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CORNELL UNIVERSITY LAW LIBRARY
The Moak Collection

—

PURCHASED FOR

The School of Law of Cornell University
And Presented February 14, 1893

IN TIETIORY OF
JUDGE DOUGLASS BOARDMAN

FIRST DEAN OF THE SCHOOL
By his Wife and Daughter
A. M. BOARDMAN and ELLEN D. WILLIAMS
Cornell Universit

Hii

ut
LAW AND PRACTICE IN BANKRUPTCY.

THE

PRACTICE IN BANKRUPTCY,

WITH THE

BANKRUPT LAW OF THE UNITED STATES

AS AMENDED,

AND

THE RULES AND FORMS;

TOGETHER WITH

NOTES REFERRING TO ALL DECISIONS

REPORTED TO JANUARY 1, 1877.

oul! J

By ORLANDO F. BUMP

REGISTER IN BANKRUPTCY.

 

 

 

 

Ainth Gaition.

NEW YORK:
BAKER, VOORHIS & CO., PUBLISHERS,

66 NASSAU STREET.
1877.
AM YAS

Entered, according to Act of Congress, in the year eighteen hundred and seventy-seven, by
ORLANDO F. BUMP,
In the Office of the Librarian of Congress, at Washington.

Baker & Gopwin, Prrters,
25 Park Row, N. Y.
PREFACE TO THE NINTH EDITION.

Tuts edition contains references to all cases reported to Jan-
tary 1,1877. The decisions that have appeared since the work
was in press have been placed in Addenda. The whole work
has been carefully revised so as to correspond with the late
impertant decisions. The references have also been carefully
verified so as to climnitfaterall errors that may have crept in from.
inadvertence or from mistakes incident to successive editions. In-
accuracies 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 accorded to it. The aim has been to make a prac-
tical, not a theoretical 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 pur-
sued, 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 contains 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
iv PREFACE TO THE NINTH EDITION.

in the State courts. A glance at the topics indicated will at
once show the fullness of the citations and the value of the ad-
ditions.

In this edition the citations from the Bankrupt Register are
all taken from the octavo volumes, and the references are accord-
ingly 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.

BaLTIMoRE, January 1, 1877.
ABBREVIATIONS USED IN THIS WORK.

AbD OOOO caiuieed Gasaat Gauceraesioeas Abbott’s United States Reports.
As Ti Viviane pause eigen es scatne oe avemru tcl Albany Law Journal.

Ay TE, ReGioceceeseeasaesca pees eres American Law Register.

As Di REY. ip a Gyaldin'a oe, Ban Cet Waneleemaueiess American Law Review.

9A sis Dh niente Ais ete cure Sea here dee eS American Law Times.

Benim eckekinevies, Rayne atioeysadee ea Benedict’s Reports.

BIS8..50 $35. decar aad ee Soe aed es Bissell’s Reports.

By Ressanebreburdy sso ses taee v dees os Bankrupt Register.

Bos Tax odes heccshe ce2.5 iasbesveiay dlayqualss buaghineehhascwmnge Bee Baltimore Law Transcript.
CLs Bee Soe gat ease: Hee ea es Cincinnati Law Bulletin.

CG, Dh; Nessewsvnsnues weeee rans oseedaes Chicago Legal News.

Cont: Th, Vici ssakosenyat danas arson Central Law Journal.

LR Rip wouele suet vag ads vedas weadieted Internal Revenue Record.
Lansigtacnsay, Gere seca eat emacs yee os Lansing (N. Y.)

Lee ING ica eie ike towdewoeewaleeeed Glee Legal Intelligencer.

Dol Vesecscess seen eenats eet E deacon ay Louisiana Law Journal.

Be Bs e/uig 8 ta ales eed ave ovo coeds Sears Law Times Bankrupt Reports.
MOMs occse -asiasis Ruan daSeabshie. araticdels Raceta eateo i Montana.

Ne ¥2 SUpieccs osaves cases ssaee essen New York Superior Court Reports.
Nev. Ys, SUPE vaney ete ace So eeiee Peeenen New York Supreme Court Reports.
Pa. Ma,, cits so iategnt irgpteen aisle oi aeewelees Pacific Law Reporter.

Pitts: Li Degcasssvseeyoweep ese texs asarsls Pittsburgh Legal Journal.

S WECM ssid Sessa Saymainte honees haa Gide aie Sweeny (N. Y.)

Bi Cina eain oes see ae dalten ohoe ye alte Same Case.

Wescdecavivais na henge 0 35 gaia here es Patoam Western Jurist.

Wes IN Ge: 2 tia o-S rad. Sia easow ate Dene Gane Weekly Notes.

WoO0lv cessed uae Sew 22 eae ye ba eid vied Woolworth.
CONTENTS.

CHAPTER I.
Commencement or Vo.tuntary BanKRUPTCY
CHAPTER II.

Commencement or Invotuntary BankRuPrTcy

CHAPTER III.

Proceepines T0 HAVE ParTNERSHIP DECLARED BanxkruPr

CHAPTER IV.

Powers or Recisters anp Move or Revising THEIR Proceep-

INGs

CHAPTER V.
Proor or Dzsrs 3 ‘i i

CHAPTER VI.
First Meerine

CHAPTER VII.
Duties or Assiagnezrs anp Move or Remova.

CHAPTER VIII.
Exemprions - ‘ ¥
CHAPTER IX.
SaLzes

CHAPTER X.

Stray or Proczzpinas. Haseas Corpus

65

81

119

140

167

181
viii CONTENTS.
CHAPTER XI.

EXaMINATIONS
CHAPTER XII.
Courts or OriginaL JURISDICTION

CHAPTER XIII.

DistriBuTIoNn
CHAPTER XIV.
Costs
CHAPTER XV.
Discnareg ‘ : ‘ z é é

CHAPTER XVI.

Mone or Revisine Procerpinas vy Marrers 1n Bankruptcy

BANKRUPT LAW AND NOTES.

CONSTITUTION

TITLE XIII.

THE JUDICIARY.
SEC,
563.—Original jurisdiction
566.—Mode of trial .
648.—Mode of trial in circuit courts
711.—Jurisdiction exclusive .

TITLE LXI. CHAPTER I.

COURTS OF BANKRUPTCY, TIEIR JURISDICTION, ORGANIZATION
AND POWERS.

4972.—Scope of the jurisdiction of courts of Dee

4973.— Authority of district courts and judges

4974.—Sessions of the district courts

4975.—Powers of district courts to compel obedience |

4976.—Powers of circuit judge during absence, sickness, or disabitity
of district judge

PAGE

191

206

235

248

266

286

PAGE
312
315
315
316

323
338
339
339

3840
CONTENTS.

BEC.

4977.— Powers of the supreme court for the District of Columbia.

4978.—Powers of the district courts for the Territories

4978a. -Clerks of supreme courts to transmit papers to district courts

4978).—Jurisdiction after transmission of papers

4979.—Jurisdiction of actions between assignees and persons ‘claiming
adverse interest ‘ : i

4980.—Appeals to circuit court

4981,.—How taken

4982.—How entered .

4983.— Waiver of appeal

4984.—Appeal from decision rejecting

4985.—Costs ‘

4986.—Power of general superintendence conferred on circuit court

4987.—Superintendence by supreme courts of Territories

4988.—Power of a district judge in a district not within any organized
circuit . : E

4989.—Appeal and writ of error to supre eme court.

4990.—Supreme court may prescribe rules

4991.— What constitutes commencement of pr oceedings

4992.—Records of bankruptcy proceedings

4993.—Registers in eae .

4994. —Who are eligible .

4995. —Qualification 3 Z

4996.—Restrictions upon registers

4997.—Removal of registers .

4998.—Powers of registers

4999.—Limitation upon power of registers .

5000.—Registers to keep memorandum of proceedings

5001.—Registers to attend at place directed by anne

5002.—Power to summon witnesses

5003.—Mode of taking evidence

5004.—Depositions and acts to be reduced to writing ;

5005..— Witnesses must attend F

5006.—Contempt before register

5007.—Registers may act for each other,

5008.—Payment of fees of registers :

5009.— Contested issues to be decided by judge :

5010.—Certificate of matters to be decided by judge

5011.—Appeal from judge’s decision ee ase submitted

5012.—Penalties against officers . ;

5013.—Definitions A

CHAPTER TWO.
VOLUNTARY BANKRUPTCY.

5014.—Petition and schedules
5015.—Schedule of debts
5016.—Inventory of property. ‘
5017.—Oath to petition and schedules
5018.—Oath of allegiance
5019.—Warrant to marshal
5020.—Amendment

CHAPTER THREE.

INVOLUNTARY BANKRUPTCY.

5021.—Acts of bankruptcy ° : ; ; ‘
5022.—Prior acts of bankruptcy . . - .

ix

Pion
340
340
340
340

341
353
358
358
359
359
360
861
368

368
368
371
372
373
374
374
375
375
375
376
378
378
378
379
379
379
379
380
380
380
381
381
383
383
383

385
391
392
394
894
394
395

397
440
x CONTENTS.

SEC.

5024.—Proceedings after filing petition .
5025.—Service of erder to show cause
5026.—Proceedings on return day

5028.— Warrant é :
5929.— Distribution of property of debtor
5030.—Schedule and inventory i é
5031.—Proceedings when debtor is absent

CHAPTER FOUR

PROCEEDINGS TO REALIZE THE ESTATE FOR CREDITORS.

5032.—Contents of notice to creditors
5033.—Marshal’s return

5034.—Choice of assignee

5085.— Who are disqualified .

5036.—Bond of assignee .

5037.—Assignee liable for contempt.
5038.—Resignation of the trust .
5039.—Removal of assignee .

5040.—Effect of resignation or removal .
5041.—Filling vacancies

5042.—Vesting estate in remaining assignee
5043.—Former assignee to execute instruments
5044.—Assigoment

5045.— Exemptions

5046.— What property vests in assignee .
5047.—Right of action of assignee

5048.—No abatement by death or removal.
5049.—Copy of assignment conclusive evidence of title
5050.—Books of account.

5051.—Debtor must execute instruments
5052.—Chattel mortgages

5053.—Trust property

5054.—Notice of appointment of assignee and record of assignment
5055.—Assignee to demand and receive all assigned estate
5053.—Notice prior to suit against assignee
5057.—Time of commencing suits

5059.—To keep money and goods separate and distinct
5060.—Temporary investment of pe
5061.—Arbitration

5062.—Assignee to sell property
5062a.-Continuance of the business
50626.-Mode of selling

5063.—Sale of disputed property

5064.—Sale of uncollectible assets

5065.—Sale of perishable property

5066 —Discharge of liens

5067.—Provable debts

5068.—Contingent debts

5069.—Liability of bankrupt as surety .
5070.—Sureties for bankrupt .
5071 —Debts falling due at stated periods
5072.—No other debts provable ‘
5078.—Set-off : ,
5074.-—Distinct liabilities

5075.—Secured debts.

5076.—Taking proof of debts

PAGR
441
447
449
464
464
465
465

466
467
468
476
476
477
477
477
479
479
479
479
480
510
525
535
544
544
545
546
546
546
548
550
550
550
554
555
555
555
559
560
501
563
563
564
564
577
580
582
584
587
587
592
592
618
CONTENTS.

SEC.

5076a.-Notaries may take proof .

50760.—Notaries may take aimee and acknowledgments

5077.—Creditor’s oath

5078.—By whom oath may be made
5679.—Before whom oath may be taken
5080.—Proof to be sent to assignee
5081.—Examination by court into proof, of claim
5082.— Withdrawal of papers
5083.—Postponement of proof

5084.—Surrender of preference .
5085.—Allowance and list of debts .
5086.—Examination of bankrupt

5086a.—Parties may be witnesses

5087.— Examination of witness .
5088.—Examination of bankrupt’s wife
5089.—Examination of imprisoned or disabled bankrupt |
5090.— No abatement upon death of debtor.
5091.—Distribution of bankrupt’s estate
5092.—-Second meeting of creditors .
5093.—Third meeting of creditors

5094,.—Notice of meetings

5095.—Creditor may act by attorney

5096. —Settlement of assignee’s account
5097.—Dividend not to be disturbed
5098.—Omission of assignee to call meetings
5099.—Compensation of assignee .
5100.—Commissions . :
5101.—Debts entitled to priority

5102. —Notice of dividend to each creditor
5103.—Settlement of eee estate by trustees
5103a.-Composition

CHAPTER FIVE.

PROTECTION AND DISCHARGE OF BANKRUPTS.

5104.—Bankrupt subject to order of court
5105.—Waiver of suit by eee ‘ a ‘
5106.—Stay of suits 3 :
5107.—Exemption from arrest
5108.—Application for discharge
5109.—Notice to creditors .

5110.—Grounds for opposing discharge 3
5111.—Specifications of grounds of opposition
5112.—Assets equal to thirty per cent. required
5112¢.—Not required of involuntary pre
5113.—Final oath of bankrupt . .
5114.—Court to grant discharge

5115.—Form of certificate of discharge
5116.—Second bankruptcy .

5117.—Debts not released ;
5118.—Liability of other persons not released
5119.—Effect of discharge 3 :
5120.—Application to annul discharge

683
684
686
692
695
696
697
716
722
722
725
726
T27
728
728
132
734
758
xii CONTENTS.

CHAPTER SIX.

PROCEEDINGS PECULIAR TO PARTNERSHIPS AND CORPORATIONS.

5121.—Bankruptcy of partnerships
5122.—Of corporations and joint stock companies”
5123,—Authority of state courts proceeding against corporations |

CHAPTER SEVEN.
FEES AND COSTS.

5124,—Fees
5125.—Traveling and incidental expenses .

5126.—Marshal’s fees
5127.—Justices of the supreme court may change tariff of fees

5127a.-Reduction of fees .
51276.-Returns

CHAPTER EIGHT.
PROHIBITED AND FRAUDULENT TRANSFERS.

5128.—Preferences by insolvent
5129.—Transfers of property to defeat the act
5130.—Presumptive evidence of fraud . ‘
5130a.—Limitations in involuntary bankruptcy
5131.—Fraudulent agreements .
5132,.—Penalties against fraudulent bankrupts

Nores ro tue Russ

Nores to Forms

ADDENDA , ‘ ‘ .
General Orpers in Bangruproy
Forms in Bankruptcy

Genera InpEx

761
776
7183

785
789
789
792
792
792

794
828
836
837
838
389

844
849
851
857
88]
951
INDEX TO CASES CITED.

A. B., 134, 474.

Abbe, Warren C., 765.

Abrahams, Aaron, 17, 386.

Adams, James M., 120, 468.

Adams, Julius L., 192, 196, 372, 386,
641.

Adams, R. A., 703.

Adams v. Boston, Hartford & Erie R.
R. Co., 1, 2, 367, 884, 777, 784.

Adams v. Meyers, 488, 491.

Adams v. Storey, 307.

Adams et al. y. Waite, 378.

Ahl et al. v. Thorner, 802, 824.

Akin y. Oakey, 769.

Alabama & Chattanooga R. R. Co., 7,
40, 41, 384, 389, 427.

Alabama & Chattanooga R. R. Co. vy.
Jones, 41, 296, 297, 338, 339, 347,
362, 363, 366, 367, 368, 420, 441,
448, 657, 778.

Alabama & Florida R. R. Co., 608.

Alcott v. Avery, 744.

Alden v. Boston, Hartford & Erie R.
R. Co., 215, 320.

Alderdice v. State Bank, 817, 821.

Alexander, Alex., 188, 235, 257, 259,
260, 263, 480, 653, 785, 788, 790,
“792.

Alexander, John, 110, 222, 227, 288,
290, 292, 297, 341, 342, 354, 359,
361, 363, 365.

Alexander, W. B., 28, 29, 30, 404, 438,
434, 487.

Alexander v. Gibson, 307.

Alexander v. McCullough, 545.

Allen, Abner H., 481, 541, 595, 608.

Allen v. Binswanger, 342.

Allen v. Ferguson, 749.

Allen v. Massey et al., 499, 527, 529.

Allen v. Montgomery, 526, 527.

Allen y. Soldiers’ Business Messenger
& Dispatch Co., 118, 686, 780.

-Allen v. Ward, 113, 686.

Allen v. Whittemore, 494.

Alling v. Egan, 741.

Alsabrook y. Gates, 527.

 

Alston v. Robinett, 286, 759.

Alston v. Wingfield, 691.

Altenheim, Eliza, 123, 469.

Amblard v. Heard, 345.

American Glass Ins. Co., 578.

American Waterproof Cloth Co., 672.

Ames v. Gilman, 144, 540.

Amoskeag Manuf. Co. v. Barnes, 731.

Amsinck v. Bean, 498, 526, 770.

Amsterdam Fire Ins. Co., 412.

Ancker v. Levy, 770, 810.

Anderson, 593, 594,

Anderson, George W., 212, 317, 338,
482, 72'7.

Anderson v. Miller, 487, 557.

Anderson y. Strassberger, 826.

Andrews vy. Dole, 554.

Andrews v. Graves, 830, 831, 836.

Andrews v. Jones, 667.

Angell, Fred’k E., 429.

Angier, 595.

Ankrim, 719.

Anon., 9, 11, 14, 19, 25, 27, 121, 133,
159, 175, 248, 257, 268, 386, 387,
891, 398, 395, 417, 428, 431, 468,
473, 481, 511, 521, 541, 610, 631,
664, 669, 696, 697, 721, 786, 790,
791, 797, 821, 831, 845, 847, 849.

Anshutz y. Fitzsimmons, 769.

Ansonia Brass Co. v. New Lamp Chim-
ney Co., 3, 113, 686, 778, 779.

Antrim v. Kelly, 531.

Apperson v. Stuart, 748, 750.

Appling v. Bailey, 536.

Appold, B. F., 155, 248, 516, 517, 584,
586, 662, 786.

Archenbraun, Wm., 468, 688, 700, 711,
718, 736.

Archenbrown, 505.

Archer vy. Duval, 551, 552.

Arledge, G. H., 831.

Armstrong v. Rickey Bros., 602, 604,
813.

Arnold, Noah 8., 100, 440, 796, 814.

Arnold v. Leonard, 169, 557, 559.

‘Arnold v. Maynard, 407, 415, 802.
xiv

Ashby v. Steere, 407, 806, 807, 810.

Ashley v. Robinson, 14, 393, 527, 533,
704, 760.

Askew, D. R., 156, 519, 834.

Aspinwall, 202, 283, 649, 707, 709,
725.

Aspinwall, James §., 107, 848.

Asten, B. C., 680, 681.

Atkins v. Spear, 825.

Atkinson, R., 217, 228, 326, 340.

Atkinson y. Farmers’ Bank, 407, 797,
806, 810.

Atkinson v. Fortinberry, 754.

Atkinson v. Kellogg, 774.

Atkinson v. Purdy, 224, 322, 325, 811.

Augustine v. McFarland, 610.

Austill v. Crawford, 730.

Austin v. Markham, 757, 838.

Austin v. O’Reilly, 584.

Avery v. Hackley, 825.

Ayde v. Baker, 769.

Ayer v. Brastow, 768.

Babbitt v. Burgess, 343, 249, 351, 483,
767, 836.

Babbitt v. Walbrun & Co., 225, 288,
344, 357, 440, 829, 830, 835, 836,
837.

Babcock, Sam’l H., 594, 661.

Bach vy. Cohn, 750.

Bachman, 783.

Bachman vy. Packard, 227, 342.

Badger v. Story, 527, 558.

Baer, Anthony, 156, 518.

Bailey, John, 704, 710.

Bailey, Tatnall, 6, 390.

Bailey v. Loeb, 584, 585, 586.

Bailey v. Moore, 788.

Bailey v. Nichols e¢ al., 574.

Bailey v. Smith, 543.

Bailey v. Whitetield, 362.

Bailey v. Wier, 551, 554.

Bairlie, 595.

Baker, Jerome E., 812.

Baker v. Vasse, 738.

Baker v. Vining, 557, 558.

Bakewell, 674.

Balch, John T., 450.

Baldwin, Theodore E., 632.

Baldwin v. Raplee, 290, 359.

Baldwin v. Rosseau, 404,419, 425,

Baldwin v. Wilder, 421.

Ballard v. Parsons, 427.

Ballou, L. 8., 223, 335, 342.

Ballou v, Minard, 811.

Baltimore County Dairy Ass’n,

Bangs v. Strong, 756.

Bank v. Cooper, 293, 301, 346, 347,
363, 368, 369.

779.

y

 

INDEX TO CASES CITED.

Bank of Commerce v. Russell, 492, 547-

Bank of Madison, 336, 491.

Bank of North Carolina, 565, 670.

Bank of Pittsburgh v. Brady’s Bend
Iron Co., 45, 424, 426, 446.

Bank vy. Franciscus, 744.

Bank v. Onion, 758.

Bank vy. Overstreet, 502.

Banks, Mark, 596, 607, 701, 711, 713,
714,

Banks v. Ogden, 486, 553.

Barber v. Rogers, 309.

Barber v. Terrell, 528.

Barclay v. Carson, 146, 537, 545, 590.

Barker v. Smith, 499.

Barman, Abram, 807.

Barnard v. N. & W. R. R. Co., 606,
608.

Bamert v. Hightower, 51, 429, 437.

Barnes’ Appeal, 585.

Barnes, Brother & Herron, 640, 662,
847.

Barnes, H. F., 85, 115, 116, 629, 656.

Barnes v. Billington, 402, 410, 603.

Barnes vy. Moore, 736, 759.

Barnes v. Rettew, 312, 353, 832.

Barnes y. U. §., 575, 576.

Barnett, 481.

Barnett v. Pool, 484.

Barney v. Patterson, 373.

Barnwell v. Jones, 767, 828, 831.

Barrett, 138, 696.

Barrett, Joseph, 85, 116, 474, 475, 476
628, 656.

Barron v. Benedict, 748.

Barron v. Morris, 290, 359, 529, 606,
807.

Barron v. Newberry, 177, 482, 617.

Barrow, R. H. (re Loeb, Simon & Co.,
re Winter), 171, 211, 316, 608.

Barstow v. Adams, 146, 312, 536, 545.

Barstow v. Hansen, 752.

Barstow v. Peckham, 222, 223, 331,
335.

Bartenbach, George A., 565, 595.

Bartholomew v. West, 159, 512, 520,
524.

Bartholow v. Bean, 821, 824.

Bartlett v. Peck, 749.

Bartusch, 94, 126, 470, 635, 636.

Bashford, Henry W., 699.

Batchelder, C. W., 415, 708, 713, 715,
806, 820.

Batchelder v. Low, 286, 759.

Batchelder v. Putnam, 509.

Bates v. Tappan, 214, 507, 747.

Bates v. West, 738.

Baum, Adolph, 192, 274, 275, 641,
717, 846,
INDEX TO CASES CITED.

Baum y. Stern, 214, 321.

Beach y. Miller, 697, 736, 748,

Beacon v. Howard, 5388.

Beal, Joseph H., 14, 393, 486, 702.

Beall v. Harreil, 534.

Beals v. Quinn, 797, 816.

Bean, Levi, 629.

Bean vy. Brookmire & Rankin, 226,
346, 440, 498, 499, 800, 829.

Bean v. Laflin, 824.

Bear v. Steinberg, 496.

Beardsley, Alfred, 14, 393, 700, 701,
719,

Beardsley v. Hall, 286, 759.

Beattie v. Gardner e¢ al., 218, 803,
810, 812, 823.

Beatty, R. W., e¢ al., 701.

Bechet, Alphonse, 682.

Beck vy. Parker, 310, 534, 831.

Beckerford, 155, 517, 523.

Beecher v. Binninger, 348, 352.

Beekman v. Wilson, 760.

Beers (John) et al,, 767.

Beers et al. v. Place & Co. et al., 225,
346, 507.

Beeson v. Howard, 538.

Belcher, W. K., 6, 390.

Belden, Francis C., 705.

Belden, W., 184, 692.

Belden v. Edwards, 374.

Belden & Hooker, 103, 192, 275, 630,
641, 648, 718.

Belis & Mulligan, 202, 280, 281, 649,
651, 711, 714, 720.

Bell v. Leggett, 838.

Bellamy, John, 137, 198, 261, 267.268,
269, 270, 271, 276, 376, 549, 643,
657, 695, 696, 697, 717, 726, 727,
849, 850.

Bellamy v. Woodson, 745.

Bellows & Peck, 211, 319, 322, 329,
330, 502, 507.

Benham, A., 53, 451.

Benjamin v. Graham, 352.

Benjamin v. Hart, 358.

Benjamin vy. Prieur, 608.

Bennett, 19, 387, 481.

Bennett, 14, 157, 398, 520.

Bennett, James, 50.

Bennett, J. 8. K., 607.

Bennett et al., 14, 763.

Bennett v. Alexander, 734.

Bennett v. Bartlett, 738.

Bennett v. Everett, 749, 750, 752.

Bennett v. Goldthwait, 115.

Bentley v. Wells, 212, 616, 808, 834,
835.

Bergeron, John B., 30, 482, 483, 459.

 

XV

Berghaus v. Alter, 374.

Bernstein, H., 217, 218, 228, 229, 328,
329, 602.

Berrian (J. M.) e€ al., 246, 774, 775.

Berry v. Gillis, 501, 587, 539.

Berthelon vy. Betts, 810, 481.

Betts vy. Bagley, 307.

Biddle’s Appeal, 214, 321.

Bidwell, 765.

Bigelow (Edw.) e¢ ai., 101, 102,
244, 570, 596, 614, 623, 624,
767.

Bill v. Beckwith e¢ al., 179, 221,
292, 296, 334, 336, 361, 365,
826, 827.

Bingham v. Frost, 439, 637, 811.

Bingham vy. Richmond, 439, 637,

Binninger (Abm.) e¢ al., 40, 206,
363, 364, 365, 427, 655.

Binninger & Clark, 136, 477.

Binns, Leonidas, 44, 443.

Binswanger, 375, 376.

Birch v. Tillotson, 537, 539.

Bird v. Hempstead, 536.

Bishop v. Loewen, 808, 693.

Bissell v. Couchane, 731.

Bissell v. Post, 315.

Bivens v. Newcomb, 755.

Black v. Blazo, 759.

Black v. McClelland, 316, 576.
Black & Secor, 37, 219, 400, 407, 410,
412, 428, 604, 796, 811, 823.

Blackburn vy. Stannard, 43, 442.

Blackman Bros., 243, 668.

Blair v. Allen; 289, 356, 824.

Blaisdell (A.) e¢ al, 268, 477, 697.

Blake, Alex’r, 196, 648.

Blake v. Alabama & Chattanooga R.
R. Co., 347.

Blake v. Bigelow, 604, 741.

Blanchard v. Russell, 307.

Blandin, E. G., 360, 570.

Blane v. Banks, 748.

Bledsoe, 611.

Blight, Peter, 670.

Blight v. Ashley, 555.

Blin v. Pierce, 487, 492, 538.

Bliss, E. G., 181, 134, 474.

Blodgett & Sandford, 148, 149, 159,
477, 478, 519.

Bloss, C. E., 28, 48, 44, 101, 102, 229,
230, 231, 442, 443, 565, 625.

Blue Ridge R. R. Co., 176, 611.

Blum v. Ellis, 617, 747.

Blum v. Ricks, 736.

Blythe v. Johns, 373.

Boas v. Hetzel, 756.

Bodenheim & Adler, 266, 696.

177,
667,

224,
562,

817.
299,
Xvi

Bogert & Evans, 95, 376, 630.

Bogert & Ockley, 475.

Bolander et al. v. Gentry, 501.

Bolton, H. C., 124, 471.

Bond, A. F., 645.

Bond v. Baldwin, 481.

Bond v. Gardner, 748.

Bonesteel, J. N., 204, 222, 223, 335,
342, 365, 647.

Bonnett, James, 410, 451.

Book, Samuel, 1, 274, 385, 388, 716,
729.

Booker v. Adkins, 690, 691.

Boone vy. Hall, 282, 337, 527, 528.

Boone v. Stone, 537, 538.

Booth, John K., 662.

Booth v. Clark, 170, 485, 557.

Booth v. Neely, 804, 823.

Booth v. Storrs, 732.

Boothroyd & Gibbs, 159, 519, 523, 834.

Borden v. Geary, 282, 724.

Borland v. Phillips, 835.

Borst, John B., 283, 725.

Bosler v. Kuhn, 739.

Bosteck v. Jordan, 595.

Boston, Hartford & Erie R. R. Co., 50,
61, 297, 368, 401, 451, 459, 475,
845.

Bostwick v. Dodge, 758.

Bosworth v. Pomeroy, 510.

Botts v. Patton, 552, 747.

Bouie v. Puckett, 731.

Bound, 711.

Boutelle, 273, 716, 849.

Bowery Savings Bank v. Clinton, 734.

Bowie, T. F., 177, 212, 217, 228, 229,
230, 326, 328, 330, 345, 613, 616.

Bowman & Harding, 214, 507, 508,
947.

Bowne & Ten Eyck, 584, 586.

Boyd, W., 495.

Boyd v. Vanderkamp, 576, 733.

Boylan, J. A., 68, 764, 776.

Boyst, 692.

Bradford y. Rice, 82, 575, 743.,

Bradley, 245, 766.

Bradley v. Frost, 509.

Bradley v. Hunter, 647, 722.

Bradshaw v. Klein, 225, 345, 497, 526,
527.

Brady v. Otis, 550.

Bragg, Maynard, 204, 644, 721.

Braley v. Boomer, 506.

Branch Bank v. Boykin, 749.

Brand, 100, 102, 104, 105, 502, 596,
625, 626, 668.

Brandt, George, 191, 198, 201, 272,
878, 495, 641, 643, 647.

 

INDEX TO CASES CITED.

Bratton v. Anderson, 689.

Bray, 79, 382.

Breck (Wm. P.) é¢ ai., 587.

‘Breck & Schermerborn, 381.

Breneman, Henry, 306, 407, 415, 417.

Brent, 283, 709, 725.

Breretoa v. Hull, 701, 708.

Brett v. Carter, 529, 608, 807.

Bridges v. Armour, 742.

Bridgman, 8. D., 101, 614, 624, 670.

Briggs, Dexter M., 46, 445, 845

Briggs v. Stephens, 102, 318, 331,
625

Brigham v. Claflin, 233, 337.

Brinkman, Henry, 177, 610, 612.

Brisco, 469, 717.

Bristol v. Sanford, 498, 653.

Britton v. Payen & Brennan, 803, 811.

Broadhead, James, 716.

Broadnax v. Bradford, 728, 729.

Brock v. Hoppock, 60, 402, 456.

Brock v. Terrell, 211, 316, 319, 499,
586, 596, 802, 820, 827, 828.

Brockway, W. E., 715.

Bromley & Co., 192, 193, 197, 208, 442,
609, 642, 643, 644, 646, 683, 687.

Bromley v. Smith e¢ al., 336, 494.

Brooke v. McCracken, 344, 823.

Brookmire v. Bean, 572.

Brooks, 208, 647, 840.

Brooks, 8. W., 598.

Brooks v. D’Orville, 535.

Brooks v. Harris, 543.

Brooks y. Scoggins, 488, 797, 801,
816, 817, 821.

Broome, James E., 528, 533, 831.

Brown, George, 14, 393, 699.

Brown, James B., 158, 161, 512, 516,
520.

Browy, Orrin, 597.

Brown, Stephen, 82, 242, 243, 575, 668.

Brown v. Branch Bank, 744.

Brown v. Collier, 750.

Brown vy. Cumming, 590.

Brown v. Farmers’ Bank, 592.

Brown y. Gibbons, 617.

Brown v. Patrick, 543.

Brown v. Ribb, 736.

Browne v. Insurance Co., 541.

Bruce, Cosmore G., 567, 581, 632.

Bruner v. Sherley, 595.

Brunquest, Wm., 599.

Bryan, G., 598.

Bryan v. Whitsett, 558.

Buchanan, William, 47, 48, 49, 450,
462, 463, 464.

Buchanan v. Smith, 213, 219, 317,
812, 815, 819, 821, 823.
INDEX TO CASES CITED.

Buckhause & Gough, 767.

Buckingham v. McLean, 211, 284, 816,
819, 325, 327, 337, 348, 350, 351,
871, 407, 481, 497, 803, 813.

Bucknam v. Goss, 828, 825.

Buckner & Company, 773.

Buckner vy. Calcote, 768, 769, 773.

Buckner v. Jewell, 336, 662.

Buckner v. Street, 572.

Bucyrus Machine Co., 245, 766.

Bugbee, Oliver, 565, 566, 571.

Buler, Francis J., 460.

Bullock, Benj., 484.

Bullymore v. Cooper, 512.

Bunster, H. B., 267, 283, 696. °

Burbank v. Bigelow, 234, 314, 338, 342.

Burch, Thomas F., 52, 433.

Burdick v. Jackson, 493, 806.

Burgess, Joseph H., 707, 708, 714, 720.

Burk, J., 279, 699, 700, 706, 716, 719,
720, 721, 850.

Burk v. Wiuters, 545.

Burkholder v. Stump, 8382, 833.

Burnett, 500.

Burnhisel v. Firman, 808, 825.

Burns, 8. & M., 217, 218, 228, 320,
322, 326, 601.

Burns v. Harris, 159, 519.

Burnside v. Brigman, 736.

Burpee v. National Bank, 350, 799,
811, 815.

Burpee v. Sparhawk, 736.

Burr v. Hopkins, 99, 637, 638, 639.

Burrus v. Wilkinson, 738.

Burt, 417, 421, 596.

Burt (Edw.) e¢ al., 572.

Burton v. Lockert, 484.

Buse, 598.

Bush, L., 50, 61, 62, 451, 459, 460.

Bush’s Appeal, 213, 317.

Bush v. Cooper, 738, 748.

Bush v. Crawford, 569.

Bushey, M. N., 238, 289, 271, 655, 727.

Butcher v. Forman, 583.

Butler, 831.

Butler, H. L., 584, 586, 800.

Butler v. Merchants’ Ins. Co., 495.

Butler v. Morgan, 211, 319, 746.

Butterfield, D. C., 38, 430, 719.

Butterfield & Burr, 116, 620, 848,

Byrne, 0., 248, 653, 771, 772.

Cake v. Lewis, 582.

Calendar, R. & L., 48, 49, 448, 463,
464.

California Pacific R. R, Go., 28, 30,
38, 39, 55, 210, 306, 313, 430, 431,
433, 442, 447, 778.

B

 

xvii

Camack v. Bisquay, 538, 557.

Cambridge Inst’n v. Littlefield, 750,

Camden Rolling Mill Co., 47, 49, 461,
463.

Cameron v. Canico & Co., 40, 776.

Camp v. Gifford, 732, 755.

Campbell, Hugh, 214, 217, 218, 227,
228, 320, 321, 326, 328, 442, 600,
601, 602.

Campbell v. Perkins, 786, 739, 754.

Canby v. McLear, 571, 848.

Canfield, Philemon, 60, 458.

Cannaday, Benj. F., 696.

Cannon v. Wellford, 144, 540, 769,
776.

Cantrell, Samuel, 529.

Capelle v. Hall, 569.

Capelle v. Trinity Church, 567, 573.

Cardwell v. Republic Fire Ins. Co.,
580.

Carey v. Esty, 703.

Carey v. Nagel e¢ al., 491.

Carlin v. Carlin, 781.

Carlisle v. Soule, 510.

Carlton, Moses, 329, 381.

Carow, 376.

Carpenter v. Turrell, 506, 734.

Carr v. Fearington, 214, 528.

Carr v. Gale, 344, 853, 482, 527, 545.

Carr v. Hilton, 527, 554.

Carr v. Lord, 548, 553.

Carr v. Whittaker, 444,

Carrier & Baum, 429.

Carson, James, 122, 472, 647.

Carson & Hard, 647.

Carson y. Osborn, 751, 752.

Carter, William, 422, 425.

Carter v. Goodrich, 748.

Caryl v. Russell, 715.

Casey, Edward A., 289, 296, 333,
849, 356, 363, 366.

Cassard v. Kroner, 311.

Castle v. Lee, 819.

Catlin et al. v. Foster et al., 91, 112,
360, 568, 589, 590, 630, 827.

Catlin v. Hoffman, 808, 811, 813.

Caylus e¢ al., 91, 588.

Cease, Hezekiah B., 699.

Central Bank, 282, 337, 662.

Cerf, Louis, 723.

Chadwick vy. Starrett, 739, 730.

Chamberlain & Chamberlain, 95, 405,
417, 635,

Chamberlain v. Perkins, 310.

Chamberlaines, 548.

Chamberlin v. Griggs, 715.

Chambers v. Neale, 744, 760.

Champneys v. Lyle, 668.

on
339,
xviii

Chan v. Chan, 814.

Chandler, 419, 420, 422, 428, 424.

Chandler, P. K., 572.

Chandler v. Siddle, 309.

Chandler v. Windship, 567, 735.

Chapman v. Forsyth, 699, 730, 732.

Chappel, 410, 426.

Chase, Ephraim, 708.

Chemung Canal Bank y. Judson, 315,
831, 338, 346, 552.

Cheney, Jonathan 1J., 186, 694.

Chilton v. Cabiness, 485.

Christley, William C., 116, 848.

Christman v. Haynes, 827.

Christy, William, 207, 218, 228, 301,
824, 325, 326, 328, 341, 370, 609.

Church v. Winkley, 749.

Citizens’ Bank v. Ober, 169, 557.

Citizens’ National Bank v. Leaming
et al., 732.

Citizens’ Savings Bank, 328.

City Bank, 91, 92, 590, 591.

City Bank v. Banks, 708.

City Bank v. Walton, 617, 747.

Claflin ct al. v. Cogan et al., 784.

Claflin v. Houseman, 851.

Claflin v. Torlina, 839.

Clairmont, Jules, 181, 182, 133, 135,
474, 475, 476.

Clancy, Jobn, 584,

Clapp, W. D., 502, 681.

‘Clarion Bank v. Jones, 219, 799, 804,
806, 811, 813, 814, 826.

Clark (A. B.) e¢ al., 145, 215, 820,
866, 539, 546.

Clark, Abraham B., 238, 376, 654,
667.

Clark, Isaac, 786.

Clark, Samuel D., 267, 696.

Clark & Binninger, 76, 95, 104, 105,
145, 209, 215, 238, 881, 626, 654.

Clark v. Binninger, 215, 313, 320, 321,
826, 3852, 540, 546, 596.

Clark & Daughirey, 606, 637, 799,
815, 817, 819.

Clark v. Clark, 170, 3848, 486, 554,
557. 5

Clark v. Hackett, 558, 554.

Clark v. Iselin, 289, 355, 356, 591,
597, 796, 805, 808, 812, 813, 817,
834.

Clark v. Marx, 833.

Clark v. Rosenda, 821, 609.

Clark v. Rowling, 742, 743.

Clark vy. Skilton, 807.

Clark v. Sparhawk, 591.

Clark, West et al., 647.

Clarke, Sarah C., 699.

Clarke v. Piet, 811.

 

INDEX TO CASES CITED.

Clarke v. Porter, 577.

Clarke v. Ray, 310.

Clarke v. Rist, 322, 595.

Clason y. Morris, 600.

Clayton v. Hamilton, 373.

Clayton v. Seibert, 378.

Clemens, John, 422, 423.

Clement v. Hayden, 757.

Clerk’s Office v. Bank, 497.

Cleveland v. Boerum, 541, 552, 553.

Clifford, George, 488.

Clifton et al. v. Foster et a/., 212, 319,
599.

Clinton v. Mayo, 30, 51, 58, 433, 451,
455.

Clough, O. H., 92. 577.

Coan & Ten Brocke Mfg. Co., 548.

Coates v. Blush, 715.

Coates v. Simmons, 753.

Cobb, V. B., 158, 154, 155, 157, 158,
514, 515, 516, 519.

Coburn v. Ware, 755.

Cockril] v. Jones, 617.

Cocks, John F., 712.

Codwise v. Gelston, 535.

Coe v. Whitbeck, 769.

Cogburn v. Spence, 746.

Cogdell v. Exum, 282. 337, 552.

Cogswell, M. C., 122, 150, 473.

Cohen, Albert, 156, 518.

Cohn, B., 406, 421.

Cohn, J. §., 831, 833.

Coit v. Robinson, 288, 291, 292, 300,
801, 855, 359, 361, 364, 365, 369.

Colby v. Ledden, 217, 327.

Cole v. Duncan, 177, 212, 617.

Cole v. Roach, 576.

Coleman, Columbus C., 110, 290, 358.

Coleman v. Davies, 731.

Colie v. Jamison, 483, 670.

Collier v. Hunter, 543.

Collier, Taxlor & Co., 248, 246, 770,
U71, 772,

Collins, Charles 8., 499.

Collins, Harriet E, 1, 886.

Collins, J. C., 645.

Collins et al. v. Bell et al., 230, 330,
820.

oe Gray, 98, 99, 439, 440, 800,

28.

Collins v. Hood, 770, 772, 810.

Collins vy. Marshall, 544.

Colman, C. C., 96, 106, 440, 630, 817,
822,

Columbian Metal Works, 608.

Comegys v. McCord, 551.

Comegys v. Vasse. 484, 485.

Comfort v. Eisenbeis, 750.

Comins vy. Coe, 488,

.
INDEX TO CASES CITED.

Commercial Bank vy. Buckner, 115,
730, 759.

Commonwealth v. Erisman, 741.

Commonwealth v. Huber, 734, 743.

Commonwealth v. Hutchinson, 737.

Commonwealth v. O’Hara, 307.

Commonwealth v. Waiker, 841.

Comstock, E. D., 158, 515.

Comstock, Edson, 187, 692, 741.

Comstock (Eugene) e¢ al., 258, 259,
665, 666, 790, 844.

Comstock & Oo., 77, 200, 382, 429,
571, 648, 650, 808, 810.

Comstock v. Grout, 190, 694, 741.

Comstock v. Wheeler, 107, 682.

Comstock & Young, 666.

Conant, Frederick J., 551, 553.

Cone v. Purcell, 146, 545.

Connell, F. E., Jr., 14, 272, 393, 396,
701, 727.

Conner y. Southern Express Co., 658.

Connor v. Gupton, 736.

Connor & Hart, 708, 806.

Conrad, 574.

Conrad v. Prieur, 608, 612.

Converse v. Sorley, 542, 558.

Cook, Enoch, 502.

Cook & Farrington, 625.

Cook & Gleason, 177, 212, 213, 318,
819, 599, 601, 772, 774.

Cook y. Lansing, 537.

Cook v. Moore, 703, 704.

Cook v. Rogers, 310, 833.

Cook v. Tullis, 494, 548, 801, 809, 834,

Cook v. Whipple, 210, 231, 233, 316,
824, 337, 498, 811.

Cooke (Jay) & Uompany, 673, 674,
686, 773.

Cookingham v. Ferguson, 582.

Cookingham vy. Morgan, 820, 824, 828,
8381.

Coons, W. §., 521.

Cordes, 165, 524.

Corey et al. v. Ripley, 286, 759.

Corliss v. Shepherd, 750.

Cornell v. Dakin, 758.

Corner v. Mallory, 501, 502.

Corner v. Miller et al., 808, 502.

Cornwall, D., 29, 57, 109, 299, 368,
403, 436, 453, 571, 573, 631, 738.

Cornwall vy. Cornwall, 436.

Cornwell's Appeal, 831.

Corpening v. Grinnell, 753.

Corse, Barney, 210, 313, 722.

Cote, 711.

Cotton, Samuel C., 1, 385, 741.

Cottrell v. Mann, 540.

Coulter, J. M., 599.

Cowing v. Altman, 662.

 

xix

Cowles, W. C., 403, 404, 419, 421.

Cox v. Wilder, 159, 512, 532.

Coxe v. Hale, 435, 637, 808, 817.

Cozart, William B., 600, 602.

Craft, Asa W., 387, 54, 292, 365, 407,
408, 409, 410, 438.

Crafts v.. Mott, 582, 583.

Cragin v. Carmichael, 345, 500, 527,
800. :

Cragin v. Thompson, 291, 357, 831,
832, 833.

Oraig, 647, 651.

Craig, Daniel, 647.

Cram, N. O., 124, 471, 580, 581, 594.

Cramer, 96, 99, 440, 637.

Crawford, F., 82, 565, 575, 576, 580.

Crawford v. Points, 301, 370, 371.

Crayton v. Hamilton, 539,

Creditors v. Cozzens é& Hall e¢ al., 42,
207, 339, 443, 444,

Creditors v. Williams, 116, 275, 276,
718, 719, 727, 849.

Cretiew, J., 283, 699, 700, 706, 709,
710, 715.

Crockett et al. v. Jewett, 15, 66, 67,
394, 526, 762.

Cromwell v. Comegys, 670.

Cronan v. Cutting, 188, 730.

Crooker v. Trevett, 701.

Crosby v. Wentworth, 746.

Crouch v. Gridley, 741, 742.

Crowley & Hoblitzell, 54, 55, 438.

Crowley v. Hyde, 561.

Culver & Calender, 436.

Cumming v. Clegg, 161, 164, 513.

Cunningham y. Cady, 481, 432. ©

Curran vy. Munger, 408, 412, 417, 418,
456.

Currier, J. R., 29, 30, 432, 483.

Curtis v. Slosson, 744.

Cushman, Jobn, 11, 727.

Cutter v. Dingee, 541.

Cutter v. Evans, 506.

Cutter v. Folsom, 1, 806, 885, 753, 754,
755.

Cutter v. Taylor, 703.

Daggett, 763, 764.

Daggett v. Cook, 214, 507, 598.

Dallas v. Flues & o., 109, 634.

Dalrymple v Hillenbrand, 838, 839.

Dambmann vy. White, 233, 3387, 535,
536, 545.

Danforth, 201, 650.

Daniels, John H., 596.

Darby, John F., 674.

Davenport, J. W., 251, 254, 611, 615,
663, 664.

Davenport v. Tilton, 502, 507.
XxX

David vy. Ferrand, 484.

Davidson, Charles A., 435, 440, 637,
811, 812.

Davidson, George J. G, 334, 335, 336.

Davis, Assg. of Bittel e¢ al., 81, 173,
176, 212, 213, 225, 318, 345, 594,
612, 614, 620, 625.

Davis, Edwin, 155.

Davis, Irwin, 214, 217, 228, 328, 516.

Davis, John, 406, 426, 427.

Davis & Son, 124, 470.

Davis v. Anderson et a/., 189, 172, 176,
211, 218, 217, 225, 319, 549, 552,
614, 623,

Davis & Green vy. Armstrong, 400, 425,
427, 820.

Davis v. Railroad Co., 3, 320, 368,
779.

Day v. Bardwell e¢ al., 15, 307, 310,
394, 757.

Day v. Laflin, 544.

Deadrick v Armour, 481, 501, 553.

Dean, Calloway, 196, 602, 614, 643.

Dean & Garrett, 44,400, 404, 444, 448,
$17.

Dean, John W., 136, 235,
258, 259, 260, 261, 262,
284, 372, 386, 477, 640,
658, 663, 669, 727, 785,
789, 790, 844.

Dean v. Speakman, 577.

Dearing v. Moffitt, 749, 750.

Deckert, Danicl, 155, 162, 517, 521.

Decoster v. Livermore, 670.

De Forrest, R. A., 61, 458.

Delavan, Charles H., 708, 710, 711.

Delavergue v. Farrand, 182, 687.

Den v. Wright, 146, 374, 545, 558.

Dennet v. Mitchell, 407, 800, 802.

Derby, James C., 2, 282, 723.

Derby, Walter 8., 51, 57, 61, 401, 452,
460.

Derry Milis, 579.

Detert, 513, 639.

Detroit Car Works, 31, 484.

Develin & Hagan, 27, 121, 468.

Devoe, James R., 188, 692, 698, 728.

Dewey, 150, 478.

Dey, James R., 172, 211.

Diblee (Henry E.) et al., 36, 37, 399,
408, 409, 410, 411, 412, 413, 415,
555, 666, 696, 720, 721, 797.

Dick v. Powell, 743. 747, 755.

Dickerson v. Spaulding, 503, 504.

Dickey v. Harmon, 492.

Diggs v. Prieur, 747.

Dillurd, George W., 162, 217, 228,
828, 512, 517, 518.

Dillard y. Collins, 526.

251, 257,
263, 265,
644, 653,
786, 787,

 

INDEX TO CASES CITED.

Dingee v. Becker, 692.

Doan v. Compton & Doan, 31, 406,
415, 425, 427, 457.

Dodge, Oliver W., 266, 695.

Dodge vy. Sheldon, 833.

Doe v. Shbildress, 322, 509.

Doggett v. Emerson, 740, 753.

Dole, Nathaniel, 189, 196, 199, 648,
645, 646, 694.

Dole v. Warren, 581, 741.

Doll v. Harlow, 563.

Donahue et al., 256, 257, 259, 789,
760, 791, 792, 844.

Donaldson, 217, 218, 228, 229, 320,
328, 329, 696.

Donaldson v. Farwell, 487.

Donnell v. Swaim, 750.

Doody, 699.

Doremus v. Walker, 319, 604.

Dormire v. Cogly, 544.

Dorn v. O'Neil, 733.

Dorsey v. Maury, 756.

Douglas v. St. Louis Zine Co., 319, 613.

Dow, J., 90, 99, 299, 867, 499, 546,
800.

Dow e¢ al., 588, 594.

Dow v. Sargent, 796.

Downer vy. Brackett, 502, 593.

Downer v. Chamberlin, 754.

Downer v. Dana, 736.

Downer v. Rowell, 722, 736, 743, 753,

756, 760.
Downing, William, 66, 243, 660, 732,
771.

Downing v. Traders’ Bank, 583, 584.

Doyle, Louis J., 417, 707.

Doyle, Philip A., 703, 720.

Drake, Priscilla J., 254, 660.

Drake vy. Jones, 760.

Drake v. Rollo, 91, 589, 590, 592.

Dresser, E. K., 705.

Dresser v. Brooks, 306, 701, 748, 755,
757,

Dreyer, Frederick A., 720.

Driggs v. Moore, Foote & Co., 408,
798, 802, 805, 818, 837.

Driggs v. Russell et al., 582.

Drisko, P. C., 2, 887, 722.

Diummond, John T., 36, 96, 403, 412,
418, 428, 637, 799.

Drury v. Vannevar, 537.

Ducros v. Fortin, 608, 609

Dudley, 19, 207, 324, 325, 326, 287,
481, 602.

Duerson, George T., 162, 517, 523.

Dumont, Edward, 176, 611.

Dunbar v. Baker, 182, 690.

Duncan, William B., 62, 449, 527,
686.
INDEX TO CASES CITED.

Duncan vy. Hargrove, 742.

Dundore v. Coates, 461.

Dunham, Henry M., 611.

Dunham & Hawks, 584, 586, 662.

Dunham & Orr, 56, 58, 403, 405, 420,
452, 455.

Dunkerson & Co., 594.

Dunkerson (Robt.) & Co., 596, 773.

Dunkerson (Robt. K.) & Co., 773.

Dunkle & Driesbach, 568, 799, 812.

Dunn ef al, 61, 379, 458.

Dunn, James H., 634.

Duan v. Sparks, 581, 583.

Dunning v. Perkins, 821.

Dupee, 284, 760.

Dupuy v. Harris, 373.

Dusar v. Murgatroyd, 576, 739, 740.

Dusenbury v. Hoyt, 286, 748, 751, 759.

Dutcher v. Importers’ & Traders’
Bank, 495.

Dutcher v. Marine Nat’l Bank, 495.

Dutton v Freeman, 50, 88, 451, 623.

Dwight v. Simon, 308.

Dwinel v. Perley, 558, 561.

Dyer v. Cleveland, 581, 733, 755.

Dyke v. Marr, 585.

Dyson v. Harper, 322.

Eames, Lucius, 308, 319.

Earle, Mortimer L., 204, 649.

Eastburn v. Yardley, 327.

Eastman v. Hibbard, 740.

Ebersole v. Adams, 810.

Ecfort & Petrung v. Greely, 28, 30,
403, 433, 487.

Edgar v. McArn, 704, 705.

Edith, 600, 608.

Edmonson v. Hyde, 357, 499, 527, 529,
532, 546.

Edwards, Leroy T, 158, 516.

Edwards v. Coleman, 527.

Edwards y. Gibbs, 702.

Eeles, William, 419.

Egbert v. McMichael, 751, 752.
Eidom, J. D., 116, 275, 279, 280, 380,
699, 701, 705, 719, 720, 721.
Elder, George, 89, 104, 105, 109, 110,
620, 622, 628, 627, 632, 634.

Eldred, Elisha, 532.

Eldridge, Spencer, 176, 573, 606, 611,
807.

El'erhorst e¢ al, 176, 216, 327, 610,
611.

Ellerhorst & Co., 582.

Elliott, Barrit R., 277, 699.

Elliott Felting Mills, 580.

Ellis, 159, 502, 505. 512.

Ellis, Joel A. H., 773.

 

xxi

Ellis, William, 399.

Ellis v. Boston & Hartford R. R. Co.,
607.

Ellis v. Ham, 583, 740, 741.

Ely, Abner §., 484.

Emery v. Canal National Bank, 83,
245, 592, 766.

Emison, David, 105, 118, 626, 684.

Erben, 14, 898, 520.

Erwin & Hardy, 241, 602, 653.

Ess & Clarendon, 425, 427.

Ethridge v. Jackson, 535.

Eureka Manuf’g Co., 566.

Evans, H. 8., 222, 223, 329, 331, 332,
335. Z

Evans, Thomas C., 249, 439, 567, 835.

Evans v. Carey, 749, 750.

Evans & Hamrick, 486.

Everett, Jared, 162, 513, 517, 518.

Everett v. Derby, 425, 457,

Everett v. Stone, 407, 502, 707, 802,
825, 833.

Ewing v. Peck, 742.

Exchange Bank v. Knox, 757.

Eyster v. Gaff, 172, 212, 214, 233, 338,
54].

Faires v. Metoyer, 545.

Fales v. Thompson, 536.

Fallon, James W., 183, 615, 692.

Farish, John W., 520, 525.

Farmers’ Bank v. Smith, 307.

Farmers’ & Brokers’ Savings Bank v.
Publishing Co, 491.

Farnsworth, 598.

Farnsworth, Brown & Co., 90, 588.

Farnum, Peter, 245, 766.

Farrar v. Walker, 782.

Farrell, J. W., 386, 696.

Farrin v. Crawford, 292, 297, 365,
404, 405, 409, 412, 413.

Farrington v. Farrington, 374.

Faxon v. Folvey, 547.

Fay, G. P. & B. W., 201, 650.

Feely. Martin W., 15, 153, 155, 157,
514, 517, 519.

Feeny, 444.

Fehley v. Barr, 161, 164, 217, 319,
878, 513, 519, 521.

Feinberg (Robt.) e¢ ai., 196, 200, 648,
650, 657.

Fellows v. Hall, 541, 542, 752.

Fendly, J. J., 48, 830, 348, 350, 442, 443,

Fenlon v. Lonergan, 233, 3387.

Fenton v. Collerd. 349, 351.

Ferguson v. Peckham, 223, 332.

Fernberg, Robert, 136, 477.

Ferris, Josiah 8., 120, 468.
xxii

Fetherston, 164, 513.

Fetter v. Cirode, 528, 595, 747.
Field v. Baker, 488, 812.

Field's Estate, 751.

Filley, Chauncey J., 718.

Fillingin v. Thornton, 316.
Findlay, Alexander, 55, 56, 452, abn
Finn, Michael, 705, 707.

Fireman’s Insurance Co., 579.

First National Bank v. Haire, 808.

First Nat’l Bank of Baltimore v.

Jaggers, 508,

First Natl Bank of Mount Jey v.

Wilson, 492, 495, 809.

Fisher v. Currier, 410, 428, 722.

Fisher v. Foss, 743.

Fisher v. Henderson, 547.

Fisher v. Vose, 504.

Fisk v. Montgomery, 308.

Fiske v. Hunt, 487, 502.

Flagg v. Ely, 730.

Flagg v. Tyler, 502. 734.

Flanagan v. Cary, 729.

Flanagan v. Pearson, 691, 729, 731,
732.

Flanders v. Abbey, 824, 851.

Fletcher v. Morey, 494, 608.

Fletcher v. Neally, 748.

Flourney v. Newton, 249, 716, 721.

Fogerty & Gerrity, 40, 61, 427, 459.

Fogg v. Stickney, 581.

Folsom v. Clemence, 800.

Foot, Norman B., 488, 774, 808.

Forbes, William D., 529, 639, 640.

Forbes v. Howe, 796, 802, 804, 806,
810, 815, 816.

Ford v. Belmont, 486.

Ford v. Keys, 812.

Forsaith v. Merritt e¢ ai., 770, 801.

Forsyth & Murtha, 569, 638, 640, 797,

802, 815.
Forsyth v. Woods, 91, 590.

Fortune, James, 8?, 83, 88, 106, 255,
504, 505, 628, 630, 660, 661.

256,
Foster, Benjamin N., 707.
Foster, Elisha, 7, 67, 68, 390,
Foster, John §.,

504.

762.

Foster (Dwight) et al. v. Ames e¢ al.
167, 170, 174, 175, 179, 225, 231,
346, 560, 562,

250, 334, 342, 345,
564, 608, 610, 612, 662.

Foster v. Hackley & Sons, 844, 418,
487, 497, 498, 529, 758, 796, 802,
806, 514, 820, 823.

Foster v. Hinckley, 758.

Foster y. Ingléee, 509.

Foster v. Lowell, 489.

Foster vy. Remick, 457.

211, 319, 330, 502,

 

INDEX TO CASES CITED.

Foster v. Rhodes, 607.

Foster v. Wylie, 538.

Fourth Nat'l Bank v.
Bank, 492.

Fowler, James L., 20, 21, 388.

Fowler v. Dillon, 325.

Fowler v. Hart, 325, 610, 614.

Fowler v. Kendall, 731, 740.

Fowles v. Treadwell, 571, 730.

Fox v. Eckstein, 29, 402, 437, 567.

Fox v. Gardner, 826, 835.

Fox y. Paine, 715, 736.

Fox v. Weed, 758.

Fox v. Woodruff, 7438.

Foxall v. Levi, 186, 694.

Fraley v. Kelly, 749, 750.

Francis & Buchanan, 435.

Francis v. Ogden, 744.

Francke, Charles J., 723.

Frank, M,, 83, 116, 124, 471, 628,
657.

Frank vy. Houston, 312, 339, 378.

Frank vy. Tolman, 851.

Franklin Fund Saving Society, 332,
555.

Frazier vy. Banks, 755.

Frazier v. Hallowell, 590.

Frear, Alexander, 568, 771.

Fredenberg, Michael W., 77, 196, 200,
381, 382, 648, 650, 657.

Freedley & Wood, 47, 48, 463, 464.

Freelander v. Holloman, 527, 551, 552.

Freeman, Robert H., 15, 394, 701,
707, 715.

Freeman v. Denning, 882.

Freeman v. Fort, 320.

Freeman v. Warren, 752.

Freeny v. Ware, 212, 617.

French vy. Carr, 484, 485.

French v. First National Bank, 350.

French v. Morse, 577, 578.

Frentress vy. Markle. 577.

Frenzel v. Miller, 825.

Friederick, Jobn, 282

City Nat'l

82, 724.

Frisbie, James W., 195, 197, 641, 642,
644.

Fritsch v. Van Mittledorfer, 217, 319,
543.

Frizelle, S. F., 177, 197. 615, 642.

Frizelle et al., 195, 614, 717, 725.

Frost, Jacob, 28, 51, 433.

Frost (Richard H.) e¢ al., 569.

Frost v. Hotchkiss, 232, 337.

Frost v. Tibbetts, 755.

Fuller, Henry W., 485.

Faller, Price, 44, 218, 228, 230, 328,
400, 443, 534, 601, 800.

Fulweiler v. Singer, 588,

Fulwood y. Bushfield, 582, 741,
INDEX TO CASES CITED.

Funkenstein, J., 62, 448.
Fuokenstein & Co., 473.

Gaffney v. Signaigo, 530, 831.

Gage v. Gates, 462, 1851.

Gainey, Eliza, 165, 520, 525, 846.

Galbraith, Cromwell & Co., 765.

Gale v. Vernon, 542.

Gallinger, A. B., 54, 410, 411, 438.

Gallisoa et al., 82, 696, 717.

Garborough v. Wood, 592.

Gardner v. Cook, 82, 504, 505.

Garnett v. Roper, 733.

Garrett, Edward, 520, 742.

Garrett v. Carow, 182, 687.

Garrison, Edward, 712, 714.

Garrison vy. Markley, 201, 347, 348,
650.

Garwood, George M., 709, 775.

Gary v. Bates, 536.

Gassett v. Morse, 415.

Gattman v. Honea, 806, 823.

Gay, Benjamin C, 707, 711, 714, 797.

Galies v. American, 344.

Gebhart, 53, 56, 450, 452, 455.

George & Proctor, 281, 713, 714, 720,
775, 802, 808.

_Gettleson, Henry, 378, 696.

Geward v. Dunbar, 755.

Ghiradelli & Co., 182, 185, 687.

Gibson v. Dolvie, 809.

Gibson v. Green, 503, 755.

Gibson v. Lewis, 566, 674.

Gibson v. Warden, 499, 605, 800, 829.

Giddings v. Dodd, 802, 806.

Gies, R. Frederick, 248, 249, 25°, 664.

Gilbert, Joseph F., 198, 196, 641, 642,
644, 651.

Gilbert v. Bradford, 704, 721.

Gilbert v. Crawford, 233, 337.

Gilbert v. Lamphier, 775.

Gilbert v. Priest, 233, 337.

Gilday, John B., 678, 679,

Gile, John, 19, 387, 388.

Gillenwaters v. Miller, 834.

Gillespie v. McKnight, 530.

Gillies et al. v. Cone et al., 426, 427.

Givens v. Robins, 182, 184, 687, 688.

Glaser, Louis, 3, 187, 189, 207, 231,
824, 372, 877, 692, 698.

Glaser, Samuel, 380.

Glen v. Johnson, 532.

Glenham Manuf’g Co., 465.

Globe Insurance Co. v. Clevcland Ins.
Co., 291, 312, 357, 417.

Goddard v. Weaver, 214, 217, 228,
319, 320.

Goedde & Co., 2438, 771.

Golden v. Prince, 307.

xxiii

ea at Abm., 408, 405,417, 715,

716.

Golson vy. Neihoff, 818, 817, 821.

Goodall v. Tuttle, 222, 226, 231, 306,
314, 316, 333, 339, 341.

Goodfellow, Joseph, 1, 2,4, 7, 8, 24,
385, 387, 390, 699, 762, 709, 737.

Goodman, Rachel, 2, 57, 454, 571.

Goodrich vy. Remington, 490.

Goodrich v. Wilson, 851, 854.

Goodridge, George H., 702, 703.

Goodwin, William F., 846. :

Goodwin v. Sharkey, 527.

Goodwin v. Stark, 7384.

Gordon, McMillan & Co. v. Scott &
Allen, 194, 250, 460, 648, 664,
720.

Goss y. Gibson, 581.

Gove v. Lawrence, 710.

Grady, John W., 70, 765,

Graham, 158, 159, 512, 515, 516, 524.

Graham, William H., 282, 724.

Graham v. Hunt, 751.

Graham v. Pierson, 82, 566, 744.

Graham y. Stark ¢¢ al., 797, 799, 803,
806, 810, 814, 818, 820, 821, 824.

Granger & Sabin, 102, 580, 625.

Grant, Benjamin B., 158, 331, 482, 496,
516, 609, 661.

Grant, John C., 133, 474.

Graves, Alexander, 17, 181, 179, 386,
478.

Graves, Jobn, 555, 561, 563.

Graves v. Winter, 402.

Gray v. Farran, 730.

Gray v. Heslep, 561.

Gray v. Rollo, 91, 589.

Great West. Telegraph Co., 61, 297,
298, 368, 459, 462.

Greely v. Scott, 522.

Greenfield, Thompson, 292, 696, 765,
776.

Greenleaf v. Maher, 741.

Green Pond R. R. Co., 28, 401, 433.

Greenville & Columbia R. R. Co., 425,
778.

Grefe, Henry M., 276, 719, 846.

Gregg, 661, 802, 804, 821, 823.

Gregg, Thomas B., 139, 255, 482.

Gregg v. Wilson, 631.

Griffen, William, 195, 650, 651.

Griffin, Jesse H., 159, 195, 512.

Griffiths, 723.

Griffiths, Charles W., 499, 546, 606.

Grinnell, George B., 614.

Grinnell & Co., 614, 615.

Griswold v. McMillan, 536.

Griswold v. Pratt, 308.

 

Grover v. Clinton, 782.
XXiv

Grow v. Ballard & Hall, 820, 828.

Guild, Moses, 721.

Gulick v. McIver, 670.

Gunther e al. vy. Greenfield e¢ al., 146,
541,

Gupton v. Connor, 736, 760.

Haake, J. C., 521. 565, 606.

Haas & Sampson, 134, 474.

Hadley, Joseph F., 30, 34, 35, 37, 39,
45, 54, 412, 420, 426, 429, 480, 431,
432, 4383, 438, 444,

Hafer & Bro., 159, 511,

Hafer & Bro. (In re Beck), 231, 330,
602, 796, 804, 817.

Hagan, Edward, 247, 670.

Haggerty v. Amory, 743.

Haggerty v. Morrison, 758.

Hahnilen, Jacob F., 610.

Haines v. Stauffer, 750.

Haldeman v. Michael, 812.

Hale v. Wiggins, 249, 664, 666.

Haley, Leonidas B., 619.

Hall, 288, 355, 421, 427.

Hall, Erie L., 25, 26, 121, 270, 395,
467, 468, 726, 845.

Hall, Horace, 7, 40, 390, 764.

Hall, Jack, 518.

Hall vy. Allen, 301, 369.

Hall v. Bliss, 615, 616.

Hall v. Cooley, 419, 420.

Hall v. Cushing, 479.

Hall v. Deshler, 312.

Uall v. Fowler, 733, 755.

Hall v. Hayver, 800.

Hall v. Scovel, 554, 557, 598, 599.

Hallam v. Maxwell, 550, 673.

Halle, Abraham, 105, 627.

Halliburten v. Carter, 731.

Halsey v. Norton, 769.

Hambright. Abner, 161, 484, 511, 594,
611, 615, 664.

Hamburger & Frankel, 587.

Hamilton v. Bryant, 508.

Hamilton v. National Bank, 493.

Hamlin v. Hamlin, 115.

Hamlin v. Pettibone, 440, 459, 823.

Hammond & Coolidge, 703, 707, 711,
713, 714, 716.

Hammond y. Rice, 144, 540.

Hampton v. Rouse, 23, 481.

Handlin, Venny, 159, 519.

Hanna, 376.

Hanna, Samuel, 124, 471, 610, 624,
625.

Hansen, Hans J., 720.

Hanson v. Herrick. 501.

Hapgood et al., 412, 548.

 

INDEX TO CASHS CITED.

Harden, Herman P., 11, 892, 573, 738.

flardin v. Osborne, 492.

Hardison, John, 699.

Hardy ¢¢ al. v. Binninger al., 55,
407, 411, 416, 419, 427, 487, 489,
457.

Hardy v. Carter, 583, 737.

Hardy ef al, v. Clark et a/., 2, 60, 391,
407, 412, 416, 418, 456.

Hare, Uttely, 258, 740.

Hargroves v. Cloud, 703, 704.

Harlow, 597.

Harmon v. Jamesgon, 505.

Harper, John B., 707, 708, 710.

Harrell v. Beal, 534.

Harrington vy. Fish, 561.

Harrington v. McNaughton, 742, 743.

Harris, Jabez, 726.

Harris, Samuel, 19, 20, 387, 481.

Harris, William, 62, 460.

Harris v. Collins, 553, 554.

Harris v. Peck, 749, 750.

Harris, Rice & Co., 784.

Harrison v. McLaren, 798, 821, 828.

Harrison v. Sterry, 242, 502, 506, 667,
768.

Harrod v. Burgess, 503.

Hart v. Strode, 374.

Hartel, J., 604.

Harthill. Alexander, 45, 445, 446.

Harthorn, 243, 668.

Hartough v. Hayden et al., 67, 763.

Hartz, Mark, 762.

Harvey v. Crane, 499, 500, 528, 607,
806.

Harwood, 104, 626.

Hasbrouck, Abraham E., 376, 845.

Haskell, 677, 679, 680.

Haskell, Stephen V , 78, 283.

Haskell v. Ingalls, 812, 819.

Haskill v. Fry, 801.

Haskins v. Warren, 374.

Hastings v. Belknap, 47, 461.

Hastings v. Fowler, 232, 306, 337, 535.

Hatch v. Seely, 102, 502, 510, 525,
626.

Hatcher, Benjamin H., 18, 844.

Hatcher v. Jones, 161, 164, 513.

Hathaway vy. Brown, 317, 501, 825.

Hathaway v. Quimby, 489.

Hatje, 51, 452, 456, 504, 572.

Hutton v. Speyer, 739.

Haughey v. Albin, 219, 225, 344, 418,
603, 746, 799, 802, 804, 811, 823.

Haughton, Joseph, 37, 54, 55, 408
410, 438.

Haughton v. Eustis, 502, 593.

Havens, James W., 133, 475.

Havens v. National City Bank, 316.

’
INDEX TO CASES CITED.

Hawkeye Smelting Co., 56, 58, 452,
456.

Hawkirs (Geo. A.) e¢ a/., 810, 881.

Hawkins v. First National Bank of
Hastings. 359, 529, 605.

Hawkins v. Hastings National Bank,
290.

Hawkins yv. Learned, 810.

Haworth v. Travis, 161, 164, 513, 600.

Haxton y. Corse, 115, 483.

Hay, Ira, 158, 516.

Hayden, J. P., 444.

Hayes vy. Flowers, 754, 755.

Hayman v. Pond, 730.

Haynes, David, 129, 246, 247, 472,
669, 670.

Hazard v. Boykin, 760.

Hazleton, 749.

Hazleton v. Valentine, 186, 189, 190,
693, 694,

Heath v. Hughes, 196, 643.

Hecht v. Wassell, 504.

Heffren v. Jayne, 731.

Heffren v. Leroy, 731.

Heffron, P. H., 48, 461.

Heirschberg, Louisa, 249, 250, 664.

Heller, 410.

Heiler, B., 22, 396.

Heller Brothers & Co., 394.

Hendricks v. Judah, 789.

Henkel, William, 159, 520, 528, 527.

Henkelman et al, v. Smith, 502.

Hennocksburg & Block, 188, 565, 576,
689.

Hercules Mutual Life Ins. Co., 421,
422, 424,

Herman, A H. & H., 94, 95, 469, 634,
635, 636.

Herndon v. Givens, 748.

Herndon v. Howard, 146, 545.

Herrick, Charles H., 760, 766.

Herrick, Hugh T., 245, 246, 671.

Hervey v. Devereux, 731.

Hester, John H., 511, 595.

Heusted, 50, 51, 192, 451, 642.

Hewett v. Norton, 321, 540.

Meydette, Frank, 55, 56, 452, 455.

Heys, Julius, 25, 26, 395, 467.

Hezekiah, 519.

High (Wm C.) e al, 100, 178, 471,
613, 614, 615.

Hill, Joseph M., 61, 459.

Hill, M. W.. 280.

Hill, William D., 11, 15, 21, 26, 120,
123, 281, 329, 391, 392, 395, 467,
469, 657, 702, 703, 716, 717, 719,
720, 844.

Hill v. Bonaffon, 351,

Hill v. Bowers, 595.

 

XXV

Hill v. Fleming, 211, 318,

Hill v. Robbins, 736, 748, 751.

Hill v. Van Valkenburgh, 378, 428,
431, 438.

Hilton v. Telegraph Co,, 410.

Hinds (J. A.) e¢ al., 497, 571, 601, 604,
773.

Hinsdale, Richard H., 674.

Hirsch, Francis A., 188, 184, 208, 314,
339, 691.

Hiscock v. Green, 595, 626, 770.

Hislop v. Hoover, 800.

Hitchcock v. Rollo, 91, 92, 589, 591,
592.

Hitchings, 558.

Hoadley v. Cawood, 102, 625,

Hobart v. Haskell, 542.

Hobson y. Markson, 460, 831.

Hodges, Joseph H., 194, 648, 644.

Hogendobler v. Lyon, 184, 688.

Holbrook y. Brenner, 170, 553, 557,
561.

Holbrook v. Coney, 139, 169, 484, 549,
5d6.

Holbreok v. Dickinson, 550.

Holbrook v. Foss, 7438.

Holland, D. G., 100, 640.

Holland, George B., 45, 445.

Holland v. Seaver, 544.

Holleman v. Dewey, 566, 572.

Hollenshade, Jacob W., 706.

Hollis (J. A.) ef al., 422, 426, 427.

Hollister v. Abbott, 742.

Holloman v. White, 521.

Holmes, Charles W., 505, 709, 715,
831.

Holmes, D. K., 696.

Holmes & Lissburger, 677, 678, 844,
848.

Holt, Asa, Jr., 645.

Holyoke v. Adams, 506, 734, 752.

Home Insuraice Co. y. Hollis, 542.

Hood ef ai. v. Karper et al., 96, 99,
638, 813, 819.

Hood v. Spencer, 489, 736.

Hook, Leonard L., 567.

Hoover v. Robinson, 232, 337.

Hoover v. Wise, 822.

Hope Mining Co., 104, 599, 600, 626,
664.

Horner v. Speed, 392, 749, 750, 751.

Harner v. Spielman, 729, 752.

Hornthal v. McRue, 750.

Horter v. Harlan, 330, 693.

Horton, Eli, 308.

Horton, Joseph H.,
807.

Hosie, Robert, 547.

Hoskins, 186, 694.

99, 308, 638,
XXvi

Hosmer v. Jewett, 547,

Hotchkiss, 586.

Hough v. First Nat’] Bank, 808.

Houghton, Charles P., 16, 283, 386,
585, 586, 710, 717, 725.

Houghton, S. 8., 275, 276, 719.

Houghton e¢ al., 585, 586.

Housberger (Doris) et al., 503, 504.

House, Sumuel A., 413.

House v. Swanson, 503.

Houston v, City Bank, 609, 610.

Houston v. State, 754.

Hovey v. Home Insurance Co., 92, 591.

Howard, Cole & Co., 245, 572, 583,
766.

Howard v. Prince, 530.

Howe v. Union Insurance Co., 503.

Howes v. Macy, 62, 464, 465.

Howland, Cornelia M., 2, 55, 454,

Hoyt, 599.

Hoyt, A. W., 241, 247, 669, 670.

Hoyt, Rufus, 419, 823.

Hoyt e¢ al. v. Freel e¢ al., 115, 184, 185,
625, 688.

Hubbard, E., 106, 627.

Hubbard v. Allaire Works, 99, 440,
800, 829.

Hubbell & Chapel, 238, 254, 654,

Hubbell v. Cramp, 736.

Huber v. Ely, 744.

Hubert v. Horter, 309.

Hudgins v. Lane, 738.

Hudson vy. Bingham, 286, 392, 759.

Hufnagel, Peter, 828, 584, 586, 602,
608.

Hughes, William H., 205, 258, 266,
380, 658, 663, 695, 726.

Hughes v. Oliver, 739, 740.

Hughes & Son, 602,

Hull, John W., 434, 765.

Hulst, William W., 445, 545, 648.

Hulverson v. Hutchinson, 617.

Humble et al. v. Carson, 744.

Hummitsh, 14, 15, 398, 704.

Humphreys v. Blight, 84, 567, 591,
628.

Humphreys v. Swett, 736.

Hunt, 792.

Hunt, C.. 161, 164, 518, 524.

Hunt, Josiah D., 179, 221, 384, 562,
796, 814, 837, 845.

Hunt v. Hornell, 29, 96, 436, 637,

Hunt et al. v. Pooke et al., 38, 401,
406, 430, 451, 652.

Hunt v. Taylor, 738.

Hurst, James T., 681.

Hurst v. Teft, 332, 366.

Hussman, Earnest, 14, 898, 498, 529,
530, 583, 702, 703, 706.

 

INDEX TO CASES CITED.

Hutchings v. Muzzy Iron Works, 212,
318, 607.

Wutchins v. Taylor, 407.

Hutto, Solomon, 161, 512, 523, 598.

Hyde v. Bancroft, 228, 326, 829, 330.

Hyde v. Cohen, 533. :

Hyde v. Corrigan, 804, 805, 817, 819.

Hyde v. Ely, 552.

Hyde vy. Findlay, 489.

Hyde y. Sontag, 526.

Hyde v. Woods, 808.

Hyman, Louis, 75, 378, 657.

Hymes, Jacob, 30, 51, 431, 433, 437.

Hynson v. Burton, 487, 542, 543.

Hyslop v. Hoppock, 343, 352.

Independent Insurance Co., 309, 401,
566.

Indianapolis R. R. Co., 462.

Ingalls, William, 244, 770, 772.

Ingalls v. Savage, 747.

Ingersoll v. Rhodes, 743, 750.

Ingraham v. Phillips, 502, 507, 747.

Innes v. Carpenter, 423.

Insurance Co. v. Comstock, 55, 288,
291, 300, 354, 356, 359, 371, 452.

Insurance Co. v. Ketterlinus, 735.

Iron Mountain Co., 177, 212, 328, 616.

Tronsides, The, 211, 319, 600.

Irving, Mary, 43, 444, 541.

Irving v. Hughes, 36, 42, 218, 219,
228, 229, 231, 326, 329, 330, 342,
428, 442, 443.

Irwine, 306.

Isaacs v. Cohn, 771.

Isidor v. Blumenthal, 197, 642,

Israel, M. C., 30, 433.

Israel v. Ayer, 800.

Ives v. Tregent, 170, 556.

Jack, Francis M., 51, 423, 452.

Jackson, Alfred, 380.

Jackson (George) et al., 85, 94, 95,
125, 130, 135, 472, 473, 476, 629,
635, 636.

Jackson y. McCulloch, 831.

Jackson v. Miller, 670.

Jackson & Pearce, 185, 520, 525, 846.

Jacoby, 133, 635.

Jacoby, Henry, 475, 690.

James, B. F., 246, 247, 669, 670, 786.

James v. Atlantic Delaine Co., 402,
457, 566.

Janes v. Beach, 504, 539.

Janeway, John L., 547, 548,

Jaycox & Green, 89, 102, 249, 250,
251, 360, 470, 497, 572, 593, 622,
625, 664.

Jefferson Insurance Co., 779.
INDEX TO CASES CITED.

Jelsh Dunnebacke, 60, 456, 457, 459.
Jemison v. Blowers, 577, 578, 788.
Jenkins v. Armour, 91, 589.

Jenkins v. Mayer, 538, 605, 821.

Jenkins y. Stanley, 756.

Jenks v. Opp. 733.

Jersey City Window Glass Co., 427.

Jervis vy. Smith, 623, 624.

Jewett, Frederick, 248, 771, 772, 775.

Jewett v. Preston, 484, 499, 605.

Jobbins v. Montague, 209, 226, 314,
324, 331, 341, 343.

Johann, 28, 433.

Johnson, 40, 428.

Johnson, Ralph, 38, 411, 487, 765.

Johnson v. Ball, 753, 754, 756.

Johnson y. Bishop, 503, 509.

Jobn-on v. Collins, 507, 508.

Johnson v, Fitzhugh, 541, 748.

Johnson v. Geisriter, 482.

Johnson v. Poag, 617.

Johnson v. Price, 342.

Johnson v. Rogers, 852, 853.

Johnson v. Worden, 378, 731.

Johnston & Hall, 258, 259, 872, 846,
847,

Joliet Iron & Steel Co., 429, 448.

Jones, 159, 481, 519, 520, 521, 523,
659, 665.

Jones’ Appeal, 774.

Jones, B. F., 455.

Jones, David W., 353, 570, 5771.

Jones, Decatur, 21, 26, 94, 106, 391,
395, 396, 469, 635, 672.

Jones, G. C., 196, 6438.

Jones, Oliver L., 709, 710.

Jones v. Clark, 728,

Jones v. Emerson, 186, 694.

Jones v. Howland, 407, 802, 805.

Jones v. Hoyt, 721, 723.

Jones v. Kinney, 832, 833.

Jones v. Knox, 578, 731.

Jones v. Leach, 23, 171, 211, 218, 217,
228, 316, 317, 318, 319, 326, 329,
345, 602, 613, 705.

Jones v. Lellyett, 747.

Jones y. Milbank, 722.

Jones y. Russell, 731, 733.

Jones v. Sleeper, 400, 410, 412.

Jones v. State, 737.

Jordan, 162, 517.

Jordan, James, 606, 639, 640.

Jordan, William G, 604.

Jordan, Willis A., 517.

Jordan v. Downey, 233, 337, 814.

Jordan v. Hall, 309.

Jorey & Sons, 710, 712, 718, 714.

Joslyn et al., 507, 585.

Joy v. Berdell, 558, 561.

 

xxvii

Judd, Bela, 308.

Judd vy. Ives, 308.

Judson, Curtis, 200, 645.

Judson v. Kelty et al., 835, 837.
Judson v. Lathrop, 553, 559, 769.

Kahley e¢ al., 282, 528, 529, 609, 610,
723, 774, 825.

Kaiser v. Richardson, 510.

Kallish, 700.

Kane v. Jenkinson, 488.

Kane y. Pilcher, 483, 541, 533,

Kane y. Rice, 497, 500, 806, 807.

Kansas City Manf, Co., 494, 497, 568,
639, 801, 826.

Kappner v. St. Louis & St. J. R. R.
Co., 109, 633.

Karr v. Whittaker, 61, 460, 652.

Kasson, Chester 8., 158, 496, 515.

Keach, William, 711, 712.

Kean e¢ al., 157, 162, 511, 517, 518,
519, 520.

Keating v. Keefer, 159, 512, 530, 581,
535.

Keefer, Herry M., 249, 700, 710, 716.

Keeler, James R., 34, 58, 429, 448.

Keenan vy. Shannon, 327, 352.

Keene v. Mould, 306, 753, 755.

Kehr vy. Smith, 530, 532.

Keller vy. Denmead, 599.

Kellogg v. Russell, 529, 348.

Kellogg v. Schuyler, 741, 742, 743.

Kelly v. Holdship, 538.

Kelly v. Scott, 494, 768.

Kelly v. Smith, 224, 325, 336.

Kelly v. Strange, 174, 520, 522, 612.

Kemmerer v. Tool, 233, 337, 808.

Kempner, 376, 603.

Kempner, David, 604.

Kennedy et al., 68, 120, 249, 465, 644.

Kennedy v. Rust, 617.

Kent v. Downing, 503.

Kenyon & Fenton, 415, 419, 420, 422,
450.

Ker in, John, 217, 327.

Kerosene Oil Co., 172, 176, 211, 222,
228, 292, 316, 318, 319, 331, 334,
835, 842, 365, 613.

Kerr, W. W., 600, 602, 811, 822.

Kerr v. Hamilton, 740.

Kerr v. Roach, 162, 517, 518.

Kimball, George W., 645, 693.

Kimball, John H., 113, 188, 189, 292,
365, 692, 693, 694, 730, 735.

King, 723.

King, Brown, 378, 716.

King, Dwight B., 410.

King, John G., 665.

King, Robert G., 458.
xxviii

King, Samuel, 28, 419, 484.

King et al., 570.

King v. Bowman, 102, 104, 174, 470,
612, 613. 624, 626.

King v. Central Bank, 733.

King v. Dietz, 501, 702, 756.

King v. Loudon, 503.

King v. Morrison, 144, 542, 543. _

Kingley v. Cousins, 75.

Kingon, James, 377.

Kingsbury e al., 100, 689, 796, 804,
818. 823.

Kingsland v. Spalding, 730.

Kingsley, Daniel P., 11, 392, 573, 738.

Kingsley, Norman W., 197, 646.

Kingsley v. Cousins, 751.

Kingsley v. Prentiss, 739.

Kingston v. Wharton, 578, 748.

Kinkead, 1, 402, 772.

Kinsman, Israel, 5, 388, 389.

Kintner, J. M., 456.

Kintzing, 43, 417, 443.

Kinzie v. Winston, 484, 486.

Kinzing v. Bartholew, 799.

Kipp, Joseph M., 96, 99, 638.

Kirby v. Garrison, 734, 754,

Kirkland, Chase & Co., 242, 600, 667.

Kirtland, Frederick 8., 175, 208, 333,
610.

Kittredge v. Emerson, 502, 504, 507,
509.

Kittredge v. McLaughlin, 489.

Kittredge v. Warren, 307, 502, 507.

Klancke, Julius, 510.

Klein, Edward, 805, 306 307,

Kline v. Bauendahl, 536.

Knabe v. Hayes, 736.

Knapp v. Anderson, 733.

Knickerbocker Ius. Co. v. Comstock,
50, 414, 464.

Knight, 243, 682, 771.

Knight v. Cheney, 180, 222. 289, 300,
331, 842. 354, 361, 369, 563.
Knoepfel, William H., 88, 116, 471,

622, 656.
Knott, Rooney & Dibest, 556.
Knowlton v. Moseley, 526, 533, 650.
Knox et al. v. Exchange Bank, 146,544,
545.
Koch, Jacob A, 208, 644, 646, 647.
Kohlsaat v. Hoguet e¢ ai., 811.
Krogmun, P. H., 552,
Krueger et al., 423.
Krum, Uriah, 811.
Krumbuaar vy. Burt, 496.
Kunzler v. Kohaus, 305, 806 753.
Kyle v. Bostwick, 582.
Kyler, Morris, 108, 110, 209, 290, 359,
632, 634.

 

INDEX TO CASES CITED.

Labron v. Woram, 758.

Lacey, Downs & Co.. 47, 48, 49, 50,
461, 462, 463, 464.

Lacy, W. Y., 608.

Lacy v. Rockett, 1. 44, 540, 543.
Lady Bryan Mining Co., 3, 215, 216,
217, 228, 326, 442, 778, 779.

Lain y. Gaither, 483.

Laird v. Laird, 318.

Lake, J. J., 482, 483. :

Lake Superior Ship Canal, Railroad
& Iron Co., 89, 94, 95, 125, 128,
130, 185, 469, 470, 472, 622, 623,
636.

Lalor v. Wattles, 306.

Lamb v. Brown, 736.

Lamb v. Damron, 341.

Lamb v. Lamb, 781. °

Lambert, Hugh G., 161, 164, 174, 511,
512, 613.

Lammer, 521.

Lamprey v. Leavitt, 509.

Lane, Joseph M., 377.

Lane (G. H.) & Co., 250,773, 800,801.

Lane, Brett & Co., 92, 591.

Lancr, P., 425,

Lang, J. B. H., 384.

Langdon, 680.

Lanier, 191,192, 195, 378, 641,643,644.

Lansing v. Manton, 560.

Lanz, George. 423.

Lapsley, 104, 626.

Large v. Bosler, 578, 739, 746.

Larrabee v. Talbot, 308.

Lathrop (Robt.) ef al., 109, 573, 575,
629, 632, 633. 670.

Lathrop, Cady & Burtis, 649.

Lathrop, Luddington & Co., 720.

Lathrop v. Drake, 226, 227, 314, 841,
342, 350, 551, 825.

Lathrop v. Stewart, 735, 758, 754. 756,
760.

Lathrop v. Stuart, 395, 756.

La Tourrette v. Price, 750, 752.

Laurie, Blood & Hammond, 250, 255,
586, 662.

Lavender v. Gosnell, 308, 311, 748.

Lawson, James H., 133, 281, 475,
516, 520, 715, 720.

Leach vy. Green, /:38.

Leachman, Stephen B., 204, 644.

Leavenworth Savings Bank, 31, 434.

Leavitt v. Baldwin, 743.

Lee, John F., 99, 100, 637, 640, 823.

Lee, Thomas D., 192, 642.

Lee v. Franklin Ave. German Savings
Institution, 845, 613.

Lee v. Phillips, 748, 744,

Leeds, William, 411, 427,
INDEX TO CASES CITED.

Lefler v. Hunt, 539.

Lehmer vy. Smith, 575.

Leibenstein e¢ a/., 689, 693.

Leighton, J., 40, 427, 699.

Leighton v. Atkins, 741.

Leighton v. Harwcod, 550, 568.

Leighton v. Kelsey e¢ al.,
507, 747,

Leiter v. Payson, 61, 460, 779.

Leland, Simeon, 440, 487, 497, 500,

638, 639.
Leland (S8.) et ai.,
Leland, W., 765.
Leland & Leland, 765.

Lemcke y. Booth, 113, 188, 730.
Lemoins v. Bank, 569.

Lenihan v. Haman, 214, 541.
Leonard, 40, 438, 441, 456,
Levin, Lewis, 276, 718.

489.

Levy (Sam’l W.) et al., 22,76, 79, 193,

195, 199, 2038, 204, 381, 382, 481,
644, 645, 647, 648, 716, 732.

Lewis, A. T., 774.

Lewis, Henry, 70, 201, 650, 764.

Lewis (Adolph) et al., 707.

Lewis v. Fisk, 320, 321.

Lewis v. Gibson, 3438.

Lewis v. Hawkins, 746.

Lewis v. Sloan, 233, 337, 797, 828.

Lewis v. U. S., 242, 248, 342, 597,
667, 770.

Lewis v. Webber, 506.

Lezynski, 184, 691.

Lincoln vy. Cherry, 282, 724.

Lingan v. Bailey, 186, 694.

Linkman v. Wilcox, 802, 811.

Linn v. Hamilton, 733, 745,

Linn et al. v. Smith, 28, 434,

Linton v. Stanton, 697, 7386, 749.

Lipscomb v. Grace, 741.

Litchfield, E. C., 652.

Little, William H., 5, 8, 65, 277, 390,
396, 699, 765.

Little v. Alexander, 812.

Littlefield, H:ram, 137, 196, 236, 270,
271, 280, 549, 644, 653, 711, 714,
726, 727.

Littlefield v. Delaware and Hudson
Canal Co., 292, 293, 296, 297, 298,
361, 362, 363, 365, 366, 367.

Livermore, George, 274, 717.

Livermore vy. Bagley, 312, 402.

Livermore v. Swazey, 146, 545.

Livingston v. Bruce, 808, 832.

Livingston v. Livingston, 600.

Lizardi v. Cohen, 746.

Locke, Worthington 8.,
707, 708,

Locke v. Winning, 823.

399, 400,

214, 821,

 

Xxix

Lockett v. Hill, 212, 349, 615, 616.

Loder, Benj. H., 89, 104, 580, 622,
630, 725.

Loder, Lewis B., 108, 133, 283, 475,
725.

Loder Brothers, 78, 261, 663, 785.

Lomme v. Kintzing, 688.

Lonergan y. Fenelon, 351, 407.

Long, William H., 378, 491, 530, 570,
6438, 708, 705, 720.

Long (Walter P.) e¢ al., 248, 766, 771,
772.

Long v. Converse, 485.

Long v. Rogers, 853.

Longacre v. Myers, 735.

Longis v. Creditors, 308.

Longley v. Swayne, 758.

Longstreth vy. Pennock, 584.

Lord, 200, 645.

Lord. F. C., 813.

Lord, Horace, 731.

Loring v. Kendall, 581, 740, 754.

Loucheim v. Henszey, 813.

Loud v. Pierce, 306, 701, 703, 720.

Loudon 7. King, 504, 505.

Louis, Solomon, 681.

Lount, Ira A. & Chas. W., 107, 108,
848.

Love v. Love, 410, 419, 428, '797, 818,
821.

Lovett v. Cutter, 146, 545.

Lowe vy. Richards, 773.

Lowenstein, 696.

Lowenstein (Sam’l) e¢ ail.,
427, 461, 790.

Loweree, James M., 104, 105, 626, 627.

Lowry v. Morrison, 747.

Lucas v. Morris, 336, 4'79.

Ludlow, Edward H., 157, 158, 496,
514, 515, 516.

Lummus v. Fairfield, 735.

Lumpkin v. Eason, 522.

Lutgens, J. H. C., 588, 702, 706, 715.

Lyall v. Miller, 558.

Lynch v. Bernstein, 584, 586.

Lyon, 644.

Lyon, J H., 487.

Lyon v. Isett, 752.

Lyon v. Marshall, 249, 716, 736.

Lyons, Julia, 1, 402, 454.

Lyttle, J. L. & Co., 682.

258, 422,

Mabry v. Herndon, 732.

Mace v. Wells, 582, 741.

Macey v. Jordan, 738.

Machad, John A., 269, 725.

Macintire, James, 191, 193, 204, 262,
263, 380, 643, 786.

Mackay ¢¢ al., 714.
xxXxX

Magee, George R., 462, 687.

Magie, William H., 5, 390, 786.

Magoon v. Wartield, 736, 754.

Main v. Mills, 783.

Major, William, 130, 180, 332,
476, 561, 562.
Malcolm, Robert, 9, 15, 392, 845.
Mallory, 133, 134, 135, 136, 148,
475, 476, 477, 478, 835,
Mallory, E., 216, 217, 219, 228,
326, 329, 330.

Malthie v. Hotchkiss, 310, 311, 831.

Manly, T. M., 529, 534.

Mann, Henry A., 852.

Mannbeim, William, 424.

Manning v. Hunt, 543.

Manning v. Keyes, 729.

Mansfield, A. S., 575.

Mansfield, John, 666, 667.

Manwaring v. Kouns, 744, 752.

Maples v. Burnside, 755.

Marcer, 29, 436.

March v. Heaton et al., 225, 345, 562,
705.

Marionneaux, A. P., 760.

Maris v. Duren, 217, 320, 541.

Marks, Isaac, 46, 230, 329,. 334, 338,
445,

Marks v. Barker, 91, 858, 588, 590.

Markson v. Heaney, 100, 176, 208, 211,
226, 288, 297, 318, 314, 319, 341,
365, 567, 563, 609, 618.

Markson v. Hobson, 799, 817, 821.

Marrett v. Atterbury, 109, 633, 819.

Marrett v. Murphy, 774.

Marsh, Daniel, 365.

Marsh v. Armstrong, 46, 382, 538, 445,
535, 564.

Marshall, 710. ;

Marshall v. Knox, 217, 222, 319, 327,
831, 334, 342, 352, 366, 584.
Marsden, William H., 280, 706, 712.

Marsden v. Stickney, 510.
Marter, Charles J., 48, 417, 442.
Martin, Anson, 277, 696.
Martin, Henry, 69, 764.

Martin, James, 226, 314, 829.
Martin v. Berry, 308, 310,
Martin v. Kilbourn, 733.
Martin, Nicholas, 161, 512.
Martin v. Smith et al., 528,
Marvin, 57, 454.

Marvin v. Chambers, 606.
Marwick, Albert, 246, 771,
Mason v. Hughart, 750, 751.
Mason v. Nash, 307.

Mason v. Warthens, 502, 689.
Massachusetts Brick Co., 423, 458.
Mastbaum, 524.

473,

249,
229,

 

INDEX TO CASES CITED.

Masterson, John, 222, 331, 384, 342, 551.

Masterson v. Herndon et al, 370.

Matteson vy. Kellogg, 730.

Maurer v. Frantz cé al., 99, 800.

Maus v. McKellip e¢ al, 606, 607.

Mawson, George S.. 79, 195, 196, 275,
277, 280, 382, 645, 650, 701, 715,
717, 719, 720.

Maxim v. Morse, 748, 751, 752.

Maxwell e al. v. Faxten, 687.

Maxwell & McCune, 164, 513.

May v. Courtney, 214, 507.

May v. Harper, 432.

May v. Merwin, 584, 587.

Mayer v. Gimbell, 755.

Mayer v. Hellman, 310, 831.

Mayer v. Hermann, 817, 820, 821, 822.

Mays v. Fritton, 617, 796.

Mays v. Manufacturers’ National Bank,
481, 482, 483.

McAdoo v. Loomis, 731.

McAllister v. Richards, 819.

McBride, 786, 787.

McBrien, Charles, 192, 204, 641, 647.

McCabe v. Cooney, 483, 755.

McCance v. Taylor, 212, 617, 746.

McCarty, John Q., 702, 703, 721.

McCausland v. Waller, 734.

McClellan, J., 174, 608, 609, 612, 849.

McConnell, William, 104, 242, 626,668

McCormick v. Buckner, 813.

McCormick v. Pickering, 306, 753.

McCullough v. Caldwell, 746.

McDermott Patent Bolt Mfg. Co., 422.

McDonald, Duvid A., 725, 732.

McDonald, John V.. 652.

McDonald y. Ingraham, 743.

McDougald v. Reid, 744.

McDowell et a/., 681.

McDuffee, 116, 620.

McEwen & Sons, 246, 772, 778.

McFaden, James, 136, 477.

McFarland & Co., 66, 518, 760, 762.

McFarland v. Goodman, 162, 513.

McGie (Fitch e¢ al. v. McGie. ex parte
Sanger, 219, 811, 822.

McGilton et al., 177, 212, 299, 362, 613,
618.

McGrath & Hunt, 662.

McGready v. Harris, 616.

McIntire, Charles H, 268. 697, 760.

McIntosh, Milton, 105, 600, 602, 625.

Mclver & Moore, 539.

Mclver vy. Wilson, 590.

McKay & Aldus, 489, 803, 805, 806, 834.

McKay v. Funk, 617, 689.

McKeon, Thomas, 462, 681.

McKercher & Pettigrew, 154, 159,
516, 519, 521.
INDEX TO CASES CITED.

McKibben, James A., 45, 52, 54, 429,
482, 488, 444.

McKiernan v. Fletcher, 558.

McKinley, John H., 62, 448.

McKinley v. O’Keson, 750.

McKinsey e¢ al. v. Harding, 85, 89,
102, 601, 625, 629, 633.

McLean, Archibald, 522.

McLean et al. v. Brown, Weber & Co.,
423, 424.

McLean v. Johnson, 831, 832.

McLean v. Klein, 585.

McLean v. Lafayette Bank, 226, 342,
346, 348, 349, 352.

McLean v. Meline, 831, 833.

McLean v. Rockey, 213, 317, 481,
620.

MecMechin v. Grundy, 806.

McMeromy vy. Ferrers, 492.

McMenomy v. Murray, 746.

McMilian v. Love, 544.

McMinn vy. Allen, 731.

McMullin v. Bank, 567, 582.

McNair, Neal A., 118, 195, 635, 644.

McNaughton, Moses A., 38, 39, 47,
423, 430, 450, 453.

McNeil v. Knott, 581, 753.

McNulty v. Frame, 736, 756.

McSpedon v. Bouton, 544.

MeVey, W. C., 274, 275, 276, 277,
281, 700, 718, 720, 846.

Mead & Co., 460, 665.

Mead v. National Bank of Fayette-
ville et al , 244, 245, 766.

Mead v. Thompson, 201, 369.

Meador v. Everett, 605.

Meador v. Sharp, 730.

Mealy, Stephen A., 204, 380.

Mebane, John A., 174, 602, 609, 612.

Mechanics’ Bank v. Lawrence, 744.

Medbury v. Swan, 752.

Meekins, Kelly & Co. v. Their Cred-
itors, 308.

Meeks v. Whatley, 610, 612.

Melick, Isaac C., 28, 58, 435, 451, 770.

Mellor & Co., 481.

Melvin v. Clark, 690.

Mendelsohn, §., 51, 414, 452.

Mendenhall, 49, 192, 456, 462, 463,
464, 642.

Mendenhall, Richard J., 48, 464, 568,

Mendenhall v. Carter, 421, 422.

Merchants’ Insurance Co., 2, 309, 402,
412, 415, 778, 853.

Merchants’ Nat’l Bank v. Comstock,
626.

Merchants’ Nat’l Bank vy. Truax, 797.
814

Merkle, ‘George, 454,

 

XXxi

Merrick, W. B., 619, 620. .

Merrifield, Truman, 255, 586, 661.

Merrill, William G., 401.

Merritt v. Glidden e¢ al., 184, 691.

Metcalf v. Duncan, 181, 182, 184, 686,
687, 690, 691.

Metz, Joseph, 587.

Metz v. Buffalo, Corry & P. R. R. Co.,
559, 780.

Metzger, Jacob, 497, 527.

Metzler v. Cowperthwaite, 44, 179,
443, 563.

Meyer, Edward, 817, 821.

Meyer v. Aurora Ins, Co., 689.

Meyers, Louis, 182, 527, 5380, 690.

Michaels v. Post, 315, 437.

Michener v. Payson, 374, 781, 782.

Mifflin, 186, 187, 692, 693.

Migel, Sclomon, 181, 189, 686, 693.

Miller, Edmund H., 241, 245, 669,
767.

Miller, §. $., 852.

Miller, William D., 462.

Miller v. Black, 395, 481.

Miller v. Bowles, 214, 215, 320,
502.

Miller v. Gillespie, 734.

Miller v. Keys, 409, 412, 572.

Miller v. Mackenzie, 502.

Miller v. O’Brien, 483, 509.

Miller v. Parker, 493.

Mills, William, 236, 239, 248, 654, 656,
771, 7738.

Mills v. Davis, 228, 814.

Milner, Jonathan J., 572.

Milwain, Elijah, 94, 636.

Mims v. Swartz, 168, 538, 539, 556.

Minon v. Van Nostrand eé al., 184,
688, 689, 694.

Minot v. Brickett, 541, 758.

Minot v. Thacher, 748.

Mitchell, J. C., 255, 596, 661.

Mitchell (T. P.) e al., 66, 763.

Mitchell v. Manufacturing Co.,
219, 227, 234, 806, 324, 325,
342, 346.

Mitchell v. McKibbin, 344, 345,
531.

Mitchell v. Singletary, 736.

Mitchell v. Winslow, 494, 539, 608.

Mittledorfer, Moses and Charles, 640,
665, 666.

Mitzel, 454.

Mixer v. Excelsior Co., 502, 507.

Moffit v. Cruise, 544,

Mollison v. Eaton, 446.

Monroe v. Upton, 82, 576, 742, 744.

Montgomery, Henry B., 104, 105, 440,
575, 583, 627, 637, 666, 667, 773.

207,
287,

530,
xxxii

Montgomery vy. Bucyrus Mach. Co.,493.

Moore, Chauncey W., 709.

Moore, Rufus E., 66, 68, 764.

Moore v. Jones, 226, 314, 315, 49%.

Moore v. Nat'l Exchange Bunk of
Columbus, 60, 456, 574.

Moore v. Rosenberger, 303.

Moore vy. Vous, 543.

Moore y, Waller, 732, 734.

Moore vy. Walton, 420.

Moore v. Young, 492, 499, 546.

Moore & Bro. v. Harley, 54, 431.

Moran v. Bogert, 378, 559, 661.

Moran y. Schnugg, 596, 611.

Morford, Charles A., 22, 396.

Morgan vy, Campbell, 502, 585, 586.

Morgan, Root & Co. v. Mastick, 407,
415,

Morgan et al. v, Thornhill et al., 227,
248, 298, 300, 801, 341, 842, 354,
B61, 364, 369.

Morganthal, Jolin, 121, 467, 472.

Moritz & Pinner, 762, 764, 765.

Morrill, George P., 527, 529, 546, 583.

Morris, 88, 52, 480, 431, 438, 622, 677,
678, 680.

Morris, Robert, 209, 813, 335, 838,
462, 463, 573.

Morris v. Davidson,

Morris v. French, 489.

Morrison, Thomas, 596, 598, 808.

Morrison v. Woolson, 736, 753, 754.

Morrow, J. H., 490.

Morse, 148, 478.

Morse, Edward P., 244, 770, 771,

Morse & Co., 576, 583.

Morse v. Cloyes, 756,

Morse v. Godlrey, 407, 802, 826.

Morse v. Hovey, 305, 806, 582.

Morse v. ILutchins, 729.

Morse v. Lowell, 105, 626, 780.

Morse v. Presby, 268, 315, 697, 736,
743,

Morsg y. Grittman, 539,

Mosby v. Steele, 687.

Moseley, Wells & Co., 619.

Moses, 8. J., 48, 444.

Mott, Jacob H., 557,

Mott v. Maris, 668,

’ Moulton e¢ al, 811.

Muirhead v. Aldridge, 532.

Muller & Bretano, 84, 39, 42, 43, 44,
45, 46, 82, 899, 428, 434, 442,
413, 444, 445, 448,

Muller y. Erich, 536,

Munger & Champlin, 418.

Munn, 403, 424, 425, 456,

Munson v. B, H. & E.R. R. Co, 507,
509.

999

Dade

 

INDEX TO CASES CITED.

Murdock, George A., 83, 84, 274, 628,
702, 716, 850,

Murphy, Alonzo, 57, 460,

Murphy v. Smith, 745.

Murray, 578.

Murray v. De Rottenham, 312, 581,
587, 737, 739, 746.

Murray v. Jones, 534, 558.

Murray v. Marsh, 874.

Murray v. Murray, 768, 769,

Murray v. Rigys, 91, 588. .

Myer v, Crystal Spring Pickling &
Pres’ Co., 320.

Myers v. Seeley, 780.

Myrick, Benj. L., 14, 104, 898, 627,657.

Napier v. Server, 531.

Nassau v. Parker, 741, 742.

National Bank v. Conway, 499.

National Bank of Leavenworth v.
Ilunt, 499.

National Life Ins, Co., 852.

National Iron Co., 609.

Nazro v. Cragin, 314.

Neal (ex purte Ball v. Beckwith e¢ al ,)
549.

Neale, Charles F., 138, 139, 480, 549.

Nebe, Henry, 86, 619.

Needham, Otis A., 11, 700.

Neilson, J., 61, 459.

Nelins y. Pugh, 406.

Nelson v. Carland, 297, 801, 367, 869.

Nesbit v. Greaves, 309.

Newhull, 431, 485.

Newhall ef al. vy, Lynn Sav, Bank 595.

New Lump Chimney Co., 249,250,664.

New Lamp Chimney Co. v, Ansonia
Brass & Copper Co., 4, 315, 777,
779.

Newland, Frank, 565, 595, 62-4.

Newman, Abraham, 711, 713.

Newman v. Fisher, 779.

Nichols v. Bellows, 495.

Nichols v. Maton, 485,

Nickodemus, Peter, 28, 30, 86, 53,
490, 401, 403, 422, 423, 451, 540,

Nightingale, John, 443.

Noakes, Thomas, 156, 513, 514, 550,
563, OFX.

Noble, George W., 04, 125, 469, 635.

Nobile v. Seoficld, 83%.

Nocsen, Theodore, 433.

Noonan, Joseph A., 66, 67, 68, 762,
763, 764,

Noonan & Connolly, 714, 720.

Noonan v. Orton, 144, 526, 535, 540,

Norcross, Nicholas G., 15, 302.

Norris, James W., 209, 222, 313, 881,
342,
INDEX TO CASES OITED.

Norris v. Goss, 743.
North American Ins. Co. v. Graham,
715.

North v. House, 817, 822, 823, 827.
Northern Iron Co., 88, 89,94, 95, 124,
125, 470, 471, 621, 622, 636.

Northman v. Insurance Co., 542.

Norton, C. H., 122, 180, 469, 473.

Norton vy. Barker, ‘553.

Norton v. Boyd, 319, 328.

Norton v. De la Villebeuve, 551, 554.

Nounnan & Co., 256, 458, 572, 625,661.

Noyes, B. B., 254, 658, 659.

Noyes, G. N., 380.

Nudd v. Burrows, 809, 811.

Nudd v. Montange, 825.

N. Y. Mail Steamship Oo., 148, 149,
254, 477, 567, 597, 656, 660, 665,
666.

O’Bannon, 14, 393, 712.

O’Brien, Mary A., 1, 288, 354, 355, 402.

O’Brien v. Weld, 851.

O’Conner v. Parker, 838.

O’Donohue, John, 202, 649.

O’Dowd, Michael, 499.

O'Fallon, 169, 170, 557,

O’Farrell et al., 269, 652, 725.

O’Hara, 665.

O’Hara vy. Dilworth, 547,

O'Hara vy. Stone, $13,

O'Mara, Michael, 186, 692.

O’Neale, A. G., 485.

O'Neil, 82, 89, 566, 634, 679.

O’Neil v. Dougherty, 544.

Oakey v. Bennett, 464.

Oakey v. Corry, 169, 482, 550, 556.

Oakey v. Gardner, 500, 501.

Oakley, Charles, 396.

Oates v. Parrish, 286, 759.

Obear, 429.

Ocean Nat. Bank v. Olcott, 286, 533,
759.

Odell v. Wooten, 733, 757.

Ogden v. Cowley, 592.

Ogden v. Jackson, 808.

Okell, William, 195, 281, 644, 720.

Olcott, Cornelius, 230, 330.

Olcott v. Maclean, 809.

Oldens v. Hallet, 307.

Olds (M.) et al,, 721.

Oliver v. Smith, 317, 669.

Olmsted, 49, 464.

Onion v. Clark, 484.

Ontario Bank v. Mumford, 487,538,541.

Orcutt, 711.

Oregon Bulletin Printing & Publish-
ing Co., 31, 293, 365, 408, 413,
416, 434, 486, 454, 456, 494, 852

Cc

 

Xxxili

Orem & Son y. Harley, 35, 53, 426,
‘428, 450,

Ormsby’ v. Dearborn, 568,

Orne, Freeman, 9, 1, 14, 21, 82, 91
94, 392, 393, 396, 565, 590, 634
635, 726, 845.

Osage Valley & South’n Kansas R. R.
Co., 454.

Osborn v. Baxter, 561.

Osborn v. McBride, 486, 770.

Otis v. Gazlin, 750, 751.

Otis v. Hadley, 233, 387, 799, 814, 816.

Ouimetie, L. H., 28, 56, 57, "434, ” 436,
436, 453, 455, 822,

Overton; W., 135, 475.

Owen & Murrin, 482.

Owens, John, 161, 512, 523.

Owens vy. Grimsley, 757.

Oxford Iron Co. v. Slafter, 810, 823.

y
?

Packard, D. C., 8385.

Paddock, 8., 106, 108, 572, 631, 684.

Paget, 274, 717.

Paine v. Caldwell, 208, 314, 343.

Palmer, 817.

Palmer, Charles N.,

Palmer, E. V., 715.

Palmer, James M., ‘40, 427,

Palmer v. Merrill et al, 689.

Palmer v. Preston, 729.

Pardee v. Leitch, 321.

Park vy. Casey, 743, 744, 752.

Parker, Renslow 8., 701.

Parker v. Atwood, 286, 758.

Parker v. Muggridge, 494, 608, 768,
769.

Parker & Peck, 642, 668, 699.

Parkes, J. T. & C. R., 124, 471, 520,
524, 624, 626.

Parks v. Goodwin, 758.

Parks v. Shelden, 506.

Parsons v. Topliff. 85 2.

Partridge v. Dearborn, 811, 813.

Patrick v. Bank, 809.

Patterson, Charles G.,
106, 138, 188, 192, 199, 203, 373,
381, 386, 390, 391, 481, 544, 565,
620, 681, $41, 645, 646, 647, 693,
729, 849.

Pattison & Co. v. Oliver, 736.

Pattison & Co. v. Wilbur, 746.

Paulson, 767.

Payne et al. v. Able et al,
734, 736, 747, 755.
Payne v. Solomon, 413, 414.

Payson v. Brooke, 374, 780, 781.
Payson v. Dietz, 231, 234, 337, 338.
Payson v. Payson, 502.

Payson v. Stoever, 491, 782.

657, 716, 718.

20, 22, 76, 81,

214, 732,
XXxivV

Payson v. Withers, 782, 783.

Pearce, Alonzo, 701, 703, 709, 715.

Pearsall v. McCartney, 721.

Pearson, George W., 128, 130, 398,
471, 472, 473. -

Pease, R. 8., 243, 770, 771.

Pease ¢¢ al., 84, 109, 628, 629.

Pease v. Bennett, 634.

Peck, Bronson, 79, 383.

Peck v. Jenness, 145, 214, 217, 327,
502, 507, 540, 594, 746.

Peckham v. Burrows, 802, 815, 820.

Peebles, Lemuel, 596.

Peel v. Ringgold, 538, 769.

Pegues, P. A., 251, 660.

Peiper v. Harmer, 282, 387, 551.
Penn (Jno. R.) e¢ al., 68, 69, 70, 388,
699, 700, 722, 737, 764, 776.

Penn v. Edwards, 542. :

Pennell v. Percival, 284, 727, 756.

Penniman v. Norton, 541, 542, 747.

Pennington v. Lowenstein, 228, 329,
845, 501.

Pennington v. Sale & Phelan e¢ ai.,
172, 211, 213, 217, 225, 228, 316,
317, 319, 326, 329, 345, 602.

Penny v. Taylor, 162, 518, 690, 745.

People v. Brennan, 332,

People v. Brooks, 694.

People v. Duncan, 486.

People’s Mail Steamship Co., 172, 211,
316, 318, 319, 334, 613.

Perdue, Lindsay, 161, 165, 166, 512,
524, 525, 598, 845, 846.

Perkins, 148, 149, 368, 478, 723.

Perkins v. Gay, 286, 759.

Perley, Daniel J., 703.

Perley v. Dole, 482, 489.

Perrin & Hance, 499, 528, 529, 806.

Perry, John §., 26, 121, 892, 395, 396,
467, 472, 479.

Perry v. Allen, 707, 713.

Perry v. Chandler, 501.

Perry v. Langley, 292, 297, 307, 365,
400, 403,404,405,416,417, 457,458.

Perry v. Lorillard Fire Ins. Co., 491.

Perry v. Somerly et al., 214, 507.

Perryman vy. Allen, 839.

Pesoa v. Passmore, 727, 735.

Peterson v. Spear, 702, 710.

Petrie, H., 590.

Pettis, Julius R., 693.

Petty v. Walker, 708, 704.

Pfaff, Frederick, 847.

Pfromm, 128, 129, 135, 472, 476.

Phelps, Caldwell & Co., 122, 124, 126,
127, 469, 471, 657, 766.

Phelps v. Classen, 28, 56, 288, 356,
434, 452, 457.

 

 

INDEX TO CASES CITED.

Phelps v. Sellick, 177, 212, 327, 345,
552, 615, 618.

Phelps v. Stearns e¢ al., 440.

Philadelphia Axle Works, 30, 431,
482, 461.

Phillips, William W., 86, 619, 620.

Phillips v. Bowdoin, 747.

Phillips v. Helmbold, 139, 317, 549,
551.

Phillips v. Russell, 730.

Phillips v. Solomon, 734.

Pheenix v. Ingraham, 3851, 353, 606,
816.

Pickering, William J., 429.

Pickett v. McGavick, 554, 760.

Picton, 292, 299, 368, 403.

Pierce v. Evans, 799, 820.

Pierce & Holbrook, 14, 271, 392, 417,
418, 716, 727, 831, 8382.

Pierce v. Phillips, 617.

Pierce v. Wilcox, 177, 212, 617, 747.

Pierson, William H., 267, 481, 696,
700, 705, 706, 708, 712, 714, 715,
727.

Pike v. Lowell, 552.

Pike v. McDonald, 741, 743.

Pillow v. Langtree, 484.

Pindell v. Vimont, 543, 607.

Pioneer Paper Co., 191, 201, 643, 650.

Piper v. Brady, 808, 813, 821.

Pitt, Uharles §., 401, 438, 552.

Pittock, Robert, 564, 574, 633.

Place & Sparkman, 110, 290, 356, 358,
860, 365.

Planters’ Bank v. Conger, 144, 540.

Platt v. Archer, 42, 309, 352, 447, 450,
673.

Platt v. Parker, 736.

Platt v. Stewart, 289, 355, 356, 661.

Plimpton, Horace, 15, 21, 392, 396.

Pogue v. Joyner, 741,

Poleman, William C., 519.

Pollock v. Pratt, 669.

Pomeroy, C. W., 15, 398, 704.

Porter v. Douglass, 527, 702, 710.

Porter v. Porter, 749.

Port Huron Dry Dock Co., 88, 89, 103,
565, 619, 621, 622, $30.

Portsmouth Savings’ Fund Society,
666.

Post v. Corbin, 351, 806, 817.

Post v. Rouse, 234, 238.

Potter et al. v. Coggeshall, 99, 499,
546, 796, 798, 800, 829.

Potter v. Wright, 678.

Potts v. Garwood, 404, 415, 457, 458.

Powell, Allen F., 116, 133, 475, 476.

Powell v. Knox, 604, 704.

Prankard (F.T.) et al.,68, 69, 764, 765.
INDEX TO CASES CITED.

Pratt, Charles C., 519, 520.

Pratt, D., 57, 385.

Pratt, Edward D., 425.

Pratt, Jr. vy. Curtis et al., 225, 345,
349, 527, 581.

Pratt v. "Russell, 749, 752.

Pray v. Torr, 115,

Prentiss v. Kingsley, 739.

Prescott, Martin, 564, 574.

Preston, Alvin B., 896.

Preston, Charles H., 82, 83, 161, 168,
164, 265, 373, 503, 504, 505, 506,
512, 513, 525.

Preston v. Simons, 753, 754.

Preston v. Speer, 703.

Prewett v. Caruthers, 749, 750.

Price, 478.

Price, J. 8. & J., 159, 519.

Price v. Bray, 753, 754, 755, 756.

Price v. Miller, 441, 456.

Price v. Phillips, 552.

Princeton, Thomas, 96, 440.

Pritchard v. Chandler, 227, 342, 554.

Providence Co. Savings Bank v. Frost,
567, 574,

Pryor, Richard, 23, 165, 525, 564.

Puffer, Jonas, 277, 717.

Pugh v. Bussell, 307.

Pulver, Eugene, 269, 272, 725, 726.

Pulver, John, 12, 26, 27, 76, 78, 120,
121, 381, 382, 391, 392, 395, 467,

68.

Pupke, H. & G., 538, 455.

Purcell v. Robinson, 615.

Purviance v. Union Nat’] Bank, 492.

Purvis, James J.,123,124,471,472, 656.

Pusey, A., 487, 834.

Pusey v. Bradley, 316.

Quackenboss, John M., 716.
Quinike, 652, 725.

Rado, Peter, 29, 436.

Raffauf, Jacob, 429.

Rahilly v. Wilson, 488, 836.

Rainsford, D. A., 531, 701, 702, 760.

Ralph, 159.

Rand v. Upham, 760.

Randall & Co, v. McLain, 503.

Randall & Reed, 19, 387.

Randall & Sunderland, 35, 36, 53, 403,
405, 408, 417, 426, 428, 450, 456.

Randall & Sutton, 736.

Randolph v. Canby, 492.

Rank, 186, 309, 694.

Rankin & Pullan v. Florida, Atlantic

& G. C. BR. R. Co., 28, 415, 565, 777.

Rankin v. Third National Bank, 819,

820.

 

XXXV

Robert, 121, 396, 467, 472,

Rathbone, Robert C., 277, 279, 280.
699, 700, 701, 702, 703, 719, 720.

Rathbone v. ‘Blackford, 391, 587.

Ray, James T., 11, 106, 192, 392, 578,
632, 640, 738.

Ray v. Brigham, 175, 610, 612, 613.

Ray v. Wight, 854.

Rayl v. Lapham, 759.

Raynor, Jacob, 38, 421, 430.

Reade v. Waterhouse, 144, 540, 544.

Reakirt, John, 199, 645.

Reavis v. Garner, 527, 558.

Redfield, 11, 272, 391, 727.

Redman ¥. Gould, 374, 536.

Redmond & Martin, 34, 35, 428, 429,
451.

Reece & Brother, 96, 687.

Reed, 292. :

Reed, C. W., 573.

Reed, Horatio, 182, 188, 690.

Reed, J. K. P., 718, 714.

Reed, John M., 288, 296, 297, 355,
365, 366.

Reed, Timothy, 709.

Reed v. Bullington, 212, 286, 617, 746,

759.

Reed v. Emory, 740.

Reed v. Pierce, 738.

Reed ef al. v. Taylor, 308, 311, 831.

Reed v. Vaughan, 306, 315, 735.

Reed v. Vaughn, 753, 756.

Rees v. Butler, 743.

Reeser v. Johnson, 833.

Regan v. Regan, 756.

Reid v. Martin, 729.

Reiman & Friedlander, 30, 52, 305,
306, 307, 432, 465, 677, 679, 680,
681.

Rein, Philip, 372, 381, 847.

Repplier v. Bloodgood, 809, 838.

Republic Insurance Co., 84, 580, 628,
780, 781, 782.

Reynolds, 308, 309.

Rhoades v. Blackiston, 144, 486, 537.

Rhodes, 609.

Rice, George, 248, 771, 772.

Rice v. Grafton, 803, 810.

Rice v. Maxwell, 838.

Rice v. Melendy, 796, 852.

Richards, Andrew J., 202, 646.

Richards v. Maryland Ins. 6o., 479,553.

Richards v. Nixon, 736, 752.

Richardson, Clementina T., 381.

Richardson (Henrietta) e¢ ail, 183, 226,
314, 341, 691.

Richardson, 8. H., 159, 519.

Richter’s Estate, 96, 100, 637, 640,796.

Ratcliffe,
479
XXXVi

Riggin v. Maguire, 578.
Riggs, Lechtenberg & Co., 574.
Riggs v. White, 757.

Riordon, John, 97, 99, 440, 639.
Rison v. Knapp, 283, 797, 799, 802,
804, 817, 820, 821, 826, 837.

Rison v. Powell, 233, 387.

Rix v. Capitol Bank, 164, 511, 519,
521, 525, 809.

Robb v. Powers, 187, 692.

Roberts v. Woods, 747.

Robertson, David H., 15, 392, 702,
711.

Robinson, Jessie H., 24, 261, 262, 263,
786, 787.

Robinson, Julius A., 666.

Robinson, Ward E., 113, 275, 292, 365,
693, 718.

Robinson, Wm. L., 107, 848.

Robinson & Chamberlain, 196, 642,
700.

Robinson v. Elliott, 529, 584, 807.

Robinson et al. v. Pesant et al., 578,
587, 738.

Robinson v. Wadsworth, 704.

Robinson v. Wilson, 159, 164, 505.

Rockford, Rock Island & St. Louis
R. R. Co. v. McKay & Aldus,
494,

Roddin & Hamilton, 767.

Roden v. Jaco, 616, 748, 746.

Rogers, Davis, 3738, 441.

Rogers, W. M., 699, 705, 712.

Rogers & Coryell, 407.

Rogers v. Stevenson, 146, 536, 545.

Rogers v. West. Insurance Co., 737
743.

Rogers v. Winsor, 222, 381, 545.

Rohrer’s Appeal, 218, 814, 826.

Rollins v. Twitchell, 92, 591.

Rooney, 0. J., 489, 456.

Roosevelt v. Mark, 312, 567, 570,
571.

Rosenberg, Israel M., 212, 316, 613.

Rosenberg, Myron, 181, 182, 184, 250,
664, 686, 687, 690, 735.

Rosenfield, Isaac, 203, 249, 281, 481,
644, 647, 699, 705, 706, 707, 708,
711, 720, 721, 835.

Rosenfields, 39, 52, 54, 480, 431.

Rosenthal, H. & M., 429,

Rosey, Louis, 661.

Rosey, Louis H., 82, 235, 575, 576,
654, 667.

Roswig v. Seymour, 694.

Rowan v. Holcomb, 306, 753, 755.

Rowe v. Page, 308, 310, 338, 509,
550.

Rowell, Christopher C., 709, 715, 721.

4

 

INDEX TO CASES CITED.

Rucknam v. Cowell, 815, 748, 7459
757.

Ruddick v. Billings, 287, 288, 291,
292, 298, 354, 355, 357, 361, 365,
366.

Rudge v. Rundle, 730, 743.

Ruehle, Ferdinand, 101, 212, 213,
614, 615, 623, 624.

Rugan v. West, 146, 373, 545.

Rugely v. Robinson, 318, 481, 500,
587, 703, 748.

Rundle & Jones, 183, 567, 691.

Rupp, 519.

Rushin v. Gause, 522.

Russell v.Cheatham, 212, 306, 617, 736.

Russell v. Owen, 232, 337, 592.

Rust, Elam, 481, 496, 603.

Ruth, David, 153, 154, 155, 156, 157,
513, 514, 515, 516, 517, 519.
Ryan, Thomas, 403, 404, 408, 454,

455.
Ryan & Griffin, 169, 556.
Ryers v. Farwell, 501.

Sabin, Philo R.,212, 224, 335,599,618.

Sacchi, 149, 477, 478, 607, 663.

Sackett v. Andross, 305, 306, 754,
755.

Safe Deposit & Savings Institution,
455.

Salkey v. Gerson, 192, 197, 642, 643,
646. 683.

Sallee, William A., 10, 177, 392, 847.

Salmons, L. T., 608.

Samson v. Blake, 211, 288, 293, 296,
298, 299, 316, 332, 335, 336, 355,
356, 362, 866, 368.

Samson v. Burton et al., 145, 214, 215,
278, 321, 328, 507, 508, 539, 546,
687, 690, 802, 814.

Samson v. Clarke, 177, 216, 219, 228,
229, 288, 299, 326, 327, 332, 336,
353, 855, 368, 508.

Samuel v. Cravens, 750.

Sandford, 403.

Sandford v. Sinclair, 758.

Sands Ale Brewing Co., 607.

Sands, Comfort, 136, 479.

Sands, George E., 477, 479.

Sands v. Codwise, 527, 528, 535.

Sandusky v. First National Bank, 338,
339, 369.

Sanford v. Huxford, 839.

Sanford v. Lackland, 485.

Sanford vy. Sanford, 82, 544, 566.

Sanger & Scott, 665.

Sanger.v. Upton, 780, 781.

Sargent, Edward, 39, 48, 51, 55, 430,
451, 432, 461.
INDEX TO OASES CITED.

Saunders v. Commonwealth, 731, 787.

Saunders, Wm. A., 85, 100, 621, 629,
639.

Sauthoff & Olsen, 161, 513, 596, 597.

Savage v. Best, 319.

Savings Bank vy. Webster, 743.

Savory v. Stocking, 739.

Sawtelle v. Rollins, 542.

Sawyer, James M., 680.

Sawyer v. Hoag, 91, 498, 587, 589.

Sawyer e¢ al. v. Turpin et al., 499, 797,
802, 806, 807, 809.

Scammon, 52, 433.

Scammon, J. Young, 34, 58, 429, 448.
97, 226, 346,
352, 796, 797, 799, 803, 815, 816,

Scammon v. Cole ¢é al.,

817, 820, 824, 837.
Scammon v. Kimball, 91, 589.
Schapter, Samuel, 556.

Scheiffer & Garrett, 129, 131, 182, 135,
188, 150, 472, 474, 476, 479, 480,

766, 849.
Schenck, 696.
Schepeler (J. F.) et al., 121, 468, 686.
Schick, Julius, 418, 797.
Schlichter (Cathn. H.) e¢ al., 2, 57,
454, 571.
Schlitz v. Schatz, 809.

Schnepf, F., 23, 216, 217, 228, 320,

326, 600, 602, 609, 705, 822.
Schofield (D. G.) et al., 284, 700, 706,
775.
Schofield v. Moorhead, 204, 380.
Schonberg, J. A., 200, 651.
Schoo, 421, 720.

Schulenberg v. Kabureck, 356, 830,

836.
Schumpert, 14, 685, 713, 714.

Schuyler, 8. D., 277, 281, 372, 457,

699, 721.

Schwab, Julius, 665.

Schwartz, M. T., 523.

Scott, 600.

Scott, Dwight, 600.

Scott, Samuel C., 185, 687.

Scott v. Kelly, 617.

Scott & McCarty, 96, 144, 440, 637.

Scott v. Wilkie, 540.

Scrafford, C. G., 30, 51, 433, 452.

Scudder, Wilcox & Ogden, 456.

Scull, Isaac, 34, 38, 52, 410, 429, 480,
448, 450.

Scully v. Kirkpatrick, 310.

Seabury, James M., 275, 717, 718,
719.

Seaman v. Stoughton, 484, 833.

Seaver v. Spink, 800.

Seckendorf, J., 195, 275, 650, 718.

Second Nat'l Bank ‘v. Hunt, "806.

 

XXXVii

Second Nat'l Bank v. Nat'l State
Bank, 596, 612, 747.

Sedgwick v. Casey, "553,

Sedgwick v. Fridenberg, 290, 359.

Sedgwick v. Lynch, 830.

Sedgwick v. Milward, 826.

Sedgwick v. Minck e¢ al., 214, 215,
820, 528.

Sedgwick v. Place ¢ al., 352, 531,
534, 655, 831.

Sedgwick v. Sheffield, 803, 814.

Sedgwick vy. Wormser, 836, 837.

Seibel v. Simeon, 612.

Seiling v. Gunderman, 587.

Selby v. Gibson, 704.

Seldner v. Smith, 733.

Selfridge v. Gill, 670.

Selfridge v. Lithgow, 742.

Selig, M., 193, 650.

Severy v. Bartlett, 689.

Seymour, J. W., 113, 181, 188, 686,
698, 694, 730, 846.

Seymour v. Browning, 752.

Shackleford v. Collier, 498, 532.

Shafer & Hamilton, 376.

Shaffer v. Fritchery & Thomas, 89,
219, 381, 846, 812, 821, 828.-

Shaffer v. McMaken, 502.

Shanahan & West, 768.

Sharman & Howell, 217, 320.

Shaw v. Mitchell, 495.

Shawhan v. Wherritt, 545, 785, 798,
811, 812, 823.

Shay v. Sessaman, 495.

Shea et al., 422, 427.

Shearman e¢ al. v. Bingham et al., 226,
232, 306, 314, 324, 339, 341, 364.

Shearon v. Henderson, 508.

Shears v. Solhinger, 308, 309.

Sheehan, Daniel, 28, 30, 46, 241, 429,
433, 435, 436, 446, 454, 461, 577,
669.

Shelden, George H., 723.

Shellington v. Howland, 113, 686,
689.

Shelton v. Pease, 577, 578, 736, 788,
760.

Shepard, Thomas 8., 619, 762, 770,
801

Shepardson’s Appeal, 310.

Sheppard, L., 104, 274, 470, 573, 619,
629, 631, 716, 738.

Sherburne, 48, 462.

Sherman v. Hobart, 750.

Sherry, 53, 455.

Sherwood, B., 78, 248, 262, 378, 379,
382, 786, 788, 789.

Sherwood v. Mitchell, 732.

Shields, D., 164, 524, 845.
XXXViii

Shields v. Niagara Bank, 631.

Shoemaker, Robert H., 700, 716, 719.

Shomo v. Zeigler, 373.

Shouse, J. A. & H. W., 30, 414, 415,
428, 429, 483, 457.

Shryock v. Bashore, 309, 310, 833, 851.

Shuey, William H., 228, 327, 328, 351.

Shulze v. Fleischer, 186, 694.

Shuman v. Strauss, 729, 751.

Shurtleff v. Thompson, 743.

Sidener v. Klier, 800.

Sidle, J. W., 249, 577, '700, 704, 708,
741, 835.

Siebel v. Simeon, 851.

Sigsby v. Willis, 29, 435, 565, 569,
583.

Silverman, Charles A., 163, 305, 306,
399, 412, 413, 455.

Sime, John & Co., 681.

Sime & Co., 364.

Simmons, Solomon, 38, 39, 55, 430,
431.

Simpson, Marcus, 190, 693.

Sims v. Ross, 539, 543.

Sinclair v. Smyth, 736.

Singer v. Sloan, 823.

Skelly William H., 56, 60, 487, 456,
461 -

Slafter v. Sugar Refining Co., 823.

Sleek v. Turner, 813.

Sloan, Frederick A., 696.

Sloan v. Lewis, 315, 437, 565.

Smalley v. Taylor, 144, 542.

Smith, 700, 701.

Smith, Elijah E., 246, 771, 772.

Smith, Elmer C., 648.

Smith, John Harper, 43, 329, 443.

Smith, John O., 18, 94, 123, 132, 224,
334, 835, 379, 469, 472, 474, 602,
615, 631, 849.

Smith, John P. & James, 217,320,601,
603, 666.

Smith, John W., 162, 517, 518.

Smith, John W. A., 517.

Smith, Moses C., 776.

Smith, S. T., 36, 58, 409, 416, 417, 453,
455,

Smith, W. Fleming, 92, 577.

Smith v. , 481, 483, 595.

Smith v. Babcock, 740, 753.

Smith & Bickford, 274, 275, 279, 700,
707, 716, 718, 719.

Smith v. Brinkerhoff, 395, 591.

Smith v. Brown, 506.

Smith v. Crawford, 553.

Smith v. Dispatch Co., 115.

Smith v. Ely, 605, 706, 807, 829.

Smith v. Engle, 508, 682.

Smith v. Gordon, 500, 528, 541, 542.

 

 

INDEX TO CASES CITED.

Smith v. Lawton, 503.

Smith v. Little, 352, 807.

Smith v. Manufacturers’ Nat'l B’k,778.

Smith v. Mason, 222, 227, 300, 331,
384, 842, 361, 369, 371.

Smith v. McLean, 529, 798, 820, 887.

Smith v. Ramsay, 759.

Smith e¢ al. v. Teutonia Insurance Co.,
2, 415, 417.

Smoot v. Morehouse, 483.

Snedaker, J. M., 102, 211, 318, 319,
613, 614, 624.

Snedaker, M. J., 607.

Snow, George W., 3838, 336, 496.

Societé D’Espargnes v. McHenry, 617.

Soldiers’ Business Messenger & Dis.
patch Co., 605.

Solis, Andrew J., 192, 195, 266, 641.

648, 695.
Solomon, 711, 713, 714.
Solomon, Joseph, 522.
Son, Nathan A., 235, 653, 720.
Sorden v, Gatewood, 212, 617, 755.
Southern Express Co, v. Connor, 540.
Southern Minnesota R. R. Co., 404,
668, 777.
South Side R. R. Co., 331, 339.
Spades, Michael W., 677, 678, 679.
Spalding v. Dixon, 481, 578.
Spalding v. New York, 738.
Sparhawk v. Broome, 738.
Sparbawk v. Cochran, 495.
Sparhawk v. Drexel, 493, 494, 588, 831.
Sparhawk v. Richards, 801.
Spaulding v. McGovern, 284, 338, 349.
351.
Speake v. Kunard, 557.
Speyer, F. & A., 876.
Spicer e¢ al. v. Ward et al., 417, 457.

Spillman, Benjamin, 677, 679, 846.

Spooner v. Russell, 748.

Springer v. Vanderpool, 540.

Staff, John J., 255, 377.

Stafford, Henry H., 254, 844.

Stansell, 28, 80, 102, 488, 625.

Staplin, 424,

Stark v. Stinson, 750.

Starkweather v. Cleaveland Ins. Co.,
335, 491,

State Bank v. Wilborn, 306.

State v. Bethune, 702, 708.

State v. Ferris, 481.

State v. Pike, 647.

State v. Rollins, 187, 874, 692.

State of Louisiana v. Recorder, 608.

State of North Carolina v. Trustees of
University, 232, 887, 343.

ee Nanas Association v. Kellogg,

0,
INDEX TO CASES CITED.

Steadman, Enoch, 211, 318, 534, 705.

Steadman v. Jones, 534,

Stebbins v. Sherman, 750.

Steele v. Towne, 537.

Steelman v. Mattix, 309, 310.
Steene v. Aylesworth, 489, 670, 703.

Steevens v. Earles, 247, 486, 556, 670.

Steiner, 248, 668.

Steinman, Louis E., 51, 437.
Steinmetz v. Ainslie, 739.
Stemmons v. Burford, 617.

Stephens, E, R., 89, 96, 99, 109, 622,

632, 637, 638.
Stephens v. Brown, 286, 759.
Stephens v. Ely, 754.
Stern, 462.
Stern v. Nussbaum, 736, 749.
Stetson, Charles A., 27, 467.

Stevens, Ezra M., 82, 94,470, 576, 635.

Stevens, R., 422, 732, 763.

Stevens, W. S., 156, 159, 164, 505,
512, 513, 519,

Stevens v. Hauser, 169, 551, 553, BBG,
559.

Stevens v. Mechanics’ Savings Bank,

282, 337, 482.
Stevens v. Palmer, 169, 556, 561.
Stevenson v. Jackson, 244, 766.
Stevenson v. McLaren, 445.
Stewart, R. R., 60, 458, 614.
Stewart, Taylor R., 608.
Stewart v. Anderson, 747, 748.
Stewart v. Colwell, 742.
Stewart v. Emerson, 729.
Stewart v. Green, 745, 752.

Stewart v. Hargrove, 483, 604, 701,

710, 744, 760.

Stewart v. Isidor et al., 102, 214, 527,

528, 625.
Stewart v. Nat. Union Bank, 486.
Stewart & Newton, 159, 519.
Stewart v. Reckless, 748, 749.
Stewart v. Warden, 508.
St. Helens’ Mill Co., 605.

Stickney v. Wilt, 291, 301, 346, 356,

361, 369, 371.
Stiles v. "Lay, 5, 388, 737, 756.
Stillwell, J. B., "424, 471, 672.
Stillwell, William, 672.
Stillwell’v. Coope, 750.
Stinson v. McMurray, 690, 691.
Stobaugh v. Mills, 831, 832, 833.
Stockwell v. Silloway, 186, 309, 507,
694, 738.
Stoddard v. Locke, 214, 507.
Stokes, Edward §., 147, 477, 699.
Stokes v. Mason, 728, 730.
Stokes v. State, 610, 663.
Stoll v. Wilson, 753, 754, 755.

 

Xxxix

Stone v. Miller, 581.

Stone v. National Bank, 182, 690.

Storm v. Davenport, 541.

Storm vy. Waddell, 528, 598, 595.

Storms & Co., B74,

Story v. Nowlan, 412.

Stotesbury v. Cadwallader, 346.

Stow v. Parks, 311, 754, 755.

Stowe, 823.

Stowers (J. R.) et al., 67, 68, 70, 763.

Strachan, 83, 109, 565, 566, 726.

Strachan, William 8., 628, 629.

Strain v. Gourdin, 291, 356, 800, 810,
828.

Stranahan v. Gregory & Co., 821.

Strauss, Bernhard, 86, 87, 372, 618,
621.

Street v. Dawson, 219, 225, 288, 345,
854, 796, 826.

Streeter v. Sumner, 500, 501.

Strong v. Clawson, "558, 736.

Stuart v. Aumueller et al. ,41, 337, 448,

Stuart v. Hines, 41, 69, 139, 172, "213,
317, 390, 448, 550.

Stubbs, 833.

Sturgeon, Edward T., 79, 80, 382.

Sturges v. Crowninshield, 305, 307.

Stuyvesant Bank, 1338, 200, 473, 475,
594, 648, 650, 668, 673.

Sullivan v. Bridge, 536, 537.

Sullivan vy. Heiskill, 310, 833.

Summers, C. M., 523.

Sutherland, Israel, 852.

Sutherland, Robert, 55, 56, 58, 275,
410, 412, 452, 454, 576.

Sutherland, Robert A., 269, 276, 281,
410, 718, 719, 720, 725.

Sutherland v. Davis, 23, 144, 540.

Sutherland v. Kellogg e¢ al., 292, 296,
298, 363, 365, 366, 367.

Sutherland vy. Lake Superior Canal
Co., 214, 228, 327, 347, 609.

Sutro v. Hoile, 487.

Suydam v. Walker, 701, 704.

Swain v. Barber, 581.

Swan v. Littlefield, 715.

Sweatt v. Boston, Hartford & Erie R.
R.Co., 1, 2, 364, 366, 384, 777, 778.

Sweet et al., 251, 660.

Swepson v. Rouse, 539, 541, 546,

Swope et al. v. Arnold, Asse., 603.

Sykes, James W.,422, 423, 424, "425, 457.

Symonds v. Barnes, 736,

Talbert v. Melton, 212, 617.

