sufficient to support the proceedings. Phelps v. Classen,
3 B. R. 87; 8s. c. 1 Wool. 204. Contra, in re Muller & Brentano, 3 B. R. 329;
:s. ec. 1 Deady, 513; s.c. 2 L. T. B. 33.

A debt contracted prior to the passage of the act is sufficient. In re
‘John W. Hull, 1 N. Y. Leg. Obs. 1.

The provisions of the bankruptcy act, literally construed, are wholly
‘unambiguous, and authorize a creditor whose debt is not due to become
-a petitioner. His debt exists at and before the adjudication of bank-
ruptcy, and is, therefore, a provable debt. Being a provable debt, it is
-sufficient to maintain the petition. Linn v. Smith, 4 B. R. 46; s.ca1L.
T. B. 229; s.c. 3 L. T. B. 218; in re Ouimette, 3 B. R. 566; s. c. 1 Saw. 47; in
‘re W. B. Alexander, 4 B. R. 178; s. ce. Lowell, 470; s. c. 2 L. T. B. 238; in re
Samuel King, 1 N. Y. Leg. Obs. 276; in re Tower, 1 N. Y. Leg. Obs. 8;
$s. c. 5 Law Rep. 214; s. c. 1 Penn. L. J. 209.

When the petition alleges the debt to be due and payable, and the
proof shows that the debt was not due at the time of the filing of the
petition, the variance will not be fatal, because the averment that the debt
“was due was not necessary. Linn v. Smith, 4 B. R. 46; 3. ¢c. 1 L. T. B.
°229;'s. c. 3 L. T.”B. 218.

‘When the petitioning creditor has received the notes of third parties.
“to be applied to the payment of his debt, if they should on inquiry. be
.found -collectible, the delivery of the notes amounts to a conditional pay-
PrtiTioNER’s Dest. 275

ment. If the notes are paid or collected according to their tenor, the debt
of the petitioner would be paid and extinguished. If they are not so paid
or collected, and the petitioner has not been guilty of negligence in, the
premises, the delivery would amount to nothing. The petitioner having
agreed to take the notes as payment if they were collectible, thereby bound
himself to sue upon them if suit should be necessary for their collection.
An agreement to take notes as payment if they are proved collectible,
implies something more than to take them if they are paid. It is equiva-
lent to an agreement to collect them so far as the same can be done by
the use of ordinary diligence. It is not the proper construction of the
agreement, that the petitioner agreed to take the notes, if, on inquiry, he
should find them collectible, and it ought not to be so interpreted. If the
notes were in fact collectible, they were, from the date of their delivery,
so far payment of the debt. If this conditional payment has in fact
turned out to be no payment, by reason of the notes proving worthless or
uncollectible, notwithstanding the due diligence of the petitioner, he should
produce them at the trial, and surrender them to the debtor. If the
balance that remains, after deducting the amount of the collectible notes,
is less than $250, it will not be sufficient in amount to enable the petitioner
to maintain his petition. In re Ouimette, 3 B. R. 566; s. c. 1 Saw. 47.

When the nature of the petitioner’s demand is fully set forth in the
petition, the question, whether the debt is provable or not, is one of law
and not of fact merely, and the court must decide it. Sigsby v. Willis,
3B. R. 207; s. c. 3 Ben. 371; s. c. 1 L. T. B. 71.

A joint liability upon a bond given by the petitioner and the debtor, and
secured by a mortgage, is not sufficient to support a petition. The joint
obligor can not prove his claim in a case where the principal creditor could
prove, and the creditor could not prove, because he has security upon
the property of his debtor. Nor can the petitioner sustain his petition
upon the ground that he has a contingent debt or a contingent liability.
It can hardly be supposed that it was intended that a petition against
a debtor should be maintained upon the allegation that upon a certain
contingency, which might never happen, the party proceeded against
would become a debtor. The provision that authorizes an application
to the court to have the present value of the debt or liability ascertained,
only authorizes proof of the amount so ascertained, and it is, to say the
least, very doubtful whether, in case of such a joint bond, there is any
provable debt within the meaning of the statute until the amount is
So ascertained. Ibid.

If two firms share in a certain venture, and deposit the proceeds in
bank under the name of one of them, with the word “Co.” added, the .
agreement will not constitute a partnership between the members of the
two firms, nor will a check drawn upon the bank establish that there is
such a copartnership- In re J. H. Warner et al., 7 B. R. 47; s. c. 4 Pac.
L. R. 123.

A participation in the profits is presumptive proof that the participant
is a partner, and sufficient proof in the absence of all other opposing cir-
cumstances. If the alleged dormant partner receives interest on the
276 Tur Bankruptcy Law.

money placed at the disposal of the firm, and a compensation beyond the
usual rate as bookkeeper, the circumstance indicates that the arrange-
ment is either a device to cover up a partnership in the profits or a
usurious loan. As it is not unlawful to be a dormant or secret partner,
and it is to loan money at usurious interest, the law will presume that the
coutingent and extra compensation for keeping the books is a device to
enable the party to share in the profits as partner. In re Francis & Bu-
chanan, 7 B. R. 359; s. c. 2 Saw. 286.

The petitioner may proceed against one partner, even though the debt
proved is a partnership debt. Upon principle as well as authority, a
partnership creditor has such an interest in the property of any one of
the partners that he may proceed against one alone upon proof of his
debt. In re Melick, 4 B. R. 97.

A creditor who has taken the property of a debtor upon legal process
can throw him into bankruptcy for that act. In re C. A. Davidson, 3 B.
R. 418; s. c. 4 Ben. 10; Coxe v. Hale, 8 B. R. 562; s. c. 10 Blatch. 56.

The institution of proceedings at law or in equity does not conclude the
creditor from afterward abandoning such proceedings and coming into
the bankruptcy court at any time before such proceedings have resulted in
a satisfaction of the debt. The issue and levy of an execution does not
take away the right of the creditor to institute proceedings in bank-
ruptcy. In re Daniel Sheehan, 8 B. R. 345.

A judgment will sustain a petition for' an adjudication of bankruptcy,
although a writ of error is pending, and a bond has been filed to stay
execution. Ibid.

If the petitioning creditor has received the debtor’s note well indorsed
in part payment of his account, and has passed it to another, the amount
due is the balance that remains after the credit for the note is given.
Culver v. Calender, 5 Law Rep. 125.

Involuntary proceedings in bankruptcy are not in any sense proceed-
ings merely for the collection or security of the particular debt of the
petitioning creditor. They are for the benefit of all the creditors. The
fact that the petitioning creditor has a provable debt to the requisite
amount is necessary to be shown for two purposes only: 1st. To show
that the alleged debtor occupies that relation; 2d. To show that the
petitioner has the requisite qualifications to commence the proceedings.
Its office is then exhausted, and it has not, and is never given, any other or
further force or effect. The petitioning creditor stands in no better or
more favorable position after adjudication than any other creditor. He
must prove his debt in the course of the bankruptcy proceedings the same
as any other creditor. His debt may be opposed, adjudicated upon,
and allowed, abated or expunged the same as any other debt. In re
Daniel Sheehan, 8 B. R. 345.

A tender in court of the amount due to the petitioner can not defeat
the petition. If the debtor is insolvent, it would not be proper for the
petitioner to accept payment in full at the expense of the other creditors.
But the fact that there are no other creditors to be prejudiced by, and
complain of, the payment, can not be presumed to be within the knowl-
PETITIONER’S DEBT. yard

edge of the petitioner. Before he accepts the tender, he must inquire
concerning it, and he may be mistaken. Besides, no understanding of
the petitioner, or proceedings between him and the debtor upon such
question, could prevent third persons, who might be creditors, from as-
serting their rights as such. In re Williams & Co., 3 B. R. 286; s. «
‘Lowell, 406; s. c. 2 L. T. B. 100; in re Ouimette, 3 B. RB. 566; s. @ 1
Saw. 47.

A debtor who is solvent may pay any or all of his debts although pro-
eeedings in bankruptcy are pending against him. In re Oregon B,
Printing Co., 18 B. R. 503; s. c. 11 Pac. L. R. 2338; s. c. 3 Cent. L. J. 515.

Where a trust in the strict and technical sense exists, cognizable only in
a court of equity, it will not be affected by the statute of limitations. But
an agent who receives money to deposit in a savings bank, but converts it
to his own use, and immediately notifies his principal of the conversion,
is not a trustee in that sense of the term. From the day the principal was
advised of the conversion the claim became a legal debt, enforcible at.
law and not in equity. From that date it was a simple legal demand upon
which the statute cf limitations ran. In re Cornwall, 4 B. R. 400; 5. c 6
B. R. 3035; s. c. 9 Blatch. 114; s. c. 2 L. T. B. 220.

A creditor who has received an unlawful preference in respect to the
debt set forth in the pétition, can not maintain the petition without a
surrender of the preference. In re Peter Rado, 6 Ben. 230.

If the petitioning creditor has received a preference upon his debt, he
can maintain his petition by making a voluntary surrender of such pref-
erence for the benefit of the creditors of the estate. In re Hunt & Hornell,
5 B. R. 433; in re Marcer, 6 B. R. 351; s. c. 29 Iueg. Int. 76.

A petition in involuntary bankruptcy can not be sustained by one whose
claim is barred by the statute of limitations of the State in which the
petition is brought. Cornwall v. Cornwall, 6 B. R. 305; s. c. 6 A. L. Rev.
365.

If it appears at any stage of the trial that the case is not within the
bankruptcy law, the proceedings must be dismissed. If the petitioning
creditor, after the filing of the petition, receives payment sufficient to re-
duce the amount of his debt below $250, he can not prosecute the case any
further. The cost incurred by him in the proceedings can not be added
to his debt to make up the requisite amount. The debtor must owe his
creditor $250, and be guilty of an act of bankruptcy, before the creditor
has any right to make costs for the purpose of having him adjudicated
abankrupt. In re Skelley, 5 B. R. 214; s. c. 3 Biss. 260.

If the principal of the petitioning creditor’s debt is less than $250, but
exceeds that sum if the interest up to the date of the petition is added, the
adjudication will be deemed valid when assailed in a collateral proceeding,
Sloan v. Lewis, 12 B. R. 173; s. c. 68 N. ©. 557; s. c. 22 Wall. 150.

If a creditor was induced to release his claim through the misrepresen-
tation of another creditor, the release is void, and the debt is sufficient,
Michaels v. Post, 12 B. R. 152; s. c. 21 Wall. 398

It is no defense in bankruptcy that the petitioner is the only creditor, or
that he has an adequate remedy at law or in equity in the State or Federal
278 Tue Bankrurtcy Law.

courts. The bankruptcy act protects all creditors, and is additional to
olner remedies where it applies. It is immaterial that the expenses in
bankruptey bear a very large proportion to that part of the petitioner's
debt which remains unsecured. It is not a matter of discretion, but of
strict right, that he shall be permitted to proceed in bankruptcy if he
chooses to do so. In re W. B, Alexander et al., 4 B. R. 178; s. c. Lowell,
470; s.¢c. 2 L. T. B. 238; Ecfort v. Greely, 6 B. R. 488; 5. c. 4 0 L. N,
209.

A creditor who holds security upon the property of a third person has
a provable debi for the full amount against the estate of his debtor.
If the debtor is a surety and pays the debt, he may be entitled to the
penefit of the collateral security. But in bankruptcy it seems more just
and equituble that the creditor should have the benefit of all his remedies,
so that he may obtain his whole debt if possible. If he is obliged to real-
ize his security and prove only for the balance, he will be losing the ad-
vantage for which he has stipulated of the full credit of the promise of
the surety. In re W. B. Alexander et al., 4 B. R. 178; s. c. Lowell, 470;
s.c. 2 L. T. B. 238; Fox v. Eckstein, 4 B. R. 373.

Although the law does not expressly require that the list of creditors
presented by the debtor in denial that the requisite number and amount

_ of creditors have joined in the petition, should be sworn to by him, the
general intent of the act indicates that it should be done. The list of his
creditors is peculiarly within his own knowledge, and the petitioning cred-
itor is entitled to the benefit of a sworn list, so that he may have some
assurance that fictitious claims are not inserted. In re Louis E. Steinman,
10 B. R. 214; s. ce. 6 Biss. 166; in re Hymes, 10 B. R. 483; s. c. 7 Ben. 427;
Barnett v. Hightower, 10 B. R. 157.

Amendment.—It belongs to courts of justice, as the general rule, to
permit amendments of proceedings before them when they have obtained
jurisdiction of the person and of the subject-matter, and it would be
strange if the district court, in the administration of the bankruptcy law,
should be held incompetent to allow such amendments. The exercise of
the power may often be indispensable to the complete attainment of jus-
tice. The rules in bankruptcy made by the supreme court contemplate
the exercise of this power, and are at least evidence that the supreme
court deemed that such amendments might lawfully be allowed. Hardy
v. Binninger, 4 B. R. 262; s. ec. 7 Blatch. 262.

The petition may be amended. Special reasons must be given to obtain
an amendment to a sworn petition, or the pleadings, which are required
to be verified by the oath of the party; and where the object is to introduce
new facts or change essentially the grounds of the prosecution or the de-
fense, the courts are disinclined to allow such amendments, except for
very special reasons, and where they are clearly required in the further-
ance of justice. In re Crowley & Hoblitzell, 1 B. R. 516; sc.1L. T. B. 79;
in re Craft, 1 B. R. 878; 2 B. R. 111; s. c. 2 Ben. 214: s. c. 6 Blatch. 177;
in re Waite & Crocker, 1 B. R. 378; s. c. Lowell, 207 ; in re Haughton, 1
B. R. 460; in re Hill & Van Valkenburgh, 5 Law Rep. 326.

The application for leave to amend should be accompanied by a copy
AMENDMENT. 279°

of the proposed amendments, and notice thereof should be served on the
opposite party. In re Crowley & Hoblitzell, 1 B. R. 516; s.¢c.1L. % B. 79.

It should be shown that the petitioners and their attorneys were not ad-
vised of the facts sought to be added by the amendment at the time the
original petition was prepared, or that they were omitted from inad-
vertence, mistake, or other reason which might excuse such omission, and
that application for leave to amend was made within reasonable time
after the necessity for amendment was discovered. Ibid.

Where an act of bankruptcy is clearly established, and especially where
something more than a mere‘technical violation of the law may be sus-
pected, it is the duty of the court to allow such amendments and further
allegations to be made as may sustain the proceedings. In re A. B. Gal-
linger, 4 B. R. 729; s. @ 1 Saw. 224. ‘

A merely formal amendment, which can not take the debtor by surprise,
may be allowed, when it appears to be due to justice, even at the hearing,
and after all the testimony in the case has been taken. In re Craft, 1 B.
R. 378; 2 B. R. 111: s. c. 2 Ben. 214; s. « 6 Blatch. 177; in re Waite &
Crocker, 1 B. R. 373; s. c. Lowell, 207; in re Haughton, 1 B. R. 460: in re
A. B. Gallinger, + B. R. 729; s. c. 1 Saw. 224.

Amendments which would introduce into the petition entirely new acts
of bankruptcy, founded upon facts not referred to in the petition, and
alleged to have been committed more than six months prior to the applica-
tion for leave to amend, will not be allowed. In re Crowley & Hoblitzell, 1
B. R. 516; s.c. 1 L. T. B. 79; in re Craft, 2 B. R. 111; s. e. 6 Blatch. 177.

An amendment to add a new party will not be allowed after all the
testimony is taken and the case is before the court upon final hearing. In
re Chas. 8. Pitt, 14 B. R. 59.

While it is in the discretion of the court, at any stage of the proceedings,
in furtherance of justice, to permit amendments to be made to pleadings,
it is a discretion properly limited to the same cause of action, not to per-
mit, under the form of amendments, new causes of action to be intro-
duced, thus perverting the power to amend into a power to substitute one
cause of action for another. The petitioning creditor, like a plaintiff,
brings a definite cause of action. and makes allegations accordingly, and
the allegata and probata must correspond at the trial. The defendant ap-
pears to meet the allegations made and no others. If there has been an
informal or imperfect statement, the court can permit the needed correc-
tions to be made on such terms as justice demands, but it would be an
unjust and unjustifiable action on its part to convert, under the name of
an amendment, one cause of action into another, entirely distinct, and call-
ing for different proofs and for different proceedings. In re Leonard, 4 B.
R. 563; s.c. 2 L. T. B. 177.

If the allegation in regard to the joining of the requisite proportion of
the creditors in the petition is defective, it may be amended. In re James.
A. McKibben, 12 B. R. 97; in re Joseph S. Hadley, 12 B. R. 366; in re
Morris, 11 B. hk. 448.

The petition ought to make a complete case for adjudication, and defects
in it can not be supplied by affidavits. In re James A. McKibben, 12 B.
R. 97.
280 Tur Bankruptcy Law.

An amendment relates back to the commencement of the proceedings in
bankruptcy, and gives effect to the action of the court upon an imperfect
petition. In re Williams & McPheeters, 11 B. R. 145; s. c. 6 Biss. 2338,

When an amendment introduces new matter, it should be met by an
answer. Hardy v. Binninger, 4 B. R. 262; s. c. 7 Blatch. 262.

An objection may be taken to a defect in an amended petition, although
it might have been made to the original petition, but was not. In re West-
ern §. & T. Co., 138 Pac. L. R. 66.

In an action for fraud, in receiving money after the filing of an involun-
tary petition, an allegation that it was recetved in good faith under an
expectation of effecting a compromise with all the creditors, is a good de-
fense. Van Alstyne v. Crane, 4 N. Y. Supr. 113. .

Limitation.— The six months’ limitation provided for in this clause ap-
plies solely to the time within which the petition for adjudication of bank-
ruptcy must be filed, and not to the time within which a preference may
be attacked. In re Tonkin & Trewartha, 4 B. R. 52;s.¢c.1L. T. B. 2323s.
c.3 L. T. B. 221; Collins v. Gray, 4 B. R. 631; s. c. 8 Blatch. 483.

In the absence.of any evidence to the contrary, it will be presumed that
the date of an instrument was the time of its execution and delivery. The
six months will only begin to run from ‘the time of the actual execution
and delivery of the deed. In re Rooney, 6 B. R. 163.

If a deed is not recorded within the period allowed by the State laws
for the registration of deeds, the time will run from its recording and
not from the time of its delivery. Thornhill v. Link, 8 B. R. 521.

What Preferences are Void.—(m) The prohibition contained in this
clause applies equally to section 5128 and section 5021. It probably would
not have been inserted if sections 5128 and 5021 had covered no other
class of cases than preferences. They do, however, provide for recovery 1D
other cases than those of preference merely, such as payments, sales,
etc., with a view to prevent the debtor’s property from coming to his
assignee, etc.; and money, goods, etc., obtained by a creditor as an induce-
ment to forbear opposition to the bankrupt’s discharge; and assignments,
gifts, etc., with intent to delay, defraud, or hinder creditors. This express
prohibition was inserted in order to prescribe one general rule, applicable
alike to all cases of recovery of money or other property paid, conveyed,
‘ete., to creditors contrary to the bankruptcy act. In re Tonkin & Tre-
wartha, 4 B. R. 52;s.c.1L. T. B. 232; 5. ¢ 3 L. T. B. 221; in re Thos. C.
Evans, 3 B. R. 261; Bingham v. Richmond,6 B. R. 127; Bingham v. Frost,
6 B. R. 180.

This section is a very long one, and recites all the acts which subject
a person to involuntary bankruptcy, and that is its main purpose. Among
the acts which constitute a man a bankrupt, are those of giving pref-
erence to creditors in contemplation of bankruptcy. And it is in the con-
clusion of this section declared in general terms that if the debtor shall
subsequently be declared a bankrupt, his assignee may recover the money
or other property which was the subject of the act of bankruptcy. But
uhe general declaration of the right of the assignee to recover is not in-
consistent with the limitation of the right in another section in cases
accruing within six and four months of the commencement of proceed-

4
PREFERENCES VOID. 281

ings in bankruptcy. Sections 5021 and 5128 having, for the first time,
set up a rule by which certain payments and transfers of property shall
be declared void —a rule at variance with the common law and with the
statutes of the several States— very properly limit and define the circum-
stances within which this new rule shall operate. These are, among’
others: that the recipients of the bankrupt’s property must have had rea-
sonable cause to believe he was insolvent, and that the transaction must
have been recent; when the bankruptcy law is applied to the case of a
creditor, within four montis, and, with the general purchaser, within
six months. Bean v. Brooknire, 4 B. R. 196; s. c. 1 Dillon, 24; Hubbard
vy. Allaire Works, 4 B. R. 623; s. ¢. g Blatch. 284; Collins v. Gray, 4 B. R.
631; s. c. 8 Blatch. 483.

This amendment does not apply to suits brought to recover preferences
before December 1, 1878. Hamlin v. Pettibone, 10 B. R. 172; s. c. 6 Biss.
167; Van Dyke v. Tinker, 11 B. R. 308; in re Simeon Leland, 7 Ben. 436.

The penalty upon a creditor provided for by this clause is enforcible
against him only in case he compels the assignee to resort to legal pro-
ceedings to recover back the property transferred in violation of the act,
and in case such proceedings are successful. The provisions of section
5084 must be construed, in connection with this clause, in such’ a manner
that, if possible, both may stand. A creditor who claims to retain the
property, makes himself conclusively a party to the fraud against the,
act, by resisting the claim of the assignee to recover the property in case
the assignee is successful; but where the creditor avails himself of the
locus poenitentiae given to him by section 5084, and voluntarily surren-
ders the property to the assignee, he ceases to be a party to the fraud,
and may prove his debt in bankruptcy and receive dividends on it. In re
C. A. Davidson, 3 B. R. 418; s. c. 4 Ben.’ 10; in re H. B. Montgomery, 8
B. R. 187; s. e. 3 Ben. 565; in re Scott & McCarty, 4 B. R. 414; in re Prince-
ton, 1 B. R. 618; s. c. 2 Biss. 116; s. c. 1 L. T. B. 125; in re J. J. & C. W.
Walton, 4 B. R. 467; s. c. 1 Deady, 598; s. c. 1 L. T. B. 162; in re Colman,
2B. R. 563.

A creditor who, after suit has been brought against him by the assignee,

and before trial, voluntarily releases his preference and surrenders it to
the assignee, can not prove his debt. Phelps v. Stern, 4 B. R. 34.
, if a mortgage is given to a creditor without his knowledge, or if a
creditor upon receipt of such knowledge repudiates it, the prohibition is
not to be enforced against him. In re Princeton, 1 B. R. 618; s. c. 2 Biss.
115; s.¢c.1L. T. B. 125. ,

But when the creditor does nothing in disaffirmance of the preference
after he has been informed of it, he makes himself liable to the penalty.
In re Colman, 2 B. R. 563.

Sections 5084 and 5021 are reconcilable by confining the latter to actual
frauds as contradistinguished from constructive frauds. Babbitt v.
Walbrun & Co., ‘4 B. R. 121; s. ¢. 1 Dillon, 19.

This clause only refers to the debt. sought to be preferred, and not to
other debts in respect to which no preference was attempted to be given.
A preferred creditor who has other claims that were not preferred should
be allowed to prove them. In re Arnold, 2 B. R. 160.
282 Tue Banxruptcy Law.

In cases of actual fraud, a preferred creditor can not prove for a moiety
of his debt until he has surrendered his preference. In re Cramer, 13 B. R.
225; s. ec. 8 C. L. N. 106; in re J. Schoenenberger, 15 B. R. 305.

The provision which prevents a creditor in case of actual fraud from
proving more than a moiety of his debt, only applies when there has been
a recovery. In re John Riorden, 14 B. R. 332; s. c. 51 How. Pr. 271.

A mere fraud on the bankruptcy law by accepting a preference in viola-
tion of its provisions is not an actual fraud. Ibid.

Acts or 1867 and 1874, § 5022. Any act of bankruptcy committed
since the second day of March, erghteen hundred and sixty-seven,
may be the foundation of an adjudication of involuntary bankruptcy,
upon a petition filed within the time prescribed by law, equally with
one committed hereafter.

§ 5023. [This section is repealed by act of June 22, 1874, ch. 390,
§ 12, 18 Stat. 180.]

Acts oF 1867 and 1874, § 5024. Upon the filing of the petition
authorized by the preceding section, if it appears that sufficient (a)
grounds exist therefor, the court shall direct the entry of an order
requiring the debtor to appear and show cause, at a court of bank-
ruptcy to be holden at a time to be specified in the order, not less
than five days from the service thereof, why the prayer of the petition
should not be granted. The court may also by injunction, (b) re-
strain the debtor, and any other person, in the meantime, from
making any transfer or disposition of any part of the debtor’s prop-
erty, not excepted by this Title, from the operation thereof, and
from any interference therewith; and if it shall appear that there
is probable cause for believing that the debtor is about to leave the
district, or to remove or conceal his goods and chattels or his evi-
dence of property, or to make any fraudulent conveyance or disposi-
tion thereof, the court may issue a warrant (c) to the marshal of
the district, commanding him to arrest and safely keep the alleged”
debtor, unless he shall give bail to the satisfaction of the court for
his appearance from time to time as required by the court, until
its decision upon the petition, or until its further order, and forth-
with to take possession provisionally of all the property and effects
of the debtor, and safely keep the same until the further order of
the court.

Statute revised — March 2, 1867, ch. 176, § 40, 14 Stat. 536.

Sufficient Grounds.— (a) The commencement of the proceedings is the
filing of the petition, and no valid order can be made until the proceedings
are commenced. Ala. & Chat. R. R. Co. v. Jones, 7 B. R. 145.
INJUNCTION, 283

A prima facie case must be established by the proofs offered to sustain
the allegation of the petition. It would otherwise be abhorrent to the
sense of justice and right that the very stringent proceedings connected
with the creditor's petition should be admissible, viz: seizure of the debt-
or’s property, injunction, and arrest. If there is not proof sufficient to
make it appear that the acts of bankruptcy charged have been committed,
no order on the defendant to show cause can be granted, and the petition
falls. If such proof is made, allegata and probata corresponding, and the
order to show cause is entered, then, under proper proofs, the court may
even grant warrants of arrest and seizure, and issue injunctions. All of
the subsequent proceedings are based on the initial proofs that “ sufficient
grounds ” exist; that is, that prima facie the defendant has committed the
act of bankruptcy. In re Leonard, + B. R. 563; s. c. 2 L. T. B. 177; in re
Price & Miller, 8 B. R. 514.

An order to show cause issued upon a petition unsupported by any proof
of the act of bankruptcy or of the creditor’s claim is void and of no effect.
In re Davis Rogers, 10 B. R. 444; s. ec. 1 Cent. L. J. 470.

The debtor, from and after the commencement of proceedings in bank-
ruptcy against him, is by the act denominated or called a bankrupt, and is
subject to the orders of the court in all matters relating to his bankruptcy.
In re Bromley & Co., 3 B. BR. 686.

Injunction.— (b) The averments in the petition for an injunction should
be positive, and not on information and belief merely. When the affidavits
filed upon & motion to dissolve an injunction do not sustain the allegations
of the petition, but disclose the existence of another ground for an injunc-.
tion, the petition may be amended so as to cover that ground. Nothing
would be gained by dissolving the injunction, and then reissuing upon
the same state of facts. In re Bloss, 4 B. R. 147;s.c.2L. T. B. 126.

An injunction can not be granted on a summary petition against a party
who claims adversely to the proceedings under a conveyance from the
bankrupt, although the conveyance may be void under the bankruptcy law.
In re Charles J. Marter, 12 B. R. 185.

The bill need not be verified by the oath of the creditor himself, but will
be sufficient if verified by the oath of his agent or attorney. In re Fendley,.
10 B. R. 250; s. ec. 1 Cent. L. J. 433.

A trustee claiming under an assignment for the benefit of creditors, may
be enjoined from disposing of the property. In re Jacob Skoll, 24 Pitts. L.
J. 207; s. ce. 9.C. L. N. 377.

An injunction may be issued without notice. The court, however, may
require notice to be given to the adverse party, and even that the applicant
shall give security for damages, whenever it thinks that the ends of justice
or the security of parties require it. In re Muller & Brentano, 3 B. R.
329; 8. c. 1 Deady, 513; s. c. 2 L. T. B. 88; Irving v. Hughes, 2 B. R. 62;
8c. 7 A. L. Reg. 209; s. c. 6 Phila, 451.

“Other person” has reference to parties interfering with the property
of an individual not yet adjudicated an involuntary bankrupt, and which
is to be preserved inviolate until his bankruptcy has been legally ascer-
tained. In re Campbell, 1B. R. 165; 5. c. 1 Abb. C. C. 185;5.c.1 L. T. B.
284 Tue Bankruptcy Law.

30; s. c. 6 Phila. 445; Irving v. Hughes, 2 B. R. 62; s. c. 7 A. L. Reg. 209;
s. c. 6 Phila, 451.

When a petition for an injunction is presented at the same time with
the petition for an adjudication of bankruptcy, the court may look to the
facts set forth in the former petition to ascertain whether the requisite
proportion of the creditors have joined in it. In re California Pacific R. R,
Co., 11 B. BR. 193; s. ¢. 3 Saw. 240.

When the injunction is sought by a bill in equity, the respondent can
not, craving oyer of the petition in bankruptcy, demur to the bill on the
ground that the petition does not set up any act of bankruptcy, for the
demurrer only goes to the sufficiency of the bill, and can not raise any
question as to the sufficiency of the petition. Blackburn vy. Stannard,
5 Law Rep. 250.

A bill for an injunction against third parties who have accepted of
a transfer from the debtor, should allege some danger either threatened
or imminent to the property. Ibid.

A bill for an injunction should contain a description of the property.
A mere allegation that it is personal estate is not sufficient. Ibid.

An injunction may be in the form of an order addressed to the debtor
and all other persons who may attempt to transfer or interfere with his
‘property. The fact that such other persons are not named in the order
makes no substantial difference, for it plainly apprises them of what
they are restrained from doing. Any distinction between a writ of in-
junction and an order in the nature of one is disregarded in practice.
In re Lady Bryan Mining Co., 6 B. R. 252.

The injunction is temporary only, and is intended to restrain the dis-
position of the goods and property of the debtor until an adjudication
can be had, and an assignee appointed to take charge of the assets for the
benefit of the creditors. Creditors v. Cozzens, 3 B. R. 281; s. « 2 W. J.
349; s. c. 16 Pitts. L. J. 236; Irving v. Hughes, 2 B. R. 62;s. ¢ 7 A. Le
Reg. 209; s. c. 6 Phila. 451; in re R. & L. Calender, 5 Law Rep. 129; in re
Metzler et al., 1 B. R. 38; s. c 1 Ben. 356; in re Kintzing, 3 B. R. 217.

The injunction granted under this section continues untii vacated by
order of the court, although the debtor is adjudicated a bankrupt. In re
Fendley, 10 B. R. 250; s. c. 1 Cent. L. J. 433.

When an injunction is asked for, at the commencement of the proceed-
ings, against any person other than the debtor, a separate petition should
be flied, so that the proceedings upon the injunction need not be compli-
cated with those praying the adjudication of bankruptcy. Irving w
Hughes, 2 B. R. 62; s.c. 7 A. L. Reg. 209; s. ce. 6 Phila. 451; Creditors v.
Cozzens, 3 B. R. 281; s. c. 2 W. J. 349; s. c. 16 Pitts. L. J. 286.

It is immaterial whether the order to show cause is in proper form or
not. The jurisdiction of the court to issue an injunction against persons
other than the debtor, or to issue a provisional warrant te take possession
of the debtor’s goods, is not dependent upon the service on the debtor of
a proper order to show cause. In re Muller & Brentano, 3 B. R. 329; 5. ¢
1 Deady, 513; 8 C 2L. T. B. 38.
INJUNCTION. 285

Quaere, Will the injunction allowed by this section extend to a case of
voluntary bankruptcy, or protect what may be a mere right of action in
the assignee to recover the proceeds of property which has been sold under
a judgment rendered in a State court? In re Price Fuller, + B. R. 115; s. c.
1 Saw. 243.

If the petitioner shows a covinous contrivance between the bankrupt and
other parties to embezzle the estate for the benefit of the bankrupt or his
preferred creditors, the district court will award an injunction restraining
them from disposing of the property. In re John Harper Smith, 1 N. Y.
Leg. Obs. 249.

The district court, before awarding an injunction against parties other
than the bankrupt, may require security to an amount adequate to cover
all probable losses. Ibid.

The distriet court will not allow an injunction against a trustee claiming
under an assignment, merely on the apprehension of a creditor that the
property may be dissipated or put out of the trustee. The court will inter-
fere with this high process only in case of actual and imminent danger to
the property of the bankrupt, and not as a mere preventive against its
possible waste or misapplication. In re John Nightingale, 1 N. Y. Leg.
Obs. 8.

When the grounds set forth in the motion for a dissolution of an injunc-
tion go to the merits of the case, and the debtor has denied the acts of
bankruptcy, and prayed a jury trial, the court will not grant the dissolu-
tion, and thus on affidavits dispose of what are really all the issues in-
volved in the proceedings. In re Metzler et al., 1 B. R. 38; s. c. 1 Ben. 356.

When a creditor seeks to dissolve an injunction issued against him to
prevent a preference, bis petition must negative the circumstances which
would, under section 5128, make the transfer void. In re Binns, 4 Ben.
152,

Upon the hearing of a motion to dissolve an injunction, affidavits for
the party making it, and counter affidavits for those resisting it, may be
read. In re Bloss, 4 B. R. 147; s. c. 2 L. T. B. 126.

A claimant of property seized under the provisional warrant can not urge
aS grounds for dissolving the injunction, that the order to show cause is
irregular, or that the petition does not show at what time the act of
bankruptcy was committed, or that there is no positive charge of an act
of bankruptcy, or that the proof of debt does not show that the debt ex-
isted at the time the act of bankruptcy was committed. Nor will the
court, on a motion for dissolution, decide the question of title to the prop-
erty. In re Muller & Brentano, 3 B. R. 329; s. c. 1 Deady, 513; s. ¢. 2 L. T.
B. 33.

When the prima facie case made out by the petition is not rebutted, the
injunction can not be dissolved. In re Dean & Garrett, 2 B. R. 89.

There is no party to a creditor’s petition except the petitioning creditor
and the bankrupt. The service of an injunction upon a person does not
make him a party to the proceedings. He may have a wrongful injunc-
tion dissolved, but he has no right to contest or vacate an adjudication.
That is a matter in which he can have no interest. A party who seeks
286 THE Banxruptoy Law.

to annul an adjudication, must show some priority of interest in the prop-
erty of the debtor. Carr v. Whitaker, 5 B. R. 123.

a party, not the debtor, can not be punished for contempt in violating
an injunction issued in accordance with the prayer contained in the peti-
tion in involuntary bankruptcy against the debtor, unless separate or dis-
tinct proceedings are instituted against him for that purpose. Creditors
v. Cozzens & Hall, 3 B. R. 281; s. c. 2 W. J. 349; s. c. 16 Pitts. L. J. 236.

A party is liable for breach of an injunction after notice of its having
been obtained, although the order has not been served upon him. All that
is required is that the defendant should have knowledge of the order for
the injunction, and the court may punish the violation of the order,
though the injunction be not served, if it appear that the defendant
knew of its existence. The belief that the order has been made and con-
cealment to avoid service are sufficient. The right to indemnity for the
damages occasioned by a breach of the injunction can not be in any way
affected by the fact that the defendant acted under the advice of counsel.
The fine should be equal in amount to the actual loss and expenses oc-
casioned by his misconduct. In re Feeny, 4 B. R. 233; s. c. 2 L. T. B.
182.

The restraining power of the court is limited in point of time to the
period of time expressed by the words “in the meantime,’ and those
relate manifestly to the period of time between the entering of the order
to show cause and the time specified therein for the hearing. The most
extended construction that can be given to these words is that they are
intended to cover the whole period up to such time as a hearing and ad-
judication shall be had upon the petition for an adjudication in bank-
ruptcy. There is no warrant whatever for extending their meaning
beyond that. Acts which are done after the restraining power of the
injunction has ceased to operate do not make the parties liable for a
contempt. In re Moses, 6 B. R. 181; in re Mary Irving et al. 14 B. R.
289.

If thé contempt committed by the bankrupt in collecting money from
his debtors is not of a willful character, it may be purged by turning
everything over to the assignee, and will not then be visited by punish-
ment, either personal or pecuniary. In re J. P. Hayden, 7 B. R. 192.

Provisional Warrant.— (c) The application for a provisional warrant
should be made by a separate petition, supported by affidavits of persons
having knowledge of the facts. A provisional warrant should not issue,
except where all material facts are stated upon personal knowledge. In
re James A. McKibben, 12 B. R. 97; in re Joseph S. Hadley, 12 B. R.
366.

The facts in support of a provisional warrant should be set forth in
separate depositions. In re Joseph S. Hadley, 12 B. R. 366.

A recital, in the order allowing the warrant, giving the date of the
bankruptcy act incorrectly —1868 for 1867—is an immaterial mistake,
and in no way affects the legality of the order. The recital of the title
of the bankruptcy act in any proceeding is mere matter of form. The
court takes judicial notice of the acts of Congress, and they need not be
PROVISIONAL WARRANT. 287

set forth or specially referred to in any proceedings before it. In re \Mul-
ler & Brentano, 3 B. R. 329; s. « 1 Deady, 513; s. ¢. 2 L. T. B. 33,

The order need not require the arrest of the debtor; the warrant may
issue against the person and goods, or either of them. When the warrant
is for the seizure of both the person and goods, it may be executed against
both or either, as the petitioning creditors may direct. Ibid.

It is the duty of the marshal to take possession of “all the property
and effects” of the debtor, in whosesoever hands he may find them.
This is a question of fact for the officer to determine for himself. If, by
mistake or otherwise, he takes the goods of another, he is liable to the
party injured on his official bond. The court must presume that the
marshal obeys the writ and seizes nothing but the debtor's property.
In re Muller & Brentano, 3 B. R. 329; s. c. 1 Deady, 5138; 5s. a 2 L. T. B.
33; in re Marks, 2 B. R. 575; s.c. 1 C. L. N. 245; s. ec. 16 Pitts. L. J. 12.

If the marshal, in the execution of the warrant, takes property be-
longing not to the bankrupt, but to another person, he is as much a wrong-
doer as if acting in a private capacity, and the act differs not in its nature
from any other trespass. Marsh y. Armstrong, 11 B. R. 125; s. c. 20 Minn.
81.

If the marshal under a provisional warrant seizes property which has
been transferred in violation of the bankruptcy law, he is not liable to the
transferee. Stevenson v. McLaren, 14 B. R. 408; s. c. 3 Cent. L. J. 478.

An attorney who directs the marshal to take goods under a warrant is
not liable for trespass unless the direction in some degree wrought injury
to the owner, or was in some degree the cause of such injury. Rice v.
Melendy, 41 Iowa, 395.

If the preferred creditor was a witness in the proceedings to put the
debtor into bankruptcy, he may be enjoined from prosecuting a suit subse-
quently instituted in a State court against the marshal for trespass in
taking the property under the warrant. In reS. §. Miller, 6 Biss. 30.

The marshal, under the warrant, may hold possession of the property
claimed by other persons when once in his possession, and may take pos-
session of property not in the possession of the bankrupt, whether indemni-
fied or not. If indemnified, it is made his duty to retain possession in the
one case, and to take possession in the other, and he would be liable if he
did not. If not indemnified, he is merely released from liability if he does
not do it. His authority is derived from the warrant, and is as complete
in the one case as in the other. With indemnity he is bound to exercise his
authority; without it he may exercise it or not, at his option. He may
take property from the possession of any person claiming to be a purchaser
of the same. In re Briggs, 3 B. R. 688; s. c. 2 C0. L. N. 218.

Property which does not belong to the debtor can not be taken under a
provisional warrant, although the transfer may be void under the bank-
ruptcy law. In re Geo. B. Holland, Jr., 12 B. R. 403; in re Harthill, 4 B. R.
392; s. c. 4 Ben. 448; s.¢c.2L. T. B. 181.

The court can not order the seizure of any property under a provisional
warrant, except such as belongs to and is in the possession of the debtor.
In re Geo. B. Holland; Jr., 12 B. R. 403.
288 Tur Bankruptcy Law.

The district court will not order a summary sale of property forcibly
taken by the marshal, under the warrant, from the possession of a receiver
appointed in a proceeding supplementary to an execution. In re William
W. Hulst, 7 Ben. 17.

If the property of another is taken under the warrant, he may come
into court promptly by petition, and ask to have the warrant set aside.
The marshal’s possession of the property having been taken under a war-
rant which was improperly issued against it, the property must be released
from the marshal’s possession, and must revert to the possession of the
owner, and, if it has been sold, the proceeds must take the same course.
The assignee must be left to take such affirmative proceedings against him
in respect to the property as may be proper. Such proceedings must he
taken by a pleading, making proper averments, and calling for an answer
on which an issue raised can be tried, leading to a determination which
the aggrieved party can have reviewed. The proceeds of property seized
by the marshal improperly under the warrant, are not in court rightfully
nor as belonging to the estate of the bankupt, and can not be awarded
according to the merits of the case between the creditors and the claim-
ant. The bona fides of the purchase can not be tried upon such petition
for restoration. In re Harthill, 4 B. R. 392; s. c. 4 Ben. 448; s. c. 2 L. T. B.
181; Doyle v. Sharp, 41 N. Y. Supr. 312.

The jurisdiction of the district court is not broad enough to authorize
the marshal simply upon a provisional warrant to take from the possession
of the sheriff property held by virtue of a levy of the final process of exe-
cution issued by a State court, and levied before the commencement of pro-
ceedings in bankruptcy. Mollison v. Eaton, 16 Minn. 426.

The exercise of the power to issue a provisional warrant to take posses-
sion of the debtor’s property is one of great delicacy, and should net be
called into action unless the court is Satisfied that it is necessary for the
protection of the property, and that it will inure to the benefit of the cred-
itors. It is discretionary, but it is a legal discretion. The court must be
satisfied that the disposition of the property is fraudulent, with the design
to remove the same to the prejudice of the general creditors, and to defeat
the provisions of the bankruptcy law. The removal of the goods of the
debtor in the performance of an existing contract is not fraudulent. It is
but the exercise of his legitimate right in carrying on his business, when
for all the goods shipped he receives an equivalent in bills of exchange or
money. Under such circumstances a provisional warrant will not be
issued. Bank v. Iron Co., 5 B. R. 491; s.¢c.3 C. L. N. 402;s.c1L. TB.
272: s. ¢. 8 Phila. 171; s. c. 19 Pitts, lL. J. 5.

The arrest of the debtor is in no manner for security or satisfaction of
the petitioning creditor's debt. It is simply to secure the attendance of
the debtor from time to time, as the court shall order, until the decision of
the court on the petition or the further order of the court, and it is to that
purpose and no other that bail is required of him. In re Daniel Sheehan,
8B. R. 345.

The arrest of the debtor does not conflict with, and is not an evasion of
the restriction against suing out execution for the satisfaction of the pe-
WuHo May FILE ano Dismiss Petrrions. 289

titioning creditor’s judgment, where a writ of error is pending thereon,
and a bond has been duly filed.. Ibid. |

If there are no other creditors, the execution of the provisional warrant
may be stayed, if executicn upon the judgment debt of the petitioning
creditor has been stayed by suing out a writ of error and filing a bond.
Ibid.

The second alternative clearly relates to a time within and not beyond
that of the first, and appears to have been inserted in the statute with the
object of allowing the debtor to be discharged, at the discretion of the
court, before the adjudication of bankruptcy, not of keeping him in custody
or attendance after that adjudication and during the pendency of the pro-
ceedings in bankruptcy. When the debter has attended the court at the
time of the order adjudging him a bankrupt, he has fulfilled the whole obli-
gation imposed upon him by the statute. The obligation can not be ex-
tended or enlarged by the court, by substituting “and” for “or” in its
order and warrant. Usher vy. Pease, 12 B. R. 305; s. c. 116 Mass. 440.

An arrest can not be made under the warrant after the adjudication of
bankruptcy. Ibid.

Bankruptcy court has full equitable powers over a proceeding in bank-
ruptey, and where it clearly appears to have been instituted for other
purposes foreign to the legitimate objects of the act, it will be summarily
dismissed. In re Hamlin, Hale & Co., 16 B. R. 522.

An objection to a defect in an amended petition may be taken irre-
spective of the fact that former petition was open to the same objection,
and such objection was not then raised. In re The Western Savings &
Trust Co., 17 B. R. 413. :

Act or 1898, Cu. 6, * * * § 59. Who May File and Dis-
miss Petitions— (a) Any qualified person may file a petition to
be adjudged a voluntary bankrupt.

(b) Three or more creditors who have provable claims against any
person which amount in the aggregate, in excess of the value of
securities held by them, if any, to five hundred dollars or over; or
if all of the creditors of such person are less than twelve in number,
then one of such creditors whose claim equals such amount may file
a petition to have him adjudged a bankrupt.

' “(c) Petitions shall be filed in duplicate, one eaBy for the clerk and
one for service on the bankrupt.

(d) If it be averred in the petition that the ee of the bank-
tupt are less than twelve in number, and less than three creditors
have joined as petitioners therein, and the answer avers the existence
of a larger number of creditors, there shall be filed with the answer
a list under oath of all the creditors, with their addresses, and there-
upon the court shall cause all such creditors to be notified of the

19
290 THe Bankruptcy Law.

pendency of such petition and shall delay the hearing upon such
petition for a reasonable time, to the end that parties in interest
shall have an opportunity to be heard; if upon such hearing it shall
appear that a sufficient number have joined in such petition, or if
prior to or during such hearing a sufficient number shall join therein,
the case may be proceeded with, but otherwise it shall be dismissed.

(e) In computing the number of creditors of a bankrupt for the
purpose of determining how many creditors must join in the petition,
such creditors as were employed by him at the time of the filing of
the petition or are related to him by consanguinity or affinity within
the third degree, as determined by the common law, and have not
joined in the petition, shall not be counted.

(f) Creditors other than original petitioners may at any time enter
their appedrance and join in the petition, or file an answer and be
heard in opposition to the prayer of the petition.

(g) A voluntary or involuntary petition shall not be dismissed by
the petitioner or petitioners or for want of prosecution or by consent
of parties until after notice to the creditors.

Act oF 1898, Cu. 4, * * * § 18. Process, Pleadings, and
Adjudications.— (a) Upon the filing of a petition for involuntary
bankruptcy, service thereof, with a writ of subpoena, shall be made
upon the person therein named as defendant in the same manner
that service of such process is now had upon the commencement of
a suit in equity in the courts of the United States, except that it
shall be returnable within fifteen days, unless the judge shall for
cause fix a longer time; but in case personal service can not be made,
then notice shall be given by publication in the same manner and for
the same time as provided by law for notice by publication in suits
in equity in courts of the United States.

(b) The bankrupt, or any creditor, may appear and plead to the
petition within ten days after the return day, or within such further
time as the court may allow.

(c) All pleadings setting up matters of fact shall be verified under
oath.

(d) If the bankrupt, or any of his creditors, shall appear, within
the time limited, and controvert the facts alleged in the petition, -
the judge shall determine, as soon as may be, the issues presented
by the pleadings, without the intervention of a jury, except in cases
where a jury trial is given by this Act, and makes [sic] the adjudi-
cation or dismiss the petition.
TimE — TRANSFER OF CASES. 291

(e) If on the last day within which pleadings may be filed none
are filed ‘by the bankrupt or any of his creditors, the judge shall
on the next day, if present, or as soon thereafter as practicable, .make
the adjudication or dismiss the petition.

(f) If the judge is absent from the district, or the division of the
district in which the petition is pending, on the next day after the
last day on which pleadings may be filed, and none have been filed
by the bankrupt or any of his creditors, the clerk shall forthwith
refer the case to the referee.

(g) Upon the filing of a voluntary petition the judge shall hear
the petition and make the adjudication or dismiss the petition. If
the judge is absent from the district, or the division of the district
in which the petition is filed at the time of the filing, the clerk shall
forthwith refer the case to the referee.

Act or 1898, Cu. 4, * * * § 31, Computation of Time —
(a) Whenever time is enumerated by days in this Act, or in any
proceeding in bankruptcy, the number of days shall be computed
by excluding the first and including the last, unless the last. fall on
a Sunday or holiday, in which event the day last included shall be
the next day thereafter which is not a Sunday or a legal holiday.

§ 32. Transfer of Cases.—(a) In the event petitions are filed
against the same person, or against different members of a partner-
ship, in different courts of bankruptcy each of which has jurisdiction,
the cases shall be transferred, by order of the courts relinquishing
Jurisdiction, to and be consolidated by the one of such courts which
can proceed with the same for the greatest convenience of parties in
interest.

Act or 1867, § 5025. A copy of the petition and order to show
cause shall be served on the debtor by delivering the same to him
personally, or leaving the same at his last or usual place of abode;
or, if the debtor can not be found, and his place of residence can
not be ascertained, service shall be made by publication in such man-
ner as the judge may direct. No further proceedings, unless the
debtor appears and consents thereto, shall be had until proof has been
given, to the satisfaction of the court, of such service or publication;
and if such proof is not given on the return day of such order, the
proceedings shall ‘be adjourned, and an order made that the notice
be forthwith so served or published. 1And if, on return day of

 

1 So amended by act of June 22, 1874, ch. 390, § 18, 18 Stat. 182.
292 Tur Bankruptcy Law.

the order to show cause as aforesaid, the court shall be satisfied that
the requirement of section five thousand and twenty-one [thirty-nine |
of said act, as to the number and amount of petitioning creditors,
has been complied with, or if within the time provided for in section
five thousand and twenty-one [thirty-nine] of this act, creditors
sufficient in number and amount shall sign such petition so as to
make a total of one-fourth in number of the creditors, and one-third
in the amount of the provable debts against the bankrupt, as provided
in said section, the court shall so adjudge, which judgment shall be
final; otherwise it shall dismiss the proceedings, and, in cases here-
after commenced, with costs.

Statute revised — March 2, 1867, ch. 176, § 40, 14 Stat. 536. Prior Stat-
ute — April 4, 1800, ch. 19, § 8, 2 Stat. 22.

Service of Process and Further Proceedings.— Where a corporation
has been dissolved by means of an order passed by a State court, in an
action instituted by the State attorney-general, the case is one where
the debtor proceeded against can not be found, on account of the dissolu-
tion, and the service of the order to show cause should be made by pub-
lication. In re Washington Marine Ins. Co., 2 B. R. 648; s. c. 2 Ben.
292.

Service is to be deemed to be made personally on a corporation when it
is effected in the only mode in which service can be made on such arti-
ficial persons, viz: by delivering the order to its head or principal officers.
The “usual place of abode” in regard to corporations means their prin-
cipal place of business. In re California Pacific R. R. Co., 11 B. R. 193;
s. c. 3 Saw. ‘240.

A service of the order to show cause upon a corporation is sufficient,
if it would be valid and effectual if made in a suit at common law in the
circuit court. Ibid.

When the order directs that a copy of the petition and order shall be
served upon the president of a corporation, if the president can not be
found, a new order may be issued, upon the -filing of an affidavit setting
forth such absence, directing the service to be made on the cashier, and
such service will be valid. Platt v. Archer, 6 B. R. 465; s. ¢. 9 Blatch.
559.

The words “if such debtor can not be found” mean if he can not be
found within the jurisdiction of the court. The marshal is not compelled
to serve him in another jurisdiction, even when he knows precisely where
he may be found. The words “not found” have a well-settled technical
meaning, and mean not found in the jurisdiction of the court. If the
debtor can not be found within the jurisdiction of the court, that does
not authorize service out of the jurisdiction. In such case other modes
of service must be resorted to. A corporation can have no legal exist-
ence out of the bounds of the sovereignty by which ft was created. It
must dwell in the place of its creation. Service upon an officer of the cor-
PROCEEDINGS — REQUISITE NUMBER. 293

poration out of the district and State, or service at the supposed residence
of the corporation, also out of the district and State, is defective and in-
valid. The fact that the corporation is also chartered by several States
does not make it one corporate body on which service can be made at
its residence in any one of those States. If the place of the debtor’s
residence can not be ascertained, as if there is no office of the corpora-
tion within the district, and no person representing the corporation, on
whom service can properly be made, can be found in the district, then
service by publication may and should be resorted to. Ala. & Chat.
R. R. Co. v. Jones, 5 B. R. 97; Stuart v. Aumueller, 8 B. R. 541.

The act is entirely silent as to the place of service. The mode only is
designated. The act authorizes service by publication only when the
party to be served can not be found or his place of residence ascertained.
When the debtor is found, personal service may be made upon him out
of the district. Stuart v. Hines, 6 B. R. 416; s. c. 33 Iowa, 60; s.c 5 L.
T. B. 46.

The act nowhere provides by whom a personal service shall be made.
The fact that the act makes special provision for the service of certain
processes by the marshal; and remains entirely silent as to the person by
whom the order to show cause shall be served, is a strong argument
against the position that such order can be served. by the marshal only.
Expressio unius est exclusio alterius. The order to show cause is. not
directed to the marshal, but to the debtor, and may be served by the mar-
shal or any other person. Ibid.

The prohibition of ‘“‘further proceedings” is intended of proceedings
upon the petition and against the debtor, and not of collateral proceedings
by or against third persons, or even the debtor. In re Muller & Brentano,
3 B. R. 329; s. c. 1 Deady, 513; s. c. 2 L. T. B. 33.

After the filing of the petition, depositions to be used in the cause may
be taken at any time, before any register, upon service of notice thereof
on the opposite party, even though the order to show cause has not been
Served upon the debtor. In re Dean & Garrett, 2 B. R. 89.

Requisite Number.— It is a matter of inquiry for the court to ascertain
and adjudge whether the requisite number of creditors have joined in the
proceedings. The reason for this is very obvious. This provision is de-
signed to guard against collusive proceedings, and makes it the duty of
the court to investigate and find whether the requisite number of
creditors have joined in the proceedings, and whether the proceedings
are in good faith. The naked allegation in the petition, although admitted
by the debtor, does not seem to be enough, but the court must be satisfied
that the requisite number of creditors have united in the petition, and
must also be satisfied that the admission of such fact, if admitted by the
debtor, is made in good faith. In re J. Young Scammon, 10 B. R. 66; s. ¢.
€ Biss. 180; in re Joliet Iron & Steel Co., 10 B. R. 60;s.c.1 A. L. T. (N. 8.)
372; s.¢c.10 A. L. J. 29; s. c. 6 CO. L. N. 328; s. ce. 22 Pitts. L. J. 207; in re
Isaac Scull, 10 B. R. 165; 8s. c. 7 Ben. 371; s. c. 10 A. L. T. (N. 8S.) 416;
in re James R. Keeler, 10 B. R. 419; s.c. 1 A. L. T. (N. 8.) 422; 8. ¢. 20
IR. R. 82.
294. Tue Bankruptcy Law.

When the court has adjudged that the requisite proportion of creditors
have joined in an involuntary petition, the judgment is final, not only as
respects the debtor, but as respects all his creditors, and will not be re-
examined by the district court except upon an allegation of fraud or bad
faith. In re Wm. B. Duncan, 14 B. R. 18; in re John H. McKinley, 7 Ben.
562; in re J. Funkenstein, 14 B. R. 213; s. c. 3 Saw. 605.

Where the summons is by publication, the adjudication will not be set
aside on the application of the debtor, in the absence of fraud or col-
lusion. In re John H. McKinley, 7 Ben. 562.

Where the debtor neither admits nor denies the allegation, but merely
makes default, the adjudication will not be set aside on the application of
creditors, unless bad faith or collusion is alleged. In re J. Funkenstein,
14 B. R. 213; s. c. 3 Saw. 605.

After an adjudication of bankruptcy no inquiry can be made into the
truth of an affidavit filed to show that the requisite proportion of creditors
have united in the petition, unless fraud or bad faith is alleged. In re
Wm. B. Duncan, 14 B. R. 18

The co-operation of the debtor in securing creditors by lawful means to
unite in an involuntary petition, is no ground for setting aside an adjudi-
eation. Ibid.

Act oF 1898, On. 4,§ 18. * * * Trials— (e) If on the
last day within which pleadings may be filed none are filed ‘by the
bankrupt or any of his creditors, the judge shall on the next day,
if present, or as soon thereafter as practicable, make the adjudication
or dismiss the petition.

(See post, page 313.)

Adjudication by default can only be opened at instance of a party to
the default. In re BE. L. Matot & Co., 16 B, R. 485.

§ 19. Jury Trials— (a) A person against whom an involuntary
petition has been filed shall be entitled to have a trial by jury, in
respect to the question of his insolvency, except as herein otherwise
provided, and any act of bankruptcy alleged in such petition to have
been committed, upon filing a written application therefor at or be-
fore the time within which an answer may be filed. If such appli-
cation is not filed within such time, a trial by jury shall be deemed
to have been waived.

(b) If a jury is not in attendance upon the court, one may be
specially summoned for the trial, or the case may be postponed, or,
if the case is pending in one of the district courts within the jurisdic-
tion of a circuit court of the United States, it may be certified for
trial to the circuit court sitting at the same place, or by consent of
OatTus — AFFIRMATIONS. 295

parties when sitting at any other place in the same district, if such
circuit court has or is to have a jury first in attendance.

(c) The right to submit matters in controversy, or an alleged of-
fense under this Act, to a jury shall be determined and enjoyed,
except as provided by this Act, according to the United States laws
now in force or such as may be hereafter enacted in relation to trials
by jury.

§ 20. Oaths, Affirmations— (a) Oaths required by this Act, ex-
cept upon hearings in ‘court, may be administered by (1) referees;
(2) officers authorized to administer oaths in proceedings before the
courts of the United States, or under the laws of the State where the
same are to be taken; and (3) diplomatic or consular officers of
the United States in any foreign country.

(b) Any person conscientiously opposed to taking an oath may,
in lieu thereof, affirm. Any person who shall affirm falsely shall
be punished as for the making of a false oath.

Cu. 1, * * * Src. 1. Oath—(17) Oath shall include af-
firmation.

Act oF 1867, § 5026. On such return day, or adjourned day, if
the notice has been duly served or published, or is waived by the
appearance and consent of the debtor, the court shall proceed sum-
marily to hear the allegations of the petitioner and debtor, and may
adjourn the proceedings from time to time, on good cause shown,
and shall, if the debtor on the same day so demands in writing, order
a trial by jury at the first term of the court at which a jury shall
be in attendance, to ascertain the fact of the alleged bankruptcy.!
Or, at the election of the debtor, the ‘court: may, in its discretion,
award a venire facias to fhe marshal of the district returnable within
ten days before him, for the trial of the facts set forth in the petition,
at which time the trial shall be had, unless adjourned for cause.
And unless, upon such hearing or trial, it shall appear to the satis-
faction of said court, or of the jury, as the case may be, ‘that the
facts set forth in said petition are true, or if it shall appear that
the debtor has paid and satisfied all liens upon his property, in
case the existence of such liens was the sole ground of the proceed-
ing, the proceeding shall be dismissed, and the respondent shall re-
cover costs; and all proceedings in bankruptcy may be discontinued
on reasonable notice and hearing, with the approval of the court,

 

1 So amended by act of June 22, 1874, ch. 390, § 14, 18 Stat. 182.
296 Tur Bankruptcy Law.

and upon the assent, in writing, of such debtor and not less than
one-half of his creditors, in number and amount; or in case all the
creditors and such debtor assent thereto, such discontinuance shall
be ordered and entered; and all parties shall be remitted, in either
case, to the same rights and duties existing at the date of the filing
of the petition for bankruptcy, except so far as such estate shall have
been already administered and disposed of. And the court shall have
power to make all needful orders and decrees to carry the foregoing
provision into effect. If the petitioning creditor does not appear and
proceed on the return day, or adjourned day, the court may, upon
the petition of any other creditor to the required amount, proceed
to adjudicate on such petition, without requiring a new service or
publication of notice to the debtor.

Statute revised — March 2, 1867, ch. 176, §§ 41, 42, 14 Stat. 537. Prior
Statutes — April 4, 1800, ch. 19, § 3, 2 Stat. 22; Aug. 19, 1841, ch. 9, § 1,
5 Stat. 440. i

Appearance and Pleadings.— A debtor who has not been served with
the order to show cause may appear by attorney. It is not necessary
that he should appear in person. In re Weyhausen et al., 1 Ben. 397.

A party who appears without an order to show cause, and confesses or
puts in a denial of the alleged acts of bankruptcy, and demands a trial,
submits himself to the jurisdiction of the court. In re Moses A. Me-
Naughton, 8 B. R. 44.

If a corporation, subject to the provisions of the bankruptcy act, is in
existence when the petition against it is filed, and when the proper papers
are served on its proper officer, a decree dissolving the corporation made
after such service and before the return day can not oust the jurisdiction
of the bankruptcy court to proceed on the return day to an adjudication
of bankruptcy. The papers having been served on an officer of the cor-
poration while the corporation was-:in being, the order of adjudication
is substantially a proceeding in rem, and not one in personam. The pro-
ceeding in bankruptcy does not abate by the dissolution of a corporation
so as to be incapable of being proceeded with thereafter. Platt v. Archer,
6B. R. 465; s. ec. 9 Blatch. 559.

Where: the parties appear on the return day or adjourned day, and join
issue, and no further proceeding or adjournment is had, the matter is
to be considered as pending from day to day. In such case each subse-
quent day is an adjourned day to all intents and purposes. I[n re William
Buchanan, 10 B. R. 97.

Tf the petitioning creditor and the debtor appear on the return day, the
want of a formal adjournment does not terminate the proceedings, for
such an adjournment is not necessary to keep them alive. Ibid.

After the return day, an answer can only be filed by special leave of
the court. In re Gebhardt, 3 B. R. 268. Vide in re Isaac Scull, 10 B. R.
165; 8. c. 7 Ben. 371; 5. c. 1 A. L. T. (N. 8.) 416.
APPEARANCE AND PLEADINGS. 297%

When the allegations of the petition are not sufficiently distinct, the
debtor may decline to answer on that ground, and ask that they be made
more definite and certain, or be stricken out. In re Randall & Sunder-
land, 3 B. R. 18; s. ec. 1 Deady, 557; s. c. 2 L. T. B. 69.

When the allegations of the petition are insufficient, the objection may
be taken by a demurrer, but a demurrer is not a proper mode to raise &
question as to the sufficiency of the allegations on the ground that they
are not precise and definite. Orem & Son vy. Harley, 3 B. RK. 263.

A plea in abatement of the pendency of other proceedings in bank-
ruptcy instituted by the petitioning creditor must show jurisdiction in the
court whose proceedings are so set up. In re John T, Balch, 3 McLean,
221.

A general demurrer which is good only as to one of the several acts:
of bankruptcy alleged in the petition can not be sustained. In re Kenyon
& Fenton, 6 B. R. 238; s. c. 1 Utah Ter. 47.

The debtor may at the same time demur to the sufficiency of the alle-
gations of the petition, and file an answer denying the acts of bankruptcy.
In re Nickodemus, 3 B. R. 230; s.c.1L. T. B. 140; 5. « 2 C. L. N. 49;
8, ¢, 16 Pitts. L. J. 233.

Objections to the maintenance of the proceedings may be made by a
motion to set aside the petition. Im re Melick, 4 B. R. 97.

When a motion to dismiss has been filed, attention must first be given
to that, unless it is waived. Hunt v. Pooke, 5 B. R. 161.

On the overruling of a demurrer, the court may adjudge the debtor a
bankrupt on the allegations of the petition, and he will have no legal
right to complain. It is in the discretion of the court to say whether he
shall make a new choice of defense or not. In re A. Benham, 8 B. R. 94.

If the debtor demurs to the petition on the return day, and the hearing
is postponed to a subsequent day, he thereby waives his right to demand
a jury trial upon the overruling of the demurrer. Ibid.

If the petition sets forth an act of bankruptcy on the part of one of
the debtors, but not of all, it may, when a demurrer is sustained, be re-
tained as to him and dismissed as to the others. In re Redmond & Martin,
9 B. R. 468. :

The questions at Issue on the petition and the denial of bankruptcy
are questions solely between the petitioning creditor and the debtor, with
which no outside party, sustaining merely the relation of a person who
claims to be a creditor, can be permitted to interfere. A mere creditor
can have no concern in the matter before adjudication. In re Boston
R. R. Co., 5 B. R. 232; in re Bush, 6 B. R. 179; s. c. 6 W. J. 276; Dutton v.
Freeman, 5 Law Rep. 447.

Any creditor has a standing in court to be heard touching the proceed-
ings in any case prior to the adjudication, if he shows by proof satisfactory
to the court, that he is in fact a creditor, and that his interests will be
affected by the adjudication. A formal and technical proof is not neces-
sary. A petition by an alleged creditor against his debtor to compel a
submission of his estate to the bankrupt court is not a mere suit inter
partes. It rather partakes of the nature of a proceeding in rem, in which
298 Ture BANKRUPTCY Law.

every actual creditor has a direct interest. The proceeding is summary,
and in a high degree informal, and it should be free from technical em-
barrassment. No one is entitled to be heard thereon who has no interest
to protect. To justify an intervention the object or purpose disclosed must
be one which in a legal sense is meritorious and not purely officious; there-
fore the facts alleged as ground of intervention must be such as entitle
the applicant to consideration. The court must be able to see that the in-
tervention may serve some useful purpose, either in protecting the rights
of the applicant, or those of the creditors at large. In re Boston R. R. Co.,
6 B. R. 209, 222; s. ec. 9 Blatch. 101, 409; Bonnet v. James, 1 N. Y. Leg. Obs.
310; in re Heusted, 5 Law Rep. 510; Clinton v. Mayo, 12 B. R. 39.

No creditor can appear and contest the proceedings until he proves
his debt. Dutton vy. Freeman, 5 Law Rep. 447.

The creditor who is charged by the petition with receiving a preference
may appear and oppose the adjudication. In re Heusted, 5 Law Rep. 510;
Clinton v. Mayo, 12 B. R. 39.

A petitioning creditor who has filed a prior petition in another court may
intervene. In re Boston R. R. Co., 6 B. R. 209; s. c. 9 Blatch. 101.

A creditor who has received a mortgage which is liable to be assailed
as a preference may intervene. In re Walter S. Derby, 8 B. R. 106; s. ¢.
6 Ben. 232.

An attaching creditor may intervene and oppose the adjudication. In
re 8. Mendelsohn, 12 B. R. 533; s. c. 3 Saw. 343; in re Hatje, 12 B. R. 548;
s. c. 6 Biss. 436; in re Francis M. Jack, 13 B. R. 296; s. c. 1 Woods, 549;
in re OC. G. Scrafford, 14 B. R. 184; s. c. 15 B. R. 104; s. ec. 4 Cent. L. J. 19.

An attaching creditor may intervene to contest an adjudication upon
the merits as well as to claim that the court has no jurisdiction of the case.
In re Elias G. Williams, 14 B. R. 182.

An attaching creditor who intervenes to oppose an adjudication may take
advantage of any defense available to the debtor. Ibid.

An attaching creditor may contest the adjudication on the ground that
the proper proportion of creditors has not joined in the petition. In re
C. G. Scrafford, 14 B. R. 184; s. c. 15 B. R. 104; s. «. 4 Cent. L. J. 19.

An objection to defects in the petition may be made even at the hearing.
The objection is in the nature of a motion in arrest of judgment. In re
Waite & Crocker, 1 B. R. 373; s. c. Lowell, 207.

The process, pleadings, and proceedings in a case of involuntary bank-
ruptcy must be regarded as governed and controlled by the rules and
regulations prescribed in the trial of civil actions at common law. Ins. Co.
v. Comstock, 8 B. R. 145; s. c. 16 Wall. 258.

A reasonable construction requires the debtor’s allegations to be reduced
to writing, and in such form as to ralse an issue in analogy to issues in
other cases triable by a jury. The word “allegations ” is used in the sense
of pleadings, as meaning a formal statement of the acts of bankruptcy in
the petition, and a like formal defense of the debtor thereto, either a
general denial which will put in issue all the facts stated in the petition,
or a statement of any matters in avoidance according to the rules govern-
ing pleadings in common-law cases, In re Sutherland, 1 B. R. 581; 5. a 1
APPEARANCE AND PLEADINGS. 299

Deady, 344; in re Alexander Findlay, 9 B. R. 83; s. c. 5 Biss. 480. Contra,
in re Heydette, 8 B. R. 383.

Form No. 61 is the form of the order to be entered by the court. It is
not an act or allegation of the debtor, but is an order of the court based
upon the allegation of the debtor previously presented or communicated to
the court in some form, either orally or in writing. In re Alexander
Findlay, 9 B. R. 83; s. c. 5 Biss. 480; in re Sutherland, 1 B. R. 531; 8. ¢. 1
Deady, 344. Contra, Phelps v. Classen, 3 B. R. 87; s. c. 1 Wool. 204; in re
Dunham & Orr, 2 B. R. 17; s. c. 2 Ben. 488; 5. c 1 L. T. B. 89; in re
Heydette, 8 B. R. 333; in re Hawkeye Smelting Co., 8 B. R. 385.

The answer should be made under oath. ‘The general rule in all courts is
to require a pleading or petition to be answered in as solemn a manner as
it is required to be made. In re Alexander Findlay, 9 B. R. 83; s. c. 5 Biss.
480. Contra, in re Gebhardt, 3 B. R. 268; in re Heydette, 8 B. R. 333.

The objection that the petition is not duly signed and verified is waived
by putting in a denial of the act of bankruptcy, and a demand for a trial.
By such an act the debtor waives not only the necessity of an order to
show cause, but the necessity of proof of the authority of the person
signing the petition, and, in fact, of any verification whatever. Proof of
the authority of a person signing a creditor’s petition in a representative
capacity, and a verification of the petition, like the accompanying proof of
the petitioning creditor’s debt and deposition as to the alleged act of bank-
ruptcy, are requisite only to authorize the making of an order to show
cause. When that is done their office is accomplished, and they never can
be and never are of any other or further use in the case. In re Moses A.
McNaughton, .8 B. R. 44. :

The debtor may deny that the petitioner is a creditor, and by proofs
maintain such denial. The act provides that if the debtor proves that the
facts set forth in the petition are not true, the proceedings shall be dis-
missed. The facts set forth in the petition are all those which are neces-
sary to make it the duty of the court to adjudge the debtor a bankrupt;
that is to. say, there must be before the court a creditor with a provable
debt to the required amount, and there must be established an act of
bankruptcy within six months before the filing of the petition. It must
also be alleged and shown that the debtor owes provable debts to the
amount of $300. Unless all these concur, the petitioner has no
tight to prosecute the petition, and however he may be able to
prove, or does prove, the commission of acts of bankruptcy, he is not by
law clothed with the right or power to begin or sustain a prosecution or
ask a decree. In re Cornwall, 6 B. R. 305; s. ¢. 9 Blatch. 114; in re
Ouimette, 8 B. R. 566; s. c. 1 Saw. 47.

The debt and the act of bankruptcy taken together constitute the cause
of action. The defense set up may go to either or both of these matters,
and there may be several defenses to each, but they must be separately
stated — that is, so that each one will stand or fall by itself without the
aid of the other. In re Ouimette, 3 B. R. 566; s. c. 1 Saw. 47.

It is nowhere expressly or impliedly said that one who can furnish proof
which, unexplained and uncontradicted, would show prima facie that he is
300 Tue Bankruptcy Law.

a creditor, may file a petition, or that a party may be adjudged a bank-
rupt upon such petition. The objection that the petitioner is not a
creditor goes not only to his disability, but to the jurisdiction of the
cause. It would be monstrous injustice if parties were not only liable to
be proceeded against, but must necessarily be adjudged bankrupts, sub-
mit to a warrant and be dispossessed of all their property at the instance
of any one and every one who either dishonestly or by mistake was able
to present, by petition and affidavits, prima facie evidence of a debt, when
in truth none existed. It might often happen that the only act of bank-
ruptcy alleged depended for its character upon the very question whether
any debt was owing to the petitioner; and if a mere prima facie case
shown by the petition precluded further inquiry on that question, a party
might be declared a bankrupt, his property be subjected to administration
under the law, and, in the end, it would appear that the petitioner, having
no debt, no act of bankruptcy had been committed, and the whole proceed-
ing, injurious as it must be, was wholly groundless. In re Cornwall, 6 B.
R. 305; s. c. 9 Blatch. 114.

When the petition sets forth the several acts of bankruptcy alleged con-
junctively, the denial in the answer should be in the disjunctive, and in
such form as to fully deny either of the intentions imputed to the debtor.
In reS. T. Smith, 3 B. R. 377; s. c.4 Ben. 1; s. c.1 L. T. B. 147.

A proceeding in bankruptcy is not an action to collect a debt, but to
procure an adjudication of bankruptcy, and, therefore, a plea of tender of
the amount due the petitioner can, under no circumstances, be a defense to
it. The allegation of the petition is, that the party is not only indebted to
the petitioner, but that he has committed an act of bankruptcy. To this
it is no sufficient answer to allege a tender of the amount due. The court
will not presume that the petitioner is the only creditor. If, in fact, there
are no other creditors, the plea should contain an allegation to that effect.
A plea containing such an allegation would not be a good defense. In re
Ouimette, 3 B. R. 566; s. c. 1 Saw. 47. ;

If the debtor proves that there are no other creditors to the requisite
‘amount to proceed against him under the bankruptcy act, and tenders
the amount due on the petitioning creditor’s claim, together with the
costs of the proceedings, the proceedings will be dismissed. In re Daniel
Sheehan, 8 B. R. 353.

If the tender of payment does not include the costs, the debtor must pay
full costs, as upon an adjudication, after hearing, if the proceedings are
dismissed. Ibid. .

If the petitioning creditor, after the filing of the petition, obtains an
order, in the suit instituted in a State court for the arrest of the bank-
rupt and another, but instructs the sheriff not to arrest the bankrupt, a vol-
untary surrender and giving of bail in that action will not be a sufficient
ground for dismissing the petition, although the debt which constitutes the
cause of action in both cases is the same. A person proceeded against as
a bankrupt does not by voluntarily placing himself under arrest, or in jail,
or in any other place of confinement, remove himself from the effect of the
bankruptcy law. In re George Merkle, 5 Ben. 8.
APPEARANCE AND PLEADINGS. 301

The debtor may set up a claim for unliquidated damages arising out of
a contract, as a set-off or counterclaim against the petitioning creditor’s
debt. In re Osage V. & 8, K. R. R. Co., 9 B. R. 281; s. c. 1 Cent. L. J. 33.

Where a debtor has committed an act of bankruptcy, he cannot discharge;
himself from his legal liability for such act by subsequent rescission or
undoing thereof. In re Thomas Ryan, 2 Saw. 411.

A feme covert may avail herself of her coverture to defeat the debt
which is the basis of proceedings in bankruptcy. In re Schlichter et al. 2
B. R. 336; in re Howland, 2 B. R. 857; in re Rachel Goodman, 8 B. R. 380;
s. c. 5 Biss. 401.

When a note is given by a feme covert, it must appear on the face that
it was given with the intent to bind her separate estate, or there must be
allegations that it was given for the benefit of her separate estate, or in
the course of trading transactions which she is authorized to engage in by
law. In re Howland, 2 B. R. 357; in re Schlichter, 2 B. R. 336.

A married woman, living separate and apart from her husband, may,
under the laws of California, contract a valid debt, which can be enforced
against her. In re Julia Lyons, 2 Saw. 524; s.¢c.1 A. L. T. (N. 8.) 167.

A person who is so unsound of mind as to be wholly incapable of man-
aging his affairs can not, in that condition, commit an act for which he can
be forcei1 into bankruptcy by his creditors against the objection of his
guardian. In re Marvin, 1 Dillon, 178; s.c.3 C. L. N. 394; in re Mitzel, 3
Cent. Li. J. 555.

The denial of a fraudulent intent to give a fraudulent preference involves
a confession of an intent to give a preference, though not a fraudulent
one. Such a preference is an act of bankruptcy. In re R. Sutherland, 1
B. R. 531; s. c. 1 Deady, 344.

A corporation by, appearing and answering a petition thereby admits
that it may be proceeded against in bankruptcy, and can not afterward
object that the petition does not allege that it is a moneyed, business or
commercial corporation. In re Oregon B. Printing Co., 13 B. R. 503; 8. ¢.
11 Pac. L. R. 233; s. c. 3 Cent. L. J. 515.

Irrelevant or immaterial matter in a pleading may be stricken out, al-
though it is a denial of an immaterial allegation in a prior pleading. In re
Oregon B. Printing Co., 13 B. R. 199; s. c. 14 B. R. 405; 8. c. 3 Saw. 614.

When the case is brought to a hearing on petition and answer, and the
answer denies material averments contained in the petition, the averments
must be regarded as disproved, unless they are conclusively presumed by
law. Wells et al. (ex parte H. B. Claflin & Co.), 1 B. R. 171; 8. c. 1 L. T. B.
20;s.¢c. 7 A. L. Reg. 163.

It is a well-settled rule of pleading, that a traverse or denial must not
be taken on a mere matter or conclusion of law, for the effect would be to
submit the question of law to the jury rather than to the court. But when
the conclusion is a mixed one of law and fact, then it is clearly traversable,
and the issue raised thereby triable by a jury, under the direction of the
court as to the law. The sale of his property by a debtor is not necessarily
an act of bankruptcy. It depends upon the intent with which it is done,
and as this intent is not a mere conclusion of law, but of law and fact
302 Tue Bankruptcy Law.

compounded, it may be traversed or denied. In re Silverman, 4 B. R. 523;
s. c. 2 Abb. C. C. 248; s. c. 1 Saw. 410.

Although the intent to prefer is a necessary ingredient in the alleged
act of bankruptcy, yet if a preference is a necessary consequence of the
facts admitted in the answer, the law conclusively presumes the intent to
prefer, and the intent can not be denied and tried as an issue of fact.
When, by law, the consequences must necessarily follow the act done, the
presumption is ordinarily conclusive, and can not be rebutted by any evi-
dence of intention. In re Silverman, 4 B. R. 523; s. c. 2 Abb. C. CG. 2438;
s. c. 1 Saw. 410; in re S. T. Smith, 3 B. R. 377; s. c. 4 Ben. 1; 8. c. 1 L. T.
B. 147; in re Thomas Ryan, 2 Saw. 411.

Aun allegation in the answer as to the value of property which the debtor
owns and holds, is simply surplusage and immaterial, and ought to be
stricken out, but it is no ground for a demurrer. A plea of a tender of the
petitioner's debt may be stricken out as immaterial. Objections to the
sufficiency of an answer may be taken by demurrer. When a demurrer to
an answer is overruled, the petitioner may be permitted to reply on pay-
ment of costs. In re Ouimette, 3 B. R. 566; s. c. 1 Saw. 47.

If the denial of the allegation in the petition is not in proper form, the
proper course is to move to strike the paper from the file, and to vacate the
Subsequent record and order made thereon. In re Heydette, 8 B. R. 333.

When the answer consists merely of the denial contained in Form No.
61, no replication is needed. In re Dunham & Orr, 2 B. R. 17; s. ec. 2 Ben.
488;s.c.1L. T. B. 89.

If the petitioning creditor is declared a bankrupt, his assignee may be
substituted as a petitioner in his place, and prosecute the petition. In re
B. F. Jones, 7 B. R. 506.

The remedies of an assignee under the law are regulated by the same
provisions that control the rights of other parties. He can not in any way
secure from an insolvent debtor a preference over other creditors for the
estate which he is administering. He must adopt the only remedy which
the law allows him in the performance of his duty to collect the assets of
the bankrupt, and that is the filing of a petition in bankruptcy against the
bankrupt’s insolvent debtor. Ibid.

A motion for an adjudication upon or notwithstanding the respondent's
answer may be denied, and the case allowed to proceed to trial upon the
merits. In re Safe D. & S. Inst., 7 B. R. 392.

A jury can not be demanded on any day but the return day. By consent
of parties, an adjourned day may be held to be the same in all respects as
the return day. In re G. & H. Pupke, 1 Ben. 342; in re Gebhardt, 3 B. R.
268; in re Sherry, 8 B. R. 142; Clinton v. Mayo, 12 B. R. 39.

If the petition was not signed originally by the requisite number of
creditors, and was only made complete by the filing of an intervening peti-
tion after the return day, the debtor may demand a jury trial on the day
when such intervening petition is filed. In re J. M. Kintner, 22 Pitts.
LL. J. 150.

If the debtor demand a jury trial, the court may issue a special venire
EVIDENCE. 303

to summon a jury to try the issue. In re Alexander Findlay, 9 B. R. 83;
s. c. 5 Biss. 480; in re Hawkeye Smelting Co., 8 B. R. 385.

The district court may impanel a jury to try the issue of bank-
ruptcy vel non during a vacation as well as in term time. Lehman v.
Strassberger, 2 Woods, 554.

Evidence.— The burden of proof rests upon the creditor. Brock y.
Hoppock, 2 B. R. 7; s. c. 2 Ben. 478; in re Randall & Sunderland, 3 B. R.
18; s. c. 1 Deady, 557; s. c. 2 L. T. B. 69; in re Leonard, 4 B. R. 563; s. ec.
21. T. B. 177; in re Price & Miller, 8 B. R. 514; in re Jelsh & Dunnebacke,
9 B. R. 412; in re Scudder, Wilcox & Ogden, 1 N. Y. Leg. Obs. 325; in re
Oregon B. Printing Co., 13 B. R. 508; s. c. 11 Pac. L. R, 238; s. ¢. 8 Cent.
L. J. 518.

A paper sworn to and filed by an officer of a corporation is competent
evidence against it, but is not conclusive. In re Oregon B. Printing Co.,
13 B. R. 508; s. c. 11 Pac. L. R. 233; s. ec. 3 Cent. L. J. 515.

A. defense which has been stricken out of the case may be given in
evidence as an admission. Ibid.

The letters of the debtor are admissible in evidence against an attaching
creditor who intervenes to oppose an adjudication. In re Hatje, 12 B. R.
548; s. c. 6 Biss. 436.

The admissions of the debtor made in the course of an examination upon
supplemental proceedings, when duly authenticated under section 905, are
admissible in evidence against him. In re Rooney, 6 B. R. 163.

The district court has plenary power to compel the examination of all
papers and books of the debtor, or in his possession, if pertinent to the
issue and required for the protection of the rights and interest of the
petitioning creditor. In re Mendenhall, 9 B. R. 285.

The provisions of section 724 are peculiarly stringent, and when a court
is asked to enforce it, a plain case must be presented for its interposition.
There is no limitation in regard to the kind of action at law which must be
on trial in order to entitle either party to the benefit of the statute. A pro-
ceeding in bankruptcy is within its purview. Ibid.

When the debtor omits to call a witness who is conversant with all the
facts and might explain doubtful points, the presumption is against him.
Curran v. Munger, 6 B. R. 33; in re Thomas Woods, 7 B. R. 126; s. c. 29
Leg. Int. 236; s. c. 20 Pitts. L. J. 21.

If the counsel for the petitioner omits to prove a particular fact, under
the impression that it has been proven, the court may allow him to supply
the omission even after the commencement of the argument of the case.
In re Munn, 7 B. R. 468; s. c. 3 Biss. 442.

When the evidence all points one way, and there is no question of fact
to be submitted, the court may direct the jury to render their verdict for
the party entitled to it. Hardy v. Clark, 3 B. R. 885; s. ec. 1 L. T. B. 151;
8§¢c3L. T. B.11;s. ¢. 17 Pitts. L. J. 61; 5.¢. 2 C. L. N. 121.

Under the issue made by the denial of bankruptcy, the débtor can in-
troduce proof to contradict all the material allegations of the petition. Bvi-
dence in regard to the indebtedness is admissible under the issue. In re
Skelley, 5 B. R, 214; s. c. 3 Biss. 260.
304. Tur Bankruptcy Law.

The creditor must establish his debt before proceeding to show acts of
bankruptcy. Brock v. Hoppock, 2 B. R. 7; s. ¢. 2 Ben. 478; Moore v. Na-
tional Exchange Bank of Columbus, 1 B. R. 470; s. ec. 2 Bond, 170; s. ¢.
1L. T. B. 74; Foster v. Remick, 1 N. Y. Leg. Obs. 232; s. c. 5 Law Rep. 406.

Quaere, When the debtor intends to deny that he owes the- petitioning
creditor debts to the requisite amount, ought he not to raise that question
before going to the jury on the alleged acts of bankruptcy? Phelps v.
Classen, 3 B. R. 87; s. c 1 Wool. 204; Foster v. Remick, 1 N. Y. Leg. Obs.
232; s. c. 5 Law Rep. 406.

While the court may in a case where the facts are undisputed take a
question from the jury and dispose of it as a matter of law, and will
generally do so in a case entirely free from doubt, yet whether the court
will do so or not is in all cases a matter of discretion, and it is not error
to send it to the jury however clear the case may be. In re Jelsh &
Dunnebacke, 9 B. R. 412.

When the petition is against two partners, one of whom is in default,
and the other of whom contests and succeeds, the petition must be dis-
missed. Both parties must be found guilty under the act before judg-
ment can be entered against the partnership. Doan v. Compton & Doan,
2B. R. 607.

if the petitioner proceeds against joint debtors, he can not prevail even
as to one by proving the commission of an act of bankruptcy by him.
James v. Atlantic Delaine Co., 11 B. R. 390.

The motive of the petitioner in prosecuting the petition, or the co-opera-
tion of one of the debtors, or his motive therefor, can have no possible
effect in determining the quality of the acts alleged to be acts of bank-
ruptcy, or the legal consequence of such acts. Evidénce tending to show
collusion between them should be rejected. Hardy v. Binninger, 4 B. R.
262; s. c 7 Blatch. 262.

The petitioning creditor*is confined to the act of bankruptcy alleged in
the petition. In re James W. Sykes, 5 Biss. 113.

The debtor can not be adjudicated bankrupt for committing an act of
bankruptcy which is not specially set forth in the petition. In re Potts &
Garwood, Crabbe, 469; in re J. A. & H. W. Shouse, Crabbe, 482; in re
James W. Sykes, 5 Biss. 1138.

Estoppel.— The pendency of a suit in a court of law on a distinct and
independent demand is not a bar to the filing of a proceeding in bank-
ruptey. The petitioning creditor may proceed to an adjudication while the
suit is pending, but the suit will be annulled and surrendered by an adju-
dication. It is true that the petitioning creditor can not carry on the two
proceedings at the same time, at law for one part of his demand and in
bankruptcy for another, but there is no reason why he should be required
to abandon his suit commenced before the filing of the petition, until it
is determined whether the petition can be sustained. Everett v. Derby, 5
Law Rep. 225.

The institution of an action at law and the recovery of a judgment
therein after the filing of the petition, is no ground for dismissing the pro-
ceedings. Van Kleeck v. Thurber, 1 Penn. L. J. 402.
EstTorre.. 305

A plaintiff who institutes proceedings in bankruptcy after the commence-
ment of his action, can not have the suit postponed until the proceedings
in bankruptcy are terminated. Stewart v. Sonneborn, 51 Ala. 126.

A creditor who has given his assent to a transaction is estopped from
urging it as an act of bankruptcy. Perry v. Longley, 1 B. R. 559; s. c. 1
L. T. B. 34; s. ec. 7 A. L. Reg. 429; in re Schuyler, 2 B. R. 549; s. c. 3 Ben.
200; s.c. 2 L. T. B. 85.

But a creditor is not estopped from setting up an assignment as an act
of bankruptcy, because he has delayed filing his petition for seventeen
days after it was executed, and sought information concerning the estate,
and offered to sell his claim, and proposed to assent to it, if the debtor and
the assignee would surrender the property assigned, and commit its dis-
posal and management to some person more satisfactory to him. Spicer v.
Ward, 3 B. R. 512.

If the petitioner has advised the making of an assignment, or after its
execution has expressly given his assent to it he will be precluded from
insisting on it as an act of bankruptcy. But a motion to have the penalty
of the assignee’s bond increased is clearly no approval of, or assent to, the
assignment. Ferry v. Longley, 1 B. R. 559;s.c.1L. T. B.34;3.07A.
Reg. 429,

If the petitioning creditor is a stockholder in a corporation against which
he holds the claim, and is present at a meeting when a resolution is passed
to give a security, it is his duty to protest, and see if the stockholders de-
liberately intend to commit an act of bankruptcy. His failure to protest
will bind him, whichever way he may vote upon the question. In re Massa-
chusetts Brick Co., 5 B. R. 408; s. c. 4 L. T. B. 220.

A creditor who has signed a composition agreement for an extension of
credit, containing a stipulation that it shall not be binding unless it is
signed by all the creditors, can not file a petition until a sufficient time
elapses to ascertain whether all the creditors will become parties thereto.
In re Potis & Garwood, Crabbe, 469.

If a creditor, after a proposition of compromise has been submitted to
him, attaches the property of his debtor, this is such an unequivocal act
that his dissent may reasonably be presumed, and a creditor who has
signed the composition may then file a petition. Ibid.

Creditors who have taken possession of the entire property of a debtor |
under a general assignment, or bill of sale intended to prefer them, can
not set up the nonpayment of a note as an act of bankruptcy. In re Hlias
G. Williams, 14 B. R. 132.

Creditors who have obtained a preference by a Dill of sale from the
debtor, are estopped to set up the execution of the same as an act of bank-
Tuptcy. Ibid.

During the pendency of proceedings in involuntary bankruptcy the
debtor can not be adjudged a bankrupt on a voluntary petition filed after
the filing of the petition of the creditors against him. In re R. R. Stewart,
3B. R. 108. Contra, in re Philemon Canfield, 1 N. Y. Leg. Obs. 284; s. ¢.
5 Law Rep. 415.

If all the creditors prove their claims under the subsequent voluntary pe-

20
306 Tue Bankruptcy Law.

tition, they thereby waive the right to insist upon going back and proceed-
ing under the prior involuntary petition. In re Nounnan & Co., 6 B. R. 579;
s.c. 4 L. T. B. 228; s. c. 1 Utah Ter. 44.

If the special verdict found by the jury is defective, there is a mistrial,
and the case remains pending in court after the verdict is stricken out. In
re Robert G. King, 3 Dillon, 364.

New Trial.— A proceeding in bankruptcy is not a quasi criminal pro-
ceeding. It does not involve any charge of crime, and is, like every other
question of fact, to be decided by the weight of evidence and tried like
any civil case. Incidental to the trial of jury causes, all courts of record,
unless specially restricted from-its exercise, possess the power of revising
verdicts of juries and setting them aside in all civil cases in their discre-
tion. In re R. A. De Forrest, 9 B. R. 278; in re Dunn et al., 9 B. R. 487;
s. ce. 12 Blatch. 42.

The matter decided by the verdict of a jury upon a mere denial of the
truth of the petition, is as to the act of bankruptcy alleged, and that is all
the verdict determines either by its terms or legal effect, and it can be
pleaded in bar only to a new proceeding in bankruptcy for the same act.
The fact of partnership in a proceeding against alleged partners, while it
is essential to the maintaining of the joint petition, yet, like the fact of the
petitioning creditor’s debt, is really but incidental to the main issue, and
the verdict adverse to the petitioning creditor is not a bar to a subsequent
action at law, nor does it conclude either fact. In re Jelsh & Dunnebacke,
9B. R. 412.

A new trial will not be granted on account of an error in the charge,
when it could have been corrected at the time without changing the result.
Hamlin y. Pettibone, 10 B. R. 172; s. c. 6 Biss. 167.

If new evidence is discovered after the trial, the bankrupt may make an
application to the district court setting forth sufficient facts to justify the
court in reopening the question connected with the decree and asking for
arehearing. The district court has the power in a proper case to entertain
and grant such an application. In re Great West. Tel. Co., 5 Biss. 359.

If the court has no jurisdiction over the case, an attaching creditor may
move to set the proceedings aside. In re Fogerty & Gerrity, 4 B. R. 451;
s.c. 1 Saw. 233; 8. c. 2 L. T. B. 174; in re John B. Bergeron, 12 B. R. 385;
s.c. 10 Pac. L. R. 259; s. ec 2 Cent. L. J. 507.

Notice of a motion to annul an adjudication must be served upon the
bankrupt, for he has an interest in the continuance of the proceedings
which may result in his discharge. In re Bush, 6 B. R. 179; s. c. 6 W. J.
276.

The mere subscription of a decree is not per se an adjudication. The
draft of an order, though signed, remaining in the sole possession and
knowledge of the judge, whether for the purpose of further consideration
or for any other reason, is subject to his control, and not final so as to
conclude him; and until it is in some manner notified to the clerk of the
court or to one of the parties in such wise that this decision can be prop-
erly said to be promulgated or announced, it concludes no one. This is
not to be taken to import that all orders must be announced formally in
New TRIAL. 307

open court, or that orders which may be made out of court must be
formally proclaimed, but there must be something tantamount to pro-
mulgation or delivery, something of which the parties to be affected can
haye or can obtain knowledge, before their rights can be said to have re-
ceived adjudication, something which completes and authenticates the
judicial act. In re Boston R. R. Co., 6 B. R. 222; 8. c. 9 Blatch. 409.

A memorandum signed by the initials of the judge directing that an
order of adjudication be entered is not an adjudication, nor can such an,
order be entered nune pro tune. The test is whether a formal order of
adjudication has been entered. Until the entry of such formal order a dis-
continuance is always allowed to be entered if desired by the petitioning
creditor. A direction that such order be entered is no more than the de-
cision of the judge. It is not a judgment, or an entry on the files of the
court that the court adjudges thus and so. The form of an adjudication
is prescribed by Form No. 58. Nothing else is an adjudication. In re
Joseph M. Hill, 10 B. R. 133; s: c. 7 Ben. 878; s.c. 1 A. L. T. (N. S.) 421.

A motion to strike out a default and an adjudication thereon is too late
when it is made after a delay of several days, during which time the
debtor has delivered the list of his creditors to the marshal, and could in
no case be entertained without the most ample and satisfactory excuse for
the delay. In re J. Neilson, 7 B.-R. 505.

The defense that the debt of the petitioning creditor is based upon the
sale of intoxicating liquors is not one to be favored by the courts, and
hence the facts must be stated fully and particularly, in order that the
court may see that the case comes within the law. Ibid.

The granting of a rehearing opens a decree and suspends its operation.
In re Boston R. R. Co., 6 B. R. 222; s. c. 9 Blatch. 409.

No mere outside creditor has a right to ask that an adjudication shall be
annulled. In re Bush, 6 B. R. 179; s. ec. 6 W. J. 276; Karr v. Whittaker,
5 B. R. 1238.

An agreement to dismiss the proceedings in bankruptcy is to some extent
under the jurisdiction and control of the bankruptcy court, and may be
set aside even after the proceedings have been dismissed, upon satisfactory
proof that it was obtained by fraud or given inadvertently or improperly,
under a mistake of fact. In re Francis J. Buler, 7 B. R. 552.

A release given to the assignee after the proceedings in bankruptcy bave
been dismissed can not be set aside by the bankruptcy court. The case has
passed out of the jurisdiction of the bankruptcy court, and will not be
reinstated for the purpose of deciding a new controversy which has arisen
since the dismissal Ibid.

An order adjudicating a debtor a bankrupt, made after the return day,
but upon the petition of a creditor, and after notice to and appearance by
the debtor, though it may be irregular, is not void, and can not be collater-
ally assailed. Hobson v. Markson, 1 Dillon, 421.

Au adjudication in involuntary bankruptcy made against an infant can
not be ratified by him after he becomes of age, so as to give the court juris-
diction as of the time of the adjudication. In re Walter S. Derby, 8 B. R.
106; s. c. 6 Ben. 232.
308 Tur Bankruptcy Law.

An adjudication against an infant, who does not appear by a guardian
ad litem, cau not be upheld. It is an adjudication against a person Wuv
has no legal existence so as to be proceeded against in a court as if he
were of full age. Ibid.

If the debtor was non compos mentis at the time of the adjudication,
the adjudication will be set aside. In re Alonzo Murphy, 10 B. R. 48.

Where an attorney assumes to appear and give any waiver of time, or
anything else, and to admit the charge brought against the debtor, the
debtor may appear within a reasonable time and move the court to have
the proceedings set aside. But he must move promptly, to show that he is
standing upon his rights, and if he does not, the court will refuse the mo-
tion. Leiter v. Payson, 8 B. R. 317; s. c. 9 B. R. 205; s. c. 6 C. L. N. 157.

The mere pendency of a prior petition against the bankrupt in another
district which is there contested, is no ground for setting aside an adju-
dication. In re William Harris et al., 6 Ben. 375.

If the debtor appeared and was adjudicated a bankrupt on his admission
of the comniission of the alleged act of bankruptcy, the adjudication will
not subsequently be set aside at the instance of other creditors, although
the debtor did not commit such act of bankruptcy. In re James 8S. Thomas,
11 B. R. 330; s.c. 7 C. L. N. 187.

Costs.— When there is a trial by jury, the docket fee of $20 to the attor-
ney of the successful party is taxable as part of the costs. There is a
distinction between trial and judgment without a trial. The pleadings
may be tiled, the issues made up, but until the jury is sworn there is no
trial. Gordon, McMillan: & Co. v. Scott & Allen, 2 B. R. 86;s.¢c.1L. T. B.
99; s.¢c. 7 A. L. Reg. 749.

When there is no denial and no contest, no docket fee can be allowed to
the attorney for the petitioning creditor. In re Mead & Co., 8 Phila. 174.

When the petition is dismissed by order of the court, the debtor is en-
titled to recover from the petitioner the same costs that are allowed by
law to a party recovering in equity. The attorney’s fee is $20. No fee
can be taxed for the attorney for the petitioning creditor. Dundore v.
Coates, 6 B. R. 304.

When it appears that the debtor was guilty at the time the petition was
filed, but has since reduced the petitioning creditor’s debt below $250, by
payments, a judgment may be entered that he shall pay all taxable costs
except docket fees made up to the time of filing his denial, and that on
such payment the proceedings shall be dismissed. In re Skelly, 5 B. R.
214; s. ec. 3 Biss. 260.

When the petition is dismissed, the petitioning creditor's debt can not be
set off against the costs taxed in favor of the respondent. In re Lowen-
stein, 3 B. R. 269; s. c. 8 Ben. 422.

If the proceedings are dismissed upon payment of the petitioning cred-
itor’s claim, he is only entitled to such costs as are allowed to party recov-
ering in a suit in equity. No allowance can be made for disbursements or
counsel fees. In re Daniel Sheehan, 8 B. R. 353.

If the motion to dismiss is founded upon new and plausible considera-
tions, the court in denying it may refuse to award costs against either
party. In re Daniel Sheehan, 8 B. R. 345.
DISCONTINUANCE. 3809

Discontinuance.— None of the creditors who have joined in the petition
will be allowed to withdraw unless all do so. In re Heffren, 10 B. R. 213;
s. c. 6 Biss. 156; in re Edward Sargent, 13 B. R. 144; in re Philadelphia
Axle Works, 1 W. N. 126.

If they were induced to join in the petition by false representations, they
may be allowed to withdraw on discovering the truth. In re Heffren, 10
B. R. 213; s. c. 6 Biss. 156; in re Edward Sargent, 18 B. R. 144.

The proceedings in involuntary bankruptcy may be withdrawn. Hast-
ings v. Belknap, 1 Denio, 190.

The petitioning creditor may dismiss the petition without giving notice
to the other creditors. There is nothing in the bankruptcy act to require
such notice until the debtor is adjudged to be a bankrupt; the only parties
to the proceedings are the petitioning creditor and the debtor. The peti-
tioning creditor has entire control of the proceedings, and can have them
dismissed at his pleasure. The only right which any other creditor has, is
io file a new pctition, or to ask to be substituted in place of the petitioning
creditor, under the last clause of section 5026. The order dismissing the
suit may be made by the court, upon the motion of the attorney for the
petiticning creditor. In re Camden Rolling Mill Co., 3 B. R. 590; s. c.
2L. T. B. 112.

A right to have a cause discontinued does not per se operate as a discon-
tinuance or divest the court of jurisdiction. Such jurisdiction continues
until there ig an actual discontinuance. Even if a court refusing a discon-
tinuance commits an error in such refusal, that does not operate as a dis-
continuance. In re Lacy, Downs & Co., 10 B. R. 477; s. ¢. 12 Blatch. 322.

If the order of discontinuance is not to take effect until the fees of the
clerk and marshal are paid, the proceedings are actually pending until the
conditions of the order are complied with, whatever may be the hindrances
that arise to delay such compliance. Ibid.

The proceedings can be discontinued only by an order of the court on
special application, especially where they have been allowed to lie for a
considerable length of time, and an intervening petition has. been filed.
In re William Buchanan, 10 B. R. 97.

If the proceedings are formally adjourned on the return day, the pro-
ceedings can not be discontinued until the adjourned day. In re Lacey,
Downs & Co., 10 B. R. 477; s. c. 12 Blatch. 322.

The dismissal of the proceedings will not prevent other creditors from
instituting new proceedings. In re Mendenhall, 9 B. R. 380; s. c.6C. L. N.
192.

The creditor can not dismiss the petition after the debtor has been ad-
judged a bankrupt. Other creditors then have an interest in the proceed-
ings. -If the parties desire to make a settlement, they can proceed under
Section 5103. In re Sherburne, 1 B. R. 558; in re Lacey, Downs & Co., 10
B. R. 477; s. e. 12 Blatch. 322.

If the proceedings are dismissed, an order reinstating the proceedings
without notice to, or appearance by, the debtor, is without authority, and
any adjudication following such reinstatement is void. Gage v. Gates, 15
B. R. 145; s. ¢. 62 Mo. 412.
310 Tue Bankruptcy Law.

The expression ‘such debtor” has relation properly only to the debtor
against whoin a petition is filed by creditors. In re Thomas McKeon, 11
B. R. 182; 8s. ec. 7 Ben. 5138.

The provisions of this section apply solely to cases where there has been
an adjudication, and confer the power of discontinuance in such cases.
Ibid.

The provisions of this section do not apply to cases of discontinuance
where there has been no adjudication, or restrict or take away the power
of discontinuance which existed in such cases independently of this sec-
tion. Ibid.

Where the bankrupt and all the creditors who have proved their debts
are Willing, the petition may be dismissed and the proceedings discon-
tinued. In re W. D. Miller, 1 B. R. 410; in re Stern, 6 I. R. R. 87; in re
Robert Mcrris, Crabbe, 70; in re George R. Magee, i W. N. 21.

If all the creditors do not consent, there can be no discontinuance with-
out a notice te all the creditors, and a hearing of them, and an approval
by the court of the propriety of a discontinuance. In re Thomas McKeon,
11 B. R. 182; s. ec. 7 Ben. 513.

If all the creditors will not assent to the dismissal of the proceedings,
the bankrupt may settle with those who will consent, and give security to
the nonassenting creditors for any claim which they may have against the
bankrupt, or be able to sustain before a competent tribunal, and the pro-
ceedings will then be dismissed. In re Great West. Tel. Co., 5 Biss. 359;
in re Indianapolis R. R. Co., 8 B. R. 302; s. ¢. 5 Biss. 287.

If there is a creditor who prima facie has a claim against the bankrupt
which is liable to be proved, before the court can dismiss the proceedings,
his claim should receive some security or protection. In re Indianapolis
R. R. Co., 8 B. R. 302; s. ¢. 5 Biss. 287.

Cases may occur in which justice to the bankrupt and to his creditors,
and the whole scope and spirit of the system require that an adjudication
ought to be revoked and superseded. The district court has the power to
revoke it, although the statute has no enumeration of such cases or special
provision or grant of power. The court to whom the power is given to
make an adjudication has the power to recall it, if it is used as an instru-
ment of fraud, oppression or injustice. In re Robert Morris, Crabbe, 70.

It is not necessary that a personal notice of an application for a superse-
deas shall be personally served on the creditors who have proved their
debts. A publication is sufficient. Ibid.

The adjudication may be superseded by an order without issuing a writ
or supersedeas. Ibid.

The adjudication may be revoked even after a discharge has been
granted. Ibid. :

The effect of a supersedeas, if lawfully ordered, is to annihilate the
adjudication, and place the hankrupt with his estate and effects in the
same situation he would have been in had it never existed. Ibid.

If the bankrupt is dead, a supersedeas can have no effect on. him or his
personal rights; it can only operate on his estate for the benefit of his
representatives. Their right does not descend from him, but is cast tipon
INTERVENTION BY CREDITORS. BLL

them by law by an event, which, occurring after his death, vests no rights
or interests in him, ‘The right arises by and from the supersedeas, and has
no existence before or without it. Ibid.

The possibility of regaining the property by a supersedeas does not give
the bankrupt any right or interest in it which he can transmit to another
either by an assignment or a devise. Ibid.

Intervention by Other Creditors.— The application of a creditor to have
the debtor declared a bankrupt inures to the benefit of all the creditors,
any of whom may come in and prosecute the application if he thinks
proper. In re Freedley & Wood, Crabbe, 544° in re R. & L. Calendar, 1 N.
Y. Leg. Obs. 200; s. ec. 5 Law Rep. 125.

Other creditors may intervene at any time when necessary for the pur-
pose of preserving and protecting their interests in the estate of the debtor.
They may, therefore, intervene before the return day, and resist a motion
made by the debtor for a dismissal of the proceedings upon the consent of
the petitioning creditor. In re Mendenhall, 9 B. R. 380; s. c. 6 CG. L. N.
192.

The statute contemplates two possible exigencies; one that the petition-
ing creditor abandoning the proceedings may not appear; the other that
the petitioning creditor may not proceed with the petition. In either
event any other creditor may intervene, and, on his application, the court
may proceed to an adjudication. In re Lacey, Downs & Co., 10 B. R. 477;
s. ¢, 12 Blatch. 322; in re William Buchanan, 10 B. R. 97.

If any other crediter wishes to have himself substituted in place of the
petitioning creditor, he ought to appear on the return day, or adjourned
day, and present his petition, if the petitioning creditor does not appear
and proceed. If no other creditors appear upon that day, the petitioning
creditor may kave his petition dismissed, without giving notice of such
dismissal to other creditors, and the order of discontinuance will not, in
such case, be set aside. The order of dismissal may be made by the court
on application of the petitioning creditor. In re Camden Rolling Mill Co.,
3B. R. 590: s. ec. 2 L. T. B. 112; in re Freedley & Wood, Crabbe, 544.

The adjourned day on which another creditor may appear and prosecute
is any day to which the proceedings on the order to show cause may be
adjourned for the purpose of inquiring into the allegations of the acts of
bankruptey. In re Lacey, Downs & Co., 10 B. R. 477; s. c. 12 Blatch. 322.

The purpose of the statute is that if the petitioning creditor does not
appear and prosecute his petition to an adjudication, another creditor may
do so while the proceedings are pending; that is to say, on the return day
of the order to show cause, or on any day to which the proceedings may be
adjourned for showing cause. Ibid.

Whether the party filing a supplemental petition is a creditor is a
question for the court and not for the jury, and must be established before
the debtor can be required to try the questions presented by a denial of the
acts of bankruptcy. Knickerbocker Ins. Co. v. Comstock, 9 B. R. 484; s. e.
6 C. L. N. 142; in re Richard J. Mendenhall, 9 B. R. 497.

The intervening petition may be filed even after the filing of the petition
for leave to discontinue the proceedings. In re William Buchanan, 10
B. R. 97,
312 Tur Bankruptcy Law.

Where other creditors have filed supplemental petitions, they have a
right on the return day to insist on a trial, though the original petitioners
consent to a continuance of the case. Knickerbocker Ins. Co. v. Comstock,
9B. R. 484; 8. ¢c.6C. L. N. 142.

When the creditor intervenes, he should be allowed to prosecute the
original petition in the same manner as the petitioning creditor could have
done. In re Lacey, Downs & Co., 10 B. R. 477; s. @ 12 Blatch. 322.

It is not in the power of the petitioning creditor or of the bankrupt, by
any arrangement between them, to cut off or defeat this right of inter-
vention, and any action of the court which prevents or defeats such right
is in violation of the statute. Ibid.

If other creditors intervene and resist the motion, the petitioning creditor
will not be allowed to dismiss the proceedings, although his debt and all of
the costs have been paid. In re Mendenhall, 9 B. R. 380; s. c. 6 C. L. N.
192; in re R. & L. Calendar, 1 N. Y. Leg. Obs. 200; s. c. 5 Law Rep. 125.

The application should be made on the return or adjourned day, because
the debtor is then in court, advised of the proceedings against him. Ifa
creditor allows that time to pass, he can no longer rely upon the existing
petition as his basis of action, but must begin anew and bring the debtor
into court upon his own motion and proceedings. In re Olmstead, 4 B. R.
240; in re Freedley & Wood, Crabbe, 544.

Malicious Prosecution.— In order to recover in an action for maliciously
instituting proceedings in bankruptcy, the debtor must show not merely a
wrongful prosecution of the proceedings, but a want of probable cause.
Sonneborn v. Stewart, 2 Woods, 599.

In order to justify a party in instituting proceedings in bankruptcy, he
must have a legal debt or demand. If he is an actual creditor, he can
defend himself from the charge of maliciously instituting the proceedings,
by showing that he had probable cause to believe that the debtor had com-
mitted an act of bankruptcy. But if he had no legal debt or demand, then
he had no right to institute the proceedings, whether he had such probable
cause or not. He can not allege that, though he had not a legal debt or
demand, yet he had probable cause to believe he had such a demand. He
took on himself the risk of having such a demand. Ibid.

If it is shown by judicial determination that a party had no legal debt
or claim, he can not, in an action for maliciously instituting proceedings in
jbankruptey, show that he had probable cause to believe that an act of
bankruptcy had been committed, but is liable for the damages sustained
thereby. Ibid.

If a party had reason to believe that he had a legal debt or claim, and
had probable cause to believe that the alleged debtor had committed an
act of bankruptcy, he can not be charged with actual malice. Ibid.

A decision to the effect that a certain act is an act of bankruptcy, is
sufficient to protect a person from a charge of actual malice in reposing on
its authority, although it has since been modified. Ibid.

In order to recover exemplary damages, the debtor must show that the
creditor was guilty of actual malice. in other words that he willfully in-
stituted and carried on the proceedings whep he knew that there was DO
ground therefor. Ibid.
PROPERTY or DEBTOR. 313

§ 5027. [This section is repealed by act of June 22, 1874, ch. 390,
§ 14, 18 Stat. 182.]

AcTS OF 1867 and 1874, § 5028. If upon the hearing or trial
the facts set forth in the petition are found to be true, or if upon
default made by the debtor to appear pursuant to the order, due
proof of service thereof is made, the court shall adjudge the debtor
to be a bankrupt, and shall forthwith issue a warrant to take pos-
session of his estate,

Statute revised — March 2, 1867, ch. 176, § 42, 14 Stat. 587. Prior
Statute — April 4, 1800, ch. 19, § 5, 2 Stat. 23.

There is never any propriety in delaying the issuing of the warrant after
an adjudication in an involuntary case. On the contrary, it ought to be
and can be issued forthwith, as the statute requires, so that the property
of the bankrupt may be forthwith taken possession of by the marshal, as
the messenger of the court. In re Howes & Macy, 9 B. R. 423; 8. « 7
Ben. 102.

A day for the first meeting of creditors can be named in the warrant,
although the schedule of creditors has not been prepared. The day must
be not less than ten nor more than ninety days after the issuing of the
warrant. In re Howes & Macy, 2 B. R. 423; s. ec. 7 Ben. 102. See ante,
dD. 294.

Acts oF 1867 and 1874, § 5029. The warrant shall be directed,
and the property of the debtor shall be taken thereon, and shall be
assigned and distributed in the same manner and with similar pro-
-ceedings to those hereinafter! provided for the taking possession,
assignment, and distribution of the property of the debtor, upon his
own petition.

Statute revised —March 2, 1867, ch. 176, § 42, 14 Stat. 587. Prior
Statute — April 4, 1800, ch. 19, § 6, 2 Stat. 23.

There is no such thing as a surrender in involuntary bankruptcy. There
is a seizure of property. An adjudication in involuntary bankruptcy, even
though uncontested, does not make the debtor a voluntary bankrupt or
give him the privilege of making, or the register the power of accepting,
the surrender which only a voluntary bankrupt can make. Nor can it
make any difference, that after an uncontested adjudication in an involun-
tary case, the bankrupt desires to make a surrender. The machinery of an
involuntary ease having been set in motion, the case must proceed as an
involuntary case. The court has no discretion to vary the mode of pro-
cedure, or to substitute the register for the marshal, as the officer to act.
In re Howes & Macy, 9 B. R. 483; s. ¢. 7 Ben. 102.

 

1 So amended by act of February 18, 1875, ch. 80, 18 Stat. 320.
314 Tur Bankruptcy Law.

An order may be passed allowing the debtor to sell his property at retail,
and pay the proceeds to the messenger daily. In re Reiman & Friedlander,
11 B. R. 21; s. c, 138 B. R. 128; s. ec. 7 Ben. 455; s. c. 12 Blatch. 562.

If the marshal under the warrant takes property out of the possession of
a receiver appointed by a State court, he must return it. In re Glenham
Manut, Co., 1 Cent. L. J. 100.

Act or 1898, Cu. 3, § 7. Duties of Bankrupts— (a) The bank-
rupt shall * * * (8) prepare, make oath to, and file in court
within ten days, unless further time is granted, after the adjudica-
tion, if an involuntary bankrupt, and with the petition if a volun-
tary bankrupt, a schedule of his property, showing the amount and
kind of property, the location thereof, its money value in detail, and
a list of his creditors, showing their residences, if known, if unknown,
that fact to be stated, the amounts due each of them, the considera-
tion thereof, the security held by them, if any, and a claim for such
exemptions as he may be entitled to, all in triplicate, one copy of
each for the clerk, one for the referee, and one for the trustee; and
(9) when present at the first meeting of his cerditors, and at such
other times as the court shall order, submit to an examination con-
cerning the conducting of his business, the cause of his bankruptcy,
his dealings with his creditors and other persons, the amount, kind,
and whereabouts of his property, and, in addition, all’ matters which
may affect the administration and settlement of his estate; but no
testimony given by him shall be offered in evidence against him in
any criminal proceeding.

Act oF 1867, § 5030. The order of adjudication of bankruptcy
shall require the bankrupt forthwith, or within such number of days,
not exceeding five, after the date of the order or notice thereof, as
shall by the order be prescribed, to make and deliver, or transmit
by mail, post-paid, to the messenger, a schedule of the creditors and
an inventory? and valuation of his estate in the form, and verified
in the manner required of a petitioning debtor.

Statutes revised — March 2, 1867, ch. 176, § 42, 14 Stat.. 587; July 27,
1868, ch. 258, § 2, 15 Stat. 228.

Act oF 1867, § 5031. If the debtor has failed to appear in person,
or by attorney, a certified copy of the adjudication shall be forthwith

 

1So amended by act of June 22, 1874, ch. 390, § 15, 18 Stat. 182.
Duties or BANKRUPTS. 315

served on him by delivery or publication in the manner provided
for the service of the order to show cause: and if the bankrupt is
absent or can not be found, such schedule and inventory shall be
prepared by the messenger and the assignee from the best informa-
tion they can obtain.

Statute revised — March 2, 1867, ch. 176, § 42, 14 Stat. 537.

The service of the order of adjudication is a necessary incident to the
duty of serving the warrant, although it is not embraced within the
command of the writ. The service by publication is mainly a right or
privilege personal to the bankrupt, and the delay in such service should
not retard the general course of proceedings. The return of the service of
the order may be made wholly on the warrant or separately on the war-
rant and order, but the latter course is preferable. In re Kennedy et al.,
7B. R, 337,
TITLE Ix.

PROCEEDINGS TO REALIZE THE ESTATE FOR
CREDITORS.

Act oF 1898, Cu.1, * * * §1. Definition —(9) “ Creditor”
shall include any one who owns a demand or claim provable in bank-
ruptcy and may include his duly-authorized agent, attorney or proxy.

Acr oF 1898, Cu. 6, * * * § 55. Meetings of Creditors.—
(a) The court shall cause the first meeting of the creditors of a bank-
rupt to ‘be ‘held, not less than ten nor more than thirty days after
the adjudication, at the county seat of the county in which the
bankrupt has had his principal place of business, resided, or had
his domicile; or if that place would be manifestly inconvenient as
a place of meeting for the parties in interest, or if the bankrupt is
one who does not do business, reside, or have his domicile within
the United States, the court shall fix a place for the meeting which
is the most convenient for parties in interest. If such meeting should
by any mischance not be held within such time, the court shall fix
the date, as soon as may be thereafter, when it shall be held.

Act or 1898, Cu. 6, § 58. Notices to Creditors.— (a) Creditors
shall have at least ten days’ notice by mail, to their respective ad-
dresses as they appear in the list of creditors of the bankrupt, or
as afterwards filed with the papers in the case by the creditors, unless
they waive notice in writing, of (1) all examinations of the bankrupt;
(2) all hearings upon applications for the confirmation of composi-
tions or the discharge of bankrupts; (3) all meetings of creditors;
(4) all proposed sales of property; (5) the declaration and time of
payment of dividends; (6) the’ filing of the final accounts of the
trustee, and the time when and the place where they will be exam-
ined and passed upon; (7) the proposed compromise of any contro-
versy, and (8) the proposed dismissal of the proceedings.

(b) Notice to creditors of the first meeting shall be published at
least once and may be published such number of additional times
as the court may direct; the last publication shall be at least one
week prior to the date fixed for the meeting. Other notices may
be published as the court shall direct.
DESIGNATION OF PAPERS. 317

(c) All notices shall be given by the referee, unless otherwise
ordered by the judge.

Acr oF 1898, Cu. 6, § 28. Designation of Newspapers.— (a)
Courts of bankruptcy shall by order designate a newspaper published
within their respective territorial districts, and in the county in which
the bankrupt resides or the major part of his property is situated,
in which notices required to be published by this Act and orders
which the court may direct to be published shall be inserted. Any
court may in a particular case, for the convenience of parties in
interest, designate some additional newspaper in which notices and
orders in such case shall be published.

Under the law of 1867 it was held that a mere clerical mistake occurring
in proceedings in bankruptcy, though resulting in a failure to specially
notify creditor, will not destroy the effect of the proceedings as regards
such creditor. Thornton v, Hogan, 17 B. R. 277.

Act oF 1867, § 5032. The notice to creditors under warrant
shall state: First. That a warrant in ‘bankruptcy has been issued
against the estate of the debtor.

Second. That the payment of any debts and the delivery of any
property belonging to such debtor to him or for his use, and the
transfer of any property by him, are forbidden by law.

Third. That a meeting of the creditors of the debtor, giving the
names, residences, and amounts, so far as known, to prove their
debts and choose one or more assignees of his estate, will be held
at a court of bankruptcy, to be holden at a time and place designated
in the warrant, not less than ten nor more than ninety days after
the issuing of the same.

Statute revised — March 2, 1867, ch. 176, § 11, 14 Stat. 521. Prior Statute
— April 4, 1800, ch. 19, § 6, 2 Stat. 23.

The fixing of the time for the first meeting of creditors is a matter in
the discretion of the register. In re Heyes, 1 B. R. 21; s. c. 1 Ben. 883; s. ¢
36 How. Pr. 249.

Where, after the issuing of the warrant, an amendment is made adding
the names of a large number of creditors, a new warrant should be issued,
to be served on all the creditors of the bankrupt. This warrant should
briefly recite the proceedings that gave rise to the new warrant, and
embrace the names contained in the original warrant, as well as those

‘added by the amendment. If the newspaper notices have been properly:
given under the original warrant, they need not be repeated. In re Perry,
318 THE Bankruptcy Law.

1B. R. 220;5.¢c.1L. T, B. 4; in re Ratcliffe, 1 B. R. 400; in re Morgenthal,
1B. RB. 402; in re Hall, 2 B. R. 192; s. c. 16 Pitts. L. J. 52.

Act oF 1898, Cu. 6, § 55. Judge or Referee Shall Preside.—
(b) At the first meeting of creditors the judge or referee shall pre-
side, and, before proceeding with the other business, may allow or
disallow the claims of creditors there presented, and may publicly
examine the bankrupt or cause him to be examined at the instance
of any creditor.

Acts oF 1867 and 1874, § 5033. At.the meeting held in pursu-
ance of the notice, one of the registers of the court shall preside,
and the messenger shall make return of the warrant and of his
doings thereon; and if it appears that the notice to the creditors
has not been given as required in the warrant, the meeting shall
forthwith be adjourned, and a new notice given as required.

Statute revised — March 2, 1867, ch. 176, § 12, 14 Stat. 522,

The marshal’s return is only prima facie evidence of the matters set
forth therein. The notice required by the warrant must be given, and
until due notice has been given, an assignee can not be chosen or ap-
pointed. If by the return it appears that due notice has been given, the
proceedings go on. If by the return it appears that due notice has not
been given, the meeting is adjourned. But the return is not conclusive,
For, if, although the return states the due giving of the notice, it satis-
factorily appears that due notice has not been given, the meeting must be
adjourned. If, however, the return shows that due notice has been given,
and there is no satisfactory evidence aliunde that due notice has not been
given, the return is prima facie evidence of the due giving of notice, and
is conclusive until rebutted; and is sufficient authority for the register to
proceed and cause an assignee to be chosen or appointed. In re W. D.
Hill, 1 B. R. 16; s. ¢. 1 Ben. 321; in re J. Pulver, 1 B. R. 46; s. c. 1 Ben. 381;
in re Hall, 2 B. R. 192; s. c. 16 Pitts. L. J. 52.

When the papers in the case show that notices of the issuing of the war-
rant and of the first meeting of creditors were duly published, and that a
like notice, containing the name of a particular creditor as creditor, and a
statement of his residence, and of the amount of his debt, ana the other
matters required, was duly served by mail upon him, the fact that he did
not receive it, will not affect the regularity of the proceedings. In re
Stetson, 3 B. R. 726; s. c. 4 Ben. 127,

The word “given,” wherever used in this section, means published as
well as served. To make the proceedings regular, the publication must be
completed, and the notices served before the commencement of the period
of ten days immediately preceding the return day of the warrant. In re
Devlin & Hagan, 1 B. R. 35; s. c. 1 Ben. 335; s. c. 1 L. T. B. 32; in re J.
Pulver, 1 B. R. 46; s. c. 1 Ben, 381.
JUDGE OR REFEREE TO PRESIDE — TRUSTEES. 319

A return by the marshal, in a case of involuntary bankruptcy, that he
has sent written or printed notices to the creditors named on the schedules
and herewith returned, which schedules were made up by him on the
best information he could obtain in respect thereto, is sufficient, although
it does not state the sources of the information, or that the bank-
rupt has furnished schedules or refused to furnish them, or that proceed-
ings have been taken ineffectually to compel him to furnish them. In re
James M. Adams, 5 Ben. 544.

Areturn that the marshal has sent the notices to the creditors on the
schedule handed to him by the attorney for the petitioning creditor, is in-
sufficient. In re Josiah Ferris, Jr., 6 Ben. 473.

A notice addressed to “ Levley, New York,” can not be presumed to
have reached Lawrence J. Levy, although he resides and does business in
New York. The two names are not idem sonans, and can not, by any
stretch of construction, be held to be the same in any respect whatsoever.
In re Wm. Archenbraun, 11 B. R. 149; s.¢. 7 C. L. N. 99.

The new notice need only be given to remedy the defects or irregulari-
ties in the first notice. If the defect occurs in the publication, the service
on the creditors being regular, a new notice must be published, but no new
notices need be served on the creditors. If the defect occurs in the service
of the notice on the creditors, the publication being regular, a new notice
must be served on the creditors, but no new notice need be published. In
re Devlin & Hagan, 1 B. R. 35; s. c. 1 Ben. 335; s. c. 1 L. T. B. 32; in re J.
Pulver, 1 B. R. 46; s. c. 1 Ben. 381; in re Hall, 2 B R. 192; s. c. 16 Pitts.
L. J. 52.

When, in proceedings in involuntary bankruptcy, proper publication has
been made, but no notices have been served upon creditors, because the
bankrupt did not have sufficient time to prepare his schedules, the proper
course is to adjourn the meeting to a day certain, and to direct the giving
for the adjourned day of a new notice in respect of the serving by mail
or personally, but not in respect of the publication. When there is no
adjournment in a case where the service of the warrant is defective, the
proceedings fall through, and there must be a pew warrant. In re Schepe-
ler et al., 3 B. R. 170; s. ec. 3 Ben. 346.

A notice not addressed to the creditor by his name does not amount to a
notice. The only way in which to cure such an error is by issuing and
serving a new and correct notice, unless the creditor will voluntarily ap-
pear and waive notice, which waiver will, of course, bind him. Anon., 1
B. R. 123.

All proceedings founded upon a defective notice are irregular, and must
be set aside. In re Hall, 2 B. R. 192; s. c. 16 Pitts. L. J. 52.

Act oF 1898, Cu. 1, § 1. (a) The word (26) trustee shall include
all the trustees of an estate.

Act or 1898, Cu. 5, § 44. Appointment of Trustees.— (a) The
creditors of a bankrupt estate shall, at their first meeting aften the
320 Tur Bankruptcy Law.

adjudication or after a vacancy has occurred in the office of trustee,
or after an estate has been reopened, or after a composition has been
set aside or a discharge revoked, or if there is a vacancy in the office
of trustee, appoint one trustee or three trustees of such estate. If
the creditors do not appoint a trustee or trustees as herein provided,
the court shall do so.

§ 45. Qualifications of Trustees (a) Trustees may be (1) in-
dividuals who are respectively competent to perform the duties of
that office, and reside or have an office in the judicial district within
which they are appointed, or (2) corporations authorized by their
charters or by law to act in such capacity and having an office in
the judicial district within which they are appointed.

Assignee is but a trustee for the creditors. While he holds the property,
a creditor may bring an action to set aside the transfer by the bankrupt, as
fraudulent, if he makes the assignee a party; if not, the defendant may set
this up as:a defect of parties. Dewey v. Moyer, 16 B. R. 1.

Until an assignee is appointed, the bankrupt is the trustee of his estate
for the benefit of his creditors. Ex parte Tremont Nat. Bk., in re Battey,
16 B. R. 397.

If he is an indorser upon notes or bills which mature before the appoint-
ment of an assignee, he may waive demand and notice. Ibid.

Semble, That he may, even without leave of court, begin any suits neces-
sary to save statute of limitation, or such as are otherwise of immediate
urgency, although he can not without suit receive payment. Ibid.

Acr or 186%, § 5034. The creditors shall, at the first meeting
held after due notice from the messenger, in presence of a register
designated by the court, choose one or more assignees of the estate
of the debtor; the choice to be made by the greater part in value
and in number of the creditors who have proved their debts. If
no choice is made by the creditors at the meeting, the judge, or
if there be no opposing interest, the register, shall appoint one or
more assignees. If an assignee, so chosen or appointed, fails, within
five days, to express in writing his acceptance of the trust, the judge
or register may fill the vacancy. All elections or appointments of
assignees shall be subject to the approval of the judge; and when,
in his judgment, it is for any cause needful or expedient, he may
appoint additional assignees, or order a new election.

Statute revised — March 2, 1867, ch. 176, § 13, 14 Stat. 522, ;
Choice of Assignee by Creditors.— The meeting should be organized at
the hour designated in the notice, or as soon thereafter as practicable, and
Cuoick oF ASSIGNEE BY CREDITORS. 821

should be kept open until a choice of assignee is made, or it is ascertained
that no choice can be made. Where the creditors are so numerous that it
is impossible to take the proofs of all the debts on the day designated in
the warrant, the meeting may be adjourned from day to day, so as to fur-
nish a proper opportunity to all creditors to prove their debts, and thus
qualify themselves to join in selecting an assignee. The several adjourn-
ments will constitute but one meeting, and will affect the proceedings in
no other way than would a necessary postponement of business from one
to another hour in the same day. See Rule VI. In re Phelps, Caldwell &
Co., 1 B. R. 525; s.c. 2 L. T. B. 25; in re C. H. Norton, 6 B. R. 297.

No particular mode nor manner of voting is prescribed by the act. It
may be assumed, therefore, that any mode or manner of voting, by which
the choice of each creditor entitled to vote is clearly expressed, is sufficient.
It may, no doubt, be taken by ballot or viva voce. It may be taken by
calling the name of each creditor, or by calling upon the person or persons
representing creditors by power of attorney, to name the choice of the
creditor or creditors represented by him. The latter mode can not be
recommended as the most approved mode, but can hardly be said to be
incompetent or irregular, so long as it clearly appears expressed. In re
Lake Superior 8. C. R. R. & I. Co., 7 B. R. 376.

The register should not in any manner interfere with or influence, either
directly or indirectly, the choosing of an assignee by the creditors. His
action should in all things be that of strict impartiality, not only in fact,
but in appearance, and he should not present the semblance of having any
interest or bias in favor of or against any particular person or assignee.
In re J. O. Smith, 1 B. R. 248; s. ec. 2 Ben. 113.

No ereditor has any right to be heard, either in person or by attorney,
upon any part of the proceedings until he has proved his claim. In re
W. D. Hill, 1 B. R. 16; s. c. 1 Ben. 321; in re Altenheim, 1 B. R. 85; s. c.
1 Ben. 431; in re Brisco, 3 B. R. 226; in re Decatur Jones, 2 B. R. 59; in re
Phelps, Caldwell & Co., 1 B. R. 525; s.c. 2 L. T. B. 25.

Votes can not be objected to on the ground that they have been in-
fluenced and procured by the bankrupt in his own interest. In re Noble,
3B. R. 96; s. c. 3 Ben. 332.

The register has no power, without a special order of court, to inquire
into the rights of creditors to vote, save for the purpose of postponing the
proof of claims until an assignee is chosen pursuant to the provisions of
section 5082. In re Noble, 3 B. R. 96; s. c. 8 Ben. 332; in re Herman et al.,
3 B. R. 618; s. c. 4 Ben, 126.

When objections are made to the claim of a creditor, the register should
listen to them, and if a prima facie case is made out, should postpone the
proof of the claim till the assignee is chosen. In re Herman et al. 3 B. R.
618; s. c. 4 Ben. 126; in re Lake Superior 8S. O. R. R. & I. Co, 7 B. R. 376.

A claim may be postponed where the doubts are whether the claim is
valid, in view of the receipt of a preference contrary to the provisions of
the act by the creditor. The register ought to exclude from voting for
an assignee all persons who appear to him, on proof, to be inhibited from
proving their debts on this account. He may do so by postponing the

21
322 Tue Bangkruproy Law.

proof of such claims until after the election or appointment of an assignee,
although the depositions for the proof of such claim have been produced
to and filed with him. Taking property on attachment or execution is
receiving a preference. Merely obtaining a judgment is not. In re Ezra
M. Stevens, 4 B. R. 367; s. c. 4 Ben. 513; s. c. 2 L. T. B. 121.

If the objection to the right of a creditor who has made the proper for-
mal proof of his debt to vote, rests on the sole ground that he has security
for the debt upon the bankrupt’s property, the better, if not the only
proper mode of presenting the question, is to move to expunge the proof.
In re Jaycox & Green, 7 B. R. 303.

A vote may be taken for assignee while a contest is pending over the
postponement of the proof of claims. The bankruptcy act nowhere directs,
nor does it seem to contemplate, a postponement of the vote for assignee,
where some creditors have proven their debts, in order to enable others to
do so. On the contrary, it seems to contemplate the utmost practical ex-
pedition in choosing the assignee, and for a very good reason, because until
there is an assignee, there is no one to represent, or whose official duty is
to look after, the interests of the estate. The creditors who have proved
their claim and are entitled to vote for assignee, may, no doubt, consent,
if they see fit to wait for others to prove, before proceeding to choose
the assignee. It is, however, optional with them. But even this power
should be exercised sparingly, and the vote ought always to be taken at
the earliest practical moment. In re Lake Superior 8. C. R. R. & I. Co, 7
B. R. 376; in re Northern Iron Co., 14 B. R. 356.

In any case where a creditor, whose proof of claims has been postponed
by the register, is dissatisfied with the result of the vote for assignee, and
considers the postponement of his claim erroneous, such creditor may
have the proceedings certified to the court, and if the postponement ap-
pears to have been erroneous, the court may set aside the result of the
vote, and refer the matter back for a new vote, unless it appears to a
reasonable certainty that the result would not be changed by another vote.
The postponement of the proof of the claim affects no right of a creditor,
except a right to vote for assignee, and where it appears that the exercise
of such right would be barren of results, it would be useless to delay the
proceedings in order to afford such creditor the opportunity to exercise
such right. In re Lake Superior S. C. R. R. & I. Co., 7 B. R. 376.

If debts are objected to, and the register considers them clearly valid
and admissible, yet he can not admit them to proof against objection. In
such an event the court must be applied to if the objections are not with-
drawn. The register has no power to proceed to a choice of assignee with-
out the votes of all the creditors who wish to vote, if their votes can in-
fluence the result, unless the register himself considers the claims doubt-
ful. He can not postpone them merely because they are objected to. In re
Bartusch, 9 B. R. 578.

A creditor who makes proof of his debt in due form, but retain$S the
deposition in his own possession, is not a creditor who has proved his debt,
within the technical meaning of those terms as used in the bankruptcy act.
CHOICE or ASSIGNEE BY CREDITORS. 323

In re Sheppard, 1 B. R. 439s. ce. 1 L. T. B. 49; s.¢c. 7 A. L. Reg. 484. Con-
tra, King v. Bowman, 24 La. An. 506.

A creditor holding security can not vote for an assignee. In re Davis
«& Son, 1 B. R. 120; s. c. 7 A. L. Reg. 30; in re Walton et al., 1 Deady, 442;
inre S. Hanna, 7 B. R. 502; -s. c.5 Ben. 5; in re J. F. & C. R. Parkes, 10 B.
hk. 82. Contra, in re Bolton, 1 B. R. 370; s. ce. 2 Ben. 189.

A secured creditor who seeks to prove his debt before the choice of an
assignee, must abandon his security; whereas, if he seeks to prove his debt
after the choice of an assignee, he is permitted to do so when he has com-
plied with the terms of section 5075. As he has security, the policy of the
act is to leave his rights to be settled after there is an assignee to contest
his claims to the property and protect the estate. In re High et al., 3 B. R
1$2;s.c. 1L. T. B. 175;5s.c2C.L. N. 9.

But the security must be upon the property of the bankrupt; otherwise
he may prove the full amount of his claim, and vote. In re Cram, 1 B. R.
504; s.c. 1 L. T. B. 65.

A creditor who holds a mortgage upon the homestead of the bankrupt,
has the right to prove his demand and vote. In re J. R. Stillwell, 7 B. R.
226; s.¢c. 11 A. L. Reg. 706; in re Tertelling, 2 Dillon, 342, note.

Where a creditor has two claims, one of which is unsecured and the
other secured, he may prove the former and vote. In re J, F. & C. R.
Parkes, 10 B. R. 82.

An officer of a bankrupt corporation, if he is a creditor, has just as much
right to vote for an assignee as any other creditor. In re Northern Iron
Co., 14 B. R. 356.

Agents and attorneys-at-law can not vote without producing letters of
attorney. The party who is entitled to vote for another must be his duly
appointed attorney in fact. In re Purvis, 1 B. R. 163; s.a1L. T. B. 19;
in re Knoepfel, 1 B. R. 23; s. c. 1 Ben. 330.

A partner may cast the whole vote of his firm, but, in estimating the
number of votes, the firm vote will only count as one vote. One of several
joint creditors, not partners, can not act or vote without the consent of the
others. In re Purvis, 1 B. R. 163; s.¢c. 1 L. T. B. 19.

Where the bankrupt petitions alone, the creditors of a firm of which he
was a member can not vote. Ibid.

There is no such thing known to the law as an informal vote. An ex-
pression of opinion viva voce by the creditors as to their preference is a
vote. In re Pearson, 2 B. R. 477.

When a creditor sells or assigns his debt after it has been proved, he has
no further business in court, although the proceedings must be carried on
in his name. The actual owner and assignee must control the debt,
vote upon it and receive the dividend. Where several claims have been
assigned to one person, he has but one vote. In re Frank, 5 B. R. 194;
8. c. 5 Ben. 164; 5s. c. 2 L. T. B. 188.

Form No. 15 contemplates that each creditor shall vote, and that his
name, residence, and amount of debt shall be recorded. If, on the first
vote, no choice be made, by reason of a greater part in number and value
failing to concur, a second, third, or any number of ballots may be had,
B24 Tur Bankruptcy Law.

until the required concurrence be obtained. ‘If the creditors can not agree
upon the first day of the meeting, they may adjourn to another day. If no
such concurrence is obtained, and the meeting adjourns sine die, the con-
tingency happens which authorizes the judge, or if there be no opposing
interest, the register to appoint an assignee. in re Phelps, Caldwell & Co.,
1B. R. 525;58.c2 L. T. B. 25.

The duty of preparing the memorandum for the signatures of the cred-
itors devolves on the register. The recital it contains as to notice must
be within his knowledge, derived from the files in the office. In it must
be stated the name of the assignee chusen or nominated, and to ascertain
this the usual practice is to take a viva voce vote of the creditors, and
‘when the required concurrence appears to prepare the memorandum for
the signatures of the electing creditors. This memorandum constitutes the
evidence of the election of an assignee. Unless it bears the signatures of
a majority in number and value of the creditors who have proved their
claims, there is no authentic evidence of an election, and the register must
certify a failure to make choice by the creditors. In re Pfromm, 8 B. R.
857.

A creditor who has given a viva voce vote in favor of a party may refuse
to sign the memorandum, for he has the right to change his vote at any
period during the progress of the election. Ibid. ‘

No creditor can change his vote after a final adjournment. In re Scheif-
fer & Garrett, 2 B. R. 591; s.c1C. L. N. 261.

Proofs which are filed after a vote is taken, can not be allowed to come in
and change the result. In re Lake Superior S. C. R. R. & I. Co.,, 7B. R.
376. :

The choice is to be made by the greater part in value and number ot
those who have proved their debts, and not the greater part, etc., of those
present and voting. Such is the plain import of the statute. If the
greater part in number and value of those who have proved their debts
do not appear and vote for the same person, then there is a failure on the
part of the creditors to make a choice. In re Purvis, 1 B. R. 163; s.¢c 1
L. T. B. 19; in re Scheiffer & Garrett, 2 B. R. 591; s.c.1O L. N. 261; in
re Pearson, 2 B. R. 477.

Where, at the first meeting of the creditors, only one creditor appears
and proves his debt, and there are no other debts proven, the right to
choose an assignee belongs to the sole creditor who has proved his claim.
In re Haynes, 2 B. R. 227; s. ce. 1 L. T. B. 121.

It is the policy of the bankruptcy act to give the creditors of the
bankrupt the choice, in the first instance, of the person who is to take «s-
sets and manage them. It is only when the creditors fail to elect, that the
register or judge can appoint an assignee. In re J. O. Smith, 1 B. R. 243;
s.c. 2 Ben. 113; in re Scheiffer & Garrett, 2 B. R. 591; s.c.1C. L. N. 261.

Where, after the issuing of the warrant, an amendment is made, adding
the names of a large number of creditors, and a new warrant has been
issued, the creditors, if they deem it expedient, may, on the return day of
the second warrant, elect an assignee, and take steps to remove any as-
signee that may have been elected or appointed in the proceedings under
APPOINTMENT OF ASSIGNEE. 325

the first warrant. In re Perry, 1 B. R. 220; s. ce. 1 L. T. B. 4; in re Rat-
cliffe, 1 B. R. 400; in re Morgenthal, 1 B. R. 402.

When the name of only one creditor is added by an amendment, after
the meeting has been held, it is not necessary or proper that a new meet-
ing of the creditors to choose an assignee should be held. The creditor
should be formally informed of the existence and condition of the suit, and
notified to prove his claim if he so desires. In re Carson, 5 B. R. 290; s. ¢.
5 Ben. 277; s. c. 2 L. T. B. 18.

Appointment of Assignee by the Register or the Court.— The opposing
interest which precludes the register from appointing an assignee is not
merely an interest contending by vote, but an interest in opposition to the
exercise of the power of appointment by the register. In re George
Jackson et al., 14 B. R. 449.

Where there is a failure on the part of the creditors assembled at a
meeting to choose an assignee, the register should state to them that the
duty of appointing an assignee devolves upon the register, unless there is
an opposing interest; and that any creditor has the right to object to the
register’s making the appointment. In re Pearson, 2 B. R. 477.

When the register announces that he has the right to appoint an as-
signee, unless there is an opposing interest, distinct disclosure should be
made if there is any opposing interest. In re George Jackson et al. 14
B. R. 449. :

The appointment by the register is irregular where there is an opposing
interest. In re Pearson, 2 B. R. 477; in re C. H. Norton, 6 B. R. 297,

There can be only one first meeting, and all adjournments are but a con-
tinuance of the same, and if there is any opposition or opposing interest to
an assignee at any stage of such first meeting, such opposition is to be
considered as continuing until the termination of. such first meeting,
whether upon the day first appointed or any other day to which such
meeting may be continued, unless it affirmatively appears that such op-
position has been withdrawn. In re C. H. Norton, 6 B. R. 297.

If the register attends at the time and place specified in the warrant and
notice for the first meeting of creditors, and no creditor appears, or is
represented, the meeting is held within the provisions of the act as fully
and effectually as if creditors had appeared or been represented at the
meeting, and the contingency happens which the section speaks of, namely,
that no choice of assignee has been made by the creditors at the meeting,
and the register is authorized to appoint one. In re Cogsweil, 1 B. R. 62;
s. c 1 Ben. 388.

An assignee should be appointed, even though no cebts have been
proved. In re Cogswell, 1 B. R. 62; 8. c. 1 Ben. 388; in re Anon., 1 B. R.
123.

An assignee should be appointed, even though there are no apparent
assets, for he is designed by the statute to act as a trustee on behalf of the
creditors, and it is his duty to search out and collect every species of prop-
erty belonging to the bankrupt. In re Alexander Graves, 1 N. Y. Leg.
Cbs. 218; s. c. 5 Law Rep. 25.

If the resolution to appoint a trustee is not confirmed by the court, and
326 Tur Bankruptcy Law.

the first meeting has been adjourned without the election of an assignee,
the court may appoint an assignee. In re Stuyvesant Bank, 6 B. R. 272.

A general order appointing a person assignee in a class of many cases, is
invalid unless it enumerates the particular cases in which the person is in-
tended to be appointed. In re William Major, 14 B. R. 71.

A general order appointing an assignee will not be recognized as valid in
any case unless the assignee qualifies specially in such case. Ibid.

Approval of the Assignee by the Judge.— The creditors are alone inter-
ested in the distribution of the estate, and it is to be supposed that
creditors having pecuniary interests will carefully canvass and inquire
into the qualifications of the assignee to whom they recommend the estate
to be intrusted. They are supposed to be commercial men, intimately
acquainted with the affairs of the bankrupt and the qualifications essential
and proper to fit a man to act as their trustee, and unless good and strong
reasons are presented to the court, the opinion of the creditors, represent-
ing a large majority in amount and number of the parties interested, is
entitled to great weight in determining who is the proper person to ad-
minister the estate in which they are interested. The discretion vested in
the court of approving or disapproving of an assignee, is a legal discre-
tion — one that must be controlled, not by caprice, prejudice, partiality,
likes or dislikes, or any other reason than a due regard to the fitness of
the proposed assignee for the position. In re Funkenstein & Co., 1 Pac.
% 8, 1,

When the register is satisfied that any reasons exist why an assignee
elected or appointed should not be approved by the judge, it is his duty
to state such reasons freely in submitting the question of approval. In re
Bliss, 1 B. R. 78; s. c. 1 Ben. 407; in re Scheiffer & Garrett, 2 B. R. 591; 5. ¢.
10. L. N. 261. .

Appointments made by registers, as well as selections made by creditors,
are in all cases subject to the approval of the judge. In other words, until
the judge has approved the selection, no one should enter upon the duties
of assignee. If the judge disapproves, the election or appointment fails.
The register has no power to approve, nor is his appointment more than
the designation to the judge of a suitable person for the trust. In re
Scheiffer & Garrett, 2B. R. 591; s.¢.10C. L. N. 261.

When there is no imputation upon the competency or character of an
assignee duly elected by the creditors, the judge will not withhold his ap-
proval. The assignee is entitled to the position by virtue of the law. In
re John C. Grant, 2 B. R. 106; in re J. O. Smith, 1 B. R. 248; s. @. 2 Ben.
118; in re Joseph Barrett, 2 B. R. 583; s.c.1L. T. B. 1443 8.010. L. N.
202.

When objection is taken to the approval of an assignee, the burden of
proof is upon the objector; but in so delicate a matter, and one in which
direct evidence is not always possible, reasonable cause of suspicion may
in some cases be sufficient. In re Clairmont, 1 B. R. 276; s. c. Lowell, 230;
s.c.1L. T. B. 6.

If the judge is advised that in any particular case the bankrupt has
brought in one or more of his particular friends, and has by them chosen
APPROVAL OF ASSIGNEE. 827

an assignee, who is also his friend and in his interest, he will withhold
his approval. It is certainly against the policy of the bankruptcy act that
a bankrupt should select his assignee. It is true that if the creditors do not
care sufliciently for the matter to attend the meeting, they ought not to
complain. But still the law is no less brought into contempt. The dis-
charge of a debtor who does not surrender all his assets is precisély what
those charged with the execution of the law are bound to guard against.
In re Bliss, 1 B. R. 78; s. c. 1 Ben. 407.

A person will not be allowed to make a regular business of seeking out
creditors of bankrupts, and soliciting them to prove their debts and vote
for him as assignee, with a view to such pecuniary emolument as may
legitimately belong to the position. Such a course opens the door to abuses.
In re Doe, 2 B. R. 308; s. c. 3 Ben. 66.

It is improper for a party seeking to be assignee to promise to pay the
claim of a creditor in full, in order to obtain his vote, and an election so
obtained will not be approved. In re Haas & Sampson, 8 B. R. 189.

Whether there has been such an influence exercised by the assignee or
not as to tfnvalidate his election, must be left to depend upon the circum-
stances of each case. There might be some solicitation on the part of the
assignee, which would in no way influence the choice of the creditors.
Neither the bankrupt nor his solicitor can make the proceedings in bank-
rupty the proceedings of the bankrupt alone. The bankrupt can not be
allowed to elect his assignee. Such an assignee might favor the bankrupt
at the expense of the creditor’s interest. That the assignee is the con-
fidential clerk of the bankrupt’s attorney, may be a goed reason for with-
holding the approval of the choice, if objections are made by the creditors
before approval; but such objections should be made, if the facts are
known to the creditors, immediately after the election. And if, with full
knowledge of the facts, the assignee is allowed to go on and exercise his
duties, something more ought to be shown — some misconduct} or that the
relation existing is in some way prejudicial to. the rights or interests of
the creditors. If the creditors, without any undue influence, and with
knowledge of the facts, choose such an assignee, and the judge approves,
without objection, it is too late to object. In re Mallory, 4 B. R. 153; s. ¢.
21. T. B. 130.

Any general bias either for or against the bankrupt, or his dealings, will
not disqualify a person of standing and character. In contested cases it
would be almost impossible to find any suitable assignee connected in any
way with the estate, who had not formed such an impression. The cred-
itors, moreover, retain an important power over the settlement of the es-
tate, and ought to exercise an oversight of the affairs pertaining to it. In
re Clairmont, 1 B. R. 276; s. c. Lowell, 230; s. c. 1 L. T. B. 6.

Under certain circumstances, a relative of the bankrupt will not be ap-
proved. In re Powell, 2 B. R. 45; in re Bogert & Ockley, 3 B. R. 651.

The director of a corporation to which a judgment was confessed by the
bankrupt shortly before the filing of his petition will not be approved.
He comes within the spirit, if not the letter, of the clause which declares
328 Tur Bankruptcy Law.

that a preferred creditor shall not be eligible as assignee. In re Powell, 2
B. R. 45.

Yhe assignee must reside in the judicial district in which the proceed-
ings are pending. In re Havens, 1 B. R. 485.

Where a person resides out of the district, but has a permanent place of
business in the district, he may be appointed assignee in conjunction with
another who resides in the district. In re Loder et al., 2 B. R. 515.

If the assignee does not reside in the same place as the bankrupt, a
person residing in that place may be associated with him as coassignee.
In re Jacoby, 1 W. N. 15.

An attorney for a creditor of the bankrupt may be assignee. Section
5035 declares who shall be ineligible as assignee. There is no other pro-
vision in the bankruptcy act rendering a person ineligible for this position,
In re Joseph Barrett, 2 B. R. 5383; s.¢c.1L. T. B. 144; s.¢c. 1 C. L. N. 202;
in re Lawson, 2 B. R. 396.

The attorney of the bankrupt may be chosen assignee, but he can not
occupy the position of counsel and assignee at the same time. He must
withdraw from the former position. In re Clairmont, 1 B. R. 276; s. c
Lowell, 230; s.c.1L. T. B. 6 ;

When an adjudication of bankruptcy is made against the debtor in three
different districts, each district should have an assignee within its juris-
dictional limits and a resident thereof. In re Boston R. R. Co., 5 B. R.
233.

A person can not act both as receiver and as assignee, and have his acts
authorized by the State court, which appointed him receiver, and by
the bankruptcy court. This is a position of incompatibility which the
bankruptcy court can not permit one of its officers to occupy. If he is
to be assignee, he must look to the bankruptcy court alone as the source
of his authority. If he is to hold and administer, as receiver under the
State laws, the property which be has received as receiver, he must so
administer it, without looking to the bankruptcy court for any authority
or direction. If he is to administer such property as an assignee, le
must so administer it, without looking to the State court, or to any other
court but the bankruptcy court, for authority or direction. He must, more-
over, account for the property received by him, and it is not proper that
an assignee be plaintiff, and, as receiver, be defendant in respect to these
matters. In re Stuyvesant Bank, 6 B. R. 272.

Upon the petition of a creditor, an additional assignee may be ap-
pointed. In re Overton, 5 B. R. 366.

An additional assignee will not in general be appointed at the request of
the minority, for the statute does not appear to intend a minority vepre-
sentation. The creditors have the right to decide upon the number of
assignees as well as to choose them. In re Clairmont, 1 B. R. 276; s. ¢.
Lowell, 230; s.c.1L. T. B. 6.

When the judge refuses to approve the choice made by the creditors,
he should order a new election. In re Scheiffer & Garrett, 2 B. R. 591;
s.c10C. L. N. 261.
BonpD oF TRUSTEES. 329

The court will not send a case back for a new election when it is not
apparent that a different result would or might be thereby attained. In re
Pfromm, 8 B. R. 357.

The court will not set aside an election of an assignee on account of any
irregularity in admitting a claim when its exclusion could not affect the
result. In re George Jackson, 14 B. R. 449.

Where a person acts as assignee in a particular case and is so treated by
the register and the judge, he may be deemed the assignee pro hac vice
as to that particular transaction, although he was never legally ap-
pointed and never qualified. In re William Major, 14 B. R. 71.

The courts uniformly disapprove of the same person acting as attorney
for the bankrupt and the assignee, not because the duties always are con-
flicting and adverse, but because they may be so. The assignee’s attorney
is a minister of the court, and his duty is to attend to the estate, even to
the prejudice of his own claims, and it is considered inconsistent with his
duty if he act also as attorney for the bankrupt. In re Mallory, 4 B. R.
153; s. c. 2 L. T. B. 180.

Acts oF 1867 and 1874, § 5035. No person who has received
any preference contrary to the provisions of this Title shall vote
for or be eligible as assignee; but no title to property, real or per-
sonal, sold, transferred, or conveyed by an assignee, shall be affected
or impaired by reason of his ineligibility.

Statute revised — March 2, 1867, ch. 176, § 18, 14 Stat. 525.

This clause declares who shall be ineligible as assignee. There is no
other provision in the act rendering a person ineligible for this position.
In re Joseph Barrett, 2 B. R. 533; s. c.1L. T. B. 144;s.c.1C. L. N, 202.

The director of a corporation to which a judgment was confessed by
the bankrupt shortly before the filing of his petition, comes within the
spirit, if not within the letter, of this clause. In re Powell, 2 B. R. 45.

Act oF 1898, Cu. 1, Sec. 1. * * * (26) “Trustee” shall
include all of the trustees of an estate.

Cu. 5, 8 50. Bond of Trustees.— (b) Trustees, before entering
upon the performance of their official duties, and within ten days
after their appointment, or within such further time, not to exceed
five days, as the court may permit, shall respectively qualify by en-
tering into bond to the United States, with such sureties as shall
be approved by the courts, conditioned for the faithful performance
of their official duties.

(c) The creditors of a bankrupt estate, at their first meeting after
the adjudication, or after a vacancy has occurred in the office of
trustee, or after an estate has been reopened, or after a composition
330 Tur Bankruptcy Law.

has been set aside or a discharge revoked, if there is a vacancy in the
office of trustee, shall fix the amount of the bond of the trustee;
they may at any time increase the amount of the bond. If the
creditors do not fix the amount of the bond of the trustee as herein
provided the court shall do so.

(d) The court shall require evidence as to the actual value of the
property of sureties.

(e) There shall be at least two sureties upon each bond.

(f) The actual value of the property of the sureties, over and
above their liabilities and exemptions, on each bond shall equal at
least the amount of such bond.

(g) Corporations organized for the purpose of becoming sureties
upon bonds, or authorized by law to do so, may be accepted as
sureties upon the bonds of referees and trustees whenever the courts
are satisfied that the rights of all parties in interest will be thereby
amply protected.

(h) Bonds of referees, trustees, and designated depositories shall
be filed of record in the office of the clerk of the court and may be
sued upon in the name of the United States for the use of any
person injured by a breach of their conditions.

(i) Trustees shall not be liable, personally or on their bonds, to
the United States, for any penalties or forfeitures incurred by the
bankrupts under this Act, of whose estates they are respectively
trustees.

(j) Joint trustees may give joint or several bonds.

(k) If any referee or trustee shall fail to give bond, as herein
provided and within the time limited, he shall be deemed to have
declined his appointment, and such failure shall create a vacancy in
his office.

(1) Suits upon referees’ bonds shall not be brought subsequent to
two years after the alleged breach of the bond. :

(m) Suits upon trustees bonds shall not be brought subsequent to
two years after the estate has been closed.

Act or 1898, Cu. 4, * * * § 49. Accounts and Papers of
Trustees.— (a) The accounts and papers of trustees shall be open
te the inspection of officers and all parties in interest.

Acts or 1867 and 1874, § 5036. The district judge at any time
may, and upon the request in writing of any creditor who has proved
his claim shall, require the assignee to give good and sufficient bond
to the United States, with a condition for the faithful performance
Accounts AND Papers oF TRUSTEES. 331

and discharge of his duties; the bond shall be approved by the judge
or register by his indorsement thereon, shall be filed with the record
of the case, and inure to the benefit of all creditors proving their
claims, and may be prosecuted in the name and for the benefit of
any injured party. If the assignee fails to give the bond within such
time as the judge or register orders, not exceeding ten days after
notice to him of such order, the judge shall remove him and appoint
another in his place.

Statute revised — March 2, 1867, ch. 176, § 13, 14 Stat. 522. Prior
Statute — August 19, 1841, ch. 9, § 9, 5 Stat. 447.

When a creditor demands it, an assignee should be required to give
pond. In re Fernberg, 2 B. R. 353.

No one but the district judge can require the assignee to execute a bond.
In re John W. Dean, 1 B. R. 249; s.¢c.1 L. T. B. 9. :

The assignee should, if required, give a separate and distinct bond for
each case in which he is appointed. A general bond, conditioned for the
faithful discharge of his duties in all cases in which he may be appointed,
is not sufficient. In Texas, a feme covert can not be a security. In re
McFaden, 3 B. R. 104.

The register has the power to require the assignee, upon the request
of creditors, to give bond, and may take testimony to determine the
amount thereof. In re Binninger & Clarke, 9 B. R. 568.

An order requiring an assignee to give bond must specify the time
within which the bond shall be filed, and if it omits to do so, the assignee
can not be deemed in default for not filing a bond. Inre George E. Sands,
7 Ben. 19.

Acts or 1867 and 1874, § 5037. Any assignee who refuses or
unreasonably neglects to execute an instrument when lawfully re-
quired by the court, or disobeys a lawful order or decree of the
court in the premises, may be punished as for a contempt of court.

Statute revised — March 2, 1867, ch. 176, § 18, 14 Stat. 525.

A list of the creditors who have proved their claims is an instrument
within the meaning of this section, and the assignee may be compelled
to furnish it to thé bankrupt. In re Blaisdell et al., 6 B. R. 78; s. c. 42
How. Pr. 274; 8. c. 5 Ben. 420.

§ 5038. An assignee may, with the consent of the judge, resign
his trust and be discharged therefrom.

Statute revised — March 2, 1867, ch. 176, § 18, 14 Stat. 525.
332 Tue Bankruptcy Law.

Act oF 1898, Cu. 5, § 46. Death or Removal of Trustees —
(a) The death or removal of a trustee shall not abate any suit or
proceeding which he is prosecuting or defending at the time of his
death or removal, but the same may be proceeded with or defended
by his joint trustee or successor in the same manner as though the
same had been commenced or was being defended by such joint
trustee alone or by such successor.

Act oF 1867, § 5039. The court, after due notice and hearing,
may remove an assignee for any cause which, in its judgment, ren-
ders such removal necessary or expedient. At a meeting called for
the purpose by order of the court in its discretion, or called upon
the application of a majority of the creditors in number and value,
the creditors may, with consent of the court, remove any assignee
by such a vote as is provided for the choice of assignee.

Statute revised — March 2, 1867, ch. 176, § 18, 14 Stat. 525. Prior
Statutes — April 4, 1800, ch. 19, § 8, 2 Stat. 23; Aug. 19, 1841, ch. 9, § 3,
5 Stat. 442.

A. motion to remove an assignee can be entertained by the court alone,
and not by the register. In re Stokes, 1 B. R. 489; in re New York
Mail Steamship Co., 2 B. R. 423.

The removal of an assignee is a matter in the discretion of the court.
Such discretion is, however, a legal discretion, and can only be exercised
to remove an assignee when cause is shown rendering such removal ex-
pedient or necessary. In re Blodgett & Sanford, 5 B. R. 472; in re Mal-
lory, 4 B. R. 153; s.¢c. 2 L. T. B. 130.

Upon a petition to remove the assignee for misconduct in instituting
a suit, the question is not whether the suit was without a proper legal
foundation, but whether its prosecution was fraudulent, malicious, or from
unjust motive, and not in good faith for the benefit of the general cred-
itors. In re Sacchi, 6 B. R. 398; s. c. 6 B. R. 497; s. c. 43 How. Pr. 250.

If one creditor becomes the sole creditor by the purchase of all the
other claims, a new assignee may, upon the application of the bankrupt
and such sole creditor, be substituted for the one originally elected by the
creditors. Ibid.

An assignee is not appointed simply for his own profit, but as trustee
for the creditors, and he is bound to exercise due diligence in collecting
and disposing of the property of the bankrupt, and in distributing its
proceeds among the creditors. If he is guilty of gross and culpable
neglect of duty in this respect, he may be removed. In re Morse, 7 B.
R. 56.

When creditors apply to an assignee to ascertain the condition of the
estate, it is his duty to communicate all material facts within his knowl-
edge, and the willful suppression of such facts is a ground for removal.
In re Perkins, 8 B. R. 56; s. ¢«. 5 Biss. 254.
DratTH oR RemMovau or TRUSTEES, 333

Such removal will be made where there is an irreconcilable disagree-
wInent between the assignee and a large portion of the creditors. The as-
signee is a trustee of each and every creditor. He receives a compensa-
tion for his services, and is held to strict diligence in watching the in-
terests of the creditors. The creditors are the beneficiaries of the court,
and have a direct pecuniary interest in the bankruptcy proceedings.
Courts of equity sometimes decree a substitution of trustees where there
has been no fault on the part of the trustees. Substitution has been made
where the trustees would not act together. The assignee must be allowed
some discretion in the prosecution of suits, and if he believes the expense
of a suit to recover property will be greater than the benefit to be de-
rived from the suit, if successful, he ought not to proceed. The court
will not constitute itself the legal adviser of the assignee. He has a
right to choose his own counsel, and must proceed with his duties ac-
cording to his best judgment, being held to no more than a just and
reasonable accountability. Should the court direct him when to proceed
in a suit, it would find that it had practically decided questions ex parte
which ought to have been decided only on a hearing of both parties in-
terested. In re Mallory, 4 B. R. 153; s. c. 2 L. T. B. 180; in re Perkins,
8 B. R. 56; s. c. 5 Biss. 254.

Erroneous legal advice, where the errors are so gross and frequent as
to be evidence of the incompetency of the legal adviser he has chosen,
may be cause for ordering the assignee to employ other counsel, but not
necessarily for removing the assignee. In re Blodgett & Sandford, 5 B.
R. 472.

After the majority of the creditors have voted to remove an assignee,
the court will exercise a judicial discretion in the matter, notwithstanding
the action of the creditors. Parties opposed in interest to the official
action of an assignee, do not have the power to dictate his conduct, even
if they happen to be able to command a majority vote of the creditors
themselves. -It is not the intention of the law that the majority should
have the absolute control over the rights and interests of the minority.
In re Dewey, 4 B. R. 412; s. ©. Lowell, 493; s. c. 2 L. T. B. 134.

When an assignee is guilty of misconduct, the register may be directed
under an order cf the court, to serve a notice on the assignee to show
cause why he should not be removed, and to employ counsel to represent the
estate and the cieditors. In re Price, 4 B. R. 406.

When the costs have been necessarily augmented by a charge of fraud
against the assignee, they must all be paid out of the estate. He is fully
Justified in rebutting the charge and vindicating himself, and the estate
must bear the costs. In re Mallory, 4 B. R. 153; s.c. 2 L. T. B. 130; in
re Blodgett & Sanford, 5 B. R. 472.

When the assignee is removed for misconduct, he might be compelled
to pay the costs of the proceedings for his removal. In re Morse, 7 B.

RR. 56.

At the meeting held under the second warrant issued in a case where an
amendment has been made, after the issuing of the first warrant, adding
the names of other creditors, the creditors may choose a new assignee,
334 Tue Bankruptcy Law.

and apply for the removal of any assignee that may have been elected
under the first warrant. Notice of such application should be given to
all creditors who have proved their debts. In re Perry, 1 B. R. 220; 5. ¢
1L. T. B. 4; in re Ratcliffe, 1 B. R. 400.

The right of compelling an assignee to account is a necessary incident
to the power of removal. Lucas v. Morris, 1 Paine, 396; in re Comfort
Sands, 1 U. S. L. J. 15.

Act oF 1867, § 5040. The resignation or removal of an assignee
shall in no way release him from performing all things requisite
on his part for the proper closing up of his trust, and the transmission
thereof to his successors, nor shall it affect the liability of the prin-
cipal or surety on the bond given by the assignee.

Statute revised — March 2, 1867, ch. 176, § 18, 14 Stat. 525.

Act oF 1867, § 5041. Vacancies caused by death or otherwise in
the office of assignee may be filled by appointment of the court or
at its discretion by an election by the creditors, in the same manner
as in the original choice of an assignee, at a regular meeting, or at
a meeting called for the purpose, with such notice thereof in writing
to all known creditors, and by such persons as the court shall direct.

Statute revised — March 2, 1867, ch. 176, § 18, 14 Stat. 525.

This clause more properly pertains to a vacancy caused after an as-
signee has been duly appointed and approved. In re Scheiffer & Garrett,
2B. R. 591;s.c10C. L. N. 261.

The removal of an assignee from office is necessary before another
assignee can be appointed in his place. In re George E. Sands, 7 Ben. 19.

Act oF 186%, § 5042. When, by death or otherwise, the number
of assignees is reduced, the estate of the debtor not lawfully disposed
of shall vest in the remaining assignee or assignees, and the persons
selected to fill vacancies, if any, with the same powers and duties
relative thereto as if they were originally chosen.

Statute revised — March 2, 1867, ch. 176, § 18, 14 Stat. 525.

An action by a surety in a custom-house bond against the assignee of
the principal does not survive against the personal representatives of the
assignee. Hall v. Cushing, 8 Mass. 521.

Prior to the adoption of this provision, it was held that the right to
prosecute an action pending at the time of the death of an assignee
vested in his personal representatives. Richards v. Md. Ins. Co., 8 Cranch,
84.
ASSIGNMENT OF Bankrupt Estatr. 335

Act OF 186%, § 5043. Any former assignee, his executors or
administrators, upon request, and at the expense of the estate, shall
make and execute to the new assignee all deeds, conveyances, and
assurances, and do all other lawful acts requisite to enable him to
recover and receive all the estate. And the court may make all
orders which it may deem expedient to secure the proper fulfillment
of the duties of any former assignee, and the rights and interests
of all persons interested in the estate.

Statute revised — March 2, 1867, ch. 176, § 18, 14 Stat. 525. Prior
Statute — April 4, 1800, ch. 19, § 8, 2 Stat. 23.

Act oF 1867, § 5044. As soon as an assignee is appointed, and
qualified the judge, or, where there is no opposing interest, the
register shall, by an instrument (a) under his hand, assign and con-
vey to the assignee all the estate, (b) real and personal, of the bank-
tupt, with all his deeds, books and papers relating thereto, and such
assignment shall relate back to the commencement of the proceedings
in bankruptcy and by operation of law shall vest the title to all such
property and estate, both real and personal, in the assignee, although
the same is then attached on mesne (c) process as the property of
the debtor, and shall dissolve any such attachment made within four
months next preceding the commencement of the bankruptcy pro-
ceedings.

Statute revised — March 2, 1867, ch. 176, § 14, 14 Stat. 522. Prior
Statutes — April 4, 1800, ch. 19, §§ 6, 10, 11, 18, 27, 50, 2 Stat. 23, 24,
26, 28, 84; August 19, 1841, ch. 9, § 8, 5 Stat. 442.

Assignment of the Bankrupt Estate.— (a) The register should not
make an assignment of the bankrupt’s estate until he receives a certifi-
cate of the judge’s approval of the assignee elected or appointed. In re
Scheiffer & Garrett, 2 B. R. 591; 5s. ¢c. 10. L. N. 261.

The adjudication of bankruptcy is an essential prerequisite and pre-
cedent condition of the power of the register, to make an assignment.
The adjudication is the judicial ascertainment and declaration of the
fact that the debtor is legally bankrupt, upon which all the subsequent
proceedings are founded. It is the act by which the court takes hold
of the subject-matter, applies to its jurisdiction, and gives legal effect
to what the statute declares to be an act of bankruptcy. Until that ad-
judication, the debtor may, in a voluntary case, withdraw his application.
Wright v. Johnson, 4 B. R. 627; s. ce. 8 Blatch. 150.

The register should make the assignment when there is no opposing
interest, even though the title to the property is.in dispute. In re Wm.
H. Wylie; 2 B. R. 137.

The assignment should be handed to the clerk and recorded, and should
336 Tue Bankruprey Law.

then be delivered to the assignee. In re A. Alexander, 3 B. R. (quarto)
20; 8s. ¢c.2 L. T. B. 187. ;

The assignment, when made by a register, should be under the hand of
the register and the seal of the court. The State laws in regard to the
acknowledgment of deeds need not be complied with. The only system
of bankruptcy laws which Congress has the power to pass is a uniform
one — one which requires the same acts and the same duties from the
officers appointed to execute the law in all the States, and producing the
same general results in all the States, without regard to the important
differences existing in the laws of the different States. If, in preparing
and passing the present system of bankruptcy laws, Congress had omitted
to make any provision in regard to executing and registering the con-
veyances or assignments required, then the State laws would have to be
conformed to. The act prescribes the forms to be observed in preparing
and executing an assignment. Registers of deeds must record the same
upon a certificate of the clerk of the district court that the same is a
copy of the assignment on file in his office, with his seal affixed, upon
demand that the same shall be recorded, and a tender to them of the
fees allowed to them for such service by the laws of the State. In re
Neale, 3 B. R. 177; 8. c.1 L. T. B. 295. Contra, Zeigler v. Shomo, 78 Penn.
3857.

Although the act prescribes that as soon as the assignee is appointed
and qualified, the judge or register shall, by an instrument under his
hand, assign and convey all the estate, real and personal, of the bank-
rupt, yet this provision must be regarded as directory, and not essential
to the assignment where some equally formal mode has been adopted,
sanctioned by the seal of the court, which imparts verity and gives
authenticity to all judicial acts of the judge. Zantzinger v. Ribble, 4
B. R. 724; s. c. 836 Md. 32.

The language of the statute will not be controlled or modified by any
inadvertence or mistake on the part of the register in stating the time
from which the assignment operates. In re Wm. H. Pierson, 10 B. R. 107.

Rights of the Bankrupt.— Until an assignee is appointed and qualified,
and the conveyance or assignment is made to him, the title to the prop-
erty remains in the bankrupt. Hampton v. Rouse, 11 B. R. 472; =. &
22 Wall. 268.

The bankrupt has the right, prior to the appointment of an assignee,
to offer to redeem property sold for taxes. Ibid.

Under the act of 1841, the decisions were conflicting as to whetner
the title of the assignee related back farther than the decree.
Berthelon v. Betts, 4 Hill, 577; in re John Ziegenfuss, 2 Ired. 463; Miller
v. Black, 1 Penn. 420; Smith v. , 4 Edw. Ch. 653; Spaulding v.
Dixon, 21 Vt. 45; in re Anon., 1 Penn. L. J. 323; in re Bennet, 1 Penn. L.
J. 145; in re Dudley, 1 Penn. L. J. 302. Vide in re Mellor & Oo., 1 Penn.
L. J. 185; McLean v. Rockey, 3 McLean, 235; Buckingham y. McLean, 3
McLean, 185; s. c. 18 How. 151; in re Newhall, 2 Story, 360; in re W.
©. H. Waddell, 1 N. Y. Leg. Obs. 53; in re Samuel Harris, 3 N. Y. Leg.

 
Ricuts oF BANKRUPTS. 337

Obs. 152; im re Abner H. Allen, 1 N. Y. Leg. Obs. 115; s. c, 5 Law Rep.
8362; in re Elam Rust, 1 N. Y. Leg. Obs. 326.

The intent and purport of this provision is that the property which was
the property of the bankrupt at the time of the filing of the petition in
bankruptcy, and no other property, shall vest in the assignee. Property
acquired by the bankrupt after the petition is filed belongs to the bank-
rupt alone. In re Patterson, 1 B. R. 125; s. c. 1 Ben. 508; in re Barnett,
16 Pitts L. J. 73; in re Levy et al., 1 B. R. 186; 8. c. 1 Ben. 496; in re-
Rosentield, 1 B. R. 319; s. c. 1 L. T. B. 81; Rugely v. Robinson, 19 Ala.
404; Bond v. Baldwin, 9 Ga. 9; Deadrick v. Armour, 10 Humph. 588.

A debtor has no right to reserve from his estate a sum of money sufii-
cient to meet the expenses of procuring his discharge. In re James
Thompson, 13 B. R. 300.

If the debtor does not set up the bar of the limitation, the bankrupt
can not claim the money after a recovery on the ground that it did not
belong to the assignee. Maybin v. Raymond, 15 B. R. 3538; s. ¢ 4 A. la
T. (N. S.) 21.

The earnings and acquisitions of the bankrupt subsequent to the com-
mencement of the proceedings are his own, subject to his eventual dis-
charge. If he does not succeed in procuring that, they remain liable to
execution or attachment by his former creditors. Mays v. Manufacturers’
National Bank, -4 B. R. 446; s. c. 4 B. R. 660; s. c. 64 Penn. 74.

When the contract of an attorney is that of an ordinary retainer to
conduct a cause, he is entitled to be paid for his services as he renders
them. For the services rendered before the filing of his petition he had
a claim upon his clients, and that passes to his assignee, but for the value
of services subsequently rendered in the cause, he is entitled to retain
the compensation. In re Jones, + B. R. 347.

If the stock has not been transferred on the books of the corporation,
the bankrupt, with the consent of the assignee, may vote thereon at a
Ineeting of stockholders. State v. Ferris, 42 Conn. 560.

If the bankrupt’s wife takes out a policy of insurance upon her life,
payable upon her death to her husband, paying one premium out of her
separate estate before the commencement of proceedings in bankruptcy,
and others afterward, without a claim to the policy being made by the
assignee, the money upon her death belongs to her husband, and not to
his assignee. In re Owen & Murrin, 8 B. R. 6; 8. c. 2 Dillon, 120.

The moment the petition is filed, the bankrupt is civilly dead. During
the interval existing between the filing of the petition and the appoint-
ment of we assignee, a condition of things exists not unlike that in the
case of a person dying intestate and before the appointment of an ad-
ministrator. On the death of a person intestate, no one is authorized
to dispose of or assign his assets. A bankrupt is civiliter mortuus from
the day on which he files his petition, and during the interval between
the filing of his petition and the appointment of the assignee no assign-
ment of his assets can be made. Johnson v. Geisriter, 26 Ark. 44; Bar-
Ton v, Newberry, 1 Biss. 149.

The expression that a bankrupt is civiliter mortuus means that he is

22
338 Tue Bankruptcy Law.

dead only as to the control of his old property and contracts. His assignee
stands like an administrator in respect to these. But the bankrupt is
still alive for other purposes in law, as he is in fact. He is alive to
acquire new property, to do and to receive wrong, to commit trespasses or
crimes, and to be prosecuted for either, and to prosecute for either when
committed on himself. Carr v. Gale, 3 W. & M. 38; s. c. 2 Ware, 330."

The bankrupt may, after the commencement of the proceedings in
bankruptcy, enter into business and hold property, subject to the con-
tingency of obtaining a discharge. In re Benjamin B. Grant, 2 Story, 312.

An agreement signed by the bankrupt after the commencement of pro-
ceedings in bankruptcy is a nullity so far as the estate is concerned.
In re Geo. W. Anderson, 9 B. R. 360.

By the bankruptcy act the records of the court in bankruptcy are
always open for inspection, and it is not until the petition is filed in court
that the statute declares that the property shall be divested. The fact
is, therefore, within the means of knowledge of any one dealing with
another, if he will take the trouble to consult the records of the court.
It is a record of the same public nature as the registry of deeds. The
record of a deed is legal notice to all parties interested, and, in the same
manner, Congress has enacted that the filing of the petition in court shall
be conclusive upon the rights of all parties, and from that time the
bankrupt shall have no control or disposition of the property formerly
belonging to him. Any subsequent conveyance or transfer by him is
a nullity, and absolutely void as against the assignee. This assignment
is subsequently executed, but its effect must depend entirely on the lan-
guage of the act, and it is expressly enacted that the assignment, when
made, shall relate back to the commencement of the proceedings, which
is declared to be the filing of the petition. Parties must, in law, be
deemed to have constructive notice of the filing of the petition, and of
its effects under the operation of the bankruptcy law. In re Gregg, 3 B.
R. 529; s. ec. 1 L. T. B. 298; Mays v. Manufacturers’ National Bank, 4
B. R. 446; s. c. 4 B. R. 660; s. c. 64 Penn. 74; in re J. J. Lake, 6 B. R. 542;
s. c, 3 Biss. 204; Perley v. Dole, 38 Me. 558; Oakey v. Corry, 10 La. An.
502. ;

If the notice that a warrant has been issued, and that the payment of
any debts to the bankrupt is forbidden by law, is published, as required
by the act, it is binding upon all persons, whether they have or have
not actual knowledge thereof, and any subsequent payment to the bank-
rupt will not discharge the debt, nor afford any greater protection than
if it had been made to any other person not authorized to receive it as
against the assignee. Stevens vy. Mechanics’ Savings Bank, 101 Mass. 109.

When the debtor of a bankrupt, in good faith and without knowledge
or notice of the proceedings in bankruptcy, pays him a debt after the
commencement of such proceedings, he can be compelled to pay it over
again to the assignee. Mays v. Manufacturers’ National Bank, 4 B. R.
446; s. c. 4 B. R. 660; s. c. G4 Penn. 74.

The burden of proving that the property did belong to the bankrupt
prior to the filing of the petition rests upon the assignee. Ibid.
Acts oF THIRD PARTIES To THE ESTATE. 339

A purchaser of negotiable paper, who is domiciled in the district where
the proceedings in bankruptcy are pending, is concluded by the notice
given to him by the records of the bankruptcy court, and can not claim
to be an innocent purchaser. In re J. J. Lake, 7 B. R. 542; s. c. 3 Biss.
204.

If the sheriff, after the commencement of proceedings in bankruptcy,
levies an execution upon and sells the bankrupt’s property, he is liable
to the assignee, although he pays the proceeds of the sale to the execution
creditor before he receives actual notice of the bankruptcy. This prin-
ciple does not involve any conflict between the State courts and the
Federal courts. If the property is no longer liable to levy for the satis-
faction of the judgment, it is no matter of conflict between the one court
and the other, which of them is called upon to recognize or administer
ihe law. Miller v. O’Brien, 9 B. R. 26; s. ec. 9 Blatch. 270.

Paywents made atter the filing of the petition in bankruptcy, mala
fide, or with a view of defeating the bankruptcy act in any of its essential
requirements, are void, and the person by whom such payment is made
can be held to answer to the original demand to the assignee. Babbitt
vy. Burgess, 7 B. R. 561; s. ec. 2 Dillon, 169; Turner vy. Shenkmeyer, 1
W. N, 206.

If the bankrupt passes a note to another before the commencement of
the proceedings in bankruptcy, with the intent thereby to transfer the
property, but omits to indorse it, he may indorse it after that time.
Smoot v. Morehouse, 8 Ala. 370.

Where the right to use an alley is reserved in a deed so long as the
grantor shall continue to own an adjoining piece of land, the right is not
terminated by the grantor’s bankruptcy, if the proceedings are settled,
and the property reconveyed to him by the assignee. Colie v. Jameson,
13 B. R. 1; s. ce. 6 N. Y. Supr. 576; s. c. 11 N. Y. Supr. 284.

A party who borrowed property from the bankrupt, efter the com-
Mencement of the proceedings in bankruptcy, can not defeat an action to
recover the same by. proof that it passed to the assignee, without con-
necting himself with the assignee’s title. Lain v. Gaither, 72 N. ©. 204.

Acts of Third Parties to the Estate.— A creditor can not, by a bill
in equity, obtain payment out of property which passed to the assignee.
McCabe v. Cooney, 2 Sandf. Ch. 314.

If a creditor’s bill is filed after the commencement of the proceedings
in bankruptcy, the objection that the property belongs to the assignee
must be taken by the assignee, and not by the debtor. Smith v. ’
4 Edw. Ch. 653.

A judgment creditor can not file a bill in equity, alleging that an
execution has been issued on the judgment and returned wnsatisfied, and
seek to have property alleged to have belonged to the bankrupt prior to
the commencement of the proceedings in bankruptcy applied to the
payment of his judgment in preference to the claims of the other cred-
itors. Haxtun v. Corse, 4 Edw. Ch. 585; s. c. 2 Barb. Ch. 506; Kane v.
Pilcher, 7 B. Mon. 651.

A party who holds funds or property belonging to the bankrupt may,

 
340 Ture Bankruptcy Law.

in an action brought by a creditor to subject the same to the payment
of his debt, plead that the assignee alone has the rigaot to claim the
same. David y. Ferrand, 2 La. An. 596.

A plea by a third party to show that the property vested in the as-
signee, must show that the district court had jurisdiction to enteriain
the petition, and that the requirements of the act were complied with.
Seaman v. Stoughton, 3 Barb. Ch. 344.

Where a petition for a partition merely alleges that the petitioner
claims title under an attachment, a plea of the bankruptcy of the defend-
ant prior to the issuing of the attachment, without averring that the
attachment was issued against him, is insufficient. Onion y. Clark, 18
Vt. 363.

What Property Vests in the Assignee.—(b) The expression, “estate
of a bankrupt,’ means such property and rights of property of the
bankrupt as the bankruptcy act vests in the assignee. The assignee
can not take anything more than the bankrupt himself had, in any case,
except the case of a fraudulent conveyance by the bankrupt. In re Ham-
bright, 2 B. R. 498; s.c. 2 L. T. B. 61; s.¢c.1C. L. N. 201.

The words, “ all the estate real and personal,” are broad encugh to cover
every description of vested right and interest attached to and growing
out of property. Under such words, the whole property of a testator
would pass to his devisee. Comegys v. Vasse, 1 Pet. 193; s. c. 4 Wash.
570.

The language of the statute is sufficiently comprehensive to embrace
the most minute and temporary interest in property. French v. Carr, 7
Ill. 664,

Every definition of property ignores the idea of value in the thing
owned. If there is an exclusive right to a thing, the law immediately
presumes it to have at least a nominal value to the owner. Kinzie v.
Winston, 4 B. R. 21; s. c. 56 Ill. 56.

The assignment vests the property in the assignee, although it was not
placed on the bankrupt’s schedules. Holbrook v. Coney, 25 Ill. 543; Bur-
.ton v. Lockert, 9 Ark. 411; Jewett v. Preston, 27 Me. 400.

A certificate of title to a burying vault, granted by a corporation whose
charter limits its use to the interment of the dead, and declares that it
shall not be reached by private creditors nor for public dues, is no more
than a license to the bankrupt to hold personally the privilege of sepulchre
for his friends, and does not pass to the assignee. The interest is no
more than the charter generates or declares, and the charter denotes
a purpose to separate this acquisition from the estate or property of the
holder. In re Abner S. Ely, 1 N. Y. Leg. Obs. 131.

The title to real estate situated in a foreign country does not vest in
the assignee, for a statutory conveyance can have no extraterritorial
effect upon real estate. Oakey v. Bennett, 11 How. 33; Barnett v. Pool,
23 Tex. 517.

Where the services have been rendered by the bankrupt, the right to
the compensation passes to the assignee, although it depends on a con-
tingency. Burton v. Lockert, 9 Ark. 411.
WHat PRorerty VESTS 1N ASSIGNEE. 341

The right to redeem property sold under an execution passes to the
assignee, and can not be exercised by any judgment creditor after the
commencement of the proceedings.in bankruptcy. Pillow vy. Langtree,
5 Humph. 389.

If the rights of the debtor and of a creditor to redeem property sold
under an execution are distinct and independent, the right of the creditor
is not defeated by the bankruptcy of the debtor, but is a right or incident
attached to the judgment, and may be deemed a part of its lien. Trimble
vy. Williamson, 49 Ala. 525.

A claim for improvements made on the public lands of the United
States passes to the assignee. French vy. Carr, 7 Ill. 664.

A franchise consisting of a right to take tolls for crossing at a bridge
is property that passes to the assignee. Stewart v. Hargrove, 23 Ala. 429.

A receiver appointed under a creditor’s bill in a State court, can not
enter another political jurisdiction and claim a fund allowed on a claim
against a foreign government in preference to an assignee appointed in
proceedings instituted after the filing of the bill. Booth v. Clark, 17
How. 322.

If a party in pursuance of a decree delivers property of a bankrupt to a
receiver before any notice or demand by an assignee, the surrender is a
complete defense to any future action by the assignee. Long y. Converse,
91 U. S. 105. ;

If by the terms of the trust, the income of a certain fund is to be paid
to the bankrupt or his wife, to be applied to the support of the bankrupt,
his wife and children, the assignee is not entitled to any part thereof.
Durant v. Mass. Hosp. L. Ins. Co., 15 A. L. J. 436.

As soon as a will of real or personal estate is admitted to probate, the
title of the legatee or devisee takes effect by relation from the death of
the testator. If the devisee or legatee is declared a bankrupt in proceed-
ings commenced after such death and before the probate of the will, the
legacy or devise will pass to his assignee if he has never renounced or
disclaimed the legacy or devise. After the commencement of the pro-
ceedings in bankruptcy he has no right to disclaim or renounce it. In re
Henry W. Fuller, 2 Story, 327.

If the bankrupt was entitled to a distributive share in the estate of a
deceased person, and was also indebted to that estate, the assignee can
only claim the balance that remains after deducting the debt from such
distributive share. In re Newhall, 2 Story, 360.

A devise of property to cease on the bankruptcy of the devisee is good,
and the limitation valid. Nichols v. Eaton, 13 B. R. 421; s. c. 91 U. §.
716. :

If a will confers an absolute discretion on a trustee which he is under
no obligation to exercise in favor of the bankrupt, it does not grant such
an interest to the latter as his assignee can assert. Ibid.

A. devise of property to a trustee, to pay the income thereof to a third
person free from liability for his debts, is not such an interest as will pass
to the latter’s assignee. Ibid.

Where a will devises property to trustees to hold until the devisee
342 Tur Bankruptcy Law.

reaches a certain age, the estate passes to the assignee of the devisee, al-
though the devisee had not attained that age at the time of the com-
mencenent of proceedings in bankruptcy. Sandford v. Lackland, 2 Dil-
lon, 6.

If an estate is devised to A., subject to the payment of a certain sum
to B. in trust for C., A. is not a trustee for C. By the terms of the devise,
B. is the person in whom the trust is reposed, and is the direct trustee,
made so by the act and choice of the devisor. If A. becomes a trustee, he
will only be an implied trustee. The statute of limitations will run in
favor of a party who enters into possession of property in his own right
and holds for his own benefit, but whose title is subsequently, by matter
of evidence or construction of law, turned into that of trustee. In re
A. G, O’Neale, 6 B. R. 425.

If a mortgagee devises his interest in the land on which he holds a
mortgage, to the mortgagor and others, this will pass the mortgage debt,
and the mortgagor’s interest therein will pass’ to his assignee. Clark
y. Clark, 56 N. H. 105.

A claim to indemnity for an illegal capture of a vessel by a foreign
government passes by abandonment to the insurer, and upon his bank-
ruptcy vests in his assignee. Comegys v. Vasse, 1 Pet. 193; s. c. 4 Wash.
570; Phelps v. McDonald, 2 McArthur, 375.

If money is to be paid under a treaty to a foreign government on account
of a claim due to a bankrupt, the court has no jurisdiction to compel
the bankrupt to make an assignment thereof. Phelps v. McDonald, 2
McArthur, 3875.

If the surety, upon a note given to a guardian, marries the ward, his
assignee can not maintain an action against the maker before a settlement
and adjustment of the guardian’s account. Chilton v. Cabiness, 14 Ala.
447.

Property which has been transferred by a deed contrary to law will
pass to a trustee appointed under a deed of trust subsequently executed,
and when such deed was made more than six months prior to the com-
mencement of proceedings in bankruptcy, and is not assailed as fraudu-
lent, no claim to the property vests in the assignee. Stewart v. National
Union Bank et al., 2 Abb. C. GC. 424.

When an execution attachment is laid in the hands of a tenant for a
term of years under rent reserved, payable quarterly, and the owner
of the reversion is adjudged a bankrupt, after the laying of the attach-
ment, but before the rent becomes due, the attachment will not bind
the rent. The rent which had not fallen due was an incident of the
reversion, followed it, and passed with it to the assignee. There was,
therefore, no debt of the bankrupt for the attachment to operate upon.
When the rent became due it belonged to the assignee. A levy upon the
reversion would have fastened upon the rent as its incident. Evans Vv.
Hamrick, 61 Penn. 19.

The growing crop passes to the assignee, and should be placed upon the
schedules as personal property. In re Schumpert, 8 B. R. 415.
WHat PRoPERTY Vests In AssIGNEnr. 343

A franchise to construct a turnpike road and collect the tolls thereon is a
perscnal trust, not assignable without the consent of the granting power,
and does not pass to the assignee by virtue of the assignment. ‘The
assignee can take nothing which the bankrupt could not voluntarily as-
sign. People v. Duncan, 41 Cal. 507.

Where an instrument executed at the same time with an absolute deed,
declares that the grantee holds two-thirds of the estate for others, the as-
signee of the grantee is only entitled to one-third. Ford vy. Belmont, 7
Robt. 97, 508; s. ¢. 85 N. Y. Supr. 135.

A purchaser, at a sale under a fi. fa. of a debtor's interest in a firm,
only acquires his interest in the chattels actually seized, and the interest
in the credits passes to the assignee. Moore v. Rosenberger, 7 Phila. 576.

A purchaser of firm property at a sale under an execution against an
individual partner, obtains only the interest of such partner in the surplus
that may remain after the firm debts are paid. Osborn y. McBride, 16 B.
R. 22; s. c. 8 Saw. 570.

The fact that the purchaser obtains the interest of both partners on
separate executions, does not enlarge the interest acquired on the separate
interest against either. Ibid.

On an individual petition, property in the possession of the bankrupt
at the time of the commencement of proceedings in bankruptcy, which
belongs toe a firm of which he has been a member, passes to the assignee,
who will hold as tenant in common with the solvent partner. In re Beal,
2B. R. 587; s. ce. Lowell, 323; s. ¢. 2 L. T. B. 95.

A legal possibility is an estate founded on a contingency. The fee-
simple title to a street, with the right to accretions thereto, is not in the
eye of the law a possibility, for the estate is not founded on a contingency.
Kinzie v. Winston, 4 B. R. 21; s. c. 56 Ill. 56; Banks v. Ogden, 2 Wall. 58.

The bankrupt is personally released by a discharge, but the property and
rights of property vested in the assignee are subject to the creditors, and
are held in trust for them in whatsoever hands these may be found.
Clark v. Clark, 17 How. 315.

The statute does not create any estate of inheritance in the assignee
himself, although he may by his official action convey lands. Whatever
rights vest in him are official, and not personal, and are not heritable or
corporate. Steevens v. Earles, 25 Mich. 40.

Assignees in bankruptcy do not, like heirs and executors, take the whole
legal title in the bankrupt’s property. They take such estate only as the
bankrupt had a beneficial, as well as legal, interest in, and which is to
be applied for the payment of his debts. Rhoades v. Blackiston, 106 Mass.
884; Blin v. Pierce, 20 Vt. 25; Ontario Bank v. Mumford, 2 Barb. Ch. 596;
Hynson v. Burton, 5 Ark. 492.

The assignee can not have a sale made by a trustee in insolvency for a
nominal consideration set aside if it was made in good faith and the
value of the property was not equal to the debts due by the estate.
Goldsmith v. Hapgeod, 1 Holmes, 454.

If the assignee forecloses a mortgage which the bankrupt had fraud-
ulently taken with the funds of another and receives the money, the
344 Tue Bankruptcy Law.

fraudulent grantor’s creditors can not recover the money from the as-
signee. Aiken vy. Edrington, 15 B. R. 271.

A certificate of membership in a beard of trade where no profits are
given to the members further than what is derived from the incidental use
made by a member of the privileges which his membership gives him, is
a mere personal privilege, and does not pass to the assignee. In re
Israel Sutherland, 6 Biss. 526.

Rights under Contracts.— In general, the assignee does not stand in a
better predicament than the bankrupt himself, and can claim only what
the latter might claim. Winsor v. Kendall, 3 Story, 507; Fiske v. Hunt,
2 Story, 582. /

A transfer of an attorney’s receipts entitles-the party in equity to the
proceeds of the judgment, and the title to the judgment does not pass
to the assignee. Anderson vy. Miller, 15 Miss. 586.

The interest and rights of the bankrupt under contracts are transferred
to the assignee. Whatever the rights are, the assignee can claim and
enforce. -It is not the purpose of the bankruptcy law to interfere with
or avoid contracts made by the bankrupt with other parties, or to pre-
vent their execution. Foster v. Hackley & Sons, 2 B. R. 406; 5s. ¢c.2L. T.
B. 8; s.¢c. 10. L. N. 1387.

If goods are actually delivered to the vendee, the vendor has not inde-
pendent of any special agreement, any lien entitling bim to claim or hold
the goods as against the assignee of the vendee. If there is a special
agreement, he must abide by the actual agreement made. If the instru-
ment is not effectual by reason of the failure of the vendor to do what
is by law necessary for his protection, he can not fall back upon any sup-
posed or possible agreement qualifying the delivery, and securing a lien
for the price. In re Simeon Leland et al., 10 Blatch. 503.

An agreement that the title to property sold to the bankrupt should not
vest in him until all the purchase money had been paid, binds the assignee,
even if the bankrupt has paid all but a small portion of the purchase
money. The ownership remains in the vendor until the final payment.
Creditors can not enforce their claims without paying to the vendor the
remaining portion. In re J. H. Lyon, 7 B. R. 182;5.c 40 L. N. 421.

The condition that the title shall not vest in the vendee until all the
purchase money is paid, is not waived by taking indorsed notes from the
vendee. Ibid.

Where the sale is absolute, the vendor can not claim the property from
the assignee. Woods vy. Oakman, 116 Mass. 599.

A contract to deliver and set up scales and receive a note and security
on the scales for the price, is entire, and no note or security can be
demanded until the scales have been all delivered and set up, and, until
‘so delivered and set up, and the note and security given, the property
in the scales does not pass to the vendee, unless there is a waiver of the
conditions. The assignee of the vendee can claim no greater rights in
the scales than the vendee had. In re Pusey, 6 B. R. 40.

The delivery of the goods to the marshal who is in possession of the
Ricuts Unprr Contracts. 345

store of the vendee under a warrant does not terminate the right of
stoppage in transitu. Sutro v. Hoile, 2 Neb. 186.

If the delivery of a note in payment for the goods is a condition of the
sale, a delivery to the marshal who is in possession of the vendee’s store
under a warrant, is not a waiver of the condition, and the vendor is
entitled to the goods. Ibid.

If the debtor at the time of the purchase did not believe or expect that
the goods would ever be paid for, the vendor may reclaim them on the
ground of fraud, and has a better title than the assignee. Donaldson v.
Farwell, 5 Biss. 451.

In order to render a sale void as against the assignee, the vendor must
show a fraud which enters into and forms a part of the purchase. If
the purchase was made without fraud and in good faith, the mere fact
that the bankrupt had concealed a crime committed by him, the exposure
of which would render him insolvent, does not make a purchase voidable.
Comins v. Coe, 117 Mass. 45.

If a warehouse receipt is sent by mail to a creditor who has not
previously agreed to accept grain in payment of his debt, and is received
by him after the commencement of the proceedings in bankruptcy, the
assignee is entitled to recover the grain, although the receipt was mailed
before the commencement of the proceedings. Brooke vy. Scoggins, 11
B. R. 258; s. c. 9 Pac. L. R. 12.

Where the vendor reserves the right to take possession of the chattels

in case of the nonpayment of the purchase money, and does take possession
before the commencement of the proceedings in bankruptcy, his title is
valid, although the right was reserved in a mortgage which was not
recorded. Field v. Baker, 11 B. R. 415; s. c. 12 Blatch. 488.
If the goods are detained in the course of transportation and deposited
in a warehouse, the giving of a conditional authority to the warehouseman
to sell is not such an assumption of possession as to terminate the right
of stoppage in transitu. In re Norman B. Foot, 11 B. R. 153; s. c. 11
Blatch. 580.

The acceptance of a delivery order by a warehouseman where the goods
are in a bonded warehouse and the duties thereon are unpaid, is not a
sufficient acceptance of the goods within the statute of frauds, and the
vendor, if the price remains unpaid, has a better title than the assignee
of the vendee. In re George Clifford, 2 Saw. 428.

If the vendor has complied with his part of the contract, the assignee
of the vendee can not recover the partial payments made by the vendee
where the vendor has sold the property to another in consequence of the
vendee’s default. Kane vy. Jenkinson, 10 B. R. 316.

If the vendor has been in no manner in fault, he may, in an action by
the assignee to recover partial payments made by the vendee, recoup the
damages which he may have suffered in consequence of the nonperform-
ance on the part of the purchaser. Ibid.

Where the depositor of grain in a grain elevator knows that by the
castom of the trade it will be mingled with other grain and its identity
lost, the bulk in the elevator being subject to constant fluctuations, and
346 THE Bankruptcy Law.

that he has only the right to call for an equal amount of grain or the
value thereof, the transaction constitutes a sale and not a bailment, and
he can not claim the grain in the elevator at the time when the warehouse-
man becomes bankrupt. Rabilly vy. Wilson, 3 Dillon, 420; s. c. 5 CL L. N.
21T.

If a miller converts grain deposited with him to his own use, the de-
positor has no interest in other grain owned by the miller. His only in-
terest is that of a general creditor of the estate. Adams v. Myers, 1 Saw.
306.

A. party can not recover specific property from the assignee, unless it
possesses indicia or earmarks by which it may be distinguished from
all others of the same description. Wood M. & R. Co. v. Brooke, 9 B. R.
395.

An agreement concerning the sale of specific and ascertained chattels
is prima facie a bargain and sale, and transfers the property therein to
the purchaser in consideration of his becoming bound to pay the price
therefor, and the vendor can not reclaim the property, unless he proves
that there was an agreement that the title should not pass until payment
should be made therefor. Ibid.

A bond under seal, with coupons attached, is a negotiable instrument if
it is made payable to bearer, and a purchaser in good faith for a valuable
consideration obtains a good title against the assignee. In re Simeon
Leland et al., 6 Ben. 175.

If parties by their bond, given on the dissolution of a firm, covenant
to indemnify the retiring partner, and to pay the firm debts, the right of
action will vest in his assignee, although he receives a discharge, for the
covenant is to pay as well as indemnify. Hood v. Spencer, 4 McLean, 168.

If an attorney and a debtor agree that an assignment shall be made of
dividends to be received from an estate of which the former is assignee,
to be credited upon an account held by him against the debtor for col-
lection, the assignee of the debtor may recover the money, if he is de-
clared a bankrupt before the assignment of the dividends is made or
the dividends credited upon the claim, for the courts can not enforce
such loose, incomplete, and unexecuted contracts. Foster v. Lowell, 4
Mass. 408.

If the bankrupt transferred his property to another under an agreement
that the latter should sell it and apply the proceeds to pay the former’s
debts, the bankrupt has a beneficial interest in the agreement, which
passes to his assignee, and the assignee may bring a suit on the agree-
ment. Steene v. Aylesworth, 18 Conn. 244.

Where the right to a conveyance under a bond has been forfeited by a
failure to comply with its terms, the right which the bankrupt may ac-
quire after the commencement of the proceedings in bankruptcy by a
waiver of the forfeiture, will not pass to the assignee. Kittridge v.
McLaughlin, 33 Me. 327.

Although tLe assignment of a bond is made and signed. by the obligee,
yet if it is never accepted, eithgr actively or constructively, by the party
Ricuts UNDER CONTRACTS. 347

to whom it was to be assigned prior to the commencement of the pro-
ceedings in bankruptcy, the bond will pass to the assignee. Perley v.
Dole, 88 Me. 558.

If a party buys a judgment against the bankrupt, and purchases land
at a sale under an execution issued tnereon, under a parol agreement
that out of the proceeds he shall retain a debt due to him and the money
paid to purchase the judgment, and pay the balance to the bankrupt, the
agreement is without consideration. Hyde v. Iindlay, 8 Pac. L. R. 147.

Under the warrant, the marshal has the right to take possession of
personal property leased by the bankrupt. If the lease stipulates that the
lessor may take possession of the property whenever he deems him-
self unsafe or the property not well taken care of, the lessor must show
that fact in order to entitle himself to take the property. Hathaway v.
Quimby, 1 N. Y. Supr. 386. ;

If the assignee sells the equity of redemption in realty, to which fixtures
are attached, for a sum equal to the value of the fixtures, he must be
considered to have received it for the fixtures, clear of the mortgage.
The owner of fixtures can, in writing, and for a valuable consideration,
convey severable chattels in such a way as to bind himself and his as-
signee in bankruptcy at least, and if he has done so, the grantee will be
entitled to the proceeds. In re McKay & Aldus, 7 B. R. 230; s. ec. Lowell,
561.

An agreement that a building erected vpon land owned by the bank-
rupt shall be considered personal property, may be shown by inference
from the subsequent recognition of rights which can result only from its
existence. A purchaser from the assignee, with notice of the facts, can
make no better title than the assignee, notwithstanding the representa-
tions made by the latter. Morris v. French, 106 Mass. 326.

The bankrupt having been directed to invest a certain sum of money in
stock for a party, purchased the stock in his own name, and hypothecated
it for money loaned to him. Being embarrassed, he deposited securities
in the hands of another, to be used for the purpose of purchasing or re-
Placing the stock, and these securities were subsequently sold, but the
stock could not be repurchased. The securities, whose sale resulted in the
proceeds in question, never belonged to the party, and were not, prior
to the time when the rights of the assignee in bankruptcy intervened, put
into the hands of the party, or any agent of his, or of any person, with his
assent or privity, nor was the placing of such securities in the hands
of the bailee made known to the party, or adopted or ratified by him prior
to the transfer of the title to them to the assignee in bankruptcy. The
property in them was in no manner changed, nor did any legal or equitable
lien, or interest, or trust, or charge arise in respect to them which would
not have been revocable by the bankrupt himself; at least, at all times
before the transaction was made known to the party. It was not made
known to him, or to any agent of his, until some time after the appoint-
ment of the assignee in bankruptcy, and such appointment must be con-
sidered a revocation of anything done by the bankrupt, if such revocation
were needed. Moreover, the delivery of the securities having been made
348 Tue Bankruptcy Law.

for a specified purpose, and the purpose not having been carried out, the
property in the securities remained in the bankrupt, and passed to his
assignee free and clear from any charge in favor of the party. Unge-
witter v. Von Sachs, 3 B. R. 723; s. c. 4 Ben. 167; s. c. 1 L. T. B. 224;
s.c. 8 L. T. B. 195.

To succeed in a suit for the recovery of property, the assignee must
show title in himself. When the bankrupt has formed a bank with other
associates, but is himself the sole owner, the assignee is not entitled to
its assets as against a receiver appointed under a State law relating to
insolvent banks. The making, recording, and filing of the certificate of
the organization, and the acts of user under it, must be held to be suffi-
cient to establish the existence of the bank as a corporation, as against
the associates and third persons. Goodrich v. Remington, 6 Blatch. 515.

A covenant in a lease that fixtures shall not be removed until the rent
is paid, binds the assignee. The act of affixing them to the freehold takes
them out of the category of chattels, and is notice to creditors and to all
the world that the right of removal will depend on the contract between
landlord and tenant. The right of a tenant to remove trade fixtures may
well enough be called rather a privilege than property, and it is one that
he may lawfully waive or modify by the terms of the lease, without the
form of either a pledge or a mortgage. In re J. H. Morrow, 2 B. R. 665;
s. c. Lowell, 386.

An agreement that chattels on the premises shall be at the disposal of
the lessor as security for rent, is not valid against creditors of the lessee
before entry, where distress for rent is not allowed. The bankruptcy
law does not undertake to enforce a mere covenant of this kind, which
by the law of the place creates no valid lien. Ibid.

If the bankrupt, by the terms of the lease, merely has the right to
possess and enjoy the use of the property, without any power to convey
it to a third person unless the lessor consents, the estate will not pass to
the assignee. In re Michael O’Dowd, 8 B. R. 451.

Property owned by the bankrupt, and used in carrying on business in
the name of another, will pass to the assignee, free from all claims to
priority for debts contracted in such business. There can not be any fair
suggestion of considerations of supposed hardship to such third person.
If he choose to suffer himself to be involved in debts incurred in carrying
on the bankrupt’s business in order to cover it against former creditors,
those former creditors ought not, for this reason. to be postponed in the
distribution of such property to other creditors, whose debts may have
been afterward contracted in his name. Nor, in case of his death, are
there any equities in favor of the creditors of his estate, against the
interests of the general body of the bankrupt’s creditors. In re Wm. H.-
Long, 3 B. R. (quarto) 66.

The assignee of a bankrupt corporation may sue stockholders to recover
unpaid subscriptions sufficient to meet all the debts and liabilifies of the
corporation. Payson v. Stoever, 2 Dillon, 427.

The estate of the hankrupt is not liable for the tortious acts of the as-
signee. Adams v. Meyers, 1 Saw. 306.
Riguts UNDER CONTRACTS. 349

At common law the termination of all interest of the insured in the
property defeats the policy. The transfer to the assignee in bankruptcy
terminates all interest of the bankrupt in the property insured. <A trans-
fer to an assignee in bankruptcy is within the terms of a provision of the
policy, which declares that the policy shall be void in case of any change
or transfer of the title to the property insured. The fact that the bank-
ruptcy is involuntary, or that the transfer is made by operation of law, is
immaterial. Starkweather ‘v. Cleveland Ins. Co.,'4 B. Ri 341; s. c 2
Abb. O. C. 67; Perry y. Lorillard Ins. Co., 14 B. R. 339; s. c. 6 Lans. 201;
s.¢c. 61 N. Y. 214.

The assignee of a bankrupt insurance company may recover upon a
note given for the payment of the annual premium upon a policy issued
by the company to the maker. Carey v. Nagel, 2 Abb. C. C. 1563's. @ 2
Biss. 244,

An insured who has given a note for the premium can not surrender
the policy and have the note delivered to him upon paying the amount due
for the time that the policy has run, for there is no implied contract that
he shall have the right to surrender the policy and receive back a portion
of the premium as unearned. In re Western Ins. Co., 6 Ben. 159.

If the drawer of a check becomes bankrupt before the presentation and
acceptance thereof by the bank, the holder is not entitled to any priority
as against the assignee. In re Charles A. Smith, 15 B. R. 459; 5. ec. 2 0. L.
B. 119.

A party who gave his check to the bankrupt on account of a debt due
to him, is not liable to an action by the assignee for the original debt
without a surrender of the check, although he stopped the payment
thereof, and it has been outstanding for a long time. Woodin v. Frazee,
38 N. Y. Supr. 190.

Where a party advances money to a corporation upon an agreement
that he shall collect certain calls on its stockholders and apply them to
the debt, and in pursuance of this agreement receives a list of the stock-
holders, and the amount due from each, this is an equitable assignment
of the calls that is not defeated by the subsequent bankruptcy of the
corporation. Farmers’ & Drovers’ Savings Bank v. Publishing Co., 3
Dillon, 287,

If a note is discounted by a bank, and the proceeds credited to the ac-
count of the depositor, which is then overdrawn, he will not, upon sub-
sequently making his account good by other deposits, be entitled to de-
mand the drafts received for the note from the bank or its assignee, al-
though the note was also taken for collection. In re Bank of Madison,
9 B. R. 184; s. c. 5 Biss. 515.

A party dealing with an insolvent bank in the ordinary way must
make out a very clear case before a court will sustain a preference in
his favor over other creditors. Ibid.

A banker, in receiving a note for collection from oné of his customers,
does not act as an agent, but is presumed to undertake the collection for
the profit that may result from the deposit and use of the money. When
he collects money for his customer, it is regarded as deposited, and in
350 THE Bankruptcy Law.

the light of any other deposit, not as the money of the customer, nor is
the customer entitled to it, but only to its equivalent as any other deposit.
If the collection is remitted by a draft, the customer is not entitled to
demand the draft from the banker or his assignee. Ibid.

A draft drawn for a part of a fund in bank is not an equitable assign-
ment of the money, and does not entitle the holder to a priority of pay-
ment out of such money in the hands of the assignee. Bank of Com-
merce v. Russell, 2 Dillon, 215; Randolph v. Canby, 11 B. R. 256; Dickey
v. Harmon, 1 Cranch C. C. 201; Walker v. Seigel, 12 B. R.-394; s. c. 2
Cent. L. J. 508,

If a party draws a check for a sum in bank, which is presented after
he has made an assignment to a trustee for the benefit of creditors, the
assignee, if the trustee subsequently transfers all his rights under the
assignment to him, may recover the sum from the bank, although the
Jatter holds a note not due at the time of the assignment or the com-
mencement of the proceedings in bankruptcy. First National Bank of
Mount Joy vy. Wilson, 72 Penn. 138.

If the bankrupt has his note discounted and leaves the proceeds on
deposit, the holder in good faith and for value of a check, which was
presented for payment before the maturity of the note and before the
commencement of the proceedings in bankruptcy, is entitled to be paid
out of the proceeds. Fourth National Bank v. City National Bank, 10
B. R. 4; s. c. 68 Ill. 398; s.c.1 A. L. T. (N. 8.) 386.

If an agent procures the discounting of a draft upon the bankrupt, at a
time when the latter has.determined to stop payment, and the package
of notes delivered to the agent on such draft is intercepted before delivery
to the bankrupt, and the contract rescinded, the assignee has no title to
the notes. Purviance v. Union Nat’l Bank, 8 B. R. 447; s. ¢. 21 Pitts. L. J.
33; s. c. 80 Leg. Int. 392.

If an order for the whole of a fund is given for a valuable considera-
tion to a third person prior to the commencement of the proceedings in
bankruptcy, it amounts to an equitable assignment of the fund, although
the drawee did not accept the order, and the right to the fund does
not pass to the assignee. Blin v. Pierce, 20 Vt. 25.

If the holder of an order on a general fund, the acceptance whereof
has been refused, proves his claim, he will be restrained from subse-
quently prosecuting a suit against the holder of the fund in a State
court. Walker v. Seigel, 12 B. R. 394; s. c. 2 Cent. L. J. 508.

An order drawn upon an agent not in possession of the fund out of
which it is to be satisfied, and accepted by him, fixes the fund irrevocably,
and amounts to an equitable assignment. Nothing vests in the assignee
of a bankrupt but the real and personal estate of which the bankrupt had
the equitable as well as legal interest. The moment the money comes into
the hands of the agent, he is bound to pay it over to the holder of the
aecepted order, although bankruptcy of the drawer has occurred between
the acceptance and the receipt of the money. McMenomy v. Ferrers, 3
Johns, 71,
Ricguts Unprer Contracts. 351

The filing of a petition in bankruptcy is an attempt to sell within the
meaning of a clause giving the mortgagee the right to take possession in
case of an attempt to sell. Moore v. Young, 4 Biss. 128.

If a deed is dated prior to the commencement of proceedings in bank-
ruptey, the bare fact that the acknowledgment is dated after that time
is not sufficient to defeat the grantee’s title. The deed vested the legal
title in the grantee at the time of its delivery. In the absence of proof
to the contrary, the presumption of law is that it was delivered on the
day of its date, and the subsequent date of the certificate of acknowl-
edgment can not overcome this presumption. Hardin v. Osborne, 60 III. 93.

A deed of the bankrupt without any certificate of acknowledgment is
good against the assignee, for he is a grantee with full notice, and takes
no greater interest or right than the bankrupt had. In re Kansas City
Manuf. Co., 9 B. R. 76.

The doctrine that ratification relates back to the inception of the trans-
actions and renders the ratified act the same as if it had been originally
authorized by the principal, is a fiction of the law, for the act of one can
not be made the act of another; but by relation the law gives to the
act of one the effect of an act of another. The law, however, will not
feign a fiction to do a wrong, to make valid an invalid act, or to defeat
the rights of others. Hence this doctrine can not be extended to the
prejudice of strangers to the transaction. The act of ratification, in
order to have a retroactive effect, must take place at a time and under
circumstances when the ratifying party may himself lawfully do the
act which he ratifies. The validity of an unauthorized deed of a corpora-
tion must be determined according to the circumstances which exist at
the time when it is ratified. Ibid.

Where a party purchased from the bankrupt a part of certain bonds to
which the latter was entitled upon complying with certain conditions, he
obtained a right that may be enforced against the assignee if the con-
ditions were performed, although the bonds were not separated from the
others if they were all alike. Hamilton v. National Loan Bank, 3 Dillon,
230.

If the bankrupt proved and filed his claim in the probate court and
then transferred it, the dividends should be paid to the assignee, and
not to the transferee, irrespective of any question of fraud on the bank-
ruptcy law. Miller v. Parker, 47 Ala. 312.

If a deed of trust to secure the payment of a note contains a power
authorizing the creditor, his agent, attorney or assignee, to sell the prop-
erty in default of payment of the note, the assignee of the creditor may
sell under the power, and his deed will convey a legal estate. Wood vy.
Boyd, 28 Ark. 75.

A claim for compensation for the destruction of a vessel by a Confederate
cruiser, equipped and sent out in England through the negligence of the
British Government, is susceptible of a transfer that may be sustained in
equity. Williamson v. Colcord, 13 B. R. 319.
352 Tue Bankruptcy Law.

A mere agreement to give what may be realized from a claim is a
promissory arrangement, and does not constitute a complete and perfect
gift. Ibid. .

An agreement by a guardian to discharge one mortgage and take a
new one, although he transcends his power in making it, is not absolutely
void but is voidable only at the election of the infant on coming of age,
and until so avoided, is valid as against the assignee of the mortgagor.
Burdick v. Jackson, 15 B. R. 318; s. c. 14 N. Y. Supr. 488.

If the bankrupt, being the holder of a mortgage pledged to secure a
loan, and then for a valuable consideration promised the mortgagor to
redeem and cancel it, the assignee, if he redeems it, may enforce it. Mc-
Lean y. Cadwallader, 15 B. R. 383; s. c. 34 Leg. Int. 140.

If an attorney institutes a suit under an agreement with the bankrupt
for a certain portion of what may be recovered, he is entitled to that
share although the recovery took place after the commencement of the
proceedings in bankruptcy. Maybin v. Raymond, 15 B. R. 353; 4 A. L.
T. (N. 8.) 21.

Where goods are obtained through a misrepresentation by a firm com-
posed of three members, a return of the goods or their proceeds to the
creditor will be valid as against the assignee of two of the partners.
if they have not lost their identity so as to form a part of the property
of the bankrupts. Montgomery v. Bucyrus Machine Co., 14 B. R. 193;
8. c..92 U. 8S. 257.

The creditor who holds collaterals as securities need not sell them at
public auction, but may sell them at the stock exchange or , brokers’
board. Sparbawk v. Drexel, 12 B. R. 450.

Where an insolvent debtor acquiesces in a sale of securities, the as-
signee is bound by his acqtiiescence, although the securities are sacrificed.
Ibid.

A creditor who is vested with the power to sell securities holds it in
trust for the debtor’s benefit as well as his own, and can not sacrifice
the securities. Ibid.

A voluntary agreement between certain persons to which the debtor is
in no wise a party, to make a contribution to him, does not create an
indebtedness to him. In re Oregon B. Printing Co., 13 B. R. 503; s. c. 11
Pac. L. R. 288; s. c. 3 Cent. L. J. 515.

AD order passed in proceedings supplemental to an execution restrain-
ing a bank from paying money to the bankrupt is no defense to any action
brought by an assignee subsequently appointed in proceedings instituted
before that time. Morris v. First Nat'l. Bank, 15 B. R. 281.

Title Subject to Equities. The assignee takes the property of the
bankrupt, subject to all legal and equitable claims of others. He is
affected by all the equities which can be urged against the bankrupt.
Cook v. Tullis, 9 B. R. 483; s. c. 18 Wall. 332; Kelly v. Scott, 49 N. Y.
595; Parker v. Muggridge, 2 Story, 334; Fletcher v. Morey, 2 Story, 555;
Mitchell v. Winslow, 2 Story, 630; Winsor v. McLellan, 2 Story, 492; Tal-
ecott v. Dudley, 5 Ill. 427.

If the bank is estopped, his assignee is also estopped. Kelly v. Scott, 49
Riguts UNDER STATUTES. 353

N. Y. 595; Rockford, Rock Island & St. Louis R. R. Co. v. McKay & Aldus,
3B. R. 50; s. c. Lowell, 845; s.c. 1 L. T. B. 183.

When the bankrupt has contracted to manufacture an engine, and on
the representation that it had been finished and delivered to a company
for transportation to the purchaser, has obtained payment therefor, but
the engine in fact was not finished or delivered for transportation, re-
maining in the possession of the bankrupt, and being designated as be-
longing to the purchaser, it belongs to the purchaser, and not to the
assignee. The bankrupt and the assignee are estopped to say that the
engine was not set apart, or that it was not in esse when the representa-
tions were made. Rockford, Rock Island & St. Louis R. R. Co. v. McKay
& Aldus, 3 B. R. 50; s. ec. Lowell, 345; s. c. 1 L. T. B. 133.

If the resolution of the directors of the bankrupt corporation approving
of a deed of trust previously executed by its officers, and purporting to
be passed by a proper quorum, was shown to the creditor before he dis-
counted the note thus secured, the assignee is estopped from proving that
it is untrue, and that a quorum was not present. In re Kansas City
Manuf. Co., 9 B. R. 76.

An agreement to sign a bond to a person to indemnify him for his lia-
bility in becoming surety for the bankrupt confers a right to an assign-
ment which may be enforced in a court of equity and binds the assignee.
Tucker v. Daly, 7 Gratt. 330.

If'a bill of sale is recorded in the clerk’s office at one place, upon a
representation by the bankrupt that he resided there, it will bind the as-
signee although the bankrupt actually resided in another place. Allen v.
Whittemore, 14 B. R. 189.

Rights under Statutes.— The assignee has no larger interests in re
gard to usurious contracts than the bankrupt had, although they are void
inlaw. Tiffany v. Boatman’s Sav. Inst., 4 B. R. 601; s. c 9 B. R. 245;
8. ¢. 1 Dillon, 14; s. c. 18 Wall. 376.

The assignee has no power to institute proceedings for the recovery
of a statutory forfeiture claimed by the bankrupt, either prior or sub-
sequent to proceedings against him in bankruptcy. The power to in-
stitute proceedings for a forfeiture under the laws of Wisconsin against
usury, is a privilege conferred upon the borrower alone, and the assignee
is not the borrower in the sense of the law, but a purchaser. Bromley
v. Smith, 5 B. R. 152; s. ¢. 2 Biss. 511.

Section 5198 only forfeits the interest for usury, but does not affect
the principal. First Nat’l. Bank of Mount Joy v. Wilson, 72 Penn. 13.

Mere accommodation paper can have no effective or legal existence until
it is transferred to a. bona fide holder. ‘The discounting of such paper at
a higher rate of interest than the law allows is usurious, and not defensible
as a purchase of the paper. Tiffany v. Boatman’s Say. Inst., 4 B. R. 601;
8. ¢.9 B. R. 245; s. ec. 1 Dillon, 14; s. c. 18 Wall. 376.

If a party purchase a negotiable note at a discount greater than the
legal rate of intevest from a broker in the usual course of business, and
without any notice that the broker is acting for the maker, the assignee

93
354 Tur Banrruptoy Law.

of the maker can not recover the excess above the legal rate of interest
as usury. Sparhawk v. Cochran, 30 Leg. Int. 232.

Where the right to recover usurious interest is a redress for a personal
wrong, it does not pass to the assignee. Nichols v. Bellows, 22 Vt. 581.

Where the statute gives to the party paying usurious interest the right
to recover it back, that right passes to the assignee. Moore v. Jones, 23
Vt. 739; Wheelock v. Lee, 10 B. R. 363; s. c. 64 N. Y. 242.

The assignee has all the rights and powers which are given tu the
whole body of creditors, or to the whole of any one class of creditors
whether at law or in equity. Wilkins v. Davis, 15 B. R. 60.

An assignee of a general partner may maintain an action to recover a
division of profits made to a special partner in reduction of the capital.
Ibid.

The assignee of a bankrupt corporation can not maintain an action to
enforce the collateral liability of the stockholders for the debts of the
corporation. Dutcher v. Marine Nat'l. Bank, 11 B. R. 457; s. ec. 12 Blatch.
435.

AbD assignee can not under the laws of New York recover moacy paid
by an insolvent bank in the usual and ordinary course of its business to
a creditor who was ignorant of its insolvency. Dutcher v. Importers’ &
Traders’ Nat. Bank, 59 N. Y. 5; s. c. 1 N. Y. Supr. 400.

The Property of the Bankrupt’s Wife and Children.— Marriage is a
qualified gift to the husband of the wife’s choses in action, upon condi-
tion that he reduces them to possession durirg its continuanc:. The as-
signment in bankruptcy vests in the assignee all the rights of the hus-
band of the choses in action of the wife, and, aS a consequence, the
assignee may do all that the husband could do prior to the assignment,
and this embraces the right to sue for, recover and receive them. It
makes no difference in regard to the rights of the assignee, whetier the
choses in action have or have not been placed upon the schedules by the
bankrupt. In re Boyd, 5 B. R. 199; Butler v. Merchants’ Ins. Co., 8 Ala.
146.

The husband’s interest in his wife’s choses in action is not ownership
but power, and does not pass to his assignee. 1f they have not been re-
duced to possession by him at the time of the bankruptcy, they do not
pass to the assignee. Wickham v. Valle, 11 B. R. 88.

If the distributive share of the bankrupt'’s wife in her father’s estate
remains in the hands of the administrator or executor at the time of the
commencement of the proceedings in bankruptcy, it do2s not pass to the
assignee. Shaw v. Mitchell, 2 Ware, 220; Shay vy. Sessaman, 10 Penn.
432; Wickham v. Valle, 11 B. R. 83.

The wife’s distributive share will not vest in the assignee, although the
husband is administrator, for he holds the property in his representative
and not in his personal character. Shaw y. Mitchell, 2 Ware, 220.

A. conveyance by the bankrupt to his wife of his interest in her choses
in action is inoperative and void, and they pass to the assignee. Butler
v. Merchants’ Ins. Co., 8 Ala. 146.
PROPERTY OF BANKRUPT’S WIFE AND CHILDREN. 355

If the bankrupt’s wife has no other means of support, she may be
allowed a portion of the income derived from real estate owned by her.
ln re Ernst Brandt, 5 Biss. 217.

If the husband at the time of joining with his wife in a mortgage on
her real estate, received a sum of money equal to the value of his estate
by courtesy, the assignee will not be entitled to any part of the residue
on a sale under the mortgage. Shippen’s Appeal, 15 B. R. 553.

If the wife, without the knowledge of her husband, takes a note pay-
able to her husband or bearer for a debt due to her before marriage, and
the husband asserts no title to it or authority over it, but allows her to
keep possession of it and collect the interest, she is entitled to it as
against the assignee. In re George W. Snow, 1 N. Y. Leg. Obs. 264; s. ¢.
5 Law Rep. 369.

A possibility which is held under a will by the bankrupt’s wife, and
made dependent upon her surviving another legatee, does not pass to
the assignee. Krumbaar v. Burt, 2 Wash. C. C. 406.

Articles of jewelry given to the wife previous to marriage, and con-
tinuing in her use since, do not pass to the assignee. In re Edward H.
Ludlow, 1 N. Y. Leg. Obs. 322; in re Chester S. Kasson, 4 Law Rep. 489.

Gifts from the husband to the wife of personal ornaments or attire, com-
patible in value and character with his circumstances at the time, are her
sole property as paraphernalia, and do not pass to the assignee. In re
Edward H. Ludlow, 1 N. Y. Leg. Obs. 322; in re Chester 8S. Kasson, 4
Law Rep. 489. Contra, in re Benjamin B. Grant, 2 Story, 312.

Mourning rings given to the bankrupt’s wife since her marriage are
from their very nature and character purely personal and for her sole and
Separate use, and do not pass to the assignee. In re Benjamin B. Gran#,
2 Story, 312.

The legal title to an insurance policy on the life of the bankrupt for the
benefit of his wife, belongs to the wife, and, if he is solvent when the
premiums are paid, the policy can not be assigned by him. In re Bear &
Steinberg, 11 B. R. 46; s. c. 1 Cent. L. J. 607._

If the husband pays premiums on a policy upon his life for the benefit
of his wife after he becomes insolvent, the assignee may recover from the
wife the amount so advanced, with interest, to be taken out of the policy
when that shall be paid. Ibid.

Gifts made by a bankrupt to his children which were proper and suitable
to him in his circumstances and condition, may be retained by them. In
re Benjamin B. Grant, 2 Story, 312.

The children of the bankrupt may retain watches given to them by
persons other than their parents. Ibid.

If the bankrupt, when insolvent, paid only part of the money to pur-
chase a watch for his child, the assignee is only entitled to the amount
So paid. Ibid.

Where the bankrupt has, in good faith, made an agreement with his
minor children that they shall have a certain share of their earnings, and
such share has always been kept by them in their own name, separate
356 THE BANKRUPTCY Law.

from his property, the share will not pass to the assignee. Tebbets y.
Torr, 5 Law Rep. 503.

Gifts made by the bankrupt to his children which were not suitable and
appropriate to his circumstances are fraudulent, and pass to the assignee.
In re Benjamin B. Grant, 2 Story, 312.

Rights in Representative Character.— An adjudication of bankruptcy
is in the nature of a statute execution for all the creditors. In re Elam
Rust, 1 N. Y. Leg. Obs. 326.

Proceedings in bankruptcy are in the nature of an equitable attachment
as against the equitable estate of the bankrupt, and the assignee, as the
representative of all the creditors of the bankrupt, thereby becomes the
owner of such equitable interest, with an equity superior even to a judg-
ment creditor who has an execution returned unsatisfied, but who had
not obt#ined an equitable lien by filing a creditor’s bill or taking other
proceedings to reach sucli equitable estate before the filing of the petition
in bankruptcy. In re Hinds et al., 3 B. R. 351.

The assignee represents the creditors, and for their benefit the ratifica-
tion of an unauthorized deed will not be permitted to relate back to the
time of its execution, so as to bind him, where it would be void under the
bankruptcy law if executed at the time of the ratification. In re Kansas
City Manuf. Co., 9 B. R. 76.

The assignee in bankruptcy more nearly resembles a purchaser of the
bankrupt’s property at an executor’s sale than any other familiar :har-
acter to which he may be likened. He acquires the rights of the debtor
in the property, and also the rights of creditors to impeach any prior
fraudulent conveyance, but takes subject to all equities against the
debtor in the property purchased. A fund paid into a State court upon a
judgment rendered in favor of the bankrupt is subject to be applied
according to its usual practice. The clerk may retain the costs due his
office out of the fund, and pay the residue to the assignee. ee Office
vy. Bank, 66 N. C. 214.

The assignee succeeds to the rights of the creditors as well as to those
of the bankrupt, and may contest the validity of a conveyance, even
though the bankrupt could not. He may institute a suit to recover prop-
erty conveyed in fraud of creditors, as well as to recover property,
or its value, which, by sections 5128 or 5021 has been transferred
in fraud of the bankruptcy act. In re Metzger, 2 B. R. 355; Foster v.
Hackley & Sons, 2 B. R. 406; s.c.2L. T. B. 8;8.c.10. L. N. 187; Brad-
shaw v. Klein, 1 B. R. 542; s. c. 2 Biss. 20; s.c. 1 L. T. B. 72; Bucking-
ham vy. McLean, 3 McLean, 185; s. c. 13 How. 151.

The proceedings in bankruptcy arrest the ordinary proceedings of cred-
itors to obtain judgments, and thereby to secure an appropriation of the
debtor’s property to their use, and the assignee represents them. He is
trustee for them, and whatever right they might assert as creditors if
they had obtained judgments, he may assert for their benefit, whether
it be to set aside conveyances which are fraudulent and void as against
creditars, or which are otherwise as against them invalid. In re Simeon
Leland et al., 10 Blatch. 508. ,
Ricuts In REPRESENTATIVE CHARACTER. 35%

Transactions by or with debtors which are void as to creditors, whether
for fraud, want of .completeness in any of their incidents, or for any
cause whatever, are equally void as against the assignee. Kane v. Rice,
10 B. R. 469.

The assignee is not bound by any lien or incumbrance which is not
valid against creditors. In re Tills & May, 11 B. R. 214.

The assignee occupies the position of a judgment creditor to all intents
and purposes, so far as he represents creditors, and whenever such
creditor can enforce rights which the debtor could not, the assignee can
also enforce them. Kane v. Rice, 10 B. R. 469; Miller v. Jones, 15 B. R.
150.

Any defense that would not be good as against creditors in an equitable
suit, can not be maintained against the assignee. His position is analogous
to that of a receiver appointed by a court of chancery. A resolution re-
leasing stockholders from their liability is not good as against him when
it is not valid as against creditors. Upton v. Hansbrough, 10 B. R. 369;
8c. 3 Biss. 417.

The assignee of a bankrupt corporation may recover money or property
obtained from the corporation under a void contract, and will not be
affected by the illegal acts of the corporation or its officers. In re
Jaycox & Green, 7 B. R. 578; s. c. 13 B. R. 122; s. c. 12 Blatch. 209; s. ¢.
13 Blateh. 70.

The assignee may impeach a transaction between a bankrupt corpora-
tion and its stockholders, which creditors could impeach. Sawyer v. Hoag,
9 B. R. 145; s. ec. 8 Biss. 298; s. c. 17 Wall. 610.

The capital stock of a corporation, especially its unpaid subscriptions,
is a trust fund for the benefit of the general creditors of the corporation.
The assignee has a right to inquire into a conventional payment of his
stock by one of the shareholders of the company. If the payment is
merely conventional through the exchange of checks, thus changing the
character of the debt from one of a stock subscription unpaid to that
of a loan of money, it is void. It would be just the same if agreeing
beforehand to turn the stock debt into a loan, the shareholder should
bring the money with him, pay it, take a receipt for it, and carry it
away with him. This would be precisely the equivalent of the
exchange of checks between the parties. It is the intent and purpose
of the transaction which forbids it to be treated as a valid payment.
Ibid.

A judgment confessed upon an insufficient verification is valid against
all except judgment creditors, who may institute proceeding to set it
aside. The assignee is not a judgment creditor, and the bankruptcy act
nowhere confers upon him the rights of such creditors. Cook v. Whipple,
9 B. R..155; s. ¢. 55 N. ¥. 150.

Although the property at the time of the commencement of proceedings
in bankruptcy is held by one who claims it by transfer, still, if it be
shown that such transfer is void, it follows that the bankrupt did own
such property at the time when bankruptcy proceedings were commenced,
and, therefore, the title to such property vests in the assignee under
358 Toe Bankruptcy Law.

the deed of assignment. Foster v. Hackley & Sons, 2 B. R. 406; s. @ 2
L. T. B. 8; s.¢c.10C. L. N. 137; in re Hussmann, 2 B. R. 487; s. c. 2 L. T. B.
58; 8. ¢.1C. L, N. 177; Shackleford v. Collier, 6 Bush, 149.

If a party refuses to take less than the full amount of his demand, and
on receiving that signs a composition article, the assignee may recover
the money, although the composition failed because it was not signed
by all the creditors, according to the requirement of its terms. Bean v.
Brookmnire, 7 B. R. 568; s. c. 2 Dillon, 108; s.c.6L. T. B. 114;5c.30L.
N. 314; Amsinck v. Bean, 8 B. R. 228; s. c. 11 B. R. 495; s. c. 10 Blatch.
361; s. c. 22 Wall. 395.

An assignee does not represent creditors so as to be able to prosecute
their claims against a trustee of a corporation who has rendered himself
liable to them for filing a false report. Bristol v. Sandford, 13 B. R. 78;
s. c. 12 Blatch. 341.

Although a composition is not by its terms to be valid unless signed by
all the creditors, yet, if the signature of a party misleads and injures
other creditors, he is estopped as against them to deny its validity, even
though it is not signed by all. Bean v. Brookmire, 7 B. R. 568; s. c 2
Dillon, 108; s. c. 6 L. T. B. 114; s. «. 3 C. L. N. 314; Amsinck v. Bean,
8 B. R. 228; s. c. 11 B. R. 495; s. c. 10 Blatch. 361; s. c. 22 Wall. 395.

If the compromise agreement stipulates for the payment of seventy per
cent. in six, twelve, and eighteen months, a secret agreement whereby a
creditor accepts fifty per cent. in cash in full of his claim, is a fraud on
the agreement. Amsinck v. Bean, 8 B. R. 228; s. c. 11 B, R. 495; s. c. 10
Blatch. 361; s. c 22 Wall. 395.

If one partner receives all the assets of the firm, and executes a com-
promise agreement with the firm creditors, his assignee may recover
-money given to a creditor in fraud of such agreement, although the firm
is not declared bankrupt. Ibid.

It is now held to be the better policy to allow the debtor, though a
participant in the fraud, to recover the amount paid to a creditor who
refuses to join in a composition agreement, unless he can obtain a prefer-
ence, and having obtained it, pretends to come into the composition with
other creditors on equal terms. The right to recover such bonus passes
to the assignee. Bean v. Brookmire, 1 Dillon, 151.

Unrecorded Deeds.— If a mortgage has never been delivered, the prop-
erty passes to the assignee free from the incumbrance, although the mort-
gage was made prior to the commencement of the proceedings in bank-
ruptey. Jewett v. Preston, 27 Me. 400.

When the statutes of a State expressly declare that a deed shall be
void as to creditors until and except from the time it is duly admitted to
record, the title of the assignee will prevail against any claim under a
deed, if it remained unrecorded when the petition in bankruptcy was
filed. It is not an unreasonable construction of the bankruptcy act which
regards it as vesting in the assignee, for the benefit of creditors in general,
the estate of the bankrupt discharged of liens or trusts, which, at the
time of the filing of the petition, are valid only inter partes under the
statute of the State in which they are claimed to exist, In re Wynne,
UNRECORDED DEEDS. 359

4B. R. 23; 8. c Chase, 227; s. c. 2 L. T. B. 116; Brock v. Terrell, 2 B. R.
643; Allen v. Massey, 4 B, R. 248; s. c. 7 B. R. 401; s. ce. 2 Abb. C. C. 60;
s. c. 1 Dillon, 40; s. ec. 17 Wall. 351; s. c. 1 L. T. B. 218; National Bank
vy. Hunt, 4 B. R. 616; s. c. 11 Wall. 391; Harvey v. Crane, 5 B. R. 218;
s. c. 2 Biss. 496; Edmondson v. Hyde, 7 B. R. 1; s. c 2 Saw. 205; 5. « 5
L. T. B. 380; in re Perrin & Hance, 7 B. R. 283; Moore vy. Young, 4 Biss.
128; Barker v. Smith, 12 B. R. 474; 8. c. 2 Woods, 87; in re Thomas C.
Gurney, 15 B. R. 373; s. ¢. 9 C. L. N. 255. Contra, in re Charles Collins,
12 B. R. 879; s. ec. 12 Blatch. 548; National Bank v. Conway, 14 B. R. 175,
513; Winsor v. McLellan, 2 Story, 492; in re Griffiths, 3 B. R. 731; 8s. c.
Lowell, 481; Coggeshall v. Potter, 4 B. R. 73; s. « 6 B. R. 10; 83 a 1
Holmes, 75; Sawyer v. Turpin, 5 B. R. 339; s. c. 138 B. R. 271; 8. ce. 91
U. S. 114; s. ec. 1 Holmes, 251.

If the State statute deprives the mortgage of effect until it is deposited
with the proper officer, as to creditors, subsequent purchasers, and mort-
gagees in good faith, it will be valid against the assignee if it is deposited
for record prior to the commencement of proceedings in bankruptcy, for
the assignee does not belong to either of the classes protected by the
statute. Gibson v. Warden, 14 Wall. 244.