Talbot, John, 119, 257, 258, 259, 789,
790, 791, 844.

Talcott, 584.

Talcott v. Dudley, 494, 768.
xl

Talcott v. Goodwin, 588.

Tallman. Darus, 275, 647, 717.

Tanner, Edward P., 195, 197, 198, 644,
645.

Taylor, William, 153, 522.

Taylor, William N. & Co., 429.

Taylor v. Bonnett, 321.

Taylor v. Nixon, 750,

Taylor v. Rasch, 226, 346, 570, 775.

Taylor v. Renn, 729, 752.

Taylor v. Whitthorn, 806.

Tebbetts, John C., 274, 391, 699, 709,
717.

Tebbetts v. Torr, 496.

Ten Eyck & Choate, 586.

Tenney et al. v. Collins, 760.

Tenth Nat. Bank v. Sanger, 826.

Terry, Lyman, 402.

Terry v. Cleaver, 804, 813.

Tertelling, 124, 471, 523.

Tesson, E. P. & E. M., 246, 766.

Thiell, W. H., 158, 158, 165, 166, 515,
525.

Thomas, James 8., 61, 460.

Thomas, Veder G., 184, 691.

Thomas v. Cruttenden, 559.

Thomas v. Jones, 736.

Thomas v. Hunter, 284, 760.

Thomas v. Shaw, 744, 745.

Thompson, 282, 724.

Thompson, James, 158, 249, 481, 516,
705.

Thompson, John, 275, 717.

Thompson v. Alger, 306.

Thompson v. Hewett, 748, 744.

Thompson v. McClallen, 421, 424.

Thompson v. Moses, 217, 319.

Thompson v. Spittle, 775.

Thompson v. Wiley, 756.

Thoms v. Thoms, 738.

Thornburgh v, Madren, 757.

Thornhill e¢ ad. v. Bank of Louisiana
et al., 292, 309, 365, 366, 367, 370,
401, 784.

Thornhill v. Link, 404, 439.

Thornton, Alvin G., 158, 516.

Thornton v. Hogan, 736.

Thorp, Stillman, 555.

Thrasher v. Bentley, 831.

Thurmond v. Andrews, 527, 736.

Tichenor y. Allen, 212, 558, 616.

Tiernan v. Woodruff, 733.

Tiffany v. Boatman’s Savings Inst’n,
226, 346, 351, 494, 495, 808, 828,
830, 4384, 835.

Tiffany v. Lucas, 799, 830, 834, 835,
837.

Tills v. May, 497, 603, 604.

Timothy v. Reed, 721.

 

INDEX TO CASES CITED.

Tinker v. Van Dyke, 811, 828.

Tinkum v. O’Neal, 184, 688.

Tivoli Brewing Co., 426.

Tobias v. Rogers, 581, 741.

Tobin v. Trump, 311.

Todd v. Barton, 691.

Tompkins v. Bennett, 737, 756, 760.

Tonkin & Trewartha, 98, 99, 400, 489,
637, 796.

Tonne, D. H., 154, 159, 515, 519.

Toof et al. v. Martin, 37, 97, 796, 797,
802, 815, 821, 823.

Tooker, Samuel B., 682.

Toombs v. Palmer, 558.

Tower, Julius, 28, 433, 434.

Towle v. Robinson, 734.

Town et al., 572, 573.

Town, R. M. & BS. R. 247, 670.

Townsend, William E., 268, 697.

Townsend v. Leonard, 228, 327.

Tracy (Wm. W.) 4 al., 699.

Traders’ Nat’] Bank v. Campbell, 146,
219, 225, 228, 347, 349, 410, 540,
802, 804, 812, 818, 826, 827.

Traphagen, 274, 717.

Trask, Benjamin J. H., 649.

Treadwell v. Holloway, 731.

Treat, 674.

Trim e¢ al., 584.

Trimble v. Wilkinson, 601.

Trimble v. Williamson, 484.

Trimountain, The, 661.

Triplett v. Hanley, 250, 665, 666, 835.

Trowbridge, 6738, 674.

Troy Woolen Co., 110, 170, 290, 293,
357, 859, 364, 557, 568, 590.

Truitt v. Truitt, 177, 212, 617, 747.

Tubbs vy. Williams, 582.

Tucker v. Daly, 494.

Tucker e¢ al. v. Opelousas & Great
Western R. R. Co., 409, 422, 777.

Tucker v. Oxley, 248, 312,589,669,771.

Tuesley v. Robinson, 161, 164, 512.

Tulley, Riley, 660.

Tunno v. Bethune, 5838, 590.

Turner v. Esselman, 581.

Turner vy. Gatewood, 687, 691.

Turner v. Shenkmeyer, 483.

Turner v. The Skylark, 320.

Tuttle v. Truax, 817, 825.

Tyler, 712.

Tyrrell, Daniel, 720.

Ulrich (Isaac) e¢ al., 208, 209, 384
335, 657.

Ulrich, Isaac, 228, 326, 330, 332, 333.

Underwood v. Eastman, 749, 750, 751.

Ungewitter v. Von Sachs e¢ al., 490,
567, 821.

4
INDEX TO OASES CITED.

Union Canal Co. v. Woodside, 551,
552.

Union Pacific R. R. Co., 412.

Upton'v. Burnham, 781, 782, 783.

Upton vy. Englehart, 782.

Upton v. Hansbrough, 353, 497, 780,
781, 782.

Uran v. Houdlette, 748.

Usher v. Pease, 446,

U. 5. v. Bayer, 842, 843.

U.S. v. Black, 648.

U. S. v. Clark, 10, 272, 378, 394, 840,

842,

8. v. Davis, 737.

S. v. Deming, 394.

v. Dobbins, 187, 692.

. v. Fisher, 667.

. v. Frank, 841.

v. Geary, 841.

v. Herron, 669, 737.

v. King, 737.

v. Latorre, 840.

v. Mackoy, 321.

v. Nikols, 394,

vy. Penn, 841, 842.

Ve Prescott, 203, 647, 841.

v. Pusey, 843.

v. Rob Roy, 578, 729, 737, 740,

. v. Smith, 840, 842,

Vv. Thomas, 841, 843.

LOW Throckmorton, 578, 737.

dd didadddddddieicteicicics
PAA ont TA tn TO TOTO Tn on Tn tn Wo wn Ca

Vairin v. Edmonson, 548, 544.
Valentine, William H., 88, 621.

Valentine v. Holloman, 14, 144, 394,

542.
Valk (Abm.) et al, 188, 189, 693.
Valliquette, 421.
Vanderheyden v. Mallory, 566, 739.
Vandyke v. Tinker, 345, 440.
Van Alstyne v. Crane, 439.
Van Anken, Aaron, 679, 680.
Van Nostrand v. Carr, 307, 308.
Van Riper, G. & J. J., 282, 724.

Van Tuyl, Andrew P., 195, 196, 203,

272, 642, 647, 651, 727.
Vanuxem v. Hazlehursts, 307.
Varnum v. Wheeler, 754.

Versilius v. Versilius, 347, 348, 349.

Vetterlein, Bernhard T., 191, 641, 643.

Vetterlein, Theodore H., 672, 773.
Vickery, Jonathan J., 82, 575.
Vidal v. Ocean Ins. Co., 317.
Viele v. Blanchard, 754.

Viele v. Ogilvie, 750.

Vila, James, 563, 564.

Vinton, 282, 723.

Viosca v. Weed, 758.

D

xli

Vogel, Henry, 171, 201, 204, 211, 316,
334, 563, 613, 642, 647.
Vogt v. Lathrop, 225, 350, 812, 813,
821.

Vogler, E. A., 154, 516, 518, 521.
Voight, Lewis, 548.

Voorhees v. Bonesteel, 349, 532.
Voorhees v. Frisbie, 233, 337.
Vorbeck, 696.

Waddell, W. C. H, 316 481, 593, 595.

Wadsworth ¥. Tyler, 344, 400, 796,
797, 820, 834,

Wager v. Hall, 639, 797, 798, 799,
"308, 804, 805, 815, 817, 819, 823.

Waggoner, Samuel D., 280, 719, 720.

Waite & Crocker, 35, 54, 408, 428,
438, 452, 665, 666,

Waite cw. H.) et ale, 66, 403, 414, 762.

Wakeman v. Hoyt, 419, 823.

Walbridge v. Harroon, 751,

Walbrun v. Babbitt, 356, 820, 830.

Wald & Aehle, 678.

Wales v. Lyon, 736, 760.

Walker, Andrew J., 394.

Walker, William A., 186, 694.

Walker, William 8., 4, 8, 389.

Walker v. Barton, 255, 584, 586, 662.

Walker v. Seigel, 492.

Wallace, 23, 211, 213, 221, 224, 228,
229, 230, 816, 319, 329,. 330, 334,
335, 705.

Wallace v. Conrad, 626.

Wallace & Newton, 765.

Waller v. Edwards, 746.

Walther (Pius) ef al., 103, 105, 621,
627.

Walton (F. E.) ef al., 85, 94, 96, 106,
124, 255, 470, 586, 620, 680, 631,
635, 637, 661, 797, 819.

Walton, J. J. & C. W., 440.

Ward, George 8., 504, 505, 662, 666.

Ward v. Jenkins, 232, 337.

Wardwell v. Foster, 751.

Warner (J. H.) e¢ al., 435, 803, 805.

Warner, 8. P., 707, 709.

Warner v. Cronkhite, 729.

Warren, Henry, 246, 767.

Warren v. Delaware, L. & West. R. R.

Co., 821, 822.
Warren v. Homestead, 170, 556, 558,
561.

Warren v. Miller, 553.

Warren Savings Bank v. Palmer, 34,
429.

Warren v. Syme, 559.

Warren v. Tenth National Bank, 293,
329, 346, 365, 799, 802, 803, 821,

 

822.
xlii

Warshing, J. & §., 660.

Wartmough vy. Gilliams, 581.

“Washburn, 661.

Washington Marine Ins. Co., 42, 402,
412, 447.

Waterman vy. Robinson, 374.

Watrous (Martin) e¢ al., 85, 629.

Watkins v. Pinkney, 322, 595.

Watson, 5, 388, 428.

Watson, John, 528.

Watson v. Citizens’ Savings Bank, 316,

327, 784.

Watson & Reynolds, 696.

Watson v. Taylor, 813.

Watts, Henry M., 22, 76, 79, 381, 382,
396.

Way y. Howes, 286, 759.

Way v. Sperry, 751.

Weakly v. Miller, 337, 550.

Weamer, David, 327.

Weaver, Christopher, 412, 418, 428.

Webb, J. C. & Co., 584, 585, 586, 724,

767,

Webb & Taylor, 282, 724.

Webb, Wm. A. & Co., 245, 282.

Weber Furniture Co., 676, 678, 679.

Webster v. Upton, 780, 782, 783.

Webster v. Woolbridge, 603.

Weeks, Charles R., 603.

Weeks, George 6., 575, 597.

Weikert e «l., 421, 425.

Weiner v. Farnum, 831.

Weisenfeld v. Mispelhorn, 2138, 317.

Weitzel, 57, 401.

Welch, William, 158, 159, 516, 604.

Weld v. O’Brien, 321.

Wells ef al. (ex parte H. B. Claflin &
Co.), 58, 374, 404, 405, 408, 410,
412, 416, 417, 421, 455.

Wells, J. L., 412.

Wells v. Brackett, 315, 373.

Wells v. Brander, 502, 504.

Wells v. Dalrymple, 367.

West v. Creditors, 308.

Westbrook Mfg. Co. v. Grant, 503.

Westcott, Charles §., 422, 424.

Westenberger v. Wheaton, 745.

Western Ins. Co., 491.

Weyhausen (Wm.) et al., 47, 450.

Wheelock v. Lee, 495, 535.

Whetmore, 721.

Whipple, 680.

Whipple, R. M., 320.

Whipps v. Ellis, 825.

Whitaker v. Chapman, 113, 730.

White, William F., 713, 714.

White v. Cushing, 751.

White v. How, 753.

White v. Jones, 350, 547.

 

INDEX TO CASES CITED.

White & May, 168, 556.

White v. Platt, 731.

White v. Raftery, 400, 814, 827.

Whitehead, John B., 161, 512, 522,
664.

Whitehouse, C. H., 189, 6938, 729.

Whithed v. Pillsbury,502,509, 534,593.

Whiting, Chester M., 185, 687.

Whitman v. Butler, 212, 319, 329, 615.

Whitney e¢ al., 715.

Whitney v. Crafts, 735.

Whitney v. Lodge, 317.

Whitridge v. Taylor, 177, 212, 617.

Whittaker, 623.

Whyte, William, 85, 629.

Wickham v. Valle, 495.

Wicks & Co. v. Perkins, 612, 617.

Wiener, 105, 627.

Wierlaski, Jacob, 386.

Wiggers, 186, 693, 729.

Wilbur, Jeremiah G., 217, 228, 280,
320, 328, 330.

Wilbur v. Wilson, 508.

Wild, 574.

Wiley, William H., 598, 773.

Wilkins v. Warren, 742.

Wilkinson’s Appeal, 806, 812.

Wilkinson, Joseph L., 270, 726.

Wilkinson v. Dobbie, 350, 352.

Wilkinson v. Wait, 514, 521.

Williams, Daniel, 665.

Williams, David B., 251, 502, 504,
575, 662, 673.

Williams, Elias G., 51, 452, 458.

Williams, Henry B., 244, 770.

Williams, Ziba, 157, 158, 166, 514,
515, 516.

Williams vy. Atkinson, 506, 784.

Williams v. Butcher, 736,

Williams & Co., 35, 57, 66, 67, 402,
404, 407, 418, 428, 436, 762, 797.

Williams v. McPheeters, "188, 439,
692, 693.

Williams v. Merritt, 213, 510.

Williams v. Miller, 587.

Williams v. Robbins, 748.

Williams v. Vermeule, 558.

Williams v. Whiting, 687.

Williamson v. Colcord, 493.

Williamson v. Dickens, 731, 739, 740.

Willis v. Carpenter, B57, 633,

Wilmott, Justus B., 696.

Wilson, George, 701.

Wilson, Guy, 428, 424,

Wilson, W.F., 282, 723.

Wilson v. Brinkman et al., 219, 225,
829, 345, 346, 806, 812, 827.

Wilson v. Capuro, 685.

Wilson y. City Bank of St. Paul, 31.
INDEX TO OASES CITED.

32, 400, 407, 798, 802, 805, 811,
812, 821.
Wilson v. Harper, 374.
Wilson v. Stoddard, 224, 336, 818.
Wilson v. Turpin, 610.
Winkens, Daniel, 65, 765.
Winn, Elijah E., 176, 602, 615, 623.
Winship, Edwin K., 645, 646.
Winship v. Phillips, 747.
Winslow v. Bliss, 91, 590, 809.
Winslow v. Clark, 177, 617, 618, 79,
+ 809, 810, 827.
Winsor v. Kendall,
819.
Winsor v. McLellan, 494, 499. /
Winter (Jn re Barrow, re Loeb, Simon
& Co., re Winter), 316.
Winter v. Iowa M. & North Pacific R.
R. Co., 414, 418, 421, 778.
Winternitz, David, 310, 311.
Winthrop, Greville T., 187, 692.
Wise v. Decker, 540. *
Withrow vy. Fowler, 770, 801.
Witkowski, 643.
Witt v. Hereth, 812.
Wolcott v. Hodge, 781, 732.
Wolfe v. Bate, 740.
Wood, Edward T., 396.
Wood, J. P., 806.
Wood yv. Bailey, 290, 358.
Wood v. Boyd, 493.
Wood v. Grundy, 373.
Wood M. & R. Co. v. Brooke, 332,
488, 548.
Wood v. Owings, 800.
Woodall v. Holliday, 540.
Woodbury vy. Perkins, 743.
Woodford v. Chamberlain, 30, 482,
433.
Woodin v. Frazee, 491.
Woods, Thomas, 410, 419, 456.
Woods v. Buckwell, 363.
Woods v. Forsyth, 227, 342.
Woods v. Oakman, 487.
Woodward, George & Julius C., 194,
199, 202, 649.
Woodward, Wm. 8., 379, 648.

407, 487, 809,

 

xliii

Woodward v. Herbert, 577, 581.

Woolfolk v. Gunn, 322.

Woolfolk v. Murray, 522.

Woolfolk v. Plant, 733.

Woolford, Staats D,, 651.

Woolums, B. W. & J. H., 277, 695.

Wooten v. Clark, 528.

Work, McCough & Co., 69, 363, 776.

World Company v. Brooks, 185, 688.

Worthington, 332, 600.

Wright (Charles R.) et ai.,

Wright, George C., 521.

Wright, John S., 647, 785, 858.

Wright, Joseph B., 797, 811, 813, 814,
821.

699.

Wright, J. W., 79, 80, 382, 383, 411.

Wright v. Filley, 410.

Wright v. Foster, 589.

Wright v. Johnson, 344, 480.

Wright v. Watkins, 315, 736.

Wyatt, W., 700, 701.

Wylie, 155, 164.

Wie, William H., 188, 478, 513, 517,
518.

Wynne, Charles H., 172, 173, 176, 211,
319, 499, 526, 546, 584, 586, 595,
606, 796, 800.

Yates v. Hollingsworth, 748, 750.

Yeaton, R. F., 585, 586.

York & Hoover, 288, 338, 354, 355,
357, 362, 365, 384, 605, 606, 615.

Young, B. F. & J. M., 159, 519, 523.

Young, Levi H., 699.

Young v. Ridenbaugh, 269, 726.

Yoxtheimer v. Keyser, 749. |

Zahm v. Fry, 219, 225, 228, 324, 347,
638, 813, 819, 826.

Zantzinger v. Ribble, 481,, 5389, 545.

Zarega, Augustus, 746.

Zeiber v. Hill, 505.

Zeigler v. Shomo, 138, 480, 550, 611.

Ziegenfuss, John, 308, 481.

Zimmer v. Schleehauf, 183, 577, 689-

Zinn et al., 672, 674.

Zollar v. Janvrin, 506, 507, 753.
PRACTICE IN BANKRUPTCY,

 

 

CHAPTER I.

COMMENCEMENT OF PROCEEDINGS IN VOLUNTARY BANK-
RUPTCY.

Tue bankrupt law declares that any person residing
within the jurisdiction of the United States, and owing
debts provable in bankruptcy exceeding the amount of
three hundred dollars, may apply for the benefit of its
provisions ($ 5014). As to the parties who may apply,
the statute is broad and comprehensive. Any person
possessing the requisite qualifications may become a
voluntary bankrupt. The term has been held to include
aliens.’ It is also broad enough to include femes covert®
and infants. There could be no question about the right
of partners to apply jointly under this provision, even
though there were not a distinct recognition of that right
in other sections of the act ($5121). The term person
also includes corporations ($ 5013), but in this sense is
limited to moneyed, business, and commercial corporations.*
It does not, therefore, extend to municipal, charitable or

 

In re Goodfellow, 3 B. R. 452; 8. c. Lowell, 510; s.c. 1 L. T. B. 179;
s.c.3 L. T. B. 69; Cutter v. Folsom, 17 N. H. 139.

>In re O’Brien, 1 B. R. 176; in re Harriet E. Collins, 10 B. R. 385; s. c.
3 Biss 415; in re Kinkead, 7 B. R. 489; 8. c. 8 Biss. 405; in re Julia Lyons,
2 Saw. 524; sc. 1A. L. T. (N. 8.) 167.

*In re Book, 5 McLean, 317; in re Samuel 8. Cotton, 2. N. Y. Leg. Obs,
270.

‘ Sweatt v. Railroad Co. 5 B. R. 234; 8. c. 1 L. T. B. 273; Adams v. Rail-
road Co. 4 B. R. 314; 5.0.6 A. L. Rev. 365.

1
2 COMMENCEMENT OF PROCEEDINGS

literary corporations. It does, however embrace railroads,’
steamboat companies, and insurance companies.’ A vol-
untary bankrupt who has contracted new debts since the
filing of his petition may file a new petition.*

The persons, however, who wish to file a petition,
must possess certain qualifications before they can do so.
They must, at the time of their application, reside in the
United States, and owe provable debts to an amount ex-
ceeding three hundred dollars. Persons who are non-
residents, or whose provable debts are less than three
hundred dollars, can not become bankrupts. The residence
required by the statute will probably be held to mean
domicile, so that citizens temporarily residing abroad
may enjoy the benefits of its provisions.” What are
provable debts is clearly defined in the act ($$ 5067 to
5072); and, unless the debtor’s liabilities are included
among those enumerated, he can not file a petition. If a
feme covert is not under the State laws liable for debts
contracted by her, she is not embraced within the pro-
visions of the statute.’ An infant also is not embraced
within its provisions, in respect to his general contracts."
The petitioner must also set forth his inability to pay his
debts, and this inability has been construed to mean legal
insolvency.’

In the case of corporations there is an additional
qualification. The officer who files the petition must be
duly authorized to do so by a vote of a majority of the

 

» Adams-v. Railroad Co. 4 B.R. 314; 8.c.5 B. RB. 234; 8. c.6 A. L. Rev.
365.

> Sweatt v. Railroad Co. 5 B. R. 234; s. c.1 L. T. B. 273.

*In re Merchants’ Ins. Co.6 B. R. 43; 8. c. 8 Biss. 162; s.c.2L. T. B.
243; Smith v. Teutonia Ins. Co. 4 C. L. N. 130.

‘Ta re Drisko, 138 B. R. 112; s.c 14B. R.

° In re Goodfellow, 3B. R. 452; 8. c. Lowell, 510; s.c.1L. T. B.179; 5.
c.3L. T. B. 69.

* In re Rachel Goodman, 8 B. R. £80; s. c. 5 Biss. 401; in re Schlichter, 2
B. R. 336; in re Howland, 2B. R. 357.

"In re Walter 8. Derby, 8 B. R. 106; s.c. 6 Ben. 232.
* Hardy v. Clark et al. 3B. R. 385;8.c.1L. T. B. 151;8.c.3L.7.B.11.
IN VOLUNTARY BANKRUPTCY. 3

corporators, at a legal meeting called for the purpose
(§ 5122). The meeting at which the vote is given must
be legal, and must also be called for the express purpose
of considering the question of going into bankruptcy.
But where all practicable means have been taken to have
a fair stockholders’ meeting, the vote will be deemed suffi-
cient, although there was an irregularity in the call on
account of the contumacy of some of the directors.’ It
must be a meeting of those who are the corporators,
according to the terms of the charter and the laws of the
State in which the corporation is located. Such is the
express requirement of the statute. But a corporator,
as understood in the law respecting corporations, is one of
the constituents or stockholders of the corporation.

The form prescribed for a corporation petition ? also
mentions directors or trustees; but, unless the directors,
or trustees, as the case may be, are the actual corporators,
their vote would not be sufficient; for the power of the
justices of the Supreme Court to prescribe forms and
rules does not enable them to dispense with an express
requirement of the statute.*

A petition filed by direction of a board of trustees
alone, without the consent of the corporators duly ob-
tained in the prescribed mode, is illegal, although the
board of trustees is authorized by the laws of the State
to manage all the ordinary business of the corporation.
Even a subsequent ratification by the corporators will not
give validity to such a petition, for it is not a question of
agency but of jurisdiction.4 Whether the officer has
been duly authorized to file the petition or not, is a ques-
tion of fact which should not be determined without some

 

* Davis v. Railroad Co. 13 B. R. 258; s. c. 1 Wood, 661.
? Form No. 3.
* In re L. Glaser, 1 B. R. 336; s. c. 2 Ben. 180; s.c. 1 L. T. B. 57.

* In re Lady Bryan Mining Co. 4 B. R. 144, 894; sc. 1 Saw. 349; 8. 0. 2
Abb. C. C. 527; Ansonia Brass Co. v. New Lamp Chimney Co. 10 B. R. 335;
8. c. 64 Barb. 435; 8. c. 53 N. Y. 123; s.c. 18 B. R. 385.
4 COMMENCEMENT OF PROCEEDINGS

evidence having a legal tendency to establish it, for if
there is a total defect of evidence to prove the essential
fact, the proceedings will be void.

The debtor may file an application in the district court
of the United States for the district in which he has re-
sided or carried on business for the six months next imme-
diately preceding the time of filing such application, or for
the longest period during such six months. Where the
debtor resides and carries on business in the same district,
there is but one court in which he can file his application.
But where he resides in one district and carries on business
in another, he has an election, and may make his applica-
tion in either district. It has been intimated that residence,
as used in the statute, is equivalent to domicile, and such
was its meaning under the insolvent law of Massachusetts.”
If this should be the meaning ultimately attached to the
term, then all questions in regard to residence would be
determined by the law relating to domicile. That law has
already been applied to the determination of one case,
Thus, where a native of Massachusetts had for a time
been domiciled in California, but had left California with
the intent to return to his native State, going, however,
in the mean time to France, and staying there eleven
months, it was beld that his native domicile revived ¢0 in-
stant as soon as he left his acquired domicile.

It has, however, been held, that the term “ residence”
is used specifically in the statute, as contradistinguished
from domicile, so as to free cases under it from the difficult
and embarrassing presumptions and circumstances upon
which the distinctions between domicile and residence
rest. The two terms certainly have distinct meanings;
and it appears to be the better construction to hold that

 

‘ New Lamp Chimney Co. v, Ansonia Brass and Copper Co. 13 B. R. 385;
8. ¢. 10 B. R. 3385; 8. c. 64 Barb. 435; 8. c. 53 N.Y. 123.

*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.

“In re W. 8, Walker, 1 B. R. 886; s c. Lowell, 237; 8 c.1L. T. B. 38.
IN VOLUNTARY BANKRUPTCY. 5

the proceedings should be instituted with reference to the
actual residence of the party, or his place of business, and
not with reference to his domicile.’ The term “residence”
denotes an actual inhabitancy in contradistinction to a
mere temporary abode in lodgings? If the debtor has a
family, his residence is where they reside, although he
may make temporary sojourns in another State?

The phrase “carried on business” has been compara-
tively little considered or discussed. Business is a term
of extensive import and indefinite meaning. In its broad-
est sense it includes nearly all the affairs in which an
individual can be an actor. Indulgence in pleasure, par-
ticipation in domestic enjoyment, and engagement in the
offices of merely personal religion, may be exceptions, but
the employment of means to secure or provide for these is
business. The term, as used in the statute, is not, however,
synonymous with employment or vocation, A minister
may have a vocation, and an operative may have an em-
ployment, but neither a minister nor an operative can well
be said to be in business. To bring himself within the
terms of this phrase, the debtor must be engaged in some-
thing that is commonly denominated business. Thus, a
person who merely has an office in,the district, where he
receives letters, and is engaged in winding up the affairs
of an insolvent firm to which he belonged, does not carry
on business.’ It is not sufficient, however, to be engaged
in it; he must carry it on. Hence, a clerk, although en-
gaged in business, can not apply in the district where he
is employed.> There is also a difference between superin-
tending business and carrying on business. A person who
superintends a business can not be said to carry on the

 

‘In re Watson, 4 B. R. 613.

* In re Israel Kinsman, 1 N. Y. Leg. Obs, 309.
® Stiles v. Lay, 9 Ala. 795.

‘Tn re Little, 2 B. R. 294; s. c. 3 Ben. 25.

* In re Magie, 1B. R. 522; s. c. 2 Ben. 369; in re Israel Kinsman, 1 N. Y.
Leg. Obs. 309.
6 COMMENCEMENT OF PROCEEDINGS

business ; for all his acts are, in fact and in contemplation
of law, the acts of his principal. There is, moreover, an-
other objection. If he merely superintends the business,
he does not furnish the capital; and no one carries on a
business unless he provides the money that is needed in
it, or has an interest in it by contributing his labor. The
capital may be borrowed, but it must stand in the debtor's
name. From this it follows that the business which is ~
carried on must be the debtor’s own business, and not that
of another. Such would seem to be the proper construc-
tion of the phrase. There are, however, two cases that
apparently conflict with this view. In both the debtors
had carried on business within the district for a long time,
and had failed. After their failure, one had been em-
ployed as a clerk and the other as an agent to superintend
business, and both had been so employed during the
whole of the six months that preceded their application ;
yet it was held that their applications were properly
filed The court appears to have been influenced by the
fact that they had always been engaged in business within
the district. In one case, however, the debtor did receive
a share of the profits of the business which he superin-
tended,’ and hence might be considered to carry on the
business, for a person may furnish labor as well as capital.

The phrase “ carrying on business” looks to the scheme
and purpose to which all the transactions tend, the design
and object which the party has in view. In carrying on
a business there are many affairs which are merely inci-
dental, and which may be, and often are, transacted else-
where than at the place where the business is located, and
such transactions may be of such frequent and even daily.
occurrence as to require an agency of considerable dura-
tion. Such collateral or incidental transactions do not

 

2 In re Bailey, 1 B. R. 613; s. c. 2 Ben, 437; in re Belcher, 1 B. R. 666;
8. c. 2 Ben. 468.

2 In re Bailey, 1 B. R. 613; s. c. 2 Ben. 437.
IN VOLUNTARY BANKRUPTCY. 7

constitute the business of the debtor, nor are they a carry-
ing on of business in the sense of the law.’

The time during which the debtor has resided or car-
ried on business in the district must also be considered.
If he has resided or carried on business within the district
during the whole of the six months that immediately pre-
cede his application, then no question can arise. If, how-
ever, he has resided or carried on business in different
districts during such six months, then the application
must be made in the district in which he has resided or
carried on business for the longest period during that
time. The phrase “longest period” means the longest
period during which the debtor has resided or carried on
business in any district.2 Thus, during the 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
district in which to make the application would be the
one in which the debtor has resided or carried on busi-
ness for the two months. So, also, if he has had but one
residence in the United States of less than six months, his
application may be made in the district where he has so
resided, although it may be made on the day after his
residence has been established, for no district can be
shown in which he has had a longer residence.’

Although the debtor may select the district in the first
instance, yet when proceedings have been once commenced
in either district, similar proceedings can not be had in
any other district, and the jurisdiction is exclusive in that
court where the jurisdiction first attaches+

 

‘In re Ala. & Chat. R. R. Co. 6 B. R. 107; 8. 0.9 Blatch. 391; 8. c. 5 L,
T. B. 76.

2 In re Foster, 3 B. R. 236: s. c. 3 Ben. 886; 8. ¢c. 1 L. T. B. 127.
i! 4

® In re Goodfellow, 8 B. R. 452; s. c. Lowell, 510; s.c. 1 L. T. B. 179;
8.0. 3 L. T. B. 69.

* In re Horace Hall, 5 Law Rep. 269.
8 COMMENCEMENT OF PROCEEDINGS

The jurisdiction, power, and authority conferred upon
the district courts in cases in bankruptcy, are also con-
ferred upon the Supreme Court of the District of Colum.
bia ($ 4977), and upon the district courts of the several
territories, when the bankrupt resides in the District of
Columbia, or in either of the territories ($ 4978; Act of
92d June, 1874, $ 16); and the power vested in the dis-
trict courts of the territories may be exercised by either
of the justices thereof while holding the district court in
the district in which the petitioner or alleged bankrupt
resides.

The questions that have been considered thus far are
all of vital importance, for they affect the jurisdiction of
the court over the person of the debtor. If the court has
no such jurisdiction, the proceedings will be a nullity. In
such case any creditor may, on filing a petition for that
purpose, have the proceedings discontinued at any time ;*
or may defeat the application for a discharge by showing
that the court has no jurisdiction over the case.

The application for the benefit of the statute must be
made by a petition, with a schedule of abilities and a sched-
ule of property annexed ($ 5014). A petition alone, with-
out these schedules annexed, would not be such a petition as
the statute requires. Several forms for petitions to suit the
character of the petitioner have been prescribed by the
justices of the Supreme Court.’ Forms for the schedules
have also been prescribed,* and these must be annexed to
and accompany the petition, whatever may be the form
selected. These forms must always be observed and used,
but the petitioner is allowed to make such alterations as
may be necessary to suit the circumstances of his particu-
lar case.” Printed blanks are commonly used, and may

 

‘Inre W. 8, Walker, 1 B. R. 886; s. c. Lowell, 237; 8.0.1 L. T. B. 38;
in re Goodfellow, 8 B. R. 452; s. c. Lowell, 510; s.c. 1 L. T. B. 179; 8. o
3L. T. B. 69.

* In re Little, 2 B. R. 294; 8. c. 3 Ben. 25.
* Forms Nos, 1, 2 and 3. ‘ Form No, 1. > Rule XXXII
IN VOLUNTARY BANKRUPTCY. " 9

usually be obtained from dealers in law stationery. The
preparation of the petition is a work that requires both
clerical and legal skill. The petition and the schedules
must be printed or written out plainly, without abbrevia-
tion or interlineation, except where such abbreviation and
interlineation may be for the purpose of reference! Abbre-
viations and interlineations are not absolutely prohibited,
but, on the contrary, are clearly permitted. Their use,
however, is confined to reference only. When that is their
sole purpose they are allowed. It has, however, been de-
cided that dots can not be used to indicate anything which
is necessary to be stated, and the practice has ever since
conformed to that decision, and all matters necessary to be
inserted in the appropriate blanks, are written out in full.
These must be written out in a legible manner, or the peti-
tion can net be filed? The petition and the schedules must
be prepared in duplicate, one for the court and the other
for the register The petition and schedules should be
on sheets of uniform size, so that they may be bound to-
gether at the termination of the proceedings.®

The petition itself should always contain those aver-
ments which are necessary to give the court jurisdiction,
and should also set forth the petitioner’s 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 the benefit of the statute.
It should be addressed to the judge of the judicial district
in which the application is made, and the name of the
judge must be correctly stated. Where the petitioner has
resided or carried on business within the district for more
than six months, the petition need not set forth the full
time, but may simply aver that he has resided or carried
on business within the district for six months. The object

 

1 Rule XLV. ? Tu re Orne, 1 B. R. 79; 8. c. 1 Ben. 429.
* Anon. 1 B. R. 216; in re Robert Malcolm, 4 Law Rep. 488.
“ Rule IV. ® Rule VIT.
10 COMMENCEMENT OF PROCEEDINGS:

of the averment is to show that the court has jurisdiction
in the premises, and the averment need only be such as is
requisite for that purpose. The petition must also be ac-
companied by an oath, and both the petition and the oath
must be signed by the petitioner. If the petitioner is a
citizen of the United States, he must also take the oath of
allegiance, which is usually incorporated in the oath to
the petition! The oath of allegiance, however, may be
taken and filed after the petition has been filed, and be-
fore any proceedings have been had thereon, with the
same effect as if annexed to the petition.’ It is not neces-
sary that there should be an averment that the petitioner
is or is not a citizen of the United States,® but, if he is not
a citizen, it is advisable to set that fact forth, in the oath
to the petition.

The schedule of liabilities required to be annexed to
the petition is called Schedule A, and consists of five sep-
arate divisions, by means of which the debts are divided
into as many distinct classes. Each class is usually placed
upon a separate sheet. When the matters belonging to
any class require more than one sheet for their proper
statement, the several sheets should be placed together so
as to form a book, and not attached to each other so as to
form a roll. Under the provisions of the statute and the
rules, the petitioner was only required to use those forms
which were necessary to set forth his affairs correctly ;*
but the rules of the various district courts now commonly
require the use of all the separate divisions, whether there
is anything to be stated under them or not. He may,
however, use additional divisions and marks, whenever he
deems it necessary, in order to set forth the condition of
his affairs clearly and lucidly.. In Schedule A he must

 

? Section 5018; Form No. 1.

°U. 5. v. Clark, 4 B. R.59; 8.0.1 L. T. B. 237; sc. 3 L. T B. 223.
°U. 5. v. Clark, 4 B. R. 59; sc. 1 L. T. B. 287; s.¢c. 8 L. T. B. 223.
‘Rule XXXII; Anon. 1 B. R. 123. * In re Sallee, 2 B. R. 228.
IN VOLUNTARY BANKRUPTOY. 11

set forth a full and true statement of all his debts, and, as
far as possible, to whom due, with the place of residence
of each creditor, if known to the debtor, and, if not known,
the fact that it is not known, and the sum due to each
creditor; also the nature of each debt or demand, whether
founded on written security, obligation, contract, or other-
wise, and also the true cause and consideration of such in-
debtedness in each case, and the place where such in-
debtedness accrued, and a statement of any existing mort-
gage, pledge, lien, judgment, or collateral, or other security
given for the payment of the same ($5015). The statement
of the debts should be full and accurate, as the petitioner
may not otherwise be able to obtain his discharge.’ It has,
however, been held that the omission of the name of a
creditor may be made with his consent, where it is not fraud-
ulent or injurious to others? An omission that arises from
mistake or inadvertence may be corrected at any time before
the discharge is granted? Debts that are barred by the
statutes of limitation should be placed upon the schedule.*

A statement of the sum and date of the debts is suffi-
cient, without a computation of the interest, for the exact
amount can be ascertained at any stage of the proceedings.
by means of such a description.> If a note has been given
or a judgment rendered on the debt, or if any person is
lable with the petitioner as partner or joint contractor,
the fact should be stated.’ When the debt is due toa
firm, the name of the firm, and not of the partners, should
be given." When a debt is due to a newspaper, the names.
of the proprietors should be given.®

 

"In re Redfield, 2 Ben. 72; in re John H. H. Cushman, 7 Ben. 482.
* In re Needham, 2 B. R. 387; 8. c. Lowell, 309; 8.c. 2L. T. B. 39.
* Rule VII.

‘In re Ray, 1 B. R. 203; s.c. 2 Ben. 53; in re Kingsley, 1 B. R. 3293.
s. c. Lowell, 216; in re Harden, 1 B. R. 805; 8.c. 1 L. T. B. 48; in re John
H. H. Cushman, 7 Ben. 482.

*In re W. D. Hill, 1 B. R. 16; s.c. 1 Ben. 321.
° In re Orne, 1 B. R. 79; 8. c. 1 Ben. 420. 7 Anon. 1B, R. 128.
* Anon. 2 BR. 141.
12 COMMENCEMENT OF PROCEEDINGS

Whenever the petitioner 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 ascer-
tain the present residence of the creditor. He must make
efforts to ascertain it, and can not satisfy the law by re-
posing on the information at hand, and the belief which
he may possess without making any efforts to ascertain
such residence.’

In classifying the debts, the notes and instructions
placed on each division of the forms should be carefully
attended to. Thus, Schedule A—1 is expressly confined
to those debts which are entitled to priority under the
provision of the statute, and these consist only of debts
due to the United States, and taxes and assessments
under the laws thereof; debts due to the State in which
the proceedings are instituted, and all taxes and assess-
ments under the laws thereof; wages due to any operative,
clerk, or house servant, to an amount not exceeding fifty
dollars for labor performed within six months next preced-
ing the publication of the notice of proceedings in bank-
ruptey ; and all debts due to any persons who, by the laws
of the United States, are or may be entitled to a priority
or preference. Unless the debts are included within this
enumeration, they should not be placed under that divis-
ion. What are commonly known as secured debts should
not be placed under this division, but should be put on
Schedule A—2. This division is specially designed for
those creditors who hold securities either by mortgage,
pledge, lien, or collaterals. The securities must consist of the
property of the petitioner. Hence the name of a creditor,
who is merely, though fully, protected by an indorsement
or some similar claim against a third party, for the debt
should not be placed under this division. Schedule A—3
is designed for creditors whose claims are unsecured; that

 

‘Tn re Pulver, 1 B. R. 46; s. c. 1 Ben. 381.
IN VOLUNTARY BANKRUPTCY. 13.

is, creditors who do not hold securities within the meaning
of Schedule A—2. It is, moreover, intended only for
those claims upon which the petitioner is liable as princi-
pal debtor, or which are not included in Schedule A—4
or Schedule A—5. Schedule A—4 is appropriated to lia-
bilities upon notes or bills discounted, which ought to be
paid by the drawers, makers, or acceptors; and Schedule
A—5 to accommodation paper. If a liability clearly falls.
within any one division, it ought not to be placed under
any other, for it is not the intention of the form that any
debt should be scheduled more than once. It is apparent,
however, that the excess above fifty dollars of wages due
to an operative, clerk or house servant, should be placed
upon Schedule A—2 or Schedule A—3, according to
whether it is secured or unsecured. The oath to Sched-
ule A should be placed after the sheets containing these
five divisions.

The inventory of the property is called Schedule B.
In the mode prescribed by this form, the petitioner must.
give an inventory of all his estate, both real and personal,
assignable under the statute, describing the same, and stat-
ing where it is situated, and whether there are any, and,
if so, what incumbrances thereon (§ 5016). The property
which is assignable under the statute consists of all the
estate, real and personal, of the petitioner, with all his
deeds, books and papers relating thereto (§$ 5044); all
property conveyed by the petitioner in fraud of creditors ;
all rights in equity, choses in action, patents and 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 has against any per-
son arising from contract, or from the unlawful taking or
detention, or of injury to his property, and all his rights
of redeeming such property or estate ($ 5046). No prop-
erty held by the petitioner in trust should be placed upon
14 COMMENCEMENT OF PROCEEDINGS

the schedules ($ 5053). Property which is exempted un-
der the statute should be described in the appropriate
place and specially claimed.

The inventory in Schedule B should also include a
claim for unliquidated damages,! money advanced as secu-
rity for the fees of the register, marshal, and clerk,’ a policy
of insurance on his life for the benefit of his wife, whereon
premiums have been paid by him after his insolvency,? a
vested interest expectant upon the termination of a life
estate, interest under a will in an estate in expect-
ancy,’ growing crops,’ property conveyed to him in fraud
of the creditors of the grantor,’ property conveyed by him
in fraud of his creditors,’ property in his possession that be-
longs to a firm of which he has been a member, and prop-
erty held de facto, though by a defeasible title,” property
conveyed to him in trust for the sole and separate use of
his wife during his life, and after her death to be equally
divided between him and her children,” and property
conveyed by him in trust for the benefit of his creditors."
It need not include the right to a share of the net profits
of a business conducted in his name, which is allowed as
a compensation for his services,” money earned by his
wife and invested in her name," a chose in action which
has been assigned in good faith and for a valuable
consideration, property held by a trustee for the benefit
of his wife, wherein his equitable interest has been sold

 

‘In re Orne, 1 B. R. 57; 8. c. 1 Ben. 361. ? Anon. 1 B. R. 123.
*In re Erben, 2 B. R. 181. “In re Bennett, 2 B. R. 181.
° In re Connell, 3 B. R. 443. ° In re Schumpert, 8 B. R. 415.

"In re O’Bannon, 2 B. R. 15.

* In re Hussman, 2 B. R. 487; 8. o.2 L. T. B. 58; Ashley v. Robinson,
29 Ala. 112.

° In re Beal, 2 B. R. 587; s. c. Lowell, 323; s.c. 2L. T. B. 95.

In re Myrick, 3 B, R. 154.

"In re Pierce & Holbrook, 3 B. R. 258.

In re Beardsley, 1 B. R. 804; in re George Brown, 5 Law Rep. 121.

18 Tn re Hummitsh, 2 B. R. 12.

4 Valentine v. Holloman, 63 N. C, 475.
IN VOLUNTARY BANKRUPTCY. 15

under execution,’ property vested in a receiver appointed
by a State court,” property which has been duly assigned
under the State insolvent laws when they were in force,’
or a claim against a person for falsely recommending
another as worthy of trust. Thestatute has reference to
some right or interest inherent in the bankrupt. What-
ever that may be, however contingent or valueless, he
must point it out. He is not permitted to exercise his
own judgment as to its worth. The separate items of
the estate must be set forth.? It is not necessary, how-
ever, to give a perfect, and complete exhibit of every
article, but the schedule must be so explicit that the
assignee can find the property if necessary.” The sched-
ule of an individual partner need not enumerate the
effects of his firm in detail.®

In claiming property as exempted in Schedule B—5,
all property specifically exempted by the bankrupt law
should be claimed under that statute. It is not necessary
that every article of clothing shall be set out. The wearing
apparel should be so set forth that the assignee can deter-
mine whether the debtor can claim it or not.’ No prop-
erty should be claimed as exempted under the State laws .
which is specifically designated as exempt under the bank-
rupt law.’? Schedule B contains six general divisions,
and twenty-six subordinate divisions, by means of which
the petitioner’s property is divided into as many different
classes. The instructions contained in the form should be

 

‘In re Pomeroy, 2 B. R. 14; in re Hummitsh, 2 B. R. 12.

?In re Freeman, 4 B. R. 64; s.c. 4 Ben. 245,

* Day v. Bardwell, 3 B. R. 455; 8. c. 97 Mass. 246.

* Crocket et al. v. Jewett, 2 B. R. 208; 8.0. 2 Ben. 514; s.c.2L. T. B. 21.
* In re David H. Robertson, 1 N. Y. Leg. Obs. 20.

°In re Robert Malcolm, 4 Law Rep. 488; in re Horace Plimpton, 4 Law
Rep. 488.

7 In re Nicholas G. Norcross, 1 N. Y. Leg. Obs. 100; s.c. 5 Law Rep. 124.
® In re Robert Malcolm, 4 Law Rep. 488.

°In re W. D. Hill, 1 B. R. 16; s. c. 1 Ben. 821.

° In re Feely, 3 B. R. 66.
16 COMMENCEMENT OF PROCEEDINGS

carefully attended to; and the classification of the differ-
ent kinds of property should be made in the manner thus
designated. The oath to Schedule B should be placed
after the various sheets which make up Schedule B.

Whenever the petitioner omits to state, in the sched-
ules, any of the facts required to be stated concerning his
debts or his property, he must state, either in its appropri-
ate place in the schedules, or in a separate affidavit, to be
filed with the petition, the reason for the omission, with
such particularity as will enable the court to determine
whether to admit the schedules as sufficient, or to require
the petitioner to make further efforts to complete the same
according to the requirements of the law.’ After the
schedules have been completed, the petitioner must sign
each separate division: and where any division consists of
more than one sheet, he must sign each separate sheet.
The petition, oaths, and schedules should then be fastened
neatly and firmly together.

The oaths may be taken before the judge of the dis-
trict court, or a register, or a commissioner of the circuit
court ($ 5017), or a notary public? The petition will be
deemed to be sufficient, although the jurat does not specify
the particular day on which the oath was taken, if it gives
the month and the year.’ The petition must have indorsed
upon it a brief statement of its character The proceed-
ings in bankruptcy may he conducted by the petitioner in
person, on his own behalf, or by his attorney or counsellor,
who must be duly authorized to practice in the circuit or
district court. All papers offered by an attorney to be
filed, must be indorsed with his name, place of residence,
and business; and the same entries must be made upon
the docket.’ The petition need not be presented to the
court simultaneously with its attestation. The lapse of a

 

* Rule XXXIII. * Act of Aug. 15, 1876,
* In re Chas, P, Houghton, 4 Law Rep. 482. * Rule L.
* Rule IL
IN VOLUNTARY BANKRUPTCY. 17

few days between the taking of the oath and the filing of
the petition will not bar the proceedings At the time
of filing the petition, the petitioner must deposit fifty
dollars with the clerk as security for the fees of the reg-
ister ($ 5124). He is also usually required to deposit
fifteen dollars at the same time, as security for the fees of
the clerk.? Parties can not conduct proceedings in forma
pauperis, for the statute contemplates that they shall dis-
charge all expenses incident to the prosecution of their
application?

As soon as the petition is filed, the clerk enters upon
it the day, and the hour of the day, upon which it is filed.
He also makes a similar note upon every subsequent paper
filed with him, except such papers as have been pre-
viously filed with the register, and the papers in each
case are kept in a file by themselves. The case is then
entered in the docket, and numbered according to the
order in which it has been filed, and the number of the
~case. must be indorsed upon every paper. The docket
must be so arranged that a brief memorandum of every
proceeding in each case may be entered therein, in a man-
ner convenient for reference, and is at all times open for
public inspection. The clerk must also keep separate
minute books for the record of proceedings in bankruptcy,
in which he is required to enter a minute of all proceed-
ings in each case, either of the court, or of a register of
the court, under their respective dates.*

After the petition has been filed, and the: proper en.
tries made, it is referred to one of the registers in such
manner as the district court directs.” There is nothing in
the statute that requires the reference to be made to. one
register rather than another. All are equally officers of

 

?JIn re Aaron Abrabams, 5 Law Rep. 328.

? Rule XXIX,
3 Tn re Alexander Graves, 1 N. Y. Leg. Obs. 218; s. o. 8 Law Rep. 25.

* Rule I. ** Rule IV.
: ‘
18 COMMENCEMENT OF PROCEEDINGS

the court. The selection of a register is regulated entirely
by the rules of the district courts; and usually the case
is referred to the register for the congressional district in
which the petitioner resides. The reference’ designates
the register, and names a day for the petitioner to appear
before him. <A copy of this order is sent by mail to the
register, or delivered to him personally by the clerk or
other officer of the court. The requirement of the order
is, that the petitioner shall appear on or before a certain
day named therein. He may, therefore, appear at any
time before the day named; but if he appears at any time
subsequent to that day, he should file a written affidavit
explaining the delay. As soon as he appears before
the register, he must furnish him with a copy of the pe-
tition and schedules.* This copy may be verified by his
own affidavit, or certified by the clerk. After such copy
has been filed, all the proceedings required by the statute
must be had before the register, except such as are re-
quired by the statute, or by a special order of the district
judge, to be had in the district court, unless some other
register is directed to act in the case.” But for improper
conduct, a case may be transferred from one register to
another ;° and any register of the court may act for any
other register thereof ($ 5007).

From the time of his appearance before the register,
the petitioner is subject to the orders of the court in, all
matters relating to his bankruptcy; and may receive from
the register a protection against arrest, to continue until
the final adjudication on his application for a discharge,
unless suspended or vacated by order of the court.’ The
protection, however, is practically worthless, because the
register has no power to enforce it.

 

‘Form No, 4. * Rule IV. *Jn re Hatcher, 1B. R 390.
* Rule IV. * Rule IV.

“Inre J. O. Smith, 1 B. R. 248; 8, c. 2 Ben. 113.

7 Rule IV. :
IN VOLUNTARY BANKRUPTCY. 19

The petitioner usually appears at the office of the
register, but the judge of the district court may direct a
register to attend at any place within the district, for the
purpose of hearing such voluntary applications under the
statute as may not be opposed (§ 5001). As, there is,
generally, no opposition, this power practically extends to
all cases. The time when and the place where the register
shall act upon the matters arising under the several cases
referred to him, must be fixed by the special order of the
district court, or by the register acting under the authority
of a general order in each case made by the district court,!
These are usually inserted in the order of reference.”

The debtor by filing his petition submits himself per-
sonally to the jurisdiction of the court, and becomes bound
to obey its orders and directions in the matter of his pe-
tition as well before as after an adjudication. The mere
filing of a petition in conformity with the statute consti-
tutes him a bankrupt before the adjudication or any action
on his petition by the court. This jurisdiction is exer-
cised on the ground that other persons besides the debtor
have an interest in the matter at this stage of the proceed-
ings.’ The creditors have an interest in them from the
moment that the petition is filed, Consequently he can
not dismiss his petition at his own pleasure, but must show
good reasons for doing so. The court may grant the lib-
erty on terms, or refuse it altogether, as justice may re-
quire, for it is ordinarily a matter of sound discretion.
If good reasons are shown, he may, however, be allowed
to dismiss his petition before adjudication,’ as, for instance,
if he effects a compromise with his creditors.’ On the

 

"Rule V. * Form No. 4.

*In re Samuel Harris, 3 N.Y. Leg. Obs. 152.

*In re Samuel, Harris, 3 N. Y. Leg. Obs, 152; in re Randall & Reed, 5
Law Rep. 115; s.c. 1 N. Y. Leg. Obs. 199.

*In re Randall & Reed, 5 Law Rep. 115; s. c.1N. Y. Leg. Obs. 199;
in re John Gile, 1 N. Y. Leg. Obs. 87; s.c. 5 Law Rep. 224; in re Dudley, 1
Penn. L. J. 302; in re Anon. 1 Penn. L. J. 828; in re Bennett, 1 Penn. L. J,
145.

* In re Randall & Reed, 5 Law Rep. 115; s.c. 1 N. Y¥. Leg. Obs. 199.
20 COMMENCEMENT OF PROCEEDINGS

other hand, if he does not choose to proceed with the pe-
tition, but allows it to remain in suspense, the creditors
may intervene by a motion for an adjudication, or for any
other matter necessary for the protection of their rights.’
As soon as a copy of the petition and schedules is
filed, the petitioner should be adjudged bankrupt. This
adjudication? may be made by the register (§ 4998) or by
the court, but the register has no power to hear a dis:
puted adjudication’ The district court has power to hear
and decide all contested questions, and to stay proceed-
ings improvidently begun. The statute contemplates that
voluntary petitions may sometimes be contested. But it
is not the intent of the statute that the district court shall
inquire whether the petitioner is insolvent or not. When
a 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. His act is for the. benefit of
‘all persons interested, and can not be retracted on the ap-
plication of only one of them, either with or without the
debtor’s consent.* Generally, there is no opposing party,
and the register passes the order of adjudication. This
order should not be postponed until the register has ex-
amined the petition and schedules, and certified to their
correctness.” No-notice is required to creditors before ad-
judication, and the judge or register is only to inquire
whether the debtor owes three hundred dollars.® The
adjudication is merely a certificate or order, made by an
authorized officer, to the effect that the petitioner has be-
come a bankrupt—a judicial finding of the fact that an
act of bankruptcy was committed at some period prior to
the time it is made." It is made ex parte, without notice

 

‘In re Samuel Harris, 3 N. Y. Leg. Obs. 152.

2 Form No. 5. * Section 4999; Rule V.
“In re James L. Fowler, 1 B. R. 681; s. c. Lowell, 161.

° In re Patterson, 1 B. R. 125; s. c. 1 Ben. 508.

‘In re James L. Fowler, 1 B. R. 681; s. c. Lowell, 161.

7In re Patterson, 1 B. R. 125; s.c. 1 Ben. 508.
IN VOLUNTARY BANKRUPTCY. 21

to creditors, and is entirely under the control of the court,
in a case where it is shown that it ought not to be made,
It is conclusive upon the insolvency of the petitioner, his
willingness to surrender his property, and his desire to
take the benefit of the statute;' but it is not conclusive
upon any other fact which goes to defeat the jurisdiction
of the court.’

It is the duty of the register to examine the petition
and schedules, and to certify whether the same are correct
in form, or if deficient, in what respect they are so? If
they are found correct, a certificate to that effect is usually
indorsed upon them, and a memorandum thereof is duly
forwarded to the clerk. But this certificate is not conclu-
sive. If defects are subsequently discovered, an amend-
ment may be ordered.*

If, however, they are found deficient, then they must
be amended. A register inay order an amendment,’
either of his own motion,’ or upon the suggestion of a
creditor.” Amendments may be made at any time prior
to the discharge of the bankrupt.? The court also has a
co-ordinate power of ordering or allowing amendments.
The order directing an amendment ought to specify par.
ticularly the points in which the petition and schedules
are deficient.’ If the petitioner is of the opinion that his
petition and schedules are correct, he may have the point
adjourned into court, for in all matters where an issue of
fact or law is raised, and contested by any party to the
proceedings, it is the duty of the register to cause the
question or issue to be stated in writing, and he must ad-

 

‘Tn re James L. Fowler, 1 B, R. 681; s. c. Lowell, 161.

*In re Goodfellow, 3 B. R. 452; s.c. Lowell, 510; s.c.1L. T. B. 179;
0.3L. T. B. 69,

* Rule VII. ‘In re W. D. Hill, 1 B. R. 16; s.c. 1 Ben. 321.
* Rule V. ° In re Orne, 1 B. R. 79; 8. c, 1 Ben, 420.
‘In re Jones, 2 B. R. 59. ® Rule VII.

"In re Orne, 1 B. R. 79; 8. c. 1 Ben. 420; In re Horace Plimpton, 4 Law
Rep. 488.
22 COMMENCEMENT OF PROCEEDINGS

journ the same into court for decision by the judge.’ The
ground of the objection should be stated, otherwise no
point or question or issue is raised.” It is the duty of the
register to adjourn the issue into court without any re-
quest to that effect. But the adjournment is a proceeding
that may be waived, and a party who waives it by sub-
mitting the issue to the decision of the register, can not
ask to have it adjourned after he finds that the point is
decided against him.®

On the other hand, the petitioner, after a careful ex-
amination of the petition and schedules, may come to the
conclusion that they are defective, or may find that he has
omitted something by mistake or inadvertence. In such
case he may apply to the register for leave to amend.
The application must state, under oath, the substance of
the matters proposed to be included in the amendment,
and the reasons why the same were not incorporated in
the schedules as originally filed; or, if there has been an
amendment, as previously amended.°? Such statement
must show a proper cause for allowing the amendment.’
This application is e”- parte, and no notice thereof need be
given to any creditor, nor has any creditor the right to op-
pose it." The register may refuse to allow the amend-
ment,’ and in such case the petitioner has the same right
to have the issue adjourned into court, as when he is or-
dered to make an amendment.’®

Whenever amendments are allowed or ordered, they
must be written and signed by the petitioner on a sepa-

 

Section 5009; Rule XI.

2 In re Levy et al. 1 B. R. 186; s. c. 1 Ben. 496.

°In re Patterson, 1 B. R 100; s.c. 1 Ben. 448,

‘In re Morford, 1 B. R. 211; 8. c. 1 Ben. 264.

® Rule XXXIII. ° Rale VII.

7In re Watts, 2 B. R. 417; s.c.3 Bon. 163; 8. cc. 2L.T. B. 74; in re B,
Heller, 5 B. R. 46; 8. c. 41 How. Pr. 213.

®TIn re B. Heller, 5 B. R. 43; s. c.41 How. Pr. 218. .
°In re Watts, 2 B. R. 447; s. c. 3 Ben. 166; s.c. 2L. T. B. 74.
IN VOLUNTARY BANKRUPTOY. 23

rate paper in the same manner as the original schedules
were signed and verified; and, if the amendments are
made to different schedules, the amendment to each
schedule must be made separately, with proper reference
to the schedules proposed to be amended, and each amend-
ment must be verified by the oath of the petitioner in the
same manner as the original schedules. The purport of
this requirement is that where an amendment, or several
amendments, are made to the same schedule, only the oath
appropriate to that schedule need be used ; but where the
amendments are to different schedules, both oaths must be
used. Of course the oaths must be modified to suit the
circumstances of the amendments,’ for the petitioner can
not swear that the amendments contain all his liabilities,
or all his property.

The title to the property remains in the debtor until
an assignee is appointed and qualified, and an assignment
made to him.? The bankrupt is also made responsible for
the care, custody and delivery of the property to the as-
signee (§ 5110); but he can not sell any of it without
authority from the court.

If the property is likely to be sacrificed or injured by a
hostile claimant, or a sale under an execution, he can and
should apply to the court for an injunction, or take other
proper measures to protect it.” On the application of any
creditor, and on good cause shown by aftidavit, the court
may order the property to be taken possession of by the
marshal, directions for which may be inserted in the
original warrant or in a special warrant to be issued for
that purpose.°

 

? Rule XIV. ? Rule XXXII.

* Hampton v. Rouse, 11 B. R. 472; 8. c. 22 Wall. 263; Sutherland v.
Davis, 10 B. R. 424; s. c. 42 Ind. 26.

* In re Richard Pryor, 4 Biss. 262.

* Jones v. Leach et al. 1 B. R. 595; in re Schnepf, 1 B. R. 190; 8. c. 2
Ben. 72; in re Wallace, 2 B. R. 134; s. c. 1 Deady, 433.

* Rule XIII.
24 COMMENCEMENT OF PROCEEDINGS

The next step in the proceedings is to issue the war-
rant.| This may be issued by the judge or the register
($ 5019). As there is not generally any opposing party,
it is usually issued by the register having charge of the
case. This must issue out of the court, under the seal
thereof, and be tested by the clerk. Blanks, with the
signature of the clerk and seal of the court, will upon ap-

plication, be furnished to the registers.” The warrant
must be signed by the judge or register, as the case may
be, and directed to the marshal of the district, authoriz.
ing him as messenger to publish notices in such news-
papers as he may select, not exceeding two,’ to serve
written or printed notices, 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 person concerned as the warrant:
specifies ($ 5019); but whenever the creditors are so-
numerous as to make any notice 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 news-
paper or newspapers, to all such creditors whose claims,
as reported, do not exceed the sums, respectively, of fifty
dollars.*

_ The register has the power to give the requisite direc-
tions for notices and advertisements * in those cases where
the court may select the newspapers. The newspapers
are generally designated by the rules of the court, and,
where such is the case, the register can not substitute
other papers for those thus designated; but in the exer-
cise of a wise discretion, he may add to them other papers
not published in the district. This power is exercised

 

* Form No. 6. * Rule II. * Act of 22 June, 1874, § 5.
* Act of 22 June, 1874, § 5. ® Rule V.
°In re J. H. Robinson, 1 B. R. §; 8. c. 1 Ben. 270.
IN VOLUNTARY BANKRUPTCY. 25

rarely, and only in cases where a large number of the
creditors reside in some other district. A complete list of
the creditors, with their respective places of residence, and
the amount of their debts, must be inserted in the war-
rant! This is an essential part of it, and must be pre-
pared by the register himself. There is no authority in
the law for calling upon the bankrupt to furnish it. It is
the duty of the register to issue the warrant, and that
is not complete without it.

The time and place where the first meeting of cred-
itors will be held must be designated in the warrant, and
the time must be not less than ten, nor more than ninety,
days after the issuing of the same (§ 5032). The fixing
of this time is a matter resting entirely in the discretion
of the register.” The interval should be neither too brief,
nor too long; but should be sufficient to enable the mar-
shal to serve and publish the notices properly. If the
time is too brief, the service of the warrant may be de-
fective. Twenty days will usually be found ample. If it
is desired that personal service should be made upon any
creditors, special directions to that effect should be in-
serted. If personal service is not desired, the register
should omit the word “ personal,” and direct the service to
be made by mail only.? The issuing of the warrant, the

certificate of correctness, and the order of adjudication, are
all generally made and performed on the same day; and
one memorandum only is sent to the clerk, of the whole
proceeding. This memorandum should state the day ap-'
pointed for the meeting of the creditors.

As soon as the warrant is completed, it should be
placed in the hands of the marshal. The fees of this
officer must be paid or secured before he can be compelled
to perform the duties required of him. This is usually

 

‘In re Hall, 2 B. R. 192.
* In re Heys, 1B. R. 21; s. co. 1 Ban. 333 ; 8. c. 36 How. Pr. 249. ,
® Anon. 1 B. R. 216. “ Rule XXIX,
26 COMMENCEMENT OF PROCEEDINGS

done by making a deposit with him, varying from fifteen
to thirty dollars, according to the number of creditors.
When his fees are properly secured, it is his duty to pub-
lish and serve the notices, as required by the warrant.
Both the notice to be published and the notice to be
served upon the creditors, should state that a warrant in
bankruptcy has been issued against the estate of the
debtor; 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 for.
bidden by law; and that a meeting of the creditors of the
debtor to prove their debts, and choose one or more as-
signees, will be held at a court of bankruptcy, to be
holden at a certain time and place designated therein."
These notices should follow the exact language of the war-
rant, but an immaterial variance will be disregarded.”
The omission to publish the notice in one of the news-
papers designated by the warrant, will make the proceed-
ings defective, irregular, and voidable.2 The publication
must be made twice in each newspaper.* The notices to
be served upon the creditors are usually printed. Each
notice should contain a complete list of all the names of
-: the creditors, together with their respective places of resi-
dence, and the amounts of their respective debts.> This
seems to be the plain requirement of the statute ($ 5032),
the rules,’ and the form.” It is sufficient if the notice con-
tains the names, residence, and the amount of the debts
(in figures) due the several creditors, so far as known, and
_ no more.® This notice should be served upon foreign cred-
itors, as well as on those who reside in the United States.

 

> Section 5032 ; Form No. 6.

* In re Palver, 1 B. R. 46; s.c. 1 Ben. 331; inre W. D. Hill, 1 B. R. 16;:
8. c. 1 Ben. 321.

*In re Hall, 2 B. R. 192. ‘Form No. 6.

* In re Jones, 2 B. R. 59; in re Perry, 1B. R. 220; s.c.1L. T.B. 4; in
re Hall, 2 B. R. 192.

° Rule XIII. * Form No. 6. * Rule XIII.
"In re Heys, 1 B. R. 21; 8. c. 1 Ben. 338; 8. c. 86 How. Pr, 249.
K
IN VOLUNTARY BANKRUPTOY. 27

It should also, as has been before stated, be served on
all creditors whose names may be handed to the mar-
shal, in addition to those contained in the schedules
(§ 5019). Every envelope containing a notice must have
printed on it a direction to the postmaster at the place
to which it is sent, to return the same within ten days,
unless called for. This direction is generally printed
upon the back of the notice, and no envelope is used.

In cases of voluntary bankruptcy, the marshal may
appoint special deputies, to act as he may designate, in
one or more cases, as messengers for the purpose of causing
the notices to be published and served as required by the
statute, and for no other purpose. And the word “ mar-
shal” includes the marshal’s deputies; and the word
“ messenger” includes his assistant or assistants ($ 5013),
wherever they are used in the statute. Where a notice
has been duly mailed, the fact that the creditor did not
receive it will not affect the regularity of the proceedings.’
A notice not addressed to a creditor by his name, does not
amount to a notice;* but an immaterial variance will be
disregarded. The publication and the service of the no-
tices must be completed before the commencement of the

period of ten days immediately preceding the return day
of the warrant.>

 

‘ Rule XXII. * Rule XIII.
* In re Stetson, 3 B. R. 726; s. c. 4 Ben. 127.
* Anon, 1B. R. 123.

"In re Develin et al. 1 B. R. 35; s.c. 1 Ben. 335; in re Pulver, 1 B. R.
46; s.c. 1 Ben. 381.
CHAPTER IL

COMMENCEMENT OF PROCEEDINGS IN INVOLUNTARY
BANKRUPTCY.

In order to institute proceedings in involuntary bank-
ruptey, the debts of the petitioning creditors must consti-
tute at least one-fourth in number, and one-third in value
of all the provable debts of the party against whom the
proceedings are commenced. Subject to this requirement,
the proceedings may be instituted by one creditor alone,
or by several creditors jointly. The debts held by the
persons who institute such proceedings, must be debts
provable under the bankrupt law. They need not be
due? It is not necessary that they should have been in ex-
istence at the time the alleged act of bankruptcy was com-
mitted.? They may be secured debts,‘ or be a fixed liabil-
ity as an indorser, or a partnership debt, where the pro-
ceeding is against one partner alone. When the proceed-
ings are against partners, it is clear that they must consist of
partnership debts; but they must, under all circumstances,

 

* Act of 22 June, 1874, § 12.

? Linn et al. v. Smith, 4 B. R. 46; 3.c.1 L T. B. 229; s.¢o.3 L. T. B.
218; in re Ouimette, 3 B. R. 566; s. co. 1 Saw. 47; in re W. B. Alexander, 4
B. R. 178; 8. c. Lowell, 470; s. o. 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; 1
Penn. L. J. 209.

* Phelps v. Classen, 3 B. R. 87; 8. c. 1 Wool. 204.

‘In re Bloss, 4 B. R. 147; 8.c.2 L. T. B. 126; Rankin & Pullan v, Atlan-
tic, Florida & G. C. R. R. Co. 1 B. R. 647; s.c. 1 L. T. B. 85; in re Stansell,
6 B. R. 183; in re Daniel Sheehan, 8 B. R. 345; Ecfort v. Greely, 6 B. R.
433; in re California Pacific R. R. Co. 11 B. R. 193; in re W. B. Alexander,
4B. R. 178; 8. c. Lowell, 470; 8. 0. 2°L. T. B. 238; contra, in re Jacob Frost,
11 B. R 69; in re Jobann, 3 B. R. 144; 8.0.4 B. R. 484; 5. c.2 Biss. 139; 5.
c.2L. T. B. 92; in re Green Pond R. R. Co. 18 B. R. 118.

5 Tn re Nickodemus, 3 B. R. 280; 3. 0.1 L. T. B. 140.
* Tn re Melick, 4 B. R. 97.
INVOLUNTARY BANKRUPTCY. 29

be provable debts. A debt so purely contingent that it
may never become a real debt, will not be sufficient? A
debt which is secured by the property of some third per-
son is sufficient? The debt must also be one that can be
enforced, and must not be barred by the statute of limita-
tions.2 Ifthe creditor has received a preference, he may
make a voluntary surrender of it, and prosecute his peti-
tion upon his original debt;* but without such a sur-
render he can not maintain a petition.”

In computing the number of creditors who must join
in a petition, creditors whose debts do not exceed two
hundred and fifty dollars are not reckoned. But if there
are no creditors whose debts exceed the sum of two hun-
dred and fifty dollars, or if the requisite number of cred-
itors holding debts exceeding two hundred and fifty dol-
lars fail to sign the petition, creditors having debts of a
less amount are reckoned.* The creditors have the right
to elect to obtain one-fourth in number of the chief cred-
itors, or one-fourth of all the creditors without regard to
the amount of their respective debts, provided that one-
third in amount of all the debts is represented in the pe-
tition." It is not necessary that the chief creditors shall
be requested to sign and refuse before the minor creditors
can join in the petition, for a failure to sign may arise from
any cause, such as sickness, or absence, and is plainly
shown by not signing. The intent of the statute is that
the petitioning creditors shall represent the requisite pro-
portion of all the creditors, or, if more convenient in any
particular case, of the larger creditors. The joining of a
due proportion of all the creditors is therefore sufiicient,

 

' Sigsby v. Willis, 3 B. R. 207; 8. c. 3 Ben. 371; 8. c.1L. T. B. 71.

7 In re W. B. Alexander, 4 B. R. 178; s. c. Lowell, 470; 8. c.2 L. T. B.
238; Fox v. Eckstein, 4 B. R. 373.

‘In re Cornwall, 4 B. R. 400; s.c. 6B. R. 305; 8.c. 9 Blatch. 114.
‘In re Hunt & Hornell, 5 B. R. 483; in re Marcer, 6 B. R, 351.

*In re Peter Rado, 6 Ben. 230. * Act of 22 June, 1874, § 12.
™In re J. R. Currier, 18 B. R. 68.
30 COMMENCEMENT OF PROCEEDINGS

and the failure of the larger creditors to join constitutes
no defense. If the chief creditors join in the petition, the
minor creditors are not to be counted in estimating the
number, but if they do not join then the minor creditors
may be counted, in order to obtain the necessary number.”
In computing the value, the aggregate of the debts of the
petitioning creditors must be equal to one-third of all the.
debts, irrespective of amount, for the minor creditors are
only excluded in certain cases in estimating the proportion
in number who must join in the petition.? The debt ofa
creditor who has issued an attachment within four months
before the filing of the petition must be counted in com-
puting the number and amount.

The amount at which the debt of a secured creditor is
to be reckoned is merely the balance that remains after
deducting the value of the security.” The debt of a cred-
itor who has received a preference is not counted in com-
puting either the number of creditors or the value of the
debts,° nor will a surrender of the preference to the
debtor render the debt provable so that it may be
counted." A creditor may purchase claims against the
debtor in good faith, and thus enable himself to unite in
the petition.®

Any person residing and owing debts, as required ina

 

‘Tn re J. R. Currier, 13 B, R. 68.

* In re Woodford & Chamberlain, 13 B, R. 575; in re J. R. Currier, 13 B.
R. 68; in re John B. Bergeron, 12 B. R. 385; inre Reiman & Friedlander,
11 B. R. 21; s. c. 7 Ben. 4555 s. c. 13 B. R. 128; 8. c. 12 Blatch. 562; in re
Philadelphia Axle Works, 1 W. N. 126.

i To re Joseph 8. Hadley, 12 B. R. 366; in re John B. Bergeron, 12 B. R. ‘
385; in re J. R. Currier, 13 B. R. 68; in re Woodford & Chamberlain, 13 B.
R. 575; contza, in re Hymes, 10 B. R. 433.

‘In re C. G. Scrafford, 14 B, R. 184.

* Jo re California Pacific R. R. Co. 11 B. R. 198; in re Stansell, 6 B. R.
183; inre W, B. Alexander, 4 B. R. 178; s, c. Lowell, 470; 2 L. T. B.
288; Ecfort v. Greely, 6 B. R. 433; in re Daniel Sheehan, 8 B. R. 845.

* In re M, C. Israel, 12 B. R. 204; 8. c. 8 Dillon, 304; Clinton y. Mayo, 12
B. R. 89; in re J. R. Currier, 13 B. R. 68.

"In re J. R. Currier, 13 B. R. 68.

®*Inre J. A. & H. W. Shouse, Crabbe, 482; in re Woodford & Chamber-
lain, 13 B. R. 575.
IN INVOLUNTARY BANKRUPTCY. aL

case of voluntary bankruptcy, may be subjected to pro-
ceedings in involuntary bankruptcy.’ The term person
includes corporations ($$ 5122, 5013), and the provisions
of the act are extended to partnerships ($5121). The
same proportion of creditors must join in a proceeding to
put a corporation into bankruptcy as is required in the
case of an individual.’ The remarks that have already
been made in regard to the amount and character of the
debts, and the residence within the jurisdiction of the
United States, apply equally to proceedings in involuntary
bankruptcy.

To warrant or justify the institution of such proceed-
ings, the debtor must have done, or allowed to be done,
something which the statute defines to be an act of bank-
ruptcy. The statute was not intended to cover all cases
of insolvency? It makes a discrimination between volun-
tary bankruptcy and involuntary bankruptcy. The debtor
upon filing a voluntary petition setting forth his inability
to pay his debts and his willingness to surrender all his
estate, is declared a bankrupt by the court. The allega-
tion can not be traversed, nor is any issue or inquiry as to
its truth permitted. But 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 are
essential to his right to appeal to the court. The reason
for this wide difference in the proceedings in the two cases
is obvious enough. When a man is himself willing to re-
fer 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

 

Act of 22 June, 1874, §12; in re Nickodemus, 3 B. R. 230; 8. c. 1 L. T.
B. 140.

° In re Leavenworth Savings Bank, 14 B. R. 82, 92; in re Detroit Car
Works, 14 B. R. 243; in re Oregon B. & P. Co. 14 B. R. 304; s. c. 18 B. R. 199.

§ Wilson v. City Bank, 9 B. R. 97; s. c. 17 Wall. 473; Doan vy. Compton
& Doan, 2B. R. 607.
32 COMMENCEMENT OF PROCEEDINGS

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, the precise circumstances on
which he is authorized to do this should be well defined
in the law.! An act of bankruptcy is accordingly the
special creature of statute law, and nothing is an act of
bankruptcy unless it is expressly made so by the statute
itself.

No person commits an act of bankruptcy unless he
departs from the State, district, or territory of which he
js an inhabitant, with intent to defraud his creditors; or,
being absent, with such intent remains absent; or con-
ceals himself to avoid the service of legal process in any
action for the recovery of a debt or demand provable un-
der the statute; or conceals or removes any of his property
to avoid its being attached, taken, or sequestered on legal
process; or makes any assignment, gift, sale, conveyance,
or transfer of his estate, property, rights, or credits, either
within the United States or elsewhere, with intent to
delay, defraud, or hinder his creditors; or is arrested and
held in custody under or by virtue of mesne process or ex-
ecution, 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 the stat-
ute, and for asum exceeding one hundred dollars, and such
process remains in force and is 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 is actually im-
prisoned for more than twenty days in a civil action,
founded on contract, for the sum of one hundred dollars
or upward; or, being bankrupt or insolvent, or in contem-
plation of bankruptcy or insolvency, makes any payment,

 

1 Wilson v. City Bank, 9 B. R. 97; 8. c. 17 Wall. 478.
IN INVOLUNTARY BANKRUPTCY. 30

gift, grant, sale, conveyance, or transfer of money, or other
property, estate, rights, or credits, or confesses judgment,
or gives any warrant to confess judgment, or procures his
property to be taken on legal process, with intent to give
a preference to one or more of his creditors, or to any per:
son or persons who are or may be liable for him as in-
dorsers, bail, sureties, or otherwise, or with the intent by
such disposition of his: property, to defeat or delay the
operation of the statute, or being a bank, banker, broker,
merchant, trader, manufacturer, or miner, fraudulently
stops payment, or 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 being a bank or banker, fails for
forty days to pay any depositor upon demand of payment
lawfully made.’

These are the only acts committed by a debtor that
are acts of bankruptcy. Unless the act complained of by
the creditor comes within this enumeration, it is not an
act of bankruptcy, and can not be made the ground for
instituting involuntary proceedings. If, however, the act
is one of those enumerated, and the debtor is subject,
under the statute, to proceedings in bankruptcy, then any
creditor or creditors who may bea party or parties to such
proceedings may apply to have him declared a bankrupt,
provided that the application is made within six months
after it was committed, and the requisite number join in
the petition.

This application must be by a petition in the prescribed
form,’ printed or written out plainly, without abbreviation
or interlineation, except where such abbreviation and in-
terlineation may be for the purpose of reference. This
petition should set forth all those matters that are requisite

 

* Act of 22 June, 1874, § 12.
* Form No, 54. 5 Rule XIV.

3
34 COMMENCEMENT OF PROCEEDINGS

to give jurisdiction to the court over the case, especially
that the act of bankruptcy was committed within the pe-
riod of six months, and must be addressed to the judge of
the district court of the United States in which it is to be
filed. The name of the judge must be correctly given, or
it can not be filed. It should set forth the names and resi-
dences of both the creditor and debtor. It must also de-
scribe the debt of the petitioning creditor sufficiently to
show that it is provable? Where the debt consists of a
note, a copy thereof may be inserted. Not unfrequently
the note, bond, account, agreement, or whatever else may.
happen to constitute the basis of the creditor’s claim, is
annexed to the petition as an exhibit, and a proper refer-
ence to it is made in that part of the petition which is
designed to describe the debt. The petition must also
affirmatively show that the requisite number of creditors
have united therein. This allegation need not necessarily
be so positive that the petitioner can be prosecuted for
perjury on it, but it may be made on information and
belief.

The allegations in regard to the act of bankruptcy
must be positive and unqualified. There is nothing in the
statute or rules or forms or the nature of the proceedings
which requires that the allegations should be made on the
personal knowledge of the petitioner. The petition must
be made by the creditor generally, and in most instances
can only be made upon information and belief* The alle-
gations, however, should be positive, and the information
and belief set forth only in the affidavit to the petition.
It has accordingly been held, in a case where the petition

 

' Anon. 1 R. R. 216.

*In re Redmond & Martin, 9 B. R. 408; in re Joseph 8. Hadley, 12 B.
R. 366.

_ *In re J. Young Scampon, 10 B. R. 66; in re Isaac Scull, 10 B. R. 165;
s. c. 7 Ben. 871; Warren Savings Bank v. Palmer, 10 B. R. 289; in re
James R. Keeler, 10 B. R. 419. "

‘In re Muller & Bretano, 3 B. R. 829; s. c. 1 Deady, 513; 3. 0.2L. T.
B, 38.
IN INVOLUNTARY BANKRUPTCY. 35

was filed by a firm, that an averment upon the information
and belief of only the partner who executed the papers
was insufficient.’

The petition should also state facts with certainty and
detail, so as to inform 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 state-
ments to Be filled in with the particular circumstances of
each case.” Thus, where the act charged is a suspension
of commercial paper, the allegation should state as nearly
as possible the date of the paper of which the payment
has been suspended, to whom made, for what amount,
when payable, whether the debtor is liable thereon as
maker or indorser, and by whom the same was held when
payment was neglected or refused? But if the description
is sufficient to identify the paper, it will not be deemed de.
fective although the date is not given. Where the act
charged is a fraudulent stopping of payment of commercial
paper, the petition need not set forth the facts that constitute
the fraud.” Where the proceedings are instituted against
a partnership, the allegations should set forth an act of
bankruptcy on the part of the firm. An averment of an
act of bankruptcy on the part of one of the members is
not sufficient. Where the alleged act of bankruptcy on
the part of a firm consists in the transfer of property, the
allegations should charge that the property so transferred
belonged to the partnership."

When several acts of bankruptcy are charged in the

 

* Orem & Son v.. Harley, 3 B. R. 263.

*Tn re Randall & Sunderland, 3 B. R. 18; s. c. 1 Deady, 557; 8.0. 2 L. T.
B. 69.

* In re Randall & Sunderland, 3 B. R. 18; s. c. 1 Deady, 557; 8. 0. 2 L. T.
B. 69.

*In re Joseph 8. Hadley, 12 B. R. 866.
*In re Joseph §. Hadley, 12 B. R. 366.

* In re Waite & Crocker, 1 B. R. 873; s. c. Lowell, 207; in re Redmond
& Martin, 9 B. R. 408.

"In re Williams & Co. 3 P. R. 286; 8. c. Lowell, 406; 8. c. 2.L.T. B. 100.
36 COMMENCEMENT OF PROCEEDINGS

same petition, they should be alleged conjunctively.”
This rule will apply not only to those cases where the
acts charged are declared to be acts of bankruptcy by
different clauses of the statute, but also to those cases
where the acts charged are different from each other in
their nature, but are declared to be acts of bankruptcy
by the same clause. It will also apply to a case where
the same act may be an act of bankruptcy under different
clauses, according to the intention of the party who com-
mitted it. Thus, an assignment may be made to defraud
creditors, and to defeat the operation of the bankrupt law.
In all such cases a description of the act complained of
may be set forth only once in the petition, and the various
intents alleged conjunctively” It has, however, never
been decided that, where the act is charged only under
one clause containing several intents, the several intents
may not be averred disjunctively in the very language of
the statute. There is no express decision upon this point,
and in numerous cases they are alleged conjunctively.? It
has been said, however, that an averment in regard to a
fraudulent conveyance may charge that it was made by
the debtor “ with intent to defraud or hinder his creditors,”
though this point does not seem to have been directly
before the court When the act of bankruptcy consists
in procuring property to be taken on execution issued upon
a judgment confessed under a warrant of attorney, 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.” If the alleged act of bankruptcy
consists of a fraudulent conveyance, no averment of the
insolvency of the debtor is necessary.°

 

"In re Drummond, 1 B. R. 231; s.c.1L. T. B. 7.

*In re 8. T. Smith, 3 B. R. 377; s.c. 4 Ben. 1; 8. 0.1L. T. B. 147.
* Irving v. Hughes, 2 B. R. 62; s.c. 7 A. L. Reg. 209.

*In re Nickodemus, 3 B. R. 230; s. c. 1 L. T. B. 140.

"In re Diblee et al. 2 B. R. 617; 8. c. 3 Ben. 283,

°In re Randall & Sunderland, 3 B. R. 18; 8.

a é 2L. T. B. 69; 8.0.1
Deady, 557; in re Nickodemus, 3 B. R. 230; s. c. 1 L. T. B. 140.

4
IN INVOLUNTARY BANKRUPTCY. 37

When the act charged is a preference or a conveyance
made with the intent to defeat or delay the operation of
the bankrupt law, the petition should aver that the debtor
at the time of the transfer was bankrupt or insolvent, or
in contemplation of bankruptcy or insolvency.’ The
meaning of these terms should be carefully considered, and
only those should be selected and used which apply to the
facts in the case. Insolvency means an inability to pay
debts in the ordinary course of business.? Bankruptcy
means a legal status to be ascertained and declared by ju-
dicial decree.* In contemplation of bankruptcy means in
contemplation of committing what is made by the statute
an act of bankruptcy, or of voluntarily applying to be
decreed a bankrupt.* In contemplation of insolvency
means in contemplation of not being, or not continuing to
be, able to pay debts in the ordinary course of business as
they mature. When the facts merely show insolvency, or
contemplation of insolvency, an averment that the debtor
was in contemplation of bankruptcy would not be sufii-
cient;° nor would an averment that the debtor was in
contemplation of bankruptcy and insolvency be correct."
The allegation may, however, be that he was “insolvent
or in contemplation of insolvency,” ® and this is the safest,
and the one that is usually made. Where the act of
bankruptcy consists of a preference, the petition should
state the name of the preferred creditor, but need not
allege that the preference was in fraud of the provisions
of the bankrupt law.’

 

‘In re Craft, 1 B. R. 378; s. c. 2 Ben. 214.

* Toof v. Martin, 6B. R. 49; s. c. 13 Wall. 40.

*In re Black & Secor, 1 B. R. 853; s. c. 2 Ben. 196; s.c. 1 L. T. B. 39.
“In re Craft, 1 B. R. 378; 8. c. 2 Ben, 214,

° In re Diblee et al. 2 B. R. 617; s. c. 3 Ben. 283.

* In re Craft, 1 B. R. 878; 8. c. 2 Ben. 214.

"In re Haughton, 1 B. R. 460.

* In re Haughton, 1 B. R. 460; inre Diblee et al. 2 B. R. 617; 8. ©. 3
Ben. 283.

° In re Joseph 8. Hadley, 12 B. RB. 366.
38 COMMENCEMENT OF PROCEEDINGS

When the petition is completed, it must be subscribed
and sworn to by the petitioning creditor or creditors.
The petition may be sufficiently verified by the oaths of
the first five signers, if there are so many.’ 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? It will thus be seen
that there may be more signers than those who verify the
petition, and that all those who are petitioners must sign
the petition? Where several petitioners join in separate
and distinct rights, it is necessary that there should be a
verification by or on behalf of each petitioner.* If they
join in the same right, a verification by one is sufficient.’
A partner may execute the papers on behalf of his firm.’
If any of the first five signers do not reside in the district
in which it is to be filed, it may be signed and verified by
the attorney or agent of such signers." This phraseology
is peculiar, but it seems to be the design of the statute to
allow all creditors who are absent from the district to sign
the petition by attorney or agent.® In no other case can
it be subscribed and sworn to by an agent or special
attorney of the creditor, and if it is the proceedings will
be defective and irregular.’ No officer of a corporation
has authority, by virtue of his office, to sign and verify a
petition, unless specially authorized by some statute, by-
law or resolution of the board of directors.° Wherever

 

1 Act of 22 June, 1874, § 12.

? In re Isaac Scull, 10 B. R. 165; s.c. 7 Ben. 871; in re California Pacific
R. R. Co. 11 B. R. 1938.

* Tn re Isaac Scull, 10 B. R. 165; 8. c. 7 Ben. 371.
“In re Solomon Simmons, 10 B. R. 258.
°In re Solomon Simmons, 10 B. R. 253.

° In re Morris, 11 B. R. 443; Hunt v. Pooke, 5 B. R. 161; in re D. C. But-
terfield, 6 B. R. 257.

7 Act of 22 June, 1874, § 12.

* In re California Pacific R. R. Co. 11 B. R. 193.

* Hunt v. Pooke, 5 R. R. 161; in re D, C. Butterfield, 6 B. R. 257; contra
in re Jacob Raynor, 7 B. R. 527; 8. c. 11 Blatch. 43. :

"In re Moses A. McNaughton, 8 B. R. 44; in re Ralph Johnson, 1 N. Y.
Leg. Obs. 166; s.c. 5 Law Rep. 313.
IN INVOLUNTARY BANKRUPTCY. 39

a person acts on behalf of another, his authority should
be made to appear in the proceedings, either by his: own
oath or other competent evidence.’ If an agent. acts for
a non-resident creditor, the fact of non-residence should be
stated and sworn to in the affidavit.’ If a partner exe-
cutes the papers on behalf of his firm, he may sign either
the firm name or the names of the members of the firm to
the petition, but the papers should show that he signed
them on behalf of his firm. The affidavit should be
changed so as to state that one only of the petitioners,
being a member of the firm, took the required oath. An
agent should verify the petition on behalf of his princi-
pal? The name of the party who verifies the petition
should be contained in the body of the verification. It is
not sufficient that the name be merely appended to it.
The affidavit may be taken before any register or commis-
sioner of the circuit court, or notary public.

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 that the affiant should speak from his own
knowledge, or at least disclose the grounds of his belief,
or the sources of his information." If any fact in a deposi-
tion to an act of bankruptcy is stated on information and
belief, the information should be stated with such particu-
larity and detail that the court may see from whom it was
derived, the circumstances under which it was acquired,
and the weight that should be attached to it. The purpose
of these depositions is merely to evince the good faith of
the parties who file the petition, protect the court against

 

‘In re Moses A. McNaughton, 8 B. R. 44; in re Rosenfields, 11 B. R. 86;
in re California Pacific R. R. Co. 11 B. R. 198; in re Joseph 8. Hadley, 12
B. R. 366; in re Edward Sargent, 13 B. R. 144.

* In re Solomon Simmons, 10 B. R. 258; in re Joseph 8. Hadley, 12 B.
R.. 366.

*Tn re Solomon Simmons, 10 B. R. 253. 4 Form No. 55.
* In re Rosenfields, 11 B. R. 86. ° Form No. 56.

"In re Muller & Bretano, 3 B. R. 829; s. c. 1 Deady, 513; 5. c. 2 L. T. B.
83; in re Rosenfields, 11 B. R. 86; in re Joseph 8. Hadley, 12 B. R. 366.

*In re Joseph 8. Hadley, 12 B. R. 366.
40 COMMENCEMENT OF PROCEEDINGS

issuing an order to show aaa improvidently, and to es-
tablish a prima facie case. At the trial the petitioning
ereditor will have to prove his debt and the alleged acts
of bankruptcy the same as if they had not been filed.
The statute does not expressly state in what district
the petition may or must be filed. In this particular it
is not as minute and precise as in the provisions relating
to voluntary bankruptcy. The averment in the prescribed
form is, that the debtor has resided in the district for six
months, From this it would appear that it must be filed
in the district in which he resides. It has been decided
that it could not be filed in a district where he neither
resided nor carried on business.’ It has also been decided
that it could not be filed in a district in which he had not
resided for the greater portion of the six months next im-
mediately preceding the time of filing,’ and the tendency
of the authorities is, that it may be filed in any district
where the debtor could file a voluntary petition, but upon
this point there is some doubt.* 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 where the firm carries on business.”
The petition must be filed in the district court, and not
the circuit court.6 When the debtor resides in the Dis-
trict of Columbia, or any of the territories, it must be filed
in the supreme court for the district or the district court
for the territory, as the case may be ($$ 4997, 4998).?
The papers must be properly indorsed, and the same en-

 

‘Tn re Leonard, 4 B. R. 563; 8.c.2 L. T. B. 177,

? In re Palmer, 1 B. R, 218; in re Fogerty & Gerrity, 4 B.R. 451; s. ct
Saw. 233; 8.¢.2 L. T.B. 174.

* In re Leighton, 5 B. R. 95; contra, in re Johnson, 1 Cent. L. J. 223.

a en & Chat. R. R. Co. 6 B. R. 107; 8. c. 9 Blatch. 391; sc. 5 L.
76

* Cameron v. Canico, 9 B. R. 527; in re Horace Hall, 5 Law Rep. 269.
* In re Bivninger et al. 3 B. R. 487; 8.c. 7 Blatch. 159; 8.c.1L. T. B. 183.
7 Act of 22 June, 1874, § 16.
IN INVOLUNTARY BANKRUPTCY. 41

tries made upon filing as in a case of voluntary bank-
ruptcy.' At the time of filing the petition a deposit of
fifty dollars must be made with the clerk, to secure the
register’s fees ($ 5124); and the fees of the clerk and the
marshal must also be secured before they can be com-
pelled to perform any of the duties required of them.’

If, upon an examination of the petition and the deposi-
tions, the court finds that sufficient grounds exist there-
for, it directs the entry of an order® requiring the debtor
to appear and show cause, at a court of bankruptcy to be
-holden at a time specified in the order, not less than five
days from the service thereof, why the prayer of the peti-
tion should not be granted (§ 5024), but such order can
not be made until the petition is filed* In case of a
vacancy in the office of the 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
($ 4976). |

After the order to show cause is issued, a copy of the
same and of the petition are delivered to the marshal to
be served upon the debtor. This service may be made by
the marshal or any of his deputies ($ 5018), and consists
merely of delivering the copies to him, or leaving them at
hislast or usual place of abode. Service may be made ona
corporation by delivering the copies to its principal officer.’
The service can not be made out of the district.° If the

 

‘Rule I. ? Rule XXIX, * Form No. 57.
* Ala. & Chat. R. BR. Co. v. Jones, 7 B. R. 145.
* In re California Pacific R. R. Co. 11 B. R. 193.

*In re Ala. & Chat. R. R. Co. 5 B. R. 97; Stuart v. Aumueller, 8 B.
a contra. Stuart v. Hines, 6 B. R. 416; s. c. 33 Iowa, 60; 8. c. 5 L.
46.

R.
T.
42 COMMENCEMENT OF PROCEEDINGS

debtor can not be found, or his place of residence ascer-
tained, then service may be made by publication, i such
manner as the judge shall direct (§ 5025). If the presi-
dent of a corporation can not be found, a new order may
be issued directing the service to be made on its cashier."
If a corporation has been dissolved, so that it has no
longer a legal existence, the proper mode of serving the
process is by publication? No further proceedings can
be had upon the petition, unless the debtor appear and
consent thereto, until proof is given to the satisfaction of
the court of such service or publication ($ 5025). If the
- process has been served, the only proof required is the
return of the marshal. If the service has been by publica-
tion, the publication must be in the newspapers designated
by the rules of court, and the proof consists of the mar-
shal’s return, accompanied by a copy of the publication
cut from each newspaper, with a certificate as to the par-
ticulars of publishing. If the required proof is not given
on the return day, the proceedings should be adjourned,
and an order made that the copies be forthwith so served,
or the publication so made (§ 5025).

There are collateral proceedings, however, that may be
instituted, although proper service has not been made on
the petition. The court may restrain the debtor, and any
other person, from making any transfer or disposition of
any part of the debtor’s property not excepted by the
statute from the operation thereof, and from any inter-
ference therewith ($ 5024). The mode of applying for
this injunction is usually by a separate petition, so that
the proceedings upon the injunction need not be compli-
cated with the proceedings in bankruptcy.’ It is imma-

 

"Platt v. Archer, 6 B. R. 465; s. c. 9 Blatch. 559.
* In re Washington Marine Insurance Co. 2 B. R. 648; 8. c. 2 Ben. 292.
* In re Muller & Bretano, 3 B. R. 329; 8.c. 1 Deady, 513; s. c. 2L.T.B. 33.

“ nat re Muller & Bretano, 8 B. R. 329; 8. c. 1 Deady, 513; s.c. 2L. T.

* Irving v. Hughes, 2 B. R. 62; Creditors v. Cozzens, 3 B. R. 281.
IN INVOLUNTARY BANKRUPTCY. 43

terial whether the order to show cause, issued in the bank-
ruptcy proceedings, is in the proper form, for the jurisdic-
tion of the court to issue an injunction is not dependent
upon the service of a proper order on the debtor. The
petition should be positive in its averments, and may be
accompanied by affidavits to support it. It should also
contain a description of the property. A mere allegation
that it is personal estate is not sufficient.’ It is always
verified by the oath of the petitioner or his agent.’ It is
usually filed as a part of the proceedings in bankruptcy ;
but a bill in equity in the district court,* may also be used.
A bill in equity must be used when an injunction is sought
against a person who claims the property adversely to the
proceedings in bankruptcy, although his title may be void
as against the assignee.?

The injunction may be issued without notice to the
adverse party; notice, however may be required, and se-
curity for damages demanded, whenever the ends of justice
require it. The injunction is merely temporary, and is
intended to restrain the disposition of the goods and prop-
erty of the debtor until an order of adjudication can be
passed. The restraining power of the court upon a sum-
mary petition is limited to the period of time between the
entering of the order to show cause and the hearing and
adjudication upon the ereditor’s petition,’ but no such lim-
itation applies where the proceeding is by a bill in equity.®
It is questionable whether it extends to a case where
the property has been sold under legal process, although

 

‘In re Bloss, 4 R. B. 147; 8. c. 2 L. T. B, 126.
* Blackburn v. Stannard, 5 Law Rep. 250.
“In re Fendley, 10 B. R. 250.

“In re Fendley, 10 B. R. 250.

* fn re Charles J. Marter, 12 B. R. 185.

* Tn re Muller & Bretano, 3 B. R. 329; s. c. 1 Deady, 513; 8. c.2 L. T. B.
33; in re John Harper Smith, 1 N. Y. Leg. Obs. 249.

In re Moses, 6 B, R. 181; in re Kintzing, 3 B. R. 217; in re Mary Irving
et al. 14 B. R, 289.

*In re J. J. Fendley, 10 B. R. 250.
44 COMMENCEMENT OF PROCEEDINGS

the proceeds have not been paid over, because there is
nothing left to the assignee but a mere right of action.’

Any party having an interest in the property covered
by the injunction may appear and move for a dissolution,
and at the hearing affidavits and counter-affidavits may be
read by either party.2 But when the grounds set forth
in the motion for a dissolution go to the merits of the
case in bankruptcy, the court will not grant the dissolu-
tion, and thus, on affidavits, dispose of what are really all
the issues involved in the case.* The claimant 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 com-
mitted, or that there is no positive charge of an act of
bankruptcy. These are all matters that may be corrected
or amended. Nor will the court decide the question of
title to the property.* In order to obtain a dissolution,
the prima facie case made out by the petition must be
rebutted.» When it appears at the hearing that the
injunction can not be sustained upon the grounds set
forth in the petition, but that there is another valid cause
for which an injunction might issue, the petition may he
amended so as to cover the new ground, and the injunc-
tion. will thereupon be continued.°

If it shall appear that there is probable cause for be-
lieving that the debtor is about to leave the district, or
to remove and conceal his goods and chattels, or his evi-
dence of property, or make any fraudulent conveyance or
disposition thereof, the court may issue a warrant to the
marshal of the district commanding him to arrest the al-

 

1 Tn re Fuller, 4 B. R. 115; 5, c. 1 Saw. 243.
7 In re Bloss, 4 B. R. 147; 5.0.2 L. T. B. 126.
3 In re Metzler et al. 1 B. R. 88: 8. c. 1 Ben. 356.

‘In re Muller & Bretano, 3 B. R. 329; s.c. 1 Deady, 513; 8c. 2 L. T.
B. 33.

° In re Dean & Garrett, 2 B. R. 89; in re Binns, 4 Ben. 152.
° In re Bloss, 4 B. R. 147; 8. c. 2 L. T. B. 126.
IN INVOLUNTARY BANKRUPTCY. 45

leged bankrupt, and him safely keep, unless he shall give
bail to the satisfaction of the court for his appearance
from time to time, as required by the court, until the de-
cision of the court upon the petition, or the further order
of the court ; and forthwith take possession provisionally
of all the property and effects of the debtor, and safely
keep the same until the further order of the court
" (3 5094).

This warrant is only a provisional warrant, and should
properly be applied for by a petition duly verified and
supported by affidavits, so as to show a probable cause to
the court for granting it.| The exercise of this power is
one of great delicacy, and should not be called into action,
unless the court is satisfied that it is necessary. It rests
in the discretion of the court, but this is a legal discre-
tion? _A misrecital in the order allowing it of the date of
the bankrupt law is immaterial. The order need not re-
quire 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 the
goods, it may be executed against both or either, as the
petitioning creditor may direct.’ It can not authorize the
marshal to seize any property except that of the debtor
himself. If property has been purchased from the debtor,
it can not be taken.‘

The arrest of the debtor is in no manner for the se-
curity 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 may order, until there is an adjudica-
tion in the bankruptcy proceedings or the court further di-

 

ane In re James A. McKibben, 12 B. R. 97; in re Joseph 8. Hadley, 12 B. R.

* Bank v. Iron Co. 5 B. R. 491; s.c.1L. T. B. 272.
7 ae re Muller & Bretano, 3 B. R. 829; s. c. 1 Deady, 513; 8.0. 2 L. T.

‘In re Harthill, 4 B. R. 392; s.c, 4 Ben. 448; 8. c. 2 L. T. B. 181; in re
Geo. B, Holland, Jr. 12 B. R. 403.
46 COMMENCEMENT OF PROCEEDINGS

rects, and it is for this purpose and no other that bail is
required of him.’

It is the duty of the marshal, under the warrant, to
take possession of all the property and effects of the
debtor, in whosesoever hands he may find them. He may
hold possession of property claimed by other persons, and
take possession of property not in the possession of the
bankrupt whether indemnified 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 de-
rived 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 his authority or
not.2. Whether the property belongs to the debtor or not,
is a question of fact that he must determine for himself;
and if, by mistake or otherwise, he takes the goods of
another, he is liable to the party injured, upon his official
bond? If he has taken possession of property claimed by
another, he may notify the petitioning creditor of such
claim, and return the property to the claimant, unless in-
demnified by a sufficient bond for the taking, detention,
and liability, within five days after such notice; and may
refuse to take any property not in the possession of the
debtor, unless indemnified in like manner.‘

The injunction and the provisional warrant are merely
intended to protect the debtor’s property until a trial
can be had upon the petition in bankruptey. If the
petition fails, they are dissolved: if it is sustained, other
means are provided for the custody of the property. No

 

1 In re Daniel Sheehan, 8 B. R. 345,
* In re Briggs, 3 B. R. 688.
*In re Muller & Bretano, 3 B. R. 829; 8. c. 1 Deady, 518; 8.0 2L. T.B.

8; Marsh v. Armstrong, 11 B, R. 125; Ss
be cae v. Armstrong, R. 125; 8. c. 20 Minn. 81; in re Marks, 2

* Rule XTII.
IN INVOLUNTARY BANKRUPTCY. 47

trial can be had unless there has been due service of the
process, or the debtor appears and consents to the proceed-
ings ($ 5026). This appearance may be by an attorney,
and not in person, even where he has not been duly
served.’ If the process has not been properly served, and
the debtor does not appear and consent, the creditor, if he
desires to prosecute the case, should have the proceedings
adjourned, and obtain an order for the due service of the
process (§ 5025).

The petitioning creditor to a certain extent has the
control of the proceedings, and hence may, if he sees
proper, discontinue them.’ The statute, however, has pro-
vided that if the petitioning creditor does not appear and
proceed upon the return day or adjourned day, the court
may, upon the petition of any other creditor to the re-
quired amount, proceed to adjudicate upon such petition
($ 5026). It follows from this right of other creditors to
appear and prosecute the case that no petition can be dis-
missed except upon a return day or an adjourned day.’
If the proceedings are formally adjourned on the return
day, the proceedings can not be discontinued until the ad-
journed day.‘ If there is no formal adjournment, the pro-
ceedings are considered to be pending from day to day,
and each subsequent day is an adjourned day.” Upon the
return day or adjourned day the petitioning creditor may
dismiss the petition without giving other creditors any
notice of his intention to dismiss. It is their duty to ap-
pear in court, watch the proceedings and protect their own
rights.? The proceedings can be discontinued only by an

 

i *In re Weyliausen et al. 1 Ben. 397; in re Moses A. McNaughton, 8 B. R.

*In re Camden Rolling Mill Co. 3 B. R. 590; 8. 0.2L. T. B. 112; Hast-
ings v. Belknap, 1 Denio, 190.

*In re Lacey, Downs & Co. 10 B. R. 477; 8. c. 12 Blatch. 322.

“In re Lacey, Downs & Co. 10 B. R. 477; 8. c. 12 Blatch. 322.

*In re William Buchanan, 10 B. R. 97.

*Inre Camden Rolling Mill Co. 3 B. R. 590; 8. c.2L. T. B. 112; in re
Freedley & Wood, Crabbe, 544.
48 COMMENCEMENT OF PROCEEDINGS

order of court on special application.’ If a creditor has
already intervened, the proceedings can not be discontinued
without notice to him.? The petitioning creditor can not
discontinue the proceedings after the debtor has been ad-
judged bankrupt, for the adjudication vests the other
creditors with rights of which he can not deprive them.’
Where several creditors have joined in a petition, it has
been held that one creditor can not be allowed to with-
draw without the consent of the others unless he has been
induced to join through misrepresentations.*

Proceedings in bankruptcy inure to the benefit of all
the creditors, and any of them may intervene and prose-
cute the application if he thinks proper.’ They may in-
tervene at any time when it becomes necessary for the
purpose of preserving and protecting their interests.
The statute provides that they may intervene on the re-
turn day or adjourned day if the petitioning creditor does
not appear and proceed. This confers upon them a right
which the petitioning creditor and the debtor can not by
any arrangement cut off or defeat." It contemplates two
possible exigencies; one, that the petitioning creditor may
not appear; the other, that the petitioning creditor may
not proceed with the petition. In either event other
creditors may intervene. If the proceedings are formally
adjourned, they may appear on the adjourned day.° The
adjourned day on which other creditors may intervene is
any day to which the proceedings under the order to show
cause may be adjourned, whether the adjournment be for

 

‘In re William Buchanan, 10 B. R. 97.
? In re William Buchanan, 10 B. R. 97.

*In re Sherburne, 1 B. R. 558; in re Lacey, Downs & Co. 10 B. R. 477;
8. ¢. 12 Blatch. 322.

“In re P. H. Heffren, 10 B. R. 213; in re Edward Sargent, 18 B. R. 144.

* In re Freedley & Wood, Crabbe, 544; inre R& L. Calendar, 1 N. Y.
Leg. Obs. 200; 8. c. 5 Law Rep. 125.

° In re Mendenhall, 9 B. R. 380.

"In re Lacey, Downs & Co. 10 B. R. 477; 8. c. 12 Blatch. 322,

* In re Lacey, Downs & Co. 10 B. R. 477; 8. c, 12 Blatch. 322; in re
William Buchanan, 10 B. R. 97.

* In re Lacey, Downs & Co, 10 B. R. 477; s. c. 12 Blatch. 322.
IN INVOLUNTARY BANKRUPTCY. 49

the purpose of procuring a proper service of the order on
the debtor, or for the purpose of inquiring into the al-
legations of the act of bankruptey.* A formal adjourn-
ment from day to day, where the debtor has been properly
summoned, is not necessary to keep the proceedings alive.
If neither the petitioning creditor nor the debtor asks for
or obtains an adjournment, the matter simply lies along
from day to day to be called up and disposedof at any
time. The proceedings are considered as pending from
day to day until disposed of, and each subsequent day is
an adjourned day.? The mere right to discontinue does
not operate as a discontinuance. ‘The proceedings are
pending until there is an actual discontinuance.? Other
creditors may, therefore, intervene even after a petition for
leave to discontinue has been filed* Even if the court
erroneously refuses to grant such leave, this does not oper-
ate as a discontinuance.” If the order of discontinuance
is not to take effect until the costs are paid, the proceed-
ings are actually pending until the conditions of the order
are complied with, whatever may be the hindrance that
arises to prevent such compliance.’ But when the pro-
ceedings have been actually discontinued on a return day
or an adjourned day, other creditors can not intervene, for
the jurisdiction of the court over the cause is at an end.’
Creditors who desire to intervene, do so by a supple-
mental petition. If they do intervene, the petitioning
creditor can not dismiss the proceedings, although his
debt and all the costs have been paid.* - The intervening

 

‘In re Lacey, Downs & Co. 10 B. R. 477; 8. c. 12 Blatch. 822.
* In re William Buchanan, 10 B. R. 97.
*In re Lacey, Downs & Co. 10 B. R. 477; 8. c. 12 Blatch. 322.
“In re William Buchanan, 10 B. R. 97.
* In re Lacey, Downs & Co. 10 B. R. 477; s. c. 12 Blatch. 322.
* In re Lacey, Downs & Co. 10 B. R. 477; 8. c. 12 Blatch. 322.

"In re Olmsted, 4 B. R. 240; in re Freedley & Wood, Crabbe, 544; in re
Camden Rolling Mill Co. 3 B. R. 590; s.c. 21. T. B. 112.

* In re Mendenhall, 9 B. R. 880; in re R. & L. Calendar, 1 N.Y. Leg. Obs.
200; 8. c. 5 Law Rep. 125.

4
50 COMMENCEMENT OF PROCEEDINGS

creditors have a right to prosecute the original petition in
the same manner as the petitioning creditor could have
done.t If no proper service of the order to show cause
has been made on the debtor, it should be ordered. If it
has been made, then no new service or publication is re-
quired ($ 5026). The intervening creditors have a right
to insist on a trial on the return day, although the peti-
tioning creditor consents to a continuance of the case.’

If proper service has been made, and the debtor fails
to appear upon the return day, a default may be taken
($ 5028). If the proceedings are not dismissed, and he ap-
pears, he must prepare his defense. ‘The defense can gen-
erally be made only by the debtor himself. The petition
by an alleged creditor against his debtor to compel a sub-
mission of his estate to the bankrupt court is not however
a mere suit inter partes. It rather partakes of the nature
of a proceeding im rem, in which every actual creditor has
a direct interest. The proceeding is summary, and in a
high degree informal, and it should be free from technical
embarrassment. No one is entitled to be heard, however,
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. The
court must be able to see that the intervention may serve
some useful purpose either in protecting the rights of the
applicant or those of the creditors at large® A petition-
ing creditor who has filed a prior petition in another court,
upon which there has been an adjudication,‘ or a creditor

 

‘In re Lacey, Downs & Co. 10 B. R. 477; s. c. 12 Blatch, 322.
* Knickerbocker Ins. Co. v. Comstock, 9 B. R. 484.

*In re Boston R. R. Co. 6 B. R. 209, 222; s.c. 9 Blatch. 101, 409; sc.
5 B. R. 282; inre James Bennett, 1 N. Y. Leg. Obs. 310; in re Heusted, 5
Law Rep. 510; vide in re Bush, 6 B. R. 179; Dutton v. Freeman. 5 Law
Rep. 447. ,

‘In re Boston R. R. Co. 6 B. B. 209, 222; s. co. 9 Blatch. 101, 409; s. co. 5
B. R. 282; in re James Bennett, 1 N. Y. Leg. Obs. 310; in re Heusted 5
eau i 510; vide in re Bush,6 B. R. 179; Dutton v, Freeman, 5 Law

ep. :
IN INVOLUNTARY BANKRUPTCY. BL

who has received a payment or transfer which is liable to
be assailed as a preference,’ or who has issued an attach.
ment within the period of four months next preceding the
filmg of the petition,? may appear and oppose an adjudica-
tion. When a creditor is allowed to intervene, he may
take advantage of any defense available to the debtor, and
may contest an adjudication on the merits,’ or on the ground
that the court has no jurisdiction over the case, or that a
due proportion of creditors has not joined in the petition.‘

If the debtor denies the allegation as to the number
or amount of the petitioning creditors, by a statement in
writing to that effect, the court may require him to file
forthwith a full list of hig creditors, with their places of
residence, and the sums due them respectively. This list
should be verified by the oath of the debtor.®> The court
must then ascertain, on reasonable notice to the creditors,
whether one-fourth in number and one-third in amount
have petitioned that the debtor be adjudged a bankrupt.
The object of the notice is to enable the petitioning credit-
ors and others of the named creditors to show that the list
is incorrect. It should contain a copy of the list, with its
names, places of residence, and amounts, and should be
sent to all the creditors named in the list, at the addresses
given in the list.’ If the petitioning creditor denies that
the list filed by the debtor is correct, either as to the na-
ture or the amount of the debts, the case may be referred
to a register,’ or to the clerk,’ to take evidence and report

 

> Clinton v. Mayo, 12 B. R. 39; in re Heusted, 5 Law Rep. 510; in re
Walter 8. Derby, 8 B. R. 106; 8. c. 6 Ben. 232.

* In re S. Mendelsohn, 12 B. R. 533; in re Hatje, 12 B, R. 548; in re Fran-
cis M. Jack, 13 B. R. 296; s. 0. 1 Wood. 549; in re C. G. Scrafford, 14 B.
R. 184,

°Jn re Elias G. Williams, 14 B, R. 182.
“In re C.G. Scrafford, 14 B. R. 184.

° In re Louis E, Steinman, 10 B. R. 214; in re Hymes, 10 B. R. 433; 8. c.
7 Ben. 427; Barnert v.. Hightower, 10 B, R. 157.

° In re Hymes, 10 B. R. 488; s. c. 7 Ben. 427.
"In re Jacob Frost, 11 B. R. 69; in re Edward Sargent, 13 B. R. 144.
* In re Hymes, 10 B. R. 482; 8. c. 7 Ben. 427.
52 COMMENCEMENT OF PROCEEDINGS

as to the correctness of the list. If it appears that such
number and amount have not so petitioned, the court must
grant a reasonable time, not exceeding ten days, within
which other creditors may join in the petition. If, at the
expiration of the time so limited, the requisite number and
amount comply with the requirements of the statute, the
matter of bankruptcy may proceed; but if at the expira.
tion of such limited time such number and amount do
not so comply, the petition must be dismissed with costs.
Whether the allegation that the petitioning creditor con-
stitutes the requisite proportion of the creditors is a juris:
dictional averment, is a point upon which the authorities
are conflicting. In one case it was held that the averment
was not jurisdictional! In another it was treated as juris-
dictional.2 One case was dismissed without allowing other
creditors to join in the petition, because the averment was
wanting® In another case the petition was dismissed be-
cause the petitioners had included the name of one creditor
without authority, and alleged that all constituted more
than the requisite proportion. In another it was held
that the petition would be dismissed if it were shown that
the creditor, at the time of filing it, knew that he did not
constitute the requisite proportion,’ for the court would
not entertain a fishing petition. If the debtor, on the
filing of the petition, admits in writing that the requisite
number and amount of creditors have petitioned, the court
if satisfied that the admission is made in good faith, may
so adjudge, and the matter proceed without further steps
on that subject.6 When the court is satisfied that the
requisite amount and number have so petitioned, its judg-
ment is final.” The statute makes the question whether

 

‘In re Morris, 11 B. R. 443; in re James A. McKibben, 12 B. R. 97.

2 In re Reiman & Friedlander, 11 B. R. 21; 8. c. 7 Ben. 455; 5. c. 13 B. R.
128; 8. c. 12 Blatch, 562.

®>In re Thomas F. Burch, 10 B. R. 150.
*In re Rosenfields, 11 B. R. 86. *In re Scammon, 11 B. R. 280.
* Act of 22 June, 1874, § 12. " Act of 22 June, 1874, § 138.
IN INVOLUNTARY BANKRUPTCY. 53

the requisite number and amount of creditors have joined
in the petition a matter for the determination of the
court. This provision is designed to guard against collu-
sive proceedings.’

If the allegations are not sufficiently full, precise and
distinct, the debtor may file an exception, declining to
answer upon that ground, and ask that they be made more
definite and certain, or be stricken out.’ If they are not
sufficient in law to sustain the proceedings, he may move
to have the petition dismissed,® or file a demurrer.t In
taking these preliminary steps, however, he should con-
sider whether or not he desires a jury trial. This can only
be demanded upon the return day;° but, by consent of
parties, an adjourned day may be held to be the same in
all respects as the return day.® If the debtor wishes to
demur, he may file objections by the way of demurrer and
an answer at the same time, and thus obtain a jury trial."
He might also, perhaps, file exceptions for want of defi-
niteness in the allegations, and a general denial. Either
of these modes will, according to the condition of the case,
enable him to take advantage of all defects in the petition,
and at the same time preserve all his rights.

If a demurrer or exceptions are filed, they must be set
down for hearing and disposed of first.

If they are sustained, or the petitioner without trial
concludes that his allegations are defective, he may ask
for leave to amend. Leave to amend may also be asked

 

‘In re J. Young Scammon, 10 B. R. 66; in re Isaac Scull, 10 B. R.
165; 8. c. 7 Ben. 871; James R. Keeler, 10 B. R. 419.

‘i aa re Randall & Sunderland, 3B, R. 18; s.c. 1 Deady, 557; 3. c. 2 L.
. B. 69.

“In re Melick, 4 B. R. 97.
‘Orem & Son v. Harley, 3 B. R. 263; in re A. Benham, 8 B. R. 94.

° In re Gebhart, 3 B, R. 268; Clinton v. Mayo, 12 B. R. 39; in re Sherry,
8B. R. 142.

°In re G. & H. Pupke, 1 Ben. 342.

"In re Nickodemus, 3 B. R. 230; 8. c. 1 L. T. B. 140.
* Form No. 61,
54 COMMENCEMENT OF PROCEEDINGS

for when he desires to include other and new matter in
his petition. Merely formal amendments, which can not
take the debtor by surprise, may be asked for in open
court, and allowed, when it appears to be due to justice,
even at the final hearing, and after all the testimony in
the cause has been taken. But when a petitioner seeks
to introduce new matter, he must ask for leave to amend
by a petition, duly verified, stating the amendments that
are desired, and setting forth special reasons therefor. It
should be shown that the petitioner and his attorney were
not advised of the facts sought to be added by the amend-
ment at the time the original petition was prepared, or
that they were omitted from inadvertence, mistake or
other reason which might excuse such omission, and that
application for leave to amend was made within a reason-
able time after the necessity for an amendment was dis-
covered. A copy of this petition should be served upon
the debtor or his attorney.

An amendment which introduces new facts, or changes
essentially the grounds of the prosecution or the defense,
will not be allowed, except. for very special reasons, and
where it is clearly required in furtherance of justice.
When it would introduce into the petition entirely new
acts of bankruptcy, founded upon facts not therein re-
ferred to, and alleged to have been committed more than
six months prior to the application for leave to amend, it
will not be allowed? The allegation in regard to the
joming of the requisite proportion of the creditors
may be amended.’ ‘The verification of the petition is
no part of the petition, and if it is defective, it may be

 

‘Tn re Craft, 1 B. R. 378; s. c. 2 Ben. 214; in re Waite & Crocker, 1 B.
R. 373; 8. c. Lowell, 207; in re Haughton, 1 B. R. 460; in re A. B. Gallin-
ger, 4B. R. 729; s.c. 1 Saw. 224.

? Crowley & Hoblitzell, 1 B. R. 516; s.c.1 L. T. B. 79.

*TIn re James A. McKibben, 12 B. R. 97; in re Morris, 11 B. R. 443; in re
Joseph 8. Hadley, 12 B. R. 366.
IN INVOLUNTARY BANKRUPTCY. 55

amended,' If it is made by an agent, and there is no
evidence of his authority, supplemental affidavits may be
filed tending to show his authority at the time he signed
and verified the petition.” An amendment to add a new
party. will not be allowed after all the evidence has
been taken and the case is before the court on final
hearing.® When leave to amend is granted, the peti-
tioner may be required to pay costs.* Merely formal
amendments may be made upon the record,’ but amend-
ments introducing new matters should be upon a separate
paper signed and verified in the same manner as the
original petition.’

So soon as the petition is adjudged to be correct, or is
made so by an amendment, the debtor must, if he has not
previously done so, put in his real defense. If an amend-
ment introduces:new matter after he has made his full
defense by an answer, he must of course reply to that,’ or,”
if he has not put in his general defense, he may demur
or except, the same as before. The general defense
should be made by an answer. The pleadings and pro-
ceedings must be regarded as governed and controlled by
the rules and regulations prescribed in a civil action at
common law.’ <A reasonable construction of the statute
requires that the debtor’s allegations should be reduced to
writing, and put in such a form as to raise an issue in
analogy to issues in other cases triable by a jury.’ This
answer should be addressed to the court,!® and may consist

 

* In re Solomon Simmons, 10 B. R. 258; in re California Pacific R. R. Co.
11 B. R. 198; in re Edward Sargent, 13 B. R. 144; contra, Moore & Bro. v.
Harley, 4 B. R. 242; 8. c. 2 L. T. B. 666.

* Tn re Rosenfields, 11 B. R. 86. *In re Chas. 8. Pitt, 14 B. R. 59.
‘Tn re Howland, 2 B. R. 357. °In re Haughton, 1 B. R. 460.

° Crowley & Hoblitzell, 1 B. R. 516; s.c.1L. T. B. 79.

" Hardy v. Binninger, 4 B. R. 262; s. c. 7 Blatch. 262.

* Ins. Co. v. Comstock, 8 B. R. 145; s. c. 16 Wall. 258.

* In re Sutherland, 1 B. R. 531; s.c.1 Deady, 344; in re Alexander Find-
day, 9 B. .R. 83; 3. c, 5 Biss. 480.

*° In re Frank Heydette, 8 B. R. 338.
56 : COMMENCEMENT OF PROCEEDINGS

either of a general denial, which puts in issue all the facts
stated in the petition,’ or a statement of any matters in
avoidance, according to the rules governing pleadings in
cases at common law.? In the latter case, the answer
should be as full, specific, and certain as an answer to a
bill in equity. The answer should conclude with a de-
mand for a hearing by the court or a trial by jury, and
should be signed by the debtor in person or by attorney.’

It should also be made under oath, for it is a general rule
in all courts to require a petition or pleading to be an-
swered in as solemn a manner as it is required to be
made?

To maintain an action to have the party adjudged a
bankrupt, it must appear from the petition that he owes
debts provable under the bankrupt act to the amount of
three hundred dollars, and that he has committed an act
-of bankruptcy. The indebtedness and the act of bank-
ruptcy 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. The statute provides that unless it
appears that the facts set forth in the petition are true, the
proceedings shall be dismissed. The facts set forth in the
petition are all those which are necessary to make it the
duty of the court to adjudge the debtor a bankrupt. Un-
less all these concur, the petitioner has no right to pros-
ecute the petition. The debtor may therefore deny that
the petitioner is a creditor, and by proofs maintain such

 

*In re Skelley, 5 B. R. 214; s. c. 3 Biss. 260; Phelps v. Clasen, 3 B. R.
87; 8, c. 1 Wool. 204; in re Dunham & Orr, 2 B. R. 17; s. c. 2 Ben, 488; s. c.
1L. T. B. 89; inre Frank Heydette, 8 B. R. 333; in re Hawkeye Smelting
Co. 8 B. R. 385.

“In re Alexander Findlay, 9 B. R. 83; s.c. 5 Biss. 480; in re Sutherland,
1B. RQ. 5381; s.c.1 Deady, 344.

*In re Frank Heydette, 8 B. R. 333.
‘To re Frank Heydette, 8 B. R. 333.

°Tn re Alexander Findlay, 9 B. R. 83; s. c. 5 Biss. 480; contra, in re Geb-
hart, 3B. R. 268; in re Frank Heydette, 8B. R. 333.

* Tn re Guiactes 3B. R. 566; 8. c. 1 Saw. 47.

-
IN INVOLUNTARY BANKRUPTCY. 57

denial. This objection goes not only to the disability of
the petitioner, but to the jurisdiction of the cause. If he
is not a creditor, he is not by law clothed with the right
or power to begin or sustain a prosecution or ask a decree,
although he may be able to prove or does prove the com-
mission of acts of bankruptcy. The existence of the debt
is a fact that must be established by sufficient evidence,
for it is nowhere expressly or impliedly provided that one
who can furnish proof which, unexplained and uncontra-
dicted, would show prima facie that he is a creditor, may
file a petition, or that a party may be adjudged a bank-
rupt upon such petition? The debtor may, therefore,
plead either infancy ° or coverture.’

As the acts of bankruptcy are required to be stated
separately, a separate defense should be made to each act
charged, and where there are several distinct defenses to
the same act, each distinct defense should be pleaded sep-
arately, and in such a manner that each will stand cr fall
by itself without the aid of the others.t <A plea of tender
is not a good plea, because the action is not a suit to col-
lect money ;° nor will the debtor be allowed to make a
tender into court of the money due to the petitioner. A
plea that the debtor was non compos mentis at the time
when the alleged act of bankruptcy was committed is a
good defense.’

In any case where the acts of bankruptcy or certain
intents have been alleged conjunctively, the answer must
be in the disjunctive, otherwise a proper issue will not be

 

‘In re Cornwall, 6 B. R. 305; s. c. $ Blatch. 114.
* In re Walter S. Derby, 8 B. R. 106; s. c. 6 Ben. 232.

* In re Schlichter, 2 B. R. 336; in re Howland, 2 B. R. 357; in re Rachel
Goodman, 8 B. R. 380; s. c. 5 Biss. 401.

*In re Ouimette, 3 B. R. 566; 3. c. 1 Saw. 47.
* In re Ouimette, 3 B. R. 566; s. c. 1 Saw. 47.
“In re Williams & Co. 3 B. R. 286; 8. c., Lowell, 406; s. c. 2 L. T. B. 100.

"In re Marvin, 1 Dillon, 178; in re Alonzo Murphy, 10 B. R. 48; in re D.
Pratt, 6 B. R. 2%6; in re Weitzel, 14B. R. —;s. .3 Cent. L. J. 557.
58 COMMENCEMENT OF PROCEEDINGS

made or tendered.!. The debtor must also take care not
to make such a negative allegation as to involve an affirm.
ative implication, and thus in reality confess the acts
charged against him, as, for instance, by denying a fraudu-
lent intent to give a fraudulent preference, when he should
simply confine himself to a denial of an intent to give any
preference.’

When the defense is in, the petitioner should proceed
to take such steps in relation to it as are proper from the
condition of the pleadings. If the defense consists merely
of a general denial, no replication is needed.’ If the de-
fense is made by a formal answer, and any pleas are
irrelevant or immaterial, a motion may be made to have
them stricken out, or if they are insufficient in law, a
demurrer may be filed, When the demurrers and excep-
tions are disposed of, a replication should be filed, unless
the case is to be brought to a hearing on petition and
answer. If the answer confesses enough to justify such a
course, the case may be brought to a hearing on petition
and answer, but denials in the answer of material allega-
tions will, on such hearing, be taken to be true <A de-
nial, however, of that which the law, from the admitted
facts, conclusively presumes, will be disregarded.’

Tf several petitions are filed against the same debtor,
the order in which they shall be heard should be next
determined. Whenever two or more petitions are filed
by creditors against a common debtor, alleging separate
acts of bankruptcy committed by such debtor on different
days within six months prior to the filing of such peti-
tion, and the debtor appears and shows cause against an

 

‘In re 8. T. Smith, 3 B. R. 877; s.c.4 Ben. 1; 8. c.1L. T.B. 147.

* In re Sutherland, 1 B. R. 531; s. c. 1 Deady, 344.

“In re Dunham & Orr, 2 B. R. 17; 8. c. 2 Ben. 488; s. c.1L. T. B. 89;
in re Hawkeye Smelting Co. 8 B. R. 345.

‘In re Wells et al. 1B. R. 171; 8.c.1 L. T. B. 20; 8.0.7 A. L. Reg. 163.

‘Inre 8. T. Smith, 3 B. R. 877; s.c. 4 Bon. 1; s.c.1L. T. B, 147; in re
Sutherland, 1 B. R.531; s. c. 1 Deady, 344,
IN INVOLUNTARY BANKRUPTCY. 59

adjudication of bankruptcy against him on the petitions,
that petition must be first heard and tried which alleges °
the commission of the earliest acts of bankruptcy; and
in case the several acts of bankruptcy are alleged in the
different petitions to have been committed on the same
day, the court before which the same are pending may
order them to be consolidated, and proceed to a hearing
as upon one petition; and if an adjudication of bank-
ruptcy be made upon either petition, or for the commis-
sion of a single act of bankruptcy, it will not be necessary
to proceed to a hearing upon the remaining petitions,
unless proceedings be taken by the debtor for the purpose
of causing such adjudication to be annulled or vacated.’

In case two or more petitions are filed against the same
individual in different districts, the first hearing must be
had in the district in which the debtor has his domicile;
and such petition may be amended by inserting an alle-
gation of an act of bankruptcy committed at an earlier
date than that first alleged, if such earlier act is charged
in either of the other petitions; and in case of two or
more petitions against the same firm, in different courts,
each having jurisdiction over the case, the petition first
filed must be first heard, and may be amended by the in-
sertion of an allegation of an earlier act of bankruptcy
than that first alleged, if such earlier act is charged in
either of the other petitions; and in either case the pro-
ceedings upon the other petitions may be stayed until an
adjudication is made upon the petition first heard; and
the court which makes the first adjudication of bank-
ruptcy will retain jurisdiction over all proceedings therein
until the same shall be closed.?

During the pendency of proceedings in involuntary
bankruptcy, the debtor can not be adjudged a bankrupt
upon a voluntary petition filed after the commencement of

 

* Rule XV, ? Rule XVI.
60 COMMENCEMENT OF PROCEEDINGS

proceedings against him by the creditors, and if an adju-
* dication is so made it will be set aside.’

If the case is entitled to precedence, it may be tried
upon the return day summarily before the court; or, if a
jury trial has been demanded, at the first term at which
a jury shall be in attendance; or, at the election of the
debtor, the court may, in its discretion, award a venire
facias to the marshal, returnable within ten days before
him, for the trial of the facts set forth in the petition, at
which time there must be a trial, unless it is adjourned
for good cause shown.? But the court may, upon good
cause shown, adjourn the proceedings from time to time
($ 5026). At the trial the petitioner must proceed to
establish the facts alleged in his petition, and the burden
of proof rests upon him The legality and provability
of his debts precede the question whether the alleged acts
of bankruptcy have been committed, and ought properly
to be established first.* After he has closed his case, the
debtor introduces such testimony as he deems advisable,
and then the petitioner offers rebutting evidence, the same
as in any other trial. When the evidence is all in, the
court passes upon it, or in case of a jury trial, submits it
to the jury with instructions. If the evidence is all one
way, the court may direct the jury to render their verdict
for the party who is entitled to it.

Ifthe facts set forth in the petition are found to be
true, or if default is made by the debtor to appear pursu-
ant to the order to show cause, the court adjudges® the

 

‘In re R. R. Stewart, 3 B. R. 108; contra, in re Philemon Canfield, 1 N.
Y. Leg. Obs. 284; s. c. 5 Law Rep. 415.

* Act of 22 June, 1874, § 14.
* Brock v. Hoppock, 2 B. R. 7; s. c. 2 Ben. 478.
“ Brock v. Hoppock, 2 B. R. 7; s. c. 2 Ben. 478; Moore v. National Ex-

change Bank of Columbus, 1 B. R. 470; s.c. 2 Bond, 170; s.c.1L. T. B.
74; in re Skelley, 5 R. B. 214; 8. c. 3 Biss. 260.

_ ° Hardy v. Clark et al. 3 B. R. 385; .c.1 L. T. B. 151; 3.03 L. T.B.
11; in re Jelsh & Dunnebacke, 9 B. R. 412. :

° Form No. 58.
IN INVOLUNTARY BANKRUPTCY. 61

debtor to be a bankrupt (§ 5028). The form of an adju-
dication is prescribed by Form No. 58. Nothing else is
an adjudication. A memorandum, signed with the initials
of the judge, directing that an order of adjudication be
entered, is not an adjudication. It is not a judgment or
entry on the files of the court! Nor is the mere subscrip-
tion of a decree per se an adjudication. There must be
something tantamount to promulgation or delivery—some-
thing of which the parties to be affected can have or can
obtain knowledge before their rights can be said to have
received adjudication—something which completes and
authenticates the judicial act.” After an adjudication has
been formally entered, the court has the power, in a
proper case, to set it aside and grant a new trial.’ It may
do so even though there has been a trial by jury, and a
verdict in favor of the debtor, for the allegations of the
petition do not involve a charge of crime, and are to be
tried like any other civil case. The power to set aside a
verdict in civil cases is a power that is incident to all
courts of record.‘ The party desiring to set aside an ad-
judication must apply within a reasonable time after it is
entered.’ The adjudication may also be set aside when it
is void, at the instance of any third person who has an
interest in the proceedings. A mere creditor has no such
interest. An attaching creditor,’ and a creditor whose
security is impeached as a preference,’ have such an inter-
est that they may apply. Notice of the motion should be

 

*In re Joseph M. Hill, 10 B. R. 133; s, c. 7 Ben. 378.
> In re Boston, Hart. & Erie R. R. Co. 6 B. R, 222; s. c. 9 Blatch. 409.
* In re Great West. Tel. Co. 5 Biss. 359.

“In re R. A. De Forest, 9 B. R. 278; in re Dunn et al. 9 B. R. 487; 8. c.
12 Blatch. 42.

* Leiter v. Payson, 8 B. R. 317; s.c. 9 B. R. 205; in re J. Neilson, 7 B. R.
505.

* In re Bush, 6 B. R. 179; Karr v. Whittaker, 5 B. R. 123.

ia: In re Fogerty & Gerrity, 4 B. R. 451; s.c. 1 Saw. 2338; s.c.2L. T. B.

*In re Walter S. Derby, 8 B. R. 106; 8. c. 6 Ben, 282.
62 COMMENCEMENT OF PROCEEDINGS

served on the bankrupt.! The pendency of a prior peti-
tion in another district is na ground for annulling an ad-
judication.? Where the debtor has admitted the commis-
sion of the act of bankruptcy, the adjudication will not be
set aside although the admission was false.® An ad-
judication will not be set aside at the instance of either
the debtor or creditors, on the ground that a due propor-
tion of creditors did not join in the petition, unless
there is proof that it was obtained by fraud or bad faith,
and in this respect it is immaterial whether the adjudi-
cation was made on default’ or after notice by publi-
cation only.6 At the time of making the adjudication
of bankruptcy, the court should forthwith issue a war-
rant to take possession of the debtor’s estate ($ 5028).
There is never any propriety in. delaying the issuing of
the warrant after an adjudication." At the time of
taking possession of the estate, the marshal should make
an inventory of the property and assets by him received.*
The order of adjudication usually contains a direction that
the case be referred to some particular register desig-
nated therein,’ and further proceedings are had before
him the same as in a case of voluntary bankruptcy.

The order of adjudication of bankruptcy must also
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
of his estate, in the form, and verified in the manner,
required in proceedings in voluntary bankruptcy ($ 5030).

 

‘Tn re Bush, 6 B. R. 179. * Tn re William Harris et al. 6 Ben. 875.
*In re James 8. Thomas, 11 B. R. 330.

“In re William B. Duncan, 14 B. R. 18; in re John H. McKinley, 7 Ben.
562; inre J. Funkenstein, 14 B. R. 213.

*In re J. Funkenstein, 14 B. R. 213.

"In re John H. McKinley, 7 Ben. 562.

"In re Howes & Macy, 9 B. R. 423; s. c. 7 Ben. 102.

* Rule XIII. * Rule IV.
IN INVOLUNTARY BANKRUPTCY. 63

If the debtor has failed to appear in person or by
attorney, a certified copy of the adjudication must be
forthwith served on him, by delivery or publication, in
the manner provided for the service of the order to
show cause. The service of the order of adjudication
is a necessary incident to the duty of serving the war-
rant, although it is not embodied in the command of
the writ If the bankrupt is absent, or can not be
found, such schedule and inventory must be prepared
by the messenger and the assignee from the best infor-
mation they can obtain ($ 5031). These schedules must
be prepared from the books or other papers of the
bankrupt that may be seized by the marshal under his
warrant, and from any other sources of information; but
all statements upon which his return shall be made
must be in writing, and sworn to by the parties mak-
ing them, before one of the registers in bankruptcy of
the court, or a commissioner of the courts of the United
States.’

The warrant is issued to the marshal, and directs him
to take possession of the property of the bankrupt, and
also to make publication and serve notices upon the cred-
itors the same as in a case of voluntary bankruptcy.*
Under this warrant, it is his duty to take possession of the
property of the bankrupt, and to prepare, within three
days from the time of taking such possession, a complete
inventory of all the property, and to return it as soon as
completed. The time for making the inventory and re-
turn may be enlarged, under proper circumstances, by
special order of the district court. If any goods or effects
so taken into possession as the property of the bankrupt
are claimed by or in behalf of any other person, the mar-
shal should forthwith notify the petitioning creditor of
such claim, and may, within five days after so giving

 

"In re Kennedy et al. 7 B. R. 337.
* Rule XIII. ‘ Form No. 59.
64 INVOLUNTARY BANKRUPTCY.

notice of such claim, deliver them to the claimant or his
agent, unless the petitioning creditor or party at whose
instance possession is taken, shall, by bond, with sufficient
sureties to be approved by the marshal, indemnify the
marshal for the taking and detention of such goods and
effects, and the expense of defending against all claims
thereto, and, in case of such indemnity, the marshal must
retain possession of such goods and effects, and proceed in
relation thereto asif no such claim had been made. In
case the petitioning creditor claims that any property not
in the possession of the bankrupt belongs to him, and
should be taken by the marshal, the marshal is not hound
to take possession of the same unless indemnified in like
manner.’ The duties imposed upon the marshal may be
performed by himself or his deputies ($ 5013).

 

> Rule XIII.
CHAPTER III.

PROCEEDINGS TO HAVE A PARTNERSHIP DECLARED
BANKRUPT.

Two or more persons who are partners in trade may
be adjudged bankrupt either on the petition of such part-
ners, or any one of them, or on the petition of any creditor
of the partners ($5121). From this provision of the
statute it is manifest that proceedings to have a partner.
ship declared bankrupt are of a mixed character, being
sometimes voluntary, sometimes involuntary, and some-
times of a guast involuntary nature.

In some cases it has been held that a member of an
insolvent firm could not apply for the benefit of the bank-
rupt law separately and individually where there are part-
nership assets, on the ground that the true theory and
intent of the law is, 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.
But this hardly appears to be correct. In the first place, it
will be observed that the language of the statute is per-
missive, not imperative. The act provides what may be
done, but does not make any particular course obligatory
upon the debtors, any more than upon the creditors. As
the creditors may elect whether they will avail themselves
of the privilege conferred by the statute, a just construc-
tion would give the debtors a similar option. In the next
place, there is no need of protecting the rights of creditors.
by construction, for they are amply protected by the stat-
ute. If they desire to have the partnership assets distrib-

 

‘In re Little, 1 B, R. 341; s. o.2 Ben. 186; in re Winkens, 2 B. R. 349.
* ;
66 TO HAVE A PARTNERSHIP

uted in a proceeding wherein the firm is declared bank-
rupt, they can attain that object in the mode and under
the limitations pointed out by the act. The better opin-
ion therefore seems to be that there is nothing in the
bankrupt law to prevent one partner from filing a. petition
separately and individually without requesting the other
members of the firm to join with him,‘ and that a dis-
charge obtained in such a proceeding will release him
from all his debts, both individual and partnership, for
such is the clear meaning of the provision of the statute
(§ 5118), that a discharge shall not release, discharge, or
affect any other person liable for the same debt as
partner.’

The language of the statute is that “two or more per-
sons who are partners in trade are adjudged bankrupt.”
From this it has been inferred in some cases that the
provision only applied to partnerships that are subsisting
at the time of the commencement of the proceedings in
bankruptcy,’ but this construction has been questioned.
It will be observed that the language is just as applicable
to creditors as to the partners, or any one of them, and it
manifestly was not the intent of the statute that the part-
ners could by a voluntary act of their own deprive a
creditor of his right to put the firm into bankruptcy. It
has accordingly been held that the firm may be put into
bankruptcy, even after a dissolution; either by the
creditors® or by the partners, or any one of them.’ The
main controversy has been whether a firm can be put into
bankruptcy when there are no partnership assets, but the
better opinion seems to be that so long as there are firm

 

‘In re Rufus E. Moore, 5 Biss. 79; in re Mitchell, 3 B. R. 441.
* In re Downing, 3B. R. 748; s. c. 1 Dillon, 83; s. co. 1 L. T. B. 207.

ie aoe et al. v. Jewett, 2 B. R. 208; s.c. 2 Ben. 514; s. c. 2.L. T.

‘In re Joseph A. Noonan, 10 B. R. 331; s. c. 8 Biss, 491.

“In re Waite et al. 1 B. R. 373; s. c. Lowell, 207; in re Williams et al.
3 B. R. 286; 8. c. Lowell, 406; inre H. C. McFarland, 10 B. R. 381.

°In re Joseph A. Noonan, 10 B. R. 331; s. c. 8 Biss. 491.
DECLARED BANKRUPT. 67

assets, or firm debts outstanding and unsettled? the firm
may be put into bankruptcy on the petition of the part-
ners themselves, or of one of them, or of the creditors.
The firm is deemed to continue for all purposes necessary
for the final liquidation of its affairs. It has accord-
ingly been held that one partner may proceed against his
eopartners, although proceedings have been instituted in a
State court for a dissolution of the partnership and a re-
ceiver has been appointed therein. It has likewise been
held that a partner who has taken the partnership
property under an agreement to pay the partnership debts
may subsequently petition for the benefit of the statute
on behalf of the firm.’ It has, on the contrary, however,
been held that one partner can not proceed against his
copartners where there are no assets,* or where the assets
that belonged to the firm have been disposed of by an
assignment,’ but these cases are of doubtful authority,
and can only be sustained, if at all, upon the ground of
an estoppel as between the partners.

When all the partners join in the proceedings, the
petition must be in the prescribed form,’ and must be
accompanied by separate schedules of the liabilities of
each partner, a separate schedule of the partnership liabil-
ities, separate schedules of the assets of each partner, and
a separate schedule of the partnership assets, all prepared
in the manner required in a case of voluntary bankruptcy.
If one partner proceeds against his copartners, he must
use the ordinary form for a partnership petition, modified
to suit the exigencies of his case. He must also file sched-

 

‘In re Foster, 8 B. R. 236; s, c..8 Ben. 886; s.c. 1 L. T. B. 127.

* In re Williams & Co. 3 B. R. 286; s. c. Lowell, 406; s.c. 2 L.T. B. 100;
in re Joseph A. Noonan, 10 B. R. 331; s. c. 8 Biss, 491; contra, Crockett et
al. v. Jewett, 2 B. R. 208 ; sc. 2 Ben. 514; s.c.2L. T. B. 21; "Hartough v.
Hayden, 3 B. R. 422.

*In re J. R. Stowers et al. Lowell, 528.
: Sect et al. v. Jewett, 2 B.R. 208; s. c. 2 Ben. 514; 5.62 LT.

* Hartough v. Hayden, 3B, R. 422. ° Form No. 2.
68 TO HAVE A PARTNERSHIP

ules of his liabilities and assets, and schedules of the part-
nership liabilities and assets. The petition should also
aver that his copartners are unwilling to join in the pro-
ceedings, and pray that the petitioner and his copartners
may be adjudged bankrupts, and that he may have a dis-
charge from all his debts It need not allege the com.
mission of an act of bankruptcy either by the firm or by
the copartners” If it does not ask that the partnership
be declared bankrupt, his copartners can not come in
voluntarily and make themselves parties to the proceed-
ings’ All the partners must be made parties to the pro-
ceedings, either as petitioners or as parties proceeded
against; otherwise the partnership can not be adjudged
bankrupt.

The petition may be filed in the district where the
partners have resided or carried on business for the six
months next immediately preceding the time of filing, or
for the longest period during such six months (§ 5014).
Tf all the partners have resided and carried on business in
the same district during such six months, it must be filed
in the district in-which they have so resided and carried
on business. If all the partners have resided in one dis-
trict, and carried on business in another district, during
such six months, it may be filed in either district. If the
partners have carried on the partnership business in any
district during any part of such six months, it may be
filed in such district, provided the district is the one in
which they have carried on business for the longest period

during such six months, even though all the partners re-
side in other districts.

 

‘In re Foster, 3 B. R. 286; s. c. 3 Ben. 886; s.c.1 L. T. B. 127..

*In re Penn et al. 5 B. R. 30; 8. o. 5 Ben. 89; s,c.2 L. T. B. 190; in re

J, R. Stowers et al. Lowell, 528; in re Joseph A. Noonan, 10 B. R. 331; 8. ¢.
3 Biss. 491.

*In re Boylan, 1 B. R. 2;.8. c. 1 Ben. 266.
‘In re Prankard et al, 1 B.R. 297; in re Rufus E. Moore, 5 Biss, 79.
* In re Foster, 3 B. R, 286; 8. c. 3 Ben. 386; s.c.1 L. T. B. 197.
DECLARED BANKRUPT. 69

If the partners have not resided or carried on business
in the same district during such six months, they can not
unite in a voluntary petition, but must file separate peti-
tions in the several different districts in which they have
so resided.1. One partner may, however, file a petition in
the district in which he has resided, asking that he and
his copartners may be adjudged bankrupts, and if
they appear and consent to such adjudication, after being
served with the order to show cause, the court will
have jurisdiction to adjudge the firm bankrupt.’
This is the purport of the decisions, but it is question-
able whether the partnership, under such circumstances,
can be brought into bankruptcy at all. If a partner
should file a petition in his own district, the court would
have no jurisdiction over his copartners; for they, in
such case, would neither have resided nor carried on
business within such district for any part of the required
time” If, on the other hand, he should file a petition
in the district in which his copartners reside, he would
have to ask to be declared bankrupt, and the court would
have no jurisdiction over him for the same reason. The
law embraces none but subsisting partnerships, and con-
siders that such partnerships will have some district in
which they have carried on business during some part of
‘such six months. A petition by a partner against the
firm should not be referred to a register, but should be
retained in court until an adjudication is made, or the
partners come in and consent to the proceedings; for a
register can not hear a disputed application (§ 4999).

The partners who refuse to join in the petition are en-
titled to resist the prayer of the petition in the same man-

 

* In re Prankard et al. 1 B. R, 297; in re Penn et al. 5 BR. 80; 5.0.5

Ban ON. 2 2 OT MD AH
70 TO HAVE A PARTNERSHIP

ner as if the petition had been filed by a creditor of the
partnership, and notice of the filing of the petition must
be given to them in the same manner as provided by law
and by the rules in the case of a debtor petitioned against ;
and they have the right to appear at the time fixed by the
court for the hearing of the petition, and to make proof,
if they can, that the copartnership is not insolvent, or has
not committed an act of bankruptcy, and to take all other
defenses which any debtor proceeded against is entitled:
to take by the provisions of the act.’ If a partner in-
trusts his copartner with the payment of the debts, he
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.’

In case two or more petitions for adjudication of bank-
ruptcy have been filed in different districts by different
members of the same copartnership for an adjudication of
the bankruptcy of such copartnership, the court in which
the petition was first filed, having jurisdiction, takes
and retains jurisdiction over all proceedings in such bank-
ruptcy until the same are closed; and if such petitions
have been filed in the same district, action must be first
had upon the one first filed? Upon the return day, the
defendants may demand a jury trial. The rules contem-
plate that one partner may proceed against his copartners,
either on the ground of insolvency, or the commission of
an act of bankruptcy on the part of the firm. Either of
these will be sufficient to enable the petitioner to maintain
his action.* The defendants may also come in at any time
and consent to an adjudication.” If an adjudication of

 

‘Rule XVIII.
2 In re J. R. Stowers et al. Lowell, 528.
* Rule XVI.

‘In re Grady, 3 B. R. 227; in re Penn et al. 5 B. R. 80; s. c. 5 Ben. 89;
s.c.2L. T. B, 190.

° Jn re Lewis, 1 B. R. 289; s, c. 2 Ben. 96.
DECLARED BANKRUPT. val

bankruptcy is made upon the petition, the copartners
should be required to furnish to the marshal, as mes-
senger, a schedule of their debts and an inventory of their
property, in the same manner as is required by the statute
in cases of debtors against whom adjudication of bank-
ruptey is made.’

 

? Rule XVIII.
CHAPTER IV.

THE POWERS OF REGISTERS IN BANKRUPTCY, AND THE MODE
OF REVISING PROCEEDINGS BEFORE THEM.

Recisters are officers of the district court appointed
for the purpose of assisting the judge in the performance
of his duties under the statute, by attending to matters of
detail and routine, and matters that are purely adminis-
trative in their character. They are appointed by the dis-
trict judge upon the nomination of the Chief Justice of
the Supreme Court ($ 4993), and are at all times subject
to removal by the judge of the district court ($ 4997).
All vacancies should be filled, unless the district judge
deems the continuance of the particular office unnecessary
($ 4993).

No person is eligible to such appointment unless he is
a counsellor of the district court for the district for which
he is appointed, or of some one of the courts of record of
the State in which he resides. Before entering upon the
duties of his office, he must give a bond! in a sum of not
less than one thousand dollars, to be fixed by the district
judge, with sureties satisfactory to such judge, for the
faithful discharge of his duties ($ 4995), and must also
take an oath? of office. No register, or any partner or
clerk of such register, or any person having any interest. -
with him in any fees or emoluments in bankruptcy, or
with whom such register has any interest in respect to
any matter in bankruptey, can 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

 

Form No. 9. Form No. 7.
POWERS OF REGISTERS. 73

court of his district, or in an appeal therefrom. Nor can
they or either of them, be executor, administrator, guard-
jan, commissioner, appraiser, divider, or assignee of, or
upon, any estate within the jurisdiction of either of such
courts of bankruptcy; nor be interested, directly or indi-
rectly, in the fees or emoluments arising from either of
such trusts.' No register, during his continuance in office,
can be either directly or indirectly interested in or bene-
fited by the fees or emoluments arising from any suit or
matter pending in bankruptcy in either the district or cir-
cuit court in his district, except those fees which are
allowed him by law (§$ 4495). His fees must be paid by
the parties for whom the services are rendered (§ 5008).

The powers of registers are of a limited character.
As soon as a voluntary petition is filed, or there is an ad-
judication upon an involuntary petition, the case is re-
ferred to a register, and the proceedings thereafter are
mainly conducted before him.’

The time when and place where the registers shall act
upon the matters arising under the several cases referred
to them, must be fixed by special order of the district
court, or by the register acting under the authority of a
general order, in each case, made by the district court;
and at such times and places the registers may perform
the acts which they are empowered to do by the statute.’
They must indorse the time of filing upon each paper
filed with them.

In all cases pending before them, they have the power
to make adjudications of bankruptcy; to receive the sur-
render of any bankrupt; to administer oaths in all pro-
ceedings before them ; to hold and preside at meetings of
creditors; to take proof of debts; to make all computa-
tions of dividends, and all orders of distribution, and to
furnish the assignee with a certified copy of such orders,

 

* Act of 22 June, 1874, § 18. ? Rule LV.
* Rule V. ‘Rule VII.
74 POWERS OF REGISTERS

and of the schedules of creditors and assets filed in each.
case; to audit and pass accounts of assignees; to grant
protection ; to pass the last examination of any bankrupt,
in cases whenever the assignee or creditor do not op-
pose ($ 4998); to give requisite direction for notices, ad-
vertisements, and other ministerial proceedings; to order
payment of rates and taxes, and salary or wages of persons.
in the employment of the assignee; to order amendments,

or inspection, or copies, or extracts, of any proceedings ; to

take accounts of proceeds of securities held by any cred-

itor; to take evidence concerning’ expenses and charges

against the bankrupt’s estate; to conduct proceedings for

the declaration and payment of dividends, to dispatch all

administrative business of the court in matters of bank-

ruptcy, and to make all requisite uncontested orders and

directions therein which are not by the statute required

to be made, done or performed by the district court itself; *

to exercise all powers, except the power of commitment,

vested in the district court for the summoning and examina-

tion of persons or witnesses, and requiring the production

of books, papers, and documents (§ 5002); and to sit in

chambers, and dispatch there such part of the administra-

tive business of the court and such uncontested matters as

are defined in the general rules and orders, or as the dis-

trict judge may in any particular matter direct (§ 4998).

They have no 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

($ 4999).

They must also make short memoranda of their pro-
ceedings in each case in which they act, in a docket to be
kept by them for that purpose, and they must forthwith,
as the proceedings are taken, forward to the clerk of the
district court a, certified copy of such memoranda, which
must be entered by the clerk in the proper minute book

 

> Rule V.
IN BANKRUPTCY. 7D

to be kept in his office ($5000). These memoranda must
be in suitable form to be entered upon the minute book of
the court, and must be forwarded to the clerk of the court
not later than by mail the next day after the act has been
performed.’ All depositions of persons and witnesses taken
before registers, and all acts done by them, must be re-
duced to writing, and be signed by them, and must be filed
(§ 5004) in the clerk’s office as part of the proceedings.

Every register in performing the duties required of
him must use all reasonable dispatch, and can not adjourn
the business but for good cause shown. Six hours’ ses-
sion constitutes a day’s sitting, if the business requires;
and when there is time to complete the proceedings in
progress within the day, the party obtaining any adjourn-
ment or postponement thereof may be charged, if the
court or register think proper, with all the costs incurred
In consequence of the delay.* He must also keep an
accurate account of his traveling and incidental expenses,
and those of any clerk or other officer attending him in the
performance of his duties, in any case or number of cases
which may be referred to him; and must make return of
the same under oath, with proper vouchers (when vouch-
ers can be procured), on the first Tuesday in each month.*
Any register may act in the place of any other register
appointed by and for the same district court (§ 5007).
The proceedings before the registers are to be conducted
with the exercise of a proper legal discretion, and, subject
to that rule, are entirely within their control.

Tn all matters where an issue of fact or of law is raised
and contested by any party to the proceedings before
them, it is their duty to cause the question or issue to be
stated by the opposing parties in writing, and they must
adjourn the same into court for decision by the judge
(§ 5009). The issue may be one of fact or one of law, but

 

* Rule XI. * Rule VI. ® Rule XII,
‘Tn re Hyman, 2-B. R. 338; s. c. 836 How. Pr. 282; s. c. 8 Ben. 28.
76 POWERS OF REGISTERS

it must be one which has actually arisen out of proceed.
ings which have taken place, and not one likely to arise,
or which may be raised, at some future time! The ground
of the objection must also be stated, otherwise no point
or question or issue is raised.” The issue must also be
contested, and the person contesting it must be a party to
the proceedings. As soon as it is raised, it is the duty of
the register to adjourn it into court without any request
to that effect by a contesting party. Such an adjourn-
ment, however, is a proceeding that may be waived, and
when a party does waive it by submitting the issue to the
decision of the register, he can not, after finding that the
decision is against him, ask to have it then adjourned into
court. The proper mode of making up the question or
issue for the judge is, to cause the opposing parties to
state it in writing, and when so stated, to transmit it into
court, with a certifieate of the facts which show that the
issue is one that ought properly to be adjourned under
the statute. An objection to a question or answer in the
course of an examination, or to an application by a bank-
rupt for leave to amend his schedule does not raise such
an issue as can be adjourned;* but an objection to an
application for an examination of a bankrupt,? or to the
allowance or rejection of a proof of debt,’ does raise an
issue which must be adjourned.

Any party, during the proceedings before a register, is
at liberty to take the opinion of the district judge upon
any point or matter arising in the course of such proceed-
ings, or upon the result of such proceedings, which must be
stated by the register in the shape of a short certificate to

 

‘In re Pulver, 1 B. R. 46; 3. c. 1 Ben. 381.
> In re Levy et al. 1 B. R. 186; s. c. 1 Ben. 496.
‘Tn re Patterson, 1 B. R. 125; s.c.1 Ben, 448,

“In re Levy et al. 1B. R. 1386; s.c. 1 Ben. 496; in re Watts, 2B. R. 447;
s.c. 8 Ben. 166; sc. 2L. T. B. 74,

* In re Patterson, 1 B. R. 125; s. c. 1 Ben. 448.
* In re Clark & Binninger, 6 B. R. 202.
IN BANKRUPTCY. 17

the judge who will sign the same if he approves thereof ;
and such certificate, so signed, will 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 (§ 5010).

In any bankruptcy, or in any other proceedings within
the jurisdiction of the court, under the statute, the parties
concerned, or submitting to such jurisdiction, may, at any
stage of the proceedings, by consent, state any question
or questions in a special case for the opinion of the court,
and the judgment of the court will be final, unless it be
agreed and stated in such special case that either party
may appeal, if, in such case, an appeal is allowed by the
act. The parties may also, if they think fit, agree that
upon the question or 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, shall be paid, delivered, or
transferred by one of such parties to the other of them,
either with or without costs (§ 5011).

These certificates can only be taken or demanded by a
person who is a party to the proceedings. No one but a
creditor or a bankrupt can be a party. A mere witness
can not be a party.!. The person, moreover, who asks for
a certificate must have taken the proper steps to make
himself a party to the proceedings. Unless this has been
done, he is not in a proper position to participate in them.
The questions that may be certified are clearly defined and
strictly limited. They are: 1. Any point or matter aris-
ing 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 proceedings which have
taken place, or a point or matter which has arisen upon

 

‘In re Fredenberg, 1 B. R. 268; 8. c. 2 Ben. 133; in re Comstock & Co.
13 B. R. 193.
78 POWERS OF REGISTERS

and after the result of the proceedings which have taken
place, and not a point or matter likely to arise, or which
may be raised thereafter, or after a result shall have been
arrived at. 2. Any question stated by consent of the
parties concerned in a special case ; but it must be a ques-
tion to which there are two parties, and one which has
arisen out of the proceedings which have taken place.
Nothing should be certified except what is necessary to
be decided to enable the case to progress properly. Ques-
tions which thus necessarily arise should be certified only
and as and when they arise, and ought not to be anticipated.*
The same principles apply to the statement of a question
in a special case.’

The usual mode of settling and determining disputed
questions arising in proceedings before a register is by
taking such certificates. Itis short, simple and expedi-
tious. It is always adopted when there is but one party
interested in the issue, and the point certified is commonly
a question of law or of practice. Registers also adopt this
mode whenever they desire to obtain the instructions of
the court on matters in which they alone are interested.’
But when there are two adverse parties interested in the
question, and the question is an issue of law or of fact,
then the point must always be stated in writing by the
opposing parties before it is certified. All points or mat-
ters arising in the course of the proceedings may be cer-
tified at the request of any party. All issues of law or of
fact must be adjourned, but such issues must be stated in
writing by the opposing parties, where there are such,
before they can be certified ($ 5009). In one case there is
a privilege conferred; in the other case there is a duty im-
posed. An objection to a question in the course of an

 

‘In re Pulver, 1 B. R. 46; s. c. 1 Ben. 381.
? In re Haskell, 4 B. R. 558.

*In re Sherwood, 1 B. R. 844; in re Loder Brothers, 2 B. R. 517; s. o. 3
Ben. 211;s.c,1L. IT. B. 159,
IN BANKRUPTCY. 79

examination, or a question as to the right of a bankrupt
to amend his schedule, are points that may be certified.’
But questions concerning the right of a bankrupt to a
discharge,’ or the effect of a discharge upon a particular
debt, or the disposition that an assignee ought to make
of certain property prior to his application for a settle-
ment of his final account,’ or the title to property when
the point does not arise in a proceeding concerning such
property to which the assignee is a party,’ or the duty of
a secured creditor who has proved his claim as unsecured,'
when the point does not arise upon any motion or pro-
ceeding, can not be certified.

The certificate should be in the prescribed form,’ and
properly entitled in the cause, and should state the name
of the party at whose instance it is made. All the facts
bearing upon the matter should be fully set forth, so that
it will appear upon the face of the proceedings that the
certificate is one that may be properly transmitted ; and
the point to be decided should be clearly and distinctly
stated. The register also generally states his own opinion
upon the point when the certificate is one that is made to
obtain the opinion of the judge, and is not for the pur-
pose of submitting a question by consent of parties for
the opinion of the court. When completed, the certificate
is signed by the register and transmitted to court. When
the certificate is made for the purpose of obtaining the
opinion of the judge, he must sign it if he approves there-
of, and it is only the certificate so signed that is declared
to be binding on all parties to the proceedings. The statute
does not state what the judge shall do if he does not ap-
prove of the certificate.’ The practice is for him to give

 

‘In re Levy et al. 1 B. R. 136; s. c. 1 Ben. 496; in re Watts, 2B. R. 447;
8. c. 3 Ben. 166; 8.0. 2L. T. B. 74.

? Tn re Mawson, 1B. R. 265; 8. c. 2 Ben. 122.

°In re Bray, 2 B. R. 139. ‘In re Sturgeon, 1 B. R. 498.
*Inre J. W. Wright, 1 B, R. 393. ° In re Peck, 3 B. R. 757.

” Form No. 50. *In re Levy et al. 1 B. R. 186; sc. 1 Ben. 496.
80 POWERS OF REGISTERS.

his opinion upon the point, and this is accepted as decisive
by the parties. If the question is certified improperly, no
opinion will be given! The pendency of the issue unde-
cided before a judge does not necessarily suspend or delay
other proceedings before the register or court in the case.”

 

‘In re Sturgeon, 1 B. R. 498; in re J. W. Wright, 1B. R. 398.
* Rule XI.
CHAPTER V.

PROOF OF DEBTS.

SrncE proceedinesin bankruptcy are the creatures of
statutory law, no debt can be proved against the bank-
rupt’s estate, unless it is included among those which the
statute makes provable ($ 5072). Ifitisincluded among
those, it may be proved, and always must be proved, if
the creditor wishes to become a party to the proceedings
in bankruptcy. No matter what may be its form, whether
it consists of a note, contract, account, bond, or judgment ;
no matter whether secured or unsecured ; it must be estab-
lished by the oath of the creditor in the manner pointed
out by the statute. The mere statement upon the schedule
is not proof, nor sufficient to entitle a party to participate
in the proceedings. It may be stated in fraud, or may not
exist. There may be payments or counter-claims, or off:
sets.’ Other creditors and the assignee have a right to
demand that all the statements required by the statute
shall be fully set forth as an evidence of the validity of
the claim and the good faith of the claimant. The pur-
pose of requiring proof is not merely to give the claimant
a standing in court, but to protect the estate against fraud.
A creditor need not wait until the first meeting of credit.
ors to prove his debt, but may prove it at any time after
the proceedings are commenced.”

It may be stated, generally, that all debts owed by the
bankrupt at the time of the filing of the petition, whether
payable then or at some future day, and all demands
against him for any goods or chattels wrongfully taken,

 

* Davis, Assig. of Bittel et al. 2 B. R. 392.
*In re Patterson, 1 B. R. 125; s. c. 1 Ben. 448.

6
$2 PROOF OF DEBTS.

converted, or withheld by him, are provable (§ 5067).
The debt, however, must have existed at the time of the
commencement of proceedings in bankruptcy, or it can not
be proved. Tf it existed before that time, and bore inter-
est, the principal and the interest thereon up to that time
may be proved. [f it did not bear interest, and was not
payable until after that time, then there must be a rebate
from its amount of the interest thereon for the interval be-
tween such commencement of proceedings in bankruptcy
and the time when. it would be payable.t Interest may
also be allowed on a demand for any goods or chattels
wrongfully taken, converted, or withheld by the bankrupt
($ 5067). 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 filing of the petition ($ 5071).

If a judgment was recovered before the commencement
of the proceedings in bankruptcy, the costs constitute a
part of the debt and may be proved.? When a debt, ex-
isting before the commencement of the proceedings, has
been merged in a judgment rendered since such time, it
may be proved; but it is not settled whether the debt or
the judgment must be proved.’ The costs that have been
incurred since the filing of the petition can not be in-
cluded in the proofs Costs incurred in an attachment suit
which was dissolved by the commencement of the pro-
ceedings in bankruptey can not be allowed.’ No cost in-

‘In re Orne, 1 B. R. 57; s.c. 1 Ben. 361.

* Ex parte O'Neil, 1 B. R. 677; s. c. Lowell, 163; Graham v. Pierson, 6
Hill, 247.

3 In re 8. Brown, 3 B. R. 584; 8. c. 5 Ben. 1; in re Vickery, 3 B. R. 696;
in re Crawford, 3B. R. 698; 8s.c.1L.T. B. 11; s.¢c.3L. T. B. 169; in re
Stevens, 4 B. R. 367; s.c. 4 Ben. 513; s.c.2L. T. B. 121; in re Gallison
et al. 5 B. R. 858; s.c.2 L. T. B. 195; Bradford vy. Rice, 102 Mass. 472; B.
Monroe vy. Upton, 50 N. Y. 593; 8. c. 6 Lans, 255; in re Louis H. Rosey, 8.
R. 509; 8s. c. 6 Ben. 507.

“In re Crawford, 3 B. R. 698; s.c.1L. T. B. 211;.8.0. 3 L. T. B. 169;
Sanford v. Sanford, 12 B. R. 565; s.c. 58 N. Y. 67.

* In re Fortune, 2 B. R. 662; s. c. Lowell, 306; in re C. H. Preston, 6 B.
R, 545; Gardner v. Cook, 7 B. R. 346.
PROOF OF DEBTS. 83

curred after the filing of the petition, or in seizing prop-
erty which was not liable to attachment can be proved.?

If the bankrupt, at the time of his adjudication, was
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 asa sole trader, and also as a member of a firm, the
circumstance that such firms are, in whole or in part, com-
posed of the same individuals, or that the sole contractor
is also one of the joint contractors, does not prevent proof
and receipt of dividend in respect to such distinct con-
tracts against the estates respectively liable upon such
contracts (§ 5074). Considered separately, the first part
of this provision would afford strong ‘support to the prop-
osition that the term sole trader is used in a technical
sense, but the whole clause must be construed together,
and the last part provides thatt he circumstance that such
firms are iu whole or in part composed of the same in-
dividuals, or that the sole contractor is also one of the
joint contractors, shall not prevent such proof, 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.?

The proof should, if possible, be made by the claimant
testifying of his own knowledge. If the claim has been
assigned in good faith, and for a valuable consideration, the
assignee may prove it, whether the assignment was made
before or after the commencement of proceedings in bank-
ruptcy, and the proof, when the assigament was made be-
fore the commencement of the proceedings, need not be
accompanied by an affidavit of the assignor.’ The indorsee

 

‘In re C. H. Preston, 5 B. R. 298.
* Emery v. Canal Nat’l Bank, 7 B. R. 217; 8. c. 5 L. T. B. 419.

°In re Murdock, 3 B. R. 146; 8. c. Lowell, 362; s. c. 2 L. T. B. 97; in re
Fortune, 3 B. R. 312; s. c. Lowell, 384; in re Frank, 5 B.R. 194; 8. c. 5
Ben. 164; 8. c. 2 L. T. B. 188; in re Strachan, 8 Biss. 181.
84 PROOF OF DEBTS.

of a negotiable note may prove it, although the indorse-
ment was made after the bankruptcy of the maker." The
true mode of proving an assigned claim is for the holder
himself to make the affidavit.2. Administrators, executors,
receivers, and other persons who are assignees by mere
operation of law, may prove in the same manner as the
parties whom they represent could have done. If the
assignment occurred after the commencement of proceed-
ings in bankruptcy, the usual forms should be changed to
suit the circumstances of the case The claim in such
case must also be supported by a deposition of the owner
at the time of the commencement of proceedings, setting
forth the true consideration of the debt, and that it is
entirely unsecured, or if secured, stating the security, as is
required in proving secured claims.? The proof for a cor-
poration may be made by its president, cashier, or treas-
urer (§ 5078). If its officers are not known by these
names, the deposition may be made by the officer whose
duties most nearly correspond to those of cashier or treas-
urer.© In cases where the claimant is absent from the
United States, or is prevented by some other good cause
from testifying, the proof may be made by his attorney or
duly authorized agent, testifying to the best of his knowl.
edge, information, and belief, and setting forth his means
of knowledge (§ 5078). Proof can only be made by an
agent in two cases; first, when the claimant is absent;
second, when he is prevented by some good cause from
testifying. In all other cases, the proof must be made by
the claimant himself. 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

 

? Humphries v. Blight, 4 Dall. 370; s. c. 1 Wash. 44.

2 In re Pease ct al. 6 B. R. 173.

“Tn re Republic Ins. Co. 8 B. R. 197; s c. 8 Biss. 504.

“Tn re Murdock, 3 B. R. 146; s. c. Lowell, 862; s.c. 2.1L. T. B. 97.
* Rule XXCXIY. ° Rule XXXIV.
PROOF OF DEBTS. 85

person having knowledge, and the creditor himself is pre-
sumed to have it; and unless he is absent or in some way
prevented from testifying, no one can do so for him." The
reason why the deposition is not made by the claimant in
person must be stated.’ Sickness is a sufficient excuse,”
but not mere absence from the State.* Where the claim is
held by a firm, an agent can not make the proof, although
one partner is sick and the other is out of the State.” If
an agent has personal knowledge of all the facts necessary
to make the proof, and the creditor has no knowledge of
the matter at all, the former may prove the debt.6 One
partner may make the proof on behalf of his firm,’ but it
must appear in the deposition on oath that the deponent
is a member of the firm. The court may in all cases, if it
shall see fit, require or receive further pertinent evidence,
either for or against the admission of a claim (§ 5078).

When partners are adjudged bankrupt, the result is or
may be that several distinct estates are to be administered
in that proceeding. Thus there may be 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.’

The statute contains conflicting provisions in regard to
the power of registers to take proofs. Among the general
powers granted to them, is the power to take proof of
debts (§ 4998). The statute then provides, that creditors

 

‘In re H. F. Barnes, Lowell, 560; McKinsey v. Harding, 4 B. R. 39; in
re William Whyte, 9 B. R. 267; in re W. A. Saunders, 13 B. R. 164.

* Rule XXXIV. ‘In re William Whyte, 9 B. R. 267.

“In re George Jackson et al. 14 B. R. 449.

"In re William Whyte, 9 B. R. 267.

“Tn re Martin Watrous et al. 14 B. R. 258.

7 In re Barrett, 2 B. R. 533; 8. c.1L. T. B. 144.

* Rule XXXIV. °In re Walton et al. 1 Deady, 510.
86 PROOF OF DEBTS.

residing within the judicial district where the proceedings
in bankruptcy are pending, shall prove their debts before
one of the registers of the court, or before a commissioner
of the circuit court within said district, and that cred.
itors residing without the district, but within the United
States, may prove their debts before a register in bank-
ruptcy, or a commissioner of a circuit court in the judicial
district where such creditor or either one of joint creditors
resides ($ 5076). It also further provides, that the oath
toa proof of debt may be taken in any district, before
any register, or before any commissioner of the circuit
court, authorized to administer oaths ($ 5079). As this
provision is the last expression of the legislative intent,
it will probably be deemed to be paramount, and to over-
rule the others so far as it conflicts with them. A notary
public may also take proof of debts,’ but a justice of the
peace can not.? If the creditor is in a foreign country, the
proof may be taken before any minister, consul or vice-
consul of the United States ($ 5079). Proofs taken be-
fore a notary, must be certified by him, and attested by
his signature and official seal? The requisites of a notarial
seal are determined by the law of the locality from which
he derives his authority. In the absence of legislation an
official seal need not contain the name of the official whose
seal it. purports to be. An impression on the paper
directly, or on wax or wafer attached thereto, made by
the official as and for his seal, is entitled to judicial sane
tion as evidence of the official character of the individual
who signs the jurat, and the presumption is that the seal
is his official seal. Proofs taken before a commissioner are
subject to revision by the register of the court ($ 5076).
In no case can the proof be taken by the creditor before
an officer who acts as his attorney in the matter.

 

1 Act of 22 June, 1874, § 20. > In re Strauss, 2 B. R. 48.
® Act of 22 June, 1874, § 20.

‘In re Wm. W. Philips, 14 B. R. 219; vide in re Henry Nebe, 11 B. R.

289. * In re Henry Nebe, 11 B. R. 289.
PROOF OF DEBTS. 87

To entitle a claimant against the estate of a bankrupt
to have his demand allowed, it must be verified by a
deposition in writing, on oath or solemn affirmation, before
the proper register or commissioner or other officer, setting
forth the demand; the consideration thereof; whether any
and what securities are held therefor; and whether any and
what payments 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 satisfaction whatever,
other than that by him set forth; that the claim was not
procured for the purpose of influencing the proceedings in
bankruptcy; 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, against such bankrupt, or take or
receive, directly or indirectly, any money, property or con-
sideration whatever, whereby the vote of such creditor, or
any other person in the proceedings, is or shall be in any
way affected, influenced, or controlled. And no claim can
be allowed unless all the statements set forth in such
deposition appear to be true (§ 5077).1

The deposition must be in accordance with the pre-
scribed form as adapted to the character of the claimant.’
The proof is neither a deposition nor an affidavit, as
known in the ordinary practice of the law. It is the re-
sult of an examination made by a duly authorized officer.
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 as-
certain the real nature of his claim, and that no fraud or
combination, either for or against the bankrupt, exists.*
The proof should be made without protest, qualification

 

‘Tn re Strauss, 2 B. R. 48. 2 Forms Nos. 21, 22, 28, 24 and 25.
?
*TIn re Strauss, 2 B. R. 48.
88 PROOF OF DEBTS.

or reservation.) It should set’ forth the name and residence
of the affiant, and the place at which it is taken. It must
also give at least one full Christian name of the creditor
as well as his surname At the time of making the proof
the creditor should produce the proper evidence of his
debt, or a copy thereof, whether the same consists of a
note, agreement, bord, or account.’ If it is an account, ,
an itemized bill should be produced. If a note is merged
in a judgment it need not be produced.* These evidences
of debt are commonly marked as exhibits, identified by
the signature of the officer taking the proof, and affixed
to the deposition. The deposition to prove a debt exist-
ing in open account must also state when the debt became
or will become due, and if it consists of items maturing
at different dates, the average due date must be stated, in
default of which it is not necessary to compute interest
upon it. All such depositions must contain an averment
that no note has been received for such account, nor any
judgment rendered thereon.’ If the claim has heen as-
signed, the proof should set forth the date and facts of
the transfer, and the name of the original creditor.’ The
defense of the statute of limitations need not be antici-
pated, for the defense must be set up affirmatively by the
party relying on it." The claimant can not determine the
amount of interest for himself, but must furnish the data,
so that the computation may be made by the register.

The consideration of the demand must be set forth
($ 5077), but what statement of the consideration is suf:
ficient to meet the requirements of the law can hardly be

 

? Dutton v. Freeman, 5 Law Rep. 447.

2In re William H. Valentine, 12 B. R. 389; s. c. 4 Biss 317.

‘Tn re Northern Iron Company, 14 B. R. 356,

4 Tn re Knoepfel, 1 B. R. 70; s. c. 1 Ben. 398.

* Rule XXXIV.

° Tn re Fortune, 3 B. R. 312; 8. c. Lowell, 884; s.c. 21. T. B. 99.
"In re Knoepfel, 1 B. R. 70; s. c. 1 Ben. 398.

*In re Port Huron Dry Dock Co. 14 B. R. 253.
PROOF OF DEBTS. 89

considered a settled question yet. There is a considera-
tion in law, and a consideration in fact. Thus, a judg-
ment duly rendered in a State court can not be impeached
collaterally, nor can the consideration upon which it is
founded be inquired into in the absence of fraud.t An
instrument under seal always always imports a considera.
tion, and a promissory note is always prima facie evi-
dence of a consideration. How far the statute intended
to set aside and reject these general principles of law is a
question of no little importance. It is true that it purges
the conscience of the claimant, and requires full disclos-
ures; but, in regard to the consideration, it simply says
that it shall be set forth, without declaring what state-
ment shall be deemed a compliance with the statute. The
whole question turns upon the meaning and definition of
the term consideration, as used in the statute. It has,
however, been held that a proof of a note which did not
state the consideration was defective,? and that a state-
ment that the consideration was goods sold and delivered,
without setting forth date, items, and kind of goods, was
insufficient.? The proof of a claim for contribution by a
partner must set forth the amount paid by him for the
debt on account of which the claim is made.* The as-
signee of a chose in action must state the consideration
that passed between the original parties.° But the holder
of a promissory note who took it for value in good faith
before the maturity thereof, need only state the considera-
tion which he gave for it.®

In all cases of mutual debts or mutual credits be-

 

7 McKinsey et al. v. Harding, 4 B. R. 39; ex parte O’Neil, 1 B. R. 677;
8. c. Lowell, 168; Shaffer v. Fritchery & Thomas, 4 B. R. 548.

* Tn re Loder, 3 B. R. 655; s.c. 4 Ben. 125; in re Jaycox & Green, 7 B.
R. 303; in re Lake Superior 8. C. R. R. GI. Co. 7 B. R. 376.

* In re Elder, 3 B. R. 670; 8. c. 1 Saw. 78; in re Port Huron Dry Dock
Co. 14 B. R. 258; in re Northern Iron Co, 14 B. R. 356. :

“In re E. R. Stephens, 6 B. R. 533; 8. c. 3 Biss, 387.
° In re Lake Superior 8. C. R. R. & I. Co. 10 B. R. 76.
* In re Lake Superior 8. C. R. R. & I. Co. 10 B. R. 76.
90 PROOF OF DEBTS.

tween the parties, the account between them must be
stated, and one debt set off against the other, and the
balance only can be allowed or paid; but no set-off can
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 (§ 5073); or in cases of compulsory bank-
ruptey, after the act of bankruptcy upon or in respect of
which the adjudication shall be made, and with a view of
making such'set-off1 The term mutual credits is more
comprehensive 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; but if one party intrusts another with goods
or value, it will be a case of mutual credit. Therefore, a
creditor who at the time of the bankruptcy had in his
hands goods or chattels 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? An acceptor of a bill of exchange
who has received goods from the drawer after the accept-
ance, and converted them into money before his bank-
ruptcy, is entitled to set off the amount so received against
the bill of exchange, although it did not become due until
after the bankruptcy. The term “credits,” however, are
only such as must, in their very nature, terminate in cross-
debts; as, where a debt'is due from one party, and credit
given by him to the other, for a sim of money payable at
a future day, and which will then become a debt; or
when there is a debt on one side, and a delivery of prop-
erty, with directions to turn it into money, on the other.
But where there is a mere deposit of property, without
authority to turn it into money, no debt can ever arise

 

1 Act of 22 June, 1874, § 6.

2 In re Dow et al. 14 B. R. 807; in re Farnsworth, Brown & Co. 14 B. R.
148; 8. c. 5 Biss. 224.
PROOF OF DEBTS. 9L

out of it, and, therefore, it is not a credit within the
meaning of the statute.' The debt must be mutual and
existing in the same right. Thus a claim by a firm
against the bankrupt can not be set off against a demand
of the bankrupt upon one of the partners.? A joint ob-
ligation of all the partners can not be set off against a
demand of the firm against the creditor. A debt which
is not yet due may be set off against one which is already
due* A mere claim for unliquidated damages can not be
set off against the demand of a creditor until it has been
put into the shape of a debt. A loss upon a policy of
insurance may be set off against an indebtedness for
money borrowed from the insurance company,’ or for
money deposited with the holder as a banker." A party
has the right to have his credit for a deposit in a bank-
tupt bank set off against his indebtedness as indorser
upon a note held by the bank and duly protested.® A
stockholder in an insurance company can not set off a
claim upon a policy held by him against his liability for
a subscription to its stock.? Nor can the treasurer of the
company set off a claim upon a policy held by him
against his liability for the funds in his hands.” A prov-
able debt, transferred before the filing of the petition in
a voluntary case, or before notice of the act of bank-

 

‘ Catlin v. Foster, 3 B. R. 540; 8s. c. 1 Saw. 87; 8. o1L 7B. 192; ex
parte Caylus et al. Lowell, 550; Murray v. Riggs, 15 Johns. 571.

* Hitchcock v. Rollo, 4 B. R. 690; 8. c. 8 Biss. 276; Gray v. Rollo, 9 B.
R, 837; s.c. 18 Wall. 629.

* Forsyth v. Woods, 5 B. R. 78; s. co. 11 Wall. 484.

ae In re City Bank, 6 B. R. 71; Drake v. Rollo, 4 B. R. 689; s. c. 3 Biss.

*In re Orne, 1 B. R. 57; s. c. 1 Ben. 361.
* Drake v. Rollo, 4 B. R. 689; 8. c. 3 Biss. 273.

7 Scammon vy. Kimball, 13 B. R. 445; s.c. 8 B. R. 337; s. 0. 5 Biss, 431;
8. c. 6 L. T. B. 424,

* Winslow v. Bliss, 3 Lans. 220; Marks v. Barker, 1 Wash. 178.

° Sawyer v. Hoag, 9 B. R. 145; 8c. 8 Biss. 293; 3. c. 17 Wall. 610;
Scammon y, Kimball, 8 B. R. 837; s.c. 18 BR. 445; s.c. 5 Biss. 431;
Jenkins v. Armour, 14 B. R. 276.

*° Scamon v. Kimmball, 8 B. R. 337; s. c. 1 B. R. 445; s. c. 5 Biss. 431.
92 PROOF OF DEBTS.

ruptcy in respect to which the adjudication was made in
an involuntary case, may be set off, although the object
and effect of the transfer is to defeat the operation of the
statute by enabling a creditor to obtain full satisfaction
of his demand by selling his claim to a debtor of the
bankrupt, to be used as a set-off.’ If the transfer is
merely nominal, the holder is deemed to be a trustee for
the owner, and can not set the claim off against a debt
due by him” If the assignment of a chose in action,
which is not negotiable, does not enable the holder to sue
thereon in his own name, it is not a mutual debt or credit
in his hands, so as to be a matter of set-off’

If the bankrupt is liable for unliquidated damages
arising out of any contract or promise, or on account of
any goods or chattels wrongfully taken, converted or with-
held, the court may cause such damage to be assessed in
such mode as it may deem best, and the sum so assessed
may be proved against the estate ($ 5067). But the
claim can not be proved until the damages are assessed,
and it is incumbent upon the creditor to make a special
application for such assessment.*

If the bankrupt is bound as a drawer, indorser, surety,
bail, or guarantor upon any bill, bond, note, or any other
specialty or contract, or for any debt of another person,
and his liability has not become absolute until after the
adjudication of bankruptcy, the creditor may prove the
same after such liability has become fixed, and before the
final dividend has been declared (§ 5069).

In all cases of contingent debts and contingent liabili-
ties contracted by the bankrupt, and not otherwise pro-

 

‘In re Oity Bank, 6 B. R. 71; Hovey v. Home Ins, Co. 10 B. R. 224;

s.c. 138 A. L. Reg. 511; contra, Hitchcock v. Rollo, 4 B. R. 690; 8. c. 3
Biss. 276.

* In re Lane, Brett & Co. 18 B. R. 43.
* Rollins v. Twitchell, 14 B. R. 201,

“Tn re Clough, 2 B. R. 151; s. c. 2 Ben. 508; in re W. Fleming Smith, 6
Ben. 187.
PROOF OF DEBTS. 93

vided 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 as-
certained and liquidated, which must then be done in such
manner as the court shall order, and he will be allowed to
prove for the amount so ascertained ($ 5068). Any per-
son liable as bail, surety, guarantor, or otherwise, for the
bankrupt, who has paid the debt or any part thereof in
discharge of the whole, is entitled to prove such debt, or
to stand in the place of the creditor if he has proved the
same, although such payments were made after the pro-
ceedings in bankruptcy were commenced. And any per-
son 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 cred-
itor or otherwise as may be provided by the rules, and
subject to such regulations and limitations as may be es-
tablished by such rules ($ 5070). The claims of persons
contingently liable for the bankrupt may be proved in the
name of the creditor when known by the party contin-
gently liable. When the name of the creditor is unknown,
such claims may be proved in the name of the party con-
tingently liable, but no dividend can be paid upon such
claim except upon satisfactory proof that it will diminish
pro tanto the original debt.

When a claim is presented for proof before the election
of an 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
investigated by the assignee, he may postpone the proof
of the claim until the assignee is chosen (§ 5083). The

 

Rule XXX1Y.
94 PROOF OF DEBTS.

register has full power to administer oaths in all proceed-
ings before him (§$ 4998), and should not allow any claim
unless it is satisfactory. He may, therefore, take testi-
mony in regard to any claim that is tendered for proof,
and should investigate it if it is disputed. He ought not
to allow it simply because the creditor swears to it. Any
creditor may serve a notice upon him protesting against
the proof of any claims by certain persons, and requesting
to be notified if such persons should tender their claims
for proof? The bankrupt may also object to the proof of
a claim, and may offer to be sworn in regard to it. In
order to justify the postponement of the proof of a claim,
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. It is suffi-
cient if he has a reasonable substantial doubt upon the
question, but this doubt must result from a judicial con-
sideration of it. He therefore can not postpone a claim
upon a mere objection, but must give the creditor an
opportunity to explain any suspicion that may be excited.
A reasonable doubt arises within the meaning of the
statute when the claim is not susceptible of a ready and
simple explanation.? Claims of a questionable character
and in dispute ;* the claim of a creditor who has accepted
a preference which he does not offer to surrender;? a
claim which is not stated in items’ and does not appear
upon the bankrupt’s schedules;* the claim of a stock:

 

‘In re Orne, 1 B. R. 57; s. c. 1 Ben. 861; in re Lake Superior 8. C. R. RB.
& I. Co. 7B. R: 376; in re Herman et al. 3 B. R. 618; s. c. 4 Ben. 126: in re
Noble, 3 B. R. 96; 8. c. 8 Ben. 832; ia re Bartusch, 9'B. R. 478, ;

*Inre J. O. Smith, 1 B. R. 243; 5. c. 2 Ben. 113.
>In re Orne, 1 B. R. 57; s.c. 1 Ben. 361.
7 ae peer Jackson, 14 B, R. 449; in re Northern Iron Company, 14
°In re Northern Iron Company, 14 B. R. 356.
° In re Jones, 2 B. R. 59.
*In re Herman et al. 3 B. R. 618; s. c. 4 Ben, 126; in re Stevens, 4 B. R.
367; 8.c. 4 Ben. 613; 8.c, 2L. T. B, 121; in re Walton et al. 1 Deady, 442.
® In re Elijah Milwain, 12 B. R. 358.
PROOF OF DEBTS. 95

holdet when the corporation is bankrupt, if it is sus-
picious;* and of a creditor who has accepted a conveyance
contrary to the bankrupt law, which he does not abandon,’
should be postponed. But the claim of a creditor who
has merely declared verbally that he was satisfied with a
conveyance made for the benefit of himself and others,
without any knowledge, at the time of such declaration,
of any facts that made the conveyance a fraud upon
the statute, may be allowed to be proved A claim
which has been postponed may be proved after the elec-
tion of an assignee, in the same manner as if it had not
been previously tendered for proof The power to post-
pone a claim must always be exercised in subordination
to the provision of the statute which requires that any
issue of law or fact raised and contested by a party to the
proceedings before him, shall be adjourned into court for
decision.» When a creditor objects to the postponement
of a claim, he should have the objection entered and the
question certified before any further action transpires be-
fore the register.°

There are two clauses in regard to the proof of the
claims of parties who have received a preference contrary
to the provisions of the statute. The first is, that any
person who has accepted any preference, having reasonable
cause to believe that the same was made or given by the
debtor contrary to any provision of the statute, can not
prove the debt or claim on account of which the
preference was made or given, nor can he receive any
dividend therefrom until he has first surrendered to the

 

‘In re Lake Superior 8. C. R.R. & I. Co.7 B. R. 376; in re Northern
Tron Co. 14 B. R. 356.

? In re Chamberlain et al. 3 B. R. 710.
* In re Chamberlain et al. 3 B. R. 710.
‘In re Herman et al. 3 B. R. 649.

* In re Jackson et al. 14 B. R. 449; in re Bogert et al. 2 B. R. 435; 8. ©.
88 How. Pr. 111; in re Clark & Binninger, 6 B. R. 202.

‘In re Geonee Jackson, 14 B. R, 449.
96 PROOF OF DEBTS.

assignee all property, money, benefit, or advantage re-
ceived by him under such preference (§ 5084). The
second is, that when any person receiving a payment or
conveyance has reasonable cause to believe that the
debtor is insolvent, and knows that a fraud on the statute
is intended, he shall not, if a creditor, 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 involun-
tary bankruptcy.’ As this last act repeals all acts incon-
sistent therewith, this second clause will prevail over the
first, so far as there is any conflict between them. Both
clauses relate to a penalty for a particular act, and the
character of the penalty and the circumstances under
which it may be imposed, must be determined by the last
clause. By that, the penalty is limited to cases of actual
fraud, but as the law now requires that a creditor shall
know that a payment or conveyance is intended as a
fraud on the statute in order to render it void, every
preference which is liable to be set aside will be a case
of actual fraud. The act may therefore be construed to
mean that a creditor who has received a payment or con-
veyance, having reasonable cause to believe that the debtor
was insolvent, and knowing that a fraud on the statute
was intended, shall not be allowed to prove for more than
a moiety of his debt unless he surrenders such payment or
conveyance.” He can not prove for even a moiety of: his
debt so long as he retains his preference ;* but the intent
of the statute seems to be that he may surrender and prove

 

Act of 22 June, 1874, § 12.

* In re Princeton, 1 B. R. 618; s. c, 2 Biss. 116; s.c.1 L. T. B. 125; in
re Colman, 2 B. R. 563; in re Walton et al 4 Be R. ed s. c. 1 Deady, 598;
s.¢.1L. T. B. 162; Richter’s Estate, 4 B, R. 221; 1 Dillon, 544; in re
Scott & McCarty, 4 B. R. 414; in re Kipp, 4 B. R. 503; sc. 1L.T.B. 246;
s.c. 4 L. T. B. 60; in re Hunt & Hornell, 5 B. R. 433; Hood v. Karper, 5
B. R. 858; s. ¢. 8 Phila. 160; s. o. 2 L. T. B. 201; in re "Reece & Brother, 2
Bond, 359; inre E.R. Bieptens 6 B. R. 583; s. c. 8 Biss. 387; in re Walton
et al. 1 Deady, 442; in re John T. Drummond, 4 Biss. 149.

*In re Cramer, 13 B. R. 225.
PROOF OF DEBTS. 97

for the whole of his debt,’ or await the result of litigation
and prove for a moiety after a recovery against him.
It also appears to be the intent of the statute that a pre-
ferred creditor in all other cases than those of actual fraud
may prove his debt even after a recovery. It has, how-
ever, been held that a mere preference is not an actual
fraud?

The next question is, when is a preference contrary to
the provisions of the statute? There must be a preference
in fact, an advantage over other creditors. When there is
a preference, the conditions requisite on the part of the
creditor are, that he shall have reasonable cause to believe
that the debtor is insolvent, and know that the payment
or transfer is made in fraud of the provisions of the stat-
ute. The requirement in regard to the insolvency of the
debtor is not knowledge, but a reasonable cause. A
reasonable cause is such a cause as would, under all the
circumstances of the case, lead a man of ordinary intelli-
gence to the required belief.® Insolvency, in its general
and popular sense, denotes the insufficiency of the entire
property and assets of an individual to pay his debts, but
as applied to traders and merchants it means an inability
to pay debts, as they mature in the ordinary course of
business, in that which is a legal tender according to law;
and a fraud on the statute means a conveyance or payment,
contrary to its provisions.* Of course, every man must be
presumed to intend the necessary consequences of his own
acts, and when there has been a preference in fact given
by a debtor, at a time when he was actually insolvent,
and did not honestly believe that he could continue in ~
business, the law conclusively presumes that a preference
was intended. Unless all of these requirements of the stat-
ute concur, the preference is valid. If, however, they all con-

 

‘In re John Riorden, 14 B. R. 332.
? In re John Riorden, 14 B. R. 332. ® Scammon y. Cole, 5 B. R. 257.
* Toof v. Martin, 6 B. R. 49; s. c. 13 Wall. 40.

q
98 PROOF OF DEBTS.

cur, there is still another requirement; it must be made
within the prescribed time. Independently of the statute
the payment of an honest debt is valid; it is invalid only
when it comes within all the requirements of the statute. In
many cases, it has simply been assumed, without comment
or discussion, that four months was the limit in a case of
voluntary bankruptcy, and six months was the limit in a
case of involuntary bankruptcy, thus making a distinction
between the two cases. The limitation of six months,
however, contained in the twelfth section of the act of
June 22, 1874, applies only to the period within which
petitions may be filed to have the debtor declared bank-
rupt, and is almost in express terms limited to that sub-
ject alone.’ There is a provision that such property or
money, so conveyed or transferred contrary to the act,
may be recovered; but the mode and manner of recovery
are provided for in the section 5128. In the latter section,
the whole subject of such recoveries is elaborately pro-
vided for, and its terms are applicable equally to all cases
in bankruptcy, whether voluntary or involuntary. It is
not limited or restricted, either expressly or impliedly, to
cases of voluntary bankruptcy. As these sections, in re-
lation to the subject of such recoveries, are in part ma-
teria, they should be construed together, and all the con-
ditions, prohibitions, and limitations contained in one may
be applied to the other, when not inconsistent with its
provisions.” Even though the limitation of six months,
contained in the latter section, were less clearly limited to
the period within which petitions might be filed against a
debtor, yet the two sections taken together would show
that it had no application to a recovery of the property
or money. A mere preference, therefore, which has stood

 

‘In re Tonkin & Trewartha, 4 B. R.52;s.c.1L. T. B. 282; s. 0.38 L.
T. B, 221; Collins v. Gray, 4 B. R. 681; s. c. 8 Blatch. 483,

2 - re Tonkin & Trewartha, 4B. R. 52; s.c.1L. TB. 232; s.¢. 3 L. T.
B, 221.
PROOF OF DEBTS. 99

for four months in cases of voluntary bankruptcy, or two
months in cases of involuntary bankruptcy, will be valid
as against all the world.’

If the preference has stood for four months or two
months, as the case may be, the creditor may prove his
debt without making a surrender of his preference in a
case either of voluntary or of involuntary bankruptcy.
If it has not stood for the required time, and falls within
the requirements of the statute, then he can not in case of
actual fraud prove for more than a moiety of the claim
without surrendering it. But the term surrender implies
some voluntary act on the part of the creditor; and when
the return of the money or property is compulsory, it is
not a surrender. Consequently, there can be no surrender
after a recovery in an action brought by the assignee.
There may be a surrender at any time before judgment.’
If the case is tried before the court without the aid of a
jury, the creditor may surrender after the announcement
of the opinion of the court, and before the entry of the
judgment, where there is nothing more than a constructive
fraud After judgment is rendered, there can be no sur-
render. A compliance with the judgment is simply made
by force of the recovery.* A creditor who is merely ap-
pointed trustee by a voluntary assignment of the debtor’s
property, is not debarred from proving his claim.2 The
creditor may make the surrender at the first meeting of
creditors and prove his claim so as to participate in the

 

* Potter et al. v. Coggeshall, 4 B. R. 73; in re Butler, 4 B. R. 303; 8. ¢.
Lowell, 506; Hubbard v. Allaire Works, 4 B. R. 623; s. c. 7 Blatch. 284;
Maurer vy. Frantz, 4 B.R. 431; 8. c. 8 Phila. 505; in re Dow, 6 B. R. 10;
Collins v. Gray, 4 B. R. 631; s. c. 8 Blatch, 483.

*In re Kipp, 4 B. R. 598; s.c.1L. T. B. 246; s.c.4 L. T. B. 60; Hood
v. Karper, 5 B. R. 358; 3, c. 8 Phila. 160; 5c. 2L. T. B. 201; inreH. R.
Stephens, 6 B. R. 538; s. c. 3 Biss. 387; in re John Riorden, 14 B, R. 332.

* Burr v. Hopkins, 12 B. R. 211.

“In re Tonkin & Trewartha, 4 B. R. 52;.s.c.1 L. T. B. 232; 3.0. 3 L. T.
B. 221; in re Cramer, 13 B. R. 225; in re John F. Lee, 14 B. R. 89.

*In re Joseph Horton, 5 Ben. 562.
100 PROOF OF DEBTS.

election of an assignee! The debt which can not be
proved is only the debt on account of which the prefer-
ence was received. If a creditor has separate and discon-
nected debts, as to which he has received separate and dis-
tinct preferences, he may surrender as to some, and prove
and receive dividends as to them, without surrendering as
to the others? But a creditor can not accept a preference
generally, and then some time after it is taken, make an
application of it to a portion only of his debt* A con-
tinuous running account is presumptively but one debt or
claim?

A creditor who has a valid security holds- a peculiar
relation to the estate in bankruptcy. He is a creditor,
and, moreover, has a valid claim upon property in which
other creditors have, or may have, an interest. Hence it
is not in all cases optional with him whether or not he
will prove his claim. The assignee may sell the prop-
erty subject to his lien. In that case he may prove
his claim or not, as he chooses. The assignee, on the
other hand, may deem it best to sell the property free
from incumbrances. In that case the creditor must prove
his debt before he can draw his share of the fund from
court. He may also relinquish his security, and prove his
whole claim. In such case, he must accompany his proof
with a release or conveyance of the security to the assignee ;
and any attempt to prove without doing this should be
disregarded." It has been said that a secured creditor
can not prove his claim before an assignee is elected, un-
less he abandons his security. If by this it is meant

 

‘In re W. A. Saunders, 13 B. R. 164.

7 In re Arnold, 2 B. R. 160; in re John F. Lee, 14 B. R. 89.
*In re D. G. Holland, 8 B. R. 190.

‘In re Kingsbury et al. 3 B. R. 318.

* Tn re Richter’s Estate, 4 B. R. 221; s. c. 1 Dillon, 544.

° Markson v. Heaney, 4 B. R. 510; 8. c. 1 Dillon, 497.

7 In re Brand, 3 B. R. 324; s.c. 2L. T. B. 66.

*In re High et al. 3 B. R. 192; sc. 1 L. T. B. 175.
PROOF OF DEBTS. 101

that he can not make a deposition to his claim, it is not
in accordance with the general practice, nor with what
appear to be the views of the justices of the Supreme
Court; for the prescribed form' requires a statement of
the property held as security, and the estimated value
thereof. Such, also, is the requirement of the statute
(3 5077). There is a distinction between making the
proof and being admitted as a creditor. 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 general 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 for a time to have the value of his security deter-
mined 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.” The proving of his debt is a necessary pre-
liminary step to his eventually being admitted as a cred-
itor.’ Such proof is commonly regarded as an election
to come into the court of bankruptcy, and submit the
property and his rights to its adjudication. He can not,
however, be, in strictness, called a creditor until an as-
signee is appointed, the securities sold, and the balance
ascertained.

A proof, according to the prescribed form,* may be
made at any time after the proceedings are commenced,
even though the value of the security is not determined,
nor the property sold.> The creditor should be careful to
set forth his securities, for it has been held that a proof
without reference to them, and without apprising the

 

' Form No. 21.
*In re Bridgman, 1 B. R. 312; s.c. 2 B. R. 252.
“In re Bloss, 4 B. R. 147; 8. c. 2 L. T. B. 126. 4 Form No. 21.

* In re Bridgman, 1 B. R. 312; s.c. 2B. R. 252; in re Bigelow et al. 1
B. R. 632; 9. c. 2 Ben. 480; s.c. 1 L. T. B. 95; in re Ruehle, 2B. R. 577;
8. ¢,2 L. T. B. 59,
102 PROOF OF DEBTS.

court of their existence, is a waiver and relinquishment
of them to the assignee! It has, on the other hand, been
held that such a proof, not accompanied by an express
release or conveyance of the securities to the assignee,
ought not to be permitted, and should be disregarded ;*
and such appears to be the requirement of the statute
(§ 5075). A claim, however, of a lien upon the entire
estate, when it only exists upon a portion of it, does not
vitiate the lien? The proof should contain a description
of the property, and its estimated value. This does not
mean the exact value, but merely an estimation of such
value.t There should also be a description of the lien, its
character, the manner in which it was acquired, and all the
circumstances that are necessary to make it a valid claim
against the property. When there are written evidences
of it, these, or duly certified copies, are generally attached
as exhibits. It is always prudent to make an express
reservation of all rights under the security, so that there
may be no risk of incurring a forfeiture. A proof made
in this manner will not invalidate the right of the cred-
itor to the securities. He does not prove as against the
estate, nor offer to prove the whole indebtedness exhibited
in his deposition, when against that indebtedness are set
out securities held therefor, the value of which, when as-
certained, the court is asked to deduct from the indebt-
edness, in order to arrive at the balance; for which bal-
ance alone he seeks to be admitted to share in the distri-
bution of the assets.®

 

Stewart v. Isidor et al. 1 B. R. 485; s. c.5 Abb. Pr. (N. 8.) 68; in re
Bloss, 4 B. R. 147; 8.c. 2 L. T. B. 126; in re Stansell, 6 B. R. 183; in re
Granger & Sabin, 8 B. R. 380; in re Jaycox & Green, 8 B. R. 241; Hoadley
v. Cawood, 40 Ind. 239; Briggs v. Stephens, 7 Law Rep. 281.

* In re Brand, 3 B. R. 324; 8. c. 2 L. T. B. 66; Hatch v. Seely, 13 B. R.
380; 8. c. 37 Iowa, 493.

* McKinsey et al. v. Harding, 4 B. R. 89.

“In re Bigelow et al. 1 B. R. 622: 8. c. 2 Ben. 480; s.c.1 L. T. B. 95.

"In re Bigelow et al, 1 B. R. 682; s. c. 2 Ben. 480; sc. 1 L. T. B. 95;
in re Snedaker, 3 B, R. 629; King v. Bowman, 24 La. An. 506,
PROOF OF DEBTS. 103

The proof should be entitled properly in the court
and in the cause in which it is to be used,‘ and should
show the district in which it is taken, and the name
and official title of the officer taking it. When the
creditor consists of a firm, it must state the names of all
the partners. It must be signed by the affiant, and by
the officer who takes it. The officer also usually appends
to it a certificate that it is satisfactory to him, and the
proof will not be allowed when it is taken before any
other officer than the register who has charge of the case,
unless such certificate is attached? It must also have in-
dorsed on it a brief statement of its character.2 An in-
dorsement of the title of the case and the court in which it
is pending is also usually made. When the proof is not
taken before the register who has charge of the case, it
should be transmitted to him (§ 5079); and he has the
power to reject it if, on its face, it does not show a com-
pliance with the law, and return it to the officer who took
it for amendment.* In examining proofs for admission, he
acts not only as a judicial officer, who is to decide all
questions according to law, but as an administrative offi-
cer, who, in the interest of all the creditors, is to take care
that a defective or insufficient proof is not allowed to pass
either through partiality or inattention.” He may decline
to file it until the fee for filing is paid. When the proof
is sent by mail to the register, and is accompanied by the
fee for filing and a fee for sending a notice to a creditor,
the register must acknowledge the receipt of it, and state
the amount at which he has entered it, and if it shall be
insufficient or unsatisfactory to him he must state the
reason.°

In order to become recognized as a creditor, it is not

4

 

*Rule XXXIV. In re Pius Walther, 14 B. R. 273.

* In re Belden & Hooker, 4 B, R. 194.

* Rule I. 4Jn re Loder, 2 B. R. 515.
*In re Port Huron Dry Dock Co. 14 B. R. 253. ° Rule XXXIV.
104 PROOF OF DEBTS.

sufficient to make the proof alone. The claimant must
put it on file in the proceedings. If he retains the proof
in his own hands, he can not be considered a creditor who
has proved his debt within the technical meaning of the
bankrupt law. After it has been placed upon file, it may
be found to be defective, either through the omission of
some merely formal statement, or of some material matter,
by inadvertence or mistake. In all such cases it should be
. amended. If the register discovers the defect, he may re-
quire an amendment, subject, however, to a revision by
the court.2 When the creditor discovers the defect, he
may apply for leave to amend, which ought generally to
be granted.’ This power to amend extends to all matters
contained in the proof. The amount of the debt may be
enlarged or diminished, as the circumstances may require.*
Formal defects may be supplied.’ A proof may be changed
in form from unsecured to secured.2 Amendments may
be made as long as the right to prove continues.’ Par-
ticipation 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 ad-
vantage thereby, or that other creditors have been in any
wise prejudiced in consequence of it, or that he was in-
fluenced by any fraudulent intent.* When the amend-
ments are merely formal, or relate simply to additional
statements, they may be made in the original proof, but
in such ease the proof must be sworn to again after such

 

‘In re Sheppard, 1 B. R. 489; s.c. 1 L. T. B. 49.

* In re Elder, 3 B. R. 670; 8. c. 1 Saw. 73; 8.¢. 3 L. T. B. 140.

“In re Loweree, 1 B. R. 74; 8. c. 1 Ben. 406.

“In re Montgomery, 3 B. R. 429.

* In re Loder, 3 B. R. 655; 8. c. 4 Ben. 125.

°In re Brand, 3 B. R. 324; 8. c.2L. T. B. 66; inre 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.

"In re Myrick, 3 B. R. 154; in re Montgomery, 8 B. R. 429.

ae In re William McConnell, 9 B. R. 3887; King v. Bowman, 24 La. An.
PROOF OF DEBTS. 105.

alteration. It has been held that when a new and differ-
ent demand has been discovered, the proper mode is to
make a separate and independent proof.’ It would seem
to be the better practice, in all cases where the amount of
the claim is to be augmented or diminished, to require a
separate proof, and let such new proof refer to the old
one, and be made as amendment of it. The ordinary
course is to prove all the debt in the first instance; and a
new claim excites suspicion. For this reason the two
matters should be kept distinct. A party who has will-
fully and fraudulently made misstatements in his proof can
not amend it, but must abide the consequences of his fraud.*

There are several decisions to the effect that a party
can not take his proof from the file.* But where the
proof has been made under a mistake of fact or even
of law, it may be withdrawn almost asa 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,
the proof may be withdrawn, if there has been a mistake,
and no want of diligence. The allowance of a withdrawal
is, however, a matter of discretion. A creditor can not.
demand it as a matter of right, nor will it be allowed for
the purpose of continuing an arrest which was made be-
fore the commencement of the proceedings in bankruptcy.°
A creditor who has inadvertently used the wrong form
may withdraw it." A proof may also be withdrawn for
the purpose of proceeding against a dormant partner of

 

‘In re Pius Walther, 14 B. R. 273.
* In re Montgomery, 3 B. R. 374; 8. c. 3 L. T. B. 40.

*In re Elder, 3 B. R 670; 5. c. 1 Saw. 78; 5.0.1 L. T. B. 198; 8. c. 8
L. T. B. 140.

“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.

°In re Abraham Halle, 7 Ben. 182. ° In re Wiener, 14 B. R. 218.

‘In re Brand, 3 B. R. 324; s. c. 2 L. T. B. 66; inre Clark & Binninger,
5 B. R. 255; Morse v. Lowell, 48 Mass. 152.
106 PROOF OF DEBTS.

the bankrupt.!. An order allowing the withdrawal of a
proof may be passed by the register, if after due notice
no opposition is made, otherwise by the court.’
The formal proof of the debt merely makes out a
prima facie case. It is always a question of fact whether
the debt has been paid in whole or in part, or whether it
is provable, and a question as to which pertinent evidence
is always admissible The court has, at all times, full
control of all proofs, and the right to entertain objections
to the validity of the debts, or the proofs thereof* It
may, on the application of the assignee, or of any creditor,
or of the bankrupt, or without any application, examine
upon oath the bankrupt, or any person tendering or who
has made proof of claims, and may summon any person
capable of giving evidence concerning such proof, or con-
cerning the debt sought to be proved, and must reject
all claims not duly proved, or where the proof shows
the claim to be founded in fraud, illegality or mistake
($ 5086). After a claim has been once formally allowed
by the register, this is the only means by which its valid-
ity can be contested. An assignee has no power to reject
it, or entertain objections to its validity. The proper mode
to set aside a proof is to make an application to the court
or the register for that purpose. This application may be
made not only by the assignee or the bankrupt, but also
by any creditor who has proved, or tendered proof of, his
debt. The application should be by a petition, properly
entitled in the cause, setting forth the grounds upon which
the validity of the debt is contested.? Such summary peti-
tions are generally verified by the oath of the petitioner.

 

‘In re E. Hubbard, 1 B. R. 679; 8. c. Lowell, 190.
2 In re E. Hubbard, 1 B. R. 679; s. c. Lowell, 190.
*In re Colman, 2 B. R. 563; in re Fortune, 3 B. R. 312; s. c. Lowell, 384.

‘In re Patterson, 1 B. R. 100; s.c. 1 Ben. 448; in re Jones, 2 B. R. 59;
in re Paddock, 6 B. R. 132; 8.0.2 L. T. B, 214.

° In re Ray, 1 B. R. 203; 8. c. 2 Ben. 58.
*In re Walton et al. 1 Deady, 442.
PROOF OF DEBTS. 107

The application may be made to the register,’ to whom the
cause is referred. The register thereupon passes an order
fixing a time for hearing the petition, of which due notice
must be given, by mail, addressed to the creditor. At the
time appointed he must take the examination of the cred-
itor, and of any witnesses that may be called by either
party.’ If the creditor is unable to attend in pursuance of
the notice, he should take steps to procure a postponement
until he can attend. But if he fails to appear and submit
to an examination, the claim may be expunged or dimin-
ished by default. If the creditor appears, he need only
offer himself for cross-examination and the assignee or
other adverse party, if he wishes to contest the proof, must
offer such opposing evidence as he may have.‘ If it appears
from the examination that the claim ought to be expunged
or diminished, the register, if no objection is made, may
order accordingly. If objection is made, the register must
require the parties then, or within a time to be fixed for
that purpose, to form an issue to be certified into court
for determination. He has no authority to require the
parties to form an issue, if either of them objects, until it
appears to him that the claim ought to be expunged or
diminished and an objection is made to his making an
order to that effect.’ Ifa party has obtained an order for
forming an issue, he can not have it revoked if the other
party did not object to the order but objects to the revo-
cation.’ Ifthe petitioner is in default in making up the
issue, the petition must be dismissed. If the creditor
whose claim is re-examined is in default in making up the
issue, the claim may be diminished or expunged by the
register. All orders thus made by the register may be

 

som Rule XXXIV. Vide Comstock v. Wheeler, 2 B. R. 561; s. c. 3 Ben.

* Rule XXXIV. °Jn re fra C, Lount, 11 B. R. 315.
“In re Wm. L. Robinson, 14 B. R. 180.
*In re James 8. Aspinwall, 7 Ben. 154.
° In re James §. Aspinwall, 7 Ben. 154.
108 PROOF OF DEBTS.

reviewed by the court on special petition, and upon
showing satisfactory cause for such review.’

The application may also be made to the court. When
the petition is filed, the court usually passes an order to
show cause, and directs that a copy of the order and of
the petition be served upon the creditor. The creditor
may also be required to attend personally for examination.
The application may be made either for striking out the
proof, or an examination, or both, It. is immaterial
whether the creditor resides in the district or not. 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 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 statute, and can reject and expunge his proof” If the
creditor has appeared by attorney, the order may be served
upon the attorney ; otherwise, it must be served upon him
personally. The response to the petition is usually made
by an answer. .
The testimony may be taken before the court or a reg-
ister viva voce, or in writing before a commissioner, or by
affidavit or on commission (§ 5003). The creditor is not
entitled to witness’ fees for attendance.* In case it is made
to appear that any creditor whose debt is contested can
not personally attend to be examined in the district where
the 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 examination before a register of the district in which
he resides.” The claim of the petitioning creditor is open
to contention. The mere fact that he is a petitioner is not
conclusive upon other creditors that he is to be allowed in

 

* Rule XXXTYV. * In re Kyler, 2 Ben. 414. * Rule III.
“Tu re 8. Paddock, 6 B, R. 132; s. c. 2 L. T. B. 214.
*In re Kyler, 2 Ben. 414; in re IraC. Lount, 11 B. R. 315.
PROOF OF DEBTS. 109

the distribution of the estate just what he claims in his
petition.

In a proper case, a claim may be allowed in part,’ or
allowed or disallowed as a whole ;? but when a creditor,
by a combination with the bankrupt, and in view of the
commencement of proceedings in bankruptcy, bas fraudu-
lently enlarged his claims, both the real and _ fictitious
claims will be disallowed. Fraud corrupts and destroys
the whole debt.’ Claims which have been purchased
with the funds of the bankrupt will be stricken out. A
friend of the bankrupt, however, may honestly and in
good faith undertake to buy up all the claims, with the
intention of stopping the proceeding, and, if he fails in
the attempt, may prove the debts which he has so pur-
chased and had assigned to him. 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 prowatia”
But 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 may be proved.? A secured
creditor whose proof is stricken out on account of usury,
will not be compelled to surrender his security.? The
court will also make an examination of the creditor with-
out any application therefor, and, when it sees, from the
testimony before it, that certain claims are improperly
proved, it will reject them.” If defects in the deposition

 

* Tn re Cornwall, 6 B. R. 305; s. c. 9 Blatch. 114.
° Form No. 66. * Form No. 67.

“In re Elder, 3 B. R. 670; s.c. 1 Saw. 73; 3.0.1 L. T. B. 198; 5. ¢.5 L.
T. B. 140; Marratt v. Atterbury, 11 B. R. 225; 8. c.3 Dillon, 444.

° In re Latbrop etal. 3 B. R.413; s.c.5B.R. 48; s. c. 8 Ben. 490.
* In re Pease et al. 6 B. R. 173; inre Strachan, 3 Biss. 181.
"Tn re E. R. Stephens, 6 B. R. 533; 8. c. 3 Biss. 387.

*In re E. R. Stephens, 6 B. R. 538; s. c. 3 Biss. 387; Kapner v. St. Louis
& St. J. R. R. Co. 8 Dillon, 228.

* Dallas v. Flues & Co. 8 Phila. 150.
* Tn re Lathrop et al. 3B. R. 418; s. c. 8 Ben. 490.
110 PROOF OF DEBTS.

have justified the application, costs can be imposed upon
the party in default.’

If the assignee or the creditor is dissatisfied with the
decision of the district court, he should take the proper
steps to have it revised. 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 (§ 4980); but no appeal can 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 dis-
trict court, to be entered with the record of the proceed-
ings, and algo to the assignee or creditor, as the case may
be, within ten days after the entry of the decision appealed
from. No appeal can be allowed unless the appellant, at
the time of claiming the same, gives bond in the manner
required by law in cases of such appeals (§ 4981). The
right of appeal can neither be enlarged nor restricted by
the district or the 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 bankrupt
law, from the district court, unless it is claimed, and bond
is filed at the time it is claimed, and notice of it given
within ten days after the entry of the decision appealed
from.’ When an appeal is not properly taken, it may be
dismissed upon motion.* 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 cred-
itor to contest the claim ceases, and any further proceed-
ings to review the decision must be taken by the assignee.®

 

‘In re Elder, 3B. R. 670; s. c. 1 Saw. 73; s.c. 1 L. T. B. 198; 3. a 8L.
T. B. 140.

? Form No, 68.
*In re Alexander, 3 B. R. 29; s. c. 2L. T. B. 81; 8. c. Chase, 295,

‘In re Kyler, 3B. R. 46; s. c. 6 Blatch. 514; inre Coleman, 2B. R. 671;
s. c. 7 Blatch. 192; in re Piace etal. 4B. R. 541; s. c. 8 Blatch. 302; in re
Place & Sp arkman, 9 Blatch. 369.

° Tn re Troy Woolen Co. 9 B. R. 829; s. c. 9 Blatch. 191.
PROOF OF DEBTS. 111

The appeal must be entered at the term of the circuit
which shall be first held within and for the district next
after the expiration of ten days from the time of claiming
the same ($4982). When a supposed creditor takes an
appeal to the circuit court from the decision of the district
court, rejecting his claim in whole or in part, he must,
upon entering his appeal in the circuit court, file in the
clerk’s office thereof a statement in writing of his claim,
setting forth the same substantially as in a declaration for
the same cause of action at law, and the assignee must
plead or answer thereto in like manner, and like proceed-
ings are had in the pleadings, trial, and determination of
the cause, as in an action at law commenced and prose-
cuted, in the usual manner, in the courts of the United
States, except that no execution can be awarded against
the assignee for the amount of a debt found due to the
creditor. The final judgment of the court is conclusive,
and the list of debts must, if necessary, be altered to con-
form thereto. The party prevailing in the suit is entitled
to costs against the adverse party, to be taxed and recov-
ered as in suits at law; if recovered against the assignee,
they must be allowed out of the estate ($ 4984). Thisap-
peal must be filed in the clerk’s office of the circuit court
within ten days after it is taken, and the assignee must.
plead or answer by a defense, in writing, within ten days
after the statement is filed. Every issue thereon must be
made up in the court, and the cause placed upon the
docket thereof, and must be heard and decided in the
same manner as other actions at law."

A creditor can not demand payment of his debt until
he makes and presents to the assignee the proper proof
thereof. This provision is analogous in purpose and pro-
ceeding to the probate of debts against the estate of a
decedent before being presented to or allowed by the ad-

 

1 Rule XXIV.
112 PROOF OF DEBTS.

ministrator. 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 action in the circuit court
against the assignee, and have his right to payment regu-
larly tried. But this action can only be maintained by
the creditor’s first taking an appeal from the order reject-
ing 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-
stances and conditions." The right of appeal, however, is
not limited to those cases where a proof is rejected, or
where summary proceedings are instituted for the purpose
of setting it aside. When the validity of a claim, or the
right of a creditor to prove it, is doubted, the proof of the
claim not only may, but should be postponed until an as-
signee is chosen. Then the proper proceedings may be
had in regard to it, and an appeal can then be taken in
the prescribed manner; while, if it is summarily rejected
before an assignee is chosen, there will be no person to be
a defendant in the proceedings in the circuit court. If the
appellant, in writing, waives his appeal before a decision,
proceedings may be had in the district court the same as if
no appeal had been taken (§ 4983).

No creditor proving his debt or claim will be allowed
to maintain any suit at law or in equity therefor against
the bankrupt, but is deemed to have waived all right of
action and suit against the bankrupt; and.all proceedings
already commenced, or unsatisfied judgments already ob-
tained thereon, are discharged and surrendered thereby
($ 5105). But a creditor proving his debt or claim is not

 

* Catlin v. Foster, 3B. R. 540; s. c. 1 Saw. 37; s.c.1L. T. B. 192.
PROOF OF DEBTS. 113

held to have waived his right of action or suit against the
bankrupt where a discharge is refused or the proceedings
are determined without a discharge! This provision,
however, does not apply to any debt which is not dis-
chargeable under the statute.” The debts that are not
discharged are debts created by the fraud or em-
bezzlement of the bankrupt, or by his defalcation as
a public officer, or while acting in a fiduciary capacity
($ 5117); and the term fiduciary capacity embraces
any fiduciary relation,® and extends to a claim arising
from the sale of goods consigned to the bankrupt to be
sold on commission.* As no discharge can be granted to
a corporation, the proof of a debt against it will not
debar the creditor from instituting a suit against it;°
or against a stockholder, to enforce his contingent
liability.

Although the general language of this provision, taken
by itself, would call for an absolute surrender forever, yet
the other provisions of the statute show that this general
language is to be considered as used in reference to the
subject-matter of this legislation only, and as only calling
for such surrender as is requisite to carry out the objects
and ends contemplated by the statute. The bare fact of
a creditor’s proving his claim does not extinguish his right
of action for the recovery and collection of his claim,
but merely operates as a waiver of his right to institute
any suit or proceedings at law or in equity which are in

 

1 Act of June 22, 1874, § 7.

*Inre W. E. Robinson, 2 B. R. 342; s. c. 6 Blatch. 253; s. c. 36 How.
Pr. 176; 8.c.2L. T. B. 18.

*In re Seymour, 1 B. R. 29; s. c. 1 Ben. 348.

“In re J. H. Kimball, 2 B. R. 204, 354; 8. c. 2 Ben. 554; 8. c. 6 Blatch.
292; Whitaker v. Chapman, 3 Lans. 155; s. c.1 L. T. B. 249; 3.0.4 L. T.
B 92; Lemcke v. Booth, 5 B. R. 851; 8. c. 47 Mo. 385.

* Ansonia Brass Co. v. New Lamp Chimney Co. 10 B. R. 355; s. c. 53 N.
Y. 123; 8. c. 64 Barb. 485; 8. c. 18 B. R. 385; 8. c. 1 Otto, 656; Allen v.
Soldiers’ Dispatch Co, 4 B. R. 587; 8. c. 2 L. T. B. 158.

*Shellington v. Howland, 53 N, Y. 371; Allen v. Ward, 36 N.Y. Sup.
296.

8
114 PROOF OF DEBTS.

any way inconsistent with his election to obtain satistac-
tion of his debt under the bankruptcy proceedings. This is
the reasonable construction of the clause, and the only one
by which the evident intent of Congress, as gathered from
a view of the whole statute, can be carried out; since by
it, while a proving creditor is prevented, whether a dis-
charge is granted or refused, from subjecting the already
acquired property of the bankrupt, to the satisfaction of
his debt otherwise than through the bankruptcy proceed.
ings, yet in the event of his successfully opposing the
bankrupt’s discharge, he remains at liberty to enforce the
collection of his claim out of after-acquired property by
suit or action in equity or at law. Thus it becomes ma-
terial to the bankrupt to obtain his discharge, and a
motive is furnished the proving creditor to oppose the
discharge; for if a valid discharge is granted, it will afford
a complete protection to all after-acquired property.

It is evident that there are some suits and proceedings
by a previous creditor, which by the bare act of the prov-
ing of a debt, irrespective of the determination of the
question as to whether the bankrupt shall have his dis-
charge, are surrendered and given up: as, for instance,
those the whole object and purpose of which are to oper-
ate on already acquired property, and that alone; while
there are other suits and proceedings which are not affected
by any express provision of the statute other than that
relating to the effect of a discharge when obtained, except
that proceedings thereon may be temporarily stayed. Of
this class of suits are ordinary actions at law for the re-
covery of a contract debt, and judgments rendered in such
actions. For although the right to enforce any lien ob-
tained by reason of such judgments is surrendered and
given up by the act of proving the debt, yet such suits
and judgments, so far as they may affect and fasten on
after-acquired property in case a discharge is not granted,
are not surrendered. The right of action is not extin-
PROOF OF DEBTS. 115

guished, but the creditor is only barred from instituting
suits or proceedings inconsistent with his election to obtain
satisfaction of his debts under the bankruptcy proceedings ;
and it is not inconsistent with such election for him, in
case a discharge is refused, to reach after-acquired property
by actions or suits at law or in equity. The bare retention
of a judgment recovered prior to the filing of the petition,
and the pendency of an action commenced prior to that
time, are not inconsistent with such election until a valid
discharge has been obtained. They do not in any way
interfere with the bankruptcy proceedings. A surrender
of them, prior to such discharge, does not aid, or remove
any obstacle to the conduct and effect of the bankruptcy
proceedings under the provisions of the statute. A creditor
may, therefore, in the event of a valid discharge not being
granted, retain a judgment or an action already commenced,
and thus save himself from the trouble and expense of in-
stituting a new suit, and be enabled, in some cases, to avoid
a plea of the statute of limitations.!

At the time of making proof of his claims, the creditor
usually executes a letter of attorney, if he wishes to have
a voice in the election of an assignee, and can not be per-
sonally present at the creditors’ meeting. This should be
according to the prescribed forms. The forms, however,
are largely advisory. Any duly executed writing, which
expresses the essential fact of the appointment of the at-
torney, and the powers confided to him, must be respected
by the judge or register? It should be properly entitled
in the cause, and addressed to the person selected as agent.
If addressed to more than one, care should be taken not to
have it joint, for then both agents must unite in acting

 

Hoyt v. Freel et al. 4 B. R. 131; s. c. 8 Abb. Pr. (N. 8.) 220; 8.0. 2 L.
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. c. 2 Barb. Ch. 506; contra,
Bennett v. Goldthwaite, 109 Mass. 494; Pray v. Torr, 18 N. H. 188; Com-
mercial Bank vy. Buckner, 20 How. 108.

* Forms Nos, 14, 26. "In re H. F. Barnes, Lowell, 560.

t
116 PROOF OF DEBTS.

under it! If it is desirable to confer a power of substitu.
tion, the power should be specially inserted, for without
it an agent can not authorize another to act for him.’ The
ordinary forms confer upon an agent no authority except
that to vote, as a careful analysis of their provisions will
show, and if other powers are to be exercised, they must
be specially conferred? The letter of attorney must be
signed by the party executing it. One partner may exe-
cute it on bebalf of his firm, and as a firm is not an entity
known to the law, he should sign the names of his copart-
ners, but the signatures should show that they were signed
by him. When an agent executes it, he must produce
legal evidence that he is duly authorized to execute it.’
He should sign the name of his principal, and not his own
name; but the signature should be made in such a man-
ner as to show that he signed it. It must be properly at-
tested. It need not be acknowledged,’ but generally is,
and a short certificate of acknowledgment attached. The
execution may be proved or acknowledged before a regis-
ter in bankruptcy, a United States circuit court commis-
sioner,’ or a notary public’ An acknowledgment taken
before a clerk of a State court is not sufficient.? When
executed on behalf of a copartnership or corporation, the
person executing the instrument must make oath that he
is a member of the firm or duly authorized officer of the
corporation on whose behalf he acts. When the party
executing is not personally known to the officer taking the
proof or acknowledgment, his identity must be established

 

‘Intre Frank, 5 B. R. 194; 8. c. 5 Ben. 164; s.c, 2 L. T. B. 188.
2 In re Eidom, 3 B. R. 106,

3 Creditors v. Williams, 4 B. R. 580; 8. c. 2 L. T. B. 163.

‘In re Barrett, 2 B. R. 533; s. c. 1 L. T. B. 144.

° In re Knoepfel, 1 B. R. 23; s. c. 1 Ben. 330,

® In re Powell, 2 B. R. 45; in re dl. F. Barnes, Lowell, 560.

7 Rule XXXIV.

® Actof Aug. 15, 1876; in re Butterfield & Burr, 14 B. R. 195; in re Me-
Duffee, 14 B. R. 336.

° In re William C. Christley, 10 B. R. 268.
PROOF OF DEBTS. 117

by satisfactory proof.’ An agent should acknowledge the
letter of attorney to be the act of his principal, and a part-
ner should acknowledge it to be the act of his firm. The
certificate of acknowledgment must be signed by the officer
taking it.

The execution of an assignment of a claim after proof
may be proved or acknowledged in the same manner as a
letter of attorney. Upon the filing of satisfactory proof of
the assignment of a claim proved and entered on the regis-
ter’s docket, the register must immediately give notice by
mail to the original claimant of the filing of such proof of
assignment. If no objection is entered within ten days, he
must make an order subrogating the assignee to the orig-
inal claimant. If objection is made within the time speci-
fied, or within such further time as may be granted for
that purpose, the register must certify the objection into
court for determination.’

+ Any creditor may file with the register a request that
all notices to which he may be entitled shall be addressed
to him at any place, to be designated by the post-office
box or street number, as he may appoint, and thereafter
and until some other designation is made by such cred-
itor, all notices must be so addressed ; and in other cases
notices must be addressed as specified in the proof of debt?

A bill of exchange, promissory note, or other instru-
ment, used in evidence upon the proof of a claim, and left
in court, or deposited in the clerk’s office, may be deliv-
ered 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 must 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 (§ 5082). No paper can be taken from the files

 

* Rule XXXIV. ? Rule XXXIV.
* Rule XXXIV.
118 PROOF OF DEBTS.

for any purpose except by the order of the court. The
instrument proven may be withdrawn.’ <A party apply-
ing for leave to withdraw exhibits filed with an examina-
tion, must show what interest he has in them, and the
purpose for which he desires to use them.’

 

* Rule L.
? In re Emison, 2 B. R. 595.
*JIn re McNair, 2 B. R. 341.
CHAPTER VI.

FIRST MEETING OF CREDITORS.

Upon the day appointed for the first meeting of cred-
itors, the marshal makes return of the warrant. This
return? is usually indorsed upon the warrant, and should
set forth the newspapers in which the notices were pub-
lished, the number of publications, the day of the first
publication, and the day on which the notices were mailed
to the creditors, and be accompanied by a statement, duly
verified, of his expenses. The marshal must make his
return, under oath, of his actual and necessary expenses
in the service of every warrant addressed to him, and for
custody of property, publication of notices, and other
services, and other actual and necessary expenses paid by
him, with vouchers therefor whenever practicable, and
also with a statement that the amounts charged by him
are just and reasonable.” This oath may be taken before
any register. With the warrant, he also returns certifi-
cates of the publications, and one of the printed notices
prepared to be served upon the creditors. If the notices
have been mailed to creditors other than those named in
the printed list, a special return to that effect should be
made. All the notices that have been returned, in pursu-
ance of the direction indorsed thereon, should be left with
the register, for they constitute a part of the papers in the
case. If the marshal lives at a distance from the office of
the register, the warrant and return are usually trans-
mitted by mail. He may also make the return personally.’
The return of the service of the order of adjudication in

 

"Form No. 7. ° Rule XII.
*Tn re Talbot, 2 B. R. 280; s.¢.2L. T. B. 15.
120 FIRST MEETING OF CREDITORS.

involuntary cases may be made wholly on the warrant or
separately on the warrant and order, but the latter course
is preferable.’

The register should examine the return, and see whether
all the proceedings under the warrant have been regular.
The return is prima facie evidence of the matters set forth
therein, but it is not conclusive. Although the return
states the due giving of the notice, evidence may be offered
to show that due notice has not been given. If, however,
the return shows that due notice has been given, and there
is no satisfactory evidence to the contrary, the return is.
prima facie evidence of the due giving of the notice, and
is conclusive until rebutted” If it appears, either from
the return or any other evidence, that due notice has not
been given, then the meeting must be adjourned, and a
new notice given ($ 50383). The service of the order of
adjudication, in cases of involuntary bankruptcy, is mainly
a right or privilege personal to the bankrupt, and any
delay in such service should not retard the general course
of the proceedings*® A return by the marshal in an in-
voluntary case, that he has sent written or printed notices
to the creditors named on the schedules therewith re
turned, and that the schedules are made up on the best
information that he can obtain, is sufficient, although it
does not state the sources of the information, or that the.
bankrupt has furnished schedules, or refused to furnish
them, or that proceedings have been taken ineffectpally to
compel him to furnish them. But a return that he sent
the notices to the creditors whose names were on a sched-
ule handed to him bythe attorney for the petitioning
creditor, is insufficient.’

 

1TIn re Kennedy et al. 7 B. R. 337.

*In re W. D. Hill, 1 B. R. 16; s. c. 1 Ben. 321; in re Pulver, 1 B. R. 463.
s. c. 1 Ben. 881.

5 Tn re Kennedy et al. 7 B. R. 337.
*In re James M. Adams, 5 Ben, 544.
“Tn re Josiah Ferris, Jr. 6 Ben. 473.
FIRST MEETING OF CREDITORS. 121

When a new notice is necessary, it need only be given
to remedy the defects or irregularities 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 upon the creditors. If
the defect occurs in the service of the notice on the credit-
ors, the publication being regular, a new notice must be
served upon the creditors, but no new notice need be pub-
lished.’ If the defect occurs only in the notice served
upon one creditor, he may waive it by appearance. All
matters relating to the service of the warrant should be
examined carefully; for, if the notices are defective, all
proceedings founded thereon are irregular, and may be set
aside even on the day appointed for hearing the applica-
tion for a discharge.’ The new notices ought to state that
the meeting to which the creditor is summoned is an ad-
journed meeting. If the meeting is not adjourned, a new
warrant must be issued.*

Sometimes an amendment is made adding new names
of creditors, when it is too late to hand them to the mar-
shal so as to have the notices served upon them. In such
a case 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 it, and embrace
the names contained in the original warrant as well as
those added by the amendmert. If the newspaper notices
have been properly given under the original warrant, they
need not be repeated. Upon the return day of the new
warrant, the creditors may elect an assignee, and take pro-
ceedings to have any assignee that may have been ap-
pointed under the original warrant removed. When the

 

‘In re Develin et al. 1 B. R. 35; s. c. 1 Ben. 385; 8.c.1 L. T. B. 32; in
re Pulver, 1 B. R. 46; 8. o. 1 Ben. '381.

? Anon. 1B. R. 123. °In re Hall, 2B. R. 192.
“In re Schepeler et al. 3 B. R. 170; s. c. 8 Ben. 346.

° In ve Perry, 1 B. R. 220; 5. ©. LL. T. B. 4; in re Ratcliffe, 1 B. R. 400;
in re Morganthai, 1 B. R. 402.
122 FIRST MEETING OF CREDITORS.

new names, however, are few in number, it is not neces-
sary that a new warrant shall be issued, but the creditors
whose names are thus added should be formally informed
of the existence and condition of the proceedings and noti-
fied to prove their claims, if they so desire.

Tf all the proceedings under the warrant have been
regular, and no new names are added by an amendment,
the first meeting of creditors may be held. The register
should attend at the time and place specified in the war-
rant for holding it. It would be irregular to hold the
meeting before that time. If no creditor attends or is
represented, the meeting is held as fully and effectually as
if creditors had appeared or been represented.? If cred-
itors attend, the meeting should be organized at the hour
designated in the notice, or as soon thereafter as prac-
ticable, and 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 make the proofs of all the debts on the day designated
in the warrant, or where the creditors are unable to agree
upon some person as their choice for assignee, the meeting
may be adjourned from day to day, so as to furnish a
proper opportunity to all creditors to prove their debts,
and to come to an agreement in regard to the selection of
‘an assignee if possible. The several adjournments will
constitute but one meeting, amd will affect the proceedings
in no other way than would a necessary postponement of
business from one to another hour in the same day. It is
still the first meeting within the contemplation of the stat-
ute, whether held on the day designated in the warrant,
or on a day to which the meeting assembled on that day
has been adjourned.

 

‘In re Carson, 5 B. R. 290; s.¢. 5 Ben. 277; s.c. 2L. T. B. 194.
* Tn re Cogswell, 1 B. R. 62; s. c. 1 Ben. 383,

*In re Phelps, Caldwell & Co. 1B. R. 525; 8.c.2L. T. B. 25; inreC. H.
Norton, 6 B. R. 297. :
FIRST MEETING OF CREDITORS. 123

With the choice of an assignee by the creditors, the
register has nothing to do except to preside at the meet-
ing at which the choice is made. He is a part of the
court. His duties are of a judicial character, and his ac-
tion should, under all circumstances, be free from re-
proach and above all suspicion of interest or partisanship.
It is especially incumbent upon him in no manner to in-
terfere with or influence, either directly or indirectly, the
choice of an assignee by 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 sem-
blance of having any interest or bias in favor of or against
any particular person as assignee, any more than of being
prejudiced for or against the bankrupt, or for or against
any creditor, in any proceeding. Any other course will
lead, if not to abuses, at least to suspicions of them, and
will impair his usefulness and derange the harmonious
working of the system. The policy of the bankrupt law
is to give to the creditors of a bankrupt, the free deliber-
ate, unbiased choice, in the first instance, of the person
who is to take the assets and manage them.’

No creditor can vote unless he has proved his claim.’
Agents and attorneys at law can not vote without pro-
ducing a letter of attorney. They must be duly appointed
attorneys in fact.’ The letter of attorney produced by an
agent should be received and filed. 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 who are not partners, can not
vote without the consent of the others.> A creditor who
holds a security which consists of property of the bank-

 

‘In re J. O. Smith, 1 B. R. 248; s. c. 2 Ben. 113.

* In re W. D. Hill, 1 B. R. 16; s.c. 1 Ben. 321; in re Altenhaim, 1 B. R.
85; s. c. 1 Ben. 481.

°In re Purvis, 1 B. R. 168; 5. c.1 L. T. B. 19.
‘In re Purvis, 1 B. R. 168; 5.0. 1L. T. B. 19.
* In re Purvis, 1B. R. 168; s.c.1L. T. B. 19.
124 FIRST MEETING OF CREDITORS.

rupt not liable to exemption, can not vote." The reason
for this is very plain. The votes are counted by value as
well as number, and the amount of his claim can not be
determined until an assignee has been selected. Mere
proof alone does not admit him to the rank of a creditor.
His lien must first be liquidated. He may, however,
abandon his security, and in that case he can vote. If the
debt consists of several parts, one only of which is secured,
he may vote on the unsecured portion.’ Where the secu-
rity consists of the property of a third person,’ or of ex.
empted property,t he may prove the whole claim and
vote. When a person who has been a partner in a firm
is in bankruptcy alone, the partnership creditors can not
vote.> When a partnership is in bankruptcy, an individ-
ual creditor of one partner can not vote. An officer of a
bankrupt corporation, if he is a creditor, has just as much
right to vote as any other creditor.” If a claim has been
assigned after proof, the actual owner alone can vote, and
if he holds several claims, he can only cast one vote.
No person who has received a preference contrary to the
provisions of the statute can vote (§ 5035). The only
grounds upon which the vote of any other creditor can be
objected to, after he has duly proved his claim, are those
that would justify a postponement of the proof till after
the election of an assignee. These are simply claims of
which there may be doubts as to their validity or the
right of the creditor to prove them. The mere fact that
the vote is influenced or controlled by the bankrupt, in

 

+ In re Davis & Son, 1 B. R. 120; in re Walton et al. 1 Deady, 442; in re
ee B. R. 502; s. c. 5 Ben. 5; contra, in re Bolton, 1 B. R. 370; 8. c.
en. ,

* In re 8. Hanna, 7 B. R. 502; s. c. 5 Ben. 5; inre J. P. & C. R. Parkes,
10 B. R. 82.

*Tn re Cram, 1 B. R. 504; 8. c.1L. T. B. 65.

“Inre J. R, Stillwell, 7 B. R. 226; in re Tertelling, 2 Dillon, 342, note.
°In re Purvis, 1 B. R. 163; s.c.1L. T. B. 19.

“In re Phelps, Caldwell & Co. 1 B. R. 525; 8. c. 2 L. T. B. 25.

7 In re Northern Iron Co, 14 B. R. 356.

*In re Frank, 5 B. R. 194; 8. c. 5 Ben. 164; s.c. 2 L. T. B. 188.
FIRST MEETING OF CREDITORS. 125

his own interest, is no ground for objecting to it. The
only mode of raising such an objection is by opposing the
approval of any assignee that may be elected by it.’

A vote may be taken while a contest is pending over
the postponement of the proof of a claim. The statute
nowhere directs nor does it seem to eontemplate the
postponement of the vote for assignee, where some cred-
itors have proved their debts, in order to enable others to
do so. On the contrary, it seems to contemplate the ut-
most practicable expedition 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 it is to
look after the estate. The creditors who have proved
their claims and are entitled to vote may, if they see
proper, consent to wait for others to prove before proceed-
ing to choose the assignee. But even this power ought to
be exercised sparingly, and the vote ought always to be
taken at the earliest practicable moment. If a creditor
whose proof of claim has been postponed by the register,
is dissatisfied with’ the result of the vote for assignee, and
considers the postponement of his claim erroneous, he
may have the proceeding certified to the court, and if the
postponement appears 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 cer-
tainty that the result would not be changed by another
vote. The postponement of the proof of a claim affects |
no right of a creditor except the right to vote for assignee,
and where it appears that the exercise of that right would
be barren of results, it would be useless to delay the pro-
ceedings in order to afford such creditor the opportunity
to exercise such right” The register, however, can not
postpone a claim merely because it is objected to, or admit

 

‘In re Noble, 3 B. R. 96; s. c. 3 Ben. 332.

* In re Lake Superior 8. C.R. R. & J. Co. 7B. R. 87s; in re Northern Iron
Co. 14 B. R. 856; in re George Jackson, 14 B. R. 449.
126 FIRST MEETING OF CREDITORS.

it to proof against objection, although he deems it clearly
valid and admissible. In such an event the court must
be applied to, if the objection is not withdrawn, for the
register has no power to proceed to the election of an as-
signee without the votes of all the creditors who wish to
vote, unless he himself considers the claim doubtful.’

It has been decided that the manner of choosing or
electing an assignee is not similar to that observed in
electing civil officers at regular State elections, and that
the creditors are not to go to the place designated, and, at
or after the hour fixed in the warrant, separately deposit
their ballots or votes in the presence of the register?
This decision rests entirely upon the construction given to
the terms “meeting” and “ preside.” A meeting, how-
ever, need not be an assembly. There may be a meeting,
although no creditors assemble. At town meetings the
voters are coming and going during the whole of the day.
And “preside” does not merely mean to sit as president.
It, in this instance, means to regulate, superintend, and
control. The meeting is a judicial proceeding; and the
register presides at it in exactly the same manner, and in
the same sense, that a judge presides over his court. In
practice, where the estate is large, and the creditors nu-
merous, it may require a whole day, or several days, to
take the proofs and complete the election. Although cred-
itors may prove their claims at any time after the com-
mencement of the proceedings in bankruptcy, they do not
generally prove them until the first meeting. This throws
a great deal of labor upon the register on that day, in-
volving time and delay and inconvenience to creditors, if
they are compelled to wait until the preliminary business
of taking proofs is finished before they can cast their
votes. Nothing, therefore, but a plain, imperative re-
quirement of the law should impose such delays and in-

 

 

' In re Bartusch, 9 B. R. 478.
* In re Phelps, Caldwell & Co. 1B. R. 525; 8.c, 2L. T. B. 25.
FIRST MEETING OF CREDITORS. 127

conveniences upon them. The policy of the statute is to
give the choice of the assignee to them, and that construc-
tion should be adopted which will furnish the greatest
facilities for carrying that purpose into effect. The man-
ner of proceeding is not prescribed by the statute, and
should, therefore, be left to be determined by the cred-
itors themselves. They may either organize into a gen-
eral meeting, or vote in the same manner as at any other
election.

That this is the proper manner of proceeding is shown
by the mode of taking the votes. The statute expressly
requires that all acts done by the register shall be reduced
to writing, and signed by him, and shall be filed in the
clerk’s office as a part of the proceedings (§ 5004). The
act of receiving the votes of creditors is one of those acts.
It is done by -him in the prosecution of a proceeding in
bankruptcy. That it was so considered by the justices of
the Supreme Court is shown by the prescribed form of
the report of the election.’ This not only contemplates
that the name, residence, and amount of debt of each
creditor shall be recorded ;* but it also contemplates that
each creditor shall make the entry upon the appropriate
blank for himself. In this respect it differs from all the
other memoranda sent by the register to the clerk. Inall
the others he himself merely forwards a brief memoran-
dum of what is done; in this alone the whole proceeding
is made a matter of record. The purpose of this require-
ment is very clear. If any dispute should arise in regard
to the actual result of an election, there would be no sat-
isfactory means for the court to settle the controversy,
unless some such record were made for its personal inspec-
tion; and the register’s opinion would be almost conclusive
upon the point. The creditors may ballot and canvass as

 

* Form No. 15.
* In re Phelps, Caldwell & Co. 1 P..R. 525; 8. 0. 2L. T. B. 25.
128 FIRST MEETING OF CREDITORS.

often as they please; but when they come to cast the vote
contemplated by the statute and the forms, they must make
it a matter of record, clear, accessible, incontrovertible, and
capable of preservation. Tbis would seem to be the prac-
tice prescribed by the justices of the Supreme Court. The
votes may be taken according to either of the two modes.
The creditors may, inthe first instance, sign their names on
the appropriate blanks in the prescribed manner. If the
proper practice is for the creditor to sign his own name to
the record, there is no reason why he should be detained
after that is done. The vote cast is like one judgment ren-
dered; but the court still continues in session to attend to
other business. Or, on the other hand, the creditors may
organize themselves into a general meeting, and take pre-
liminary ballots and votes, either véva voce or on written
slips. Such votes will not be informal.’ But when a final
result is reached, it must be made a matter of record, and
the creditors who have chosen the assignee must then sign
the appropriate certificate” It is not believed that an
election conducted in either of these modes would be set
aside for irregularity. If, on the-first vote, there is no choice
made, a second, third, or any number of ballots may be
had, until the required concurrence is obtained. If no such
concurrence is had, and the meeting adjourns sine die,
there is then no choice made by the creditors.

The mode of counting the votes is peculiar. The
choice can only be made by the greater part in number
and in value of the creditors who have proved their debts
($5034). All the debts which have been properly proved
and placed on file must be included in ascertaining the
result. A majority in number and value of the votes
east merely will not be sufficient, unless a vote has been
cast on every debt proved. It must also be a majority in

 

1In re Pearson, 2 B. R. 477; in re Lake Superior 8. C.
B. R. 376. , ’ perior R.R. & IL Co. 7

° In re Pfromm, 8 B. R. 357,
FIRST MEETING OF CREDITORS. 129

number and value of all the debts proved. By this mode
of counting, every debt on which a vote has not been cast
in favor of a person must be counted against him. When
there are two candidates, all the debts not voted must be
counted against both. The count, moreover, is not simply
acount of number; it is also a count of value. <A per-
son may receive the votes on a majority of the debts
proved, yet, unless the majority in number also consti-
tutes a majority in the amount of the claims proved, he
will not be elected. A person may likewise receive the
votes on a majority in amount of the debts proved, yet,
unless that majority in amount also constitutes a majority
in number, he will not be elected. The majority must be
a joint majority of both the number and the value.’ The
object of this provision of the statute is clear. If the
count was of value alone, one large creditor might have
the sole choice of assignee, to the detriment of other cred-
itors, and to the oppression of the bankrupt. If, on the
other hand, the count was of numbers only, several credit-
ors having insignificant claims might choose an assignee,
to the great injury of the only creditor who had a real in-
terest in the proceedings. If the creditors can not com-
bine and work together harmoniously, the law wisely con-
fers the power of appointment upon the register or the
court. When 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.” A creditor has the right to change
his vote at any time during the progress of an election.
He may, therefore, refuse to sign the certificate, although
he has given a viva voce vote in favor of a party.’ But after
afinal adjournment no vote can be changed.‘ Proofs which

 

‘In re Scheiffer & Garrett, 2 B. R. 591.

* In re Haynes, 2 B. R. 227; 8. c. 1 L. T. B. 121.
* In re Pfromm, 8 B. R. 357.

“In re Scheiffer & Garrett, 2 B. R. 591.

9
130 FIRST MEETING OF CREDITORS.

are filed after a vote is taken can not be allowed to come
in and change the result."

If no choice is made by the creditors, the judge, or if
there is no opposing interest, the register must appoint
one or more assignees ($ 5034). No official assignee can
be appointed by the court or judge, nor any general as-
signee to act in any class of cases.” It is only when the
creditors fail to elect that the register or judge can appoint
an assignee. The opposing interest which precludes the
register from making an appointment is not merely an in-
terest contending by vote but an interest in opposition to
the exercise of the power by him. When there is a fail-
ure on the part of creditors assembled to make a choice, it
is the duty of the register to inform the creditors of their
rights, and state distinctly that he can not make an ap-
pointment if there is an opposing interest. He must
ascertain affirmatively that there is no opposition, and can
only do so by asking directly if there is any objection to
his making the appointment. If he makes such announce-
ment, there should be a distinct disclosure if there is an
opposing interest.* If there is opposition, an appointment
by him will be irregular. If there is an opposing interest
at any stage of the meeting, such opposition is to be con-
sidered as continuing until the termination of the meet-
ing, whether upon the day first appointed or any other
day to which the meeting may be continued, unless it
affirmatively appears that such opposition has been with-
drawn. When no creditors appear, or are represented,
the register may appoint an assignee, and should do so,
though no debts have been proved.’ An assignee should

 

‘In re Lake Superior 8. C. R.R. & I. Co. 7 B. R. 376.

? Rule [X; in re Wm. Major, 14 B. R. 71.

“Tn re George Jackson, 14 B. R. 449.

“In re George Jackson, 14 B. R. 449; vide in re Pearson, 2 B. R. 477.
* In re Pearson, 2 B. R. 477. *Inre 0. H. Norton, 6 B, R. 297.
7 In 1e Cogswell, 1 B. R. 62; s.c. 1 Ben. 888.
FIRST MEETING OF CREDITORS. 131

be appointed, even though there are no apparent assets,
for he is designed by the statute to act as trustee on be-
half of the creditors, and it his duty to search for and dis-
cover the assets, if there are any.

In making a report to court of the meeting, the regis-
ter should always send a certificate of the holding of the
meeting, and a list of the creditors who have proved
their debts,’ and a certificate of the election,‘ or the failure
to elect,> as the case may be. In making up the forms,
the justices of the Supreme Court evidently contemplated
that claims would not be proved at any time before the
first meeting ; but, as the practice is different, the certifi-
cate should be varied, so as to include all the debts which
are on file at the time when the meeting is held, or vote
taken, whether proved on that day or not. The object of
the report is to make the whole proceedings a matter of
record, so that any person interested can, by a mere in-
spection of the papers, see whether the election has been
regular. The register has no power to make an election
of an assignee valid by his mere approval; but, if no ob-
jections exist, he should certify to his approval of the
choice as a mere preliminary step to the final approval by
the judge. As he is personally familiar with the whole
proceeding, he ought not to let any election pass without
his affirmative and express approval or disapproval.’ If
he is satisfied that any reasons exist why an assignee,
elected by the creditors, should not be approved, it is his
duty to state such reasons freely in submitting his report
of the proceedings."

All elections or appointments of assignees are subject
to the approval of the judge, and when, in his judgment,

 

‘In re Alexander Graves, 1 N. Y. Leg. Obs. 213; s. c. 5 Law Rep, 25.
* Form No. 15. ° Form No. 13. ‘Form No. 15.
* Form No. 11. ‘Form No. 15.

7In re Bliss, 1 B. R. 78; s.c. 1 Ben. 407; in re Scheiffer & Garrett, 2B.
R. 591; in re Clairmont, 1 B. R. 276; s. o. Lowell, 230; s.c. 1 L. T. B. 6.
132 FIRST MEETING OF CREDITORS.

it is for any cause needful or expedient, he may appoint
additional assignees, or order a new election ($ 5034).
This includes appointments made by registers, as well as
selections made by creditors, and no one should enter upon
the duties of assignee until such approval is obtained. If
the judge disapproves, the election or appointment fails,"
The only persons who are positively disqualified for the
position of assignee are those who have accepted a prefer-
ence contrary to the provisions of the statute (§ 5035).
All other persons may be assignees, if duly elected or
appointed, but the judge, in the exercise of a sound dis-
cretion, may withhold his approval. This discretion is a
legal discretion, and 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. The creditors alone are interested in the
distribution of the estate, and, as they have pecuniary in-
terests at stake, it will be presumed that they have care-
fully canvassed and inquired into the qualifications of the
person to whom they recommend the estate to be intrusted.
They are generally commercial men intimately acquainted
with the affairs of the bankrupt, and the qualifications es-
sential and proper to fit a man to act as assignee, and un-
less good and strong reasons are presented, the opinion of
the creditors, representing a majority in number and value,
is entitled’ to great weight in determining who is the
proper person to administer the estate in which they are
interested. The judge, therefore, will always approve of
an election made by the creditors, unless something is
placed before him to show that the choice is not a proper
one.” An appointment made by a register is nothing more
than the designation of a suitable person for the trust ;°

 

‘In re Sheiffer & Garrett, 2 B. R. 591.

*In re J. O. Smith, 1 B. R. 243; 8. c. 2 Ben. 113; in re Clairmont, 1 B.
R. 276; s. c. Lowell, 230; s.c.1L. T. B. 6.

*In re Sche'ffer & Garrett, 2 BR. R. 591.
FIRST MEETING OF CREDITORS. 133

but is usually approved, unless objections are made. An
assignee, duly elected by the creditors, is entitled to the
position by virtue of the statute, unless there is an impu-
tation upon his competency or character.’

An assignee should reside in the district in which the
proceedings are pending;” but, if he has a place of busi-
ness within the district, the judge may appoint a person
who resides in the district to act as assignee, in conjunc-
tion with him, and will then approve the choice.’ An at-
torney for a creditor,‘ or an attorney for the bankrupt,’
may be chosen; but an attorney for the bankrupt must
cease to act as such, for the two positions are manifestly
inconsistent and incompatible. A director of a corpora-
tion which has received an unlawful preference can not
be approved.’ A relative of the bankrupt is not abso-
lutely disqualified; but if there are any unlawful prefer.
ences to be investigated, the choice may be disapproved."
The election of the confidential clerk of the bankrupt’s at-
torney is objectionable.’ A person can vot act both as
receiver and as assignee and have his acts authorized by
the State court and by the bankrupt court. This is a
position of incompatibility which the bankrupt court can
not permit one of its officers to occupy. If he is to be as-
signee, he must look to the bankrupt court alone as the
source of his authority. A general bias either for or
against the bankrupt or his dealings will not disqualify a
person of standing and character.”

 

‘In re Grant, 2 B. R. 106.
* In re Havens, 1 B. R. 485; Anon. 1 B. R. (quarto), 29.
*In re Loder et al. 2 B. R. 515; in re Jacoby, 1 W.N. 16.

‘In re Barrett, 2 B. R. 583; s.c. 1L. T. B. 144; in re Lawson, 2 B. R.
396.

*Inre Clairmont, 1 B. R. 276; 8. c. Lowell, 230; 5.c.1L. T. B. 6.
‘In re Powell, 2 B. R. 45.

"In re Powell, 2 B. R. 45; in re Bogert et al. 3 B. R. 651.

° In re Mallory, 4 B. R. 158; 8. o. 2 L. T. B. 130.

° In re Stuyvesant Bank, 6 B. R. 272.

In re Clairmont, 1 B. R. 276; s. c. Lowell, 230; s.c. 1 L. T. B. 6.
134 FIRST MEETING OF CREDITORS.

The solicitation of votes is permissible in all cases,
when properly exercised. If the creditors take an interest
in the meeting, the whole subject of the election may be
thoroughly canvassed and discussed, and all arguments
appropriate for conviction and persuasion may be used.
The choice must be free and unbiased ; but it ought, also,
to be the result of deliberation and an enlightened judg-
ment—a choice made with the full knowledge of all the
facts and their bearings. Improper means and undue in-
fluence can never be permitted. Whether there has been
such undue influence or improper means exercised as to
invalidate the election, will depend upon the circumstances
of each case! A promise to pay the claim of a creditor in
full is improper, and an election so procured will not be
approved.” There are circumstances, also, under which no
solicitation can be permitted. ‘There is a manifest differenee
between soliciting the votes of creditors who are inter-
ested in the proceedings and watchful of their rights, and
soliciting the votes of those who are entirely indifferent,
and merely come in as a matter of accommodation, to en-
able a certain person to accomplish his purpose. Thus,
where the only claims proved were those of two friends
of the bankrupt, brought in by him for the sole purpose
of selecting an assignee, the choice was disapproved.’ So,
also, the election of a person who made it a business, in
cases were there were no assets, to bring in a creditor to
prove a claim, and vote for him with a view solely to the
pecuniary emoluments that belong to the position, was re-
jected* The facts, in both of these cases, were peculiar,
and in both the manifest policy and object of the statute
were defeated by an abuse of its forms and privileges.

All objections should be made, if the facts are known

‘In re Mallory, 4 B. R. 153; 8. c. 2 L. T. B. 180.
“In re Haas & Samson, 8 B. R. 189.

"In re Bliss, 1 B. R. 78; s. c. 1 Ben. 407.
“Inre A. B. 2B. R. 808; 8. c. 2 Ben. 66.
FIRST MEETING OF CREDITORS. 135

to the creditors, immediately after the election. If, with
full knowledge of the facts, the creditors allow the as-
signee to go on and exercise his duties, they can not
afterward have him removed without showing some mis-
conduct, or that the relation he holds to the creditors or
the bankrupt is in some way prejudicial to the mghts or
interests of the creditors! When the judge withholds
his approval of the choice made by the creditors, a new
election must be ordered.? He may also when, in his judg-
meut, it is for any cause needful or expedient, appoint ad-
ditional assignees, or order a new election (§ 5034). No
additional assignee can be appointed except upon the peti-
tion of one-fourth in number and value of the creditors
who have proved their debts and upon good and sufficient
cause shown. An additional assignee will not, in general,
be appointed at the request of the minority of the creditors,
for the statute does not appear to intend a minority repre-
sentation. The creditors have the right to decide upon
the number of assignees, as well as to choose them.” A
new election will not be ordered when it is not apparent
that a different result would be thereby attained.°
Appended to the usual report of the choice of an as-
signee is a form for the appointment of a solicitor for the
assignee, and the judge’s approval thereof.’ The intent of
this clearly is, that such solicitor must be a quasi officer of
the court, and be duly appointed and regularly approved.
He is considered as a minister of the court, and his duty is
to attend to the estate. The court uniformly disapprove
of the same person acting as attorney for the bankrupt
and the assignee, not because the duties are always con-

 

‘In re Mallory, 4 B. R. 158; 8. c. 2 L. T. B. 180.

* In re Scheiffer & Garrett, 2 B. R. 591.

* In re Overton, 3 B. R. 366. * Rule IX.
* In re Clairmont, 1 B. R. 276; s. c. Lowell, 230; 8. c. 1 L. T. B. 6.

‘In re Pfromm, 8 B. R. 357; in re Lake Superior 8. C. R. R. & I, Co. 7
B. R. 876; in re George Jackson, 14 B. R. 449.

7 Form No. 15.
136 FIRST MEETING OF CREDITORS.

flicting and adverse, but because they may be so. His
first duty will be to the estate, and it is considered incon-
sistent with his duties if he acts also as attorney for the
bankrupt."

It isthe duty of the register, immediately upon the
appointment of an assignee, should he not be present at
the meeting, to notify him personally or by mail of his
appointment; and in such notification the assignee so ap-
pointed must be required to give notice forthwith to the
court or register of his acceptance or rejection of the trust.’
The notification must be entitled in the cause, and should
be in the prescribed form.’ If an assignee, chosen or ap-
pointed, fails within five days to express, in writing, his
acceptance of the trust, the judge or register may fill the
vacancy ($ 5034). When the assignee is present, the ac-
ceptance is written upon the certificate of his election; if
he is absent, it is made upon the notification, which is then
placed on file.

The judge at any time may, and, upon the request in
writing of any creditor who has proved his claim, must
require the assignee to give good and sufficient bond to
the United States, with a condition for the faithful per-
formance and discharge of his duties (§ 5036). No one
but the judge can require an assignee to execute a bond,
and this should always be done when a creditor demands
it? The order should specify the time within which the
bond shall he filed, and if it omit to do so, the assignee
can not be deemed in default for not filing a bond.® There
must be a separate and distinct bond for each case in
which he is appointed. A general bond, conditioned for
the faithful performance of his duties in all cases in which
he may be appointed, is not sufficient.?’ The bond must

 

‘In re Mallory, 4 B. R. 153; 8. c. 2 L. T. B. 130. 7
* Rule IX. * Form No. 16.

“In re Dean, 1 B. R. 249; 5. c. 1 L. T. B. 9; contra, in re Binninger &
Clark, 9 B. R. 568.

*Tn re Fernberg, 2 B. R. 353.
“In re George E. Sands, 7 Ben. 19. "In re McFaden, 3 B. R. 104.
FIRST MEETING OF CREDITORS. 137

be in the prescribed form.1| The bond must be approved
by the judge or register by his indorsement thereon, and
be filed with the record of the case. It inures 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 orders, not exceeding ten days after no-
tice to him of such order, the judge must remove him and
appoint another in his place (§ 5036).

The assignee must immediately give notice of his ap-
pointment by publication, at least once a week for three
successive weeks, in such newspapers as shall for that
purpose 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 reside (§ 5054). The order directing the publi-
cation may be made by the register,” and the publication
should be in the newspapers designated by the rules of
the court, if any are so designated. The notice must be
published once in every seven days for three successive
periods of seven days each; the interval between any two
publications must be not less than seven days; the inter-
val between the last publication and any proceeding de-
pendent upon the publication must be not less than seven
days; and the publications must be three in number.*
The publication is not essential to the regularity of the
proceeding. It is directory to the assignee and not in-
tended so much for creditors as for persons owing debts
to, or otherwise having business with, the estates This
notice must be according to the prescribed form.’

As soon as the assignee is appointed and qualified, the
judge, or where there is no opposing interest, the register
must, by an instrument under his hand, assign and convey

 

* Form No, 17. * Rule V.

° In re Bellamy, 1 B. R. 64; 8. c. 1 Ben. 890; 8. c.1 L. T. B. 22.
“In re Littlefield, 3 B. R. 57; s. c. Lowell, 831; s.c.1L. T. B. 164.
* Form No. 16.
138 FIRST MELTING OF CREDITORS.

to the assignee all the estate, real and personal, of the
bankrupt, with all his deeds, books and papers relating
thereto; and such assignment relates back to the com-
mencement of the proceedings in bankruptcy, and there-
upon by operation of law, the title to all such property and
estate, both real and personal, vests in the assignee, al-
though the same is then attached on mesne process as the
property of the bankrupt, and dissolves any such attachment
made within four months next preceding the commencement
of such proceedings. This assignment should be made ac-
cording to the prescribed form,' and should always be under
the seal of the court, whether made by the register or by
the judge? The word “is” in the form, before the word
“ possessed,” is probably a misprint, and should be changed
to was? The title should be made to vest in the assignee
from the time of the filing of the petition in the cause.
The assignment should never be made until the judge cer-
tifies his approval of the assignee elected or appointed *
It should be made, even though the title to the property
is in dispute. No acknowledgment is necessary. The
title passes by virtue of the bankrupt law, which is the
paramount law by force of the power conferred upon Con-
gress by the Constitution to establish a uniform system
of bankruptey, and the only forms that need be observed
in the execution are those prescribed by the statute itself*

By the rule of court, in some districts, duplicates are
prepared, one of which is left with the clerk and the
other delivered to the assignee. Where this is not the
practice, the assignment should be first taken to the clerk
and recorded, so that he may have a proper record from
which he can make’ the certified copies required by the
statute."

 

' Form No. 18. *In re Neale, 2 B. R. 177; 8. c.1 L. T. B. 295.
°In re Patterson, 1 B. R. 125; 8. c. 1 Ben. 508.
‘In re Scheiffer & Garrett, 2 B. R. 591. “In re Wylie, 2 B. R. 187.

° In re Neale, 3 B. R. 177; 8. c. 1 L. T. B. 295; contra, Zeigler v. Shomo,
78 Penn. 357,

"In re A. Alexander, 3 B. R. (quarto), 20.
FIRST MEETING OF CREDITORS. 139

The assignee must, within six months, cause the assign-
ment to him to be recorded in every registry of deeds or
other office within the United States, where a conveyance
of any land owned by the bankrupt ought by law to be
recorded ($ 5054). 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.
It may also be used as evidence in the courts without
being recorded. The object in requiring it to be recorded
is, that every purchaser of land at an assignee’s sale may
have recourse to a certified copy from such record as a
link in his claim 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. Recording is necessary for the safety of such
purchaser. There is but one original assignment, and
that must be filed eventually in the office of the clerk of
the district court. This might be destroyed or lost, and it
is often very inconvenient to have recourse to it! The
recording of the assignment, however, is not essential to
the validity of the transfer, and is not designed to operate
as under the State registry acts. The assignment relates
back to the commencement of the proceedings, and all
subsequent purchasers are affected accordingly, whether
they purchase before the assignment is actually made or
afterwards. A person who purchases from the bankrupt
after the commencement of the proceedings, takes no title
although he has no notice thereof. The question of notice
can not arise. The purchase being of what the bankrupt
had at the time of transfer, the purchaser acquires no title
as against the assignee.”

 

a y A re Neale, 3B. R. 177; 8. ¢c.1 L. T. B. 295; Holbrook v. Coney, 20
. 5438.

? Davis v. Anderson, 6 B. R. 145; in re Gregg, 3 B. R. 529; 8. c. 1 L. T.
B. 298; Stuart v. Hines, 6 B. R. 416; s. c. 83 Iowa, 60; 8. c.5 L, T. B. 46;
Philips v. Helmbold, 26 N. J. Eq. 202.
CHAPTER VIL

DUTIES OF ASSIGNEES AND MODE OF REMOVAL.

Tue assignee must, immediately upon entering upon his
duties, prepare a complete inventory of all the property
of the bankrupt that comes into his possession, except

where an inventory is furnished to him by the marshal;

in which case, having verified the same, he must add there-
to a certificate that the same is correct, or that the same is
correct as modified by a supplemental inventory, to be
annexed thereto; in which supplemental inventory he
must state any deficiency of assets named in the marshal’s
inventory, and must add any property or assets not con-
tained therein! Every assignee must keep a regular
account of all moneys received or expended by him, to
which every creditor may, at reasonable times, have free
access.” The assignee of a partnership must keep separate
accounts of the joint stock or property of the firm, and of
the separate estate of each partner (§ 5121). The assignee
must 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 all
other times when the court, on motion or otherwise, shall
so order.’

The assignee must, 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 and apart from all other money in his possession ;
and must, as far as practical, keep all goods and effects
belonging to the estate separate and apart from all other

 

‘Rule XIX. * Act of 22 June, 1874,§ 4. * Act of 22 June, 1874, § 4.
DUTIES OF ASSIGNEES. 141

goods in his possession, or designated by appropriate
marks, so that they may be easily and clearly distin-
guished, and may not be exposed or liable to be taken as
his property, or for the payment of his debts ($ 5059).
The district court in each district designates certain national
banks, if there are any within the judicial district, or if
there be none, then some other safe depository, in which
all moneys received by assignees, or paid into court in the
course of any proceedings in bankruptcy, must be de-
posited ; and every assignee, and the clerk of such court,
must deposit all sums received by them severally, on ac-
count of any bankrupt’s estate, in one designated depos-
itory, and every clerk and assignee must make a report
to the court of the funds received by him, and of deposits
made by him, on the first Monday of every month. No
moneys so deposited can be drawn from such depository
unless upon a check or warrant signed by the clerk of the
court, or by an assignee, and countersigned by the judge
of the court, or one of the registers designated for that
purpose, stating the date, the sum, and the account for
which it is drawn; and an entry of the substance of such
check or warrant, with the date thereof, the sum drawn
for, and the account for which it is drawn, must be forth-
with made in a book kept for that purpose by the assignee
or the clerk; and all checks and drafts must be entered in
the order of time in which they are drawn, and must be
numbered in the case of each estate. A copy of Rule
XXVIII must be furnished to the depository so designated,
and also the name of any register authorized to counter-
sign such checks.' The substance of each monthly return
of the assignee must be sent by the register to any cred-
itor who shall request it and pay the fee provided for
notices to creditors.’

‘When it appears that the distribution of the estate

 

* Rule XXVIII > Rule XIX.
142 DUTIES OF ASSIGNEES

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 a register of the court, or may authorize the same to be
deposited in any convenient bank upon such interest, not
exceeding the legal rate as the bank may contract with
the assignee to pay thereon (§ 5060).

All proofs must be delivered or sent by mail to the
assignee whose duty it is to examine the same and compare
them with the books and accounts of the bankrupt, and
to 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 proofs are received, stating the
time of receipt of such proofs, and the amount and nature
of the debts, which book must be open to the inspection
of all the creditors ($ 5080). Proofs of debt received by
any assignee must be delivered 'to the register to whom
the cause is referred.*

The assignee may, under the direction of the court,
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 controversy; and may, under such
direction, compound and settle any such controversy, by
agreement with the other party, as he thinks proper and
most for the interest of the creditors (§ 5061). Whenever
an assignee makes application to the court for authority
to submit a controversy arising in the settlement of de-
mands against the bankrupt’s estate, or of debts due to
it, to the determination of arbitrators, or for authority to
compound and settle such controversy by agreement with
the other party, the subject-matter of the controversy and
the reasons why the assignee thinks it proper and most
for the interest of the creditors that it should be settled

* Rule XXXIV.
AND MODE OF REMOVAL. 143

by arbitration or otherwise, must be set forth clearly and
distinctly im the application; and the court, upon exam-
ination of the same, may immediately proceed to take
testimony and make an order thereon, or may direct the
assignee to give notice of the application, either by publi-
cation or by mail, or both to the creditors who have
proved their claims, to appear and show cause, on a day
to be named in the order and notice, why the application
should not be granted, and may make such order thereon
as may be just and proper.’

The assignee must demand and receive, from any
and all persons holding the same, all the estate assigned,
or intended to be assigned, under the provisions of
the statute (§ 5055). The debtor must, 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 him-
self fully of all the assets of the bankrupt (§ 5051).
No person is entitled, as against the assignee, to with-
hold from him possession of any books of account of
the bankrupt, or claim any lien thereon ($ 5050). The
assignee has 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 ren-
dered and no assignment had been made (§ 5047).

If, at the time of the commencement of proceedings in
bankruptcy, an action is pending 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 may, if he requires it, be admitted to prose-
cute the action in his own name, and in like manner and
with like effect as if it had been originally commenced by
him (§ 5047), The bankrupt may continue to prosecute
a pending action until the assignee is appointed and an
assignment made to him, for he holds the title, and there

 

* Rule XX.
144 DUTIES OF ASSIGNEES

is no one to take his place until that time.’ If a chose in
action upon which a suit has been brought was assigned
before the commencement of proceedings in bankruptcy,
the suit may still be prosecuted in the name of the bank-
rupt.2 Whether such a transfer is void under the bank-
rupt law or not is a question that can not be raised by
the defendant, for the assignee is the only party who can
contest it.2 Ifthe suit is on a contract made by the bank-
rupt as agent for another, the suit may still be continued
in his own name.t The bankrupt may also continue to
prosecute an action of replevin for an article which is set
apart to him as exempt.” Where the right of action, how-
ever, passes to the assignee, he must prosecute the suit in
his own name, and not in the name of the bankrupt, for
the bankrupt is e¢viliter mortwus, and can not, in such a
case, sue either for himself or for another. The bankrupt
can not prosecute the action in his own name, although he
did not place the right on his schedule." The language of
the statute, however, is permissive. It only becomes a duty
to prosecute suit when the interest of the estate demands
it, and of this the assignee is in the first instance the judge.
He need not proceed unless he sees that it is for the bene-
fit of the estate, and has money in hand sufficient to meet
the expenses.* If he deems it expedient, he may prosecute
the action in his own name, whether it is pending in a
State or a Federal court.’ His right to do so is not affected
by the circumstance that third persons also have an inter:
est in the claim.” If any suit at law or in equity in which

 

* Sutherland v. Davis, 10 B. R. 424; s.c. 42 Ind. 26.

* Valentine v. Holloman, 63 N, C. 475; King v. Morrison, 5 Ark. 519.

* Smally v. Taylor, 33 Tex. 668.

* Rhoades v. Blackiston, 106 Mass. 834. * Scott v. Wilkie, 65 N. C. 376.

* Cannon v. Wellford, 22 Gratt, 195; Lacy v. Rockett, 11 Ala. 1002; con-
tra, Noonan vy. Orton, 12 B. R. 405; s. c. 34 Wis. 259.

7 Planters’ Bank v. Conger, 20 Miss, 527.

* Reade v. Waterhouse, 10 B. R. 277; s.c. 52 N. Y. 587; 8. 0. 85 N.Y.
Sup. 78; s. 0.12 Abb. Pr. (N. S.) 255.

* Ames y. Gilman, 51 Mass. 229. * Hammond y. Rice, 18 Vt. 353.
AND MODE OF REMOVAL. 145

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
(§ 5047). The power of State courts to proceed with
pending suits is thus, under certain prescribed lmita-
tions, recognized by the statute itself, If a creditor pros-
ecuting such pending suit proves his debt, his right to
continue it is suspended until a hearing is had upon the
application for a discharge; and, if a discharge is granted,
is absolutely surrendered. If he does not prove his debt,
then the suit can only be stayed temporarily to await the
determination of the right of the bankrupt to obtain a
discharge. Congress could have made an adjudication in
bankruptcy operate, proprio vigore, to withdraw all cases
pending in other courts, at the time of the filing of the
petition, to which the bankrupt should be a party, from
those tribunals, and transfer them into the district court.
It has not, however, done so. It not only has not de-
prived those courts of jurisdiction over such cases, but it
has provided for their prosecution and defense in those
courts by the assignee. The jurisdiction of other courts
is not extinguished, except in those cases where the cred-
itor proves his debt. Nor can the district court determine
any of the questions that may arise in actions so pending
in those courts. They have authority over such actions,
and jurisdiction of the parties and subject-matter, and
must determine such 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 those tribunals. In no other way can
their decisions be reversed or revised.’

 

* Samson v. Burton, 4 B. R.1; 8. c. 5 Ben. 825; Clark v. Binninger, 3 B.
R. 518; s. c, 38 How. Pr. 341; 8. c. 89 How. Pr. 363; s.c. 3 L. T. B. 49; in
re Clark et al. 3 B. R. 524; 8.0.4 Ben. 88; Peck v. Jenness, 7 How. 612.

10
146 DUTIES OF ASSIGNEES

This provision, however, does not oblige the assignee
to seek a remedy by becoming a party to a pending suit.
He may institute proceedings in the Federal courts in
those instances where Jurisdiction is expressly conferred
upon them by the statute.’ In making his application to
be admitted as a party to a suit, the assignee must show
that he has some interest in the controversy. There is no
reason for making him a party to a protracted litigation
unless it is shown that there is good reason for supposing
that he has some right which may be affected by the suit.’

A copy, duly certified by the clerk of the court, under
the seal thereof, of the assignment, is conclusive Ss adlenies
of the title of the assignee to take, hold, sue for, and re-
cover the property of the bankrupt ($ 5049). He will
be admitted as a party to the suit, on motion, upon the
production of such copy duly certified It is not neces-
sary for him to show all the steps in the proceedings,‘ or
the jurisdiction of the court over the proceedings or the
person of the bankrupt,’ for the copy of the assignment is
made conclusive evidence of his right to sue. For the
‘same reason, the existence or sufficiency of the debt of
the petitioning creditor can not be collaterally drawn in
question.®

No suit pending in the name of the assignee, or to
which he is a party, will be abated by his death or re-
moval; but, upon the motion of the surviving or re-
maining or new assignee, as the case may be, he will be
admitted to prosecute the suit in like manner and with

 

? Traders’ National Bank v. Campbell, 3 B. R. 498; s. c. 6 B.R. 858; 8. ¢.
2 Biss. 423; 8. c. 14 Wall. 87.

a. Gunther et al. v. Greenfield et al. 3 B. R. 780; 8. c. 8 Abb. Pr. (N. 8.)
* Herndon v. Howard, 4 B. R. 212; 8. c. 9 Wall. 664; s. c. 40 How. Pr.
288; Knox v. Exchange Bank, 12 Wall. 379.
* Rogers v. Stevenson, 16 Minn, 68.
* Cone v. Purcell, 11 B. R. 490; s.c. 56 N.Y. 649.
* Barstow v. Adams, 2 Day, 70: Rugan v. West, 1 Binn. 263; Barclay v.

Carson, 2 Hay (N. C.) 243 ; Lovett v. Cutler, 1 Mass. 67; Livermore y. Swa-
“ey, 7 Mass. 218; Den v. Wright, Pet. C. C. 64,
AND MODE OF REMOVAL. 147

like effect as if it had been originally commenced by him
(§ 5048). . :

* Whenever it may be deemed for the benefit of the
estate to compound any debts, or other claims, or securi-
ties due’ or belonging to the estate of the bankrupt, the
assignee, or the bankrupt, or any creditor who has proved
his debt, may file his petition therefor in the office of the
clerk of the district court; and thereupon the court will
appoint a suitable time and place for the hearing thereof,
notice of which must be given in some newspaper, to be
designated by the court, at least ten days before the hear-
ing, so that all creditors and other persons interested may
appear and show cause, if they any have, why an order
should not be passed by the court upon the petition, au-
thorizing such act upon the part of the assignee.’

The court, after due notice and hearing, may remove
an assignee for any cause which, in its judgment, renders
such removal necessary or expedient, and at a meeting
called for the purpose, by order of the court in its discre-
tion, or called upon the application of a majority of the
creditors in number and value, the creditors may also,
with consent of the court, remove any assignee by such
vote as is necessary for the choice of an assignee (§ 5039).
Any ‘person interested in the settlement of the estate may
file a petition in the prescribed form, asking for such re-
moval,? and must set forth in his application the causes
for which such removal is requested. This petition must
be entitled in the cause, addressed to the judge, and duly
verified by the oath of the petitioner. The register can
not entertain such a petition. It must be filed in court.’ |
Upon the filing of the petition, an order * for the assignee
to appear and show cause is passed, and served upon him
by the marshal.’ The return of service is made in the

 

’ Rule XVII. * Form No. 40.
*In re Stokes, 1 B. R. 489. “Form No. 41.
* Rule XXIII.
148 DUTIES OF ASSIGNEES

usual form. Upon the return day the assignee should
-appear and answer the allegations of the petition. The
motion for removal may be tried on affidavits or testimony
‘taken in open court, or before a register or commissioner
(§ 5008).

The court may order a removal,‘ or call a meeting of
creditors to consider the question of removal.’? The re-
moval is a matter in the discretion of the court. Such
discretion is, however, a legal discretion, and can only be
exercised when cause is shown rendering such removal
expedient or necessary.? 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 the proceeds among the creditors. If he is
guilty of gross and culpable negligence of duty in this
respect he may be removed.* When there is an irreconcil-
able difference between the assignee and a large portion of
the creditors, an order for his removal will be made. He
is a trustee of each and every creditor. He receives a
compensation for his services, and is held to strict diligence
in watching their interests. They are the beneficiaries, and
have a direct interest in the proceedings. The court will
not constitute itself the legal adviser of the assignee. He
has a right to choose his counsel, subject to the approval
of the court, and must proceed with his duties according
to his best judgment, being held to no more than a just
and reasonable accountability.” Hf the assignee is charged
with misconduct in instituting a suit, the question is not
whether the suit was without proper legal foundation, but

 

? Form No. 48.

i a eae Steamship Co. 2 B. R. 428; in re Mallory, 4 B. R. 153; 8. ¢.

*In re Blodgett & Sandford, 5 B. R. 472.
‘Jn re Morse, 7 B. R. 56.

*In re Mallory, 4 B. R. 158; s. c. 2 L. T. B. 180; i ki
56; so. 5 Biss 304 ; ; inre Perkins, 8 B. R.
AND MODE OF REMOVAL. 149

whether its prosecution was fraudulent, malicious, or from
unjust motives and not in good faith’ Erroneous legal
advice, where the errors are so gross and frequent as to be
evidence of the incompetency of his legal adviser, may be
cause for ordering him to employ other counsel; but does
not necessarily constitute a cause for removing the assignee
himself? When creditors apply to an assignee to ascer-
tain the condition of the estate, he should communicate all
material facts within his knowledge, and the willful sup-
pression of such facts is a ground for removal.? He may
also be removed if he fails and neglects to well and faith-
fully discharge his duties in the sale or disposition of prop-
erty, or in any manner unfairly or wrongfully sells or dis-
poses of, or in any manner fraudulently or corruptly com-
bines, conspires or agrees with any person or persons with
intent to unfairly or wrongfully sell or dispose of the
property committed to his’ charge* If a proper case is
established upon the hearing of such petition, the court
may also, and upon the application of a majority of the
creditors in number and value must, call a meeting of the
creditors to consider the question of such removal, and
may also direct that if the requisite vote at such meeting
is in favor of a removal, the creditors may then at the
same time choose a successor.’ The order for the meeting
must be in the prescribed form.’ If it is made upon the
petition of a creditor, it should set forth the charges, or if
it is made at the request of the majority of the creditors,
the fact should be so stated. Notices to the creditors of
the time and place of meeting must be given through mail
by letter, signed by the clerk of the court. Every en-
velope containing a notice must have printed upon it a

 

‘In re Sacchi, 6 B. R. 398; s. c. 6 B. R. 497; s, c. 43 How. Pr. 250.
* In re Blodgett & Sandford, 5 B. R. 472.
*In re Perkins, 8 B. R. 56; s. c. 5 Biss. 254.

* Act of 22 June, 1874, § 4. °In re N. Y. Steamship Co. 2 B. R. 428.
* Form No. 42.
150 DUTIES OF ASSIGNEES

direction to the postmaster at the place to which it is sent
to return the same within ten days unless called for... The’
form of the vote for a removal is the. same as that for
an appointment, except that the word remove is substi-
tuted for the word appoint; a successor is elected in the
same manner as the original assignee was, and the same
memorandum of the election should be made. The re-

moval, however, is subject to the approval of the judge,

who will exercise a legal discretion.? In case the assignee
neglects to file any report or statement which it is made

his duty to file or make by the bankrupt act, or any gen-

eral order in bankruptcy, within five days after the same

is due, it is the duty of the register to make the order re-

quiring the assignee to show cause before the court, ata

time specified in the order, why he should not be removed

from office. The register must cause a copy of the order

to be served upon the assignee at least seven days before

the time fixed for the hearing, and proof of the service

thereof to be delivered to the clerk.