Where a chattel mortgage takes effect as against third persons as well
as between the parties from the time of its execution, although it is not
recorded or accompanied by possession, unless intervening rights have
been obtained, it will be valid against the assignee if it is recorded before
the commencement of the proceedings in bankruptcy. Sawyer v. Turpin,
5 B. R. 389; s. c. 18 B. R. 271; s. ce. 91 U. S. 114; s. c 1 Holmes, 251.

If a deed of trust is actually delivered to a trustee with power to record
it when he deems proper, it is valid as against the assignee, although it
is not recorded until after the grantor’s failure. National Bank v. Con-
way, 14 B. R. 175, 513.

Although a mortgage be regarded as having no validity whatever until
it is filed, as against creditors of the mortgagor, yet it will be valid if it
is filed before the filing of the petition in bankruptcy, for the title of
the assignee relates back only to the filing of the petition. In re Perrin
& Hance, 7 B. R. 283.

If a mortgage, although it is not recorded in time, is valid as against
general creditors and there are only general creditors at the time of the
filing, it will be valid as against the assignee. Johnson v. Patterson, 2
Woods, 448.

If judgment creditors have levied upon the property covered by a
chattel mortgage, which is void under the recording laws of the State,
the assignee may maintain an action to set it aside. Platt v. Stewart,
13 Blatch, 481.

Under the laws of Illinois, a mortgagee who takes possession of the
property before any other person has acquired any lien or vested rights
therein, hag a better title than the assignee, although the mortgage was
not properly acknowledged. In re Burnett, 6 C. L. N. 366.

Where the statute declares that a mortgage of chattels shall be void,
if the mortgagor remain in possession, unless the mortgage is filed in
&

360 Tue Bangruptcy Law.

the record office of the place where the mortgagor resides, the mortgage
will be void as against the assignee for want of filing, although it was
given to secure a note payable one day after date. In re Simeon Leland,
‘10 Blatch. 503.

Under the laws of Iowa, the assignee in assailing a mortgage which
was recorded at the time of the commencement of proceedings in bank-
ruptcy, must show something more than that debts were created without
notice of it before it was recorded. Cragin v. Carmichael, 11 B. R. 511;
s. ec. 2 Dillon, 519. '

By the laws of Michigan, a mortgage of chattels is absolutely void as
against the creditors of the mortgagor unless it is filed in the clerk’s
office in the township where the mortgagor resides. If the mortgage is
given by more than one, and the mortgagors reside in different townships,
it will be void, although it is filed in the clerk’s office in the township
where one of them resides and where the property is located. Kane vy.
Rice, 10 B. R. 469.

If a mortgage of chattels is void on account of the omission to record
it, the mortgagee does not obtain a right to them by taking possession
before the commencement of proceedings in bankruptcy. Harvey v.
Crane, 5 B. R. 218; s. c. 2 Biss. 496; Kane v. Rice, 10 B. R. 469. Contra,
Miller v. Jones, 15 B. R. 150.

The assignee in attacking a conveyance as invalid under the laws of
the State has precisely the rights which an attaching or judgment creditor
would have, and no more. Cragin v. Carmichael, 11 B. R. 511; s. c 2
Dillon, 519; Miller v. Jones, 15 B. R. 150.

Rejection by Assignee.— As a general rule, contracts to be performed
to a party and his rights of action are deemed property, and such con-
tracts and rights of action pass by the operation of the bankruptcy law
to the assignee. But to this general rule there are many exceptions,
some from the nature of the contracts, and some from the nature of the
interests involved. Streeter v. Sumner, 31 N. H. 542.

The assignee has an election to repudiate a contract, if it may more
properly be regarded as a burden than a privilege, as for instance, where
from the conditions of the contract, he can derive no benefit for the
creditors, and may subject the estate to loss if he assumes the contract.
Such a contract is not property within the meaning of the law. Streeter
v. Sumner, 31 N. H. 542; Oakey v. Gardner, 2 La. An. 1005; Rugeley v.
Robinson, 19 Ala. 404.

The assignee is not at least ordinarily bound to take into his possession
property which will be a burden instead of a benefit to the estate. If he
elects not to take, the property remains in the bankrupt, and no one
has a right to dispute his possession. His possessory title is good against
all the world but his assignee. Smith vy. Gordon, 2 N. Y. Leg. Obs. 325;
s. c. 6 Law Rep. 313.

If the assignee may elect to take or not to take any part of the bank-
rupt’s property, some period of time must be limited, within which the
election is to be made, for he can not be allowed to hold the title in abey-
ance for an indefinite period. If, with the knowledge of the bankrupt’s
Errrct oF SURRENDER TO ASSIGNEE. 361

‘title or with means of knowledge, he stands by for a length of time with-
out asserting his claim, and allows third persons to acquire an interest in
the property, it is too late to assert his claim, and the time for an election
is past. Ibid.

The right of the assignee to reject property is confined. to those cases
where he would be charged with a burden or liability if the property
passed to him. Berry v. Gillis, 17 N. H. 9.

The neglect of the assignee to impeach a fraudulent conveyance does
not enable a creditor to pursue it and appropriate it to the payment of his
debt. King vy. Dietz, 12 Penn. 156.

The assignee of an individual partner may relinquish all right to a
judgment rendered in favor of the firm if the firm is insolvent. Oakey
v. Gardner, 2 La. An. 1005. :

The taking of the title to a debt or claim does not charge the assignee
with a liability to the party from whom it appears to be due. He can
not, therefore, reject it. The'debtor is entitled to know to whom he is
indebted, and it should not be left to the election of the assignee to
determine whether he shall be a debtor to the bankrupt or a debtor to
the assignee. Berry v. Gillis, 17 N. H. 9; Deadrick v. Armour, 10 Humph.
588.

The assignee may elect to abandon a contract which stipulates for the
personal services of the bankrupt. Streeter vy. Sumner, 31 N. H. 542.

If the assignee of a lease under seal continues to occupy the premises
after the commencement of the proceedings in bankruptcy, without any
arrangement with the assignee in bankruptcy, he holds under the land-
lord as a tenant at will, and is liable in assumpsit and not in covenant
upon the lease. Ryerss v. Farwell, 6 Barb. 615.

Effect of Surrender to the Assignee.— When the défendant in an action
of replevin, after the commencement of the suit, délivers the property
in controversy to the assignee of the party from whom the plaintiff ob-
tained it, by transfer which is void under the bankruptcy law, he may set
up such delivery as a defense to the action of replevin. SBolander v.
Gentry, 36 Cal. 105.

A sheriff who is sued for the conversion of certain property, seized
by him under an attachment, which is claimed by the plaintiff under a
Mortgage, may show that before the commencement of the action he
delivered the property to the assignee of the mortgagor, and that the
mortgage is void under the bankruptcy law as a fraudulent preference.
It is a familiar principle, that the defendant in an action of trover may
always show in mitigation of damages, especially when the taking or
conversion was not willful, that the property has gone from his possession,
by process of law or otherwise, to the plaintiff, or to his use, or to a
party who, as against the plaintiff, had the better title to it. The United
States courts have exclusive jurisdiction of proceedings in bankruptcy,
but all questions of title to property derived through such proceedings
are within the jurisdiction of the State courts. The question presented
by such defense is not a question of jurisdiction but of title. Hanson
v. Herrick, 100 Mass. 323; Perry v. Chandler, 56 Mass. 237. Contra,
Bromley v. Goodrich, 15 B. R. 289; s. c. 40 Wis. 131.
362 Tue BankRuPtcy Law.

If the action was instituted before the commencement of the pro-
ceedings in bankruptcy, the proof will prevent the recovery of more
than nominal damages, Perry v. Chandler, 56 Mass. 237.

If the sale is good at common law, the purchaser can recover in an
action against the sheriff for a levy on the property. If it is a fraud on
the bankruptcy act, the assignee can recover to a like extent against
the purchaser. The pendency of such an action is no defense to the
action against the sheriff. Hathaway v. Brown, 18 Minn. 414.

In an action by a preferred creditor to recover the value of property
taken by the sheriff, under an attachment against the debtor, the de-
fendant can not plead a surrender of the goods to the assignee as a bar
to the action. Stanley v. Sutherland, 16 A. L. Reg. 298.

A sheriff who is sued for the value of property taken by him under an
attachment can not prove that the transfer to the plaintiff was made
by the debtor in violation of the bankruptcy law. Ibid.

Dissolution of Attachments.— (c) “Mesne process” is all process
issued in a suit before execution. Pennington v. Lowenstein, 1 B. R.
570; Corner v. Mallory, 31 Md. 478.

The term “attachment on mesne process” embraces any process by
which a lien is first acquired. Morgan v. Campbell, 11 B. R. 529; s. c
22 Wall. 381.

An attachment under the C. C. P. of North Carolina is prior to final
judgment, and is, therefore, in its nature mesne process. Mixer v. Ex-
celsior Co., 65 N. C. 552.

An attachment on mesne process is a statute lien. Peck v. Jenness,
7 How. 612; Downer v. Brackett, 2 Vt. 599; s. ec. 5 Law Rep. 392; Haugh-
ton v. Eustis, 5 Law Rep. 505; Ingraham v. Phillips, 1 Day, 117; Wit-
tredge v. Emerson, 15 N. H. 227; Wells v. Brander, 18 Miss. 348; Shaffer
v. McMaken, 1 Ind. 274; Kittredge v. Warren, 14 N. H. 509; Davenport
vy. Tilton, 51 Mass. 320. Contra, in re John S. Foster, 2 Story, 131;
Everett v. Stone, 3 Story, 446; in re Bellows & Peck, 3 Story, 428.

Congress has the power, by the operation of a general bankruptcy law,
to divest the conditional lien acquired by the levy of an attachment.
Corner y. Miller, 1 B. R. 403; in re Ellis, 1 B. R. 551; in re David B.
Williams, 2 B. R. 229; s.c. 1 L. T. B. 107, 118; s. @ 3 A. L. Rev. 374; in
re Brand, 3 B. R. 324; s. c. 2 L. T. B. 66; Mixer v. Excelsior Co., 65 N. C.
552; Payson v. Payson, 1 Mass. 283; Flagg v. Tyler, 6 Mass. 33; Harrison
vy. Sterry, 5 Cranch, 289; s. ¢. Bee, 244; Hatch v. Seely, 13 B. R. 380;
8%. c. 387 Iowa, 493.

The provision applies to attachments sued out in State courts. Bank
vy. Overstreet, 13 B. R. 154; s. c. 10 Bush, 148.

The language of this clause is broad and comprehensive, and not
restricted, and made to have refereace to the time at which the act was
to become operative. The period of four months was not intended to
have reference to the 1st day of June, 1867, when the act was to go into
effect as to all its provisions, but was fixed as a period within which no
preference should be gained by one creditor, by attachment, over the
claims of other creditors of the bankrupt. An attachment made after
DiIssOLUTION OF ATTACHMEMTS. 363

the passage of the act, but before the 1st day of Tune, 1867, and within
a period of four months next preceding the commencement of proceed-
ings in bankruptcy, was dissolved. Corner y. Mallory, 31 Md. 478,

The appointment of a receiver and the transfer of the eustody of the
attached property from the sheriff to him alters no one’s rights. His cus-
tody is that of the law, and is in its nature provisional and, suspensive,
leaving the rights of the parties concerned to be controlled by the ulti-
mate judgment of the court. Miller v. Bowles, 9 B. R. 354; s. c. 10 B. R.
515; s.c. 2 N. Y. Supr. 568; s. c. 58 N. Y. 253.

The commencement cof proceedings in bankruptcy against one partner
within four months after the issuing of an attachment against a firm does
not dissolve it. Mason v. Warthens, 14 B. R. 341; s. c. 7 W. Va. 532

A resolution of compesition which is passed. without calling the first
meeting of creditors and electing an assignee, does not dissolve an attach-
ment issued within four months befcre the commencement of such pro-
ceedings. In re W. D. Clapp & Co., 14 B. R. 191; in re Shields, 15 B. R.
532; s. c. 4 Cent. L. J. 557; s. ce. 24 Pitts. L. J. 190. Contra, Miller v.
Mackenzie, 13 B. R. 406; s. ce. 43 Md. 404; Smith vy. Engle, 14 B. R. 481;
s.¢c. 9 C. L. N. 46.

An attachment is not a fraud on the bankruptcy law, and rights which
have accrued thereby under the State law other than expenses are not
affected by proceedings in bankruptcy. Whithed v. Pillsbury, 13 B. R.
241,

This section only refers to attachments which are pending at the time
the petition in bankruptcy is filed. If the attachment is prosecuted to
judgment prior to that time, the judgment can not be examined or im-
peached in a collateral action. Henkleman v. Smith, 12 B. R. 121; s. ¢.
41 Md. 164; in re Enoch Cook, 2 Story, 376; Fiske v. Hunt, 2 Story, 582.

When an execution is not in fact levied upon a fund in the hands of
the garnishee, neither the judgment nor execution create any lien upon
the fund other than that under which it has been previously held. The
mere fact that a judgment has been rendered and an execution issued,
but not levied, dces not have the effect to convert the attachment lien
upon a fund in the hands of a garnishee into a lien upon final process. In
such a case the attachment lien remains, after the judgment and before
the levy of the execution, precisely what it was before, to-wit, an attach-
ment under mesne process. Howe vy. Union Ins. Co., 42 Cal. 528; s. c. 4
L, T. B. 41.

An attachment made March 8, 1867, at seven oclock in the afternoon,
was dissolved by the commencement of proceedings in bankruptcy on
July 8, 1867, at two o’clock and fifteen minutes in the afternoon, for it
was made within the period of four months prior to such commencement.
Fractions of a day will be considered and the yery hour ascertained where
the means for an accurate computation are afforded. Westbrook Manuf.
Co. v. Grant, 60 Me, 88; s. c. 6 L. T. B. 545.

If a lien is obtained by the filing of a bill to reach the equitable assets of
the bankrupt, it will be preserved although an attachment was issued with
the summons, for the attachment may be regarded as mere surplusage.
House v, Swanson, 7 Tenn. 32.
364 Tur Bankruptcy Law.

If a mechanic issued an attachment within the time required by law,
he retains his lien although the attachment is dissolved. Loudon vy. Blan-
ford, 56 Ga. 150.

A, judgment obtained in the courts of one State, can not be collected in
another State, except by a suit thereon at common law, or by process of
attachment; and in either case, the writ issued in the suit to collect it is
mesne process. An attachment on such judgment will be dissolved, if is-
sued within four months before the commencement of proceedings in
bankruptcy. Randall & Co. v. McLain, 40 Ga. 162.

An attachment properly issued is legal and valid until dissolved. It is
not vacated or made void ab initio by the commencement of proceedings in
bankruptcy, but simply dissplved. All proceedings under it up to that
time are regular and valid. In re Housberger et al., 2 B. R. 92; s. c. 2 Ben.
504; in re C. H. Preston, 6 B. R. 545.

A bankrupt can not plead the pendency of the proceedings in bank-
ruptcy in abatement of the attachment. Sims v. Jacobson, 51 Ala. 186.

The bankrupt can not claim the dissolution of the attachment for the

lien continues as to him. Ibid.
' A trustee in bankruptcy is entitled to all the assets seized on attachment
on mesne process issued from a State court within four months before the
commencement of the proceedings in bankruptcy, and the State court, on
the petition of the trustee, will order that they be delivered to him.
Ballin v. Ferst, 55 Ga. 546.

The assignee can not be made a party plaintiff in an attachment suit
pending against the bankrupt. The assignee is the representative of the
bankrupt’s estate, but he is not the representative of the plaintiff in an
attachment. Smith v. Lawton, 39 Ga. 29.

The assignee may, on his own motion, be made a party, if for no o other
reason than to have it properly made known to the court that the de-
fendant has become a bankrupt. He has also a right to move to dismiss
the attachment. The adjudication of bankruptcy must be made known to
the State court in some authentic mode. It may be denied. Order is one
of the first requisites of legal proceedings, and the State court can not take
notice of the judgments of other, courts by instruction. They must be
brought to the notice of the court, and this can not be done without parties.
Kent v. Downing, 10 B. R. 538; s. c 44 Ga. 116; Johnson vy. Bishop, 8
B. R. 533; s. c. 1 Wool. 324; Harrod v. Burgess, 5 Rob. (La.) 449.

Where the attachment was issued within four months before the com-
mencement of the proceedings in bankruptcy, it will, on motion, be dis-
solved by the State court, although a judgment has been entered and the
proceeds of a sale of the property under an execution paid over to the
plaintiff by the sheriff. Dickerson v. Spaulding, 15 B. R. 318; s. c. 14.N. Y.
Supr. 288. .

An assignee may move for a dissolution of the attachment, although the
property has been sold, and it is not proper to put him on terms in this
respect. IXking v. Loudon, 14 B. R. 383; s. ¢. 53 Ga. 64.

When a motion for the dissolution of an attachment asks that the
sheriff be directed to deliver the property to the assignee, notice thereof
DISSOLUTION oF ATTACHMENTS. 365

must be given to the sheriff. Dickerson vy. Spaulding, 15 B. R. 313; s. ¢c.
14 N. Y. Supr. 288.

A claim by the assignee of the defendant that the attachment has been
dissolved by the bankruptcy, presents substantive material facts to abate
the proceedings, and those facts should be pleaded in an issuable shape
and verified by the oath of the claimant instead of being set forth in a
motion. Hecht v. Wassell, 27 Ark, 412.

A plea of the commencement of the proceedings in bankruptcy is in-
sufficient, for the filing of the petition is but an incipient step in the
proceeding for an adjudication. Wells v. Brander, 18 Miss. 348.

If the defendant files a petition in bankruptcy after the levying of an
attachment, the proceedings should be stayed until an assignee is appointed.
Fisher v. Vose, 3 Rob. (La.) 457; Kittredge v. Emerson, 15 N. H. 227.

The assignee has a right to appear in the State court, and on motion have
the attachment dissolved. Loudon v. King, 50 Ga. 302.

An allegation that the attachment has been dissolved by the bankruptcy
of the defendant, is matter in abatement, and should be properly pleaded
and verified, instead of being set forth in a general vague motion. Hecht
vy. Wassell, 27 Ark. 412.

Where the garnishee files a petition in bankruptcy within four months
after the service of the writ of garnishment upon him, the attachment is
dissolved. Janes v. Beach, 1 Mich. N. P. 94.

No intervention by the assignee in the attachment suit is essential to
the dissolution of a garnishment. When the bankruptcy of a garnishee
occurs, the fund falls back into the estate, and is unaffected by a judg-
ment between a bankrupt and a third person assuming to direct it. Ibid.

From the date of the dissolution of the attachment, the sheriff, or other
person having then, actual possession of the attached property, becomes
divested of all official relations to that property, and becomes a simple
bailee thereof to the use of the person by virtue of the bankruptcy act
entitled to the same. If he afterward, by sale or in any other way, dis-
poses of the property otherwise than to transfer the bankrupt’s interest in
the same to him, to whom by the bankruptcy law it falls, his act has no
official character, and needs, to make it valid, the ratification of the per-
son having title under the law. In re Ci H. Preston, 6 B. R. 545.

An attaching creditor whose attachment has been dissolved by an order
of the court, has no lien on the fund. Loudon v. Blanford, 56 Ga. 150.

The clerk has no right to his costs until the fund has been adjudged sub-
ject to costs on the termination of the suit. Ballin v. Ferst, 55 Ga. 546.

The attaching creditor can not prove the costs incurred in the attach-
ment, because until judgment is obtained, they are not a debt of the
bankrupt, for they were not incurred for his benefit or at his request. In
re Fortune, 2 B. R. 662; 8. c. Lowell, 306; Gardner v. Cook, 7 B. R. 346; in
re C. H. Preston, 6 B. R. 545; in re Hatje, 12 B. R. 548; s. c. 6 Biss. 436.

The lien for the debt and for the costs is precisely the same in all re-
spects, in regard to the means by which it is acquired, and the tenure by
which it is held, and when such lien ceases by reason of the dissolution
of the attachment as to one, it must necessarily cease as to the other. In
366 Tur Bankruptcy Law.

re Geo. S. Ward, 9 B. R. 349; in re C. H. Preston, 6 B. R. 545; in re For-
tune, 2 B. R. 662; s. @ Lowell, 306. Contra, in re Housberger et al., 2
B. R. 92; s. c. 2 Ben. 504; in re C. H. Preston, 5 B. R. 293; Louden v. King,
50 Ga. 302; in re John S. Foster, 2 Story, 131.

When the claim on which the attachment was issued is merged into a
judgment rendered after the commencement of proceedings in bankruptcy,
the lien for fees and expenses is lost and extinguished in the judgment.
In re David B. Williams, 2 B. R. 229; s. c. 3 L. T. B. 107, 113; s. ¢. 3 A. L.
Rev. 374.

The rights of the officer making the attachment are no greater than
those of the attaching creditor. 1n case of the dissolution of the attach-
ment, he has no lien whatever for his costs and disbursements. In such
case he must look to the attaching creditor alone for the same, and in no
case can he withhold the property from the marshal or assignee on ac-
count thereof, or look to the assignee or the bankrupt’s estate for the pay-
ment thereof. In re Geo. S. Ward, 9 B. R. 349.

An officer must look to the party who employs him for his fees. He has
no claim upon the adverse party for them. Zeiber v. Hill, 8 B. R. 239; s.
ec. 1 Saw. 268.

If the sheriff sells the property after the commencement of proceedings
in bankruptcy, his lien is lost when he lets it go. Nothing less than the
consent of the person entitled at the time of the sale to the property can
preserve the lien to take effect on the proceeds. In re C. H. Preston,
6 B. R. 545.

The sheriff can not retain the property until the fees and charges are
paid; for when the attachment, by virtue of which he holds the property,
is dissolved, he has no means of enforcing his lien against the property.
His remedy, if he has a lien, is to apply to the bankruptcy court to have it
allowed and paid out of the assets that may come into the hands of the
assignee. In re W. 8S. Stevens, 5 B. R. 298; s. c. 2 Biss. 373.

The costs are but an incident, and the debt or principal must be proven
and allowed before the costs can be proven and allowed. In re C. H.
Preston, 5 B. R. 293.

Costs which are made after the commencement of proceedings in bank-
ruptcy can not be allowed. Ibid.

Costs incurred in attaching property which is not liable to attachment
can not be allowed. Ibid.

The State court can not direct any of the fund to be paid to the attach-
ing creditor, but the whole must be paid over to the assignee. Harmon v.
Jameson, 1 Cranch C. C. 288.

When the attachment is dissolved, the State court may adjust the lien
for costs before turning the money over to the assignee. Loudon v. King,
50 Ga, 302.

The bankruptcy court may, in the exercise of its equitable jurisdiction,
require the assignee to pay such charges as appear to have benefited the
estate in his hands, though incurred before the petition was filed, and not
protected by an absolute lien. When the assignee receives the benefit of
the costs of an attachment, he should sustain the burden. In re Fortune,
DIssoLuTION or ATTACHMENTS. 367

2B. R. 662; s. c. Lowell, 306; Gardner v. Cook, 7 B. R. 346; Zeiber v. Hill, 8
B. R. 239; s. c. 1 Saw. 268; in re Geo. S. Ward, 9 B. R. 349; in re Holmes
et al, 14 B. R. 493; in re H. E. P. Jenks, 15 B. R. 301.

If the attaching creditor is not the petitioning creditor for the adjudica-
tion of bankruptcy, this fact raises a presumption against the allowance
of the claim for expenses. In re Geo. S. Ward, 9 B. R. 349.

Where the interval between the levying of the attachment and the
filing of the petition in bankruptcy by another creditor is brief, the omis-
sion to file such petition is not unreasonable. Ibid.

Where the costs are incurred solely for the benefit of the attaching
creditor, they can not be allowed. In re Archenbrown, 8 B. R. 429.

The attachment can not be sustained as against property which will be
set apart to the bankrupt as exempt. In re ©. H. Preston, 5 B. R. 293; in
re Ellis, 1 B. R. 551. Contra, Robinson vy. Wilson, 14 B. R. 565; s. ce. 15
Kans. 595.

If the assignee files a petition to set aside a sale of exempted property
made under an attachment, the petition will be dismissed with costs to the
assignee personally. In re C. H. Preston, 6 B. R. 545.

If an attachment for a firm debt is laid upon the property of a firm com-
posed of three members, of whom one only is bankrupt, it may be dissolved
as to the interest of the latter, and bind the interests of other members.
Harrison v. Sterry, 5 Cranch, 289; s. c. Bee, 244.

If the bankrupt is not a debtor to the firm, his interest may be considered
to be his proportionate share of the property. Ibid.

While the lien created by an attachment continues, the sheriff may at any
time demand a return of the property from a receiptor, and if it is refused,
he has an immediate right of action, irrespective of the question whether
it will or will not be needed for the payment of the debt on which it was
attached. Such a liability will not be discharged or in any manner affected
by the bankruptcy of the debtor. If the receiptor refuses to deliver the
property to the sheriff, after an execution has been issued upon a judg-
ment rendered in the attachment proceedings, he can not take advantage
of his own fault and claim that the attachment has been dissolved. Parks
v. Sheldon, 36 Conn. 466.

If an insolvent debtor in an attachment suit gives a bill of sale of the
attached goods to a receiptor, with an understanding that the property
shall be sold and the proceeds applied toward the payment of the debt
of the attaching creditor, without regard to the attachment and without a
demand perfected in an execution, that is a preference, but if the under-
standing is that the proceeds shall be held by the receiptor as security
against his liability on his receipt, and applied to the debts only upon de-
mand duly made on execution, the bill of sale is valid. Parsons v. Topliff,
14 B. R. 547; s. c. 119 Mass. 245.

Where the attachment was against an individual partner, a receiptor
may show that the firm at the time of the attachment was insolvent, and
subsequently became bankrupt, and that the property was firm property,
and was delivered to the assignee. Lewis v. Webber, 116 Mass. 450.

If a judgment is entered in the attachment suit, even after the com-
368 THe Bankruptcy Law.

mencement of the proceedings in bankruptcy, the subsequent discharge of
the defendant will not relieve the receiptor from liability. Smith y.
Brown, 14 N. H. 67.

If the defendant fails to apply for a stay of the proceedings, and judg-
ment is rendered against him, it is conclusive against his surety on the
bond to dissolve the attachment, although the plaintiff proved his debt.
Cutter v. Evans, 11 B. R. 448; s. c. 115 Mass. 27; Haber v. Klauberg, 15
B. R. 347; s. c. 4 Cent. L. J. 342.

The provisions of this clause do not apply to the collateral liability of
sureties upon a bond given to dissolve the attachment, and by which the
lien is discharged. The bond is not a mere substitute for the attachment.
It does not merely restore the possession of the property to the debtor,
subject to the attachment; it dissolves the attachment utterly. It is not
given for the property itself, nor as security for its value; but for the
payment absolutely of the judgment when recovered in suit, whatever
may be its amount. It is not the equivalent of the attachment, and has
not its incidents. The discharge, when obtained, may be pleaded in bar
to the action, and the sureties on the bond may thus be released, even
though the attachment was issued more than four months prior to the com-
mencement of proceedings in bankruptcy. Carpenter v. Turrell, 100 Mass.
450; Williams v. Atkinson, 36 Tex. 16. Vide Zollar v. Janvrin, 49 N. H.
114; Holyoke v. Adams, 10 B. R. 270; s.c. 2 N. Y. Supr. 1; s.a 8 N.Y.
Supr. (Hun) 223.

Where an attachment issued more than four months before the com-
mencement of the proceedings in bankruptcy, was dissolved by filing a
bond, the bankrupt will not be allowed to file a supplemental answer set-
ting up his discharge. Holyoke v. Adams, 13 B. R. 418; s. c. 59 N. Y. 283.

The bankrupt may give a bond to dissolve the attachment, although it
was issued more than four months prior to his bankruptcy. Braley v.
Boomer, 12 B. R. 803; s. ec. 116 Mass. 527.

No matter or thing which has arisen since the judgment in the original
writ can, upon review, be pleaded in bar of the original action. A plea
of a subsequent discharge in bankruptcy is irregular, and can not defeat
the attachment. Zollar v. Janvrin, 49 N. H. 114.

An action of review is merely a chose in action, which, in virtue of the
adjudication of bankruptcy, became vested in the assignee. Whatever
may be recovered upon the review, in the way of damages or costs, or in
reduction of either, must be recovered by the assignee for the benefit of
the creditors, whose rights, as well as those of the bankrupt, the assignee
represents. If the action is prosecuted in the name of the debtor instead
of the assignee’s, the judgment must be for the adverse party. Ibid.

Every State court owes obedience to an act of Congress, concerning 4
matter within the power of Congress, as fully as a court of the United
States. An adjudication of the district court of another State is equal
in all respects to a similar adjudication by the district court of the State
in which the attachment is pending. Mixer v. Excelsior Co., 65 N. C.
552.

A proceeding by way of distress for rent, under the statute of the State
DISSOLUTION OF ATTACHMENTS. 369

of Illinois, is in the nature of an attachment, and the property is attached
upon mesne process; but the certificate given by the court, setting forth
the amount found to be due to the landlord, together with the costs of
court, is in the nature of final process. In re Joslyn et al., 3 B. R. 473; 8.
c. 2 Biss. 235.

In Connecticut, the first attaching creditor has sixty days in case of per-
sonal property, and four months in case of real estate, after final judg-
ment, within which to levy his execution, and thus enforce his attachment.
lien. After he has done so, or if his time has expired, then the second
attaching creditor has the same length of time within which to levy his
execution. The third attaching creditor has the same time after the second
that the second does after the first; and so on till the property is exhausted
or the attachments are all satisfied. The levy of an execution, while there
is a subsisting prior incumbrance by attachment on the same property, is
void. The assignee represents the creditors of the bankrupt, as well as
the bankrupt himself, and can take advantage of any remedy which would
be open to a subsequent attaching creditor. Beers v. Place & Co., 5 B. R.
459; s. c. 836 Conn. 579; s. c. 1 L. T. B. 262.

No attachment made prior to the period of four months next preceding
the commencement of proceedings in bankruptcy is dissolved. Not being
dissolved, it remains in full force. When the attachment is so made prior
to that time, the debtor’s title to the property attached passes to the as-
signee, subject to the creditor’s lien acquired by virtue of such attach-
ment. The lien may be enforced by any requisite proceedings therefor
which do not involve a judgment in personam. A judgment only to be en-
forced against the property attached, but not to be enforced against the
person of the defendant, or any other property, may be entered, even
though a discharge has been granted, and is pleaded in bar of the action.
Bates v. Tappan, 3 B. R. 647; s. c. 99 Mass. 876; Bowman v. Harding, 4
B. R. 20; s. c. 56 Me. 559; Samson v. Burton, 4 B. R. 1; s. c. 5 Ben. 325;,
Leighton v. Kelsey, 4 B. R. 471; s. c. 57 Me. 85; Perry v. Somerly, 57 Me.
552; Stoddard v. Locke, 9 B. R. 71; s. c. 43 Vt. 574; Daggett v. Cook, 37
Conn, 841; May v. Courtney, 47 Ala. 185; Peck v. Jenness, 7 How. 612;.
Ingraham v. Phillips, 1 Day, 117; Kittredge v. Emerson, 15 N. H. 227; Kit-
tridge v. Warren, 14 N. H. 509; Davenport v. Tilton, 51 Mass. 320; John-
son vy. Collins, 116 Mass. 392; Munson v. B. H. & HE. R. R, Co., 14 B. R.
178; s. c. 120 Mass. 81; Stockwell v. Silloway, 113 Mass. 382. Vide in re
Bellows & Peck, 3 Story, 428.

An attachment by garnishment gives a valid lien if made more than
four months before the commencement of the proceedings in bankruptcy,
although no notice was given to or process served on the bankrupt. In re
J.Q. A. Peck, 16 B. R. 43.

The rules of law by which the amount for which the plaintiff is entitled
to judgment is determined, are not affected by the bankruptcy of the de-
fendant. Johnson v. Collins, 116 Mass. 392.

No special judgment can be entered to be enforced against the bond, if
the defendant pleads his discharge, where the attachment was issued more
than four months before the commencement of the proceedings in bank-
370 Tur Banxruptcy Law.

ruptey, although the bond was filed after the adjudication of bankruptcy.
Hawilton v. Bryant, 14 B. R. 479; s. c. 114 Mass. 543; Fickett v. Durham,
119 Mass. 159.

Where the attachment was laid more than four months prior to the
commencement of proceedings in bankruptcy, no personal judgment
should be rendered against the debtor if he pleads a discharge. Shearon y.
Henderson, 38 Tex. 245.

If the State law allows a bond to dissolve an attachment to be filed at
any time before judgment it can not be filed after a trial, but before the
entry of a special judgment to bind the property. Johnson v. Collins, 12
B. R. 70; s. c. 117 Mass. 343.

A demurrer to a plea of discharge in bankruptcy is erroneous in an
attachment suit. The proper practice is to file a replication stating the
time of suing out the attachment, and the date of the proceedings in
bankruptcy. Gibson v. Green, 45 Miss. 209.

The assignee should be made a party to the attachment suit, or at least
be afforded the opportunity by citation to come in, if he will. He repre-
sents the creditors of the bankrupt, whose interests are entitled to protec.
tion. He takes the property attached, subject to all legal liens upon it,
and in his hands he can interpose every defense open to the bankrupt,
whether to the demand itself or to the attachment, interposing a defense, in
his discretion, in the best interests of the estate. Ibid.

A creditor having a valid attachment, can at any time be prohibited
from selling the property attached. The assignee has a right to free the
estate from the attachment lien, if that course becomes advisable, and the
district court can protect him in the exercise of that right, and interpose
its authority at such time as may be most expedient or proper. Samson
v. Burton, 4 B. R. 1; s. c. 5 Ben. 825; Samson v. Clarke, 6 B. R. 493; s. «
9 Blatch. 372.

The lien of an attachment is incident to the process. It can not exist
without it. When the process dies, the lien must necessarily die with it.
How then can a lien of attachment on process issued by a State court be
preserved and enforced in the Federal courts? Daggett v. Cook, 37 Conn.
841.

The return of the sheriff, showing a valid attachment, is conclusive, and
ean not be impeached by proofs ab extra. Bowman v. Harding, 4 B. BR.
20; s. c. 56 Me. 559.

Where by law the plaintiff having a judgment may issue an attachment
thereon, instead of any other execution, such an attachment is final and
not mesne process. It is true it originates a new suit between the plain-
tiff and the garnishee, which may result in a judgment and execution
against the latter, but this makes it none the less final process as against
the defendant in the original judgment, and such process does not fall
within the operation of this clause of the bankruptcy act. The First Na-
tional Bank of Baltimore v. Jaggers, 31 Md. 38; Wilbur v. Wilson, 2 W. N.
496; Stewart v. Warden, 1 W. N. 3.

The title to the property attached vests in the assignee as soon as the
assignment to him is executed, and with this title he acquires the right to
DISSOLUTION OF ATTACHMENTS. 3871

immediate possession. He can not sue the sheriff by an action at law in
the district court. Whether the attachment has ceased to have any bind-
ing force depends not only upon a proposition of law, but also upon two
questions of fact — that is, whether the debtor has been adjudicated bank-
rupt, and whether he is entitled to the property. Of the principle of law,
that bankruptcy operates to dissolve the attachment, the State court is
bound to take judicial notice; but of the two facts stated it is not bound to
take such notice. No court is bound to take judicial notice of the proceed-
ings of another court. If material to a controversy before it, it must be
informed thereof by the pleadings; and if the allegations are denied, they
must be proved by the record. The State court should be informed in a
proper way of the proceedings in bankruptcy before its possession of
property held under an attachment is interfered with or assailed. It
would be a violation of judicial comity, and provoke unseemly conflicts, to
seize the property out of the hands of its officer. If the assignee desires
possession of the property, and it is withheld, he must seek relief in the
State courts. Johnson v. Bishop, 8 B. R. 533; s. c. 1 Wool. 324; Doe v.
Childress, 11 B. R. 317; s. c. 21 Wall. 643.

The assignee can not treat the judgment in the attachment suit as a
nullity, for he claims under the defendant by a transfer subsequent to the
attachment. He may come in as a party, and can not, therefore, be re-
garded as a stranger to the judgment which may be rendered. Kittredge
vy. Emerson, 15 N. H. 227.

Where the attachment was issued more than four months prior to the
commencement of the proceedings in bankruptcy, a purchaser at a sale
under a decree made after that time acquires a title which can not be
attacked collaterally by the assignee, although the assignee was not made
a party to the suit. Doe v. Childress, 11 B. R. 317; s. c 21 Wall. 643.

The sheriff is not liable to the assignee for the value of property sold
under a fieri facias issued upon a judgment entered in an attachment suit
after the commencement of the proceedings in bankruptcy, although the
attachment was issued within four months before that time. Bradley vy.
Frost, 8 Dillon, 457. Contra, Miller v. O’Brien, 9 B. R. 26; s. c. 9 Blatch.
270,

If the plaintiff in an attachment suit, issued within four months before
the commencement of the proceedings in bankruptcy, obtains a judgment
and issues an execution after that time, under which the attached prop-
erty is sold, he is liable to the assignee for the value. Bracken v. Johnson,
15 B. R. 106; s. c. 3 A. L. T. (N. 8.) 687; s. c. 4 Cent. L. J. &

If judgment is entered and the property sold after the commencement
of the proceedings in bankruptcy, the assignee may recover the proceeds
from the attaching creditor. Bradley v. Frost, 3 Dillon, 457.

If real estate is subject to an attachment that is valid as against the
assignee, the taxes thereon should be paid out of the fund realized there-
from if they were allowed and deducted from the valuation at the time
of the levy. Foster v. Inglee, 13 B. R. 239.

If an attaching creditor pays off a prior inecumbrance under the pro-
visions of a State law, which gives him a right to be repaid from the pro-
' 372 THe Bankruptcy Law.

ceeds of the property, he will, upon the dissolution of the attachment, be
entitled to repayment from the proceeds received therefrom by the as-
signee. Whithed v. Pillsbury, 13 B. R. 241.

An attachment issued by a State court against a corporation more than
four months before the commencement of the proceedings in bankruptcy,
will not be dismissed for want of jurisdiction. Munson v. B. H, & E. R.
R. Co., 14 B. R. 173; s. ce. 120 Mass. 81.

After a qualified judgment has been entered, the sheriff may maintain
an action against the receiptor upon his receipt. Lamprey v. Leavitt, 20
N. H. 544.

The lien of an attachment upon property delivered to a receiptor follows
the property into the hands of the debtor’s assignee. Rowe v. Page, 13 B.
R. 366; s. c. 54 N. H. 190.

If property taken under an attachment issued more than four months
before the commencement of the proceedings in bankruptcy is delivered to
a receiptor, the plaintiff is entitled to take a judgment in rem and levy an
execution upon the money which may be collected from the receiptor.
Batchelder v. Putnam, 13 B. R. 404; s. c. 54 N. H. 84.

If an attachment is laid in the hands of a garnishee prior to the period
of four months next preceding the commencement of the proceedings in
bankruptcy, it is not dissolved. Hatch v. Seely, 13 B. R. 380; s. c 387
Iowa, 493.

If the defendant is adjudged bankrupt after the issue and levy of an
attachment to perfect a mechanic’s lien, an order of notice may be issued
against the assignee to appear at the next term and show cause why
judgment should not be rendered against the property attached for the
lien, and if he neglects to appear the plaintiff may then proceed with his
case and take a judgment in rem against the property. Marston v. Stick-
ney, 55 N. H. 383.

Where the attachment is on both real and personal property, evidence
that the attachment has by agreement been dissolved as to the personal
property is incompetent, for it remains an existing lien on the real estate.
A qualified judgment does not determine the right to levy on the personal
property, but that question can be raised when the levy is made. Bos-
worth v. Pomeroy, 112 Mass. 293.

The commencement of proceedings in bankruptcy within four months
after the issuing of an attachment renders it illegal for a receiptor who
merely undertook to produce the property to satisfy any execution that
might be issued on any judgment rendered therein to perform his contract,
and releases him from the same. Kaiser v. Richardson, 14 B. R. 391; s. ¢
5 Daly, 301.

The only right which a judgment creditor has under a levy made subse;
quent to an attachment, is an interest in the property subject to the attach-
ment. When the attachment is dissolved, his right remains the same, and
the assignee takes the interest covered by the attachment. The provisions
of the act preserving existing securities do not indicate any intention to
improve the condition of any creditor, or create new rights. In re Julius
Klancke, 4 B. R, 648; s. c. 4 Ben. 326; in re H. Badenheim & Co., 15 B. R.
370.
IcXEMPTIONS OF BANKRUPTS. 373

The nature or comparative efficiency of the means provided by the
statute to secure the property for the benefit of all the bankrupt’s creditors
does not affect the operation of the adjudication of bankruptcy to bring all
his assets at once into the custody of the law, and prevent their subsequent
attachment by one creditor for his own benefit. “A sheriff who makes an
attachment, pending the proceedings in bankruptcy, can not dispute the
title of a party who claims the property by a transfer from the debtor, on
the ground that such transfer is fraudulent. Williams v. Merritt, 4 B. R.
706; s. c. 103 Mass. 184.

The sheriff, in an action against him for neglecting to execute an attach-
ment, can not excuse the nonperformance of his duty by averring that its
discharge might not have availed the plaintiff to satisfy his debt, because
the bankruptcy law might have intervened and taken the property, when
attached, from the custody of the State law. The plaintiff had the right
to have the command of his process obeyed, and the attachment made by
the sheriff, whether it availed him or not. Carlisle v. Soule, 44 Vt. 265.

If proceedings in bankruptcy are commenced within four months after
the garnishment, the garnishee who pays the money under an execution
upon a judgment subsequently rendered is liable to the assignee therefor,
although he was ignorant of such proceedings. Duffield v. Horton, 16 B. R.
59; 8. c. 17 N. Y. Supr. 140.

The assignee is entitled to the money although a judgment was entered
and an execution issued in the attachment suit after the commencement of
the proceedings in bankruptcy, for the statute discharges the property then
held by the attachment, and not merely such as may be so held at the time
of the execution of the assignment. B. & M. Ins. Co. v. Davenport, 17
N. Y. Supr. 264.

If the debt of the attaching creditor exceeds the value of the property
attached, the dissolution of the attachment will not entitle a judgment
creditor to priority who levied an execution on the property after the
attachment and before the commencement of the proceedings in bank-
ruptcy. In re Roscoe R. Steel, 16 B. R. 105.

If an attaching creditor obtains judgment and levies an execution on the
property, the lien of the execution relates back to the attachment and he
is entitled to a lien as against the assignee although another creditor laid
an attachment after his, and before the execution and the last attachment
were dissolved by bankruptcy. Ibid.

Act or 1898, Cu. 3, § 6. Exemptions of Bankrupts.— (a) This
Act shall not affect the allowance to bankrupts of the exemptions
which are prescribed by the State laws in force at the time of the
filing of the petition in the State wherein they have had their domi-
cile for the six months or the greater portion thereof immediately
preceding the filing of the petition.
374 Tur Banxruptcy Law.

Act or 1898, Cu. 5, * * * § 45. Duties of Trustees.— (a)
Trustees shall respectively * * * (11) set apart the bankrupt’s
exemptions and report the items and estimated value thereof to the
court as soon as practicable after their appointment.

Under statute of Colorado a merchant is not entitled to an exemption of
$200 worth of goods as stock in trade; he is entitled to a horse as working
animal, but not to a buggy. In re Peabody, 16 B. R. 248.

Individual partners of bankrupt mercantile partnership not entitled to
claim as exempt, under statutes of Wisconsin, each the sum of $200 out
of the partnership stock. In re Hughes & Teague, 16 B. R. 464.

Interest of tenant in common, not exceeding $5,000 in value, in dwelling-
house and land actually occupied by him as homestead is, by Nevada
constitution and laws, exempt from forced sale. In re Swearinger &
Lamar, 17 B. R. 138.

Where partnership is insolvent, one member of firm can not, upon re-
tiring, withdraw beyond reach of creditors and to their injury a portion of
the assets, and make a personal appropriation of those assets by placing
them in form of a homestead. In re Sauthoff & Olson, 16 B. R. 181.

Under such circumstances, though in form of a homestead, the property
is as much within reach of a court of equity as before; and no such change
in its character can give it new sacredness, or endow its possessor with
new privileges in its ownership or use. Ibid.

A bachelor may be considered as head of a family, and entitled to home
stead exemption, when his widowed sister resided with and kept house for
him, regarding it as her home. Bailey v. Comings, 16 B. R. 382.

Right to such exemption not abandoned by residence of bankrupt for a
time at another place, occasioned by his ill-health. Ibid.

Where a certain sum is allowed by statute to be invested in a home-
stead, such sum may be put into an undivided part interest in a homestead,
and into premises to which others hold the legal title. Jolinson v. May,
16 B. R. 425.

Where a larger sum than the statute allows was invested, method of
reaching same pointed out. Ibid.

Under laws of Alabama, claim of homestead exemption must be asserted
before a sale. Steele v. Moody, 16 B. R. 558.

If bankrupt fails to claim ‘such exemption in his schedules he must be
deemed to have waived it. And if he has misdescribed it in same the
bankruptcy court alone has power to correct such error. Ibid.

Under homestead exemption law of Georgia lands, ete., claimed to be
exempt must be laid off and designated as such before the debtor is
entitled to such exemption, although such lands had been previously set
apart to him in proceedings in bankruptcy as exempt under such law.
Darsey v. Mumpford, 17 B. R. 181.

Partnership assets are a trust fund for payment of firm debts, and no
exemptions can be set apart from them to the individual partners until all
partnership debts are paid. In re Croft Bros., 17 B. R. 324.
Duties oF TRUSTEES. 375

Within a month prior to commencement of proceedings in bankruptcy,
and while the firm was insolvent, a large amount of partnership property
was sold, and the proceeds divided between the partners, and the firm
then offered to settle with their creditors at fifty per cent. One partner,
upon receiving his share of proceeds of said sale, immediately purchased
property exempt under the State statutes. Held, that under the circum-
stances such property was not exempt, but must be regarded as partner-
ship assets held in trust for creditors. In re Mélvin & Fox, 17 B. R. 543.

Under Oregon code, bankrupt not entitled to wagon and team as exempt,
unless he personally follows some trade, occupation or profession to the
carrying on of which such wagon and team is necessary, nor unless he
habitually earns his living by such trade, occupation or profession. In re
Parker & Morris, 18 B. R. 43.

The business of merely buying and selling, or directing or employing
labor of others, is not a trade, occupation or profession within the statutes.

It is for the benefit of those who live by their own labor, and require
therefor the use of some of the articles enumerated therein. Ibid.

By Wisconsin statute, a merchant is entitled to $200 exemption of stock
in trade, and in absence of fraudulent intent partners may dissolve partner-
ship, one partner sell his interest to the other, and the partner continuing
in interest be allowed to claim his exemption from the stock, though the
partnership at the time of dissolution owed debts in excess of assets. In
re Bjornstad, 18 B. R. 282.

Acts or 1867 and 1874, § 5045. There shall be excepted from the
operation of the conveyance the necessary household and kitchen fur-
niture and such other articles and necessaries of the bankrupt as the
assignee shall designate and set apart, having reference in the amount
to the family, condition, and circumstances of the bankrupt, but alto-
gether not to exceed in value, in any case, the sum of five hundred
dollars; also the wearing apparel of the bankrupt, and that of his
wife and children, and the uniform, arms and equipments of any
person who is or has been a soldier in the militia, or in the service
of the United States; and such other property as now is, or hereafter
shall be, exempted from attachment, or seizure, or levy on execution
by the laws of the United States, and such other property not included
in the foregoing exceptions as is exempted from levy and sale upon
execution or other process or order of any court by the laws of the
State in which the bankrupt has his domicile at the time of the
commencement of the proceedings in bankruptcy, to an amount al-
lowed by the constitution’ and laws of each State, as existing in the
year eighteen hundred and seventy-one; and such exemptions shall
be valid against debts contracted before the adoption and passage
of such State constitution and laws, as well as those contracted after
376 Tue Bankruptcy Law.

the same, and against liens by judgment or decree of any State court,
any decision of any such court rendered since the adoption and
passage of such constitution and laws to the contrary notwithstanding.
These exceptions shall operate as a limitation upon the conveyance
of the property of the bankrupt to his assignee; and in no case shall
the property hereby excepted pass to the assignee, or the title of
the bankrupt thereto be impaired or affected by arly of the provisions
of this Title; and the determination of the assignee in the matter
shall, on exception taken, be subject to the final decision of the said
court.

Statutes revised — March 2, 1867, § 14, 14 Stat. 522; June 8, 1872, ch.
330, 17 Stat. 334; March 3, 1878, ch. 235, 17 Stat. 577. Prior Statutes —
April 4, 1800, ch. 19, §§ 18, 34, 35, 58, 2 Stat. 26, 30, 31, 34; Aug. 19, 1841,
ch. 9, § 3, 5 Stat. 442. :

What Property May be Exempted.— Exempted property does not pass
to tho assignee. It is excepted, by this section and Form No. 18, from the
operation of the assignment. In re Lambert, 2 B. R. 426; Rix v. Capitol
Bank, 2 Dillon, 367.

The bankruptcy act secures to the bankrupt certain parts of his estate
which are set off to him free from the claims of creditors. Of these he, in
fact, becomes the purchaser, the consideration for the purchase being the
surrender of all his estate, and the sanction for his title being in the
supreme law of the land. The lien of a creditor upon property so set apart
can not, therefore, be enforced. In re Hambright, 2 B. R. 498; s. ¢. 2 L. T.
B. 61; s.c.10. L. N. 201.

A bankrupt who has received his discharge has no standing in court to
‘ask for an exemption not existing at the time of his discharge. In re Kean
et al., 8 B. R. 367.

The assignee is not entitled to any of the exempted property, and it is
mo concern of his who may have the right to it. Upon the death of the
bankrupt the title to such property vests in his executor or administrator.
In re Hester, 5 B. R. 285.

When the partnership assets are not exempted from execution by the
State laws, the bankrupt is not entitled to any portion of them. All the
provisions of the exemption clause, except the last, relate only to the
separate property of the bankrupt. In re Hafer, 1 B. R. 457; Anon., 1 B. R.
(quarto) 187.

Where property that would be exempted under the bankruptcy act has
been seized and sold under an attachment on mesne process, which is sub-
sequently dissolved by the commencement of proceedings in bankruptcy,
the bankrupt is entitled to the fund, and he need not watt to ascertain if
the assignee will be able to collect enough from the assets assigned to pay
the expenses of the proceedings. The expenses are to be paid from the
assets of the bankrupt when collected, but not from property which is
exempt from the assignment, The same property which is exempted upon
WHat Property May Be EXemprep. 377

a petition filed by the debtor is also exempted where the proceedings are
commenced by creditors. In re Ellis, 1 B. R. 551.

The exemption may be allowed, although the property has within four
months prior to the petition been attached on mesne process. In re W.
S. Stevens, 5 B. R. 298; s. c. 2 Biss. 373.

A sale after the filing of the petition in bankruptcy, of property exempt
both by the bankruptcy act and the State law, under a levy made prior to
the commencement of proceedings in bankruptcy, will be set aside. In re
J. H. Griffin, 2 B. R. 254; 5. ¢c. 2 L. T. B. 23.

A bankrupt is entitled to an exemption of his household furniture and
other necessary articles, although they were taken under an executidn
prior to the commencement of the proceedings in bankruptcy. In re
Nicholas Martin, 13 B. R. 397; in re John Owens, 12 B. R. 518; s. c. 6 Biss.
432.

If the bankrupt, after filing his petition in bankruptcy, takes the benefit
of the State insolvent law, he must file an account of his property, for the
exempt property does not pass to the assignee, nor is the title of the bank-
rupt thereto impaired or affected. Bullymore v. Cooper, 2 Lans. 71; s. c.
46 N. Y. 236.

The estate of the bankrupt may be all personal property, and every ar-
ticle may be subject to a lien to secure a debt owing to some one or an-
other creditor. By the operation of the bankruptcy law, no such lien, ex-
cept at the option of its holder, would be extinguished. Every such lien
would constitute for the person holding it a special property in the thing
covered by the lien, and might be the most valuable part of his estate, and
for the law to divest it might be to make one bankrupt in the endeavor
to relieve another. In re C. H. Preston, 6 B. R. 545.

Property can not be exempted to the prejudice of a creditor who holds
a valid vendor’s lien thereon. The lien must prevail; Congress did not
intend that the bankruptcy act should override cases of that nature. In re
Perdue, 2 B. R. 183; 5. c. 2 W. J. 279; in re Whitehead, 2 B. R. 599; in re
Jas. B. Brown, 3 B. R. 250; s. c. 2 L. T. B. 122; 5. c.1 CG. L. N. 409; in re
Hutto, 3 B.'R. 787; s. c. 1 L. T. B. 226; s. c. 3 L. T. B. 197.

Where the property claimed to be exempted is subject to a mortgage,
the assignee will discharge his whole duty if he designates the exempted
property, and then leaves the bankrupt and mortgagee to settle their re-
spective rights by themselves. In re Lambert, 2 B. R. 426.

A mortgage, though fraudulent and void as against creditors, is good as
between the parties. A decree of the district court, declaring a mortgage
fraudulent as against creditors, does not affect its validity as between the
parties, nor its operation upon property in which the creditors have no
rights. A mortgagee who has done nothing by proof of his debt or other-
wise to waive his mortgage, may hold the exempted property as security
for his debt, and this right can not be affected by the bankrupt’s discharge.
Tuesley v. Robinson, 103 Mass. 558.

The bankrupt can not claim any exemption in property conveyed by him
prior to the commencement of proceedings in bankruptcy. in fraud of his
creditors, and afterward recovered to the estate. The sale is good as
378 THe Bankruptcy Law.

against him, and in attempting to place his property beyond the reach of
his creditors, he placed his exemption beyond his own reach. In re Gra-
ham, 2 Biss. 449; Keating v. Keefer, 5 B. R. 183; s.c. 1 L. T. B. 266; s. ¢.
4 L. T. B. 162; in re Dillard, 9 B. R. 8; s. ¢. 6 L. T. B. 490. Contra, Bar-
tholomew v. West, 8 B. R. 12; s. ec. 2 Dillon, 290; Cox v. Wilder, 5 B. R.
443; s.¢c.7B. R. 241; s. ce. 2 Dillon, 182; s.¢.5 L. T. B. 500; Penny v. Taylor,
10 B. R. 200; McFarland vy. Goodman, 11 B. R. 134; s. c..6 Biss. 111; s. ¢.
138 A. L. Reg. 697.

If a transfer of exempted property is surrendered as a preference by
the grantee, the debtor may claim his exemption. In re Detert, 11 B.'R.
293; s. ec. 14 A. L. Reg. 166; s. c. 7 C. L. N. 130.

If the assignee proceeds to sell exempted property, or to treat it as
assets, the court, on the application of the bankrupt, will restrain him.
The district court has no concern with the property exempt under a State
law, and will not enjoin a judgment creditor from selling it. The decision
of the rights of the parties properly belongs to the tribunals of the State
under whose laws they are claimed. In re C. Hunt, 5 B. R. 498; s.c 2 L.
T. B. 197; 5.¢c.4C. L. N. 5; s. c. 2 Pace. L. R. 146; in re Fetherston, 5 C. L.
N. 193; s. ¢. 20 Pitts. L. J. 77; in re Jared Everett, 9 B. R. 90. Vide in re
W.S. Stevens, 5 B. R. 298; s. c. 2 Biss. 373.

The exemption relates back to the filing of the petition. The exempted
property in contemplation of law remains the property of the bankrupt,
subject to all legal incumbrances. A lien on articles so exempted, can not
be enforced in the bankruptcy court, because that court has not possession
of the articles the lien affects. It has sent them beyond or rather declined
to receive them within its jurisdiction, and would need to obtain jurisdic-
tion, setting aside the action of the assignee, before it could enforce the
lien. Only such liens as are on property in the possession of the court
will be enforced by it. In re C. H. Preston, 6 B. R. 545. Contra, in re
Wylie, 5 L. T. B. 330.

The bankruptcy court has no jurisdiction to order a sale of the exempted
property, although some of the creditors hold notes waiving the benefit
of the exemption laws. In re Miles Bass, 15 B. R. 4538; s. ca 9C. L. N.
B08; & G 13 Pac, Li R. 190.

After a decree has been entered declaring that the bankrupt is not en-
titled to a homestead, an order may be passed requiring him to vacate the
premises, although his wife lives with him. In re Boothroyd & Gibb, 15
B. R. 368.

If a person takes a mortgage after the entry of a decree declaring that
the bankrupt is not entitled to the premises as a homestead, an order may
be entered on a summary petition requiring the mortgagee to discharge his
mortgage. Ibid.

If a mortgagee who holds a mortgage upon land claimed as a homestead,
but worth more than the law allows to be exempt, proves his claim and
obtains a sale of the property, the purchaser may obtain an order from
the bankruptcy court upon the bankrupt to surrender the possession
thereof. In re Betts, 15 B. R. 586; s. c. 4 Cent. L. J. 558; s. ec. 13 Pac.
L. R. 208.
EXEMPTION UNDER THE Bankruptcy Act. 379

If a judgment creditor did not prove his debt, he may enforce his lien
against the land set apart as a homestead, as soon as the bankrupt aban-
dons it, although he obtained a discharge. Jackson y. Allen, 30 Ark. 110.

A State court can not review the action of the bankruptey court in
directing the assignee to sell exempted property to satisfy a mortgage ex-
isting thereon. Maxwell v. McCune, 10 B. R. 306; s. c. 37 Tex. 515.

If a creditor has a mortgage upon the bankrupt’s homestead, he may be
required to exhaust that remedy before he can enforce his other remedies
against the bankrupt’s estate. In re Sauthoff & Olson, 14 B. R. 364; s. ¢.
8c. L. N. 370; s. c. 3 Cent. L. J. 544.

The assignee in bankruptcy is not a judicial officer. His act in designat-
ing and setting apart exempt property is not a judgment in rem conclusive
against all the world. His act of setting apart property to the bankrupt
under the exemption clause of the bankruptcy act, does not divest the
valid lien of a judgment creditor, nor invalidate the title of a purchaser
at a sheriff’s sale under execution upon that judgment. Fehley v. Barr,
66 Penn. 196; Bush v. Lester, 15 B. R. 36; s. ¢. 55 Ga. 579.

The allotment of property by the assignee as exempt does not impair
the lien of a judgment. Haworth v. Travis, 18 B. R. 145; s. c. 67 Ill. 301.

If a mortgagee neither appears in the bankruptcy court nor is brought in
by adverse proceedings, he may foreclose his mortgage in a State court
although the property has been set apart to the bankrupt as exempt.
Hatcher v. Jones, 14 B. R. 387; s. c. 53 Ga. 208; Cumming vy. Clegg, 14
B. R. 49; s. c. 52 Ga. 605.

The assignee should first ascertain what is exempt under the State laws.
If the bankrupt, under the State laws, has selected his furniture, he can
not have any other allowance in lieu thereof. In re Noakes, 1 B. R. 592;
in re Ruth, 1 B. R. 154; s.c. 7 A. L. Reg. 157; s. c. 6 Phila. 438.

The sheriff can not protect himself from an action for levying upon
exempted property, nor mitigate the damages by showing a delivery upon
demand to the assignee even under protest. The assignee has no right of
his own motion, and without an order of the court, to take exempted
property which has been levied upon by the sheriff, and compel the bank-
rupt to abandon his remedy against the sheriff, and follow the assignee into
the district court. Nothing which transpires after the taking of the prop-
erty and the refusal to deliver it when demanded, can defeat the action or
mitigate the damages below the value of the property at the time of the
conversion and interest. Wilkinson v. Wait, 44 Vt. 508.

Exemption under the Bankruptcy Act.— The true construction of this
clause will allow the bankrupt the following exemptions without qualifica-
tions, viz:

1. Necessary household and kitchen furniture to an amount not exceed-
ing $500.

2. Wearing apparel of the bankrupt, his wife, and children.

3. Uniform, arms, and equipments, if the bankrupt has been or is in the
military service of the United States.

4. Other property exempt by the laws of the United States; and

5. Property exempt by State laws of different species from that already
specified.
380 Tur Bankruptcy Law.

In addition to the foregoing, it is the duty of the assignee, in the exercise
of a sound legal discretion, taking into consideration “the family, condi-
tion, and circumstances of the bankrupt,” to set apart other articles and
necessaries, but so that, with the household and kitchen furniture, the
amount shall not exceed the sum of $500. In considering the family, the
assignee must have regard to the number composing it; in inquiring after
the condition, he must ascertain the social status, and whether ill health
prevails or not; and, in regard to the “ circumstances,” he must inquire
how the bankrupt is employed, what is his income, and, if any, how many
of the family earn their own living, and whether they contribute to the
support of others; and, also, how much and what property the bankrupt is
entitled to under the State laws. In re Feely, 3 B. R. 66; s. c. 15 Pitts. L. J.
291; in re Ziba Williams, 5 Law Rep. 155; in re Edward H. Ludlow, 1N. Y.
Leg. Obs. 322.

The words import a limitation upon the amount to be allowed to the
bankrupt. It is in no case to exceed the sum of $500; but it may be below
that, and vary according to the circumstances of particular cases from a
very small allowance up to the fullsum. In re Ziba Williams, 5 Law Rep.
155.

Every bankrupt is entitled to have his necessary household and kitchen
furniture exempted from the operation of the bankruptcy act, to any amount
not exceeding $500. The furniture so exempted must be necessary. It
can not be necessary, in the sense of the law, unless the bankrupt is a
householder — the head of a family. He need not have a wife; his house-
hold may consist of servants, or any person residing with him and under
his control. In exempting other articles, the assignee has a discretionary
power, but his discretion must be a sound legal discretion. The furniture
and the other exempted articles must not exceed $500. In re Cobb, 1 B. R.
414; s.c.1L. T. B. 59; in re Noakes, 1 B. R. 592; in re Ruth, 1 B. R. 154;
s.c. 7 A. L. Reg. 157; s. c. 6 Phila. 438.

The act evidently intends that every bankrupt householder shall be
permitted to retain as much household and kitchen furniture as may be
reasonably necessary to enable him to keep house in a plain and con-
venient manner. The fact that his wife may have, as her separate prop-
erty, household and kitchen furniture in use in the house in which the
bankrupt resides, can make no difference. Such separate property does
not belong to him; he has no right to its possession and control, and she
may, at any moment and against his will, remove and dispose of it.
The bankruptcy act does not intend to make a man dependent upon his
wife for the necessary means of keeping house. In re Cobb, 1 B. R. 414;
s. c. 1 L. T. B. 59; in re D. H. Tonne, 13 B. R. 170.

This action, so far as it relates to “necessary household and kitchen
furniture,” is imperative on the assignee, though he must judge and de-
termine what furniture of the kind described is under the circumstances
necessary. In re W. H. Thiell, 4 Biss. 241.

In exempting articles other than household or kitchen furniture, an ex-
emption to the full amount of $500 should not be made without discrimina-
tion. The allowance is conditional, and is measured with reference not
EXEMPTION UNDER THE Bankruptcy Act. 381

merely to value, but also to subjects and their suitableness to personal re-
quirements. In re Ruth, 1 B. R. 154; s.¢. 7 A. L. Reg. 157; s. c. 6 Phila.
438.

In making an allowance for “other articles and necessaries,” the as-
signee should not allow anything of mere luxury or ornament. Gold
watches, silver watches, pianos, and the like, are not embraced in the dis-
cretionary power of the assignee. In re Cobb, 1 B. R. 414;s.c.1L. T. B.
59; in re Graham, 2 Biss. 449; in re Chester S. Kasson, 5 Law Rep. 489;
in re Edward H. Ludlow, 1 N. Y. Leg. Obs. 322; in re W. H. Thiell, 4 Biss.
241.

The other necessary articles should be ejusdem generis as to utility to
the family with those specifically enumerated. In re E. D. Comstock, 1 N.
Y. Leg. Obs. 326; in re Ziba Williams, 5 Law Rep. 155.

The phrase “ other articles’ is a very indefinite expression. It may in-
clude family pictures, keepsakes, a cheap watch or clock, and many other
things of small value. In re W. H. Thiell, 4 Biss. 241.

The statute contemplates only that description of property which is pal-
pably of immediate necessity to the bankrupt or his family. The “ other
articles and necessaries’? ought accordingly to be understood as having
relation to things not precisely furniture or wearing apparel, but mani-
festly useful to the individual or his family in a like sense. In re Edward
H. Ludlow, 1 N. Y. Leg. Obs. 322.

“ Other articles or necessaries’ do not include articles of emere fancy,
taste or convenience. Ibid.

The term ‘“ necessaries’’ may include things other than household and
kitchen furniture. It may, for example, include the tools of a tradesman
and the books of a professional man. In re W. H. Thiell, 4 Biss. 241.

Cases may exist where a moderate quantity of material for carrying on
a trade may be fairly comprehended under the term “ other articles.” Ibid.

The phrase “other articles” does not include manufactured articles
kept for sale. Ibid.

A cow may or may not be necessary, according to circumstances. In re
Ziba Williams, 5 Law Rep. 155.

A pew can not be set apart as a necessary. It is no more than desirable
or convenient. In re E. D. Comstock, 2 N. Y. Leg. Obs. 326.

The auction stand and flag of an auctioneer may be exempt, as things
in daily use and necessary to his business. In re Edward H. Ludlow, 1
N. Y. Leg. Obs. 322.

Clocks and desks which are not peculiar to the bankrupt’s employment

‘can not be set apart, for they are mere conveniencies. Ibid.

A fowling piece, fishing tackle, paintings cr breast-pins are not neces-
saries. Ibid.

The common implements or tools of trade by which a daily support is
gained, may justly be ranked as necessaries. Ibid.

A clock is not a necessary. In re Ziba Williams, 5 Law Rep. 155.

Silver spoons may or may not be necessary, according to circumstances.
Tbid.
382 Tue Bankruptcy Law.

A family sewing machine may be set apart as a necessary article. In re
Graham, 2 Biss. 449.

Provisions may be allowed as necessary articles. In re Cobb, 1 B. R. 414;
8. c.1L. T. B. 59; in re Edward H. Ludlow, 1 N. Y. Leg. Obs. 822.

The term ‘“ other articles and necessaries’ can not be so construed as
to embrace land. A fair and proper construction of this section, as well
as the true spirit and object of the law, will not justify or authorize such
an exemption. In re Thornton, 2 B. R. 189; s. c. 8 A. L. Reg. 42. Contra,
in re Edwards, 2 B. R. (quarto) 109.

Under the head of other articles and necessaries, money may be allowed,
for it not infrequently happens that money is quite as necessary to the
temporary subsistence of a bankrupt and his family as any articles that
can be mentioned. In re Thornton, 2 B. R. 189; s. c. 8 A. L. Reg. 42; in re
Lawson, 2 B. R. 54; in re Ira Hay, 7 B. R. 344; in re Benjamin B. Grant, 2
Story, 312; in re James Thompson, 13 B. R. 300. Contra, in re Welch, 5
B. R. 348; s. c. 5 Ben. 230. ;

When the money is the proceeds of articles which could and ought to be
set apart under the head of “ other articles and necessaries,” it may be
exempt. The items of the property that has been sold should be stated,
so that it may be determined whether they come within the description of
“other articles and necessaries.” In re Welch, 5 B. R. 348; s. ce. 5 Ben. 230.

A. gold watch or breast-pin is not wearing apparel. In re Edward H.
Ludlow, 1 N. Y. Leg. Obs. 322.

The exemption should be so made as not to operate adversely to the
interests of the creditors. In re Edwards, 2 B. R. (quarto) 109.

When the property is incapable of division, it may be sold, and the
exemption allowed out of the proceeds. In re Jas. B. Brown, 3 B. R. 250;
s.¢c.2 L. T. B. 122;s.¢10C. L. N. 409.

Under the provision of section 986 the practice of the Federal and State
courts is in general the same as to the exemption of the property of debtors.
In re Ruth, 1 B. R. 154; s. ec. 7 A. L. Reg. 157; s. ec. 6 Phila. 438; in re
Appold, 1 B. R. 621; s. c. 6 Phila. 469; s.c.1 L. T. B. 88.

If no rule has been adopted by the Federal court of the State, no exemp-
tion can be claimed under section 986. In re EB. A. Vogler. 8 B. R. 132.

The property exempt by the territorial statutes from levy and sale on
execution may be allowed. In re McKercher & Pettigrew, 8 B. R. 409.

Exemptions under State Laws.— The words “other property not in-
cluded in the foregoing exceptions” mean property other than and not
included among the articles set apart under the first clause, and embrace
all the property, whether of the same or a different kind. which is by
State law exempted from forced sale. In re Irwin Davis, 2 Saw. 255.

The assignee can not set apart to the bankrupt, under the State law,
any property specifically exempted by the bankruptcy act, but he may set
apart any property not so designated. It is not necessary that the State
law should name specifically the articles of property exempted by it. In
re Feely, 3 B. R. 66; s. c. 16 Pitts. L. J. 291.

The system of bankruptcy is, in a relative sense, uniform throughout
the United States, when the assignee takes in each State whatever would
Exrmptions UNDER State Laws. 383

have been available to the recourse of execution creditors if the bankruptcy
law had never been passed. Though the States vary in the extent of their
exemptions, yet what remains the bankruptcy law distributes equally
among the creditors. The bankruptcy act does not in any way vary or
change the rights of the parties. All contracts are made with
reference to existing laws, and no creditor could recover more from
his debtor than the unexempted part of his assets, and as the thing is at-
tained by the bankruptcy law, it is uniform. In re Beckerkorb, 4 B. R.
203; 8. c. 1 Dillon, 45; s. c. 1 L. T. B. 241; in re Jordan, 8 B. R. 180; in re
Appold, 1 B. R. 621; s. c. 6 Phila. 469; s. c. 1 L. T. B. 83; in re Ruth, 1 B.
R. 154; s. c. 7 A. L. Reg. 157; s. c. 6 Phila. 438; in re Wylie, 5 L. T. B. 330;
in re Daniel Deckert, 10 B. R. 1; 5. ¢. 1 A. L. T. (N. S.) 386;5.¢.9 A. L. J.
390; sc. 6 GO. L. N. 310.

A bankruptcy law to be constitutional must be uniform, and whatever
rule it prescribes for one, it must for all. If it provides that certain kinds
of property shall not be assets under the law in one place, it must make
the same provision for every other place within which it is to have effect.
The provision that in each State property specified in the laws thereof,
whether actually exempted by virtue thereof or not, shall be exempted, is
unconstitutional and void. In re Daniel Deckert, 10 B. R.1;s.¢c.1A. L. 'T.
(N. 8.) 336; s. c. 9 A. L. J. 890; s. c. 6 CG. L. N. 310; in re Kerr & Roach, 9
B. R. 566; in re Geo. W. Dillard, 9 B. R. 8; s. c. 6 L. T. B. 490; in re George
Duerson, 13 B. R. 183; in re Shipman, 14 B. R. 570; Bush v. Lester, 15
B. R. 36; s. c. 55 Ga. 579. Contra, in re Kean et al. 8 B. R. 367; in re
John W. Smith, 8 B. R. 401; s. c. 6 C. L. N. 33; in re Willis A. Jordan, 10
B. R, 427; in re John W. A. Smith, 14 B. R. 295; 's. ec. 2 Woods, 458.

The uniformity required is as to the general policy and operation of the
law. The bankruptcy act in some minor particulars must necessarily
operate differently in the different States. Thus, the bankruptcy law re-
gards as valid the legal and equitable liens existing by law in the several
States, and as the nature, force, and effect of such liens are dependent
upon the local laws, they will in some respects be different in the different
States. In re Jordan, 8 B. R. 180.

When the property is incumbered by a lien, it is only the bankrupt’s
sub modo. The lien creditor has a vested interest in it also, and the bank-
rupt can only be allowed an exemption out of such estate as remains to
him after the vested interests of others have been satisfied. In re Geo. W.
Dillard, 9 B. R. 8; 8. c.6 L. T. B. 490; in re Daniel Deckert, 10 B. R. 1; s. ¢.
1A. L. T. (N. S:) 336; 8. ¢. 9 A. L. J. 390; s. ec. 6 C. L. N. 310. Contra, in re
Jordan, 8 B. R. 180; in re Kean et al., 8 B. R. 367; in re John W. Smith,
8B. R. 401; s. c. 6 C. L. N. 33; in re Jared Everett, 9 B. R. 90.

A State exemption law which attempts to divest a prior judgment lien
impairs the obligation of contracts, and is unconstitutional. In re Jared
Everett, 9 B. R. 90.

An act of Congress can not give validity to a State law which is uncon-
stitutional. In re Geo. W. Dillard, 9 B. R. 8; s.c. 6 L. T. B. 490.

The establishment of a uniform system of bankruptcy involves the idea:
of a discharge greater or less from precedent obligations. So far Congress
384. Tur Bankruptcy Law.

has the right to impair the obligation of contracts. It is also clearly within
the competency of Congress to grant a retrospective exemption, so as to
discharge antecedent obligations. Congress may, if it chooses, insert a
homestead provision, making it good against debts already contracted,
although its inevitable effect would be to impair the obligation of contracts,
for the simple reason that the power to such an end is expressly given by
the Constitution. Congress, in the enactment of a bankruptcy law, has the
power to make exemptions embracing past as well as future debts. In re
Wylie, 5 L. T. B. 330; in re Kean et al., 8 B. R. 367; in re E. A. Vogler, 8
B. R. 132; in re John W. Smith, 8 B. R. 401; s. ¢. 6 C. L. N. 33; in re Jared
Everett, 9 B. R. 90.

The relation of the bankrupt to his property is fixed in voluntary bank-
ruptcy the moment he files his petition, and in involuntary bankruptcy as
soon as he is adjudicated a bankrupt. The rights of his creditors to his
estate are determined at the same time. What the homestead exemptions
are at these times both the bankrupt and his creditors are presumed to
know. He petitions and they resist, or they petition and he resists, with a
full knowledge of the then existing law of bankruptcy. Every bankrupt
and his creditors are concluded as to his and their interest in the estate by
the law of bankruptcy then existing. What is then surrendered must be
distributed, and what is then exempt he may retain. In re Geo. W. Dillard,
9B. R. 83s. c.6L. T. B. 490; in re Kerr & Roach, 9 B. R. 566. Contra,
in re E. A. Vogler, 8 B. R. 182; in re Kean et al., 8 B. R. 367; in re Wylie,
5 L. T. B, 330.

When Congress chooses to add to its own list of exemptions further
exemptions under the State laws, it refers the Federal courts, in their ac-
tion thereupon, to the State laws. A statute consists not merely of its
terms, but of the judicial expositions thereof. If a law of the State has
been construed by the highest court of the State, the Federal courts are
bound by that construction. In re Wylie, 5 L. T. B. 330.

A bankrupt is entitled to the exemption allowed by the State laws in
force in 1871, although those laws have since been amended so as to reduce
the amount. In re Albert Cohen, 3 Dillon, 295.

If the State law was changed during the year 1871, the exemption can
only be allowed according to the law that was in force at the close of the
year. In re Anthony Baer, 14 B. R. 97.

The bankrupt can not claim any exemption out of property conveyed
away prior to the commencement of proceedings in bankruptcy. In re
Jared Everett, 9 B. R. 90.

Where a homestead has been duly allotted under the State law, and
there is no fraud, such allotment will be recognized and allowed. In re
E. A. Vogler, 8 B. R. 132.

Where an allotment has not been made previous to the commencement of
proceedings in bankruptcy, the homestead may be ascertained and set
apart by the assignee. Ibid.

Where no fraud is alleged, an allotment of a homestead under a State
law will not be set aside for mere excess of value. Where fraud, com-
plicity, or irregularity are alleged and established by proper special pro-
EXEMPTIONS UNDER Statr Laws. 385

ceedings, the allotment of homestead may be set aside in the State courts,
and in such cases similar relief will be furnished in the bankruptcy court.
Mere excess of value in the allotment is not fraud, and to successfully im-
peach such proceedings it must be shown that the debtor by some fraudu-
lent representation or deception, or by complicity with the appraisers,
procured such excessive allotment. In re Jack Hall, 9 B. R. 366.

A judgment of the court of ordinary allowing an exemption creates a
lien upon the property set apart. An appeal does not vacate but merely
suspends the judgment until the case is reviewed and passed upon by the
appellate court. If the judgment was rendered prior to the commence-
ment of proceedings in bankruptcy, the assignee should become a party to
the proceedings on appeal if he desires to contest it. In re Moseley, Wells
& Co., 8 B. R. 208.

The allowance of the exemption in the bankruptcy court does not affect
the property with the local restrictions in regard to title and power of dis-
position as if it had been set apart under the State law. Farmer v. Taylor,
15 B, R. 515; 6. ¢. 56 Ga. 559.

The property exempted by this clause is in addition to that exempted
by the preceding clauses. In re Ruth, 1 B. R. 154; s.c. 7 A. L. Reg. 157;
s. c. 6 Phila. 438; in re Cobb, 1 B. R. 414; s.c1L. T. B. 59

If the State law allows personal property to a certain amount to be
selected by the debtor, he may claim that amount in addition to what is
allowed by the bankruptcy law itself. In re Hezekiah, 11 B. R. 578; s. ¢.
2 Dillon, 551. ;

The bankruptey act expressly limits the exemptions to be allowed a
bankrupt in bankruptcy to the State exemption laws in force in 1871.
When his wife makes an application in the State court to have the home-
stead set apart on the same day that he files his petition, the exemption
may be considered as a transfer which is void under section 5129. The
survey and setting apart of the homestead by the State court after the
commencement of proceedings in bankruptcy are null and void. In re
Askew, 3 B. R. 575.

The exemptions are regulated by the laws of the State where the bank-
tupt has his domicile, although the property is located in another State.
In re W. S. Stevens, 5 B. R. 298; s. c. 2 Biss. 373.

As to the subjects of the claim for an exemption under the State law, the
only function of the assignee is to see to their proper appraisement. In
seeing to it, he should proceed as conformably to the laws of the State as
may be possible. In re Ruth, 1 B. R. 154; s.¢. 7 A. L. Reg. 157; 8. c. 6
Phila, 488; Fehley v. Barr, 66 Penn. 196; in re Feely, 3 B. R. 66; s. ¢. 15
Pitts. L. J. 291; in re Kean et al., 8 B. R. 367.

A waiver by the bankrupt of his homestead rights in favor of a particular
creditor, does not confer any special rights upon his general creditors, nor
opeate in their favor. The bankrupt is, therefore, entitled to his exemp-
tion, although the land is subject to a mortgage wherein the homestead is
waived. In re Poleman, 9 B. R. 376; s. c. 5 Biss, 526; in re Jones, 2
Dillon, 243; Rix v. Capitol Bank, 2 Dillon, 367.

25
386 Tue Bankruptcy Law.

If the homestead is subject to a mortgage, the amount will be allowed
out of the equity of redemption. In re Poleman, 9 B. R. 376; 8s. ¢. 5: Biss.
526; in re Charles C. Pratt, 1 Cent. L. J. 290; s. c. 7 Pac. L. R. 202.

If personal property is covered by a mortgage, the assignee may sell it
for the purpose of liquidating the mortgage, and the bankrupt may then,
without a previous demand, claim his exemption out of the proceeds. In
re Henry May, 2 C. L. B. 152.

No exemption can be allowed to a partner out of the firm property
cuntil all the partnership creditors are paid in full. In re J. S. & J. Price,
6 B. R. 400; in re Handlin & Venny, 12 B. R. 49; s. c. 3. Dillon, 290; in re
Blodgett & Sandford, 10 B. R. 145; in re D. H. Tonne, 13 B. R. 170; in re
Stewart & Newton, 13 B. R. 295; in re Boothroyd & Gibbs, 14 B. R.
223. Contra, in re Rupp, 4 B. R. 95; s. c. 2 L. T. B. 123; in re Young et al.,
3 B. R. 440; in re McKercher .& Pettigrew, 8 B. R. 409; in re S. H. Richard-
son & Co., 11 B. R. 114; s.¢ 7 0. L. N. 62.

If an insolvent firm transfer a note to one partner, who purchases land
therewith, he can not claim that as a homestead. In re Boothroyd &
Gibbs, 14 B. R. 223.

One of two or more partners can not have a portion of the partnership
effects set apart to him as his personal property exemption without the
consent of the other partner or partners, because the property is not his.
But if the other partner or partners consent, then it may be done. The
creditors of the firm can not object, because they no more have a lien upon
the partnership effects for their debts.than creditors of an individual have
upon his effects. Burns v. Harris, 67 N. C. 140.

A partner may claim a homestead where the house was built on the
land of such partner with partnership funds, with the knowledge and
consent of his copartner, but not in excess of the debt due by the firm to
him. The house became a part of the realty, and as much the separate
property of the partner as the realty itself. No reimbursement can be
claimed by the copartner on account of such use of the firm funds, because
the firm owed the partner more than the amount of the funds so used.
‘The firm, therefore, has not only no interest or ownership in the house,
but no claim for reimbursement. In re J. F. & C. R. Parks, 9 B. R. 270.

The ownership will be deemed to be in severalty, although the title
bond is taken to the firm, if the partners have divided the land and entered
into an agreement that each shall hold his part in severalty. Bartholomew
v. West, 8 B. R. 12; s. ce. 2 Dillon, 290.

‘Where the State laws exempt a certain amount of property, real or per-
sonal, and the bankrupt has nothing but claims against other parties, he
‘can not have an allowance of money equal to the amount exempted under
the State laws. In re Lawson, 2 B. R. 54.

Expectant interests which can not be sold, even though they may be
reached by proper process in the State court, may be exempt. In re Erben,
‘2B. R. 181; s.¢. 8 A. L. Reg. 34; in re Bennett, 2 B. R. 181; s. c. 8 A. L. Reg.
84; 25 Pitts. L. J. 316.

Where, by the State law, real estate to a certain amount is exempted
from levy and sale, provided the debtor comply with certain requirements,
Exemptions UNDER State Laws. 387

and the bankrupt has falled to comply, no property can be claimed as
exempted under that law. In re Farish, 2 B. R. 168; in re Jackson &
Pearce, 2 B. R. 508; in re Gainey, 2 B. R. 525.

A law which exempts property from debts existing at the time when the
homestead is set apart is unconstitutional and void, as it impairs the
obligation of contracts. Kelly v. Strange, 3 B. R. 8

A homestead law is unconstitutional so far as it affects debts con-
tracted after its adoption. In re Henkel, 2 B. R. 546; 2 Saw. 305.

If a decree for alimony is a lien on land, the exemption will be made
subject to the wife’s right of alimony. In re Edward Garrett, 11 B. R. 493.

But property mortgaged to secure a loan before the passage of the State
exemption law may be exempted, even though the mortgage debt is not
paid. This right is given to the bankrupt by the bankruptcy act. In re
Jas, B. Brown, 3 B. R. 250; s. c. 2 L. T. B. 122; 5,ca 10. L. N. 409.

The exemption is a fixed and determinate right, and not dependent upon
the discretion of the assignee or the court. When the claim is made by the
bankrupt before sale, though not recognized by the assignee, the right may
be asserted against the proceeds in court for distribution. In re Jones, 2
Dillon, 2438.

If the bankrupt selects money or personal property for his homestead,
he must indicate the mode in which it shall be preserved or invested for
the use of himself or family, as a homestead provision, subject to the
limitations of the State law. In re Kean et al., 8 B. R. 367.

The object of a homestead exemption law is as much to protect the wife
and children as the husband. Mere absconding will not give rise to a pre-
sumption of a fixed intention not to return. While the family remain in
the State, occupying the premises as a home, the exemption is secured,
Inasmuch as it continues to be owned and occupied by the bankrupt while
his family resides upon it. Their occupancy is his occupancy. His resi-
dence is where his family reside. In re Charles OC. Pratt, 1 Cent. L. J. 290;
8 ¢ 7 Pac. L. R. 202.

As the title to the homestead does not pass ta the assignee, a subsequent
abandonment of it by the bankrupt gives no right to the assignee. Rix v.
Capitol Bank, 2 Dillon, 367.

The proof of an intention to abandon the homestead should be clear and
decisive. Ibid.

If a judgment is docketed before the execution of a general deed of trust
to secure all creditors, the judgment, with its priority, remains intact, and
no exemption can be allowed unless there is a surplus after paying all
the debts. In re W. S. Coons, 5 C. L. N. 515.

If a judgment is subject to an exemption, the exemption can be claimed

against a fi. fa., for it is an emanation from the judgment, and its lien
falls with the lien of the judgment. In re Anon., 5 C. L. N. 515.
"If the bankrupt sells his homestead and moves into his store, under a
Scheme to defraud his creditors, he can not claim the latter as a home-
stead, for he has no right to shift his homestead to the prejudice of his
¢reditors and in violation of the principles of fair dealing. In re Geo. C.
Wright, 8 B. R. 480; s. ¢. 3 Biss. 359.
888 Tur Bankruptcy ‘Law. ;

Although a bankrupt upon becoming insolvent moves into a block
erected for business purposes and not in any manner constructed so as to
have the appearance or character of a dwelling-house, yet he can not
claim it as exempt under the laws of Wisconsin. In re Lammer, 14 B. R.
460; s. c. 8 C. L. N. 386; s. c. 3 Cent. L. J. 574.

A bankrupt may enforce a trust deed assigned to him with his homestead
and as a muniment of his title. Holloman v. White, 41 Tex. 52.

When stock out of the State is brought into the State and mixed with
other goods without any fault of the bankrupt, the two should be taken as
together constituting the stock in trade of the bankrupt. In re Jones, 2
Dillon, 243.

If a party who has executed a mortgage to secure future advances sub-
sequently declares a homestead on the premises so mortgaged, and then
obtains further advances without disclosing the fact that he has thus
declared a homestead, the mortgagee will be protected for any advances
made without notice of the declaration of a homestead. In re Haake, 7
B. R. 61; s. c. 2 Saw. 231.

Exemption laws founded on the humane policy of making provision for
the support of the poor man and his family are to be liberally rather than
strictly construed. hey should receive such fair construction as will
best promote the beneficent intention of the legislature. In re Jones, 2
Dillon, 243; in re McKercher & Pettigrew, 8 B. R. 409; in re E. A. Vogler,
8 B. R. 182.

If a debtor has two pairs of oxen in his possession, the title to one of
which is to remain in the vendor until paid for, the other is his only pair
of oxen, and is exempt under the laws of Vermont. Wilkinson v. Wait,
44 Vt. 508.

In Pennsylvania the right of exemption does not affect or impair the
vendor’s lien for the purchase money, and can not be set up against his
judgment. Fehley v. Barr, 66 Penn. 196.

The constitution of Virginia took effect, so far as it relates to the pro-
vision for exemptions, on July 6, 1869. It follows thatthe exemption laws
passed to give effect to thdt are to become operative from that date. In
re Daniel Deckert, 10 B. R. 1; s.c.1 A. L. T. (N. S.) 886;5..66L
N. 310; s.¢c. 9 A. L. J. 390.

The constitution of Virginia grants the exemption as a privilege to the
householder. It declares that he shall be entitled to hold property to be
selected by him. Whether he will make his claim or not is optional with
him. He may, therefore, waive his right to the exemption. In re Joseph
Solomon, 10 B. R. 9; s.c.1 A. L. T. (N. 8S.) 3513 s. ec: 9 A. L. J. 391.

The act of Congress, passed June 25, 1868 (15 Stat. 73), approving of the
constitution of the State of North Carolina, did not alter or affect the pro-
vision of this section in respect to exemptions. No amendment of the
bankruptcy law was intended by the act of acceptance, nor did that act
have that effect. In re Archibald McLean, 2 B. R. 567.

In North Carolina, the law of February, 1867, éntitled “An act restoring
to married women their common-law right of dower,” declaring that the
dower shall be laid off before any sale can be made on execution in the
EXEMPTIONS UNDER State Laws. 389

lifetime of the husband, is only an effort to create a new and additional ex-
emption, and to this extent is unconstitutional and void as to debts existing
at the time of the passage of that law. The law of 1868 has the same
purport, and must be similarly construed. Kelly v. Strange, 3 B. R. $.

The vendor's lien was not preserved by the code which went into force
in Georgia on the 1st of January, 1863. Courts will presume that the prop-
erty which has been set apart to the bankrupt is property that was ex-
empt, and that the bankruptcy court saw to it that all the requisites neces-
sary to make its judgment binding were complied with. A judgment ren-
dered upon a note for the purchase money, prior to the filing of the petition,
can not be enforced against the land, and the fact that the creditor did
not prove his claim is of no avail. Rushin v. Gauze, 41 Ga. 180.

Under the laws of Georgia, there is no property or right of property in
the family until the homestead is laid off. The right of the wife and fam-
ily to a homestead does not stand on the footing of an equitable title or
lien, which follows the preperty into the hands of a purchaser with no-
lice. It isa right which depends for its existence upon the judgment ofa
court. If the husband is declared a bankrupt before a homestead is set
apart, the right of the wife and family is a matter for the adjudication of
the bankruptcy ccurt, and the State courts have no jurisdiction over the
same. The true course for them to pursue is to present their claims to the
bankruptcy court, not as an exemption of the husband’s property, but as a
claim of their own. Woolfolk v. Murray, 10 B. R. 540; s. c. 44 Ga. 133;
Lumpkin v. Eason, 10 B. R. 549; s. c. 44 Ga. 339.

Under the laws of Georgia, real estate mortgaged by the vendee, at the
.time of the purchase, to the vendor, to secure the payment of the purchase
Money, can not ve claimed as exempt from the claim of the mortgagee
until the mortgage debt is paid; such property can not be exempted. In
re Whitehead, 2 B. R. 599.

Under the laws of Georgia, to constitute a head of a family it is not
necessary that a man shall have either a wife or a child. If he resides in
a house of which he is proprietor, and has no other inmates than hired
servants, he is in law the head of a family. When the bankrupt rents a
house, hires servants, and allows an adopted daughter and her children to
live with him, he is entitled to the exemption allowed to the head of a
family, but hé is not entitled to any enlargement of his exemption on ac-
count of the children. In re Wm. Taylor, 3 B. R. 158.

Under the constitution of Florida, the bankrupt’s shop, store, mill or
farm, where he pursues his usual trade or avocation, if connected with
and adjacent to his dwelling is included in his homestead. Greely v.
Scott, 12 B. R. 248; s. c. 2 Woods, 657.

Under the laws of Kentucky, a homestead can not be acquired by a
mere naked intention. The present purpose to erect at a future time a
dwelling-house on land and to occupy it as a home is not sufficient to con-
stitute a homestead in it. There must be a dwelling-house on it which is
occupied or has been occupied, and which has not been abandoned, or to
which at least the bankrupt, if he has never occupied it, looks as his home.
In re Geo. T. Duerson, 13 B. R. 183.
390 THE Bankruptcy Law.

If a bankrupt under the laws of Texas acquires a right to a rural home-
stead, the subsequent extension of the limits of a city so as to embrace a
part thereof does not affect his right. In re W. C. Young, 15 B. R. 205.

Under the State law in Texas, an unmarried man who keep a house,
and has orphan children apprenticed to him, is‘not entitled to the home-
stead allotted to a family. He is entitled to fifty acres under the act of
1839. In re Summers, 3 B. R. 84.

Under the laws of Texas, a homestead can not be claimed by the bank-
rupt to the prejudice of a vendor’s lien thereon. In re Hutto, 3 B. R. 787;
s.c.1L. T. B. 226; 3 L. T. B. 197.

Under the laws of California, a homestead may be declared at any time
before the lien of a judgment has actually attached to the laid. In re
Henkel, 2 B. R. 546; s. c. 2 Saw. 305.

A person indebted, or even insolvent, may apply his property to the ac-
quisition of a homestead, or the discharge of incumbrances thereon, with-
out depriving it of the exemption from forced sale by law. In re Henkel,
2B. R. 546; s. c. 2 Saw. 805. Contra, in re Boothroyd & Gibbs, 14 B. R. 223.

If the bankrupt has placed a mortgage on his homestead to the amount
of the full value thereof, the bankrupt under the laws of Ohio is entitled to
an exemption of $500 out of the personal property. In re Henry May, 2
©. L. B. 152.

Under the laws of Ohio, providing that a certain amount of real estate
used as a homestead, shall be exempt from sale on execution, the debtor
does not acquire in the homestead so set off to him a fee-simple absolute
title, but he possesses only a qualified right, a right to possess and occupy
it so long as he uses it as a homestead for his family, and otherwise com-
plies with the requirements of the law. The remainder or- reversion in
such property, after that right is ended, belongs to his creditors, and passes
by the assignment to the assignee, who may sell the same. In re John
Watson, 2 B. R. 570; s. c. 2 Ll. T. B. 93.

Under the laws of Indiana, a bankrupt is not entitled to an exemption as
against a judgment for damages and costs in an action of replevin. In re
John Owens, 12 B. R. 518; s. c. 6 Biss. 432.

In Missouri, a bankrupt is entitled to have a homestead set apart in the
leasehold estate owned by him at the time he was declared bankrupt, if
he is the head of a family. In re Beckerkorb, 4 B. R. 203; s. ¢. 1 Dillon, 45;
s.c1L. T. B. 241.

It is lawful and proper when there is no individual ownership by the
head of a family of the property referred to in section 11, chapter 63, of
the Revised Statutes of Missouri, to make the allowance out of partnership
assets, even though they are not sufficient to pay all the partnership debts.
It is true that there can be no individual interest of a partner in partner-
ship property until partnership debts are paid, yet his right of exemption
in his individual property disregards the otherwise legal rights of his.cred-
itors. In re Young et al., 3 B. R. 440.

In Kansas a merchant is not entitled to an exemption of $400 out of his
stock in trade. In re Schwartz, 4 B. R. 588.

A merchant tailor who does not sell goods as merchants usually do, but
PRACTICE IN MAKING EXEMPTIONS. 391

manufactures them for customers upon special orders under his own
superintendence, is entitled to the exemptiou of $400, under the laws of
Kenrsas. The fact that he did not do all the work himself, but employed
workmen, makes no difference. In re Jones, 2 Dillon, 243.

Under the laws of Kansas, the whole house occupied by the bankrupt as:
a home is exempt, though a portion of it may be used and may have been
constructed with a view to be used for other purposes. In re Tertelling, 2
Dillon, 339.

In order to come within the provisions of the homestead laws of
Michigan, the dwelling-house must be owned by the occupant, as well as.
the land upon which it is located. In re J. F. & C. R. Parks, 9 B. R. 270.

Under the laws of Nebraska, it is not necessary that the ownership of
the land must be of the full legal title. It is sufficient that the interest
be such as may be sold on execution or subjected to the payment of debts.
A title bond makes the holder the owner in such a sense as to. entitle
him to the benefit of the homestead exemption. Bartholomew v. West,
8 B. R. 12; s. c 2 Dillon, 290.

Practice in Making Exemptions, and Exceptions Thereto.— The reg-
ister does not hold a court auxiliary to the district court. His duties are
purely ministerial, and he can not pass upon questions of fact, except
when a special case is referred to him. He has nothing to do with the
report of exemption, unless it is referred to him, and certainly has no
authority to take testimony, and thereupon determine its correctness.
The report must be filed in court, and the court can not recognize a deposit
of it with. the register. It is the groundwork for movements in court, and
is the basis of a contest in which the court may call a jury for its aid
in reviewing the discretion and judgment exercised by the assignee in
setting aside and issuing his certificate for property claimed to be ex-
empt under State laws, or otherwise. If the court does not have upon its
files a report, duly and properly returned according to law, all proceed-
ings resting thereon are irregular. In re Cordes, 1 Pac. L. R. 165.

Where a doubt exists as to whether the bankrupt has made full dis-
closures of all his property in his schedules, he is not entitled to his ex-
emption until after his last examination. In re Mastbaum, 2 W. N. 479.

A proper and reasonable construction of the rule requiring the assignee
to make a report of the exempted property within twenty days after re-
ceiving the assignment, demands that, where the property to be exempted
is in litigation, the time shall be computed from the date of the final de-
cision of the court, so as to give twenty days after the property is ad-
judged to be within or under the control of the assignee. In re D. Shields,
1B. R. 344,

In the list of exceptions the value of the articles set apart should be
stated, so that it may be seen whether they come within the limitations
of the act. In re Graham, 2 Biss. 449.

The provisions of Rule XIX, requiring the assignee to report to the
court the “articles set off.to the bankrupt under the fourteenth section
of the act, with the estimated value of each article,” evidently refers to
the “necessary household and kitchen furniture, and other articles and
392 THe Banrruptcy Law.

necessaries not exceeding $500 in value,’’ which the assignee is by that
section required to designate and set apart, and not to real estate held as
a homestead. A homestead is not a necessary article to be set off by the
assignee. In re C. Hunt, 5 B. R. 498;5.¢.2L. T. B.197;5.c 40 LN,
5; 8. ¢. 2 Pac. L. R. 146.

The auxiliary “may,” in Rule XIX, allowing creditors to file excep-
tions, is not to be taken in an imperative sense. The supreme court in-
tended to leave a discretion with the circuit and district court, to permit
them to repair accidents, correct mistakes, and prevent frauds. In re
Perdue, 2 B. R. 188; s. c. 2 W. J. 279.

Where an attempt is made to exempt a species of property that can not
be exempted, it is not necessary in order to defeat the exemption, to file
exceptions within the required time. No exceptions need be taken. The
title to property so attempted to be exempted, passes to the assignee, and
remains in him until it is divested in some one of the ways provided by
the law. The attempt to exempt is ineffectual. The creditors may except
to the account of the assignee, if he omits to account for or charge him-
self with the value of such property. In re Gainey, 2 B R. 525; in re
Jackson & Pearce, 2 B. R. 508; in re Farish, 2 B. R. 168.

Where the exceptions are as to articles comprehended by the terms
“household or kitchen furniture, or other articles or necessaries,’ they
must be made in the way, and also in the time, prescribed. In re Gainey,
2B. R. 525.

Where the exceptions go to the title to the exempted property, they
need not be filed within the required time. In re Perdue, 2 B. R. 183; s. ¢.
2 W. J. 279.

Quaere, Should the assignee give notice to the creditors that he has filed
his report of articles set apart for the bankrupt? Ibid.

The assignee is not obliged to designate articles on which there is no
lien. If he were, the bankrupt might have nothing exempted. The as-
signee, moreover, is not a judicial officer to determine the question of lien
or no lien. If the assignee should make such a designation of exempted
articles as would by reason of the incumbrances on those articles, be
worthless or insufficient to fulfill the beneficent design of the law in
making exemptions, the bankrupt could obtain redress by excepting to
the determination of the assignee. His appeal from the assignee to the
court would bring before the court the whole question of the existence and
amount of the liens. In re C. H. Preston, 6 B. R. 545.

Where the exemption under the State law is absolute, it is not neces-
sary in order to preserve the exemption that the bankrupt shall apply to
the assignee to have the property selected and set apart as a home
stead. Rix y. Capitol Bank, 2 Dillon, 367.

The decision of the assignee can only be reversed on an exception to
it. This need not be done in the shape of a formal bill of exceptions. In
re Richard Prior, 4 Biss. 262; in re W. H. Thiell, 4 Biss. 241.

The court will deem the allowance made by the assignee to be reason-
able and suitable until the contrary is shown by some appropriate facts
and proofs. In re Ziba Williams, 5 Law Rep. 155.
TrrLe TO PRopEerry. 393

The court will not reverse the decision of the assignee, unless it plainly
appears that he has abused the discretionary power confided te him.
In re W. H. Thiell, 4 Biss. 241.

Act or 1898, Cx. 7, § 70. Title to Property.— (a) The trustee
of the estate of a bankrupt, upon his appointment and qualification,
and his successor or successors, if he shall have one or more, upon
his or their appointment and qualification, shall in turn be vested
by operation of law with the title of the bankrupt, as of the date
he was adjudged a bankrupt, except in so far as it is to property which
is exempt, to all (1) documents relating to his property; (2) interests
in patents, patent rights, copyrights, and trade-marks; (3) powers
which he might have exercised for his own benefit, but not those
which he might have exercised for some other person; (4) property
transferred by him in fraud of his creditors; (5) property which
prior to the filing of the petition he could by any means have trans-
ferred or which might have been levied upon and sold under judicial
process against him: Provided, That when any bankrupt shall have
any insurance policy which has a cash surrender value pay-
able to himself, his estate, or personal representatives, he may,
within thirty days after the cash surrender value has been
ascertained and stated to the trustee by the company issuing the same,
pay or secure to the trustee the sum so ascertained and stated, and
continue to hold, own, and carry such policy free from the claims
of the creditors participating in the distribution of his estate under
the bankruptcy proceedings, otherwise the policy shall pass to the
trustee as assets; and (6) rights of action arising upon contracts or
from the unlawful taking or detention of, or injury to, his property.

(b) All real and personal property belonging to bankrupt estates
shall be appraised by three disinterested appraisers; they shall be
‘appointed by, and report to, the court. Real and personal property
shall, when practicable, be sold subject to the approval of the court;
it shall not ‘be sold otherwise than subject to the approval of the
court for less than seventy-five per centum of its appraised value.

(c) The title to property of a bankrupt estate which has been sold,
as herein provided, shall be conveyed to the purchaser by the trustee.

(d) Whenever a composition shall be set aside, or discharge re-
voked, the trustee shall, upon his appointment and qualification, be
vested as herein provided with the title to all of the property of the
bankrupt as of the date of the final decree setting aside the com-
position or revoking the discharge.
394 Tue Bankruptcy Law.

(e) The trustee may avoid any transfer by the bankrupt of his
property which any creditor of such bankrupt might have avoided,
and may recover the property so transferred, or its value, from the
person to whom it was transferred, unless he was a bona fide holder
for value prior to the date of the ‘adjudication. Such property may
be recovered or its value collected from whoever may have received
it, except a bona fide holder for value.

(f) Upon the confirmation of a composition offered by a bankrupt,
the title to his property shall thereupon revest in him.

Act oF 1867, § 5046. All the property conveyed by the bankrupt
in fraud of his creditors; all rights in equity, choses in action, patent
rights and copyrights; all debts due him, or any person for his use,
and all liens and securities therefor; and all his rights of action
for property or estate, real or personal, and for any cause of action
which he had against any person arising from contract or from
the unlawful taking or detention, or injury to the property of the
bankrupt; and all his rights of redeeming such property or estate;
together with the like right, title, power, and authority to sell,
manage, dispose of, sue for, and recover or defend the same, as the
bankrupt might have had if no assignment had been made, shall,
in virtue of the adjudication in bankruptcy and the appointment of
his assignee, but subject to the exceptions stated in the preceding
section, be at once vested in such assignee.

Statute revised — March 2, 1867, ch. 176, § 14, 14 Stat. 522. Prior Stat-
utes — April 4, 1800, ch. 19, §§ 13, 17, 20, 44, 2 Stat. 25, 26, 27, 38; Aug. 19,
1841, ch. 9, § 8, 5 Stat. 442.

Such powers did not pass by law of 1867. Jones y. Clifton, 18 B. RB.
125.

Power given to cestuis que trustent, in deed of trust to secure a debt,
to appoint a new trustee on failure of original trustee to act, is a personal
trust or confidence in cestuis que trustent, and will not pass to their
assignee in bankruptcy. Clark et al. v. Wilson et al., 16 B. R. 356.

Judgment in personam can not be taken against the wife of a bank-
rupt, or her executors, for the value of real or personal property con-
veyed to her in fraud of creditor. Phipps v. Sedgwick, 16 B. R. 64.

A bankrupt at time when free from debt, and without contemplation
of bankruptcy, conveyed to his wife, without intervention of a trustee,
certain lands to her separate use, reserving the power of revocation and
appointment to any such uses or person as he might designate. Held,
that the settlement would be upheld against assignee in bankruptcy.
Jones v. Clifton, 18 B. R. 125.

Omission to insert power of revocation in a voluntary settlement will
subject the settlement to more or less suspicion. Ibid.
TITLE TO PRopERry. 395.

A court of equity should and will protect a wife so long as she is in
actual enjoyment of any substantial benefit conferred on her by a settle-
ment, though it contain reservation tending to impair to full benefit of the
provisions made for her, it having been made by the husband, when
free from debt, and induced by no fraudulent motive. Ibid.

Where a debtor, while insolvent, invested his means in the purchase of
property, taking conveyance in name of his wife, and was afterward
adjudicated bankrupt; Held, that the State court had no jurisdiction of a
suit brought by a creditor to set aside such conveyance and appropriate
the proceeds to payment of his debt. Such rights and interests vest in
the assignee in bankruptcy, and he is a necessary party to the suit.
Winters v. Claitor, 18 B. R. 533.

An assignment for the benefit of all the bankrupt’s creditors is not void
at common law, but is only void, under the bankruptcy law, as against
the assignee, and no lien exists in favor of a judgment creditor whose
judgment was entered and enrolled against the bankrupt after such
an assignment. In re John C. Walker, 18 B. R. 56.

The trustee was subsequently chosen assignee in bankruptcy. Held,
that the title became vested in him from the date of the assignment,
and this being so all his acts as trustee performed in accordance with the
deed of assignment, intermediate its date and the bankruptcy, must be
approved. Ibid.

Interest in lands acquired at administrator’s sale, where administrator
has not made title, is assignable. In re Wm. P. Reynolds, 16 B. R. 158.

Such equitable interest is liable to liens of judgment creditors, subject
to equities of a surety of debtor who holds a prior assignment as in-
demnity for his liability. Ibid.

A claim in favor of bankrupt against the government will pass to his
assignee. In this case a claim for burning cotton in enemy’s country, dur-
ing the war, against the officers who destroyed same, is held to be sub-
stantially a claim against the government. Phelps v. McDonald, 16 B. R..
217.

In Indiana, a conveyance of real estate to husband and wife creates
an estate in joint tenancy, and in such an estate neither husband nor wife
has any interest subject to execution or that will pass to assignee of
either. Effect of a divorce subsequent to adjudication in bankruptcy
discussed. In re Benson, 16 B. R. 377.

One who holds a mortgage, valid as against the provisions of the bank-
ruptey law, with condition broken before commencement of proceedings,
has a right, as against the assignee, to all the bark-wood and timber
cut from the premises, whether on them or not. In re Wm. Bruce, 16.
B. R. 318. ;

“Where such mortgagee has given notice of his claim to the marshal
when he seized the property, and to the assignee when he took posses-
sion of it, they are to be considered as taking it for him, and the expense
of securing it should be borne by him. Ibid.

Bankrupt nearly a year before petition filed left a note, signed by a
third person, with an attorney for collection, and afterward drew sev-
396 THE BankRuPptcy Law.

eral orders upon him payable out of the proceeds thereof. Held, holders
of such orders were entitled to payment out of such proceeds in prefer-
ence to the assignee. In re BE. M. Smith, 16 B. R. 399.

Assignee takes the property of bankrupt as an attaching creditor would
take it, subject to all claims upon it. Safford v. Burgess, 16 B. R. 402.

H., by will, devised his real estate to his three grandchildren and their
heirs, the will providing that said real estate ‘‘ shall not at any time here-
after be sold or alienated,’ but provided that the executors should rent
Sanie, and pay the rent to testator’s heirs; also that “in case any of my
said heirs and devisees shall die without lawful issue” the share of one
so dying shall go to the grandchildren and the survivor of them, and to
the heirs of such survivor forever. At the time of death of H., one of
the grandchildren, W., was married and had seven children living. Held,
that the remainder to issue of said grandchild was vested, and alienable,
and would pass to a general assignee in bankruptcy during the life of
the said W. Smith v. Scholtz, 17 B. R. 521.

The bankrupt, under contract with S. & ©o., purchased hides, and
manufactured leather for them, discounting drafts upon S. & Co., at bank,
proceeds of drafts being placed to credit of bankrupt’s general account,
and the hides were paid for by checks upon, such account. Held, the
hides became the property of S. & Co.; that it is not necessary that an
agent should pay out identical bank notes he receives from his principal.
Safford v. Burgess, 16 B. R. 402.

Where some of the hides were purchased with proceeds of drafts which
S. & Co. refused to accept, their title to same is not affected by such
fact, but they become debtors to the estate, or to the bank advancing the
money. Ibid.

The title to the leather, when completed, passes under the arrange-
ment for the purchase of the hides. Ibid.

Arrangement between two banks, by which one is to act as agent of
the other for clearing-house purposes, and the latter deposits funds to
meet checks drawn upon it, creates relation of debtor and creditor, and
such deposits upon failure of former bank will pass to its assignee.
Phelan, Assignee, v. Iron Mountain Bank, 16 B. R. 308.

Where latter bank has knowledge of insolvency of former, a repay-
ment of such deposits by former on day of its failure is a preference, and
may be recovered by the assignee. Ibid.

A lease of property owned by the bankrupt, which is valid against
him, although not recorded as required by the statute of the State, is
valid against the assignee, although he had no knowledge of its existence.
Goss v. Coffin, 17 B. R. 332.

Bankrupt payee of a negotiable bill or note, who before bankruptcy
sells and delivers same without indorsement, may indorse same after
adjudication, so that the holder may maintain an action thereon in his
own name. Hersey v. Hlliott, 18 B. R. 358.

Where income of trust moneys is to be paid to the bankrupt during
his life, to be applied to the support of himself and wife and the educa-
tion and support of their children, the trust declaring the principal and
TITLE TO PROPERTY. 397

income inalienable, the bankrupt takes it as a subtrustee, and is bound to
apply it to the purposes named, and, therefore, it will not, upon hig
bankruptcy, pass to the assignee. Durant, Assignee, v. Mass. Hospital
Ins. Co., 16 B. R. 324.

The court can not apportion such income and give assignee an aliquot
share. Ibid.

The firm of J. & S. was dissolved by mutual consent, and the firm
property divided, each partner agreeing to pay the debts contracted in
respect of the property received. S. sold an interest in the portion re-
ceived by him to M., with whom he formed the new firm of 8. & M., which
incurred debts and became bankrupt. Before the adjudication, the prop-
erty of the latter firm was attached by a creditor of the firm of J. & S.
Held, that the property attached was property of tbe new firm; that
the assignee was entitled to possession of it for the purpose of satisfying
creditors of that firm, and that only the balance which might be due to
§., after payment of the firm debts. and adjustment of accounts, would be
subject to the attachment. Crane, Assignee, v. Morrison, 17 B. R. 393.

B. and wife, for the purpose of securing money to pay off incum-
brances on a farm, conveyed it to K., the wife’s father, who delivered the
money and executed an instrument which was a lease to B. and wife
during lives of lessor and his wife, provided lessees should pay a stipulated
annual sum. Then followed a conveyance to B. and wife, and the last
clause directed redemption of the premises if the stipulations were
faithfully fulfilled. The conveyance of the premises was in considera-
tion of acquittance of all claims on K.’s estate by B. and wife. B.’s wife
died in 1867, and K. and his wife died in 1874. The annual sum was paid
up to 1867. B. afterward became bankrupt. Action was brought by his
assignee to determine what rights he had in the farm. Held, B. and
wife took it as joint tenants, and upon death of his wife B. took the whole;
that the intention to have the estate holden for the fulfillment of the
condition is plain; that assignee is entitled to the farm, subject to lien
in favor of K.’s administrators for amount of annual payments due at
K.’s death, with interest from the time they should have been paid.
Atwocd, Assignee, v. Kittell, 17 B. R. 406.

Sheriff held liable in damages to assignee in bankruptcy, and was
guilty of conversion in selling goods seized by him under warrant of at-
tachment, and sold under order of Staie court as perishable, after filing
of an involuntary petition, but before adjudication, though the sheriff
had no notice of the bankruptcy proceeding. Long, Assignee, v. Conner,
Sheriff, 17 B. R. 540: .

Sheriff is liable for true market value of the property on the day of
the sale, and not merely for the amount realized at the sale. Ibid.

The market value of the property, rather than any injury over and above
the market value which the assignee or the original owner might have
suffered, is the measure of damages. Ibid.

For proper evidence in determining market value, see this case. Ibid.

The fact that the assignee in bankruptcy has already obtained judgment
against the attachment creditor in a suit for damages for the same con-
398 Tue Bankruptcy Law.

version, and has issued execution, is no defense to a suit against the
sheriff — the judgment being still unsatisfied. An unsatisfied judgment
against one of two joint tort-feasors is no bar to an action against the
other. Ibid.

An arrangement was entered into between defendant and a committee
appointed by the bankrupt corporation, defendant, and other owners, by
which defendant was to furnish the lumber necessary to rebuild a dam
owned by them all. Defendant furnished a part of the lumber, placing
it where it would be taken for use on his own land, but the dam was
not rebuilt. Defendant proved his claim in bankruptcy for the bankrupt's
share of the purchase price, but afterward withdrew it, and neither the
bankrupt nor its assignee ever paid anything for the lumber thus fur-
nished, or otherwise took possession of it. Subsequently defendant ob-
tained leave of the assignee to sell it, and promised thereupon to pay
him his share of the avails; but after selling some he refused, on de-
mand, to pay over plaintiff’s share. In an action by the assignee to re-
cover such share as money had and received to his use, Held, that it was
proper to submit to the jury the question whether anything remained to
be done to the lumber by defendant before, under the contract, it was to
be taken and used; that the question whether the title to the lumber passed
to the bankrupt, and, therefore, whether there was a consideration for
defendant’s promise, depended upon whether anything remained to be
done by the seller. Gates v. The Winooski Lumber Co., 18 B. R. 31.

Bankrupts having made default in payment of a chattel mortgage,
the mortgagees, pursuant to the terms thereof, took possession of the mort-
gaged property. Before the sale a creditor issuéd execution to the sheriff,
One hour thereafter the petition was filed. Held, that at the time the
execution was issued the bankrupt had no leviable interest in the prop-
erty, and that the creditor had no lien on the surplus to exclusion of
assignee. In re Wrisley, 17 B. R. 259.

Bankrupt had obtained a large sum of money through appellant’s firm,
who were insurance agents, and left a portion thereof in their hands
to be applied as premiums upon policies which he agreed to furnish in
the companies represented by them, as a mode of compensation for their
services. One-half of the amount in hands of appellant was applied in
payment of premium upon a policy procured by the bankrupt on his
own life. No other risks were furnished. In an action by assignee in
bankruptcy against appellant to recover balance of amount so left,
Held, that the firm had a vested interest in the money, and the as-
signee was not entitled to recover. Newcomb vy. Launtz, 18 B. R. 276.

Where one party agrees to furnish goods to another at a fixed price, the
latter to pay freight, storage and charges, and pay at the end of every
three months for the goods sold by him within that time, and pay at the
end of the year for all goods remaining unsold, the proceeds of the
goods sold by latter can not be recovered from his assignee in bank-
ruptcy. Such arrangement does not create relation cf principal and
agent, but that of buyer and seller. In re Linforth, Kellogg & Co., 16
B. R. 435.
TITLE TO PROPERTY. 399

Right of action to recover usurious interest passes to assignee. Whee-
lock, Assignee, v. Lee, 17 B. R. 568; Wright v. Nat. Bk., 18 B. R. 87.

The assignee, however, can not maintain an action to compel return of
collaterals given by the bankrupt, as security for usurious loan, until he
has paid, or offered to pay, the sum loaned. He is not a borrower within
meaning of the statute. Wheelock, Assignee, v. Lee, 17 B. R. 563.

Where cause of action pending at time of adjudication is one which
passes to the assignee, he should be notified, and in case of his refusal
the action must be dismissed. An order that a nonsuit be entered if
assignee did not appear within a specified time held erroneous. Towle
y. Davenport, 16 B. R. 478.

A bankrupt may continue to prosecute an action pending at time of
adjudication, where the cause of action is one that does not pass to the
assignee. Ibid.

Where before commencement of bankruptcy proceedings the holder of a
ckattel mortgage executed by the bankrupt took possession of the mort-
gaged property and appropriated it to his own use, the assignee could not
maintain an action of trover to recover the value of same. Jones v. Miller,
Assignee, 17 B. R. 316.

Assignee can not maintain a suit in equity to obtain possession of
properfy alleged to belong to the estate. Remedy is at law. In re The
Oregon Iron Works, 17 B. R. 404.

In an action brought by an assignee of a corporation to enforce the
subscription of defendant to an increased capital stock of a reorganized
corporation of which he had acted as an officer, the defendant could not
deny the regularity of the organization of the new company. Chubb v.
Upton, Assignee, 16 B. R. 537.

In a suit brought against a party who appears upon the books of the
corporation as a stockholder, to recover amount of an assessment upon
stock apparently held by him, the burden of proof is upon defendant to
show that he is not a stockholder. Turnbull, Jr., v. Payson, Assignee, 16
B. R. 440.

In the ordinary case of a solvent private corporation there is no: lia-
bility of the stockholders to pay the capital until an assessment; but in
the case of insolvency payment is compellable at the suit of the
creditors, though no assessment may have been made. Wilbur v. Stock-
holders of Corporation, 18 B. R. 179.

Under proceedings in equity for this purpose the court may, if sufficient
corporate organization continues to subsist, order an assessment by the
corporate authorities upon the stockholders in any stage of the proceed-
ings. for any purpose for which it may be thought convenient. Ibid.

The bankrupt was a company organized under special act, with a
capital of $50,000, divided into 1,000 shares, with power to increase the
number of shares to 3,000. It gave no authority to the directors, or to
any officer, to accept payment for the stock except in money or money’s
worth, By the articles of association it was provided that the sub-
scribers should give their notes without interest for the amount sub-
scribed bv them resnectivelv. which notes should not be liable at anv time
400 Tur Bankruptcy Law.

to an assessment of more than fifty per cent. of their face, nor to any
assessment of more than twenty per cent., within eighteen months from
the organization of the company. Held, that the meaning of the provision
was that, with ultimate relation to creditors, capital was of the full
residuary amount, but such calls for payment on the stock as might
from time to time be made by the corporate authorities during the
course of the active business of the company as a solvent concern should
not exceed one-half of that amount. There was nothing, therefore, in
the articles of association to exempt or absolve stockholders from lia-
bility to creditors for so much of the whole subscribed capital as might
be required for the payment of debts. Ibid.

Most of the stockholders gave such notes in payment for their stock,
which contained the provisions of the articles of association, and also
a provision that all dividends should be credited proportionately upon
it until its full amount by reason of credits by assessments and dividends
should be paid, and the same should be returned, and in lieu thereof a
paid-up certificate of stock be issued. Held, that the operation of the
articles of association as to creditors was not and could not be altered
by the insertion of this provision. Ibid.

The company having become bankrupt, and the deficiency of other
assets exceeding the whole amount of subscribed capital, Held, that the
stockholders were liable to the assignee for their respective proportions
of such unpaid amount. Ibid.

Stockholders of an insolvent corporation, who are also creditors, can
not deduct the amount due to them from their respective proportions of
the unpaid capital, but if they prove their debts deductions equai to their
estimated respective dividends may perhaps be made from the amount
of the assignee’s demands against them as stockholders. Ibid.

Where an investment of stock by a corporation is ultra vires the corpo-
ration will not be held liable as a stockholder. Ibid.

A transferee of stock in a bankrupt company is liable to the assignee in
respect to such stock; but where the transfer is not accepted by the
transferee the transferer is alone liable. Ibid.

Where the issue of shares of capital stock in a corporation which is
fraudulent in fact appears formal and regular on its face, and the books
of the corporation show that the shares are fully paid up, and there is
nothing to put an innocent purchaser of such shares in the open market
upon inquiry, such purchaser can not be held liable, but the remedy of
the corporation is against the guilty perpetrators of the fraud in their
individual capacity. Foreman v. Bigelow, 18 B. R. 457.

Purchaser at sale takes estate subject to all equities against it, and it
is immaterial whether he knows of them or not. Steadman v. Taylor, 17
B. R. 283.

Order of sale of bankrupt’s property, which directs the assignee to sell
the right, title, interest, etc., of the bankrupt, is sufficient; it need not
direct sale of right, title, interest, ete., which the assignee acquired. by
the decree of bankruptcy. Smith v. Scholtz, 17 B. R. 521.
TITLE TO PROPERTY. 401

Assuming that sale of real estate by assignee is to be assimilated to
_ Sale under decree in equity, silent as to the manner of sale, it can not
e attacked collaterally and held absolutely void because not made in
arcels. Ibid.

Assignee is not bound by a partition to which he was not a party,
nd is entitled, if he does not elect to affirm the partition, to sell the
individed interest of the bankrupt which had been vested in him before
he partition, if at all. Ibid.

Under the law of 1867, it was held that where a composition, partly
arried out, is set aside, and an assignee appointed, the order should be
nade without prejudice to the lawful acts done or titles acquired under
nd by virtue of such composition. Ex parte Hamlin, In re Brodt, 16
3. R. 320.

That creditors who have taken the composition should not be allowed
o vote for assignee was also held in this case. Ibid.

In action by assignee to set aside a sale or transfer of goods, as having
yeen made in violation of bankruptcy act, the declaration must set out
he facts of the illegal transaction. Hallack & Bro. v. Tritch, 17 B. R.
93.

Bankrupt is not a necessary party to bill filed by assignee to set aside, as
, fraud upon creditors, a conveyance of real and personal property.
3uffington v. Harvey, 17 B. R. 474.

Assignee can not reclaim money deposited for a special purpose, in which
he person holding the deposit has acquired a vested interest. Newcomb
*, Lountz, 18 B. R. 276.

One S., a special partner in a firm whose nominal assets exceeded its
iabilities by only two-ninths, made a settlement upon his wife of lease-
old property and bonds to amount of $100,000. About this time the
irm dissolved, and S., and’ one of the members of the old firm, formed
, Dew copartnership, furnishing no new capital and continuing the busi-
iess as if the old firm still subsisted. Two years later the new firm failed,
ud was found to be hopelessly insolvent. It did not appear that the
vife took any part in bringing about the settlement, or that there was
hy guilty knowledge on her part in the transaction. She died before the
ailure. Her executor having sold the leasehold property, payment for
lame being partly in cash and partly by mortgage, loaned the vash to
\ firm which afterward failed, and it was lost to the estate. In action
if assignee of firm to reach the property settled upon the wife, and sub-
ect it to his administration. Held, that the settlement was invalid; that
he assignee was entitled to the possession of the mortgage, but that there
‘ould be no money judgment against the estate for the balance of the
woceeds of sale of the leasehold property. U. S. Trust Co. v. Sedgwick,
8 B. R. 340.

The estate of a bankrupt, after satisfying the valid claim against it,
‘elongs to the bankrupt, and, therefore, a conveyance by him alleged
0 be fraudulent as against the creditors will not be set aside in a suit by

26
402 THe Bankruptcy Law.

the assignee where it appears that there are no debts provable against the
estate. Nicholas v. Murray et al., 18 B. R. 469.

Where a pledge has been made in good faith and for a valuable con.
sideration, the assignee can not disregard the contract and recover the
property, and a refusal by pledgee to surrender the property to the as.
signee is not equivalent to a conversion. Yeatman et al., Assignees, y.
N. O. Sav. Bk., 17 B. R. 187.

Upon discharge of assignee, property remaining in his hands reverts
to debtor without reassignment. Dewey v. Moyer, 16 B. R. 1.

The bankruptcy court, under its power to enforce compositions, has no
jurisdiction to compel a voluntary assignee to whom debtor had assigned
his property, before commencement of proceedings in bankruptcy, for
benefit of creditors, to deliver the property to the debtor, no suit having
been brought to set aside such assignment, and the assignee not being
a party to the proceedings. In re Waitzfelder et al., 18 B. R. 260.

Where property has, by order of bankruptcy court, been sold, subject to
a lien, the assignee’s deed providing that such lien is to remain in full
force, the purchaser is estopped to deny the validity of such lien. Buck-
nam v. Dunn et al., 16 B. R. 470.

It was held, under the law of 1867, that the bankruptcy act had not
entirely superseded the State insolvent laws, and where an insolvent
debtor refuses to file a voluntary petition, and has committed no act of
bankruptcy, and it does not appear that the requisite number of cred-
itors are ready to join in a petition against him, compulsory proceed-
ings by a creditor under the State insolvent law are not prohibited.
Geery’s Appeal, 17 B. R. 196.

Choses in Action.— The phrase “ choses in action” is qualified and
limited by the rest of the section. The choses in action for tort which
pass to the assignee are rights of action for real or personal property,
or for the unlawful taking or detention of preperty, or for injuries thereto,
and not causes of action for merely personal injuries. Noonan y. Orton,
12 B. R. 405; s. c. 84 Wis. 259.

The words “choses in action” mean nothing more than the words
“rights of action,” and it has been uniformly held that these latter words
only include rights of action founded on contracts or for injuries to
preperty, and not rights of action for torts which are purely personal, and
die with the party. Dillard v. Collins, 25 Gratt. 343.

The rights of action which pass to the assignee are those that are
founded upon beneficial contracts made with the bankrupt where the
pecuniary loss is the substantial and primary cause of action, and for
injuries affecting his property, so far as they do not involve a claim for
personal damages. Ibid. :

An action for an abuse of an attachment or. garnishee process is au
action for a personal injury, and does not pass to the assignee, although
the wrong injured the bankrupt’s business. Noonan v. Orton, 12 B. R.
405; s. c. 84 Wis. 259.

A plea that the plaintiff has been adjudicated bankrupt is not a good
plea to an action of slander, Dillard vy. Collins, 25 Gratt. 343.
FRAUDULENT CONVEYANCES. 403

A right of action for damages arising from a fraudulent and deceitful
recommendation of a person as worthy of trust and confidence, does not
pass to the assignee. Crockett v. Jewett, 2 B. R. 208; s. c. 2 Ben. 514; s. ¢.
2L. T. B, 21.

Fraudulent Conveyances.— The provisions of this clause relate to the
State statutes against fraudulent conveyances, and to those only; and
the right of action is not affected by section 5128. Section 5128 has no
reference to those statutes, but is only intended to reach frauds on the
bankruptcy act. Bradshaw vy. Klein et al., 1 B. R. 542; s. c. 2 Biss. 20;
s.c, 1 L. T. B. 72; Knowlton v. Moseley, 105 Mass. 136; Allen vy. Mont-
gomery, 10 B. R. 503; s. c. 48 Miss. 101; Hyde v. Sontag, 8 B. R. 225; s. ec.
1 Saw. 249.

Property received by a creditor in fraud of a compromise agreement
vests in the assignee of the debtor under this clause. Amsinck v. Bean,
8B. R, 228; s. c. 11 B. R. 495; s. c. 10 Blatch. 361; s. ¢. 22 Wall. 395.

The assignee represents the rights of creditors, as well as the rights of
the bankrupt, and any lien or incumbrance which would be void for fraud
as against creditors if no petition had been filed, or assignee appointed, will
be equally void as against the general creditors represented by the
assignee. He may contest the validity of a conveyance, even though the
bankrupt could not. That is what the act means when it vests in the
assignee all property conveyed in fraud of creditors. It does not make any
conveyance or incumbrance fraudulent. It simply clothes the assignee
with the entire title, notwithstanding such conveyance or incumbrance,
and makes it his duty to invoke the proper jurisdiction to annul the
fraudulent proceedings. In re Wynne, 4 B. R. 23; s. ¢c. Chase, 227; s. c. 2
L. T. B. 116; Bradshaw v. Klein et al., 1 B. R. 542; s. c. 2 Biss. 20; s. c.
1L. T. B. 72; in re Metzger, 2 B. R. 355; in re Louis Meyers, 1 B. R.
581; s. c. 2 Ben. 424; Boone v. Hall, 7 Bush, 66; Pratt v. Curtis, 6 B. R.
189; Carr v. Gale, 3 W. & M. 38; s. c. 2 Ware, 330; Carr v. Hilton, 1 Curt.
230; Ashley v. Robinson, 29 Ala. 112. Vide Reavis v. Garner, 12 Ala. 661;
Porter v. Douglass, 27 Miss. 379. :

A creditor who has instituted an action to set aside a fraudulent convey-
ance, may prosecute it after the commencement of proceedings in bank-
ruptecy. Phelps v. Curts, 16 B. R. 85.

If an insolvent husband purchases property in the name of his wife,
the assignee can not abandon the pursuit of the property, and seek a judg-
ment against her in personam. Phipps v. Sedgwick, 16 B. R. 64.

Conveyances made with a specific intent to defraud creditors, and con-
veyances in fraud of creditors, in the technical and legal sense of the
term, are both within the letter and spirit of the bankruptcy act. All
conveyances made void as against creditors by’ the statute of frauds, in
legal contemplation, are made in fraud of such creditors, whether they
are fraudulent in fact by specific intent or only fraudulent in law. Ed-
Monson vy. Hyde, 7 B. R. 1; s. c. 2 Saw. 205; s. c. 5 L. T. B. 380; Allen
Vv. Massey, 4 B. R. 248: s. c. 7 B. R. 401; s. c. 17 Wall. 351; s. c. 2 Abb.
©. C. 60; s. c. 1 Dillon, 40; s. c. 1 L. T. B. 218; in re Geo. P. Morrill, 8 B. R.
li7; 5. c. 2 Saw. 356.
404 Tue Bankruptcy Law.

The declaration of a homestead is in no sense a conveyance. He who
declares land which he already owns to be a homestead, does not con-
vey it. He merely avails himself of a legal right to place it in a con-
dition where it will not be liable to a forced sale. The right of prop-
erty remains unchanged, except that the law, mindful of the object for
which homesteads are allowed to be declared, provides that after the
declaration the homestead can not be alienated except with the con-
currence of the wife, and that on the death of the husband it survives to
her for the benefit of herself and the family. It is evident that to call the
declaration of a homestead a conveyance of the property would be doing
extreme violence to the language of the act, and in view of the pro-
visions allowing exemptions, such construction is inadmissible. In re
Henkel, 2 B. R. 546; s. c. 2 Saw. 305.

An assignee may maintain an action to set aside fraudulent con-
veyances made by the debtor before he was adjudged a bankrupt, and
even before the bankruptcy act was passed. Bradshaw v. Klein, 1 B.
R, 542; s. c. 2 Biss. 20; s.c. 1 L. T. B. 72.

After the commencement of proceedings in bankruptcy, no one but the
assignee can bring or maintain an action to set aside a fraudulent con-
veyance made by the bankrupt. In re Louis Meyers, 1 B. R. 581; s. c
2 Ben. 424; Stewart vy. Isidor, 1 B. R. 485; s. c«. 5 Abb. Pr. (N. 8.) 68;
Goodwin vy. Sharkey, 3 B. R. 558; s. «. 5 Abb. Pr. (N. 8.) 64; Allen v.
Montgomery, 10 B. R. 503; s. c. 48 Miss. 101; Edwards v. Coleman, 2 Bibb,
204; Thurmond v. Andrews, 13 B. R. 157; s. ec. 10 Bush, 400.

The assignee may avoid a fraudulent conveyance, although he has no
lien on the property. Cragin v. Carmichael, 11 B. R. 511; s. ¢. 2 Dillon,
519; in re Wm. B. Duncan, 14 B. R. 18.

If the fraud was merely constructive, and not actual, the assignee can
not recover in an action at law. Badger v. Story, 16 N. H. 168.

If the assignee refuses to institute proceedings to set aside a fraudu-
lent conveyance, any creditor who has proved his debt has a right to
apply to the court for an order directing proceedings for that purpose to
be instituted, upon such terms as appear to be right. Freelander v.
Holloman, 9 B. R. 331.

A creditor may file a bill in equity to vacate a fraudulent conveyance,
and make the assignee a party defendant. Freelander v. Holloman, 9 B.
R. 331; Allen v. Montgomery, 10 B. R. 503; s. c. 48 Miss. 101; Sands v.
Codwise, 4 Johns. 536.

A creditor can not file a bill in a State court to set aside a fraudulent
conveyance without making the assignee a party. Alsabrook v. Cates, 5
Tenn. 271.

If a creditor, who does not prove his debt, holds a judgment which is
a lien on property fraudulently transferred by the bankrupt, he may
issue a fi. fa. and levy thereon even after the commencement of the pro-
ceedings in bankruptcy, if the assignee has taken no steps to reach the
property. Barber v. Terrell, 54 Ga. 146.

The right of creditors to institute a suit to set aside a fraudulent convey-
ance is perfect upon the refusal of the assignee to permit the use of his
FRAUDULENT CONVEYANCES. 405

name, and can not be divested after the institution of the suit by any
change of the assignee, for the latter merely comes into the place of the
former and acquires no greater rights than he had. If the case has been
carried to an appellate court, the proceedings will not be stayed until
such assignee is made a party. Sands v. Codwise, 2 Johns. 485.

The creditors, as beneticiaries, are proper, though not necessary, parties.
Boone v. Hall, 7 Bush, 66.

When a creditor has acquired a lien by virtue of proceedings instituted
prior to the commencement of proceedings in bankruptcy to set aside a
fraudulent conveyance of a bankrupt, he may continue the suit so as to
enforce his lien. Sedgwick v. Minck, 1 B. R. 675; s. c. 6 Blatch. 156;
Stewart v. Isidor, 1 B. R. 485; s. c. 5 Abb. Pr. (N. 8.) 68; Carr v. Fearington,
63 N. C. 560; Wooten v. Clark, 23 Miss. 75; Fetter v. Cirode, 4 B. Mon.
482; Storm v. Waddell, 2 Sandf. Ch. 494. Contra, Smith vy. Gordon, 2
N. Y. Leg. Obs. 325; s. ec. 6 Law Rep. 313.

A petition to set aside a deed of trust not contrary to other provisions
of the bankruptcy act should allege that the property was conveyed by
the bankrupt in fraud of his creditors, and show that the same passed to
the assignee, under this section, as property conveyed by the bankrupt
in fraud of his creditors. In re Broome, 3 B. R. 343; s. c. 3 Ben. 488.

Equity looks at substance and not form. It penetrates beyond externals
to the substance of things, and it accounts as nothing and delights to
brush away barricades of written articles and formal documents, when
satisfied that they have been devised to conceal or protect fraud. If
the fraud does not consist in a particular sale, but in the mode of con-
ducting the business, it is a continuous fraud. Martin v. Smith, 4 B. R.
275; se. 1 Dillon, 85; s. c. 3 L. T. B. (C. R.) 199.

The statute of limitations of Missouri contemplates fraud which is
secret or concealed, as distinguished from fraud which is open and
known. If a party knows the facts constituting the fraud, he knows the
transaction to be fraudulent. It is not enough simply that he is aware
of the fact of the transfer, but he must know the facts which make that
transfer fraudulent. If those facts are such that any creditor must, if
ordinarily vigilant, have discovered the fraud within five years, the
action will be barred. Ibid.

A mortgage upon a stock of goods which authorizes the mortgagor to
sell them and replace them with others, at such time and in such manner
as he may determine, and use the proceeds generally as he sees fit, is
fraudulent and void. A mortgage accompanied by such an agreement,
consent, or understanding is no protection to the mortgagee. Such an
arrangement defeats its essential nature and qualities as a mortgage,
so that it can not in a legal sense be called a security. It is
nothing more than the expression of a confidence by the mortgagee in
the mortgagor. If such an agreement is inserted in the mortgage, it is
proven by the production of the mortgage, but if it is not, it may be
proven by evidence aliunde. It is not necessary that it should be in
Writing or in the mortgage. It may be proven by parol, or inferred from
circumstances and the conduct of the parties. In re Kahley et al., 4 B. R.
406 Tur Bankruptcy Law.

878; s. c. 2 Biss, 383; Harvey v. Crane, 5 B. R. 218; s. c. 2 Biss. 496; in re
Perrin & Hance, 7 B. R. 283; in re Samuel Cantrell, 6 Ben. 482; Smith y.
McLean, 10 B. R. 260; Smith v. Ely, 10 B. R. 553; Robinson v. Elliott, 11
B. R. 553; s. c. 22 Wall. 513; in re Manly, 3 B. R. 291; s. c. 2 Bond, 261;
s.c. 2 L. T. B. 89. Contra, Brett v. Carter, 14 B. R. 301; Barron v.
Morris, 14 B. R. 371; s. c. 2 Woods, 354; Johnson v. Patterson, 2 Woods, 443.

If the power to sell is not contained in the mortgage, its existence must
be found by the jury before the mortgage can be declared fraudulent,
Miller v. Jones, 15 B. R. 150.

A provision that a certain person shall take possession of the property
as trustee under the mortgage and retain possession until the mortgage
debt is paid will not render the mortgage valid, if the trusteeship is a
mere pretense and the trustee merely sees that the business is regularly
conducted. Smith v. Ely, 10 B. R. 553.

The taking of possession under a claim of title will not render the mort-
gage good, for the title still remains fraudulent. Smith v. Ely, 10 B. R.
553; Robinson v. Elliott, 11 B. R. 553; s. c. 22 Wall. 513; in re William D.
Forbes, 5 Biss. 510.

A mortgage may be in operation as to a portion of the property, and
fraudulent as to the residue. In re Kahley, 4 B. R. 378; s. c. 2 Biss. 383;
in re Perrin & Hance, 7 B. R. 283; in re Geo. P. Morrill, 8 B. R. 117; s. ¢.
2 Saw. 356.

A mortgage containing a stipulation that the mortgagor shall remain in
possession, and sell the mortgaged property as agent of the mortgagee,
and account for the proceeds, until the mortgage debt is paid, is not
necessarily void. If carried out in good faith, it does not hinder, delay, or
defraud creditors. The object is to subject the mortgaged property to
the payment of the loan. The mortgagor can only rightfully dispose of
it for the purpose of liquidating the secured debt. He can not sell for his
own use; this would be a fraud upon creditors, and if such permission were
given by the terms of the instrument, or agreed and consented to by parol,
the mortgage would be void. Hawkins v. First National Bank of Hastings,
2B. R. 338; s. c. 1 Dillon, 462. Contra, in re William D. Forbes, 5 Biss. 510.

A mere power of sale will not vitiate a mortgage of personal property
if it is provided that the proceeds shall be applied to purchase other goods
as a substitute for those sold. Mitchell v. Winslow, 2 Story, 630.

When the State laws make all sales of chattels void unless accompanied
by delivery within a reasonable time, and followed by an actual and
continued change of possession, and there was no delivery or change of
possession because the vendor and vendee lived together in the same
house, the sale is void, and the assignee may recover the property so
sold. Allen v. Massey, 4 B. R. 248; s. c. 7 B. R. 401; s. ec. 1 Dillon, 40; s. ¢
2 Abb. C. C. 69; s. ec. 17 Wall. 351; ssc. 1 L. T. B. 218; Edmonson v. Hyde,
7 BR, le s. @ 2 Saw, 206: sc. BL. T. By. BSH;

If the change of possession does not accompany the transfer, it is not
sufficient that a change is made before a creditor acquires a lien on the
goods, In re Geo. P. Morrill, 8 B. R. 117; s. « 2 Saw. 356
FRAUDULENT CONVEYANCES. 407

From Twyne’s, down to the very latest case, no sale has ever been
upheld by any court where the vendor has remained in possession, per-
forming all the offices of an absolute owner, and continuing so for
many months in every beneficial use and enjoyment which ordinarily
appertain to the ownership of property. No state of facts can be made
out of sufficient force to repel the inference of fraud. In re Hussman, 2
B. R. 487; s. ce, 2 L. T. B. 53; 8. ec. 1 OC. L. N. 177; in re Manly, 3 B. R. 291;
s.¢. 2 Bond. 261; s. c, 2 L. T. B. 89; Foster v. Hackley & Sons, 2 B. R. 406;
s.c.2L. T. B. 8; 8.¢c.10. L. N. 187.

The publicity attributed to an involuntary transfer of personal prop-
erty under an execution fairly levied, prevents the application of the
general rule, that continuance of possession by a debtor after a transfer
of his property is a badge of such fraud as renders the transfer avoidable
by his creditors, though it was a transfer for a valuable consideration.
But the exception ceases as soon as the demands of the judgment cred-
itors are paid. When these demands are paid the general rule becomes
applicable. In re Wm. H. Long, 3 B. R. (quarto), 66.

If such change of possession is made as the nature of the subject ad-
mits of, nothing more is in general required. Mitchell v. McKibbin, 8
B. R. 548; s. c. 29 Leg. Int. 412.

The retention of the possession of fixtures after the execution of a
mortgage is merely prima facie evidence of fraud. Howard v. Prince, 11
B. R, 822.

In Kentucky, an actual change of possession, so far as the thing sold
is susceptible of it, is absolutely necessary to the validity of the sale, as
to creditors and subsequent purchasers, whenever the vendor at the time
of the sale is in possession of the property. And this.transmutation of
possession, to be effectual, must not be merely nominal or momentary,
but must be real, actual and open, and such as may be publicly known.
In re Hussman, 2 B. R. 487; s. c. 2 L. T. B. 53; s. cc. 1 C. L. N. 177.

An absolute deed intended as a mortgage is not conclusive evidence
of fraud. Gaffney v. Signaigo, 1 Dillon, 158.

Where the State laws make the purchase of property in the name of
another presumptively fraudulent as to existing creditors, and raise a
trust in favor of such creditors when the presumption of fraud is not
disproved, property so purchased passes to the assignee of the party
whose money was so invested, and he can sue for and recover the same.
In re Louis Meyers, 1 B. R. 581; s. ¢. 2 Ben. 424.

By the laws of Mississippi, the income of a wife’s separate estate, ‘so
far as necessary, should be used jointly with that of her husband in
support of the family. If she permits the husband to receive the income
of her estate without accounting for the same for a longer period than
one year, she loses the right to call him to an account for such income.
The accounting for such income after the title has thus become vested
in the husband, is a gift by the husband to the wife, and this can not
be done to the prejudice of creditors. The relationship of the parties and
the conveyance of all property that is subject to execution are evidence
408 Tue Bankruptcy Law.

of fraud. The rights of all parties must be governed by the law in force
when they accrue. The act of 1867, entitled “An act to amend the law
heretofore in force respecting the rights of married women,” has no
application to this case, having been passed subsequent- to the con-
veyance. Gillespie v. McKnight et al., 3 B. R. 468.

A condonation after a deed of separation renders the deed a voluntary
conveyance instead of a conveyance for a valuable consideration. Kehr
vy. Smith, 7 B. R. 97; s. c. 10 B. R. 49; s. ec. 2 Dillon, 50; s. c. 20 Wall. 31.

The relinquishment of a contingent right of dower, without any agree-
ment for compensation therefor, is not a valuable consideration for a sub-
Sequent conveyance. Ibid.

A promise which is not founded upon a valuable consideration is
voluntary, and not a sufficient consideration for a transfer. Ibid.

A voluntary settlement by a debtor who is insolvent is fraudulent.
Keating v. Keefer, 5 B. R. 183; s.c.1L. T. B. 266; s.c. 4 L. T. B. 162; Kehr
v. Smith, 7 B. R. 97; s.c. 10 B. R. 49; s. c. 2 Dillon, 50; s. c. 20 Wall. 31.

In determining whether the donor retains enough to meet his liabilities,
attention should be given to the business in which he is engaged, the
society in which he lives, and his necessary expenses. The economy of
country life does not furnish a standard or measure for city transactions.
Sedgwick v. Place, 10 B. R. 28; s. ec. 5 B. R. 168; s. c. 5 Ben. 184; 5. «
12 Blatch 163.

If the subsequent expenditures in improving the property are in pur-
suance of a plan formed at the time of the gift thereof, the whole will be
taken as one transaction. Ibid.

A voluntary conveyance made by a person who is indebted is prima
facie fraudulent, and the burden is on the grantee to show tliat the debtor
had abundant means, besides the property conveyed, to pay all his debts.
Pratt v. Curtis, 6 B. R. 1389.

The assignee alone can impeach a voluntary conveyance, and work out
the equity of antecedent creditors. Ibid.

When a deed is void as to existing creditors, and is, therefore, set aside,
all creditors, both prior and subsequent, participate in the fund pro rata.
A man who is indebted and unable to pay can not, as against his creditors,
part with his property under the name of a sale at an undervalue, so as
to give away the surplus value to a father, son, friend, or favored cred-
itor. Mitchell vy. McKibbin, 8 B. R. 548; s. c. 29 Leg. Int. 412.

A voluntary settlement by a man who is indebted, is fraudulent and
void if the debts existing at the time of the conveyance are only paid by
contracting other obligations which finally result in insolvency. Antrim
v. Kelly, 4 B. R. 587.

The earnings of a feme covert are by the common law the property of
the husband and liable for his debts, and do not constitute a good consid-
eration for a conveyance. Keating y. Keefer, 5 B. R. 133; s.c.1 1. T. B.
206; s.0c.4 L. T. B. 162.

The payment by a feme covert of her money toward a purchase of
property, without insisting upon any agreement for a reconveyance or
conveyance of any interest to her, is conclusive evidence of a gift of the
FRAUDULENT CONVEYANCES. 4.09

money to the husband, without any right on her part to reclaim any in-
terest in the land or in its proceeds as against him or his creditors. Ibid.

A purchase in the name of a feme covert by the husband constitutes
a gift to-the same extent, and with the same effect, as if the property
were first conveyed to him, and then by him to her. Ibid.

If a party furnished the money with which a house was purchased in
the name of the bankrupt, and then subsequently took a note therefor
which he proved against the estate, a conveyance of the house to him,
after the giving of the note, will be claimed to be void, and not an execu-
tion of the resulting trust. Napier v. Server, 2 W. N. 400.

When the deed is kept from record, and the debtor appears as the owner
and obtains credit upon the faith of the property, a voluntary conveyance
is void as to subsequent creditors. Keating v. Keefer, 5 B. R. 183; s. ¢.
1L, T. B. 266; s. c. 4 L. T. B. 162; in re Rainsford, 5 B. R. 881.

A voluntary conveyance made with the intent to cast on creditors the
hazards of future speculations, and to provide a home in case of disaster,
is fraudulent. In re Rainsford, 5 B. R. 381.

The assignee claims not under but adversely to a fraudulent deed. He
claims that the deed is void as to creditors, and on this ground alone at-
tacks it, and upon this ground alone has he any right to the property.
He can not claim under it, and must claim against it. When it is decreed
to be fraudulent and void at his instance, he can not set it up to defeat
the right of the debtor’s wife to dower. He can not ask that the same
instrument be held void as to creditors, and then in their favor held
valid as to the wife. The debtor’s wife is not, under such circumstances,
barred of her dower. Cox v. Wilder, 7 B. R. 241; s.c. 5 B. R. 448; s. ¢.
2 Dillon, 132; s. c.5 L. T. B. 500. :

The exemption from execution is a right or privilege given to the
debtor. He may waive it by not claiming the exemption. If he does not
choose to assert any claim to have the property exempted, the fraudulent
grantee is in no position to claim it as against the assignee. Hdmonson
y. Hyde, 7 B. R. 1; s. a. 2 Saw. 205; 5. c. 5 L. T. B. 380. Contra, Kehr v.
Smith, 7 B. R. 97; s. c. 10 B. R. 49; s. ec. 2 Dillon, 50; s. c. 20 Wall. 31.

Where by the State laws a feme covert may own property in her own
right and carry on business in her own name, she may employ her husband
and pay him. She has a right to all the advantages that flow to her from
her own or her husband’s tact and foresight, so long as his means, services,
and earnings do not enter into her business. Property thus obtained
bona fide can not be taken from her and turned over to the creditors of her
husband. On the question of the ownership of such property, the pre-
sumptions are all in her favor. Driggs v. Russell, 3 B. R. 161; s. « L
L. T. B. 161; s.c. 10. L. N. 353; in re Eldred, 3 B. R. 256;s.a 10, L. N.
389,

If the personal labor and capacity of the husband have contributed
largely to the accumulation of property held as his wife's separate es-
tate, or if a successful business conducted in her name has been wholly
Managed by her, and its profits resulted alone from her industry, skill,
and economy, then, as by the settled principles of law which govern the
410 Tue Bankruptcy Law.

relative rights of husband and wife, even the proceeds of her labor and
industry ordinarily belong. to him, the property so acquired is subject to
the debts of the husband, whatever equitable rights the wife may have
as between herself and him; with this exception, however, that the skill,
sare, or labor of either husband or wife bestowed on her estate, so far as
may be reasonably necessary, inures to the benefit of such estate, and does
not render it liable to the husband’s debts. Shackleford v. Collier, 6 Bush,
149.

Where a husband receives money from his wife and engages in transac-
tions in real estate in her name until he accumulates property of con-
siderable value by his skill and energy, the property is liable to his as-
signee. Muirhead v. Aldridge, 14 B. R. 249.

According te the laws of New York, as interpreted by the courts, a
married woman may own property of every description in the same man-
ner as if she were a feme sole. She may engage in trade, and her labor
and her time are not the property of her husband. She may even employ
the time and labor of her husband in the business of using her capital
in trade, and she may support her husband out of the profits of her
business; and neither the fact that she employs her husband, nor the
fact that the labor and skill of the husband contribute to the success of
the business, nor the fact that the husband and his family are supported
out of the profits of the business, will make the business or its profits
the property of the husband. Voorhees v. Bonesteel, 7 Blatch. 495; s. ¢
16 Wall. 16.

Under the laws of Georgia, a feme covert, with the consent of her
husband, may have a separate estate in her earnings, and the purchase
of property in her name with such earnings is not fraudulent. Glenn
v. Johnson, 18 Wall. 476.

A mere intent to prefer does not render a transfer fraudulent which
is otherwise valid. Cookingham v. Ferguson, 4 B. R. 686; s. c. 8 Blatch.
488.

Parties who have taken transfers from the fraudulent vendee are nec-
essary parties. Ibid.

By the laws of Florida, an assignment appropriating the property to
such creditors as shall sign a compromise agreement, and none others,
with a direction that the surplus shall then revert to the assignor, is not
an assignment of the whole of the assignor’s property, and is fraudulent
and void. In re Broome, 3 B. R. 444; s. c. 3. Ben. 488.

If a fraudulent assignment has not been expressly assented to by the
creditors, it is merely a power which is revoked by the commencement
of the proceedings in bankruptcy. Ashley v. Robinson, 29 Ala. 112.

The assignee may recover property fraudulently purchased in the name
of another, after the commencement of the proceedings in bankruptcy,
with the funds of the bankrupt. Hyde v. Cohen, 11 B. R. 461.

A. lien is not a property in the thing itself, nor does it constitute a mere
right of action for the thing. It more properly constitutes a charge upon
the thing. In some general sense creditors have an equitable lien upon
property purchased with the debtor’s funds in the name of another. So
‘

FRAUDULENT CONVEYANCES. 411

they would have if a general liability instead of a resulting trust had been
declared. So debts are an equitable lien upon property fraudulently trans-
ferred by the debtor, and it may be said that every debtor is a trustee
for his creditors, and bound to use his property for their benefit, and that
creditors have an equitable lien upon the property of the debtor. But in
all these cases the usual remedies are to be pursued to create and force
the lien before a specific charge creating an incumbrance is created. A
creditor can not enforce the liability of a resulting trust under the stat-
ute without a preliminary judgment and execution. Before the equitable
interests of a debtor can be reached in equity, all available legal remedies
must be exhausted. Neither a judgment nor execution constitutes a lien
upon equitable interests. The commencement of the equitable action and
the filing of the lis pendens are necessary for that purpose. Ocean, Nat’l.
Bank y. Olcott, 46 N. Y. 12.

It is an easy matter for-parties to go through the form of paying and
receiving money in the presence of witnesses. This is the common de-
vice of parties contriving a fraud, but endeavoring to fortify themselves
with the evidence of good faith. So, too, the placing of the device “ agt.”
on the sign is so generally the cover of fraud, that so far from freeing
the transaction from suspicion, it only serves to awaken it. When the
parties are competent witnesses in the cause, but do not testify or offer
any explanation of the transaction, it is a sound rule, sustained by reason
as well as by authority, that the presumption is, that the evidence in their
possession, if given, would be in corroboration of that which has already
been given against them. In re Hussman, 2 B. R. 487; 5 «2 L. T. B.
58; 8s. ce, 1 C. L. N. 177.

A conveyance which is made by an insolvent to a relative of nearly
all his property for an inadequate price, for the purpose of putting it out
of the reach of his creditors, and which is absolute in form, but in fact
on secret trust for the benefit of the grantor and such creditors as he may
see fit to select, and which is kept from record for nearly a year, has
nearly every badge of fraud. In re J. H. C. Lutgens, 7 Pac. L. R. 89.

Evidence of prior transactions between the same parties which tends
to show the consideration of the conveyance and the inducements which
led the debtor to make it, bears directly upon the question whether it
was made in good faith or in fraud of creditors, and is admissible. Knowl-
ton v. Moseley, 105 Mass. 136.

When goods covered by a bill of sale are left upon the premises of the
original owner in charge of a person partially employed by him, the trans-
fer is valid when there is no evidence that a creditor or a purchaser has
been misled or deceived thereby. Jenkins vy. Mayer, 3 B. R. 776; s. c.
2 Biss, 303.

A judgment confessed upon a defective statement is not absolutely
void, but only so as to creditors who have a lien upon the property sought
to be affected by the judgment. It has, indeed, been ruled that even as
against lien creditors, the insufficiency of statement is only prima facie
evidence of fraud, and that it is admissible to support the judgment by
proof that the transaction was in good faith and the judgment confessed
412 Tue BanKRUPTCY Law.

upon an actual existing debt. The bankruptcy act must be construed
as giving the creditors who prove their debts, from and after the filing of
the petition, such a direct interest in the property or assets of the bank-
rupt as to enable them, or the assignees for them, to attack such a judg-
ment as fraudulent in law or fact, even though their claims do not con-
sist of judgments. In re Price Fuller, 4 B. R. 115; 3. c. 1 Saw. 243.

The statutes requiring chattel mortgages to be filed in the office of the
county recorder, do not make a mortgage valid which would otherwise
be void as to creditors. It would be a serious drawback to all trading
operations, if a dealer were obliged to search the files of the recorder’s
office to ascertain whether there is a mortgage on property held out to
the world by a party as his own. In re Manly, 3 B. R. 291; s. c. 2 Bond,
261; s. c. 2 L. T. B. 89; Robinson v. Elliott, 11 B. R. 553; s. c. 22 Wall.
513.

No acts of the assignor, after the assignment, can invalidate it, or afford
any evidence from which fraud in fact can be legitimately inferred.
When a conveyance is not fraudulent at the time of the making of it, it
shall never be said to be fraudulent for any matter ex post facto. Beck
v. Parker, 65 Penn. 262.

The title of a fraudulent grantee is good against all parties except the
assignee and creditors. A tenant can not defeat the title of the grantee
by showing fraud in a transfer by his landlord, at least until he has been
notified by the landlord’s assignee of a claim for the property. Until such
notice the tenant can not be held liable to the assignee for rent. Steadman
v. Jones, 65 N. C. 888.

Although an indorsement on a mortgage to the effect that it shall cover
property acquired after its execution is made for the purpose of defraud-
ing creditors, yet it will not affect the validity of the original mortgage.
Whithed v. Pillsbury, 13 B. R. 241.

The assignee has no greater rights than the judgment creditor, and a
bona fide purchaser from a fraudulent grantee will be protected, although
his purchase was made after the appointment of the assignee. Beall v.
Harrell, 7 B. R. 400; s. c. 1 Woods, 476; Murray v. Jones, 50 Ga. 109.

If the purchaser has notice of facts sufficient to put him on the in-
quiry, he is not a bona fide purchaser. Beall v. Harrell, 7 B. R. 400; s. ¢
9 B. R. 49; s. c. 17 Wall. 590.

Although a gift is void, a mortgagee who makes a loan in good faith
gets a good title. Sedgwick v. Place, 10 B. R. 28; s. c. 12 Blatch. 163.

A mortgagee who takes his mortgage to secure a desperate debt due
by the donor, is not a purchaser for value if he is aware of the defects of
the title, Ibid.

A party who, after the commencement of proceedings in bankruptcy,
purchases at a sale under a fraudulent execution, does not obtain a valid
title as against the assignee. Ibid.

If the donee has sold the property, the assignee may recover the value
from him. Ibid.

To constitute a bona fide purchaser, he must be without notice of the
fraud, not only at the time of the purchase, but also at the time of the
DUTIES OF TRUSTEES. 413

actual payment of the consideration. Marsh v. Armstrong, 11 B. R. 125;
sg. c. 20 Minn. 81.

The lien of a judgment rendered after the making of a fraudulent con-
veyance, and before the commencement of the proceedings in bankruptcy,
is preserved, and is entitled to priority when the conveyance is set aside.
Codwise v. Gelston, 10 Johns. 507.

When a fraudulent deed is set aside, the property should be turned over
to the assignee. Sands v. Codwise, + Johns. 536.

When a fraudulent conveyance of land is set aside, all the stock and
grain, except such as the law exempts, will be considered assets. Keating
y, Keefer, 5 B. KR. 183; s. c. 1 L, T. B. 266; &. @. 4d L. T. B. 162,

The account for rents and profits should only be taken from the time of
filing the petition in bankruptcy. Sands v. Codwise, 4 Johns. 536.

Expenditures may be set off against rents and profits. Ibid.

A person who takes a mortgage from a fraudulent grantee has no right
to sell the property after notice of the claim of the grantor’s assignee.
Brooks v. D’Orville, 7 Ben. 485.

If a party in good faith takes a mortgage for a valuable consideration
from a fraudulent grantee, it will be valid against the assignee. Ibid.

Act oF 1898, Cu. 5,° * * * § 47. Duties of , Trustees.
(a) Trustees shall respectively (1) account for and pay over to the
estates under their control all interest received by them upon prop-
erty of such estates; (2) collect and reduce to money the property
of the estates for which they are trustees, under the direction of the
court, and close up the estate as expeditiously as is compatible with
the best interests of the parties in interest; (3) deposit all money
received ‘by them in one of the designated depositories; (4) disburse
money only by check or draft on the depositories in which it has
-been deposited; (5) furnish such information concerning the estates
of which they are trustees and their administration as may be re-
quested by ‘parties in interest; (6) keep regular accounts showing all
amounts received and from what sources and all amounts expended
and on what accounts; (7) lay before the final meeting of the creditors.
detailed statements of the administration of the estates; (8) make
final reports and file final accounts with the courts fifteen days before
the days fixed for the final meetings of the creditors; (9) pay divi-
dends within ten days after they are declared by the referees; (10)
report to the courts, in writing, the condition of the estates and the
amounts of money on hand, and such other details as may be re-
quired by the courts, within the first month after their appointment
and every two months thereafter, unless otherwise ordered by the
courts; and (11) set apart the bankrupt’s exemptions and report the
414 Tue Bankruptcy Law.

items and estimated value thereof to the court as soon as practicable
after their appointment.

(b) Whenever three trustees have been appointed for an estate,
the concurrence of at least two of them shall be necessary to the
validity of their every act concerning the administration of the estate.

Act or 1898, Cu. 7, § 61. Depositories for Money.— (a) Courts
of bankruptcy shall designate, by order, banking institutions as de-
positories for the money of bankrupt estates, as convenient as may
be to the residences of trustees, and shall require bonds to the United
States, subject to their approval, to be given by such banking insti-
tutions, and may from time to time as occasion may require, by like
order increase the number of depositories or the amount of any bond
or change such depositories.

Act or 186%, § 5047. The assignee shall have the like remedy
to recover all the estate, debts, and effects in his own name as the
debtor might have had if the decree in bankruptcy had not been
rendered and no assignment had been made. If, at the time of the
commencement of the proceedings in bankruptcy, an action is pend-
ing in the name of the debtor for the recovery of a debt or other
thing which might or ought to pass to the assignee by the assignment,
the assignee shall, if he requires it, be admitted to prosecute the
action in his own name, in like manner and with like effect as if
it had been originally commenced by him. And if any suit at law
or in equity, in which the bankrupt is a party in his own name, is
pending at the time of the adjudication of bankruptcy, the assignee
may defend the same in the same manner and with the like effect
as it might have been defended by the bankrupt.

Statute revised — March 2, 1867, ch. 176, §§ 14, 16, 14 Stat. 528, 524.
Prior Statutes — April 4, 1800, ch. 19, § 18, 2 Stat. 25; Aug. 19, 1841, ch. 9,
§ 3, 5 Stat. 442.

During pendency of a bill in equity brought by the assignee for the re-
demption and sale of the bankrupt’s real estate, an incumbrancer will not
be allowed by redeeming to acquire any absolute title to the property,
to exclusion of assignee or the other incumbrancers. In re Longfellow,
17 B. R. 27.

Where the assignee has used the general funds of the estate to redeem
the real estate of the bankrupt, at request of the subsequent incum-
brancers, the amount so paid should be refunded out of the proceeds of
sale of the premises. Ibid.

Assignee can not maintain a suit in equity to obtain possession of prop-
erty alleged to belong to the estate. The remedy is at law. In re The
Oregon Iron Works, 17 B. R. 404.
ORIGINAL SuIts. 415

An assignee of corporate stock who has caused it to be transferred
to himself on the books of the company, and holds it as a collateral se-
curity for a debt due from his assignor, is liable for the unpaid balances
thereon. Pullman vy. Upton, Assignee, 17 B. R. 489.

Assignee can not reclaim money deposited for a special purpose, in
which the person holding the deposit has acquired a vested interest.
Newcomb v. Launtz, 18 B. R. 276.

The assignee may redeem property of the bankrupt, which has been
sold on execution to the judgment creditor, without paying the unsatis-
fied balance of the judgment, or taking the property subject to the lien
of such judgment. Lloyd, Assignee, v. Hoo Lue et al., 17 B. R. 170.

Under the law of 1867, held, that a register had no authority to set off
exempt property to the bankrupt, nor to direct assignee in the matter.
In re Peabody, 16 B. R. 248.

An objection, that the assignee did not obtain permission from the
bankruptcy court to bring the suit, is of no avail unless it is pleaded.
Avery v. Ryerson, 34 Mich. 362.

If the assignee of a mortgagee who held a second mortgage, dies after
the entry of a decree pro confesso, for want of an appearance, and be-
fore a final decree in a proceeding to foreclose a prior mortgage, the
sale will not affect the second mortgage. Ibid.

If the assignee is finally discharged after more than two years from the
time of his appointment, he is not a necessary party to an action by a
creditor, instituted before the commencement of the proceedings in bank-
ruptey, to set aside a fraudulent conveyance. Phelps y. Curts, 16 B. R. 85.

Original Suits.— This provision is limited by the preceding section.
The assignee can only sue for the property or rights of action which pass
to him as assignee, and can only prosecute actions of a like character in
his own name. Noonan v. Orton, 12 B. R. 405; s. c. 34 Wis. 259.

The statement in a complaint that the plaintiff is assignee may be
treated as surplusage, or at most as descriptio personae, and may be dis-
regarded. Dambmann y. White, 12 B. R. 488; s. c. 48 Cal. 439.

It is not necessary to allege in detail the adjudication, the appointment
of assignee, and the assignment and record thereof. As in the case of an
executor or administrator, it is only necessary to state ————, assignee
of the estate of — . duly adjudged a bankrupt according to the stat-
ute in such case made and provided. Ethridge v. Jackson, 19 I. R. R.
184; 8. c. 7 Pac. L. R. 182; Wheelock v. Lee, 10 B. R. 868; s. c. 64 N. Y.
242; Hastings vy. Fowler, 2 Ind. 216.

The assignee’s title to the bankrupt’s estate, and right to sue therefor,
are derived from the assignment, and hence a copy of the assignment need
not be procured before the institution of a suit. Rogers v. Stevenson,
16 Minn, 68.

After the execution of a deed of assignment the bankrupt. is entirely
divested of his property, and the same is vested in his assignee. The
whole estate is conveyed by the assignment, and there is no residuary
{interest in the bankrupt. It results as a necessary legal consequence
that the assignee may and alone can maintain ejectment. His is the

 
416 Tue Bankruptcy Law.

r
title; to him the real estate of the bankrupt exclusively belongs, and in
the event of an ejectment, he is the person dispossessed and injured.
Barstow vy. Adams, 2 Day, 70. Vide Fales v. Thompson, 1 Mass. 34.

In proceedings in bankruptcy, the legal title vests in the assignee under
the assignment. Whatever right the bankrupt had is assigned to and
vests in the assignee, who thereby becomes, for the purpose of maintain-
ing or defending suits, possessed, as of his own property, of the estate
assigned to him. It is true, he holds the title of the property when re-
covered, in trust for certain purposes specified in the statute; but as be-
tween him and a stranger, he holds the title, and may assert it in the
same form of action as though he owned the fee. Dambmann y.. White,
12 B. R. 488; s. c. 48 Cal. 439.

So far as a removed executor has claims against the estate of a dece-
dent, they may be asserted in the probate court by his assignee. Appling
vy. Bailey, 44 Ala. 333.

A party who takes an assignment of a chose in action from the bank-
rupt after the commencement of the proceedings in bankruptcy, has a good
title if the proceedings are discontinued without the appointment of an
assignee before the trial of a suit on such chose in action. Kline v. Bauen-
dahl, 12 B. R. 375; s. c.6 N. Y. Supr. 546; s.c. 11 N. Y. Supr. (Hun) 265.

A. bankrupt can not have relief in respect to lands where the title to
the land or interest in it is vested in his assignee. ‘The effect of his bank-
ruptcy can not be avoided by an averment that he is a trustee for his
wife, she not being made a party. Muller v. Hrich, 5 Pac. L. R. 223.

The assignee is clothed with the legal title as well as the beneficial in-
terest in a judgment rendered in favor of the bankrupt, and must proceed
in his own name agaiust a sheriff for neglecting to return an execution
issued thereon, although the execution was issued in the name of the
bankrupt after the commencement of the proceedings in bankruptcy.
Gary v. Bates, 12 Ala. 544.

The bankrupt can not institute an action of trover for the conversion
of property belonging to the estate after the commencement of the pro-
ceedings in bankruptcy, for, in order to maintain such a suit, the plaintiff
must have a right of property in the goods converted, as well as the right
of possession at the time of the conversion. Redman vy. Gould, 7 Blackf.
361.

In the absence of all proof, the presumption is that the equitable inter-
est is united with and follows the legal title, and, under such circum-
stances, a suit can not be instituted in the name of the bankrupt on a
note made payable to him prior to the commencement of the proceedings
in bankruptcy, although the suit is entered to the use of a third party.
Griswold v. McMillan, 15 Ill. 590.

The assignment extends to all claims founded in property. In all cases
where the cause of action would survive to the executor of a bankrupt,
it passes to his assignee. Sullivan v. Bridge, 1 Mass. 511. Vide Bird
v. Hempstead, 2 Day, 272; s. c. 2 Day, 293.

A right of action against a sheriff for negligence in the levy of an exe-
cution, whereby the claim was lost, vests in the assignee of the judg-
ment creditor. Sullivan v. Bridge, 1 Mass. 511.
ORIGINAL SvuITs. 417

A suit on a judgment in the name of the bankrupt can not be main-
tained, for all suits instituted after the appointment of the assignee should
be brought in his name, or at least prosecuted for the benefit of the cred-
itors whom he represents. Cook v. Lansing, 3 McLean, 571.

If no plea in abatement is interposed, the assignee may recover a
moiety of a debt due to a firm of which the bankrupt and another were
members. Barclay v. Carson, 2 Hay (N. C.), 243.

The bankrupt can not institute a suit in the name of a third person for
his benefit, where his interest in the cause of action accrued prior to the
commencement of the proceedings in bankruptcy. Berry v. Gillis, 17 N.
H. 9.

The bankrupt has the exclusive right to sue for a trespass committed
upon the exempt property prior to the commencement of proceedings in
bankruptcy. It is not necessary for him to produce a certificate of ex-
emption, for what the law requires to be done it presumes has been done,
until the contrary is shown. Seiling v. Gunderman, 35 Tex. 3-15.

The bankrupt may institute an action for a levy on property which
was exempt from execution, although the property was sold after ihe
commencement of the proceedings in bankruptcy, and before the allow-
ance of the exemption by the assignee. Williams v. Miller, 16 Conn.
144,

If a note is allowed to the bankrupt as a part of his exempiion, he may
institute a suit thereon in his own name. Henly vy. Lanier, 15 B. R. 280;
8s. ¢c. 75 N. C. 172. :

A creditor may file a bill in equity to reach certain assets of the bank-
rupt, without a previous refusal of the assignee to institute a suit where
the whole conduct of the assignee shows that he has abandoned all claim
to it. Rugely v. Robinson, 19 Ala. 404.

When a contract not under seal is made with an agent in his own name
for an undisclosed principal, either the agent or the principal may sue
upon it. If the agent sues it is no ground of defense that the beneficial
interest is in another, or that the agent, when he recovers, will be bound
to account to another. If the agent becomes bankrupt, he may still sue
in his own name. If a party pledges his business for a debt, with an
agreement that it shall be carried on with the capital of the pledgee, he
has no beneficial interest in contracts subsequently made, and in case of
bankruptcy may nevertheless sue upon them in his own name. Rhoades
vy. Blackiston, 106 Mass. 334.

The assignee is a necessary party to a bill filed by a creditor to reach
the equitable assets of the bankrupt. Rugely v. Robinson, 19 Ala. 404.

The bankrupt may institute an action at law in his own name on a
claim which was not placed on his schedules. Steele v. Towne, 28 Vt.
TT.

If the judgment was assigned prior to the commencement of the pro-
ceedings in bankruptcy, a sci. fa. may be maintained in the name of the

bankrupt for the benefit of the owner of the judgment. Boone v. Stone,
8 Ill, 687,

27
418 Tue Bankruptcy Law.

If the payee of a note obtains possession of the note after a sale thereof
‘by his assignee, he is remitted to his original legal title, and may transfer
dt by his indorsement. Birch vy. Tillotson, 16 Ala. 387.

If a note passes to the assignee by delivery without indorsement, and
-he sells and transfers it to the bankrupt by delivery, the bankrupt may
‘be considered as reinstated in his original right, and may sue thereon in
-his own name. Drury v. Vannever, 59 Mass. 442.

If a note passes to the assignee by delivery without indorsement, and
‘he sells and transfers it by delivery to one of the bankrupts, the latter
‘may-sue thereon in the name of the bankrupts. Ibid.

If the bankrupt purchases a chose in action from the assignee, he may
bring an action thereon in his own name. Udall v. District, 48 Vt. 5&8,

If the bankrupt made an equitable assignment of a chose in action. be-
fore the commencement of the proceedings in bankruptcy, he may main-
tain an action in his own name if he subsequently purchases the claim.
Blin v. Pierce, 20 Vt. 25.

A party who took an assignment of a chose in action as a collateral
security prior to the commencement of the proceedings in bankruptcy,
ean not institute a suit in equity where the bankrupt had no beneficial
interest therein, although the assignee refuses to allow the use of his
name, for the creditor may sue at law in the name of the bankrupt. On-
tario Bank v. Mumford, 2 Barb. Ch. 596.

The purchaser of a chose in action from the assignee takes merely an
‘equitable title, and must sue in the name of the assignee for his use.
WCamack y. Bisquay, 18 Ala. 286.

The purchaser of a chose in action from the assignee can not main-
tain an action thereon in his own name. Leach v. Greene, 12 B. R. 376;
6. c. 116 Mass. 534.

If a chose in action is sold by the assignee, an action may be brought
in the name of the bankrupt for the benefit of the purchaser. The au-
thority given an assignee in bankruptcy to sue for and recover, in his own
name, the debts due the bankrupt, is not for the benefit of the debtors nor
of the purchasers, but for the benefit of the estate, and when the estate
is not to be benefited by such suit, no reason is perceived why it should
be brought in his name. Foster v. Wylie, 60 Me. 109; s. c. G6 L. T. B. 576;
Mims v. Swartz, 10 B. R. 305; s. ¢. 37 Tex. 17.

The purchaser may also sue in his own name. Mims vy. Swartz, 10
B. R. 305; s. c. 87 Tex. 17.

The act of the assignee in selling a chose in action can not be collaterally
impeached in a State court. Ibid.

If a suit is instituted in the name of the assignee without his authority,
‘and afterward ratified by him, its prosecution in his name is lawful.
Carr v. Lord, 29 Me. 51.

A plea that the plaintiff is not the assignee of the bankrupt is a plea
in bar, for it denies that the plaintiff has any cause of action. Peel V.
Ringgold, 6 Ark. 546.

_ A confession of judgment admits the assignment and the right of ac-
tion to be in the assignee agreeably to the declaration. Suffering judg-
ORIGINAL SUITS. 419

ment to go by default admits the contract to be as declared on. Kelly v.
Holdship, 1 Browne, 36.

A plea that a note was indorsed by one of two payees after he became
a bankrupt, is defective unless it shows that the indorsement was made
by a party who was not duly authorized to make it, and that the note was
so held as to vest in the assignee, and also gives the name of the as-
signee. Fulweiler v. Singer, 2 Greene (Iowa), 372.

A plea of the bankruptcy of the plaintiff is bad when the obligation
was given after the filing of the petition although it alleges that the con-
sideration was an indebtedness that accrued before the bankruptcy.
Beacon v. Howard, 11 B. R. 486; s. c. 44 Ind. 413.

A plea that after the rendition of the judgment, and before the issuing
of a,sci. fa., the plaintiff became a bankrupt, is a good plea, for a sci. fa.
to revive a judgment, can only be maintained in the name of the as-
signee. Boone v. Stone, 8 Ill. 537.

The assignee stands in the place of the bankrupt, and must establish his
title to real estate in the same way. Talcott v. Goodwin, 3 Day, 264.

The plaintiff must prove himself to be duly appointed assignee by pro-
ducing a certified copy of the record or of the assignment. In re McIver
& Moore, 1 Cranch ©. C. 90. ;

If it is proved that proceedings in bankruptcy were duly commenced, it
devolves upon the party who asserts that they were interrupted or super-
seded to prove it. In the absence of proof to the contrary, it will be
presumed that the proceedings which follow as of course after those that
are ‘proved did take place, including the appointment of an assignee.
Janes v. Beach, 1 Mich. N. P. 94. :

If the adjudication of bankruptcy is established, the appointment of an
assignee may be presumed. Mims v. Swartz, 10 B. R. 305; s. c. 37 Tex.
17; Janes v. Beach, 1 Mich. N. I. 94.

As an assignment is required to be made in all cases as a matter of
course, the maxim that in courts of general jurisdiction, omnia praesu-
muntur rite esse acta applies, and in the absence of any allegation or proof
to the contrary, the courts, in a collateral action, will generally assume
that an assignment has been made. Swepson v. Rouse, 65 N. C. 34.

If the bankruptcy is expressly admitted, and the right of the assignee
to sue is not put in issue by any of the pleas, it is not incumbent on the
assignee to prove the assignment. Zantzinger v. Ribble, 4 B. R. 724; s. «
86 Md. 32.

If a party permits the transcript from the records of the bankruptcy
court to establish the presumption of the execution of an assignment, with-
out an objection as to the nonproduction of the deed, he can not raise
that question for the first time in the appellate court. Crayton v. Ham-
llton, 87 Tex. 269.

An assignee stands in a representative capacity, and may sue and be
sued in that relation. He may, therefore, under the laws of Pennsyl-
Vania, appeal from an award without paying the costs or entering in recog-
nizance. Morse y. Grittman, 10 B. R. 132; s. c. 81 Leg. Int. 246.
420 THe Bankruptcy Law.

The bankruptcy of the plaintiff may be proved under the general issue,
where the action has been instituted since the commencement of the
proceedings in bankruptcy. Sims v. Ross, 16 Miss. 557; Berry v. Gillis,
17 N. H. 9; Lefler v. Hunt, 8 Blackf. 195; Pike v. Crehore, 40 Me. 503.

The objection that the indorsement of a note was made by the payee
after the commencement of proceedings in bankruptcy may be taken
under the general issue, for the plaintiff must show that he has a legal
title to the note. Birch v. Tillotson, 16 Ala. 387.

Continuance of Pending Suits.— The provisions of this section include
suits and actions pending in the State courts, and are addressed to the
courts in which suits or actions are pending, quite as much as to the
Federal courts. The power of State courts to proceed with pending suits
in cases where creditors have provable debts, but which they do not prove
under the bankruptcy proceedings, under certain prescribed limitations,
is recognized by the bankruptcy act itself. The jurisdiction of the State
courts is not extinguished, except in those cases where the creditor proves
his debt or claim. The bankruptcy court has no control over the State
courts, and can not determine questions of law that may arise upon
cases pending therein. The State courts having jurisdiction of the parties
and subject-matter, must determine the questions as they arise according
to law, subject to the final judgment of the proper appellate tribunal.
In re Clark et al., 3 B. R. 491; s. c. 4 Ben. 88; Samson y. Burton, 4 B. R.
1; s. c. 5 Ben. 325; Clark v. Binninger, 5 B. R. 254; s. ec. 39 How. Pr. 368;
Peck v. Jenness, 7 How. 612; Hewitt v. Norton, 13 B. R. 276; s. «a1
Woods, 68; Linthicum v. Fenley, 11 Bush, 131.

The provision that the assignee may prosecute and defend all suits
pending at the time of the adjudication of bankruptcy to which the bank-
rupt is a party does not oblige him to seek a remedy in that way. Traders’
National Bank v. Campbell, 3 B. R. 498; s. c. 6 B. R. 353; s. c. 2 Biss. 423;
s. c. 14 Wall. 87.

The words “ he may prosecute” are permissive. It only becomes a duty
for an assignee to prosecute a suit when the interest of the estate de-
mands it, of which the assignee is, in the first instance, the judge. Reade
v. Waterhouse, 10 B. R. 277; s. c. 12 Abb. Pr. (N. 8.) 255; 5. @ 52 N.Y.
587; s. c. 85 N. Y. Supr. 78.

The bankrupt may continue tc prosecute an action of replevin in his
own name for an article which has been set apart to him as exempt by
the assignee. Scott v. Wilkie, 65 N. C. 376.

Until an assignee is appointed and qualified, and the conveyance or
assignment made to him, the title to the property remains in the bank-
rupt. Until that time the bankrupt may prosecute pending actions, for
there is no one to take his place. Sutherland y. Davis, 10 B. R. 424;
8. c. 42 Ind. 26.

A bankrupt may continue to prosecute a pending action till some one
appears with a better right. Gilmore v. Bangs, 55 Ga. 403.

The bankrupt can not prosecute an action in chancery to obtain satis-
faction of a judgment, although he did not place it on the schedules.
Planters’ Bank v. Conger, 20 Miss. 527.
CONTINUANCE OF PENDING SuITs. 421

A motion for leave to prosecute the suit in the name of the bankrupt,
for the benefit of the assignee, should be denied, because the bankrupt,
by his bankruptcy, becomes civiliter mortuus, and can no longer sue
either for himself or another. All his rights of property pass by the as-
signment to the assignee, in whose name alone can the suit be prosecuted,
Cannon v. Welford, 22 Gratt. 195; Lacy v. Rockett, 11 Ala. 1002. Contra,
Noonan v. Orton, 12 B. R. 405; s. c. 84 Wis. 259.

An assignee upon filing a duly certified copy of the assignment, may
on notice to the plaintiff have a pending action entered to his use. Cot-
trell v. Mann, 1 W. N. 157.

If the plaintiff is declared a bankrupt after the commencement of a
suit, the court may instruct the jury, if they find for the plaintiff, to find
their verdict in the name of the plaintiff for the use of his assignee in
bankruptcy. The verdict and judgment will be a sufficient protection to
the defendant, and it is not a matter of concern to him who gets the
money. Woodall v. Holliday, 10 B. R. 545; s. c. 44 Ga. 18.

A decree entered after the bankruptcy of the complainant is void, and
can not be enforced by an attachment, for the suit thereby became
defective. Springer v. Vanderpool, 4 Edw. Ch. 362.

The assignee may be admitted to prosecute the suit in his name, al-
though third persons have an interest in the claim. Hammond v. Rice,
18 Vt. 353.

The assignee may prosecute a pending action in his own name, al-
though it is pending in.a State court. Ames v. Gilman, 51 Mass. 239,

If the suit is continued without exception in the name of the bankrupt,
the defendant can not ask the court to instruct the jury, that if they
Tender a verdict against him it must be for the use of the assignee.
Southern Express Co. v. Connor, 12 B. R. 58; s. c. 49 Ga. 415.

The suit is not abated by the substitution of the plaintiff's assignee.
Wise v. Decker, 1 Cranch C. C. 190; Hammond y. Rice, 18 Vt. 353.

The substitution of the assignee, when actually made, relates back
to the commencement of the proceedings in bankruptcy. Browne v. Ins.
Co., 4 Yeates, 119.

The State court can not proceed to hear and decide a case for the specific
performance of a contract to convey iand, if the vendor becomes bank-
Tupt after the commencement of the suit, unless the assignee is made a
party. Swepson v. Rouse, 65 N. ©. 34.

The assignee is the only person who can move to set aside an execu-
tion after the judgment debtor is declared bankrupt. Maris v. Duren,
1 Brewst. 428; s. c. 6 Phila. 327.

When the assignee seeks to be made a party defendant to an action
brought to recover the possession of property alleged to have been wrong-
fully taken and converted by the bankrupt, he should show that he has
Some right to the property in controversy. A motion which does not
set forth such a right will be dismissed. Gunther et al. v. Greenfield
et al, 3B. R. 730; 8. c. 8:-Abb. Pr. (N. 8.) 191.

Where property of the bankrupt has been sold, and the proceeds paid
to the complainant under a decree which is subsequently reversed, the

‘
422 THe Bankruptcy Law.

complainant can not defeat a motion for an order directing a repayment
of the money by dismissing the bill before the assignee becomes a party,
Kane vy. Pilcher, 7 B. Mon. 651.

The commencement of proceedings in bankruptcy does not affect the
jurisdiction of a State court over an action then pending to foreclose a
mortgage, and a sale under a decree entered after the appointment of an
assignee will pass a valid title to the purchaser. Eyster v. Gaff, 13 B. R.
546; s. c. 91 U. S. 521; s. c. 2 Col. 28; in re Mary Irving et al., 14 B. R. 289;
Smith v. Gordon, 2 N. Y. Leg. Obs. 325; s. c. 6 Law Rep. 313; Cleveland
v. Boerum, 24 N. Y. 613; s. c. 23 Barb. 201; s. c. 27 Barb. 252; Lenihan
v. Hamann, 8 B. R, 557; s. c. 11 B. R. 471; s. c. 14 Abb. Pr. (N. 8.) 274;
s. ec. 55 N. Y. 652; Jerome v. McCarter, 15 B. R. 546. Contra, Anon., 10
Paige, 20; Ontario Bank v. Mumford, 2 Barb. Ch. 596; Johnson v. Fitzhugh,
3 Barb. Ch. 860; Fellows v. Hall, 3 McLean, 487; in re Abner H. Allen,
1 N. Y. Leg. Obs. 115; s. c. 5 Law Rep. 362; Storm v. Davenport, 1 Sandf.
Ch. 185; Penniman v. Norton, 1 Barb. Ch. 246.

It is the duty of a State court to proceed with an action to foreclose
a mortgage until it is informed by some proper pleading of the bankruptcy
of the mortgagor. It is not sufficient for the assignee merely to file a
certificate of his appointment without any motion or plea to be made a
party or to take part in the case. Eyster v. Gaff, 138 B. R. 546; s. c. 91 U.
S. 521; s. c. 2 Col. 28.

Where a sale is made after the commencement of proceedings in bank-
ruptcy under a decree entered before the adjudication in an action to
foreclose a mortgage in a State court, and a decree for the deficiency fs
entered against the bankrupt, the decree is a bar to the right of the as-
signee to raise the question of usury in regard to the mortgage. Cutter
vy. Dingee, 14 B. R. 294.

An assignee appointed after a completed foreclosure by judgment and
sale will be bound by the judgment, and especially in a case where the
eourt of bankruptcy has authorized the continuance of the suit before
judgment and sale. Lenihan v. Hamann, 8 B. R. 557; s. c. 11 B. R. 471;
8. c. 14 Abb. Pr. (N. 8.) 274; s. c. 55 N. Y. 652.

The mere filing of a petition in bankruptcy does not of itself constitute
a sufficient reason for the dismissal of an action pending in a State court.
Hobart v. Haskell, 14 N. H. 127.

Until the plea of bankruptcy is interposed, the plaintiff is not bound to
take notice of the bankruptcy of the defendant. Fellows v. Hall, 3 Me-
Lean, 281. :

Bankruptcy is a fact, and when set up as a defense to a bill in equity by
one or all of the defendants, should be pleaded in some regular way.
Unless admitted as a fact by the opposite party, with a concession of its
effect as barring all relief, it is not of itself cause for dismissing the bill
in advance of the hearing. Ballin v. Ferst, 55 Ga. 546.

If a fund .is in the hand of a receiver appointed by a State court for
distribution, the assignee may intervene as a representative of the bank-
rupt and the general creditors, and contest any claim against the fund.-
Loudon v. Blanford, 56 Ga, 150.
CoNTINUANCE OF PENDING Suits. 423

If the assignee, with knowledge of the pendency of a bill brought by
a creditor prior to the commencement of the proceedings in bankruptcy
to vacate a deed alleged to be fraudulent, fails to be made a party to the
suit until after a decree is made declaring the deed fraudulent, the cred-
itor is entitled to payment in full out of the proceeds, Smith v. Gordon,
2N. Y. Leg. Obs, 325; s. c. 6 Law Rep. 313.

If a suit is pending against the bankrupt at the time of the commence-
ment of the proceedings in bankruptcy, the plaintiff by due process may
cause the assignee to be made a party thereto. Norton v. Switzer, 93
U. S. 355; s. ec. 27 La. An. 25,

If the assignee is made a party to a pending action in his representative
eapacity, a judgment against him in his individual character is void,
Tbid. :

If the assignee is made a party to a pending action, the judgment is
effectual and operative only to establish the amount and validity of the
claim, and may be filed with him as a basis of dividends. Norton v.
Switzer, 938 U. S. 355; s. c. 27 La. An. 25, Contra, Minot v. Brickett, 49
Mass. 560.

If a pending action is allowed to proceed to judgment for the mere
purpose of establishing the validity of the claim and the amount due,
any provision in such judgment awarding a lien to the plaintiff is entirely
unavailing. Norton v. Switzer, 93 U. S. 355; s. c 27 La. An. 25. Vide
Switzer v. Zeller, 27 La. An. 468. ‘

A party to whom a claim has been assigned prior to the bankruptcy
of the plaintiff may afterward intervene. The question of the bankruptcy
of the plaintiff is not properly before the court upon a motion to inter-
vene. The assignee in bankruptcy may contest the transfer of the claim,
but not the defendant. Smalley v. Taylor, 33 Tex. 668.

When a chose in action upon which a suit has been brought is assigned
for a full and valuable consideration before the commencement of pro-
ceedings in bankruptcy, the plaintiff becomes a trustee for the pur-
chaser, and may continue the suit in his own name. His subsequent bank-
ruptey does not affect the right of his cestui que trust. The assignee in
bankruptcy has no interest in the suit, and no right to be substituted
as plaintiff. Valentine v. Holloman, 63 N. C. 475; King v. Morrison, 5
Ark. 519; Hynson v. Burton, 5 Ark. 492.

If a judgment was transferred to another, the suit thereon may be con-
tinued in the name of the bankrupt. Penn yv. Edwards, 50 Ala. 68.

If the assignee declines to intervene, an action of replevin may be
prosecuted in the name of the bankrupt by the surety on the replevin bond
to whom the goods were delivered as security for his liabuity on the
bond. Sawtelle v. Rollins, 23 Me. 196.

A party who has taken a transfer of the note may intervene and prose-
a the sult in the name of the bankrupt. Converse v. Sorley, 39 Tex.

15,

If the assignee sells his interest in property which is in litigation in a
court of equity, the purchaser should be made a party instead of the as-
signee, Penniman y. Norton, 1 Barb. Ch. 246.
424 THE Bankruptcy Law.

The court will not permit an action to be prosecuted in the name of
the assignee on the motion of a purchaser who has bought the claim from
the assignee. Gale v. Vernon, 1 Sandf. Ch. 679.

If the assignee sells the claim, the purchaser will not be permitted to
prosecute the action in his own name. Ibid.

If a suit in the name of the bankrupt is settled and dismissed after
the commencement of the proceedings in bankruptcy, the assignee may
move to have the case reinstated at the first regular term after his ap-
pointment. Home Ins. Co. v. Hollis, 14 B. R. 337; s. ce. 53 Ga. 659.

Neither the bankrupt nor his attorney has the authority to settle a
suit in the name of the bankrupt after the commencement of the pro
ceedings in bankruptcy. Ibid.

When a suit is settled after the commencement of the proceedings in
bankruptcy, it is not incumbent on the assignee to show that the settle
ment was wrong in order to have the case reinstated. Ibid.

If the complainant becomes bankrupt while a suit in equity is pending,
the bill may, on motion of the defendant, be dismissed unless the as-
signee intervenes within a certain time. Bailey v. Smith, 10 R. IL. 29.

If the assignee declines to intervene and prosecute a bill filed against
a conventional trustee alleging a mismanagement of the trust fund, the
bankrupt can not make him a party by a supplemental bill. Ibid.

The assignee may intervene in an action commenced by the bankrupt
by an original bill in the nature of a supplemental bill. Northman v. Ins.
Co., 1 Tenn. Ch. 312, 319.

If a demurrer is entered to a plea setting up the bankruptcy of the
plaintiff properly, it should be overruled. for no one can be or remain
a party to a suit after his bankruptcy. Collier v. Hunter, 27 Ark. 74.

A plea of the bankruptcy of the plaintiff should conclude with a verifica-
tion. Brown v. Patrick, 7 Phila. 143.

A. plea of the bankruptcy of the plaintiff pendente lite need make no
allegation in respect to the jurisdiction of the bankruptcy court, for it
will be intended that the petition was filed in the proper court. Lacy v.
Rockett, 11 Ala. 1002.

If the assignee takes issue upon the plea of the bankruptcy of the
plaintiff, and it is found against him, judgment must be entered for the
defendant. Ibid.

The assignee may avoid a plea of bankruptcy of the plaintiff pendente
lite by submitting to make himself plaintiff. Lacy v. Rockett, 11 Ala
1002; Brooks v. Harris, 12 Ala. 555. i

The defendant may plead that the plaintiff has been declared a bank-
rupt by the proper district court subsequent to the institution of the suid.
Such a plea is a plea in bar. Lacy v. Rockett, 11 Ata. 1002; Hynson v.
Burton, 5 Ark. 492; King v. Morrison, 5 Ark. 519.

A plea that the defendant became a bankrupt before the suing out of a
writ of error, need not set forth the name of the assignee. Vairin vV.
Edmonson, 9 Ill. 120.
CONTINUANCE OF PENDING SuITs. 425

The question whether the person who claims to be assignee of the
plaintiff is such, can not be raised by a general demurrer, but only by a
plea in abatement. Manning v. Hunt, 36 Tex. 118.

The State court is not a mere auxiliary tribunal of the Federal court
to entertain the claim of the assignee to property, and to order it to be
surrendered up to him unconditionally, right or wrong, to be administered
and disposed of by the bankruptcy court. If the aid of the State court
is sought and demanded by an assignee to recover property, he must
submit to the terms prescribed, and recover or not recover as the principles
of law and equity bearing on the rights of the contesting parties de-
mand. He is estopped in such a case to deny the jurisdiction of the
State court to decide the merits of the controversy. Pindell v. Vimont,
14 B. Mon. 400.

When the assignee appears to defend a pending action, he may adopt
the answer already filed. Fritsch v. Van Mittledorfer, 2 Cinn. 261.

A plea that a part only of the plaintiffs have become bankrupts
pendente lite is a good plea. Lacy v. Rockett, 11 Ala. 1002; Sims v. Ross,
15 Miss. 557.

The bankruptcy of the plaintiff can not be proved by parol evidence.
Moore y. Voss, 1 Cranch C. C. 179.

If the assignee is permitted to appear and defend a suit in the name of
a bankrupt defendant, he can not be directed to pay costs after the
rendition of a judgment. The proper practice in such a case is to move for
security for costs dt the time of his appearance, or prior to the termina-
tion of the proceedings. Holland v. Seaver, 21 N. H. 386.

Under the laws of New York the assignee is not liable for costs, except
in case of mismanagement or bad faith. Reade v. Waterhouse, 10 B. R.
277; 8. c. 12 Abb. Pr. (N. 8.) 255; s. c. 52 N. Y. 587; s. c. 85 N. Y. Supr. 78.

Costs can not properly be taxed to the assignee before he became a
party to the suit. Norton v. Switzer, 98 U. S. 355; s. c. 27 La. An. 25.

If a party who has recovered a judgment takes the benefit of the bank-
ruptey act and afterward dies, the suit in the appellate court should be
revived against the assignee in bankruptcy, and not against the adminis-
trator. Moffit v. Cruise, 7 Cold. 187.

If the judgment debtor is declared a bankrupt after the rendition of a
judgment affecting a right of property which would pass to his assignee,
the latter is theproper party to bring a writ of error, and he alone can do
it. Knox vy. Exchange Bank, 12 Wall. 379; Day v. Laflin, 47 Mass. 280;
Vairin v. Edmonson, 9 Ill. 120; Sanford v. Sanford, 12 B. R. 565; 8. c. 58
N. Y. 67.

When the bankrupt is seeking to prevent the establishment of a claim
against himself, he has an interest sufficient to entitle him to maintain an
appeal. Sanford v. Sanford, 12 B. R. 565; s. c. 58 N. Y. 67.

Where the judgment of a justice in a summary proceeding against the
bankrupt under the landlord and tenarit act is reversed on appeal, the
assignee who has been appointed since the commencement of the proceed-
ing is entitled to a writ of restitution, although he never was in possession,
426 THE BANKRUPTCY Law.

for he is entitled to all the rights of the bankrupt in respect to his prop-
erty. McMillan v. Love, 72 N. C. 18.

Where an action is brought on an appeal bond to recover costs, an objec-
tion that one of the appellees became bankrupt after the taking of the
appeal and before the dismissal thereof, will be deemed to be waived un-
less it is pleaded, and can only be pleaded in abatement. McSpedon y.
Bouton, 5 Daly, 30.

The bankrupt may sue out a writ of error in his own name to remove a
judgment rendered against him after the commencement of the proceed-
ings in bankruptcy. Dormire y. Cogly, 8 Blackf. 177.

If the defendant is declared a bankrupt before the taking of an appeal,
the appeal may be prosecuted in his name or in that of his assignee.
O’Neil v. Dougherty, 10 B. R. 294; s. c. 46 Cal. 575. :

A bankrupt may appeal from a judgment rendered against him as
guardian after the commencement of the proceedings in bankruptcy.
Collins v. Marshall, 10 Rob. (La.) 112.

The time of the adjudication of bankruptcy is the time of filing the
petition. In re Patterson, 1 B. R. 125; s. c. 1 Ben. 508.

Act oF 1898, Cu. 5, § 46. Death or Removal of Trustees —
(a) The death or removal of a trustee shall not abate any suit or
proceeding which he is prosecuting or defending at the time of his
death or removal, but the same may be proceeded with or defended
by his joint trustee or successor in the same manner as though the
same had been commenced or was being defended by such joint
trustee alone or by such successor.

AcTs oF 1867 and 1874, § 5048. No suit pending in the name
of the assignee shall be abated by his death or removal; but, upon
the motion of the surviving or remaining or new assignee, as the
case may be, he shall be admitted to prosecute the suit in like manner
and with like effect as if it had been originally commenced by him.

Statutes revised — March 2, 1867, ch. 176, § 16, 14 Stat. 524. Prior

Statutes — April 4, 1800, ch. 19, § 9, 2 Stat. 24; Aug. 19, 1841, ch. 9, § 9,
5 Stat. 442.

Act oF 1898, Cu. 4, § 21. Evidence; Certified Copy of Order
Approving Bond.— (e) A certified copy of the order approving the
bond of a trustee shall constitute conclusive evidence of the vesting
in him of the title to the property of the bankrupt, and if recorded
‘shall impart the same notice that a deed from the bankrupt to the
trustee if recorded would have imparted had not bankruptcy pro-
ceedings intervened.
EVIDENCE — Arprovine Bonn. 42%

Act oF 1867, § 5049. A copy, duly certified by the clerk of the
court, under the seal, thereof, of the assignment, shall be conclusive
evidence of the title of the assignee to take, hold, sue for, and recover
the property of the bankrupt.

Statute revised — March 2, 1867, ch. 176, § 14, 14 Stat. 522. Prior
Statutes — April 4, 1800, ch. 19, § 56, 2 Stat. 35; Aug. 19, 1841, ch. 9, § 15,
5 Stat. 448.

When an appellant becomes bankrupt after an appeal taken, his assignee,
upon producing a copy of the assignment, duly attested by the clerk of the
proper district court, may, on motion, be admitted as a party to the suit
in the appellate court in the place of the bankrupt. Herndon vy. Howard,
4B. R. 212; 8. c. 40 How. Pr. 288; s. c. 9 Wall. 6645 Knox v. Exchange
Bank, 12 Wall. 379.

An uncertified copy of the petition to be declared bankrupt and a cer-
tificate of discharge are no evidence of the appointment of an assignee.
Alexander v. McCullough, 32 Leg. Int. 336.

Oral testimony to prove an assignment is not admissible until evidence
is given to show that the original or a certified copy thereof can not be
produced. Burk y. Winters, 15 B. R. 140; s. c. 28 Ark. 6; Files v. Harbison,
29 Ark, 307.

The right of the assignee to maintain a suit does not depend on the in-
strument of assignment. A copy of an assignment, under the seal of the
court, if duly certified, is sufficient to show the assignee’s right to sue,
although the original assignment is not signed either by the judge or the
register. Zantzinger v. Ribble, 4 B. R. 724; s. c. 836 Md. 32.

It is not necessary to produce proof’ of an acceptance of the appointment
or of a publication of the appointment or of the recording of the assign-
ment, for a duly certified copy of the assignment is made conclusive evi-
dence of the right to sue. Rogers v. Stevenson, 16 Minn. 68; Faires v.
Metoyer, 6 Rob. (La.) 75.

In a suit instituted by the assignee, it is not necessary to prove all the
steps in the proceedings in bankruptcy, for a copy of the assignment is
conclusive evidence of the assignee’s title. Dambmann v. White, 12 B. R.
438; s. c. 48 Cal. 439; Shawhan v. Wherritt, 7 How. 627; Carr v. Gale,
2 Ware, 330; s. c.3 W. & M. 38."

If the assignee produces a duly certified copy of the assignment, it is
not necessary for him to show the jurisdiction of the district court over
the proceedings or the person of the bankrupt. Cone v. Purcell, 11 B. R.
490; s. c. 56 N. Y. 649.

Neither the validity of the adjudication of bankruptcy, nor the existence,
sufficiency, or validity of the debt of the petitioning creditor can be col-
laterally drawn in question. In all suits brought by the assignee, the
assignment is conclusive evidence of his right to sue. Barstow v. Adams,
2 Day, 70; Rugan vy. West, 1 Binn. 263; Barclay v. Carson, 2 Hay (N. C.)
248; Lovett v. Cutter, 1 Mass. 67; Livermore v. Swazey, 7 Mass. 218; Den v.
Wright, Pet. C. C, 64.
428 Tur Bankruptcy Law.

§ 5050. No person shall be entitled, as against the assignee, to
withhold from him possession of any books of account of the bank-
rupt, or claim any lien thereon.

Statute revised — March 2, 1867, ch. 176, § 14, 14 Stat. 522.

Until a conveyance is declared to be void by due course of law, the
grantee’s right to books and papers conveyed to him is as perfect, to all
intents, as against the assignee, as his right to any other property. Rogers
v. Winsor, 6 B. R. 246.

A receiver appointed by a State court, is entitled to refuse to deliver up
the bankrupt’s books to the assignee, or to give him possession thereof,
until they are properly taken from him by adverse proceedings, but he
must produce them to be used on the examination as evidence. In re
William W. Hulst, 7 Ben. 40.

Act oF 1898, Cu. 3, § 7%. Duties of Bankrupts— The bankrupt
shall * * * execute to his trustee transfers of all his property
in foreign countries.

Acts oF 1867 and 1874, § 5051. The debtor shall, at the request
of the assignee and at the expense of the estate, make and execute
any instruments, deeds, and writings which may be proper to enable
the assignee to possess himself fully of all the assets of the bankrupt.

Statutes revised — March 2, 1867, ch. 176, § 14, 14 Stat. 522.

The bankruptcy court will order the bankrupt to execute and deliver to
the assignee the proper papers to enable him to be admitted to prosecute
suits pending in the State courts in his own name, in the same manner
and with the like effect as they might have been prosecuted by the bank-
rupt; and direct the bankrupt himself to refrain from prosecuting the
actions, or applying for any order or decree therein. In re Clark et al., 3
B. R. 491; s. c. 4 Ben. 88; Samson v. Burton, 4 B. R. 1; s. c. 5 Ben. 325;
Clark v. Binninger, 5 B. R. 255; s. c. 89 How. Pr. 363.

Act or 1898, Cu. 7, § 67%. Liens. —* * * (d) Liens given
or accepted in good faith and not in contemplation of or in fraud
upon this Act, and for a present consideration, which have been
recorded according to law, if record thereof was necessary in order
to impart notice, shall not be affected ‘by this Act.

Act oF 1867, § 5052. No mortgage of any vessel or of any other
goods or chattels, made as security for any debt, in good faith and
for a present consideration, and otherwise valid, and duly recorded
LIENS. 429

pursuant to any statute of the United States or of any State, shall
be invalidated or affected by an assignment in bankruptcy.

Statute revised — March 2, 1867, ch. 176, § 14, 14 Stat. 522.

This provision can not enlarge the rights or title of the assignee, or
make a mortgage invalid against him, which, but for the provision,
would have been valid. It appears to have been inserted out of greater
caution, lest it should be supposed that valid chattel mortgages would be
affected by the assignment, and not with any view of construing the laws
regarding record; and so, if the mortgage be one that requires no record,
as if it be executed in a State having no statute upon the subject, or if the
record is not required between the parties, the provision will not defeat it.
In re Chas. W. Griffiths, 3 B. R. 731; s. c. Lowell, 451; Coggeshall v. Pot-
ter, 4 B. R. 73; s.c. 6 B. R. 10; s. c. 1 Holmes, 75.

It would be going too far to hold all mortgages not included by the terms
of the description to be invalidated by the act. The clause expressly saves
certain mortgages, but it says nothing as to others. Much less does it say
anything as to deeds of trust or conveyances of analogous character. It
leaves all deeds and instruments of writing not expressly saved to the
general principles of jurisprudence. In re Wynne, 4 B. R. 23; s. c. Chase,
227; s.c. 2 L. T. B. 116.

‘Mortgages which are not otherwise valid or duly recorded are not enume-
rated as protected in favor of the mortgagee, but, on the contrary, are care-
fully excluded. The attention of Congress was specially called to chattel
mortgages, and the language of the act is carefully framed, so as to recog-
nize and protect such liens as were already valid by the laws of the land,
the statutes of the United States, or of the State where the transaction
occurred. The maxim expressio unius est exclusio alterius, applies to other
cases, Edmonson v. Hyde, 7 B. R. 1; s. c. 2 Saw. 205; 8. c. 5 L. T. B.
380; in re Geo. P. Morrill, 8 B. R. 117; s. c. 2 Saw. 356; Moore v. Young, 4
Biss. 128.

In a contest between the assignee and third parties to ascertain their
respective rights as to real estate, which had been purchased by the bank-
rupt and such parties, under an agreement to furnish the outlay and
share in the profit and loss equally, it is necessary to adjust the partner-
ship dealings to the time of the commencement of bankruptcy proceedings,
and ascertain the exact interest of the bankrupt and each of his partners
in such transaction. Where partnership debts are still outstanding on
which the bankrupt’s partner is liable, such partner is entitled to a lien
upon such real estate until the debts are paid, to indemnify him in case
he is compelled to pay them. Thrall v. Crampton, Assignee, 16 B. R. 261.

Where one has a valid lien upon property in his custody belonging to an-
other who is on the eve of bankruptcy, and sells the same with knowledge
that bankruptcy is imminent, the sale will not be afterward disturbed by
the court of bankruptcy if untainted by fraud, if there has been no sacri-
fice of the property. In re Roseberry et al., 16 B. R. 340.
430 Tur Bankruptcy Law.

The lien of a factor for his advancements, charges and commissions is
within the meaning of the statute providing that securities taken in
good faith, etc.; will not be affected by the act. Ibid.

Where a mortgage was executed to secure a mortgagee as indorser, and
it does not appear that he has taken up any of the indorsed paper, he can
claim no rights under the mortgage, and is liable to the assignee for any
moneys paid him for its release. Sessions v. Johnson, 17 B. R. 64.

A mortgage given as collateral security for a debt, and also to secure
mortgagee against liability as surety for the mortgagor, is a valid and
subsisting lien from the date of its record to secure such amount as may
appear to be due upon the indebtedness secured thereby. Milner v. Meek,
17 B. R. 82.

A mortgage executed by a bankrupt prior to commencement of proceed-
ings in bankruptcy, to secure a present indebtedness and also future ad-
vances of goods to be made by the mortgagee, is a valid security for such
indebiedness, and the amount of advances actually made. Schulze, As-
signee, v. Bolting, 17 B. R. 167.

A mistake in description of premises in such mortgage may be corrected
as against the assignee subsequently appointed. Ibid.

It was held in this case (under law of 1867) that where the mortgagee
had proved his debt as a secured claim in the proceedings, an action to
foreclose the mortgage could be brought in the bankruptcy court, by leave
of the court first obtained. Ibid.

The rights of a pledgee are not impaired or affected by any of the pro-
visions of the bankruptcy law, nov are they impaired by his failure to
appear in the bankruptcy court and refusal to become a party to the pro-
ceedings by proving his debt. Yeatman et al., Assignees, v. N. O. Sav:
ings Bank, 17 B. R. 187.

A bankrupt previous to commencement of the proceedings sold certain
premises. Parties who had prior to the conveyance performed work upon
the premises subsequently filed a lien therefor and proved their claim in
the bankruptcy proceedings, but neglected to state that it was secured
by a lien, and received a dividend. In an action to foreciose the lien,
Held, that the grantee of the premises could not claim that the lien was
thereby released. Bassett v. Baird, 17 B. R. 177.

Where sale of goods was made on condition that the title of the vendor
was not to pass until the purchase money should be paid, and the goods
were delivered to the vendee, Held, that such a stipulation is valid, and if
all taint of fraud is disproved a subsale of the goods by the vendee, before
payment in full to the vendor, will not affect the title of the original
vendor. In re Binford, 17 B. R. 353.

Possession of goods does not of itself carry along with it the property
in them, nor of itself identify the real owner of them. In Virginia the
possession of the fixtures and outfit of a tobacco manufactory was held not
to create the presumption that the title to them was in the person using
them. Ibid.

A charterer of a vessel having purchased supplies: of a materialman
upon the credit of the vessel, afterward went into bankruptcy and pro-
LIENS. 431

posed a composition with his creditors, which was accepted. Held, that
the lien of the materialman was not thereby discharged, even though he
voted in favor of accepting the composition. The “ Home,” 18 B. R. 557.

Money furnished to a vessel is not a lien unless it be furnished for pur-
pose of paying claims which would themselves be liens. Ibid.

A mortgage was not fully made, as against the assignee, until it was
recorded, and as it was made to bankrupt’s brother to secure a pre-exist-
ing debt, and was not recorded until within two months of the filing of the
petition, it was void. Bostwick v. Foster, 18 B. R. 123.

The bankrupt sold certain bonds belonging to his sister, which were in
his hands, and out of the avails paid and took up a mortgage note secured
on certain real estate, and kept the balance to his own use. At that time he
also owed his sister for a balance of interest he had previously received,
and had other bonds of hers which he had already or afterward pledged
for his debts. During the following six years he paid her money from
time to time, which was charged against the interest received by him
upon her bonds, and was not otherwise applied by either. Held, that she
was entitled to be treated as if she had held the mortgage from the time
he took it up; that the payments should be applied upon the inter-
est and not to the balance of.avails of the sale, and that she was entitled
to a lien equivalent to a mortgage lien for the payment of the sum found
to be due to her after application of such payment. Dewey v. Kelton,
18 B. R. 217.

At the advice of one of their creditors, V. sold! out his interest in the
firm to his partner B., B. agreeing to pay all the firm debts, and giving
V. his note for $300. This was done upon the representation that the cred-
itor would in that event give time. Instead of doing so, he took judgment
upon a warrant of attorney held by him, and levied on the goods in B.’s
possession. Afterward B. was adjudicated bankiupt on the petition of the
firm creditors and V. Another creditor, G., who had obtained a judg-
ment against the firm, then levied upon the goods held by the sheriff
under the former levy. The assignee afterward recovered possession of
the proceeds of the levy. In a suit by G.’s assignee to establish a lien by
virtue of his levy, Held, that the levy having been made after adjudication
no lien could attach unless the sale to B. was fraudulent in fact, or by
necessary construction of law, so that the goods still remained firm assets.
Russell, Assignee, v. McCord, Assignee, 17 B. R. 508.

Act oF 186%, § 5053. No property held by the bankrupt in trust
shall pass by the assignment.

Statute revised — March 2, 1867, ch. 176, § 14, 14 Stat. 522.

The trustee meant by this clause can only be a mere naked trustee who
holds the legal title but has no beneficial interest in the subject of the
trust. A vendor is not such a trustee for the vendee, if all the purchase
money has not been paid. Swepson v. Rouse, 65 N. C. 34.
432 Tue Bankruptcy Law.

A purchase by the bankrupt at a sale of property in which his wife is
interested, under a parol promise to hold it for her benefit, does not vest a
resulting trust in her so that she can hold it against his assignee. O’Hara
vy. Dilworth, 72 Penn. 397.

To create a resulting trust in case of a purchase of property with the
wife’s money, it must clearly appear that the money was hers, and that
it was paid at the time of the purchase. If it was paid at a subsequent
time the trust can not be maintained. Fisher v. Henderson, 8 B. R. 175.

When a husband, without any instructions from his wife, uses her
money in the purchase of property, and takes the title in his own name,
she may, if she so elect, set up a resulting trust to it, or she may treat the
transaction as a loan, which she will be presumed to have done unless she
takes steps within a reasonable time to set up her trust after she shall have
been informed of the disposition of the money. Ibid.

The statute applies to all estates where the trusts can be legally estab-
lished, and is effectual against one claiming under the assignee who is not
in the position of a purchaser without notice. Information of a fact
coming from a source which ought to be heeded, is suflicient notice.
Faxon v. Folvey, 110 Mass. 392.

Lands held by the bankrupt under an agreement to reconvey upon the
payment of a certain note, is held in trust and does not pass to the
assignee. Ibid.

If a bankrupt insurance company reinsures in another company, and in
ease of a loss receives the amount of the reinsurance from the latter, under
an express trust to pay it over to the assured, the amount is held in trust
and does not pass to the assignee. Hosmer v. Jewett, 6 Ben. 208.

Where the identical money collected by a corresponding banker on notes
sent to-him for collection is not kept separate and distinct from his other
mouey, there is no trust attached to this money in favor of the banker who
s0 remitted the notes for collection. Bank of Commerce v. Russell, 2
Dillon, 215.

If a party placed a certain sum of money in the hands of the bankrupt,
to be applied to redeem a note and mortgage, and the bankrupt credited
the amount on his books and then used it in his business, he can not claim
the return of an equal amount from the assignee, but must prove his claim
the same as other creditors. In re Robert Hosie, 7 B. R. 601; s. c. 6 L. T. B.
89; s. c.5 Pac. L. R. 198.

A claim for money placed in the hands of the bankrupt to be invested,
but which he failed to invest, is not entitled to priority. In re Janeway,
4B. R. 100; s. c. 4 Brewst. 250; s. c. 2 L. T. B. 124.

If the debtor, acting as a factor, sells goods of his principal, and in viola-
tion of his instructions takes notes therefor in his own name, and has them
discounted, turning over the proceeds to an accommodation indorser to
pay the notes upon which he is liable, and such indorser receives the money
without notice of any violation of any trust, the fund which may be re-
covered by the assignees from such indorser solely on the ground that he
received a preference by such payment, will not be liable to any trust.
The principal’s lien was destroyed when the proceeds were received by
LIENS. 433

such indorser, and the assignee’s recovery was simply as a representative
of the creditors, and not of the debtor or his principal, and the trust is
discharged. White v. Jones, 6 B. R. 175.

The trust property must be property that can be followed or distin-
guished. There must be some ear-mark by which it can be recognized.
As, for instance, where goods are sent to a factor to be disposed of, and
the factor becomes a bankrupt, and the goods yet in his possession can be
distinguished from the general mass of his property, the principal may
recover them in specie, and is not obliged to prove his debt under the com-
mission. And even where the bankrupt has sold the goods, if he has. kept
the money received from the sale in separate bags, the principal has been
permitted to claim and hold the money against the assignee. Where, how-
ever, the trust property does not remain in specie, but has been made
way with by the trustee, the cestuis que trust have no longer any specific
remedy against any part of his estate in his bankruptcy or insolvency;
but they must come in pari passu with the other creditors, and prove
against the trustee’s estate for the amount due them. In re Janeway, 4
B. R. 100; s. c. 4 Brewst. 250; s. c. 2 L. T. B. 124; Wood M. & R. Co. v.
Brooke, 9 B. R. 395; in re Coan & Ten Broeke Mfg. Co., 12 B. R. 203; s. ¢.
6 Biss. 315.

If the bankrupt, acting as banker and broker, kept the money arising
from the brokerage business in a separate bank, a party who. gave him
bonds to sell may claim payment in full if the money in the bank is more
than sufficient to meet all demands against the brokerage department.
Voight v. Lewis, 14 B. R. 543; s. c. 33 Leg. Int. 402; s.¢c.9 C. L. N. 65.

It is not essential to the effective assertion of a beneficial title to a trust
fund that the fund shall be susceptible of separate identification. No
more is required than proof of substantial identity. Money has no ear-
marks by means of which it can be specifically identified. Into whatever
form it may be changed, if it can be clearly traced, equity will rescue it
from a wrongful appropriation, and give effect to the right of its real
owner. An ear-mark is only a means of identification, but is not evidence
of ownership. Ibid.

If the consignment is a consignment on sale, as distinguished from a
consignment on del credere guaranty, the consignor can not reserve a
special property in the proceeds of the goods as against the assignee of the
consignee. In re Chamberlaines, 12 B. R. 230.

It is not necessary in order to enable an owner or cestui que trust to
claim newly-acquired property that it shall be purchased with the pro-
ceeds of the original property. It is sufficient if the newly-acquired prop-
‘erty is acquired by direct exchange with it. The real question is, What
has taken the place of the property in its original form? Whenever that
can be ascertained, the property in the changed form may be claimed by
the original owner or cestui que trust. Cook v. Tullis, 9 B. R. 483; 6. ¢.
18 Wall. 332.

If the bankrupt deposited the trust funds in bank with his own in his
oWD name, the mode of ascertaining how much belongs to the trust estate,

28
434 Tur BANKRUPTCY Law.

is to take the deposits and withdrawals in the order of their dates, find
out how much of the balance belongs to the trust and how much to the
general fund, and divide accordingly. In re Hapgood, 14 B. R. 495.

A depositor is not entitled to priority of payment, although the bank
having previously suspended payment agreed, at the time of receiving the
deposit, to receive special separate deposits, from its customers, for the
purpose of continuing business, unless the deposit was kept separate so as
to be identified. In re Mutual Savings Bank, 15 B. R. 44,

Aots or 1867 and 1874, § 5054. The assignee shall immediately
give notice of his appointment, by publication at least once a week
for three successive weeks in such newspapers as shall for that pur-
pose be designated by the court, due regard being had to their
general circulation in the district, or in that portion of the district
in which the bankrupt and his creditors shall reside, and shall, within
six months, cause the assignment to him to be recorded in every
registry of deeds or other office within the United States where a
conveyance of any lands owned by the bankrupt ought by law to
be recorded,! and the record of such assignment, or a duly certified
copy thereof, shall be evidence thereof in all courts.

Statute revised — March 2, 1867, ch. 176, § 14, 14 Stat. 522. Prior
Statute — April 4, 1800, ch. 19, § 11, 2 Stat. 24.

Publication.— A requirement that a notice shall be published once a
week for three successive weeks, is a requirement that it shall be pub-
lished in every seven days for three successive periods of seven days each;
that the interval between any two publications shall not be less than seven
days; that the interval between the last publication and any proceeding
dependent upon the publication shall be not less than seven days; and that
the publications shall be three in number. In re Bellamy, 1 B. R. 64; 8. ¢.
1 Ben. 390; s. c. 1 L. T. B. 22.

“The publication by the assignee of his appointment is not essential to the
regularity of the proceedings. This provision of the act is merely directory
to the assignee, and not intended so much for creditors as for persons
owing debts to, or otherwise having business with, the estate. In re
Littlefield, 3 B. R. 57; s. c. Lowell, 331; s.c. 1 L. T. B. 164.

Record.— The purpose in requiring the assignee to cause the assign-
ment to be recorded is that every purchaser of land at an assignee’s sale
may have recourse to a certified copy of such registry, as a link in his
chain of title in any suit he may bring for the possession, or in any suit in
respect to the property which he, or his heirs, or others claiming under
him, may desire to bring thereafter. Registration is necessary to the
safety of such purchaser; for there is but one original assignment, and

 

1 So amended by act of February 18, ch. 80, 1875, 18 Stat. 320.
RECORD. 435

that is filed in the office of the clerk of the district court. When this law
is observed, the loss of the original would work no loss or inconvenience
to the purchaser or others claiming under him; for they could have re-
course to a certified copy from the registry, which the act declares shall
be evidence thereof in all courts. The object in requiring the assignment
to be recorded is not to vest a title in the assignee, for he has title
though the assignment may never be recorded. The assignee may use it
as evidence of his title in the courts, though the same may not have been
recorded. In re Neale, 3 B. R. 177; 8. c. 1 L. T. B. 295; Holbrook v. Coney,
25 Ill. 548.

As the county records should contain a complete registry of all instru-
ments on which transfers of title depend, it was eminently proper for the
protection of all concerned, that the assignment in bankruptcy should be
there recorded; an instrument in writing, which though not conforming in
the usual particulars with conveyances from one party to another, or even
with sheriff’s deeds, yet by the paramount law is a complete transfer and
conveyance of all the bankrupt’s real and equitable interest, with the ex-
ceptions named in the act. That instrument is not signed by the bank-
rupt, or acknowledged by him, but is signed by the register or judge.
When the assignment is recorded, the record, or a duly certified copy
thereof, is made evidence of the assignment in all courts, notwithstanding
very different rules as to instruments affecting realty may obtain under
State laws. It is to be remarked, that the clause directing the assignment
to be recorded, gives no further effect thereto than that just stated. The
assignment itself passes the property with relation back to the commence-
ment of the proceedings, and all subsequent purchasers are affected accord-
ingly, whether they purchased before assignment actually made or after-
ward, and consequently the recording of the assignment is not essential
to the validity of the transfer, and is not designed to operate as under State
registry acts. A purchaser from the bankrupt, after the commencement of
proceedings, although he has no notice thereof, will take no title. The
question of notice can not arise. The purchase being of what the bank-
rupt debtor had at the time, and all his interest having passed to the
assignee previously, the purchaser acquires no title as against the as-
signee. Davis v. Anderson, 6 B. R. 145; Phillips v. Helmbold, 26 N. J.
Eq. 202.

A copy from the record of the assignee’s deed is admissible in evidence
to prove registration. Oakey v. Corry, 10 La. An. 502.

When the assignment has been recorded, and it is apparent of record
at the time of a sale on execution, that the judgment debtor has no title
to or interest in the property sold, the purchaser at the sheriff’s sale ac-
quires no title. Stuart v. Hines, 6 B. R. 416; s. c. 33 Iowa, 60; s.c 5 L.
T. B. 46.

The purchaser at a sale of real estate by the assignee of a bankrupt, will
hold the title against a prior unrecorded deed of the bankrupt. Holbrook
v. Dickinson, 56 Ill. 489.

A copy from the State records of an assignment not acknowledged ac-
cording to the State laws, is not admissible in evidence. Zeigler v. Shomo,
78 Penn. 357.
436 Tue Bankruptcy Law.

The title of a party who claims under the assignee will prevail against
a party who obtained a conveyance from the bankrupt after the com-
mencement of the proceedings in bankruptcy with notice of such title,
although the assignment to the assignee was not acknowledged and re-
corded according to the laws of the State where the land was situated.
Brady v. Otis, 14 B. R. 345; s. c. 40 Iowa, 97,

§ 5055. The assignee shall demand and receive, from all persons
holding the same, all the estate assigned or intended to be assigned.

Statute revised — March 2, 1867, ch. 176, § 15, 14 Stat. 524.

If the assignee is satisfied that property taken by him does not belong to
the bankrupt, he should surrender it without delay to the owners. In re
Noakes, 1 B. R. 592.

Act or 1867, § 5056. No person shall be entitled to maintain an
action against an assignee in bankruptcy, for anything done by him
as such assignee, without previously giving him twenty days’ notice
of such action, specifying the cause thereof, to the end that such
assignee may have an opportunity of tendering amends, should he
see fit to do so.

Statute revised— March 2, 1867, ch. 176, § 14, 14 Stat. 522. Prior
Statute — April 4, 1800, ch. 19, § 49, 2 Stat. 34.

This section covers all the acts which the assignee honestly does in the
discharge of the trust which the law casts upon him. The statute requires
a specific notice. The mere presentation of a bill for services rendered is
not sufficient. Hallam v. Maxwell, 2 Cinn. 136.

This section does no apply to an action of replevin to recover prop-
erty which the assignee took from the possession of the plaintiff. Leigh-
ton v. Harwood, 12 B. R. 360; s. c. 111 Mass. 67.

No notice need be given to an assignee before bringing a bill to enjoin
a judgment recovered by the bankrupt by his fraudulent contract. Weak-
ley v. Miller, 1 Tenn. Ch. 523.

The omission to give notice to an assignee can only be taken advantage
of by a plea in abatement. Ibid.

By appearing and filing a plea the assignee waives the want of notice
before bringing the suit. Rowe v. Page, 13 B. R. 366; s. c. 54 N. H. 190.

Acts oF 186% and 1874, § 5057. No suit, either at law or in
equity, shall be maintainable in any court between an assignee in
bankruptcy and a person claiming an adverse interest, touching any
property or rights of property transferable to or vested in such as-
signee, unless brought within two years from the time when the
LIENS. 437

cause of action accrued for or against such assignee. And this pro-
vision shall not in any case revive a right of action barred at the
time when an assignee is appointed.

Statutes revised — March 2, 1867, qh. 176, § 2, 14 Stat. 518. Prior Statute
— Aug. 19, 1841, ch. 9, § 8, 5 Stat. 446.

A suit is a prosecution of some demand in a court of justice. Wilt v.
Stickney, 15 B. R. 23; s. c. 13 Pac. L. R. 61.

The cause of action accrues to the assignee on the execution of the as-
signment, and the limitation begins to run from that time. Lathrop vy.
Drake, 30 Leg. Int. 141.

On all matured claims and demands the cause of action accrues to the as-
signee at the date of the assignment; on all others from their maturity,
or at the time when an action will lie, and he must sue from these dates
respectively. Norton v. De la Villebeuve, 13 B. R. 304; s. c. 1 Woods, 163.

This section applies equally to courts of equity and courts of law.
Bailey v. Wier, 12 B. R. 24; s. c. 21 Wall. 342.

The limitation applies when the suit is brought in a State court as well
as when it is brought in a Federal court. Comegys v. McCord, 11 Ala.
932; Archer v. Duval, 1 Fla. 219.

A suit is the lawful demand of a right at law or in equity, and it matters
not what form is given to it by the legislative power, it still remains a
suit in the sense of the definition, although it retains none of the features
by which proceedings at law or in equity have been distinguished. Union
Canal Co. v. Woodside, 11 Penn. 176.

The limitation applies only to suits growing out of disputes in respect
to property and rights of property of the bankrupt, which come to the
hards of the assignee, and to which adverse claims existed while in the
hands of the bankrupt and before assignment. These disputes of claims
affect the assets of the bankrupt, and an adjustment of them, either by
compromise or suit, is indispensable to a settlement and distribution of
the estate among the creditors. A short bar by limitation to suits brought
either by the assignee or the adverse claimant, furnishes a fit and appro-
priate remedy against delay where compromise is impracticable. In re
Frederick J. Conant, 5 Blatch. 54; Stevens v. Hauser, 39 N. Y. 302; 8. ¢.
1 Robt. 50.

It is entirely within the power of Congress, in establishing a uniform
system of bankruptcy, to provide a uniform rule on the subject of actions,
whether by or against an assignee in bankruptcy; and such rule must of
necessity supersede all State legislation on the subject. If the right of
action asserted by the assignee is not actually barred at the time of his
appointment — a case expressly saved by the proviso — he has two years,
and only two years from the time the cause of action accrued for or
against such assignee. This is to apply, by the express words of the sec-
tion, to actions brought “in any court whatsoever;” therefore in any
court, State or Federal. Peiper v. Harmer, 5 B. R. 252; s. c. 8 Phila. 100.

This is a separate and independent provision, and has no connection
with any State statute on the subject. It may extend or it may contract
438 Ture Bankruptcy Law.

the time provided in the State statute of limitations. Thus if at the time of
the appointment of the assignee but a few days remain of the time neces-
sary to complete the bar, the time will be extended; or, if the statute has
just commenced running, and under the State law would have ten years to
run, it would be complete within two years. Freelander v. Holloman, 9
B. R. 331.

A petition to a court, to order a distribution of a fund lodged in its
registry, is not an action or suit within the meaning of this clause. In re
Masterson, 4 B. R. 553.

The limitation does not extend to an application by an assignee for
money brought into a State court in proceedings instituted before the
commencement of the proceedings in bankruptcy. Phillips v. Helmbold,
26 N. J. Eq. 202.

When the defendant only disputes the amount, there is no controversy
in regard to the interests and rights touching the property. A voluntary
assignor, under a void assignment, can not have or claim any adverse in-
terest as against the assignee in bankruptcy. A claim against the bank-
rupt’s estate, for services rendered to the bankrupt, is not within the
statute. In re Krogman, 5 B. R. 116.

A venire to assess damages for land taken by a corporation is a suit at
law. Union Canal Co. v. Woodside, 11 Penn. 176.

A claim for damages for the taking of the land of the bankrupt by a
corporation is not barred, for the corporation is not an adverse claimant.
Ibid.

The omission to bring the suit for more than two years after the cause
of action accrued may be a good defense, if properly pleaded, but does
not go to the jurisdiction of the court. Chemung Canal Bank vy. Judson, 8
N.Y. 254.

The title of a party who purchases at a sale under a proceeding to fore-
close a mortgage which was instituted after the commencement of the
proceedings in bankruptcy, without making the assignee a party thereto,
will not be rendered valid by the lapse of two years, unless he takes actual
possession of the premises and occupies them in such a manner that the
assignee must be presumed to have had notice thereof, or gives some notice,
actual or constructive, to the assignee that he claims an adverse interest.
Price v. Philips, 3 Robt. 448.

A mortgage does not of itself constitute an adverse claim, for it is simply
a lien or charge on the land, and does not confer on the mortgagee any
estate in the land. Price v. Philips, 3 Robt. 448. Vide Cleveland v. Boe-
rum, 24 N. Y. 613; s. ¢. 23 Barb. 201; s. ec. 27 Barb. 252.

An action on judgment is barred by the lapse of two years. Archer V.
Duval, 1 Fla. 219.

The limitation applies, although the suit is brought in the name of the
assignee for the use of a third person. Pike v. Lowell, 32 Me. 245.

If a party buys a judgment against the bankrupt, and purchases certain
land at a sale, under an execution issued thereon, under a parol agreement
that out of the proceeds he shall retain a debt due to him, and the money
used to buy the judgment, and then pay the balance to the bankrupt, the
LIENS. 439

statute begins to run from the time when he receives the proceeds. Hyde
y. Ely, 8 Pac. L. R. 147.

If the assignee is not made a party to a pending action until more than
two years after his appointment, his claim will be barred, for the amend-
ment by which he is made a party will not relate back, and thereby make
him a party ab initio, and thereby defeat the limitation. Cogdell v. Exum,
10 B. R. 327; s. c. 69 N. C. 464, :

A bill to set aside a fraudulent conveyance will be defeated by a plea of
the statute of limitations, if more than two years have elapsed since the
appointment of the assignee. Freelander v. Holloman, 9 B. R. 831; Botts
vy. Patton, 10 B. Mon. 452.

If a mortgagee enforces his lien in a State court after the commencement
of proceedings in bankruptcy, the assignee has two years from the time of
the sale in which he can institute proceedings to set it aside. Phelps v.
Sellick, 8 B. R. 390.

This clause does not apply to a proceeding to set aside a sale made under
a levy upon land, after the filing of a petition to enforce a judgment lien.
Davis v. Anderson, 6 B. R. 145.

A suit merely to collect a debt, or enforce the payment of money due on a
contract, does not fall within the provisions of this clause. The plaintiff
does not claim an interest adverse to the defendant in or touching any
property, or right of property, of the bankrupt, transferable to or vested in
the plaintiff as assignee; nor does the defendant claim any interest adverse
to the plaintiff in or touching any such property, or right of property. The
defendant claims no ownership of or title to the debt or contract which
the plaintiff seeks to enforce against the defendant; nor dies the plaintiff
claim any ownership of or title to any specific property, or right of prop-
erty, as having passed to him by virtue of his appointment, which the de-
fendant also claims to own; nor does the defendant claim any ownership of
or title to any specific property which belonged to the bankrupt. The
limitation of two years applies only to such controversies. Moreover, it
applies only to controversies of which the circuit court of the district has
concurrent jurisdiction with the district court of the same district. Sedg-
wick vy. Casey, 4 B. R. 496; s. c.3 C. L. N. 177; Smith v. Crawford, 9 B. R.
38; s. c. 6 Ben. 497; Carr v. Lord, 29 Me. 51. Contra, Harris v. Collins, 13
Ala. 388; Norton v. Barker, 1 W. N. 29.

The limitation does not relate to an action by a purchaser to recover a
debt which was sold as a part of the bankrupt’s assets. Judson v. La-
throp, 6 La. An. 587.

This section does not apply to.sales or conveyances, and the assignee may
convey any portion of the estate after even the lapse of two years.
Warren vy. Miller, 38 Me. 108; Holbrook v. Brenner, 31 Ill. 501.

If the claim of the assignee is barred by the lapse of two years, he can
not, by a transfer to another, confer a right of action which he has suffered
to expire, and thus avoid the limitations. Cleveland v. Boerum, 23 Barb.
201; s. «. 27 Barb. 252; s. c. 24 N. Y. 6138.

The limitation has no application to suits which are pending at the
time of the commencement of the proceedings in bankruptcy. Jane v.
Pilcher, 7 B. Mon. 651.
440 Tur Bankruptcy Law.

The limitation has no reference to suits growing out of the dealings of
the assignee with the estate after it comes into his hands. These are
matters for which he may be made personally responsible, and no reason
existed for changing the general period of limitations any more than in the
case of any other trustee dealing with trust property. In re Frederick J.
Conant, 5 Blatch. 54.

The limitation does not apply to a party who takes possession of the
property after the commencement of the proceedings in bankruptcy. Ste-
vens v. Hauser, 39 N. Y. 302; s. « 1 Robt. 50.

If an assignee, after instituting a suit, dies, and the new assignee insti-
tutes another suit instead of continuing the prior suit, the statute runs
to the time of the institution of the second suit. Richards v. Maryland
Ins. Co., 8 Cranch, 84.

The limitation provided by this section does not apply to a proceeding
to review a decision of the district court. Wilt v. Stickney, 15 B. R. 23;
s. c. 13 Pac. L. R. 61.

An action by an assignee of a bank to recover money paid by persons
pretending to act as commissioners of the bank to their attorney, before
the appointment of the assignee, is barred, unless it is brought within
two years after that time. Miltenberger v. Phillips, 2 Woods, 115.

The limitation can not affect any suit, the cause of which occurred from
an adverse possession taken after the bankruptcy, until the expiration of
two years from the taking of such possession. Banks v. Ogden, 2 Wall.
58.

The failure of the assignee to sue and recover a distributive share of
an estate of one of the bankrupt’s children, to which the bankrupt was
entitled, does not confer any right on the bankrupt to sue for it. Dead-
rick v. Armour, 10 Humph. 588.

If the claim of the assignee is barred by the limitation, the creditors
may file a bill to set aside a fraudulent conveyance made by the bankrupt
before the commencement of the proceedings in bankruptcy. Tichenor v.
Allen, 13 Gratt. 15; Dewey v. Moyer, 16 B. R. 1; s. c. 16 N. Y. Supr. 473.

A bill to set aside a judgment recovered by the assignee on the ground of
fraud is barred unless it is brought within two years from the time of the
discovery of the fraud. Clark v. Hackett, 1 Cliff. 269.

When there has been no negligence or laches on the part cf the plaintiff
in coming to the knowledge of the fraud which is the foundation of the
suit, and when the fraud has been concealed or is of such character as to
conceal itself, the statute does not begin to run until the fraud is discov-
ered by, or becomes known to, the party suing, or those in privity with
him, Bailey v. Wier, 12 B. R. 24; s. ¢. 21 Wall. 342; Carr y. Hilton, 1 Curt.
230; Pritchard v. Chandler, 2 Curt. 488.

The limitation bars the action, although the assignee was ignorant of
his rights, for the court can not engraft an exception on the statute. Nor-
ton v. De la Villebeuve, 18 B. R. 304; s. c. 1 Woods, 163.

This rule applies to suits at law as well as in equity. Bailey v. Wier, 12
B. R, 24; s.¢, 21 Wall. 342.
Dutirs or TRUSTEES. 441

The statute begins to run from the time when the assignee could have
discovered the fraud by the use of due diligence. Andrews v. Dole, 11
B. R. 352.

As the adverse party is under no duty to make known the cause of ac-
tion to the assignee, something more than silence on his part must be
proved in order to sustain a charge of fraudulent concealment. Pritch-
ard vy. Chandler, 2 Curt. 488.

If the statute once begins to run, it must continue until the completion
of the bar, and to prevent it from beginning to run, the fraudulent con-
cealment must exist at the moment when the assignee’s title accrued.
Ibid.