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 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 person as the court may direct ($ 5041). The vacan-
cies, however, are only those which occur after an assignee
has once been regularly elected or appointed, and received
the approval of the judge.®

An assignee may, with the consent of the judge, resign
his trust, and be discharged therefrom (§ 5038). The
resignation or removal of an assignee in no way releases
him from performing all things requisite on his part for

\

‘Rule XXIII. ? Form No. 42.
° Form No. 44. ‘Rule XIX.

° In re Dewey, 4 B. R. 412; 8. c. Lowell, 498; 5, 0.2 L. T. B. 184,
° In re Scheiffer & Garrett, 2 B. R. 591.
AND MODE OF REMOVAL. 151

the proper closing up of his trust and the transmission
thereof to his successors, nor does it affect the liability of
the principal or surety on the bond given by the assignee
($ 5040). When, by death or otherwise, the number of
assignees is reduced, the estate of the debtor not lawfully
disposed of vests 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 ($ 5042). Any former assignee, his ex-
ecutors or ‘administrators, upon request, and at the ex-
pense of the estate, must 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 fulfil-
ment of the duties of any former assignee, and the rights
and interests of all persons interested in the estate
($ 5043).. An assignee refusing or unreasonably neglect-
ing to execute an instrument when lawfully required by
the court, or disobeying a lawful order or decree of the
court in the premises, may be punished as for a contempt
of court ($ 5037).
CHAPTER VIII.

EXEMPTIONS.

Tue assignee must make report to the court, within
twenty days after receiving the deed of assignment, of the
articles set off to the bankrupt by him, with the estimated
value of each article.’

The exemptions which may be made are the necessary
household and kitchen furniture, and such other articles
and necessaries of such bankrupt as the assignee may des-
ignate and set apart, having reference in the amount to
the family, condition, and circumstances of the bankrupt,
but altogether not to exceed in value, in any case, the sum
of five hundred dollars; and also the wearing apparel of
such 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 may be, exempt from attachment or seizure,
or levy on execution by the laws of the United States;
and such other property not included in the foregoing ex-
emptions, as is exempted from levy and sale upon execu-
tion 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 allowed by the constitution and laws of each
State as existing in the year eighteen hundred and seven-
ty-one (§ 5045). As these provisions are founded upon
the humane policy of providing means for the support of
the poor man and his family, they are to be liberally
rather than strictly construed; they should receive such

 

1 Rule XTX.
EXEMPTIONS. 153

fair construction as will best promote the beneficent inten-
tion of Congress.

The following property is, according to these provisions,
exempt absolutely and independently of the exercise of
any discretion on the part of the assignee, viz.: Ist.
Necessary household and kitchen furniture to an amount
not exceeding $500; 2d. Wearing apparel of the bank-
rupt, his wife and children; 3d. Uniform, arms, and
equipments, if the bankrupt has been or is in the Federal
military service; 4th. Other property, which, at the time
of the filing of the petition, is exempt by the laws of the
United States; and 5th. Property exempt by State laws
other than that already specified.*

The provision in regard to household and kitchen fur-
niture is imperative on the assignee, though he must de-
termine what furniture, under the circumstances, is neces-
sary.” The furniture, in order to be 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 household may
consist of servants, or any persons residing with him, and
under his control.? If he has an adopted daughter and
her children living with him, but hires the servants, he is
the head of the family,‘ although he has neither wife nor
children. These illustrations are enough to show what is
intended when it is said that the bankrupt must keep
house, or be the head of a family. It would make no
difference whether he has a whole house or only a portion.
If he has a wife or children, and furnishes his own rooms,
he might still be entitled to the exemption, although he
was merely boarding, for he would, even then, be the
head of a family. It is not sufficient, however, that he be
the head of afamily merely. The furniture must also

 

1In re Feely, 8B. R. 66. 2 In re W. H. Thiell, 4 Biss. 241.
°In re Cobb, 1B. R. 414; 3.¢c.1L. T. B. 59; in re Ruth, 1B. R. 154.
‘In re Taylor, 3 B. R. 158.
154 EXEMPTIONS.

be necessary to him in his condition and circumstances.
Only those articles are exempt which are necessary to en-
able him to keep house. This necessity need not be a
stringent, imperative necessity. The statute does not so
limit the exemption, nor declare that the articles must be
strictly and indispensably necessary. Those articles may
be considered necessary which are commonly used among
men of moderate means in that community. The articles
and the amount will, of course, both vary, according to
the locality and the business of the bankrupt. What
would be necessary on a farm would not be necessary in
a city, and vice versa. If he had furniture to the amount
of $500, it would probably be exempt to that amount.
Furniture to the amount of $355 has been declared little
enough. The fact that the bankrupt’s wife has furniture
which is her separate property does not affect the ques.
tion, for it is not the policy of the statute to leave him
dependent upon her for the means necessary to enable him
to keep house.? .

The practice in the Federal and State courts was, in
1871, generally the same, as to the exemption of the prop-
erty of debtors’ This fact is very important, and should
be duly considered in making exemptions under the State
laws, for no property can be exempted under the State
laws which is or can be included in any other exemptions
(§ 5045).4 An exemption may be allowed under the ter-
ritorial statute.” The exemption under the laws of the
United States is not limited to those exemptions which
could have been made at the time the bankrupt law was

 

‘In re Cobb, 1 B. R. 414; s.c.1L. T. B. 59.

* In re Cobb, 1 B. R. 414; s.c.1L. T. B. 59; inre D. H. Tonne, 13 B.
R. 170.

* In re Ruth, 1 B. R. 154; s8.c. 1 L. T. B. 59; in re Appold, 1 B. R. 621 ;
8, c. 6 Phila. 469; s.c. 1 L. T. B. 83.

‘In re EB. A, Vogler, 8 B. R. 132.
° In re McKercher & Pettigrew, 8 B. R. 409.
EXEMPTIONS. 155

passed, but extends to those which may be allowed by
any other subsequent acts ($ 5045).

There was at one time considerable discussion in re-
gard to the constitutionality of the clause allowing exemp-
tions under the State laws, upon the ground that it was
not uniform in its operation; but only a few cases have
ever been decided upon that point,' and the law is gener-
ally acquiesced in. Such exemptions are in addition to
all others,? but can not embrace any property included in
those. Hence the assignee can not set apart to the bank-
rupt under the State laws any property specifically desig-
nated as exempt under the other provisions of the statute,
such as household and kitchen furniture, wearing apparel,
the uniform, arms, and equipments of a soldier? It has
also been decided that there can be no exemption under
the State laws, unless those laws exempt by name differ-
ent kinds of property from those allowed under the other
exemptions; as, for instance, that if a bankrupt has $1,000
worth of furniture, and claims $500 as exempt under the
bankrupt law, he can not claim any of the balance under
any State law. But this, clearly, is not the proper con-
struction. It is not requisite that the property shall be
different in kind. It must be other property; that is,
property not covered by the other exemptions. This very
balance comes within the very words of the statute. It
is “other property not included in the foregoing excep-
tions.” The only effect of this provision is to compel the
baukrupt to claim all that, he can under the other exemp-
tions, and then he may make a claim under this clause.‘

It is a mistake to say that the only exemption that can
be made is that which-is allowed under the State laws
which were in force in 1871. The exemption may be

 

' 1Inre Beckerford, 4 B. R. 208; s. c. 1 Dillon, 45; 3. c. 1 L. T. B. 241; in
re Wylie, 5 L. T. B. 380; in re Daniel Deckert, 10 B. R. 1.

“In re Ruth, 1 B. R. 154; in re Cobb, 1 B, R. 414; 8. c. 1 L. T. B. 59.
* In re Feely, 3B. R. 66. ‘In re Edwin Davis, 2 Saw. 255.
156 EXEMPTIONS.

allowed under the law that is in force at the time of the
exemption, but the amount must not exceed that allowed
under the laws in force in 18717 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? It has also been held that, if the law has
been since amended so as to reduce the amount, the ex-
emption may be allowed under the prior law ;* but this
decision is questionable. The language of the statute is
that such other property may be excepted as “is exemp-
ted” by the laws of the State. It, therefore, can not be
exempted unless there is a State law exempting it. If
there is such a law, then it may be exempted to the
amount allowed by the laws in force in 1871, and no
more, The existence of the State law is an indispensable
condition, and the provision as to the amount is a limita-
tion.

The exemption, moreover, must be made according to
the laws of the State where the bankrupt had his domicile
at the time of the commencement of proceedings in bank-
ruptey, and not according to the laws of the State embrac-
ing the district in which the proceedings are pending, or
of the State where the property is located. It has been
said that the assignee should first ascertain what is ex-
empt under the State laws,> but this scarcely seems to be
correct. The proper mode is to ascertain first what is ex-
empt absolutely and unconditionally, commencing with
the exemptions under the bankrupt law, and then ascer-
taining whatis exempt under the State laws, for otherwise
it will, in many cases, be impossible to determine what
may be allowed under the State laws. In making ex-
emptions under State laws, the assignee should proceed as

 

*TIn re Askew, 3 B. R. 575. *Tn re Anthony Baer, 14 B. R. 97.
*In re Albert Cohen, 8 Dillon, 295.

‘In re W. 8. Stevens, 5 B. R. 298: s. c. 2 Biss, 878.
*In re Ruth, 1 B. R. 154; s.c.1L. T. B. 59; in re Noakes, 1 B. R. 592.
EXEMPTIONS. 157

conformably to those laws as may be possible! Expect-
ant interests which can not be seized and sold under ex-
ecution by the State laws are exempted under this pro-
vision.”

After these exemptions are allowed, the assignee
should next consider those exemptions in regard to which
he may exercise a discretion. These are necessaries and
other articles which, in character ay well as in amount
and value, are suitable to the family, condition, and cireum-
stances of the bankrupt. This allowance is conditional,
and is measured with reference not merely to value, but
also to subjects and their suitableness to personal require-
ments.? These exemptions, however, together with the
household and kitchen furniture, must not exceed the sum
of $500.4 The discretion must be a sound legal discretion.
The assignee must look to the policy and spirit of the
law. This allowance is to be made with reference to the
family, condition, and circumstances of the bankrupt. In
considering the family, he must have regard to the num-
ber 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 his in-
come is, how many of the family earn their own living,
whether they contribute to the support of the others, and
also how much and what property he is entitled to abso-
lutely and unconditionally.» The phrase, “other articles
and necessaries,” is an indefinite expression. It must, how-
ever, be construed as limited by the context, and as relat-
ing to things not precisely furniture or wearing apparel,

 

*In re Ruth, 1 B. R. 154; s.c.1L. T. B. 59; in re Keanet al. 8 B. R.
367; in re Feely, 3 B. R. 66.

* In re Bennett, 2 B. R. 181.
* In re Ruth, 1 B. R. 154; s.c. 1 L. T. B. 59.
“In re Cobb, 1 B. R. 414; s.c.1 L. T. B59,

*In re Feely, 3 B. R. 66: in re Ziba Williams, 5 Law Rep. 155; in re
Edward H. Ludlow, 1 N. Y. Leg, Obs. 322.
158 EXEMPTIONS.

but manifestly useful to the individual or his family in a
like sense.’ It does not include articles of mere fancy,
taste or convenience.” It may include family pictures,
keepsakes, and many other things of small value? It may
also include provisions,’ money,” a sewing machine,’ the
tools of a tradesman,’ the books of a professional man,°
the auction stand and flag of an auctioneer,’ a cow,” silver
spoons," and a moderate quantity of material for carrying
on a trade,” but not land, or gold watches or pianos or
other articles of mere luxury or ornament,” or a pew,” or
clock,"* or desks," or a fowling-piece, fishing tackle, breast-
pin or painting,” or manufactured articles kept for sale.”
When the property is incapable of division, it may be
sold, and the exemption allowed out of the proceeds.” If
the exempted articles have been sold by the assignee, the

 

‘In re E. D. Comstock, 1 N. Y. Leg. Obs. 826; in re Ziba Williams, 5
Law Rep. 155; in re Edward H. Ludlow, 1 N. Y. Leg. Obs. 322.

* In re Edward H. Ludlow, 1 N. Y. Leg. Obs. 322.
°JIn re W. H. Thiell, 4 Biss. 241.

‘In re Cobb, 1B. R. 414; s.c. 1 L. T. B. 59; in re Edward H. Ludlow,
1N. Y. Leg. Obs. 322.

* In re Thornton, 2B. R. 189; in re Ira Hay, 7 B. R. 844: 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. 6 Ben. 230.

°In re Graham, 2 Biss. 449,

"In re W.H. Thiell, 4 Biss. 241; ia re Edward H. Ludlow, 1 N. Y. Lég.
Obs. 822.

°In re W. H. Thiell, 4 Biss, 241.

° In re Edward H. Ludlow, 1 N. Y. Leg. Obs. 322.
Tn re Ziba Williams, 5 Law Rep. 155.

“In re Ziba Williams, 5 Law Rep. 155.

“In re W. H. Thiell, 4 Biss. 241.

“In re Thornton, 2 B. R. 189; contra, in re Edwards, 2 B. R. (quarto),
109.

In re Cobb, 1B, R. 414; 8. c. 1L. T. B. 59; in re Chester S. Kasson, 4
Law Rep. 489; in re Edward H. Ludlow, 1 N. Y. Leg. Obs. 822; in re W. H.
Thiell, 4 Biss. 241.

** In re E. D, Comstock, 1 N. Y. Leg. Obs. 326.

*° In re Ziba Williams, 5 Law Rep .155; in re Edward H. Ludlow, 1 N. Y-
Leg. Obs. 322.

Tu re Edward H. Ludlow, 1 N.Y. Leg. Obs. 822.
* Inre Edward H. Ludlow, 1 N.Y. Leg. Obs. 822.
” Inre W. H. Thiell, 4 Biss, 241.

2° In re Brown, 3 B. R. 250; s.c. 2L. T. B. 122.
EXEMPTIONS. 159

proceeds may be given to the bankrupt.’ The exemption
may be allowed although the property has within fonr
months prior to the filing of the petition been attached on
mesne process. If the property which would have been
exempt has been sold under an attachment on mesne pro-
cess which was dissolved by the commencement of pro-
ceedings in bankruptcy, the proceeds belong to the bank-
rupt.2 When property, which is exempt under both the
State laws and the bankrupt law, is levied upon before
and sold after the filing of the petition, the sale will be
set aside* An individual partner can not claim an ex-
emption out of the partnership assets, unless it is allowed
by the State laws;° and he can not claim it under the
State laws, unless there is an express provision to that
effect. A person who is indebted or even insolvent may
apply his property to the acquisition of a homestead, or
the discharge of incumbrances thereon, without depriv-.
ing it of the exemption from forced sale by law." No ex-
emption can be allowed out of property which has been
transferred with the intent to delay, hinder or defraud
the creditors. ‘The transfer is valid against the hankrupt,
and in attempting to place his property beyond the reach
of his creditors, he placed his exemptions beyond his own
reach.*

 

‘In re Welch, 5 B. R. 848; 8.c. 5 Ben. 230; in re Jones, 2 Dillon, 248.

* In re W. S. Stevens, 5 B. R. 298; 8. o. 2 Biss. 273.

* In re Ellis, 1 B, R. 551; contra, Robinson vy. Wilson, 15 Kans. 595.

“In re Griffin, 2 B. R. 254; s.c.2L. T. B. 23.

°In re Hafer, 1 B. R. 547; Anon. 1 B. R. (quarto), 187.

* Burns v. Harris, 67 N.C. 140; in re Handlin & Venny, 12 B. R. 49; 8.
c. 3 Dillon, 290; in re Blodgett & Sanford, 10 B.R 145; in reJ.8. & J.
Price, 6 B. R. 400; in re D. H. Tonne, 18 B. R.170; in re Stewart & Newton,
13 B. R. 295; in re Boothroyd & Gibbs, 14 B. R. 223; contra, in re Ralph,
4B. R. 95;,8. c. 2 L. T. B. 128; in re Young et al. 3 B. R. 440; in re
McKercher & Pettigrew, 8 B. R. 409; in re 8. H. Richardson & Co. 11 B.
R. 114.

"In re Henkel, 2B. R. 546; 8. c. 2 Saw. 305.

*In re Graham, 2 Biss. 449; Keating v. Keefer, 5 B. R. 183; s.c. 1 L. T.
B. 266; s.c. 4 L. T. B. 162; in re Dillard, 9 B. R. 8; sc. 6 L. T. B. 490;
contra, Cox v. Wilder, 5 B. R. 448: s. c. 7 B. R. 241; s. c. 2 Dillon, 182; s.
c.5 L. T. B. 500; Bartholomew y. West, 8 B. R. 12; 8. c. 2 Dillon, 290.
160 EXEMPTIONS.

The question of the rights of a creditor who holds a
valid lien upon the exempted property is one which would
seem to be clear on principle, but the authorities are not
very satisfactory.

There are two classes of exemptions to wit, those
specifically allowed by the statute, and those which are
permitted in bankruptcy because they are allowed by the
State laws. In regard to the first class, the solution of
the question depends upon the construction of the statute.
That law both makes exemptions and protects liens, and
the question in all such cases is which provision shall
prevail. The determination of this question depends en-
tirely upon the construction of the statute itself. Ifthe two
provisions were entirely repugnant to each other, it would
certainly be most in consonance with justice to give effect
to the lien, especially when it has been created by the
voluntary act of the bankrupt for a valuable consideration
through an instrument which, at the time of its execution,
was valid and secure. To allow the subsequent bank-
ruptcy of a debtor to defeat such a security, and restore
the property to the bankrupt while the creditor remains
unpaid, as would happen in cases where there are no as-
sets, is harsh, destructive of all contracts, and in violation
of good faith, and would in many cases lead to and permit
positive fraud. A construction which leads to such re-
sults should not be adopted, unless rendered necessary by
the plainest and most imperative provisions of the law.

The terms of the statute, however, clearly demand a
different construction. The section relating to exemptions
provides for an assignment of the bankrupt’s effects, and
merely excepts certain articles from its operation. It is,
moreover, expressly provided that such property shall not
pass to the assignee, or the title of the bankrupt thereto
be impaired or affected by any of the provisions of the stat-
ute (§ 5045). In other words, it simply provides that the
assignee shall not take such property, and that is its only
EXEMPTIONS. 161

effect and purpose. It does not confer any better or dif-
ferent title upon the bankrupt than he had before. If he
had a defeasible title then, he will have a defeasible title
still. If the title was bad then, it will be bad still. The
same course of reasoning leads irresistibly to the conclu-
sion, that if it was subject to liens then, it will be subject
to liens still If the property is not more than sufficient
to pay the lien creditor, the assignee should simply set the
exempt property apart and leave the lien creditor and the
bankrupt to settle their respective rights by themselves.’
But the lien creditor, on the other hand, may be required
to exhaust his lien before he can share in the general
estate.’

The act of the assignee in designating and setting
apart exempted property, is simply a declaration that the
court of bankruptcy has no concern with it,* and nota
judgment in rem conclusive against all the world.” A
creditor who has a valid lien upon such property may
enforce it, notwithstanding a discharge,’ and even contro-
vert the right of the bankrupt to the exemption."

The question whether the exemption allowed by the
State laws will prevail over a lien upon the property is to
be determined in accordance with the State laws. The
statute, it is true, provides that such exemptions shall be

 

‘In re Perdue, 2 B. R. 183; in re Whitehead, 2 B. R. 599; in re Hutto,
3B. R. 787; s.c. 1 L. T. B. 226; s. c. 83 L. T. B. 197; in re Brown, 8 B. R.
250; 8. ©. aL. T. B. 122; Haworth v. Travis, 13 B. R. 145; s. c. 67 T. 301;
Hatcher v. Jones, 14 B. R. 387; 8. 0. 53 Geo. 208 ; Cumming v. Clegg, 14 B.
R. 49; s. c. 52 Geo. 605 ; contra, in re Hambright, 2 B.R. “498; s.c.2 L. T.
B. 61; in re Brown, 3 BR. 250; s.c. 2L. T. B. 122; in re Nicholas erin
13 B. R. 397; in re Jobn Owens, 12 B. R. 518.

? Tn re Tiember?, 2B. R. 426.

‘Tn re Sauthoff & Olson, 14 B. R. 864.

“In re C. Hunt, 5 B. R. 493; 8.c. 2L. T. B. 197.

* Fehley v. Barr, 66 Penn. 196.

° Tuesley v. Robinson, 103 Mass. 558; in re C. H. Preston, 6 B. R. 545.

" Fehley v. Barr, 66 Penn. 196; in re C. Hunt, 5 B. R. 498; 5.0. 2L. 7.
B. 197; Haworth v. Travis, 13 B. R. 145; s. c. 67 TN. 301; Hatcher yv. Jones,
a R897; 8. c. 538 Geo. 208; Cummings y. Clegg, 14.B. R. 49; s. c. 52

eo.

11
162 EXEMPTIONS.

valid against debts contracted before the adoption and
passage of the State constitution and laws, as well as those
contracted after the same, and against liens by judgment
or decree of any State court, any decisions of such State
court rendered since the adoption and passage of such con-
stitution and laws to the contrary notwithstanding, but
this provision is manifestly unconstitutional. A bankrupt
law to be constitutional must be uniform, and whatever
rule it prescribes for one it must prescribe for all. If it
provides that certain kinds of property shall not be assets
in one place, it must make the same provision for every
other place within which it is to act. So far, therefore, as
this provision attempts to give the debtor an exemption
which he can not claim under the State laws, it is void.’
Where the lien is valid by the State law and paramount
to the exemption, the lien creditor has a vested interest in
the property, and the bankrupt can only be allowed an ex-
emption out of such estate as remains to him after the
vested interests of others have been satisfied. This pro-
vision tacitly concedes that all liens except those by judg-
ment or decree will prevail over the exemption. It is only
necessary, therefore, to consider the effect of the law upon
liens by judgment or decree. The question will be made
plainer by considering a case belonging to the first class,
where the sole debt is due to the lien creditor, and where
all the property consists of that which is subject to the
lien, and not sufficient to satisfy it. Such a lien consti-
tutes for the person holding it a special property in the
thing covered by the lien, and might be the most valuable

 

 

‘In re Daniel Deckert, 10 B. R, 1; s.¢. 1 A. L. T. (N. 8.) 336; in re Geo.
W. Dillard, 9B. R. 8; s.c. 6 L. T. B. 490; in re George Duerson, 13 B. R.
183; contra, in re Kean et al. 8 B. R. 367; in re John W. Smith, 8B. RB. 401;
s.c. 14 B. R. 295.

*In re Geo. W. Dillard, 9 B. R. 8; s. c. 1 L. T. B. 490 ; in re Daniel Deck-
ert, 10 B. R. 1; 8.¢c.1A.L. T. (N. 8.) 836; in re Kerr & Roach, 9 B. R.
566 ; contra, in re Jordan, 8 B. R. 180; in re Kean et al. 8 B. R. 367; in re
John W. Smith, 8 B. R. 401; s, c. 14 B. R. 295; in re Jared Everett, 9 B. R.
90; Penny v. Taylor, 10 B. R. 200; McFarland y. Goodman, 11 B. R. 184.
EXEMPTIONS. 163°

part of his estate.' The question, then, where the lien ex-
isted before the passing of the law, is simply whether
this property can be taken from one man and given to
another, whether private property can be taken without
compensation. The power conferred upon Congress by
the Constitution, is simply the power to pass uniform laws
upon the subject of bankruptcies. Thisis merely a power
to distribute the estate of the debtor among his creditors,
and to give the debtor a discharge from his debts.’ That
is the full extent and scope of the power. What then is
the estate of a debtor in property which is subject to a lien ?
It is merely his right to the surplus after the lien is dis-
charged. This surplus a bankrupt law may take and distrib-
ute, and may, as an incident to the ascertainment whether
there is a surplus, provide for the liquidation of the lien,
but can not deprive the creditor of his lien without just
compensation. Under the guise of a bankrupt law, Con-
gress can not take the property of one man and give it to
another. It can not take the farm of A. and give it to B.
But there is no distinction between absolute titles and
those titles which are merely defeasible, like mortgages, or
those which require some process to be enforced like liens..
The inherent rights of property are independent of the
character of the title by which they are held, for their
sanctity rests in the lack of power in Congress under the
Constitution to affect them, and not in the peculiar nature
of their origin or tenure. If the exemption overrides the
lien by the State law it may of course be allowed.

How a lien upon exempted property may be enforced
‘isa question which the authorities do not make clear.
The title to such property does not pass to the assignee,
but remains in the debtor. Consequently, the lien creditor
may enforce his lien against the property in the State

 

‘In re C. H. Preston, 6 B. R. 545.
2 Tn re Silverman, 4 B. R. 523; 8. c. 2 Abb. C. C. 248; 8. c. 1 Saw. 410.
164 EXEMPTIONS.

courts,! and the bankrupt courts will not enjoin such pro-
ceedings” The bankrupt court, however, has jurisdiction
over all the parties and over the bankrupt’s estate, and
there would seem to be no valid reason why a chediter, if
he chooses, may not have his lien enforced in that court.’
For this purpose, the assignee, as the representative of the
creditors, may be deemed to be clothed with the rights of
- the lien creditors, and the right of the bankrupt in the
property will be simply a right to the surplus that may
remain after the lien is extinguished.

The question as to the effect of a failure of the assignee
to make the exemptions within the required time has never
arisen or been discussed, but, as the title to exempted
property does not pass to the assignee, the bankrupt’s
right to all property which he may claim absolutely, would
not be affected by such failure* As to those articles
which are in the discretion of the assignee, it might be
different. It has been held that where the property was
in litigation, the twenty days might be computed from
the time when the litigation terminated.’ This report
must be made in the prescribed form,’ setting forth the
separate items and the estimated value of each, and must
be filed with the court. This exception operates as a
limitation upon the conveyance of the property of the
bankrupt to his assignee. And in no case will the ex-
empted property pass to the assignee, or the title of the
bankrupt thereto be impaired or affected by any of the

 

> Fehley v. Barr, 66 Penn, 196; Tuesley v. Robinson, 103 Mass. 558; Haworth

v. Travis, 138 B. R. 145; 8. 8. 67 i. 301; Hatcher v. Jones, 14 B. R. 887;s.c. - ~

538 Geo. 208 ; ; Cummings v. Clegg, 14 B. R. 49; s. c. 52 Geo. 605; Robinson v.
Wilson, 15 Kans. 595. -

“In re C. Hunt, 5 B. R. 493; sc. 2 L. T. B. 197; in re Fetherston, 5 C.
L. N. 198; 5. ¢. 20 Pitts. L. J. 77; in re Lambert, 2 B. R. 426; vide-in re
Stevens, 5 'B. R. 298; s. c. 2 Biss. 373.

*JIn re Wylie, 5 i T. B. 380; Maxwell v. McCune, 10 B. R. 306; s. c. 37
Tex. 515; contra, in re C. H. Preston, 6 B. B. 545.

* Rix v..Capitol Bank, 2 Dillon, 367.
° In re Shields, 1 B. R. 344,
° Form No. 20.
EXEMPTIONS. 165

provisions of the act. And the determination of the as-
signee in the matter is, on exception taken, subject to the
final decision of the court (§ 5045).

Any creditor may take exceptions to the determina-
tion of the assignee within twenty days after the filing of the
report.' And this is the only mode in which the decision
of the assignee can be reversed.” The report may be filed
with the register.2 The register may require the excep-
tions to be argued before him, and must certify them to
court for final determination, at the request of either
party.*

The Supreme Court intended to leave a discretion with
the circuit and district courts, to permit them to repair
accidents, correct mistakes, and prevent frauds.’ But, in
the absence of fraud, accident, or mistake, the exceptions
must be filed within the required time. When an attempt,
however, is made to exempi 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 re-
mains in him until it is divested in some one of the ways
provided by the law. The attempt to exempt is ineffect-
ual. The creditors may except to the account of the as-
signee, if he omits to account for or charge himself with
the value of such property. Where the exceptions are
as to articles comprehended by the terms of “ household or
kitchen furniture, or other articles or necessaries,” they
must be made in the way and also in the time prescribed."
Where the exceptions go to the title to the exempted

 

> Rule XIX.
* In re Richard Pryor, 4 Biss. 262; in re W. H. Thiell, 4 Biss. 241.
*Tn re Cordes, 1 Pac. L. R. 165. “Rule XIX.

* In re Perdue, 2 B. R. 183.

° In re Gainey, 2 B. R.525; in re Jackson & Pierce, 2 B. R. 508; in're
Farish, 2 B. R. 168,

"Tn re Gainey, 2 B. R. 525.
166 EXEMPTIONS.

property, they need not be filed within the required time.'
Where the exemption is one that rests in the discretion
of the assignee, the allowance made by him will be deemed
to be reasonable and suitable until the contrary is shown
by some appropriate facts and proofs,’ and will not be
disturbed unless it plainly appears that he has abused
the discretion confided in him.’

 

1In re Perdue, 2 B. R. 188.
?In re Ziba Williams, 5 Law Rep. 155.
°In re W. H. Thiell, 4 Biss. 241.
CHAPTER IX.
SALES.

Tue assignee has the same right, title, power, and au-
thority to sell, manage, and dispose of the property and
estate, as the bankrupt might or could have had if no as-
signment had been made ($ 5046). The court may, in its
discretion, on sufficient cause shown, and upon notice and
hearing, direct the assignee to take possession of the prop-
erty, and carry on the business of the debtor, or any part
thereof, under the direction of the court, when, in its judg-
ment, the interest of the estate as well as of the creditors
will be promoted thereby, but uot for a period exceeding
nine months from the time the debtor was declared a bank-
rupt; but such order can not be made until the court is
satisfied that it is approved by a majority in value of the
creditors The court may also authorize him to spend
money to put property into a salable condition. He
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 con-
dition 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, to almost a moral certainty, insure the creditors
against loss, and insure them a large gain within a reason-
able time.’ The assignee may sel] and assign, under the

 

’ Act of 22 June, 1874, $1.
1 Foster et al. v. Ames et al. 2B. R. 465; 3. c. Lowell, 313.
168 SALES.

direction of the court, and in such manner as the court.
may 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 ($ 5064). He may sell all
unincumbered 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 inter-
ested, 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 (§ 5062).
No order from the court is needed to sell unincumbered
assets. Unless otherwise ordered by the court, the as-
signee must 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 may be best calculated to
produce the greatest amount with the least expense. All
notices of public sales by any assignee or officer of the
court must be published once a week for three consecutive
weeks in the newspaper or newspapers, to be designated
by the judge, which, in his opinion, shall be best calcu-
lated to give general notice of the sale. The court, onthe
application of any party in interest, has complete super-
visory power over such sales, including the power to set
aside the same and to order a resale, so that the property
sold may realize the largest sum. The court may, in its
discretion, order any real estate of the bankrupt, or any
part thereof, to be sold for one-fourth cash at the time of
sale, and the residue within eighteen months, in such
instalments 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?
Upon application to the court, and for good cause shown,

 

‘In re White et al. 1 B. R. 218; s. c. 2 Ben. 85; Mims v. vee 10 B. R.
305; s. c. 87 Tex. 13.

* Act of 22 June, 1874, § 4.
the assignee may be authorized to sell any specified
portion of the bankrupt’s estate at private sale, in which
case he must keep an accurate account of each article sold,
and the price received therefor, and to whom sold ;. which
account he must file with his report, at the first meeting of
creditors after the sale.

In making sale of the franchise of a corporation, it
may be offered in fractional parts, or in certain numbers
of shares, corresponding to the number of shares in the
bankrupt corporation.’

No title to property, real or personal, sold, transferred,
or conveyed by an assignee, is affected or impaired by
reason of the ineligibility of any person as assignee
($5035). The assignee may sell real estate lying in another
State. He may sell the property although it is in the
possession of an adverse claimant, for the sale is a judicial
sale? He may be vested with a discretion in regard to
the time and manner of sale. If the assignee acts under
an order, anything which he may do in conflict with, or in
violation of such order, is null and void. Under an order
to sell for the highest price he can obtain, he must accept
the highest bid, although he has previously agreed 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.” If his authority is
limited to the property set forth in the schedule, he can
not convey any other property. The bankrupt may pur-
chase at an assignee’s sale.’ The solicitor of the assignee
can not purchase at the assignee’s sale.* If a sale is fairly

 

? Rule XXT. ? Oakey v. Corry, 10 La. An. 502.

3 Stevens y. Hauser, 1 Robt. 50; 8. c. 89 N. Y. 302; Stevens v. Palmer,
10 Bosw. 60.

* Holbrook v. Coney, 25 Ill. 543.

° Tn re Ryan & Griffin, 6 B. R. 235.

°In re O'Fallon, 2 Dillon, 548.

7 Arnold y. Leonard, 20 Miss. 258.

* Citizens’ Bank v. Ober, 13 B. R. 328; 8. c. 1 Wood, 80.
170 SALES.

made, and the bids are understood by the bystanders and
the auctioneer, it will be valid, although the assignee is
present, and in consequence of his negligence and inatten-
tion fails to understand the terms thereof.’ A sale of real
estate is subject to the approval of the court.’ The court,
in its discretion, may refuse to confirm a sale for mere in-
adequacy of price, nor is it necessary that the inadequacy
should be so gross as to be evidence of fraud Although
all the technical formal requisites to a regular sale have
been complied with, yet if there has been any improper
conduct on the part of the purchaser, the court has the
power to set the sale aside If the right to property, and
the evidence to establish it, are concealed trom the as-
signee and the creditors, so that the assets are sold fora
nominal sum to the bankrupt himself, the sale may be set
aside.®> No sale can be set aside so as to bind the pur-
chaser, unless he is a party to the proceedings.®

The assignee has authority, under the order and direc.
tion 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 incum-
brances (§ 5066). The terms of these provisions are so
broad that it has been contended that the assignee may
redeem even before the debt becomes due.” Whenever it
may be deemed for the benefit of the estate of a bankrupt
to redeem and discharge any mortgage, or other pledge, or
deposit, or lien upon any property, real or personal, or to
relieve such property from any conditional contract, and

 

‘ Ives v. Tregent, 14 B. R. 60; s. c. 29 Mich. 390.

? Warren v. Homestead, 33 Me. 256.

°In re O'Fallon, 2 Dillon, 548.

*In re Troy Woolen Co. 4 B. R. 629; 8. c, 8 Blatch. 465.

> Clark v. Clark, 17 How. 815; Booth vy. Clark, 17 How. 322.
® Holbrook v. Brenner, 31 Il. 501.

* Foster et al. v. Ames et al.2 B. R. 455; s. c. Lowell, 3138.
to tender performance of the conditions thereof, the as-
signee, or the bankrupt, or any creditor who has proved
his debt, may file his petition therefor in the office of the
clerk of the district court; and, thereupon, the court will
appoint a suitable time and place for the hearing thereof,
notice of which must be given in some newspaper, to be
designated by the court, at least ten days before the hear-
ing, so that all creditors and other persons interested may
appear and show cause, if any they have, why an order
should not be passed by the court upon the petition,
authorizing such act on the part of the assignee’ This
petition should be according to the prescribed form.”

The jurisdiction of the district court, sitting as a court
of bankruptcy, extends to the collection of all the assets
of the bankrupt, the ascertainment and liquidation of the
liens and other specific claims thereon, and the adjustment
of the various priorities and conflicting interests of all par-
ties (§ 4972). The commencement of proceedings in bank-
ruptcy gives to the district court jurisdiction over the
bankrupt, his estate, and all parties and questions con-
nected therewith. The property and estate of the bank-
rupt, so far as any interference therewith is concerned, is
thereby brought ¢o instante, into the court of bankruptcy,
and placed in its custody and under its protection as fully
as if actually brought into the visible presence of the
court.t Its jurisdiction is superior and exclusive in all
matters arising under the statute. The officer appointed
to manage it is accountable to the court appointing him,
and to that court alone. No court of an independent State
jurisdiction can withdraw the property surrendered, or
determine in any degree the manner of its disposition.”
Claims against the estate, so long as it remains in the

 

? Rule XVII. 2 Form No. 34.
* Jones v. Leach et al. 1 B. R. 595.

‘In re Vogel, 2 B. R. 427; s.c.3 B.R. 198; 8.c. 7 Blatch. 18; 8. c. 2
L. T. B, 154.

°In re Barrow et al. 1 B. R. 481; s.c. 1 L. T. B. 63.
172 SALES.

possession of the court, can generally be only enforced by
proceedings properly instituted therein, or under its au-
thority.’

The levy of an execution,’ the institution of an action
to foreclose a mortgage, the filing of a libel i rem,* the
issuing of a distraint warrant,’ the recording of claims for
mechanics’ liens under a law which only makes the claim
a lien from the time of such filing,® after the filing of the
petition in bankruptcy, are all proceedings that are irregu-
lar and unauthorized. All the rights and all the duties of
the bankrupt in respect to whatever property not ex-
pressly excluded from the operation of the statute, he may
hold, under whatever title, whether legal or equitable, and
however incumbered, pass to and devolve upon the as-
signee at the date of the filing ‘of the petition in bank-
ruptey. All rights thus acquired are to be enforced by
process issuing from the courts of bankruptcy, and all
duties thus imposed are to be performed under their su-
perintendence. No lien can be acquired" by any proceed-
ing in a State court, commenced after such petition is filed,
though jurisdiction which has been previously acquired by
State courts, of a suit brought in good faith to enforce a
valid lien upon property, will not be divested §

When a creditor has a mortgage or pledge of real or
personal property of a bankrupt, or a lien thereon for se-
curing the payment of a debt owing to him from the

 

*In re People’s Mail Steamship Co. 2 B. R. 553; s, c. 3 Ben. 226; Pen-
nington v. Sale & Phelan, 1 B. R. 572.

? Davis v. Anderson et al. 6 B. R. 145,

*In re Kerosene Oil Co. 2 B. R. 528; s. c. 3 B.R.125; s.c. 3 Ben. 35;
s, oc. 6 Blatch. 521; s. oc. 2 L. T. B. 79,

“In re People’s Mail Steamship Co. 2 B. R. 553; s. c, 3 Ben. 226.

*In re Wynne, 4 B. R. 23; s.c. 2 L. T. B. 116; s. c. Chase, 227.

°In re Day, 3 B. R. 305; 8. 0. 8 Ben. 450; s.c. 9 Blatch. 285. The law
has heretofore been considered to be as stated in the text, but some doubt
has been recently raised upon the subject by the decision of the Supreme Court
in the case of Eyster v. Gaff, 13 B. R. 546: s. c. 1 Otto, 521.

’ Stuart v. Hines, 6 B. R. 416; s. c. 33 Iowa, 60; sc. 5 L. T. B. 46.

“In re Wynne, 4 B. R. 28; 8. c. 2 L. T. B. 116; s. c. Chase, 227.
bankrupt, the value of such property may be ascertained
by agreement between him and the assignee, or by a sale
thereof, to be made in such a manner as the court may di-
rect. 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, must execute all
deeds and writings necessary or proper to consummate the
transaction (§ 5075).

There is no distinction in the bankrupt law between
different kind of liens. Its provisions apply equally to all
liens of whatever kind, character, or description." The
first point to be ascertained is whether there is a valid
lien according to the laws of the State where the property
is situated. If there is no valid lien under those laws,
there can be no claim upon the property under the bank-
rupt law. If there is a valid lien under those laws, it fol-
lows the property into the court of bankruptcy, and will
be there recognized, protected and enforced. Liens are of
various descriptions, and may arise in various ways. The
definition that seems to be warranted upon principle, as
well as authority, is, that whenever the law gives a cred-
itor the right to have a debt satisfied from the proceeds of
property, or before the property can be otherwise disposed
of, it gives a lien on such property to secure the payment
of this debt. Whenever such a lien exists, the assignee
must determine what course he will pursue in regard to it.

The right of redemption has already been considered.
Another course is to release the right of redemption to the
creditor. If neither of these plans is adopted, he may sell
the property, either subject to the lien or free from the
lien. In all cases he should exercise a sound discretion,

 

’ Davis, assg. of Bittel, et al. 2 B. R. 392.
? In re Wynne, 4B. R. 23; 3. c. 2 L. T. B. 116; s. c. Chase, 227.
174 SALES.

and proceed accordingly, as he thinks the interests of
the creditors will be best promoted by the one or the other
mode of sale! It is not necessary, however, that he
should take any proceedings whatever in regard to incum-
bered 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 is of less value than
the amount of the incumbrance.? He may sell the prop-
erty subject to the lien without any order of the court
for that purpose.? Whenever he sells without such order,
he can only sell subject to the lien, and does not give
to the purchaser any better right or title than he him-
self had.* The proceeds of such sale are always pre-
sumed to be the price or value of the interest so sold, with
a full knowledge on the part of the purchaser of all in-
cumbrances.°

Whenever he wishes to sell property free from liens,
he must apply to the court for an order to that effect.
This application should never be made where the prop-
erty has no market value, or one that is clearly less than
the debt secured by the lien.° He acts only in the in-
terest of the general creditors, and should institute no
proceedings except for their benefit. It is no part of his
duty to make such an application unless he believes that
such a sale will create a larger fund for distribution
among the unsecured creditors.’ The proper mode of
making such an application is by a petition, addressed to
the judge of the court of bankruptcy, properly entitled
in the cause in bankruptcy, and duly verified. As the

 

‘In re McClellan, 1 B. R. 389. “In re Lambert, 2 B. R. 426.
* In re McClellan, 1 B. R. 889; King v. Bowman, 24 La. An. 506.

* Kelly v. Strange, 3 B. R. 8; King v. Bowman, 24 La. An. 506.

® In re Mebane, 8 B. R, 347.

* Foster et al. v. Ames et al. 2 B. R. 455; 8. c. Lowell, 313,

" In re Mebane, 3 B. R. 347,
granting of such an order is not a matter of course, the
petition should set forth the facts that justify the applica-
tion, and not merely rely upon the petitioner’s belief.
The question is to be decided upon the belief of the court,
and not upon the belief of the assignee, and hence the
matters necessary to produce conviction should be fully
stated. The petition must also state what persons have
liens, incumbrances, or interests in the property.

As this proceeding specially affects the rights of the
secured creditor, he must be properly notified and sum-
moned to appear and protect his interests.” This is done
by passing an order to show cause, and directing that a
copy of such order, and of the petition, be served upon
him. If the notice is served on an agent of the secured
creditor, and such agent appears for the creditor, that is
sufficient.? The proceedings are usually summary, and are
tried in open court. The defense to the application is
that the property is worth less than the lien claim, or that
the creditor will be injured by such a sale.‘

The selling of property free from incumbrances is a
matter of judicial discretion. 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 lien creditor, will be most beneficial to all the parties
interested. The assignee may be directed to sell at public
sale without credit, but he ought not to be permitted to
sell at private sale on credit without first submitting the
price and terms to the court on notice to the secured cred-
itor, for confirmation and approval.’ The lien creditor
can not demand as a matter of right that the assignee shall,
upon his offer, convey the property to him on condition

 

* In re Anon. 29 Leg. Int. 29.

* Ray v. Brigham, 12 B. R. 145; 25 La. An. 600.

* In re Frederick 8. Kirtland, 10 Blatch. 515.

* Foster et al. v, Ames et al. 2 B. R. 455; s. c. Lowell, 313.
* In re Frederick §. Kirtland, 10 Blatch. 515.
176 SALES.

of his agreeing not to present a claim for any part of the
debt against the other assets of the bankrupt. The re-
jection of such a proposition will not be at the peril of
throwing the costs of any effort to obtain a better price
upon the other creditors.’ If a sale is ordered, the lien is
transferred to the fund, and must be paid first, after de-
ducting the expenses of the sale. The apportionment of
costs is a matter to some extent of judicial discretion.
The bankrupt court, as incident to its power to adjust and
liquidate the lien, is authorized to adjust the costs of the
proceedings necessary to give effect to the specific len.
The expenses of the sale, including commissions to the
assignee, may therefore be charged upon the proceeds.’
When the conduct of the creditor has been such as to
justify the institution of proceediugs in bankruptcy, for
the purpose of attacking his security, the court may, in its
discretion, order all the costs in bankruptcy to be first
paid from the proceeds.’ If there are several liens, they
will be entitled to payment according to their respective
priorities.‘

If the assignee does not institute any proceedings to
have the property sold, the creditor may, and sometimes
must do so. W _ enever he wishes to enforce his lien or
prove his claim in bankruptcy, he ought generally to make
disposition of the property in the court of bankruptcy or
under its superintendence. If he attempts during the pend-
ency of the proceedings to enforce his lien in any other
manner, he is liable to be enjoined,’ and any sale so made
is liable to be set aside.® It does not, however, necessarily

 

' In re Elierhorst et al. 7 B. R. 49; s. c. 2 Saw. 219.

* In re Ellerhorst et al. 7 B. R. 49; s. c. 2 Saw. 219; in re Eldridge, 4 B.
R. 498; s. c. 2 Biss. 862; in re Blue Ridge R. R. Co. 18 B. R. 815.

* In re Dumont, 4 B. R.17; s.c.2L. T. B. 114.
‘In re Winn, 1 B. R. 496; sc. 1 L. T. B. 17.
*In re Wynne, 4 B. R. 28; s.c. 2 L. T.B. 116; s. c. Chase, 227; Markson

v. Heaney, 4 B. R. 510; s.c. 1 Dillon, 497; in re Kerosene Oil Co. 2 B. R.
528; s.c. 3 B. R. 125; s.c. 3 Ben. 35; 8. c. 6 Blatch. 521; s.c. 2 L. T. B. 79.

° Davis Assig. of Bittel et al. 2 B.R. 892; Davis v. Anderson, 6 B. R. 145.
follow that the bankrupt court must, in all cases, prohibit
any proceeding in a State court for the benefit of a lien
creditor. Often it is quite convenient, and ordinarily it
may be quite desirable to permit the institution of such
proceedings. The bankrupt court may therefore author-
ize a lien creditor to enforce his lien in a State court.
Even if such a proceeding is instituted without such
authority, it will not be absolutely void;* nor will the
bankrupt court interfere where no advantage can result
to the bankrupt’s estate.* The assignee must, in such
cases, be made a party to the proceeding.” The proceed-
ing may be ratified on the application of the secured cred-
itor and proof that the estate and the other creditors will
not be injured thereby.’ It has also been said, that by
electing to proceed in the State court, the lien creditor will
deprive himself of the right to prove his debt in bank-
ruptcy for the deficiency.?. The lien creditor may sur-
render his lien or rely upon his lien without proving his
claim,

If he desires a sale in the court of bankruptcy, the
first step properly is to prove his claim. Te must estab-
lish his security and his debt, before he can show that he
has any right to call upon the court to sell the property,
and both, or either of these, may be disputed. If it is
shown that either has no existence, he will have no
standing in court. It has, on the other hand, been de-

 

’ Samson v. Clarke, 6 B. R. 408; s.c. 9 Blatch. 372.

7 In re McGilton zt al. 7 B. R. 294; 8. 0.3 Biss. 144; in re Cook & Glea-
son, 3 Biss. 116.

‘ Whitridge v. Taylor, 66 N. C. 273; Cole v. Duncan, 58 Ill. 176; Truitt
vy. Truitt, 38 Ind. 16; Pierce v. Wilcox, 40 Ind. 70,

“In re Iron Mountain Co. 4 B. R. 645; s.c. 9 Blatch. 320; in re Bowie,
pe R. 628; s.c. 1 L. T. B. 97; in re Brinkman, 6 B, R. 541; 8. c. 7 B. R.

* Cole vy. Duncan, 58 Ill. 176; Winslow v. Clark, 47 N. Y. 261; 8. c. 2
Tans. 377; Barron vy. Newberry, 1 Biss. 149; Truitt v. "Truitt, 38 Ind. 16.

° Phelps v Sellick, 8 B. R. 390.

"In re Iron Mountain Co. 4 B. R. 645; s. c. 9 Blatch. 320.

* In re Bigelow et al. 1 B. R. 632; s.c. 2 Ben. 480; 5.c.1L. T. B. 95;
re Frizelle, 5 B, R. 122; in re Philo R. Sabin, 9 B. R. 383.

12
178 SALES.

cided, that a formal proof of his claim is not a necessary
preliminary step,’ but the argument in favor of proving
the claim is certainly the strongest, and, as no right is
thereby lost or waived, it is certainly the better practice,
and the more orderly course of proceeding.

The validity of the debt, or of the lien, or of both may
be contested when they are presented for proof, and if the
claim is allowed, either with or without dispute, a prima
facie case is established at least, and this is sufficient to
justify an application for a sale. This application must
be by a petition addressed to the judge of the court, prop-
erly entitled in the cause, and duly verified. The petition
should describe the property, and set forth the character
of the lien. As soon as it is filed, an order to show cause
is passed, with a direction that a copy of the petition, and
of the order, be served upon the assignee. Service upon
him is sufficient, for he represents the creditors generally.
This proceeding is also summary, and is tried in the same
manner as an application for a sale by the assignee. The
defense consists of an attack upon the debt or security, or
the omission of the preliminary proof. If the lien and
the debt are established, a sale must be ordered in such
manner as the court may direct, for this is a right con-
ferred upon the creditor by the statute. After deducting
the expenses of the sale, the proceeds are applied toward
the payment of the claim.

‘When it appears to the satisfaction of the court that
the estate of the debtor, or any part thereof, is of a per-
ishable nature, or liable to deteriorate in value, the court
may order the same to be sold in such manner as may be
deemed most expedient, under the direction of the mes-
senger or assignee, as the case may be, who will hold the
funds received in place of the estate disposed of (§ 5065).
The application for a sale must be made to the court and

 

‘In re High et al. 3B. R. 192; 3. 0.1L. T. B. 175.
*In re High et al. 3B. R. 192; 8.0 1 L. T. B. 175,
not to the register.' The passing of the order is a matter
resting in the discretion of the court. No sale can be
ordered unless the property is in the possession of the
marshal or assignee.” The proceeds must be deposited in
court.

Whenever it appears to the satisfaction of the court
that the title to any portion of an estate, real or personal,
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 claim-
ant, his agent, or attorney, as the court may deem reason-
able, order it to be sold, under the direction of the as-
signee, who must hold the funds received in place of the
estate disposed of (§ 5063). It is immaterial whether the
property isin the possession of the assignee or not. A
sale may be ordered of property which is not in his pos-
session, as well as of property which is in his possession.
The court may exercise such control as it deems proper in
regard to property which is in controversy. If it inter-
 feres in the matter, it should order the property into the
possession of the assignee. Where a sale has been made,
and the proceeds realized by that sale are in controversy,
it 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 them.2 This power, however, is
not unlimited. It extends to personal estate found in the
hands of a mere depositary, carrier, or bailee for safe keep-
ing or transportation, without claim of title or interest
in the goods, and to personal property subsequently dis-
covered in the possession of the bankrupt, which was
not transferred to the assignee, and other cases of a like
character. But it does not extend to a case where the

 

? In re Graves, 1 B. R. 287; 8. c. 2 Ben. 100.
* Rule XXII; in re Metzler et al. 1 B. R. 88; 8. c. 1 Ben. 356.

* Bill v. Beckwith, 2 B. R. 241; Foster et al. v. Ames et al. 2 B. R. 455;
8. c. Lowell, 313; in re Hunt, 2 B. R. 539.
180 SALES.

estate in question is in the actual possession of a third: -

person holding it as owner and claiming absolute title to
and dominion over it, whether the title and possession
were derived from the debtor or any other former owner.
A party can not be deprived of his property without due
process of law, and in a case at law where the value in
controversy exceeds the sum of twenty dollars he is enti-
tled to a trial by jury. This is a constitutional right, and
the bankrupt court can not deprive him of it by directing
the assignee to sell his estate, and compelling him to
appear in court and vindicate his title, and to accept, if
successful, the proceeds of the sale as the value of his
property.! The application for a sale must be made to
the court, and not to the register, and the sale must be
public after public notice.? The proceeds of the sale,
when one is ordered, are considered the measure of the
value of the property in any suit or controversy between
the parties in any court (§ 5063).

 

* Knight v. Cheney, 5 B. R. 805; s. c. 2 L. T. B. 205.
?7In re Wm. Major, 14 B. R. 71.
CHAPTER X.

STAYING PROCEEDINGS. HABEAS CORPUS.

No crrprror whose debt is provable under the statute
is allowed to prosecute to final judgment any suit at law
or in equity therefor against the bankrupt until the ques-
tion of the debtors discharge has been determined
($ 5106). The object of this provision is to prevent a
race of diligence between creditors, and to protect the
bankrupt from being harassed with suits while he is pro-
ceeding 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, and to enable him to claim pro-
tection as against such suits through his discharge, if he
obtains it. It applies to all cases where the personal
liability of the debtor is sought to be fixed or ascertained.
by a final judgment pending the determination of the
question of his discharge.’ An action to recover a prov-
able debt is to be stayed until a determination 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 court should enter into the inquiry,
whether a discharge will operate to release any particular
debt. That inquiry is one properly to be made only by
the court in which a direct suit on the debt is pending,
and whose determination will be a binding judgment on
the question between the parties.? Such inquiry can only
be instituted after the discharge is pleaded. The attempt

 

*In re Rosenberg, 2 B. R. 236; s. c. 38 Ben. 14; in re Metcalf et al. 1 B.
R. 201; 8, c, 2 Ben. 78,

°Tn te Rosenberg, 2 B. R. 236; s.c. 3 Ben. 14; in re Migel, 2 B. R. 481;
in re Seymour, 1 B. R, 29; s.c. 1 Ben. 348.
182 STAYING PROCEEDINGS.

to determine in advance what will be the effect of a dis-
charge upon particular debts, when as yet it is not known
whether any discharge will be granted, is premature and
unnecessary."

The provision for a stay is addressed quite as much to
the State courts as to the courts of bankruptcy, and is ap-
plied and enforced by the former quite as much as by the
latter? A stay in the State courts is obtained apon mo-
tion supported by the production of a copy of the order
of adjudication. The bankruptcy of the defendant can
not be pleaded in bar of the action” The motion for a
stay should be served on the plaintiff and brought to the
notice of the court.t An application to the court of bank-
ruptcy must be made by a petition addressed to the judge
of the court, properly entitled in the cause, and duly veri-
fied. The petition should set forth the suit, the court in
which it is pending, and the cause of action, so as to show
that the suit is one that may properly be stayed. The
option to endeavor to obtain a discharge, and, failing in
that, to defend all undetermined personal actions, is a
right given to a debtor by the bankrupt law under the
Constitution of the United States, and he is entitled to be
protected in that right by the court of bankruptcy.’ The
power conferred upon the district court of granting in-
junctions to stay suits and proceedings to recover debts
from a bankrupt is not granted to any other court than
the “court of bankruptcy,” which means the court where
the proceedings in bankruptcy are pending. When the
bankrupt applies for the benefit of the bankrupt law in

 

‘In re Ghiradelli, 4 B. R. 164; 8. ¢. 1 Saw. 343; 8.0. 2.1L. T. B. 135.

2In re Rosenberg, 2 B. R. 236; s. c. 8 Ben. 14; in re Metcalf et al. 1 B.
R. 201; s.c 2 Ben. 78; Delavergue v. Farrand, 1 Mich. N. P. 90; contra,
Garrett v. Carow, 3 Houst. 652; Givens v. Robins, 5 Ala. 676.

* Stone v. Nat’l Bank, 39 Ind. 284; Hobart v. Haskell, 14 N. H. 127.

* Dunbar vy. Baker, 104 Mass. 211.

*In re Rosenberg, 2 B. R. 236; s. c. 3 Ben. 14; in re Metcalf et al. 1 B.

R. 201; 3.0.2 Ben. 78; in re Reed, 1 B, R. 1; in re Meyers, 1 B. R. 581; 8.
c. 2 Ben. 424.
HABEAS CORPUS. 183

one district, the district court of another district has no
power to grant an injunction to stay suits brought by
creditors against him.'

Upon the filing of the petition, a stay may be granted
forthwith, or an order to show cause may be issued.
When the creditor lives out of the district, it is question-
able whether the court has jurisdiction over him, and,
even if it has, the difficulties that lie in the way of an en-
forcement of its orders appear to be insurmountable.” In
this proceeding, no attack can be made upon either the
existence of the debt due to the petitioning creditor, or
the adjudication upon his petition. So long as the adju-
dication stands unrevoked, all inquiry as to the validity
or existence of the debt is precluded® If the bankrupt
has been guilty of unreasonable delay in applying for his
discharge, the stay will not be granted (3 5106). When
the amount of the debt is in dispute, the action may be
allowed to proceed to a judgment (§ 5106).4 An action
in tort for a personai injury can not be stayed, for the
claim is not provable until final judgment is obtained.
The entry of a judgment on a verdict in such an action, ren-
dered before the commencement of the proceedings in bank-
ruptcy, will not be stayed.’ Proceedings on an examina-
tion supplemental to an execution may be stayed.’ 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 proceedings in bankruptcy, may be
stayed. In such a case there is no final judgment within
the meaning of the bankrupt law. A motion for further
security in such a suit on the part of the creditor is a pro-

 

*Tn re Richardson et al. 2 B. R. 202; s. c. 2 Ben. 517; s. co. 2 L. T. B. 20.
* In re Hirsch, 2 B. R. 3; 8. c. 2 Ben. 493; s,c.1L. T. B. 92.
* In re Fallon, 2 B. R. 277.

‘In re Rundle et al. 2 B. R. 113; in re Richardson et al. 2 B. R. 202; s.
. 2 Ben. 517; 8. c. 2 L. T. B. 20.

*In re Hennocksburg & Block, 7 B. R. 57; 8. c. 6 Ben. 150.
* Zimmer v. Schlechauf, 11 B. R. 813; sc. 115 Mass. 52.
"In re Reed, 1 B. R. 1.
184 STAYING PROCEEDINGS.

ceeding against the bankrupt.’ Proceedings upon charges
filed under a recognizance, taken before the filing of the
petition, in accordance with the poor debtors’ act, can not
be stayed? An action upon a joint contract, made by the
bankrupt with other joint contractors, will not be stayed,
but an entry will be made to stay all actions against the
bankrupt under the judgment that may be rendered.’

The language of the injunction should be in accord.
ance with the statute. The injunction only continues in
force until the question of discharge can be determined.
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 ob-
ject 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. No motion for a dissolution is needed. No
order to show the termination is required. The bankrupt
must use his discharge as his protection in cases thereby
affected.t If there is unreasonable delay in procuring a
discharge, the order staying proceedings will be vacated.’

Where the action of the creditor, taken after the grant-
ing of the injunction, does not tend to enforce any demand
against the bankrupt, nor deprive the assignee of any
property or right, the stay is not violated.

While the statute forbids the maintaining or the prose-
cution to final judgment of any suit for a provable debt, it
does not in terms prohibit the commencement of such a

 

* In re Metcalf etal. 1 B. R. 201; s. c. 2 Ben. 78; in re Lezynsky, 3 Ben.
487; contra, Merritt v. Glidden et al. 5 B. R. 157; s. c. 39 Cal. 559.

* Minon v. Van Nostrand; 4 B, R. 108; s. c. Lowell, 458.

* Hoyt et al. v. Freel et al. 4 B. R. 181; 8s. c. 8 Abb. Pr. (N. S.) 220;
s,c.2L. T. B. 144; Givers v. Robbins, 5 Ala. 676 ; contra, Tinkum y. O’Neal,
5 Nev. 98; Hogendobler v. Lyon, 12 Kans. 276.

‘ In re Thomas, 3 B. R. 38; in re Rosenberg, 2 B. R. 236; s, c. 3 Ben. 14.
° In re W. Belden, 6 B. R. 443; 8. c. 5 Ben. 476.
* In re Hirsch, 2 B. R. 3; 8. c. 2 Ben. 498; sc. 1 L. T. B. 92,
HABEAS CORPUS. 185

suit. Whenever it appears that the suit is one to which
the discharge in bankruptcy would be no bar, and that,
if not commenced forthwith, the statute of limitations
might run against it, or that service might not be ob-
tained upon the bankrupt, or that testimony might be
lost, the district court may permit the suit to commence
for the purpose of saving the statute, effecting a service,
or securing testimony. When these objects are obtained
the suit can be stayed to await the determination of the
question of the debtor’s discharge, or the expiration of a
reasonable time therefor.’ If the bankrupt has been guilty
of unreasonable delay in applying for a discharge, the
creditor may be allowed to commence a suit.? The special
reasons on which the application is based, must be set
forth and proved, and leave to prosecute will be granted
only so far as may be absolutely necessary to secure the
creditor's rights.

Proceedings on an examination supplemental to an ex-
ecution issued under a judgment rendered after the filing
of the petition, on a debt that was provable in bankruptcy,
may be stayed when a discharge has been granted? <A
bankrupt can obtain the full protection of his discharge,
after, as well as before judgment, on application to the
court in which the action is pending. In case of a judg-
ment rendered prior to the filing of the petition, the bank-
rupt’s only remedy, in every case, is by such application
to the court which rendered the judgment, or a court of
equity.*

No bankrupt is liable to arrest during the pendency
of the proceedings in bankruptcy in any civil action, un-
less such arrest is founded on some debt or claim from

 

* In re Ghiradelli, 4 B. R. 164; s. 0. 1 Saw. 348; 3. c. 2L. T. B. 135.

‘ *In re Chester M. Whitney, 1 W. N. 30; in re Samuel 8, Scott, 1 W. N.
0.

® World Co. v. Brooks, 3 B. R. 588; 8.c. 7 Abb. Pr. (N. 8.) 212.

* Hoyt et al. v. Freel et al. 4B, R. 131; 8.c,8 Abb. Pr. (N. 8.) 220;
8.c. 21. T. B. 144.
186 STAYING PROCEEDINGS.

which his discharge in bankruptcy would not release him
($5107). There is no distinction between an arrest on
mesne and final process. So far as the arrest is concerned,
the object and intent of the statute are the same. This
provision only applies to arrests that have been made
since the commencement of proceedings in bankruptcy.’
If the arrest was made before that time, the bankrupt is
not entitled to a release by virtue of any provision of the
bankrupt law. A prisoner out on bail is theoretically
and practically in arrest substantially, to all imtents and
purposes, the same as if he had not been released on
bail, and a surrender by the bail is not a new taking?
The fact that the magistrate before whom the bankrupt
appeared, according to his recognizance given upon taking
the poor debtor’s oath, did not find him guilty of the
charges alleged against him, and, therefore, permitted him
to go at large pending the appeal, does not make the tak-
ing of his body on execution in case of his ultimate con-
viction a new arrest. It is merely a restoration to the
confinement from which he obtained a temporary relief
pending the appeal.

If the arrest is made by aState court, the court making
the arrest may, on the application of the bankrupt, release
him,’ and it has been held that in such a case he should
first apply to the State court in order to avoid a conflict
of jurisdiction.®

If the arrest has been made since the commencement
of proceedings in bankruptcy, the bankrupt may apply to

 

* In re Wiggers, 2 Biss. 71; in re Mifflin, 1 Penn. L. J. 146.

"In re W. A. Walker, 1 B. R. 318; 8. c. Lowell, 222; Hazelton v. Valen-
tine, 2 B. R. 31; s.c. Lowell, 270; s.c. 1 L. T. B. 105; in re Hoskins, Crabbe,
466; Schulz v. Fleischer, 1 Penv. L. J. 11; in re Rank, Crabbe, 493; in re
Jonathan H. Cheney, 5 Law Rep. 19.

* Hazelton v. Valentine, 2 B.R 31; s. c. Lowell, 270; s.c.1L. T. B. 105;
inre Rank, Crabbe, 493; in re Jonathan H. Cheney, 5 Law Rep. 19; contra,
Foxall vy. Levi, 1 Cranch C. C. 139; Lingan y. Bailey, 1 Cranch C. C. 112.

* Stockwell vy. Silloway, 100 Mass. 287.

* Jones v. Emerson, 1 Caines, 487.

* In re Michael O'Mara, 4 Biss, 506.
HABBAS CORPUS. 187

the court of bankruptcy for a release.’ If the bankrupt,
during the pendency of the proceedings in bankruptcy, is
arrested or imprisoned upon process in any civil action,
the district court, upon his application, may issue a writ
of habeas corpus to bring him before the court to ascertain
whether such process has been issued for the collection of
any claim dischargeable in bankruptcy; and if so dis-
chargeable, he must be discharged ; if not, he must be re-
manded to the custody in which he may lawfully be.
Before granting the order for discharge, the court must
cause notice to be served upon the creditor, or his attor-
ney, so as to give him an opportunity of appearing and
being heard before the granting of the order.’

The only court that can entertain such application, by
virtue of the bankrupt law and Rule XXVII, is the dis-
trict court in which the proceedings in bankruptcy are
pending. When the bankrupt is arrested out of such dis-
trict, he must make an application according to the pro-
visions of section 753.

In making the return to the writ of habeas corpus, the
party who has custody of the bankrupt should set forth
the authority by virtue of which he made the arrest and
still detains him. The question to be decided is whether
the debt is one that will be released by a discharge under
the statute. If it will be released, the bankrupt must be
set free; if it will not be released, he must be remanded?
The debts that will not be released are those created by
the fraud or embezzlement of the bankrupt, or by his
defaleation as a public officer, or while acting in any fidu-
ciary character (§ 5117). The language of the statute is
so broad as to extend to a debt created by the bankrupt

 

‘In re L. Glaser, 1 B. R. 336; s. c. 2 Ben. 180; s,c.1 L. T. B. 57; U.S.
v. Dobbins, 1 Penn. L. J.9; s. c. 5 Law Rep. 81; in re Mifflin, 1 Penn. L. J.
146; in re Grenville T. Winthrop, 5 Law Rep. 24; State v. Rollins, 13 Mo.
179; vide in re Edson Comstock, 22 Vt. 642; Robb v. Powers, 7 Ala, 658.

* Rule XXVII.

* In re L, Glaser, 1 B. R. 336; s. c. 2 Ben. 180; s. c. 1 L. T. B. 57.
188 STAYING PROCEEDINGS.

while acting in any fiduciary character, and embraces
claims for the proceeds arising from the sale of goods con-
signed to be sold on commission." A debt created by
fraud is not so merged and extinguished by the judgment
as to be released by a discharge.” A judgment rendered
upon a declaration setting forth all the facts that made up
the fraud is conclusive.*

Evidence can not be introduced to show that the aver.
ments contained in the declaration upon which the arrest
is founded are false* It is not necessary that it should
appear from the declaration that the debt is one from
which a discharge will not release the bankrupt. It is
sufficient if it appears from the affidavit and order of
arrest, although they are ew parte. Their verity can not
be called in question. They are entitled to as much credit’
as more formal proceedings.” The district court examines
the papers on which the arrest is founded, not to determine
whether the bankrupt is arrested upon a debt which is in
fact not dischargeable in bankruptcy, but solely to deter-
mine whether the court which ordered the arrest intended
to found it on a debt or claim which would not be released’
by a discharge in bankruptcy. If the district court sees
from the face of those papers that the court, in ordering
the arrest must have done so because it considered the
case made out by the papers to be such a debt, it must re-
gard the arrest as founded upon such debt, and hold the
bankrupt lable to such arrest.®

It has been said that the question whether the debt
was one from which a discharge would release him was

 

‘In re Seymour, 1 B. R. 29; s. c. 1 Ben. 348; in re J. H. Kimball, 2 B.R.
204, 354; 8. c. 2 Ben. 554; s.c. 6 Blatch, 292 ; Lemeke v. Booth, 5 B. R. 351;
s. c. 47 Mo. 385; vide Cronau y. Cutting, 4B. R. 6675; s.c. 104 Mass. 245.

? In re Whiteliouse, 4B. R. 63; s.c. Lowell, 429.
* In re Patterson, 1 B. R. 307; s. c. 2 Ben. 155.

“Tn re Devoe, 2 B. R. 27; 8. ©. Prone 251; s.c.1L. T. B. 90; contra,
in re Williams & McPheeters, 11 B. R. 145.

*Inre J. H. Kimball, 2 B. R. 204, 354; s. 0. 2 Ben. 554; s.c.6 Blatch. 292.
° In re Valk et al. 3B. R. 278; s. co. 6 Ben. 431.
HABEAS CORPUS. 189

one of fact which the district courts must decide for them-
selves, but as arrests are usually made upon declarations
or affidavits setting forth the grounds therefor, a case can
hardly ever arise in which testimony can be taken or will
be admissible. Whenever such a case does arise, it can
not be decided on ev parte testimony.’ If a judgment
shows that the debt on which it is founded is discharge-
able, no evidence to the contrary is admissible? The
district court has authority to require a person within its
jurisdiction to release a party held in custody beyond its
jurisdiction.’

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 pro-
ceedings in bankruptcy. They are pending so far as the
bankrupt’s right to a release upon a writ of habeas corpus
by virtue of the provisions of the bankrupt law is con-
cerned, only until the determination of his application for
a discharge.* No release can be granted from any arrest
made during the pendency of such proceedings, and
founded upon a debt that will not be discharged; and
when the papers on which the arrest was made show that
it is founded upon such a debt, no evidence is admissible
in the district court to show that the debt is one that
would be released. Ifthe bankrupt wishes to controvert
the allegations in regard to the character of the debt, he
must move for a discharge in the court that ordered the
arrest.” Upon such motion he can enter into the merits of
the case, and in that way alone. After he has obtained
a discharge he may apply to the court that ordered the

 

‘In re L. Glaser, 1 B. R. 336; s. c. 2 Ben. 180; s. c. 1 L. T. B. 87.
* Hazleton v. Valentine, 2 B. R. 31; s. c. Lowell, 270; s.c.1 L. T. B. 105.
* Hazleton v. Valentine, 2 B. R. 31; s. c. Lowell, 270; s.c.1L. T. B. 105.

‘In re J. H. Kimball, 2 B. R. 264; s, c. 2 Ben. 554; in re Nathaniel Dole,
7 2&B. R. 538; s.c. 9B. R. 198; s.c. 11 Blatch. 499.

“In re Migel, 2 B. R. 481.
“Tn re Valk et al. 8 B. R. 278; 8. c, 3 Ben. 481.
190 . STAYING PROCEEDINGS.

arrest,! or to the district court,’ to obtain a release from an
arrest made before the commencement of proceedings in
bankruptcy.

 

-

1 Hazleton vy. Valentine, 2 B. R. 31; s. c. Lowell, 270; 5. c.1 L. T. B.
105; Comstock v. Grout, 17 Vt. 512.

? In re Simpson, 2 B. R. 47.
CHAPTER XI.

EXAMINATIONS.

Tue district court may, on the application of the as-
signee in bankruptcy, or of any creditor, or without any
application, at all times require the bankrupt, upon rea-
sonable notice, to attend and submit to an examination
(§$ 5086). The district court may, in like manner, require
the attendance of any other person as a witness ($ 5087).
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 such wife do not
attend at the time and place specified in the order, the
bankrupt will not be entitled to a discharge unless he
proves to the satisfaction of the court that he was unable
to procure the attendance of his wife ($ 5088).

Tn case of a refusal of a party to attend or to testify
before a register, the same proceedings may be had as are
now authorized with respect to witnesses to be produced
on examination before an examiner of any of the courts of
the United States on written interrogatories

The application for an examination may be made either
to the court or to the register to whom the case bas been
referred, for such register has and may exercise all powers,
except the power of commitment, vested in the district
court for the summoning and examination of persons or
witnesses, and for requiring the production of books, pa-
pers, and documents (§ 5002).?. The only persons who
can make the application are the assignee or a creditor. A

 

* Rule X.

* In re Brandt, 2 B. R. 215; in re Vetterlein, 4 B. R. 599; 8. c. 5 Ben. 7;
in re Pioneer Paper Co. 7B. R. 250; in re Macintire, 1 B. R. ‘11; 8. c. 1 Ben.
277; in re Lanier, 2 B. R. 154,
192 EXAMINATIONS.

creditor must prove his claim before he can make such ap-
plication! The court or the register may, without any
application, require the bankrupt or any witness to sub-
mit to an examination? 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.’
The examination may be made at any time after the com-
mencement of proceedings in bankruptcy.“ The debtor
may be examined even before an adjudication whether the
case is one of voluntary ® or involuntary bankruptcy.°

An order for an examination will not, in any case, be
granted, except upon good cause shown; but, when the
application is for the examination of the bankrupt or of a
witness, the court or the register may exercise a discretion
in regard to what will be considered sufficient cause.’ The
application may be made verbally unless otherwise re-
quired, but if required, it must be by a petition duly veri-
fied. The petition need not specify the particular mat-
ters to which the examination is to be directed.? Neither
a petition nor an affidavit is usually required of the as-
signee, for he is a guas? officer of the court.”

The wife of a bankrupt can only be required to sub-
mit to an examination upon the application of some per-
son who has authority to make it. The assignee and
creditors must both show good cause for granting the
order by a petition duly verified. A prima facie case
must be established. Such a case is not made out by show-

 

‘In re Ray, 1 B. R. 203; s. c. 2 Ben. 53.

*In re Baum, 1 B. R. 5; s c. 1 Ben. 274; in re Patterson, 1 B. R. 100;
8. c. 1 Ben. 448,

> In re Belden & Hooker, 4 Ben. 225.
‘Tn re Baum, 1 B. R. 5; s. c. 1 Ben. 274.
* In re Thomas D. Lee, 4 Law Rep. 486; s.c. 1 N. Y. Leg. Obs. 88.

* In re Bromley & Co. 3 B. R. 686; in re Salkey & Gerson, 9 B. R. 107;
8. c. 5 Biss, 486; in re Mendenhall, 9 B. R.285; inre Heusted, 5 Law Rep. 510.

"In re Solis, 4 B. R. 68; s. c. 4 Ben. 148; s. c. 2L. T. B. 158.
°In re Adams, 2 B. R. 95; s. c. 2 Ben. 508; s. c. 86 How. Pr. 51.
° In re Lanier, 2 B. R. 154,

*° In re McBrien, 2 B. R. 197; s. c. 2 Ben. 518.
EXAMINATIONS. 193

ing that the bankrupt has committed frauds of which she
is probably cognizant. It is not the intention of the statute
to destroy the usual and proper confidence between hus-
band and wife. The cases in which she can be examined
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 any other fraud upon the statute.
In that case, she being a party to the fraud, may be fully
examined concerning it, and conversations which are of
the res geste, may be inquired into. So also, if she offers
a debt for proof, she may be fully examined concerning
it. Where the application is made merely for delay, it
will be refused.’

If the bankrupt is present before the court or the reg-
ister, and the assignee or any creditor desires to examine
him, they should, unless there is no ground for the re-
quest, be allowed to do so, and no special order need be
passed. In other cases a special order must be passed.
This order must be according to the form prescribed to
suit the case.* The order is a summons.> It must issue
out of the court, and be tested by the clerk. Blanks with
the signature of the clerk and seal of the court must, on
application, be furnished to the registers. The order is
ex parte, and no previous notice is required to be given
to any party.’ Nor need any notice be given to the bank-
rupt of the time and the place appointed for the examina-
tion of a witness.® It is not necessary that the summons
shall be served by the marshal. The service may be made

 

‘In re Gilbert, 3B. R. 152; 8. c. Lowell, 340.

*In re Selig, 1 B. R. 186.

*In re Brandt, 2 B. R. 215; inre Bromley & Co. 3 B. R. 686.
‘ Forms Nos, 45, 47.

° Tn re Bellamy, 1 B. R. 64; s.c.1 Ben. 390; 3.0.1 L. T. B. 22.
* Rule IL.

"In re Macintire, 1 B. R. 11; 8. c. 1 Ben. 277.
* In re Levy et al. 1 B. R.105; 8. c. 1 Ben. 454.
13
194 EXAMINATIONS.

by any one,’ but must be personal? The order can only
be served in the district,’ or within one hundred miles of
the place where the examination is to be held.*

Parties and witnesses summoned before a register are
bound to attend in pursuance of such summons at the
place and the time designated therein, and are entitled
to protection, and are liable to process of contempt in like
manner as parties and witnesses are liable thereto in case
of default in attendance under any writ of subpcena
($5005). Ifa witness fails to attend on being summoned
thereto, the court may compel his attendance by warrant
directed to the marshal, commanding him to arrest such
person, and bring him forthwith before the court, or before
a register in bankruptcy, for examination as such witness
($ 5087). For neglect or refusal to obey any order of the
court, the bankrupt may be committed and punished as
for a contempt ($ 5104).

If the bankrupt is without the district, and unable to
return and personally attend at any of the times which
may be specified, 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
must be permitted so to do with like effect as if he had
not been in default (§ 5104).

If the bankrupt is imprisoned, absent, or disabled
from attendance, the court may order him to be produced
by the jailor or any officer in whose custody he may be;
or may direct the examination to be had, taken, and cer-
tified 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 (§ 5089). The court

 

* Gordon, McMillan & Co. v. Scott & Allen, 2 B. R. 86; s.c.1 L. T. B. 99.
? In re Joseph Hodges, 11 B. R. 369.

‘Jn re Joseph Hodges, 11 B. R. 369.

‘In re Wm. 8. Woodward, 12 B. R. 297.
~

EXAMINATIONS. 195

may, on his application, order him to be produced upon
habeas corpus by the jailor, or any officer in whose custody
he may be, before the register for the purpose of testifying
in any manner relating to his bankruptcy.’

The bankrupt is bound to appear, and is not entitled to
fees as a witness.” Neither a witness nor the bankrupt’s
wife is bound to attend unless the fees are paid or ten-
dered at the time of the service of the summons. The
fees to which they are entitled are five cents a mile to and
from the place at which they may be summoned to attend,
and one dollar and a half for each day’s attendance.
When the bankrupt’s wife can not be found or is beyond
the jurisdiction of the court, the order may be served
upon him, and if she fails to attend, he will not be entitled
to his discharge unless he can prove that he was unable
to procure her attendance.°

The return should always be in the prescribed form.’
As the order is made ex parte, the bankrupt or other per-
son who is to be examined on appearance in pursuance of
the order may make any objection or raise any question
which would have been proper if an opportunity bad
been granted before the order was made.‘ The examina-
tion may be and usually is held before the register. The
time for an examination is not terminated by an applica-
tion for a discharge.* The proceedings on such application
may be adjourned either before or after the filing of speci-
fications until a reasonable opportunity is afforded for
such examination. No examination can be had after a

 

"Rule XXVII.

*In re Okell, 1 B. R. 808; 8. c. 2 Ben. 144; 5. 4 1 L. T. B. 32; in re
McNair, 2 B. R. 219.

* Rule XXIX. ‘In re Griffin, 1 B. R. 871; s. c. 2 Ben. 209.
*TInre Van Tuyl, 2 B. R. 579; 8. c. 3 Ben. 237. ° Form No. 42.
"In re James W. Frisbie, 13 B. R. 349.

‘In re Tanner, 1 B. R. 316; 8. c. 2 Ben. 211; 8 c. Lowell, 215; in re
Lanier, 2 B. R. 154.

* Tn re Solis, 3 B. R. 761; s. c.4 Ben. 148; in re Frizelle et al. 5 B. R. 119.

In re Seckendorf, 1 B. R. 626; s. c. 2 Ben. 462; in re Mawson, 1B. R.
271.
196 ’ EXAMINATIONS.

discharge has been granted? A mere witness may be
examined before the bankrupt himself, and there need not
be any matter of controversy to be settled by testimony,”
and the fact that he is a party to proceedings instituted
by the assignee to recover property alleged to belong to
the bankrupt’s estate is no ground for objecting to such
examination® An examination of a witness and an ex-
amination of a bankrupt are two independent proceedings,
and may be conducted without reference to each other.
The party applying for the examination must see that due
appointments are made with the register, and give the
other party notice of them.’ The examination may be
adjourned for good cause shown.’ When a party inad-
vertently makes default under one order, he may apply for
a second order.’

The right of examination must not be abused. Every
creditor has the right to make an examination, and such
examination inures to the benefit of all thecreditors. The
fact, however, that one creditor has made an examination,
is no reason for withholding the privilege from another
creditor. Yet the time, manner, and course of the exam-
ination should he so regulated as to protect parties from
all annoyance, oppression, and mere delay, while at the
same time a full and fair opportunity is allowed to the
assignees and to the creditors to make all the inquiries
permitted by the statute’ Where a party has been ex.
amined once at considerable length, and some time elapses

 

‘In re C. Dean, 3 B. R. 769; in re G. C. Jones, 6 B. R. 886; in re
Nathaniel Dole, 7 B. R. 588; s. c. 9 B. R. 198; s. c. 11 Blatch, 499; contra,
in re Heath & Hughes, 7 B. R. 448.

* Tn re Fredenburg, 1 B. R. 268; s. c. 2 Ben. 183; in re Blake, 2 B. R. 10.

* In re Feinberg et al. 2 B. R. 475; s. c. 3 Ben. 162.

‘Tn re Levy et al. 1B. R. 107; s. c. 1 Ben. 454. ‘

* In re Littlefield, 3 B. R. 57; 8. c. Lowell, 831; 8. c.1L. T. B. 164.

* In re Mawson, 1 B. R. 271.

ai re Van Tuyl, 2 B. R. 70; s. c. 8 Ben. 287; in re Robinson et al, 2 B.
R. 516.

*In re Adams, 2B. R. 272; 8. c. 2 Ben. 503; s, c. 86 How. Pr. 51; in re
Gilbert, 3 B. R. 152; s. c. Lowell, 340.
EXAMINATIONS. 197

before another application is made, special reasons must
be shown before the examination will be allowed. If an
examination is sought or carried on to gratify malice or
mere curiosity, it may be arrested.’

Every party is entitled to reasonable notice of the ap-
plication for his examination. Such time, or the length
of such time, depends upon circumstances and facts sur-
rounding the party; the distance he is from court, or the
place of his examination; and also, upon what, if any, par-
ticular facts he is to be examined. If he 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 exam-
ination is in regard to a few items of his property pertain-
ing to his own person, such as a watch, ring, or money in
his pocket. A reasonable notice is such time as will en-
able him to reach and appear before the court with such
knowledge as may be under his control upon the matter
of the investigation or information asked for. When the
interrogatories call for no exercise of skill or investigation,
but simply the capacity and the disposition to answer ac-
cording to the truth, no time for preparation will be al-
lowed.? If, however, time is needed to refresh the mem-
ory by referring to books or papers, or for the production
of any written instruments or documents, it should be
granted.* So long as the debt of a creditor stands proved
and unimpeached, a claim that it has been extinguished
by an offset or does not exist, furnishes no ground for a
refusal to be sworn.?

The persons under examination are to answer substan-

 

In re Isidor et al. 1 B. R. 264; s. c. 2 Ben. 123; in re Frizelle et al. 5 B.
R. 122; in re James W. Frisbie, 13 B. R. 849,

te re Salkey & Gerson, 9 B. R. 107; 8. c. 5 Biss. 486.

* In re Bromley & Co. 3 B. R. 686.

“In re Tanner, t B. R. 316; s. c. Lowell, 215; 8. c. 2 Ben. 211.
*Inre N. W. Kingsley, 7 B. R. 558; s. c. 6 Ben. 800.
198 EXAMINATIONS.

tially like other witnesses, and not merely to have inter-
rogatories filed and propounded to them after the manner
adopted in equity and admiralty." The usual practice is
to conduct the examination orally, by question and answer,
which are reduced to writing by the register, and the in-
terrogatories are always numbered in the order in which
they are given. The examination of persons before a reg-
ister may be conducted by the party in person, or by his
counsel or attorney, and such persons are subject to exam-
ination and cross-examination, which must be had in con-
formity with the mode now adopted in courts of law.
The depositions upon such examination must be taken
down in writing by or under the direction of the register
in the form of a narrative, unless he determines, or the
rules of court require, that the examination shall be by
question and answer in special instances, and when com-
pleted must be read over to such persons and signed by
them in the presence of the register. Any question or
questions which may be objected to must be noted by
the register upon the deposition, but he has no power to
decide on the competency, materiality, or relevancy of the
question; and the court has power to deal with the costs
of incompetent, immaterial, or irrelevant depositions, or
parts of them, as may be just.’

The register has no power to decide upon the compe-
tency, materiality, or relevancy of a question. When a
question is objected to, the question and the fact and
grounds of objection must be taken down by the register,
and the question, although incompetent, immaterial, or ir-
relevant, must be answered, and when the deposition is
closed, the court will deal with it as a whole, and then
pass upon the question as to what parts of it are incom-
petent, immaterial, or irrelevant. The bankrupt or other
witness has the power, in a clear case of abuse, to refuse,

 

‘In re Tanner, 1 B. R. 316; s. c. Lowell, 215; s. c. 2 Ben. 211,
? Rule X.
EXAMINATIONS. 199

under the advice and responsibility of counsel, to answer
a question. 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. This extends,
not only to objections to questions, but also to objections °
to answer and testimony, on the grounds of competency,
materiality, and relevancy ; and neither question nor an-
swer nor testimony is to be held ultimately incompetent,
immaterial, or irrelevant, unless objected to on the record
for some ground of incompetency, immateriality, or irrele-
vancy stated on the record. The register is required to
note the objection upon 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 objection; and the ground of objection must
be directed to the competency, materiality, or relevancy
of that which is objected to.

There are some objections made in the course of an
examination which raise issues that must be adjourned
into court, such as objections to the regularity of the
order,’ or to the liability of the party to an examination ;®
but objections to questions or answers are not such issues.
The statute, however, gives to any party the right to take
the opinion of the judge upon any point arising in the
proceedings before the register, and also provides that par-
ties may, by consent, state any question, and submit it to
the decision of the court ($ 5010). It is found in prac-
tice more convenient to adopt this course than to apply
for an attachment. There are but few cases of applica-
tions for an attachment, while there are numerous cases

 

i a re Levy et al. 1 B. R. 136; s. c.1 Ben. 496; vide in re Reakirt, 7 B.

* In re Patterson, 1 B. R. 100; s. c. 1 Ben. 448.

‘ *In re Woodward et al. 38 B. R. 719; in re Nathaniel Dole, 7 B. R. 538;
8s. c. 9B. R. 193; s. c. 11 Blatch. 499.
200 EXAMINATIONS.

where questions have been certified upon the request of
oné party, or by the consent of both parties.

A mere witness can not have the assistance of counsel.!
The bankrupt has the undoubted right to have the assist-
ance of counsel. The only question is, whether he has the

‘right to consult counsel during the course of his examina-
tion. Generally no consultation is allowed, but no rule
can be laid down to govern the exceptions. The solution
of the question is left to the register to decide, in the ex-
ercise of a sound discretion, according to the facts of each
particular case The bankrupt’s wife is not entitled to
the assistance of counsel, nor has the bankrupt’s counsel
a right to advise her while under examination.’

The bankrupt may be examined in regard to all mat-
ters relating to the disposal or condition of his property ;
to his trade and dealings with others, and 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
(§ 5086). The question has never vet been raised, but it
would seem that the examination of a witness and of the
bankrupt’s wife are limited to and extend to the same sub-
jects.* It has, however, been said, that 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
upon the trial of the issues, as parties do in ordinary trials

 

‘In re Fredenburg, | B. R. 268; s. c. 2 Ben. 183; in re Feinberg et al. 2
B. R. 475; 8. c. 3 Ben, 162; in re Stuyvesant Bank, 7 B. R. 445; s.c. 6 Ben.
83; in re Comstock & Co. 13 B. R. 198.

*In re Lord, 3 B. R. 243; in re Judson, 1 B. R. 864; 8. c. 2 Ben. 210; s.
c. 85 How. Pr. 15. ;

*In re J. A. Schonberg, 7 Ben, 211.
‘In re Stuyvesant Bank, 7 B. R. 445; s. c. 6 Ben. 33.
EXAMINATIONS. 201

at law. Such information no one has theright to demand
or obtain otherwise than as it may be voluntarily given,
unless it be upon the trial of issues or questions made up.’

It is, however, different with the bankrupt himself.
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 when he asks for it the law only allows it
when he surrenders himself to be dealt with in an extra-
ordinary way, if the court sees proper to exercise that
power to the ends of justice. Information possessed by
the bankrupt is often important to the proper adjustment.
of conflicting interests; to detect the establishment of an.
unjust claim against his estate; to establish justice in dis-
putes that may arise between the assignee and debtors to
the estate, or between the assignee and such persons as may
claim to have liens or priorities. For all such and for all
other proper purposes the bankrupt is subject to the order
of the court to be summoned and examined at any and at
all times when it may seem that the ends of justice will
be furthered thereby.’

A party need not answer any question which does not
relate to any matter of fact in issue, or to any matter con-
tained in his direct testimony, when a truthful answer
would tend to degrade him’ But he can not refuse to
answer questions concerning his dealings with the bank-
rupt on the ground that his answer may furnish evidence
against him in a civil case brought or to be brought on be-
half of the assignee, for the main, if not the only, purpose
of the statute in authorizing such examination is to enable:
the assignee to obtain evidence for civil suits, or to ascer-
tain that there is no such evidence A claim of privilege

 

‘In re Brandt, 2 B. R. 215.
* In re Brandt, 2 B. R. 215; in re Vogel, 5 B. R. 393.
° In re H. Lewis, 3 B. R. 621; s. c. 4 Ben. 67.

_ ‘In re Fay et al. 3 B. R. 660; in re Pioneer Paper Co. 7 B. R. 250; Gar-
rison v. Markley, 7 B. R. 246; in re Danforth, 1 Penn. L. J. 148.
202 EXAMINATIONS.

does not warrant a refusal to be sworn. The party
claiming it must submit to be sworn, and interpose his
privilege when a question is asked that invades it.’ An
attorney is not privileged from answering as to every
thing which comes to his knowledge while he is acting as
attorney. The privilege only extends to information
derived from his client as such. He must answer ques-
tions in regard to acts which might have been performed
equally as well by any mere agent or third party, such as
conveyances of land to and by him,’ or the superintendence
of an auction sale and disposition of the proceeds.’ These
are his own proceedings, and not something that his clients
communicated to him. They are not professional, and
do not appertain to the duty of an attorney. Whatever
is done in this behalf is not in his capacity of attorney
or counsel, but is in the character of an agent or third
party. An attorney must also state whether he drew or
directed the drawing of a certain deed,* and whether at a
certain time he received acheck drawn to the order of the
bankrupt, and what disposition he made of it.” He must
also state what affairs of the bankrupt were the subject
of conversation between him and other persons.®

The bankrupt must state whether he has played cards,
faro, or any other game of chance, with certain persons
prior to the commencement of proceedings in bankruptcy,
though the answer may tend to degrade him.’ The
question whether the bankrupt may be compelled to an-
swer a question when his answer would criminate himself
may be considered as still unsettled. In two brief cases,

 

‘In re Woodward et al. 3 B. R. 719.

"In re Belis et al. 3 B. R. 199; s. c. 8 Ben. 886; s. c, 88 How. Pr. 79;
s.c.1L. T. B. 178,

* In re O’Donohue, 3 B. R. 245.

“In re Aspinwall, 10 B. R. 448; s. c. 7 Ben. 433.
* In re Aspinwall, 10 B. R. 448; 8. c. 7 Ben. 433.
“In re Aspinwall, 10 B. R. 448; s. c. 7 Ben. 433.
? In re Richards, 4B. R. 93; 8. c. 4 Ben. 303.
EXAMINATIONS. 203

jt has been decided, without argument and without an
examination of the authorities, that he could not.’ It has
also, on the other hand, been decided that he can not
cover up his fraud behind the shield that if he answers he
will criminate himself by proving up his fraud in testify-
ing 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 tothe judgment of the law. It is possible, or rather
probable, that he may be protected from disclosing some
distinct criminal act; but even in such case he can not be
protected in refusing 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 fraudu-
lent concealment, or that he owns property that has been
illegally obtained, and will thus render himself liable to
penalties.” It has, however, been held that the examina-
tion is not competent evidence against him in a criminal
action? and in that view of the law there appears to be
no good reason why he should not be compelled to answer
fully.

The bankrupt can not be examined in regard to prop-
erty that did not belong to him,‘ or that has been acquired
by him since the commencement of proceedings in bank-
ruptcy,’ unless it is shown that the same has some con-
nection with his property or business before that time.®
An investigation may commence by showing means and
going to results, or showing the results and discovering
the means by further examination. The true point of in-
quiry in such cases is, when and how did he acquire it?

 

1Tn re Patterson, 1B. R. 152; 8 c. 1 Ben. 508; in re Koch, 1 B. R. 549.
? In re Bromley & Co. 3B. R. 686.

°U. 8. v. Prescott, 2 Dillon, 405; in re Brooks, 5 Pac. L. R. 191.
‘In re Van Tuyl, 1 B. R. 636.

*In re Patterson, 1 B. R. 125; s. c. 1 Ben. 508; in re Levy etal. 1 B. R.
136; s. c. 1 Ben. 496.

*In re Rosenfield, 1 B. R. 319; s.c.1 L. T. B. 81.
204. EXAMINATIONS.

He must answer whether or not he was in the possession
of a large amount of property under exceptional circum-
stances, and whether it was possessed before bankruptcy
oris the proceeds of property that belongs to the assignee."
He may also be examined in regard to property in which
it may possibly be shown that he has an interest.” It is
no ground for refusing to answer a question that he an-
swered the same question in a previous examination by
another creditor’ It is a contempt of court for the bank-
rupt to leave the office of the register before the examina-
tion is concluded. A witness must answer all proper
questions relating to his dealings and trade with the bank-
rupt, and may be compelled to produce his books or copies
therefrom relating to such transactions.” The parties may
be cross-examined.®

The fees of the register must be paid to him by the
party for whom the services are rendered (§ 5008). He is
not required to look, in the first instance, for such fees to
the bankrupt, or to the fifty dollars deposited to secure
his fees, or to the bankrupt’s estate.’ When witnesses are
produced before the register, each party must pay for the
direct examination of his own witnesses and for such
cross-examination as he may make of the witnesses of
the adverse party. The authorities are conflicting as to
whether the bankrupt must pay the fees of his cross-ex-
amination or of statements made by him after the close of
his direct examination.? He must pay for the examina-
tion of his own witnesses, and such cross-examination as
he may make of adverse witnesses.° The assignee must

 

? In re McBrien, 3 B. R. 845; s. c. 3 Ben. 481.

? In re Bonesteel, 2 B. R. 880. *In re Vogel, 5 B. R. 393.

‘In re Vogel, 5 B. R. 893. * Tn re Earle, 3 B. R. 564.

“In re Leachman, 1 B. R. 891; in re Levy et al. 1B. R. 186; 5. c. 1 Ben.
496; in re Maynard Bragg, 1 N. Y. Leg. Obs. 119; s, c. 5 Law Rep. 323.

"In re Macintire, 1 B. R. 11; 1 Ben. 277,

* Schofield v. Moorehead, 2 B. R. 1.

° In re Mealy, 2 B. R. 128; in re Macintire, 1 B. R. 11; s. c. 1 Ben. 277.

7 In re Mealy, 2 B. R. 128.
EXAMINATIONS. 205

pay for an examination made by him whether he has assets
or not.’

The examination must be in writing, and signed by
the party examined, and filed with the other proceedings
(§ 5086). The bankrupt may he allowcd to correct any
statement made during the course of his examination? If
any person examined before a register refuses or declines
to answer, or to swear to or sign his examination when
taken, the register must refer the matter to the judge,
who may order the person so acting to pay the costs
thereby occasioned, if such person is compellable by law
to answer such question or to sign such examination; and
such person is also liable to be punished for contempt
(§ 5006). All persons willfully and corruptly swearing
or affirming falsely before a register are liable to all the
penalties, punishments, and consequences of perjury.

 

‘Tn re Hughes, 1 B. R. 226; s. c. 2 Ben. 85; s.c. 1 L. T. B. 45.
* Rule XXXIII.
CHAPTER XII.

COURTS OF ORIGINAL JURISDICTION IN BANKRUPTCY.

Tue several district courts of the United States are
constituted courts of bankruptcy, and they have original
jurisdiction in their respective districts in all matters and
proceedings in bankruptcy ($ 563). Proceedings in bank-
ruptecy can not be initiated in the circuit court. For that
purpose the jurisdiction of the district court is plainly ex-
clusive. The statute does not blend or confound the two
courts in the administration of the bankrupt law. The
courts are distinct under that law as under all others, and
exercise a separate jurisdiction, each in its own sphere.

All the jurisdiction, power and authority conferred
upon the district courts in cases in bankruptcy, are con-
ferred upon the Supreme Court of the District of Colum-
bia ($ 4977) and upon the district courts of the several
Territories ($ 4978). The jurisdiction conferred upon
the district courts of the Territories may be exercised
by either of the justices of such courts while holding the
district court for the district where the proceedings are
pending (§ 4978).

The courts of bankruptcy must always be open for the
transaction of business under the statute, and the powers
and jurisdiction granted and conferred upon them may be
exercised as well in vacation as in term time; and a
Judge sitting at chambers has the same powers and juris-
diction, including the power of keeping order and of
punishing any contempt of his authority, as when sitting
in court (§ 4973). In case of a vacancy in the office of dis-

 

ve In re Binninger et al. 3 B. R. 487; s.c. 7 Blatch. 159; sc. 1 L. T. B.

* Act of 22 June, 1874, § 16.
COURTS OF ORIGINAL JURISDICTION. 207

trict judge of any district, or in case any district judge is,
from sickness, absence, or other disability, unable to act,
the cireuit 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 cases in bankruptcy, and cause the same to be entered
or issued, as the case may require, by the clerk of the dis-
trict court (§ 4976).

The courts of bankruptcy may sit for the transaction
of business in bankruptcy at any place in the district, of
which place and the time of holding court they shall have
given notice, as well as at the places designated by law for
holding such courts ($ 4974). They 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
($ 4975). The proceedings instituted for the purpose of
punishing a party for contempt must be separate and dis-
tinct from the proceedings in bankruptcy, so that proper
issues may be made up between the parties.

In addition? to their jurisdiction over all matters and
proceedings in bankruptcy, the jurisdiction of the courts
of bankruptcy extends to all cases and controversies arising
between the bankrupt and any creditor or creditors who.
claim any debt or demand under the bankruptcy; to the
collection of all the assets of the bankrupt; to the ascer-
tainment and liquidation of the liens and other specific
claims thereon; to the adjustment of the various priorities
and conflicting interests of all parties; and to the marshal-
ing 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,

 

1 Creditors v. Cozzens & Hall, 3 B. R. 281.

*In re L. Glaser, 1 B. R. 386; s. c. 2 Ben. 180: 5. co. 1 LL. T. B. 57; in
re William Christy, 8 How. 292; in re Dudley, 1 Penn. L. J. 302; Mitchell
v. Manuf. Co. 2 Story, 648.
208 COURTS OF

and things to be done under and in virtue of the bank.
ruptcy, until the final distribution and settlement of the
estate of the bankrupt, and the close of the proceedings
in bankruptcy (§$ 4972).

The jurisdiction in matters of bankruptcy is conferred
upon the district courts in their respective districts. The
words, “in their respective districts,” must receive their
usual ordinary signification, and manifest a purpose and
intent on the part of Congress to limit and restrict the
authority and jurisdiction of the district courts in bank-
ruptcy within their own districts, 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. Although their authority does extend to
all matters in bankruptcy, and there is no limit to the
subject-matter over which the courts have 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 bankrupt law was passed. They
can not, therefore, summon parties before them from places
beyond the limits of their districts."

A voluntary appearance, however, is effective to give
jurisdiction over a party, even though there has been no
previous service of process upon him. The object of proc.
ess in a suit 7m personam is to secure the appearance of
the party, and his general appearance waives all irregu-
larities in the service of such process, and confers jurisdic-
tion, so far as the person is concerned. Thus, where an
order of a court of bankruptcy is served upon a party
who lives beyond the district, and he voluntarily enters
his appearance in the action, the court has jurisdiction
over him.’ So, also, a party who has proved his debt is

 

* Paine v. Caldwell, 6 B. R. 558; in re Hirsch, 2 B. R. 3; 8. c. 2 Ben. 493;
ae 1 E T. B. 92; vide Markson v. Heaney, 4B. R. 510; s.c. 1 Dillon, 497;
, note.

?JIn re Ulrich, 3 B. R. 183; 8. c. 3 Ben. 855; in re Frederick 9. Kirtland,
10 Blatch, 515.
ORIGINAL JURISDICTION. 209

subject to its jurisdiction, and may be served with a copy
of an order, although he lives beyond the district.’ If
the court, however, has no jurisdiction over the subject-
matter of the suit, a voluntary appearance can not give
jurisdiction, and it is never too late at any stage of the
cause to consider it.2 When jurisdiction has been con-
ferred by a voluntary appearance merely, it can not be
withdrawn by the act of the party who has so appeared,
without the consent of the court or of the complainant. If
the right to withdraw depends upon questions of fact, the
court will pass upon the existence and pertinence of the
facts, and allow or refuse the withdrawal on previous no-
tice to the opposite party.®

Courts of bankruptcy, as they existed in England at
the time the statute was passed, were, and still are, sepa-
rate, distinct organizations, with powers and jurisdiction
separate and distinct from all other courts; and it is, un-
doubtedly, in this sense that the words are used in the
statute: that is, courts possessing power and jurisdiction
peculiar to themselves. The only difference is, that here
instead of creating a new organization, an organization al-
ready existing, known as the district court, is taken up and
made use of in lieu ot such new organization. But the
district court, when acting as a court of bankruptcy, is
none the less a separate and distinct court, exercising pow-
ers and jurisdiction as a distinct court, than if it were
such separate and distinct organization.* Being thus the
special creature of statutory law, it has no powers except
those that are expressly granted by the statute, and such
implied powers as may be necessary to give full force and
effect to the jurisdiction conferred upon it.2 The functions
of the district court, however, are employed as a court,

 

*In re Kyler, 2 Ben. 414. * Jobbins v. Montague, 6 B. R. 509.
*In re Ulrich, 3 B. R. 188; s. c. 8 Ben. 855.
“In re Norris, 4B. R. 85; 8. c. 1 Abb. U. C. 514; 8.0, 1 L. T. B. 227.
* Clark v. Binninger, 3 B. R. 518; s.c. 38 How. Pr. 341; s.c, 3 L. T. B.
49; Jobbins v. Montague, 6 B. R. 509; in re Robert Morris, Crabbe, 70.
14
210 , COURTS OF

and a new jurisdiction is conferred on it. It may, there-
fore, continue to use its customary powers, except where
such use is especially limited and restricted. In every par-
ticular not otherwise designated by the statute, Congress
must have intended that it should proceed with the new
jurisdiction upon the principles appropriate to like pro-
ceedings under any other branch of its power.’ The strict
rule of construction, moreover, which is applied where a
statute gives to a court power to do a particular thing,
has no application to the bankrupt law where full and
complete jurisdiction is conferred over an extensive sub-
ject?

This jurisdiction over cases in bankruptcy is exclusive
of the courts of the several States (§ 711), and necessarily
so, for independently of the statute there is no jurisdiction
in any tribunal over any such proceedings, and no original
jurisdiction is given to any other courts.’ It extends over
the bankrupt, his estate, and all parties and questions con-
nected therewith. The great object of all bankrupt or in-
solvent laws is to distribute the property of a debtor, who
is unable to pay his debts in full, among his creditors, by
judicial proceedings, in which all may be heard, and to dis-
charge his property acquired afterwards, or at least his per-
son, from the debts owed by him at the time of the institu-
tion of such proceedings. The estate surrendered is placed
in the custody and under the protection of the court of
bankruptcy as fully as if actually brought into its visible
presence, and the officer appointed to manage it is account-
able to the court appointing him, and to that court alone.
This jurisdiction attaches as soon as the proceedings are
commenced, and after that time no other court, and no per-
son acting under any process from any other court, can in-

 

‘In re Barney Corse, 1 N. Y. Leg. Obs. 231; in re California Pacific R.
R. Co. 11 B. R. 193. :

7 In re California Pacific R. R. Co. 11 B. R. 193.
* Cook v. Whipp!te, 9 B. R. 155; 8. c. 55 N. Y. 150.
ORIGINAL JURISDICTION. O11

terfere with or withdraw the property so surrendered, or
determine, in any degree, the manner of its disposition."
The commencement of proceedings in bankruptcy oper-
ates as a bar to all other proceedings than such as may
.afterward be bad under the authority of the court of
bankruptcy, until such case is closed. Thus the levy of
an execution,’ or the filing of a bill to foreclose a mort-
gage,’ or the filing ofa libel a rem,* or the issuing of a
distress warrant,’ or the institution of summary proceed-
ings under a statute relating to tenants holding over after |
the expiration of their term,’ or the filing of a mechanic’s
lien claim where the lien only exists from the time of such
filing,’ or the issuing of a writ of replevin,® for the purpose
of affecting the estate, is irregular and improper, when
such proceedings are instituted in any other court after
that time. Claims against the bankrupt’s property should
be enforced in the court of bankruptcy during the pendency
of the proceedings, and this principle extends not only to
liens, but to all controversies concerning even the title to
property which was in his possession at the time of the
filing of the petition? When, however, there was a valid

 

‘In re Barrow et al. 1 B.R.48t; s.c.1L. T.
B. R. 595; in re Vogel, 2 B. R. 427; 5. c. 3 B. R.
s.c. 2 L. T. B. 154.

* Pennington v. Sale & Phelan et al. 1 B. R. 572; Davis v. Anderson, 6
B. R. 145; in re Wallace, 2 B. R. 134; s.c. 1 Deady, 433; in re John 8, Fos-
ter, 2 Story, 131; in re Bellows & Peck, 3 Story, 428.

*In re Kerosene Oil Co. 2 B. R. 528; s.c. 3 B. R. 125; s.c. 8 Ben. 85;
s. c. 6 Blatch. 521; s.c.2L. T. B. 79; in re Snedaker, 3B. R. 629; Markson
v. Heaney, 4 B. R. 510; s.c. 1 Dillon, 497; Buckingham v. McLean, 3 McLean,
185; s. c. 13 How. 151.

* In re People’s Mail Steamship Co. 2 B. R. 553; 8. c. 3 Ben. 226; contra,
The Ironsides, 4 Biss. 518.

"In re Wynne, 4 B. R. 23; s.c. Chase, 227; s.c. 2 L. T. B. 116; Brock
v. Terrill, 2 B, R. 643; vide Butler v. Morgan, 8 W. & S, 53.

° In re Enoch Steadman, 8 B. R. 319.

"In re Dey, 3 B. R. 805; s. c. 8 Ben. 450; 8. c. 9 Blatch. 285.

"In re Vogel, 2 B. R. 427; s.c.8 B. R. 198; s.c. 7 Blatch. 18; 20. 2L.
‘T. B. 154.

*Tn re Vogel, 2 B. R. 427; 3. c. 3 B. R. 198; s.c. 7 Blatch. 18; s. c. 2 L.
'T. B. 154; Hill v. Fleming, 39 Geo. 662; Samson v. Blake, 6 B. R. 410; 3. c.
9 Blatch. 379.

B. 68; Jones v. Leach, 1
1983.8. o. 7 Blatch. 18;
212 COURTS OF

lien at that time, and the filing of a petition in another
court is necessary in order to keep it alive, such petition.
may be filed, but all proceedings under it must be stayed
until the termination of the case in bankruptcy.’ These
principles apply with even more force to proceedings in
pais? A mortgagee therefore can not take possession of the
property,’ or sell under a power contained in the mortgage*

The court of bankruptcy may, however, authorize the
institution of suits in other courts for the purpose of affect-
ing property belonging to the bankrupt’s estate.” Even
if such suits are commenced without authority, the court
of bankruptcy may not in all cases deem it proper to pro-
hibit their prosecution. Where no advantage can result
to the estate of the bankrupt, there is no reason why the
court of bankruptcy should interfere. Under such cir-
cumstances, it may exercise a discretion on the subject,
and may decline interference.’ The State courts may in
those cases assume jurisdiction." The bankrupt court also
on application may ratify such proceedings in a State
court where it is shown that the estate will suffer no
injury thereby. The better practice, however, is to apply

 

’ Clifton et al. v. Foster et al. 3 B. R. 656; s. c. 103 Mass. 233; in re Cook
& Gleason, 3 Biss. 116.

° Phelps v. Sellick, 8 B. R. 390.

* Hutchings v. Muzzy Iron Works, 8 B. R. 458; in re Israel M. Rosenberg,.
3 B. R. 1380; s.c.3 Ben. 366; contra, Bentley v. Wells, 61 Ill. 59.

* Phelps v. Sellick, 8 B. R. 390; Davis, Assig. of Bittel, 2 B. R. 392; Whit-
man v. Butler, 8 B. R. 487; in re Ruehle, 2 B. R. 5°77; 5.0.2 L. T. B. 59;
Lockett v. Hill, 9 B. R. 167; s. c. 1 Wood, 552. The Jaw has fora long time
been considered to be as stated in the text, but the decision of the Supreme
Court in the case of Eyster v. Gaff, 13 B. R. 546, casts some doubt upon
the subject.

*In re McGilton et al.7 B. R. 2943 8. c. 8 Biss. 144; in re Cook & Glea-
son, 3 Biss. 116; in re Philo R. Sabin, 9 B. R. 383.

°TIn re Iron Mountain Co. 4 B. R. 645; s. c. 9 Blatch. 320; in re Bowie,
1B. R. 628; 8. c. 1 L. T. B. 97; Tichenor vy. Allen, 13 Gratt. 15 ; contra, in
re Geo. W. Anderson, 9 B. R. 360.

" Whitridge v. Taylor, 66 N. C. 273; Cole v. Duncan, 58 Ill. 176; Truitt
v. Truitt, 88 Ind. 16; Pierce vy. Wilcox, 40 Ind. 70; Reed v. Bullington, 11
B. R. 408; s, c. 49 Miss. 223; Russell vy. Cheatham, 16 Miss. 703; Freeny' v.
Ware, 9 Ala. 370; Talbert v. Melton, 17 Miss. 9°; Sorden v. Gatewood, 1 Ind.
107; McCance v. Taylor, 10 Gratt. 580. .

* Phelps v. Sellick, 8 B. R. 890.
ORIGINAL JURISDICTION. 213.

to the bankrupt court for the proper authority before in-
stituting such proceedings,' for otherwise all sales made
therein are liable to be set aside.’

No lien or interest in the estate can be acquired by any
proceeding instituted in another court after the filing of
the petition. The title of the assignee relates back to the
commencement of the proceedings, aud from that time the
bankrupt is divested of all interest in the estate, and no
proceeding against him can affect it; consequently, the ap-
pointment of a receiver, or the levy of an execution,‘ or
attachment,’ after that time is absolutely void. It is not
even necessary that the assignee should appear and defend
such an action.’ The remedy of the assignee in such case,
is by an action against the sheriff or the sheriff's vendee,
and not by claiming the proceeds of the property which
may have been thus unlawfully sold."

How far the courts of bankruptcy, in the exercise of
their jurisdiction, may interfere with other courts, is a
question that has been much discussed, and is not entirely
free from difficulty. They, clearly, have no authority to
withdraw cases instituted in other courts before the com-
mencement of proceedings in hankruptcy from those courts,
and proceed to settle and adjust the claims of the parties
thereto. Congress could, no doubt, have made an adjudi-
cation in bankruptcy operate proprio vigore to transfer all
cases which should be pending in other courts at the time

 

7 In re Cook & Gleason, 3 Biss, 116.

_ * Davis v. Anderson, 6 B. R. 145; Davis, Assig. of Bittel et al. 2B. R. 392;
in re Ruehle, 2 B. R. 577; 5.0. 2 L. T. B. 59.

* Buchanan v. Smith, 4 B. R. 397; 5. c. 7 B. RB. 513; s.c. 8 Blatch. 153;
8. ¢. 16 Wall. 277,
_ ‘Pennington v. Sale & Phelan, 1 B. R.572; Jones v. Leach, 1 B. R. 595;
ra z Wallace, 2B. R. 184; s. c. 1 Deady, 433; McLean v. Rockey, 3 McLean,

* Stuart v. Hines, 6 B. R.416; s. c. 33 Iowa, 60; s.c. 5 L. T. B. 46; Wei-
senfield v. Mispelhorn, 5 W. Va. 46; Williams v. Merritt, 4 B. R. 706; 8. c.
103 Mass. 184.

* Stuart v. Hines, 6 B. R. 416; s. c. 33 Iowa, 60; s.c. 5 L. T. B. 46.

” Bush’s Appeal, 65 Penn. 363.
214 COURTS OF

of the filing of the petition, and to which the bankrupt
should be a party, from those tribunals into the courts of
bankruptcy. It has not, however, done so. It not only
has not deprived the other courts of jurisdiction over such
causes, but it has provided for their prosecution and de-
fense in those courts by the assignee.’ This principle ap-
plies not only to all ordinary actions to collect a debt, but.
also to all proceedings to enforce a lien.” The lien of an
attachment,’ or the lien of a creditor upon property con-
veyed in fraud of creditors, or the lien of a partner
upon partnership funds,’ or the lien created by a mort-
gage,’ may be enforced in other courts when proceedings
for that purpose have been instituted before the com-
mencement of the proceedings in bankruptcy. Having
obtained lawful jurisdiction over the parties and subject
matters, they have the right to 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 them. ;

So, also, where a receiver, appointed by another court
before the commencement of proceedings in bankruptcy,

 

* Samson v. Burton et al.4 B. R. 1; 8. c. 5 Ben. 325; in re Campbell, 1B.
R. 165; s. c. 1 Abb. C. C, 185; 5.0. 1 L. T. B. 80; in re Irwin Davis, 4 B. R..
716; s.c. 8B. R. 167; s. c. 1 Saw. 260; Sutherland v. Lake Superior Canal
Co. 9 B. R. 298; Peck v. Jenness, 7 How. 612.

* Baum vy. Stern, 1 Rich. (N. 8.) 415; Biddle’s Appeal, 9 B. R. 144; s. c.
68 Penn. 13.

* Samson y. Burton et al. 4 B. R.1; s. c.5 Ben. 825; Bates v. Tappan, 3
B. R. 647; s. c. 99 Mass. 376; Bowman v. Harding, 4 B. R. 20; s. c. 56 Me.
559; Stoddard v. Locke, 9 B. R. 71; s. o. 43 Vt. 574; Leighton v. Kelsey, 4
B. R. 471; s.c. 57 Me. 85; Perry v. Somerly, 57 Me. 552; Daggett v. Cook,.
37 Conn. 341; May v. Courtnay, 47 Ala. 185.

* Sedgwick v. Minck et al. 1 B. R. 675; 8. c.6 Blatch. 156; Payne v. Able,.
4B. R. 220; s. c. 7 Bush, 344; Stewart v. Isidor et al. 1 B. R. 485; s. c. 5
Abb. Pr. (N. 8.) 68; Carr v. Fearington, 63 N. C. 560.

* Clark v. Binninger, 3 B. R. 518; s.c. 38 How. Pr. 841: s.c. 3 L. T. B.
49; Clark v. Binninger, 89 How. Pr. 368; Miller v. Bowles, 9 B. R. 354; 8. ¢.
10 B. R. 515; s. c. 2. N. Y. Supr. 568; s. c. 58 N. Y. 253.

* Lenihan vy. Hamann, 8 B. R. 557; s. oc. 11 B. R. 471; s.c.14 Abb. Pr. (N.
8.) 274; 8. c. 55 N. Y. 652; Goddard v. Weaver, 6 B. R. 440; s. c. 1 Wood,

257; in re Irwin Davis, 4 B. R. 716; s.c.8 B. R. 167; s. c. 1 Saw. 260; Eyster
y. Gaff, 18 B. R. 546.
ORIGINAL JURISDICTION. 215
t

has taken possession of the property which belonged to
the bankrupt, and the jurisdiction of such court over the
subject-matter of the. suit therein, and over the parties
thereto when it was instituted and the receiver was ap-
pointed, and its jurisdiction to appoint such receiver are
im no manner impeached or questioned, the courts of bank-
ruptcy can not compel the receiver to give up the posses-
sion of such property without its being shown that such
possession of the property by such court is void or invalid
by reason of the provisions of the bankrupt law. When
property is lawfully placed in the custody of a receiver
by the court which appoints him, it is in the custody and
under the protection and pontrel of such court for the
time being, and no other court has the right to interfere
with such possession, unless it be some court which has a
direct supervisory control over the court whose process
has first taken possession, or some superior jurisdiction in
the premises. Under such circumstances, the courts of
bankruptcy have neither such superior jurisdiction, nor
such supervisory control, as to authorize them to take the
‘property from the possession of such court, or to enjoin
the receiver from further interfering with it.’

When the amount of the lien has been fixed and ascer-
tained by a judgment or decree, the assignee has the right
to free the estate from such lien, if that course becomes
advisable; and the courts of bankruptcy can protect this
right and interpose their authority at such time as may
be most expedient or proper.? This doctrine appears to
be supported by the current of decisions, and the practice
certainly conforms to it. This power of the courts of
bankruptcy is necessary to a proper administration of the

 

‘Tn re Clark et al. 8 B. R. 524; 8. c. 4 Ben. 88; Sedgewick v. Mincket al.
1B. R. 675; 8c. 6 Blatch. 156; Alden v. Boston R. RB. Co.5 B. R. 280;
Miller v. Bowles, 9 B. R. 854; 3.0.10 B. R. 515; 8. c. 2N. Y. Supr. 568; 3,
c. 58 N. Y. 253; Clark v. Binninger, 39 How. Pr. 363.

o Samson y. near et al. 4B. R.1; s.c.5 Ben. 825; in re Lady Bryan
Mining Co. 6 B. R. 252.
216 COURTS OF

bankrupt law, and is fairly included in the power con-
ferred upon them by the statute to collect all the assets
of the bankrupt, to ascertain and liquidate liens or other
specific claims thereon, and to adjust priorities and mar-
shal and dispose of the ditferent funds and assets, so as to
secure the rights of all persons and the due distribution
of the assets among all the creditors.* 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 for effecting the result
must follow by necessary implication. 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 prop-
erty by restraining its sale until the lien is ascertained to
be good or void. The bankrupt law is highly remedial,
and ought to have a liberal construction for the purpose
of effecting its aim and policy.” The power to liquidate
the liens upon the assets necessarily includes the power to
ascertain what liens there are and the amount thereof* It
makes no difference with the power of the court over the
subject that the liens or alleged liens are inchoate and in-
capable of execution until the amount secured thereby is
ascertained and settled, for the power to ascertain and
liquidate is expressly given.*

A great many actions have been instituted upon the
theory that all the property of the bankrupt must be dis-
tributed under the direction of the courts of bankruptcy,
no matter how it may be situated, but this is clearly a
mistake. A distinction is to be drawn between proceed-
ings instituted after and proceedings instituted before the

 

‘In re Schnepf, 1 B. R. 190; s. c. 2 Ben. 72.

* In re Lady Bryan Mining Co. 6 B. R. 252; in re Mallory, 6 B. R. 22; 8.
c. 1 Saw. 88; s.c. 2 L. 1. B. 247; in re Ellerhorst et al. 7 B. R. 49; 5.0.2
Saw. 219; Samson v. Clarke, 6 B. R. 408; s. c. 9 Blatch. 372.

*JIn re Ellerhorst et al. 7 B. R. 49; s. c. 2 Saw. 219.
‘Samson v. Clarke, 6 B. R. 408; s. c. 9 Blatch, 372.
ORIGINAL JURISDICTION. 217

filing of the petition. The former are irregular so far as
they affect the estate, while in case of the latter there
only remains a right to liquidate a lien. But this right
is never exercised unless it is shown that the general
creditors will be benefited thereby.! Thus where a levy
has been made before the commencement of proceedings
in bankruptcy, the possession and legal. title is in the
officer making the levy, for the purpose of satisfying the
process in his hands, and he, as trustee, has the right to
go on and sell the property unless a sale would be injuri-
ous to the general creditors, or to some one having a prior
lien.” This doctrine, however, does not apply to a mere
judgment lien, where there has been no levy.?/ When a
sale would, under a levy, sacrifice the property, it is the
duty of the courts of bankruptcy, charged as they are with
the interests of all the creditors, to interfere and direct a
sale in such a manner as will be for the benefit of all If
the property has already been sold, the officer has the
right to apply the proceeds to satisfy the process and his
charges and fees, and will only be required to account for
such balance as may remain after this has been done, for
no advantage can result from requiring the money to be

 

‘In re Bowie, 1 B. R. 628; s. c. 1 L. T. B. 97; inre Irwin Davis. 4 B. R.
716; s.c. 8 B. R, 167; s. c. 1 Saw. 260; inre Geo. W. Dillard, 9 B. R. 8; 8.
c.6 L. T. B. 490.

? Jones v. Leach et al. 1 B. R. 595; Sharman v. Howell, 40 Geo. 257;
Fehley v. Barr, 66 Penn. 196; Thompson v. Moses, 48 Geo. 883; Goddard v.
Weaver, 6 B. R. 440: 8. c. 1 Wood, 257; Maris v. Duren, 1 Brews. 428; in re
Smith et al. 1 B. R. 599; 8. c. 2 Ben. 122; s.c. 1 L. T. B. 112; in re Wilbur,
3B. R. 276; s. c. 1 Ben. 527; s.c. 2 L. T. B. 171; Marshall v. Knox, 8 B. R.
97; s.c. 16 Wall. 551; Fritsch v. Van Mittledorfer, 2 Cin. 261; Peck v. Jen-
ness, 7 How. 612; Colby v. Ledden, 7 How. 626; in re John Kerlin, 3 How.
326.

* Davis v. Anderson, 6 B. R. 145. Jones v. Leach, 1 B. R. 595; Penning-
ton v. Sale & Phelan, 1 B. R. 572.

“In re Schnepf, 1 B. R, 190; s. c. 2 Ben. 72; Goddard v. Weaver, 6 B. R.
440; 8. c. 1 Wood, 257; in re Donaldson, 1 B. R. 181; 8. c. 1 L. ‘T. B. 5; in
re Wilbur, 3 B. R. 276; s.c. 1 Ben. 527; s.c. 2 L. T. B. 171; in re R. At-
kinson, 7 B. R. 143; s. c. 5 L. T. B. 820; in re Mallory, 6 B. RB. 22; s.c. 1
Saw. 88; s o. 2 L. T. B. 247; in re Lady Bryan Mining Co. 6 B. R. 252; in
re Geo. W. Dillard, 9 B. R. 8; s.c.6 L. T. B. 90; in re Bernstein, 1 BR.
199; s. c. 2 Ben. 44; contra, in re Campbell, 1 B. R. 165; s.c.1 Abb. C. C.
185; s.c. 1 L. T. B. 30; in re Burns, 1 B. R. 174.
218 COURTS OF

paid into the courts of bankruptcy with’ a view to its ap-
plication by those courts in satisfaction of the lien ;* nor
can those courts set aside such a sale, and order the prop-

erty to be resold, however apparent it may be that the

price which was offered and accepted is much below the
real value. The purchaser acquires a good title which
can only he vacated upon exceptions to the confirmation
of the sale, filed in the court under whose process the
property has been sold.’

The right and power of the courts of bankruptcy to
interfere, when the proceedings in other courts are in
violation of the principles of the bankrupt law, has been
much discussed and seriously denied ; but the current of
authority, as well as the nearly uniform practice, is in
favor of such interference. The ground uponwhich this
power has been denied is, that the courts in which such
proceedings are pending are the only ones that are com-
petent to determine upon their validity.’ It is true that
the bankrupt law is equally binding upon all courts, and
its provisions must be respected and enforced by one as
much as by another, in all cases over which they have
valid jurisdiction ;* but the question, in all such cases, is,
whether the courts of bankruptcy, in matters peculiarly
cognizable in proceedings in bankruptcy, may not, in the
exercise of their powers to collect the assets of the bank-
rupt, restrain parties to proceedings in other courts from
doing what would frustrate or directly impede the juris-
diction expressly conferred upon them by the bankrupt
law.’ The statute was manifestly intended to provide a
system capable of entire self-execution by the Federal tri-

 

1In re Bernstein, 1 B. R. 199; s,c 2 Ben. 44; inre Campbell, 1 B. R.
165; sc. 1 Abb. C. C. 185; s.c.1 L. T. B. 30; in re Donaldson, 1 B. R. 181;
8 0.1L. 7. B.S.

2In re Fuller, 4 B. R. 115; s.c. 1 Saw. 243,
In re Burns, 1B. R. 174.
‘In re Rohrer’s Appeal, 62 Penn. 498.

* Irving v. Hughes, 2 B. R. 62; Beattie v. Gardner, 4 B. R. 323; s. ¢. 4
Ben. 479; in re William Christy, 3 How. 292.
ORIGINAL JURISDICTION. 219

bunals, without the assistance or co-operation of the State
tribunals! Ample jurisdiction is conferred upon the Fed-
eral courts to fulffl all its exigencies; they are the ap-
pointed instrumentalities for the execution of the law, and
their duty to enforce its provisions is imperative.’

If this power did not exist, many of the beneficial pro-
visions of the statute would be futile, on account of the
difficulty of enforcing them, and the facility with which
they might beevaded. The statute declares certain trans-
fers and proceedings absolutely void, and there is no reason
why the general principles, applicable to all fraudulent.
conveyances, should not be applied to these also, and that
they should be treated as nullities, no matter how solemn
the instrument, or how sacred the proceedings, that parties.
may adopt to accomplish their purpose. The practice has
certainly conformed almost uniformly to this doctrine.
Money obtained upon a judgment given as a preference.
has been recovered in an action of assumpsit.2 Replevin
against an officer of another court has been sustained for
the purpose of getting possession of property held under
a similar judgment.* The officer has also been directed to
deliver the property similarly held to the assignee? On
several occasions the parties and the officer have been
directed to pay over to the assignee the proceeds arising
from the sale of property seized under process issied upon
judgments which had been given as unlawful preferences.’
The lien of a judgment has been vacated."

 

* Mitchell v. Manuf. Co. 2 Story, 648. 2 Zahm v. Fry, 9 B. R. 546.

* Street v. Dawson, 4 B. R. 207; Clarion Bank v. Jones, 11 B. R. 381; 8.
c. 21 Wall. 325; s.c.2 A. L. T. (N. 8.) 185.

* Haughey v. Albin, 2 B. R. 399; s. c. 2 Bond, 244; 3. c. 2L. T. B. 47.

* McGie (ex parte Sanger), 2B. R. 531; s. c, 2 Biss, 163; s.c.2L. T. B. 80.

*In re Black & Secor, 1 B. R. 353; s. c. 2 Ben. 196; 8.c. 1 L. T. B. 39;
Wilson v. Brirkman, 2 B. R. 468; Traders’ Nat'l Bank v. Campbell, 3 B. R.
498; 5.0. 6 B. R. 353; s. o. 2 Biss. 423; s. c. 14 Wall. 87; Zahm v. Fry, 9 B.
R. 546; Samson v. Clarke, 6 B. R. 403; 8. c. 9 Blatch. 372; in re Mallory, 6
B. R. 22; s. c. 1 Saw. 88; s.c. 2 L. T. B. 247; Irving v. Hughes, 2B. R. 62.

"Buchanan vy. Smith, 4 B. R. 397; 8. c.7 B, R. 518; s. c, 8 Blatch. 153;
8.c. 16 Wall. 277; Shaffer v. Fritchery, 4 B. R. 548.
220 COURTS OF

The statute confers the fullest and most comprehensive
authority upon the court of bankruptcy and the district
judge in respect to all matters relating to proceedings in
bankruptcy, and provides that this jurisdiction and au-
thority may be exercised at the place appointed for hold.
ing court in the district, or by the district judge sitting in
chambers. It is clearly intended that a large portion of
the jurisdiction thus conferred shall be exercised in the
most summary and informal manner by the district judge,
at chambers as well as in term. The same authority is
given to the district judge to exercise his jurisdiction
under the act at chambers as at term, or when the court is
regularly held. The object and policy of the bankrupt
law, undoubtedly, is that the proceedings under it shall
be summary; that matters shall be settled as speedily as
possible, and that the expenses shall be diminished by
this summary and informal mode of procedure. The man-
ner in which the courts shall exercise their jurisdiction
was a matter for the consideration of Congress in framing
the statute. Congress possesses the sole right to say what
shall be the forms of proceedings in the courts of the
United States. It is a matter of sound discretion, and to
be exercised by Congress in such a manner as shall, in its
judgment, best promote the public convenience and the
true interest of all parties.

The truth is, that in no other way can the bankrupt
system be put into operation without interminable doubts,
controversies, embarrassments, and difficulties, or in suth
a mauner as to achieve the true end and design thereof.
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 liqui-
dation of liens and other specific claims thereon; in ad-
justing the various priorities and conflicting interests; in
marshaling the different funds and assets; in directing the
sales at such times and in such manner as shall best sub-
ORIGINAL JURISDICTION. 221

serve the interests of all concerned; in preventing, by in-
junction or otherwise, any particular creditor or person
having an adverse interest from obtaining an unjust and
inequitable preference over the general creditors, by an
improper use of his rights or remedies in the State tribu-
nals; and, finally, in making a due distribution of the
assets and bringing to a close within a reasonable time
the whole proceedings in bankruptcy."

The bankrupt law necessarily vests a large measure of
discretion in the court or judge administering it. This
discretion, however, is not a wanton power. It is not a
power to order this or that summarily 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 ac-
cordance with sound precedent; and is so to mold itself
to, and meet the necessary 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 profession, 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? The grant of jurisdiction 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 the 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 éxigencies of the
case in the execution of the authority conferred, the re-

 

' Bill v. Beckwith, 2 B. R. 241; in re Wallace, 2 B. R. 184; 8. c. 1 Deady,
433.

? In re Hunt, 2 B. R. 539.
222 COURTS OF

striction being that they must not be such as are in viola-
tion of the fundamental: law or in derogation of constitu-
tional rights of the citizen.’

This summary jurisdiction extends only to those per-
sons who are parties to the proceedings. Persons who are
not parties, and who have not voluntarily appeared and
become parties, can not be compelled to come into court
under a petition for a rule to show cause.”

All suits which may be brought by the assignee in
bankruptcy against any person claiming an adverse inter-
est, or by such person against such assignee, touching any
property or rights of property of the bankrupt transfer-
able to or vested in such assignee, must be either at law
or in equity, and not by a summary proceeding’ This
doctrine rests upon the theory that the practice in the
courts of bankruptcy must conform to the practice pre-
scribed for the circuit courts in those cases over which the
two courts have concurrent jurisdiction. There are but
two courts of original jurisdiction in bankruptcy, the courts
of bankruptcy and the circuit courts. The statute first
defines the jurisdiction of those courts (§ 4972), but does
not prescribe the form of proceedings. If it had stopped
here, any of the forms known to jurisprudence might have
been used:* It goes on, however, to define the original
jurisdiction of the circuit courts, and in so doing limits it
to suits at law or in equity, and to certain classes of cases,
and makes it concurrent with that of the courts of bank-
ruptcy. The phraseology of the statute is so peculiar,
that, if such suits must not be either at law or in equity

 

2 Goodall v. Tuttle, 8 B. R. 198; s. c. 3 Biss. 219.

? Smith v. Mason, 6 B. R. 1; 8. c. 14 Wall. 419; 8.6.5 L. T. B. 7;
Marshall v. Knox, 8 B. R. 97; s. c. 16 Wall. 551.

* Smith v. Mason, 6B. R. 1; s.c. 14 Wall. 419; s.c.5 L. T. B. 7; in re
Kerosene Oil Co. 3 B. R. 125; 8. c. 6 Blatch. 521; in re Bonesteel, 3 B. R.
517; 8. c. 7 Blatch. 175; in re Masterson, 4 B. R. 553; Knight v. Cheney, 5
B. R. 305; s. c. 2 L. T. B. 205; Barstow v. Peckham, 5 B. R. 72; Rogers v.
Winsor, 6 B. R. 246; in re H. 8. Evans, Lowell, 525; contra, in re Norris, 4
B. R. 35; 8. co. 1 Abb. C. C, 514; 8. c. 1 L. T. B. 227.

‘In re Alexander, 3 B. R. 29; 8. c. Chase, 295; s.c. 2L. T. B. 81.
ORIGINAL JURISDICTION. 223

in the courts of bankruptcy, there will not be any concur-
rent jurisdiction in the circuit courts. The form of the
procedure is made as essential to the jurisdiction as the
subject: matter of the suits. The effect of the clause, there-
fore, is to limit the manner of proceeding in certain classes
of cases in the courts of bankruptcy. The objection to the
form of the proceedings may be taken even at the hear-
ing, or in the supervisory court.2 Where a party has
made a mistake in selectirg his form of proceeding, the
petition may be dismissed, with leave to pursue the ap-
propriate remedy.’ The petition may also be converted
into a bill in equity, but the only advantage to be gained
by so doing, is the saving of the service of a new sub-
pena, as the answers filed and the testimony taken, if
any, can not be used except by consent: in the proseration
of the suit in its amended form.* The assignee, who is an
officer of the court of bankruptcy, may be proceeded
against by a summary petition in respect to any funds in
his hands, if the opposing party chooses to proceed in that
way, Aiongh the assignee himself na no right to take
similar action against others

The power of the courts of bankruptcy is, in its nature,
an equity power, and may be exercised by proceedings in
the nature of equity proceedings. A party seeking an
affirmative relief must proceed in person in the first in-
stance and not by an attorney. He must seek his redress
by a petition and not by a motion. It is not necessary or
proper that resort should be had to the formal and plen-
ary 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

 

"In re Ballou, 3 B. R. 717; s. c. 4 Ben. 135.
7 Tn re Bonesteel, 3 B. R. 517; 8. c. 7 Blatch. 175.

*In re Bonesteel, 3 B. R. 517; 8. o. 7 Blatch. 175; in Ball
117; s. c. 4 Ben. 135. Sakae

“ Barstow v. Peckham, 5 B. R. 72.
*In re H. 8. Evans, Lowell, 525; Ferguson v. Peckham, 6 B. R. 569.
224 COURTS OF

sufficient. It must also be signed and verified by the
petitioner’ As soon as the petition is filed, an order to.
show cause is passed, appointing a day for the hearing,
and directing that a copy of the order or a copy of the
petition and order be served upon the adverse party. The
defendant appears and makes his defense by demurrer,
exceptions, or an answer, in a manner analogous to the
ordinary course of equity practice. The judge may order
the issue to be tried by a jury whenever he thinks such
course will best subserve the interests of justice.” The
evidence may be taken before the court viva voce or in
writing, or before a register, or commissioner of the circuit
court, or by affidavit, or on commission; and the court
may direct a reference to a register to take and certify it,
and may compel the attendance of witnesses, the produc-
tion of books and papers, and the giving of testimony, in
the same manner as in suits in equity in the circuit courts
($ 5603),

The jurisdiction of the courts of bankruptcy over suits
at law, in matters relating to bankruptcy, in all cases
where such actions constitute the appropriate form of the
remedy is unquestionable.* Such suits may be instituted
in those courts in all cases where they have jurisdiction
over the parties and the subject-matter. Their jurisdiction
over the parties is not made dependent upon either resi-
dence or citizenship.» The service of the appropriate
process, or a waiver of such service by a voluntary ap-
pearance is the only requirement. Their jurisdiction over
the subject-matter only attaches when the cause of action
arises from a proceeding in bankruptcy.

In proceedings at law, instituted in the Federal courts,

 

‘In re J. O. Smith, 2 B. R. 297; in re Wallace, 2 B. R. 134; 8. ¢. 1
Deady, 433; in re Philo R. Sabin, 9 B. R. 383.

* Wilson v. Stoddard, 4 B. R. 254.
* Bill v. Beckwith, 2 B. R. 241. ‘ Bill v. Beckwith, 2 B. R. 241.
* Kelly v. Smith, 1 Blatch. 290; Atkinson v. Purdy, Crabbe, 551.
ORIGINAL JURISDICTION. 225

for the purpose of carrying the provisions of the statute
into effect, or for enforcing the rights or remedies given by
it, the rules of the circuit court regulating the practice
and procedure in cases at law must be followed as nearly
as may be; but the court, or the judge thereof, may, by
special rule, in any case, vary the time allowed for return
of process for appearance and pleading, and for taking
testimony and publication, and may otherwise modify the
rules for the preparation of any particular case, so as to
facilitate a speedy hearing.’ Parties may adopt any form
of action appropriate to their particular case. Assumpsit,’
replevin, and trover‘ have already been used.

The jurisdiction of courts of bankruptcy over suits in
equity is equally as broad and as extensive as over suits
at law, and is limited by the same conditions and regulated
by the same circumstances. Suits in equity have been
used to obtain an injunction ;° to set aside a sale of the
bankrupt’s property on the ground of fraud ;° to review
and set aside a sale, made after the commencement of pro-
ceedings in bankruptcy, by virtue of a deed of trust exe-
cuted to secure a creditor;" to recover property conveyed
by the bankrupt in fraud of creditors;* to recover money
obtained upon a judgment given contrary to the bankrupt
act ;° to enforce a right of redemption in mortgaged prop-
erty ;‘°to remove a cloud on the title of the assignee; to
recover the amount. received by a corporation as interest

 

’ Rule XXXII. ? Street v. Dawson, 4 B. R. 207.

® Haughey v. Albin, 2 B. R. 399; s. c. 2 Bond, 244; 8. c. 2 L. T. B. 47.

* Babbit v. Walbrun & Co. 4 B. R. 121; s. c. 1 Dillon, 19.

* Pennington v. Sale & Phelan et al. 1 B. R. 572.

° March v. Heaton et al. 2 B. R. 180; s. c. Lowell, 278.

7 Davis, Assig. of Bittel et al. 2B. R. 892; ‘Davis v. Anderson, 6 B. R. 145.

® Bradshaw vy. Klein, 1 B. R. 542; 8. c,2 Biss. 20; 8.0.1 L. T. B. 72;
Pratt v. Curtis, 6 B. R. 139,

®° Wilson v. Brinkman et al. 2 B. R. 468; Vogle v. Lathrop, 4 B. R. 439;
s. c. 4 Brews. 253; Zahm v. Fry, 9 B. R. 546 ; Traders’ Nat. Bank v. Camp-
bell, 3 B. R 498; ’s. c. 6 B. R. 353; 8. c. 2 Biss. 428; 3. c. 14 Wall. 87.

Foster v. Ames et al. 2 B. R. 455; 3. c. Lowell, 313.
“ Beers v. Place, 4B. R 459; s.c. 86 Conn. 579; s.c. 1 L. T. B. 262.
15
226 COURTS OF

above what its charter allowed;' to recover the money
paid secretly to a creditor in fraud of a composition agree-
ment ;? to recover the value of property transferred by
one partner in fraud of the partnership,’ and to set aside a
mortgage on the property of the bankrupt, made by him
with intent to prefer acreditor.t In proceedings in equity
instituted for the purpose of carrying into effect the pro-
visions of the statute, or for enforcing the rights and rem-
edies given by it, the rules of equity practice established
by the Supreme Court of the United States must be fol-
lowed as nearly as may be.”

The question whether any district court except that in
which the proceedings are pending may exercise any of
the powers conferred upon courts of bankruptcy, has been
extensively agitated, but the weight of authority at pres-
ent is in favor of such jurisdiction. The statute 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 are pending. On
the contrary, its whole tenor shows that Congress intended
to provide for the complete administration of the system
in the Federal courts and through the Federal officers.
The district courts are accordingly auxiliary to each other
to perfect and accomplish the objects of the statute. An
assignee elected in one district may therefore institute
proceedings in the district court of another district to re-
cover money paid by the bankrupt to a preferred creditor
contrary to the provisions of the statute.®

 

‘ Tiffany v. Boatman’s Savings Inst. 4 B. R. 601; s.c. 9 B. R. 245; 3.0. 1
Dillon, 14; 8. c. 18 Wall. 876.

? Bean v. Brookmire, 1 Dillon, 151. * Taylor v. Rasch, 5 B. R. 399.

“Scammon v. Cole et al. 3 B. R. 393; 8. o. 5 B. R. 257; 8. 6.2L. 7. B.
103; McLean v. Lafayette Bank, 3 McLean, 415.

* Rule XXXII.

* Shearman y. Bingham, 5 B. R. 84; s. c. 7 B. R. 490; Goodall v. Tuttle,
7B. R. 198; 8. c. 8 Biss. 219;-in re James Martin, 5 Law Rep. 158; Moore
v. Jones, 28 Vt. 739; Lathrop v. Drake, 13 B. R. 472; contra, Jobbins v.
Montague, 6 B. R. 509; in re Richardson et al. 2 B. R. 202; s.c. 2 Ben. 517;
s.¢, 2 L. T. B, 20; Markson y. Heaney, 4 B. R. 510; s. o. 1 Dillon, 497.
ORIGINAL JURISDICTION. 227

The circuit courts have concurrent jurisdiction with
the district courts of any district of all suits at law or in
equity which may be brought by the assignee in bank-
ruptey against any person claiming an adverse interest, or
owing any debt to such bankrupt, or by such person
against such assignee, touching any property or rights of
property of the bankrupt transferable to or vested in such
assignee ($ 4979).' This concurrent jurisdiction is con-
fined to cases in which there is a disputed title or claim to
property—to suits to which some title or claim to the
property or assets, adverse to that of the assignee, is set
up,’ and to suits brought by the assignee to collect debts
due to the bankrupts estate.’

No suit at law or in equity is in any case maintainable
by or against the assignee, or by or against any person
claiming an adverse interest, touching the property and
rights of property-of the bankrupt, in any court whatso-
ever, unless the same is brought within two years of the
time the cause of action accrued, for or against such as-
signee. No right of action barred at the time such as-
signee is appointed, is revived by such appointment
(§ 5057). No person is 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 op-
portunity of tendering amends, should he see fit to do so
(§ 5056). |

The power of the courts of bankruptcy to enjoin per-
sons who are parties to suits pending in other courts has
been much discussed, and sometimes denied ;* but is gen-

 

Act of June 22, 1874, § 8; Lathrop v. Drake, 13 B. R. 472.

* Morgan v. Thornhill, 5 B. R. 1; s.c.11 Wall. 65; Smith v. Mason, 6 B.
R. 1; 8. c. 14 Wall. 419.

® Woods v. Forsyth, 2 W. J. 848; s. co. 16 Pitts. L. J. 234; in re Alexander,
3B. R. 29; s. c. Chase, 295; 8, c. 2 L. T. B. 81; Bachman vy. Packard, 7 B.
R. 353; 8. c. 2 Saw. 264; Pritchard v Chandler, 2 Curt. 488; Mitchell v.
Manuf. Co. 2 Story, 648; McLean v. Lafayette Bank, 8 McLean, 185.

‘In re Campbell, 1 B, R. 165; 8. c. 1 Abb. C, C. 185; 8. c. 1 L. T. B. 30,
228 COURTS OF

erally exercised not only to preserve property surrendered
to their custody from encroachments by other courts,’ and
to prevent unlawful preferences,’ but also to prevent prop-
erty from being sacrificed by a sale under an execution
issued upon a valid judgment,’ or under a mortgage.*
There is a special provision for an injunction in cases of
involuntary bankruptcy (§ 5024), but the power to issue
it in all cases seems to be incident to the general juris-
diction of those courts. When Congress delegated to them
the equitable jurisdiction in bankruptcy over the prop-
erty of the debtor, it by necessary implication also dele-
gated at the same time the power to administer such
remedies known to the law as are absolutely indispensable
to the complete exercise of the jurisdiction expressly con-
ferred. This jurisdiction extends to all the parties to the
proceedings, all the assets, and all the liens thereon. One
power directly given is the power to collect all the assets.
Closely connected with this is the power to ascertain and
liquidate the liens which may be claimed to exist upon
those assets. The means by which these results are to be

 

In re Kerosene Oil Co. 2 B. R. 528; 5.c.2 L. T. B. 79; 8. c. 3B. R.125;
s. c. 6 Blatch. 521; s.c. 3 Ben. 85; Markson v. Heaney, 4 B. R. 510: 3.0.1
Dillon, 497; Pennington v. Lowenstein, 1 B. R. 570; Pennington y. Sale &
Phelan, 1 B. R. 572; Jones v. Leach, 1 B. R.595; in re Bowie, 1 B. R. 628;
s.c. 1L. T. B. 97; Hyde v. Bancreft, 8 B. R. 24; sc. 6 Ben. 392; in re
Ulrich et al. 8B, R. 15; 8. c. 6 Ben. 483; in re Wallace, 2B. R. 184; s.c. 1
Deady, 483; in re William Christy, 8 How. 292.

* Irvin v Hughes, 2 B. R. 62; Samson v. Clarke, 6 B. R. 403; 8. «. 9
Blatch. 372; in re Mallory, 6 B. R. 22; s.c.1 Saw. 88; 8. c. 2 L. T.B, 247;
in re Wm. H. Shuey, 9 B. R. 526; Traders’ Nat. Bank v. Campbell, 3 B. R.
498; 8. c. 6. B. R. 358; s,c. 2 Biss. 423; s. c. 14 Wall. 87; Sutherland v.
Lake Superior Canal Co. 9 B. R. 298; Zahm v. Fry, 9 B. R. 546; contra, in
re Burns, 1 B. R. 174; Townsend vy. Leonard, 3 Dillon, 370.

*In re Fuller, 4 B. R. 115; sc. 1 Saw. 248; in re Lady Bryan Mining Co.
6 B. R. 252; in re Schnepf, 1 B. R. 190; s. c. 2 Ben. 72; Goddard y. Weaver,
6 B. R. 440; 8. c. 1 Wood, 257; in re Donaldson, 1 B. R. 181;3c 11. T.B.
5; in re Wilbur, 3B. R. 276; s.c.1 Ben. 527:8.c.2 L. T. B. 171; in re
R. Atkinson, 7 B. R. 148; s. c. 5 L. T. B. 320; in re Mallory, 6 B. R. 22;
8. C. 1 Saw. 88; 8. c. 2 L. T. B. 247; in re Lady Bryan Mining Co. 6 B.R.
252; in re Geo. W. Dillard, 9B. R. 8; s.c. 6 L. T. B. 490; in re Bernstein, 1
B.R. 199; 8. c. 2 Ben. 44; contra, in re Campbell, 1B. R. 165; s.c. 1 Abb.
CG. C. 185; 1 L. T. B. 30.

“In re Irwin Davis, 4 B. R. 716; s.c. 8 B. R. 167; 8. c. 1 Saw. 260;
Goddard v. Weaver, 6 B. R. 440; 8. c. 1 Wood, 257.
ORIGINAL JURISDICTION. 229

reached are not enumerated, but power to accomplish
these results is given, and the.right to employ the proper
legal process for effecting these results follows by neces-
sary implication. The aim and policy of the statute can
not be effectually carried out in any other way.!

Before the appointment of an assignee, proceedings
for an injunction to protect the property of the bank-
rupt may be instituted by the bankrupt, or the petition-
ing creditor.” But as soon as the assignee is appointed he
should be made a party to the proceedings by a supple-
mental bill. After an assignee has been appointed, he is
the only person who can institute such proceedings on
behalf of the estate. The allegations of the bill should
be positive, and affidavits may be filed to sustain them.‘
The officer of another court may be, and usually is, made
a party to the proceedings whenever it is desirable to stay
any action on his part.” The court may, in its discretion,
require notice to be given to the adverse party before grant-
ing an injunction.’ It may, also, in its discretion, before
granting an injunction against a judgment creditor who
has a valid lien, require the general creditors to indemnify
the judgment creditor." Whenever the proceedings sought
to be enjoined are prosecuted for the purpose of enforcing
a valid lien, and were instituted before the commencement
of proceedings in bankruptcy, the courts, in granting or
refusing an injunction, are governed by the same principles
that regulate their action in the liquidation of liens, and
will only interfere when such interference will benefit the

 

*Tn re Mallory, 6 B. R. 22; s. c. 1 Saw. 88; s. o. 2 L. T. B. 247; Samson
vy. Clarke, 6 B. R. 403; s. c. 9 Blatch. 372.

* Irving v. Hughes, 2 B. R. 62; in re Bowie, 1 B. R. 628; s.c.1L.T.B.97.

* Irving v. Hughes, 2B. R. 62.

“To re Bloss, 4 B. R. 147; 8. c. 2 L. T. B. 126.

*In re Bernstein, 1 B. R. 199; s.c. 2 Ben. 44; in re Mallory, 6 B. R. 22;
8. C. 1 Saw. 88; 5. c. 2 L. T. B. 247.

ie Irving v. Hughes, 2 B. R. 62; in re Wallace, 2 B. R. 134; s. c. 1 Deady,

"In re Donaldson, 1 B. R. 181; s. c. 1 L. T. B. 5.
230 COURTS OF

creditors generally Neither proceedings to punish a
party for contempt,’ nor proceedings against the marshal
for taking possession of property which did not belong to
the debtor, under a warrant in involuntary bankruptcy,’
will be enjoined.

Where an injunction is obtained upon a summary peti-
tion, it may be dissolved on motion without resorting to
the formality of a demurrer.! Upon the hearing of the
motion, affidavits and counter affidavits may be read, so
that the court may be possessed of all the facts hearing
upon the question, and thereby enabled to protect the in-
terests of all parties concerned.” If it does not appear
that the proceedings under an execution will affect the
interests of any party entitled to the protection of the
courts of bankruptcy under the bankrupt law, the injune-
tion 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. When the assignee, after
his appointment, does not take possession of property lev-
ied-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 injunc-
tion, it will be dissolved."

If the weight of evidence is rather with the defendant,
and there is no suggestion that he is not abundantly re-
sponsible pecuniarily, or that the assets are in peril, the
injunction will be dissolved. An execution creditor, who

 

1TIn re Bowie, 1 B. R. 628; s.c. 1 L. T. B. 97; in re Fuller, 4 B. R. 115;
8. c. 1 Saw. 243.

2 InreM. W. Gill, 2B. R. 140. * In re Marks, 2 B. R. 575.
‘In re Wallace, 2 B. R. 184; s. c. 1 Deady, 433.

"Tn re Bloss, 4 B. R. 147; 3.0.2 L. T. B. 126.

"In re Olcott, 2 Ben. 443,

%,In re Wilbur, 3 B. R. 276; s. c. 1 Ben. 527; s.c. 2L. T. B. 171.
* Collins et al. v. Bell et al. 3 B. R. 587.
ORIGINAL JURISDICTION. 231

has been delayed by an injunction, is entitled to a prompt
adjudication of the validity of his judgment as soon as an
assignee is appointed. This question, however, can not
be determined on e@ parte affidavits." When the affidavits,
at the hearing of the motion, disclose a valid ground for
an injunction which is not covered by the petition, the in-
junction will be continued, with leave to amend the peti-
tion so as to cover that ground ; for nothing can be gained
by dissolving the injunction and then reissuing it upon
the same state of facts. An injunction may also be ob-
tained by a bill in equity, in either the district or circuit
court, in cases over which they have jurisdiction.

The jurisdiction of the State courts over suits brought
by the assignee is at present exciting considerable atten-
tion. It is necessary before deciding this question to de-
termine how far the jurisdiction of the district courts is
exclusive. They are constituted courts of bankruptcy
($ 563) and vested with original jurisdiction over such
proceedings. That jurisdiction over the proceedings in
bankruptcy strictly so called is exclusive both by statute
($ 711) and by the principles of judicial comity. In ad-
dition to this jurisdiction,’ certain other powers are also
conferred upon the district court (§ 4972), among which
is the power to collect the assets, and there is nothing in
the statute to show that this jurisdiction was designed to
be exclusive.’ It seems accordingly, to be generally con-
eeded that the State courts have jurisdiction over actions
which arise under the common law or by virtue of some
State statute, without reference to the district where the

 

‘In re Hafer & Bros.; in re Beck, 1 B. R. 586.
* Tn re Bloss, 4 B. R. 147; s. c. 2. L. T. B. 126.

* Irving v. Hughes, 2 B. R. 62; Foster v. Ames etal. 2 B. R. 455; 3. c.
Lowell, 313.

* Cook v. Whipple, 9 B. R. 155; s: c. 55 N. Y. 150; Goodall v. Tuttle, 7
B. R. 198; s. c. 3 Biss. 219.

° Cook v. Whipple, 9 B. R. 155; s. c. 55 N. Y. 150; in re L. Glaser, 1 B.
R. 836; s. c. 2 Ben. 180; s. 0.1 L. T. B. 57. *

° Payson v. Dietz, 8 B. R. 193; s. c. 2 Dillon, 504.
232 COURTS OF

proceedings are pending." Thus they may entertain suits
to collect debts due to the bankrupt,’ or to set aside a fraud-
ulent conveyance,’ or to recover property which belonged
to the bankrupt at the time when the proceedings in bank.
ruptcy werecommenced.‘ The only doubt isin regard to the
right of the assignee to bring an action in a State court to
recover property conveyed by the bankrupt with the intent
to prefer a creditor, or to defeat or delay the operation of the
bankrupt law. The State courts have jurisdiction of ques.
tions arising between persons within their jurisdiction,
whether they arise under the laws of any other State or any
foreign nation. If they arise under the laws 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 Federal
and State eure may and do have concurrent jurisdiction
of the same questions, When, however, the right of
action is created by an act of Congress, Congress may
prescribe 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 mere 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

 

1 Stevens v. 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; in re Central Bank, 6 B. 8.
207; Boone vy. Hall, 7 Bush, 66; State v. Trustees, 5 B. R. 466; Cogdell v.
Exum, 10 B. R. 327; 5. c. 69 N. C. 464; Hoover v. Robinson, 3 Neb. 487;
Ward y. Jenkins, 51 Mass. 583; Hastings v. Fowler, 2 Ind. 216; Russell v.
Owen, 61 Mo. 185; contra, Frost v. Hotchkiss, 14 B. R. 443.

° Shearman v. Bingham, 5 B. R. 34; s. 0. 7 B. R. 490.

* Boone v. Hall, 7 Bush, 66.

‘ Stevens v, Savings Bank, 101 Mass. 109.
ORIGINAL JURISDICTION. 233

except such as is conferred by Congress.' The only
ground, therefore, upon which the jurisdiction can be de-
nied, is that the statute prescribes a penalty, and the
State courts never enforce a penalty prescribed by an act
of Congress. The bankrupt law, however, is established
upon the theory of the equal rights of all the creditors.
Equality is equity. Preferences, even at common law,
were merely permitted, not favored, and were always re-
garded as in violation of the dictates of abstract justice.
The property of an insolvent debtor has necessarily been
purchased with the funds of his creditors. At law he is the
owner, but equitably it belongs to his creditors. As their
funds contributed to its purchase, they are entitled to
share in it proportionately. A law which merely enforces
the principles of abstract justice can hardly be considered
as imposing a penalty.’ It ought rather to be considered
as highly remedial, and should be liberally construed.
Moreover in this aspect of the case the question is not
simply whether the assignee may institute a suit in the
State courts, but whether the State courts will recognize
the provisions of the bankrupt law as paramount. The
assignee may be defendant as well as plaintiff, and a
penalty can not be enforced in favor of a defendant any
more than in favor of a plaintiff. If the doctrine is true,
the Federal courts will have to interfere with the State
courts far more frequently than heretofore. These prin-
- ciples appear to have been recognized by Congress as cor-
rect, for the statute now provides that the court having
charge of the estate of any bankrupt may direct that any

 

* Cook v. Whipple, 9 B. R. 155; s. c. 55 N. ¥. 150; Gilbert v. Priest, 8
B. R. 159; s.c. 63 Barb. 369; s. c. 68 Barb. 444; s.c, 14 Abb. Pr. (N.S.)
165;, Gilbert v. Crawford, 46 How. Pr. 222; Jordan v. Downey, 12 B R. 427;
8.c. 40 Md. 401; Lewis v. Sloan, 68 N. C.557; Dambmann v. White, 48 Cal.
439; s. c. 12 B. R. 438; Rison v. Powell, 28 Ark. 427; Otis v. Hadley, 112
Mass. 100; Eyster v. Gaff, 13 B. R. 546; s. c. 1 Otto, 521; Kemmerer v. Tool,
12 B. R. 334; s. c. 78 Penn. 147; contra, Voorhees v. Frisbie, 8 B. R. 152;
8. 0. 25 Mich. 476;8. ¢.6 L. T. B. 85; Brigham v. Claflin, 7 B. R. 412; s. ¢.
‘31 Wis. 607; Fenlon y. Lonergan, 29 Penn. 471.

? Cook vy. Whipple, 9 B. R. 155; s. c. 55 N. Y. 150.

\
234 COURTS OF ORIGINAL JURISDICTION.

of the legal assets or debts of the bankrupt, as contradis.
tinguished 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
jurisdiction of claims of such nature and amount.’ In
construing this statute, however, it must be borne in mind
that Congress has no right to require that the State courts
shall entertain suits for the purpose of carrying out the
provisions of the bankrupt law. The States in providing
their own judicial tribuuals have a right to limit, control
and restrict their judicial functions and jurisdictions ac-
cording to their own mere pleasure.”

An assignee who is a citizen of one State may main-
tain an action in the circuit court of another State against
a party who is a citizen of that State to enforce any right
which may be enforced at common law or in equity.

 

* Act of June 22, 1874, § 2.

* Mitchell v. Manuf. Co. 2 Story, 648; Buckingham v. McLean, 3 McLean,
185; s. c. 13 How. 51. :

* Payson v. Dietz, 8 B. R. 198; sc. 2 Dillon, 504; Spaulding v. Me-
Govern, 10 B. R. 188; Post v. Rouse, 1 W.N. 39; Burbank v. Bigelow, 14
B. R. 445.
CHAPTER XIII

DISTRIBUTION OF THE ESTATE.

Ar the expiration of three months from the date of the
adjudication of bankruptcy, the assignee must file with the
register a report which must exhibit just and true ac-
counts of all receipts and payments, verified by his oath;
and he must. also file at the same time a statement of the
whole estate of the bankrupt.as then ascertained, of the
property recovered, and of the property outstanding,
specifying the cause of its being outstanding, and also
what debts or claims are yet undetermined.’

If there are assets on hand sufficient to justify the ex-
pense, then, 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 re-
quest of the assignee, must call a general meeting of the
creditors, of which due notice must be given (§$ 5092).
The provisions of the statute are imperative, and if the
assignee requests it, the second general meeting must be
called.?

No meetings for distribution ought to be called unless
the assignee has in his hands some money out of which a
dividend can be made.? When no assets have come to
hand at the times when such meetings ought to be called,
the assignee should make a return‘ to that effect, and have
the meetings dispensed with by a special order of court.*
It is not essential that these meetings shall be held at any

 

* Act of 22 June, 1874, § 4. 2 In re Louis H. Rosey, 6 Ben. 137.

*In re Son, 1 B. R. 310; 8. c. 2 Ben. 153; in re Dean, 1 B. R. 249; 8.0. b
L. T. B. 9.

* Form No. 35. ®In re Alexander, 8 B. R. (quarto), 20.
236 DISTRIBUTION OF THE ESTATE.

particular time, but only that they shall be held at the
expiration of certain months. The requirement of the
statute is, that the court shaJl call the meetings at the
expiration of those months, but they are to be held sub-
sequently. 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 held be-
fore the end of six months from the time of the filing of
the petition.’

Although it is the duty of the assignee to call the
meetings at the expiration of the time mentioned, and he
may be required to do so, and may be liable for his neglect
if any injury results from it, yet nothing touching the regu-
larity of the proceedings depends upon their being called
or held on the days when those months respectively expire.
If they are not held, any creditor, or the bankrupt, or the
assignee, may call upon the court to require them to be
held, though it may have been the fault of the assignee :
that they were not sooner called; otherwise, it would be
in the power of the assignee to take advantage of his own
neglect, and to defer indefinitely the accounting which the
law requires of him at those meetings.

The application for the meeting should be in the pre-
seribed form,® and the order thereon must bear the seal of
the court. The notice of the meeting must be published
for two successive days in the newspapers designated in
the order, and the notices to creditors are generally re-
quired to be sent at least ten days before the meeting.
These notices must be given by the assignee ($ 5094),
and must be sent to all known creditors whether they
have proved their debts or not. The bankrupt should
be notified to be present. The meeting is held before the
register.

 

‘In re Littlefield, 3 B. R. 57; 8. c. Lowell, 881; 8. c. 1 L. T. B. 164.
"In re Littlefield, 3 B. R. 57; s. c. Lowell,331; s, c. 1 L. T. B. 164.
* Form No, 28. “Tn re William Mills, 11 B. R. 117; s. c.7 Ben, 452.
DISTRIBUTION OF THE ESTATE. 237

Upon the day appointed for the meeting, the assignee
must make return, under oath, of the publication and the
sending of the required notices in the prescribed form,
and produce the proper certificates of publication. The
assignee must 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 must also
produce and file vouchers for all payments for which
vouchers are required by any rule of the court. He must
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, specifying the cause of its being outstanding ;
also what debts or claims are yet undetermined, and stat-
ing what sums remain in his hands.

' At such meeting the majority in value of the creditors
present must determine 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 such meeting, either in person or by at-
torney, it is the duty of the assignee so to determine
(§ 5092). On any settlement of the accounts of any as-
signee, he must account for all interest, benefit, or advan-
tage received, or in any manner agreed to be received,
directly or indirectly, from the use, disposal, or proceeds
of the bankrupt’s estate. And he, upon such settlement,
must make and file in court an affidavit declaring, accord-
ing 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 re-
ceive, directly or indirectiy, any interest, benefit, or ad-

 

* Form No, 29, * Forms Nos. 37, 88.
238 DISTRIBUTION OF THE ESTATE.

vantage from the use or deposit of such funds; and such
assignee may be examined orally upon the same sub-
ject.

‘The court for all purposes of the auditing, settlement,
and adjustment of the assignee’s account and distributing
the estate is held before the register.” The intention of
the statute is that the disbursements of the assignee in
administering the estate, whether only incurred and not
yet paid, or whether incurred and paid, shall be submit-
ted to the creditors at a general meeting, and audited by
the register as a part of the business of auditing the ac-
counts of the assignee. Consequently, all bills for clerical,
professional, or other services rendered to him should be
presented at the meeting® The creditors must be pre-
pared to object, if they desire, to the account of the as-
signee, and all outstanding claims against him which are
not disputed or objected to, must be deducted in order to
ascertain the net sum to be divided.* The register may,
however, if no objection is made, postpone the auditing of
the assignee’s account until the third meeting.’

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, and no fund need be left to pay a similar per-
centage upon the claims which have not been proved. A
sum must, however, be left in his hands sufficient to pro-
vide for undetermined claims which are in controversy,
and for claims which have not been proved on account of
the distance of the creditors, or for any other good cause.
The register in a proper case may deduct and retain this
sum without a vote of the creditors, for it is the duty of

 

' Act of 22 June, 1874, 4.
* In re Bushey, 3 B. R. 685.  °*In re Hubbell & Chappel, 9 B. R. 528.
“In re Clark & Binninger, 6 B. R. 197; s. c. 5 Ben. 389,

if a re Clark & Binninger, 6 B. R. 204; in re Abraham B, Clark, 9 B.
DISTRIBUTION OF THE ESTATE. 239

the court, and not of the creditors, to protect the rights of
the absent.*

Full oportunity for exception at the public meeting,
or an adjourned session of such meeting, should be af-
forded to all parties interested. The exception must be
certified to court with the register’s report. Exceptions
will not be received afterward, unless upon special cause
shown. If no exceptions are taken, the acts of the register
are in themselves acts of the court, without any formal
judgment or confirmation.’

The report of this meeting must be in the prescribed
form, and signed by the creditors or the assignee, as the
case may be.’

In case a dividend is ordered, the register must within
ten days after such meeting prepare a list* of creditors
entitled to dividend, and 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 forward by mail
to every creditor a statement® of the dividend to which
he is entitled, and such creditor will be paid by the as-
signee in such manner as the court may direct (§ 5102).
The manner of payment has been fixed by the rules. The
funds are deposited in bank, and can only be drawn out
by a check or warrant signed by the assignee and counter-
signed by the judge or one of the registers designated for
that purpose.® This check is called a dividend warrant,
and is delivered to the creditor or the person authorized
to receive it for him."

Similar proceedings must be had at the expiration
of the next three months, or earlier, if practicable, and
a third meeting of creditors must then be called by the

 

‘In re William Mills, 11B. R.117; 8. ¢. 7 Ben. 452.
2 In re Bushey, 3 B. R. 685, 2 Form. No. 30.

‘Forms Nos. 32, 33, * Form No. 31. *Rule XXVIII.
™Form No, 31.
240 DISTRIBUTION OF THE ESTATE.

court, and a final dividend then declared, unless any action
at law or suit in equity be pending, or unless some other
estate or effects of the debtor afterward come to the hands
of the assignee, in which case the assignee must, as soon
as may be, convert such estate or effects into money, and
within two months after the same are so converted, the
same must be divided in the same manner (§ 5093).

Preparatory to the final dividend, the assignee must
submit his account to the court, and file the same, and
give notice to the creditors of such filing, and must 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 must audit and pass the accounts of the as-
signee; and such assignee must, if required by the court,
be examined as to the truth of such account, and, if
found correct, he must be discharged® from all liability
as assignee to any creditor of the bankrupt. The court
must thereupon order a dividend of the estate and effects,
or of such parts thereof as it sees fit, among such of the
creditors as have proved their claims, in proportion to the
amount of their respective debts ($ 5096).

If, by accident, mistake, or other cause, without
fault of the assignee, either or both of the second and third
meetings are not held within the times limited, the court
may, upon motion of an interested party, order such meet-
ings with like effect as to the validity of the proceedings
as if the meetings had been duly held (§ 5098).

Further dividends may be made in like manner as
often as occasion requires. And after the third meeting
of creditors no further meeting can be called, unless or-
dered by the court (§ 5093). No dividend already de-
clared will be disturbed by reason of debts being subse-
quently proved, but the creditors proving such debts are
entitled to a dividend equal to those already received by

‘Form No. 383. ? Form No. 39.
DISTRIBUTION OF THR ESTATE. 241

the other creditors before any further payment is made to
the latter ($ 5097).

All ereditors whose debts are duly proved and al.-
lowed, are entitled to share in the bankrupt’s property
and estate pro rata, without any priority or preference
whatever ($5091). The estate must be divided accord-
ing to the provisions of the statute, and not according to
the State laws relating to the distribution of the assets of
decedents.! There is no authority in the statute for pay-
ing dividends to creditors who have not ‘proved their
claims.” The passing of the order of dividend isthe
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, al-
though the proofs are made previous to the payment of
the money out of the hands of the assignee. This is the
only construction that can give consistency to the proceed-
ings, for if additional debts may be brought into the com-
putation, no pro rata can ever be fixed, as it would be
subject to incessant fluctuations.’

No debt proved by a person liable as bail, surety,
guarantor, or otherwise, for the bankrupt, can be paid to
the person so proving the same until satisfactory evidence
is produced of the payment: of such debt by such person
so liable, and the share to which sueh debt would be en-
titled may be paid into court, or otherwise held for the
benefit of the party entitled thereto, as the court may
direct (§ 5091). If the debt consists of a judgment from
which a writ of error bas been taken, and a bond given to
stay execution, no dividend can be paid until the writ of
error is determined.

In the order for a dividend, the following claims are
entitled to priority or preference, and to be first paid in

 

*In re Erwin et al. 3 B. R. 580. 2 Tn re Hoyt, 3 B. R. 55.
*Inre Edmund H. Miller, 1 N. Y. Leg. Obs. 180.
“Tn re Daniel Sheehan, 8 B. R. 845.

16
242 DISTRIBUTION OF THE ESTATE.

full, in the following order: Ist. The fees, costs, and ex.
penses of suits, and the several proceedings in bankruptey
under the statute, and for the custody of property. 2d.
All debts due to the United States, aud all taxes and as-
sessments under the laws thereof. 8d. All debts due to
the State in which the proceedings in bankruptcy are
pending, and all taxes and assessments made under the
laws of such State. 4th. Wages due to any operative,
clerk, or house-servant, to an amount not exceeding fifty
dollars, for labor performed within sixmonths next pre-
ceding the first publication of the notice of proceedings in
bankruptcy. 5th. All debts due to any persons, who, by
the laws of the United States, are or may be entitled to a
priority or preference, in like manner as if the bankrupt
law had not been passed ($ 5101). The right to priority
is not waived by proving the debt.1. The United States
is entitled to priority, although it does not prove its debt,
no matter what the form of indebtedness may be. It
need not exhaust collaterals held by it and may claim
payment out the separate estate of a resident partner, al-
though its claim is against a firm of which an alien isa
member.? If a party purchases an article duty free, and
is compelled to pay the duty, in order to get possession of
the property, he is entitled to be subrogated to the right of
the United States to priority,? although he proved his
debt as unsecured.* This priority is only allowed out of
the estate of the bankrupt; therefore, where a fund is de-
rived from the sale of property which is subject to specific
liens, the lien creditors must be first paid in its distribu-
tion.” The claim of a laborer employed by a brickmaker
is entitled to priority ;° but that of a surveyor of wood

 

* Harrison v. Sterry, 5 Cranch, 289; s. c. Bee, 244.
* Lewis v. U.S. 14 B. R. 64; s.¢. 18 B. R. 38.

*In re Kirkland, Chase & Co. 14 B. R. 189.

‘In re Kirkland, Chase & Co. 14 B. R. 157.

* In re William McConnell, 9 B. R. 887.

° In re 8, Brown, 3 B. R. 720; s. c. 4 Ben. 142.
DISTRIBUTION OF THE BSTATE. 243

is not! The claim of an apprentice for work done beyond
the time fixed by the master as reasonable, under an agree-
ment for a specific compensation, is entitled to priority, as
the claim of an operative.? If the claim arises under an
entire contract for labor, and for the services of a team, it
can not be apportioned, and is not entitled to priority. A
party who has taken an assignment of the claims of sev-
eral operatives is entitled to priority on each claim4 <A
father is entitled to priority for the services rendered by
his minor son as an operative.?

There has been considerable discussion in regard to
the right of partnership creditors to share in the separate
estate of a member of the firm who is a bankrupt individu-
ally and separately ; but the weight of authority at pres-
ent seems to be in favor of such right where there is no
solvent partner and no joint estate. Their debts are prov-
able, and the estate must, by the express terms of the
statute, be distributed among all creditors whose debts
are duly proved.6 Where tbe bankrupt has taken all the
property and agreed to pay all the debts of the firm, the
firm creditors may avail themselves of the contract, and
prove their claims against his estate." The rule in regard
to the distribution of the joint and separate property only
applies where the joint estates as well as the separate
estate is before the court for distribution.® But if there is
both a joint and a separate estate, the partnership creditors

 

‘In re Blackman Bros. 6 C.L.N.18. 7? In re Steiner, 1 Penn. L. J. 868.

*In re Blackman Bros. 6 C. L. N. 18.

*In re 8. Brown, 3 B. R. 720; 8. c. 4 Ben. 142.

° In re Harthorn, 4 B. R. 103.

°In re Downing, 3 B. R. 748; s.c. 1 Dillon. 33; 8 c. 1 L. T. B. 207; in
re Jewett, 1 B. R. 491; in re Goedie & Co.6 B R. 295; in re George Rice,
9B. R. 373; in re Knight, 8 B. R. 486; s. c. 2 Biss. 518; in re William Mills,
11 B. R. 74; Tucker v. Oxley, 5 Cranch, 34; s. c. 1 Cranch C. C. 419; in re
R. 8. Pease, 18 B. R. 168; in re Collier, Taylor & Co. 12 B. R. 266; contra,
in re Byrne, 1 B. R. 464.

"In re Downing, 3 B. R. 748; s. c. 1 Dillon, 83; s. c. 1 L. T. B. 207; in
re George Rice, 9 B. R. 873; in re Walter P. Long & Co. 9 B. R. 227; s.¢. 7
Ben. 141.

R * Lewis v. U. 8. 13 B. R. 83; s. oc. 14 B. R. 64; in re R. 8. Pease, 13 B.
. 168.
244 DISTRIBUTION OF THE ESTATE.

are entitled solely to be paid out of the partnership estate,
and the separate creditors are solely entitled to be paid
out of the separate estate”

When the partnership is in bankruptcy, after deduct-
ing the whole of the expenses and disbursements out of
the whole amount received by the assignee, the net pro-
ceeds of the joint stock must be appropriated to pay the
creditors of the copartnership, and the net proceeds of the
separate estate of each partner must be appropriated to
pay his separate creditors; and if there is any balance of
the separate estate of any partner, after the payment of
his separate debts, such balance must 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 must be divided and appro-
priated to and 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 must
be applied to the payment of his separate debts (§ 5121).
It is of no consequence whether there are several proceed-
ings by or against the partners or only one, for in either
case the rights of creditors are precisely the same.”

A creditor holding a partnership bond, by express
terms joint and several, for a partnership debt, may re-
ceive dividends from the separate estates.2 A creditor
who has split up a partnership debt, and taken a partner-
ship note for one part, and individual notes for the other
part, is entitled to receive dividends from the estates of the
respective makers according to the terms of the respective
notes.“ A creditor holding a partnership note, indorsed

 

‘In re William Ingalls, 5 Law Rep. 401; in re Henry B. Williams, 5 Law
Rep. 402.

? In re Edward P. Morse, 13 B. R. 876.
*Tn re Bigelow et al. 2 B. R. 371; 5. c. 3 Ben, 146; 8.c. 2 L. T. B. 41.

‘Mead y. National Bank of Fayetteville, 2 B. R. 173; s. c. 6 Blatch. 180;
sc. 1 L. T. B. 108; Stevenson v. Jackson, 9 B, R, 255.
DISTRIBUTION OF THE ESTATE. 245

by the several partners, is entitled to receive dividends
from both the joint and separate estates, and will not be
required to make an election.’ The right of a party hold-
ing two valid obligations to the benefit of both is founded
both in Jaw and in justice, and he may ordinarily pros-
ecute all his remedies until he obtains complete satisfac-
tion. When a part of the obligation, however, is paid by
the indorser or the principal, as the case may be, the claim
against the estate of the other is only for the balance that
remains unpaid, and not for the whole debt.’ If the ob-
ligation is given by the partners individually and not by
the firm name, it is only provable against their individual
estate, although the consideration passed to the firm?
But where a firm uses funds belonging to an estate of
which one partner is executor, with full knowledge of its
character, it is liable therefor, and the beneficiaries may
prove their claim either against the firm, or against the
individual estate of the partner who was executor.
When the intention of the contracting parties is that the
firm shall be bound, and the obligation is within the scope
of the partnership business, the obligation will bind the
firm in whatever form it may be made, whether signed by
the partners jointly, or with the firm name, or by one
alone. The presumption which arises from the form of
the obligation, that the creditor elected to look to the
partners individually, may be overcome by proof that no
such election was made. It may be shown that the note
of an individual partner was taken with the intention of
looking to the firm for the payment of the debt. Where

 

* Mead v. National Bank of Fayetteville, 2 B. R. 173; s. c. 6 Blatch. 180;
a.c.1L. T. B. 108; in re Howard, Cole & Co. 4 B. R. ‘B71; 3.0.2 L, T. B.
161; Emery v. Canal Nat. Bank, 7 B. BR. 217; 5.06.5 L. 1. B. 419; in re
Bradley, 2 Biss. 515; in re Peter Farnum, 6 Law Rep. 21.

* In re Howard, Cele & Co. 4B. R. 871; s.c. 2L. T. B. 161; in re Peter
Farnum, 6 Law Rep. 21.

5 *In re Bucyrus Machine Co. 5 B. R. 803; in re Hugh T. Herrick, 13 B.
. 312.

— Webb & Co. 2 B.R. 614; s.c.2L.T. B. 87; in re Edmund H.
Miller, 1 N. Y. Leg. Obs. 38.
246 DISTRIBUTION OF THE ESTATE.

the partners sign a note with their individual names, or
one draws a bill and the other accepts it, for a partnership
object, the obligation may be treated for all purposes as a
partnership debt.* If a party takes the note of one part-
ner 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 judgment on the note.? A joint individ.
ual bond of all the partners is not a claim against the
partnership estate. A judgment against the partners in-
dividually and others constitutes a several debt as to the
partners and can not be proved against the firm.* 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 is
to be added to the partnership estate, and applied to the
payment of the partnership debts before paying the inter-
est that has accrued on the separate debts since that
time.’ If there are no joint assets, the partnership cred-
itors may share pari passu with the individual creditors.®
If the firm assets are merely sufficient to pay the costs, the
rule is the same as if there were no joint assets,’ but the
costs will be apportioned to each estate.® If there are any
joint funds, no matter how small the joint fund may be
the firm creditors can not share in the individual estates?

Where only one creditor has proved his claim, he is
entitled to be paid in full, if there are funds enough for
that purpose; if there are not enough, he takes the whole.”
If a surplus remains after satisfying all the debts at the

 

1Jn re Henry Warren, 2 Ware, 322.

2In re Hugh T. Herrick, 13 B. R. 312.

*InreE P. & E. M. Tesson, 9 B. R. 378.

“In re Hugh T. Herrick, 13 B. R. 312.

° In re Berrin et al. 44 How. Pr. 216; s. c. 6 Ben. 297.
°Tn re Collier, Taylor & Co. 12 B. R. 266.

7In re McEwen & Sons, 12 B. R. 11.

*In re Elijah E. Smith, 13 B. R. 500.

oa. In re Albert Marwick, 2 Ware, 233; in re Elijah E. Smith, 12 B. R-
500.

© Tn re Haynes, 2 B. R. 227; 8. c. 1 L. T. B. 121: in re James, 2 B.R. 227;
s.c. 1 L. T. B. 121.
DISTRIBUTION OF THE ESTAT®. 247

amount as proved, it should be applied to the payment of
interest to be computed on the claims from the date of
the adjudication! What disposition shall be made of the
balance that remains after the payment of all the creditors
who have proved their debts, in a case where there are
names of creditors placed upon the schedule who have not
proved their debts, can scarcely be considered as a settled |
question yet. Such cases are rare, and the authorities are
conflicting ; some holding that it should be held for the
unproved claims,’ and others that it should be paid to the
bankrupt It is the evident intent of the statute that
there shall be further dividends only when additional
assets come to hand (§ 5093), and that the estate must be
wound up and settled at some definite period. The only
persons who can be recognized as creditors are those who
have proved theirdebts. The mere statement of a liability
upon the schedule does not make any person a technical
creditor, or entitle him to a dividend. It would seem,
therefore, that when all the claims proved are paid in full,
the estate stands in exactly the same condition as if all
creditors had been paid in full, and that the balance which
may remain belongs to the bankrupt. The presumption
is that the unproved claims have been paid in full previ-
ously, although the bankrupt may have forgotten the fact.
In order to obtain the balance, the bankrupt must file a
petition, duly verified, setting forth his reasons for believ-
ing that other creditors do not wish to prove their claims,
and asking that it be paid to him. Before such payment
is made, it must be shown that the creditors have had due
notice of the proceedings in bankruptcy, and an opportu-
nity to prove their claims.*

 

z ‘In re R. M.& 8. R. Town, 8B. R. 40; in re Edward Hagan, 10 B. R.
383.

2 In re Haynes, 2B, R. 227; 5. c.1L. T.B. 121; in re James, 2 B. R. 227;
8.0.11. T. B. 121.

*In re Hoyt, 3B. R. 55; Steevens v. Earles, 25 Mich. 40.
‘In re Hoyt, 3 B. R, 55.
CHAPTER XIV.
COSTS.

Tue funds deposited with the register, marshal, and
clerk are considered in all cases where they come out of
the bankrupt’s estate as a part of the estate, and the as-
signee is charged therewith, and is not allowed for any
disbursement therefrom, except upon the production of
proper vouchers from those officers respectively, given
after the due allowance of their respective bills* Ten
days before the day fixed for the consideration of the
assignee’s final account, or at any other time fixed by the
court on its own motion, or on the application of any per-
son interested, the clerk, marshal, and register must file
with the clerk a statement of fees, including prospective
fees for final distribution, which must exhibit, by items,
each service and the fee charged for it, and the amount
received. The clerk must tax each fee-bill, allowing none
but such as are provided for by the Rules, which taxation
is conclusive, reserving to the party interested exceptions
to the report, which must be decided by-the court. Any
money received by either of the officers mentioned in
excess of lawful fees or compensation, must be ordered
by the judge to be paid into court, and such order may
be enforced, if necessary, by attachment as for contempt.
No allowance can be made against the estate of the
bankrupt for fees of attorneys, solicitors, or counsel, except
when necessarily employed by the assignee, when the same
may be allowed asa disbursement? This provision applies
to both voluntary and involuntary cases.*

 

‘Rule XXIX; Anon. 1 B. R. 123; in re Sherwood, 1 B. R. 344; in re
Appold, 1 B. R. 621; 8. c. 6 Phila. 469; s co. 1 L. T. B. 83.

7 Rule XXX. * Rule XXX. “In re R. Frederick Gies, 12 B. R. 179.
COSTS. 249

An attorney for a voluntary bankrupt is not entitled
to any priority on account of services rendered in the prep-
aration of the petition and schedules, for he is neither a
clerk nor an operative; and the costs, fees, and expenses
provided for in the act are those incurred by and due to
the register, clerk, assignee, and marshal, and not those
due to the bankrupt’s attorney for services in connection
with the procedings! No matter how meritorious or
necessary the services may have been, the claim stands on
the same footing as the claim of any other creditor.’ He
may, however, demand and receive a reasonable compen-
sation before rendering his services, and the payment will
be valid? It. has been said that he may even include
compensation for services already rendered,* but this is
exceedingly questionable. It has been decided that he
can not take a mortgage to secure the payment of his
fees,® but it is difficult to see upon what grounds this de-
cision can be sustained. The conveyance is not a prefer-
ence, for it does not secure a pre-existing debt. Being
founded upon a present consideration, it would ordinarily
be valid. There is only one objection that can be taken
to it, The only ground upon which it can possibly be set
aside is, that it is made for the purpose of preventing the
property from coming to the assignee. But this objection
will not lie if the fee is proper and reasonable.” If it is
so excessive and extravagant as to manifest a recklessness
and indifference in regard to the estate, the law will un-

 

Tn re Heirschberg, 1 B. R. 642; s. c. 2 Ben. 466; in re New Lamp Chim-
ney Co. 2A. L. J. 343; in re Hale & Wiggins, 5 Law Rep. 403; in re R.
Frederick Gies, 12 B. R. 179; contra, in re Kennedy et al. 20 Pitts. L. J. 193.

* In re Evans, 3B. R. 261; in re Jaycox & Green,7 B. R. 140.

* In re Rosenfield, 2B. R. 117; s,c.1L. T.B, 100; in re James Thompscn,
13 B. R. 300.

me In re Rosenfield, 2 B. R. 117; s. c.1L. T. B, 100; in re Sidle, 2B. R.

° In re Evans, 3 B. R. 261.
° In re Mallory, 4 B. R. 153; s. c. 2 L. T. B. 130.

"In re Keefer, 4 B.R. 389; Flourney v. Newton, 8 Geo. 306; Lyon v.
Marshall, 11 Barb. 241.
250 COSTS.

doubtedly set it aside as being the result of a fraudulent
combination between the bankrupt and his attorney.’
The appearance fee of twenty dollars is not allowable in
cases of voluntary bankruptcy.’

The decisions in regard to an allowance for disburse-
ments in cases of voluntary bankruptcy are difficult to
understand or reconcile. In one case disbursements to the
amount of $100 were disallowed, though it is evident that
they were paid to the officers of the court as fees.’ In
another case the register was held to have authority to
pass an order to allow disbursements for such fees In
the last case it was decided that the application for the
allowance must be made to the court.’ It is not clear for
what fees the disbursements were made, though all seem
to have been the usual advances required to be made in
cases of voluntary bankruptey.

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 he should employ other persons to
assist him, it ig just that they should receive a compensa-
tion out of the estate. In order to justify the allowance
of such a claim, it must be clearly shown that the alleged
services were properly and necessarily rendered for the
purpose of benefiting or preserving the estate in the in-
terest of the general creditors, and not in the interest of
any creditor or class of creditors; and the extent, value,
and necessity of such services must be clearly established.’
If there is no satisfactory proof upon which the court can
fix and allow any specific sum for such services, the peti-

 

Triplet v. Hanley, 1 Dillon, 217.
2 Gordon, McMillan & Co. v. Scott & Allen, 2 B. R. 89; s.c. 1 L. T. B, 99.

*In re Heirschberg, 1 B. R.642; 8. c. 2 Ben. 466; in re R. Frederick Gies,
12 B. R. 179.

“In re Lane, 2 B. R. 309; s. c. 3 Ben. 98.

°In re Rosenberg, 3B. R. 286; s.c. 3 Ben. 14; in re New Lamp Chimney
Co, 2 A. L. J. 343.

°In re Jaycox & Green, 7B. R. 140.
COSTS. 251

tion may be dismissed, without prejudice to any subsequent
application.’

The assignee is entitled to be allowed all the ex-
peuses necessarily incurred, and all the necessary disburse-
ments made by him in the execution of his trust ($5099).
Rent for the use of premises, to store goods of the bank-
rupt, from the commencement of the proceedings in
bankruptcy until the time when he surrenders them,’ and
expenses incurred in putting the property into a salable
condition,® or in publishing the notice of his appointment,
or in recording the assignment, or in advertising sales of
the assets, or for stationery and postage,’ or in the custody
of the property,’ are all allowed. Compensation for the
services of an auctioneer will depend entirely upon the
custom of the locality, and the circumstances of each case.°

He is also entitled to an allowance for his services on
all moneys received and paid out by him; for any sum
not exceeding 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 (§ 5100).
This commission can he calculated but once upon the
amount of moneys received and paid, and not upon both
the receipt and payment thereof." The compensation for
receiving and paying out money is limited to this commis-
sion, graduated according to the amount.® Thecommission
on moneys paid out can only be allowed on the amount of
debt canceled, and not on the amount of debt proved.’

 

‘In re Jaycox & Green, 7 B. R. 140.

* To re Laurie et al. 4 B. R. 82; 8. c. Lowell, 404.

* Foster et al. v. Ames, 2 B. R. 455; 8. c. Lowell, 313.

‘In re Davenport, 3 B. R. 77; 8. c.2L. T. B. 136.

°In re Williams, 2 B. R. 229; 8.c.1L. T. B. 113.

°In re Pegues, 3 B. R. 80; 8. c. 2 L. T. B. 186; in re Sweet et al. 9 B. R.
48,

7 Rule XXX. "In re Dean, 1 B. R. 249; 3.0.1 L. T. B. 9.

° In re Davenport, 3B. R. 77; 8. ¢. 2L. T. B. 136.
252 COSTS.

In addition to his commissions, the assignee is allowed
the following fees, to wit:

For serving or sending notices to creditors, or publish-
ing the same, when required to be done by the assignee,
fifteen cents, which includes postage and stationery.

For each hour necessarily employed in making inven-
tory or supplemental inventory of bankrupt’s property, or
verifying marshal’s inventory, one dollar.

For each folio of inventory or supplemental inventory
made by assignee, twenty cents.

For all services in designating the exempt property of
a bankrupt, and filing report thereon, five dollars.

For attending a general meeting of creditors, three
dollars.

For every deed for real estate sold, two dollars.

For drawing and filing each monthly report, one dol-
lar.

For drawing and filing each quarterly report, not ex-
ceeding four, unless specially allowed, five dollars.

For each general account, submitted to a creditors’
meeting, not exceeding two, unless specially allowed, ten
dollars.

For all services in paying a general dividend, or exe-
cuting an order of final distribution, and making report
thereon, including all disbursements, five dollars; in addi-
tion, for each creditor to whom a dividend is paid, twenty-
five cents.

No allowance can be made to the assignee for custody
of the bankrupt’s property, except necessary disburse-
ments in relation thereto. The necessity and reasonable-
ness of disbursements must in all cases be passed upon by
the court."

If any assignee fails or neglects to well and faithfully
discharge his duties in the sale or disposition of property

 

"Rule XXX.
253
costs.
he forfeits all fees and emoluments to which he might be
entitled in connection with such sale. If he in any man-
ner in violation of his duty unfairly or wrongfully sells or
disposes of, or in any manner fraudulently or corruptly
combines, conspires, or agrees with any person or persons
with intent to unfairly or wrongfully sell or dispose of
the property committed to his charge, upon proof thereof,
he forfeits all fees or other compensation for any and all

services in connection with the estate.’ .

If, at any time, there is not in his hands a sufficient
amount of money to defray the necessary expenses re-
quired for the further execution of his trust, he is not
obliged to proceed therein until the necessary funds are
advanced, or satisfactorily secured to him (§ 5100). The
funds must be advanced by the party for whom the
services are to be performed.’

The assignee may apply to the court in the first in-
stance for authority to employ professional or clerical
assistance, but the court could do but little more than
grant such authority in general terms, leaving the instances
in which such assistance may be employed largely to the
discretion of the assignee, as emergencies might arise mak-
ing such assistance necessary. Such authority the as-
signee possesses without such an order, 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 as-
sistance. No general rule can be given, defining the cir-
cumstances under which and the extent to which the as-
signee is at liberty to charge the assets in his hands for
professional and clerical services in the execution of his
trust. This must be left to be decided in each individual

1 Act of June, 22 1874, § 4.
° In re Haghes, 1 B. R. 226; 8. o. 2 Ben. 85; 5. c. 1 L. T. B, 45.
254 COSTS.

case according to its peculiar exigences.' Fees for the
assistance of an attorney are not allowed without the
most satisfactory evidence to show the necessity for legal
aid on the part of the assignee and the actual rendition
of the services? As a general rule, no charge can be
allowed for professional services which were rendered
prior to his appointment; but, under special circumstances,
services may be included which were rendered as far back
as the time of the filing of the petition.’

The intention of the statute is that the disbursements
of the assignee in administering the estate shall be sub-
mitted to the creditors at a general meeting. An applica-
tion for an allowance for expenses and for disbursements
for clerical, or professional, or other services, should ac-
company his report submitted at such a meeting, and will
not in general be allowed in any other way.* It should
contain a brief statement of the circumstances out of which
the necessity for the disbursement or the employment of
assistance arose, and from which the reasonableness of
the amount claimed therefor may appear, and should be
verified.®

All accounts of assignees are to be referred, as of
course, to the register for audit, unless otherwise specially
ordered by the court.’ The register has the power to
audit and pass accounts of assignees (§ 4998), to take evi-
dence concerning expenses and charges against the bank-
tupt’s estate, and to order the payment of the salary or
wages of persons in the employment of the assignee.’
Consequently he may hear and determine such an ap-
plication for disbursements, when it is uncontested. The

 

‘In re B. B. Noyes, 6 B. R. 277.

*In re Davenport, 3 B. R. 77; 8. c. 2L. T. B. 136; Rule XXX; in re
Priscilla G. Drake, 14 B. R. 150.

*In re N. Y. Mail Steamship Co. 2 B. R. 554.

“In re Hubbell & Chappel, 9 B. R. 523; in re B. B. Noyes, 6 B. R. 277.
* In re B. B. Noyes, 6 B. R. 277. * Rule XIX.

7 Rule V.

“In re B. B. Noyes, 6 B. R. 277; in re Henry H. Stafford, 13 B. R. 378.
COSTS. 255

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. The word “audit” is
never applied to the action of a court. It implies
executive as well as judicial action. If the act of audit-
ing implied only judicial action, no more would be re-
quired of a register than that fie take such evidence as
the parties see fit to submit, and pass upon the same,
basing his decision upon sndlt evidence alone. But an
auditing officer proceeds to examine an account for the
purpose of ascertaining in any way he may be able, with-
out regard to established forms or technical rules, what
sum ought in fairness to be allowed. The word, as used
in the statute, is used in this accepted sense. In auditing
an account, the register may therefore cross-examine all
witnesses and summon such other witnesses as he may
deem proper.!

There are some disbursements made after the filing of
the petition and before the appointment of the assignee,
which may be charged against the estate, and are entitled
to be paid in full out of the assets. The title of the as-
signee relates back to the commencement of the proceed-
ings, and he is the debtor by relation for all such expenses.”
Rent for the use of premises to store goods belonging to
the estate,’ and the charges for keeping cattle,‘ are in-
stances of such disbursements. Advances and expendi-
tures made to discharge liens and preserve and benefit the
estate, by a party whose relation to the property justified
such advances and expenditures, are an equitable claim
and lien upon the estate.® It has even been held that the

 

‘Inre John J. Staff, 48 How. Pr. 110; s. c. 5 Ben. 574.
* In re Fortune, 2 B. R. 662: 8. c. Lowell, 306.

* In re Laurie et al. 4 B. R, 82: 8. ¢. Lowell, 404; in re Merrifield, 3 B. R.
98; Walker v. Baron, 3 B. R. 265; in re Walton, 1B. R. 557.

* In re J. C. Mitchell, 8 B. R. 47.
"In re Gregg, 3 B. R. 529; 3. c,1L. T. B. 298.
256 COSTS.

bankrupt court, in the exercise of its equitable jurisdic-
tion, may require the assignee to pay such charges as ap-
pear to have benefited the estate in his hands, though
incurred before the petition was filed, upon the gronud
that he received the benefit and should sustain the bur.
den."

The marshal serves the court of bankruptcy as a mes-
senger. The statute and the rules designate the fees ap-
pertaining to the office, and he can not claim fees other
than those thus designated for services rendered under the
statute. The marshal is entitled to the same fees as are
allowed for similar service by section eight hundred and
twenty-nine of the Revised Statutes, as modified by section
five thousand one hundred and twenty-six, including addi-
tional fees allowed by the latter section for distinct serv-
ices?

These fees are: 1st, for service of warrant,two dollars
(§ 5126). The warrant provided for in this clause is the’
warrant issued ina voluntary or an involuntary case, and
perhaps also the provisional warrant. The marshal may
also charge his actual expenses incurred in traveling and
these must be equitably apportioned among all the cases
attended to at the same time.’ 2d, for all necessary travel,
atthe rate of five cents a mile, each way ($5126). Mileage
may be charged for serving the order to show cause, the in-
junction and the adjudication. The travel must be necessary
travel. The language of the statute precludes all construct-
ive mileage whatsoever. The distance by the nearest trav-
eled route from the place of service to the place of return
is the necessary travel meant by the statute. The place of
service should be stated in the return, in order that the cor-
rectness of the mileage charged may appear on its face.
Ifthe marshal has two or more processes in his hands at
the same time, and in the same matter or proceeding,

 

‘In re Fortune, 2 B. R. 662; s. c. Lowell, 806; in re Nounnan & Co. 6 B.
R. 579; 8.c. 4 L. T. B, 228,
a Rule XXX, * Tn re Donahue et al. 8 B. R. 453.
COSTS. 257

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 additional travel necessary, he may
charge for such additional travel, but no more.’ He 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 No charge for constructive mileage can be made
when the notices for creditors are served by mail? 3d, for
each written note to a creditor named in the schedule, ten
cents ($ 5126). A charge of ten cents per folio for each
notice can not be made on the ground that it is a copy.
The notices are not copies; each is an original! The
amount paid for printing them may be allowed as neces-
sary expenses.’ 4th, for custody of property, publication
of notices, and other services, his actual and necessary ex-
penses, 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 same to be
taxed or adjusted by the court; and the oath of the
messenger is not conclusive as to the necessity of such ex-
penses ($5196). This provision relates 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, — Mileage may
therefore be allowel without an affidavit that it was
necessary and actually performed. The word expenses
implies an expenditure or payment, and nothing can be
allowed as expenses which is not shown affirmatively to
have been necessary, and just and reasonable in amount,
and to have been actually paid. The sum actually paid

 

*In re Donahue et al. 8 B. R. 453; contra, in re Talbot, 2 B. R. 280; s. ©.
2L. T. B. 15. ~ ;

*In re Donahue et al. 8B. R. 453; in re Anon. 4 C. L. N. 210.
*In re A. Alexander, 3B. R. (quarto), 20. :
“In re Dean, 1 B. R. 249; 3.0.1 L. T. B. 9.

°In re Talbot, 2 B. R. 280; 50.2 L. IT. B. 15.

°In re Donahue et al. 8B. R 453.

17
258 COSTS.

a keeper or keepers to watch property in custody, not ex-
ceeding $2.50 a day, may be taxed and allowed by the
court upon satisfactory proof that a prudent precaution
in regard to all concerned in the property justified the
marshal in placing a keeper over it, that the keeper actu-
ally continued in charge of it for the time specified, and
that the sum charged therefor is reasonable for the serv-
ices, and has been actually paid by the marshal,’ but the
entire amount can not exceed $2.50 a day. At the rate of
$2.50 a day, the marshal can only be allowed for one
keeper” A keeper may be appointed, although the goods
might be safely stored.? Postage, envelopes, and costs of
advertising the notices are always allowed.* The expense
of procuring copies of the advertisements and making
affidavit to the return are taxable. There is no fee for
attendance.® The marshal is also entitled to one dollar
for each hour necessarily employed in making an inven-
tory of the bankrupt’s property, and twenty cents for each
folio of the inventory. He is entitled to one dollar per
hour for the time of persons whom he employs to take an
inventory. But if a keeper is employed in taking an in-
ventory, and is entitled to be paid therefor, his allowance
as keeper must be diminished proportionately.’ The mar-
shal is not entitled to any allowance for the time spent
with the assignee in verifying the inventory, but may
charge at the rate of ten cents per folio for a copy of the
inventory furnished to the assignee.’ He is also allowed
one dollar for each hour actually and necessarily employed
in personal attention in taking care of the bankrupt’s

 

‘In re Lowenstein et al. 3 B. R. 269; s. c. 3 Ben. 422; in re Eugene Com-
stock, 9 B. R. 68.

> In re Johnston & Hall, 12 B. R. 345.

‘In re Hare, 48 How. Pr. 86.

‘In re Degn, 1 B. R. 249; sc. 1 L. T. B. 9.

* In re Talbot, 2 B. R. 280; s. c. 2 L. T. B. 15.
°In re Johnston & Hall, 12 B. R. 345.

"In re Johnston & Hall, 12 B. R. 345.

* In re Johnston & Hall, 12 B. R. 345.
COSTS. 259

property,’ but this allowance can only be made when he
in person actually and necessarily gives his personal atten-
tion to the property, and does not cover personal attention
by a deputy? No other allowance can be made for the
custody of property except for actual disbursements.’ The
marshal can not charge a commission on the value of
property for its custody. The marshal is entitled to an
allowance of two per cent. on all money disbursed by
him.® The requirement that the return shall be accompa-
nied by vouchers whenever practicable is in addition to
the requirements of the statutes.© Whenever vouchers
are omitted, the marshal must in his return state the rea-
sons for such omission, or produce testimony for that pur-
pose, so that the court may judge of the practicability of
his obtaining vouchers.’

The clerk may charge the fees allowed by section eight
hundred and twenty-eight, for services required by the
bankrupt law, and not otherwise provided for. His fees
are regulated by that statute and by the rules ($ 5124).
He is entitled to charge ten cents for filing each paper and
making an entry thereof in the docket, and fifteen cents
for making an entry upon the paper itself, of the day and
hour of the filing. This entry must be made for every
paper filed with him, which has not been previously filed
with the register, and so indorsed by him.? Every writ-
ing which relates to one particular subject is such a paper,
no matter of how many sheets it is composed. Thus, the
petition is one paper; Form No. 4, another; Form No. 5,
another, and so on.” For all processes issued by him, he

 

* Rule XXX, ? In re Johnston & Hall, 12 B. R. 345.
* Rule XXX. ‘In re Johnston & Hall, 12 B. R. 345.
6 In re Johnston & Hall, 12 B. R. 845.
*Inre Donahue et al. 8 B. R. 453.

"In re Eugene Comstock, 9 B. R. 88.

°In re Talbot, 2B. R. 280; s.c. 2L. T. B. 15; in re A. Alexander, 3 B.
R. (quarto), 20.

° Rule I. Tn re Dean, 1 B. R. 249; s.c. 1 L. T. B. 9.
260 COSTS.

may charge one dollar. This includes the warrant. It
has been decided that Form No. 45 is embraced by it ;*
but this form is a subpcna rather than a writ, and the
proper fee appears to be twenty-five cents instead of one
dollar. He is entitled to this fee, although he delivers the
blanks, with his signature and the seal of the court at-
tached, to the register, who fills them up and sends them
out. For recording the assignment in those districts where
it is recorded, his fee is fifteen cents per folio. For each
notice required to be sent by mail, when signed by him,
he can charge fifteen cents.® For every copy of any paper
in proceedings in bankruptcy, his fee is ten cents per folio,
The charge for the order of reference,* certificate of dis-
charge, and copy of the assignment, should be regulated
by these rates.°

For entering memoranda or minutes of the register,
lis fee is ten cents for each folio. For sending notices by
mail to creditors, his fee is fifteen cents for each notice.
For inserting notice in newspaper, his fee is fifty cents,
but the necessary cost of advertising must be paid as an
expense of the estate. For taxing costs in each case, his
fee is one dollar, and in addition to that, ten cents for each
folio of the taxed bill.®

The register is entitled to five dollars for filing and
entry of the general order of reference, and for office rent,
stationery, and other incidental expenses of proceedings,
conducted in the usual office of the register, to be allowed
once only in any cause."

When the proceedings are not conducted in the usual
office of the register, but in some other city or town, he is
allowed for each day employed in going, attending, and

 

‘In re A. Alexander, 8 B. R. (quarto), 20.
*In re Dean, 1 B. R249; 8. c.1 L. T. B. 9.
5 Rule XXX. “Form No. 4.

*In re Dean, 1 B. R. 249; 8. c. 1 L. T. B. 9; in re A. Alexander, 8 B. R.
(quarto), 20.

* Rule XXX. " Rule XXX.
COSTS. 261

returning, five dollars, and traveling and incidental ex-
penses of himself and of any clerk or other officer attend-
ing him. These expenses and fees must be apportioned
among the cases by the judge."

Every register must keep an accurate account of his
traveling and incidental expenses, and those of any clerk
or other officer attending him in the performance of his
duties in any case or number of cases which may be re-
ferred to him; and make return of the same under oath,
with proper vouchers, when vouchers can be procured, on
the first Tuesday in each month.’

For each day’s service while actually employed under.
a special order of the court, he is entitled to a sum to be
allowed by the court, not exceeding five dollars.

But only one per diem allowance can be made for a
single day, and no duplication of such allowances can be
made for different cases on the same day. No other allow-
ance can be made for clerk hire except as above stated.’

The construction of this provision depends entirely
upon the meaning of the term special order. The proper
meaning seems to be, an order directing him to perform
services not in the course of his general duties. The order
of reference* merely directs him to perform the duties
which the statute imposes upon him, and is not such a
special order.” He is entitled to this allowance while act-
ing under a special order to examine the papers and report
upon their regularity,® or to take charge of the bankrupt’s
property and superintend sales thereof,’ or to perform any
other service specially required of him by the court.

For every affidavit to any petition, schedule or other
proceeding in bankruptcy, except proof of debt by a cred-

 

'Rule XXX. ? Rule XII. > Rule XXX.
‘Form No. 4.

° In.re Bellamy, 1 B. R. 118; 8. c. 1 Ben. 474; in re Dean, 1 B. R. 249;
gc 1L.T. B. 9.

°In re J. H. Robinson, 1 B, R. 285; s. c. 2 Ben. 145; 8.0.1 L. T. B. 25.
"In re Loder Brothers, 2B. R. 517; s. c. 3 Ben. 211; s..c. 1 L. T. B. 159,
262 COSTS.

itor or his agent, he is allowed twenty-five cents for each
oath and certifying the same."

His fee for taking depositions, including proofs of
debts, and examination of bankrupt or his wife, twenty
cents for each folio, and twenty-five cents for certifying
proof of debt as satisfactory?

He is also allowed ten cents for every summons or sub-
pena requiring the attendance of a bankrupt, a bank-
rupt’s wife, or a witness for examination, for each person
summoned.?

His fee for examining petition and schedules, and cer-
tifying to their correctness, is three dollars. He is enti-
tled to two dollars for every warrant in bankruptcy, or
other process, issued and directed to the marshal, not in-
cluding warrants for payment of money or anything other
than process.* He can not make any extra charge for the
list of creditors inserted in it, for this is a part of the war.
rant itself’ He is also entitled to the same fee for a sup-
plemental warrant.*

For each day in which a general meeting of creditors
is held, and attending same, he is allowed three dollars.’

The meeting is one to which all the creditors are sum-
moned. An attendance for the purpose of conducting an
examination is not a meeting,’ neither is the appearance of
creditors to show cause against the granting of a dis-
charge? It has, however, ‘been held, that three dollars
may be ehiirmed for the day on mente the bankrupt first
attends before the register.” The allowance is for the day,
and not for the meeting. It has accordingly been held
that where two meetings are held in the same case on one

 

‘Rule XXX. ° Rule XXX.

* Rule XXX. * Rule XXX.

*In re J. H. Robinson, 1 B. R. 285; s. c. 2 Ben. 145; 8.0. 1 L. T. B. 25.
*In re J. H. Robinson, 1 B. R. 285; s. 0. 2 Ben. 145; s. o. 1 L. T. B. 25.
7 Rule XXX. “In re Macintire, 1B, R. 11; s.c.1 Ben. 277..
° In re Dean, 1 B. R. 249; 8. c. 1 L. T. B. 9.

Tn re Sherwood, 1 B. R, 344.
COSTS. 263

day, the charge can only be three dollars! This fee can
not be increased by means of an order designed to be
special.?

His fee for notification to assignee of his appointment
is fifty cents.? The fee allowed for an assignmeut of bank-
rupt’s effects is one dollar.* He is entitled to one dollar
for every bond with sureties.” The approval of the as-
signee’s bond entitles him to this allowance.’ For every
application for a general meeting of creditors, he is entitled
to one dollar.*’ This fee is limited to the application, and
when two meetings are called upon one application, only
fifty cents can be charged? The register is entitled to this
allowance whenever he orders the creditors to meet.’ It
has been decided that there is no application for the first
meeting, and that this fee can not be allowed for calling it.”
He is not entitled to the fee for making an order for an
examination,” or an order to show cause against the grant-
ing of a discharge.” For copies of depositions and other
papers, he is allowed ten cents each folio.” His fee for
each notice which the register may be required to send to
or serve on any creditor, which includes for postage and
stationery, is fifteen cents.* He is entitled to the same
mileage in making personal service, when necessary, as is
allowed by law to the marshal.” For inserting notice in
newspaper when required, he is allowed fifty cents, and
the costs of advertising are allowed as part of the expenses
of the estate.’ His fee for each order for a general divi-

 

‘In re J. H. Robinson, 1 B. R. 285; s.c. 2 Ben. 145; 8.c.1L. T. B. 25;
in re Dean, 1 B. R. 249; 8. c.1L.T. B. 9.

*In re Alexander, 3 B. R. (quarto), 20.

° Rule XXX. “Rule XXX. * Rule XXX.

*In re Dean, 1 B. R. 249; 3.0 1L. T.B. 9. 7 Rule XXX.

*In re J. H. Robinson, 1 B. R. 285; 8. c. 2 Ben. 145; 3.0. 1 L. T. B. 25.
°In re Dean, 1 B. R. 249; 8c. 1 L. T. B. 9.

* In re J. H. Robinson, 1 B. R. 285; s. c. 2 Ben. 145; s.c. 1 L. T. B, 25.
“Tn re Macintire, 1 B. R. 11; s. c. 3 Ben. 277.

Tn re J. H. Robinson, 1 B. R. 285; 8. c. 2 Ben. 145; 8. c.1 L. T. B. 25.
* Rule XXX. “4 Rule XXX.

Rule XXX. ” Rule XXX.
264 COSTS.

dend is three dollars.' The order for a dividend is that
which is made by the creditors or the assignee at a regu-
lar meeting. He is allowed three dollars for computation
of dividends, and ten cents in addition thereto for each
creditor” For every judicial order made by a register,
necessary or proper to be made by him, and not herein
otherwise specially provided for, and not including mat-
ters merely ministerial, he is entitled to one dollar” His
fee for every discharge, where there is no opposition, is
two dollars. He is allowed one dollar for auditing the
accounts of assignees, and one dollar for each additional
hour necessarily employed therein after the first hour.
His fee is one dollar for every certificate of question to
the district court or judge, under sections five thousand
and nine, and five thousand and ten of the Revised Stat-
utes, and twenty cents for each folio in such certificate.®
His fee for each folio of memorandum sent to the clerk is
ten cents." He is also allowed ten cents for countersign-
ing check of assignee.® For filing every paper not previ-
ously filed by the clerk, and mar re and identifying every
exhibit, he is entitled to ten cents.

The fees of the officers are entitled to priority in ai
cases where there are funds ($5101). The fees of the
register, marshal and clerk must be paid or secured in all
cases before they can be compelled to perform the services
required of them.” It is further provided that the fees of
the register shall have priority of payment over all other
claims out of the estate, and before a warrant issues the
petitioner must deposit with the clerk of the court fifty
dollars as security for the payment thereof. The petition
may be filed even though the deposit is not made. The
deposit is merely an act preliminary to the issuing of the

 

‘Rule XXX, ?> Rule XXX. > Rule XXX.
‘Rule XXX, ®* Rule XXX. * Rule XXX,
T Rule XXX. * Rule XXX. ° Rule XXX.

* Rule XXX,
COSTS. 265

warrant.' This deposit must be delivered by the clerk -
to the register to whom the case is referred If there are
not sufficient assets for the payment of the fees, the per-
son upon whose petition the warrant is issued must pay
the same, and the court may issue an execution against
him to compel payment to the register (¢ 5124).

The enumeration of the fees in the statute does not
prevent the justices of the Supreme Court from prescrib-
ing a tariff of fees for all otber services of the officers of
courts of bankruptcy, or from reducing the fees prescribed
in sections 5124, 5125 and 5126, in classes of cases to be
named in their rules and orders ($5127). They have the
power to regulate the fees payable, and the charges and
costs to be allowed, with respect to all proceedings in
bankruptcy, not exceeding the rate of fees now allowed
by law for similar services in other proceedings ($ 4990).
But they must not in any case exceed the rate now allowed
for similar services.*

 

‘In re C. H. Preston, 6 B. R. 545,
? Rule XXX.
*In re Dean, 1 B. R. 249; 3.0.1 L. T. B. 9.
CHAPTER XV.
DISCHARGE.

Ir no debts have been proved, or if no assets have
come to the hands of the assignee, the bankrupt may
apply for a discharge at any time after the expiration of
sixty days from the adjudication of bankruptcy, and be-
fore the final disposition of the cause.’ The time is to be
computed from the date of the adjudication, and not from
the time of the commencement of proceedings in bank-
ruptcy.? .

The construction given to the phrase, no assets, is that
no money has been received or paid out by the assignee,
on account of the estate.’ Neither an outstanding claim,*
nor an uncollected note,’ nor certificates of stock,’ upon
which nothing has been realized up to the time of the
application, constitute assets within the meaning of this
provision of the statute, although the assignee may have
reason to believe that he will, at some future time, be able
to realize something out of them.

Where both debts have been proved, and assets have
come to the hands of the assignee, the application can not
be made until after the expiration of six months from the
date of the adjudication."

The computation of the time must, in all cases, be so
made as to exclude the day of the adjudication of bank-

 

* Act of July 26, 1876.

? In re Bodenheim et al. 2 B. R. 419; s.c. 2 L. T. B. 64.

*In re Dodge, 1 B. R. 485; 3, c. 2 Ben. 847.

* In re Hughes, 1 B. R. 226; s. c. 2 Ben. 85; s.c.1L. T.B. 45.
° In re Dodge, 1 B. R. 435; 8. c, 2 Ben. 347.

°In re Solis, 3 B. R. 761; 8. c. 4 Ben. 148.

"In re Bodenheim et al. 2 B. R. 419; s.¢c.2L. T. B. 64.
DISCHARGE. 267

ruptcy, and include the day when the application can or
should be made, according to the phraseology of the stat-
ute, unless this last day falls on a Sunday, 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 must be reckoned
exclusive of that day also ($ 5018).

An involuntary, as well as a voluntary, bankrupt may
apply for a discharge.’ The application must be by a pe-
tition in the prescribed form,’ addressed to the judge, and
properly entitled in the cause. It should state the day
on which the petitioner was adjudged bankrupt, and the
date on which it is filed. If it is made within six months
from the date of the adjudication of bankruptcy, it must
allege either that no debts have been proved, or that no
assets have come to the hands of the assignee. A mem-
ber of a firm need not pray for a discharge from his part-
nership debts in precise words, for if he asks for a.
discharge from all his provable debts, he virtually prays
for a discharge from his partnership debts.2 The petition
must be signed by the petitioner, but need not be sworn
to. When it is sworn to, the affidavit is usually according
to the form appended to the petition, in involuntary bank-
ruptcy. The general practice is to file the petition in
court.* In some districts it is referred to the register, but
generally it is retained in court. At the time of filing the
petition the bankrupt must deposit money siough to
secure the costs of serving the notices upon the creditors.
A list of all creditors who have proved their debts must
also be obtained from the assignee or register, and filed
with the petition. If the assignee refuses to furnish such
list, the register, upon the application of the bankrupt,

 

1TIn re 8. D. Clark, 3 B. R. 16; s. c. 2 Biss. 73; in re Bunster, 5 B. R. 82;
s. c. 41 How. Pr. 406; 8s. c. 5 Ben. 242,

* Form No. 51. °In re Wm, H. Pierson, 10 B. R. 107.
“Tn re Bellamy, 1 B. R. 113; ¢.c. 1 Ben. 474,
268 DISCHARGE.

has the power to pass an order directing him to make it
out and deliver it to the bankrupt."

The court, as soon as it finds that the application is
properly filed, orders notice to be given by mail to all
creditors who have proved their debts, and by publica.
tion, at least once a week, in such newspapers as may be
designated, due regard being had to the general circula-
tion of the same in the district, or in that portion of the
district in which the bankrupt and his creditors reside,
to appear upon a certain day, appointed for that purpose,
and show cause why a discharge shall not be granted to
the bankrupt ($ 5109).

The order to show cause must be in the prescribed
form.’ It must have the seal of the court and the signa-
ture of the clerk, even when it is issued by the register,
and may be made returnable at his office. The newspapers
in which the notices are to be published must be desig-
nated, and be selected from among those named in the
rules of court.’ The rules provide that the second and
third meetings may be called at the same time that the
notices are sent to the creditors,* but these meetings are
now everywhere dispensed with in cases where there are
no assets. ;

The notices must be sent by the clerk,’ and should be
im the prescribed form.* These notices are only sent to
those creditors who have proved their debts.’ If no cred-
itors have proved their delts, the publication is the only
notice required.® A return is always made to the register.
The clerk’s certificate is sufficient evidence that the notices
were duly mailed.? Copies of the advertisements in the

 

‘In re Blaisdell et al. 6 B. R. 78; s. c. 42 How. Pr. 274; 8. c. 5 Ben. 420.

? Form No. 51. *In re Bellamy, 1 B. R. 98, 113; s.c. 1 Ben. 426, 474.

‘Rule XXV. ° In re Bellamy, 1 B. R. 98, 113; s. c. 1 Ben. 426, 474.

* Form No. 52.

"In re McIntyre, 1 B. R. 151; s.c. 1 Ben. 543; Morse y. Presby, 25 N. H.
299. * Anon, 1 B. R. 123.

° In re Townsend, 1 B. R. 216; s.c. 2 Ben. 62; 5.0.1 L. T. B. 2.
DISCHARGE. 269

newspapers are always filed with the return, and in some
districts are verified by the oath of the printer.*

If the application has been made within six months
from the date of the adjudication, the bankrupt must, upon
the return day or before the granting of the discharge,
procure and file a return of the assignee, certifying that, at
the date of the filing of the petition for a discharge, there
were either no assets in his hands or no debts proved, as
the case may be.” He must also appear before the reg-
ister, and subscribe an oath to the effect that he has not
done, suffered, or been privy to any act, matter, or thing
specified in the statute as a ground for withholding such
discharge, or as invalidating such discharge if granted
($ 5118). This oath is merely an item of indispensable
evidence, without which the discharge can not be eranted,
and should be taken and subscribed before the certificate
of conformity can be granted. It may, however, be pro-
duced and filed at the hearing. It should be administered
whether specifications have been filed or not.® No dis-
charge can be granted if the bankrupt dies before he takes
this oath. But if he dies after he has taken the final
oath, the discharge may be granted as of a date when he
was alive." When specifications are withdrawn after the
oath is taken, it must be again taken and subscribed after
the withdrawal.

After the oath has been taken, it is the duty of the
register to examine all the papers in the case, including
the clerk’s return of the service of the order to show cause,
and certify whether all the proceedings have been regular,

 

1 In re Bellamy, 1B. R. 98; 8.c. 1 Ben. 426.

*In re Bellamy, 1 B. R. 64; 8. c. 1 Ben. 390; s.¢c. 1 L. T. B. 22.
*TIn re Bellamy. 1 B. R. 98; s. c. 1 Ben. 426.

*In re Robert A, Sutherland, 1 Deady, 673.

*In re Pulver, 2 B. R. 313; s.c. 8 Ben. 65.

°In re O'Farrell, 2 B. R. 484; s.c.3 Ben. 191; s.c.1 L. T. B. 159.
" Young v. Ridenbaugh, 11 B. R. 563; s.c. 8 Dillon, 289.

*In re Machad, 2 B. R. 352.
270 DISCHARGE.

and whether the bankrupt has complied with all the re-
quirements of the statute. This is called the certificate of
conformity, and can only be made under a special order
of the court.! This certificate is made essential by the
requirement that no discharge shall be granted unless it
appears that the bankrupt has in all things conformed
to his duty under the statute, and is entitled under its
provisions to be discharged ($ 5114). The court must
take notice of its own record, not only of irregularities in
the proceedings, but of all other matters, which prevent
the granting of a discharge, and is legally bound to make
a thorough examination for the purpose of ascertaining
that no valid ground exists for withholding it. Any ad-
mission, in the course of an examination, of loss of money
by gambling, since the passage of the statute, prevents a
discharge.” These were matters that appeared upon the
face of the record, and were made the grounds for re-
fusing a discharge, although no creditor interposed an
objection.

Irregularities in the cours# of the proceedings affect
the jurisdiction of the court, and must be judicially no-
ticed. Thus, defects in the service of the warrant, whether
in the publication or in the mailing of the required no-
tices, or the reference of the case to the wrong register,
or an application either premature or too late, make the
proceedings void. In all such cases, all proceedings subse-
quent to the irregularity must be set aside, and the same
proceedings must, if possible, be had again with due regu-
larity. It certainly seems to be the better opinion that
the failure of the assignee to publish the notice of his ap-
pointment properly, or to call the second and third meet-
ings of creditors at the required times, does not affect the
regularity of the proceedings.®

 

‘In re Bellamy, 1 B. R. 98,113; sc. 1 Ben. 426, 474.
* Jn re Wilkinson, 3 B. R. 286. *In re Hall, 2 B. R. 192.
‘In re Littlefield, 3 B. R. 57; s.c. Lowell, 331; s.c. 1 L. T. B. 164.

*In re Littlefield, 3 B. R. 57; 8, c. Lowell, 331; s.c. 1 L. T. B. 164; con-
tra, in re Bellamy, 1 B. R. 64; s. c. 1 Ben, 390; 8. c. 1 L. T. B. 22.
DISCHARGE. 271

What the statute means by declaring that the bank-
rupt must conform to his duty under the statute has been
frequently considered, but never carefully defined. The
duty is the duty of the party as a bankrupt, and not his
duty simply as a debtor before he becomes a bankrupt.
For violations of his duty as a debtor, other penalties are
imposed; for violations of his duty as a bankrupt, the
penalty imposed is the withholding of his discharge. The
question to be determined, then, is what is the duty of a
bankrupt under the statute? It must be confessed that
this is difficult to define or determine, and the decisions do
not render much assistance. He is made at all times sub-
ject to the orders of the court (§ 5104), and it would
seem that this penalty might have been intended as a pun-
ishment for disobedience; yet it has been gravely ques-
tioned whether there is any other punishment in such case
except commitment for contempt.’ It certainly appears to
be a greater violation of his duty to disobey an order than
to be negligent in making the officers perform their duties;
yet he has been made responsible, in some cases, for a
failure of the assignee to perform his duties, such as to
publish the proper notice of his appointment,’ or to file his
account,’ or to properly notify creditors to attend meet-
ings for distribution.4 Those duties which the statute
specially imposes upon other persons can scarcely be said
to be duties of the bankrupt. He is only made responsi-
ble for an omission to perform his own duties, and not for
omissions of others to perform their duties, except so far
as a failure may affect the regularity of the proceedings
and the jurisdiction of the court to grant. a discharge.
The statute has imposed duties upon various officers and
other persons, but it has not, either expressly or impliedly,
made him a general supervisor to overlook and superin-

 

‘Tn re Littlefield, 8 B. R. 57; s.c. Lowell, 881; s.c.1L. T. B. 164.
* In re Bellamy, 1 B. R. 98; s. c. 1 Ben. 390.
* In re Pierce & Holbrook, 3 B. R. 258. ‘Tn re Bushey, 3 B. R. 685.
272 DISCHARGE.

tend their labors. It is his duty to file correct schedules,”
and a discharge should be withheld until he has complied
with this requirement. A discharge would probably
also be withheld for a failure to surrender his property to
the assignee, or to execute any necessary papers, OF for
fraudulently withdrawing himself from the jurisdiction of
the court. He is made responsible for the failure of his
wife to attend for examination, unless he can prove that
he was unable to procure her attendance.* No discharge
can be refused or delayed by reason of the non-payment
of any fees except the fee for his certificate of discharge?

When the order to show cause is made returnable
before the register, he must make a certificate of the pro-
ceedings, stating whether or not there is any opposition.
When specifications have been filed, the certificate of con-
formity should except the particulars covered by the speci-
fications!’ In those districts where a final examination
is made, it is generally held at this stage of the proceed-
ings; but generally there is no final examination, nor
any examination at all, unless specially ordered? If there
are no assets, or the assets have all been distributed, the
register must file all the papers in the case in the office of
the clerk of the district court, and these, together with
those on file in the clerk’s office, constitute the record in
each case. It is the duty of the clerk to cause them to
be bound together." The register must see that they are
filed. He ought not deliver them to the bankrupt, or
a creditor, or any person representing them.

Any creditor may file specifications against the grant-
ing of a discharge ($5111). There has been considerable
discussion as to whether a creditor must prove his debt

 

1In re Connell, 3 B. R. 443; in re Redfield, 2 Ben. 72.

2In re Van Tuyl, 2 B. R. 579; 8. o. 38 Ben. 237, * Rule XXX.

“In re E. Pulver, 2 B. R318; 8. c.3 Ben. 65. ° In re Brandt, 2 B. R. 215.
°U.S. v. Clark, 4B. R.59; s.c 1 L. T. B. 287; 8c. 8 L. T. B. 223.

7 Rule VIL.
i)
DISCHARGE. 273

before he can oppose the discharge, but the weight of
authority, as well as of argument, is against imposing
this requirement. The statute clearly gives to any person
who has a suit pending in a State court, at the time
of the commencement of proceedings in bankruptcy, the
right to keep aloof from the court of bankruptcy and
prosecute his action aiready instituted.’ Since he has this
right, he must necessari!y have the power to protect his
interests against the injurious effects of a discharge, which
might materially affect him. Yet, if he proves his debt
he surrenders his right ($5105). The justices of the
Supreme Court foresaw this, and provided that all per-
sons in interest might file specifications* In general a
person who has not proved his debt, is not deemed a
creditor, and has no interest in the mode of settling the es-
tate, or in the dividend, or in the acts or omissions of any
of the parties to the proceedings. But he has an interest
in the discharge, because if it is granted, he will be barred.
He may hold security which is inadequate for its full pay-
ment, and yet is not in a condition to be advantageously
liquidated, or he may have many other good reasons for
not proving his debt or concerning himself with the pro-
ceedings, and yet it may be of the greatest importance to
him that the bankrupt should not receive his discharge.
Upon principle, therefore, he ought to be heard on that
issue. The statute evidently contemplates it, because it
gives every creditor whose debt is provable, whether
proved or not, the riglit to set aside the discharge, at any
time within two years, on proving fraud, and that he had
no knowledge of the fraud until after the discharge was
granted. It is very difficult to maintain that the statute
debars a creditor from opposing the discharge before it is
granted, when it allows him to do so, afterward upon

 

? Samson y. Burton, 4 B, R, 1 ; 8.0.5 Ben, 825,
* In re Boutelle, 2 B, R. 129,
18
274 DISCHARGE.

showing good cause why he did not do it before.’ If he
does not prove his debt, he must show, by affidavit or
otherwise, what interest he has in the matter. The inter-
est must be pecuniary, and must be satisfactorily shown.’

A creditor of an estate of which the bankrupt was
administrator, may oppose the discharge if the probate
court has directed a dividend to be made among the cred-
itors of the estate? If a creditor who has assigned his
claim as a collateral will have any surplus coming to him
after the payment of the debt, he may oppose the dis-
charge The appointment of a receiver and an assignment
of the claim to him does not so divest the creditor of his
interest in the claim, but that he can oppose the discharge.”

Any creditor who desires to oppose the discharge
must enter his appearance on the day when the creditors
are required to show cause.’ This provision is considered
as enabling and not prohibitory. If the appearance is
not entered by the time specified, the right to appear will
be lost, but it may be entered before that time.’ A re-
quest to have an appearance entered, however, can not be
made until after the petition for a discharge is filed.*
This seems to be the orderly course of proceedings. The
creditors are not called upon to state their objections until
that time. Before that time it is not known whether the
bankrupt will apply for a discharge. The application, as
it were, institutes a new suit in which there are separate
pleadings and distinct issues. There certainly can not be
a defense until it is called for, and it is not called for until
the petition is filed. In some districts, however, it may

 

‘In re Murdock, 3 B. R. 146; s. c. Lowell, 362; s.c. 2 L. T. B. 97; in re
Smith & Bickford, 8 Blatch. 461; in re Samuel Book, 3 McLean, 317.

* In re Sheppard, 1 B. R. 439; s.c. 1 L. T. B. 49.

*Tn re John C. Tebbetts, 5 Law Rep. 259.

‘Tn re Traphagen, 1 N. Y. Leg. Obs. 98; s. c. 5 Law Rep. 323.

“In re Traphagen, 1 N. Y. Leg. Obs. 98; s. c. 5 Law Rep. 328.

* Rule XXIV. "In re Baum, 1 B. R. 5; s. c. 1 Ben, 274.

* In re McVey, 2 B. R. 257; in re Paget, 1 Penn. L. J. 367; in re George
Livermore, 5 Law Rep. 370.
DISCHARGE. 275

be made at any time after the commencement of the pro-
ceedings," ‘The appearance may be in person or by coun-
sel. The direction to enter the opposition may be either
verbal or in writing, but an entry of the opposition must
be made upon the docket.?

The proceedings may be adjourned * without requiring
creditors to enter their appearance. The rights of credit-
ors upon the adjourned day are the same in all respects
as upon the return day. An adjournment sine die
terminates the proceedings. The petition for a discharge
will remain good, but a new order to show cause must be
issued.° The proceedings are sometimes adjourned to
enable creditors to make a more complete examination of
the bankrupt or of witnesses.6 The application for an
adjournment may be made by a creditor, although a pro-
test has been made against the allowance of his claim."
No adjournment should be made except for good cause’
shown,’ and any abuse of this power by the register will
be corrected by the court.’ An appearance not duly au-
thorized,” or not entered within the prescribed time," will
be disregarded. But the court has a discretion in this
matter, and may allow an appearance to be entered even
after the’ time for filing specifications has expired. There-

 

‘In re Baum, 1 B. R. 5; 8. 0. 1 Ben. 274.
* In re McVey, 2 B. R. 257. * In re Mawson, 1 B. R. 271.

“In re Thompson, 1 B. R. 328; s. c. 2 Ben. 166; in re Tallman, 1 B. R.
540; 8. c. 2 Ben. 404; in re James M. Seabury, 10 B. R. 90; in re 8. S.
Houghton, 10 B. R. 337.

* In re Seckendorf, 1 B. R. 626; 8. c. 2 Ben. 462,

* In re Seckendorf, 1 B. R. 626; s. c. 2 Ben. 462; in re Belden & Hooker,
4 Ben. 225.

"Tn re Belden & Hooker, 4 Ben. 225.
“Tn re Mawson, 1 B. R. 271.

°In re W. E. Robinson, 2 B. R. 842; 8. c. 6 Blatch. 253; s. c. 836 How.
Pr. 176; 8c. 21. T. B, 18.

Tn re Eidom, 3 B. R. 106.

“Inre McVey, 2 B. R. 257; in re Smith & Bickford, 5 B. R. 20; in re
Robert A. Sutherland, 1 Deady, 573; Creditors y. Williams, 4 B. R. 580; 8.

c.2 L. T. B, 166; in re James M. Seabury, 10 B. R. 90; in re Joseph Bux-
baum, 13 B. R. 477.
276 DISCHARGE.

fore, if a creditor files specifications and then declines to
prosecute them, other creditors may be permitted to enter
their appearance in support of the specifications, although
the time for entering an appearance is passed.* If no ap-
pearance is entered, the proceedings may be continued
from time to time, to suit the convenience of the bank-
rupt. A day is appointed for the creditors to show cause,
but such appointment does not fix the day for hearing the
application for the discharge.’ The proper entry of an
appearance suspends further proceedings until the time
for filing specifications.

Tke specifications must be in writing and set forth the
grounds of the opposition ($ 5111). They must state the
name of the opposing creditor’ They must be filed
within ten days after the last day on which an appearance
can be entered, unless the time is enlarged by the district
courtt They can only be filed by those who have entered
their appearance properly. If they are not filed within
the prescribed time, they can not be entertained.” If a
creditor who has regularly entered his appearance fails,
through inadvertence, to file them within the prescribed
time, he may, on showing proper cause, be allowed to file
them nunc pro tunc® Although the register can not hear
any question concerning the allowance of a discharge
(§ 4999), the specifications may, nevertheless, be filed with
him.’’ The practice varies according to the place where
the order to show cause is returnable. If it is made re-
turnable in court, they are filed there; if it is made re-
turnable before the register, they are filed with him. He
proceeds with the case, notwithstanding the specifications,

 

 

‘To re 8. 8. Houghton, 10 B. R. 337; in re Lewis Levin, 14 B. R. 385;
contra, Creditors v. Williams, 4 B. R. 580; s.c.2 L. T. B. 166.

2 In re Robart A. Sutherland, 1 Dealy, 573.
>In re 8. 8. Houghton, 10 B. R. 337. ‘Rule XXIV.

*TIn re McVey, 2 B. R. 257. ° In re Grefe, 2 B. R. 329.
‘In re Bellamy, 1 B. R 98; s. c. 1 Ben. 426.
DISCHARGB. 207

until his duties are performed,' and then the case, by vir-
tue of the specifications, is removed into court.* If the
specifications are not filed within the prescribed time, and
the time for filing is not extended, the cause progresses as
though there were no opposition.’ If there is no opposi-
tion, the grounds for withholding a discharge are regarded
as not existing,’ unless they appear upon the face of the
proceedings.

The specifications must be in the prescribed form,’ and
set forth some act which isa valid ground for withholding
the discharge. This must be some.one of the acts specific-
ally designated by the statute ($ 5110), or some defect or
irregularity that defeats the jurisdiction of the court over
the debtor,’ or deprives it of the power to grant the dis-
charge in the present condition of the proceedings.’ Ob-
jections which go to the power of the court to grant the
discharge, may also be made by motion.’ Proceedings in
bankruptcy are strictly statutory proceedings, and if the
formal and jurisdictional requirements of the statute have
been met and complied with, the discharge can only be
refused for some ground specially set forth in the statute.
Hence the existence of fiduciary debts,’ or fraud in the
creation of the debt," is not a sufficient ground. By the
express terms of the statute, however, no discharge can be
granted if the bankrupt has willfully sworn falsely in his
affidavit annexed to his petition, schedule, or inventory,
or upon any examination in the course of the proceedings
in bankruptcy, in relation to any material fact concerning
his estate or his debts, or to any other material fact; or if
he has concealed any part of his estate or effects, or any

 

‘In re Puffer, 2 B. R. 43. * In re Mawson, 1 B. R. 265; s.c. 2 Ben. 122.
*In re McVey, 2 B. R. 257.

*In re Schuyler, 2 B. R. 549; 8..c. 3 Ben. 200; 8.c, 2 L. T. B. 85.

° Form No. 53. °In re Little, 2 B. R. 294; 8.c. 3 Ben. 25.
"In re Martin, 2 B.R. 548. *In re Woolums, 1 B, R. 496.

° In re Elliott, 2 B. R. 110.

9 Tn re Rathbone, 1 B. R. 324; s. c. 2 Ben. 188.
278 DISCHARGE.

books or writings relating thereto ; or if he has been guilty
of any fraud cr negligence in the care, custody, or delivery
to the assignee of the property belonging to him at the
time of the presentation of the petition and inventory, ex-
cepting such property as he is permitted to retain under
the provisions of the statute ; or if he has caused, permitted,
or suffered any loss, waste, or destruction thereof; or if,
within four months before the commencement of such pro-
ceedings, he has procured his lands, goods, money, or chat-
tels to be attached, sequestered, or seized on execution;
or if, since March 2, 1867, he has destroyed, mutilated,
altered, 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, or caused to be removed, any
part of his property from the district, with intent to de-
fraud his creditors; or if he has given any fraudulent
preference contrary to the provisions of the statute; or
made any fraudulent payment, gift, transfer, conveyance,
or assignment of any part of his property; or has lost
any part thereof in gaming; or has admitted a false or
fictitious debt against his estate; or if, having knowledge
that any person has proved such false or fictitious debt,
he has not disclosed the same to his assignee within one
month after such knowledge; or if, being a merchant or
tradesman, be has not, at all times, since March 2, 1867,
kept proper books of account; or if he, or any person in
his behalf, has procured the assent 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 ; or if he has, in contemplation of becoming
bankrupt, made any pledge, payment, transfer, assignment,
or conveyance of any part of his property, directly or in-
directly, absolutely or conditionally, for the purpose of
preferring any creditor or person having a claim against
DISCHARGE. 279

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 under
the statute in satisfaction of his debts; or if he has been
convicted of any misdemeanor under the statute ($ 5110.)

It is not sufficient for the specifications to follow and
adopt the language of the statute, nor will they be allowed
to be vague and general. They must be precise and defi-
nite, and allege facts so distinctly and specifically as so
advise the bankrupt of what he must be prepared to meet
and resist. They must particularize the facts descriptive
of the offense alleged as the ground for withholding the
discharge, setting forth as clearly as may be, the time,
place, person, property, both as to kind and quality, and
the manner in which the act was committed. The facts,
and not the evidence to prove them, should be stated.
The allegations should also be positive, and so framed
that an issue can be raised upon them.’

When the specifications deny the right of the bank-
rupt to apply in the district, they must aver that he re-
sided or carried on business, as the case may be, in some
other district for a longer period during the six months
next immediately preceding the filing of the petition than
he did in the district where the proceedings are pending.
An averment that he did not reside or carry on business
in the district for such six months is too broad. It may
be true, and yet he may be entitled to his discharge.” An
averment that he swore falsely in the affidavit to his peti-
tion, schedule, or inventory, or upon any examination,
must charge that such false oath was willful. If the alleged
false oath was taken in the course of an examination, it
must set forth the facts in regard to which it was taken,

 

_ ‘Inte Rothbone, 1 B, R. 294; s. c. 2 Ben. 188; in re Hidom, 3 B. R. 106;
in re Smith & Bickford, 5 B. R. 20.

*In re Burk, 3 B. R. 296; s.c. 1 Deady, 425; s.c. 2 L. T. B. 45.
280 DISCHARGE.

and charge that they were material.’ If the specifications
charge a concealment of property, they must state, with
some particularity, both as to kind and quantity, what
property was concealed? When the specifications charge
that the bankrupt destroyed, mutilated, or falsified his.
documents, papers or writings, they must aver that the
act was done with intent to defraud his creditors.? Speci-
fications which charge that he has not kept proper books
of account must aver that he was a merchant or tradesman,
Where the objection is that a cash account is wholly
wanting, the allegations may be general.* Thus, an alle-
gation that the books do not show what moneys were
received, or what disposition was made of the same, is
sufficiently specific to admit evidence that no such account
whatever was kept for a period of time.” If the objec-
tion, however, is that certain entries are wanting, or that
there are irregularities in the mode of keeping the books,
these must be specially pointed out.’ If the specifications
charge that the bankrupt has procured the assent of a
creditor to his discharge, or influenced the action of any
creditor at any stage of the proceedings, they must aver
that he did so by means of a pecuniary consideration or
obligation.’

As soon as the specifications are filed, the bankrupt
must determine what course he will pursue in regard to
them. If they are vague and general, he may move to
have them stricken out,’ or rely upon this defense at the
trial, for the court will always disregard them? If they

 

‘In re Rathbone, 1 B. R. 3244s. c. 2 Bon. 138; in re Hidom, 3 B. R. 106.
? To re Mawson, 1 B. R. 487; 8. c. 2 Ben. 882.

§In re William H. Marston, 5 Ben. 313.

“Tn re Littlefield, 3 B. R. 57; s. c. Lowell, 831; 8. c. 1 L. T. B. 164.

* In re Belis et al. 8 B. R. 496; s. c. 4 Bon. 58.

°In re Littlefield, 3 B, R. 67; s.c. Lowell, 881; s.c. 1 L. T, B.164.

"In re Mawson, 1 B. R. 437, 548; 8. c. 2 Ben, 832, 412,

* In re Waggoner, 1 Ben. 532.

° In re Rathbone, 1 B. R. 294; s,c 2 Ben. 138.
DISCHARGE. 281

are insufficient in law, he may demur to them) or file ex-
ceptions analogous to those allowed in equity. If the
creditor finds his specifications are defective, he may, upon
application, be allowed to amend them.2 Whenever the
bankrupt sees proper to make the general defense, he com-
monly does so by means of an answer.

As soon as tbe issues are made up, the. court must
make an order as to the entry of the case for trial on the
docket, and the time within which the same will be heard
and decided.* If the bankrupt is dilatory, the creditor
may move the court to set the case down for a hearing.?
The judge may, in his discretion, order any question of
fact to be tried at a stated session of the court (§ 5111).
A trial by a jury may be directed, and parties may ask for
it on the day assigned for a hearing, without having made
any previous demand.® The burden of proof rests upon
the opposing creditor.*. Evidence in support of the speci-
fications is the only evidence that can be introduced. The
creditor is bound by them, and can not go beyond them
or produce evidence outside of them.® If he has given his
assent to any act, he will be estopped from urging it as a
ground for withholding the discharge. Where it appears
to be due to justice, an amendment of the specifications
may be allowed at the trial.”

If the bankrupt is successful upon the trial of the
specifications, or if there is no opposition to his discbarge,
there is still, in cases of voluntary bankruptcy, another re-
quirement of the statute that must be complied with
before he can obtain his discharge. No discharge can be

 

‘In re MeVey, 2 B. R. 257.

? In re Rosenfield, 2B. R. 117; 3.c 1 L. T. B. 100.

?In re W. D. Hill, 1 B. R. 275; s. co. 2 Ben. 136. “Rule XXIV..
5 In re Robert A. Sutherland, 1 Deady, 573.

®In re Lawson, 2 B. R. 113.

7 In re Okell, 2 B. R. 105; in re George & Proctor, Lowell, 409.

8 Tn re Rosenfield, 2 B. R. 117; 5, c. 1 L. T. B. 100.

®° In re Schuyler, 2 B. R. 549; 8. c. 3 Ben. 200; s.c. 2L. T. B. 85.

10 Tn re Belis et al. 3 B. R. 496; s. c. 4 Ben. 53.
282 DISCHARGE.

granted to a voluntary bankrupt whose assets are not
equal to thirty per centum of the claims .proved against
his estate upon which he is liable as the principal debtor,
without the assent of at least one-fourth in number and
one-third in value of his creditors! A debtor who is put
into bankruptcy on the petition of his copartner is re-
garded asa voluntary bankrupt within the meaning of
this provision.2 The value of the assets is to be deter-
mined, not by an appraisement made at the time of the
filing of the petition’ but by such proceeds of the assets
as may be in the hands of the assignee at the time of the
hearing’ In ascertaining the amount, the sum necessary
to pay off and discharge all liens must be deducted.’ The
term “assets” is pot used to express the net balance
to be distributed among the creditors, but means the en-
tire estate of the bankrupt, without any deductions for
the costs or expenses of the proceedings.’ The statute
does not permit a fictitious or exaggerated valuation of
his assets by the bankrupt, while, on the other hand, if the
assets are, at a fair and just estimate, equal to thirty per
cent. of the debts proved upon which he is liable as prin-
cipal debtor, the discharge is not to be denied by reason
of any sacrifice made by the assignee or the creditors in
converting the assets into cash."

The time of the hearing of the discharge is the return
day of the order to show cause, whether that is the original
day or an adjourned day, and no claim proved after that time

 

* Act of June 22, 1874, § 9; in re James Derby, 12 B. R. 241.

? In re W. F. Wilson, 13 B. R. 253.

*In re Friederick, 3 B. R: 465; s. c, 1 L. T. B. 181; in re Van Riper, 6 B.
R. 573.

‘In re Webb et al. 3 B. R. 720; in re Borden & Geary, 5 B. R. 128; 8. ¢.
5 Ben. 228; in re Van Riper, 6 B. R. 573; vide in re Lincoln & Cherry, 7 B.
R. 334; 8. 0. 2 L. T. B. 241.

*In re W.H. Graham, 5 B. R. 155; in-re Van Riper, 6B. R. 578.

*Tn re Kahley et al. 6 B. R. 189; s. c. 3 Biss. 169; contra, in re Vinton, 7
B. R. 1388; in re Thompson, 2 Biss, 481.

7In re Thompson, 2 Biss, 481; in re Lincoln & Cherry, 7 B. R. 334; 8. ¢.
21. T. B. 241.
DISCHARGE. 283

can be counted among the claims that are to be taken into
account in computing the number requisite to a discharge.!
A party who purchases claims against the bankrupt at a
discount, holds them to their full amount.? Creditors who
have given a release in pursuance of an assignment made
before the commencement of the proceedings in bank-
ruptcy, can not be recognized as creditors, for the debts
maust be existing and unpaid at the time of the hearing.®
A liability as indorser is not a liability as principal debtor,
for such liability is secondary to that of the maker who is
the principal debtor.‘

A certificate of conformity can not be granted, unless
the bankrupt, before or at the time of hearing the applica-
tion for a discharge, tenders or files the assent in writing
of the requisite number of such creditors, or shows by the
return of the assignee, that his assets equal the required
proportion of such debt.’ A creditor who has given his
assent in writing, by which others have been presump-
tively influenced in giving theirs, has no absolute right to
withdraw it even on the day fixed for the hearing.°

It is also provided that no person who has been dis-
charged under the statute, and afterward becomes bank-
rupt 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 bank-

 

‘In re John B. Borst, 11 B. R. 96.

* In re Chas. P. Houghton, 5 Law Rep. 321.

*In re Aspinwall, 3 Penn. L. J. 212.

‘In re Lewis B. Loder, 4 Ben. 828.

* In re Bunster, 5 B. R. 82; 8. c. 41 How. Pr. 406; s. c. 5 Ben. 242; in re
Cretiew, 5 B. R. 423; s.c.2 L. T. B. 137.

°In re Brent, 8 B. R. 444; 8. o. 2 Dillon, 129.
284 DISCHARGE.

ruptey, or who has been voluntarily released therefrom
by his creditors, is entitled to a discharge in the same
manner and with the same effect as if he had not previ-
ously been bankrupt (§ 5116).

Whenever it appears that the bankrupt has in all
things conformed to his duty under the statute, and is en-
titled to a discharge, the court must grant him a certifi-
cate under its seal in the prescribed form ($ 5114). The
original order of discharge is retained in court, and a ©
copy is given to the bankrupt.1. When a partnership is
brought into bankruptcy, the certificate of discharge is
granted or refused to each partner in the same manner as
it would be if the proceedings had been against him
alone® ($ 5121).

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 require. A decree allowing a
discharge, however, will only be opened upon good cause
shown, and for a trial upon the merits, and not upon any
mere technical matter.

Any creditor or creditors of the bankrupt, whose debts
were proved or provable against the estate in bankruptcy,
who see fit to contest the validity of the discharge on the
ground that it was fraudulently obtained, may, at any time
within two years after the date thereof, apply to the court
which granted it to set aside and annul the same. ‘This
application must be in writing, and specify which, in par-
ticular, of the several acts mentioned in section twenty-
nine, it is intended to give evidence of against the bank-
rupt, setting forth the grounds of avoidance; and no
evidence will be admitted as to any other act, but the
application is subjéct to amendment at the discretion of

 

i In re Dean, 1 B. R. 249; 8. c. 1 1. T. B. 9; Pennell v. Percival, 13 Penn.

? Tn re Schofield et al. 3 B. R. 551,
* In re Dupee, 6 B. R. 89; Thomas v. Hunter, 8 McLean, 297.
DISCHARGE. 285

the court. The court must 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 may seem fit and proper. If, upon the hearing, the
court finds that the fraudulent acts, or any of them, set
forth by the creditor or creditors against the bankrupt,
are proved, and that the creditor or creditors had no
knowledge of the same until after the granting of the dis-
charge, judgment must be given in favor of the creditor
or creditors, and the discharge must be set aside and
annulled. But if the court finds that the fraudulent acts,
and all of them, are not proved, or that they were known
to the creditor or creditors before the granting of the dis-
charge, then judgment must be rendered in favor of the
bankrupt, and the validity of his discharge will not be
affected by such proceedings ($ 5120).

It appears to be the better opinion that the power
conferred upon the court of bankruptcy to annul the dis-
charge is exclusive, and that the discharge, like any other
judgment, can not be impeached, when brought in question
in a collateral action by any party who has been properly
notified of the pendency of the proceedings in bankruptcy.
The statute, it is true, declares that the discharge, if
granted, shall not be valid, if the bankrupt has committed
any of the acts which would constitute valid grounds for
withholding it (§ 5110); but this evidently contemplates
the means subsequently provided for annulling it. If this
were not so, it would be idle to summon creditors into a
special court to set up objections which could be alleged
and tried equally as well in any court. There must, more
over, be an end of litigation, a time beyond which certain
facts can not be contested. This is the design in appoint-
ing one special forum to hear and adjudicate upon such
facts, and if they are not raised in the prescribed mode, it
is certainly due to justice, and consonant with the intent
and spirit of the statute, to hold that they can not be raised
286 DISCHARGE.

elsewhere. The necessity of meeting and contesting them
in every court in which the discharge may be pleaded is a
hardship that Congress never intended to impose upon the
bankrupt, and is, moreover, so flagrantly unjust and con-
trary to all the ordinary principles of jurisprudence, that
nothing but the plainest and most imperative terms of the
statute could justify or warrant such a construction?

 

* Corey v. Ripley, 4 B. R. 502; s. c. 57 Me. 69; Oates v. Parish, 47 Ala.
157; Batchelder v. Low, 8 B. R. 571; s.c. 43 Vt. 662; Ocean Nat’l Bank v.
Olcott, 46 N. Y. 12; Parker v. Atwood, 51 N. H. 181; Way v. Howe, 4B.
R. 677; 8. c. 108 Mass, 502; Alston v. Robinett, 9 B. R. 74; s. c. 37 Tex. 56;
Hudson v. Bingham, 8 B. R. 494; 8. c.6 L, T. B. 826; Dusenbury v. Hoyt,
10 B. R. 318; 8. c. 14 Abb. Pr, (N. 8.) 182; s.c. 58 N. Y. 521; 3.0. 86N. Y.
Sup. 94; Reed v. Bullington, 11 B. R. 408; 8. c. 49 Miss. 223; Stephens v.
Brown, 11 B. R. 568; s. c. 49 Miss. 597; contra, Perkins v. Gay, 3 B. R. 772;
s.c.1L. T, B. 221; Beardsley v. Hall, 36 Conn. 270.
CHAPTER XVI.

MODE OF REVISING THE PROCEEDINGS OF THE COURTS IN
MATTERS OF BANKRUPTCY.

Apprats may be taken from the district to the circuit
courts in all cases in equity, and writs of error may be
allowed from the circuit courts to the district courts in
cases at law, under the jurisdiction created by the statute,
when the debt or damages claimed amount to more than
five hundred dollars (§ 4980). 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
Federal jurisprudence, is treated as a question of law, as
distinguished from equity or admiralty proceedings, it
may be carried to the circuit court by a writ of error;
but in either case, the debt or damages claimed must
amount to more than five hundred dollars! Any sup-
posed creditor, whose claim is wholly or in part rejected,
or an assignee who is dissatisfied with the allowance of a
claim, may also appeal from the decision of the district
court to the circuit court for the same district (§ 4980).
The proceedings in such appeals have been fully treated
of heretofore, and need not now be explained again.

These are the only provisions relating to appeals, and
from them it is apparent that appellate jurisdiction of de-
cisions of a court of bankruptcy is conferred upon the
circuit court in only four classes of cases: 1st. By appeal
in cases in equity decided in the district court under the
jurisdiction created by the statute; 2d. By writs of error

 

1 Ruddick v. Billings, 3 B. R. 61; s.c. 1 Wool. 330.
288 MODE OF REVISING

in cases at law, decided in the exercise of that jurisdiction ;
3d. 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 cred-
itor; 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 courts
and courts of bankruptcy, and other similar suits.’ The
cases at law in which a writ of error may be taken are not
merely suits, which the common law recognized among its
settled proceedings, but all suits of a similar kind in which
legal rights are-to be determined, without reference to the
particular form of procedure which may be adopted.’ No
appeal lies, when the issue is tried by the court without a
jury, from a decision upon a petition in involuntary bank-
ruptcy,® or upon a petition for a discharge,* or from an
order annulling an adjudication of bankruptcy,’ or from
the ratification of a sale by the bankruptcy court, or from
a decision in a summary proceeding.’ A writ of error has
been used to review decisions in actions of assumpsit,’
trover, and an adjudication of bankruptcy where the case
was tried before a jury.” But if an action at law is tried

 

‘In re Alexarder, 3 B. R. 29; s. c. Chase, 295; 8.c.2 L. T. B. 81; Mor-
gan v. Thornhill, 5 B. R. 1; 8. c 11 Wall. 65; in re York & Hoover, 4 B. R.
479; 8. c. 1 Abb. C. C. 503; s.c.1L. T. B. 290.

? Insurance Co. v. Comstock, 8 B. R. 145; s.c. 16 Wall. 258.
* In re O’Brien, 1 B. R. 176.

‘In re J. M. Read, 2 B..R. 9; Ruddick v. Billings, 3 B. R. 61; 8.0. 1
Wool. 330; Coit v. Robinson, 9 B. R. 289; s. c. 19 Wall. 274.

*In re Hall, 1 Dillon, 586.

E a tre York & Hoover, 4 B. R. 479; s.c. 1 Abb. C. C. 508; s3.c.1 L. T.
. 290.

™Samson v Blake, 6 B. R. 410; s. c. 9 Blatch. 879; Samson v. Clarke, 6
B. RB. 403; 8. c. 9 Blatch. 372.

® Street v. Dawson, 4 B. R. 207.
° Babbit v. Walbrun & Co. 4 B. R. 121; 5. c. 1 Dillon, 19.

*° Insurance Company v. Comstock, 8 B. R. 145; 8. c. 16 Wall. 258; Phelps
v. Clasen, 3 B. R. 87; 8. oc. 1 Wool. 204.
THE PROCEEDINGS. 289

before the district court without the intervention of a jury,
and no case is stated in the nature of a special verdict, a
writ of error will not lie.’ When the debt or damage
claimed does not exceed the sum of five hundred dollars,
the decree or judgment of the district court is final and
conclusive.? An appeal in cases in equity must be from
the final decree, and from that only. The language of
the statute plainly indicates that it is to be from a decree,
and not from any and every order in the progress of the
cause. If the decree declares a conveyance void, but
directs a reference to a master to take an account of the
rents and profits, and to make allowances affecting the
rights of the parties, it is not a final decree* The decree
must be final, not merely as to all rights in litigation, but
as to all parties. If it is not final as to one party, the
others can not appeal.’ No appeal is 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
opposite party in equity, within ten days after the entry
of the decree or decision appealed from, and unless the
appellant at the time of claiming the same, also gives bond
in manner required by law in cases of such appeals. The
appeal must be entered at the term of the circuit court
which is first held within and for the district next after
the expiration of ten days from the time of claiming the
same (§ 4981).

The right of appeal, as given by the statute, can neither
be enlarged nor restricted by the district or the circuit
court. The regulation of appeals is a regulation of juris-

 

Blair vy. Allen, 3 Dillon, 101.

* Knight v. Cheney, 5 B. R. 305; 8. c. 2 L. T. B. 205.

* Clark v. Iselin, 9 Blatch. 196; in re Edward A. Casey, 8B. R. 71; 8. ¢.
10 Blatch. 876.

* Platt v. Stewart, 47 How. Pr. 206.

* Platt v. Stewart, 47 How. Pr. 206.

19
290 MODE OF REVISING

diction. The circuit court has no jurisdiction of any ap-
peal in any case under the bankrupt law from the district
court, unless it is claimed, and bond is filed at the time it
is élaimed, and notice of ‘ given, as required by the stat-
ute, within ten days after entry of the decree or decision
appealed from.! The notice must be given to the opposite
party as well as to the clerk.’ If the requirements of the
statute have not been complied with, the appeal may be
dismissed upon the motion of the appellee® The words
which refer to the entering of the appeal at the next cir.
cuit are, however, merely directory. The circuit court
obtains jurisdiction by the filing and serving of the notice
of appeal.t What is required to be filed in the circuit
court within the ten days, is the appeal containing a state-
ment of the appellant’s claim, and a brief account of what
has been done in the district court, and the grounds of
appeal. It is not necessary that the transcript of the pro-
ceedings shall be filed within the ten days. The district
or circuit judge may, in a proper case, enlarge the time for
entering the appeal,’ or the time may be enlarged by
agreement.’ Although the rule is merely directory, still
if it is disregarded, the appellee has a prima facie
ground of dismissal. The district court will not grant a
reargument, so that an appeal may be taken from the
decree when re-entered, except, perhaps, in extraordinary
and extreme cases. But where the omission to take the

appeal in time arose from a mistake in selecting the rem-

 

‘In re Alexander, 3 B. R. 29; s. c. Chase, 295; s.c. 2 L. T. B. 81.
* Wood v. Bailey, 12 B. R. 132; s. c. 21 Wall. 640.

*TIn re Kyler, 8 B. R. 46; 8. c. 6 Blatch. 514; in re Coleman, 2 B. R. 671;
ss. c. 7 Blatch. 192; in re Place et al. 4B. R. Bal: 8. c. 8 Blatch. 302; Haw-
kins v. Nat?l Bank, 1 Dillon, 453; Sedgwick v. Fridenburg, 11 Blatch. 77.

‘ Baldwin v. Rapplee, 5 B. R. 19; Barron v. Morris, 14 B. R. 371.

® Barron v. Morris, 14 B. R. 871. ° Barron v. Morris, 14 B. R. 871.
* Baldwin v. Rapplee, 5 B. R. 19. ® Barron v. Morris, 14 B. R. 371.
° In re Troy Woolen Co. 6 B. R. 16; 8. c. 5 Ben. 413.
THE PROCEEDINGS. 291

edy, the district court may grant a review of the decree
so that a regular appeal may be taken.’

Appeals in equity from the district to the circuit court,
and from the circuit court to the Supreme Court, are regu-
lated by the rules governing appeals in equity in the
courts of the United States.’ If the appellant, in writing
waives his appeal before any decision thereon, proceedings
may be had in the court of bankruptcy as if no appeal
had been taken (§ 4983).

No writ of error is allowed unless the party claiming
it complies with the statutes regulating the granting of
such writs (§ 4981). The limitation of ten days applies
to writs of error as well as appeals, and due notice thereof
must be given in the same manner. The bill of excep-
tions must show on its face that it was taken at the trial.*
Questions of fact can not be re-examined on a writ of error.
It may be necessary to enable the court to see the princi-
ple of law that was decided, to make the facts, to some
extent, a part of the record by bill of exceptions, but it is
always the law decided that is subject to review, and not
the facts.> Ifa bill of exceptions is taken to the rejection
of certain evidence, it must set out the evidence so re-
jected,’ and if it does not, the defect can not be removed
by a petition for a writ of error which forms no part of
the bill of exceptions." A motion to dismiss a writ of
error can not be made before the return day.°

The only other mode of revising the decisions of the
courts of bankruptcy is by means of the supervisory
jurisdiction conferred upon the circuit court. The several
circuit courts of the United States, within and for the dis-

 

* Stickney v. Wilt, 11 B. R. 97; s. c. 23 Wall. 150. 2 Rule XXVI.

3 Insurance Company v. Comstock, 8 B. R. 145; 8, c. 16 Wall. 258; Coit
v. Robinson, 9 B. R. 289; 8. c. 19 Wall. 274.

4 Strain v. Gourdin, 11 B. R. 156.

* Ruddick v. Billings, 3 B. R. 61; s.c. 1 Wool. 330; Cragin v. Thompson,
12 B. R. 81; 8. c, 2 Dillon, 513.

®° Strain v. Gourdin, 11 B. R. 156. 7 Strain v. Gourdin, 11 B. R. 156.
* Globe Ins. Co. v. Cleveland Ins. Co, 21 1. R. R. 14.
292 MODE OF REVISING

tricts where the proceedings in bankruptcy may be pend-
ing, have a general superintendence and jurisdiction of all
cases and questions 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 ($ 4986). 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 circuit courts, the
appellate jurisdiction which has already been explained
and defined ; and, on the other, brings within that cate-
gory all decisions of the courts of bankruptcy, or the dis-
trict judge at chambers, which can not be thus reviewed
upon appeal or writ of error.’ Except in a regular action
at law, or suit in equity, or case of decision upon a disputed
claim, the circuit courts have a general and universal
supeniitendence of the proceeding of the courts of bank-
ruptcy,? and of all questions that may be decided by them.
They may review a decision upon a petition in involun-
tary bankruptcy where there is no jury trial,? or upon a
petition for a discharge,* or upon a petition for a stay of
proceedings in a pending suit,> or upon a petition for a
release from arrest,’ or upon a summary petition,’ or upon
a petition for the sale of property.’ When issues are, how-

 

*In re Alexander, 3 B. R. 29; 8. c. Chase, 295; s.c. 2 L. T. B. 81.

? Bill v. Beckwith, 2 B. R. 241; Littlefield v. Del. & Hud. Canal Co. 4 B.
R. 257.

* Perry v. Langley, 2 B. R. 596; Farren v. Crawford, 2 B. R. 602: in re
Craft, 2B. R. 111; 8. o. 6 Blatch. 177; Sutherland v. Kellogg, 2 Biss. 405;
Thornhill v. Bank, 5 B. R. 867; s. 0. i Wood, 1; in re Picton, 11 B. R. 420;
8. c. 2 Dillon, 548,

‘In re Reed, 2 B. R. 592; Ruddick v. Billings, 3 B. R. 61; s. c. 1 Wool.
330; in re Greenfield, 6 Blateh. 287 ; Littlefield v. Del. & Hudson Canal Co.
4B. R. 257; Coit v. Robinson, 9B. R. 289; s.c. 19 Wall, 274.

° Jn re W. E. Robinson, 2 B. R. 842; s. 6. 6 Blatch. 253; s c. 836 How. Pr.
176; 3.0.2 L. T. B. 18.

: In re J. H. Kimball, 2 B. R. 854; s. c. 6 Blatch. 292; s. c. 8 Ben. 554.

" Bill vy. Beckwith, 2B. R. 241; in re Kerosene Oil Co. 8 B, R. 125; 8. c.
6 Blatch. 521.

*In re Alexander, 3 B. R. 29; s. c. Chase, 295; 8.0.2 L. T. B. 81.
THE PROCEEDINGS. 293

ever, framed upon an involuntary petition, or a petition
for a discharge, and tried by a jury, they can not be re-
vised by this mode.’ Nor can questions which arise in
the progress of the case be reviewed, except by a writ of
error after a final judgment.? One creditor can not in this
manner obtain a revision of a decision of the district court
allowing the claim of another creditor” An interlocutory
order made by the district court in a suit in equity can
not be thus revised.* These examples are suflicient to
illustrate the character and extent of the jurisdiction. The
statute confers a complete supervision over all the pro-
ceedings of the court of bankruptcy within the limits above
mentioned. There is not only a general superintendence,
but, lest that word might not include everything, there
is a general jurisdiction conferred. This extends not only
to all cases, but to all questions arising under the statute.
In other words, the circuit court may review the whole case
and decide on it, or it may assume jurisdiction of any par-
ticular question arising in the progress of the case. It is im-
material whether the decision is an interlocutory order or
a final decree. In conferring jurisdiction upon the circuit
court for the district where the proceedings are pending,
the statute simply describes the particular circuit court in
which the jurisdiction shall be exercised, and not the state
of the matters té be revised. The jurisdiction of the cir-
cuit court to review summary proceedings is not limited
by any measure of the value of the property involved."
It is clear, however, that the superintendence and ju-
risdiction can only be exercised: over proceedings already

 

' Morgan v, Thornhill, 5B. R.1; s.c. 11 Wall. 65.
* In re Oregon B. P. & P. Co. 14 B. R. 394.

°In re Troy Woolen Co. 9 B. R. 829; s. c. 9 Blatch. 191; Bank v. Cooper,
9B. R. 529; s.c. 20 Wall. 171.

* Warren v. Tenth National Bank, 9 Blatch. 193.

® Ruddick v. Billings, 3 B. R. 61; s. c. 1 Wool. 330.
* Littlefield v. Del. & Hud. Canal Co. 4 B. R. 257.

* Samson v. Blake, 6 B. R. 410; 8. c. 9 Blatch. 3879.
294 MODE OF REVISING

pending in the court of bankruptcy.’ They are revisory
of cases and questions arising in the court of bankruptcy,
and contemplate 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 bankrupt 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 statute, 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 court of bankruptcy. But, in either
view, the questions, or cases presenting such questions,
must arise in the court of bankruptcy ; and their determi-
nation in the circuit court is either for the guidance or con-
trol of the court of bankruptcy. This is not a jurisdiction
to assume the conduct of the proceedings, or to specifically
enforce or execute the orders or decrees of that court.
For that purpose the court of bankruptcy has ample and
exclusive power.

The statute does not blend or confound the two courts
in the administration of the bankrupt law. The courts are
distinct under that statute, as under all others, and exer-
cise a separate jurisdiction, each in its own sphere. The
proceedings for a review of the decree of the court of
bankruptcy bring the decree, aud whatever orders are in-
volved 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 in-
stance. Ifthe decree is affirmed, it stands as the decree of
the court of bankruptcy, and not of the circuit court; and
is to be carried into due execution by the former, and not

 

‘In re Alexander, 3 B. R. 29; s. c. Chase, 295; s.c. 2L. T. B. 81.
THE PROCEEDINGS. 295

the latter! The circuit court can not assume the primary
exercise of the primary jurisdiction conferred upon the
court of bankruptcy, and will not during the pendency of
proceedings for a review, direct the marshal to take pos-
session of the property of the bankrupt, nor proceed to
ascertain and liquidate the assets.? The case or question
presented for revision must, moreover, be a case or ques-
tion fairly presented to and passed upon by the bankrupt
court. That is the court of first resort. To that court
first must the question and proofs be presented, and if that
court errs, 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.? The
exercise of this jurisdiction is not placed by the statute
under specific regulations and restrictions, like the pro-
ceeding by appeal or writ of error, nor has the Supreme
Court prescribed any rule concerning it. It must depend
upon the sound discretion of the court. Unreasonable
delay in invoking the superintending jurisdiction should
not be allowed, nor should such excessive rigor be exer-
cised that the ends of justice will probably be defeated.*
The statute provides that, except when special pro-
vision is otherwise made, the circuit may, upon bill, peti-
tion, or other proper process of any party aggrieved, hear
and determine such cases as in a court of equity ($ 4986).
The revisory jurisdiction may be invoked either by a
formal bill® or by a petition? addressed to the circuit
court, stating clearly and specifically the point or question

 

? Binninger et al. 3 B. R. 487; s. o. 7 Blatch. 159; s.c. 1 L. T. B. 183;
Clark et al. 3 B. R. 489; s. c. 7 Blatch. 159, 165.

? In re Clark et al. 1 B. R. 489; s. c. 7 Blatch. 165.
* Ala. & Chat. R. R. Co. v. Jones, 7 B. R. 145.

‘Tn re Alexander, 3 B. R. 29; 8. c. Chase, 295; 8. c. 2 L. T. B. 81; Little-
field v. Del. & Hud. Canal Co. 4 B. R. 257; Sutherland v. Kellogg et al. 2
Biss, 405; Bank v. Cooper, 9 B. R. 529; s. c, 20 Wall. 171; in re Edward A.
Casey, 8 B. R. 71; 8. c. 10 Blatch. 376.

® Marshall v. Knox, 8 B. R. 97; 8. o. 16 Wall. 551; Hurst y. Teft, 13 B.
R. 108; s. co. 12 Blatch. 217.

°In re J. M. Reed, 2B. R. 9.
296 MODE OF REVISING

decided in the district court, charging that the petitioner
is aggrieved thereby, and praying the circuit court to re-
view and reverse the décision of the court below. A
notice of appeal is not a proper process for invoking a re-
view of a decision of the district court! It has, however,
been intimated that the circuit court may exercise this au-
thority. either upon the statement of counsel or the admis-
sions of the parties, or upon petition and answer.” An al-
legation by a petitioner that he is aggrieved is not suffi-
cient, unless it be also alleged in what the error consists—
whether of law or fact; and the nature of the error should
be distinctly stated for the information of the circuit court,
and as a matter of notice to the opposite party. Appel-
late courts, even in appeals, proceed upon the ground that
the decree in the subordinate court is correct, and the bur-
den to show error is upon the appellant. The petition
must also state the relief desired. While the whole mode
of procedure is summary, and may be exercised in such
manner as shall be thought proper, yet care will be taken
that it is not so summary that wrong or injustice is done
to either party. The adverse party should be notified of
the pendency and object of the proceedings, and of the
day assigned for hearing the cause.” A service of the pe-
tion upon the attorney who acted as his counsel in the
original proceedings 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.®

Appeals in equity suits and in causes of admiralty and
maritime jurisdiction vacate the respective decrees in the
subordinate court, and remove the whole record into the

 

‘In re Edward A. Casey, 8 B. R. 71; s. c. 10 Blatch. 376.
2 Bill v. Beckwith, 2 B. R. 241.
* Littlefield v. Del. & Hud. Canal Co, 4 B, R. 207; Sutherland v. Kellogg

et al. 2 Biss. 405; Samson v. Blake, 6 B. R. 410; s. c. 9 Blatch. 379; in re
Edward A. Casey, 8 B. R. 71; 8. c. 10 Blatch. 376.

‘ Bill v. Beckwith, 2 B. R. 241. *Inre J. M. Reed, 2 B. R. 9.
° Ala. & Chat. R. R. Co. v. Jones, 5 B. R. 97.

RAGE Lchkee oe ek
ere _
THE PROCEEDINGS. 297

court of paramount jurisdiction ; but nothing of the kind
is done in a proceeding by a supervisory petition.!

The supervisory powers and jurisdiction granted to the
circuit court may be exercised either by the court, or by
any justice thereof, in term time or vacation ($ 4986).
The district judge can not sit as a member of the circuit
court in the exercise of its supervisory powers.? When
the case is heard in vacation, at chambers, the judge
may entertain and act upon the petition either in® or out
of the district. The statute declares that the circuit
court shall hear and determine the case as in a court of
equity. The statement of the grievance and the redress
desired is sometimes called a petition,» and sometimes a
bill® The questions presented for decision have generally
been merely points of law. In one case all the proceed-
ings in the court below, including the testimony, were
made a part of the bill." In another, the court is reported
to have heard the case anew,* but probably on the testi-
mony that was produced before the court of bankruptcy.
In another, leave was given to the parties to file affida-
vits.? From this it appears that the circuit court does not
hear the case strictly as an appellate court, but as a court.
of original jurisdiction, and hence may receive additional
testimony,’” and is not limited to the evidence produced
in the court below. It has, on the other hand, been held
that although matters of fact as well as matters of law
may be revised, yet it is not the intention of the statute
in this form of proceeding, to give a party a second trial
merely as such, but to secure to him an appellate tribunal

 

’ Littlefield v. Del. & Hud. Canal Co. 4 B. R. 257.

? Nelson v. Carland, 1 How. 265.

5 Ala. & Chat. R. R. Co. v. Jones, 5 B. R. 97.

* Markson y. Heany, 1 Dillon, 511; note.
°In re J. M. Reed, 2 B. R. 9. 6 Farrin v. Crawford, 2 B. R. 602.
" Perry v. Langley, 2 B. R. 596. * Farrin v. Crawford, 2 B. R. 602.
° In re Alexander, 3 B. R. 29; s. c. Chase, 295; s. c. 2 L, T. B. 81.

In re Bost. & Hart. R. R. Co. 6 B. R, 209; 8. c. 9 Blatch. 101; contra,
in re Great West. Tel. Co. 5 Biss. 359.
298 MODE OF REVISING

for the re-examination and revision of the rulings, orders,
and decrees of the district court, and for the reversal of
the same in case they are found erroneous.’ It has also
been held that a statement made by counsel, setting forth
the order or ruling complained of, and sufficient facts to
enable the circuit court to form an opinion upon the point,
and verified by the judge or clerk, might form the basis of
the petition, or that the whole case may be brought up by
a bill of exceptions? The petition may be amended.’
Advantage may be taken of defects in the petition by de-
murrer,* or by an answer.”

The statute does not declare in terms that the party
aggrieved, or any party, shall have the right to invoke
that superintendence and jurisdiction; but that is neces-
sarily 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 juris-
diction is itself discretionary, 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 dis-
miss their application. And the control of the court
over frivolous and vexatious appeals of any kind is not
questionable. But the court can not impose compulsory
dismissal as a penalty or consequence of alleged or sup-
posed misconduct 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

 

* Littlefield v. Del. & Hudson Canal Co. 4 B, R. 257; in re Great West.
Tel. Co. 5 Biss. 359.

* Sutherland v. Kellogg et al. 2 Biss. 405.

* Littlefield v. Del. & Hudson Canal Co. 4 B. R. 257; Sutherland v. Kel-
logg et al. 2 Biss. 405; Samson v. Blake, 6 B. R. 410; 8. ’c. 9 Blatch. 379.

* Lttlefield v. Del. '& Hudson Canal Co. 4 B. R. 257,
* Sutherland v. Kellogg et al. 2 Biss. 405.
THE PROCEEDINGS. 299:

the appellee to restrain him from prosecuting the proceed-
ing in bankruptcy... When the revisory jurisdiction of
the circuit court is invoked over a decision of the district
court upon a question of fact, the burden is on the peti-
tioner to show error in the decision. It is not sufficient
merely to show such a condition of the testimony in the
case that different minds, with equal fairness, might possi-
bly arrive at different conclusions, but it must be shown,
more nearly in analogy to the case of a motion for a new
trial, that the evidence can not support the finding.” 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
the weight of the testimony is better than can be afforded
by an inspection of the testimony when reduced to writ-
ing, will not be reversed without a very clear and decided
conviction that it is erroneous The circuit court sits as
a court of equity, and on an inquiry into questions of fact
is not bound to reverse upon strictly legal grounds, if sat-
isfied that the facts are correctly found, and that no injus-
tice has been done.* If there is nothing in the record to
show that the district court found anything upon a par-
ticular point, the circuit court can not consider that as a
question properly before it.”

In those judicial districts which are not within any
organized circuit of the United States, the power and
jurisdiction of a circuit court may be exercised by the
district judge ($ 4988). There appears to be some doubt
as to the mode in which the supervisory power may be
exercised in the territories. The statute provides that the
supreme courts of the territories shall have the same super-

 

' Binninger et al. 3 B. R. 489; s. c. 7 Blatch. 165; s.c.1L. T. B. 186.
* In re Dow, 6 B. R. 10.

* Samson v. Clark, 6 B. R. 403; s. c. 9 Blatch. 372; in re Cornwall, 6 B. R,
805; s.c. 9 Blatch. 114; in re Picton, 11 B. R. 420; s. o. 2 Dillon, 548.

* Samson vy. Blake, 6 B. R. 410; s. c. 9 Blatch. 379.
° In re McGilton et al. 7 B. R, 294; s. c. 8 Biss. 144.
300 MODE OF REVISING

visory jurisdiction over the acts and decisions of the jus-
tices thereof as is conferred upon the circuit courts over
proceedings in the district courts ($ 4987). The recent
amendment! makes the district courts of the territories
subject to the general superintendence and jurisdiction
of the circuit courts, but no circuit courts appear to have
been created that can exercise such jurisdiction.

In cases arising under the statute, no appeal or writ of
error is allowed in any case from the circuit courts to the
Supreme Court of the United States, unless the matter in
dispute in such case exceeds five thousand dollars (§ 4989).

In all cases where concurrent jurisdiction is vested in
the circuit and district courts ($ 4979), either party, where
the proceeding is instituted in the circuit court may, in a
proper case, if the matter in dispute is sufficient, remove it
into the Supreme Court for re-examination, when it has
proceeded to a final judgment or decree, in the same man-
ner as is provided for other controversies outside of the
bankrupt law.’ The final decrees and judgments rendered
in the circuit courts, in the exercise of their appellate juris-
diction over the judgments and decrees of the district
courts by appeal or writ of error (§ 4980), where the sum
or value exceeds five thousand dollars, may be re-examined
in the Supreme Court by appeal or writ of error in the
same manner as in other cases of a similar character.’
But if the circuit court in such a case dismisses a writ of
error for want of jurisdiction, the proper remedy is by a
writ of mandamus, and not by a writ of error. No appeal
lies to the Supreme Court from a decree of the circuit court
rendered in the exercise of its special supervisory jurisdic-

 

1 Act of 22d June, 1874, § 16.

2 Smith v. Mason, 6 B. R. 1; 8. c. 14 Wall. 419;8 0 5 LT. B. 7;
Knight v. Cheney, 5 B. R. 303; s, c. 2 L. T. B. 205; Morgan v. Thornhill,
B. R. 1; s.c. 11 Wall. 65.

* Knight v. Cheney, 5 B. R. 305; s. co. 2 L. T. B. 205; Morgan v. Thorn-
hill, 5 B. R. 1; 3. o. 11 Wall. 65; Coit v. Robinson, 9 B. R. 289; s. c. 19
Wall. 274; Ins, Co. v. Comstock, 8 B. R. 145; s. c. 16 Wall. 258.

‘Ins. Co. v. Comstock, 8 B. R. 145; 8. c. 16 Wall. 258.

oe
THE PROCEEDINGS. 301

tion,’ but if the circuit court decides that it has no juris.
diction to entertain a petition or bill 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 erroneous decision respecting the power of the circuit
court, and enabling the party to be heard on his applica-
tion.? 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 Supreme Court will reverse
the judgment or decree and remand the cause with direc-
tions to dismiss the suit. It is doubtful whether a judg-
ment rendered in the circuit court on an appeal from a
decision of the district court allowing or rejecting a claim *
can be revised. The Supreme Court can not entertain an
appeal from the district court,’ nor exercise a direct revis-
ing power over its decree.®

 

» Morgan v. Thornhill, 5 B.R. 1; s.c. 11- Wall. 65; Hall v. Allen, 9 B. R.
6; 8. c. 12 Wall. 452; Mead v. Thompson, 8 B. R. 529; s. c. 15 Wall. 635;
Coit v. Robinson, 9 B. R. 289; s, c. 19 Wall. 274; Nelson v. Carland, 1 How.
265. ®

? Bank v. Cooper, 9 B. R. 529; 8. c. 20 Wall. 171.

* Stickney v. Wilt, 11 B. R. 97; s. c. 28 Wall. 150.
* Coit v. Robinson, 9 B. R. 529; s. c. 19 Wall. 274.
* Crawford v. Points, 138 How. 11.

*In re William Christy, 3 How. 292; Crawford v. Points, 18 How. 11.
THE BANKRUPT LAW

NOTES OF DECISIONS.
THE BANKRUPT LAW.

CONSTITUTION.

Art. I, Szc. 8.—The Congress shall have power * * * #
to establish * * * * uniform laws on the subject of bank-
ruptcies throughout the United States.

Extent of the Power.

The subject is divisible in its nature into bankrupt 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 difficulty of discriminating with
any accuracy between insolvent and bankrupt laws would lead to the opinion
that a bankrupt 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 bankrupt law. (Sturges v. Crowninshield, 4 Wheat. 122.)

The word bankruptcy is employed in the Constitution in the plural and
as part of an expression ‘‘ the subject of bankruptcies.” The ideas attached
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. 2
N. Y. Leg. Obs. 185; in re Silverman, 4 B, R. 523; s. c. 1 Saw. 410; s.c. 2
Abb. C. C. 243.)

Bankruptcy bears a meaning co-extensive with insolvency, and is equiva-
lent to that wordin theConstitution. (Kuneler v. Kohaus, 5 Hill. 317; Sackett
vy. Andross, 5 Hill, 327; Morse v. Hovey, 1 Barb. Ch. 404; s.c. 1 Sandf. Ch.
187.)

The grant is a grant of plenary power over the “subject of bankruptcies.”
The subject of bankruptcies includes the distribution of the property 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 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. (Jn re Silverman, 4 B. R. 523; 8. c. 1 Saw. 410; 8. c. 2 Abb.
C. C. 243; tn ve Reiman & Friedlander, 11 B. R. 21; 8. c. 13 B. R. 128; 8. ¢.
7 Ben. 455; s. c, 12 Blatch, 562.)

The power of Congress extends to all cases where the law causes the prop-
erty 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 intermediate
legis'ation affecting substance and form, but ‘ending to further the great end
of the subject—distribution and discharge—is in the competency and dis-
cretion of Congress. (Jn re Edward Klein, 1 How. 277, note; s.c. 2 N.Y. Leg.

20
306 THE BANKRUPT LAW. [AR®. I.

Obs. 185; zn re Silverman, 4 B. R. 523; 8. c. 1 Saw. 410; sc. 2 Abb. C.
C. 243.)

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 discretion.
Cn 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 lati-
tude as the like power has been and may be by the British Parliament.
(Kuneler v. Kohaus, 5 Hill, 317; in re Edward Klein, 1 How. 277, note; s. c.
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 bankrupt laws had when the Consti-
tution was adopted. The power is general, unlimited and unrestricted over
the subject. (In re Silverman, 4 B, R. 523; s.c. 1 Saw. 410; s.c. 2 Abb. C.
C. 248: inre Reiman & Friedlander, 11 B. R. 21; s. c. 18 B. R. 128; 3... 7
Ben. 455; s. c. 12 Blatch. 562; Lhompson 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 Klein, 1 How. 277, note; s. c. 2N.Y.Leg. Obs. 185; Kuneler v.
Kohaus, 5 Hill, 817; in re California Pacific R. R. Co. 11 B. R. 198; in re
Silverman, 4 B. R. 523; s. c. 1 Saw. 410; s. c. 2Abb. C. C. 243.)

It is not necessary that a bankrupt law shall provide for the debtor’s dis-
charge. (Jn re California Pacific R. R. Co. i1 B. R. 193.)