A bill which states a case of secret fraud does sufficiently aver that the
eause of action was fraudulently concealed, for a secret or concealed fraud
is a fraudulent concealment of the cause of action. Carr v. Hilton, 1 Curt.
230.

The interest adversely claimed, which the statute protects, is an interest
in a claimant other than the bankrupt. Clark v. Clark, 17 How. 315;
Pickett v. McGavick, 14 B. R. 236.

If the bankrupt, at an assignee’s sale, fraudulently purchases a claim
against a foreign government, the cause of action does not accrue until
he gets possession of the money. Clark v. Clark, 17 How. 315.

A bill, which is in theory and in fact an original bill, can not, for the
purpose of avoiding the limitation, be treated as an amendment of a prior
bill which was dismissed. Clark v. Hackett, 1 Cliff. 269.

Where a court of equity allows a respondent to amend his answer so as
to set up the statute of limitations, the amendment must afterward be
deewed to have been duly and properly allowed. Ibid.

A casual averment in an answer to a petition to the effect that the
assignee has lain by for a period of over two years without notifying the
respondent that he would have to account for certain rents, is not a suffi-
cient plea of the statute. Hall v. Scovel, 10 B. R. 295.

If the declaration shows that the cause of action is barred by the statute
of limitations, the defendant may demur. Harris v. Collins, 13 Ala. 388.

§ 5058. [This section is superseded by act of June 22, 1874,
ch, 390, § 4, 18 Stat. 178.]

Act oF 1898, Cu. 7, § 61. Depositories for Money.— (a) Courts
of bankruptcy shall designate, by order, banking institutions as de-
positories for the money of bankrupt estates, as convenient as may
he to the residences of trustees, and shall require bonds to the United
States, subject to their approval, to be given by such banking insti-
tutions, and may from time to time as occasion may require, by like
order increase the number of depositories or the amount of any bond
or change such depositories.

Act or 1898, Cu. 5, § 47. Duties of Trustees— (a) Trustees
shall respectively (1) account for and pay over to the estates under
442 Tue Bankruptcy Law.

their control all interest received by them upon property of such
estates; (2) collect and reduce to money the property of the estates
for which they are trustees, under the direction of the court, and
close up the estate as expeditiously as is compatible with the best
interests of the parties in interest; (3) deposit all money received
by them in one of the designated depositories; (4) disburse money
only by check or draft on the depositories in which it has been
deposited.

Acts oF 1867 and 1874, § 5059. The assignee shall, as soon as
may be, after receiving any money belonging to the estate, deposit
the same in some bank in his name as assignee, or otherwise keep
it distinct from all other money in his possession; and shall, as far
as practicable, keep all goods and effects belonging to the estate
separate from all other goods in his possession, or designated by
appropriate marks, so that they may be easily and clearly distin-
guished, and may not be liable to be taken as his property or for the
payment of his debts.

Statutes revised — March 2, 1867, ch. 176, § 17, 14 Stat. 524. Prior
Statutes — April 4, 1800, ch. 19, § 54, 2 Stat. 84; Aug. 19, 1841, ch. 9, § 9,
5 Stat. 447.

If the assignee does not deposit the money in bank within the time fixed
by the statute, he is chargeable with interest if he has not a reasonable
excuse for not complying with the statute. In re Stillman Thorp, 4 N. Y.
Leg. Obs. 377.

Act oF 1867, § 5060. When it appears that the distribution of
the estate may be delayed by litigation or other cause, the court may
direct the temporary investment of the money belonging to such
estate in securities to be approved by the judge or register, or may
authorize it to be deposited in any convenient bank upon such in-
terest, not exceeding the legal rate, as the bank may contract with
the assignee to pay thereon.

Statute revised — March 2, 1867, ch. 176, § 17, 14 Stat. 524.

Act oF 1898, Cu. 4, § 26. Arbitration of Controversies.— (a)
The trustee may, pursuant to the direction of the court, submit to
arbitration any controversy arising in the settlement of the estate.

(b) Three arbitrators shall be chosen ‘by mutual consent, or one
by the trustee, one by the other party to the controversy, and the
third by the two so chosen, or if they fail to agree in five days after
their appointment the court shall appoint the third arbitrator.
CoMPROMISES. 443

(c) The written finding of the arbitrators, or a majority of them,
as to the issues presented, may be filed in court and shall have like
force and effect as the verdict of a jury.

Act or 1867, § 5061. The assignee, under the direction of the
court, may submit any controversy arising in the settlement of de-
mands against the estate, or of debts due to it, to the determination
of arbitrators, to be chosen by him and the other party to the con-
troversy, and under such direction may compound and settle any
such controversy, by agreement with the other party, as he thinks
proper and most for the interest of the creditors.

Statute revised — March 2, 1867, ch. 176, § 14, 14 Stat. 524. Prior
Statutes — April 4, 1800, ch. 19, § 48, 2 Stat. 38; Aug. 19, 1841, ch. 9, § 11,
5 Stat. 447. .

The assignee must apply to the court by petition, and not to the register.
In re John Graves, 1 B. R. 237; s. c. 2 Ben. 100.

An crder authorizing the assignee to compromise any and all debts due
the bankrupt’s estate with the consent of certain persons selected by the
creditors, is not authorized in this section. In re Dibblee et al., 3 B. R. 12;
s.c. 3 Ben. 354.

This provision does not apply where there is no suit or demand against
the estate, or controversy as to a debt due to it. In re Franklin Fund Sav-
ing Society, 31 Leg. Int. 173.

When the assignee applies to the court under the provisions of this sec-
tion, he should take unequivocally upon himself the direct responsibility
of recommending the proposed arrangement as in his opinion a proper
one. Ibid. :

If an assignee attempts to arbitrate or compromise without pursuing the
course prescribed by the statute, the agreement will be binding on him in
his individual and not his representative capacity. Blight v. Ashley, Pet.
C. GC. 15.

The act of one assignee will not bind a coassignee without his previous
authority or subsequent ratification, especially when the act is not
within the scope of their authority, for they act under delegated authority.
Ibid. ‘

It is not competent for a creditor and a bankrupt to submit to arbitration
the question of the amount due the creditor from the bankrupt’s estate.
In re Ford & Co., 18 B. R. 426.

Act or 1898, Cu. 4, § 2%. Compromises.— (a) The trustee may,
with the approval of the court, compromise any controversy arising
in the administration of the estate upon such terms as he may deem
for the best interests of the estate.

Bankrupts prior to filing of their voluntary petition paid their attorneys
$150, and assigned them a large amount of uncollected claims to secure
them, as alleged, for services rendered and to be rendered in bankruptcy
444 Tur Banxrurtcy Law.

proceedings. Some of these claims were afterward collected by the
attorneys. Action was breught by assignees to recover said assigned
claims and the money collected. On application made by assignee, after
issue joined, to compound the claims by accepting from the attorneys the
claims still uncollected, and releasing them from all claims on those col-
lected: Held, not a proper case for compromise of disputed claim under
General Order No. 20, (Bankruptcy Act of 1867); In re Rowe et al., 18 B. R.
429,

Act oF 186%, § 5062. The assignee shall sell all such unincum-
bered estate, real and personal, which comes to his hands, on such
terms as he thinks most for the interest of the creditors; but, upon
petition of any person interested, and for cause shown, the court
may make such order concerning the time, place and manner of sale
as will, in its opinion, prove to the interest of the creditors.

Statute revised — March 2, 1867, ch. 176, § 15, 14 Stat. 524. Prior
Statutes — April 4, 1800, ch. 19, §§ 44, 59, 2 Stat. 33, 35; Aug. 19, 1841, ch. 9,
§ 9, 5 Stat. 447.

The State laws in regard to the transfer of estates are subject to the
plenary power of Congress over bankruptcy, and there can be no doubt
of the complete force of the bankruptcy law to dispose of the bankrupt’s
property for all the purposes designated or implied by it. The rights of the
assignee are broad enough to dispose of all the property, if such disposi-
tion be needed. Stevens vy. Earles, 25 Mich. 40.

The assignee has the authority to sell unincumbered assets without an
order from court. In re White & May, 1 B. R. 218; s. c. 2 Ben. 85; Mims v.
Swartz, 10 B. R. 305; s. c. 837 Tex. 17.

A State law prohibiting sales of land in the possession of an adverse
claimant does not apply to a sale by an assignee, for that is a judicial sale.
Stevens v. Hauser, 39 N. Y. 302; s. c. 1 Robt. 50; Stevens vy. Palmer, 10
Bosw., 6.

An assignee in one State may sell real estate lying in another State.
Oakey v. Corry, 10 La. An. 502.

The assignee may be vested with a discretion in regard to the time
and manner of making a sale. Holbrook v. Coney, 25 Ill. 543.

When the authority of the assignee, under an order to sell, is limited
to the property set forth in the schedule, he can not convey any other
property. Warren v. Homestead, 33 Me. 256.

The assignee is limited in his transactions to the powers and authority
conferred upon him by the bankruptcy act, and by the orders of the court.
Anything he may do outside, or in conflict with, or in violation of such
powers and authority, is null and void. Under am order to sell for the
highest price he can obtain, he must accept the highest bid, although he
has previcusly agreed, without consideration, to sell to another person
for a certain price, and to wait for an answer for a certain time, which
period has not expired, at the time of receiving a better bid. In re Ryat
& Griffin, 6 B. R. 235.
CoMPROMISES. 445

If a lease made by the assignee is not authorized or sanctioned by the
court, those who are in possession under it can claim no rights as against
such order as the court may make concerning the property. In re Samuel
Schapter, 9 B. R. 324.

The court may authorize a private sale of land so far as the authoriza-
tion may be required to assure the title to the purchaser, but not so as to
exempt the assignee from responsibility to creditors for negligence, if any,
in obtaining the best price for the property. In re Knott, Rooney & Dibest,
1 W. N. 52.

If a sale is fairly made, and the bids are understood by the auctioneer
and the bystanders, it will be valid, although the assignee is present and
in consequence of his negligence and inattention fails to understand the
terms thereof. Ives v. Tregent, 14 B. R. 60; s. c. 29 Mich. 390.

If an assignee makes a sale of property, but refuses to deliver the pos-
session thereof, he may be sued at law if the sale has never been brought
to the attention of the bankruptcy court nor in any manner acted on by it.
Thid.

The solicitor of the assignee can not purchase at a sale made by the

assignee, for he is not the personal counsel of the assignee, but of the
assignee as the representative of the creditors. Citizens’ Bank v. Ober, 13
B. R. 328; s. c. 1 Woods, 80.
_ An agreement by a party who expects to become a purchaser at an as-
signee’s sale, to sell the property to the assignee’s solicitor for a fixed
price, without reference to the amount that may be bid therefor, does not
render the sale void. Ibid.

When the terms are cash on the day of sale, a party who expects to pur-
chase may agree with another party, that in case he becomes purchaser,
he will sell the property to him at a named price on terms of credit, es-
pecially when he has no notice or knowledge that the party proposing to
buy, is prepared to pay cash, and is ready to bid and able to make his bid
good. Ibid. —

The bankrupt may purchase property at an assignee’s sale. Arnold v.
Leonard, 20 Miss. 258; Phelps v. McDonald, 2 McArthur, 375.

The district court has the power to set aside a sale made by an as-
signee. When a portion of the creditors unite in a purchase for the joint
benefit of themselves, it ought to appear that the sale has been so con-
ducted that no prejudice has come to other creditors. It is not sufficient
that the technical formal requisites to a regular sale have been complied
with, when there has been an improper combination between the assignee
and the purchaser, which has resulted in a sacrifice of the property. A
creditor, whose claim is in dispute, may file a petition to set aside a sale.
In re Troy Woolen Co., 4 B. R. 629; s. c. 8 Blatch. 465.

A sale of real estate at public auction by the assignee is subject to the
approval of the court, which has a discretion to refuse to confirm it for
Mere inadequacy of price. It is not necessary that there should be fraud
or such gross inadequacy of price as to be evidence of fraud. In re
O'Fallon, 2 Dillon, 548.
446 Ture Banxkrurtcy Law.

A Sale of real estate is not confirmed by the court, but the purchaser is
left to establish his title whenever the occasion may arise. In re H. O.,
Alden, 16 B. R. 39; s. c. 9 C. L. N. 346.

If the right to property and the evidence to establish it are concealed
from the assignee and the creditors, so that the assets are sold for a
nominal amount to the bankrupt himself, then the purchase is fraudulent
and may be set aside. Clark y. Clark, 17 How. 315; Booth v. Clark, 17
How. 322.

The court will not direct the repayment of the consideration where the
sale is void, unless it appears that the purchaser acted in good faith and
under the belief that the assignee in making the sale was exercising the
powers of his office in a right and fair manner. In re Jacob H. Mott, 1
B. R. 9. ‘

A purchaser is not bound by a subsequent decree for a sale of the prem-
ises unless he is a party to the proceedings, although it purports to set
aside the previous sale to him. Holbrook v. Brenner, 31 Ill. 501.

A. knowledge of the bankruptcy does not necessarily imply any knowl-
edge that the assignee is about to sell property belonging to another, and
will not estop the owner from asserting his title against a purchaser from
the assignee. Davis v. Fairclough, 68 Mo. 61. \

If the vendor and the bankrupt, before the commencement of the pro-
ceedings in bankruptcy, agreed that the sale should be rescinded and the
money paid thereon forfeited, the vendor will have a better title than the
purchaser from the assignee. Ibid.

Where an individual partner is adjudged bankrupt, the statute of limita-
tions runs from the date of the adjudication against any purcbaser of a
chose in action at a sale by the assignee. Blackwell v. Claywell, 15 B. R.
800; s. c. 75 N. C. 218.

The purchaser at an assignee’s sale is entitled to the rents from the day
of sale. Hall v. Scovel, 10 B. R. 295.

A. purchaser from an assignee takes no higher right than the bankrupt
himself had. Anderson y. Miller, 15 Miss. 586; Baker v. Vining, 30 Me.
121.

The statute does not enable the assignee to convey a legal title where,
by the rules of law, the bankrupt himself could not. The sale gives to the
purchaser no other title than a sale by the bankrupt himself before his
bankruptcy would confer. If the bankrupt could not give a legal title by
his sale, the assignee can not. Camack v. Bisquay, 18 Ala. 286.

Such a sale does not divest the dower of the wife of the party from
whom the bankrupt bought the land. Speake v. Kinard, 4 Rich. (N. 8.) 54.

Where the bankrupt, prior to the commencement of the proceedings in
bankruptcy, executed a deed of trust to secure an indebtedness with a
power to sell, the purchaser will not take the legal title, but merely the
surplus that may remain after the debt is paid. Lyall v. Miller, 6 McLean,
482.

If a privilege without registry is good against the bankrupt, it is also
good against the purchaser. McKiernan v. Fletcher, 2 La. An. 438
CoMPROMISES. 447

The purchaser of a chose in action from the assignee takes it subject
to all the equities existing against it in the hands of the bankrupt. Strong
y. Clawson, 10 IH. 346.

A purchaser of a note at an assignee’s sale takes it subject to a prior
lawful transfer thereof by the bankrupt. Converse v. Sorley, 89 Tex. 515.

A person who purchases from the assignee can not impeach a prior con-
veyance for fraud and have it set aside. Reavis v. Garner, 12 Ala.’ 661.

A purchaser who buys all the interest of the assignee in certain property
may impeach a prior conveyance for fraud. Dwinel v. Perley, 32 Me. 197;
Badger v. Story, 16 N. H. 168.

A sale of all the bankrupt’s rights of property gives the purchaser all
the rights of action which the assignee could exercise in respect of such
property, and he may impeach a prior fraudulent conveyance. Williams
y. Vermeule, 4 Sandf. Ch. 388.

A purchaser of the mere right which the bankrupt had in the premises
at the commencement of the proceedings in bankruptcy, as distinguished
from the right of the assignee, does not represent creditors. Baker v.
Vining, 30 Me. 121.

If the property is sold subject to incumbrances, the purchaser takes it
subject only to legal and valid incumbrances, and may impeach an in-
cumbrance for fraud. Murray vy. Jones, 50 Ga. 109.

A sale of a lease, good will, and fixtures will only pass such fixtures as
are affixed in some way to the building, and their accessories. If any of
these are subsequently sold, the first purchaser may claim the proceeds.
In re Hitchings, 4 B. R. 384.

He who purchases property at the sale of an assignee acquires the
possession legally, and the owner, if there is a better title, can not recover
the property by a possessory warrant. He must bring trover, or other
proper action, to try the title. Bryan v. Whitsett, 39 Ga. 715.

The statutory right to redeem property sold under a deed of trust passes
to the assignee, and may be sold by him. But the purchaser at the sale
under the deed of trust is not deprived of any of his rights, and may
demand a repayment of the advance, as well as the original bid, as a con-
dition precedent to the right of redemption. Toombs v. Palmer, 4 Heisk.
331,

If a purchaser who claims under a sale by the assignee fails to estab-
lish the regularity of the proceedings in bankruptcy, he may rely upon a
subsequent mortgage made by the bankrupt. Den v. Wright, Pet. C. C. 64.

The sale and a compliance with its terms vest an equitable title in the
purchaser, but the conveyance alone passes the legal title. Consequently
the purchaser can not sustain an action of ejectment by proof of a deed
made after the institution of the suit, although the sale was made before
that time. Joy v. Berdell, 25 Ill. 537.

If the purchaser buys only the mortgage note, without taking an assign.
ment of the mortgage, he can not maintain an action at law to recover the
land. Warren vy. Homestead, 33 Me. 256.

A debtor to the estate can not, in an action by a purchaser of the claim,
set off a debt obtained by him after the commencement of the proceedings
in bankruptcy. Judson v. Lathrop, 6 La. An. 587.
448 Tue Bankruptcy Law.

A debtor to a bankrupt firm can not, in an action by a purchaser, set
off 4 debt due to him by one of the bankrupts. Ibid.

A claim against the bankrupt before his bankruptcy can not be set off
against an indebtedness for goods purchased from the assignee. Moran vy.
Bogert, 14 B. R. 393; s. c. 16 Abb. Pr. (NX. 8.) 803; s. c. 10 N. Y. Supr. 603.

A claim against the bankrupt’s estate for a benefit conferred upon it,
may be set off against a liability for goods purchased from the assignee.
Ibid.

An objection that purchaser at a sale by the assignee was the attorney
for assignee, and as such was incapable of purchasing, can not be raised
in a collateral action; it must be made in the bankruptcy court. Spilman
v. Johnson, 16 B. R. 145.

Where claim is marked in schedule as worthless, the validity of a sale
of the assets, including such claim, is not affected by its afterward be-
coming valuable. Phelps, Assignee, v. McDonald, 16 B. R. 481.

Sale of stock to a creditor who holds it as collateral security for $10
per share, when it was worth $25 per share, will be set aside for in-
adequacy of price. In re Bousfield & Poole, 16 B. R. 481.

Validity of sale by assignee in bankruptcy, can not be questioned in
a collateral proceeding in a State court. Steele v. Moody, 16 B. R. 558.

The defendant in an action brought by the purchaser to recover the
property, can not impeach the proceedings in bankruptcy for defects or
irregularities. Stevens v. Hauser, 39 N. Y. 302; s. c. 1 Robt. 50.

The sale of the property by the assignee for a nominal consideration, is
an objection that can not be raised in an action by the purchaser to recover
the property. Ibid.

A purchaser is not liable for any injury caused by the negligence of the
assignee in the management of the property, after the sale and before the
ratification of the sale and conveyance of the property. Metz v. Buffalo,
Corry & P. R. R. Co., 12 B. R. 559; s. ¢. 58 N. Y. 61.

A. recital in a deed by an assignee that a person was declared bankrupt,
that the grantor was appointed his assignee, and that he was directed to
sell the property, is not evidence of the facts recited against a person
claiming the property otherwise than through or under the grantor.
Warren v. Syme, 7 W. Va. 474.

The appointment of the assignee may be established by proof that he
acted as assignee, without producing the record of his appointment, in a
controversy between the purchaser and third parties. Arnold v. Leonard,
20 Miss. 258.

Where the plaintiff, in an action of ejectment, claims title under an
assignee, he may prove the proceedings in bankruptcy by parol evidence if
the records are destroyed. Thomas v. Cruttenden, 4 Cranch C. C. 71.

Act oF 1898, Cu. 7, § %0. “Appraisement.—(b) All real and
personal property belonging to bankrupt estates shall be appraised
by three disinterested appraisers; they shall be appointed by, and
report to, the court. Real and personal property shall, when practi-
ee ee

APPRAISEMENT. . 449

cable, be sold subject to the approval of the court; it shall not be
sold otherwise than subject to the approval of the court for less than
seventy-five per centum of its appraised value.

Act or 1874, § 50624 (June 22, 1874, ch. 390, § 1, 18 Stat.
178). That the court may, in its discretion, on sufficient cause
shown, and upon notice and hearing, direct the receiver or assignee
to take possession of the property, and carry on the business of the
debtor, or any part thereof, under the direction of the court, when
in its judgment, the interest of the estate as well as of the creditors
will be promoted thereby, but not for a period exceeding nine months
from the time the debtor shall have been declared a bankrupt.
Provided, that such order shall not be made until the court shall
be satisfied that it is approved by a majority in value of the creditors.

The court may authorize the assignee to spend money to put property
into a salable condition. The assignee should endeavor to settle and
liquidate the estate as rapidly as possible, and to the best advantage. It
is no part of his ordinary right or duty to carry on a trade. But if, in a
reasonable time and at a reasonable expense, he can make property salable
which is not so in the condition in which he finds it, he may do so. ‘He
will not be allowed to do so, however, unless it is clearly shown that he
can make such a bargain for the necessary work as will almost to a moral
certainty insure the creditors against loss, and insure them a large gain
within a reasonable time. Foster v. Ames, 2 B. R. 455; s..c. Lowell, 313.

If a receiver institutes a suit to recover the value of property sold by the
bankrupt in fraud of the bankruptcy law prior to the commencement of
proceedings in bankruptcy, the assignee will not be admitted to prosecute
the suit. Lansing v. Manton, 14 B. R. 127.

A receiver can not maintain an action to recover the value of property
sold by the bankrupt in fraud of the bankruptcy law prior to the com-
mencement of proceedings in bankruptcy. Ibid.

Act oF 1874, § 50628 (22 June, 1874, ch. 390,'§ 4, 18 Stat.
178). That, unless otherwise ordered by the court, the assignee
shall sell the property of the bankrupt, whether real or personal, at
public auction, in such parts or parcels, and at such times and places,
as shall be best calculated to produce the greatest amount with the
least expense. All notices of public sales under this act by any
assignee or officer of the court shall be published once a week for
three consecutive weeks in the newspaper or newspapers to be desig-
nated by the judge, which, in his opinion, shall be best calculated
to give general notice of the sale. And the court, on the application
of any party in interest, shall have complete supervisory power over

29
450 Tue Bankruptcy Law.

such gales, including the power to set aside the same and to order
a resale, so that the property sold shall realize the largest sum. And
the court may, in its discretion, order any real estate of the bank-
upt, or any part thereof, to be sold for one-fourth cash at the time
of sale, and the residue within eighteen months, in such installments
as the court may direct, bearing interest at the rate of seven per
centum per annum, and’ secured by proper mortgage or lien upon
the property so sold. And it shall be the duty of every assignee
to keep a regular account of all moneys received or expended by
him as such assignee, to which account every creditor shall, at rea-
sonable times, have free access. If any assignee shall fail or neglect
to well and faithfully discharge his duties in the sale or disposition
of property as above contemplated, it shall be the duty of the court
to remove such assignee, and he shall forfeit all fees and emoluments
to which he might be entitled in connection with such sale. And
if any assignee shall in any manner, in violation of his duty afore-
said, unfairly or wrongfully sell, or dispose of, or in any manner
fraudulently or corruptly combine, conspire, or agree with any person
or persons, with intent to unfairly or wrongfully sell or dispose of
the property committed to his charge, he shall, upon proof thereof,
be removed, and forfeit all fees or other compensation for any and
all services in connection with such bankrupt’s estate, and upon
conviction thereof before any court of competent jurisdiction, shall
be liable to a fine of not more than ten thousand dollars, or imprison-
ment in the penitentiary for a term of not exceeding two years, or
both fine and imprisonment, at the discretion of the court. And any
person so combining, conspiring, or agreeing with such assignee for
‘the purpose aforesaid, shall, upon conviction, be liable to a like
‘punishment. That the assignee shall report, under oath, to the
‘court, at least as often as once in three months, the condition of the
estate in his charge, and the state of his accounts in detail, and at
cat all other times when the court, on motion or otherwise, shall so
order. And on any settlement of the accounts of any assignee, he
shall be required to account for all interest, benefit, or advantage
Teceived, or in any manner agreed to be received, directly or indirectly,
from the use, disposal or proceeds of the bankrupt’s estate. And
‘he shall be required, upon such settlement, to make and file in court
an affidavit declaring, according to the truth, whether he has or
has not, as the case may be, received, or is or is not, as the case may
be, to receive, directly or indirectly, any interest, benefit, or advan-
APPRAISEMENT. 451

tage from the use or deposit of such funds; and such assignee may
be examined orally upon the same subject, and if he shall willfully
swear falsely, either in such affidavit or examination, or to his report
provided for in this section, he shall be deemed to be guilty of
perjury, and on conviction thereof, be punished by imprisonment in
the penitentiary not less than one and not more than five years.

The assignee’s right to convey depends entirely upon the statute which
gives him the power, and he is bound to convey in the manner prescribed
by the statute, or else his conveyance is a nullity. Stevens v. Palmer, 10
Bosw. 60; Harrington v. Fish, 10 Mich. 445; Gray v. Heslep, 33 Mo. 238;
Warren v. Homestead, 33 Me. 256; Dwinel v. Perley, 32 Me. 197; Osborn v.
Baxter, 58 Mass. 406; Joy v. Berdell, 25 Ill. 537; Holbrook v. Brenner, 31
Ill. 501. Vide Crowley v. Hyde, 116 Mass. 589.

The register may designate the newspapers in which a notice of sale by
the assignee shall be published. In re Peter N. Burke, 15 B. R. 40.

Act oF 1867, § 5063. Whenever it appears to the satisfaction
of the court that the title to any portion of an estate, real or per-
sonal, which has come into possession of the assignee, or which is
claimed by him, is in dispute, the court may, upon the petition of
the assignee, and after such notice to the claimant, his agent, or
attorney, as the court shall deem reasonable, order it to be sold,
under the direction of the assignee, who shall hold the funds received
in place of the estate disposed of; and the proceeds of the sale shall
be considered the measure of the value of the property in any suit
or controversy between the parties in any court. But this provision
shall not prevent the recovery of the property from the possession
of the assignee by any proper action commenced at any time before
the court orders the sale.

Statute revised — March 2, 1867, ch. 176, § 25, 14 Stat. 528.

This section intrusts the court with a discretion which can only be
exercised by the court itself, and can not be delegated to any officer of the
court. In re Wm. Major, 14 B. R. 71; in re John Graves, 1 B. R. 237; 8. ¢. 2
Ben. 100.

An order of a register authorizing a private sale without notice is null
and void. In re Wm. Major, 14 B. R. 71.

No confirmation by the court can give validity to an order of a register
authorizing a private sale without notice. Ibid.

An approval by the court of a sale can not be regarded as a confirmation
where it is private and does not become a part of the record until some
time afterward. Ibid.
452 Tue Bankruptcy Law.

A purchaser at a judicial sale made under a void decree, is bound by the
rule caveat emptor to look to the jurisdiction of the court, and the legality
of the decree and proceedings from which it arose. Ibid.

A sale can only be made after such notice to those claiming adversely
as the court in its discretion may deem proper. Ibid.

If property in dispute is sold without notice to the claimant, the sale is
a nullity so far as he is concerned. Stanley v. Sutherland, 16 A. L. Reg.
298,

The sale must be public after public notice. In re Wm. Major, 14 B.
R. 71.

Before the appointment of an assignee, the bankrupt is the custodian of
the estate, and must act in the interest of the creditors. He stands ina
fiduciary relation to the estate and can not be a purchaser. March v.
Heaton, 2 B. R. 180; s. c. Lowell, 278.

Quaere, Does this clause apply to mortgaged property? Its language is
better adapted to claims made by title paramount. Foster v. Ames, 2
B. R. 455; s. ec. Lowell, 313.

The provision that the court may order a sale of property not in the pos-
session of the assignee implies very clearly that the court may exercise
such control as it deems proper, in regard to property which is in contro-
versy, and which is not in the possession of the assignee. Of course it
must be reduced to possession. Where a sale has been made and the
proceeds realized by that sale are in controversy the court may order the
proceeds to be delivered to the assignee, and held subject to the rights of the
party who may prove himself entitled to it. Bill v. Beckwith, 2 B. R. 241;
Foster v. Ames, 2 B. R. 455; s. c. Lowell, 313; in re Josiah D. Hunt, 2 B.
R. 589; s.c. 1 ©. L. N. 169.

Taken literally, the phrase ** or which is claimed by hie’ ”” appears to af-
ford some support to the theory that the power of sale extends to any
portion of an estate, the title to which is in dispute, where the same is
elaimed by the assignee; but it is impossible to adopt that view, as it
would authorize the district judge, in the settlement of the estate of a
bankrupt, however small, to order the sale of the estate, if claimed by
the assignee, of every inhabitant of his judicial district, and to direct the
assignee to hold the funds received from the sales in the place of the es-
tate sold, and to compel the owners in possession of the same to appear in
court and vindicate their titles, and to accept, if successful, the proceeds of
the sales as the value of their property. Such a construction would an-
nul the Constitution, for a man might under it be deprived of his property
without due process of law, and could not claim a trial by jury unless he
commenced his action before the court ordered a sale. The phrase can
not, however, be rejected as surplusage. It was incorporated into the act
for the purpose of giving an enlarged power of sale, and authorizes a sale
though the estate may not have come to the possession of the assignee, if
it is claimed by him, and the title is in dispute, as where personal estate
is found in the hands of a niere depositary, carrier, or bailee for safe-
keeping or transportation, without claim of title or interest in the goods;
or, what more frequently occurs, where personal property is subsequently
APPRAISEMENT, 453

discovered in the possession of the bankrupt which was not transferred
to the assignee, and other cases of a like character. Other examples might
be put, but these are sufficient to show that the power of sale even as en-
larged by incorporating the phrase into the provision, does not extend to
a case where the estate in question is in the actual possession of a third
person, holding the same as owner, and claiming absolute title to and
dominion over the same, whether the title and possession were derived
from the debtor, or any other former owner. Knight y. Cheney, 5 B. R,
305; s. c. 2 L. T. B. 205.

The notice required by this section to be given to a claimant is not in
terms at least limited to claimants residing in the district. Markson v.
Heaney, 4 B. R. 510; s. ce. 1 Dillon, 497.

Under this provision the property may be recovered from the possession
of the assignee by an action brought in a State court, before the com-
mencement of proceedings in bankruptcy, and to which the assignee is
made a party, or after the commencement of proceedings in bankruptcy,
by an action brought in the bankruptcy court, or in the circuit court.
But an action of replevin, brought in a State court, to recover specific
property, after such property has been taken, into custody by the bank-
ruptey court is not, within this section, a “ proper action.”’ In re Vogel, 2
B. R. 427; s. ec. 3 B. R. 198; s. c. 7 Blatch. 18; s. c. 2 L. T. B. 154; in re
Noakes, 1 B. R. 592.

If the assignee is satisfied that property taken by him did not belong to
the bankrupt, he should return it without delay to the owner. In re
Noakes, 1 B. R. 592.

The statute does not exempt an assignee from an action in a State court
for a tortious taking of property not in possession of the bankrupt and be-
longing to a stranger. Leighton v. Harwood, 12 B. R. 360; s. ec. 111
Mass. 67.

In an action against the marshal for an illegal seizure of property, the
measure of damages is the true value of the property, not the amount for
which it was seld. Doll v. Harlow, 11 B. R. 350; s. c. 5 N. Y. Supr. 699;
s.c.9 N. Y. Supr. (Hun) 659.

Act oF 1867, § 5064. The assignee may sell and assign under
the direction of the court, and in such manner as the court shall
order, any outstanding claims or other property, in his hands, due
or belonging to the estate, which can not be collected and received
by him without unreasonable or inconvenient delay or expense.

Statute revised — March 2, 1867, ch. 176, § 28, 14 Stat. 530.

Act oF 1867, § 5065. When it appears to the satisfaction of the
court that the estate of the debtor, or any part thereof, is of a perish-
able nature, or liable to deteriorate in value, the court may order
454 Tue Bankruptcy Law.

the same to be sold, in such manner as may be deemed most expe-
dient, under the direction of the messenger or assignee, as the cage
may be, who shall hold the funds received in place of the estate dis-
posed of.

Statute revised — March 2, 1867, ch. 176, § 25, 14 Stat. 528.

The parties must apply to the court, and not to the register. In re John
Graves, 1 B. R. 237; s. c. 2 Ben. 100.

The court can not order the sale of the property in an involuntary case
until it comes into the hands of the marshal. In re Metzler & ae
thwaite, 1 B. R. 38; s. « 1 Ben. 356.

It is the duty of the court, from the moment that the property is sub-
mitted to its custody, to take due order for-its preservation, and to turn it
to the best account for the creditors. The district court may, therefore,
even before the appointment of an assignee, order the sale of the whole or
any part of the property, if it will be beneficial to the creditors, and is as.
sented to by the bankrupt. In re James Vila, 5 Law Rep. 17.

The filing of a petition for a stay of the sale of certain property as per-
ishable does not make the petitioner a party to the proceedings. Marsh v.
Armstrong, 11 B. R. 125; s. c. 20 Minn. 81.

If a sale is made before the appointment of an assignee, it should not be
made by the bankrupt. In re James Vila, 5 Law Rep. 17.

The bankrupt can not sell any of his property without authority from
the court. In re Richard Prior, 4 Biss. 262.

If a sale is made before the appointment of an assignee, it is necessary
that the creditors should have due notice of the application before the
gale takes place, so that they may appear in the district court and show
cause against any sale, or for a postponement thereof. The best mode of
giving notice to the creditors is by advertisement in some public news-
paper a sufficient time before the sale to enable them to act if they see fit.
In re James Vila, 5 Law Rep. 17. *

Act oF 1867, § 5066. The assignee shall have authority, under
the order and direction of the court, to redeem or discharge any
mortgage or conditional contract, or pledge or deposit, or lien upon
any property, real or personal, whenever payable, and to tender due
performance of the condition thereof, or to sell the same subject to
such mortgage, lien, or other incumbrance.

Statute revised — March 2, 1867, ch. 176, § 14, 14 Stat. 522. Prior
Statutes — April 4, 1800, ch. 19, § 12, 2 Stat. 24; Aug. 19, 1841, ch. 9, § 11,
5 Stat. 447.

Quaere, Can the assignee redeem before the debt is payable? Foster v.
Ames, 2 B. R. 455; s. c. Lowell, 313.
Wuat Cuaims Vain. — 455.

Act or 1898, Cu. 1, Sec. 1. * * * Debt— (11) “Debt”
shall include any debt, demand, or claim provable in bankruptcy.

Act oF 186%, § 5067. All debts due and payable from the bank-:
tupt at the time of the commencement of proceedings in bankruptcy,
and all debts then existing but not payable until a future day, a
rebate of interest being made when no interest is payable by the
terms of the contract, may be proved against the estate of the bank-.
rupt. All demands against the bankrupt for or on account of any
goods or chattels wrongfully taken, converted, or withheld by him,
may be proved and allowed as. debts to the amount of the value of
the property so taken or withheld, with interest. When the bank-
tupt is liable for unliquidated damages arising out of any contract
or promise, or on account of any goods or chattels wrongfully taken,
converted, or withheld, the court may cause such damages to be
assessed in such mode as it may deem best, and the sum so assessed
may be proved against the estate. ‘

Statute revised — March 2, 1867, ch. 176, § 19, 14 Stat. 525. Prior
Statutes — April 4, 1800, ch. 19, § 39, 2 Stat. 32; Aug. 19, 1841, ch. 9, § 5,
5 Stat. 444.

What Claims are Valid.—When a creditor seeks to prove a debt against
the estate of a bankrupt, he stands in the position of a plaintiff in a suit
at law seeking to enforce such claim. In re Prescott, 9 B. R. 385; 8s. « 5
Biss. 523; in re Robert Pittock, 8 B. R. 78; s. c. 2 Saw. 416.

The assignee may set up any defense to a claim which the debtor him-
self could set up. In re Prescott, 9 B. R. 385; s. c. 5 Biss. 523.

Any debt which may be proved by complying with the provisions of the
bankruptcy act is a provable debt. It is true that a secured creditor can be
admitted as a creditor only for the balance of his debt after deducting the
value of the property upon which he has a lien, unless he releases or con-
veys his security to the assignee, in which case he may be admitted as a
creditor for his whole debt; yet his debt is, nevertheless, provable within
the meaning of the act, before such balance is ascertained or such release
or conveyance is made. It does not follow that, because he can not be ad-
mitted as a creditor, he, therefore, can not prove his debt. On the contrary,
the proving of his debt is a necessary preliminary step to his eventually
being admitted as a creditor. In re Bloss, 4 B. R. 147; s. c. 2 L. T. B. 126;
Rankin & Pullan v. Florida, Atlantic & G. C. R. R. Co., 1 B. R. 647; s. c.
1L. T. B. 85. Contra, Sigsby v. Willis, 3 B. R. 207; s. c. 3 Ben. 371; s. c.
1L. T. B. 71. :

The time of the adjudication of bankruptcy is the time of filing the
petition. In re Patterson, 1 B. R. 125: s. c«. 1 Ben. 508. Contra, in re Hen-
nocksburgh & Block, 7 B. R. 37; s. c. 6 Ben. 150.

The time of the adjudication in bankruptcy is taken by the statute as
the decisive time. The debt must exist at the time, or it can not be
456 ‘Tor Bankruptcy Law

proved. If it exists then, but is not payable until afterward, and is not a
debt running with interest, there must be a rebate from its amount of the
interest on that amount from the time of the adjudication of bankruptcy
to the time when it would be payable. If it exists, but is payable beforg
'that time, and bears interest, the statute intends that the debt shall be
proved for the amount of the principal, and of the interest thereon to the
time of the adjudication of bankruptcy. In re Orne, 1 B. R. 57; 8. c 1 Ben.
361; in re Crawford, 3 B. R. 698; s. c. 3 L. T. B. 169; 5. c. 5 B. R. 301; in re
Port Huron Dry Dock Co., 14 B. R. 253.

The accrued interest constitutes part of a debt provable against the
bankrupt’s estate. Sloan v. Lewis, 12 B. R. 173; s. c. 22 Wall. 150; s. c. 68
N. ©. 557; in re Hugo Broich, 15 B. R. 11.

If the contract is silent as to interest after maturity, the creditor is en-
titled to interest after that time by operation of law, and not by any pro-
vision of the contract. Interest can not be allowed on interest in such
cases. In re Geo. A. Bartenbach, 11 B. R. 61; s. c. 2 A. L. T. (N. S.) 33.

No interest can bé allowed on the bills of a bankrupt bank until pay-
ment has been demanded thereon and refused. In re Bank of North
Carolina, 10 B. R. 289.

The proof of a bank bill against a bankrupt bank is equivalent to a de-
mand of payment, and if the estate is sufficient to pay the face value of the
claims as proved, interest may be allowed from the time of filing the
proof. Ibid.

Claims will draw interest from the time of the adjudication up to the
payment at the agreed rate, when that is agreed upon, and when not at the
legal rate. In re Strachan, 3 Biss. 181.

Interest on provable debts can not be computed as against the general
assets beyond the date of the adjudication. The estate is a dead fund,
and in such a shipwreck, if there is a salvage of a part to each person in
the general loss, it is as much as can be expected. It is immaterial to the
creditor at what time interest stops on his debt, provided interest on all the
debts stops simultaneously with his own, for his proportionate share of the
assets will be the same, whatever period be fixed for the stoppage on all
the debts. In re Haake, 7 B. R. 61; s. c. 2 Saw. 231; in re Oliver Bugbee,
9 B. R. 258.

If the value of a security held by a creditor is greater than the amount
of the debt, interest may be computed up to the day of payment and
allowed thereon. In re Haake, 7 B. R. 61; s. c. 2 Saw. 231; in re Frank
Newland, 9 B. R. 62; s. c. 7 Ben. 63.

Interest on a lien claim should be allowed up to the date of making up
the report. In re Abraham A. Devore, 24 Pitts. L. J. 185.

The rate of interest and damages which the drawer of a bill of exchange
is to pay ex mora, is governed by the law of the place where the bill is
drawn. In re Chas. H. Glyn, 15 B. R. 495; s. c. 9 GC. L. N. 183.

If judgment is recovered before the commencement of proceedings in
bankruptcy, the costs are a part of the debt, and may be proved. Interest
on the judgment is also provable. Ex parte O'Neil, 1 B. R. 677; 5. ¢
Lowell, 162.
ConTRACTS. 457

A trustee may prove his claim for services rendered under an assign-_
ment. In re George Lains, 24 Pitts, L. J. 207.

A judgment for costs is a provable debt. Graham v. Pierson, 6 Hill, 247.

A judgment for costs incurred after bankruptcy is not a provable debt.
Sanford v. Sanford, 12 B. R. 565; s. c. 58 N. Y. 67.

If a draft falls due after the commencement of proceedings in bank-
ruptcy, or is payable at the domicile of the debtor, damages for the non-
payment thereof can not be allowed. In re Oliver Bugbee, 9 B. R. 258.

Drafts drawn and accepted after the commencement of proceedings in
pankruptcy are not provable, although the acceptor paid the money to
extinguigh claims that existed prior to that time. He is not entitled to be

“subrogated to the rights of the creditors to whom the drafts were given,

unless he has taken an assignment of their claims. In re Strachan, 3
Biss. 181.

A claim against the bankrupt for liability on stock held by him, can
not be proved until an assessment is made by competent authority. Gib-
son v. Lewis, 11 B. R. 247; s. c. 9 Pac. L. R. 75; s. c. 32 Leg. Int. 22.

The liability of a stockholder for the debt of a corporation is not a
provable debt. James v. Atlantic Delaine Co., 11 B. R. 390.

Contracts.— The only legal effect of an indorsement of a Confederate
bond was to transfer the title, and not to render the party liable as in-
dorser or guarantor. Holleman v. Dewey, 7 B. R. 269.

If a policy of insurance contains a clause authorizing the assured to
surrender the policy at any time, or the company to cancel the same on
five days’ notice, and provides for a return of a part of the premium in
either event, the holder may cancel and surrender the policy after the com-
pany becomes insolvent, and before it becomes bankrupt, and the return
premium will be a provable debt. In re Independent Ins. Co, 7 A. L.
Rev. 362.

The right to maintain an action for money had and received, does not
always depend on privity of contract, or upon contract at all. It is enough
to prove that the defendant has money of the plaintiff which in equity and
good conscience, he ought not to retain. Where the defendant is bound by
a valid contract to pay the money to some one else, the plaintiff can not
prevail. The law does not imply a contract to pay A. when the debtor is
already bound by a valid contract to pay B. In cases not founded on a
direct contract, the inquiry is not concerning priority of contract, but con-
cerning identity of property. If a party fraudulently overdraws his bank
account, the bank has a claim upon those who received the checks without
giving value therefor. Their obligation to pay the drawer must yield as
Soon as the fraud is shown. The bank bas a claim for the bank bills which
were drawn out upon the fraudulent checks by the parties themselves.
The same result will follow whenever the proceeds of fraudulent cliecks
are traced to their possession, whether in the identical bills or not. When
such checks are paid directly to the parties, it will be presumed that they
drew them, or caused them to be drawn. In those instances in which
such checks are paid directly to the creditors of such parties, it may be
458 Tue Bankruptcy Law.

somewhat more difficult to say that the money of the bank comes to the
hands of the parties themselves. In re Bureka Manuf. Co., Lowell, 500.

The debt of a wife contracted dum sola is a provable debt. Vander-
heyden v. Mallory, 1 N. Y. 452.

A note given to compensate another for indorsing a note for the maker
is valid. Providence Co. Savings Bank v. Frost, 13 B. R. 356.

A subscription for a religious or charitable institution given in consid-
eration of a similar subscription by another party, and not revoked until
the institution has incurred new expenses on the faith of it, is a valid
promise, and founded on good and sufficient consideration. Capelle y. .
Trinity Church, 11 B. R. 5386. :

If the bankrupt agrees to pay expenses of taking out a patent in con-
sideration of an interest therein, an indorsement of a note given to pay for
labor on the patent is for a valuable consideration, and the note is a
provable debt. In re Cosmore G. Bruce, 6 Ben. 515.

If notes are given to an accommodation indorser to indemnify him for
his liability, and are subsequently indorsed by him, and passed to a third
party, with the fraudulent design of charging the estate of the maker with
a larger amount than is justly chargeable, the holder can not prove the
claim against the indorser, even for the amount paid for the notes. In re
Leonard L. Hook, 11 B. R. 283.

A person can not claim to be a bona fide holder of a note, if the circum-
stances are of such a strong and pointed character as necessarily to cast
a shade on the transaction, and to put him on the inquiry. Ibid.

An overdue note under seal, given as a collateral security to indemnify
the payee against liabilities as indorser for the bankrupt, is a provable
debt, although the payee has not actually advanced the, money for which
he is bound as surety. Roosevelt v. Mark, 6 Johns. Ch. 266.

A promissory note to deliver specific articles is a provavle debt. Chandler
v. Windship, 6 Mass. 310; McMullen v. Bank, 2 Penn. 3438.

If a creditor signs a negotiable paper after the commencement of the
proceedings in bankruptcy, the purchaser takes it subject to all just offsets
existing at the time of the commencement of the proceedings, for the
creditor can assign, and the assignee can purchase, no more than the
balance due from the bankrupt after all credits are admitted. Humphreys
v. Blight, 1 Wash. 44; s. ¢. 4 Dall. 870.

If one of several jOint makers of a promissory note takes it up by giving
his individual note therefor, and thus satisfies the holder, it is immaterial
how he satisfies him, and he has a demand for contribution, whether he
has, in point of fact, paid his own note or not. Fox v. Eckstein, 4 B. R. 373.

Debts created by fraud, and debts created by defalcation in a fiduciary
character are provable. In re Rundle & Jones, 2 B. R. 113.

A person who has advanced money to the bankrupt for the purchase of
stock, which, however, was purchased in the name of the bankrupt, and
by him hypothecated for money loaned to him, has, as against the other
creditors, merely a provable debt to. the amount of the value of the stock
so directed to be purchased for him. Ungewitter v. Von Sachs, 8 B. R. 7235
s. c. 4 Ben. 167; s.c.1L. T. B. 224; 5.¢.3 L. T. B. 195.
PARTNERSHIP, 459

A claim for services rendered by counsel for the bankrupt in opposing
the petition in involuntary proceedings, is a provable debt. In re N. Y,
Mail Steamship Co., 2 B. R. 74, 554; s.c. 3 B. R. 280, 627; 8. c. 7 Blatch. 178.

A claim for services rendered by counsel for the bankrupt in the prepara-
tion of papers in voluntary bankruptcy is provable. In re Thos. C. Evans,
3B. R. 261.

A person who has taken charge of the bankrupt’s property under a deed
of trust, which was subsequently declared void under the provisions of the
bankruptcy act, has a claim against the bankrupt for services so rendered,
and such claim is a provable debt, although he had notice that the deed
was fraudulent at the time when he rendered the services, Catlin v.
Foster, 3 B. R. 540; s. c. 1 Saw. 37; s.c. 1 L. T. B. 192.

A party dealing with an agent has a right to resort to his principal to
compel the performance of an ordinary or verbal contract made by the
agent for the benefit, and by the authority, of his principal, unless the
credit was knowingly given exclusively to the agent. ‘This principle also
applies, although the agent contracts in his own name without disclosing
his principal, and the other party supposes the agent to be acting for
himself only, and it makes no difference that the contract is in such form
that the agent is also personally liable. In re Troy Woolen Co., 8 B. R.
412,

Some law under which a corporation with the powers assumed may be
lawfully created must be shown in addition to mere user before an as-
sociation can be said to exist de facto. An association must be shown to
be a corporation de facto within this rule before a party dealing with it
will be deemed to be estopped from showing that it had no legal cor-
porate existence. In such case a creditor may treat the association as a
partnership, and his claim will constitute a debt provable against the
members. In re Richard J. Mendenhall, 9 B. R. 497.

If a note on its face purports to make the promise that of the bank-
rupt corporation, and bears the impression of the seal of the corporation,
it is provable against the estate, although the signature is merely that of
the president as president. In re Kansas City Manuf. Co., 9 B. R. 76.

When the common seal of a corporation appears to be affixed to an
instrument, and the signatures of the proper officers are proved, the pre-
sumption is that the officers did not exceed their authority, and the seal
itself is prima facie evidence that it was affixed by proper authority. Ibid.

Parol evidence is admissible to prove that a note executed by an officer
of a corporation was intended as the promise of the corporation. In re
Southern Minn. R. R. Co., 10 B. R. 86.

A party who elects to prove his claims as for goods sold and delivered
to the bankrupt, can not without withdrawing the proof institute an
action of replevin on the ground that the bankrupt was merely his agent.
Ormsby v. Dearborn, 116 Mass. 386.

Partnership.— Where a member of a firm files a separate petition, a
partnership creditor may prove his claim. In re Frear, 1 B. R. 660; s. c
35 How. Pr. 249; s. c, 2 Ben. 467.
460 THe Bankruptcy Law.

Where one partner, in fraud of the firm, issues firm notes for the pur-
pose of obtaining his share of the capital, an accommodation indorser
who subsequently pays them has no claim against the firm, if by prudent
inquiry at the time of their indorsement he could have ascertained that
they were unconnected with the current business of the firm. In re
Dunkle & Driesbach, 7 B. R. 107.

If a note is drawn by one partner in the firm name, apparently in the
course of the firm dealing, the title of the holder will not be affected by
his mere knowledge of facts that were admonitory to greater caution and
further inquiry. There must be knowledge of facts impeaching the valid-

_ity of the note. The fault of the partner’s meditated fraud must be im-
planted in the holder’s title, so that his assertion of a claim against the
firm would necessarily subject him to the imputation of bad faith. Bush
y. Crawford, 7 B. R. 299; s. c. 2 L. T. B. 239,

An agreement made by a member of a firm who are the payees of an
accommodation note not to call on the maker for payment, binds the other
partner who was personally ignorant of the transaction, and he can not
prove the note against the maker, although he took it up with his own
individual funds. Capelle v. Hall, 12 B. R. 1.

In favor of third persons acting in good faith, the presumption is that
notes indorsed in the name of the firm were indorsed on partnership ac-
count, and the indorsement will bind the firm, unless it appears that the
holder had notice that the indorsement was outside of partnership af-
fairs. Lemoins v. Bank, 3 Dillon, 44.

If the holder has notice that the indorsement is an accommodation in-
dorsement, the burden of proof is upon him to show the assent of the
partners, either express or implied, from the firm’s course of dealing.
Ibid.

The possession of a note by the maker before its maturity raises a pre-
sumption that an indorsement thereon is an accommodation indorsement.
Ibid. 2

A check drawn in the firm name for the proceeds of a note bearing the
accommodation indorsement of the firm, does not operate as a ratifica-
tion, so as to bind a partner who had no knowledge of the indorsement or
of the drawing of the check. Ibid.

If a party advances money to one partner for a purpose entirely out-
side of the partnership business, and takes a firm note therefor, the bur-
den is on him to prove the consent of the other partner; and if he fails to
do so, the claim is not provable against the joint estate. In re Forsyth &
Murtha, 7 B. R. 174.

An indebtedness growing out of partnership transactions, of which no
settlement has been made between the parties, in a case where the part-
nership debts have not all been paid nor all the partnership property dis-
posed of, and being in part for assets that have never been disposed of,
is not a provable debt. But a claim arising from a fraudulent misappro-
priation of the partnership funds by one partner may be proved against
the separate estate of the wrong-doer. The partner thus wronged by such
dishonest and fraudulent acts of his copartner, is entitled to treat the mis-
EQuiTABLE DEBTS. 461

appropriation as entirely foreign to the partnership business, and prove
the debt for his share of such funds precisely the same as though the
partnership had never existed. Sigsby v. Willis, 3 B. R. 207; s. c. 3 Ben.
871;s.c 1 L. T. B. 71.

When the articles of partnership stipulated that the share contributed
by each partner to the capital stock should be left in the concern until
the expiration of the partnership, and the partnership gave a firm note,
payable four days after date, to each member, for the share contributed
by him, the wife of a partner who has indorsed his note to her before
maturity, for money loaned by her to him, and by him contributed to the
capital stock of the firm, can not prove the note against the firm until the
partnership debts are paid. She may prove it against her husband, and
is entitled to participate in any dividend of the proceeds of his individual
estate. The knowledge of the husband of facts affecting the wife’s prop-
erty, which he is managing by her consent, must be regarded as the
knowledge of the wife, and she must be charged with notice of all facts
known to him which may affect his transactions on her behalf. In re
Frost et al., 3 B. R. 736.

In order to dissolve a limited partnership under the laws of New York
there must be one publication of the dissolution, and then a repetition
three times after the first publication, at an interval of seven days be-
tween each of the four times. In re King et al. 7 B. R. 279.

The general partners in a limited partnership can not bind the firm
by a contract beyond the purpose and scope of the partnership, and a
claim arising from such a contract can not be allowed as an offset to a
debt due to the firm. Taylor v. Rasch, 11 B. R. 91.

No departure by the general partners from the scope of the business,
no matter how common or long continued, if not consented to or known
and acquiesced in by the special partner, can have the effect to change
or enlarge the scope of the business. Ibid.

Until a partner pays the partnership debt, he has no claim, contingent
or otherwise, against his copartner. Hester v. Baldwin, 2 Woods, 483.

If one partner advances more than his proportion to the capital of the
firm, the assignee of the firm may prove for such advance against the
estate of the copartner. In re John McLean & Son, 15 B. R. 333.

Equitable Debts.— Equitable debts are within the scope of the bank-
ruptey act. It is the intent of the statute to give all creditors an equal
share of the assets, without regard to the mode in which their rights
might have been enforced if there had been no bankruptcy, and that the
debtor should be discharged from all debts and demands which are liqui-
dated or capable of liquidation. In respect to both debtors and cred-
itors, the act is highly remedial, and the district court is vested with
most ample equitable powers to enable it to work out full remedies to
all persons. This section makes provable all debts and liabilities, in
language broad enough to cover such as a trustee owes to his cestui que
trust, or a partner to his copartner, and so of demands which but for
bankruptcy would be properly cognizable in a court of admiralty. If
this were not so, the law could not be uniform, for proof of debts would
462 Tur Bankruptcy Law.

depend on the remedies given in the several States, in one of which the
very same debt might be sued at law, which in another must be prose-
cuted in equity, and in some of whicb there is no distinction betwe2n
law and equity. In re Blandin, 5 B. R. 39; s. c. Lowell, 543; s. c. 2
L. T. B. 198; Roosevelt v. Mark, 6 Johns. Ch. 266.

When the bankrupt has carried on business in the name of another,
demands arising from such business may be considered as equitable
debts of the bankrupt, and proved against his estate. In re Wu. H,
Long, 3 B. R. (quarto) 66.

Claims by Bankrupt’s Wife.— Money loaned by the wife of the bank-
rupt to him out of her separate estate is a claim that may be proved.
While the law regards claims of this character with great distrust, equity
will protect the rights of the wife even against the creditors of the hus-
band. The court being satisfied that the money was the separate prop-
erty of the wife, and was placed in the husband’s hands as a loan or
trust for the benefit and use of the wife, and not as a gift, will adjudge
him to be her debtor to that amount, and will award payment to her
as to any other creditor. In re Bigelow et al., 2 B. R. 556; s. c. 3 Ben.
198; in re Blandin, 5 B. R. 39; s. c. Lowell, 5438; s. c. 2 L. T. B. 198; in re
David W. Jones, 9 B. R. 56; s. c. 6 Biss. 68.

Gifts from the husband to the wife can not be offset against such a
loan. If the gifts were disproportioned to the circumstances of the parties,
or there were reasons to suspect the motives with which they were made,
the court might marshal the gifts and offset them against the loan. In
tre Bigelow et al., 2 B. R. 556; s. c. 3 Ben. 198.

A mortgage taken in the name of the wife merely for the sake of con-
venience will not be deemed a settlement or advancement, and a subse-
‘quent use of the notes by the husband will not give the wife a valid
‘claim against his estate. In re David W. Jones, 9 B. R. 56; s. c. 6 Biss.
68.

Where the husband, by the consent of his wife, is in the habit of receiv-
ing the income, profits, and dividends of her separate estate, the law
‘presumes that she intended to thus dispose of them for the benefit of the
family, and does not, therefore, imply a promise to repay them. Ibid.

A note given by the bankrupt to his wife for a legacy previously re-
duced to possession, is without consideration and can not be enforced.
‘Canby v. McLear, 13 B. R. 22.

Defenses. Where a foreign creditor has obtained a judgment and
levied an execution upon the personal property of the bankrupt in such
foreign country after the commencement of proceedings in bankruptcy,
if he seeks to prove his claim he must first refund what he has so ac
‘quired, and come in equally with the rest of the creditors, or not at all.
In re Oliver Bugbee, 9 B. R. 258.

If the debt of such foreign creditor consists of two claims, on one of
which alone was such judgment obtained and execution issued, he can
not prove either claim, for the whole debt of the creditor is considered
the debt upon which the principle of equality operates, Ibid.
DEFENSES. 463

If a foreign corporation transacts business within the limits of a State
before the appointment of an agent upon whom process may be served,
where such appointment is required by the laws of the State as a con-
dition precedent to the right to transact such business, all contracts so
made are void. In re Comstock & Co., 12 B. R. 110; s. c. 3 Saw. 320.

A debt contracted by a feme covert in a case where she was not au-
thorized to incur it by the law of her domicile, is not provable. In re
Schlichter, 2 B. R. 336; in re Rachel Goodman, 8 B. R. 380; s. c. 5 Biss.
401.

The taking of the note of a third party for a debt, and the obtaining
of a judgment thereon, extinguish the original debt, and make it the debt
of the third party. In re Hinds et al., 3 B. R. 351.

A receipt given by the bankrupt to the sheriff for certain property
taken under an attachment is a provable demand. Iowles y. Treadwell,
24 Me, 377.

A surety fixed at law, and having as a security an absolute note for
a sum certain, due and payable, or a judgment in the name of his trustee,
but for his use, for a sum certain, due and payable, may be admitted to
prove his debt, although the notes upon which he is fixed as indorser, or
the forfeited bonds on which he stands as security have not been actually
paid. He has his legal, absolute debt, liable only to be defeated in equity
by the very remote and possible contingency that he may never be called
upon to pay the notes and bonds. Roosevelt v. Mark, 6 Johns. Ch. 266.

An absolute judgment in the name of another to indemnify a surety for
liabilities incurred by him for the bankrupt, is a legal subsisting debt of
which the surety is the beneficial owner, and which he may prove. Ibid.

A gift made voluntarily and freely by the donor, and accepted by the
donee, is not a sufficient consideration to support the promise contained
in a note which was not executed on consideration, nor as a condition
of the gift. At most it is only a moral consideration, and is not sufficient
to support a promise. There is no legal obligation or duty which a prom-
ise can reach and rest on. A note, which is a mere renewal or repetition
of a lost voluntary note, is like that without consideration and void. “In re
Cornwall, 4 B. R. 400; 5. c. 6 B. R. 305; s. c. 9 Blatch. 114; s. ce. 2 L. T.
B. 220,

In order to entitle a third party to prove a note Which was given with-
out any valuable consideration, there must be some present consideration
at the time of the transfer. He must show that he paid value when he
took it, or incurred some responsibility, or relinquished some right, or
granted some indulgence, or discharged a precedent debt, upon the faith
and credit of the paper. In re Howard, Cole & Co., 6 B. R. 372; 8. ¢. 2
Md. L. R. 448.

If a party has broken the essential part of a contract, his claim thereon
will be disallowed, for he must fulfill the essential part of his contract,
or show that he has been released therefrom by the bankrupt, or prove
that the bankrupt, and not himself, was the cause of his failure to comply
therewith. If he fails to do this, he is without legal remedy or equitable
redress. In re Nounnan & Co., 7 B. RB. 15.
464 Tur Bankruptcy Law.

A debt incurred by the loan of Confederate notes is not provable. In
re Milner, 1 B. R. (quarto) 19; 8s. c. 1 B. R. 419; s. ¢. 85 Ga. 380; s. «.
1 Abb. C. C. 261; s.c 1 L. T. B. 15.

The acceptance of Confederate notes or bonds as payment was a suffi-
cient consideration to liquidate or discharge a contract debt. Holleman
v. Dewey, 7 B. R. 269.

‘A claim for money loaned to a debtor to enable him to depart from the
State with intent to defraud his creditors is not provable. In re Hatje,
12 B. R. 548; s. @ 6 Biss. 436.

A savings bank which is prohibited from making a loan on personal
security, can not prove a note taken for such loan. In re Jaycox & Green,
13 B..R. 122; s. c. 12 Blatch. 209; s. c. 7 B. R. 578; s. c. 13 Blatch. 70.

A savings bank which is prohibited from making loans on personal se-
curity can not prove claim for money so loaned. In re Jaycox & Green,
13 B. R. 122; s. c. 12 Blatch. 209.

A contract for the services of convicts is valid, although the contractor
did not make the deposit with the comptroller required by law. In re
Edward Burt et al., 13 B. R. 187; s. c. 12 Blatch. 252.

A note given for negroes before the emancipation proclamation took
effect is valid and constitutes a provable debt. Miller v. Keyes, 3 B. R.
224. Contra, Buckner v. Street, 7 B. R. 255.

If a compromise failed because all the creditors refused to sign it, a
creditor who received a secret preference may prove his original debt,
although the assignee by suit compelled the refunding of the fraudulent
preference. Brookmire v. Bean, 12 B. R. 217; s. ¢. 8 Dillon, 136.

The purchase of the right to deliver grain at a certain price before
some future day, is void as a wagering contract, if the parties do not
intend to deliver the grain, but only at the utmost to settle the differ-
ences, and the holder can only prove for the purchase money where the
State laws on the subject of gaming allow the money paid to be recov-
ered. In re P. K. Chandler, 9 B. R. 514; s. c. 6 Biss. 53; in re John Green,
15 B. R. 198.

A broker who advances the margin for his principal on a gaming
contract, for a future delivery of grain, can not prove for such advance
under the laws of Wisconsin. In re John Green, 15 B. R. 198. ;

A factor may prove a note against his principal given for money ad-
vanced by him on a contract for a future delivery of cotton, where there
was to be no delivery but the difference only was to be paid, and for
services in relation to that contract. Lehman v. Strassberger, 2 Woods,
554.

If a party reserves the option to receive or deliver cotton on a contract ,
for a future delivery, the contract: is not a wagering contract if he did
not communicate his purpose not to receive or deliver to the other party.
Ibid.

If the goods were selected by the bankrupt and at his request set apart
and marked with his name, this is a sufficient delivery and acceptance,
and the vendor may prove the claim although the goods were destroyed
by fire in his store. In re Downing, 15 B. R. 564; s. c. 13 Pac. L. R. 167.
DEFENSES. 465

When a contract is within the statute of frauds it is not completed
until there is an actual acceptance and receipt of the goods. In such
eases the contract is to be governed by the law of the place where the
goods are accepted, and when it is illegal there, on account of a law pro-
hibiting the sale of liquor, it is not provable. In Michigan payments
can not be applied to the older items in point of time, so as to extinguish
the items for spirituous liquors. A note given for the balance of an ac-
count of which items for liquor constitute a part, being founded in part
on an illegal consideration, is totally void. In re Paddock, 6 B. R. 132;
s.c 2 L. T. B. 214; in re Town et al., 8 B. R. 88.

A verbal contract is not within the statute of frauds, unless it ex-'
pressly shows that it was not to be performed within a year from the
making thereof. Capelle vy. Trinity Church, 11 B. R. 536.

If a note is made in the State and sent by mail to another State where
the sale was made, the validity of the note must be determined according
to the laws of the latter State. In re Town et al., 8 B. R. 38.

A claim for goods sold to the bankrupt under a contract made in another
State, by a citizen of that State, and valid in the place where it was made,
is a provable debt, even though no suit could be maintained thereon in
the courts of the State where the bankrupt resides and files his petition.
If an action can be sustained on the claim before the circuit court, on
appeal, and if the discharge would relieve the debtor from his liability
therefor, then the district court should recognize and allow the same as
a debt provable against the bankrupt’s estate. The proceedings in bank-
ruptey being by virtue and authority of the act of Congress, which au-
thorizes the proof of all legal demands against the bankrupt’s estate, a
law of the State denying all remedy for the recovery of the account, can
not in any way control the proceedings in bankruptcy of the district
court. In re Murray, 3 B. R. 765.

A valid debt is provable, even though prosecuted by an attorney who
has taken it for collection under an agreement to pay all expenses and
retain a certain per cent. of all that may be recovered as a compensation
for his services. The claim against the bankrupt exists independently
of such an agreement. The agreement is a collateral matter. Under
such circumstances it has never been held that an agreement made by
4 creditor with a third party in reference to the prosecution of a claim,
although it would be held to be champertous if either party to it were
setting it up as the foundation of a suit, or a defense in a court of jus-
tice, can be used to defeat the creditor in establishing a claim otherwise
valid. In re Lathrop et al., 3 B. R. 413; s. c. 3 Ben. 490.

A debt is provable, although it may be barred by the statute of limita-
tions of the State where the petitioner resides. In re Ray, 1 B. R. 203;
8c. 2 Ben. 58; in re L. Sheppard, 1 B. R. 489; s.a1L. T. B. 49; s. ¢ 7
A. L, Reg, 484. Contra, in re Danl. P. Kingsley, 1 B. R. 329; s. c. Lowell,
216; in re Harden, 1 B. R. 395; s. c. 1 L. T. B. 48; in re Cornwall, 6 B.
R. 305; 8. c. 4 B. R. 400; s. c. 9 Blatch. 114; 8. c. 2 L. T. B. 220; in re C.
W. Reed, 11 B. R. 94; s. c. 6 Biss. 250.

30
466 Tur Bankruptcy Law.

Where a debt is already barred by the statute of limitations, a prom-
ise by the debtor to pay it when he is able is regarded as conditional,
and not to create an obligation as a revival of the debt until ability to pay
appears; but where there is a present debt, a promise to pay when able
does not destroy the right of the creditor to sue, nor postpone such rights,
and in no wise hinders or prevents the running of the statute. In re
Cornwall, 6 B. R. 305; s. c. 4 B. R. 400; s. c. 9 Blatch, 114; s. c. 2 L. T. B.
220.

The filing of the petition in bankruptcy creates a trust, and the stat-
ute of limitations which ran against the debt ceases to run against the
trust, and the debt is not barred if the time of limitation had not expired
at the commencement of the proceedings in bankruptcy. In re Eldridge
& Co., 12 B. R. 540. Vide in re Robert Morris, Crabbe, 70; in re John S.
Wright, 6 Biss. 317; in re J. W. Maybin, 15 B. R. 468.

The statute of limitations does not run against one who was a non-
resident at the time of the accruing of the cause of action until he comes
into the State. Capelle v. Trinity Church, 11 B. R. 536.

Usury.— The assignee may set up the defense of usury against any
claim presented for proof. The principles adopted in a court of equity
where a debtor seeks relief from a usurious contract do not apply, for the
creditor is seeking to enforce his contract. In re Prescott, 9 B. R. 385;
8s. ec 5 Biss. 523.

The district court has jurisdiction to pass upon the legality of a claim,
and to reject it if. it is void under the usury laws, although it may not
have jurisdiction to enforce a penalty imposed by a State law on account
of an act making any such claim illegal. In re Robert Pittock, 8 B. R.
78; s. ec. 2 Saw. 416.

The defense of usury may be pleaded so long as any part of the debt
for which the usury was paid or agreed to be paid remains unpaid. In re
Prescott, 9 B. R. 385; s. c. 5 Biss. 523.

Where a creditor seeks to prove his claim, a forfeiture of all interest
for usury may be enforced. Ibid.

If a loan is made at the rate of thirty per cent., and eighteen per cent.
of such interest is put in a separate note, which is pot due at the time
of the filing of the petition, the rebate must be at the rate of eighteen per
cent. In re Riggs, Lechtenberg & Co., 8 B. R. 90.

Notes drawn, dated, signed, and indorsed in one State, where the makers
and indorsers reside, but sent to another State to be discounted, are to
be governed by the laws of the latter State if they are accommodation
paper, for they are not complete contracts until they are transferred for
a valuable consideration. The fact that the consideration was remitted
by check to the former State does not affect the question. If the notes
are void for usury by the laws of the latter State, they are not provable.
In re Conrad, 4 L. T. B. 189; s. ¢. 28 Leg. Int. 324; Providence Co. Savings
Bank v. Frost, 13 B. R. 356.

The principal of money loaned by a national bank upon usurious inter-
est is a provable debt. Moore v. National Exchange Bank of Columbus,
1B. R. 470; s. c. 2 Bond, 170;s.c1L. T. B, 74,
Errects oF Acts Done Arrer BANKRUPTCY. 467

If the usury laws of the State do not apply to loans made to corpora-
tions, then as to such loans there is no law of the State, and the whole
interest is forfeited for usury under the laws of the Uniteu States. In
re Wild, 10 B. R. 568; s.¢ 8 A. L. J. 235.

A mere accommodation indorser is entitled to all the protection which
his principal may obtain, and can set up the defense of usury. Ibid.

The Amount that May be Proved.— When a party holds, as collaterals,,
notes of the bankrupt which are invalid as between the bankrupt and
the payee, and is a bona fide holder, he may prove the full amount of the
notes, or aS much thereof as may be necessary to entitle him to a divi-
dend equal to the full sum of his claim. Bailey v. Nichols, 2 B. R. 478;
s.c.2 L. T. B. 60; s.c.1C. L. N. 185; in re Storms & Co., Lowell, 394.

There is no law for restricting the proof on a note to the amount paid
for it. The right of a party who holds a note of the bankrupt as a col-
lateral can not be enlarged after bankruptcy, nor will a good title ag
pledgee be merged in a defective title as purchaser. The rule of equity
is that the party may hold by his best title. If the pledgee releases the
pledgor, and retains the note at a certain per cent., he will be considered
a pledgee who has in good faith recovered what he could from the pledgor,
and may prove for the full amount of the note, but can receive dividends
only to the extent of the per cent. at which he took it. In re Storms &
Co., Lowell, 394.

A party who bas compromised his claim with the bankrupt after the
commencement of proceedings in bankruptcy, can not, in the absence of
fraud on the part of the bankrupt, hold his claim against the estate of
the bankrupt for the balance beyond the amount so received on the com-
promise. As to fraud, if the contract for compromise is void for fraud,
it must be void in the whole and not in the part. The creditor can not
retain the amount receivéd under the compromise and prove a claim for
the balance. He can not affirm one-half of the contract and disaffirm the
other. In re Lathrop et al., 3 B. R. 413; s. ec. 3 Ben. 490.

If the bankrupt as a commission merchant sells grain in violation of
the order of his principal, no reference in estimating the damages can
be had to the market at any later time than the date of the bankruptcy.
Lehmer v. Smith, 1 C. L. B. 45.

Payments made by the maker of a promissory note after the proof
thereof against the indorser do not affect the amount upon which a divi-
dend can be demanded unless the result would be to overpay the note.
In re George S. Weeks, 13 B. R. 263.

Where payments have been made by the maker of a promissory note
prior to the proof against the indorser, the balance is the only amount
that can be proved against the estate of the latter. Ibid.

Effects of Acts Done After Bankruptcy.— A note made prior to the
commencement of proceedings in bankruptcy, which was taken up after
such proceedings were commenced by the bankrupt’s giving a new note,
does not constitute a debt which may be proved by an indorser. If a
creditor of the bankrupt, after the adjudication, accepts a new obliga-
tion from the bankrupt in substitution for the debt existing at the time
468 THE Bankruptcy Law.

of the filing of the petition, he relinquishes his claim upon the estate of
the bankrupt, and must look to his debtor alone for the payment of his
debt. In re Henry B. Montgomery, 3 B. R. 429.

A debt upon which a judgment has been rendered since the commence-
ment of proceedings in bankruptcy, may be proved. The debt is not ex-
tinguished. The instrument, contract, or obligation upon which the debt
arose is extinguished, but not the debt. The debt remains. 1f this were
not so, the judgment would destroy itself by extinguishing the very foun-
dation upon which it is built. The debt was founded upon contract; it is
now founded on judgment, but it is, nevertheless, the same debt. A judg- —
ment operates to extinguish a debt only when it produces the fruits of a
judgment. It operates as a change of remedy merely. It is a security
of a higher nature. It is still but a security for the original cause of ac-
tion. The theory that the debt is so merged in the judgment as to be
extinguished, has no applicability under the bankruptcy act. In re Craw-
ford, 3 B. R. 698; s.c.1L. T. B. 211; s.¢c 38 L. T. B. 169; s. ce. 5 B. R.
801; in re Vickery, 3 B. R. 696; in re S. Brown, 3 B. R. 584; s. c. 5 Ben. 1;
Barnes v. U. S., 12 B. R. 526; s. c. 21 I. R, R. 212. :

Contra, neither the debt nor the judgment is provable. The debt is
merged in the judgment, and the judgment did not exist at the time of
the adjudication of bankruptcy. In re David B. Williams, 2 B. R. 229;
s.c.11L. T. B. 107, 113; 5. c.3 A. L. Reg. 374; Bradford v. Rice, 102 Mass.
472; in re Gallison et al., 5 B. R. 363; s. c. 2 L. T. B. 195; in re A. S.
Mansfield, 6 B. R. 388.

It is not the judgment but the debt, as it existed on the day of the
filing of the petition, that is provable. In re Vickery, 3 B. R. 696; in re
S. Brown, 3 B. R. 584; s. c. 5 Ben. 1; in re Louis H. Rosey, 8 B. R. 509;
s. c. 6 Ben. 507; in re Theodore Vetterlein, 18 Blatch. 44; in re J. W. May-
bin, 15 B. R. 468.

Contra, the debt or claim as it stood at the time of the filing of the
petition, is merged in the judgment, and, therefore, the judgment must
be proved. The judgment must be proved, not because it existed at a
proper time, but because the debt constituting the foundation did exist
at that time. The costs, however, which accrued subsequent to the time
of the filing of the petition, can not be said to constitute a claim or debt
which existed at that time, and should be excluded in making up the
amount upon which dividends are to be declared. In re Crawford, 3 B.
R. 698; s.c. 1 L. T. B. 211; s. c. 3 L. T. B. 169; s. c. 5 B. R. 301; Monroe v.
Upton, 50 N. Y. 593; s. c. 6 Lans. 255.

It is not necessary for a creditor who recovered judgment after the
adjudication of bankruptcy to strike out his judgment before he can
prove the claim on which the judgment was recovered. In re Ezra M.
Stevens, 4 B. R. 367; s. c. 4 Ben. 513; s.c. 2 L. T. B. 121.

A decree for more than $500 obtained in a State court in an action insti-
tuted after the commencement of the proceedings in bankruptcy, e not
a provable debt. In re J. W. Maybin, 15 B. R. 468.

Torts and Damages.— A claim for damages for a purely personal in-
jury is not provable, unless liquidated and transmitted into a legal debt
TorTs AND DAamaggs. 469

by a judgment obtained before the adjudication of bankruptcy. In re
Hennocksburgh & Block, 7 B. R. 37; s. ¢. 6 Ben. 150.

A mere verdict in an action for a personal tort is not a provable debt.
Black v. McClelland, 12 B. R. 481; s. c. 7 C. L. N. 420.

A judgment entered after the commencement of the proceedings in
bankruptcy upon a verdict rendered before that time in an action for
a personal tort, is not a provable debt. Ibid.

A judgment for a fine imposed by law for the commission of a crime
is not provable. A. judgment that a party pay a fine, in the absence of
anything to the contrary, must be presumed to have been given ss a
punishment for the commission of a crime. In re Sutherland, 3 B. R.
314; s. c. 1 Deady, 416.

A penalty incurred by the bankrupt in selling matches without stamps
is a provable debt. In re Louis H. Rosey, 8 B. R. 509; s. c. 6 Ben. 507.

A claim of the United States for the value of goods imported contrary
to the revenue laws is a provable debt. Barnes v. U. S., 12 B. R. 526;
s.c. 21 I. R. R. 212; in re Theodore Vetterlein, 18 Blatch. 44.

If the bankrupt wrongfully converted the property of another while he
was legally in possession thereof, a claim for damages for the conversion
constitutes a provable debt. Cole v. Roach, 10 B. R. 288; s. c. 37 Tex.
413,

If the bankrupt converts an acceptance to his own use and has it dis-
counted, the owner may prove for the full value of the acceptance, al-
though the bankrupt is also liable as indorser to the holder. {!n re Morse
& Co, 11 B. R. 482.

If the original ground of action is founded on contract, but the im-
mediate cause of the action arises ex delicto, and is a claim for damages
unliquidated by an express agreement, it is not a provable claim. Dusar
vy. Murgatroyd, 1 Wash. 13.

A decree for damages in a suit for the specific performance of a con-
tract is a present debt, and, therefore, provable, although the amount re-
mains to be liquidated by the master. Boyd v. Vanderkemp, 1 Barb. Ch.
273.

If there has been a trial in an action for damages arising from a breach
of a contract and a report of the judge fixing the amount of the damages
and a taxation of the costs, so that the whole amount due has been as-
certained, the demand is provable. Monroe v. Upton, 50 N. Y. 593; s. ¢.
6 Lans.. 255.

Where a claim originates in contract, although fraudulently induced,
and is prosecuted in an action soundiag in damages, it constitutes a
provable debt, although the fraud must be proved in order to recover.
In re Henry Schwarz, 15 B. R. 330; s. c. 52 How. Pr. 513.

A liability to an action for deceit on account of a misrepresentation
of the condition of the bankrupt’s firm is not a provable debt. In re
Frederick Schuchardt, 15 B. R. 161.

A representation made by one member of a firm to a person who
subsequently purchases commercial paper of the firm from a third per-
Son, without any intimation that the latter intends to make such pur-
470 THE Bankruptcy Law.

chase, does not render the partner liable individually although it is false.
Ibid.

A judgment obtained for a breach of a promise to marry is provable.
In re Sidle, 2 B. R. 220; in re Daniel Sheehan, 8 B. R. 345.

At the common law, except in the case of judgments in certain inferior
courts, the record and judgment remain in the court in which the judg-
ment is entered after, as well as before, writ of error, a transcript merely
being sent up. The judgment is in no manner superseded, invalidated or
affected by the pendency of the writ of error. The execution only is
stayed or superseded by giving bond. The judgment ‘s a provable debt.
In re Daniel Sheehan, 8 B. R. 345.

Where the claim is for unliquidated damages, there must be an assess-
ment of the damages by the court before the claim can be proved. The
court is not called upon to order an assessment unless the creditor applies
for the same. In re Clough, 2 B. R. 151; s. c. 2 Ben. 508.

A claim for losses arising from the failure of the bankrupt to accept
goods purchased by a broker in his own name for the bankrupt is a
claim for unliquidated damages, and can not be proved without an as-
sessment. In re W. Fleming Smith, 6 Ben. 187.

Act oF 186%, § 5068. In all cases of contingent debts and con-
tingent liabilities contracted by the bankrupt, and not herein other-
wise provided for, the creditor may make claim therefor, and have
his claim allowed, with the right to share in the dividends, if the
contingency .happens before the order for the final dividend; or he
may, at any time, apply to the court to have the present value of
the debt or liability ascertained and liquidated, which shall then
be done in such manner as the court shall order, and he shall be
allowed to prove for the amount so ascertained.

Statute revised — March 2, 1867, ch. 176, § 19, 14 Stat. 525. Prior
Statutes — April 4, 1800, ch. 19, § 39, 2 Stat. 82; Aug. 19, 1841, ch. 9, § 5,
5 Stat. 444.

The only contingent debts and contingent liabilities allowed to be proved

are those contracted by the bankrupt. Zimmer vy. Schleehauf, 11 B. RB. 313;
8s. c. 115 Mass. 52.
“A bankruptcy law may be so framed as to avoid and annul all contracts
existing at the time of the bankruptcy, whether the liability of the bank-
rupt upon such contracts was fixed at the time of the bankruptcy or de-
pended entirely upon contingencies which might afterward arise. Shel-
ton v. Pease, 10 Mo. 4738.

The phrase “contingent debt’ means not demands whose existence
depends on a contingency, but existing demands upon which the cause
of action depends on a contingency. French v. Morse, 68 Mass. 111.

The term contingent demand is inapplicable where a present claim exists
or where it is certain to arise in future, and is only appropriate when
Torts anD DamaAgss., 471

there is no claim in praesenti, and when it is uncertain whether any in’
fact will arise. Jemison v. Blowers, 5 Barb. 686.

It is necessary to distinguish between a contingent demand anda
contingency whether there ever will be a demand. Woodard vy. Herbert,
24 Me. 358.

The contingent demands provided for by the statute are those contingent
demands which are in existence as such, and in such a condition that
their value can be estimated. Ibid.

Every joint debtor has a demand against his codebtor contingent upon
his being compelled to pay more than his share of the debt, and such
demand is provable. Dean vy. Speakman, 7 Bilackf. 317; Frentress y.
Markle, 2 Greene, 553; Clarke v. Porter, 25 Penn. 141.

As long as it remains wholly uncertain whether a contract or engage-
ment will ever give rise to an actual duty or liability, and there is no
means of removing the uncertainty by calculation, such contract or en-
gagement is not provable. A covenant for an indefeasible title in fee
can not be proved when the claim consists merely of a contingent right
of dower in the wife of one of the former owners of the property. Riggin
y. Maguire, 8 B. R. 484; s. c. 15 Wall. 549.

If a party placed property in the hands of the bankrupt at the time
of signing a bond to obtain a release thereof from an attachment under an
agreement that it should be held until the liability on the bond was
terminated, the claim is not provable if the attachment is not dismissed
until after the granting of a discharge. Jacobson vy. Horne, 52 Miss. 185.

This provision has no application to a claim for storage which arose
after the commencement of proceedings in bankruptcy, under a contract
which was terminable at pleasure. There must be a debt or liability_either
as principal or surety, which, if the contingency has happened, or the
term of credit has expired, will be ascertainable. Robinson v. Pesant, 8
B. R. 426; s. c. 58 N. Y. 419.

Where the payment of a debt can not be enforced until the happening
of some contingency, such debt being readily estimated, may be proved;
or, if the extent of a liability depends on the happening of a contingency,
and such contingency is reasonably certain to happen before final divi-
dend, the court may by, some method determine the value to be placed
by the claimant, on such value and admit him to prove it. U. 8. v. Throck-
morton, 8 B. R. 309; s. c. 5 C. L. N. 520; s. c. 6 Pac. L. R. 102; 8. c. 18 L
R. R. 54.

A bend given by the bankrupt to obtain the delivery of property is
not a provable debt, unless the decision on which the liability depends
was rendered before the final dividend. U.S. v. Rob Roy, 13 B. R. 235;
8. c. 1 Woods, 42.

The liability of the sureties of a guardian attaches whenever the
guardian receives property of his ward, and becomes a debt on and to
the extent of the guardian's default, and is a contingent liability. Jones
v. Knox, 8 B. R. 559; s. c. 46 Ala. 53.

Although a ground rent deed contains a stipulation that the rent shall
cease on payment of a certain sum within a certain period, yet it is not
472 oe THe Bankruptcy Law.

a, contingent demand. The payment of the principal sum depends wholly
upon the election of the covenantee. A ground rent is an incorporeal
hereditament, and can not be styled a contingent demand or a debt.
Large v. Bosler, 3 Penn. L. J. 246.

A covenant in a deed to warrant the title against all liens or incum-
brances is a provable demand. Shelton vy. Pease, 10 Mo. 473.
| A covenant against incumbrances is not a provable debt, unless the
breach occurs before the discharge of the bankrupt. French v. Morse,
68 Mass. 111.

The grantee of land which at the time of the grant is subject to incum-
brances which may defeat it, has, before eviction, a contingent demand
against his grantor upon the covenant for quiet enjoyment in his deed,
and the claim is provable, although the breach occurs after the com-
mencement of the proceedings in bankruptcy. Jemison v. Blowers, 5
Barb. 686. 5

The levy of a fi. fa. on the land without more is not sufficient evidence
of a breach of a warranty of title. Williams v. Harkins, 15 B. R. 34;
8. ¢. 55 Ga. 172.

A note which is deposited in the hands of a third party, for the sole
purpose of enabling the creditor to determine whether he will elect to
abide by a certain contract and receive the note, is a contingent claim.
Spalding v. Dixon, 21 Vt. 45.

A promise to pay when the debtor becomes able, is a contingent de
mand. Kingston v. Wharton, 2 8S. & R. 208.

A policy of insurance is provable, although the loss does not occur until
after the commencement of the proceedings in bankruptcy, for it is a
contingent liability. In re American Glass Ins. Co., 12. B. R. 56.

If a policy of insurance contains a stipulation that the insured may sur-
render it any time, and that thereupon the company shall retain the
customary short-time rates of premium for each month entered upon
before the surrender, the provable debt is the difference between the
premium originally paid in advance, and such sum as would have been
payable according to the tariff of short-time rates for the time that
elapsed before the surrender, counting a month which has been begun
as a whole month. Ex parte Derry Mills, 7 A. L. Rev. 573.

The proof of the debt is deemed equivalent to the commencement of
a suit, within the spirit and meaning of the “ year clause,” and a failure
or neglect to make such proof, or bring a suit within twelve months
from the time when the loss occurred, bars the claim as effectually as
would the failure to sue if the company were not in bankruptcy. in re
Fireman’s Ins. Co., 8 B. R. 123; s. ce. 3 Biss. 462.

If a loss upon a policy has been duly and regularly adjusted in good
faith before the company is adjudicated a bankrupt, the claim can be
proven like any other debt, without regard to the “ year clause” of the
policy. Ibid.

If the preliminary proofs are not submitted or acted upon until after
the petition is filed in bankruptcy, the assured, in order to preserve his
claim, must not only present his preliminary proofs, but must also make
Torts AND DAMAGES. 473

his proof in bankruptcy as the equivalent or substitute for the com-
mencement of a suit within twelve months. The assignee has no right
to make an express promise to pay the loss as adjudged, and the law
will not imply one against him from what he may do. If the assured
fails to follow up the preliminary proof by proving his debt in bank-
ruptcy, his claim will be barred by the “ year clause.” Ibid.

It is the duty of the assured to furnish such preliminary proof as the
terms of his policy require, and bring himself within the terms of his
contract. The assignee can make no waiver of such proof. His duty
requires him to allow and pay no claim for losses, unless the assured
first furnishes all the proofs, and submits, on request, to the examina-
tion provided for. As an officer of the court, he can allow no claim or
debt upon his own information or knowledge, and can waive the perform-
ance of no condition which the assured is bound to perform in order to
vitalize his demand. Even where proofs have been furnished, and losses
adjusted before adjudication, especially if such adjustment was made
after the intervention of actual insolvency, it would undoubtedly be the
right and duty of the assignee to examine and revise such proofs and
adjustment, and call for further proof if the claim was not clearly made
out, or there was any evidence of the lack of entire good faith in the
adjustinent. Ibid.

Where there is clear evidence of the waiver of the preliminary proof
by the company prior to the filing of the petition, shown in the proof of
debt, the claim should be allowed, subject to the right of the assignee to
have inquiry made into all the facts touching such alleged waiver. Ibid.

The clause, “ loss, if any, payable at the same time and pro rata with
the insured” in a policy of reinsurance, means that the reinsuring com-
pany shall not pay any more loss than the original company is liable for —
that is, the reinsuring company is to have the benefit of any deductions,
by reason of other insurance or salvage, that the original company would
have, and also to have the benefit of any time for delay which the
original company might claim, so that the liability of the reinsuring
company shall be coextensive only with the liability of the original com-
pany. The claim of the company primarily liable against the reinsuring
company is not limited by its ability to meet its obligations to its original
policy-holders. It may, therefore, prove for the full loss, although it las
only paid a certain per cent. to the original policy-holders. In re Re-
public Ins. Co., 8 B. R. 197; s. ce. 8 Biss. 504.

If a policy is to be void unless the premium note is paid, and the vessel
is stranded after the maturity of the note and before its payment,
the holder has no claim, although the vessel could have been saved if
a storm had not arisen after the payment of the note. Cardwell v.
Republic Fire Ins. Co., 12 B. R. 253; s. c. 7 0. L. N. 282.

If the company that granted a reinsurance receives copies of the pre-
liminary proofs from the company that granted the original policy with-
out objection, this is a waiver of any right to demand original proof. In
re Republic Ins, Co., 8 B. R. 197; s. c. 3 Biss, 504,
474 Tue Bankruptcy Law.

Acr oF 1867, § 5069. When the bankrupt is bound as drawer,
indorser, surety, bail, or guarantor upon any bill, bond, note, or any
other specialty or contract, or for any debt of another person, but
his liability does not become absolute until after the adjudication
of bankruptcy, the creditor may prove the same after such liability
becomes fixed and before final dividend is declared.

Statute revised — March 2, 1867, ch. 176, § 19, 14 Stat. 525. Prior
Statute — Aug. 19, 1841, ch. 9, § 5, 5 Stat. 444.

A claim against a bankrupt as drawer, indorser, surety, bail, or guar‘an-
tor, can not be proved before the liability has become fixed. Until that
time, it is not regarded as a debt due and payable, or even as a debt
existing but not payable until a future day, so as to be provable. In re
Loder, 4 B. R. 190; s. c. 4 Ben. 305.

To charge the bankrupt as indorser upon a note payable upon demand,
the note must be presented for payment within a reasonable time. A
demand after the lapse of more than four years is not sufficient. In re
Crawford, 5 B. R. 301.

If a note is passed to the holder for a loan made by him to the bank-
rupt who indorses it, the claim is provable, whether the note is negotiable
or not. In re Granger & Sabin, 8 B. R. 30.

If a party intending to take the property of a corporation and pay its
debts, buys one of its notes,-this does not release the iudorser. In re
Elliott Felting Mills, 13 B. R. 160.

A representation that a note has been paid does not operate as an es-
toppel in favor of an indorser unless there has been some actual loss.
Ibid.

The giving of time to a maker does not release an indorser, unless there
was a valid contract which could be enforced. Ibid.

A valid agreement for extension of time between the holder of a note
and the maker, without reservation, discharges the indorser. If a valid
extension is shown, the burden is upon the holder to prove a reservation
of all rights and remedies against the indorser. Such agreement must
be express, and made at the time and as a part of the transaction. In
re Granger & Sabin, 8 B. R. 30.

Whenever an indorser’s liability has become fixed, such liability con-
stitutes a debt due and payable from him, and may be proved against his
estate. In re Nickodemus, 3 B. R. 230; s. c.1L. T. B. 140;8s.c 26. L
N. 49; s. ec. 16 Pitts. L. J. 233; in re Cram, 1 B. R. 504; s. c. 1 L. T. B. 65.

But when a payment has been made, the unpaid balance is all that can
be proved. When the payment consists of property, the title to which has
become absolute in the creditor by foreclosure, the debt can not be
proved until an assignee has been elected and has fixed the value of
the property. In re Cram, 1 B. R. 504; s.c.1L. T. B. 65.

Indorsers who are liable in the second instance are included in the
statute, and such a claim is provable, McNeil vy, Knott, 11 Ga, 142,
Torts AND DAMAGES. 475

If the holder of a note indorses it to be liable in the second instance,
the right of action accrues immediately upon the indorsement if the
maker has paid the note while in the hands of a prior holder. Ibid.

A party who takes an accommodation note indorsed for the benefit of
the maker as collateral security for an antecedent debt, without any
notice of any want of consideration, is a bona fide holder for a valuable
consideration, and may prove the claim against the indorser. Fogg v.
Stickney, 11 B. R. 167.

A jail bond is not a provable debt or claim, either against the debtor
or his bail, unless there*has been a breach of the condition prior to the
commencement of the*proceedings in bankruptcy. Dyer vy. Cleveland, 18
Vt. 241.

A guaranty that if a claim can not be recovered from the debtor, the
guarantor will pay it, is a provable debt. Stone v. Miller, 16 Penn. 450.

A bond given to release a debtor from arrest, and conditioned that he
will, within fifteen days after the term at which judgment may be
rendered, notify the creditor for the purpose of disclosure and examination,
is not a demand provable against the surety where the judgment is
rendered after the commencement of the proceedings in bankruptcy.
Woodard v. Herbert, 24 Me. 358.

The omission to file an account is a mere formal breach of ¢ probate
bond, and furnishes a claim for nominal damages only, and so is not a
claim provable against the surety. Loring v. Kendall, 67 Mass. 305.

A sheriff who holds a bond of indemnity against liability for executing
a fi. fa. has a provable debt if judgment was rendered against him in an
action by the owner of the goods prior to the commencement of the
proceedings in bankruptcy. Wartmough y. Gilliams, 1 Phila. 572.

Where principal on debt is insolvent the sureties, in respect to their
liability, are regarded in equity as creditors, and may retain any funds
of principal in their hands, even against an assignee for value without
notice. In re Wm. P. Reynolds, 16 B. R. 158.

A former partner or joint covenantor with the bankrupt who is liable
for joint debts and pays them may prove the amount against the assets
of his former partners or cocontractors. Ex parte Lake et al., In re Whit-
ing et al., 16 B. R. 497.

Prior to commencement of proceedings the bankrupt sold his interest
in the firm to E., his partner, at the same time agreeing to pay all the
firm debts, and to indemnify E. against any liability thereon; Held, that
as between themselves the bankrupt became the principal debtor, and
E. surety for him as to all the debts of the firm, and that E. could not
make proof for the respective differences between the total amount of
the firm debts and the dividends which the estate will pay thereon as a
contingent debt, when he has not paid any part of such differences. In
re Phelps, 17 B. R. 144.

This provision contemplates two cases, 1st. Where the whole debt has
been paid, and the creditor satisfied by the surety, the latter may prove
the debt, or, if it has already been proved by the creditor, the surety
A6 Tur Bankruptcy Law.

may stand in the place of the latter. 2d. Where the surety has not paid
the whole debt, but is still liable for the same or any part thereof, he
may, if the creditor shall fail or omit to prove such debt, prove the
sanie either in the name of the creditor or otherwise. It is evident that the
debt to be proved by the surety in the latter case is not the indebtedness
of the bankrupt to him for the amount which may have been paid by
him, but the whole indebtedness of the bankrupt to the creditor. This
provision is the necessary consequence of the preceding clause, and in-
dispensable for the protection of the surety, for if he has not satisfied the
whole debt, he can not prove under the first clause, and if the creditor
who has been in part satisfied, should choose not to prove, the surety who
has paid part, and is liable for the balance, would be deprived of all share
in the bankrupt’s estate. The two clauses together secure the attainment
of justice in all cases. By the first the surety who has discharged the
debt, is subrogated to the right of the creditor whom he has paid. By
the second the creditor may prove the whole debt. The surety can not in
such case prove, for that would be to allow the same debt to be proved,
in part, twice. But if the surety has paid part, the creditor, after re-
ceiving in dividends, satisfaction of the balance due him, will hold as
trustee for the surety, any dividends received by him in excess. If the
creditor omits to prove, the surety may do so, and will hold any dividends
he may receive to meet his liability to the original creditor. The estate
will thus pay dividends only on the true amount of the indebtedness, the
ereditor, who has the double security of the bankrupt’s lability, and
that of the surety, will be satisfied, while the surety will be reimbursed,
either through the creditor, if he proves, or directly by himself, proving
the debt in the creditor’s name, that portion of the debt he has paid,
or is liable for, to which as a creditor of the bankrupt he is entitled.
This result, however, can only be attained by allowing the creditor who
has been partly paid by the surety to prove and receive dividends on the
whole debt, or the surety, who in csse of omission by the creditor proves
in his name, to make like proof and receive like dividends. In re Eller-
horst & Co., 5 B. R. 148.

A surety has a provable claim against the principal, although he has not
paid the debt for which he is liable. Mace v. Wells, 7 How. 272; 8. ¢
17 Vt. 503; Kyle v. Bostick, 10 Ala. 589; Fulwood yv. Bushfield, 14 Penn.
90; Tubbs v. Williams, 9 Ired. 1; Morse v. Hovey, 1 Sandf. Ch. 187; s. ¢.
1 Barb. Ch. 404. Contra, McMullen v. Bank, 2 Penn. 343; Cake v. Lewis,
8 Penn. 493.

A surety has a provable debt against the principal, although the debt
does not fall due until after the commencement of the proceedings in
bankruptcy. Crafts v. Mott, 4 N. Y. 603; s. c. 5 Barb. 305.

The claim of an indorser against the principal is provable, although the
indorser does not pay the note until after the commencement of the
proceedings in bankruptcy. Hardy v. Carter, 8 Humph. 153; Tunno v.
Bethune, 2 Dessau. 285.

If the drawer is not a cosurety with the payee of a bill of exchange
drawn for the accommodation of the acceptor, the claim of ‘the payee is a
provable debt. Dunn vy. Sparks, 7 Ind. 490.
Ricuts oF INDIVIDUAL SURETIES. At?

An accommodation maker who has not paid the note can not prove his
claim if the holder has proved the note, for the demand can not be twice
proved. In re Morse & Co., 11 B. R. 482.

The solvent partner stands in the relation of a surety to the bankrupt
for the firm debt, and may prove for the latter’s share of the indebtedness
upon showing simply that he stands liable for payment. Butcher v.
Forman, 6 Hill, 583. .

If a party who is liable with the bankrupt as a maker of a joint and
several note, is merely surety for the bankrupt, and takes up the note
by giving the holder his own individual note, he is entitled to prove his
debt. In re Geo. P. Morrill, 8 B. R. 117; s. ce. 2 Saw. 356.

A second indorser upon a note of the bankrupt is entitled to prove the
claim by way of security against the possible responsibility of any of
the parties personally liable, and then his right to share in the dividends
will depend upon his having paid any or all of the note. In re Henry
B. Montgomery, 3 B. R. 426; s. c. 3 Ben. 565.

If the creditor has proved the claim, the surety may apply to the
court for an order that the proof shall stand for his benefit to the extent
of the payments made by him thereon. Downing v. Traders’ Bank, 11°
B. R. 871; s. c. 2 Dillon, 186. :

This clause does not authorize proof by the party so liable, only in a
case where the real creditor could prove his claim. Sigsby v. Willis, 3
B. R. 207; s. c. 3 Ben. 371; s. c. 1 L. T. B. 71.

A bond conditioned for the faithful performance of the duty of a
public officer, is not, prior to breach, a debt either in praesenti or in
futuro, and is not provable against the surety. Loring v. Kendall, €7
Mass. 305; Turner v. Esselman, 15 Ala. 690.

As between cosureties no claim exists until payment has been made
upon the debt by one of them. There is no existing liability from one
surety to the other, until that event. If the payment is not made until
after the final dividend, there is no claim, contingent or otherwise, that
can be proved. Swain v. Barber, 29 Vt. 292; Dunn v. Sparks, 1 Ind. 397.
Contra, Tobias v. Rogers, 13° N. Y. 59.

The claim of a surety against his cosurety, on an official bond for
money which the former was compelled to pay after the final dividend,
is not a provable debt, although the breach occurred before that time.
Goss v. Gibson, 8 Humph. 197; Dole vy. Warren, 32 Me. 94.

If the bankrupt puts another in possession of premises leased by him,
but agrees to be accountable for the rent until they are relet, the claim
for rent is provable. In re Cosmore G. Bruce, § Ben: 515.

A covenant to pay the debt due to another, is for a debt certain or
capable of being reduced to a certainty, and is provable. Murray vy. De
Rottenham, 6 Johns. Ch. 52.

Act or 1898, Ox. 6, § 5%. Individual Sureties, Rights of—
(i) Whenever a creditor, whose claim against a bankrupt estate is
secured by the individual undertaking of any person, fails to prove
478 Tue BANKRUPTCY Law.

such claim, such person may do so in the creditor’s name, and if
he discharge such undertaking in whole or in part he shall be sub-
rogated to that extent to the rights of the creditor.

' Aor or 1867, § 5070. Any person liable as bail, surety, guarantor,
‘or otherwise for the bankrupt, who shall have paid the debt, or any
part thereof, in discharge of the whole, shall be entitled to prove
such debt, or to stand in the place of the creditor if the creditor
has proved the same, although such payments shall have been made
after the proceedings in bankruptcy were commenced. And any
person ‘so liable for the bankrupt, and who has not paid the whole
of such debt, but is still liable for the same or any part thereof,
may, if the creditor fails or omits to prove such debt, prove the
same either in the name of the creditor or otherwise, as may be pro-
vided by the general orders, and subject to such regulations and
limitations as may be established by such general orders.

Statute revised — March 2, 1867, ch. 176, § 19, 14 Stat. 525. Prior
Statute — Aug. 19, 1841, ch. 9, § 5, 5 Stat. 444.

A. surety upon an official bond has no claim against the officer until
he has suffered an injury in consequence of becoming surety. Ellis v.
Ham, 28 Me. 385.

The claim of a surety on an official bond, arising from the neglect of
the officer, is not a provable demand against the principal when: there
is no proof that he has not faithfully discharged all his official duties,
although he at the time has actually been guilty of official neglect.
Ibid.

A bond to indemnify a party against a mortgage signed by the cred-
{tor jointly with the bankrupt is a provable debt, although the install-
ments which the holder is compelled to pay fall due after the com-
mencement of the proceedings in bankruptcy. Crafts v. Mott, 4 N. Y. 603;
8. c. 5 Barb. 305.

A creditor who holds a note made for the accommodation of the
bankrupt, and indorsed by him, and upon which, under the authority of
the court, he has effected a settlement with the maker at forty cents on
the dollar, without prejudice to his rights against the bankrupt, can
only prove for the balance against the bankrupt’s estate. In re Howard,
Cole & Co., 4 B. R. 571; s. c. 2 L. T. B. 161.

If a creditor holding a draft drawn by the bankrupt and accepted for
his accommodation, receives a part payment from the acceptor without
prejudice, after the commencement of proceedings in bankruptcy, he may
prove the whole amount of the draft against the estate, and at most will
only be liable to be treated as proving in part for the benefit of the ac-
ceptor. Downing v. Traders’ Bank, 11 B. R. 371; s. c. 2 Dillon, 136.

Where an indorser pays a certain sum in discharge of his liability on
a note, the holder may prove the full amount against the estate of the
Riguts oF INDIVIDUAL SURETIES. 479

maker without giving credit for what he receives from the indorser. The
legal effect of the transaction is an agreement not to sue the indorser, and
the holder remains the owner of the whole debt in trust to collect it from
the principal debtor and to pay the remainder of his own demand first,
and to then turn the balance over to the indorser, who has a right to be
indemnified subject only to the holder’s better title. Ex parte Talcott,
9 B. R. 502.

§ 5071. Where the bankrupt is liable to pay rent or other
debt falling due at fixed and stated periods, the creditor may prove
for a proportionate part thereof up to the time of the bankruptcy, as
if the same grew due from day to day, and not at such fixed and
stated periods.

Statute revised — March 2, 1867, ch. 176, § 19, 14 Stat. 525. Prior
Statute — Aug. 19, 1841, ch. 9, § 5, 5 Stat. 444.

The words “ the time of bankruptcy ’’ mean the time when the petition
was filed, to which time the adjudication relates. Rent for the time
after the commencement of proceedings in bankruptcy is not a provable
debt. Where an article is purchased, the consideration is, or is assumed to
be executed, while in the case of rent the consideration is assumed to be
not executed, but executory, the use and occupation being in futuro. May
y. Merwin, 9 B. R. 419; s. c. 47 How. Pr. 37; s. c. 7 Ben. 238; Bailey y.
Loeb, 11 B. R. 271; s. c. 2 Woods, 578; in re Lynch & Bernstein, 7 Ben.
26; in re Peter Hufnagel, 12 B. R. 554.

Rent accruing after bankruptcy can not be brought in question, in the
bankruptcy court. Wylie v. Breck, 2 Woods, 673.

Rent should be allowed only up to the time of the commencement of
the proceedings in bankruptcy, and not to the time of the adjudication.
Ibid.

Rent should be allowed from the commencement of the term, although
the terms begins before the date of the lease. Ibid.

Where the property has been condemned for public uses, and a certain
sum allowed to the bankrupt, upon tbe theory that he would remain
Hable for the rent till the termination of the lease, the landlord may
Prove a claim for the full rent, with a proper rebate of interest. In re
John Clancy, 10 B. R. 215.

Whenever the law gives a creditor a right to have a debt satisfied from
the proceeds of property, or bexore the property can be otherwise dis-
posed of, it gives a lien on such property to secure the payment of this
debt. Rent is a lien under the statutes of Maryland, Virginia, Ken-
tucky, New Jersey, South Carolina, Mississippi, Georgia, and Louisiana,
In re Wynne, 4 B. R. 23; s. c. Chase, 227; s.c. 2 L. T. B. 116; in re Dun-
ham & Hawkes, 7 Phila. 611; in re Trim et al., 5 B. R. 23; in re Webb &
Co., 6 B. R. 302; Walker v. Barton, 3 B. R. 265; s. c. 1 L. T. B. 625; Mar-
shall y. Knox, 8 B. R. 97; s. c. 16 Wall. 551; Austin v. O’Riley, 12 B. R.
480 Ture Bankruptcy Law.

329; s. c. 8 B. R. 129; s. c. 2 Woods, 670. Contra, Bailey v. Loeb, 11 B. R.
271; s. c. 2 Woods, 578; Loudon v. Blanford, 56 Ga. 150.

The lien is not waived by a mere agreement to forbear to distrain upon
the condition that the property shall be kept upon the premises. Walker
v. Barton, 3 B. R. 265; 8s. c. 1 L. T. B. 625.

Where the statute of 8 Anne, ch. xiv, or similar statutory provisions
prevail, the landlord, by making a demand upon the assignee, before the
removal of the goods, for an amount not exceeding a year’s rent, is
entitled to priority of payment, whether the right of distraining exists or
not. In re Appold, 1 B. R. 621; s. c. 6 Phila. 469; s. c. 1 L. T. B. 83; Wal-
ker v. Barton, 3 B. R. 265; s. c. 1 L. T. B. 625; in re Trim et al, 5 B. R.
23; Longstreth v. Pennock, 20 Wall. 575; s. c. 7 B. R. 449; s. c. 12 B. RB.
95; 5s. c. 9 Phila. 394. Contra, in re H. L. Butler, 6 B. R. 501; s. ¢. 19 Pitts.
L. J. 146.

If a trustee under an assignment for the benefit of creditors sells the
goods after the commencement of the proceedings in bankruptcy, and
delivers the proceeds to the assignee, the landlord is entitled to priority of
payment out of the same. In re Bowne & Ten Eyck, 12 B. R. 529.

If an execution is issued before the commencement of the proceedings
in bankruptcy, the landlord is entitled to a priority for the rent in arrear,
although the levy was not made nor notice of the rent given to the sheriff
until after that time.. Barnes’ Appeal, 13 B. R. 548; s. c. 76 Penn. 50.

If the lease contains a provision that the whole rent for the term shall
become due and payable whenever the lessee attempts to remove the prop-
erty without paying the same, and that distraint may issue therefor, a
distress for the rent on the happening of the contingency is valid. Good-
win v. Sharkey, 15 B. R. 526; s. c. 80 Penn. 149.

The landlord’s right to rent against the bankrupt’s estate. expires on
the day of adjudication. In re Webb & Co., 6 B. R. 802.

Under the statutes of Illinois, a distress for rent is in the nature of an
attachment upon mesne process. Hence, the assignee of a bankrupt tenant
is vested with all the property of the tenant upon which a distress war-
rant has been issued and levied, prior to the granting of the certificate
of the court to the officer of the amount due from the tenant, and as-
sessed and entered of record. But where the right of the landlord has
been exercised by the issuing and levy of the warrant, and filing a copy
of that and of the inventory of the goods before the magistrate, or in the
proper court, and the obtaining of the certificate of the amount found
due, the landlord has a priority over the general creditors. Where no
distress warrant has been issued prior to the filing of the petition in bank-
ruptey, the landlord can have no priority or preference over the general
creditors. In re Joslyn et al., 3 B. R. 473; s. c. 2 Biss. 235; Morgan Vv.
Campbell, 11 B. R. 529; s. ¢. 22 Wall. 381.

A mortgage to secure the rent under a lease which provides for its
termination, if the assignee, in case of the bankruptcy of the lessee, shall
not accept the lease within ten days after his appointment, is a security
for the payment of the rent up to the time when the assignee elects not
Rieuts oF INDIVIDUAL SURETIES. 481

to take the lease, although more than ten days have elapsed. In re R. F.
Yeaton, Lowell, 420.

If a chattel mortgage executed in pursuance of the terms of a lease is
void under the recording laws of the State, the lessor has neither a
legal nor an equitable lien. Platt v. Stewart, 13 Blatch. 481.

Where a lease stipulates that all unpaid rent shall be a mortgage lien
upon the property on the premises, it creates an equitable lien that is
valid against the assignee. McLean v. Klein, 3 Dillon, 118.

A leaso containing a covenant that the lease shall operate as a mort-
gage upon all property placed on the premises to secure the rent accruing
thereunder, is void as against the creditors of an assignee of the lease,
although it is properly recorded as a chattel mortgage, unless it is ac-
companied by some evidence or notice that he holds the premises subject
thereto. In re Dyke & Marr, 9 B. R. 480.

All right to priority under a lease which stipulates that the rent shall
be a lien on the property placed on the premises, and gives the landlord
the power to take possession thereof, is terminated if the assignee takes
possession before the landlord does. Ibid.

A lease which contains a covenant that the lease shall constitute a
mortgage on the property placed on the premises to secure the rent ac-
eruing thereunder, is void unless it is properly recorded as a chattel mort-
gage. Ibid. \

If the assignee elects not to accept the lease, the landlord can not prove
for the damages suffered by him in reletting the premises. Future rent
is not a contingent debt or liability. There is no right of action at the
time of the bankruptcy, except for the arrears. Ex parte Houghton et
al., Lowell, 554.

If the landlord re-enters, under a power contained in the lease, such
entry puts an end to the term, and to all claim for future rent. Ibid.

Damages for alterations, made in violation of a covenant contained in
a lease, constitute a provable demand. Ibid.

A covenant to pay taxes assessed during the term, where they are as-
sessed as of the first day of May in each year, includes only those taxes
which were assessed in the months of May during the continuance of
the term. Ibid.

If the bankrupt, as sublessee, covenants to pay the taxes, and they are
assessed to the owner of the estate, the claim of the mesne landlord, if
he pays them, is not entitled to preference, because, as between the
parties, it rested in contract merely, and was, to all intents and purposes,
& part of the rent. As the taxes were not assessed to the bankrupt, the
State had no right to prove them in bankruptcy. Ibid.

If the landlord takes a note for the rent which is not paid at maturity,
he is entitled to all his remedies for the security or collection of the debt
in the same manner as if the note had never been given. In re Bowne &
Ten Eyck, 12 B. R. 529.

A distress warrant can not be issued against the property of the bank-
Tupt after the commencement of proceedings in bankruptcy. No lien

31
A482 Tur Bankruptcy Law.

can be acquired or enforced by any proceedings in a State court after the
petition has been filed. In re Wynne, 4 B. R. 23; s. e. Chase, 227; s. ¢c. 2
L. T. B. 116; Brock v. Terrell, 2 B. R. 643; Morgan v. Campbell, 11 B. R.
529; s. ec. 22 Wall. 381.

Until an assignee in bankruptcy elects to accept a lease as assignee he
does not become liable for rent accruing after the adjudication and
assignment in bankruptcy. In re Ten Eyck & Choate, 7 B. R. 26.

Occupation of the premises, independently of the lease, is not evidence
of an election to accept it. Ibid.

Merely allowing the bankrupt’s goods to remain on the premises does
not alone prove an acceptance of the lease, especially when the key is sent
‘back to the lessor, which is an unequivocal act of renunication. In re
R. F. Yeaton, Lowell, 420.

If the assignee rejects the lease, and the bankrupt collects rents from
a subtenant, the district court, on the application of the lessor, may
direct that such subrents shall be applied to pay so much of the original
rent as is provable in bankruptcy. Wylie v. Breck, 2 Woods, 673.

If a joint lease to the bankrupt and another reserves the right to re
enter for the nonpayment of the rent, and the tenants, by a subagreement,
apportion the property and the rent among themselves, the tenants will
be entitled to as full use of the whole premises as the assignee, until
the latter pays in full what the bankrupt was to pay by the’ subagree
ment in order to enjoy the exclusive use of his part as against the solvent
tenant. But the solvent tenant is not entitled to the exclusive use of the
entire premises until the assignee pays the arrears of rent. In re Hotch-
kiss, 9 B. R. 488; s. c. 7 Ben. 235.

Rert for the use of premises to store goods of the bankrupt, from the
time of the commencement of proceedings in bankruptcy to the date
of surrender, should be paid by the assignee, and charged as a part of his
expenses. In re Walton, 1 B. R. 557; s. c. 1 Deady, 598; s. c. 1 L. T. B.
162; in re Appold, note, 1 B. R. 621; s. c. 6 Phila. 469; s. ca 1L. T. B. 83;
Walker v. Barton, 3 B. R. 265; s. c. 1 L. T. B. 625; in re Merrifield, 3 B.
R. 98; in re Laurie, Blood & Hammond, 4 B. R. 32; s. c. Lowell, 404; in re
Dunham & Hawkes, 7 Phila. 611; in re Webb & Co., 6 B. R. 302; in re
H. L. Butler, 6 B. R. 501; s. c. 19 Pitts. L. J. 146; in re Lynch & Bern-
stein, 7 Ben. 26; in re Peter Hufnagel, 12 B. R. 554.

The landlord is not entitled necessarily as a question of law to full
rent of the premises from the commencement of the proceedings in bank-
ruptcy to the date of the surrender. In re Lynch & Bernstein, 7 Ben. 26.

A landlord has no lien on the goods on the premises for the rent that
‘accrues after the commencement of proceedings in bankruptcy, for the
debt is not provable. Bailey v. Loeb, 11 B. R. 271; s. ce. 2 Woods, 578.

The fact that an injury to the building was prevented by not removing
the machinery, is not a circumstance that can be considered in deter-
mining the amount of the compensation for the use of premises. In re
Breck & Schermerhorn, 12 B. R. 215; sc. 9 Pac. L. R. 242.

A reasonable compensation may be allowed to the landlord for the use
of premises after the commencement of the proceedings in bankruptcy,
SET-OFFS AND COUNTERCLAIMS. 483

where the estate has received a benefit to that amount. In re Breck &
Schermerhorn, 12 B. R. 215; s. c. 9 Pac. L. R. 242; in re Hamburger &
Frankel, 12 B. R. 277.

If the landlord desires to obtain compensation equal to the rent offered
by other persons, he should ask the court to sanction the rate of rent
or give up the premises, It is not enough to ask possession or rent from
the marshal. In re Joseph Metz, 6 Ben. 571.

A covenant to pay taxes upon a certain piece of ground as to all taxes
imposed after the discharge can not be proved. Murray v. De Rottenham,
6 Johns. Ch. 52.

A claim for storage which accrued after the commencement of proceed-
ings in bankruptcy, is not a provable debt. Robinson v. Pesant, 8 B. R.
426; s.c. 538 N. Y. 419.

Aot oF 186%, § 5072. No debts other than those specified in the
five preceding sections shall be proved or allowed against the estate.

Statute revised — March 2, 1867, ch. 176, § 19, 14 Stat. 525.

The provisions in regard to what debts may be proved are arbitrary,
but do not affect the existence or validity of such debts as are not
provable, nor does a discharge release them. If a debt is provable, it
comes in for a dividend, and can, unless it is an excepted debt, be
discharged. If it is not provable, it does not come in for a dividend, and
will not be discharged. May v. Merwin, 9 B. R. 419; s. c. 47 How. Pr. 37;
8. ¢c. 7 Ben. 238.

If creditors whose debts arose subsequent to the bankruptcy were per-
mitted to share with those whose demands accrued before, the latter would
be exposed to the hardship of having only a dividend in bankruptcy,
while the former, besides an equal dividend, would retain a remedy for
the residue against the bankrupt himself and his future property. The
privilege, therefore, of creditors to prove and of the bankrupts to be
discharged from debts is wisely made coextensive and commensurate.
Rathbone vy. Blackford, 1 Caines, 588.

Act oF 1898, Cu. 7, § 68. Set-offs and Counterclaims.— (a)
In all cases of mutual debts or mutual credits between the estate
of a bankrupt and a creditor the account shall be stated and one
debt shall be set off against the other, and the balance only shall
be allowed or paid.

(b) A set-off or counterclaim shall not be allowed in favor of
any debtor of the bankrupt which (1) is not provable against the
estate; or (2) was purchased by or transferred to him after the filing
of the petition, or within four months before such filing, with a
484. Tur Bankruptcy Law.

view to such use and with knowledge or notice that such bankrupt
was insolvent, or had committed an act of bankruptcy.

Act oF 1867, § 5073. In all cases of mutual debts or mutual
credits between the parties, the account between them shall be stated,
and one debt set off against the other, and the balance only shall
be allowed or paid, but no set-off shall be allowed in favor of any
debtor to the bankrupt of a claim in its nature not provable against
the estate, or of a claim purchased by or transferred to him after
the filing of the petition,t or in cases of compulsory bankruptcy,
after the act of bankruptcy upon or in respect of which the adjudica-
tion shall be made, and with a view of making such set-off.

Statute revised — March 2, 1867, ch. 176, § 20, 14 Stat. 526. Prior Stat-
utes — April 4, 1800, ch. 19, § 42, 2 Stat. 38; Aug. 19, 1841, ch. 9, § 5, 5
Stat. 444.

This section was not intended to enlarge the doctrine of set-off, or to
enable a party to make a set-off in cases where the principles of legal or
equitable set-off did not previously authorize it. The debts must be mu-
tual, and must be in the same right. Sawyer v. Hoag, 9 B. R. 145; s.¢ 3
Biss. 298; s. c. 17 Wall. 610.

The term ‘ debt ” is fairly to be construed to mean any debt for which
the act provides. A debt which may be proved, and to the owner of
which a dividend must be paid, is a debt in the sense of the term as used
in this section. Tucker v. Oxley, 5 Cranch, 34; s. ec. 1 Cranch C. ©. 419.

The term ‘‘ mutual credits” in the bankruptcy act is more comprehen-
sive than the term “ mutual debts” in the statutes relating to set-off.
The term credit is synonymous with trust, and the trust or credit need
not be of money on both sides. Where a creditor has goods or choses in ac-
tion of the bankrupt put in his hands before bankruptcy, by a valid con-
tract, by the terms of which the deposit will result in a debt, as if they
are deposited for sale or collection, the case of mutual credit has arisen
within the meaning of the bankruptcy act. Ex parte Caylus et al., Lowell,
520; Catlin v. Foster, 3 B. R. 540; s. c. 1 Saw. 87; 8s. ec. 1 L. T. B. 192; Mur-
ray v. Riggs, 15 Johns. 571. ;

Upon bankruptcy of a depositor, his deposit becomes a security for the
payment of his indebtedness to the bank, and such amount should be set
off against the aggregate debt due in bank, not including any notes upon
which the bankrupt is surety unless the principals are insolvent. Ex
parte Howard Nat. Bk., in re North & Co., 16 B. R. 420.

Bankrupt in a composition case in which no assignee has been ap-
pointed stands in the position of an assignee in respect to set-off. Ibid.

Semble, that if the bank held mere contingent debts or liabilities, or 4
claim for unliquidated damages arising upon contract, it may retain the
deposit until the amount of its provable debt can be ascertained, and
may then use it as a set-off. Ibid.

1 So amended by act of June 22, 1874, ch. 390, § 6, 18.Stat, 179.

 
SET-OFFS AND COUNTERCLAIMS. 485

Bankrupt was engaged in manufacturing flour and storing grain in an
elevator attached to its mill. Defendant, prior to the bankruptcy, and
in ignorance of the insolvency of the corporation, purchased a storage
receipt issued by it, and subsequently demanded a delivery of the grain,
which was refused. In action brought by assignee to recover money of
the bankrupt which the defendant had in his possession at the time of
adjudication: Held, that the value of the grain so converted might be
set off. McCabe, Assignee, v, Winship, 17 B. R. 113.

Where set-off is founded on a duty which the plaintiff owes the de-
fendant, the wrongful act can be waived and a set-off is proper; but
where the cause of action is a tort, then the wrongful act can not be
waived. Ibid.

Nothing can be set off against the principal of a debt due a creditor
except a debt due from a creditor to the bankrupt. In re Purcell, 18
B. R. 447.

Where the bankrupt had given a creditor his accommodation notes to
an amount larger than the claim of such creditor, which were discounted
and afterward proved against the estate by the holders: Held, that an
assignee would have the right to set off the dividend paid upon the notes
against the dividend due such creditor, and recover from him the balance
of the amount so paid — and the same equitable right obtains in the case
of a composition. Ibid.

A bank holding a deposit of a bankrupt, and also being his creditor
by a note, may receive a check from bankrupt upon itself, and surrender
the note, though it has notice of bankrupt’s insolvency. Robinson v. Wis-
‘consin M. & F. Ins. Co. Bank, 18 B. R. 2438.

A note which is subject to an offset for a larger amount is not a
provable debt. In re Ford & Co., 18 B. R. 426.

Stockholders of an insolvent corporation, who are also creditors, can
not be allowed to deduct the amount due to them from their respective
proportions of the unpaid capital; but if they prove their debts under
the bankruptcy, deductions equal to their estimated respective dividends
may perhaps be made from the amounts of the assignees’ demands against
them, as stockholders. Wilbur v. Stockholders of the Corporation, 18
B. R. 179.

It was held in this case that the right of stoppage in transitu still ex-
isted as to 600 cases of wine out of an original shipment of 1,500 cases,
which had been stored in a bonded warehouse selected by the bankrupt,
but stored in the name of the shipper, and that the giving of authorization
to withdraw part of the goods was such a separation by consent of the
parties of that part from the rest that a delivery of that part is ‘not to
be considered as a constructive delivery of the whole, or as affecting the
right of stoppage in transitu as to the remaining part. In re Bearns, 18
B. BR. 500.

Stockholders of an insolvent corporation who are also creditors can
not be allowed to deduct the amount to them in their respective pro-
Portions of the unpaid capital, but if they prove their debts under bank-
tuptey, deductions equal io their estimated respective dividends may per-
486 Tur Bankruptcy Law.

haps be made from the amounts of the assignee’s demands against them as
stockholders. Wilbur v. Stockholders of Corporation, 18 B. R. 179.

A. court of equity will not aid a debtor to a bankrupt’s estate to set off
debts bought upon a speculation of the probable dividends against the
debt he owes the estate. Hunt v. Holmes et al., 16 B. R. 101.

A creditor who at the time of the bankruptcy has in his hands goods
or chattels of the bankrupt, with a power of sale, or choses in action, with
a power of collection, may sell the goods or collect the claims and set
them off against the debt the bankrupt owes him. In re Dow et al., 14
B. R. 307.

A. party who holds stock of the bankrupt as collateral for a certain
debt which was overdue at the commencement of the proceedings in bank-
ruptcy, may, if he has power to sell the stock, retain the surplus by way
of set-off on another claim which he holds against the bankrupt. Ibid.

Where the same persons conduct business under two different names

in different places, there is no implied ulterior lien upon the surplus of
the securities deposited with one house for any deficiency in the value of
the securities deposited with the other house. Sparhawk v. Drexel, 12
B. R. 450. ,
, If the debtor knows that two houses are composed of the same persons,
and the declarations or acts of the parties pending the business indicate
a belief upon each side, that either house may control the securities de-
posited with the other house, an ulterior lien will attach in favor of either
house upon any surplus in the value of the securities deposited with the
other house. Ibid.

A partnership can not retain the surplus arising from the sale of se-
curities deposited with a member of the firm to secure a loan made by him
without a positive appropriation by the bankrupt to their claim, or an
agreement of equivalent effect. Ibid.

A creditor who purchases a secured claim and receives a transfer of the
Securities, can not retain the surplus arising from the sale of the securities
on account of his own claim. Ibid.

If a banker in the regular course of business receives drafts for col-
lection, he may retain the amount so collected to pay an indebtedness due
to him, although the money was collected after the commencement of the
proceedings in bankruptcy. In re Farnsworth, Brown & Co., 14 B. R.
148; s. c. 5 Biss. 224.

The words “ mutual credit” are broad enough to include an indorser on
a bill of excharge which was protested before the commencement of the
proceedings in bankruptcy, although he did not pay it until afterward.
Marks v. Barker, 1 Wash. 178.

Before an indorser can offset a liability on a draft indorsed for the
bankrupt, he must show the debt to be subsisting in him alone, for the
debt attempted to be set off must be a good and subsisting one at the
time the action is brought. Ibid.

The claim may be set off by the holder, although he has never proved
it in bankruptcy. Tucker v. Oxley, 5 Cranch, 34; s. c. 1 Cranch C. C. 419.

A stockholder can not set off a claim held by him upon the corporation
SET-OFFS AND COUNTERCLAIMS. 487

against a demand for an unpaid subscription for stock. The debts are not
mutual. The debt due on the subscription is a trust fund devoted to the
payment of all the creditors of the company. As soon as the company be-
comes insolvent, and the fact becomes known to the stockholder, the right
of set-off for an ordinary debt, to its full amount, ceases. It becomes a
fund belonging in equity equally to all the creditors, and can not be ap-
propriated by the debtor to the exclusive payment of his own claim.
Sawyer v. Hoag, 9 B. R. 145; s. c. 3 Biss. 293; s. c. 17 Wall. 610; Scammon
v. Kimball, 8 B. R. 337; s. c. 13 B. R. 445; s. c. 5 Biss. 431; 5.a6L. T. B.
424; Jenkins v. Armour, 14 B. R. 276; s. c. 6 Biss. 312.

A claim for a loss on a policy of insurance may be set off against an
indebtedness from the holder to the company for money deposited with
him as a banker. Scammon vy. Kimball, 8 B. R. 337; s. c. 13 B. R. 445;
s.c. 5 Biss. 481; s.c. 6 L. T. B. 424. :

If a stockholder purchases a claim against the corporation and accepts
his stock note in return therefor, he is liable for interest from the date
of the conversion. Jenkins v. Armour, 14 B. R. 276; s. c. 6 Biss. 312.

Losses upon policies of insurance may be set off against money borrowed
from the insurance company. Drake v. Rollo, 4 B. R. 689; s. c. 3 Biss.
273. :

A party who has acted under a deed of trust, for the benefit of cred-
itors, declared void as being contrary to the provisions of the bankruptcy
act, is entitled to set off the value of the services rendered by him under
such deed against the claim for property that came to his hands under it,
even though he did have notice of the act of bankruptcy committed by the
bankrupt at the time of the rendering of the services. Catlin v. Foster,
3B. R. 540; s. c. 1 Saw. 37; s.c. 1 L. T. B. 192.

A joint claim —that is to say, a debt due to several joint creditors —
can not be set off against a debt due by one of them. If a debt is due to
A. and B., how can any court compel the appropriation of it to pay the in-
debtedness of A. to the common debtor, without committing injustice to-
ward B.? The debtor who owes a debt to several creditors jointly can not
discharge it by setting up a claim which he has against one of those cred-
itors, for the others have no concern with his claim, and can not be af-
fected by it; and no more can one of several joint creditors, who is sued
by the common debtor for a separate claim, set off the joint demand in
discharge of his own debt, for he has no right thus to appropriate it.
Equity will not allow him to pay his separate debt out of the joint fund.
Gray v. Rollo, 9 B. R. 337; s. c. 18 Wall. 629; s.c.1 A. I. T. (N. S.) 195;
Hitchcock v. Rollo, 4 B. R. 690; s. c. 3 Biss. 276.

If A. and B. are indebted upon a joint note to a bankrupt insurance
company, and B. and O. have a joint claim for a loss under a policy issued
by the company, the claim under the policy can not be set off against
the note, for there is neither a mutual debt nor a mutual credit. Gray
y. Rollo, 9 B. R. 337; s. c. 18 Wall. 629; s.c. 1 A. L. T. (N. 8.) 195.

The set-off can not be allowed in such a case, even though the liability
on the note is several as well as joint, and C. consents to the set-off.
Ibid,
488 Tur Bankruptcy Law.

A joint indebtedness may be proved and set off against the estate of
either of the joint debtors who may become bankrupt, and the fact that
it may be subject to be marshaled makes no difference. The joint debtors
are severally liable in solido for the whole debt. Gray v. Rollo, 9 B. R.
337; s. c. 18 Wall. 629; sc. 1 A. L. T. (N. S.) 195; Tucker v. Oxley, 5
Cranch, 34; s. c. 1 Cranch C. C. 419. Contra, Wright v. Foster, 3 McLean,
229.

The partnership is a different thing from the partners themselves, and
the debts of the firm are different in character from other joint debts.
A joint debt incurred by all the partners can not be set off against a de-
mand of the firm upon the creditor who holds the joint obligation. An
illegal claim can not be set off. Forsyth v. Woods, 5 B. R. 78; s. ¢ 11
Wall. 484,

An unliquidated demand against the bankrupt, as supercargo, for vio-
lating his instructions in not keeping the vessel insured, can not be set
off against a demand for wages due to him and moneys advanced by him.
Brown v. Cumming, 2 Caines, 33.

A demand against the bankrupt which has arisen since the bankruptcy
can not be set off against the assignee. Barclay vy. Carson, 2 Hay (N. C.),
243.

A bond due from the bankrupt can not be set off against a note made
after the commencement of the proceedings in bankruptcy, and passed
by the payee to the assignee. McIver v. Wilson, 1 Cranch C. C. 423.

When a plaintiff becomes bankrupt, the defendant may, even in the
State courts, plead any set-off which the bankruptcy law allows. Hunt
v. Holmes, 16 B. R. 101.

A consignee who has received goods for sale in excess of the advances
made thereon, may hold such goods as a set-off against notes of the hank-
rupt, purchased by him in good faith, without suspicion of the consignor’s
insolvency. Goodrich v. Dobson, 43 Conn. 576.

A court of equity will not interfere by injunction to enforce a set-off,
where the debt has been bought after insolrency on a speculation as to
the probable dividend. Hunt v. Holmes, 16 B. R. 101.

A creditor who receives his composition under a resolution, thereby
waives his right to set off the original debt against a judgment subse-
quently recovered upon a cause of action which existed prior to the com-
mencement of the proceedings in bankruptcy. Inbid.

If a party fails to plead the set-off, he can not obtain relief in equity
after judgment is rendered against him. Ibid.

If the mortgagor sets up a counterclaim in an action brought by aD
assignee to foreclose a mortgage, the assignee can not raise the objection
that it is barred by the statute of limitations, if it was not so barred at
the time of the commencement of the proceedings in bankruptcy. Van
Sachs v. Kretz, 17 N. Y. Supr. 95.

If a partner sells his interest in real estate held by the firm to another,
and takes a mortgage thereon to secure the payment of the purchase
money, he will be entitled to priority over the creditors of a new firm,
composed of his copartner and the purchaser, whose capital consists in
SET-OFFs AND CoUNTERCLAIMS. 489

part of such real estate, although the debts of the old firm are paid in
a large part with moneys due from the new firm. Nor are his rights
affected by a subsequent release of the mortgage and the taking of a new
one, in order to give priority to another mortgage then made to another
by the firm, for the new mortgage is a mere continuation of the first one.
Beecher v. Stevens, 438 Conn. 587.

Under the laws of Colorado a creditor obtains a lien upon the property
of the debtor by a delivery of the fi. fa. to the sheriff. Bartlett v. Russell,
24 Pitts. L. J. 206; s.c. 9C. L. N. 3877.

The right of a creditor to a lien is a strict legal right, and must stand
or fall by the statute which gives it. In a controversy with the assignee
there are no equities in favor of the creditor. In re Hamiiton Boyd, 16
B. R. 187; s. c. 9 GC. L. N. 385.

If a judgment against two persons provides that it may be enforced
against the property of one and the joint property of both, the judg-
ment can not become a lien on the property of the other. Ibid.

To create a lien the docket of a judgment must be complete in itself,
und can not be aided by reference to the judgment or other proceedings
in the action. Ibid.

A docket entry which consists of mere abstract numbers, without any
mark to indicate dollars, is not sufficient to create a lien. Ibid.

If the judgment is for gold coin, it must be so docketed. Ibid.

If a creditor who holds the guaranty of the firm for the debt of another,
obtains judgment and makes the money out of the firm assets, one partner
is not entitled to a lien on the individual estate of his copartner by right
of subrogation to the creditor. In re G. W. Smith, 16 B. R. 113.

A. party who has funds in his hands, arising from the sale of goods, may,
in an action of assumpsit therefor, set off a claim held by him against the
bankrupt, although the goods were shipped to him under a special contract,
that the proceeds should be applied to another purpose, and not to such
claim so held by him. Marks v. Barker, 1 Wash. 178.

If a party who had joined with the bankrupt in sending a vessel on a
voyage, where he retained the government of the adventure, subsequently
indorsed for the bankrupt without a special agreement that he should hold
the bankrupt’s share in the venture as security, he can not claim to retain
the proceeds of the venture to reimburse himself for moneys paid on the
indorsements, especially if the cargo did not come into his possession until
after the commencement of the proceedings in bankruptcy. Tunno v.
Bethune, 2 Dessau. 285.

If a party takes a deed of land in his own name, and subsequently loans
his notes to the person for whose benefit he holds the title, he may retain
the land until the notes are paid. Frazer v. Hollowell, 1 Binn. 126.

A debt payable in futuro can be set off against a debt payable in
praesenti. Though there are not debts mutually payable between the
parties, there are mutual credits, and the case is within the equity of the
statute. In re City Bank, 6 B. R. 71; 8. ¢c.4 ©. L. N. 81; Drake v. Rollo,
4B. R. 689; 8. c. 8 Biss. 273.

A claim for unliquidated damages can not be set off by the bankrupt
490 Ture Bankruprcy Law.

against the claim of a creditor. The creditor has the right to prove his
claim in full. In re Orne, 1 B. R. 57; 8. ce. 1 Ben. 361.

Quaere, Can a party, by way of defense to an action by the assignee,
plead and set off a claim which has been once presented for proof, and
rejected? Catlin v. Foster, 3 B. R. 540; s. c 1 Saw, 37; s.a 1L. T. B.
192.

When the assignee brings an action upon a demand due to the bank-
rupt, the defendant may plead a set-off to more or less of such demand,
although the same has not been proved and presented to the assignee, and
rejected by the judge, and appeal taken to the circuit court. Ibid.

A party has the right to have his credit for a deposit in a bankrupt
bank set off against his indebtedness as indorser upon a note held by the
bank and duly protested. And if the parties before bankruptcy do what
the law allows, and the indorser thus takes up the note, it can not be re
covered from him. Winslow v. Bliss, 2 Lans. 220.

A bank may set off the amount due on a protested draft, against a de-
posit made by the bankrupt, and need not pay such deposit to the assignee.
In re H. Petrie, 7 B. R. 332.

Any collections in excess of the advances for which they were specifi-
eally pledged, made after the commencement of proceedings in bankruptcy,
are collections for the account of the assignee, and as to them no right of
set-off exists. Clark yv. Iselin, 9 B. R. 19; s. c. 11 B. R. 337; s. c. 10 Blatch.
204; s. c. 21 Wall. 360.

A creditor is entitled to retain money due to the bankrupt and apply it
to his claim, although he has attempted to obtain a preference thereon, for
the debt is a valid debt against the bankrupt, although it can not be
proved, and the law allows and requires the set-off. Ibid.

A creditor who has received and sold the goods of the bankrupt under an
agreement to account for the same to a committee of creditors can not set
off the balance due from him on the special account against the general
balance due him from the creditor. In re Troy Woolen Co., 8 B. R. 412.

A claim purchased before the filing of the petition in voluntary cases, or
before the act of bankruptcy upon which the adjudication was made in
involuntary cases may be set off, although the purchaser knew that the
debtor was insolvent. Hovey v. Home Ins. Co., 10 B. R. 224; 13 A. L.
Reg. 511; in re City Bank, 6 B. R. 71; s.¢c.4C. L. N. 81. Contra, Hitchcock
v. Rollo, 4 B. R. 690; s. ¢. 3 Biss. 276.

A consent to an assignment of an open account given after the commis-
sion of the act of bankruptcy, but before the filing of the petition against
the debtor, does not confer any higher or better rights upon the holder.
Rollins v. Twitchell, 14 B. R. 201.

A chose in action which is not negotiable, and on which the assignee
must sue in the name of the assignor, does not by assignment become 2
mutual debt or credit in the hands of the assignee, so as to be a matter of
set-off. Ibid.

A party who takes a nominal transfer of a claim will be deemed to be
trustee for the owner, and can not set it off against a claim due by him
to the estate. In re Lane, Brett & Co., 13 B. R. 48.
SET-OFFS AND COUNTERCLAIMS, 491

If a debtor makes an assignment, and afterward becomes bankrupt, an
agreement made between him and one member of a firm before the as-
signment, that a debt due to him by the partner should be set off against
a debt due by him to the firm, can not avail where the other partners only
assent to it after the assignment, and some only after the commencement
of the proceedings in bankruptcy. Clark v. Sparhawk, 2 W. N. 115.

A set-off may be allowed against the indorsee of a note who took it after
the commencement of proceedings in bankruptcy against the maker, and
with notice thereof, whether the note was due or not at the time of the
indorsement, for the filing of the petition was legal notice that wherever
mutual debts subsisted between the bankrupt and his creditors, the right
of set-off attached. Humphries v. Blight, + Dall. 370; s. c 1 Wash. G
O. 44.

A person who purchases the bankrupt’s note while the proceedings in
bankruptcy are pending must be deemed to have constructive notice of
those proceedings, and is not a bona fide purchaser. He succeeds merely
to the rights of the creditor, and can not set the note off against a claim
due by him to the bankrupt. Smith v. Brinkerhoff, 6 N. Y. 305; s. c. 18
Barb. 519.

A party can not set off checks of the bankrupt held by him against his
own note, unless he proves that he had possession of the checks at the
time of the commencement of proceedings in bankruptcy, and upon this
point the burden of proof rests on him, because his defense consists of a
particular fact of which he is supposed to be connusant. It would be
unjust if one person who happened to be indebted to another at the time
of the bankruptcy, were permitted by any intrigue between himself and a
third person so to change his own situation as to diminish or totally de-
stroy the debt due to the bankrupt by an act ex post facto. Such an act
would be a fraud on the equality of the bankruptcy act. Ogden v. Cowley,
2 Johns. 274.

A party who goes into a court of equity to have an assigned claim al-
lowed as a set-off, must show that he is more than the nominal owner.
Hitchcock v. Rollo, 4 B. R. 690; s. c. 3 Biss. 276.

If the debt owing to the bankrupt is not yet due, the creditor may file
a bill in equity to obtain the set-off. Drake v. Rollo, 4 B. R. 689; s. c. 3
Biss. 273.

The bankruptcy of the payee of a note taken for a debt due to his
principal will not affect the right of the maker to such offsets as he ac-
quired under the honest belief that the payee was the owner of the note.
Yarborough v. Wood, 42 Tex. 91.

Proving the entire debt in the proceedings in bankruptcy without
offering to abate the claim by any set-off which the creditor may have,
is a waiver of the right to do so, and an election to proceed on such claim
alone in the bankruptcy proceedings, and the subsequent assertion of part
of the same debt by a plea of set-off in an action against the creditor is
equivalent to the prosecution of an original suit upon the claim, against
the prohibition of the bankruptcy law. Brown v. Farmers’ Bank, 6 Bush,
198; Russell v. Owen, 15 B. R. 322; s. c. 61 Mo. 185.
492 Tue Bankruptcy Law.

Act or 1898, Cu. 3, § 5. Two Partnership, or Individual and
Partnership Estates.— (g) The court may permit the proof of the
claim of the partnership estate against the individual estates, and
vice versa, and may marshal the assets of the partnership estate and
individual estates so as to prevent preferences and secure the equi-
table distribution of the property of the several estates.

Act or 1867, § 5074. When the bankrupt, at the time of ad-
judication, is liable upon any bill of exchange, promissory note, or
other obligation in respect of distinct contracts as a member of two
or more firms carrying on separate and distinct trades, and having
distinct estates to be wound up in bankruptcy, or as a sole trader
and also as a member of a firm, the circumstance that such firms
are in whole or in part composed of the same individuals, or that
the sole contractor is also one of the joint contractors, shall not
prevent proof and receipt of dividend in respect of such distinct
contracts against the estates respectively liable upon such contracts.

Statute revised — March 2, 1867, ch. 176, § 21, 14 Stat. 526.

Two classes of persons are mentioned as embraced in this provision, to-
wit: ist, any bankrupt liable upon any bill of exchange, promissory note,
or other obligation, in respect to distinct contracts, as a member of two
or more firms carrying on separate and distinct trades, and having dis-
tinct estates to be wound up in bankruptcy; 2d, or as a sole trader and also
as a member of a firm. Considered separately, the first part of the clause
would afford strong support to the proposition that the term sole trader
is used in a technical sense; but the whole clause must be construed to-
gether, and the last part provides that the circumstance that such firms
are, in whole or in part, composed of the same individuals, or that the
sole contractor is also one of the joint contractors, shall not prevent such
proof, and the receipt of dividends, and thus shows that the term sole
trader is not used in a technical sense, and that its meaning was intended
to be enlarged by the latter part of the clause. Emery vy. Canal Nat’l.
Bank, 7 B. R. 217; s.c.5 L. T. B. 419.

Act or 1898, Cu. 6, § 56. Voters at Meetings of Creditors.—
(a) Creditors shall pass upon matter submitted to them at their
meetings by a majority yote in number and amount of claims of all
creditors whose claims have been allowed and are present, except
as herein otherwise provided.

(b) Creditors holding claims which are secured or have priority
shall not, in respect to such claims, be entitled to vote at creditors’
meetings, nor shall such claims be counted in computing either the
number of creditors or the amount of their claims, unless the amounts
SECURED CREDITOR. 493

of such claims exceed the values of such securities or priorities, and
then only for such excess.

§ 5%. Proof and Allowance of Claims.— (e) Claims of secured
creditors and those who have priority may be allowed to enable such
creditors to participate in the proceedings at creditors’ meetings held
prior to the determination of the value of their securities or priorities,
but shall be allowed for such sums only as to the courts seem to be
owing over and above the value of their securities or priorities.
* * *

Act oF 1898, Cu. 4, § 57. * * * Value of Securities.—
(h) The value of securities held by secured creditors shall be deter-
mined by converting the same into money according to the terms
of the agreement pursuant to which such securities were delivered
to such creditors or by such creditors and the trustee, by agreement,
arbitration, compromise, or litigation, as the court may direct, and
the amount of such value shall be credited upon such claims, and
a dividend shall be paid only on the unpaid balance.

Cu. 1, Szc. 1. * * * Secured Creditor— (23) “Secured
creditor ” shall include a creditor who has security for his debt upon
the property of the bankrupt of a nature to be assignable under this
Act, or who owns such a debt for which some indorser, surety, or
other persons secondarily liable for the bankrupt has such security
upon the bankrupt’s assets.

After adjudication, a creditor holding a mortgage for $15,000 on bank-
rupt’s real estate had it sold at auction, and purchased it for himself, for
$142.50, and proved for residue of mortgage as an unsecured claim. Proof
allowed over objections, and he was permitted to vote for assignee,
whereby a majority in value of the creditors was obtained. Held, no such
mode of ascertaining value of mortgaged security is recognized by the
bankruptcy act; that the register had no authority to admit the proof, and
allow the vote against objection, and that the choice of assignee under
such circumstances was irregular. In re W. R. Hunt, 17 B. R. 205.

Where the former assignee of the bankrupt, a second mortgagee, was
made a party defendant in a suit to foreclose the first mortgage, and died
after entry of decree pro confesso, but before final decree, and the
successor was not made a party to the suit, a sale will not affect the second.
mortgage, and the assignee will be permitted to redeem. Avery Vv.
Ryerson, 16 B. R. 289.

Where secured creditor bas secured his claim without stating fact of
its being secured, and has received a dividend thereon, if those interested
in the distribution of the estate do not take advantage of the forfeiture of
the security caused thereby, third parties, not being so interested, have no.
standing to do so. Bassett v. Baird, 17 B. R. 177.
494. THE BANKRUPTCY Law.

Under the law of 1867, it was held that a creditor having a lien upon the
pankrupt’s estate may decline to appear in the bankruptcy court, in which
case he will be unaffected by the proceedings, unless the proper steps are
taken to sell the estate clear of all incumbrances; or he may elect to prove
his debt in the bankruptcy proceedings, and rely upon his security, and
such action will be a waiver of his right to institute any suit or proceeding
in any way inconsistent with such election. Spilman v. Johnson, 16 B. R.
145.

As to bankrupt and his wife, the bankruptcy proceedings do not divest
the State court of jurisdiction of an action to foreclose a mortgage given
by them, and the creditor whose claim is secured by a mortgage may,
after having proved his claim, and upon leave of the court, foreclose in
State court, if the assignee does not object. McHenry v. La Société
TI'rancaise, 16 B. R. 385.

A firm creditor holding mortgage security upon the separate estate of one
of the partners may prove his whole debt against the joint estate, without
valuation or surrender of the security, even though the individual
schedules of the partner whose separate estate is thus mortgaged do not
show that he holds individual debts. In re Thomas & Sivyer, 17 B. R. 54.

Where a suit against a bankrupt to enforce a lien is pending at time of
the adjudication, the lien creditor may, before any final disposition of
such suit, prove his demand in the bankruptcy court, and have it allowed
as a lien claim, with all the rights and privileges belonging to it under the
bankruptcy law. Bucknam v. Dunn et al., 16 B. R. 470.

A creditor of the bankrupt, holding security by way of mortgage upon
real estate, obtained leave of the bankruptcy court to foreclose his mort-
gage in a State court, sold the real estate under decree of foreclosure, and
proved his judgment for deficiency on the sale as a claim against the
estate. On re-examination of the claim; Held, that he could not prove for
his deficiency; that if he desired to do so he should have taken proper
steps to obtain a valuation of his security in the manner prescribed by the
law. In re Herrick, 17 B. R. 335.

Ordinary order granting leave to foreclose a mortgage upon bankrupt’s
property can not be construed as directing that the value of the security
be ascertained by sale under decree of foreclosure. The fact that a re-
covery of amount of a mortgage in the bankruptcy court would be bur-
dened with greater expenses than if the mortgagee were allowed to go on
and foreclose, will not control the actions of court where it is obviously
for the interest of creditors that the estate should be administered in the
bankruptcy court. In re Duryea, 17 B. R. 495.

The Bowery Savings Bank held a first mortgage on property of the
bankrupt, which was not contested by the assignee. It commenced fore-
closure proceedings, which were restrained by injunction of the bank-
ruptey court. On motion to be allowed to proceed with the foreclosure
to the entry of judgment; Held, that there was no reason for allowing it
to do so, as its rights would be fully secured on the distribution of the
proceeds of sale whenever the property should be sold under direction of
the court. Ibid.
SECURED CREDITOR. 495

Where a secured creditor proved his debt, had his security appraised and
accepted dividend upon balance of his claim, after deducting appraised
value of the security, the discharge of the bankrupt is no defense to an
action on the security. Streeper v. Mckee, 17 B. R. 419.

Where creditor whose claim is secured by mortgage has proved such
claim in bankruptcy proceedings, and the court has made an order, upon
application of a prior lienor, permitting the latter to sell the premises, and
directing that the proceeds thereof, beyond the sum admitted to be due
on such prior lien, abide the further order of the court upon hearing be-
tween claimants of the fund, a State court has no jurisdiction after such
sale of a suit to foreclose the mortgage. Levy v. Haake, 18 B. R. 544.

Act oF 1867, § 5075. When a creditor has a mortgage or pledge of
real or personal property of the bankrupt, or a lien thereon for secur-
ing the payment of a debt owing to him from the bankrupt, he shall
be admitted as a creditor only for the balance of the debt after de-
ducting the value of such property, to be ascertained by agreement
between him and the assignee, or by a sale thereof, to be made in
such manner as the court shall direct; or the creditor may release
or convey his claim to the assignee upon such property, and be
admitted to prove his whole debt. If the value of the property
exceeds the sum for which it is so held as security, the assignee may
release to the creditor the bankrupt’s right of redemption therein
on receiving such excess; or he may sell the property; subject to the
claim of the creditor thereon; and in either case the assignee and
creditor, respectively, shall execute all deeds and writings necessary
or proper to consummate the transaction. If the property is not
so sold or released and delivered up, the creditor shall not be allowed
to prove any part of his debt.

Statute revised — March 2, 1867, ch. 176, § 20, 14 Stat. 526. Prior Stat-
utes — April 4, 1800, ch. 19, § 68, 2. Stat. 36; Aug. 19, 1841, ch. 9, § 2, 5
Stat. 442.

Construction.— The general purpose and policy of the act is to produce
equality among the creditors of insolvent debtors with the exceptions pro-
vided for in the act, and to attain that end its provisions should in cases
of extreme doubt be construed beneficially for the general unsecured cred-
{tors. In re Jaycox & Green, 8 B. R. 241.

The term “lien” comprehends all privileges and charges upon the
thing recognized by local statutes or long-established usages or the prin-
ciples of general law. In re W. C. H. Waddell, 1 N. Y. Leg. Obs. 53.

A lien denotes a legal claim or charge on property, whether real or per-
sonal, for the payment of any debt.or duty. Downer v. Brackett, 21 Vt.
599; 8. ¢, 5 Law Rep. 392; Storm v. Waddell, 2 Sandf. Ch. 494.
496 Tur Bankruptcy Law.

In the different States there are various securities upon property, which,
by the laws of the respective States, are as essentially a lien on the prop-
erty as those existing at the common law. These liens or securities, pe-
culiar to the several States, are preserved as well as common-law liens. It
is of no importance what they are called, whether liens. or securities or
anything else. Haughton v. Eustis, 5 Law Rep. 505; Downer v. Brackett,
21 Vt. 599; s. c. 5 Law Rep. 392.

When a party is compelled to pay the debt of a third person in order to
protect his own rights, a court of equity substitutes him in the place of
the creditor as a matter of course, without any agreement to that effect.
Whithed v. Pillsbury, 13 B. R. 241.

The term ‘ has” is of broader signification than the term holds. Al-
though the holder of a promissory note, the indorser of which is secured by
a mortgage upon the property of the bankrupt, has no legal title or com-
mon-law right to any mortgage, pledge or lien upon the property of the
bankrupt, which can be directly enforced by him under the strict and
technical rules of the common law, yet be has in equity and potentially a
mortgage, pledge or lien, upon the property of the bankrupt for securing
the payment of his debt within the intent and meaning of this provision.
In re Jaycox & Green, 8 B. R. 241.

A. mortgage to indemnify a surety does not render the principal debt a
secured debt. In re William M. Lloyd, 15 B. R. 257; s. c. 24 Pitts. L. J.
113.

The provision in regard to the proof of secured claims applies only to
securities upon property, real or personal, of the bankrupt. In re Ander-
son, 12 B. R. 502.

A claim that is secured by the guaranty indorsement or collateral lia-
bility of a third person may be proved as unsecured. In re Anderson, 12
B. R. 502; in re Hugo Broich, 15 B. R. 11; in re William M. Lloyd, 15 B. R.
257; 8. c. 24 Pitts. L. J. 118.

Every line of this section points most distinctly and directly to property
of the bankrupt, and only to property of the bankrupt which the district
court in bankruptcy can deal with, and does not contemplate the sale of
property of third parties held by the claimant as security for his demand.
A distinction is taken between the case of a security given to the creditor
by the bankrupt himself of his own property, and the case of the security
of a third person transferred to the creditor by the bankrupt or otherwise.
In the former case the creditor is not allowed to prove his debt against the
bankrupt, unless he surrenders up the security, or it is sold with his: con-
sent. In the latter case he may prove his debt in bankruptcy without sur-
rendering the security of the third person which he holds, and may, not-
withstanding such proof, proceed to enforce his security against such
third person, provided, however, that he does not take under the bank-
ruptcy and the security more than the full amount of his debt. In re
Cram, 1 B. R. 504; s. ¢c. 1 L. T. B. 65; in re Dunkerson & Co., 12 B. R. 413;
s. c. 4 Biss. 253; in re Samuel H. Babcock, 3 Story, 393.

When one partner pledges his property as security for a firm debt, the
creditor may prove his full claim against the firm without a valuation of
the securities. In re Dow et al,, 14 B. R. 807.
Wuat Ligns PRESERVED. 4Ov

The holder of a bill of exchange which the bankrupt accepted for the
accommodation of the drawer has the right to prove his debt, and also to.
proceed against the drawer by attachment until he has recovered the full
amount of his debt. The most that the assignee is entitled to is to have
the aid of the court in having the attachment suit carried on to its proper
conclusion for the benefit ‘of the bankrupt’s estate, as far as regards any
surplus which may remain after the creditor has received from the divi-
dends in bankruptcy and under the attachment, the full amount of his
debt. The creditor is not bound to pursue the attachment suit at his own
expense, unless he chooses so to do, but he is bound, if he does not cboose
to carry it on upon his own account, to allow the assignee to carry it on for
the benefit of the bankrupt’s estate at the expense thereof. In re Samuel
H. Babcock, 3 Story, 398.

What Liens are Preserved.— All vested legal or equitable rights and in-
terests in property ereated by the laws of the State are left undisturbed.
But this still leaves open the question whether a particular claim is a right
or interest in property. If it is not, it is not a lien or security. In re Stuy-
vesant Bank, 9 B. R. 318; s. c. 10 Be R. 399; s. c. 49 How. Pr. 133; s. e
12 Blatch. 179.

There is no distinction in the bankruptcy law between different kinds of
liens. Its provisions apply equally to all liens, of whatever kind, character,
or description. Davis, Assignee of Bittel et al., 2 B. R. 392; Peck v.
Jenness, 7 How. 612.

The bankruptcy act does not divest liens acquired and consummated
before the adjudication of bankruptcy. When it speaks of the estate of
the bankrupt, it means such estate with all the incumbrances existing
upen it at the time of the bankruptcy; in other words, the net value of
the property after the liens upon it are satisfied. In re Hambrigbt, 2 B.
R. 498; 5. c.2 L. T. B. 61; s. cc. 1 C. L. N. 201.

All the rights, and all the duties of the bankrupt in respect to whatever
property, not expressly excluded from the operation of the act, he may
hold under whatever title, whether legal or equitable, and however in-
cumbered, pass to and devolve upon the assignee at the date of the filing
of the petition in bankruptcy. And all rights thus acquired are to be
enforced by process, and all duties thus imposed are to be performed under
the superintendence of the national courts. No lien can be acquired or
enforced by any proceeding in a State court commenced after the petition
is filed. In re Wynne, 4 B. R. 23; s. c. Chase, 227; s. c. 2 L. T. B. 116.

The wife’s right of dower is preserved, and will prevail against her
husband’s assignee. In re Angier, 4 B. R. 619; s. c. 10 A. L. Reg. 190; s. ¢.
1L. T. B. 48; in re Bairlie, 4 B. R. (quarto) 103, 127; in re Hester, 5 B. R.
28. Contra, Hill v. Bowers, 4 Heisk. 272; Bostick v. Jordan, 7 Tenn. 370.

A bankrupt’s wife has no inchoate dower in real estate, held as partner-
Ship assets. Hiscock v. Green, 12 B. R. 507.

If the real estate of the bankrupt is covered by a mortgage, the inchoate
dower of his wife attaches to the equity of redemption only. Ibid.

32
498 Tue Bankruptcy Law.

The money paid to extinguish the dower of the bankrupt’s wife will be
apportioned to the parties interested according to the amount of the pro-
ceeds which each is entitled to receive. In re Geo. A. Bartenbach, 11 B. R.
61; 8. c.2 A. L, T. (N. §.) 33.

If the lien expires by the statute of limitations after the commence-
ment of the proceedings in bankruptcy, the title of the assignee becomes
absolute. Bruner v. Sherley, 27 Miss. 407.

If a man is seized during coverture of an equity of redemption, and the
Jand is sold under the mortgage, his wife is not entitled, as against his
assignee, to a dower interest in the surplus that remains after paying off
the mortgage debt. At any time before sale, she can bring her bill to
redeem and protect herself against an unreasonable refusal on the part of
her husband’s assignee to pay the mortgage, especially when such refusal
is given with the intent to defeat her interest by suffering a sale to be
made. But after a foreclosure and a conversion of the estate into money,
it is too late for an application on her part to share in the proceeds. She
is as much barred of her right as if foreclosure had been without sale by
entry for breach of condition and lapse of time. When the husband's
estate in the land is converted into personalty by a sale under the mort-
gage, it belongs to those who are entitled to his personal estate. Newhall
vy. Savings Bank, 101 Mass, 428.

A creditor, by filing a bill in chancery to reach the equitable or other
assets of the debtor, obtains a lien thereon from the time of the service of
the process. Clarke v. Rist, 3 McLean, 494; Fetter v. Cirede, 4 B. Mon.
482; Storm vy. Waddell, 2 Sandf. Ch. 494; in re Abner H. Allen, 1 N. Y.
Leg. Obs. 115; s. c. 5 Law Rep. 362; Watkins v. Pinkney, 3 Edw. Ch. 533;
Smith v. , 4 Edw. Ch. 653. Contra, in re W. H. C. Waddell, 1 N. Y.
Leg. Obs. 53.

The mere filing of the bill without service of process does not create a
lien. In re Charles Smith, 1 Penn. L. J. 149.

The lien acquired by filing a creditor’s bill extends only to property
which can not be reached on execution. Johnson v. Rogers, 15 B. R. 1;
s.a 14 A. L. J. 427.

Until a receiver is appointed in the creditor’s action, there is no lien as
against chattels that are subject to levy and sale on execution that can
be upheld as against the assignee. Ibid.

If a creditor, after the commencement of proceedings in bankruptcy,
takes out an insurance policy on the life of the bankrupt as security for the
debt, and the bankrupt dies before any dividend is made, he must credit
the net amount so realized on his claim, and can only receive a dividend on
the balance. In re Frank Newland, 9 B. R. 62; s. a 7 Ben. 63.

If the creditor, after the value of the policy held by him as security has
been fixed and credited on his debt, keeps the policy alive, he must, in case
the bankrupt dies before a dividend, credit the net amount so realized upon
his claim, and only receive a dividend for the balance. He holds the same
relation to the estate, as if he had taken out a new policy. Ibid.

Each partner has a specific lien upon the partnership property for the
satisfaction of the partnership debt, and for the payment of any surplus

 
Wuat Liens PRESERVED. 499

that may remain to him after the adjustment of the rights and equities
between themselves; and a suit instituted in a State court of equity to
enforce such lien wherein a receiver has been appointed, is not terminated
or discontinued by the partnership being adjudged bankrupt under pro-
ceecings subsequently commenced, but the suit may be continued, and the
property distributed in the State court. Clark vy. Binninger, 3 B. R. 518;
s. c. 88 How. Pr. 341; s.c. 8 L. T. B. 49.

The assignment to the assignee is for the benefit of the creditors, and is
not affected by secret unrecorded liens. Brock v. Terrell, 2 B. R. 643.

If the by-laws of a bank provide that no transfer of stocks shall be made
so long as the holder is indebted to the bank, the bank has a lien on the
stock for the indebtedness of the holder, and this lien is not waived by
taking a note with an indorser. In re Thomas Morrison, 10 B. R. 105; s. ec.
6C. L. N, 110.

A national bank has no lien on its stock for debts due to it by the
holder of the stock. Second Nat’l. Bank v. Nat’l. State Bank, 11 B. R. 49;
s.c. 10 Bush, 367. Contra, in re Robert Dunkerson & Co., 4 Biss. 227; in re
Bigelow et al., 1 B. R. 667; s. c. 2 Ben. 469.

A banking corporation has a general lien on collaterals deposited to
secure a particular debt, and may retain them as security for other debts.
In re Lemuel Peebles, 13 B. R. 149.

The taking of collaterals expressly as security for a particular debt does
not waive the lien which a banking corporation by its charter has reserved
on the shares of a stockholder for other debts. Ibid.

A broker who holds stocks on a margin is bound to take notice of the
bankruptcy of the buyer, and if he continues to hold them for an un-
reasonable period after that time and then sells them without notice, he
must sustain the loss. In re John H. Daniels, 13 B. R. 46; s. c. 6 Biss. 405.

A tenant of leasehold premises owned by the bankrupt can not interfere
between the owner of the reversion and the assignee, and ask that the
rents derived from the tenements shall be appropriated to the extinguish-
ment of the ground rent until he is personally charged with it. In re
Mark Banks, 1 N. Y. Leg. Obs. 250; s. c. 5 Law Rep. 871.

If a receiver was authorized to issue certificates and make them a lien
on the property for the purpose of preserving it, the assignee can not
object to the validity of the lien. Jerome v. McCarter, 15 B. R. 546.

If the lien depends upon possession, the creditor will be deemed to have
waived and abandoned it by a voluntary surrender of the property to the
assignee. In re J. C. Mitchell, 8 B. R. 47; 8.¢c.5 0. L. N. 271.

In West Virginia, the State has a prior lien for taxes on all realty. If
the lien, however, is for a debt other than taxes, the State is not entitled
to any preference over other creditors of the same class. In re Brand, 3
B. R. 324; s.¢.2 L. T. B. 66.

The State of New York has a lien upon the machinery and tools of a
contractor which are used by him on the prison premises for operating a
contract for the services of convicts. In re Edward Burt et al. 13 B. R.
187; 8, ¢, 12 Blatch, 252.

1
500 Tur Bankruptcy Law.

If there are several judgments, the priority of the lien on the real estate
is determined by the order'in which the judgments are obtained, and the
priority of the lien on the personal property is determined by the order of
the levy of execution. Johnson v. Rogers, 15 B. R. 1; s. c. 14 A. L. J. 427,

A mortgage which is recorded before the filing of a mechanic’s lien
claim, is, under the laws of New York, entitled to priority. Moran y.
Schnugg, 7 Ben. 399.

The assignee is not entitled to object to any mistake in regard to the
order of priority im which liens are to be paid for; he is only interested in
the surplus. Jerome v. McCarter, 15 B. R. 546.

The power of marshaling assets will not be exercised to the material in-
jury, or prejudice of the creditor holding both funds. In re Sauthoff &
Olson, 14 B. R. 864; s. c. 8 C. L. N. 870; s. c. 3 Cent. L. J. 544.

A mere delay or postponing of payment is not regarded as a material in-
jury, for the interest of the claim is deemed an adequate compensation
to the party for such delay. Ibid.

An action to foreclose a mortgage is not a doubtful remedy, and will
not unreasonably delay the party or materially injure or prejudice his
rights. Ibid.

Where a third party has assigned his property to a creditor to secure the
debt, he may require the creditor to first exhaust all the property of the
bankrupt upon which he has a claim before proceeding against the prop-
erty so assigned. Ibid.

Where a third party has assigned his property to a creditor to secure
the debt, the creditor is not required to exhaust such security before he
can enforce his remedies against the bankrupt’s estate.

If the United States holds collaterals, it may assert its claim against the
estate without first exhausting the collaterals. Lewis v. U. S., 18 B. R.
33; s. c. 14 B. R. 64; s. c. 92 U. S. 618.

Attorney’s Lien.—An attorney’s lien on the papers of a bankrupt for
professional services is preserved. In re New York Mail Steamship Co., 2
B. R. 74; in re Orrin Brown, 5 Law Rep. 324.

There is no lien on any papers for opposing the petition in involuntary
bankruptcy. In re New York Mail Steamship Co., 2 B. R. 74.

In adjusting and liquidating such a lien the following points must be
ascertained:

1. What suits ought to be proceeded with by the assignee, either in
prosecution or defense.

2. What papers in such suits are in the possession of the attorney,
which are necessary to the assignee in prosecuting or defending such suits.

3. The amounts due and unpaid to the attorney in respect of professional
Services rendered by him in and about such suits severally, which are
liens on such papers, and which ought to be paid to the attorney on the
delivery of such papers to the assignee. Ibid.

The statement of the notes on the schedule as part of the bankrupt's

estate by the attorney is not a waiver of his lien thereon. In re Orrin

Brown, 5 Law Rep. 324.
PLEDGES. 501

Pledges.— In order to constitute a mortgage, the legal title must pass to
the creditor. If the transaction is merely a pledge, the creditor will waive
his lien by surrendering the possession to the debtor. In re Harlow, 10
B. R. 280.

A party who loans money to a party on a note indorsed by him, does not
take it as a pledge. In re George S. Weeks, 13 B. R. 268.

Where a promissory note is pledged by a debtor to secure a debt, the
special property of the pledgee is not lost by a redelivery to the pledgor to
enable him to collect the note. Money which he may collect thereon is the
specific property of the creditor. Clark v. Iselin, 9 B. R. 19; s ¢c. 11 B. R.
3387; 8. c. 21 Wall. 360; s. c. 10 Blatch. 204.

If a note is in the possession of a prior pledgee, an actual delivery of the
note to a subsequent pledgee is not indispensable to the validity of the
pledge. In re William H. Wiley, 4 Biss. 171.

A past consideration is a sufficient consideration for a pledge, if there
still remains a subsisting liability. Ibid.

Commercial paper deposited by the bankrupt as security, is personal
property within this clause. If the bankrupt has indorsed such paper, the
pledgee can only prove for the amount due, for the bankrupt can not, by
giving him a promise for more, enable him to prove beyond the real
debt. Against the promisors on the collateral notes, he can prove for
the full amount of the notes, but he can receive in dividends from both
parties no more than his whole debt. There is no technical difficulty in
the way of this mode of dealing with the subject, because the creditor can
surrender the principal note to the bankrupt, and make his proof on the
indorsement up to the amount of his debt against the bankrupt, and he
will then have no security for his debt. Ex parte Farnsworth, Lowell,
497.

If, together with an indorser, the note of the bankrupt is secured by a
collateral put up by the maker, equity will treat ‘the collateral as for ihe
benefit of the indorser. The holder has two resources, and if he makes
the money out of the indorser the latter has an equitable right to the
application of the collateral for his benefit, or he may require in equity
that the collateral shall be first applied. In re Thomas Morrison, 10 B. R.
105; 8s.c 6G L. N. 110.

A party with whom a sum of money has been deposited to indemnify
him as security in an appeal from a judgment rendered against the bank-
Tupt which is still pending, may hold the same until his liability is ter-
minated. In re Buse, 3 B. R. 215.

If the assignee collects a note that has been pledged, the court may
direct that the proceeds shall be applied to extinguish the liability of the
Pledge. In re William H. Wiley, 4 Biss. 171.

A pledgee has a right to use his collaterals either by sale or collection
Until the full amount of his debt is satisfied. Jerome v. McCarter, 15 B.
R. 546,

An assignee can not object that a pledgee was allowed to prove for the
full amount of a bond issued by the bankrupt and delivered to him as a col
lateral, Ibid.
502 THE BANKRUPTCY Law.

An irrevocable power of attorney to transfer stock as a security for a
debt is not revoked by the death of the attorney, and the creditor is enti-
tled to the security as against the assignee of the debtor. Lightner vy.
Nat’l Bank, 15 B. R. 69; s. ¢. 82 Penn. 301.

Vendor’s Lien.— The vendor’s lien for unpaid purchase money will pre
vail against the assignee under the bankruptcy law. The lien is not ex-
tinguished by taking notes, nor by obtaining judgment upon the notes.
In re Perdue, 2 B. R. 183; s. c. 2 W. J. 279.

The vendor’s lien is personal, and not assignable. It does not pass to
the transferee of a note given for the purchase money. In re §. W.
Brooks, 2 B. R. 466.

A. vendor’s lien is not waived by taking a mortgage on the land therefor,
and takes precedence over a judgment lien obtained prior to the mort-
gage. In re Bryan, 3 B. R. 110.

A vendor’s lien is not waived or in any manner affected by taking a
mortgage upon the property therefor. In re Hutto, 4 B. R. 787; s.c1L.
T. B. 226; sc. 3 L. T. B. 197.

A vendor has no lien on the rents for the unpaid purchase money. Hall
v. Scovel, 10 B. R. 295.

If the vendor of land sold to the bankrupt, collects the rents, he is en-
titled to credit them on the unpaid purchase money. Ibid.

The right to the rents of land vests in the assignee from the time of the
commencement of the proceedings in bankruptcy, and an agreement that
the vendor may collect them, and apply them to the unpaid purchase
money is thereby terminated Ibid.

If the vendor of land still holds the title, his claim for the purchase
money is secured. In re William M. Lloyd, 15 B. R. 257; s. c. 24 Pitts. L. J.
113.

Mechanics’ Liens.— The laws of Massachusetts, Oregon, New Jersey,
Pennsylvania, Nevada, and Wisconsin create a lien as soon as the labor is
performed, or the material furnished and used, but declare that it shall
be dissolved unless the creditor shall file a lien claim within a prescribed
period. Such lien claim may be filed after the commencement of proceed-
ings in bankruptcy. These steps are necessary to keep the lien alive, and
can not be deemed encroachments upon the authority of the bankruptcy
court. No sale can be made during the pendency of the proceedings in
bankruptcy. The State court will order the suit to stand continued to
await the result of the action in the bankruptcy court. Clifton v. Foster,
3 B. R. 656; s. c. 108 Mass. 233; in re Coulter, 5 B. R. 64; s. c. 2 Saw. 42;
8s. c. 1 L. T. B. 257; in re Cook & Gleason, 3 Biss. 122; in re Dey, 3 B. R.
805; s. c. 3 Ben. 450; s. c. 9 Blatch. 285; Keller v. Denmead, 68 Penn. 449;
in re Hope Mining Co., 1 Saw. 710. Vide in re Philo R. Sabin, 12 B. R. 142.

A mechanic’s lien which derives its existence wholly from a State
statute, and the continuance of which is by such statute made dependent
on the commencement of a suit within a prescribed period, is not pre
Served as a valid incumbrance on the property when no suit is com-
menced in the State court, and no step taken in the bankruptcy court
equivalent to such suit, within the time limited by the statute for the
Mercuanics’ iEns. 503

preservation and enforcement of the lien, although proceedings in bank-
ruptcy are commenced within that period. In re William Brunquest, 14
B. R. 259.

To preserve a statutory lien, dependent for its continued existence upon
the observance of the terms of the statute, those terms must be com-
plied with by performance of the required act or its equivalent. Ibid.

A lien claimant can, as an equivalent for commencing a suit in a State
court, prove or assert his lien in the bankruptcy, proceedings within the
. time limited by the statute creating the lien. Ibid.

When the material is not in fact used by the bankrupt in the building,
the creditor must show that he sold it to be so used. In re Cook & Gleason,
8 Biss. 122.

The amount required to finish a contract should be deducted from the
stipulated price. Ibid.

No claim can be allowed for work done after the filing of the petition
in bankruptey. Ibid.

The liens of mechanics and others for work and material relate back
to the commencement of the building, without reference to the time when
the work is done or material furnished, and have a priority over all liens
created by the party after that time. Hence they prevail over a mortgage
executed after the commencement of the building. In re Hoyt, 3 Biss. 436.

There is no preference as between the claimants of mechanics’ liens.
The circumstance of one commencing work first does not give any priority.
They all stand on the same footing, and are to be paid in full or pro rata
as the funds may suffice. Ibid.

Hauling quartz to be crushed in a mill is performing labor in carrying
on the mill. In re Hope Mining Co., 1 Saw. 710.

No allowance out of the bankrupt’s estate can be made to the counsel
for a lien creditor who has successfully resisted an attempt on the part of
the assignee to vacate the lien. In re Hope Mining Co., 7 B. R. 598. |

Where a legislature in one act consolidates all the old laws on the sub-
ject of mechanics’ liens and repeals the former laws, the new act is to be
considered as substituted for and continuing in force the provisions of the
old laws rather than as abrogating and annulling them. In re Hope
Mining Co., 1 Saw. 710.

An act which repeals a lien law, and thereby takes away the lien for
labor already performed, is unconstitutional and void so far as it impairs
the obligation of the contract. Ibid.

The proceeds arising from the sale of a vessel are subject to the follow-
ing liens, in the following order, to-wit:

ist. Strictly maritime liens, such as seamen’s wages, materials, supplies
and repairs in ports of other States, for damages for collision, and for
tonnage and wharfage in foreign ports.

2d. Mortgage liens under mortgages made and recorded according to the
requirements of section 4192. In re Dwight Scott, 3 B. R. 742; s. ec. 1 Abb.
0. C. 136.

A maritime lien is not divested by the proceedings in bankruptcy. The
Ironsides, 4 Biss. 518.
504 Tur Bankruptcy Law.

Liens created by State laws upon vessels are void. In re Scott, 15 I. R.
R. 59; in re Edith, 6 B. R. 449; s. c. 5 Ben. 432.

Materialmen have a lien upon domestic vessels for repairs made in the
home port. In re Kirkland, Chase & Co., 12 A. L. Reg. 300.

If the repairs are made on the credit of the respective vessels, and
charged on the books to the vessels, the lien is not waived by merely
making out a general account against the owner. Ibid.

The new rule in admiralty applies to all libels in rem by material-
men filed after the passage of the rule, whether the repairs were made
before or after its passage. In re Kirkland, Chase & Co., 12 A. L. Reg. 300.

Judgments.— The lien of a judgment is preserved. Livingston v.
Livingston, 2 Caines, 300; Haworth y. Travis, 13 B. R. 145; s. c. 67 Tl. 301;
Loudon v. Blanford, 56 Ga. 150.

The bankruptcy act does not discourage diligence in the collection of
debts. Creditors who have obtained a lien, by a legitimate effort to collect
an honest debt, must be permitted to enjoy the advantages gained by their
diligence. In re Kerr, 2 B. R. 388; s. c. 2 L. T. B. 39; in re Campbell, 1
B. R. 165; s. c. 1 Abb. C. C. 185; s.c.1L. T. B. 30; s. c. 6 Phila. 445; in
re Schnepf, 1 B. R. 190; s. c. 2 Ben. 72.

Where the judgment is not a lien by the State laws, it will not be treated
as a lien by the bankruptcy court. In re McIntosh, 2 B. R. 506; in re
Cozart, 8 B. R. 508. :

The filing of a transcript of a judgment on Christmas is a mere minis-
terial act, and will give a valid lien. In re R. C. Worthington, 14 B. R. 388;
s.c. 8 Cent. L. J. 526; 5. ¢c.8 C. L. N. 302;58.490C. L. N. 346.

An indorser who pays the judgment against him may take an assign-
ment of the judgment against the maker of the note, and claim the lien
thereby secured. Clason v. Morris, 10 Johns. 524.

Where a judgment has been obtained in a State court by fraudulent
conduct on the part of the plaintiff, its validity can not be contested in
the bankruptcy court. Assignees and creditors must resort to the State
court in which the judgment was rendered to test its validity. In re
Burns, 1 B. R. 174; 8. ¢. 7 A. L. Reg. 105; s. c. 6 Phila. 448; in re Campbell,
1B. R. 165; s. ec. 1 Abb. C. ©. 185; s.c. 1 L. T. B. 30; s. c. 6 Phila. 445.

The objection that there is usury in the consideration of the debt upon
which the judgment is founded, can not be raised in the bankruptcy court.
The district court can not go behind the judgment of a State court and
inquire into the consideration of the debt upon which the judgment is
founded. If any matter of fact constitutes the ground for a review, a
writ of error coram nobis in the court wherein the judgment was rendered
would be the proper mode of redress. A court of equity is not the proper
forum. McKinsey v. Harding, 4 B. R. 39.

A judgment can not become usurious by means of a stipulation that the
accruing interest shall bear interest if not paid annually. The State laws
provide the rate of interest a judgment shall bear, and the parties can not
change it by stipulations or terms inserted therein. Such stipulations are
simply void.” The payment of a judgment confessed for a sum due may
be enforced by execution; but if the creditor neglects or forbears to use
JUDGMENTS. 505

this remedy, he can not recover interest on interest accruing in the mean-
time. The fact that such a stipulation was never attempted to be enforced
is a good defense to the charge of usury. In re Price Fuller, 4 B. BR. 115;
s.c. 1 Saw. 243.

The statutory right of a judgment creditor to redeem the lands of his
debtor, sold under judicial process, is not taken away by the bankruptcy
of the debtor occurring after the rendition of judgment and before the
offer to redeem. Trimble v. Williamson, 14 B. R. 53; s. c. 49 Ala. 525:

Under the laws of New York, a judgment confessed to secure future
advances of notes and other commercial paper is valid. Cook v. Whipple,
9 B. R. 155; s. c. 55 N. Y. 150.

In New York, the filing and docketing of a transcript of a judgment in
the office of the county clerk makes the judgment a lien on all the real
estate of the defendant situated in the county. Inre J. P. & J. Smith, 1 B.
R. 599; s. c. 2 Ben. 122; s. c. 2 Ben. 482; 5.c.1L. T. B. 112.

In New York, a judgment rendered against four persons as joint debtors
in an action, in which one of them was not served with process, and in
which he did not appear, is not a legal lien upon the individual property
of the person who was not served with a process. Nor is it entitled to
payment out of real estate purchased in his name prior to the creation of
the debt on which such judgment is founded, although one-half of tbe
purchase money was furnished by one of the other joint debtors whom it
binds. Nor will the fact that these two were partners give it any claim
to payment therefrom, on the ground that the one who was served with
process had an equitable interest therein. Such an equitable interest is
not bound by a judgment and execution against the owner. Nor will the
fact that the four joint debtors were partners make it a lien upon such
property. The judgment is’ not even evidence of indebtedness as
against the party not served, and a fortiori is no lien in equity any more
than at law upon his separate property. No lien is obtained upon equi-
table interests or choses in action by judgment and execution alone. In
order to obtain a lien, the creditor must have his execution returned unsat-
isfied, and file a bill in equity, or take other legal proceedings to reach
such choses in action or equitable interests. In re Hinds et al., 3 B. R. 351.

In Texas, from Feb. 14, 1860, to Nov. 9, 1866, a judgment in a court of
record created no lien on real estate, unless the same was recorded in the
clerk’s office of the county court in the county where the land was situ-
ated. A deed made before, but recorded after the rendition of a judgment,
passes a legal title, and prevents the judgment from becoming a lien on
the lands so conveyed. In re C. Dean, 3 B. R. 769.

In Georgia, a judgment is not a lien upon a promissory note, nor entitled
to priority of payment out of the proceeds thereof. The State. laws re-
lating to the distribution of the estate of a decedent, and of money brought
into a State court, do not govern the distribution of the estate of a bank-
rupt. The bankrupt’s assets must be divided in accordance with the pro-
visions of the bankruptcy act. In re Erwin & Hardy, 3 B. R. 580.

In Georgia, a judgment becomes dormant when there has been no entry
Upon the execution for seven consecutive years, although the stay laws
506 THE BankKRUPTCY Law.

were in force and the rebellion existed during a portion of that time. In
re Cozart, 3 B. R. 508.

In Ohio, the sheriff may make a levy on land by getting a description of
the land from the recorder’s office, and indorsing a description of the
land and the fact of the levy on the back of the excution, without going
near the land, and such a levy becomes a valid lien on the land. Arm-
strong v. Rickey Brothers, 2 B. R. 473; s.c.1C. L. N. 145.

In North Carolina, a judgment prior to the enactment of the Code of
Civil Procedure was not a lien on the property, either real or personal, of
the defendant until a levy was actually made. Without the levy there was
no lien. In re McIntosh, 2 B. R. 506; in re Mebane, 3 B. R. 347.

In Missouri, a judgment is not a lien upon personal property until there
has been an actual seizure thereof. In re Kerr, 2 B. R. 388; s. c. 2 L. T.
B. 39.

In Mississippi, the enrollment of a judgment makes the judgment a lien
upon all the estate, real and personal, of the defendant situated in the
county where the enrollment is made. Pennington v. Sale & Phelan et al.,
1 B. R. 572; Jones v. Leach et al., 1 B. R. 595.

The question of the validity of a lien can not be decided on ex parte
affidavits. In re Hafer & Bro. (in re Beck), 1 B. R. 586; s. ce. 6 Phila. 474.

If an assignment is fraudulent, a creditor may obtain a lien upon the
real estate by getting a judgment, and upon the personal property by the
levy of an execution thereon, and such lien, if obtained before the com-
mencement of the proceedings in bankruptcy, is valid as against the
assignee. Johnson v. Rogers, 15 B. R. 1; s. ¢ 14 A. L. J. 427.

A creditor who is precluded from assailing an assignment as fraudulent
can not obtain a lien on the property which will be valid as against the
assignee. Ibid.

A creditor who, with full knowledge of the facts that constitute the
fraud, concurs with other creditors in assenting to its execution, can not
impeach it as fraudulent. Ibid.

A party who takes a colorable transfer of a claim from a trustee who has
accepted the trust with full knowledge of all the facts, can not impeach the
assignment. Ibid.

A creditor who has assented to an assignment may purchase a claim
from a creditor who has not done so, and as to that claim, may impeach
the assignment. Ibid.

A creditor who purchases property from the trustee in ignorance of the
fraud is not precluded from impeaching the assignment. Ibid.

A party who purchases a judgment has no higher right to impeach a
fraudulent assignment than his assignor had. Johnson v. Rogers, 15
B. R. 1.

A judgment against a partner individually is a lien on real estate held
by the firm, subject, however, to the payment of the firm debts and the
equities of the other partner. Johnson v. Rogers, 15 B. R. 1; 8. ¢. 14 A. L.
J. 427.

A judgment rendered after the commencement of the proceedings in
bankruptcy, is not entitled to a lien on a fund in a State court. Loudon Vv.
Blanford, 56 Ga. 150.
EXECUTIONS. 507

Executions.— A levy that is good, and creates a valid lien under the
State laws, will be held valid in the bankruptcy court. McLean v. Rockey,
3 McLean, 235; in re Dudley, 1 Penn. L. J. 302; in re Winn, 1 B. R. 496; s. ¢.
1L. T. B. 17; Armstrong v. Rickey Brothers, 2 B. R. 473;s.c.10L. N.
145.

The lien of a levy is not affected by the fact that the execution creditor
held further securities for the judgment. In re Peter Hufnagel, 12 B. R.
554. \

The lien of a levy made under an execution issued upon a final judgment,
obtained bona fide and without collusion, provided such lien attached be-
fore the commencement of proceedings in bankruptcy, is preserved. In
re Bernstein, 1 B. R. 199; s. c. 2 Ben. 44; in re J. P. & J. Smith, 1 B. R. 599;
s.c. 1 L. T. B. 112; s. c. 2 Ben. 122; s. c. 2. Ben. 432; in re Kerr, 2 B. R.
388; s. c. 2 L. T. B. 39; in re Campbell, 1 B. R. 165; s. ec. 1 Abb. CG. C. 185;
s.c.1L. T. B. 30; s. c. 6 Phila. 445; in re Schnepf, 1 B. R. 190; s. c«. 2
Ben. 72.

Where a creditor obtains a judgment, and holds or uses it for the
purpose of preventing or obstructing other creditors in, the collection of
their claims, courts will see that no undue advantage is taken. In re
Kerr, 2 B. R. 888; s. c. 2 L. T. B. 39; s. c. 6 Phila. 445.

In the absence of fraud, or preference in obtaining a judgment and
execution, mere delay in making a levy will not defeat the lien which the
law gives against the goods of a defendant in execution from the time
the writ comes into the hands of the sheriff. In re Chas. R. Weeks, 4 B.
R. 364; s. c. 2 Biss. 259.

The sheriff has no lien upon goods under the levy of an execution issued
upon a judgment obtained in violation of the bankruptcy law, and thus.
rendered void. In re David Kempner, 43 How. Pr. 129.

When a constable levies on property in the hands of a sheriff by virtue
of a judgment subsequently declared to be invalid, as a fraud upon the
bankruptcy act, but suspends further proceedings, the lien thus acquired
will be preserved, even though the period fixed by law for the lifetime of
an execution does elapse before he can enforce it. Haughey v. Albin, 2
B. R. 390; s. c. 2 Bond, 244; s. c. 2 L. T. B. 47.

The mere delivery of an execution to the sheriff does not give to the
Judgment creditor a lien which will prevail over the title acquired by the
assignee to the personal effects of the defendant in the execution. In re
Elam Rust, 1 N. Y. Leg. Obs. 326.

If a judgment creditor had levied an execution on the property before
the commencement of the proceedings in bankruptcy, he is entitled to
payment out of the proceeds, although an appeal was taken from the
judgment without filing a bond to stay execution. In re Gold Mountain
Mining Co., 15 B. R. 545; 8. c. 3 Saw. 601.

Where writs are in the hands of different officers, they take priority ac-
cording to the time of the levy, and not according to the time of the issue.
In re Hughes & Son, 11 B. R. 452; 8.¢c.7C. L. N. 162.

_ As between different writs issued from different courts, the one first
actually executed binds the property, without regard to the priority of liem
508 Tur BanKruproy Law.

ereated by the delivery of the writ to the officer. The warrant issued ina
case of mvoluntary bankruptcy is such a writ or legal ‘process as will]
divest the lien of a prior execution which has never been levied. In re
Tills & May, 11 B. R. 214.

The receipt of a second execution after the levy under the first, and
while such levy remains in force, operates as a constructive levy under the
second, and an actual levy is unnecessary. In re J. P. & J. Smith, 1B. R,
599; s. c. 2 Ben. 122; s. c. 2 Ben. 432; s.c.1L. T. B. 112.

A general description of the property is sufficient when: the legal im-
port of the return is that the sheriff took possession. The lien of a levy
is not lost by taking a delivery bond. The execution creditors are entitled
to a lien upon the property levied upon by the sheriff, although it is after-
ward seized by the marshal. Swope v. Arnold, 5 B. R. 148.

A levy does not create a valid lien unless the sheriff designates the prop-
erty seized under the execution either in the body of the return or by
reference to a schedule accompanying it. Barnes v. Billington, 1 Wash.
G. C. 29; s. ec. 4 Day, 81, note.

Where a levy is made prior to the commencement of the proceedings
in bankruptcy, the lien thereof is not lost under the laws of Missouri,
although the sheriff does not sell during the term, but returns the writ,
for the property may be sold under a new execution. Webster v. Wool-
bridge, 3 Dillon, 74.

The lien of a levy is preserved, although the property is left in the
debtor’s store under the charge of his employee, who gives the sheriff a
receipt therefor. In re Peter Hufnagel, 12 B. R. 554.

A levy does not create a valid lien if the debtor is allowed to remain
in possession of the property and exercise acts of ownership over it
Barnes vy. Billington, 1 Wash. C. C. 29; s. c. 4 Day, 81, note.

If the levy has been actually made, the execution is a lien on the prop-
erty, although the custodian appointed by the sheriff is temporarily absent
at the time when the marshal takes possession. In re Hughes & Son, 11
B. R. 452; s. c. 7 C. L. N. 162.

The lien of an execution is lost unless the execution is renewed from
term to term until the proceedings in bankruptcy are commenced. Stewart
v. Hargrove, 23 Ala. 429.

The execution of a forthcoming bond by a third person who claims the
goods taken under an execution does not destroy the lien. The lien may
be kept in abeyance, but its active energy will be revived, and the lien
may be coerced so soon as the claim interposed shall be determined to be
indefensible. Doremus v. Walker, 8 Ala. 194.

A judgment creditor does not obtain a specific lien upon the equitable
estate of the debtor by the return of an execution unsatisfied, but by the
commencement of a suit in equity, after the execution has been so re
turned. Blake vy. Bigelow, 5 Ga. 437; Powell v. Knox, 16 Ala. 364; in re
Hinds et al., 3 B. R. 351.

The return of the sheriff is a matter of record, and, therefore, conclusive,
and can not be inquired into in the proceedings in bankruptcy. If the
return is false, the sheriff is answerable for it to the proper party in a
" MortGAceEs. 509

proper action, but its truth or falsity can not be inquired into in an action
between other parties. Armstrong v. Rickey Brothers, 2 B. R. 473; s. ¢.
1C. L. N. 145.

The return of nulla bona does not preclude the execution creditor from
showing that there was property of the bankrupt on which the execution
wasalien. In re Tills & May, 11 B. R. 214.

The plaintiff in a judgment obtained in a Federal court on which an
execution was issued, and under which the marshal sold property of the
defendant, is entitled to the proceeds of such sales, although that judg-
ment, execution, and levy ‘under it were subsequent to a judgment, execu-
tion, and levy of process from a State court. The marshal can only sell
such right or interest in property as the process in his hands will warrant,
though he may declare that he sells more or a higher interest, or even so
states in his conveyance. His conveyance transfers no more or greater in-
terest to the purchaser than the law, by virtue of the process and the
proceedings upon which the same is based, allows to pass. If a prior law-
ful incumbrance or lien exists, the sale can only be and is made subject to
such incumbrance or lien. A purchaser at an execution sale is as much
bound to know of the existence of a prior lien or incumbrance existing
against the property offered by force of a judgment, execution, and levy,
as if there were an incumbrance existing by a mortgage, or in any other
way. In re William B. Jordan, 3 B. R. 182.

The sheriff is entitled to poundage fee on a levy at the time he makes
the levy. A sale is not necessary. In re Black & Secor, 2 B. R. 171.

Poundage can be allowed only on the amount which the property
brought, and is a lien thereon. In re William Welch, 5 Ben. 278.

If the sheriff acts in good faith, he is entitled to be paid, without refer-
ence to the validity of the judgment. Ibid.

The taxation of costs by a State court, without notice either to the bank-
rupt or the assignee, or any other person, will not be regarded as in any
sense a judicial act. In re David Kempner, 43 How. Pr. 129.

Mortgages.— A note signed by the bankrupt and his wife, and secured
by a mortgage upon the wife’s real property, may be allowed as a secured
demand. The court, on proper motion, will attend to the application of the
security and to the interests of the assignee in the realty. In re J. Hartel,
7B. R. 559.

The assignment of a lease by the lessor and the execution of a power
of attorney to collect the rent, gives the grantee a lien upon the rent
thereby reserved. Meador v. Everett, 10 B. R. 421; s. c. 3 Dillon, 214.

Where the mortgage embraces property situated in two States, and is
duly recorded in one State, but is not duly recorded in the other, it is valid
as to the property situated in the first, but will not bind the property situ-
ated in the second. It must be regarded as if the property situated in the
State where it was not duly recorded was not embraced in it. In re Sol-
diers’ Business Messenger and Dispatch Co., 2 B. R. 519; s. c. 3 Ben. 204.

When a mortgage contains a stipulation that the mortgagor shall remain
in possession and sell the mortgaged property as the agent of the mort-
8agee, and account for the proceeds thereof until the mortgage debt is
510 Tur BANKRUPTCY Law.

paid, the proceeds of all sales made subsequent to the execution of the
mortgage must be credited pro tanto toward the payment of the mort-
gage debt, and the debt itself will be extinguished as soon as the proceeds
of such sales equal the amount of the debt and interest, whether the
same have been paid to the mortgagee or not. Hawkins v. National Bank
of Hastings, 2 B. R. 338; s. c. 1 Dillon, 462; Smith v. Ely, 10 B. R. 553.

If the mortgagee never had any such notes as those described in the
mortgage, the mortgage is ineffectual. Jewett v. Preston, 27 Me. 400.

A mortgage of real property by a corporation must be under the corpo-
rate seal or it will be of no effect. In re St. Helen’s Mill Co., 10 B. R.
414; 5, c. 3 Saw. 88&

A mortgage executed by the officers without due authority from the cor-
poration does not bind the corporation even as an equitable mortgage.
Ibid.

The distinction between real and personal property, and between the
means which are necessary to affect them, is well settled. Personal prop-
erty, according to the common law, could always be transferred or incum-
bered without the use of a deed for that purpose. A seal has never been
held necessary to the validity of a bill of sale. A chattel mortgage is only
a bill of sale with a defeasance incorporated in it. The presence or ab-
sence of that formality is wholly immaterial. Gibson v. Warden, 14 Wall.
244; Jenkins v. Mayer, 3 B. R. 776; s. c. 2 Biss. 303.

If the laws of the State do not require a mortgage of personal property
to be under seal, the fact that a seal is attached does not change its char-
acter or effect. The seal may be regarded as surplusage. Gibson v,
Warden, 14 Wall. 244; Hawkins v. National Bank of Hastings, 2 B. R. 338;
8. ¢c. 1 Dillon, 462.

One partner can bind the firm by an instrument under seal in the name
of the firm where all the partners are interested in the transactions, if
‘there is a previous parol authority or a subsequent parol assent to the act.
Ibid.

It is not necessary that an agent should have written authority to make
a bill of sale of personal property. When an agent without authority
executes a bill of sale under seal, the ratification need not be by an instru-
ment under seal. Jenkins v. Mayer, 3 B. R. 776; s. c. 2 Biss. 303.

A mortgage given to secure future advances to the amount of $25,000,
with a stipulation that the account shall be adjusted at a certain time,
under which $53,000 was advanced, and more than $25,000 repaid, is not
thereby fulfilled and extinguished, but stands as a security for the balance
that was due at the stipulated time of settlement, even though a note for
the $25,000 was given at the time of the execution of the mortgage. In re
York & Hoover, 3 B. R. 661.

Under the laws of Louisiana, notes mentioned in a mortgage as secured
thereby, which were placed in the hands of an agent for negotiation, but
not negotiated until after the inscription of the mortgage, are protected by
the same. The mortgagor’s purpose was to raise money by a loan, and,
preparatory thereto, the notes were made and a mortgage, declaring the
existence of a debt, executed and inscribed, and both mortgage and notes
“MortGaGEs. 511

placed in the hands of an agent for negotiation. It may be that, until they
were negotiated, there was no creditor, no debtor, no right of action, and
no perfect obligation; but the agent, from the date of inscription, was in
the possession of all means to the making of a perfect contract by the
delivery of the securities to a bona fide holder. These securities, by such
a delivery, become operative from their date, and are binding ab initio.
Ibid.

Under the laws of New Jersey, a chattel mortgage is good against judg-
ment creditors from the time of filing. Miller v. Jones, 15 B. R. 150.

An assignee can not recover the value of property covered by a mortgage
if the mortgagee took possession before the commencement of the pro-
ceedings in bankruptcy. Ibid.

A statement which notifies creditors of the extent of the mortgagee’s
lien is sufficient to accompany the refiling of a mortgage. Ibid.

A mortgage stipulating for the payment, at or before the expiration of
nine months from the date thereof, of certain notes therein described, one
note only being described, and for the payment of any and all notes given
or indorsed by the mortgagee for the accommodation of the mortgagor
during the pendency of the mortgage, secures all notes of the kind men-
tioned until it is given up, or in some way canceled or abrogated. It is not
terminated by the payment of the described note and of all notes given or
indorsed within nine months after its date. In re Chas. W. Griffiths, 3
B. R. 731; 8. ec. Lowell, 481.

A mortgage made in good faith to secure future advances is valid to the
extent of the advances actually made. Marvin v. Chambers, 13 B. R. 77;
8. ¢, 12 Blatch. 495.

Where a mortgage made by a railroad corporation provides that it shall
include all property subsequently acquired by the mortgagor, it will in-
clude a railroad with its appurtenances subsequently leased by the mort-
gagor, and the title thereto will be valid as against the assignee of the
mortgagor. Barnard v. N. & W. R. R. Co., 14 B. R. 469; s. c. 3 Cent. L. J.
608.

A mortgage or other conveyance made as security for a debt evidenced
by a note or bond, will operate as security for the same continuing debt,
though the evidence of it be changed by renewal or otherwise. But the
rule is different when the security itself is changed, and not the evidence
of the debt. When a deed is made in substitution of a prior deed, the prior
deed ceases to have any validity or effect. In re Wynne, 4 B. R. 23; s. ¢.
Chase, 227; s. c. 2 L. T. B. 116; in re Jas. Jordan, 9 B. R. 416; 8. « 7 Pace.
L, R. 194; Barron v. Morris, 14 B. R. 871; s. c. 2 Woods, 354.

If the mortgage by mistake describes the note as made by A. and in-
dorsed by B., it may be corrected in equity so as to cover a note made by
A. and signed by B. as surety. In re Clark & Daughtrey, 10 B. R. 21.

A mortgage of personal property does not cover what is afterward ac-
quired. As to such property, it is in the nature of a revocable license to
take possession. Under some circumstances, the term “goods and mer-
chandise,” may include fixtures, but the facts of the case may limit the
construction of the language. In re Eldridge, 4 B. R. 498; 8. c. 2 Biss. 362.
512 THE Bankruptcy Law.

If a mortgagee takes possession of the vessel mortgaged, and omits to
sell it within a reasonable time, this operates as a satisfaction of the debt
to the extent of its value when he took possession. In re Haake, 7 B. R. 61;
s. c. 2 Saw. 231.

If the mortgage contains a stipulation, that the counsel fees and costs to
which the mortgagee may be put in collecting the debt shall be paid by the
mortgagor, the usual commission for collection may be allowed. Maus v.
McKellip, 88 Md. 231.

The fee paid to counsel for resisting a suit by the assignee to sell the
property free from all liens, can not be allowed. Ibid.

If the mortgage contains a stipulation that the mortgagee may retain
the possession of the property until the mortgage debt is paid, the assignee
can not divest the mortgagee of the possession until the debt secured by
the mortgage is paid. Pindell v. Vimont, 14 B. Mon. 400.

In order to obtain the profits when the mortgage is not full security for
the debt, the mortgagee may enter or bring his writ of entry. If he
chooses to lie by and suffer the mortgagor to keep possession, he consents
that the intermediate profits may be received by him and held without
account. He can only acquire an equitable lien upon the rents or profits
by a bill in equity and the appointment of a receiver, before the growing
crop is severed, or the rent is collected, and becomes vested in the mort-
gagor or his legal representatives in possession. The filing of the petition
in bankruptcy fixes the rights of the several parties in injerest; and the
rights, equitable or otherwise, not actually acquired by lien, in virtue of a
pill and the appointment of a receiver, remain unacquired or unsecured,
as the case may be. When no such lien has been acquired, the assignee is
entitled to the proceeds of grass cut by him from the mortgaged premises,
and the mortgagee has no prior claim upon the same. In re M. J. Sned-
aker, 4 B. R. 168; s. c. 2 L. T. B. 152; Ellis v. Bost. & Hart. R. R. Co., 107
Mass. 1; Foster v. Rhodes, 10 B. R. 523; in re J. S. K. Bennett, 12 B. R.
257; in re Mark Banks, 1 N. Y. Leg. Obs. 250; s. ec. 5 Law Rep. 371.

The mortgagee is entitled to the rents from the time of filing a claim
therefor in court, and due notice thereof to the assignee. In re J. 8. K.
Bennett, 12 B. R. 257.

A mortgagee is not entitled to have the rents which fell due after the
commencement of the proceedings in bankruptcy, and were collected by
the assignee, applied to his mortgage claim, although the mortgage also
conveys the rents, issues and profits of the land. Foster v. Rhodes, 10
B. R. 523.

If there be doubt whether the mortgaged premises are adequate security
for the payment of the debt and interest, the district court will recognize
the proper lien of the mortgage upon the land, and the equitable right of
the mortgagee to have the rents separated from the general estate of the
bankrupt, by a receivership or otherwise, and not permit them to be applied
to the payment of other debts, or even to the expenses of the assignee or
his fees. In re Sacchi, 6 B. R. 497; s. c. 48 How. Pr. 250.

The assignee, upon the application of the mortgagee, may be directed
to pay to the mortgagee a reasonable compensation for the use of the
MorrGaces — Equitasie Liens. 513

mortgaged premises, as rents and profits. Hutchings v. Muzzy Iron
Works, 8 B. R. 458; s. c. 6 C. L. N. 27,

If the defendant becomes bankrupt before the service of process on him
in a proceeding to foreclose a mortgage, the mortgagee will be entitled
to the rents collected by a receiver subsequently appointed therein. Hayes
y. Dickinson, 15 B. R. 350; s. c. 16 N. Y. Supr. 277.

A covenant to insure for the benefit of the mortgagee runs with the
land. If the mortgagor does in fact keep the premises insured by a policy
which contains no statement that the mortgagee has any interest therein,
the mortgagee, nevertheless, has an equitable interest or lien upon the
proceeds of the policy, in case of loss, which will be enforced for his
benefit. Although the mortgage stipulates that the insurance ghall be
made in companies to be selected at the option of the mortgagee, the
mortgagee is entitled to the benefit of the insurance that is made, whether
it was effected without or even contrary to his selection. In re Sands’
Brewing Co., 6 B. R. 101; s. ec. 3 Biss. 175.

When changes are made after acknowledgment, the mortgage should be
reacknowledged. Harvey v. Crane, 5 B. R. 218; s. c. 2 Biss. 496.

Under the laws of Texas, a mortgage executed and recorded after the
rendition of a judgment, but before the recording of the same, is entitled
to priority over the lien of the judgment. In re Lacy, 4 B. R. 62; s.c1
L. T. B. 226.

If there are two mortgages upon a vessel, one upon one-half of the
vessel, and the other upon three-quarters of the vessel, the first will, if
possible, be paid out of the one-fourth not covered by the latter, and the
remaining three-fourths will be applied to the latter. This applies to the
distribution the familiar principle that where there are two funds, and
one of them is subject to the lien of one suitor, and the lien of another
suitor covers both, the latter suitor will be paid, if possible, out of the
fund that is subject only to his own lien. In re Edith, 6 B. R. 449; s. c
5 Ben. 482.

The bankrupt can not have the inscription of a judgment rendered
against him erased, if it has not been paid. The bankruptcy act does not
provide that a sale of the property shall operate as a release of the mort-
gage, and attach it to the proceeds. State v. Recorder, 21 La. An. 401.

A mortgage of personal property to be subsequently acquired, consti-
tutes an equitable lien which may be enforced against the assignee, for
wherever the parties, by their contract, intend to create a positive lien or
charge upon personal property, whether it is then owned by the contractor
or not, and whether it is then in esse or not, the lien attaches in equity as
soon as the contractor acquires a title thereto. Mitchell v.’ Winslow, 2
Story, 680; Barnard v. N. & W. R. R. Co., 14 B. RB. 469; 8. c. 3 Cent, L. J.
608; Brett v. Carter, 14 B. R. 301.

Equitable Liens.— Equitable liens, mortgages, and securities are as
much within the act as legal liens, unless there is some prohibition in the
State laws which renders them invalid. Parker v. Muggridge, 2 Story,
334; Fletcher v. Morey, 2 Story, 555; in re Abner H. Allen, 1 N. Y. Leg.
Obs. 115; 5. «. 5 Law Rep. 362.

33
514 Tue Bankruptcy Law.

Possession is not necessary to create or support an equitable lien. Par-
ker v. Muggridge, 2 Story, 334.

EKyvery agreement for a lien or charge in rem, whether upon real estate
or personal estate, or money in the hands of third persons, constitutes a
trust, and may be enforced as an equitable lien. Fletcher v. Morey, 2
Story, 555.

It is a universal maxim that, wherever persons agree concerning a par-
ticular subject, in a court of equity, as against the party himself and any
claiming under him voluntarily or with notice, it raises a trust, and the
same rule prevails in bankruptcy. Parker v. Muggridge, 2 Story, 334.

If the equitable lien is valid by the laws of the State, it may be allowed,
although no remedy is provided for its enforcement by the State jurispru-
dence in the State courts. Fletcher v. Morey, 2 Story, 555.

An agreement that goods to be purchased with future advances are
pledged and hypothecated for the repayment thereof, constitutes an
equitable lien on the goods. Ibid.

Sale Free From Incumbrances.— On the application of the assignee, the
district court may order incumbered property to be sold free from iucwn-
brances, the lien being transferred to the fund in court. 1n re T. R.
Stewart, 1 B. R. 278; s.c. 1 L. T. B. 16; in re Barrow, re Loeb, Simon &
Co., re Winter, 1 B. R. 481; s.c. 1 L. T. B. 63; in re McClellan, 1 B. R.
389; in re Columbian Metal Works, 3 B. R. 75; in re Salmons, 2 B. R. 56;
in re Alabama & Florida Railway Co., 1 B. R. (quarto) 100; Conrad v.
Prieur, 5 Rob. (La.) 49; Benjamin v. Prieur, 8 Rob. (La.) 193; Ducros v.
Fortin, 8 Rob. (La.) 165; Foster v. Ames, 2 B. R. 455; s. c. Lowell, 313; in
re Schnepf, 1 B. R. 190; s. c. 2 Ben. 72; in re Rhodes, 19 Pitts. L. J. 99;
s.c. 3 Pac. L. R. 99; s. c. 6 W. J. 123; in re Nat’l. Iron Co., 8 B. R. 422; 5. ¢.
20 Pitts. L. J. 208; s. c. 30 Leg. Int. 272; Sutherland v. Lake Superior Canal
Co., 9 B. R. 298; s. c. 1 Cent. L. J. 127; Houston v. City Bank, 6 How. 486.

The disposition of the securities is a matter resting in the sound discre-
tion of the district court, upon all the circumstances of each particular
ease. The district court has full authority to ascertain the true value by
a sale or by an appraisement, or in any other mode which it may deem
best for the interest of all concerned in the estate, or it may allow the cred-
itor to take any one or more or all of the securities at their nominal valve,
if that is ascertained to be the true and highest value of the security.
In re Benjamin B. Grant, 5 Law Rep. 3038.

The liens, mortgages and other securities within the purview of this
provision, so far as they are valid, are not to be annulled, destroyed or
impaired under the proceedings in bankruptcy, but they are to be held of
equal obligation and validity in the Federal courts as they would be in
the State courts. The district court sitting in bankruptcy, is bound to re
spect and protect them. But this does not, and can not, interfere with the
jurisdiction and right of the district court to inquire into and ascertain
the validity and extent of such liens, mortgages and other securities. In
re William Christy, 3 How. 292.

If it be ascertained that the property of a bankrupt is ineumbered by
lien or mortgage, the assignee may, if he shall believe it to be to the inter-
&

SALE FREE From INCUMBRANCES. 515

est of that class of creditors whom he especially represents — for instance,
the class entitled to pro rata distribution — file his petition and obtain an
order directing him to sell the property incumbered on such terms as to
the court may seem proper, and convey the property free from such in-
cumbrance. The court will then protect the lien creditors by a proper
distribution of the proceeds. But it is not a part of the duty of the as-
signee so to petition, unless he shall believe that such a sale will create a
larger fund for distribution to creditors generally than if there should be a
sale by the lien creditor. In re Mebane, 3 B. R. 347; in re McClellan, 1
B. R. 389.

Although the mortgage contains a clause de non alienando, a purchaser
will acquire a valid title, and his assignee may sell the property free from
the mortgage. Ducros v. Fortin, 5 Rob. (La.) 165.

A secured creditor does not have absolutely the election to stand outside
of the operation of the bankruptcy act. The assignee has the right to bring
him into the court of bankruptcy, and contest the amount of his debt and
the validity of his lien, and to have the court make such equitable orders
as to the disposition of the property as seem best. The court of bank-
tuptey has the right to prevent the control from being taken away by
resort to other tribunals against its will. Markson v. Heaney, 4 B. R. 510;
8. ¢. 1 Dillon, 497, 511, note; Bromley v. Smith, 5 B. R. 152; s. c. 2 Biss.
511; Clarke v. Rosenda, 5 Rob. (La.) 27.

The bankruptcy court has the right to take possession of the mortgaged
property after a default in payment, and sell it without first satisfying the
mortgage, although the mortgagee is in possession. In re Kahley, 4 B. R.
378; 8, c. 2 Biss. 383.

When the proceedings to foreclose a mortgage in the State court have
reached a stage where substantially all the expenses except those which
would attend any sale of the property, even by the bankruptcy court, have
been incurred, and incurred by the action of the assignee while a party to
such suit in suffermg proceedings to go on without applying to the bank-
ruptey court to restrain them, the petition for leave to sell the property
free from incumbrances will be denied. In re H. Brinkman, 6 B. R. 541;
8c. 7B. R. 421; Augustine v. McFarland, 13 B. R. 7.

When an order is made to sell property against which a judgment of
foreclosure has been entered, the injunction against the sale under the
judgment may be so far modified, if deemed desirable in order to obtain
a better price for the property, that the sale may take place under both the
order and the judgment, and the referee may unite in the deed. In re
Hanna, 4 B. R. 411; s. c. 4 Ben. 469.

The power ought not to be exercised where the rights of the secured cred-
itor will be injuriously affected, as whereethe property has no market value,
or one that is clearly less than the mortgage debt. In such a case the
secured creditor ought to have the right to hold the property, and wait the
chances of a market if the assignee will not redeem. Foster v. Ames, 2
B. BR. 455; s. c. Lowell, 313; in re Kahley, 4 B. R. 378; s. c. 2 Biss. 383; in re
Jacob F, Hahnien, 1 Penn, L. J. 10.
516 Tur BANKRUPTCY Law.

The petition for leave to sell free from incumbrances must set forth the
facts and circumstances which justify the application, so that the court
may decide whether or not the application shall be granted. Ray v.
Norseworthy, 12 B. R. 145; s. c. 25 La, An. 600; s. c. 23: Wall. 128.

The application for a sale must state what persons have liens, incum-
brances, and interests in the property, and notice must be given prior to
the sale to all persons claiming to have liens, incumbrances or interests
therein. In re Anon., 29 Leg. Int. 20.

Proper notice of the application for leave to sell incumbered property
should be served on the secured creditor. Foster v. Ames, 2 B. R. 455; 8, ¢.
Lowell, 813; Houston v. City Bank, 6 How. 486; Fowler v. Hart, 13
How. 373.

If the mortgagee is not made a party to the proceeding to sell the prop-
erty free from incumbrances, his rights will be unaffected thereby. Ray
v. Norseworthy, 12 B. R. 145; s. c. 25 La. An. 600; s. c. 23 Wall. 128; Meeks
vy. Whatley, 10 B. R. 498. Contra, Wilson v. Turpin, 5 Gill, 56.

The assignee ought not to be permitted to make private sales, or sales on
credit, without first submitting the price and terms of the sale to the
court on notice to the mortgagee for approval and confirmation. In re
Frederick S. Kirtland, 10 Blatch. 515.

A sale by the assignee of property free from all incumbrances will not
divest the right of the State to enforce the payment of taxes on the prop-
erty wherever it may be found, and the purchaser takes it subject to that
right. Stokes v. State, 9 B. R. 191; s. c. 46 Ga. 412; Meeks v. Whatley, 4
B. R. 498.

A mortgagee can not demand, as a matter of right, that the assignee
shall, upon his offer, convey the premises to him on condition of his
agreeing not to present a claim for any part of the debt against the other
assets of the bankrupt. Neither the refusal of the assignee to accede to
such a proposition, nor the refusal of the court to permit him to accept,
will be at the peril of throwing the cost of any effort to secure a better
price upon the other creditors. It is the duty of the assignee and of the
court to take that course in the premises which, in their judgment, having
due reference to the rights of the mortgagee, will be most beneficial to all
the parties interested. In re Hllerhorst et al., 7 B. R. 49; s. c. 2 Saw. 219.

The selling of property free from incumbrances is a matter of judicial
discretion. The apportionment of costs is also a matter, to some extent,
of judicial discretion. The district court, as incident to its power to
adjust and liquidate the lien, is authorized to adjust the costs of the pro
ceedings necessary to give effect to the specific lien, and does not exceed
the bounds of sound discretion in charging upon the proceeds of the
mortgaged property the costs of.the proceedings adopted to enforce and
liquidate the specific lien. The costs of the sale, including commissions
to the assignee, may be charged upon the proceeds. Ibid.

Where property is sold free from incumbrances, under a proceeding
instituted before the expiration of a lien, the rights of the lienor are
deemed to be fixed from the commencement of the proceedings, and he
need not renew or continue his lien. Moran v. Schnugg, 7 Ben. 399.
SALE FREE FROM INCUMBRANCES. 517

A sale of the property free from incumbrances does not pass to the pur-
chaser the right to the growing crops which the tenant had agreed to
pay by way of rent. In re Bledsoe, 12 B. R. 402; s. c. 10 Pac. L. R. 46.

Where the record shows a proceeding to bring the general jurisdiction
to bear on the special case, the purchaser need not look beyond the order
of sale to see whether every particular has been complied with in the ap-
pointment and qualification of the assignee. Zeigler v. Shomo, 78 Penn.
357,

Where an assignee sells property which is incumbered or in dispute
under an order of court, it is the order and not the assignment which em-
powers him to act. Ibid. ;

A sale may be made in bulk where that is the only possible mode
which will enable purchasers to buy with confidence. Jerome v. McCarter,
15 B. R. 546.

Where the property is sold free from incumbrances, the assignee can
only deduct the costs of the proceedings necessary for proving the lien,
and must appropriate the balance of the proceeds to the payment of the
claim of the secured creditor. In re Hambright, 2 B. R. 498; 5s. « 2 L. T,
B. 61; s. c. 1 C. L. N. 201; in re Davenport, 3 B. R. 77; 5. « 2 lL. T.
B. 136; in re Eldridge, 4 B. R. 498; s. c. 2 Biss. 862; in re Blue Ridge
R, R. Co, 18 B. R. 315.

In a proceding to sell property free from incumbrances, the bankruptcy
court has no authority to adjust the claims of a trustee under a mortgage,
nor to ascertain what is due by the trustee to his counsel. In re Blue
Ridge R. R. Co., 18 B. R. 315.

Costs in bankruptcy are left by the act entirely in the discretion of the
court, and questions arising in relation to them must be disposed of upon
equitable principles. It can not be denied upon authority as well as prin-
ciple, that if a mortgagee allows the mortgaged property to be so used
and managed, and the mortgage itself to be so placed and coutinued
upon the records in a condition to induce in the minds of reasonable men
a suspicion or belief that the mortgage is a mere cover to protect the
Property of the mortgagor from his creditors, and the creditors act upon
such suspicion or belief, they should be reimbursed their costs and ex-
penses out of the mortgage fund, notwithstanding the mortgage is even-
tually held to be valid, there being no other assets. A mortgage given
for $4,000, when only $1,000 is actually advanced, is prima facie fraudu-
lent, and creditors who have endeavored to have it declared void are
entitled to be reimbursed the amount of their reasonable costs, expenses,
and disbursements in the proceedings in bankruptcy, including the sale
of the mortgaged property, from the proceeds of such sale, In re Dumont,
4B. R. 17; 8. ¢c 2 L. T. B. 114.

If the property is sold free of incumbrances, the mortgagee can not
be allowed the costs and commissions of a scire facias to foreclose the
mortgage, issued and served on the bankrupt alone after the commence-

ment of the proceedings in bankruptcy. In re Abraham A. Devore, 24
Pitts. L. J. 185,
518 Tue Bankruptcy Law.

If an assignee voluntarily paid a mortgage debt in gold prior to the
change in the law made by the last decisions of the Supreme Court, he is
not entitled to relief. All matters that were closed by the parties before
the change are, in the absence of fraud, beyond the reach and influence
of any retrospective action of the law caused by such change. In re
Henry M. Dunham, 29 Leg. Int. 389; s. ec. 2 Md. L. R. 485.

The petition for leave to sell property free from incumbrances may,
in case of improper conduct, be dismissed with costs to be paid by the
assignee personally and not out of the estate. In re H. Brinkman, 6 B. R.
541; s.¢c. 7 B. R. 421.

If the estate is sold free from incumbrances, the State court may grant
@ mandamus against the State officer, directing an erasure of the mort-
gages. Conrad v. Prieur, 5 Rob. (La.) 49.

The district court has jurisdiction to decree an erasure of the mortgages,
where the property is sold free from incumbrances. Ibid.

Surrender to Creditor.— The assignee is invested with the right, in-
dependent of the sanction of the court, to release the bankrupt’s right of
redemption to the secured creditor. Second National Bank v. State
National Bank, 11 B. R. 49; s. ec. 10 Bush, 367.

The powers of an assignee are in no sense judicial, and his acis bind
only those whom he represents. In the sale of the estate of a bankrupt
he acts only for the creditors who prove their claims, and in such matters
he can conclude the rights of no one else. The act of the ussignee in
allowing a creditor to retain an alleged security, after deducting the value
of the same from the amount of the claim, does not include other cred-
itors claiming the same security, if they have not proved their claims.
Ibid.

When the assignee, in the exercise of the discretion left to him,
abandons all claim to incumbered property, then the State courts may sub-
ject such property to the satisfaction of the secured creditor’s claim, ard
may afford him any relief touching such property as he would have been
entitled to if the proceedings in bankruptcy had never been instituted.
Ibid.

Sale Subject to Incumbrances.— The assignee may sell, without pett-
tioning the court, or without any order of the court, any property of the
bankrupt in his possession incumbered in any manner. But when he so
sells, he does so subject to any and all lawful incumbrances, and can
convey no higher or better interest. The proceeds of such a sale are
supposed to be the price or value of the interest so sold, and with a knowl-
edge of the incumbrances. In re Mebane, 3 B. R. 347; in re McClellan,
1 B. R. 389; Kelly v. Strange, 3 B. R. 8; King v. Bowman, 24 La. An.
506; Second National Bank v. State National Bank, 11 B. R. 49; s. ¢. 10
Bush, 367; Ray v. Norseworthy, 12 B. R. 145; s. ec. 25 La. An. 600; s. ¢. 23
Wall. 128; Wicks & Co. v. Perkins, 18 B. R. 280; s. c. 1 Woods, 383.

When property subject to an incumbrance has been sold without an
order of the court, it will be taken for granted, that the assignee sold only
such right or title to the property as was vested in him, and, therefore,
Sold it subject to the incumbrance. Kelley vy. Strange, 3 B. R. 8; Meeks
v. Whatley, 4 B. R. 498; Linthicum v. Fenley, 11 Bush, 131.
SALE. 519

Where property is sold subject to liens, the purchaser takes the title
subject to the terms of the sale. Seibel v. Simeon, 62 Mo. 255.

Property may be sold clear of incumbrances, to the prejudice of the
rights of no one, by an agreement between the assignee and a secured
creditor, and the creditor will then be entitled to be paid out of the
palance of the proceeds that remain after the payment of the costs of sale
and the lawful commissions of the assignee. In re Mebane, 3 B. R. 347.

As a general rule of equity jurisprudence, there is an equity of re-
demption in chattel mortgages. In Massachusetts, the statute remedy
is not exclusive. The mortgagor may tender performance, and have his
action at law; or, if for any reason this remedy is incomplete, he may
proceed in equity. Foster v. Ames, 2 B. R. 455; s. c. Lowell, 313.

It is not necessary for the assignee to take any proceeding whatever in
regard to incumbered property, unless by so doing he can realize a net sum
of money free from incumbrances for the benefit of the estate. It would
be idle to go through the form of selling the property, if the property be
of less value than the amount of the incumbrance. In re Lambert, 2 B.
R. 426; in re Bowie, 1 B. R. 628; s.c.1L. T. B. 97; s. c. 15 Pitts. L. J. 448.

If the petition ask for leave to sell the property subject to certain
specified incumbrances, and the report sets forth that the property was
sold free from all incumbrances, except those specified, the report will
not be adopted by a mere confirmation of the sale. It should explicitly ap-
pear in the order of confirmation that the report was confirmed, and that
the sale as such was confirmed, so as to show that the court acted upon
that part of the report, and confirmed the sale by making it free and clear
from all other incumbrances. That ig indispensably necessary in order
to make it binding on the court, because it could only be effectual by a
ratification brought home to the knowledge of the court of the particular
clause in the report. The assignee acted under a power. He was bound
to follow the instructions of the power. If it is sought to be enlarged, the
court ought to know of that enlargement, and ratify and confirm it as
such. In re McGilton et al., 7 B. R. 294; s. c. 3 Biss. 144.

If a lien creditor is present at a sale by an assignee, he is present in
contemplation of law, only with knowledge of the facts which are stated
in the petition for sale, and in the order of the court. If the petition
simply. asks for leave to sell the property subject to certain incumbrances,
it is questionable whether he would be bound by an unauthorized state-
ment of the assignee. Ibid.

If the assignee sells the property without an order of the court, a se-
cured creditor may enforce his claim against the property in a State
court, although he has proved his debt. King v. Bowman, 24 La. An. 506.

The fact that land against which a mortgagee seeks to enforce his
mortgage has been sold by the assignee, does not deprive the State
tribunal of jurisdiction over the suit. Ibid.

If the property is sold subject to a lien, the lien claimant may proceed
in the State court to enforce his lien. Douglass v. St. Louis Zine Co., 56
Mo. 388,
520 Tue Bankruptcy Law.

Where hypothecary proceedings are instituted after the sale of the
property by the assignee, it is not necessary to serve notices of the pro-
ceedings on the assignee or the bankrupt. The assignee has no interest
in the hypothecated property, and the discharged bankrupt is no longer
bound for the debt. Ray v. Norseworthy, 12 B. R. 145; s. c. 25 La. An.
600; s c. 28 Wall. 128. :

Sale on Application of Secured Creditor.— Liens upon the property of
the bankrupt, so long as it remains in the possession of the bankruptcy
court, can only be enforced in the district court sitting as a court of
bankruptcy. In re People’s Mail Steamship Co., 2 B. R. 553; s. ¢. 3 Ben.
226; Davis, Assignee of Bittel, et al., 2 B. R. 392; Jones v. Leach, 1 B. R.
595; in re Vogel, 2 B. R. 427; 5 c. 3 B. R. 198; s. c. 7 Blatch. 18; s. ¢.
2L. T. B. 154; Lee vy. Franklin Av. S. Inst. et al, 3 B. R. 218; s.c 1 C0. L.
N. 370; in re Kerosene Oil Co., 2 B. R. 528; s. c. 3 B. R. 125; s. ¢. 3 Ben.
385; s. c. 6 Blatch. 521; s. ec. 2 L. T. B. 79; in re Israel M. Rosenberg, 3 B.
R. 130; s. c. 3 Ben. 366; in re J. M. Snedaker, 3 B. R. 629; in re High et al.,
8 B. R. 192;s.c.1L. T. B. 175; s.¢.2C. L. N. &

The filing of a petition in bankruptcy operates from the time of such
filing as a practical restraint on a pledgee of the property of the bank-
rupt, who is notified of such filing, from disposing of it otherwise than
at his own risk, until the bankruptcy court can act in the premises. In
re Grinnell & Co., 9 B. R. 29; s. c. 7 Ben. 42.

A judgment which is a lien upon land must be proved, and can only be
enforced through the bankruptcy court. Davis v. Anderson, 6 B. R. 145.

For just and equitable purposes and to guard against fraud, the act
rightfully takes. the pledged property or lien out of the power of the
secured creditor’s control or management in reducing it to money in bis
chosen way without responsibility, and places it in fhe hands of the
assignee of the bankrupt, who, being an agent to the court. and at the
same time the representative of the rights of all parties in interest, is
supposed to be above the temptation to fraud, and directs him in such
capacity and under the pledge of his official bond as assignee, and under
the direction of the court, to convert such mortgaged or pledged prop-
erty into money, and to distribute the same under the provisions of the
act, with due regard to all the priorities shown to exist in the proceedings
in bankruptcy by the proof of the claims against the bankrupt. So far
from taking any right or rights from the secured creditors, under the mort-
gage, lien, or pledge by which he holds the same, it simply regulates the
mode and means of foreclosing the mortgage or other lien, and of reducing
such security to money, in order that the court may be able to enforce ex-
act justice, and to see that the rights of all the creditors are secured to
them under the proof of claims, and under the law. In re J. M. Snedaker,
3 B. R. 629.

Where the members of a firm are adjudged bankrupts individually, and
-not as copartners, a pledgee holding collaterals to secure a firm debt need
not obtain an order of the court for leave to sell the same, In re Geo.
B. Grinnell, 9 B. R. 187.
SALE. 521

If a corporation pledged its own bonds to secure a loan, the pledgee
may sell them after an adjudication. Jerome v. McCarter, 15 B. R. 546.

A secured creditor may apply to the district court to have the in-
eumbered property sold, and the proceeds applied pro tanto toward the
payment of his debt. In re T. R. Stewart, 1 B. R. 278; s.c.1L. T. B.
16; in re Bigelow et al., 1 B. R. 6382; s. c. 2 Ben. 480; 5. c. 1 L. T. B. 95;
Davis, Assignee of Bittel et al., 2 B. R. 392; in re Ruehle, 2 B. R. 577; 8.
1L. T. B.59;s.c 10. L. N. 186; s. c. 16 Pitts. L. J. 5.

The application can not be made until the claim has been duly proved.
To grant permission for a sale without proof would be to assume the
existence of facts which may never be made to appear. For it can not
otherwise be known that the creditor has any debt, or, if he has, that
the property is properly held as security for the debt. In other words, to
grant the order without proof, would be to assume as proved the facts
upon which the right to the order is, by the bankruptcy act, made depend-
ent. In re Bigelow et al., 1 B. R. 632; s. c. 2 Ben. 480; s. c. 1 L. T. B. 95; in
re Bridgman, 1 B. R. 312; s. c. 2 B. R. 252; in re Frizelle et al., 5 B. R. 119;
in re Geo. B. Grinnell, 9 B. R. 187. Contra, in re High et al., 3 B. R. 192;
5.6. 11, ‘1. B. 175: 5, «. 2 GC. Te N.S,

When property is claimed under deed, by persons other than the bank-
tupt or assignee, a creditor asserting that he has a lien thereon, and
desiring to enforce the same, must institute an original proceeding for
that purpose and make the other claimants parties thereto. In re C. Dean,
3B. R. 769.

A subsequent mortgagee who was not made a party to a petition
against the assignee by a prior mortgagee to reform his mortgage, may
state this as an objection to a sale or in claiming the proceeds. Fowler
y. Hart, 18 How. 373.

The sale can not take place before an assignee is appointed. The as-
signee is the only person who can represent the creditors other than the
particular secured creditor. Whether such other creditors are wholly
unsecured or insufficiently secured, they have an interest in seeing that
the debt of the particular secured creditor is duly proved, and is not
fraudulent or illegal, and that the securities held for it are applied on
it at their proper value, whether such value is ascertained by agreement
between such particular secured creditor and the assignee, or by a sale.
Before such application of the securities is made, the assignee has a
right on behalf of such other creditors to elect whether he will redeem
the pledged property by paying the debt and .taking the property, or
whether he will give it up to the secured creditor on receiving an agreed
sum as its excess of value over the debt. Nothing of all this can be done
until there is an assignee. In re Geo. B. Grinnell, 9 B. R. 187.

Notice of the application should be given to the assignee. In re J. O.
Smith, 1 B. R. 248; s. c. 2 B. R. 297; s. ec. 2 Ben. 113; in re High et al., 3 B.
R.192;8s.c.1 L. T. B. 175; s.¢c.2 0. L. N. 9; in re 8. F. Frizelle, 5 B. R.
122.

Generally, when the proceeding is by a secured debtor, notice upon
the assignee who represents the estate will be sufficient, without notice
522 Tue Bankruptcy Law.

to the creditors, though exceptions might be allowed to this rule in some
cases very properly. In re High et al, 3 B. R. 192;s.c. 1 L. T. B. 148;
s.¢c.2C. L. N. 9.

If the time for the payment of a debt secured by a mortgage has been
extended, an order of the bankruptcy court passed without notice to the
bankrupt permitting the mortgagee to sell before the time of the ex-
tension expires, will be void as to the bankrupt. In re Betts, 15 B. R.
536; s. c. 4 Cent. L. J. 558; s. c. 13 Pac. L. R. 203.

A. secured creditor can not apply to have his lien satisfied until some-
thing has been realized out of the property subject to his lien. In re
Fallon, 2 B. R. 277.

The difference between the net proceeds of the sale of mortgaged
property and the amount of the mortgaged debt is not to be paid in full out
of the general funds of the estate. This difference is simply a claim against
the estate, like all other unsecured claims. In re Purcell & Robinson, 2
B. R. 22; s. ec. 2 Ben. 485; s. ec. 86 How. Pr. 42; in re Ruehle, 2 B. R. 577;
s.c2L. T. B. 59; 9.¢c10C. L. N. 186; s. ce. 16 Pitts. L. J. 5; in re Winn,
1B. R. 496; s.¢c. 1 L. T. B. 17.

Inasmuch as the lien creditor seeks and enjoys the aid of the district
court in enforcing and realizing his lien, he is bound to pay the cost
incurred in obtaining .this aid. But, with regard to the costs of general
administration, in which he has no concern, and in which he can have
no interest until his lien is either satisfied or realized, it would be in-
equitable to require him to bear the burden of them. In re Hambright,
2B. R. 498;5 e201. T. B. 61; s.c 10. L. N. 201; in re Davenport, 3
B. KH. Ti? 8. & 2 Ee .. B. 286,

The fund should be charged with the costs and expenses of sale and
orders relative thereto, and its proportion of the general expenses of the
estate. In re York & Hoover, 3 B. R. 661.

Proceedings in State Courts.— After the commencement of proceedings
in bankruptcy, a mortgagee can not foreclose the mortgage, under a
power of sale contained therein, in the mode and manner prescribed by
the State statutes. Phelps v. Sellick, 8 B. R. 390; Whitman v. Butler, 8
B. R. 487.

The power of a mortgagee to sell the property in the name of the mort-
gagor and his attorney is not affected by the bankruptcy of the mort-
gagor, for it is a power coupled with an interest. Hall v. Bliss, 14 B. R.
329; s. c. 118 Mass. 554. Contra, Lockett v. Hill, 9 B. R. 167; s. ¢. 1
Woods, 552. .

Where the title does not, under the State laws, pass to the mortgagee,
a power to sell is not a power coupled with an interest, and is revoked by
the bankruptcy of the mortgagor. Lockett v. Hill, 9 B. R. 167; s. ¢ 1
Woods, 552.

The mere possession of the property is not of that dignity and nature
which can be engrafted on a power in a mortgage, so as to make it a power
coupled with an interest. Ibid.

If the power to sell is limited to a certain period, it is lost by a failure
to exercise it during that period. Ibid.
PROCEEDINGS. 523

A mortgagee holding a power of sale can not purchase the land himself,
either in severalty, joint tenancy, or otherwise. He can not be vendor
and vendee; the characters are inconsistent, and the power does not
extend so far. Ibid.

Where the right to purchase is provided for in the mortgage, a mort-
gagee may purchase at a. sale made by him in pursuance of a power con-
tained in a mortgage. Hall v. Bliss, 14 B. R. 329; s. c 118 Mass, 554.

A mortgagee holding a power of sale coupled with an interest, should,
after the bankruptcy of the mortgagor, convey the property in his own
name, and not in that of the bankrupt, who is civiliter mortuus, or at
least incapable in law to execute a deed of conveyance. Lockett v. Hill,
9 B. R. 167; s. c. 1 Woods, 552.

A power of sale in a mortgage is merely cumulative, and does not bar
a foreclosure. Ibid.

A purchaser at a sale under a deed of trust, after the commencement
of proceedings in bankruptcy against the grantor, obtains a legal title
which will be deemed valid until it is set aside by the assignee. Mc-
Gready v. Harris, 9 B. R. 135; s. c. 54 Mo. 137; Roden v. Jaco, 17 Ala. 344.

A sale under a deed of trust is valid, although the holder of a second
deed of trust on the property was bankrupt at the time thereof. Long
v. Rogers, 6 Biss. 416.

A mortgagee holding a mortgage of personal property may take pos-
session of the property after the commencement of proceedings in bank-
ruptcy. Bentley v. Wells, 61 Ill. 59.

Where no advantage can result to the estate of the bankrupt, there is
no reason why the district court should interfere with a suit brought in
a State court after the commencement of the proceedings in bankruptcy
to enforce a lien, when neither the assignee nor any creditor invokes such
interference, and it appears without contradiction that the equity of re-
demption is of no value. There is no excess of value to be paid to the
assignee on his releasing the right of redemption. There is nothing to be
sold subject to the mortgage which will yield anything, and any action
of the district court for the liquidation and settlement of the amount of
the lien, and for the sale of the property to satisfy it, would be a mere
expense to the estate, producing nothing. Under such circumstances, the
district court may exercise a discretion on the subject, and may decline
interference. In re Iron Mountain Co., 4 B. R. 645; s. c. 9 Blatch. 320;
in re Bowie, 1 B. R. 628; s. c. 1 L. T. B. 97; 8. c. 15 Pitts. L. J. 448;
Tichenor vy. Allen, 13 Gratt. 15.

The case should be clear, and the proof that nothing, can be saved to
the estate should be satisfactory. If the court can see that any prejudice
to the interests of creditors may happen, it should not permit those in-
terests to be put at hazard by a proceeding to which the general cred-
itors are not parties, and in respect to which they have no protection but
through the proceedings in bankruptcy. In re Iron Mountain Co., 4 B. Ri
645; s. c. 9 Blatch. 320.

In all matters of controversy, where the subjects in dispute are of a
local nature, the rights of parties must be determined by actions in, the
524. Tuer Bankruptcy Law.

local courts. Thus the title and disposition of real estate, where there are
adverse claims, can not generally be determined in a court out of the
State in which the land is situated. The right of a mortgagee to have
a foreclosure of his mortgage can not be administered by a district court
in another State, sitting as a court of bankruptcy. In such a case, the
State court where the land is situated can afford a remedy by foreclosure
and sale. Whitridge v. Taylor, 66 N. C. 273.

The claimant of a lien, by electing to pursue the property in the State
court, will deprive himself of any right to prove his debt in bankruptcy
for the deficiency. In re Iron Mountain Co., 4 B. R. 645; s. ec. 9 Blatch.
320; Brown v. Gibbons, 18 B. R. 407; s. c. 87 Iowa, 654.