Congress may establish a system of voluntary as well as involuntary bank-
ruptcy. (Loud y. Pierce, 25 Me. 233; Lalor v. Wattles, 8 Ill. 225; Kunzler v.
Kohaus, 5 Hill, 817; 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; Thompson
v. Alger, 53 Mass. 428; State Bank v. Wilborn, 6 Ark. 85; Keene vy. Mould, 16
Ohic, 12; Cutter v, Folsom, 17 N. H. 139; McCormick v. Pickering, 4 N. Y.
276; Rowan v. Holcomb, 16 Ohio, 463; Dresser v. Brooks, 8 Barb. 429; Hastings
r cae 2 Ind. 216; Reed v. Vaughan, 15 Mo. 187; in re Irwine,1 Penn. L.

. 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 trom contracts subsisting at the
time when the law was passed. (Huneler v. Kohaus, 5 Hill, 817; Suckett v.
Andross, 5 Hill, 327; im 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 ; MeCormick 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. Cn re Henry Brenneman,
Crabbe, 456.)

_ The power to enact a bankrupt law implies the power to make it effi-
cient. The end implies the means. (Russell v. Cheatham, 16 Miss. 703.)

Congress has the power not only to establish uniform laws on the subject
of bankruptcies, but also to commit the execution of the system to such
Federal courts as it may see fit, und to prescribe such modes of procedure
and means of administering the system as it may deem best suited to carry
the law into successful operation. (Sherman v. Bingham, 5 B. R. 84; 8. c. 7
B. R. 490; 8. c. 30. L. N. 258; Goodall v. Tuttle, 7B. R. 193; 8. c. 3 Biss.
219; Mitchell v. Manuf. Co, 2 Story, 648.)

Congress has the power to define what and how much of the debtor’s
§ 8.] CONSTITUTION. : 307

property shall be exempt from the claims of his creditors. (dn re Reiman
& Friedlander, 11 B. R. 21; 3. c. 138 B. R. 128; 8. c. 7 Ben. 455; 5. c. 12
Blatch. 562.)

Yo come within the constitutional provision a bankrupt law must be a
uniform law throughout the United States. A law which prescribes one rule
in ene district and a different one in another can not be regarded as a uni-
form 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 throughout
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 to Congress may be exercised or declined as the wis-
dom of that body shall decide. If, in the opinion 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 is not the mere existence of the power, but its exercise which is incompat-
ible with the exercise of the same power by the States. It is not the right to
establish these uniform laws, but their actual establishment which is incon-
sistent with the partial acts of the States. (Sturges v. Crowninshield, 4
Wheat. 122; Blanchard v. Russell, 18 Mass. 1; Farmers’ Bank v. Smith, 3 8.
& R. 63; Betis v. Bagley, 29 Mass. 572; Adums v. Storey, 1 Paine, 79; Pugh
v. Bussel, 2 Blackf. 294; Alewander vy. Gibson, 1 N. & McC. 480; contra,
Vanurem v. Hazlehursts,4N. J. L. 192; Oldens v. Ballet, 5 N. J. L. 466;
Golden v. Prince, 3 Wash. 318; Mason v. Wash, 1 Breese, 16.)

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. (Jn 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 author-
ized 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 legislation on
that part of the subject to which the acts of Congress may extend. (Sturges
v. Crowninshield, 4 Wheat. 122.)

The right of the States to pass a bankrupt law is not extinguished but
merely suspended by the enactment of a general bankrupt law. The repeal
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. (Sturges v. Crown-
inshield, 4 Wheat. 122.)

The bankrupt 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
bankrupt act; and all proceedings upon such cases commenced under the
State laws after that time are null and void. (Commonwealth v. O’ Hara, 1B.
R. 86; 8.¢,6 A. L. Reg. 765; Perry v. Langley, 1 B. R. 559; 8. c. 1 L. T.
B. 34; 8.0. 7 A. L. Reg. 429; Van Nostrand v. Carr, 2 B. R. 485; s. c. 30
308 THE BANKRUPT LAW. [ART. I.

Md. 128; Martin v. Berry, 2B. R. 629; 8. c. 87 Cal. 208; 8. c. 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. L 485 ; in re Lucius Eames,
8 Story, 322; Bishop v. Loewen, 2 Penn. L. J. 364; Griswold v. Pratt, 49 Mass.
16; Rowe v. Page, 13 B. R. 866; s. c. 54 N. H. 190.)

The State insolvent Jaws are not entirely abrogated. They exist and
operate with full vigor until the bankrupt law attaches upon the person and
property of the debtor. (Jn re John Ziegenfuss, 2 Ired. 463; Reed v. Taylor,
4B. BR. 710; s. c. 32 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 jurisdictions,
must be in conflict with each other. Though the modes by which the remedy
is administered may vary, yet, where the bankrupt act and the State insolv-
ent law have substantially the same scope and object, and act upon the same
persons and cases, the State insolvent law is suspended. The act of Congress
is both a bankrupt act and an insolvent act. (Martin v. Berry, 2 B. R. 629;
s. 0. 37 Cal. 208; s.c. 2 L. T. B. 180; Van Nostrand v. Carr, 2'B. R. 485; s.
c. 30 Md. 128.)

The jurisdiction of the bankrupt act does not depend upon the right of
the debtor to ultimately obtain a discharge. Jf his case comes within the
provisions of the bankrupt act, he can not obtain a discharge under 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,
2B. R. 485; s. c. 830 Md. 128.)

Ifa 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. 87 Cal. 308; s.c. 2 L. T. B. 180; Meekins, Kelly & Oo. v. Cred-
itors, 3B. R. 511; sc. 19 La. An. 497; in ve Eli Horton, 5 Law Rep. 462; in
ré Bela Judd, 5 Law Rep. 828; West v. Creditors, 5 Rob. [La.] 261; s. c. 8
Rob. [La.] 123; Dwight v. Simon, 4 La. An. 490; Larrabee v. Talbot, 5 Gill,
425; Lavender v. Gosnell, 12 B. R. 282; Longis v. Creditors, 20 La, An. 15.)

If the debtor was divested of his property under the State insolvent law
at the time of the adoption of the bankrupt law, the jurisdiction of the State
court is not affected thereby. (Judd v. Ines, 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 bank-
ruptcy were commenced should be stayed until an assignee is appointed.
(West v. Creditors, 4 Rob. [La.] 88; s. ¢. 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 con-
trol of his estate. (Martin vy. Berry, 2 B. R. 629; s. c. 37 Cal. 208; 8.6.2 L.
T. B. 180; Mcekins, Kelly & Co. v. Creditors, 8 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 in-
solvent law by the enactment of the bankrupt law before tle surrender was
ordered, divested the State court of its jurisdiction over cases previously
instituted, and no further proceedings can be had therein. (Fisk y. Mont-
gomery, 21 La An, 446.) ?

The State laws relating to insclvent corporations were superseded. The
State courts have jurisdiction us tar as the forfciture of the charter of a cor-
§ 8.] CONSTITUTION. 309

poration for insolvency is concerned; but witb the decree of forfeiture 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. 435; s. c. 5 B. R. 387; s. c. 1 Wood, 1; s.
c.1L. T. B. 156; s. 0.3 L. T. B. 38; in ve 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, ana the corporation is within the provisions of the
bankrupt law, the Federal courts sitting in bankruptcy have exclusive juris-
diction of the property, and the fact that a State law does not purport or
attempt to relieve the debtor from his debts can not be urged as a reason why
the State court should hold the assets and administer them after proper pro-
ceedings 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 insolv-
ent law, although it may not authorize the discharge of the debtor from
further liability. Ifthe fact of insolvency does not exist, the State court may
probably have the right to administer the assets as an incident to a proceed-
ing for the dissolution of the corporation, but when insolvency intervenes so
as to make the debtor a proper subject for the operation of the bankrupt
law, the exclusive jurisdiction of the bankrupt coart 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 (Jn re Merchants’ Ins. Co. 6B. R. 43; s. c. 8 Biss. 162; 8. 0.2 L.
T. B. 248: Thornhill et al. v. Bank of Louisiana et al. 3B. R. 485; 8. c.5 B. R.
367; s.c. 1 Wood, 11; s.c.1L. T. B. 156; s.c. 3 L. T. B. 38; in re Inde-
pendent Ins. Co. 6 B. R. 169, 260; Plutt v. Archer, 6 B. R. 465; s. c. 9 Blatch.
559; Shryock v. Bashore, 13 B. R, 481.)

A proceeding in bankruptcy is not the exclusive method of winding up
insolvent corporations. The bankrupt act does not ipso facto suspend State
laws for the collection of debts. (Chandler v. Siddie, 10 B. R. 286; s. ¢. 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. (Steel-
man Vv. Mattix, 836 N. J. 844; Shears v. Solhinger, 10 Abb. Pr. [N. 8.] 287; én
re Reynolds, 9 B. R. 50; s. c. 8 R. 1. 4853; Jordin v. Hall, 9 R. I. 218; in re
Rank, Crabbe, 493.) ;

If the distribution of the property is merely incidental to the release of
the person from imprisonment, and the debt is not discharged, the proceed-
ing 1s not a proceeding in bankruptcy. . (Steelman v. Matti, 86 N, J. 344.)

The bankrupt act can not affect the determination of a debtor’s right to
be discharged by taking the poor debtor’s oath, and of his liability to im-
prisonment by way of punishment for fraud, upon proceedings which were
commenced before the act took effect. (Stockwell v. Silloway, 100 Mass. 287.)

In an action on a bond given on the arrest of the debtor, and conditioned
that he will apply for the benefit of the State insolvent laws, a plea that he
has since obtained a discharge under the bankrupt law is a valid plea, unless
the debt is one that is not released by a discharge. (Hubert v. Horter, 14

.B. R. 480; 8. c. 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 undertak-
ing is in the alternative, either to obtain a discharge or to return to the con-
310 THE BANKRUPT LAW. [ART. I.

dition 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 v. Mattiz, 86 N. J. 344.)

A State insolvent law which merely protects the person from imprison-
ment, without affecting contracts, is not superseded, although it also provides
for the distribution of the debtor’s property. (Sullivan v. Hieskill, Crabbe,
525; s. c. 4 Penn. L. J. 171.)

A State law providing for the arrest and punishment of fraudulent debtors
is not suspended by the bankrupt law. (Scully v. Kirkpatrick, 33 Leg.
Int, 184.)

The bankrupt law does not supersede the State laws relating to the settle-
ment of the insolvent estate of lunatics, spendthrifts, or deceased persons.
(Hawkins v. Learned, 54 N. H. 333.)

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 bankrupt law. (Zbersole v. Adams,
13 B. R. 141; s.c. 10 Bush, 83.)

The bankrupt law does not supersede a State law regulating assignments
for the benefit of creditors. (Mayer v. Hillman, 13 B. R. 440; s. c. 1 Otto,
496; inre Hawkins, et al. 2 B. R. 878; s. c. 34 Conn. 548; Beck v. Parker, 65
Penn. 262; Maltbie v. Hotchkiss, 5 B. R. 485; s, c. 88 Conn. 80.)

The law allowing assignments for the benefit of creditors is not a part of
the insolvent laws, and is not superseded by the bankrupt law. (Cvok v.
Rogers, 18 B. R. 97; s. c. 81 Mich. 391; s.c. 14 A. L. Reg. 633.)

An assignment made asa part of the machinery of a State insolvent law,
and deriving all its validity and efficacy from the statute is void. (Shryock v.
Bashore, 13 B. R. 481; Lowe 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.)

The insolvent. laws are no further suspended than they seek upon notorious
grounds to seize and distribute the effects of the debtor among his creditors
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 ; 8. c. 97 Mass. 246; Martin v. Berry, 2 B. R. 629;
s.c. 37 Cal. 208; 8. c. 2 L. T. B. 180; Chamberlain v. Perkins, 51 N. H. 336.)

The State laws are operative to some extent and forsome purposes. They
are clearly operative in all cases which are not within the provisions of the
bankrupt law. (Shepardson’s Appeal, 36 Conn. 23; Clarke v. Ray, 1 H. & J.
318; in re Winternitz, 4B. R. (quarto), 127; s. c. 18 Pitts. L. J. 61.)

The bankrupt 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 case is not within the pur-
view 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
pie the oe are more or less than that amount. (Shepardson’s Appeal, 36

onn, 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 bankrupt act, such as debts
created by the fraud of the bankrupt. Where the bankrupt act expressly
excepts a class of cases, it must have been the intention of Congress not to
§ 8.] CONSTITUTION. 311

interfere, in such specified class, with the laws of the several States, A party
imprisoned under a judgment founded upon a fraudulent debt, may take the
benefit of the State insolvent laws for the purpose of obtaining a release

and discharge from that debt. (Zn re Winternitz, 4 B. R. (quarto), 127;
s. co. 18 Pitts. L. J. 61.)

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 proceedings
in involuntary bankruptcy, and authorizes the distribution of the property
equally among all the creditors, is superseded. (Tobin v. Trump, 3 Brews. 288.)

There is a material distinction between discharging a debtor and dis-
tributing his assets among his creditors. The bankrupt 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 bankrupt law, some statutory provis-
ions for the distribution of the effects of insolvent debtors among their credit-
ors, and it can hardly be supposed that Congress intended to repeal or suspend
those State laws, except so far as was necessary for the accomplishment of the
main object in view, and that necessity may well be limited so 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 bankrupt court, within the
time limited, asserts its jurisdiction, the proceedings in the State court are
thereby superseded. Should the State courts attempt to grant a certificate’
of discharge to an insolvent debtor, no court would give any effect to it.
(Maltbie v. Hotchkiss, 5 B. R. 485; 8. c. 88 Conn. 80; Reed v. Taylor, 4 B. R.
710; 8. c. 32 Iowa, 209.)

Asa bankrupt law merely suspends State insolvent laws without repeal-
ing them, they revive and are in force on the repeal of the bankrupt law, and
need not be reenacted. (Lavender v. Gosnell, 12 B. R. 282.).'

The bankrupt law must prevail in cases where it conflicts with the ordi-
nance of 1787. (Stow v. Parks, 1 Chand. 60.)
TITLE XIII.
THE JFUDICIARY.
CHAPTER THREE.

DISTRICT COURTS.

SzEc. SEc. Seok, Gentes
563.—Original jurisdiction. 648.—Mode of trial in circuit courts.
566.—Mode of trial in district courts. 9711,—Jurisdiction exclusive.

Src. 563.—Eighteenth. * * * * The district courts are consti-
tuted courts of bankruptcy, and shall have in their respective
districts original jurisdiction in all matters and proceedings in
bankruptcy.

Rule of Interpretation.

The words of the bankrupt 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 statute by the courts of the country whose
legislature enacted it, is adopted. The Supreme Court has more than once
applied this rule where an American 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 uniform and con-
sistent sense, if that may be done ; or,in other words, the construction must
be made upon the entire statute, and not merely wpon disjointed parts of it.
(Hall v. Deshler, 71 Penn. 299.)

In the construction of the law the principle of uniformity must not he
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 vy, Adums, 2 Day, 70.)

While a construction of a Federal law hy the Federal courts other than
Supreme, is not conclusive, it is entitled to careful consideration in the State
courts. (“rank vy. Houston, 9 Kans, 406.)

The English decisions properly apply as rules of construction. (Zoosevelt
v. Mark, 6 Johns. Ch. 266; Livermore v. Bagley, 3 Mass. 487; Murray v. De
Rottenham, 6 Jolms. Ch. 52; Tucker v. Oxley, 5 Cranch, 84; 8 c. 1 Cranch C.
C. 419 5 Globe Ins, Co. v. Cleveland Ins, Co, 14 B. R. 3811; 8.0. 8C. LN.
258.)
§ 563. ] NOTES OF DECISIONS. 313

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 un-
doubtedly in this sense that the words are used in the act; that is, courts
possessing power and jurisdiction peculiar to themselves. The only difference
1s, that here, instead of creating a new organization, an organization already
existing, known as the district court, is taken up and made use of in lieu of
such new organization. But the district court, when acting as a court of
bankruptcy, is none the less a separate and distinct court, exercising powers
and jurisdiction separate and distinct from its powers and jurisdiction as a
district court, than if it were such separate and distinct organization. (In re
Norris, 4 B. R. 85; s.c. 1 Abb. C. C. 514; 8.c. 1 L. 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 ex-
empted from the operation of the act, passes to the assignee. This is equally
true of property under mortgage, as of that which is unincumbered. Debts,
whenever payable, and creditors, wherever residing within the United States,
are within the operation of the act. The bankrupt court is invested with
this jurisdiction over the bankrupt and his estate, and over creditors who are
brought involuntarily into it, in order to administer the estate for the benefit
of all the creditors according to their respective rights. Thus, it is plain
beyond controversy, that the property of the bankrupt, though situate in
another State, and though mortgaged by the bankrupt, prior to the institu-
tion of proceedings in bankruptcy, is within the jurisdiction and under the
control of the bankrupt court. (Markson et al. v. Heaney, 4 B. R. 510; 8. ¢.
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. (Jn ve Robert Morris,
Crabbe, 70; Clurk vy. Binninger, 3 B. R. 518; 8. c. 88 How. Pr. 341; 8.0.8 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 bankrupt law in England. (Jn 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
bankrupt law, where full and complete jurisdiction over an extensive subject
is given to a court constituted for the purpose. (Jn re California Pacific R.
R. Co, 11 B. R. 193.)

In enjoining upon the district court to take cognizance of, and administer
the bankrupt law, Congress must be accepten to intend that, in every partic-
ular 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 lawgiver, in adding to the range
of their employment, must be supposed to contemplate that they will coa-
tinue the use of their customary powers, unless he specially limits and restricts
that use. (Jn re Barney Corse, 1 N. Y. Leg. Obs. 231; ine California Pacific
R. R. Co, 11 B, R. 193.)

The district court has jurisdiction of two distinct kinds: ist. As a court
of bankruptcy, over the proceedings in bankruptcy initiated by the petition
and ending in the dlistribution of assets among the creditors, and the discharge
or refusal of a discharge to the bankrupt; 2d. As an ordinary court over
314 THE BANKRUPT LAW. [§ 563.

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 v. Drake, 13 B. KR. 472.)

The jurisdiction of the district courts, extends to all matters and proceed-
ings in bankruptcy, without limit. When the act says that they shall have
jurisdiction in their respective districts, it means that the jurisdiction 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 bank-
ruptcy without limitation. (Lathrop v. Drake, 13 B.R. 472; 8.c, 1 Otto, 516;
Burbank v. Bigelow, 14 B, R. 445.)

The words, “in their respective districts,” must receive their usual ordi-
nary signification, and manifest a purpose and intent in Congress to restrict
and limit the authority and jurisdiction of the district courts in bankruptcy
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 matters in bankruptcy, and there is no limit
to the subject-matter over which the court has jurisdiction, yet they are ex-
pressly confined and restricted in its exercise to the limits of their own terri-
tory, and enjoy no other or greater power or authority outside of their own
districts than they had before the bankrupt act was passed. They can not
summon parties before them from without their districts. (Paine v. Calduell,
6B. RB. 558; s.c. 29 Leg. Int. 284; in re Hirsch, 2 B. R. 3; 8. c. 2 Ben. 493;
s.c. 1 L. T. B. 92; Markson et al. v. Heaney, 4 B. R. 510; 8.0, 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 bankrupt act shows that Congress intended to
provide for the complete administration of the bankrupt system in the Fed-
eral 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 proceedings 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; 8.0.38 C. L. N. 258; Goodall v. Tuttle, 7 B. R. 193;
s.c. 3 Biss. 219; in ve James Martin, 5 Law Rep. 158; Moore v. Jones, 23 Vt.
739; contra, Jobbins v. Montague, 6 B. R. 509; in re Richardson, 2 B. R. 202;
s, c. 2 Ben. 617; 8. ¢c. 2 L. T. B. 20; Markson v. Heaney, 4 B. R. 510; 8.0. 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 parties
from interfering with the debtor's property. (Jn 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 reasonable
charges and expenses incurred in obtaining the judgment. (Moore v. Jones, .
28 Vt. 739.)
8§ 566, 648. | NOTES OF DECISIONS. 315

The attorney for the bankrupt can not be allowed for services rendered in
opposition to a motion made by the assignee in the State court for leave to
appear and prosecute the suit in his own name. (Moore v. Jones, 23 Vt. 789.)

A State court, in a collateral action, may inquire into the jurisdiction cf

the district court as a court of bankruptcy. (Chemung Canal Bank v. Judson,
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 in-
ferior court in the technical sense of that term, and its jurisdiction need not
appear on the face of the proceedings. (Chemung Canal Bank v. Judson, 8
N. Y. 254; Ruckman v. Cowell, 1 N.Y. 505; Reed v. Vaughn, 10 Mo. 447; 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 sub-
ject-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; 8. c. 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 rendering 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; 8. c. 13 B. R. 885; 8. c. 64 Barb. 485; 8.0. 53 N.Y.
123; s.c. 1 Otto, 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; 8. 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 vy. 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 judgment on that
point can not be urged as a defect of jurisdiction in a collateral action.
(Chemung Oanal Bank v. Judson, 8 N. Y. 254.)

Sno. 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 provided in pro-

' *

ceedings in bankruptcy, shall be by jury. * * *

CHAPTER SEVEN.

Src. 648.—The trial of issues of fact in the circuit courts shall
be by jury, except in cases of equity and of admiralty and mari-
time jurisdiction, and except as utherwise provided in proceedings
in bankruptey. * * * *
316 THE BANKRUPT LAW. [§ 711.

CHAPTER TWELVE.

Seo. 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 baukruptey.

The jurisdiction thus given depends wholly upon the act, and is necessarily
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 onea bankrupt, thereby vest-
‘ing title to his property in an assignee appointed pursuant to the act. (Cook
v. Whipple, 9 B. R. 155; 8. c. 55 N. Y. 150.)

By the proceedings and adjudication, jurisdiction is obtained of the bank-
rupt 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; 8. c. 3 Biss. 219.)

A State court, on the application of the debtor, may enjoin the petitioning
creditor from prosecuting a fraudulent and oppressive petition in bankruptcy
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.c. 46 How. Pr. 255.)

No State court can by any process prevent a party from applying to the
dlistrict court for the benefit of the provisions of the bankrupt law. (Watson
v. Citizens’ Savings Bunk, 11 B. R. 161; Pidlingin v. Thornton, 12 B. R. 92; 5. ©.
49 Geo. 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 voluntary
case, for it has no exclusive power over the property until there is an adjudi-
cation. (Un re W. C. H. Waddell, 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 sit-
ting in bankruptcy, and the officer appointed to manage it is accountable to
the court appointing him, and to that court alone. No court of an inde-
pendent State jurisdiction can withdraw the property surrendered, or deter-
mine in any degree the manner of its disposition. (Jn ve Barrow, ve Loeb,
Simon & Co. ve Winter, 1B. R. 481; s.c. 1 L. T. B. 63; in ve Vogel, 2B. R.
427; s.c. 3B. R. 198; 8. c. 7 Blatch. 18; s.c.2.L. T. B. 154; in re People’s
Mail Steamship Co. 2 B. R. 553; s. c. 3 Ben. 223; in re Kerosene Oil Co. 2
B. R. 528; 8. c. 3 Ben. 35; sc. 2L. 7. B. 79; Brock v. Lerre!, 2 B. R. 648;
Pennington v. Sale & Phelan ct al. 1 B. R. 572; Jones v. Leach ct al. 1B R.
595; in re Wallace, 2 B. R. 134; s c. 1 Deady, 433; Buckingham v MeLean,
ae 185; s.c, 15 How. 151; Wetson v. Citizens’ Savings Bank, 11 B.

. 161.)

_ Any interference with the property, while so in the custody of the court,
is liable to be punished asa contempt (dn re Vogel, 2 B. R. 427; s. 0. 8B.
R. 198; 8s. ¢. 7 Blateh. 18; s.¢. 2 L. 7. B. 154.)

From the time of the filing of the bankrupt’s petition, the property is in
the custody of the bankrupt court, and at least from the time of the appoint-
ment of the assignee, the possvssion of it by the bankrupt is, in law, the
§ 711.] NOTES OF DECISIONS. 317

possession of it by the assignee. (In re J. M. Rosenberg, 3 B. R. 180; 8. c.
3 Ben. 366.)

The district court would fail in its duty if it were to suffer the possession
of the assignee to be forcibly displaced by a third person, although using the
form of the process of a State court, ina suit to which the assignee is not a
party, and in which the title of the assignee is not in question, but where the
property would be subjected to such fate as a contest between two strangers
to the proceedings in bankruptcy might involve. (Samson vy. Blake, 6 B. R.
410; s.c. 9 Blatch. 379.)

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 without such
proceeding, may compel its return. (Samson v. Blake, 6 B. R. 410; s.c. 9
Blatch. 379.)

A party who holds a claim that is not provable need not apply to the
district court for leave to issue an execution. (Black v. McClelland, 12 B. R.
481; 8.0.7 C0. 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; 8. c. 6 N.Y.
Supr. 346.)

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, inter-
ests and things in action which belonged to the debtor on the presentation
of the petition. From and after the filing of the petition, therefore, creditors
can acquire no interest by receivership, or otherwise, in the property of the
‘debtor which the decree in bankruptcy will not displace or annul. (Buchanan
v. Smith, 4 B. R. 397; 8. ¢. 7B. R. 513; 8. c. 8 Blatch. 1583; s.c. 16 Wall.
277, Stuart v. Hines, 6 B. R. 416; s.c. 33 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 v. Rockey, 3 McLean, 235.)

The levy of an attachment after the commencement of proceedings in
bankruptcy is absolutely void. (Stuart v. Hines, 6 B. R. 416; s. c. 83 Iowa,
60; 8.0.5 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 adjudica-
tion. (Phillips v. Helmbold, 26 N. J. Hq. 202.)

The issuing of an injunction out of the district court, restraining a pur-
chaser and the sheriff from Uitpusiue of goods, does not confer such exclu-
sive jurisdiction over the subject as to prevent the purchaser from instituting
an action against the sheriff. (Huthaway v. Lrown, 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 proceeds, 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 claimant. If a levy is
made after the commencement of proceedings in bankruptcy, 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. (Busi’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 statute
318 THE BANKRUPT LAW. [§ 711.

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. (Jn re Enoch Steadman, 8 B. R. 319.)

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 ji. fa. the sheriff had made a levy
previously to the commencement of proceedings in bankruptcy. The sheriff
has his remedy by an action of trover, or he may institute the proper pro-
ceedings in the bankrupt court, to which the assignee is amenable. (Hill v.
fleming, 89 Geo. 662.)

A creditor may proceed in a State court to reach property of the bankrupt
which the assignee has abandoned as being a burden rather than a benefit.
(Rugely v. Robinson, 19 Ala. 404.)

A bankrupt who has received a discharge is not entitled to file an ob-
jection 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 surplus
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. Stephens, 7 Law.
Rep. 281.)

Claims against the property of the bankrupt, so long as it remains in
the possession ef the bankrupt court, can only be enforced in the district
court sitting as a court of bankruptcy. (dn re People’s Mail Steamship Co.
2B. R. 558; s. c. 3 Ben. 226; Jones v. Leach et al. 1 B. R. 595; Davis, Assig.
of Bittel et al. 2B. R. 392; in re Kerosene Oil Co. 2 B. R. 528; s.c. 3B. R.
125; s. c, 3 Ben. 35; 8. c. 6 Blatch. 521; 8. c. 2 L. T. B. 79; in ve 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 bankrupt court for relief, 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 bankrupt court if they do sue. The bankrupt court will
insist upon its right to administer and distribute the property. Parties should
understand that they have no right to commence suits against an assignee to
affect the property, for, as he is accountable to the bankrupt court for the
property, it is the duty of the court to protect him in the possession. The
Federal courts sedulously avoid all interference 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 not
permit persons through process issuing from State courts to interfere with
impunity with property so in the possession of the Federal courts or their
officers. (dn 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; 8. c. 6 C. L. N. 27.)
S711, NOTES OF DECISIONS. 319

A subsequent sale, whether under judgment or mortgage, without the
consent of the bankrupt 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 bankrupt court. (Jn ve Cook & Gleason, 3 Biss. 116.)

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-
ment 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 made on this petition for the sale of the property to satis!y the lien
of the petitioner. The rights of the creditor will be preserved, and all in-
terference with the custody or jurisdiction of the bankrupt 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; 8. c, 103 Mass. 233; in re Cook &
Gleason, 3 Biss. 116; Douglass v. St. Louis Zine Co. 56 Mo. 388.)

The following proceedings, instituted after the commencement of proceed-
ings 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. (Penning-
ton v. Sale & Phelan et al. 1B. R.572; Jones v. Leach et al, 1 B. R. 593; in
re Wallace, 2 B. R. 134; s. c. 1 Deady, 483; im re John 8. Foster, 2 Story,
181; in re Bellows & Peck, 3 Story, 428.)

Proceedings by a mortgagee to foreclose a mortgage on the property of
the bankrupt. (Jn re Kerosene Oil Co. 2 B. R. 527; -8. c. 3 B. R. 125; 8.0.
3 Ben. 85; 8. c. 6 Blatch. 521; s.c.2L. T. B. 79; in re Snedaker, 3 B. R.
629; Markson v. Heaney, 4 B.R. 510; 8. c. 1 Dillon, 497; Whitman v. Butler,
8 B. R. 487; Buckingham v. McLean, 3 McLean, 185; 8. 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; 8,0. 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. 643; in re Wynne, 4 B. R. 23; 8. c. Chase, 227; s.c.2 L. T.
B. 116; 8.0. 9 A. L. Reg. 627; vide Butler v. Morgan, 8 W. & S. 53.)

Proceedings under a State insolvent law. (Jn 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 aguinst his prop-
erty. 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 bankrupt act, as auxiliary for
the preservation of the bankrupt’s interest for the benefit of his general cred-
itors, 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 bank-
rupt has any interest or share. (@oddard v. Weaver, 6 B. R. 440; 8.¢. 1
Wood, 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 disturbed
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 vy. Knox, 8 B. R. 97; 8. 0.16 Wall. 551; Savage v. Best, 3 How.
111; Norton v. Boyd, 3 How. 426 ; Doremus v. Walker, 8 Ala. 194 ; Fritsch
v. Van Mittledorfer, 2 Cinn. 261; Fehly v. Barr, 66 Penn. 196; Thompson v.
320 THE BANKRUPT LAW. [§ 711.

Moses, 48 Geo. 383; Goddard v. Weaver, 6 B. R. 440; 8. 0. 1 Wood, 257;
Maris v. Duren, 1 Brews. 428; in re Donaldson, 1B. R. 181; 8. 0.1L. T. B.
5; 8.0.7 A. L. Reg, 2138; 8.0. 24 Leg. Int. 380; in re Smith e¢ al. 1 B.R.
599; 8. c. 2 Ben. 482; 8.c. 1 L. T. B. 112; én re Wilbur, 3 B. R. 276; s.c.1
Ben. 527; 8.c.2L. T. B. 171; in re Campbell, 1 B. R. 165; s. c. 1 Abb. ©.
C. 185; s.c.1L. T. B. 30; in ra Burns, 1 B. R. 174; 8. c. 7 A. L. Reg. 105;
s. 0. 24 Leg. Int. 857; vide Turner v. The Skylark, 4 Biss. 388; in re Schnepf,
1B.R. 190; 8. 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 bankrupt court for the purpose of liqui-
dating the lien and adjusting all claims and equities. (Sharman v. Howell,
40 Geo. 257.)

When a receiver, appointed by a State court before the commencement
of proceedings in bankruptcy, has taken possession of the property which
belonged 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 with-
out its being shown that such possession of the property by the State court
is void or invalid by reason of the provisions of the bankrupt act. (Jn re
Clark et al. 8 B. R. 491; s.c.4 Ben. 88; Clark v. Binninger, 3 B. R. 518;
s. c. 388 How. Pr. 341; s.c.3 L.T. B. 49; Sedgwick v. Minck et al. 1 B.R.
675; s. c. 6 Blatch. 156; Alden v. Boston, Hartford & Hrie R. R. Co. 5 B.R.
230; Davis v. Railroad Co, 13 B. R. 258; 8. c. 1 Wood, 661.)

Proceedings in bankruptcy supersede all other proceedings for the admin-
istration of the assets of the debtor, subject only to the priorities which have
been obtained by any creditor by the use of diligence. (dn re R. M. Whipple,
13 B. R. 873; 8. c. 80. L. N. 184.)

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 proceedings
in bankruptcy, may be enjoined from proceeding further in the State court.
(in re R. M. Whipple, 13 B. R. 373; 8. c. 8 C. L. N. 184.)

When a State court has acquired jurisdiction over the parties to a cred-
itor’s bill and appointed a receiver, before the commencement of the proceedings
in bankruptcy, it will not on a mere motion direct a delivery of the property
to the assignee. (Hreeman v. Furt, 14 B. R. 46; 8. c. 52 Geo, 371.)

If a receiver is appointed by a State court ina 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 turn
the property over to the assignee. (Myer v. Crystal Works, 14 B. R. 9; 8.¢.
8C. 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 proceedings in
bankruptcy against the firm, the court has the right to finish its proceedings
before being interfered with by any other court. If the assignee 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. (Willer v. Bowles, 9 B. R. 854: 8.
c.10B. R515; s.c. 2.N. Y. Supr. 568; s.c. 58N.Y. 253; Clark y. Bin-
ninger, 39 How. Pr. 863.)

The plaintiff in such a suit for a dissolution of partnership can not have
the decree appointing a receiyer rescinded and the property turned over to
the assignee. (Miller v. Bowles, 9 B. R. 854; 8.c. 10 B. R. 515; s.c.2 N.
Y. Supr. 568; 8, c. 58 N. Y. 253.)
§ 711.] NOTES OF DECISIONS. 321

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 as-
signee of the partnership property, who has been subrogated to the rights of
both the plaintiff and defendant, asks that the suit may be discontinued, and
the property delivered to him. (Olark v. Binninger, 39 How. Pr. 363.)

Parties in a State court may be enjoined from obtaining a writ of sequestra-
tion to take property from the possession of the assignee, although the suit
was instituted before the commencement of the proceedings in bankruptcy.
(Hewitt v. Norton, 13 B. R. 276; 8. c. 1 Wood, 68.)

The district court has no authority to withdraw cases instituted ina State
court before the commencement of proceedings in bankruptcy from the State
courts, and proceed to settle and adjust the claims of the parties thereto.
Congress could, no doubt, have made adjudication in bankruptcy 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 pe-
tition, from those tribunals, and transfer them into the district court. It has
not, however, done so. It not only has not deprived the State courts of juris-
diction over such causes, but it has provided for their prosecution and de-
fense in those courts by the assignee. (Samson v. Burton et al. 4 B. R. 1; 8.
. 5 Ben. 325; vide Clarke v. Rosenda, 5 Rob. [La.] 27; Lewis v. Fisk, 6 Rob.
[La.] 159.)

Full force and efficacy may be given to that clause in the bankrupt 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; 8. 0. 57
Me. 85.)

Proceedings to enforce the lien of acreditor pending at the commence-
ment of proceedings in bankruptcy are not affected thereby, but the creditor
may proceed. to obtain satisfaction of his lien. (Baum v. Stern, 1 Rich. [N.
8.] 415; contra, Taylor v. Bonnett, 38 Tex. 521.)

The jurisdiction of the district court over preceedings for the condemna-
tion of property under the internal revenue laws is not divested by the com-
mencement of proceedings in bankruptcy against the distiller. (U. 8. v. Mac-
koy, 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.¢. 1 Abb. C. C. 185;
8.0.1 L. T. B. 30.)

When the State court has jurisdiction to enforce a lien and sell the prop-
erty, 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. (Jn re Biddle’s Appeal, 9 B. R. 144; 8. c.
68 Penn. 13.)

The assignee takes the rights of the debtor in the same plight and con-
dition as the debtor himself possessed them, and a purchaser from him will
be bound by a deciee fora partition rendered before the filing of the petition.
(Baum v. Stern, 1 Rich. [N. 8.] 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 irreg-
ular and void. (Pardee v. Leitch, 6 Lans. 803.)

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 amendment
may be made, although the defendant has been declared a bankrupt, and the

21
322 THE BANKRUPT LAW. [§ 711.

proceedings in bankruptcy are pending at the time when the motion is made.
( Woolfolk v. Gunn, 10 B. R. 526; 8. c. 45 Geo. 117.)

Although a ji. 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; 8. c. 49 Geo. 361.)

Where a sheriff who is selling the goods at private sale with the consent
of the mortgagor and mortgagee, under a mortgage ji. fa. receives a gen-
eral fi. fa. before the commencement of the proceedings in bankruptcy,
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 v. Harper, 54 Geo. 282.)

The filing of a petition in bankruptcy, and the execution of an assignment.
to the assignee after the filing of a bill in equity, is a sufficient excuse for not
making an assignment to a receiver appointed by the State court. (Watkins
v, Pinkney, 8 Edw. Ch. 583.)

The mere filing of the petition in bankruptcy is no ground for refusiug 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. (Watkins v. Pinkney, 3 Edw. Ch. 533.)

If a creditor prior to the commencement of proceedings in bankruptcy has
filed a bill in a State court to reach the equitable assets of the debtor, and has
thereby obtained a lien thereon, he may continue the suit. (Clark v. Rist, 3
McLean, 494.)

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 im-
peached, it can not be done except upon an intervention by the assignee,
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 execution
issued on a judgment which is void under the bankrupt law. (Atkinson v.
Purdy, Crabbe, 551.)

If the property of the bankrupt has been sold under an execution issued
upon a judgment which is void under the bankrupt law, the assignee should
apply to the State court. (Atkinson v. Purdy, Crabbe, 551; in re Burns, 1
B. R. 174; 8. c. 7 A. L. Reg. 105; 8. c. 24 Leg. Int. 357.)
TITLE LXI.

BANKRUPTCY.

CHAPTER ONE.

COURTS OF BANKRUPTCY, THEIR JURISDICTION, ORGANIZA-
TION, AND POWERS.

Sec.

4972,—Scope of the jurisdiction of courts
of bankruptcy.

4973.—Authority cf district courts and
judges.

4974,— Sessions of the district courts.

4975.—Powers of district courts to com-
pel obedience.

4976.—Powers of circuit judge during
absence, sickness, or disability
of district judge.

497'7,—Powers of the supreme court for
the District of Columbia.

4978.—Powers of the district courts for
the Territories,

4978a.-Clerks of supreme court to
transmit papers to district
courts.

49788,-Jurisdiction after transmission
of papers,

4979.—Jurisdiction of actions between
assignees and persons claiming
adverse interest,

4980.—Appeals to circuit court.

4981.—How taken.

4982.—How entered,

4983.—Waiver of appeal.

4984.—Appeal from decision rejecting
claim,

4985.—Costs.

4986.—Power of general superintendence
conferred on circuit court.

4987.—Superintendence by supreme
courts of Territories,

4988.—Power of a district judge in a
district not within any organ-
ized circuit.

Sec.

4989.—Appeal and writ of error to su-
preme court.

4990.—Supreme court may prescribe
rules,

4991.—What constitutes commencement
of proceedings.

4992.—Records of bankruptcy proceed-
ings.

4998, —Registers in bankruptcy.

4994,—Who are eligible.

4995.—Qualification.

4996.—Restriction upon registers.

4997.—Removal of registers,

4998.—Powers of registers.

4999,—Limitations upon powers of regis-
ters.

5000.—Registers to keep memorandum ef
proceedings.

5001.—-Registers to attend at place di-
divented by judge.

5002.—Power to summon witnesses.

5003.—Mode of taking evidence.

5004.—Depositions and acts to be re-
duced to writing.

5005.—Witnesses must attend.

5006.—Contempt before register.

5007.—Registers may act for each
other.

5008.—Payment of fees of registers.

5009.—Contested issues to be decided
by judge.

5010.—Certificates of matters to be de-
cided by judge.

5011.—Appeal from judge’s decision up-
on question submitted.

5012.—Penalties against officers.

5013.—Definitions.

Src. 4972.—The jurisdiction conferred upon the district
courts as courts of bankruptcy shall extend—

First. To all cases and controversies arising between the
bankrupt and any creditor or creditors who shall claim any debt

or demand under the bankruptey.
024 THE BANKRUPT LAW. _ [3 4972.

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 con-
flicting interests of all parties.

Fitth. To the marshaling and disposition of the different funds
and assets, so as to secure the rights of all particvs and due distri-
bution 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 settle-
ment of the estate of the bankrupt, and the close of the proceed-
ings in bankruptey.* 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 jurisdiction of claims of such nature and
amount.

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. (Jn re William Christy, 3 How. 292; i re Dud-

ley, 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.c.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 as-
signee and third persons, which are regulated by the second section. (Shear-
man et al. v. Bingham et al, 5 B. R. 84; 8.c. 7B. R. 490; s. 0. 8 C. L. N. 258;
Jobbing v. Montague, 6 B. R. 509.)

Congress meant to provide a system capable of entire self-execution by
the national tribunats, 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. (Mit-
chell v. Manuf. Co. 2 Story, 648; Zahm v. Fry, 9 B. R. 546; 8. c. 21 Pitts.
L. J. 155; s. c. 31 Leg. Int. 197.)

In the absence of this clause, it might well be doubted whether the dis-
trict 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 State. 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. 155; s. c. 55 N. Y. 150.)

The last clause of this section is manifestly added in order to prevent the
force of any argument that the specific enumeration of the particular classes
of cases ought to be construed as excluding all others not enumerated. (Jn
re William Christy, 8 How. 292.)

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

 

*So amended by act of 22 June, 1874, § 2.
§ 4972.] NOTES OF DECISIONS. 325

their debts constitute present subsisting claims upon the bankrupt’s estate,
unextinguished in fact or in law, and capable of being asserted 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 not limited to creditors
who prove their debts. (Jn ve 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 inception 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 directions of the
statute, over all which it gives plenary jurisdiction; yet it does not give
jurisdiction over all persons and things which may be affected by the pro-
ceedings in bankruptcy. (Jn re Dudley, 1 Penn. L. J. 302.)

The object of these clauses is to give the district court complete jurisdic-
tion to accomplish of itself all the purposes of the law, and to enable it, inde-
pendently of any other jurisdiction, to begin, continue and end all such pro-
ceedings 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 ve 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 v. McLean, 3 McLean, 185; s. c. 13 How.
151.)

The district court is vested with full chancery and common Jaw powers to
act in all cases arising under the bankrupt law. (Buckingham vo. McLean, 8
McLean, 185; s. c. 18 How. 151.)

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. (Helly 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. (Kelly v. Smith, 1 Blatch. 290; Atkinson v. Purdy, Crabbe,
551.)

The district court has jurisdiction to entertain a bill filed by a mortgagee
against an assignee of the mortgagor to reform a mortgage which by mistake
does not conform to the intention of the parties. (Lowder v. Hart, 18 How.
373.)

Subsequent mortgagees, as well as the assignee, should be made parties to
a bill to reform a mortgage. (fowler v. Hurt, 13 How. 373.)

The bankrupt 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. 808.)

The bankrupt court has the power to reduce the amount of a judgment at
law rendered on confederate contracts to its equivalent in legal money.
(Fowler v. Dillon, 12 B. R. 308.)

The bankrupt court may require the abatement of war interest embraced
in ajudgment. (Fowler v. Dillon, 12 B. R. 308.)
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 become necessary in order to
give force and effect to the jurisdiction and powers conferred upon it by the
326 THE BANKRUPT LAW. [§ 4972.

bankrupt act. (Jn re William Christy, 3 How. 292; Irving v. Hughes, 2
B. BR. 62; 8.6.7 A. L. Reg. 209; Jones v. Leach et al. 1B. R. 595; Hyde v.
Bancroft, 8B. R. 24; 8. c. 6 Ben. 3892; Pennington v. Sule & Phelan et al. 1 B.
R. 572; Pennington v. Lowenstein et al. 1 B. R. 570; in re Schnepf, 1 B. R.
190; s.c. 2 Ben. 72; in re Bowie, 1 B. R. 628; s.c. 1 L. T. B. 97; 8.0. 15
Pitts. L. J. 448; in re R. Atkinson, 7 B. R. 143: 8.0 5L. T. B. 320; 5. c¢. 4
C.L. N. 359; s.c. 19 Pitts. L. J. 188; contra, in re Campbell, 1 B. R. 165;
s.c.1 Abb, C. GC. 185; s.c. 1 L. T. B. 30; in re Burns, 1 B. R. 174; 8. c.7
A. L. Reg. 105; s. c. 24 Leg. Int. 857; Clark v. Binninger, 3 B. R. 518; s. ¢,
38 How. Pr. 341; 3.0.3 L. T. B. 49: Tenth Navl Bank v. 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 cred-
itor’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, ascertain-
ing and adjasting conflicting priorities and claims, and accomplishing a due
and equitable distribution among all the parties in interest in the estate. (In
ve 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 the subject, power to take from State courts the administra-
tion of remedies for the enforcement of liens. The bankrupt law is, then, the
supreme law of the land, binding alike upon Federal and State tribunals, and
wherever, by express words or by necessary implication, it affects State laws,
the power of State courts or the remedies of suitors therein, it is paramount.
When Congress delegated to the district 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 indispensable to the cumplete exercise of the juris-
diction expressly conferred. One power directly given is the power to coliect
all the assets. The means by which this result is to be reached are not enu-
merated, but power to accomplish the result is given and the right to employ
the proper legal process for effecting the result must follow by necessary im-
plication. Closely connected with the power of collecting the assets is that
of ascertaining 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 bankrupt law is
highly remedial, and ought to have a liberal construction for the purpose of
effecting its aim and policy. It gives the bankrupt court an exclusive and
original jurisdiction over all the parties to the bankruptcy proceedings, all
the assets, and all the liens thereon. The express grant of power to enjoin in
proceedings in invitum is not a denial of such power in voluntary proceed-
ings, upon the maxim eapressio unins exelusio 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 giving the court power to enjoin between the
time of filing the creditor’s petition and the retumm of the order to show cause,
as there is in these cases no voluntary surrender of the property. (Jn re
Mallory, 6 B. R. 22; s. 0. 1 Saw. 88; s.c.2 L. T. B. 247; in ve Lady Bryan
Mining Co. 6 B. R. 252; Samson v. Clarke, 6 B. R. 403; s. c. 9 Blatch. 372;
im re Ulrich et a7. 8 B. R. 15; s. c. 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
§ 4972. ] NOTES OF DECISIONS. 327

show how fully the whole administration of the estate is confided to the
court. (Samson v. Clarke, 6 B. R. 403; s. c. 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 juris-
‘diction 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 pro-
hibit any proceeding in a State court for the benefit of a creditor having 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 mortgiuge in the State court was permitted,
though begun after petition filed in the district court. (Samson v. Clarke, 6
B. R. 403; 8. c. 9 Blatch. 372.)

The power to control creditcrs 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: ist. Without such
power there is no adequate protection to the other creditors against collusion
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 determina-
tion of claims which are in dispute into iis own hands. (Samson v. Clarke, 6
B. R. 403; 8. c. 9 Blatch. 372.)

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 paymezt 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. (Jn re Ellerhorst et al. 7 B. R. 49;
8. 0. 2 Saw. 219.)

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. (Keenan v.
Shannon, 9 B. R. 441; 8. c. 31 Leg. Int. 85.)

Where a levy has been made before the commencement 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 issued has been satisfied.
(In re David Weamer, 8 B. R 527; s. c. 21 Pitts. L. J. 17; 30 Leg. Int. 321;
6C. L. N. 27; Marshall v. Knox, 8 B. R. 97; 8. c. 16 Wall. 551; Pech v. Jen-
ness, 7 How. 612; Colby v. Ledden, 7 How. 626; in re John Kerlin, 3 How.
826.)

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; 8. c. 1 Cent. L. J. 127.)

If the execution creditor has security on real estate as well as on personal
property, he may be enjoined for 4 brief period, to allow the creditors 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. (Hustburn v. Yardley, 8
Pac. L. R. 127; s. c. 80 Leg. Int. 404.)

Where the judgment was obtained in fraud of the bankrupt law, the
bankrupt court may enjoin a sale under an execution issued thereon. (Suth-
erland v. Lake Superior Canal Co. 9 B. R. 298: s. c. 1 Cent. L, J. 127; mm re
Wm. H. Shuey, 9 B. R. 526; 5. c. 6 C. L. N. 248; Buckingham v. MeLeun, 3
McLean, 185; 8. c. 18 How. 151; contra, Townsend v. Leonard, 8 Dillon, 370.)
328 THE BANKRUPT LAW. [§ 4972.

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 account of
frand, or for the reason that it is in violation of the bankrupt law. The as-
signee has no right to the immediate possession of the property seized before
the judgment is satisfied. (Jn re William H. Shuey, 9 B. R. 626; s. c. 6 C.
L. N. 248.)

The lien under an execution is prima facie valid. (In re William H.
Shuey, 9 B. R. 526; 8. c. 6 C. L. N, 248.)

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. (Jn re Donaldson, 1 B. R. 181; 8.c.1 L. T. B. 5;
sc. 7A. L. Reg. 218; s. c. 24 Leg. Int. 380.)

After the process of the State court has been executed, and the property :
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 prin-
ciples, the district court can not set aside a sale upon the process of a State
court, and order the property resold, however apparent it may be that it was
sold much below its real value. The remedy is in the State court, upon ob-
jections to the confirmation of the sale. (dn re Fuller, 4 B. R. 115; s.c.1
Saw. 243.)

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 bankrupt court. (Jn re Campbell, 1
B. R. 165; 8. o. 1 Abb. U. C. 185; s.c. 1 L. T. B. 30; 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; 8. c. 85 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 re-
ceiver, and surrenders its assets to the register under an order of the bank-
rupt 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
Oey a upon proceeding with the suit. (Jn re Citizens’ Savings Bank,

. R. 152.

When a creditor who is prosecuting a suit in a State court, has obtained
an agreement by which he will obtain an improper advantage, he may be en-
joined from prosecuting his suit. (Samson 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 ve Bowie, 1 B. R. 628; 8.0.1 L. T. B. 97; s. c. 15 Pitts. L. J. 448; in re
Donaldson, 1 B. R. 181; 8.c.1 L. T. B.5; 0.7 A. L. Reg. 213; 8. 0. 24
Leg. Int, 380; in ve 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.c. 9 Blatch. 320; in ve Irwin
Davis, 4 B. R. 716; s. c. 8 B. R. 167; 8. o. 1 Saw. 260; én re Dillard, 9 B. R.
8; 8.¢c.6 L. T. B. 490; im re William Christy, 8 How. 292; Norton v. Boyd,
3 How. 426; in ve Peter Hufnagel, 12 B. R. 554.)

The fact that steps have been taken to enforce the lien, makes no differ-
ence, It is not a question of jurisdiction or of right, but of discretion. (In
re Geo, W. Dillard, 9 B. R. 8; 8. c. 6 L. T. B. 490.)
§ 4972.] NOTES OF DECISIONS. 329

Proceedings in the State court to punish a party for contempt will not be
enjoined, (Inve M. W. Hill, 2 B. R. 140.)

An injunction will not be granted to stay proceedings on a suit instituted
in a State court against the marshal, for taking possession of property which
did not belong to the debtor, under a warrant in involuntary bankruptcy.
(In re Marks, 2 B. R. 575; 8. c. 1 C0. L. N. 245; 8. c. 16 Pitts. L. J. 12.)

The district court can not enjoin a suit in the State court by a party who
claims under « 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 bankruptcy, or to
enjoin such an action in the court which has jurisdiction of it. (in ve H. 8.
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; 8. c. 11 Blatch. 519.)

The sheriff of the State court may be made a party to the proceedings for
an injunction. (Jn re Bernstein, 1 B. R. 199; 8. c. 2 Ben. 44; Jones v. Leach
et al. 1B. R. 595; Pennington v. Sale & Phelan et al. 1B. R. 572; Pennington
v. Lowenstein et al. 1 B. R. 570; Wilson v. Brinkman et al. 2 B. R. 468; 8. c. 1
C. L. N. 198; in re Mallory, 6 B. R. 22; 8. c. 1 Saw. 88; s.c. 2 L. T. B. 247;
Warren v. Tenth Nat'l Bank, 7 B. R. 481; 8. 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. (Whztman v. Butler, 8 B. R. 487.)

If the mortgagee, prior to the commencement of proceedings in bank-
ruptcy, sold the property by virtue ef a power contained in the mortgage,
but the purchaser refused to accept the title, the bankrupt court may enjoin
the mortgagee from attempting to resell after the commencement of proceed-
ings in bankruptcy, the same as if no sale had ever been made. (Whitman
v. Butler, 8 B. R. 487.)

An injunction will lie against a party within the jurisdiction of the court
to stay proceedings in any court beyond its territorial limits. (Jn re James.
Martin, 5 Law Rep. 158; Hyde v. Bancroft, 8 B. R. 24; 3. 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 us well as them personally. (Jn 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. (Jn re Moses Carlton. 1
N. Y. Leg. Obs. 291; 8. c.5 Law Rep. 120; in re John Harper Smith, 1 N.
Y. Leg. Obs. 291; Lvving v. Hughes, 2 B. R. 62; 8. 0.7 A. L. Reg. 209; in re
Wallace, 2 B. R. 184; s. 8. 1 Deady, 483; in re Muller & Bretano, 3 B. R. 829;
s.c. 1 Deady, 518; s. c. 2 L. T. B. 83.)

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; 8. c. 7A. L. Reg.
209; Jones v. Leach et al. 1 B. R. 595; in re Donaldson, 1B. R. 181; 8. i
330 THE BANKRUPT LAW. [§ 4972.

L. T. B.5; 8.0.7 A. L. Reg. 213; 8.0, 24 Leg. Int. 880; in re Bowie, 1 B. R.
.628; s.c.1L. T. B. 97; s.c. 15 Pitts. LL. J. 448; in re Ulrich et al. 8 B. R.
15; 8. ¢.6 Ben. 483; in re John 8. Foster, 2 Story, 131; i re Bellows &
Peck, 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; 8. ¢. 7 A.
L, Reg. 209.)

Where an injunction is obtained upon a petition filed in the cause pend-
ing in bankruptcy, it may be dissolved on a motion, without resorting to the
formality of a demurrer. (Jn re Wallace, 2 B. R. 134; 8. c. 1 Deady, 433; in
re Mallory, 6 B. R. 22; s. c. 1 Saw. 88; 8. c. 2 L. T. B. 247.)

An execution creditor, who has been delayed by an injunction, is entitled
to a prompt adjudication of the validity of his judgment as seon as an as-
signee is appointed. The question, however, can not be determined on e&
parte affidavits. (Jn re Hafer & Bros. (in re Beck), 1 B. R. 586; s. c, 25 Leg.
Int. 164.)

When the assignee, after his appointment, does not take possession of
property levied on by virtue of an execution issued upon a valid judgment,
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. (Jv re Wilbur, 3 B. R, 276; s. co. 1 Ben. 527;
s.c.2L.T. B. 171; in re J. J. Fendley, 10 B. R. 250.) 3

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 bankrupt act, the injunction will be dissolved. When the bank-
rupt claims that the property held under an execution belongs to his wife,
and the assignee does not assert any claim thereto, the injunction will not be
continued. Cn 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 abun-
dantly 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 et al. v. Bell et al. 3B. B. 587.)

A decree enjoining a judgment creditor and the maker of a note from en-
forcing a judgment against the bankrupt, does not restrain the maker of the
note upon which the judgment was rendered from proceeding ev delicto, at
law against the bankrupt for his fraud in disposing of the note. (Horter v.
Harlan, 7 B. R. 238; s. c. 29 Leg. Int. 229.)

A party who is served with an injunction restraining him from prosecut-
ing a suit must affirmatively take steps adequate to prevent such proceedings.
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 measures to stop the pro-
ceedings, 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. Ban-
croft, 8 B. R. 24; s. c. 6 Ben. 392.)

A party who has violated an injunction may be compelled to pay expenses
of the proceeding to punish him for contempt, together with a proper fee for
the counsel for the complainant. (Hyde v. Bancroft, 8 B. R. 24; s. c. 6 Ben.
392.) :

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
§ 4972.] NOTES OF DECISIONS. 331

receiver appointed. (Jn re South Side R. R. Co. 10 B. R. 274; 8. c. 7 Ben.
391.)

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 jurisdic-
tion, and it is never too late, at any stage of the cause, to consider it. (Jvd-
bins v. Montague, 6 B. R. 509.)

Courts of bankruptcy are mere creatures of the statnte, and derive all their
life and vigor from it. Jurisdiction is only given *‘in their respective dis-
tricts.” The fair legal inference from these words is that jurisdiction was
meant to be withheld outside of those districts. (Jobbins v. Montague, 6 B.
R. 509.)

The case in bankruptcy includes all the summary preceedings. (Chemung
Canal Bank v. Judson, 8 N. Y. 254.)

The whole proeeedings in bankruptcy are on the equity side of the court,
and whatever a court of equity may do in the exercise of its general jurisdic-
tion over subjects requiring a like interposition, may properly be done by the
district court in cases in bankruptcy. (Jn re Benjamin B. Grant, 5 Law Rep.
303 ; in re Moses Carlton, 1 N. Y. Leg. Obs. 291; s. c. 5 Law Rep. 120.)

Power and jurisdiction in all matters and proceedings in bankruptcy are
conferred upon the district courts, and these courts, as courts of bankruptcy,
are authorized to hear and edjudicate upon the same, according to the pro-
visions of the bankruptact. Examined separately, the clause which provides
that the powers and jurisdiction therein granted and conferred may be exer-
cised as well in vacation as in term time, and that a judge sitting in cham-
bers 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 juris-
diction of the district courts when sitting as courts in bankruptcy may be
exercised in a summary way as by arule 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 con-
nection with all the other provisions of the bankrupt act. Superadded to the
general clause, and as an exposition of the same, is another aud more import-
ant clause, in which is given a specific enumeration of the cases and contro-
versies to which that general jurisdiction extends, and it is plain that the
enumeration does not include “ suits at law or in equity which may or shall be
brought by the assignee iu 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,
6B.R.1; s.c. 14 Wall. 419; 3.c.5 L. T.B.%; Marshall v. Knox, 8 B. R. 97 ;
s.c. 16 Wall. 551; Knight v. Cheney, 5 B. R. 305; 8. c. 2L, T. B. 205; Bar-
stow vy. Peckham, 5 B. R. 72; in ve Kerosene Oil Co. 8B. 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. 8. Evans, Lowell, 525; Briggs v. Stephens, 7
Law Rep. 281; contra, in re Norris, 4 B. R. 35; 8. c. 1 Abb. C. C. 514; 8. ¢.
1L. 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 person
is not a party to the proceedings in bankruptcy. (Marshall v. Know, 8 B. R.
97; 3. c. 16 Wall. 551.)

The only parties to the proceedings in bankruptcy are the debtor, his as-
332 THE BANKRUPT LAW. [§ 4972.

signee and his creditors. Other persons are not affected by them. (Marsh
v. Armstrong, 11 B. R. 125; 8. 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;
3. c. 20 Minn, 81.)

If a stranger to the proceedings appears in answer to a summary petition,
and consents to a reference of the case to a register, he can not impeach the
decision of the court, in a collateral action for want of jurisdiction. (People
v. Brennan, 12 B, R. 567; 8, 0.6 N. Y. Supr. 120; 8,c. 10 N. Y. Supr. [Hun],
66.)

The assignee, who is an officer of the bankrupt court, may be proceeded
against by summary petition in respect to any funds in his hands if the op-
posing party chooses to proceed in that way, though the assignee himself has
no right to take similar action against third persons. (Jn re H. 8. Evans,
Lowell, 525; Ferguson vy. Peckham, 6 B. R. 569; 8. 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. & BR. Co. v.
Brooke, 9 B. R. 395.)

When the assignee denies the validity of a claim, and asserts title to the
property, the claimant can not proceed by a summary petition. (Hurst v.
Teft, 13 B. R. 108; 8. c, 12 Blatch, 217.)

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 not
entitled to a summary order, directing the payment of his claim out of the
property. (Hurst v. Teft, 13 B. R. 108; 8. c. 12 Blatch. 217.)

Whatever powers are given by this section are designed to be exercised
summarily. When the property affected by alien isconfessedly the property
of the bankrupt, and has passed to the assignee, and it only remains to ascer-
tain and liquidate the alleged lien, the summary jurisdiction of the district
court is entirely adequate. (Samsonv. Clarke, 6 B. R. 408; s.c. 9 Blatch. 372;
in re Ulrich e¢ al, 8 B. R. 15; s. 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 atrial 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 v. Blake, 6 B. R. 410; 8. 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. (Jn re Worthington,
14 B. R. 888; s. c. 8 C. L. N. 862; s. c. 8 Cent. L. J. 526.)

The district court is legislatively made a court of summary equitable ju-
risdiction over the assignee and over his trust. Therefore, independently of
any special provisions of the bankrupt act, the court can, by way of direction
to him, decide any question of legal or equitable right which can be conten-
tiously discussed for opposing interests. (Jn re Franklin Saving Fund
Society, 31 Leg. Int. 173.)

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. (Jn 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. (Jn re Wm. Major, 14 B. R. 71.)

The power to issue an injunction to prevent parties from interfering with
§ 4972.] NOTES OF DECISIONS. 333

the property of the bankrupt, may be exercised summarily without a formal
suit. (dn re Ulrich ef al, 8 B. R. 15; 8. c. 6 Ben. 483.)

If the wife fora debt due to her takes 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,
1N. Y. Leg. Obs. 264; s. c. 5 Law Rep. 369.)

Jurisdiction to order a foreclosure in favor of an alleged mortgagee claim-
ing 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, (Jn re Edward A. Casey, 8 B. R. 71; 8. c. 10
Blatch. 376.)

Jurisdiction to foreclose mortgages upon the estate of the bankrupt is not
included in the powers to be exercised summarily. (dn re Edward A. Casey,
8B. R. 71; 8. c. 10 Blatch. 376.)

The court in a summary proceeding may direct the sale of property free
from all incumbrances, although the assignee disputes the validity of a mort-
gage 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 con-
tested, settled in an appropriate proceeding to be subsequently taken. (Jn
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 incumbrances.
(Cn re Frederick 8. Kirtland, 10 Blatch. 515.)

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 exi-
gencies of the case, in the execution of the authority conferred; the restric-
tion 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 therefore
necessarily an additional and independent authority. (Goodall vy. Tuttle, 7
B. R. 193; 8. ©. 3 Biss. 219.)

The fullest and most comprebensive 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 proceedings
in the nature of equity proceedings. It is undoubtedly the object and policy
of the bankrupt act, that proceedings under it shall be summary; that matters
shall be settled as speedily as possible. In no other way can the bankrupt
system be put into operation without interminable doubts, controversies, em-
barrassments, and difficulties, or in such a manner as to achieve the true end
and design thereof. Its success 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 conflicting interests; in marshaling the different funds and assets: in
directing the sales at such times and in such manner as shall best subserve
the interests of all concerned; in preventing, by injunction or otherwise, any
334 THE BANKRUPT LAW. [§ 4972.

particular creditor or person, having an adverse interest, from obtaining 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. (Dill v. Beckwith, 2 B. R. 241;
in re Wallace, 2B. R. 134; s. c. 1 Deady, 483 ; in re Kerosene Oil Co. 2 B. R.
528; s. c. 3 Ben. 35;s.c. 2. T. B. 79; in re J. O. Smith, 2 B. R. 297; in re
Marks, 2 B. R.575;8 c.1C. L. N. 245; 8.0.16 Pitts. L. J. 12; in re People’s
Mail Steamship Co. 2 B. R. 553; s. c.8 Ben. 226; in re Davidson, 2B. R. 114;
s. c. 2 Ben. 506; in re Vogel, 2 B. R. 427; s.c. 3 B. R. 198; 5. c. 7 Blatch. 18;
s.c. 2L. T. B. 154; Foster v. Ames, 2 B. R. 455; 8. c. Lowell, 313; in re
Hunt, 2B. R. 539; s.c.1C. 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 accordance with
sound precedent, and is so to mold itself to, and meet the necessarily 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 enact-
ment, 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 profession, nor those rules of practice and judicial pro-
cedure now so interwoven with our system of jurisprudence as to have be-
come 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. (Jn re Hunt, 2 B. R. 539; s.c.
1C.L. N. 169; Bill v. Beckwith, 2 B. R. 241.)

Strangers to the proceedings in bankruptcy, not served with process, and
who have not voluntarily appeared and become parties to such litigution,
can not be compelled to come into court, under a petition for a rule to show
cause. (Smith v. Mason, 6 B. R.1; 8. c. 14 Wall. 419; sc. 5 LT. B.7;
Marshall v. Know, 8 B. R. 97: 8. 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 confers 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 hasso appeared, without the consent of the court or of the
prosecuting party. If the right to withdraw depends upon questions 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 prosecuting party. (Jn re
Ulrich, 3 B. R. 133; s. c. 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 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 agreement be-
tween 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. Either 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 upon such peti-
tion or motion, The dismissal of it will not necessarily establish the title of
any contesting party. The court may well adjudge that one petitioner has
failed to establish his right, and dismiss his petition, retaining custody of the
fund until some other petitioner, it may be a second, or it may be a fiftieth
a estallish his right satisfactorily to the ceurt. (Zn re Masterson, 4 B. R.

53.
§ 4972.] NOTES OF DECISIONS. 335:

An application to the summary jurisdiction of the court to be exer-
cised by an order to show cause, as upon a motion, is nota suit, and can
not be treated as a suit. (dn re Edward A. Casey, 8 B. R. 71; 5. ©. 10
Blatch. 376.)

The objection that the proceeding should be bya bill in equity, or an
action at law, may be taken at the hearing, or in the appellate court. (Jn re
Bonesteel, 3 B. R. 517; s. c. 7 Blatch. 175; in re Ballou, 3 B. R. 717; s.c. 4
Ben, 135; contra, in re Ulrich, 3 B. R. 1388; 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-
pena, as the answers filed and the testimony taken, if any, can uot be used,
except by consent, 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. Peckham, 5 B.
R. 72; Starkweather v Cleveland Ins. Co. 4 B. R. 341; s. c. 2 Abb. C. C. 675,
in re H. 8, 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.
(Un re Bonesteel, 3 B. R. 517; 8. c. 7 Blatch. 175; in re Ballou, 3B. R. 717;
s. c. 4 Ben. 135.)

The summary jurisdiction may be exercised upon the ordinary processes,
orders to show cause, notices of motions, &c., therein, or upon petitions
where special aid or relief is sought in any matter embraced in that jurisdic-
tion. (dn re Edward A. Casey, 8 B. R. 71; 8. c. 10 Blatch. 376.)

A party seeking relief in the bankrupt court should come in by petition
and not by motion. The petitioner should sign and verify the petition.
Coming into court as he does, in an original manner, seeking affirmative re-
lief, and not brought in by another party, he must come in in person in the
first instance, and not by an attorney. (dn re J. O. Smith, 2 B. R. 297; in
re Davidson,.2 B. R. 114; s.c, 2 Ben. 506; im ve 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. (Jn re Philo R. Sabin, 9 B. R. 383.)

When the oath is administered by a notary public, the signature and no-
tarial seal of the notary constitute a sufficient authentication. When not ac-
companied by such seal, the signature and official character of the notary
must be authenticated in the usual manner. (Jn re Philo R, Sabln, 9B. R. |
383.)

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 peti-
tion stating the facts relied on for relief, and praying for the order, relief, or
proceeding sought for, is sufficient. (/n re Wallace, 2 B. R. 134; 8.0.1
Deady, 482; in re J. O. Smith, 2 B. R. 297.)

When the district court has jurisdiction of the subject-matter and of the
question at issue, and both parties submit themselves to its exercise and in-
voke 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 v. Blake, 6 B. R. 410; 8. c. 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 peti-
tion to set up an interest subsequently acquired. (Jn re Robert Morris,
Crabbe, 70.)
336 THE BANKRUPT LAW. [§ 4972.

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 subsequently
acquires an interest, he may file a new petition, (Jn re Robert Morris,
Crabbe, 70.)

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; 8. 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.) ‘

Tf 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 the 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.c.8C. LN.
3380; s.c.1L. L. J. 176.)

_ The testimony may be taken ore tenus atthe hearing. (Wilson v. Stoddard,
4B. R. 254; 8.6.2 OC. L. N. 161.)

If the mortgagee is dead, the mortgagor can not testify in favor of his
assignee in a proceeding against the executorsof the mortgagee. (Bromley v.
Smith, 5 B. R. 152; s. c. 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-con-
spirator and as a part of the res geste. (Samson v. Blake, 6 B. R. 410; 3. ¢. 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 suit, and nothing is more common in dis-
posing of motions than to give leave to renew or apply upon new and further
evidence for additional relief. The highly equitable and remedial 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 additional facts, is not final and con-
clusive as res adjudicata, (Samson v. Clarke, 6 B. R. 408; s. c. 9 Blatch.
872.)

Where property has been delivered to the plaintiff in a replevin suit
brought in a State court, and has been subsequently taken from the posses-
sion of the plaintiff by the marshal, there is no conflict or interference on
the part of the marshal with the officers of the State court. (Jn re David-
son, 2B. R. 114; s. c. 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 peti-
tion is dismissed. (Jn ve Bank of Madison, 9 B. R. 184; s. c. 5 Biss. 515.)

Jurisdiction of State Courts over Suits by Assignees.

The jurisdiction of the district court is not exclusive over the entire ex-
ecution of the law. (Lucas v. 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 bankrupt law. The
§ 4972.] NOTES OF DECISIONS. 337

States in providing their own judicial tribunals have a right to limit, control
and restrict their judicial functions and jurisdiction according to their own
mere pleasure. (Mitchell v. Manuf. Co. 2 Story, 648; Buckingham v. McLean,
3 McLean, 185; 8. c. 138 How. 151.)

An assignee under the bankrupt law of the United States may sue in his
own name in the State conrts 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. Mechanics’ Savings
Bank, 101 Mass. 109; Peiper v. Hurmer, 5 B. R. 252; 8. 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 v. Hxum, 10 B. R. 327; 5. ©.
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. 583; Russell
v. Owen, 61 Mo. 185 ; contra, Frost v. Hotchkiss, 14 B. R. 448.)

In an action brought by an assignee, the defendant may deny the jurisdic-
tion of the district court over the bankrupt in the proceedings in which the
assignee was appointed. (Stuart v. Aumueller, 8B. R. 541.)

The State courts have jurisdiction of questions arising between persons
within their jurisdiction, whether they arise under the laws of any other State
or any foreign nation. “ If they arise under the 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 Federal and State
courts may and do have concurrent 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 pre-
scribe, in 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, 9B. 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. 8.] 165;
Gilbert v. Crawford, 46 How. Pr 222; Jordan v. Downey, 12 B. R. 427; 8. ©.
40 Md. 401; Lewis v. Sloan, 68 N.C. 557; Damimann vy. White, 12 B. R. 438;
8. c. 48 Cal. 439; Kemmerer v. Tool, 12 B. R. 334; 8. c. 78 Penn. 147; Otis v.
Hadley, 112 Mass. 100; Rison v. Powell, 28 Ark. 427; contra, Voorhees v.
Frishie, 8 B. R. 152; 8. co. 25 Mich. 476; s.c. 6 L T. B. 85; Brigham v.
Claflin, 7 B. R. 412; 8. c. 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; 8, 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 deprive
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, 8B. R. 193; 8. c. 2
Dillon, 504.)

A bankrupt is not a necessary party to a suit brought to enjoin a judg-
ment fraudulently recovered by nim. (Weakly v. Miller, 1 Tenn. Ch. 522.

The assigaee can properly institute a suit in a State court only under the
22
‘338 THE BANKRUPT LAW. [§ 4973.

direction of the district court. (Chemung Canal Bank v. Judson, 8 N. Y.
954.)

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 per-
sonal property with him, is concurrent with and does not divest that of. the
‘State courts. (Hyster v. Guff, 13 B. R. 546; s.c. 1 Otto, 521; 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; 8. c 20
Minn. 81: in ve Isaac Marks, 2 B. R. 575; 8. c.1C. L. N. 245; 8. ¢. 16 Pitts.
L. J. 12.)

Whenever State courts have jurisdiction over controversies between the
assignee and third parties, the circuit courts have it independent of the bank-
rupt law if the proper citizenship of the parties exist. (Burbank v. Bigelow,
14 B. R. 445.)

An assignee who isa 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 upoa another court. The
mere grant of jurisdiction to a particular court has never been held to oust

any other court of the powers which it before possessed. (Payson v. Dietz, 8
B. R. 193; s.¢.2 Dillon, 504; Spaulding 7. McGovern, 10 B. R. 188; Bur-
bank v. Bigelow, 14 B. R. 445; Post v. Rouse, 1 W. N. 39.)

If 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. 866; s. c. 54 N. H. 190.)

Sxo. 4973.—The district courts shall be always open for the
transaction of business in the exercise of their jurisdiction as courts
of bankruptey ; 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 punishiag any con-
tempt of his authority, as when sitting in court.

A proceeding in bankruptcy from the time of its commencement until the
final settlement of the estate is but one suit. (Sandusky v. First Natl Bank,
12 B. R. 176; in re York & Hoover, 4 B. R. 479; s.c. 1 Abb. C. C. 503; s.c.
11. 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 v. Natl Bunk, 12 B. R. 176; Ala. & Chat. R. R. Co, v.
Jones, 7 B. R. 145.)

Its proceedings in any pending suit are at all times open for re-examina-
tion 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 aisturbed by its vacation. Application for such re-examina-
tion may be made by motion or petition, according to the circumstances of
§§ 4974, 4975.] NOTES OF DECISIONS. 339

the case. Such a motion or petition will not have the effect of 2 new suit,
but of a proceeding in the old one. (Sandusky v. Nat’! Bunk, 12 B. R. 176.)

Every court has power to alter and amend its records so as to conform to
the truth during the term to which the record relates. During the pendency
of proceedings in a particular case, the court, upon the representation 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 bankrupt 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 bank-
ruptcy business, the clerk’s office is stationary at the place designated by law.
But the holding of court necessitates the filing of papers and the issue of
process. The one can make little progress without the other. Hence it ap-
pears that Congress contemplated the necessity of filing papers otherwise
than by delivering them to the clerk at his stationary office, although it pro-
vided that such office should be their final place of custody. A petition pre-
sented to the judge at chambers, and acted upon by him, will be deemed to
be filed on the day of its presentation, although not actually deposited in the
clerk’s office until a subsequent day. (Hrunk 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 vaca-
tion 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. Bing-
ham, 5 B. R. 34; 8.0.7 B. R. 490; 3.6.3 C0. L. N. 258; Goodall v. Tuttle, 7
B. R. 193; 8. c. 8 Biss. 219.)

Actions at Jaw or suits in equity can not be heard and determiued by the
district court at chambers, or in vacation. (Shearman vy. Bingham, 5 B. R.
84; 8.c. 7B. R. 4903.8. c. 80. L. N. 258.)

Sxc. 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 hold-
ing sessions of such court.

Sec. 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.

The proceedings to punish a party for contempt in violating an injunction
issued in a case of involuntary bankruptcy must be separate and distinct
from those against the bankrupt. (Creditors v. Cozzens & Hall et al. 3 B. R.
281; 8. c. 2 W. J. 349; s. c. 16 Pitts. L. J. 286.)

Where a firm is enjoined, one partner 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; 8. c. 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 contempt.
(in re Hirsch, 2 B. R. 8; 8. c. 2 Ben. 498; s.c.1L. T. B. 92.)

It is not a sufficient justification for the violation of an injunction that the
340 THE BANKRUPT LAW. [§ 4976-4978 B.

party was acting under a i. fa. issued upon a judgment rendered in a State
court. (Jn re R. Atkinson, 7 B. R. 148; 8. c.5 L. T. B. 820; 30.40. L. N.
859; 8. c. 19 Pitts. L. J. 188.)

Src. 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 disabi.ity, 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 prepara-
tory 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.

Suc. 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.

Sec. 4978.—The same jurisdiction, power, and authority which
are hereby conferred upon the district courts in cases in bank-
ruptcy are also conferred upon the* district courts of the several
Territories,+ subject to the general superintendence and jurisdic-
tion conferred upon circuit courts by section four thousand nine
hundred and eighty-sia [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 district court in the district in which the
petitioner or the alleged bankrupt resides.

Sec. 4978 a (Act of April 14, 1876, § 1).—Be it enacted by
the Senate and House of Representatives of the United States of
America in Congress assembled, That in all cases in bankruptey
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 undeter-
mined therein, the clerks of the said several courts shall imme-
diately transmit to the clerks of the district courts of the several
districts of said Territories, all the papers in, and a certified tran-
script of, all the proceedings 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 dis-
trict courts.

Sec. 4978 Bp (Act of April 14, 1876, § 2).—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

 

*So amended by act of 22 June, 1874, § 16.
+ So amended by act of 22 June. 1874, § 16.
§ 4979.] NOTES OF DECISIONS. 341

of the filing of the petition in bankruptcy in said case ; and as
soon as the said 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 jurisdic-
tion of the said case, to hear and determine all questions aris-
ing 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.

Src. 4979.—The several circuit courts shall have, within each
district, concurrent jurisdiction with the district court of* 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.

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 else”
Where than by this clause, though the jurisdiction may be well enough held
to be included in the general grant of section 4972. (In re Alexander, 3 B.

R. 29; 8. c. Chase, 295; s.c. 2L. T. B. 81; in re William Christy, 3 How.
292.)

Independent of the bankrupt act the district courts possess no equity
jurisdiction whatever. Whatever jurisdiction they possess in that behalf is
wholly derived from the bankrupt act now in force. (Morgan v. Thornhill, 5
B. R. 1; 8. c. 11 Wall. 65; in re William Christy, 3 How. 292.)

The jurisdiction of the district court over suits at law or in equity is con-
ferred by the general grant of power to collect all the assets of the bank-
tupt. (Goodall v. Tuttle, 7 B. R. 193; s. co. 3 Biss, 219; Shearman v. Ling-
ham, 5 B. R. 34; 8. co. 7 B. R. 490; s.¢. 8 C. L. N. 258)

Congress in framing the bankrupt law intended to provide Federal instru-
mentalities for its complete execution, and such as are sufficient to carry it
into full effect. Jurisdiction over an action brought by an assignee to col-
lect 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. 7B. R. 490; 8.0.7 C0. LN.
258; Goodall v. Tuttle, 7 B. R. 193; 8. c. 3 Biss. 219; Lathrop v. Drake, 18
B. R. 472; 8. c. 1 Otto, 516; contra, in re Richardson et al. 2 B. R. 202; 8. ¢.
2 Ben. 517; 8. c.2 L. T. B. 20; Markson v. Heaney, 4 B. R. 510; 8. c. 1 Dil-
lon, 497; Jobbins v. Montague, 6 B. R. 509; Lamb v. Damron, 7 B. RB. 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

 

* So amended by act of 22 June, 1874, § 3.
+ So amende‘ by act of 22 June, 1874, § 3.
342 THE BANKRUPT LAW. [§ 4979.

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 conditions must concur to.
give the jurisdiction. The jurisdiction conferred by this clause is other and
different from the special jurisdiction and_ superintendence described in sec-
tion 4986. (Morgan v. Thornhill, 5 B. R. 1; 8. ¢. 11 Wall. 65; Knight v.
Cheney, 5 B. R. 805; 8. c. 2 L. T. B. 205; Woods v. Forsyth, 2 W. J. 348; 8.
c. 16 Pitts. L. J. 234; Bachman v. Packard, 7 B. R. 853; 8. 0. 2 Saw. 264; in
re Alexander, 3 B. R. 29; 8. c. Chase, 295; 8. c. 2L. 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. (Bachman v. Packard, 7 B.
R. 858; s. c. 2 Saw. 264.)

A claim of a lien and to vossession 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 property 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 bas jurisdiction under the bankrupt law. (Burbank v. Bigelow, 14
B. R. 445.) ;

The jurisdiction over controversies between an assignee and adverse claim-
ants may be exercised by any circuit court having jurisdiction of tbe par-
ties, and is not confined to the circuit court of the district in which the:
decree of bankruptcy was made. (Burbank vy. Bigelow, 14 B. R. 445; Lathrop
v. Drake, 13 B. R. 472; s. c. 30 Leg. Int. 141; s. c. 1 Otto, 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 bankruptcy.
(Lewis v. U. 8.18 B, R. 88; 8.c. 14B. R. 64; 3.0.2 W. N. 81; 8. c. 82 Leg.
Int. 371.)

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, 18 B.
R. 523; contra, Irving v. Hughes, 2 B. R. 62; s. c. 7 A. L. Reg. 209.)

The circuit court may entertain a bill brought to obtain an injunction:
against parties who are interfering with the baukrupt’s estate under a claim
adverse to that of the assignee. (Foster v. Ames, 2 B. R. 455; s. c, Lowell,
313.)

The circuit court has jurisdiction of an action to collect a debt due to the
bankrupt. (Mitchell v. Manuf. Co. 2 Story, 648; Pritchard y. Chandler, 2
Curt. 488; McLean v. Lufuyette Bank, 8 McLean, 185; Allen v. Binswanger,
2 Cent. L. J. 724; contra, Bachman v. Packard, 7 B. R. 353; 8. c. 2 Saw. 264.)

In all cases where an assignee may pursue the remedies provided by this
section, a fair interpretation requires that he shall do so. He can not adopt,
another remedy, as, for instance, summary proceedings. (Smith v. Mason, 6
B. R. 1; 8. ¢. 14 Wall. 419; s.c.5 L. T. B.7; Knight v. Cheney, 5B. R. 8055.
8. c. 2 L. T. B. 205; in ve Kerosene Oil Co. 3 B. R. 125 ; s. c. 6 Blatch. 521;
in re Bonesteel, 8B. R. 517; 8.0.7 Blatch, 175; in re Ballou, 3 B. RB. 17;
s.c. 4 Ben. 135; 7% ve Masterson, 4 B. R. 553; contra, in re Norris, 4 B. R.
35; s.c. 1 Abb. C.C, 514; 8, c. 1 L. T. B, 227.)
§ 4979.] NOTES OF DECISIONS. 343

A State can not bring a suit in the circuit court. (State v. Trustees, 5 B.
R. 466.) ,

Subpena,

The conferring of the jurisdiction on the two courts concurrently by this
section, in the same terms, indicates plainly that one of them can not exer-
cise such jurisdiction to an extent or ina manner 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 pur-
suance of that section. There is nothing in the bankrupt act indicating an
intention on the part of Congress that process in the suits specitied 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 sec-
tion 629. There is nothing in the acts of Congress, or in the rules in bank-
ruptcy, or in the rules in equity prescribed by the supreme court which au-
thorizes a marshal to serve a subpeena to appear and answer in an equity suit
at a place outside of the territorial limits of the district for which he is
appointed. (Jobbing v. Montague, 6 B. R. 117; 8.0.5 Ben. 422; Paine v.
Caldwell, 6 B. R. 558; 8. c. 29 Leg. Int. 284; Lewis v. Gibson, 32 Leg. Int.
22.)

Rule thirteen in equity does not permit the service to be made by leaving
the subpeena at the last place of abode or at the last usual place of abode,
but the subpeena 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 consequences of
frauds committed by him on the creditors, yet the district court does not ac-
quire jurisdiction over him by means of a subpeena 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; 3. c. 5 Ben. 447.)

The whole subject of the service of a subpcena in a suit in equity is reg-
ulated by act of Congress and by the rules in equity established by the Su-
‘preme 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 accordance with
rule thirteen in equity. No order can be passed for the service of process by
publication, or by a substituted service ona receiver of rents. (Hyslop v.
Hoppock, 6 B. R. 557; 8. c. 5 Ben. 583.)

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 bill in equity against him by service of a subpcena upon the attor-
ney who acted for him in obtaining the judgment. (Paine v. Caldwell, 6 B.
R, 558; s. c. 29 Leg. Int. 284.)

Where a new term of the district court in equity is held on the first
Tuesday of each month, a subpeeva may be made returnable on the first Tues-
day instead of the first Monday of the month. (Hyslop v. Hoppock, 6 B. R.
552; 8s. 0. 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 re-
spective districts. (Babbitt vy. Burgess, 7 B. R. 561; s. c. 2 Dillon, 169.)
344 THE BANKRUPT LAW. [§ 4979.

Actions at Law.

Parties seeking redress in the district court in matters relating to bank-
ruptcy, 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 bank-
rupt act. (Haughey v. Albin et al. 2 B. R. 399; 8. 0. 2 Bond, 244; 8. c. 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 bankrupt act. (Pos/er
v. Hackley & Sons, 2B. R. 406; s. c. 2 L. T. B. 8; s.¢c. 1 C. L.N. 187; Wads-
worth v. Tyler, 2 B. R. 316; s. 0.2L. T. B. 28; Babbitt v. Walbrun & Co, 4
B. B. 121; s. c. 6B. R. 359; s.c.1 Dillon. 19; Mitchell v. McKibbin, 8 BR.
548; s. c. 29 Leg. Int. 412; Brooke v. MeCracken, 10 B. R. 461; 8. c. 7 Cc. L.
WN. 10;s. o. 8 Pac. L. R. 102; contra, Gayles v. American, 14 B. R. 141; 8. 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. 38;
s. c. 2 Ware, 330.)

Ifthe 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. (Carr v. Gale, 3 W.
& M. 38; s. c. 2 Ware, 330.)

If the bankrupt aids another in converting his goods to the latter’s use 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. (Carr v. Gale, 3 W. & M. 38; s. c. 2 Ware, 330.)

Tf 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,
is a conversion. (Carry. Gale, 3 W. & M. 38; s. c. 2 Ware, 330.)

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, 4 B. R. 627; s. 0. 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
wiil 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. (.Witehell v. Alo-
Kibbin, 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 y. .&ack-
ley & Sons, 2B. R. 406: s.c. 2 L.T. B.8; s.c.1C. L N. 137; Wadsworth v.
Tyler, 2B. R. 316; s. c. 2 L. T. B. 28.)

If » party in possession of property, claiming an exclusive right in him-
self 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 conversion of
the part to which he is not entitled. (Mitchell v. McKibbin, 8 B.‘R. 548; 8. ¢.
29 Leg. Int. 412.)

The assignee can not recover in an action of trover any more than the
value of the corporeal moyable effects. He can not recover the profits
§ 4979. ] NOTES OF DECISIONS. 345

received from a business, or the value of the good will. (Mitchell v.
McKibbin, 8 B, R. 548; 8. c. 29 Leg. Int. 412.)

Where one count of the answer is a general denial, a special affirmative
defense set up in the answer can not be relied on asa 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
petition. If he assails a transfer as void under the bankrupt law, he can not
recover upon the ground that the transfer is void under the State law.
(Cragin v. Carmichael, 11 B. R. 511; s. c. 2 Dillon, 519.)

Assumpsit : brought by an assignee to recover the money received by a
preferred creditor upon a judgment given contrary to.the bankrupt 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 v. Tinker, 11
B. R. 308.)

The non-joinder of the copartners, where the preference was given to the
firm, can not be raised at the trialon the merits. (Vun Dyke v. Tinker, 11
B. R. 308.)

A new trial will not be granted to let in testimony which is merely
cumulative. (Van Dyke v. Tinker, 11 B. R. 308.)

To a writ of sctre facias to have execution of a judgment rendered
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. (Jn re Bowie, 1 B. R. 628; 5.
c.1L. T. B. 97; s. c. 15 Pitts. L. J. 448; Jones v. Leach et al. 1 B. R. 595;
Pennington v. Sale & Phelan etal. 1 B. R. 572; March v. Heaton et al. 2 B. R.
180; s. c. Lowell, 278; Foster et al. v. Ames, 2 B. R. 455; s. c. Lowell, 313 ;
Wilson v. Brinkman et al. 2 B. R. 468; s.c.1C. L. N. 193; Davis, Assig. of
Bittel et al. 2 B. R. 892.) : ‘

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; 5.c.1L. T. B. 97; 8.0. 15
Pitts. L. J. 448; Pennington v. Lowenstein et al. 1B. R. 570; Pennington v.
Sale & Phelan et al. 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 et al. 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, Assig. of Bittel et al. 2 B. R. 892; Lee v. Franklin Av. 8. Inst. et al. 3
B. R. 218; s.¢. 10. L. N. 370; Phelps v. Sellick, 8 B. R. 390.)

To recover property conveyed by the bankrupt in fraud of creditors.
(Bradshaw v. Klein, 1 B, R. 542; s. c. 2 Biss. 20; s.c.1 L. T. B. 72; Pratt v.
Curtis, 6 B. R. 189.)
346 THE BANKRUPT LAW. [§ 4979.

To recover money obtained upon a judgment given contrary to the
bankrupt act. (Wilson v. Brinkman et al. 2B. R. 468; 8. c. 1 C. L. N. 193.)

To enforce a right of redemption in mortgaged property. (Poster et al. v.
Ames et al. 2B. R. 455; 8. 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 creditors.
(Bean v. Brookmire, 7 B. R. 568; s. c. 1 Dillon, 151; s. c. 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 v. Cole et al. 3 B. R. 398; 8. c. 2
L. T. B. 108; 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 process.
(Beers et al. v. Place & Co. 4 B. R. 459; s. c. 86 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 bankrupt court for the sale of the
property. (Shaffer v. Fritchery et al. 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 have been
sold by it, and applied to the debt. (Tiffany v. Boatman’s Savings Inst. 4
B. R. 601; sc. 9 B. R. 245; s. c. 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 principal.
(Mitchell v. Manuf. Co. 2 Story, 648.)

To set aside an assignment and reach dividends paid to a creditor there-
under. (Chemung Canal Bunk v. Judson, 8 N. Y. 254.)

To set aside a pretended lien upon the bankrupt’s estate. (Stickney v.
Wilt, 11 B. R. 97.)

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 proceeded 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, pro-
tect him in delivering the property levied upon to the assignee. (Warren vy.
Tenth Natl 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 cach claim without a discovery, he may file
a bill asserting both claims, and make it a general creditors’ bill. (Stotesbury
yv. Cadwallader, 31 Leg. Int. 229.)

If an assignee with knowledge or with reason to believe that one claiming
to be a creditor of the bankrupt has proved a debt against the estate which
hag no existence, or which is tainted with fraud, neglects or refuses to con-
test 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. (Bunk v.
Cooper, 9 B. R. 529; 8. c. 20 Wall. 171.)

A ereditor can not maintain a bill in equity to have the claim of another
§ 4979.] , NOTES OF DECISIONS. 347

creditor disallowed, without averring more than that the district court drew
a wrong conclusion from the evidence. (Bank v. Cooper, 9 B. R. 529; 8. c.
20 Wall. 171.)

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. (Bank v. Cooper, 9 B. R. 529; 8. c. 20 Wall. 171.)

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 measure
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 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. 381.)

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 cir-
cuit court may pass upon questions not raised in the other court, even be-
tween 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 property, does not authorize the
circuit court to interfere. The receiver is responsible to the court which ap--
pointed 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. (Ala. & Chat. R. R. Co. v. Jones, 7 B. R. 145.)

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 question
should be first made to the court exercising jurisdiction. (Ala. & Chat. R. R.
Co. v. Jones, 7 B. R. 145.)

Where a bill in equity has been filed prior to the commencement of pro-
ceedings 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 encumbrances, where the sub-
sequent mortgages cover some property not included in the prior mortgage;
but he should file a cross bill in the suit in equity. (Sutherland v. 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 matter is
substantially ended, for relief. (Zraders’ Nat'l Bank v. Campbeil, 3 B. R.
498; 5. c. 6 B. R. 353; s. 0. 2 Biss. 423; 8. c. 14 Wall. 87; Zahm v. Fry, 9
B. R. 546; 8. o, 21 Pitts. L. J. 155; s. c. 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 convey-
ance or illegal transfer, the right to call for an account is not questionable.
(Verselius v. Verselius, 9 Blatch. 189.)

The assignee has the right, as ancillary to relief by an cccount, to have a.
B48 THE BANKRUPT LAW. [§ 4979.

discovery from the defendant to supply the deficiency in his own knowledge,
and his ignorance of the particulars sought not only entitles him toa dis-
covery, but excuses the want of more precise specification of the particular
fraud alleged. (Verselius v. Verselius, 9 Blatch, 189.)

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 necessary to
enforce the surrender and appropriation of his property. (Beecher v. Binninger,
7 Blatch. 170.)

The claim to relief on the grounds of the right to a discovery can not be
maintained when the complainant knows that the property transferred con-
sists in a stock of merchandise, for this constitutes data amply sufficient to
enable a competent pleader to frame a declaration at law, with all the part:cu-
larity 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, and values broad 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 infor-
mation which he could possibly obtain by an answer to a bill in equity.
(Garrison vy. Markley, 7 B. R. 246.)

Since the law has been changed, so as to allow parties to be called and ex-
amined as witnesses in trials at law, bills for discovery in aid of trials at law,
or to enforce purely legal rights, have become entirely unnecessary—have, in
fact, fallen into disuse, and may be considered practically obsolete. (G@ar-
rison v. Markley, 7 B. R. 246.)

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 io the case of a
transfer by the bankrupt, for the bankrupt is a competent witness. (Garrison
v. Markley, 7 B. R. 246.)

A mortgagee may file a bill to foreclose a mortgage in the circuit court.
(Buckingham v. McLean, 3 McLean, 185; s. c. 18 How. 151.)

The assignee may file a bill to vacate a transfer of property, although he
is in possession thereof. (Hellogg 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 prop-
erty. CUnreJ. J. Fendley, 10 B. R. 250.)

If the assignee is dead, and no one has been appointed in his stead, a
ereditor has a right to file a bill to detain property of the bankrupt, to be ad-
ministered by an assignee subsequently appointed. (Clark v. Clark, 17 How.
315.)

It is immaterial whether the crediter who files the bill has proved his
debt or not, for he may subsequently proveit. (Clark v. Clark, 17 How. 315.)

The assignee has the right to file a bill in the circuit court against all the
encumbrancers claiming liens on a piece of property, to test the validity,
priority, and amount of their claims. (MeLem vy. Lufayette Bank, 3 McLean,
415.)

Where the bill alleges preferences, several creditors claiming by distinct
§ 4979.] NOTES OF DECISIONS. 349-

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 no common
interest. (McLean v. Lafayette Bank, 3 McLean, 415.)

Parties who have received the property of the bankrupt under fraudulent
conveyances may be joined, although the conveyances were separate and dis-
tinct acts. (Spaulding v. McGovern, 10 B. R. 188.)

If two executions have been levied upon the property of the bankrupt,
under such circumstances as make them void as a preference, and the proceeds
placed in the possession of one of the execution creditors, the court will re-
quire the other creditor to be made a party to the suit, if he is within its ju-
risdiction, and his interest and absence are formally brought to the attention
of the court; but if this can not be done, it will proceed to administer such
relief as may be in its power between the parties before it. The organization
of the Federal courts has always required them to dispense with parties in
chancery not within their jurisdiction, unless their presence is an absolute
necessity. (Zraders’ Natl Bank v. Campbell, 3 B. R. 498; 3. c. 6 B. R. 358 ;
8. C. 2 Biss. 423; 8. c. 14 Wall. 87.)

In a proceeding to set a transfer aside for fraud or illegality, the bankrupt
has a direct interest in the question whether the property shall be taken from

the grantee, and is therefore a proper party. (Verselius v. Verselius, 9 Blatch.
189.) ;

The holder of a part of the mortgage notes is a necessary party to a suit
in equity to foreclose the mortgage. (Jn re Edward A. Casey, 8 B. R. 71; 8. c.
10 Blatch. 376.)

The district court has jurisdiction over a party who is served with process
in the district, although he dves not reside therein. (Babbit v. Burgess, 7 B.
R. 561; 8. c. 2 Dillon, 169.)

If a party, who is out of the district, voluntarily appears and answers, he

thereby makes himself a party to the suit. (McLean v. Lafayette Bank, 3
McLean, 415.)

The appearance of a party who was personally served with process can not
be withdrawn. (Fenton v. Collerd, 11 B. R. 535.)

Whether the bankrupt is a proper party to a bill in equity, filed by the
mortgagee against the assignee and the bankrupt, will not be considered where
the bankrupt has appeared and answered. (Lockett vy. Hill, 9 B. R. 167; 8. c.
1 Wood, 552.)

Pleadings.

The bili need not point out the particular section of the bankrupt law
which gives the complainant a right to assailatransfer. The bill is to set out
facts, and it would be bad pleading to allege the law. (Prait v. Curtis, 6 B.
R. 189.)

Affirmative relief will not be granted in equity on the ground of fraud,
unless it be made a distinct allegation in the bill, so that it may be put in

issue by the pleadings. (Voorhees v. Bonesteel, 7 Blatch. 495; 8. c. 16 Wall.
16.)

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 ap-
pointment of a receiver,on the ground that there is an irreconcilable differ-
ence between the assignee and transferee, because they proceed on entirely
350 THE BANKRUPT LAW. [§ 4979.

different grounds, and are repugnant to each other. (Wilkinson v. 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. (Jn re J. J. Fendley, 10 B. R. 250.)

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 considera-
tion. (Burpee v. Nat'l Bank, 9 B. R. 314; 8. 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; 8.c. 1 Otto,
516; s. c. 30 Leg. Int, 141.)

If the respondent, on information and belief, denies an allegation of mat-
ters which may be, or can be, assumed to be within his personal knowledge,
the allegation will be taken to be true. (Burpee v. Nat’l Bank, 9B. 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 knowl-
edge, applies to a corporation. (Burpee v. Nat’l Bunk, 9 B. R. 814; 8. ¢. 5
Biss. 405.)

Any informality in the answer may be overlooked on final hearing, if the
answer denies the material allegations of the bill in such a munner as to con-
stitute an issue within the established rules of equity pleading. (Burpee v.
Nat'l Bank, 9 B.R. 814; 8. c. 5 Biss. 405.) :

A denial, on information and belief, of matters that are within the per-
sonal 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. (Burpee
v. Nat'l Bank, 9 B. R. 314; s.c. 5 Biss, 405.)

If the respondent may not know, or can not be assumed to know, the mat-
ters charged in the bill, he may answer on information and belief. (Burpee
v. Nat'l Bank, 9 B. R. 314; 8. c. 5 Biss, 405.)

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 allegation 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 answer-

‘ing. (White v. Jones, 6 B. R. 175.)

When the answer denies certain allegations of the bill, and the plaintiff
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 unsustained. (Vogle
vy. Lathrop et al. 4 B. R. 489; 8. c. 4 Brews. 258.)

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; 8. 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 knowledge, in-
formation and belief of its officers, ascertained from all proper sources of in-
formation. (Hrench vy. First Nat'l Bank, 11 B. R. 189; s. c. 7 Ben. 488.)

The officers and agents of a corporation can not be compelled to answer
the interrogatories in a bill, unless they are parties to the cause. (French v.
First Natl Bank, 11 B. R. 189; s. c. 7 Ben. 488.)

If a party in his answer lays no claim 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, 18 How.
151; 8.c. 3 McLean, 185.)
§ 4979. ] NOTES OF DECISIONS. 351

An answer by a creditor in respect to the debtor’s state of mind, though
responsive to the bill, is entitled to but little weight, unless the reasons for
the belief are given. (Buckingham v. McLean, 13 How.151; s. c. 83 McLean,
185.)

An answer which is responsive to the bill must prevail, unless it is over-
come 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.
(Phenix v. Ingraham, 5 Johns. 412.)

A demurrer for the misjoinder of parties defendant 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.c. 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 multifari-
ousness, (Hill v. Bonaffon, 2 W.N. 356.)

Practice.

If the answer sets up a title to certain property which the assignee 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; 8. c. 8 McLean,
185.)

Where there is a co-assignee 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 co-assignee 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.
4B.R. 601; 8. c. 9 B. R, 245; 8. co. 1 Dillon, 14; s. c. 18 Wall. 376.)

A contract whereby a corporation reserves a greater interest than is per-
mitted by its charter, is void, and can not be .enforced in a court of ‘justice.
(Tiffany v. Boatman’s Sav. Inst. 4 B. R. 601; s.c. 9 B. R. 245; 8. 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. (Jn 7e William H. Shuey, 9 B. R. 526; s.c. 6 C. 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 cred-
itor will be continued until the assignee can file a bill in equity. (Jn re Wil-
liam H. Shuey, 9 B. R. 526; s. 0. 6 C. L. N. 248.)
352 THE BANKRUPT LAW. [§ 4979.

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 par-
ties to the cause. (Smith v. Little, 9B. R. 111; s. c. 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. (Mar-
shall v. Knox, 8 B. R. 97; 8, 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; 8. c. 81 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 represented by
counsel who appear to resist the motion. (McLean v. Lafayette Bank, 3 Mc-
Lean, 503.)

A receiver may be appointed when such appointmeut is proper and neces-
sary. (Sedgwick v. Place et al. 3 B. R. 189; s. c. 3 Ben. 860; McLean v. La-
Jayette Bank, 3 McLean, 603.)

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 cor-
poration. (Platt v. Archer, 6 B. R. 465; 8. c. 9 Blatch. 559.)

If the party alleged to hold the property adversely to the complainant is
not served with process, a receiver will not be appointed. (Hyslop v. Hoppock,
6 B. R. 552; 8. 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 cred-
itors. 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; 8. c. 81 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. (Benjamin
v. Graham, 4 B. R. 391.) :

Courts, in collateral actions, will not listen to any argument which pro-
ceeds upon the allegation that the adjudication of bankruptcy was erroneous
in fact or in law; but will, on the contrary, presume that the decree is cor-
a (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 controversy
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 con-
flicting 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
§ 4980. ] NOTES OF DECISIONS. 353

motion, an order for a preliminary injunction before the filing of the answer.
Cases have occurred in which the voluntary assignment protected equities
which, without it, could not be protected under the bankrupt 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 assign-
ment 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 ease, 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 ad-
ministered 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 the assignee. Where disposal by him is allowed, but dis--
tribution prohibited, he ordinarily receives his reasonable charges, including:
an equitable proportion, usually one half, of the commission which would
otherwise be chargeable. (Barnes v. Rettew, 8 Phila. 133.)

Evidence,

Proof of false and fraudulent statements in regard to the condition of the
company at the time of subscribing for stock is not admissible in a suit by
the assignee against the subscriber to recover the amount unpaid under such
subscription. (Upton v. Hansbrough, 10 B. R. 369; s. 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 has asa court of equity to have the testimony of
witnesses taken in open court. That power is expressly reserved in the 78th
rule, which implies its existence and its perpetuation. It is there left to the
discretion of the court. (Samson v. Clarke, 6 B. R. 408; 8. c. 9 Blatch. 372.)

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 ve David W. Jones, 9 B. R. 56;
8.c 60. L. N. 271.)

The bankrupt’s schedule is not admissible in favor of a fraudulent grantee
to establish the validity of his title. (Curr v. Gale, 2 Ware, 330; 8. c. 3 W.
& M. 38.)

An admission made by the bankrupt before the commencement of the pro-
ceedings in bankruptcy is competent evidence against his assignee. (Marks
v. Barker, 1 Wash. 178.)

The declaration 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, (Phenix v. Ingra-
ham, 5 Johns. 412.)

The subsequent acts of a party to a sale or transfer are not competent evi-
dence, (Phenix v. Ingraham, 5 Johns. 412.)

Szc. 4980.—Appeals may be taken from the district to the cir-
cuit courts, in all cases in equity, and writs of error from the cir-
cuit courts to the district courts may be allowed in cases at law

23
B54 THE BANKRUPT LAW. [$ 4980.

arising under or authorized by this Title, when the debt or dam-
ages 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.

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 ap-
peal, it may be carried to the circuit court by that mode of transferring
cases. When it is a question which, by the system of Federal jurisprudence,
is treated as a question of law, it may be carried to the circuit court bya
writ of error; but, in either case, the debt or damages claimed must amount
to more than five hundred dollars. (Auddick v. Billings, 3 B. R. 61; 5. 0.1
“Wool. 330.)

Quere. How are the words, “debt or damages claimed,” to be construed ?
(Ruddick v. Billings, 3 B. R. 61; 8. c. 1 Wool. 330.)

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-ex-
amined in any court of the United States than according to the rule o! the
common law.” Two modes only were known to the common law to re-ex-
amine 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 ir the proceeding. Congress could not provide that a judg-
ment of the district court, founded upon the verdict of a jury in a civil ac-
tion whether for a less or greater sum than five hundred dollars, 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 five hundred dol-
‘lars, and the decrees of the district court in such case are final and conclusive.
(Knight v. Cheney, 5 B. R. 805; 8. ¢.2L. T. B. 205; Ins. Co. v. Comstock, 8
B. R. 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
decided in the district court under the jurisdiction created by the act; 2d.
By writs of error in cases at law decided in the exercise of that jurisdiction ;
3d. By appeal from decisions rejecting wholly or in part the claims of sup-
posed creditors; and 4th. By appeal from decisions ullowing such claims.
In the first two classes of cases, the appeal or writ of error is given to the un-
successful 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 as-
signee. 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 ap-
peal 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 bapk-
rupt, or by such persons against assignees. (Jn re Alexander, 3 B. R. 29;
.8. C. Chase, 295; sc. 2L. T. B. 81; in re O’Brien, 1 B. R. 176; Street v.
Dawson, 4 BR. 207; im ve York & Hoover, 4 B, R. 479; 8. co. 1 Abb. (. C.
503; 8.c.1 L. T. B. 290; Morgen v. Thornhill, 5 B. R. 1; s.c. 11 Wall. 65;
Knight v. Cheney, 5 B. R. 805; s. c. 2 L. T. B. 205.)

The judgments or decrees of the district court rendered in the exercise of
§ 4980.] NOTES OF DECISIONS. 355

the regular jurisdiction between party and party can not be reviewed or re-
vised 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; 8.
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. (Coit v. Robinson, 9 B. R. 289; 8. c. 19 Wall. 274.)

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.
(Coit v. Robinson, 9 B. R. 289; s. c. 19 Wall. 274.)

Appeals,
The phrase ‘‘ case in equity,” means a suit in equity. Courts of law fre-
quently 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 avery 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, assum-
ing to pass upon the priorities of claimants 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 par-
ties made a case in equity. When the district court passes upon the validity
of a sale,and directs the distribution 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. Itis 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. (Jn re York & Hoover, 4 B. R. 479; s.c. 1 Abb. C. C. 503; 8. 0.1 L.
T. B. 290.)

Summary proceedings in the district court can not be revised by an ap-
peal to the circuit court. (Samson v. Bluke, 6 B. R. 401; Samson v. Clarke, 6
B. R. 403; 8. c. 9 Blatch. 372.)

An appeal can not be taken to revise a decision on a question relating to
the bankrupt’s discharge. (Jn re J. M. Reed, 2B. R.9; Ruddick v. B llings,
3 B. R. 61; 8. c. 1 Wool. 380; Coit v. Robinson, 9 B. R. 289; 8. c. 19 Wall.
274.)

An appeal will not lie froma decision in a case of involuntary bankruptcy
declaring the debtor a bankrupt. (/n 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. (Jn 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
vy. Iselin, 9 Blatch. 196; Plutt 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 appealed
from.” The language refers to and is apt to describe each class, and only
356 THE BANKRUPT LAW. [§ 4980.

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 immediately preceding lan-
guage, 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 2
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. (Jn re Edward A.
Casey, 8B. R. 71; s. c. 10 Blatch. 376.)

A decree which merely declares a conveyance void, but directs a reference
to the master to take an account of the rents and profits, and to make allow-
ances affecting the rights of the parties, is not a final decree. (Platt v. Stew-
art, 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. (Platt v. Stewart, 47 How.
Pr. 206.)

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.)

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.)

When the question raised on an appeal is doubtful, no costs will be
allowed. (Clark v. Iselin, 9 Blatch. 196; in re Place & Sparkman, 9 Blatch.
369.)

Writ of Error.

It is the right of the excepting party in a case of involuntary bankruptcy,
which is tried before a jury, to have the questions arising during the trial, if
duly presented by a hill of exceptions, re-examined by the circuit court on a
writ of error. (ins. Co. v. Comstock, 8 B. R. 143; s. c. 16 Wall. 258; Phelps
v. Classen, 3 B. R. 87; s. co. 1 Wool. 204.)

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 vy. Gourdin, 11 B. R. 156.)

A bill of exceptions to the rejection of certain evidence is insufficient if it
does not set out the evidence so rejected. (Strain v. Gourdin, 11 B. R. 156.)

A petition for a writ of error which is not made a part of the bill of ex-
ceptions forms no part of the record, although it purports to set out all the
evidence in the case. (Strain v. Gourdin, 11 B. R. 156.)

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 verdict as
they did, the judgment will be affirmed. (Schulenberg v. Kabureck, 2 Dillon,
182; Walbrun vy. Babbitt, 6 B. R. 539; s.c. 9B. R.1; 8. c. 16 Wall. 577.)

Questions of fact can not le re-examined on a writ of error. It may be
necessary, to enable the court to sec the principle of law that was decided, to
make the facts, to some extent, a part of the record by bill of exceptions but
it is always the law decided that is subject to review, and not the facts.
§ 4980. ] NOTES OF DECISIONS. 357.

(Ruddick v. Billings, 3 R. R. 61; s. c. 1 Wool. 830; Cragin v. Thompson, 12
B. R. 81; 8, c. 2 Dillon, 513.)

Tt 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 between coin and currency,
and adding it to the coin value. The result would practically be the same,
for the amount of currency would be increased so as to equal the value as act-
ually 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. (Hdmondson vy. Hyde,
7B. R.1; 8s. c. 2 Saw. 205; s.c. 5 L. T. B. 380.)

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. (Buhbité v. Burgess, 7 B. R. 561; 8. c. 2 Dillon,
169.) .

Parties litigant should, if they so desire, interpose their technical objec-
tions in the district court, and if they do not, they ought not to be heard for
the first time in the appellate court u»on such points, especially where it is
obvious that the judgment was such as the law and facts demanded. Tech-
nical and formal defects should be assailed in order that they may be cor-
rected in the court of original jurisdiction. Such defects are no ground for
the reversal of a judgment in the appellate court. (Babbitt v. Burgess, 7 B. R.
561; s. c. 2 Dillon, 169.)

Objection to the pleadings can not be entertained in the circuit court
(§ 954), unless they were raised by aspecial demurrer in the district court.
(Babbitt v. Burgess, 7 B. R. 561; s. c. 2 Dillon, 169.)

A motion to dismiss a writ cf error will be overrruled ifit is made before
the day on which the writ is returnable. (Globe Ins. Co. v. Cleveland Ins. Co.
211. RR. i4.)

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 explanation they would
be incomplete in respect to some matter sufficiently explained in the evidence.
{ Willis v. Carpenter et al, 14 B. R.)

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 question of priority
of payment is one totally distinct trom the question of the allowance or rejec-
tion of the claim or debt. ‘There is a distinction between the claim of a debt
or demand against the bankrupt, and the claim of priority as to other cred-
itors. A claim of priority is not a claim asserted against the bankrupt, but a
right asserted against other crecitors. (Jn re York & Hoover, 4 B. R. 479;
8. c.1 Abb. C. C. 503; 3. 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 review the decision
must be taken by the assignee. (Jn re Troy Woolen Co. 9 B. R. 329; 8.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
358 THE BANKRUPT LAW. [8§ 4981, 4982..

from the time of claiming the same, and does not set forth a statement, 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, although he claimed
an appeal within the proper time, and gave due notice thereof to the clerk of
the district court and the opposite party. (Jn re Coleman, 2 B. R. 671; 8. c.
7 Blatch. 192; in re Place et al. 4 B. R. 541; 8. c. 8 Blatch. 302.)

A decree rejecting a claim, and directing that the assignee recover costs
against the claimant to be taxed by the clerk, and have execution therefor,
is final in such a sense that an appeul will lie therefrom. It settles the sights
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. (Jn re Place & Sparkman, 9 Blatch.
369.)

An objection which goes to the jurisdiction of the court does not rest in
discretion. (In re Place & Sparkman, 9 Blatch. 369.)

If no bond is given within the required ten days, no appeal can be allowed.
Still, if the bond is in proper form, and is 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 ae court the decree appealed from was rendered. (Benjamin v. Hart, 4
B. R. 408.)

Sxo. 4981.—No appeal shall be allowed in any case from the
district to the cirenit 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 3.
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.

‘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 vy. Bailey, 12 B. R. 132;
s.c. 21 Wall. 640.)

The words “defeated party” must be construed as “ opposite party,” or
‘‘successful party,” or ‘adverse party.” (Wood v. Bailey, 12 B. R. 182; 8.¢.
21 Wall. 640.)

_ Sec. 4982.—Such appeal shall be entered at the term of the
cirenit court which shall be held within the district next after the
expiration of ten days from the time of claiming the same.

The right of appeal, as given by the statute, can neither be enlarged nor
restricted by the district or the ciicuit court. The regulation of appeals is a
regulation of jurisdiction. The circuit court has no jurisdiction of any ap-
peal in any case under the bankrupt act from the district court, unless it is
claimed, and bond is filed at the time it is claimed, and notice of it given, as.
§§ 4983, 4984. ] NOTES OF DECISIONS. 359

required by this section, within ten days after 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 thé proper district next after the expiration of ten days
from the time it was claimed. (/n ve Alexander, 3 B. R. 29; 8. c. Chase, 295;
8.c, 2 L. T. B. 81; in re Kyler, 3 B.R. 46; 8. c. 6 Blatch. 514; Hawkins v.
Hastings Nat’! 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 direc-.
tory, and the time for filing the transmiss may be enlarged by agreement.
(Baldwin v. Rapplee, 5 B.R. 19; Barron v. Morris, 14 B. R. 371.)

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 v. Morris, 14 B. R. 871.)

Although the rule in regard to entering the appeal is merely directory,
still if it is disregarded, the appellee has a prima facie ground of dismissal.
(Barron v. Morris, 14 B. R. 371.)

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 appel-
lant’s claim, and a brief account of what has been done in the district court,
and the grounds of appeal. It is not necessary that the transcript of the pro-
ceedings in the district court shall be filed within ten days. (Barron v. Morris,
14 B. R. 871.)

When an appeal has not been properly taken, a motion for a re-argument,
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 meritoricus; 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, perhaps in such extraordinary
and extreme cases as ought to be considered as exceptions to an almost in-
flexible and absolute general rule. (Jn re Troy Woolen Co. 6 B. R. 16; 8. c.
5 Ben. 413.)

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 in-
clude the writ of error as well as appeal, as the whole section seems to con-
template 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. Comstoch, 8 B. R.145; 3.0.16 Wall. 258; Coit v. Robinson,
9B. R. 289; s.c. 19 Wall. 274.) :

Sro. 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.

Suc. 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 writ-
ing 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
360 THE BANKRUPT LAW. *  [§ 4985.

shall therenpon 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 exccution shall be awarded against the assignee for the amount
of a debt found due to the ercditor.

A creditor can not demand payment of his debt until he makes and pre-
sents to the assignee the proper proo!. 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 thisis 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 pre-
cedent circumstances and conditions. But they are not adjudications, but
only proceedings preliminary of adjudication. (Catlin v. Foster, 3B. R. 540;
s. c. 1 Saw. 37; s.c.1L. T. B. 192.)

The statement must bein form and substance a declaration of the supposed
cause of action, to which the adverse party can plead and go to trial. (la re
Place e¢ a/. 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 circuit
court has full appellate power, and may make such order in relation to appeals,
not fully provided for in this section, as may be necessary to conform the pro-
ceedings to the nature of the case. (Za re Blandin, 5 B. R. 89; s. c. Lowell,
543; s.c. 2L. 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 pre-
sented 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 establish facts not proved
below and new questions of law may arise thereupon. (Jn re Jaycox &
Green, 13 B. R. 122; 8. c. 12 Blatch. 209.)

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 J aycox & Green,
13 B. R. 122; s. c. 12 Blatch, 209.)

Sc. 4985.—The final judgment of the cireuit court, rendered
upon any appeal provided for in the preceding section, shall be
conclusive, and the list of debts shall, if necessary, be altered to
conform thereto. The party prevailing in the suit shal] 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 al-
lowed ont of the estate.
§ 4986. ] NOTES OF DECISIONS. 361

Src. 4986.—The circuit court for each district shall have a
general superintendence and jurisdiction of all cases and questions
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 ex-
cept 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 cir-
euit judge of the circuit.

Construction.

It would be difficult to use language capable of conferring a more com-
plete 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 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 bank-
ruptcy already pending in the district court. (Ruddick v. Billings, 3 B. R.
61; s.c. 1 Wool. 330; in re Alexander, 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. & Hud. 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 bank-
rupt act, as sufficiently appears from the words ‘ general superintendence ”
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, showing that it includes the
latter as well as the former, and that the jurisdiction may be exercised in
chambers as well as in court, and in vacation as well as in term time. (Mor-
gan v. Thornhill, 5 B. R. 1; 8. c. 11 Wall. 65; Coit v. Rudinson, 9 B. R. 2389;
s. c. 19 Wall. 274.)

The only construction, which gives due effect to all parts of the act relat-
ing to revisory jurisdiction, is thut which, on the one hand, excludes from
the category of general superintendence and jurisdiction of the circuit 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. (Jn re Alexander, 3 B. R. 29; 8. c. Chase,
295; sc. 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 extend
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, 6B. R.1; 8. c. 14 Wall. 419;
8.0.5 L. T. B. 7; Knight v. Cheney, 5 B. R. 305; 8. 0. 2 L. T. B. 205; Stiek-
ney v. Wilt, 11 B. R. 97.)

The proceeding in bankruptcy, from the filing of the petition to the dis-
362 THE BANKRUPT LAW. [§ 4986.

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 regu-
lar 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 aclaim. 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 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 bill, peti-
tion or other proper process of any party aggrieved, be heard and determined
in the circuit court as a court of equity. (Jn re York & Hoover, 4 B. R. 479;
s.c. 1 Abb. C. C. 568; s.c. 1 L. 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 employ-
ing that language, is to describe the particular circuit court in which the
jurisdiction shall be exercised, and nct 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. Re-
vision must be sought in the circuit court of the district where the proceed-
ings took place which the petitioner asks to have revised; but he is not de-
prived of a remedy because the decree is in its nature final. It was the in-
tention of Congress to subject every ruling, order and decree of the district
court, in bankrupt cases, to the examination and revision of the circuit court.
(Littlefield v. Del. & Hud. Canal Co. 4 B. R. 257.)

It is not every proceeding in a bankrupt case that the circuit court is au-
thorized to review. The circuit court is not empowered to pass upon the
doings and actings of the registers, or assignees, or creditors. The case or
question presented for revision must be a case or question fairly presented to
and passed upon by the bankrupt 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,
7B. R. 145.)

The circuit court will not set aside an alleged fraudulent sale of real
estate ordered by the bankrupt court and made by the assignee, unless the
motion is first presented to the bankrupt court, because it can only review
the action of the court, and not the action of the assignee. (Bailey v. Whit-
Jield, 7 B. R. 178.)

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; s. c. 9 Blatch, 379.)

Tf 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. (Jn re McGilton et al. 7 B. R. 294;
8. c. 3 Biss. 144.)

The bankrupt 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 discretionary powers in
reference to the appointment and approval of assignees, and the circuit
§ 4986. ] NOTES OF DECISIONS. 363:

courts will decline to interfere with them. (Woods v. Buckwell, 7 B. R. 405;
8. c. 2 Dillon, 38.)

The circuit court has jurisdiction to revise the proceedings of the district
court for the middle district of Alabama. (Alubama R. R. Co. v. Jones, 5 B.
R. 97.)

Decrees of the district court are final, in the constitutional sense, although
they are rendered under an act of Congress which makes them subject to re-
vision 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 revision in the circuit court, no
party acquires or can acquire any interest in the decrec to defeat the right of
such revision. (Littlefield v. Del. & Hud. Canal Co. 4 B. R. 257.)

The superintendence and jurisdiction conferred by this clause are revisory
of cases and questions arising in the district court, and contemplate 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 bankrupt 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 tbe 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 cases
presenting such questions, must arise in the district court; and their deter-
mination in the circuit court is either for the guidance or control of the
district court. This is not a jurisdiction to assume the conduct of thepro-
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 administration of
the bankrupt law. The courts are distinct under that act, as under all others,
and exercise a separate jurisdiction, each in its own sphere. The proceed-
ings for a review of the decree of the district 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 be carried into due execution by the former, and not the
latter. (Jn re Binninger e¢ al. 3 B. R. 487; 8. c. 7 Blatch. 159; s.c. 1. T.
B. 183; in re Binninger eé al. 3 B. R. 489; 8. c. 7 Blatch. 165; s.c.1L. 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 depend
on the sound discretion of the court. Unreasonable delay in invoking the
superintending jurisdiction should not be allowed, nor should such excessive
rigor be exercised that the ends of justice will probably be defeated. (Jn re
Alexander, 3 B. R. 29; s.c. Chase, 295; 8.c.2 L.T.B. 81; Littlefield v.
Del. & Hud. Canal Co. 4 B. R. 257; Sutherland v. Kellogg, 2 Biss. 405; in re
Work, McCough & Co. 30 Leg. Int. 361; Bank v. Cooper, 9 B. R. 529; 8. ©.
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 v. Cooper, 9 B. R. 529; 8. c. 20 Wall.
171.)

A review may be applied for at any time before the supposed erroneous
order is carried into execution. (Jn re Edward A. Casey, 8 B. R. 71; 8. c.
10 Blatch. 376.)
364 THE BANKRUPT LAW. [§ 4986..

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 repugnaut to the laws of the United States, and are not‘incon-
sistent with the rules relating to the same subject established by the supreme
court. (Sweat v. Boston R. R. Co. 5 B. R. 234; 8.0. 1 L. T. B. 278.)

The jurisdiction conferred by this clause can only be exercised within and
for the district “where the proceedings in bankruptcy shall be pending.”
(Shearman v. Bingham, 5 B. R. 84; 8. c. 7B. R. 490; 8. c. 3 C. L. N. 258.)

If the judge was a creditor at the time when the proceedings were com-
menced, 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. (Jn re Sime & Co. 7 B. R. 407; 8. c. 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 jurisdiction;
but that is necessarily implied. A court of justice is not at liberty to dis-
own its jurisdiction, or to refuse to entertain parties who apply in due form
for its exercise. Where the jurisdiction is itself discretionary, it may be
declined ; and where partics 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,
doubless the court may dismiss their application. And the control of the
court over frivolous aud vexatious appeals of any kind is not questionable.
But the court can not impose compulsory dismissal as a penalty or conse-
quence of alleged or supposed misconduct 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 bim from prosecuting the proceedings in
bankruptcy. (Jn ve Binninger ef al. 3 B. R. 489; 8. c. 7 Blatch. 168; s. 0. 1
L. T. B. 187.)

There is one class of cases where, by the provisions of the bankrupt act,
issues may be framed and tried by a jury, to wit, where the debtor opposes
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 parenthesis into the body
of this part of the section. Special provision is made in such cases wihin
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 dis-
trict 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 v.
Thornhill, 5 B. R. 1; 8. c.11 Wall 65.)

Special provision is not otherwise made for the re-examination by the cir-
‘cuit of the decision of the district court in granting or refusing a discharge,
and hence it can only be done under the power conterred by this clause. (Coit
v. Robinson, 9 B. R. 289; 8. c. 19 Wall. 274.)

The circuit court can not entertain a petition on the part of an objecting
creditor to review the decision of the bankrupt court allowing the claim of
another creditor. (Jn 7¢ Troy Woolen Co. 9 B. R. 329: 8.0. 9 Blatch. 191.)

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
§ 4986.] NOTES OF DECISIONS. 365

cause, the review can only be had by means of an appeal, and not by means of
a petition of review. (Warren v. Tenth Natl 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 reviewed
by a writ of error after a final adjudication. (Jn re Oregon B. P. & P. Co. 14
B. R. 394.)

The granting or refusing of a motioh for a new trial is a matter resting in
the sound discretion of the district court, under all the circumstances of the
case, and can not be revised by the circuit court, and the statute intended to
provide for the revision of questions of law and not questions of discretion.
(In re Daniel Marsh, 6 Law Rep. 67.)

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 cir-
cumstances of the whole case, are brought before it by a complete report. (Jn
re Daniel Marsh, 6 Law Rep. 67.)

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 bank-
rupt, where there is no trial by ajury. (Perry v. Langley, 2 B. R. 596; 8. ©.
8 A. L. Reg. 427; Farrin v. Crawford et al. 2B. R. 602; in re Craft, 1 B. R.
878; 8. c. 2 B. R. 111; 8. c. 6 Blatch. 177; 8. c. 2 Ben. 214; Sutherland v.
Rellugg, 2 Biss. 405; Thornhill v. Bank, 5 B. R. 367; s. c. 1 Wood, 1; in re
Picton, 11 B. R. 420; s.c. 2 Dillon, 548.)

Proceedings on the bankrupt’s application for a discharge. (Zn re J. M.
Reed, 2 B.R. 9; Ruddick v. Billings, 3 B. R. 61; 8.c. 1 Wool. 330; Littlefield
v. Del. & Hudson Canal Co, 4 B. R. 257; Coit v. Robinson, 9 B. R. 289; 8. c. 19.
Wall. 274.)

A decision refusing to stay proceedings on a suit in a State court against
the bankrupt. (Jn re W.E. Robinson, 2 B. R. 842; s.c. 6 Blauch. 253; 8. c..
36 How. Pr. 176; 8.c.2L. 1. B. 18.)

Proceedings instituted by an assigneee to sell property belonging to the
bankrupt’s estate. (In re Alexander, 3 B. R. 29; s. c. 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 re-
cover property held contrary to the bankrapt 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 a release from arrest. (Jn re J. H. Kim-
ball, 2 B.R. 354; 8.0. 6 Blatch. 292; s.c. 2 Ben. 554.)

Proceedings for the purpose of ascertaining and liquidating liens. (Jn re
York & Hoover, 4 B. R. 479; s.c. 1 Abb. C. C. 503; s.c. 1 L. T. B. 290.)

But a decision allowing or disallowing a claim can not be reviewed. (In re
Place et al. 4 B. R. 541; 8. c. 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 under section 4980, and
not by a petition under this section. (Jn 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, pro-
hibiting it trom 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. (Jn re Binninger e¢ al. 3 B. R. 487; 8.c. 7 Blatch.
159; s.c.1 L. T.B. 183.)

The circuit court will not, during the pendency of proceedings to review
366 THE BANKRUPT LAW. [§ 4986.

the decree of the district court, direct the marshal to take possession 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 summary juris-
diction conferred upon the district court. (Clark ef al. 3 B. R. 489; 8.¢. 7
Blatch. 165; s.c.1L. T. B. 186.)

Proceedings for Review.

The only way in which the circuit court can exercise its supervisory juris-
diction in such cases is by a petition addressed 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. (Jn re J. M. Reed, 2 B.R.
9; Ruddick v. Billings, 8 B. R. 61; s.c. 1 Wool. 380; in re Edward A. Casey,
8 B.R. 71; s8.c. 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 proceed-
ings and decision of the district court, it is a proper proceeding, and ought to
be entertained by the circuit court. (Marshall v. Knox, 8 B. R. 97; 8. c. 16
Wall. 551.)

A bill of review may be treated as a petition for review. (Hurst v. Teft,
13 B.R. 108; 8.c. 12 Blatch. 217.)

A notice of appeal is not a proper process for invoking a review of a
summary proceeding. (Jn re Edward A. Casey, 8 B. R. 71; 8. 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. RB. 234; 8. c.1 L. T. B. 278; contra, Ala. & Chat. R. RB. Co. v. Jones, 7 B.
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
v. Bank, 5 B. R. 367; 8. c. 1 Wood, 1.)

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. Appel-
late 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 se-
cure to him an appellate tribunal for the re-examination and revision of the
rulings, orders, and decrees of the district ccurts, and for the reversal of the
same in case they are found to be erroneous. (Littlefield v. Del. & Hud. Canal
Co. 4B, R. 257; Sutherland v, Kellogg, 2 Biss, 405; Samson v. Blake, 6 B. R.
a 8. c. 9 Blatch. 879; in ve Edward A. Casey, 8 B. R. 71; 8. c. 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 an 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 whole case
§ 4986. ] NOTES OF DECISIONS. 367

may also be brought up by bill of exceptions, or otherwise. (Sutherland y.
Kellogg, 2 Biss. 405.)

Appeals in equity suits and in causes of admiralty and maritime jurisdic-
tion, vacate the respective decrees in the subordinate courts, and remove 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. &
Hud. Canal Co, 4 B. R. 257.)

The filing of a petition forthe exercise of the revisory power of the circuit
court does not ordinarily operate as a stay of the proceedings in the subordi-
nate court. (Adams v. Railroad Co. 4 B. R. 314; 8.0. 6 A. L. Rev. 365.)

The petition may be amended. (Littlefield v. Del. & Hud. Canal Oo. 4 B.
R. 257; Sutherland v. Kellogg, 2 Biss. 405.)

The statement of an attorney that he is duly authorized by the petitioner
to institute and prosecute the proceeding, is conclusive evidence of the fact,
unless some proof to the contrary is shown, (Ala. & Chut. R. R. Co. v. 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 review 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 sum-
mary, and a reasonable notice to counsel accomplishes the ends of justice.
(Ala, & Chat. RB. R. Co, v. Jones, 5 B, R. 97.)

If the service of the petition is defective, it is cured by an appearance and
the filing of an answer. (Ala. & Chat. R. R. Co. v. Jones, 5 B. R. 97.)

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. & Hud. Canal Co. 4 B. R. 257.)

Objections to the answer for insufficiency may be taken by an exception.
(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. Bunk, 5 B. R. 367;
8, c. 1 Wood, 1.)

The district judge can not sit as a member of the circuit court in the ex-
ercise of its revisory powers. (Welson v. Carland, 1 How. 265.)

The circuit judge has power in vacation at his chambers, though outside
of the district, to entertain and act upon the petition of review. (d/arkson 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 questior. of fact, the burden is on the
petitioner for review to show error in the decision. It is not sufficient merely
to show such a condition of the testimony in the case, that different minds,
with equal fairness, might possibly arrive at different 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. (Jn re Dow, 6 B. R. 10; Wells v. Dal-
rymple, 15 I. R. R. 59.)

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 reduced to writing, should
not be reversed without a very clear and decided conviction that it is erro-
368 THE BANKRUPT LAW. [S$ 4987-89.

neous. (Samson v. Clarke, 6 B. R. 403; 8. c. 9 Blatch. 372; in re Cornwall, 6
B. RB. 805; 8. c. 9 Blatch. 114; in re Picton, 11 B. R. 420; s.c. 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 circuit court is bound
to presume that the evidence offered in support of the amendment was legal
and sufficient. It must presume that the bankrupt court acted in good faith.
The amended record can not be impeached in a circuit court. (dla. & Chat.
R, R. Co. v. Jones, 7 B, R. 145.)

The circuit court sits asa court of equity, and on an inquiry into ques-
tions of fact, is not bound to reverse upon strictly legal grounds, if satisfied
that the facts are correctly found, and that no injustice has been done.
(Samson v. Blake, 6 B. R. 410; 8. c. 9 Blatch. 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. (Jn re Boston R. R. Co. 6 B. R. 209;
8. c. 9 Blatch. 101.)

The circuit court, in cases presented for review, is not a court of original
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 superintendence
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 ag-
grieved, may ask the court to retry. The circuit court, in its discretionary
power, may properly conclude that no sufficient case is presented calling for
a retrial of the facts. (Bunk v. Cooper, 9 B. R. 529; 8. c. 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 assiguee
vi appoint another in his place. (Jn re Perkins, 8 B. R. 56; s. c. 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 v. Railroad Co.
13 B. R. 258; 8. c. 1 Wood, 661.)

Where property is unlawfully taken from the possession of a receiver and
sold, the circuit court, on reversing the decree of the district court, will de-
clare the sale void. (Davis v. Railroad Co. 18 B. R. 258; s. c. 1 Wood, 661.)

Suc. 4987.—The several supreme courts of the Territories shall
have the same general superintendence and jurisdiction over the
acts and decisions of the justices thereof-in cases of bankruptcy as
is conterred on the cirenit courts over proceedings in the district
courts.*

Sec. 4988.—In districts which are not within any organized
cirenit of the United States, the powers and jurisdiction of a cirenit
court in bankruptcy may be exercised by the district judge.

Src. 4989.—No appeal or writ of error shall.be allowed in any
case arising under this Title from the circuit courts to the supreme

 

* Vide sec, 4978.
§ 4989. ] NOTES OF DECISIONS. 369

eourt, unless the matter in dispute in such case excveds* five thou-
sand dollars.

Decrees in equity, in order that they may be re-examined in the supreme
court, must be final decrees rendered in term time as contradistinguished
from mere interlocutory decrees, or orders which may be entered 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 jurisdiction. (Morgan v. Thornhill,
5 B.R. 1; 8.0. 11 Wall. 65; Hall y. Allen, 9 B. R. 6; 3. c. 12 Wall. 452;
Mead v. Thompson, 8 B. R. 529; 8. c. 15 Wall. 635; Coit v. Robinson, 9 B. R.
289; s. 0. 19 Wall. 274; Melson v. Curland, 1 How. 265.)

An appeal does not lie from a decision of the circuit court affirming a de-
cision of the district court upon a motion to set aside an adjudication.
(Sandusky vy. National Bank, 12 B. R. 176.)

If the circuit court decides that it has no jurisdiction to entertain a bill
of review, the supreme court may entertain an appeal from such decision, not
for the purpuse of reviewing, but for the purpose of correcting an erroneous
decision respecting the power of the circuit court, and enabling the party
to be heard on his application. (Bank v. Cooper, 9 B. R. 529; 8. 0. 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 jurisdic-
tion intended to be conferred upon the district courts is the regular jurisdic-
tion 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 char-
acter 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 de-
crees 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 ex-
isting laws. (Morgan v. Thornhill, 5 B. R.1; 8. c. 11 Wall. 65; Coit v. Rob-
inson, 9 B. R. 289; s.c. 19 Wall. 274.

Tn all cases where concurrent jurisdiction is vested in the circuit and dis-
trict 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 controversies
outside of the bankrupt act. (Smith v. Mason, 6B. R. 1; s. c. 14 Wall. 419;
s.c.5 L. T. B. 7; Knight v. Cheney, 5B. R. 305; 3. c. 2 L. T. B. 205; Morgan
y. Thornhill, 5 B. R. 1; 8. 0. 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 five hundred dollars, 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 five thousand dollars, may be re-
examined in the supreme court, by appeal or writ of error, as provided in
the judiciary act, and the act allowing appeals in cases of equity, and of ad-
miralty and maritime jurisdiction. (Knight v. Cheney, 5 B. R. 305; 8. c. 2 L.
T. B. 205; Stickney v. Wilt, 11 B. R. 97.)

The supreme court can not entertain an appeal from the district court,

 

* So amended by act of Feb, 16, 1875, § 3.
24
370 THE BANKRUPT LAW. [§ 4989.

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. (Jn re William Christy, 3 How. 292;
Crawford v. Points, 13 How. 11.)

On an application for a prohibition against the district court, allegations
of facts, not found in the proceedings of the district court, can not be con-
sidered, for the application must be made on the ground that the district
court bas transcended its jurisdiction in entertaining those proceedings, 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. (Jn ve 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 allowed generally,
when more than one person was interested jointly in a cause of action or
other proceeding, and one of them refused to participate 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 or judgment 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 assign-
ing 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 pro-
ceeding called summons 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 writ-
ing 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 ap-
pearance 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. 130; 8. c. 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 ap-
peal. 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
application 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 tocomply 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 minutes of the
court, or something else must be clone to show that the appeal has been taken
within sixty days. The allowance of the appeal rela‘es back to the time when
the original application was made for an appeal. The appeal suspends the
operation of the judgment of the circuit 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
supersedeas ; consequently all facts made or done by either court, after the ap-
peal has been applied for, are vacated by an allowance of the appeal. (Thorn-
hill vy, Bank, 5 B, R. 877; 8. c. 1 L. T. B, 287.)

The object of a citation is to give notice of the removal of the cause, and
such notice may be waived by entering a general appearance ‘by counsel.
§ 49990. ] NOTES OF DECISIONS. 371

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 ap-
pearance is entered for that purpose. After the lapse of the term the motion
1s too late. (Buckingham v. McLean, 138 How. 151; s. c. 3 McLean, 185.)

Want of notice of an appeal comes too late after a general appearance.
‘(Smith v. Mason, 6B. R. 1; 8s. c, 14 Wall. 419; 8.¢.5 L. T. B. 7.)

No appeal lies unless the decree is final, and a decree which directs an ac-
‘count 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 decree
is entered as between all the parties. (Buckingham v. McLean, 13 How. 151;
‘s. c. 8 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. (Sucking-
ham v. McLean, 18 How. 151; s. c. 3 McLean, 185.) ‘

If the circuit court renders a judgment or decree in favor of the party in-
stituting the suit, in a case where it is without jurisdiction, the supreme court
will reverse the judgment or decree and remand the cause with directions to
‘dismiss the suit. (Stickney v. Wilt, 11 B. R. 97.)

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 question pre-
sented in the bill of exceptions filed in the district court, as those questions
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 supreme 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 district court. (Zns. 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.
(Ins. Co. v. Comstock, 8 B. R. 145; 8. c. 16 Wall. 258)

Sec. 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, re-
scind, 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 cliarges and

~ costs to be allowed,* with respect to all proceedings in bank-

 

* So amended by act of 22 June, 1874, § 18.
372 THE BANKRUPT LAW. [§ 4991..

ruptcy 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 ap-

eals.

e Fifth. For regulating the filing, enstody and inspection of
records.

Sixth. And generally for carrying the provisions of this Title
into cffect.

All such general orders shall from time to time be reported to
Congress, with such suggestions as the justices may think proper.

* And said justices shall have power under said sections, by
general regulations, to simplify, and so far as in their judgment
will conduce to the benetit 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 unneces-
sary expense may be avoided.

Practice in Bankruptcy.

A court of bankruptcy is sud generis in its nature,.and its practice is con-
trolled by the Jaws which created it, aided by such light as may be thrown
upon them by the reported decisions under similar statutes. (dn re Strauss,
2B. R. 48; in re Adams, 2 B. R. 95; s. c. 36 How. Pr. 51; s. c. 2 Ben. 503.)

Proceedings in the bankrupt case proper are regarded as proceedings in
equity,,and are to be governed by the rules and analogies of equity jurispru-
dence. (Jn ve 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. (dn re L. Glaser, 1B. R. 236; s. c. 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 ofthe act are expressly conferred upon officers created thereby. (In re
Philip Rein, 49 How. Pr. 801.) :

Establishment of Fees.

The justices can not allow larger fees than those now given for similar
services in other proceedings. (Jn re Dean, 1B. R. 249; s.c.1L. T. B. 9;
in re J. H. Robinson, 1 B. R. 285; s. c. 2 Ben. 145; 5. c.1 L. T. B. 25.)

The power of the justices of the supreme court to prescribe fees, com-
missions, 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 proceed-
ings. (Jn re Johnston & Wail, 12 B, R. 845.)

Se. 4991.—The filing of the petition for an adjudication in
bankruptey, either by a debtor in his own behalf, or by any cred-
itor against a debtor, shall be deemed to be the commencement of
proceedings in bankruptcy.

 

* So amended by act of 22 June, 1874, § 18.

wrreee
§ 4992. ] NOTES OF DECISIONS. 373

The order referred to in this provision must men the ordar adjudicating
the debtor a bankrupt. (Zn re Patterson, 1 B. R. 125; 8. c. 1 Ben. 508.)

The filing of the petition is the commencement of the proceedings. The
deposit of fifty dollars to secure the register’s fees, is merely an act prelimi-
nary to the issue of the warrant. (Jn re C. H. Preston, 6 B. R, 5435.)