A foreclosure to which the assignee is not made a party is of no effect
as to him, and his equity of redemption remains in full force. Winslow
v. Clark, 47 N. Y. 261; s. ec. 2 Lans. 377; Barron v. Newberry, 1 Biss. 149;
Truitt v. Truitt, 38 Ind. 16; City Bank v. Walton, 5 Rob. (La.) 158; Cole
vy. Dunean, 58 Ill. 176; Pierce v. Phillips, 3 Robt. 488.

If the bankrupt also bad an interest in the mortgage debt, the assignee
is a necessary party to an action to foreclose the mortgage, although he
has sold all the bankrupt’s interest in the land. Clark v. Clark, 56 N. H.
105.

A proceeding instituted in a State court to foreclose a mortgage after
the commencement of the proceedings in bankruptcy, without making the
assignee of the mortgagor a party thereto, is valid as against thosé who
are parties thereto. -Brown v. Gibbons, 13 B. R. 407; s. ce. 37 Iowa, 654;
Hulverson v. Hutchinson, 39 Iowa, 316.

After a surrender in bankruptcy, the bankrupt has no interest in prop-
erty mortgaged by him, and can not be proceeded against by the ap-
pointment of a curator ad hoc to represent him in an action to foreclose
the mortgage. A service of the citation on such curator is a nullity, and
the proceeding is void. Kennedy v. Rust, 25 La. An. 554.

After the discharge of the bankrupt has been granted, the mortgagee
may file a bill to foreclose the mortgage in a State court. Cole v. Duncan,
58 Ill. 176; Truitt v. Truitt, 38 Ind. 16; Pierce v. Wilcox, 40 Ind. 70.

A mortgagee does not lose the lien of his mortgage by omitting to prove
it in bankruptcy, but may enforce it after the proceedings in bankruptcy
are terminated. Wicks & Co. v. Perkins, 13 B. R. 280; s. c. 1 Woods, 383.

If the assignee does not seek to redeem the mortgaged property, the
mortgagee may institute an action in a State court to foreclose the mort-
gage. Brown v. Gibbons, 13 B. R. 407; s. c. 37 Lowa, 654; McKay v. Funk,
13 B. R. 334; s. c. 87 Iowa, 661.

When the bankruptcy court consents, a mortgagee may foreclose the
mortgage in a State court. Société D’Espargnes v. McHenry, 49 Cal. 351.

If a decree to foreclose a mortgage does not fix any personal liability
upon the bankrupt, it is proper where the bankrupt transferred the
property before his bankruptcy, although the proceedings to foreclose
the mortgage were instituted in a State court after that time. Cockrill
vy. Jones, 28 Ark. 193.
PROCEEDINGS. 525:

Where no action is taken by the assignee or the creditor in the bank-
ruptcy court, the State court has jurisdiction to make the lien available.
Reed v. Bullington, 11 B. R. 408; s. c. 49 Miss. 223.

If the bankrupt transferred the property before the commencement
of the proceedings in bankruptcy, the holder of a mechanic’s lien claim
thereon may enforce it in a State court. Glendon Company v. Town-
send, 120 Mass. 346.

If the assignee appears in the State court and claims a surplus arising
from the foreclosure of a mortgage, without objecting to the power of the
court to render a judgment, he can not, when the decision is adverse to
him, appeal to the supreme court, and raise the objection there. Mays v.
Fritton, 11 B. R. 229; s. c. 20 Wall. 414; Scott v. Kelly, 12 B. R. 96; s. ce
22 Wall. 57.

A fi. fa. may be issued after the commencement of proceedings in
bankruptcy to enforce the lien of the judgment. Russell v. Cheatham,
16 Miss. 708; McCanee v. Taylor, 10 Gratt. 580; Freeny v. Ware, 9 Ala.
370; Talbert v. Melton, 17 Miss. 9; Sorden v. Gatewood, 1 Ind. 107.
Contra, Johnson v. Poag, 39 Tex. 92; Stemmons v. Burford, 39 Tex. 352;
Blum vy. Ellis, 13 B. R. 345; s. c. 73 N. CG. 298. ,

The bankruptcy court will treat the enforcement of a lien in the State
courts as valid, on the application of the lien holder, and a showing by
him that the estate and the other creditors will suffer no injury thereby.
Phelps v. Sellick, 8 B. R. 390.

‘A purchaser from the mortgagee is a necessary party to the bill to
redeem. Winslow v. Clark, 47 N. Y. 261; 5. c. 2 Lans. 377.

An owner of an equity of redemption in real estate, which has been
sold under a foreclosure to which he was not a party, can not recover
against the mortgagee or the purchaser at the mortgage sale, a personal
Judgment for the value of his interest in the mortgaged premises.
Ibid.

If a creditor proves his debt, he can not afterward resort to a State
tribunal to enforce his lien against property which was the subject of
proceedings in bankruptcy to which he was a party. Spilman v. Johnson,
27 Gratt. 33.

If a judgment creditor proves his claim as unsecured, and receives a
dividend thereon from the estate of one joint debtor, he can not enforce
the lien of the judgment against the other joint debtor through a State
court. Heard v. Jones, 15 B. R. 402; s. c. 56 Ga. 271.

‘The district court may authorize a judgment creditor to proceed in the
usual way to collect his judgment, if that course seems best for the
estate. In re McGilton et al., 8 B. R. 294; s. c. 3 Biss. 144.

In order to entitle a mortgagee to apply to the bankruptcy court for
leave to foreclose his mortgage in another court, he must prove his debt
as a secured debt. The petition must allege this fact, and also the date
of the proof and the amount of the debt as proved. The mortgage and
the property covered by it must be fully described in the petition, and
it must be stated whether there are other and what incumbrances on such
Property, with a full description of such incumbrances, if any. It must
526 Tur Bankruptcy Law.

be made to appear, that the estate has no ultimate interest in the mort-
gaged property, and to this end the petition must state the actual value
of the mortgaged property, in order that the court may be informed
whether there is or is not a surplus of value over the incumbrances. In
case the value of the property is greater than the incumbrances, it must
be made to appear that the rights of the petitioner can not be fully
protected by a sale of the property by the assignee under the bank-
ruptcy proceedings, either subject to the incumbrances or free from the
same, and the debt or debts paid out of the proceeds, and to this end the
petition must state the facts from which such conclusion is claimed to
follow. In re Philo R. Sabin, 9 B. R. 388.

If a proceeding to foreclose a mortgage is instituted in a State court
after the commencement of the proceedings in bankruptcy, it may be
stayed on the application of the assignee. Markson v. Heany, 12 B. R.
484; s. c. 47 Ind. 31.

Acr oF 186%, § 5076. Creditors residing within the judicial dis-
trict where the proceedings in bankruptcy are pending shall prove
their debts before one of the registers of the court, or before a com-
missioner of the circuit court within the said district. Creditors
residing without the district, but within the United States, may prove
their debts before a register in bankruptcy or a commissioner of a
circuit court in the judicial district where such creditor or either
one of joint creditors reside; but proof taken before a commissioner
shall be subject to revision by the register of the court.

Statute revised — March 2, 1867, ch. 176, § 22, 14 Stat. 527; July 27,
1868, ch. 258, § 3, 15 Stat. 228. Prior statutes — April 4, 1800, ch. 19, § 6,
2 Stat. 23; Aug. 19, 1841, ch. 9, §§ 5, 7, 5 Stat. 444, 446.

A proof of a debt taken before a justice of the peace is not duly proved,
and must be rejected. In re Strauss, 2 B. R. 48.

The proof of a debt in bankruptcy may be taken by a register or by a
commissioner, in all cases, whether of a resident or nonresident creditor,
or whether such commissioner holds his office in the same town or in the
same building in which a register holds his office, the only limitation being
that it shall be taken before a register or commissioner of the same
judicial district in which the creditor resides or in which the proceedings
are pending. The law never did require, nor does it seem to have con-
templated, that such proof should be taken before the register to whom
the case in bankruptcy has been referred, to the exclusion of all others.
In re W. B. Merrick, 7 B. R. 459; in re L. Sheppard, 1 B. R. 439; s. ce. 1
L. T. B. 49; s. c. 7 A. L. Reg. 484. Contra, in re Haley, 2 B. R. 36.

It is no doubt the wiser policy for creditors, in all cases where they
can do so conveniently, to make their proof before the register in charge,
because he is thereby afforded an opportunity of putting such questions to
them and making such explanations to them as to their rights and lia-
PROCEEDINGS. 527

bilities as he may see fit, and the creditor may then be saved the trouble
ot being afterward summoned before the court to submit to an examina-
tion in regard to his claim. But all the court can do is to commend that
course to creditors as the wiser policy. In re W. B. Merrick, 7 B. R. 459.

The court has no discretion to refuse to receive and file a proof of
debt which appears on its face to have been taken by a proper officer and
to be correct in form and substance. By the receipt and filing of the
proot of debt, and by it alone, the court obtains jurisdiction of the
claim and of the creditor presenting it, and then, and then only, does
the revisory power of the court over such proof commence. Ibid.

The receiving and filing of a proof of debt concludes nothing. Unless
otherwise ordered, it entitles the creditor to be placed on the list of
creditors, vote for assignee, and receive dividends, but the court may
otherwise order and do all things in regard to it which the act author-
izes to be done. Ibid. :

A proof made by the creditor before his own attorney can not be
allowed. In re Henry Nebe, 11 B. R. 289.

A proof of debt made by an officer of a corporation before a register
in a State other than that under whose laws the corporation was organ-
ized is insufficient. Ansonia B. & C. Co. v. Babbitt, 15 N. Y. Supr. 157.

Act oF 1874, § 50764 (June 22, 1874, ch. 390, § 20, 18 Stat.
186). That in addition to the officers now authorized to take proof
of debts against the estate of a bankrupt, notaries public are hereby
authorized to take such proof, in the manner and under the regula-
tions provided by law; such proof to be certified by the notary and
attested by his signature and official seal.

The impression of a notarial seal can not be received as evidence unless
the name of the notary is engraved on the seal so as to make it his
official seal. In re Henry Nebe, 11 B. R. 289; in re Port Huron Dry Dock
Co., 14 B. R. 253.

The requisites of a notarial seal are determined by the law of the
locality from which he derives his authority. In re Wm. W. Phillips, 14
B. R. 219; 8. c. 8 C. L. N. 409. .
+An official seal is an impression on the paper directly, or on wax or
wafer attached thereto, made by the official as and for his seal. Ibid.

In the absence of express legislation, an official seal need aot contain
the name of the official. Ibid.

Any impression made upon sealing-wax or wafer adhering. to the
paper, without any device or words indicative of the particular official,
is entitled to judicial sanction as evidence of the official character of the
individual who signs the jurat. Ibid.

It is the seal, and not its composition or character of words and devices,
which raises the presumption of official character of which the courts
take judicial notice. Ibid.
528 Ture Bangruptcy Law.

The presumption is that a seal is the official seal of the person it pur-
ports to be, and who subscribed the jurat. Ibid.

The power given to notaries to take proof of debts carries with it the
incidental power to take acknowledgments of letters of attorney. In re
Butterfield & Burr, 14 B. R. 195; in re McDuffee, 14 B. R. 336.

§ 5076B (Act of August 15, 1876, ch. 304, 19 Stat. 206). Be
it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That notaries pub-
lic of the several States, Territories, and the District of Columbia
be, and they are hereby, authorized to take depositions, and do all
other acts in relation to taking testimony to be used in the courts
of the United States, take acknowledgments and affidavits, in the
same manner and with the same effect as commissioners of the United
States circuit court may now lawfully take or do.

A bankrupt may verify his schedules before a notary public. In re
John W. Bailey, 15 B. R. 48.

Act oF 1898, Cu. 6, § 57. Proof and Allowance of Claims.—
(a) Proof of claims shall consist of a statement under oath, in writing,
signed by a creditor setting forth the claim, the consideration there-
for, and whether any, and, if so what, securities are held therefor,
and whether any, and, if so what, payments have been made thereon,
and that the sum claimed is justly owing from the bankrupt to
the creditor. * * *

(j) Debts owing to the United States, a State, a county, a district,
or a municipality as a penalty or forfeiture shall not be allowed,
except for the amount of the pecuniary loss sustained by the act,
transaction, or proceeding out of which the penalty or forfeiture
arose, with reasonable and actual costs occasioned thereby and such
interest as may have accrued thereon according to law. * * *

(m) The claim of any estate which is being administered in bank-
ruptey against any like estate may be proved by the trustee and
allowed by the court in the same manner and upon like terms as
the claims of other creditors.

(n) Claims shall not be proved against a bankrupt estate subse-
quent to one year after the adjudication; or if they are liquidated
by litigation and the final judgment therein is rendered within thirty
days before or after the expiration of such time, then within sixty
days after the rendition of such judgment: Provided, That the right
Proor. 529

of infants and insane persons without guardians, without notice of
the proceedings, may continue six months longer.

Act or 1867, § 5077. To entitle a claimant against the estate
of a bankrupt to have his demands allowed, it must be verified by a
deposition in writing, under oath, and signed by the deponent, set-
ting forth the demand, the consideration thereof, whether any and
what securities are held therefor, and whether any and what pay-
ments have been made thereon; that the sum claimed is justly due
from the bankrupt to the claimant; that the claimant has not, nor
has any other person, for his use, received any security or satisfac-
tion whatever other than that by him set forth; that the claim was
not procured for the purpose of influencing the proceedings in bank-
ruptey; and that no bargain or agreement, express or implied, has
been made or entered into, by or on behalf of such creditor, to sell,
transfer, or dispose of the claim, or any part thereof, or to take or
receive, directly or indirectly, any money, property, or consideration
whatever, whereby the vote of such creditor for assignee, or any
action on the part of such creditor, or any other person in the pro-
ceedings, is or shall be in any way affected, influenced or controlled.
No claim shall be allowed unless all the statements set forth in such
deposition shall appear to be true.

Statute revised — March 2, 1867, ch. 176, § 22, 14 Stat. 527.

The Proof.— The statement of the debt in the schedule is not a proof
of it. It may be stated in fraud, and may not exist. The bankrupt may
have made payments, or may have counterclaims and offsets. The debt
must be proved by the oath of the creditor. This applies to a lien cred-
itor as well as to an unsecured creditor. Davis, Assignee of Bittel et al.,
2B. R. 392.

A creditor need not wait until the first meeting of creditors to prove
his claim, nor is it the duty of the register to notify the bankrupt of the
filing of the proof. In re Patterson, 1 B. R. 100; s. c. 1 Ben. 448.

Where notes were exchanged, and holder has received a payment
from the maker, he can only prove for balance against the surety. Ex
parte Harris et al.; In re Cochrane, Jr., 16 B. R. 482. ;

Creditor could not be excluded as a witness, on ground of interest, from
proving this claim, under the law of 1867. In re Merrill, 16 B. R. 35.

A creditor, though the wife of the bankrupt, is a competent witness.
In re Richards, 17 B. R. 572.

The holder and owner of a claim can alone make the proof. In re
Ford & Co., 18 B. R. 426.)

A “deposition”. by a debtor, proving his claim against the estate of
the bankrupt, is neither an affidavit nor a deposition, as known in the
ordinary practice of law. It is the result of ari examination of the creditor

34
530 Tur Banxrurtcy Law.

made by the officer of the law authorized to make it. The creditor is
not only required to testify to the amount of his claim, but he must testify
to its consideration, and whether he has received any payment, or holds
any security whatever for the same, and to other facts required by the
act. In no other court of justice is such testimony required for the due
proof of any debt, and it is evident that Congress intended that the court
and its officers should, by a careful examination of the creditor, purge his
conscience, and ascertain the real nature of his claim, and that no fraud
or combination, either for or against the bankrupt, exists. In re Strauss,
2 B. R. 48; in re Elder, 3 B. R. 670; s. c. 1 Saw. 73; s. t. 1 L. T. B. 198;
s.c.3 L. T. B. 140.

There is no requirement that the deposition shall be written by the
officer taking it, or by some disinterested person in his presence, or by
the witness. Neither is it of So much importance in view of the fact
that what the creditor must swear to is clearly and explicitly pointed out
in the act, and the exact form in which he shall do it is also prescribed.
It is a practice, however, not to be commended. It is far preferable, and
more in accordance with the spirit of the act, that the officer, with the
act and the form before him, should examine the creditor on oath touch-
ing the matter specified, and himself reduce the depositions to writing,
or fill up the printed blank, if such is used. In re W. B. Merrick, 7 B. R.
459.

The proof of a debt against a firm should state that the firm or com-
pany, describing it by its firm name, and the individuals who composed
it, was indebted to the creditor, and how and for what amount. It should
not be uncertain whether the demand is a firm debt, or a joint claim
ngainst the individuals who compose the firm. In re Walton et al. 1

Deady, 510.
When partners are adjudged bankrupts, the result is, or may be, that

several distinct estates are to be administered in that proceeding. There
are the estate and debts of the partnership, and the Separate estate and
debts of each individual included in the partnership. Proof of a debt
against either of these estates ought not to include or be joined with the
proof of a debt against either of the others. Two distinct debts against
different estates can not be included in one proof or deposition. Ibid.

A proof of debt can not be filed unless it is correctly entitled in the
cause. In re Pius Walther et al, 14 B. R. 273.

The proof should contain at least one full christian name of the ered-
itor as well as his surname. In re William H. Valentine, 12 B. R. 389;
s. c. 4 Biss, 317.

As a general rule, the proof of a claim must be established by the
same degree and character of evidence as that required in a trial at law
or a hearing in equity. In re Northern Iron Company, 14 B. R. 356.

If the deposition refers to an annexed account which merely gives
dates and amount without stating the subject-matter of the account, that
is not sufficient. In re Port Huron Dry Dock Co., 14 B. R. 2538.

The amount of interest to which a claimant is entitled is not to be
determined by himself, but the data must be furnished by him under
cath, and the computation is to be made by the register. Ibid.
Proor. 531

A proof in due form makes out a prima facie case against an indorser,
although there is no evidence of a protest, for the creditor is not obliged
by the mere interposition of an objection to produce such evidence as
would be necessary at an ordinary trial. In re W. A. Saunders, 13 B.
R. 164.

Where a claim consists of a promissory note, the creditor must pro-
duce the note, or a copy thereof. In re Northern Iron Co., 14 B. R. 356.

Where a note appears to have been discounted after the commencement
of the proceedings in bankruptcy, the holder must show something more
from which his good faith may be inferred than a bare assertion that
he has discounted it for a specified sum. In re Port Huron Dry Dock Co.,
14 B. R. 253.

A statement that a note has been regularly protested on an indorser
does not state a fact, and hence does not prove that une liability of the
bankrupt has been fixed by demand and notice.

When the debt is evidenced by a promissory note, the note must be
produced and exhibited when required by the register, the assignee, or
the bankrupt, on proper occasions. Forms Nos. 31 and 33 distinctly show
that a bill or note or security held for a debt is to be exhibited at the
time the proof of debt is handed in; and Forms Nos. 27 and 31 show that
it is to be again exhibited before a dividend is paid on it. When the note
is merged in a judgment, it need not be produced. In re Knoepfel, 1
B. R. 70; s. ec. 1 Ben. 398; in re Jaycox & Green, 7 B. R. 3038.

The proof need not anticipate the defense of the statute of limitations,
or give any facts to take the debt out of the statute. The statute may
be waived, and, when relied on as a defense, must be set up affirmatively
by the party making the defense. In re Knoepfel, 1 B. R. 70; s. c. 1 Ben.
398.

A transfer of the claim is valid unless it is fraudulent or oppressive.
In re Morris, 12 B. R. 170.

One object of the law in requiring the consideration to be stated, is
to enable the register to say whether it is legal in its nature, and will
support a demand or promise; another, to show him whether or not the
demand is unliquidated, and must be ascertained by assessment before
its allowance; another, to afford the assignee means for comparing the
books of the bankrupt. with the proof. But the chief object, no doubt,
is to put a check, upon the proof of fraudulent and fictitious claims by
requiring the claimant to give such a particular and definite statement
of the consideration as will enable other creditors to trace out, discover,
and expose the fraud or illegality of the claim, if any exist. The require-
Ment is intended to be for the benefit of all other creditors of the estate
and the bankrupt, and to prevent fraud. If the statement of the con-
sideration is so general and indefinite as to afford no aid to the creditors
in their inquiry as to the fairness and legality of the claim, it does not
effect the object of the law, and must be held insufficient. A general state-
Ment that the consideration of a demand is goods, wares, and merchandise,
or hay, barley, and board, is not sufficient. The kind of goods, the
quantity, the price, and the time of delivery, if delivered at one time, or
{f delivered continuously through a period of time, that period should be
532 Tue Banrruptcy Law.

stated. If the proof falls short of this, the register ought not to con-
sider it satisfactory, and should withhold his approval. In re Elder, 3
B. RB. 670; s. c. 1 Saw. 73; s.c.1L. T. B. 198; s. c. 3 L. T. B. 140; in re
Northern Iron Co., 14 B. R. 356.

When the debt consists of a promissory note, the proof should set forth
the consideration of the note, and state whether any and what payments
have been made thereon. In re Loder Bros., 2 B. R. 517; s. c. 3 Ben. 211;
s.c.1L. T. B. 159; in re Jaycox & Green, 7 B. R. 308; in re Lake Superior
S. 0. R. R. & I. Co., 7 B. R. 376.

The proof of a claim for contribution by a partner should set forth the
amount paid by him for the debt on account of which the claim is made,
In re BE. R. Stephens, 6 B. R. 533; s. c. 3 Biss. 387.

The assignee of a simple chose in action or contract for the payment
of money must state the consideration which passed between the original
parties. In re Lake Superior S. ©. R. R. & I. Co., 10 B. R. 76.

The holder of a negotiable paper, who took it for value in good faith
before the maturity thereof, need only state the consideration which he
gave for sucb paper. Ibid.

The creditor must make the proof simpliciter, and he is not at liberty
to interpose any protest or qualification or reservation. Dutton v. Free-
man, 5 Law Rep. 447. :

Where a party has a demand by its terms payable in coin, he should
prove it according to its terms. The demand should then be entered upon
the books of the assignee, as payable in coin, and the claimant will be
entitled to receive his dividend thereon in the stipulated currency. In re
Elder, 3 B. R. 670; s. c. 1 Saw. 73; s.c. 1 L. T. B. 198; s. ec. 3 L. T. B. 140.

A note dated March 18, 1861, and payable three years after date, in
current money of the State, is payable in lawful currency, and not in
State treasury notes subsequently issued. The parties could not have
contemplated payment in treasury notes. In re Whittaker, 4 B. R. 160.

Proof of Secured Debt.— A secured creditor can resort to one of three
remedies: Ist. He may rely upon his security; 2d. He may abandon it,
and prove the whole debt as unsecured; 3d. He may be admitted only as
a creditor for the balance remaining after the deduction of the value of
the security. Before he can prove his whole debt as a general creditor,
he must surrender the security. Any attempt on the part of a creditor to
prove a debt before a register, without complying with the conditions
imposed by the law, should be disregarded by him. In re Brand, 3 B. BR.
324; 8.¢c. 2 L. T. B. 66.

A secured creditor should always prove his claim; any other theory is
entirely irreconcilable with the provisions of the bankruptcy act. If
the enforcement of his lien satisfies his demand, the debt will be dis-
charged, but if it does not, then the balance remains as a general claim
against the estate, like all other unsecured claims. Davis, Assignee of Bittel
et al., 2 B. R. 392; in re Ruehle, 2. B. R. 577; s.c.1L. T. B. 59:8 0106.
L. N. 186; s. ¢. 16 Pitts. L. J. 5; in re Winn, 1 B. R. 496; s.c.1L. T. B. 17.

The bankruptcy court has jurisdiction over the debtor and all his cred-
itors, and also over all demands affecting the bankrupt’s estate. The se-
Proor or Srcurep Dest. 533

cured creditor must prove his demand, and obtain the aid of the bank-
ruptcy court for its enforcement, and can not wait until bankruptcy
proceedings are closed, and then enforce his lien through the State court.
Davis v. Anderson, 6 B. R. 145.

The word “debt,” as used in this section, means the amount upon
which the dividend is to be computed, and the phrase “ proved his debt,”
is equivalent to the phrase “ share in the distribution of the assets.” In
re Bigelow et al, 1 B. R. 632; s. c. 2 Ben. 480; s.c.1L. TB. 95; Jervis
y. Smith, 3 B. R. 594; s. c. 7 Abb. Pr. (N. S.) 217.

This rule that a creditor, having security for his debt, is to be admitted
as a creditor only for the balance of his debt; remaining after the de-
duction of the value of his security, had its origin in chancery, and
probably in the doctrine of election. The debt or obligation of the debtor
is the principal thing; the pledge, the collateral or incident. If the debtor
makes default, the creditor has a right of election as to his remedies. He
may institute a personal action against his debtor upon his obligation,
and by means of judgment and execution thereon, collect bis debt out of
the estate of his debtor, or he may proceed to make his collateral securities
available to the payment of his debt. The natural and usual course is
to proceed against the debtor, in the first instance, by a personal action.
If the collateral securities have not, by some conventional act or inter-
vening equity, become the primary fund for the payment of the debt, there
is nothing in reason or natural justice which requires the creditor to
proceed against the securities in the first place. But the lord chancellor,
in the exercise of his summary powers over suitors and the commissioners
of bankruptcy, long before any statutory provision, was accustomed to
compel creditors to elect between the commission and the other remedies
they might have for the recovery of their debts, and to stand to the
election; and he restrained the commissioner from admitting a lien creditor
or permitting him to prove his debt until he had exhausted his lien or
security. Subsequently the practice of valuing securities was adopted
to avoid delays. Jervis v. Smith, 3 B. R. 594; s. c. 7 Abb. Pr. (N. S.) 217.

A deposition, according to Form No. 21, is such a proof as is allowed by
this section, even though the value of the security is not determined, nor
the property sold. In re Bridgman, 1 B. R. 312; s. c. 2 B. R. 252; in re
Bigelow et al., 1 B. R. 632; s. c. 2 Ben. 480; s. c. 1 L. T. B. 95; in re Ruehle,
2B. R.577;5.c.1L. T. B.59;s.c.10. L. N. 186; s. c. 16 Pitts. L. J. 5.

The value of the securities held by the creditor is not required by the
bankruptcy act to be set forth in the deposition, and Form No. 21 only
requires an estimate of that value to be made. A creditor does not prove,
as against the estate, or offer to prove, the whole indebtedness of the
bankrupt exhibited in his deposition, when against that indebtedness are
set out securities held therefor, the value of which, when ascertained, the
court is asked to deduct from the indebtedness, in order to arrive at the
balance, for which balance alone the creditor seeks to be admitted to
share in the distribution of the assets. In re Bigelow et al., 1 B. R. 632;
8, c. 2 Ben, 480; s, ec. 1 L, T. B. 95.
534 Tue Bankruptcy Law.

The proof of a claim by a secured creditor differs from that of an un-
secured creditor in this: the latter at once steps into the column of gen-
eral creditors who are to be paid out of the assets of the bankrupt pro
rata, according to the amount of their claims; while the former, or secured
creditor, halts awhile to have the value of his security determined in
such manner as the court may direct, and then becomes a general creditor,
or shares in the bankrupt’s assets for the balance, after deducting the
value of his securities. In re Bridgman, 1 B. R. 312; s. c. 2 B. R. 262,

“The proof of a secured claim, according to Form No. 21, does not
invalidate the right of the creditor to the securities which he is found to
hold. In re Bigelow et al., 1 B. R. 632; s. ec. 2 Ben. 480; s.c.1L. T. B.
95; in re J. M. Snedaker, 3 B. R. 629; King v. Bowman, 24 La. An. 506,

A collateral consisting of a policy of insurance upon the life of the
bankrupt is not a mortgage or pledge of real or personal property of the
bankrupt, or a lien thereon, but, nevertheless, the creditor must credit
the present value of the security on the debt. The present value of the
policy is its cash surrender value, and the creditor is entitled to prove for
the balance after deducting this amount from his debt. In re Frank New-
land, 7 B. R. 477; s. c. 6 Ben. 342.

If a secured creditor also has an unsecured claim, he may prove such
claim, and vote for an assignee. In re S. Hanna, 7 B. R. 502; s. ce. 5 Ben.
5; in re J. F. & C. R. Parkes, 10 B. R. 82.

An estimate of the value of the securities made by the secured creditor
is not sufficient for the purpose of adjusting the amount on which he may
be admitted to vote for assignee. The ascertainment of such value must
rest in abeyance until after the election of an assignee. In re S. Hanna,
7 B. R. 502; s. c. 5 Ben. 5.

The claim of a creditor who has sold his collaterals can not be rejected
absolutely, but may be allowed for such amount as may be found to be
actually due. In re Nounnan & Co., 6 B. R. 579; s. ec. 1 Utah Ter. 44; s. e
4 L. T. B. 228

The holder of a promissory note, the indorser of which is. secured by a
mortgage upon the property of the bankrupt, may release and surrender
his security, and then prove his debt as wholly unsecured. This may be
done by a direct and formal release, or by such acts as, either in law or
equity, are equivalent to such express release. As the beneficiary of the
trust, created or implied for his sole benefit, he can release and discharge
the trust, the trustee, and the trust property, without the aid or inter-
vention of a trustee having no interest in the continuance of the trust;
and as such release and discharge, without the consent of the surety,
must release and discharge the surety, at least to the extent of the full
value of the trust property released, the surety has no interest in op-
position to the release. In re Jaycox & Green, 8 B. R. 241; 9. c. 7 B. R.
303. '

Effect of Proving Secured Claim as Unsecured.— A secured creditor
who proves his claim without reference to his lien or security, and witb-
out apprising the bankruptcy court of its existence, thereby waives
his lien, and relinquishes it to the assignee. Stewart vy. Isidor, 1 B. R.
EFFECT OF PRovine SEcuRED Cam as UNSECURED. 535.

485; 8. ¢. 5 Abb. Pr. (N. 8.) 68; in re Bloss, 4 B. R. 147; s. c. 2.1L. T. B. 126;
in re Stansell, 6 B. R. 183; in re Granger & Sabin, 8 B. R. 30; in re
Jaycox & Green, 8 B. R. 241; Hoadley v. Cawood, 40 Ind. 239; Briggs v.
Stephens, 7 Law Rep. 281.

A secured creditor, who in his proof claims a lien upon the entire
estate of the bankrupt, when he only has a lien upon a certain portion
thereof, does not thereby lose the real lien to which he is entitled, nor
is his proof vitiated. MclI<insey v. Harding, 4 B. R. 39.

The proof without a release or conveyance is contrary to law, but does
not of itself operate to discharge a mortgage. It may prevent the cred-
itor from setting up a mortgage against the assignee, but the assignee
alone can avail himself of the rights which this provision is intended to.
secure. Third parties can derive no right or advantage therefrom. Cook
y. Farrington, 104 Mass. 212.

There is no provision in the bankruptcy act that the claim of a proving
creditor against joint debtors with, or sureties for, the bankrupt, shall be
assigned or given up by the creditor to the assignee. Indeed, such pro-
vision would be manifestly absurd. The claim of the creditor against 'the
surety of the bankrupt is, in no sense, the property of the bankrupt. The
bankrupt has no right or interest in it, and, consequently, can transfer
none to his assignee. A creditor who has proved a claim against the bank-
rupt’s estate, arising from a contract made by the bankrupt and certain
others, as joint contractors, without stating in his proof that the same was
in any manner secured, may, nevertheless, maintain an action upon such
contract against the other joint contractors. Hoyt v. Freel, 4 B. R. 181;
s.c. 7 Abb. Pr. (N. 8.) 220; 5. c. 2 L. T. B. 144.

Before a secured creditor can prove his full claim as an unsecured debt,
he must surrender his security. Such a proof should not be received until
a release or conveyance is filed. In re Brand, 3 B. R. 324;8s.c. 2 L. T. B.
66; Hatch v. Seely, 13 B. R. 380; s. c. 37 Lowa, 493.

But where a release has not been made, and the title to the property
comes in question in a controversy between the assignee and other par-
ties, that will be considered as having been done which ought to have
been done. Wallace v. Conrad, 3 B. R. 41; s. c. 3 Brewst. 329; s. c. 7
Phila. 114.

If an indorser takes a mortgage from the maker to secure the payment
of all notes indorsed by him and to indemnify him against his indorsements
for the maker, and the creditor is not a party to the transaction, it is
optional with the creditor to seek and take the benefit of any trust or
equitable lien which the law may give him, or to waive such right and
rest content with the personal responsibility of the indorser. He can not
be coerced to avail himself of the security. If the maker, therefore, be-
comes bankrupt, the holder does not lose his right of action against the
indorser by proving the debt as unsecured. Merchants’ Nat’l. Bank v.
Comstock, 11 B. R. 235; s. ¢. 55 N. ¥. 24.

If the holder of a note, the indorser whereof is protected by a mort-
gage, proves his claim as unsecured, this does not extinguish the mortgage,
536 THE BANKRUPTCY Law.

for the assignee is subrogated to the rights of the holder. Hiscock y.
Green, 12 B. R. 507.

It will not be presumed that a creditor fraudulently concealed the fact
of his lien in proving his claim. Hatch v. Seely, 13 B. R. 380; s. c. 87
lowa, 493.

Merely proving a secured claim as a general claim does not waive the
security. Ibid.

Amendment of Proof.— Proofs of debt can not be taken from the file,
In re Loweree, 1 B. R. 74; s. c. 1 Ben. 406; in re McIntosh, 2 B. R. 506; in
re Emison, 2 B. R. 595. Contra, Morse vy. Lowell, 48 Mass. 152.

A. secured creditor, who inadvertently proves his debt as an unsecured
claim, will not be required to surrender his lien and participate in the
general distribution of assets, but will be allowed, if he elects to do so,
to withdraw or amend the proof, and rely upon his security. In re Brand,
3B. R. 324;s.c.2L. T. B. 66. See Rule I; in re Clark & Binninger, 5 B. R.
255; in re Hope Mining Co., 1 Saw. 710; in re Harwood, Crabbe, 496; in re
Lapsley, 1 Penn. L. J. 245.

Participating in the election of an assignee will not preclude a creditor
from amending his proof from unsecured to secured, when there is no
evidence that he gained any advantage thereby, or that the other creditors
have been in any wise prejudiced in consequence of it, or that he was in-
fluenced by any fraudulent intent. In the absence of evidence, the pre-
sumption is that none existed. In re William McConnell, 9 B. R. 387; s. ¢.
31 Leg. Int. 61; King v. Bowman, 24 La. An. 506; in re J. F. & C. R.
Parkes, 10 B. R. 82.

If the secured creditor has received a dividend, he may be allowed to
amend, upon condition that be refunds the dividend, with interest. In re
J. F. & G. R. Parkes, 10 B. R. 82.

Where a creditor has been guilty of ingen’ in claiming his security, the

court may, as a condition for allowing an amendment, require that there
shall be a deduction from the proceeds realized by selling the security,
of a portion of the costs and expenses of the proceedings. In re William
McConnell, 9 B. R. 387; s. c. 31 Leg. Int. 61.

Where proof has been made under a mistake of fact, or even of law, it
may be corrected, almost as a matter of course, if neither the bankrupt nor
other creditors who have proved will be injured. Even where the rights
of others will be affected, if the only effect is to restore all parties to the
position they were in before the debt was proved, it would be proper to
allow the withdrawal, if there has been a mistake and no want of dili-
gence. The proof may be withdrawn for the purpose of proceeding against
a dormant partner of the bankrupt. In re Edward Hubbard, 1 B. R. 679;
s. ce. Lowell, 190.

An order allowing a withdrawal of a proof may be passed by the regis-
ter, if, after due notice, no opposition is made; otherwise, by the court.
Ibid.

Where a proof is sworn to and filed, and afterward, upon the objection
of other creditors, is postponed, the creditor has no right to withdraw it
apon his mere demand. In re Abraham Halle, 7 Ben. 182.
AMENDMENT OF PrRoor. 537

A creditor wili not be allowed to withdraw a proof merely for the pur-
pose of continuing an arrest of the bankrupt, which was made before the
commencement of the proceedings in bankruptcy. In re Wiener, 14 B.
R. 218.

The power of the court to allow a creditor to withdraw a proof that
has been filed inadvertently, is wholly discretionary. Ibid.

It is the policy and purpose of the act to do equal and exact justice
between the estate of the bankrupt and creditors. The court has ample
power to investigate a claim at any stage of the proceedings, and to
make any correction equity and justice demand, not only to reduce the
amount if it is too large, but also to increase it if, through inadvertence,
it is smaller than by right it should be. Questions of amendment address
themselves to the equitable consideration of the court, and great discretion
is exercised in disposing of them. In re Henry B. Montgomery, 2 B. R.
429; s. c. 3 Ben. 565.

A creditor can not authorize an attorney to alter a proof without hav-
ing it sworn to again after such alteration. In re Pius Walther et al., 14
B. R. 273.

So long as the right to prove continues, the right to amend a proof filed
should not be denied. In re Myrick, 3 B. R. 154; in re Henry B. Mont-
gomery, 3 B. R. 429; s. c. 3 Ben. 565.

When the proof is defective, a party may be allowed, and ought to be
required to amend it. In re Loweree, 1 B. R. 74; s. ¢. 1 Ben. 406; in re
Myrick, 3 B. R. 154.

The register has the right, and it is ‘his duty, to permit and require a
defective proof to be amended; but if, in such case, an issue of law or fact
is raised, he must adjourn the same into court for decision. In re Elder,
3B. R. €70; s. c. 1 Saw. 73; 1 L. T. B. 198; 8 L. T. B. 140,

When the amendment sought relates to a new and different dlaim from
any one of those embraced in the existing proof of debt, leave to amend
the existing proof must be denied. The proper course is for the creditor
to prove his newly-discovered debt independently. In re Henry B. Mont-
gomery, 3 B. R. 429; s. c. 3 Ben. 565.

An amendment of a proof relates back to the original filing unless the
rights of others have in the meantime intervened, and an objection that
a note was not attached to the original proof, or that the claim was barred
at the time of the filing of the objection, can not be maintained. In re J.
W. Maybin, 15 B. R. 468.

Act oF 1867, § 5078. Such oath shall be made by the claimant,
testifying of his own knowledge, unless he is absent from the United
States, or prevented by some other good cause from testifying, in
which case the demand may be verified by the attorney or author-
ized agent of the claimant testifying to the best of his knowledge,
information and belief, and setting forth his means of knowledge.
Corporations may verify their claims by the oath of their president,
538 Tue Bankruptcy Law.

cashier, or treasurer. The court may require or receive further per-
tinent evidence either for or against the admission of any claim.

Statute revised — March 2, 1867, ch. 176, § 22, 14 Stat. 527. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 5, 5 Stat. 444.

In the proof of debts by a creditor firm composed of several members,
the firm is to be treated as one creditor, and any one member may act for
all in proving the debts. In re Joseph Barrett, 2 B. R. 533; 8.c 1 L. T.
B. 144; 8s. ¢c 1 C. L. N. 202.

A receiver appointed in one State may file a proof of claim in the dis-
trict court in another State. Any person who is authorized to give an
acquittance of a debt is entitled to prove the debt in bankruptcy, if he
be acting in a representative capacity as trustee, assignee, receiver, ex-
ecutor, administrator or in any other of the various representative capaci-
ties which the law provides for the administration of human affairs. In
re Republic Ins. Co., 8 B. R. 197; s. c. 3 Biss. 504.

A deposition by an assignee for value, before bankruptcy, of a chose in
action, is sufficient to entitle him to be considered the creditor in respect
to such debt, to all intents and for all purposes. His deposition should
show the facts and the date of the transfer, and the name of the original
creditor. It is not necessary that the assignor should join in making the
deposition. Such assignee of a chose in action, so proving, should have
the right to take any such action or proceeding in the catise in the name
of his assignor, at his own expense, as he may be advised. An appeal
from the disallowance of such a claim ought, perhaps, to be taken in the
name of the original creditor. In re Fortune, 3 B. R. 312; s. ¢c. Lowell,
384; s.¢c. 2 L. T. B. 99.

A party to whom a debt has been assigned after the commencement
of proceedings in bankruptcy, may prove it. It is true that the Forms
require that the debt shall be due to the creditor at the time of the com-
mencement of proceedings in bankruptcy, but these may be modified
to suit the facts of each particular case. Taken literally, they would
exclude administrators, or other assignees, by mere operation of law,
which certainly can not have been intended. There is nothing in this sec-
tion to avoid a real and honest transfer without any purpose of influencing
the proceedings in bankruptcy, but rather an implication that it may be
done if there is no such purpose. In re Murdock, 3 B. R. 146; s. c. Lowell,
362; s. c. 2 L. T. B. 97; in re Frank, 5 B. R. 19%; s. c. 5 Ben. 164; 5. c. 2
L. T. B. 188.

If the holder of a negotiable note indorses it after the bankruptcy of
the maker, the indorsee may prove the debt. Humphreys v. Blight, 4
Dall, 370; s. c. 1 Wash. 44.

A party who in good faith undertakes to buy up all the claims against
the bankrupt, with the intention of stopping the proceedings and giving
the debtor time to pay them, does not violate any of the provisions of
the bankruptcy act, The bankruptcy act should not be construed so strictly
as to prevent the bankrupt from making efforts to extricate himself from
the bankruptcy proceedings, and if he can find a friend to buy up his
AMENDMENT OF Proor. 539

debts, for the purpose of giving him time to convert his property into
money to pay them, he may do so. The bankruptcy act encourages all
honest efforts, and sustains all honest transactions of a debtor. The
clause which provides that the creditor must prove that the claim was
not procured for the purpose of influencing the proceedings under this
act, does not relate to transfers after the filing of the petition any more
than before, and is not intended to interfere with ordinary transfers, but
only of notes and demands, such transfers as are procured for the pur-
pose of influencing the proceedings in bankruptcy. If the person who
honestly undertakes to purchase up the debts, fails, he may prove the
claim and participate in the estate. In re Strachan, 3 Biss. 181; in re
, Pease et al., 6 B. R. 1738.

There must be an assignment of the claim. A receipt of payment is
not sufficient. If the claimant has paid the claim, he may have a demand
for money paid against the bankrupt, but, when such payment is made
after the filing of the petition, the demand is not a provable debt. In re
Strachan, 3 Biss. 181.

The true mode of proving an assigned claim, is that the holder should
himself make the affidavit, else, the statement that the claim was not pro-
cured, etc., becomes merely illusory, for it is not made by the party who
has bought the claim, and might be entirely true in respect to the affiant,
and false as to the real party in interest. In re Pease et al., 6 B. R. 173.

An agent can not make oath in the deposition in proof of his principal’s
debt, without showing that the creditor is absent from the United States,
or prevented by some other good cause from testifying. This cause is to
be proved to the satisfaction of the judge or register before whom the debt
is offered for proof. The law requires the oath of some person having
knowledge, and the creditor himself is presumed to have it, and unless
he is absent, or in some way prevented from testifying, no one can do so
for him, unless he is a person having actual knowledge. In re H. F.
Barnes, Lowell, 560,

If one partner is sick and the other is out of the State, this is not a suf-
ficient reason for allowing an agent to make the proof, although his knowl-
edge is superior to that of the absent partner. In re William Whyte, 9 B.
R, 267.

If an agent has personal knowledge of all the facts necessary to make
proof of it, and the creditor has no knowledge of the matter at all, the
former may prove the debt. In re Martin Watrous et al., 14 B. R. 258.

An agent holding negotiable paper can not prove it when the owner is in
a situation to make the proof himself. In re W. A. Saunders, 13 B. R. 164.

Mere absence from the State or the locality where the proof is made, is
not alone regarded as cause for proof by an agent. In re George Jackson
et al, 14 B. R. 449.

If the creditor is confined to his house by sickness, so that he is unable
to testify, this is a sufficient reason for allowing an agent to make the
proof. In re William Whyte, 9 B. R. 267.

When an agent testifies positively of his own knowledge, the proof need
not show any reason why the creditor himself could not have made the
540 Tur Bankruptcy Law.

deposition, nor need he testify to the best of his knowledge, information
and belief, nor set forth his means of knowledge as to the claim.
McKinsey v. Harding, 4 B. R. 39.

A person who has acted as the agent of the bankrupt in purchasing
claims against the bankrupt’s estate, can not prove them. In re Lathrop
et al., 3 B. R. 413; s. c. 3 Ben. 490.

A creditor who makes the proper deposition, but retains the proof in his
own hands, can not be considered a creditor who has proved his debt within
the technical meaning of the bankruptcy act. In re L. Sheppard, 1 B. R.
439; s.c.1L. T. B. 49; 5. c. 7 A. L. Reg. 484.

A bankrupt may testify to support a claim of his wife against the estate,
where such testimony would be competent under the State laws. In re
Levi Bean, 14 B. R. 182; s. c. 1 W. N. 482.

The proof of a claim by a State should be made by the State treasurer
or by some officer holding a relation to the State similar to the relation
which a president, cashier or treasurer bears to a corporation of which he
is such officer. A warden can not make the proof. In re Corn Exchange
Bank, 15 B. R. 216; s. ¢. 9 C. L. N. 254, 481.

Act oF 1867, § 5079. Such oath may be taken in any district
before any register or any commissioner of the circuit court author-
ized to administer oaths; or, if the creditor is in a foreign country,
before any minister, consul, or vice-consul of the United States.
When the proof is so made it shall be delivered or sent by mail to
the register having charge of the case.

Statute revised — March 2, 1867, ch. 176, § 22, 14 Stat. 527; July 27,
1868, ch. 258, § 3, 15 Stat. 228.

A proof can not be taken before a consular agent. In re Robert V.
Lynch, 16 B. R. 38.

Act oF 1867, § 5080. If the proof is satisfactory to the register
it shall be delivered or sent by mail to the assignee, who shall ex-
amine the same and compare it with the books and accounts of the
bankrupt, and shall register, in a book to be kept by him for that
purpose, the names of creditors who have proved their claims, in the
order in which such proof is received, stating the time of receipt
of such proof, and the amount and nature of the debts. Such books
shall be open to the inspection of all the creditors. The court may
require or receive further pertinent evidence either for or against
the admission of any claim.

Statute revised — March 2, 1867, ch. 176, § 22, 14 Stat. 527.
The officer taking the proof, should append it to a certificate, that it is
satisfactory to him. In re Belden & Hooker, 4 B. R. 194.
AMENDMENT oF Proor. Bell

The register who has charge of the proceedings in bankruptcy, may
reject a proof taken before another register, when the same does not
appear to be in conformity to law, but if an issue of law or of fact is
raised and contested thereon, the question must be adjourned into court
for the decision of the judge. roofs so rejected should be returned for
amendment. In re Benj. H. Loder, 3 B. R. 665; s. c. 4 Ben. 125.

The register has the power to pass upon the satisfactory or unsatisfac-
tory character of a proof, but the power is to be exercised in subordination
to the provision of section 5009, which requires that an issue of law or fact
raised, and contested by a party to the proceedings before the register,
shall be adjourned into court for a decision. In re Bogert & Evans, 2
B. R. 485; s. c. 38 How. Pr. 111.

A register, in examining proofs of debt for admission, acts not only as
a judicial officer who is to decide all the questions arising in the discharge
of his duty according to law, but sitting also as an administrative officer
in the interest and service of all the creditors, he is to take care that
defective and insufficient proofs are not allowed to pass, through partiality,
to any creditor, or inattention which would produce all the mischievous
effects of partiality. In re Port Huron Dry Dock Co., 14 B. R. 258.

A claim may be said to be duly proved, when the statements of the depo-
nent, if true, establish prima facie the existence of the debt, and the pres-
ent right of, the creditor to payment of the same out of the estate of the
bankrupt. But a claim is not duly proven when any allegation which
the act requires to be made in the proof concerning it is omitted, or where
the proof is not made in conformity with the forms prescribed, and the
rules and practice of the court. In re Walton et al., 1 Deady, 510.

The formal proof of the debt is prima facie sufficient. It is always a
question of fact whether the debt has been paid or secured in. whole or
in part, or whether it is provable, and a question as to which pertinent
evidence is always admissible. But the prima facie case is made out by
the affidavit of the creditor. In re Colman, 2 B. R. 563; in re Fortune, 3
B. RB. 312; sc. 2 L. T. B. 99.

The creditor is a competent witness to establish his claim, although
the bankrupt died before it was offered for proof. In re E. C. Merrill,
16 B. R. 35.

Quaere, Can a creditor who has omitted to take his appeal from the
rejection of his proof within the prescribed time, set up the rejected
claim in any other action? Catlin v. Foster, 3 B. R. 540; s. c. 1 Saw. 37;
8 Q@1L. T. B. 192.

All proofs of debts are to be sent to the assignee for him ‘to report them
ag required in this section. When the assignee has completed his lists,
he must return them to the register? and they must, under Rule VII, be
filed in the clerk’s office with the papers in the case. Anon., 1 B. R. 219;
2B. R. 68; in re L. Sheppard, 1 B. R. 489; s. c. 1 L. T. B. 49; 8. ¢. TALL.
Reg. 484,

A creditor may prosecute an action against a surety before a final dis-
tribution, although he has proved the note against the principal. Gregg
*v, Wilson, 15 B, R. 142; s, ec. 50 Ind, 490.
542 Tur Bankruptcy Law.

If a treasurer of a bank fraudulently gives a certificate in his own
name to a depositor, instead of in the name of the bank, the latter is bound
to be prompt in disaffirming the contract, and demanding bis money or a
certificate in proper form to bind the bank, and can not do so after he
has proved his claim against the treasurer, and received a dividend
thereon. Shields v. Niagara Bank, 10 N. Y. Supr. 477; s. c.5 T. & C. 585.

A certificate of deposit, after the bankruptcy of the maker, is dishonored
paper, and after it is proved and filed, has no longer the qualities of nego-
tiable paper. The claim is transferable neither by delivery nor indorse-
ment; it may still be assigned, but not delivered or taken from the files.
A purchaser of the claim takes it subject to all equities that exist against
his vendor. In re John Sime & Co., 12 B. R. 315.

The proof of a judgment does not operate to release a sheriff from lia-
bility for relinquishing his levy, and surrendering the property to the
marshal. Ansonia B. & C. Co. vy. Babbitt, 15 N. Y. Supr. 157.

In an action for misrepresentation in regard to the credit of another,
the plaintiff may give evidence to establish the bankruptcy of such person
and the proof of a claim against him by the defendant. Stafford v. Grout,
120 Mass. 20.

Act oF 1898, CH. 3, § 7%. Rejection of Claims; Duties of
Bankrupts.— (a) The bankrupt shall (1) attend the fisst meeting
of his creditors, if directed by the court or a judge thereof to do
so, and the hearing upon his application for a discharge, if filed;
(2) comply with all lawful orders of the court; (3) examine the cor-
rectness of all proofs of claims filed against his estate; * * *
(9) when present at the first meeting of his creditors, and at such
other times as the court shall order, submit to an examination con-
cerning the conducting of his business, the cause of his bankruptcy,
his dealings with his creditors and other persons, the amount, kind,
and whereabouts of his property, and, in addition, all matters which
may affect the administration and settlement of his estate; but no
testimony given by him shall be offered in evidence against him in
any criminal proceeding.

Act oF 1898, Cu. 6, § 5%. * * * Objections to Claims—
(f) Objections to claims shall be heard and determined as soon as
the convenience of the court and the best interests of the estates
and the claimants will permit.

(g) The claims of creditors who have received preferences shall
not be allowed unless such creditors shall surrender their preferences.
2. ok & :

(k) Claims which have been allowed may be reconsidered for cause
and reallowed or rejected in whole or in part, according to the
equities of the case, before but not after the estate has been closed. °
OBJECTIONS TO CLAIMS. 543

(1) Whenever a claim shall have been reconsidered and rejected,
in whole or in part, upon which a dividend has been paid, the trustee
may recover from the creditor the amount of the dividend received
upon the claim if rejected in whole or the proportional part thereof
if rejected only in part.

Bankruptcy law does not prescribe any rule or furnish any method for
ascertaining the character of distributable assets. That is a subject of
preliminary judicial inquiry to be determined by legal principles of recog-
nized controlling applicability. In re Zug, 16 B. R. 280.

Where bankrupt collects moneys belonging to his estate, either before or
after the filing of the petition in bankruptcy, and fails to account for, the
same, he will be compelled to pay such moneys to the assignee, and such
proceedings may be instituted by summary process. In re Ettinger, 18
B. R, 222.

Payment of such moneys, after filing of petition for interest on mort-
gages, will not be allowed unless shown to be for benefit of the estate.
Ibid.

Where bankrupt has been ordered to submit himself to further examina-
tion, a departure from the district before the time appointed, without
examination, is such a violation of the drder that no discharge (under
law of 1867) would be granted until it is rectified by submitting himself
to such examination. In re Kingsley, 16 B. R. 301.

' » A creditor who has received a preference contrary to provisions of the
law can not prove his debt after the preference has been recovered from
him by assignee. In re Stein, 16 B. R. 569.

Iusolvents made assignment of all their partnership property to their
largest creditor, upon which they were adjudicated bankrupt. At first
meeting of creditors, this creditor having sold out the partnership goods,
and collected its notes and accounts in part, appeared before the register
and offered to surrender to him a roll of uncounted bills, as the net pro-
ceeds of the fraudulent preference, to prove his debt, and vote for assignee.
Held, that the surrender of a fraudulent preference can only be made to
the assignee, and pending his appointment and qualification the proof of
the debt must be postponed, and the offer of the preferred creditor to
vote for assignee is to be denied. In re Parham & Dunn, 17 B. R. 300.

After recovery against the preferred creditor by the assignee the cred-
itor may prove his debt, if he has not actively assisted in the fraud. See
In re Stein, 16 B. R. 569; in re Black, Currier & Osgood, 17 B. R. 399.

Assignee recovered a judgment for value of goods taken by him prior to
the bankruptcy, in payment of his indebtedness. The creditor paid the
amount of such judgment and costs, and proved his debt in the bankruptey
proceeding. On motion to expunge the claim; Held, that such payment
was a surrender of his preference, and that, in absence of actual fraud,
the creditor had a right to prove his claim. In re Newcomer, 18 B. R. 85.

Act or 1867, § 5081. The court may, on the application of the
assignee, or of any creditor, or of the bankrupt, or without any
544, Tur Bankruptcy Law.

application, examine upon oath the bankrupt, or any person tender-
ing or who has made proof of a claim, and may summon any person
capable of giving evidence concerning such proof, or concerning the
debt sought to be proved, and shall reject all claims not duly proved,
or where the proof shows the claim to be founded in fraud, illegality,
or mistake.

Statute revised — March 2, 1867, ch. 176, § 22, 14 Stat. 527. Prior
Statutes — April 4, 1800, ch. 19, § 16, 2 Stat. 26; Aug. 19, 1841, ch. 9, § 5,
5 Stat, 444.

Under this clause the court bas at all times full control of all proofs of
debts, and the right to entertain objections to the validity of the debts or
the proofs thereof. In re Patterson, 1 B. R. 100; s. c 1 Ben. 448; in re
Decatur Jones, 2 B. R. 59.

The objection to the proof of a claim must be by a written allegation
specifying, with reasonable certainty and brevity, the grounds of such
objection. In re Walton et al. 1 Deady, 442.

The creditor stands before the court in the attitude of a plaintiff in-
voking its jurisdiction, and ample provision is made for adjudication and
determination of his claim in a court of law and by a jury, of which he
may avail himself by taking an'appeal to the circuit court. In re Paddock,
6B. R. 182; s. ¢. 2 L. T. B. 214.

The claim of the petitioning creditor is open to contention. His debt
must be established. The mere fact that he is a petitioner is not conclu-
sive upon other creditors that he is to be allowed in the distribution of the
estate just what he claims in his petition, nor is it conclusive upon the
assignee. If this were not so, collusion between a debtor and a petitioner
setting up a pretended but fictitious claim would work the grossest in-
justice. In re Cornwall, 6 B. R. 305; s. c. 9 Blatch. 114.

A creditor may intervene and contest the allowance of the claim of any
other creditor. In re Adolph Joseph, 2 Woods, 390.

Any creditor has the right to serve a notice on the register, protesting
against the proof of any claims by certain persons, and requesting that he
may be notified if such persons should tender their claims for proof. In
re J. O. Smith, 1 B. R. 243; s. ec. 2 Ben. 113. ,

Persons who are not creditors can not question the right of another to
prove a claim. That right must be questioned otherwise. In re Lathrop
et al., 8 B. R. 413; s. c. 3 Ben. 490.

The court alone has the power to pass an order requiring a creditor to
show cause why proof should not be vacated and annulled. The register
can not make such an order. Comstock v. Wheeler, 2 B. R. 561; s. ¢ 3
Ben, 236.

The court may maké an examination of a creditor without any applica-
tion therefor, and when it sees, from the testimony before it, that certain
claims are improperly proved, it will reject them. In re Lathrop et al., 3
B. R. 418; s. ec. 3 Ben. 490.
OBJECTIONS TO CLAIMS. 545

A creditor who does not reside in the judicial district in which the court
of bankruptcy sits, may be required by an order duly served upon him to
attend and be examined in regard to his debt. <A creditor who has proved
his debt becomes subject to the jurisdiction of the court without regard to
his place of residence, and is bound to obey all the orders of the court
touching his alleged debt. In case of his disobedience of its orders, the
court can deprive him of all the benefits of the bankruptcy act given to
creditors, and can reject and expunge his claims. In case it shall be made
to appear that any creditor whose debt is contested can not personally
attend, to be examined in the district where proceedings are pending,
without hardship to him, owing to the distance of his residence, or other
similar reasons, the court will provide by order for the taking of his exam-
ination before a register of the district in which he resides. In re Kyler,
2 Ben. 414.

Where the assignee appears under an order of reference procured on the
petition of a creditor alleging that he and the assignee object to a certain
claim, and states that he is satisfied with the proof filed with him since his
election, no further proceedings should be taken under the reference. In
re Theodore BH. Baldwin, G6 Ben. 196.

The words “ any creditor ’’ must be held to mean not only a creditor who
has proved a debt, but a creditor who has tendered proof of a debt which
has not yet been allowed. In re Ray, 1 B. R. 203; s. c. 2 Ben. 53.

A note given by the bankrupt for more than was actually due, in pur-
suance of a combination between the bankrupt and the creditor for the
purpose of enlarging the creditor’s dividend, is illegal, and this illegality
of a portion of the consideration makes the whole note void and unavail-
able, so far at least as the interests of creditors are concerned. In re Elder,
3B. R. 670; s. c. 1 Saw. 73; s.c.1L. T. B. 198; 5. a3 L. T. B. 140.

Ina proper case, a claim may be allowed in part, or allowed or disallowed
asa whole. But when a creditor, by a combination with the bankrupt, and
in view of the commencement of proceedings in bankruptcy, fraudulently
enlarges his claim by taking fictitious notes, both the real and fictitious:
claims will be disallowed. Fraud corrupts and destroys the whole debt..
Every party to proceedings under a bankruptcy law must be held to the:
utmost good faith; and he who attempts a fraud can not, if discovered,
complain when he is made to abide by the legal consequences of his act.
Thid.

A claim which has its origin in a transaction entered into by the claimant
with the bankrupt, for the purpose of delaying, hindering, or defrauding
the creditors of the latter, is not provable. In re H. R. Stephens, 6B. R..
583; 5. c. 3 Biss. 387. :

A claim which is valid independently of a fraudulent transfer, is not
merged thereby. When the transfer is set aside, the claim is revived, and
Inay be proved. Ibid.

Claims which are purchased by an agent of. the bankrupt are illegal,
and must be rejected. In re Lathrop et al., 3 B. R. 413; s. c. 3 Ben. 490; s.
c.5 B, R. 48; s. c. 5 Ben. 199.

35
546 THe Bankruptcy Law.

{f a creditor who has advanced a certain sum to a member of a firm
to be put into the business as capital, subsequently takes a note of the
firm therefor, and falsely claims that it as well as other sums were ad-
vanced to the firm, he forfeits his right to prove for his real advances. Mar-
rett v. Atterbury, 11 B. R. 225; s. c. 3 Dillon, 444.

A proof of a judgment which is subsequently set aside should be ex-
punged. In re Cosmore G. Bruce, 6 Ben. 515.

If a party who took a bill of sale as security deliberately proves a debt
which assumes that he is the absolute owner of the goods, and persists in
such false claim in an action by the assignee to recover the goods, and at-
tempts to support it by his own oath, he is estopped from claiming them as
security. Willis v. Carpenter et al, 14 B. R. 521.

After the claims of all bona fide creditors and all the expenses have been
paid, the money expended by the agents of the bankrupts may be refunded
to them. When the purchase has been made by one partner, his copartner
must share the burden, if he desires the benefit. The balance will not
be turned over to the bankrupts without providing for such money so
used in the purchase of the claims. In re Lathrop et al., 5 B. R. 43; s. ¢
5 Ben. 199.

The prohibition of the allowance of a claim founded in illegality is
only in affirmance of the common law. What is or is not an illegal trans-
action depends upon the law of the place where the contract was made or
the transaction had. In re Robert Pittock, 8 B. R. 78; s. a. 2 Saw. 416.

If a mortgage is merely constructively fraudulent, the mortgagee may
prove for his actual advances when the mortgage is set aside. Kappner
v. St. Louis & St. J. R. R. Co., 3 Dillon, 228. :

It is not competent for the district court to go behind the judgment of a
State court and inquire into the consideration of the debt upon which the
judgment is founded. A judgment rendered upon a usurious contract can
not be set aside by the court of bankruptcy. If insanity or any matter of
fact constitutes the ground on which a review of the judgment is sought,
the proper remedy is by a writ of error coram nobis in the court wherein
the judgment was rendered. McKinsey v. Harding, 4 B. R. 39.

Creditors whose interests are affected by a judgment against their
debtor, may avoid it collaterally, because they have no right to have it
reviewed directly. In bankruptcy, the creditors are interested in contest-
ing a judgment which is offered for proof in competition with their own
debts, and may show, by any appropriate evidence, that the judgment is
void or voidable for fraud or irregularity. A debtor might suffer judg-
ment against him for the very purpose of affecting the proceedings in bank-
ruptcy, or a judgment may be obtained for a just debt, but under cir-
cumstances which would make it a fraudulent preference. In all such
cases it must be open to other creditors to object to the judgment when
offered for proof against the assets. On the other hand, where the court
Tendering the judgment has jurisdiction, and there has been no fraud
and no preference, no one can examine into the consideration of a judg-
ment, and show by evidence outside of the record that the judgment ought
not to have been rendered, or not for so large a sum. While the debtor is
OBJECTIONS TO CLAIMS. 547

not bankrupt, nor acting in contemplation of bankruptcy, he binds all the
world by his acts and omissions in relation to his own affairs, and if he
does not choose to defend an action to which he has a legal defense, and
of which be has had full notice, his estate will be committed by his act or
neglect, just as it would be by any improvident bargain he might make,
or by any new promise to pay a. debt barred by the lapse of time or a
former discharge in bankruptcy. When, therefore, the judgment is either
void or voidable as of right, by the debtor or by creditors, it may be ex-
amined into when offered for proof. Where it is valid against the debtor,
and no fraud on creditors is shown, it is valid for the purpose of proof.
If there is an intermediate case in which it would be discretionary with
the court which rendered the judgment to vacate it upon the ground of
mistake, the assignee might be allowed to pursue that remedy, the proof
in the meantime being postponed. Ex parte O’Neil, 1 B. R. 677; s. «a
Lowell, 163; in re James H. Dunn, 11 B. R. 270.

Evidence is not admissible to impeach a judgment merely on the ground
of an excessive assessment of damages. Ex parte O’Neil, 1 B. R. 677; 5. ¢«
Lowell, 163.

Under section 4998 and Rule V, the register has the power to take the
evidence required by this clause. When a question is raised as to the
validity of a claim tendered for proof, and evidence is offered in regard
to it, the register ought to investigate the question so raised, and not allow
the claim merely because the creditor swears to it. In re Orne, 1 B. R. 57;
s.c. 1 Ben. 361.

The register has no power to set on foot the inquiry provided for in this
section, except for the purpose of ascertaining whether or not a claim
shall be postponed. In re Herman et al., 3 B. R. 618; s. c. 4 Ben. 126.

When the question of due proof or not comes up before the court upon
the application of creditors to have the claim rejected, if the evidence
taken before the court shows the consideration to be legal and sufficient, .
the claim will not be rejected. If defects in the deposition have justified
the application, costs can be imposed upon the party in fault. In re
Elder, 3 B. R. 670; s. c. 1 Saw. 73; s. c.1L. T. B. 198; s.c.3 L. T. B. 140.

When a creditor presents his claim for proof, he at once subjects himself
and his claim to the power and jurisdiction of the court, and both thereby
become subject to the orders of the court under and within the provisions
of the bankruptcy act. When he is examined in respect to his claim, he
is examined as a party to the proceedings, and is in no sense a witness
in the sense in which that word is used in the act of Congress allowing
fees to witnesses. A claim for fees will, therefore, be disallowed. In re
S. Paddock, 6 B. R. 132; s. c. 2 L. T. B. 214; in re Kyler, 2 Ben. 414.

When the claim of a creditor, who has proved his debt without surren-
dering his collaterals, is stricken out as illegal and void on account of
usury, the court will not also compel him to surrender the collaterals.
Dallas v: Flues & Co., 8 Phila. 150. .

The decree of the district court in expunging a proof is in the nature of
a judgment binding upon all the partiés to it, and prevents a subsequent
Presecution of the claim in a State court. Pease v. Bennett, 17 N. H. 124.
548 Tur Bankruptcy Law.

Act oF 1898, Cu. 6, § 5%. * * * Withdrawal of Original
Claim.— (b) Whenever a claim is founded upon an instrument of
writing, such instrument, unless lost or destroyed, shall be filed with
the proof of claim. If such instrument is lost or destroyed, a state-
ment of such fact and of the circumstances of such loss or destruction
shall be filed under oath with the claim. After the claim is allowed
or disallowed, such instrument may be withdrawn by permission of
the court, upon leaving a copy thereof on file with the claim.

Act oF 1867, § 5082. A bill of exchange, promissory note, or other
instrument used in evidence upon the proof of a claim, and left in
court or deposited in the clerk’s office, may be delivered, by the
register or clerk having the custody thereof, to the person who used
it, upon his filing a copy thereof, attested by the clerk of the court,
who shall indorse upon it the name of the party against whose estate
it has been proved, and the date and amount of any dividend declared
thereon.

Statute revised — March 2, 1867, ch. 176, § 24, 14 Stat. 528.

The instrument proven may be withdrawn, in pursuance of the provi-
sions of this section. In re Emison, 2 B. R. 595.

The court may, upon cause shown, order the withdrawal of exhibits
filed in a cause, but it will not order or allow them to be withdrawn, except
upon the application of some person having an interest in them, who can
show the proper use for which he desires them. In re McNair, 2 B. R.
219, 341.

Act or 1898, Cu. 6, § 57. * * * Objections Heard, When.
— (f) Objections to claims shall be heard and determined as soon
as the convenience of the court and the best interests of the estates
and the claimants will permit.

Act or 1867, § 5083. When a claim is presented for proof before
the election of the assignee, and the judge or register entertains
doubts of its validity or of the right of the creditor to prove it,
and is of opinion that such validity or right ought to be investi-
gated by the assignee, he may postpone the proof of the claim until
the assignee is chosen.

Statute revised — March 2, 1867, ch. 176, § 28, 14 Stat. 528.

Act of 1898, ch. 6, § 57, f. g., ante, p. 542.

The purport of this section is that it is the duty of a register, when he
entertains a doubt of the validity of a claim, or of the right of a creditor
to prove it, and is of opinion that such validity or right ought to be in-
vestigated by the assignee, to postpone the proof of a claim until the
assignee is chosen. In re Orne, 1 B. R. 57; s. c. 1 Ben. 361; in re Herman
OBJECTIONS. 549

et al., 3 B. R. 618; 8. c. 4 Ben. 126; in re Noble, 3 B. R. 96; s. c. 8 Ben. 332;
in re Bartusch, 9 B. R. 478; in re Jacoby, 1 W. N. 15.

The claim may be postponed, although the deposition for the proof
thereof has been produced to, and filed with, the register. In re Ezra M.
Stevens, 4 B. R. 367; s. c. 4 Ben. 513; s. c. 2 L. T. B. 121.

A claim of questionable character, and in dispute, should be postponed.
In re Decatur Jones, 2 B. R. 59.

The claim of a creditor who has accepted a preference should be post-
poned. In re Herman et al., 3 B. R. 618; s. c. 4 Ben. 126; in re Bara M.
Stevens, 4 B. R. 367; s. c. 4 Ben. 518; s. c. 2 L. T. B. 121; in re Walton et
al, 1 Deady, 442.

A creditor who has accepted a conveyance prohibited by the bankruptcy
law should not be allowed to prove his debt until an assignee is chosen.
In re Chamberlain et al., 3 B. R. 710.

When a conveyance prohibited by the bankruptcy law has been made to
a third person, for the benefit of creditors, creditors who had no knowledge
whatever of the facts that make up the intent to defeat the bankruptcy act
until after the conveyance was executed and delivered and who were
not consulted concerning it, and who did not in any way accept of it,
except to declare verbally that they were satisfied with it, may prove their
claims and participate in the election of an assignee. In no sense can it
be said that they received the conveyance. The conveyance was not to them
directly or indirectly; it was complete before they had any knowledge of
it. Ibid.

In order to justify the postponement of a claim until after the election of
an assignee, it is not necessary that the register shall be satisfied or have
before him positive evidence that the claim is invalid or that the creditor
has no right to prove it. In re George Jackson et al., 14 B. R. 449.

In order to postpone a claim, there must be such investigation as will
influence the mind to a conclusion as to whether there is such doubt of the
validity of the claim or of the creditor’s right to prove it. Ibid.

Upon facts and circumstances being laid before the register which create
in his mind a substantial doubt upon the question of the validity of the
creditor’s right, it is his duty to postpone the claim for investigation. Ibid.

‘Mere relationship to the bankrupt will not alone justify the postpone-
Ment of a claim. Ibid.

The register can not postpone a claim on mere objections. In re George
Jackson et al., 14 B. R. 449; in re Bartusch, 9 B. R. 478.

The doubt in the mind of the register should be a reasonable substantial
doubt resulting from a judicial consideration of the question. In re George
Jackson et al., 14 B. R. 449.

The proof of a claim which is not stated in items, and does not appear
on the schedule, may be postponed. In re Elijah Milwain, 12 B. R. 358;
8c. 9 Pac. L. R. 236.

The register has no right to postpone any claim ‘unless he has suspicion
that it is unfounded. Such suspicion can not be entertained judicially
unless predicated upon facts which legitimately excite it. If they exist,
the creditor should be accorded the opportunity to explain them. A sus-
550 Tue Bankrurtoy Law.

picion within the statute arises when the claim is not susceptible of a
ready and simple explanation. In re Northern Iron Co., 14 B. R. 356.
When a creditor objects to the postponement of his claim, he should have
the objection entered and the question certified before any further action
transpires before the register. In re George Jackson et al., 14 B. R. 449,
When the power of postponement is erroneously exercised by a register,
the creditor may have the judgment of the court on the question. Ibid.
The proof of the claim of an officer of a bankrupt corporation, who is
also a stockholder, should be postponed when the claim appears suspicious.
Such a debt ought to be investigated by an assignee who has been
nominated by other creditors. In re Lake Superior §. C. R. R. & I. Co.,
7 B. R. 376; in re Northern Iron Co., 14 B. R. 356.
The proof of a claim which has been postponed is to be treated in all
respects as if the claim had not been tendered before the election of an
assignee and postponed. In re Herman et al., 3 B. R. 649.

Act oF 1898, Cu. 6, § 57. * * * Preferences Surrendered.
—(g) The claims of creditors who have received preferences shall
not be allowed unless such creditors shall surrender their preferences.

Act oF 1867, § 5084. Any person who, since the second day of
March, eighteen hundred and sixty-seven, has accepted any prefer-
ence, having reasonable cause to believe that the same was made or
given by the debtor, contrary to any provisions of the act of March
two, eighteen hundred and sixty-seven, chapter one hundred and
seventy-six, to establish a uniform system of bankruptcy, or to any
provisions of this Title, shall not prove the debt or claim on account
of which the preference is made or given, nor shall he receive any
dividend therefrom until he shall first surrender to the assignee all
property, money, benefit, or advantage received by him under such
preference.

Statute revised — March 2, 1867, ch. 176, § 23, 14 Stat. 528.

Payment of a judgment or decree recovered against a creditor on ac-
count of a fraudulent preference, is not a surrender within the meaning of
this section. To surrender, clearly implies action on the part of the
person receiving the preference. To recover, as clearly implies action
against the person receiving the preference. Under this section, it is left
to the option of the person receiving the preference, whether he will give.
up the property he has received by the way of preference, or whether he
will hold on to it; the only consequence being that he can not prove his
debt or receive any dividend upon it, in case he chooses to pursue the lat-
ter course. In case of a recovery he has no such option. From this analy-
sis it clearly appears that the recovery provided for in section 5128 is
the alternative of the surrender provided for in this section. But when
does this alternative arise, and in what case may it be resorted to?
PREFERENCES SURRENDERED. 551

Clearly in those cases, and those only, in which there is a failure, refusal
or neglect to surrender. A surrender may, probably, be made so as to
fully answer the requirements of this section at any time before judgment,
because the word “recover” is evidently used in its strict legal sense,
and, in that sense, the obtaining of a judgment by the assignee in his favor,
is the recovery meant. But after the rendition of the judgment there can
be no surrender. The recovery is then complete, and anything done after
that in satisfaction of the judgment or decree can in no sense be deemed
a surrender. In re Tonkin & Trewartha, 4 B. R. 52; 8. c.1L. T. B. 282;
s.c.3 L. T. B. 221; in re Richter’s Estate, 4 B. R. 221; s. ¢. 1 Dillon, 544;
in re John F. Lee, 14 B. R. 89; in re Cramer, 13 B. R. 225: s.c. 80. L. N.
106.

The provisions of this section must be construed in connection with the
clause in section 5021 which prohibits certain creditors from proving their
debts, in such a manner that, if possible, both may stand. The construc-
tion which attains this end is that the clause in section 5021 applies only
to cases in which the assignee is compelled to resort to legal proceedings
to recover the property; that the creditor who claims to retain the prop-
erty makes himself conclusively a party to the fraud by resisting the claim
of the assignee to recover the property, in case the assignee is successf.l;
but that, where the creditor avails himself of the locus poenitentiae, by
voluntarily surrendering the property to the assignee, he ceases to be a

- party to the fraud, and may prove his debt. In re O. A. Davidson, 3 B. R.
418; s. c. 4 Ben. 10; in re H. B. Montgomery, 3 B. R. 429; s. c. 3 Ben. 565;
in re Scott & McCarty, + B. R. 414; in re Hunt & Hornell, 5 B. R. 433; in
re Reece & Brother, 2 Bond, 359; in re BE. R. Stephens, 6 B. R. 533; s. e.
3 Biss. 8387; in re Walton et al., 1 Deady, 442; Coxe v. Hale, 8 B. R. 562; s.
e. 10 Blatch. 56; in re Clark & Daughtrey, 10 B. R. 21; in re Drummond, 4
Biss. 149. Contra, Bingham y. Richmond, 6 B. R. 127; Bingham v. Frost,
6 B. R. 180.

A claim on account of which a preference has been accepted, would, but
for this section, undoubtedly be provable. This section operates to suspend
the right until the creditor holding a preferred claim shall first have sur-
rendered to the assignee the preference received by him. When such sur-
render is made the suspension ceases. The office of this clause, therefore,
is in the first instance that of suspension merely, to ripen, however, into
absolute prohibition in case of a refusal or neglect to surrender. Upon
such surrender being made, the right of such creditor to prove his debt
revives, and is in full force the same as if such suspension had never ¢€x-
isted. In re Scott & McCarty, 4 B. R. 414.

It will not do to say that this clause is to be given effect in voluntary
and not in involuntary cases, because that would involve the absurdity of
saying that the quality and consequences of the act of the creditor in
accepting a preference are to be measured and judged of not by the stat-.
ute itself, but by what the debtor may see fit subsequently to do. It must
be a strong necessity growing out of positive and unmistakable pro-
visions of the law that would induce a court to adopt a construction lead-
ing to such unreasonable and inconsistent results. In re Scott & McCarty,
4B, R, 414; in re E, R. Stephens, 6 B. R. 533; s. c. 3 Biss. 387.
Bd2 Tue Bankruptcy Law.

Where there is nothing but a constructive fraud, and the creditor has
acted in good faith and under the conviction that he has a valid right to
retain the property, he may do so, and allow a suit to be prosecuted against
‘him and proof to be introduced against him without being deprived of his
right to surrender before the actual entry of a judgment. Burr v. Hopkins,
12 B. R. 211; s. c. 6 Biss. 345; in re Joseph Schoenenberger, 15 B. R. 305.

It makes no difference whether the transfer is constructively fraudulent
under the statute of Elizabeth or under the special provisions of the bank-
ruptcy law. Burr v. Hopkins, 12 B. R. 211; s. ¢. 6 Biss. 345.

Until a recovery has been had by judgment or decree, a preferred cred-
itor may surrender, and his right to prove his debt against the bankrupt’s
estate and to receive dividends therefrom will, by such surrender, be re-
vived and become binding on all concerned, regardless of the question
whether a suit shall or shall not have been commenced against him by the
assignee and be pending at the time of such surrender. It is immaterial
whether there was a demand and refusal before suit was brought. In re
Kipp, 4 B. R. 598; s.c. 1 L. T. B. 246; s. c. 4 L. T. B. 60; in re Simeon
Leland et al., 9 B. R. 209.

Mere possession of the property by the assignee is not a recovery of it
aniless he obtains such an adjudication as to the preference. In re Simeon
Tieland et al., 9 B. R. 209.

‘It is not necessary that there shall be a direct suit by the assignee
against the preferred creditor, and a recovery of property from him and
out of his possession, in order to constitute the recovery referred to by the
statute. An adjudication in any proceeding where the court has juris-
diction over the subject and the parties is sufficient. Ibid. ~

Where the fraud is only constructive and not actual, the creditor should
in equity have a reasonable opportunity of considering whether he will
surrender his preferences and pay all the costs and charges, but his de-
cision must precede the final decree. The entry of the final decree may be
suspended for a brief period to give him such an opportunity. Hood v.
Karper, 5 B. R. 358; s. c. 8 Phila. 160; s. c. 2 L. T. B. 201; Zahm v. Fry, 9
B. R. 546; s. ec. 21 Pitts. L. J. 155; s. c. 61 Leg. Int. 197.

It may be a matter of discretion with the court whether a party shall
be allowed to surrender after suit brought, and particularly after the testi-
mony is taken, and the party becomes satisfied it is enough to defeat him.
The spirit of the act does not warrant a practice of the kind. A party
should not be allowed to experiment and speculate upon the ability of the
assignee to prove a case against him, and when he sees that he has suc-
ceeded, then to plead guilty and make a surrender. Such a practice ought
not to be tolerated. A party ought to elect, and having elected will be held
to his election. A surrender can not be made after suit brought except
under very peculiar circumstances. In re BE. R. Stephens, 6 B. R. 533; s. ¢.
3 Biss, 387.

In order to be allowed to prove a debt unlawfully preferred, the party
must surrender the unlawful preference wholly, and wipe out the security
eriirely, even though a part of property is exempt from execution. Ibid.

A creditor may, of course, if he chooses, accept a preference. In doing
PREFERENCES SURRENDERED. 553

so, however, he takes the chances of his debtor going into bankruptcy
either voluntarily or involuntarily, and thus losing the advantage obtained.
In such cases, all he has to do to remove the obstacle to proving his claim
in bankruptcy, and his standing on an equal footing with the other cred-
itors, is simply to surrender such advantage to the assignee. In re Forsyth
& Murtha, 7 B. R. 174.

The creditor contemplated by this clause is a creditor who has received
a payment or conveyance giving him a preference. A creditor who is
appointed an assignee by a voluntary assignment of the debtor’s property
for equal distribution pro rata among all the creditors of the debtor does
not thereby receive a preference, and consequently is not debarred from
proving his debt. In re Joseph H. Horton et al., 5 Ben. 562; in re William
M. Lloyd, 15 B. R. 257; s. ce. 24 Pitts. L. J. 118.

If a creditor who has proved his claim as unsecured, afterward unites in
a proceeding to assert the validity of a security held by him for the claim
without amending his proof, he stands as if he never had filed any proof
of debt. The objection that the proof is a surrender of the security is one
that the assignee may waive. If the creditor fails to sustain his right to
the security, he can not afterward set up his proof to avoid the forfeiture
imposed by the statute. In re Simeon Leland et al., 9 B. R. 209.

A mortgage to indemnify the sureties on a bond is not a preference of
the principal debt unless the creditor is a party to the transaction. In re
William M. Lloyd, 15 B. R. 257; s. c. 24 Pitts. L. J. 113.

If the creditor is precluded from proving his claim, on account of re-
ceiving a preference and refusing to surrender it, a guarantor can not
prove it. In re C. B. Ayers, 6 Biss. 48.

The court will not, in a proceeding to recover the preference, enter a
decree prohibiting the preferred creditor from proving his debt. Wager v.
Hall, 5 B. R. 181; s. c. 3 Biss. 28; s. c. 16 Wall. 584.

A creditor who has received a preference may surrender it and prove
his claim at the first meeting. In re W. A. Saunders, 13 B. R. 164.

A creditor who has been preferred by a deed of trust to which he has
never assented, may renounce it and prove his debt at the first meeting.
Ibid.

If the preferred creditor asks leave to prove his debt, the court can
not in such proceeding render a judgment or decree directing the payment
to the assignee of the money received as a preference. In re William D.
Forbes, 5 Biss. 510.

If the assignee accepts the amount received by a preferred creditor
after he has put in his proof, and the creditor has put in considerable proof
before the special examiner to whom the action has been referred, and
dismisses his suit upon payment of costs, this is a surrender, and the cred-
itor may prove his debt. In re John Riordon, 14 B. R. 382; s. c. 51 How.
Pr. 271.

The law has not determined the manner in which a surrender shall be
made. An agreement that other creditors may share in the proceeds of a
sale thereof may be treated as a surrender. In re Detert, 11 B. R. 393;
8 ¢.70. L. N. 130; s. c. 14 A. L. Reg. 166.
554 Tue Bankruptcy Law.

Where the creditor is allowed to surrender after the bringing of a suit,.
he may be required to pay the compensation of the assignee’s counsel and.
the expenses to which the assignee may have been subjected in conse-
quence of the suit, before he is allowed to prove his debt. Burr v. Hop-
kins, 12 B. R. 211; s. ec. 6 Biss. 345.

No part of the debt can be proved, although a prior mortgage securing
the debt in part was surrendered when the mortgage was taken. In re
James Jordan, 9 B. R. 416; s. c 7 Pac. L. R. 194.

The attempt of an indorsee to avail himself of a security given to the
payee by proving his debt as secured, will not defeat his claim upon the.
note. In re Kansas City Manuf. Co., 9 B. R. 76.

When payments have been made upon a debt as an entirely, and after-
ward applied to certain notes constituting only a portion thereof, the
preference affects the whole debt. To permit a creditor to avoid the effects.
of the acceptance of such a preference, by a subsequent application and
indorsement of the amount of such preference upon particular notes,
nearly paying the same in full, would defeat the provisions of the law.
In re Kingsbury et al., 3B. R. 318.

If the preferred debt is single and entire, the illegal preference affects.
the whole of it, though the property received does not equal it in value.
But otherwise, if in their origin, or by contract, the debts of the creditor
are not single and entire, but divided, or divisible and disconnected, and
the creditor receives a preference distinctly as one, and not the other. A
claim consisting of a running and apparently continuous account, made
up of items of goods purchased at various times, constitutes prima facie
but one debt or claim within the meaning of the bankruptcy act. The
creditor may show that the debt preferred is disconnected from, and not
the same debt as that which is offered for proof. An application for
this purpose may be made, even after a decision from an appeal from an
order disallowing the claim. The effect of the recovery by the assignee
is to establish, as an adjudicated fact, that the creditor has received a
fraudulent preference in respect to the preferred claim. In re Richter’s.
Estate, 4 B. R. 221; s. c. 1 Dillon, 544; in re John F. Lee, 14 B. R. 89.

Where a creditor has separate and disconnected debts as to which he
has received separate and distinct preferences, he may surrender as to
some, and prove and receive dividends as to them, without surrendering
as to the others. In re D. G. Holland, 8 B. R. 190.

If a party proves a claim consisting of two items, an account and a note,.
he can not, when objection is made to the proof on account of a preference,
divide the proof into two parts. In re Barnes, Brother & Herron, 1 W..
N. 21.

Where there is no allegation of bad faith against the preferred creditor,.
he may be allowed a reasonable sum for his care in selling the goods. In
re William D. Forbes, 5 Biss. 510.

When the conduct of a creditor in holding on to his preference is with-
out excuse, his proof may be expunged with costs, including an attorney’s:
fee. In re Forsyth & Murtha, 7 B. R. 174; in re James Jordan, 9 B. R.
416; s.c. 7 Pac, L. R. 194.
Duties or Banxrupts. 555

When the unprovable character of the claim is founded largely upon

presumptions, the proof may be expunged, without costs to either party.
In re Forsyth & Murtha, 7 B. R. 174.

Act or 1898, Cu. 6, § 57. * * * Allowance of Claims.—
(e) Claims after being proved may, for the purpose of allowance, be
filed by the claimants in the court where the proceedings are pending
or before the referee if the case has been referred.

(d) Claims which have been duly proved shall be allowed, upon
receipt by or upon presentation to the court, unless objection to
their allowance shall be made by parties in interest, or their con-
sideration be continued for cause by the court upon its own motion.

Act or 1867, § 5085. The court shall allow all debts duly proved,
and shall cause a list thereof to be made and certified by one of the
registers.

Statute revised — March 2, 1867, ch. 176, § 23, 14 Stat. 528.

The district court has the power, upon the petition of a creditor whose
claim has been rejected, to revise the decision of the assignee rejecting it.
It is irregular to act upon such a petition without giving notice thereof
to the assignee. He should bave an opportunity to answer the petition and
contest the claim. If the claim is allowed, the order should only require
the assignee to place it upon the list of admitted claims, and pay dividends
accordingly. In re Mittledorfer & Co., 3 B. R. 39; s. ec. Chase, 276.

The list is the list shown by Forms Nos. 32 and 33. That list is to be
given to the assignee. The list can be made from the register kept by the
assignee under section 5080. In re John W. Dean, 1 B. R. 2449; s.c. 1 L.
T, B. 9.

Debts are to be considered proved when duly authenticated and sent to
the assignee or register. Ex parte Harris et al., In re Cochrane, Jr., 16
B. R. 482.

Act or 1898, Cu. 3, § 7. Duties of Bankrupts.— (a) The bank-
rupt shall * * * (9) when present at the first meeting of his
creditors and at such other times as the court. shall order, submit
to an examination concerning the conducting of his business, the
cause of his bankruptcy, his dealings ‘with his creditors and other
persons, the amount, kind, and whereabouts of his property, and, in
addition, all matters which may affect the administration and settle-
ment of his estate; but no testimony given by him shall be offered
in evidence against him in any criminal proceeding.

Act oF 1867, § 5086. The court may, on the application of the
assignee, or of any creditor, or without any application, at: all times
tequire the bankrupt, upon reasonable notice, to attend and submit
556 Tur BanKRuUPtTcY Law.

to an examination on oath, upon all matters relating to the disposal
or condition of his property, to his trade and dealings with others,
to his accounts concerning the same, to all debts due to or claimed
from him, and to all other matters concerning his property and
estate and the due settlement thereof according to law. Such exam-
ination shall be in writing, and shall be signed by the bankrupt and
filed with the other proceedings.

Statute revised — March 2, 1867, ch. 176, § 26, 14 Stat. 529. Prior
Statutes — April 4, 1800, ch. 19, §§ 18, 23, 52, 2 Stat. 26, 28, 34; Aug. 19,
1841, ch. 9, § 4, 5 Stat. 443.

Application for an Examination.— The words ‘any creditor” mean
any creditor who has proved his claim. Before a creditor can apply for an
order to examine the bankrupt, he must prove his claim. In re Ray, 1B. R.
203; s. c. 2 Ben. 53.

Such order may be made, and such examination may be had, on the
application of the assignee, or of any creditor, or on the suggestion of the
court or register, without any application. The bankrupt and all other
persons are subject to examination at all times, at the instance of the
assignee, or of any creditor, or of the court, or of the register. <A creditor
may make an application at any time after he has proved his debt. In re
Baum, 1 B. R. 5; s. c. 1 Ben. 274; in re Patterson, 1 B. R. 100; s. c. 1 Ben.
448; in re Brandt, 2 B. R. 215.

If a protest is entered against the allowance of the claim of a creditor
who asks for an examination, the register or the court may make the order,
as they have the power to make it at all times without any application.
In re Belden & Hooker, 4 Ben. 225.

The granting of an order for an examination of the bankrupt is not a
matter of course, but should only be done in a proper case, on application
of a party entitled to apply. The court or register has a discretion to
require good cause for granting the order by a petition or affidavit, duly
verified, and the exercise of this discretion by the register may be revised
by the court. But the application need not be in writing unless required.
In re Solis, 4 B. R. 68; s. c. 4 Ben. 143; s. c. 2 L. T. B. 158; in re Julius L.
Adams, 2 B. R. 95; s. c. 36 How. Pr. 51; s. c. 2 Ben. 503; in re B. T. Vetter-
lein, 4 B. R. 599; s. c. 5 Ben. 7.

The proper way to make application is by a petition. In re Julius L.
Adams, 2 B. R. 95; s. c. 2 Ben. 503; s. c. 36 How. Pr. 51; in re Brandt, 2 B.
R. 215; in re Lanier, 2 B. R. 154.

The petition need not specify the particular matters to which the ex-
amination is to be directed. In re Lanier, 2 B. R. 154.

The petition on the part of a creditor should show good cause for grant-
ing the order, and be verified by affidavit. In re Julius L. Adams, 2 B. R.
95; s. ec. 2 Ben. 503; s. c. 36 How. Pr. 51.

The petition on the part of the assignee need not show the grounds for
the proposed examination, nor be verified by affidavit. As the bankrupt is,
theoretically, the ward of the court, and the assignee a quasi officer of
Duries oF BANKRUPTS. 55?

the court in each case, it is only necessary that the court should be satis-
fied of the bona fides of the assignee's application. In re Lanier, 2 B. R.
154; in re McBrien, 2 B. R. 197; s. c. 2 Ben. 513.

The application may be made to the court or to the register. If the
application is made to the court, it is not necessary that the application
should be sustained by any certificate of the register as to the propriety of
granting the order. In re Brandt, 2 B. R. 215.

Every creditor has a right to examine the bankrupt. Such examination
inures to the benefit of all the creditors. But the fact that one creditor has
examined the bankrupt is no reason for withholding the privilege from
another creditor. Yet the time, manner, and course of the examination
should be so regulated as to protect the bankrupt from annoyance, oppres-
sion, and mere delay, while at the same time full and fair opportunity is
allowed to the creditors to inquire as to the matters specified in this sec-
tion. In re Julius L. Adams, 2 B. R. 272; s. c. 36 How. Pr. 270; s. c. 3 Ben.
7; in re Gilbert, 3 B. R. 152; s. c. Lowell, 340.

If a full examination has been already had either upon the application
of the assignee or of any other creditor, a subsequent application may be
denied, unless it is made to appear that the first examination was either
collusive or deficient in some material and specified particulars. In re
James W. Frisbie, 13 B. R. 349.

Whether the court in the exercise of its discretion will direct a second
examination depends on the facts of each particular case. Ibid.

The assignee and a creditor stand upon the same footing as to their
rights under this section. The particular province of the assignee is to
examine the bankrupt as to the disposition, condition, and amount of his
property, and the debts due and owing by him, so as to get in the assets
properly. A creditor examines the bankrupt, not only for the purpose of
discovering property, but more especially to elicit facts upon which objec-
tions to the discharge of the bankrupt can be alleged. A creditor, there-
fore, has the right to examine the bankrupt although the assignee may
have already examined him. Where two creditors, or the assignee and a
creditor, examine the bankrupt at different times, the statute does not
impose any regulations or restrictions upon the party asking for the second
examination. The statute would be of little or no practical efficacy if
every creditor should be required to investigate all previous examinations
of the bankrupt, and so to shape every question as not to be liable to an
objection that the bankrupt has answered that question on a previous
examination. Every creditor, without reference to anything which may
have been done by any other creditor, has the right to put his question in
his own way. In view of the object for which the bankrupt invokes the
statute, he is not warranted in regarding it as oppressive or unduly annoy-
ing, if every one of his creditors exercises his rights, under the statute, of
investigating the condition, affairs, and dealings of the bankrupt, and as-
certaining whether he has brought himself within the remedial provisions
of the act, and is entitled to its benefit. An answer to the same question on
4 previous examination does not exempt him from answering again when
the question is put by another creditor on a subsequent examination. In
te Vogel, 5 B. R. 393.
558 Tue Bankruptcy Law.

When a party inadvertently makes default under one order, he may
apply for a second order, and proceed to examine the bankrupt. The right
to examine the bankrupt, however, is not to be abused. In re Van Tuyl,
2B. R. 70; in re Robinson & Chamberlain, 2 B. R. 516.

When the bankrupt has been examined at considerable length by the
assignee, and none of the creditors ask for an examination until the day
appointed to show cause against the discharge, it would be unreasonable to
require the bankrupt to submit to a new examination, especially when no
reason for doing so is shown by the petition. In re Isidor & Blumenthal,
1B. R. 264; s. c. 2 Ben. 123; in re S. F, Frizelle, 5 B. R. 122. :

A party will not be entitled to a second order for examination, except
upon notice and cause shown. In re Gilbert, 3 B. R. 152; s. c. Lowell,
340.

A voluntary bankrupt may be examined, even prior to an adjudication
of bankruptcy. In re Thomas D. Lee, 1 N. Y. Leg. Obs. 88; s. c, 4 Law
Rep. 486; in re Parker et al., 1 Penn. L. J. 370.

A. debtor against whom proceedings in involuntary bankruptcy have
been commenced may be examined, even before adjudication, when suffi-
cient foundation is shown for the application. After due service of copies
of the petition, and of the orders made in the case upon him, he may be
examined when be is shown prima facie to have property which he has,
in disobedience to an order of the court, refused to surrender to the mar-
shal. Ifor some purposes, the distinction between ‘ debtor’? and “ bank-
rupt ’— the former applying to a defendant before adjudication, and the
latter to a defendant after adjudication — is used and observed in the
bankruptcy act; yet, for other purposes, these two terms are used as
synonymous terms. In re Bromley & Co., 3 B. R. 686; in re Salkey &
Gerson, 9 B. R. 107; s. c. 5 Biss. 486; in re Mendenhall, 9 B. R. 285; in re
Heusted, 5 Law Rep. 510.

The power to examine a debtor prior to an adjudication of bankruptcy
should not be exerted unless in case of actual necessity. It is not as of
course, but only under such exigencies as seem to require its exercise for
the purpose of promoting justice and the rights of creditors. In re Salkey
& Gerson, 9 B. R. 107; s. c. 5 Biss. 486.

The time to examine the bankrupt does not expire with the making of
his application for his discharge. In re Solis, 4 B. R. 68; s. c. 4 Ben. 143;
s.c.2L. T. B. 158; in re Wm. H. Long, 3 B. R. (quarto) 66.

The words “at all times”’ must be read in connection with the subse-
quent clauses of the statute. AJl these provisions tend to show that it is
only until his discharge that the bankrupt is under the summary jurisdic-
tion of the court, to be proceeded against by order in its discretion and to
be punished for neglect or refusal to pay by imprisonment, as for a con-
tempt of court. He can not, therefore, be required to submit to an exami-
nation after he has obtained his discharge. In re Nathaniel Dole, 7 B. R.
538; s. c. 9 B. R. 193; s. ec. 11 Blatch. 499; in re G. Cl Jones, 6 B. R. 386;
in re CG. Dean, 3 B. R. 769; in re Witkowski, 10 B. R. 209. Contra, in re
Heath & Hughes, 7 B. R. 448
Duties or BANKRUPTS. 559

The law provides the means by which an absent bankrupt may be
brought forward, at a given day and place, to be examined. But when he
appears without this coercive power at a regular meeting, a party who
happens to be present may ask for leave to examine him, and should be
permitted to do so, unless there is no ground or reason for the request. In
re Brandt, 2 B. R. 215; in re Bromley & Co., 3 B. R. 686.

No previous notice is required to be given to any person of the applica-
tion for the order. The order is to be made ex parte. In re Macintire, 1
B. R. 11; s. c. 1 Ben. 277. 7

The order may be made by the register. In re Mackintire, 1 B. R. 11; 8.
¢c. 1 Ben. 277; in re Lanier, 2 B. R. 154; in re Brandt, 2 B. R. 215; in re
B. T. Vetterlein, 4 B. R. 599; s. c. 5 Ben. 7; in re Pioneer Paper Co., 7 B.
R. 250.

Form No. 45 is the proper order. In re Lanier, 2 B. R. 154; in re Brandt,
2B. R. 215.

The register is not entitled to charge any fee for making the order, In
re Macintire, 1 B. R. 11; s. c. 1 Ben. 277.

Form No. 45 is a summons, and, under Rule II, blanks not filled up,
but bearing the signature of the clerk and the seal of the court, should,
on application, be furnished to the register. In re Bellamy, 1 B. R. 64;
s. ce. 1 Ben. 309; s.c. 1 L. T. B. 22.

It is not necessary that a subpoena for a witness should be served by
the marshal. It may be served by any one. The party making the service
is entitled to the fees. Gordon, McMillan & Co. v. Scott & Allen, 2 B. R.
86;s.c.1L. T. B. 99; 8. ¢c 7 A. L. Reg. 749.

The service of the order should be personal. In re Joseph H. Hodges, 11
B. R. 369. :

If the bankrupt is in another district, and the order is served on him
there, the district court has no authority to arrest him for not appearing
to answer process so served. Ibid.

The bankrupt is most certainly entitled to reasonable time, after notice
of the application for his examination; but such time, or the length of such
time, always depends upon circumstances and facts surrounding the bank-
tupt; the distance he is from court or the place of his examination, and also
upon what, if any, particular facts he is to be examined. If the bankrupt
is a merchant, and has been doing a large and complicated business, and
he is notified that his examination is to cover his entire business operations,
a reasonable time would, manifestly, be much longer than in a case where
the notice of examination was in regard to a few items of his property
Pertaining to his own person, such as watch, ring, and money in his pocket
when service was made upon him. A reasonable notice is such time as will
enable him to appear before the court with such knowledge as may be
under his control upon the matters of the investigation or information
asked for. An opportunity to study under the tutelage of counsel is not
required, and will not be granted when the interrogatories are plain and
simple, and do not call for the exercise of any skill. In re Bromley & Co.,
3B, R. 686,
560 Tur Bankruptcy Law.

Mode of Conducting the Examination.— The examination may be had
before the register. In re Tanner, 1 B. R. 316; s. c. 2 Ben. 211; s. c. Lowell,
215; in re Lanier, 2 B. R, 154.

The court may direct the examination to be taken before a register in
another district. In re Joseph H. Hodges, 11 B. R. 369.

The bankrupt is bound to appear, and is not entitled to fees as a witness,
In re Okell, 1 B. R. 303; s. c. 2 Ben. 144;s.¢c. 1 L. T. B. 32; in re McNair,
2 B. R, 219.

AS an order for an examination is made ex parte, the bankrupt, on
appearing in pursuance to the order, may make any objection or raise any
question which would have been proper if an opportunity had been
afforded him before the order was granted. In re James W. Frisbie, 13 B.
R. 349.

It is for the creditor to see that due appointments are made with the
register for the purpose of examining the bankrupt, and to give the other
party notice of them. The bankrupt’s duty is performed by being ready to
be examined on due notice. In re Littlefield, 3 B. R. 57; s. c. Lowell, 331;
s.c.1L. T. B. 164; in re Gilbert, 3 B. R. 152; s. c. Lowell, 340.

The testimony of the bankrupt taken on his examination is a deposition.
In re Levy et al., 1 B. R. 1386; s. c. 1 Ben. 496; in re John W. Dean, 1 B. R.
249;s.c1L. 1. B. 9.

The bankrupt is a witness, and subject to cross-examination like any
other witness. In re Levy et al., 1 B. R. 136; s. c. 1 Ben. 496; in re Leach-
man, 1 B. R. 391; in re Maynard Bragg, 1 N. Y. Leg. Obs. 119; s. c. 5 Law
Rep. 323.

The statute does not intend that the bankrupt shall become a competent
witness in all respects, so as to be enabled to give testimony on his own
behalf beyond and out of the subject-matter of his examination. In re
Maynard Bragg, 1 N. Y. Leg. Obs. 119; s. c. 5 Law Rep. 323.

The bankrupt is to answer substantially like a witness, and not merely
to have interrogatories filed and propounded after the manner adopted in
equity and admiralty. It is not intended that the bankrupt, or his attorney,
shall write the answers, but merely that the deposition should be reduced
to writing. In re Tanner, 1 B. R. 316; s. c. 2 Ben. 211; s. c. Lowell, 215.

The answers of the bankrupt are to be made orally to the court or toa
duly appointed officer of the court. In re Bromley & Co., 3 B. R. 686.

The register has no power to decide upon the competency, materiality, or
relevancy of a question. In re Levy et al. 1 B. R. 136; s. c. 1 Ben. 496; in
re Rosenfield, Jr., 1 B. R. 319; s.¢c.11L. T. B. 81; s. c. 15 Pitts. L. J. 245; in
re Koch, 1 B. R. 549; In re Lyon, 6 I. R. R. 135.

The manifest intention of Rule X is, that when a question is objected to,
the question and the fact and grounds of objection shall be taken down
by the register, and that the question, although incompetent, is immaterial,
or irrelevant, shall be answered, and that when the deposition is closed,
the court shall deal with it as a whole, and then pass upon the question as
to what parts of it are incompetent, immaterial, or irrelevant. The bank-
rupt or other witness has the power, in a clear case of abuse, to refuse,
under the advice and responsibility of counsel, to answer a question.
MopeE oF ConDUCTING EXAMINATION. 561

Then, on application to punish the party for contempt, which must come
before the court, the whole question as to competency, relevancy, and
materiality, will be raised in a proper way for adjudication. The good
sense of rule X is, that it extends, not only to objections to questions, but
also to objections to answers and testimony, on the grounds of compe-
tency, materiality, and relevancy, and that neither question, nor answez,
nor testimony, is to be held ultimately incompetent, immaterial, or irrele-
vant, unless objected to on the record for some ground of incompetency,
immateriality, or irrelevancy, stated on the record. In re Levy et al., 1 B.
R, 186; s. c. 1 Ben. 496; In re Bond, 3 B. R. 7.

The register should declare his opinion when the objection is made, and
should order the party to answer the question, if he so decides. If an ex-
ception is taken, he should certify it for the summary consideration of
the court, the examination proceeding in its other parts. If the party
without such exception refuses to answer the question, his contumacy
should be reported. In re Reakirt, 7 B. R. 329.

The register is required to note the objection on the deposition — that is,
not merely the fact of objection; but the ground of objection; and, if no
ground of objection is assigned, he is not bound to note the fact of objec-
tion; and the ground of objection must be directed to the competency,
materiality, or relevancy of that which is objected to. In re Levy et al.,
1B. R. 186; s. ec. 1 Ben. 496.

Questions arising in the course of the examination may be certified to
the court, under section 5011, when put in proper form. In re Patterson,
1B. R. 125; s. ec. 1 Ben. 508; in re Levy et al., 1 B. R. 136; s. c. 1 Ben.
496.

Whether the bankrupt has properly answered a question, is a point
that may be certified to court for decision at the request of the creditor.
In re Holt, 3 B. R. 241.

No rule can be laid down which will enable the register to determine
whether the bankrupt under examination ought or ought not to be allowed
to consult counsel. The solution of the matter must be left for the register
to decide according to the circumstances of each particular case. Gen-
erally, he should not allow consultation. In re Patterson, 1 B. R. 147; s. ¢.
1 Ben. 508; in re Tanner, 1 B. R. 316; s. c. 2 Ben. 211; s. c. Lowell, 215; in re
Judson, 1 B. R. 364; s. c. 2 Ben. 210; s. ec. 35 How. Pr. 15; in re J. C. Col-
ling, 1 B. R. 551; in re Lord, 3 B. R. 243.

One creditor has no right to interpose any objection to the examination
of a bankrupt by another creditor. In re Edwin K. Winship, 7 Ben. 194.

The examinaticn of the bankrupt may be adjourned for good cause
shown. In re Mawson, 1 B. R. 271.

The bankrupt is exempt from arrest while obeying the order to appear
for examination. In re G. W. Kimball, 1 B. R. 193; s. c. 2 Ben. 38.

A bankrupt who obeys the process of the court, and places himself
within its jurisdiction, may file a preliminary objection, which goes to the
right to examine him, and may refuse to be sworn upon that ground. In
re Nathaniel Dole, 7 B. R. 538; s. c. 9 B. R. 193; s. c. 11 Blatch. 499.

36
562 Tur BANKRUPTCY Law.

When the bankrupt refuses to be sworn on account of a preliminary
objection which goes to the right of the party to examine him, a certificate
will not be given to court so that he may be declared in contempt, for he
has a right to have the question decided, and his declining to be sworn
after raising the objection is not an act constituting a contempt of court.
Ibid.

So long as the debt of a creditor stands proved and unimpeached, the
claim that it had been extinguished by an offset, or does not exist, fur-
nishes no ground for a refusal by the bankrupt to be sworn and examined.
In re N. W. Kingsley, 7 B. R. 558; s. ¢. 6 Ben. 300; in re Edwin K. Winship,
7 Ben. 1%.

When satisfied that an examination has been sought, or is being carried
on to gratify malice or mere curiosity, it is the duty of the court to arrest
it. In re Salkey & Gerson, 9 B. R. 107; s. c. 5 Biss. 486.

Upon what Topics the Bankrupt may be Examined.— The bankrupt
may decline to answer a question where, by answering, he would crimin-
ate himself. In re Patterson, 1 B. R. 147; s. c. 1 Ben. 508; In re Koch, 1
B. R. 549.

Contra, The power given to the court to examine the bankrupt at all
times, upon reasonable notice, is a fundamental as well as an important
element in the administration of the bankruptcy law. Without such
power, proceedings in bankruptcy, in many cases, would be ineffectual,
thereby defeating the equity designed by the act. While it is true, from
the necessity of the case, that difficult questions are liable to arise upon the
examination of all bankrupts, yet it is also true that the bankrupt can not
cover up his fraud behind the shield that if he answers he will criminate
himself, by proving up his fraud in testifying as to the distribution of his
property. Though such examination may expose him to penalties for
fraudulent concealment, or fraudulent disposition of his property, he is
left to the judgment of the law. Notwithstanding it may be possible, nay,
probable, that he may be protected from disclosing some distinct criminal
act, yet even in such case he can not be protected in yefusing to discover
all his estate and effects, and the full particulars relating to them, though
thereby he may show that he has been guilty of fraud or of fraudulent
concealment, or that he owns property which he has illegally obtained, and
will thus be liable to penalties. It has been held that a bankrupt is bound
to answer questions relating to particular property, though at the time ap
indictment was pending against him for concealment of such property. '
It has been held, also, that a bankrupt is compelled to answer questions
touching his estate and effects, although such answer or answers might
tend to convict him of perjury committed by him upon a former occasion,
and also be evidence against him that he had incurred penalties by con-
cealing his effects. And it has also been held that he can not refuse to
answer questions tending to show that he has committed the act of bank-
ruptcy charged in the involuntary petition. In re Bromley & Co., 3 B. R.
686.

The bankrupt must state whether or not he has played cards, faro, oF
any other game of chance with a certain person named in the interrogatory,
ToPICs ON WHICH THE BANKRUPT May BE EXAMINED. 563

and whether he has lost any money at games of chance, even though he
declines to answer on the ground that his answers would criminate or
degrade himself. In re Richards, 4 B. R. 93; s. c. 4 Ben. 303.

If the purpose of the examination be to elicit facts to be used in opposing
the bankrupt’s discharge, it is not competent for the register to summon
any witness or person who may know or be suspected of knowing facts
pertinent, or that might be serviceable in the preparation of specifications.
In regard to such facts, a creditor should be left to establish them on the
trial of the issues, as parties do in ordinary trials at law. Such informa-
tion no one has the right to demand or obtain otherwise than it may be
voluntarily given, unless it be upon the trial of issues or questions made up.
But it is not so with the bankrupt. In relation to such of his creditors as
prove their debts, he stands upon different grounds altogether. When he
files his petition, he asks that in consideration of his complying with every
requirement of the law, he may be absolved from every legal obligation to
his creditors. This is an extraordinary exemption, and the law only
allows it when he surrenders himself to be dealt with in an extraordinary
way, if the court shall see proper to exercise that power to the ends of
justice. In re Brandt, 2 B. R. 215; in re Vogel, 5 B. R. 393.

The bankrupt can not be examined in regard to property which does not
belong to him. In re Van Tuy], 1 B. R. 686; in re Carson & Hard, 2 B. R.
107.

But he may be examined in regard to property in which it may possibly
be shown that he has an interest. In re Bonesteel, 2 B. R. 330; in re Carson
& Hard, 2 B. R. 107.

The bankrupt must answer questions in relation to his wife’s property
when it is shown that he may possibly have an interest in it. In re D. Craig,
3B. R. 100; s. c. 4 B. R. (quarto) 50; s. c. 3 Ben. 353; in re Clark, West et
al, 4 B. R, 287.

The bankrupt can not be examined as to property acquired or business
done after the date of the filing of the petition in bankruptcy, unless it can
be shown that the same has some connection with his property or business
before that time. In re Rosenfield, Jr., 1 B. R. 319; s.c.1L. T. B. 81; s. ¢.
16 Pitts. L. J. 245; in re Patterson, 1 B. R. 125; s. c. 1 Ben. 508; in re
Levy et al., 1 B.“R. 136; s. c. 1 Ben. 496.

Interrogatories in regard to money in the possession of the bankrupt soon
after the commencement of proceedings in bankruptcy, are relevant and
must be answered. The assignee is entitled to any facts directly or cir-
cumstantially tending to show that the bankrupt, before filing his petition
in bankruptcy, was in possession of money which he had concealed, but
which should have gone to the assignee. The point of inquiry in such
cases is, when did the bankrupt acquire it, and how? The assignee will
have to show that it was acquired before bankruptcy, and he may also
show that, though acquired after, still it is the proceeds of property or
effects belonging to the assignee. In re McBrien, 3 B. R. 345; s. ce.
3 Ben, 481.

The bankrupt may be examined in regard to matters which transpired
before the creation of the debt of the creditor. In re D. Craig, 3 B. R. 100;
8. ¢. 3 Ben, 353.
564 Tue Bankruptcy Law.

Evidence can not be introduced to prove that the debt of a creditor was
contracted by fraud. The question of fraud in the creation of a debt can
not be litigated in the proceedings in bankruptcy. In re J. 8. Wright, 2
B. R. 142; s. c. 36 How. Pr. 167; s. c. 2 Ben. 509; in re Tallman, 1 B. R. 462;
s. ec. 2 Ben. 348, Contra, in re Koch, 1 B. R. 549.

The conduct of the bankrupt in withdrawing from the office of the
register before the completion of his examination, is a contempt of court.
In re Vogel, 5 B. R. 393.

-' The examination of the bankrupt is not competent evidence against him
in a criminal action. Evidence given or statements made by a party, under
compulsion or order of court, tending to criminate himself, can not be put
in evidence in a criminal proceeding against him. U. S. v. Prescott, 2
Dillon, 405; in re Brooks, 5 Pac. L. R. 191.

The State courts have no jurisdiction to punish a party for the crime of
perjury committed in the course of an examination before a register.
State v. Pike, 15 N. H. 88.

An examination of a bankrupt by a creditor does not bar an action by
the assignee against the vendee of the bankrupt to recover property frau-
dulently conveyed by the bankrupt to such vendee. Bradley v. Hunter,
50 Ala. 265.

§ 50864. (June 22, 1874, ch. 390, § 8, 18 Stat. 180.) That in all
causes and trials arising or ordered under this act, the alleged bank-
rupt, and any party thereto, shall be a competent witness.

This section only applies to civil causes. The bankrupt is not a compe-

tent witness in a criminal proceeding against him. U.S. v. Black, 12 B. R.
340; s c. 10 Pac. L. R. 41.

Act oF 1898, Cu. 5, § 41. Contempts.— (a) A person shall not,
in proceedings before a referee, refuse to appear after having been
subpcenaed, or upon appearing refuse to take the oath as a witness,
or after having taken the oath, refuse to be examined according to
law; Provided, That no person shall be required to attend as a witness
outside of the State of his residence, and more than one hundred
miles from such place of residence, and only in case his lawful mile-
age and fee for one day’s attendance shall be first paid or tendered
him.

Act oF 1867, § 508%. The court may, in like manner, require
the attendance of any other person as a witness, and if such person
fails to attend, on being summoned thereto, the court may compel
his attendance by warrant directed to the marshal, commanding him
to arrest such person, and bring him forthwith before the court, or
before a register in bankruptcy, for examination as a witness.

Statute revised — March 2, 1867, ch. 176, § 26, 14 Stat. 529. Prior Stat-
ute — April 4, 1800, ch. 19, § 14, 2 Stat. 25.
ConTEMPTs. 565

It is not necessary to give the bankrupt notice of the time and the place
of the examination of a witness summoned by the assignee. An examina-
tion by an assignee, and an examination by creditors, are two independent
proceedings, and one may be conducted without reference to the other. In
re Levy et al., 1 B. R. 107; s. c. 1 Ben. 454.

A mere witness may be examined before the bankrupt himself, and
there need not be any matter of controversy to be settled by testimony.
In re Fredenburg, 1 B. R. 268; s. c. 2 Ben. 133; in re Blake, 2 B. R. 10.

A receiver appointed by a State court may be examined as a witness.
In re William W. Hulst, 7 Ben. 40.

An assignee may be subpoenaed and required to testify in the same
manner as any other witness, and the register has authority to make the
requisite order. In re Elmer C. Smith, 14 B. R. 432.

An assignee is not subject as of course to an examination by any cred-
itor whenever the latter may desire it, but will be protected against un-
necessary annoyance by refusing an application for his examination unless
upon some issue regularly referred to the register. Ibid.

One creditor has no right to interpose objections to the course of the
examination of a witness by another creditor. The only person who prop-
erly has an opposing interest in such an examination is the bankrupt him-
self, and to him is preserved and allowed the right of cross-examination.
In re Stuyvesant Bank, 7 B. R. 445; s. c. 6 Ben. 33.

A party whose transactions with the bankrupt are being investigated can
not appear by counsel at the examination of a witness. In re Comstock
& Co, 13 B. R. 193; s. c. 3 Saw. 517.

A witness is bound to attend before the register, although the summons
is served on him out of the district, if he does not live more than one hun-
dred miles from the place where he is required to attend. In re Wm. §.
Woodward, 12 B. R. 297; s. c. 7 C. L. N. 87; s. ¢. 10 Pac. L. R. 14.

The witness may be exanined, even though he is a party to proceedings
instituted by the assignee to recover property alleged to belong to the
bankrupt’s estate. In re Feinberg et al., 2 B. R. 475; s. ¢. 3 Ben. 162.

A witness must answer questions put to him so far as they relate to
any matter of examination specified in this section. In re Belden &
Hooker, 4 B. R. 194; in re Stuyvesant Bank, 7 B. R. 445; s. c. 6 Ben. 33.

A witness must state where he got the money with which he purchased
certain claims against the bankrupt’s estate. In re Lathrop, Cady &
Burtis, 4 B. R. (quarto) 93.

The right to refuse to answer a question on the ground of privilege does
not warrant a refusal to be sworn as a witness. The privilege can not
be interposed until a question is asked which invades the privilege. In re
Woodward et al, 3 B. R. 719.

An attorney who took charge of an auction sale for the bankrupt must
testify in regard to the amount and disposition of the proceeds. It is
a mistake to suppose that an attorney is privileged from answering as to
everything which comes to his knowledge while he is acting as attorney.
The privilege only extends to information derived from his clients as
such. Questions in regard to the amount and disposition of the proceeds
566 Tue Banxruptcy Law.

of a sale only call upon him to state his own proceedings in the disposition
of the stock of goods, and the amount he received therefor. It is solely
his own acts which he is required to disclose, and not anything whatever
which his clients ever communicated to him. These acts were not pro-
fessional, and did not appertain to the duty of an attorney, but were
such as any agent could have done, being the ordinary proceedings of an
agent in selling the property of his principal, and paying over the pro-
ceeds which were the subject of investigation and inquiry. In re O’Dono-
hue, 3 B. R. 245.

An attorney who has received a conveyance of land from a bankrupt,
and has shortly afterward conveyed the property to the wife of the bank-
rupt, must answer questions touching such conveyances. In such a case
the rights and privileges of the attorney, and his duty to his client, are
entirely separate and distinct from his rights and duties as a purchaser
and vendor, the transaction in relation to the real estate not being a
part and parcel of, or in and about any lawsuit in which he was counsel
for either the bankrupt or his wife. In re Belis & Milligan, 3 B. R. 199;
8. c, 388 How. Pr. 79; s. c. 3 Ben. 386; s. ¢. 1 L. T. B. 178.

An attorney for the bankrupt may be required to state whether, at a
certain date, he received any checks drawn to the order of the bankrupt
by a certain person, and what disposition was made of any such checks
so received. In re Jas. S. Aspinwall,‘10 B. R. 448; s. ec. 7 Ben. 433.

An attorney for the bankrupt may be required to state whether he drew
or directed the drawing of a certain deed from the bankrupt. Ibid.

An attorney of the bankrupt may be required to state what affairs of
the bankrupt were the subject of a conversation between him and other
persons than the bankrupt, although he can not be compelled to disclose
information about such affairs imparted to him by the bankrupt or re-
ceived from persons to whom he was referred by the bankrupt for the
purpose of obtaining such information as counsel for the bankrupt. Ibid.

A. witness must answer all proper questions on matters relating to his
trade and dealings with the bankrupt prior to the commencement of pro-
ceedings in bankruptcy; and if, to answer properly, fully, and truthfully
any such question, it is necessary that he shall produce a copy of any
transaction of his with the bankrupt, as contained in any book of the
witness, such copy must be produced. In re Earle, 3 B. R. 564.

It is no sufficient reason for a refusal to state the consideration paid by
the witness for certain claims assigned to him, that the consideration did
not come from the bankrupt or his estate, or that to testify would reveal
his own private business, or that an answer might prejudice him in a suit
then pending. In re Benjamin J. H. Trask, 7 Ben. 60.

A witness can not refuse to answer questions concerning his dealings,
ete., with the bankrupt, on the ground that his answer may furnish evi-
dence against him in a civil case brought, or to be brought, on behalf of
the assignee. The main, if not the only, purpose of the statute authorizing
such an examination, is to enable the assignee to obtain evidence for civil
suits, or to ascertain that there is no such evidence. In re Fay et al., 3 B.
R. 660: in re Danforth, 1 Penn. L. J. 148.
ConTEMPTs. 5G

The assignee can compel the examination of a preferred creditor, and
obtain a full disclosure. Garrison vy. Markley, 7 B. R. 246.

The president of a corporation may be compelled to state what was the
consideration of a judgment obtained by the corporation against the bank-
rupt, although the purpose is to impeach it as fraudulent. In re Pioneer
Paper Co, 7 B. R. 250.:

A witness on cross-examination is not bound to answer a question not
relating to any matter of fact in issue, nor to any matter contained in
his direct testimony, when an answer thereto would tend to degrade him.
In re H. Lewis, 3 B. R. 621; s. @ 4 Ben. 67.

A mere witness can not have the assistance of counsel. In re Freden-
berg, 2 B. R, 268; s. c. 2 Ben. 133; in re Feinberg et al., 2 B. R. 475; 5. ¢.
3 Ben. 162; in re Stuyvesant Bank, 7 B. R. 445; s. c. 6 Ben. 33; in re Com-
stock & Co., 13 B. R. 193; s. c. 8 Saw. 517.

The fees to which witnesses are entitled are five cents a mile for coming
and returning, and $1.50 for each day’s attendance. The “ traveling expen-
ses’, mentioned in Rule X XIX, mean no more than the traveling fees
allowed by section 848. In re Wm. Griffen, 1 B. R. 871; s. ec. 2 Ben. 209.

The clerk’s certificate is only prima facie evidence of the number of
days that a witness attended before a register. In re J. Crane & Co., 15
B. R. 120.

A witness is entitled to fees only for the days of actual attendance, and
not for the days on which he was ready to attend. Ibid.

The memoranda, or entries made 'by the register, may be used as evi-
dence to prove what proceedings have been had before him. Ibid.

The time for examining witnesses is not terminated by the application
for a discharge. The time for filing specifications against a discharge
may be kept open by adjournment until a reasonable opportunity is af-
forded for examination of witnesses. In re Seckendorf, 1 B. R. 626; s. ¢.
2 Ben. 462; in re Mawson, 1 B. R. 271.

The answers of a witness made by him in an examination under oath
before a register in bankruptcy are admissible to contradict him. . They
fall within the rule which allows a witness to be impeached by proof that
he has made conflicting statements at other times. The fact that the
examination was not completed, and the answers not signed, affects the
weight of the testimony, but does not render it incompetent. The answers
which are reduced to writing by his agent at his dictation are admissible
as his statements, Knowlton v. Moseley, 105 Mass. 136.

Act oF 1867, § 5088. For good cause shown, the wife of any
bankrupt may be required to attend before the court to the end
that she may be examined as a witness; and if she does not attend
at the time and place specified in the order, the bankrupt shall
not be entitled to a discharge unless he proves to the satisfaction
of the court that he was unable to procure her attendance.

Statute revised — March 2, 1867, ch. 176, § 26, 14 Stat. 529. Prior
Statute — April 4, 1800, ch. 19, § 24, 2 Stat. 28.
568 Tue Bankruptcy Law.

The examination of the wife of the bankrupt is not a matter of right,
and where an application for such an examination is made merely for
delay, it way be refused. In re Selig, 1 B. R. 186.

An examination of the bankrupt’s wife will only be ordered when a
prima facie case is made out by affidavit; and such a case is not made out
by showing that the bankrupt has committed frauds of which the wife is
probably cognizant. It is not the intention of the statute to destroy the
usual and proper confidence between husband and wife any more than
between attorney and clients. The cases in which the wife may be exam-
ined are, where she is, on reasonable grounds, suspected of having, or of
having had, property in her possession which should have been surrendered
to the assignee, or to have participated actively in other frauds upon the
statute. In that case, conversations may be of the res gestae, and may be
inquired into. She is a party to a fraud, and may be fully examined con-
cerning it. When she professes to be a creditor of her husband’s estate,
and offers her debt for proof, she can be fully examined in regard to it,
like any other person under similar circumstances. In re Gilbert, 3 B. R.
152; s. c. Lowell, 340.

The wife of the bankrupt is entitled to witness fees for attendance and
travel, the same as any other witness. In re Wm. Griffen, 1 B. R. 371; s. ¢
2 Ben. 209.

The wife of the bankrupt is not bound to appear unless the fees are paid
or tendered to her at the time of the service of the summons. In re Van
Tuyl, 2 B. R. 70.

The order for the bankrupt’s wife to appear for examination may, in cer-
tain cases, be served on the bankrupt himself, and when she fails to attend,
the bankrupt is not entitled to a discharge, unless he can prove that he
was unable to procure her attendance. In re Van Tuyl, 2 B. R. 579; s. ¢
3 Ben. 237. .

The wife of the bankrupt must attend and submit to an examination, the
same as any other witness. If she does not attend on being summoned,
her attendance may be compelled by a warrant to the marshal, under
which she may be brought before the register and detained until her
examination is concluded. If, when she comes, or is brought before the
register, she refuses to answer, she may be punished for contempt. In re
Woolford, 3 B. R. 444; s. ec. 4 Ben. 9.

When the reasons assigned for the nonattendance of the bankrupt’s wife
relate to the legal right of the court, under the circumstance of the case,
to compel her to attend, the proper proceeding to enforce attendance is to
pass an order to show cause why a warrant should not issue. In re Belis
& Milligan, 3 B. R. 270; s. ce. 388 How. Pr. 88.

The bankrupt’s wife is not entitled to the aid of counsel on her examina-
tion. In re J. A. Schonberg, 7 Ben. 211.

The counsel for the bankrupt is not entitled to advise the wife of the
bankrupt while on examination. Ibid.

When the bankrupt’s wife alleges the advice of counsel as her only
reason for refusing to produce a letter, she should produce it if it pertains
to a transaction between her and the bankrupt. Ibid.
DEATH OR INSANITY OF BANKRUPTS. 569

If the bankrupt contracted for a house, but took the title in his wife’s
name, she may be examined fully concerning all the facts and cireum-
stances of the transaction, and concerning the money used to pay for the
house. Ibid.

The bankrupt’s wife must answer questions in regard to her property
when it is shown that her husband may possibly have an interest in it.
In re D. Craig, 3 B. R. 100; s. c. 4 B. R. (quarto) 50, 52; s. «. 3 Ben. 353.

§ 5089. If the bankrupt is imprisoned, absent, or disabled from
attendance, the court may order him to be produced by the jailer,
or any officer in whose custody he may be, or may direct the examina-
tion to be had, taken, and certified at such time and place and in
such manner as the court may deem proper, and with like effect
as if such examination had been had in court.

Statute revised — March 2, 1867, ch. 176, § 26, 14 Stat. 529. Prior
Statute — April 4, 1800, ch. 19, § 18, 2 Stat. 26.

Act oF 1898, Cu. 3, § 8. Death or Insanity of Bankrupts.—
(a) The death or insanity of a bankrupt shall not abate the pro-
ceedings, but the same shall be conducted and concluded in the same
manner, so far as possible, as though he had not died or become
insane: Provided, That in case of death the widow and children
shall be entitled to all rights of dower and allowance fixed by the
laws of the State of the bankrupt’s residence.

Act oF 1867, § 5090. If the debtor dies after the issuing of the
warrant, the proceedings may be continued and concluded in like
manner as if he had lived.

Statute revised — March 2, 1867, ch. 176, § 12, 14 Stat. 522. Prior
Statute — April 4, 1800, ch. 19, § 45, 2 Stat. 33.

Sale of lands of a bankrupt by the assignee does not divest dower of
bankrupt’s wife. Lazear v. Porter, 18 B. R. 549:

The word “ proceedings ” does not include a discharge, unless there is
&@ compliance with the requirements of section 5113, in regard to the
application for the discharge and the oath. No discharge can be granted
where the debtor dies before these requirements are complied with. This
clause must be taken as applying to such proceeding as may be taken
by the assignee or other parties in settling the estate. In re O’Farrel et al.,
2B. R. 484; 5. ec 3 Ben. 191; s. c. 1 L. T. B. 159; in re Quinike, 4 B. R. 92;
8 ¢ 2 Biss. 354. :

The decease of one partner prior to any adjudication upon the question
in bankruptcy under an involuntary petition, is not a legal cause for a
dismissal of the petition as against the surviving partners. Hunt v.
Pooke, 5 B, R. 161.
570 Tue Bankruptcy Law.

If the debtor in a case of involuntary bankruptcy dies after the issuing
of the order to show cause, and before trial, the proceedings abate. Pro-
ceedings in involuntary bankruptcy are analogous to actions at law for
torts, which abate on the death of the party. {n re John V. McDonald, 8
B. R. 237; s. c. 30 Leg. Int. 332; s. c. 20 Pitts. L. J. 185; 8. ¢. 5 C. L. N, 504;
sc. 6 Pac. L. R. 94.

Proceedings in involuntary bankruptcy do not abate by the death of
the bankrupt after the entry of the order of adjudication, but before the
actual issuing of the warrant. The warrant is required to be issued forth-
with. It is, in judgment of law, issued simultaneously with the entry of
the order of adjudication. Whenever it is actually issued, it relates. back,
for the purposes of this section, to the entry of the order of adjudication.
This section contemplates the issuing of the warrant in a voluntary case
simultaneously with the entry of an order of adjudication, and the same
intent exists in regard to ah involuntary case. In re H. C. Litchfield, 9 B.
R. 506; s. c. 7 Ben. 259.

There is no party to a creditor’s petition, except the petitioning creditor
and the bankrupt. A person who does not claim any right or interest in the
property of the debtor, or seek to assert any claim to any specific property
in the hands of the assignee, can not, merely because an injunction has
been issued against him, move to vacate the adjudication on the ground
of the death of the debtor prior to the adjudication. Karr v. Whittaker, 5
B. R. 123.

§ 5091. All creditors whose debts are duly proved and allowed:
shall be entitled to share in the bankrupt’s property and estate, pro
rata, without any priority or preference whatever, except as allowed
by section fifty-one hundred and one. No debt proved by any person
liable, as bail, surety, guarantor, or otherwise, for the bankrupt, shall
be paid to the person so proving the same until satisfactory evidence
shall be produced of the payment of such debt by such person so
liable, and the share to which such debt would be entitled may be
paid into court, or otherwise held for the benefit of the party entitled
thereto, as the court may direct.

Statute revised — March 2, 1867, ch. 176, § 27, 14 Stat. 529, Prior Stat-
utes — April 4, 1800, ch. 19, § 31, 2 Stat. 30; Aug. 19, 1841, ch. 9, § 5, 5 Stat.
444.

This section simply provides that when the creditors who are entitled
to share in the distribution are determined they shall take pro rata. In
re Byrne, 1 B. R. 464; 5. ce 7 A. L. Reg. 499.

The State laws in relation to the distribution of the estate of decedents
do not govern in the distribution of the estate of a bankrupt. The bank-
rupt’s assets must be divided in accordance with the provisions of the
bankruptcy act. In re Erwin & Hardy, 3 B. R. 580.
MEETINGS oF CREDITORS. b71

The claim of a trustee of a bankrupt corporation who has rendered him-
self individually liable to the creditors, can not be postponed until the
other creditors are paid in full. Bristol v. Sanford, 13 B. R. 78; 8. c. 12
Blatch, 341.

Act or 1898, Cu. 6, § 55. Meetings of Creditors—(a) The court
shall cause the first meeting of the creditors of a bankrupt to be
held, not less than ten nor more than thirty days after the adjudica-
tion, at the county seat of the county in which the bankrupt has
had his principal place of business, resided, or had his domicile; or
if that place would be manifestly inconvenient as a place of meeting
for the parties in interest, or if the bankrupt is one who does not
do business, reside, or have his domicile within the United States,
the court shall fix a place for the meeting which is the most con-
venient for parties in interest. If such meeting should by any mis-
chance not be held within such time, the court shall fix the date,
as soon as may be thereafter, when it shall be held.

(b) At the first meeting of creditors the judge or referee shall
preside, and, ‘before proceeding with the other business, may allow
or disallow the claims of creditors there presented, and may publicly
examine the bankrupt or cause him to be examined at the instance
of any creditor.

(c) The creditors shall at each meeting take such steps as may
be pertinent and necessary for the promotion of the best interests
of the estate and the enforcement of this Act.

(d) A meeting of creditors, subsequent to the first one, may be
held at any time and place when all of the creditors who have se-
cured the allowance of their claims sign a written consent to hold
a meeting at such time and place.

(e) The court shall call a meeting of creditors whenever one-fourth
or more in number of those who have proven their claims shall file
a written request to that effect; if such request is signed by a majority
of such creditors, which number represents a majority in amount of
such claims, and contains a request for such meeting to be held at
a designated place, the court shall call such meeting at such place
within thirty days after the date of the filing of the request.

(f) Whenever the affairs of the estate are ready to be closed a
final meeting of creditors shall be ordered.

Act oF 1867.— (See Duties of Trustee, ante, Act of 1898, § 47,
and Meeting of Creditors, ante, Act of 1898, § 55.)
572 Tue Bankruptcy Law,

§ 5092. At the expiration of three months from the date of the
adjudication of bankruptcy in any case, or as much earlier as the
court may direct, the court, upon request. of the assignee, shall
call a general meeting of the creditors, of which due notice shall
be given, and the assignee shall then report, and exhibit to the
court and to the creditors just and true accounts of all his receipts
and payments, verified by his oath, and he shall also produce and
file vouchers for all payments for which vouchers are required by
any rule of the court; he shall also submit the schedule of the
bankrupt’s creditors and property as amended, duly verified by the
bankrupt, and a statement of the whole estate of the bankrupt as
then ascertained, of the property recovered and of the property out-
standing, specifying the cause of its being outstanding, and showing
what debts or claims are yet undetermined, and what sum remains in
his hands. The majority in value of the creditors present shall de-
termine whether any and what part of the net proceeds of the estate,
after deducting and retaining a sum sufficient to provide for all
undetermined claims which, by reason of the distant residence of
the creditor, or for other sufficient reason, have not been proved, and
for other expenses and contingencies, shall be divided among the
creditors; but unless at least one-half in value of the creditors attend
the meeting, either in person or by attorney, it shall be the duty
of the assignee so to determine.

Statute revised — March 2, 1867, ch. 176, § 27, 14 Stat. 529. Prior
Statutes — April 4, 1800, ch. 19, § 29, 2 Stat. 29; Aug. 19, 1841, ch. 9, § 10,
5 Stat. 447.

It is not essential that the second and third meetings should be held at
any particular time, but only that they should be held at the expiration
of certain months, etc.; and unless this means on the very day that the
month runs out, there is no day on which it can be said that it is too late
to hold these meetings, unless, possibly, it may be said that the second
meeting should be called before the end of six months. In re Littlefield, 3
B. R. 57; s. «. Lowell, 331; 5. «1 L. T. B. 164.

No second meeting of creditors under section 5092, and no third or other
meeting under section 5093, ought to be called unless the assignee has in
his hands some money out of which a dividend can be made. In re
Son, 1 B. R. 310; s. c. 2 Ben. 153; in re John W. Dean, 1 B. R. 249; 5. ¢
1L. T. B. 9.

But they can not be dispensed with except by an order of court pre-
dicated upon a report of the assignee showing that there are no assets. In
re A. Alexander, 3 B. R. (quarto) 20.

Where the assignee. at the expiration of threa months from the date
of the adjudication of bankruptcy, requests the court so to do, a second
MEETINGS oF CREDITORS. 573

general meeting of the creditors must be called. In re Louis H. Rosey,
6 Ben. 187.

Wheu the register states at the meeting that the accounts of the as-
signee will be filed, and that they can be examined thereafter by any
of the creditors who desire to examine the same, and that they will not
be audited or passed until the final meeting of creditors, and thereupon
makes an entry to that effect without objection from any one, an order
allowing the credits claimed by the assignee may be postponed to the final
meeting of creditors. In re Clark & Binninger, 6 B. R. 204; in re Abraham
B. Clark, 9 B. R. 67,

The register has the power, and it is his duty, to audit and pass any ac-
counts reported and exhibited at the second meeting. Creditors must be
prepared to object, if they desire, to such accounts as the assignee shall
report and exhibit. In order to arrive at the net sum to be divided, the
outstanding claims not disputed or objected to, must be ascertained, and
their amount deducted. If they are not disputed, it is the duty of the
register to direct their payment as part of the business of auditing and
passing the accounts, even though they have not been actually paid by the
assignee. They may properly come under the head of “ other expenses,”
the amount of which is to be retained by the assignee, such retention being
specifically authorized by the meeting and the register, to meet the
specific items as expenses. In re Clark & Binninger, 6 B. R. 197; s. c.
5 Ben. 389.

It is proper to take the views of the creditors in regard to the fees and
charges of the assignee, whether a majority is present or not, but their
views are not necessarily binding. In re Merchants’ Ins. Co., 6 Biss. 252.

The allowance of°a reasonable compensation is no part of the duty of
the creditors’ meeting, nor of the register, but is to be made by the court
in the exercise of a judicial discretion in view of the nature of the duties
performed, and the degree of compensation received from the regular fees.
The proper practice is to apply to the court for the allowance previous
to the final meeting. Ibid.

The assignee’s account may be submitted to the creditors’ meeting for
examination, discussion, explanation, and approval before it is audited.
Thid.

Ample opportunity should be given all creditors to examine and object
to the assignee’s account, but the meeting may, on motion, dispense with
the reading of the account and vouchers in detail. Ibid.

It is the duty of the register to examine and regulate the charges of the
assignee, whether any creditor objects to the account or not. In re Jas,
M. Sawyer, 14 B. R. 241; s. c. 4 Cent. L. J. 470; in re Colwell, 15 B. R. 92.

If the assignee employs an attorney who renders legal services for him,
the bill of the attorney therefor should be presented by the assignee as
bart of his accounts, at the meeting of creditors where the assignee’s ac-
counts are required to be presented. The intention is that the disburse-
ments of the assignee in administering the estate, whether only incurred
and not yet paid, or whether incurred and paid, shall be submitted to the
creditors at a general meeting, and be audited by the register as a part
574, Tur Bankruptcy Law.

of the business of auditing the accounts of the assignee. In re Hubbell
& Chappel, 9 B. R. 523; s. c. 19 I. R. R. 150.

Under special circumstances the court may properly, on due notice to all
creditors who have proved their debts, institute an inquiry into the ser-
vices rendered to an assignee by an attorney, with a view to payment
of them prior to the holding of any second general meeting of creditors,
but the practicé is one not to be encouraged. Ibid.

At the second meeting the creditors may dispose of the funds to those
who have proved their claims, without leaving in the hands of the assignee
a sum sufficient to pay a similar percentage upon the claims set forth in
the schedules, but which have not been proved. The whole fund in the
hands of the assignee, less such sum as may be retained for expenses and
contingencies, should be distributed, unless good cause to the contrary
is shown. In re William Mills, 11 B. R. 117; s. c. 7 Ben. 452.

It is the duty of the register to deduct and retain in the hands of the
assignee a sum sufficient to provide for undetermined claims when in
controversy, and for unproven clatms when it shall be made to appear
probable that, by reason of the distance or for any other good cause, they
have not been proved, for it is the duty of the court and not of the cred-
itors to guard the rights of the absent. Ibid.

When a receiver has been appointed in a suit pending between the
assignee and trustees claiming under a deed of trust for the benefit of
creditors, the dividend ought to be made directly to such creditors by the
special receiver, as part of the proceedings in such suit, and not by the
assignee in bankruptcy as part of the proceedings in bankruptcy, after a
transfer to him by the special receiver of the proper sum to be divided.
There must be a reference to a master to ascertain and report the proper
sum to be divided, and to prepare a schedule of the distributees, and of
the amounts of their debts which ought to share in the dividend, and of
the rate of dividend, and of the amount to be paid to each creditor. The
rate of dividend should not exceed the rate that would be allowed in case
all the creditors named in the schedule annexed to the deed of trust had
proved their debts in bankruptcy, in addition to such debts proved in bank-
ruptcy as do not appear in such schedule. Sedgwick v. Place et al. 3
B. R. 302.

Act oF 1867.— (See Duties of Trustees, Act of 1898, § 47 and § 55.)

§ 5093. Like proceedings shall be had at the expiration’ of the
next three months, or earlier, if practicable, and a third meeting
of creditors shall then be called by the court, and a final dividend
then declared, unless any suit at law or in equity is pending, or
unless some other estate or effects of the debtor afterward come to
the hands of the assignee, in which case the assignee shall, as soon
as may be, convert such estate or effects into money, and within
two months after the same shall be so converted, they shall be divided
in manner aforesaid. Further dividends shall be made in like manner
MEETINGS or CREDITORS. 575

as often as occasion requires; and after the third meeting of creditors
no further meeting shall be called, unless ordered by the court.

Statute revised — March 2, 1867, ch. 176, § 28, 14 Stat. 530. Prior
Statute — April 4, 1800, ch. 19, § 30, 2 Stat. 29,

The court of bankruptcy, for all purposes of the auditing, settlement,
and adjustment of the assignee’s account, and of distribution, is held
provisionally by the register, whose acts are, of course, subject to ex-
ception. Full opportunity for exception at the public meeting, or at an
adjourned meeting, should be afforded to all parties interested. The
assignee Should see that proper special notice be given to creditors who
have, and to those who have not, proved their debts; and the register
should see that this moral and legal duty of the assignee has not been
neglected. A bankrupt who allows omissions to occur in these respects
may, through neglect of his duty to creditors, lose the right to a dis-
charge. After all due precautions have been thus adopted, exceptions
must be taken before the register, and certified by him to the court with
his report. Exceptions, unless upon special cause shown, are not after-
ward received by the court. If no exception is certified, the acts of the
register are, in themselves, acts of the court without any formal judg-
ment of confirmation. In all cases, the register should so report as to
show particularly how notices and opportunity for exception have been
given. In re Bushey, 3 B. R. 685.

Rule V makes it the duty of the register to “take proceedings for the
declaration and payment of dividends.” When the assignee makes an
application for a third meeting, the register has the power to make an
order requiring the assignee to furnish information in regard to the
funds for distribution. It is the duty of the register to ascertain for
what purpose the meeting is to be called, and whether there are any
funds for distribution. Without such information the register can not
be called upon to exercise the discretion devolved upon him by the act
upon such an application. When creditors make a request for a meeting,
it is the practice to order the assignee to file an account, or otherwise
inform the register in regard to the funds in his hands. When this is
ascertained, the register exercises a discretion, calling or not calling a
meeting, as the facts may warrant. In re Binninger, 6 B. R. 193.

The court may restrain the register and the assignee from taking any
further steps toward making or paying dividends, with a view to give an
opportunity to any person interested to apply to the court on proper papers
and on proper notice, to vacate the order of dividend. In re N. Y. Mail
Steamship Co., 3 B. R. 280.

Act oF 186%, § 5094. The assignee shall give such notice to all
known creditors, by mail or otherwise, of all meetings, after the first,
as may be ordered by the court.

Statute revised — March 2, 1867, ch. 176, § 17, 14 Stat. 524.
576 Tue Bankruptcy Law.

The notice to be given by mail is not confined to creditors who have
proved their debts. Notice must be sent by mail to all known creditors,
Creditors who have proved their debts may not be all the known cred-
itors. In re William Mills, 11 B. R. 117; s. c. 7 Ben. 452.

If notice is not sent to a creditor whose name is on the schedule, the
meeting must be adjourned and a proper notice sent to him, although he
has not proved his debt. Ibid.

§ 5095. Any creditor may act at all meetings by his duly consti-
tuted attorney the same as though personally present.

Statute revised — March 2, 1867, ch. 176, § 23, 14 Stat. 528. Prior
Statute — April 4, 1800, ch. 19, § 6, 2 Stat. 23.

In order to vote for an assignee, the attorney must be an attorney in
fact and must be appointed by a power of attorney. In re Purvis, 1 B. R.
163; s.c. 1 L. T. B. 19.

One member of a firm may execute.a power of attorney authorizing a
person to vote for assignee in the name of the firm, and bind all the
other members thereby. It is often inconvenient to bring together all
the members of a firm to execute a deed of this character. If such was
not the law great injury might result to a firm in prosecuting their
claims against a debtor, when it is important to proceed without delay.
In re Joseph Barrett, 2 B. R. 5383; s.c. 1 L. T. B. 144; s.¢c.1C. L. N. 202.

When an agent executes a power of attorney in the name of the principal,
he must produce legal evidence that he is duly authorized to execute the
power of attorney. The certificate of the register before whom the power
of attorney was executed, as to the identity of the agent, does not supply
the place of such proof. In re Knoepfel, 1 B. R. 23; s. ec. 1 Ben. 330.

A power of attorney, made before the passage of the bankruptcy act,
may authorize an agent to represent his principal in proceedings under it,
if its terms are broad enough. A power of attorney authorizing an
agent to sign the name of the principal to any paper necessary for the
purpose of collecting or receiving any debt due to the principal, authorizes
the agent to execute a power of attorney according to Form No. 14. In
re Knoepfel, 1 B. R. 70; s. ec. 1 Ben. 398.

There is no law which requires powers of attorney of this sort to be
acknowledged. It is true that the foot-note to Form No. 26 provides
that they may be acknowledged, but the supreme court would have pre-
scribed some rule upon the subject, if they had intended to make such
action obligatory. The forms are largely advisory. Any duly executed
writing which expresses the essential fact of the appointment of the
attorney, and the powers confided to him, must be respected by the judge
or register. If the supreme court ordered the foot-note to be appended
to Form No. 26, it must have been in anticipation that some question
of acknowledgment might arise under the municipal law of some partic-
ular State; and it is, therefore, pointed out that, in case of acknowledg-
ment, it may be before certain officers. The foot-note is not a rule that
Divipenps. Bay

the letter appointing such an attorney must be acknowledged, nor even
that it must be a deed. In re H. F. Barnes, Lowell, 560; in re Powell, 2
B. R. 45.

The power of attorney does not require a stamp. In re Myrick, 3 B. R.
154. Contra, see 6 I. R. R. G8.

Where the authority is joint, it must be exercised by all to whom it is
given, but Forms Nos. 14 and 26 do not confer a joint authority. In re
Phelps, Caldwell & Co., 1 B. R. 525; s. ¢. 2 L. T. B. 25.

When a letter of attorney addressed to a firm does not authorize either
of the partners to act separately, one partner can not act alone and
without the co-operation of his copartner. In re Frank, 5 B. R. 194; s. ¢.
5 Ben. 164; s. c. 2 L. T. B. 188,

A power of attorney, not containing a power of substitution, does. not
confer any authority upon any other than the person duly constituted
agent thereby to act for the creditor, nor can any one else sign the name
of such agent to a paper on behalf of the creditor. In re CL N. Palmer,
3B. R. 301.

Only the bankrupt or a creditor can appear by attorney, unless where
a witness is made a party to a new collateral proceeding by being cited to
answer for an alleged contempt. In re Fredenburg, 1 B. R. 268; s. ec.
2 Ben. 183; in re Feinberg et al., 2 B. R. 475; s. c. 3 Ben. 162.

The register can not, at the instance of the bankrupt, inquire into the
authority given to an attorney-at-law who has been admitted to practice
in the circuit or district court. In re W. D. Hill, 1 B. R. 16; 3 «@ 1
Ben. 321.

The statement of an attorney in regard to his authority must be taken
as conclusive, unless some proof to the contrary is shown. Alabama R.
R. Co. v. Jones, 5 B. R. 97.

An attorney who has appeared for a defendant can not withdraw his
appearance so as to divest the court of jurisdiction, without the consent
of the court or prosecuting party. When an appearance is entered by
mistake, if the mistake is one of law, the party making it must abide by
its consequences. If it is one of fact, the court must pass upon the
existence and pertinence of the fact, and allow or refuse the withdrawal
upon notice to the prosecuting party. In re Ulrich et al 3 B. R. 183; s. ¢.
3 Ben. 355.

When an attorney unreasonably refuses to proceed, the case must pro-
ceed without him. In re Hyman, 2 B. R. 333; s. c. 36 How. Pr. 282; s. ¢.
3 Ben. 28.

Act oF 1898, Cu. 7%, § 65. Declaration and Payment of Divi-
dends.— (a) Dividends of an equal per centum shall be declared and
paid on all allowed claims, except such as have priority or are
secured,

(b) The first dividend shall be declared within thirty days after
the adjudication, if the money of the estate in excess of the amount
hecessary to pay the debts which have priority and such claims as

37
578 Tue Bankruptcy Law.

have not been, but probably will be, allowed equals five per centum
or more of such allowed claims. Dividends subsequent to the first
shall be declared upon like terms as the first and as often as the
amount shall equal ten per centum or more and upon closing the
estate. Dividends may be declared oftener and in smaller propor-
tions if the judge shall so order. * * *

(d) Whenever a person shall have been adjudged a bankrupt by
a court without the United States and also by a court of bankruptcy,
creditors residing within the United States shall first be paid a divi-
dend equal to that received in the court without the United States
by other creditors before creditors who have received a dividend in
‘such courts shall be paid any amounts.

(e) A claimant shall not be entitled to collect from a bankrupt
estate any greater amount than shall accrue pursuant to the pro-
visions of this Act.

Cu. 5, § 47. Meetings; Dividends; Duties of Trustees.— (a) Trus-
tees shall respectively * * * (5) furnish such information
concerning the estates of which they are trustees and their adminis-
tration as may be requested by parties in interest; (6) keep regular
accounts showing all amounts received and from what sources and all
amounts expended and on what accounts; (7) lay before the final
meeting of the creditors detailed statements of the administration of
the estates; (8) make final reports and file final accounts with the
courts fifteen days before the days fixed for the final meetings of
creditors; (9) pay dividends within ten days after they are declared
by the referees.

Act oF 1867, § 5096. Preparatory to the final dividend, the
assignee shall submit his account to the court and file the same,
and give notice to the creditors of such filing, and shall also give
notice that he will apply for a settlement of his account, and for a
discharge from all liability as assignee, at a time to be specified in
such notice, and at such time the court shall audit and pass the
accounts of the assignee, and the assignee shall, if required ‘by the
court, be examined as to the truth of his account, and if it is found
correct he shall thereby be discharged from all liability as assignee
to any creditor of the bankrupt. The court shall thereupon order
a dividend of the estate and effects, or of such part thereof, as it
sees fit, among such of the creditors as have proved their claims, in
proportion to the respective amount of their debts.

Statute revised — March 2, 1867, ch. 176, § 28, 14 Stat. 530.
(

DIvIDENDs. 59

Where no assets have come to the hands of the assignee, Form No. 35
is the account. Where assets have come to the hands of the assignee,
Forms Nos. 37 and 38 constitute the account. In re Bellamy, 1 B. R. 6;
s.c. 1 Ben. 390; s. c. 1 L. T. B. 22.

The return is a deposition, and the register is entitled to charge for
itas,such. In re John W. Dean, 1 B. R. 249; 5.¢ 11. T. B. 9.

If the assignee has been discharged without being substituted as a party
plaintiff to an action pending at the time of the filing of the petition, the
suit may be prosecuted in the name of the bankrupt for the use of who-
ever may be entitled to the proceeds. Conner v. Southern Express. Co.,
9B. R. 188; s. c. 42 Ga. 37.

Where a discharge of an assignee is inadvertently put on file, the dis-
trict court may order that it stand for naught and direct the assignee to
proceed in the discharge of his duties. Maybin v. Raymond, 15 B. R. 353;
s.c.4 A. L. T. (N. S.) 21.

When the assignee is discharged, the property that remains undistributed
reverts to the bankrupt without a reassignment. Dewey v. Moyer, 16
B. R. 1; 8. c. 16 N. Y. Supr. 473.

Act or 1898, Cu. 7, § 65. Dividends Paid not Affected by
Allowing Claims Subsequently.— (c) The rights of creditors who
have received dividends, or in whose favor final dividends have been
declared, shall not be affected by the proof and allowance of claims
subsequent to the date of such payment or declarations of dividends;
but the creditors proving and securing the allowance of such claims
shall be paid dividends equal in amount to those already received by
the other creditors if the estate equals so much before such other
creditors are paid any further dividends.

Act or 1867, § 5097. No dividend already declared shall be
disturbed by reason of debts being subsequently proved, but the
creditors proving such debts shall be entitled to a dividend equal
to those already received by the other creditors before any further
_payment is made to the latter.

Statute revised — March 2, 1867, ch. 176, § 28, 14 Stat. 530. Prior
Statute— Aug. 19, 1841, ch. 9, § 10, 5 Stat. 447.

§ 5098. If, by accident, mistake, or other cause, without fault
of the assignee, either or both of the second and third meetings
should not be held within the times limited, the court may, upon
motion of an interested party, order such meetings, with like effect
as to the validity of the proceedings as if the meeting had been
duly held.

Statute revised — March 2, 1867, ch. 176, § 28, 14 Stat. 530.
,

580 Tue Bankruptcy Law.

§ 5099. The assignee shall be allowed, and may retain out of
money in his hands, all the necessary disbursements made by him
in the discharge of his duty, and a reasonable compensation for his
services, in the discretion of the court. See Act of 1898, post, 766..

Statute revised — March 2, 1867, ch. 176, § 28, 14 Stat. 530. Prior
Statute — April 4, 1800, ch. 19, § 29, 2 Stat. 29.

Application for Allowance.— The assignee is not entitled to compensa-
tion beyond his commission without an order of the court. In re Jas. M,
Sawyer, 14 B. R. 241; s. c 4 Cent. L. J. 470.

This allowance is in the discretion of the court, and can be made only
upon a specific application to the court, and a showing that the disburse-
ments and services for which such allowance is asked were necessary
and are reasonable in amount. It is preferable that the hearing should
be had before the register, because, having the proceedings all before him,
he is better able to judge of the exigencies upon which the necessity for
the disbursements and services, and the reasonableness of the amount
charged depend. In re B. B. Noyes, 6 B. R. 277; in re Colwell, 15 B. R. 92,

This allowance can not be made until after the services have been
rendered, because, until the court is advised what the services have been,
it can not determine whether any particular amount of compensation
is or is not reasonable. If there is any money in the hands of the as-
signee, the allowance may be retained out of the money. If there is no
money in the hands of the assignee, the allowance may be secured by
withholding the discharge until the bankrupt pays it, on the ground that
until then he has not in all things conformed to his duty under the act. In
re Hughes, 1 B. R. 226; s. c. 2 Ben. 85; s.c. 1 L. T. B. 45; in re John W.
Dean, 1 B. R. 249; 8. a 1 L. T. B. 9.

The court will determine whether or not the disbursements are neces-
sary. In re Noakes, 1 B. R. 592.

The assignee is not at liberty to charge the assets of the estate in his
hands for professional and clerical services rendered him in the execu- »
tion of his trust until the same shall have been first duly allowed by
the court. In re B. B. Noyes, 6 B. R. 277.

The assignee may apply to the court, in the first instance, for authority
to employ professional or clerical assistance, but in such case the court
could do but little more than grant such authority in general terms,
leaving the instances in and to which such assistance may be employed
largely to the discretion of the assignee, as emergencies may arise mak-
ing such assistance necessary. Such authority the assignee already pos-
sesses under his general powers, subject, however, to the control of
the court. Such power must be used by him cautiously, and in the
exercise of a sound discretion, and with the understanding that any abuse
of it will be corrected by the court when applied to for authority to
charge the estate for such assistance. Ibid.

It would be difficult and impracticable to prescribe any general rule
defining the circumstances under which and the extent to which an
WHAT MAY BE ALLOWED. 581

assignee is at liberty to charge the assets of the estate in his hands for
professional and clerical services in the execution of his trust. This
must be left to be decided in each individual case according to its peculiar
exigencies. Ibid.

When the assignee desires to pay for any professional: or clerical as-
sistance out of funds in his hands belonging to the estate, before sub-
mitting his final account, he should apply to court for the allowance of
the same, or the person rendering the service may himself apply. In
cither case the assignee would be at liberty to charge the amount allowed
to the estate at once, on payment of the same. If no such application is
made, or if he has incurred liabilities, or made disbursements for such
assistance, or otherwise, in regard to which no allowance has been made,
or if he makes a claim other than his commissions for services, then the
assignee must accompany: his final account with a separate and distinct
application for an allowance of the same, and submit to such examination,
and furnish such proofs as may be required touching the necessity of
such disbursements and services and the reasonableness of the amounts
charged. Ibid.

The application for an allowance for professional or clerical assistance,
or disbursements, or personal services, should contain a brief statement
of the circumstances out of which the necessity for the disbursements,
and the professional or clerical assistance, and the assignee’s own ser-
vices arose, and from which the reasonableness of the amounts claimed
therefor may appear, and should lhe verified by the assignee. Ibid.

If the assignee in asking for authority to employ an attorney to prose-
cute a pending action omits to disclose to the court the fact that an at-
torney was already employed by the bankrupt to prosecute it upon a
contingent fee, the employment of an attorney who knows this fact is
not binding upon the court, and such attorney is only entitled to a
reasonable compensation. Maybin v. Raymond, 15 B. R. 353; s.¢. 4 A. L.
T. (N. S.) 21.

When the assignee intends to claim a compensation beyond the fees
allowed to him, he should give notice thereof in the notices for the
meeting at which the account is to be considered. In re Colwell, 15
B, R. 92.

If the application accompanies the final account, it will be laid before the
creditors at the same time, and if they assent, or fail to object to the
same, and the items and amounts appear to be just and reasonable, all
further inquiry may be dispensed with. In re B. B. Noyes, 6 B. R. 277.

What May be Allowed.— An allowance by the day is a convenient
mode of getting at a proper allowance for the services of an assignee,
but it is hardly a fair mode where the time charged for is very large,
and the estate very small. Five dollars is the maximum, but this should
not be allowed where the time charged for is unusually large and the
estate small. The assignee should also be held to the exercise of a. reason-
able judgment as to the amount of time to be devoted to the execution of
the trust. In re Jones, 9 B. R. 491.
582 Ture Bankruptoy Law.

The following decisions have been made in regard to fees and expenses
of assignees. The abbreviations used are as follows: a, allowed; d, dis-
allowed; r, reduced:

Drafting certificates of exempted property...... $5 00

Drafting acceptance and notice of appointment.. 8 00 | r to $5 00
Drafting petition for sale of property .......... 5 00

Publishing notice of appointment .............. 6 00a
Advertising sale of property ............-..66+- 1 50a

Recording assignment . ......... ce eee eee eee 1 Ba
Stationery, postage, ete. ......... scicavatstunaets ois eave 1 50a

Writing and delivering deed to purchaser....... 5 00d
Commission at the rate of 5 per cent............ 66 56a

For each day employed in selling property, collect-
ing accounts, examining papers, and preparing

BOVELTISCIMENES: ssi sce cciseatae: snaceceerarene YE erate waar sc 7 00 r to proper comp.
Services of auctioneer . ........... cee eee eee 2 00d
Attorney's, feeS 2 .csccwersace rds miedieses caine eee proper compensation.

In re Davenport, 3 B. R. 77; s. c. 2 L. T. B. 136; in re Pegues, 3 B. R. 80;
s.c.2 L. T. B. 186; in re Tulley, 3 B. R. 82; 5. c 2 L. T. B. 187.

The computation of the amount due to printers for advertising a sale
of real estate should be in accordance with the following rates:

Each square of eight lines, first time ...............0.c cece ee ceee $1 00
Each subsequent insertion, per SQUaYe ........... cece eee eee as 50
In re Wm. Downing, 3 B. R. 741, 748; s. c. 1 Dillon, 33; s. c.1L. & B. 207.

The assignee can not employ an auctioneer without first obtaining an
order authorizing such employment. In re Pegues, 3 B. R. 80; s. « 2
L. T. B. 136; in re Tulley, 3 B. R. 82; s. c. 2 L. T. B. 137.

The assignee must make the necessity for the aid of an auctioneer and
the reasonableness of the amount paid therefor to appear before he can
have a charge for such services allowed. In re Sweet et al., 9 B. R.
48; in re Pegues, 3 B. R. 80; s. c. 2 L. T. B. 186; in re Tulley, 3 B. R. 82;
s.¢. 2 L. T. B. 187.

Fees for the assistance of an attorney will not be allowed without the
most satisfactory evidence going to show the necessity for legal aid on
the part of the assignee, and the actual rendition of the services charged
for. In re Davenport, 3 B. Ri. 77; s. c. 2 L. T. B. 136; in re Pegues, 3
B. R. 80; s. c. 2 L. T. B. 136; in re Tulley, 3 B. R. 82; s.¢. 21, T. B.
187; in re Warshing, 5 B. R. 350; in re Colwell, 15 B. R. 92.

The compensation of the assignee’s attorney must be reasonable and
proportioned to the value of the estate. In re Priscilla G. Drake, 14
B. R. 150.

As a general rule, no charge for professional services of counsel can be
allowed against the assets in the hands of the assignee for payment in
full, and as expenses of the assignee in the administration of his trust,
which were rendered prior to the appointment of the assignee. Under
special circumstances, services may be included which are rendered as
far back as the adjudication of bankruptcy. In re New York Mail Steam-
ship Co., 2 B. R. 554.
WHAT MAY BE ALLOWED. 583

The assignee should pay all reasonable and necessary expenses in-
curred after the date of the filing of the petition, because his title relates
to that time, and he is the debtor by relation for all such expenses. The
bankrupt is bound to see that his estate is kept together, and preserved
for the assignee, and all the necessary charges for the fulfillment of his
duty must be allowed him. In re Fortune, 2 B. R. 662; s. c. Lowell, 306.

Assignees, except in cases of fraud, are affected with all the equities
which would affect the bankrupt, if he were asserting his rights and in-
terests in the property. But this principle can only operate on the title
‘as it stood when the property passed from the bankrupt to the assignee,
and not to any rights attempted to be obtained subsequently. Advances
and expenditures made to discharge liens, and preserve and benefit
the estate after the commencement of proceedings in bankruptcy, by a
party whose relation to the property justified such advances and ex-
penditures, are an equitable claim and lien upon the estate. In re T.
B. Gregg, 3 B. R. 529; s. c. 1 L. T. B. 298.

The bankruptcy court may, in the exercise of its equitable jurisdiction,
require the assignee to pay such charges as appear to have benefited the
estate in his hands, though incurred before the petition was filed, and not
protected by any absolute lien. Equitably considered, the assignee re-
ceives the benefit and should sustain the burden. In re Fortune, 2 B. R.
662; s. c. Lowell, 306.

A party who is employed in the prosecution of a claim for the debtor,
after the filing of an involuntary petition, and before the filing of the
voluntary petition under which the proceedings are held, is entitled to
priority out of the proceeds of such claim, when such employment was
made with the consent of the creditors. In re Nounnan & Co., 6 B. R.
579; s.c. 4 L. T. B. 228; s. c. 1 Utah Ter. 44.

The claim of a referee rests in contract between himself and the par-
ties before him. If he decides in favor of the defendant, who was de-
clared bankrupt after the taking of the testimony, but prior to the
rendering of the decision, his claim for fees is a debt which may be
proved in bankruptcy. Such claim is not entitled to priority, if the as-
signee has not become a party to the suit. Perhaps the assignee might
be justified in taking up the report and docketing judgment. And in
such case, the payment of the referee’s fees might be allowed as a
necessary disbursement. In re Louis Rosey, 43 How. Pr. 471.

The estate is liable for the keeping of cattle from the institution of
bankruptcy proceedings. In re J. C. Mitchell, 8 B. R. 47;8.¢c.5 0G. L. N.
271; Moran v. Bogert, 14 B. R. 393; s. c. 10 N. Y. 603; s. c. 16 Abb. Pr. (N.
8.) 308.

The sheriff has no claim for services rendered under executions issued
after the filing of the petition in bankruptcy. Platt v. Stewart, 11 B. R.
191,

The sheriff may be allowed a compensation, not exceeding his legal
fees, for services rendered under an execution issued prior to the filing
of the petition in bankruptcy, although the judgment and execution is not
alien, Ibid.
584 Tue Bankruptcy Law.

If the bankrupt was interested in the defense of a suit, and agreed
to pay one-half of the expense, although his share was only one-tenth, and
the assignee with knowledge of the contract appears and continues the
defense, he will be assumed to have acquiesced in the terms, and the
estate will be charged with that proportion of the expense. In re Samuel
H. Babcock, 1 W. & M. 26.

The usual and ordinary expenditures made in the delivery of the cargo
of a vessel owned by the bankrupt in order to enable her to free herself
from liability on her existing centract of affreightment, and to collect her
freight, are entitled to priority out of the freight and the proceeds of the
vessel coming into the hands of the assignee. The Trimountain, 5 Ben.
246.

The assignee may allow the bankrupt a reasonable sum for taking
charge of the property prior to his appointment. In re Benjamin B. Grant,
2 Story, 312.

The liability of the assignee for rent depends on whether he has
accepted the lease or not. Mere neglect by the assignee is of no im-
portance, for in the absence of a positive acceptance he is not liable.
In re Washburn, 11 B. R. 66. :

Rent for the use of premises to store goods of the bankrupt, from the
time of the commencement of proceedings in bankruptcy to the date of
surrender, should be paid by the assignee and charged, as a part of his
expenses. In re Walton, 1 B. R. 557: in re Appold, note, 1 B. R. 621; s. ¢.
6 Phila. 469; s. @ 1 L. T. B. 83; Walker v. Barton, 3 B. R. 265; in re
Merrifield, 3 B. R. 98; in re Laurie et al., 4 B. R. 32; s. c Lowell, 404;
Buckner v. Jewell, 14 B. R. 286; s. «. 2 Woods, 220. Contra, in re MeGrath
& Hunt, 5 B. R. 254; s. «. 5 Ben. 183.

As soon as the marshal takes possession, it is the duty of the land-
lord to apply to the court to have the goods removed and the premises
vacated by the marshal. In re McGrath & Hunt, 5 B. R. 254; 5 «
5 Ben. 183.

Where the assignee occupies the premises after the commencement
of the proceedings in bankruptcy, the landlord is entitled to be paid out
of the proceeds of the goods on the premises, whether they are suffi-
cient to pay the other expenses of the proceedings or not. Buckner v.
Jewell, 14 B. R. 286; s. c. 2 Woods, 220.

Compensation to the bankrupt for extraordinary services rendered in
order to make the property available can only be allowed as a matter of
grace by the creditors. In re Barnes Brother & Herron, 1 W. N. 21.

Expenses incurred by the assignee in putting property into a‘salable
condition may be allowed. Foster v. Ames. 2 B. R. 455; s. c. Lowell, 313.

Courts deal with assignees as the representatives of the bankrupt’s estate
from the commencement of proceedings in bankruptcy, and in the settle-
ment it is their duty to look after the payment of all proper expenses in-
curred subsequent to that date. Before they consent to a dividend to
the creditors, they should retain under their own control a sufficient sum
of the assets to cover expenses and costs, and their failure so to do —
such failure being of their own wrong, or the result of their own neg-
COMPENSATION OF TRUSTEES. 585

- lect — can not be made the basis of an appeal to the court to relieve them
from the consequences. If they do not pay such expenses, an order may
be passed requiring the payment of them, even after a dividend of all
the assets has been declared and paid. In re Dunham & ,Hawks, 7
Phila. 611.

When the sheriff, by an amicable arrangement, is allowed to rémain
jn possession of goods duly attached after the dissolution of the attach-
ment, the expenses so incurred should be allowed and paid in full as
incident to the settlement of the estate. In re David B. Williams, 2 B. R.
229: s. ec. 1 L. T. B. 107, 118; s. c. 8 A. L. Rev. 374.

No expenditure by a third party can be allowed unless it is shown that
it was necessary, or resulted in a benefit to the estate. In re George S.
Ward, 9 B. R. 349.

A State court has no jurisdiction to direct that a judgment in an
action against the assignee shall be paid in full out of the estate. In re
Central Bank of Brooklyn, 12 B. R. 286; s. c. 7 C. L. N. 871.

An agreement by the creditors to pay a person a certain sum in ad-
dition to his legal fees if he will act as assignee is illegal and void.
Cowing v. Altman, 1 T. & ©. 494; s.c. 12 N. Y. Supr. 556.

No State can tax the funds belonging to a bankrupt’s estate in the
hands of the assignee. In re John K. Booth, 14 B. R. 232.

Act or 1898, Cu. 5, § 48. Compensation of Trustees.— (a)
Trustees shall receive, as full compensation for their services, pay-
able after they are rendered, a fee of five dollars deposited with the
clerk at the time the petition is filed in each case, except when a
fee is not required from a voluntary bankrupt, and from estates
which they have administered, such commissions on sums to be paid
as dividends and commissions as may be allowed by the courts, not
to exceed three per centum on the first five thousand dollars or less,
two per centum on the second five thousand dollars or part thereof,
and one per centum on such sums in excess of ten thousand dollars.

(b) In the event of an estate being administered by three trustees
instead of one trustee or by successive trustees, the court shall appor-
tion the fees and commissions between them according to the ser-
vices actually rendered, so that there shall not be paid -to trustees
for the administering of any estate a greater amount than one trustee
would be entitled to.

(c) The court may, in its discretion, withhold all compensation
from any trustee who has been removed for cause.

Act oF 1867, § 5100. In addition to all expenses necessarily in-
curred by him in the execution of his trust, in any case, the assignee
shall be entitled to an allowance for his services in such case on all
moneys received and paid out by him therein, for any sum not ex-
586 Tue Bankruptcy Law.

ceeding one thousand dollars, five per centum thereon; for any
larger sum, not exceeding five thousand dollars, two and a half
per centum on the excess over one thousand dollars; and for any
larger sum, one per centum on the excess over five thousand dollars.
If, at any time, there is not in his hands a sufficient amount of
money to defray the necessary expenses required for the further
execution of his trust, he shall not be obliged to proceed therein
until the necessary funds are advanced or satisfactorily secured to
him.

Statute revised — March 2, 1867, ch. 176, § 28, 14 Stat. 430.

This clause does not conflict with the provision in the preceding section,
except so far, perhaps, as to limit the allowance for receiving and paying
out money to a certain per centum, graduated by the amount. In re John
W. Dean, 1 B. R. 249; 5. ce. 1 L. T. B. 9.

The commission of five per cent. can only be allowed on the amount of
debt canceled, and not on the amount of debt proved. In re Davenport,
3B. R. 77; s.¢. 2 L. T. B. 136. ;

When the assignee resigns, he may be allowed his commissions on the
moneys received and paid, or to be paid. But it would not be just or
reasonable to allow him commissions based upon the speculative idea that
possibly, if continued in office and permitted, for the mere purpose of
earning commissions, to litigate the validity of a mortgage against the
will of all who are interested in that question, he might establish its
invalidity. The bankruptcy law was not enacted for the purpose of
enabling an assignee to earn fees by unnecessary litigation, where no
interest of the parties to be affected thereby requires it, and where, on
the contrary, every beneficial interest involved therein forbids it. In re
Sacchi, 6 B. R. 497; s. c. 43 How. Pr. 250.

When the register takes possession of property and sells it under a
special order of court, he may receive a commission similar to that al-
lowed to assignees under this section. In re Loder Brothers, 2 B. R. 517;
& @ 3 Ben. 211; s. & 1 In T. B. 159.

The necessary funds for the performance of a duty are to be advanced
by the party for whom the services are to be performed. In re Hughes, 1
B. R. 226; s. c. 2 Ben. 85; sc. 1 L. T. B. 45.

Act oF 1898, Cu. 7%, * * * § 63. Debts which May be
Proved.— (a) Debts of the bankrupt may be proved and allowed
against his estate which are (1) a fixed liability, as evidenced by a
judgment or an instrument in writing, absolutely owing at the time
of the filing of the petition against him, whether then payable or
not, with any interest thereon which would have been recoverable
at that date or with a rebate of interest upon such as were not then
payable and did not bear interest; (2) due as costs taxable against
DEBTS. 587

an involuntary bankrupt who was at the time of the filing of the
petition against him plaintiff in a cause of action which would pass
to the trustee and which the trustee declines to prosecute after
notice; (3) founded upon a claim for taxable costs incurred in good
faith by a creditor before the filing of the petition in an action to
recover a provable debt; (4) founded upon an open account, or upon
a contract express or implied; and (5) founded upon provable debts
reduced to judgments after the filing of the petition and before the
consideration of the bankrupt’s application for a discharge, less costs
incurred and interests accrued after the filing of the petition and
up to the time of the entry of such judgments.

(b) Unliquidated claims against the bankrupt may, pursuant to
application to the court, be liquidated in such manner as it shall
direct, and may thereafter be proved and allowed against his estate.

In ascertaining the validity of the docket entry of a judgment, the
whole entry is to be looked at, and if from the whole the amount and date
of the judgment. the parties and the court in which it was rendered appear,
the entry is sufficient. In re Hamilton Boyd, 16 B. R. 207.

While a judgment record can not be resorted to in order to supply omis-
sious in the docket entry, it may be examined to test the validity of such
entry, Ibid.

No debt can be proved on which an action could not be maintained
against the bankrupt in the State where the petition is filed, in case bank-
tuptcy proceedings were not instituted. In re Doty, 16 B. R. 202.

A judgment against the bankrupt existing at time his petition is filed,
whether founded upon contract or not, is a provable debt. Howland v.
Carson, 16 B. R. 872.

Where a firm, which has indorsed a note of one of the partners, becomes
bankrupt before maturity of such note, protest and notice to firm of its
dishonor not necessary in order to prove it against the joint assets. Hx
parte Russell, in re Paul & Son, 16 B. R. 476.

Holder of bill or note may prove it in full against the party primarily
Hable upon it, notwithstanding he may have received a part or all of it
from a surety or quasi surety, but must give credit upon his claims for
any property of the principal which came into his hands through a com-
Position with such surety, who in this case was a factor of the principal.
Ex parte Harris et al., in re Cochrane, Jr., 16 B. R. 432.

Entries of accommodation notes in the books of the bankrupt against
the payee will not estop the bankrupt nor his trustee from disputing the
claim of the holder of such note. In re Dodge, 17 B. R. 504.

Making notes payable to another party has never been held such a rep-
resentation as estops the maker from showing that they were accommoda-
tion paper, even in favor of one to whom the payee has represented them
to be business paper and who took them in good faith on such representa-
tions. Ibid.
588 Tue Bankruptcy Law.

The notes in this case were held usurious and void and were governed
by the law of New York, where they were executed, and where they were
discounted by the Connecticut firm, which paid for same by sending check
on a New York bank. Ibid.

The trustee is not estopped from disputing the claim of the holder of
the notes by reason of said trustee’s having proved them against the estate
of the payee in bankruptcy, when the holder has not, upon the faith
thereof, parted with his money or changed his position as to such notes,
Ibid.

Where one member of a firm makes representations to the purchaser of
commercial paper bearing the firm name, to effect that it is business
paper, the firm or its assignee in bankruptcy is estopped from setting up
that it is accommodation paper and void for usury. In re Many &
Marshall, 17 B. R. 514.

Where an assignee moves to expunge a claim on ground of usury, al-
leging that the promissory note on which the claim is founded was
accommodation paper, and took its inception in hands of present holder,
who obtained it at discount of more than lawful rate of interest, Held,
that it must be shown clearly that the note was accommodation paper.
Ibid.

Where all members of one firm are partners of another firm, they can
not prove its debt against the latter. In re Savage, 16 B. R. 368.

Evidence is always admissible between principal and surety to show
what their equitable rights toward each other are. In re May & Co., 17
B. R. 192.

The bankrupts made a certain note for $6,000 for accommodation of
one H., who indorsed and procured its discount at the bank. The bank,
before note came due, had knowledge of purpose for which it was given.
The bank discounted H.’s note for $5,000, and took his check for $6,000.
The last note not being indorsed the bank held the old note, and sought to
prove it against the estate of bankrupts. Held, the bankrupts were
sureties, and were discharged by extension of time to H. without their
consent. The Valley Nat. Bk. v. Meyers, 17 B. R. 257.

It seems that notes given by factors, by way of advances to their prin-
cipals, on credit of goods consigned, are business paper and not accommo-
dation paper. In re Many & Marshall, 17 B. R.,514.

Indorser of a note is, in any event, liable to his indorsee only for amount
actually paid by the indorsee, with lawful interest thereon, and not for the
face value of note. Ibid.

Claim of one of the creditors was upon two notes given by the bankrupt
to a firm of which the claimant was a member, for debt due to the firm
secured by a pledge of stock. The firm afterward surrendered to the bank-
rupt a large number of notes, and signed an agreement to take up and
surrender others, including the ones in question, and received from the
bankrupt a cash payment, which, it was agreed, with the stock held by
them, should be taken in satisfaction of the debt. Held, that the notes
were paid, In re Ford & Co,, 18 B. R. 426,
Dersts. 589

The statute of limitations of the State where the bankrupt resides ap-
plies to the proof of debts against his estate; and such statute continues to
run after adjudication in bankruptcy, and, therefore, no claim can be
proved or enforced against such estate unless an action could be maintained
thereon in the courts of such State. Nicholas v. Murray, 18 B. R. 469.

But a debt against which the statute of limitations has run, but which
is included in the debtor’s schedules, is provable in bankruptcy. In re
Hertzog, 18 B. R. 526.

In an action brought by the bankrupt against one B., the defendants in-
terposed a counterclaim. The bankrupt having been adjudicated before
the trial of the action, B. offered no evidence in support of his defense,
and judgment was rendered against him. Held, that he was not precluded
from proving his claim in the bankruptcy proceedings. In re The People’s
Safe Dep., etc., Inst., 18 B. R. 498.

Bankrupts drew drafts upon their correspondents (who accepted same)
against consignments which bankrupts agreed to, but failed to make.
After dishonor of the drafts, the holder received from acceptor sixty per
cent. of the amount due on them in full release of all claims against such
acceptors, but without prejudice to his rights against bankrupt. Held,
that the holder of the drafts had a right to prove against the bankrupts for
the whole amount of the drafts. In re Baxter & Ralston, 18 B. R. 497.

The bankrupt had made two subscriptions to an endowment fund and
a building fund of Denison University. After the second subscription the
bankrupt executed and delivered to the university a note secured by mort-
gage, the amount being made up of his former note, the balance due on his
second subscription, and money borrowed of the university. In a proceed-
ing by the assignee to settle and declare the amount and priority of liens,
and for a sale of the bankrupt’s property, a supplementary petition was
filed asking that so much of the university’s claim as was made up of
voluntary gifts of the bankrupt be set aside. Held, that the claim was
valid; that if it was founded upon the original subscription it would be
good; but in this case the original subscription had been settled, satisfied
and paid by the notes, and that after such changes and settlements every
Presumption is in favor of the transaction, and the court will not go bebind
it. Sturgis v. Colby, 18 B. R. 168.

Where an attachment lien fails in consequence of proceedings in bank-
ruptcy, the attaching creditor is not entitled to have his costs allowed and
paid out of the bankrupt’s estate unless it is clearly shown that his
design was to employ the attachment in aid of bankruptcy proceedings,
and that the creditors generally were benefited thereby. In re Irons &
Coon, 18 B. R. 95.

The bankrupt, prior to commencement of the proceedings, purchased
goods of one Q., and gave therefor his notes secured by mortgage on the
goods, under an agreement to sell the goods and apply the proceeds to the
payment of the notes, even before maturity, if sales were brisk enough.
He sold part of the goods, and appropriated the proceeds to his own use,
and the remainder came into the hands of the assignee. Held, that the
bankrupt was in effect agent for sale of the goods; that the goods remain-

-
590 Tur Bangkruprcy Law.

ing unsold should go to Q.; and that he should be allowed to prove as an
unsecured creditor tor the goods sold by the bankrupt and misappropriated,
on surrendering the notes and mortgage. Overman, Assignee, v. Quick, 17
B. R. 235.

A. contract for future delivery of personal property, which the seller
has not when the contract is made, nor any means of getting it, is not void
for illegality. Clark, Assignee, v. Foss, 17 B. R. 261.

Secret intention of one of the parties, uncommunicated to the other,
not to fulfill his contract, is not enough to make the transaction illegal.
The intent that it should be a mere betting on the market, without any
expectation of actual performance, must be mutual and constitute an in-
tegral part of the real contract, in order to vitiate it. Ibid.

If contracts were valid in their inception, and not tainted with any
gambling intent or device, a subsequent mutual settlement by the parties,
which took the place of actual performance, can not have the retroactive
effect of making them void for illegality. Ibid.

A bankrupt corporation occupied a store under a lease for a term of
years, at a yearly stipulated rent. A petition was filed against the cor-
poration, and afterward an assignee appointed, who about five months
after date of filing of petition took possession of the goods and removed
them from the store. He never had actual or constructive possession of
the store, and no sales were made therein. The landlord claims for rent
of premises from time of the filing of the petition up to time of removal
by assignee. Held, that the assignee never became assignee of the lease,
and that the landlord can only claim as against the estate for the use
and occupation of the premises as a place of storage or safe-keeping, and
the court fixed as a reasonable sum for same an amount about one-fourth
that claimed by the bankrupt. In re Lucius Hart Mfg. Co., 17 B. R.
459.

A, provable claim which has not been proved may be _ prose-
cuted to final judgment in an action against bankrupt, if assignee
does not intervene and no motion for a stay of proceedings is made. Hol-
land v. Martin, 18 B. R. 359. .

Claim for alimony is not a provable debt, whether accruing before or
subsequent to commencement of bankruptcy proceedings, and a proceed-
ing to enforce its payment can not properly be stayed by a bankruptcy -
court. In re Lachemeyer, 18 B. R. 270.

Judgment recovered pending bankruptcy proceeding, in an action pre-
viously begun on a provable debt, is itself provable, and a creditor having
such a judgment has an interest in the question of discharge, and a right
to be heard thereon. In re Stansfield, 16 B. R. 268.

Interest upon a judgment obtained in an action prosecuted by leave
of the court is allowable. In re Bousfield & Poole Mfg. Co., 17 B. R. 153.

A judgment obtained in such a case is valid, though assignee is not made
a party. Ibid.

A claim by retired partners for unliquidated damages, by reason of
their liability under provision of a lease to the firm, that in case of failure
to perform the lessors may re-enter and relet the premises, at the risk of
DeEsBrTs. 591

the lessees, who should remain liable for the rent and credited with sums
actually realized, can not be proved against estate of their former partner.
Ex parte Lake et al., in re Whiting et al. 16 B. R. 497.

It is no objection to a proof that a court or jury may find difficulty in
assessing damages for a breach of an absolutely broken contract. So,
also, as to contingent debts, where the contingency happens before the
close of the bankruptcy. Ex parte Pollard, 17 B. R. 228.

Where a contract of employment was to run for ten years, and the
parties bound themselves in the sum of $10,000 by way of liquidated
damages, and it appears that in a prior contract the sum had been called
both a penalty and liquidated damages, Held, that it was a penalty, Ibid.

Act oF 1898, Cu. 7, § 64. Debts which Have Priority— (a) The
court shall order the trustee to pay all taxes legally due and owing
by the bankrupt to the United States, State, county, district, or
municipality in advance of the payment of dividends to creditors,
and upon filing the receipts of the proper public officers for such
payment he shall be credited with the amount thereof, and in case
any question arises as to the amount or legality of any such tax
the same shall be heard and determined by the court.

(b) The debts to have priority, except as herein provided, and to
be paid in full out of bankrupt estates, and the order of payment
shall be (1) the actual and necessary cost of preserving the estate
subsequent to filing the petition; (2) the filing fees paid by creditors
in involuntary cases; (3) the cost of administration, including the
fees and mileage payable to witnesses as now or hereafter provided
by the laws of the United States, and one reasonable attorney’s fee,
for the professional services actually rendered, irrespective of the
number of attorneys employed, to the petitioning creditors in in-
voluntary cases, to the bankrupt in involuntary cases while perform-
ing the duties herein prescribed, and to the bankrupt in voluntary
cases, as the court may allow; (4) wages due to workmen, clerks, or
servants which have been earned within three months before the
date of the commencement of proceedings, not to exceed three hun-
dred dollars to each claimant; and (5) debts owing to any person
who by the laws of the States or the United States is entitled to
priority.

(c) In the event of the confirmation of a composition being set
aside, or a discharge revoked, the property acquired by the bankrupt
in addition to his estate at the time the composition was confirmed
or the adjudication was made shall be applied to the payment in
full of the claims of creditors for property sold to him on credit,
592 THE Bangruptcy Law.

in good faith, while such composition or discharge was in force, and
the residue, if any, shall be applied to the payment of the debts which
were owing at the time of the adjudication.

Funds in hands of assignee may be taxed by the State. In re Mitchell,
ex parte Sherwin, 16 B. R. 535.

A creditor, who is entitled to preference, can only have a priority
in payment out of what assets the debtor has which would go to this
assignee, and where it appears that there are no assets of any value he
can not demand that his claim shall be paid in full before confirmation
of a composition, or that such composition shall be subject to his debt.
But he may examine the debtor and other witnesses in the composition
proceedings to show that the debtor has other assets. In re Chamberlain,
17 B. R. 49.

Under the law of 1867, debts due the United States and the States were
entitled to priority. What are such debts? In re Chamberlain, 17 B. R.
49; in re Bousfield & Poole Mfg. Co., 17 B. R. 153; in re Miller, 17 B. R. 402,

Where an adjudication has been had, and an assignee under the State
law has surrendered the estate in his hands, the rights of creditors are to
be determined by the court under the provisions of the bankruptcy law,
not under those of the State law. In re Bousfield & Poole Mfg. Co., 17
B. R. 153.

Where property taken by assignee is aharged with a lien, the reasonable
cost of keeping and disposing of it, including the assignee’s fees (law of
1867), should be charged upon it. No charge can be allowed for services
ef an auctioneer, unless it be shown that such services were necessary;
nor can such fund be charged with attorney’s fees for services rendered
to assignee in a contest with the lienor respecting such property. In re
Peabody, 16 B. R. 348.

Under the law of 1867, it was held that where an insolvent who has made
a general assignment for the benefit of creditors is afterward adjudged
bankrupt, the assignee under the assignment is entitled to his disburse-
ments legitimately made in the execution of this trust, but is not entitled
to priority as to his compensation as such assignee, nor as to attorney’s fees
incurred in connection with the assignment. As to such items he stands
in the same position as other creditors, and must prove his claim. In re
Geo. Lains, 16 B. R. 168.

Petitioners had prior to the commencement of proceedings delivered to
the bankrupt certain wool which he was to manufacture into cloth for
them. The assignee, under direction of the court, completed the manu-
facture of the cloth and sold it. Petitioners demanded of the assignee the
unfinished cloth and yarn and wool belonging to them, offering to pay for
the labor and materials expended thereon. Upon refusal, they brought suit
against the assignee in trover and recovered judgment for their damages,
with interest and costs. The recovery was afterward limited to the
amount realized by the assignee on the sale, less the cost of the labor and
material put into the goods by the bankrupt and the assignee. The assets
Dersts. 593.

being insufficient to pay this judgment in full, after payment of the fees,
costs and expenses of the assignee incurred in course of the proceedings
and in his administration of the estate, petitioners asked that the judg-
ment be paid in full, or so far as the assets would go toward its payment.
Held, that petitioners, having elected to sue in trover for damages, waived
any claim they might have had to the moneys in the assignee’s hands as
their own moneys, and were not entitled to priority over those expenses
which are expressly preferred by the statute. In re Oberhoffer, 17 B. R.
546.

A claim by a landlord for use and occupation of premises by the marshal
for keeping and storing the goods, and the costs on reference to adjust the
amount vf claim, are costs of administration, to be paid in full if the
assets are sufficient; if not, to be paid pro rata with all other expenses of
administration of the same class. In re Hoagland, 18 B. R. 530.

Costs of a claimant upon a reference to have the claim declared and
enforced are to be paid out of the balance remaining after payment of all
the expenses of administration. Ibid.

The assignee can not pay a claim for use and occupation of premises
without an order of the court, and without ascertaining whether the assets
are sufficient to discharge all the expenses of administration of the same
class. Ibid.

Where there are debts due workmen, which are privileged, the assignee
has no right to waste their money in litigation for supposed benefit of
general creditors. In re J. M. Sawyer, 16 B. R. 460.

If the general creditors consent, the assignee should pay the privileged
debts as soon as he realizes sufficient money for that purpose. Ibid.

Claimant had been employed by the bankrupts for the term of one year,
but was discharged at expiration of six months, and for a long time there-
after was unable to procure employment. He was paid for the time he
actually worked. He was not entitled to priority in the payment of the
sum claimed by him as wages for the time he was unemployed. In re
Perrear & La Croix, 17 B. R. 461.

A claim of the landlord for rent for which, by the laws of the State, he
had a lien on goods which have been seized by the marshal, is a preferred
claim so far as the proceeds of such goods will go. In re Hoagland, 18
B, RB, 530.

Act oF 1867, § 5101. In the order for a dividend, the following:
claims shall ‘be entitled to priority, and to be first paid in full, in
the following order:

First. The fees, costs, (a) and expenses of suits, and of the several
proceedings in ‘bankruptcy under this Title, and for the custody of
property, as herein provided,

Second. All debts due (b) to the United States, and all taxes and
assessments under the laws thereof.

38
594 Tur Bankruptcy Law.

Third. All debts due to the State (c) in which the proceedings
in bankruptcy are pending, and all taxes and assessments made under
the laws thereof.

Fourth. Wages (d) due to any operative, clerk, or house-servant,
to an amount not exceeding fifty dollars, for labor performed within
six months next preceding the first publication of the notice of pro-
ceedings in bankruptcy.

Fifth. All debts due to any persons (e) who, by the laws of the
United States, are, or may be, entitled to a priority in like manner
as if the provisions of this Title had not been adopted. But nothing
contained in this Title shall interfere with the assessment and col-
lection of taxes by the authority of the United States or any State.

Statute revised — March 2, 1867, ch. 176, § 28, 14 Stat. 530. Prior
Statutes — April 4, 1800, ch. 19, § 62, 2 Stat. 36; Aug. 19, 1841, ch. 9, § 5,
5 Stat. 444.

Costs and Expenses in Voluntary Bankruptcy.— (a) The fees, costs,
‘and expenses named in the first of the five subdivisions are those incurred
by and due to the register, clerk, assignee, and marshal, and not those
incurred by the bankrupt, or due to his attorney in the proceedings for
‘services or disbursements in connection with such proceedings in voluntary
bankruptcy. In re Heirschberg, 1 B. R. 642; s. c. 2 Ben. 466; in re New
Lamp Chimney Co., 2 A. L. J. 343; in re Hale & Wiggins, 5 Law Rep.
403; in re R. Frederick Gies, 12 B. R. 179; s. ec 7 C. L. N. 379. Contra,
Kennedy et al., 20 Pitts. L. J. 193.

Money advanced as security for the fees of the register, marshal, and
clerk is not to be refunded to the bankrupt. It is part of the bankrupt’s
estate, and should be credited to the assignee. Anon., 1 B. R. 123.

The bankrupt’s attorney may be allowed the money advanced to pay the
marshal for his fees in giving the notices required by law. In re R.
Frederick Gies, 12 B. R. 179; s.¢. 7 C. L. N. 379.

An application by the attorney for the bankrupt to have certain sums
advanced as costs in the case refunded to him out of the estate, should be
by petition. In re Myron Rosenberg, 3 B. R. 73.

In cases of voluntary bankruptcy, the docket fee of $20 to the attorney
‘of the successful party is not allowable. Gordon, McMillan & Co. V¥.
Scott & Allen, 2 B. R. 86; s.c.1L. T. B. 99; s. ec 7 A. L. Reg. 749.

An attorney is a general creditor in respect to services rendered in the
preparation of the petition and schedules, and consultation therefor, and
must prove his debt in the usual form, and take his dividend in concur-
rence with the other creditors of the bankrupt. In re Jaycox & Green,
7 iB. R. 140.

In order to justify an order that the assignee pay the claim of an
attorney for services rendered to the bankrupt after the adjudication, it
must be clearly shown that the alleged services were properly and neces-
sarily rendered for the purpose of benefiting or preserving the estate of the
Costs anD Expensss. 595

bankrupt in the interest of the general creditors, and not in the interest of
any creditor or class of creditors. It is the duty of the bankrupt to see
that his property is preserved until the appointment of an assignee, and if
it is necessary that other persons should render similar services, the extent
and value and necessity of such services should be clearly shown. Ibid.

If there is no satisfactory proof upon which the court can fix and allow
any specific sum for services rendered by an attorney after the adjudica-
tion, the petition may be dismissed, without prejudice to any subsequent
application for payment for services necessarily rendered in protecting the
estate of the bankrupt. Ibid.

All the costs of the whole proceedings in bankruptcy are not to be paid
before the proceeds of the sale of property subject to a lien can be applied
toward the payment of the lien. The only costs that are entitled to
priority out of that fund are the costs incurred in enforcing the lien. In re
Hambright, 2 B. R. 498; s. c. 2 L. T. B. 61; s. c. 1 CO. L. N. 201; in re.
Whitehead, 2 B. R, 599; in re Davenport, 3 B. R. 77; s. ce 2 L. T. B. 136.

No fee can be allowed out of the fund to the counsel of a lien creditor
for services rendered in supporting the lien against the assignee. In re
Hope Mining Co., 2 Saw. 351.

Costs and Expenses in Involuntary Bankruptcy.— The reasonable ex-
penses incurred by the petitioning creditor in the prosecution of the pe-
tion may be allowed out of the fund. In re Mittledorfer, 3 B. R. 1; s «
Chase, 288; in re Schwab, 2 B. R. 488; s. c. 3 Ben. 231; s.c. 2 L. T. By
106; in re Geo. Chandler, 2 Mich. Law, 8. ;

In involuntary proceedings, counsel fees for the attorneys of the pe-
titioning creditors may be allowed out of the estate. The creditors who
seek to share in the estate must bear their due proportion of the costs.
Section 824 is only intended to reach taxable costs, and may have its full
effect without being construed to take away the power from the court to
allow counsel fees to successful creditors in appropriate cases out of funds
that have been gained by their diligence. Even since the passage of that
statute, coutisel fees for all parties have, in some cases, been allowed out
of the fund. Without such an allowance, there can not be such a due
distribution of the assets as is provided for by the statute. In re Daniel
Williams, 2 B. R. 83; in re O’Hara, 1 L. T. B. 123; s. c. 8 A. L. Reg. 113;
8. ¢. 16 Pitts. L. J. 184; in re Waite & Crocker, 2 B. R. 452; s. c. Lowell,
821; s. c. 2 L. T. B. 77; in re Schwab, 2 B. R. 488; s. c. 3 Ben. 231; s. c. 2
L, T. B. 106; in re Mittledorfer et al., 3 B. R. 1; 8s. c. Chase, 288; in re New
York Mail Steamship Co., 2 B. R. 554; s. c. 3 B. R. 627; s. c. 7 Blatch. 178;
in re Eugene Comstock, 9 B. R. 88; in re John G. King, 4 Biss. 319; in re
Geo. Chandler, 2 Mich. Law, 8.

What are reasonable expenses must depend upon the circumstances of
each case. The expression has reference to necessary disbursements made
in connection with the steps proper to be taken by the petitioning creditor
preliminary to, and attendant upon, the adjudication of bankruptcy. No
allowance can be made to the petitioning creditor for his time and ser-
vices. In re Mead & Co., 8 Phila. 174; in re John G. King, 4 Biss. 319.
596° Tue BANKRUPTCY Law.

Allowance for counsel fees should be guarded by the most cautious re-
gard for the rights and interests of the creditors at large, lest, under the
form of necessary expenses, undue liberality to counsel should be sanc-
tioned in reduction of the fund. In re New York Mail Steamship Co., 3
B. R. 627; s. ec. 7 Blatch. 178; Triplett v. Hanley, 1 Dillon, 217.

Where the estate is small, charges for services, whether professional or
otherwise, will be limited to what the court considers a bare compensa-
tion. In re Jones, 9 B. R. 491.

Fifty dollars may be allowed to the attorney for the petitioning cred-
itor, and twenty-five dollars for the necessary preliminary investigations.
Ibid.

The allowance should only be for services rendered by the attorney in
proceedings for the common benefit of all the creditors. Where the peti-
tioning creditor attempts, after adjudication, to exclude other creditors
from participating either in the choice of assignee, or in the assets of the
estate, and fails, the allowance will be refused. The question is not
whether the attorney has acted with a proper sense of delicacy and honor,
but whether the petitioning creditor has incurred a liability in instituting
proceedings for the pecuniary advantage of the other creditors. A rea-
sonable fee for filing the petition and obtaining the order of adjudication
should be allowed. When there is no denial and no contest, $60 is a
reasonable compensation for such services. In re Mead & Co., 8 Phila
174.

One thousand dollars has been considered too extravagant, and the allow-
ance refused, unless the assignee and the bankrupt, and all the creditors
who had proved their debts, would assent thereto in writing. In re Sanger
& Scott, 5 B. R. 54.

After adjudication the petitioning creditor has no preference over any
other creditor as to the allowance of expenses incurred by him in connec-
tion with the proceedings. In re Eugene Comstock et al., 9 B. R. 88.

The expenses of a creditor in attending meetings of creditors to vote for
assignee or otherwise are not allowed as charges against the estate. In
re Geo. S. Ward, 9 B. R. 349.

The register can not entertain an application for such an allowance.
There must be a petition to the court by the party, setting out the facts
and asking the relief desired. In re Dibblee et al. 3 B. R. 754; s. c. 4 Ben.
137.

The petition may be filed with the register, and upon proper notice to
the assignee, the register may take such testimony as may be offered on
both sides, and then, if desired by either party, may certify the whole
matter to the judge for decision. The register has the power to take the
testimony without a special order from the judge. In re Julius A. Robin-
son, 43 How. Pr. 25.

An opportunity should be allowed to the assignee to examine and con-
test the claim or any items thereof. In re Mittledorfer et al., 3 B. R. 1;
8. c. Chase, 288; in re Henry B. Montgomery, 3 B. R. 426; s. c. 3 Ben.
364; in re Hale & Wiggins, 5 Law Rep. 403.
Costs AND EXPENSES. 597

Only the fees for two counsels can generally be allowed. In re Waite &
Crocker, 2 B. R. 452; s. c. Lowell, 321; s. c. 2 lL. T. B. 77; in re New York
Mail Steamship Co., 2 B. R. 554.

The court can not allow the repayment of the gross sum advanced by the
petitioning creditor to secure the fees of the register, marshal, and clerk,
but it may direct the assignee to pay those fees out of the estate, but they
must be regular bills of legal fees properly taxed, and not the gross sum
advanced. In re J. P. & J. Smith, 2 Ben, 122.

The amount which the bankrupt gets by exemption is in most cases
triding, and in no case is it so much but that he and his family are
dependent for support on his personal efforts and earnings. Thus the law
takes the bankrupt’s property, and leaves him in no condition to pay an
attorney for services rendered in contesting any doubtful questions as to
the acts of bankruptcy charged in the petition, and yet the same law gives
to the debtor the right to oppose before a judge or jury the petition for
adjudication. When the debtor is given the right to appear and defend,
and when the exercise of that right depends on the right to have enough
of his property appropriated to pay the expenses incident to appearing and
defending, the court has the power, and of right ought to allow such
expenses aS nay be just and proper, to be paid from the assets in the
hands of the assignee. Before allowing anything, the court should be
satisfied that the defense was fairly justified, and should scrutinize the
charges made for such defense. Twenty-five dollars may be allowed for
resisting the adjudication. For services in securing the allowance of an
exemption refused by the assignee, the sum of $25 has been allowed.
In re Comstock & Young, 5 B. R. 191; s. c. 2 L. T. B. 186; in re Portsmouth
Savings Fund Society, 11 B. R. 303; in re John Mansfield, 6 Ben. 28.

The payment of $1,500 by, the debtor to his attorney after the filing of
the petition is excessive, when the attorney knows that it is useless to
oppose the proceeding, and the amount may be recovered by the assignee,
An allowance of $200 may be made for all necessary advice, expenditures,
and services. Triplett v. Hanley, 1 Dillon, 217.

Services rendered by counsel for the bankrupt in opposing the petition
in involuntary proceedings are rendered prior to the adjudication of
bankruptcy, and the claim for them is provable like an ordinary debt.
The services were not rendered to the assignees. In re New York Mail
Steamship Oo., 2 B. R. 74.

In order to obtain an allowance out of the fund, it must be shown that
the efforts of counsel were not directed toward obtaining delay or hinder-
ing the bankruptcy proceedings. In re John Mansfield, 6 Ben. 284.

When it is shown that the services rendered by the counsel for the
bankrupt saved the estate considerable expense, and expedited the con-
version of the same into money, the counsel may be allowed compensation
for such services out of the funds in the hands of the assignee. In re
Henry B. Montgomery, 3 B. R. 426; s. c. 3 Ben. 364; in re Abraham B,
Clark, 43 How. Pr. 70; in re John Mansfield, 6 Ben. 284.

A bill by counsel for the bankrupt, for services in attending on the re»
turn of the order to show cause, and resisting the grounds on which the
598 Tur Bankruptcy Law.

adjudication was sought, and also for services in preparing the inventories
and schedules, is not chargeable against the estate of the bankrupt in the
hands of the assignee. In re Bigelow et al., 2 B. R. 371; s. c. 3 Ben. 146;
sc. 2 lL, T. B. 41.

Where a firm is in bankruptcy, $100 may be allowed to an attorney as
compensation for preparing the individual and partnership schedules. In
re Andrews & Jones, 11 B. R. 59; s. c. 22 Pitts. L. J. 41.

Claims Entitled to Priority.— (b) No expense for litigation can be
allowed until the debts entitled to priority are paid in full. In re Jas. M.
Sawyer, 14 B. R. 241; s. « 4 Cent. L. J. 470.

The priority allowed by section 3466 attaches to a penalty incurred. in
selling matches without stamps. In re Louis H. Rosey, 8 B. R. 509; s. «
6 Ben. 187; U. 8. v. Fisher, 2 Cranch, 358.

The right to priority is not waived by proving the debt. This section in-
troduced an exception from the general rule, and leaves to the United
States the right to full satisfaction of their debts, to the exclusion of other
creditors. Harrison v. Sterry, 5 Cranch, 289; s. c. Bee, 244.

An assignment which was made under circumstances that make it void
under the bankruptcy law, is no bar to the claim of the United States
to priority. Ibid.

Where the United States holds a claim against a firm of which some
of the partners are aliens, it may claim priority of payment out of the
estate of the resident individual partners without first resorting to the
partnership effects. Lewis v. U.S., 14 B. R. 64; s. ¢. 13 B. R. 33; 8. ¢. 2 W.
N. 31; s. ¢. 32 Leg. Int. 371.

The United States is entitled to priority of payment without regard to
the form of the indebtedness. Lewis v. U. S., 13 B. R. 33; 14 B. R. 64;5.¢
92 U. S. 618.

The United States need not exhaust collaterals held by it before claim-
ing priority of payment out of a bankrupt estate. Ibid.

The United States is entitled to priority, although it does not prove its
claims. Ibid. :

If a party purchases an imported article, duty free, and is subsequently
compelled to pay the duty in order to get possession of the article, he is
entitled to be subrogated to the priority of the United States. In re Kirk-
land, Chase & Co., 14 B. R. 139.

A party who purchased an imported article, duty free, and was com-
pelled to pay the duty in order to get possession thereof, is entitled to
priority, although he has proved his claim as unsecured. In re Kirkland,
Chase & Co., 14 B. R. 157; 8. ¢. 22 Pitts. L. J. 207; s. c. 8 C. L. N, 410.

(c) A State may come into the bankruptcy court and claim taxes due to
it, but it can not be compelled to do so. Stokes vy. State, 9 B. R. 191; s. ¢-
46 Ga. 412,

In West Virginia, the State has a prior lien on all realty for taxes, and
the undoubted right to enforce it to the prejudice of any claim due to @
citizen, although such lien may be subsequent in point of time. If the lien
is for a debt other than taxes, the State is not entitled to any preference
over other creditors of the same class. In re Brand, 3 B. R. 324; 8. ¢. 2
L. T. B. 66.
CLaims ENTITLED To PRIORITY. 599

The failure of the bankrupt to comply with his covenant to pay the taxes
assessed upon the demised premises, does not give the lessor a right to
claim a priority upon the payment thereof. In re Parker & Peck, 6 Ben.
286.

Although a warden who has given bond for the performance of his
official duties deposits money received from the State in his official char-
acter, yet the State is not entitled to priority of payment out of the estate
of the bankrupt bank. In re Corn Exchange Bank, 15 B. R. 216; 5. ¢ 9
Cc. L. N. 481.

(d) This section does not refer to any part of the estate derived from the
sale of property on which creditors may have a specific lien. Operatives.
can not, therefore, claim a priority over lien creditors in the distribution of
such a fund. In re William McConnell, 9 B. R. 387; s. c. 31 Leg. Int. 61.

Where the fund derived from the sale of property in a manufactory is
not sufficient to pay both the landlord and the operatives, they will, under
the laws of New Jerséy, be allowed to share pro rata. Ibid.

Laborers employed by a brickmaker are entitled to a priority under this
section. A party who has taken an assignment of the claims of several
laborers, as security for money advanced by him to them, is entitled to
demand this priority on each claim so held by him, and the balance that
remains after the payment of his advances will be paid to the laborers. In
re S. Brown, 3 B. R. 720; s. ¢. 4 Ben. 142.

A claim by a father for services rendered by his minor son as an opera-
tive to the bankrupt is entitled to priority to the amount of $50. In re
Harthorn, 4 B. R. 103.

A surveyor of wood is not entitled to a preference as an operative for
his services. In re Blackman Bros., 6 C. L. N. 18.

If the claim arises under an entire contract for the labor of the claim-
ant and the services of his team, it can not be apportioned, and the claim-
ant is not entitled to a preference as an operative. Ibid.

The claim of an apprentice for work done beyond the time fixed by the
master as reasonable, under an agreement for a specific compensation, is
entitled to priority as the claim of an operative. In re Steiner, 1 Penn L.
J. 368.

The claim of an attorney for services rendered in defending a suit prior
to the commencement of the proceedings in bankruptcy is not entitled to
priority. In re Richard Handell, 15 B. R. 71.

The claim of an attorney for services rendered in preparing the petition
and schedules, and filing the same, is not entitled to priority. Ibid.

An accountant who is employed as an expert to examine and straighten
the books of the bankrupt is entitled to priority. In re Taylor, 15 B. R. 95.

If the general creditors agree, the assignee may pay workmen as soon
as the money comes to hand without requiring proof of their claims. In
re James M. Sawyer, 14 B. R. 241; s. c. 4 Cent. L. J. 470.

(e) This is limited to priorities or preferences created by the laws of the
United States. It does not extend to priorities or preferences created by
the laws of a State. In re Stuyvesant Bank, 9 B. R. 318; s. c. 10 B. R. 399;
8. c. 49 How. Pr. 133; s. c. 12 Blatch. 179.
600 THe Bankruptcy Law. )

An agreement that a creditor shall have priority of payment out of the
assets, is contrary to the entire spirit and purpose of the statute, and is
invalid. Ibid.

The surety on a custom-house bond is entitled to priority of payment out
of the estate of the principal. Mott v. Maris, 2 Wash. 196; Champneys v.
Lyle, 1 Binn. 327.

The surety on a custom-house bond is entitled to priority, although he
paid it after the commencement of proceedings in bankruptcy. Mott y.
Maris, 2 Wash. 196.

If the trustee of the principal in a duty bond receives the funds of the
principal and then mingles them with his own, the surety can not claim
priority of payment out of the estate of the trustee in bankruptcy. Pollock
y. Pratt, 2 Wash. 490.

A surety upon a custom-house bond can not lay an attachment in the
hands of the assignee, for Congress did not consider the same person in
relation to the same property indifferently as the assignee holding the
property adversely to the bankrupt, and as a trustee holding it under and
for him. Oliver v. Smith, 5 Mass. 183.

Taxes, whether Federal or State, may be collected in the ordinary way,
but if not collected, and the property passes to and is administered by
the assignee, the taxes are then entitled to priority and preference under
this section. U.S. v. Herron, 9 B. R. 535; s. c. 20 Wall. 251;s.c0 1A. LT.
{N. 8S.) 274.

Act oF 1898, Cu. 5, § 39. Duties of Referees.— (a) Referees
shall (1) declare dividends and prepare and deliver to trustees divi-
dend sheets showing the dividends declared and to whom payable;
* * * (4) give notices as herein provided.

Act oF 1867, § 5102. Whenever a dividend is ordered, the register
shall, within ten days after the meeting, prepare a list of creditors
entitled to dividend, and shall calculate and set opposite to the
name of each creditor who has proved his claim the dividend to
which he is entitled out of the net proceeds of the estate set apart
for dividend, and shall forward, by mail, to every creditor a state-
ment of the dividend to which he is entitled, and such creditor shall
be paid by the assignee iu such manner as the court may direct.

Statute revised — March 2, 1867, ch. 176, § 27, 14 Stat. 529. Prior Stat-
ute — April 4, 1800, ch. 19, § 29, 2 Stat. 29.

The list is the list shown by Forms Nos. 32 and 33. Anon., 1 B. R 219;
in re John W. Dean, 1 B. R. 249;s.c.1L. T. B. 9

There is no warrant in the statute for paying dividends to creditors who
have not proved their claims; on the contrary; all sections on the subject
expressly or by necessary intendment refer to creditors who have verified
their debts in the mode required by law. In re A. W. Hoyt, 3 B. R. 55.
UNCLAIMED DIVIDENDS. 601

The passing of the order of dividend is the period that fixes the rights
of creditors in respect to that particular dividend. Creditors who prove
their claims after that time can not participate in the dividend, although
the proofs are made previous to the payment of the money out of the
hands of the assignee. This construction is the only one that can give con-
sistency to the proceedings. If additional debts may be brought into the
computation, no pro rata can ever be fixed, as it would be subject to inces-
sant fluctuations and renewals. In re Edmund H. Miller, 1 N. Y. Leg.
Obs. 180.

Act or 1898, Cu. 7, * * * § 66. Unclaimed Dividends.—
(a) Dividends which remain unclaimed for six months after the final
dividend has been declared shall be paid by the trustee into court.

(b) Dividends remaining unclaimed for one year shall, under the
direction of the court, be distributed to the creditors whose claims
have been allowed but not paid in full, and after such claims have
been paid in full the balance shall be paid to the bankrupt: Provided,
That in case unclaimed dividends belong to minors such minors may
have one year after arriving at majority to claim such dividends.

A dividend duly made and filed in court can not be disturbed except for
some error committed by the register, apparent from his memoranda and
papers on file, existing at the time of or prior to the making of the divi-
dend. In re B. K. Smith, 15 B. R. 97.

A register has no power to vacate or reopen a dividend for the purpose of
paying a claim which was not proved and filed or presented prior to the
dividend meeting. Ibid.

A register has no power to vacate or reopen a dividend for the purpose of
paying a claim for services rendered to the assignee, which was not pre-
sented at the dividend meeting. Ibid.

Every creditor who proves his debt is entitled to a dividend, whether
he is an individual creditor or a creditor of a firm of which the bankrupt
Was amember. Tucker v. Oxley, 5 Cranch, 34; 8. c.1 Cranch C. C. 419.

If a writ of error is pending, and a bond has been filed to stay execution,
no dividend can be paid on the judgment until the writ of error is deter-
mined, when the debt will be ordered to be paid or expunged, or further
suspended, as shall be indicated by the exigencies of.the judgment on
the writ of error. In re Daniel Sheehan, 8 B. R. 345.

Where only one creditor has proved his claim, he is entitled to be paid
in full, if there is enough for that purpose; if there is not enough, he takes
the whole. In re Haynes, 2 B. R. 227; s. c. 1 L. T. B. 121; in re James, 2
B. R. 227; 8c 1L T. B. 121.

If there is a surplus fund after payment of all the debts of a bankrupt
bank, the holders of its bills may be allowed interest from the date of
the adjudication. In re Bank of North Carolina, 10 B. R. 289; 5. c. 12 B. R.
129,
602 Tur Bankruptcy Law.

If the assets are more than sufficient to pay all the claims in full that
have been proved against the estate, interest may be allowed up to the
day of the payment of the claims respectively. In re Edward Hagan, 10
B. R. 383; in re R. M. & S. R. Town, 8 B. R. 40.

After a dividend has been declared, an attachment of the sum due toa
creditor may be laid in the hands of the assignee. Decoster v. Livermore,
4 Mass. 101. Contra, in re Bridgman, 1 B. R. 312; s. c. 2 B. R. 252; Jackson
v. Miller, 9 B. R. 148; s. c. 6 L. T. B. 95.

The assignee in an action to recover a dividend can not deny the au-
thority of the court to declare the dividend. Gulick v. McIver, 3 Cranch C.
C. 650.

Unclaimed dividends can not be turned over to the bankrupt so long as
any creditors remain unpaid and choose to insist upon payment. In re
Peter Blight, 1 Penn. L. J. 225.

If dividends remain unpaid they will, after a certain time, fall into the
general fund, and a new dividend may be made. Ibid.

If the holder of a note which is indorsed by two persons receives pay-
ment in full from the second indorser, and subsequently accepts a dividend
from the estate of the second indorser, he must be considered as holding
such dividend for the use of the second indorser. Selfridge v. Gill, 4 Mass.
95.

Where a balance remains in hand, after paying all the creditors who
have proved their claims,-it should be held for those who have failed to
prove their claims. In re Haynes, 2 B. R. 227; s. c. 1 L. T. B. 121; in re
James, 2 B. R. 227; s.c 11. T. B. 121.

After the debts are paid, the assignee is trustee for the bankrupt; and
the debts are those which have been duly proved to be such. The balance
that reniains after such debts are paid may be given to the bankrupt.
Steevens v. Earles. 25 Mich. 40; in re A. W. Hoyt, 3 B. R. 55; in re Lathrop
et al., 5 B. R. 48; s. ec. 5 Ben. 199; Steene v. Aylesworth, 18 Conn. 244; Crom-
well y. Comegys, 7 Ala. 498.

An omission of property from the schedule will not estop the bankrupt
or his heirs from claiming any title or interest in it. Steevens v. Earles,
25 Mich. 40.

It can make no special difference whether the rights of the assignee are
regarded as powers or trusts. In most respects they are quite analogous
to the former. Under the statute, the rights of the bankrupt to what re-
mains to bim as surplus is the same in either case, whether regarded
as the residuum of a trust or as a title discharged of the burden of a power
of disposal. The statute makes no provision for a reconveyance, and
without it the title to land that remained undisposed of after the termina-
tion of the proceedings, and the payment of all expenses, and all the claims
that have been proved, vests in the bankrupt, because the estate of a
trustee who receives land for particular purposes terminates when they
are fulfilled. Steevens v. Earles, 25 Mich. 40; Colie y. Jameson, 13 B. R. 1;
s.c. 6 N. Y¥. Supr. 566; s. c 11 N. Y. Supr. 284.

The bankrupt should file a petition, on oath, showing his reasons to be-
lieve that no other creditors desire to prove their claims, and asking to
UNCLAIMED DIVIDENDs. 603

have the fund paid to him. Before such a payment is made it should be
shown that the creditors have had due notice of the proceedings, and an
opportunity to prove their claims. In re A. W. Hoyt, 3 B. R. 55; in re
Lathrop et al.. 5 B. R. 43; s. c. 5 Ben. 199.

If the assignee resists, the bankrupt is not entitled to have the property
turned over to him, although no debts have been proved against the estate,
and a long time has elapsed since the filing of the petition. In re John 8.
Wright, 6 Biss. 317.

Whea the declaration of a dividend was on the face of the deposition un-
authorized, the assignee may withhold its payment. In re Hugh T.
Herrick, 13 B. R. 312.

Act oF 1867, § 5103. If, at the first meeting of creditors, or at
any meeting of creditors specially called for that purpose, and of
which previous notice shall have been given for such length of time
and in such manner as the court may direct, three-fourths in value
of the creditors whose claims have been proved shall resolve that it
is for the interest of the general body of the creditors that the estate
of the bankrupt shall be settled by trustees, under the inspection and
direction of a committee of the creditors, the creditors may certify
and report such resolution to the court, and may nominate one or
more trustees to take and hold and distribute the estate, under the
direction of such committee. If it appears, after hearing the bank-
rupt and such creditors as desire to be heard, that the resolution
was duly passed, and that the interests of the creditors will be pro-
moted thereby, the court shall confirm it; and upon the execution
and filing, by or on behalf of three-fourths in value of all the credit-
ors whose claims have been proved, of a consent that the estate of
the bankrupt shall be wound up and settled by trustees according
to the terms of such resolution, the bankrupt, or if an assignee has
been appointed, the assignee shall, under the direction of the court,
and under oath, convey, transfer, and deliver all the property and
estate of the bankrupt to the trustees, who shall, upon such convey-
ance and transfer, have and hold the same in the same manner, and
with the same powers and rights, in all respects, as the bankrupt
would have had or held the same if no proceedings in bankruptcy
had been taken, or as the assignee in bankruptcy would have done
had such resolution not been passed. Such consent and the pro-
ceedings under it shall be as binding in all respects on any creditor
whose debt is provable, who has not signed the same, as if he had
signed it, and on any creditor whose debt, if provable, is not proved,
as if he had proved it. The court, by order, shall direct all acts
and things needful to be done to earry into effect such resolution
604: Tur Bankruptcy Law.

of the creditors, and the trustees shall proceed to wind up and settle
the estate under the direction and inspection of such committee of
the creditors, for the equal benefit of all such creditors; and the
winding up and settlement of any estate under the provisions of
this section shall be deemed to be proceedings in bankruptcy; and
the trustees shall have all the rights and powers of assignees in bank-
ruptcy. The court, on the application of such trustees, shall have
power to summon and examine, on oath or otherwise, the bankrupt
or any creditor, or any person indebted to the estate, or known or
suspected of having any of the estate in his possession, or any other
person whose examination may be material or necessary to aid the
trustees in the execution of their trust, and to compel the attendance
of such persons and the production of books and papers, in the same
manner as in other proceedings in bankruptcy; and the bankrupt
shall have the like right to apply for and obtain a discharge after
the passage of such resolution and the appointment of such trustees
as if such resolution had not been passed, and as if ail the proceedings
had continued in the manner provided in the preceding sections of
this Title. If the resolution is not duly reported, or the consent
of the creditors is not duly filed, or if, upon its filing, the court does
not think fit to approve thereof, the bankruptcy shall proceed as
if no resolution had been passed, and the court may make all neces-
sary orders for resuming the proceedings. And the period of time
which shall have elapsed between the date of the resolution and
the date of the order for resuming proceedings shall not be reckoned
in calculating periods of time prescribed by this Title.

Statute revised — March 2, 1867, ch. 176, § 43, 14 Stat. 538.

The creditors may avail themselves of the provisions of this section
either at the first meeting or at any time subsequent to the first meeting.
In re Decatur Jones, 2 B. R. 59.

Parties desiring the confirmation of the resolution are the moving parties,
and should serve papers in support of their motion on the opposing parties.
The opposing parties may then, in turn, serve papers in opposition thereto.
In re American Water Proof Cloth Co., 3 B. R. 285; s. ec. 1 Ben. 526.

The bankrupt must make affidavit that creditors holding three-fourths
of all the debts proven have signed the appointment of the trustees. It is
an objection to the trustee that he is a relative of the bankrupt, aud to a
member of the committee that he has become a creditor by the purchase of
elaims, It is an insuperable objection that the trustee is one of the com-
mittee, which consists only of two. The action of the trustee would
neutralize the opposition of the other member, and there is in substance 10
committee. In re Wm. Stillwell, 2 B. R. 526.
UNcLAIMED DIVIDENDSs. 605

The mere fact of relationship in the ninth degree, or to a less degree, on
the part of a proposed trustee, to the bankrupt, or to a creditor, even the
largest in amount, of the bankrupt, or to a proposed member of the com-
mittee, or on the part of a proposed member of the committee to such
creditor or to the bankrupt, can not be regarded as a disqualification.
Other facts may, however, concur with such relationship to make a con-
firmation improper. If the proposed member of the committee has a
place of business in the district which he visits daily, the fact that he
resides out of the district is immaterial. In re Zinn et al, 4 B. R. 436;
s.c. 4 Ben. 500; s. c. 40 How. Pr. 461; s. c. 43 How. Pr. 64.

The court has the power to protect the interests of those who do not
vote in favor of the resolution. The will of three-fourths in value of the
creditors whos? claims have been proved, is not to control in respect to the
claims of those who do not vote for the resolution, unless the court sees
that the interests of the latter will be promoted by carrying the resolution
into effect. A trustee who has obligated himself by a private agreement to
wind up the estate for his own benefit and that of the signing credito-s,
to the exclusicn of the nonsigning creditors, will not be approved. In re
Theoccre H. Vetterlein, ¢ B. R. 518.

A. person wko has been appointed a receiver in a proceeding in a State
court, which is voidable under the bankruptcy law, can not be a trustee.
If he is to account to the bankruptcy court at all, he must account to the
irustee or assignee to be appointed by that court. It is not proper that he
should as trustee be plaintiff, and as receiver be defendant. This is a
positive incolnpatibility which the court can not permit one of its officers
to occupy. If he is to be trustee, he must look to the bankruptcy court.
alone as the source vf his authority. If he is to hold and administer as.
receiver under the State laws the property which he received as receiver,
he must so administer it without looking to the bankruptcy court for any
authority or directiou. If he is to administer such property as trustee, he
must so administer it without looking to the State court or any other
court but the bankruptcy court for authority or direction. In re Stuy-
vesant Bank, 6 B. It. 272; Platt v. Archer, 6 B. R. 465; s. c. 9 Blatch. 559.

The action of the creditors in selecting a trustee and a committee is a
unit, and the resolutions must be confirmed as a whole or not at all. If one
of the proposed cowmittee is the president of a corporation which claims
a preference that is disputed by other creditors, the resolution will not be
‘approved. Ibid.

When the order of the court directs that a conveyance shall be executed
by the bankrupt and the assignee to the trustee, subject to the approval
of the court, the title wil) not pass until the conveyance is so approved.
Potter v. Wright, 1 W. N. 687.

The title vested in a trustee chosen under this section is the same in all
Tespects as the title vested in an assignee regularly appointed in proceed-
{ngs in bankruptcy. In re David B. Williams, 2 B. R. 229; s. c. 1 L. T. B.
107, 118; 55 « 8 A. LL. Rev. 374.

When a trustee departs from his actual duty, and volunteers. to do some-
thing outside of his duty for the benefit of the estate, he incurs a personal
ability. Hallam vy. Maxwell, 2 Cin. 136.
606 ' Tore Banxruptcy Law.

When a trustee acts bona fide in the discharge of a duty imposed upon
him by law, he does not incur, at least, a primary personal liability. Ibid.

The bankrupt may be examined by a creditor, although the proceedings
have been superseded by the appointment of a trustee. In re Jay Cooke
& Co., 10 B. R. 126.

The intent and effect of this section are that all the ordinary processes
and proceedings under the act are for the time being absolutely superseded
aod suspended, excepting so far as such processes and proceedings are re-
tained by express words or necessary implication. In re Trowbridge, 9
B. R. 274.

The power and jurisdiction of the court are retained over the proceeding,
in order that it may interfere whenever it may become necessary for
the preservation and enforcement of the rights of all parties concerned.
The trustee and committee have full power to arrange, and by mutual
agreement to adjust everything relating to the settlement and winding up
of the estate, but they can not adjudicate or decide any disputed matter,
They have no judicial powers. Those are all reserved to the court. Ibid.

A creditor who proves his claim before the selection of a trustee and
committee, thereby establishes his right prima facie to participate in the
distribution of assets under those proceedings. If, in such a case, the
claim is disputed, the only way in which the dispute can be adjudicated
is by an application to the court to expunge or abate the claim, in which
application the trustee must, of course, be the moving party. Ibid.

The trustees, under direction of the committee, may, if so ordered by
the court, proceed to settle the estate just as if there had been no adju-
dication of bankruptcy, and the bankrupt was managing his own affairs,
taking care always to secure legal protection to each of the creditors. If,
under such a general order, the interposition of the court is needed for
the examination of witnesses under oath, etc., application therefor may be
made to the judge or register. And, if made to the judge, he, on granting
the same, will order the examination to be had before the register or
otherwise. In other words, whenever the trustees and committee are satis-
fied that demands are correct, and need no testimony to be taken, they can
allow the same. When they are not satisfied, the demand should be proved
before the register on notice to the trustees. They can dispose of assets
and settle the estate without especial orders in each matter before them;
keep their own accounts and records of their proceedings; have the aid
of the register or judge when needed, and finally have their action ulti-
mately closed by the formal decree of the court. The register should allow
no claims except such as are disputed or are submitted to him for decision
by the trustees. In re Darby, 4 B. R. 211, 309; in re Zinn et al., 4 B. R
436; s. c. 4 Ben. 500; s. c. 40 How. Pr. 461; s. c. 43 How. Pr. 64; in re Trow-
bridge, 9 B. R. 274. Contra, in re Bakewell, 4 B. R. 619; s.c. 2 L. T. B.
212; s. c. 18 Pitts. L. J. 289.

If a claim which was not proved before the selection and appointment
of the trustee is disputed, the creditor should proceed by petition directly
to the court, setting forth the fact, nature, and consideration of his claim,
and praying for leave to prove the same and for its allowance. If the
CoMPOSITIONS. 607

facts stated in the petition make out a prima facie case, the court will
make an order requiring the trustee to answer the same. Upon the
coming in of the answer, the court will proceed by reference to take proofs
or otherwise to a final disposition or determination of the matter as may
be deemed most expedient. In re Trowbridge, 9 B. R. 274.

By providing that over the settlement and distribution the committee
shall have the direction, the statute has withdrawn control over them
from every other power, and to that extent has superseded the ordinary
proceedings in bankruptcy. The ordinary proceedings are intended to be
summary. Such hurried settlement of estates is sometimes prejudicial to
the interests of the creditors; for this reason the power to administer the
estate is given to certain representatives of the creditors. The district
court can not, therefore, direct the calling of a meeting for purposes of
distribution. In re Jay Cooke & Co., 11 B. R. 1; s. ¢. 31 Leg. Int. 357; s. ¢.
1 Cent. L. J. 580; s. c. 22 Pitts. L. J. 59; s. c. 1 W. N. 51.

If the committee exercise their discretion mala fide, they may be con-
trolled, but in the absence of fraud, their direction to the trustee in regard
to the settlement of the estate is conclusive. Certainly the discretion
vested in them can not be controlled by any meeting of creditors called
after their appointment. Ibid.

Where a creditor has been guilty of unreasonable delay in preparing
his claim for proof, the court will not restrain the trustee from declaring
a dividend. Gibson v. Lewis, 11 B. R. 247; s. c. 32 Leg. Int. 22; 5. « 9
Pac. L. R. 75.

If a creditor, who has not proved his debt, has a lien on certain stock
in the hands of the trustee, he may be restrained from disposing of that
stock until the claim can be proved. Ibid.

The committee are entitled to compensation for their services. In re
Treat, 10 B. R. 310.

The compensation of the committee should be limited to such an amount
as will afford a reasonable compensation for the services required and
rendered to a person of ordinary standing and ability competent for such
duties. Ibid.

The estate in the hands of a trustee is not liable for the register’s fees
incident to a second general meeting of creditors. In re Richard H. Hins-
dale, 12 B. R. 480; s. c. 6 Ben. 231.

Act oF 1898, Cu. 3, § 12. Compositions, when Confirmed. —
(a) A bankrupt may offer terms of composition to his creditors after,
but not before, he has been examined in open court or at a meeting
of his creditors and filed in court the schedule of his property and
list of his creditors, required to ‘be filed by bankrupts.

(b) An application for the confirmation of a composition may be
filed in the court of bankruptcy after, but not before, it has been
accepted in writing by a majority in number of all creditors whose
claims have been allowed, which number must represent a majority
608 Tue Bankruptcy Law.

in amount of such claims, and the consideration to be paid by the
bankrupt to his creditors, and the money necessary to pay all debts
which have priority and the cost of the proceedings, have been de-
posited in such place as shall be designated by and subject to the
order of the judge.

(c) A date and place, with reference to the convenience of the
parties in interest, shall be fixed for the hearing upon each applica-
tion for the confirmation of a composition, and such objections as
may be made to its confirmation.

(a) The judge shall confirm a composition if satisfied that (1) it
is for the best interests of the creditors; (2) the bankrupt has not
been guilty of any of the acts or failed to perform any of the duties
which would be a bar to his discharge; and (3) the offer and its ac-
ceptance are in good faith and have not been made or procured
except as herein provided, or by any means, promises, or acts herein
forbidden.

(e) Upon the confirmation of a ‘composition, the consideration
shall ‘be distributed as the judge shall direct, and the case dismissed.
Whenever a composition is not confirmed, the estate shall be admin-
istered in bankruptcy as herein provided.

§ 138. Compositions, when Set Aside— (a) The judge may,
upon the application of parties in interest filed at any time within
six months after a composition has ‘been confirmed, set the same
aside and reinstate the case if it shall be made to appear upon a trial
that fraud was practiced in the procuring such composition, and
that the knowledge thereof has come to the petitioners since the
confirmation of such composition.

The register had not the power, by an announcement beforehand, to fix
a limit within which examination of the debtor must be concluded, without
regard to the rature of the questions sought to be put or the interest with
which the same are propounded, In re Tifft, 17 B. R. 421.

Refusal of one member of a firm to join in voluntary proceedings,

-attend and be examined, etc., may well deprive him of all benefit of the

composition; but unless the refusal or neglect is the result of fraud on
part of those partners who do carry on the proceedings it is no reason for
avoiding those proceedings as to them. In re Henry, Curran & Co., 17
B. R. 463.

At an adjourned composition meeting, after waiting a reasonable time,
creditor was allowed to continue his examination of the debtor which had
been taken at regularly adjourned meetings. Subsequently the attorney
for another creditor appeared and asked permission to continue an exam-
ination which had been previously closed, and that all the testimony taken
CoMPOSITIONS. 609

at such meeting be stricken out; which was denied. It appearing that his
power of attorney nad been revoked, he then asked permission to go ou
with the examination in behalf of another creditor, which was also denied.
Held, that the register was right in refusing to suspend the examination
then pending. No other creditor was entitled to priority at that time.
In re Tifft, 17 B. R. 550.

The attorney asked permission to examine the bankrupt as to the cir-
cumstances under which the revocation of his power of attorney had been
obtained, which was refused. Held, no error. Ibid.

Register refused to suspend examination then pending until the ques-
tions certified by him could be decided. Held, no error. Ibid.

An inadvertent mistake in amount of a debt, made by a bankrupt in the
schedule filed in composition proceedings, will not avoid the composition.
Beebe v. Pyle, 18 B. R. 162.

It matters not to what time interest on a debt is computed, provided the
interest on all the debts is computed to the same time. Ibid.

At the meeting of creditors to take action on a resolution of composition,
under law of 1867, amended by act of 1874, the register had no power to
require any other person to testify except the debtor. In re Dobbins, 18
B, RB, 268.

In co.position proceedings, the debtor being present may by a vote of
the creditors present be excused from examination on account of illness.
In re Wilson & Greig, 18 B. R. 800.

If a claim is disputed on its merits the register who presides at a com-
Position 1weeting may examine and pass upon it subject to review by the
court. In re Keller & Goodhue, 18 B. R. 331.

Creditors not entitled to vote upon proposals for composition without
first having proved their debts. In re Mathers & Moffett, 17 B. R. 225.

A composition which provides, in addition to an offer of money in de-
ferred payments, that the real estate which the bankruptcy assignee has
acquired shall be converted into money for the use of the creditors, is
proper. In re Wronkow & Hogan, 18 B. R. 81.

Fact that security provided for a composition does not certainly secure
the full payment of the composition and does not make the composition un-
certain. In re Wilson & Greig, 18 B. R. 300.

Under the law of 1869, as amended, it was held that where a composition
was only two per cent., and the largest creditor, without whose vote, if she
had been present, it could not have been passed, was strongly opposed to
it, and owing to a misdirection of the note, by accident or design, she was
not preseni to vote, there was also a doubt as to right of one of the con-
senting creditors to vote. Held, that the composition was not for the
best interests of the creditors; that there was a formal but not a real com-
Pliance with the requirements of the law as to consenting majority of
creditors. In re Spencer, 18 B. R. 199.

Objections to a claim of a creditor on ground that it is fictitious or
invalid should be promptly made, and can not be raised for first time
Upon a motion for confirmation. In re Bloch, 18 B. R. 828.

39
610 Tue Bankruptcy Law.

The statute allows any composition which is satisfactory to the requisite
number of the creditors and which is for the best interests of all con-
cerned. In re Purcell, 18 B. R. 447.

In composition proceedings, when objections are interposed by the
minority whose claims will be discharged against their will, it is the duty
of the court to examine those objections fully and carefully. In re Keiler,
18 B. R. 36.

Under the repealed law, a refusal by the register to proceed further with
the examination of the debtor without payment of his fees or security, full
opportunity having been given to make such payment, or deposit security,
before closing the examination, affords no ground upon which a creditor
can base an opposition to the recording of composition. In re Tifft, 18 B. R.
227.

So long as the inventory is produced before the register, and at all times
made accessible to the creditor for the purpose of examining it, or the
bankrupt in respect to it, the creditor is not prejudiced by a refusal of per-
mission to take a copy of it. Ibid.

At a con:position meeting only those creditors who prove their claims
are conipetent to engage or take part in its proceedings. In re Keller &
Goodhue, 18 B. R. 331.

It is not a good objection to a composition that the schedules stated the
real estate of the debtor as of unknown or uncertain value. In re Welles,
1S B. R. 525. :

Nor is it a good objection that property standing in the name of the
bankrupt’s wife should have been included in his schedules, and should be
deemed the property of the bankrupt, where the facts relating thereto
were brought out by the testimony, and considered by the creditors in
coming to the conclusion to accept the composition. Ibid.

The general objection that the estate could pay more is not one that will
avail unless very clearly made out, and unless the disparity is evident.
Ibid.

Although the bankrupt has acted in utter disregard of the rights of his
creditors, and it is probable that he will profit by the composition, yet if,
looking at the assets of the estate, it is apparent that the interests of the
creditors will be better promoted by the composition than by administering
the estate in bankruptcy, the court has no alternative but to confirm the
composition. In re Allen, 17 B. R. 157.

Where it appears that the creditors can receive no more than the amount
proposed, if ordinary administration be had, and there is no adequate proof
of collusion, the composition should be confirmed. In re Keiler, 18
Bb. R. 36.

The authority of a bankruptcy court upon the submission of a resolution
(under law of 1874) of composition, duly accepted and confirmed by the
requisite number of creditors, is not limited to the determination of a
mathematical result. In the absence of fraud, accident or mistake, the
determination of the creditors is final as to the ‘quantum of composition;
but when, through preferences fraudulent under the act, injustice has
clearly been done to the body of creditors, the ancient maxim must apply,
CoMPOSITIONS. 611

“The law would rather tolerate a private loss than a public evil,” and the
court will not lend its aid to the relief and discharge of the debtor, and
create a precedent for the doing of that which the bankruptcy laws were
devised to prevent. In re Jacobs, 18 B. R. 48.

The appellate court will not inquire into the question whether tne com-
position is for the best interests of the creditors, unless specific errors in the
action of creditors or the court below can be pointed out which, if sus-
tained, would change the judgment. In re Wronkow & Hogan, 18
B. R. 81.

The circumstance that there is no security given for the payment of the
composition notes is merely one of the facts to be considered with .and in
the light of all the other facts on the question whether the composition is
for the best interest of all concerned. In re Wilson & Greig, 18 B. R. 200.

The quéstion as to the time within which, and how rapidly, the debtor
can pay the composition, is one for the creditors to consider, and their
judgment will not be reversed unless valid reasons for so doing are shown.
Ibid.

A composition was for twenty-five per cent. payable five per cent. cash
in five days after confirmation, and ten per cent. at the end of three and
six monils from same date. Resolution provided that upon payment of
the five per cent. the property should revert to tke debtor. It appeared
that the bankrupts had, with full knowledge of the wrongful nature of
their act, used moneys belonging to a creditor, without his consent, which
they had deposited in bank in their own name as a special deposit for
him. Held, that the arrangement was not judicious nor reasonably safe
for the creditors. A person proved once to have misappropriated the funds
of another, fully understanding the wrongful character of the act, is unfit
lo be trustee for benefit of his creditors. In re Bloch, 18 B. R. 328.

A corporation in its managing officers is not of that unquestionable per-
sonal and business character that it would be reasonably safe to trust it
for three years, pending the deferred payments of the composition, with
the property on which creditors had a hold; and composition was refused
where its president, who was also its treasurer, had used the funds and
credit of the company to a large amount for his own benefit, and had re-
signed office as treasurer, but not as president, after his defalcation had
been discovered, and none of the trustees had manifested any disposition to
ptnish him or compel him to make restitution, but had settled with him.
In re The McNab & Harlin Mfg. Co., 18 B. R. 388.

Under law of 1867, it was held that the mere fact that bankrupt had
been refused a discharge for a cause set forth in section 5110, Revised
Statutes, was not an absolute bar to a composition. In re Odell, 16
B. R. 501.

A composition of five per cent. sustained where there appeared to be no
assets of any value and no probability of any dividend, though the assignee
and the parties were acting in good faith. Ibid.

The court will not hestitate to interfere when the debtor has deceived
the creditors into.a vote which they would not have given had the facts
612 Ture Bankruptcy Law.

been honestly and fairly before them; nor to withhold its assent to the
composition if it is satisfied that the proceedings are collusive, although
there is only one dissenting creditor. But the court must act on evidence,
not suspicion. In re Keiler, 18 B. R. 36.

While the rights of the minority creditors should be carefully protected
against all unreasonable acts of the majority, the judgment of the requisite
majority should always be allowed to prevail, unless obtained without
sufficient consideration or by some unfairness or undue influence. In re
Wronkow & Hogan, 18 B. R. 81.

On the question whether, the composition being in other respects fair
and just, the debtor should be allowed to keep his property, the principal
element is his personal and business character. In re Wilson & Greig,
18 B. R. 300.

It is competent to produce any creditor and prove by him that he has
been induced or biased to sign the resolution by any false statement or by
any evil practice of the debtor. In re Keller & Goodiue, 18 B. R. 331.

Bankruptcy court has a right to and will, on application, enjoin creditors
holding unsecured debts, or debts in respect to which any security has
been surrendered, from harassing the debtor as long as this composition
proceeding is pending, and it is pending until the time allowed for making
the last payment has expired. In re Richard H. Hinsdale, 16 B. R. 550.

A provision of a resolution of composition to effect that upon delivery of
the composition notes all the property in the bands of a voluntary assignee
of the bankrupt shall be delivered to them, and the assignee discharged
from responsibility, is wholly nugatory, so far as it purports to affect the
assignee’s responsibility, or the rights of creditors under the assignment,
otherwise than as the confirmation of the composition and release of the
creditors’ claims by payment of the composition may necessarily affect
them. In re Hyman, 18 B. R. 299.

Confirmation of composition does not give the assent of the court to
what such provision vainly attempts to effect. Ibid.

Confirmation of the composition, containing provision that the proceed-
ings in bankruptcy may be discontinued at any time after delivery of the
notes, does not bind the court to allow such discontinuance, unless sufi-
cient grounds therefor are shown to exist when the application is made.
Ibid.

A provision in composition agreement that the proceedings may be dis-
continued at any time without notice to the creditors is to be treated
merely as a waiver on the part of creditors of notice of an application to
discontinue, and does not bind the court to grant such discontinuance.
In re The McNab & Harlin Mfg. Co., 18 B. R. 388.

Where by the terms of a composition it is provided that the property
and books of the bankrupt, which had been held by a voluntary assignee,
should be returned to the debtors, creditors who are bound by the composi-
tion will be held to have consented to such transfer, and if by any means
such transfer shall be effected, in furtherance of the terms of composition,
they will not be permitted to undo what has thus been done with consent.
In re Rodger et al., 18 B. R. 381.
CoMPOSITIONS. 613

Moneys payable under a composition can not be reached by attachment
or their payment obstructed by proceedings, of another court, the object
of which is to withhold the fund from the creditor entitled thereto for
the security of a plaintiff pending the litigation. In re Koblsaat et al., 18
B. R. 570.

Except in a case where the plaintiff, in action against the creditors
claims title to, or a specific lien upon, the fund in question, or has pro-
cured the appointment of a receiver who has succeeded to the creditor’s
title, the bankruptcy court can not be asked to suspend or deny the right
of the creditor to receive his composition. Ibid.

A delay in payment of composition notes, occasioned by legal or other
difficulties, will not ipso facto avoid the composition; nor will a failure
to pay one of the creditors according to the terms of composition work a
forfeiture of the bankrupt’s rights under same as to those creditors to
whom payment has been punctually made. Ibid.

A resolution of composition was adopted in this case, by which the cred-
itors agreed to accept the notes of the new firm, to be composed of two
members of the old firm and such other person or persons, if any, as they
might associate with them, with a fresh capital of at least $20,000, which
if borrowed should not be withdrawn until the composition was paid.
The new firm was formed, with the capital required, and a deed of release
signed by the creditors. The capital which had been borrowed was repaid
soon after. The first and second installments of the composition were
paid by the firm, but not the third. A day or so before this the case had
been dismissed. Held, that the dismissal should not be vacated, and the
case sent back into bankruptcy, because (1) creditors of the new firm could
not prove their debts or be paid in this proceeding, and (2) because the
Ttemaining partner, himself innocent, lost his opportunity, by the dis-
charge, of seeing that the composition was fully and faithfully carried out.
In re Ewing & Co, 17 B. R. 109.

No injunction to restrain creditors from interfering with or molesting
the bankrupt can be granted after the lapse of the full time provided by
the terms of composition.

This rule is applicable to a case in which the bankrupt has put in his
answer in a suit in a State court before the composition could be set
up as a defense, and has been obliged to apply for leave to put in a supple-
mental answer setting up the composition and its fulfillment, where he
had had ample cime to apply for and obtain an injunction during the
pendency of the composition proceedings. In re Nedenzahl & Marks, 17
B. R. 23.

Where notes given upon a composition settlement fall due, pending
action upon a petition to review the order of confirmation, and the peti-
tioners refuse to receive payment, the money must be paid into court in
order to absolve the bankrupt from liability. In re Alfred P. Reynolds,
16 B. R. 176.

Under such circumstances, upon a subsequent demand of payment by
the creditor, and refusal by the bankrupt, the former is entitled to a sum-
mary order for payment. Ibid.
614 Tur Bankruptcy Law.

Notice of an application to set aside composition proceedings should be
given to all the creditors, as well as to the debtor. Ex parte Hamlin, in
re Brodt, 16 B. R. 320.

An agreement by a bankrupt to pay a debt of his creditor in full, if
he will assent to his discharge, is illegal and contrary to the provisions of
the act; and all instruments made for the purpose of giving it effect,
though made after discharge obtained, are tainted with the illegality, and
can not be enforced by a court of equity, though executed by a third
party without knowledge of fraudulent agreement. Blasdel v. Fowler,
17 B. R. 412.

In bankruptcy proceedings where the question is one of the exercise of
discretion, laches, when coupled with injury to innocent parties, are cir-
cumstances of controlling weight. In re Herman, 17 B. R. 440.

The bankrupts included in their schedule of liabilities the special capi-
tal of one G., who, under the articles of copartnership, was a special part-
ner, but who, by reason of failure to comply with the statute requiring
the special partner’s capital to be paid in cash, was in fact a general
partner. Held, not to be a fraudulent statement, as the other partners
then supposed him to be a special partner, and, though his claim against
the assets as such special partner would be postponed to those of other
creditors, it was properly described as a liability as they then understood
it. In re Henry, Curran & Co., 17 B. R. 463.

Act oF 1867, § 5103a (June 22, 1874, ch. 390, § 17, 18 Stat.
182). That in all cases of bankruptcy now pending, or to be here-
after pending, by or against any person, whether an adiudication in
bankruptcy shall have been had or not, the creditors of such alleged
bankrupt may, at a meeting called under the direction of the court,
and upon not less than ten days’ notice to each known creditor, of
the time, place, and purpose of such meeting, such notice to be per-
sonal or otherwise, as the court may direct, resolve that a composi-
tion proposed ‘by the debtor shall be accepted in satisfaction of the
debts due to them from the debtor. And such resolution shall, to
be operative, have been passed by a majority in number and three-
fourths in value of the, creditors of the debtor assembled at such
meeting either in person or by proxy, and shall be confirmed by
the signatures thereto of the debtor and two-thirds in number and
one-half in value of all the creditors of the debtor. And in calcu-
lating a majority for the purpose of a composition under this section,
creditors whose debts amount to sums not exceeding fifty dollars shall
be reckoned in the majority in value, but not in the majority in num-
ber; and the value of the debts of secured creditors above the amount
of such security, to be determined by the court, shall, as nearly as
circumstances admit, be estimated in the same way, And creditors
CoMPOSITIONS. 615

whose debts are fully secured shall not be entitled to vote upon or
to sign such resolution without first relinquishing such security for
the benefit of the estate.

The debtor, unless prevented by sickness or other cause satis-
factory to such meeting, shall be present at the same, and shall
answer any inquiries made of him; and he, or, if he is so prevented
from being at such meeting, some one in his behalf, shall produce
to the meeting a statement showing the whole of his assets and
debts, and the names and addresses of the creditors to whom such
debts respectively are due.

Such resolution, together with the statement of the debtor as
to his assets and debts, shall be presented to the court; and the court
shall, upon notice to all the creditors of the debtor of not less than
five days, and upon hearing, inquire whether such resolution has
been passed in the manner directed by this section; and if satisfied
that it has been so passed, it shall, subject to the provisions herein-
after contained, and upon being satisfied that the same is for the
best interest of all concerned, cause such resolution to be recorded
and statement of assets and debts to be filed; and until such record
and filing shall have taken place, such resolution shall be of no
validity. And any creditor of the debtor may inspect such record
and statement at all reasonable times.

The creditors may, by resolution passed in the manner and under
the circumstances aforesaid, add to, or vary the provisions of, any
composition previously accepted by them, without prejudice to any
person taking interests under such provisions who do not assent to
such addition or variation. And any such additional resolution shall
be presented to the court in the same manner and proceeded with
in the same way and with the same consequences as the resolution
by which the composition was accepted in the first instance. The
provisions of a composition accepted by such resolution in pursuance
of this section shall be binding on all the creditors whose names and
addresses and the amounts of the debts due to whom are shown in
the statement of the debtor produced at the meeting at which the
resolution shall have been passed, but shall not affect or prejudice
the rights of any other creditors.

Where a debt arises on a bill of exchange or promissory note,
if the debtor shall be ignorant of the holder of any such bill of
exchange or promissory note, he shall be required to state the amount
of such bill or note, the date on which it falls due, the name of the
acceptor and of the person to whom it is payable, and any other
616 THE Bankruptcy Law.

particulars within his knowledge respecting the same; and the in-
sertion of such particulars shall be deemed a sufficient description
by the debtor in respect to such debt.

Any mistake made inadvertently by a debtor in the statement
of his debts may ‘be corrected upon reasonable notice, and with the
consent of a general meeting of his creditors.

Every such composition shall, subject to priorities declared in said
act, provide for a pro rata payment or satisfaction, in money, to the
creditors of such debtor, in proportion to the amount of their unse-
cured debts, or their debts in respect to which any such security
shall have been duly surrendered and given up.

The provisions of any composition made in pursuance of this sec-
tion may be enforced by the court, on motion made in a summary
matner by any person interested, and on reasonable notice; and any
disobedience of the order of the court made on such motion shall
be deemed to be a contempt of court. Rules and regulations of
court may be made in relation to proceedings of composition herein
provided for in the same manner and to the same extent as now
provided by law in relation to proceedings in bankruptcy.

If it shall at any time appear to the court, on notice, satisfactory
evidence,.and hearing, that a composition under this section can not,
in consequence of legal difficulties, or for any sufficient cause, pro-
ceed without injustice or undue delay to the creditors or to the
debtor, the court may refuse to accept and confirm such composition,
or may set the same aside; and, in either case, the debtor shall he
proceeded with as a bankrupt in conformity with the provisions of
law, and proceedings may be had accordingly; and the time during
which such composition shall have been in force shall not, in such
case, be computed in calculating periods of time prescribed by said act.

This section should receive a strict construction, because it is in plain
derogation of common right. It compels the dissenting minority of credit-
ors to accept just so much on their claims as the debtor and the requisite
majority see fit to resolve that all shall accept. Its provisions, therefore,
should not be extended by construction to embrace more than the words
clearly and manifestly import. In re Shields, 15 B. R. 532; s. ¢. 4 Cent.
L. J. 557; s. @ 24 Pitts. L. J. 190.

A corporation as well as a natural person is entitled to the benefits of
the provisions for a composition. In re Weber Furniture Co., 13 B. R.
529; s. c. 18 B. R. 559.

A case in bankruptcy must be pending to authorize proceedings for a
composition. In re Reiman & Friedlander. 11 B. R. 21; s. c. 13 B. R.
128; s. c. 7 Ben. 455; s. c. 12 Blatch. 562.
CoMPOSITIONS. 617

A meeting to consider a composition may be called in an involuntary
case, although the petition is defective, for the defect does not affect the
jurisdiction of the court. In re Morris, 11 B. R. 443.

When an application is filed, an order will be made directing the register
to call a meeting and give the proper notices. In re Michael H. Spades,
13 B. R. 72; 8s. c. 6 Biss. 448.

An order referring a proposition of compromise to a register, should re-
quire him to report whether the resolution of composition is duly passed
at the first meeting, whether it has been confirmed by the required sig-
natures, and whether the terms of the composition are for the best inter-
ests of all concerned. In re Scott, Collins & Co. 15 B. R. 73; 8. ¢. 4
Cent. L. J. 29.

If a firm is in bankruptcy, one member alone may make a proposition of
compromise, for the word ‘“ debtor ” means any one or more of the debtors.
Pool v. McDonald, 15 B. R. 560; s. c. 9 C. L. N. 322; 5. ec. 2 C. L. B. 151.

The register is an officer of the court, and must take judicial notice of its
judgments and decrees. In re Scott, Collins & Co., 15 B. R. 73; s. «. 4
Cent. L. J. 29.

The register should keep a docket and minutes, but need not send memo-
randa to the court, because the report includes them. In re Benjamin F.
Spillman, 13 B. R. 214.

The course of proceedings pointed out by the law seems to be for the
creditors to meet and discuss, the debtor being present and answering all
questions, and then they may not only accept or reject a proposition which
was made and filed ten days before, but the debtor may make and they
may accept quite a different proposition from that which he came prepared
to offer. The creditors are to be notified of the time, place and purpose of
the meeting, but not necessarily of the precise proposition to be made.
In re Haskell, 11 B. R. 164; s. c. 9 Pac. L. R. 36; s. ¢. 1 Cent. L. J. 531.

Where the sworn schedules have been filed, they may be used as the
written statement. Ibid.

The testimony of the debtor given at the meeting constitutes a part of
his statement. In re Reiman & Friedlander, 11 B. R. 21; s. « 18 B. R. 128;
8. ¢. 7 Ben. 455; s. c. 12 Blatch. 562.

The inquiry may be made by any person entitled to inquire, although the
other creditors object. In re Morris, 11 B. R. 443.

The examination of the debtor is for the purpose of arriving at a true
exhibit of his affairs, and the inquiries to be made must be only such as
will be in furtherance of such object, and such as will aid in determining
whether any composition at all ought to be accepted, or the terms of the
one which ought to be accepted. In re Holmes & Lissberger, 12 B. R. 86;
8. c. 49 How. Pr. 142.

If any creditor desires a postponement of the vote until after examina-
tion is completed, it should, be postponed. Ibid.

If the debtor has kept books in his business, they must be produced on
demand of any inquiring creditor, and the debtor must answer all inquiries
in reference to any entry in such books which bears upon the question of
the exact condition of his affairs. Ibid.
618 THE Bankruptcy Law,

The course of examination must be regulated by the sound discretion of
the register. The taking of the vote may be postponed to a definite day in
order to allow the examination to be completed. Ibid.

If it seems necessary that time shall be given to have the books exam
ined by an expert, the register must regulate the matter of adjournment in
his sound discretion. Ibid.

When the books have been previously examined by a committee of cred-
itors, that circumstance is entitled to consideration on the question of
granting time for a further examination of the books. Ibid. 2

The examination of the debtor should be conducted as the examination of
a witness is conducted in court, and he should answer the inquiries made
of him by an examining creditor, and do no more until the examining cred-
itor has closed, after which he may of his own volition, or in answer to
inquiries by his own counsel, make such explanations as are relevant.
The examination should be reduced to writing, and be signed and sworn
to by him. Ibid.

The register has the power to regulate the form and order of proceedings
at the meeting, and to decide questions that arise, subject to review by the
court. Ibid.

The register must decide who are entitled to vote, and in respect to
what amount of debts, and pass upon the regularity and propriety in
form of the proofs of debts and of letters of attorney. Ibid.

Creditors must prove their claims in order to vote on a resolution of
composition. In re Scott, Collins & Co., 15. B. R. 73; s. c. 4 Cent. L. J. 29.

In involuntary proceedings the petitioning creditors on whose motion an
order to show cause has been issued, need not prove their debts anew.
Ibid.

If the children of one partner who holds a firm note, as their guardian,
are sui juris, they may prove the debt and vote thereon, although the note
has not been indorsed to them. In re Bailey & Pond, 2 Woods, 222.

A. married woman may vote for and sign a resolution if she has the
authority of her husband, whether it is exhibited or not. Ibid.

If the husband subsequently files an affidavit stating that his wife had
authority to vote for and sign the resolution, and that her act is approved
by him, this ratifies and validates her act. - Ibid.

A creditor who has bought up claims against the debtor may vote on
them against the adoption of the resolution. In re Morris, 12 B. R. 170.

A secured creditor can be admitted to vote only on the excess of his debt
above the value of the security. In re Michael H. Spades, 13 B. R. 72;
s. c. G Biss. 448.

A creditor who has personal security may vote as an unsecured creditor.
Ibid.

Where a partnership proposes a composition, all the creditors, both
partrership and individual, may vote without any classification, if no
objection is made, but if one of any class of creditors perceives that the
other class is about to force an unjust composition upon him, he may
demand a separate vote. Ibid. :
COMPOSITIONS. 619

If the voting of all the creditors, both partnership and individual, works
injustice, redress may be obtained at the hearing before the court for a
ratification. Ibid.

The word “ creditor” means all who have debts provable in bankruptcy.
In re I'rafton, 14 B. R. 507.

If a claim is in dispute the district court may provide for its liquida-
tion, either by permitting a pending action to be prosecuted to judgment
in orcger to ascertain the amount, or by ordering an inquiry before the
court itself. Ibid.

Where the letter of attorney especially authorizes the attorney to sign a
compromise for a precise sum, and the attorney has but a ministerial duty
to perform,.there is no incompatibility in the same person appearing as
attorney for the debtor upon the record, and also as attorney in fact au-
thorized to compromise for the sum named in the power of attorney itself.
In re Weber Furniture Co., 13 B. R. 529; s. c. 18 B. R. 559.

When an attorney-at-law appears before a register to represent a person,
he is to be accepted as such attorney unless some one puts him to proof,
by a rule therefor, to show his authority. In re Scott, Collins & Co., 15 B.
R. 73; s. c. 4 Cent. L. J. 29.

If a person who is not an attorney-at-law, desires to represent another
before a register, he must show a formal power of attorney. Ibid. |

If a telegram is produced revoking a power of attorney, the register, if
the facts justify it, may, in his discretion, suspend action until proof of
the revocation and new appointment can be presented to him. Ibid.

The proceedings before the register must be recorded in writing as they
take place in order to be in a shape to be reported. In re Holmes
& Lissberger, 12 B. R. 86; s. c. 49 How. Pr. 142.

In the expressions “in calculating a majority,” and “the majority in
value,” and ‘‘the majority in number,” the word “ majority’ refers to
and embraces everything previously spoken of in the section as a result
to be arrived at by calculation. It embraces the * majority in number”
of the creditors assembled at the first meeting; the ‘three-fourths in
value” of such creditors; the ‘* two-thirds in number” of all the creditors;
and the “one-half in value” of all the creditors. In re John B. Gilday, 11
B. R. 108; s. c. 7 Ben. 491.

Creditors whose claims do not exceed $50 are to be disregarded in com-
puting the majority who must pass the resolution, as well as in ascertain-
ing the number of those who are required to sign the confirmatory paper.
In re Wald & Aehle, 12 B. R. 491; 8. c. 7C. L. N. 26; s. c. 1 Cent. L. J.
581; in re Michael H. Spades, 13 B. R. 72; s. c. 6 Biss. 448.

The statute means that in making the calculation to see whether the
two-thirds in number of all the creditors have signed the composition, the
creditors whose debts do not exceed $50 shall not be reckoned either as a
Part of the whole number of creditors, or as a part of the necessary two-
thirds in number. In re John B. Gilday, 11 B. R. 108; s. c. 7 Ben. 491.

Where the assets are undoubtedly sufficient to pay workmen to the
extent of $50 each, they can not vote on the question whether a resolution
620 Tur Bankruptcy Law.

of composition shall be adopted or not, except to the extent of their re-
spective debts above $50. In re O’Neil, 14 B. R. 210.

Creditors who are not fully secured need not be reckoned in computing
the proportion who must join in a composition. In re Aaron Van Anken,
14 B. R. 425.

A creditor who has an attachment issued within four months before
the commencement of proceedings in bankruptcy, can not vote at a com-
position meeting. In re Scott, Collins & Co., 15 B. R. 73; s. c. 4 Cent.
L. J. 29.

A claim for damages in closing up a store in order to force a settle-
ment may be excluded from the estimate of the debts, of which the proper
proportion must be obtained in order to make a composition valid, if the
damages have never been assessed. In re Bailey & Pond, 2. Woods, 222.

After the resolution has been adopted it must be confirmed. This pro-
vision was designed to protect the creditors from the effect of a resolution
adopted by a small number of creditors at the meeting. A reasonable time
may be given to secure such additional signatures as may be required to
confirm it. In re Michael H. Spades, 18 B. R. 72; s. c. 6 Biss. 448.

The confirmation of a resolution of composition need not be made at
the meeting or presented to the register. The debtor may procure it
within any reasonable time after the meeting. In re Benjamin F. Spill-
man, 138 B. R. 214.

No second meeting of creditors, as such, need be held to confirm the
resolution of composition. In re Scott, Collins & Co., 15 B. R. 73; s. ¢. 4
Cent. L. J. 29.

The statute does not contemplate that the confirmatory signatures must
necessarily be attached at the first meeting. Ibid.

The confirmatory signatures must be attached at or before the hearing
for a ratification. Ibid.

The court has a discretion to accept or reject the composition, as may
be for ‘‘ the best interests of all concerned.” This means the best inter-
est at the time being, all things considered. In re Haskell, 11 B. Ri 164;
s. c. 1 Cent. L. J. 5381; s. « 9 Pac. L. R. 36.

At the hearing for the ratification of the resolution, objections can be
presented as to the due passing of the resolution, as to the confirmatory
signatures, and as to what is for the best interest of all concerned. In
re Scott, Collins & Co., 15 B. R. 73; s. c. 4 Cent. L. J. 29.

None but unsecured creditors can object to the ratification of a resolution.
Ibid.

The debtor is not required to appear at the hearing for a ratification or
submit any statements. Ibid.

Where no evidence outside of the statement and resolution is presented,
the resolution, as a nearly universal rule, should be recorded. The only ex-
ception is where it manifestly appears there was some fraud, sccident,
or mistake. Such a contingency as would incline the court in any other
case of ordinary practice to refuse ex mero motu to proceed, and upon no-
tice to all parties concerned, require the exceptional and suspicious cir-
*

CoMPOSITIONS. 621

cumstances to be explained. In re Weber Furniture Co., 13 B. R. 529; s.
c. 13 B. R. 559.

Where no fraud appears, the duty is cast upon the objecting creditors to
show affirmatively that the resolution is unwarranted, and the court
should record it, unless upon notice and hearing it inquires into the testi-
mony which shows that it ought to be rejected. In re Weber Furniture
, Co, 138 B. R. 559.

The presumption is in favor of the resolution, and the burden rests
upon the objecting creditors to produce the testimony to show that it ought
not to be recorded. In re Weber Furniture Co., 13 B. R. 529; s c. 18
B. R. 559.

In deciding a motion to confirm a resolution of composition, the court
will take into account the relations of the creditors favoring the compro-
mise to the debtor, and the relative number of creditors whose individual
opinions are expressed in person by the resolution, as compared with
thosa who dissent. Ibid.

Whether a great or small number of creditors assented to the resolution
is only a circumstance which may be taken into consideration in con-
nection with others in a doubtful case where fraud or gross inadequacy
appears. Lbid.

A resolution can not be defeated on the mere ground that by the defeat
some peculiar benefit may accrue to the objecting creditor. In re Scott,
Collins & Co., 15 B. R. 73; s. ec. 4 Cent. L. J. 29.

An advance in the percentage is demonstrative of the fact that the orig-
inal proposition is not for the best interest of all concerned. Ibid.

If the requisite proportion signed a resolution, whether the claim of the
bankrupt’s brother be counted or not, the resolution will be ratified,
although that claim consists of debts purchased by him openly and with-
out concealment. In re Blaney T. Walshe, 2 Woods, 225.

If there is a concealment of assets or a failure to name all the creditors,
this does not necessarily render all the proceedings void; but the question
is for the determination of the court. In re Scott, Collins & Co., 15 B. R.
73; 8. ¢. 4 Cent. L. J. 29.

The making of an assignment prior to the commencement of the pro-
ceedings in bankruptcy does not preclude the confirmation of the composi-
tion, for the composition will discharge the debts, and the creditors will
then have no claim on the assigned property under a trust which is
terminated. Pool v. McDonald, 15 B. R. 560; s. c. 9 C. L. N. 322; 8. ¢. 2
C. L. B. 151.

Where there is no fraud or concealment, the omission to include an asset
in the statement is no ground for refusing to confirm the resolution, if the
creditors were fully informed concerning it, and its value was such as
would not reasonably require an alteration of the terms of the composition.
In re Reiman & Friedlander, 11 B. R. 21; s. c. 13 B. R. 128; s. c. 7 Ben. 455;
8 ¢, 12 Blatch. 562.

A resolution can not be recorded where the statement of assets and of
debts shows that the requisite proportion of creditors have not confirmed
it, although the statement is inaccurate. In re B. C, Asten, 14 B. R. 7.
622 Tue BangrRuptcy Law.

If a creditor is induced to vote or sign by any unfair means, whether
known to the debtor or not, his vote so influenced operates as a fraud on
the other creditors, and makes the composition voidable by any of them.
In re James M. Sawyer, 14 B. R. 241; s. c. 4 Cent. L. J. 470.

If a vote is influenced by the expectation of advantage, though without
any positive promise, this can not be considered an unbiased vote. Ibid.

Knowledge that the opposition of a creditor to a composition has been
bought off must be imputed to the debtor, unless there is clear and un-
doubted evidence against it. Ibid.

The omission of the court in a voluntary case to adjudicate the debtor
a bankrupt, does not defeat a composition made before such adjudication.
In re Aaron Van Anken, 14 B. R. 425.

Where a composition is made before adjudication, the mere fact that the
debtor retains the possession of his assets is no ground for refusing to
ratify it. Ibid.

A provision that the debtor may retain his-assets does not defeat a
composition, for it is surplusage, and on the application of a creditor a
warrant may be issued, notwithstanding the terms of the provision. Ibid.

The fact that the debtor has preferred a creditor does not necessarily
prevent the ratification of the resolution. In re Haskell, 11 B. R. 164;
s. ce. 1 Cent. L. J. 531; s. c. 9 Pac. L. R. 36. :

If the debtor does not substantially appropriate all his property to pay
his creditors pro rata by offering a composition which will pay at least as
much as such property can pay, or can reasonably be expected to pay, then
the composition is not for the best interest of all concerned, and can not
proceed without injustice to the creditors, and will not be confirmed. In re
Reiman & Friedlander, 11 B. R. 21; s. c. 18 B. R. 128; s. c. 7 Ben. 455; s. c
12 Blatecb. 562.

In the absence of fraud and concealment, the question for the court
seems to be not whether the debtor might have offered more, but whether
his estate will pay more in bankruptcy. In re Morris, 11 B. R. 448; in re
Whipple, 11 B. R. 524.

The statute does not intend that no debtor can compound with his
ereditors under this section, who would not be able to obtain a discharge.
The law seems to leave it very much to the requisite number and amount
of creditors, who, if all the facts are before them, may decide the whole
matter. In re Haskell, 11 B. R. 164; s. c. 1 Cent. L. J. 531; s. « 9 Pac.
L. R. 36.

A composition providing for a payment or satisfaction in “ money,” is
placed in contradistinction to one for payment or satisfaction in property.
It does not prevent the payment of the money in installments. A composi-
tion may well provide for successive payments in money at stated future
times, but if so there can be no good reason why the stated payments may
not be evidenced by notes, to be indorsed if desired, the notes being pay-
able in money. In re Reiman & Friedlander, 11 B. R. 21; s. c 18 B. R.
128; s. c. 7 Ben. 455; s. c. 12 Blatch. 562; in re Langdon, 13 B. R. 60.

A composition which provides for a payment in indorsed notes is de-
fective and will not be ratified. In re Langdon, 13 B. R. 60.
CoMPOSITIONS. 623

Although a resolution provides literally for payment in indorsed notes,
yet it will be ratified if it can be construed to mean a payment in cash.
In re James T. Hurst, 13 B. R. 455; s, c. 8 C. L. N. 147; 5. ¢. 8 Cent. L. J. 78.

When the notes for the deferred payments are to be indorsed, the reso-
lution should provide for ascertaining the satisfactory character of the
indorser, either by naming him or by providing for his being definitely
named. In re Reiman & Friedlander, 11 B. R. 21; s. ¢. 13 B. R. 128; 8. «.
7 Ben. 455; s. ce. 12 Blatch. 562.

A resolution which provides that the payment of the composition shall
be secured by a satisfactory bond to three persons who are styled a com-
mittee of the creditors is sufficient. In re Solomon Louis, 14 B. R. 144;
s.c. 7 Ben. 481.

A resolution of composition may be confirmed although it does not pro-
vide for the expenses of an attachment, if there has been no first meeting
of creditors, and no appointment of an assignee. In re W. D. Clapp &
Co, 14 B. R. 191.

When the case is before the court for hearing, the court may refer the
matter back to the register for inquiry as to any particular fact. In re
Blaney T. Walshe, 2 Woods, 225.

When a debtor has had his proposition for a settlement duly considered
and passed upon, he should abide by the decision then had, and not be
permitted to annoy creditors by requiring their attendance at further
meetings. In re McDowell & Co., 10 B. R. 439; s. c. 6 Biss. 193.

The court should afford all proper facilities for correcting mistakes or
enabling the parties most interested to carry out their wishes. Where the
failure to accept the offer arose from a failure to properly instruct the
attorneys, a new meeting may be called. In re McDowell & Co., 10 B. R.
439; s. c. 6 Biss. 198.

A defect in the resolution can only be cured by an additional resolution
passed in the same way as the original resolution. In re Reiman & Fried-
lander, 11 B. R. 21; s. c. 13 B. R. 128; s. ce. 7 Ben. 455; s. c. 12 Blatch. 562;
in re B. C. Asten, 14 B. R. 7.

A second resolution varying the provisions of a previous resolution can
not be recorded until a meeting on notice to all the creditors is called in
the same manner as on the original resolution to inquire whether such
second resolution has been passed in the manner directed by the statute.
In re Reiman & Friedlander, 11 B. R. 21; s. c. 18 B. R. 128; s. c. 7 Ben.
455; 8. c. 12 Blatch. 562.

No further recording of the resolution. is necessary than to record the
decree containing the resolution. Smith v. Engle, 4 B. R. 481; s. c. 9 C.
L. N. 46.

Where there has been a composition in an involuntary case before adju-
dication, it does not necessarily follow that there must be a discontinuance
upon the request of the petitioning creditors, after the composition has
been confirmed. The matter must be regarded with reference to the
status of the property in each case, and the terms of the resolution. In re
Thomas McKeon, 11 B. R. 182; s. c. 7 Ben. 513.
624. THE Bankruptcy Law.

If the resolution does not provide for a surrender of the property to the
debtor, the property will not be surrendered, if there has been an adjudi-
cation of bankruptcy, until the terms of the composition have been com-
plied with. Ibid.

If a composition is accepted in an involuntary case prior to an adjudica-
tion, the proceedings may be discontinued upon the consent of the debtor
and the petitioning creditors, without notice to other creditors. Ibid.

The meeting for the purpose of adding to or varying the original propo-
sition is one to follow the confirmation and recording thereof. In re Scott,
Collins & Co., 15 B. R. 78; s. c. 4 Cent. L. J. 29.

If a resolution of composition has been duly ratified, it confines the se-
cured creditor to his security and discharges the debtor from personal lia-
bility for the secured debt. In re J. L. Lytle & Co., 14 B. R. 457; s. c
24 Pitts. L. J. 14; s. c. 33 Leg. Int. 349. c

If a composition is entered into for cash payments secured by a mort-
gage on real estate, the district court has no jurisdiction to restrain a cred-
itor from levying an execution on personal property, although the name
of such creditor was properly placed on the list of creditors. Ibid.

If a debtor after the adoption of a resolution of composition omits to
plead it, he is not entitled to relief against the judgment so obtained by an
injunction from the district court. In re Samuel B. Tooker, 14 B. R. 35.

A composition discharges the debts of those creditors whose names, ad-
dresses, and debts are placed on the statement, and no other discharge is
needed, for the composition is a substitute for the ordinary proceedings
and discharge. In re Alphonse Bechet, 12 B. R. 201; s. c. 2 Woods, 173; in
re Knight, 2 W. N. 479.

If the name and debt of a creditor were placed on the list, the compo-
sition will bar the debt, although there was an error in stating the amount.
Beebe v. Pyle, 1 Abb. N. C. 412.

A composition will not be effective to discharge a debtor, unless the
amount agreed upon is actually paid. James T. Hurst, 13 B. R. 455; s. ¢
8 C. L. N. 147; 3 Cent. L. J. 78; in re Reiman & Friedlander, 11 B. R. 21;
s. c. 13 B. R. 128; s. «. T Ben. 455; s. c. 12 Blatch. 562.

Where there is no defect in the proceedings for a composition, the ad-
mission of a discharge in evidence does not prejudice the adverse party.
Smith v. Engle, 4 B. R. 481; s.c.9 O L. N. 46.

A decision that a proper proportion of the creditors have confirmed a
resolution can not be impeached in a collateral action. Ibid.

A decision that a resolution which provides for payment in notes is
valid, is conclusive in a collateral action. Ibid.

If the jurisdiction of the bankruptcy court is shown to have attached,
the subsequent proceedings are presumed to be regular, and its decisions
whether correct or otherwise, upon every question properly arising in the
case, are binding and conclusive in a collateral action. Ibid.

If the notice to creditors of the meeting to consider a proposition of
compromise was properly given, the omission to give a proper and suffi-
cient notice to the creditors of the hearing to determine whether the resolu-
tion has been properly passed, does not render the order ratifying the
resolution void in a collateral action. Ibid.
COMPOSITIONS. 625

A resolution of composition will be deemed valid in a collateral action,
although the signatures of the bankrupt and the creditors in confirmation
of the resolution were attached to a separate paper, and not to the resolu-
tion itself. Ibid.

Where the decree requires the statement of debts and assets to be filed,
the presumption in a collateral action is that it was dene as directed.
Ibid.

Where the district court determines that a statement of debts sufficiently
states the address of a creditor, the decision is conclusive in a collateral
action. Ibid.

The ratification of the compromise and the acceptance of payment there-
under do not satisfy the debts in the sense of an absolute extinguishment
for all purposes, but release the debtor himself from all further liability
thereon, while the remedy against partners, indorsers, and sureties is pre-
served. Mason & Hamlin Organ Co. vy. Bancroft, 1 Abb. N. C, 415; s. ¢. 4
Cent. L. J. 295.

40
TITLE X.

DUTIES, PROTECTION AND DISCHARGE OF
BANKRUPTS.

Act or 1898, Cu. 3, § 7%. Duties of Bankrupts—(a) The bank-
rupt shall (1) attend the first meeting of his creditors, if directed
by the court or a judge thereof to do so, and the hearing upon his
application for a discharge, if filed; (2) comply with all lawful orders
of the court; (3) examine the correctness of all proofs of claims
filed against his estate; (4) execute and deliver such papers as shall
be ordered by the court; (5) execute to his trustee transfers of all
his property in foreign countries; (6) immediately inform his trustee
of any attempt, by his creditors or other persons, to evade the pro-
visions of this Act, coming to his knowledge; (7) in case of any person
having to his knowledge proved a false claim against his estate, dis-
close that fact immediately to his trustee; (8) prepare, make oath to,
and file in court within ten days, unless further time is granted,
after the adjudication, if an involuntary bankrupt, and with the
petition if a voluntary bankrupt, a schedule of his property, showing
the amount and kind of property, the location thereof, its money
value in detail, and a list of his creditors, showing their residences,
if known, if unknown, that fact to be stated, the amounts due each
‘of them, the consideration thereof, the security held by them, if
any, and a claim for such exemptions as he may be entitled to, all
in triplicate, one copy of each for the clerk, one for the referee, and
one for the trustee.

Act oF 1867, § 5104. The bankrupt shall at all times, until his
discharge, be subject to the order of the court, and shall, at the
expense of the estate, execute all proper writings and instruments,
and do all acts required by the court touching the assigned property
or estate, and to enable the assignee to demand, recover, and receive
all the property and estate assigned, wherever situated. For neglect
or refusal to obey any order of the court, the bankrupt may be
committed and punished as for a contempt of court. If the bank-
rupt is without the district, and unable to return and personally
é PROTECTION OF BANKRUPTS. 627

attend at any of the times or do any of the acts which may be
required pursuant to this section, and if it appears that such absence
was not caused by willful default, and if, as soon as may be after
the removal of such impediment, he offers to attend and submit to
the order of the court in all respects, he shall be permitted so to do,
with like effect as if he had not been in default,

Statute revised — March 2, 1867, ch. 176, § 26, 14 Stat. 529. Prior
Statute — April 4, 1800, ch. 19, §§ 21, 38, 2 Stat. 27, 30.

Bankruptcy court has power to order a bankrupt to pay over to the
assignee sums which apparently are in his hands. In re How, 18 B. R.
565.

Under law of 1867, bankruptcy court had no jurisdiction over property.
of bankrupt in foreign countries, and could not compel assignment thereof
by him. Phelps v. McDonald, 16 B. R. 217.

Bankrupt must give satisfactory explanations of deficits which are
shown in the assets of his estate, or pay over the amount thereof to the
assignee. In re Peltasohn, 16 B. R. 265.

Under laws of Alabama, if bankrupt fails to claim his homestead exemp-
tion in his schedules he must be deemed to have waived it. Steele v.
Moody, 16 B. R. 558.

Debtors should, in preparing their schedules, set down in schedule of
liabilities all the paper that they may be liable on, with proper explana-
tions in regard to them. In re Henry, Curran & Co., 17 B. R. 463.

If the bankrupt on examination admits the possession of property, he
must clearly account for the same to the satisfaction of the court, other-
wise he will be held to still have it in his possession and to be able to hand
it over to his assignee, and on failing or refusing to account in a reasonable
manner for the disposition of the assets which are traced to him, he may
be committed for contempt. In re Salkey & Gerson, 11 B. R. 423, 516;
8. c. 6 Biss. 269, 280. :

The subjection of the bankrupt and of his property to the court is not for
the purpose of punishment in any sense, but to enable the court to en-
force a distribution of the bankrupt’s estate according to the provisions of
the act, and, as a matter of necessity, the law makes the bankrupt, from
and after the first preliminary and ex parte adjudicatien upon the petition,
‘subject to any and all orders that may be deemed necessary under the act
to secure such distribution to the creditors. In re Bromley & Co., 3 B. R.
686,

Before a bankrupt can be committed for failing to account for property
received by him, it must appear that a reasonable man would not be able
to give credit to his evidence, but would be satisfied of its substantial
untruth. In re Joseph Mooney, 15 B. R. 456.

An uncontested order of the register is an order of the court, and a
violation of such order may be punished by commitment for contempt. In
te Horatio N, Allen, 18 Blatch. 271.
628 Tue Bankruptcy Law.

When the contempt is not committed in the presence of the court, the
bankrupt may be committed until the further order of the court. Ibid.

If the bankrupt is arrested under a warrant of commitment out of the
district, he is entitled to be discharged. Ibid.

An application for an order to direct the bankrupt to execute certain
deeds must be made to the court. The register has no power to pass such
an order. In re Anon., 3 B. R. (quarto) 58.

Under the provisions of this clause the court may direct the bankrupt to
execute and deliver to the assignee the proper papers to enable him to be
admitted to prosecute, in his own name, an action pending in a State court
to which the bankrupt is a party, in the same manner and with the like
effeat as it might have been prosecuted by the bankrupt, and may order
the bankrupt to refrain from prosecuting said action, or from applying for
any order or decree therein. In re Clark et al., 3 B. R. 491; s. c. 4 Ben. 88.

Where the bankrupt has used due diligence to comply with the orders of
the court, he is not guilty of contempt. In re Carpenter, 1 B. R. 299.

Act oF 1898, CH. 3, § 11. Suits by and against Bankrupts.—
(a) A suit which is founded upon a claim from which a discharge
would be a release, and which is pending against a person at the
time of the filing of a petition against him, shall be stayed until
after an adjudication or the dismissal of the petition; if such person
is adjudged a bankrupt, such action may be further stayed until
twelve months -after the date of such adjudication, or, if within that
time such person applies for a discharge then until the question
of such discharge is determined.

(b) The court may order the trustee to enter his appearance and
defend any pending suit against the bankrupt.

(c) A trustee may, with the approval of the court, be permitted
to prosecute as trustee any suit commenced by the bankrupt prior
to the adjudication, with like force and effect as though it had been
commenced by him.

(d) Suits shall not be brought by or against a trustee of a bank-
tupt estate subsequent to two years after the estate has been closed.

Act or 1867, § 5105. No creditor proving his debt or claim shall
be allowed to maintain any suit at law or in equity therefor against
the bankrupt, but shall be deemed to have waived all right of action
against him, and all proceedings already commenced or unsatisfied
judgments already obtained thereon against the bankrupt shall be
deemed to be discharged and surrendered thereby. But a creditor
proving his debt or claim shall not be held to have waived his right

 

 

1So amended by act of June 22, 1874, ch. 390, § 7, 18 Stat. 179.
SUITS BY AND AGAINST BANKRUPTS. 629

of action or suit against the bankrupt where a discharge has been
refused or the proceedings have been determined without a discharge.

Statute revised — March 2, 1867, ch. 176, § 21, 14 Stat. 526. Prior
Statute — Aug. 19, 1841, ch. 9, § 5, 5 Stat. 444.

This provision does not interfere with the right of any creditor to pro-
ceed against the assignee under the bankruptcy to have the benefit of any
mortgage, pledge, or other security pro tanto, if he elects to do so, or with
the right of the assignee to redeem the same. In re William Christy, 3
How. 292.

This clause meets and provides for two distinct cases. 1st, For that
where the creditor has proved his debt before a suit is commenced. The
proving the debt alone is a bar to any suit at law or in equity for the re-
covery of the debt so proved. 2d. Where the suit has been commenced
before the proof of the debt in bankruptcy. In this case the proving of
the debt operates as a surrender ipso jure, of the action, and is a bar to
any further proceedings in the suit. Everett v. Derby, 5 Law Rep. 225.

Where defendants in action brought by creditors to set aside fraudulent
conveyance of the bankrupt desire to avail themselves of fact that such
property had become vested by assignment in an assignee in bankruptcy,
the fact of appointment of such assignee must be pleaded as a defense; a
plea of discharge is not sufficient to raise the questicn. Dewey v. Moyer,
18 B. R. 114.

Under law of 1867, Held, that jurisdiction of State courts over pending
actions is not affected by the adjudication or discharge of a defendant,
unless such adjudication or discharge is pleaded. Serra é Hijo v. Hoffman,
17 B. R. 124.

The provisions of the bankruptcy law relating to stay of proceedings do
not apply to proceedings in appellate courts. Ibid.

Under law of 1867, it was held that to entitle the bankrupt to a stay of
suit, pending a determination of his discharge, the proceedings in bank-
tuptey must be pleaded or brought to the knowledge of the court in a
Proper manner. Holden v. Sherwood, 18 B. R. 111.

Also that the mere filing of a petition in bankruptcy was no bar to the
prosecution of a suit against him in a statement. Murphy v. Young, 18
B. R. 505.

Prior to commencement of the bankruptcy proceedings, a surrogate’s
‘decree was docketed against the bankrupt for the payment of moneys
misappropriated by him as administrator, and an appeal taken from a
decision of the surrogate refusing an application for a commitment of the
bankrupt for failure to pay. Upon such appeal, pending the bankruptcy
Proceedings, decision of surrogate was reversed and the proceedings re-
mitted to him to enforce the proper remedy against the person of the
bankrupt. Held, that the proceedings could not be stayed so as to prevent
an application to surrogate for a commitment, the debt being one from
which a discharge would not relieve the bankrupt, and the remedy of
arrest being reserved to creditor. In re Whitney, 18 B. R. 563.
630 Tue Bankruptcy Law.

Where assignee intervenes at proper time to defend a suit against
bankrupt, he has no right to demand a stay of proceedings, nor can he
plead a final discharge in bar. The bankruptcy act of 1867 gives these
privileges to the bankrupt alone. Serra é Hijo v. Hoffman, 17 B. R. 124.

Assignee holds the assets as an officer of the court which appointed him,
and his possession and management thereof can not be interfered with by
the State courts. Southern et al. v. Fisher, 16 B. R. 414.

Where a cause of action pending at time of adjudication is one which
passes to assignee, he should be notified, and in case of his refusal the
action must be dismissed. Towle v. Davenport, 16 B. R. 478.

Assignee of a corporation represents both corporation and its creditors,
and defense of irregular organization can not be urged against him.
Chubb v. Upton, 16 B. R. 537,

Although the assignee may prosecute or defend the suit. pending at the
time of adjudication, he is not compelled to resort to the State court
before which it is pending, but may apply directly to the Federal courts.
(Law of 1867.) Southern et al. v. Fisher, 16 B. R. 414.

If assignee does not choose to become a party voluntarily to a suit pend-
ing in the name of bankrupt, the court in which such suit is pending has
no power or authority to make him a party or compel him to submit to its
jurisdiction and control. Serra é Hijo v. Hoffman, 17 B. R. 124.

Cross-bill setting up defendant’s discharge in bankruptcy is not defective
in not making the assignee a party, nearly four years having elapsed since
appointment of assignee and he has made a final settlement and been
discharged. Phelps v. Curts, 16 B. R. 85. :

Limitation in bankruptcy act in relation to suits by and against as-
signees (trustees) applies to a suit in equity brought by assignee of bank-
rupt corporation to charge the shareholders for the unpaid amount of
their shares. Foreman v. Bigelow, 18 B. R. 457.

Under law of 1867, a suit to recover debts due the estate was barred
by limitation where the summons was not issued within two years from
the time when the cause of action accrued, although the petition in such
suit was filed within such time. Walker, Assignee, v. Towner, 16 B. R.
285.

Where a sale by the assignee took place more than two years after the
assignment to him, the limitation of suits by and against assignees pre-
scribed by the bankruptcy act of 1867 can not be set up as a defense to a
collateral action brought against the bankrupt by one claiming title under -
a sale by the assignee. The bankrupt should avail himself of it on ap-
plication to vacate the sale. Steele v. Moody, 16 B. R. 558.

The limitation prescribed by the bankruptcy law (1867) applies only to
cases where the right of action accrued after the bankruptcy, and where
an adverse interest in or touching any property or right of property is
claimed by either of the parties. Latting v. Fassman et al. 17 B. R. 183.

In composition proceedings, when objections are interposed by the
minority, whose claims will be discharged against their will, it is the duty
of the court to examine those objections fully and carefully. In re Keiler,
18 B. R. 36,
SvuITS BY AND AGAINST BANKRUPTS. 631

Under the repealed i:aw, a refusal by the register to proceed further
with the examination of the debtor without payment of his fees or secu-
rity, full opportunity having been given to make such payment or deposit
security before closing the examination, affords no ground upon which a
creditor can base an opposition to the recording of composition. In re
Tifft, 18 B. R. 227,

As this section is a part of a general system of statutory regulation, it
must be read and applied in connection with every other section apper-
taining to the same features of the general system, so that each and
every other section of the act may, if possible, have their due and conjoint
effect without repugnancy or inconsistency. New Lamp Chimney Co. v.
Ansonia Brass & Copper Co., 13 B. R. 385; s. « 10 B. R. 355; 8. c. 64
Barb. 435; s. c. 53 N. Y. 123; s. c. 91 U. S. 656.

The provision in regard to debts proved must be construed in connection
with the clause of section 5117. So much of this section as imposes a
penalty for proving a debt, can not be construed as applying to a debt
which, by section 5117, is not dischargeable. Such a debt is not surrendered
or discharged by proof thereof. In re W. E. Robinson, 2 B. R. 342; s. ¢.
6 Blatch. 253; s. c. 36 How. Pr. 176; s. c. 2 L. T. B. 18; in re M. Rosenberg,
2B. R. 236; s. c. 3 Ben. 14; in re J. S. Wright, 2 B. R. 142; s. c. 36 How.
Pr, 167; s. c. 2 Ben. 509; in re Migel, 2 B. R. 481.

The proof of the debt does not extinguish, but simply suspends the right
of action. Hoyt v. Freel, 4 B. R. 131; s. c. 8 Abb. Pr. (N. 8S.) 220; s. ¢
2L. T. B. 144; Smith v. Dispatch Co., 37 N. J. 60; Hamlin v. Hamlin, 3
Jones Eq. 191; Haxtun v. Corse, 4 Edw. Ch. 585; s. ec. 2 Barb. Ch. 506;
Brandon Manuf. Co. v. Frazer, 13 B. R. 362; s. c. 47 Vt. 88; Cook v. Coyle,
113 Mass. 252. Contra, Bennett v. Goldthwaite, 109 Mass. 494; Commercial
Bank v. Buckner, 20 How. 108; Pray v. Torr, 18 N. H. 188.

The proof of a claim only prevents future proceedings against the bank-
Tupt or his estate. Ansonia B. & C. Co. y. Babbitt, 15 N. Y. Supr. 157.

Creditors who have proved their claims are temporarily barred from pur-
suing their claims against the bankrupt in any other forum. By submitting
themselves to the jurisdiction, and becoming parties to the proceedings,
they preclude themselves from proceeding against the bankrupt in any
other manner, without the leave of the court which has acquired jurisdic-
tion of their claims. They must await the result of the bankrupt’s applica-
tion for his discharge. If it is refused, they are then free to pursue their
claims by other means and in other tribunals. If the bankrupt unreason-
ably delays his application for a discharge, or is guilty of laches in his
efforts to bring it to a conclusion, the creditor who has proved his debt
is still incapable of proceeding elsewhere, without the permission of the
court of bankruptcy. In such a case he must expedite the proceedings in
bankruptcy or obtain leave of the bankruptcy court to proceed to collect
his debt by due course of law. Dingee v. Becker, 9 B. R. 508; 8. ¢. 9
Phila, 196,

If a judgment creditor who has proved his debt issues a fi. fa. on his
Judgment, without first obtaining leave of the bankruptcy court, the fi. fa.
632 Tue Bankruptcy Law.

will be set aside. Dingee v. Becker, 9 B. R. 508; s. c. 9 Phila. 196; Frazier
vy. Banks, 11 La. An. 31.

If a creditor proves his claim and receives a dividend, a fi. fa. on a
judgment subsequently obtained may be set aside if the proceedings in
bankruptcy are still pending. Beckler v. Hambrecht, 2 W. N. 353.

If a creditor proves his debt, he can not institute an action in a State
court while there are funds in the hands of the assignee and before the
bankrupt has applied for a discharge. Wood v. Hazen, 15 B. R. 491.

If a creditor, who has proved his debt, proceeds subsequently in the
State court to obtain an arrest of the debtor, the proceeding may be
stayed without affecting the arrest or releasing the bankrupt therefrom.
In re Isidor Goldstein, 52 How. Pr. 426.

The act of the creditor in proving his debt can not be pleaded in bar of
a. subsequent action to enforce the claim. Smith v. Dispatch Co., 37 N. J.
60; Buckner v. Calcote, 28 Miss. 432. Contra, Wilson v. Capuro, 4 B. R.
714; s. @ 41 Cal. 545.

The proof of a debt against a corporation does not bar a subsequent
action thereon in a State court. Ansonia Co. v. New Lamp Chimney Co.,
10 B. R. 355; s. c. 18 B. R. 385; s. ce. Gt Barb. 435; s. c. 58 N. Y. 123; 8. ¢.
91 U. S. 656; Chamberlain v. Huguenot Manuf. Co., 118 Mass. 582.

The power of the State courts to proceed with pending suits in cases
where creditors have provable debts, but which they do not prove under
the proceedings in bankruptcy, is, under certain prescribed limitations,
recognized by the bankruptcy act. The jurisdiction of the State courts is
not extinguished except in those cases where a creditor proves his debt.
Actions pending therein, which were brought by creditors who do not
prove their debts, are under the authority of the State courts. They have
jurisdiction of the parties and subject-matters, and must determine all
questions as they arise, according to law, subject to the final judgment of
the Supreme Court of the United States, in case any right or claim is set
up under any statute of the United States, and such right or claim is
denied by the State tribunals. In no other way can their decisions be
reversed or revised. The district court has no control over such suits.
Samson vy. Burton, 4 B. R. 1; s. ec. 5 Ben. 325.

There is a distinction between persons and corporations and members
thereof, because no discharge can be granted to any corporation or jdint-
stock company, or any person or Officer or other member thereof. The
proof of a debt, therefore, does not, per se, prevent the continuance of an
action against it. The effect of granting a stay upon an action against a
corporation before execution returned, or setting aside an execution issued
thereon, the stockholders of which are personally responsible, would be to
discharge ‘‘a person or officer or member thereof,’ where such liability
must. be predicated of a judgment and execution returned unsatisfied, and
thus indirectly accomplish what the bankruptcy act declares shall not be
attained. Allen v. Soldiers’ Business Messenger & Dispatch Co., 4 B. R.
537; s. c. 2 L. T. B. 158; Shellington vy. Howland, 53 N. Y. 371; Ansonia
Co. v. New Lamp Chimney Co., 10 B. R. 355: s. ¢. 18 B. R. 885; s. c. 64
Barb. 435; s. c. 58 N. Y, 123; s. c. 91 U. S. 656.
SUITS BY AND AGAINST BANKRUPTS. 633

The proof of the debt against the corporation does not bar an action
against a stockholder upon his contingent liability. Shellington v. How-
land, 58 N. Y. 871; Allen v. Ward, 36 N. Y. Supr. 296.

The proof of the debt against the corporation is partially equivalent to
the commencement and prosecution of an action, and a proximate com-
pliance with such a condition imposed by statute to the liability of the
stockholder, if not a substitute for a literal compliance with such condition.
Shellington v. Howland, 53 N. Y. 871.

When a firm has proved their debt, the resident members may be re-
strained from further prosecution of a suit in a foreign country. In re
Schepeler & Co., 4 Ben. 68.

The court may allow a proof of a debt provisionally, and authorize the
continuance of a pending suit for the purpose of liquidation, although the
question involved is whether the bankrupt is liable at all upon the contract
alleged to have been broken. In re Jay Cooke & Co., 1 W. N. 30.

Act oF 1867, § 5106. (See ante, Act of 1898, ch. 3, § 11, p. 628.)
—No creditor whose debt is provable shall be allowed to prosecute to
final judgment any suit at law or in equity therefor against the
bankrupt, until the question of the debtor’s discharge shall have
been determined; and any such suit or proceedings shall, upon the
application of the bankrupt, be stayed to await the determination
of the court in bankruptcy on the question of the discharge, pro-
vided there is no unreasonable delay on the part of the bankrupt
in endeavoring to obtain his discharge, and provided, also, that if
the amount due the creditor is in dispute, the suit, by leave of the
court in bankruptcy, may proceed to judgment for the purpose of
ascertaining the amount due, which amount may be proved in bank-
tuptey, but execution shall be stayed.

Statute revised — March 2, 1867, ch. 176, § 21, 14 Stat. 526.

The object of this section is to prevent a race of diligence between cred-
itors, and to prevent the bankrupt from being harassed with suits while
he is proceeding in good faith to obtain his discharge, and until the
question of his discharge is determined, and he either obtains it or is
refused it. [t applies to all cases where the personal liability of the
debter is sought to be fixed or ascertained by a final judgment, pending
the determination of the question of his discharge. In re M. Rosenberg, 2
B. R, 236; s. c. 3 Ben. 14; in re Metcalf & Duncan, 1 B. R. 201; 8. c. 2
Ben. 78,

An action to recover a provable debt is to be stayed until a determina-
tion is had as to the discharge, whether the debt be one that will be dis-
charged or one that will not be discharged. There is no good reason why
the bankruptcy court should enter into the inquiry whether a discharge
will operate to discharge any particular debt. The inquiry is one properly
to be made only by the court in which a direct suit on the debt is pending,
634 Tue Bankruptcy Law.

and whose determination will be a binding judgment on the question be-
tween the parties. In re M. Rosenberg, 2 B. R. 286; s. c. 3 Ben. 14; in re
Migel, 2 B. R. 481; in re Seymour, 1 B. R. 29; s. c. 1 Ben. 348; in re W. B.
Duncan, 14 B. R. 18; in re Henry Schwarz, 15 B. R. 330; s. ec. 52 How.
Pr, 518.

Whether a discharge will release a particular debt is a question that
can only be determined properly when the discharge is pleaded in an
action brought to enforce it. The attempt to determine in advance what
the effect will be, when as yet it is not known whether any discharge will
be granted, is premature and unnecessary. The act does not in terms pro-
hibit the commencement of a suit to enforce a provable debt. Whenever
it appears that the suit is one to which a discharge would be no bar, and
that, if not commenced forthwith, the statute of limitations might run
against it, or that service might not be obtained upon the bankrupt, or that
testimony might be lost, the court may permit the suit to commence for the
purpose of saving the statute, effecting a service, or securing testimony.
When these objects are attained, the suit can be stayed to await the deter-
mination of the question of the debtor’s discharge, or the expiration of a
reasonable time therefor. But in order to obtain such permission, the
creditor must show special reasons; and leave to prosecute will be granted
only so far as may be absolutely necessary to secure his rights. In re
Ghiradelli & Co., 4 B. R. 164; s. c. 1 Saw. 343; s.c. 2 L. T. B. 185.

When a creditor applies for leave to institute suit against the bankrupt,
the court will direct personal service of notice of the application on the
bankrupt. In re George R. Magee, 1 W. N. 21.

Where there is an unreasonable delay in obtaining a discharge, the
court may allow a creditor to institute a suit against the bankrupt, pro-
vided that no execution is levied upon any property which belonged
to the bankrupt at the commencement of the proceedings in bankruptcy.
In re Chester M. Whiting, 1 W. N. 30; in re Samuel S. Scott, 1 W. N. 30.

The granting of leave to institute a suit by the bankruptcy court is
conclusive evidence in a State court that the bankrupt has lost his im-
munity from suit by misconduct or delay. Williams v. Whiting, 1 W. N.
94.

The provisions of this section and the preceding section are addressed
quite as much to the State courts as to the bankruptcy tribunals, and are
to be applied and enforced by the former quite as much as by the latter.
In re M. Rosenberg, 2 B. R. 236; s. c. 3 Ben. 14; in re Metealf & Duncan, 1
B. R. 201; s. c. 2 Ben. 78; Samson v. Burton, 4 B. R. 1; s. c. 5 Ben. 325;
Delavergne vy. Farrard, 1 Mich. N. P. 90; Nat’l. Bank v. Taylor, 120 Mass.
124. Contra, Garrett v. Carow, 3 Houst. 352; Givens v. Robbins, 5 Ala.
676.

The discharge when granted relates back to the commencement of the
proceedings in bankruptcy, and protects all the subsequent acquisitions
from coercive appropriation to the satisfaction of antecedent debts. The
Siate courts may, therefore, grant an injunction to protect the bankrupt’s
property until he can obtain a discharge. Turner vy. Gatewood, 8 B. Mon.
613; Mosby vy. Steele, 7 Ala. 299.
SUITS BY AND AGAINST BANKRUPTS. 635

If a creditor obtains a judgment after the commencement of the pro-
ceedings in bankruptcy, the bankrupt may obtain an injunction restrain-
ing proceedings under an execution issued thereon until the question in
relation to a discharge is determined. Keating v. Arthur, 27 La. An. 570.

In cases of voluntary bankruptcy, an application for a stay may be
made as soon as the petition is filed; but no application can be made in
cases of involuntary bankruptcy until the order of adjudication is passed.
Maxwell v. Faxton, + B. R. 210; s. ¢. 18 Pitts. L. J. 107. Contra, in re
Bromley & Co., 3 B. R. 686.

The objects and purposes of this section are: 1st. That the already ac-
quired property of the bankrupt shall not be subjected to the payment
of his debts by means of a judgment recovered after the filing of the
petition, or of proceedings had on such judgment. 2d. That the bankrupt
shall not be needlessly subjected to actions and suits. 3d. And, perhaps,
to enable the bankrupt to claim protection as against such actions and
suits through his discharge, if he obtains it. These are the only pur-
poses and objects which the provisions for a stay can, by any possibility,
be supposed designed to carry out. But such provisions must be con-
strued in connection with the clause in section 5117, which provides that
“no discharge granted under this act shall release, discharze, or affect
aay person liable for the same debt for or with the bankrupt, either as
partner, joint contractor, indorser, surety, or otherwise.’ Since it is neces-
sary, in cases of partners and joint contractors, that an action shall he
brought against all the partners and all the joint contractors, to proceed
against them all, and that the judgment to be rendered shall be a joint
judgment against all, unless one or more of them shall have died, or been
discharged from the obligation of the contract or indebtedness by opera-
tion of law, an action against the bankrupt and certain other parties, upon
a joint contract made by them, will not be stayed, but may be prosecuted
to judgment, and an order entered staying all proceedings against the
bankrupt upon the judgment. This course does not interfere with the
attainment of the objects sought by the bankruptcy law. Nor will a stay
of the proceedings against the other joint defendants be granted, since the
filing of the petition in bankruptcy can not have a greater effect than the
discharge. Hoyt v. Freel, 4 B. R. 131; s. c. 8 Abb. Pr. (N. 8.) 220; 8. ¢.
2L. T. B. 144; Givens v. Robbins, 5 Ala. 676. Contra, Tinkum v. O’Neale,
5 Nev. 93.

If one of two partners become bankrupt while an action for the con-
version of property is pending, the suit may be prosecuted against the
other partner, although it is stayed as to the bankrupt. Hogendobler v.
Lyon, 12 Kans. 276.

Where one partner is bankrupt, the proceedings may be stayed as to
him, and a judgment may be entered against the other partner, to be en-
forced against the partnership property and the property of the solvent
partner. Loome v. Kintzing, 1 Mont. 290.

This clause contemplates application by the debtor for a stay under its
provision, unless the creditor proves his debt, which operates as a stay,
and in strictness he should apply for such a stay. But where he has
636 Tue Bankruptcy Law.

omitted to apply for such a stay, and judgment has been rendered against
him, he may, nevertheless, interpose his discharge, and obtain a stay of
proceedings for an examination supplementary to the judgment founded
upon a debt from which he is released by his discharge, on the payment
of the costs that accrued in the suit subsequent to the filing of his petition
in bankruptcy, and the costs of the motion for such a stay. World Co. v.
Brcoks, 8 B. R. 588; s. e. 7 Abb. Pr. (N. 8.) 212.

A stay may be granted although the name of the creditor does not
appear upon the proceedings, and no notice thereof has been served
upon him. In re Wm. Archenbraun, 11 B. R. 149; s.¢ 7 C. L. N. 99.

Quaere, Do the words “any such suit or proceeding” include some-
thing more than any suit at law or in equity? And will they cover any
legal mode of enforcing payment of a provable debt? Would a creditor
who should undertake to prosecute a proceeding in admiralty, or to seize
on execution after-acquired property of the bankrupt, be within the
scope, as he clearly would be within the mischief, of this section? If
this be so, no creditor holding a provable debt can prosecute any pro-
ceedings for its recovery pending the bankruptcy. Minon v. Van Nostrand,
4B. R. 108; s. c. Lowell, 458; s. c. 1 Holmes, 251.

The district court can not stay proceedings upon charges filed with a
magistrate, before whom the bankrupt had, prior to the filing of his
petition, given his recognizance to appear for examination, under the
laws for the relief of poor debtors, in order to release nimself from arrest.
The bankrupt having, before his bankruptcy, given a recognizance to take
the poor debtor’s oath, or surrender, and the arrest not being avoided
by the bankruptcy, the district court has no right to avoid it indirectly
by requiring the proceedings under it and which are instituted at tbe
debtor’s instance to be conducted in any particular manner, or to he stayed
in part for his further advantage. The filing of the charges does not
appear to be a suit or proceeding for the recovery of the debt more
than would be a renewal of the execution, or the charging in execution,
or any other matter incidental to the lawful arrest. Ibid.

A claim in tort for a personal injury can not be stayed, for it is not
provable until final judgment is obtained. In re Hennocksburg & Block,
7 B. R. 87; s. c. 6 Ben. 150.

If a verdict is rendered in an action for a personal tort prior to the
commencement of the proceedings in bankruptcy, the proceedings for
the entry of a judgment on the verdict will not be stayed. Zimmer V.
Schleehauf, 11 B. R. 318; s. ec. 115 Mass. 52..

A suit against a corporation will not be stayed. Meyer v. Aurora
Ins. Co., 7 B. R. 191.

A proceeding to revive a judgment so that it may operate as a tien on
real estate is a proceeding that may be stayed. Bratton v. Anderson, 14
B. R. 99; s. c. 5 Rich. (N. 8.) 504.

A judgment entered after a motion for a stay of proceedings is e!-
roneous, although it provides that no execution shall issue without a
further order of the court. McKay vy. Funk, 18 B. R. 334; s. ¢. 37 Iowa,
661.
SUITS BY AND AGAInst BANKRUPTS. 637

If a motion is made for a stay of the proceedings in an action 10 fore-
close a mortgage, that portion thereof looking to a personal judgment
against the mortgagor should be stayed. Ibid.

Where an attachment was issued more than four months before the
commencement of the proceedings in bankruptcy, the proceedings for
a judgment in rem agaiust the property will not be stayed. Mason y.
Warthens, 14 B. R. 341; s. c. 7 W. Va. 5382.

A proceeding on an attachment issued more than four months before
the commencement of the proceedings in bankruptcy may be stayed. Ray
y. Wight, 14 B. R. 563; s. c. 119 Mass. 426.

The running of the statute of limitations is suspended during the time
that proceedings against the debtor may be stayed. Von Sachs v. Kretz,
17 N. Y. Supr. 95.

If the creditor institutes his suit within the time limited by the State
‘law, in order to render a stockholder liable for his debt, but is prevented
from obtaining a judgment by an injunction issued from the district court
at the instance of the stockholders, the latter can not, in a suit against him,
object that no judgment has been obtained. Shellington v. Howland, 53
N. Y. 871.

The suggestion of bankruptcy is one to be made by the bankrupt. The
continuance by the bankruptcy law is to be granted ‘upon the appli-
cation of the bankrupt.’ The plea of a discharge in bankruptcy is a
personal one, which the defendant may make, or not, at his own election.
If the defendant declines relying upon the privilege granted by the stat-
ute, the cause proceeds to trial. If judgment is rendered against him, it
is a valid judgment, and is unaffected by his discharge. The plaintiff
has no more right to suggest the bankruptcy of the defendant than he
has to plead his certificate of discharge, if he obtain one. He can no
more file one plea for him than another. The defendant is the judge of
‘his own defense. The suggestion of bankruptcy is not like the suggestion
-of the death of a party; in that case no valid judgment can be rendered
against the deceased. But notwithstanding the defendant’s bankruptcy,
a valid judgment can be rendered against him, unless he avails himself
of the proceedings in bankruptcy. Palmer v. Merrill, 57 Me. 26; in re
Leibenstein et al., 4 C. L. N. 309.

In Maine it was the intention of the legislature in enacting the act of
1868, ch. 157, that a defendant, whether alone or one of many defendants,
taking advantage of his bankruptcy, should not recover costs if the plain-
tiff should elect to strike his name from the writ. The striking of the
defendant’s name from the writ is a discontinuance. It is not neces-
‘sary that the technical term discontinuance should be used. Severy v.
Bartlett, 57 Me. 416.

It is not the duty of the court to stay proceedings upon being advised
that the debtor has filed his petition in bankruptcy, whether asked to do so
or not. Courts seldom act as counsel for parties, or thrust legal rights
upon them. It is the duty of counsel to present the causes of their
clients, and of the courts to pass upon such matters as are presented.
Stone v, Nat'l. Bank, 39 Ind. 284.
638 THe Bankruptcy Law.

Where the creditor has not proved his claim in bankruptcy, the pendency
of the proceedings in bankruptcy can not be pleaded in bar of an action
to recover the claim before the debtor’s final discharge. Ibid.

An affidavit of defense that the defendant has been adjudged bank-
rupt is sufficient to prevent the entry of a judgment against him until he
has a reasonable time to apply for a discharge. Frostman v. Hicks, 15
B. R. 41s. c. 8 W. N. 202; s. c. 24 Pitts. L. J. 80.

A suggestion of the bankruptcy of the appellee on the information and
belief of the appellant is not such evidence as will justify any action on
the part of the appellate court. Booker v. Adkins, 48 Ala. 529.

The motion for a continuance must be properly presented, and an
adjudication obtained thereon, before the entry of a judgment. A motion
which is not served upon the plaintiff nor brought to the notice of the
court is not sufficient. Dunbar vy. Baker, 104 Mass 211. ‘

When it appears from the record in the appellate court that a cause

against several defendants was continued as to some of them, -on their
plea of bankruptcy, the appellate court will presume that sufficient evi-
dence of the truth of the plea was shown to the court, unless. the con-
trary is made to appear. Melvin v. Clark, 45 Ala. 285.
' The suggestion of the defendant’s bankruptcy operates as an injunction
against the further prosecution of the suit, and such further proceedings
must be deemed void while the injunction continues. Penny v. Taylor,
10 B. R. 200.

This provision is especially addressed to the bankruptcy court, and the
stay provided for is to be, and is in practice, granted by that court.
The option to endeavor to obtain a discharge, and failing in that, to de-
fend all undetermined personal actions, is a right given to a debtor by
the bankruptcy act under the Constitution of the United States, and he is
entitled to be protected in that right by the bankruptcy court. In re
M. Rosenberg, 2 B. R. 236; s. c. 3 Ben. 14; in re Metcalf & Duncan, 1 B. R.
201; s. c. 2 Ben. 78; in re Horatio Reed, 1 B. R. 1; in re Jacoby, 1 B. R.
118; in re Louis Meyers, 1 B. R. 581; s. ec. 2 Ben. 424; Samson v. Burton,
4B. BR. 1; 8s. c. 5 Ben. 325; Stinson v. McMurray, 6 Humph. 339.

This provision was intended for the protection of the debtor. Still it
is obvious that the district court has the power to stay creditors from
proceeding at all in a State court until the question of discharge is
determined. The assignee may apply for the stay, but the granting of the
same is a matter resting in the discretion of the court, and will be re-
fused when it would lead to embarrassment and delay. Samson v. Bur-
ton, 4 B. R. 1; s. ec. 5 Ben. 325.

The stay is temporary. The object of the stay is to give time for
putting into action the permanent bar to the debt. If the discharge is
refused, the stay ceases; its object having been accomplished, and the
bankrupt having had an opportunity, unharassed by suits, to endeavor
to obtain his discharge. If the discharge is granted, the stay ceases. The
bankrupt is then able to plead his discharge in any suit. When the dis-
charge is pleaded, the question of the extent of its operation upon the
debts of the bankrupt comes up for determination by the court in which
it is pleaded. In re M. Rosenberg, 2 B. R. 236; s. c. 8 Ben. 14.
SuITs BY AND AGAINST BANKRUPTS. 639

The language of the injunction should be in accordance with the stat-
ute. The injunction only continues in force until the question of dis-
charge can be determined. The effect of the discharge is to terminate the
injunction. No motion for a dissolution is needed. No order to show the
termination is required. The bankrupt must use his discharge as his pro-
tection in cases thereby affected. In re Veeder G. Thomas, 3 B. R. 38.

If a motion was made for a continuance upon a suggestion of the de-
fendant’s bankruptcy before judgment, a discharge may be pleaded on
the allowance of a writ of review. Todd vy. Barton, 13 B. R. 197; s. «
117 Mass. 291.

If the court is satisfied that the refusal of a continuance on the sugges-
tion of the bankruptcy of the defendant has worked injustice to him, it
may in its discretion grant him a review. Ibid.

An affirmance of a judgment by an appellate court, where no sugges-
tion of the bankruptcy of the appellant is made, is valid although the
proceedings are then pending. Flanagan v. Pearson, 14 B. R. 87; 8. «
42 Tex. 1. j

If the defendant is adjudged bankrupt after the rendition of a judg-
ment against him in an action of ejectment, this is no ground for stay-
ing proceedings in an appellate court. Alston v. Wingfield, 53 Ga. 18.

An action pending in the court of appeals of the State, to which an
appeal was taken by the bankrupt prior to the commencement of pro-
ceedings in bankruptcy, may be stayed. In such a case there is no final
judgment within the meaning of the bankruptcy act. A motion for
further security in such a suit on the part of the creditor is a proceed-
ing against the bankrupt. In re Metcalf & Duncan, 1 B. R. 201; s. «.
2 Ben. 78; in re Leszynski, 3 Ben. 487.

A judgment in a subordinate court, from which an appeal is taken,
is final in the sense of this section. It is not the purpose of the statute
to suspend the right of a plaintiff to maintain in the appellate court the
correctness and validity of a judgment from which the bankrupt may
choose to take an appeal, until the determination of the question of his
discharge. Proceedings in the appellate court will not be stayed when
the defendant appeals and then becomes bankrupt. Merritt v. Glidden, 5
B. R. 157; s. ¢. 89 Cal. 559.

If the appellee becomes bankrupt after the submission of the case
in the appellate court, the judgment will be rendered as of the date of
the submission. Booker v. Adkins, 48 Ala. 529.

If the sheriff, acting under an execution issued upon a judgment ren-
dered after the commencement of the proceedings in bankruptcy, pro-
ceeds to sell the property after he is served with an injunction from the
district court, he may be held liable in an action of trespass for the
damages. Stinson v. McMurray, 6 Humph. 339; Turner vy. Gatewood, 8
B. Mon, 613. :

Where the action of the creditor does not tend to enforce any demand
against the bankrupt, nor deprive the assignee of any property or right,
the stay is not violated. In re Hirsch, 2 B. R. 3; s. c. 2 Ben. 493; s.¢.1 L.
T. B, 92,
640 Tur Bankruptcy Law.

The power conferred upon the district court by this section, of grant-
ing injunctions to stay suits and proceedings to recover debts from a
bankrupt, is not granted to any other court than the “court. in bank-
ruptecy,” which means the court where the proceedings in bankruptcy are
pending. When the bankrupt applies for the benefit of the bankruptcy
act in one district, the district court of another district has no power to

_ grant an injunction to stay suits brought by creditors against him. In
re H. Richardson et al., 2 B. R. 202; s. c. 2 Ben. 517; s. c. 2 L. T. B. 20.

When the amount of the debt is in dispute, the suit should be allowed
to proceed to judgment. In re Rundle & Jones, 2 B. R. 113; in re H.
Richardson et al., 2 B. R. 202; s. c. 2 Ben. 517; s. c. 2 L. T. B. 20; Norton
v. Switzer, 93 U. S. 355; s. c. 27 La. An. 25.

So long as the adjudication of bankruptcy stands unrevoked, all in-
quiry as to the validity or existence of the debt claimed to be due to the
petitioning creditor in involuntary proceedings is precluded. The debt due
to such creditor was established for the purposes of the adjudication, and
neither the debt nor the adjudication can be attacked upon a motion to
vacate an order staying proceedings in a State court. In re Fallon, 2 B.
R. 277.

The order staying proceedings will be vacated when there is unreasonable
delay in procuring a discharge. In re W. Belden, 6 B. R. 448; s. c. 5 Ben.
476.

A. creditor who has not proved his debt has no status in the court of
bankruptcy. He does not submit himself to its jurisdiction, and his right
to proceed is no farther affected than it is affected by the restraining
words of the statute. But this restraint is by the very terms of the
statute subject to a condition, and that condition is that the restraint
shall not exist if the bankrupt does not use reasonable diligence to
obtain his discharge. But the suit can only be stayed by the court in
which it is pending. There is no reason for sending him into the court
of bankruptcy to apply for permission to proceed. If there has been un-
reasonable delay, the proceedings in bankruptcy do not arrest his suit,
and he has a right to proceed, which has not been surrendered by any
act of his, and which the law has not taken away from him. In such a
case the question of unreasonable delay must necessarily be a question to
be determined by the court in which the creditor’s action is pending.
Dingee v. Becker, 9 B. R. 508; s. ec. 9 Phila. 196.

Act oF 1898, Cu. 3, § 9. Protection and Detention of Bank-
rupts.— (a) A bankrupt shall be exempt from arrest upon civil
process except in the following cases: (1) When issued from a court
of bankruptcy for contempt or disobedience of its lawful orders;
(2) when issued from a State court having jurisdiction, and served
within such State, upon a debt or claim from which his discharge
in bankruptcy would not be a release, and in such case he shall be
exempt from such arrest when in attendance upon a court of bank-
ruptcy or engaged in the performance of a duty imposed by this Act.
PROTECTION AND DETENTION. 641

(b) The judge may, at any time after the filing of a petition by
or against a person, and before the expiration of one month after
the qualification of the trustee, upon satisfactory proof by the affi-
davits of at least two persons that such bankrupt is about to leave
the district in which he resides or has his principal place of business
to avoid examination, and that his departure will defeat the proceed-
ings in bankruptcy, issue a warrant to the marshal, directing him
to bring such bankrupt forthwith before the court for examination.
If upon hearing the evidence of the parties it shall appear to the
court or a judge thereof that the allegations are true and that it
is necessary, he shall order such marshal to keep such bankrupt in
custody not exceeding ten days, but not imprison him, until he shall
be examined and released or give bail conditioned for his appearance
for examination, from time to time, not exceeding in all ten days, as
required by the court, and for his obedience to all lawful orders
made in reference thereto.

Act oF 1867, § 5107. No bankrupt shall be liable during the
pendency of the proceedings in bankruptcy to arrest in any civil
action, unless the same is founded on some debt or claim from which
his discharge in bankruptcy would not release him.

Statute revised — March 2, 1867, ch. 176, § 26, 14 Stat. 529. Prior
Statute — April 4, 1800, ch. 19, §§ 22, 38, 60, 2 Stat. 27, 32, 35.

If the debt was created by fraud, the bankrupt will not be released
from arrest. In re Martin Alsberg, 16 B. R. 116.

The right of the debtor to a release from arrest depends on the evi-
dence produced in the district court to prove that the debt is one from
which a discharge will not release him, and not upon the reasons which
may have been filed in the State court for the arrest. Ibid.

A bankrupt arrested under order of arrest granted by a State court
in an action founded upon a claim for proceeds of goods consigned for
sale as factors: Held, he was entitled to discharge from such arrest,
the liability being one which is released by discharge in bankruptcy.
In re Smith et al., 18 B. R. 24. 5

Adjudication of a bankrupt under arrest in a civil action, pending at
the time proceedings were commenced, does not entitle him to a release
from such arrest. Brandon Nat’l. Bk. v. Hatch, 16 B. R. 468.

Bankruptcy law of 1867 did not authorize arrest of a bankrupt in
voluntary proceedings. In re Hale, 18 B. R. 335.

The district courts are competent to relieve the bankrupt from arrest
on process from a State court, provided the arrest was foundéd upon
a debt from which a discharge in bankruptcy would release him. In
re L. Glaser, 1 B. R. 336; s. c. 2 Ben. 180; s. c. 1 L. T. B. 57; in re Boyst,
2B. RB. 171; State v. Rollins, 138 Mo. 179; U. 8S. v. Dobbins, 1 Penn. L. J.

41
642 Tur BANKRUPTCY Law.

91; s. «. 5 Law Rep. 81; in re Mifflin, 1 Penn. L. J. 146; in re Grenville 'T.
Winthrop, 5 Law Rep. 24; in re Samuel T. Taylor, 16 B. R. 40. Vide
in re Edson Comstock, 22 Vt. 642; Robb v. Powers, 7 Ala. 658.

The district courts must necessarily inquire into that question and de-
cide it for themselves. The question is,one of fact, which can not he
decided on ex parte testimony. In re L. Glaser, 1 B. R. 336; s. c. 2 Ben.
180; s.c.1L. T. B. 57; in re Boyst, 2 B. R. 171.

The proper course is to issue a writ of habeas corpus, and on the hearing
to discharge the bankrupt from arrest. In re Williams & McPheeters, 11
B. R. 145; s. c. 6 Biss. 233.

The bankrupt should apply in the first instance to the State court, for
that will avoid a conflict of jurisdiction. In re Michael O’Mara, 4 Biss,
506.

Evidence can not be introduced to show that the averments in the
declaration upon which the arrest is founded are false. In re Devoe, 2
B. R. 27; s. ec. Lowell, 251; s.c. 1 L. T. B. 90; in re J. H. Kimball, 2 B. R.
204, 354; s. c. 2 Ben. 554; s. c. 6 Blatch. 292.

When it appears from the face of the proceedings that the debt is one
from which a discharge will not release the debtor, he can not be re-
lieved. It is not necessary that this should appear from the declaration.
It is sufficient if it appear from the affidavit and order of arrest, even
though these are ex parte. Their verity can not be called in question in
the bankruptcy court. They are entitled to as much credit as more
formal and specific proceedings. In re J. H. Kimball, 2 B. R. 204, 354; s.
ce. 2 Ben. 554; s. c. 6 Blatch. 292; in re W. E. Robinson, 2 B. R. 342; 5. «
36 How. Pr. 176; s. ce. 6 Blatch. 253; s. c. 2 L. T. B. 18; in re Migel, 2 B. R.
481; in re Leibenstein et al., 4 C. L. N. 309. Contra, in re Williams &
McPheeters, 11 B. R. 145; s. c. 6 Biss. 233.

The necessity for an examination by the district court of the papers
on which the arrest is founded, is not to determine whether the bankrupt
was liable by the State law to arrest, or whether he was arrested on a
debt which is in fact not dischargeable, in bankruptcy, but solely to.
determine whether the State court intended, in ordering the arrest, to
found it on a debt or claim which would not be discharged by a discharge
in bankruptcy. The distinction is a plain one. If the bankrupt claims
that, on the merits, the facts on which the State court acted in ordering
his arrest did not exist, he must try that question in the State court. The
district court can not go into such an inquiry. It can not try that ques-
tion on affidavits or by proofs. In re Valk et al., 3 B. R. 278; s. ec. 3 Ben.
431.

The bankrupt should move for a discharge in the State court, and
controvert the facts on that motion. In re Migel, 2 B. R. 481.

A judgment rendered upon a complaint setting forth all the facts that
make up the fraud is conclusive evidence of the fraud. In re Patterson,
1B. R. 307; s. c. 2 Ben. 155; in re Seymour, 1 B. R. 29; s. ce. 1 Ben. 348; in
re Pettis, 2 B. R. 44; 8s. c. 7 A. L. Reg. 695.

A judgment rendered in an action for deceit does not so merge the
original cause of action as to make the demand dischargeable. The
PROTECTION AND DrETENTIon. 643

record of the action in which the execution issues may be looked at, and
if it shows a material and traversable allegation of fraud as its sole
foundation, the debt or demand may fairly be said to be one founded
in fraud, and the action to be one founded upon a debt or claim from
which the bankrupt’s discharge would not release him. In re Whitehouse,
4B. R. 63; s. c. Lowell, 429.

But where the debt is one from which a discharge in bankruptcy will
not release the bankrupt, he can not be relieved. In re L. Glaser, 1 B. R.
336; s. c. 2 Ben. 180; s. c. 1 L. T. B. 57; in re Patterson, 1 B. R. 307; 8. ¢.
2 Ben. 155; in re Seymour, 1 B. R. 29; s. c. 1 Ben. 348; in re Pettis, 2
B. R. 44; s. c. 7 A. L. Reg. 695; in re G. W. Kimball, 1 B. R. 198; s. c¢.
2 Ben. 38; in re Devoe, 2 B. R. 27; s. c. Lowell, 251; s.c. 1 L. T. B. 90;
Horter v. Harlan, 7 B. R. 238; s. ¢. 9 Phila. 63. ,

Though the State court would probably release the debtor, it is the
duty of the district court to see that he is released, and to protect him.
In re Simpson, 2 B. R. 47; in re Wiggers, 2 Biss. 71.

The refusal of a previous application by the State court is not final and
binding. In re Wiggers, 2 Biss. 71.

It was obviously the object of the law to bring the bankrupt at all
times within the control and disposition of the district court, and the
State courts can not have control over the bankrupt in a manner different
from that authorized by the law. In re Wiggers, 2 Biss. 71; Bishop v.
Loewen, 2 Penn. L. J. 364.

There is no distinction between an arrest on mesne and final process.
So far as the arrest is concerned the object and intent of this clause
are the same. In re Wiggers, 2 Biss. 71; in re Mifflin, 1 Penn. L. J. 146.

The district court has the power to require a citizen within its juris-
diction to release a person held in custody beyond its jurisdiction. Hazle-
ton v. Valentine, 2 B. R. 31; s. c. Lowell, 270; s.c. 1 L. T. B. 105.

Rule XXVII applies only to the court in which the proceedings in
bankruptcy are pending. In re Seymour, 1 B. R. 29; s. c. 1 Ben. 348.

The authority of the district court to release a bankrupt from imprison-
ment applies only to cases where the arrest is made after the commence-
ment of proceedings in bankruptcy. In re W. A. Walker, 1 B. R. 318; s. ¢.
Lowell, 222; Hazleton v. Valentine, 2 B. R. 31; s. ¢. Lowell, 270; s. @
1L. T. B. 105; Minon v. Van Nostrand, 4 B. R. 108; s. c. Lowell, 458; s. ¢.
1 Holmes, 251; in re Hoskins, Crabbe, 466; Schulze v. Fleischer. 1 Penn. L.
J. 11; in re Rank, Crabbe, 493; in re Jonathan H. Cheney, 5 Law Rep. 19.

The arrest contemplated is manifestly a new arrest for the benefit of
the creditor. The fact that the debtor was not found guilty by the
magistrate in the proceedings before him under the act relating to poor
debtors, and was, therefore, permitted to go at large pending the ap-
peal, does not make the taking of his body on execution, in case of his
ultimate conviction, a new arrest. So far as the creditor is concerned,
it is a restoring of the debtor to the confinement from which he had
obtained a temporary relief pending the appeal. It is not an arrest
a the contemplation of this clause. Stockwell v. Silloway, 100 Mass

7.
644 Tue Banxruptcy Law.

A-prisoner out on bail is theoretically and practically in arrest, sub-
Stantially, to all intents and purposes, the same as if he had not been
released on bail. Hazleton v. Valentine, 2 B. R. 31; s. ec. Lowell, 270;
g.c.1L. T. B. 105; in re Rank, Crabbe, 493; in re Jonathan H. Cheney,
5 Law Rep. 19. Vide Foxall v. Levi, 1 Cranch C. C. 139; Lingan v. Bai-
ley, 1 Cranch C. C. 112.

The proceeding to discharge a debtor from arrest is very limited in
its scope. The action of the district court is confined, in point of time,
to the pendency of the proceedings in bankruptcy. They are pending,
so far as the debtor is entitled to relief by virtue of the provisions of
this section, only until the termination of proceedings for the discharge of
the bankrupt. In re J. H. Kimball, 2 B. R. 204; s. ec. 2 Ben. 554; s. «
6 Blatch. 292; in re Nathaniel Dole, 7 B. R. 538; s. c. 9 B. R. 193; s. ¢. 11
Blatch. 499. :

Where a debtor files his petition in one district, the district court of
another district may, in a proper case, release him from arrest under the
provisions of section 753. In re Seymour, 1 B. R. 29; s. c. 1 Ben. 348.

Proceedings in voluntary bankruptcy by an imprisoned debtor is a
fraud upon the State laws, and will prevent his obtaining a discharge
under them. An account of his property, which only includes what re-
mains after the assignment in bankruptcy, is defective and insufficient.
People v. Brooks, 40 How. Pr. 165.

If, prior to being charged in execution, a debtor makes a valid assign-
ment of his property, by filing his petition in bankruptcy, the fact of his
having done so will not bar his discharge under the State laws; nor
can he he required to assign more than his contingent interest in such
property, in the event of its being more than sufficient to pay his debts,
or of the bankruptcy proceedings being dismissed or discontinued.
Roswig v. Seymour, 7 Robt. 427.

The State court will release the party from arrest as well as the district
court. Jones v. Emerson, 1 Caines, 487.

After the bankrupt has received. his ‘discharge, the State court will, on
a proper application, release him from arrest. Comstock v. Grout, 17
Vt. 512. .

A creditor who holds the bankrupt under arrest, upon process issued
before the commencement of the proceedings in bankruptcy, will not be
permitted to prove his debt, unless he consents to discharge the bank-
rupt from custody. In re Jonathan H. Cheney, 5 Law Rep. 19.

Act or 1898, CH. 3, § 14. Discharges, when Granted. — (a)
Any person may, after the expiration of one month and within the
next twelve months subsequent to being adjudged a bankrupt, file
an application for a discharge in the court of bankruptcy in which
the proceedings are pending; if it shall be made to appear to the
judge that the bankrupt was unavoidably prevented from filing it
within such time, it may be filed within but not after the expiration
of the next six months.
DISCHARGE. 645

Act oF 186%, § 5108.1 At any time after the expiration of six
months from the adjudication of bankruptcy, or if no debts have
_ been proved against the bankrupt, or, if no assets have come to the
hands of the assignee, at any time after the expiration of sixty days,
and before the final disposition of the cause, the bankrupt may apply
to the court for a discharge from his debts. This section shall apply
in all cases heretofore or hereafter commenced.

Statute revised — March 2, 1867, ch. 176, § 29, 14 Stat. 531. Prior
Statute — Aug. 19, 1841, ch. 9, § 4, 5 Stat. 443.

A bankrupt must apply for his discharge before the final disposition
of the administration of the estate. In re Wm. C. Brightman, 15 B. R. 213,

The law allows the bankrupt to apply for his discharge after the ex-
piration of sixty days from the adjudication, and within six months, either
when no debts.have been proved, or when no assets have come to the
hands of the assignee. It is only when both debts have been proved and
assets have come to the hands of the assignee, that the discharge can
not be applied for until after the expiration of six months. In re B. W.
& J. H. Woolums, 1 B. R. 496.

Where, up to the time of the application for the discharge, the assignee
has neither received nor paid any moneys on account of the estate, the
case is to be regarded as one where no assets have come to his hands, even
though he may have reason to believe that he will thereafter receive
money on account of the estate as the proceeds out of the assets thereof,
In re Dodge, 1 B. R. 485; s. c. 2 Ben. 347; in re Hughes, 1 B. R. 226; s. ¢.
2 Ben. 8; s.ca.1 L. T. B. 45. :

Certificates of stocks or claims against debtors of the bankrupt, which
up to the time of the application of the bankrupt for a discharge have
not actually produced anything, and for which the only offer made is
the offer of a small sum of money, while there is strong evidence that
these stocks and claims are absolutely worthless, may very justly be said
not to be assets at the time of the application for a discharge, whatever
they may be, or may become afterward. In re Solis, 3 B. RB. 761; s. c. 4
Ben. 143.

Notes, accounts, and claims against others, on which no money has been
received, are not considered as assets. In re Dodge, 1 B. R. 485; s. ¢,
2 Ben. 347; in re Hughes, 1 B. R. 226; s. c. 2 Ben. 85; s. c. 1 L. T. B. 45,

The interpretation given to the term ‘no assets” by the justices of
- the supreme court, in Form No. 35, is, that the assignee has not received
or paid out any money on account of the estate. In re Dodge, 1B. R
435; s. c. 2 Ben. 347.

It is not necessary, on presenting a petition for discharge, to produce
the assignee’s return, nor any certificate from the assignee that no as-
sets have come to his ‘hands, nor any other evidence than the mere state-
ment in the petition that no debts have been proved, or that no assets

180 amended by act of July 26, 1876, ch. 234, § 1, 19 Stat. 102.
646 Ture Bankruptcy Law.

have come to the hands of the assignee. Of course, upon the return of
the order to show cause made upon the bankrupt’s application for his
discharge, the court will not grant the discharge without satisfactory
evidence that no debts have been proved, or that no assets have come
to the hands of the assignee. The highest evidence as to debts, and the
highest evidence as to assets, are in the hands of the assignee. The
evidence, therefore, must come from him. In re Bellamy, 1 B. R. 64;
s. ec. 1 Ben. 890; s.c. 1 L. T. B. 22.

The assignee, when requested by the bankrupt, should make his return
on Form No. 35, when’he has not in fact received or paid out any money
on account of the estate, even though he may have reason to believe that
he will, at some future time, receive moneys on account of the same.
In re Hughes, 1 B. R. 226; s. c. 2 Ben. 85; s. c. 1 L. T. B. 45.

The register has the power to pass an order requiring the assignee to
makeareturn. In re Bellamy, 1 B. R. 64; s. c. 1 Ben. 390;s.c.1L. T. B.
22.

When debts have been proved, and assets have come to the hands of
the assignee, an application for a discharge can not be filed before the
expiration of six months from the adjudication of bankruptcy. The six
months is to be computed from the date of adjudication — not from the
date of filing the original petition. In re Bodenheim & Adler, 2 B. R. 419;
s.c. 2 L. T. B. 64; in re D. K. Holmes, 14 B. R. 209.

When no debts have been proved and no assets have come to the hands
of the assignee, the bankrupt may apply for a discharge even after the
expiration of six months. In re Cannaday, 3 B. R. 1; s. c. 2 Biss. 75; in
re Vorbeck, 1 Pac. L. R. 100; in re Donaldson, 11 B. R. 460; s. c. 2 Dillon,
346; in re Wm. H. Pierson, 10 B. R. 107. Contra, in re Wilmott, 2 B. R.
214; in re Franklin A. Sloan, 12 B. R. 59; s. c. 13 Blatch. 67; in re Anson
Martin, 2 B. R. 548; in re Gallison et al., 5 B. R. 3538; s.c. 2 L. T. B. 195;
in re Schenck, 5 B. R. 93; in re Farrell, 5 B. R. 125; in re Barrett, 11 B.
R. 527; s. c. 1 Cent. L. J. 556; in re Greenfield, 2 B. R. 298, 311; s. c 6
Blatch. 287; in re Watson & Reynolds, 1 W. N. 86, 334; s. c. 2 W. N. 356;
in re Lowenstein, 18 B. R. 479; s. c. 3 Dillon, 145.

The fact that the debtor is an involuntary bankrupt does not of itself
alone prevent his discharge. If sections 5110 and 5112 do not prevent
it, he is entitled to a discharge. In re S. D. Clark, 3 B. R. 16; s. ¢. 2 Biss.
73; in re Dibblee et al., 2 B. R. 617; s. c. 3 Ben. 283; in re Bunster, 5 B. R.
82; s. c. 41 How. Pr. 406; s. c. 5 Ben. 242.

The bankrupt is not required to pray for a discharge from his partner-
ship debts in precise words. If he prays to be discharged from all his
provable debts, he virtually prays to be discharged from his partnership
debts. In re Wm. H. Pierson, 10 B. R. 107.

Act or 1898, Cu. 3, § 14. Procedure to Secure Discharge —
(b) The judge shall ‘hear the application for a discharge, and such
proofs and pleas as may be made in opposition thereto by parties in
interest, at such time as will give parties in interest a reasonable
PROCEDURE TO SEcuRE DISCHARGE. 647

opportunity to be fully heard, and investigate the merits of the appli-
cation and discharge the applicant unless he has (1) committed an
offense punishable by imprisonment as herein provided; or (2) with
fraudulent intent to conceal his true financial condition and in con-
templation pf bankruptcy, destroyed, concealed, or failed to keep
books of account or records from which His true condition might be
ascertained.

(c) The confirmation of a composition shall discharge the bank-
rupt from his debts, other than those agreed to be paid ‘by the terms
of the composition and those not affected by a discharge.

Bankrupt must apply for his discharge before final report and discharge
of assignee. In re Cross, 16 B. R. 294.

A petition for a discharge in bankruptcy should clearly state from what
debts the bankrupt desires to be discharged. Where, in involuntary.
proceedings against one who is a member of a partnership, the bank-
rupt files his petition for discharge, giving no schedule of firm debts and
assets, nor praying for a discharge from firm liabilities, the discharge
granted upon such petition will only release him from his individual debts.
Corey v. Perry, 17 B. R. 147.

Under the law of 1867, where it appeared that-the cashier of the ob-
jecting creditor (a bank) had recovered judgment in his own name upon
the claim proved by the bank; that he had afterward filed a creditor’s
bill against the debtor and his wife, praying that certain conveyances
be set aside as a fraud upon creditors; that his bill was dismissed after
a hearing, and upon appeal to supreme court this decree was affirmed:
Held, that the matter was res adjudicata, as between the objecting cred-
itor and the bankrupt, and that the former was estopped to oppose his

discharge. In re Antisdel, 18 B. R. 289.

‘The court of its owa motion will not refuse a discharge, though it may
appear that the bankrupt has committed an act which, if properly pleaded,
would bar discharge. Ibid.

Creditors who have been duly notified, and make no opposition, are
tegarded as consenting to a discharge. Ibid.

Where specifications are overruled upon ground personal to the object-
ing creditor, time may be given to other creditors to appear and oppose
the discharge. Ibid.

It was objected that the court had no jurisdiction to grant a discharge,
on the ground that a prior petition for discharge was still pending and
undetermined. Held, that the objection was frivolous; that no discharge
could have been granted on the prior petition because not seasonably
Made, and that the proceedings under it were abandoned when this
Petition was filed. In re White et al., 18 B. R. 106.

Whenever an objection to a discharge rests on facts, there must be a
Specification in order that the bankrupt may produce evidence, and that
there may be a trial of the fact. Ibid.
648 Tue Bankruptcy Law.

In order to bar a discharge on the ground that bankrupt swore falsely
in' the affidavit accompanying his schedules that he was indebted to a
creditor named therein, or that he did not disclose to assignee that the
claim was false and fictitious, it must appear that he knew the claim
was false and fictitious. In re Blumenthal, 18 B. R. 555.

If a bankrupt honestly regards a judgment held by him as worthless,
he is not chargeable with false swearing or fraud if he omit it from his
schedule, even if he consider it as having a value. The omission must
be intentional. In re Winsor, 16 B. R. 152.

Keeping books of account, within meaning of the bankruptcy act, is
the keeping of an intelligent record of the merchant or tradesman’s
affairs, and with that reasonable degree of accuracy and care which is to
be expected from an intelligent man in that business, and a casual mis-
take therein will not prevent a discharge. Ibid.

It is not required that a chattel mortgage given to secure a debt should
be entered upon a merchant’s or trader’s books. Entry of notes upon the
fly-leaf of the blotter sufficient. Ibid.

Requirement that bankrupt shall keep proper books of account is sat-
isfied if his creditors can gather from them a correct understanding of
his business and financial condition. In re Antisdel, 18 B. R. 289.

A discharge will not be refused upon the ground of material erasures
and alterations in such books, unless they appear to have been made with
fraudulent intent. Ibid.

Bankrupt kept proper books of account with his customers, but it was
conceded that he kept no books showing the transactions between him-
self and S. Held, that his dealings with S. were just as much a part of
his business, within meaning of the statutes, as his dealings with his cus-
tomers. In re Blumenthal, 18 B. R. 555.

Bankrupt carried on the business of butchering, as agent and salesman
for one S., under a contract which provided that he should account daily
with S., and pay over moneys received until S. was reimbursed for his .
outlay. The transactions between bankrupt and S. were entered daily
by bcokkeeper of S. in a pass-book, which was kept in bankrupt’s pos-
session. Held, such pass-book was one of bankrupt’s bocks, and proper
within meaning of statute. In re Blumenthal, 18 B. R. 575.

A merchant or trader who prior to- becoming such kept books of ac-
count showing state of his affairs is not required to carry their contents,
or any part of them, into his books opened and kept as a trader, in order
to satisfy requirements of the statute. In re Winsor, 16 B. R. 152.

A bankrupt who has received his final discharge is entitled to his future
acquisitions, and may use them to purchase his former assets on a sale
thereof by the assignee. Phelps, Assignee, v. McDonald, 16 B. R. 217.

Provable debts, though created by fraud, are discharged by a composi-
tion in bankruptcy. Wells.v. Lamprey, 16 B. R. 205; in re Shafer &
Wesselhoefft, 17 B. R. 116.

Where an insolvent has been legally released from his obligations by 4
composition with his creditors, the debt of one of such creditors who ac-
cepted the composition on the written condition that none of the other
PROCEDURE TO SEcURE DISCHARGE. 649

creditors should receive better terms, is not revived by the payment, after
such release of additional sums to other creditors. In re Sturgis, 16 B.
R. 304,

Where in a composition proceeding the statement of liabilities repre-
sents a claim as being fully secured, and the creditor is in attendance
but does not participate in the proceedings nor raise any objection to such
representation, the claim is not discharged by the composition, but the
creditor is entitled to the percentage agreed upon in such proceeding on
the deficit left unpaid on realizing such security whenever ascertained.
Paret v. Ticknor et al., 16 B. R. 315.

Defendants who were indorsers of a promissory note were adjudged
bankrupt before its maturity, and proposed a composition of fifty cents
on the dollar, which was accepted, the note being entered on their schedule
as held by the party from whom plaintiff had received it, plaintiff having
no knowledge of the proceeding and not assenting thereto. After ma-
turity of the note the makers were adjudged bankrupt, and offered a com-
position of fifty per cent. to the creditors, including plaintiff, which was
accepted and duly performed. Defendants then offered to pay fifty-five
per cent. of the balance remaining due, which was refused. Held, plaintiff
was entitled to its double security; that as the note was not provable in.
bankruptcy before maturity it could not be satisfied by the composition,
and that even if it could, the defendants having refused to pay accord-
ing to their composition, could not.protect themselves by it from an action
at law. Nat. Mt. Wollaston Bk. v. Porter, 17 B. R. 329.

After lapse of one or two years it was held, under law of 1867, that
creditors could not be heard to set aside a composition where, pending
the composition, suspicious circumstances appeared showing votes of cred-
itors to have been purchased, and the complaining creditors made no
inquiry as to the facts, but accepted the settlement. In re Herman, 17
B. R. 440.

Discharge by virtue of compliance with terms of a composition is a
discharge by operation of law, and an indebtedness thus discharged is a
sufficient consideration for a new and express promise to pay the original
debt. In re Merriman’s Estate, 18 B. R. 411.

Where the names and addresses of the judgment creditors, with the
amount of their judgment, were stated in the statement of debts and assets
presented by the debtors at the meeting of creditors at which the com-
Position was adopted, and they were tendered the composition percentage
on the full amount of their judgment; Held, that although they were
secured creditors to the extent of their lien upon the land, tbat lien being
acquired prior to the commencement of the bankruptcy proceedings, and
to that extent were not affected by the composition, yet they were so far
bound by it that they were not entitled to take any steps to acquire new
liens, and their judgment was extinguished except as to their right to
enforce the liens already acquired. Conover et al. v. Dumahaut et al.
17 B. R. 558, ,

Defendants, who were indorsers upon a promissory note, filed a volun-
tary petition before its maturity, and proposed a composition, which was
650 THe Bankruptcy Law.

accepted. The holders in no way participated in the proceedings, which
were terminated before the note matured. The composition percentage
was tendered to the holders in due time, but was rejected. In an action
upon the note after maturity: Held, that defendants were liable for the
full amount thereof; that their contingent liability was not affected by
the composition. Smith v. Krauskopf, 18 B. R. 6. .

A composition in bankruptcy operates as a satisfaction of debts that
were fraudulently contracted. Bamberg v. Stern, 18 B. R. 74.

Where a resolution of composition provides that it should be consum-
mated within a limited time or be void; Held, that such agreement was
not absolute, but would be void if not consummated as to all of the cred-
itors within the time limited. Evans et al., v. Gallantine, 18 B. R. 311.

And where, in an action by a creditor upon his original claim, the de-
fendant set up as an answer such composition agreement, and that he had
performed such agreement as to plaintiff within the time specified: Held,
that the answer was insufficient for want of an averment that such agree-
ment was duly consummated as to all of the creditors. Ibid.

A composition in bankruptcy does not become effective (Law of 1867,
as amended 1874) so as to discharge the debtor from his debts until the
composition notes are paid, and if a note given to a creditor agreeing
to the composition is not paid when due, he can sue for the original debt,
and is entitled to his pro rata proportion under an assignment for the
benefit of creditors, if one has been made. In re Assignment of Leip-
ziger, 18 B. R. 264.

Where a creditor has proved his claim in bankruptcy, voted on a reso-
lution of composition, and accepted his pro rata share in money and
promissory notes given in pursuance of said composition to secure pay-
ment of future installments, he cannot sue upon his original debt in a
State court, although the debtor has made default in payment of one of
the installments. Deford et al. v. Hewlett, 18 B. R. 518.

Where a debtor who had been discharged under composition proceed-
ings in bankruptcy gave one of his creditors who had signed the resolu-
tion a new note for his old debt, and afterward again went into bank-
ruptey; Held, that the claim so revived should not be postponed to those
of the new creditors. In re Merriman’s Estate, 18 B. R. 411.

Act or 1867, § 5109. Upon application for a discharge being
made, the court shall order notice to be given by mail to all creditors
who have proved their debts, and by publication at least once a week
in such newspapers as the court shall designate, due regard being
had to the general circulation of the same in the district, or in that
portion of the district in which the bankrupt and his creditors shall
reside, to appear on a day appointed for that purpose, and show
cause why a discharge should not be granted to the bankrupt.

Statute revised — March 2, 1867, ch. 176, § 29, 14 Stat. 531. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 4, 5 Stat. 443.
APPLICANT ENTITLED TO DISCHARGE. 651

The register may pass the order to give notice to the creditors to ap-
pear and show cause against the discharge of the bankrupt. In re Gettle-
son, 1 B. R. 604. Contra, but he may, if the court authorizes him to do
so. In re Bellamy, 1 B. R. 64, 96, 118; s. c. 1 Ben. 390, 426, 474; s a 1
L. T. B. 22.

The order in Form No. 51, although the register is to direct it to be
issued, is to have the signature of the clerk and the seal of the court. It
may be made returnable before the court at the office of the register. It
should name the newspapers in which the notice is to be published. The
selection of the newspapers is to be made with due regard to the require-
ments of this section, and from among the newspapers named in the rules
of the court in bankruptcy. In re Bellamy, 1 B. R. 64, 113; s. c. 1 Ben.
426, 474.

If the bankrupt does not apply for his discharge within three months,
the notice need not say anything about the second and third meetings of
creditors. Anon, 1 B. R. 219.

The notices are to be sent only to the creditors who have proved their
debts. In re McIntyre, 1 B. R. 151; s. c. 1 Ben. 543; Morse v. Presby, 25
N. H. 299.

If no creditors have proved their debts, the publication is the only
notice required by the law. Anon., 1 B. R. 123.

The notices are to be sent by the clerk. The clerk’s certificate that
the notices have been duly mailed is sufficient evidence of the fact. In re
Bellamy, 1 B. R. 64, 113; s. c. 1 Ben. 426, 474; in re Townsend, 1 B. R.
216; 8. c. 2 Ben. 62; s.c.1 L. T. B. 2.

A formal judicial process and return is not necessary. The service may
be by letter. Linton v. Stanton, 4 La. An. 401; Beach vy. Miller, 15 La.
An. 601.

The register should transmit to the clerk a list of all the proofs of debts.
which have been furnished to the register or the assignee, containing the
names, residences and post-office addresses of the creditors with sufficient
particularity to enable the notices to be served properly. In re Bellamy,
1B. R. 113; s. «. 1 Ben. 474.

If the assignee refuses to give a certificate of the names of the cred-
itors who have proved their debts, the register, upon the application of the
bankrupt, has the power to pass an order directing the assignee to furnish
such certificate, and it is the duty of the assignee to comply with it. In
Te Blaisdell et al., 6 B. R. 78; s. c. 42 How. Pr. 274; s. c. 5 Ben. 420.

The proof of publication may be by the usual affidavit of the printer.
In re Bellamy, 1 B. R. 96; s. c. 1 Ben. 426.

The allegation in the record that due proofs of the publication of the
notices were given, can not be impeached in a collateral action. Linton
Vv. Stanton, 4 La, An, 401.

Act oF 1898, Cu. 3, § 14. Applicant Entitled to Discharge —
(bl) The judge shall discharge the applicant unless he has (1) com-
mitted an offense punishable by imprisonment as herein provided;
or (2) with fraudulent intent to conceal his true financial condition.

‘
652 Tue Banrrurptoy Law.

and in contemplation of bankruptcy, destroyed, concealed, or failed
to keep books of account or records from which his true condition
might be ascertained.

Act oF 1867, § 5110. No discharge (a) shall be granted, or, if
granted shall be valid in any of the following cases:

First. If the bankrupt has willfully (b) sworn falsely in his affi-
davit annexed to his petition, schedule, or inventory, or upon any
examination in the course of the proceeding in bankruptcy, in rela-
tion to any material fact.

Second. If the bankrupt has concealed (c) any part of his estate
or effects, or any books or writings relating thereto; or has been
guilty of any fraud or negligence in the care, custody, (d) or delivery
to the assignee of the property belonging to him at the time of the
presentation of his petition and inventory, excepting such property
as he is permitted to retain under the provisions of this Title, or if
he has caused, permitted, or suffered any loss, waste, or destruction
thereof.

Third. If, within four months before the commencement of such
proceedings, the bankrupt has procured his lands, goods, money or
chattels to be attached, (e) sequestered, or seized on execution.

Fourth. If, at any time after (f) the second day of March, eighteen
hundred and sixty-seven, the bankrupt has destroyed, mutilated, al-
tered, (g) or falsified any of his books, documents, papers, writings,
or securities, or has made or been privy to the making of any false
or fraudulent entry in any book of account or other document, with
intent to defraud his creditors; or has removed (h) or caused to be
removed any part of his property from the district, with intent to
defraud his creditors.

Fifth. If the bankrupt has given any fraudulent (i) preference
contrary to the provisions of the act of March two, eighteen hundred
and sixty-seven, to establish a uniform svstem of bankruptcy, or to
the provisions of this Title, or has made any fraudulent (j) payment,
gift, transfer, conveyance, or assignment of any part of his property,
or has lost any part thereof in gaming, (k) or has admitted (1) a false
or fictitious debt against his estate.

Sixth. If the bankrupt, having knowledge that any person has
proved such false or fictitious debt, has not disclosed the same to
his assignee within one month after such knowledge.

Seventh. If the bankrupt, being a merchant or tradesman, has
not, at all times after the second day of March, eighteen hundred
and sixty-seven, kept proper books (m) of account.
GROUNDS FOR WITHHOLDING DISCHARGE. 653

Eighth. If the bankrupt, or any person in his behalf, has procured
the assent (n) of any creditor to the discharge, or influenced the action
of any creditor at any stage of the proceedings, by any pecuniary
consideration or obligation.

Ninth. If the bankrupt has, in contemplation (0) of becoming
bankrupt, made any pledge, payment, transfer, assignment, or con-
veyance of any part of his property, directly or indirectly, absolutely
or conditionally, for the purpose of preferring any creditor or person
having a claim against him, or who is or may be under liability
for him, or for the purpose of preventing the property from coming
into the hands of the assignee, or of being distributed in satisfaction
of his debts.

Tenth. If the bankrupt has been convicted of any misdemeanor
under this Title.

Statute revised — March 2, 1867, ch. 176, § 29, 14 Stat. 5831. Prior
Statutes — April 4, 1800, ch. 19, §§ 36, 37, 2 Stat. 31; Aug. 19, 1841, ch. 9,
§ 4,5 Stat. 443.

Grounds for Withholding a Discharge.— (a) The acts enumerated in
this section are not in the nature of offenses, created and defined by the
bankruptcy law, the penalty for the commission of which by the bankrupt
is the forfeiture of his right to a discharge. The bankruptcy act. was in-
tended to operate, and has been uniformly held to operate upon and pro-
vide for the discharge of debts created before as well as after its passage,
and in respect to debts contracted before its passage, it is clearly a retro-
spective and retroactive law so far as:it authorizes the discharge of such
prior debts. Prior to the passage of the act, the debtor had no right to a
discharge from such debts, and he now has no right to such discharge
except in the cases provided for, and upon the conditions prescribed in
the act. These provisions create no offenses, and there is no forfeiture
of an existing right denounced as the penalty for a newly-created offense,
for the simple and obvious reason that a right to a discharge in the cases
Provided for did not exist when the act was passed, and therefore the
provisions are not retroactive or retrospective in the proper sense of those
terms. The act gives a debtor a right to a discharge, provided he fully
complies with its provisions, and is not brought within the limitations,
exceptions, or prohibitory provisions of the act, and, as this right only
exists by virtue of the bankruptcy act, the provisions of this section are
only exceptions in restriction or limitation of the grant of power to the
bankruptcy court, under which grant alone a debtor can, in any case not
excepted from its operation, assert a right to a discharge. In re Cretiew,
5B, R. 428; 8. ¢c.2 L. T. B. 187.

Congress has an undoubted right to annex such conditions as it chooses
to the grant of a discharge. Such a condition is not a punishment nor
Tetroactive. It is simply a condition precedent. In re Goodfellow, 3
B, R, 452; s, c, Lowell, 510; 8. c. 1 L. T. B. 179; 8. ¢. 3 L. T. B. 69.
654 Tue BanKRuptTcY Law.

The question of withholding a discharge for any of the reasons speci-
fied in this section, when the bankrupt has taken the required oath, and
has conformed to all the modal requirements of the bankruptcy act, is
one wherein the creditors are the attacking party. If they do not enter
an appearance, and file specifications, they are regarded as not opposing
the discharge, and as assenting to it, and the grounds for withholding a
discharge specified in this section are regarded as not existing in respect
to the particular bankrupt. In re Schuyler, 2 B. R. 549; s. ec. 3 Ben. 200;
s.c. 2 L. T. B. 85; in re Rosenfield, 2 B. R. 117; s.c. 8 A. L. Reg. 4438. ¢
1 L. T. B. 100.

If the formal requirements of the bankruptcy act have been complied
with, a discharge is only to be refused for some grounds set forth in this
section. The fact that the debt of the creditor is a fiduciary debt, is no
ground for withholding a discharge. In re Elliott, 2 B. R. 110; in re Tracy
et al., 2 B. R. 298; Chapman v. Forsyth, 2 How. 202; in re George Brown,
5 Law Rep. 258; in re John OC. Tebbets, 5 Law Rep. 259; in re Levi H.
Young, 5 Law Rep. 128. Vide in re Parker et al., 1 Penn. L. J. 370; in re
Jobn Hardison, 5 Law Rep. 255; in re Hezekiah Cease, 5 Law Rep. 408.

Fraud in the creation of a debt is no ground for withholding a dis-
charge. In re Rathbone, 1 B. R. 324; s. ec. 2 Ben. 138; in re Rosenfield,
1 B. R. 575; s. ce. 1 L. T. B. 100; in re Wright et al., 2 B. R. 41; s. @ 15
Pitts. L. J. 558; in re Bashford, 2 B. R. 73; in re Clarke, 2 B. R. 110; in re
Doody, 2 B. R. 201; in re Stokes, 2 B. R. 212.

Neither the purchase of goods when the bankrupt knew that he could
not pay for them, nor the fraudulent purchase of a piano, are within the
act. The frauds which prevent a discharge are, nearly all, such as tend
to the injury of creditors generally. One who has been induced, by
fraudulent representations, to sell goods to the bankrupt, finds his remedy
in the right to receive a dividend, and to hold the remainder of his debt
undischarged by the certificate. Any fraud on the act may be given in
evidence, including all that are mentioned in section 5132. In re W. M.
Rogers, 3 B. R. 564; s. c. Lowell, 423.

The fact that the assignee, by inadvertence or mistake, has set apart
to the bankrupt certain property as exempt, which is not exempt by law,
and which should be subject to his creditors, is no ground for opposing
the discharge. The propriety of the assignee’s action in this respect
‘should have been contested at the proper time, and in the proper manner.
In re Hidom, 3 B. R. 106.

The question of the residence or place of business of the bankrupt may
be made the ground for opposing the discharge. The question whether
the petition is filed in the proper district is a question of jurisdiction.
If the court does not have jurisdiction, it can not grant a discharge. In
re Little, 2 B. R. 294; s. c. 3 Ben. 25; in re Penn et al., 3 B. R. 582; s. ¢
4 Ben. 99; in re Leighton, 5 B. R. 95. Contra, it should be charged that
the bankrupt has willfully sworn falsely in relation thereto. The false
oath may be made the ground for withholding the discharge. In re Burk,
3B. R. 296; s. c, 1 Deady, 425;5,4. 2 L, T. B. 45,
WILLFUL PERJuRY. 655

An averment that the bankrupt has not resided or carried on business
jn the district where the petition is filed for six months next preceding
the filing of the petition, is too broad. It may be true, and yet the bank-
rupt may be entitled to his discharge. It is only necessary that he should
have been in the district for the longest period during that six months.
In re Burk, 3 B. R. 296; s. c. 1 Deady, 425; 5. c. 2 L. T. B. 45.

A specification which alleges that the bankrupt’s assets are not equal
to thirty per cent. of the claims proved against his estate upon which he
is liable as principal debtor, without alleging that the consent of one-
fourth in number and one-third in value of the creditors holding such
debts, was not filed before or at the hearing upon the order to show cause,
is insufficient. The question, however, may be presented by the opposing
creditor, or any ‘other creditor, upon the hearing before the register on
the reference of the general question, whether the bankrupt is entitled to
the discharge. In re Cretiew, 5 B. R. 423; s. c. 2 L. T. B. 137.

Willful Perjury.— (b) The specification must aver that the false oath
was willful. Omissions in the schedules must be alleged to have been
intentional. A false oath on examination must be alleged to have been
willful, and in regard to a material fact. In re Rathbone, 1 B. R. 324; s.
c, 2 Ben. 188; in re Beardsley, 1 B. R. 304; in re Wyatt, 2 B. R. 288; in
re Sidle, 2 B. R. 220; in re Robinson et al., 3 B. R. 70; in re Wm. H. Pierson,
10 B. R. 107; in re John OG. Tebbets, 5 Law Rep. 259; in re Robert H.
Shoemaker, 4 Biss. 245; in re Wm. Archenbraun, 12 B. R. 17; s. ¢. 7 C.
L. N. 281.

An allegation that the bankrupt willfully omitted property from his
schedule is entirely insufficient, for the reason that it does not allege that
the bankrupt willfully swore falsely in his affidavit annexed to his sched-
ule or inventory. In re Keefer, 4 B. R. 389; s. c. 3 C. L. N. 125.

The causes for withholding a discharge are some act omitted which was
required to be done, or some act done which was forbidden, and these acts
faust have been in fraud of the law. Mere oversight or mistake is not
sufficient; these are infirmities to which all are liable, and for the cor-
rection of which ample remedy is afforded to all parties. In re McVey,
2B. R. 257; in re Smith & Bickford, 5 B. R. 20.

If the bankrupt has willfully sworn falsely in omitting the name of a
creditor from his schedules, the discharge will be refused. It is ques-
tionable, however, whether the act ought not to be so construed that this
Objection can only be made by a creditor who is interested in the debt,
which is the subject of the misconduct of the bankrupt, or who is or may
be injured by the omission or falsehood concerning it. In re Kallish, 1
Deady, 575.

The omission of the name of a creditor from the schedule with his con-
sent can not be availed of by other creditors whom it has not injured
a8 a willful falsehood. It is not a willful and fraudulent omission if
made with the assent of the creditor, express or implied, antecedent or
subsequent. This does not apply to a case where fraud or injury is proved.
In re Needham, 2 B, R. 387; 8. c. Lowell, 809; s. a 2 L. T. B. 39.
656 Tue Bankruptcy Law.

It must be proved that the taking of a false oath was intentional. The
omission to place upon the schedules property in which it can not be
positively determined whether the bankrupt has any interest or not, is
no ground for withholding the discharge. In re Wyatt, 2 B. R. 288; in
re Penn et al 5 B. R. 288; s. c. 2 L. T. B. 193; in re Smith, 13 B. R. 256;
s. ec. 1 Woods, 478.

Where a bankrupt is informed that a certain debt exists, by his partner,
who had exclusive management of the business to which that debt re-
lates, he has the right to believe the statement to be true, and to place it
upon his schedules. In re Schofield et al., 3 B. R. 551.

Transactions entered into in blind confidence may be explained by the
manifest presence of good faith. In re Beatty et al., 2 B. R. 582; s. c. 3
Ben. 238. 7

There is a distinction between willfully swearing false and the crime of
perjury. Perjury is the willfully and corruptly swearing false. Corrup-
tion is an element of crime. The advice of counsel may shield a client
from corrupt intent, but can not relieve him from the fact that he actually
intended what he did. In re Rainsford, 5 B. R. 381.

Concealment of Property.— (c) The specification should state with some
particularity what property has been concealed. In re Mawson, 1 B. R.
437; s. c. 2 Ben. 332; in re Rathbone, 1 B. R. 324; s. c. 2 Ben. 138; in re
Beardsley, 1 B. R. 304; in re Freeman, 4 B. R. 64; s. c. 4 Ben. 245.

A mere allegation in general terms that the bankrupt failed to file a
full schedule of the notes and accounts held by him, without specifying
which were omitted, is insufficient. Stewart v. Hargrove, 23 Ala. 429.

An allegation of concealment should state how and in what manner the
concealment was effected. Brereton v. Hull, 1 Denio, 75.

An allegation of a concealment of an interest in a firm should show
that the bankrupt had an interest in the firm assets, and that there was
something due to him. Dresser v. Brooks, 3 Barb. 429.

An allegation of concealment which describes certain property, and
charges the concealment of other property without any description what-
ever, either as to kind or quality, is bad, but will not vitiate the whole
specifications. The bankrupt should not demur, but on the trial should
object to any evidence that may be offered under the general words.
Brereton v. Hull, 1 Denio, 75.

The term “ concealment” implies something willful, intentional. One
can not be said to conceal property, unless he not only knows that he
owns it, but unless he also intentionally, not inadvertently, conceals the
same from his assignees or creditors. The act of concealment must be
shown to be intentional. In re Wyatt, 2 B. R. 288: in re George Wilson,
6 Law Rep. 272; in re Mark Banks, 1 N. Y. Leg. Obs. 274; Dresser V.
Brooks, 8 Barb. 429.

The language of the law means to hide, to secrete. Where a man owns
property of which he has no knowledge, the fact that he did not put it on
his schedules will not prevent his discharge. In re Renslow S. Parker,
4 Biss. 501,
CONCEALMENT OF PROPERTY. 657

A mere failure on the part of the bankrupt to render in property pos-
sessed by him, on his schedules, is not made a ground by the act for re-
fusing his discharge. The act does make the concealment of the same
a ground for such action; but then it must be averred and proved that it
was willful. The allegation of the time when the bankrupt had possession
of the property should be definite. In re Eidom, 3 B. R. 106; in re Con-
nell, 3 B. R. 443; in re Smith, 13 B. R. 256; s. c. 1 Woods, 478.

An omission of property by accident or mistake will not prevent a dis-
charge. Loud y. Pierce, 25 Me. 233; Suydam v. Walker, 16 Ohio, 122;
Crooker v. Trevett, 28 Me. 271.

A. bankrupt can not be held to be guilty of a willful concealment of
property, by omitting to specify in his schedule a mass of obsolete and
worthless demands, upon which no action whatever can be maintained.
In re Alonzo Pearce, 21 Vt. 611.

A concealment of property from a person entitled to its possession is
not the less a concealment because he knows that it is concealed, if he
does not also know where it is concealed. In re Beal, 2 B. R. 587; s. ¢.
Lowell, 323; s. c. 2 L. T. B. 95.

The concealment denounced by this section embraces a concealment
of title to property, as well as the hiding from view of property itself.
What matters it to the creditors that the property may be seen by all
men, if the debtor's right to it is concealed? Undoubtedly, concealment
of property may be effected by the literal hiding of it. But the most dan-
gerous sort of concealment is when the debtor places the title to property
in the hands of another person to hold for his benefit, and conceals his
beneficial right to it. Either kind of concealment will preclude the grant-
ing of a discharge. In re Hussmann, 2 B. R. 487; s. c. 2 L. T. B. 53; s. c.
10. L. N. 177; Edwards v. Gibbs, 39 Miss. 166.

It is concealment to leave out of the schedule property that has been
conveyed by the bankrupt in fraud of creditors. It is wholly immaterial
that the title, as between vendor and vendee, vested in the vendee. As to
creditors, the conveyance was void, and the title remained in the vendor.
Concealment is a continuous act. In re Hussmann, 2 B. R. 487; s.c. 2 L.
T. B. 53;'s. c.1C. L. N. 177; in re Rathbone, 1 B. R. 536; 2 B. R. 260; s. c.
3 Ben. 50; 8. c. 1 L. T. B. 70, 114; in re W. D. Hill, 1 B. BR. 431; 8. ¢«. 2
Ben. 349; s. c. 1 L. T. B. 56; in re Goodridge, 2 B. R. 324; in re Good-
fellow, 83 B. R. 452; s. c Lowell, 510; s.c.1L. T. B.179;8s.c 3 L. T. B.
69; Peterson v. Speer, 29 Penn. 478; King v. Dietz, 12 Penn. 156. Contra,
State v. Bethune, 8 Ired. 139; Porter v. Douglass, 27 Miss. 379; in re David
H. Robertson, 1 N. Y. Leg. Obs. 20; in re John Q. McCarty, 5 Law Rep.
322,

A fraudulent conveyance made by a debtor anterior to the passage of
the act will not of itself preclude his discharge, but in such case he should
hot conceal nor attempt to conceal the fraud when he seeks the benefit
of the statute. He must come into court with clean hands, or at least
with a clear conscience, and disclose fully all property and rights of prop-
erty which the creditors may appropriate in satisfaction of their claims.

42
‘658 Ture Bankruptcy Law.

In re Hussmann, 2 B. R. 487; s. c. 2 L. T. B. 538; sc. 1 O. L. N. 177; in re
-Rainsford, 5 B. R. 381.

If property which had been conveyed to defraud creditors was sold in
:good faith, and the purchase money paid to the bankrupt or his creditors
‘before the commencement of proceedings in bankruptcy, there is no
concealment of assets by omitting it from the schedules. In re J. H. C.
Lutgens, 7 Pac. L. R. 89.

When property is, in fact, concealed, in specie, or where the title is
concealed by a colorable conveyance, the discharge can not be granted;
Tbut there are many doubtful cases, in which justice seems to demand
that the assignee should be entitled to try his rights, but in which unfair-
mess on the debtor’s part can not be made out. An open and notorious
conveyance of property from the bankrupt to his wife, made long before
the commencement of proceedings in bankruptcy, and at a time when he
is alleged to have been solvent, is no ground for withholding a discharge.
Such a conveyance does not stand on the footing of a mere voluntary
conveyance to a stranger, or of one made on a secret trust for the grantor.
No doubt the debtor has always had, and always will have, some ad-
vantage from it, but it would be a perversion of terms to say that there
was any concealment about it. Whether the conveyance can be avoided
by the assignee is a different question. In re Murdock, 3 B. R. 146; s. ¢
Lowell, 362; s. c. 2 L. T. B. 97.

A. transfer of property from the bankrupt to his wife, at the time when
he was insolvent, but believed himself to be solvent, may be a good
ground for refusing a discharge. If he surrenders the property as soon
as the mistake is discovered, he will stand in a favorable condition; but
if he does not do so, nor make any attempt to repair the error, it will be
difficult to believe that the transfer was a mere mistake. In re R. A.
Adams, 3 B. R. 561.

The keeping of books from the assignee involves the question of intent.
If the books were accidentally lost before the bankruptcy, there can have
‘been no such concealment. If they were not lost, but within the control
‘of the bankrupt, and not given up on demand, with intent to prevent the
iassignee from obtaining them, but their existence denied, the. charge of
‘concealment is sustained. It is not necessary that they should have been
mput In any unusual or out-of-the-way place. In re Hammond & Coolidge, 3
3B. -R. 273; s. ec. Lowell, 381.

A judgment rendered in a suit instituted in a State court to which
the opposing creditors and the bankrupt were parties, and in which the
fraudulent character of the conveyance was litigated and determined is
conclusive. In re Hussmann, 2 B. R. 487; s. c. 2 L. T. B. 53; s. ¢e. 1 0. L.
N. 177.

‘Concealment of property involves.not only the charge of gross fraud,
but also the crime of false swearing, and it ought to be substantiated either
“by direct testimony, or by such facts as afford unequivocal circumstantial
‘evidence of it. It certainly ought not to be taken to be true upon any
slight ar ambiguous presumptions, nor upon any state of facts which does
CoNCEALMENT oOFf PRorEerry 659

not clearly, and indeed almost necessarily, call for such an inference.
Rugely v. Robinson, 19 Ala. 404; State v. Bethune, 8 Ired. 139; in re Alonzo
Pearce, 21 Vt. 611; Loud v. Pierce, 25 Me. 233; Carey v. Esty, 29 Me. 154;
in re John Q. McCarty, 5 Law Rep, 322; in re Chas. H. Delavan, 5 Law
Rep. 370.

Fraud by concealing assets is one that can seldom be proved by other
than circumstantial evidence. The parties to the transaction are gener-
ally the only witnesses, and if their stories are to be believed as told, no
fraud can be established. External evidence is not to be had, and the
truth must be reached by examining the evidence of the alleged parties
to the fraud, and weighing its probabilities, and scrutinizing its general
tenor and manner. Of course, those who would commit a fraud would
swear falsely to carry it through. If their positive testimony to the
honesty of the transaction is overborne by badges and indicia of fraud,
the conclusion must be that there was fraud. If their positive testimony
to the honesty of the transaction is true, there will not be found in their
testimony any badges and indicia of fraud sufficient to overbear such
positive testimony. In re Goodridge, 2 B. R. 324; in re Rathbone, 1 B. R.
586; s. c. 2 B. R. 260; s. c. 3 Ben. 50; s.c.1 L. T. B. 70, 114; in re W. D. Till,
1B. R. 481; s. c. 2 Ben. 349; s. c. 1 L. T. B. 56; in re Philip A. Doyle, 3
B. R. 782; in re Wm. H. Long, 3 B. R. (quarto) 66; Preston v. Speer, 29
Penn. 478; City Bank v. Banks, 1 La. An. 418; in re Daniel J. Perley, 4
N. Y. Leg. Obs. 254.

The mere omission of property from the schedule is not sufficient evi-
dence of a willful concealment of it. Steene v. Aylesworth, 18 Conn.
244,

If the bankrupt honestly regards a judgment as worthless, he may omit
it from his schedule without being chargeable with false swearing and
fraud. In re Zenas G. Winsor, 9 C. L. N. 402.

If the bankrupt, prior to becoming a trader, kept books of account
which exhibited the state of his affairs, it is not necessary that he shall
carry any part of their contents into the books opened and kept by him
while he was a trader. Ibid.

To keep proper books of account is to keep an intelligent record of
his business affairs with that reasonable degree of accuracy and care
which is to be expected from an intelligent man in that business. Ibid.

If the bankrupt kept an intelligent record of his affairs, and evinced
reasonable care and an honest purpose to fully enter or keep proper ac-
counts, an omission to make an entry by mistake is no ground for with-
holding a discharge. Ibid.

An omission to enter a chattel mortgage given to indemnify the mort-
gagee against future liability is no ground for withholding a discharge.
Thid. -

An omission to place property upon the schedule, because the bankrupt
concludes in good faith that it does not pass to the assignee, is not a
willful concealment of it, where the law by which it may be deemed to
vest in him is doubtful and uncertain.’ Rugely vy. Robinson, 19 Ala. 404.
660 Tur Bankruptcy Law.

The circumstances to establish concealment must depend. more or less
on the circumstances of every particular case. Petty v. Walker, 10 Ala.
879; Hargroves v. Cloud, 8 Ala. 173.

The magnitude of a note is evidence of an intentional concealment.
Cutter v. Taylor, 1 Sandf. 593.

Proof that the debts owing to the bankrupt, and included in his sched-
ules, were against insolvent and irresponsible persons is admissible, for
the value of his assets has a material bearing on the question whether he
has honestly surrendered all his property. Cook v. Moore, 65 Mass. 213.

Whenever the intent of a party forms a part: of the matter in issue upon
the pleadings, evidence may be given of other acts not in issue, provided
they tend to establish the intent of the party in doing the acts in question.
Ibid.

Where the specification refers to the property alleged to have been con-
cealed as described in a certain deed duly recorded, a copy from the rec-
ords is not admissible without an attempt to produce or account for the
original deed. Petty v. Walker, 10 Ala. 379.

The disclosure made by the bankrupt to his counsel who assisted and
advised him in making up his inventory, and the advice of his counsel
thereon, are admissible under a specification alleging a concealment of
property. Robinson y. Wadsworth, 49 Mass. 67; Suydam v. Walker, 16
Ohio, 122.

It is not enough to show that the bankrupt may have made moneys
which he has not accounted for. To prevent the granting of the discharge,
the opposing creditor must prove that the bankrupt has willfully sworn
falsely. In re Hummitsh, 2 B. R. 12; s. c. 15 Pitts. L. J. 494; in re Pom-
eroy, 2 B. R. 14; in re Sidle, 2 B. R. 220.

Mere proof of the ownership of property prior to the commencement
of the proceedings in bankruptcy, does not devolve on the bankrupt the
burden of showing that he was not the owner at that time. Powell vy.
Knox, 16 Ala. 364.

Testimony that a man possessed a capital at one time in property or
money, is evidence conducive to show that he held it or some representa-
tive in value at any subsequent time, and if the two periods are brought
into close proximity, and no known change of his affairs occurs, the evi-
dence will raise a presumption next to positive proof that he continued to
possess such means. As the periods compared recede in point of time
the force of the presumption weakens. In re John Bailey, 1 N. Y. Leg.
Obs, 18; s. c. 5 Law Rep. 320.

Proof of ownership of property prior to the commencement of the pro-
ceedings in bankruptcy, and of possession after that time, raises a pre
sumption of ownership at that time, and makes it the duty of the bank-
rupt to show what disposition had been made of it. Powell v. Knox, 16
Ala. 864; Selby v. Gibson, 3 La. An. 209.

Whenever the possession of property is not referred to the time of the
commencement of the proceedings in bankruptcy, or so recently afterward
that no business or industry could reasonably have created a fund by
Custopy or Property. 661

which the property might have been obtained, it rests on the creditor
to create the presumption of fraud, by showing that the business or in-
dustry of the bankrupt could not reasonably furnish the means to acquire
the property held by him as owner. Petty v. Walker, 10 Ala. 379; Powell
vy. Knox, 16 Ala. 364.

The possession of property by the bankrupt immediately after the com-
mencement of the proceedings in bankruptcy, which by industry he might
reasonably have acquired, will not warrant the presumption that he did
not make a full surrender of his estate. But where the value of it is 30
great as to make it improbable that it was earned by him since that time,
{t devolves upon him to show how he became the proprietor of such prop-
erty, whether by inheritance, bequest or purchase. The burden of proof
is thrown on him who is best acquainted with the origin and nature of
his title. Hargroves v. Cloud, 8 Ala. 173; Ashley v. Robinson, 29 Ala,
112; Gilbert v. Bradford, 15 Ala. 769. i

After the bankrupt has proved that he was engaged in a certain busi-
ness during a certain period, he can not prove what another wholly dis-
connected from him may have lost while engaged in a similar business.
Edgar v. McArn, 22 Ala. 796.

To rebut a presumption of the possession of funds, the bankrupt may
prove that all the persons engaged in a similar business at a certain place,
during a certain period, failed. Ibid.

Custody of Property after Filing Petition.— (d) Under the bankruptcy
act, the bankrupt, before the appointment of an assignee, is the custodian
of the estate, and must act, if at all, in the interest of the creditors. March
vy. Heaton, 2 B. R. 180; s. c. Lowell, 278; in re Enoch Steadman, 8 B. R.
319.

This clause authorizes the bankrupt to file a petition in his own name
for an injunction against execution creditors. Jones v. Leach, 1 B. R.
595; in re Schnepf, 1 B. R. 190; s. c. 2 Ben. 72; in re Wallace, 2 B. R. 134;
8c. 1 Deady, 433.

A specification alleging that the bankrupt permitted the destruction of
certain property should state the time of such destruction, the amount
destroyed, and aver that the bankrupt was in charge of the property at
the time of its loss, or responsible for it. In re Hidom, 3 B. R. 106.

A specification that the bankrupt, prior to the commencement of pro-
ceedings in bankruptcy, caused and permitted loss, waste, and destruction
of his estate and effects, and misspent and misused the same, can not
be sustained. There is no such objection to a discharge to be found in
the bankruptcy act, unless the loss, etc., occurred after the filing of the
petition. Every kind of fraud is carefully prohibited, but not extrava-
gance or waste, except gaming. In re W. M. Rogers, 3 B. R. 564; 8. c.
Lowell, 423; in re Rosenfield, 2 B. R. 117; s.c.1L. T. B. 100;s.c. 8 A. L.
Reg. 44,

The neglect of the debtor to turn over certain books of account to the
assignee is no ground for withholding the discharge, when they are use-
less, and the omission was without fraud on the part of the bankrupt,
In re Wm. H. Pierson, 10 B. R. 107.
662 Tue Bankruptcy Law.

A bankrupt has the right to employ counsel for the purpose of preparing
the petition and schedules, and to raise the money to pay him a reasonable
compensation therefor, and such compensation is valid. In re James
Thompson, 13 B. R. 300.

The collection of moneys after the commencement of proceedings in
bankruptcy and applying them to his own use, is a ground for withhold-
ing a discharge. In re Michael Finn, 8 B. R. 525.

The bankrupt must account to the assignee fairly for any money, etc.,
on hand, and credits outstanding at the commencement of the proceed-
ings in bankruptcy, and for all subsequent profits. In re Wm. H. Long,
3 B. R. 66.

A bankrupt who fails to pay over to the assignee the money mentioned
in his schedules as on hand at the time of the commencement of pro-
ceedings in bankruptcy, may, after being cited before court, under an
order to show cause, be committed for contempt. In re Dresser,.3 B. R
557.

Attachment.— (e) When the property of the bankrupt has been attached
without his knowledge or consent by a hostile creditor, the omission to
dissolve an attachment by an application in bankruptcy can not by retro-
spective effect supply the intent to give a fraudulent preference, which
is essential in order to prevent the bankrupt from obtaining a discharge.
In re Francis ©. Belden, 2 B. R. 42; s. ce. 2 A. L. Rev. 771; s. c. 15 Pitts.
L, J. 547.

Limitation.— (f) The limitation as to time annexed to the sixth item
was intended. to apply to all the intervening items between that and the
fourteenth, or these intervening items having no limitation as to time an-
nexed to them must be construed with reference to the principle ap-
plicable to law generally, which is that they take effect from the time of
their passage. In re Rosenfield, 1 B. R. 575; 2 B. R. 117; 8s:a1L T.
B. 81, 100; s. c. 8 A. L. Reg. 44; in re Hussmann, 2 B. R. 487; s. c. 2 L. T.
B. 53; s. c. 1 C. L. N. 177; in re Schofield, 3 B. R. 551; in re Hollenshade,
2B. R. 651; s. c. 2 Bond, 210; in re J. H. C. Lutgens, 7 Pac. L. R. 89.
Contra, in re Burk, 3 B. R. 296; s. ec. 1 Deady, 425; s.¢c.2 L. T. B. 45.

In regard to the first four of the clauses of this section, relating to the
grounds for withholding a discharge, it may be conceded that the char-
acter of the acts therein described requires that they should have been
committed after the passage of the bankruptcy act. In the fifth clause
there is an express limitation of time, which only requires that the act
therein described should have been committed within four mouths before
the commencement of proceedings in bankruptcy, and as a petition could
have been filed at the end of three months after the passage of the act,
it can hardly be said that the act referred to in this clause must have
been committed after the passage of the bankruptcy act, in order to bring
the bankrupt within the prohibition of the section. The next clause by
its express terms is limited to acts committed since the passage of the
statute, and as the succeeding clauses—the seventh and the eighth—
are only connected with it by the disjunctive “or,” the same may be said
in regard to those clauses. The actual and distinct expression of a lim-
FRAUDULENT PREFERENCES, 663

itation to acts committed after the passing of the statute, would seem to
evidence an intention on the part of the legislature, that the clauses in
which there is no such limitation, either expressed or necessarily to be in-
ferred, should not be so limited. In the next or ninth clause there is a
change of phraseology, which was not necessary unless it was intended
to disconnect its provisions from the limitations of time contained in the
three next preceding clauses. If not so intended, the connection with the
sixth, seventh, and eighth clauses would have been made by the use of
the word “ or,” alone, as in the seventh and eighth clauses; but the words
“if he” are inserted apparently ex industria to so far disconnect this
clause from those immediately preceding, so as to remove it from the
limitation of time expressed in the sixth clause. The subsequent insertion:
in the thirteenth clause of the words “subsequently to the passage of this
act,” is also a significant indication that the legislature intended no such
or similar limitations to the clauses where no limitation was expressed,
or necessarily to be implied from the nature or character of the acts.
described, aud in the fourteenth and sixteenth clauses the words ‘“‘if he”
are inserted as indicating a partial but distinct separation of these clauses
from the preceding ones, so as to disconnect them from any limitation of
time contained in the preceding clauses. In re Cretiew, 5 B. R. 423;
s.c.2L. T. B. 187.

Mutilation of Books.— (g) A specification alleging that the bankrupt
has destroyed, mutilated and falsified his documents, papers and writings,
is defective, unless it avers that the act was done with intent to defraud
his creditors. In re William H. Marston, 5 Ben. 313.

The mutilation of the books by third persons after the termination of
the business does not bar a discharge. In re Wm. H. Pierson, 10 B. R.
107.

Removal Beyond the District.— (h) A charge that the bankrupt, in
contemplation of bankruptcy, and with intent to defraud the assignee,
consigned certain goods to a party out of the district is good in substance
—the bankrupt having waived objecticns of mere form; and if this re-
moval was made with a view, at the time, of becoming bankrupt, and with
intent to keep the property from the assignee, it is, in substance, a sufii-
cient charge that the removal was to defraud creditors. But as all this
is alleged, though the contemplation of bankruptcy was not necessary,
it must be proved. In re Hammond & Coolidge, 3 B. R. 273; s. c. Lowell,
381.

Fraudulent Preferences.— (i) By the term “fraudulent preference” is
meant a preference contrary to the provisions of this act. In re Rosen-
field, 1 B. R. 575; 8s. @ 2B. R. 117; s.c. 1 L. T. B. 81, 100; s.¢c. 8 A. L.
Reg. 44.

A preference is an advantage or benefit which others do nut enjoy. In
re Aspinwall, 8 Penn. L. J. 212.

It is not necessary to allege that the persons to whom the payments were
made were creditors of ‘tthe bankrupt. The ordinary and obvious con-
struction of the allegation is, that the preferences, or payments, or trans-
fers, were made to the persons named as creditors, real or supposed, of
664 Tuer Banxruptcy Law.

the bankrupt, or as persons to whom he was or might become liable. -
In re Smith & Bickford, 5 B. R. 20.

The fair and reasonable construction of this section is, that it refuses
a discharge on the ground of preference only when the act is brought
within the definition of section 5110, or of section 5128 itself. Under the
latter, it must be proved that bankruptcy was in contemplation, and, under
the former, that the creditor was a party to the fraud. In re Locke, 2 B.
R. 382; s. c. Lowell, 293; in re Burgess, 3 B. R. 196; in re Freeman, 4 B. R.
64; 8. c. 4 Ben. 245; in re S. P. Warner, 5 B. R. 414; in re John B. Harper,
6C. L. N. 279.

In order to deprive a party of his discharge, the transfer or conveyance
constituting the preference must be made by him in contemplation of bank-
ruptcy or insolvency, or when he is in fact insolvent, and, in the latter
ease, the court must not only be satisfied that he was insolvent, but
further, that he either had actual knowledge of his insolvency, or had good
grounds for fearing and believing that he was insolvent, and acted on
such belief in making the preference. In short, he must have designedly
and intentionally given a preference, meaning to secure or pay that par-
ticular creditor, when he was not able to pay all his debts in the usual and
ordinary course of business, at the time fearing and believing such to be
the condition of his affairs. It is not necessary that the creditor receiving
payment or security should, at the time, know of the insolvency, in order
to defeat the discharge by the preference given to him. This fact can
in no way affect the condition of the bankrupt himself. He must be held
responsible for his own actions, and abide the consequences of his own
fraudulent purposes and designs, and should not be permitted to derive
any benefit from the fact that, in accomplishing his fraudulent purpose,
he was shrewd enough to conceal from the other party his insolvent con-
dition. In re Gay, 2 B. R. 358; s. c. 1 L. T. B. 73; in re Adolph Lewis et
al, 2 B. R. 449; s. c. 3 Ben. 153; s.c. 2 L. T. B. 75; in re Benjamin N.
Foster, 2 B. R. 232; s. c. 1 L. T. B. 127; in re Rosenfield, 2 B. R. 117; 5. ¢.
1L. T. B. 100; s.c 8A. L. Reg. 44; in re L. J. Doyle, 3 B. R. 640; 5. c.
1 Holmes, 61; Everett v. Stone, 3 Story, 446.

It may be that the courts can fairly give a slightly different construction
to the phrase “ fraudulent preference ” from that which obtains under the
other section relating to the avoidance of the payment or security. In re
Perry & Allen, 20 Pitts. L. J. 184; s. ce. 7 W. J. 379.

No preference can be fraudulent, under the act, unless it is made within
four months before the filing of the petition in bankruptcy. In re John B.
Harper, 6 C. L. N. 279; in re Wm. H. Pierson, 10 B. R. 107.

An allegation of a preference should describe the property transferred
either as to kind or quantity, and state to whom it was transferred.
Brereton v. Hull, 1 Denio, 75.

An allegation that the bankrupt made payments or agreements, convey-
ances or transfers of property with intent to prefer, 1s bad, because it is
in the alternative. Tbid. .

Where a preference has been fully condoned, so far as the preferred
creditor is concerned, by a surrender, and the general creditors have been
FRAUDULENT CONVEYANCES. 665

restored to the position they would have occupied if there had been no
preference, the law does not intend the preference to be regarded as still
subsisting against the bankrupt. The general creditors are not tech-
nically estopped, because they have no choice but to accept the surrender;
but they will receive a dividend out of the very property, in accordance
with the policy of the law, which condones the fault of the preferred
ereditor in consideration of his voluntary action; and the law does not
intend to give him, who is usually the active party to the technical fraud,
and the only one benefited by it, ali the advantages of the repentance,
and withhold them from the other party. The policy of the law appears
to be to hold out a motive for the prompt settlement of all cases of this
kind in favor of the general creditors, by forgiving mere preferences when
voluntarily abandoned, even after bankruptcy. In this forgiveness the
pankrupt may share, and he may lawfully reply to the specification that
there was no preference, but only an attempted preference, abandoned
before it was too late. In re Connor & Hart, Lowell, 582. Contra, in re
Michael Finn, 8 B. R. 525.

The English law has two conclusive presumptions. One is, that a
trader who conveys his whole property to a pre-existing creditor must
have contemplated a preference of that creditor; and the other is, that a
debtor who pays an honest debt, with a part only of bis assets, does uot
commit a technical fraud which will render the payment void, if the
act was done in consequence of threats or demands on the part of the
creditor. The bankruptcy act adopts neither of these presumptions as
conclusive. It defines a preference in the statute itself, or rather it has
language which is inconsistent with the English definition. It makes the
intent to prefer or give an advantage to one creditor the important thing,
and this may evidently concur with pressure on the part of a creditor.
A payment does not lose its character of preference by being made under
pressure. Nor, on the other hand, will the fact that the conveyance was
of all the property necessarily and in all cases show a preference. It
is a very important circumstance, and almost decisive. But the presump-
tion is still one of fact, and the question, in every case, is whether a
preference was intended. It would be very difficult to explain so sus-
picious a fact. ‘In re Batchelder, 3 B. R. 150; s. c. Lowell, 373; in re
Connor & Hart, Lowell, 532; in re Ephraim Chase, 22 Vt. 649.

The payment of a debt through inadvertence, or under a mistaken sense
of duty, and without any fraudulent intent, will not deprive a bankrupt
of his discharge. In re Rosenfield, 2 B. R. 117; s.c.1 L. T. B. 100; 8. ¢.
8 A. L. Reg. 44; in re Locke, 2 B. R. 382; s. c. Lowell, 298; in re Sidle,
2B. R. 220; in re Burgess, 3 B. R. 196.

It is not sufficient to show that the bankrupt acted under legal advice
in giving a preference, unless it is made to appear that he did so in good
faith, believing that he had a legal right to do what he did. In re Michael
Finn, 8 B. R. 525.

The mere making of payments in the course of his business, with the
bona fide, though mistaken, expectation that he can keep along without
going into bankruptcy, there being no actual design to favor or prefer,
666 Tue Bankruptcy Law.

will not deprive a party of his discharge, although he was insolvent
when the payments were so made. In re Brent, 8 B. R. 444; s. c. 2 Dillon,
120; in re Geo. M. Garwood, Crabbe, 516; in re Alonzo Pearce, 21 Vt.
611.

A preference made by an alien, when he was a resident of a foreign
country, is a ground for opposing the discharge, for he must show that he
has complied with the conditions imposed by law, although he was not
aware of them, or was not subject to the law when he did the act. In
coming here for the benefits of a discharge from his debts, he adopts the
law, and must take it as he finds it. There is no distinction between
citizens and aliens in this respect. A citizen who owns property and
carries on business in other countries can not do acts which are per-
fectly lawful there and still obtain the benefits of the statute if the acts
are such as will be a bar to the discharge. In re Goodfellow, 3 B. R.
452; s. c. Lowell, 510; s.c.1 L. T. B. 179; s. c. 3 L. T. B. 69.

The application of money on deposit with a bank to pay a note held by
it, is a preference, especially when the payment is. made before the note
becomes due. In re 8. P. Warner, 5 B. R. 414.

An order by an insolvent debtor upon his consignee to pay a certain
sum to a creditor, bars a discharge, although the transfer was inoperative
through the omission of the consignee to carry it into effect. In re George
M. Garwood, Crabbe,. 516.

The mere giving of a consent to a sale under a valid attachment is
not a preference where the creditor only got what he would ultimately
obtain in due course of law. In re Timothy Reed, 21 Vt. 635.

Suffering a judgment to be taken by default in an attachment suit after
the commencement of the proceedings in bankruptcy, and making no
objection to an assessment of the damages where the silent partner, who
is a joint defendant, consents, is not a preference, for the security was
gained by the attachment and not the judgment. In re Christopher C.
Rowell, 21 Vt. 620.

An assignment exacting releases as a condition of receiving a dividend
is a ground for refusing a discharge, because it is a preference. In re
Aspinwall, 3 Penn. L. J. 212. Contra, in re Charles W. Holmes, 1 N. Y.
Leg. Obs. 211.

A mere preference given without contemplation of the proceedings in
bankruptcy and more than six months before the filing of the petition, is
no ground for withholding a discharge. In re Oliver L. Jones, 13 B. R.
286.

Fraudulent Transfers.— (j) Quaere, Does a specification which not
only avers a fraudulent assignment, made in 1861, with the intent to
enable the assignor to retain the control and disposition of a large amount
of property pretended to be assigned, but goes further, and avers that this
property has ever since been in the charge and custody, or under the
contro] of the assignor; that no dividend or other distribution of this
property has ever been made to the creditors under the assignment; that
a partner now has in his hands, or under his control, a large amount of
property and assets pretended to have been included in the assignment;
GaMING. 667

and that this disposition, detention and custody of the property is with
the knowledge, consent, and connivance of the bankrupt — set forth a
state of facts which, if proved, would constitute a fraudulent transfer
within the meaning of this clause? In re OC. W. Moore, 2: Ben. 325; in re
Cretiew, 5 B. R. 423; s. ¢. 2 L. T. B. 187.

An allegation that the bankrupt had made a fraudulent conveyance of
his property, without stating the person to whom the conveyance was
made or the property conveyed, is insufficient. Stewart v. Hargrove, 23
Ala. 429.

A fraudulent conveyance made prior to the passage of the bankruptcy
law is ground for withholding a discharge. In re Cretiew, 5 B. R. 423;
sc. 2 L. T. B. 187; Peterson v. Speer, 29 Penn. 478. Contra, in re
Keefer, 4 B. R. 389; s. c. 3 C. L. N. 125; in re Charles P. Houghton,
4 Law Rep. 482; in re Charles H. Delavan, 5 Law Rep. 370; Gove v.
Lawrence, 26 N. H. 484; Porter v. Douglass, 27 Miss. 379.

A relative may purchase the property of the debtor at a public sale
under an execution or mortgage, if he does not do so with the funds
of the latter. The relationship merely serves to help out or give point to
proofs of mala fides in the transaction. In re John Bailey, 1 N. Y. Leg.
Obs. 18; s. c. 5 Law Rep. 320.

When the least degree of concert or collusion is shown between the
bankrupt and an alleged fraudulent grantee, the acts and declarations of
.the grantee may be given in evidence to affect the bankrupt. Peterson v.
Speer, 29 Penn. 478.

If the bankrupt, shortly before the filing of the petition in bankruptcy,
gave his wife a considerable sum of money to meet the family expenses,
this was fraudulent. The amount allowed by law as exempt from the
operation of the bankruptcy law, is all the bankrupt had the right to
retain. The money given to his wife belonged to his creditors, and
should have been entered on his schedule of property and assets. In re
Jorey & Son, 2 B. R. 668; s. c. 2 Bond, 336.

Spending large sums of money in making permanent improvements
upon property belonging to his wife, with intent to delay, hinder and de-
fraud his creditors, is not a fraud of such a character as will bar a dis-
charge. In re John B. Harper, 6 C. L. N. 279.

The fraudulent payment, gift, transfer, conveyance and assignment
must be such as are denominated frauds by the terms of the bankruptcy
law, and particularly described in sections 5128 and 5129. Ibid.

A fraudulent conveyance made at a time so recent that it will affect
any of the creditors who can come in under the bankruptcy, is a ground for
withholding a discharge. In re Oliver L. Jones, 13 B. R. 286.

Gaming.— (k) Property acquired in gaming is assets, and, if the bank-
Tupt spend it in gaming, he loses his right to a discharge. It is impos-
sible to look into the mode in which such property as the statute speaks
of has been acquired. If property once in the possession of the bank-
Tupt has been spent in gaming, which, if not so spent, might be assets
in bankruptcy, the case is made out. It is too late, after it is spent, to
say that it was unlawfully acquired, or acquired in a particular way, or
668 Tur Bankruptcy Law.

that creditors are no worse off on the whole. Such losses can not be dis-
tinguished from those which any other debtor might sustain in a similar
way. Neither the knowledge of the creditors of the course of business
of the debtor, nor any intent on his or their part, is material. The fact
can only be inquired into. Nor does the law in the matter of discharge
invest the court with discretion, as it does so largely in England. It isa
mere question of legal right. In re Marshall, 4 B. R. 106; s. c. Lowell,
462.

Fictitious Debts.— (1) Setting forth a false and fictitious debt in the
schedule, is an admission of it against the estate that will bar a dis-
charge, but the burden of proof is on the creditors to show that the
debt is false and fictitious. In re Orcutt, 4 B. R. 538; s. c. 5 Ben. 19.

The language of the statute does not embrace a claim admitted to be
just in its origin, but against which the bankrupt insists upon rights cf
set-off, or asserts that it has been satisfied. The distinction is between
fabricating a debt where none exists in fact, and stating a dehkt un-
questionably outstanding with the claim of defense to it. In re Mark
Banks, 1 N. Y. Leg. Obs. 274.

A. judgment confessed by the bankrupt without any valuable con-
sideration, however fraudulent it may be as to creditors, is binding on
him, and he may put the holder of the judgment on the list of his cred-
itors. In re David H. Robertson, 11 N. Y. Leg. Obs. 20.

In order to bar the discharge the debt must be falsely admitted in
proceedings under the act. Merely giving a preference to a fictitious debt
in an assignment, is not sufficient. In re Chas. H, Delavan, 5 Law Rep.
370.

The placing of a fictitious debt upon the schedules as just and owing
is admitting the debt against the estate within the mischief and mean-
ing of the statute. Ibid.

Books of Account.— (m) The word “after’’ means at any time since
the passage of the act, though the neglect may not cover the whole
period. In re Rosenfield, 1 B. R. 575; s.c.1L. T. B. 81.

If the objection is that certain entries are wanting, or that there are
irregularities in the mode of keeping proper books, they ought to be
pointed out in the specifications; but where objection is that a cash ac-
count is wholly wanting, a general specification is sufficient. In re Little-
field, 3 B. R. 57; s. c. Lowell, 331; s.c. 1 L. T. B. 164; in re Hammond
& Coolidge, 3 B. R. 273; s. ¢c. Lowell, 381.

A specification averring that the bankrupt has not kept proper books
of account in his business, in that such books do not show what moneys
were received, or what disposition was made of the same, is sufficiently
specific to admit evidence that no cash-book whatever was kept for a
period of time. In re Belis & Milligan, 3 B. R. 496; s. c. 4 Ben. 53; in re
Bound, 4 B. R. 510.

The law intends that a merchant’s or trader’s books and documents
should be in such a condition as to show his business situation to his
creditors as well as to himself. By keeping such books in a proper
Manner, a debtor can not but be aware of his standing, his property and
Booxs or Account. 669

effects, and his liabilities. On the other hand, his books should exhibit to
his creditors his position, so that, when placed before them for investi-
gation, they may at once ascertain his standing and property and the
result of his business, and whether everything has been fair and honest
on his part. In re Gay, 2 B. R. 358; s. c. 1 L. T. B. 73; in re Newman,
2B. R. 302; s. c. 3 Ben. 20; in re Solomon, 2 B. R. 285; s. c. 6 Phila. 481;
in re Keach, 3 B. R. 138; s. c. Lowell, 835; s. c. 1 L. T. B. 167; in re
William Archenbraun, 12 B. R. 17; s. ¢. 7 C. L. N. 231.

The word “tradesman” has substantially the same meaning as shop-
keeper. In re Cote, 14 B. R. 508.

As the section is almost penal, the term ‘‘ tradesman” should be con-
fined to those who belong to that class with some degree of permanence.
Ibid.

Persons who buy and Sell in a small way merely by way of eking out
their living, which is earned substantially in other ways, are not trades-
men. Ibid.

Manufacturers of and dealers in shoes are tradesmen. In re Jorey &
Son, 2 B. R. 668; s. ec. 2 Bond, 336.

A party whose only business is that of speculating in stocks is not a mer-
chant or tradesman, if he keeps no office and buys and sells through
brokers. In re William H. Marston, 5 Ben. 313.

A stairbuilder is a merchant or tradesman. He is none the less a trades-
man because he is also a manufacturer ofthe stairs, or because he does
not resell the lumber and other materials in the same state in which he
‘ buys them, or because he does not buy and sell completed stairs. In re
Edward Garrison, 7 B. R. 287; s. c. 5 Ben. 480.

A person buying and selling goods for the purpose of gain, though only
occasionally, is a merchant and trader. In re O’Bannon, 2 B. R. 15.

The distinction taken in England, whether every one who buys and
sells goods is quoad hoc a tradesman, may admit of question. And yet
it is very difficult to draw any line founded solely on the smallness of
the transactions. It would seem that any one who buys on credit with
intent to sell again at a profit, and who has no other regular business, is
fairly within the mischief of the act. Though, where the buying and
selling are a mere incident, as, if a farmer should buy stock or grain in
addition to what he had raised, perhaps such a person could not be
described as a tradesman. In re Tyler, 4 B. R. 104.

A person who bought goods which he could use, and did use, and which
he sold when pressed for money, can not be deemed a trader.: Isolated
and separate acts, having no connection with each other, and showing
no intention to set up any trade, do not make a person a tradesman. The
deliberate purpose of buying goods to sell them again might be within
the letter of the act. So might an amount of trading, however small,
connected with an intent to deal generally. In re W. M. Rogers, 3 B. R.
564; s. c. Lowell, 423.

A person whose occupation is that of a baker, and who buys flour
which he converts into bread, and then sells the bread to daily customers,
isa tradesman. In re Cocks, 3 Ben. 260.
670 Tur Bankruptcy Law.

If a firm has not kept proper books of account, a partner can not obtain
a discharge, although he was a junior member and not a keeper of the
books. In re Wm. H. Pierson, 10 B. R. 107.

Ween the business has been wholly closed, so that no rights or in-
teres’s can be subject to examination or decision in the bankruptcy court,
and there is nothing left outstanding in the way of assets or of debtors
or of creditors, and the business was one which neither required nor
received the use of any capital, so that there is nothing in it which can
concern the assignee, or which the books could show him to his advantage,
such past trading can not be considered as within the equity or letter
of the statute, and in those transactions the bankrupt is not a merchant
or tradesman within the fair construction of the bankruptcy act. The
books are not the only proper evidence that the business is thus wholly
closed and past. This may be proved aliunde. The schedules, proofs of
debt, and all the proceedings in the case, may be admitted for that
purpose, together with oral testimony. In re Keach, 3 B. R. 18; s. ¢.
Lowell, 385; s. c. 1 L. T. B. 167.

The final winding up of a trader’s business should be recorded, as well
as its current course, and, unless the bankrupt can clearly show that every-
thing has been so fully ended that no such account could affect his stand-
ing, or touch the interests of his creditors at the time of his bankruptcy,
the omission to keep proper books, which, at the time of his trading, was
an illegal act, will be an effectual bar to his discharge. In re Tyler, 4 B.
R. 104.

If there was no continued trading, the bankrupt was not required to keep
regular kooks. In re Mark Banks, 1 N. Y. Leg. Obs. 274.

The creditor must take the burden of proof and show that the bankrupt
did not keep proper books of account. Ibid.

This is a most important provision, because it is that which is intended
to provide the assignee representing the creditors with the means of tracing
out all the dealings of the debtor, to ascertain what has become of his
property, what are the causes of his failure, and whether he has dealt
fairly and equally with his creditors. However harshly the law may
sometimes operate with some small traders, whose affairs seem hardly
worthy of the trouble of recording them, it is a most reasonable and
salutary rule in its application to merchants dealing with large sums and
contracting large debts, and in a position to know and to be able to carry
out the law. In re George & Proctor, Lowell, 409.

The intent of the nonkeeping of books is of no importance. The mere
owission is the thing plainly interdicted. Such omission prevents a dis-
charge, whether the intent was fraudulent or not. In re Solomon, 2 B.
R. 285; s. c. 6 Phila. 481; in re Newman, 2 B. R. 302; s. c. 3 Ben. 20; in re
Jorey & Son, 2 B. R. 668; s. c. 2 Bond, 336; in re Schumpert, 8 B. R. 415;
in re William Archenbraun, 2 B. R. 17; s.c. 7 GC. L. N. 281.

No excuse, however true, and no innocence of ‘intention, will avail to
supply the deficiency. In re George & Proctor, Lowell, 409.

Whether the books of account are properly kept is a question which
must be decided in every case upon the facts as they appear, and not upon
Booxs oF Account. 671
any strict rule that such and such books and such and such entries are
essential in all cases. In re Perry & Allen, 20 Pitts. L. J. 184; s. c. 7
W. J. 379.

It is not necessary that these books be kept according to the forms
taught in schools, or in ledgers and day-books bound in leather. In busi-
ness of some kinds, any contemporaneous written memorials, formalsor in-
formal, of a tradesman’s transactions, whether in a bound volume or in
detached sheets, may answer the definition of proper books of account, if
they have been preserved and so arranged as to present an intelligible
and substantially complete exposition of his affairs. The question of what
are proper books must be in each case a question of evidence. What
would be proper and sufficient books in one case would be improper and
insufficient in another. In re Solomon, 2 B. R. 285; s. c. 6 Phila, 481; in re
Newman, 2 B. R. 302; s. c. 3 Ben. 20; in re Wm. F. White, 2 B. R. 590;
sc. 2 L. T. B. 105; s. ce. 16 Pitts. L. J. 110; in re Batchelder, 3 B.
R. 150; s. ¢. Lowell, 373.

It is not sufficient that the bankrupt employed a bookkeeper whom he
considered competent, and left the whole charge of the books to him. The
law does not require traders to keep a bookkeeper, but to keep books, and
they are rsponsible to see that this is done. In re Hammond & Coolidge,
3B. R. 2738; s. c. Lowell, 381.

Entries upon numerous slips of paper, each entry being on a separate
slip, is not a keeping of books under the law. This may do for a short
time in the absence of the books, but not as a system or policy of a per-
manent character. If the books were lost, and there was no reasonable
expectation of finding them, or if they were not found within a reasonable
time, it was the duty of the bankrupt to supply their place with others.
Ibid.

A retail dealer who keeps the usual books and all his invoices keeps
proper books of account, although he kept no invoice book. In re J. K. P.
Reed, 12 B. R. 390.

There is no positive rule of law requiring the entries to be made daily
(though they ought to be at or near the time of the transactions), or the
balances to be made at any fixed periods, or the books to be kept in any
particular mode. In re George & Proctor, Lowell, 409.

The law requires that a merchant or tradesman should keep such books
as, considering the nature and circumstances of his trade, are necessary
to exhibit to a person of competent skill the true state of his dealings and
affairs. In re Hammond & Coolidge, 3 B. R. 273; s. c. Lowell, 381; in re
Solomon, 2 B. R. 285; s. c. 6 Phila. 481; in re Jorey & Son, 2 B. R. 668; s. c.
2 Bond, 336; in re Mark Banks, 1 N. Y. Leg. Obs. 274.

It is a question of fact whether the books are such as will give to a com-
petent person examining them knowledge of the true state of the bank-
Tupt’s affairs. The question is addressed to the good sense and knowledge
of the jury, aided by such explanations as may be offered by experts or
other competent witnesses. In re George & Proctor, Lowell, 409; in re
Hammond & Coolidge, 3 B. R. 273; s. c. Lowell, 381; in re Schumpert, 8 B.
R. 415; in re J. K. P, Reed, 12 B. R. 390.
672 Tue Bankruptcy Law.

Where the day-book and the ledger taken together show all the trans-
actions of the bankrupt, a discharge may be granted, although there are
some meaningless mutilations in each. In re Wm. H. Pierson, 10 B. R.
107.

A cash account is necessary to an understanding of a trader’s business,
and when one has not been kept a discharge will be refused. In re Gay,
2B. R. 358; s. c. 1 L. T. B. 78; in re Solomon, 2 B. R. 285; s. c. 6 Phila. 481;
in re Littlefield, 8 B. R. 57; s. c. Lowell, 331; s.c. 1 L. T. B. 164; in re Belis
& Milligan, 3 B. R. 496; s. c. 4 Ben. 55.

The cash-book should show, in an intelligible and proper manner, the
nature and character of the receipts and disbursements of cash made by
the bankrupt. In re Mackey et al., 4 B. R. 66; s.¢c.2C. L. N. 393.

The omission of an entire book or set of entries, necessary to the under-
standing of the business, prevents a discharge. In re Wm. F. White, 2
B. R. 590; s.c. 2 L. T. B. 105; s. c. 16 Pitts. L. J. 110.

Careless omissions or mistakes, without fraud, in books themselves
proper, may be overlooked. In re Wm. F. White, 2 B. R. 590; s. ¢ 2 L, T.
B. 105; s. c. 16 Pitts. L. J. 110; in re Burgess, 3 B. R. 196.

The question is, whether the bankrupt did all that a prudent business
man, intending to keep his accounts accurately, would naturally do. A
temporary omission, in good faith and for a reasonable time to make the
entries, would not be a failure to keep books. But a neglect to keep them
on purpose for a reasonable time would be. In re Hammcnd & Coolidge, 3
B. R. 278; s. c. Lowell, 381.

Where one of the books has been mutilated, but all the outstanding ac-
counts which it contained have been transferred to another book, a dis-
charge will be granted when the evidence shows that no fraud was done
to the creditors by the change, and that the accounts were all collected, as
far as collectible. In re Noonan & Connolly, 3 B. R. 267.

Persons who buy on credit, and sell again in such wise as to be mer-
chants or tradesmen, must see to it, in order to be in‘a position when
misfortune overtakes them to obtain the benefits of the bankruptcy act,
that they keep such books in relation to their business as will furnish an
intelligible account to their creditors of the state and course of their
business transactions, not leaving such accounts to be made up from
memory, or from sources other than such books. In re Edward Garrison,
7 B. R. 287; s. ec. 5 Ben. 480.

A discharge will not be refused co a bankrupt for not keeping proper
books of account, without full evidence of the facts and of their bearing
upon his business. The books themselves should be produced, and the
parol statements should be definite. In re Batchelder, 3 B. R. 150; s. ¢.
Lowell, 373.

A. canceled check is admissible in evidence in connection with the stump
of the check-book, to show how the book was kept. In re W. B. Brock-
way, 7 B. R. 595.

Assent of Creditor to Discharge.—(n) A specification which avers that
the bankrupt or some person in his behalf has procured the assent of cer-
tain creditors to his discharge and influenced their action by a pecuniary
TRANSFERS. 673
consideration is too vague-to be triable. In re Freeman, 4 B. R. 64; 8. ©
4 Ben. 245.

The specification should aver that the bankrupt has procured the assent
of a creditor to the discharge by a pecuniary consideration or obligation.
The bankrupt is not forbidden to procure the assent of a creditor to his
discharge, nor is he forbidden to influence the action of a creditor. The
prohibition is against procuring such assent or influencing such action by
any pecuniary consideration or obligation. In re Mawson, 1 B. R. 437, 548;
s.¢, 2 Ben. 332, 412; Fox v. Paine, 10 Ala. 5283; Coates v. Blush, 55 Mass.
564; Chamberlin v. Griggs, 3 Denio, 9.

If a bankrupt obtains the consent of a creditor to a discharge by giving
him his indorsed note for a part of the debt, his discharge will be refused,
although he had previously procured the assent of a sufficient number to
entitle him to a discharge. In re BH. VY. Palmer, 14 B, R. 482.

If a claim is purchased by a friend of the bankrupt with no conceivable
motive but to benefit the bankrupt, and the assent of the creditor to a dis-
charge is so placed on the paper that it may have influenced others, the
presumption is that the purchase was made in behalf of the bankrupt,
and the discharge will be refused. In re Whitney et al., 14 B. R.1;8.4 8
0. L. N. 195.

Transfers in Contemplation of Becoming Bankrupt.— (0) ‘An examina-
tion of the act, in connection with the Forms, shows that the expression,
“becoming bankrupt,’ means committing an act of bankruptcy, and that
the expression, ‘‘in contemplation of becoming bankrupt,’’ means in con-
templation of committing an act of bankruptcy. The act of bankruptcy,
the commission of which must be contemplated, is such an act as the
statute declares to be an act of bankruptcy. A debtor may become bank-
rupt or commit an act of bankruptcy by filing a petition under section 5014,
or by doing some one of the things which is declared by section 5021 to be
the commission of an act of bankruptcy. It is not necessary, in order that
he should have contemplated becoming bankrupt, that he should have con-
templated having a petition filed against him, and being adjudged a bank-
tupt thereon, provided he contemplated committing an act which is defined
by section 5021 to be an act of bankruptcy, or filing a petition under section
5014. In re Goldschmidt, 3 B. R. 165; s. c. 3 Ben. 379; in re Freeman, 4
B. R. 64; 8. c. 4 Ben. 245; in re Lawson, 2 B. R. 113; in re Cretiew, 5 B. R.
423; 8, c. 2 L. T. B. 137; in re J. H. C. Lutgens, 7 Pac. L. R. 89; in re
Wm. H. Pierson, 10 B. R. 107; in re Alonzo Pearce, 21 Vt. 611; in re
Ohristopher C. Rowell, 21 Vt. 620; Swan v. Littlefield, 58 Mass. 574; Caryl
Vv. Russell, 18 N. Y. 194; s. c. 18 Barb. 420; North American Ins. Co. v.
Graham, 5 Sandf. 197. Vide in re Chas. W. Holmes, 5 Law Rep. 360.

A debtor may sell property for the purpose of procuring means to defray
his expenses in contemplated bankruptcy proceedings, provided he does
hot sell at a sacrifice, and that the sum so raised is reasonable in amount.
In re Keefer, 4 B. R. 389; s. c. 3 C. L. N. 125; Flournoy v. Newton, 8 Ga.
306; Lyon y. Marshall, 11 Barb. 241.

Where an insolvent debtor makes an assignment for the benefit of cred-
itors three days before the filing of his petition in bankruptcy, his denial of

43
674 THE Bankruptcy Law.

any intention, at the time of making the assigament, to take the benefit
of the bankruptcy act, however positive, is not, in the absence of confirma-
tory circumstances, sufficient to repel the presumption arising from the
facts, and a discharge must be refused. A system which would thus, in
practice, permit a discharge of the debtor, without a simultaneous adminis-
tration and distribution of the property among the creditors, would be a
monstrosity. In re Broadhead, 2 B. R. 278; s. c. 3 Ben. 106.

An assignment for the benefit of creditors by a party in contemplation of
becoming bankrupt is good ground for refusing a discharge in a case of
voluntary bankruptcy. The fact that the assignment is one of all the
debtor's property, and creates no preferences among his creditors, makes
no difference. It is as repugnant to the act as if it had assigned only a part
of his property, or had created preferences. It shows an intent and a
purpose on the part of the bankrupt to assume the distribution of his prop-
erty in satisfaction of his debts through the agency of an assignee selected
by himself. This necessarily involves the existence of a purpose to prevent
the same property from being distributed under the bankruptcy act in
satisfaction of the same debt. There could be no other purpose. In re
Goldschmidt, 3 B. R. 165; s. c. 3 Ben. 379. Contra, in re Pierce & Holbrook,
3 B. R. 258; s. c. 16 Pitts. L. J. 204; in re John M. Quackenboss, 1 N. Y.
Leg. Obs. 146; Smith v. Ely, 10 B. R. 553.

This clause does not include consignments which do not change the title,
but are merely the employment of an agent. In re Hammond & Coolidge,
3 B. R. 273; s. ec. Lowell, 381.

The filing of a bill in equity against a copartner, and procuring the ap-
pointment of a receiver is not such a transfer as is contemplated by this
section. In re Robert H. Shoemaker, 4 Biss. 245.

Act oF 1898, As to contesting discharge, see post, p. 729.

Act oF 1867, § 5111. Any creditor opposing the discharge of
any bankrupt may file a specification in writing of the grounds of
his opposition, and the court may in its discretion order any question
of fact so presented to be tried at a stated session of the district court.

Statute revised — March 2, 1867, ch. 176, § 31, 14 Stat. 532. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 4, 5 Stat. 448.

Filing Specifications.— Any person who shows by affidavit or other-
wise that he is a creditor, has the right to appear and oppose the dis-
charge, without being in technical strictness a creditor who has proved
his debt. To entitle him to oppose the discharge, he must have a pecu-
niary interest in the matter, and that interest must be satisfactorily
shown. In re L. Sheppard, 1 B. R. 489; c.1L. T. B. 49;8.07A.
L. Reg. 484; in re Smith & Bickford, 8 Blatch. 461; in re Murdock, 3 B. R.
146; s. c. Lowell, 362; s. c. 2 L. T. B. 97; in re Boutelle, 2 B. R. 129; 8. ¢.
15 Pitts. L. J. 616; in re Samuel Book, 3 McLean, 317. Contra, in re Levy
et al., 1 B. R. 327; s. c. 2 Ben. 169; in re W. D. Hill, 1 B. R. 16; 8s. ¢. 1
Ben, 321; in re Burk, 3 B, R, 296; s, ¢, 1 Deady, 425; s. c. 2 L. T. B. 45;
FILING SPECIFICATIONS. 675

in re O. N. Palmer, 3 B. R. 301; in re Brown King, 1 N. Y. Leg. Obs. 228
s.c. 5 Law Rep. 220.

A judgment obtained after the adjudication in bankruptcy, creates a
new debt which can not be proved in bankruptcy, because the judgment
is a merger, and creates a new debt, and the judgment creditor can not
oppose the discharge, because he has no provable debt, and because the
discharge will be no bar to the judgment. A creditor who proved his
debts before obtaining judgment, may keep his proof and oppose the dis-
charge if he will file a stipulation to release his judgment in case the final
decision in bankruptcy shall grant the bankrupt his discharge. In re
Gallison et al., 5 B. R. 358; s. c. 2 L. T. B. 195.

Where the bankrupt has acted as administrator, and the probate court
has directed a dividend to be made among the creditors, any creditor of
such an estate has an interest in the bankrupt’s estate, and may oppose
his discharge. In re John C. Tebbetts, 5 Law Rep. 259.

If a creditor who held the bankrupt’s bond assigned it as a collateral
to secure a debt, and then allowed a judgment to be recovered thereon
in his name, has any surplus that would come to him after the payment of
the debt, he may oppose the discharge. In re Traphagan, 1 N. Y. Leg.
Obs. 98; s. c. 5 Law Rep. 323.

The appointment of a receiver and an assignment of the claim to him
does not divest the creditor of his interest in the claim so but that he can
oppose the discharge. Ibid.

The specifications may be filed with the register. Form No. 53 contem-
plates that they may be addressed to him. In re Bellamy, 1 B. R. 98; s. ¢.
1 Ben. 426.

By section 4999, the register is forbidden to hear any questions as to
_the allowance of an order of discharge. Such questions are to be deter-*
mined by the court after the bankrupt has applied for his discharge. If
the specifications are filed, the case is then ipso facto removeu from before
the register and taken into court. In re Mawson, 1 B. R. 265: s. c. 2 Ben.
122; in re Puffer, 2 B. R. 48.

A creditor may file specifications at any time. Rule XXIV is enabling,
and not prohibitory. A creditor who does not file specifications by the
time specified in Rule XXIV, will lose his opportunity of doing so. But
he has the right to file them at any stage of the proceedings before that
time. In re Baum, 1 B. R. 5; s. c. 1 Ben. 274.

The orderly conduct of the proceedings requires that the trial of all
questions so raised shall be postponed till the hearing of the petition for
discharge. The register will proceed with the case, notwithstanding the
Specifications. In re Puffer, 2 B. R. 43; in re Brisco, 2 B. R. 226; in re W.
D. Hill, 1 B. R. 16; s. c. 1 Ben. 321; in re Paget 1 Penn. L. J. 367° in re
George Livermore, 5 Law Rep. 370.

The proceedings upon the order to show cause may be adjourned upon
the return day thereof. In re Mawson, 1 B. R. 271.

Such an adjournment may be made without requiring the creditors to
file an appearance under Rule XXIV. The rights of a creditor upon the
adjourned day are the same in all respects as upon the return day, In re
676 Tue Bankruptcy Law.

Jobn Thompson, 1 B. R. 323; 8. c. 2 Ben. 166; in re Tallman, 1 B. R. 540;
s. c. 2 Ben. 404; in re James M. Seabury, 10 B. R. 90; in re 8. S. Houghton,
10 B. R. 837.

On the entry of an appearance of a creditor to oppose a discharge, all

proceedings upon the petition for a discharge are suspended until specifica-
tions shall be filed. On filing the specifications, the hearing upon the
petition is at once transferred into court. There can not, therefore, be
any examination of the bankrupt on the application for a discharge be-
fore the register. The proceeding for an examination must be taken under
section 5086. In re Frizelle et al., 5 B. R. 119.

The time to file objections to a discharge may be kept open by adjourn-
ing any day which may be fixed for showing cause against a discharge
until a full, reasonable opportunity is afforded for the examination of the
bankrupt and his wife and other witnesses. In re Seckendorf, 1 B. R.
626; s. c. 2 Ben. 462.

The time for showing cause against the discharge may be extended
from time to time upon the application of a creditor, even though a pro-
test has been made against the allowance of his claim, until the examina-
tion of the bankrupt and other witnesses is concluded, the whole matter
being subject to regulation by the register and the court as to the use of
reasonable diligence. In re Belden & Hooker, 4 Ben. 225.

An adjournment sine die terminates the proceedings. The petition for
discharge remains good, but nothing can be done under it unless a new
order to show cause is issued. In re Seckendorf, 1 B. R. 626; s. c. 2 Ben.
462.

Any abuse by the register of the power to adjourn may be corrected by
the district court, which has power to supervise the proceedings. In re W.
‘RB. Robinson, 2 B. R. 342; s. c. 836 How. Pr. 176; s. c. 6 Blatch. 253; s.
e.2L.T B, 18.

Upon the day appointed to show cause, a creditor intending to oppose
the application for a discharge must enter his appearance in opposition
thereto. His appearance is entered with the clerk, as provided in Rule
III. Until such appearance is entered, the creditor has no standing in
court as to the petition for a discharge, and, therefore, can not be heard
in opposition thereto. In re Robert A. Sutherland, 1 Deady, 573.

On the day fixed to show cause, the creditor must appear by himself or
counsel, and enter his opposition, which should either be in writing or
verbally; but an entry of such opposition should be made on the docket,
and suspend further proceedings until the filing of the specifications; and
if the specifications are not filed within ten days, the cause progresses as
though no opposition had been made, unless, for sufficient cause shown,
the time for filing is extended. A request to have an appearance entered
can not be made until after the petition for discharge is filed. In re
MeVey, 2 B. R. 257; in re James M. Seabury, 10 B. R. 90.

The appearance is not complete until the clerk enters the name of the
attorney and his place of business upon the docket, with the date of entry.
In re James M. Seabury, 10 B. R. 90.
FILING SPECIFICATIONS. 677

An appearance entered after the return day must be disregarded. In re
MeVey, 2 B. R. 257; in re Smith & Bickford, 5 B. R. 20; Creditors v. Wil-
liams, 4 B. R. 580; s. c. 2 L. T. B. 166; in re Robert A. Sutherland, 1 Deady,
578; in re James M. Seabury, 10 B. R. 90; in re Joseph Buxbaum, 13 B. R.
477,

If the creditor did not receive notice of the application for a discharge,.
he may be allowed to enter an appearance after the return day. In re
Chauncey J. Filley, 2 Cent. L. J. 419.

The district court may, in its discretion, allow a creditor to enter his
appearance and file specifications in opposition to a discharge, although
the time for entering an appearance in opposition thereto has expired. In
re Lewis Levin, 14 B. R. 385.

Specifications not filed within the prescribed time can not be entertained.
In re MeVey, 2 B. R. 257.

A specification not signed by an attorney legally authorized to act for the
creditor is a nullity, and must be disregarded. A power of attorney not
ecortaining-a power of substitution, does not authorize a person other than
the party duly constituted agent thereby, to sign his own name or affix the
name of such agent to specifications on behalf of a creditor. In re C. N.
Palmer, 3 B. R. 301; Creditors v. Williams, 4 B. R. 580; s. c. 2 L. T. B. 166.

When a creditor has regularly entered his appearance on the return day,
but has failed, through inadvertence, to file specifications within the pre-
scribed time, the court, on cause shown, will allow him to file them nunc
pro tune. In re Grefe, 2 B. R. 329.

The filing of an opposition to a bankrupt’s discharge is the commence-
ment of an individual proceeding on the part of the creditor against the
bankrupt. It is, in fact, a suit arising in the course of the bankrupt’s pro-
ceedings. It involves pleadings, costs, and attorney’s fees; it may involve
a trial by jury. The question of discharge may linger in the court for
years, and in every case involves more or less expense and costs. A letter
of attorney, according to Form No. 26, does not authorize the attorney to
make opposition to the discharge of the bankrupt, and involve him in such
a controversy. Creditors v. Williams, 4 B. R. 580; 8. c. 2 L. T. B. 166.

The proceeding for a discharge depends on the proceedings in bank-
Tuptey, and is inseparably connected with them. In fact and in law it
must be considered as a continuation of the former proceedings. In re
Ankrim, 3 McLean, 285.

If the original objector declines to prosecute his specifications, other
creditors may be permitted to enter their appearance and be heard in sup-
port of the objections, although the time for entering an appearance is past.
In re 8. 8. Houghton, 10 B. R. 337. Contra, in re David A. McDonald, 14
B. R. 477; s. ¢, 24 Pitts. L. J. 42; s. c. 12 Pac. L. R. 99.

Where there is no opposing party, the petition of the bankrupt for final
discharge may be continued from time to time to suit the convenience of
the bankrupt. A day is appointed for the creditors to show cause, but
such appointment does not fix the day for hearing the application for a
discharge. In re Robert A. Sutherland, 1 Deady, 573.
678 Tur BANKRUPTCY Law.

Averments in Specifications.— The specification should state the name
of the opposing creditor. In re Robert H. Shoemaker, 4 Biss. 245.

‘All grounds against the discharge, except those which appear on the
face of the proceedings, must be assigned in writing as specifications,
whether they are enumerated in section 5110 or not, if the creditor intends
to rely on them. In re James M. Seabury, 10 B. R. 90.

The specifications must not be vague and general. The allegations must
be allegations of facts, and must be distinct, precise, and specific, and
must not be merely allegations in the language of section 5110, or allega-
tions so general as really not to advise the bankrupt what facts he must
be prepared to meet and resist. In re Rathbone, 1 B. R. 294, 324; s. «.
2 Ben. 138; in re Beardsley, 1 B. R. 304; in re W. D. Hill, 1 B. R. 275; s. c.
2 Ben. 136; in re Mawson, 1 B. R. 487; s. c, 2 Ben. 332; in re Waggoner, 1
Ben. 532; in re Burk, 3 B. R. 296; s. c. 1 Deady, 425; s. c. 2 L. T. B. 45; in
re Butterfield, 14 B. R. 147; s. c. 5 Biss. 120.

The strictness of common-law pleading is not required, but the bankrupt
is entitled to such particularity of statement as to give him reasonable
notice of what is expected to be proved against him. In re Smith & Bick-
ford, 5 B. R. 20.

Specifications must particularize facts descriptive of the offense as
charged to constitute the ground for objecting to the discharge, setting
forth, as clearly as may be, the time, place, person, etc. A specification
containing a reference to facts supposed to be shown upon an examination
of the bankrupt is, in that respect, faulty. The facts alone should be set
forth, without reference to any matter aliunde. In re Eidom, 3 B. R. 106.

The specifications may be amended. In re W. D. Hill, 1 B. R. 275; s. ¢.
2 Ben. 136; in re Rathbone, 1 B. R. 294; s. c. 2 Ben. 138; in re Burk, 3
B. R. 296; s. c. 1 Deady, 425; s. c. 2 L. T. B. 45.

The creditors will not be compelled to abide by the specifications placed
on file, when there has not been sufficient examination or disclosure on the
part of the bankrupt before the time appointed for a hearing in court
upon his application for his discharge. In re Wm. H. Long, 3 B. R.
(quarto) 66.

The court may, in its discretion, where it appears to be due to justice,
allow an amendment of the specifications, even at the trial. In re Belis &
Milligan, 3 B. R. 496; s. ¢. 4 Ben. 53.

Vague and general specifications may be stricken out. In re Waggoner,
1 Ben. 532.

Vague specifications may be disregarded. In re Rathbone, 1 B. R. 294;
s. c. 2 Ben. 138; in re Son, 1 B. R. 310; s. c. 2 Ben. 153; in re Tyrell, 2 B. R.
200; in re Hanson, 2 B. R. 211; in re Dreyer, 2 B. R. 212.

Trial of Specifications.— The bankrupt may question the sufficiency in
law of the grounds of opposition to his discharge by a demurrer, or by
exceptions analogous to those allowed in equity. In re Rosenfield, 2 B. R.
117;1L. T. B. 100; s. ce. 8 A. L. Reg. 44; in re McVey, 2 B. Ry 257; in re
Burk, 3 B. R. 206; s. «. 1 Deady, 425; s. ec. 2 L. T. B. 45.

The court may direct a trial of the specifications by a jury. When
there is a trial, the docket fee of $20 to the attorney of the successful
TRIAL OF SPECIFICATIONS. 679

party is taxable as part of the costs, The word “trial” means a trial by
jury. The pleadings may be filed, the issues made up, but until the jury
is sworn there is no trial. Gordon, McMillan, & Co. v. Scott & Allen, 2
B. R. 86; s. c1 L. T. B. 99; s. ce. 7 A. L. Reg. 749; in re Eidom, 3 B.
R. 160.

The opposing creditor can not move to dismiss the petition because the
bankrupt is supposed to be dilatory in bringing the matter on for a hear-
ing. The remedy of the creditor is to move the court to set down the
matter for hearing upon the petition and his objections thereto. In re
Robert A. Sutherland, 1 Deady, 578.

On the day assigned for hearing the specifications, the creditors are enti-
tled to a trial by jury, without having previously made a special demand
for it. In re Lawson, 2 B. R. 113.

The burden of proof is on the creditor to show that the bankrupt has
forfeited his title to a discharge by having done some of the things speci-
fied in section 5110, as grounds for withholding it. In re W. D. Hill, 1
B. R. 275; 8. c. 2 Ben. 136; in re Mawson, 1 B. R. 548; s. c. 2 Ben. 412; in re
Okell, 2 B. R. 105; in re Burgess, 3 B. R. 196; in re Noonan & Connolly,
3 B. R. 267; in re George & Proctor, Lowell, 409; Loud v. Pierce, 25 Me.
233,

When the creditors have established a prima facie case, the burden of
overthrowing it is imposed upon the bankrupt. In re P. A. Doyle, 3 B. R.
782.

The decision rendered upon the petition for involuntary bankruptcy does
not affect the debtor on the question of his discharge. In re Dibblee et al.,
2B. R. 617; s. c. 3 Ben. 2838.

The debtor will not be prejudiced in his application for a discharge by
allowing judgment to be taken by default on the petition in involuntary
bankruptcy. In re Latorop, Luddington & Co., 3 B. R. 46; s. c. 2 L. T. B.
124. Contra, in re Schoo, 2 B. R. 215.

Evidence in support of the specifications is the only. evidence that can be
introduced. The creditor is bound by his specifications. He can not go
beyond them, or produce evidence outside of them. In re Rosenfield, 2
B. R. 1i7;s.c.1L. T. B. 100; s.¢c. 8 A. L, Reg. 44; Timothy v. Reed, 21
Vt. 635,

A creditor who has given his assent to any act on the part of the bank-
rupt is estopped from urging that act as a ground for withholding the
discharge. In re Schuyler, 2 B. R. 549; s. c. 3 Ben. 200; s.c. 2 L. LT. B.
85; in re Whetmore, 1 Deady, 585; s. c. 1 L. T. B. 136; in re Jones & Hoyt,
12 B. R. 48; 8. c. 7 C. L. N. 162. .

A person who was not a creditor at the time of the alleged removal of
property, or whose debt was then barred by the statute of limitations, can
not object to the discharge on the ground of the removal. Practically, as
to him, there was no fraud. In re Burk, 8 B. R. 296; s. c. 1 Deady, 425;
8%¢c2L. T. B. 45.

The only grounds on which the charge will be withheld, are those set
forth in the specifications. In re Rosenfield, 3 B. R. 117; s, c.1L. T. B. 100;
680 Ture Bankruptcy Law.

s. c. 8 A. L. Reg. 44; in re Schuyler, 2 B. R. 549; s. c. 3 Ben. 200; 8. ¢. 2
L. T. B. 85.

The assertion of a fact by the bankrupt’s wife, in his presence and de-
nied by him, can not be given in evidence to impeach the testimony of the
bankrupt. In re John Q. McCarty, 5 Law Rep. 322.

An exemplification of the sworn answer of the bankrupt to a bill brought
against him in chancery is admissible against him. Anon., 1 N. Y¥. Leg.
Obs. 349; in re Maynard Bragg, 1 N. Y. Leg. Obs. 119; s. a 5 Law Rep.
323.

Where an original bill filed by the bankrupt is given in evidence, the
amended bill is not admissible to rebut or explain admissions made in the
original bill. Pearsall v. McCartney, 28 Ala. 110.

When the transfer is shown to be in writing, the written instrument
must be produced, although its contents can be proved by the declarations
of the bankrupt. Flournoy v. Newton, & Ga. 306.

It is not competent for the bankrupt to repel a charge of fraud by evi-
dence of his character. Pearsall v. McCartney, 28 Ala. 110.

The declaration of a party in the possession of real or personal property
that he holds in his own right or under another, is proper evidence as a
part of the res gestae, which res gestae is his possession, but such declara-
tions beyond this are no part of the subject-matter or thing done, and can
not be received as evidence. Gilbert v. Bradford, 15 Ala. 769.

The opposing creditor holds the affirmative of the issue, and ought to
begin. In such a proceeding the objector is the actor, and the bankrupt
stands on the defensive. Anon., 3 N. Y. Leg. Obs. 155.

If there was probable cause for filing specifications, each party may be
required to pay his own costs. In re Christopher C. Rowell, 21 Vt. 620.

The costs of taking testimony before a register to be used in the trial of
the specifications can not be taxed against an unsuccessful creditor. In re
Hidom, 3 B. R. 160. /

When the bankrupt has, in all things, fully conformed to his duty under
the act, the assignee, when he has funds belonging to the estate, should
pay the costs incurred upon the petition for a discharge, the publication of
notice of hearing, and the hearing of the petition. The case would be
different if creditors successfully opposed the granting of a discharge. In
re Olds et al., 4 B. R. 146; s. c. 2 L. T. B. 125; in re Dibblee et al., 4 Ben.
3804; in re Moses Guild, 1 W. & M. 29.

A discharge granted after trial upon a specification charging the con-
cealment of certain property, is not a bar to a suit by the assignee to re-
cover the same. Jones v. Milbank, 6 Lans. 73.

The district court will not restrain the assignee from prosecuting a suit
in a State court, although the allegations are the same in substance as
those stated in specifications against a discharge by others than the as-
signee, and which were then held out to be proved as matter of fact. It
is more proper that such questions should be determined in the plenary
suit, if raised therein, and by the tribunal in which the suit is brought,
with the provisions for review which obtain between party and party. In
re Penn et al., 8 B. R. 93; s. c. 5 Ben. 500.
TRIAL OF SPECIFICATIONS. 681

The district court may set aside the verdict of a jury, and order a new
trial in consonance with the rules upon which such new trials are granted
in courts of law. In re Barney Corse, 1 N. Y. Leg. Obs. 231. :

The decision of the district court on the specifications is an estoppel to
any other action between the same parties involving the same questions.
Downer v. Rowell, 25 Vt. 336.

The discharge of the bankrupt after opposition by a creditor does not
eperate as a bar to a recovery by the assignee against a vendee in an action
of ejectment for property fraudulently conveyed to him by the bankrupt.
Bradley v. Hunter, 50 Ala. 265.

If there is an omission to enter an order refusing a discharge, the bank-
ruptcy court may make it nunc pro tune, if no rights of third parties have
intervened which can be prejudiced thereby. In re Drisko, 13 B. R. 112;
s.¢. 14 B. R. 551.

A bankrupt whose discharge has been refused, may, upon the repeal of
the bankruptcy law, apply for the benefit of a State insolvent law. Fisher
y. Currier, 48 Mass. 424.

The refusal of a discharge by the district court protects the creditors
whose debts were provable, against any discharge of the same debts by
operation of any State law. Ibid.

If the debtor whose discharge has been refused, takes the benefit of the
State insolvent law upon the repeal of the bankruptcy law, the creditors
whose debts were provable in bankruptcy may prove their debts in in-
solvency, but in that case their debts will be barred by a discharge.
Ibid.

Act or 1868, § 5112. In all proceedings in bankruptcy commenced
after the first day of January, eighteen hundred and sixty-nine, no
discharge shall be granted to a debtor whose assets shall not be equal
to fifty per centum of the claims proved against this estate, upon
which he shall be liable as the principal debtor, unless the assent
in writing of a majority in number and value of his creditors to whom
he shall have become liable as principal debtor, and who shall have
proved their claims, is filed in the case at or before the time of the
hearing of the application for discharge, but this provision shall not
apply to those debts from which the bankrupt seeks a discharge which
were contracted prior to the first day of January, eighteen hundred
and sixty-nine.

Statute revised — July 27, 1868, ch. 258, § 1, 15 Stat. 227. Prior
Statute— March 2, 1867, ch. 176, § 33, 14 Stat. 532.

Aot oF 1874, § 51124 (June 22, 1874, ch. 390, § 9, 18 Stat. 180).—
That in cases of compulsory or involuntary bankruptcy, the pro-
visions of said act, and any amendment thereof, or of any supple-
682 Tur Bankruptcy Law.

ment thereto, requiring the payment of any proportion of the debts
of the bankrupt, or the assent of any portion of his creditors, as a
condition of his discharge from his debts, shall not apply; but he
may, if otherwise entitled thereto, be discharged by the court in the
same manner and with the same effect as if he had paid such per
centum of his debts, or as if the required proportion of his creditors
had assented thereto. And in cases of voluntary bankruptcy, no
discharge shall be granted to a debtor whose assets shall not be equal
to thirty per centum of the claims proved against his estate, upon
which he shall be liable as principal debtor, without the assent of
at least one-fourth of his creditors in number, and one-third in value.
And the provision in section five thousand one hundred and twelve
[thirty-three of said act of March second, eighteen hundred and sixty-
seven] requiring fifty per centum of such assets is hereby repealed.

The amendment applies to pending cases; and any bankrupt, whether
voluntary or involuntary, may obtain a discharge by complying with its
provisions. In re King, 10 B. R. 556; s. c. 3 Dillon, 3; in re Griffiths, 10
B. R. 456; s. c. 1 A. L. T. (N. S.) 476; & c. 10 A. L. J. 249; s. ce. 1 Cent.
L. J. 507; in re Perkins, 10 B. R. 529; s. c. 6 Biss. 185; in re Louis Cerf, 11
B. R. 148; 8s. c. 7 C. L. N. 79; in re Jones & Hoyt, 12 B. R. 48; s.c. 7 C. L.
N. 162. Contra, in re Charles J. Francke, 10 B. R. 488; s. c. 7 Ben. 420;
s.c. 1A. L. T. (N. 8S.) 476; in re George H. Shelden, 12 B. R. 68.

In voluntary cases pending at the time of the passage of the amend-
ment, the bankrupt need not show any percentage of assets, nor any assent
of creditors in respect to debts contracted prior to January 1, 1869, In re
Gecrge H. Shelden, 12 B. R. 63.

A voluntary bankrupt is only required to file the assent of the requisite
proportion of the creditors to whom he is liable as principal debtor and
who have proved their debts. In re James C. Derby, 12 B. R. 214.

A partner who is brought into bankruptcy by his copartner, must have
assets to the required amount, or obtain the consent of the requisite pro-
portion of the creditors, for such a proceeding is not involuntary or com-
pulsory. In re W. F. Wilson, 13 B. R. 253.

The word “ assets” means the proceeds of the bankrupt’s property
which are applicable to the payment of his debts. The subject-matter of
this section points to this signification. Nothing else could pay debts.
In this section the word ‘“ assets”? is not synonymous with estate. In re
Frederick, 3 B. R. 465; s.c. 1 L. T. B. 181; s. ¢. 2 C. L. N. 139.

The term “assets” is as comprehensive as “estate” or “effects.” It
includes all the estate of the bankrupt, not that only which is applicable
to the payment of debts; but that applicable to the payment of costs and
expenses aS well. The term “assets” is not used to express the net
balance to be distributed among the creditors, but means the entire estate
of the bankrupt, irrespective of the use to which it may be appropriated
by the court, and in determining the question whether the assets’ amount
TRIAL OF SPECIFICATIONS, 683

to the requisite thirty per cent., the costs and expenses of the proceed-
ings are not first to be deducted. In re Kahley et al., 6 B. R. 189; 8. ¢.
3 Biss. 169. Contra, in re Vinton, 7 B. R. 138.

What sum the estate or assets may be appraised at is by no means a
true criterion of their value, or rather what they are ‘‘ equal to. There
may be as many differing opinions as to the value of a given piece of prop-
erty, as the number of individuals whose judgment is sought. The true
test as to value, when that value is to be used to pay creditors, is, the
amount the property will bring upon a sale by the assignee in accordance
with law; what it produces in money with which to pay dividends to cred-
itors and costs of proceedings, money being the only thing with which
such payments can be made. In re Van Riper, 6 B. R. 578.

The word “ assets " does not mean money actually realized. So restricted
a construction should not be placed upon it. Where the bankrupt has
acted in good faith, and performed his duty under the bankruptcy law,
he is entitled to a discharge if, at the time he filed the petition, he was
possessed of property fairly worth thirty per cent. of the debts proved
against his estate, upon which he was liable as principal debtor. He
ought not to be made the victim of circumstances over which he has no
eentrol. In re Lincoln & Cherry, 7 B. R. 834; 2 L. T. B. 241; s. c. 20 Pitts.
LJ. 1.

The assets consist of the sum that remains after discharging all liens,
and this surplus must equal thirty per cent. of the required claims. In re
W. H. Graham, 5 B. R. 155; s. c, 28 Leg. int. 317; in re Van Riper, 6 B. R.
573.

The proceeds of the bankrupt’s property in the hands of his assignee,
subject to be divided among his creditors, must at the time of the hearing
of the application for the discharge, be equal to thirty per centum of the
amount of the claims proved against his estate on which he was liable
as principal debtor, in order to entitle him to a discharge without the as-
sent of his creditors as provided for in this section. In re Webb & Taylor,
3B, R. 720; s. ce. 2 0. L. N. 318.

This provision does not admit of a fictitious or exaggerated valuation
of his assets by the bankrupt, in his schedule or inventory, while, on the
contrary, if the assets are at a fair and just estimate and valuation equal
to thirty per cent. of the debts proved, the bankrupt is not to be denied
his discharge by reason of any sacrifice made by the assignee or credit-
ors to convert the assets into cash, or because of the absorption of so large
4 proportion of the proceeds by expenses as to prevent the payment of
thirty cents on the dollar. In re Thompson, 2 Biss. 481.

In the absence of proof to the contrary, the proceeds in the hands
of the assignee will be taken to be the true value of the estate. In re
Borden & Geary, 5 B. R. 128; s. c. 5 Ben, 228.

A motion for the appointment of appraisers to ascertain the value of the
assets, made before the first meeting of creditors, can not be entertained.
In re Frederick, 3 B. R. 465; s.c.1L. T. B. 181; s.¢c.2C. L. N. 139.

The fixing of the liability of an indorser does not make him liable as a
Principal debtor when he otherwise would not be so liable. Although the
684 Tur Bankruptcy Law.

liability of an indorser, from being contingent, becomes absolute and fixed,
it does not thereby become the liability of a principal debtor. When it is
put into the shave of a judgment, the liability on such judgment becomes
the liability of a principal debtor; but until then the fixed liability of an
indorser is not the liability of a principal debtor. The maker of the note
is the principal, or chief, or primary debtor. The indorser is the secondary
debtor, liable only on the default of the maker after demand of payment,
and on due notice thereof. Such default and notice fix the liability of the
indorser, but it still remains the liability of an indorser. It can not be
established without showing how it became fixed, and it must thus neces-
sarily be shown to be the liability of an indorser. None of the contingent
liabilities, or contingent debts, spoken of in section 5068, whether those of
drawer, indorser, surety, bail, guarantor, obligor for the debt of another
person, or whatever else, can be regarded as liabilities of a principal debtor,
until they have undergone some other change than merely becoming
absolute and fixed in contradistinction of being contingent. In re B. H.
Loder, 4 B. R. 190; s. c. 4 Ben, 125.

An indorsement of the note of a third party does not constitute the in-
dorser a principal to the holder of a protested note so as to require his
corsent to a discharge. The words “ principal debtor ” are to be taken in
their ordinary legal acceptation, and do not include such an indorser. The
liability of an indorser is secondary to that of the maker, who is the prin-
cipal debtor, and the character of the obligation remains unchanged not-
withstanding it may have become fixed by demand and notice of non-
payment. In re Lewis B. Loder, 4 Ben. 328.

The time of the hearing of the application for a discharge is the return
day of the order to show cause, whether the original day or the adjourned
day. At or before that day, the assent in writing to the discharge, if such
assent is necessary, may and must be filed. No claim proved after that
day can be counted among the claims which are to be taken into account
in computing the number requisite to a discharge. In re John B. Borst,
11 B. R. 96.

A party who purchases claims against the debtor, at a discount with his
own funds, holds the debts to their full amount, although he was also
trustee, under an assignment. In re Chas. P. Houghton, 5 Law Rep. 321.

A discharge can not be granted without the assent of the requisite pro-
portion of the creditors whose debts are existing and unpaid at the time of
the hearing. Creditors who have given releases in pursuance of an assign-
ment made prior to the commencement of the proceedings in bankruptcy,
can not be recognized as creditors. In re Aspinwall, 3 Penn. L, J. 212.

When a creditor has once given his consent in writing, and the bankrupt
has acted upon it, and other creditors have given theirs, and presumptively
been influenced by one another's action in this respect, and the assent of
the requisite number in value and amount is obtained and filed at the
hearing, a creditor thus assenting has no absolute right, even on the day
fixed for the hearing, to withdraw or cancel his assent. In re Brent, 8
B. R, 444; s, ¢, 2 Dillon, 129.
Court To GRANT DISCHARGES. 685

In the absence of consent by creditors, in voluntary cases, no matter
when commenced or when the debts were contracted, the assets must be
equal to thirty per cent., or no discharge can be granted. In re Haviland
Gifford, 16 B. R. 185; s. c. 9 C. L. N. 889.

If the holder of a note assents to the discharge of the maker, without the
consent of the indorser, he thereby releases the indorser. In re David A.
McDonald, 14 B. R. 477; s. ¢, 24 Pitts. L. J, 42; 5, c, 12 Pac. L. R. 99,

§ 5113. Before any discharge is granted, the bankrupt must take
and subscribe an oath to the effect that he has not done, suffered, or
been privy to any act, matter or thing specified as a ground for with-
holding such discharge, or as invalidating such discharge if granted.

Statute revised — March 2, 1867, ch. 176, § 29, 14 Stat. 581. Prior

Statute — April 4, 1800, ch. 19, § 34, 2 Stat. 31.
. On the return of the order to show cause, the register should require the
bankrupt to take the oath provided for by this section. This oath is to be
taken and subscribed before the granting of the certificate of conformity.
It should be administered whether specifications have been filed or not.
In re Bellamy, 1 B. R. 118; s. ec. 1 Ben. 426; in re E. Pulver, 2 B. R. 313;
s.c. 3 Ben. 65; in re Frizelle et al., 5 B. R. 119.

When specifications are withdrawn after the oath has been taken, the.
oath should be again taken and subscribed after the withdrawal. In re
Machad, 2 B. R. 352.

When a bankrupt dies before he has taken this oath, a discharge can not
be granted. In re O’Farrell et al., 2 B. R. 484; s. c. 3 Ben. 191; 8s. ca 1 L.
T. B. 159; in re Quinike, 4 B. R. 92; s. c. 2 Biss. 354.

The final oath is merely an item of indispensable evidence, without
which the bankrupt is not entitled to his discharge, and it is sufficient if it
be produced and filed on the hearing. In re Robert A. Sutherland, 1 Deady,
573.

If the bankrupt dies after the taking of the final oath and the granting
of the certificate of conformity, the court has the power to order a dis-
charge as on a date when the bankrupt was in life. Young v. Ridenbaugh,
11 B. R. 563; s. c. 2 Dillon, 239.

The presumption raised by a certificate of conformity which sets forth

‘ that the final oath has been taken, is not overcome by the mere fact that

the oath is not on file. Ibid.

Act or 1898, Cu. 3,§ 14. Discharges, When granted— * * *
(b) The judge shall hear the application for a discharge, and such
proofs and pleas as may be made in opposition thereto by parties in
interest, at such time as will give parties in interest a reasonable
opportunity to be fully heard, and investigate the merits of the appli-
cation and discharge the applicant.
686 Tue BanKRuPTCY Law.

Act or 186%, § 5114. If it shall appear to the court that the
bankrupt has in all things conformed to his duty under this Title,
and that he is entitled, under the provisions thereof, to receive a
discharge, the court shall grant him a discharge from all his debts,
except as hereinafter provided, and shall give him a certificate thereof
under the seal of the court.

Statute revised — March 2, 1867, ch. 176, § 82, 14 Stat. 532. Prior
Statute — Aug. 19, 1841, ch. 9, § 4, 5 Stat. 443.

The provisions of this section, as to the prerequisites to a discharge,
mean that ali the requirements of the act as to what steps are to be taken,
from the commencement of the proceedings to the end, must be conformed
to as a prerequisite to the granting of a discharge, and not merely that
the bankrupt has personally done what he is required to do. Before the
discharge is granted, the register must certify that the bankrupt has com-
plied with all the requirements of the act. In re Bellamy, 1 B. R. 64, 98;
s. c. 1 Ben. 390, 426; s. c.1 L. T. B. 22; in re Orne, 1 B. R. 79; s. c. 1 Ben.
420; in re Jabez Harris, 2 B. R. 105.

A special order of the district court is necessary to authorize the register
to examine the papers and certify to the regularity of the proceedings. In
re Bellamy, 1 B. R. ys, 113 s. c. 1 Ben. 426, 474.

When, on the return of the order to show cause before the register, a
creditor appears to oppose the discharge, the register must make a cer-
tificate of the proceedings, stating the opposition, and return the papers
into court in like manner as if there were no opposition. In re Hughes, 1
B. R. 226; s. c. 2 Ben. 85; s.c. 1 L. T. B. 45; in re Bellamy, 1 B. R. 98;
s. c. 1 Ben. 426,

When specifications have been filed, the certificate of conformity should
except the particulars covered by the specifications. In re Pulver, 2 B.
R. 313; s. c. 3 Ben. 65.

It is the duty of the court to examine the record before granting the
discharge, and if it appears that the bankrupt is not entitled thereto, to
refuse it, even though creditors do not interpose objections. When the
record of the bankrupt’s examination shows that he has, since the passage
of the bankruptcy act, lost money at gambling, the discharge must be re-
fused. In re Wilkinson, 3 B. R. 286; s. c. 2 W. J. 250; s. ce. 16 Pitts.
L. J. 287. ;

No discharge can be granted when notice of the assignee’s appointment
has not been duly published. In re Bellamy, 1 B. R. 64; s. c. 1 Ben. 390;
s.c. 1 L. T. B. 22; in re Strachan, 3 B. R. 601. Contra, in re Littlefield, 3
B. R. 57; s. ec. Lowell, 331; s.c. 1 L. T. B. 164.

Nor when the warrant has not been properly served upon the creditors.
Proceedings subsequent to an irregularity must be set aside, and the same
proceedings had again with due regularity. In re Erie L. Hall, 2 B. R
192; s. c. 16 Pitts. L. J. 52.

Where there is any failure of jurisdiction, as where, by mistake, the
case has been conducted by the wrong register, the discharge may be
Court To Grant Discuarass. 687

refused; so, probably, as a matter of practice, the meetings ought to be
duly warned and held before the discharge can be granted. In re Little-
field, 8 B. R. 57; s. c. Lowell, 331; s. c. 1 L. T. B. 164.

The omission to call the second and third meetings at the proper times
is no ground for withholding the bankrupt’s discharge. In re Littlefield,
3 B. R. 57; s. ¢ Lowell, 381; s. c. 1 L. T. B. 164. Contra, in re Bushey,
2B. R. 685.

The granting of a discharge may be suspended until the assignee shall
have filed and settled his accounts. It is a part of the bankrupt’s duty
to his creditors to see that the assignee’s account is exhibited in proper
season. In re Pierce & Holbrook, 3 B. R. 258; s. ¢. 16 Pitts. L. J. 204.

When it appears that the bankrupt has innocently omitted certain prop-
erty from his schedules, the granting of the discharge will be suspended
until he shall have properly amended his schedules. In re Connell, 3 B.
R. 443.

When the bankrupt has omitted the names of certain creditors from his
schedules, he must make an amendment by inserting such names before
a discharge will be granted. Petitions in bankruptcy must be full and
true in point of fact; otherwise no discharge will be granted. In re
Redfield, 2'Ben. 72.

A discharge will be refused if the bankrupt omits from his schedule
debts which he claims are barred by the statute of limitations. In re John
H. Wf. Cushman, 7 Ben. 482.

When an order for the bankrupt’s wife to attend for examination has
been served upon the bankrupt, though not served upon her, and she has
failed to attend at the time and place specified, the bankrupt is not entitled
to a discharge, unless he proves to the satisfaction of the court that he
was unable to procure her attendance. In re Van Tuyl, 2 B. R. 579; s. c.
3 Ben. 237.

A discharge will not be granted until, under Rule VII, all the papers re-
lating to the case are filed by the register in the office of the clerk of the
district court. In re Bellamy, 1 B. R. 98; s. c. 1 Ben. 426.

The omission of the assignee to obtain the assignment, or have it re-
corded, is no ground for withholding a discharge. In re Wm. H. Pierson,
10 B. R. 107.

If the filing of specifications was unauthorized and null, a discharge may
be granted nunc pro tune as of the time when by law the bankrupt was
entitled to it. Creditors v. Williams, 4 B. R. 580; s. c. 2 L. T. B. 166.

The bankrupt is in no manner or degtee reinvested by the discharge
With control over the estate which he surrendered in bankruptcy. In re
Geo. W. Anderson, 9 B. R. 360.

The discharge does not take effect until it is signed by the judge. Pesoa
v. Passmore, 4 Yeates, 139.

The original discharge is retained in the district court, and a copy is
granted to the bankrupt. Pennell v. Percival, 18 Penn. 197; in re John W.
Dean, 1B. R. 249; 3,1 L. T. B. 9.
688 Tue Bankruptcy Law.

§ 5115. The certificate of a discharge in bankruptcy shall be in
substance in the following form:
District court of the United States, District of
Whereas has been duly adjudged a bankrupt under the
Revised Statutes of the United States, Title “ Bankruptcy,” and
appears to have conformed to all the requirements of law in that
behalf, it is therefore ordered by the court that said be
forever discharged from all debts and claims which by said Title
are made provable against his estate, and’ which existed on the
day of , on which day the petition for adjudication
was filed by (or against) him; excepting such debts, if any, as are
by law excepted from the operation of a discharge in bankruptcy.

Given under my hand and the seal of the court at , im
the said district, this day of :
(Seal.) , Judge.

Statute revised — March 2, 1867, ch. 176, § 32, 14 Stat. 582.

§ 5116. No person who has been discharged, and afterwards be-
comes bankrupt on his own application, shall be again entitled to
a discharge whose estate is insufficient to pay seventy per centum
of the debts proved against it, unless the assent in writing of three-
fourths in value of his creditors who have proved their claims is filed
at or before the time of application for discharge; but a bankrupt
who proves to the satisfaction of the court that he has paid all the
debts owing by him at the time of any previous bankruptcy, or who
has been voluntarily released therefrom by his creditors, shall be
entitled to a discharge in the same manner and with the same effect
as if he had not previously been bankrupt.

Statute revised — March 2, 1867, ch. 176, § 30, 14 Stat. 532. Prior Stat-
utes — April 4, 1800, ch. 19, § 57, 2 Stat. 85; Aug. 19, 1841, ch. 9, § 12, 5
Stat. 447.

Act oF 1898, Cu. 3,§ 17. Debts not Affected by a Discharge.
—(a) A discharge in bankruptcy shall release a bankrupt from all
of his provable debts, except such as (1) are due as a tax levied by
the United States, the State, county, district, or municipality in
which he resides; (2) are judgments in actions for frauds, or obtain-
ing property by false pretenses or false representations, or for willful
and malicious injuries to the person or property of another; (3) have
Dexsts not AFFECTED BY DISCHARGE. 689

not been duly scheduled in time for proof and allowance, with the
name of the creditor if known to the bankrupt, unless such creditor
had notice or actual knowledge of the proceedings in bankruptcy;.
or (4) were created by his fraud, embezzlement, misappropriation, ,
or defaleation while acting as an officer or in any fiduciary capacity.
See post, p. 699.

A debtor may waive a discharge, and allow judgment to be recovered .
against him for the original debt. Dewey v. Moyer, 16 B. R. 1.

Where debtor has waived his discharge as a defense, it can not be
raised by one who is in possession of property transferred by the debtor
with intent to defraud creditors, in an action to set aside such transfer.
Ibid.

Bankruptcy court has no jurisdiction to relieve against a judgment ob-
tained against a bankrupt in a suit brought against him after his adjudica-
tion, in which, for any cause, he has failed to plead his discharge. In re
Ferguson, 16 B. R. 530.

Even if it had such jurisdiction, it would not interfere to relieve the
bankrupt against the laches of his counsel and himself. Ibid.

Discharge in bankruptcy releases bankrupt from liability as surety on
a guardian’s bond. Reitz v. The People, 16 B. R. 96; Ex parte Taylor, 16
B. R. 40.

Where sureties on an appeal bond are discharged in bankruptcy (where,
as in Mississippi, a judgment against them follows a judgment against
principal) pending an appeal, they must plead same in order to avail them--
selves of it as a defense. Jones v. Coker, 16 B. R. 343.

Where a new promise to pay is made after a discharge, such discharge:
will not preclude a recovery, and old debts from which bankrupt has been.
discharged are sufficient consideration for subsequent confession of judg--
ment for the same indebtedness. Classen v. Schoeneman, 16 B. R. 98;:
Dewey v. Moyer, 18 B. R. 114.

Discharge does not operate as a payment, but is simply a bar to enforce:.
ment of the obligation, and unless pleaded in defense by debtor it is:
waived. Ludeling v. Felton, 17 B. R. 310.

Discharge of husband can not be pleaded by the wife in bar of actiow
against her, under laws of Louisiana, to recover her half of a community:
debt, where she has accepted a community. Ibid.

Discharge of a bankrupt judgment debtor releases a judgment recoveredi
on @ provable debt pending bankruptcy. In re Stansfield, 16 B, R. 268.

Where the bankrupt bought the business of another, agreeing to pay his
debts and hold him harmless, a discharge will release him. Brown et al. v.
Broach et al., 16 B. R. 296.

The better and more logical pleading is not to attempt to avoid a dis~
charge by averments and declarations, but to reply such matter in response:
to plea. Ibid. :

A bankrupt in a given proceeding must be discharged as to all his debts,
or from none, In re Plumb, 17 B. R. 1

44
690 THE Bankruptcy Law.

Where one member of a firm is adjudged a bankrupt without any ad-
judication against the firm, and there were at the time firm assets, the
estate of firm is not in bankruptcy so as to make a discharge operative as
to the firm debts. Ibid.

Discharge bars collection of a claim for purchase money of land which
has jbeen allotted to debtor as a homestead in bankruptcy proceedings.
Hoskins vy. Wall, 17 B. R. 314.

A discharge in bankruptcy can not be set up as a general defense to an
action to set aside a conveyance in fraud of creditors, pending at time of
filing petition, where such creditor has not proved his claim in bank-
ruptcy proceedings, and the assignee has not interfered in the cause in any
way. Phelps v. Curts, 16 B. R. 85.

But the discharge may be set up in such action in bar of a personal
judgment against the bankrupt, other than the subjection of the property
and claims reached by the creditors’ bill to satisfaction of the judgment.
Ibid.

Liability of a factor for proceeds of goods consigned to him for sale is
released by his discharge in bankruptcy. In re Smith et al., 18 B. R. 24.

Defendant sold plaintiff premises by warranty deed, and at the same
time gave him a writing by which he agreed to pay off a certain mortgage
which was a lien upon the premises. Defendant was afterward adjudged
bankrupt and received his discharge. Subsequently the mortgage was
foreclosed and the premises sold. In an action for breach of warranty;
Held, plaintiff should have proved his claim in the bankruptcy proceed-
ing as a contingent debt, and not having done so his claim is barred by the
discharge. (Law of 1867.) Parker v. Bradford, 17 B. R. 485.

Where, by terms of a lease, the bankrupt is to pay rent at fixed and
stated periods, the rent is to be regarded as growing due from day to day.
The discharge releases bankrupt from liability for the proportionate part
up to time of bankruptcy, but does not affect his liability for the part
growing due after that time. Treadwell et al. v. Mardin et al., 18 B. R. 353.

While a promise made after receiving a discharge in bankruptcy, to pay
a debt from which the promisor has been discharged, is valid, such
promise before the discharge has been obtained is without consideration
and cannot be enforced. Ogden et al. v. Redd, 18 B. R. 317.

Under the law of 1867, a discharge in bankruptcy would not release lien
of judgment which was not proved. Darsey v. Mumpford, 17 B. R. 181.

Where, under contract for manufacture and sale of iron, plaintiff is to
- own iron manufactured, and the proceeds thereof, after payment to plain-
tiff of his advances, and a percentage on the net sales, and the amount of
a certain note are to be paid over to defendant and another party, an in-
debtedness of defendant for the proceeds of sales, made with knowledge
of plaintiff, which he fails to pay over, is not a debt created while acting
in a fiduciary capacity. Barber v. Sterling, 17 B. R. 218.

Default of a factor in not making payment to his principal is not a
fraud, nor is the debt created by such defalcation one created “ while
acting in any fiduciary character.” Keime v. Graff & Co.., 17 B. R. 319.
FRAUDULENT Depts. 691

Only technical or special trusts, as contradistinguished from those
which the law implies from the contract, are within meaning of this
section. Ibid.

The fraud referred to here is positive fraud, or fraud in fact, involving
moral turpitude or intentional wrong, and not implied fraud or fraud in
law, which may exist without the imputation of bad faith or immorality.
Neal v. Scruggs, 17 B. R. 102.

§ 5117. No debt created by the fraud or embezzlement of the
bankrupt, or by his defalcation as a public officer, or while acting
in any fiduciary character, shall be discharged by proceedings in
bankruptcy; but the debt may ‘be proved, and the dividend thereon
shall be a payment on account of such debt.

Statute revised — March 2, 1867, ch. 176, § 33, 14 Stat. 532. Prior Stat-
ute — Aug. 19, 1841, ch. 9, § 1, 5 Stat. 440.

The word “debt” is used as synonymous with “claim.” Stokes vy.
Mason, 12 B. R. 498; s. c. 10 R. I. 261.

Fraudulent Debts.— If the bankrupt obtained the possession of goods
under a contract to pay cash on delivery, and at once shipped them beyond
the control of the vendor, and then refused payment, such conduct may
warrant the conclusion that the debt was created by fraud. Classen vy,
Schoeneman, 16 B. R. 98.

If the false representation as to means did not induce the creditor to
sell the goods then the debt is not created by fraud. In re Martin Als-
berg, 16 B. R. 116.

If the ereditor was induced to sell the goods by false representation as
to means, then the debt was created by fraud. Ibid.

If the bankrupt, at the time of purchasing the goods, did not intend to
pay for them in whole or in part, then the debt was created by fraud.
Ibid,

A discharge releases the bankrupt from liability as surety on a guard-
jan’s bond. Reitz v. People, 16 B. R. 96.

The statute does not say “ actual” fraud, or “moral” fraud, or qualify
the word by any other adjective. It uses only the generic word “ fraud,”
which must be construed in its general sense. It, therefore, includes im-
Plied fraud. Jones y. Clark, 25 Gratt. 642.

The debt must be tainted with fraud in its inception. The vice must
Come into existence with the debt. If the contract was fair and honest,
When made, the discharge will release the bankrupt from his liability,
although he was subsequently guilty of fraudulent conduct in respect to
the debt. Brown v. Broach, 52 Miss. 536.

In order to render a debt fraudulent when contracted under a represen-
tation of the bankrupt, the intention to deceive is an essential element of
the fraud. Broadnax v. Bradford, 50 Ala. 270.

A claim for deceit on account of certain false and fraudulent represen-
tations and inducements, whereby the bankrupt procured from the plain-
692 Tue Bankruptcy Law.

tiff an assignment of a complete stock in trade, including goods, choses in
action, ete., in exchange for a note of much less value than was repre-
sented, if not wholly worthless, is not discharged. In re Devoe, 2 B. R.
27; s. ec. Lowell, 251; s.c 1. T. B. 90.

A claim against a purchaser of property from an executor on account of
his having fraudulently participated with the latter in a devastavit, is a
debt created by fraud, and is not released by a discharge. Jones v. Clark,
25 Gratt. 642.

A bond given by a claimant in order to obtain the delivery of property
is not a debt created by fraud, although he subsequently endeavored to
sustain his claim by false testimony. U.S. v. Rob Roy, 18 B. R. 235; s. ¢
1 Woods, 42.

A certificate of discharge in bankruptcy will not defeat the plaintiff's
right of action in tort for the defendant's false and fraudulent represen-
tations. Morse v. Hutchins, 102 Mass. 439.

A purchase of goods with the intent never to pay for them is such a
fraud as prevents the discharge from releasing the purchaser from the
debt. Stewart v. Emerson, 8 B. R. 462; s. c. 52 N. H. 3801; s.¢c. 6 L. T.
B. 250.

A judgment in a court of law obtained in an action of tort, is a debt
dischargeable under the bankruptcy act. Manning v. Keyes, 9 R. I. 224;
in re Wiggers, 2 Biss. 71; in re Samuel Book, 3 McLean, 317.

A discharge will release the debtor from his liability to his cotenants
for his share of the rents, issues and profits of the property held in
common. Flanagan y. Cary, 37 Tex. 67.

A judgment does not convert an unliquidated demand for damages into
a, debt. The record of the action in which the execution issues may be
looked at, and if it shows a material and traversable allegation of fraud
as its sole foundation, the debt or demand may fairly be said to be one
founded in fraud, and the action to be one founded upon a debt or claim
from which the bankrupt’s discharge will not release him. The execution
is a writ issued in the cause. In re Whitehouse, 4 B. R. 63; s. c. Lowell,
429; in re Patterson, 1 B. R. 307; s. c. 2 Ben. 155; Flanagan v. Cary, 37
Tex. 67; Warner v. Cronkhite, 13 B. R. 52; s. c. 6 Biss. 453; Reid v. Martin,
11 N. Y. Supr. 590; Taylor v. Renn, 8 C. L. N. 410; Horner v. Spelman, 78
Ill. 206.

Whether a judgment was for fraud or not is a question to be deter-
mined by the court from the record, and should not be submitted to a jury.
Flanagan vy. Pearson, 14 B. R, 87; s. ¢c. 42 Tex. 1.

Where the record shows a material and traversable allegation of fraud
as its sole foundation, the judgment need not, on its face, show that the
demand originated in fraud. Warner v. Cronkhite, 18 B. R. 52; s. c 6
Biss. 453.

If the plaintiff sues in assumpsit on the contract, he is not estopped by
the form of his action to answer the plea of discharge by the replication
of debt created by fraud. He does not by such a replication attempt to re-
scind, or invalidate, or renounce the contract, but he affirms it, and claims
that the debt is a valid subsisting debt. In the declaration he asserts a
Fipuctary Drsts. 693

debt. In the replication he asserts the same debt. He avers the fraud,
not to avoid the contract himself, but to show that the defendant can not
avoid it; not to show that by reason of the fraud the debt declared upon
was never created, but to show that being created by fraud, it was not
discharged under the bankruptcy act — not to show that there is no such
debt, but to show that there is such a debt notwithstanding the discharge,
Stewart v. Emerson, 8 B. R. 462; s. c. 51 N. H. 801; s. c. 6 L. T. B. 250;
Broadnax v. Bradford, 50 Ala. 270.

If the record shows that the debt was created by contract, the plaintiff
can not, when a discharge is pleaded in bar to the judgment, be allowed
to show that the debt sought to be collected was created by fraud. Palmer
y. Preston, 45 Vt. 154; Shuman v. Strauss, 10 B. R. 300; s. c. 34 N. Y,
Supr. 6; s. c. 52 N. Y. 404.

Whether the debt was created by fraud will not be determined upon
conflicting affidavits, on a motion for leave to issue an execution. Shu-
man v. Strauss, 10 B. R. 300; s. ¢. 52 N. ¥. 404; s. c. 84 N. Y. Supr. 6.

A claim arising from fraud may be prosecuted in any proper form of
suit after the question of discharge has been determined, although it has
been proved. Stokes v. Mason, 12 B. R. 498; s. c. 10 R. I. 261.

If the defendant in an action of trover pleads a discharge, the plaintiff
may reply that the debt was created by fraud. Ibid.

A discharge is no bar to an action for a debt created by fraud, although
the creditor proved his claim and received a dividend thereon. Ibid.

If the bankrupt bought the business of another under an agreement to in-
demnify him against all his liabilities, a discharge will release him al-
‘though he falsely stated that he had paid a debt of the latter. Brown y,
Broach, 52 Miss. 536. .

Fiduciary Debts.— The language seems to have been. intentionally made
so broad as to extend to a debt created by a defalcation of the bankrupt
while acting in any fiduciary capacity and not to be confined to any
special fiduciary capacity. In re Seymour, 1 B. R. 29; s. c. 1 Ben. 348.

The construction of the bankruptcy law must be the same all over the
United States, and can not be varied in each State by the local law. To
understand the use of terms employed in it, resort must be had to their
Meaning in the common law, and not in the local law of the State where
the bankrupt may happen to be domiciled. Austill v. Crawford, 7 Ala.
835.

The phrase implies a fiduciary relation existing previously to, or inde-
pendently of, the particular transaction from which the debt arose. A de-
posit of bills of exchange, with instructions to collect and apply the pro-
ceeds to the payment of certain debts, and to pay the balance to the
depositor, does not create a fiduciary relation between the depositor and
the bailee. The meaning of the phrase “ fiduciary capacity,” having been
ascertained, and declared by a judicial construction of the act of 1841, is
affixed to the general term, and this fixed definition is carried into the new
statute. Cronan v. Cutting, 4 B. R. 667; s. c. 104 Mass. 245.

A claim against a person for withholding the proceeds arising from the
sale of goods consigned to him to be sold on commission, is a debt con-
694 Tur Bankruptcy Law.

tracted by him in a fiduciary capacity. In re Seymour, 1 B. R. 29; s.a1
Ben. 348; in re J. H. Kimball, 2 B. R. 204, 354; s. c. 2 Ben. 554; s. c. 6
Blatch. 292; Whitaker v. Chapman, 3 Lans. 155; s. c. 1 L. T. B. 249; s. ¢. 4
L. T. B. 92; Lemcke v. Booth, 5 B. R. 351; s. c. 47 Mo. 385; Rudge vy.
Rundle, 1 N. Y. Supr. 649; Gray v. Farran, 2 Cin. 426; Meador v. Sharp,
14 B. R. 192; s. c. 54 Ga. 128; Banning v. Bleakley, 27 La. An. 257. Contra,
Chapman v. Forsyth, 2 How. 202; Commercial Bank v. Buckner, 2 La. An.
1023; Hayman vy. Pond, 48 Mass. 328; Austill v. Crawford, 7 Ala. 335;
Woolsey v. Cade, 15 B. R. 238; s. c. 4 Cent. L. J. 202; Owesley v. Cobia,
15 B. R. 489; s.c.9 C0. L. N. 328.

The debt due from a collector of taxes for a municipal corporation to the
corporation for taxes received and not accounted for, is a fiduciary debt.
Morse v. Lowell, 48 Mass. 152.

The receipt of money to be carried to another place to pay a note does
not create a debt of a fiduciary character. Phillips v. Russell, 42 Me. 360.

A receipt for the property given by the bankrupt to an officer who held
an attachment against him, does not create a debt of a fiduciary character.
Fowles v. Treadwell, 24 Me. 377.

If the bankrupt receives money as agent, to be used in a particular way
or for a specific purpose, for the use of the principal, then the money is
held by him in a fiduciary capacity. Matteson v. KeHogg, 15 Ill. 547;
Flagg v. Ely, 1 Edm. Sel. Cas. 206. 7

If the bankrupt receives money under an assignment and a judgment in
trust to pay certain creditors of the assignor, the debt is a fiduciary debt.
Kingsland v. Spalding, 3 Barb. Ch. 341.

A general deposit, with authority to the bailee to mix the money with
his own and use it until applied for by the depositor, does not create a
fiduciary debt. Hervey v. Devereux, 72 N. C. 463.

A claim by a conditional vendor for a conversion of the property is
founded upon a breach of trust, and is not barred by a discharge. Johnson
v. Worden, 13 B. R. 335; s. c. 47 Vt. 457.

A conditional vendor by proving his debt does not lose his claim for
the conversion of the property. Ibid.

If the maker of a promissory note gives money to his surety to pay to the
holder of the note, and the surety does not so apply it, this does not
create a fiduciary debt. Bissell v. Couchane, 15 Ohio, 58.