The proceedings in bankruptcy are not commenced until the petition is
actually filed, although it was'previously made, signed, and verified. (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 pre-
ceding 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 a order of adjudication
may be made by the court. (Jn 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 consti-
tute the commencement of proceedings in bankruptcy. (In re Davis Rogers,
10 B. R. 444; s.c.1 Cent. L. J. 470.)

Src. 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 num-
bered 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
-eases be presumptive evidence of the facts therein stated.

A copy of an order of adjudication certified to by a register is not properly
authenticated, andis not admissible as evidence in a collateral action. (Adams
.e al. v. Wait, 42 Vt. 6.)

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.
(Fehley v. Barr, 66 Penn. 196; Rugan v. West, 1 Binn. 263; Blythe v. Johns, 5
er a vide Wood y. Grundy, 3 H. & J. 13; Barney v. Patterson, 6 H. &

The original papers in proceedings in bankruptcy are: admissible in evi-
dence for the purpose of proving the declarations of the bankrupt. (Clayton
‘vy. Siebert, 3 Brews. 176.)

The certificate may be made by the clerk of the court. (Clayton v. Ham-
alton, 37 Tex. 269.) p

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. (Shomov. Zeigler, 31 Leg. Int. 205; 8. c. 78 Penn. 357.)

A duly certified copy of the inventory is competent evidence against the
bankrupt, without the production of the entire record. (Dupuy v. Harris, 6
B. Mon. 534.)

The transcript of the proceedings in bankruptcy, under the seal of the dis-
374 THE BANKRUPT LAW. [8§ 4993-4.

trict 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 v. 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, 13 Mo. 179.)

If a fraudulent vendee sells the goods to a third person, his subsequent
petition and adjudication are not competent evidence against such purchaser,
(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 v. Marsh, 2 Hay, [N. C.j 20.)

In actions depending upon the bankruptcy of a stranger, there must be
proof of the proceedings in bankruptcy, the act of bankruptcy, and the pe-.
titioning creditor’s debt. (Waterman v. Robinson, 5 Mass. 303; Belden v. Hd-
wards, 2 Day, 246; Farrington v. Furrington, 4 Mass, 237.)

The proceedings in bankruptcy do not constitute an integral record, but
acopy of any portion thereof duly authenticated as a separate record, is.

prima facie evidence of the facts stated therein. (Michener v. Puyson, 13 B.
R. 49; 8.¢c.8C.L. N. 17; 8. c. 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 bankrupt 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. Har-
per, 5 Rich. [N. 8.] 294.)

To establish the bankruptcy of the debtor, the production of the procecd-
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 vy. Strode, 2 A. K. Marsh. 115; Den v. Wright, Pet. C.
C. 64.) 4

When an adjudication of bankruptcy is proved, the party who alleges
that the proceedings have been dismissed, must prove the time of dismissal.
(Wells v. Claflin, 13 B. R. 487.)

Src. 4993.—Each district judge shall appoint upon the nomina-
tion and recommendation of the Chief Justice of the Supreme
Court, one or more registers in bankruptcy when any vacaney
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.

Sto. 4994.—No person shall be eligible for appointment as reg-
ister 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.
§§ 4995-7. ] NOTES OF DECISIONS. 375.

Sxc. 4995.—Before entering upon the duties of his office, every
person appointed a register in bankruptey 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 sec-
tion 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, inter-
ested in or benefited by the fees or emoluments arising from any
suit or matter pending in bankruptcy, in either the district or cir--
cuit court in his district.

Src. 4996.*—No register or clerk of court, or any partner or
clerk of such register or clerk of court, or any person having any
interest with either in any fees or emoluments in bankruptcy, or
with whom such revister 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, commis-
sioner, appraisor, divider, or assignee of, or upon any estate within
the jurisdiction of either of said conrts of bankraptey ; nor be in-
terested, directly or indirectly, in the fees or emoluments arising
from cither of said trusts.

The formal receipting for a dividend check, or the filling of the blanks
in.a case of involuntary bankruptcy, when done gratuitously as a favor to a
friend, is not within the spirit of this provision. (Hz parte Binswanger, E.
D. Mo.)

A register may purchase property ata sale made by an assignee. (He
parte Binswanger, E. D. Mo.)

Suc. 4997.—Registers are subject to removal from ottice by the
judge of the district court.

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, itis necessary that an inquiry should be made, so that the pu-
rity of judicial administration shall be maintained. Ordinarily, investigations
instituted for public ends, as in criminal cases, are conducted at public ex-
pense. But if a party who institutes a private complaint fails to sustain it,
he must pay the costs. (Hx parte Binswanger, E. D. Mo.) :

It is impossible to prescribe a standard of official courtesy. It is only
when a register is unfitted by temper or otherwise to observe the manners and
bearing due his office, or fails to observe them, that’ his official conduct calls
forreview. (Hz parte Binswanger, E. D, Mo.)

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. (Ha-
parte Binswanger, E. D. Mo.)

 

* So amended by act of 22 June, 1874, § 18.
376 THE BANKRUPT LAW. [§ 4998.

Sxc. 4998.—Every register in bankruptcy has power: (a)
First. To make adjudication of bankruptcy in cases unopposed..
Second. To receive the surrender (5) 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 asscts filed in cach
case.

Eighth. To audit (c) and pass accounts of assignees.

Ninth. To grant protection. (d)

Tenth. To pass the last examination (¢) of any bankrupt in
cases whenever the assignee or a creditor do not oppose.

Eleventh. To sit in chambers and dispatch there such part(/) 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.

i (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 asis purely clerical. (He parte Binswanger, E. D. Mo.)

(6) After passing the order of adjudication, the register, in voluntary cases,
upon the request of the bankrupt, is authorized and required to receive the
surrender of the property, and keep it safely until it can be turned over to
the assignee. (Jn 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 et al. 2 B. R. 586.) :

In proper cases the register may appoint a watchman to take charge of
the property. (In re Bogert e¢ al. 2 B. R. 585; in re Shafer e¢ al. 2 BL 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; 8. c. 42 How. Pr. 397; in re Kempner, 6 B. R, 521.)

Jf the marshal has property in his possession and 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. (Jn re Carow, 4 B.
R. 543; s. c. 41 How. Pr. 112.)

The register, by special order, may be directed to sell property and execute
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 referee. (Jn
re Hanna, 5 B. R. 292.)

(c) Under the power conferred by this clause and Rule V, the register is
authorized to pass an order requiring the assignee to make his return. (Ja
re Bellamy, 1 B. R. 64; 8. c. 1 Ben. 390; sc. 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
§ 4998.] NOTES OF DECISIONS. 377

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.
Hx vi termini it implies executive as well as judicial action. If the act of
auditing implied only judicial action, no more would be required of the reg-
ister 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 audit-
ing officer proceeds to éxamine an account for the purpose of ascertaining in
any way he may be able, without regard to established forms or technical
Tules, what sum ought in fairness to be allowed. This is the course univer-
sally pursued by the auditing officers of corporations, 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 administra-
tion of the estate in the interests of all concerned. Thus 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 officer, a new class of officers is called into being, who are espe-
cially charged with the administrative duties of the court. These officers
are deprived of the strict judicial function of deciding an issue duly framed,
but upon them are devolved only those guwast 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 witnesses,
and summon such other witnesses as he may deem proper. (in re John J.
Staff, 43 How. Pr. 110; s.c. 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 re-
garded as evidence of the items of alleged services and disbursements, 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 aud 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.) :

Quere. Can an attorney for the assignee retain moneys collected by him
until his fees are paid? (Jn re John J. Staff, 42 How. Pr. 414.)

The register should proceed to audit the accounts without first requiring
that moneys in dispute shall be deposited in bank. When the accounts are
audited, such order may be made as may seem necessary. (In re J. J. Staff,
42 How. Pr. 414.)

When no reason is shown why an assignee should make an amendment to
his return, how such amendment is proper or necessary, or what particular
object isto be subserved by his making it, or what interest of the bank-
rupt is to be promoted by making it, or to be injured by not making it, he
will not be required to make it. (Jn re Kingon, 3 B. R. 446; 8. c. 38 How.
Pr. 392.)

The register has the power to order the payment of fees and expenses in-
curred in the proceedings, out of funds in the hands of the assignee. (Jn re
Lane, 2 B. R. 309; 8. c. 3 Ben. 98.)

(2) 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;
8. c. 2 Ben. 180; 8. c. 1 L. T. B. 57.)

(e) In some districts it is the practice of the registers, where no party de-
mands the examination of the bankrupt, to examine him of their own accord.
378 THE BANKRUPT LAW. [s§ 4999-5001.

For a specimen of such an examination, see 1B. R, 135. (Jn re Sherwood
[note], 1 B. R. 344; s. c. 25 Leg. Int. 76. See, also, Rule VIL; én ve Brandt,
2B. R. 215; in re Long, 3 B. R. quarto, 66.)

When the bankrupt asks to be discharged, he must submit himself, if re-
quired, to be examined, with a view to show whether he has made a full and
fair surrender. (Zn re Brandt, 2 B. R. 215.)

There is no last examination ia bankruptcy, nor any examination at all,
unless specially ordered. (U. 8. v. Clark, 4 B. R. 59; 8. c. 1 L. T. B. 287;
8. 0. 8 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, 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 ve Lanier, 2 B. R. 164; in ve 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. Ifa party refuses to proceed, the case must proceed without him.
No general inflexible law can be laid down in respect to adjournments or
postponements. Every case must be treated on its own merits, and accord-
ing to the best judgment of the register. (Jn re Hyman, 2 B. R. 333; s. c. 36
How. Pr. 282; s. c. 3 Ben. 28.)

When a matter is 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 consider 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. (Jn 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 v. Worden, 13 B.
R. 885; s. 6. 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 adjust-
ment. (Moran v. Bogert, 14 B. R. 398; s. c. 16 Abb. Pr. [N. 8.] 803; s. c. 10
N. Y. Supr. 603.)

Src. 4999.—No register shall have power to commit for con-
tempt, or to make adjudication of bankruptcy when opposed; or
to decide upon the allowance or suspension of an order of dis-
charge.

Sxc. 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 proceed-
ings are taken, forward to the clerk of the district court a certified
copy of these memoranda, which shall be entered by the elerk in
a proper minute-book to be kept in his office.

Src, 5001.—The jadge of the district court may direct a regis-
ter to attend at any place within the district for the purpose of
hearing such voluntary applications under this Title as may not
§ 5002-5. ] NOTES OF DECISIONS. 379

be opposed, of attending any meeting of creditors, or receiving
any proof of debts, and generally, for the prosecution of any pro-
ceedings under this Title.

The register can nut fulfil the requirements of his official duty by holding
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 always open during the
hours of business to the inspection of those interested. (Jn re Sherwood, 1
B. R. 344; 8. c. 25 Leg. Int. 76.)

For improper conduct, a case may be transferred from one register to
another. (In re J. O. Smith, 1 B. R. 248; s. c. 2 Ben. 113.)

Src. 5002.—Every register, so acting, shall have and exercise
all powers, except the power of commitment, vested in the dis-
trict court for the summoning and examination of persons or wit-
nesses, and for requiring the production of books, papers, and
documents.

A witness is baund 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. (Jn re Wm. 8. Woodward,
12 B. R. 297; s.c.10 Pac. L. R. 214.) ,

Src. 5008.—Evidence or examination in any of the proceed-
ings under this Title may be taken before the court, or a register
in bankruptcy, viva voce or in writing, before a commissioner of
the circuit court, or by affidavit, or on commission, and the court
may direct a reference to a register in bankruptcy, or other suit-
able person, to take and certify such examination, and may com-
pel 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.

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 exclusive.
Testimony to be used in a case of involuntary bankruptcy can not be taken
on mere notice, but must be taken on commission. (Jn re Dunn ef al. 9 B.
R. 487; 8. c. 12 Blatch. 42.)

Src. 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 ad-
minister oaths in all cases, and in relation to all matters in
which oaths may be administered by commissioners of circuit
courts.

Src. 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 pro-
tectiou, and be liable to process of contempt in like manner as
380 THE BANKRUPT LAW. [$$ 5006-8.

parties and witnesses are now liable thereto in case of default in
attendance under any writ of subpeena.

Src. 5006.—Whenever any person examined before a register
refuses or declines to answer, or to swear to or sign his examina-
tion 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 to punish him for contempt, if such
person be compellable by law to answer such question or to sign
such examination.

Where a commission issued from 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 impossible to
determine whether the questions which the witness refuses to answer are or
are not pertinent to the inquiry, and an attachment can not be granted. (Jn
ve 5. Glaser, 2B. R. 398.)

Src. 5007.—Any register may act in the place of any other
register appointed by and for the same district court.

Src. 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.

Under the provisions of this section and Rule XXIX, where the assignee
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. (Jn re Hughes, 1 B. R. 226; 8. c. 2 Ben. 85; 8.c.1L. 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 examination.
Those who cross-examine the witnesses must pay the fees and expenses of the
cross-examination. The rule applies to the matter only as between the regis-
ter 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,
Se He a by the party seeking the examination. (Jn re G. N. Noyes, 11

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. (Jn re Mealy, 2 B. R. 128; contra, in re Mac-
intire, 1B. R. 11; s. c. 1 Ben. 277.)

If a creditor desires that the final examination shall be reduced to writing
a register, he must pay for the services. (dn re Alfred Jackson, 8 B. R.
24,

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 conformity, as
these are required to he performed if no creditor appears. (Jn re Alfred
Jackson, 8 B. R, 424.)
§§ 5009-10.] NOTES OF DEOISIONS. 381

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. (Jn re Breck & Schermer-
horn, 13 B. R. 216.)

If the register improperly refuses to countersign a check, he is not
entitled to a lien on the fund for the services rendered in making up the
certificate which the party is thus compelled to take. (Jn re Philip Rein, 13
B. R. 551.)

The fees of the register for services under a reference procured by the
bankrupt before the appointment of an assignee, for the purpose of contest-
ing a claim offered for proof, may be paid out of the estate. (Jn re Clemen-
tina T, Richardson, 7 Ben. 155.)

Sec. 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 decision by the judge.

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. (Jn re 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 re-
quest to that effect by a contesting party. But still such an adjournment 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 ad-
journed into court. (Jn re Patterson, 1 B. R. 100; 8. c. 1 Ben. 448.)

The ground of objection should be stated, otherwise no point or question
or issue is presented or raised. (Jn re Levy e al. 1B. R. 136; 8. c. 1 Ben.
496; in re Fredenburg, 1 B. R. 268; 8. o. 2 Ben. 133.)

An objection to a question or answer, in the course of an examination be-
fore a register, does not raise a question or issue of law which can be ad-
journed into court. (In re Levy ¢ al. 1B. R. 136; 8. c. 1 Ben, 496.)

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 re-.
gard toit. (In re Watts, 2B. R. 447; 8. 0. 3 Ben. 166; 8.0.2 L. T. B. 74.)

An objection to an application for the examination of the bankrupt raises.
an issue of law which should be adjourned. (Jn re Patterson, 1 B. R. 100;
8. Cc. 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. (Jn re Clark & Binninger,
6 B. R. 202.)

A party who secks to review the act of a register must do so in a respect-
ful manner, and if he makes a wanton attack upon his character, he is liable
to be punished for contempt. (Jn re Brick & Schermerhorn, 13 B. R. 216.)

Seo. 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 proceed-
ings, 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 certifi-
382 THE BANKRUPT LAW. [§ 5010,

cate so signed, shall be binding on all the parties to the procecd-
ing; but every such certificate may be discharged or varied by
the judge at chambers or in open court. iW

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 bankrupt
or a creditor. (In re Fredenburgh, 1 B. R. 268; 8. c. 2 Ben. 133; in re
Comstock & Co. 13 B. R. 198; 8. c. 80. L. N. 82.)

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 act-
ually 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 pro-
ceedings, or upon the result of the proceedings; but it must be # point or
matter which has arisen in the course of the proceedings 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 @ point or matter likely to arise
or which may be raised thereafter, or after a result shall have been arrived at.
8. 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 cer-
tified or decided except what is necessary to be cecided to enable the case to
progress properly. Questions which thus necessarily arise are to be decided
as and when they thus arise, and are not to be anticipated. (Zn re Pulver, 1
B. R. 46; s. c. 1 Ben. 381; i re J. W. Wright, 1 B. R. 393; in re Sturgeon,
1B. R. 498; in re Bray, 2 B. R. 189; in re Levy e¢ al. 1 B. R. 186; s.c. 1
Ben. 496.)

Objections to questions and answers in the course of an examination,
when put in proper form, may be certified. (Jn re Levy e al. 13. R. 186;
8. 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
course analogous to that prescribed by this section. (Jn re Sherwood, 1 B.
R. 344; 8. c. 25 Leg. Int. 76.)

If a register improperly refuse an application for leave to amend, the
bankrupt can, under this section, take the opinion of the judge on the ques-
tion, by means of a certificate from the register. (In re Watts, 2 B. R. 447;
s.c. 8 Ben. 166; s. c. 2 L. T. B. 74.)

No opinion will be given on a question improperly certified. (In re
a 1B. R. 498; in re J. W. Wright, 1 B. R. 398; in ve Bray, 2 B.

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. (Jn re
Mawson, 1 B. R. 265; 8. c. 2 Ben. 122.) ,

No question concerning the effect of a discharge to release a particular
debt. (in re Bray, 2 B. R. 139.)

No question as to the disposition that an assignee shall make of certain
property before his application for a settlement of his final accounts. (Jn re
Sturgeon, 1 B. R. 498.)

No question concerning the title to property not arising in a proceeding
8§ 5011-13.] NOTES OF DECISIONS. 383

concerning such property, or in which the assignee isa 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. (Jn re Peck, 3 B. R. 757.)

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 secured
debt not having been proved. (Jn re Haskell, 4 B. R. 558.)

Sxc. 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 consent, state
any questions in a special case for the opinion of the court, and the
judgment of the court shall be tinal 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, shall be paid, delivered, or transferred by one of such par-
ties to the other of them, either with or without costs.

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 sec-
tion. 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, Ist, parties; and 2d, 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. (Jn re Haskell, 4 B. R. 558.)

Sec. 5012.—If any judge, register, clerk, marshal, messenger,
assignee, or any other officer of the several courts of bankruptcy
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, gratu-
ity, 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 dol-
lars, and be imprisoned not exceeding three years.

Sxc. 5013.—In this Title the word “assignee,” and the word
“ ereditor,” shall include the plural also; and the word “ messen-
ger” shall include his assistant or assistants, except in the pro-
vision for the fees of that officer. The word “marshal” shall
include the marshal’s deputies ; the word “ person ” (a) shall also
include “corporation ;” and the word “ oath” shall include “ aftir-
mation.” 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
384 THE BANKRUPT LAW. [§ 5013.

under this Title, for the doing of any act, or for any other pur-
pose, 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, (6) 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.

(a) This section is not to be construed as applying the word person to in-
clude any other corporations as subject to the provisions of the act than those
described in section 5122. (Adams v. Railroad Company, 4 B. R. 314; 8. c.
6 A. L. Rev. 865; Sweatt v. Railroad Company, 5 B. R. 234; 8. c.1 L. T. B.
273; in re Ala. & Chat. R. R. Co. 6 B. R. 107; s. c. 9 Blatch. 391; 8. c. 5 L.
T. B. 76.)

(6) 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. (Jn re York & Hoover,
4B. R. 479; 8. c. 1 Abb. C. C. 508; s,c.1L. 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. (Jn re Lang, 2 B. R. 480.)
CHAPTER TWO.

VOLUNTARY BANKRUPTCY.

Sro. Src.
5014,—Petition and schedules. 5018.—Oath of allegiance.
5015.—Schedule of debts. 5019.—Warrant to marshal.
6016.—Inventory of property. 5020.—Amendment of schedule.

5017.—Oath to petition and schedules,

Sec. 5014.—If any person residing within the jurisdiction
of the United States, and owing debts provable in bankruptcy
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 a discharge from his debts,
and shall annex to his petition a schedule, and inventory * and
valuation, in compliance with the next two sections, the filing of
such petition shall be an act of bankruptcy, and such petitioner
shall be adjudged a bankrupt. :

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 cer-
tain amount of debts, subject to the act, and it is not denied that resident
aliens are here included. If confirmation were needed, it is found in the lat-
ter part of the section, which prescribes a special form of oath for citizens of
the United States; clearly showing that some others than citizens are capable
of becoming petitioners. (Jn re Goodfellow, 3 B. R. 452; s. c. Lowell, 510;
so. 1L. T. B. 179; s.c. 3 L. T. B. 69.)

A person who is a partner in a foreign firm may apply for the benefit of
the bankrupt 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 bankrupt law was passed, but such as at any subsequent
period become resident in the United States. (Cutter v. Folsom, 17 N. H.
139.)

An infant may file a petion in his own name. (Jn re Samuel Book, 3
McLean, 317; in re Samuel 8. 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.)

 

*So amended by act of 22 June, 1974, § 16.
25 ?
/
386 THE BANKRUPT LAW. [§ 5014.

A feme covert who is a sole trader may apply for the benefit of the bank-
rupt law. (Ja re Harriet E. Collins, 10 B. R. 335; g. c. 3 Biss. 415.)

The making of a fraudulent conveyance does not prevent the debtor from
filing a voluntary petition. (Jn re Chas. P. Houghton, 4 Law Rep. 482.)

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 reqaired by the act. (Jn re Patterson, 1 B. R. 125; s.c. 1 Ben. 508.)

The petition is sufficient although the jurat does not specify the particular
day on which the oath was taken, if it gives the month and year. (La 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. (Zn re Aaron Abrahams, 5
Law Rep. 328.)

No provision is made by the bankrupt 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 application.
(In re Alexander Graves, 1 N. Y. Leg. Obs. 213; s. c. 3 Law Rep. 25.)

The petition and schedules are three papers. (Jn re Dean, 1 B. R. 249;
e.c, 1 L. T. B. 9.)

The provisions of the act and the rules serve to show that the petition is
filed once forall in any case; that ifit is amended, such amendment does not
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. (Jn ve 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 petitioner
against his creditors, in which action the petitioner is plaintiff and the cred-
itors defendants; the petitioner asking the court for a judgment against his
creditors, the defendants, discharging him from his indebtedness 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 application for a dis-
charge from the payment of his debts, any single creditor may make opposi-
tion thereto, by entering his appearance and putting on file specifications
against the discharge. Each defendant has the right to appear separately
and put in a separate plea or answer. (Jn re Adams, 2 B. R. 272; 8. c. 86
How. Pr. 270; 8. c. 3 Ben. 7; in ve 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 sub-
sequently 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 non-prossed ; he has the costs of the first proceedings to
pay, but is allowed to commence again and to continue until he reaches a
judgment upon the merits ofhis case. (Jn re Farrell, 5 B. R. 125.)
§ 5014. ] NOTES OF DECISIONS. 387

A voluntary bankrupt who has contracted new debts since the filing of
his petition, may file a new petition in bankruptcy. (dn re P. C. Drisko, 18
B.R. 112; 3. c. 14 B. R.)

The petition is conclusive evidence that the debtor is insolvent, and de-
sires to take the benefit ef 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 bankrupt, 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 decree which must be impeached, if at
all, ina 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 an-
nulled, at least before the first meeting of creditors. (Zn re Goodfellow, 3 B.
R. 452; 8. c. Lowell, 510; s. c.1 L. T. B. 179; 8. c, 3 L. T. B. 69.)

The bankrupt by filing his petition submits himself personally to the
jurisdiction of the court, and he becomes bound to obey its orders and direc-
tions in the matter of his petition as well before as after an adjudication. The
mere filing of his petition in conformity with the statute constitutes him a
bankrupt, within the purview of the act, before the adjudication 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. (Jn re Samuel Harris, 3 N. Y. Leg.
Obs. 152.)

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 acquired 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. (Jn re Samuel
Harris, 3 N. Y. Leg. Obs. 152.)

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.
(Jn re Randall & Reed, 1 N. Y. Leg. Obs. 199; s. c. 5 Law Rep. 115.)

A voluntary bankrupt may, for good reasons, be allowed to withdraw his
etition at any time betore adjudication, (Jn re Bennett, 1 Penn. L. J. 145;
ire Randall & Reed, 1 N. Y. Leg. Obs. 199; 8. 0.5 Law Rep. 115; in re
Anon. 1 Penn. L. J. 823; in ve Dudley, 1 Penn. L. J. 302; 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. (Jn re Randall & Reed,
-1N. Y. Leg. Obs. 199; 8. 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 thelr rights. (Jn 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 to be
vacated, and all further proceedings stayed, on notice to him to show cause
aa the motion. (Jn re John Gile, 1 N. Y. Leg. Obs. 87; 8. c.5 Law Rep.
224.)

After an adjudication, the petition can not be dismissed without the con-
388 THE BANKRUPT LAW. [§ 5014.

currence and consent of all the creditors, (In re John Gile, 1 N. Y. Leg.
Obs. 87; 8. c. 5 Law Rep. 224.)

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 abatement,
but the plea will be treated merely as a written objection. Cn 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 reg-
ister 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 insolv-
ent or not. When the debtcr swears that he is unable to pay his debts in
full, and files the requisite petition and schedules, he has committed 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 inquire whether the debtor owes three
hundred dollars. That he isunableto pay his debts in full, and is willing
to surrender all his property is conelusively proved by his petition so far as
a decree of bankruptcy is concerned. The only questions open upon a vol-
untary petition are those which go to the jurisdiction, such as residence, and
asum totai ef provable debts of three hundred dollars. (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. (/n ve James L. Fowler, 1 B. R. 681;
s. c. Lowell, 161.)

A motion toset 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 specifi-
cations against the discharge of the bankrupt. (Jn re Pennet al. 3B.R.
582; 8. c. 4 Ben. 99.)

In what District Petitions must be Filed.

The bankrupt act uses the term ‘‘ residence ” specifically, as contradistin-
guished from “ domicile,” so as to free cases under it from the difficult and
embarrassing presumptions and circumstances upon which the distinctions
between ‘‘domicile ” and ‘‘residence” rest. Congress, as if ex industria de-
signing 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 connected with it. ‘ Residence” is a fact easily ascertained; ‘* domi-
cile,” a question difficult of proof. It is true that the two terms are often used
ag 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.
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
ie na in another State during the whole period. (Jn re Watson, 4

. R. 618.

The residence of the bankrupt is the place where his family reside, although
he may make temporary sojourns in another State. (Stiles v. Lay, 9 Ala. 795.)

Residence denotes an actual domicile or inhabitancy, in contradistinction

to amere temporary abode in lodging. (In re Israel! Kinsman, 1 N. Y. Leg.
Obs. 209.) ee ie
§ 5914. ] NOTES OF DECISIONS. 389

Upon the hearing of a pet*tion filed by a creditor to vacate the whole pro-
‘ceedings in bankrup‘cy, for want of jurisdiction, it was held that where a per-
son 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, 1B. RB. 386;
s. c. Lowell, 237; s.c.1L. T. B. 38.)

A corporation can have no residence out of the State by whose laws it was
created, and therefore, in virtue of residence, no jurisdiction can he acquired
by any district court outside of such State. (Jn re Ala. & Chat. R. R. Co. 6
B. R. 107; s. c. 9 Blatch. 391; s.c.5 L. T. B. 76.)

In a certain sense, the place of the most transient stoppage, a mere pur-
chase, a bargain made by w man on his transit through a place, would ren-
der 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 ac-
ceptation, their places of business there in conducting such transactions. 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 ap-
plication, if his legal residence is in a different district. More must be shown.
It must appear distinctly that he has a fixed and notorious employment, pur-
sued by him in such manner as to denote a place of business established by
him distinct from his place of residence. A fugitive or equivocal occupation
that may continue for a long period or may terminate instantaneously, with-
out any outward change or indications calculated to mark its continuance or
character, will not be sufficient to satisfy this provision of the law. (dn ve
Israel Kinsman, 1 N. Y. Leg. Obs. 309.)

An agent who is merely temporarily executing his agency in a district
-does not have a place of business in the district. (Zn re Israel Kinsman, 1
N. Y. Leg. Obs. 309.)

In 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 mercly personal religion may be exceptions in the case of an individual,
but the employment of means to secure or to 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 business—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 consid-
erable duration. Such transactions are not a carrying on of business in the

sense of the law. ‘Carrying on business’ looks to the scheme and purpose
to which such transactions tend, and not to the incidental transactions them-
selves. The debtor may find it necessary or expedient, in aid of his busi-
ness, 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 proceedings 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 ve
Ala. & Chat, R. R. Co. 6 B. R. 107; 8. c. 9 Blatch. 391; s. c. 5 L. T. B. 76.)

A person who resides in one 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 bankrupt act, in the latter district, and can
390 THE BANKRUPT LAW. [§ 5014.

only apply in the district where he resides. (Jn re Little, 2 B. R. 294; 8. c.
3 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 district.
where he has been employed, but must apply in the district where he has re-
sided. It can hardly be said that a book-keeper carries on business in a way
that will give such publicity to his occupation or person as is contemplated.
by the act. (Jn re Magie, 1 B. R. 522; 5. c. 2 Ben. 869.)

But where the petitioner is well known to be doing business as the agent
of another party, he may apply in the district where he transacts his business.
(In re Bailey, 1B. R. 613; s. c, 2 Ben. 487; in re Belcher, 1 B. R. 666; 8. 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 auy district for any length of time, provided
the proceedings are instituted in the district in which his residence or carry-
ing 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 district 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 busi-
ness in another district for as long a period during the six months as he car-
ried 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 six months than he carried it on in the latter. (Jn re Foster e¢ al. 3 B. R.
286; s.c. 3 Ben. 386; 8.c. 1 L. T. B. 127; in re Goodfellow, 3 B. R. 452;
s. c. Lowell, 610; 8.c. 1 L. T. B. 179; 8.c. 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 resi-
dent 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 district, is sufficient
to sustain the jurisdiction of the court, if the proceedings 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; 8. c. 83
Towa, 60; 83.0.5 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 neces-
sary 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 postponed until the
register has examined the petition and schedules, and certified them to be
correct, (In re Patterson, 1B. R. 125; s, c. 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 bankrupt.
§ 5OL5.] NOTES OF DECISIONS. 391

It is nothing but a judicial finding of the fact that an act of bankruptcy was
committed at some period prior to the time the adjudication is made. (In re
Patterson, 1 B. R. 125; s. c. 1 Ben. 508.)

’ The register is to declare the party a bankrupt, but has no authority to
ascertain the day of his becoming so. If be names the day, it is competent
for a party ina collateral action to controvert the act of the register, so far as
it respects the fixing of the day when the bankrupt become such, and to say
that it was not till long afterwards. (Rathbone v. Blackford, 1 Caines, 588.)

Src. 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 otherwise ; the true cause and consideration of the
indebtedness in each case, and the place where such indebtedness.
accrued ; and also a statement of any existing mortgage, pledge,
lien, judgment, or collateral or other security given for the pay-
ment of the same.

Petitions in bankruptcy must be full, and be true in point of fact, other-
wise no discharge will be granted. (Jn 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 et al. 3 B. R. 885; s. 0.1L. T. B.151; 8.0.3 L. T. B.11; 3.c. 17 Pitts.
L. J. 61; 3.0. 20. 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 Jones, 2B. R. 59.)

Wherever the sum and the date of the debt are given, the statement is
sufficient. (Inve W. D. Hill, 1B. R. 16; s. c. 1 Ben. 321.)

Where the petitioner owes a debt to a newspaper he should give the names
of the proprietors. (Anon. 2B. R. 141.)

Where the petitioner owes a debt to a firm, it is safest to return the part-
nership debt as due to the firm, without naming the partners. (Anon. 1 B.
R, 123.)

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. (Jn re John
C. Tebbets, 5 Law Rep. 259.)

The abode and the post office address should be both stated, so that per-
sonal service may be ordered at the former, or service by mail at the latter.
Cn re Pulver, 1 B. R. 46; 8. c. 1 Ben. 381.)

In view of this section of the act, end 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
392 THE BANKRUPT LAW. [$ 5016.

which he may posses3, without making ary efforts to ascertain such present
residences. (Jn re Pulver, 1B. R 46; s. c, 1 Ben. 381.)

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. (Ju re Orne, 1 B. R. 79; 8. c. 1 Ben.
420.)

Debts barred by the statute of limitations should be placed on the sched-
ules. (in re Perry, 1 B. R. 220; 3.c.1L. T. B. 4.)

The placing of a debt barred by the statute of limitations upon the sched-
ules will not revive the debt. (Jn ve Ray, 1 B. R. 203; s. c. 2 Ben. 58; in re
Kingsley, 1 B. R. 329; s. c. Lowell, 216; in re Harden, 1 B. R. 395; s.c. 11.
T. B. 48; contra, Horner v. Speed, 2 Pat. & H. 616.)

Absolute accuracy is not required, for it is to be done as far as practicable.
The provisions of this section show that all the creditors, 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 v. Bingham, 8B.
R. 494; s.c. 6 L. T. B. 326; s. c. 12 A. L. Reg. 637.)

Src. 5016.--The said inventory must contain an accurate state-
ment of all the petitioner’s estate, both real and personal, assign-
able under this Title, describing the same and stating where it is
situated, and whether there are any, and if so, what incumbrances
thereon.

The schedules must set forth the separate items of the petitioner’s estate.
Cin ve W. D. Hill, 1B. R. 16; s. c. 1 Ben. 321; 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 ascertain whether he can
claim it or not. (Jn re Robert Malcolm, 4 Law Rep. 488; in ve Horace
Plimpton, 4 Law Rep. 488.)

Property conveyed by the petitioner in trust, for the benefit of his credit-
ors, 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 refer-
ence 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. (Jn re David H. Robertson, 1 N. Y. Leg. Obs. 20.)

The petitioner should state the proportion of his interest in the property
of afirm of which he isa member, but need not enumerate the cffects in
detail. (Jn re Nicholas G. Norcross, 1 N. Y. Leg. Obs. 100; s. c. 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. (Jn re Sallee, 2 B. R. 228.)

The petitioner is only required to use such of the forms as are appropriate
§ 5016. ] NOTES OF DECISIONS. 393

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.—£d.)

The term assets has been held to include the following things, to wit :

A claim for unliquidated damages. (Jn re Orne, 1 B. R. 57; 8. c. 1 Ben.
361.)

Property conveyed to the petitioner in fraud of the creditors of the
grantor. (Jn re O’Bannon, 2 B. R. 15.)

_A vested interest expectant on the termination of a life estate. (In re
Bennett, 2B. R. 181; s.c. 8 A. L. Reg. 34; 8. c. 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 insolvency.
Un re Erven, 2 B, R. 181; 8. c. 8 A. L. Reg. 34.)

Property in the possession of the petitioner, which belongs to a firm of
which he has been a member. (Jn re Beal, 2 B. R. 587; s. c. Lowell, 323;
s.c.2L. 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, 4 W. J. 204.)

Property conveyed by the petitioner in fraud of his creditors. (Jn re
Hussman, 2 B. R 4387; s. c.2L. T. B. 58; 8.0.1 0. L. N. 177.)

Property in the possession of the petitioner covered by a fraudulent
assignment to which the creditors have never assented. (Ashley v. Robinson,
29 Ala. 112.)

Property held de facto, though by a defeasible title. (Jn re Beul, 2 B. R.
587; s. c. Lowell, 823; s.c. 2.L. T. B. 95.)

The money advanced by the petitioner as security for fees to the register,
the c’erk, 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 shal! not be liable to
the payment of the debts of any present or future husband. This latter pro-
vision 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. (Jn
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. (Jn re Beardsley,
1B. R. 804; in re Wm H. Pearson, 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 has been sold under execution. (Jn 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. (Jn re Hummitsh, 2 B. R. 12; s. c. 15 Pitts. L. J. 494.)
394 THE BANKRUPT LAW. [S$ 5017-19.

A claim against a person for falsely recommending another as worthy of
trust. (Crockett et al. v. Jewett, 2 B. R. 208; 8.c.2 Ben. 514; 8. c. 2L. T.
B. 21.) :

Property which, at the time of the filing of the petition, is vested in a
receiver appointed by a State court. (Jn re Freeman, 4 B. R. 64; 3. c. 4 Ben.
245.)

A chose in action on which suit has been brought, but which has been
assigned in good faith fora full and valuable consideration (Valentine v.
Holloman, 63 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 party of the assets of the bankrupt. (Day v. Bardwell, 3 B. R. 455; s. c.
97 Mass. 246.)

Sxo. 5017.—The schedule and inventory must be verified by
the oath of the petitioner, which may be taken either before the
district judge, or befure a register, or before a commissioner ef the
circuit court.

A petition in involuntary bankruptcy can not be verified before a notary
public. (ln re Heller Bros. & Co. 32 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. S. v. Nikols, 4 McLean, 23.)

_ An indictment for perjury, which describes the petition as made to “a
judge sitting as a bankrupt court,” is sufficient, for no judge can sit in bank-
ruptcy except the district judge. (U. 8. v. Deming, 4 McLean, 3.)

Sro. 5018.—Every citizen of the United States petitioning to be
declared bankrupt, shall, on filing his petition, and before any pro-
ceedings 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 section, and shall
be filed and recorded with the proceedings in bankruptcy.

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 with
precisely the same effect as if annexed. (U.S. v. Clark, 4 B. R. 59; 8. 0.1
L. T. B. 387; s.c. 3 L. T. B. 223; in re A. J. Walker, 1 B. R. 335.)

Suc. 5019.—Upon the filing of such petition, schedule, and in-
ventory, 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 messen-
ger, to publish notices in such newspapers * as the marshal shall

 

* So amended by act of 22 June, 1874, § 5.
§ 5020.] NOTES OF DECISIONS. 395

sclect, 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 no-
tice to any persons concerned as the warrant specifies ; * but when-
ever 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.

The proceedings in bankruptcy are in no just sense ez parte in their char-
acter, for notice is required to be given to the creditors either personally or
by publication. (Lathrop v. Stuart, 5 McLean, 167.)

After the public notice required by the statute has been given, creditors
must be treated as having notice of the proceedings. (Smith v. Brinkerhoff
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 Ball, 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. (Jn re Hall, 2 B. R.192;
s. c. 16 Pitts. L. J. 52.)

The marshal should insert in the notices served on-the creditors the exact
language of the warrant, but an immaterial variance will be disregarded.
Cn re Pulver, 1B. R. 46; 8. c. 1 Ben. 881; im re W. D. Hill, 1 B. R. 16; sc.
1 Ben. 321.)

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 amount
due toeach. (Jn re Jones, 2B. R. 59; in re Perry, 1 B. R. 220; s.c.1L. T.
B. 4; in re Hall, 2 B. R. 192; 8. 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.
Cn re Pulver, 1 B. R. 46; s. c. 1 Ben. 381.) o

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. 1 B. R. 216.)

The notice must be served on foreign creditors, as well as those who reside
in the United States. (In re Heys, 1 B. R. 21; 8. c. 1 Ben. 333; 8. c. 36
How. Pr. 249.)

Sec. 5020.—Every bankrupt shall be at liberty, from [time] to
time, upon oath, to amend and correct his schedule of creditors and
property, so that the same shall conforin to the facts.

 

* So amended by act of 22 June, 1874, § 5.
396 THE BANKRUPT LAW. [§ 5020.

For the purpose of allowing amendments where they are uncontested,
the register is the court, and has the power to aliow them on a direct appli-
cation 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; 8. c. 1 Ben. 264; in re B. Heller, 5 B. R. 46; 8.
c. 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 pointsin which
the petition and schedules are defective. (Inve 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 Jones, 2 B. BR. 59.)

The register may refuse to allow amendments, except upon such conditions
as will prevent injustice. (Jn ve Ratcliff, 1 B. R. 400; in re Perry, 1B. R.
220; s.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. (Jn re B. Heller, 5 B. R. 46; 8. c. 41 How. Pr. 218; in re
Chas. Oakley, 5 Law Rep. 327.)

When it appears, on the hearing of the specifications against the discharge
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. (Jn re Connell, 3 B. R. 448; in re Preston,
3 B. R. 103.)

The application for leave to amend is ex parte, and no notice is necessary,
No creditor has a right to oppose the application. The allowance of an
amendment does not prejudice the rights of a creditor. He is not 2 party to
the proceeding, and is not estopped by the order. (Jn re Watts, 2 B. R. 447;
s. c. 8 Ben. 166; 8. c. 2 L. T. B. 74; on reB. Heller, 5 B.R. 46; s. c. 41 How.
Pr. 213.)

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 application
to be givento them. (JnreB. Heller, 5 B. R. 46; 8. 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
-ereditors. (Jn re B. Heller, 5 B. R. 46; s. c. 41 How. Pr. 213.)

The bankrupt may amend his petition so as to bring in his copartner.
Cin re Little, 1 B. R. 841; 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. (Jn re Edward T. Wood, 13 B. R. 96; 5. ¢.
6 Ben. 339.)
CHAPTER THREE.
INVOLUNTARY BANKRUPTCY.

Src, Szo.
6021.—Acts of bankruptcy. 5027.—Costs at trial.
6022.—Prior acts of bankruptcy. 5028.—Warrant.
5023.—Who may file petition. * 5029,.—Distribution of property of debtor.
5024,—Proceedings after filing petition.  5030.—Schedlle and inventory.
§025.—Service of order to show cause. 5031.—Proceedings when debtor is absent,.

5026.—Proceedings on return day.

Sxc. 5021.*—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 (d) 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 (e):
or remove any of his property to avoid its being attached, taken,
or sequestered on legal process; or shall make any assignment,
gift, sale, conveyance, 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 (¢) 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 re-
sides or has property, founded upon a demand in its nature prov-
able against a bankrupt’s estate under this act, and for a sum ex-
ceeding 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, Dis-
trict, 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 dol-
lars or upward; or who, being bankrupt or insolvent, (/) or in
contemplation of bankruptcy or insolvency, shall make any pay-
ment, gift, grant, sale, conveyance, or transfer of money or other
property, estate, rights, or credits, or confess judgment, or give
any warrant to contess judgment, or procure his property to be
taken on legal process, 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

 

* So amended by act of 22 June, 1874, § 12.
398 THE BANKRUPT LAW. [§ 5021.

with the intent, by such disposition of his property, to defeat ()
or delay the operation of this act; or who, being a bank, banker,
broker, merchant, trader, (7) manufacturer, or miner, has fraudu-
lently stopped payment, or who being a bank, banker, broker,
merchant, trader, manufacturer, or miner, has stopped or sus-
pended 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 payment law-
fully made, shall be deemed to have committed an act of bank-
ruptey, and, subject to the conditions hereinafter prescribed, shall
be adjudged a bankrupt on the petition (&) of one or more of his
creditors, who shall, constitute one-fourth thereof, at least, in
number, and the aggregate of whose debts (/) provable under
this act 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: * Provided
also, That no voluntary 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 creat-
ing any preference, and valid according to the law of the State
where made, shall of itself, in the event of his or their being sub-
sequently 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 com-,
pulsory or involuntary bankruptcy commenced since the first day -
of December, eighteen hundred and seventy-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 here-
after, 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 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 satistied that
the admission was made in good faith), shall so adjudge, which
judgment 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 reason-
able 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 expira-

 

* So amended by act of July 26, 1876.
§ 5021.) NOTES OF DECISIONS. 399

tion 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 here-
after commenced, with costs. And if such person shall be ad-
judged 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 receiving such payment
or conveyance had reasonable cause to believe that the debtor
was insolvent, and knew that a frand on this act was intended ;
and such person, if a creditor, shall not, in cases of actual fraud
on his part, be allowed to prove for more than a moicty of
his debt; and this limitation on the proof of debts shall apply
to cases of voluntary as well as involuntary bankruptcy. And
the petition of creditors under this section may be sutticiently
verified by the oaths of the first five signers thercof, 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 attor-
ney or attorneys, agent or agents, of such signers. And in com-
puting 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 hun-
dred and fifty dollars, or if the requisite number of creditors hold-
ing 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.

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 enact-
ment. 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 be-
tween his creditors to whom in justice it belongs. It is remedial, and seeks
to protect the honest creditor 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 accord-
ing to the fair import of its terms, with a view to effect its objects and to
promote justice. (/n re Locke, 2 B. R. 382; 8. c. Lowell, 293; in re Muller &
Bretano, 3 B. R. 329; 8. c. 1 Deady, 513; s.c.2L. T. B. 33; in re Silverman,
4B. R. 528; 8. c. 2 Abb. C. C. 243; 8. ¢, 1 Saw. 410; in re Wm. Ellis, 1 N. Y.
Leg. Obs. 85; s. c. 5 Law Rep. 273.)

Its scope and purpose are to oblige insolvent traders to take the benefit of
the bankrupt act, and thus to insure an equal distribution of their estate
under its carefully framed provisions. (Jn re Diblee et ai, 2 B. R, 617; 8.0.
400 THE BANKRUPT LAW. [§ 5021.

8 Ben. 283; in re Locke, 2 B. R. 382; s. c. Lowell, 293; White v. Raftery, 3
B. R. 221; 8.c.1C. L. N. 361; 8. c. 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, 2N. Y. Leg. Obs. 181.)

Sections 5128 and 5021 are very nearly related to each other in their pro-
visions, and must be construed together in puri materia. Section 5128, in
express language, applies equally to voluntary and involuntary cases. There-
fore all the qualifications and conditions prescribed by section 5128, not in-
consistent with the provisions of section 5021, will apply to proceedings
under the latter section, and all the qualifications, conditions, and prohibi-
tions of section 5021, so far as they relate to the same class of matters pro-
vided for by section 5128, and are not inconsistent with its provisions, will
apply to proceedings under section 5128. (Jn re Tonkin & Trewartha, 4 B.
R. 52; 8.c. 1 L. T. B. 232; s.o. 8L. T. B. 221; in re Black & Secor,1 B. R.
353; 8. c. 2 Ben. 196; 8. c. 1 L. T. B. 389; Wadsworth v. Tyler, 2 B. R. 316;
8. 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 in-
sufficient to justify a decree declaring void a transfer of property, or prefer-
ence given to a creditor. (dn re Nickodemus, 8 B. R. 230; s.c.1L. T. B.
140; 8.c.2 C. L. N. 49; 8. c. 16 Pitts. L. J. 233; in ve Fuller, 4 B. R. 115;
s. c. 1 Saw. 248.)

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 busi-
ness, is not only void, but evidence of fraud. (Perry v. Langley, 1 B. R. 559;
s.c.1L. T. B. 34; 8. ¢. 7 A. L. Reg. 429; Dean & Garrett, 2 B. R 89; Davis
& Green v. Armstrong, 3 B. R. 34; 8. c. 2 L. T. B. 188.)

The act makes a discrimination between cases of voluntary and involun-
tary bankruptcy. The debtor upon filing a petition with the proper aver-
ments 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 cir-
cumstances, 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 clenied 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 asa
business man—in short, to place him a 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. (Wilsm v. City Bank, 5 B. R. 270; 8.0.9 B. R. 973
s.¢.1 Dillon, 476; s,c.17 Wall. 489; Jones v. Slee er, 2N. Y. Leg. Obs. 131.)
§ 5021.] NOTES OF DECISIONS. 401

What Sum a Debtor must Owe.

(a) The language, ‘‘owing debts as aforesaid,” has reference to the fol-

lowing words of section 5014, viz.: ‘‘ owing debts provable in bankruptcy ex-
- ceeding the amount of three hundred dollars.” From this the following con-
clusions must be deduced :

1. The foundation of voluntary proceeding is indebtedness due and paya-
ble 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 con-
stitutes 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 sec-
tion. (In re Nickodemus, 3 B. R. 230; s.c. 1 L. T. B. 140; s.c. 2C. 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.)

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. (Jn re William G. Merrill, 13 B.
R. 91; 8. c. 12 Blatch. 221.)

A firm can not be adjudged bankrupt on an involuntary petition, unless
all the partners are parties to the proceeding, (Jn ve Chas. S. Pitt, 14 B.
R. 59.)

A consolidated railroad corporation, existing under charters from several
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 afterwards adjudicated a bankrupt upon another petition
by another creditor, brought 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 adjudication will carry all
corporate assets in the hands of the assignee. (Jn re Boston 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 bankrupt
law. (Jn re Walter 8. Derby, 8 B. R. 106; 8. c. 6 Ben. 282.)

A party who is under guardianship as a lunatic may be proceeded against
in involuntary bankruptcy in opposition to the wish of his guardian. (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 re-
lating to the distribution of the assets of insolvent corporations, is no ground
for refusing to adjudicate such corporation bankrupt. (Jn re Green Pond R.
R. Co. 13 B. R. 118.)

The decree of a State court dissolving a corporation on account of a for-
feiture of its charter does not prevent proceedings against it in bankruptcy.
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 having this dove by a court of equity acting on its property. A peti-
tion in bankruptcy is an equitable sequestration. (Zn re Independent Ins, Co.
6 B. R. 169; 8. c. 6 B. R. 260; Thornhill v. Bank, 5 BL R. 377; 8.0.3 B. R.

26
402 THE BANKRUPT LAW. [§ 5021.

4385; s.c. 3 L. T. B. 88; 8. c.2C. L. N. 157; in ve Merchants’ Ins. Co. 6 B.
R. 43; s. c. 3 Biss. 162; s. c. 2 L. T. B. 243; in re Washington Mar. Ins. Co,
2 B. R. 648; s. c. 2 Ben. 292.)

The bankrupt law does not in general embrace trustees such as executors,
administrators and 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 a banker who is merely authorized by the will to con-
tinue the business so Jong as may be necessary to a fair liquidation and settle-
ment thereof, and has no power that does not tend to the object, can not be
declared a bankrupt as such. (Graves v. Winter, 9 B. R. 357; 8. c. 7 Pac. L.
R. 165.)

A feme covert who is authorized by the laws of the State to carry on busi-
ness as a sole trader, and incur liabilities, may be declared a bankrupt. (in
ve Kinkeade, 7 B. R. 439; s. c. 3 Biss, 405; in re O’Brien, 1 B. R. 176; in re
Julia Lyons, 2 Saw. 524; 3.0.1 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 copart-
nership 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 Kinkeade, 7 B. R. 489; 8. c. 8 Biss, 405.)

The directors and stockholders can not be adjudged bankrupts on account
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 v. Atlantic Delaine
Co. 11 B. R. 380.)

(4) An order for the examination of a debtor upon proceedings supple-
mental to an execution is a legal process within the meaning of the. aci.
(Brock v. Hoppock, 2 B. R. 7; 8. 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. (Barnes v. Billington, 1 Wash. C. C.
29; 8. c. 4 Day, 81, note.)

It is not an act of bankruptcy for a special partner to procure a general
partner to leave the State. (/n re Lyman Terry, 5 Biss. 110.)

(c) 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 concealment, but
the concealment of tne actual title and position of property of whatever kind.
(dn re Williams & Co. 3 B. R. 286; 8. c. Lowell, 406; s. ¢. 2 L. T. B. 100.)

An allegation that the debtor concealed money with imtent 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 sufficient. It is not necessary to state that
there was any legal process in existence, (Fov v. Eckstein, 4 B. R. 373.)

The secrecy and concealment of goods, which constitutes an act of bank-
‘Tuptcy distinct from a fraudulent conveyance of them, must be an actual, not
a constructive concealment of them by the bankrupt bimself, or by his pro-
curement, while they continue, in his intention, his own goods. (Livermore
v. Bagley, 3 Mass. 487.)
§ 5021.] NOTES OF DECISIONS. 403

Fraudulent Conveyances.

(d) It is not an element of this act of bankruptcy 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.
Un re Dunham & Orr, 2 B. R. 17; 8. c. 2 Ben. 488; s. c.1 L. T. B. 89; in ve
Randall & Sunderland, 3 B. R. 18; s. c. 1 Deady, 557; s.c. 2. L. T. B. 69; in
re Nickodemus, 3 B. R. 230; s. 0.1L. T. B. 140; s.c.2C. L. N. 49; 8. c. 16
Pitts. L. J. 233; in re Thomas Ryan, 2 Saw. 411.)

The intent means an actual design in the mind, and must be proved asa
question of fact. (Jn re Drummond, 1 B. R. 231; 8.0.1 L. T.B. 7; in re
Cowles, 1 B. R. 280; s.c. 1 W. J. 867; Perry v. Langley, 2 B. R. 596; 8. ¢. 8
A. L. Reg. 427; in re Goldschmidt, 3 B. R. 165; 8. c. 3 Ben. 379.)

The intent need exist only on the part of the person making the transfer.
If that exist, the debtor clearly commits an act of bankruptcy, however in-
nocent the intent of the preferred creditor or thé person to whom the trans-
fer is made. (Zn re Drummond, 1 B. R. 281; 8. c.1L. T. B. 7.)

The question of intent to hinder, delay, or defraud creditors must be
solved by looking at what the debtor says and does, and the effect thereof.
(Ecfort v. Greely, 6 B. R. 488; 8.c.4C.L. N. 209; in ve 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. (Jn 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. (Jn re Cornwall, 6 B. R. 305; s. c.
9 Blatch. 114; s.c.2L. 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. (Jn
re Waite ct al. Lowell, 407.)

A transfer of the firm property by one partner to his copartner is not acon-
veyance to hinder or delay the firm creditors. (Jn re Munn, 7 B. R. 468; 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 intentionally,
fraudulent, in that it hinders, delays, and defrauds the vendor, although the
vendee is induced thus to act by the stress of his circumstances, and may
hope ultimately to pay the vendor. (Jn re Picton, 11 B. R. 420; s.c. 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 concerned.
When the effect necessarily is to delay creditors, the intent ought to be pre-
sumed. When the defense is that the property was conveyed 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 trust even on the question of intent. When
the petitioner is a witness, the fact that he has acted ina harsh and oppres-
sive manner toward the debtor may be shown in evidence for the purpose of
404 THE BANKRUPT LAW. [§ 5021.

affecting his credibility. (Jn re W. B. Alexander e¢ al. 4 B. R. 178; s. c..
Lowell, 470; 8. c. 2 L. T. B. 238; Thornhill v. Link, 8 B. R. 621.)

Allowing property to be taken ona false and fictitious judgment is a trans-.
fer with intent to hinder, delay, and defraud creditors. (In re Schick, 1 B.
R. 177; s. c. 2 Ben.5; 3.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 de-
feat 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 im-
mediate 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 be-
yond that result and determine upon doubtful evidence, or any evidence, that
the parties intended, when the fund was illegally withdrawn from the ordi-
nary 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 convey-
ances, (dn re Williams & Co. 3 B. R. 286;-s. c. Lowell, 406; s.c. 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 pur-
pose and with the manifest design of so encumbering his available means that
creditors will be hindered and delayed in the collection of their demands, is
fraudulent. (Jn re Cowles, 1 B. R. 280; s.c.1W. J. 367; Baldwin v. Russeau,
1N. Y. Leg. Obs. 391.) .

A sale of all the debtor's property for a small portion in cash and the bal-
ance in long notes does to that extent delay creditors. (In re Dean & Garrett,
2 B. R. 89.)

The insertion of a power ina 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
badge of fraud. (Baldwin vy. Rosseau, 1 N. Y. Leg. Obs. 391.)

The retention of possession by the mortgagor is a badge of fraud. (Bald-
win v. Rosseau, 1 N. Y. Leg. Obs. 391.)

Where the right to transfer a franchise is conferred by the Legislature, an
assignment thereof may be made with intent to delay, hinder, or defraud
creditors. (Jn re Southern Minn. R. R. Co. 10 B. R. 86.)

Assignment for the Benefit of Creditors.

To make a general assignment for the benefit of creditors an act of bank-
ruptcy within the meaning 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 fol-
lowing it. It becomes a question of fact. The innocence or guilt of the act
depends on the mind of him who did it, and it is not a fraud within the
meaning of the bankrupt act unless it was meant tobeso. (Perry v. Langiey,
1B. R. 559; ¢. c. 2B. R. 596; s.c.1 L. T. B. 84; 3.c. 8 A. L. Reg. 427; 7
A. L. Reg. 429; Furrin v. Crawford et al. 2B. R. 602;-Wells e al. 1 BR.
171,58 ¢c.1 LT. B. 20; 8 ¢.7 A. L. Reg. 168; in re Potts & Garwood,
Crabbe, 469.)

An assignment is to he subjected to the sharpest scrutiny, and any hadge
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 bankrupt law will sweep it away and subject the person and estate of
§ 5021. ] NOTES OF DECISIONS. 405

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. (Marrin v. Crawford et al.
2B. R. 602; in ve Chamberlain e¢ al. 3 B. R. 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 preventing them from
subjecting the debtor’s property, by the ordinary legal proceedings and pro-
cess, to the satisfaction of their claims. An assignment which authorizes the
assignee to sell on credit, or in any manner to prolong his possession of the
property beyond the time reasonably necessary to convert it into cash and
distribute it among the creditors, is fraudulent. (Jn re Randall & Sunder-
land, 8 B. R. 18; s. c. 1 Deady, 557; 8. c. 2 L. T. B. 69.)

An assignment made with the intent to prevent creditors who are pressing
suits to judgment from obtaining a preference over other creditors, is not an
act of bankruptcy. (Perry v. Langley, 1 B. R. 559; 8. c. 2B. R. 596; 8. c. 1
L. T. B. 34;°s.c. 8 A. L. Reg. 427; 7 A. L. Reg. 429; Wells e¢ al. [ex parte
H. B. Claflin & Co.) 1 B.R.171; s.c.1 LT. B. 20; 5.0. 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 intent to
delay or hinder his creditors. An assignment made for the purpose of pre-
venting creditors who have sued him from appropriating the assigned prop-
erty towards the payment of their claims, is made to hinder and delay such
creditors. (Jn re Goldschmidt, 3 B. R. 165; 8. c. 3 Ben. 379.)

An intent to hinder, delay, or defraud one creditor, is such an intent as
the bankrupt act contemplates. (Perry v. Langley, 1 B. R. 559; 8. c. 1 L. T.
B. 34; 3.0.7 A. L. Reg. 429; contra, in re Dunham & Orr, 2 B. R. 17; 3. ¢.
2 Ben. 488; s.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. Langley, 1 B. R. 559; s. c. 1 L. T. B. 84;
8. c.7 A. L. Reg. 429.)

Arrest of Debtor.

(e) A debtor who has not been 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 bankrupt on account of such arrest. The
statute evidently intends to draw a distinction between being actually im-
prisoned for more than twenty days, and being held in custody for a period .
of twenty days. It confines the former 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 er 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 custody, although a person held in
custody is not necessarily actually imprisoned—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 suffi-
cient, under the first clause, that the debtor be arrested and held in custody,
406 THE BANKRUPT LAW. [§ 5021.

under mesne process founded on such claim, for a period of twenty days, then
no cases exist which would not fall within the first clause, and the second
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 prin-
ciples 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. (Jn re Davis, 3 B. R. 339; 8. c. 3 Ben. 482.)

The arrest and the 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 commits 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 unlawfulness tested before the
proper tribunal. If he neglects or delays within that time to obtain his dis-
charge from duress in either of these ways, he commits the act of bankruptcy
defined by the statute, and it is no defense that the order of arrest was sub-
sequently set aside, and a discharge granted to him upon giving common
bail. (in re B. Cohn, 7B. R. 31; 8. c. 29 Leg. Int. 309; 8. c. 5 C. L. N. 14.)

An imprisonment commencing on the forenoon of Sept. 8th, 1870, and
terminating before noon on the 28th of that month, was held not to be suffi-
cient. In legal contemplation, the debtor was in prison nineteen entire days
and portions of two other days, and the first day being excluded, this made
only twenty days. (Hunt v. Pooke, 5 B. R. 161.)

Insolvency.

(f) Mere insolvency is not, of itself, ground for involuntary 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 implica-
tion, 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 bank-
ruptey. 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 creditors, by meeting only such debts as
are pressed, and even by the submission of some of their property to be seized
on exccution, they are finally able to pay all and to 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 insti-
tute proceedings in a bankrupt court. But until this is done, their honest
struggle to meet their debts and to avoid the breaking up of all their busi--
§ 5021.] NOTES OF DECISIONS. 407

ness 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; 8. c. 9 B. R. 97; 8. c. 1 Dillon,
476; 8. c. 17 Wall. 489.)

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 particular-
legal status, to be ascertained by a judicial decree. (Jn re Black & Secor, 1
B. R. 353; 8. c. 2 Ben. 196; s.c.1 L. T. B. 39; in ve Craft, 2 B. R. 111; 8. ec.
6 Blatch. 177; Morgan, Root & Co. v. Mastich, 2 B. R. 521; Buckingham v..
McLean, 18 How. 151; 8. c. 3 McLean, 185; Jones v. Howland, 49 Mass. 877;
Lonergan v. Fenlon, 7 Pitts, L. J. 266; contra, in re Henry Breneman, Crabbe,.
456 ; Arnold v. Muynard, 2 Story, 849; Morse v. Godfrey, 3 Story, 364; Hverett
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; 8. c.1 N.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 voluntarily
applying to be decreed a bankrupt. (Jn re Craft, 1 B. R. 378; s. c. 2 Ben.
214.)

Insolvency means an inab‘lity to pay debts, as they mature and become
due and payable, in the ordinary course of business, as persons carrying 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 pay-
ment of debts, and a debtor has no right to pay 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 et al. 8 B. R. 885; 8.c.1 L. T. B. 151; 8.0.3 L. T. B. 11; s.¢. 17
Pitts. L. J. 61; s.c.2C. L. N. 121; in re Williams & Co. 8 B. R. 286; 8s. c.
Lowell, 406; 8. 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-.
rupt act for the beneficial purposes for which it was designed. Without this,.
the trader’s property may be wasted, preferences among creditors be given,
and other transfers of his property be effected, wholly inconsistent with the
intent of the act. To hold that the probability that, ifthe 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 there-
upon be adjudged insolvent. This would be an extreme view. (Ilurdy et al.
v. Binninger et al. 4 B. R. 262; 8. c. 7 Blatch. 262.)

Inability to pay one debt in the ordinary course of business is sufficient.
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, unpro-
vided 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 business.
408 THE BANKRUPT LAW. [§ 5021.

(In re Diblee et al. 2B. B. 617; 3. c. 8 Ben. 283; Driggs v. Moore, Foote & Co,
3B. R. 602; s.c.1 Abb. C. C. 440.)

A solvent man is one 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 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. Ifa 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 particylarly in the sense in which the word is used
inthe bankrupt act. (in re Wells, 3 B. R. 871; s. o. 20. L. N. 49; ine
Randall & Sunderland, 8 B. R. 18; s.c. 1 Deady, 557; s.c. 2L. T. B. 69; in
re Oregon Printing Co. 13 B. R. 503; s. c. 11 Pac. L. R. 282; s. c. 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. (Jn
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
preterence, It is a general principle, to which there are no exceptions, that,
where the parties know the insolvency, they must act at their perilif 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 irrele-
vant fact that they erroneously supposed that creditors had consented. Their
careless, rash, or interested conclusions give them no power over the statu-
tory vested rights of innocent and non-concurring creditors. (Curran v.
Munger, 4 B. R. 295; s. c. 6 BR. 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 insolvency,
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 Printing Co.
13 B. R. 508; s. c. 11 Pac. L. R. 233; s. c. 8 Cent. L. J. 515.)

A debtor admitting insolvency by his acts is conclusively presumed to
contemplate insolvency. (Jn re Waite & Crocker, 1 B. R. 373; s. c. 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 con-
templation of insolvency, and this is the only averment that should be made.
(in re Craft, 1 B. R. 878; s.c. 2B. R. 111; 8. c. 2 Ben. 214; s. c. 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 itselé,
raises any presumption of insolvency. (Jn re Diblee e¢ al. 2B. R. 617; s. ©.
3 Ben. 283.)

A voluntary contribution received by a debtor does not constitute a debt
due byhim. (dn 7e Oregon Printing Co. 13 B. R. 503; 8. o. 11 Pac. L. R. 232;
s,c. 8 Cent. L. J. 515.)

The fact that the bonds of a railroad corporation are at a mere nominal
§ 5021.) NOTES OF DECISIONS. 409

value does not make the corporation insolvent. (Tucker v. Opelousas & Great
Western R. Rk. Co. 3 B. R. quarto, 21.)

Whether a debtor knows that he is insclvent, 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; inthe other, an unavoidable legal
inference. (Farrin v. Crawford et al. 2 B. R. 602.)

When a party is in fact insolvent, but denies insolvency under oath, it will
be presumed that he was ignorant of the legal detinition of the term insolv-
ency, and that such ignorance led to such denial. (Jn re 8. T. Smith, 3 B. R.
377; s.c.4 Ben. 1; 8.0.1 L. T. B. 147.)

A trader unable to pay his debts in the ordinary course of business is in-
solvent 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
procurir g or suffering property to be taken on legal process, with the intent
named, is an act of bankruptcy, whether the debtor is or is not otherwise
shown to be bankrupt or insolvent, or to be contemplating bankruptcy or
insolvency, on the idea that the act becomes ¢pso facto one in contemplation of
bankruptcy, because, it being an act of bankruptcy, and thus being bank-
ruptcy, 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 iasolvent, or contemplate insolvency, and would virtually
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 ineviteble legal conclusion,
and insolvency, or the contemplation 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 insolv-
ent, or in the contemplation of bankruptcy or insolvency. (Jn re Craft, 1 B.
R. 378; 8. c.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, contemplated that
he would not be, and continue to be, from that time thenceforth, able to pay
his debts, as such debts should mature in the ordinary course of his business,
then he contemplated insolvency; and, if he contemplated insolvency, that
puts the case in precisely the same predicament as though he was insolvent.
A debtor has no more right to do the forbidden 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. (Jn re Diblee e al. 2 B. R. 617; s. c. 3 Ben.
283.)

Preferences.

(g) In an act of bankruptcy under this clause, there are the following in-
gredients, to wit:

1st. The debtor must either be insolvent, or contemplate insolvency.

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. (in re Diblee et al. 2B. R. 617; s. c. 3 Ben. 283.)
410 THE BANKRUPT LAW. [§ 502).

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 bank-
ruptcy was committed on the blank day of blank, 1860, and in which the
only other allegation of the time of its commission 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 suffering.
The word ‘‘suffer” is different: from the word “procure.” ‘‘ Suffer” im-
plies a passive condition, so to speak, as to allow, to permit; not a demon-
strative, active course, like the word “ procure.” (Jn re Black & Secor, 1 B.
R. 858; s. c. 2 Ben. 196; 8. c.1 L. T. B. 39; in re Craft, 1 B. R. 378; s. co. 2
Ben. 214 ; in re Sutherland, 1B. R. 531; s. c.1 Deady, 344; in re Diblee e¢ al.
2B. R. 617; s. c. 38 Ben. 283; in re Haughton, 1 B. R. 460; in re Heller, 3
Biss. 158; in re A. B. Gallinger, 4 B. R. 729; s.c. 1 Saw. 224; Traders’ Natl
Bank v. Campbell, 3 B. R. 498; s.c. 6 B. R. 353; 8. 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 inability to
go into voluntary bankruptcy when he was sued, is not of itself an act of
bankruptcy. (Wright v. Filley, 4 B. R. 611; 8.¢. 1 Dillon, 171; Love v.
Love, 21 Pitts. L. J. 101; contra, in re Black & Secor, 1B. R. 358; s.c. 2 Ben.
196; s.c. 1 L.T. B. 89; in re Heller, 8 Biss. 153; in re Wells, 3 B. R. 371;
8.c.2C. L. N. 49; in re A. B. Gallinger, 4 B. R. 729; s. c. 1 Saw. 224; Bon-
nett v. James, 1 N. Y. Lég. 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. Itis
not to aid, co-operate, or advise. (Jones v. Sleeper, 2 N. Y. Leg. Obs. 181.)

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 exeeution of the power, it is not an act of procurement.
(Barnes y. Billington, 1 Wash. C. C. 29; 8. c. 4 Day, 81, note.)

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 the
court without that agreement, is not a procurement of the taking of his prop-
erty 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 pro-
ee it to be taken. (Fisher v. Currier, 5 Law Rep. 217; s. c. 1 Penn. L. J.
270.)

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 deteat or delay
the operation of the act. (Jn re Isaac Scull, 10 B. R. 165; s. c. 7 Ben. 370;
s.c.1 A. L. T. [N. 8.] 416.)

A debtor who confesses judgment in favor of a creditor procures his prop-
erty to be taken on legal process. (Jn re Craft, 1 B. R. 878; s. c. 2 Ben. 214;
in re Sutherland, 1 B. R. 581; s. co. 1 Deady, 344; in re A. B. Gallinger, 4 B.
R. 729; 8. c. 1 Saw. 224.)

The mere admission of service of the summons does not amount to a pro-
curing 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 com-
plicity between the parties. (Jn re Dwight B. King, 10 B. R. 103.)
§ 5021. ] NOTES OF DECISIONS. 41h

An execution is the legal purpose of a judgment, its end and fruit. The
motive and intention of a man can only 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 execu-
tion—in other words, that the tendency of procuring a judgment is that the
execution shall follow. It is not an absolute legal inference that a man who
procures a judgment to be obtained against himself intends that an execution
shall follow, but a question of fuct, (J 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. (Jn re Thomas Woods,
7B. R. 126; s. c. 28 Leg. Int. 236; s. o. 20 Pitts. L. J. 21.)

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 attachment into
a lien by judgment, execution, and levy, is an act of bankruptcy. (dn re A.
B. Gallinger, 4 B. R. 729; s. co. 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 confess judgment
is an act of bankruptcy. (Jn re Leeds, 1 B. R. 521; 5.0.7 A. L. Reg. 698;
s.c. 1 L. T. B. 78; in ve Ralph Johnson, 1 N. Y. Leg. Obs. 166; s. c. 5 Law
Rep. 313.)

Where the 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 Cs..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 reasonable
time to contest the validity of the judgment in the State court. (Hilton v.
Telegraph Co, 1 Cent. L. J. 75.)

Allowing property to be taken on legal process issued upon a judgment.
confessed, under a warrant of attorney given at a time when the debtor was
not insolvent, is an act of bankruptcy when the other elements of such an
act coexist. (Jn re Diblee e¢ al. 2 B. R. 617; s.c. 8 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 7e
Diblee e¢ al. 2 B. R. $17; s. c. 3 Ben. 283.)

When a State court has permitted a judgment to be entered up, and exe-
cution 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.
(Jn re Diblee et al. 2 B. R. 617; 8. c. 8 Ben. 283.)

The term legal process, as used in the bankrupt act, is not to be confined
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, attachments, 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 withdrawing it from the possession
and control of the debtor, and from the ordinary reach of creditors for the
payment of what is due to them, are each and either of them within the in-
tent and true meaning of the term legal process, as employed in this section.
(Hardy et al. v. Binninger et al. 4 B. R. 262; 8. c. 7 Blatch. 262.)

The fact that the bankrupt act makes, in broad terms, the procuring of
property to be taken on legal process, with certain attendant circumstances,
an act of bankruptcy, shows that the circumstance that the property is taken
A412 THE BANKRUPT LAW. [§ 5021.

on legal process issued out of a State court furnishes no ground for with-
holding an adjudication of bankruptcy. On the contrary, in view of the
well-known fact that the mass of civil legal process is issued 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 et al. 3B. R. 385; 8.c.1 L.T.B. 151; 8.c. 3L. T. B. il: s. c. 17
Pitts. L. J. 61; s.c. 20. 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 pur-
pose of obtaining a dissolution of the corporation, is procuring it to be taken
on legal process. (Jn re Washington Marine Ins. Co. 2 B. R. 648; 8. c. 2
Ben. 292; in re Merchants’ Ins. Co. 6 B. R. 43; 8. c. 3 Biss. 162;. 8. c. 2
L. T. B, 248.)

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 by the
appointment and not the subsequent collection. (Jn re Amsterdam Fire Ins.
Co. 6 Ben, 368.)

Intent to Prefer.

An allegation of a preference should give the name of the preferred cred-
‘itor, (In re Joseph 8. Hadley, 12 B. R. 366.)

An allegation of a preference need not charge that it was in fraud of the
provisions of the bankrupt law. (In re Joseph 8. Hadley, 12 B. R. 366.)

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 prop-
erty, and therefore has no natural right to dispose of the property in his pos-
session otherwise than with the consent of the real owners—his creditors.
(In re Silverman, 4 B. R. 523; 8. c. 2 Abb. C. C. 248; 3.0. 1 Saw. 410; Story
vy. 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 abundantly
solvent, such payment is not an act of bankruptcy. (Jn re Hapgood et al. 7
A. L. Rev. 664.)

A mortgage by a railroad company of all its property, to secure all its
creclitors 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. (Jn re
Union Pacific Railroad Co. 10 B. R. 178; s.c. 8 A. L. Rev. 779; 8.0.6 C. L.
N. 355 ; 8. c. 81 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. 132.)

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 re-
sults 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 insolvency,
§ 5021.] NOTES OF DECISIONS. 413.

he could have no intent to give a preference to one creditor over another. If
a person, while paying one creditor, nonestly supposes that he is able to pay
every creditor, there can be no intent to give a preference. (Jn re Diblee e
al. 2 B. R. 6173 8. o. 3 Ben, 283.)

Where the probable consequence of au act is to give a preference, the
debtor will be conclusively presumed to have intended to give such prefer-
ence. (Jn re Drummond, 1 B.R. 231; s.c.1L. T. B. 7; in re Black & Secor,
1B. R. 3538; 8. c. 2 Ben. 196; s.c.1L. T. B. 39; in re Sutherland, 1 B. R.
531; s.c. 1 Deady, 344; in re Diblee e¢ al. 2 B. R. 617; 8. c. 3 Ben. 283; in
re Wells, 3 B. R. 871; s.c. 20. 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 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 insolvent 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 motives may have actu-
ated the debtor, but that makes the payment none the less a preference. Jn-
deed, 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 et al. 2B. R. 602; in re Silverman, 4 B.
R. 523; s.c. 2 Abb. C. C. 243; 8. c. 1 Saw. 410.)

If a debtor is insolvent at the time of making a payment, he is presumed
to know it until the contrary appears. (Jn re Silverman, 4 B. R. 523; s. c. 2
Abb, C. C. 243; s. co. 1 Saw. 410; im 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. (Jn re
Oregon Printing Co. 13 B, R. 503; 8. c. 11 Pac. L. R. 288; 8. 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 evi-
dence of the intent. (Jn re Oregon Printing Co. 13 B. R. 503; 8. c. 11 Pac.
L. R. 282; s. o. 3 Cent. L. J. 515.)

A payment by an insolvent debtor is an act of bankruptcy, although it is
made in the usual course of business. (Jn re Oregon Printing Co. 13 B. R.
503; s.c. 11 Pac. L. R. 233; 8. c. 3 Cent. L. J. 515.)

Where the defense is that the securities belonged to the creditor on ac-
count of an alleged fraud, the burden of proof is on the debtor to establish
the fraud and the identity of the securities by a fair preponderance of evi-
dence. (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 bankruptcy. (Payne
y. Solomon, 14 B. R. 162.)

There ig a distinction between an agreement that securities purchased
with the proceeds of an overdraft shall all the time be considered the prop-
erty of the bank, and an agreement to turn over the title asa future act.
(Puyne v. Solomon, 14 B. R. 162.)
4l4 THE BANKRUPT LAW. [§ 5021.

If a bank merely certifies the check of a debtor in advance, relying on bis
promise to make his account good during the day, such an overdraft, in the
absence of fraud, creates simply the relation of debtor and creditor, and the
payment of such a debt after insolvency occurs, is an act of bankruptcy.
{Payne v. Solomon, 14 B. R. 162.)

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 overdrafts,
will not vest a title to the securities in the bank, so that a transfer of them
will not be a preference. (Payne v. Solomon, 14 B. R. 162.)

A mortgage of the whole stock in trade to a pre-existing ereditor is prima
facie a preference. Itis very strong evidence, because it is out of the ordi-
nary 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 e 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 part-
nership, 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 partuership creditors as will
make it an act of bankruptcy. (Jn re J. A. & H. W. Shouse, Crabbe, 482.)

If an insolvent firm is dissolved, and all its assets transferred to one part-
ner, who immediately executes a mortgage to secure a separate debt, the act
is voidable oy 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. (Jn 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 3B. R. 289; s. c. 2 Dillon, 487.)

A conveyance attempted to be made by an instrument void for want of a
stamp is not an act of bankruptcy. (Jn re Dunham & Co. 2B. R. 17; 8. ¢.
2 Ben. 488; s.c. 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.
(dn re 8, Mendelsohn, 12 B. R. 583; 8. c. 9 Pac. L. R. 193.)

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 & Co. 2B. R. 17; 8. c. 2 Ben. 488; s. ¢.
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. (Knickerbocker Ins. Co. v. Comstock, 9 B. R. 484;
8. 0.6 C, L. N. 142.)

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 afterwards ensue, And, on the other hand, if the debtor,
being insolvent, 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 in-
§ 5021.) NOTES OF DECISIONS. 415

tent with which the act was done; and the intent is to be proved as a fact,
either by direct evidence, or as the necessary and certain consequence of other
facts clearly proved. (Morgan, Root & Co, y. Mastick, 2 B. R. 521; Doan v.
Compton & Doan, 2 B. 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 the assets. A payment of rent may be made to pre-
vent a forfeiture of the lease. (Smith v. Teutonia Ins. Co. 4 C. L. N. 130;
contra, in re Merchants’ Ins. Co. 6 B. R. 48; 8, c. 3 Biss. 162; 8. 0. 2 L. T. B.
243.)

Agents may retain the money in their hands for the payment of their sal-
aries. 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 copartner
is not an act of bankruptcy as against the firm creditors, for the property is
not put out of the firm. (Jn re Kenyon & Fenton, 6 B. R. 238.)

A preference to an employee is an act of bankruptcy. The law gives to
an employee a priority to the amount of fifty dollars, but this must be secured,
if at all, by and through the proceedings in bankruptcy, and not outside of
them, or independent of and in spite of this act. (Jn re Kenyon & Fenton, 6
B. R. 238.)

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 vy.
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 distinc-
tion between giving a preference when the creditor asks for it, and giving a
preference when the creditor does not ask for it. (In re Diblee et al. 2 B. R.
617; s. c. 8 Ben. 283; in re Batchelder, 3 B. R. 150; s. c. 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. 0. Railway Company, 1 B. R. 647; 8. ¢.
1L. 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. (Jn re J. A. & H. W. Shouse,
Crabbe, 482.) .

A security given at the time of receiving a loan is not a preference. (Jn
re J. A.& H. W. Shouse, Crabbe, 482.)

A preference is an act of bankruptcy, although it is given under pressure.
(Gassett v. Morse, 21 Vt. 627; in re Henry Brenneman, Crabbe, 456; Arnold
v. Maynard, 2 Story, 349.) s

A preference is an act of hankruptcy, 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
416 THE BANKRUPT LAW. [§ 5021.

involuntary proceeding. (Jn re Oregon Printing Co. 13 B. R. 503; 8. Cc.
11 Pac, L. R. 283; 8. 0. 3 Cent. L. J. 515.)

Intent to Defeat the Operation of the Bankrapt Act.

(4) The question 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 bankrupt act, unless it was meant to be
so. (Perry v. Langley, 1B. R. 559; sc. 2 B. R. 596; s.c. 1 L, T. B. 343
sc. 7 A. L. Reg. 429; s.c. 8 A. L. Reg. 427; Wells e¢ al. 1 B. R. 171;
s.c. 1 L. T. B. 20; s.c. 7 A. L. Reg. 163.) o

Every person of a sound mind is presumed to intend the necessary nat-
ural or legal consequences of his deliberate act. This 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 consequences
must necessarily follow the act done. the presumption is ordinarily conclusive,
and can not be rebutted by any evidence of a want of such intention. 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 hearing upor bill and
answer without the filing of any replication. When the result which neces-
sarily and inevitably follows an act is to defeat the operation of the bank-
rupt act, the law conclusively presumes that the party intended to accomplish
that result, and his denial of such an intent is of no consequence. (Jn re
8. T. Smith, 3 B.R. 3877; 8. c. 4 Ben. 1; 8.0.1 LT. B. 147; Hardy v.
Clark et al. 3 BR. 885; 8.c. 3 L. 1. B. 11; 8.0.1 L. T. B. 151; 8.06 17
Pitts. L. J. 61; 8.0.2 C0. L. N. 121.)

The motives of the debtor in committing the act are immaterial. It isno
defense that other considerations were the moving cause. Motive should not
be confounded with intent. When he intends to do the thing which neccs-
sarily 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 voluntary 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. (Hurdy et al. v. Binninger
et al. 4 B. R. 262; 8. c. 7 Blatch. 262.)

An assignment for the equal benefit of all creditors is in contravention of
the spirit and policy of the bankrupt 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 bankrupt 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 according to the
wish or preference of the insolvent, or in acéordance with the insolvent laws
of a State, but according to the provisions of the national bankrupt act.
Practically an assignment defeats or delays the operation of the act. It de-
prives creditors of a legal right under the statute, and is clearly in contra-
vention of its spirit and its letter. It commits the disposition and the dis-
tribution of the property to an assignee selected by the debtor, and deprives
his creditors of the right given them by the bankrupt act to choose an as-
signee 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 respect 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 importance, the infraction of which is punished as
§ 5021.) NOTES OF DECISIONS. ALT

‘heinous crime. Such an assignment necessarily and absolutely defeats the
“operation of the bankrupt act. The provisions of the statute fully author-
ize, if they do not absolutely require, this construction. (Perry v. Langley,
1B. R. 559; 8.c. 1 L. T. B. 84; 8.0.7 A. L. Reg. 429; in re 8. T. Smith, 3
B. R. 877; s.c.4 Ben. 1; s.c.11L. T. B. 147; Anon. 3 B. R. 78; Spicer ev
al. y. Ward et al. 3 B. R. 512; Curran v. Munger, 6 B. RB. 83; in re.Gold-
schmidt, 8 B. R. 165; s. 0. 3 Ben. 379; in re Pierce & Holbrook, 3 B. R.
258; 8. c. 16 Pitts. L. J. 204; in ve Randall & Sunderland, 3B. R. 18; 8. c.
1 Deady, 557; s.c.2 L. T. B. 69; in ve Wells et al. 1 B. R. 171; 8.c.1 L. T.
B, 20: s.c. 7 A. L. Reg. 163; in re Burt, 1 Dillon, 439; in re Henry Brenne-

man, Crabbe, 456; Glohe Ins. Co, v. Cleaveland Ins, Co. 14 B, R. 311; 8. 6. 8 «-

C. L. N. 258; contra, Perry v. Longley, 2B. R. 596; 8. c. 8 A. L. Reg 427;
in re Kintzing, 8 B. R. 217; Smith v. Teutonia Ins. Co. 4 0, L. N. 130; 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. (Inve §. T. Smith, 3 B. R. 377; s. c. 4 Ben.
1;s.c.1L.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, in-
cluding 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 bankrupt 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. (Jn re
Chamberlain et al. 3 B. R. 710; in re L. J. Doyle, 3 B. R. 640.)

The requirements of the bankrupt. 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 bank-
ruptcy, 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 voluntarily. An insolv-
ent 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 bankrupt act. In the first place, it absolutely defeats
the operation of the bankrupt act by withdrawing the property from any ad-
ministration under it. Whether some other administration, either through
a receiver or a voluntary assignee is wiser and better or not; whether the
end will be the same if those modes are carried into honest and faithful exe-
cution or not—the operation of the bankrupt act is equally defeated. For
the statute does not say with intent to defeat or prevent the result which the
bankrupt 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 bankrupt act are that the property
of insolvents shall be secured to the creditors in the very mode pointed ont
thereby, with all the facilities for its appropriation, all the security for its
administration, all the safeguards against fraud, all its protection against de-
vices to establish false claims, fictitious debts, and illegal or inequitable pref-
erences which that act provides, 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

27 e
418 THE BANKRUPT LAW. [§ 5021..

true, it would be only saying that they will resort to an expedient to defeat
the bankrupt 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 partnership 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 proceed-
ing which must pass througb all the ordinary forms of litigation, and which
is susceptible of almost indefinite protraction through orders, appeals, rehear-
ings, &c., is substituted for the summary proceedings which the act provides.
(Hardy v. Clark et al. 3B. R. 885; s.c. 1L. T. B. 151; sc. 3L. T.B. 11;
s. c. 17 Pitts. L. J. 61; s.c.2C0.L. N. 121; Hardy v. Biuninger et al. 4 B.
R. 262; s. c. 7 Blatch. 262.)

It has always been the law and practice, under the insolvent statute of
Massachusetts, to consider all partial settlenents by insolvents as, in them-
selves, acts of bankruptcy; and it is well understood that, if a single creditor
stands out, no arrangement can be made except through the bankrupt court.
(In re Williams & Co. 3 B. R. 286; 8. c. Lowell, 406; s.c.2L. T. B. 100;
in ve Pierce & Holbrook, 3 B. R. 258; 8. c. 16 Pitts. L. 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
that a man has not assented to that which is to his disadvantage, The pre-
sumption of law is that he has not. (Curran v. Munger, 6 B. R. 83.)

The sale of goods by an insolvent debtor from bis store to customers in
the ordinary course of trade, at a time when he is endeavoring to compromise
with his creditors, does not raise a presumption of an intent to defeat the
operation of the bankrupt act. His efforts to settle with his creditors without
going through bankruptcy in court, are entirely legitimate, and not prohibited
by any provision of the bankrupt act; and continuing to sell goods in the
usual way of trade pending such negotiations, is entirely proper and justifi-
able, 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
isnot an act of bankruptcy. (Jn 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 the stock of the com-
pany, not before issued, in payment of the bona side debt of the company,
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 authorized act of
the corporation to creditors, under circumstances to give them an illegal pref-
erence, no reason is perceived why it would not be an act for which the cor-
poration could be proceeded against under the bankrupt law. (Winter v.
Rk. BR. Co. 7 B. R. 289; 8. c. 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 bankrupt act. (Jn re Schick, 1 B. R. 177; s. c. 2 Ben.
5; 8.0.1 L. T. B. 28.)

It isimmaterial whether the debtor had in contemplation the provisions
of the bankrupt act or not. (foster v, Hackley & Sons, 2 B. R. 406; 8. ¢. 2
L. T. B. 8; s.c.1C. L. N. 187; Haughey v. Albin, 2B. R. 399; 2 Bond, 244;
sc. 2L, T. B47; contra, in re Drummond, 1 B. R. 231; s.c.1L. T. B. 7)
§ 5021.] NOTES OF DECISIONS. 41g

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. (dn re Cowles, 1 B. R. 280; 8. ¢c. 1 W. J. 867; 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; tn ve Chandler, 4 B. R. 218; s, c. Lowell, 478;
s. 0.2L. T. B, 170.)

If he merely makes up the produet of his own land, he is not a trader.
(In re Chandler, 4 B. R. 213; s. c. Lowell, 478; 8.¢. 2 L. T. B. 170; in re
Samuel King, 1 N. Y. Leg. Obs. 276.)

The keeper of a livery stable isnota 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 atrader. (Hall v. Cooley, 3 N.Y. Leg.
Obs. 282.) ;

The occasioual sale by the keeper of a livery stable of horses and carriages
that have become unfit for use, is but a necessary incident to the main busi-
ness of letting for hire, and does not render him a trader. (Hull v. Cooley, 3
N. Y. Leg. Obs. 282.)

The keeper of a livery stable, who only sells horses occasionally, without
holding himself out asa dealer in horses, ig not a trader, for this is only aux-
iliary to his main business. (Hall v. Cooley, 3 N. Y. Leg. Obs. 282.)

A manufacturer and vendor of sleighs, carriages and other vehicles, is a
trader. (Jn 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. (Jn re Wiiliam Heles, 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 ve 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, (Jn re Rufus Hoyt, 1 N. Y¥. Leg. Obs. 1382; Wakeman v.
Hoyt, 5 Law Rep. 309.)

A person who ownsand leases oil land, and receives a part of the products
as rent, is not a trader as respects his dealings in the products of his land in
acrude state. The word “trader” is to be interpreted according to its
meaning in the English bankrupt law, and when the interpretation 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 net 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. (Jn re Thomas
Woods, 7 B. R. 126; s. c. 29 Leg. Int. 236; 8. c. 20 Pitts. L. J. 21.)

The publishers of a newspaper, who also conduct a book and job printing
office connected therewith, are manufacturers. (Jn re Kenyon & Fenton, 6
B. R. 288.)

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
420 THE BANKRUPT LAW. [§ 5021.

manufacture as that of books or cards or billheads. (Jn re Kenyon & Fenton,
6 B. R. 2388.)

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 now commonly used;
and the making is one merely incidental to the cultivation of his land. But
jn the case of Jumber, the land may be elmost 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. (Jn re Chandler, 4 B. R. 213; s, c. Lowell, 478; s. o. 2 L. T. B. 170;
Hall vy. Cooley, 3 N. Y. Leg. Obs. 282.)

The powers of a corporation must be determined by its charter. A cor-
poration is an artificial person, the creature of law. It has no powers except
what are given by its incorporating act, either expressly or as incidental to
its existence and its express powers. The mere power does not make the
‘company a manufacturer unless it actually engages in the business of manu-
facturing. 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 bankrupt law. (Ala. &
Chat. R. R. Co. v. Jones, 5 B. R. 97.)

The involuntary feature of the bankrupt law is punitive in its character
and effect, and as such should only be applied to those who do some act for-
bidden by the law, or who fail to do some act required by it. It is not the
contracting the debt only that constitutes the act of bankruptcy, but it is
something that is done, or neglected to be done afterwards, and contemplates
the power in each individual to refrain from doing the thing forbidden, or
having the power to do the thiag rquired. This every partner is presumed
to possess, but one who has only Jent his credit to the firm by holding him-
self out a8 a partner, and thereby liable to those who gave credit on that ac-
count, having no interest in the business, and having no voice in the control
over its affairs, has not such power, and is not, therefore, subject to be de-
clared a bankrupt for an uct of bankruptcy committed by the firm. (Moore
v. Walton, 9 B. R. 402.)

A loan of money to be used in fusiness 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 advanced with interest,
does not make the parties partuers inter se without an election to share in the
profits. (Moore vy. Walton, 9 B. R. 402.) :

Any person who has fraudulently stopped payment of his debts generally
may be adjudicated a bankrupt. (Jn re Joseph 8. Hadley, 12 B. R. 366.)

What will constitute a stoppage of payment is usually easy to determine.
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. (Jn ve Joseph 8. Hadley, 12 B. R. 366.)

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 continuance.
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 fraudu-
lently stop payment of their debts, be liable to be adjudged bankrupts at
once, and if they stop or suspend payment of their commercial paper, and do
§ 5021.) NOTES OF DECISIONS. 421

not resume payment of it within a period of forty days, they shall then be
liable to be adjudged bankrupts. (Wells et ai. 1 B. R. 171; 9. c.1 L. T. B.
20; 3.0.7 A. L. Reg. 163; in re Weikert e al. 3 B. R. 27; 8. ¢. 1 Ben. 397;
in ve Thompson & McClallan, 3 B. R. 185: 8. c. 2 Biss. 166; 8.c.1L. T. B.
137; in re Cowles, 1 B. R. 280; 8. c.1 W. J. 867; in re Schoo, 3 B. R. 215;
Baldwin v. Wilder, 6 B. R. 85; in ve Burt, 1 Dillon, 4389; in re Hall, 1 Dil-
Jon, 586; én 7e Hercules Ins. Co, 6 B. R. 338; s.c. 6 Ben. 35; 8.c. 5 L. T. B.
400; Mendenhall vy. Carter, 7 B. R. 820; Winter v. R. RB. Co. 7 B. R. 289; 3.¢.
1 Dillon, 487; in re Valliquette, 4 B. R. 807; tn re B. Cohn, 7 B. R. 31; 8. c..
5C. 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 subsequent
non-resumption of payment of his commercial pvper does not constitute an
act of bankruptcy. The words “stopped” and ‘not resumed” have dis-
tinct 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 fraudulent stopping of payment is
an immediate act of bankruptcy, and no subsequent resumption will free the
fraudulent debtor from an adjudication of bankruptcy, if proceedings are
commenced within six munths. In this clause of the statute the word
“stopped” refers to the time of the immediate act, and the question of non-
resumption 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 bankrupt 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 non-payment 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 anc non-resumption of pay-
ment. 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, und 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 not resuming pay-
meat. Whether his continued suspension and non-resumption of payment be
termed a cortinuous act of bankruptcy, or be regarded as daily successive
acts of bankruptcy, is not material. So long as it continues, the creditors
may avail themselves of it as an act of bankruptcy, committed as truly with-
inthe preceding six months as on the day on which the debtor first violated
his commercial obligation. (In re Jacob Raynor, 7 B. R. 527; 8. c. 11
Blatch. 43; Buldwin v. Wilder, 6 B. R. 85; contra, Mendenhall v. Carter, 7
B.R. 820.)

An express authority is not in general indispensable to confer upon a cor-
poration 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 th s includes
the power to borrow money for use in its legitimate business, and the power
to give a time engagement to pay the debt in any form not prohibited by
ek (Iv re Hercules Ins. Co. 6 B. R. 8388; 8. c. 6 Ben. 35; 8. c. 5 L. T.

. 400.)

The term commercial paper is used in the bankrupt act to denote bills of
exchange, promissory notes, and negotiable bank checks—paper governed by
those rules which have their origin in and are established upon the custom of
422 THE BANKRUPT LAW. [§ 5021.

merchants in their commercial transactions known as the law merchant.
Such paper is usually denominated commercial paper, and it should be pre-
sumed that Congress used the term in its common acceptation rather than in
a more restricted sense. (In re Nickodemus, 3 B. R. 230; 3. c. 1 L. T. B.
140; 5.¢.2C. L. N. 49; 8. c¢. 16 Pitts, L. J. 233; in ve Hollis e al. 3 B.R.
310; in re Chandler, 4 B. R. 218; s. c. Lowell, 478; 8. c.2 L. T. B. 170; in
ve R, Stevens, 5 B. R. 112; 3. c. 1 Saw. 397; in 7e Carter, 6 B. R. 299; 8. c. 8
Biss. 195; in re Kenyon & Fenton, 6 B. R. 238; in re Hercules Ins. Co. 6 B.
R. 888; 8. c. 6 Ben. 85; s.c.5 L. T. B 400; iw re James W. Sykes, 5 Biss.
113; vide in re Lowenstein e¢ al, 2 B. R. 306; in re McDermott Patent Bolt
Manuf. Co. 3 B. R. 128; s. c. 8 Ben. 369; in re Clemens, 8 B. R. 279; 8. ¢. 9
B. R. 57; 8. c. 2 Dillon, 584.)

Negotiable paper stands, by usage and by statute, upon the custom of
merchants, and is controlled and regulated by such custom ; and these regu-
lations are always treated as part of the iaw 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 ot 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. (Jn ve Chandler, 4 B.
R. 213; 8. c. Lowell, 478; 8. c. 2 L. 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 commercial
paper of the maker as between him and the petitioner. (Jn re Charles S.
Westcott e¢ al. 7 B. R. 285; 3. 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. 820)

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 etal. 3B. R. 187; 8. c. 2 Biss. 156; s.c.1L. T. B.107:
in re Nickodemus, 3 B. R. 230; s.c.1 L. T.B. 140; s.c.2C. L.N.49; 5. 6.16
Pitts. L. J. 233; in re Carter, 6 B. R. 299; 3 Biss. 105: Mendenhall v. Carter,
7 B. R. 320.)

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, docs not divest the latter of
lus character of manufacturer. especially when the debt which forms the con-
sideration of the draft is a debt contracted by the firm in the course of its
manufacturing business, (Jn ve R. Stevens, 5 B. R. 112; s. c. 1 Saw. 397.)

The bonds and coupons of a railroad corporation are not commercial
paper. (Zuerer v. Opelousas & Great Western R. R. Co. 3B. R. quarto, 31.)

_ Interest coupons severed from the bonds are commercial paper when
issued by a railroad corporation. «(Ju re Greenville & Col. R. R. Co. 5 C0. L.N.
124; 8.¢.6 A. L. J, 422.)

A note given by one partner upon the dissolution of tbe firm on final set-
'§ 5021. ] NOTES OF DUCISLONS. 423

tlement at the close of mercantile business, is not commercial paper. (Jn 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. (/n re Massachusetts Brick Co.
6B. 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. (Jn 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 represents
must have been incurred by the debtor in his character of bank, banker,
broker, merchant or trader, manufacturer or miner. This being so, it mat-
ters 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
Taust be commercial paper, and the debtor must be a party thereto with a
fixed liability; and it must be adebt incurred in his character of banker,
merchant or tracer. (Jn re Nickodemus, 8 B. R. 230; s.c. 1 L. T. B. 140;
s.c. 20. L.N. 49; s.c. 16 Pitts. L. J. 233; invre 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.c. 9 B.R. 57; 8. c. 2 Dil-
lon, 534; in re Nickodemus, 3 B. R. 230; s.c.1 L. T. B. 140; 58.c.2C. L.
N. 49; s.c. 16 Pitts. L. J. 233; Jnnes v. Carpenter, 4 B. R. 412; contra, in
re Chandler, 4 B. R. 213; 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 while he was
atrader. The language of the section clearly indicates that the making of
the note must have been done while the party was a trader. (Jn re Francis
M. Jack, 18 B. R. 296; s. c. 1 Wood, 549.)

A note given by one partner, on a settlement of a partuership 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. (ln ve George
Lang, 14 B. R. 159.)

It is not necessary that the non-payment for the given period shall be
general. The statute has not declared that suspensivn 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. (Jn re Wilson, 8 B.
R. 396; 8. c. 5 Biss. 8387; McLean v. Brown, Weber & Co. 4 B. R. 585; 8. c. 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 non-payment, it is for the debtor to show it before the court. The peti-
tioner need not therefore set forth by negative allegations all the particular
circumstances which by possibility might show the non-payment to be with-
in the meaning of the law. It is sufficient that a prima facie case is made ,
upon the petition. (Jn re Wilson, 8 B. R. 396; s. c. 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
che has a valid claim against the paper, or a set-off, that is not a stoppage or
424 THE BANKRUPT LAW. [§ 5021.

suspension within the meaning of the bankrupt act. (Jn re Thompson & Mc-
Clallen, 3 B. R. 185; s. c. 2 Biss. 166; 3. c.1L. T. B. 187; in re Chandler, 4
B. R. 213; s,c, Lowell, 478; s c. 2L. T. B. 170; Bank v. Iron Co. 5 B. R.
491; 5. c 1L. T. B. 272; 8. 0,19 Pitts. L. J.5; 8.c.3 C. L. N. 402; 8. ¢.
28 Leg. Int. 317; in re Charles 8. Westcott et al. 7 B. R. 285; 8. c. 6 Ben.
135; in re Mannheim, 7 B. R. 842; 3. c. 6 Ben. 270; 8. c. 6 L. T. B. 94; tn re
James W. Sykes, 5 Biss. 113.

The court of bankruptcy will not sit to try the validity of the reasons for
the non-payment 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 connection with the
circumstances surrounding it. The non-payment of one piece of paper is not
of itself suspension, for there may be a good reason for it. Rut 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. 4B. R.
585; s. c. 2L. T. B. 169; in re Hercules Ins. Co. 6 B. R. 338; s. c.6 Ben. 55;
s.c.5 L. T. B. 400.)

The clause ought not to be used to enable a creditor to collect an ordinary
debt on commercial paper, where the circumstances show that, although 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 col-
leet the paper is all that the creditor is entitled to. The court, however,
must guard ‘against being imposed upon by a denial of liability which is
altogether 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 non-payment can not be regardcd as a stoppage or suspension
within the act. (Jn re Hercules Ins. Co. 6 B. R. 338; s.c. 6 Ben. 35; 3. c..
5 L. T. B. 400.)

It is not sufficient to defeat the operation of the bankrupt law to simply
deny liability upon the commercial paper, The party must satisfy the court
that he has good reason for disputing his liability, and that his liability is
involved in doubt, at least, before a bankrupt 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 decree in bank-
ruptcy should not go against him that he is solvent, 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 non-payment of commercial
paper and its continuance for forty days from constituting an act of bank--
ruptcy must be a legal reason, such as to enable the court to say that it is not
within the scope and meaning of the bankrupt law. (Za re 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 ad-
judged, Such a case is not one for an adjudication of bankruptcy, but for
a suit on the paper in a proper tribunal, (Jn re Charles S. Westcott et al. 7
B. R. 285; s. c. 6 Ben. 1385; ez re Hercules Ins. Co. 6 B. R. 338; 8. c. 6 Ben.
35; 8. c. 5 L. T. B. 400; iz re Mannheim, 7 B. R. 342; s. c. 6 Ben. 270; 8. ¢.
6 L. 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. (Jn re Stapliv, 9 B. R. 142.)

A suspension which has taken place on account of an injunction against
the debtor, restraining him from making any transfer or disposition of his-
§ 5021.] NOTES OF DECISIONS. 425,

property is not an act of bankruptcy. (Jz 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 creditors, does
not prevent the bankrupt court from entertaining a proceeding against the
debtor, (Jn re P. Laner, 9 B. R. 494.)

The suspension continues, although 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. (Jn ve P, Laner, 9 B. R.
494.)

Evidence that the debtor is a man of means, and has met his other 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 bankrupt act. (Jn 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 suspen-
sion raises a presumption of insolvency, and makes the party guilty thereof 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 satisfy all his creditors, if he would wipe out the offense
against his commercial standing committed by the suspension. (Jn re Ess &
Clarendon, 7 B. R. 133; s. c. 8 Biss. 301.)

The dissolution of a partnership, and the assumption of the partnership:
debts by one partner, does not make any difference with the duty and liability
of the retired partner to meet the partnership paper. He sbould pay the debt,,
and look to his late partner for reimbursement. (Inve Weikert et al. 3B. R.
27; 8. c. 1 Ben. 397.)

It is no defense that the debtor 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 becomes liable to meet it in the time
specified by the law, no matter what his occupation may then be. (Davis &
Green v. Armstrong, 3 B. R. 34; 8. c. 2 L. T. B. 188; Baldwin 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 commercial
paper, whether made before or after he commenced business. Consequently
he may be declared a bankrupt for suspending the payment of commercial
paper issued by him prior to the time of entering such business. (Jn re Car-
ter, 6 B. R. 299; 8. c. 3 Biss, 195.)

The principle upon which the liability as secret partner rests is essentially
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. (Jn re Munn, 7 B. R. 468;
8. C. 3 Biss. 442.)

Suspension and non-resumption, 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.)
426 THE BANKRUPT LAW. [§ 5021.

An allegation of stoppage and suspension on a certain day, upon commer-
cial paper which was made and dated within the six months next preceding
the actual filing of the petition, counected 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.)

The petition should state, as nearly as possible, the date of the promissory
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 indorser, and
by whom the same was held when payment was neglected or refused. (In re
Rendall & Sunderland, 3 B. R. 18; s.c. 1 Deady, 557; 8. c. 2 L. T. B. 69;
Orem & Son v. Harley, 3 B. R. 263.)

If the forty days have not expired at the time of the filing of the petition,
the suspension can not be relied on to support it, although the forty days
elapse before the hearing. (Jn re Tivoli Brewing Co. 11 B. R. 470.)

When fraud is averred, the petition should set forth the acts that make
the suspension and non-resumption fraudulent. (Gillies et al. v. Cune et al. 2
B, R. 21; s. c. 2 Ben. 502.)

If the allegation sufficiently describes the paper to identify it and prevent -
the party from being misled, it need not give the date thereof. (Jn re Joseph
8. Hadley, 12 B. R. 366.)

An allegation that the paper was the commercial paper of the debtor, and
made by him as a merchant, &c., need not be averred except in general
language. (Jn re Joseph 8. Hadley, 12 B. R. 366.)

It is not necessary that the facts constituting the fraud in the suspension
-of the paper shall be set forth in the petition. (Jn re Joseph 8S. Hadley, 12
B. R. 366.)

A fraudulent stopping of payment is not an act heretofore known or de-
fined, and it is not easy of Cefinition. 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
tefusal 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 v. Iron Co. 5 B. R. 491;
s.c.1L. T. B. 272; s3.c.3 C. L. N. 402; 8. c. 19 Pitts. L. J.5; s. c. 28 Leg.
Int. 517.)

Something must be shown from which the court can draw the conclusion
that the stoppage or suspension of payment of the paper was fraudulent.
The mere non-payment does not warrant such conclusion. It is for the cred-
itor 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. (Jn re Davis, 3 B. R. 339; 8. ©.
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 commits
a fraud upon his creditors if he appropriates the proceeds to any other pur-
pose until the obligation is discharged; indeed, his whole capital stock is
virtually pledged for the payment of such commercial liabilities ag he may
incur in such business; he is farther pledged to give to his business his best
§ 5021. ] NOTES OF DECISIONS. 427

skill and attention; and a failure to comply with these requisitions is a fraud
on the rights of those who have given him credit in his business, and whose
demands remain unsatisfied. (Davis & Green v. Armstrong, 3 B. R, 84; 8. ©.
2L. T. B. 138.)

A solvent debtor, who has the means wherewith to pay commercial paper,
and does not pay it, is guilty of fraud. (Jn re Lowenstein et al, 2 B. R. 806;
Hardy et al. v. Binninger et al. 4 B. R. 262; s. & 7 Blatch. 262.)

Suspension and non-resumption, with the assent of the holder of the sus-
pended paper, is not fraudulent. (Jn 7e Lowenstein ef al. 2 B. R. 306.)

In the following cases it was held, prior to the amendment, that suspen-
sion and non-resumption were prima facie evidence of fraud. (Jn re Jersey
City Window Glass Co. 1 B. R. 426; 8.0.1 L. T. B. 61; 8.0.7 A. L. Reg.
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. Armstrong, 3
B. R. 34; s.c. 2 L. T. B.188; in re Shea et al. 3 B. R. 187; 8. c. 2 Biss. 156;
s.c.2L. T. B. 107; in ve Hollis et al. 3 B. R. 310.)

In the following cases it was held that mere suspension and non-resump-
tion were not sufficient, but that fraud must be proved. (Jn re Leeds, 1 B.
R. 621; 3.0. 1L. T. B. 78; 3.0. 7 A. L. Reg. 693; Gillies et al. vy. Cone et al.
2B. R. 213; s. co. 2 Ben. 502; in re Davis, 3 B. R. 339; 8. 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 pre-
scribed period. (Jn re Hall, 1 Dillon, 586; in re Ess & Clarendon, 7 B. R.
133; s. c. 3 Biss. 301.)

The Involuntary Pctition.

(4) Proceedings in bankruptcy can not be initiated in the circuit court.
For that purpose the jurisdiction of the district court is plainly exclusive.
Cin re Binninger et al. 3B. R. 487; s. c. 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 the 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 an adiudication of voluntary bank-
ruptcy, to be had in the court of the district in which he has resided or car-
ried on business for the preceding six months, or for the longest period
thoreof. The assent of the debtor to the proceeding will not make it valid,

. for consent can not give jurisdiction. The petition must be addressed 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. 2338: 8. c. 2.L. T. B. 174;
in re Ala. & Chat. R R. Co.6 B.R. 107; s.c. 9 Blatch. 891; 3. ca. 5 L. T.
B. 76.)

The petition can not be filed in the district where the debtor neither resides
nor carries on business. (Jn re J. M. Palmer, 1 B. R. 218; in re Fogerty &
Gerrity, 4 B. R. 421; s.c. 1 Saw. 233; 8s. 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 tor the longest
period of the six months next immediately preceding the filing of the petition.
(Cn re Leighton, 5 B. R. 95.)

Proceedings in bankruptcy should be instituted with reference to the act-
ual residence of the party, or his place of business, and not with reference to
428 THE BANKRUPT LAW. [§ 5021.

his domicile. Ifa 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 duriag the whole period. (Mm re
Watson, 4B. R. 613.)

The district court of any district in which the debtor may actually reside
and do business at the time of the filing of the petition against him has juris-
diction to hear the cause and make an acjudication of bankruptcy. (Jn re
Johnson, 1 Cent. L. J. 223.)

If the name of the judge is given, it must be correct. A petition misnam-
ing the judge can not be filed. (Anon. 3 B. R. 128.)

The petition should name facts with certainty and detail, so as to inform
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 state-
ments, 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 & Sunder-
land, 3 B. R. 18; s. c. 1 Deady, 557; s.c.2L. 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 proceed-
ings 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 instances 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 that 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 circumstances of the particular case. (In re
Muller & Bretano, 3 B. R. 329; s. c. 1 Deady, 518; 8. c, 2 L. T. B. 33; Orem
& Son v. Hurley, 3 B. R. 268.)

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 bank-
ruptcy on the part of one of the members is not sufficient. (In re Waite &
oo 1B. R. 873; 3. c, Lowell, 207; in re Redmond & Martin, 9 B. R.

A petition against partners must allege that the act of bankruptcy was
committed during the continuance of the partnership. (Jn re Hill & Van
Valkenburgh, 5 Law Rep. 826.)

_ 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 be-
longed to the firm. (In re Williams & Co. 3 B. R. 286; s. c. Lowell, 406;
8. 0.2L. T. B. 100.)

A transfer of firm property by one member of a firm, without the privity
or consent of his copartners, is an act of bankruptcy on the part of the firm
when accompanied by the other conditions prescribed by the act. (In ve
Black & Secor, 1 B. R. 858; s. c. 2 Ben. 196; s. o 1L.T. B. 39; Fisher v.
Currier, 5 Law Rep. 217; s. c. 1 Penn. L. J. 217.)

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 de-
fense, are alleged conjunctively, it is enough that either of them be satisfac-
torily proved. (Jn re Drummond, 1 B. R. 231; 8. c.1L. TB. 7; Irving v.
Hughes, 2 B. R. 62; 8. c. 7 A. L. Reg. 209.)

Where one of the alternatives will support the pleadings and the other
§ 5021.) NOTES OF DECISIONS. 429

not, the construction will be against the pleading, and it will be held bad on
demurrer. (Jn 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 ondemurrer. (Jn ve Redmond & Martin,
9 B. R. 408.)

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. (Jn 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 demand
has already been averred to be against the alleged debtor, an omission to so
charge in the description of the claim will not render the petition bad on
demurrer. (Jn re Raymond & Martin, 9 B. R. 408; vide in ve 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. (Jn re Joseph S. Hadley, 12
B. R. 366.)

The petition must affirmatively show that the requisite number of credit-
ors 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; 8. c.6C. L. N. 328; 3. c. 1 Cent. L. J. 328; s.c. 10 A. L. J. 29;
8. c. 20 Pitts. L. J. 207; in re Joliet Iron & Steel Co. 10 B. R. 60; s.c. 1
A. L. T. [N. 8.] 872; 3.¢.10 A. L. J. 29; 5. c. 6 C. L. N. 328; g. ©. 21 Pitts.
L. J. 207; in re Isaac Scull, 10 B. R. 165; 8. c. 7 Ben. 871; 5. c.1 A. L, T.
(N. 8.] 416; Warren Savings Bank v. Palmer, 10 B. R. 239; 3. c.6C. L. N.
366; s. c. 31 Leg. Int. 261; 3.0.8 Pac. L. R. 44; 21 Pitts. L. J. 193; in re
James R. Keeler, 20 I. R. R. 82; s.c. 10 B. R. 419.)

The requirement of the statute is not met by an allegation that the peti-
tioners constitute the requisite proportion of the creditors when two of them
hold claims for less than two hundred and fifty dollars. (Jn re James A.
McKibben, 12 B. R. 97.)

It is not necessary to amend the petition when there has been an adjudi-
cation before the amended act took effect. The judgment of adjudication
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. (dn re Jacob Raffauf, 10 B.R. 69; s.c. 21 Pitts. L. J.
206; s.c.6 CO. L.N. 341; in re Frederick E. Angell, 10 B. R. 73; s. c. 31
Leg. Int. 254; s.c. 21 Pitts. L. J. 206; 6 C. L. N. 341; s.c.1 Cent. L. J.
363; in re H. & M. Rosenthal, 10 B. R. 191; 8. c. 31 Leg. Int. 254; 6 C. L.
N. 342; in re Ob2ar, 10 B. R. 151; 8. c. 3 Dillon, 87; in re C. B. Comstock
& Co. 10 B. R. 451; s. c. 8 Pac. L. R. 86; s. c. 22 Pitts. L. J. 23; 60. L. N.
413; Barnert v. Hightower, 10 B. R. 157; inre Wm. J. Pickering, 10 B. R.
208.)

An adjudication made on the 22d day of June, 1874, may be set aside if
the proper proportion of creditors did not join in the petition. (Jn ve Car-
tier & Baum, 13 B. R. 208.)

%

If an adjudication has been made upon a petition not signed by a sufficient
number of creditors, the court upon the filing of a petition signed by the
requisite proportion of creditors praying for a confirmation of the proceed-
ings may make a new adjudication. (Jn re Wm. N. Taylor & Co.1 W.N. 16.)
430 THE BANKRUPT LAW. [§ 5021.

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. (Jn re Isaac Scull, 10 B. R. 165; s. c. 7 Ben. 871; 8. c.
1A.L.T. [N. 8.] 416.)

Where several petitioners join in the petition in the same right, a verifica-
tion 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 verifica-
tion by or on behalf of each petitioner. (dn re Solomon Simmons, 10 B. R.
258; s.c. 1 Cent. L. J. 440.)

The petition may be signed in the name of the firm and verified by a
member of the firm. (Jn re Morris, 11 B. R. 443.)

Wher an agent is clothed with full authority, and is able to present the
proper authentication of the petition required by the forms, the petition should
be entertained, although the petitioning creditor does not in person sign or
swear to the petition. The act does not in terms say that the petition shall
be signed or verified at all. Iteshould be construed as similar language is in
the whole field of legislation, and in the terminology of courts; and there the
maxim, ‘‘ qui fucit 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.” (Inve Jacob Rayner, 7 B. R. 527: s.c. 11 Blatch. 43; contra,
Hunt v. Pooke, 5 B. R. 161; in re D. C. 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 verifying the petition,
or other competent evidence. (In re Moses A. McNaughton, 8 B. R. 44; in re
Ralph Johnson, 1 N. Y. Leg. Obs. 166; s. c. 5 Law Rep. 313.)

When the petition is signed and certified by an agent there must be proof
of his authority, either by his oath or otherwise, (Jn re Rosenfields, 11 B.
R. 86; s. c. 1 Cent. L. J. 583; in re Joseph S. Hadley, 12 B. R. 866; in re
Edward Sargent, 13 B. R. 144.)

If the petition is signed by an agent of the petitioning creditor, it need
not set forth the authority under which the agent acts. (Jn re California Pa-
cific R. R. Co. 11 B. R. 193.)

If there is no proof of the authority of the agent, the court may receive
supplementary affidavits tending to prove the authority of the agent at the
time when he signed and verified the petition. (Jn re Rosentields, 11 B. BR.
86; s. c. 1 Cent. L, J. 583.)

All creditors who are absent from the district may sign the petition by
attorney. (Jn re California Pacific R. R. Co. 11 B. R. 198.)

__If the petition is verified by an agent, where there are more than five pe-
titioning creditors, the fact of non-residence should be stated and sworn to
in the affidavit. (Jn re Solomon Simmons, 10 B. R, 253; s. c. 1 Cent. L. J.
440; in re Joseph 8. Hadley, 12 B. R. 866.)

Where there are less than five petitioning creditors, the fact of non-resi-
dence need not be stated in the affidavit when it is made by an agent, (Inre
Solomon Simmons, 10 B. R. 253; s. c. 1 Cent. L. J. 440.)
&

§ 5021.] NOTES OF DECISIONS. 431

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 veri-
fied, although the name is appended to the verification. (Jn re Rosenfields,
11 BR. 86; s.c.1 Cent. L. J. 583.)

_When an agent verifies the petition, he should do so on behalf of his
principals. (Jn ve Solomon Simmons, 10 B. R. 253; s.c. 1 Cent. L. J. 440.)

If the petition purports to ke 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
. ie be allowed. (Jn re Rosenfields, 11 B. R. 86; 8, c. 1 Cent. L.

. 583.

The jurat subscribed by the register need not contain a venue when it can
be sufficiently collected from the deposition itself that the oath was adminis-
tered where the officer resides. (Jn re Hill & Van Valkenburgh, 5 Law Rep.
326.)

The affidavit as well as the petition should be subscribed by the petitioner.
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; 3. 0. 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 prescribed.
action in furtherance of the jurisdiction acquired by the filing of the petition.
A defective verification may, therefore, be amended. (Jn re Solomon Sim-
mons, 10 B. R. 253; s. co. L Cent. L. J. 440; in ve California Pacific R. R.
Co. 11 B. R. 193; tn re Edward Sargent, 13 B. R. 144.)

An objection to a defective verification may be waived by the debtor. (Jn
ve Morris, 11 B. R. 443.) ,

The Depositions.

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 clearness as to leave no
doubt as to their meaning. (Jn re Rosenfields, 11 B. R. 86; 8. c. 1 Cent. L.
J. 583.)

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. (Jn re Phila-
delphia Axle Works, 1 W. N. 126.)

A single member of a firm who are the petitioning creditors, is competent
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. (Jn re Joseph 8. 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 detail, 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
toit. (dn re Joseph 8. Hadley, 12 B. R. 366.) .

A deposition to an act of bankrupicy, consisting of a fraudulent convey-
ance, must allege or show the fraudulent intent of the debtor in making the
conveyance. (Cunningham v. Cady, 13 B. R, 525; 3.0.8 C. L. N. 165.)
432 THE BANKRUPT LAW. [§ 5021.

f= A deposition in proof of the debt, should state whether the claim is
secured or not. (Cunningham v. Cudy, 13 B. R. 525; 8. c. 8 C. L. N. 165.)

“{! A petition will not be dismissed because the depositions in support thereof
are defective, but the petitioning creditor on motion will be allowed to file
supplemental depositions. (Cunningham v Cady, 13 B. R. 525; ine Joseph
S. Hadley, 12 B. R 366; 8.c.8 C. L. N. 165; contra, May v. Harper et al. 4
B. R. 478; 8 c. 4 Brews. 253; a,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. (Jn re James A. McKibben,
12 B. R. 97.)

A deposition to an act of bankruptcy can not be taken before a notary
public. (Jn re James A. McKibben, 12 B. R. 97.)

The Amount.

The object of notice to the creditors named in the list is to enable the pe-
titioning creditors and others of the named creditors to show that the list is
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 petition. (Jn re Hymes, 10 B, R. 433;
s. c. 7 Ben. 427; in re Edward Sargent, 13 B. R. 144.)

The affirmative of the allegation and denial on the reference is with the
petitioning creditors. (Jn re Hymes, 10 B. R. 433; 8. 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 should
contain a copy of the list with its names, places of residence and amounts.
(In re Hymes, 10 B. R. 438; s. c. 7 Ben. 427.)

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. (Jn re Hymes, 10 B. R. 433; s. c. 7 Ben. 427.)

The petitioning creditors are to be “one or more” in number; but
whether one will suffice, cr if more are necessary how many there must be, is
to be determined by certain tests prescribed by the section. (Jn re Hymes,
10 B. R. 488; s. o. 7 Ben. 427.)

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. (Jn re J. R. Currier, 13 B. R.
68.)

It is not necessary that the chief creditors shall have been asked to sign
and have refused. (Jn re J. R. Currier, 13 B. R. 68.)

Creditors whose claims are under $250 are not to becounted in estimating
the numbers, if one fourth of the creditors above that sum join in the peti-
tion. If such number do not join, then creditors below $250 may be counted
to obtain the necessary number. (Zn re Woodford & Chamberlain, 13 B. R.
575; s.c. 1 C. L. N. 87; tm ve Reiman & Friedlander, 11 B. R. 21; 8. c. 7
Ben. 455; 8. c. 18 B. R. 128; 8c. 12 Blatch. 562; in ve John B. Bergeron,
# i an 885; s. c. 10 Pac. L. R. 259; in re Philadelphia Axle Works, 1 W.

. 126.

In computing the amount, the aggregate of the petitioning creditor’s debts

+
§ 5021.] NOTES OF DECISIONS. 433.

must be equal to one third of all the debts, irrespective of amount, provable
against the estate. (Jn re Joseph 8. Hadley, 12 B. R. 366; in re John B.
Bergeron, 12 B. R. 885; s. c. 10 Pac. L. R. 259; 8. c. 2 Cent. L. J. 507; in re
J. R. Currier, 13 B. R. 68; én ve Woodford & Chamberlain, 18 B. R. 57538. ¢.
10. L. J. 87; contra, in re Hymes, 10 B. R. 144; 8. c. 7 Ben. 427.)

A party has the right to purchase a claim in good faith, with a view to
enable himself to join in a petition in order to make up the necessary number..
(In ve Woodford & Chamberlain, 13 B. R. 575; 8.c.1C.L J. 87; inveJ. 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 cout is to be deemed to belong to
the assignor. (Jn re Woodford & Chamberlain, 13 B. R. 575; s.c.1C.L.
J. 87.)

A creditor who has issued an attachment within four months before the
commencement of the proceedings in bankruptcy, must be reckoned iu com-
puting the proportion of creditors who must unite in the petition. (In re
C. G. Scrafford, 14 B. R. 184.)

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 invol-
untary petition filed in that State. (Jn re Theodore Noesen, 12 B. R. 422;
s.c.7 C0. L. N. 419)

A petition by creditors who are entitled to petition alone is not affected by
the joining of another creditor whose debt is insufficient. (Jn re Tower, 1
N. Y. Leg. Obs. 8; 8. c. 5 Law Rep. 214; 8. 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. (Jn re M. C. Israel, 12 B. R. 204; 8. c. 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. (Jn re California Pacific R. R. Co. 11 B. R. 193; in re Stan-
sell, 6 B. R. 183; in re Daniel Sheehan, 8 B. R. 345; in ve W. B. Alex-
ander, 4 B. R. 178; s. c. Lowell, 470; 3. c. 2 L. T. B. 238; Eefort v.
Greely, 6 B. R. 483; 8.6.4 C. L. N. 209; conéra, in re Johann, 3 B. R. 144;
s.c. 4 B. R. 484; s. c. 2 Biss. 189; 8. c. 2.L. T. B. 92; tn re Jacob Frost, 11
B. R. 69; 3.0. 7 C. L. N. 42; in re Green Pond R. R. Co. 13 B. R. 118.)

If the petitioning creditors do not constitute one fourth in number, and
there is no allegation to that effect, the petition will be dismissed withoui al-
lowing any time for other creditors to unite therein. (Jn 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 statement
of bis 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 be-
fore the court by a motion. (Jn re Scammon, 11 B, R. 280; 8.0.7 C. L. N.
42.)

It the petitioning creditors deny that the list of creditors filed by the
debtor is truce, either as to the nature or amount of the debts, the case may
be referred to a register to take proof and report as to the correctness of the
list. (Zn re Jacob Frost, 11 B. R. 69; 8. c. 7 C. L. N. 42.)

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

28
434 THE BANKRUPT LAW. [§ 5021.

petition, and such time will not be enlarged, except for sufficient cause. (In
ve Benjamin Bullock, 1 W. N. 22.)

The same number and amount of creditors must join in a proceeding to
force a corporation into bankruptcy, as is required in the case of an individual.
(In re Leavenworth Savings Bank, 14 B. R. 82, 92; in re Detroit Car Works,
14 B. R. 248; in re Oregon B & P. Co. 14 B. R. 394; 5. c. 18 B. R. 199; 5. ©.
8C. L. N. 81; 8. c. 10 Pac. L. R. 103.)

The Petitioner’s Debt.

(2) 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 payable 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 proceed-
ings. (Phelps v. Clasen, 3 B. R. 87; 8. c. 1 Wool. 204; contra, in re Muller &
Bretano, 8 B. R. 829; s.c. 1 Deady, 513; s. c. 2 L. T. B. 33.)

A debt contracted prior to the passage of the act is sufficient. (Jn re
John W. Hull, 1 N. Y. Leg. Obs. 1.)

The provisizns of the bankrupt act, literally construed, are wholly unam-
biguous, and authorize a creditor whose debt is not due to become a peti-
tioner. His debt exists at and before the adjudication of bankruptcy, aad is,
therefore, a provable debt. Being a provable debt, it is sufficient to maintain
the petition, (Linn et al. v. Smith, 4 B. R. 46; 8. c. 1 L. T. B. 229; s.¢. 3
L. T. B. 218; in re Ouimette, 3 B. R. 566; s. c. 1 Saw. 47; in ve W. B. Alex-
ander, 4B. R. 178; s. c. Lowell, 470; s. c.2 L. T. B. 238; im re Samuel King,
1N. Y. Leg. Obs. 276; in re Tower, 1 N. Y. Leg. Obs. 8; 8. 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 et al. v. Smith, 4 B. R. 46; sc. 1 L. T. B. 228; 8.0.3
L. T. B. 218)

When the petitioning creditor has received the notes of third parties, to
be applied to the pryment of his debt, if they should on inquiry be found
collectible, the delivery of the notes amounts to a conditional payment. If
the notes are paid or collected according to their tenor, the debt of the peti-
tioner 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 de-
livery 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 equivalent 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 prov-
ing worthless or uncollectible, notwithstanding the due diligence of the peti-
tioner, he should produce them at the trial, and surrender them to the debtor.
If the balance that remains, after deducting the amount of the coilectible
notes, is less than $250, it will not be sufficient in amount to enable the pe-
§ 5021.] NOTES OF DECISIONS. 435

titioner to maintain his petition. (/n re Ouimette, 3 B. R. 566; s. ¢. 1 Saw.
47.)

When the rature of the petitioner’s demand is fully set forth in the peti-
tion, 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, 3 B. R. 207;
8. c. 8 Ben. 871; 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 acertain contingency, which might
never happen, the party proceeded against would become a debtor. The pro-
vision 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 ascer-
tained, and itis, to say the least, very doubtful whether, in case of sucha joint
bond, there is any provable debt within the meaning of the statute until the
amount is so ascertained. (Sigsby v. Willis, 3 B. R. 207; s. c. 8 Ben. 371;
8.0.11. T. B. 71.)

If two firms share in a certain venture, and deposit the proceeds in bank
under the name of one of them, with the word ‘‘Uo.” 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 copartner-
ship. (In re J. H. Warmer et al. 7 B. R. 47; 8. c. 4 Pac, L. R. 123.)

A participation in the profits is presumptive proof that the participant is
apartner, and sufficient proof in the absence of all other opposing circum-
stances. If the alleged dormant partner receives interest on the money placed
at the disposal of the firm, and a compensation beyond the usual rate as book-
keeper, the circumstance indicates that the arrangement is either a device to
cover up a partvership 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 contingent and extra compensation for keeping
the books is a device to enable the party to share in the profits as partner.
(In re W. W. Francis et al. 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 partner-
ship creditor has such an interest in the property of any one of the partners

that he may proceed against one alone upon proof of hisdebt. (Jn re Mellick,
4B. R. 97.)

A creditor who has taken the property of a debtor upon legal process can
throw him into bankruptcy for that act. (Jn re C. A. Davidson, 3 B. R. 418;
s.c. 4 Ben. 10; Cowe 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 afterwards abandoning such proceedings and coming into the.
bankruptcy court at any time before such procecdings have resulted in a sat-
isfaction of the debt. The issue and levy of an execution does not take away
the right of the creditor to institute proceedings in bankruptcy. (Lu re
Daniel Sheehan, 8. B. B, 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 execu-
tion. (Jn re Daniel Sheehan, 8 B. R. 345.)

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
436 THE BANKRUPT LAW. [§ 5021.

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 proceedings
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: 18t. 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 peti-
tioning creditor stands in no better or more favorable position after adjudi-
cation than any other creditor. He must prove his debt in the course of the
bankruptcy proceedirgs the same as any other creditor. His debt may be
opposed, adjudicated upon, and allowed, abated or expunged the same as
any other débt. (In 7e Daniel Sheehan, 8 B. R. 345.)

A tender in court of the amount due to the petitioner can not defeat the
petition. Ifthe 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 knowledge 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 be-
tween him and the debtor upon such question, could prevent third persons,
who might be creditors, from asserting their rights as such. (Jn re Willi:ms
& Co. 3 B. R. 286; s. c. Lowell, 406; s.c. 2L. T. B. 100; in ve Ouimette, 3
B. R. 566; s. 0. 1 Saw. 47.)

A debtor who is solvent may pay any or allof his debts although proceed-
ings in bankruptcy are pending against him. (Jn re Oregon Printing Co. 18
B. R. 508; s.c. 11 Pac. L. R. 233; s. c. 38 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, enforceable at law and not in
equity. From that date it was a simple legal demand upon which the statute
of limitations ran. (Jn re Cornwall, 4B. R. 400; 8.c.6 B.R. 805; 8. ¢. 9
Blatch. 114; s.c. 2L. T. B. 220.)

A creditor who has received an unlawful preference in respect to the debt
set forth in the petition, can not maintain the petition without a surrender of
the preference. (Jn re Peter Rado, 6 Ben. 280.)

If the petitioning creditor has received a preference upon his debt, he can
maintain his petition by making a voluntary surrender of such preference for
the benefit of the creditors of the estate. (Jn re Hunt & Hornell, 5 B. R. 433;
in re Marcer, 6 B: R. 351; s. c. 29 Leg. 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 bank-
rupt law, the proceedings must be dismissed. If the petitioning creditor,
after the filing of the petition, receives payment sufficient to reduce 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
§ 5021.) NOTES OF DECISIONS. 437

be guilty of an act of bankruptcy, before the creditor has any right to make
costs for the purpose of having him adjudicated a bankrupt. (Jn re Skelley,
5 B. R. 214; 8. ©. 8 Biss. 260.)

If the principal of the petitioning creditor’s debt is less than $250, but ex-
ceeds that sum if the interest up to the date of the petition is added, the ad-
judication will be deemed valid when assailed in a collateral proceeding.
(Sloan v. Lewis, 12 B. R. 173; 8. 0. 68 N. C. 557; 8. c. 22 Wall. 150.)

If a creditor was induced to release his claim through the misrepresenta-
tion of another creditor, the release is void, and the debt is sufficient. (Michaels
y. Post, 12 B. R. 152; 8. 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
courts. The bankrupt act protects all creditors, and is additional to other
remedies where it applies. lt is immaterial that the expenses in bankruptcy
bear a very Jarge 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 e¢ al. 4 B. R. 178; 8. c. Lowell, 470; 8. c. 2 L. T. B. 238;
ficfort et al. v. Greely, 6 B. R. 483; s. c. 4.0. L. N. 209.)

A creditor who holds security upon the property of a third person has a
provable debt 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 benefit of the
collateral seeurity. But in bankruptcy it seems more just and equitable 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 realize his security and prove
only for the balance, he will be losing the advantage for which he hag stipu-
lated of the full credit of the promise of the surety. (/n re W. B. Alexander
et al. 4 B. R. 178; 8. c. Lowell, 470; 8.c.2 L. T. B. 238; Pow v. Eckstein, 4
B. R. 373.)

Although the law does not expressly require that the list of creditors pre-
sented by the debtor in denial that the reqnisite number and amount of cred-
itors 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 creditor is entitled
to the benefit of a sworn list, so that he may have some assurance that ficti-
tious claims are not inserted. (lx re Louis E, Steinman, 10 B. R. 214; 8. c. 6
Cc. L. N. 338; s. c. 21 Pitts. L. J. 200; s.c. 34 Leg. Int. 269; in re Hymes,
10 B. R. 483; 8. c. 7 Ben. 427; Barnert 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 bankrupt law, should be held incompetent to
allow such amendments. The exercise of the power may often be indispen-
sable to the complete attainment of justice. 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 law-
fully be allowed. (Hardy et al. v. Binninger et al. 4 B. R, 262; s. c. 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 defense, the
courts are disinclined to allow such amendments, except for very special
438 THE BANKRUPT LAW. [§ 5021.

reasons, and where they are clearly required in the furtherance of justice.
(Crowley & Hoblitzell, 1B. R, 516; 8. c. iL. T. B. 79; in re Craft, 1 B. R.
378; 2 B.R. 111; s. c. 2 Ben. 214; 8, 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 of
the proposed amendments, and notice thereof should be served on the oppo-
site purty. (Crowley & Hoblitzell, 1 B. R. 516; 8.c.1L. T. 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 inadvertence,
mistake, or other reason which might excuse such omission, and that applica-
tion for leave to amend was made within reasonable time after the necessity

for amendment was discovered. (Crowley & Hoblitzell, 1 B. R. 516; 8. c. 1
L. T. B. 79.)

Where an act of bankruptcy is clearly established, and especially where
something more than a mere technical violation of the law may be suspected,
it is the duty of the court to allow such amendments and further allegations
to be made as may sustain the proceedings. (Jn re A. B. Gallinger, 4 B. R.
729; 8. c. 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. (Jn re Craft, 1B. R.
378; 2 B. R. 111: 8. co. 2 Ben. 214; 8. c. 6 Blatch. 177; in re Waite &
Crocker, 1 B. R. 878; s. c. Lowell, 207; in re Haughton, 1 B. R. 460; in re
A. B. Gallinger, 4 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 application for
leave to amend, will not be allowed. (Crowley & Hoblitzell, 1 B. R. 516; s.
c.1L. T. B. 79; in ve Craft, 2 B.R. 111; 8. c. 6 Blatch. 177.)

An amendment to add a new party will not be allowed after all the testi-
mony is taken and the case is before the court upon final hearing. (Jn 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 permit, under
the form of amendments, new causes of action to be introduced, thus per-
verting 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 allegvta and probate
must correspond at the trial. The defendant appears to meet the allegations
made, and no others. If there has been an informal or imperfect statement,
the court can permit the needed corrections to be made on such terms as jus-
tice 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 calling for different proofs and for different
proceedings. (Jn re Leonard, 4 B. R, 563; 8. 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 8. Hadley, 12 B. R. 366; in re Mor-
ris, 12 B. R. 443.)

The petition ought to make a complete case for adjudication, and defectg

o ; can not be supplied by affidavits. (Jn re James A. McKibben, 12 B. R.
§ 5021.] NOTES OF DECISIONS. 439

An amendment relates back to the commencement of the proceedings in
bankruptcy, and gives effect to the action of the court upen an imperfect
petition, (Jn re Williams & McPheeters, 11 B. R. 145; 5. ¢. 7 CL. N.
49.)

When an amendment introduces new matter, it should be met by an an-
swer, (Hardy v. Binninger, 4 B. R. 262; 8. c. 7 Blatch. 262.)

In an action for fraud, in receiving money after the filing of an involun-
tary petition, an allegation that it was received in good faith under an ex-
pectation of effecting a compromise with all the creditors, is a good defense.
(Van Alstyne v. Crane, 4 N. Y. Supr. 113.)

Limitation.

The six months’ limitation provided for in this clause applies solely to the
time within which the petition for adjudication of bankruptcy must be filed,
and not to the time within which a preference miy b2 attacked. (Jn re Ton-
kin & Trewartha, 4 B. R. 52; 3 ¢,1 L. T. B. 282; 8.¢.3 L. I. B. 221; Col-
ling 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. (Jn ve Rooney, 6 B. R. 168.)

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 inthis 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 in other cases than those of preference merely,
such as payments, sales. &c., with a view to prevent the debtor’s property
from coming to his assignee, &c. ; and money, goods, &., obtained by acred-
itor as an inducement to forbear opposition to the bankrupt’s discharge; and
assignments, gifts, &c., 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, con-
veyed, &c., to creditors contrary to the bankrupt act. (/n re Tonkin & Tre-
wartha, 4 B. R. 52; 8.c.1L. T. B, 232; s.c.3 L. T. B. 221; in re Evans, 8
B. R. 261; Bingham v. Richmond, 6 B.R.127; Bingham v. Frest, 6 B.R. 180.)

This section is a very long one, and recites all the acts which subject a
person to involustary bankruptcy, and that is its main purpose. Among the
acts which constitute a man a bankrupt, are those of giving preference to
creditors in contemplation of bankruptcy. And it is in the conclusion of this
section declared in general terms that if the debtor shall subsequently be de-
clared a bankrupt, his assignee may recover tae money or other property
which was the subject of the act of bankruptcy. But the general declaration
of the right of the assignee to recover is not inconsistent with the limitation
of the right in another section in cases accruing within six and four months
of the commencement of proceedings in bankruptcy. Sections 5921 and 5128
having, for the first time, set up a rule by which certain payments and trans-
fers 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 de-
fine the circumstances within which this new rule shall operate. These are,
among others: that the recipients of the bankrupt’s property must . have had
440 THE BANKRUPT LAW. [§ 5022.

reasonable cause to believe he was insolvent, and that the transaction must
have been recent; when the bankrupt law is applied to the case of a creditor,
within four months, and, with the general purchaser, within six months.
(Bean v. Brookmire ct al. 4 B. R. 196; 8. c.1 Dillon, 24; Hubbard v. Allaire
Works, 4 B. R. 623; s. c. 7 Blatch. 234; Collins v. Gray, 4 B. R. 631; 8. ¢. 8
Blatch 483.)

This amendment does not apply to suits brought to recover preferences be-
fore Dec. 1st, 1873. (Hamlin v. Peltibune, 10 B. R. 172; s. c. 31 Leg, Int. 298;
s. c. 8 Pac. L. R. 83; 1 Cent. L. J. 404; 8.0.10 A. L. J.141; Vandyke v. Tin-
ker, 11B. R. 808; in re Simeon Leland, 7 Ben. 439.)

The penalty upon a creditor provided for by this clause is enforceable
against bim only in case he compels the assignee to resort to legal procced-
ings 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 him-
self 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 penitenti@ given to him by sec-
tion 5084, and voluntarily surrenders 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. (Jn re C. A. Davidson, 3 B. R. 418; s. o. 4 Ben. 10; in re
Montgomery, 3 B. R. 187; 8. c. 8 Ben. 565; in 7e Scott & McCarty, 4 B. R.
414; in re Princeton, 1/B. R. 618; s.c. 2 Biss. 116; 8. c.1 L. T. B. 125; in
reJ. J. & C. W. Walton, 4 B. R. 467; s. o. 1 Deady, 598; s. oc. 1 L. T. B. 162;
in re Colman, 2 B. R. 563.) >

A ereditor 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. Sterns et al. 4B. R. 84.)

If a mortgage is given to a creditor without his knowledge. or if a cred-
itor upon receipt ef such knowledge repudiates it, the prohibition is not to
be enforced against him. (/n re Princeton, 1 B. R. 618; s.c. 2 Biss. 116;
s.c. 1 L. T. B. 125.)

But when the creditor does nothing in disaffirmance of the pzeference
after he has been informed of it, he makes himself liable to the penalty. (Jn
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. c. 1 Dillon, 19.)

This clause only refers to the debt sought to be preferred, and not to other
dehts in respect to which no preference was attempted to be given. A pre-
ferred creditor who has other claims that were not preferred should be
allowed to prove them. (/n re Arnold, 2 B. R. 160.) ,

Tn cases of actual fraud, a preferred creditor can not prove for a moiety
of his debt until he has surrendered his preference. (Zn re Cramer, 13 B. R.
225; s.c. 8 C. L. N. 106.)

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, (Jn re John Riorden, 14 B. R. 332.)

A mere fraud on the bankrupt law by accepting a preference in violation
of its provisiohs is not an actual fraud.” (Jn ve John Riorden, 14 B. R. 832.)

Sze. 5022.— Any act of bankruptey committed since the second
day of March, eighteen hundred and sixty-seven, may be the
§§ 5023-4. ] NOTES OF DECISIONS, 441

foundation of an adjudication of involuntary bankruptey, upon
a petition filed within the time prescribed by law, equally with
one committed hereafter. ’

Seo. 5023.—[This section is repealed by act of 22 June, 1874,
§ 12.]