A debt which arises from a consignment of goods to the debtor to sell
under an agreement that he shall have as commissions all that can be
realized above a certain sum, is a fiduciary debt. Treadwell v. Holloway;
12 B. R. 61; s. c 46 Cal. 547.

An auctioneer acts in fiduciary capacity or character, and his discharge
will not relieve him from liability for the proceeds of goods placed in his
hands for sale. Jones v. Russell, 11 B. R. 478; s. c. 44 Ga. 460; in re
Horace Lord, 5 Law Rep. 258.

A discharge does not relieve a guardian from his fiduciary obligation as
such, and if the surety discharges these and obtains a judgment therefor,
he may levy upon the property of the bankrupt acquired after his dis-
charge. Carlin v. Carlin, 8 Bush, 41; Halliburton v. Carter, 10 B. R. 359;
8. c. 55 Mo. 485.
Fipuctary Dests. 695

The surety upon the bond of a public officer is not liable in a fiduciary
capacity. Saunders v. Comm., 10 Gratt. 494; Fowler v. Kendall, 44
Me. 448.

The liability of a surety on a guardian’s bond is not a fiduciary debt.
The sureties of a guardian have no control of his conduct. Their obli-
gation is entirely different from his. They undertake to pay money on his
account, while he in addition engages to be honest, faithful, and careful.
It is for failure in this latter respect that the law refuses to release him
from his debt. Jones v. Knox, 8 B. R. 559; s. c. 46 Ala. 58; Bouie v. Pucket,
7 Wumph. 169; in re Samuel T. Taylor, 16 B. R. 40.

If the guardian gives his note under seal to the ward’s husband, in
settlement of his account, and receives a release from them, he is not
liable thereon in a fiduciary capacity. Coleman vy. Davies, 45 Ga. 489.

Ap agreement by an executor guaranteeing the payment of a demand
agaiust the estate is not a debt created by him while acting in a fiduciary
capacity. In making the promise he acts outside of his character as ex-
ecutor, and he is not acting in a fiduciary character as respects the party
to whom it is made. Amoskeag Manuf. Co. v. Barnes, 49 N. H. 312.

A surety upon a constable’s bond is not a public officer, and will be re-
leased from liability by a discharge. McMinn vy. Allen, 67 N. C. 181.

An attorney who collects a debt for a client acts in a fiduciary capacity,
and will not be released from his obligation to pay the money to his
client by a discharge. Heffren v. Jayne, 39 Ind. 463; Heffren v. Leroy, 39
Ind. 471; White v. Platt, 5 Denio, 269; Flanagan v. Pearson, 14 B. R.
87; 8. c. 42 Tex. 1. Contra, Wolcott v. Hodge, 81 Mass. 547; Williamson v.
Dickens, 5 Ired. 259.

If an attorney received a note not in a professional character but as a
gratuitous bailee, and his liability is merely for negligence in failing to re-
turn it, he is released by a discharge. McAdoo v. Lummis, 43 Tex. 227.

if an agent is authorized to carry the money received into account, and
to report sales and pay over balances only monthly, the debt due to his
principal is not a fiduciary debt. Grover v. Clinton, 8 B. R. 312; s. c. 5
Biss. 324.

If a fiduciary debt was merged in a judgment prior to the commence-
ment of the proceedings in bankruptcy, it is released by a discharge. Wol-
cott v. Hodge, 81 Mass. 547.

The fiduciary creditor may sue the debtor, although he did not appear
before the bankruptcy court and have his debt excepted from the operation
of the discharge. Chapman v. Forsyth, 2 How. 202.

A judgment rendered in an action where the pleading raised the issue
whether the defendant acted in a fiduciary capacity is conclusive evidence
that the debt was so contracted. Flanagan v. Pearson, 14 B. R. 37; s. ¢.
42 Tex. 1.

A replication to a plea of a discharge, that the debt is of a fiduciary
character, is bad, for it states a legal conclusion instead of specially dis-
closing the facts, so that the court may determine whether the debt is
founded on such a trust as is expected from the operation of the statute.
Mabry y. Herndon, 8 Ala. 848.
696 Tur BanKRupTcoY Law.

The burden of proving that the debt is of a fiduciary character is on the
creditor, and if he fails to make the proof, the debt will be taken to be
one of an ordinary character. Sherwood v. Mitchell, 4 Denio, 435.

A debt which consists of a judgment rendered upon a promissory note
is prima facie a debt that is barred by a discharge. Hayes v. Ford, 15
B. R. 569.

Act oF 1898, Cu. 3, § 16. Codebtors of Bankrupts.— (a) The
liability of a person who is a codebtor with, or guarantor or in any
manner a surety for, a bankrupt shall not be altered by the discharge
of such bankrupt.

Act or 1867, § 5118. No discharge shall release, discharge, or
affect any person liable for the same debt for or with the bankrupt,
either as partner, joint contractor, indorser, surety, or otherwise.

Statute revised — March 2, 1867, ch. 176, § 33, 14 Stat. 532. Prior
Statutes — April 4, 1800, ch. 19, § 34, 2 Stat. 30; Aug. 19, 1841, ch. 9, § 4,
5 Stat. 448.

This section only applies to the discharge in bankruptcy merely, and does
not refer to, or have in view, any act of the parties effecting a release of
liability at law or in equity. In re David A. McDonald, 14 B. R. 477; s. ¢
24 Pitts. L. J. 42; s. c. 12 Pac. L. R. 99.

The creditor may sue any one else liable upon the same debt, and pro-
ceedings pending against others thereon and unsatisfied judgments already
obtained against others thereon, are not affected, discharged, or surren-
dered by proving the debt. In re Levy et al., 1 B. R. 327; s. c. 2 Ben. 169;
Payne v. Able, 4 B. R. 220; s. c. 7 Bush, 344; Moore v. Waller, 1 A. K.
‘Marsh. 488.

The assignee of a promissory note is not bound to follow the maker into
‘bankruptcy, in order to fix the liability on the assignor. Booth v. Storrs, 3
©. L. N. 210. :

The fact that the principal in a note secured by a mortgage given by the
‘surety on his own lands has taken the benefit of the bankruptcy act does
not relieve the surety, or affect the rights of any of the parties under the
mortgage, and a suit for foreclosure may be instituted. Citizens’ National
‘Bank y. Leming, 8 I. R. R. 182.

The use of the word ‘“ partner” shows that it was contemplated that
‘one partner might, under the antecedent provisions of the act, be entitled
to be discharged for or in the respect of partnership debts. In re Wm.
Downing, 3 B. R. 748; s. c. 1 Dillon, 33; s. ec. 1 L. T. B. 207.

When a firm which has been dissolved by the death of one of the
partners is put into bankruptcy by proceedings against the surviving
partner, the discharge of the surviving partner will not operate to release
‘the estate of the deceased partner from liability. In re R. Stevens, 5 B. R.
112; 8. c. 1 Saw. 397.

If the obligation is joint, an obligor is a necessary party to the suit,
although he has received a discharge in bankruptcy. Camp y. Gifford, 7
LIABILITY OF OTHER PERsons. 69%

Hill, 169. Contra, Dorn v. O’Neil, 6 Nev. 155; Jenks v. Opp, 12 B. R. 19;
s. c. 43 Ind. 108.

If the fact of discharge arises after suit brought, and is pleaded by the
pankrupt debtor, the creditor has the right to admit that such discharge
has been obtained, and take a judgment against the other joint defendant
alone. Dorn vy. O’Neil, 6 Nev. 155.

The sureties upon an auctioneer‘s bond are not relieved by the discharge
of the principal from liability for the proceeds of goods placed in his hands
for sale. Jones v. Russell, 11 B. R. 478; s. c. 44 Ga. 460.

The discharge of the principal obligor in a forthcoming bond does not
release the sureties. Garnet v. Roper, 10 Ala. 842.

The discharge of the debtor does not release the sureties upon a jail
bond from liability fer a breach which occurred after the commencement
of the proceedings in bankruptcy. Dyer vy. Cleveland, 18 Vt. 241.

The surety on an appeal bond remains liable, although the principal
becomes a bankrupt and obtains his discharge while the appeal is pending.
Hall v. Fowler, 6 Hill, 680; Knapp v. Anderson, 15 B. R. 316; s. c 14
N. Y. Supr. 295.

The discharge of the maker of a note does not release the indorser from
his liability. MKing v. Central Bank, 6 Ga. 257.

Discharge of bankrupt does not impair remedy of creditor against
sureties upon a bond given to dissolve an attachment issued more than
four months before commencement of proceedings. In re Albrecht, 17
B. R, 287.

Certain credits had been garnished in the hands of third persons in a
State court, more than four months before commencement of bankruptcy
proceedings, and the garnishment had been released by giving a bond to
pay the judgment. Held, plaintiff had a right to prosecute the syit, so far
as to fix liability of sureties upon bond, notwithstanding the discharge of
the bankrupt. Ibid.

Maker of accommodation paper not discharged from liability by fact
of holder thereof, knowing its character, entering into a composition in
bankruptcy proceedings instituted against the indorsers. Guild v. Butler,
16 B. R. 847.

Where a creditor, with knowledge of debtor’s insolvent condition, ac-
cepts payment of his debt, in fraud of the bankruptcy law, without con-
sent of the surety or indorser, the latter is thereby discharged from lia-
bility, although the assignee of the debtor subsequently recovers back such
fraudulent payment. Northern Bk. of Ky. v. Cooke, 18 B. R. 306.

If a mortgage, pledge or lien is given by a principal debtor to secure his
surety, and both become insolvent, the holders of the debts for which the
surety is bound have an equity to require the property to be applied to the
discharge of their debts specifically. Ex parte Morris, in re Foye, 16 B. R.
572, (Under law of 1898, such creditors are treated as secured creditors,
Sec. 1, Clause 23, Law of 1808.)

But if the surety has been discharged by the negligence of the cred-
itors, or if the state of the accounts between the parties is such that the
surety has lost his lien, the creditors have no equity. Ibid.
698 THE Bankruptcy Law.

The giving of time to the maker of a note for a valuable consideration,
after he has received his discharge, does not release the indorser, for he can
prove the liability against the bankrupt’s estate. Tiernan v. Woodruff, 5
McLean, 350.

The discharge of one judgment debtor does not release or affect the other
joint debtors. The judgment being joint, it is necessary to the validity of
the execution that it shall conform to the judgment, and a joint execution
against all the debtors is regular. Linn vy. Hamilton, 34 N. J. 305. Vide
Boyd v. Vanderkamp, 1 Barb. Ch. 273.

The sureties in a replevin bond, for the purpose of reducing the damages,
may prove that the goods so replevined have never been paid for, although
the notes given therefor are not in their possession, if the assignee of the
principal has tendered the notes to the plaintiff, and he has refused them
and prevented the sureties from getting them. Seldner v. Smith, 41 Md.
602.

A surety who is sued after the principal has been adjudged bankrupt,
can not set off usury paid by his principal to the creditor on contracts
other than the one sued on. Woolfolk v. Plant, 46 Ga. 422.

A-careful perusal of this clause will show that it only applies to a surety
who contracted to become liable for the payment of the debt, and not for
the payment of the judgment which might be entered in a particular ac-
tion. It clearly contemplates a case where the surety contracts to become
liable with the principal for the payment of the debt. When a discharge is
pleaded in the appellate court so that no judgment can be rendered against
the defendant, a surety on an appeal bond conditioned to pay such judg-
ment as might be entered in the appellate court, is released. As no judg-
ment was rendered against his principal, no liability attached to him.
Odell v. Wooten, 4 B. R. 183; s. c. 38 Ga. 225; Martin v. Kilbourn, 1 Cent.
L. J. 94.

This clause applies to persons who are liable for the debt of the bankrupt
which existed before, and is discharged by, the proceedings in bankruptcy.
A bond given to dissolve an attachment is not such a debt. It does not
become of the nature of a debt until the contingency arises upon which it
is to be made operative — to-wit, a judgment valid against the principal
and which he is bound to pay. When a judgment is rendered for the de-
fendant upon a plea of a discharge in bankruptcy, the bond is discharged,
not by the proceedings in bankruptcy, but by the determination of the
contingency upon which the obligation of the bond is made to depend.
Carpenter v. Turrell, 100 Mass. 450; Payne vy. Able, 4 B. R. 220; 53. a 7
Bush, 344; Williams v. Atkinson, 37 Tex. 16. Contra, Holyoke v. Adams,
10 B. R. 270; s. c. 2 N. Y. Supr. 1; s. c 8 N. Y. Supr. (Hun) 223,

The discharge of a debtor in bankruptcy. after a bond requiring him
to take the poor debtor’s oath has become absolute by breach of the con-
dition, can not avail the sureties as a defense. After such breach, the right
to surrender the principal no longer exists, and the subsequent discharge
of the debtor can not avail the sureties. Although the discharge releases
the debtor, it can not release the sureties. Claflin v. Cogan, 48 N. H.
411.
LIABILITY OF OTHER PERsons. 699

It was not the intent of Congress to do anything more than to declare
that the act should not be construed so as to discharge sureties, and this
was done not so much to fix the law of the case, as by way of caution to
prevent the act from being construed to have an effect that by its terms
it would not have. In other words, the contract of a surety, as it is under-
stood in the commercial world, is always conditioned that the surety shall
not be discharged by the bankruptcy of the principal, and the provisions
of the act are only in furtherance of, and declaratory of, what would have
been true had they not been put in the act. The Code of Georgia does
not have the effect to release the surety upon the discharge of the prin-
cipal. Phillips v. Solomon, 42 Ga. 192.

If a debtor upon his arrest gives a bond to take the poor debtor’s oath
within one year from the date, or surrender himself at the jail at the ex-
piration of that time, and then files a petition in bankruptcy within the
year and obtains a discharge, the discharge will not release the sureties
if the bond is forfeited. Goodwin v. Stark, 15 N. H. 218.

Where the bankrupt leaves the prison limits after he receives his dis-
charge, the discharge is a good defense for the sureties in an action on the
jail bond. Kirby v. Garrison, 21 N. J. 176.

The discharge does not extinguish the debt, but merely relieves the
bankrupt from his personal liability. It does not, therefore, release a
party who has covenanted to pay a certain rate of interest until the prin-
cipal debt is paid. Bowery Savings Bank v. Clinton, 2 Sandf. 113.

A promise by a third person to deliver certain property taken under an
attachment, is not released or affected by the subsequent bankruptcy
and discharge of the debtor whose property is so attached. Towle v. Robin-
son, 15 N. H. 408.

The surety on an administrator’s bond is not released by the discharge
of the principal. Moore v. Waller, 1 A. K. Marsh. 488.

A discharge of the principal under a petition filed after the return day of
the sci. fa. issued against the bail, does not release the bail. Bennett v.
Alexander, 1 Cranch C. C. 90.

The discharge of the principal in a replevin bond, and the delivery of
the goods to his assignee in bankruptcy, does not operate to release or dis-
charge the sureties. Flagg v. Tyler, 6 Mass. 33.

When the bankrupt is discharged, the court will on motion discharge
his bail by ordering an exoneretur to be entered. Comm. v. Huber, 5 Penn.
L. J. 331; McCausland vy. Waller, 1 H. & J. 156.

A judgment in favor of a surety on a plea of his discharge in an action
upon an administration bond is no defense to an action for contribution
by a cosurety who was codefendant in that suit, and who has paid the
judgment. Miller v. Gillespie, 59 Mo. 220.

A failure to prove a note against the principal for the purpose of ob-
taining a dividend thereon will not release a surety. Clopton v. Spratt,
52 Miss, 251.

Act or 1867, § 5119. A discharge in bankruptcy duly granted
shall, subject to the limitations imposed by the two preceding sec-
700 THE Bankruptcy Law. .

tions, release the bankrupt from all debts, claims, liabilities, and
demands which were or might have been proved against his estate
in bankruptcy. It may be pleaded by a simple averment that on
the day of its date such discharge was granted to the bankrupt,
setting a full copy of the same forth in its terms as a full and complete
bar to all suits brought on any such debts, claims, liabilities, or de-
mands. The certificate shall be conclusive evidence in favor of such
bankrupt of the fact and regularity of such discharge. See ante,
p. 688.

Statute revised — March 2, 1867, ch. 176, § 34, 14 Stat. 533. Prior Stat-
utes — April 4, 1800, ch. 19, § 34, 2 Stat. 30; Aug. 19, 1841, ch. 9, § 4, 5
Stat. 443.

It was not intended by any of the provisions of the bankruptcy act that
the bankruptcy court should pass, in a plenary manner, upon the ques-
‘tion whether a particular claim will or will not be released by a dis-
charge. That inquiry is one properly to be made only by the court in
which a direct suit on the debt is pending. When the discharge is pleaded,
the question of the extent of its operation upon the debts of the bank-
rupt, and whether a particular debt is or is not discharged by it, comes
up for determination by the court in which it is pleaded, and the deter-
mination will be a binding judgment between the parties. In re J. H.
Kimball, 2 B. R. 204; s. c. 2 Ben. 554; s. c. 6 Blatch. 292; in re M. Rosen-
berg. 2 B. R. 236; s. c. 3 Ben. 14; in re J. S. Wright, 2 B. Ri 142; s. ¢
36 How. Pr. 167; s. c. 2 Ben. 509. ar

The fact that the assignee embezzled all the funds is no defense against
a demand, even though it was proved, for nothing arising in the pro-
ceedings in bankruptcy can protect the bankrupt but a certificate of
discharge duly obtained. Whitney vy. Crafts, 10 Mass. 23.

The proving of a note payable in specific articles is equivalent to a
demand upon the bankrupt for them. A demand on him would have been
fruitless, as all his property was out of his control and vested in the
assignee, who held the estate in trust, as well for him as his creditors, to
pay his debts. The assignee, having the fund, was the proper person on
whom the demand ought to be made, and the proving of the claim was
the making of a demand on the assignee. If the debtor fails to obtain a
discharge, he is then liable on the note. Chandler v. Winship, 6 Mass. 310.

Mere bankruptcy, without a certificate of discharge, is no bar to an
action upon a demand which was proved, and upon which the creditor
received a dividend. The bankruptcy, in such a case, has the effect of a
statute execution, which, like private executions, takes the property of
the bankrupt toward the Satisfaction of his debts without discharging
them. Lummus y. Fairfield, 5 Mass. 249; Pesoa v. Passmore, 4 Yeates,
139.

A plea of an adjudication of bankruptcy is not a good defense to an
action on a provable debt. Longacre v. Myers, 1 W. N. 109; Ins. Co. Vv.
Ketterlinus, 1 W. N. 130; Rarguel v. Gerson, 2 W. N. 304.
/
IMPEACHING THE DISCHARGE. VO1

Impeaching the Discharge.— It is competent for Congress to declare
what shall be the force and effect of a discharge. Reed vy. Vaughan, 15
Mo. 187.

If the public notice required by the act has been given, creditors must be
treated as having notice of the proceedings, and can not impeach them
collaterally, as they are in the nature of a proceeding in rem before a
court of record having jurisdiction. Shawhan v. Wherritt, 7 How. 627.

When the discharge is pleaded, the court will presume that the re-
quirements of the law in regard to notice to creditors, were complied with,
and, consequently, that they were parties to the proceedings in bank-
ruptey. Lathrop v. Stuart, 5 McLean, 167.

The district court must be presumed to have proceeded regularly ac-
cording to the jurisdiction granted, until the contrary appears. Morrison
y. Woolson, 23 N. H. 11.

The discharge can not be impeached collaterally on account of defects
and irregularities in the proceedings, between the petition and the dis-
charge. Wright v. Watkins, 2 Greene (lowa), 547; Beach v. Miller, 15.
La, An. 601; McNulty v. Frame, 1 Sandf. 128; Linton v. Stanton, 4 La.
An. 401; Morrison v. Woolson, 23 N. H. 11; Sinclair v. Smyth, 1 Brews.
402; Campbell v. Perkins, 8 N. Y. 480; s. c. 5 Barb. 699; Morrison v.
Woolson, 29 N. H. 510; Richards y. Nixon, 20 Penn. 19.

The discharge is conclusive against a creditor who proved his claim,
and can not be impeached by him in a collateral action. Connor v. Gup-
ton, 11 Humph. 320; Downer v. Rowell, 25 Vt. 336; Wales v. Lyon, 2 Mich.
276: Lyon vy. Marshall, 11 Barb. 241; Humphreys v. Sweet, 31 Me. 192.
Contra, Gupton v. Connor, 11 Humpb. 287.

A discharge duly granted by a district court of competent jurisdiction,
can not be impeached in a collateral action because a discharge had been
refused by another district court in a prior proceeding. Morrison v.
Woolson, 23 N. H. 11.

The mere pendency of proceedings on the petition of one partner in
one district, will not render a discharge void which is granted upon a
subsequent petition filed by another partner in another district when that
discharge is pleaded in a collateral action. Ibid.

If the notice required by the statute had been duly published, the
discharge will bar the debt, although the name of the creditor was not
Placed on the schedule nor any notice given to him. Symonds v. Barnes,
6B. R. 877; s. c. 59 Me. 191; Payne v. Able, 4 B. R. 220; s. c. 7 Bush, 344;
Randall v. Sutton, 2 Houst. 510; Knabe v. Hayes, 71 N. C. 109; Stern v.
‘Nussbaum, 47 How. Pr. 489; s. c. 5 Daly, 382; in re William Archen-
braun, 11 B. R. 149; s. c. 7 ©. L. N. 99; Williams v. Butcher, 12 B. R.
148; s. c. 22 Pitts. L. J. 141; Blum v. Ricks, 39 Tex. 112; Hood v. Spencer,
4 McLean, 168; Pattison & Co. v. Wilbur, 12 B. R. 193; s. c. 10 R. I. 448;
Burnside v. Brigham, 49 Mass. 75; Shelton v. Pease, 10 Mo. 473; Fox v.
Paine, 10 Ala. 523; Brown v. Rebb, 1 Rich. 374; s. c. 1 Strob. Ch. 296;
Strong vy. Clawson, 19 Ill. 346; Magoon v. Warfield, 3 Greene (Iowa), 293;
Hubbell v, Cramp, 11 Paige, 310; Campbell v. Perkins, 8 N. Y. 430; s. c. 5
Barb. 699; Mitchell v. Singletary, 19 Ohio, 291; Downer v. Dana, 22 Vt.
%02 THe BANKRUPTCY Law.

837: Lamb v. Brown, 12 B. R. 522; 8. c. 7 C. L. N. 363; Platt v. Parker,
18 B. R. 14; s. aq 11 N. Y. Supr. (Hun), 135; s. c. 6 N. Y. Supr. 377; Thur-
mond vy. Andrews, 13 B. R. 157; s. c. 10 Bush, 400; Thomas v. Jones, 39 Wis,
124; Heard v. Arnold, 15 B. R. 543; s. c. 56 Ga. 570; Jones v. Knox, 51 Ala,
867; Thornton v. Hogan, 63 Mo. 143. Contra, Morse v. Presby, 25 N. H.
299; Russell v. Cheatham, 16 Miss. 703; Barnes v. Moore, 2 B. R. 573; s. ¢
2 L. T. B. 92; Anon, 1 B. R. 123; Hill v. Robbins, 1 Mich. (N. P.) 305; s,
e, 22 Mich. 475; Thornton v. Hogan, 63 Mo. 163.

The notice which must be duly published in order to give the district
court jurisdiction over the creditors who are not notified personally, is
the notice required on the filing of the application for a discharge,
Pattison & Co. v. Wilbur, 12 B. R. 198; s. c. 10 R. I. 448; Thurmond y,
Andrews, 13 B. R. 157; s. c. 10 Bush, 400.

A creditor whose name was fraudulently omitted from the schedules
may waive the want of notice and make himself a party to the proceedings.
A creditor who applies to the district court to annul and set aside a dis-
charge, voluntarily makes himself a party to the proceedings, and can not
impeach the discharge by any other suit or proceeding. Burpee v.
Sparhawk, 4 B. R. 685; s. c. 108 Mass. 111.

A discharge granted by a district court which has no jurisdiction over
the person of the bankrupt because neither his residence nor place of
business was within the district, is void. Stiles v. Lay, 9 Ala. 79%.

Every bankrupt or insolvent system in the world must partake of the
character of a judicial investigation. Parties whose rights are to be
affected are entitled to a hearing. Hence every system professes to sum-
mou the creditors before some tribunal to show cause against granting
a discharge to the bankrupt. Day v. Bardwell, 3 B. R. 455; s. c. 97 Mass.
2-46.

A discharge granted without jurisdiction is void; for by this section
it is only a discharge duly granted which is of any avail. A discharge
granted without jurisdiction to grant it is not duly granted, and is no
discharge. In re Penn et al., 3 B. R. 582; s. c. 4 Ben. 99.

A fact which goes to defeat the jurisdiction of the court of bankruptey
may be shown by plea and proof in any court by a person not estopped
to show it. In re Goodfellow, 3 B. R. 452; s. c. Lowell, 510; s. ¢c. 1 L. T.
B. 179; s. c. 3 L. T. B. 69.

The discharge is a bar to the action, although the particular debt upon
which the suit is brought was not placed on the schedules. Rogers v.
West. Ins. Co., 1 La. An. 161.

The discharge can not be impeached on the ground that the bankrupt,
being an alien, came to this country and took up a temporary residence
for the purpose of seeking the benefit of the bankruptcy law. Tompkins
vy. Bennett, 3 Tex. 36.

What Claims are Barred.— The certificate of discharge is a bar only to
debts and demands which were or might have been proved, but not as
against personal covenants and engagements which were not provable.
If a demand is not provable, it is not barred by the certificate. This
is the just and settled rule. Murray v. De Rottenham, 6 Johns. Ch. 52.
WHAT CLAIMS ARE BARRED. 708

If the debt is provable, the action is barred, although it was not actually
proved. Hardy v. Carter, 8 Humph. 153; Rogers v. West. Ins. Co., 1 La.
An. 161.

The words ‘creditor or creditors,” as used in the several provisions
of the bankruptcy act, do not include the United States. U.S. v. Herron,
9B. R. 585; s. c. 20 Wall. 251; s.c. 1 A. L. T. (N. S.) 274; U.S. v. King,
Wall. Sr. 12. Contra, U. 8. v. Davis, 3 McLean, 483; U. 8S. v. Throck-
morton, 8 B. R. 309; s. c. 6 Pac. L. R. 102; s. ce. 5 GC. L. N. 520; 8. @. 18 1.
RB. R. 64.

A surety for the faithful performance of the duties of a public officer is
not released from his obligation by a distharge. U.S. v. Herron, 9 B. R.
585; 8, c. 20 Wall. 251; 8. c. 1 A. L. T. (N. 8.) 274. Contra, U. S. v. Throck-
morton, 8 B. R. 309; s. c. 5 C. L. N. 520; 8. c. 6 Pac. L. R. 102; 5. c. 181. R.
R. 54; U. S. v. Davis, 3 McLean, 483.

Debts due to the United States are not within the provisions of the
bankruptcy law. U.S. v. King, Wall. Sr. 12; U. S. v. Rob Roy, 13 B. R.
285; 8. c. 1 Woods,,42.

A bankruptcy law will not be construed as intended to bind a State,
unless the intent is manifested by express words or irresistible implica-
tion. The statute discloses no purpose on the part of Congress to bind a
State. A discharge will not, therefore, release the bankrupt from a debt
due to the State. Saunders vy. Comm., 10 Gratt. 494; Comm. vy. Hutchin-
son, 10 Penn. 446.

A discharge releases a bail from his liahility on a bond given to the
State to secure the appearance of a person accused of a crime to answer
the charge in court. Jones v. State, 28 Ark. 119.

If a debtor applies to take the poor debtor’s oath, and charges of fraud
are filed against him prior to the commencement of proceedings in bank-
ruptey, the certificate of discharge will not defeat or avoid the pro-
ceedings to punish him criminally for fraud upon being convicted thereof
on the charges so filed. The certificate of discharge is no bar to his being
senienced and imprisoned, as prescribed by statutes, upon such con-
viction, Stockwell v. Silloway, 105 Mass. 517.

A discharge does not release the bankrupt from a fine imposed by a
State court for the violation of an injunction. Spalding v. New York,
4 How. 21; s. c. 7 Hill, 301; s. c. 10 Paige, 284.

The discharge does not release the bankrupt from his liability for a
contempt in violating an injunction. Macey v. Jordan, 2 Denio, 570.

If there is partnership property, a discharge in proceedings against one
partner alone will not release him from liability for partnership debts.
Crompton vy. Conkling, 15 B. R. 417; 18 Pac. L. R. 205; s. c. Hudgins v.
Lane, 11 B. R. 462.

If the bankrupt gave a deed with warranty of title when he had no
deed for the land, his liability on the warranty is released by his
discharge, Williams v. Harkins, 15 B. R. 84; s. c. 55 Ga. 172.

An action of covenant on a warranty of title is barred, although the
covenant is not broken until afier the discharge is granted. Bates v.
West, 19 Ill, 184; Shelton v. Pease, 10 Mo. 473; Bailey v. Moore, 21 Ill. 165;
104 THe Bankruptcy Law.

Jemison v. Blowers, 5 Barb. 686. Contra, Bush vy. Cooper, 18 How.
(Miss.) 82; s. c. 26 Miss. 599; Burrus v. Wilkinson, 31 Miss. 537; Reed
vy. Pierce, 86 Me. 455.

If a creditor received certain property as a collateral security, and
held the possession thereof.or of the proceeds until after the granting
of the discharge, when it was taken away by a claim under a prior and
paramount title, the discharge is no bar to an action on the implied
watranty of title. Bennett v. Bartlett, 60 Mass. 225,

The claim of an indorser who pays the note after the commencement of
the proceedings in bankruptcy, is barred by the discharge of the maker,
Baker v. Vasse, 1 Cranch C. ©. 193.

The certificate of discharge is a complete defense to an action by an
indorser against the bankrupt, who was the acceptor of a bill of ex-
change, which the indorser paid after the commencement of proceedings
in bankruptcy. Hunt v. Taylor, 4 B. R. 683; s. c. 108 Mass. 508.

A discharge will not release the bankrupt from liability to a warehouse-
man for storage, which accrued after the commencement of proceedings
in bankruptcy. Robinson v. Pesant, 8 B. R. 426; s. c. 53 N. Y. 41%

If the bankrupt indorses a note between the time of the commence-
ment of proceedings in bankruptcy and the date of his discharge, he
will be liable to the holder, notwithstanding such discharge. Sparhawk v.
Broome, 6 Binn. 256.

A promissory note for money received by the bankrupt from his wife
is discharged. Thoms vy. Thoms, 45 Miss. 263.

A debt barred by the statute of limitations is discharged. Whether a
claim is provable or not is to be determined by its nature, and not by in-
quiring whether it is possible to establish it. Provision is made in the
act itself for the exclusion of many debts and claims which are in their
nature provable. The discharge is equally effectual as against such cred-
itors to release the bankrupt as it is against any other creditor. In re
Cornwall, 6 B. R. 305; s. ec. 9 Blatch. 114; in re Ray, 1 B. R. 208; s. «
2 Ben. 53; in re Daniel P. Kingsley, 1 B. R. 329; s. c. Lowell, 216; in re
Harden, 1 B. R. 395; s. c. 1 L. T. B. 48; in re L. Sheppard, 1 B. R. 439; 8. ¢.
1L. T. B. 49; s.¢c. 7 A. L. Reg. 484.

A covenant against incumbrances is broken by the existence of an
incumbrance at the time of the conveyance, and is released by a discharge.
Reed v. Pierce, 36 Me. 455.

The discharge of the husband releases him from the debts of his wife
contracted dum sola, and the creditors can not have her separate estate
applied to the payment of their debts during his life. Vanderheyden
v. Mallory, 1 N. Y. 452.

If a feme sole marries after the filing of a petition for a discharge, but
before the granting of a discharge, a discharge granted to her in her
maiden name will, on proof of identity, be a good defense to her and her
husband in an action to recover a provable debt. Chadwick v. Starrett,
27 Me. 188.

The covenant in a deed of trust, to pay the taxes, is not a covenant to
pay the debt secured by the deed, but to protect the pledge, and is
Wuat CLAIMS ARE BARRED. 705

cqvenant as distinct from and independent of the debt as a covenant in
a mortgage against incumbrances or to insure the title. Such a covenant
runs with the land. The creditor may resurt to the personal covenant
of the debtor for the purpose of rendering the security available. If the
breach of the covenant arose after the discharge, and did not relate to
any certain and specific demand capable of being proved, the covenantee
is entitled to his remedy notwithstanding the certificate of discharge.
Murray v. De Rottenham, 6 Johns. Ch. 52.

A discharge will not release the bankrupt from liability on an express
covenant to pay rent where the rent fell due after the commencement of
the proceedings in bankruptcy. Large v. Bosler, 3 Penn. L. J. 246; Kings-
ley v. Prentiss, 6 Penn. L. J. 479.

The discharge does not release the bankrupt from the rent that ac-
erued after the commencement of the proceedings in bankruptcy and
before the discharge. Savory v. Stocking, 58 Mass. 607; Prentiss vy.
Kingsley, 10 Penn. 120.

A discharge is no bar to an action upon a covenant in a ground rent
deed for an installment that became due after the granting of the dis-
charge. Bosler v. Kuhn, 8 W. & S. 183.

If the bankrupt occupies the premises after his discharge, he will be
liable for the rent that accrues during such occupation. Hendricks v.
Judah, 2 Caines, 25; Steinmetz v. Ainslie, 4 Denio, 573.

The grantor can not, in an action on a covenant to pay rent in a ground
rent deed, obtain a judgment for the rent that fell due prior to the com-
mencement of the proceedings in bankruptcy to be levied only upon the
land, and a personal judgment against the bankrupt for the rent that fell
due after that time. A single judgment can not thus consist of two
parts to be enforced in different modes. Large v. Bosler, 3 Penn. L. J.
246,

If the original ground of action is founded in contract, but the im-
mediate causes arise ex delicto, and the claim is for damages unliquidated
by express agreement, or such as will not be implied, the discharge does
not bar the action. Dusar v. Murgatroyd, 1 Wash. 13; Hughes v. Oliver,
8 Penn. 426.

The only rule prescribed is to practicability of proving the debt, and
this can not be evaded by the form of action which the creditor may
Select. Hatten v. Speyer, 1 Johns. 37; Campbell v. Perkins, 8 N. Y. 480; s.
c. 5 Barb. 699; Hughes v. Oliver, 8 Penn. 426. Contra, Williamson v.
Dickens, 5 Ired. 259. .

A person who received money prior to his bankruptcy, under a prom-
{se to put it out on bond and mortgage, and which he failed to do, is
not liable after his discharge, in a special action on the case, for such
neglect. Hatten v. Speyer, 1 Johns. 37.

A demand for damages for breach of a contract of a common carrier
is barred by a discharge. Campbell v. Perkins, 5 Barb. 699; s. c 8
N. Y. 480. Vide Dusar v. Murgatroyd, 1 Wash. 13.

A claim arising from the neglect of an officer is a tort, and is not dis-
charged, Ellis vy. Ham, 28 Me. 385.

45
706 Tur Bankruptcy Law.

A suit against an agent for a breach of duty in the management of
luis agency is not barred by a discharge. Williamson v. Dickens, 5 Ired,
259.

The discharge is not a bar to an action for deceit in falsely representing
that he had confessed a judgment on a judgment note, and thereby made
it a lien on his land, for the action is distinct and independent of the
debt. Hughes v. Oliver, 8 Penn. 426.

An action by a shipper against a carrier for negligence whereby the
goods of the former were injured, is not barred by a discharge. Dusar
v. Murgatroyd, 1 Wash. 13.

No decree will be rendered in equity against a bankrupt after his dis-
charge, for mortgaging property not his own, or for disposing of the
mortgaged property prior to the commencement of the proceedings in
bankruptcy. Wolfe v. Bate, 9 B. Mon. 208.

A discharge is no bar to an action in equity to rescind a contract on
the ground of fraud. Doggett v. Hmerson, 1 W. & M. 195; Smith v.
Babcock, 2 W. & M. 246.

If the bankrupt as claimant signed a bond conditioned to restore the
vessel if judgment should be rendered against him, a discharge will not
release him from the bond, if the decision was not rendered until after
the declaration of the final dividend. U.S. v. Rob Roy, 13 B. R. 235; s. ¢.
1 Woods, 42.

When the evidence does not show when the final dividend was made,
the discharge will only be deemed to operate on claims which were
liquidated or fixed at the time of the commencement. of the proceedings
in bankruptcy. Ibid.

A discharge of the bankrupt does not prevent the assignee from re-
covering property that belonged to his estate, althourh it was not placed
on his schedules. Maybin v. Raymond, 15. B. R. 353; s. ec 4 A. L. T.
(N. 8.) 21.

if the bankrupt waives the benefit of his discharge and permits judg-
ment to be entered against him, a fraudulent grantee can not object that
the defense was not made. Dewey v. Moyer, 16 B. R. 1; s. c. 16 N. Y¥.
Supr. 473.

Sureties.— The surety on a custom-house bond, in case of the discharge
of the principal in bankruptcy, is, like other creditors, barred of his action
for a debt due before the bankruptcy. Reed v. Emory, 1S. & R. 339; Kerr
v. Hamilton, 1 Cranch C. C. 546.

A surety who has paid a duty bond has not the right of the United
States to proceed against the person of the bankrupt, but only against
his effects, and the claim is barred. Kerr v. Hamilton, 1 Cranch C. C.
546.

The discharge does not extend to contracts upon which no claim could
be founded at the time of the commencement of the proceedings in bank-
ruptey, and in regard to which there was then no reason to presume that
any demand for money would ever exist. The discharge does not re-
lease a surety from liability on a bond given by an officer for the faith-
ful performance of his duties, where the breach occurred after the dis-
JUDGMENTS. 107

charge was granted. Loring v. Kendall, 67 Mass. 305; Fowler v. Kendall,
44 Me. 448.

A discharge does not release a bankrupt from his liability as surety
on an injunction bond, when the proceedings in which the injunction
was issued are not determined until after the granting thereof. Eastman
y. Hibbard, 18 B. R. 360; s. c. 54 N. H. 504k.

A bond to secure the faithful performance of official duties is a con-
tinuing indemnity, and every breach of it is a good cause of action,
affording a remedy when, and only when, each severally occurs. A dis-
charge releases the surety for all breaches that occurred prior to the
commencement of the proceedings in bankruptcy. Fowler v. Kendall,
44 Me. 448.

A discharge does not release the bankrupt from his liability to his
surety on a delivery bond. if he pays the amount for which he is liable
after the commencement of the proceedings in bankruptcy, although the
breach occurred before that time. Pogue v. Joyner, 6 Ark. 241.

The claim of a surety upon an official bond, arising from the neglect
of the officer, is not barred by a discharge. Hillis v. Ham, 28 Me. 385.

If a judgment is rendered against the principal and the surety after
the commencement of proceedings in bankruptcy, but before the granting
of a discharge to the principal, the surety on paying the judgment will
have a claim against the principal. Pike v. McDonald, 32 Me. 418.

The discharge releases the bankrupt from his liability to a surety upon
his note or bond, although some of the installments fell due and were
paid by the surety after the granting of the discharge. Fullwood v.
Bushfield, 14 Penn. 90.

A surety can not recover against a principal who has been discharged
in bankruptcy, upon payment of an obligation for which the bankrupt
was liable before his discharge. His claim is contingent, and may be
preved. Lipscomb vy. Grace, 26 Ark. 231; Mace v. Wells, 7 How. 272;
8c. 17 Vt. 508. Contra, Greenleaf v. Maher, 2 Wash. 44.

The discharge does not release the bankrupt from his liability to a
surety for money paid on a judgment rendered against them both after
the granting of the discharge. Leighton v. Atkins, 35 Me. 118.

The claim of a surety on a replevin bond against his cosurety for
contribution is barred, although judgment is not rendered in the replevin
suit until after the discharge is granted. Tobias v. Rogers, 13 N. Y. 5Q

The discontinuance of a suit by the obligee in an official bond against
the surety, upon a plea of the discharge, does not relieve him from
liability for contribution to his cosurety. Dole v. Warren, 32 Me. 94.

Judgments. A demand ex delicto is not discharged unless a judg-
Ment was obtained upon it before the commencement of the proceed-
ings in bankruptcy, thereby changing its character from tort to debt.
Ellis v. Ham, 28 Me. 385; Crouch v. Gridley, 6 Hill, 250; Kellogg v.
Schuyler, 2 Denio, 73.

A discharge releases the bankrupt from all judgments rendered against
him prior to the commencement of the proceedings in bankruptcy, for a
judgment is a debt of record. Blake v. Bigelow, 5 Ga. 437.
708 Tue Bankruptcy Law.

A judgment of separation of property is released by a discharge. Alling
v. Egan, 11 Rob. (La.) 244.

A judgment in an action in tort is barred by a discharge. Comstock
y. Grout, 17 Vt. 512; in re Edson Comstock, 22 Vt. 642.

A judgment obtained upon a breach of promise to marry is barred.
In re Sidle, 2 B. R. 220.

A judgment in an action for seduction, rendered prior to the com-
mencement of the proceedings in bankruptcy, is not barred. In re Samuel
S. Cotton, 2 N. Y. Leg. Obs. 370; Nassau v. Parker, 2. Penn. L. J. 298.

The discharge does not release the bankrupt from a decree for the
maintenance of a bastard child. The character of the claim partakes of
the nature of a penalty and police regulation for the enforcement of a
moral and natural duty, resulting from a wrongful and criminal act, and
has nothing of the character of a debt except the duty to pay money to
another. Comm. v. Erisman, 21 Pitts. L. J. 69; in re Samuel S. Cotton,
2N. ¥. Leg. Obs. 370.

Where a decree directs the payment of a certain sum every month as
alimony, the monthly payments which fall due after the commencement
of the proceedings in bankruptcy are due by natural obligation and not
by contract, and are not affected by a discharge. In re Edward Garrett,
11 B. R. 498.

The certificate of discharge is no bar to a judgment for a prior debt
obtained after the granting thereof. Selfridge v. Lithgow, 2 Mass. 374.

The discharge may be pleaded to a sci. fa. to revive a judgment.
Duncan vy. Hargrove, 22 Ala. 150; Alter v. Nelson, 27 La. An. 242.

The discharge is no defense to a sci. fa. to revive a judgment of revival
entered after the granting of a discharge. Stewart v. Colwell, 24 Penn.
67.

A judgment entered after the commencement of the proceedings in
bankruptcy in an action in tort is not barred by a discharge, although
the verdict was rendered before that time. Kellogg v. Schuyler, 2 Denio,
73.

If a verdict in an action for a tort is rendered before the commence-
ment of the proceedings in bankruptcy, and the entry of a judgment is
suspended by a motion for a new trial, and is not made until after the
granting of a discharge, the judgment is not barred. Nassau v. Parker,
2 Penn. L. J. 298.

The report of referees is equivalent to the verdict of a jury. Although
the report liquidates the damages, it does nob change the nature of the
demand. That remains the same until it is extinguished by the judg-
ment, and if that is entered after the commencement of the proceedings
in bankruptcy the claim for the tort is not barred by a discharge. Crouch
v. Gridley, 6 Hill, 250.

An agreement among the referees as to the amount of the damages,
without a report, does not change the nature of the demand. So long
as the report remains incomplete there is nothing but the original tort.
Ibid.
JUDGMENTS. 709

If a judgment by default is entered before the granting of a discharge
in an action pending at the time of the commencement of the proceed-
ings in bankruptcy, and a final judgment entered after the granting of the
discharge, the discharge is not a bar to the demand, for the bankrupt
was not bound to submit to the discretion of the court by applying to
have the default set aside. Ewing v. Peck, 17 Ala. 339.

The discharge does not release the bankrupt from a judgment entered
up after the granting of a discharge in an action pending at the time
of the commencement of the proceedings in bankruptcy, and in which a
default was entered before the discharge was granted. Hollister v. Ab-
bot, 31 N. H. 442.

A judgment entered after the filing of the petition in bankruptcy upon a
decision rendered prior thereto is released by the discharge. Monroe
y. Upton, 6 Lans. 255; s. c. 50 N. Y. 593.

The discharge is not a bar to the bankrupt’s liability for costs of a
suit pending in his name at the time of the commencement of the pro-
ceedings in bankruptcy, and subsequently prosecuted in his name.
Bridges v. Armour, 5 How. 91.

If the bankrupt was plaintiff in an action pending at the time of the
commencement of proceedings in bankruptcy, and made no objection at
the time of the entry of a judgment against him for costs on his failure
to sustain his suit, his discharge will not release him from such judg-
meut. Wilkins v. Warren, 27 Me. 488.

If the bankrupt’s partner institutes a suit in the name of the firm after

the commencement of proceedings in bankruptcy to collect a debt due to
the firm, the discharge will not release the bankrupt from a judgment for
costs entered after the granting thereof. Ward v. Barber, 1 HE. D. Smith,
423.
; The costs which accrue after the commencement of the proceedings
in bankruptcy rest upon the original debt, and a plea puis darrein con-
tinuance operates as a discharge of the action for the costs as well as
the debt. Harrington v. McNaughton, 20 Vt. 293; Clark v. Rowling, 3 N.
Y, 216,

The discharge releases the bankrupt from all liability for costs in an
action pending in his name at the time of the commencement of the
proceedings in bankruptcy, although the suit was prosecuted by him after
that time and dismissed after the granting of bis discharge. Leavitt v.
Baldwin, 4 Edw. Ch. 289.

The discharge releases the bankrupt from a-judgment for a provable
debt entered after the commencement of the proceedings in bankruptcy
and before the granting of a discharge. Harrington v. McNaughton, 20
Vt. 298: Dresser v. Brooks, 3 Barb. 429; Johnson v. Fitzhugh, 3 Barb.
Ch. 860; McDonald v. Ingraham, 30 Miss. 389; Clark v. Rowling, 3 N. Y.
216; Rogers vy. West. Ins. Co., 1 La. An. 161; Fox v. Woodruff, 9 Barb.
498; Dick v. Powell, 2 Swan, 632; Downer v. Rowell, 26 Vt. 897. Contra,
Bradford v. Rice, 102 Mass. 472; Ellis v. Ham, 28 Me. 385; Thompson v.
Hewitt, 6 Hill, 254; Kellogg v. Schuyler, 2 Denio, 73; Woodbury v.
710 Tur Banxkruprcy Law.

Perkins, 59 Mass. 86; Holbrook v. Foss. 27 Me. 441; Uran v. Houdlette, 36
Me. 15; Pike v. McDonald, 32 Me. 418; Ingersoll v. Rhoades, Hill & D.
Sup. 371; Fisher v. Foss, 30 Me. 459; Roden v. Jaco, 17 Ala. 344.

A discharge is no bar to an action on a judgment rendered in another
State after the granting of the discharge, if it would not be a bar to a
similar action upon a judgment rendered in the State. Rees v. Butler,
18 Mo. 173.

When an action is brought in another State on a judgment rendered
after the commencement of the proceedings in bankruptcy, but before the
granting of a discharge, it will be deemed to be barred by the discharge
if it would be barred by the laws of the State where the judgment was
rendered. Haggerty v. Amory, 89 Mass. 458.

If the jurisdiction of the district court over the person of the debtor
is shown, it will be presumed that the notices to the creditors have been
regularly given until the contrary appears. Morse v. Presby, 25 N. H.
299; Rucknam vy. Cowell, 1 N. Y. 505; Norris v. Goss. 2 Spear. 80.

Remedies against Judgments.— A judgment will be set aside for the
purpose of letting the bankrupt plead his discharge when it appears to
have been entered without his knowledge or acquiescence, or under such
circumstances as would induce a court to open a judgment, when it is
clear that the defendant has a valid defense. Comm. v. Huber, 5 Penn.
L. J. 3381.

If a judgment for a deficiency is entered against a bankrupt in a pro-
ceeding to foreclose a mortgage, he may move to set it aside as soon
as he learns what has taken place, and then plead his discharge. Mutual
Life Ins. Co. v. Cameron, 1 Abb. N. C. 424.

If application is seasonably made, a judgment by default will be
stricken off upon terns to allow a party to plead his discharge in bar
to the further maintenance of the suit. The bankruptcy law is to be
treated with the same respect as if it were a statute of the State. Sav-
ings Bank v. Webster, 48 N. H. 21; Lee v. Phillips, 6 Hill, 246; Carter v.
Goodrich, 1 How. Pr. 239.

If the bankrupt’s attorney fails by mistake to appear and plead his
discharge, and judgment is entered by default, a review may be granted.
Shurtleff v. Thompson, 12 B. R. 524; s. ec. 63 Me. 118.

The bankrupt may be required to pay costs before the judgment will
be set aside. Lee v. Phillips, 6 Hill, 246.

If he omits to plead his discharge when he has the opportunity, the
eourt will not relieve him on motion. Rudge v. Rundle, 1 N. Y. Supr. 649.

The plea of bankruptcy is not a privileged plea, nor is it regarded with
such favor that, under the rules of common-law practice and pleading,
a default will be open to let in the plea. Park v. Casey, 35 Tex. 586.

A new trial will, not be granted if the bankrupt has been guilty of
laches in pleading his discharge. Manwarring v. Kouns, 35 Tex. 171;
Park v. Casey, 35 Tex. 536.

A judgment obtained against a discharged bankrupt in a pending
action under circumstances going to show fraud, trick, or contrivance,
may be enjoined. Ibid.
REMEDIES AGAINST JUDGMENTS. 711

If the bankrupt at the time of the rendition of the judgment against
him is in attendance upon the court as a grand juryman, this is good
ground for enjoining the judgment. It is error not to cause him to be
called before entering a judgment by defauli against him. Manwarring
y. Kouns, 85 Tex. 171.

If the judgment is set aside to permit the defendant to plead a dis-
charge, the plaintiff may discontinue without costs. Lee vy. Phillips, 6
Hill, 246.

When a judgment is set aside by the granting of a new trial, the de-
fendant may plead a discharge obtained since the rendition of the judg-
ment. The court can not render a judgment against the defendant in
the face of his discharge, nor in his favor upon any plea of set-off, as
that belongs to his assignee. The suit may be dismissed without pre-
judice, leaving the parties to their remedies under the bankruptcy law.
Humble vy. Carson, 6 B. R. 84.

The defendant can not move to have his discharge entered of record
for the purpose of preventing the issuing of an execution before one is
sued out, for that would enable him to become the actor while the
creditor is passive. Brown v. Branch Bank, 20 Ala. 420,

An execution should not issue upon a judgment after the debtor has
obtained a discharge, without an order of the court allowing it made upon
notice to the bankrupt of the motion for such order. Francis v. Ogden,
22 N. J. 210; Alcott v. Avery, 1 Barb. Ch. 347.

If execution is issued upon a judgment which is released by the dis-
charge, it will be-set aside, on motion, and a, perpetual stay entered.
Huber v. Ely, 4 A. L. J. 185; Monroe v. Upton, 6 Lans. 255; s. c. 50 N. Y.
595; Thomas v. Shaw, 2 Cin. 97; Graham v. Pierson, 6 Hill, 247; Mc-
Dougald v. Reid, 5 Ala. 810; Stewart v. Hargrove, 23 Ala. 429; Alcott v.
Avery, 1 Barb. Ch. 347; Curtis v. Slosson, 6 Penn. 265; Chambers v. Neale,
18 B. Mon. 256; Milhous v. Aicardi, 51 Ala. 594. /

When the discharge is granted, an execution levied prior to that time
upon property of the bankrupt acquired subsequently to the filing of the
petition in bankruptcy, will be set aside, although the judgment cred-
itor did not prove his debt. Bank v. Franciscus, 10 Mo. 27.

A perpetual stay of execution will be granted where a verdict was
rendered before the commencenient of the proceedings in bankruptcy,
but the entry of the judgment was suspended by a motion for a new trial,
but finally made before the granting of the discharge. Mechanics’ Bank
y. Lawrence, 1 Sandf. 659.

A perpetual stay will not be granted where the judgment was entered
after the commencement of the proceedings in bankruptcy, under an
agreement that it should not be affected by any discharge that might be
obtained. Thompson y. Hewitt, 6 Hill, 254.

A perpetual stay of execution is never granted where the defendant
might have pleaded his discharge. Lee v. Phillips, 6 Hill, 246.

On motion for a perpetual stay of execution, the discharge may be
proved by a copy. Thompson v. Hewitt, 6 Hill, 254.
12 Tue Bankruptcy Law.

As the creditor is entitled to appear and oppose, the motion will only
be granted upon the payment of the costs of opposing. Huber v. Ely,
4 A. L, J. 185; Mechanics’ Bank v. Lawrence, 1 Sandf. 659.

Whether the property which is taken on the execution was fraudulently
transferred to another prior to the commencement cf the proceedings in
bankruptcy, is a question which will not be tried on motion to set aside
the levy. Thomas v. Shaw, 2 Cin. 97.

A court of equity has no more right to interfere to annul a judgment
rendered after the bankrupt had an opportunity to plead his discharge,
in order to give effect to the discharge, than it has to set aside a judg-
nent in favor of any other defense. Bellamy v. Woodson, 4 Ga. 175;
Stewart v. Green, 11 Paige, 535; Goodrich v. Hunton, 2 Woods, 187.

The mere postponement of a cause from term to term, until the de-
fendant obtains his discharge, and: the taking of a judgment at that
time, do not constitute a fraud in the obtaining of the judgment, or
entitle the defendant to relief in equity. Bellamy v. Woodson, 4 Ga. 175.

Where a judgment by default was rendered against the bankrupt prior
to the commencement of the proceedings in bankruptcy, and the case
then continued from term to term, until a discharge was granted, his
negligence in omitting to plead his discharge will prevent him from ob-
taining relief in equity against a final judgment subsequently rendered
against him. Bellamy v. Woodson, 4 Ga. 175.

A discharge extinguishes a. judgment which existed before the com-
mencement of proceedings in bankruptcy, and all proceedings on a fieri
facias issued thereon are irregular and illegal, and may be enjoined.
Murphy v. Smith, 22 La. An. 441.

If the goods of a bankrupt are seized under a fieri facias issued upon
a judgment in respect of a debt due before the bankruptcy, the court, on
motion, will set aside the execution. The remedy is in the court out of
which the execution issued, by a summary application, when. the dis-
charge operates upon the judgment. The court will not set aside the
execution without giving the execution creditor an opportunity to show
that the discharge is inoperative as against his debt, and, when neres-
sary, will direct an issue to try the fact. The creditor may resist the
application on any of the grounds which except his debt from the effect
of the discharge, and the court will determine the question on affidavits
in a summary manner, or will grant an issue in its discretion. Linn v.
Hamilton, 34 N. J. L. 305.

When the execution is regular upon its face, and is issued by the
proper authority, and executed by the officer to whom it is directed, the
judgment debtor can not recover the possession of the property by an
action of replevin, even though he may, after the rendition of the judg-
ment and before the issue of the execution, have obtained a discharge
in bankruptcy. Westenberger v. Wheaton, 8 Kans. 169.

The district court has no jurisdiction to enjoin a creditor who has
caused an execution to be issued on a judgment rendered after the com-
mencement of proceedings in bankruptcy. The jurisdiction of the bank~
LIENS. Y13

ruptcy court ceases with the granting of the discharge. Penny v. Taylor,
10 B. R. 200.

If a discharge is valid, it extinguishes a prior judgment, and an execu-
tion thereon, though it may be a protection to the officer who makes the
levy, can not justify the party at whose instance it issues. He acts at
his peril. Although he is ignorant of the discharge, yet, if he takes the
bankrupt’s property without authority, it is a trespass for which he must
answer, however innocent he may be of any intention to do an illegal
act. Rucknam v. Cowell, 1 N. Y. 505.

A judgment creditor may issue an execution on his judgment, and the
execution is not absolutely void but voidable duly; that is, it is a valid
writ until the bankrupt shows it toa be erroneous. The execution will
afford protection to the party issuing it until it is set aside. Cogburn v.
Spence, 15 Ala. 549; Roden v. Jaco, 17 Ala. 344.

When the bankrupt has caused the execution to be set aside, then the
party issuing the process is responsible for all the injury resulting to the
bankrupt from the execution. Cogburn v. Spence, 15 Ala. 549.

Alien Creditors.— A discharge in bankruptcy bars a foreign as well as a
domestic creditor. There is no need of an express declaration of the
legislature that foreign creditors are included in the operation of the
bankruptcy law when the language of the statute is otherwise suffi-
ciently general and comprehensive, and when the evident policy of the
law is to embrace all debts that can be proved, and to give the un-
fortunate merchant who conducts himself fairly, new credit in the com-
mercial world and new capacity for business. Murray v. De Rottenham,
.6 Johns. Ch. 52; in re Augustus Zarega, 1 N. Y. Leg. Obs. 40; s. c. 4
Law Rep. 480; Pattison & Co. v. Wilbur, 12 B. R. 198; s. c. 10 R. I. 448.
Contra, Lizardi v. Cohen, 3 Gill. 4830; McMenomy v. Murray, 3 Johns. Ch.
435.

Liens.— In order to give full effect to ail the provisions of the act, the
bankrupt’s certificate must be made to operate as a discharge of his per-
son and future acquisitions, while, at the same time, mortgagees and
other lien creditors are permitted to have their satisfaction out of the
property mortgaged or subject to lien. Peck v. Jenness, 7 How. 612.

If a vendee who has taken a bond of conveyance sells the land to
another who agrees to pay the consideration, a discharge will release
the vendee from personal liability but will not affect the vendor's lien or
the rights of the purchaser. Lewis v. Hawkins, 23 Wall, 119.

If a vendee sold the land before the commencement of the proceed-
ings in bankruptcy, his discharge will not prevent the entry of a judg-
ment in rem to enforce the vendor’s lien. Elliott v. Booth, 44 Tex. 180.

A discharge will not prevent the entry of a judgment in rem to en-
force a vendor’s lien. Boone v. Revis, 44 Tex. 384.

A bill to enforce vendor’s lien can not be enforced against bankrupts.
Pearce v. Foreman, 29 Ark. 563.

The certificate of discharge does not prevent those entitled from re-
covering any specific property held by the bankrupt in a fiduciary
capacity. Waller v. Edwards, 6 Litt. 348.
714 THE BankKRuPtTcY Law.

The discharge operates to bar actions for the recovery of debts only,
and can not be pleaded to a summary process in the nature of a possess-
ory action to recover the possession of land. Crosby v. Wentworth, 48
Mass. 10; Lomax v. Spear, 51 Ala. 532.

The discharge of the tenant will not prevent the landlord from recover-
ing in an action of replevin instituted prior to the commencement of the
proceedings in bankruptcy to recover property taken as distress for rent.
Butler v. Morgan, 8 W. & S. 53.

The discharge can not be pleaded to a sci. fa. to enforce a mechanic’s
lien, for the proceeding is strictly in rem. McOullough v. Caldwell, 5
Ark. 237.

The discharge does not affect the lien of a judgment. McCance v.
Taylor, 10 Gratt. 580; Heard yv. Patton, 27 La. An. 542.

If the judgment proposed to be revived is a lien on land, the revival
may be limited to a sale of the land, leaving the discharge to operate as
apn absolution of the personal obligation. Reed v. Bullington, 11 B. R.
408; s. c. 49 Miss. 223.

If an action of covenant is brought against the bankrupt on an ex-
press covenant in a ground rent deed, for rent that fell due prior to the
couimencement of the proceedings in bankruptcy, a restricted judgment
may be entered, to be levied only on the land out of which the ground
rent issues, for the rent is a lien on the land. Large vy. Bosler, 3 Penn.
L. J. 246.

When an attachment has been laid upon the property of the bank-
rupt prior to the period of four months next preceding the commence-
ment of proceedings in bankruptcy, a judgment may be entered in the
eourt in which such attachment is pending, to be enforced against the
property attached, and not to be enforced against the person of the
bankrupt, even though the discharge is pleaded in bar of the further
maintenance of the attachment suit. Bates v. Tappan, 3 B. R. 647; s. ¢.
99 Mass. 376; Bowman v. Harding, 4+ B. R. 20; s. c. 56 Me. 559; Leighton v.
Kelsey, 4 B. R. 471; s. c. 57 Me. 85; Ingraham v. Phillips, 1 Day, 117.

A party having a judgment lien upon property conveyed by the bank-
rupt, before the filing of his petition to another, may enforce it by a fi. fa.,
even after a discharge has been granted, when neither the judgment nor
the property has ever been before the bankruptcy court for adjudication.
Jones v. Lellyett, 89 Ga. 64. Contra, Blum vy. Ellis, 13 B. R. 345; s. c
73 N. C. 293.

A judgment which is a lien upon property sold by the bankrupt before
the commencement of the proceedings in bankruptcy may be enforced
against such property after the granting of the discharge, although it was
proved against the bankrupt’s estate, if such proof was subsequently
withdrawn under a special order of the bankruptcy court. Phillips v.
Bowdoin, 14 B. R. 48; s. ce. 52 Ga. 544.

A judgment creditor may enforce his lien against land sold by the
bankrupt before the commencement of the proceedings in bankruptcy, al-
though be abandoned a levy made upon personal property by permitting
it to go back into the hands of the defendant, and did not follow it into
LIENS. 715

the hands of the assignee. Winship v. Phillips, 14 B. R. 50; s. ¢ 52 Ga,
593.

A party who has a lien upon property fraudulently conveyed away
by the bankrupt may prosecute a suit to enforce it, instituted before the
commencement of proceedings in bankruptcy, even though the discharge
is pleaded in bar of the suit. Payne y. Able, + B. R. 220; s. ec 7 Bush,
344; Fetter v. Cirode, 4 B. Mon. 482; Lowry vy. Morrison, 11 Paige, 327.

In such a case the proper course for the bankrupt is to apply for an
order that the complainant proceed, and bring the assignee before the
court by a supplemental bill in the nature of a bill of revivor. The bank-
rupt may then by plea or answer set up his discharge in bar of the suit
so far as he is continued a party to the same by such supplemental bill.
Lowry v. Morrison, 11 Paige, 327.

A discharge in bankruptcy constitutes no defense to an action to fore-
close a mortgage. But no judgment can be rendered against the bankrupt
for any deficiency. This applies to a mortgage of personal as well as real
property. Pierce v. Wilcox, 40 Ind. 70; Truitt v. Truitt, 38 Ind. 16; City
Bank v. Walton, 5 Rob. (La.) 158; Stewart v. Anderson, 10 Ala. 504;
Second National Bank v. State National Bank, 11 B. R. 49; s. c. 10 Bush,
367; Roberts v. Woods, 38 Wis. 60; Carlisle v. Wilkins, 51 Ala. 371.

When the bankrupt has received a discharge, he may apply to the State
court for an erasure of the conventional and judicial mortgages. Diggs
vy, Prieur, 11 Rob. (La.) 54.

A creditor can not file a bill in equity to set aside a fraudulent con-
veyance after a discharge has been granted, for the debt is thereby dis-
charged. Botts v. Patton, 10 B. Mon. 452.

A bill of equity, to reach the property of the bankrupt, can not be
further proceeded in against the bankrupt himself after the granting of a
discharge. Penniman v. Norton, 1 Barb. Ch. 246.

The commencement and pendency of proceedings in bankruptcy is no
matter in bar of a creditor's suit, as the bankrupt may fail in his effort
to obtain a discharge. Dick vy. Powell, 2 Swan, 632; Ingalls v. Savage,
4 Penn. 224,

If the assignee repudiates a particular piece of property because it
is so hedged about with difficulty and embarrassments as to render it
doubtful whether it would be profitable to endeavor to acquire it, a cred-
itor may subject it to the payment of his claim, although the bankrupt
has obtained his discharge. Rugely v. Robinson, 19 Ala. 404.

If a party who has taken the benefit of a State insolvent law under a
statute which gives the trustee or the creditors a right to claim future
acquisitions, subsequently takes the benefit of the bankruptcy law, his
discharge will release his future. acquisitions from the claims of those
creditors whose debts existed prior to the filing of his petition. Beach
y. Miller, 15 La. An. 601. ;

If a debtor who has obtained a discharge under a State insolvent law,
subsequently obtains a discharge under the bankruptcy law, the discharge
in bankruptcy will not affect the right of the insolvent trustee to property
acquired by inheritance after the granting thereof. Lavender v. Gosnell,
12 B, R. 282; 8. c. 43 Md. 153.

‘
716 Tur BANKRUPTCY Law.

If a surety enters into a covenant to pay the amount that may be re-
covered against the principal in a certain action, and the principal sub-
sequently becomes bankrupt, the court may allow the suit to be prosecuted
to judgment upon the entry on the docket by the plaintiff, of a stipulation
that such judgment shall not affect the defendant’s property as a lien,
or be the ground of an execution against him, and the sum so ascertained
may be recovered from the surety upon the covenant. Bond v. Gardner,
4 Binn. 269.

Although the bankrupt personally is released, yet the debt due from
the land remains undischarged, and he does not derive from the statute
any power to do or assert anything which will impair a mortgage other-
wise valid. His personal discharge does not free him from an estoppel
arising from a covenant in the mortgage. If the mortgage contains a
covenant against incumbrances, the debtor is estopped from setting up
a title acquired after his discharge under a lien existing prior to the
mortgage. Bush v. Cooper, 18 How. (Miss.) 82; s. c. 26 Miss. 599; Stewart
vy. Anderson, 10 Ala. 504.

A discharge under the bankruptcy law does not prevent the creditor
from proving his debt in a proceeding previously commenced under a
State insolvent law, and receiving a dividend from the insolvent estate.
Minot v. Thacher, 48 Mass. 348.

As a discharge extinguishes the debts, the trust under an assignment for
the benefit of creditors is thereby terminated unless it is made to appear
that the debts survive the discharge and are to be paid out of the as-
signed property. Seymour v. Street, 5 Neb. 85.

New Promise.— There is no law that requires a promise to pay a debt
discharged ‘by proceedings in bankruptcy, to be made in writing to be
valid. Therefore such a promise may be proved by parol, and when
proved is binding. Barron v. Benedict, 44 Vt. 518; Hill v. Robbins, 22
Mich. 475; s. c. 1 Mich. N. P. 305; Apperson vy. Stuart, 27 Ark. 619; Henly
vy. Lanier, 15 B. R. 280; s. c. 75 N. C. 172.

If a bankrupt promise to pay the debt in consideration of an agreement
on the part of the debtor to take no dividend from the estate, the promise
is binding if everything is fair. Kingston v. Wharton, 2 S. & R. 208.

The legal obligation of the bankrupt is by force of positive law dis-
charged, and the remedy of the creditor existing at the time the discharge
was granted, to recover his debt by suit, is barred. But the debt is not
paid by the discharge. The moral obligation of the bankrupt to pay ‘it
remains. It is due in conscience, although discharged in law, and this
moral obligation, uniting with a subsequent promise by the bankrupt to
pay the debt, gives a right of action. Dusenberry v. Hoyt, 10 B. R. 313;
s. c. 53 N. Y. 521; s. ec. 14 Abb. Pr. (N. 8S.) 132; s. c. 36 N. Y. Supr. 94;
Yates vy. Hollingsworth, 5 H. & J. 216; Maxim v. Morse, 8 Mass. 127;
Stewart v.. Reckless, 24 N. J. 427; Spooner vy. Russell, 30 Me. 454; Williams
v. Robbins, 32 Me. 181; Fletcher v. Neally, 20 N. H. 464; Herndon v. Givens,
16 Ala. 261; Blane v. Banks, 10 Rob. (La.) 115.

The promise by which a discharged debt is revived must be clear, dis-
tinct, and unequivocal. There must be an expression by the debtor of a
NEw Promise. V17

clear intention to bind himself to the payment of the debt. Allen v.
Ferguson, 9 B. R. 481; s. c. 18 Wall. 1; Fraley v. Kelly, 67 N. C. 78;
Linton v. Stanton, 4 La. An. 401; Branch Bank v. Boykin, 9 Ala. 320; in re
Hazleton, 82 Leg. Int. 13.

The new promise must be distinct, unambiguous and certain. Stern v.
Nussbaum, 47 How. Pr. 489; s. ¢. 5 Daly, 382.

The promise must be express in contradistinction to a promise implied
from an acknowledgment of the justness or existence of the debt. Yox-
theimer v. Keyser, 11 Penn, 364; Pratt v. Russell, 61 Mass. 462; Bennett
v. Everett, 3 R. I. 152; Horner v. Speed, 2 Pat. & H. 616; Porter v. Porter,
31 Me. 169.

The expression of an intention to pay the debt is not sufficient. There
must be a promise before the debtor is bound. An intention is but the
purpose a man forms in his own mind; a promise is an express undertak-
ing or agreement to carry that purpose into effect. Allen v. Ferguson, 9
B. R. 481; s. c. 18 Wall. 1; Dearing v. Moffitt, 6 Ala. 776; Stewart v. Reck-
less, 24 N. J. 427; Church v. Winkley, 73 Mass. 460; Yoxtheimer v. Keyser,
11 Penn. 364.

The expression of an intention to do right is not sufficient to revive the
debt, for what may be right depends on many circumstances. The prin-
ciple is impracticable as a rule of action to be administered by the courts.
Allen v. Ferguson, 9 B. R. 481; s. c. 18 Wall. 1.

There is no precise form of words required. The true test is, did the
party mean that he would pay the amount of the debt? If he did, and
the words used by him were susceptible of no other construction, then
they amount in law to an express promise. Evans vy. Carey, 29 Ala. 99;
Bennett v. Everett, 3 R. I. 152.

A declaration that he expects to pay as fast as he can pay in money
is the expression of a mere hope, without any words of promise or mani-
festation of the intent to contract an obligation. Bartlett v. Peck, 5 La.
An, 669.

If the words spoken amount to nothing more than loose declarations or
mere admission, or the mere expression of the obligation in foro con-
scientiae, they are insufficient. Bartlett v. Peck, 5 La. An. 669; Prewett
y. Caruthers, 20 Miss. 491; Bennett v. Everett, 3 R. I. 152.

A declaration that he is able and willing to pay the debt amounts to an
express promise to pay. : Evans v. Carey, 29 Ala. 99.

As a promise is merely evidence of the determination of the mind to
do a particular act, there is no reasonable distinction between “I will
pay” and “I intend to pay,” on the happening of a particular event.
Dearing v. Moffitt, 6 Ala. 776.

To prove a new promise it is not necessary to show that the word
“promise” was used. An agreement to pay, or any word signifying an
intent to pay, or giving assurance that he would pay, is sufficient evidence
of a new promise. Harris v. Peck, 1 R. I. 262.

The bankrupt is at liberty to make the proposition in such manner as
suits his own purposes, and the promise must be taken as it is made. If
he promises to pay the debt by giving a new note, this can not be con-
718 Tue Bankruptcy Law.

strued as a promise to pay the prior note. The promise is to make at
a future time a written agreement to pay the debt, and his liability is not
fixed until the new note is given. Porter v. Porter, 31 Me. 169.

A refusal to give a new note is not inconsistent with an express prom-
ise to pay the existing note. Underwood v. Eastman, 18 N. H. 582; Pratt
v. Russell, 61 Mass. 462. Vide Horner v. Speed, 2 Pat. & H. 616.

Partial payments on a debt are not in law a new promise to pay the debt,
nor do they constitute evidence from which a jury may infer a new prom-
ise to pay the debt. Stark v. Stinson, 23 N. H. 259; Viele v. Ogilvie, 2
Greene, 326.

The mere payment of the interest on the note does not revive the debt.
Cambridge Institution v. Littlefield, 60 Mass. 210.

A promise to settle a demand which is justly due, and wholly unpaid,
can mean nothing less than that it shall be paid. Stillwell v. Coope, 4
Denio, 225.

The new promise, like every other contract. must have the assent of
both parties. Samuel v. Cravens, 10 Ark. 380.

The fact that no time was fixed when the payment was to be made
does not affect the force of the legal obligation, for the law itself will fix
the time. Harris vy. Peck, 1 R. I. 262.

It is not necessary that the new promise shall be made by the bank-
rupt to the creditor or his authorized agent. It may be made to a third
person. Haines v. Stauffer, 18 Penn. 541; McKinley v. O’Keson, 5 Penn.
369; Evans v. Carey, 29 Ala. 99; Bennett v. Everett, 3 R. I. 152; Comfort
v. Hisenbeis, 11 Penn. 18. Contra, Underwood v. Eastman, 18 N. H. 582.

In determining whether the words amount to an express promise, the
fact that they were spoken to a third person, and not to the creditor nor
his agent, may be taken into consideration with the other facts in evi-
dence, for the sense of the words may best appear from them, and the
cause and occasion of speaking them considered together. Evans v. Carey,
29 Ala. 99; Prewett v. Caruthers, 20 Miss. 491; Horner y. Speed, 2 Pat. &
H. 616. :

A request made by the bankrupt to a third party, out of the presence
of the creditor, to indorse a note for the amount which he owed the cred-
itor, does not raise a presumption of a promise to pay the debt. Bach v.
Cohn, 3 La. An. 101.

The new promise must be an express promise, and must be absolute and
unconditional. If there is anything like a condition in the promise, it
must be removed by testimony, and placed on the footing of an absolute
undertaking, to entitle the creditor to a recovery. As if the bankrupt
should say that he would pay when he was able, the creditor must show
an ability to pay. Yates v. Hollingsworth, 5 H. & J. 216; Brown v. Col-
lier, 8 Humph. 510; Mason v. Hughart, 9 B. Mon. 480; La Tourrette v.
Price, 28 Miss. 702; Samuel v. Cravens, 10 Ark. 380; Sherman v. Hobart,
26 Vt. 60; Taylor v. Nixon, 4 Sneed, 352; Ingersoll v. Rhoades, Hill &
D. Supp. 871; Apperson vy. Stuart, 27 Ark. 619.

The ability to pay must be clearly proven. The mere opinion of wit-
nesses that a party has means sufficient wherewith to discharge the debt
NEw PRomisz. "19

ean not be regarded as sufficient evidence. The jury should be fully
satisfied, by facts proved to exist, that the debtor has property and
means which enable him to pay. Mason v. Hughart, 9 B. Mon. 480.

If the promise is to pay when he is able, the debtor may defeat +he
prima facie right established through proof that he owns property, by
showing that the payment of debts contracted honestly and in the or-
dinary course of his business, subsequent to his discharge will exhaust
his estate. Ecklar v. Galbraith, 16 A. L. Reg. 80.

If the promise is to pay out of the proceeds of certain work, the plain-
tiff must prove that the bankrupt has received the proceeds. Dearing v.
Moffitt, 6 Ala. 776. :

There is no distinction between a promise made after the filing of the
petition, but before the certificate, and one made after it. Both are
equally binding, the only consideration being the old debt. Tlornthal v.
McRae, 67 N. C. 21; Fraley v. Kelly, 67 N. C. 78; Donnell v. Swain,
8 Penn. L. J. 3938; Corliss v. Shepherd, 38 Miss. 550; Otis v. Gazlin, 31
Me. 567; Stillwell v. Coope, 4 Denio, 225. Contra, Stebbins v. Sherman,
1 Sandf. 510; Ingersoll v. Rhoades, Hill & D. Supp. 871.

If the bankrupt, after the filing of his petition, continues to deal with
a creditor whose name is not placed upon his schedule, and makes pay-
ments without directing that they shall be applied to the subsequent pur-
chases, they will be applied in their order to the first items of his account.
Hill v. Robbins, 22 Mich. 475; s. c. 1 Mich. N. P. 305.

If the action is against a firm, the new promise must be made by both
partners. Breit v. Osner, 2 W. N. 601.

The statute of limitations only commences to run from the time of the
new promise. Horner v. Speed, 2 Pat. & H. 616.

A State law requiring the new promise to be in writing is valid, al-
though it applies to a promise made before its adoption, for it prescribes
the kind of evidence necessary to establish a fact, and regulates the rem-
edy. Kingley v. Cousins, 47 Me. 91.

If there has been a new promise, the debt may be enforced, although
it was proved in the proceedings in bankruptcy. Mason v. Hughart, 9
B. Mon. 480.

The benefit of the new promise does not pass to the indorsee of the note
to whom it is subsequently indorsed, for the new promise is not nego-
tiable. Wardwell v. Foster, 31 Me. 558; White v. Cushing, 30 Me. 267;
Walbridge v. Harroon, 18 Vt. 448.

A new promise made to the payee of a negotiable note is a promise to
pay to him or order, according to its tenor, and will inure to the benefit
of a subsequent indorsee. Way v. Sperry, 60 Mass. 238; Underwood vy.
Eastman, 18 N. H. 582.

A new promise to pay a specialty debt does not revive the original debt
as a debt by specialty, but the original debt is merely a good consideration
for the new promise. Field’s Estate, 2 Rawle, 351; Graham v. Hunt, 8
B. Mon. 7,

If the debt has been revived by a new promise, an action of debt may
be maintained on a judgment. A new promise places the debt in the
420 Tus Bankruptcy Law.

same condition as it was before the discharge, and is a full and complete
answer to the discharge. Otis v. Gazlin, 31 Me. 567; Maxim v. Morse,
8 Mass. 127.

The creditor should wait until the proceedings in bankruptcy are fully
closed, for the promise must be understood as meaning only to pay so
much as may remain unpaid after exhausting all the assets, and after the
assignee has fully reported. Mason v. Hughart, 9 B. Mon. 480.

Whether the debtor has made a new promise will not be determined
upon conflicting evidence on a motion for leave to issue an execution.
Shuman v. Strauss, 10 B. R. 300; s. c. 52 N. Y. 404; s. c. 34 N. Y. Supr. 6.

When the bankrupt has promised to pay the debt after his discharge,
the creditor may bring his action upon the original demand, and reply
the new promise in avoidance of the discharge set out in the plea. The
discharge bars the debt sub modo only, and the new promise operates as
a waiver of the defense which the discharge gave. Dusenbury v. Hoyt,
10 B. R. 818; s. c. 53 N. Y. 521: s. c. 14 Abb. Pr. (N. 8S.) 182; s. @ 36 N.Y.
Supr. 94; Maxim v. Morse, 8 Mass. 127. Contra, Egbert vy. McMichael,
9 B. Mon. 44; Carson v. Osborn, 10 B. Mon. 155.

The creditor may, if he so elects, ground his action on the new promise
instead of the original debt. Horner v. Speed, 2 Pat. & H. 616.

If the declaration is based on a new promise, it need not set forth the
original consideration for the debt where a note has been given therefor.
Egbert v. McMichael, 9 B. Mon. 44.

A declaration on a conditional promise need not state in what the de-
fendant’s ability to pay consisted. Horner v. Speed, 2 Pat. & H. 616.

A conditional promise and an unconditional promise may be joined
in the same declaration. Ibid.

If the plaintiff avers an absolute and unconditional new promise, he
can not prove a conditional promise by the bankrupt to pay when he is
able. Egbert v. McMichael, 9 B. Mon. 44.

If the defendant, after a demurrer to a replication of a new promise
has been overruled, files a rejoinder, this is a waiver or withdrawal of
the demurrer, and leaves him in the same condition as he would have
been had the demurrer never been filed. Carson v. Osborn, 10 B. Mon.
155. ;

If the words are capable of being construed as a promise, it is for the
jury to determine whether the bankrupt, by the words, intended to
promise to pay the debt. Pratt v. Russell, 61 Mass. 462; Bennett v.
Everett, 3 R. I. 152.

Where the evidence is conflicting, it is for the jury to determine whether
the promise was absolute or conditional. La Tourrette v. Price, 28 Mias.
702.

If a verdict is found in favor of the plaintiff, and the cause of action
is based on the original debt instead of the new promise, the verdict will
not authorize the court to enter a judgment against the defendant. Carson
v. Osborn, 10 B. Mon. 155.

If the plaintiff avers a new promise to a plea of discharge in an action
on a judgment, and the defendant rejoins, judgment will be entered on
Piea or DISCHARGE. 21

the verdict, although the defendant moves in arrest of judgment. Maxim
y. Morse, 8 Mass. 127.

Plea of Discharge.— The State court does not lose jurisdiction of the
person of the defendant by his being adjudicated a bankrupt. A judg-
nent may be rendered against him if he does not plead his discharge.
A discharge will not avail unless it is pleaded. Manwarring v. Kouns,
85 Tex. 171; Park v. Casey, 35 Tex. 536; Fellows v. Hall, 3 McLean, 487;
Stewart v. Green, 11 Paige, 535; Freeman v. Warren, 3 Barb. Ch. 635;
Seymour v. Browning, 17 Ohio, 362; Taylor v. Renn, 8 C. L. N. 410; Horner
y. Spelman, 78 Ill. 206,

A discharge should be pleaded both at law and in equity, and can not
be taken advantage of by motion. Fellows v. Hall, 3 McLean, 281.

No time is prescribed within which a discharge must be pleaded. If
the discharge’ is pleaded in the proper order, and at the proper stage of the
proceedings, it makes no difference whether the time is long or short.
Pugh v. York, 74 N. C. 3838.

The court in its discretion may allow a plea of a discharge although a
long time has elapsed since it was obtained. Falkner v. Hunt, 76 N. C.
202.

If the defendant becomes bankrupt while the action jis pending, he
has a right to plead his discharge as soon as he obtains it. National
Bank y. Taylor, 120 Mass. 124.

If a discharge is obtained after the institution of a suit to which it would
be a bar, the defendant, on motion, will be allowed to plead it in a sup-
plemental answer. Lyon v. Isett, 34 N. Y. Supr. 41.

An application for leave to set up a discharge by a supplemental an-

swer is addressed to the discretion of the court, and will be denied when
there has been unreasonable delay in making it. Medbury v. Swan, 8
B, R, 587; s. c. 46 N. Y. 200; Barstow v. Hansen, 4 N. Y. Supr. 569; s. ¢.
9N. Y. Supr. (Hun) 333.
' Leave to file a supplemental answer setting up the discharge must be
granted unless the papers show a case in which the court may exercise
a discretion as to granting or withholding it. Holyoke v. Adams, 13 B.
R. 413; s. c. 59 N. Y. 233.

If a judgment by default constitutes a lien on the debtor’s land, and is
permitted to stand as a security for the creditor’s claim upon leave given
to the defendant to answer, a supplemental answer setting up a discharge
will not be allowed, for that would defeat the lien. Barstow v. Hansen,
4N. Y. Supr. 569; s. c. 9 N. Y. Supr. (Hun) 333.

A plea of a discharge can not defeat an action to set aside a fraudulent
conveyance instituted before the commencement of the proceedings in
bankruptcy. Phelps v. Curts, 16 B. R. 85.

If the bankrupt pleads his discharge in an action to set aside a fraudu-
lent conveyance instituted before the commencement of the proceedings
in bankruptcy, no personal judgment can be rendered against him. Ibid.

A discharge will not preclude a recovery if the bankrupt promised to
pay the debt after the granting thereof. Classen v. Schoeneman, 16
B. R. 98.

46
722 Tue Bankruptcy Law.

A discharge is a matter which a court may allow to be set up by an
amendment of the proceedings. Richards v. Nixon, 20 Penn. 19.

If a discharge is obtained after an answer in equity has been filed,
special leave should be given to the defendant that he may plead it.
Fellows v. Hall, 3 MeLean, 281.

When a discharge is obtained after the pleadings are closed in a suit
in equity, it is usually pleaded as a defense at the very next term hap-
pening after the last continuance. If a long delay afterward intervenes,
it can not be pleaded unless a good excuse is given for the delay and on
suitable terms. Doggett vy. Emerson, 1 W. & M. 195; Smith v. Babcock,
2 W. & M. 246.

A discharge granted after the commencement of the suit should be
pleaded in bar of its further maintenance, and not in bar generally.
Kunsler v. Kohaus, 5 Hill, 317.

If the discharge is obtained after pleas have been filed, it should be
pleaded puis darrein continuance not in bar of the action, but to the
further prosecution of the suit, and can not be given in evidence under
the other pleas. Corpening v. Grinnell, 10 Ired. 15.

If there has been no personal service of the writ on the defendant,
and the plea is filed at the first term at which he appears, it need not be
pleaded in bar of the further maintenance of the action, for when the
matter of the plea in bar of the further maintenance is, in the first in-
stance, and before any other plea filed, pleaded in bar, it need not be al-
leged to be puis darrein continuance. Cutter v. Folsom, 17 N. H. 189.

A plea puis darrein continuance need not state the time when the de-
fendant pleads. Keene vy. Mould, 16 Ohio, 12.

If.a plea of a discharge in bankruptcy is put in as a plea puis darrein
continuance, the court may set it aside when it is manifestly fraudulent
and against the justice of the case. Zollar v. Janvrin, 49 N. H. 114.

A plea of a discharge must set forth a copy of the discharge. Stoll vr.
Wilson, 14 B. R. 571; s. c. 88 N. J. 198.

A complaint setting up a discharge is sufficient, although it does not
set forth a copy thereof. Hayes v. Ford, 15 B. R. 569.

A plea of a discharge in bankruptcy is sufficient if it sets out a dis-
charge duly authenticated. Lathrop y. Stuart, 5 McLean, 167; White
v. How., 3 McLean, 291; McNeil vy. Knott, 11 Ga. 142; Rowan v. Holcomb,
16 Ohio, 463; Downer v. Chamberlin, 21 Vt. 414; Reed vy. Vaughn, 10
Mo. 447; Morrison y. Woolson, 23 N. H. 11; Preston v. Simons, 1 Rich.
262; Keene v. Mould, 16 Ohio, 12.

It is not necessary that the plea shall set out the proceedings at large.
If the court appears to have had jurisdiction and to hare granted the
discharge, any mere error in the course of its proceedings would not avail
to defeat the discharge. If the proceedings were set forth in detail,
most of the averments could not be traversed, as that would only lead to
an immaterial issue. It is, therefore, only necessary to set forth enough
to show that the court had jurisdiction of the case and granted the dis-
charge. Johnson y. Ball, 15 N. H. 407: Morrison v. Woolson, 23 N. H. 11;
McCormick y. Pickering, 4 N. Y. 276: Price y, Bray, 21 N. J. 13.
Pura or DIscHARGE. 723

The facts to be stated distinctly in a plea of discharge in voluntary
bankruptcy, for the purpose of showing the jurisdiction of the district
court to grant the discharge, are: 1st. The residence of the defendant,
or the place where he carried on business. 2d. The existence of debts to
the amount of $300. 3d. That the defendant presented a petition to the
district court where he resided or carried on business, and that the peti-
tion contains what the act required that it should contain. If the plea
shows these facts the presumption is thenceforward in favor of the
regularity of the proceedings. McCormick v. Pickering, 4 N. Y. 276.

The plea should set forth what court entertained the case and granted
the discharge. Morrison v. Woolson, 29 N. H. 510.

It is not sufficient to aver that the defendant was a bankrupt, but the
plea must aver that he owed provable debts. Coates v. Simmons, 4 Barb.
403.

The plea must plead the discharge, and not merely a decree granting a
discharge. Hayes v. Flowers, 25 Miss. 169. Contra, Viele v. Blanchard,
4 Greene, 299; Magoon v. Warfield, 3 Greene (Iowa), 293.

A plea of the commencement of proceedings in bankruptcy which does
not set forth a discharge is bad. Atkinson y. Fortinberry, 15 Miss. 302.

Facts which are necessary to confer jurisdiction must be positively
stated. Hence the plea must allege that the defendant owed debts to the
requisite amount, not that he filed a petition setting forth that he owed
such debts. Varnum v. Wheeler, 1 Denio, 331.

The plea must aver that the defendant resided or carried on business in
the district where the petition was filed at the time of the filing thereof.
Johnson v. Ball, 15 N. H. 407; Loring v. Kendall, 67 Mass. 305.

The plea must allege that the defendant applied to the district court
by petition setting forth the list of ‘his creditors and inventory of his
assets as required by law. Cutter v. Folsom, 17 N. H. 1389.

The plea of a discharge in involuntary bankruptcy need not aver the
existence of the facts upon which the creditors were authorized to file the
petition. An averment in general terms that the defendant had become
a bankrupt is sufficient. Stephens v. Ely, 6 Hill, 607.

The plea must allege that the discharge was granted by the court and
not the judge. Sackett v. Andross, 5 Hill, 327.

It is not necessary to set out all the steps which were taken in obtaining
the discharge, but it is necessary to show that the court acquired juris-
diction to grant it. It is not enough to say in general terms that the
court had jurisdiction, but the facts on which jurisdiction depends must
be specially set forth. Sackett v. Andross, 5 Hill, 327; Stow v. Parks,
1 Chand. 60; Stoll v. Wilson, 14 B. R. 571; s. ¢c. 88 N. J. 198.

The plea need not aver that the court granting the discharge had juris-
diction to entertain the proceedings. Lathrop v. Stuart, 5 McLean, 167.

No direct and formal admission of the cause of action is necessary in
a plea of a discharge. It is enough that the cause of action is not denied.
for not being denied it is in law admitted. A plea which says that “ the
Supposed cause of action, if any there was,” is sufficient. Morrison v.
Woolson, 23 N. H. 11.
924 Tur Bankruptcy Law.

The plea must aver that the claim in suit was a provable debt. Hayes
v. Flowers, 25 Miss. 169; Sackett v. Andross, 5 Hill, 327.

If the plea avers that the debt which is the cause of action was due
and owing at the time of the commencement of the proceedings in bank-
ruptcy, it need not aver that the debt was provable. Morrison v. Woolson,
23 N. H. 11.

The plea need not allege that the debt was provable where the debt
alleged in the declaration is prima facie provable. If there is any pe-
euliarity which exempts the debt from the operation of the discharge, the
plaintiff must set it forth in his replication. Cutter v. Folsom, 17 N. H.
139.

The plea of a discharge in an action upon a bail bond should aver the
date of the final dividend of the bankrupt’s assets, and that the liability
was fixed before that time. Houston v. State, 34 Tex. 542.

When the plea consists of matter of fact as well as matter of record,
it should conclude with an ordinary verification. Price v. Bray, 21 N. J.
18; Kirby v. Garrison, 21 N. J. 176; Downer v. Chamberlin, 21 Vt. 414;
Preston v. Simons, 1 Rich. 262.

The defendant may conform to the practice of the State court, and
plead the general issue, and give notice of his discharge where that mode
of pleading is allowed. Campbell v. Perkins, 8 N. Y. 480; s. c. 5 Barb.
699.

The plea of a discharge in bankruptcy introduces new matter in con-
fession and avoidance of the plaintiff's claim, and ought to conclude with
a verification. The plaintiff can then reply, and if the defendant thinks
the replication sets up matter inadmissible under the bankruptcy act, he
can‘raise the question by a demurrer. Mayer v. Gimbel, 30 Leg. Int. 5;
Stoll v. Wilson, 14 B. R. 571; s. c. 88 N. J. 198.

A garnishee can not plead the discharge of the defendant. Frazier v.
Banks, 11 La. An. 31.

If the bankrupt joins with his sureties in pleading his discharge, if the
plea is insufficient for them it is bad for all. Dyer vy. Cleveland, 18 Vt.
241; Hall v. Fowler, 6 Hill, 630.

A defective plea of a discharge in bankruptcy may be amended. Stoll
vy. Wilson, 14 B. R. 571; s. c. 38_N. J. 198.

A. defective plea may be deemed to be cured by a replication and a
verdict. Dresser y. Brooks, 3 Barb. 429.

If the bankrupt is sued jointly with others upon a joint contract, and
pleads his discharge, the plaintiff may enter a nolle prosequi as to him,
and prosecute the suit against the others. Coburn v. Ware, 25 Me. 330.

Where the discharge is obtained before the action is commenced, the
plaintiff can not discontinue without the payment of costs. Camp Vv.
Gifford, 7 Hill, 169.

If the defendant pleads his discharge to a pending action, the plaintiff,
under the laws of Massachusetts, should be allowed to discontinue solely
on the grounds of the discharge; or if the defendant insists on going to
trial, he should be required to waive his discharge and to proceed on his
other grounds of defense, Geward v. Dunbar, 58 Mass. 500.
DEMURRER. 725

Demurrer.—If the plea puis darrein continuance is filed, with leave
of the court, it will not be held bad on demurrer, although the matter
of the plea arose before the last continuance. Keene v. Mould, 16 Ohio,
12.

When a demurrer to a plea of a discharge is sustained, the judgment
should be respondeat ouster. Hayes v. Flowers, 25 Miss. 169:

The suggestion of the pendency of the proceedings in bankruptcy sus-
pends the cause until the final action of the bankruptcy court granting or
denying a final discharge. If a demurrer to a plea of a discharge subse-
quently entered is sustained, the discharge is virtually out of the case,
and the cause again stands suspended upon the suggestion of pending
proceedings in bankruptcy, and the entry of a personal judgment against
the bankrupt is irregular. Gibson v. Green, 45 Miss. 209.

Replication.— A replication admits the genuineness of the discharge.
Payne v. Able, 4 B. R. 220; s. c. 7 Bush, 344.

If the debt is excepted from the operation of the discharge, the better
practice is to declare as if there were no anticipation of a plea of a dis-
charge, and when the plea is put in, to reply to the facts to avoid its
effect. Jacobson v. Horne, 52 Miss. 185; Brown vy. Broach, 52 Miss. 536.

If the plaintiff seeks to avoid the discharge, on the ground that the
debt sued upon was of a fiduciary character, he should allege that fact
in his replication to the plea. Stow v. Parks, 1 Chand. 60; Rowan y. Hol-
comb, 16 Ohio, 468; Dick v. Powell, 2 Swan, 632; Cutter v. Folsom, 17
N. H. 189; McCabe v. Cooney, 2 Sandf. Ch. 314. Contra, Sackett v. An-
dross, 5 Hill, 8327; Maples v. Burnside, 1 Denio, 332; Frost v. Tibbetts,
80 Me. 188; Sorden v. Gatewood, 1 Ind. 107; Bivens v. Newcomb, 2 Ind. 98.

If the plea omits to aver the filing of a petition in bankruptcy, the defect
is waived by a replication. Price v. Bray, 21 N. J. 13.

When the plaintiff replies that the district court had no jurisdiction to
grant the discharge, because the bankrupt did not at the time reside or
carry on business within the district, and issue is joined thereon, parol
evidence is not admissible to contradict the record, if that shows that the
court had jurisdiction. Lathrop v. Stewart, 6 McLean, 6380; Reed v.
Vaughan, 15 Mo. 137. Vide Stiles v. Lay, 9 Ala. 795.

The plaintiff can not aver that the defendant did not become a bank-
Trupt, or that he did not comply with all the requisites of the statute, or
that he did not obtain a discharge. He may reply nul tiel record; or if
he can not safely deny the record, he may plead tliat the cause of action
has accrued since the commencement of the proceedings in bankruptcy,
ora new promise. Price v. Bray, 21 N. J. 13.

If there is any matter which renders the discharge invalid, or takes the
case out of its operation, the plaintiff may set it forth in the replication.
Johnson y. Ball, 15 N. H. 407.

A replication in confession and avoidance admits every fact substan-
tially set forth in the plea in bar; and if the discharge is substantially
set forth in the plea, there can not, after a verdict, be a judgment non
obstante veredicto, or a repleader. Jenkins v. Stanley, 10 Mass. 226.
726 Tue Bankruptcy Law.

A replication which sets forth several distinct allegations, each of
which standing alone would be a sufficient answer to the plea, is bad,
for duplicity. McNulty v. Frame, 1 Sandf. 128; Downer v. Rowell, 26
Vt. 397.

Evidence.— Parol testimony is not: admissible ta prove a discharge
without sufficient excuse for the nonproduction of the certificate, for the
certificate is the best evidence of the discharge. Regan v. Regan, 72
N. C. 195.

The validity of a discharge will not be determined on affidavits, but
the allegations of the parties must be tried in a more formal way. Bangs
vy. Strong, 1 Denio, 619.

A discrepancy of dates in a certificate of discharge is no reason for
excluding the record, where that is obviously a clerical error and time is
immaterial. Pennell v. Percival, 18 Penn. 197.

It is not necessary to prove the proceedings in the district court pre-
liminary to the granting of the discharge, for the certificate is conclusive.
Thompson v. Wiley, 34 Me. 194.

The certificate itself is competent evidence of the fact of bankruptcy,
without the production of the whole record. Boas v. Hetzel, 3 Penn. 298;
Morse v. Cloyes, 11 Barb. 100; Pennell v. Percival, 13 Penn. 197; Strader
v. Lloyd, 1 West. L. J. 3896.

The certificate of discharge is admissible in evidence, although the plain-
tiff produces a full record of the proceedings, which does not contain any
discharge, for the clerk may have neglected to make the entry of the
final discharge. King v. Dietz, 12 Penn. 156.

If the certificate of discharge is to be used in another State, it should
be authenticated by the seal of the court, the attestation of the clerk, and
the certificate of the judge that the attestation is in due form. Tappan v.
Norvell, 3 Sneed, 570.

If the clerk merely signs the certificate, without stating that the seal
is the seal of the court, parol evidence is admissible to prove that fact.
Mason y. Lawrason, 1 Cranch C. C. 190.

The authentication by the judge must certify that the clerk at the time
of the certificate was the clerk of the district court, as well as that the
exemplification is in due form of law. Pennell v. Percival, 13 Penn. 197.

A certified copy of a discharge granted by a district court in another
State is not admissible in evidence without an authentication of the clerk’s
certificate by the judge. Dorsey v. Maury, 18 Miss. 298; Heard vy. Patton,
27 La. An. 542.

A copy of the entire and full record of the proceedings is competent
evidence of the discharge. The law prescribes no particular form in
which the certificate of the clerk shall be made, and the part of the rec-
ord not absolutely required is only surplusage. Tompkins v. Bennett, 3
Tex. 36.

If a copy of the discharge is produced, it will be presumed that the
notice by publication was duly given. Jones v. Knox, 51 Ala. 367.

If the replication merely denies that the discharge was granted in man-
ner and form as alleged in the plea, the defendant, upon the production
PRACTICE IN APPELLATE TRIBUNALS. 29

of a duly certified copy thereof, is entitled to a verdict, and neither the
judge nor the jury can pass upon or decide as to the effect to be given
to it. Dresser v. Brooks, 3 Barb. 429.

An objection that the clerk did not certify that he had compared the
copy with the original, and that it was a correct transcript therefrom,
and of the whole original, and that the seal was not impressed on wax,
wafer, or other substance, if overruled at the trial, may be obviated on a
motion for a new trial by the production of a copy duly authenticated in
the precise form required by the objection. Ibid.

A duly certified copy of a discharge is admissible in evidence, in an
action to recover a debt, although the creditor was not notified of the
proceedings in bankruptcy, for the court in the absence of proof can not
presume that it does not operate to discharge the debt. Thornburgh vy.
Madren, 33 Iowa, 380.

The plea of bankruptcy must be supported by proper evidence. Owens
v. Grimsley, 44 Ala. 359.

The production of a certificate of discharge will not authorize the court
to dismiss the suit. This plea in bar is not different from any other plea.
The fact of discharge is a matter to go to the jury, just like any other fact.
Austin v. Markham, 10 B. R. 548; s. c. 44 Ga. 161.

The burden of maintaining that the debt was provable, is on the bank-
rupt. If it does not clearly appear when the petition was filed, that fact
may be left to the jury. Clement v. Hayden, 4 Penn. 138.

When the discharge is given in evidence without being pleaded, juris-
diction to grant it is presumed until the contrary appears. Rucknam v.
Cowell, 1 N. Y. 505.

Practice in Appellate Tribunals.— If a party in whose favor judgment
was rendered in the subordinate court is declared bankrupt, and obtains
a discharge before the judgment is reversed in the appellate court, a
decree may be entered upon the reversal, that no execution shall issue
upon the judgment without a previous order to that effect made by the
subordinate court, after reasonable notice to the party to appear and
show cause, if any he can, against it. Exchange Bank v. Knox, 19 Gratt.
789,

When a party against whom a judgment has been rendered, takes an
appeal, and gives bond with surety to pay such judgment as may be en-
tered in the appellate court, where the case is brought up for a new trial
before a special jury, and after appeal is taken is adjudged a bankrupt,
and duly obtains a discharge, he may plead such discharge in the appel-
late court, and the suit will not be allowed to proceed to judgment to
bind the surety. The contract of the surety was to pay the judgment
that might be entered. But as no judgment could be rendered against
his principal, no liability attached to him. He complied with the con-
tract, and his liability was terminated. Odell v. Wootten, 4 B. R. 183;
8. ¢. 88 Ga. 225.

An appellate court can not entertain a petition to set aside a judgmeut
rendered by it after the granting of the discharge in bankruptcy. If it
were to entertain it, the opposite party would have the right to controvert
728 Tur Bankruptcy Law.

the facts stated therein. This might result in issues of fact and of law
which would constitute a new lawsuit. None but a court with original
jurisdiction could try and determine this issue. Riggs v. White, 4 Heisk,
503.

The bankruptcy of the plaintiff or defendant, after the judgment or
decree of an inferior court, can not be made available in the appellate
court by a plea in abatement, although the bankruptcy may have oc-
curred and the discharge have been granted before the filing of the record
for writ of error. Longley v. Swayne, 4 Heisk. 506, note. :

A certificate of discharge is a’ bar to further proceedings in an appellate
court to obtain a reversal of a judgment rendered in favor of the bank-
rupt, who is defendant in the case. Fox v. Weed, 21 La. An. 58.

If a judgment on which an appeal is pending is proved, the appellate
court may order that the appellant be discharged therefrom. Haggerty
vy. Morrison, 59 Mo. 324.

The appellate court, after a discharge, can render no judgment in a
case except that of dismissal. Viosca v. Weed, 22 La. An. 218.

The suggestion of the discharge of the defendant while his appeal is
pending, can have no effect in the appellate court. The remedy is by a
motion for a perpetual stay of execution. Cornell v. Dakin, 38 N. Y. 2538.

If a discharge is obtained after rendition of the judgment in the subor-
dinate court, the appellate court may in its discretion reverse the judg-
ment pro forma, in order to enable the defendant to plead his discharge.
Bank v. Onion, 16 Vt. 470.

If the defendant against whom a judgment has been rendered, obtains
a discharge between the argument of the cause in the appellate court, and
the decision affirming the judgment, the appellate court on application
will order a perpetual stay of execution. Parks v. Goodwin, 1 Mich. 35.

Where the party against whom a judgment has been rendered, neg-
lects to inform his attorney that he has obtained a discharge, because
he supposes that his discharge is a sufficient protection, and the attorney
brings the case to a hearing in the appellate court without setting up the
discharge, the appellate court on motion will grant a perpetual stay of
execution. Bostwick v. Dodge, 2 Doug. 331.

If on appeal the verdict is set aside, the defendant may plead his dis-
charge when the case is remanded to the subordinate court. Minot v.
Brickett, 49 Mass. 560.

A motion to discontinue without costs will be granted, although the
defendant waives the benefit of his discharge. Sandford v. Sinclair, 6
Hill, 248.

The plaintiff in error may discontinue his suit without costs, if the
defendant in error becomes bankrupt after the joinder in error. Labron
vy. Woram, 5 Hill, 378.

No costs will be allowed to the plaintiff in review, under the laws of
Maine, where the reversal of the judgment is obtained by pleading a dis-
chargé obtained after the rendition of the judgment. Foster v. Hinckley,
40 Me. 54.
WuEN DiscHarces REVOKED. 929

When judgment has been rendered against the plaintiff, he can not
have leave to discontinue without costs on the bankruptcy of the defend-
ant, although a writ of error is pending. He can only discontinue on
the reversal of the judgment. Sandford vy. Sinclair, 6 Hill, 248.

Act oF 1898, Cu. 3, § 15. Discharges, when Revoked.— (a)
The judge may, upon the application of parties in interest who have
not been guilty of undue laches, filed at any time within one year
after a discharge shall have been granted, revoke it upon a trial if
it shall be made to appear that it was obtained through the fraud
of the bankrupt, and that the knowledge of the fraud has come to
the petitioners since the granting of the discharge, and that the
actual facts did not warrant the discharge.

Act oF 1867, § 5120. Any creditor of a bankrupt, whose debt was
proved or provable against the estate in bankruptcy, who desires to
contest the validity of the discharge on the ground that it was frand-
ulently obtained, may, at any time within two years after the date
thereof, apply to the court which granted it to annul the same.
The application shall be in writing, and shall specify which, in
particular, of the several acts mentioned in section fifty-one hundred
and ten it is intended to prove against the bankrupt, and set forth
the grounds of avoidance; and no evidence shall be admitted as to
any other of such acts; but the application shall be subject to amend-
ment at the discretion of the court. The court shall cause reasonable
notice of the application to be given to the bankrupt, and order him
to appear and answer the same, within such time as to the court
shall seem proper. If, upon the hearing of the parties, the court
finds that the fraudulent acts, or any of them, set forth by the cred-
itor against the bankrupt, are proved, and that the oreditor
had no knowledge of the same until after the granting of the
discharge, judgment shall be given in favor of the creditor, and the
discharge of the bankrupt shall be annulled. But if the court finds
that the fraudulent acts and all of them so set forth are not proved,
or that they were known to the creditor before the granting of the
discharge, judgment shall be rendered in favor of the bankrupt, and
the validity of his discharge shall not be affected by the proceedings.

Statute revised — March 2, 1867, ch. 176, § 34, 14 Stat. 533. Prior Stat-
utes —April 4, 1800, ch. 19, § 34, 2 Stat. 30; Aug. 19, 1841, ch. 9, § 4, 5
Btat. 443.

There can be no legal fraud in a bankrupt’s procuring an adjudication
on involuntary proceedings unless it be followed by a discharge that
730 THe Bankruptcy Law.

could not be had on voluntary proceedings. In re E. L. Matot & Co., 16
B. R. 485.

Discharge obtained by fraud will be vacated. A decree annulling a
discharge can not be set aside except upon due notice to the parties to be
affected thereby. In re Augenstein, 16 B. R. 252.

Discharge can not be impeached collaterally for fraud in preventing
notice to creditors of pendency of proceedings, nor for the fact that the
bankrupt, before proceedings in bankruptcy commenced, fraudulently re-
moved his property out »f the jurisdiction with intent to defraud’ his
creditors. Howland y. Carson, 16 B. R. 372.

Ignorance of fact that a discharge has been granted, no excuse for
delay in making ‘an application to set it aside. In re Bucbstein, 17 B.
R. 1.

Where proceedings for review are not taken within the time prescribed,
and the bankrupt has in the meantime acted upon his discharge, it will
not be set aside for purpose of having a trial upon specifications filed in
opposition to the discharge which had been overlooked. Ibid.

District court which granted a discharge alone has jurisdiction of a
proceeding to annul it. Nicholas v. Murray, 18 B. R. 469.

The authority to set aside and annul a discharge in bankruptcy con-
ferred upon the Federal courts by this section is incompatible with the
exercise of the same power by a State court; and the former is para-
mount. <A discharge duly granted, when pleaded in bar to the further
maintenance of an action for a prior indebtedness, can not be impeached
in a State court, for any cause which would have prevented the granting
of it under section 5110, or been sufficient ground for annulling it under
this section. Proceedings in bankruptcy are statutory proceedings. The
powers exercised and the remedies provided in bankruptcy are given by
statute. The impeaching tribunal is specified, and this designation, ac-
cording to well-established principles of interpretation, forms a part of the
remedy, and excludes all others. The authority of Congress over the
subject of bankruptcies being paramount to State authority, where it has
provided a mode of dealing with a bankrupt’s estate, that mode only can
be pursued; and it would be an infringement of the paramount law, if
State courts should adopt another and a different mode. There is no
distinction between actions brought before the debtor petitions to be
adjudged a bankrupt, and those brought afterward. The authority of
Congress over the subject-matter is the same in both cases. Corey V.
Ripley, 4 B. R. 503; s. c. 57 Me. 69; Parker v. Atwood, 52 N. H. 181;
Oates v. Parish, 47 Ala. 157; Ocean National Bank v. Olcott, 46 N. Y. 12;
Way v. Howe, 4 B. R. 677; s. c. 108 Mass. 502; Alston v. Robinett, 9
B. R. 74; s. ec. 87 Tex. 56; Hudson v. Bingham, 8 B. R. 494; s. ¢. 6 L.
T. B. 826; s. c. 12 A. L. Reg. 637; Dusenbury v. Hoyt, 10 B. R. 313;
14 Abb. Pr. (N. S.) 132; s. c. 538 N. Y. 521; s. c. 36 N. Y. Supr. 94; Reed
v. Bullington, 11 B. R. 408; s. c. 49 Miss. 223; Stephens v. Brown, 10 B.
R. 568; s. c. 49 Miss. 597; Smith v. Ramsey, 15 B. R. 447; s. c. 27 Ohio
St. 339; Seymour v. Street, 5 Neb. 85. Contra, Perkins v. Gay, 3 B. R.
WHEN DIscHAaRGES REVOKED. 731

772; 8 c« 1 L. T. B. 221; s.c 2 C0, L. N. 279; s. c. 18 Pitts. L. J. 98;
Beardsley v. Hall, 86 Conn. 270,

A discharge can not be impeached in a State court on the ground that
the name of the creditor was fraudulently omitted from the schedules
and he had no notice of the proceedings. Black y. Blazo, 13 B. R. 195;
s, c, 117 Mass. 17; Rayl v. Lapham, 15 B. R. 508; s. c. 27 Ohio St. 452;
Milhous v. Aicardi, 51 Ala. 594. Contra, Barnes y. Moore, 2 B. R. 573;
s,c.2 L. T. B. 92; Batchelder vy. Low, 8 B. R. 571; s. c. 43 Vt. 662.

The circuit court has no jurisdiction to annul a discharge for frauds
upon the statute, which would have prevented the bankrupt from receiving
it. The district court alone has the power to inquire into such frauds.
Commercial Bank vy. Buckner,.20 How. 108.

The bankruptcy court has the same inherent power as all other courts
to recall its own decrees, or to vary or annul them, as justice may re-
quire. All courts claim and exercise this power when it is the only
remedy for the party aggrieved. When a sudden and overpowering
accident prevents the attendance of the creditor’s counsel at the hearing,
the court will reopen the decree granting the discharge. The decree,
however, will orly be opened upon good cause shown, and for a. trial
upon the merits, and not upon any mere technical matter. In re Dupee,
6 B. R. 89; Thomas v. Hunter, 3 McLean, 297.

A suit to set aside a discharge of a bankrupt must be brought within
two years from the time it was granted, although the creditor did not
discover the cause therefor until a long time afterward, because the
bankrupt had fraudulently concealed it. Pickett v. McGavick, 14 B. R.
236.

The certiticate is, prima facie, conclusive as to the validity of the dis-
charge, subject, however, to be impeached for fraud, if any was per-
petrated in obtaining it. Gupton vy. Connor, 11 Humph. 287.

The specifications must be precise and definite. In re McIntire, 1 B. R.
436; s. c. 2 Ben. 345; in re Rainsford, 5 B. R. 381; Stewart v. Hargrove,
23 Ala. 429; Chadwick v. Starrett, 27 Me. 188; Tompkins v. Bennett, 3
Tex. 36; Lathrop v. Stewart, 6 McLean, 630; Drake v. Jones, 3 Ala. 638;
Chambers v. Neal, 13 B. Mon. 256; Rand v. Upham, 22 N. H. 39; Shelton
v. Pease, 10 Mo. 473; Hazard v. Boykin, 8 Rob. (La.) 253.

The creditor can not contest the discharge on any ground not stated
in the specification. Ashley v. Robinson, 29 Ala, 112.

The creditor may rely upon certain grounds, although other ‘creditors
relied on the same acts as a ground of opposition to the granting of the
discharge. Beekman y. Wilson, 50 Mass. 434.

The decision on the specifications in opposition to the discharge is con-
clusive, although the creditor presents a different claim. Wales v. Lyon,
2 Mich. 276.

A creditor who has opposed the granting of the discharge may im-
Peach it for other and further instances of fraud. The estoppel is
limited to the specifications that were passed upon. Downer v. Rowell,
25 Vt. 336.
732 Tur Banxkruptcy Law.

Under a specification of a judgment for $183.81, a judgment for $122.81
can not be given in evidence. Ashley v. Robinson, 29 Ala. 112.

If the bankrupt has willfully made a false oath by omitting the name
of a creditor from his schedule, the discharge may be set aside upon
the application of a creditor who had no knowledge of the act until after
the granting of the discharge. In re Chas. K. Herrick, 7 B. R. 341.

Conveyances made by the bankrupt, and alleged to be fraudulent, can
not be shown in evidence unless charged in the specifications, except so far
as they may be used to show the intent of certain acts which are speci-
fied. Tenney v. Collins, 4 B. R. 477; s. ¢. 1 Dillon, 66.

The wife of a bankrupt can not be made a witness for or against her
husband on a motion to set aside a discharge. Tenney v. Collins, 4 B. R.
477; 3. c. 1 Dillon, 66, note; in re Moritz Augenstein, 2 McArthur, 322,

The dying declarations of an alleged fraudulent grantee are not com-
petent evidence against the bankrupt. In re A. P. Marionneaux, 13 B. R.
222; s. c. 1 Woods, 37.

The conspiracy must be established. before the declarations of an al-
leged conspirator are competent evidence against the bankrupt. Ibid.

A decree annulling a discharge can not be set aside without an applica-
tion therefor and due notice thereof to the parties affected thereby. In
re Moritz Augenstein, 2 McArthur, 322.
TITLE XI.
PARTNERSHIPS AND CORPORATIONS.

Act oF 1898, Cu. 3, Sno. 5. Partners.— (a) A partnership, dur-
ing the continuation of the partnership business, or after its disso-
lution and ‘before the final settlement thereof, may be adjudged a
bankrupt.

(b) The creditors of the partnership shall appoint the trustee; in
other respects sd far as possible the estate shall be administered as
herein provided for other estates.

(c) The court of bankruptcy which has jurisdiction of one of the
partners may have jurisdiction of all the partners and of the ad-
ministration of the partnership and individual property.

(d) The trnstee shall keep separate accounts of the partnership
property and of the property belonging to the individual partners.

(e) The expenses shall be paid from the partnership property and
the individual property in such proportions as the court shall deter-
mine.

(f) The net proceeds of the partnership property shall be appro-
priated to the payment of the partnership debts, and the net proceeds
of the individual estate of each partner to the payment of his indi-
vidual debts. Should any surplus remain of the property of any
partner after paying his individual debts, such surplus shall be added
to the partnership assets and be applied to the payment of the part-
nership debts. Should any surplus of the partnership property re-
main after paying the partnership debts, such surplus shall be added
to the assets of the individual partners in the proportion of their
respective interests in the partnership.

(g) The court may permit the proof of the claim of the partner-
ship estate against the individual estates, and vice versa, and may
marshal the assets of the partnership estate and individual estates
so as to prevent preferences and secure the equitable distribution of
the property of the several estates.

(h) In the event of one or more but not all of the members of
& partnership ‘being adjudged bankrupt, the partnership property
134 Tue Bankruptcy Law.

shall not be administered in bankruptcy, unless by consent of the
partner or partners not adjudged bankrupt; but such partner or
partners not adjudged bankrupt shall settle the partnership business
as expeditiously as its nature will permit, and account for the interest
of the partner or partners adjudged bankrupt.

Act oF 1867, § 5121. Where two or more persons who are part-
ners in trade are adjudged bankrupt, either on the petition of such
partners, or of any one of them, or on the petition of any creditor
of the partners, a warrant shall issue, in the manner provided by
this Title, upon which all the joint stock and property of the co-
partnership, and also all the separate estate of each of the partners,
shall be taken, excepting such parts thereof as are hereinbefore ex-
cepted. All the creditors of the company, and the separate creditors
of each partner, may prove their respective debts. The assignee
shall be chosen by the creditors of the company. He ,shall keep
separate accounts of the joint stock or property of the copartnership,
and of the separate estate of each member thereof, and after deduct-
ing out of the whole amount received by the assignee, the whole
of the expenses and disbursements, the net proceeds of the joint
stock shall be appropriated to pay the creditors of the copartnership,
and the net proceeds of the separate estate of each partner shall be
appropriated to pay his separate creditors. If there is any balance
of the separate estate of any partner, after the payment of his sepa-
rate debts, such balance shall be added to the joint stock for the
payment of the joint creditors; and if there is any balance of the
joint stock after payment of the joint debts, such balance shall be
appropriated to and divided among the separate estates of the several
partners according to their respective right and interest therein, and
as it would have been if the partnership had been dissolved without
any bankruptcy; and the sum so appropriated to the separate estate
of each partner shall be applied to the payment of his separate debts.
The certificate of discharge shall be granted or refused to each part-
ner as the same would or ought to be if the proceedings had been
against him alone. In all other respects the proceedings against part-
ners shall be conducted in the like manner as if they had been com-
menced and prosecuted against one person alone. If such copartners
reside in different districts, that court in which the petition is first
filed shall retain exclusive jurisdiction over the case.

Statute revised — March 2, 1867, ch. 176, § 36, 14 Stat. 534. Prior
Statute — Aug. 19, 1841, ch. 9, § 14, 5 Stat. 448. :
PARTNERS. 735

Paying individual debt with partnership property, although both part-
ners liable for such debt, is an act of bankruptcy by a partnership. In
re E. Ll. Matot & Co., 16 B. R. 485.

If on dissolution of a copartnership, the retiring partner takes out a
portion of the assets of the firm for his individual use, he must do so
without impairing the fund to which the creditors have the right in
equity to look for payment, and it must be made clearly to appear that
such remaining fund is ample. In re Sauthoff & Olson, 16 B. R. 181.

Agreement by member of a firm to consent and procure the consent
of the partners to an adjudication against the firm, is valid, and the con-
sideration therefor may be recovered. Sanford v. Huxford, 17 B. R. 385.

A partner will not be allowed to put his firm, whose affairs were settled
years ago, into bankruptcy, on the allegation that it is insolvent by reason
of petitioner's own fraud in effecting a composition with its creditors.
In re Hamlin, Hale & Co., 16 B. R. 522.

Where the petitioning partner has obtained, without consideration,
assignments to his father of a large numoer of the pretended claims
against his firm: Held, that this conduct, under circumstances of the
case, is a fraud on the bankruptcy law. Ibid.

An adjudication against a firm obtained by one member, in voluntary
petition, without giving notice, as required by Rule XVIII (Law of 1867),
was void. Jn re Temple, 17 B. R. 345.

A partnership dissolved by death of one member not to be treated as
still subsisting subject to bankruptcy law, but the survivor being ad-
judged bankrupt individually and as such surviving partner, his as-
signee was entitled to possession of firm assets. Ibid.

Court has jurisdiction, on voluntary petition for adjudication of a
firta, to entertain and determine the question what persons in fact con-
stitute firm, and same is valid until set aside or reversed. In re Griffith
& Wundrum, 18 B. R. 510.

After a delay of six years before making application to set aside such
an adjudication because there was another partner than alleged in peti-
tion, such application should be denied on ground that rights and in-
terests of others had grown up under it and been adapted to it. Ibid.

Adjudication of a copartnership must be made in one proceeding, under
one petition; and adjudication of one member in one proceeding and of
the other members, as members of another firm, in another, is not an ad-
Judication of the copartnership, and the bankruptcy court will not thereby
acquire jurisdiction over estate of the copartnership. In re Plumb, 17
B. R. 76.

Where requisite number of creditors join in petition against a firm,
it is not necessary that they should all be creditors of the firm. In re E. L.
Matot & Co., 16 B. R. 485.

From the schedules annexed to a petition filed by one partner of a
dissolved firm against his copartners for an adjudication of the firm it
appeared that the firm had been dissolved by judicial decree, and all its
assets transferred to a receiver, and that there were firm debts. Held,

‘
736 Tue Bankruptcy Law.

that the firm could not be adjudicated. In re Hopkins v. Carpenter et al.,
18 B. R. 339.

A sale of his interest for a valuable consideration by one partner to the
other, where the firm is insolvent, does not of itself constitute fraud.
Russell, Assignee, v. McCord, Assignee, 17 B. R. 508.

Under the law of 1867, it was held that where, in a voluntary petition
of partners in trade, the names of any of the copartners are withheld,
creditors can not supply the omission, because in voluntary proceedings
that law provided for a proceeding in invitum against nonjoining parties
only at the instance of their petitioning associates. Citizens’ Nat’l. Bank y.
Cass, 18 B. R. 279.

Such omission would not affect the rights of creditors against creditors
who are not parties to the proceeding. The law left them in possession
of all remedies against parties not joined which they had before. Ibid.

If any were excluded who ought to be joined, the court would refuse
to petitioning parties the benefit of the act, and leave them, as well as
their associates who refused to join, subject to all the remedies to which
their creditors might resort, irrespective of bankruptcy proceedings. Ibid.

So long as there are undistributed partnership assets and partnership
debts or liabilities, the firm may be adjudicated bankrupt. In re Gor-
ham, 18 B. R. 419.

As between himself and the firm creditors, one member of a firm can not
estop himself by any dealings with his partner from any duty he owes
these creditors. Ibid.

A firm in which one G. was a partner, having expired by limitation,
the interests of the other partner were transferred to him by bills of
sale, and at the same time he entered into an agreement to faithfully apply
the firm assets to the payment of the firm debts. He afterward filed a vol-
untary petition in bankruptcy and included the firm assets and debts in
his schedule. Held, that another member of the firm had a right to inter-
vene and have the firm adjudicated, to the end that the firm assets might
be applied to the payment of the firm debts. Ibid.

The bankrupt entered into a contract with one S., by which he under-
took to carry on the butchering business for S., as his agent and salesman.
The contract provided that the “ offal, feet, and the commission on hides,
and the usual slaughter-house perquisites,” were to go to S., and the bank-
rupt was to receive, in lieu of wages, all he could make over and above
the current price of cattle bought, after deducting all expenses. Held,
that the agreement did not create a partnership. In re Blumenthal, 18 B.
R. 555.

Where a separate adjudication is made against a bankrupt who is or
has been a member of a firm, the separate creditors have a right to vote
for the assignee. In re F. A. Falkner, 16 B. R. 508.

Where all members of one firm are partners in another firm, and a bank
has discounted drafts drawn by the former firm upon one who is a partner
with the members of such firm in the latter firm, it can not prove its claim
against the joint estate, but must look to the separate estate of the drawee.
In re Savage et al., 16 B. R. 368,
PARTNERS. 737

Where one member of a firm indorses an accommodation note in the
firm name, for the benefit of a third party, without consent or knowledge
of his copartner, such note can not be proved against the firm assets. In re
Irving, 17 B. R. 22.

Where real estate has been held by partners as tenants in common, the
classification thereof as partnership assets, in the schedule filed by them,
will not change the nature of the title to the prejudice of the rights of
separate creditors. In re Zug & Co., 16 B. R. 280.

As to questions touching the tenure of real estate, the Federal courts are
to be governed by the laws and decisions of local tribunals of the country
where such real estate is situated. Ibid.

Where T. and S. have become partners and, preliminary to beginning
their copartnership business, negotiated a loan of money, giving therefor
their joint note, but signing the same by their individual names, and the
money was treated as a copartnership fund, and applied to the business
uses of the firm; Held, that the debt was a firm liability. In re Thomas’ &
Sivyer, 17 B. R. 54.

Joint creditors share equally-in joint assets, whether their debts are
partnership debts or not. In re Nims & Long, 18 B. R. 91.

The bankrupts were formerly partners under the firm name of O. L.
Nims & Co., and failed without assets. Shortly thereafter they com-
menced business again as partners under the name of L. O. Nims, agent,
and failed, leaving assets. Held, that the creditors of the old firm were
entitled to share equally with the partnership creditors in the partnership
assets. Ibid.

Where there is an undoubted partnership, oral evidence is admissible to
prove that the factory in which the partners carried on their business,
and upon which they expended their money, was a part of the capital stock
contributed by them; and where such evidence is clear and undisputed,
and admitted to be true, the property in question is to be treated in bank-
ruptcy as the property of the firm — if on no other ground, then clearly on
that of part performance. In re Farmer et al., 18 B. R. 207.

The bankrupts, as agents, consigned goods of the corporation for sale to
an English firm, of which B. was a member. Prior to the receipt of the
goods said firm had accepted and paid drafts of the bankrupts to an
amount exceeding the value of all their consignments, and on that account
claimed that they had accounted to the bankrupts and paid over the
proceeds of the goods to them. Held, that this was not a payment which
would discharge said firm from liability, and that the claim for such pro-
ceeds being for a partnership liability of B. ranks in the distribution of
his individual estate after his individual debts. In re Baxter & Ralston,
18 B. R. 62. $

A joint creditor, in case of the separate bankruptcy of one member of the
firm, has a right to prove his joint debt, and vote for assignee in the
Separate bankruptcy. In re Webb, 16 B. R. 258.

It was held (Law of 1867) that where the individual property of one of the
members of a firm is pledged for a debt of the firm the creditor may, and

47
738 ‘THe Bankruptcy Law.

indeed is bound to prove, at the request of the separate creditors, his whole
debt without deduction against the joint assets; but can only prove the
‘deficiency, after disposing of the security, against the separate assets of
‘such partner. In re May & Co., 17 B. R. 192.

‘ Bankrupts were general business agents of a corporation, and as such
were authorized to receive and disburse all moneys of the corporation
“except subscriptions to its capital stock.” B., one of the bankrupts, was
the treasurer of the corporation, received subscriptions to the capital stock,
which he paid into the business of his firm. It did not appear that any
‘stockholder or director of the corporation except B. and his partner had
any knowledge of the misappropriation of the funds. Held, that B. was
liable personally therefor; that the firm, having taken the funds with
knowledge that it was not entitled to receive the same, was equally liable
and that proof could be made against both estates. In re Baxter &
Ralston, 18 B. R. 62.

Where one member of a firm was adjudged bankrupt without any ad-
judication against the firm, and there were at the time firm assets, the
estate of the firm is not in bankruptcy so as to make a discharge operative
as to the firm debts. In re Plumb, 17 B. R. 76.

When Partnerships may be Adjudged Bankrupts.— Two or more per-
sons ‘‘ who are partners” in trade, may be adjudged bankrupt on the pe-
tition of the partners or any one of them. This language can only apply
to a subsisting partnership. But a mere formal dissolution of the part-
nership, so long as there are partnership debts and partnership assets
existing, the partners being joint debtors and the assets being joint prop-
erty, will not prevent the operation of the act upon the partners, either
in a voluntary or an involuntary case. Where there are assets as well as
debts of the partnership remaining, the partnership may properly be con-
sidered as subsisting quoad its creditors, and for the purpose of applying
its joint stock and property to the payment of its creditors. Crockett v.
Jewett, 2 B. R. 208; s. c. 2 Ben. 514; s. c. 2 L. T. B. 21; in re Elisha Foster,
3 B. R. 236; s. c. 8 Ben. 386; s. c. 1 L. T. B. 127; in re H. C. McFarland &
Co., 10 B. R. 381.

Where partnership affairs are to be wound up, the partners may join or
be joined in one petition. If it were not so, the partners would always
have it in their power to defeat one of the main provisions of the law,
which is, that the creditors of the firm shall choose the assignee. It seems
to be settled that there.may be a joint petition so long as joint assets re-
main to be distributed. A like result must also follow if there are joint
debts outstanding. It is for the benefit of the joint creditors, so long as
any remain, that the proceedings should be joint, because they have the
choice of the assignee. Whether there are any joint assets or not may
often be disputed, and be the very question which an assignee is needed
to try; but the fact of joint creditors whose rights are to be protected
is easy of ascertainment, and, when ascertained, shows a necessity for a
joint action. So long as joint debts remain outstanding and unsettled,
the proceedings, whether voluntary or involuntary, may be joint. In re
Williams & Co., 3 B. R. 286; s. c. Lowell, 406; s. c. 2 L. T. B. 100; in re
PARTNERSHIPS. 739

Joseph A. Noonan, 10 B. R. 331; s. c. 3 Biss. 491. Contra, Crockett v.
Jewett, 2 B. R. 208; s. c. 2 Ben. 514; s. c. 2 L. T. B. 21; in re Moritz & Pin-
ner, 5 Law Rep. 325; in re Mark Hartz et al., 1 N. Y. Leg. Obs. 39.

A fraudulent dissolution will not oust the jurisdiction of the district
court over a petition in invitum filed thereafter. In re Waite & Crocker,
1B. R. 878; s. c. Lowell, 207.

A dissolution of a partnership, though binding as between the parties
themselves, can not have any effect upon the rights of those who subse-
quently become creditors, provided the partners continue to treat each
other, in point of fact, as partners, and to act as such in their business
transactions with others. In re H. C. McIfarland & Co., 10 B. R. 381.

An agreement for a dissolution, stipulating that one partner shall take
the partnership property, and apply it to the payment of the partnership
debts does not dissolve the partnership as to the other partner and the
creditors, nor does the transfer make the property the individual property
of the partner receiving it, until and unless the partnership debts are first
paid. The case is not one where the transfer of the interest of the retiring
partner in tne partnership property is absolute, and the remaining partner
merely agrees to pay and assume the debts of the partnership. In re T. 8.
Shepard, 3 B. R. 172; s. ec. 3 Ben. 347.

Although one partner has taken the partnership property under an
agreement to pay al? the partnership debts, either of them may, after such
dissolution, petition for the benefit of the act on behalf of the firm. The
partner who petitions is acting for the creditors as well as himself, and
the creditors may proceed against all the partners in bankruptcy, unless
they have agreed to accept one as their debtor. Such a proceeding by part-
ners differs in this from one by creditors, that no act of bankruptcy need be
alleged, but only that the firm is insolvent. If a partner could not petition
by reason of any contract with his copartner, the creditors would be de-
prived of the very important power of procuring adjudication through the
petition of one partner, when the firm is clearly insolvent, but no technical
joint act of bankruptcy has been committed. In re J. R. Stowers et al.,
Lowell, 528.

A partner, by intrusting his copartner with the payment of the debts,
takes the risk of his being both able and willing to do so, and in defense to
the petition of such copartner, can not set up that he left the firm solvent,
and that the act of the petitioner changed the state of affairs. Ibid.

When it is made to appear that the interests of creditors will not be
served by bankruptcy, and that they do not press the case, but it is brought
forward by one partner for ends of his own, he must fully and clearly
establish the insolvency of his copartner. In re Bennett et al., 12 B. R. 181.

Au assignment which transfers all the right, interest, property and claims
of the retiring partner in and to the partnership and firm business, termi-
nates the partnership. Persons who are not partners in trade, or who do
not at the time of the filing of the petition have any joint stock or property
belonging to the firm of which they have been members, can not be brought
jointly into bankruptcy. Hartough v. Hayden, 3 B. R. 422.
740 Tue Bankruptcy Law.

A member of a firm may commit a separate act of bankruptcy and be-
come bankrupt without joining his copartners. When two persons who
have been partners under one firm name file their joint petition in bank-
ruptcy, the proceedings can not be stayed on the ground that they have
omitted to bring in a third person who has been a partner with them
under another firm name. If such third person shall apply to have the
other firm adjudged bankrupt, the court may consolidate the suits, if
expedient, or arrange in some other appropriate way, that the greatest con-
venience to creditors shall be arrived at with the least expense. The rights
of all classes of creditors are the same, under all forms of*proceeding. In
re Mitchell et al., 3 B. R. 441; in re R. Stevens, 5 B. R. 112; s. c. 1 Saw. 397.

The institution of proceedings in a State court for a dissolution of the
firm and the appointment of a receiver, will not prevent the bankruptcy
court from taking jurisdiction. In re Joseph A. Noonan, 10 B. R. 331; s. ¢
3 Biss. 491; in re Hathorn & Batchelor, 2 Woods, 73.

If a firm is dissolved by the death of one of the partners, the executors
of the deceased partner can not be brought into bankruptcy, nor can
possession be taken of his separate estate, which is under the process and
control of a probate court. Hence no proceedings can be taken under this
section against the estate of a deceased partner. But if the surviving
partner, while clothed with his rights as such, commits an act of bank-
ruptcy, the creditors may invoke the aid of a court of bankruptcy to take
out of his hands the joint assets as well as his separate estate, and dis-
tribute them among his creditors. Such proceedings can be taken against
him by either a joint or separate creditor. In re R. Stevens, 5 B. R. 112;
8. c. 1 Saw. 397.

If the administrator of the deceased partner has given the necessary
bond and taken charge of the partnership property, which he is administer-
ing in the probate court, the district court may, in its discretion, refuse to
adjudge the partnership bankrupt. In re Daggett et al., 8 B. R. 433; s.-c.
8 B. R. 287; s. ¢. 3 Dillon, 83.

Mode of bringing Partnerships into Bankruptcy.— The provisions of
this section clearly contemplate that persons who are copartners may be
adjudged bankrupts on three descriptions of petitions: 1st. The petition
of all the copartners. 2d, The petition of one of the copartners. 3d. The
petition of a creditor of the copartners. The proceeding by the petition of
all the copartners is purely voluntary, and where they all unite, the juris-
diction of the court over all of them, either by residence or by carrying on
business, must appear in the petition. The proceeding by the petition of a
creditor of the copartners is a purely involuntary proceeding, and requires
the adjudication to proceed on the commission of some act of bankruptcy.
The proceeding by the petition of one of two or more copartners to have
such copartners adjudicated bankrupts is a proceeding which necessarily
is neither wholly voluntary nor wholly involuntary, but is partly volun-
tary and. partly involuntary. So far as the petitioner is concerned, it is
voluntary; so far as the copartners not petitioning is concerned, it is not
involuntary, in the sense of section 5021, unless the adjudication is asked
for on the ground of the commission of an act of bankruptcy, although it
PARTNERSHIPS. V41

may be involuntary in the sense of not being voluntary, under section
5u14. Where it is not involuntary in the sense of section 5021, the adju-
dication may be asked on the ground that the members of the copartner-
ship are unable to pay all their debts, and no allegation that an act of
bankruptcy has been committed, either by the firm or by the copartners
who are proceeded against, is necessary. A partner may also petition
to have himself adjudged bankrupt, because of his inability to pay his
debts, and to have his copartners adjudged bankrupts because of the com-
mission by them of an act of bankruptcy to which he was not a party.
In re Penn et al. 5 B. R. 30; s c. 5 Ben. 89; s. c. 2 L. T. B. 190; in re
Joseph Noonon, 10 B. R. 331; s. ¢. 3 Biss. 491,

The firm can not be adjudged bankrupt upon the petition of one partner
if the other partners do not consent, and neither reside nor carry on
business in the district. In re Henry Martin, 6 Ben. 20.

Where a petition is filed to have a firm declared bankrupt, if all the mem-
bers of the firm do not join in or consent to the petition, notice of the filing
must be given to such of the members as do not joint in it or assent to it,
in like manner as if the proceedings were on an involuntary petition
against the members of the firm. Until this is done, the register has no
authority to make an adjudication in regard to the bankruptcy of the
firm. In re Henry Lewis, 1 B. R. 239; s. @ 2 Ben. 96; in re Prankard et al.,
1B. R. 297; in re Moritz & Pinner, 5 Law Rep. 325; in re Rufus EH.
Moore, 5 Biss. 79.

When a petition, in due form, for the adjudication of a firm has been
filed by one partner, the other may come in voluntarily by petition and
assent to the adjudication of the bankruptcy of the firm. This affects
4 compliance with Rule XVIII. Even though the latter petition prays for
the adjudication of the bankruptcy of the firm, it may be regarded as
simply giving assent to the adjudication under the first petition. Rule
XVI does not apply to such a case. In re Henry Lewis, 1 B. R. 239; s. ¢.
2 Ben. 96; in re Horace Hall, 5 Law Rep. 269.

If the administrator of the deceased partner has given the necessary
bond and taken charge of the partnership property, which he is adminis-
tering in the probate court, the district court may, in its discretion, refuse
to adjudge the partnership bankrupt. In re Daggett et al. 8 B. R. 287;
sc. 8 B. R. 488; s. ec. 3 Dillon, 83. .

When one member of a firm files a petition praying for his discharge
alone, his copartners residing in another district can not be permitted to
join in the proceedings. This section only applies to a case where two
or more persons who are partners are adjudged bankrupts. In re Boylan,
1B. R. 2; s. c. 1 Ben. 266.

The case of two members of a. firm constituting a separate firm under
another name was not contemplated by this section, but its provisions, as
applicable to the estate and debts of a single firm, and the separate
Property and individual debts of the members of such firm, are only de-
claratory of the acknowledged principles of equity upon which the court
would marshal the assets in the absence of such provision. When the firm
which embraces the members of such separate firm has been declared
42 Tur Bankruptcy Law.

bankrupt, it is improper to proceed to an adjudication against the sepa-
rate firm while the former proceedings are pending. In re Leland &
Leland, 5 B. R. 222; s. c. 5 Ben. 168; s.c. 1 L. T. B. 284; 58.04 L. T.
B. 185.

When the partners reside in different districts, and have no place of
business in the district where the petition is filed, the nonresident partner
can not be adjudged a bankrupt upon his own petition until he shall have
filed a petition in the district where he resides. In re Prankard et al., 1
B. R. 297.

When there are partnership debts and partnership assets of an insolvent
firm, the assignee of one of the partners may file a petition against the
other members to have the firm adjudged bankrupt, and the partnership
assets distributed by the bankruptcy court. If the other members of the
firm deny the insolvency, they are entitled to have that issue tried by a
jury, but in such cases, it is wholly unnecessary to show an act of bank-
ruptcy on their part. When one member of the firm has asked for the
benefit of the bankruptcy act, the question before the court becomes a
purely legal one, and the firm must of necessity be adjudged bankrupt. In
re Grady, 3 B. R. 227; in re Greenfield, 42 How. Pr. 469; s. c. 5 Ben. 552.

Unless the firm is declared a bankrupt, no member thereof can be dis-
charged from the firm debts, because the theory and intent of this section
and Rules XVI and XVIII are that the creditors of a firm shall be
required to meet but once, and in one bankruptcy forum, all questions in
regard to the bankruptcy of the firm. In re Little, 1 B. R. 341; s. « 2 Ben.
186; in re Bidwell, 2 B. R. 229.

The bankrupt can not be discharged of a portion of his liabilities merely,
but if discharged at all, he must be discharged of all of them, and this can
not be unless the firm debts are paid, or the firm assets administered in the
bankruptcy court. In re Grady, 3 B. R. 227. ;

This applies to partnerships actually existing, or where there are assets
belonging to the firm, and not to partnerships terminated by bankruptcy,
insolvency, assignment, or otherwise. In re Winkens, 2 B. R. 349.

Where there are no partnership assets to be administered, a member of
a late partnership may, upon his individual petition, be discharged from all
his debts, partnership as well.as individual. In re Abbe, 2 B. R. 75; 8. ¢
TA. L. Reg. 824.

Proceedings in voluntary bankruptcy can not be conducted in the united
names of parties who have no common interest and do not seek a common
decree. Individuals can not associate and make a joint and several peti-
tion with a view to a separate adjudication in favor of each applicant. A
petition by two petitioners conjointly, when they can not petition as part-
ners, can not avail them individually. In re Moritz & Pinner, 5 Law
Rep. 325.

Persons can not join or be joined in a petition in bankruptcy who could
not sue or be sued in any form of action at law or in equity. Distinct
firms composed in part of different persons can not be so joined. In re
Wallace & Newton, 12 B. R. 191.
PROCEEDINGS oF CREDITORS. 143

No number less than the whole of a firm can file a | voluntary petition:
In re Moritz & Pinner, 5 Law Rep. 325. ( :

The filing of a petition in bankruptcy by one partner against his co-
partner will not prevent the latter fiom bringing a suit on his individual
claim, and prosecuting it to judgment. Booth v. Meyer, 14 B._R. 575;
s.c. 3 W. N. 196. Ba

While the proceeding by one partner against his copartner’ ‘is pending:
the district court may enjoin the latter from disposing of the firm assets;
although he has been appointed receiver in a State court on a ‘proceeding
by him against the former. In re Hathorn & Batchelor, 2 Woods, 73..

Partners are not liable to be adjudged bankrupts upon the petition of
their creditors, upon mere proof of their insolvency, without other Breor,
of the commission of an act of bankruptcy. In re Ralph Johnson, 1 N. y.!
Leg. Obs. 166; s. c. 5 Law Rep. 313; in re John W. Hull, 1 N. Y. Leg. Obs.
1. Contra, in re Galbraith, Cromwell & Co., 1 N. Y. Leg. Obs. 5, note.

Proceedings at First Meeting of Creditors.— None but creditors of the
firm can participate in the election of an assignee. In re Phelps, Caldwell
& Co., 1 B. R. 525; s. c. 2 L. T. B. 25; in re Scheiffer & Garrett, 2 B. R.
§91;s.c.10C. L. N. 261.

This section draws a distinction between the creditors of “ the copartner-
ship” and “the separate creditors” of each partner. It also calls the
former “ joint creditors,” and speaks of the debts due to them as “ joint
debts,” while it speaks of the debts due to such separate creditors as sepa-
rate debts. It puts joint creditors and joint debts in antithesis, and sepa-
rate creditors and separate debts. This it does, although necessarily the
copartners are jointly and severally liable to the creditors of the copart-
nership for the joint debts. The separate debts must, therefore, be re-
‘garded as confined to debts which arise out of a liability other than, or
in addition to, that resulting solely from a debt contracted by the firm.
In re Walter P. Long & Co., 9 B. R. 227; s. c. 7 Ben. 141.

A firm creditor who holds a firm note indorsed by one of the partners
may elect to prove his debt against the separate estate of such copartners.
Stevenson v. Jackson, 9 B. R. 255.

A creditor holding notes both of the partnership and of the individual
partners for a partnership debt has the right to prove the notes against
the respective makers, and is entitled to receive dividends from the joint
and separate estates according to such proof. Meade v. National Bank of
Fayetteville, 2 B. R. 173; s c. 6 Blatch. 180; s. c. 1 L. T. B. 108.

Although by tbis section, where partners in trade shall be adjudged
bankrupts, all the joint property of the partnership and also all the sepa-
rate estate of each of the partners shall be taken, yet in the distribution
the joint and separate estates are considered as distinct estates. This is
perfectly clear by the rule laid down for their administration. It has,
therefore, been held that a joint creditor having a security upon the
separate estate is entitled to prove against the joint estate without giving
up his security; he would, therefore, by the same principle, be allowed to
prove his whole claim against both estates, and receive a dividend from
each, but so as not to receive more than the full amount of his debt. A
744 Tue BANKRUPTCY Law.

creditor holding a note indorsed both by the firm and by one of the co-
partners, may prove his claims against both estates. In re Howard, Cole
& Co., + B. BR. 571; s. c. 2 L. T. B. 161; Emery v. Canal National Bank, 7
B. BR. 217; 8. c.5 L. T. B. 419; Meade v. National Bank of Fayetteville, 2 B.
R. 173; s. ¢. 6 Blatch. 180; s. c. 1 L. T. B. 108; in re Bradley, 2 Biss. 515;
in re Peter Farnum, 6 Law Rep. 21.

If a dividend has been paid by one estate, the amount thereof should
be deducted and a dividend only on the balance allowed from the other.
In re Peter Farnum, 6 Law Rep. 21.

Although the consideration passed to the firm, yet if the obligation
is given by the partners individually, and not by the firm name, the debt
is provable against their individual estate. In re Bucyrus Machine Co.,
5 B. R. 303.

Where the partnership as such receives and uses the funds belonging
to an estate of which one partner is the executor, with full knowledge
of its character, it becomes liable therefor, and the beneficiaries may
prove their claim either against the partnership estate or against the in-
dividual estate of the partner who was executor. In re BE. P. & BE. M.
Tesson, 9 B. R. 378.

lf a person takes the note of one partner without knowing that the
money is for the benefit of the firm, he can not prove a claim against the
firm after he has obtained a judgment on the note. In re Hugh T. Herrick,
13 B. R. 312. °

A person who takes a note of one partner for money loaned for the use
of the firm, can not prove a claim against the firm. Ibid.

Where the deposition on its face shows a several debt, the creditor can
not be held ito have proceeded against the joint estate, although the proof
is in that form. Ibid.

A judgment against the partners individually and others constitutes a
several debt as to the partners, and can not be proved against the joint
estate. Ibid.

A creditor holding a partnership bond, by express terms joint and
several, for a partnership debt, has the right to prove it against the
separate estates, and is entitled to receive dividends out of the individual
assets. In re Bigelow et al., 2 B. R. 371; s. c. 3 Ben. 146; s. c. 2 L. T. B. 41.

A joint agreement given by two members ofa firm to indemnify a retir-
ing partner may be proved for the full amount against the separate estate
of-each partner. In re Beers et al., 5 B. R. 211.

A bond signed by the members of a firm, in their individual names, as
sureties, and not given for a partnership liability, is a claim against them
individually, and not as members of the firm. In re W. D. Webb & Co., 2
B. R. 614; s.¢c. 2 L. T. B. 87; s. @ 16 Pitts. L. J. 48; in re Edmund H. Mil-
ler, 1 N. Y. Leg. Obs. 38; in re Roddin & Hamilton, 6 Biss. 377.

Where one of the partners of a bankrupt firm is also a member of an-
other firm, a claim by the latter against the former may be proved by the
solvent partner, for the firms are regarded as distinct legal entities, capable
of contracting with each other in equity. In re Buckhause & Gough, 10 B.
R. 206,
PROCEEDINGS OF CREDITORS. V45

When a partnership consists of two persons, and they both sign a note
or bill with their individual names, and not by the name of the firm, or
one draws a bill and the other accepts it, if it is in fact for a partnership
object, it may be treated for all purposes as a partnership debt. In re
Henry Warren, 2 Ware, 3822.

When the intention of the contracting parties is that the firm shall be
bound, and the contract is within the scope of the partnership business,
the contract will bind the firm in whatever form it may-be made, whether
signed by the parters jointly, or with the firm name, or by one partner
alone. In re Henry Warren, 2 Ware, 322.

The presumption that arises from the form of the note, that the separate
name of the partner was taken from choice, may be overcome by proof
that no such election was made. Ibid.

A creditor who takes the individual note of one partner in a transaction
for the benefit of the firm is presumed to elect to take that in preference
to the firm note. Ibid.

The assignee of the firm is the assignee of a member of the firm, and
may sue to recover money due to him. Babbitt v. Burgess, 7 B. R. 561;
8. ¢. 2 Dillon, 169.

An assignee of a firm may recover property transferred by one partner
in violation of the bankruptcy law. Barnwell v. Jones, 14 B. R. 278.

Assignee of Individual Partner.—An adjudication upon the petition of
one partner in his own behalf, and as a member of a firm, does not pass
the partnership effects to his assignee. In re Paulson, 1 N. Y. Leg. Obs.
6, cited.

Upon the bankruptcy of one partner, his private property and his interest
in the funds of the firm pass to his assignee. Harrison v. Sterry, 5
Cranch, 289; s. c. Bee, 244.

The assignee of a bankrupt partner and the remaining solvent partner,
are tenants in common in respect to the partnership funds, and, like all
tenants in common, one party can not call the joint property out of the
hands of the other. They are entitled equally to the possession in law.
Neither party is strictly entitled, as against the other, to anything more
than his share of the surplus after the partnership debts are paid. Mur-
ray v. Murray, 5 Johns. Ch. 60; Ayer v. Brastow, 5 Law Rep. 498; in re
Shannahan & West, 6 Biss. 39.

Where partners agree to give another an interest in the assets after
the payment of the firm debts, the latter, upon the bankruptcy of the
former, is not entitled to receive the property from their assignee until
the debts are paid. In re Shannahan & West, 6 Biss. 39.

The solvent partner has generally the right to retain the control and
Possession of the partnership assets until an account is taken for the
purpose of applying them in good faith to the discharge of the joint debts
and for his share of the surplus. Ayer v. Brastow, 5 Law Rep. 498; Tal-
cott v. Dudley, 5 Ill. 427.

The solvent partner, upon the dissolution of the partnership by bank-
ruptey, being a tenant in common, may retain and distribute the funds in
his possession, and may sell the partnership effects for a valuable con-
%46 Tuer Bankruptcy Law.

sideration and without fraud. They can not be called out of his posses-
sion by his cotenant. But, on the other hand, there is no foundation in law
or equity for the solvent partner to call to account either the partnership
debtors who have bona fide settled with the assignee, or the assignee
himself for the funds in his possession. Murray v. Murray, 5 Johns.
Ch. 60. ;

The only interest in partnership property which passes to the assignee
of an individual partner, is the interest which the bankrupt may appear to
have on taking an account. But the interest of the bankrupt does not
pass to the assignee with precisely the same powers over the property
which the bankrupt himself had. Before the bankruptcy, his power
over it was that of a partner; it was a joint tenancy. The bankrupt could

- dispose of the whole property. But, by the bankruptcy, the partnership is
dissolved, and the joint tenancy severed. The assignee succeeds to the
rights of the bankrupt, not as a partner, but as a tenant in common.
Ayer v. Brastow, 5 Law Rep. 498.

Without a special order of the court for that purpose, the assignee of
an individual partner has no power to take and dispose of the assets of
the firm so as to divest the rights of the other partners and vest the entire
interest in the assets of the firm in a purchaser at his sale. Buckner v.
Calcote, 28 Miss. 482.

Where one partner becomes bankrupt, the district court may take into
its own hands the exclusive management and administration of all the
partnership assets and inhibit the other partners from intermeddling
therewith for the purpose of ascertaining the partnership assets and debts,
and adjusting and distributing the same, but will do so with caution. Par-
ker vy. Muggridge, 2 Story, 334; Ayer v. Brastow, 5 Law Rep. 498; McLean
v. Ihmsen, 1 West. L. J. 189.

A creditor who has obtained a judgment against the ostensible partner
may levy on the firm goods, although they are placed in the possession of
the assignee of the dormant partner prior to the levy, but after the issu-
ing of the execution. Talcott v. Dudley, 5 Ill. 427.

If one partner, who owns all the property, is declared a bankrupt, his
assignee will be estopped from denying that his copartner had all the
usual rights of a partner as against an attaching creditor of the firm.
Kelly v. Scott, 49 N. Y. 595.

The appropriation of the firm property to pay an individual debt of one
partner, where he becomes a bankrupt, does not bind the firm unless the
solvent partners assent to it prior to the commencement of the proceed-
ings in bankruptcy. Anshutz v. Fitzsimmons, 9 Penn. 180.

The assignee of a liquidating partner is merely a mandatory of the in-
terest of the other partner for purposes of liquidation, and a purchaser
from him will not acquire that interest. Akin v. Oakley, 10 Rob. (La.)
410.

The assignee of an individual partner does not, by virtue of the interest
he takes in the firm, acquire any claim against the bankrupt. Buckner v.
Calcote, 28 Miss. 4382.
ASSIGNEE OF INDIVIDUAL Partner. V4.7

Where one partner becomes bankrupt, his assignee can take only that
portion of the partnership assets which would belong to the bankrupt
after payment of all the partnership debts, and the solvent partners have
a lien upon the partnership assets for all the partnership debts, and
also for their own shares. Parker y, Muggridge, 2 Story, 334.

The assignee of an individual partner, who is a member of three firms
composed of the same individuals, can only claim what may be due after
the payment of all the debts of the firms, and upon an account of the re-
spective interests of the partners inter se. Buckner vy. Calcote, 28 Miss. 432.

Where an individual partner applies alone and surrenders partnership
assets, a sale by his assignee will pass the entire interest of the firm.
Judson v. Lathrop, 6 La. An. 587.

If the assignee of the bankrupt partner settles with the partnership
debtor, the solvent partner can not set aside such settlement in order to
obtain possession of what was due from the debtor for the purpose of
distribution, inasmuch as the assignee had competent power to make the
settlement and to obtain possession of what was due and coming from the
settlement for the like purpose of distribution. Murray v. Murray, 5
Johns, Ch. 60.

The assignee of one partner may become a party on the record with the
other partner of his assignee when the suit is prosecuted to collect a de-
mand due to the firm. Cannon v. Wellford, 22 Gratt. 195.

Where the partnership is insolvent, so that the assignee of an individual
partner has no interest in the effects of the firm, the assignee need not be
made a party to a suit in equity to obtain payment of a debt due to the
firm. Coe v. Whitbeck, 11 Paige, 42.

Where one partner becomes bankrupt, a suit on a cause of action belotig-
ing to the firm should be brought in the name of the solvent partner and
the assignee. Peel v. Ringgold, 6 Ark. 546; Coe v. Whitbeck, 11 Paige, 42;
Halsey v. Norton, 45 Miss. 703.

But it must be shown that there is another person not coplaintiff who
ought to be joined. This may be by a plea in abatement, or by nonsuit, if
proved at the trial, or by demurrer, if it appears on the face of the declara-
tion. If the nonjoinder of the solvent partner is relied on to nonsuit the
assignee, the defendant must prove the existence of such a partner.
Halsey v. Norton, 45 Miss. 703.

If upon the declarations of the firm one partner takes the firm assets
and undertakes to pay the firm debts, and the retiring partner subse-
quently pays firm debts to an amount more than sufficient to cover the
deficiency that might remain after applying the joint assets to pay the
joint debts, the assignee of the latter is entitled to the surplus of the firm
assets in the hands of the former. Hyde v. Baker, 11 Pac. L. R. 81.

There must be an adjudication of bankruptcy against the partners com-
Posing the firm, and an assignee must be appointed in such a proceeding
before any step can be taken to reach the partnership assets in bankruptcy.
The partnership property can not be taken and administered by the bank-
ruptcy court unless all the persons who have an interest as copartners in
such property are adjudged bankrupt: An assignee of the individual and
748 Tur Bankruptcy Law.

separate estate of one partner has no title to call third parties to an
account for partnership property. The court does not intend to decide
what the right of the assignee would be to set aside a transfer of the
bankrupt’s interest in the joint property. In re T. S. Shepard, 3 B. R. 172;
s. c. 83 Ben. 347; Forsaith v. Merritt, 3 B. R. 48; s. c. Lowell, 336; s. c. 1 L.
T. B. 168; Withrow vy. Fowler, 7 B. R. 339; s. c. 5 Pac. L. R. 102; Amsinck
v. Bean, 8 B. R. 228; s. c. 11 B. R. 495; s. c. 10 Blatch. 361; s. c. 22 Wall.
395.

The assignee of an individual partner can not maintain an action to re-
cover money of the firm secretly paid to a firm creditor, in fraud of the
rights of other creditors, under a compromise. Amsinck y. Bean, 8 B. R.
228; s. a 11 B. R. 495; s. c. 10 Blatch. 361; s. ec. 22 Wall 395.

Distribution of Assets.— This section was inserted simply to indicate
the correct and equitable mode of administration of the partnership prop-
erty and separate estates of each partner when two or more persons who
are partners in trade shall be adjudged bankrupt, and can not be made
to apply to a case where only one of the partners is proceeded against. In
its main features it embodies no new law, but was only declaratory of
the equitable principles which the courts had adopted in the distribution
of the bank’s assets. It was, nevertheless, proper and useful in this re-
spect — that it put to rest the long-mooted and much-discussed question
of the power of the bankruptcy court, in administering the bankrupt’s
estate, to make orders for the marshaling of assets and the payment of
partnership debts with partnership funds, and separate debts with sepa-
rate funds, without the intervention of proceedings by bill in equity. In
re Melick, 4 B. R. 97; Collins v. Hood, 4 McLean, 186; in re Collier, Taylor
& Co., 12 B. R. 266; Ancker v. Levy, 3 Strobh. Eq. 197.

The rule applies only where the joint estate as well as the separate is
before the court for distribution, and where there are joint creditors and
also separate creditors. Lewis v. U. S., 13 B. R. 33; s. c. 14 B. R. 64; 5. ¢.
92 U. S. 618; in re R. S. Pease, 13 B. R. 168.

In the distribution of the estate, it is of no consequence, excepting in
the matter of expense, whether there are two proceedings by or against
two partners or only one. Everything is conducted in the same way, and
the rights of creditors and all others are precisely the same. In re
Edward P. Morse, 13 B. R. 376.

Where one partner goes into bankruptcy alone, the separate creditors
are entitled to be paid solely out of the separate estate, and the partner-
ship creditors are entitled solely to be paid out of the partnership
estate. In re William Ingalls, 5 Law Rep. 401; in re Henry B. Williams,
5 Law Rep. 402.

Premises used by partners for the purpose of carrying on their trade
are prima facie a part of the partnership property. Osborn v. McBride,
16 B. R. 22; s¢. 3 Saw. 590.

Real estate held as partnership assets does not lose that character until
it is shown not only that the firm creditors have been paid, but that as
‘between themselves the acounts of the partners have been settled. His-
cock vy. Green, 12 B. R. 507.
DISTRIBUTION oF ASSETS. V49

If real estate is purchased as a speculation in which the capital is to be
derived from and the losses sustained by the assets of the firm, and the
profits which may accrue are to augment the capital of the firm, it will be
deemed to be partnership assets. Ibid.

If a partner, after a formal dissolution, continues to carry on business
under the firm name, with the consent of his copartner, his trade assets
should be treated as joint assets. In re Edward P. Morse, 13 B. R. 376.

Where an individual partner is bankrupt, a partnership. creditor who has
received a payment in part from the firm assets held by the copartners,
may prove his debt for the balance, and share pro rata with the individual
creditors. In re R. 8. Pease, 13 B. R. 168.

When a partner takes all the firm property and stipulates to pay all
the firm debts, he makes those debts his individual debts, and the creditors
of the partnership may prove their debts against him alone, and share in
his separate estate pro rata with his individual creditors. By this promise
he is bound, and the creditors of the firm are in equity entitled to enforce
it against him. It is, on their election to avail themselves of it, cumulative
to their other rights. They need not release the firm in order to get the
benefit of this promise made by one of the members for their benefit. The
right of the creditors is not defeated by his subsequent bankruptey. They
may assent to and claim the benefit of it at any time, either before or
after the bankruptcy of the debtor. In re Wm. Downing, 3 B. R. 748; s. c.
1 Dillon, 33; s. c. 1 L. T. B. 207; in re George Rice, 9 B. R. 373; in re
Walter P. Long & Co., 9 B. R. 227; s. c. 7 Ben. 141; in re Collier, Taylor &
Co, 12 B. R. 266.

An agreement between two traders to unite their stocks in trade, as the
capital of a partnership to be formed between them, and to convert the
separate debts of either into joint debts of the firm, will not entitle a
separate creditor, who has not acceded in any way to the arrangement, to
prove in bankruptcy as a joint creditor of the firm. In re Isaacs & Cohen,
6B. R. 92; s. c. 3 Saw. 35.

If partners divide the firm property on a dissolution, and one partner
puts his share into a new firm, the assignee of the last firm is entitled to
have it first applied toward the payment of the partnership debts, as
against a creditor of the prior firm who has levied an execution thereon.
Crane vy. Morrison, 13 Pac. L. R. 81.

When there is no joint estate and no solvent partner, all the creditors,
joint and separate, will share pari passu in the estate of the bankrupt
partner, in case of his separate application for the benefit of the bankruptcy
act. Under such circumstances, the creditors of the firm have a right to
prove their debts against the estate of the bankrupt partner, and are
entitled to share pro rata under section 5091, as it extends to “all creditors
whose debts are duly proved,” and are embraced in the discharge provided
for in section 5119. In other words, this section of the bankruptcy act only
comes into operation when there are firm assets, and the proceedings are
instituted against the firm and each of its members, in which case the
assets are to be marshaled according to the equity rule, firm creditors to
have priority as respects the joint assets, and individual creditors as
750 Tue Bankruptcy Law.

respects the separate estate of their debtor. In re Wm. Downing, 3 B. R.
748; s. c. 1 Dillon, 83; s. c.1L. T. B. 207; in re Fred’k Jewett, 1 B. R. 491;
s.c, 7A. L. Reg. 291; s. c. 15 Pitts. L. J. 354; in re Goedde & Co., 6 B. R.
295; in re George Rice, 9 B. R. 373; in re Knight, 8 B. R. 436; s. c. 2 Biss.
518; in re William Mills, 11 B. R. 74; Tucker v. Oxley, 5 Cranch, 34; s. ¢
1 Cranch C. C. 419. Contra, in re Byrne, 1 B. R. 464; s. c. 7 A. L. Reg.
499; in re Frear, 1 B: R. 660; s. c. 35 How. Pr. 249; s. c. 2 Ben. 467.

In order to share in the separate estate, there must be absolutely no joint
estate. If there is any, however small, the joint creditors can not be
allowed to réceive dividends from the separate estate. In re Albert Mar-
wick, 2 Ware, 233; s. ec. 3 N. Y. Leg. Obs. 286; in re Elijah E. Smith, 13
B. R. 500.

The rule covers all cases where there is a joint fund, without regard to
its origin. A separate creditor may, therefore, purchase a worthless asset
belonging to the joint fund for a small sum in order to defeat the right of
the joint creditors to share in the separate estate. In re Albert Marwick,
2 Ware, 233; s. c. 3 N. Y. Leg. Obs. 286.

Where there are partnership assets, the partnership creditors can not
share in the individual estate although the partners were declared bank-
rupts on separate petitions. In re Edward P. Morse, 13 B. R. 376.

_ Where there are assets of a firm and of the individual members thereof,
each estate must pay its proportion of the entire expenses of administer-
ing the estate. In re Elijah E. Smith, 13 B. R. 500; in re William Ingalls,
5 Law Rep. 401.

If the firm assets are only sufficient to pay the cost of the proceedings,
the firm creditors may share in the individual estate, for the words * net
proceeds ” refer to the estate to be distributed among the creditors, and
were only designed to exclude one class in case there were some funds
for distribution in the class to which such creditors belonged. In re
McEwen & Sons, 12 B. R. 11; s. c. 6 Biss. 294.

Where the firm is in bankruptcy, the firm creditors may share pari passu
with the separate creditors in the separate estate if there are no joint
assets. In re Collier, Taylor & Co., 12 B. R. 266.

The burden of proving that there is a joint fund rests upon the in-
dividual creditors. The partnership creditors can not be required to prove
a negative. In re Frederick Jewett, 1 B. R. 491; s. ce. 7 A. ‘L. Reg. 291;
8. ce. 15 Pitts. L. J. 354. Contra, in re Byrne, 1 B. R. 464; s.c. 7 A. L. Reg.
499.

The court will not presume that the other partner is solvent and has
property that can be reached by the joint creditors. His pecuniary re-
sponsibility is a matter of affirmative proof by the individual creditors who
object to the firm creditors sharing in a dividend from the bankrupt’s
estate. In re George Rice, 9 B. R. 373.

If a petition is filed against a firm, and an adjudication is thereupon
entered against the firm and one partner, but no adjudication is entered
against the other partner, the separate creditors of the partner so de-
clared bankrupt can not participate in the firm assets. An adjudication
against the other partner can only be necessary for the purpose of reaching
DISTRIBUTION oF ASSETS. Y51

his individual property, and may be made at any subsequent time, if it
becomes necessary in the course of the proceedings. In re Kinkead, 7 B.
R. 439; 3 Biss. 405.

When partners are in fact insolvent, they are considered in equity as
holding the partnership effects in trust for the benefit of the firm creditors,
and they can not, by a transfer of the interest of one to the other, defeat
this trust. A sale by one partner to his copartner when the firm is insolvent
and upon the eve of bankruptcy, which, if upheld, would operate to apply
the property of the retiring partner to the payment of the individual debts
of the partner purchasing, is presumptively fraudulent as to firm cred-
itors, and the court will set aside such sale, and distribute the property
as firm property to the payment of the firm debts. If the legal effect
of such transfer is to change the order of payment and prefer certain
creditors, the private creditors over the firm creditors, it will be void as
creating a preference. In re Cook & Gleason, 3 Biss. 116; Collins v. Hood,
4 McLean, 186.

If a transfer of the firm property to one of the copartners is made honestly
and in good faith upon a dissolution, and for a valuable consideration,
and without any fraud or collusion between the copartners to defeat the
rights of the joint creditors, the joint property becomes by such transfer
the separate property of such copartner. In re Walter P. Long & Co., 9
B. R. 227; s. c. 7 Ben. 141.

When only five days had intervened between the dissolution of the firm
and the commencement of proceedings in bankruptcy, the transfer of the
partnership property was held to be void, as a fraud on the copartnership
creditors, and the property so transferred was held to be a joint fund.
In re Byrne, 1 B. R. 464; s. c. 7 A. L. Reg. 499. é

When firm property has been transferred to a partner under an agree-
ment to apply the proceeds of the same to the payment of the firm debts,
and he has purchased other property, and mingled it with the firm prop-
erty in such a manner as to make it impossible to distinguish between
them, the whole should be regarded as his individual property, and liable,
in the first instance, to his individual debts. In re H. B. Montgomery, 3
B. R. 874; 5. c. 3 L. T. B. 40.

The separate estate of a partner is that in which he is separately in-
terested to the exclusion of his copartners. If the interest of each partner
extends to the entire stock in trade, the excess of the interest of one
partner over that of the other partners is not the former’s separate estate.
In re Lowe & Richards, 11 B. R. 221.

If the surviving partner, with the knowledge and consent of the adminis-
trator of the deceased partner, converts the firm assets to his own use, the
Property belongs to his individual estate. In re William Mills, 11 B. R. 74.
If one partner in good faith sells the partnership property to his co-
partner, who agrees to pay the firm debts, the property from the moment
of sale ceases to be partnership property, and becomes the individual
Property of the purchasing partner, and primarily liable for the payment
of his individual debts. In re William H. Wiley, 4 Biss, 214.
%52 Tue BANKRUPTCY Law.

When the bankrupt has been a member of two separate firms, the prop-
erty of each firm must be applied to the payment of its own debts in
preference to the debts of the other firm. No part of the proceeds of such
property can be applied to the latter debts until the former are fully paid.
In re Hinds et al., 3 B. R. 351.

If any surplus remains after the individual creditors are paid, it must
be distributed pro rata among all the creditors who have proved their
claims and to whom the partner was liable either as a member of the
bankrupt firm or any other firm. In re Robert K. Dunkerson & Co., 12
B. R. 391; s. c. 4 Biss, 323.

If a partner is a member of two distinct firms, both of which are liable
to a creditor on commercial paper, the creditor has no advantage over the
creditors of either firm in the distribution of his individual estate. In re
Robert K. Dunkerson & Co., 4 Biss. 227.

If the partners conduct business in two different places under different
names, the two firms, in the distribution of the assets, will be treated as
one firm, and no notice will be taken of the indebtedness of one firm to
the other. In re Theo. H. Vetterlein et al., 4 B. R. 599; s. c 5 Ben. 311;
Buckner v. Calcote, 28 Miss. 432; Ballin v. Ferst, 55 Ga. 546. Vide in re
Buckner & Co., 28 Miss, 447, note.

If one of the bankrupts is a member of a firm which is a creditor, the
whole dividend should not be paid to the firm, but the proportion to which
the bankrupt would be entitled should be retained for his individual cred-
itors, and the rest paid to the other members of the firm. In re Joel A. H.
Ellis, 5 Ben, 421.

The firm creditors can not have recourse to the separate estate for money
advanced by the firm to one of the partners. In re G. H. Lane & Co., 10 B.
R. 135; in re McEwen & Sons, 12 B. R. 11; s. c 6 Biss. 294; in re John
McLean & Son, 15 B. R. 333.

The firm creditors can not have recourse to the separate estate for goods
sold by the firm to one of the partners. In re G. H. Lane & Co., 10 B. R.
135.

The amount which a firm is entitled to prove against a copartner, is the
balance that remains after deducting the partner’s share of the profits.
In re Jay Cooke & Co., 12 B. R. 30.

If a creditor, having a firm note indorsed by a partner and holding prop-
erty of the partner as security, obtains payment by the sale of a security,
the separate creditors are entitled to receive from the joint estate a sum
equal to the dividend on the note. In re Norman B. Foote et al., 12 B. R.
337.

If the holder of a firm note indorsed by one partner resorts to the
separate estate, the separate creditors are entitled to be substituted in the
place of the holder of the note, and allowed to prove the note against the
joint estate. Ibid.

Real estate purchased with the intention that it shall be held as partner-
ship property, will be deemed to be personalty so far as creditors are con-'
cerned, and will be applied to pay firm debts, even as against individual
creditors who have obtained judgments which would otherwise be liens.
thereon. Marrett v. Murphy, 11 B. R, 131; s. c. 1 Cent. L. J. 554.
DISTRIBUTION OF ASSETS. 753.

If partners purchase land with partnership funds, and take a deed to
themselves jointly as tenants in common, and the orphans’ court, upon the.
death of one of them, orders his interests in the land to be sold, the pro-
ceeds do not belong to the assignee of the surviving partner. What was.
sold was the estate of the decedent, and not that of the partnership. The
money is the proceeds of his estate. Whether the sale was of a moiety of
the lands, the title of the decedent as a tenant in common, or his interest
as a partner in the firm, the result is the same, and the assignee has no.
right to the money. Jones’ Appeal, 70 Penn. 169.

A creditor holding a judgment against one partner acquires no lien upon.
firm property transferred to that partner at a time when the firm is,
insolvent. In re Cook & Gleason, 3 Biss. 122.

If the judgment of a partnership creditor against the firm is prior in:
point of time to the judgment of an individual creditor against one of the
partners, the share which the partnership creditor is entitled to receive out
of the partnership assets must be first applied as a credit on his judg-
ment against the separate partner, in relief of the fund of such separate
partner, for the benefit of the separate creditor. In re A. T. Lewis, 8
B. R. 546.

When a judgment has been obtained by a partnership creditor against
the members of the firm, it operates as a several lien against the real
estate of each partner, and if prior in point of time to a judgment ob-
tained against an individual partner by an individual creditor of such
partner, is to be preferred to such subsequent judgment. Ibid.

A creditor who holds a judgment against all the partners, rendered on a
firm note, is not entitled to a dividend out of the separate estate of each
partner on an equal footing with the separate creditors. In re Berrian et.
al., 44 How. Pr. 216; s. c. 6 Ben. 297.

The assignee may settle an indebtedness of the partnership by can-
celling a debt due from the creditor to the separate estate of one of the
partners, and placing the sum to the proper account. If the claim is dis-
puted, the assignee may retain in his possession as much of the proceeds
which would otherwise belong to the creditor of the partnership as may be
necessary to satisfy the debt due from the partnership creditor to the
separate estate of one of the members. In re Atkinson & Kellogg, 10 B. R.
585; s.¢c. 7 C. L. N. 9.

- The rule that appropriates partnership property to the payment of part-
nership debts is for the benefit of the partners, and they may waive it.
A mortgage is not void as against partnership creditors, because the notes
or debts which it was in fact given to secure were individual debts of the
respective partners, and not properly a partnership demand. In re Kahley
et al, 4 B. R. 878; s. c. 2 Biss. 383.

The presumption is, that an arrangement made by one partner to sell
firm property, and, in consideration thereof, to receive goods for his own
individual use, is entered into by both parties in fraud of the partnership.
This presumption may be rebutted by showing an express or implied
assent of the other partners, but without such proof the arrangement is
void. Taylor vy. Rasch, 5 B. R. 399.

48
754 THe Bankruptcy Law.

A member of a firm may assign his interest in the existing assets of the
firm, subject to the claims of the creditors of the firm and of the other
partners. The fact that the mortgagor purchased other goods after the
making of the mortgage, and mingled them with mortgaged goods, is not
material, when the proceeds of the property actually mortgaged are more
than the sum claimed by the mortgagee. The mortgagor can not, by such
an act, in any way affect the title of the mortgagee. Thompson,v. Spittle,
102 Mass. 207.

The fact that a note secured by a mortgage is also secured by the
signature of a surety who gave the payee a mortgage of his property
as additional security, imposes no obligation on the payee of the note to
resort to him. He has a right to resort to the principal debtor and to the
security obtained from him. Against the surety the unsecured creditors
have no superior equity. Ibid.

If the separate estate of one partner is more than enough to pay his
separate debts, at the amounts proved as they stood at the time of the
adjudication of bankruptcy, the surplus of such separate estate over such
debts is to be added to the partnership estate, and applied to the payment
of joint debts, before paying interest on the separate debts after that
time. In re Berrian et al., 44 How. Pr. 216; s. c. 6 Ben. 297.

A former partner of the bankrupt will not be allowed to receive a divi-
dend on notes given to him by the bankrupt for his share in the firm
at the time of the dissolution theréof until the joint creditors are paid in
full. In re Frederick Jewett, 1 B. R. 495; s.c. 7 A. L. Reg. 294.

Discharge.— Upon an application for a discharge, there are in reality
two cases, and the petition of each partner for a discharge, and the objec-
tions made to it, must be considered severally. Each bankrupt must stand
or fall by his own acts. Those of his copartner, committed without his
knowledge, will not affect him, excepting that a neglect to do what the
law positively requires, such as keeping proper books, will affect both,
though it should actually be the neglect of one only. In re George &
Proctor, Lowell, 409; in re George M. Garwood, Crabbe, 516.

Specifications which apply to one partner alone will not prevent the
discharge of the other partners. The discharge is to be granted or refused
to them the same as it would be if the defaulting partner were not a party
to the proceedings. In re Scofield et al. 3 B. R. 551.

The question whether the bankrupts were partners or not, at the time
of the commencement of proceedings in bankruptcy, will not be enter-
tained on the hearing of their petition for a discharge. In re Gilbert &
Lamphier, 1 N. Y. Leg. Obs. 327.

Proceedings where Partners Reside in Different Districts.— This set-
tion applies only to a case where two or more persons who are partners are
adjudged bankrupts. The clause which provides that where “such co-
partners reside in different districts, that court in which the petition
is first filed, shall retain exclusive jurisdiction over the case,” means that
where two or more petitions are filed in different districts, praying that
two or more persons who are partners be adjudged bankrupt, the court
in which the first in order of time is filed shall have exclusive jurisdiction

’
CoRPORATIONS. 155

to do what this section allows and adjudges bankrupts. In re Boylan, 1
BR. 238, c. 1 Ben. 266; in re M. C. Smith, 1 B. R. 214,

This provision implies that the court which first obtains jurisdiction
over the subject-matter of the petition and over the person of the peti-
tioner, shall have exclusive jurisdiction over the case; that is over the sub-
ject-matter of the petition and over all the copartners, if the nonpetitioning
copartners are brought in by appropriate process. In re Penn et al., 5 B.
R. 80; s. c. 5 Ben. 89; s.c. 2 L. T. B. 190.

One partner can not file a petition against his copartners in the district
where he resides, but in which they have neither resided nor carried on
business during any portion of the six months next preceding the filing of
the petition. In re Work, McCough & Co., 30 Leg. Int. 361. Contra, in
re Penn et al., 5 B. R. 30; s. c. 5 Ben. 89; s. c. 2 L. T. B. 190.

Where the members of a firm reside in different districts, the only court
that has jurisdiction of a petition against the firm, is the district court of
the district jin which the firm carries on business. Cameron v. Canieo, 9
B. R. 527; in re Horace Hall, 5 Law Rep. 269.

If proceedings to have the firm declared bankrupt, are commenced in one
district on the same day that proceedings in bankruptcy are commenced
by one of the partners in another distridt, the assignee elected in the
former proceedings is alone the proper assignee of the firm. Cannon v.
Wellford, 22 Gratt. 195. ;

By the commencement of proceedings to have a firm declared bankrupt,
the district court obtains jurisdiction of both partners, and a subsequent
proceeding by one partner in another district is void. Ibid.

When each partner files a separate petition in distinct and separate
courts, the partnership property will not vest in the assignee of either
court. The proceedings in the court where the latest petition was filed are
yoid. In re Greenfield, 42 How. Pr. 469; s. c. 5 Ben. 552.

An adjudication against a member of a firdn in one district does not
prevent a subsequent adjudication against the firm in another district. In
re Jewett & Co., 15 B. R. 126; s.c. 16 B. R. 48;8.c.9 C0. L. N. 345.

Act or 1898, Cu. 1, Suc. 1, * * *. Corporations, Meaning of. —
(8) “ Corporations ” shall mean all bodies having any of the powers
and privileges of private corporations not pogsessed by individuals
or partnerships, and shall include limited or other, partnership asso-
ciations organized under laws making the capital subscribed alone
responsible for the debts of the association.

THE Same, Cu. 2, Sec. 2. * * *. Punishment of Corporations.—
(4) Arraign, try, and punish bankrupts, officers, and other persons,
and the agents, officers, members of the board of directors, or trustees,
or other similar controlling bodies, of corporations for violations of
this Act, in accordance with the laws of procedure of the United
States now in force, or such as may be hereafter enacted, regulating
trials for the alleged violation of laws of the United States.
756 Tur Bankruptcy Law.

Act oF 186%, § 5122. The provisions of this Title shall apply
to all moneyed, business or commercial corporations and joint stock
companies, and upon the petition of any officer of any such corpora-
tion or company, duly authorized by a vote of a majority of the
corporators at any legal meeting called for the purpose, or upon the
petition of any creditor of such corporation or company, made and
presented in the manner provided in respect to debtors, the like pro-
ceedings shall be had and taken as are provided in the case of debtors.
All the provisions of this Title which apply to the debtor, or set
forth his duties in regard to furnishing schedules and inventories,
executing papers, submitting to examinations, disclosing, making over,
secreting, concealing, conveying, assigning, or paying away his money
or property, shall in like manner, and with like force, effect, and
penalties, apply to each and every officer of such corporation or
company, in relation to the same matters concerning the corporation
or company, and the money and property thereof. All pay-
ments, conveyances, and assignments declared fraudulent and void
by this Title when made by a debtor shall in like manner, and to
the like extent, and with like remedies, be fraudulent and void
when made by a corporation or company. Whenever any corpora-
tion by proceedings under this Title is declared bankrupt, all its
property and assets shall be distributed to the creditors of such
corporation in the manner provided in the Title in respect to natural
persons. But no allowance or discharge shall be granted to any
corporation or joint stock company, or to any person or officer or
member thereof.

Statute revised — March 2, 1867, ch. 176, § 37, 14 Stat. 535.

Construction.—Only such portions of the bankruptcy system as are
expressly or impliedly adopted by this section are applicable to corpora-
tions or joint-stock companies. New Lamp Chimney Co. v. Ansonia Brass
& Copper Co., 13 B. R. 385; s. c. 10 B. R. 855; s. c. 64 Barb. 485; s. ¢. 53
N. Y. 128; s, a 91 U. 8.“656.

What Corporations.— A corporation created for the purpose of carrying
on or pursuing any lawful business defined by its charter, and clothed
with power so to do for the sake of gain, is clearly a business corporation,
and amenable to the provisions of the bankruptcy act. Rankin & Pullen v.
Florida, Atlantic & G. C. R. R. Co., 1 B. R. 647; s. ce. 1 L. T. B. 85.

Public corporations created for municipal or political purposes, and such
private corporations as are ecclesiastical or eleemosynary, or established
for the advancement of learning, are clearly not made subject to the pro-
visions of the act. The words, ‘‘ moneyed, business, or commercial corpora-
tions,” are intended to embrace all those classes of corporations that deal
CORPORATIONS, TD

in or with money or property in the transactions of money, business, or
commerce, for pecuniary gain, and not for religious, charitable, or educa-
tional purposes. The attempt to limit the word “ business” so as to be
merely synonymous with trading, would deprive it of its meaning beyond
that included in the other words, * moneyed,” and “commercial.” A
trading corporation is a commercial corporation. The word “ business”
has a broader meaning as applied to corporations. A railroad corporation
is chartered to conduct the business of a common carrier, and is subject to
the provisions of the act. If the whole interest does not belong to the
government, or if the corporation is not created for the administration of
political or municipal power, the corporation is private. The question
whether railroad corporations are subject to be dealt with under the pro-
visions of the bankruptcy act is not one of which the solution is dependent
upon the special provisions of the statutes of the several States regulating
the transfer of the corporate property or franchises, or the mode of apply-
ing them to the payment of the corporate debts. As the system of bank-
ruptcy is to be uniform throughout the United States, the solution of this
question must depend upon the construction of the terms of the act itself,
and not upon the particular legislation of the several States. Adams v.
Railroad Co., 4 B. R. 314; s. c. 6 A. L. Rev. 365; s. c. 1 Holmes, 30;
Sweatt v. Railroad Co., 5 B. R. 234; s. ec. 1 L. T. B. 278; in re Southern
Minn. R. R. Co., 10 B. R. 86. Contra, Tucker v. Opelousas & Great
Western R. R. Co., 3 B. R. (quarto) 31.

Railways are created for the purpose of carrying passengers and freight,
and they are everywhere regarded as common carriers, when engaged in
transporting merchandise and the baggage of their passengers. Steam-
ship and steamboat companies, when incorporated and engaged in ac-
complishing the purpose for which they are created, and canal corporations
not of a public character, are undoubtedly commercial corporations.
Created as railways are for the same general purpose as the other corpo-
rations named, they are legally known by the same denomination, and are
properly included in the same classification. All such corporations con-
tract immense amounts of business, and may, perhaps, in view of that fact
be well enough called business corporations, but their true legal and con-
stitutional denomination is that of commercial corporations, as they are
created for the purpose of transporting passengers and freight, which is a
commercial business, as it involves intercourse and an interchange of
commodities. Every corporation which transacts business for gain as its
chief and ultimate purpose is, in a general sense, a business corporation.
The word business as applied to corporations has a broader meaning than
the word commercial as used in the same clause, but it was not the in-
tention of Congress to give such a scope to the word business as to
supersede the words moneyed and commercial, and leave them without
any practical signification. Railways are private corporations just as
much as steamship and steamboat companies, or canal corporations, where
the stock belongs to the corporators, or as much as moneyed, manufac-
turing or business corporations. Doubtless some such corporations are
More convenient and useful than others, but the question is not affected by
758 Tur Bankruptcy Law.

the degree of importance which attaches to the corporation. Sweatt vy,
Boston R. R. Co., 5 B. R. 234; 8. c, 1 L. T. B. 278; Ala. & Chat. R. R. Co.
v. Jones, 5 B. R. 97; Winter v. R. R. Co., 7 B. R. 289; s. @ 2 Dillon, 487;
in re Greenville & Col. R. R. Co., 6 A. L. J. 422; 5. c. 5 C. L. N. 124; in re
California Pacific R. R. Co., 11 B. R. 193; s. c. 3 Saw. 240.

The business of insurance is included within the definitions of the sec-
tion. In re Merchants’ Ins. Co., 6 B. R. 48; s. c. 3 Biss. 162; s. c. 2 L. T. B,
2438.

Inasmuch as the general bankruptcy law has not yet expressly repealed
the specific provisions relating to the administration of the affairs of
insolvent national banks, and does not necessarily contradict them, it
must be presumed that it was the intention of Congress to except this class
of corporations from the operations of the law. Smith v. Manuf. Nat’l.
Bank, 9 B. R. 122; s. c. 5 Biss. 499.

The jurisdiction of the bankruptcy court is not ousted because the State
is a creditor. In re Greenville & Col. R. R. Co., 6 A. L. J. 422; 5s. c. 5 C.
L. N. 124.

Voluntary Petition.— No other petition on behalf of the corporation can
be recognized under the act than one which has been duly authorized by a
vote of a majority of the corporators at a legal meeting called for the pur-
pose. A “corporator,” as understood both in the law respecting corpo-
rations and in common speech, is one who is a member of a corporation;
that is to say, one of the constituents or stockholders of the corporation.
Congress has power to prescribe the conditions upon which the benefits
of the act may be attained, and the mode of procedure for their attain-
ment, and when prescribed, these conditions must be complied with. The
action of a board of trustees which, by the laws of the State, has the man-
agement of the ordinary business of the corporation, can not be regarded
as the action of the corporators. The corporators themselves must act in
a meeting called for that purpose. In re Lady Bryan Mining Co., 4 B.
R. 144, 394; s. ec. 2 Abb. GC. C. 527; s. c. 1 Saw. 349; Ansonia Brass Co. v.
Chimney Co., 10 B. R. 355; s. c. 13 B. R. 385; s. c 64 Barb. 485; s. «
53 N. Y. 123; s. c. 91 U. S. 656.

The only fair and reasonable construction of the words ‘‘ majority of the
corporators”’ is to so interpret them as that the holders of a majority
of the shares of the capital stock may authorize the filing of a petition.
When a corporation seeks to avail itself of the provisions of the bank-
ruptey act, it can do so only in the mode prescribed by the act, and the
petition in bankruptcy can only be filed by authority of the corporators
holding a majority of the shares of stock, given at a legal meeting called for
that express purpose. Where the commencement of proceedings was un-
authorized and void, no subsequent ratification by the corporators can
make the proceedings valid. It is not a matter of agency but of juris-
diction. In re Lady Bryan Mining Co., 4 B. R. 144, 394; s. ec. 2 Abb. ©.
C. 527; s. ec. 1 Saw. 349.

Where all practicable measures have been taken to have a fair stock-
holders’ meeting, the vote will be deemed sufficient although there was an
irrgularity in the call on account of the contumacy of some of the direct-
ors. Davis v. Railroad Co., 18 B. R. 258; s. ce. 1 Woods, 661.
Petition — Errects or BANKRUPTCY. 759

If a stockholder dies intestate and no letters of administration are taken
out on his estate, his stock can not be counted. Freeman’s Nat’l. Bank v.
Smith, 18 Blatch. 220.

When the petition of a corporation has been filed without the
consent of the corporators legally obtained, an attaching creditor
may file a petition asking ‘to have the proceedings dismissed. In
re Lady Bryan Mining Co., 4 B. R. 144, 804; s. c. 2 Abb. C. C. 527; 8. 1
Saw. 349.

If the petition is filed by virtue of a resolution of the directors alone,
it will not be dismissed at the instance of a corporator who,with full knowl-
edge of all the facts, delayed making his application for more than a year.
In re Baltimore County Dairy Association, 11 B. R. 253; s. c. 2 Md. L. R.
297; in re Jefferson Ins. Co., 11 B. R. 287.

The proof of his claim does not estop a creditor from setting up the
invalidity of the proceedings on the ground that the petition was filed
by the officers without the consent of the corporators, for consent can not
give jurisdiction. Ansonia Brass Co. v. Chimney Co., 10 B. R. 355; s. ¢.
13 B. R. 385; s. c. 64 Barb. 485; s. c. 53 N. Y. 123; s. c. 91 U. S. 656.

Whether the president was duly authorized to file the petition or not,
is a question of fact to be determined by the district court. If there is a
total defect of evidence to prove the essential fact and the court finds it
without proof, the action of the court is void, but when the proof exhibited
has a legal tendency to show a case of jurisdiction, then, although the
proof may be slight and inconclusive, the action of the court will be valid
until it is set aside by a direct proceeding for that purpose. Ibid.

Whether the officers who filed the petition were duly authorized to do
so by a proper vote of the stockholders, is a question that can not be raised
in a collateral action. Davis v. Railroad Co., 13 B. R. 258; s. c. 1 Woods,
661.

Even though the petition is filed upon the authority of a vote of the
directors and not of the corporators, yet the funds in the hands of the
assignee can not be attached under a writ of attachment issued upon a
judgment rendered in a State court against the corporation. The ques-
tion whether the petition was filed by an officer of the corporation legally
authorized by the act to do so, is one which belongs to the bankruptcy
court; and whilst the proceedings in bankruptcy are in fieri, its judgment
and the grounds upon which it was rendered are not matters of review in
a State court. The assignee holds the property by virtue of his appoint-
ment by the bankruptcy court, and to that court alone is he responsible
for its custody and disposition. Newman v. Fisher, 37 Md. 259.

In cases of involuntary bankruptcy, it is not necessary that there shall
be a previous vote of the shareholders or corporators in order to authorize
an attorney to appear for the corporation, and admit the alleged acts of
bankruptcy and consent to an adjudication. Leiter v. Payson, 8 B. R. 317;
8c. 9 B. R. 205, s.c. 6 C. L. N. 157.

Effects of Bankruptcy.— The creditors have a right to all the property
of the corporation which is all that they acquire by bankruptcy, and the
Provision in the law declaring that it shall not be discharged, is based upon
%60 Tur Bankruptcy Law.

that proposition, and the ulterior remedy which they may have predicated
upon the personal responsibility of the stockholders, officers, or members,
and which would be destroyed if the debt itself were discharged. Allen v.
Soldiers Bus. Mes. & Dispatch Co., 4 B. R. 587; s. c. 2 L. T. B. 158.

A corporation for all essential purposes is as effecutally dissolved by
the commencement of proceedings in bankruptcy, as if a solemn judgment
were pronounced to that effect. It is such a dissolution as will afford cred-
itors a remedy against the individual shareholders where they are made
liable upon dissolution of the corporation. State Savings Association v.
Kellogg, 52 Mo. 583.

A bankrupt corporation is not liable for an injury caused by the negli-
gence of an assignee or receiver. Metz v. Buffalo, Corry & P. R. R. Co.,
12 B. R. 559; s. ¢. 58 N. Y. 61.

The purchasers of a franchise of a bankrupt corporation do not, by the
purchase, take the place of the pre-existing stockholders, and thereby be
come the corporators acquiring the corporate entity. Ibid.

Suits against Stockholders.— Before recovery can be had in an action at
law from the stockholders of an insolvent corporation in respect of the
unpaid balances on their stock subscriptions, there must be either corporate
action to fix, or a judicial ascertainment of the defendant’s liability. . Pay-
son v. Brooke, 1 W. N. 89.

It is not competent for the assignee of a bankrupt corporation of his
own motion to make an assessment on unpaid balances or installments on
stock in such corporation. Ibid.

The assignee can not file a bill in equity against the stockholders for the
purpose of having an account of the assets taken, and a call made for un-
paid subscriptions. Myers v. Seeley, 10 B. R. 411; s. ¢. 1 Cent. L. J. 451.

The district court has the power to call in the unpaid stock for the pur-
pose of paying the debts of the corporation. In re Republic Ins. Co., 3 Biss.
452; Sanger v. Upton, 13 B. R. 226; s. c. 91 U. S. 56; Webster v. Upton,
91 ~U. S. 65.

If the certificate of stock provides that the balance unpaid thereon shall
‘be paid on the call of the directors when ordered by a vote of the majority
of the stockholders themselves, the bankruptcy court may make or direct
any assessment or call necessary or preliminary to the collection of the
assets, as fully to all intents and purposes as the stockholders or directors
could have done if the company had not gone into bankruptcy. After the
commencement of ‘the proceedings in bankruptcy, neither the chartered
officers nor stockholders had any right to interfere with the collection or
distribution of the estate. All power over the estate and the assets of the
company became thereby vested in the bankruptcy court, which then had
the power and control over the assets that was previously vested in either
the chartered officers of the company, or the stockholders, or both col-
lectively. Upton v. Hansbrough, 10 B. R. 369; s. c. 8 Biss. 417; Sanger v.
Upton, 13 B. R. 226; s. ¢. 91 U.S. 56.

Although the right to make an assessment does not arise under the
charter, except in case of “ losses exceeding the means of the corporation,”
yet the clause does not limit the right of the company or court to make an
EFFECTs oF BANKRUPTCY. 761

assessment for the payment of losses only. When the funds are exhausted
by losses, and an assessment becomes necessary, it may be made for all
purposes, either to pay debts already contracted or to create a new fund
for the purpose of a business basis. In re Republic Ins. Co., 3 Biss. 452.

Tivery stockholder is bound to take notice of what the bankruptcy court
does in winding up the affairs of the company, and it is in the discretion
of the bankruptcy court whether to direct notice to be given to the stock-
holders or not before or during an assessment upon the stock. Upton v.
Burnham, 8 B. R. 221; s. c. 3 Biss. 520; Upton v. Hansbrough, 10 B. R.
369; s. c. 3 Biss. 417.

If the order is made without notice, they may be considered as quasi
parties to the bankruptcy proceedings to such an extent as to be bound
by it in a collateral action. If they are dissatisfied with it, they have such
a standing in the bankruptcy court as to enable them to move in that
court to set aside the order if improvidently made, or to apply for a review
in the circuit court. If they omit to do so, they are concluded in a col-
lateral action. Neither can the question whether the call is for a larger
amount than is necessary be inquired into collaterally. Upton v. Hans-
brough, 10 B. R. 369; s. c. 3 Biss. 417; Upton v. Burnham, 8 B. R. 221; 5. ¢.
3 Biss. 520; Sanger v. Upton, 13 B. R. 226; s. ec, 91 U. S. 56; Michener vy.
Payson, 13 B. R. 49; s. c. 8 C. L. N. 17; s. c. 2 W. N. 339.

Not only the corporation, but its entire constituency, is before the
court, and full justice can be done not only to creditors but among
stockholders. If a part of the stockholders have paid more than their fair
proportion, the others who have not paid can be compelled to pay enough
to adjust the account among stockholders. The district court, having all
the powers of a court of equity in the premises, can compel every stock-
holder to pay what in equity and good conscience he ought to pay, and dis-
tribute the proceeds of such payment among those entitled to receive it,
whether creditors or stockholders who have paid more than their ratable
share. In re Republic Ins. Co., 3 Biss. 452.

An assessment may be made to pay the unearned premiums, to cancel
policies yet unexpired. Ibid.

An assessment may be made to pay the expenses of closing the affairs
of the company. ‘This is incident to the administration of the law, and the
item is one to be provided for out of the unpaid stock. Ibid.

An assignee of a bankrupt corporation may sue at law to recover the
balance due on subscription for stock. Sanger v. Upton, 13 B. R. 226;
8.¢c. 91 U. S. 56.

An exemplification of a decree authorizing an assessment of the stock-
holders by the assignee is not admissible if parts of the records of the
Proceedings that culminated in the decree are not certified and there is no
offer to prove their contents. Payson v. Brooke, 1 W. N. 89.

An assessment by the bankruptcy court does not preclude a policyholder
from making a defense to an action on the premium which shows that it
is void. Lamb v. Lamb, 13 B. R. 17; s. c. 6 Biss. 420.

If a party pays part of a subscription for stock and accepts a certificate
in blank, he is liable for the unpaid balance due thereon. Sanger v. Upton,
13 B. R, 226; s. c. 91 U. 8. 56.
762 THe Bankruptcy Law.

A premium note given to a foreign insurance company whose agent
has not complied with the law in regard to filing his commission is void.
Lamb y. Lamb, 13 B. R. 17; s. c. 6 Biss. 420.

Misrepresentation at the time when the subscription was taken, is no de-
fense to an action by the assignee if the stockholder has been guilty of
laches in discovering the fraud. Farrar v. Walker, 138 B. R. 82; s c 2
Cent. L. J. 670.

If a party has taken his certificate of stock and received a dividend
thereon, he can not defeat an action for his subscription by proving a
representation in regard to the establishment of a local office which was
never carried out. Michener v. Payson, 13 B. R. 49; s.c.8C. L. N. 17; s. ¢
2 W. N. 339.

A plea that a subscription was obtained by a fraudulent misrepresenta-
tion must show that the defendant made use of reasonable diligence to
make himself acquainted with the matters of fact in respect of which the
fraud is claimed, and when and how he repudiated the contract, and that
he offered to surrender the certificate promptly upon discovering the
fraud. Upton v. Englehart, 3 Dillon, 496.

A misrepresentation by an agent of the effect of the laws of another
State, will not be a defense to an action by an assignee to recover the
amount due on the subscription, if the subscriber has been guilty of any
laches in discovering the fraud and repudiating the subscription. Ibid.

Where papers having color of compliance with the State statutes have
been filed with the proper State officers, which meet their approval, but are
in fact so defective as to be incapable of supporting the corporation as
against the State, they are against a subscriber to its capital sufficient to
constitute a corporation de facto if supported by proof of user. Upton v.
Hansbrough, 10 B. R. 369; s. c. 3 Biss. 417.

A resolution releasing the stockholders from liability for the balance due
on their stock is fraudulent and inoperative when not made public. Ibid.

No fraud or misconduct by the managers of a corporation can be set up
by stockholders to defeat their liability to creditors on unpaid stock. In
re Republic Ins. Co., 3 Biss. 452.

A representation made by an agent at the time of taking a subscription
that no more than twenty per cent. would be called for, will not release the
subscriber from his agreement. Payson v. Withers, 5 Biss. 269.

Stockholders are liable to be compelled to pay whatever remains unpaid
upon their stock, whenever it becomes necessary that such payment should
be made for the purpose of discharging the debts of the company, although
the word ‘‘ nonassessable,” is written or printed across the face of the
certificate. As between the company and its stockholders, this contract
may be binding. Upton v. Burnham, 8 B. R. 221; s. c. 3 Biss. 520; Webster
v. Upton, 91 U. S. 65. ;

To a certain extent, the terms of a grant are subject to the control of the
legislature, and every stockholder takes his shares subject to that control,
and subject also to the control of those who manage its affairs — namely,
the board of directors. When the legislature merely declares that, instead
of the stock being increased by the corporation at the discretion of the
Errects or BANKRUPTCY. 763

stockholders, the stock shall be increased by the resolution or act of the
board of directors, there is not such a change as will authorize a stock-
holder to say that his subscription is at an end. Payson v. Withers, 5 Biss.
269; Payson v. Stoever, 2 Dillon, 427.

When a citizen of one State subscribes to the stock of a foreign corpora-
tion, he is presumed to know what the terms of the act are which created
that corporation. They are created by the law of another State, and he,
for the purpose of assuming his obligation, in a certain sense, goes into
another State, and casts off, for the time, the vesture which his own State
throws around him, and puts on that of the other State, and is bound by
the obligations which the legislature of that State has imposed upon the
corporation, the privileges which it has granted, and the conditions
and terms of the grant. All these he is presumed to know, just as much
as when he makes any contract to be executed by him in another State.
Payson v. Withers, 5 Biss. 269.

The mere assignment of the certificate does not, of itself, constitute the
assignee a stockholder, or create a liability upon the part of such transferee
to pay assessments upon the stock. Upton v. Burnham, 3 Biss, 431.

The transferee of stock on the books of the corporation is liable for calls
for the unpaid portion made during his ownership without proof of any
express promise made by him to pay such calls. Webster v. Upton, 91 U.
8. 65.

The vendor has a right to request that the stock shall be transferred on
the books of the company, and when it is made at his request the pur-
chaser becomes liable for subsequent calls. Ibid.

A certificate to a party, or registry of his name upon the stock register, is
not absolutely necessary to constitute the legal relation or privity. The
purchaser may waive it, and be held liable, without either a certificate or
registry of his name. Upton vy. Burnham, 3 Biss. 431.

An indebtedness on stock subscription is a debt that prevents a transfer
of the stock. In re Bachman, 12 B. R. 223; s. c. 2 Cent. L. J. 119.

A transfer by the officers of a corporation while a debt remains unpaid,
is void. Ibid.

Authority to an officer to make the transfer, is not sufficient where the
by-law requires that the transfer shall be on the books of the corporation.
Ibid.

The provision requiring the transfer to be upon the books of the com-
pany is for the benefit of the company, and the company can waive it; and
if it is waived at the request of the holder of the certificate, or with his
consent, express or implied, he is liable directly to the company for future
assessments. Upton v. Burnham, 8 B. R. 221; 8. ¢. 3 Biss. 431, 520.

If the certificate is indorsed in blank, and passed from the original sub-
scriber to others, the entry of the name of the holder upon the stock-books
is a waiver. The holder of a stock certificate, by assignment and blank
transfer to him, becomes thereby clothed, not only with all the rights, but
With all the obligations of a stockholder. Ibid.

If a dividend is paid to an officer at a time when a prudent officer should
have known that there were no profits to be divided, the assignee may
recover the amount. Main vy. Mills, 6 Biss. 98.
64 THE Bankruptcy Law.

§ 5123. Whenever a corporation created by the laws of any State,
whose business is carried on wholly within the State creating the
same, and also any insurance company so created, whether all its
business shall be carried on in such State or not, has had proceed-
ings duly commenced against such corporation or company before
the courts of such State for the purpose of winding up the affairs
of such corporation or company and dividing its assets ratably among
its creditors and lawfully among those entitled thereto, prior to pro-
ceedings having been commenced against such corporation or com-
pany under the bankruptcy laws of the United States, any order
made, or that shall be made, by such court agreeably to the State
law for the ratable distribution or payment of any dividend of assets
to the creditors of such corporation or company while such State
court shall remain actually or constructively in possession or control
of the assets of such corporation or company shall be deemed valid
notwithstanding proceedings in bankruptcy may have been com-
menced and be pending against such corporation or company.

Statute revised — Feb. 3, 1878, ch. 185, 17 Stat. 436.

The State laws relating to insolvent corporations are superseded by the
bankruptcy act. A State court has jurisdiction of an action taken by the
State attorney-general to forfeit the charter of a corporation; but with
the degree of forfeiture the jurisdiction ends. It can not go on and ad-
minister upon the property of the corporation, for the insolvent laws of
the State touching insolvent corporations, by virtue of which the court
can alone act, are no longer in force. The fact that the corporation has
expired, and become extinct by the forfeiture of its charter, and that in
consequence thereof no proceedings can be had against it, is no defense
to an action to recover its property. The court will lay hold of such
property wherever it can find it; and persons in possession of the same,
whether claiming in open wrong or under a show of title, are parties
proper to be made defendants in such a proceeding. Its property may be
taken from a receiver appointed by a State court in an action to forfeit
its charter. Thornhill v. Bank, 3 B. R. 485; s.c.1L. T. B. 156; 5. « 3
L. T. B. 38; s. c. 2 C. L. N. 157.

A State court which has a general equitable jurisdiction to settle the
affairs of an insolvent corporation, does not lose it because proceedings -
in bankruptcy are instituted against the corporation. Until there is an
adjudication of bankruptcy, the State court preserves its jurisdiction.
Watson v. Citizens’ Savings Bank, 9 B. R. 458; s. ¢. 5 Rich. (N. 8.) 159.

‘An attorney of a corporation who advises it to apply for the benefit of
the bankruptcy law, after the passing of an order by a State court re-
straining it from disposing of its funds, is guilty of a contempt to the
State court. Ibid.

we
EFFECTS oF BANKRUPTCY. * 165

The jurisdiction of a State court over an insolvent corporation is at
an end the moment the corporation is adjudged a bankrupt, and in this
respect there is no difference between the proceedings of a State court
under a particular statute relating to insolvent corporations and its pro-
ceedings under its general powers as a court of equity, to wind up the
affairs of an insolvent corporation. Watson v. Citizens’ Savings Bank,
11 B. R. 161.

The district court may take jurisdiction of the affairs of an insolvent
corporation, even after the filing of a bill in a State court, to wind up its
affairs, if no receiver has been appointed, although the officers may have
been enjoined from disposing of its property. Ibid.

This action applies only to,such orders relating to the ratable distribu-
tion or payment of dividends as the State courts may have passed prior
to the commencement of proceedings in the district court, or prior to the
adjudication in bankruptcy. Ibid.; id re National Life Ins. Co., 6 Biss. 35.

A voluntary assignment is not a proceeding duly commenced against
a corporation for the purpose of winding up its affairs, and does not pre-
vent an adjudication of bankruptcy. In re Harris, Rice & Co., 2 Cent.
L. J. 224.

Until the assignee is appointed, the action of the receivers, who are
officers of a State court, and the validity of arrangements made with
them will not be affected by the commencement of proceedings in bank-
ruptey against a corporation. Adams vy. Railroad Co., 4 B. R. 314; s. c. 6
A. L. Rev. 365; s. c. 1 Holmes, 30.

The costs and commissions of the receiver should be paid before the
balance is paid to the assignee. Loudon v. Blanford, 56 Ga. 150.

If the assignee applies for the funds in the hands of a receiver, the
State court may first direct that the fees for the defendants’ counsel shall
be paid. Clark v. Binninger, 1 Abb. N. C. 421.

A receiver of an insolvent corporation is not entitled to an allowance
for the expense incurred by him in employing counsel to resist a suit
brought by the assignee to recover the property. Platt v. Archer, 13
Blatch. 351. '

A receiver can not be allowed for the expense of the services of an
attorney in accounting before a State court after the commencement of
the suit by the assignee to recover the property. Ibid.

A receiver may be allowed the expense for the services of counsel which
benefited the estate and were not hostile to the commencement of the
proceedings in bankruptcy. Ibid.

A receiver of an insolvent corporation is not entitled to an allowance
for the expense incurred by him in resisting the proceedings in bank-
tuptcy, Ibid,
TITLE XIi.

FEES, COSTS AND ATTORNEY-GENERAL’S
STATISTICS.

Act oF 1898, Cu. 5, § 40. Compensatiow of Referees.— (a) Ref-
erees shall receive as full compensation for their services, payable
after they are rendered, a fee of tqn dollars deposited with the clerk
at the time the petition is filed in each case, except when a fee is
not required from a voluntary bankrupt, and from estates which
have been administered before them one per centum commissions
on sums to be paid as dividends and commissions, or one-half of
one per centum on the amount to be paid to creditors upon the
confirmation of a composition.

(b) Whenever a case is transferred from one referee to another
the judge shall determine the proportion in which the fee and com-
missions therefor shall be divided between the referees.

(c) In the event of the reference of a case being revoked before
it is concluded, and when the case is specially referred, the judge
shall determine what part of the fee and commissions shall be paid
to the referee.

§ 48. Compensation of Trustees.— (a) Trustees shall receive, as
full compensation for their services, payable after they are rendered,
a fee of five dollars deposited with the clerk at the time the petition
is filed in each case, except when a fee is not required from a volun-
tary bankrupt, and from estates which they have administered, such
commissions on sums to be paid as dividends and commissions as
may be allowed by the courts, not to exceed three per centum on
the first five thousand dollars or less, two per centum on the second
five thousand dollars or part thereof, and one per centum on such
sums in excess of ten thousand dollars.

(b) In the event of an estate being administered by three trustees
instead of one trustee or by successive trustees, the court shall appor-
tion the fees and commissions between them according to the services
actually rendered, so that there shall not be paid to trustees for the
administering of any estate a greater amount than one trustee would
be entitled to.
ExPENSES OF ADMINISTERING ESTATES. "67

(c) The court may, in its discretion, withhold all compensation
from any trustee who has been removed for cause.

§ 51. Duties of Clerks.— (a) Clerks shall respectively (1) account
for, a8 for other fees received by them, the clerk’s fee paid in each
case and such other fees as may be received for certified copies of
records which may be prepared for persons other than officers; (2)
collect the fees of the clerk, referee, and trustee in each case insti-
tuted before filing the petition, except the petition of a proposed
voluntary bankrupt which is accompanied by an affidavit stating that
the petitioner is without, and can not obtain, the money with which
to pay such fees; (3) deliver to the referees upon application all
papers which may be referred to them, or, if the offices of such
referees are not in the same cities or towns as the offices of such
clerks, transmit such papers by mail, and in like manner return
papers which were received from such referees after they have been
used; (4) and within ten days after each case has been closed pay
to the referee, if the case was referred, the fee collected for him,
and to the trustee the fee collected for him at the time of filing the
petition.

§ 52. Compensation of Clerks and Marshals.— (a) Clerks shall
respectively receive as full compensation for their service to each
estate, a filing fee of ten dollars, except when a fee is not required
from a voluntary bankrupt.

(b) Marshals shall respectively receive from the estate where an
adjudication in bankruptcy is made, except as herein otherwise pro-
vided, for the performance of their services in proceedings in bank-
ruptey, the same fees, and account for them in the same way, as they
are entitled to receive for the performance of the same or similar
services in other cases in accordance with laws now in force, or such
as may be hereafter enacted, fixing the compensation of marshals.

§ 62. Expenses of Administering Estates.— (a) The actual and
necessary expenses incurred by officers in the administration of es-
tates shall, except where other provisions are made for their payment,
be reported in detail, under oath, and examined and approved
or disapproved by the court. If approved they shall be paid or al-
lowed out of the estates in which they were incurred.

In 1868 a suit was commenced by one T. against C. and others for the
joint benefit of the bankrupt and one W., who had agreed to share in
the results of the litigation and bear its expenses in equal proportions.
A judgment was recovered in favor of T., from which an appeal was
taken about the time the proceedings in bankruptcy were commenced.
768 Tur Bankruptcy Law.

The assignee in bankruptcy was substituted in place of the bankrupt,
who was a defendant in the suit, and contributed to the payment of counsel
fees and expenses until he gave notice that he would pay no more ex-
penses. Afterward, under an order of the court, the assignee was per-
mitted to withdraw and assign all his interest in the litigation to W.
The judgment was reversed by the general term and a new trial ordered,
and the court of appeals affirmed the judgment of the general term. The
counsel having, after the termination of the suit, presented a claim against
the assignee for their services before as well as after his substitution;
Held, that they were only entitled to payment for their services and dis-
bursements after the assignee stipulated to be substituted, and that W.,
by taking the assignment of the assignee’s interest, assumed all its bur-
dens, and has no equity to demand reimbursement from the assignee.
In re Litchfield, 18 B. R. 347.

While the assignee is bound to pay a reasonable compensation for the
use of premises occupied by him in winding up the estate, he does not,
by accepting the trust, become the assignee of leases belonging to the
bankrupt, or bound to pay’ the rent reserved. In re Ives et al., 18 B. R.
28.
The same rule applies where the marshal kept property seized by him
on premises which had been leased by the bankrupt. The estate is liable
to the landlord before the appointment of the assignee, not on the ground
of contract, but upon equitable considerations for a benefit conferred
upon the estate, and the allowance is ‘to be measured by the benefit
thus conferred. Ordinarily it is the value of the premises for storage
of the goods, unless circumstances are such as to make a greater expense
proper. The landlord is entitled to nothing by virtue of the covenants
of the lease unless the assignee elected to take the lease, and thereby
became in fact the assignee thereof. In re Wheeler & Lang, 18 B. R.
885.

An assignee is not bound to take a leasehold estate belonging to the
bankrupt unless it would be beneficial to the creditors for him to do so.
White v. Griffing, 18 B. R. 399.

Where the assignee has accepted the lease, and has sold his interest,
as assignee in the leased premises to the lessor, the lease is thereby
extinguished, and the guarantor of the lease released from all liability
accruing after the commencement of the bankruptcy proceedings. Ibid.

Acts or 186% and 1875, § 5124. In each case there shall be
allowed and paid, in addition (a) to the fees of the clerk of the
court as now established by law, or as may be established by general
order for fees in bankruptcy, the following fees, which shall be
applied to paying for the services of the registers:

First. For issuing every warrant, (b) two dollars.

Second. For each day in which a meeting (c) is held, three dollars.

Third. For each order for a dividend, three dollars.

~
EXPENSES OF ADMINISTERING EstTatrs, 769

Fourth. For every order substituting an arrangement by trust deed
for bankruptcy, two dollars.

Fifth. For every bond with sureties, two dollars.

Sixth. For every application for any meeting in any matter under:
this Title? one dollar.

Seventh. For every day’s service while actually employed under
a special order (d) of the court, a sum not exceeding five dollars, to
be allowed by the court.

Eighth. For taking depositions, the fees now allowed by law.

Ninth. For every discharge when there is no opposition, two
dollars.

Such fees shall have priority of ‘payment over all other claims
out of the estate; and, before a warrant issues, the petitioner shall
deposit with the clerk of the court fifty dollars, (e) as security for
the payment thereof; and if there are not sufficient assets for the
payment of the fees, the person upon whose petition the warrant
is issued shall pay the same, and the court may issue an execution
against him to compel the payment to the register.

Statutes revised — March 2, 1867, ch. 176, § 47, 14 Stat. 540; July 27,
1868, ch. 258, § 2 15 Stat. 228. Prior Statutes — April 4, 1800, ch. 19,
§§ 46, 47, 2 Stat. 33; Aug. 19, 1841, ch. 9, § 13, 5 Stat. 448.

(a) The fees for necessary services performed by the clerk in bank-
ruptey proceedings, which are not provided for by the bankruptcy act or
the rules, but are provided for by section 828, may rightfully be taxed and
allowed under the latter. In re A. Alexander, 3 B. R. (quarto) 20.

The register is not entitled to fees of clerk in addition to the fees given
by the act to the register. In re John W. Dean, 1 B. R. 249; 5s. a 1 L.
T. B. 9; in re A. Alexander, 3 B. R. (quarto) 20.

The order of reference is not a process, and the clerk is not entitled to.
a fee of $1 for issuing it. In re John W. Dean, 1 B. R. 249; s. @..
1L. T. B. 9.

Form No. 45 is a process. Ibid.

(b)-The register is not entitled to any fee for the list of creditors that
accompanies the warrant. In re J. H. Robinson, 1 B. R. 285; s. c. 2 Ben.
145;s.c.1 L. T. B. 25.

(c) Where two meetings are held in the same case on one day, the reg-
ister is only entitled to $3. Ibid.

The word “ meeting,” wherever used in this section and elsewhere,
Means a meeting of creditors, such as is spoken of in sections 5033, 5092,
5098. In re Macintire, 1 B. R. 11; s. ec. 1 Ben. 277. Contra, in re Sher-.

wood, 1 B. R. 344; s. c. 6 Phila. 461.

1§0 amended by act of February 18, 1875, ch. 80, 18 Stat. 320.
49
770 Tuer Bankruptcy Law.

Whenever the register orders the creditors to meet, he is entitled to
this fee. In re John W. Dean, 1 B. R. 249; s.c.1L. T. B. 9. Contra, in
re J. H. Robinson, 1'B. R. 285; s. ec. 2 Ben. 145; s. c. 1 L. T. B. 25.

The register is not entitled to this fee for making an order for the bank-
rupt to appear for examination. In re Macintire, 1 B. R. 11; s. c. 1 Ben.
277.

Nor making the order to show cause against the bankrupt’s discharge.
In re J. H. Robinson, 1 B. R. 285; s. @ 2 Ben. 145; 8. c. 1 L. T. B. 25.

(d) The register is entitled to $5 a day while acting under an order to
examine the papers and report upon their regularity. In re John W. Dean,
1B. R. 249;s.c.1L.'T. B. 9; in re J. H. Robinson, 1 B. R. 285; s. c. 2 Ben.
145; s.¢c.1L. T. B. 25.

The register is entitled to $5 a day while acting under a special order of
court to take charge of the bankrupt’s property, and superintend sales
thereof. In re Loder Brothers, 3 B. R. 517; s. c. 3 Ben. 211; s.c 1. T. B.
159. :
The order of reference is not a special order, and the register is not
entitled to $5 a day while acting under it. In re John W. Dean, 1 B. R.
249; s.c.1L. T. B. 9; in re J. H. Robinson, 1 B. R. 285; s. c. 2 Ben. 145;

s.c.1L. T. B. 25; in re Sherwood, 1 B. R. 344; s. c. 6 Phila. 461.

Where the bankrupt appears in pursuance of an order for his examina-
tion, and the examination is postponed without doing anything, the reg-
ister is not entitled to $5 as for a day’s service. In re I, Clark, 1 B. R. 188;
s. ce. 2 Ben. 72.

(e) The whole $50 must be immediately handed over to the register to
whom the case is referred. Anon., 1 B. R. 24.

When a petition is dismissed for want of jurisdiction, the money de-
posited as security for the fees of the clerk and register must be returned
to the petitioner. In re Magie, 1 B. R. 522; s. ce. 2 Ben. 369.

The balance that remains after deducting the fees of the register is to
be paid to the assignee. In re Sherwood, 1 B. R. 344; s. ¢. 6 Phila. 461;
in re Appold, 1 B. R. 621; s. c. 6 Phila. 469; s. c. 1 L. T. B. 83; Anon. 1
B. R. 123; in re James, 2 B. R. 227; s.c. 1 L. T. B. 121.

If the assets are insufficient in an involuntary case, the court may order
the bankrupt to pay the fees of the clerk and the register. In re McBride,
1 W.N. 42.

When the register applies for an order for the payment of his fees in
‘excess of the deposit where there are no assets, it will be set down for
hearing upon notice to the petitioning creditors and the bankrupt. In re
McBride, 1 W. N. 16.

The following list shows the decisions that have been made in regard to
fees in the most important cases. The following abbreviations have been
used, to-wit: a, allowed; d, disallowed; r, reduced; B, not charged against
the estate, but to be paid by the bankrupt: In re J. H. Robinson, 1 B. R.
285; s. c. 2 Ben. 145; s.c.1 L. T. B, 25,
Fres. YL

REGISTER’s FEES.

Examining schedules and certifying same correct..... ..-$5 00d
Certified copy of adjudication of bankruptcy........ ,-.. O 45rto035
Application for first meeting of creditors............... 1 00d
Certified list of creditors for warrant.................. 0 95d
Supplemental warrant ....... 0... ccc cece cece eee t renee 2 00a
Certified copies of schedules for assignees .............. 4 45a
One day’s service under special order of reference upon

petition for final discharge .................. Fessenden 5 00a
Application for meeting at the same time............... 1 00d
Order to show cause and certifying copy for clerk....... 1 00d
Application for second and third meetings....... seeeee- 2 00rto100
Deposition of assignee on his return ............ seseeee. O GA
Service under special order to show cause why the bank-

rupt should not be discharged ................6- --.. 5 00a
Second and third meetings of creditors ................ 6 OOrto3 00
Services, examination of bankrupt and proceedings, and

for making a certificate of conformity ........ see mee 5 00a
Discharge without opposition ........ 0... ccc cee eee eens 2 00a

In re John W. Dean, 1 B. R. 249; s.c.1 L. T. B. 9.

REGISTER’s FEES.

Examining schedules and certifying same correct........ $5 00d
Certified copy of adjudication of bankruptcy............ 0 45rto035B
Certified copy of Memorandum ........... cee cece ween 0 45 rto035
Certified list of creditors who have proved their debts, for

Clete & ainusessceaieds oe ged Soe See ee week ee SRG eT ees 0 35a
Certified list of creditors who have proved their debts, for

assignee, not to be furnished except for dividend...... 0 35d
Order: POrii- NO; WS ice cecuiwaied ag cde cee te wMese 24% not stated. d
Order appointing assignees and notice .............06.- not stated. d
Assignment of bankrupt’s effectS ........... cee cee eens not stated. d
Certified copy of schedules for assignee ..........+.--0-+ not stated. a
Taking bond of assignee .......... ccc eseeeee rene ais te aha 2 00a
Applications for second and third meetings ............ 2 00 rto1t00
Final meeting under order to show cause .........-..+- 3 00d
Second and third meetingS ........:ce cee eee cence eeeeee 6 00 rto3 00
Final examination, 10 folios at 20c., certificate at 25c.,

charge for Certificate ..... cece cece eect een eee eens rto015
Examination of papers and certificate of conformity ..... 5 00a
DISGhAT EO <5 ¢ icc adaqis obs Dewees FANG EE ee TG eS 2 00a
Stationery, postage, rent, incidental expenses, clerk hire,

Ries as eecraaiorie 3 SEAR IAEA wes ek aus TS ....-. not stated. d

CuerK’s FEEs. |
Filing and entering petition and schedules, and oaths A
And B, at LOC. wo. cee ee cee eee reer n eet eeeees $0 30a
Issuing order, Form No. 4 wcsceeeeecee eee cee ce ceees ..e-. 1004
V2 Tue BANKRUPTCY Law.

Drawing assignment and affixing seal of court ..........$0 65a
Issuing order, Form No. 45 ..... cece eee cee ete cen eens 1 00a
Certificate of discharge and seal ............- feos alee not stated. a
Entering on six papers, certificate of day and hour of

filing, at 15a a folio ......... RBIS Spee a Sua a ES ... not stated. aB.
Glerk’s certificate and seal to judge’s signature ........ .. not stated. aB.
To certificate of discharge ...... eiadigiew ws geacansicase’s veeeeeee Not Stated, aB.

ASSIGNEE’S FEES.
Services rendered. Actual disbursements and .........$19 00a
In re A. Alexander, 3 B. R, (quarto) 20.

Cierx’s FEEs.
Filing certificate, and entry of order to record assignment.$0 40a

Filing, certifying, and entry of assignment ............. 1 05a
Certified copy of assignment ................ manuatnna’ Soules 100d
Issuing ‘warrant sc4veccswdeesesags cecauieds doncieeeaey< .150a

REGISTER’S FEEs.
Filing three papers, viz.: petition, assignment, and order

Of reference .......cscscvacencs aoeeOeRauRe eS hia Se naite S $0 75 rto045
Certifying correctness of petition and schedules ........ . 0 55a
Issuing orders of adjudication .................00.- ---. 100 ‘ rto100
Certifying same to clerk ...... Sibi SO aditia antioee tapke bit aesaaneke 1 00
Entering case and proceedings in docket ................ 1 00d
Certifying abstract of same to clerk ................005 0 25a
Certifying copy of petition and schedules .............. 6 50a
One hour’s employment order special order ............. 0 40a
One day’s service at meeting of creditors ............... 5 00 rto3 00
Oath upon return of Warrant .... ccc cece eee eee ee ees 0 50a
Issuing order appointing assignee ............. cee eens 1 00
Certifying same to clerk ¢sisscescs vues cecwee es ores vs oe 1 ak a
Application for meeting of creditors ................05. 1 00
issuing order talling the same ......... daieie Byavessteanioscainctavs 1 00 ; rto100
Certifying same to clerk ...... saanavexhane aia ad aera 8 ata aisiabiess 1 00
Affidavit to order calling meeting ............ atin . 0 50a
Affidavit to assignee’s report ......... cc cece ee eee cece ee 0 50a

In re Sherwood, 1 B. R. 344; s. ce. 6 Phila. 461.

This case was attended to in a county remote from the residence of the
register. The services performed were not rendered under any special
order of the court, except, perhaps, those rendered on the first day’s
attendance of the bankrupt. For this day $3 were allowed. Also
$3 for every day employed, subject to the conditions, imposed by
Rule VI. The traveling expenses were apportioned among the several
cases attended to at the same time, and allowed. Three dollars for each
day consumed in going and returning might be allowed, but should be
CoMPENSATION OF MARSHALS. 173

apportioned like the traveling expenses. Five dollars for each day em-
ployed at the following three stages, to-wit: the time preceding the issu-
ing of the warrant, the first meeting, and the final discharge, might be a
reasonable allowance. As the cause was ex parte, the last two points
were not definitely settled.

§ 5125. The traveling and incidental expenses of the register,
and of any clerk or other officer attending him, shall be settled
by the court in accordance with the rules prescribed by the justices
of the supreme court, and paid out of the assets of the estate in
respect of which such register has acted; or if there are no such
assets, or if the assets are insufficient, such expenses shall form a
part of the costs in the case in which the register acts, to be appor-
tioned by the judge.

Statute revised — March 2, 1867, ch. 176, § 5, 14 Stat. 519.

Where the services in the case are all rendered in the office of the
register, he is not entitled to an allowance for traveling and incidental
expenses. In re John W. Dean, 1 B. R. 249; s.c.1L. T. B. 9.

The expenses of the register should be apportioned among all the cases
attended to at the same time. In re Sherwood, 1 B. R. 344; s. c. 6 Phila,
461.

Act oF 1898, Cu. 5, § 52. Compensation of Marshals.— (Ante,
p. 76%.)

Acr of 1867, § 5126. Before any dividend is ordered, the assignee
shall pay out of the estate to the messenger the following fees, and no
more:

First. For service of warrant, two dollars.

Second. For all necessary travel, at the rate of five cents a mile
each way.

Third. For each written note to creditor named in the schedule,
ten cents.

Fourth. For custody of property, publication of notices, and other
services, his actual and necessary expenses, upon returning the same
in specific items, and making oath that they have been actually
incurred and paid by him, and are just and reasonable, the came
to be taxed or adjusted by the court, and the oath of the messenger
shall not be conclusive as to the necessity of such expenses.

For cause shown and upon hearing thereon, such further allow-
ance may be made as the court, in its discretion, may determine.

Statute revised — March 2, 1867, ch. 176, § 47, 14 Stat. 540.
The marshal has the right to charge mileage for serving the order to
show cause, the injunction, and the adjudication. The travel so charged
974, Tue Bankruptcy Law.

for must be necessary travel. The language of the act precludes all con-
structive mileage whatsoever. Hence it is essential that the marshal
should state the place of service in his return, in order that the correctness
of the mileage charged may appear upon its face. If he has two or three
processes in his hand at the same time, and in the same matter or pro-
ceeding, which may be served at the same time and place, he can charge
mileage but once. If the service of any one of such processes makes ad-
ditional travel necessary, he may charge for such additional travel, but
no more. In re Donahue et al., 8 B. R. 453. Contra, in re Talbot, 2 B.
R, 280; s. c. 2 L. T. B. 15.

It is probable that in framing Rule XII the judges understood that the
first clause of. this section, providing a fee of $2 for service of
warrant, without adding, ‘‘and travel,’’ would preclude any charge for
travel in serving that particular process, but that the payment of the
marshal’s actual and necessary expenses in making such service was in-
tended to be provided for by the fourth clause, under the phrase “ and
other services.” In re Donahue et al., 8 B. R. 453.

The warrant is the warrant provided for by sections 5019 and 5028 to
be issued after adjudication, and may perhaps include the provisional
warrant provided for by section 5024. Ibid.

The distance by the nearest traveled route from the place of service
to the place of return is the “ necessary travel’? meant by the act. The
marshal may charge for mileage although the process is sent by mail to
a deputy at the place of service, and returned in the same manner. The
manner of getting the process there and back is a matter purely of the
marshal’s own concern, and something with which the court has nothing
to do so long as there is no complaint of any consequent failure of official
duty. Ibid.

When the notices are served by mail, the marshal can not charge for
constructive mileage. In re A. Alexander, 3 B. R. (quarto) 20.

The marshal is not entitled to ten cents per folio for copying the notices
to creditors. The notices are not copies. Each notice is an original paper.
In re John W. Dean, 1 B. R. 249; s. c.1 L. T. B. 9; in re Talbot, 2 B. R.
280; s. « 2 L. T. B. 15.

The amount paid to the printer for printing these notices may be al-
lowed as expenses for other services provided for by Rule XII. In re
Talbot, 2 B. R. 280; s. c. 2 L. T. B. 15.

The word “expenses” implies an expenditure or payment, and nothing
can be allowed as expenses under this section which is not shown af-
firmatively to have been necessary and just and reasonable in amount,
and to have been actually paid. The sum actually paid a keeper to watch
property in custody, not exceeding $2.50 a day, may be taxed, upon proof
that a prudent precaution in regard to all concerned in the property justi-
fied the marshal in placing a keeper over it, that the keeper actually con-
tinued in charge of it for the time specified, and that the sum charged
therefor is reasonable for the service, and has been actually paid by the
marshal. In re Lowenstein et al., 3 B. R. 269; s. c. 3 Ben. 422; in re
Anon., 4 C. L. N. 210; in re Eugene Comstock, 9 B. R. 88
CoMPENSATION OF MARSHALS. 175

The marshal may appoint a watchman, although the goods could be
safely stored. In re Hare, 43 How. Pr. 86.

Something beyond the ordinary duties which a marshal is called upon
to discharge in all cases, is contemplated by the provision for a further
allowance. Ibid.

There is no rule of law or practice authorizing the marshal to charge
a commission upon his own cost bill. In re Anon., 4 C. L. N. 210.

Neither this section nor Rule XII specifies all the services which the
marshal as messenger may be called upon to perform, and, therefore, no
tariff or fees, covering all the acts which he may be called upon to per-
form, has been prescribed either by Congress or the supreme court, but
the taxation of such fees is left to the discretion of the court. It was not
the intention of Congress to limit his fees for all services which he might
probably render to the four items enumerated in this section. The rules
to be observed in taxing the costs of the marshal are: 1st. To allow him
such fees as are specifically enumerated by law; and, 2d. Such other fees,
not included in the enumerated fees, as he may show himself to have
earned, the items to be determined by analogy to those allowed for sim-
ilar services rendered by him in the district court in cases at common
law and in chancery. If he sends process by mail to his deputy in a
distant county for service, he is entitled to mileage on that process; and
if he sends a deputy to such county, he is entitled to be paid the reason-
able expenses of such deputy, but, in that event, he is not entitled to
mileage. Ibid.

Mileage may be allowed without an affidavit that the same was neces-
sary and actually performed. All that is necessary is, that the place of
service be stated in the return, so that the correctness of the dis-
tance charged for may be ascertained if disputed. The marshal’s travel
fees are not included among the items as to which he is required to make
oath. Those requirements relate exclusively to disbursements of money
by the marshal in the manner and for the purposes named. In all other
respects his official return is prima facie sufficient. In re Donahue et al.,
8B. R. 453.

Interest can not be allowed on the marshal’s fees for services before
they have been duly taxed and allowed. His expenditures, however,
stand upon a different footing. They are often necessarily large, and far
beyond the amount required to be deposited, and it is a matter of but
simple justice that he should be compensated by way of an allowance
at the usual rate of interest or otherwise for such advances. Ibid.

The following list shows the decisions that have been made in the most
important cases. These abbreviations have been used, to-wit: a, allowed;

d, disallowed.

Service of warrant Lape ne ete een tence een ee seveeees $2 008
Necessary travel, 592 miles, at 5c. .....--. seve cree 29 60d 4 ona
Notices to creditors, 27, at 10c. ......... ea eee «. 270a

Actual and necessary expenses in publication of no-
tices — advertising, $4, prepare same, 90c., post-
age, envelopes . .....see-eee dane Gea wy ate oes seseee 4988

&
776 Tue BANKRUPTCY Law.

Preparing 27 notices, 118 folios, at-10c. ............ $11 80d
Stamps and envelopes, 27 notices, at 4c. .......... 1 08a
Furnishing two copies of advertisements, at 5c.... 0 10a
Making affidavit to warrant ................. -.... 0 50a
-Draft and copy costs, 1 folio .............e eee eee 0 10a
PSTUONGATICE: ge. oi) 2 eracadeesactoai slags cutmuinccieesdbuectytniescosoensce- a ema 1 50d

In re Talbot, 2 B. R. 280; s. c. 2 L. T. B. 15.

Serving five defendants and parties in Mercer Co.

With (Order sadn cea wce nd eaiaw amas ¥earalog boise $10 00a
‘Three copies of petition on defendants, $6.00; copies

Dey Ay yu, ae ced talecgd saatontyitte, dy eudeteuiel abevecSpotnd tne s nee Dacre 8 25a
‘Warrant of seizure, $2.00; one copy, $1.50......... 3 50a
Expenses of deputy sent to Mercer Co., $29.30; tele-

STAMOS we se a) -seehha-s 54 Sains sb lel bie lealaw ashe aaee bees 31 90a
“Wages of deputy in possession 9 days after seizure,

UG 2200! se eee ead apa eta slvacien Sea eases a sapiens teuecesbone ee 18 00a
Serving order of adjudication on two parties, $4.00;

copy, 50c.; mileage, $17.00............. 2. eee eee 21 50a
Preparing notice publication, 40c.; paid printers,

POCO is) as wakawa s deatels ¥ eed Maro see OMe 10 00a
Preparing notice 1st meeting, $7.60; services, $3.00;

POsta ge: PLOO! oo ve vcng vesnaarce vaasnwd.o5 oe nea dates 11 60a
Serving orders on two keepers to deliver, $4.00; copy,

ED Gax- Wie" in ib) -sonamidniberovahavaaesasers a tavepn eee Saaiaree win uae pas ong Reis 4 50a
Copies of inventories oss scsidvies aed cas eeeedoeeee 5 76a
Ninety days keepers’ fees, at $2.00 ................. 180 00a

In re Anon., 4 C. L. N. 210.

Service of warrant .............0005 we NE-PE Rane ee $2 00a
Each written notice to creditors in schedules, at 10c.. 6 90a
Necessary expenses in publication of notices ...... 4 00a
PE OSUABC: 3. soy cea sdb eater deanaesy andre evar eratniaye Manrachar aig weaned dl ubaraieg 1 97a
‘Copying notices, 483 folios, 10c. per folio........... 48 30d

In re A. Alexander, 3 B. R. (quarto) 20.

§ 5127. The enumeration of the foregoing fees shall not prevent
‘the justices of the Supreme Court from prescribing a tariff of fees
for all other services of the officers of courts of bankruptcy, or from
reducing the fees prescribed in the three preceding sections, in classes
of cases to be named in their general orders.

Statute revised — March 2, 1867, ch. 176, § 47, 14 Stat. 540.

The authority conferred upon the justices is to prescribe a tariff of fees
for all ‘other services,’ that is, for services other than those for which
provision is made in this section. It is also limited to reduction only,
and does not extend to the entire abolition of the fees for which pro-
vision is so made. In re Donahue et al., 8 B. R. 453.
Bankruptcy PRocEEDINGS. Ole

§ 51274 (June 22, 1874, ch. 390, § 18, 18 Stat. 184). That
from and after the passage of this act, the fees, commissions, charges,
and allowances, excepting actual and necessary disbursements, of,
and to be made by the officers, agents, marshals, messengers, assignees,
and registers in cases of bankruptcy, shall be reduced to one-half
of the fees, commissions, charges, and allowances heretofore provided
for or made in like cases: Provided, That the preceding provision
shall be and remain in force until the justices of the Supreme Court
of the United States shall make and promulgate new rules and regu-
lations in respect to the matters aforesaid, under the powers conferred
upon them by sections four thousand nine hundred and ninety [ten]
and five thousand one hundred and twenty-seven [forty-seven] of
said act, and no longer, which duties they shall perform as soon as
may be.

Reduction applies to the fees of the clerk. In re Hunt, 1 Cent. L. J. 359.

Act oF 1898, Cu. 5, § 53. Duties of Attorney-General.— (a)
The Attorney-General shall annually lay before Congress statistical
tables showing for the whole country, and by States, the number
of cases during the year of voluntary and involuntary bankruptcy;
the amount of the property of the estates; the dividends paid and the
expenses of administering such estates; and such other like informa-
tion as he may deem important.

§ 54. Statistics of Bankruptcy Proceedings.— (a) Officers shall
furnish in writing and transmit by mail such information as is
within their knowledge, and as may be shown by the records and
papers in their possession, to the Attorney-General, for statistical
purposes, within ten days after being requested by him to do so.

Act or 1867, § 5127%B (June 22, 1874, ch. 390, § 19, 18 Stat.
184). That it shall be the duty of the marshal of each district, in
the month of July of each year, to report to the clerk of the district
court of such district, in a tabular form, to be prescribed by the jus-
tices of the Supreme Court of the United States, as well as such
other or further information as may be required by said justices,

First, the number of cases in ‘bankruptcy in which the warrant
prescribed in section five thousand and nineteen [eleven] of said
act has come to his hands during the year ending June thirtieth,
preceding;

Secondly, how many such warrants were returned, with the fees,
costs, expenses, and emoluments thereof, respectively and separately;
778 Tur BANKRUPTCY Law.

Thirdly, the total amount ‘of all other fees, costs, expenses, and
emoluments, respectively and separately, earned or received by him
during such year, from or in respect of any matter in bankruptcy;

Fourthly, a summarized statement of such fees, costs, and emolu-
ments, exclusive of actual disbursements in bankruptcy, received or
earned for such year;

Fifthly, a summarized statement of all actual disbursements in
such cases for such year.

And in like manner, every register shall, in the same month and
for the same year, make a report to such clerk of,

First, the number of voluntary cases in bankruptcy coming before
him during said year;

Secondly, the amount of assets and liabilities, as nearly as may
be, of the bankrupt;

Thirdly, the amount and rate per centum of all dividends declared;

Fourthly, the disposition of all such cases;

Fifthly, the number of compulsory cases in bankruptcy coming
before him, in the same way;

Sixthly, the amount of assets and liabilities, as nearly as may be,
of such bankrupts;

Seventhly, the disposition of all such cases;

Eighthly, the amounts and rate per centum of all dividends de.
clared in such cases;

Ninthly, the total amount of fees, charges, costs, and emoluments
of every sort, received or earned by such register during said year
in each class of cases above stated.

And in like manner, every assignee shall, during said month make
like return to such clerk, of,

First, the number of voluntary and compulsory cases, respectively
and separately, in his charge during said year;

Secondly, the amount of assets and liabilities therein, respectively
and separately;

Thirdly, the total receipts and disbursements therein, respectively
and separately;

Fourthly, the amount of dividends paid or declared, and the rate
per centum thereof, in each class respectively and separately;

Fifthly, the total amount of all his fees, charges, and emoluments,
of every kind therein, earned or received;

Sixthly, the total amount of expenses incurred by ‘him for legal
proceedings and counsel fees.
Bankruptcy PRoceeprnas. 779

Seventhly, the disposition of the cases respectively;

Eighthly, a summarized statement of both classes as aforesaid.

And in like manner, the clerk of said court, in the month of August.
in each year, shall make up a statement for such year, ending June
thirtieth, of,

First, all cases in bankruptcy pending at the beginning of the said
year;

Secondly, all of such cases disposed of;

Thirdly, all dividends declared therein;

Fourthly, the number of reports made from each assignee therein;

Fifthly, the disposition of all such cases;

Sixthly, the number of assignees’ accounts filed and settled;

Seventhly, whether any marshal, register, or assignee has failed to
make and file with such clerk the reports by this act required, and if
any have failed to make such reports, their respective names and
residences.

And such clerk shall report in respect of all cases begun during said
year.

And he shall make a classified statement, in tabular form, of all
his fees, charges, costs, and emoluments, respectively, earned or ac-
crued during said year, giving each head under which the same ac-
erued, and also the sum of all moneys paid into and disbursed out
of court in bankruptcy, and the balance in hand or on deposit.

And all the statements and reports herein required shall be under
oath, and signed by the persons respectively making the same.

And said clerk shall in said month of August, transmit every such
statement and report so filed with him, together with his own state-
ment and report aforesaid, to the attorney-general of the United
States.

Any person who shall violate the provisions of this section shall
on motion made, under the direction of the attorney-general, be
by the district court dismissed from his office, and shall be deemed
guilty of a misdemeanor, and, on conviction thereof, be punished by
a fine of not more than five hundred dollars, or by imprisonment not
exceeding one year.
TITLE XIII.

PROHIBITED AND FRAUDULENT TRANSFERS.

Act oF 1898, Cu. 6, § 60. Preferred Creditors (a)) A per-
son shall be deemed to have given a preference if, being insolvent, he
has procured or suffered a judgment to be entered against himself
in favor of any person, or made a transfer of any of his property, and
the effect of the enforcement of such judgment or transfer will be
to enable any one of his creditors to obtain a greater percentage of
his debt than any other of such creditors of the same class.

(b) If a bankrupt shall have given a preference within four months
before the filing of a petition, or after the filing of the petition and
before the adjudication, and the person receiving ‘it, or to be bene-
fited thereby, or his agent acting therein, shall have had reasonable
cause to believe that it was intended thereby to give a preference, it
shall be voidable by the trustee, and he may recover the property or
its value from such person.

(c) If a creditor has been preferred, and afterwards in good faith
gives the debtor further credit without security of any kind for prop-
erty which becomes a part of the debtor’s estates, the amount of
such new credit remaining unpaid at the time of the adjudication in
bankruptcy may be set off against the amount which would otherwise
be recoverable from him.

(d) If a debtor shall, directly or indirectly, in contemplation of
the filing of a petition by or against him, pay money or transfer prop-
erty to an attorney and counselor at law, solicitor in equity, or proctor
in admiralty for services to be rendered, the transaction shall be re-
examined by the court on petition of the trustee or any ereditor and
shall only be held valid to the extent of a reasonable amount to be
determined by the court, and the excess may be recovered by the
trustee for the benefit of the estate.

Act or 1898, Cu. 1, Src. 1. * * * Definition — (25)
“ Transfer ” shall include the sale and every other and different mode
of disposing of or parting with property, or the possession, of prop-
erty, absolutely or conditionally, as a payment, pledge, mortgage, gift,
or security.
DEFINITION. 781

Act or 1867, § 5128. If any person, being insolvent, or in con}
templation of insolvency, within four months before the filing of the
petition by or against him, with a view to give a preference to any
creditor or person having a claim against him, or who is under any
liability for him, procures or suffers any part of his property to be
attached, sequestered, or seized on execution, or makes any payment,
pledge, assignment, transfer, or conveyance of any part of his prop-
erty, either directly or indirectly, absolutely or conditionally, the
person receiving such payment, pledge, assignment, transfer or con-
veyance, or to be benefited thereby, or by such attachment, having
reasonable cause to believe such person is insolvent, and! knowing
that such attachment! sequestration, seizure, payment, pledge, as-
signment, or conveyance is made in fraud of the provisions of this
Title, the same shall be void, and the assignee may recover the prop-
erty, or the value of it, from the person so receiving it, or so to be
benefited. And nothing in said section five thousand one hundred
and twenty-eight [thirty-five] shall be construed to invalidate any
loan of actual value, or the security therefor, made in good faith,
upon a security taken in good faith on the occasion of the making
of such loan.

Statute revised — March 2, 1867, ch. 176, § 35, 14 Stat. 536. Prior Stat-
utes — April 4, 1800, ch. 19, § 28; 2 Stat. 28; Aug. 19, 1841, ch. 9, § 2, 5
Stat. 442.

Where one bank has knowledge of insolvency of another, repayment to
former by latter of deposits on the day of its failure is a preference,
and may be recovered by the assignee. Phelan, Assignee, v. Iron Moun-
tain Bk., 16 B. R. 308.

An insolvent debtor who was a trader gave a creditor new notes, pay-
able on demand, signed by himself alone, to take up others of the same
amount, secured by the signature and indorsement of other responsible
parties, and purchased goods of persons who were ignorant of his in-
solvency, in order that such goods might be taken on execution or judg-
ments recovered on such notes: Held, that he thereby procured, at least
suffered, his property to be seized on execution within the meaning of the
act. Sage, Jr., v. Wynkoop, Assignee, 16 B. R. 363.

An oral promise, made at time debt is contracted, to give security if
required, can not be executed after the debtor has become insolvent.
Lloyd, Assignee, v. Strobridge, 16 B. R. 197.

Where creditor accepts and records a chattel mortgage, correctly de-
scribing note secured, in place of a prior unrecorded mortgage incor-
rectly describing such note, the transaction does not constitute an illegal
preference, but is a simple exchange of securities. Player, Assignee, v.
Lippincott, 16 B. R. 208.

1 So amended by act of June 22, 1874, ch. 390, § 11, 18 Stat. 180.

 
782 Tue Bankruptcy Law.

_Where a private banker obtains an advance from a bank on his check

from New York, and on the following day delivers securities to the bank
stating at the time that he had reason to fear his check would not be
met: Held, that the securities were transferred with intent to give a
preference, and that the bank had reasonable cause to believe him in-
Solvent. Merchants Nat. Bk. v. Cook, 16 B. R. 392.
‘ The taking of a bill of sale of logs purchased with money furnished by
the creditor is not a preference unless it appears that such bill of sale
included more than the creditor was entitled to. In re The Bousfield &
Poole Mfg. Co., 16 B. R. 489.

Where M., in pursuance of a scheme to obtain a preference for H., a
creditor of the bankrupt, purchased logs of the bankrupt and subse-
quently took a transfer of a note held by H.: Held, that he held such note
as trustee for H., and that the acceptance of the logs was a preference.
In re Stein, 16 B. R. 569.

The debtor can not be admitted as a witness to testify as to his intent
in making the transfer. Where probable consequence of the act is to give
a preference he will be conclusively presumed to have intended to give
such preference. Ecker v. McAllister, 17 B. R. 42.

Mere nonresistance of a debtor to judicial proceedings against him,
when the debt is due and there is no valid defense to it, is not suffering
and giving a preference under the bankruptcy act. Tenth Nat. Bk. v.
Warren, 17 B. R. 75.

Giving a note indorsed by a third party, on account of an indebtedness,
is not a fraudulent preference. Dalrymple vy. Hillenbrand, 17 B. R. 434.

Bankrupts were members of a firm doing business in the State of New
York, and also members of other firms engaged in same business in Can-
ada, but in each of said firms there was another partner — at least nom-
inally. The creditors of the Canadian firms having threatened suits to
sequestrate property of those firms in Canada, transfers of same, upon
recommendation of some of the principal New York creditors, were made
by way of mortgage to such creditors, in consideration of advance to carry
on the business and secure payment of the debts of the Canadian firms.
It appears that the transfers were made in good faith. Held, that under
the circumstances the transfers were not preferences within meaning of
the act. In re White et al., 18 B. R. 106.

Defendant bank was a creditor of bankrupt by note of $4,000, and at
same time indebted to bankrupt on deposit account to amount of $4,500.
Prior to bankruptcy proceedings, and at maturity of note, defendant,
with knowledge of bankrupt’s insolvency, received from him a check
for $4,000, and surrendered the note, and by the transaction reduced to
that extent the amount of deposit account in favor of bankrupt on books
of defendant. Held, an adjustment of mutual debts, within meaning
of the act, and not a fraudulent preference. Robinson vy. Wisconsin M.
& F. Ins. Co. Bk., 18 B. R. 248.

Payments to the government, though with intent to give a preference,
not forbidden by the act. Tiffany v. Morrison, 18 B. R. 365.
DEFINITION. 783

A deputy U. S. revenue collector, becoming insolvent, paid over to
his principal, within four months of his adjudication as a bankrupt,
moneys received by him in line of his duty as such officer: Held, not an
unlawful preference. Ibid.

As between the parties to a chattel mortgage, the circumstance that
the mortgagees allowed the mortgagor to remain in possession of the
mortgaged property, after condition broken, will not affect the validity
of the mortgage. Where such a secured creditor takes goods in fair
exchange for the security, the transaction is not a preference forbidden
by the bankruptcy law. Halleck & Bro. v. Tritch, Assignee, 17 B. R. 293.

Where the bankrupt at the time of giving a mortgage, in pursuance
of a previous agreement to secure pre-existing debt, requests the cred-
itor to permit him to secure other creditors in such instrument, such re-
quest is notice of the existence of such creditors and of the bankrupt’s
inability to pay them. Lloyd, Assignee, v. Strobridge, 16 B. R. 197.

A creditor who has obtained a preference is chargeable with knowledge
of facts, the existence of which he could have ascertained by the slightest
effort. Ibid.

Not necessary for the creditor to know that preferences are prohibited.
It is enough if he knew such facts and circumstances as bring it within
the prohibition of the law. Ibid.

Where the mortgage sought to be set aside was executed within the
time specified in bankruptcy act, with a view to give a preference, the
fact of repeated promises to pay, which were not kept, together with
knowledge on the part of the creditor of a large amount of debts due
by the bankrupt at or prior to that time, which he was unable to pay:
Held, to be a reasonable cause for the creditor to believe that the in-
solvency which in fact existed did exist. In re Armstrong, 16 B. R. 275.

Where such creditor knew of other unsecured debts which the debtor
could not pay, and that a large part of the property was common to all
from which to get their pay: Held, that he knew the mortgage was made
in fraud of the provisions of the bankruptcy law. Ibid.

A creditor may be said to have reasonable cause to believe a debtor
was insolvent, where the fact of insolvency actually existed, when such
a state of facts is brought to his notice respecting the affairs and pe-
cuniary condition of his debtor as would lead a prudent man to the con-
clusion that the debtor is unable to meet his obligations as they mature
in ordinary course of his business. (This was under definition of in-
solvency in law of 1867.) Dutcher v. Wright, 16 B. R. 331; Merchants
Nat. Bk. v. Cook, 16 B. R. 392.

In calculating the time a preference must stand in order to be valid,
the day the petition was filed must be excluded. Dutcher v. Wright, 16
B. R. 331.

Knowledge, or reasonable cause to know, on part of creditor’s agent
that the transaction was in fraud of the bankruptcy law is same as if
the creditor himself had participated therein with same cause to believe
and game knowledge. Sage, Jr., v. Wynkoop, Assignee, 16 B. R. 363.
784 Tue Bankruptcy Law.

In order to invalidate a security taken by a creditor from an insolvent

debtor it is not sufficient that the creditor had some cause to suspect the
insolvency of the debtor, but he must have such a knowledge of facts as
to induce a reasonable belief thereof. Grant, Assignee, v. First Nat. Bk.,
17 B. R. 498.
' Where a surety for a debtor in failing circumstances takes a transfer
of the debtor’s property, and from the proceeds of the sale thereof pays
the debt, the assignee in bankruptcy of the debtor can not recover the
amount so paid from the creditors receiving it, where they were without
any information as to the source from which it was derived, and the
payment was made and accepted as in discharge of the surety’s obliga-
tion. Tyler, Assignee, v. Brock, 17 B. R. 239.

Schedules of indebtedness made by a bankrupt are not competent evi-
dence to show his insolvency in an action brought by the assignee (trus-
tee) under this provision. Ibid.

Bankrupt :was a druggist, manufacturer and a stock speculator, and
had committed forgery. The agent and director of the bank, having heard
of the forgeries, demanded payment of his indebtedness to the bank, or
security, and compelled a transfer of his funds in bank. Held, that such
transfer was a fraudulent preference which might be recovered by the
assignee. West Phila. Bk. v. Dickson et al., Assignee, 17 B. R. 482.

A creditor receiving a payment of his debt from insolvent debtor with-
out the consent of the surety or indorser, though it is afterward avoided
by assignee and recovered by him, thereby releases the surety or indorser.
Northern Bk. of Ky. v. Cooke, 18 B. R. 306.

Conveyance by a merchant to his wife of a large amount of property,
made at a time when he was heavily indebted in a losing business, and
pressed by his creditors, and when a withdrawal of this amount of
property from his assets was likely to prevent his meeting his obliga-
tions, can not be supported by testimony that twenty years before his
wife had advanced him money, without security or written obligation,
under a simple verbal promise of repayment, which money he had in-
vested in his own name and used to obtain credit in his business. In re
Antisdel, 18 B. R. 289.

Mere fact that debtor bought or caused goods to be brought within
reach of the execution a short time before the sheriff's sale, which was
closely followed by proceedings in bankruptcy against him, is not suffi-
cient to invalidate the sale. Louchheim v. Henzey, 18 B. R. 173.

Where a sale has been made under two judgments, it is not invalidated
by fact that the debtor, with a desire to prefer either plaintiff, failed
to make a defense which by law he was entitled to make. Ibid.

Where, after a general assignment for creditors has been made, a judg-
ment is recovered in the ordinary course of practice, and without col-
lusion between the debtor and creditor for the purpose of giving priority,
such judgment and levy under it are good, even as against an assignee
in bankruptcy subsequently appointed. Dolson et al. v. Kerr, 16 B. R.
405.
RULES OF CoNSTRUCTION. 785

The bankrupts mortgaged certain personal property to S. to secure him

as their indorser, and he assigned the mortgage to defendant as security
for a debt. The bankrupts subsequently, and within four months of the
commencement of proceedings against them, made a second mortgage to
one G., the proceeds of which were given to S., who used them to pay
off certain notes of the bankrupts which had been indorsed by the mort-
gagees in both mortgages. The equity of redemption was then sold for
a certain sum, of which defendant received part and G. the balance, and
both mortgages were released. The assignees having recovered judg-
ment against G. for the value of the property covered by his mortgage,
and such judgment having been satisfied, and an action against G. for the
preference obtained by him when the notes were paid having been
settled: Held, that such proceedings against G. did not estop the as-
signees from maintaining an action against defendant to recover the
moneys received by him under his mortgage. Sessions v. Johnson, 17
B. R. 64.
. Bankruptcy act does not forbid the creditor of an insolvent debtor to
take a contract or covenant from any third party, in consideration of for-
bearance to institute proceedings in bankruptcy against such debtor.
Such a transaction is not a violation of the act or of public policy, but
if such creditor has received a transfer of property from the debtor, hay-
ing at the time knowledge or reasonable cause to believe the debtor to
be then insolvent, the contract is without consideration, and there can
be no recovery upon it. Ecker v. McAllister, 17 B. R. 42.

A bank purchased a quantity of its stock on the market, and, not hav-
ing the right to hold it in its own name, divided it among some of the
directors. The bankrupt B., who was one of the directors, took some of
this stock and gave his note therefor, the bank retaining the certificate
for him, although the stock was transferred to him on the books and
he received dividends thereon. On his failure, the bank caused him to
transfer the stock to its teller, but retained the note as an asset. In
an action by the assignee to set aside the transfer as a preference; Held,
that the bank had lawfully no stock to convey, and that B. was not the
lawful owner. Meyers y. Valley Nat. Bk., 18 B. R. 34.

In order to render a transfer void, it is not enough to merely show
that the grantee knew that the grantor was insolvent. Campbell yv.
Waite, 16 B. R. 98.

The day on which the petition was filed must be excluded in making
the computation of the time that a preference must stand in order to be
valid. Dutcher v. Wright, 16 A. L. J. 100.

Rules of Construction.— Sections 5128 and 5021 are very nearly related
to each other in their provisions, and must be construed together in pari
Materia. Section 5128 in express language applies equally to voluntary
and involuntary cases. Therefore all the qualifications and conditions
prescribed by section 5128, not inconsistent with the provisions of section
5021, will apply to proceedings under the latter section; and all the quali-
fications, conditions, and prohibitions of section 5021, so far as they relate

50
186 Tur Bankruptcy Law.

to the same class of matters provided for by section 5128, and are not
inconsistent with its provisions, will apply to proceedings under section
5128. In re Tonkin & Trewartha, 4 B. R. 52; s.c¢c.1L. T. B. 232; 5s. ¢ 8
L. T. B. 221; in re Richter’s Estate, 4 B. R. 221; s. @ 1 Dillon, 544; in re
Black & Secor, 1 B. R. 353; s. c. 2 Ben. 196; s. c. 1 L. T. B. 39; Wads-
worth v. Tyler, 2 B. R. 316; s.c. 2 L. T. B. 28.

It is the intention of the bankruptcy act to prevent all preferences by an
insolvent person, and, as far as possible, to insure the equal distribution
of his property to all his creditors. It differs in a material point from
the act of 1841. By the second section of that act, to render a transfer
void it must have been made “in contemplation of bankruptcy.” The
present act only requires ‘‘insolyency, or contemplation of insolvency.”
In re Arnold, 2 B. R. 160; Haughey v. Albin, 2 B. R. 399; s. ec. 2 Bond,
244; s. ec 2 L. T. B. 47; Foster v. Hackley & Sons, 2 B. R. 406; s. c. 2
L. T. B. 8; s. a 10. L. N. 187; in re Kingsbury et al., 3 B. R. 318.

It is as much the policy of the bankruptcy act to uphold liens and trusts
when valid, as it is to set them aside when invalid. In re Wynne, 4
B. R. 23; s. c. Chase, 227; s. c. 2 L. T. B. 116; Coggeshall v. Potter. 4 B.
R. 73; 8. c. 6 B. R. 10; s. c. 1 Holmes, 75.

What Facts Bring a Transfer Within the Provisions of this Section.—
This section is designed to defeat a preference to a creditor, while the next
is designed to defeat any transfer of property. To make a transfer void,
the following facts must concur:

1st. The debtor making the transfer must be insolvent.

2d. If the transfer gives a preference, it must have been made with a
view to give a preference to the creditor.

3d. In any event, the person receiving the transfer must, at the time,
have reasonable cause to believe the person making the transfer to be
insolvent; and,

4th. Must also know that such transfer was in fraud of the provisions
of the bankruptcy act.

5th. And the payment, pledge, assignment, transfer, or conveyance must
be made within four months before the filing of the petition by or against
the bankrupt. Toof v. Martin, 6 B. R. 49; s. ec. 18 Wall. 40; Foster v.
Hackley & Sons, 2 B. R. 406; s.c. 2 L. T. B. 8; s.c 10. L. N. 137; in re
Josiah D. Hunt, 2 B. R. 589; s. ec. 1 C. L. N. 169; Street v. Dawson, 4 B.
R. 207; s. c. 1 L. T. B. 869; Haughey v. Albin, 2 B. R. 399; s. c. 2 Bond,
244; 8. c. 2 L. T. B. 47; Scammon vy. Cole, 5 B. R. 257; Forbes vy. Howe,
102 Mass. 427; Dow v. Sargent, 15 N. H. 115; Rice v. Melendy, 41 Iowa,
335.

These things must concur. They must concur not only in fact but in
time. The debtor must be insolvent, or contemplating insolvency, when
the alleged preference is given, and he must then have in view the giving
of a preference. The unlawful view to a preference must coexist with the
preference. It is not enough that it precedes or follows the preference.
Clark v. Iselin, 9 B. R. 19; s. c. 11 B. R. 337; s. c. 10 Blatch. 204; s. ¢. 21
Wall. 360.
INSOLVENCY. "BY

If the debtor did not intend to give a preference, and the creditor did
not have reasonable cause to believe the debtor to be insolvent, the transfer
is valid, although the debtor was then insolvent. Mays y. Fritton, 11 B.
R. 229; s. c. 20 Wall. 414.

This section does not render a sale ipso facto void. Upon an issue of
title between the assignee and vendee, it is incumbent upon the former
to first show a sale, and a sale within the time limited, and its unusual
character. In re Josiah D. Hunt, 2 B. R. 539; s. c. 1 CG. L. N. 169; in re
Hafer & Bros. (in re Beck), 1 B. R. 586; s. ec. 6 Phila. 474.

The proceedings and judgment on the petition in involuntary bankruptcy
against an insolvent debtor do not, in any manner, affect or determine
any question involved in a suit brought by the assignee of that debtor’s
estate against a preferred creditor. In re Drummond, 1 B. R. 231; s. e.
1L. T. B. 7; in re Dibblee et al., 2 B. R. 617; s. c. 3 Ben. 288; in re Schick,
1B. R. 177; 8s. c. 2 Ben. 53s. c.1L. T. B. 28; in re Dunkle & Driesbach,
7B. R. 72; Lewis v. Sloan, 68 N. C. 557; Love v. Love, 21 Pitts. L. J. 101;
Atkinson vy. Farmers’ Bank, Crabbe, 529; Brooke v. Scoggins, 11 B. R.
258; s. c. 9 Pac. L. R. 12.

A conveyance may be an act of bankruptcy in the grantor, although
no fraudulent intent is known to or participated in by the grantee. There
is an important difference between our statute and the English law in
this respect. In our system the title of the assignee relates only to the
filing of the petition, and not to the act of bankruptcy, except when that
act is the filing of a voluntary petition. It follows that an adjudication
does not, per se, affect the title of a purchaser. In re Williams & Co.,
3B. R. 286; s. c. Lowell, 406; s. c 2 L. T. B. 100.

When there is no transfer or conveyance from the bankrupt to the
holder of the property, the assignee will derive no aid from this clause.
Winslow v. Clark, 47 N. Y. 261; s. ec. 2 Lans. 377.

Act oF 1898, Cu. 1, Szc. 1. * * * Insolvency, what is?— (15)
A person shall be deemed insolvent within the provisions of this Act
whenever the aggregate of his property, exclusive of any property
which he may have conveyed, transferred, concealed, or removed, or
permitted to be concealed or removed, with intent to defraud, hinder
or delay his creditors, shall not, at a fair valuation, be sufficient in
amount to pay his debts.

Insolvency.— The term insolvency is not always used in the same sense,
It is sometimes used to denote the insufficiency of the entire property
and assets of an individual to pay his debts. This is its general and its
popular meaning. But it is also used, in a more restricted sense, to
express the liability of a party to pay his debts as they become due in
the ordinary course of business. It is in this latter sense that the term is
used when traders and merchants are said to be insolvent; and, as applied
to them, it is the sense intended by Congress. With reference to other
788 Tue Bankruptcy Law.

persons not engaged in trade or commerce, the term may, perhaps, have
a less restricting meaning. The bankruptcy act does not define what shall
constitute insolvency, or the evidence of insolvency in every case. Toof
v. Martin, 6 B. R. 49; s. c. 4 B. R. 488; s. c. 13 Wall. 40; s. @ 1 Dillon,
208.

Insolvency, as used in the bankruptcy act, does not mean an absolute
inability to pay one’s debts, at a future time, upon a settlement and
winding up of all a trader’s concerns; but a trader may be said to be
in insolvent circumstances when he is not in a condition to pay his debts
in the ordinary course of business, as persons carrying on trade usually
do. Sawyer v. Turpin, 5 B. R. 339; s. c. 18 B. R. 271; s. c. 91 U.S. 114;
s. ec. 1 Holmes, 251; Merchants’ National Bank of Hastings v. Truax, 1
B. R. 545; s. c. 1 L. T. B. 73; in re Gay, 2 B. R. 358; s.c 1 L. T. B. 73;
in re J. B. Wright, 2 B. R. 490; Wadsworth v. Tyler, 2 B. R. 816; s. «
2L. T. B. 28; Graham vy. Stark, 38 B. R. 357; s. c. 3 Ben. 520; Scammon
v. Cole, 3 B. R. 393; s. c. 2 L. T. B. 103; Rison v. Knapp, 4 B. R. 349;
s. c. 1 Dillon, 186; Anon., 1 Pac. L. R. 173; in re Forsyth & Murtha, 7
B. R. 174; in re Walton, 1 Deady, 442; Wager v. Hall, 5 B. R. 181; s. ¢. 3
Biss. 28; s. c. 16 Wall. 584; Webb v. Sachs, 15 B. R. 168; s. ce. 9 GC. LL N.
156; s. c. 13 Pac. L. R. 28; Platt v. Stewart, 138 Blatch. 481; Stanley v.
Sutherland, 16 A. L. Reg. 298.

So far as a case depends upon proof that a debtor was insolvent in fact
at the time of giving a preference, it is not enough to show that there
was danger of insolvency as a coming result. Beals v. Quinn, 101 Mass.
262.

Perhaps no precise rule can be laid down which will be applicable to all
eases, inasmuch as the determination of each case rests largely upon its
own peculiar facts. It is generally held by the bankruptcy courts that
a trader who is not able to pay all his debts in the usual and ordinary
course of business, as persons carrying on trade usually do, is insolvent
within the meaning of the bankruptcy law, and there is no better general
rule to govern courts when they are considering the facts of a case. It
is neither too broad nor too narrow; while it would be quite too narrow
and restricted to hold that failure to pay some one debt when due is evi-
dence of insolvency in all cases under the act. Whether a single instance
of nonpayment of a debt at maturity would be evidence in a given case
‘of insolvency depends somewhat upon the magnitude of the debt, the lo-
eality of the debtor, and what is the ordinary course of business and cus-
tom, in that respect, of the locality where the debtor resides, and upon
such other facts and circumstances as will bear upon the question of
insolvency. A. different course would ignore the usage and course of
business recognized between the debtor and creditor class ‘in that par-
ticular locality, and would present the spectacle of the mercantile class
saying the trader is solvent, and the courts saying he is insolvent; whereas
the courts, upon such questions, should adopt the mercantile usage as the
rule of decision. The question is whether the debtor or trader is able to
pay his debts in the ordinary course, as persons carrying on trade there
usually do. Hence it may be, and undoubtedly is, true that insolvency
INSOLVENCY. 789

in commercial centers is not insolvency in small country towns. In the
former places, if the debtor’s paper is dishonored, his credit is gone, and
he is prima facie insolvent; whereas, in the latter localities, it is not so.
Insolvency is a fact, and not a matter of definition or rule of law; and
wlat is evidence of insolvency in London or Paris, or New York, is not
evidence of insolvency everywhere. Driggs vy. Moore, Foote & Co., 3
B. R. 602; s. ec. 1 Abb. C. C. 440; Wager v. Hall, 5 B. R. 181; s. e. 8 Biss.
28; s. c. 16 Wall. 584; Lakin v. First Nat'l. Bank, 15 B. R. 476; s. c. 13
Blatch. 83.

A debtor is legally insolvent when he has not sufficient property sub-
ject to execution to pay all his debts if sold under legal process, and com-
mercially insolvent when he bas not the means to pay off and discharge
his commercial obligations as they become due in the ordinary course of
business. Harrison v. McLaren, 10 B. R. 244; Smith v. McLean, 10 B.
R. 260.

Although there may be outstanding claims against a person which he
has not the money in hand wherewith to pay, yet he can not be declared in-
solvent when, on the other hand, it does not appear that any of these were
then due under the arrangements and understanding between him and his
creditors, while it does appear that all the property and effects, in pro-
curing which these debts have been contracted, and some $5,000 of his own
earnings which had been expended, are still in his possession, uninjured
and undecayed; that his health is as vigorous, his skill as unquestioned,
his character as untarnished, his credit as good, his friends as numerous
and zealous, and, finally, the business enterprise in which he has just
engaged as promising, in prospectu, as ever before. Coggeshall vy. Potter,
4B. R. 73; s. ec. 6 B. R. 10; s. c. 1 Holmes, 75.

A merchant having no property but his stock in trade, who, when pressed
for a debt admitted to be just, gives as a reason, that he is unable to pay it,
and suffers judgment to be rendered against him, is insolvent within any
accepted or sound definition of that term as used in the bankruptcy act,
although the stock in trade may, at cost price or cash value, could it be
sold for what it is worth, equal or exceed the trader’s liabilities. Wilson
y. City Bank, 5 B. R. 270; s. c. 9 B. R. 97; s. c. 1 Dillon, 476; s. ce. 17 Wall.
473.

The commission of an act of bankruptcy is considered as a test of in-
solvency, showing conclusively the inability of the debtor to pay his debts
or carry on his trade. Shawhan v. Wherritt, 7 How. 627.

Suspension of commercial paper for more than fourteen days, is, of itself,
in the case of a merchant, proof of insolvency. Wilson v. City Bank, 5 B.
R. 270; s. c. 9 B. R. 97; s. ec. 1 Dillon, 476; s. ec. 17 Wall. 473.

The statute does not require that the debtor should know that he is in-
solvent at the time of making the transfer to invalidate the transaction. It
only requires the existence of the fact of insolvency to bring it within the
scope of this section, if the other elements contemplated by the statute to
render the transaction a nullity coexist. Haughey v. Albin, 2 B. R. 399;
8. ¢c. 2 Bond, 244; s. c. 2 L. T. B. 47; Rison v. Knapp, 4 B. R. 349; s. ¢. 1
Dillon, 186; Wager v. Hall, 5 B. R. 181; 8. c. 3 Biss. 28; s. c. 16 Wall. 584;
in re Clark & Daughtrey, 10 B. R. 21.
790 Tue Bankruptcy Law.

The fact that a paper secured by a deed of trust is permitted to remain
past due for a length of time, indicates either a virtual renewal of the loan
or consent given, and does not, therefore, necessarily subject the debtor
to the penalties of the act. Tiffany v. Lucas, 5 B. R. 487; s. c. 8 B. R. 49;
8. ¢c. 1 Dillon, 164; + ¢c 15 Wall. 410.

A bank suspending payment, and closing its doors against its creditors,
makes to the world a proclamation of its insolvency. Markson v. Hobson,
2 Dillon, 327.

When a composition agreement contains a provision that it is not to be
binding on any one unless it shall be agreed to and signed by all of the
creditors, it is not binding on any of the creditors unless all accept it, and
will not relieve the debtor from insolvency. MKinzing v. Bartholew, 1
Dillon, 155.

In estimating the liabilities of the bankrupt, the mere fact that some of
them have been merged in judgments since the transfer will not affect the
validity of the transfer, for the judgment is neither a payment nor satis-
faction of the debt. Burpee v. Nat’l. Bank, 9 B. R. 314; s. c. 5 Biss. 405.

Contemplation is not used in the sense of meditation merely. It refers to
the condition of a debtor who knows he will not be able to pay his debts as
they become due, or who does not expect or intend to do so. Paige v.
Loring, 1 Holmes, 275.

But little reliance can be placed by the court upon the statement of the
bankrupt that, at the time of the transfer, he had no reason to believe him-
self insolvent, for he may not be aware of the legal definition of insolvency.
Graham y. Stark, 3 B. R. 357; s. a 3 Ben. 520; Scammon v. Cole, 3 B. R.
393; s.c. 2 L. T. B. 103; Warren v. Tenth Nat’l. Bank, 7 B. R. 481; s. ¢
10 Blatch. 493.

The question whether or not the preference was made at a time when the
bankrupt was insolvent, should be submitted to the jury. Pierce v. Evans,
61 Penn. 415.

If the quantity and value of the bankrupt’s assets did not materially
diminish from the time of the transfer till the commencement of the pro-
ceedings in bankruptcy, the jury may find that he was insolvent when he
made the transfer. Clarion Bank v. Jones, 11 B. R. 381; s. ¢. 21 Wall. 325;
s.c. 2 A. L. T. (N. 8.) 135.

The bankrupt may be asked whether on the day of the transfer he
believed himself insolvent. Otis v. Hadley, 112 Mass. 100.

Evidence of the amount of property in the possession of the bankrupt
within a few days after the transfer is admissible. Ibid.

Evidence of the general signification of the word “insolvent” in the
place where the transaction occurred is not competent. Stanley vy. Suther-
land, 16 A. L. Reg. 298.

Statements made by the bankrupt in regard to his condition at the time
of getting the money are not admissible in favor of the defendant. Good-
rich vy. Wilson, 14 B. R. 555; s. c. 119 Mass. 429.

Limitation as to Time.— The acts mentioned in this section are not such
as were forbidden by the common law or generally by the statutes of the
States. Nor are they acts which, in their essential nature, are immoral or
LIMITATION AS To Timz, TOL

dishonest. Although a preference of creditors of an insolvent may some-
times be unjust to other creditors, it is not morally wrong. But the
framers of the bankruptcy act were about to prepare a system of law, the
main feature of which was to provide for the distribution of the property
of an insolvent debtor among his creditors, and they adopted, wisely, as
the general and prevailing rule of distribution, equality among the cred-
itors. But they found that the general principle could not, without hard-
ship, be made of universal application. When a creditor had obtained, by
fair means, a lien upon any property of the bankrupt, that lien ought'to be
respected. If he had so obtained payment of the whole or a part of his
debt, the payment ought to stand. These exceptions to the general rule
of distribution were, however, liable to be abused, and might be used to
defeat the purpose of the bankruptcy law. Congress, therefore, adopted a
conventional rule to determine the validity of preferences. In all cases
where an insolvent pays or secures a creditor to the exclusion of others,
and that creditor is aware that it is so when he receives the preference,
he must run the risk of the debtor’s continuance in business for four
months. If the law which requires equal distribution is not called into ac-
tion for four months, the transaction, being otherwise honest, will stand;
but if, by the debtor himself, or by any of his creditors, the law is invoked
within four months, the transaction will not stand, but the money or prop-
erty received by the party becomes a part of the common fund for dis-
tribution. Bean v. Brookmire et al., 4 B. R. 196; s. cg, 1 Dillon, 24.

After the lapse of four months, the preferences — simple preferences —
which an insolvent debtor may have made, are to be held valid as against
all the world, so far as the preferred creditor is concerned. In. this respect
there is no difference between cases of voluntary and cases of involuntary
bankruptcy. Coggeshall v. Potter, 4 B. R. 73; s.c 6 B. R. 101; 8. ¢. 1
Holmes, 75; in re Wynne, 4 B. Ri 23; s. c. Chase, 227; s. ec. 2 L. T. B.
116; in re Price Fuller, 4 B. R. 115; s. c. 1 Saw. 243; Bean v. Brookmire,
4B. R. 196; s. ec. 1 Dillon, 24; in re Butler, 4 B. R. 303; s. c. Lowell, 506;
Maurer v. Frantz, 4 B. R. 431; s. c. 8 Phila. 505; Hubbard v. Allaire
Works, 4 B. R. 623; s. c. 7 Blatch. 284; Hall v. Hayner, 38 C0. L. N. 402;
Collins v. Gray, 4 B. R. 681; s. ec. 8 Blatch. 483; Israel v. Ayer, 2 Rich. (N.
S.) 244; Hislop v. Hoover, 68 N. C. 141; in re G. H. Lane & Oo., 10 B. R.
185; Sidener v. Klier, 4 Biss. 391; Dennet v. Mitchell, 6 Law Rep. 16; s. c.
1N. Y. Leg. Obs. 356; Shearman y. Bingham, 1 Holmes, 272.

The assignee may have a preference set aside which was given by the
directors of an insolvent corporation to a firm of which a director was a
member, although it was given more than four months before the com-
mencement of the proceedings in bankruptcy. Bradley v. Farwell, 1
Holmes, 433.

A deed of trust executed prior to, but recorded within the period of
four months before the commencement of proceedings in bankruptcy, is
valid. Although it did not take effect until the time of record as against
creditors, it is not for that reason void. The recording of the deed was
not the act of the bankrupt. The deed, as against him, was operative
.from its date, It was then that all his interest in the property described
792 THE Bankruptcy Law.

in it became vested by way of security in the grantee. It was then that
he delivered the deed and parted with all control of it. If the beneficiary
was satisfied with the security afforded by the deed unrecorded, there was
neither necessity nor obligation to record it. To record it was only neces-
sary to make it a valid security against other creditors; and it was not
for the bankrupt but for the creditor secured, to determine whether it
should be recorded or not. The delivery of it for record was in no sense
his act, but theirs. The preference which the law condemns is a prefer-
ence made within the limited time by the bankrupt, and not a priority
lawfully gained by a ereditor; and the preference gained by the record
was not a preference made by the bankrupt. Moreover, the law which
makes deeds of trust void ‘ until and except from” the time of record
clearly makes them valid from that time. In re Wynne, 4 B. R. 23; 5. c
Chase, 227; s. c. 2 L. T. B. 116; Seaver v. Spink, 8 B. R. 218; s. c. 65 Ill.
441; Cragin v. Carmichael, 11 B. R. 511; s. ce. 2 Dillon, 519; Folsom v. Cle-
menece, 111 Mass. 273.

A deed made and delivered before, but acknowledged within four
months prior to the commencement of proceedings in bankruptcy, is valid
when it is valid under the State laws without an acknowledgment after it
is recorded. Seaver v. Spink, 8 B. R. 218; s. c. 65 Ill. 441; Gibson v. Warden,
14 Wall. 244.

If a deed is sealed and delivered on one day, and acknowledged on a
subsequent day, the time begins to run from the day of the delivery, and
not from the time of the acknowledgment. Wood v. Owings, 1 Cranch,
239.

If an insolvent debtor conveys property to a creditor to hold in trust
for such uses as shall be designated before a certain time in any com-
position between the debtor and the other creditors, but if no composi-
tion is made before that time, then absolutely to his own use, whereby
the debt is to be discharged, the limitation runs only from the time so
stipulated if no composition is made. Haskill vy. Frye, 14 B. R. 525.

The ratification by one of the unauthorized act of another operates upon
the act ratified precisely as though authority to do the act had been
previously given, except where the rights of third parties have intervened
between the act and the ratification. If the depositary of a bond appro-
priates it to his own use, and substitutes other property in its place,
without the authority of the bailor, the latter may ratify the act, although
the bailee is insolvent at the time of the ratification. The ratification
will be of the whole transaction, taken together, of the appropriation and
substitution — not a part without the rest — not of the appropriation with
out the substitution. Cook v. Tullis, 9 B. R. 483; s. c. 18 Wall. 332.

If the debtor, without the knowledge of the creditor, places the amount
of the debt in bank, and takes a certificate therefor in the name of the
creditor, the ratification by the creditor will not relate back to the time
of the deposit, if he is informed of the debtor's insolvency and of the de-
posit at the same time, for the rights of other creditors intervene as soon
as the notice is given. Strain v. Gourdin, 11 B. R. 156; s. c. 2 Woods, 380.

If the president of a corporation executes a deed without authority, the
INTENT TO PREFER. 793

time will run from the ratification, and not from the date of the deed,
for the law will not feign a fiction to make valid an invalid act, and the
act of ratification to relate must take place at a time and under circum-
stances when the ratifying party may himself lawfully do the act which
he ratifies. In re Kansas City Manuf. Co., 9 B. R. 76.

If the creditor has previously agreed to receive grain in payment of his
debt, the transfer dates from the time when the warehouse receipt is
mailed to him. Brooke vy. Scoggins, 11 B. R. 258; s. c. 9 Pace. L. R. 12.

If the creditor has not previously agreed to receive grain in payment of
his debt, the transfer dates from the time when the receipt sent by mail
is received and accepted by him. Ibid.

A preference given by a firm, of which only one member subsequently
goes into bankruptcy, can not be avoided by the assignee of the bankrupt
partner. The preference is not void unless given within the prescribed
time before the commencement of proceedings in bankruptcy; and, being
a joint act, the bankruptcy of both members must follow within the speci-
fied period, or the preference becomes merely the payment of a just debt.
Forsaith v. Merritt et al, 3 B. R. 48; s. c. Lowell, 336; s. c. 1 L. T. B. 168;
in re T. S. Shepard, 3 B. R. 172; s. c. 3 Ben. 347.

If the surviving partners are put into bankruptcy without the firm’s
being declared bankrupt, the assignee can not set aside a preference made
by the firm. Withrow v. Fowler, 7 B. R. 339; s. c. 5 Pac. L. R. 102.

If four months elapse after the giving of a firm note by a partner
to pay a separate debt, before the bankruptcy of the firm, but less than
four months before the bankruptcy of the partner, the transfer is valid.
In re G. H. Lane & Co., 10 B. R. 135.

Intent to Prefer.— The present bankruptcy act avoids a sale made witha
view to give a preference, if the debtor at the time be in fact insolvent,
although he may not contemplate bankruptcy. Under this statute the
phrase “ with a view to give a preference,’ must be construed so as to
include an intent to give one creditor any advantage over others in respect
to payment or security of his debt. Forbes v. Howe, 102 Mass. 427; in re
George & Proctor, Lowell, 409.

Every one is presumed to intend what are the necessary and unavoidable
consequences of his acts. Haughey v. Albin, 2 B. R. 399; s. c 2 Bond, 244;
s.c.2 L. T. B. 47; Foster v. Hackley & Sons, 2 B. R. 406; s. ¢. 2 L. T. B. 8;
s.¢.10. L. N. 187; Ahl et al. v. Thorner, 3 B. R. 118; s. c. 2 Bond, 287; s. c.
1L. T. B. 129; Brock v. Terrell, 2 B. R. 648; Sawyer v. Turpin, 5 B. R. 339;
s.¢c, 13 B. R. 271; s. c. 1 Holmes, 251; s. c. 91 U. S. 114; in re Forsyth &
Murtha, 7 B. R. 174; in re George & Proctor, Lowell, 409; Arnold v. May-
nard, 2 Story, 349; Morse v. Godfrey, 8 Story, 364; Everett v. Stone, 3
Story, 446; Peckham vy. Burrows, 3 Story, 544; Dennet v. Mitchell, 1 N. Y.
Leg. Obs. 356; s. c. 6 Law Rep. 16; Webb v. Sachs, 15 B. R. 168; s. c. 13
Pac, L. R. 28; s. c.9 ©. L. N. 156. Vide Jones v. Howland, 49 Mass. 377.

Every man is presumed to know the law, and he is bound to know what
are the legal results of his acts. His mere private intention can not over-
come the legal intention and purport of his acts. Arnold v. Maynard, 2
Story, 8349; Morse v. Godfrey, 3 Story, 364.
W94 Tue Bankruprcy Law.

When a debtor is insolvent and knows it, any payment then made by
him to a creditor in full must be made with intent to prefer. Driggs v.
Moore, Foote & Co., 3 B. R. 602; s. c. 1 Abb. C. C. 440; Rison v. Knapp,
4B. R. 349; s. ce. 1 Dillon, 186; in re Gregg, 4 B. R. 456.

The intentions of parties are to be judged by the legal effect of their
acts. Samson v. Burton, 4 B. R. 1; s. c. 5 Ben. 325; Traders’ National Bank
vy. Campbell, 3 B. R. 498; s. c. 6 B. R. 353; s. c. 2 Biss. 423; s. c. 14 Wall. 87.

The intent to prefer may be inferred from the fact of preference. Rison
v. Knapp, 4 B. R. 349; s. ¢. 1 Dillon, 186.

It is not necessary that there should be an actual intent in the mind of
the debtor. The intent may be inferred from circumstances. Linkman v;
Wilcox, 1 Dillon, 161; Giddings v. Dodd, 4 B. R. 657; s. c. 1 Dillon, 115.

The intent with which an act is done is not ordinarily a matter of direct
evidence, but of inference from the act and the surrounding circumstances,
In re George & Proctor, Lowell, 409.

Motive and intent are not identical. An intent often exists where motive
is wholly wanting and indifference exists. Warren v. Tenth Nat’l. Bank,
7 Bz. R. 481; s. c. 10 Blatch. 493; Webb v. Sachs, 15 B. R. 168; s. ¢. 18 Pac.
L. R. 28; 8. c. 9 C. L. N. 156.

It is a general principle that every one must be presumed to intend the
necessary consequences of his acts. The transfer in any case by a debtor
of a large portion of his property, while he is insolvent, to one creditor,
without making provision for an equal distribution of its proceeds to all
his creditors, necessarily operates as a preference to him, and must be
taken as conclusive evidence that a preference was intended, unless the
debtor can show that he was at the time ignorant of his insolvency, and
that his affairs were such that he could reasonably expect to pay all his
debts. The burden of proof is upon him in such case, and not upon the
assignee. Toof v. Martin, 6 B. R. 49; s ¢. 4 B. R. 488; s. c. 1 Dillon, 203;
8. c. 18 Wall. 40.

The general legal proposition is true that, where a person does a positive
act the consequences of which he knows beforehand, he must be held to
intend those consequences. But it can not be inferred that a man intends,
in the sense of desiring, promoting, or procuring, a result of other persons’
acts when he contributes nothing to their success or completion, and is
under no legal or moral obligation to hinder or prevent them. Wilson y.
City Bank, 5 B. R. 270; s.c.9 B. R. 97; s. c. 1 Dillon, 476; s. @ 17 Wall. 473.

If the intent of the debtor is to give a legal quality to a transaction, it
must be an intent accompanying an act done by himself and not an intent
or purpose arising in his-mind afterward, while third persons are acting.
Where a judgment is obtained by means of a power of attorney, the
inquiry as to his intent must be limited to the time when he executed the
power. Buckingham vy. McLean, 138 How. 151; s. c. 3 McLean, 185.

Some payments may be preferences though made in what seems to De
the ordinary course of business, and others may not be though made out
of it. It is a question of intent in each case. The mode in which pay-
ments are made is usually important, but only as evidence of intent. In
re George & Proctor, Lowell, 409.
INTENT TO PREFER. 195

The act does not require the debtor to know of his insolvency or believe
it. It treats of insolvency as a condition of fact, not of belief. He can
not set up his ignorance of that condition to defeat the operation of this
section. He is presumed to know and is chargeable with knowledge of it,
aud neither ignorance nor willful blindness will exonerate him from the
operation of its provisions. When he is insolvent in fact, he is chargeable
by law with knowledge of such condition, and it follows as a logical se-
quence, that if he pays or secures one creditor in full, not having enough
to pay all, the transfer or payment necessarily operates as a preference,
and he is held liable to intend the natural and logical consequences of
his acts. Wager v. Hall, 5 B. R. 181; s. c. 3 Biss. 28; s. c. 16 Wall. 584.

Every person is presumed to know his pecuniary condition. The pre
sumption, however, may be rebutted, and a person may show that he was
innocently mistaken as to his true condition, but the burden is upon the
person setting up such acclaim. In re §, P. Warner, 5 B. R. 414; Sedgwick
y. Sheffield, 6 Ben. 21.

The intent may be inferred from the conduct of the debtor, and the cir-
cumstances of the transaction. Beattie v. Gardner, 4 B. R. 823; 5. « 4
Ben. 479.

The presumption that a man intends the natural and probable conse-
quences of his acts is only one element of proof to establish the fact of
actual intent. Rice v. Grafton, 13 B. R. 209; s. c. 117 Mass. 228.

The fact that the information in regard to the debtor’s insolvency came
from the debtor is no evidence of any wish or design on his part to give a
preference, or of affording the creditor any facility for obtaining a judg-
ment where the information was net given with that view or design.
Britton v. Payen, 9 B. R. 445; s. @. 7 Ben. 219. f

It is immaterial whether other debts were due and payable at the time
when the preference was given or not. Warren v. Tenth Nat’l. Bank,
7B. R. 481; s. c. 10 Blatch. 493.

The inevitable consequence of a mortgage upon a debtor’s stock in trade
is to put an end to further credit to him and break up and terminate his
business. The natural and inevitable effect of thus incumbering his prop-
erty is to give the secured creditors a fraudulent preference. Graham y.
Stark, 3 B. R. 357; s. c. 3 Ben. 520; Scammon y. Cole, 3 B. R. 393; s. ¢. 2
L. T. B. 103.

A mortgage of all the property of a trader, or of so much as will make
him insolvent, when given for a pre-existing debt, is such an apparent
Preference that it would be almost impossible to explain it away. In re
McKay & Aldus, 7 B. R. 230; s. c. Lowell, 561.

When the debtor is in point of fact insolvent, it will require strong proof
to repel the legal presumption that payments made by turning out and
transferring an open account and delivering goods upon an order in
favor of a third party, and also by delivering goods to be applied on the
Same order, not to the third party, but to the creditor himself, and which
necessarily and obviously had the effect to give a preference to a creditor,
were not intended to have that effect. In re Kingsbury et al., 3 B. R. 318.
796 Tuer Bankruptcy Law.

The giving of a note payable one day after date, with a warrant to con-
fess judgment, importing the right to an execution without delay and a
consequent levy, affords the strongest grounds for the presumption that
the debtor intended that the creditor should make a levy, and thus obtain
a preference. Haughey v. Albin, 2 B. R. 399; s. c. 2 Bond, 244; s. « 2
L. T. B. 47; in re Hafer & Bro. (in re Beck), 1 B. R. 586; s. c. 6 Phila. 474;
Clarion Bank y. Jones, 11 B. R. 381; s. c. 21 Wall. 325; s.c. 2 A. L. T.
(N. 8S.) 185.

It is to no purpose that a man says, when he is insolvent and signs a
note and warrant of attorney and gives it to his creditor, the effect of
which is to enable the creditor to enter the judgment, issue execution, and
levy upon his property, that he did not intend to give a preference. Actions
in this, as in so many other cases, speak louder than words, and the con-
clusion necessarily follows, from such a state of facts, that he does in-
tend to do what is the necessary consequence of what he does; or according
to the oft-repeated statement of the books, a man is supposed to know
what is the necessary consequence of his acts. Traders’ National Bank vy.
Campbell, 3 B. R. 498; s. c. 6 B. R. 853; s. c. 2 Biss. 423; s. c. 14 Wall. 87.

The fact that the debtor did not consider that he was giving a preference
by a judgment note, since he did not believe that a judgment and execution
would be available as a preference over other creditors, does not affect the
case, for the legal consequence of the note with warrant to confess judg-
ment was an execution, levy and sale of the property to the exclusion of
other creditors. In re Terry & Cleaver, 4 B. R. 126; s. c. 2 Biss. 356.

In order to give a struggling debtor the right to pay pressing debts or
suffer some of his property to be levied on, he must know that his means
are ample, *his assets sufficient to pay all his debts, and his condition not
one of merely technical insolvency. His struggle to meet his debts must
not only be honest, but made with reasonable ground for expecting a
successful issue. Hyde v. Corrigan, 9 B. R. 466; s. c. 7 Pac. L. R. 121; in

-re Gregg, 4 B. R. 456; Wager v. Hall, 5 B. R. 181; s. ¢. 3 Biss. 28; s. c.
16 Wall. 584.

It does not rebut the intent to prefer to show that the debtor has also
another motive to the proceeding, namely, expectation of future benefit
to himself by means of future loans of money, and being enabled thereby
to continue his business. Rison v. Knapp, 4 B. R. 349; s. c. 1 Dillon, 186.

A conveyance to secure an extension of indebtedness without any inten-
tion to give a preference is valid. Booth v. Neely, 12 B. R. 398.

The fact that the debtor was induced to give security for debts pre-
viously contracted, by the hope and expectation of thereby obtaining
further credit and means for the continued prosecution of his business,
does not make it any the less a preference. The fact that the debtor was
influenced by some other consideration or inducement, beyond and aside
from the purpose to secure an existing debt, is not such a circumstance as
will repel the inference that he intended to give his creditor a preference.
Forbes v. How, 104 Mass. 427.

It may be true that the bankrupt hoped to work out, and that one
means to this end was to obtain time in which to pay his debts. But it is
INTENT TO PREFER. 797

wholly untenable to say that a trader who knows himself to be insolvent
can mortgage his property to secure a pre-existing debt without entertain-
ing the view that such action is a preference. The court must judge of
the bankrupt’s standing at the time of the transfer, and, if it appear that
his condition was such that a mortgage must operate as a preference
it can not be declared that there was no intention or view to give a
preference because there was a possibility of his earning, in the future,
enough to pay all his debts, and he hoped to do so. It matters not what was
his principal motive, if he was actually insolvent, and knew it, he will not
be allowed to pledge all his property, or any part of it, to one creditor,
leaving the other creditors dependent, in whole or in part, upon his sub-
sequent good or ill fortune in business enterprises. This view is in
tarmony with the spirit and intention of the bankruptcy act. Any other
view renders its provisions as worthless as a rope of sand, and opens a
door to evade one of its most salutary requirements. Driggs v. Moore,
Foote & Co., 3 B. R. 602; s..¢. 1 Abb. C. C. 440; Hyde v. Corrigan, 9 B. R.
466; 7 Pac. L. R. 121.

The purpose of the act being to enforce the equal distribution of an in-
solvent’s estate, every act of an insolvent that tends to defeat that purpose
should be construed strictly as against him, and courts should indulge
every presumption that is permissible, according to well-settled rules of
law, to secure the full benefit of the cardinal principle of the law. The
act ought not to be construed to prevent the exercise of a reasonable bona
fide effort on the part of an energetic and hopeful debtor struggling, with
an honest intent to pay all his debts; but to allow every embarrassed
debtor to go on and sustain his acts because he says he thought he could
go through, and hold as valid his payments and securities, would be to de-
feat altogether the objects and provisions of the bankruptcy act. Wager
y. Hall, 5 B. R. 181; s. c. 3 Biss. 28; s. c. 16 Wall. 584; in re S. P. Warner,
5 B. R. 414; Jones v. Howland, 49 Mass. 377; Clark v. Iselin, 9 B. R. 19;
s.¢c. 11 B. R. 337; s. ec. 10 Blatch. 204; s. c. 21 Wall. 360.

The transfer by a debtor who is insolvent of his property or a con-
siderable portion of it, to one creditor as a security for a pre-existing debt,
without making provision for an equal distribution of its proceeds to all
his creditors, operates as a preference to such transferee, and must be
taken as prima facie evidence that a preference was intended, unless the
debtor or transferee can show that the debtor was, at the time, ignorant
of his insolvency, and that his affairs were such that he could reasonably
expect to pay all his debts. Wager v. Hall, 5 B. R. 181; s. a 3 Biss. 28;
8. ¢c. 16 Wall. 584.

The question being in each case whether there is an intent to prefer,
there may be many cases in which the evidence of a real and honest inten-
tion not to stop payment may make valid a security, which is partly given
for money previously advanced, if coupled with sufficient present ad-
vantages to the debtor; and there may even be cases where the purpose
and expectation to keep on are so manifest that no intent to prefer can
be found, though the insolvency is well known to both parties. In re
McKay & Aldus, 7 B. R. 2380; s. c. Lowell, 651.
798 THE Bankruptcy Law.

The mere omission by an insolvent debtor, when he is sued for a just
debt, to file a petition in bankruptcy, is not sufficient evidence of an intent
to prefer or defeat the operation of the act. Wilson y. City Bank, 5 B. R.
270; s. c. 9 B. R. 97; 8. c. 1 Dillon, 476; s. c. 17 Wall. 473. ;

To make an effort by dilatory and false pleas to delay a judgment ina
State court, when he is sued for a just debt and has no defense, is a moral
wrong and fraud on the due administration of the law. There is no obliga-
tion on him to do this, either in law or in ethics. If the debtor neither
hinders or facilitates a creditor in the prosecution of his suit, an intent to
prefer can not be inferred from his conduct. Ibid.

There is no legal or moral obligation upon an insolvent, when sued by
one creditor in ordinary proceeding likely to end in judgment and seizure
of property, to file a petition in voluntary bankruptcy. The voluntary
clause is wholly voluntary. No intimation is given that the bankrupt must
file a petition under any circumstances. Ibid.

It is wholly immaterial whether the preference was voluntary, or by
reason of threats and coercion. The voluntary or involuntary character
of the transaction is not important. It is a conclusive presumption of the
English law that a debtor who pays an honest debt with a part only of his
assets does not commit a technical fraud which will render the payment
void, if the act is done in consequence of threats or demands on the part
of the creditor. Our law does not adopt this presumption as conclusive.
It defines a preference in the statute itself, or, rather, it has language
which is inconsistent with the English definition. It makes the intent
to prefer or give an advantage to one creditor the important thing, and
this may, evidently, concur with pressure on the part of the creditor.
Foster v. Hackley & Sons, 2 B. R. 406;s.c.2L. T. B. 838.010. LN.
137; Wilson v. Brinkman, 2 B. R. 468; s. c. 1 C. L. N. 198; in re Batchelder,
3 B. R. 150; s. c. Lowell, 373; Giddings y. Dodd, 4 B. R. 657; s. ec. 1 Dillon,
115; Sawyer v. Turpin, 5 B. R. 399; s. c. 18 B. R. 271; s. c. 91 U.S. 114; 8
¢c. 1 Holmes, 251; in re McKay & Aldus, 7 B. R. 230; s. ec. Lowell, 561; Cla-
rion Bank vy. Jones, 11 B. R. 381; s. ¢. 21 Wall. 325; s.¢c.2 A. L. T. (N. 8.)
135; Atkinson v. Farmers’ Bank, Crabbe, 529; Webb v. Sachs, 15 B. R. 168;
s. c. 18 Pac. L. R. 28; s. ¢. 9 C. L. N. 156. Vide Ashley v. Steere, 2 W. &
M. 347; McMechen v. Grundy, 3 H. & J. 185; Taylor v. Whitthorn, 5
Humph. 340; Phoenix yv. Ingraham, 5 Johns. 412; Wilkinson’s. Appeal, 44
Penn. 284.

An agreement for a future security is a mere executory contract, and
not a conveyance, and the validity of such security will depend entirely
upon the circumstances under which it is made, and the state of things
existing at that time. An agreement to give security for a debt due or to
be contracted, imposes no higher legal obligation upon the debtor than
his promise of payment involved in the contracting of the debt. His
fulfillment of the one is equally open to objection as a preference as is
his fulfillment of the other. Forbes v. Howe, 102 Mass. 427; Second
National Bank v. Hunt, + B. R. 616; s. c. 11 Wall. 391; Sawyer v. Turpin,
5 B. R. 339; s. c. 138 B. R. 271; s. ce. 91 U.S. 114; 8.01 Holmes, 251; Gra-
ham vy. Stark, 3 B. R. 357; s. c. 3 Ben. 520; Harvey v. Crane, 5 B. R. 218;
INTENT TO PREFER. 99

s. c. 2 Biss. 496. Contra, in re J. P. Wood, 5 B. R. 421; in re McKay & AI-
dus, 7 B. R. 230; s. c. Lowell, 561; in re Connor & Hart, Lowell, 532. Vide
McMechen y. Grundy, 3 H. & J. 185.

When an agreement is made that certain and specific property shall be
conveyed, and the conveyance is made within a reasonable time there-
after, the advance is considered as a present consideration for the convey-
ance. Gattman v. Honea, 12 B. R. 498; s. c. 7 C. L. N. 395; s. c. 10 Pac.
L. R. 4.

A mortgage upon real estate executed immediately before the com-
mencement of proceedings in bankruptcy, in pursuance of a parol agree-
ment made long before that time, is not a preference, and is valid as
against the assignee of the mortgagor. Burdick v. Jackson, 15 B. R. 318;
s.c. 14 N. Y. Supr. 488.

A conveyance of land in pursuance of a previous agreement, when
there has been an actual possession under the agreement, and performance
of it, can not be set aside, although the consideration was paid prior to
the transfer. Post v. Corbin, 5 B. R. 11.

If the promise to give security was merely general, without relating to
any specific property, a transfer in pursuance thereof would be a prefer-
ence. In re Jackson Iron Manuf. Co., 15 B. R. 488; s. c. 2 0. La B. 154.

Where the contract of sale contemplates that the payment and transfer
shall be synchronous, the vendee does not receive a preference by accept-
ing a transfer immediately after making the payment, although the vendor
in the interval becomes insolvent. Sparhawk v. Richards, 12 B. R. 74.

A security fairly given as part of the same transaction is valid, as the
loan can not be invalidated by a change of the borrower’s situation. re
infecta; as if the money were advanced while the mortgage was in course
of preparation, and the debtor fails in the meantime. In re McKay &
Aldus, 7 B. R. 230; s. c. Lowell, 561; in re Connor & Hart, Lowell, 532; in
re Perrin & Hance, 7 B. R. 283.

As a mortgage of property to be acquired after the date of its execution
is not a valid mortgage, but merely an authority to take possession, the
right of creditors under the bankruptcy law must depend upon its effect
upon the property at the time the act was done which might be supposed
to operate as a transfer. This was the taking of possession under the li-
cense contained in the mortgage. It is not competent for a party to give
his authority in relation to property which he may afterward acquire,
and thus prefer a creditor who shall take possession when he is known to
be insolvent, and thus avoid the effect of the bankruptcy law, because,
literally, he has not made a transfer. That would be a facile method of
evading the scope and spirit of the law. In legal effect the transaction
was a continuing act from the date of the authority to the taking of pos-
session, the last act being the consummation of the transfer. It must be
treated as if a mortgage were made of the after-acquired property at the
time the mortgagee took possession. In re Eldridge, 4 B. R, 498; s. c. 2
Biss. 362; Smith v. Ely, 10 B. R. 558; Robinson y. Elliott, 11 B. R. 553;
8. ¢c. 32 Wall, 518.
800 Tue Bankruptcy Law.

A mortgagee who has omitted to record his mortgage obtains a prefer-
ence if he takes possession of the goods with the assent of the debtor,
for he has no greater right to take possession than any general and unse-
cured cieditor. Kane v. Rice, 10 B. R. 469.

If a bill of sale under the laws of the State vests a complete title in the
grantee, although it is not recorded or attended by possession, subject,
however, to be defeated by any intervening right before record is made
or possession taken, it will constitute a valid consideration for a mortgage,
although there was an agreement that it should be kept secret and not
recorded. Sawyer v. Turpin, 5 B. R. 339; s. c. 138 B. R. 271; s. ce. 91 '‘U. S.
114; s. c. 1 Holmes, 251.

A mortgage is not a preference where the debt is secured by a prior
mortgage covering goods subsequently acquired, if both mortgages cover
the same goods. Brett vy. Carter, 14 B. R. 301.

Where a subsequent and a prior mortgage do not cover the same goods,
the former is liable to be set aside as a preference as to all goods not in-
cluded in the latter. Brett v. Carter, 14 B. R. 301; Barron v. Morris, 14
B. R. 371; s. c. 2 Woods, 354.

A chattel mortgage is not rendered invalid as against the assignee by
failure to file the same or take possession of the property until a month
before the commencement of proceedings in bankruptcy, although the
mortgagee then knew the mortgagor to be insolvent, and that the in-
strument gave him a preference. In re Abram Barman, 14 B. R. 125.

Where the consequences of an act are penal and a fair and honest mo-
tive is as consistent with the act as a fraudulent one, the former is to be
presumed to be the real and true one. Ashby v. Steere, 2 W. & M. 347.

If the payment is received in pursuance of an offer to compromise made
to all the creditors, the intent to prefer may be shown by evidence that he
was either unable or unwilling to carry out the compromise. If he is able
and willing to treat all alike the intent is not made out. Clark v. Skilton,
20 1. R. R. 175.

If the bankrupt has procured one of his debtors to execute a mortgage,
and transfer property to a creditor, the transaction will be deemed a pref-
erence, although there was no express agreement that the indebtedness due
to the bankrupt should constitute the consideration therefor. Smith v.
Little, 9 B. R. 11; s. c. 5 Biss. 269

A preference, within the meaning of the act, is an advantage in the pay-
ment of the debt due to him acquired by one creditor over the other cred-
itors of the debtor. In re Joseph Horton et al., 5 Ben. 562. :

Where the by-laws of a stock board provide that the seat of any member
who has failed to comply with his contracts with other members of the
board for six months shall be sold, and the proceeds of the sale applied to
the payment of his creditors in the board, an assignment of the seat be-
fore the expiration of the six months, for the purpose of facilitating such
payment, is not a preference, because the general creditors can not obtain
any greater rights of property than the debtor himself possesses. Hyde
v. Woods, 10 B. R. 54; s. c. 15 B. R. 518; s. c. 2 Saw. 655.
INTENT TO PREFER. 801.

A release of the equity of redemption to the mortgagee, who agrees to
take the property at a fair price, and credit the amount on the mortgage
debt, for the purpose of saving the expense of a foreclosure, is not a prefer-
ence, when the property is worth less than the mortgage debt. Coxe v.
Hale, 8 B. R. 562; s. c. 10 Blatch. 56; Catlin v. Hoffman, 9 B. R. 342; s. c.
2 Saw. 486.

Where the lien is greater in amount than the value of the property, the
more reasonable inference is that money paid by the lien creditor at tha
time of the conveyance was paid to obtain the conveyance rather than as
a consideration for the property. Catlin v. Hoffman, 9 B. R. 342; s. c. 2
Saw. 486.

The preference at which the law is directed can only arise in case of an
antecedent debt. The giving of a security when the debt is created, is not
within the law, and if the transaction be free from fraud in fact, the party
who loans the money can retain it until the debt is paid. Tiffany v. Boat-
man’s Sav. Inst., 4 B. R. 601; s. c. 9 B. R. 245; s. c. 1 Dillon, 14; s. «. 18
Wall. 376; Clark v. Iselin, 9 B. R. 19; s. « 11 B. R. 387; s. c. 21 Wall. 360;
s. c. 10 Blatch. 204; Bentley v. Wells, 61 Ill. 59; in re Thomas Morrison,
10 B. R. 105; s. c. 6 C. L. N. 110; Piper v. Brady, 10 B. R. 517; s. e@. 381
Leg. Int. 316.

The exchange of one set of securities for another of equal value is not a
preference. Burnhisel v. Firman, 11 B. R. 505; s. ce. 22 Wall. 170.

A creditor and debtor have a right to state an account and strike a
balance, although the former may know that the latter is then insolvent.
A mere accounting between the parties does not prefer the creditor or
diminish the assets of the debtor. In re Comstock & Co., 12 B. R. 110;
8. c. 3 Saw. 320.

The giving of a check on deposits in a bank, to be applied on a note
held by the bank, is not payment, but an adjustment of accounts, and
does not constitute a preference. Hough v. First Nat. Bank, 4 Biss.
349, oe

If a mortgage is executed to secure an indorser at the time of the dis-
counting of a note by a national bank, an assignment of the mortgage to
the bank is not a preference, for the bank in equity was entitled to the
benefit of the mortgage from the time of discounting the note. First Nat’l.
Bank v. Haire, 36 Iowa, 443.

If a creditor has a lien on the property of the debtor to the full amount
of his debt, there is no preference in paying money to discharge it. Liv-
ingston v. Bruce, 1 Blatch. 318.

The mere consent of the debtor to the revival of a judgment so as to
continue the lien thereof, does not constitute reasonable cause to believe
him to be insolvent. Kemmerer v. Tool, 12 B. R. 334; s. c. 78 Penn. 147.

Where goods are sold for cash on the receipt of the invoice, the nonpay-
ment of the price warrants a rescission, and such rescission is not a
preference. In re Norman B. Foot, 11 B. R. 153; s. ¢. 11 Blatch. 530.

The surrender of a pledge by another creditor upon a promise by the
Preferred creditor to pay him out of the proceeds of the property, does
not affect the validity of the transfer. Ogden vy. Jackson, 1 Johns. 370.

51
802. Tue Bankruptcy Law.

A mortgage upon a homestead or other exempt property can not be set
aside by the assignee, although it would have been a preference if put
upon other property. Rix vy. Capitol Bank, 2 Dillcn, 367; Schlitz v. Schatz,
2 Biss. 248,

If the individual property exceeds the individual liabilities, a mortgage
to an individual creditor can not be set aside, although the firm is in-
solvent. Hewitt v. Norton, 16 B. R. 27; s. c. 16 N. Y. Supr. 277.

The assignee of the firm may assail a transfer of property purchased
by one partner in the name of his wife, with the firm money, and con-
veyed to a firm creditor, with the intent to give a preference Patrick v.
Bank, 1 Dillon, 3038.

A transfer of property to a factor, with intent to give him a preference
by enabling him to claim a factor’s lien thereon, is void. Nudd v. Bur-
rows, 13 B. R. 289; s. c. 91 U. S. 426.

A transfer of property within the United States to prefer an alien
creditor may be set aside in the courts in the United States. Olcott v.
Maclean, 14 B. R, 379; s. c. 50 How. Pr. 455.

If an insolvent debtor conveys his property to another, and the latter
executes a mortgage thereon to a creditor, the transfer may be set aside,
for the legal effect is the same as if the mortgage had been given directly
by the debtor himself. Gibson v. Dobie, 14 B. R. 157; s. ¢. 5 Biss. 198.

If a depositary of a bond, at the time of appropriating it to his own use,
puts other property in its place, the transaction is not a preference of one
creditor over-another, within the meaning of the bankruptcy act. There
is no loan made or credit given. It is a case of an exchange of one
species of property for another, made by one party without authority from
the other, or of the conversion to his use by the depositary of property
in his hands, and substituting property equivalent in value as the in-
vestment of the property converted. Cook v. Tullis, 9 B. R. 433; s. c
18 Wall. 332.

An agreement at the time of discounting a note that a part of the
proceeds shall be held to meet the note at maturity, is not a preference,
or void under the bankruptcy law. First National Bank of Mount Joy v.
Wilson, 72 Penn. 13.

A contract for a conditional delivery of goods gives no just cause of
complaint to the creditors of the vendee. Sawyer v. Turpin, 5 B. R. 339;
s. c. 13 B. R. 271; 8. c. 91 U. S. 114; s. c. 1 Holmes, 251.

A change in the form, or even in the substance, of securities will be
protected, if no greater value is put into the creditor's hands than he
had before. Ibid.

When an insolvent bank holds a protested note, and has on deposit funds
of an indorser sufficient to pay it, the money may be appropriated on the
note, and the note delivered to the indorser. The fact that the indorser
subsequently collects the amount from the maker is immaterial. Cred-
itors can not question the right of the indorser to take up the note by pay-
ment or set-off, and they have no interest in his remedy over against the
maker. Winslow v. Bliss, 3 Lans, 220.
INTENT TO PREFER. 803

It is well settled that payment in full to a creditor of a bankrupt by a
third person, as a friendly act, is not an illegal preference as between
the creditor so paid and the other creditors, because it in no way affects
the other creditors. The fund to which they looked for payment is in no
way diminished by it. Repplier v. Bloodgood, 1 Sweeny, 34; Winsor v.
Kendall, 3 Story, 507.

One person has the right to transfer his property to pay or secure the
debt of another. Such a preference is not a preference given by the
debtor, but is that of the owner for the debtor’s benefit. Creditors have
no reason to complain of such preference or payment, for in the property
transferred they have no manner of interest. Winslow v. Clark, 2 Lans.
877; 8. c. 47 N. Y. 261.

‘A mortgage once paid can not be revived by a parol agreement, or con-
tinued for a demand other than the one it was given to secure, for the
purpose of giving a preference thereby. The policy and object of the
bankruptcy law are to seize and appropriate the property of the bank-
rupt for the benefit of his creditors. The debts are made a lien upon it,
and it is disposed of for the purpose of satisfying them. To permit a
bankrupt, after he knows that he is insolvent, to revive satisfied liens,
in order to pay a part of his creditors, would be as fatal to the rights of
his other creditors —as palpable a violation of the objects, as well as of
the letter of the act--as if he were permitted to create new liens for the
same purpose. The bankruptcy law itself, as well as the general prin-
ciples alluded to, prohibit any such revival. Ibid.

The acts, knowledge, and intentions of the agent are, in law, the acts,
knowledge, and intentions of his principal. Graham v. Stark, 3 B. R. 357;
s.c. 3 Ben. 520; Beattie v. Gardner, 4 B. R. 323; s. c. 4 Ben. 479.

The burden of proof is on the assignee. Parsons v. Topliff, 14 B. R.
547; s. ec. 119 Mass. 245.

A witness may testify as to what the defendant stated to be the con-
tents of a letter without notice to produce the letter. Paige v. Loring,
1 Holmes, 275.

If payment is made in the ordinary course of dealing between the
parties, the circunistance tends to show that some other motive actuated
the debtor, rather than an intent to prefer. Ashby v. Steere, 2 W. & M.
347,

If the debtor goes to a particular creditor, hunts him up, picks him out
from the rest, and pays him more in proportion than he can pay others,
or if he elects to pay a relative to whom he is indebted, or if the transfer
or conveyance is done secretly, or if it is out of the usual course of busi-
ness, in a new, extraordinary, or unusual manner, or if payment of a
debt is made before it becomes due, the circumstance tends to show an
intent to prefer. Ashby v. Steere, 2 W. & M. 347; Atkinson v. Farmers’
Bank, Crabbe, 529.

Testimony of the parties as to their intention is inexpressibly weak,
and can rarely avail against the stronger proof which the transaction it-
self affords. ‘Oxford Iron Co. v. Slafter, 14 B. R. 380; s. c. 13 Blatch. 455.
804 . Tur Bankruptcy Law.

If the bankrupt delivered goods to the workmen of a creditor upon the
credit of the creditor, with the expectation that they would be paid for
at the next pay day, there is no preference, although the creditor subse-
quently applies the amount to a pre-existing debt. Rice v. Grafton, 13
B. R. 209; s. c. 117 Mass. 228.

Evidence of other transfers about the same time may be considered
in determining whether there was-an intent to prefer. Atkinson vy. Far-
mers’ Bank, Crabbe, 529.

An entry in the books of a party, or the absence of it, may be evidence
against him of more or less weight, owing to the circumstances, but is
not conclusive. In re Comstock & Co., 12 B. R. 110; s. ce. 8 Saw. 320.

Legal advice given to the debtor that he would be liable to a criminal
prosecution unless he paid the debt will not make the payment valid.
Strain v. Gourdin, 11 B. R. 156; s. c. 2 Woods, 380.

A transfer of firm property with the intent to prefer an individual cred-
itor may be set aside. Ancker v. Levy, 3 Strobh. Eq. 197.

If a transfer of firm property to one partner is made with the intent
to give a preference to his individual creditors, it is void. Collins v.
Hood, 4 McLean, 186.

If mortgaged property is sold, with the permission and consent of the
mortgagee, and another mortgage is subsequently taken to secure the
same debt, it is a new security, and not a mere substitution of securities.
Forbes v. Howe, 102 Mass. 427.

The word “ conveyance’”’ in the bankruptcy act is a generic term, in-
eluding all proceedings to dispose of or incumber property in derogation
of the equality of creditors, with intent by such disposition to give a pref-
erence, or to defeat or delay the operation of the act. It includes mort-
gages. Bingham v. Trost, 6 B. R. 130.

The assignee may maintain a bill to have a mortgage declared void as
a preference, although the bankrupt conveyed away the equity of re-
demption prior to the commencement of proceedings in bankruptcy.
Burpee v. Nat’l. Bank, 9 B. R. 314; s. c. 5 Biss. 405.

The right to recover property transferred by the insolvent, which is
given by this section, is in no sense a penalty imposed upon the party re-
ceiving it. The transfers and titles based thereon are thereby made void.
Hence the right of recovery. Cook v. Whipple, 9 B. R. 155; s. ¢. 55 N. Y.
150; Tinker v. Van Dyke, 14 B. R. 112; s. ¢. 8 C. L. N. 235.

The declarations of the bankrupt in regard to a transfer made as a
preference, are competent evidence against the preferred creditor, if the
conspiracy to give the preference is established, although they were not
made in the presence of, or brought to the knowledge of, the preferred
creditor. Nudd v. Burrows, 18 B. R. 289; s. c« 91 U. S. 426.

The declarations of an alleged partner of the bankrupt are not admis-
sible in favor of a preferred creditor. Ibid.

Judgments.— The statute being within the express powers of Con-
gress is supreme, and overrides all State legislation on the subject. If,
therefore, a judgment is entered in contravention of the law, it is void.
Atkinson v. Purdy, Crabbe, 551,
JUDGMENTS. 805

The amount received as a preference may be recovered, although it
was received by virtue of a sale under an execution. Clarion Bank vy.
Jones, 11 B. R. 381; s. c. 21 Wall. 325; s. « 2 A. L. T. (N. 8.) 135.

If the property of the bankrupt has been sold under process from a
State court issued on a judgment which is void as a preference, the cred-
itor is liable to refund the money thus received to the assignee. Shawhan
vy. Wherritt, 7 How. 627.

There is nothing in this section which expressly or impliedly prohibits
the taking or obtaining of a mere judgment against an insolvent debtor.
The judgment alone only serves to establish the claim of the creditor and
fix its amount, and if obtained without fraud or collusion with the debtor,
is as conclusive evidence of those facts as if the debtor had been solvent.
Where the authorities speak of a judgment as an illegal preference or an
attempt to get one, it will be found in every instance that there was also
a lien acquired upon the property of the debtor by means of the judg-
ment, and that the illegal preference consisted in this lien, and not in
the mere judgment itself. Catlin v. Hoffman, 9 B. R. 342; s. c. 2 Saw.
486.

Merely allowing a creditor to obtain a judgment by default in an ac-
tion for a debt to which there is no defense, does not, as a conclusion of
law, raise an implication of a motive or an intent to prefer. Wilson v.
City Bank, 5 B. R. 270; s. c. 9 B. R. 97; 8. c. 1 Dillon, 476; s. c. 17 Wall.
473; in re Kerr, 2 B. R. 388; s. c. 2 L. T. B. 39; in re J. B. Wright, 2 B.
R. 490; Haughey v. Albin, 2 B. R. 399; s. c. 2 Bond, 244; s. « 2 L. T. B.
47; in re Moulton et al., 4 Pac. L. R. 127; Ballou v. Minard, 2 Brews.
560; Britton v. Payen, 9 B. R. 445; s. «. 7 Ben. 219; Partridge v. Dear-
born, 9 B. R. 474; Clarke v. Piet, 3 McLean, 494; in re Uriah Krum, 7
Ben. 5; Platt v, Stewart, 18 Blatch. 481. Contra, in re Black & Secor,
1B. R. 358; s. c. 2 Ben. 196; s. c. 1 L. T. B. 39; in re McGie (ex parte
Sanger), 2 B. R. 531; s. c. 2 Biss. 163; s. c. 2 L. T. B. 80; Kohlsaat v.
Hoguet, 5 B. R. 159; s. c. 4 Ben. 565; in re C. A. Davidson, 3 B. R. 418;
s. c. 4 Ben. 10; Linkman v. Wilcox, 1 Dillon, 161; Catlin v. Hoffman, 9
B. R. 342; s. c. 2 Saw. 486.

Something more than the passive nonresistance of an insolvent debtor
to regular judicial proceedings in which a judgment and levy on his prop-
erty are obtained, when the debt is due and he is. without just defense
to the action, is necessary to show a preference of a creditor or a pur-
pose to defeat or delay the operation of the bankraptcy law. Wilson vy.
City Bank, 5 B. R. 270; s. c. 9 B. R. 97; s. ¢. 1 Dillon, 476; s. c. 17 Wall.
473.

Very slight evidence of an affirmative character of the existence of a
desire to prefer one creditor, or of acts done with a view to secure such
preference, may be sufficient to invalidate the whole transaction. Such
evidence may be sufficient to leave the matter to a jury or to support a
decree, because the known existence of a motive to prefer or to defraud
the bankruptcy act will color acts or decisions otherwise of no significance.
The cases must rest on their own circumstances. Wilson v. City Bank,
5 B. R. 270; 8. c. 9 B. R. 97; 8. c. 1 Dillon, 476; s. « 17 Wall. 473; Buchanan
806 Tur Bankruptcy Law.

v. Smith, 4 B. R. 397; 8. c. 7 B. R. 513; s. c. 8 Blatch. 153; s. c. 16 Wall.
277; Traders’ Nat’l. Bank v. Campbell, 3 B. R. 498; s. c. 6 B. R. 353; s. «
2 Biss. 428; s. c. 14 Wall. 87; Beattie v. Gardner, 4 B. R. 323; s. c. 4 Ben.
479; Wilson v. Brinkman, 2 B. R. 468; s. c. 1 C. L. N. 198; Ford v. Keyes,
15 I. R. R. 59; in re Dunkle & Driesbach, 7 B. R. 72; Shaffer v. Fritchery,
4 B. R. 548; Vogle v. Lathrop, 4 B. R. 439; s. c. 4 Brews. 253; in re Jerome
E. Baker, 14 B. R. 433.

If the debtor does anything before suit which will secure the creditor
a judgment with priority of lien, with intent to do so, this will render the
preference void. Little v. Alexander, 12 B. R. 134; s. c. 21 Wall. 500.

If a person who knows that he is insolvent, substitutes small notes for
a large note, whereby the creditor is enabled to recover summary judg-
ments, the executions thereon may be set aside. Loudon v. First Nat'l.
Bank, 15 B. R. 476.

Though a judgment creditor, who has obtained a judgment by default
through the mere passive nonresistance of the debtor, may know the
insolvent condition of the debtor, his levy and seizure under such circum-
stances are not void nor any violation of the bankruptcy law. Wilson v.
City Bank, 5 B. R. 270; s. c. 9 B. R. 97; s. ec. 1 Dillon, 476; s. c. 17 Wall.
473.

There is no distinction in this respect between involuntary and volun-
tary bankruptcy. Haskell v. Ingalls, 5 B. R. 205; in re C. A. Davidson,
3 B. R. 418; s. c. 4 Ben, 10.

If a judgment is confessed at a time when the debtor is solvent, an
execution may be subsequently issued when the debtof is insolvent.
Field v. Baker, 11 B. R. 415; s. c. 12 Blatch. 436.

If a confession of judgment by an insolvent debtor is actually followed
by an execution and seizure of his property, it is an unlawful preference
if made with a view to prefer. Webb v. Sachs, 15 B. R. 168; s. ¢. 13 Pac.
L. R. 28; s.¢c.9C. L. N. 156.

Where the preference is obtained by a judgment and execution, there
must be guilty collusion to constitute the fraudulent preference condemned
by the statute. Clark v. Iselin, 9 B. R. 19; s. c. 11 B. R. 337; s. c. 21 Wall.
360; s. c. 10 Blatch. 204.

The slightest solicitation on the part of the creditor will protect the
judgment. Unless it clearly appears that the act originated with the
debtor, and that he took the first step to have the judgment rendered, it
is valid. Haldeman v. Michael, 6 W. & S. 128; Wilkinson’s Appeal, 4
Penn. 284.

A security or priority gained by a suit in a State court has no better
claim to protection than a payment by the debtor himself. Shawhan v.
Wherritt, 7 How. 627.

A creditor may reduce his claim to a sum within the jurisdiction of a
magistrate, take a judgment by default thereon, and obtain priority by
issuing an execution for the same. Witt v. Hereth, 18 B. R. 106; s/ ¢.
6 Biss. 474.

The mere filing of an affidavit and issue of an execution on the day
of the commencement of the proceedings in bankruptcy, do not esteblish
collusion hetween the creditor and the bankrupt. Ibid.
JUDGMENTS. 80%

A party who claims that a levy was void under the bankruptcy law
must allege the facts necessary to make the levy invalid. O’Hara v. Stone,
48 Ind. 417.

In an action at law, actual collusion in obtaining a judgment is always
a question for the jury. Loucheim v. Henzey, 77 Penn. 305.

A preference may be set aside, although it is obtained by virtue of a
warrant to confess judgment. Clarion Bank y. Jones, 11 B. R. 381; s. ¢.
21 Wall. 825; s. c. 2 A. L. T. (N. S.) 135.

The mere entry of a judgment by virtue of a warrant of attorney given
when the debtor was solvent, is not such a preference as the statute
avoids, although it is entered just before the commencement of the pro-
ceedings in bankruptcy, and when the creditor knows that the debtor
is insolvent, and though it is followed by an execution. Clark v. Iselin,
9B. R. 19; s. @ 11 B. R. 337; s. c. 21 Wall. 360; s. c. 10 Blatch. 204; Buck-
ingham v. McLean, 13 How. 151; s. c. 8 McLean, 185; Piper v. Brady, 10
B. R. 517; s. c. 81 Leg. Int. 316; Sleek v. Turner, 10 B. R. 580; 76 Penn.
142; s.c. 1 A. L. T. (N. S.) 485; in re J. B. Wright, 2 B. R. 490; Arm-
strong v. Rickey & Brothers, 2 B. R. 473; s. c. 1G L. N. 145; Love v.
Love, 21 Pitts. L. J. 101; Watson v. Taylor, 21 Wall. 378. Contra, Golson v.
Neihoff, 5 B. R. 56; s. c. 2 Biss. 484; Hood v. Karper, 5 B. RL 358; s. c. 8
Phila. 160; s. c. 2 L. T. B. 201; in re F. C. Lord, 5 B. R. 318; in re Terry
& Cleaver, 4 B. R. 126; s. c. 2 Biss. 856; Vogel v. Lathrop, 4 B. R. 439; s.
e. 4 Brews. 253; Zahm v. Fry, 9 B. R. 546; s. c. 31 Leg. Int. 197; s. «
21 Pitts. L. J. 155.

The execution under the warrant of attorney will be valid, although
the creditor's son was the bankrupt’s bookkeeper, and gave his father
balance sheets from time to time, showing the bankrupt’s condition.
McCormick v. Buckner, 2 W. N. 480.

If the bankrupt was insolvent at the time of the giving of the warrant
of attorney and the creditor knew it, the preference obtained by a sub-
sequent execution may be set aside, although the proceedings in bank-
ruptcy are instituted against him more than two months after the giving
of the warrant of attorney. In re August Herpich, 15 B. R. 426; s. c 9
C. L. N. 258.

This section defines acts that may render other persons liable to ac-
tions at the suit of the assignee for the recovery of assets. Section 5021
only defines the acts of a debtor for which he may be involuntarily ad-
judged a bankrupt. The latter section makes the mere giving, under
certain circumstances, of a warrant to confess judgment an act of in-
voluntary bankruptcy. This applies to the debtor only. This section,
which affects other persons, does not mention the warrant at all. Thus,
the creditor who has the warrant of attorney is never affected injuriously
by merely having received it. The reason for the difference is obvious.
The subsequent use of the warrant of attorney can alone give rise to any
question so far as the creditor is concerned. Hood v. Karper, 5 B. R.
858; s. @ 8 Phila. 160; s. c. 2 L. T. B. 201.

If a judgment, taken merely as an auxiliary security, and embodying
the amount of other judgments, is void as a preference, it will not infect
808 Tue Bankruptcy Law.

and vitiate them, because this section abrogates only the instrumentality
by which a preference is sought to be obtained, and all interests or ad-
vantage acquired by its use, and the creditor may himself annul the void
judgment by a release on the record and hold the valid judgment. Vogle
v. Lathrop, 4 B. R. 439; s. c. 4 Brews. 253.

The lien of a judgment upon real property binds it for the payment of
the claim for which the judgment was given as effectually as a mortgage
made by the debtor for that purpose. Indirectly, it works, causes or
makes a transfer of the property upon which it operates from the judg-
ment debtor to the judgment creditor. Catlin v. Hoffman, 9 B. R. 342;
s. c. 2 Saw. 486. .

If a creditor sues to recover a debt before it is due, the lien acquired
by his judgment will be set aside as fraudulently obtained through the
use of improper means. Partridge v. Dearborn, 9 B. R. 474.

An agreement discontinuing several suits in a State court, and trans-
ferring the claim for litigation in another suit pending between the same
parties, for the purpose of enabling a creditor to shelter and protect any
sum that he may recover by the attachment issued in the latter suit, is
void. A debtor and a creditor can not be allowed, on the very eve of
bankruptcy, to enter into any arrangement by which they can control
the course of future litigation in the State court in suits there pending
to which the debtor is a party. The assignee has the right to be sub-
stituted as a party in the place of the bankrupt, and he may and should
exercise that right. It is the duty of the district court to grant an effect-
ual relief against the use of such agreement, and secure to the assignee
the free and untrammeled exercise of all the rights which the bankruptcy
act confers upon him with reference to such litigation, whether in the
prosecution or defense of such suits. Samson v. Burton, 4 B. R. 1; 5s. ¢.
5 Ben, 325.

The mere fact that the property taken on an execution has been turned
into money, does not prevent it from still remaining the debtor’s prop-
erty under the bankruptcy act. Mills v. Davis, 10 B. R. 340; s. @ 35
N. ¥. Supr. 355. ;

Evidence that the entry of a judgment under a warrant to confess
judgment was a surprise on the bankrupt, is immaterial and inadmissible.
Clarion Bank vy. Jones, 11 B. R. 381; s. c 21 Wall. 325;s.c2 A. lL. T.
(N. 8.) 185.

When property of the bankrupt has been sold under judgment confessed,
with a view to give fraudulent preferences, the assignee may apply in
the State court for permission to come in at any time before a final decree,
and claim the fund against the creditors, and have a trial of the facts.
It is unnecessary that the judgment should be opened. The act of Con-
gress operates directly upon the rights of the creditors, and makes their
preferences void. The assignee claims, not upon an adverse title, but
under and through the bankrupt by virtue of the bankruptcy act. His
claim is adverse to the creditors only in the sense that they are post-
poned, and he supersedes them, and comes in upon, the fund, and not
the property, on account of the rightful jurisdiction of the State court,
REASONABLE CAUSE. 809

at the time to seize and sell the property. Rohrer’s Appeal, 62 Penn~- 498:
Jordan v. Downey, 12 B. R. 427; s. c. 40 Md. 401; Chan v. Chan, 1 Penn.
L, J. 175. =

Reasonable Cause.— The bankruptcy act does not require that the party
-yeceiving the transfer shall know, etc., but that he shall have reasonable
cause to believe —such reasonable cause as would induce the belief in
the mind of an intelligent, capable business man. Foster v. Hackley &
Sons, 2 B. R. 406; sq 2 L. T. B. 8; sc. 1 C. L. N. 187; Graham v. Stark,
3 B. R. 357; s. c. 3 Ben. 520; Sedgwick v. Sheffield, 6 Ben. 21; Otis v.
Hadley, 112 Mass. 100.

It is sufficient if the creditor had reasonable cause to believe the debtor
to be in contemplation of insolvency, although he did not have reason-
able cause to believe him to be insolvent in fact. Paige v. Loring, 1
Holmes, 275.

It is not necessary that the creditor shall know or be aware of the
debtor’s intent to give a preference. Webb v. Sachs, 15 B. R. 168; s. c.
13 Pac. LL R. 28;s.¢c.9 0. L. N. 156.

It should be averred that the creditor, at the time of the transfer, had
reasonable cause to believe, etc. In re Hunt, 2 B. R. 5389; s.c10C. L. N.
169. :
“ Reasonable cause to believe,’ means a state of facts or circumstances
which would lead any prudent man to make inquiries. It will not do
to ask protection on account of ignorance, when a small amount of inquiry
would have given all necessary information. In re J. B. Wright, 2 B.
R. 490; in re Arnold, 2 B. R. 160; White v. Raftery, 3 B. R. 221; s. c. 1
Cc. L. N. 361; s. c. 16 Pitts. L. J. 110; Merchants’ National Bank v. Truax,
1B. R. 545;s.c.1L. T. B. 73.

The statute does not require that the creditor shall have absolute knowl-
edge on the point, nor even that he shall, in fact, have any belief on the
subject. It only requires that he shall have reasonable cause to believe,
and he must be considered to have reasonable cause to believe when such
a state of facts is brought to his notice, in respect to the affairs and pe-
cuniary condition of the debtor, as would lead prudent business men
to the conclusion that the debtor can not meet his obligations as they
mature in the ordinary course of business. Toof v. Martin, 6 B. R. 49;
s.c.4 B. R. 488; s. c. 1 Dillon, 203; s. c. 18 Wall. 40; Buchanan y. Smith,
4B. R. 897; s. c. 7 B. R. 518; s. c. 8 Blatch. 153; s. c. 16 Wall. 277; Wager
y. Hall, 5 B. R. 181; s. c. 3 Biss. 28; s. c. 16 Wall. 584; in re Clark &
Daughtrey, 10 B. R. 21; Burpee v. National Bank, 9 B. R. 814; 8.0 5
Biss. 405; Platt v. Stewart, 13 Blatch. 481.

Actual belief is not: made the criterion of proof, nor is it necessary
that it should appear that the creditor actually believed that the debtor
was insolvent; but the true inquiry is, whether the creditor, as a business
man acting with ordinary prudence, sagacity, and discretion, had reason-
able cause to believe that the debtor was insolvent, in view of all the
facts and circumstances known to him at the time he received the trans-
fer of the property. If it appears that the debtor was actually insolvent,
and that the means of knowledge upon the subject were at hand, and that
810 ‘Tor Bankruptcy Law.

such facts and circumstances were known to the creditor as clearly put
him on inquiry, he had“reasonable’ cause to believe that the debtor was
insolvent. Ordinary prudence, is required of a purchaser in respect to
the title of the seller, and. if, “he fails’ to investigate, when put upon in-
quiry, he is chargeable with “all the knowledge which it is reasonable to
suppose he would have acquired if he had performed his duty. Con-
structive notice is sufficient, upon the ground that when a party is about
to perform an act by which he has reason to believe that the rights of
a third person may be affected, an inquiry as to the facts is a moral duty,
and diligence an act of justice. Whatever fairly puts a party upon in-
quiry is sufficient notice where the means of knowledge are at hand, and
if the party, under such circumstances, omits to inquire, and proceeds
to receive the transfer or conveyance, he does so at his peril, as he is
chargeable with a knowledge of all the facts which, by a proper inquiry,
he might have ascertained. Scammon vy. Cole, 5 B. R. 257; s. c. 3 B. R.
393; s. c. 2 L. T. B. 108; Buchanan v. Smith, 4 B. R. 397; sc. 7 B. R.
513; s. @ 8 Blatch. 153; s. c. 16 Wall 277.

Knowledge of a trader’s inability to pay his debts in the ordinary
course of business, derived from his failure to pay the debt due to the
preferred creditor himself, is at least sufficient to put a party upon the
inquiry as to the debtor’s solvency. In re Forsyth & Murtha, 7 B. R.
174.

Willing ignorance, as where a party willfully shuts his eyes to the
means of information which he knows are at hand, is regarded as equiva-
lent to actual knowledge. Scammon vy. Cole, 5 B. R. 257; Wager v. Hall,
5 B. R. 181; s. c. 3 Biss. 28; s. c. 16 Wall. 584; Peckham v. Burrows, 3
Story, 544.

If other creditors institute inquiries, shortly after the making of the
transfer, and find no difficulty in learning that the debtor owes more than
the value of his property, this shows that the means of ascertaining his
condition were at hand. Wager v. Hail, 5 B. R. 181; s. c. 3 Biss. 28;
8. c. 16 Wall 534.

The proposition of ‘‘ reasonable cause to believe,” is one of fact, to be
established by proof, and found by the jury. The intent to prefer may
be inferred from the fact of preference, and it is competent for the jury
that this intent is’so plainly inferable, from the acts of the debtor known
to the creditor, as to amount ‘to reasonable cause to believe. Forbes v¥.
Howe, 102 Mass. 427.

The actual belief of the creditor as to the solvency of the debtor is
wholly immaterial. The only inquiry which, under the statute, is rele-
vant to the issue is, whether the creditor had reasonable cause to believe
the debtor insolvent; that is, whether, in view of all the facts and cir-
cumstances which were known to the creditor, concerning the business and
pecuniary condition of the debtor, in connection with the time and mode
of the transfer of the property taken, he, as a reasonable man, acting
with ordinary prudence, sagacity and discretion, had good ground to
believe that the debtor was insolvent. This is the only legitimate sub-
ject of inquiry. It was not intended by the statute to make the actual
REASONABLE CavseE. 8t1

belief of the party concerning the solvency of the debtor one of the
standards by which to test the validity of the transfer of property to
him, Such a belief might, or might not, be well founded. It would be
an uncertain and fluctuating standard. That which would satisfy one
man, would be wholly insufficient ta convince another; and those facts
which would fall far short of producing belief in a person who was dis-
interested and impartial might have a different effect upon the same per-
son when acting under a strong influence of self-interest. In the place of
a test so uncertain and unsatisfactory as the belief of a party, formed
under a great bias, the statute has established one much more safe and
definite, applicable to all persons alike, and easily understood and readily
applied — the belief of a reasonable man taking a transfer of property
under like circumstances. Scammon y. Cole et al. 3 B. R. 3938; 5. «@ 2
L. T. B. 108.

Instructions which confine the plaintiff to proof of reasonable cause of
belief as to the debtor's actual financial condition, instead of permitting
him to prove reasonable cause of belief on the defendant’s part as to the
debtor’s purposes and ultimate intentions are erroneous. It is undoubt-
edly true, that the distinction here pointed out is usually of not much
practical importance. The question usually submitted to the jury, as the
turning point in the trial, is, as to the preferred creditor’s reasonable cause
to believe the debtor to be insolvent in fact at the time of making the
payment, or giving the security complained of, as constituting an unlaw-
ful preference. But when the evidence has a tendency to show that there
were apparent indications that insolvency was a probable and approach-
ing event, it is material to instruct the jury that the plaintiff is entitled
to recover, if his proof as to the defendant’s reasonable cause of belief
goes no further than cause to believe that the debtor, at the time, was
acting in contemplation of insolvency. Beals v. Quinn, 101 Mass. 262.

Evidence tending to prove that the creditor had reasonable cause to
believe the debtor to be insolvent is not competent unless it is brought
home to. his personal knowledge before or at the time of his purchase.
Crump v. Chapman, 15 B. R. 571.

Where the defendant admits that a statement made by the bankrupt
on examination in his presence is true, the statement may be proved by
any one who heard it. Goodrich v. Wilson, 14 B. R. 555; s. c. 119 Mass.
429,

Evidence of the debtor’s financial condition and reputation a year pre-
vious to the giving of the security is competent upon the question of his
solvency or insolvency a year later, and as tending to show what means
the creditor had to know, or cause to believe, that the debtor was insolvent.
Forbes v, Howe, 102 Mass. 427.

Evidence that it was a general custom and within the ordinary course
of business for persons engaged in the same business to make sales like
the one in controversy, and that this custom was well known to the trade,
is competent. Otis v. Hadley, 112 Mass. 100.

Evidence that such a sale would not be a suspicious circumstance that
would affect the bankrupt’s reputation for solvency is inadmissible.
Ibid.
812 Tue Bankruptcy Law.

The defendant can not prove that he has made similar purchases from
others in the same trade. Ibid.

Evidence as to the creditor’s actual belief is inadmissible, for, if he had
reasonable cause to believe, it is immaterial whether he did in fact be
lieve or not. Forbes v. Howe, 102 Mass. 427.

The declarations or acts of the debtor subsequent to the transfer are
not admissible as against the creditor. Phoenix v. Ingraham, 5 Johns,
412,

The creditor is not of necessity affected by a misrepresentation or deceit
of the bankrupt in regard to the transaction. Brooke v. Scoggins, 11
B. R. 258; s. c. 9 Pac. L. R. 12.

Any serious and intentional misstatement, or attempt to mislead or
deceive other creditors in regard to the transaction, when made by the
creditor casts suspicion on the transaction. Ibid. :

The validity of a preference does not depend on the moral good faith
-with which it was accepted by the creditor. Alderdice v. State Bank,
11 B. R. 398.

The creditor’s belief that he is entitled to the preference is not materia).
The intent to receive a preference should not be confounded with cor-
rupt motive. Bingham vy. Richmond, 6 B. R. 127.

The bankruptcy act disarms the vigilance of creditors generally, by de-
elaring that no vigilance can be rewarded by a preference, if obtained
contrary to its provisions within four months prior to the filing of the peti-
tion in bankruptcy. It undertakes to disable creditors from procuring
preferences within that period by attachment, mortgage, or confession
of judgment. It must be so administered as to Suppress illegal prefer-
ences, or it necessarily operates as a fraud upon the rights of the mass of
creditors who in good faith refrain from seeking advantages contrary to
its provisions and policy. Markson v. Hobson, 2 Dillon, 327.

All experience shows that positive proof of fraudulent acts between
debtor and creditor is not generally to be expected, and it is for this
reason, among others, that the law allows in such controversies a resort
to circumstances as the means of ascertaining the truth, and the rule of
evidence is well settled that circumstances altogether inconclusive, if sepa-
rately considered, may by their number and joint operation, especially
when corroborated by moral coincidences, be sufficient to constitute con-
clusive proof. Wager v. Hall, 5 B. R. 181; s. ce. 3 Biss. 28; s ¢c. 16 Wall.
584.

If a merchant debtor in a mercantile community is so straitened that,
without pretense of any defense, he is under the pressure of suits to com-
pel payment of debts maturing in his current business, this is very high
evidence of his inability to pay. Mayer v. Hermann, 10 Blatch. 256.

The existence of a financial crisis constitutes of itself a reasonable cause
for believing doubtful men to be insolvent. In re Clark & Daughtrey,
10 B. R. 21.

A creditor may be affected by rumors which he has heard about the
debtor’s embarrassment. Post v. Corbin, 5 B. R. 11; Golson v. Neihoff,
5 B. R. 56; s. c. 2 Biss. 484; Hyde v. Corrigan, 9 B. R. 466; s. c. 7 Pac.
L. R. 121,
REASONABLE CAUSE. : 813

A payment received in the ordinary course of business, without any
reasonable cause to believe the debtor to be insolvent, is valid. Coxe v.
Hale, 8 B. R. 562; s. c. 10 Blatch. 56; Clark v. Iselin, 9 B. R. 19; s. « 11
B. R. 337; 8. c. 21 Wall. 360; s. c. 10 Blateh. 204,

A conveyance out of the ordinary course of business is sufficient evi-
dence, if uncontrolled, to establish a knowledge of the debtor’s insolvency.
The purchaser is put upon the inquiry, and should take steps to ascertain
the condition of the debtor, or at least his general reputation as to
solvency. Tuttle v. Truax, 1 B. R. 601; in re Palmer, 3 B. R. 283; s. ¢.
1L. T. B. 1389; in re E. Meyer, 2 B. R. 422; 5. c. 1 C. L. N. 210; in re Col-
man, 2 B. R. 563; in re Dean & Garrett, 2 B. R. 89; in re Hafer & Bro.
(in re Beck), 1 B. R. 586; s. c. 6 Phila. 474; Scammon v. Cole, 5 B. R. 257;
North v. House, 6 B. R. 365.

Independent of the express provisions of the bankruptcy act, the gen-
eral rule of law is, that the transfer or delivery of property will be con-
sidered fraudulent when it is not delivered in the usual course of trade,
or of the accustomed dealings between the parties. Rison v. Knapp, 4 B.
R. 349; s. c. 1 Dillon, 186.

A creditor who has before him what the bankruptcy act declares shall
be prima facie evidence of fraud, must, in law, be deemed to have reason-
able cause to believe in the existence of such fraud, unless this legal pre-
sumption is overborne by opposing evidence. In re Kingsbury et al., 3
B. R. 318; Wilson v. Stoddard, 4 B. R. 254; s. ¢. 2 C. L. N. 161.

This prima facie evidence is present to every creditor who. accepts a
security in any case to which the provision is applicable; and unless the
creditor has evidence sufficient to repel this legal presumption, he has

' reasonable cause to believe that the security is fraudulent and void under
the bankruptcy act. This will necessarily prevent any security voluntarily
given by an insolvent to a favored creditor from being held valid, simply
because it proceeded from the voluntary act of the debtor, and was pre-
pared without any previous communication with the creditor, either in
regard to the giving of the security, or the financial condition of the
debtor. A creditor can not, by shutting his eyes when this statutory
prima facie evidence of fraud is placed before him, escape the conse-
quences of this provision. When he accepts a security, he is conclusively
presumed to know what appears upon its face, and to have reasonable
cause to believe it was intended to accomplish what must be its ordinary
and necessary effect; and no masterly inactivity, no self-imposed ignorance
of what the circumstances call upon him to ascertain, however intense,
and however closely guarded that ignorance may be, can make fraudulent
preferences valid and binding as against the assignee. Graham y. Stark,
3B. R. 357; s. c. 3 Ben. 520.

Travsfers made in the usual and ordinary course of a trader’s business,
or payments made at the time a debt matures, and in the usual mode of
paying debts, are prima facie valid. On the other hand, whenever a ered-
itor is in possession. of such facts and circumstances in reference to his.
debtor's standing, as arouse suspicion with regard to his solvency or ability
to meet his indebtedness, the creditor is so far put upon inquiry that he.
Will not be allowed to shut his eyes to those facts and circumstances, and
814 Tue Bankruptcy Law.

obtain payment of a debt otherwise than as it matures, or take security
or a transfer of property from the debtor to the prejudice of other cred-
itors. Not paying debts in the usual and ordinary course of a trader’s
business, from a lack of present means, and want of ability to raise means,
must be regarded as prima facie evidence of insolvency, and the creditor
who has knowledge of such facts must act in view of them. Driggs v.
Moore, Foot & Co., 3 B. R. 602; s. c. 1 Abb. C. C. 440.

It is a sound rule that, when a person suspects the solvency of a debtor,
and, in consequence cf that suspicion, obtains property or money, and
thereby a preference, and it turns out in fact that his debtor is insolvent,
he may be said to be in the predicament contemplated by the bankruptcy
law; he has reasonable ground to believe that his debtor is insolvent, and
so can not avail himself of the payment made, or security obtained.
Courts ought not to prevent or interfere with the ordinary business opera-
tions between man and man, and do not attempt to do so unless there
is something in the transaction indicating that the man who makes it
has reason to believe that he is getting what ought to belong to cred-
itors generally, and if so, the bankruptcy law declares he can not avail
himself of money or property thus obtained. But, when a man acts with-
out knowledge of the condition of the party, or of anything to create sus-
picion of his solvency, and in good faith obtains a payment or security,
then the bankruptcy law will not interfere with it. Traders’ National
Bank v. Campbell, 3 B. R. 498; s. c. 6 B. R. 353; s. c. 2 Biss. 423; s. ¢. 14
Wall. 87.

Although the consideration for an assignment of a claim to a third
person is paid out of the funds of the debtor ‘by such third person, yet the
assignee is not entitled to recover unless it appears that the creditor at
the time clearly understood that he was dealing directly with the debtor’s
agent for a conveyance, security, transfer or payment from or out of the
funds of the debtor. The creditor is entitled to retain the money if he
was misled by such third person into the belief that the transaction was
a mere assignment of the debt to himself for his own benefit, and to
be paid for out of his own funds. Wiusor y. Kendall, 3 Story, 507.

Mere knowledge that a claim of less than $100 remains unsettled does
not constitute reasonable cause to believe that a fraud on the act is being
committed by accepting a payment. Castle v. Lee, 11 B. R. 80.

The small amount of means used to carry on the business can not affect
the validity of the transfer, for the statute can not be graded by any
system of minimums in its application to the various trades, professions
and callings of individuals. McAllister v. Richards, 6 Penn. 133.

No creditor, after exacting a deed of trust so stringent as to destroy
the credit of an insolvent debtor, has a right to claim that he did not
have reasonable cause to believe the debtor to be insolvent. In re Clark
& Daughtrey, 10 B. R. 21.

The taking of a debtor’s property on legal process is not in the ordinary
eourse of his business. When a creditor makes repeated demand for
payment, and is compelled to resort to legal process to obtain satisfaction,
he has reasonable cause to believe the debtor to be insolvent. Haskell
v. Ingalls, 5 B. R. 205.
REASONABLE CAUSE. 815

‘The confession of a judgment can not be considered as an act done
in the ordinary course of the debtor’s business. It is, therefore, prima
facie contrary to the provisions of the act, both as to the debtor and the
creditor receiving it. The burden of proof is upon the creditor to over-
come this presumption. In re Walton et al., 1 Deady, 442.

When an execution must necessarily stop the debtor’s business, the
execution creditor, in general, has reasonable cause to believe the debtor
to be insolvent. Hood v. Karper, 5 B. R. 358; s. c 8 Phila. 160; s. ce. 2
L. T. B. 201; Zahm v. Fry, 9 B. R. 546; s. c. 21 Pitts. L. J. 155; s. ¢.
81 Leg. Int. 197.

Creditors issuing executions on judgments obtained on demands long
overdue, against a bankrupt who has been pressed in repeated instances
to pay or secure the demands, and has failed to do so because of his
inability, must be held to have had reasonable cause to believe that
the debtor was insolvent. Buchanan y. Smith, 4 B. R. 397; s. c. 7 B. R.
513; s. c. 8 Blatch. 153; s. c. 16 Wall. 277.

Payments by a banker, whose doors are closed, in checks upon another
bank in the same place, are not in the ordinary course of his business.
Markson v. Hobson, 2 Dillon, 327.

If the bank is not the general banker of a bankrupt, the case is not
one for the application of the cautionary rule which requires transac-
tions between them to be scrutinized with care. Rankin v. Third Nat’l.
Bank, 14 B. R. 4.

The debtor’s remonstrances, that the giving of the security will injure
his credit, is sufficient to put the creditor upon inquiry. Wager v. Hall, 5
B. R. 181; s. c. 3 Biss. 28; s. c. 16 Wall. 584; Hyde v. Corrigan, 9 B. R.
466; s. c. 7 Pac. L. R. 121.

If a transfer was not in the usual and ordinary course of business
of the bankrupt, that fact is prima facie evidence that a fraud was com-
mitted upon the bankruptcy act by the transfer, and the burden of proof
will be upon the creditor receiving it to show the validity of the transac-
tion as respects a fraud on the act. But if the transfer was made in the
usual and ordinary course of business of the bankrupt, then the burden
of proof will rest upon the assignee. Collins et al. v. Bell et al, 3B. R.
587; Scammon v. Cole et al., 3 B. R. 393; s. c. 2 L. T. B. 103.

A transfer of the whole of the debtor’s property is not in the usual
and ordinary course of business. A conveyance of part may be public,
fair and honest, but a conveyance of all must either be fraudulently
kept secret or produce an immediate absolute bankruptcy. Nothing re-
mains for the creditors in any shape. The debtor is, therefore, insolvent,
of course, the moment he executes the deed, for there is nothing at all left
for his creditors. Grow v. Ballard, 2 B. R. 254; s. c. 1 L. T. B. 111; Brock
v. Terrell, 2 B. R. 648; Davis & Green v. Armstrong, 3 B. R. 34; s. ¢.
2L. T. B. 138; Foster v. Hackley & Sons, 2 B. R. 406; 5 c. 2 L. T. B.
8; s.¢c.1C. L. N. 137; in re Batchelder, 3 B. R. 150; s. c. Lowell, 373;
Graham v Stark, 3 B. R. 357; s. c. 8 Ben. 520; Rison v. Knapp, 4 B. R.
349; s. ec. 1 Dillon, 186; Cookingham v. Morgan, 5 B. R. 16;'s. c. 7 Blatch.
480; Walbrun v. Babbitt, 6 B. R. 589; s. c. 9 B. R. 1; s. c. 16 Wall. 577;
Peckham y. Burrows, 3 Story, 544.
816 THe Bankruptcy Law.

A. conveyance of all the debtor’s property to a creditor who has no
knowledge that there are any other creditors is valid. Wadsworth v.
Tyler, 2 B. R. 316; s.¢c. 2 L. T. B. 28.

The transfer will stand if nothing was brought to the attention of the
creditor which would reasonably have induced him to believe the debtor
to be insolvent. Rankin v. Third Nat'l. Bank, 14 B. R. 4.

The transfer of all the goods of a debtor and the lease of the Store-
house in which they are kept, and putting others in possession with
authority to sell all his stock and apply the proceeds to the payment of
debts in execution, is not in the usual course of business; does break up
his business; and is not only some, but very strong evidence of an intent
to prefer his creditors, he being at the time insolvent. What is the
usual course of a retail merchant’s business? It is to sell‘his goods at
his usual place of business to customers as they come, to keep up an or-
dinary stock, and continue in business in the usual way that such mer-
chants do. Certainly it is not in the usual course of a retail merchant’s
business when in a state of actual insolvency, to confess judgment to
certain creditors, suffer executions to be levied by them, and then assign
over to them all his stock, and his place of business, put them in posses-
sion, and provide that the surplus over the payment of their claims shall
be returned to himself. Such a state of facts undoubtedly justifies the .
court in saying that it is required to be rebutted by some evidence that
the transaction was not intended as an undue preference contrary to the
provisions of the bankruptcy law. Pierce v. Evans, 61 Penn. 415; Mayer
v. Hermann, 10 Blatch. 256.

When a party is aware that all demands for which he could be held
liable, as well for the individual members as for the firm itself, and
whether the same had matured or not, were to be paid, whilst other de-
mands known to him are left unsecured, and that by the arrangement
debts not due are anticipated, and thereby the discount which has been
paid is lost, he has reasonable cause to believe that a preference is in-
tended. Knowledge of overdue debts, and the fact that a large amount of
firm property is applied to the discharge of the personal liabilities of
the partners, and not to the firm debts, are circumstances that call for
plenary proof that the transfer was not designed as a preference.
Scammon v. Cole et al., 3 B. R. 393; s. c. 5 B. R. 257; s. ec. 2 L. T. B. 103.

A transfer of all the debtor’s property subject ta execution, leaving
other creditors to obtain payment out of the debts due to him, constitutes
a reasonable cause to believe him to be insolvent. Smith v. McLean, 10
B. R. 260.

The rule that insolvency consists in present inability to pay debts might
apply if the debtor be present and the negotiations are with him. But
when he is absent, and that absence is alleged as the sole reason for the
nonpayment of the debt, and the reasons given for such absence are not
such as would excite any suspicion of insolvency or present inability to
pay, it has no application. Clerks and agents are not supposed to have
entire control of the resources of their principal to such an extent as to
make their failure to meet an obligation of their principal an act of
REASONABLE CAUSE. "817

bankruptcy against him. Security given by an agent after demand and
nonpayment of a debt under such circumstances will be valid. Jenkins
y. Meyer, 3 B. R. 776; s. c. 2 Biss. 303.

When a merchant fails to pay his notes or rather mercantile obligations
as they become payable, the immediate presumption of inability to pay
arises. There may be reasons in a particular case why payment at
maturity is not made. There may be a defense to the apparent debt; the
nonpayment may be caused by accident or carelessness or inattention,
or it may be the result of some other special temporary cause entirely
consistent with amplest solvency. Nevertheless, where no such cause
exists, nonpayment prima facie imports inability to pay in due course of
business. Mayer v. Hermann, -10 Blatch. 256; Dunning v. Perkins, 2
Biss. 421; Bartholow v. Bean, 10 B. R. 241; s. c. 18 Wall. 635; Shaffer v.
Fritchery, 4 B. R. 548; Golson v. Neihoff, 5 B. R. 56; s. c. 2 Biss. 434;
Wilson v. City Bank, 5 B. R. 270; s. c. 9 B. R. 97; s. ec. 1 Dillon, 476; s. ¢.
17 Wall. 473; Warren v. Del., L. & West. R. Co., 7 B. R. 451; s. ¢. 10 Blatch.
493; Warren v. Tenth Nat'l. Bank, 7 B. R. 481; s. a 10 Blatch. 4938; Harri-'
son vy. McLaren, 10 B. R. 244.

Notice of the nonpayment of a judgment note is not notice of the
insolvent condition of the maker. Love v. Love, 21 Pitts. L. J. 101; Piper
y. Brady, 10 B. R. 517; s. ec. 31 Leg. Int. 316.

The nonpayment of an account for goods sold when there is no cir-
cumstance warranting any other inference than that the debtor can not
pay for the want of means, indicates insolvency, and affords a reasonable
cause to believe him to be insolvent. Mayer v. Hermann, 10 Blatch. 256.

The existence of the required reasonable cause for belief may be in-
ferred from all the circumstances of the transaction. In re Gregg, 4 B. R.
456; Stranahan v. Gregory & Co., 4 B. R. 427; Anon, 1 Pac. L. R. 173;
Buchanan v. Smith, 4 B. R. 397; s. ec. 7 B. R. 518; s. c. 8 Blatch. 153;
s. c. 16 Wall. 277; Alderdice v. State Bank, 11 B. R. 398; Brooke v.
Scoggins, 11 B. R. 258; s. c. 9 Pac. L. R. 12.

The making of subsequent advances does not negative the existence of
a reasonable cause to believe the debtor to be insolvent, when it was for
the interest of the creditor to make such advances. Harrison v. McLaren,
10 B. R. 244.

To confess knowledge of the facts which constitute insolvency, and at
the same time deny knowledge of the bankrupt’s insolvency, is simply a
denial of law rather than of fact. Rison v. Knapp, 4 B. R. 349; s. ¢. 1
Dillon, 186; Toot v. Martin, 4 B. R. 488; s. c. 6 B. R. 49; s. c. 13 Wall. 40;
s. @ 1 Dillon, 203; Warren v. Del., L. & West. R. Co., 7 B. R. 451; 8. ¢.
10 Blatch. 493.

Equity pays no regard to the forms resorted to by parties in fraud of
the law. Toof v. Martin, 4 B. R. 488; s. c. 6 B. R. 49; s. c. 13 Wall. 40;
8. c. 1 Dillon, 203. :

The principal is chargeable with all the knowledge which his agent
had at the time of the transaction. In re E. Meyer, 2 B. R. 422; 5. c. 1
0. L. N. 210; Ungewitter v. Von Sachs, 3 B. R. 723; s. ¢. 4 Ben. 167; s. ¢c.
1L. T. B. 224; 5. c. 3 L. T. B. 195; Graham v. Stark, 3 B. R. 357; 8. ¢.

52
818 THe Bankruptcy Law.

3 Ben. 520; Vogle v. Lathrop, 4 B. R. 439; s. c. 4 Brews. 253; Markson y,
Hobson, 2 Dillon, 327; Mayer v. Hermann, 10 Blaich. 256. Contra, in re
J. B. Wright, 2 B. R. 490.

Where a creditor places his claim in the hands of a collection agent
to forward for collection, the creditor is not chargeable with the knowl-
edge of a subagent employed by the latter if he does not receive the
proceeds of a judgment by confession obtained by him, although the
proceeds were remitted to the collection agent. Hoover v. Wise, 14 B. R.
264; s. c. 61 N. Y. 305; s. c. 91 U.S. 308.

Where the attorney of a creditor is prosecuting a debtor to enforce
payment of a debt, and by reason thereof the debtor discloses to him that
he is irsolvent and asks his advice, and be assumes to give it, he can
not by accepting such retainer evade the operation of the rule that the
knowledge of the agent acquired in the conduct of his employer’s busi-
ness is knowledge of his principal. In every step of the prosecution of
the claim to collection, he is the agent of the creditor, the performance of
his duty to that creditor involves the gaining of knowledge of the
debtor’s insolvency, and no proffered confidence put in him by the
adverse party can make that information less his client’s property, or less
information acquired in his agency, and imputable to such client. Mayer
v. Hermann, 10 Blatch. 256.

A general authority, with subsequent tacit acquiescence, is sufficient
proof that an agent had authority to accept a preference. In re Colman,
2B. R. 563. /

A corporation is chargeable with the knowledge of its officers. Loudon
v. First Nat'l. Bank, 15 B. R. 476.

The mere fact that the creditor was not present when the transfer was
made and knew nothing of the transaction, does not affect its character.
If, when informed of it, he does not repudiate it, but accepts benefits
under it, he is as much bound by the acts of his agent in accepting the
transfer as if he had accepted himself. North v. House, 6 B. R. 365.

Where there is collusion between the creditor and the debtor, or delay
in issuing the execution, or a use of the judgment for the purpose of
preventing and obstructing other creditors in the collection of their
claims, the judgment will be declared void. In re McGie (ex parte Sanger),
2B. R. 531; s. c. 2 Biss. 163; s. c. 2 L. T. B. 80; in re Kerr, 2 B. R. 388;
s.c. 2 L. T. B. 39; in re Schnepf, 1 B. R. 190; s. c. 2 Ben. 72.

Knowledge on the part of the creditor of the commission of an act of
bankruptcy by the debtor constitutes a reasonable cause to believe him to
be insolvent, and the creditor must be held to the just and reasonable
inferences from such act. Warren v. Tenth Nat'l. Bank, 7 B. R. 481; s. ¢.
5 B. R. 479; s. c. 42 How. Pr. 169; s. c. 5 Ben. 395; s. c 10 Blatch. 493.

Money received upon notes of third parties accepted by a creditor as
conditional payment of his debt is, in contemplation of law, received at
the time of the delivery of the notes, without regard to the time when
the money was actually paid. In other words, the actual receipt of the
contents of the note relates back to the conditional payment, and con-
verts it into an absolute one. The question of preference in the receipt
FRAUD UPON THE Act. 819

and collection of the note would have to be determined by the facts as
they existed when the conditional payment was made. If the creditor was
justifiable in receiving the notes when he did, in payment of his debt,
then he became the owner of them, and his right to collect and receive the
money on them at any subsequent time can not be affected by the fact
that the debtor has since become insolvent, or that he bas since learned,
or has good reason to believe, that the debtor was insolvent at the time
of the transfer. In re Ouimette, 3 B. LR. 566; s. c. 1 Saw. 47.

When there is sufficient evidence to raise a legal presumption that a
transfer was made, with a legal or actual intent to give, or to obtain a
preference, in fraud of the policy and provisions of the bankruptcy law,
the transfer can only be sustained upon very clear and satisfactory proofs
to repel such presumption. Warren v. Del., L. & West. R. Co, 7 B. R. 451;
s. c. 10 Blatch. 493.

The mere fact that the preferred creditor may have paid a valuable
consideration, or advanced money on the deed, will not validate it, if he
had reasonable cause to believe the debtor insolvent at the time of its
execution. North v. House, 6 B. R. 365.

Knowledge.— There is a difference between “ knowing” and “ having
reasonable cause to believe.’’ Singer v. Sloan, 11 B. R. 433; s.c. 12 B. R.
408; s. ec. 8 Dillon, 110. Contra, Hamlin v. Pettibone, 10 B. R. 172; s. ¢.
6 Biss. 167; Brooke v. McCracken, 10 B. R. 461; s. ec. 8 Pac. L. R. 102; 8. ¢.
70. L. N. 10; Webb v. Sachs, 15 B. R. 168; s. ¢. 138 Pac. Ls Ri 28; & ¢. 9
©. L. N. 156.

The amendment to this section does not apply to transactions that
occurred prior to December 1, 1873. Oxford Iron Co. v. Slafter, 14 B.
R. 380; s. c. 13 Blatch. 455; Tinker v. Van Dyke, 14 B. R. 112; 8s. ¢ 8
C. L. N. 335; Barnwell v. Jones, 14 B. R. 278; in re John F. Lee, 14 B. R.
89; Slafter v. Sugar Refining Co., 13 B. R. 320; Hamlin v. Pettibone, 10
B. R. 172; s. ec. 6 Biss. 167; Brooke v. McCracken, 10 B. R. 461; s. ¢. 7
0. L. N. 10; s. « 8 Pac. L. R. 102; Warren v. Garber, 15 B. R. 409.
Contra, Booth v. Neely, 12 B. R. 398; Singer v. Sloan, 11 B. R. 433; s. ¢.
12 B. R. 208; s. ec. 8 Dillon, 110.

The creditor’s knowledge of the fraud may be established by cir-
cumstantial evidence. Gattman v. Honea, 12 B. R. 493; s. ¢. 7 C. L. N. 395;
s.¢. 10 Pac. L. R. 4; Loudon v. First Nat’l. Bank, 15 B. R. 476.

The circumstances attending a transaction may be such that the cred-
itor will not be justified in relying on the debtor’s false statement as
to his condition. Bucknam v. Goss, 13 B. R. 337.

The burden of proving knowledge rests on the assignee. Crump Vv.
Chapman, 15 B. R. 571.

Definition of Fraud Upon the Act.— The act was designed to secure
an equal distribution of the property among the creditors, and any
transfer made with a view to secure the property or any part of it to one,
and thus prevent such equal distribution, is a transfer in fraud of the
act. Toof v. Martin, 4 B. R. 488; s. c. 6 B. R. 49; s. c. 1 Dillon, 203; s. c.
13 Wall. 40; Wager v. Hall, 5 B. Ri 181; s. ¢. 3 Biss. 28; s. ¢. 16 Wall.
584; Shawhan v. Wherritt, 7 How. 627; in re Rufus Hoyt, 1 N. Y¥. Leg.
820 Tur BanKRuptToy Law.

Obs. 132; Locke vy. Winning, 3 Mass. 8325; Wakeman v. Hoyt, 5 Law Rep.
309; Koster v. Hackley & Sons, 2 B. R. 406; s.c. 2L. T. B. 835. a1
C. L. N. 187; Haughey v. Albin, 2 B. R. 399; s. « 2 Bond, 244;8.a2L,
T. B. 47; in re Black & Secor, 1 B. R. 353; s. c. 2 Ben. 196; s. c. 1 L. T. B.
89; in re Kingsbury et al., 3 B. R. 318.

It is immaterial whether the parties have the provisions of the bank-
ruptcy act in contemplation or not. Foster v. Hackley & Sone, 2B. R.
406; s.c.2 L. T. B. 83s. c.1C. L. N. 187.

Ignorance of the provisions of the statute constitutes no excuse. Lewis
v. Sloan, 68 N. C. 557.

An act which directly and manifestly tends to defeat the purpose and
policy of the bankruptcy act, and which is done in contravention of and
with the intent to defeat such purpose and policy, is fraudulent and void.
A fraudulent contrivance, with a view to defeat the bankruptcy law, is
void. When ‘a person has shown his inability to meet his engagements, one
ereditor can not, by collusion with him, obtain a preference to the injury
of others. Such conduct is considered a fraud on the act, whose aim is
to divide the assets equally and, therefore, equitably. Beattie v. Gardner,
4B. R. 323; s. c. 2 Ben. 479; in re Gregg, 4 B. R. 456; Buchanan v. Smith,
4B. R. 397; s.c. 7 B. BR. 513; s c. S Blatch. 153; s. c. 16 Wall. 277.

Recovery where there is a Surety.— Although the term “ indorser”
is not specifically used in this section, it is the clear intention of the law
to make any payment or preference to an indorser or other surety, fraudu-
lent and void, where the other elements in the transaction exist to give
it that character. The payment of an indorsed note before maturity, by
an insolvent debtor, is a preference to the indorser, and the money may
be recovered from him. It is true that the legal liability as indorser can
not be legally enforced until.the maturity of the note, and demand of the
maker, and notice of nonpayment; yet, in the statutory sense of the term,
there is a liability of the indorser from the date of the indorsement. When
the indorser is solvent, the payment does not give a preference to the
holder. The holder is not benefited, as he would have been paid at once
by the indorser when the note became due. Ahl et al. v. Thorner, 3 B.
R. 118; s. ec. 2 Bond, 287; s. ec. 1 L. T. B. 129.

When the surety or indorser is innocent of all participation in any
scheme by the principal debtor to contravene the law, and the debt is paid
at or before maturity without any action on his part, he is not liable.
Bean v. Lafiin, 5 B. R. 333.

A mortgage given to secure money loaned to the debtor for the purpose
of taking up certain notes upon which the mortgagee was liable as in-
dorser can not be sustained as a mortgage given for a present considera-
tion. If it could be, all an indorser or surety need do to obtain valid se-
curity for his liability would be to lend his principal the amount with
which to pay the debt, and receive back a mortgage as security for the
loan. Such a proceeding, within the purview of the bankruptcy act,
is nothing more than an exchange or substitution of securities— a mere
attempt and contrivance to relieve or protect an indorser or surety; and,
whatever means may be adopted to accomplish this purpose, it will
TRANSFER MERELY VOIDABLE. 821

prove invalid under the bankruptcy law when it is designed and used to
obtain a preference for the party who is under a liability for the bank-
rupt. Under such circumstances, the security would, in all respects,
have been equally valid if it had been so drawn as, in terms, to in-
demnify the indorsers or sureties on the notes for which they were liable.
Scamumion v. Cole, 3 B. R. 393; s. c. 5 B. R. 257; 5. c. 2 L. T. B. 108; Cook-
ingham v. Morgan, 5 B. R. 16; s. c. 7 Blatch. 480.

Property which has been mortgaged to a creditor who is fully secured by
an indorsement, may be recovered from the creditor, and the mortgage
may be declared void. Graham v. Stark, 3 B. R. 357; s. c. 3 Ben. 520.

The payment of an overdue note to the holder may be avoided as a
preference, although the indorser was solvent. The statute intended, in
pursuance of its policy of equal distribution, to exclude both the holder
of the note and the surety, or indorser, from the right to receive payment
from an insolvent debtor. It is forbidden. It is made by the statute
equally the duty of the holder of the note and of the indorser to refuse
to receive such payment. Bartholow v. Bean, 10 B. R. 241; s. « 18
Wall. 635.

If an accommodation indorser merely induces the bankrupt to give a
eheck cn the bank which holds the note in order to pay it, he is not
liable to the assignee. Blair v. Allen, 3 Dillon, 101.

If a feme covert indorses a note for the accommodation of the bank-
tupt, without expressly making the debt a charge upon her separate
estate, she is not liable for money paid as a preference to the holder.
Flauders v. Abbey, 6 Biss. 16.

If the money received by the nolder of a note signed by the bankrupt,
and a surety from the bankrupt is recovered by the assignee as a prefer-
ence, the holder may recover the full amount from the surety. Watson v.
Poague, 15 B. R. 473; s. c. 42 Iowa, 582.

Transfer merely Voidable.— Until the debtor becomes amenable to
‘the bankruptcy court by the commencement of proceedings in bankruptcy,
the question whether a conveyance is in violation of the provisions of the
bankruptcy law can not be raised. Atkins v. Spear, 49 Mass. 490.

A judgment or attaching creditor is entitled to take under his levy
or attachment all that then rightfully belongs to his debtor, and no more,
inasmuch as he stands merely in the place of the debtor. If the prop-
erty is then covered by a conveyance which is valid under the State
laws, but void only under the bankruptcy law, the title of the assignee,
as soon as he is appointed, goes back by relation to the time when the
conveyance was executed, so that his title will overreach that derived
from any levy or attachment subsequent to that time. Everett v. Stone,
8 Story, 446.

When the property upon which a mortgage was given by the debtor
has been sold by the assignee, the preferred creditor can not foreclose
the mortgage, even though he was not made a party to the proceedings
for sale, for he can not show a right superior to that of the purchaser.
Whipps v. Ellis, 7 Bush, 268.

A party who has received a transfer of goods from the debtor may
822 Tue Bankruptcy Law.

maintain an action against the sheriff for a levy thereon, although the
transfer is void under the bankruptcy law. Hathaway v. Brown, 18
Minn. 414.

The maker of a promissory note can not set up as a defense that the
payee assigned it to the holder in fraud of the bankruptcy law, with the
intent to prefer his creditor. Frenzel v. Miller, 37 Ind. 1.

A mortgage given for a consideration passed at the time of its execu-
tion, and also to secure .a pre-existing debt, being void in parts as to the
pre-existing debt, is void as to the whole. Tuttle v. Truax, 1 B. R. 601.

If the mortgagee gave a full present consideration at the time of the
execution of the mortgage, but consented to include therein a claim due
to another, the mortgage will be valid as to his claim. in re Stowe, 6
B. R. 429.

If the mortgage is made in part to prefer the mortgagee as to his claim,
and in part to secure a present loan made for the purpose of enabling
the debtor to prefer another creditor, it is entirely void. Bucknam vy.
Goss, 13 B. R. 337.

If a creditor advances the money to pay off a prior execution, and then
takes a judgment for the advance and his own debt, his execution will
be good to the extent of the advance. Lathrop v. Drake, 13 B. R. 472;
s. c. 91 U.S. 516. :

If the assignee elects to avoid a transfer, he takes the property subject
to any prior liens held by the creditor and not abandoned in accepting
the transfer. Avery v. Hackley, 11 B. R. 241; s. c. 20 Wall. 407.

A bailee who receives the possession of property from a preferred cred-
itor can not, in an action of replevin by the bailor, set up a title sub-
sequently acquired by him from the debtor’s assignee. Nudd vy. Montanze,
388 Wis. 511.

If a preference given upon the surrender of a valid security is set aside,
the surrender may in equity be deemed to be annulled, and the security
revived. Burnhisel vy. Firman, 11 B. R. 505; s. c. 22 Wall. 170.

If a purchase by a mortgagee of the mortgaged property is set aside
as a preference, be bas the right to assert his lien by virtue of his mort-
gage so far as that is valid. His purchase does not impair his rights
under the mortgage, but on the failure of the title which he supposed
that he got by the purchase, he will be restored to his rights as a mort-
gagee as they existed befere he attempted to purchase. He will lose his
title under the purchase, and nothing more. In re Kahley, 4 B. R. 378;
s. c. 2 Biss. 383.

Bona Fide Purchaser.— A bona fide purchaser for value at a sale
under an execution, without notice of the invalidity of the judgment, has
a good title as against the assignee.- Where the judgment is apparently
a valid lien under the State law, constructive notice of the pendency of
proceedings in bankruptcy will not affect his title. Zahm y. Fry, 9 B. R.
546; s. c. 21 Pitts. L. J. 155; s. «@ 31 Leg. Int. 197.

A person who purchases from a preferred creditor will not be pro-
tected unless he is a bona fide purchaser without notice and for value.
He is not a bona fide purchaser without notice, if he knows facts suffi-
WHAT MAY BE RECOVERED. 823

cient to put a man of ordinary care and prudence upon inquiry. He must,
however, not only have no notice, but he must have paid a consideration at
the time of the transfer, either in money or other property, or by a
surrender of existing debts or securities. Executing notes for the whole
amount which are overdue and still remain in the hands of the payee,
is not sufficient. Rison v. Knapp, 4 B. BR. 349; s. c. 1 Dillon, 186.

Where the security for a note is void under the bankruptcy law, an
indorsee for value obtains no better right than the payee if the security
is not of a negotiable character. The security passes with the note only
as an incident, and is subject to the same defense in the hands of the
indorsee as it would have been in the hands of the payee. In re Kansas
City Manuf. Co., 9 B. R. 76.

A purchaser who takes only the ‘right, title and interest” of the
grantee, without any covenants as to title, takes the property subject to
all the infirmities of the original title, and can claim as against the
assignee no more than the grantee himself could. Morse vy. Godfrey, 3
Story, 364.

A party who pays no new consideration upon the faith of the transfer,
but merely takes it as an auxiliary security for an antecedent debt or
liability, is not a purchaser for a valuable consideration. Ibid.

The pendency of the proceedings in bankruptcy is constructive notice
thereof to all purchasers from the grantee, and they are affected thereby.
Ibid.

What may be Recovered.— The language of the statute, authorizing
the assignee ‘“‘ to recover the property, or the value of it, from the person
so receiving it, or so to be benefited,” does not create a qualification or
limitation of power. The words are those of caution merely, and give the
assignee no power that he would not possess if they had been omitted
from the statute. Fox v. Gardner, 12 B. R. 187; s. c. 21 Wall. 475.

Although the act declares that the assignee may recover the prop-
erty or its value, yet it is to be construed as giving a right to recover the
latter only as a substitute for the former, in cases where the property
has been destroyed, or has passed beyond the control of the creditor, or
been constructively converted to his own use by a refusal to deliver the
same upon the demand of the assignee. Schuman v. Fleckenstein, 15 B. R.
224; s.¢c.9 C0. L. N. 174.

When property is levied upon and sold under execution, before the
proceedings in bankruptcy begin, the State court has a rightful jurisdic-
tion at ‘the time to seize and sell the same, and the assignee can not
follow the property, but must resort to the State court to lay in his
claim as the rightful owner of the fund against the preferred creditors.
Rohrer’s Appeal, 62 Penn. 498.

The amount which the assignee is entitled to recover from a creditor
who has received a preference by means of a judgment is the gross
amount obtained on execution, without any deduction for the costs and
expenses of the creditor. The sum appropriated as costs and fees for
attorney must be considered as having been paid by the creditor, after it
was received under the judgment. Street v. Dawson, 4 B. R. 207;
824 Tue Bankruptcy Law.

Bill v. Beckwith, 2 B. R. 241; Traders’ Nat'l Bank v. Campbell, 3 B. R.
498; s. c. 6 B. R. 353; s. c. 2 Biss. 423; s. c. 14 Wall. 87; Sedgwick v.
Millward, 5 B. R. 347.

The measure of the damages is the value of the property and not the
amount realized by a sale under an execution. Clarion Bank v. Jones,
11 B. R. 381; s. ¢. 21 Wall. 325; s.c.2 A. L. TL. (N. S.) 185.

If the creditor, upon being released from the effect of an injunction,
chooses to sell the property under an execution, he does so at his own risk,
and may be held liable for the value, if that exceeds the proceeds of the
sale. Anderson y. Strasburger, 6 Ben. 372.

If the evidence does not show what the value of the property was, the
assignee, where the property has been sold by the sheriff, can only re-
cover the amount indorsed upon the execution. Christman v. Haynes,
8 B. R. 528; Anderson v. Strasburger, 6 Ben. 372.

When the proceedings are in the nature of equity proceedings, the court
may, in its discretion, make a decree for the net, instead of the gross,
amount received. Wilson vy. Brinkman et al., 2 B. R. 468;5.a.10L
N. 133; Brock v. Terrell, 2 B. R. 643.

The court can not allow, by way of reduction, the amount paid to other
unpreferred creditors out of the proceeds of property conveyed in fraud
of the bankruptcy act, nor so much thereof as they would have been
entitled to receive on an equal distribution of the estate. The direction
of the law is, that the assignee may recover the property or its value.
The debtor can not be allowed to make the distribution of his estate.
White v. Raftery, 3 B. R. 221; s.c.10. L. N. 361; s. c. 16 Pitts. L. J. 110;
Bill v. Beckwith, 2 B. R. 241; North v. House, 6 B. R. 365.

Money paid by a theck drawn on the creditor himself, and money held
by an attachment laid by the creditor in his own hands, may be recov-
ered. If the creditor had stood on his right of set-off, it might possibly
have been available; but when he treats it as the bankrupt’s property, and
endeavors to secure an illegal preference, by getting the bankrupt to
make a payment in the one case and seizing it by attachment in the
other, both appropriations will be void. Traders’ Nat'l. Bank v. Campbell,
3 B. R. 498; s. c. 6 B. R. 353; s. c. 2 Biss. 423; s. @ 14 Wall. 87.

The creditor is also liable for the interest from the time of the receipt
of the money. Ibid.

The creditor is only liable to the assignee for what came into his hands
from or through the bankrupt, and was not returned to him or his rep-
resentative, the assignee. He may employ the debtor at a reasonable
compensation to take charge of the property transferred, and deduct the
amount actually paid from the sum that comes into his hands. In case
of a void assignment, he may also deduct compensation for his own
services. Catlin v. Foster, 3-B. R. 540; s. c. 1 Saw. 37; s.¢.1L. T. B. 192.

The assignee holds the title to the property convered by way of
preference, and the bankruptcy law entitles him to recover it, or the
value of it. If a conveyance has been made, or incumbrance imposed
on the property by the person claiming it as purchaser under the bank-
rupt, the law permits the assignee to sue for and recover the value. It
LIENs. 825

thus enables the assignee to ratify and confirm the sale, prevents litigation,
and at the same time fully secures the rights of creditors. He may re-
lease or quitclaim to the purchaser his interest as assignee, so as effectually
to cure any defect there might be in the title by reason of the proceed-
ings in bankruptcy and the assignment to him. Winslow y, Clark, 2
Lans. 877; s. c. 47 N. Y. 261.

If a transfer is set aside on technical or other grounds entirely con-
sistent with good faith in the transferee, and he appears to have acted
under an honest mistake, it may be proper to allow him the amount of
the liens which he has paid in order to obtain the benefit of the transfer,
but no such allowance will be made where he obtains the property by
means which are a clear fraud upon the bankruptcy act, and under
circumstances which make it a fraud upon other creditors, and afford a
presumption of an unlawful intent on his part. Cookingham v. Morgan,
5 B. R. 16; s. ¢. 7 Blateh. 480.

When the circumstances of the case and a doubt of the bona fides of
the transaction make it reasonable that the assignee should file the bill,
it may be dismissed without costs to either party. Collins v. Gray, 4
B. R. 631; s. ec. 8 Blatch. 483.

Where a commission merchant continues to deal with the debtor after
he has reasonable cause to believe him to be insolvent, he may be com-
pelled to account for the excess of the consignments over the advances
subsequent to that time. Harrison v. McLaren, 10 B. R. 244.

Where usury has been exacted of the bankrupt, the excess above the
legal rate of interest may be recovered, although the debt has been merged
in a judgment in a State court. Shaffer vy. Fritchery, 4 B. R. 548; Tiffany
vy. Boatmen’s Saving Institution, 4 B. R. 601; 53 « 9 B. R. 245; 5. a 1
Dillon, 14; s. ec. 18 Wall. 376.

When the transfer includes articles exempt from levy and sale on
execution, the assignee can not recover them or their value. They do
not pass to the assignee, nor can their proceeds be distributed as assets,
nor can any creditor have any claim to or interest in them. Grow v.
Ballard et al., 2 B. R. 254; s. c. 1 L. T. B. 111; Brock v. Terrell, 2 B. R. 643.

The assignee is entitled to recover the full amount, although the
creditor previous to the payment had drawn a check for a part thereof,
which had not been presented or accepted or paid, for the simple draw-
ing of a check does not transfer the fund. Strain v. Gourdin, 11 B. R. 156;

s. @. 2 Woods, 380.

Act or 1898, Cu. 7, § 6%. Liens.— (a) Claims which for want of
tecord or.for other reasons would not have been valid liens as against
the claims of the creditors of the bankrupt shall not be liens against
his estate.

(b) Whenever a creditor is prevented from enforcing his rights
as against a lien created, or attempted to be created, by his debtor,
who afterwards becomes a bankrupt, the trustee of the estate of such
826 - Ture Bankruptcy Law.

bankrupt shall be subrogated to and may enforce such rights of such.
creditor for the benefit of the estate.

(c) A lien created by or obtained in or pursuant to any suit or
proceeding at law or in equity, including an attachment upon mesne
process or a judgment by confession, which was begun against a per-
son within four months before the filing of a petition in bankruptcy
by or against such person shall be dissolved by the adjudication of
such person to be a bankrupt if (1) it appears that said lien was ob-
tained and permitted while the defendant was insolvent, and that its
existence and enforcement will work a preference, or (2) the party
or parties to be benefited thereby had reasonable cause to believe
the defendant was insolvent and in contemplation of bankruptcy, or
(3) that such lien was sought and permitted in fraud of the pro-
visions of this Act; or if the dissolution of such lien would militate
against the best interests of the estate of such person the same shall
not be dissolved, but the trustee of the estate of such person, for
the benefit of the estate, shall be subrogated to the rights of the
holder of such lien and empowered to perfect. and enforce the same in
his name as trustee with like force and effect as such holder might
have done had not bankruptcy proceedings intervened.

(d) Liens given or accepted in good faith and not in contemplation
of or in fraud upon this Act, and for a present consideration, which
have been recorded according to law, if record thereof was necessary
in order to impart notice, shall not be affected by this Act.

(e) That all conveyances, transfers, assignments, or incumbrances
of his property, or any part thereof, made or given by a person ad-
judged a bankrupt under the provisions of this Act subsequent to
the passage of this Act and within four months prior to the filing of
the petition, with the intent and purpose on his part to hinder, delay,
or defraud his creditors, or any of them, shall be null and void as
against the creditors of such debtor, except as to purchasers in good
faith and for a present fair consideration; and all property of the
debtor conveyed, transferred, assigned, or encumbered as aforesaid
shall, if he be adjudged a bankrupt, and the same is not exempt from
execution and liability for debts by the law of his domicile, be and
remain a part of the assets and estate of the bankrupt and shall pass
to his said trustee, whose duty it shall be to recover and reclaim the
same by legal proceedings or otherwise for the benefit of the cred-
itors. And all conveyances, transfers, or incumbrances of his prop-
erty made by a debtor at any time within four months prior to the
filing of the petition against him, and while insolvent, which are
AVOIDING TRANSFERS. 827

held null and void as against the creditors of such debtor by the laws
of the State, Territory, or District in which such property is situate,
shall be deemed null and void under this Act against the creditors of
such debtor if he be adjudged a bankrupt, and such property shall
pass to the assignee and be by him reclaimed and recovered for the
benefit of the creditors of the bankrupt.

(f) That all levies, judgments, attachments, or other liens, obtained
through legal proceedings against a person who is insolvent, at any
time within four months prior to the filing of a petition in. bank-
ruptcy against him, shall be deemed null and void in case he is ad-
judged a bankrupt, and the property affected by the levy, judgment,
attachment, or other lien shall be deemed wholly discharged and re-
leased from the same, and shall pass to the trustee as a part of the
estate of the bankrupt, unless the court: shall, on due notice, order
that the right under such levy, judgment, attachment, or other lien
shall be preserved for the benefit of the estate; and thereupon the
same may pass to and shall be preserved by the trustee for the benefit
of the estate as aforesaid. And the court may order such conveyance
as shall be necessary to carry the purposes of this section into effect:
Provided, That nothing herein contained shall have the effect to
destroy or.impair the title obtained by such levy, judgment, attach-
ment, or other lien, of a bona fide purchaser for value who shall have
acquired the same without notice or reasonable cause for inquiry.

Act oF 1898, Cu. 7,§ 70. * * * Avoiding transfers— * * *
(e) The trustee may avoid any transfer by the bankrupt of his prop-
erty which any creditor of such bankrupt might have avoided, and
may recover the property so transferred, or its value, from the person
to whom it was transferred, unless he was a bona fide holder for value
prior to the date of the adjudication. Such property may be re-
covered or its value collected from whoever may have received it
except a bona fide holder for value.

A chattel mortgage on the present and after-agquired property of the
mortgagor, which by its terms asserts that oe is that the lien
may attach to all new goods brought into the store, and be released from
all such as are sold in the due course of a regularly conducted business,
so that such mortgage may be a continuing one, is void. In re Bloom,
17 B. R. 425.

A mere promise to pay out of a particular fund, when received, the
promisor retaining control of such fund, and no notice being given to
the person who is to pay. creates no lien upon such fund. Ex parte
Tremont Nail Co., in re Middleboro Shovel Co., 16 B. R. 448,
828 Tue Bankruptcy Law.

Docketing a judgment, under the laws of New York, obtains a lien on
the land of the judgment debtor within the county as land, but no len
on the rents and profits of the same. Conover et al. v. Dumahaut, 17 B. R.
558.

A judgment creditor does not acquire a lien protected under the bank-
ruptcy law by commencing proceedings supplementary to execution; un-
til the appointment of a receiver his right is not a lien within the mean-
ing of the bankruptcy law. In re Wheeler & Lang, 18 B. R. 385.

Decrees enrolled against a debtor are not liens upon property pur-
chased by him while insolvent in the name of his wife, but a court of
equity will pursue, for the benefit of creditors, the means thus invested,
and the lien in equity attaches on filing the bill. Winters v. Claitor, 18
B. R. 533.

A creditor can not obtain an equitable lien on the property interests of
his debtor by suit brought after the latter has been declared a bankrupt.
Ibid.

Under laws of Vermont, attachment of a debt by trustee process creates
a lien on the funds in the hands of the trustee, after service upon him,
although no notice is given to principal debtor. Such lien is a lien
by attachment by mesne process, and will be saved when made the
prescribed length of fime before bankruptcy. In re Peck, 16 B. R. 43.

For facts and circumstances which would put a creditor on notice of
debtor’s insolvency, see Lloyd, Assignee, v. Strowbridge, 16 B. R. 197; in
re Armstrong, 16 B. R. 275; Dutcher v. Wright, 16 B. R. 331.

Where the agent of creditor had reasonable cause to believe the debtor
insolvent, and knew the act was in fraud of the bankruptcy law, it is
the same as if the creditor had himself taken part therein, with the
same cause to believe and the same knowledge. Sage, Jr., v. Wynkoop,
Assignee, 16 B. R. 363.

Knowledge on part of agent of fraudulent intent and effect of a transac-
tion is imputed to principal. Ibid.

A debtor’s passive nonresistance to an action is not necessarily a fraud
on the bankruptcy act, although be may be insolvent in contemplation
of that act. Louchheim vy. Henzey, 18 B. R. 173.

Conveyance made in fraud of creditors was, under the law of 1867,
voidable, and not void, and the property embraced in it did not absolutely
vest in assignee as part of the bankrupt’s estate. Phelps v. Curts, 16
B. R. 85.

A delay of more than three months in filing petition in bankruptcy,
after the execution and delivery of an assignment for the benefit of
creditors, would under the law of 1867 deprive an assignee of right to
possession of the property assigned. In re Kimball, 16 B. R. 188.

An assignee may petition summarily to set aside a mortgage given
after commencement of proceedings in bankruptcy. Resort to a bill in
equity is unnecessary. In re Sims, 16 B. R. 251.

A general assignment made in fraud of the bankruptcy act may be
set aside if the proceedings are commenced within the time prescribed
by the act. In re Temple, 17 B. R. 345.
AVOIDING TRANSFERS. 829

Under law of 1867 it was held that until a general assignment for
benefit of creditors has been set aside, the title to property embraced in
it remains in the assignee, and dves not vest in the assignee in bank-
ruptcy by the mere force of an adjudication and his appointment as as-
signee. Belden, Assignee, v. Smith, 16 B. R. 302.

An assignment for benefit of creditors, without preferences, made in
good faith, with no fraudulent intent, is valid. Haas, Assignee, v. O’Brien,
16 B. R. 507.

In North Carolina a bond for title given on executory contract for
purchase of lands conveys an equitable estate in the land to the vendee,
which is assignable. And assignment of such estate to indemnify sure-
ties made without intent to delay or defraud creditors is valid, and
the assignee is entitled to priority over judgment creditors of the as-
signor. In re Wm. P. Reynolds, 16 B. R. 158. :

‘Such assignment is valid, although no money is paid. The debt upon
which the sureties are liable furnishes a sufficient consideration to
support it. It need not be registered to be available against creditors,|
unless the time limited by statute for the registration of a bond has
expired. Ibid. But see § 67, Clause D, of Law of 1898. ‘

An insolvent exchanged $500 worth of wheat for a wagon and team,
with view to claim the latter as exempt from operation of bankruptcy
law, by reason of its being exempt property under Oregon Civil Code.
Held, void, and title to wheat vested in assignee. Semble, that assignee
may elect to take wagon and team as price or value of the wheat, and
thereby affirm the exchange. In re Parker & Morris, 18 B. R. 43.

When a secured creditor takes goods in fair exchange for the security,
the transaction is not in fraud of the bankruptcy law. Halleck & Bro.
y. Tritch, 17 B. R. 293.

In an action to recover from a vendee goods sold on the eve of bank-
ruptey, it must be established not only that the bankrupts intended to
dispose of their property in fraud of the act, but that defendant knew
such to be their intention, and guiltily combined and colluded with them.
Dickinson v. Adams, 17 B. R. 380.

Where one member of a firm, doing a very large but failing business,
on a limited capital, withdraws over one-third of his share of the capital
to build upon property which he conveys to his wife, but which appears
upon the firm books as an investment of the firm, until charged up to him
after an assignment by such firm prior to an adjudication in involuntary
bankruptcy; Held, such conveyance to the wife was void, and the
assignee was entitled to the proceeds of the property as against a joint
creditor who had taken a mortgage thereon as security for his debts.
Phipps v. Sedgwick, Assignee, 16 B. R. 64.

Bankrupt owner of twenty bonds of like character and value, held by
bailee, sold six of them to defendant and received pay therefor prior to
the bankruptcy: Held, that the rights of such purchaser were superior
to these of the assignee in bankruptcy. Hamilton v. Nat. Loan Bk., 18
B. R. 97.

Where one of the motives which prompts a conveyance by one member
830 THE Bankruptcy Law.

of the firm to his partner of his interest in such firm, is to hinder and de-
feat creditors, such conveyance is fraudulent at common law, and is
denounced by the express provisions of the bankruptcy act, although other
considerations may also have induced the conveyance. Burrill v. Lawry,
18 B. R. 367.

A creditor of the bankrupt, having issued an attachment against him,
‘defendant, who was the bankrupt’s partner, procured a delay of its
‘execution, and in the meantime purchased the bankrupt’s interest in
the firm for $400, without taking account of stock or of firm debts and
assets. The purchase money was returned to defendant, who placed it
in a safe, from which it was drawn out by the bankrupt from time to
time as he called for it. In an action by the assignee in bankruptcy to
invalidate the sale, defendant claimed that he purchased the bankrupt’s
| interest for the sole purpose of geeting rid of him and protecting his
| own interests. Held, that both parties to the transaction were charge-
able with having contemplated the result accomplished thereby, and
nuust be considered guilty of interiding to hinder and delay this creditor
in obtaining security for his demand. Ibid.

Where the marshal demanded and received of a sheriff property which
"the latter held under execution levy, and delivered same to assignee, an
action for a wrongful taking and conversion can not be maintained by
‘judgment creditor against the assignee. Ansonia Brass & Copper Co. v.
Pratt, 16 B. R. 170.

Such action can not be maintained in the State court, as the enforce-
ment of a lien upon funds in the hands of assignee acquired by virtue
of the judgment. Such lien can only be enforced in bankruptey court.
Ibid.

In Colorado the delivery of an execution to the sheriff constitutes such
a lien upon the debtor’s property as will be valid against proceedings
in bankruptcy filed after such delivery but before a levy is made. Bart-
lett, Assignee, v. Russel, 16 B. R. 211.

This is also the law in the State of New York. In re Payne, 17 B. R. 87.

A judgment recovered after the making of a general assignment for the
benefit of creditors, without preferences, and valid by the laws of the
State where made, creates no cloud upon the title of property transferred
by the assignment, although such assignment be subsequently set aside
upon the application of an assignee in bankruptcy. Belden, Assignee, v.
Smith, 16 B. R. 302.

Subsequent executions create a lien on all the debtor’s property in the
sheriff’s hands not covered by a prior attachment. In re M. J. Nelson,
16 B. R. 312.

A levy which has been relinquished before filing of a petition in bank-
ruptcy creates no lien upon the property as against the assignee. Sage,
Jv., Vv. Wynkoop, Assignee, 16 B. R. 363.

Where a judgment is docketed, and thereafter a petition in bankruptcy
is filed against the judgment debtors, and after the filing of such peti-
tion, but before appointment of an assignee, proceedings supplementary
to execution were instituted upon the judgment, and a receiver was
AVOIDING TRANSFERS. 831

appointed by the court in which the judgment was rendered: Held, that
title of subsequently-appointed assignee in bankruptcy related back to
the date of filing petition in bankruptcy, and cut off ‘title of receiver to
rents and profits of the judgment debtor's lands. Conover v. Dumahaut,
17 B. R. 558.

Assignment to assignee duly appointed in bankruptcy proceedings dis-
solves lien of attachment levy within four months prior to filing of peti-
tion. Duffield v. Horton, 16 B. R. 59.

And a debtor of the bankrupt who has, in ignorance of the appoint-
ment of the assignee, paid the amount of his indebtedness to the sheriff
under execution in the attachment suit, is not thereby relieved from his
liability to the assignee. Ibid.

Order of Staie court in attachment suit for sale of goods attached, as
perishable, is no protection to a sheriff when order is made after filing
of petition in bankruptcy, though before adjudication. Ibid.

Note.— Under the law of 1867, as it appears in the United States Revised
Statutes, the assignment to the assignee in bankruptcy relates back to
the commencement of the proceedings in bankruptcy, and by operation
of law vests the title to all such property and estate, both real and
personal, in the assignee, although the same is then attached on mesne
process as the property of the debtor, and shall dissolve any such attach-
ment made within four months next preceding the commencement of the
bankruptcy proceedings. U. S. Rev. Stat., § 5044.

Under this section see the following decisions:

An execution lien obtained in good faith before bankruptcy, on the
individual property of member of partnership firm under 3. judgment
against the firm, will not yield to the equities of the separate creditors of
that partner. In re Sandusky, 17 B. R. 452.

The attachment referred to in the above section is an attachment on
mesne process; it does not relate to proceedings on final process. Storer
et al. v. Haynes, 18 B. R. 354. *

Where judgment was recovered, and process issued thereon to sell
the attached property, its lien relates back to the service of attachment,
and there is then no attachment process in existence upon which this
section can operate in case of subsequent bankruptcy proceedings. Hud-
son v. Adams, 18 B. R. 102; Shelley et al. v. Elliston, 18 B. R. 375.

For cases holding that a valid execution lien is not affected by this
section, and for discussion of what are such valid execution liens, see
in re Hull, 18 B. R. 1; in re Stockwell et al. 18 B. R. 144; Storer et al,
vy. Haynes, 18 B. R. 354; in re Wheeler & Lang, 18 B. R. 385; in re Biesen-
thal & Henschel, 18 B. R. 120.

Act oF 1867, § 5129. If any person, being insolvent, or in con-
templation of insolvency or bankruptcy, within six months before
the filing of the petition by or against him, makes any payment, sale,
assignment, transfer, conveyance, or other disposition of any part
of his preperty to any person who then has reasonable cause to be-
832 Tue Banxruptcy Law.

lieve him to be insolvent, or to be acting in contemplation of insoly-
ency, and! knowing that such payment, sale, assignment, transfer,
or other conveyance is made with a view to prevent his property from
coming to his assignee in bankruptcy, or to prevent the same from
being distributed under this Title,? or to defeat the object of, or in
any way impair, hinder, impede, or delay the operation and effect of,
or to evade any of the provisions of this Title, the sale, assignment,
transfer, or conveyance shall be void, and the assignee may recover
the property, or the value thereof, as assets of the bankrupt.

Statute revised — March 2, 1867, ch. 176, § 35, 14 Stat. 536. Prior
Statute — Aug. 19, 1841, ch. 9, § 2, 5 Stat. 442.

This and the preceding sections differ mainly in their application to
two different classes of recipients of the bankrupt’s property or means.
The preceding section is limited to a creditor or person having a claim
against the bankrupt or who is under any liability for him, and who
receives the money or property by way of preference; and this section
applies to the purchase of property of the bankrupt by any person
who has no claim against him, and is under no liability for him. That
the preceding section is confined to persons of that character named can
not well be doubted, since the acts therein mentioned are acts done with
persons of that character, and must be done with a view to giving such a
person a preference over others of the same class. That this section has
reference to another class of persons, and is governed by other rules, seems
to be strongly sustained by these considerations: 1st. The sale, or other
transfer of property mentioned in it, need not be in preference of a cred-
itor or person liable for the bankrupt to render it void. 2d. It need not
be made to a person of that character. 3d. In the preceding section the
transfer may still be valid, although within all other conditions of the
clause, if made more than four months before the filing of a petition in
bankruptcy, while the transfer described in this section requires that it
shall have been made more than six months before the filing of the pe-
tition to have the same effect. Congress seems to have thought that in
case of a creditor who had parted with his money or property to the in-
solvent party, and whose reasons for further dealing with him were
more pressing, in order that he might be saved from an impending loss,
the time which should secure the transaction from the effect of the bank-
ruptcy act should be less by two months than in the case of one whe has
no such incentive to action, because he is a voluntary purchaser of an
insolvent’s property, with knowledge of his insolvency. Bean v. Brook-
mire et al., 4 B. R. 196; s. c. 1 Dillon, 24.

The preceding section was intended to refer to the past, and this sec-
tion to the present. The language employed in the preceding section im-

 

180 amended by act of June 22, 1874, ch, 390, § 11, 18 Stat. 180.
2So amended by act of February 18, 1875, ch. 80, 18 Stat. 320.
AVOIDING TRANSFERS. 833

ports clearly that the consideration must be one growing out of a former
wansaction, and that the recipient must stand in the relation thus created
to the other party. It is equally clear that this section must be limited
to cases where the transaction in question was original and complete in
itself at the time it occurred, and had no reference for its consideration to
anything between the parties which had gone before it. It is only by
this construction that the two sections can be made to harmonize, and
full and distinct effect be given to each. A mortgage for a present con-
sideration is within this section. Gibson v. Warden, 14 Wall. 244.

This and the preceding sections must be construed together, and a scope
of operation given to each of them if possible. Some effect must be
given to the four months’ limitation. This section, with its six months’
limitation, is to be held to cover every case, as well that of a preference
to a creditor, as all other cases; the preceding section is useless, and
might as well have been omitted. But the partial clause precedes the
general clause. The preceding section provides for the case of a transac-
tion done with a view to give a preference to a creditor or person having
a claim against the debtor, or who is under any liability for him. In
such case, if the transaction takes place within four months before the
filing of the petition in bankruptcy, and the other circumstances specified
exist, the transaction is made void. This section must be held to be in-
tended to provide for any disposition of property that is not provided for
by the preceding section—that is, for any disposition that does not
give such a preference as the preceding section provides for. But when-
ever a case falls within the preceding section, it must, although it may
be also in terms within this section, be tested as to its. validity, and as to
the limitation of time prescribed exclusively by the provisions of the pre-
ceding section. Hubbard v. Allaire Works, 4 B. R. 623; s. ec. 7 Blatch.
284; Coggeshall v. Potter, +4 B. R. 73; s. c. 6 B. R. 10; s. c. 1 Holmes, 75;
Babbitt v. Walbrun & Co., 4 B. R. 121; s. c. 6 B. R. 359; s. ec. 1 Dillon, 19.

This limitation does not, per se, determine what property shall vest in
the assignee. There are transfers that may be impeached, even though
they were made more than six months before the filing of the petition.
Smith v. Ely, 10 B. R. 553.

A sale made by a debtor will be fraudulent if the following facts concur:

1st. If the debtor is insolvent, or contemplates insolvency or bankruptcy.

2d. If the purchaser, when he buys the goods, has reasonable cause
to believe the debtor to be insolvent, or to be acting in contemplation of in-
solvency.

8d. And knows that the sale was made by the debtor with a view
to prevent, ete., or to defeat, ete., or to evade, etc., the provisions of the
bankruptcy act.

Sales so made are void, and in fraud of creditors and their rights under
the bankruptcy law. And, as against the immediate vendee, and all actual
participators, such sales, if made out of the usual and ordinary course of
business —as when an insolvent merchant sells out all his stock and
property —are prima facie evidence of fraud; that is, of the foregoing
elements constituting a fraudulent sale. But it is only prima facie, and

53
834 Tue Banxruptcy Law.

the presumption may be rebutted by evidence aliunde to be produced by
the vendee. An instruction to the jury which omits some of the essential
elements of fraud, or declares a sale out of the ordinary course of the
debtor’s business necessarily, instead of presumptively, fraudulent, is
erroneous. Babbitt v. Walbrun & Co., 4 B. R. 121; s. c. 6 B. R. 359; s. ¢.
1 Dillon, 19; Andrews v. Graves, 5 B. R. 279; s. ¢. 1 Dillon, 108.

The presumption of fraud arising from the usual nature of the sale
can only be overcome by proof on the part of the buyer that he took the
proper steps to find out the pecuniary condition of the seller. All reason-
able means pursued in good faith must be used for this purpose. Merely
inquiring the object of the debtor in selling is not sufficient. Walbrun vy.
Babbitt, 6 B. R. 359; s. c. 9 B. R. 1; s& ¢ 16 Wall. 577.

The degree of inquiry which devolves as a duty upon a person who
proposes to make a purchase out of the usual course of business of the
seller depends upon the circumstances of the particular transaction. Such
a person must in all cases make a reasonable inquiry ‘as to the right of
the seller to make the proposed sale. Schulenberg v. Kabureck, 2 Dillon,
182.

Where the circumstances are very suspicious, the purchaser may be
held to make diligent inquiry. Schulenberg v. Kabureck, 2 Dillon, 132

The mere fact of sales at low prices does not make them sales out of
the usual and ordinary course of business of the vendor, and so prima
facie evidence of fraud. The business of a purchaser is to buy as cheaply
as he:can. Many men relieve themselves from temporary embarrassments
when money is dear, by sacrificing property at low prices to meet their
obligations. Such acts are often praiseworthy and successful, and much
to be preferred for their own interests and those of their creditors to the
incurring of new obligations at exorbitant rates of interest. Sedgwick
v. Lynch, 8 B. Ri 289; s. c. 5 Ben. 489.

A. debtor whose failure is ultimately caused by his inability to collect
debts due to him, can not be said to have been insolvent or in contempla-
tion of insolvency merely because he was selling his goods at a sacrifice,
if he at the time had reasonable cause to believe that he would be able
to avoid a failure. Sedgwick v. Lynch, 8 B. R. 289; s. ec. 5 Ben. 489.

The fact that the debtor put his paper on-the street through brokers,
is not conclusive evidence that he is insolvent, for a man may sell his
paper on the street at a great sacrifice to effect a purpose deemed bene-
ficial by him, and still not be insolvent. Tiffany v. Lucas, 5 B. R. 487;
sc 8 B. R. 49; s c@ 1 Dillon, 164; s. ec. 15 Wall. 410.

The presumption is that street brokers act for others and not them-
selves. Where a note is offered for discount by a street broker, with
the indorsement of a party who is known to have no occasion to go on
the street to get paper discounted, the purchaser, in the absence of other
evidence, will be presumed to know that it is accommodation paper.
Tiffany v. Boatman’s Say. Inst., 4 B. R. 601; 8.29 B. R. 245;8s.a1
Dillon, 14; s. c. 18 Wall. 376.

The admission in a deed of trust of the inability of the grantor to meet
his debts, is sufficient notice of the fact to the grantee. Stobaugh v. Mills,
8 B. R. 361; s. c.5 C. L, N, 526,
AVOIDING TRANSFERS. 835

A person advancing his own money to a trader or other person in
business, and taking security from him out of the ordinary course of busi-
ness, is liable to reconvey the security, although the only fraud intended
by the debtor is the payment of a creditor by way of preference. As the
assignee can recover from the creditor, who is the party benefited, the
court, upon application of the mortgagee, may, on proper terms, direct
the assignee to bring an action against the creditor. In re ‘Butler, 4 B.
R. 308; s. c. Lowell, 506.

If security is taken for a loan made for the purpose of extinguishing
liens upon the debtor’s property, and the money is actually so applied,
it is valid. Gaffney v. Signaigo, 1 Dillon, 158.

The claim of an attorney for services in drawing up and attending
to the business connected with the assignment can only be allowed on
proof as any other claim. In re George Lains, 24 Pitts. I. J. 207.

A trustee is not entitled to priority on a claim for personal services
rendered in the execution of the trust. Ibid.

The trustee is entitled to an allowance for disbursements legitimately
made in the execution of his trust before the debtor was adjudged bank-
rupt. Ibid. as

If the debtor’s father-in-law, when the debtor is known by him to be
insolvent, purchases his property, and applies the purchase money to
pay off a mortgage upon the property of the debtor’s ‘wife, the transac-
tion is a transfer of the debtor’s property to his wife in fraud of his
creditors, through the agency of his father-in-law, for the benefit of his
wife and the mortgagee. Andrews vy. Graves, 5 B. R. 279; s. ¢. 1 Dillon,
108.

The bankruptcy law, conceived and enacted in the belief that it pro-
vided the best mode of administering the estate of an insolvent, will tol-
erate no attempt by individuals to devise and carry into effect some other
plan inconsistent therewith, nor permit such an attempt to be justified
by the excuse that they thought such other plan wiser or better. Cook-
ingham v. Morgan, 5 B. R. 16; s. c. 7 Blatch. 480.

An assignment is not absolutely void —it is merely voidable, and can
not be impeached unless proceedings in bankruptcy are commenced within
six months after its execution. Maltbie v. Hotchkiss, 5 B. R. 485; s. «
388 Conn. 80; in re Arledge, 1 B. R. 644; Beck v. Parker, 65 Penn. 262;
Hobson v. Markson, 1 Dillon, 421; Reed v. Taylor, 4 B. R. 710; s. c. 32
Iowa, 209; in re Pierce & Holbrook, 3 B. R. 258; s. c. 16 Pitts. L. J. 204;
in re J. S. Cohn, 6 B. R. 379; Sedgwick v. Place, 1 B. R. 673; s. c. 3 B. R.
189; s. c 38 Ben. 360; s. c. 1 L. T. B. 97; in re Hawkins et al., 2 B. R. 378;
s. c. 84 Conn. 548; in.re Broome, 3 B. R. 343; s. c. 3 Ben. 488; Cragin v.
Thompson, 12 B. R. 81; s. «@ 2 Dillon, 513; Thrasher v. Bentley, 2 N. Y.
Supr. 809; s. c. 59 N. Y. 649; s. c. 1 Abb. N. C. 39; McLean vy. Meline, 3
Mcluean, 199; McLean v. Johnson, 8 McLean, 202; Cornwell’s Appeal,
7 W. & S. 305; in re Charles W. Holmes, 1 N. Y. Leg. Obs. 211; Weiner
vy. Farnum, 2 Penn. 146; s. « 3 Penn. L. J. 440; in re Anon., 1 Penn.
L. J. 323; Sparhawk v. Drexel, 12 B. R. 450; McLean v. Ihmsen, 1 West.

L. J. 189.
836 THE BANKRUPTCY Law.

An assignment made for the benefit of all creditors equally in good
faith, and without any actual fraud or intent to defeat the operation of
the statute, is valid. Haas v. O’Brien, 52 How. Pr. 27.

An assignment for the benefit of creditors made more than six months
before the commencement of the proceedings in bankruptcy is valid as
against the assignee. Mayer v. Hillman, 13 B. R. 440; s. c. 91 U. S.
496.

An assignment by one partner of his individual estate for the equal
benefit of his individual creditors first, and the excess, if any, to be paid
to his partnership creditors, may be set aside under this section. Barn-
well v. Jones, 14 B. R. 278.

An assignment for the benefit of creditors by an insolvent debtor, is
conclusive evidence of an intent to defeat the operation of the bankruptcy
law, and may be set aside at the instance of the assignee. Jackson vy.
McCulloch, 13 B. R. 283; s. c. 1 Woods, 4338.

The trustee and all persons claiming under an assignment are charge-
able with knowledge of the terms thereof, and consequently with knowl-
edge of the insolvency of the debtor, and his purpose to evade the opera-
tion of the bankruptcy law. Jackson v. McCulloch, 13 B. R. 283; s. ¢.
1 Woods, 483.

As the intent of an assignment is to be legally inferred from its neces:
sary tendency, the words, “‘ with intent to delay or defeat the operation
of this act,’ include such a conveyance. They are words of like import
with “puts his estate into a course of distribution different from that
prescribed by the act,” which has been the substance of the language of
Lords Mansfield, Eldon, and Wensleydale. In the absence of actual fraud,
an assignment, though constructively fraudulent under the bankruptcy
law, is not void, but voidable; and is voidable only at the suit of the as-
signee in bankruptcy. In the United States, the reasons for consider-
ing an assignment an act of bankruptcy are stronger than those which
prevailed in England. During more than three-quarters of a century,
since the constitution enabled Congress to establish uniform laws on the
subject of bankruptcies throughout the United States, there has not. been
such a law in force, except in two short intervals; and the usages and
legislation, as to voluntary assignments for the benefit of creditors, have,
in the meantime, become various in the several States. The abrogation
of such local differences at the election of any nonassenting creditor is
an essential part of “an act to establish a uniform system of bankruptcy
throughout the United States.” Barnes v. Rettew, 8 Phila. 133.

A trustee claiming under an assignment made within two months be-
fore the commencement of proceedings in bankruptey against the debtor,
can not maintain an action against a judgment creditor who levied on the
property after the execution thereof and the commencement of such
proceedings. Dolson v. Kerr, 52 How. Pr. 481.

If a receiver has possession of property which has been assigned for the
benefit of creditors, the State court will not pass an order allowing the
assignee to sue him. Ex parte John H. Platt, 41 N. Y. Supr. 513; s. c. 52
How. Pr. 468.
AVOIDING TRANSFERS. 837

i

Acts done under it previously in good faith may be sustained.’ An
injunction under such a bill may be refused when it would prevent the
working out of an equity beneficial to the creditors or the completion of a’
beneficial sale. In re Pierce & Holbrook, 3 B. R. 258; s. c. 16 Pitts. L. J!
204; Barnes v. Rettew, 8 Phila. 133.

If the trustee has filed a bill in chancery to enforce a right claimed
under the assignmért, the assignee may elect to come in and prosecute
the suit in his name. Freeman vy. Deming, 3 Sandf. Ch. 327.

When an assignment is set aside, it.is usual and proper for the decree
to contain a direction for a reconveyance by the trustee to the assignee
in bankruptcy. Although the decree annuls the assignment, and orders
a surrender of the estate, yet tne conveyance, by a deed of surrender, may
effectuate or facilitate the purposes of the decree. Burkholder v. Stump,
4B. R. 597; s. a 8 Phila. 172.

The assignee may apply to the State court for an order upon the trustee
to surrender the estate to him. Cragin v. Thompson, 12 B. R. 81; s. ¢ 2
Dillon, 518.

If the trustee surrenders the property to the assignee, he should be pro-
tected in so doing by the State court. Ibid.

A surrender of a part of the property to the debtor prior to the com-
mencement of proceedings in bankruptcy will not relieve an assignee from
the legal effect of the deed of trust, and he must account therefor. Sto-
baugh v. Mills, 8 B. R. 361; s. a 5 C. L. N. 526.

Where the assets have been changed by the trustee, the assignee may
receive the money or other proceeds in lieu thereof. McLean v. Johnson,
8 McLean, 202. .

Money paid by the trustee to discharge valid liens on the property, in
pursuance of the terms of the trust, can not be recovered from the secured
creditor. Livingston v. Bruce, 1 Blatch. 318.

The trustee is entitled to be credited with the payments to lawful cred-
itors made by him in accordance with the terms of the assignment, be-
fore the institution of a suit by the assignee, and is not liable to the
assignee therefor. Jones v. Kinney, 4 B. R. 649; s. c. 5 Ben. 259; Cragin
v. Thompson, 12 B. R. 81; s. ¢. 2 Dillon, 518.

The trustee is liable for the balance that remains in his hands undis-
tributed. Jones v. Kinney, 4 B. R. 649; s. c. 5 Ben. 259; Everett v. Stone,
3 Story, 446.

A creditor who has received a payment under an assignment is liable
to the assignee therefor. Jones v. Kinney, 4 B. R. 649; s. c. 5 Ben. 259;
Cragin v. Thompson, 12 B. R. 81; s. ¢ 2 Dillon, 513.

The expenses of converting the property into money may be allowed to
a trustee under an assignment. In re J. S. Cohn, 6 B. R. 379; Stobaugh v.
Mills, 8 B. R. 361; 8. c. 5 GC. L. N. 526; Macdonald v. Moore, 15 B. R. 26;
8.c.1 Abb. N. C. 53. Contra, in re Stubbs, 4 B. R. 376.

Every person receiving an assignment, ought to know that it is liable to
be set aside, if a bankruptcy follows, and the allowance to him: of his
charges and expenses ought to be refused where it can not be so guarded
as to prevent any injurious duplication of charges. In some of the judi-
838 Tue Bangruprcy Law.

cial districts the allowance is refused wholly. No allowance can be made
for the expense of a future settlement of the trustee’s account in the court
of a State under its laws relating to assignments. Burkholder v. Stump,
4 B. R. 597; s. c. 8 Phila. 172.

The trustee can not be allowed for any disbursements or expenses which
he made or incurred by virtue of the assignment, or to maintain his title
or possession thereunder. Clark v. Marx, 6 Ben. 275. ~

An assignment for the benefit of creditors, which gives priority to certain
creditors, is not void except as against the assignee in bankruptcy.
Shryock v. Bashore, 13 B. R. 481; s. c. 15 B. R. 283; s. c. 82 Penn. 159.

An assignment is valid as against a judgment creditor who lays an
attachment in the hands of the trustee. Cook v. Rogers, 13 B. R. 97; s. c. 31
Mich. 391; s. c. 14 A. L. Reg. 683. :

A creditor can not levy upon the property transferred by an assignment,
although it is void under the bankruptcy law, for it is void only as to
persons claiming in virtue of proceedings under the statute. Dodge v.
Sheldon, 6 Hill, 9.

An assignment is void only as against the assignee. The trustee who
has received the property in trust, to apply it to the payment of creditors,
can, not allege that the assignment was void under the bankruptcy law,
without showing that the property has been recovered from him by the
assignee. Seaman v. Stoughton, 3 Barb. Ch. 344.

If an action by the assignee against the trustee to vacate the assignment
is pending, and there is no collusion, the trustee can not be compelled to
account’ by a creditor until a definite result is reached. In re Bowery
Nat’l. Bank, 1 Abb. N. C. 404.

If the debtor, after making an assignment, takes the benefit of a State
insolvent law, which merely protects the person from imprisonment, and
does not affect contracts, the property will pass to the insolvent trustee,
and can not be recovered by an assignee appointed in bankruptcy pro-
ceedings subsequently commenced. Sullivan v. Hieskill, Crabbe, 525; s. c.
4 Penn. L. J. 171.

A levy under an execution issued upon a judgment obtained in the
regular course of judicial proceedings is valid, although it is made after an
assignment which is void under the bankruptcy law. McLean vy. Meline,
3 McLean, 199.

The money paid by a trustee to an attorney can not be allowed. In re
J. S. Cobn, 6 B. R. 379.

Where a judgment is obtained after the execution of an assignment,
but before the commencement of proceedings in bankruptcy, the creditor
should be permitted to sell the real estate, and try his right in an action of
ejectment. Reeser v. Johnson, 10 B. R. 467: s c@ 76 Penn. 313.

When a transfer is made void as to the assignee, his title relates back to
the time of the transfer, and no judgment or execution obtained or levied
after the transfer and before the commencement of the proceedings in
bankruptcy is a lien on the property. In re Solomon Biesenthal, 15 B. R.
228. Contra, Macdonald v. Moore, 15 B. R. 26; 5s. c 1 Abb. N. C. 53.

A mortgage made to a person who indorses a note for the debtor is valid
if the debtor never becomes bankrupt, although it was made to the in-
AVOIDING TRANSFERS. 839

dorser to evade the provisions of the bankruptcy law. Boyd yv. Parker,
43 Md. 182.

A married woman can not claim a homestead out of the property of
her husband, at the same time that he seeks relief and a discharge from
his debts in a court of bankruptcy. He, being fully cognizant of the action
his wife is taking, and offering no objection thereto, thereby showing
consent on his part, is in the same condition as if he had made a transfer
of the property to his wife, and she being fully cognizant of his application
for the benefit of the bankruptcy act, and accepting such transfer by the
action she took, is in the same condition as if she had accepted a. deed of
the property from him; and such a transfer is void. In re Askew, 3 B. R.
575; in re Boothroyd & Gibbs, 14 B. R. 223.

There is nothing in the bankruptcy law which interdicts. the loaning
of money to an insolvent, if the purpose is honest, and the object not
fraudulent; and it makes no difference that the lender had good reason
to believe the borrower to be insolvent, if the loan was made in good
faith, without any intention to defeat the provisions of the bankruptcy
act. It is not difficult to see that in a season of pressure, the power to
raise ready money may be of immense value to a man in embarrassed
circumstances. With it he might be saved from bankruptcy, and without
it financial ruin would be inevitable. If the struggle to continue his busi-
uess be an honest one, and not for the fraudulent purpose of diminishing
his assets, it is not only not forbidden, but it is commendable, for every
one is interested that his business should be preserved. In the nature of
things he can not borrow money without giving security for its payment,
and this security is usually in the shape of collaterals. Neither the terms
or policy of the bankruptcy act are violated, if these collaterals: be taken
at the time the debt is incurred. His estate is not impaired or diminished,
as he gets a present equivalent for the securities he pledges for the repay-
ment of the money borrowed. Tiffany v. Boatman’s Sav. Inst., 4 B. R.
601; s. c. 9 B. R. 245; s. c. 1 Dillon, 14; s. c. 18 Wall. 376; Bentley v. Wells,
61 Ill. 59; in re McKay & Aldus, 7 B. R. 230; s. c. Lowell, 561.

Clearly all sales are not forbidden. It would be absurd to suppose that
Congress intended to set the seal of condemnation on every transaction
of the bankrupt which occurred within six months of bankruptcy, without
any regard to its character. A policy leading to such a result would be an
excellent contrivance for paralyzing business, and can not be imputed to
Congress without an express declaration to that effect. The interdiction
applies to sales for a fraudulent object, and not to those with an honest
purpose. The law does not recognize that every sale of property by an
embarrassed person is necessarily in fraud of the bankruptcy act. If it
were so, no one would know with whom he could safely deal, and a per-
son in this condition would have no encouragement to make proper efforts
to extricate himself from difficulties. It is for the interest of the community
that every one should continue his business, and avoid, if possible, going
into bankruptcy. Tiffany v. Lucas, 5 B. R. 437; s. c. 8 B. R. 49; s. ce 1
Dillon, 164; s. c. 15 Wall. 410; Wadsworth v. Tyler, 2 B. R. 316; s. ¢. 2 L.
T. B. 28; in re Pusey, 7 B. R. 45; Gillenwaters v. Miller, 49 Miss. 150.
840 Tue Bankruptcy Law.

If it shall turn out on examination that the transfer was made by the
bankrupt in good faith, for the honest purpose of discharging his indebted-
ness, and in the confident expectation that by so doing he could continue
his business, it will be upheld. Tiffany v. Lucas, 5 B. R, 4387; s. c. 8 B. R.
49; 8. @. 1 Dillon, 164; s. ¢. 15 Wall. 410.

A fair exchange of value may be made at any time, even if one of the
parties to the transaction is insolvent. There is nothing in the bankruptcy
act, either in its language or object, which prevents an insolvent from
dealing with his property, selling or exchanging it for other property, at
any time before proceedings in bankruptcy are taken by or against him,
provided such dealing is conducted without any purpose to defraud or
delay his creditors, or give a preference to any one, and does not impair
the value of his estate. His creditors can only complain if he wastes his
estate, or gives a preference in its disposition to one over another. His
dealing will stand if it leaves his estate in as good plight and condition
as previously. Cook vy. Tullis, 9 B. R. 433; s. c. 18 Wall. 332; Clark v.
Iselin, 9 B. R. 19; s. c. 11 B. R. 337; s. ec. 21 Wall. 360; s. c. 10 Blatch. 204.

If a party who owes money to an insolvent debtor pays him in good
faith, without having reasonable cause to believe that the latter intends to
make fraudulent preferences or payments therewith, the assignee can not
recover the sum so paid. Borland vy. Philips, 2 Dillon, 383.

A party who accepts a draft with the intent thereby to enable the drawer
to give a preference to the holder, can not be compelled to pay the same.
Fox v. Gardner, 12 B. R. 187; s. e. 21 Wall. 475.

If a party who owes money to the bankrupt, pays it to one of the bank-
rupt’s creditors, with the intent thereby to enable him to obtain a prefer-
ence, he will be deemed to still hold the money, and is liable to the assignee
therefor. Ibid.

There is no arbitrary rule by which the good faith of a transaction can
be tested. Tiffany v. Lucas, 5 B. R. 487; s. c. 8 B. R. 49; s. c. 1 Dillon, 164;
s. c. 15 Wall. 410.

The existence on the part of the vendee of a reasonable cause to believe
each of the two elementary facts, to-wit, the insolvency of the debtor, and
the debtor's intention to contravene the bankruptcy act, must be satis-
factorily proved to render a deed void. Tiffany v. Lucas, 5 B. R. 437; s. ¢.
8 B. R. 49; s. ¢. 1 Dillon, 164; s. c. 15 Wall. 410; Judson y. Kelty, 6 B. R.
165; s. c. 5 Ben. 348; s. c. 2 L. T. B. 218; Bentley v. Wells, 61 Ill. 59.

If a corporation, whose charter prohibits it from taking interest beyond
a certain per cent., makes a loan, upon interest above the rate thus pre-
scribed, to a party who is subsequently declared to be bankrupt, and takes
securities therefor. the assignee can only recover the excess, and the
securities will be valid for the principal debt, with legal interest. The line
which separates that which is authorized from that which is prohibited, is
Plainly drawn, and the division easily made. The power of the corporation
to make loans is expressly conferred, and therefore exists; the limitation
is only as to the rate. Up to the limitation, all is good; beyond that, bad.
The parties are not in pari delicto, and as to the excess above the principal
and lawful interest, the corporation is under a liability to the assignee.
AVOIDING TRANSFERS. 841

Tiffany v. Boatman’s Sav. Inst., 4 B. R. 601; s.c. 9 B. R. 245; s. c@. 1 Dillon,
14;s.c. 18 Wall. 376.

Every, case must be decided on its own facts, and it will never be pos-
sible to lay down any general formula applicable to all cases. The intent
to prefer a creditor necessarily involves the idea of an expectation of pay-
ing some ‘others less than their whole debt, and this expectation is not
always proved by the proof even of a known insolvency. There must be a
fear or anticipation of stopping payment, which, indeed, may often be
inferred from insolvency or from acts which have a tendency to produce
it, but which is to be decided as a fact in each case. A sweeping rule
should not be adopted, prohibiting insolvent persons from borrowing
money on a mortgage, even of their stock in trade, or requiring mort-
gagees to see to the application of the money they lend. Ex parte Packard,
Lowell, 523.

A sale by an insolvent person, though known to be insolvent, is not
therefore necessarily void, otherwise an insolvent person could not lawfully
dispose of any of his property. Babbitt v. Walbrun & Co., 6 B. R. 359.

A mortgage made by a debtor to secure the compensation. for services to
be rendered by an attorney in the preparation of his petition and schedules
in bankruptcy is void. A bankrupt can no more execute a conveyance in
order to secure a fee to his lawyer than to secure the claims of any other
creditor. The claim of a lawyer for professional services, no matter how
meritorious or necessary such services may have been, is not a preferred
one. In re Thos. C. Evans, 3 B. R. 261; in re Mallory, 4 B. R. 153; s. e.
2L,. T. B. 180. Contra, in re Sidle, 2 B. R. 220; in re Rosenfield, 2 B. R.
117;s.¢c.1L. T. B. 100; s. ec. 8 A. L. Reg. 44; Triplett v. Hanley, 1 Dillon,
217.

If an insolvent debtor pays a fee to an attorney for the purpose of
hindering, delaying, or impeding the provisions of the act, and the attorney
knows that the debtor is insolvent, and that such is his purpose, the fee
may be recovered by the assignee. Goodrich v. Wilson, 14 B. R. 555; s. ¢.
119 Mass, 429.

A declaration which avers that the debtor did on a certain day transfer,
assign and convey certain property to the defendant, covers any transfer,
assignment or conveyance during the six months prior to the filing of the
petition. Andrews v. Graves, 5 B. R. 279; s. c. 1 Dillon, 108.

When the record of the proceedings in bankruptcy is produced and recog-
nized as in evidence, and no objection is made that they are not formally
read or offered in evidence, they are evidence. Ibid.

The record of the proceedings in bankruptcy is admissible to show the
fact of adjudication and the appointment of the assignee. Babbitt v. Wal-
brun & Co., 6 B. R. 359.

The record of a suit for an injunction, to which the person making the
payment was a party, is competent evidence to establish mala fides in a
payment made after the service of an order for an injunction. Babbitt v.
Burgess, 7 B. R. 561; s. c. 2 Dillon, 169.

Although a register has no authority to take a deposition to be used in
a controversy at‘law between the assignee and a purchaser, yet he has full
authority to administer oaths, and when, by the assent of parties, he takes
842 Tue Bankruptcy Law.

a deposition to be used as evidence in a cause, the same becomes a sworn
statement made in the case to be used as evidence therein, to which the
party causing the same to be taken can not object. The officer ought to
cause the same to be transmitted to the court for the benefit of all con-
cerned, and the party at whose instance it was taken can not except
thereto nor cause it to be suppressed on the ground of any irregularity or
informality. Andrews v. Graves, 5 B. R. 279; s. c. 1 Dillon, 108.

When the records are before the court, the judge may state to the jury
the date of the filing of the petition in bankruptcy. Ibid.

When it is proposed to affect a second vendee, such vendee must be
shown to have participated in the original fraudulent sale, or it must be
shown that he knew, or at least had reasonable cause to know, the facts
which make the first sale fraudulent. The mere fact, without more, that
the second vendee knew that the first sale embraced all the stock of the
insolvent vendor, is not enough to make his purchase fraudulent in law.
The title of the second vendee can only be impeached when it is shown
that he participated in the fraudulent sale, or, if this is not shown, then by
showing that his purchase was actually mala fide; that is, made with
knowledge that the sale to the first vendee was fraudulent; and the mere
fact that the second vendee knew that the sale to the first vendee was
made out of the ordinary course of business, will not alone defeat the title
of the second vendee. It is only a circumstance proper as evidence to go
to the jury on the question of the bona fides of the purchase by the second
vendee. The distinction is to be observed between fraud and the evidence
which goes to establish fraud. Babbitt v. Walbrun & Co., 4 B. R. 1213s. ¢
1 Dillon, 19; Rahilly v. Wilson, 3 Dillon, 420; s.c.5 C. L. N. 217.

If a mortgage is sustained, an accounting for the transactions connected
with it can not take place in a suit brought to set it aside, but must take
place in some other suit based upon its validity. Sedgwick v. Wormser, 7
B. R. 186.

Where the purchase is joint, the judgment should be joint, and not a
separate judgment against each proportioned to the sum which they
separately paid for the property. Schulenberg v, Kabureck, 2 Dillon, 182.

Act or 1867, § 5130. The fact that such a payment, pledge, sale,
assignment, transfer, conveyance, or other disposition of a debtor's
property as is described in the two preceding sections is not made in
the usual and ordinary course of business of the debtor, shall be
prima facie evidence of fraud.

Statute revised — March 2, 1867, ch. 176, § 35, 14 Stat. 536.

The words, “sale, assignment, transfer, conveyance,’”’ employed in this
clause, are of comprehensive import, and embrace almost every disposition
of the property, whether absolute or conditional. Both the antecedent
paragraphs refer to and are designed to protect the property of the in-
solvent, and the clause as to fraud is designed to the same end. All these
provisions relate to the same subject-matter, viz., the property, and all
three aim to protect property of insolvents from fraudulent disposals.
AVOIDING TRANSFERS. 843

Scammon y. Cole, 3 B. R. 398; s. c. 5 B. R. 257; sc. 2 L. T. B. 103; Driggs
v. Moore, Foot & Co., 3 B. R. 602; s. c. 1 Abb. C. C. 440; Babbitt v. Walbrun
& Co, 4 B. R. 121; s. c. 1 Dillon, 19.

If a sale is made, not out of the usual course of general trade, but out of
the usual course of trade of the debtor; that is, if it is unusual in the time,
or place, or character, or quantity of the goods sold, or in other respects,
having reference to the then business of the vendor; such facts, as against
the vendee, shall be prima facie evidence of fraud in him. In other words,
in the absence of counter testimony, it will be presumed that he, at the
time of purchase, knew that the vendor was insolvent, and that the vendor
was making the sale to prevent all or some portion of his property as the
case may be, from passing to his assignee, and so evading and defeating
the provisions of the law. But upon an issue of title between the assignee
and vendee, it is first incumbent upon the former to show the unusual
character of the sale before the presumption of fraud will arise against the
vendee. Cases may occur involving all the elements of fraud, so far as
the vendor is concerned, and yet be made valid by the palpable presence of
good faith in the vendee. In re Josiah D. Hunt, 2 B. R. 589; s.¢.1C. L. N.
169.

The question is not whether such transactions are usual, in the general
conduct of business throughout the community, but whether they are ac
cording to the usual course of business of the particular person whose
conveyance is the subject of investigation. And if it is a departure from
his usual and ordinary course of business, the statute intends that the
party taking the conveyance from him shall be put upon inquiry. Rison
vy. Knapp, 4 B. R. 349; s. a 1 Dillon, 186.

To bring this clause into operation it is necessary to show that, the
transfer was made out of the usual and ordinary course of business of the
debtor. It is not enough to show that the general business of the debtor
was to sell goods, and that a sale of land is not a sale of goods. Without
reference to the general business of the debtor, the transfer must be out of
his usual and ordinary course of business in respect to an article of the
description of that transferred. Judson vy. Kelty, 6 B. R. 165; s. ¢. 5 Ben.
348; s.c. 2 L. T. B. 218; Tiffany v. Lucas, 5 B. R. 437; s. c. 8 B. R. 49; s. ¢.
1 Dillon, 164; s. c. 15 Wall. 410.

A sale of a store for the purpose of curtailing business can not be re-
garded as a thing out of the usual course of business, so as to be prima
facie evidence of fraud. Sedgwick v. Wormser, 7 B. R. 186.

A sale in bulk or by wholesale is not in the usual course of the business
of a retail merchant, and throws upon the vendee the burden of proof to
show its fairness and validity. Smith v. McLean, 10 B. R. 260.

Acr or 1867, § 5130a (June 22, 1874, ch. 390, § 10, 18 Stat.
180). That in cases of involuntary or compulsory bankruptcy, the
period of four months mentioned in section five thousand one hun-
dred and twenty-eight [thirty-five] of the act to which this is an
amendment, is hereby changed to two months, but this provision shall
not take effect until two months after the passage of this act, and in
844 Tue Bankruptcy Law.

the cases aforesaid, the period of six months mentioned in said sec-
tion five thousand one hundred and twenty-nine [thirty-five] is hereby
changed to three months, but this provision shall not take effect
until three months after the passage of this act.

§ 5131. Any contract, covenant, or security made or given by a
bankrupt or other person with, or in trust for, any creditor, for
securing the payment of any money as a consideration for or with
intent to induce the creditor to forbear opposing the application for
discharge of the bankrupt, shall be void; and any creditor who obtains
any sum of money or other goods, chattels, or security, from any
person as an inducement for forbearing to oppose, or consenting to
such application for discharge, shall forfeit all right to any share or
dividend in the estate of the bankrupt, and shall also forfeit double
the value or amount of such money, goods, chattels, or security, so
obtained, to be recovered by the assignee for the benefit of the estate.

Statute revised — March 2, 1867, ch. 176, § 35, 14 Stat. 536.

A note of which a part of the consideration is an agreement to dismiss
proceedings in bankruptcy against the maker, is neither founded upon an
illegal consideration, nor void as against the policy of the bankruptcy act.
Repplier v. Bloodgood, 1 Sweeny, 34.

A promise by the bankrupt to pay a note in consideration that the
holder would withdraw his opposition to the maker’s discharge as a bank-
rupt, is illegal and void. Even without the statute it would be void.
Such a promise is a fraud upon the other creditors, and is contrary to pub-
lic policy. Austin v. Markham, 10 B. R. 548; s. c. 44 Ga. 161; Rice v.
Maxwell, 21 Miss. 289. Vide Bell v. Leggett, 2 Sandf. 450.

A. note made by the wife of the bankrupt after his discharge, and passed
to a creditor in pursuance of an agreement that he should be paid for
assenting to the discharge, is void. Blasdel v. Fowler, 120 Mass. 47.

The payments which the law makes void are those which reduce the
means of the debtor to pay his debts ratably. A change in the form of his
own obligation from an account to a note could not have the effect; neither
could the accommodation indorsement with which a friend might favor
him. These circumstances work no wrong to the other creditors. A note
so indorsed is valid and may be enforced. O'Connor y. Parker, + B. R.
713; s. c. 23 Mich. 22; Noble v. Scofield, 44 Vt. 281; Dalrymple v. Hillen-
brand, 62 N. Y. 5; s. c. 5 N. Y. Supr. 57; Boyd v. Parker, 43 Md. 182.

If a party signs a note as surety, and takes property from the principal
to indemnify him for his liability, the fact that the property is subse-
quently taken from him by the assignee of the principal, on the ground
that the transfer was void under the bankruptcy law, does not constitute
a valid defense to the note. Noble v. Scofield, 44 Vt. 281.

If a note is given upon the consideration or with the intent specified in
this section, it is void even in the hands of a bona fide holder, for no excep-
tion is made in favor of innocent holders of negotiable securities made in
EXTRADITION OF BANKRUPTS — OFFENSES. 845

violation of the law. Dalrymple v, Hillenbrand, 62 N. Y. 5; 8.c 5 N. ¥,
Supr. 57. :

A note given by a third person, without the knowledge or intervention
of the bankrupt, to induce a creditor to withdraw his. objections to the
bankrupt’s discharge, is founded on an illegal consideration, and is void.
Bell v. Leggett, 7 N. Y. 176.

A note given in consideration of a promise by the payee to dismiss pro-
ceedings in bankruptcy instituted by him, and to procure the assent of
other creditors to a composition for a less sum than he receives, can not
be enforced against the indorser if the promise is not performed. Claflin
y. Torlina, 11 B. R. 521; s. @ 55 Mo. 569,

An agreement between creditors who have received preferences to con-
tribute proportionately such sum as may be necessary to induce other
creditors to forbear to put the debtor into bankruptcy, is valid. Perry-
man y. Allen, 15 B. R. 113; s. «. 50 Ala. 573.

An agreement by a debtor to consent to an adjudication of bankruptcy,
and to procure the consent of his copartners to an adjudication against
the firm, is not in fraud of the bankruptcy law, and the debtor may re-
cover the consideration therefor. Sanford y. Huxford, 32 Mich. 313.

Act or 1898, Cz. 2,§10. * * * Extradition of Bankrupts.— (a)
Whenever a warrant for the apprehension of a bankrupt shall have
been issued, and he shall have been found within the jurisdiction of
a court other than the one issuing the warrant, he may be extradited
in the same manner in which persons under indictment are now ex-
tradited from one district within which a district court has jurisdiction
to another.

Act or 1898, Cu. 4,8 20. * * *. Affirmation — (b) Any per-
son conscientiously opposed to taking an oath may, in lieu thereof,
affirm. Any person who shall affirm falsely shall be punished as for
the making of a false oath.

§ 29. Offenses.— (a) A person shall be punished, by sripnaniienent
for a period not to exceed five years, upon conviction of the offense of
having knowingly and fraudulently appropriated to his own use, em-
bezzled, spent, or unlawfully transferred any property or secreted or
destroyed any document belonging to a bankrupt estate which came
into his charge as trustee.

(b) A person shall be punished, by imprisonment for a period not
to exceed two years, upon conviction of the offense of having know-
ingly and fraudulently (1) concealed while a bankrupt, or after his
discharge, from his trustee any of the property belonging to his es-
tate in bankruptcy; or (2) made a false oath or account in, or in
relation to, any proceeding in bankruptcy; (3) presented under oath
any false claim for proof against the estate of a bankrupt, or used
846 Tur Bankruptcy Law.

any such claim in composition personally or by agent, proxy, or at-
torney, or as agent, proxy, or attorney; or (4) received any material
amount of property from a bankrupt after the filing of the petition,
with intent to defeat this Act; or (5) extorted or attempted to extort
any money or property from any person as a consideration for acting
or forbearing to act in bankruptcy proceedings.

(c) A person shall be punished by fine, not to exceed five hundred
dollars, and forfeit his office, and the same shall thereupon become
vacant, upon conviction of the offense of having knowingly (1) acted
as a referee in a case in which he is directly or indirectly interested;
or (2) purchased, while a referee, directly or indirectly, any property
of the estate in bankruptcy of which he is referee; or (3) refused,
while a referee or trustee, to permit a reasonable opportunity for the
inspection of the accounts relating to the affairs of, and the papers
and records of, estates in his charge by parties in interest when di-
rected by the court so. to do.

(d) A person shall not be prosecuted for any offense arising under
this Act unless the indictment is found or the information is filed in
court within one year after the commission of the offense.

The bankruptcy act does not forbid the creditor to take any contract,
eovenant or security from a third party as an inducement to forbear
instituting proceedings against his debtor; but to constitute the forbear-
ance a valid consideration for such contract or security the creditor must
at the time of receiving it have a right to proceed in bankruptcy against
his debtor. Ecker v. Bohn, 16 B. R. 544.

Act oF 186%, § 5132. Every person respecting whom proceedings
in bankruptcy are commenced, either upon his own petition or upon
that of a creditor:

First. Who secretes or conceals (a) any property belonging to his
estate; or,

Second. Who parts with, conceals, destroys, alters, mutilates, or
falsifies, or causes to be concealed, destroyed, altered, mutilated, or
falsified, any book, deed, document, or writing relating thereto; or,

Third. Who removes, or causes to be removed, any such property
or book, deed, document, or writing out of the district, or otherwise
disposes of any part thereof, with intent to prevent it from coming
into the possession of the assignee in bankruptcy, or to hinder, im-
pede, or delay him in recovering or receiving the same; or,

Fourth. Who makes any payment, gift, sale, assignment, transfer,
or conveyance, (b) of any property belonging to his estate with the
like intent; or,
‘

OFFENSES. 847

Fifth. Who spends any property belonging to his estate in gam-
ing; OT;

' Sixth. Who, with intent to defraud, willfully and fraudulently
conceals from his assignee, or omits (c) from his inventory, any prop-
erty or effects required by this Title to be described therein; or,

Seventh. Who, having reason to suspect that any other person has
proved a false or fictitious debt against his estate, fails to disclose the
same to his assignee within one month after coming to the knowledge
or belief thereof; or,

Eighth. Who attempts to account for any of his property by
fictitious losses or expenses; or,

Ninth. Who, within three months before the commencement of
proceedings in bankruptcy, under the false color and pretense (d) of
carrying on business and dealing in the ordinary course of trade,
obtains on credit from any person any goods or chattels with intent
to defraud; or,

Tenth. Who, within three months next before the commencement
of proceedings in bankruptcy, with intent to defraud his creditors,
pawns, pledges, or disposes of, (e) otherwise than by transactions
made in good faith in the ordinary way of his trade, any of his goods
or chattels which have been obtained on credit and remain unpaid for,

Shall be punishable by imprisonment, with or without hard labor,
for not more than three years.

Statute revised — March 2, 1867, ch. 176, § 44, 14 Stat. 539. Prior Stat-
ute — April 4, 1800, ch. 19, § 23, 2 Stat. 28.

(a) A person is not criminally liable for the payment of fair current
expenses for the support of his family between the commencement of pro-
ceedings in bankruptcy against him and the final adjudication. 1n re
Brooks, 5 Pac. Il. R. 191.

If the bankrupt has been examined before the register in regard to the
property which is charged to have been concealed, no demand before the
indictment is necessary. U.S. v. Smith, 13 B. R. 61.

(b) The gist of the offense created by this clause is a conveyance with
intent to keep property from an assignee in bankruptcy, and the offense
can not be committed unless proceedings in bankruptcy have been com-
menced in a court of competent jurisdiction, in which an assignee can be
appointed. An indictment for a misdemeanor must state an offense,
and must convey to the accused the information necessary to enable him to
make his defense. A mere averment of the commencement of proceedings
in bankruptcy, pursuant to the act, without in any way describing the pro-
ceedings, except by the names of the creditors, and the words “ pursuant
to the act,” is insufficient, for it does not state a time, nor a place, nor a
tribunal before which the alleged proceedings in bankruptcy were taken,
subsequent to which and with reference to which the accused made the
848 Tue Bankruptcy Law.

alleged conveyance of property, nor allege any adjudication or proceedings
in bankruptcy before a court of competent jurisdiction, nor set forth any
facts from which it can be seen that any court had jurisdiction of the
proceedings alluded to. U. S. v. Latorre, 8 Blatch, 134.

(c) This clause is not qualified by the original limitation of time. It is
a new division of the subject, and one which requires no such limitation,
because the prohibited act can not be committed before bankruptcy. The
offense is complete if a bankrupt fraudulently omits from his schedule
any property or effects with the designated intent. It is complete without
a final examination. In practice, there is no last examination in bank-
ruptcy, nor any examination at all, unless specially ordered. When the
indictment does not on its face show that the defendant was a citizen of
the United States, it need not aver that he took the oath of allegiance. If
the defendant was a citizen, and neglected to take the oath, he must
show it in defense. U.S. v. Clarke, 4 B. R. 59; s.c.1 L. T. B. 287; 5. ¢.
3 L. T. B. 223.

The proceeding may be by information and not indictment. U. S. v.
Black, 9 C. L. N. 284.

(d) Neither as to the proceedings nor jurisdiction of the court in bank-
ruptcy is it sufficient in an indictment, under the act, to rely merely upon
a general averment. All matters necessary to constitute the offense must
be pleaded. It is not sufficient to aver that proceedings in bankruptcy
were duly commenced. It must be pleaded and proven, in order to convict,
that a petition in bankruptcy was presented to the district court by a cer-
tain creditor, naming him, and also the amount of the debt of such peti-
tioning creditor, and the alleged case of bankruptcy, and the adjudication
of bankruptcy. It must appear affirmatively that the petitioning creditor
had a right, under the law, to commence and prosecute proceedings in bank-
ruptey. The amount of his debt must appear, otherwise the court would
have no jurisdiction. It must appear that the bankrupt obtained goods
within three months of the bankruptcy by means of a representation,
which he knew to be false, that he was carrying on business and dealing
in the ordinary course of trade, and such representation must actually be
made by him. The description of the goods obtained by the defendant
should state a certain number of packages, instead of a large quantity.
This can be ascertained from the bills of sale. The description of the
goods in an indictment should be as definite as in a declaration in trover.
The word feloniously should be omitted. The offenses made indictable are
misdemeanors. And in drawing indictments, figures for dates should not
be used. U.S. v. Prescott et al., 4 B. R. 112; 5. c. 2 Abb. G CG 169; 8. ¢
2 Biss. 325; s.c. 2 L. T. B. 184.

To constitute the offense the accused must:

1. Obtain goods and chattels from some person or persons on credit,
under the false pretense of carrying on business and dealing in the
ordinary course of trade.

2. Such credit must be obtained within three months before the com-
mencement of proceedings in bankruptcy.

3. Such goods and chattels must be obtained on credit as aforesaid with
intent to defraud.
t OFFENSES. 849

‘The obvious purpose of the statute is to prevent persons from obtaining

goods on credit, with the expectation on the part of those who give the
credit that they will be disposed of in the ordinary course of business,
when in fact the purchaser intends to dispose of such goods in some ex-
traordinary or unusual manner, or knows that he is insolvent, and that the
goods will go into the hands of his assignee in bankruptcy, and be disposed
of for the benefit of his creditors generally, and not in the usual course of
trade. It was to prevent men from abusing their credit, and imposing by
means of it upon others, that the act was passed to compel, so far as law
will do it, the observance of good faith in commercial transactions between
business men. A man’s intentions can only be ascertained from his acts.
Criminal intentions are not, as a rule, divulged, but are to be inferred
from the conduct of the parties. From the circumstances surrounding the
whole transaction, the jury are to infer what was the probable purpose and
intent of the defendant at the time he obtained the goods. The short time
that elapsed between the purchase and the unusual transfer of the goods,
the false and conflicting statements made by him in regard to his financial
condition, and the subterfuges and acts resorted to by him to keep his
creditors quiet, are circumstances to be considered as tending to show a
fraudulent intent. The criminal intent is not to be presumed without
evidence. The law presumes every one innocent until proven guilty, and
the defendant is entitled to the benefit of every reasonable doubt. The
doubt must be a reasonable doubt —a doubt engendered by the insuffi-
ciency of the evidence for the prosecution to establish a belief of guilt. In
other words, it must be unreasonable to believe him guilty under all the
proofs in the case. U.S. v. Frank, 3 B. R. (quarto) 175; s. c. 2 Biss. 263 ;.
U. S. v. Geary, 4 B. R. 534; U. S. v. Thomas, 7 B. R. 188; U. S. v. Penn,
(13 B. R. 464.

The statute is not against obtaining goods under all false colors and pre-
tenses, but against the single one — that of carrying on business and deal-
ing in the ordinary course of trade. U.S. v. Penn, 13 B. R. 464.

The pretense may be by conduct as well as by words. Ibid.

This section does not reach an offense which consists in a conspiracy
to obtain goods under false pretenses. The adjudication of bankruptcy
against one of the parties engaged in such a conspiracy does not divest
the State courts of jurisdiction to try the other conspirators. Comm. v.
Walker, 4 B. R. 672; s. c. 108 Mass. 309.

(e) The scope of the act is to punish frauds on the creditors generally
and not on the particular creditor who sold the goods, and an indictment
which charges a fraud on one creditor only can not be sustained. If the
goods were obtained upon credit with the intent of disposing of them to
raise money, the fraud on the seller would be the most obvious one but
the object of the statute seems to be to punish fraud on the creditors
generally, and it does not refer the. intent to the time of the disposing
of the goods out of the usual course of the trade, and at that time the
fraud would not be of one creditor more than of the rest. U.S. v. Clark,
4B.R.59;80q11L. T. B. 287; 8. ¢. 3 L. T. B. 223; U. S. v. Penn, 13 B. R.
464,

54
°

850 Ture Bankruptcy Law.

When there is a several finding on each count, the verdict can not be set
aside if either of the counts is good. U.S. v. Clark, 4 B. R. 5€;s.c1L.
T. B. 237; s.¢c. 3 L. T. B. 223.

The making of a fraudulent chattel mortgage renders a party liable un-
der this provision. U. S. v. Bayer, 13 B. R. 88.

It is not necessary that the goods which have been fraudulently disposed
of shall have been obtained within three months before the commence-
ment of the proceedings in bankruptcy. U.S. v. Smith, 13 B. R. 61.

The intent to defraud may be established by facts and circumstances.
U.S. v. Penn, 18 B. R. 464.

The intent to defraud may be inferred from all the circumstances of the
case. U.S. v. Smith, 13 B. R. 61; U. S. v. Bayer, 13 B. R. 88.

It must be shown that the intent existed in the mind of the defendant
at the time the sale was made. U.S. v. Penn, 13 B. R. 464.

Every man is presumed to intend the usual and ordinary consequences of
anact. U.S. v. Smith, 13 B. R. 61.

When the government introduces evidence tending to prove that the de
fendant left the State with the intention of remaining absent therefrom,
the defendant may prove that while on the journey he stated his intention
to return. U. 8. v. Penn, 13 B. R. 464.

The defendant may put in evidence his former good character in relation
to the particular crime with which he stands charged. Ibid.

An examination of a witness taken before a commissioner upon an issue
contained in one of the counts is admissible if he has since died. Ibid.

Quaere, Can Congress legislate for frauds committed by a debtor on
a single creditor within the same State, unless the act relates to bank-
ruptcy or to some other matter within the Federal jurisdiction? U. S§.
v. Clark, 4 B. R.59;s.c. 1 L. T. B. 237; 8s.¢c.3 L. T. B. 223.

Among the powers of Congress enumerated in the Constitution are the
powers “ to establish uniform laws on the subject of bankruptcies through-
out the United States,” and “to make all laws which shall be necessary
and proper for carrying into execution the foregoing powers and all other
powers vested by the Constitution in the government of the United States,
or in any department or officer thereof.” If this clause is a law * neces-
sary and proper” for carrying the bankruptcy law into effect, it comes
within the latter power named, and is constitutional. The subject of bank-
ruptcy, in a general sense, concerns the relation of debtor and creditor,
and, in a particular and no doubt stricter sense, concerns such relation in
cases where the debtor is unable or unwilling to pay his debts. Laws upon
that subject have for their object the appropriation, either voluntarily or by
compulsion, of the debtor’s property to the payment of his debts pro tanto
or in full, as the case may be, and the relief of honest debtors. To accom-
plish this object, these laws are made to operate upon, affect, and control
the relations of the parties so as to limit and circumscribe the rights of the
debtor in, and his control over, his property, and the rights of others deal-
ing with him in regard thereto, in many particulars, before any proceed-
ings in bankruptcy shall have been commenced by or against such debtor.
The meaning of the words “necessary and proper” has been judicially
determined by the supreme court to be “ needful.” “ requisite,” ‘“ essential,”
RULES — WHEN TO TAKE EFFECT. 851

“conducive to.” The end sought by a bankruptcy law is the appropriation
of the debtor’s property to the payment of his debts. This clause is for
the prevention of frauds by debtors on their creditors, by which that end
may be defeated or impaired, and is clearly conducive and plainly adapted
to the end sought. The proceedings in bankruptcy merely constitute the
machinery by which the appropriation of the debtor’s property to the pay-
ment of his debts is attained. The prevention of the fraud denounced
py the clause being conducive to that end, it makes no difference whether
it relates to a fraud committed before or after the machinery provided for
the accomplishment of the end is set in motion. A debtor may or may not
be a bankrupt. From the fact that both words “debtor” and “ bank-
rupt,” are used, and in the disjunctive, it must be held that the former is
used in the clause as descriptive of a person who is a debtor, but who has
not at the time of committing the offense become a bankrupt. The “ sub-
ject of bankruptcies,” however, as used in the Constitution, concerns the
relation of debtor and creditor. The provision in regard to the time is
merely a limitation. The act which the clause purports to punish is an
offense the moment it is committed. U. 8. v. Pusey, 6 B. R. 284; s. c.
6 L. T. B. 184.

The duty of a commissioner is narrowed to the single inquiry, not
whether there is sufficient legal evidence to convict and imprison the
accused, but whether there is a prima facie case. If probable cause is
shown to justify the belief that the accused has committed the crime
charged, he should be committed for trial. U. 8. v. Thomas, 7 B. R. 188.

If the bankrupt and other persons conspire to commit the acts made
criminal by this section and either does any act in purusance of such con-
spiracy to effect its object, they are liable to indictment under section 5440.
U. S. v. Bayer, 13 B. R. 400.

Act or 1898, Cu. 4, * * *. § 30. Rules, Forms, and
Orders.—(a) All necessary rules, forms, and orders as to procedure
and for carrying this Act into force and effect shall be prescribed,
and may be amended from time to time, by the Supreme Court of
the United States.

The general rules and orders made by the supreme court, under authority
of the bankruptcy law, were designed to systematize and facilitate the
practice of the bankruptcy courts, and so far as they apply must be
strictly followed; but they were not designed to, nor do they, create or

declare the rights of creditors in the estates of bankrupts, still less do they
abrogate and annul those rights. In ré Baxter & Ralston, 18 B. R. 560.

Act or 1898, Cu. 1, § 71. The Time when This Act Shall go
into Effect.— (a) This Act shall go into full force and effect upon
its passage: Provided, however, That no petition for voluntary bank-
ruptcy shall be filed within one month of the passage thereof, and
no petition for involuntary bankruptcy shall be filed within four
months of the passage thereof.
GENERAL INDEX.

 

For Index to Law of 1898 see under “ Law, Bankruptcy, of 1898.”

 

ABATEMENT: Page.
not caused by death of debtor ..... se Tavnhdegeae srikvas sitar gaheule Rowers rape 569
death or removal of assignee .............0200 005 426

ACCOUNTS:
assignee to keep ....... 0. cece ccc cc ce cececuesecuees sBiileayaxa seveee 450
to allow inspection Of . 0.0.0... ccc cece ce ceeee 81, 330, 450
to exhibit .. ........ isapidauoh ard oh)'a) aye Olbier’ay shuneloc as Si wubnplakaete 450
LO VOTE Yo i2 Gs iid wceia se andiaee tie Ses AGA esteem a ames Ox 450
to apply for settlement of ............ TaawA esa RETA 578
Of, t6. D6: AUGITEE i... Sicas eines se Bane tee Ree Bia Lee as 192
separate, of joint and separate property ...... Paar even at asanideearin’ 733
Of SUMS Grawm : « « seardvenersicesade evades es aiereraueus Danie 413, 578
OL TO ZISTOM 6-5 ge BS eek craved Ba udeared Seed A A wawualina 1 DOW MRED eee 78
OF MArSHAl sie ake cwedpadehs wage want Ake wiley aah Peewee ees 82, T67
OL TPUBtOE: 5 a.) 4d wine eae co eem Sore e ean nae ds Rese lge mee s 330

ACTIONS:

bankrupt’s rights of, vest in assignee ........... ccc cee eee eeee 414
by or against assignee limited to two years ...............000-- 436
on assignee’s bond .. ............ Mi pOhWUts SG SOTA TSse4 CA ten 330:
none against assignee without notice ........ 0... cece eee cece eee 436
assignee may maintain, in his own name ............ saved «aaa 414
not to abate by death or removal of assignee .................. 426
assignee may prosecute and defend pending .................. 414
when creditors may continue pending ...............0ec eee eeee 420
surrendered by proof of debt ........ ccc cece cee ccc cence eens 628
when stayed . . oo... cece eee ee coos erauay endear s ardoneisene aa aay vacanaers 633.
when allowed to be commenced ........ cece eee cece eee eee 633
district court can not withdraw pending, from State courts ..... 420
may proceed when amount is in dispute ...........--. cee eeeeee 6383
to set aside fraudulent conveyances ........... cece eee e eet eens 893
by summary petition .. 6... cee cece ee cere ee ee ee ee tee reece eens 394
Dy sACtiOn: at Wa w iscchiehi weds oS pes des sweat dlamireseak aca dears 145
by Dill inh equity. sic sods cGy athe s sear tay, wo Baw ae Siw Gala ee Rares 146
when, must be by Dill in equity .............. sc ghatiniviss Seow a aout aa a6 132
AG TAYE os aces secicauasesa Ged Rhian SAO Ge Hele MO ee ive ti acageewe uae 148
eeaud’ sane da Mieke fea sa 402

CHOSES IT: sees, ave os. deca ce.ed seed ea
854 GENERAL INDEX.

ACTS OF BANKRUPTCY: Page.
filing voluntary petition . . .......seeeeeeeee iveuigeiintie xe vets 206
what are, in involuntary bankruptcy ......... ee. eeeeeee a Masiorere 227
departing from the State ....... cc cece cere eee tree ener eeenee 230
remaining absent from the State .........cccccccsee cee eeeeee .. 230
avoiding service of Civil PYOCESS ....... cece eee eet teeters 230
FOmMOval: Of OGOS: 44,0 csv tie ieekiniiw oa wend Grattan ecereibenig ine aoe gangsliees 230
fraudulent CONVEYANCES 6 as ee ie k Heian de ee eens Os Gee Kew e es 230
arrest ON mesne PTOCESS 1.0... ccc cece cere rece ee ree cent eeeeeeeee 230
what are; law of ISOS) soscscaaucs tema sides s anemee esas ean ealeuies 64
IMPLISOMMENE 3003. a ade deae tick out SBC dade se SERS Sen eterge 230
PEELE CI COS 2 5.ay Gr saueessinsy spice nivendidine Sodldmadee aud aoeunons ace iach hee afocaane aieaneines 231
suspension of commercial paper... ...... cece cece ee ee ee tere eens 231
fraudulent suspension of payment ........... cece eee eee re eee eee 231
failure to pay GePOSItOTr ss sevesci sc cewene ds tele ck wane eee sais we 231
assignment for benefit of creditors ...........e eee e eevee .... 231, 252

ADJOURNMENT:
in discretion of register... ....... i saa Ea IR qwatehe soe wares 195
when service of warrant is defective ..........c cece cee eee . 317
of meetings of CreditOrS 1.6... cece cee cee eee cen eee teenies 321
GE CXAMIN AOD a ve watendeoltemand Los Oeienve es annie Ui genscc dia Gonntenomi 561
of proceedings on order to SHOW CAUSE ........ ce cee eee ee eee . 676
of proceedings in involuntary bankruptcy .......... sew iw enue BOS

ADJUDICATION OF BANKRUPTCY:
CHATACTER Of 0s oe aol eupelehwadewiealieladamalaeea cena anaes aaa veous
What. LOUNGE, DY sss. wsisscece cdiwraiay Seeeawe ee ging le xg ceraigetene eS ee
OW: SEU ASIDE ax “ udind wag oO e ig thins's we eeawete ae kcaats Cee REe era
* when register may make. . cicvsucatessvenssaces sesiveresesauas
in yoluntary bankruptcy . « scssecsesads tise wer vacances was ese
ON: PETITION OL CrEGItOM ».. 50sec ieseca abd s doeeee ese aaauecldve d, fier euavaeed ee wiaunaaten'e
when debtor is absent .. ..... cee cece eee ee eee te eee te eeees
copy to be served on debtor .. 1... cc eee ce eee eee ee ere tenes
reférénce Of Gases alter avcsinss s vie paris a. owas esse eae soe mues vane
definition: OF s.0 %. wssescw ne Penne Mex Benne Rac siehee eee scare eee
judge may make .. ............ RAC RR MEMES oad eS FASE ene ihe

ADVERTISEMENT:
in voluntary bankruptcy . . cc. .ee cece cece ee eee nett eee eens .
of assignee’s appointment . . oo... kee cece eee eee ee eeees
OL BAIGS: fe ae jae setae snes Rye ee ira oi a em aa a ata bigaa cs
of application for discharge . . ...... ccc ccc ccc eee eee ee eens
of second meeting of creditors . . .... cece cece ee ee ene
of third meeting of creditors 2. 06... cece cece eee cee eeeeee
in case of dissolved corporations . . .......cccecceucceeccecceues
in case debtor is absent... 1... .... cc cece eee ee aeld a ena haneeias ifs

217
217
213
192
217
313
313
313
196
225
294
GENERAL INDEX. 855

AFFIRMATION: Page.
In, Hew Of O8tD ¥. 6. see se dawisiaieia nd wulbce cane adios i SdiaiteRna ie teat 845,
ALIENS: :
may become bankrupt .. 1 wee. cece cece cent ee ee eeees 211
debts of, barred by discharge ............00..000- iteens Laue 713
AMENDMENTS:
when allowed in a voluntary petition ............. ccc eee eee eee 223
do not affect the time of filing 2.0.0... .. ccc cece eee ee ee nee 212
OF LOOT OF CLAM. ose ied dee censeatoiiuec Wags w HACE Mactlerec @ onde ame aL Ss ears 536
OL SPECHMCALIONS 5) 24 a) added ete eased anal dang hae dws waace 678
of involuntary petition . 0.1 ccc ccc cece cee teen e een eens 278
AMOUNT:
that may be proved........ 4 Salene iv Ga Witeeee ve saneiae tease we oe AGT
APPEALS:
from district to circuit courts ............... ganunanebenrentroasa amas . 159
when. may: be. TAKEN 1:05! coves oe Raa ee maa eben eS Saies . 159
‘what notice:-givel: 4 4 ius cssasae eoesac eee eeeaued seecan sama . 166
DODGE AN. is cw ase eisaek ex ew awe eves alaseoas eee ed Hwee a aT AROS 166
In) What: CASES: He: -) scikassd pena welds etwas VSS tree eed, Rivne 74, 162
when entered in Circuit COUrt 1.0... . ccc ce cece cece ne ee teen ees 166
from rejection or allowance of Claim ........... cece eee ee ee ee 159
statement made in circuit court ......... cece cece ee eee ee eee 168
from bankruptcy court to circuit COUTT ... 6... cee cee eee tee eee 74
to supreme court of territories 2.0... ccc ccc eee eee nena 74
defense of ASSIZMEE 2... Le cece eee eee te eee t ence eneeene 168
may be waived ... .......4.0es isle Se) NC UN weReathanele ae win Grete nieere 168
from circuit to SUPTEME COULE 10... cece cece ete tte eee eens 180
how proceedings in bankruptcy may be reviewed ........... 163, 170
Construction UNdEL . . . cece cece eee eee e ee eee teen tte eee e enone 161
HOW take 664. cwindiase scene wines ace ced paue Pete ee MeeEw Bae Bae 166
APPEARANCE:
when to be in person:............. shigeceah Reka geawed as 5.We ale Beck aha 1387
when by attorney . owe cece eect e ee cece ete teen teen re eeeeennne 576
in involuntary proceedings . . 1... ccc cece cece eee e ee nee teen teens 296
And pleadings . . ... cece cece ene ween ect n renee neces sadwee ee aa% 296
,
APPRAISEMENT:
Of bankrupt’S PLOPeErty . 1 wee cece cece teen eee e eet eee e een eenaee 448
ARBITRATION:
assignee may submit to ....... Piarhce teeiatevate ia age AS b lavcisins oo oF a>. Raia 442
manner or mode of submitting ......... cece e eee eee eee eae 15, 442

Of CONLLOVETSICS 6 6c cece ee rere tee ee tener ne nseeee en etennas 75, 442
856 GENERAL INDEX.

ARREST: Page.
when bankrupt not liable tO ... ccc cece ccc ec cece eee ce eeeee 68, 640
bankrupt exempt from, attending for examination .............. 641
when marshal to make, in involuntary cases ..........-..+45 282, 641
of debtor... c eee cece eeeee Saber NG hae Te Ee EC ESES ... 239

ASSENT TO DISCHARGE:

when procuring, bars discharge ..........c ces ce cece cnc sete renee 652
‘In case of second bankruptcy, when necessary ...........-.+-08+ 688
WHEN NCCOSSALY as i. SW EKeis sews s Res Gsinewed eum alse Suu eGas esse 681
ASSETS:
WMA FATES acs yp eecateuavenayesrevatauaulonapeuane ac aslaua icra tecsceos sae suugplanene Orava vaiiivbbavbsanens daaaieuncere 335
what amount necessary to a discharge .........-eceeeeeeeee 681, 683
jurisdiction extends to collection Of ........cceceeceeeeeeeeeeenes 118
how distributed when partnership is bankrupt .................. 733
assignee’s return WHED NO ..... ee cece eee eee cee ete ee teaee 645
GIStHIDUTLON:. OF acd acsicleintsy sacar srneulaie sardiacaees we tareecentacwe aiden acne 748
ASSIGNEE:

who may De: 2.2% aseensiaentos eohbcatenw.ceeee ere naeeas Serer .. 326
CHOLES ROR es, aie crea asad secea nappa casei Seated. alona th sausetecbay habeas veda asded, Oaebaoentveaeniverneas 320
WHO! DAY VOCS a rh stacy osu eausuaee tne waa wehslnican aataheneextieantueeecuetnnearey 321
in Case: of Partnership... «. cesses xeciewmawierwanien dkerasrddeeuann casa hile 734
when appointment may be made ........... cece eee eee ee eee 320
Who may appoint: iisecacesovs aan wnawiieend deus vas vaewed 320, 325
PUL OY Al. OL 5: soi ee. cacostectta.e Cinta ieuane'ses edivanyasoud Gia aaera acoehveuasa cn eens. Suandbenvaaw aac 326
tO ACCEDIIN AVE: CAYSi i. as sas vownabinacaian, tarde eioaeeat onaee dans 320
additional, appointed . 2 1... . cee cece e eee cece eee ence eneeeeees 328
DONG OE a: 2 aia snteadidnny sealed cAii wlagielecm aetna Rawal e kee 329
approval of bond... ........ eed ces ORL SNR Bsa aca epnautdcw de aseiantin ce aane 330
when new choice ordered . . oo... .. eee ccc cee cence tee een eeaees 828
give notice of appointment ........... cece cee eee cece eeees oe. 484
what property vestS in .......... cc ccc cece ee cee senescence saa 334
to record assignment .. ......... cc ccncecceccseveccenenues st aene 434
rights against bankrupt .. ..... ccc ce cece cece cece ceccecaetens 336
third parties .. .......... Sedavaentoctons ies Stata 339

what property PASSES tO ...... ccc eee cece eee e cece eeceneaeenes 340
Wests: G0 4c nce geecscuwe odie ai ardiatrai gage aes ade nen tenant's 340

enjoined before adjudication ............0.0085 Wie ee aKa Skee ewW ates 123
rights under contracts .. ............. Aiahval aueee’ Rost A Maa ee 344
purchaser with notice of equities ................ i aaa sua se masaneeesere 352
rights under statutes . 2... ...cce ec eccc cece ee cencceeuccenenuneus 353
against bankrupt’s Wife ........... ccc ceca ccecceeee esas 354

ChINdREN: «,. 3c osteuwiydguicentaawenes Seen BOLE
represents Creditors . 0. ccc cc ese cen eet eenceeueaes Sega stutubedhavens .. 356
unrecorded CONVEYADCES «0. Lec ccc cece cece cece es eneeceevnces 358
must give injunction bond........... edccuantenliiel, diane ener cones LOD)
GENERAL INDEX. — 852

¢
ASSIGNEE — Continued. Page.
can not sue in State court when ............. sates Sues oe daee a Led
against assignee for conversion ............0.0.ccecee eG Poke Meee 159
not necessary party When... ....... cee cec ce cec ccc ceceeucues we. 414
permission to SUC . 1. 6... eee cece cece ence cece eueueuecenueens 414
May Reject: PTOPSTty s&s sweca se yaw toedu in baad vee edladava ceuanoaedes 360
property conveyed in fraud....... Spar tuhuc a tnibael trate Menaahiie’n ooeie a aoa 394
liable in State court for tort ................0005 cowicieecas Scan 453
bankrupt’s books not withheld from ............. aie eRe a acca Bes 428
to report exemptions within twenty days ............ecececeeeee 391
to prosecute and defend suits ......... ccc ccc cece eee e ce eees 414
must be admitted to pending sults ....... 0... 0. cc cece cece ce ceee 414
copy of assignment evidence of right to sue ...............0.00 427
copy of assignment, how admitted ............... cece cece ceeeee 427
MAY INSCILULE SUITS 5, 4...) casas ta aha Ga voaswige Shaely pamMeeee ea eR 415
limitation of suits by and against ............... ccc cece eee ce cece 436
in what courts suits must be brought .....................0000. 132
not to be sued without notice ........ Sdestenddseree a blduaitecn CAA arg aries sous 436
may sell unincumbered property ...........ccccccecasccucceceave 444
TO: CEPOSIE MONEY osc. -k ctyeenaiad Bad ew hunde SE MRIS ovals ews eek 442
to keep goods separate . . .... ccc cece ee ce cee eeceetaeneuenes 442
to make temporary investment ........... 0 ccc ccc cece ee cece nees 442
to compound claims . 1. eee eee ee eee ete ee teneecunee 443
to submit to arbitration ........... 0... c cece cece cece ence eees 443
to redeem mortgaged property . . ......... cece eeeeeaeee sys Shahi 454
to sell property subject to mortgage ........... ccc cece cece ees 495
to sell free from incumbrances ......... 0. ccc cece cect eceeeeees 514
to receive all proofs of debt .......... cece eee cece ee bee eeaeee 539
Temoval Of ss <a sssewss 04s wet Haase SORA Sed cease A eS 332
Vacancies; HOw fled. cel. sos ccccceeeaeceispainns:cc0.8 digs bed satecasdlacopauste dhe.auaveus 334
no suit to abate by death or removal of ..............c cece eeees 426
to call meetings of creditors 12... cc. eee ce cette cece eens 575
TOSIPNATION Of deve Gia chaw ere dowiens eo abana Ses oni ahacvdale: Bem ee MR ae 334
to Contest: POOLS) a0. 4s amdiee ovieanee ewer acigaea's Geewing s LA we eee x 543,
to examine bankrupt «0. sssies cesses dean ia hoes eater ee eae eas 555
to call second meeting .. ....e cece cee e eee e eee e eee neeeeeeeees 571
to call third meeting ........... gn Giteye Ga aNarla fee eatin sails wenger ee aes 574
settlement: of: ACCOUNT ccani.Geedees 2e4 ma sy Kaeo ee eae ea . 578
to distribute: estate. sciccecsisesvcav seats ies ak veev et wa teen aces . 578
OXPCTISES) Off oc ie: 6 Gar sucess SRE eS eS HAT AAS SOL AR Re memes 580
COMMISSIONS: Of 269-4. cransineld, d aod Rito abet Sie Rida epee PE Glade dd ea aeels 585
CiSChaTr@e: Of. os dass dae Ce ooae th ea be Aa he owe ees sale es 578
Penalties: Aeaimst cds w- saa leclicie go: SeisieeAd eed dies ge aN ELA Seat 205
auditing accounts Of oc sence cde s csc ee rene sine erences neeeaniens 192
not liable to examination ....... see hade ess idideneaes Texas domes 565
employment of ClerkS Dy . 1. ces cece cece eect eee eee e tent tneenee 580
rights in representative character... ...eseceeeeeeee horsey ee alas 356

rejection by... .s.eeeeee See w EGR OS oRtauiee ayant eee daw OOO.
858 GENERAL INDEX.

t
ASSIGNEE — Continued. Page.
effect of Surrender to . 1. wise e cece cece cence reer eeecccstteeeese SOL
what may be allowed to ....... cc cece cee cece eee en ee en ecnees 581
fees Of 5.4% ste veeess asi gdh Bb ca Oth tacass one oumeneaene diel Os Mee wSste Avekeg toe cae GAZ
ASSIGNMENT:
when: to: De! mad ee is sinaiesc striate oavals'a spucuere-e elgheelanies Beteeaaesia ares 335
need not be acknowledged ......... 2. cece cee ewer ene e ne eeeeane 336
where to be recorded .......... ccc cc cent e ete e cence tneeeeeenae 434
certified copy evidence Of ....... cece cee eee ee cette cent eeeens 434
WHat PASSOSi DY ss wow douse ge jee hau aa RAs sted en anTeS aNae os 335
subject’ to all equitles sau. + discdacusa cb eweirslyelsswegre omeeue candee 352
property ‘vested. under « « 2...sssse00 44554 deeweeee rs see eceea ee ee 340
not ‘property Weld. tn. truSt: ic socg 5 ccciee ces tienes oe eed ie a Sateen vw Giae 431
Ind, TPUST: DY MGW EGTE iii co cosa tceaerarsetelivd are ieua unre D a:8-Geeudaanensodduaca aetna 229, 673
an act of. bankruptcy ...........c cece eee cece eens 231, 252
DAES OISCHAG SS o.25.. scwssareacsavcecjavacca iy adaueraveteve qcovateranstoeranstal eeu 652, 673
when: ‘set -aSid@ 5 i cee es dulowatines duldudes ova pemeenece ss 91, 781
for benefit: of creditors) .ascces ss ecguwins a esare oe asawed esc s acces 238
of bankrupt estate ................ Baas ts ea senen euansiey. Gos iacouatusnty ovaden tases 335
ASSUMPSIT:
brought by assignee .. ............ iviauedie sauce iG e's Gee eeNe 149
ATTACHMENT:
WAN. CISSOLVEd: & <<. w wee edadin salto hindie le sas ulus te cremienres «.. 335, 362
LISD LOL” COSTS) sr ay es sé tusndaadacaid hd dyiicdadees do ocnabsvea ara Ran ace ecw ede are 365
TEtUIM IN, CONCLUSIVE 2. sisi sda dasivaigaieiee Omen Meleeed oe wee 370
when yaliG! 5 cs: ie gai aeiat carprakae-aireaes eee eee semae ed as 369, 372
how valid lien enforced ....... 0... cece ccc ee cece cnc uacees 369, 372
effect of discharge on bond for dissolution ........... 0.00000 eeee 368
Ol MAHAL “PLOCESSHK wise iss s Acasa are homeihckad oes wal amrs-com aaeuade ab araeiare 370
OTN RENE aia sicter a lalleusdisrdva Avarovameswxentes auesanvcas adaesSesersnuiehetsn's aqanei nemedeyateavsaaarnete 368
no retroactive effect of failure to dissolve .......... (sce a Baers ee ate 662
funds in hands of assignee subject to ...........0. cece ee ceeeees 602
What iS mesne PTOCESS 2.0... . cc ccc cece ee ence cee e ete eens ee eees 362
EDS 5 ie TE Titian oh op aa Ges ic sgeae nape Hs dasa cee ciots ude Boane pedal Sumac atonaaaao ace. veenes 362
lien may be divested ......... cee cece eee c ent ee tec eet teneenee 362
not dissolved after judgment ............. cc cece cece cece eeeeee 363
Wwheh Surplusage: s..4 ©. dine. jsey siaeaenas ware eee ee MoE oRRa eis 363
assignee Way APPCAr = 6 <cswonsey casas dans saad oeeneue ands OGRE ES 365
Stay Of «ee 08s sien ich ABA Stef cdi S5 & ose dy ionstupeauacscn wea eosuaunnsils cevaueln 365, 636
when one partner is bankrupt .. .......... cc cc cee cee ee eee eee 363
liability of receiptor . . 1... cele cc ccc cee ce ce cent eee eeeeee 366
when bond may be filed to dissolve ............... cece cece en enee 368
dissolution Of «i 4 ciexsagavnes cvdwee es Rs Wau. d5 ss cueere beet Oe «es 362

omission to diSSolVe ... Lok cece eee eee eee ence eeseeeeee aseiceeee O62
GENERAL Inpex. 859

ATTORNEYS: Page.
creditors may act bY 2. ok... lec c ccc c ccc cvcnveuececenns 576
how constituted . 0. oi. eee e cece cece etc eeneeue sive gee DOIG
appearance for debtor in involuntary cases ...........0. 0c cceee 296
who may be, for assignee ....... 0... 0. ccc cece cece eee cecneeeve 329
effect of voluntary appearance by ........... ccc cccucccceeceues . 136
appearance, how withdrawn .. ........ ee eee e cece eens . 136
when $20 allowed to ........ ccc cece ccc c cence ecenceeenceeenaus . 5
may be assignee . . wo. eee c eee e cece enc eee ees sient tenon ed 328
fees of, for assignee ........ BOE Gay Mae eas Sateen gawd oe 582

for debtor vroceeded against .. ....... cee eee eee eee 596
for petitioning creditor . 2. .... cece cece en eee tence 596
for voluntary bankrupt ... .......c cece cece eee ee cea 594.
lienOn PADErS «5 4 cans yweled cate smie Mage deal a'es'oy adaeaiaraseuldecees 500
claim ‘of; ‘fOr ‘SEYVICES: 65 jascew sed ie dew cheese oo54 Bbaae se owe 835

ATTORNEY-GENERAL:

GUEIES: OF: sania: dsaitoaiaroan tele tohaaoe oy ake rie Se ened alls gad Aas eamae 83, T77
Statistics to be forwarded to ......... ce cece cece eset tence eenes oe TIT

BAIL:
demands against, provable... ...... cece ccc cece cent eee ee tees « 474
WHET. TAY” PLOVE: sg eise> Gueweiese an tach, avte ous etinleecd gave: avovonanse Wie digiereceaelnle ane ATS
when debtor may Zive .. . ... cece cece cece cee eceneeteeevane . 282
when may share in estate’... acc cnr eeweae cae dee dees Kew Tee 570

BANKRUPT:
who may become ..... Sick oitioatens PD eacerainisun Meee a eae 11, 18, 66, 207, 225
When. PrOoteCteds oo 520 6. cess Eid ore BARS eee ed eM EMG Miwre eS 122
who may be involuntary ............cce cece ee S sisaietlag eta Analy a . 225:
subject to orders: of COUPE 6:3 vie sagas heey Geaw Me a eH eSe oH HHO s 626
to execute Instruments: « « saiiesi cece eevee ves eedaweees sane ews 428
fraudulent conveyances DY . . ... cece cette eee eee e eee 393
property held in trust DY ......... cece cee eee cece eee ences . 431
may have actions stayed .......... cece cee cee eee tee e eee . 633
hold property acquired after petition ......... 0... cece cece ee eee 337
may be attached for contempt ............ cece eee eeeeees 198, 626, 662
may obtain injunction ......... cece cee eee ee ee tenes . 130
to protect estate . 0. Lice cc ccc eee ee eee reteset eee eset teeneee 835
transfer after petition Void ......... eee eeee cence avivapausteneea aus ea . 887
can not purchase estate before appointment of assignee ......... 453
may purchase estate . . 6 wii aside cess eve esses eewawan eee tees 445
payment to, after petition, VOID ....... cc eee e eee eee eect ee enone 338
examination of ... .....eeeee iii Saha hele the eed <a ase S . 555
on what may be examined . . .. ss cece cee e eee eee n eens Birieeuleins 555
liable for contempt . . 1 cece ccc e cette ee cee tenet e ee teen enen eens 626
May consult counsel ....... cece eee ee eee teen tenet e eens 561

questions that would criminate himself .....sseceeeeeereeeenres OBZ
860 GENERAL INDEX.

BANKRUPT — Continued. Page.
not entitled to witness fees ............+. gu sho a tia yeas lauvansdeate «ese. 560
examination of wife Of .........e.ee eee sansa ak vee raartvelteotenn peated 567
wife of, entitled to witness feeS ........ cece cece ee cere cena cnee . 568
discharge refused if she does not attend ........... cs ee ee eveeeee 568
may amend ScheduleS 2... .. ce cece cee cece eee e ee ene ee ee eteenes 228
not liable to arrest... ......... Nay aishes Wats censkGaplencereiceut Ghiane aan dong Alissa 640
when to apply for discharge ........... ccc eee cece eee coer tees 644
tor takes Mia, Oa thy jp cisisscetetes cs: scaialiecervater na adnngarce ag etivarinr ena gisesicelerai ones ree hess 685
grounds for opposing discharge Of .........sccee cee ee cece tenons 650
obtaining false credit, penalty for ........... cece reece eee en eeeee 847
tO) Lurmish: SCHEGAUICE! «3. cccesisie. dooce adidas Re Sse sew C Care cle RE 314
PEDGM LES APA S ce, si sey casein <a Srratoearecasaciva savese to aponscautecduasGenudneva cde ayars Bera saia' 845
selling goods fraudulently .. 2... .... cee eee ce ce eee eee eens . S47
GUTIES OL. icine aicctareuarie increas Redgenie tee aang guineas 314, 428, 542, 555, 626

under law 0f 1898) sssciacocsga ves oc meen wieaae ee casinine 67
death or insanity of: iac.cccsenws. ccsawed sae sseienas ames soos , 68, 569
protection and detention Of ........ ccc ee eee eee eee eee eee 68, 640
POPE. BE oho SS TedRe a bea GS READER eERS SENS 69, 845
BULLS. Dy: ANd BFAISE cx osc necks aiareumredwacinnes sania car eiere'ac ina) . 69
COdEDLOE Of is. Saeco nena genes Janae sieieeaieateeiionag gape 70, 696
definition of ......... aine@etine owns eerwe ee peeghtoculemeys 61, 207
judge or referee may hear petition of ........... cc cece eee eee eee 207
TIGITS: OF! ese: ee ce zeeaa yas he ee ests et Reda aiw ache a MRED oaeecee 336
property of wife and children of ........... cc cee eee ee ee eens 354
CxCM PON Ola wv nemunnteo elem dda atkhoddn emma aon Marine cm 373
Claims: Wy Wile: Of: <. @ mgiivoy ga whcinaiawidiontinenna + wate madiaeidnoens alae 462
suits by and against... ..... oie sk Gees p We ARR ER RN RAE Bae Mew + 628
liability of codebtor of ........ aw Sire ae he RETR Ne Se Ka NOR ae . 696

BANKRUPTCY:
in the United States, historical sketch ...............0.ceeeeeees 1
in England, historical sketch ............ cee cece eee cece teneeeee 2
act: of 1867, historical Sketeh.. 6. iaseescs ewnes ade vane bienene seas 3
law must be uniform: swaccs ccsae-se ste sae ce weRNs se Hedda nese Haie% 5
voluntary and involuntary .. ....... NEES custo cralresiiateivtad aacpandsineceass 9
and insolvency contrasted .......... ccc cece cect e cee e ee ee ees 14
involuntary prerequisites ....... 0... cece cece ee ee cee e ee ee ener ence 16
what are acts of, law of 1898 ........... cece cece cece ee cnee caves 64
1aW ANd. PIACHCO ID cccccieegovassowisien sas Seed sae naan eee 28, 49, 61, 94
What: are: acts Of sccwaunsssonaaownnes nemied ® Weer ees el caseladaencns 227
intent to defeat operation of act ......... 0. ccc cece ee ce ee er eees 252
exemptions under the act ....... ccc ccc ccc cece cee tees eens 379
effect of acts done after ........... ccc cece ce cence eee sane wale 467
costs and expenses in voluntary ...............000. sare ewe E .. 594

involuntary» « siege ccanewsnnsexen camee ses 595
transfers in contemplation of ........... 0c. ce cece eee cee eee 673

partners and partnerships .............. pabvedieOa aye ete Nlewctach Svea 738, T40
GENERAL INDEX. 861

BANKRUPTCY — Continued. Page.
effects of, COrporationS ........ cece cece ee cece eee eeeeae eee ee 759
statistics of proceedings in ........ ccc ccc cece cece ec ee ce eeeeucus TTT

law of 1800, 1801, 1802, 1803, 1841, 1843, 1867, 1898.
(see Law, Bankruptcy.)

BONDS:
Of PORISUET: te: y ciiacay a Us vars seegahered Gismaalemate’s § Hea Base owe esas 189
on appeal or writ Of CTTor 1.0.6... cece ce ee eens ee eeeunes 166
Of, assignee’ sis. hed ehenieks s Seite eecadeaeud-eseaunecrsa au eciees wane 329
claim under, provable .......... ccc ccc ccc cee cee eee eee eeeee 474
no stay of action on joint ....... 0... ccc cece cee e ee neee 635
OE (TRUSTEO 6.5. ie) egies Sas Saha PGES wolee Sa pu k Gaus 8 ok hee Hees 329
certified copy of order approving ............ cc ccc eee cee eeeenee 426

BOOKS:
Kept DY ClORK ce kecG cari soew ieee ected. os cliente 2 asm aawee ae 197
Dy PegIStel tease takin: Se easiness bylas Genie ha ame ea aw cea waa 197
pankrupt’s, pass to aSSignee .. 6... cece e eee cece et ceee tenes 335
no right to withhold bankrupt’s ....... 0... . cece cece cece ee eeees 428
production: Of 3.2 see sis ch asweks baa oss aad sees hans Sachi a 195
witness must produce copieS Of ......... cece ee eee cere eens 566
MUtHATION: Off 4. (csc acied-dauas 6 outreieeheoee s Reales oneness 652, 663
penalty for mUtiation osc. cecce eee sation no is Sa gece Sere ee 846
omission “to: Keep: istic oi pswies bse eusede od deae oawmneemeen 652, 659, 668
WHAt ARE -PLOPER ase icone sess eeau ee ys Paes shee da es clue a ts 670
assignee to keep .............4. Hage Vedas mee adele Mew heen 450
penalty for destroying ..... 0... cece cece ce cee eee reece eee eee 848
Of “ACCOUNES sicads setentaawia nba teeth o1e ha deewue. 0B Hekate ondionaeie tloteat acess 668

CASES:
transfer Of! 6.6 so ana ake ne Ceiitieewe es eae ciede es eeu see es tee 76, 200, 291
reference of, after adjudication ....... cc. cece eee ec eect ee eenees 196

CERTIFIED COPIES:

Of assignment . . ... cece ence eee ee een een tee eneeeeeneas 427

Of PECOPAS = 6 icc saraisnd oe. d ciaroretaine PHEW Ww Os a el te. 8a) laithin ts aig giasieie’s Ue 434

NOt Dy register... oc. e cee ce cece eee ee tence eee eee e nena eee eeaee 186
CERTIFYING QUESTIONS:

issues Of LAW cc 26668 556 Fives e sb sasiew anes Meee hie cre ed atbtonte ay caye 202

who may take certificate . . ... ce sec e eee e cece teens ae aenes Mantis asec 203

what may be certified ......... cesses cece recente renee en teneaes 203,

Effect Of Aecision OD 1... ccc ccve ccc ccees essence eeeeeeeeeeeeanes 203
CLAIMS:

proof and allowance Of ...-....e reece ree eeseeeenes 84, 493, 528, 555

PLOOL Of oo ccc c eee e ce eee eee n eet nent ene et te eereneetereeenaees 165
862 GENERAL INDEX.

CLAIMS — Continued. Page.
what are valid .. ..............00- diate asa weyers savlahanbsacasiar en scauibvatauGrsenecene 455,
rejection: Of is. 26. ssicsccepaerecwatinnsire’s Galpieauareaayts tose eda wea ereninete ets 542
Objections: 10) «: «4% sseescs werd cisceeeryer Shaws «rs See ee eeu nee 5A2
withdrawal of original . . 1... ee cc cee ene ee ee tn en eeeee 548
Objections to, heard When ........... cc cse ccc ce ee ce tne eer tnacnee 548
preferences Surrendered . . 21... cece cece eee ce cece eee eect enenes 550
entitled to priority « « savcien. eesie sees a senwe ries ewees rae lok eemisias 598
what are barred .. ........eeeee (2:4 SPAR URE AEN MRE amaNE dso 702
which would not have been valid ........... ce ccseeeneeeeeeenes 825

CLERKS:
to keep minute-DOOKS. 4: sven es civenccntien awe ees eeenenes somndeniegs 197
notice to; of appeals: s4s25 ccccee nieces dae nnes ce seae Cee eRe enews 166
Offenses: DY: «a we asus esata See eeeRd ioe te aaa taaies cowie: 205
FOES OL: S55) Jessica ase ceusnscctansain tense age Ade yen ACRES Auneont eee 82, 767, 771, 772
to send notice of application for discharge ..............eeee00. 651
CUTIES OP 5-5) 5 ia pian an cidade Merws pete Gnaeugstutete sire rtesia tee? av'dianis 82, 767
compensation: Of os. 6 sxeciieaes caewr ee teeters ene evwew we See eS 82, 767
definition: Of as s2. 2+ sxawes aacaweesinderen sania ec ssiewiGkie tas 197

COMMENCEMENT OF PROCEEDINGS:

WAG AS: ties Kear neeaseainywe Kine ovnitwa aces mete bien oa ein 185
assignment relates: t0 «6 «casio nesas weenie end sass Ase a aeeowas 335
COMMISSIONERS:
TAY TAKES TESTIMONY <5. a scscce disci beeia eee aces sla gecele esa wh svavereees todas Mies 198
May take: PrOOls 5 su: wsdwasnarameiew Rok wend aaumetal oan 526, 528
proofs by, subject to revision ............ eee eee eiawerintatshetes sbtaley shee 528
COMPOSITION:
meeting to CONSIdeEr ..... cc cece cee cece eee tee Pay kvauielnae sae 607
FCCOPEAM COs SOE rs capeeeetaieace dieser hnes Sane s Quen dav atau canoe i aids ionenanatepdievidiate, analans 608
TEV WOT: HO GIST US: sa, se cay saesigeneitd soi arcicerrona eats tens aca wale conan eee wird aolngsiowae 607
recording resolitlonM wo « sec swans amtenioss asec meme oye 615
Warying ‘Of « « «caw ss sees ev ate Pie RiNYG dapeaNered eamemmea esos 615
statement of debts. « txsaces.0ss saesee veiewe es sient hese eases we 615
correcting mistakes . . ... sce e ween ce ee eens Stoiencietha esa orecken BN 616
PYO TATA DAYMEN 2... cee cee cee c eee recente ne ene een ee ee nee ene ees 616
HOW CNLOUCEC a... aessa ened seneatges Mmod halaman yew NaOa Some 616
How’ set: Sides. 6 ses eiqsmeaies aussie ne saeeanas ve ice wel gars wie 616
computation of time . 1 we. eee ee eee 64 aa Poe eR Ce Se 616
meeting may be called, though petition defective ................ 61T
schedules used as statements .......... cece ccc eee ee eee eee G17
EXAMINATION, OR MEDtOE saccacwwadekdaninmed mused danas aud cud svolnaiels 617
adjournment of meeting . 2 1... cece eee eee eee cent ener neces 618
production, of b0okS s 0 secssssaurs ssw wits dealer Beare mae eo 618

WHGOATIAY VOLO a0 sxiems ws os aneewater cos Seeded aeee ees PERRO 618
a

GENERAL INDEX. 863

OOMPOSITION — Continued. Page.
mode of computation .. ................. AE Madde canna naa BLO
COStS: IN 5. 2 554s Be Seeded ew Diwan dws Svieeaa eves ev iegeeee es kOe
FESOLULION: LO" PAY i's: sows x tases capaanganee walemagaee «snuullew « eaes 122
violation of, enjoined .. .......... ec cee eee WRATCE LEER Sen eRe eS 122
Whed COMATMED, 605s eewees baw cad eee a 8 CaS Vee eee aa sees 69, GOT
SOU ASIME oe des. ceive aig Kee Seabee hed, Sita d bca aus davon 28. du avnaans 70, 608
confirmation of resolution... ... ick cece cece cece eee tee eee eeeaes 620
TEJECTION. OF ioc) avis aca ase ae Sd ie SEV GEA Baie Re Ow BHU 620
purchase: Of VOteS: 5s seiecg waidek Goren ele oa Watiaite eee eu teas pewe wh 621
how defects in, cured ............0eeeaes Mam gk eat ewean dye dyke 622
when property surrendered to bankrupt ........... 0... eee eee 624
PAY MeN b. AN CASH: gg. Mea so eee OCR Reco cd aad Grave Saidae ede cece Matas aks 622
injunction from district court ......... cc cece eect ee eee eee 624
conclusive in collateral actionS ......... cc ccee eee cee e te eet eeeee 624
MO discharge MECESSALY over ccc ec cc cece cree cree eee se trees ecnes 624
joint debtor not released ........... 2.0002 eee 6499 Dow ee esos aeee 625
error in stating AMOUNt . . 1... eee cece eee eee eee eee e eens 624.

COMPOUNDING CLAIMS:

ASSIZNOE: INAS ss Vise Fay arsed ba Rand emma sgt aeiiete a Sede ove 443,

COMPROMISES:
by trustees ........ bec huns dion oiscerapietes Pater eae esa TAS eaSe cas 75, 443

CONCEALMENT:
of books bars discharge ....... cece eee eee eens iia aah ecin cd oxeuneate 652
when an act of bankruptcy ......... cece ee ee cee eee ee eee en enee 227
of property an act of bankruptcy ......... ee steals sce eee 227
bars discharge ......... Bate he Re sips Vataaia iy ase 4 alngacinre 652

CONFESSION OF JUDGMENT:

when an act of bankruptcy ..... seh diptetane Ses cleanalavac ace leviian Be aierass ogsanee 230
when @ preference . . wccee cece ee eee eee eet e tent teen en enees 780
when set aSide . . w.cce cece ee eee eee eees Veh eG a weds angungnel ye giaeatare. 805,
CONGRESS:
has supreme jurisdiction ....... a Geebeal Owed Heshlandaesie ae ELSIE SALTER 8 4
CONSTITUTION:
extent Of DOWEL 2. veces ee cece eter n nent ee eee nena Lene uhcoevanea algo ee
meaning of bankruptcy . . ...ee cece cece eee eee eee ne eee eens 4
not limited to English lawS .......::ee esse eee crete teen trees 95
particular class of persons .. 1. ese ee seer eee 95
voluntary bankruptcy . . .csecee eee e eee eee tenet teen ene e es 95
Obligation of ContractS 0.2... cece ee tee tence tent tenet eee cnet es 95
Selecting tribunals . . 1... seer eer eee ert eer tenes ale eclalasnnareners . 96

suspension of State insolvent JAWS ....seseeeeeeerserercereeeees
864 GENERAL INDEX.

CONSTITUTION — Continued. Page.
EX eM pPton. CLAUSE: og: vs: doadiatedelsiene a Det te nsantuatedie Muah ewes o Saat 383
liens not invalidated .. ............ Hina cues tseN are adam eens . 383

CONSTRUCTION:

POLS Oly Sr 5- 93 encase aatosiveed Sacodin canal maw cediwengey ee ace ene aa Meacaglataus 185,

CONTEMPLATION, OF BANKRUPTCY:

What 18 s-6< ess ekseviwr wa ee HMGNTEEES KEY RS SES PERbaa ET eEeRlae 241
acts done in, acts of bankruptcy ............. he Reseda TKS 227
bar discharge .. we... se eeeeeeeee Sb saedeaiaas spo denseyirg dca 652
CONTEMPLATION. OF INSOLVENCY:
acts done in, are acts of bankruptcy ............. ene oe waMensele . 227
CONTEMPT:
district court may punish for ......... cece cece cee cee eee nes 141
parties and witnesses liable . 1... .... cece eee ene ceeaee 199
register can not COMMIt fOT 1... . ec ce cent teens 197
bankrupt punishable for ........... ccc cece cee eee e cent eens 626
assignee liable to punishment for ............ 0c eee e cece e eee eee 331
with notice of injunction . . 66... . cece eee eet eee eens 286
when order to SHOW CAUSE ........cc eee e cence ence tees ee eeeenees 568
proceeding for, can not be enjoined ....... ccc cece ccc eect ee nee 129
in courts of bankruptcy ...........scee cece cece eee ewes vee. 142, 564
before referees .. ........ mortinwres sues saeteateha se -eleaeeha wince «. 79, 195
CONTRACTS:
assignee entitled to benefit of .......... Sig Wino n ated pare eae Hele sine e wat
for not opposing discharge void .......... weuvaarees indeseaeeanees 844
penalty «a ncicnnses ss sonewnaiaeee ees 844
for withdrawing involuntary petition ............... 0.0 sees 228, 844
PISS) WMDAER sc: a) erdeiawiara ave. iaewracebes Sealahateus aed eyesore anaratenalene rs Be 344
decisions on .. ......... sais tad ures Oa tise ye Saverielok os loos oas hae Wiehe ahafowsl'n cesta 457
CONTROVERSIES:
arbitration of . .j. .........000- Shea Scueasey ae anaes uta Gleuhaa en due ayn 75, 442
CONVEYANCES:
unrecorded . 1. cece sce ee ee cenee eee anomie Po ea tiwleanls A Aatem Ks 4 358
PRAWAUWIENT se. ox, csesieyens 4 xe BE Nise a idee. 0:6 Snes cores Scouesbed-ovelinw 236, 394, 403
by way of preference, VOId ......... cc cece cee cee eee eee a feviste tears 781
in fraud of thé: act; VOId) assoc cansaees see yo ds gered Stereeremne ters « 827
what, are acts of bankruptcy .. ............0200e eed e Hee alae es 227
fraudulent, by corporationS ......... ccc ccc eee e eee eee tee 756

chattel Mortgages . 1. veceeeersecrecetentseresees ciieeh Mitandehy Save ees .
GENERAL INDEX. 865

CORPORATIONS: Page.
may become bankrupt. . ............... cease uA ess aiapanan gate . 156
voluntary petition by .. ..............088 Oise Tadeanwmelavessed 78
who may authorize «is i sciciiiecea sees ees nueweuucuasviaabedae 758
officers to furnish schedules ......... 0... cece cece cece eceeeeueues 756

execute papers seitinpstae at ates, i Oke Os oe arenes Bee 756

submit to examination .............. 0 ccc cece eee eeee 756

penalties for concealing property ........... cece eee eeeeenee ees 756
no discharge to be granted ............c0cccee cece eee ceeteeens 756
how assets to be distributed ........... ccc cee cece ee teens 756
service on, after dissolution ............. 0c. ccc cece ee eee eee eeae 292
effect of proceedings to forfeit charter ..............00cee uae 99, T64
State insolvent laws relating to, suspended ................. 99, 764
proof of debt: 4.<. ss ssaseis tease heed iti a < tadua ae adase aac 5387
SEPVICE “OD 6 rca es eRe OOS SA Bw me EE od GR Olae ee eae! 292
when release of stockholders Void ..............0 cc cecceeeuneeee 357
assignee may impeach transactions by ............cceeceeueeeee 357
conventional payment of stock void ............. ate 's 866 ahaa’ 357
attorney may admit acts of bankruptcy ..........cceeeee ee eee eee 759
assessment on stockholders . . 11... .. cece cece ce cree teen eeeeee 760
not impeached collaterally ............... cece eee eee 761

liability of stockholders . 1.0... ec ccc eee cee eee eee eee eens 762
sued after proof of debt 2.0... cece cece cece eee eect ee ene 765.
no stay of suit: against) 2.4 .asGe nese caiiata cnddge ends tsee aes see 637
bankruptcy is dissolution Of ......... cc cece eee ee ere een eens 52... 760
GENNITION OF 5) 6) 4. ee hilar de eee a a OS Ba Oe ee eee LS Se 755
PUBIST VOI EOL. a>. sez 2oiee a suesidey 8 dsew saat ds yas gemeceaca a aca ood e ean etek ws duane Gta een Siac 755
WHAT ATE AMENADIO: os cig cate cca whuneaid do ekonw ee eugene . 156
effects: on; Of DAMKTUPLCH. aie isis cosas cise Weise eke sess one OM Ce . T59

COSTS:
in attachment are not a lien ......... cece ee ence eee shee, sli Senta’ 365
when not provable .. 1... cece eee tence ee neee §Aeuh ve eyayesscntrece 865
against assignee, allowed out of estate .....-.. cee ee eee eee eee 168
on disputed claim .. ............. an nee SSS adaade Gated eats 168
in pending actions... ....-+.+. ida dea yadas MReEN Heese rBee' nee 425
on trial of specificationDS ......... cece ce eee cece eee teen en eeee 679
bankrupt’s, for discharge, payable out of estate ...............- 680

what allowed between parties in involuntary bankruptcy ....... 308
what allowed between parties in involuntary bankruptcy out of

OSTATE: 0. aaa eee ngewe Sania ss sigaseane eaaees sieiaas etic sk ees 595
of petitioning creditor . 1 wc icc e ccc e een eee renee teenie nee 595
of attorney for voluntary bankrupt .........-. cece cece cece eeeee 594

involuntary bankrupt . . ....sseeseeee ees Cedvatoa 595
petitioning creditor . . 6.1... cece eee eee e eens .. 595
Of Tegister 2... cece cece eee te eee eee e nett tenn e eee enna 769
Of Clerk 66k cet cect ee ete e nen n settee tee e ne een reece eraneaes 768
of marshal . . . w.cc eect eeee Fenner e eens ISS ERS .. 773

55
866 GENERAL INDEX.

COSTS — Continued. Page.
ADYDCALAN CE LOC so iiie: seca aieaes. Sudalnd welelareiAlainerg alelard sargsoaielde meer Minas Grd senions .« 594
entitled to priority ....... Bishan bcd oere ot Sees a etaralah Maeidaien es Sonia oie 593
and expenses in voluntary bankruptcy ......... 0. eeee eee eeenes 594

involuntary bankruptcy .......... pieemavaees 595

COURTS:
jurisdiction of United States and State ........... cece eee eae 13
and procedure therein .........c.ccceecceeseeceteeeseaeenes . 71, 522

COURTS, APPELLATE:
PUTISCICEIOM: Of ss. swewsla: cones sd thier paver sie waren ean atlas anor nanan tiie alae ayardanaseaeners 169
PIACtiCS AM e.4- ec agowae. nd Sarauigier hadnt anemdid taare bs couvanianavanadariy nice ceees « 127

COURTS OF BANKRUPTCY:

may enjoin creditor from harassing debtor ........... suilovetnitt dyawasan Mame
creation and jurisdiction Of ......... cc cece eee ence eet cence 63, 118
law Of 1867 ic. sgres soaatidiaadssewearieeee eee8e wise tee wies 19, 108

ASOS: 2. de cdinedniacette taveeer ore eee se whdal eg e's 20, 103
organization of .. ....... Rabe stuateries Siegel Sea cae areas eet Meee 118
FUPISGICHON: Of we 4. a, ceroenad 4 cadet dpmundiedcinweachiy aloe REE AES 141
Contempts: DELOLe oo vessiiee wees deniea gine nee sere wee neler ee 142, 564
in districts and territories ........... eee eee eee apiiale aso 143
may appoint assignee .............6- ea Pair casey geal eo aha Bia ents hat ester 325
shall designate depositories for money .......... aiswiahs Ge wustianaeis s-kexs 441

COURTS, STATE:

jurisdiction: Of « ««, vxsvcwwnwesiinswene ves ears ele ves Aa teas wala 73
PrOCEdUré: In... os asians gorwcee ver eeyerereerenyy eens EN 71, 522
CREDITORS:

notice to, of first meeting ...............e eee aisha shal cha ca peleormenseene 222
first meeting of ........... MEME sae ROME RORS LAOS EUs 21, 318, 743
who may vote at meetings Of........ 0. c cece ce eee eee 84, 321
how many, necessary to choice of assignee ............. 0.0 e ee eee 320
WAY LEQUMIFE DONE se cciac ce uvecceenqae ances taiae a waiere fe teagahengane eres 329
MAY TEMOVE ASSIONCE: «2 ascc-wedess syed ateaias te tuceke Yeu gua ew na 332
to be notified of meetingS.......... ccc ec cc cee eee eee eee eee 575
what claims are provable ....... 0... cece cece eee nee eee ences 455
surrender pending suit by proof..... 0.0... ccc cee cc eee cee eens 628
when, may prosecute pending actions................. aeegeins 414
WHEDESUTTS OT; StAYOd: jiniiex ws niosca le aeunene oe om qed eartatunwae wien winsealers 633
when allowed to commence suit ............ cece eee cee ee eee 633
proof of debt by ............. igjte or tap biti beads Gperen asahoeal udtaavhealaccatavrnnaiaobua os anas 528

SCCULRED science npat aad accra dans Soe AeNe 493
HOW Prook. Dy, MACE! 22 si 4 eaewatied Aaa awortaeen sure + becrma onan e 528
may notify register not to allow claim. ........... 0... u eee eeeee 544

when proof by, POStpOMed ..... ce cece cece cee eee eeees veeees 048
GENERAL INDEX. 867

CREDITORS — Continued. Page.
when to surrender preference .......... ccc ccc e cect ee eene weeee 55O
appeal from rejection of claim ................... sods Dewi whine LEO
how appeal prosecuted ........... ae a nba ha mestasta ce a variance elses adits os Rane 167
may appear by attorney .. .... eee cece eee cet ee epee nalneiy 576
notice to, of application for discharge...............0 0c ceva enea GAT
may oppose discharge ...... alee Ae SARE VE DOR SOAR OWEEES Banta eas 674
when to file specifications ................... Saehavs Seermmlance eiaiesctuate 674
when assent to discharge necessary........... ccc cce eee ceveeaes . 68L
assent In case of second bankruptcy ............ cece cece ences 688
may vacate discharge ........ ada Mig she ahea Wha a atisecets Gis alanedele ataceaen: oa wlataiS 729
notice to, of second meeting. ........ ccc eee eee cnet ee eens 571
may order first dividend ............ ccc cece cee ee ee enon eenes 572
notice to, of third meeting .............. cece ences Rarieaceee aS Ae 574
who entitled to dividend ..... eeachitec tana die'e SF ec ectatl cen Aaeas ei cnosactda aca 572

in partnership estates .. ............05. 733

DULOLILY i-5.: onesies fae esa Oe ae MAR eta SES 593

may examine bankrupt ........ ssasgavaanar acawtavaantne/ aclaraudle wnataravancahee cede 555
who may file involuntary petition. ............ cc cece eee ce tenes 227
no notice to, for dismissal ............ ccc cece eee ere ee teees 309
may take place of petitioning creditor.............cececceeeeeees 311
may file petition for sale of securities. ...... 6... cc cece e eee eee 520
meetings of ...... ane Maa Lae aw Wee HOR Oe ha eae cay 84, 316, 571
notices to ........ eer ere re dB ath Pw Dac oe ice Ware wags 86, 316
assignment for benefit Of 2.0... ccc eee cece cee ce cee tee enene 238
who must sign deposition .......... ccc ccc cee ee eee ee eee tenes 268
requisite number must join in petition...................000- 271, 293
intervention by other ....... Piel RURS CGE a Pi aan eee SMa gw tek SLL
definition of ...... a rsd ik va case ey ero cne aie epepte manatee Sea teh Sees meeansia te enim Das 316
SOCUPEOvee 3s 68 de ea Raw brhady anna eeoukig nan s Aiea aoa eam’ 493
BUTTON er WO soe-ce ede e ee She OES Ke dee cee eee ENN ee Re ee pe 518.
assent:of, to GiScharges éi sais seeg sovis s oe Gaie eee a WEE Se haw eee wee 8 672
AICTE S Seen crane ds Samael GeSeee pum neebion’ye ae kneaded teks Sars 713
proceedings at first meeting Of. ........ cece ccc cee cece een e nee 743
PE OLSRE GG osc vate sacai nae sevenen ec se. or tapnas acasaeusee oe Sue ehdithaetandse Mysnniteaeterwwte’ 780

DAMAGES:
proof of unliquidated ........... eee eee eee eee ees soiiia Baeow 455
assessment Of ........0. ee eeeeee (Es eee TERS NAE Ley OHS Fa% HEE EOE ae 470
creditor must ask for assessment Of.......... sce e eee eee ences 470
when may be set off ..... Sia eda aliaen St eeeeee Aoreetaa jeoghaghasadaaede ee 489

DATES AND DEPOSITIONS:
filing of petition ............0065 a Veale oe eae esata meee ea antse 185
mode of computing time ....... cece cence eee enee sone eee aes 206
all proceedings matters of record...... btarioh ae aaaniceeis fe sete het 186
how képt sv soca vivine 6a a nies eas pee Peas Pee Le Oe a edlalaah: Aa tony eiainwed 186

Open to public inspection ....csseeseeereereennesereresreeenerens 186
868 GENERAL INDEX.

DEATH: Page.
of bankrupt no abatement.............-. jane ein amon ine suxtiusntuerece: (OOD)
NO discharge after .....cccc seen e cee ne eee seer tee reeseneeeeses 569
of assignee ..... abs ub ae scar 6 sty tay bcd abn Be eo RUAN AL Se CNS aN Se a Tamera 1 426
Of, TLUBTOE, seorsicsescominigraisiais dine dooneer axe reser an Ni vau cManamiowasil aves 80, 332, 426
or insanity of bankrupt ............ sia ecole atatiacade ore nsaia Wdotiaieis, dhae A OSs “DOO

DEBTOR: |
what sum, must owe........... icabigauihd-d ausaneieniee iosradases mausase tinans 234
BITOSt OL ses wens sass gsi cael tach nani ab cateelmteniouas Seloieiyd Guouavavenbitsauadnsiouyaese 239

DEBTS:
what are provable .............. Mea ste TSS 88, 455, 586, 691
TOU TA AN SOCOM sess cigs hls seca: soene cece cnsanet acer veins sna eye neie ersasestonete een seg eee 483
ATITEPEST OU se odiiuscpaceis pea aid odeaneyd tavavseid wiayd Geel ai avonie dean dnvtiana arora rowed whl A . 456
secured, Should be Proved.......ccccceec see ce ce cen scence cennane 532
DLOOE OF ip iesesc aie oie isis eos wastes arses s Pebowewe mee ates dtehdiecieat Eee 528

Secured). ¢ davvenwianhetuw dian seamed wears seule aems 5382
to be handed to assignee ............ cece cect e eee eeeee 540
VISE: Of}. GO: DEN COPEIMOG cis: io eserevate's Funteriorence sh akca ain cn cnsed cae ds oniace sasespbeacayauinrecese 555
postponement of proof Of...........c cee eeees TNs cad ahve karmic’ 548
CISPULITES POOL Ob seco: disnwiz-eravevaceexcspavehacie hiteneaeanb nigra reepe aie eae toeha agreed ease 541
mode of disputing ........... 0... cee e eee eee (eReader wae be 543
Giminution: Of pains sesemeraxenenaians sees ve aiwataes vee eacenes 545
expunging...... Aa oe Nae SRA S eae e eae Reet elles 546
suits for collection of............. 00.0 ee ee iicbded gh thse lahacavadautaseleraette .. 414
ID GIStriCt: COULE o..05. Geisine dee wise Adac ucdavor aia resale 125
oe AM CIPCUIC COURE 5. cs 6 wicicssaranec we tancocodiiiaca s craig Sara-siaranatel aera 150
Sale Of: UNCOMECCHDIE? ja ciswernteners ine ateeesn wieder a lato eanmantaees 453
Of PEtitlONINE: CLeitOr® sisciewaaiddsaciuresw.sieaonw@a eas veer ees OS 274
what;to have prioritiy® ji: ssw sacwie ye eeaceee e R4 Raa EK io SE hans 88, 591
compounding ........ eaecoare vitae ae  ceateake pSdathaass ayes ce aaVatancuenouibecs 443
arbitration 2. 6... .... ec cece eee SeonivatSihacei inasaiasle abacrapune aha caresna Saataritedmiers 442
what not discharged ........... syoiisa de dah Qa Aeeaneeshevensha dale Becreaee 71, 688
need not exist at time of the act of bankruptcy................. . 274
matters examined into ................ 563
act urged against discharge ........... 679
petitioner’s .. ...........08. aes eleaed es esicceirecabe ised aie aelantee musvane 274
definition Of ccciwe seerxass wa eae acces Sas cota sha taslnlndl ear earns 455
CQUILADIS 6.6 a eis aiide seo wie yee, om vere man vor aikdislaagn ua harlore tevthiancs fav leSoralel fares 461
TCU OUS 5 oo eei.e dncdeisdonevgnacdaiecs vec laa cogil dsibhgn Hiareuatings aaa ited wea aye ar aerars Akt 668
fraudulent .............. diselenide atgtnlals tema Seve awas Fattinn Mewes 691
fiduciary ............... eer ey newedde th iedaealecescuepeneasids seeeees 693
DECISIONS:

under law of 1800 ..........
GENERAL InpDEx. 869

DEEDS: Page.
MNPECOPdEM 2: 2s siessciie cee ware aeiaaialele eutadae bcd Qasactd Stee ede eves 358
DEFENSES © 6 savsoies saagiens ts ewe kince ds ansede-niedvoud ew edad bees 462
DEFINITIONS:
Da We Of 1 SOS os aina act Sistocisnid a teensy ane Aes CRISS SaseEg Ebel haw 20, 61
JUMBO. 6) goatee dug ee dare yas a eee caked sd sinaidins wha a ca miue wea 118
ClOLK ie. wististe wish ie We WHERE Se arses Gad makin ae ate deena aeiviegaukonael 2 197
Wear DC io aiecin shee ahaha eran dea 4 i wla's 0G Wigucndea ss anelina owe Alene Kee 207
PeUMON: s acduisrne vader Hawen Nese neal and melee eens 207, 225
COCUM EN oes daieie Sante sagas wend we des 14 FRE RR aa 207
bankrupt, involuntary .......... ccc cece cece cece eceeensenees 225
VOMUDUATrY a5: 5 hak Wishes cd haa Wd A bk 4 OhKS OE BENE KE 225
BO JUGICATIOMS 2. oie, aces yete lg eyes eyaads svevavar g elated alors et amdveadena entatey sa 225
GISCHAT SC iar Seed ian HOGS ae eyed Gist ape e Sacoass oute ards Aaa ens 225
DGTSOD ¢ oo etenisse ke eee ss ttin est daa deena e eae 8 ee Se 225
WAPOA? 6. waa ieee deeged We Leesa wew SS BMT STE WS eae TEES 225
commercial paper’ s-<: acvda Hoi H¥A wats ei eS oe kied Rab awe casey wae 255
ERAD OR 5.55 vapors cha et sae aucts Sy wecoae to ek Gates wiv Gdiala oid Fanaa Beg Wratten a b's latest 255
SUMCIENt BrounS: spice ea ganie esd daw we wwatans wate ea ou ee eee 282
OAC Sige eccaisnslerg es bial arerejieg ho SON. Es wise Oa emacs AuSk Keen yateaees 295
creditor . PRRs eB E OER Ee Se atea dad a eee bea ales SaaS 316
CODE 6 ised sauraie ss aivew ks eaten s oR kaw eed eae ye cedeas Best doses 455
COFPOPAUON i's: aise tages RRS e den esate shes aus ated ada ean eae 755
ATAMSL OT sierisncte: ci oncdaltes Gcrrentin canara o% laminator reed hace ela uae ak tacbirete aes anes 780
INSOLVENCY. ss. 7o. sisare, qaleceg Gib dad Gael Aina: d Xmas rad diene ae ea eee 787
preferred: (Creditor: a:i:.-i6) ss ssi sa ees Be bee CRs ewe Sees 87
reasonable: Cause ss:4y.6.6)e Pag eweecsa sae os sad ee Ssgiwldi a brs's Haw ea Y 809
fraud ‘upon: the :act 22 so0204 seeks heakas nha oe aSae REA Lees ce 819
BSSCUS ss. in hoc tosie Faw ver HEPA Oe RARE 6 PRET nes GREG AS Ree ek nai 335
COUNT ec os ais cosa a eat Sa Za se Go laerad in Gpmvlac av a, eaves Sea aiguinca Saath uauene WeManeserdiwlee AiO mle 61
COUTTS: Of DANKTUPCY csc dcgace eds Ware eee eee aeolian ee eens age ieee 61
NOMA Ys is joes gtcherne setae ns ane nears oR end ie Foleulen eae ee aes 62, 205
DEMURRER:
When sustained 3 s2/0 sais css wes eo eewsews asa es MheK TRIER TA ET ees 725
DEPOSITIONS:
Tegistem May takes istinuedealnigers eer voces Cees enewiaeeoeewewaeed 198
when reduced to Writing. .........-cee cece ee cee ee eee eee ee eeeee 199
examination “18: Ais... -sweage chads aqhe aa eae sa aRe REE 4a BOGS 6 ee ai 560
WO MUSE: AAS: joss. sraiecine e559 Jee saved aadace. Bs aves Beak ded comtcsdnuden’ ek rave db: eincatenn 270
DEPOSITS:
assignee to make... «1... sseeeeeees Gruaughere av WaueareneGnG aie daimeneac srs 442, 542
Where Wade: « as. < cue gt ses oS erate tga glares ary ol 6 de Buea s alee ie oe. 413

DOW GLa Wh. OM sees sees Fa tees vaio ye MONS «wae se wsseareye 413
870 GENERAL INDEX.

DEPOSITS — Continued. Page.
to BeCUre FOC8 «ccna de erag eee SERT EE SEER RE Ee teteeenererenss 7166
Dy trustees 0... cece cee ee ee ete ene e cere erent eeeees +... 4138, 578
TEPOrts Of oo. cee cece cee ee eee etre reeeenene deena wea tarecareie eres AD

DISCHARGE:
of assignee on final account. ......... cee cece ee cee tree e ee eees +. 578
Misconduct preventS ........ cee ee cece cee ee eect eee eee ee enone sew 119
stay of action to AW@it...... cL ee eee eee teen eenee wees 633
application. f6r ..:2...43 .2n8s0 sseweens ¥es eaten wey eee es . 644, 754
when Day De MAME ic edie ee ene SATIS SOI EY OS veeeeeee 644
court granting, alone Can ADDUl......... cc cee eee cece ee ee eens ~. 122
circuit court may set aside fraudulent conveyance after ...... eee 122
surety on guardian’s bond released by...... ag ayeyswls a ast eis coher seve 691
Gefinition Of asiiacosserc sss seas nesta sss see vee oe eeeleescONES 6 . 225
DIOCCUULE: TO: RECULE® no iisce siesesecmerdiedacecerace 8 MER CREE SOMONE LONER & ... 646
APDLGANE ENtitlE. CG ssc cessie ein stusceriscds severe send auapersvane biedesbuk eva) evaue one 8 Boe 651
ASSENG Of CREGILOR LO ceria arene wianseavterennie Verena wraiaatcs Tork neve Duele Wi attetine nies 672
debts not affected, Dyes, csscsac-s awcasd eecalsiee d awitea v9 areteinns sda ees eee 688
EVIdENCE 2 « aiiviecca exaed coger e se aad 4 eK Pek ewe eases HERE LE ee 726
of involuntary bankrupt ..............cc ee ae eens achat egeaicscg abe 646
MOTICE OF, APPLICALION, isocoiscsis god 6. dsccasaracerierace ceca verasareonie laceuavatia aed wfandednivevesnce 647
grounds for withholding ............. 0... cece wees cece eee 651, 653
CALM “DELOTE MAL co iarssicrgermareniis satricodiens estate gine ea pmalalaanes < .. 685
return on order to SHOW CAUSE .......... cee e cece ee tet eeeeeees 651
certificate: of conformity’ ssccasussscescaenes teee eer ceeeeied wk . 685
specifications against . 1. wk. ke ccc ce ccc ee eee e urea reas . T+

must be definite... ............ devel aiaieeeige se siperete a 678

tA OF oscn of eeecishavee nies oad ie eeriecew eid ateeehege ee . 678

none for misconduct of Wife ....... 6... ccc eee eee cece eee eee 567
willful false swearing . 11... ce ee eee eee eee ee es 652
concealment of estate, books, etc. ........ cece ee eee ees 652

fraud or negligence in custody of property ........... 652

causing or permitting loSS .......... cc eee cee ee eens 652
procuring attachment: . so. s¢s0. veaesses eee aes ees wee 652
destroying or mutilating books .. .......... eee eee -. 652

making false entries .. .......... PARVATI ae eRe 652
removing property from district ........... ccc cece eee 652

giving fraudulent preference .. .............005 Be. atasanena 652

LOSS: Dy PAMING 5 a: warcasiniiacwannuiiatiaeiaewe wecamnwies 652
admitting false or fictitious debts ..................04. 652

not keeping proper books of account ............ Meets 652
procuring assent of creditorS ........... cece ee ee ee ee eee 653

making preferences . . 1... cc cee e eee cee cece tenes 653
transfers in contemplation of bankruptcy ............. 3
conviction of misdemeanor . . ....... cece ee eee eee eee 653

in case of partnerships ...............00 08 Vase eae oa Gane 734, 754

of one partner alone ..........c cece cee ee eee eens ceceeenees 180, 154
GENERAL InpEx. 871

DISCHARGE — Continued. Page.
on appointment of trustee 2. 6... ccc c cece cucecuevevuseus 604
none in case of composition ........... is fasp vita ar ecanen eo oho ance w ene 624
when granted .. ..... cee eee eee Gia Og awie carte es 70, 681, 685
in case of second bankruptcy .............cccce sce eee eeeeee eas 688
when assets must equal 30 per cent. ......... 0... cece cece ee eee 682
when no assets required ......... 0... cece eee eee neces eeaenes 682
LOTMA OLR so sh 0 -aid ae Saget oe, Saag ennss oS alae aaa oasis hotel cc acaeretiads aec oes 688
CMS CU LOL, saa eaves senor mrasnnS Gaiee-tears Saray G ees eetaione te ou 688, 721
impeaching in collateral action ......... 0.0... ccesee ees eee ce aes 701
to what: elains: a. bar 046.250 deielewse tues Kaas datas oRe 699, 702
debts to United States . 2 oo... kc cc ccc cee eee eee e nes 703

to: State a6 csevsie se wiea ies Mee Pe Pecado pd ewe bee dea 703

LINC 5. Sy Fae Sees ors aedeagal Sores pukoere tease ks Seine Sra ania! eee TAS 703
Warranty Of -UWtlOwe 2 a) sends sie ae nba caa. Seman adres es y eee T03
eontingent: Wabilties: «0.5 age cipeseageees ed sages see ded AAs ae 704
debts of ‘wife duin. solaisccsase cousin 6 ocean 824 eee bees Kee ae aes 704
TONE 5 a 4 geese dwa ccd wauey ee Peds Cae ee mes Ue ON ea RODE Wa eRe Bad 705
Suit. In EQUIty 2.s weed case neeseteweceds as A Si eS NES As La Sat erates 706
SUPEHES) 66. a. ej Nsravsase eivetae bade jae Guatevauapies ooo acavebaaey a aaben sid Roreanalawde a 706
WHEN: TEVOKEO. 4752) a) eateloawles Aaa eee ea waded wa ausaeiee aerate 70, 729
EPMA TN ST ES 655s So ahita ca ave ers anna whe Garg ga) Bela a Sacae aetey rw arial daalaa Wee ecaaie TOT
IN “COTES 5, a. Gee ie See ea es ees sa ee tay aS 708

remedies against judgments . 2... . cece cece ce ete e ee eet ee eees 710
stay of execution ........... ERRORS ORAATS Shea Tee Reams BNE HE 711
no relief in equity from judgment ........... cee cece ee eee 712
GebtsS AWE to ALIENS cax.dc pase a evs tee ace ee ae ean ne a ae wwe Eee are 713
Claim, 10 PTOPELTEY® s.34 stig esa decease eae Oe oleae Aaa nae SRA aS. 714
HONS 2 Gas Ha ei ss gucink cee a deme eee Bkoreia stone cabadasweetnn 713
estoppel in MOrtgage ..... cece eee cece te cece scene ere eeneeereens 716
New promise: «8 asisnessess seeied si aes see wey nnee ren ewe ne es 716, 720
PICA NOF foe a ideo Rack ois ea BETA Ss Fos Mea oa SARE Need 720, 721
Gemurrer tO pled . 1... . cece eee ee ete een ete ene eeeeeenee 725
replication... ... Ms SN savas slats tia Occur gee ELS Gye eames aes ates Va 725
DIOL OT ye xp witete ps sb oho are ee CNET SHOR Cas Wea Eee be 726
appellate: tribunitls; 20:10 .¢2ac @4e sa saneeee pel eieay Geeeeeeenee se ee BOT
debts not affected DY ..... ccc ec cece eee en eee cere ee ees 71, 688, 691
debts not released created by fraud .......... cess ee eee noes 688, 691
embezzlement... ............ 688, 691

defalcation .. ........... 688, 691, 693

fiduciary ............... 688, 691, 693

not affect parties jointly liable .......... eee cece ee ee eee eee eeee 696
How pleaded . oo. cece cece cece te cee e eee e eee n eee e teen nnenees 699, 721
How annulled . ow. ccccs ccc cc ccc c cece cess eves saves nese reeseenge 729
district court alone can annul ...........-+. Snes eueiee ae aes 730
contracts for assent tO, VOId ...... cece eee ee teen eee e et teen eeneee 844
notes or securities given therefor VOId .......-eeeeee eee ee eee eee 844

penalty for fraudulent agreement ....sssee cesses ee teers ceerers 844
872 GENERAL INDEX.

Page.
DISCONDINUAN CB 6: e. ginaaiece treaties waa aren eas eae adda opehetn tery 309
DISPUTED PROPERTY:
SAO Of, oe. sii. Fa GMa YORE oR GRRTAY EGOS Se em Te Se ee asides as 451
proceedS measure Of VAlUC 2.1... ce cece eee ee crete eter nee eees 451
recovered froM ASSIZNEE 2. ce ccc e eee e eee ett eeeeeenes 451
PLOPE! Action OM gcc gacawe gets ce weed ewe te ssa Mawes eee ee ee 451
when bankrupt can not purchase ........... CREE oan wey 452
DISTRAINT:
void after filing petition .. 1... ccc cece eee cee tee teen re erenane » 113
when enjoined .. wo. ee eee eee eee eee nee Saotecadlas None deciers Sus SaEANOaReeS 113
gives valid lien... ......... aig ceiel haba ndahipnicinlta nate a waned oheaghans 479
DISTRIBUTION:
registers may make .......-.....06- Hee ASKART S RM aa 192
AU BECO. WICSEUT sacs ciceccseeideg staan aesdee 2 eSB Aleuigys oo cavdanel& sevncsuenh ts ayer otto 572
at third meeting ................. hal eeDeduar leat Ras eaten Mee Be eve Reaes 574
register to make computation for ............ cee cece reece ee eee 600
who entitled to priority .... cc ccc ccc cee ctw cece ee cere eee eeteaees 591
who may share on Separate petition ........... cece eee ween eee 748
who may share on partnership petition ............ ccc eee ese eee 734
when bail, surety, etc., may share in ....... csc eee e cece eee nee 570
DISTRICT COURTS:
COUrtS OF bankruptey” sissies. cinerea Caney eevee aeeee 104, 132
jurisdiction of .. ........ sie nis ba N GhoweeGine sameatn ead 103, 119, 141
EXcluUSiVe «x4 due staaun eriavawsvanamgucewwow tees 110
jurisdiction, to what extendsS .........ccc secre cece cence neeenee 119
tO be- ALWAYS OPO, « & aeawied soos nama’ os davecsacna eds remind seamces 141
power of judges in vacation 2.0... ... cece eee eee eee 141
PUDISh fOr CONTEMPt csasca wdc saiaw seveccwa Mrs oe aw daw Oa ONE 141
sit anywhere in district .. ........eee seen eee Hotes a elec steenersere 142
jurisdiction in suits at law... .........-.... Gelert apace ert 145
in sults in eQuity’ sccs ces sacs ee caw s sameness ee 145, 150
how invoked .. .......... 136

by summary petition, 135
by action at law .... 147
by bill in equity .... 150

may Issue“ InjunchoI sa) csiednsieds Vawieganie Yes mouse Susan Beales 126
revising’ decisions Of iccsie cicenes ceswnnwes ca eet vans ees owas es 159
appeal from .. ......... eee eee ee He CREE ENE KTATTA ChoE SG RMIT ES a 159
writ of error... ee ee eee eee aaevay aiaag ashes Quenanapaudexvenctueee Jaccateaiesha aes 159
certificate to... cece eee eee en ee 1 eave sicese cava dines news o oNeextetane te A eanacaus 203
opinion of judge on ........ Sates weal lasckrvns ee Cue arceh haters ouraoR 203
entertain voluntary petition .. .......e.eee swe s araienahd ao G0 210

ISSUE: WALTADE .igdicaser naar er eaawe iss seeNe aes eee 222
GENERAL INDEX. 873

DISTRICT COURTS — Continued. Page.
designate place of deposit ......... 0. ccc ccc ccc cccccuvcuaeguues 441
fix time, place and manner of sales ......... 0. ccc. cecccceeeeees 449
TEMOVE: ASSIQNECS) aw 2oi6 diiceesdcn eau ouins a voaanagnnedes saan eRe eed us 332
MAY BAY SUIS cose seein dened oe ainingrn os anuleuae-ea4 Haga eed adi né 633
CXPUDSE “POOLS wi acne Saude qawne uhlew- nae se Aan Saeed nas 543
POStPONS -ClalMS. «6.6 s wakiewaie ss eaKanwe os04 OH Fe saci qcudeeseeeecs 548
examine bankrupt . . 1 oo... cece cece eee c cc eect aecececeueuse 555
release bankrupt from arrest ........... 0... cc cece ee eecceeceeeus 641
produce imprisoned debtor ............. 0. cece cee ccc eeeeeeeenes 569
hear application for discharge .. ......... 0. ccc ce eect eee lee es 645
tOSrant. GisScharger. oo 45 tanwsey aes one uke bay Oh rete awn eens 686
vacate discharge . ......... ae eames elasaleias RAG MEG Ae RK eae eed 729
may entertain involuntary petition ........... 0... ccc cece een eeee 230

issue provisional warrant . . ........ ccc ccc cece cece ceeeees 282
grant temporary injunction . . 22... ... ieee ec cee eee eee 282

DISTRICT JUDGE:
powers of, in chambers .......... ccc cece cece eee cette see ee ences “141
to appoint TegiSters. «csi cee ges ee ges ok REGS CORY Saad aes 188
may remove registers: sic iewess si wewr sa wee eet Med eRe s ad SEs eee 190
to decide issues raised before registerS...............cc cee u cues 202
to give opinion in shape of a certificate............ 0... cee eee 208
may compel attendance of witness............... cee eee eee eee eee 197
to designate register to take charge of case............. cece eee 195
to approve assignee ........ a iain Meade oe ahacniscaa ra adie aed cea Reet 320
when to appoint assignee. ...... 1 cece cece cece ee eee eee teenies 320
may require Dond ..... ccc ccc e cece rece eens enone Letwelets ewes 829
to direct temporary investment ....... 0... cece cee eee eee ee 442
when to exercise powers of circuit courts............. cece eee eee 180
who to act in case of disability. ....... 0... ccc eee eee eee eens 1438

DISTRICT:
of Columbia and Territories, power of supreme courts in..... 148, 144

when exercised by judge .... 143, 144

DIVIDENDS:
registers may Compute ....... 0. cece cee ee ee teen ete e nee 192
when to De: Made ssascevaeess eee ae sulda ce ee red dase s Reames ee 572
creditors to determine ............0..0e008- REE AS Maa aw Ao 6 a 572
registers to give MOtice .......... cece cee eee tent eeneennee 600
after third meeting .......... cc see cece eee n eee eect eee nneee 575
not disturbed by subsequent proofs. ......... e+ cee eee cere ee ees 579
on Separate petition 1.0... 0. cece cece te eee e eee e ene eeenenee 748
on partnership petition ..... 0... cece cece cece eee cee e ener eene 734
DPLLIOTITY «isa babe dances Vows er eee Seaauinertees sien eae treodies a ekaselaneroek 591
AMAL yoo pales gf cdhine sae duieuas dea etna. 2 aSOaIR SPW Re ews eee ae Selene ere ww eke eae 578
assignee must file account before............ see cee eee cece eeeee 578

“WhO MAY LECCIVE 1... eee tere ee eee teeta tenet en eee + 570
8r4 GENERAL INDEX.

DIVIDENDS — Continued. Page.
register to make computation for ...... SoS e eases il iaveraaast acviiuh 600
declaration and payment Of. ......... cece cece ewww cece een cees 89, 577
UNClAUNEM cg ease wae ena aE Ree Aga Reewiks Rw CHE See Oa maiaaeis 90; 601
application for AlOWANGCE: osk-ss Ke ons meaner eee Healdens Soxon ees, O80

DOCUMENT:

Gein tion Of. oxic eeisresass ere eee pie eamlvens avarplotahinluarecenntas he . 207

DOWER:
not divested by assignee’s Sale ........ cece ee cee eee eet eees 569
When: allowed, .ssecsuleka cau dead mee Wate saeet SERS Bee ee RemE aes, 497

DUTIES OF:

ASSIBNCE::. &. nucaraant caiman daar woe nw chunk Wieraubue acai aus tnsemabeadtionapanmaliona eg 442
ALLOLPMEGY=BONMOS TA. ce se: sesesaianisiee ataver iat grees voter iaratiaciamerjg aes abies ts wo rfeenave. Samana 83, 777
bankruptioy ciuvxcenieccseewsa ated seer eneskss 314, 428, 542, 555, 626
Clerk: 5x. cssuee ses ok esee eee eesew eed MO Vas SeREEE eee Ee CEE TS 82
JURLC ag cstacasiaeten cme we the SORE Rae ERT es 207, 294, 318
TC CO UW CL 22> vasa soeaca hv cee taytaile 12 cece lacie eros lylaphagl ening ontnaviautbd fauszen pa al Sed denonpmaavonanebayete . 449
TOL CV COS: ig. oi caysca ern neseiissn sshaneiancire Gites loeee. wall avevons SMART IN sane 78, 189, 191, 600
POBISETS: 5 ccngusns cosines hacen eieuie ak rete eaadiel eee BH Er ereieisens ier eiagsienareinaare . 192
trustees .. ........0.. lil ayes a wseeemate or sas SieeRONAG Oe ts 80, 873, 418, 441, 578
ELECTION:

OF ASSIGNEE: so crasersses: areas sia. ice 9 8 i cabeaieerm il ose cancers aha No ibg: Wislesnra unaware islatsase wane 320
HOw Conducted) osissacusewaaves ae eigen egrivece se eieiwlecre stare spears a owe 820
who may ‘Vote fOr wei scescacacainiontelernheesesleeeiee same wee aus 320
what votes necessary to &@ CHOICE... 1.6... ee ee eee ee ee eee 820
BPPLOVAL OL: 5.5 coven ded. Geoacs renee ca AE HS OTA SEES BE oN MIRRS 320
acceptance of, within five dayS... 1.2... cece ee ce eee eee eee eens 320
NOUICE Of APPOUMMENG oc.iccssceisccnwiase Weiewidradenedeeie: win Cal wedve ce Canin orsreuens 434
incase of Partnerships. <6 sic.saw seed dense iees eine ee sien abies eeu . 134

COLPOLALION: «4 4c Raisers he eae eee wadakelaa nea 756
on removal of assignee. ....... 0... cece ee cee ee cee cece nen eenes wee 332

EQUITY, PROCEEDINGS IN:

AME CISETICE COUT isa as daec dosent sy ccedecay aun tare Seta geauese coasseoeaae inunteadd: suceeoanalia 145, 150
BID CIE CULE COME 5.55) dud csiiasteap at Sihea a astanenicd val esle a vo ions aeiaevaaimeass lava ick ieaaans 145
fOr WHALE PULPOSES: USE. oasisie -csteerecenins wid OA Sea Weed Ba ea teorral oe 150
when action must be by............0ceeeeeee VPLS REDE RE Eee 132
appointment of receiver in 1... . ce cece cee cee ee cee ee ee eees . 157
effect of bankruptcy on pending.................00000- ees AO IES: 414
to vacate fraudulent ConVeyances .......... cece cc eee nett e tees 403
when creditor may continue .......... ccc ccc ce cee eee neeee - 405
PATUE Bice, daa yeaa vadadceanialnsis awe naw Swetungeten aes aoa ees 153
PIGAOIN GS isc cscs iets woe news sancnr eaters do's yeaa deo neg me=aanienle .- 154
PIACUCO. «: weiivaw dae deweteedeanctesdee wma wns Sess Meets wees 157

CVIGENCE 6. eis eas dwaine deste Wed Rew NU VOR RaT BRED EAs he Bure ORE .. 159
GENERAL INDEX. BY5

ESTATES: Page.
appraisement of bankrupt’s property...........c.ceeceeceeveeees 448
depositories of money ...... sitherie s Riga eigenen gueue oaaelaee ee 87, 414
GispositiOn: Of: cans cages casidee se stbir's Oke Seales eae GRR a Fae ane ww 2L
expenses of administering ............ 0... c cece cece eee e eee 88, 767
proceedings to realize for creditors........ 0.0.0.0 cc cece eee ee eee 816
assignment of bankrupt ........ 0.0... ccc cece cece een en eee en eeeeee 335
acts of third parties to. 2... ccc ccc cece eee tenet eee eanene 339
two partnership or individual. ........... 0c. cece cece eee ee ees ... 492

ESTOPPEL . «sewed sesea ecaaes ae aNaaaest Sie Saupe +o aga teiemtonss ieuraemlone Sass capeunnes 304

EVIDENCE:
how taken ............ deren sae COG AOA EET GER OT OTE REE aE ER eS .. 198
marshal’s returns are prima facie ..... ha Wwe ecieausan D ava Soesecteapemseacauaess 318
what; Of aSSIGNMENE: 5: 4.6.5: sececedie ad Mew SAG Gane oe ered aaa aun 427, 434
of right to sue ...... accecav ali sepatandnncecd na canctet atan' aanaeacunzansl Zonk Cems ian, ts 427
certificate of discharge conclusive .............. cee ee eee eeee 700, 726
copies of records prima facie. ...... 1. cece cence eee der eae anew secu 186
sale, etc., out of the usual course of business, prima facie........+ 842
on trial of specification .46 i sa.c cise sates cee css desea seawreeias 679
DMD ULL Ey. cassis ses xaos 0 ag id 8 8a Geng bg RD ao era waves a be BEANS catanes WR OVOP 159
in involuntary bankruptcy ........ cece cece eee cee eee e eens .. 803
who may give ........... bse benb ar apa fav Bare dda nares er apolace yest Be epee Kes 72
of discharges is.aecinckies cde eed oie see ees via ieee aoaaiw yeas’ T26
bankrupt’s wife can not testify. ......... cc cee eee ee eee een: 732
Oral; IN CQUItY: 25 sae dota s opted se CAS ORG Cs SHR AHO Ded SOR SF 159
burden of proof rests upon Creditor... ..... cee ce ee eee ee ee eee . 803
certified copy of order approving bond............ceeceeeeeeenes . 426

EXAMINATION:
who may apply for 4 sis ceca eee sedan ve sevdanes we Gest s Resa eRe 555,
how application must be made vide aa wees ee wie BA SHE RE eS Y eee .. 556
when application must be made .......... eee cece ee ne eee teen nes 556
WHE: MAY OFAEST isis occ siete ea seeee died antes w S sueid teed ease Salat dace ede a ibe A Sate 558
when bankrupt is present ...... 0... cece cece eee ee eet een enes 560
before: Whom Made :ss4is1go4 parks ea Seas IONS aN oe eee eS 560
creditor to appoint time .......... ccc cece cece nee eee eee . 560
how conducted ii.cacccs ce cia seaweed oo sess ce anewe se gee aes maou ees .. 560
to be in writing and signed. ......... 0... cece cece eee Sacre peas ae 560
ON. WHAT TOPICS: « cisieie ccecdiacs st sinde laid ecm aneia ee Maen hee eed Ra oa poaner gD ione 562
of witness ..... a ijadaoceea cars WHC ee a ek auedid pada Sia te auabetel ata ead SeoeMeaE aes .- 564
of bankrupt’s wife ...........02ee ee eee gu aahacineseuaerShaevo SS dene alse a aR 567
DY: TEUSTCE: viaew es Ge We toate bse tat wie AR CS EWE Se erge ae ae eas 604
after appointment of trustee ..... 0... ee cece eee teen tenes 604
register to-paiss final, ...2:aghs204 sds sees ite tae sae eRe eas 192
when final, is MAGE ....... cic cece cee ce eee et teen ee eee eens 194

how attendance compelled ..... Dp Rausaia Se alae) He eklst a Momaedodsae LIS
876 GENERAL INDEX.:

EXAMINATION — Continued. Page.
when bankrupt is imprisoned ..........ceere ee cenn eee recee sereee 569
BDBOTUY 5.5 ceetisiectona. acagratleel aco Geetlasand <a evauadenn.e. a seeeee DBD
may consult with counsel............ Seria's cere IDOL
privileged communication ..........+-seeeeee fica steamas wea ce xan 565
fees for, by Whom paid. ...... csc cece eee ee eeee Bc iaeesct aaaven eeeterenests 201
when witnesS MUSt ANDSWEL .....-.. cece cece cee nero eteeeenes 564
witness can not refuse co*be SWOTD.......... cee cere eecee iene Due eons 565
commission, to take in another district.............. S5 Soin a emir 198
summons within 100 miles ............ pcicl Duoueydtnavecanabn Saxenearessarraueks 565
Of TVECCIVED ses vae ten aes cesemeee weenie hasta anlage Ges Rada eca sete psi bike we. 565
Of ASSISNEE 244 wees csseies neous oa BG. e eakuwies a: F miaeererere te wate Save a aes 565
EXECUTION:
when valid ........ Se saeedectes Bs easing Waliaha valu che gvayaicinans Stiles areal areca 113
MTN: OB cassava ev aaustd ane tlic cai, Sb gms tas far ge ssid feed sa mUNsa cD viene eee napa ae a «+. 507
MAY DC Stays oe eiees saris seas eeinsiae daweeeies Gree cee SEe's Hens 126
set aside as a preferences . cies csisees cwievec ceases vow ses ween 126
sheriff may: sell Under ......:.c¢de neni ssw is es des teed eee sees 114
none after filing of petition...... senile! aaveuasoaeaywnagoe Suara cdurngten aera ae ass 113
against assignee for creditor’s debt .........cceeeeeeeeeees . 168
EXEMPTION:
title to, does not pass to ASSIZNEE. ....... ee eee eee eee cee renee eee 375
what property 1S GXCMPt . 0.65 cess ne secs Rae 6 OSS SR REET ES 376
absolutely . 0. wecceeeeeeeeee sselasntbrans courcve Sealepeasve bo edgad: araoeapasleaaers 3879
in discretion of assignee ....... Soa lnid arnmrdgeanbelna a Sense enins 380
under State Iaws) so. vss. tsaeawcnuge snggsne Neus weecowirees 382
PULTICULE? 5. dsc casa a ie ermagenn te aersececara e's ee ewwrie areletesera's acuamvers 375
MONEY. «5. & Sierras ais Wee ya ee ee dee MOUS Awe sete s Dena wa wnlauresiars 382
ProviSiONS 6 see ss sewers eeweves WeSSe sew ees Se Sees wees es asaceeea''s 382
under law: Of, 1898" 3.2.04. adcateseane alleen sea de hia Tle, cues Seco 67, 379
land...... sp apialensing Venedeladia a lansapon aGrecean akan sabintastaxiousal ae dalle bp 8 Seystiaas yar aca useeteh er Seer 382
apparel ........... id aah haan Getdcauni aca atalino enters eyyes oearonstanrets aleie 3879
arms: and! Cquipments? i:.5.cuecnsigar ye cakiesay dawha-s ease ee eared oes 3879
constitutionality of, under State laws.......... ccc eee cee eee 383
as to pre-existing debts 2.245 sswisis ceed os tueeve sees ce danee rsd as 383
when subject to liens ............ Bs auto ancuecolertomip uae ace annene: aantien Smee 383
assignee to report within twenty days............ ccc cece cee eee 391
effect of failure to report......... gavareaghug wakeup kama atceinee Guano e we 891
creditors to file exceptions ...... dig SAGE Bus A Re Hea Viele emSN ew are 392
effect of failure to file exceptions ...... ee CO rr ore ee 392
act of assignment not conclusSive..... 0... cece eee cece eens eee 379
divesting of liens unconstitutional ............. 0. cece cece eee 383
mode of enforcing lien .......... cc cece cee eens cnet eee cee ne eee 379
of bankrupts ...... 0 ig ahaha ane auaaeee aa Eg Gouseewids Date Meee .. 373

practice in making ..............eeeee cisaew exer ends sivas Wee 391
GENERAL INDEX. 877
EXTORTION: Page.
punishinént: Of; wissen vad news sees aa Gaeaeals suitcase aeeraens . 205
EXTRADITION:
OL DANK PUPS sarksss cats Gotha oe ea o DEE Cee He ee aa 69, 845
FEES:
justices of the supreme court to regulate. ............c cc cee eevee 184
T@AUCTION “Of sea bs site tek nee dadwac esas CG ieee Ae TREE TE Wh eee S 7176
registers not interested im Certain. ......... 0... cece eee eee eee 189
by Whom tO: De: Pald sis ices -eecgcene yaa aie ovale ee i aerate CaaurE ye ee 201
what allowed in referred CaSeS. 0... 0... ccc cece cece teen eens 769
when to be S€CUrEd ci is eee cess ce cei tee ce su Ree e ee Haw eee ea Kees Sw 769
OL CLOT choy Seehais aes as ein Sense Siu Aaa ee 06 BE we PR Gha te WV AS 769
Of MATSHAL » 566 /sia5 esas seashaunged See alsin Sg lvaedes be Sala bb Seaandee Buca etm se adare 173
Of ASSIZNGE: suis ewatieht eal ata tu, i ean ceed eee sublohaneacaa . 580
Of COUNSEl for ASSIENEE: cea is Gee e ea Ge ees Se eR 581
petitioning creditors . 2... 6. eee eee ee eee 595
voluntary bankrupt .. ...... cece cece eee ee eens 594
involuntary bankrupt . . ...... ce eee eee eee eee 596,
what to have priority ........ 0... cece cece eee eeee eee ee 598
GEPOSIE. OF SHO) LOR oasis secs a dice Gaus dip ayaa sg) bw ease BSE ceusliglya a, SOAS aE: Gaeae 769
petitioner may be compelled to pay... ... 2... cece eee cece nae ed dca 769
Whell Paid OUE Of LUNG, oss sie esses aha e ue eee Kidde Me wey 583, 595
establishment Of ..... 0... cc cee eee cee ee ee eee Saini ois «os 185
FEME COVERT:
may become voluntary bankrupt ...... EAM RRS RAG a RR BERET . 211
may: plead coverture to involuntary bankruptcy .............++. 301
what property may be retained DY.....-.. see ese ee cece eee ceeeee 354
may employ her husband ........-..+-++ garda PGE aU A SO OS 409
what debts provable against ........ cece eee eee eet e renee teens 462
when may prove claim against estate of husband...............- 462
when affected by husband’s knowledge..........eseeee ee eeeeees . 462
property of bankrupt’s ......... een nee nee teen eee ee eanee . 851
FICTITIOUS DEBTS:
allowance bars discharge ......0.seee cece eee e renee eet ence cease « 652
penalty for allowing ........... pianelecens Loy sets obs eee . 847
FIDUCIARY DEBTS: is
not barred by discharge ........eeceeeeereeeeeernees arias veeee 691
what are oo... cece ee eee eee Wiehe bs Ne Sha tarinia vahioy wie dnb bea uauane dc ev TR oats 693
no ground for withholding discharge. .....--.+++++sseeeeseeeeees 654
FORMS:

Tules and OFdeTrs ...se cece eee e cece eee e teen eeneeenseeerens iemrnave

851
878 GENERAL INDEX.

FRAUD: Page.
claims founded on, provable ............+++ SGA Mev RRaiE Nate 455, 469
discharge does not release from........ ehauanss F aleyauateeanecieel aaecemens eats 688
POOLE J SCLEG MOL iter dssgevsigseiessicarces di dvaidy sion a ecclde B Ha aa a ole lose sean ase 542
evidence of, in contracting, inadmissible ............. wu tal ets tease 564
property conveyed in, may be recovered............seeeceee reves 394
in creation of debt, no bar to discharge..........-. cee cece cue eeee 654
discharge obtained by, may be set aside. .......... 02 ce eer eceees . 729
conveyances in, of act, are VOId...... 0. ee cee ee eee eee ee eeeee 831
what prima facie evidence of...... deat eae ae Cae eee ee 842
ID! PLEFETENGS jcieie ess eosin c MH ee does HO EAE DADRA Re EERE ES HOES 663
upon the act, definition OF, cece cee ee eee nent e eens eeene 819

FRAUDULENT CONVEYANCES:

Void against assigheé si cicasdcccacaeu tecasaaes eweme ees ERR aeE. 394
when creditor May VaCate . . veces cs ccc tee ce rerosenscerecesneses 404
MUPECOLRA SE, ECU S 5, soak ese de cayencacavecaki s aeveisn ah ohm hve ative west darcaibvandega ce Braupeecumnae ee 358
POSHESSION: Dy: VEDGOT iii. iiss sae eee Konsiawedin syeeaaanedet ends 407
possession on sale under judgment ............ ccc eee ee ee eee 406
stipulation in mortgage, of right to Sell ........... 0.0.0 .e eee 405
judgment on defective statement .......... 0. cee cece ee eee eee All
effect of filing chattel mortgage ............. ese e ee ee cee eee eee 412
gift from husband to Wife ............ cece eee ee eee eee eee ee eee 407
may prosecute Suit to avOid ..... 0. cece ce cece eee eee eee eee 405
fiCtiLIOUS: Judement: oe dures «wages yada gleteined ose wees Sag eee ses 238
a mortgage with fraudulent intent ............ ccc cece eee eee 238
sale for long noteS = « scscicsadvada scar sviesewads ee eeene dees s 230
assignment exacting releases ..... To lah se geatietvaciowa ac aga Gens’ Sea a sarBosiaiate tous . 410
retention of benefit, by gramtor ........ 0c. cece eee eee ee eee e eee 238
assignment authorizing sale on credit ........... cee cece e eee eee 239
an act of bankruptcy ...... Notas teah SS esl re eae aes nia oct ee erie Ns 236
Dar sOtS Charge: ss se wasdaiaic-t-aas Was 8 oS SHR ER ORS + AS EOIN Se Td, Boz
in fraud of ‘act -VOId) 4 ciwesswescs enc oaee sae Re Bae4 FO SR RAMRRSS 826
vacated within six months .......... ccc cece eee cee eee 831, 843
against second Vendee . . ... ccc cece cece eee eee teen et en eeneees 842
DENAIEY TOR sos Sar cena gael aniereeebanie ae aeadonies «tee eames 87
State statutes A@AINSt . oc cic cise ewes eee gedenee caw ew deer woe Ee.s 403

FUND:

in hands of assignee ..... sa arann wees % eee eee eee 120
7 may be taxed by State ................0045 592

FURNITURE:
what exempt .. wo. ccc cece eee cree aver pcenave yee GR atk Rie Mae eaaintets 373
when deemed necessary .. ....... IPG, «SMEG Sa Uwe Mesa 875

GAMING:
loss by, although acquired by gaming ............ aiehdd ix teeotve sees 667

bars discharge . . 0 cscssceseetececvucees is aiewketpavalgeies (Oe
GENERAL INDEX. 879

GAMING — Continued. Page.
penalty for ..............., VMS edad eS Mel ye wESTGME- RET S SRE acme BAT
property acquired in .. ................, acecaielens due avagenrneurvnrdad 667

GROUNDS, SUFFICIENT:
definition of .. ............... bse Stataeceraiebegs i Gitlin. eS MS eeu aoa 282

HABEAS CORPUS:
application for... ............ ats: BRS asa actors ioe Witg lag d akin made ata Rx 642
what debts release from ........... ccc ccc cece eee ccecceeaeaue G42
not from arrest before petition ....... 0... ccc ccceeeecueeee ei eruandnanas 642
how made after discharge ............ cece ce ecec ee ceeeceeeuenes 644
what facts inquired into ............cceceeae jeWaxiiphiitece wee sigs 642
when proceedings on arrest conclusive .........ccesceecuseceeece 642

HOMESTEAD:
when application for, void ............ ath ities Balanites ead 385, 839
remainder in, may be sold .............0.. sak sy Bs ener NEA cgtatoinl aay hes 390
not defeat vendor’s lien .......... ccc ccc c cece ween eee eeeneeuce 377
when allowed .......... ear Uavibigs o Sarg muahaha") la. aateea ala d ok SYREN Ease Gees 382
State law must be complied with ........... ccc. cecceeveeceeeees 3884
when contrary to bankruptcy act .........ccceec cee eenceneeees 839

HUSBAND AND WIFE:
husband may work for wife ...............6. Pee Oe re ee 409
wife bound by husband’s knowledge ..........cecccccscecee sucess 462
when transfers between, fraudulent .....................-. 409, 658

bar discharge . . ow. cece eee ee ee eee 658
an act of bankruptcy .. .............. 237
under law of 1867 ............... pesaase berated Hee seeming ereeanes 13

IMPRISONED DEBTOR:
when imprisonment an act of bankruptcy ...............06. 230, 239
may be produced on habeas corpus ...ccccccscserecceeceeeer evens 569
whens released |.-¢ 4.ag ain’. sednenae os doawk id sa deused sea eaeee eee 641
while attending for examination ...........cceeeeee eee e ne ee aces 561

IMPRISONMENT:
for twenty days an act of bankruptcy ....... 0: esse eee eceeeee 230, 239
to what debits: limited, 22260060 c2e ea keue cbse e edits Wee eos eigle 230, 289

INDICTMENT:
when against bankrupt . . 1... eee cece eee eee ence eee tee eens $46

OTIGOTS: ce sp So. ve cius wtasens. 8.8 estes law eresdup a opavaeusee Satyuaae ae 205 ,
against ASSIZDEe . 1 wk ee cece eee treet eee tenn ee te nnenees 449
for omitting report . 2 12... ccc cee ee ee ete teen erent netnenes 7719

NOW QPAWN «4 ose do ndeu dtr essen deed eaduiwe 458 VaR aN ea a4 bee ivissens BAT
889 GENERAL INDEX.

INJUNCTION: Page,
in involuntary bankruptcy ........... cess ce eee eee reece ee eeenene 283
who may be enjoined) wwe svscs owe aes se tawe oe dee ede ee ae wae se 283
allegations of petition for ............0 cc cence eee cen e ence ee cone 283
TO! MOUS: SOL: yay" siicaa: SS iseoweicy: wide tendevaa eohoesedsa aod, @avyubinnee ave. we eau gune nage ave 283
When: GiSSOINEO) i yb ances cade ceanetieeUEeea Manne SE away Meee 285
violation, with notice of, is contempt .................- bccn cad 286
power to: dssue .. ys sadeaeveanke 14.4 seeded xa aos + eee wesint sua Ae 126
against State COuUrts <a ai saws dea 24 taste sss Mined Bee sds stem 120, 126
practice in dissolving ......... ccc cee cece et enero e te eereeeersees 181
to stay PYVOCceediNgS 2.0... cece cee ee ce tee enn teen tenes 121, 683
all Suits: will, De Stayed: sadn gorcin. ce sews Vie oe pare eR a slabs wagrenee ... 633
what is violation of Stay scssecss cause secs ts eee aes weeeees sae 639
proceedings to punish contempt ....... 00... cee eee eee eee eee 143
party can not be enjoined from going into bankruptcy .......... 110
TLOM. GiIStrict COUMS % 6 6565 Via sada agubts Sees cata e ya 126

INSOLVENCY:

MEANING: Of 4. so 684.478 ake ie ee dane ee RRR 241, 787
inability to pay debts ....... §loviostocht buds € 8 eududvantane ieee avetteceneas came veun 241, 187
property worth less than debts ...........cececeeee eee ee ees 242, 789
not matter of definition « . ceissecdeas cust onmuag is ee ecewme ces 787
nonpayment of one debt not sufficient ............. cee eee ee eee 788
varies with localities . 2 1... ee cee eee eee eee OH Se cansd need . 788
and bankruptcy contrasted .. ...... dustayte ciated aoanenepaeenen’ srauasenewaneusnsce 14

INSOLVENT LAWS:

SUSPEDAEd 2-0-5 sada vines Sas aaa debe e rete Goo eee dS 7, 96, 97
TrOM, WHA THRE cheiacscacpasind aver iaried $444 48660 26 GOe Vee meRS 101
proceedings under, VOId ..... ccc cece eee cee cece teen ee eee eee nee 97
what proceedings may be continued ............- cue cece eeeeee 98
effect of 30 per cent. CIAUSE 2.1... ce eee eee et ee teen etree eens 682
in force as to debts not discharged ........... eee eeeees Se wees . 101
POOr CEDtOL’S ACT cise edaved sew es e442 a AW EVENS oeRe wee aes cheT 100
GCOLPOLPAUIOMS? 5.) 95 5p: ia cdpaldcaco Gia s Seavasecd bossa aoe wobec ce dee Mee BITE OAS HIRO ESE ROE 69
OH AO THEE. xu aaah dies oaaus saeeieeuianeeus ses useeeens . 100
GIStHIDUTOD WNGEE 4.4. ten sacieee ss wre awwae dhe Fanig dees see eeaceuts 101
right: of ‘tPuStEC «cu sieeve neg cies gee a idee tg ge ee WOE t Faw dae 102
when no bankruptcy proceedings ........... cece eee eee ogee ss 99
and bankruptcy laws, sketch of. ........... eee eee ce eee ee tee ~ 9
States MAY PASS). a wadaeasuaien Heewaswa Pils ane ate ee eee SEN BAK - 10
DtALE: 2¢ . ciskis ginculgatnrds aaa natuatueloa aramaide Kaleinoes Ruse puececeave ra iNeaNe . 96
INTENT:
when presumed ... wc esse e cece cece ene aie is aoe @ oc aaLeLaalee Os 248, 793
judged by legal effect ................ Wied MER Gee ae Seas x 248, 793
not confounded with motive ................ a datesesecera snGian ani 248, 793

when conclusively presumed ........... s Wakes paisegelels dare “248s
GENERAL InprEx. 881

INTENT — Continued. Page.
of agent is that of principal ....... Wider araldas acu maura aloes bates baile 803
in case Of PreSSUTe 2.00... .. cece ccc cece cee cecececcuce 798
what facts show intent ............... ccc cceeee Ne Brat jana ae .» 795
CO PIOPOr ss ee ecba saa watane series ee pe h ines tuna eat ad, REGAN OS TO 793

INTEREST:
when provable . 1. wk... cece cece cece Unga eee Game ce Vemais se ADD
when rebate of 2. 6... . ccc cee eee ee eG ew aeerae se dees Mann eae Se . 455
ID; CASE Of TOPE 8 a: Gass insula st acne caw alain Thaliale de ooo aes 455
when there is surplus ......... 0... cc cece ceceeceeseceeueeuceues 602
in case of partnership ............c ccc c cece sce c eee euens 733, 754

INVENTORY:
in involuntary proceedings ................ ecru ea giereape Ma's ade danni 314
returned. Dy Marshal! g.c.0<5..4.3cdssesswsesagewnw dagedonde ceded dae . 814
MACE Dy ASSIGNEE: iii awsaw een ne wee ees MAjecuwe ds amen 4e same EES 315
submitted at creditors’ meeting ............. ccc c ccc eecececcceace 572
annexed to debtor’s petition .. ....... cc ce eee eee se sSieee way aataa eae 219

INVOLUNTARY BANKRUPTCY:

who may file petition... 0. ccccce ccc ene cee maennesecseest a ni@enve 231
debt of petitioning creditor .................. dee koe ras em eee 273
who may be proceeded against............ ccc e ccc ce cence eacees 230
what are acts of bankruptcy. ........ ccc cece cece eee nee eeeee 230
petition must be filed within six months............ eee awe es 231
what petition must state ........ cc cece cece eee ees resi Seghe widdivens 230
Pleading An: PStUO Ms sass cc isesie ses scsee is setae i gicess Wiel ga ge Maen ba eae 266
how many must unite in petition... ......... ccc cece cena 231
when assignment is ground for ............. cece e cece eee ee 231, 252
TeCei ver Dy State: COU ie inig vise e daesas wc aosen 0d 24 Gotgew he Ras Hae Rhee 254
suspension of commercial paper ........... cc ce eee cee ee eee 231, 255
fraudulent conveyances ..............+ diols bea ee Sarda ciaee 230, 236
deposition to creditor’s debt ......... ccc eee eee cee ee ee ree tenes 270

to act of bankruptcy .. 01.2... cee cece eee eee ee 270

amendablé s. 05 sisaeeedan cease hones teams Pea awe Ted 271
verification .. ..........005- gic as ig Sipualecs w Seaunipece deca duet Weel ease 268
when amendments of petition ADV O WEG e. aiec sedis acer nase ce gd. eee eee ae aI 278
when order to show cause iSSued......... 0. cece cece eee cence 282
Service: UPON! debtor 654 Pees ores ¥ cee aie eere dines PEE aes, woe e we Fes 291
provisional Warrant «desk sc. ccos che Heaw eeu a HERES A eERe OAs BEG T oa 282
temporary injunction ........ cece ce eee eee teen e eee ees 282
Giscontinuanees.. 2 seco nesedw ede eG aeladige cee a Es Mele Oak Balbedars 309
intervention by others ........e+.eeeeeeeee oh toreraearseusnslin se konaeg ts 311
appearance Of debtor ......... eee cece eee teen tees aie aes 296
judgment by default ........ cc cece cee cece cece cence se iveewaets 313
demand for jury trial .........-+...+++- a ahbnniblscduel winieibieneatetrasgreteiste aa 294
mode of taking defense ........ sees cece veces avetad sd a Helwig’ i veaeiae: 200)

56

4
882 GENERAL INDEX.

INVOLUNTARY BANKRUPTCY — Continued. Page.
tEIAL o.oo aces eevee Lad De teheeat Ma eew iat aed ONS Lees eas 295
TOW? LIAL + - siacacadsiataeera. wiashsavaene Sedoen etae a rarhlans Bats bu cesuanegsstraremeasyeaacetoe 306
COSLS Ae ae gph moe Radian oy wide GOT ARa neat Mee eaKsaaheetd cena 308
proceedings under MALTA E ‘arcic dovaters geen tosiwiiowiaece meee ex eoumenie 313
when first meeting adjourned ......... 0. ccc cece cee te tee ee eee 319
debtor can not file voluntary petition. ....... 0... eee eee cence eens 305
EXOMPUONS: tO) os igssscjawee Aamlnnnie she dalam dee ARE SRE eRe aye 375
may be discharged, «s6.004 visaeraers sawene reas see cote ue eeueee 646
when default bars discharge ......... cc cece cee eee teen een tene 679
30 per cent. clause does not apply to ....... ce cece eee cee eee ene 682
HIStOLrical “SKEtED: Of. sq, icadccdencnrere oa bu Gurwen teresecalnual nae aoa) Chao mis 9
PLCLSCQUISICOS 5a cores: sia cereis va denararas tic asstere, sige sti apes goons Std depo dda Suswiene ecm thie NeN 16
definition: Of a5 a aan eunaaeeames wore Mielean Hale ceaietadiuhsmiaes 225,
IDJUNCUON AM: se) 6. asidicsedithe: ee SSE Rade AHEM EA ARE en eons Mawarnes 283
COSES: ANG. EXPCHSES IN neice dcciine ce Saccine notre ie keIaiaass Ree weeded 595.

ISSUES:
when adjourned ............. itis Gpetlaris lan ano auetesiwee pelea ter nA Pisbisediceatise 202
what must be adjourned 266 ciisiscecr ceca sc dveswaws cect even tne 202

JUDGMENT:
when proceedings on, enjoined ........... cece ee cee eee eens 127
when: lien. Of, PPOTECTOR, soi seiisies sices sénseeneigte rors gee ase gen Beeadangnn nw wie wien 115
when validity of, must be attacked in State court .............. 504
when void aS a preference ........ ccc ccc cee ce cece tet eee ene 804
when set aside by district court ......... cee ee eee eee eee 808
when confession of, an act of bankruptcy ...........-2..0eeeee- 230
presumed to be regular ..,.... cece eee ce cee cece eee ee eee tes 247
proof of, when rendered after adjudication ........... 2.0000 e eee 468
warrant to confess, effect Of 1.0.0... ccc eee cee ee ete e ee nee 807

no presumption of insolvency ...........+- . 243
takes effect from entry .. .....e cece eee eee 807
when levy under, valid .. ...........0--.-4+ 807
ex delicto, NOt discharged ......... ccc eee e ee ee etree renee tenet eee 707
remedies Against wicca gisne deers eaeee eases oe enseranamemeniy eee 710

JUDGE:
may hear petition of bankrupt ........... avr soa 6 ‘uetno anaes 207
to make adjudication .............. eee eee aba Wigisit ce sebiaRh anap ash nace 294
or referee shall preside at first meeting ........... cece eee eee 318
approval of ASSIZNEE DY ... cece e ee cece reece eee eee teeter nneeees 826

JURISDICTION:
of State courts not divested ........ cee eee eee eee ees scengennaeor 414
may be attacked collaterally 2... .... 0. cece ee cece eee te eee eee

ase

in voluntary bankruptcy . ... cee cece cece cece cette eee te teen en tee
GENERAL INDEx. 883

JURISDICTION — Continued. Page.
in involuntary bankruptcy ........... cc cccc ce cesseeceeees seeees 266
in cases of partmership ......... 00... ccc cece cee cee eee uceveee 734
jurisdictional facts must be alleged ............ 00. cc cece ee ee cee 121
shown as objection to discharge ...........0c ce ccece eee eeee teers 71
of district court in bankruptcy .......... 0. cee cece eee e ee eens 104
to enjoin State Courts, . 2.0.0. .cc cee ese ee venta en eee nmencenee ees 126
WO. WHEL; EXTOMOS: -csiiiies uiua we Giveaiel ewes dwn ele oe bide Sed wed eae 119
CONSENE CAM NOt GIVE: cic eonrgnn Gea tines Soto a aus sade Soae 121
on Summary petition . oo... cece cece eee tee neeees 132
by: Suit. at: WW sc ecaas gue ecengeee ah ss COON 1s CARRS EE ds a RO OEE SS 145
by suit in, equity «ss ssseesses nant veeeainndecvesawiades dondecaue 145
to enforce EM ss cecseejpesrec she ecanetceas Fo aurheeaawess ba aph oad diyarwra ab a ea 121:
ON ER PUIG, ics. ce. paises Gearereaave dia a: eee antes wyawaveld WS ee RE Dw er ap erade 121
extent territorially” 22.20 hosicaasiaaweuan do rancG Woes maamteawene 107
conferred Dy APPCATANCE 2... .cecc sce reeeneeeetueeenwectees 132, 186
appearance of Wife: ssdecsdeceoie 15.4 ceeds eds DAdGR Eas DEERE EES 121
Of the supreme: COULE icici dee eee ee sees ST meade ce eared des 180
of the supreme court of D. CO. oo. cece cece eee cece nee 144
of the district courts of territories ........ Ties ai Radete Scphadalages ade asta 144
10: TAVIS CECISIONS «sin siete is sixi se iensrars enon ip waslesaticei go oleae sine Seaa toe a 161
of Glrcuit: COUT, «. si aca casas oan ccnes arenas + Saal davalretaiia Giese MeN Ae 145

OO LAW « s ciaukeeeur ss C284 ned be ee 4a de eeeeG nd eas & 145
OL EQUILY .5.a.6 oad Ganache seta shade teu twee Geet 145
LO: LEVISE GEOCISIONS, foie sc iceGiscnced dia e se Gesacesec 6 ain dace 169
how invoked . . ..... eee eee ee ee eee wialehiansqateen a 176
TO What Extends: & «. ssiiduiswcwmine sew etarnast ada’ 170
OU MAP POD sg. oe. sepia tsisdariia gene: chaite tons ge a eiANe arenas asian OOS 161
Ot WEE OL OTTO veces eh cha yee e ONE 4s 41s eR yw es 161
of State courts over suits by assignee ........ cece eee eee eee 139
of bankruptcy courts, law of 1898 ....... cece cece eee eee e en ees 63
of United States and State courtS .........e eee cece e eee eens 73, 103
of appellate COUTTS «0... ce cece cece eee eet eee te tee eens 74, 169
Congress haS SUPLFeMe . . oe. eee cee eee eee e ee ee teen nent eeenee 4
of State courts .......- Se naedtnaes Yee al alata ata 2 Cauvitecp ta ae paid ete tar 98, 139
rule of interpretation . 2... cece eee teen eee entree ete eees 105
Character Of . . ccc ce cc ccc eee e cece cette seen teen eee eeeeeeneretne 105
in chambers and term .....-.cceeeec cece eee e cern teens eeeeeens 141

JURY TRIAL:
on summary petitionS . . ces ee reer seen eee ees Sas tcsiaiotiie Ras ined Ge 138
ON SPeCificationS 2 6. .ecseeer eect eee tent teen e eee tenet e as 674
in involuntary ProceediNgS ....--... cece eee eee e eee ence eect een e es 294
who shall be entitled to ..... sc cece ce reece ee tenet eee cee eeneee 72

109

When May DCs creer reece eee e ee tee r eet entree seen teen cannes

+JUSTICES OF SUPREME COURT:
to frame rUuleS . 1 cece ee ee teeter ne tenet ee tenon teen teens 184
can not extend operation Of ACt ... eee eee eee ee terete eee ee eee .. 185
884 GENERAL INDEX.

KNOWLEDGE: Page.
aNd Teasonable CAUSE oo vccswugeuay eee edgeiases wwy awa Lae ae oe 819

LAW, BANISRUPTCY:

the modern Law us cece eciteee ve eerininwe ede areona ve si Baae 6s era eterna cones 4
CTRE OLA TW is. Secs asain evans ce he aehstons tg hte Deal ate lea ttes lovenidenl se eaves a aanifonaneed 3
SOUPCEN OF & 5: te se eerie ie ce-aleotages cwwiinas s vis eae Pritt tennessee eee 3
must: be uniform vicsceeccrnaeve coins vee dewaw) eee meee seeds care 5
Of, 1800 @ 5.6 22845 diteeers es teams ideas dd ss oteas bs aeeescs wins 23
decisions under... ........... rcvistatee duns Statwaavasdet Suerarsanie sain Seblens 23
repealed by law of 1808 .......... ccc e eee cece eee ences 48

OF A80L: so. s. seare vase ss satya sige wee gale ee eNcoas 47
Olt B02 %s2 asunder stern ade a's ais htt y-centiapttagaen, wialayene Selena nso teal cana 48
Of W808 43.~ & ME Sen meoRen s Apyae sees sa een da we baled a cua ee cae 48
Of TBAT ood eect eeea cdi eres ys Sea eas eae Sees s etude 49
TIOLES) OW 5 :c5 spapstlansiec aig ares Meatachootshsce eenangieue-a om pnatecco-neave Gtacéaal dae aan 49
repealed by law of 1843 ........ ccc ce eee n eee e eee e ee eenee 60

Of AB4S a GS. Sonu aldud seis etna ve oS eae eeteees Lt pean sence 60
of 1867, husband and wife under ..............0+0eeeeee Detos es ete 13
courts of bankruptcy .............. ig se SARE ah a Sree eS 19
OXEMPtHONS. UMGEL oo. cscs cance ertieieie ei ietere sented Soca.drrcane a we Hee a ove 379
OL! VSO: CSR HL, BTU E ical ic ce: cs cas besser snavescace 4 auors cass desis dn ce davayatnaie ae vane ele 61

LAW, BANKRUPTCY, of 1898:

Absence,

filling vacancy of referee ...... cece cee ee eee renee . 79, 195
Accounts

of trustees, open to inspection, etc. .......... cece ee ee ee eee 81, 330
Act,

when to take effect .............. Lege ce OAR G ATE > SAW OR 93, 851
Acts

of bankruptcy, of what to consist ........... 0... cee eee 64, 227
Adjudication,

definition of... ..... eee eee eee Hal aberindeh «a cinteaeeai ver sorela sa 61, 225
Affirmations,

may be taken in bankruptcy proceedings ............ 72, 295, 845
Alaska,

United States courts in, made courts of bankruptcy... 62, 63, 118
A Person against whom a Petition has been Filed,

construction of ........... eee eee  slahiefae atau oraaectevapunga eb eines 61, 205
Appeals
from decisions of bankruptcy courts, to United States Su-
preme Court CG. aia vcs eweseccs vee wediescuamewa cea 7+, 159, 169
Appearance,
creditors other than original petitioners, entry of ........ 87, 208

Appellate Courts (see Supreme Court, United States).
definition Of sadvscess cnnss vavenniows ce 4sair an ee kwesas 61, 108
GENERAL INDEX. 885

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Appointment
in bankruptcy proceedings, of trustees ...........0.e00s . 79, 319
Of TELETCeS oo g- swaleg aargeee 04 a ees L904 a Ae «.» 76, 188
Appraisal
of bankrupt’s property ......... sce cece eee eee eees 17, 398, 448
Arbitration,
submission of controversies in settling estates ........... 15, 442
selection of arbitrdtors ...........cc cc cece eet et eee ne creas 75, 442
MindiNgs, C1C.« w ciavace oes Sexes vos oe sh omeaed «Feige ees 75, 443
Arrest,
bankrupt exempt from, on civil process, ete. ..........+-- 68, 640
Assignments,
general, an act of bankruptcy ................ siadapetaeatecbtetee 65, 227
_ subsequent to act, etc., to defraud, void ...........-.0-5 91, 826
Attachments,
‘obtained within four months, ete., void ...... ee eee 91, 826
Attorney-General,
in bankruptcy proceedings, to report annually to Congress, 83, 777
officers to furnish statistical information ............... 83, T77
Attorneys,
payments to, by bankrupt may be re-examined .......... 87, 780
Bankrupt,
GOTIDITIOM OE ye) phe sides acaeeneld so sce Aeacenneeee Da eA eae nnendk Seer 61, 225
ACS: Of DADKLUPUCY. aici. de- dado atc ct sundae oe diac Guo he as 64, 227
transferring, etc., property with intent to defraud .... 64, 227
while: {nSoOlVent;, Cb). <0. 'ss5 ir oe ee ea ieee S eee 8 Wrendrans 65, 227
permit preferences through legal proceedings..... 65, 227
general assignment ...........0 cece ee ee eee te eeeee 65, 227
admitting inability to pay debts, etc..............- 65, 227
petition to be filed in four months ...........-..eeeeeeee (5 £27
from: whem t6 date .4jsccewads de saevee ye eeeniaeeee wes 45, 227
defense of SOIVENCY ....... cece cece cece cee e rene eeene 65, 228
Durden Of proof ...... cc cece e eee eee ee teen enes 65, 228
testimony, CCC. 2. wees ccc cr cece cenennreseerseencee 65, 228
to be accompanied by bond .. .......--eeeeeeeee eeeee 65, 228
liability for COSts, CCC. . 2... ee eee eter eee e eee eee 66, 228
counsel fees, ete, fixing Of .......e eee eee eee eee eee 66, 228
Who may DeCOME ...... eee eee eee eee erent ete eens 66, 225
voluntary . 6. eee ee eect eee ee eee ete tenes 66, 225
GMVOIUNATY 61 cece cece eee eet eee en eee tent eens 66, 226
a partnership, may be adjudged ........-+seeee eee esses 66, 226
administration of eState ........e eee eee nee eee ee nes 66, 226
jurisdiction over one partner sufficient, etc........... 66, 226
trustees’ duty . 6. cece ete cee eee eee tenet eens enes 66, 226
EXPENSES ©. 1 cece cece eee teeter ete e erent e eet enes 66, 226

payment of debtS ........e eee eee este eee eee e ees 66, 226, 773
886 GENERAL INDEX.

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Bankrupt — Continued.
a partnership, claims of, against individual estates, etc. .. 67, 227

492, 733

administration of estate, where all not bankrupts.. 67, 227, 733
ERSMPCIOMS! Ol. ~c.5coui cag acctasaitemcdinlates nia uaa deers eed paedeaud we duamelnare 67, 373
GQUUICE: Of Wccnd soinea roti ege ttt angerakimoe eens 67, 68, 542, 626
when not compelled to attend creditors’ meeting ........ 68, 542
death: ‘or insanity Of. .sscss0ne<sseeiiens over meses cree 68, 569
rights of widow and children ................. 000000) 68, 569
protection and detention of ...........0 ec cee cece eee eee 68, 640
SXEMPtION LYON ALVESC occ s is wuiieseee wow ea nw owedrwe ers 68, 640
detention for purpose of examination ................ 68, 641
how long detained in custody ...............0000- 68, GAL
extradition Of saeveiicuensvseyeseecevs s cnaws Sinihea gator Bare 69, 845
Suits: by and. QPaINSt. 2... ccc ccs en oe edie aeee ee SS 69, 628
stay until adjudication, etc. ....... 2. cc ce ee ee eee 69, 628
HPPEAFANCe Of (LUSTES: 2 ccosani we sewence ceased waters 69, 628
time for bringing, against trustee ................... 69, 628
COMPOSITIONS: 5s: we eisiaiewlytha sadvelaie y Gresbersrery: Siena ere srmarnaae 69, 607
when may be offered ....... ccc cee cece crc ee cac tee nee 69, 607
application for confirming ...............-. eee eee eee 69, GOT
Malte; CEC. LOM MALIN. oak Seco ssuassrare acme: omeuegesoied eeauawdueceiere 69, 608
condition of confirmance ......... cece eee eee ee eee eee 69, 608
distribution of consideration ............ 00. cee eee eee 70, 608
may be set aside for fraud ........... cece eee eee 70, 608
confirmation of, discharges from debts .............. 70, GAT
discharges, application for .............. cee ee cee eee eee 70, 644
HOC ARIIS oo i. de Secular Seiherensvacd Absa nachos ublach Walesa abies 70, 646, 685
WHET: TEV OEE: 6: a2.c sa sees, wibce es. thacenhies, where's Banas 4s Generale ecenn 2 70, 729
codebtors’ liability not affected by discharge ............ 70, 696
debts not affected by discharge ............... 0.00. e eee 71, 688
courts and procedure to declare, ete. ............ 71, 202, 290, 294
officers; duties and compensation .................... 76, 189
creditors, meetings, claims of, etc. .......... 83, 316, 528, 548, 571
PRESIOS Eas. Geass dh chewed Hae end beeen aes 76, 413, 585, 766
time when act takes effect ..........--. cece ee eee ete 93, 851

trustee not personally liable on bond for penalties of .... 82, 330
Bankruptcy. (see Bankrupts; Courts of Bankruptcy).

with reference to time, what to meam ............ 0.000005 62, 185
COULtS, Of ccvecisdesaneseescaeweraweewae ss eeeee ss erew ENS 638, 118
jurisdiction of Courts) s.2 cccssdiswdses cease t neces 68, 118, 755
VO ASE OE. s.iiicaacecaistx-cnivaseersadtsaa sa wei eas ae eonra Seiebey alevanee asa cahasacdanewiedddcersiigngenicd 64, 227
process, pleading, and jurisdiction ...... bss Se aersensleea arent 71, 290
creation of offices of trustee and referee ...............-. 76, 187
GLO GICOUS i 4: sateora aie satenutetetens cites ad RiaNaaidineibary wanaares 83, 316, 317, 571
STATES 5 sedans aoe cease Meee seme ieeates na lecors 88, 418, 585, 767
attorney-general to report proceedings, etc..............-. 83, TTT

statistical information for ........... ccc cece eee neues sacs Svinneeeke TTT
GENERAL INDEX. 887
LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Board of Directors,
punishment of, by courts of bankruptey......... 00.00.0005 63, 118
Bona Fide Purchaser,
for value, etc., title obtained by lien, ete., not affected..... 91, 827
Bond,
in bankruptcy proceedings ....................00. 81, 82, 189, 329
when petitioner to give ....... 0.0... cece eee cece ne eeues Go, 228
trustees not to give, on appealS..... 0.0.0... ccc eee sees 75, 160
OL TETETeeS 4 sis yaa Geis 24s jek cava 46 did dei-o wae ES OME eaten 81, 189
OE MEUSTCOS! faite stone: descsce’,& Anal dohiediam a haner ee oe aeae ule wake nes 81, 329
May De INCreased. 600. eoeasitieg vvved ones ce eee eae eee es 81, 330
surety’s property, value of ................ Breen ees 81, 330
CWO TOCOSSALY sates 45 ade 204 Wiel ss 4 God d besa dbenw aint ese eonnver’s 81, 330
EXCESS OF “PLOPELEY: .oio.0 66 ssiacecc cee wieie aio 4 MRE ee wisraireve Wiebe “ns 82, 330
corporations may be ........ cece cee eee cence ences 82, 330
AMIN Of.) cccctiaeadaa ae cose og aronip ear ean aaa eats eed eee 82, 330
of trustees, not liable for bankrupt’s penalties, ete........ 82, 330
joint ior several) © e.¢s.qseee ds Gee ges SRY ec eae R EL oe nccdetaaces 82, 330
failure to give, createS VACANCY ........ ccc ee ee ee eee teens 82, 330
suits upon, referees and trustees ......... cece eee eee e es 82, 330
to be given by depositories of money of bankrupt estates... 88, 414
to indemnify, to be given on taking bankrupt’s property.... 92, 230
of bankrupt, to recover possession of property............ 92, 230

Circuit Courts,

jurisdiction of controversies between trustee and adverse claim-_

VIN ia say dig adds Scns Ges dela aude abner ea. @ mMWOW wate sao aeinle, Binlace 73,.

concurrent with courts of bankruptcy...................05 74,

Circuit Courts of Appeals,

granted appellate jurisdiction over courts of bankruptcy... 74,

on refusal to adjudge defendant bankrupt............. 74,
on denying a discharge .......... cece eee ee eee ee eee 74,
on allowing, etc., debts of $500 or over. ......... 2.00005 74,
when to be taken 1... ...cc sees eee e eect gene eee eens T4,
appeal to supreme court from decision of...............64- 74,
where amount is over $2,000, etC......... eee eee ee eee T4,
where question is certified by supreme court justice. ... 74,
trustees not to give Dond........ cece ee eee ee eee 75,
Claims,
). unliquidated, may be liquidated and allowed.............. 88,
Clerk,
GEATITION OF» accdsaee x dtc Fa said $5.4 SOS FS ORE RE Se RO ARES NS 61,
in bankruptcy proceedings, duties of........... 06s eee eee 82,
account, Collect, etC. 2... cc cee eee ce tne eee eee teens 82,
deliver papers to referee, etC.. 1... ec cece cece eee eens 82,
DAY referee 2... eect et ee nee teeta ees 82,
Compensation Of 6... cece eee cere et cette te teen eee nes 82,
Codebtor,

liability of, not affected by bankrupt’s discharge.......... 70,

103
104

159
160
160
160
160
160
160
160
160

587

197
167
767
767
767
167
888 GENERAL INDEX.

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Commencement of Proceedings,
definition of .............6. weadeleiin seers paises iad bie aie telese noms 62, 185
Compensation,
in bankruptcy proceedings, of trustees.............6.. 81, 585, 766
OE POLCLCES! odo 5 aesenuesers dod wihteears austere Oe iiss ae 78, 79, 200, 766
to be paid by clerk, etc.......-..... cece eee ee eee 82, 767
OL ClOLES? sj crii ira Saeed dacvaasive nies cae wees aeeeR Toes 82, 767
OF Marshals! ¢ cassedsekeas ee era Gasaas state decewea vane wie 82, 767
Compositions,
courts of bankruptcy to confirm or reject...........-. -..+. 64, 756
when, may be offered ......... ccc cece ee cee ener enenes 69, 607
application for eonfirming .............. cece cee ee tee eee 69, 607
date: of hearing: <0 sag.204 39 saa eee 08 sie ince eins Hees Om 69, 608
conditions OF CONTMMARCE «is cages eeu ena puswuees cee 69, 608
distribution of consideration .............cc cece ee eres 70, 608
TWA DC SOE ASIDE: ccs snc cig 08 solarcked Gamtelityals Aid dean easier -70, 608
upon proof of fraud ........... ccc eee eee cence cence 70, 608
confirmation of, a discharge from debts.................. 70, CAT
payment of claims accruing after, when discharge revoked,
PLCs Lik seven riadh tn eh ean es OA ala veodiedye San muielsuaceccisyeedbwieuiese ouatve 89, 591
Compromise,
trustees may compromise controversies, et@.............65 75, 443
Conceal,
GLE TATTOO E oye sescSacings artessuavaascautansausse, sucaiuscnnsnacatwa iecsunladcaeavonenudnacmuiiacts 62
Contempt,
in bankruptcy proceedings, before referee ......... 64, 79, 195, 755
proceedings to punish ........... cece ce eee eens 79, 196
Conveyances, ,
subsequent to act, ete., to defraud, void.................0. 91, 826
within four months of petition, void under State laws, etc., 91, 826
Corporations,
CefnitioniOl wc sccsierecacoetesdmnigicn daa haw eee 61, 205, 755
punishment of, by cedicie of bankruptcy.............. 63, 119, 755
may be sureties on bonds of trustees and referees......... 82, 330
Costs,
JUS MCTUS: LOR so sossanatccarednenackssrausiheastsucssad due tans a taratat ees MOSS 64
allowance of, on dismissing petition ............-.0.0. 0005 66, 228
Counsel Fees,
allowance of, on dismissing petition ..................004- 66, 228
Counselor-at-Law,
payments to, by bankrupt, may be re-examined........... 87, 780
Counterclaims,
between bankrupt and creditor............ Saeeerenaehiee 91, 483
Court,
GEAMITION OL isivcncie aiinacaine srasagete digdkenserias a farfakigh anise oer Caen Guar ar 61, 103
GENERAL INDEX, 889

LAW, BANKRUPTCY, OF 1898 — Continued. Page.

Courts (see Courts of Bankruptcy; Pleading and Practice; United
States Courts),

to determine issues, where facts controverted............. 71, 290
decision, where pleadings not filed. ............0..ccc cece 71, 294
to hear and adjudicate voluntary petitions............... 72, 202
Courts of Bankruptcy,
CEMIMON: Of sos. sees ontera ta acini ves Semenw here a Reed Ra ea eae 61, 103
United States district court .................05. sis ecayals ater 63, 118
supreme court, District of Columbia....................0. 63, 118
Territorial district courts 0.2.0.0... 0. cece cece eee cee ees 63, 118
United States courts, Indian Territory and Alaska.......... 638, 118
JULISICION: OF! cows eola ses rane sa ea ae eRe kes 68, G4, 118, 755
adjudge bankrupt ......... 0... ccc cece ce cee cece neces 638, 118
allow and disallow claims, etc.......... 0.0.0 ccc eee eeee 68, 118
appoint receivers, etc. ..... ccc ccc ce cee cee cece ecnees 63, 118
try and punish bankrupts .............cccee cee eee 68, 118, 755
permit temporary transaction of business.............. 64, 119
substitute additional persons in proceedings, etc....... 64, 119
collect and distribute assets .......... cece c cee cee ceeeees 64, 119
CIOSC ESTATES siiesss a5 Gkanin Secdeecs: dee dural Neled a nmtoae ac awe 64, 119
confirm or reject compositions ............ cc cece eee eeeee 64, 119
modify, ete., referees’ findings .............c.cc ccc ueeewes 64, 119
determine exemptions ........... cee cee eee ee eee eect eee 64, 119
discharge bankrupts, etc. ......... cc ccc cee cece es cee aeuee 64, 119
€NLOTCE OFMELS sities s4cnheeleana ih danmdea weed ieeeaeds 64, 119
extradite. bankrupts: oui... ccc cas cee eee ce eweawen ss naw ee 64, 119
make Orders, Ct@. ..... csc cece sce c nee e este cectctcecss cess G4, 119
PUNISH Tok CONTEM Pt::..xcsre a donei acu ware doa Mein dadaghees doses 64, 119
appoint: trustees, ete: 22css6-ag ey oue'del aes ateinn eee’ Hew ae es 64, 119
tax costS ........ PEs PARE ROROVE OLE BAER ES GUROSaE eS 64, 119
TRATISTOR CASES sino kos HERR 64 Rea KMIN SEEN S HHO SRL REE EO) Bae 64, 119
unspecified POWeTS ...... 0. cece eect cece ee eeeenenes 64, 119
when an appeal may be taken from decisions.......... 74, 75, 160
to designate newspapers in which to publish notices....... 75, 317
transfer of cases commenced in different........... eve ee 76, 291
to appoint and remove referees, etc. ......... ec cece ee eee 76, 188
when to call meeting of creditors ..................0. 83, 84, 571
Creditors,

Ce finitlOn OF 4c2eeccswateee ema anee a eked oe gveevedes 62, 205, 316
of bankrupt, time and place of meeting .............. 83, 316, 571
presiding officer, duties ........... 0. cece ee eee ee 83, 318, 571
steps for best interest of estate .......... cee cece eens 8&3, 571
subsequent MeetiDgs ...... cece cee cece ee eee eee enes 83, 571
meetings, call of, by judge ......-.eeee cece eee eee eee 84, 571
fiNAl sc HW ote eae id Vesweeere HeeRaad Kis aesaNs aes 84, 571

VOUING At. 6 cece eee e eee cee e ee teeter nee ec eens 84, 492
890 GENERAL INDEX.

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Creditors — Continued.

Claims; PrOOf OL civ. esac see wee ve nee ge avavianss oRvagonere . 84, 498, 528
when founded upon a writing ............. eee eee ees 84, 548
after proved, may be filed ........... ccc cece cee eee 84, 555
allowance: Of as 4 scvasereidtaetswe seve es armen oes 84, 555
of secured creditors, Ct@. 00... cece ee ee cece eee ees 84, 493
hearing objectionS .. ... ccc ccc cece ee cece eens 85, 542, 548
PLELETLEM oc. c. arecaiscal sarki hea erase ween Bande we 85, 542,.549, 550
value of securities held by secured creditors, etc....... 85, 493
secured by individual undertaking .................. 85, 476
due to government, etc., allowance of ................ 85, 528
reconsideration Of .......cccc cece cece eect eee neenaes 85, 543
POCOVERY Of GIVIMENA 2 cacccccaeeaeancennntetvaanes rea 85, 543
of one bankrupt against another..................600% 85, 528
time for Proving’: «gcse ames ox seles edulriined dees wees see 85, 528

of infants; ete: = « as sa saeneieewe ssa cawsiek «seca ¢ 85, 529

NOUICES: TOF WAIVED sa4icee voids 005s Gauaweseestawoes rete se 86, 316

who may file a petition ......... cc eee eee ee eee 86, 207

notice to, not joined in petition .................0 0 eee 86, 208, 317

computing Number Of civ wdc wana yess van ais kewaw eee 87, 208

A PDCAT ANCE so 120 sees: sarc saeceres ss soetecouat os wis waranes Seat atte, soso eg, e selene: 87, 208

Hover of Cisniiesal sis 5sse euaese e639 ¥h0ws 2o HESS LH Hessen 87, 208

preferred, who deemed . . ..... cece eee ce eee ee ee eee eees 87, 780
giving further credit, etc. 2... .. cc eee cee cee eee 87, 780

examination of payments to attorneys, etc., on application, 87, 780

notices to, of pendency of petition .................. 86, 208, 316

other than original, appearance Of ............. cece sees 87, 208

notice to, of dismissal of petition .......-..... 0... eee ee 87, 208

receiving dividends, not affected by proof of subsequent claims,

CLG 6s 4s peadahy Kawa aa eae eaves ha TTA EES RS 89, 579

within United States, entitled to certain preferences. . . 89, 578

set-offs between bankrupt’s estate and .............. "91, 92, 483

Crimes and Offenses,
courts of bankruptcy to punish violations of act... 63, 64, 118, 119

15D
in bankruptcy proceedings, making false oath or affirma-

TLOID ai jes gic ees Geavoncuanst PM RApU Ss do avapasi eooneaGA oaeiuey Re ONES 75, 845
inisupprepriating PROPOLEY, OU 2 cvsnseads cies re enas 75, 845
concealing Property... wicccivcg edie ecru wwe ean wares 75, 845
making false oath or account, et@. ....... 0... cee ee eee 75, 845
receiving property from bankrupt ..................0. 76, 846
extorting money for forbearing to act, ete. .......... 76, S46
acting as referee, when interested .......... 00. ce eee ee 76, S46
purchasing property, etc. 2. oo... cece eee eee eee 76, 846
refusing to permit inspection of accounts ............ 76, 846
prosecutions to be in one year ....... cee cee eee eee ee 76, 846

contempt before referee, etc, ...... ee eee cence eee sees TY, 195
GENERAL INDEX. 891

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Damages,
allowance of, on dismissing petition ..............0eceeee 66, 230
Date of Bankruptcy,
CENNICION, Of + accspgekees. Bakes Cena we see eas 62, 185
Death,
of bankrupt, not to abate proceedings ................... 68, 569
of widow and children entitled to dower, etc. .......... 68, 569
of trustee, suits not to abate .............e eee cease 80, 382, 426
Debts,
GENDIMON. “OF sos: 3g Sesaeslevavisdaesice Suiee yy ped ies Da dione 2 oR 62, 455
confirmation of composition, a discharge from ............ 70, GAT
allowable against estate, fixed liability .............. 88, 496, 586
costs of suits due, etc. ..... ccc cc cece ee eee nee 88, 591
costs incurred before filing petition ................. 88, 592
allowable on open accounts or contract ............0 sees 88, 587
on provable debts reduced to judgments, etc. ........ 88, 587
having: priority, tameS <2 .<4cgises se wiewdeiw oie dene oie ao 88, 591
costs of preserving eState ......... cc cece ccc ee eens 88, 591
MUMS MLCES soa gal ien a0. Ad bdhnd eAa- eR bal Aaaide-s BN DRet Soha 88, 591
costs of administration, etc. ........ ccc cece ce ena 89, 591
Wilees of yorkie, €6G.. 4.4444 dean vt oy deed Wew a heagaes 89, 591
owing to persons entitled to priority ...............00005 89, 591
payment of claims accruing after composition, etc. ...... 89, 594
due the United States, allowance of ...............2 eee 88, 528
Definitions,
a person against whom a petition has been filed ......... 61, 205
AAIMAICATION m3. 3.035404 wuieicde ay sme sok dela ew eee aa ee 61, 225
appellate: COUFLS 4.64) «canes. ds Hen dwees SRS eaeud 3 saw 61, 108
DADKPUPt csi ge korn oe a oe ede Baeo a ne oe ee « 61, 207
DADRA PtH sc. 2a v cistsaieaden Ba dG deeb bss Aadachanda re coe ee atk 62, 185
CLONE soe dh-rat er Sichaeshar aye 4 Reena ERAS tee A ude Dengiablonmalaoaes uduas, ae 61, 197
commencement of proceedings ....... ccc cece ee cee e ete 62, 185
GONCOal ck eae vee esate ed asians s Soe aaagaeuaemens 62, 845.
COTPOLAtiONS oo) 4 caer dacbeea se ta eemeers Vem Ee Ds 25 Fee 61, 205, 755
COULE 2 Go ee dtganialrnomdup as Youesaeneiens sahsow sy kees Mee oe Pyotr 61
courts of DANKTUPtCY 2. cee cee eee ee eee eee 61
CPO GUCOT a. eee SS ceis re taice hale aes Sie aie wheal 0S aa eeaudade pia a ty abild 62, 205, 316
date of bankruptcy ........- cece eee eee t eee tee nance eens 62, 185
ONE socg cack siscsae 4 BRE BOS Bo tle ee Where: Ow Aiahalie aw a eee ae eS, 62, 455
Cischarge 20. cece cece ee ce eee cence ee eee cnet teen eee 62, 225
GOCUMENTE 4 6. & Loddve karti ETE Se RabwS Clee Geese ee outa 62, 207
100) 606: a ccna 62, 205
InSOlVeNnt seg sled eeresls eared ORS ee WEN RET ERA GREE Bas 62, 225, 787
FUU ZO Lo cee cece eect e een ene een net n nent e teen es 62, 118
OBE «cd Ged cmeGNO ee ces EE: Leela REET RR ees 62, 205, 295
OFMCOL cob ee is ood oe see AG aL Ped Ene OL ee Meee EE ees 62, 205
PCTSONS . . were eeeeeee Seen een ene eee enenes ceeceeees 62, 206, 207
892 GENERAL INDEX.

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Definitions — Continued.
DG UMLODD xc tecisiieis tse, ocestyesS,asiotat eeeense ss sontinne tb nsis iar Subeevsoetecacuaibedee de Ate 62, 205
DOO ce a) bb eae Qe aed DOP AWAS ne Saud ¢ AWE aGS 62, 188
secured creditor .. ...... Petbayegnd Ravel amada teste 62, 493
DLACES a Ate soci aa aie ade lace dare eier deur totale wien i seenne denels 62
times. of. bankruptcy «0 « soes6ss swewser ves waemes oeeewers 62, 185
CPATS FER 5. eh side cesecusia aia seeds Baa ante wake cuca aaa gees 62, 780
CEMSUGS? 5 arya shes aha athens en ayaa eieae Nusa iene ate Satter daaeuen has 63, 329
WAL E-CALMG 4. sashcs eect. cecarwrs elendan dhe tinal ioies) dais: Seen atia paranalaans omnartami 68, 225
words importing masculine gender .............-.....0-. 63, 206
plural, number « « « aeaviesonae gees coreanci eweeaiiy oes 68, 206
singular number 4s sca vaeaete. ae Leeson sae eeeee 63, 206
Depositions,
in bankruptcy cases, laws governing ..............+6-. 72, 73, 198
Depositories,
designation of, for money of bankrupt estates .......... 87, 414
to. give: DON. ccccesiss sewed oid eneeevors seecwse tems 88, 414
Detention,
of bankrupt for purposes of examination ................ 68, 641
MORAG COE; cas od say, ohided ranted cay ctitncehisctin cause taannvedeestcen verse dane taunearcetrs 68, 641
Discharge,
CehniVONViOl «6g wawiaedidcewey eases chi Rene oo4s Seeewe eee 62, 225
application for’ «. % scei.sneswe<saaa sesewaas atee SL mee 70, 644
NCATING OL n2de a aeminc sete adelereca die 70, 71, 646. 651, 685
from debts, on confirmation of composition .............. 70, 647
WHEN PEVOKER 2. 6 ar cmn ain tes waaaien Oe Cebus Oa aA Os 70, 729
of bankrupt, not to affect codebtor’s liability ............ 70, 696
on revocation, payment of claims accruing after composi-
LIONS & ae Salaladraes a istehenune eka ore Sx & Ais Bee 89, 691
District Courts (see United States Courts),
made courts of bankruptcy ........... cece eee eens 63, 118
supreme court, made court of bankruptcy ................ 63, 118
Dividends,
referees to declare in bankruptcy cases, etc. ............0. 78, 600
declaration and payment on allowed claims .............. 89, 577
declaration, of first « « sscawesieees neam ss seen eee eee aes 89, 577
SubSeqUeNt «vee Mya SeaRneee RAE Ged Rod skeen e qietanetooaue 89, 578
creditors receiving, not affected by proof of subsequent claims,

EGS Sacmive dds sie aed Seeence ath pa una AOA Tar vane eta ne Maou alana oes 89, 579
prererenvs to certain creditors, etc........ cece eee eee 89, 577
limit: ‘to right. to collects siies sos wawas see oes 8a NRE RE RIED Go 90, 578
unclaimed after six months, disposition. ................. 90, 601

AETET ONE) Y-CAT> gevers Sistpyi doexd Avwterecdav ds ascent aederwraver ave @dals sis 90, 601
of minors ..... i aarint hieden sha eta ant Aa sana cagonaamin cade wetnenceeiel 90, 601
Document,
GOR TITIONN GOL: of iy ies aseres cia alamo wale aovedio ae sie eden erate eee eece 62, 207
Dower,

death of bankrupt, not to affect widow, etc.....
GENERAL INDEX. 893

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Estates,
bankrupt, depositories for money...........s.seeeeee. 87, 88, 414
expenses of administering ................0.05 Se aa 88, 767
debts which may be proved...... iat a eeaut ae to Berane Malate 88, 571, 586
allowance of unliquidated claims.................0c cee .. 88, 587
debts which have priority....... 0... .. ccc ccc cee cee eee ene 88, 591
declaration and payment of dividends..................005 89, 577
UNCAIM Ed: x) eased sad ee 855 Kew Be A eRe eA eh Bee Ss weeds 90, 601
HieHS asaasns chido ROW ENTRAR em a ectrotebeeny Alene asus 90, 825
set-offs and counterclaims ........ 0... cece cee cee teens 91, 483
POSSESSION: OL scsi gases Us sin ee 6 wrelamae Da ead Race ene wee apEN 92, 229
UITIES10: ces taaig ge Rea eS Sa See eek oar da ages 92, 393
Evidence,
compulsory attendance of witnesses...............00eee eee 72, 198
depositions, laws governing ............... inte oaleteusct eet 72, 198
NLOUICE: OL TAINS 325 os Sehid 2 5a esd eecshamesaipiauiesod Aue aguas 73, 198
certified copies of proceedings, etC......... cc cee cee eee 73, 198
Exemptions,
of bankrupts, allowed by State laws, etc..............00.. 67, 3873
Extradition,
by courts of bankruptcy, from one district to another.... 64, 119
of bankrupts ........... cee eee aiahsaatausuaushevete eparouend? ocexecn 69, 845

Fines (see Crimes and Offenses),
in bankruptcy matters, for acting as referee when interested,

Obed ehiss needs wee acd ee ens bees EG Grease 8 gamieele ve-aeus 76, 846
purchasing property of estate, etc. ...... cc cece ee eee eee 76, 846
refusing inspection of accounts, etC............ 0c cece eee . 76, 846
Forms,

in bankruptcy matters, to be prescribed by supreme court.. 76, 651
Fraud,

practice of, grounds for setting composition aside......... 70, 608
Guarantor,

liability of, not affected by bankrupt’s discharge........... 70, 696
Holiday,

Gefinition: Of essa ois eisieiaeien stews Cae ered we see eu ae Re 62, 205
Incumbrances,

subsequent to act, etc., to defraud, void.......... ie eign ees 91, 826

within four months of petition, void under State laws, etc., 91, 826

827

Indian Territory,

United States courts in, made courts of bankruptcy........ 63, 118
Infants,

time for proving claims against baukrupt.............. 85, 86, 529
Insane, .

bankrupt, time for proving claims against............. 85, 86, 529

becoming, not to abate proceedings.............e.eeeee 68, 569
894. GENERAL INDEX.

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Insolvent,
Gefinition Of ... cc cee seve cee eee i aweiea wee weeeeee 62, 225, 787
filing of petition against ............-. atest Jove EMeeS 65, 227
from when to date ....... cc ccc r cee cee nce s re tenerenes 65, 227
failure to prove, a complete defense...........-++0+005 65, 228
liens created while, to be dissolved...........22eeeee- .... 90, 826
Insurance Policy,
of bankrupt, how may be retained...........seeeeeeeeeee 92, 393
Involuntary Bankrupt,
Who may DeECOME .....- . cece ee eee eee eee igs eg e peauandua otaea ts 66, 225
Judge,
GO DTTON, Of cosas in eesivice,sctsssvese re siereeere 3 ORANGE TE 22.9 RAE sects 62, 118
Judgment,
lien created by, when dissolved.........ceeeee eer ereecene 90, 826
obtained within four months, etc., VOId.........-..--.--ee 91, 826
Jurisdiction,
of courts of bankruptcy ..........-0-205 exam Bee 63, 64, 118, 755
of circuit court in suits between trustee and adverse claimant, 73
108
concurrent, between circuit courts and courts of bankruptcy, 74, 104
of appellate Courts: i 6i.ciw net eveee re reeks w teens 74, 159, 160, 169
Of TeLCreGS 20scaydassacdavee deme es Mega has metered eR SLE 77, 190, 600
over one partner, sufficient, etC..... cc cece ce cee cee eens 66, 773
Jury,
person against whom petition filed, entitled to trial by.... 72, 294
waiver of right .......... icnigh an) Seblaiecar Pinna ie loeraniele ee ibe 72, 294
attendance Ol sic iiseas ginisiredcopenste oe cialere arenes wae’ s seine 72, 294
laws as to tridls sisecesacenedasanereeeaee ieawiguaer iiecpalauadee 72, 295
Levies,
obtained within four months, etc., Void............. 0.000. 91, 827
Liens,
unrecorded claims not, CtC. .... cc cece cere eee eee eet ee eeee 90, 825
trustees subrogated to rights of creditor.............. 90, 824, 825
created within four months of filing petition to be dissolved, 90, 826
if defendant were insolvent ........... pasa REE Meare 90, 826
through fraud .......... ccc cece eee e cece nes ce ges te 90, 826
trustees subrogated, etc. 2... ... cee ec cee ce ee eee ees 90, 826
given in good faith, etc., not affected. ..........0.cc ce eee 90, 428
conveyances, etc., subsequent to act, ete., to defraud...... 91, 826
property remains part of assetS....... 0.0... ccc eee eee 91, 826
void under State laws..............0000 hgeadelofeseeicanty acbutas 91, 827
created through legal proceedings, void, etc.............. 91, 827
property passes to trustee................. eawEaaaE 91, 827
court may order conveyances........... cane ate Giaee Rae 91, 827
purchaser for value, etc., not affected.................. 91, 827
Marshals,
courts of bankruptcy to appoint.................. vraeeese 68,118
compensation of ......... Cui ening eed sens aagineames 82, 767
GENERAL INDEX. 895

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Masculine Gender,
words importing, how construed ................eeseeee++ 63, 206
Meetings,
bankrupt to attend creditors’, etc. ........... cece eee 67, 542, 626
when not required........... ccc cc cee eee eee ee 68, 626, 627
of bankrupt’s creditors, place and time............... 83, 316, 571
DECSIGING OMCEL 3a ose Ha vwrdelde Waquiare sa sare eas 4G 88, 318, 571
time and place of subsequent. ....... ccc ccc cece cece eee 838, 571
Call Of; Dy COUT sit osx2naw de Sess 6K Gin de Seated oa 84, 571
Anal, OFdered: v eves saeaiusgv4-ssec 6 66 bodes ae Gadlals ee ecciben 84, 571
WOU SAG kad se dtsce eeingaecdie we we aim iales Ge aise kd ee We se wie de cas 84, 492
holders of secured claims not entitled to vote......... 84, 492
Minors,
time for claiming dividend ...............ceccee eee ee eeee 90, 601
Newspapers,
designation of, to publish bankruptcy notices............. 75, 317
Non Compos Mentis (see Insane).
Notices,
tOCLEGLLOFS, “HIME:-OF, occ eeu tauew ess anand vp alideaiee wa den 86, 316
May be“ WalVed scside aeuudadsy see sen swe asain tes eens 86, 316
of first. meeting; efC. sscsc 025 caste gees eee ceva eea s ... 86, 316
to be given by referee...... i RE Ries b crcanitve ete scdtyes Beale | laseca shies 86, 317
to creditors not joined in petition................. 000000 86, 208
petitions not to be dismissed without................. 000s 87, 208
Number,
words importing plural, how construed...............+04. 68, 206
singular, how construed ............ eee eee cease p++. 63, 206
Oath,
COTM EGIOM: OL. So gsctare, se aveuke sianatnsiseie aca vapouieie saya esacseenerelavaree te dgears bane 62, 295
by whom administered in bankruptcy matters........... . 72, 295
Of Office: of Tefevee: escssis eee sseiad gs wae eae eee BES Ca WS 77, 189
Officer,
definition Of .:.4isavss ana OCT See ree ence ree Cea ae or 62, 205
in bankruptcy matters, creation of trustee and referee.... 76, 187
Papers
of trustees, open to inspection, etC............. eee ee ee ee 81, 228
Partnership,
may be adjudged bankrupt ............. cee eee eens 66, 226, 733
administration of estate ....... cc cece ce eee cee eens 66, 226, 733.
jurisdiction over one partner sufficient............ 66, 226, 733
EDUIStEES? CUT ea. a gas hee eidneca Po aged a ava tone due a eospbab cen 66, 226, 733
expenses, payment Of ......... cece eee cena ... 66, 226, 733
payment of debtS ...... ee cee ee cece cece eee eens 66, 226, 733
individtial debts. 2.42.6. .vaeaes enaie oe eee danas 66, 226, 733
surplus of property ..... cc cece cece eet ee eee en eens 67, 226, 733

claims of, against individual estates, etc. ........ 67, 227, 733
administration of estate, where all not bankrupt.. 67, 227, 733
896 GENERAL INDEX.

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Persons,
definition Of «cs<sscss wie ves aeaaes tas oe eee es Nee ews 62, 206, 207
Petition,
ERNILION, OF ws oS sod kee dyememneesAeansaeeaaseianeun 62, 207, 225
of “ A person against whom a petition has been filed’’.. 61
185, 205
against insolvent, when filed ......... 0.0... e cee e eee 65, 227
FLOM WHEN TO GALE... 5. soos eset tiene, nvivelaivlacecds 6, auees ea Stn dine 65, 227
involuntary bankruptcy, service Of ...........eeeeee eens 71, 289
Ve@rlfication 55. ssameireas toe Sie eke ese eee ees 71, 289
to be adjudged voluntary bankrupt, who may file........ 86, 207
involuntary bankrupt . oo... cece cece eet eens 86, 207
tO: De. I; CUP CATS .oiecii cs cece s ese iecsisdiceim e Facer oo es Wie SS IS 86, 207
notice to creditors not joined ............ cece ee ee eee 86, 208, 316
NGariNeS= 4g & wos eter csc ee eee a egw eeey eieiece aad 86, 208, 316
Pleading and Practice,
involuntary bankruptcy, service of petition .............. 71, 290
WORE PETIA ook cancunedds fee teae eens be ence eee ss 71, 290
MECN 2 ohn g. 2445S FGA E Sw GRIST aeee eee 71, 290
determination of isSuCS ......... ce eee ee ce ee ee ee eens 71, 290
decision, when not filed . 1... ccc eee eee ee eee eee 71, 294
voluntary bankruptcy, hearing on filing petition .......... 72, 202
involuntary bankruptcy, jury trials ...................6. 72, 294
oaths and affirmations .......... cc ce eee ee eee een ee 72, 295, 845
GVIGENCEa Bie doa Seeds e sd oe whe nsende od daauten tds «dares C2) 9B, 426
compulsory attendance of witnesses ................. 72, 198
depositions, laws governing ............. cece ee ee eee 72, 198
certified copies of proceedings, ete... ............ 73, 198, 426
reference of cases after adjudication .................... 73, 196
transfer of cases to different referee ............c eee e eee 738, 196
jurisdiction of United States and State courts ...... 73, 74, 103
suits of trustees, where brought ................ eee ee eee T4, 103
appellate courts, jurisdiction of .............--eee0es 74, 160, 169
appeals and writs of error .......... eee cece eee eee 74, 159
arbitration of controversieS .......... ccc eee cece nee e eens 7, 442
COMPTOMISE:. «2: 5:.c sanidineiee yd ek hea oan Ses OA ceueal odes 75, 443
notices, how published ........... cece c eee cece eee eens 75, 316
punishment for misappropriating property, ete. .......... 75, 845
rules, forms, and orders, promulgation of ............... 76, 851
computation of times... csecreds nea vada eweesaeneens seas 76, 291
transfer Of CaS@S 4 aa eewess s¢ wewiees oe sAdieweom ss wees see 76, 291
Policy of Insurance,
of bankrupt, how may be retained ............. eee eee 92, 393
Possession,
of bankrupt’s property, when taken ................ 92, 229, 230

release of, on giving bond ............... cece eee eee 92, 230
GENERAL InDEx. 897

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Preference,

transferring property, ete., while insolvent .............. 65, 227

through legal proceedings . 2. 1... ke cece cece cc eee ees 65, 227

Preferred Creditors,
claims not to be allowed unless preference surrendered... 85, 550

who deemed such, et@. ..... ccc ccc cee eee e tenes 87, 780
when preference voidable ....... 0... 0. cece cece cece renee 87, 780
giving further credit, ete... cc... ccc ee cee cree ce ueace 87, 780
set-off of ‘new Credit: s.00.c4ca@ued xd enna teas omeeeeans 87, 780
Proof,
against bankrupt, of creditors’ claims, of what to consist.. 84, 528
MAIN OE Ge 52 ieee aa oh Metal 4b eG ah did ta negli 85, 528
Of INLANTS). CtGh ce Be whd sehedas ee ae wnlagiaen ae ones OBR 85, 529
Property (see Estates).
Purchaser,
for value, ete., title obtained by lien, etc., not affected ... 91, 827
Receivers,
courts of bankruptcy to appoint .......... ccc cece ee eee eee 63, 118
Records,
in bankruptcy proceedings, of referees, etc. .............. 78, 196
Referee,
CeRNIEION Of feos. swt Seed dane ss Bed eee nee ease aise a 61, 189
in bankruptcy proceedings, creation of office ............ 76, 187
appointment, removal, and districts ................005. 76, 188
qualifications... eycsesi nc eae saan a gedees casas eee 77, 188
tO take: Oats gc wie in biped os aeiee eae ee Mgme eee hee ees 77, 189
umber OF ec couwkessc cies vi wdiew aruaelaeee ae dame wa eis pisces 'e 77, 188
Jurisdiction. :-. s ckececasaks tude hed akdiseeceees dede ena 77, 190
Consider petitionS . . ..... cece cece sec e eee e ese eeeas 77, 191
administer oaths, examine witnesses, etc. .... 72, 77, 191, 295
take possession and release property, etc. ............ 77, 191
perform certain duties of bankruptcy courts ........ 77, 191
authorize employment of stenographers .............. 77, 191
GUtiGS) Of es eee odin 4c he 2 a5 Peele. o ie tne ag ee wares 78, 189, 600
declare dividends . . 1... cece cece tcc e eee e eens 78, 191, 600
examine schedules, ete. . 2 ce cece cee ee te teen eee 78, 191
furnish information, etc. 2... cece ese ee eee eee eee ees 78, 191
Bive NOTICES 6. ese cece eee rere ce eee eee teens 78, 191, 600
prepare records, etc... -. ese cece eee eee teen ete ee en ees 78, 191
schedules, Ct@. 2. eevee cece cece ee eet ener een e eens 78, 191
preserve papers, records, evidence, etc. .......e.se sees 78, 191
not to act if interested .......... cece eee eee et eee 78, 189
compensation Of 0... .. eee cee eee teeter eee es 78, 200, 766
where case transferred from one to another.... 78, 200, 766
where reference revoked ........eeeeee ee eeees 79, 201, 766
contempt before... cece eee e ete e eee tenet eet teeters 79, 195
when witness not required to attend ...... eee eee eee 79, 195
proceedings to punish for ....-..sseeee esse cree tere ee es 79, 196

57
898 GENERAL INDEX.

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Referee — Continued.

records, manner of keeping .........0. eee ceeeeeeneee 79, 196, 197

absence or disability .........: eee cece ee cee eee e eet enees 79, 195

filling vacancy 404 2 csc cea vanes ses scam eves alee e ces dades 79, 195

DON Of sai sues fens Seer eheet aes Hones Aad Rede nee ae 81, 189

ME COLG. OF sae sala csssuts nd Secooouys don saceneiies bug desognedertane iene uate se Aenea aia 82, 330

failure to give, createS Vacancy ......... 2... eee eee eee 82, 330

suits upon, when to be brought .................. 82, 330

elerk to pay, within ten days of closing case, etc........ 82, 767

punishment of contempt before ............... eee eee 64, 119

case to be referred to, in absence of judge .............. 71, 202

reference of cases to, after adjudication .................. 73, 196

transfer of cases from one to. another .................-. 73, 196

at creditors’ first meeting, to preside, ctc. .......... 88, 318, 571

all notices to be given Dy ......... cc cece cece ee eee eee neees 86, 317
Rules, :

in bankruptcy matters to be prescribed by supreme court, 76, 851
Secured Creditor,

Gefinition, Of 5. 6s wy se eew ie eaciee eee Gages esis peewee eee 62, 493
when not entitled to vote ........ cece cee ce teens 84, 493
allowance of claims Of ....... cece cece ee cee ete eee tenes 84, 493
value of securities held by .......... 0. ce eee eee ee eee eee 85, 4938
claims secured by individual undertaking, etc. ........ .. 85, 475
Seizure,
of bankrupt’s property, to prevent deterioration, etc. ..... 92, 229
bond. to De given seas ea caeewd te ae ose ees eee 92, 230
when may be released ........... 0.02 cece ee eee eee eens 92, 230
Set-Offs,
between bankrupt and creditor .............. cece eee eee 91, 483
Solvency,
a complete defense to bankruptey proceedings ........... 65, 228
States,
GehNItOM OF" x coc agus tee ele a oh ely eal aes eke eeee eas te 63
proceedings under insolvent laws of, not affected......... 93, 97
Stenographers,
referees to authorize employment .................--0-0- 78, 192
Suits,
by and against bankrupts......... 0... cece cece eee eee 69, 628
stay until adjudication, etc... ..... cc. cee eee 69, 628
appearance. of; trustee «is 6.csawes wes ves chew gees DENA OE WS 69, 628
commenced prior to adjudication .............. Rn oaa 69, 628
time for bringing, against trustee.............. 0. eee eee 69, 628
not to abate on death of trustee... 1.00.0... eee eee eee 80. 332, 426
upon bonds of trustees and referees, when brought........ 82, 330
in the name of the United States, etc.......... Seach Brclinens 82, 330

lien created pursuant to, when dissolved v.scsreseeeesees 90, 826
GENERAL INDEX. 899
LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Supreme Court, District of Columbia,
made court of bankruptcy ........ alot a pasa eeeatae ames .. 63, 118
Supreme Court of the Territories,
granted appellate jurisdiction over bankruptcy courts...... 74, 169
‘Supreme Court of the United States,
appellate jurisdiction over courts of bankruptcy, etc........ 74, 169
over circuit courts of appealS.......... 0 eee cece ee eee 74, 169
certification of cases to, by United States courts........ 75, 160
to prescribe rules, forms and orders for bankruptcy courts. . 76, 851
Sureties (see Bonds),
on bonds of trustees and refereeS.......... 0. ce eee 81, 189, 330
tWO MECESSATY OD CACH 2... cece e sere cece neces ee eens 81, 330
excess of property ....... cee cece eee eee aon tiieoianserela, 20% 82, 330
corporations May De 2.1... cece cee cee ee eee eens 82, 330
liability of, not affected by bankrupt’s discharge.......... 70, 696
Taxes
owing by bankrupt, payment Of..... 0... cece eee cee eee 88, 586
Territories,
district courts of, made courts of bankruptcy............. 63, 118
Testimony,
person denying insolvency, to give........ cc cee ee eee eee 65, 228
burden Of proof ....... cece cece eee eee aaayes atu ee ts 65, 228
Time,
bankruptcy act, computation of days............e cece eee 76, 291
when to take effect........ cess cece cee ee teen ne eees 93, 851
Time of Bankruptcy,
CERN ON. OL vis aiiecieseaie ge RE EERE sees hae alec eee eens 62, 185
Title, .
to bankrupt’s property vested in trustee...............06- 92, 393
documents « .. sais scsc died os seem we tania ee wad Gee Oe eae eS 92, 393
patents, etc. ........... NBG thease aivaesuati ee Beaey tau wees Ncheas oes 92, 393
powers which might have been exercised, etc.......... 92, 393
property transferred in fraud ............ 0. cece eee 92, 393
which might have been transferred, ete............ 92, 393
disposition of policy of insurance, etC..........0e. ee eee 92, 393
rights of action upon contracts, etC............066. 93, 393
tLUStEe tO CONVEY ociciaacucieieciacin cae baw bes Hens Oo 98, 393
vested in trustee on setting composition aside.......... 938, 393
revested in bankrupt on confirming composition........ 93, 394
Transfer,
Gefinition Of 6.4 cccecgewccesceaenscweee MBEROEET DS Bawieties 62, 780
of cases commenced in different courtS............0 eevee 76, 291
subsequent to act, etc., to defraud, VOid...............504. 91, 826
within four months of petition, void under State laws..... 91, 826
Trials,
by jury, in involuntary bankruptcy cases.........seseeeuee 72, 294
900 GENERAL INDEX.

LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Trustee,

GeCTiIGE: OL 2 cscnasd sc 0aGas beann wees Ke Vines tounres snatas GB) 629

in bankruptcy proceedings, creation of office.............. 76, 187

appointment; qualifications .............. 63, 81, 119, 319, 330

death Or LEMOVAL 5 cc asiis so eg en ve wse sewuss cadets 80, 3382, 426

SUITS NOL. tO. ADATE 0.00505, cd eietams sewed see; ¥ 80, 332, 426

; specification of duties ...........0e eee eaee 80, 82, 374, 413, 517

concurrence of two out of three necessary..........+--+ 80, 414

COMPCNSAHON jy . siscd egies uh pg Sate Bis a ees Pare ewe 81, 585, 766

apportionment, where more than one.......... 81, 585, 766

withholding: . .. asses ueevseaces ese Sees somecees 81, 585, 767

accounts and papers, open to inspection, etc........... 81, 330

DOTS OE 5 caisiciinaec aveade eiicw ithe se Woes dea aca es eatveded aheacarauenies 81, 329

NEW" TPUSCCOS ay eccieisetes o sougteievs on enmen/aasauteiad ave Waray aUR Ne 81, 329

amount may be increased ..........eee cece cece eee 81, 330

filing Of wisesccsceds sia ste ee ee wees awakes saee ves 82, 330

DO MAD UIGY  escaiice a sickiare-o 45.8, oe 3 OO RI SAREE oF THe 82, 330

failure to give ............ See aT Gaaverelaes AURIS OR cates 82, 380

Do personal liability for penalties of bankrupt, etc.. 82, 330

JOINT OF Several) soci osie ees seater erareigs oe Reels Powauiow. ss 82, 330

suits upon, when brought .......... 2+. cee ee eee eee 82, 330

appearance Of scisaeeis cvedes come tere sees Sees teas ee mes, 69, 628

time of bringing suit against ....... Moet wadies Sean ees aie 69, 628

in settling partnership estate, appointment of......... 66, 226, 733

NEY ad ve estes dyaneeatereions Sudanese ss sure as 66, 226, 733

punishment of, by courts of bankruptcy.............. 63, 118, 755

not required to give bond on appeals............eeeee cerns 75, 160

may compromise controversies, etc............ ieee heey 75, 442

title to property vested in ........ ce eee ee ee eee eee 91, 393

to convey title etc............ 2 eee i Micitarssei ais BSCR Hautes aad 93, 393

payments to attorneys, re-examination on petition of...... 87, 780

United States Courts (see Supreme Court of the United States),

district, etc., made courts of bankruptcy..............0065 63, 118

jurisdiction of suits between trustee and adverse claimant, 73, 103

suits by trustee, where brought.............. cece eee eens 74, 1038

circuit court, concurrent jurisdiction with courts of bankruptcy, 74

104

jurisdiction of appellate, ete. .... 00... cee cece ee enees wees 74, 169
Venue,

transfer of cases from one court of bankruptcy to another.. 64, 118
Voluntary Bankrupt,

WhO May DECOME ..... cc cece cece ee ene cere eee ceeanencene 66, 225
Voting,
at creditors’ meetings ........ 0.0... cece eee Jang roladign re OA, Boe
holders of secured claims not entitled.............+. ... 84, 492
Wage-Earner,

definition Of sssavsaseadvisweseriiawea ian iss eae aaewunas 08; 220
GENERAL INDEX. 901
LAW, BANKRUPTCY, OF 1898 — Continued. Page.
Wages,
entitled to priority of payment ................. Sena ee 89, 591
Witnesses,
in bankruptcy proceedings, refusing to testify, etc........ 79, 195
Words (see Definitions),
importing masculine gender .............eeeeeeeees Roeene 63. 206
Plural Number viii k sue 2 oalge veca vase ee eew eater es one 63, 206
Singular number .......... ccc cece ce eee ee eeeaes 63, 206
Writs of Error,
when allowed to review decisions of bankruptcy courts..... 74, 159
LAW, STATE:
exemptions under... ............. Be Sis aylelNa tay erate iy eee area taco cea 882

LAW, PROCEEDINGS AT:

in district court . . ..... cee cece ee ce eee Makiioe aye Ramee vite 145
In -CiPCUIt: COUEE sxe Yee eee aig dah a eaya Gada eos eesyusaeecetegn nue ond 145.
when must be used . . ...... cece cece cece ete eee tececasenees 1382
WHIGOF ONnPOr BN 45 Gaia sees setee ee aig Hae wwiled Sreainled detainee 159
LIENS:

preserved in bankruptcy ........ iieldiogs so Wie Shas MTR RRS 494, 497
equitable? «ss secede si siexweeed vos dea tein 643 Woks sec aad kaon es 497, 513
MECHANICS: 9.0 205,65 Reacstareeracnediaig Bz each lee BS Ghtvennig ss AUS bie Aud Blah adaelaesir 502
OE PATEDORS ea x55 5.8 Sih aig sah oh ya aid ca le tare Syd a opaGs Sa Se eles dh dcacanen WOME Adexsue 499
Against. TWO PSTSONS wi Poe ceeia a vy ENE eee NE Spee whe New arene eS 489
ON. *VOSSEL ps bisias Rityox Pie cone Seuase eas pernaboee cad weeeaaexe oes 503
UNTOCOLdE 4a. 6s ce eek oe eee ERG Lt EEK OEE e+ oO TER 90, 503
FUGR MENGE: fie. a cei ok 8d deicnaedh EA AGG ER AS acne AE ORT aoa a dae 489, 504
OX CCUCION eg ayes. ae eg bvolay els Soars nines eat aa Titans Tan eeoe a Ar roneaa, a Ge wexe 507
Of VONMOP 2 6 ey sok Sak Sarid oie wine eee dae oe ee 502, 713
C1) ge: 1100) 6 2 2a nm Sr ee ee 500!
mortgage .... ....... Se Oe eer ee eee eee 509
pled sess. 25 ks vad ee Geiaieie ge Manet Cateaa eh eee as Magee e Ae ia 501
OD! PLOTS) 55 6.06. on otc a aeaiatevered alee abhaie, outee. duaeconesindathnal eas olncieeene yaaa 512
PLOOf Of ys 4. eK Seka ne dene eis demu auies sear ae ee a ape Remar cea's 532
when: forfeited: yir5. $4.5 ¢ciaies sei betes OR SERA dee o's BIS awe 5384
district court may liquidate . 2. ..... cece ccc cee eee eee eee 514
assignee sell free frOM ... 0... cece cece eee eeeeees Va beheeusine ss 117, 514
SUDIECE TOG 2 cee Geewee seat et aces dats Ceae oemoie’s 518

lienor may apply for Sale ....... 6. cece cece eee teen eens 117, 520
Cost Of Liquidation 1.02... cece cece cece eee eee eee een enee 516
Tedemption Of 2 1. cecccccceen eee e cree eee e tense nance ence ee ranes 454
by bills to set aside fraudulent conveyances ................44. 403
498

by creditor’s Dill . 1 ce cece ee eee cent rere eens ‘Rae eA ieo ck
902 GENERAL INDEX,

LIENS — Continued. Page.
DY AttacChMent: «2c wsaceneaade ec eQucaw ie seg WHE eee oye wil ee 362
how enforced after discharge .........ccesee cece cet e eens nee cees 369
When Tent JS) e ve gy eem atalns PG Aee yo S64 Mas ee Ma PARA Seeman oe OA 479
on exempted property . 2. wie e cece cece cece ete ee nee eee ee eenees 377
in Colorado, f. fa...... gai: eee Ns aly Bawitieed Rec dasine Goad Savas Te A aes 489
strict Jegal Tighti«c <4 sss swine ats csgeewee soraceuens ys ereeeete se 489
given or accepted in good faith ........... 0. ccc cece eee nee 428
claims which would not have been valid ..............eeeeeeee 825

LIMITATION:

Suits by and against aSsignee .......... eee cece ence een cenes 436
not revived by appointment of assignee ........... 0... cc eeeeees 437
debts barred by, to be scheduled .......... 0... cece ee cee eee eeees 218

ATS PLOVADIE. 6-5. sscessn as da wrecmsvacid eae eeosioneee 465, 488

are discharged wo nw cesmacdaanteiuecce says 704
proof need not anticipate defense Of .......... cece eee eee tees 531
of six months to act of bankruptcy ......... ccc cece cee eee nee 231
of four months to preference ........... ccc eee ee ence eee 781, 843
of six months to assignments ....... 0... . cece eee eee ee eee 831, 844
in involuntary bankruptcy ......... cece eee cee eee ene eee eens 843
Statute suspended . . wvccsee ees eeeecccsenceees diaietauagas eames .. 6387

MARRIED WOMEN (see Feme Covert).

MARSHAL:

to serve warrants in voluntary cases .......... LaVer mere Hae cAeee 222

in involuntary CASES . . wee eee eee eee ee eee 313
OLGEL tO: SHOW CAUSE: 6.0: iscesgeneic ca igrede girs a Cain FeO eae eens LOS
When: ‘to: arrest debtor so. . wiewGned sas vee meoie en ewmnee eel ees 282
when to take debtor’s property ......... cece cece ce reenter teenies 282
WHEN SeIZULe BY; POP vesicc cs vous beens Gees Baste maa s ye see 287
may demand indemnity . . wo. ccc ccc cece eee eee cette eens 287
Hable LOE APESPASS 1.4. wesc cea sean aang did hbase eee wale Yaar dd ass 287
return at creditors’ meeting ....... cece cee eee ce eee e eee enee 318
Tees iO 4 ws ws Semnsas eehasceenee tee seesd eso telga See 82, 773
for eustody of property’ is sac eisscceevcessaasewe vce satwee ane eeds 773
Includes: ASSISTANES . 0 6 kv eee gcc cee he ened Ge cinco POET Peas 206
compensation Of . .... cc ce te cece cece eens avisachedig Ss Necmace ods 82, 767, 773

MEANING OF TERMS:

used in the acts ........... ite ules jane suewe hese ee eoarepseaviete saveiatt 205
DALlYy a a. sh PA di ahs ages ase Hens 1E ss. 6 SEES N CA ERENERE EEE Dee Se 2038
PIVEN. 4 5 He Geel ey edema se he eAme o oe ae ye 4 ee Meee Rae eee ees 318
time of adjudication of bankruptcy ........... 0. ce cee cence eee 455.
CONCEAIMENE wo a. 2 SEG ac anpQead we de don dea teadaead aia een BO 656
fraudulent preference . . 1 cc cee ccc ccc ese teen nee ne ee neeeaeese 663

Atle? «6% secieinaseaneas cep ed: ay Aanehate Wkwreiontettes Nahas os eay'eeian) GOS?
GENERAL INDEX. 903

MEANING OF TERMS — Contirued. Page.
trader... TAU WNG a MAAN Ey Cd 4 RAMMOP ARE Maun cada owl ead ecemane LOO, GEO!
becoming bankrupt 6. 6s sede cesev ics su hey penw ead vad ovsbeeunueys 673.
HaBRPUptey’ sg ayy eaters eee ctaadg cade a aueia Ooeuievguecsoun ia daw és 241
TNSOLVEUCY: ap ish xs Xe 88 Sake arasant Gordo dagietets anliate: ea ag Un ede aes cea 241
reasonable Cause .. ool. cece cece cece cece eceeueenensenas 809
contemplation of bankruptcy . . aac sree ed tae ae cada cee ene ee Bante 241
Manutacturer os vo. sialon es yee a Nese ae A sola eaeand 256
commercial PAPE ay sc ceswee ins 64 Gas ag nea wade weve bs eae oeeae 259
MOCUM ES! i 5s ernest gia housed dials «site Oho dhh Mase doe Gk wa eae ee 769
POS GI CO's. 5a) yeacelalne 's wvandiasa dosamsteta atau aaiatsSeedeang em ing ghana few Gur eind 266

MEETINGS:
the first, when to be called ..... 00... ccc ccc cece cee cece eeuee 21, B1F
Register ‘to ik. TiMNe Of s.scis vsiacdee fides. weiss d 4 odiouline sneeeacees 317
DPOSIU CAG ee cs sadtraacuancanins PASE SND cowed vs nde SMU enn 192
return of marshal at ............. ecwirenis Wea da saa Ce Wess 318
when to be adjourned . ow... cic cece cece tenn tee e eee teens 318
CleCHOR Bb. ai. aetie xe wigevae bess wigs ae ec Av ob ee ease Rook Bidreec 820
how long to be held ........... ccc cece cece cece cea eeees , 820, 821
the second, when to be called 2.2... . ccc cece etc eee ee eens 572
What: to: De Gone ss. 6 ¢cadtocsitead akin ily sumed Oereua etme 571
the third, when to be called ......... ccc cece cee cece eee eeeetaes 574
what;'to be done; =: seyeecds ey casgne ype emus gesesdiewndeteuacs 574
tO TeMOVe ASSIZNEE:2 f 9. grax candies Soe vedere ese whe ee waned Hew eA 332
to consider appointments of trustees ........... 0. ccc e eee ees 603
to be ecalléd. Dy ASSIGNEE. .cca ee wedciaveds weoade ese ew ome 575
second and third, on discharge ........... cece cece eee ee cee eeee 573
others; when, Called. 40.5 4 susswie's aula ines 0s oauls arene anos 89. aot g Ah-5 Fee BID
Of Creditors: 244 see easaies gyi saunle ev ds se aeeeee ce Bea eee aoe 84, 316
VO COTS AG ote Suits d. sop esheets sede BOM Ane Sin ane os baie eek Se A aes Beem aeaens 84
judge or referee shall preside at first ...........- cece ee ee eee ee 318
Atial; :of creditors: 2.36 gewsaa vse thatetinseaead esis eset ee4 578

MINUTE BOOK:

CLEVE (O° KEEP .6 hi Sidewecead Qhee SET 854 RHE ELSA MN a Kee eee es 197
memorandum to be entered iD 1... eee ccc e eee reece 197
Constitutes TECOLd 6.6. eee ect bese ned eae awe ees pacoeaadedent ase 186

MONEY:

GSpoOsitories: LOF 6.4. < dawssss ae nvesss Ges suas eee de ee eas WeeR RE . 414
courts shall designate . oi cece cece ect e eect eect eeetes 441

MORTGAGES:
of chattels . ....... 4 Gibpanihea es ease- al adun tees hea ORs See eee tances Sead eae 428
Chattel, when Valid . ....-ecce ce cee cence eee eee ence ene eeees 428
unrecorded . . . seceeeeeee Hames es se Siase Ges 2 aie SArmg aes 1... 358
on vessels . 1. weeee cere Piscendha-dnawanaveaahin Saltaetes ssececnangeteacastenae m aenoten 508
904 GENERAL INDEX.

MORTGAGES — Continued. Page.
effect On: Vendors VEN: .. sisccisiae yenaaaewawa saw eee de prdeaies 502
on property in two States: ..ccsssnjsees sre 0s de evaesa weed cerns waar 509
by partner Under SAL «cid 8G sae be ee OH e ORER SDM Rew HAE Leo 510
WP ABOUT: UMGET SEAL cede. sece secs segue esa g cgay eeapauaid a tventvara cea btaveh ne Subuneaaneneias 510
POP LUtMLE WOVEN COS ai 1s) aetie ayeiaia weatnsestitan due aeanpiavincnece curanar eisai e ener anaes Bee 510
effect of change Of NOLO oo. .ncssaiea: coos nase evens see wnene ees 511
change Of MOrtgage ss « ssa aieiseen ates eeneee seems vee eed ee 511
Tule PrOts! go, ahaa chee eRiata eet amas cours Ginien meme engines 512
TAS UT AIC ES voy s5e- ce Aes seoay ae anistne stead cages ance vata aaans aoa iaeevee Cee Miauopantubian aap aieies 513
district court may liquidate ...... 0... 0 ccc cece cee ce eee cee eneee 494
assignee may sell free from ........... cece ee eee eee ee teenies d14

Subject tO: < acct sewadssamesreeanetesssenrvadas 518
mortgagee may apply to district court to sell .................4.. 520
when void as preference ......... ccc ce cee cee ete e rece tees teens 781
may be withheld from record ......... 0. cece cee ee ce eee e nents 791
in pursuance of previous agreement ...........ce cece eee eee ee 798
when: ‘fraudulent: « 5 % ssseuei0wceaded gre eawaes eased Seabed wee aeme 404
right of redemption «x « scasiciveisaianowse cose aes eae ae ss waeaees 454
mortgagee may SUITENEr . . 2... kee cee reece ee renee eens 495
POP OO GS OIE gs cs eee yiata ioc scch waa ceusntee ptaataaceaautuoanciva sa suaaaeanayavanisnsisvcauananostani a taeeGuantea tanaverone 532.
EUCIS WCET: fc sik etaratateinn anoermanun’ ot geaaderan cn srtacta eae @ btetguaectn sweated a 415
Ol: Wite’S: PROPEL svwecceepadea ve cuseeaee ee aeldrenennses air ewe’ deca auicaes 509

MUTUAL DEBTS: 1
to be set off ....... Sine RoR DR aR RAE ene Rie Makes wen 91, 483
when on claim purchased ....... 0... cece cee ee ee eee neee 483
not on unliquidated claim .......... aE nba oe Sah neato annaiee Merete ee 489
MEATIDE OF COTM: « wisorigce sd ewaigs apa ysiereeis Oeige ses bowlers 484
Dy SIMCEROIIe ass ceyuessweeeewsunevee sd pps GCE BUERE ANE RS 486
jointagainst ‘separate «sicvideseewvew ive casersenen bee cea wee ee x 487
LODE: TOG Gy rai cas x ek a ue aren eel t Ahad ac deri diaaesoatauerloeSeacaae i enaunls » 489
AUSULA MCE OMEY so scissisccesa tes. Grains sueunlelaisladessnquensnaeaun due e — a in nalve Muacsamreely 487
not by nominal OWnNEer ... 1... . ec ccc ee tee eee en ee eees 490
CLECt OL PrOGE WithOUWt 4s cccvaiin onewrva: date enetaia neu lines atensiela's(e-auilieds 491

NEWSPAPERS:

Cesignation: OFF os.cs-wsndievewaa www weaaris <ecalads sda gaveid eecm ace’ corncae 75, 317

NOTICH:

OE SER EMM COUT? aes.s- aria vin desis reaaragenn wn agels otesanaiomnnen atm teen eee a Satine 81T
HOW: SEEVER. << sain es carom mee secn er omeee 222
Dy ‘MUblication) « 6 war cdgedeews dee disanadand cess 222
adjourned without proper. . ........ceeeeeeee eae 317
WHEMOW), BUVIEN: oc.55: Sia dpee in sets cent anetserenasanne alemlers 818
to assignee before suit brought.............cccccc cee cece ee enee 436
of appointment of assignee ...... _ XERREA CM BERS ERAGE ROM DSR EOS 434

meetings ordered Dy COUrt ...... cece cece eee eet et eevee eeeeeneee 575
GENERAL INDEX. 905

NOTICE — Continued. Page.
meetings for removal of assignee ..............eececeecucceeaes 332
SECON: MECH os wesvaasegamnadoes ree eteeeraeess 571
third Meeting’ 2.5 vacwa seus aac ana nlced sane vedo ses 574
final account of assignee ........... 0... cece eee ee 578
Gividend. «4. aiid. sais we deeces is Gausauiaiaest ale moe names as 600
application for discharge ............... ccc es uees 650
involuntary petition 02... ... cc cece cee cece ce nent teen ene eenveee 291
appeal..... Jimena Siem teat are eee nae iauairkeea ies pilcanse tue 2a esas 166
revisory proceedings ......... cece e eee eee oh Wake gees been y cad pies 177
applications to sell incumbered property by assignee............. 515
ereditor ... ........ 521
Petition: FOr COUNSEL] oie wied he doeds be ag Hinde wee | ed ee eo eae . 596
GOL -SUMMALY PStllOD ay asprin aparece davdial pao apace he. taianen Teng s 187
tO: IGREGHONS: 60%. ceavew tines 4 eatin aig BN £4 @ has po daldasc.atee nea dare 5 316
OATH:
of register ..... Sateewies ar sansa a's bby ah Ghee Saas ele we Rea a se 189
allegiance ............... on apes s erag aud Sel pace Go geee ae alan aba ee 221
register may administer . . ......... cc cece cee eee ees 221
to Gebtor'’s: PetitHON, sicko issn ca weba ce aw eee aA wk Mae 8 221
HON PLOOE OL: CLA 56/5. seec5. a nace se al deacnse! ood gnedabod. eave aaah dsdeauasavealersed 526, 540
bankrupt examined OM 1... .. cece cece ee ce ee cee teste eee eee neaee 555
of bankrupt before discharge ............ cece cee cee ee eee eens 685
fees: for deposition: .cesiccssiages egos ares oe eee a a See le ohare y els altars 769
to creditor’s petition ........ 4 ORaSHa4 SVS be Hose SS eR ees 267, 659
debts, sbaeelwae ess wees s cebed be es eee ee eae . 270
To:act Of ‘bankruptey siselecescasdiece sane aie te acsgreed Pea ae Se ESS 270
LO: SCHCMULES 5 i. 524: sesnaue 30-93 Grehuaceartu a acdianebuatale a aladds GUUS. E 2G eeaieee seep 221
what officers may take ....... cece cece cee cece eee teen teen cane . 221
affirmation .. ........ cee ee ee ee eee Sb BARS Cra wae Ae ee 72, 295, 845
Telerbes; ay: avs ciwieeans rowed ye sedi si eaG doses Helen ee AREA pe 189
verification of petition DY... ..... cece ee cece eee cette et eee teens 268
definition of ......... Vieng sesuaras tlk Avie wes badd Feb ee ae orateawes sane 205
OFFENSES:
punishment fOr ........ cece cece eee e tees ia eee sree e 15, 845
OFFICERS:
public, defalcation Of . 0... cece esccee ea teeeneee Te ainlieh ea salner aes 691
of corporation to petition .............. oe playa cierenes Sere 756
authority to file petition .......... ccc cece eee ee 758
not to be discharged ....... ccc cece eee e cece ee eee ee 756
duty and compensation .......-.eeeeeeeeee roa. Roa lb avalon Baa aoa Bede ae ANAS 73
shall include .........-. a eater we ea ea anaiterd ie Siatannldyduinaca endpsec ben cec 188
OFFICES:

creation Of tWO ..ccssrercceueens ere FIBRO PRR Te .. 76, 187
906 GENERAL INDEX.

OFFSET: Page.
against bankrupt ........ cc cee ce eee eet e eee tee ee ene ee anes 487
ORDER:
OL Sale: DY (COULE iceiceisc cite caer ete dee aie Remains Sen nave oveia eee ave 449
for examination, «asccnus sa dtesayaiGoessekes setae pies ee weed ees 555
fot GiIVIdENd tsssucsasccsseawes co ered eee ses See kee Se aas 570
FOF AEHtOF tO: APPESAM. ois asiscseceves eisiesecice sheave ai rare enemys BAe 282
for creditors to show cause against discharge...........+..e000: 646
OF TEFETeUCE,s NOT SPECIE vic cciesies vategavecie* wemudarsinsyeckeosnar ee yy 770
courts may compel obedience to............ sisi ecutive auatedatanieiats 143
Of discharge: ccicesccrnes cat saonrs cere seauws Hise eee ees Meswes 688
ORDERS:
TUES): LOLS AIG) sys se isiesavecss te dos cow igraig atasapwsavianiatar Upforicon even a ESN teleatan aint 851

PAPER, COMMERCIAL:

GeRnITIONOL <snecniiees iat cee aes eres Sees HEaeeetene se 255
PARTIES:
to enjoin preferred creditors ........ cece ee eee e eee ene 153
PARTNERS:

Proceedings DY asics nce serceees 1 we wives weaswareeeess CEeeN RNa weS 733
where: petition. of; filed. sin tascesada cre eiwd eee en enti. Ode Rea RT 734
WIEN Ay TTS: JOTI Y? sais eis. oe scorscoiie bee se gpecern.aupacevbvbse oiseisvave.teausisesae da saaecounse 734
how long partnership subsists....... tales cates theca eee ean 738
priority of ......... por nonin aayeelaring Sauce tensa Di loces Som Bia araleeds Aaa 488
under law of 1898..... iasiacial tig abicie Sienaacriahns stapled sevtsi sg “anede tapas ank senate echistayers 66
who may vote on petition Of............ cece cece eee eee e cee aee 1384
how property of, distributed... ..... 0.0... ccc cee ce eee eens T34
proofs against several estates Of.......... cece cee ee eee eee nee 743
when one may share in estate of another........... 02.0. eee eeee 750
when transfer by one to another, Void. .... 2.2... eee e ee eee eee Tl
proceedings by one against another..............cc ccc ee ee ceeees 738

what petition in, should state ........... 0. ccc eee 739

where petition may be filed .............0ceeeueeee .. 134

Cefenses AM 2 2 caxatoseaew s Hoaxes eendiaks seeeaee@enes 742

when brought in by assignee ............. cee ce eee 742

all must be parties .......... cee eee cece eee eee 743

AO JUGICATOM TD sc seueiivotec) asswlaueydaen avon alemiaweSyseeecd eves ase 734
when conveyances by, may be set aside .......... 0. ccc eee 751, 798
discharge of ....... Soa aaa toasecaeweieses eat unuatiatons 696, 754

on individual petition ......... 0.0.0.0... eee ee 734, 754

from partnership debts .. ..... sce cee ce eae 696
discharge of one, does not release another.................... «.. 696
proceedings by creditors against. ........... cee cece eee siatausra ace, 266
petition must charge Joint act. ... sc. cc cee eee e ween ceeds sa 206
GENERAL INDEX. 907

PARTNERS — Continued. Page.
act of one is act of all ..... SaMhia es Wehbe se ewalnely ipa achignd a aGraeiet 266
one may defend though others make default.................... 304
when creditors of, share in separate estate.......... cc cee cence 749

share in individual estate ...............000. TAT
rights of assignee of one partner............. cece cc een e ee eeaes . 745
may be adjudged bankrupts.......... 0. cc cee eee ee eee 226, 733, 738
mode of bringing into bankruptcy.................. pi tap ie eealN aa 740
where, reside in different district, ccc cccseeee eee eev cece ee eeraee CO4

PARTNERSHIPS .. 2... ccc ceca seen Dimes sais aks cue Rete waded 459
may be adjudged bankrupts ....... cece cece e ce eee cette eee eneee 738

PAYMENT:
of claims ..........46- WRG dae 4eak P40 WWE Ee eaE ENE Che ea g ae oes 579
fraudulent, prevents discharge ............. ccc cece eee ee eee nee 652
WHEN: ‘a PLELCren Ce: ge: é2.5. sy kd har aceh dbo aeadde oa ddan wale UES 781
on contract not to oppose discharge......... cece cece eee ee eee e ee 844
what an act of bankruptcy.......... 8 lado la anise a aig i new wider yeaa ean 230
suspension: Of s0i.iseis vated veh sae ee yemee de ewe uae ee eee esas wees 231
when a misdemeanor ........... Liga Fae dewaeasae earn ss SFB)

PENALTIES:
offenses under the act ........ cece e eee eenee age hicdlual isi a grecptaetecs ca anda . 846
concealment of property ......... cece ee cee teen teen ee eeee 846
destruction or mutilation of books................ ch ocotencntariatit Recht 846
removing books out of district........ 0... ce cee ee cee ee eens 846
fraudulent payments, gifts, CtC........ eee eee eee ee eee sees, 846
TOSS Dy amine isc eee Gn ee bec G oe See a ite Wo .ere ove tein cere ... 847
concealing property from aSSignee........ cece cece eee teens 847
omitting property from schedule ......... cee cece eee ee eee renee 847
allowing fictitious debt ........... eee eee ee teens any a4 24s als 847
alleging fictitious losses 01... cece eee eee eee tee ee ene 847
obtaining credit fraudulently ........ ccc cee cece ee eee tree e ees 847
indictinent. for. <1. se ews Siw wwe Gad ee Hanne. a9 Sis Cee N EA EEE ee Sr 848
what officers subject tO 0... .c ccc cence rece s erence ete eee reees 205
what acts of officers punished..... PARE DAO MO DES SEie Har aIRE es .» 205

PERISHABLE PROPERTY:
or in dispute, may be SOld... 1... cee eee eee eet te te tte neta 451
when to be SOD 1... cece cece cece eee ee ee teen eee ee ee een ennee 451
proceeds measure of value ..... Vr ae au tues GiaisGaawsondasae es 451
ordered into possession Of ASSIGNEE ....s eee eee eee e eee ee enees 451

PERJURY: >
WALEUL 4 é chad eed kter SST Ee TREE ERS ees ane Stdatedenk Glotecs 6 te avs oare 655,

PERSON:

GefNition OF ... ccc cece cess eee ee ee eee eee eee teens pills “sca eden. 6 . 225
908 GENERAL INDEX.

PETITION AGAINST ASSIGNEE: Page.
for ‘removal Of ccsaciaszessenceawass neee eyes ieu wean due eS 332
What: MUSE Aver 5... 4 etsetciddeducadw aodtee hteer eines Meee < 332
WHEL TAY WS: TIC. i iigecace aeiesicsiiis dre Winds a decane saan ayeck Gemnaterase ooeuaad at dae 332.
When court MAY TEMOVE .... ese cecect eee ete ee eee teeta ees 332
when meeting of creditors called ...... 0.0... cee eee eee 332

PETITION FOR DISCHARGE:
when filed in Sixty GAYS 21... . ccc cece cree eee tenner enareeeeans 645
when may be filed at any time .......... ccc eee ce ee eee eee ee tees 645
what. Must AVEC s4s0+4 ocac awed wepeess CRiee EEE Se Leese ee uQ eas 645,
Order PON . « 6 <eeews (seeds eee ew REO A Oe Ree Ew 650
service of notice UDdEr . . oi. cece ete e teen eee e teen ence cennene 650

PETITION IN INVOLUNTARY BANKRUPTCY:

WhO IMA ee yieinmaw awed mad Maem ea emeiaebears aleaaren 86, 207, 225, 289
who may be proceeded against ..........0ceccceeeeeeeeeeeceees 225
what actS neceSSary tO ..... se eect eee igitkeied -sauh ee Aes 226
WHEE. IIS Ty VOL vg. cupsavidecu sash doveecovntcaiah austin cuances oz aunablatailsaudtaustanens vesaons astannatelonsue 266
must allege proper number have joined ........... ee eee een eee 268
must berslened) scs-4 ahve vaneuion casmedumeradaasoruarowegeamoweadcn 268
must, be: verified a0. scevsscut wee ertoed we en aogiinw eae dese dienes 268
where may be. filed, o iccSsicisxsns mtevesrncivrsis ieee sacs Merees 265
May? Wei ANIEDME, «ise scciisrndeceesiamadeerds CRA Meee Aree eRe 278
order upon filing ..........ee eee eae sah arogubpateasa sdesseae eter OG Mtkepan apaemenaS 282
when dismissed without notice .......... OR Teli reMeiecate Grails ay lites 309
at “what: time dismissed. o.oo veg: cisis sig costs o gitteegn wae ene © Beene g years 309
can not be dismissed after adjudication: «i ciecccsieeaseccausanes 310
must be accompanied by depositions .......... 22.0. cece eee eee 266
may be dismissed for want of proper deposition ...............6. 271
how objections to, may be taken .........ce ccs ece eee ee eee eee ees 295
WHO NB Y ISIASS: fo oy is: caressa lecadetete raracnitecgacyues seat iw deanna Glens seein toneuaratan wien 86
deninition: Of 4.06, wewnewe weeaad awaneenlndediinn anaes Sdaddioiats 207, 225
verification of; by Oath « « eo0uxs. seen sews waeeewerascetuurs «e+. 268

PETITION IN VOLUNTARY BANKRUPTCY:

WHO. Tay EU Go, a. cipeavhermaae sane toy mecrboeuh doceuntacd etannads 86, 207, 210, 211, 289
what to set forth ........... cece cece eee nee ua trac hance coon reaifanai io 210
TOM DO VOTUTSA: og. yas seein cecteens sokagg sei vartyt ghar wvtartana te verve as Rieatlgne te anapnanel: apantilar’enel abate 221
where:to’ De: Ted wc eutcoonee sue aeouendute areata qaeeumen eee 210
ean not be dismissed: oo weinacvwsasasdeneneesian eoasaeas Reams aos 213
adjudication. Upon. . << 2. «tiwaawwrranacwae tise vale jee cmene 211
when warrant under, to isSUC 1... cc cece eee eee cern ee eee 222
TAY Gs ATT ST SN se acast.sciees Se pucincn eA Wes sa denies donee ptsadancovesaraiiae Sanee ay Soed tetocep ey Sree 223
register may order amendmentS ............. ccc cece ee eee eeens 223,
creditor may ask for amendments ........... 0. cece ee eee ete ene 223,
bankrupt may amend........... Spal i ahede cae Deslattes teres rg teantcnaeg ace a ete 223

where amendments must be filed ............... tera renwisene 22S
GENERAL INDEX. 909

PETITION IN VOLUNTARY BANKRUPTCY — Continued. Page.
may be amended before discharge ........... 000. ccccceceececees 223
creditor may oppose amendments ...............ecec cues ee eeees 223
W.HO} May GISMISS: sg se eke aude aw wipe y Hag tea es OSL ROS 86
judge or referee may hear ......... 0.00. cece ccc ec cc cceeuceennens 207
GeHDITION OF sacha vs Qaeda CT OR Res Oak Ts acca ie Edy MOK ee 207, 225
in what districts must be filed ..... Sd Hien ty Bloc re otal aarti bed aes svatze 214
COTPOPALIONS). i: 5° oc5 and Oe sana QRwdawa Waa itaddenues wale eek deena s g dead 758

PETITION, REVISORY: :
when filed in Circuit court ....... 0... 0c c cc cece cee cece eee eenene 170
when proper mode of revising decrees ...........0 cece eee ee nee 170
to what decree extendS . oo... .. cece ccc cece erences ..e« 170, 177
jurisdiction of circuit court under ........... cc cece ee cece eee 170
WHALE MUSE AVNER Bam's six diecdend- se Wetec does A teeca Ne oso segcdany OA cesta 176
PRACTICE! UNG SP 5 s52 silos ack ud eased dd es Roanssebeal ao a)H eine dade Se kva and S Seae bases 177

PETITION, SUMMARY:

WHEN “MAY DE USE: s:c sisscccosese: 5-5-5 ssi stars sagud dab aaazscena gs Bibeg eet oon ode acationece 132
when the proper remedy ........ Ty) a snarasmsntanebley Crate dete eters Basten can 132
when objections to, may be taken ........... cece ee eee eee eee 133
what must aver. ........ Wahi detedens Gia a ais!s ag tela aries a cays SE an eee Rpts 137
must bé signed ses caus ess se eb aes waedees ds seesou ve aee see yada awe 1387
must be. Verified ac issscdiccesaantendascdceseg Fe wee 00d Skee dee 137

PLEADING:
upon appeal on disputed claim 1... ...... csi eect ee tee ee 168
Whak MUSt AVNER sc caus neds ee daaaen ak es Mawedenwaee Ghee Redan 168
MANNET 1OL. sce wel sGis cane he ecaded, oe sh Sawy gee pew ade Ranta cures . 154
and appearance . 4 2 scaveusawee syiteges vanmees baw asies eons acter 296

PLEDGES:

HONS: 4 444 Hote A eases KE Oss SRO EE SE ESEK oe ea RES Chews eEsemeNY 501

PRACTICE:
justices to regulate . 0... cece cece eee e ence en eee is as hal sachin . 184
what adopted in equity . ..... ec ccc e cece cece eee e teen een e ee eaee . 150

BG. THA os whee eae SO Ria dado OE REARS 84S eS: 157

when summary petition may be uSed ........--. cece eee eee ee ees 182
when suits must be at law or in equity ....... 0. cece eee eee eee 132
when decrees may be reviewed on petition .............-++0ee- 170
when appeal lieS . 6. pe eee cece ee eee eee eee te ete nee teen tees 161
when writ of error lieS . ow. cece eee eee ete eee etn eee nee 161
when suits in State courts continued .....-...-. ee cee e eee eens 632
when State courts enjoined ........ cece cee eee eee 126
what proceedings are VOId «11.1... cece cere cette eee ete eens 111
on appeal upon disputed claim’ ....... 0.6. seee reese teen eee 161
ON habeas COVPUsS - - ver ers e rr es reenee ences ited ioe eee dees G41
633

on petition for stay ...---.-seees Bo ‘ola ra iseNation nie sin she aageerae lo rabenuncos ai
910 GENERAL INDEX.

PREFERENCE: Page.
USAT, WO VAM EAR Cres os. covieco: tisindaouns o:Sepeniniwsase sande acacoue uta anda: bunrlpsanaaetave Meese . 248
when an act of bankruptcy ......... 0... ce cece eee eens 230, 231, 244
WHE: Void): a -dsrsewuninw ari eengan oo eweiwbusae doe ea aes 781, 793
what. may be Set aside « isasivcsssuw ceva vessars sew ters sevens oon 804
what must concur to constitute ............ cc cee cece eee eee 786
standing four months is valid ............ ccc cc ce eect ee eee tenes 791
WHEN CeDtOr 18 INSOLVENT 26. is ieee coarse tee sieiepe ace oe siecaiee ew aes aioe 788
standing two months is Valid ......... cece ce eee cence er eeees 843,
what constitutes intent: « osi0sscrcesa saad iesccereawes se weenned se 793
Made-uNder PreSSULE.. 6. was des eRe arden aaa Keane dew SE FTA OS 793
what is reasonable CAUSE ....... cece eee e eee ee te cece eect eneeees 809
COMA ANG ORS OR sca ., civtie atatai eee sig desenle odvsngher diaessaeed 0001 ‘oye aa a eaeel eo evanend eas oe 820
TO SULCUS s--4.cs Gon eareaeres Bees aa dase as zane asiie nega abi egates w wa Sie loner even ersaed cers 820
to principal where there is surety ......... ccc. ceee ee eeceet eens 820
bind receiver’. 4 sc casssievevsitaowrsuwiea te scvi une eraaws eae tenet 449
by warrant of attorney «2 aids nad swueaiee dias bied es ease emia wee 807
OYE JAA O MG fa vecsge, saizad SMe avd gaceas ace angus aos ten eo ecg col vvbeseuancgsasoee Cavaniguenaues aie sslehuaeauacese 804.
when district court may interfere with judgment ..... pcre eavavohes ds 805
Bars: A. diSCHaR FO. 3.5, woke coaiera dus heneig eshawvijets wales Waeieate sees ea 653, 663
when conclusively presumed ..............005- Roun ailern a atiale. 248, 793
under prior agreement: seiss scsnacccnseass sewn ce ease sesaseReee oa 801
present consideration .. 1... . cece ce cee eee teen ee eees ba waeenk 801
EMOWLED SEE 9a. ay dk saseBaeeses Bane ears dca aeve-aed Wiesandcauab dwsvandsn ad auanesenevayh Wevaawatans 819
merely! VOlGA OSs 5. cae ecdiivacedeivordaten alk caatromecmend s aadharewoe aay Paes 821
bona fide PUTCHASEY . . 1... eect ccc e ee seen nea eeeveteseeeeece 822
THEO LIC. EO! BV On ce hey sigs sas oeeicscwia ots eeaoaio: wl gescollstalarstoe ais eueratarers 248, 793
Wuhiate Hig; VOI) “sass ote aid disiensiera aeraeaee aie Rags sales velerset ee Geemekeae 280
must. be surrendered: « 2 ccs. 2ssismeines anadeowa de ve eee Suareees 550
fraudulent « «ss viseceeset wees nace tha Oia tee POEes San nlonn ewan 663.

PREFERRED CREDITOR:

can not vote for assignee ..... (aaa ee eRe ele Masi sdsineareve guests 329
Can NOt: DEWASSIZNES: ais caccwnccrepeeumwwier gine dada stewinul ddad slesameats 329
must surrender preference before proof ..........ccceeeeecece ». 550
can not surrender after judgment ........... cc cece eee eens 551
may surrender in involuntary CaSeS ......... cece eee eee eee eee 281
what debts: forfeited, sissies ca sescecs.055, 480d avaiovesctca-duavestin vans wane veoer 550
WAL IS! di ars. ttaeAicdunnnauieeadcntiemtiais nwamaied wNamweaauine aay orev Shae 87
PRIORITY:
of wages... ...... deena aheienenw en am aes Sewed SEWER RL SORE Cae we 594.
What claims to have: «siscsssevs seacewerasween ed eccdsdans ates 593, 598
OF EGOS! 3), 4: canny aiainteaes Hid Bae aeccad Ap oehicter wuuvaun ie aeumebie adie 769
OL. HENS: 5. 5, saigibiges txaiadnesaaced dsandecd due. ove iis salar ses atest coal gdesarahser SSN 495

PROCEEDINGS IN BANKRUPTCY:

Matter Of PECOTA) < vw caaccniesactewawabins saabememe eas wor isanceacy: 186
Mot recorded . . wi. cc cece cece eceeen (aaa die aR ea auoushatayivagoraveseva 186
GENERAL INDEX. 911

PROCEEDINGS IN BANKRUPTCY — Continued. Page.
CODICES: OF, \ eddie aadeadameeesyS cae wun waited oon aalaGedisbrad. a aiauasenadca cans 186
how certified . ..... Cig ERT EMO Guduaisiandu cha gle yore eniia eee 186
what is commencement Of ........... 00 ccc cece ec ceecceenucueeees 185
SCAGISUICS: OR ony ee cashew) ora esata bead eeiele $s Sass a vermieneld Soe adncahcle huacaides 83
for review, circuit Court 2.2.0... cc ccc cece cece ee eeeeeeeenes 176
to realize estate for creditors ........... 2 Stel £925 Ata eee aaah 316

PROCESS:

HOW ISSUCO 4 ase acheter ike ciahaueled aa ccnaaw at eed abnles eae Aawis 291
POGS: 26. Sel ag k a ths acaontaicanasscacd. Raveean Daievenendinl er ain iodo a Shania eed ary aoe eeatanen 292
pleadings, and adjudications ......... 0... cece ccc cece eee enee 71, 290
Tepallys i 34. ancind iat races card daa Soe weit aad ea eee eae 245.
service of, and further proceedings ......... cee ce cette eee teens 292

PRODUCTION: d
of bankrupt to testify ........... Sa Neca arayhu tats aut Mccetis asens ey asian ge oat 596
Of DOOKS ANd PAPETS ..... cece cece eee ee cree reese eee Sr mate Save . 197

PROMISE, NEW:

WHEN VAG, ia dans escalate ae Saal ware as Bale sre asians ocho ea eueins 716

PROOF OF DEBTS:

by whom may be Made........ cee eee e ee ee ee cee Guietuceusassayeseusudee 5387
WHat WING COND 5 465 99949485 oe wee ee addins oe eee eRe DoE 529
who may take ........ eds MiWare Re ew AEN eae Thee Se ae ee ees 526, 540
POStPOME MEN OF y 6 isitere ies sserwigee ws ane Gig StS ws Scisainn Lalas erite Wks egpars Rg woes 548
of preferred. debts esis cise ns Seees tekken ss ses Sea es ee o OS aceRe 548
register MAY POStPONE asc cevene ccissads ccd ewewe vows ses Hew ee cues 548
not. taken from. file: eso esnc.acaw eeawiew oes eee es gaw oe candy a Sans 536
WAY DE: AMET! vs erase alone Fee Sceis Ras ea a wk dete Oe Sher Bee 536
at what time amended........c secs ccc cc ccc ce eer eee se uetcneees 5387
HOW far amended) as.c-tacien G24 noe cde See Ate aed area setteelelas heat 5387
DVD SOC ULE seers afc a gare atsntg sag) 5 Sn eat sop o oiggg We Bs Gees we waEG ae Som 532
when security forfeited Dy ......... cee cece eee ce eee eee n enone .. 534
relinquishment of preference before ........... cee cee cence eee 550
retained by creditor no proof. ....... ccc cee ee ee ee eee eens ean O22:
£0: bE SEDE- TO ASSIGNEE. «p43. wid a ose deine Foe Fals Menu a ees Aa EE gue 540
COUTt has: CONtLOl ‘OVER as wad cacy els dae msine de Gade Wee how San ees 543
who may ask for rejection Of........ 0... ec ccc cee eee cee eens 543
WHEN: TOJECLOR. sd isuitlnetenewisced wiarertig eee are nualet dna y ee eee axa netomtos Hoi 544
appeal from rejection or allowance Of......... cc cee ce cece eee 161
notice of appeal w.sccicaves vesee nes seadeevanwaes Nea a ptewrae yes 165, 166
pleadings on appeal ......... ccc cece cee tenet e eee eens 168
when appeal dismissed ........ cece cece cee cette teen ee eens 165
when debtor member of two firMS....... 00. cece cece e cee nett eens 492
actions surrendered DY ... 1... cee cece eee eect eee e ee cee eee 628

How far SUFVENGELEd veers seer esse reer e eens eet ee teense ee eneee 628
912 GENERAL INDEX.

PROOF OF DEBTS — Continued. Page.
for unliquidated damages ........ cece ee eee ee eee eee e ee eenes 455
FOr INtCTeSt 4: 65 sia watind eels ees ea din peed ee oR Buksins Beet eceeE 455
Of JUATMENE yesex we duwadiewe weenie wanted metre) a greaarals AE NRISare Ms a 468
by bail, surety or guarantor ..... 0.0... cece ce cee ee ee eens 475, 476
TOP POOE aed ova wakes dened ieee LRN dod ee Kee went Rea WEEE S 477
ContIMG ent TADINMES! jy scsc sens cccteneiach esenserive Monessen al eset wk ae annie a AT
HOWE TAG OF sare ease! fore eianaitates cerns sls inane saeehautnie Wi witee tits wear ara ieed tens dag mearertne 529
effect of proving secured as UDSECUFed. .. 1... ee ee ce ee ee ences 534

PROPERTY:
not collectible to be Sold 1.0... cece ee cee eee cee te ee tenet eenes 453
procuring, ‘to be:attached 252.064 eeewers csuisles eaeidies easier where ees 652
rémoving from GiStliCt ssa ceces pcacGiew owen estaa bes eeers BEES HES 652
NOS GUD Ye eT aires sy.se ieee yastsee aude dcdljavte she recent: S:body Dieusedeecexeeahtine aya soane severeaeren 652
Conveyed fraudulently ...... ccc eee c eee eens meron te sanenneenee 652
conveyed aS @ preference... .. ccc cece eee ee ee eee ee eee eee enes 652
cconyeyed. to defeat: aCb. srniceedice ssyeeee ctsleees eb ees Geet co welaces 832
concealment an act of bankruptcy... ....... cee eee eee eee ee eee 230
assignment for benefit of creditors. ........ 0... cee ee eee eee 238, 252
marshal to take possession Of .......... ec cee ee eee eee eens 288
taken on provisional Warrant ...... 0... cee ce cee ee eee ee eee 288
WHAT PASSES! TO ASSISIEE: c.igseicc siete erie ie seie sic greveitiiaeg auereienere g gueteterens Soave wie 334
acquired After PetltONs aac scenic ecau aioe sinewe x came sem ae Sow Reaees 337
when sale by bankrupt Void ......... cee cee eee eee ee eee ee eens 338
POSSESSION: Of a vwscxeieusasieis aveesee deems eee eee Sees 22, 92, 229
ELLIO! CO! gy ssapintedidee Seorioes wads eats zea wvia aS cuamtueaycceenh ecess Bete acioueas 22, 92, 393
what vests in ASSIZMNEE 1... kL ce ee eee teen teen eens 340
of bankrupt’s wife and children........... ai sree asi A estes el prtoa 354
what may be €X@MPt «.ccicicc cag csi cewienea cide s eeiee ee ern emer eens 376
CONGCAIMENE OF sic ais ia vigsal nas wane wes od guesses eden een soar ahaarordust ate on cap 656
custody of, after filing petition. ........ 0. cee cee eee eee eee 661
acquired by gaming: 5.20 cee euwecedsuyas Ooare Vee Ke se eee ES RSS 667

PROSECUTION, MALICIOUS: :
POTUIOCLY, LOU? 555.50 sasese dsc. cie encase pl #oxavatanecs & aporaseuonessis Sanedenpsuah auuan Gene weatalleoy aubohuorate 312

PUBLICATION (see Advertisements).

PURCHASER:

DOG: FG wi fs: oeisfacndiadtnaulea Sale abeateiy Keblnts cana aN RR EA eincoaacoasd 822

REASONABLE CAUSE:

WRU AAS). ciaose seetoedt a asthe rececanau cm Sieeacontoniarascel alauaudus saan tectsaxernmaceneedive meee 809
belief of intelligent man ............ cc ccc ccc cece ec ee es ncueces 809
UNUSUAL CONVEYANCE ...... cece cece cece ce ene e eee ceeteneunnce 8138
suspicion... ....... hdd chaise C aeonaic caucasian rhe ne 8 apy hun ok 814

transfer of all property .........c cece ccc cee eects eens canine BLS
GENERAL INDEX. 913

REASONABLE CAUSE — Continued. Page.
transfer of all property by retail dealer....... ehh Kile Fee SR 4 et 816
knowledge of overdue debts .......... 0. cece cc cee eee ce eee eens 817
warrant of attorney ............... BIE he Uete Sees ta Sie ance STs Yotne RO tas 809
SUSPENSION aa, 5 av ences ctectie s atberadind ad cuvandoga- nwa BAS ween amen oie 817
contrasted with knowledge ........... cece cece cece nent een aee 819

RECEIVER:
when district court may appoint .......... cc cece eee eee eees 157
when distribution made by. .......... 0. ccc cece cece eee ences eset ares 574
appointment of, an act of bankruptcy. .......... ccc eee eee ees 254
when property in possession of, not disturbed.............. aioe 114
authorized to carry on DUSINESS........... 0 cee ee ee eee tne ee 449
can not set aside a preference .......... cece ect eeeeen eae 449
allOW ANCES! TO: ce garsde xy eames demas. cA adeeb yee aS 765

RECORDS:

HOW Kept: sisnde2t cudieu swells iasaaya pbsaamaeaa ae en See 186
copies to be evidence... 1... cece cece ee etter eee eee etenes 186
minutes of register to be entered........ 4a Salad i gee <saune yeas 197
Of aSSigNMeNt, 65 wae ca daw si esinea saa ae sea SaaR See HER ETS MRE EARS 434

In: GIStriet: COUPE <6. icccs 6 ii Sonare nie da jane a dale alae 336
OR PELCT CCS) pe. oa5 segs ecea na sibihat amt Sauk .8 need. @ Reale UR euouaaate em NOanela aes 79

RECOVERY:
where theré is SUPELtY sc 060s desde s vines ees ew be eee Cee ee oa 820
when there May De: onde cee eed oS ae PENS SHEETS Re Eee es se 823

REDEMPTION:
assignees’ right Of ccjses ccc iciwee eos mei ee RUDE ee dad a ewes 454
before: debt Que: sis srry. 2644 Sid eesti ss ak She See eas Dow gees oa 454
release to creditor sseaicedsisdade cawsad ess he ded eens caren Haws se 495

REFEREE:
appointment Of .......... eee cee eens cdl eave alae ations ‘Lea... 21, 76, 188
TeMOVS OF: sess wcthite gas Sindgadss Richa Sarasa Dugan wae aad e 76, 188, 190
GISTHICES: (Of: 04 o eis so Sate tw Me ee daS OS Wanda eeieere Hae we eS Tae 76, 188
Qualifications Of ii ccisesc rs camew yes eee Ss Heew eee eeeeioaace es 77, 188
OATS OE OTICE OL ocand eed S054 wu oe HAE ES 8 See eee’ a ee EO TT, 189
MUTA DET OL: cist & asa dee: wb se ichar dh asdssoguie mcd cae annie deaee ap Be ied faytoas eetarieusuess 77, 188
jurisdiction Of ........ccc cece ec ceeee eee e anes Wassiin Senso Toate 77, 190
duties! Of se si Siaseapes shcesskaws toe mawlseies ole tes 78, 188, 191, 600
Compensation Of . ... cece cece eee e ence ee nett ene nenenes 78, 200, 766
ContemptSs DefOTE 2.2... ccc wc cece cen eee ee ee eect ence enscenes 79, 195
TOCOLS Off vc ce cee Hesse sees eae ee ee ee eee ee 79, 196
ADSONCE OF vasar vs ba aaus fawe ve aes eee Waa RHA aOR ee dees 79, 195
Gisability Of ...-- cece eet c cere eee ee tent e ene ee ne eeee ees 79, 195
bonds of .. .....5- See eee Sie Pe ao Sew ulactonn a ama Kets seees 81, 189
914 GENERAL INDEX.

REFEREE — Continued. Page.
FVIAIS DY seceiccesin c & scam wl araine id oa eanaie ees es ee ae a ee es bee eG Os 202
may hear petition Of DANMKLUPt...6 cca ees wees sees eR eH eee MS 207
or judge shall preside at first meeting. ..........e eee eee eee ceee 318

REFERENCE: ;
of cases after adjudication ......... 0. cece eee eee ee eee ane A 13, 196

REGISTERS:

How appointed ..... 6... cece ee eee eee eet teen nett ence es 188
WhO eligible 2.0.0... ccc eee eee eee ee enn e nent ete t eee ene 188
to Give DONd . 1... ccc eee cece eee eee ce eee e een e eee e eee eens 189
to take oath of Off1CC. 2... cece ce ce cre eee eee eee ren ones 189
what disqualified for ............0.s000 Slide na oh dane Reta 189
TOMOVAL Of ames eae de es ened 28 oe BEE Ro RN SOG dees cadence pSavatses 190
vacancies, how filled ....... 0... cece ee ee cee eee ee eee teen eee 188
GUESS: OL. sicagea Fas dcoace se SST S RAE SEHR ERS 2 eee ee ese Se anes 192
to make adjudication 22... cece eee eee eee teens 192
fo adminiSter OATHS «22204540 nae na en rad teas FA ER EM Oe TRON E OME ¥ 192
to preside at meetings ...............4- Ta et bua tis asiuanend sa cwtaiee 8 i OEE 192
tO: TAKS POOLS a6 aye erase dean Pea Be Oe eter ee eee Bee Sees 192
to compute dividends .......... eee ccc eee ee teen teenies 192
to make orders of distribution ............. cece cee ee ee eee eee 192
to audit accounts . . ........e eee ee eee pete needs baka te tees tute ate 192
to grant protection 1.2.0... ccc cece cette e eee ett et eet ane 192
to pasS examination ©... 6... cece cece ee eee eee tee teens 192
to summon and examine Persons....... cece cee cece ee ee eens 197
to require the production of books, etc. ......... cece cee eee 197
to dispatch administrative business .............. cece eee ee eeee 192
not to commit for contempt. ........2. cee eee ce te cee ee eee 196
hear disputed adjudication ........... 0... ccc eee ee exe, 196
AUOW GiIsChargve: . ...6csiaie sewn Cee SAWS Sane e AGE eV eaLS 196
LOe MAIS MEMIOLANGA. 26 scnaisieze Stata aik-k w aeduecd Scdcousseih sosaauans Sehacnea w Somme enous é 197
to adjourn issues into COUrt... 2.0... ccc ce ee ee cee eee eee 202
may take opinion of judge... .... cece cece cee eee eee eee 202
POTEPETCE: OL. CASCS CO: casein wsearsvrare seisiceew ween abepa te Wang Baba a eka ba wees 204
to take depositions of witmesseS.......... 00. cc cee cw eee ee eens 199 ©
acts by, to be reduced to writing.............. cc cece cece eee eeae 199
parties summoned before, must attend............. 0. .cc cece ee 199
tO ISSUE a Warrant oc aie s screeds cee MNase ce be btacdains ome ds emmarede 222
tO. be: Impartial: 22 scent ee seseecnia S weaiqua aw vena Baud Made dea Ridhian deo Henares ek 821
to preside at first meeting........ 0.0.0... cece eee ce eee ecee eee 318°
to make assignment ............. cece cece cence ceeeeeceuceevs 335
to hold meetings for distribution ........ 0... cc ccc cece cee ee 572
to prepare list of creditors... 0.0... 0... ccc cee eee cece eee tances 6UU
to notify assignee of his appointment...... facie Nar enasler eaea Whey aalaceoshane 320
may order an examimation.......... 0.0... cc cee cece nec ceeecceae 555

examination before ...........0..08. eek audew ea SaaS srs Vacate ois Seoul .. 560
GENERAL INDEX. 915

REGISTERS — Continued. Page.
no power to decide objections..... rine Dy dnerhauate me ae noe eee ee 560
to note objections ............... Suaras) sata Suauntoaaeavans Wideman on 560
to forward memoranda to clerk of district court...............6. 197 -
fees Of sss inaws ss de res dew’ os eoewh ones eam evadeowmens Fades 768, 771, 772
fees to be secured ....... cc eee eee ee eee sax trombone inte td oar abo ps 769
may order assignee to make returnD...........-ee ee eeee Shalala wet e 564
when case taken from ..... cc cece eee e eee ee eens Wades ence oe 200
when, may appoint assignee ......... 0. cece cee eee eee eee 320, 825
Offenses: DY’ sc ewes ei iwe 8)6 wee EKER Re HS LedeeeS Vee KES eee eeRS 205
evidence may be taken before ........ na keds Fawn sin SNe a Re 198
can not certify to copies ............ eee ee eee igh old: Seaie RR Nate eee 186
proof must be satisfactory 1.0... . 0. eee eee cette eee ene 540
not to be counsel or attorney....... sant d Manele ea Say ee A SS 189
to receive surrender of bankrupt........ cia atte nlacatn cxtanee ere eaiscages 192
REMOVAL: |
OL -TERISUED 6 x 8.45. hina db a waaca sda gneg eae Reucvitbeidaie: Bye ueroeee 190
OL ASBIBNER TS, <x sspsulaie Geese s Ltie ena be Nes ga aly aN oes Sth ena peaucane ered opt 332
who may file petition for ........... Fovertnalanoy’ dvelieie.g axRaus 332.
OPGr’ OM. 6 6.5 oe HERS see RRR resem Se eee ee ee ae 332
of property, bars discharge .......... cece cee ee eee eee eee enee 653
, an act of bankruptcy ..... cece ee cee eee eee eee 230
how punished . . ....c cece eee e eee eer e teen cece 846
GE PELETES: oe: ke ewrsciedin Se eeaie oped. daecauuin edo vee Re ae SRS 76, 188, 190
Of TLUSTER sas sakes eee areas ues Spdovidaleds ean doce adariotac 5a ceucscbveas 80, 332, 426
of books does not bar discharge ........ccs cee eeeeeeen ener nr cues 663
Deyond district .. cei cece cece eee eee eee eee tenet ee eene nes 663
RENT:
when apportioned . . ..... eee esse eeee a3 Gielentaans 2:9 glenets ele tibienete 477
whencd: EN, secede cotaceisaaelh auaaut eeyadadeeeied ie aanes cawtis 479
when to have priority ...... Sg he ch cipentiice Laan hank Ae SAGAR HOO TS SOROS 480
when part of ‘expenses Sed hay deg asia va Shh WHS BOS Raden Acayaacdie) Seats Jac eas 482
when distresS fOr, VOId ......e cece eect ee ence rete eens ajar er escian ears 113
REPLBVIN 6.) a wieiies o giesicinlenacee cee ae ids azagyee veda iw ss Otero 148
REPORTS, ANNUAL:
by marshal... cece cece eee eee een tenet ene eter eet e ena VT
+ by register . 6 css eeee ese eres i aetea he aheN Orden 8 Oe AAT SS OEE RR w 18
Dy Clerk ow cee e cece eet cent eet eenene ns a ae aapeues iagetadams Te
Dy ASSIGNEE 2. veer eect tere rt ee etn e nett ees Nise oe ar biGtineansatrtae Sescnan Ve
penalty for omitting ....-.-eeereeeeeeeeeeee ie ine alah cence edciretubs 779

RULES, FORMS AND ORDERS: ;
may be amended ....+++ee reer eeeeer ener se sreceres aisea 76, 184, =
to be prescribed wsscsereeeteretersreeesesess pimedtaawececes, 184) Sb.
916 GENERAL INDEX.

SALES: Page.
assignee May MAKe . . ..... eee ee ete cence nee eet ee eee 400
of unincumbered property . 1. wo... cece ce cee eee teen enes 444
DY PUble: AUCTION je. te ie cccterae die deed ate saelalyeie) a she eases BareaerasaHes 449
by private sale . « «siagers pamnenawis ess vase, yee a. 8d Sakae thence ... 450
NOLUCE Of ec sade dined soon dase modeniec eae Ra Oe Mae ees 449
of franchise of Corporation . . ..... eee cee cee cect e eet tere enees 756
OT PES) BAe 6 a axcicane Kadwad td ridex nese daeeeeserds weees 449, 451
of ‘uncollectible: assets: «6 2 ccccasia eva cwiguinsans sae es woe RHR RES 8 453
of property of corporation ......... cc cece eee ee eee eens 756
of incumbered property ...... 2c cece cece cece cece renee teee teens 495,

free from incumbrances .............. 514

of property subject to incumbrances ........... 0. cece eee eee eee 518
on petition of creditor . . oo... cece eee eee ee eee 520

In CiSPUlE® a4 cswies cowie s te gemanes Pv Ghialalin eames 451

of perishable property « 4 sos ssscvaieiaes ceeriead ee scat xs ee coins 453
when auctioneer may be employed .. ....... ce cece reece eee eee 582
title of purchaser ... 0... cece cee cece scence eee ee teen neaes 445, 452
on execution . . ....... eAaladaliag artsatedeunetecrast Wie sisi oa eaanticcesane a eceeen eee 113
when district court can not set aside ...........eceee eee ates ', 128
of ‘exempted, Property og bse eeidssiaces ee smreieiew are’ wiecayaecs eters 378
when bankrupt may purchaSe ........... cece eee eee ee eens 445, 452
when by bankrupt. VOId sca cc0s cs sscerwsciaeun cots cecseewe sees 338
when @ Misdemeanor . . ..... cece eee eee erence ee teseeenee 846
when void aS preference ...... cee cece ee ce cee eee e eee eteee 781
when by debtor valid as preference ......... cece cece ee tee reese 791

SCHEDULES:

Of GODS! 4: ic astute dahwrecns) oxy ea hauionine sielathinas Qetnaamieuiedareie seas enete 217
Of, ASSCIS « &. sssewan ys cmiewie vedine meee wee Pe Kew MWe sew SRS Sao 219
may be amended ¢ 4 scicacesinews visaeven seo das oy vases ead see en 223
to be furnished by involuntary bankrupt ................eeeeeee 314
made up by marshal ....... aati eames tae ABIES aresetiasad Gah 315:
what must contain . . oo... eee ee ee eee eee ee pontine aaceentoa oats 217
mode of stating property in . . cick ccc ee cee ee eee eens 219
mode of stating’ debts «5 sasesed ve cae does ses ened ere ee owiee sae in eT
SECURITIES:
POE OO Le LOTS cs sess ei aecaiseacsvsisenses acetone he aS psa ada cou ipa bs asailas Boacoaanauat Rovere 532
when forfeited Dy Proof 2... .. ccc cee cee ete eee teen eee e nares 534
MOGS:Of WW ATI Sos. csccscsdises kceaeeariesaea Woe rw oenatca Gnegcatabanevaraiin io @ gilgtarearw setae 495
may: ‘be: Surrendered. sos cacccwes ics wanna ses ceeardele Ca eaemngereste . 495
value Of ss 2 ang yas erases ciceaweaes wagades cus aiuin o2 aanietes aes 493

SERVICE:

Of “VOIUNTALY’ PECMIOM a. ose iisess 6.6 Kitwiecadstwrs eV. covssseaiwew ce vdeares-e dywte ein wc oan 222
of involuntary petition © 2... cece cece eee dave; soars eecee 282

when debtor can not be found ................ Gia hie ERG aeieisters LOLs
GENERAL INDEX. 917

SERVICE — Continued. Page.
on dissolved corporation .. 1... .... ccc ccc ecccccceuceeuceus 292, 293
of petition for discharge 0.0.0.0... 00. cece ccc cccvcceucceeuucucuce 650
for removal of assignee ........... 0c cece ceeeecceecceucceeeens 332
for dividend meetings . ......... 0... ccc cee cece cceccueeuceeues 572
waived by appearance ...........cc cece cece eens ph agai lee 24 asta 136
of process and further proceedings .............0ccceecesecceeaes oo

SET-OFF (see Mutual Debts).

SPECIFICATIONS:
WHOU Day fle ms: a maaes ys: Sead gina Sh keene 4k ao SOE aban ae aucee 674
WHEN! CO: bO: MICO Coe aces «car descgpacnidhetinn.d.vocnlsroune- lacie ptendaa vewnbaededed oe 67+
may be filed with register ....... 0.0... cc cece ce cc cscs cenetceeucs 675
Must (be Gehnite:3 0 cessease cay ansomwusini as Haeind eas eine od Need soe 678
What MUSE State. oi. es ee areas sees 5548 eccetesdce Sle Sgcirsva oes 8 © aceteield.a 6 an 678
may be amended....... PeSafetchss oaeln gues ad aC aceyancselieey ay snsctedineer @-sehnntetls 678
mode of objecting to 0... ccc cece cece eee eee n eee ete eeeees 678
Grae OF. soy ay Aajioss ect AAAS AeMracuash GaMareauanea a oon Relates we vee aoa 678
evidence in support Of ........... ccc ce ceca eevee eees Pies daa base 679
what creditors estopped from filing ............... cece ee eee 679
BVEIMCN(S ID 4s asweg nes caveendee ahaa s ONS Pere ceeds saad 678

STATES:
may pass insolvent laws ........... ccc cece cee erence teen teens 10
INSOLVENT: TAWS! Of: wc ecbsies sawn Twiedy eek Weve dealin os se a weas te 96

STATE COURTS:

JUPISAICTON OL; os. aecsnnainiels wae inna > geaceerroue haniaiets 98, 109, 117, 119, 139
suits in, may be continued .......... ccc cece eect te cece ee ee eens 414
when. suits in, surrendered ........... ccc cee eee e cence eee eeeeee 628
injunction against . . ........ ee eee ee eee poieleld Be SAge wee dis 0's Weieea 6d 126
over suits by assignee .. 1... cece ee ee eee e ee ee e445 sa egemee es 139
can not enjoin party from going into bankruptcy .............. 110
procedure in . . cece cece scene eee eee oubaasaling oe ecicay a andaatare @uaFea wie ae 522
STATISTICS:
of bankruptcy proceedings ........ cece eee ee ee ce ee eee ees 83, 777
to attorney-gemeral 21. Lecce cece eet e eee eee tenn ena TTT
STAY:
Of ‘what SUIS os aenawshee es nig ee eae aw eee ey et 632
ti WHYE TIE: oes iee coe bak eral Mladic Rae andes aac ees 633
by State court . ......... Nee rgiiie 6 was plows es seblenie vasa yeaa te 634
by court of bankruptcy . . ....e eee cece ee eee ee eee ee eee eee 638
when amount in dispute ....... 0... cece ec cee cece cence eens 633
by debtor proceeded against ...... ec cece cece e eee teen ee ee eee 635
when suits allowed . occ e cece cece eee ne eet eee nenee Dara niadeniets 634

after discharge . . ..seeeeeeeeees SSE Vio eA Sardis waaeaeany Hos neainalas aly 633
918 GENERAL INDEX.

STOCKHOLDERS: Page.
suits against . © .....s6e. Pacis Ae e AOR Eagar sarasala aera reeeeie . 760
SUBPOENA ... ...eeee- aycaravdwascarbustten eval dapardcnn aciayuen seaman an oira ra reve Dale avait (e 147
SUITS:
original . . .......- (LSTA HURS TES EOE ERE eee Ler een ee eters 415
continuance of peNding .. 6... cece cece ce cence nent tens taeeee 420
against stockholders . . .-... cece cece cece cee etn e cette teen eee 760

SUPERSEDING BANKRUPTCY PROCEEDINGS:

by agreement of creditors. ....... 22... eee cee ee tee eee «eee» 603
nomination Of tPUSTEE once cece ee deen so OWES Cee eee SAE ae Eee 603
GCOULE £O COMFLIM: Foie éisiacneie dave ad arecenemce we ene ese isa esas eek DEE TES .. 603
who are moving parties ......... cece cece eee ete eee ee eens 603
CONVEYANCE tO 2... eee eee e nee tee tenet e cnet teen e tent nnenene 603
jurisdiction over truste@S 1.0... .. cece cee cee cee e eee ee neces 606
power of trusteeS 2.0... ccc ccc ce cee eee cere eee ener eee 606
examination of bankrupt ............... Sshignead saat ba ol aeiedas 604, 606
PROOL OF MODES: scccniv ansteatedchondeiincs sete e ey orsublauumnes ee iansns adame a tcetustauayais 606
GUSCH AT BO: osu. ea see casso eiiarr see sererer sing preicare ee erm AG sone lar eee Jo Granade shccevanel aia 604
when proceedings continue ........ 6. cece cece ee ee eet nena 604
‘SURETY:
TUVARY OROVCS .oiececasoves snavaitetiessesstereadicestedsiSus:entseetesouainceveneywesub ma BreeRtaasaa aevatausceieine 475
when may receive dividend .......... cece cee ee eee eee een eee 570
PLELEPENCE: TO; WOLD: sicaia sia cesar mesa etere vera itn newiwrare we ce viecnbee ae 781, 820
‘when Not TCl6ASEO. 44.0 cngnewerae rea waee ane ade das wae lye eae 696
released by assent to discharge .......... ccc eee cece eee cen enee 697
demands against, provable ......... 0. ccc ccc eee cee ee ee teens 474
OD ANpPCal DOM wc acinees we dee wards eae dies oidtaceoma 8 aus! alaleoe avaseieraca cause aati 166
OW ASSIBTIES’S: DOW: desis dosecdeeaveccntesissied, ia navatdveraaieemardrodeceniscaeCaweesn 330
on bond to dissolve attachment .......... 0. cece cee cee ee ce eee 367
when released by discharge .......... ccc cece cect eect eceeeees 707
Hights: Of Andi vidual cocvgacsuceeeaienee agas cuanenuaremeundaes 477
Claim Of; barney sists wees e eden RC ron aie ae wa cee eater bidoangua 706
recovery Where THELE: IS: Bisse cease eiecdee acne awe dade a badeuneren 820
SURRENDER:
SMECU OL; CO LASSI PH CEs gs cassie ane warama weeny GAME wR Ree Gd wea 361
LOMCLOCITOT a. cs) sat -iesninlghrar dean nuheerees awk temp aceovnn teed koggidooai sc nayy peta suited 518
SUSPENSION:
of commercial paper ....... Rac uadaiarnlenals Gh cha audi nlaane tine animes 231, 255
VAL AEE: GIS ce cep OSraaicies draceintuanetsesenae avs dreidiinan, Wig gdloiars ete ded min manetingteRTeinaNe ec sos 259
when continued forty days ............... ee ee cose dare hemvothene 231
EPAMATICHE: jo so) crouterataaranereromarealarere eoesnee bf acs hi casa jantoraaitacabet pane 264
GENERAL INDEX. 919

TAXES: Page.
LO DAVE DPIOTI CY ve. rayre wid ease ios ube v aew conta sooks hed ae erate SR Raa ea 593
TERRITORIES:
courts of bankruptcy in ......... cece cece cece eee ee ences 143

TERRITORIAL COURTS:

JULISCICHOU:. OF. jx. caigisndls ve suled eva aan nies ova hex onan pees 4k 144
HOW? Dela” gga avensiarscslveg ow avrgare vanes dx OSs wm EGA EES alae sae Re oe 144
how proceedings are revised ............ cc cece cece eee eens 144, 180
TESTIMONY:
NOW, AMON) inh diaed e ert dekeee tends sae ee cae daape eee Seam 198
POSISter May TAKS... wes eos sis eked ee Ab oIG os oS EES BS REE OS BE 198
to be filed with clerk 2.4% sseccans cos sa au v0 544 Vee bead Seew BV aaa 199
Of DaAnkrupe <4. -Sssdesacd eens sada sees bocce deeded A adde-t es kee 555
OL WALITESSES= 25 3 crea. eis ssnuieeled ora asa lauir wees ae asus ae eed ans anaes bye ged austen 564
Of DaAnKTUPtS: “Wile: oi. seas me Maal ue eka aieet nana eels 567
Claim Of Priv lege s5, gas eucige eure siae 5 CasGdel ls ede Cae Soa eine tae 565

THIRTY PER CENT::

when assetS must equal . ......... cece cee cece eee eee eee 682
liens deducted . . .,........... seis Sea uae ewe RE Ss ete wae des 683
Ho deductions ‘for COSts ss es wisecnwe ae aslewea ss sesh awards anes wes 683
when not required ....... EWES ORES RADERR ITS ERASE EO OR Bot eues 682
Involuntary DADKTUPE op ciccedies oectiae Fees pace ewe yg Oe Miwa 8p gure 681
NO Certificate, WiIthOUl... 6 6s ow eed enews eee ema ree eee dae 682
TIME:
GCOMpPutation: «6 ce ec ssc eaee ss sa dee sasede de sensg yews 76, 206, 291, 780
ATHACDMENE .. co) Se eek Rois eid SRN oa eM doa so eeNRe dees 368, 364
preference .......... cased retiisecanad Seaud ediese Sobre LAE SS BG ard aaeeaaet 781
when law of 1898 took effect .......... cece e eee eee eee 22, 98, 851
Himiitation: Of sic. wie a wapeass ego tags ans chain scouts taratahost 280, 662, 790
TITLE:
to property ......... sine 8884 5a eiland ey SYNGE Rees hele Aa SS 22, 393
subject to equities sia celia AS asa auudal are rlacoelaue ss cei SOS id BS BRE SOS SSE wi OTN 8 352
TRADER:
WHO IS. es, “Masse SS Hae ais Slate OTR ee Fa eingle es 4 Gulls 255, 669
suspension of paper by ....... sc cece cece eee ence eee e ce eennees 255
omission to keep bDOOKS ...........4. Cette nee t nett eens 652, 668
TRANSFER:
fraudulent . 1. cee eeeeee reece en re ee eee eee 394, 666
to give Preference . - wees cece eect eet e ete ee eee e eee eee e nents 781

adler Gling w DEMON a 4 Sivas sy swan ceevasaseyeemeveenens 337, 388
920 GENERAL INDEX.

TRANSFER — Continued. Page.
not enough to show knowledge of insolvency ..........++.. pone TSO:
OE SCASES) acs. savas Seda sa Seesaw ceiceot as ed anew aired a arduaiyguneace ole Suaassertaee ee NRE aE 76
WHET iF DOISCEMCATION «6.5 9. saseiesg:cversiss @iese: cards wubiecaayernle Siauietevevaue: puecmoerece: @ ove 846
what constitutes: OffCNSOS: 4. 6. eireciec eee e:siniseeeg tials ies eeteieiee eee ecdie se 846
in contemplation of bankruptcy .......eccceee cere eee eceeneeeee 673
GeHNiItlON OF... Kaiasvcae dees dusie ad Hewes atemes see ew aaa 780
when Voidablé .... ciccccues sivcans ee ccces sieGedi an eyiidasad nc vetnteaseeuadeeas 786
THELEN VOI ANG 5. & Kaeo we EEE OEEORU GE Seo ees ke deo e Reese 821
AVOIMING .. 4 eid veltioees manne a cigdnlietencslimetiieios omens waatren die 827
TRIALS:
judge to make adjudication .......... ccc eee ccc eee eee eee eee 294
NEW a ee weenie ee si RNG ERO ARE Nae EE EEE oN SUeeE BEERS 306
"TROVE Ris 1a. te eay sien ge enminaia saute deeastorcuat hey ea sueitenles e gaia seals 148
TRUST:
property held by bankrupt im ........ ccc cee cece ee eee eee 431
when eXiStS IM Specig ...ceccecce reece e renter eee ete tens neeenes 482
claim ‘for Conversion, Of  & «s.¢ 48506 ee see nine a pied siwiese eas wie eIOee or ecece 433
conveyances in, when valid ............... Peas Dee SEs DREROR ER 836
conveyance in, when an act of bankruptcy ........-....+--. 238, 252
TRUSTEES:
TO) BELUECBCATE 3 nin. 5 wacssure eurdeavqutaner cnt) adele enh o acasnaenecuonudanuerudeaervans 603
delivery Of PrOPerty tO ..... ccc cece ee cet c eee e ee cence eeeetneeee 603
POWCLS Of a a tic poo ors ga-esa eg ee caw irecioamne i nmadn een es 603
fay Ne Sones « s sacked ecenns + eased Hee ee ee Re oes 283
COMpPromMiIses: DY cacnes ia sneie pers beso cd eg ROSE Sea we REE 75, 443
appointment Of avssccsaterciseeawaeewndt«wamis omeaneewarees 21, 79, 319
TAY LOVES: CUA UIN. en. 2c5istceinnce, Gb e sel oa G08 Aubin elcg TES a acecnca een WTS PSI 457
VAL “TOE PGLOR scsisiisince cada Seeusiacesveys ayes nutpausviiie nuevas essay nSadr o:& anaude scares roncuede 835
SDCITICM 16: EXPCTSES: snes secs rwaed arvissaitetsnn a Qduererivevacdg.dealiseiay sponceteienbsd Avene lave 835
MAL TCA TIONS: Oi cs, evacgsea ceusseras. aisapiaty evade aia rore Gi sckgiene doalatanioaecene 80, 320
COAtD Of isis aoe aiatene ea nnrs weed eae tests Ae u ee eee 80, 332, 426
removal Of c¢ « seg24s44dabees nw sneer dea yee eas eee 80, 332, 426
duties: Of" sux we amasgesssessewe aceasta apa ens 80, 373, 413, 441, 578
COMPCNSALON) OL. siege eleieceeSiereraie non seeae ts eressesee. did.e dh acorndebiarea 81, 595, 766
accounts and paperS Of ..... cc cece ee cece te tee cee eeeee 81, 330
DOTS! OE 3, or ai: scajeiwintawavics whee e w amalaynieteee wiasetgnecshients sreineniierasos 81, 329

UNITED STATES:
debts due: to... wi. waesadeeac wees SRR e sees aati ee rT 594
Collection: Of HAXES. 6 cca. Wane echuisastarddiemee been emda soeee 594
not affected by discharge .......... been irisi sic aeielcelne tage .. 703
GENERAL INDEX. 921

UNLIQUIDATED DAMAGES: Page.
CLAM HOT ow aus nso taveroaneu biel av ee dgews Posodw sewed evade 455, 469
Can NOt :bE Set. Off. ow. da wcederstiegues oosa 4d BARE Sa awe eee ana ERE ae He 489
ASSESSING: OF i orsl-a ss austen we 8 ow 8 arta oudle cine. cease cetavaseic ee sea 470

USURY:
judgment not void for ....... icc cece ee cee e eee eeeenees 504

can not be vacated for ......... ccc cece eee eee aes 504, 546
DY: COFPOTPAUION sc ga rey vaewed eis Vee eee PTA Migs debe deen daa wine 840
assignee can not recover .. .....e cee cece eee So Reajiaale at Sean eae wes 353
defense (O<Claim: os -isi5 danichdew siddaduiond os kb ode Go eaan eon eas 466
forfeiture for, enforced in bankruptcy ............eeeeeeeee ee ees 466
determined by lex loci contractus ...cccccc ce ccececeeen tenn eeeenns 466

VERIFICATION:

OL DEtItON: Dy OAT: sccas isi saws eS tudin@awadsrewaw be das Fo aalb dead ewan 268

VOLUNTARY BANKRUPTCY:

who may petition .............. (RETNA SPER ROME YL Bee ee Es 207, 210
what residence necessary ...........ee eee eee eset eal Ssh 121, 210
PCCWIOM “OTe «ges ees de Se ves easeaess Rea eucnon rose a adcoea glad penance: damon eae 211
schedules in . . ..c cc ccc cece eee seeeee aihitheliy 2d bataaeets wale en beat 210
in what courtS COMMENCEd ........ cece cece eet e ee eee eens 210
commencement, an act of bankruptcy ............ cece cece 212
oath of allegiance « « sis ssacscis wecssssaewerades ag Satews sane O mes 221
adjudication of citizenship .............. Minisv aera sa Pteneance ca 121
issuing of Warrant .. ..... cece cc ee ee eee segehee heeaacucaaue Sopesne 222
publication Of NOUCOS occ ssigciis ne seiiwiae ads Comaws ene jarale.e 222
what ‘proper Service’ « «seas ecewageredd eda ce ee eet RS Veo as aee's 225
what adjournment for defects in service ....... alaraigow an ve ceaareieecs 318
historical sketch Of .. wc cece eee cece eect eeenne eee ree 9
COSTS ANd CXPEDSES IN 1... cece eee cece eee teen ee ee ences enenes 594
VOTE:
WHO May Cast. kon ccc csaneee sees dese saa ee P5495 EUR YS Se Swe E 821
SO]icitation Of . 1 we. c cece eee eee eet tence tn ee enna teen eneee 327
hone by preferred Creditor 2.0... cece cece ee eee e eee eee e teens 829
what necessary to CHOICE . 1 cece eect c eee eee ee ee eee rennet 320
on removal of assignee ...... 20h acl iol Goa chalansesisdanciate whmio wie a avy eiorke 332
who may, at creditors’ meetings ......... eee eee aS eeees 84, 492
WAGE-EARNER:
Aefinition . 6. peewee eee eee eee e nee reeees AYesan's) ¥ avs tease eSca ty aaa 225
WAGES:

to have priority .. ..+.++.+- eecasciats Bates Giamutage aie ores ialhea wees ae 591
922 GENERAL INDEX.

WAIVER: Page.
Of BPDEAl oo 5 ao divans nenikecas Lda ee lace ey Galea doers 168
of right of action by proof ........... soe ts devey Kearse eRaee<seeN 628

WARRANT:
on debtor’s petition -. .......... Scat aun rhne aleden Wace Deog races wt aed akc hateanguanar teed 222.
tO DeMINdER REAL s <> sanadiengad ein Geass ce wateder ws Bad bwwdeets 229.
By “whoit ASSUER! 4:40 xsd oe Goeteay dale eae ehbwndd 144 aor ae ara das ene 222
what tO COMPAID 5 x « weeds enuuiraen.e Faeee Py esas kb seus Pecan ean 222
MOE Of SCTVING vw os racdeea asses coweae veewwe a carenea aameeba tes 222,
to be served by marshal ......... cece ccc cece eneeereeus 222
what is proper service Of .. 10... ee cece e cece eee ce cee et eeeteeeese 222
TCCUUDS Of 4 oe ah 5448 eedae sd exe's Ge bw’ sscew Sab awae eanlea is sala ee 318
when new Service ordered .......... cee cece cece ee ce eneees Es 318
provisional . s. ssiaciias eacavedanss KGa s 4a dee ee Te dae oes 282, 286
to take possession of property ............  SeSa Ce Goapietand, elaavag atone hae acs 282
TO AETESE. “CEDLOR es. acca siigsoese mn cavaredou Qin Stee eide WA Gua oD e-ayaley oe emesis 282
OM, INVOUMTALY PETITION o5.. 6-3 aves casinia sos edie gies = cs predie cine oe 313
When Hew; td: DecisSsiied. «.. s.0s4a6 swintieve (6 sew la ees Geis wow ayer 318
death of debtor after issuing .. ....... cece cece cee eee ren eeee 569
to arrest WITMESSES 24 decisis sews rie issitaw siaawoannd ses Bos haa Se 199

WARRANT OF ATTORNEY:

when an act of bankruptcy ........ yisiele gh Sntolae Hb sin ike Giale's Gaetan ag 230
not evidence of inSO]lVENCY ....... cc ce cece ee ee ee teen eens » 243
when ‘seizure under, VOId wesu eee es sa ees evinces be eee se arses aes 807

WIFE OF BANKRUPT:

may prove claim against husband ...............ce ee ee ees 121, 462
separate property Of ....... ccc cece cece cece re eee ee nse eeeene 122, 407
bound by husband’s knowledge ............... oseaspbvemse se” auinayahaual aoe 462
May’ De <CXAM INE | 5 55 eee sce dei ss slow gE ERE NGG dees Whe pray siscsarge ness 567
on what topics examined ...... 8 Bib crating tales Poe Seen a eee gOS 568
effect of failure to attend examination ............. cee eee ee eens 567
cap not be Made @ WItNESS ... cece eee eee ee eee e eee ee eees 732
property of .. ....... cates nseitibvan etess iboess't 5 CAG Auieinincds Meshes 122, 354
NO: JUAZMENE ASAINSE os, sede cv weer aina sere a: wohonecs-e ace Smenpiaya ie ee wedding aoe e403
mortgage on property of ......... SNe ay Se OS Ee re 509
WITNESSES:
who may be summoned ........... cece eee eee re eee 564
court may compel attendance .......... cece eee ee eee renee 199
register MAY SUMMON . . ...... eee ee eee eee eee iA gine haeaaaeae Ae 197
attendance under arrangement ......... cece cece eect eee teens 604:
parties may Deis «wee. eed sew ec wees CaS PRINS oe seni Yaw wars 566, 567
TOCS Of sw vanessa eedewe ss oi BUR CUeds PEGE ere Cr eee ee 567
bankrupt’s wife can not be ......... $9.04 Biwied sag samereGs ett 732

fees tendered . . we cece eee eens PAR Aaeceaes walt sces P09 Seeeae cee Sar OO
GENERAL INDEX. 923

WITNESSES — Continued.

Page
“may be examined ........... ak ainnueataes warads Ratiee BREN weve eee 064
on what topics examined .. ..... ce cece cece cence cette ones 564
deposition of, to act of bankruptcy ......... ccc cece eee eee eee 270
MOC. AMEHAADIES » .. cv acecc cee wies Hawes s He Laon vee QTL

WORDS AND PHRASES:
meaning of, law of 1898 ..........cce cece tcc e ee eeeeneeeneees 61, 205

WRIT OF ERROR:

tO: GIStVICE COULE: cai le heir deo easccee elses Poe etna oe Lee 161
Tei HAE RSGES TIES oa hak 6d we ed hkds ee Seed OR Se bee 163, 164
MOCICE: Of gs Gstkd Sis ak acento nee ANS Ae ea Aareahalag aiken eles aaapauans 166
PONE: ON io 4 | wasnd se oak a aaa een peda eae 166
when assignee may Maintain . . ... ee cece ee eee ee eee 161
tO: -CIFCULE COURT f6. sass eeed ais choos PHGGR. vende Fees ees aes demain 179
COTISTEUCHON TNGET 2g Ki key edad oo ndew TADS ES 6 ONS He em 161
KF 1524 BOL 1898

 

Author

Vol.

Bump, Orlando Franklin

 

Title

Copy

The law and practice in bankruptcy

 

 

Date

Borrower's Name