Src. 5024.—Upon the filing of the petition authorized by the
preceding section, if it appears that sufficient (@) grounds exist
therefor, the court shall direct the entry of an order requiring the
debtor to appear and show cause, at a court of bankruptcy 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, (d) re-
strain the debtor, and any other person, in the mean time, from
making any transfer or disposition of any part of the debtor’s
property, 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 tle debtor is about to
leave the district, or to remove or conceal his goods and chattels
or his evidence of property, or to make any fraudulent convey-
ance or disposition thereof, the court may issue a warrant (¢) to the
marshal of the district, commanding him to arrest and sately 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 uutil its further order,
and forthwith 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.

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, 't B. R. 145.)

A prima facie case must be established by the proofs cffered 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 debtor’s prop-
erty, 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 war-
rants 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.
Cn re Leonard, 4 B. R. 563; 8. c. 2 L. T. B. 177; in re Price & Miller, 8B. R.
514.)

An orsler 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.
(Inre Davis Rogers, 16 B. R. 444; s. c. 1 Cent. L. J. 470.)

The debtor, from and after the commencement of proceedings in bank-
449 THE BANKRUPT LAW. [§ 5024.

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. R. 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 a mo-
tion to dissolve an injunction do not sustain the allegations of the petition,
but disclose the existence of another ground for an injunction, the petition
may be amended so as to cover that ground. Nothing would be gained by
dissolving the injunction, and then re-issuing upon the same state of facts.
(in re Bloss, 4 B. BR. 147; 8. ¢. 2 L. 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 bank-
rupt, although the conveyance may be void under the bankrupt law. (n 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. (Inre Fendly,
10 B. R. 250; s. o. 1 Cent. L. J. 433.)

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 the ends of justice or the
security of parties require it. (Jn re Muller & Bretano, 3 B. R. 329; 8. c.
1 Deady, 513; s.c.2 L. T. B. 38; Irving v. Hughes, 2 B. R. 62; s.¢. 7 A. L.
Reg. 209.)

‘‘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 ascertained. (Jn
re Campbell, 1B. R. 165; s.c. 1 Abb. C. C. 185; 8.6. 1L. T. B. 380; Irving
v. Hughes, 2B, R. 62; s.c. 7 A. L. Reg. 209.)

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 tc ascertain whether the requisite proportion

y the creditors have joined in it, (Jn re California Pacific R. R. Co. 11 B.
. 193.)

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 sufliciency of the bill. and can not raise any question as to the
sutliciency of the petition. (Blackburn v: Stannard, 5 Law Rep. 250.)

A bill for an injunction against third parties who have accepted of a trans-
fer from the debtor, should allege some danger either threatened or imminent
to the property. (Blackburn v. Stannard, 5 Law Rep. 250.)

A bill for an injunction should contain a description of the property. A

mere allegation that it is personal estate is not sufficient. (Blackburn v. Stan-
nard, 5 Law Rep. 250.)

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 sub-
stantial diflerence, for it plainly apprises them of what they are restrained
from doing. Any distinction between a writ of injunction and an order in
the nature of one is disregarded in practice. (In re Lady Bryan Mining Co,
6 B. R. 252.)
§ 5024.] NOTES OF DECISIONS. 443

The injunction is temporary only, and is intended to restrain the disposi-
tion 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 y. Cozzens ct al 3 B. R. 281; sc. 2 W. J. 849; s, ©.
16 Pitts. L. J. 2386; Irving v. Hughes, 2 B. R. 6238.0. 7 A. L. Reg. 209; in re
R & L. Calender, 5 Law Rep. 129; in ve Metzler et al. 1B. R. 88; s.c. 1 Ben,
356; in re Kintzing, 3 B. R. 217.)

The injunction granted under this section continues until vacated by
order of the court, although the debtor is adjudicated a bankrupt. (In re
Fendly, 10 B. R. 250; s. c. 1 Cent. L. J. 483.)

When an injunction is asked for, at the commencement of the proceed-
ings, against any person other than the debtor, a separate petition shou!d be
filed, so that the proceedings upon the injunction need not be complicated
with those praying the adjudication of bankruptcy. (Jrving v. Hughes, 2 B.
R. 62; s.c.7 A. L. Reg. 209; Creditors v. Cozzens et al. 3 B. R. 281; 8. c. 2
W. J. 349; s. c. 16 Pitts, L. J. 236.)

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 to take possession of the deltor’s
goods, is not dependent upon the service on the debtor of a proper order to
show cause. (Jn re Muller & Bretano, 3 B. R, 329; s.c.1 Deady, 513; 8. ¢.
21. T. B. 33.)

Quere. 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? (dn re Fuller, 4 B. R. 115; 8. 0. 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 pre-
ferred creditors, the district court will award an injunction restraining them
from disposing of the property. (Jn 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. (Jn re John Harper Smith, t N. Y. Leg. Obs. 249.)

The district court will not allow an injunction against a trustee claiming
under an assignment, merely on the apprehension of a creditor that the prop-
erty may be dissipated or put out of the trustee. The court will interfere
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. (Jn 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 bank-
ruptcy, and prayed a jury trial, the court will not grant the dissolution, and
thus on affidavits dispose of what are really all the issues involved in the pro-
ceedings. (in re Metzler e¢ al. 1 B. R. 88; 8. c. 1 Ben. 356.)

When a creditor seeks to dissolve an injunction issued against him to pre-
vent a preference, his petition must negative the circumstances which would,
under section 5128, make the transfer void. (Jn 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 ve 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 ir-
444 THE BANKRUPT LAW.. [§ 5024.

regular, 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 existed at the time the
act of bankruptcy was committed. Nor will the court, on a motion for dis-
solution, decide the question of title to the property. (Jn re Muller & Bre-
tano, 3 B. R. 329; 8. c. 1 Deady, 513; s.c. 2 L. T. B. 33.)

When the prima facie case made out by the petition is not rebutted, the
‘injunction can not be dissolved. (Jn re Dean & Garrett, 2 B. R. 89.)

There is no party to a creditor’s petition except the petitioniag 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 injunction
‘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 to annul an
adjudication, must show some priority of interest in the property of the
‘debtor. (Carr v. Whitaker, 5 B. R. 128.)

A party, not the debtor, can not be punished for contempt in violating an
injunction issued in accordance with the prayer contained in the petition in
involuntary bankruptcy against the debtor, unless separate or distinct pro-
ceedings are instituted against him for that purpose. (Creditors v. Cozzens et
al. 3B. R. 281; 8. 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 re-
quired is that the defendant should have knowledge of the order for the in-
junction, 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 exist-
ence. The belief that the order has been made and concealment to avoid ser-
vice 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 occasioned by hismisconduct. (Jn 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 mean time,” and those relate mani-
festly 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 construc-
tion that can be given to these words is that they are intended to cover the
whole period up to such time asa bearing and adjudication shall be had upon
the petition for an adjudication in bankruptcy. 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. (Jn re Moses, 6 B. R. 181; in re Mary Irving
et al. 14 B: R. 289.)

If the contempt committed by the bankrupt in collecting money from his
debtors is not of a wilful churacter, it may be purged by turning everything
over to the assignee, and will not then be visited by punishment, either per-
sonal or pecuniary. (dn 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. (Jn re James A. McKibbeu, 12 B. R. 97; in re
Joseph 8. Hadley, 12 B. R. 366.)

The facts in support of a provisional warrant should be set forth in sep-
arate depositions. (Jn re Joseph 8. Hadley, 12 B. R. 366.)
§ 5024. ] NOTES OF DECISIONS. 445,

A recital, in the order allowing the warrant, giving the date of the bank-
rupt 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 bankrupt act
in any proceeding is mere matter of form. The court tukes judicial notice of
the acts of Congress, and they need not be set forth or specially referred to in
any proceedings before it. (/n re Muller & Bretano, 3 B. R. 329; 8. c. 1 Deady,
613; 8.c.2L. T. B. 33.)

The order need not require the arrest of the debtor ; the warrant may issue
against the person and goods, or cither 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 creditor may direct. (Jn re Muller & Bretano, 3 B.
R, 829; s.c. 1 Deady, 513; s.c. 2 L. T. B. 83.)

It is the duty of the marshal to take possession of ‘all the property and
effects” of the debtor, in whosesoever hauds he may find them. This is a
question of fact for the ofticer 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. (Jn re Muller & Bretano, 3 B.
R, 329; s.c. 1 Deady, 513; 5. c.2 L.T. B. 83; in re Marks, 2 B. R. 575;
s.c.1U. L. N. 245; 8. c. 16 Pitts. L. J. 12.) :

If the marshal, in the execution of the warrant, takes property belonging
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 v. Armstrong, 11 B. R. 125; s. c. 20 Minn. 81.)

If the marshal under a provisional warrant seizes proverty which has been
transferred in violation of the bankrupt law, he is not liable to the transferee.
(Stevenson v. McLaren, 14 B. R. 403; s. c. 3 Cent. L. J. 478.)

The marshal, under the warrant, may hold possession of the property
claimed by other persons when once in his possession, and may take possession
of property not in the possession of the bankrupt, whether indemnified 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 in-
demnified, he is merely released from liability if he does not do it. His au-
thority 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 pos-
session of any person claiming to be a purchaser of the same (Jn re Briggs,
3B. R. 638; 8. c. 2 C. 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 bankrupt
law. (In re Geo. B. Holland, 12 B. R. 403; in re Harthill, 4 B. R. 392; s. c.
4 Ben. 448; 8. c. 2 L. 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.
Cn re Geo. B. Holland, Jr. 12 B. R. 403.)

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 @ proceeding supplementary to an execution. (Jn 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 warrant
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..
446 THE BANKRUPT LAW. [§ 5024.

The assignee must be left to take such affirmative proceedings against him in
respect to the property as may be propér. Such proceedings must be 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 bankrupt, and can not be awarded according to the merits
of the case between the creditors and the claimant. The bona fides of the pur-
chase can not be tried upon such petition for restoration. (Jn re Harthill, 4
B. R. 892; 8. c. 4 Ben. 448; 8. oc. 2 L. T. B. 181.)

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 tinal process of execution is-
sued by a State court, and levied before the commencement of proceedings
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 not 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 creditors. 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 bankrupt law. The removal of the goods of the debtor in the perform-
ance of an existing contract is not fraudulent. It is but the exercise of his
legitimate right in carrying on his business, wheu for all the goods shipped
he receives an equivalent in bills of exchange or money. Under such cir-
cumstances a provisional warrant will not be issued. (Bank v. Iron Co. 5 B.
R. 491; 8. c. 38 C. L. N. 402; 8. c. 1 L. T. B. 272; 8. c. 28 Leg. Int. 317; 8. ¢.
19 Pitts. L. 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 ordcr, until the decision of the
court on the petition or the further order of the court, and it is to that pur-
pose and no other that bail is required of him. (Zn re Daniel Sheehan, 8
B. 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 petition-
ing creditor’s judgment, where a writ of error is pending thereon, and a bond
has been duly filed. (Jn re Daniel Sheehan, 8 B. R. 345.)

If there are no other creditors, the execution of the provisional warrant
may be stayed, if execution upon the judgment debt of the petitioning cred-
itor has been stayed by suing out a writ of error and filing a bond. (Jn re
Daniel Sheehan, 8 B. R. 845.)

The second alternative clearly relates to a time within and not beyond
that of the fist, and appeurs 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 proceed-
ings in bankruptcy. When the debtor has attended the court at the time of
the order adjudging him a bankrupt, he has fulfilled the whole obligation
imposed upon him by the statute. That obligation can not be extended or
enlarged by the court, by substituting “and” for “or” in its order and wat-
rant. (Usher v. Pease, 12 B. R. 3805; 8. c. 116 Mass, 440.)

An arrest can not be made under the warrant after the a@judication of
bankruptcy. (Usher v, Pease, 12 B. R. 305; s. c. 116 Mass. 440.)
§ 5025.] NOTES OF DECISIONS. 447

Seo. 5025.—A copy of the petition and order to show cause
shall be served on the debtor by delivering the same to him per-
sonally, 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
manner 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.
* And if, on return day of the order to show cause as aforesaid,
the court shall be satisfied that the requirement of section jive
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 jive 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 tbe
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
hereafter commenced, with costs.

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 dissolution, and the service of the order to show cause should be made
by publication. (Jn 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 artificial
persons, viz., by delivering the order to its head or principal officers. The
‘*usual place of abode” in regard to corporations means their principal place
of business. (Jn re California Pacific R. R. Co. 11 B. R. 193.)

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. (Jn re California Pacific R. R. Co. 11 B. R. 193.)

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; 8. c. 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

 

*So amended by act of 22 June, 1874, § 13.
448 THE BANKRUPT LAW. [$ 5025.

may be found. The words ‘‘not found” have a well-settled technical mean-
ing, 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 existence out of the bounds of
the sovereignty by which it was created. It must dwell in the place of its.
creation, Service upon an oflicer of the corporation 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 invalid. 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 corporation within the district, and no person representing the corpo-
ration, 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; 8. c. 33 Iowa, 6); 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 tor the service of certain processes
by the marshal, and remains entirely silent as to the person hy 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. Hzpressio 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 marshal or any other person. (Stuart v.
Hines, 6 B. R. 416; 8. c, 33 Iowa, 60; s. c. 5 L. T. B. 46.)

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 persoas, or even the debtor. (Jn re Muller & Bretano, 3
B. R. 829; s. c. 1 Deady, 513; 8. 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. (Jn 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 designed to guard against collu-
sive 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. (Ju re J. Young Scammon,
10 B. R. 66; 8.c.6 C. LN. 828; 8. c. 1 Cent. L. J. 328; 8.¢.10 A. LJ. 29; 5.
c, 21 Pitts. L. J. 207; in re Joliet Iron & Steel Co. 10 B. R. 60;5.c.1A.L. T.
[N. 8] 872; 5.c. 10 A. L. J. 29; 8c. 6 C. LN. 828; 8. c. 22 Pitts, L. J.
207; in re Isaac Scull, 10B. R. 165; 8. c. 7 Ben. 871; 8.c.10 A. L. T. [N.S]
416; in ve James R. Keeler, 10 B. R. 419; s.c. 1A. L. T. [N. 8.] 422; s. ¢.
201. R. R. 82.)

When the court has adjudged that the requisite proportion of creditors.

i
§ 5028. ] NOTES OF DECISIONS. 449

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. (ln 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 Cent. L. J. 448; 8.c. 8C. L.
N. 345.) :

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 collusion.
(Un re John H. McWinley, 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. (Jn re J. Funkenstein, 14
B. R. 213; 8. c. 3 Cent. L. J. 448; s.c. 80. L. N. 845.)

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. 13.)

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 adjudication.
(In re Wm. B. Duncan, 14 B. R. 18.)

Src. 5026.—On such return day, or adjourned day, if the no-
tice has been duly served or published, or is waived by the
appearance and consent of the debtor, the court shall proceed
summarily 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 atrial by jury at the first term of the court
at which a jury shall be in attendance, to ascertain the fact of the
alleged bankruptey.* Or, at the election of the debtor, the
court may, in its discretion, award a venire factas to the 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 fur cause. And unless, upon such hearing
or trial, it shall appear to the satisfaction 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 proceeding, the proceeding shall be dismissed, and the re-
spondent shall recover costs; and all proceedings in bankruptcy
may be discontinued on reasonable notice and hearing, with the
approval of the court, 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 there-
to, 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 bank-
ruptcy, except so far as such estate shall have been already ad-
ministered and disposed of. And the court shall have power to

 

* So amended by act of 22 June, 1874, § 14.
29
450 THE BANKRUPT LAW. [§ 5026.

make all needful orders and decrees to carry the foregoing pro-
vision into effict. If the petitioning creditur dovs not appear
and procced 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.

Appearance and Pleadings,

A debtor who has not been served with the order to show cause may ap-
pear by attorney. It is not neccssary that he should appear in person, (Jn
ve Weyhausen et al. 1 Ben. 397.)

A party who appears without en order to show cause, and confesses or puts
in a denjal of the alleged acts of bankruptcy, and demands a trial, submits
himself to the jurisdiction of the court. (Jn re Moses A. McNaughton, 8 B.
R. 44.)

If a corporation, subject to the provisions of the bankrupt 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 1eturn day can not oust the jurisdiction of
the bankrupt court to proceed on the return day to an adjudication of bank-
ruptcy. The papers having been served on an officer of the corporation
while the corporation was in being, the order of adjudication is substantially
a proceeding zm rem, and not one in personam. The proceeding in bankruptcy
does not abate by the dissolution of a corporation so 98 to be incapable of
being proceeded with thereafter. (Platt v. Archer, 6 B. R. 465; s. c. 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 subsequent day
is an adjourned day to all intents and purposes. (Jn ve William Buchanan,
10 B. R. 97.)

If the petitioning creditor and the debtor appear on the return day, the
want of a formal adjournment dees not terminate the proceedings, for such

an adjournment is not necessary to keep them alive. (Jn re William Bu-
chanan, 10 B. R. 97.)

After the return day, an answer can only be filed by special leave of the
court. (Jn re Gebhardt, 3 B. R. 268; vide in ve Isaac Scull, 10 B. R. 165; 6.
c. 7 Ben, 371; 8.c.1 A. L. T. [N. S.] 416.)

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 mure defi-
nite and certain, or be stricken out. (Jn re Randall & Sunderland, 3 B. R.
18; 8. c. 1 Deady, 557; 8. 0. 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 a ques-
tion as to the sufficiency of the allegations on the ground that they are not
precise and definite. (Orem & Son v. Harley, 3 B. R. 263.)

A plea in abatement of the pendency of other proceedings in bankruptcy
instituted by the petitioning creditor must show jurisdiction in the court
whose proceedings are so set up. (Jn re John T. Balch, 3 McLean, 221.)

A general demurrer which is good only as to one of the several ec‘s of

bankruptcy alleged in the petition can not be sustained. (In re Kenyon &
Fenton, 6 B. R. 238.)
§ 5026.] NOTES OF DECISIONS. 451

The debtor may at the same time demur to the sufficiency of the allega-
tions of the petition, and file an answer denying the acts of bankruptcy. (Jn
re Nickodemus, 3 B. R. 230; s.c.1 L. T. B. 140; 3c. 2C. L. N. 49; 3. c. 16
Pitts. L. J. 282.)

Objections to the maintenance of the proceedings may be made by a mo-
tion to set aside the petition. (dn re Melick, 4 B. R. 97.)

When a motion to dismiss has been filed, attention must first be given to
that, unless itis waived. (Huut et al. v. Pooke e al. 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. (Jn 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. (Jn re A. Benham, 8 B. R.
94.)

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 retained as
to him and dismissed as to the others. (Jn re Redmond & Martin, 9 B. R.
408.)

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 con-
cern in the matter before adjudication. (Jn re Boston R. R. Co. 5 B, R. 232
in re Bush, 6 B. R. 179; 8. c. 6 W. J. 276; Dutton v. Freeman, 5 Law ee
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 af-
fected by the adjudication. A formal and technical proof is not necessary.
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 én rem, in which every actual creditor
has a direct interest. The proceeding is summary, and in a high degree in-
formal, and it should bé free from technical embarrassment. No one is en-
titled to be heard thereon who has no interest to protect. To justify an in-
tervention the object or purpose disclosed must be one which in a legal sense
is meritorious and not purely officious; therefore the facts alleged us ground
of intervention must be such as entitle the applicant to consideration. The
court must be able to see that the intervention may serve some useful pur-
pose, either in protecting the rights o! the applicant, or those of the creditors
at large. (dn ve Boston R. R. Uo. 6 B. R. 208, 222; s. c. 9 Blatch. 101, 409;
in re James Bonnet, 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 v. Freeman, 5 Law Rep. 447.)

The creditor who is charged by the petition with receiving a preference

may appear and oppose the adjudication. (Jn re Heusted, 5 Law Rep. 510;
Clinton v. Mayo, 12 B. RB. 89.)

A petitioning creditor who hag filed a prior petition in another court may
intervene. (Jn 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
452 THE BANKRUPT LAW. [§ 5026.

as a preference may intervene. (Jn re Walter S. Derby, 8 B. R. 106; 3. c. 6
Ben. 232.)

An attaching creditor may intervene and oppose the adjudication. (In re
S. Mendelsohn, 12 Bb. R. 533; 8. c. 9 Pac. L. R. 198; in re Hatje, 12 B. R.
548; in re Francis M. Jack, 13 B. R. 296; 8.c.1 Wood, 549; tn re C. G.
Scrafford, 14 B. R. 184.) ;

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, (Jn
re Elias G. Williams, 14 B. R. 132.)

An attaching creditor who intervenes to oppose an adjudication may take
advantage of any defense available to the debtor. (Jn re Elias G. Williams,
14 B, R. 132.)

An attaching creditor may contest the adjudication on the ground that
the proper proportion of creditors have not joined in the petition. (Jn re C.
G. Scrafford, 14 B. R. 184.)

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; 8. c. Lowell, 207.)

The process, pleadings, and pruceedings in a case of involuntary bank-
ruptcy must be regarded as governed and controlled by the rules and regula-
tions 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 raise 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 state-
ment of any matters in avoidance according to the rules governing pleadings
in common law cases. (dn re Sutherland, 1 B. R. 581; s. c. 1 Deady, 344;
in ve Alexander Findlay, 9 B. R. 83; s. c. 5 Biss. 480; contra,in re Heydette,
8 B. R. 333.)

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. (Jw re Alexander Find-
lay, 9 B. R. 83; s. c. 5 Biss. 480; in re Sutherland, 1 B. R. 531; s.c.1 Deady,
344; contra, Phelps v. Classen, 3 B. R. 87; 8. c. 1 Wool. 204; in re Dunham &
Orr, 2B. R. 17; 8. c, 2 Ben. 488; s.c.1L. T. B. 89; in re Heydette, 8 B. R.
338; 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, (Jn re Alexander Findlay. 9 B. R. 83; 8. c. 5
a 480 ; contra, in re Gebhardt, 3 B. R. 268; in re Frank Heydette, 8 B. R.

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
‘ ereditor’s debt and deposition as to the alleged act of bankruptcy, are re-

quisite only to authorize the making of an order to show cause. When that
§ 5026. ] NOTES OF DECISIONS. 453

is done their office is accomplished, and they never can be and never are of
any other or further use in the case. (Jn re Moses A. McNaughton, 8 B. R.
44.)

The debtor may deny that the petitioner is a creditor, and by proofs main-
tain 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 dismissed.
The facts set forth in the petition are all those which are necessary 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 three hundred dollars.
Unless all these concur, the petitioner bas no right 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. (Jn re Cornwall, 6 B. R. 805; s. c. 9
Blatch. 114; in re Ouimette, 3 B. R. 566; 8. 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. (Jn re Ouimette, 3 B. R. 566; 8..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
a creditor, may file a petition, or that a party may be adjudged a bankrupt
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, submit to a warrant and be dis-
posse-sed 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 affida-
vits, prima facie evidence of a debt, when in truth none existed. It might
often happen that the only act of bankruptcy alleged depended for its char-
acter upon the very question whether any debt was owing to the petitioner;
and if amere prima fucie case shown by the pecition precluded further inquiry
on that question, a party might be declared a bankrupt, his property be sub-
jected to administration under the law, and, in the end, it would appear that
the petiitoner, having no debt, no act of bankruptcy had.been committed, and
the whole proceeding, injurious as it must be, was wholly groundless. (Jn re
Cornwall, 6 B. R. 805; s. ¢. 9 Blatch. 114.) :

When the petition sets forth the several acts of bankruptcy alleged con-
junctively, the denial in the answer should be im the disjunctive, and in such
form as to fully deny either of the intentions imputed to the debtor. (ln re
8. T. Smith, 3 B. R. 377; s.c. 4 Ben. 1; 8.¢c. 1 L. T. B. 147.)

A proceeding in bankruptcy is not an action to collect a debt, but to pro-
cure 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 con-
taining 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 bankrupt act, and tenders the:
454 THE BANKRUPT LAW. [§ 5026.

amount due on the petitioning creditor’s claim, together with the costs of the
proceedings, the procecdings will be dismissed. (Jn 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 d.s-
missed, (Jn re Daniel Shechan, 8 B.R. 353.)

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 bankrupt and’
another, but instructs the sheriff not to arrest the bankrupt. a voluntary sur-
render and giving of bail in that action will not bea sufficient ground for
dismissing the petition, although the debt which constitutes the cause of
action in both cases isthe 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 bankrupt
law. (In re George Merkle, 5 Ben. 8.)

The debtor may set up a claim for unliquidated damages arising out ofa
contract, as a set-off or counter-claim against the petitioning creditor’s debt.
Cin 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 can not discharge
himself from his legal liability for such act by subsequent rescission or un-
doing thereof. (Jn 7e Thomes Ryan, 2 Saw. 411.)

A feme covert may avail herself of her coverture to defeat the debt whick
is the basis of proceedings in bankruptcy. (In re Schlichter et al. 2B. R.
336; in re Howland, 2 B. RB. 357; in re Rachel Goodman, 8 B. R. 380; 38.0.
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 allega-
tions 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. 857; 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. (Jn re Julia Lyons, 2 Saw. 624; s.c.1 A. L. T. [N. 8.] 167.)

A person who is so unsound in mind as to be wholly iticapable of manag-
ing his affairs can not, in that condition, commit an act for which he can be
forced into bankruptcy by his creditors against the objection of his guardian.
(Zn re Marvin, 1 Dillon, 178; 3. c. 83 C. L. N. 894; in re Mitzel, 14 B. R.; s.
c. 8 Cent. L. J. 553.)

The denial of a ss esatlae aallaa 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. (Jn re R. Sutherland, 1 B. R. 5315
8. 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 atterwards object
that the petition does not allege that is a moneyed, business or commercial
corporation, (In' re Oregon Printing Co. 18 B. R. 508; s.c. 11 Pac. L. R.
233; s.c. 8 Cent. L. J. 515; 8. c. 14 B. R. 405.)

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. P. & P. Co, 13 B. R. 199; 8.¢. 8 C. L. N. 81; s.c. 10 Pac L. RB.
103.)

When the case is brought to a hearing on petition and answer, and the
answer denies material averments contained in the petition, the averments
§ 5026. ] NOTES OF DECISIONS. 455

must be regarded as disproved, unless they are conclusively presumed by law.
(Wells e¢ al. 1 B. R. 171; 8c. 1 L. T. B. 20; 8.0. 7A. L. Reg. 163.)

It is a well-settled rule of pleading, that a traverse or deniul must not be
taken on a mere mutter or conclusion of law, for the effect would be to sub-
mit 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
tothe 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 compounded, it
may be traversed or denied. (Jn re Silverman, 4 B. R. 523; s. 0. 2 Abb. C. C.
243; s.c. 1 Saw. 410.)

Although the intent to prefer is a necessary ingredient in the alleged act
of bankruptcy, yet, if a pteference is a necessary consequence of the facis ad-
mitted 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 or-
dinarily conciusive, and can not be rebutted by any evidence of intention.
(Un re Silverman, 4 8. R. 523; 8. c. 2 Abb. C. C. 248; 3. c. 1 Saw. 410; in re
8. T. Smith, 3 B, R. 877; s. oc. 4 Ben. 1; s.c. 1 L. T. B. 147; in re Thomas
Ryan, 2 Saw. 411.)

An allegation in the answer as to the value of the property which tke
debtor owas 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
petitiover’s debt may be stricken out as immaterial. Ovjections to thé sutli-
ciency of an answer may be taken by demurrer. When a demurrer to an an-
swer is overruled, the petitioner may be permitted to reply on payment of
costs. (Zn 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. (Jn re Frank Heydette, 8 B. R.
333.)

When the answer consists merely of the denial contained in Form No. 61,
no replication is needed. (/n re Dunham & Orr, 2 B.R.17; s. c. 2 Ben. 488;
s.c. 1 L. T. B. 89.)

If the petitioning creditor is declared a bankrupt, his assignee may be
subst:tuted as a petitioner in his place, and prosecute the petition. (Jn re B.
F, Jones, 7 B. R. 506.)

The remedies of an assignee under the law are regulated by the same pro-
visions that control the rights of other parties. He can not in any way secure
from an insolvent debtor a preference over other creditors for tne 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 bankrupts insolvent
debtor. (In re B. F. Jones, 7 B. R. 506.)

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. ¢/n 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. 842; in re Gebhardt, 3 B. Rt. 268;
in re Sherry, 8 B. R. 142; Clinton v. Mayo, 12 B. R. 89.)

If the petition was not signed originally by the requisite number of cred-
itors, and was only made complete by the filing of an intervening petition
456 THE BANKRUPT LAW. [§ 5026.

after the return day, the debtor may demand a jury trial on the day when such
intervening petition is filed. (Jn re J. M. Kintner, 22 Pitts. L. J. 150.)

If the debtor demands a jury trial the court may issue a special venire to
summon a jury to try the issue. (Jn re Alexander Findlay, 9 B. R. 83; 8. c.
5 Biss. 480; ix 7e Hawkeye Smelting Co. 8 B. R. 385.)

Evidence.

The burden of proof rests upon the creditor. (Brock v. Hoppock, 2 B. R.
7: 8. c, 2 Ben. 478; in re Randall & Sunderland, 3 B. R. 18; 8.0.1 Deady,
557: s.c.2L T. B. 69; im re Leonard, 4 B. R. 568; 8. c. 2 L. T. B. 177; in
re Price & Miller, 8 B. R. 514; in re Jelsh & Dunnebacke, 9 B. R. 412 i an re
Scudder, Wilcox & Ogden, 1 N. Y. Leg. Obs. 325; in re Oregon Printing
Co, 13 B. R. 503; s. c. 11 Pac. L. R. 233; 8. c. 3 Cent. L. J. 515.)

A paper sworn to and filed by an officer of a corporation is competent
evidence against it, but is not conclusive. (Jn re Oregon Printing Co. 13 B.
R. 508; s. c. 11 Pac. L. R. 233; s. oc. 3 Cent. L. J. 515.)

A defense which has been stricken out of the case may be given in evidence
as an admission. (Jn ve Oregon Printing Co. 13 B. R. 508; s. c. 11 Pac. L.
R. 233; s. c. 3 Cent. L. J. 515.)

The letters of the debtor are admissible in evidence against an attaching
creditor who intervenes to oppose an adjudication. (Jn re Hatje, 12 B. R.
548.)

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. (Jn 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 petition-
ing creditor. (Jn ve 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 et 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. (Jnre Mendenhall, 9 B. R. 285.)

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 Weods,7 B. R. 126; 8, c. 29
Leg. Int. 286; 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
ve 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. (Ardy v. Clark et al. 3 B. R. 385; s.c. 1 L. T. B. 151;
s. 0.3L, T. B. 11; s.c. 17 Pitts. L. J. 61; .¢.2C.L.N. 121.) =

Under the issue made by the denial of bankruptcy, the debtor can intro-
duce proof to contradict all the material allegations of the petition. Evi-
dence in regard to the indebtedness is admissible under the issue. (In re
Skelley, 5 B. R. 214; s. c. 3 Biss. 260.)

The creditor must establish his debt before proceeding to show acts of
bankruptcy. (Brock vy. Hoppock, 2B. R. 7; s. 0. 2 Ben. 478; Moore v. National
§ 5026. ] NOTES OF DECISIONS. 457

Exchange Bank of Columbus, 1 B. R. 470; s.c. 2 Bond, 170; 5.c.1L. T. B.
74; in re Foster, 1 N. Y. Leg. Obs. 232.)

Quare. When the debtor intends to deny that he owes the petitioning
creditor debts to the requisite amount, ought he not to raise that question be-
fore going to the jury on the alleged acts of bankruptcy? (Phelps v. Classen,
3 B. R. 87; 8. c. 1 Wool. 204; Foster v. Remick, 1 N. Y. Leg. Obs, 232; 8. ¢.
5 Law Rep. 406.)

While the court may in a case where the facts are undisputed take a ques-
tion 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 dismissed.
Both parties must be found guilty under the act before judgment can be en-
tered against the partnership. (Doan v. Compton & Doan, 2 B. 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. (Jumes
y. 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 bankruptcy, or the
legal consequence of such acts. Evidence tending to show collusion between
them should be rejected. (Hardy et al. v. Binninger et al. 4 B. R. 262; 8. ¢.
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, 113.)

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 bankruptcy. The peti-
tioning creditor may proceed to an adjudication while the suit is pending,
but the suit will be annulled and surrendered by an adjudication. It is true
that the petitioning creditor can not carry on the two proceedings at the
game 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 com-
menced hefore the filing of the petition, until it is determined whether the
petition can be sustained, (Hverett v. Derby, 5 Law Rep. 225.)

A creditor who has given his assent to a transaction is estopped from
urging it as an act of bankruptcy. (Ferry v. Langley, 1 B. R. 559; s. c. 1
L. T. B. 34; 7 A. L. Reg. 429; in re Schuyler, 2 B. R. 549; 8. c. 8 Ben. 200;
8,02 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 te assent to it, if the debtor and the
assignee would surrender the property assigned. and commit its disposal and ;
Management to some person more satisfuctory to him, (Spicer et al. v. Wurd
eéal.3 B. QR. 512.)

If the petitioner has advised the making of an assignment, or after its
458 THE BANKRUPT LAW. [§ 5026..

execution has expressly given his assent to it, he will be precluded from in-
sisting 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. (Perry vy. Langley, 1 B. R. 559; 3.c.1L. T. B. 34; 5.¢. 7A.
L. 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 deliber-
ately intend to commit an act of bankruptcy. His failure to protest will bind
him, whichever way he may vote upon the question. (Jn re Massachusetts
Brick Co. 5 B. R. 408; 8.0.4 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 as-
certain whether all the creditors will become parties thereto. (Jn re Potts &
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 hay signed the
composition may then file a petition. (Jn re Potts & Garwood, Crabbe, 469.)

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 non-payment of a note as an act of bankruptcy. (Jn re Elias G.
Williams, 14 B. R. 132.) .

Creditors who have obtained a preference by a bill of sale from the debtor,
are estopped to set up the execution of the same as an actof bunkruptcy. (Jn
re Elias G. Williams, 14 B. R. 182.)

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. (Jn re R. R. Stewart, 3
B. li. 108; contra, in re Philemon Canfield, 1 N. Y. Leg. Obs. 284; 8. c. 5
Law Rep. 415.)

If all the creditors prove their claims under the subsequent voluntary
petition, they thereby waive the right to insist upon going back ard pro-
ceeding under the prior involuntary petition. (Jn re Nounnan & Co. 6 B. R.
579; s.c.4 L. T. B, 228.)

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. (Jn
re Robert G. King, 3 Dillon, 364.)

New Trial.

A proceeding in bankruptcy is not a guasi criminal proceeding. 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. Inci-
dental 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 discretion. (In re RB. A. De
Forest, 9 B. R. 278; in ve Dunn c¢ al. 9 B. R. 487; 8. c. 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
§ 5026.] NOTES OF DECISIONS. 459

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

a nor does it conclude either fact. (Jn re Jelsh & Dunnebacke, 9 B. R.
12.)

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,
(Damlin v. Pettibone, 10 B. R. 172; s. c. 81 Leg. Int. 293; 8. c. 1 Cent. L. J.
404; s.c. 10 A. L. J. 141; 2. ¢. 8 Pac. L. R. 83.)

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 a
rehearing. The district court has the power in a proper case to entertain and
grant such an application. (Jn re Great West. Tel. Co. 5 Biss, 359.)

Tf 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; 3.
c. 1 Saw. 233; s. c. 2 L. T. B. 174; an re John B. Bergeron, 12 B. R. 385; s..
c. 10 Pac. L. R. 259; s. c. 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 proceedings which
may result in his discharge. (Jn 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 knowl-
edge 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 his decision can be properly 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 open court, or that
orders which may be made out of court must be formally proclaimed, but
there must be somethiug tantamount to promulgation or delivery, something
of which the parties to be affected can have or can obtain knowledge, before
their rights can be said to have received adjudication, something which com-.
pletes and authenticates the judicial act. (dn re Boston, Hartford & Erie R.
R. Co. 6 B. R. 222; s. 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 nunc pro tune. The test is whether a formal order of adjudication
has been entered. Until the entry of such formal order a discontinuance is
always allowed to be entered if desired by the petitioning creditor. A direc-
tion that such order be entered is no more than the decision of the judge.
It is not a judgment, cr an entry ou the files of the court that the court ad-
judges thus and so. ‘The form of an adjudication is prescribed by Form No.
58. Nothing else is an adjudication. (Jn re Joseph M. Hill, 10 B, R. 1383; s.
c. 7 Ben. 878; ¢.c.1 A. L. T. [N. 8] 421.)

A motion to strike out a default and an adjudication thereon is too late
when it is made arter 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 liquozs is not one to be favored by the courts, and hence
the facis must be stated fully and particularly, in order that the court may
gee that the ease comes within the law. (Zn re J. Neilson, 7 B. R. 505.)

The granting of a rehearing opens a decree and suspends its operation.
(In ve Boston, Hartford & Erie R. R. Co, 6 B. R. 222; 8. c. 9 Blatch, 409.)
460 THE BANKRUPT LAW. [§ 5026.

No mere outside creditor has a right to ask that an adjudication shall be
annulled. (Jn re Bush, 6 B. R. 179; 8. c. 6 W. J. 276; Harr v. Whitaker, 5
B. R. 128.)

An agreement to dismiss the proceedings in bankruptcy is to some extent
under the jurisdiction and control of the bankrupt 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. (Jn re Francis J. Buler, 7 B. R. 552.)

A release given to the assignee after the proceedings in bankruptcy have
been dismissed can not be set aside by the bankrupt court. The case has
passed out of the jurisdiction of the bankruptcy court, and will not be rein-
‘stated for the purpose of deciding a new controversy which has arisen since
the dismissal. (Jn ré Francis J. Buler, 7 B. R. 552.)

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 collaterally
assailed. (Hobson v. Markson, 1 Dillon, 421.)

An 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. (Jn re Walter 8. Derby, 8 B. R.
106; 8. c. 6 Ben. 282.)

An adjudication against an infant, who does not appear vy a guardian ad
litem, can not be upheld. It is an adjudication against a person who has no
jegal existence so as to be proceeded against in a court as if he were of full
age. (Jn re Walter S. Derby, 8 B. R. 106; 8. c. 6 Ben. 232.)

If the debtor was non compos mentis at the time of the adjudication, the
adjudication will be set aside. (Jn 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 pro-
ceedings 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 motion. (Leiter
v. Payson, 8 B. R. 317; 8. c. 9 B. R. 205; s. 0.6 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 adjudica-
tion. (Jn re William Harris et al. 6 Ben. 875.)

If the debtor appeared and was adjudicated a bankrupt on his admission
of the commission 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. (Jn re James 8S. Thomas, 11
B. R. 330; s. 0. 7 C. L. N. 187.)

Costs.

When there is a trial by jury, the docket fee of $20 to the attorney of the
successful party is taxable as part of the costs. There is a distinction be-
tween trial and judgment without a trial. The pleadings may be filed, the
issues made up, but until the jury is sworn there is no trial. (Gordon, Me-
Millan & Co, v. Scott & Allen, 2 B. R. 86; 8.0.1 LT. B99; 3807 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 & Oo. 8 Phila. 174.)

When the petition is dismissed by order of the court, the debtor is en-
§ 5026.] NOTES OF DECISIONS. 461

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 twenty dollars. 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 ex-:
cept docket fees made up to the time of filing his denial, and that on such
payment the proceedings shall be dismissed. (Jn re Skelly, 5 B, R. 214; 8. o.
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. (Jn re Lowenstein,
3B. R. 269; 8. o. 3 Ben. 422)

If the proceedings are dismissed upon payment of the petitioning credit-
or’s claim, he is only entitled to such costs as are allowed to a party recover-
ing ina suit in equity. No allowance can be made for disbursements or
counsel fees. (Jn re Daniel Sheehan, 8 B. R. 353.)

If the motion to dismiss is founded upon new and plausible considerations,.
the court in denying it may refuse to award costs against either party. (In
ve Daniel Sheehan, 8 B. R. 345.)

Discontinuance,

None of the creditors who have joined in the petition will be allowed to
withdraw unless alldo so. (Jn re P. H. Heffron, 10 B. R. 218; s.c.6C. L.
N. 358; in re Edward Sargent, 13 B. R. 144; én ve Philadelphia Axle Works,
1 W.N. 136.)

If they were induced to join in the petition by false representations, they
may be allowed to withdraw on discovering the truth. (Jn re P. H. Heffron,
10 B. R. 213; 8.c. 6 CO. L. N. 358; in ve Edward Sargent, 13 B. R. 144.)

The proceedings in involuntary bankruptcy may be withdrawn. (Hastings
v. Belknap, 1 Denio, 190.)

The petitioning creditor may dismiss the petition without giving notice
to the other creditors. There is nothing in the bankrupt 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 petitioning
creditor has entire control of the proceedings, and can have them dismissed
at his pleasure. The only right which any other creditor has, is to file a new
petition, 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 petitioning creditor.
(are Cumden Rolling Mill Co. 3 B. R. 590; s. c. 2 L. 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 is an actual discontinuance. Even if a court refusing a discontinuance
commits an error in such refusal, that does not operate as a discontinuance.
(In re Lacey, Downs & Co. 10 B. R. 477; 8. c. 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
couditions of the order are complied with, whatever may be the hindrances
that arise to delay such compliance. (/n re Lacey, Downs & Co. 10 B. R.
477; s. c. 12 Blatch. 322.)

. The proceedings can be discontinued only by an order of court on special
application, especially ‘where they have been allowed to lie for a considerable
462 THE BANKRUPT LAW. [§ 5026.

length of time, and an intervening petition has been filed. (Jn re William
Buchanan, 10 B. R. 97.)

If the proceedings are formally adjourned on the return day, the proceed-
ings can not be discontinued until the adjourned day. (Jn re Lacey, Downs
& Co. 10 B. R. 477; 8. c. 12 Blatch. 322.)

The dismissal of the preceedings will not prevent other creditors from in-
stituting new proceedings. (Ju re Mendenhall, 9 B. R. 380; 5. c.6 C. L, N.
192.)

The creditor can not dismiss the petition after the debtor bas 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 sec-
tion 5108. (Jn re Sherburne, 1 B. R. 558; in re Lacey, Downs & Co. 10 B.
R. 477; s. c. 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, 62 Mo. 412.)

The expression ‘‘such debtor” has relation properly only to the debtor
against whom a petition is filed by creditors, (Jn re Thomas McKeon, 11 B.
R. 182; s. c. 7 Ben. 513.)

The provisions of this section apply solely to cases where there has been-
an adjudication, and confer the power of discontinuance in such cases, (In
re Thomas McKeon, 11 B. R. 182; s. c. 7 Ben. 513.)

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 independeatly of this section.
Cn re Thomas McKeon, 11 B. R. 182; s. c. 7 Ben. 518.)

Where the bankrupt and all the creditors who have proved their debts
are willing, the petition may be dismissed and the proceedings discontinued.
(in re Miller, 2B. R. 410; in re Stern. 6 I. R. R. 87; in ve Robert Morris,
Crabbe, 70; in ve George R. Magee, 1 W. N. 21.)

If all the creditors do not consent, there cau be no discontinuance without
a notice to 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, c. 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
non-assenting creditors for any claim which they may have against the bank-
rupt, or be able to sustain before a competent tribunal, and the proceedings
will then b2 dismissed. (In re Great West. Tel. Co. 5 Biss. 359; in re Indian-
apolis R. R. Co. 8 B. R. 802; s. c. 5 Biss, 287.)

Tf there is a creditor who prima facie has a claim against the bankrupt
which is liable to be proved, before the court can dismis3 the proceedings,
his claim should receive some security or protection. (In re Indianapolis R.
R. Co. 8 B. R. 362; 8. c. 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 ad-
judication has the power to recall it, if it is used as an instrument of fraud,
oppression or injustice. (In re Robert Morris, Crabbe, 70.)

It is not necessary that a personal notice of an application for a super-
sedeas shall be personally seived on the creditors who have proved their
debts, A publication is sufficient. (Jn ve Robert Morris, Crabbe, 70.)
§ 5026. ] NOTES OF DECISIONS. 463

The adjudication may be superseded by an order without issuing a writ
of supersedeas, (Jn ve Robert Morris, Crabbe, 70.)

The adjudication may be revoked even after a discharge has been granted.
(In re Robert Morris, Crabbe, 70.)

The effect of a supersedeas, if lawfully ordered, is to annihilate the ad-
judication, and place the bankrupt with his estate and effects in the same
situation he would have been in had it never existed. (Jn re Robert Morris,
Crabbe, 70.)

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 repre-
sentatives. Their right does not descend from him, but is cast upon them by
Jaw by an event which, occurring after his death, vests no rights or interest
in him. The right arises by and from the supersedeas, and has no existence
before or without it. (Zz re Robert Morris, Crabbe, 70.)

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. (dn re Robert Morris, Crabbe, 70.)

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. (Jn re Freedley & Wood,
Crabbe, 544; in re R. & L. Calendar, 1 N. Y. Leg. Obs. 200; s. c. 5 Law Rep.
125.)

Other creditors may intervene at any time when necessary for the purpose
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 peti-
tioning creditor. (Jn re Mendenhall, 9 B. R. 380; 8. c. 6 C. L. N. 192.)

The statute contemplates two possible exigencies; one that the petitioning
creditor abandoning the proceedings may not appear; the other that the peti-
tioning 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. (Jn re Lacey, Downs & Co. 10 B, R. 477; s.c. 12 Blatch. 322;
in re William Buchanan, 10 B. R. 97.) ,

If any other creditor 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 pro-
ceed. If no other creditors appear upon that day, the petitioning creditor
may have 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 clismissal may be made by the court on application of
the petitioning creditor. (Jn re Camden Rolling Mill Co. 3 B. R. 590; 8. ¢.
2L. 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 ad-
journed for the purpose of inquiring into the allegations of the acts of bank-
Tuptcy. (Jn re Lacey, Downs & Co. 10 B. R. 477; 8. o. 12 Blatch. 322.)

The purpose of the statute is that if the petitioning creditor does not ap-
pear and prosecute his petition to an adjudication, another creditor may do
80 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 ad-
464 THE BANKRUPT LAW. [§$ 5027-9.

journed for showing cause. (In re Lacey, Downs & Co. 10 B. R. 477; 8. ¢-
12 Blatch. 822.)

Whether the party filing a supplemental petition is a creditor is a ques-
tion 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; 8. c.6 C. L.
N. 142; in ve 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. (Jn re William Buchanan, 10 B.

R, 97.)

Where other creditors have filed supplemefital 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, 9 B. R.
484; s.c.6 C0. L. N. 142.)

When the creditor intervenes, he should be allowed to prosecute the orig-
nal petition in the same manner as the petitioning creditor could have done.
(In re Lacey, Downs & Co. 10 B. R. 477; s. c. 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 intervention,
and any action of the court which prevents or defeats such right is in viola-
tion of the statute. (Jn re Lacey, Downs & Co. 10 B. R. 477; 8. c. 12 Blatch.
322.)

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. (Jn re Mendenhall, 9 B. R. 380; 3. c. 6C. L. N.
192; inre 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. If a
creditor allows that time to pass, he can no longer rely upon the existing pe-
tition as his basis of action, but must begin anew and bring the debtor into
court upon his own motion and proceedings. (Jn re Olmstead, 4 B. R. 240;
in re Freedley & Wood, Crabbe, 544.)

g Sec. 5027.—[This section is repealed by act of 22 June, 1874,
14.]

Src. 5028.—If upon the hearing or trial the facts set forth in
the petition are fonnd 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 possession of his estate.

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 iesued forthwith, as the statute requires, so that the property of the
bankrupt may be forthwith taken possession of by the marshal, 2s the mes-
senger of the court. (/n re Howes & Macy, 9 B. R. 428; s.c. 7 Ben. 102.)

A day for the first meeting of creditors can be named in the warrant, al-
though the schedule of creditors has not been prepared. That day must be
not less than ten nor more than ninety days after the issuing of the warrant.
(In re Howes & Macy, 9 B. R. 423; 8. c. 7 Ben. 102.)

Sno. 5029.—The warrant shall be directed, and the property
of the debtor shall be taken thereon, and shall be assigned and
§§ 5030-1. ] NOTES OF DECISIONS. 465

distributed in the same manner and with similar proceedings to
those hereinafter * provided for the taking possession, assignment,
and distribution of the property of the debtor, upon hig own
petition.

There is no such a 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 porver of accepting, the
surrender which only a voluntary bankrupt can make. Nor can it make any
difference, that after an uncontested adjudication in an involuntary case, the
bankrupt desires to make a surrender. The machinery of an involuntary
case having been set in motion, the case must proceed as an involuntary case.
The court has no discretion to vary the mode of procedure, or to substitute
the register for the marshal, as the officer to act. (Jn re Howes & Macy, 9 B.
R. 423; s.c. 7 Ben. 102.)

An order may be passed allowing the debtor to sell his property at retail,
and pay the proceeds to the messenger daily. (dn re Reiman & Friedlander,
11 B. R. 21; s. c. 18 B.R. 128; s,c. 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. (Jn re, Glenham
Manuf. Co. 1 Cent. L. J. 100.) .

Src. 5030.—The order of adjudication of bankruptcy shall re-
quire 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.

Sxc. 5021.—If the debtor has failed to appear in person, or by
attorney, a certified copy of the adjudication shall be forthwith
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 in-
ventory shall be prepared by the messenger and the assignee from
the best information they can obtain.

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 warrant and order, but the latter
course is preferable. (Jn re Kennedy et al. 7 B. R. 387.)

 

* So amended by act of 18 February, 1875. 7.
+ So amended by act of 22 June, 1874, § 15.

30
CHAPTER FOUR.
PROCEEDINGS TO REALIZE THE ESTATE FOR CREDITORS.

SEo.

'5032.—Contents of notice to creditors.

5033.—Marshal’s return.

5084.—Choice of assignee.

5035.—Who are disqualified.

5036.—Bond of assignee,

5037.— Assignee liable for contempt.

-5038.—Resignation of the trust.

5039.—Removal of assignee.

5040,—Effect of resignation or removal.

6041.—Filling vacancies.

5042.—Vesting estate in remaining as-
signee,

5043.—Former assignee to execute instru-
ments.

5044,—Assignment.

5045.—Exemptions.

5046,—What property vests in assignee.

5047.—Rizht of action of assignee.

5048.—No abatement by death or removal.

5049.—Copy of assignment conclusive
evidence of title,

5050.—Books of account.

5061.—Debtor must execute instruments.

5052.—Chattel mortgages.

5053,—Trust property.

5054.-—Notice of appointment of assignee
and record of assignment,

5055.—Assignee to demand and receive
all assigned estate.

5056.—Notice prior to suit against as-
signee,

5057.—Time of commencing suits.

-5058.—To keep account of money received.

‘5059.—To keep money and goods sepa-
rate and distinct.

‘6060,—Temporary investment of money.

5061.—Arbitration.

5062.—As:ignee to sell property.

-6062a.—Continuance of the busiuess.

-6062B.-Mode of selling.

-6063.—Sale of disputed property.

5064.—Sale of uncollected assets,

5065.—Sale of perishable property.

6066.—LDischarge of liens,

5067.—Provable debts.

6068.— Contingent debts.

So, *

5069.—Liability of bankrupt as surety.

6070.—Sureties for bankrupt.

5071.—Debts falling due at stated periods,

5072,.— No otber debts provable,

5073.—Sct-off.

5074,—Distinct liabilities.

5075.—Secured debts.

5076.—Taking proof of debt.

5076a.-Notaries may take proof.

50768.-Notaries may take depositions and
acknowledgments.

5077.—Creditor’s oath.

5078.—By whom oath may be made.

5079.—Before whom oath may be made.

5080.—Proof to be sent to assignee.

5081.—Examination by court into proof
of claims,

5082.— Withdrawal of papers.

5083.—Postponement of proof.

6084.—Surrender of preferences.

5085.—Allowance and list of debts,

508€.—Examination of bankrupt.

5086a.—Parties may be witnesses.

5087.—Examination of witnesses.

5088.—Examination of bankrupt’s wife.

5089.—Examination of imprisoned or
disabled bankrupt.

5090.—No abatement upon death of
debtor.

5091.—Distribution of bankrupt’s estate.

5092.—Second meeting of creditors,

5098.—Third meeting of creditors.

5094.—Notice of meetings,

5095.—- Creditor may act by attorney. —

5096.—Settlement of assignee’s account.

5097.—Dividend not to be disturbed.

5098,—-Omission of assignee to call meet-

ings,

5099,—Compensation of assignee.

5100.—Commissions,

5101.—Debts entitled to priority.

5102.—Notice of dividenl to each cred-
itor.

5103.—Settlement of bankrupt estates by
trustees.

5103 a.-Composition,

Sec. 5082.—The notice to creditors under warrant shall state:
First. That a warrant in bankruptcy has been issued against.

the estate of the debtor.
§ 5033.) NOTES OF DECISIONS. 467

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, aud amounts, so far as known, te 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.

The fixing of the time for the first meeting of creditors is a matter in the
discretion of the register, (Jn re Heyes, 1 B. R. 21; 8. c. 1 Ben. 388; 5. ©.
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 nut berepeated. (/n re Perry, 1B. R. 220; 5. c.
1L. T. B. 4; in ve Ratcliffe, 1 B. R. 400; in re Morgenthal, 1 B. R. 402; in
re Hall, 2 B. R. 192; s. c. 16 Pitts. L. J. 52.)

Src. 5033.—At the meeting held in pursuance 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.

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 nut be chosen or appointed. 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 beea given, the meeting is
adjourned. But the return is not conclusive. For if, although the return
states the due giving of the notice, it satisfactorily appears that due notice
has not been given, the meeting: must be adjourned. If, however, the re-
turn shows that due notice has been given, and there igs no satisfactory evi-
‘dence 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. (Jn re W. D. Hill, 1 B. R. 16; s.c.1 Ben. 321; tn re
Pulver, 1 B. R. 46; s.c. 1 Ben. 881; 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-
tant 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 bis debt, and the other mat-
ters required, was ciuly served by mail upon him, the fact that be did not re-
ceive it, will not affect the regularity of the proceedings. (Jn re Stetson, 3
B. R. 726; 8 c. 4 Ben. 127.)

The word ‘‘ given,” wherever used in th‘s section, means published as well
468 THE BANKRUPT LAW. [§ 5034.

as served. To make the proceedings regular, the publication must be com-
pleted, and the notices served before the commencement of the period of ten
days immediately preceding the return day of the warrant. (In re Devlin et
al. 1B. R. 35; s. c. 1 Ben. 335; 5.0.1 L. T. B. 32; in re Pulver, 1 B. R. 46;
s. Cc. 1 Ben. 381.)

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 infor-
mation he could obtain in respect thereto, is sufficient, although it does not
state the sources of the information or that the bankrupt has furnished
schedules or refused to furnish them, or that proceedings have been taken
ineffectually to compel him to furnish them. (Inve James M. Adams, 5 Ben.
544.)

A return that the marshal has sent the notices to the creditors on the
schedule handed to him by the attorney for the petitioning creditor, is insuf-
ficient. (Jn 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. (Jn re Wm.
Archenbraun, 11 B. R. 149; s.c. 7 C. L. N. 99.)

The new notice need only be given to remedy the defects or irregularities
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. (Jn re Devlin
et al. 1 B, R, 35; 8. s. 1 Ben. 385; s.c. 1 L. T. B. 32; in re Pulver, 1 B. R.
46; 8. 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 bank-
rupt 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 serviee of the warrant is defective, the proceedings fall through,

and there must be a new warrant. (In re Schepeler et al. 3 B. R. 170; 8. c.3
Ben. 846.)

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 sery-
ing a new and correct notice, unless the creditor will voluntarily appear 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. (Ju re Hall, 2 B. R. 192; s. c. 16 Pitts. L. J. 52.)

Suc. 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 andin
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
§ 5034. ] NOTES OF DECISIONS. 469

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.

Choice of Assignee by Creditors,

The meeting should be organized at the hour designated in the notice, or
as soon thereatter as practicable, and should be kept open until a choice of
assignee is made, or it is ascertained that no choice canbe made. Where the
ereditors 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 furnish a proper opportunity to all creditors to prove
their debts, and thus qualify themselves to join in selecting an assignee. The
several adjournments will constitute but one meeting, and will affect the pro-
ceedings 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. B. 525; 8.¢c.2 L. T. B. 25; in re C. H. Norton, 6 B. R.
297.)

No particular mode or 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 represent-
ang 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 irregu-
lar, so long as it clearly appears that the choice of each creditor who has
proved his claim is thereby clearly expressed. (Jn re Lake Superior C. 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 ac-
tion 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 as assignee. (Jn re J. O.
Smith, 1 B. R. 243; s. c. 2 Ben. 113.)

No creditor has any right to heard, either in person or by attorney, upon
any part of the proceedings until he has proved his claim. (Jn re W. D. Hill,
1B. R. 16; s.c. 1 Ben. 321; in re Altenheim, 1 B. R. 85; s.c.1 Ben. 431;
in re Brisco, 2 B. R. 226; in re Jones, 2 B. R. 59; in re Phelps, Caldwell &
Co. 1 B. R. 525; 8. c. 2 L. T. B. 25.)

Votes can not be objected to on the ground that they have been influened
and procured by the bankrupt in his own interest. (Jn re Noble, 3 B. R. 96;
8. C. 3 Ben. 332.)

The register has no power, without a special order of court, to inquire
into the right of creditors to vote, save for the purpose of postponing the
proof of claims until an assignee is chosen pursuant to the provisions of sec-
tion 5082. (In re Noble, 8 B, R. 96; 3. c. 8 Ben. 332; in re Hermanet al. 3
B. R. 618; 8. 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. (Ju re Herman cé al. 3 B. R.
618; s.c. 4 Ben. 126; in re Lake Superior C. R. & I. Co. 7 B. R. 376.)

A claim may be postponed where the doubts are whether the claim is
470 THE BANKRUPT LAW. [§ 5034,

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 as-
signee 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 proof of such
claims until after the election oy appointment of an assignee, although te
depositions for the proof of such claim have been produced to and filed with
him. Taking property on altachment or execution is receiving a preference.
Merely obtaining a judgment isnot. (Jn re Stevens, 4 B. R. 367; 8. c. 4 Ben,
518; 8c. 2 L. T. B. 121.)

If the objection to the right of a creditor who has made the proper formal
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. (Jn 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 bankrupt act no where 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 ihe utmost practical expedition
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 it is to look
after, the interests of the estate. The creditors who have proved their claims
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 be taken at the earliest practical
moment. (Jn re Lake Superior C. R. &I. Co. 7 B. R. 376; in re Northern
Tron Co. 13 B. R. 856.)

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 appears 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 suchright. (In re Lake
Superior C. 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 withdrawn.
The register has no power to proceed to a choice of assignee without the
votes of all the creditors who wish to vote, if their votes can influence the
result, unless the register himself considers the claims doubtful. He can not
postpone them merely because they are objected to. (In re Bartusch, 9 B. R.
478.)

A creditor who makes proof of his debt in due form, but retains the depo-
sition in his own possession, is not a creditor who has proved his debt, within
the technical meaning of those terms as used in the bankrupt act. (in re
Sheppard, 1 B. R. 439; s.c. 1 L. T. B. 49; s.¢. 7 A. L. Reg. 484; contra,
King v. Bowman, 24 La. An. 506.)

A creditor holding security can not vote for an assignee. (In re Davis &
Son, 1B. R. 120; s.c. 7A. L, Reg. 80; in re Walton et al. 1 Deady, 442; in
§ 5034.) NOTES OF DECISIONS. 471

re 8. Hanna, 7 B. R. 602; s.c. 5 Ben. 5; inve J. F. & O. R. Parkes, 10 B. R.
82; contra, in re Bolton, 1 B. R. 870; s. c. 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, ne is to be permitted to do so when he has
complied with the terms of section 5075. As he has security, the policy of
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. (Jn re High et al. 3 B. R. 192;
s.c.1L. T. B. 175; s.c. 20. 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. (Jn re Cram, 1 B. R.
504; sc. 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. (Jn 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. CUnvreJ. F. & C. R. Parkes, 10
B. RB. 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. he party who is entitled to vote for another must be his duly
appointed attorney in fact. (dn re Purvis, 1 B. R. 163; s.c.1 L. T. B. 19;
in ve Knoepfel, 1 B. R. 23; 8. 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. (Jn re Purvis, 1 B. R. 163; 8. 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. (Jn re Purvis, 1 B. R. 163; 3.0.1 L. T. B.
19.) . ‘

There is no such thing known to the law as an informal vote. An expres-
sion of opinion viva voce by the creditors as to their preference is a yote. (Jn
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. (Jn7e Frank, 5 B. R. 194; s. co. 5 Ben. 164; 8.
c.2L. 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, 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 con-
currence is obtained, and the meeting adjourns sine die, the contingency hap-
pens which authorizes the judge, or if there be no opposing interest, the
register to appoint an assignee.. (Ja re Phelps, Caldwell & Co. 1 B. R. 525;
8. ¢. 2 L. T. B. 25.)

The duty of preparing the memorandum for the signatures of the creditors
devolves on the register. The recital it contains as to notice must be within
his knowledge, derived from the files in his office. In it must be stated the
472 THE BANKRUPT LAW. [§ 5034.

name of the assignee chosen 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 elec-
tion 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 certity a failure to make choice
by the creditors. (Jn re Pfromm, 8 B, R. 357.)

A creditor who has given a viva voce vote in favor of a party may refuse
to sign the memorandum, for he bas the right to change his vote at any
period during the progress of the election. (Jz re Pfromm, 8 B. R. 357.)

No creditor can change his vote after a final adjournment. (Jn re Scheif-
fer & Garrett, 2 B. R. 591; s.c. 1 C. L. N. 261.)

Proofs which are filed after a vote is taken, can not be allowed to come
in and change the result. (Jn re Lake Superior C. R. & I. Co. 7 B. R. 376.)

The choice is to be made by the greater part in value and number of those
who have proved their debts, and not the greater part, &c., 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 or
vote for the same person, then there is a failure on the part of the creditors
to make a choice. (Jn re Purvis, 1 B. R. 163; 8.¢c.1L. T. B. 19; in re
Scheiffer & Garrett, 2B. R. 591; s. c. 1 C. 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 hisclaim. (Jn re Haynes,
2B. R. 227; 0.1 L. T. B. 121.)

It is the policy of the bankrupt act to give the creditors of the bankrupt
the choice, in the first instance, of the person who is to take the assets and
manage them. It is only when the creditors fail to clect, that the register or
judge can appoint an assignee. (In re J. O. Smith, 1 B. R. 248; 8. c. 2 Ben.
118; 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 assignee that may
have been elected or appointed in the proceedings under the first warrant.
Cin re Perry, 1 B. R. 220; 8.0. 1 L. T. B. 4; in re Ratcliffe, 1 B. R. 400; én
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 meeting 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. (Jn re Carson, 5 B.R. 290; s. c. 5 Ben. 277;
8.0. 2 L. T. B, 194.)

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 op-
position 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 meet-
ing 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
§ 5034. ] NOTES OF DECISIONS. 473

interest ; and that any creditor has the right to object to the register’s mak-
ing the appointment. (Jn ve Pearson, 2 B. R. 477.)

When the register announces that he has the right to appoint an assignee,
unless there is an opposing interest, distinct disclosure should be made if
there is any opposing interest. (/n 7¢ George Jackson ef al. 14 B. R. 449.)

The appointment by the register is irregular where there is an opposing
interest. (Jn re Pearson, 2 B. R. 477; in re C. H. Norton, 6 B. R. 297.)

There can be only one first mecting, 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 con-
sidered as continuing until the termination of such first meeting, whether
upon the day tirst appointed or any other day to which such meeting may be
continued, unless it affirmatively appears that such opposition has been with-
drawn. (Jn re C. H. Norton, 6 B. R. 297.) :

Ifthe 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 repre-
sented, 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. (Jn re Cogswell, 1 B. R. 62; s.c. 1
Ben. 388.)

An assignee should be appointed, even though no debts have been proved.
(in re Cogswell, 1 B. R. 62; 8. c. 1 Ben. 888; in ve Anon. 1 B. R. 123.)

An assignee should be appointed, even though there are no apparent as-
sets, 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. (Jn re Alexander Graves, 1 N. Y. Leg.
Obs. 213; s.c. 5 Law Rep. 25.)

If the resolution to appoint a trustee is not confirmed by the court, and
the first meeting has been adjourned without the election of an assignee, the
court may appoint an assignee. (Jn re Stuyvesant Bank, § 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. (Jn re Wiliiam 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. (In re Wm. Major,
14 B. R. 71.)

Approval of the Assignee by the Judge.

The creditors are alone interested in the distribution of the estate, and
it is to be supposed that creditors having pecuniary interests will caretully
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 qualifi-
cations 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 cred-
itors, representing a large majority in amount and number of the partics in-
terested, is entitled to great weight in determining who is the proper person
to administer the estate in which they are interested. The discretion vested
in the court of approving or disapproving of an assignee, is a legal discretion
—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. (Jn re Funkenstein & Co. 1 Pac. L. R, 11.)
“

474 THE BANKRUPT LAW. [§ 5034.

When the register is satisfied that any reasons exist why an assignee
elected or appointed should not be approved by the judge, it 1s his duty to
state such reasons freeiy in submitting the question o! approval. (/n re Bliss, .
1B. R. 78; 8.c.1 Ben. 407; re im Scheiffer & Garrett, 2 B. R. 591; sc.
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 bis appointment more than the des-
ignation to the judge of a suitable person tor the trust. (Jn re Scheiffer &
Garrett, 2B. R. 591; 8.c.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. (Jn re
Grant, 2 B. R. 106; in re J. O. Smith, 1 B. R. 248; 8. o. 2 Ben. 118; in re
Barrett, 2 B. R. 583; s.c.1L. T. B. 144; 8.c.1C. 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 «lways possible, reasonable cause of suspicion may in
some cases -be sufficient. (Jn ve Clairmont, 1 B. R. 276; s.c. Lowell, 280;
8. 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 an
assignee, who is also his friend and in his ‘nterest, he will withhold his ap-
proval. It is certainly against the policy of the bankrupt act that a bank-
rupt should select his assignee. It is true that if the creditors do not care
sufficiently for the matter to attend the meeting, they ought not to complain.
But still the law is no less brought into contempt. The discharge of a debtor
who does not surrender all his assets is precisely what those charged with the
execution of the law are bound to guard against. (Jn 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 hankrupts, and soliciting them to prove their debts and vote for
him as assignee, with a view to such pecuniary emolument as may legiti-
mately belong to the position. Such a course opens the door to abuses. (Jn
re A. B. 2 B. R. 308; 8. c.3 Ben. 66.)

At 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 ob-
tained will not be approved. (Jn re Ilaas & Samson, 8 B. [. 189.)

Whether there has been such an influence exercised by the assignee or not
as to invalidate his election, must be left to depend upon the circumstances
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 bankruptcy the pro-
ceedings of the bankrupt alone. The bankrupt can not be allowed to select
his assignee. Such an assignee might favor the bankrupt at the expense of
the creditors’ interest. That the assignee is the confidential clerk of the
bankrupt’s attorney, may be a good reason for withholding the approval of
the choice, if objections are made by the creditors before approval; but such
objections should be mide, if the facts are known to the creditors, immediately
afier 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 isin 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
§ 5034. ] NOTES OF DECISIONS. 475:

judge approves, without objection, it is too late to object. (Jn re Mallory, 4
B. R. 158; 8. 0. 2. L. T. B. 180.) °

Any general bias either for or against the bankrupt, or his dealings, will
not disqualify a person cf standing and character. In contested cases it
would be ulmost impossible to find any suitable assignee connected in any
way with the estate, who had not formed such an impression. The creditors,
moreover, retain an important power over the settlement of the estate, and
ought to exercise an oversight of the affairs pertaining to it. (In re Clair-
mont, 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
approved. (Jn 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 that a
preferred creditor snall not be eligible as assignee. (Jn re Powell, 2 B. R.
45.)

The assignee must reside in the judicial district in which the proceedings
are pending. (Jn 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. (dn re Loder eé¢ al, 2 B. R. 515.)

If the assignee does not reside in the same place as the bankrupt, a person
residing in that piace may be associated with him as co-assignee. (In re
Jacoby, 1 W. N. 16)

An attorney for a creditor of the bankrupt may be assignee. Section 5035
declares who shall be ineligible as assignee. There is no other provision in
the bankrupt act rendering a person ineligible for this position. (In re
Barrett, 2 B. R. 688; s.c. 1 L. T. B. 144; 83.¢.1C. L. N. 202; im re Lawson,
2B. 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 with-
draw from the former position. (J. ve 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 jurisdic-
tional limits and a resident thereof. (Jn re Boston, Hartford & Erie 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
bankrupt court. This is a position of incompatibility which the bankrupt
court cin not permit one of its officers to occupy. If he is to be assignee, he
must look to the bankrupt court alone as the source of his authority. If he
is to hold and administer, as receiver under the State laws, the property
which he has received as receiver, he must so administer it, without looking
to the bankrupt court for any authority or direction. If he is to administer
such property as an assignee, he must so administer it, without looking to
the State court, or to any other court but the kankrupt court, for authority
or direction. He must, moreover, account for the property received by him,
and it is not proper that an assignee be plaintiff, and, as reeeiver, be defend-
ant in respect to these matters. (Jn re Stuyvesant Bank, 6 B. R. 272.)

‘Upon the petition of a creditor, an additional assignee may be appointed.
(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 representa-
476 THE BANKRUPT LAW. [S$ 5035-6.

tion, The creditors have the right to decide upon the number of assignees
as well as to choose them. (Jn re Clairmont, 1 B. R. 276; s. c. Lowell, 280;
8, c.1L. T. B. 6.)

When the judge refuses to approve the choice made by the creditors, he
should order a new election, (Jn re Scheiffer & Garrett, 2 B. R. 591; s. 0.1
C. L. N. 261.)

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. (Jn 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. (Jn re George Jackson et al. 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 wasnever legally appointed and never
qualified. (Jn re Wm. 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 conflicting
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. (Jn re Mallory, 4 B. R. 153; s. c.
2L. T. B. 130.)

Src. 5035.—No person who has received any preference con-

_ trary to the provisions of this Title shall vote for or be eligible

as assignee; but no title to property, real or personal, sold, trans-

ferred, or conveyed by an assignee, shull be affected or impaired
by reason of his ineligibility.

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
Barrett, 2 B. R. 583; s.c.1 L. T. B. 144; 8.¢c.1 C. 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. (Jn re Powell, 2 B. R. 45.)

Suc. 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 sufticient bond to the United
States, with a condition for the faithful performance and dis-
charge of his duties; the bond shall be approved by the judge
or register by his indorsement thercon, shall be filed with the
record of the case, aud inure to the benefit of all creditors prov-
ing their claims, and may be prosecuted in the name and for the
benefit of any injured party. If the assignee fails to give the
bend within such time as the judge or register orders, not exceed-
ing ten days after notice to him of such order, the judge shall
remove him and appoint another in his place.
§§ 5037-9. ] NOTES OF DECISIONS. 477

When a creditor demands it, an assignee should be required to give bond.
(In re Fernberg, 2 B. R. 353.)

No one but the district judge can require the assignee to execute a bond..
(in re Dean, 1 B. R, 249; s. 0.1 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
fuithful 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 ve McFaden,
3B, 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. (Jn 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. (Jn re George E. Sands, 7
Ben. 19.) ; t

Sxc. 5037.—Any assignee who refuses or unreasonably neg-
lects to execute an instrument when lawfully required 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.

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
farnish it to the bankrupt. (Jn re Blaisdell et al. 6 B. R. 78; s. c. 42 How..
Pr. 274; s. c. 5 Ben. 420.)

Src. 5038.-An assignee may, with the consent of the judge,
resign his trust and be discharged therefrom.

x

Sxc. 5039.—The court, after due notice and hearing, may re-
move an assignee for any cause which, in its judgment, renders
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.

A motion to remove an assignee can be entertained by the court alone, and
not by the register. (Jn re Stokes, 1 B. R. 489; in re New York Mail Steam-
ship 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 re-
move an assignee when cause is shown rendering such removal expedient or
necessary. (fn re Blodgett & Sanford, 5 B. R. 472; in re Mallory, 4 B. R.
153; 8.0. 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 founda-
tion, but whether its prosecution was fraudulent, malicious, or from unjust
motive, and not in good faith for the benefit of the general creditors. (Jn re
Sacchi, 6 B. R. 398; s. c. 6B. R. 497; 8. c. 48 How. Pr. 250.)
478 THE BANKRUPT LAW. [$ 5039.

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 creditor.
Cn re Sacchi, 6 B. R. 398; s. c. 6 B. R. 497; 8. c. 43 How. Pr. 250.)

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 dis-
posing 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. (dn re Morse, 7 B. R. 56.)

When creditors apply to an assignee to ascertain the condition of the es-
tate, it is his duty to communicate all material facts within his knowledge,
and the willful suppression of such facts is a ground for removal. (Jn re Per-
kins, 8 B. R, 56; 8. c. 5 Biss. 254.)

Such removal will be made where there is an irreconcilable disagreement
between the assignee and a large portion of the creditors. The assignee is a
trustee of each and every creditor. He receives a compensation for his serv-
ices, and is held to strict diligence in watching the interest 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
trustee. Substitution has been made where the trustees would not act to-
gether. 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 derived 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 according 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 ona hearing of both parties in-
terested. (Jn re Mallory, 4 B. R. 153; 8. c. 2 L. T. B. 130; 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. (Jn 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 hap-
pen 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 absvlute
control over the rights and interests of the minority. (/n 7e Dewey, 4 B. R.
412; s. c. Lowell, 493; s.c. 2L. T. B. 184.)

When an assignee is guilty of misconduct, the register may be directed,
under an order of the court, to serve a notice on the assignee to show cause
why he should not be removed, aud to employ counsel to represent the estate
and the creditors. (Jn re Price, 4 B. R. 406.)

When the costs have been unnecessarily augmented by a charge of fraud
against the assignee, they must all be paid out of the estate. He is fully jus-
tified in rebutting the charge and vindicating himself, and the estate must
bear the costs. (Jn re Mallory, 4 B. R. 153; s. c. 2 L, T. B. 180; én re Blod-
gett & Sandford, 5 B. R. 472.)

When the assignee is removed for misconduct, he may be compelled to
pay the costs of the proceedings for his removal. (Jn re Morse, 7 B. R. 56.)

®
§§ 5040-3. ] NOTES OF DECISIONS. 479

At the meeting held under the second warrant issued in a case where an
amendment has been made, after the issuing of the firat warrant, adding the
names of other creditors, the creditors may choose a new assignee, 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. (Ja re Perry, 1 B. R. 220; 3.0.11. 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,
1U.8.L. J. 15.)

Sxc. 5040.—The resignation or removal of an assignee shall in
no way release him trom performing all things requisite on his
part tor the proper closing up of his trust, and the transmission
thereof to lis successors, nur shall it affect the liability of the
principal or surety on the bond given by the assignee.

So. 5041.—Vacancies caused by death or otherwise in the
office of asxignee 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 choive of an assignee, at a regular neeting, or
at a meeting called fur the purpose, with such notice thereof in
writing to all known creditors, and by such person as the court
shall direct.

This clause more properly pertains to a vacancy caused after an assignee
has been duly appointed and approved. (Jn re Scheiffer & Garrett, 2 B. R.
591; s.c. 10. L.N. 261.)

The removal of an assignee from office is necessary before another assignee
can be appointed in his place. (Ju re George E. Sands, 7 Ben. 19.)

Szc. 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 per-
sons selected to fill vacancies, if any, with the same -powers and
duties relative thereto as if they were originally chosen.

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 as-
signee. (Hail 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. (ichards v. Md. Ins. Co. 8 Cranch, 84.)

Sc. 5043.—Any former assignee, his executors or administra-
tors, upon request, and at the expense of the estate, shall make
and execute to the new assignee all decds, conveyances, and assur-
ances, 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 fulfill-
480 THE BANKRUPT LAW. [§ 5044.

ment of the duties of any former assignee, and the rights and
interests of all persons interested in the estate. :

Sxc, 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 convey to
the assignee all the estate, (6) real and personal, of the bankrupt,
with all his deeds, books, and papers relating thereto, and such
assignment shall relate back to the commencement of the proceed-
ings 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 (¢) process as
the property of the debtor, and shall dissolve any such attach-
ment made within four months next preceding the commence-
ment of the bankruptcy proceedings.

Assignment of the Bankrupt Estate.

(a) The register should not make an assignment of the bankrupt’s
estate until he receives a certificate of the judge’s approval of the assignee.
elected or appointed. (dn re Scheiffer & Garrett, 2 B. R. 591; 8.c.10C.
L. N. 261.)

The adjudication of bankruptcy is an essential prerequisite and preced-
ent 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 it its jurisdiction, and gives legal effect to what the statute
declares to be an act of bankruptcy. Until that adjudication, the debtor
may, in a voluntary case, withdraw his application. (Wright v. Johnson, 4 B.
R. 627; s. c. 8 Blatch. 150.)

The register should make the assignment when there is no opposing in-
terest, even though the title to the property is in dispute. (In re Wylie, 2
B. R. 187.)

The assignment should be handed to the clerk and recorded, and should
then be delivered to the assignee. (In re A. Alexander, 3 B. R. quarto, 203
s. 0.2L. T. B. 137.)

The assignment when made bya register, should be under the hand of the
register and the seal of the court. The State laws in regard to the acknowl-
edgment of deeds need not be complied with. The only system of bankrupt
laws which Congress has the power to pass is a uniform one—one which re-
quires the same acts and same duties from the officers appointed to execute
the law in all the States, and producing the same gereral 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 bankrupt
laws, Congress had omitted to make any provision in regard to executing and
registering the conveyances or assiguments 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 de-
mand that the same shall be recorded, and a tender to them of the fees al-
lowed to them for such service by the laws of the State. (In re Neale, 3 B.
R177; s.c, 1 L. T. B. 295; contra, Zeigler v. Shomo, 78 Penn. 357.)
§ 5044. ] NOTES OF DECISIONS. 481

Although the act prescribes that as soon as the assignee is appointed and
qualified, the judge or register shall, by en instrument under his hand, assign
and convey all the estate,.real and personal, of the binkrupt, yet this pro-
vision must be regarded as directory, and not essential to the assignment
where some equally formal mode has been adupted, 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; 3. c. 86 Md. 82.)

The language of the statute will not be controlled or modified by any in-
-advertence or mistake on the part of the register in stating the time from
which the assignment operates. (Jw re Wm. H. Pierson, 10 B. R. 107.)

Rights of the Bankrupt.

Until an assignee is appointed and qualified, and the conveyance or assign-
ment is made to him, the title to the property remains in the bankrupt.
(Hampton v. Rouse, 11 B. R. 4723 8, c. 22 Wall. 263.)

The bankrupt bas the right, prior to the appointment of an assignee, to
offer to redeem property sold for taxes. (Hampton v. Rouse, 11 B. R. 472; s.
c. 22 Wall. 263.)

Under the act of 1841, the decisions were conflicting as to whether the
title of the assignee related back farther than the decree. (Berthelon v. Betts,
4 Hill, 577; in ve John Ziegenfuss, 2 Ired. 463; Miller v. Black, 1 Penn. 420;
Smith v. ,4 Edw. Ch. 653; Spaulding v. Dizon, 21 Vt. 45; in re Anon.
1 Penn. L. J. 823; in re Bennett, 1 Penn. L. J. 145; in re Dudley, 1 Penn. L.
3.302; vide in re Mellor & Co.1 Penn, L. J. 1385; McLean v. Rockey, 3 McLean,
235; Buckingham v. McLean, 3 McLean, 185; s c. 18 How. 151; in re Newhall,
2 Story, 360; in re W. C. H. Waddell, 1 N. Y. Leg. Obs. 53; in re Samuel
Harris, 3 N. Y. Leg. Obs. 152; in ve Abner H. Allen, 1 N. Y. Leg. Obs. 115;
s.c. 5 Law Rep. 362; 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 bank-
ruptcy, and no other property, shall vest in the assignee. Property acquired
by the bankrupt after the petition is filed belongsto the bankrupt alone. (ln
re Patterson, 1 B. R. 125; s.c. 1 Ben. 508; in ve Barnett, 16 Pitts. L. J. 73;
an re Levy et al. 1 B. R. 185; s. c. 1 Ben. 496; in re Rosenfield, 1 B. R. 319;
s.c.1L. T. B. 81; Rugely v. Robinson, 19 Ala. 404; Bond v. Baldwin, 9 Geo.
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. (Jn re James Thomp-
son, 13 B. R. 300.)

The earnings and acquisitions of the bankrupt subsequent to the com-
mencement of the proceedings are his own, subject to his eventual dischurge.
If he does not succeed in procuring that, they remain liable to execution or
attachment by his former creditors. (Mays v. Manufacturers’ Nationat Bank,
4B. R. 446; s.c. 4 B. R. 660; s. oc. 64 Penn. 74.)

When the contract of an attorney is that of an ordinary retainer to con-
duct 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 pusses to his assignce, but for the value of services sub-
sequently rendered in the cause, he is entitled to retuin the compensation,
(in re Jones, 4 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 meeting of
stockholders, (State v. Ferris, 42 Coun. 560.)

If the bankrupt’s wife takes out a policy of insurance upon her life, pay-
31

 
482 THE BANKRUPT LAW. [§ 5044.

able upon her death to her husband, paying one premium out of her separate
estate before the commencement of proceedings in bankruptcy, and others.
afterwards, 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. (Jn
ve Owen & Murrin, 8 B. R. 6; s. 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 appointment of the
assignee, a condition of things exists not unlike that in the case of a person
dying intestate and before the appointment of anadministrator. 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 assignment of his assets can be made. (Johnson v. Geisriter,
26 Ark. 44; Barron v. Newberry, 1 Biss. 149.)

The expression that a bankrupt is civiliter mortuus means that he is dead
only as to the control of bis 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 isin fact. He is alive to acquire new property,
to do and to receive wrong, to commit trespasses or crimes, and to be prose-
cuted for either, and to prosecute for either when committed on himself.
(Carr vy. Gale, 3 W. & M. 38; 8, c. 2 Ware, 330.)

The bankrupt may, after the commencement of the proceedings in bank-
ruptcy, enter into business and hold property, subject to the contingency of
obtaining a discharge. (Jn 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 bankrupt 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. The assignment is subsequently executed, but jts effect must depend
entirely on the language of the act, and it is expressly enacted that the as-
signment, when made, shall relate back to the commencement of the proceed-
ings, 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 bankrupt law. (dn re Grege, 3 B. R. 5295
sc, 1L. T. B. 298; Mays v. Manufacturers’ National Bank, 4 B. R. 446; s. ¢.
4 B. R. 660; 8. c, 64 Penn. 74; inve J. J. Lake, 6 B. R. 542: 8. c. 3 Biss.
204; Perley v. Dole, 88 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 bankrupt will not dis-
charge 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.
(Slevens v. 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 com-
§ 5044. ] NOTES OF DECISIONS. 483

mencement of such proceedings, he can be compelled to pay it over again to
the assignee. (Mays v. Manufucturers’ National Bink, 4 B, R. 446; 8. c. 4 B.
R. 660; s. c, 64 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. (Mays v. Manufucturers’
National Bank, 4 B. R. 446; 8. c. 4 B. R. 660; 8. c. 64 Penn. 74.)

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 bankrupt court, and can not claim to be an inno-
cent purchaser. (In re J. J. Lake, 7 B. R. 542; s. c, 8 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 principle
does not involve any conflict between the State courts and the Federal courts.
If the property is no longer liable to levy for the satisfaction 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 the law. (Miller v.O’Brien, 9 B. R.
26; 8. c. 9 Blatch. 270.)

Payments made after the filing of the petition in bankruptcy, mala jide, or
with a view of defeating the bankrupt act in any of its essential requirements,
are void, and the person by whom such payment is made can be held to an-
swer to the original demand to the assignee. (Bubbitt v. Burgess, 7 B. R.
561; 8. c. 2 Dillon, 169; Turner v. Shenkmeyer, 1 W. N. 266.)

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, 18 B. R,
1; 8.c.6N. Y. Supr. 576; s. c. 11 N. Y. Supr. 284.)

A party who borrowed property from the bankrupt, after the commence-
ment of the proceedings in bankruptcy, can not defeat. an action to recover
the same hy proof that it passed to the assignee, without connecting him-
self with the assignee’s title. (Lain v. Gaither, 72 N. C. 234.)

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 unsatisfied, and seek to have
property alleged to have belonged to the bankrupt prior to the commence-
ment of the proceedings in bankruptcy applied to the payment of his judg-
ment in preference to the claims of the other creditors. (Havtun v. Corse, 4
Edw. Ch. 585; 8. c. 2 Barb. Ch. 506; Kane v. Pitcher, 7 B. Mon. 651.)

A party who holds funds or property belonging to the bankrupt may, in
an action brought by.a creditor to subject the same to the payment of his

 
484 THE BANKRUPT LAW. [§ 5044.

debt, plead that the assignee alone has the right to claim the same. (David
vy. Ferrand, 2 La. An. 596.)

A plea by a third party to show that the property vested in the assignee,
must show that the district court had jurisdiction to entertain tbe 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 defendant prior to
the issuing of the attachment, without averring that the attachment was
issued against him, is insufficient. (Onion v. Clark, 18 Vt. 363.)

What Property Vests in the Assignee.

(0) The expression, ‘‘ estate of a bankrupt,” means such property and
rights of property of the bankrupt as the bankrupt act vests in the assignee,
The assignee can not take anything more than the bankrupt himself had, in
any case, except the case of afraudulent conveyance by the bankrupt. (Ja
re Hambright, 2 B. R. 498; 8. c.2L. T. B. 61; s,c.1 C. L. N. 201.)

The words, ‘‘all the estate real and personal,” are broad enough 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; 8. 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 Tll. 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 pominal value to the owner. (Kinzie v. Winston, 4 B. R. 21.)

The assignment vests the property in the assignee, although it was not
placed on the bankrupt’s schedules. (Holbrook v. Coney, 25 Ill. 543; Burton
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 rediched 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. (Jn ve Abner S.
Ely, 1 N. Y. Leg. Obs. 131.) ‘

The title to real estate situated in a foreign country Goes not vest in the as-
signee, 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 contingency.
(Burton vy. Lockert, 9 Ark. 411.)

. The right to redeem property sold under an execution passes to the as-
signee, and can rot be exercised by any judgment creditor after the com-
mencement of the proceedings in bankruptcy. (Pillow v. Lungtree, 5 Humph.
889.)

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 at-

tached to the judgment, and may be deemed a part of its lien, (Zrimlle v.
Williamso 1, 49 Ala, 525.)
§ 5044. ] NOTES OF DECISIONS. 485

A claim for improvements made on the public lands of the United States
passes to the assignee. (french v. 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. Hlurgrove, 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 in-
stituted after the filing of the bill. (Booth v. Clark, 17 How. 3822.)

If a party in pursuance of a decree delivers property of a bankrupt toa
receiver before any notice or demand by an assignee, the surrender is a com-
plete defense to any future action by the assignee. (Long v. Converse, 1 Otto,
105.)

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 testa-
tor. If the devisee or legatee is declared a bankrupt in proceedings com-
menced after such death and betore 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 proceedings in bankruptcy
he has no right to disclaim or renounce it. (Jn 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 distribu-
tive share. (Jn re Newhall, 2 Story, 360.)

A devise of property to cease on the bankruptcy of the devisee is good
and the limitation valid. (Wichols v. Eaton, 13 B. R. 421; 8.c. 1 Otto, 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. (Nichols v. Haton, 13 B. R.
421; 8. c. 1 Otto, 716)

A devise of property to a trustee, to pay the income thereof toa third
person free from liability for his debts, is not such an interest as will pass to
the latter’s assignee. (Wichols v. Eaton, 13 B. R. 421; 8. c. 1 Otto, 716.)

Where a will devises property to trustees to hold until the devisee reaches
a certain age. the estate passes to the assignee of the devisee, although the
devisee had not attained that age at the time of the commencement cf pro-
ceedings in bankruptcy. (Sandford y. Lackland, 2 Dillon, 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. ‘he statute of limitations will run in favor of a party
who onters into possession of property in his own right and holds for his
own benefit, but whose title is subsequently, by matter of evidence or con-
ee of law, turned into that of a trustee. (Jn re A. G. O’Neale, 6 B. R.

25.)

A claim to indemnity for an illegal capture of a vessel by a foreign gov-
ernment passes by abandonment to the insurer, and upon his bankruptcy vests
in his assignee. (Comegys v. Vasse, 1 Pet. 193; s. c. 4 Wash. 570.)

Ifthe surety, upon a note given to a guardian, marries the ward, his as-
signee can not maintain an action against the maker before a settlement and
adjustment of the guardian’s account. (Chilton v. Cubiness, 14 Ala. 447.)

Property which has been transferred by a deed contrary to law will pass
486 THE BANKRUPT LAW. [§ 5044.

to a trustee appointed under a deed of trust subsequently executed, and when
such deed was made more than six months prior to the commencement of
proceedings in bankruptcy, and is not assailed as fraudulent, no claim to the
property vests in the assignee. (Stewart v. National Union Bank et al. 2 Abb.
C. C, 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 attachment 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 attach-
ment to operate upon. When the rent became due it belonged to the as-
signee. A levy upon the reversion would have fastened upon the rent as its
incident. (Hvans v. Hamrick et al. 61 Penn, 19.)

The growing crop passes to the assignee, and should be placed upon the
schedules as personal property. (dn re Scbuimpert, 8 B. R. 415.)

A franchise to construct a turnpike road and collect the tolls thereon is
a personal 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 assign. (People v.
Dunean, 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 assignee,
of the grantee is only entitled to one-third. (ford v. Belmont, 7 Robt. 97,
508; 8. c. 85. N. Y. Sup. 135.)

A purchaser of firm property at a sale under an execution against an in-
dividual partner, obtains only the interest of such partner in the surplus that:
may remain after the firm debts are paid. (Osborn v. McBride, 11 Pac. L. R.
105.)

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. (Osborn v. McBride, 11 Pac. L. R. 105.)

On an individual petition, property in the possession of the bankrupt at
the time of the commencement of proceedings in bankruptcy, which belongs
to a firm of which he has been a member, passes to the assignee, who will
hold as tenant in common with the solvent partner. (Zn re Beal, 2 B. R. 587;
8. c, Lowell, 323; s.c. 2 L. T. B. 95.)

A legal possibility is an estate founded on acontingency. 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. (Kineie v.
Winston, 4 B. R. 21; 8. c. 56 Ill. 56; Banks v. Ogden, 3 Wall. 58.)

_ The bankrupt is personally released by a discharge, but the property and
rights of property vested in the assignec are subject to the creditors, and are
held in trust for them in whatsoever hands these may be found. (Qlurk v.
Clark, 17 How. 315.)

The statute docs not create any estate cf inheritance in the assignee him-
self, 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. Harles, 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 ap-
plied for the payment of his debts. (Rhoades v. Blackiston, 106 Mass. 334;
§ 5044. ] NOTES OF DECISIONS. 487

Blin v. Pierce, 20 Vt. 25; Ontario Bank vy. Mumford, 2 Barb. Ch. 596; Hynson
v. Burton, 5 Ark. 492.)

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 receipt entitles the party in equity to the pro-
ceeds of the judgment, and the title to the judgment does not pass to the as-
signee. (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 bankrupt law to interfere with or avoid contracts
made by the bankrupt with other parties, or to prevent their execution.
(Foster v. Hackley & Sons, 2 B. R. 406; s3,c. 2 L.T. B.8;8.0.10.L. N.
137.)

If goods are actually delivered to the vendee, the vendor has not, inde-
pendent of any special agreement, any lien entitling him 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 instrument is not
effectual by reason of the failure of the vendor to do what is by law neces-
sary for his protection, he can not fall back upon any supposed or possible
agreement qualifying the delivery, and securing a lien for the price. (Jn re
Simeon Leland ¢ 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.
Un re J. H. Lyon, 7 B. R. 182; 8. c. 4 C. L. N, 421.)

The condition that the title shall not vest in the vendee until all the pur-
chase money is paid, is not waived by taking indorsed notes from the vendee.
(In re J. H. Lyon, 7 B. R. 182; 8.0.4 0. L. N. 421.)

Where the sale is absolute, the vendor can not claim the property from the
assignee. (Woods v. 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 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 the possession of the vendee’s store
under a warrant, is not a waiver of the condition, and the vendor is entitled
to the goods. (Suéro v. Hvile, 2 Neb. 186.)

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.)
488 THE BANKRUPT LAW. [§ 5044..

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 yoidable. (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 commence-
ment of the proceedings. (Brovke v. 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 non-payment 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. 438.)

If the gocds are detained in the course of transportation and ceposited 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 stop-
page in transilu. (In re Norman B. Foot, 11 B. R. 153; s. c. 11 Blatch. 530.)

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 suffi-
cient 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, ean 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 v. 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 non-performance-
on the part of the purchaser. (Mane v. Jenkinson, 10 B. R. 316.)

Where the depositor of grain in a grain elevator knows that by the cus-
tom 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 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 warehouseman becomes bankrupt.
(Rahilly v. Wilson, 8 Dillon, 420; 8. c. 5 C. L. N. 217.)

If a miller converts grain deposited with him to his own use, the depesitor
has no interest in other grain owned by the miller. His only interest is that.
of a general creditor of the estate. (Adams vy. Myers, 1 Saw. 806.)

A party can not recover specific property from the assignee, unless it pos-
sesses 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. (Wood M. & &. Co. v. Brooke, 9 B. R. 395.)

A bond under seal, with coupons attached, is a negotiable instrument if it.
§ 5044.] NOTES OF DECISIONS. 489

is m-de payable to bearer, and a purchaser in good faith for a valuable con-
sideration obtains a good title against the assignee. (Jn 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. (ood v. Spencer, 4 McLean, 168.)

Tf 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 collection, the
assignee of the debtor may recover the money, if he is declared 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 un-
executed contracts. (Moster v. Luwell, 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 agreement. (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 acquire
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 the assignment of a bond is made and signed by the obligee,
yet if it is never accepted, either actively or constructively, by the party to
whom it was to be assigned prior to the commencement of the proceedings
oo the bond will pass to the assignee. (Perley v. Dole, 38 Me.
558.

If a party buys a judgment against the bankrupt, and purchases 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 paid to
purchase the judement, and pay the balance to the bankrupt, the agreement
is withuut consideration. (Hyde v. Findlay, 8 Pac. L. R. 147.)

Under the warrant, the marshal has the right to take possession of per-
sonal property leased by the bankrupt. If the lease stipulates that the lessor
may take possession of the property whenever he deems himself unsafe or
the property not well taken care of the lessor must show that fact in order
i“ entitle himself to take the property. (Huthawayv. Quimby, 1 N. Y. Supr.

36.)

If the assignee sells the equity of redemption in realty, to which fixtures
are attached, ior a sum equal to the value of the fixtures, he must be consid-
ered 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 assignee in bankruptcy at
least, and if he has done so, the granice will be entitled to the proceeds. (Zn
re McKay & Aldus, 7 B. R. 280; s. c, Lowell, 561.)

An agreement that a building erected upon land owned by the bankrupt
shall he 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 representations made by the latter.
(ALrris v. French, 106 Mass. 326.)

The bankrupt having been directed to invest a certain sum of money in
490 THE BANKRUPT LAW. (§ 5044.

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 replacing 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 bis, 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 bank-
rupt 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 appointment of the assignee in bankruptcy, and such appoint-
ment must be considered a revocation of anything done by the bankrupt, if
such revocation were needed. Moreover, the delivery of the securities having
been made 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. (Ungevitter
v. Von Sachs, 3 B. R. 723; s.c.4 Ben. 167; s.c. 1 L. T. B. 224; 3.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 associ-
cates, 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 sufficient to establish the exist-
ence 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 tixtures 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 ora mortgage. (Jn ve J. H. Morrow, 2 B. R. 665; s. c. Lowell, 386.)

An agreeinent that chattels on the premises shall be at the disposal of the
lessor as security for rent, is not valid against creditois of the lessee before
entry, where distress for rent is not allowed. The bankrupt law does not
undertake to enforce a mere covenant of this kind, which by the law of the
Lats creates no valid lien. (Jn re J. H. Morrow, 2 B. R. 665; s. 0. Lowell,

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 furmer creditors, those former creditors:
ought not, for this reason, to be postponed in the distribution of such prop-
erty to other creditors, whose debts may have been afterward contracted in
§ 5044.] NOTES OF DECISIONS. 491

hisname. 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 bank-
rupt’s creditors. (Jn re 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 liabilities of the cor-
poration. (Payson v. Stoever, 2 Dillon, 427.)

The estate of the bankrupt is not liable for the tortious acts of the assignee.
(Adams v. Meyers, 1 Saw. 306.)

At common law the termination of all interest of the insured in the prop-
erty defeats the policy. The transfer to the assignee in bankruptcy terminates
all interest of the bankrupt in the property insured. A transfer 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 bankruptcy is involuntary, or that
the transfer is made by operation of law, is immaterial. (Starkweather v.
Cleveland Ins, Co. 4 B, R. 841: s. c. 2 Abb. C. C. 67; Perry v. 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 tor the payment of the annual premium upon a policy issued by the
company to the maker. (Carey v. Nagel et al. 2 Abb. C. C. 156; 8. c. 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 pre-
mium as unearned. (in re Western Ins. Co. 6 Ben. 159.)

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. (Woedin v. Frazee, 38 N. Y. Sup.
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 stockholders,
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 Bunk v. Publishing Co. 3 Dillon, 287.)

If a note is discounted by a bank, and the proceeds credited to the account
of the depositor, which is then overdrawn, he will not, upon subsequently
making his account good by other deposits, be entitled to demand the drafts
received for the note from the bank or its assignee, ‘although the note was
also taken for collection. (Jn ve Bank of Madison, 9 B.R. 184; s. c. 5 Biss. 515.)

A party dealing with an insolvent bank inthe ordinary way must make
out a very clear case before a court will sustain a preference in his favor over
other creditors. (Jn re Bank of Madison, 9 B, R. 184; 3. ¢. 5 Biss. 515.)

A banker, in receiving a note for collection from one 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 moncy. When he col-
lects money for his customer, it is regarded as deposited, and in the light of
any other deposit, not as the money of the customer, nor is the custcmer enti-
tled 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 trom the
banker or his assignee. (Jn re Bank of Madison, 9 B. R. 184; 8. c. 5 Biss.
515.)
492 THE BANKRUPT LAW. [§ 5044.

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 payment.
out of such money in the hands of the assignee. (Bank of’ Commerce v.
Russell, 2 Dillon, 215; Randolph v. Canby, 11 B. R. 296; Dickey v. Harmon,
1 Cranch ©. 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 latter holds a note
not due at the time of the assignment or the commencement of the pro-
ceedings in bankruptcy. (First National Bank of Mount Joy v. Wilson, 72
Penn. 18.)

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 pre-
sented for payment before the maturity of the note and before the commence-
ment of the proceedings in bankruptcy, is entitled to be paid out of the
preceeds. (Hourth National Bank v. City National Bank, 10 B. R. 44; s. ce.
68 Ill. 398; s.c.1 A. L. T. [N. S.] 386.)

If an agent procures the discounting of a draft upon the bankrupt, at a
time when the latter has determined to ston 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 Navl Bank, 8 B. R. 447; 8. c. 21 Pitts. L. J. 33;
s. c. 30 Leg. Int. 392.)

If an order for the whole of a fund is given for a valuable consideration
to a third person prior to the commencement of the proceedings in bank-
ruptey, 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 subsequently pros-
ecuting a suit against the holder of the fund ina State court. (Walker v.
Seigel, 12 B. R. 394; s. c. 2 Cent. L. J. 508.)

An order drawn upon an agent not ia 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 accepted
order, although bankruptcy of the drawer has occurred between the ac-
eal and the receipt of the money. (McMenomy v. Ferrers, 3 Johns.

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. (Avore v. Young, 4 Biss. 128.)

If a decd is dated prior to the commencement of proceedings in bank-
ruptcy, 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 acknowledgment can not overcome
this presumption. (Hardin y. Osburne, 60 TI. 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
§ 5044. ] NOTES OF DECISIONS. 493

greater interest or right than the bankrupt had. (Ja re Kansas City Manuf.
Co. 9B R. 76.)

The doctrine that ratification relates back to the inception of the trans-
action, 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 tuke place at a time and under circumstances when the ratifying party
may himself lawfully do the act which he ratifies. The validity of an un-
authorized deed of a corporation must be determined according to the cir-
cumstances which exist at the time when it is ratified. (Jn ve Kansas City
Manut. Co. 9 B. R. 76.)

Where a party purchased from the bankrupt a part of certain bonds to
which the latter was entitled upon complying with certain conditions, he ob-
tained a right that may be enforced a-uinst the assignee if the conditions were
performed, although the bonds were not separated from the others if they were
allalike. (Hamilton vy. National Loan Bank, 3 Dillon, 230.)

Tf 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 bankrupt law. (Miller
v. Parker, 47 Ala, 312.)

If a deed of trust to secure the payment of a note contains a power au-
thorizing the creditor, his agent, attorney or assignee, to sell the property 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 v. 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.)

A mere agreement to give what may be realized from a claim is a promis-
sory arrangement, and does not constitute a complete and perfect gift.
(Williamson v. Colcord, 13 B. R. 319.)

An agreement by a guardian to discharge one mortgage and take a new
one, although he transceuds 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.

Juckson, 14 N. Y. Supr. 488.)

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 cred-
itor 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 bank-
rupts. (Montgomery v. Bucyrus Machine Co. 14 B. R. 193.)

A creditor who holds collaterals as securities need not sell them at public
auction, but may sell them at the stock exchange or brokers’ board. (Spar-
huwk v. Di exel, 12 B. R. 450.)

Where an insolvent debtor acquiesces in a sale of the securities, the as-
signee is bound by his acquiescence, although the securities are sacrificed.
(Sparhawk v. Drexel, 12 B. R. 450.)

A creditor who is vested with the power to sell securities holds it in trust
494 THE BANKRUPT LAW. [§ 5044.

for the debtor’s benefit as well as his own, and can not sacrifice the securities.
(Sparhawk v. Drexel, 12 B. R. 450.)

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 indebt-
edness tohim. (Jn re Oregon Printing Co. 13 B. R. 508; s.c. 11 Pac. L.
R. 283; 8. c. 3 Cent. L. J. 515.)

Title Subject to Equities.

The assignee takes thé 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; 6. c. 18 Wall. 382;
Kelly v. Scott, 49 N. Y. 595; Parker v. Muggridge, 2 Story, 334; Pletcher v.
Morey, 2 Story, 555; Mitchell v. Winslow, 2 Story, 680; Winsor v. McLellan,
2 Story, 492; Talcot v. Dudley, 5 1). 427.)

If the bankrupt is estopped, his asSignee is also estopped. (Kelly v. Sevtt,
49 N. Y. 595; Rockford, Rock Island & St. Louis RR. Co. v. McKay & Aldus,
3B. RB. 50; 8. c. Lowell, 345; s. c. 1 L. T. B. 133.)

When the bankrupt has contracted to manufacture an engine, and on the
representation that it had been finished and delivered to a company for trans-
portation to the purchaser, has obtained payment therefor, but the engine in
fact was not finished nor delivered for transportation, remaining in the pos-
session of the bankrupt, and being designated as belonging 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 representations were made. (Rockford, Rock Island &
St, Louis R. R. Co. v. McKay & Aldus, 3 B. R. 50; s. c. Lowell, 345; s.c. 1
L. T. B. 183.)

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 discounted
the note thus secured, the assignee is estopped from proving that it is un-
true, and that a quorum was not present. (Jn ve Kansas City Manuf. Co. 9
B. R. 76.)

An agreement to assign a bond to a person to indemnify him for his lia-
bility in becoming surety for the bankrupt confers a right to an assignment
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 repre-
sentation by the bankrupt that be resided there. it will bind the assignee
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 regard to usurious contracts than
the bankrupt had, although they are void in law. (Tiffany v. Boatman's Sac.
Inst, 4 B. R. 601; 8,¢. 9B. R. 245; s.c. 1 Dillon, 14; 8. 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 subsequent to
proceedings against him in bankruptcy. The power to institute proceedings
for a forfeiture under the laws of Wisconsin against usury, is a privilege con-
ferred 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: 8. 6, 2
Biss. 511.) mes
§ 5044.] NOTES OF DECISIONS. 495:

Section 5198 only forfeits the interest for usury, but does not affect the
principal. (First Natl 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 jide 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. Boutinan’s Sav. Inst. 4 B. R. 601; 8. ¢.
9 B. R. 245; s. co. 1 Dillon, 14; s. c. 18 Wall. 376.)

Ifa party purchase a negotiable note at a discount greater than the legal
rate of interest from a broker in the usual course of business, and without any
notice that the broker is acting for the maker, the assignee of thé 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. (JMovore v. Jones, 23 Vt.
739; Wheelock v. Lee, 10 B. R. 363.)

The assignee of a bankrupt corporation can not maintain an action to en-
force the coilateral liability of the stockholders for the debts of the corpora-
tion. (Dutcher v. Marine Nat'l Bank, 11 B. R. 457; 3. c. 12 Blatch. 435.)

An assignee can not under the laws of New York recover money paid by
an insolvent bank in the usual and ordinary course of its business to a cred-
itor who was ignorant of its insolvency. (Dutcher v. Importers’ & Traders*
Nat. Bank, 59 N.Y. 57; 8.¢. 1 N.Y. Supr. 400.)

The Property of the Bankrupt’s Wife and Children.

Marriage is a qualified gift te the husband of the wife’s choses in action,
upon condition that he reduces them to possession during its continfance.
The assignment in bankruptcy vests in the assignee all the rights of the hus-
band to 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 em-
braces the right to sue for, recover and receive them. It makes no difference
in regard to the rights of the assignee, whether the choses in action have or
have not been placed upon the schedules by the bankrupt. (Jn ve 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. If they have not been reduced to
possession by him at the time of the bankruptcy, they do not pass to the as-
signee. (Wickham v. Valle, 11 B. R. 83.)

If the distributive share of the bankrupt’s wife in her father’s estate re-
mains in the hands of the administrator or executor at the time of the com-
mencement of the proceedings in bankruptcy, it does not pass to the assignee.
(Shaw v. Mitchell, 2 Ware, 220; Shay v. 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 charater. (Shaw v. 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. (Builer v. Mer-
chants’ Ins. Co. 8 Ala. 146.)

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. (Jn re Ernst
Brandt, 5 Biss. 217.)
496 THE BANKRUPT LAW. [§ 5044.

If the wife, without the knowledge of her husband, takes a note payable
to her husband or bearer for a debt due to her before marriage, and the hus-
band asserts no title to it or authority over it, but allows her to keep posi3es-
sion of it and collect the interest, she is entitled to it as against the assignee.
(In re George W. Suow, 1 N. Y. Leg. Obs. 264; s. c. 5 Law Rep. 369.)

A possibility which iz 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 continuing
in her use since, do not pass to the assignee. (Jn re Edward H. Ludlow, 1N.
Y. Leg. Obs. 322; zn ve Chester 8. 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. (Jn re Edward
H. Ludlow, 1 N. Y. Leg. Obs. 822; in re Chester 8. Kasson, 4 Law Rep. 489;
contra, in ve 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. (/n re Benjamin B. Grant, 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 premi-
ums are paid, the policy can not be assigned by him. (Jn re Bear & Stein-
berg, 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 advanccd, with interest, to be taken out of the policy when
that shall be paid. (Jn re Bear & Steinberg, 11 B. R. 46; s. c. 1 Cent. L. J.
607.)

fits made by a bankrupt to his children which were proper and suitable
to him in his circumstances and condition, may be retained by them. (Jn
ve Benjamin B. Grant, 2 Story, 312.)

The children of the bankrupt may retain watches given to them by per-
sons other than their parents. (Jn re Benjamin B. Grant, 2 Story, 312.)

If the bankrupt, when insolvent, paid only a part of the moncy to pur-
chase a watch for his child, the assignee is only entitled to the amount so
paid. (Jn re Benjamin B. Grant, 2 Story, 312.)

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 from his
property, the share will not pass to the assignee. (Zebbets v. Vorr, 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. (Jv ve 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 as-ignee, as the rep-
resentative of all the creditors of the bankrupt, thereby becomes the owner of
such equitable interest, with an equity superior even to a judgment creditor
who has an execution returned unsatisfied, but who had not obtained an
§ 5044. ] NOTES OF DECISIONS. 497

equitable lien by filicg a creditor’s bill or taking other proceedings to reach
such equitable estate before the filing of the petition in bankruptcy. (In re
Hinds e¢ al. 3 B. R. 351.)

The assignee represents the creditors, and for their benefit the ratification
of an unauthorized deed will not be permitted to relate back to the time of
its execution, so as to bind bim, where it would be void under the bankrupt
law if executed at the time of the ratification, (Jn 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 character
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 prop-
erty 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 prac-
tice. The clerk may retain the costs due his office out of the fund, and pay
the residue to the assignee. (Clerk's Office v. 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 property 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 bankrupt act. (In
re Metzger, 2 B. R. 855; Poster v. Hackley, 2 B. R. 406; s.c. 2 L. T. B. 8;
s.c.1C. L. N. 187; Bradshaw v. Klein, 1 B. R. 542; s. o. 2 Biss. 20; 8. c. 1
L. T. B. 72; Buckingham v. McLean, 3 McLean, 185; s. o. 18 How. 151 )

The proceedings in bankruptcy arrest the ordinary proceedings of credit-
ors to obtain judgments, and thereby to secure an appropriation of the
debtor’s property to their use, and the assignee represents them. Heis trustee
for them, and whatever right they might assert as creditors if they had ob-
tained judgments, he may assert for their benefit, whether it be to set aside
conveyances which are fraudulent and void as against creditors, or which are
otherwise as against them invalid. (In re Simeon Leland e al. 10 Blatch.
503.)

Transactions by or with debtors which are void as to creditors, whether
for fraud, want of completeness in any of their incidenis, or for any cause
whatever, are equally void as against the assignee. (Kune v. Rice, 10 B. R.
469.)

The assignee is not bound by any lien or incumbrance which is not valid
against creditors. (Jn 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 cou!d not, the assignee can also enforce
them. (Kane v. Rice, 10 B. R. 469.)

Any defeuse that wonld 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 releas-
ing 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; s. 0. 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. (/n re Jaycox & Green,
7B. R. 578; 8. c. 80 Leg. Int. 296.)

The assignee may impeach a transaction between a bankrupt corporation
32
498 THE BANKRUPT LAW. [§ 5044.

and its stockholders, which creditors could impeach. (Sawyer y. Hoag, 9 B.
R. 145; 8. o. 8 Biss. 298; 8. 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 conyentional payment of his stock by
one of the shareholders of the company. If the payment is merely conycn-
tional 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 asa
valid payment. (Sawyer v. Hoag, 9 B. R. 145; 8. c. 3 Biss. 293; 8. 0. 17
Wall. 610.)

A judgment confessed upon an insufficient verification is valid against all
except judgment creditors, who may institute proceedings to set it aside.
The assignee is not a judgment creditor, and the bankrupt act nowhere con-
fers upon him the rights of such creditors. (Cook v. Whipple, 9 B. R. 155;
s. c. 55 N. Y. 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 prop-
erty at the time when bankruptcy proceedings were commenced, and there-
fore the title to such property vests in the assignee under the deed of' assign-
ment. (Soster v. Hackley & Sons, 2 B. R. 406; 8. c. 2 L. T. B. 8; 8. ¢c.1C.
L. N. 187; im re Hussman, 2 B. R. 487; 8. o. 2 L. T. B. 58; 5.0.10. L. NL
177; Shackleford y. 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. Brovkmire, 7
B. R. 568; s. c. 2 Dillon, 108; s.c.6L. T. B. 114; Amsinck v. Bean, 8 B. R.
228; 8. 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 rendcred hinuiself liable to
them for filing a false report. (Bristol v. Sandford, 13 B. R. 78; 8. 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; 8. c. 2 Dillon, 108; s.
¢.6.L. T. B. 114; Amsinck v. Bean, 8 B. R. 228; 8. c. 11 B. R. 495; 8. c. £0
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 agreen.cnt whereby acred-
itor accepts filty per cent. in cash in full of his claim, is a fraud on the agrce-
ment. (Amsinck v. Bean, 8 B. R, 228; s. c, 11 B. R. 495; 8. c. 10 Blatch. 361;
8. 0. 22 Wall. 395.)

If one partner receives all the assets of the firm, and exccutes a compro-
mise agreement with the firm creditors, bis assignee may recover money given
to a creditor in fraud of such agreement, although the firm is not declared
bankrupt. (Amsinek v. Bean, 8 B. R. 228; 6. c. 11 B. R. 495; 8. c. 10 Blatch.
361; 3. Cc. 22 Wall. 395.)
§ 5044. ] NOTES OF DECISIONS. 499

Tt is now held to be the better policy to allow the debtor, though a par-
ticipant in the fraud, to recover the amount paid to a creditor who refuses to
join in a composition agreement, unless he can obtain a preference, and hay-
ing 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 property passes to the assignee
free from the incumbrance, although the mortgage was made prior to the
commencement of the proceedings in bankruptcy. (Jewett v. Presten, 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 re-
mained unrecorded when the petition in bankruptcy was filed. It is not an
unreasonable construction of the bankrupt 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. (/n re Wynne, 4 B. R, 23; s.c. Chase, 227; 8. c. 2 L. T. B.
116; Brock v. Terrell, 2 B. R. 648; Allen v. Massey et al. 4B. R. 248; 8.0.7 ,
B.R. 401; 8. c. 2 Abb. C. C. 60; s. c. 1 Dillon, 40; s. oc. 17 Wall. 351; s.c. 1
L. T. B. 218; National Bank v. Hunt, 4 B. R. 616; s.c. 11 Wall. 391; Har-
vey v. Crane, 5 B. R. 218; 8. c. 2 Biss. 496; Hdmondson v. Hyde, 7B. R. 1; 8.
c. 2 Saw. 205; s.c. 5 L. T. B. 380; im re Perrin e¢ al. 7 B. R. 283; Moore v.
Young, 4 Biss. 128; Barker v. Smith, 12 B. R. 474; contra, in re Charles Col-
lings, 12 B. R. 379; s.c. 12 Blatch. 548; National Bank v. Conway, 14 B. R.
175; Winsor v. McLellan, 2 Story, 492; in re Griffiths, 3B. R. 731; s. c. Low-
ell, 481; Potter et al. v. Coggeshall, 4 B. R. 78; in re Dow, 6 B. R. 10; Saw-
yer v. Turpin, 5 B. R. 339; s. c. 13 B. R. 271; s. o. 1 Otto, 114.)

If the State statute deprives the mortgage of effect until it is deposited
with the proper officer, as to creditors, subsequent purchasers, and mortgagees
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 achattel mortgage takes effect as against third persons as well as be-
tween 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. 339; 8. c. 18
B. R. 271; 8. c. 1 Otto, 114.)

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. Conway, 14 B. R.
175.)

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. (Jn re Perrin et al. 7 B. R, 283.)

Under the laws of Illinois,a mortgagee who takes possession of the prop-
erty before any other person has acquired any lien or vested right therein, has
500 THE BANKRUPT LAW. [§ 5044.

a better title than the assignee, although the mortgage was not properly
acknowledged. (Jn re Burnett, 6 C. L. N. 866.)

Where the statute declares that a mortgage of chattels ehall be void, if
the mortgagor remain in possession, unless the mortgage is filed in 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. (Jn re Simeon Leland et al. i0 Blatch. 503.)

Under the laws of Iowa, the assignee in assailing a mortgage whica was
recorded at the time of the commencement of proceedings in bankruptcy,
must show something more than that debts were created wilhout notice of it
before it was recorded. (Cragin v. Carmichael, 11 B. R. 511; 8. c. 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 townsbips, 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 islocated. (Kane v. Ace, 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 bankruptey. (Harvey v. Crane, 5 B. R.
218; s. c. 2 Biss. 496; Kune v. Rice, 10 B. R. 469.)

The assignee in attacking a conveyance as invalid under the laws of the
State has precisely the rights which an attaching creditor would have, and
no more, (Oragin v. Carmichael, 11 B. R. 511; 8. ©. 2 Dillon, 519.)

Rejection by Assignee.

Asa general rule, contracts to be performed to a party and his rights of
action are deemed property, and such contractx and rights of action pass by
the operation of the bankrupt 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 prop-
erly 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 luss if he assumes the contract. Such a contract is not
property within the meaning of the law. (Strecter v. Sumner, 31 N. O. 542;
Oakey v. Gardner, 2 La. An. 1005; Ltugley 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
right to dispute his possession. His possessory title is good against all the
wold but his assignee. (Smith vy. Gordon, 2 N. Y. Leg. Obs. 825; 8. 0. 6
Law Rep. 313.)

If the assignee may elect to take or not to take any part of the bankrupt’s
property, some period of time must be limited, within which the election isto -
be made, for he can not be allowed to hold the title in ateyance for an in
definite period. Tf, with the knowledge of the bankrup:’s title or with means
of knowledge, be stands by for a length of time without asserting his claim,
and allows third persons to acquire au interest in the property, it is too Inte to
assert hia claim, and the time tor an election is past. (Smith v. Gordon, 2N.
Y. Leg Obs. 825; 8. c, 6 Law Rep. 313.)

The right of the assignee to reject property is confined to those cases

,
§ 5044.] NOTES OF DECISIONS. 501

where he would be charged with a burden or liability if the property passed
tohim. (erry 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 v. Dietz, 12 Penn. 156.)

The assignee of an individual partner may relinquish all right to a judg-
ment rendered in favor of the firm if the firm is insolvent. (Oakley v. Gard-
ner, 2 La, An. 1005.)

The taking of the title toa debt or claim docs 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 vy. Armour, 10 Humph. 588.)

The assignee may elect to abandon a contract which stipulates for the
personal services of the bankrupt. (Streeter v. Sumner, 81 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 arrange-
ment with the assignee in bankruptcy, he holds under the landlord 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 defendant in an action of replevin, after the commencement of
the suit, delivers the property in controversy to the assignee of the party from
whom the plaintiff obtained it, by a transfer which is void under the bank-
rupt law, he may set up stich delivery as a defense to the action of replevin.
(Bolander v. Gentry, 33 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
bankrupt law as a fraudulent preference. Jt 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 litle
to it. The United States courts have exclusive jurisdiction of proceedings in
bankruptcy, but all questions of title to property derived through such pro-
ecedings are within the jurisdiction of the State courts. The question pre-
sented by such defense is not a question of jurisdiction hut of title. (Munson
vy. Herrich, 100 Mass, $23; Perry v. Chandler, 56 Mass. 237.)

If the action was instituted before the commencement of the proceedings
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. [f it1s a fraud on the bank-
Tupt act, the assignee can recover to a like extent against the purchaser. ‘The
pendency of such an action is nv defense to the action against the sheriff,
(Hathaway v. Brown, 18 Minn, 414.) ,

Dissolution of Attachments,

(c) ‘‘Mesne process” is all process issued in a suit before execution.
(Pennington v. Lowenstein, 1B. R. 570; Corner vy. Mullory, 31 Md. 478 )
502 THE BANKRUPT LAW. [§ 5044.

The term ‘attachment on mesne process” embraces any process by which
a lien is first acquired. (Morgan v. Cumpbell, 11 B. R. 529; 8. c. 22 Wall.
381.)

An attachment under the ©. C. P. of North Carolina is prior to final
judgment, and is therefore in its nature mesne process. (Mixer v. Excelsior Co.
65 N. C. 552.)

An attachment on mesne process is a statute lien. (Peck v. Jenness, %
How. 612; Downer v. Brackett, 2 Vt. 599; s. c. 5 Law Rep. 392; Haughton v.
Eustis, 5 Law Rep. 505; Ingruhum vy. Phillips, 1 Day, 117; Kittredge v. Emer-
son, 15 N. H. 227; Wells v. Brander, 18 Miss. 348; Shaffer v. McMaken, 1 Ind.
274; Kittredge v. Warren, 14 N. H. 809; Davenport v. Tilton, 51 Mass. 320;
contra, in re John §. Foster, 2 Story, 131; Hverctt v. Stone, 3 Story, 446; in
ve Bellows & Peck, 3 Story, 428.)

Congress has the power, by the operation of a general bankrupt law, to
divest the conditional lien acquired by the levy of an attachment. (Corner
y. Miller, 1 B. R. 408; in re Ellis, 1 B. R. 551; in re Williams, 2 B. R. 229;
s.c.1 L. T. B. 107, 118; 5. c. 8 A. L. Rev. 374; in re Brand, 3 B. R. 324;
s. 0.2 L. T. B. 66; Mixer v. Excelsior Oo. 65 N. C. 552; Payson v. Puyson, 1
Mass. 283; Flagg v. Tyler, 6 Mass. 33; Harrison v. Sterry, 5 Cranch, 289;
s. c. Bee, 244; Hatch v. Seely, 13 B. R. 380; s. c. 37 Iowa, 493.)

This provision applies to attachments sued out in State courts. (Bank v.
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 reference to the time at which the act was to become oper-
ative. The period of four months was not intended to have reference to the
first day of June, 1867, when the act was to go into effect as to all its pro-
visions, 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 the passage of the act, but before the
first day of June, 1867, and within a veriod of four months next preceding
the commencement of proceedings in bankruptcy, was dissolved. (Corner v.
Mallory, 31 Md. 478.)

The appointment of a receiver and the transfer of the custody of. the
attached property from the sheriff to him alters no one’s rights. His custody
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 ultimate judgment of
the court. (Miller v. Bowles, 9 B. R. 354; s.c. 10 B. R. 515; 5.0.2 N. Y.
Supr. 568; s. c. 58 N. Y. 253.)

The commencement of 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. 582.)

A resolution of composition which is passed without calling the first
meeting of creditors and electing an assignec, does not dissolve an attach-
ment issued within four months before the commencement of such proceed-
ings. (dnre W. D. Clapp & Co. 14 B. R. 191; contra, Miller v. Mackenzie,
13 B R, 496; Smith v. Bugle, 9 0. L. N. 46.)

An attachment is not a fraud on the bankrupt law, and rights which have
accrued thereby under the State law other than expenses are not affected by
proceedings in bankruptey. (Whithed v. Pil/sbury, 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 impeached in a col-
lateral action, (//enkelman v. Smith, 12 B. R. 121; 8. c. 41 Md. 164; in re
Enoch Cook, 2‘Story, 876; Fiske v. Hunt, 2 Story, 582.)
§ 5044. ] NOTES OF DECISIONS. 503

When an execution is not in fact levied upon a fund in the hands of the
garnishee, neither the judgment nor execution create any lién 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, docs
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 attachment under mesne process. (Howe v.
Union Ins. Co. 42 Cal. 528; 8s c. 4 L. T. B. 41.)

An attachment made March 8, 1867, at seven o’clock 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, tor it was made
within the period of four months prior to such commencement. Fractions of
a day will be considered and the very 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.)

It 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.)

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 at-
tachment; 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 issued within
four months before the commencement of proceedings in bankruptcy. (fan-
dall & Co. v. McLain, 40 Geo. 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 dissolved. All proceedings under it up to that time
are regular and valid. (Jn re Housberger et al. 2 B. R. 92; 8. c. 2 Ben. 504;
in re C. H. Preston, 6 B. R. 545.)

The assignee can not be made a party plaintiffin an attachment suit pend-
ing against the bankrupt. The assignee is the representative of the bank-
Tupt’s estate, but he is not the representative of the plaintiff in an attachment.
(Smith v. Lawton, 39 Geo. 29.)

The assignee may, on his own motion, be made a party, if for no other
reason than to have it properly made known to the court that the defendant
has become a bankrupt. He has also a right to move to dismiss the attach-
ment. 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. Down-
ing, 10 B. R. 538; 8. c. 44 Geo. 118; Johnson v. Bishop, 8 B. R. 533; 8. 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 dissolved
by the State court, although « judgment has been entered and the proceeds
of asale of the property under an execution paid over to the plaintiff by the
sheriff. (Dickerson v. Spaulding, 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 re-
‘spect. (King v. Loudon, 14 B. R. 383; s. c. 53 Geo. 64.)

‘When a motion for the dissolution of an attachment asks that the sheriff
504 THE BANKRUPT LAW. [§ 5044.

be directed to deliver the property to the assignee, notice thereof must be
given to the sheriff. (Dickerson v. Spaulding, 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 ‘eri-
fied 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 insuffi-
cient, 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 at-
tachment, the proceedings should be stayed until an assignee is appointed.
(Fisher v. Vose, 8 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 Geo. 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 v. Was-
sell, 2% 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 dis-
solved. (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 inte the estate, and is unaffected by a judgment between
a bankrupt and a third person assuming to direct it. (Janes vy. Beach, 1
Mich. N. P. 94.)

From the date of the dissolution of the attachment, the sheriff, or other
person having then actual possession of the attached property, becomes di-
vested of all official relations to that property, and becomes a simple bailee
thereof to the use of the person by virtue of the bankrupt act entitled to the
same. If he afterwards, by sale or in any other wav, disposes of the prop-
erty otherwise than to transfer the bankrupt’s interest in the same to him to
whom by the bankrupt law it falls, his act has no official character, and
needs, to make it valid, the ratification of the person having title under the:
law. (Ju re OC. H. Preston, 6 B. R. 545.)

The attaching creditor can not prove the costs incurred in the attachment,
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. (Jn re Fortune, 2 B.
R. 662; 8 c. Lowell, 806; Gardner v. Cook, 7 B. R. 346: in re C. H. Preston,
6 B. R. 5453; in re Hatje, 12 B. R. 548.)

The lien for the debt and for the costs is precisely the same in all respects,
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 attach-
ment as to one, it must necessarily cease as to the other. (Jn re Geo. S. Ward,
9 B. R. 849; in re C. IL. Preston, 6 B. R. 545; in re Fortune, 2 B. R. 662; 3.
c. Lowell, 806; contra, in re Housberger et al. 2 B. R. 923 s.c. 2 Ben. 504; in
ve CO. H. Preston, 5 B. R. 293; Lovdon v. King, 50 Geo. 302; in re John 8.
Foster, 2 Story, 131.) :

When the claim on which the attachment was issued is merged in a judg-
ment rendered after the commencement of proceedings in bankruptcy, the
lien for fees and expenses is lost and extinguished in the judgment. (In re
Williams, 2B. R. 224; 3. ¢.3L. T. B. 107, 118; sc. 3 A. L. Rey. 874)
§ 5044. ] NOTES OF DECISIONS: 505.

The rights of the officer making the attachment are no greater than those
of the attaching creditor. Incase of the dissolution of the attachment, he
has no lien whatever for his costs and disburs2ments. In such case he must
look to the attaching creditor alone for the same, and in no case can he with-
hold the property from the marshal or assignee on account thereof, or look
to the assignee or the bankrupt’s estate for the payment thereof. (/n re Geo.
S. Ward, 9 B. R. 849.)

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; 3. c.
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
Hien to take effect on the proceeds, (Jn 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 dis-
solved, he has no means of enforcing his lien against the property. His rem-
edy, if he has a lien, is to apply to the bankrupt court to have it allowed and
paid out of the assets that may come into the hands of the assignee. (ln re
W.S. Stevens, 5 B. R. 298; 8 c. 2 Biss. 873.)

The costs are but an incident, and the debt or principal must be proven
and allowed before the costs can be proven and allowed. (Jn re C. H. Pres-
ton, 5 B. R. 293.)

Costs which are made after the commencement of proceedings in bank-
Tuptcy can not be allowed. (Jn ve OC. H. Preston, 5 B. R. 293.)

Costs incurred in attaching property which is not liable to attachment
can not be allowed. (Jn re C. H. Preston, 5 B. R. 293.)

_ 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.
Jamesson, 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
Geo. 302.)

The bankrupt court may, in the exercise of its equitable jurisdiction, re-
quire 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 pro-
tected by an absolute lien When the assignee receives the benefit of the
costs of an attachment, he should sustain the burden. (Jn re Fortune, 2 B.
R. 662; 8. ce, Lowell, 306; Gardner v. Cook, 7 B. R. 840; Zeiber v. Hill, 8 B.
R. 239; 8. c. 1 Saw. 268; in re Geo. 8. Ward, 9 B. R. 349; in re Holmes et al.
14 B. R. 209.)

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. (ln re Geo. 8. 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 omission to file:
such petition is not unreasonable. (Jn re Geo. S. Ward, 9 B. R. 349.)

Where the costs are incurred solely for the benefit of the attaching cred-
itor, they can not be allowed. (Jn re Archenbrown, 8 B. R. 429.)

The attachment can not be sustained as against property which will be
set apart to the bankrupt asexempt. (Jn re C. H. Preston, 5 B. R. 293; in
re Ellis, 1 B. R. 551; contra, Robinson v. Wilson, 15 Kans. 595.)
506 THE BANKRUPT LAW. [$ 5044.

If the assignee files a petition to set aside a sale of exempted property
made under an attachment, the petition will be dismissed with ccsts to the
assignee personally. (Jn re C. H. Preston, 6 B. R. 545.)

Tf 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; 8. 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. (darrison v. Sterry, 5 Cranch,
289; s. c. Bee, 244.)

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 judgment
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.)

Where the attachment was against an individual partner, a recciptor may
show that the firm at the time of the attachment was insolvent, and subse-
quently became bankrupt, and that the property was firm property, and was
delivered to the assignee. (Lewis vy. Webber, 116 Mass. 450.)

If a judgment is entered in the attachment suit, even after the commence-
ment of the proceedings in bankruptcy, the subsequent discharge of the de-
fendant will not relieve the receiptor from liability. (Smith v. 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; 8. c. 115 Mass. 27.)

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
isdischarged. The bond is not a mere substitute for the attachment. It docs
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 prop-
erty itsclf, nor as security for its value; but for the payment absolutely of the
judgment when recovercd 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 commencement of proceedings in bankruptcy.
(Carpenter et al. v. Turrell, 100 Mass, 450: Williams v. Atkinson, 35 Tex. 16;
vide Zollar v, Junvrin, 49 N. VW. 114: Molyoke vy, Adams, 10 B. BR. 270; 8. c. 2
N. Y. 8upr. 1; 8. c. 8 N. Y. Supr. | Lun], 228.)

Where an attachment issued more than four months before the eommence-
ment of thé proceedings in bankruptcy, was dissolved by filing a bond, the
bankrupt will not be allowed to file a supplemental answer setting up his
discharge. (ITolyoke v. Adama, 13 B. R. 413; 8, c. 59 N. Y. 233.)

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. 303; 8, c, 116 Mass. 527.)

No matter or thing which has arisen since the judgment in the original
§ 5044. ] NOTES OF DECISIONS. 507

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. (Zollur v. Janvrin, 49 N. Il. 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 reduc-
tion 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 repre-
sents. If the action is prosecuted in the name of the debtor, instead of the
assignee’s, the judgment must be for the adverse party. (Zollar v. Janvrin, 49
N. H. 114.)

Every State court owes obedience to an act of Congress, concerning a mat-
ter within the power of Congress, as fully as a courtof 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 attach-
ment is pending. (Mizer v. Excelsior Co. 65 N. C. 552.)

A proceeding by way of distress for rent, under the statutes of the State
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. (dn re Joslyn et al. 3 B. R.473; s.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 jadgment,
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 attach-
ments are all satisfied. The levy of an execution, while there is a subsisting
prior encumbrance 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 et al. v. Place & Co. 5 B. R. 459; s. c. 86 Conn.
579; s.c. 1 L. T. B, 262.)

No attachment made prior to the period of four months next preceding
the commencement ef 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 assignee,
subject to the creditor’s lien acquired by virtue of such attachment. The
lien may be enforced by any requisite proceedings therefor which do not in-
volve a judgment in personam. A judgment only to be enforced 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;
8. C. 99 Mass. 376; Bowman v. Harding, 4 B. R. 20; 3. c. 56 Me. 559; Ssmson
v. Burton et al. 4 B. R. 1; s. c. 5 Ben. 325; Leighton v. Kelsey et al. 4 B. R.
471; 8.0.57 Me. 85; Perry v. Somerly, 57 Me. 552; Stoddard v. Locke, 9B. R.
71; 8c. 48 Vt. 574; Daggett v. Cook, 87 Conn. 841; May v. Courtney, 47
Ala. 185; Peck v. Jenness, 7 How. 612; Ingraham v. Philips, 1 Day, 117; Jit-
tredge vy. Hmerson, 15 N. H. 227; Kittredge v. Warren, 14 N. H. 509; Daven-
port vy. Tilton, 51 Mass. 320; Johnson v. Collins, 116 Mass. 392; Munson v. B.
H. & E.R. R. Co. 14 B. R. 178; 8. c. 8 Cent L. J. 269; Stockwell v. Silloway,
113 Mass, 382; vide in re Bellows & Peck, 3 Story, 428.)

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 defend-
ant. (Johnson v. Collins, 116 Mass. 392.)
508 THE BANKRUPT LAW. [§ 5044.

No special judgment can be entered to be enforéed 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 bankruptcy,
although the bond was filed after the adjudication of bankruptcy. (Hamilton
v. Bryant, 114 Mass, 543)

Where the attachment was laid more than four months prior to the com-
mencement of proceedings in bankruptcy, no personal judgment should be
rendered against the debtor if he pleads a discharge. (Shearon v. 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 vy. Collins, 12 B. R. 70; 8.
c. 117 Mass. 343.)

A demurrer to a plea of discharge in bankruptcy is erroneous in an attach.
ment suit. The proper practice is to file a replication stating the time of
suing out the’ attachment, and the date of the prcceedings 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 represents
the creditors of the bankrupt, whose interests are entitled to protection, 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. (Gihson v. Gtreen, 45 Miss. 209.)

A creditor, having a valid attachment, can at any time be prohibited from
selling the property attached. The assignee has the 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 au-
thority at such time as may be most expedient or proper. (Samson vy. Burton
etal.4B.R.1;8.¢. 5 Ben. 825; Samson v. Clark, 6 B. R. 403; 8. c. 9
Blatch. 272.)

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 Jien of attachment on process issued by a State court be pre-
served and enforced in the Federal courts? (Daggett v. Cook, 37 Conn. 341.)

The return of the sheriff, showing a valid attachment, is conclusive, and
can not be impeached by proofs ab ertra. (Bowman v. Marding, 4 B. R. 20;
8. 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 plaintiff 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 docs not fall within the operation of
this clause of the bankrupt act. (The First National Bank of Baltimore v.
et 31 Md. 88; Wilbur v. Wilson, 2 W.N. 496; Stewart v. Warden, 1

_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 a right to im-
mediate possession. He can not sue the sheriff by an action at law in the dis-
trict court. Whether the attachment has ceased to have any binding force
depends not only upon a proposition of law, but also upon two questions of
fact—that is, whether the debtor has been adjudicated bankrupt, and whether
he is entitled to the property. Ofthe principle of law, that bankruptcy oper-
ates to dissolve the attachment, the State court is bound to take judicial no-
§ 5044.] NOTES OF DZCISIONS. 509

tice; but of the two facts stated it is not bound to take such notice. No
court is bound to take judicial notice of the proceedings 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 proceed-
ings 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 the possession of the property. and it is withheld, he
must seek relief in the State courts. (Johnson v. Bishop, 8 B. R. 533; . c. 1
Wool. 324; Doe v. Childress, 11 B. R. 317; 8. c. 21 Wall. 643.)

The assignee can not treat the judgment in the attachment suit as a nulity,
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 regarded as a stranger
to the judzment which may be rendered. (Kittredge v. Emerson, 15 N. H.
227.)

Where the attachment was issued more than four months prior to the com-
mencement 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 collat-
erally by the assignee, although the assignee was not made a party to the suit.
(Doe v. Childress, 11 B. R. 317; 3. c. 21 Wall. 643.)

The sheriff is not liable to the assignee for the value of property sold under
a fieri fucias 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 v. Frost, 3 Dillon,
457; contra, Miller v. O’Brien, 9 B. R. 26; s. c. 9 Blatch. 270.)

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. (Bradl-y vy. Frost, 3 Dillon, 457.)

If real estate is subject to an attachment that is valid as against the as-
signee, the taxes thereon should be paid out of the fund realized therefrom
it 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 incumbrance under the provisions
of a State law, which gives him a right to be repaid from the proceeds of the
property, he will, upon the dissolution of the attachment, be entitled to re-
payment from the proceeds received therefrom by the assignee. (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 hankruptcy, will
not be dismissed for want of jurisdiction. (Munson v. B. H. & £. BR. R. Oo.
14 B. R.178; s, c. 8 Cent. L. J. 269.)

After a qualified judgment has been entered, the sheriff may maintain an
action aguinst 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. Puge, 13 B. R.
366; 8. c. 54 N. H. 1990.)

If property taken under an attachment issued more than four months
before the commencement of the proceedings in bankruptcy js delivered to a
Teceiptor, the plaintiff is entitled to take a judgment in rem and levy an exe-
cution upon the money which may be collected from the receiptor. (Batch-
elder v. Putnam, 13 B. R. 404; 8. c. 54 N. H. 84.)

If an attachment is laid in the hands of a garnishee prior to the period of
510 THE BANKRUPT LAW. [§ 5045.

four months next preceding the commencement of the proceedings in
bankruptcy, it is not dissolved. (Hatch v. Seely, 13 B. R. 380; 8. c. 87 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 judg-
ment 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. Stickney, 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 prop-
erty 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. (Bosworth
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. (Jn re Julius Klancke, 4
B. R. 648; s. c. 4 Ben. 326.)

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 tbat
aoe isfraudulent. (Williams v. Merritt, 4 B. R. 706; s. c. 108 Mass.

The sheriff, in an action against him for neglecting to execute an attach-
ment, can not excuse the non-performance of his duty by averring that its
discharge might not have availed the plaintiff to satisfy his debt, because the
bankrupt 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.)

Sxo. 5045.—There shall be excepted from the operation of the
conveyance the necessary household and kitchen furniture, and such
other articles and necessaries of the bankrupt as the assignee shall
designate and set apart, having reference in the amount to the fam-
ily, condition, and circumstances of the bankrupt, but altogether 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
§ 5045. ] NOTES OF DECISIONS. BIL

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 exccution by the
laws of the United States, and such other property not included in
the foregoing exceptions as is exempted from levy and sale npon
exccution 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
commencemert of the proceedings in bankruptcy, to an amount
allowed 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 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 bankrnpt
to his assignee ; and in no case shall the property hereby excepted
pass to the assignee, or the title of the bankrupt thereto be im-.
paired or affected by any 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.

What Property May be Exempied.

Exempted property does not pass to the assignee. It is excepted, by this:
section and Form No, 18, from the operation of the assignment. (Jn re Lam-
bert, 2 R. B. 426; Riz v. Capitol Bank, 2 Dillon, 367.)

The bankrupt 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, be-
comes 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:
oe (in re Hambright, 2 R. B. 498; s.c.2 L. T. B. 61; 8.0.10. L.

. 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. (Jn re Kean
@ al. 8 B. R. 367.)

The assignee is not entitled to any of the exempted property, and it is no
concern of his who may have the right to it. Upon the death of the bank-
Tupt the title to such property vests in his executor or administrator. (ln 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 pro-
visions of the exemption clause, except the last, relate only to the separate
property of the bankrupt. (Jn re Hafer, 1 B, R. 457; Anon. 1 B. R. quarto,
187.

Where property that would be exempted under the bankrupt act has been
seized and sold under an attachment on mesne process, which is subsequently
dissolved by the commencement of proceedings in bankruptcy, the bankrupt
is entitled to the fund, and he need not wait to ascertain if the assignee will
be able to collect enough from the assets assigned to pay the expenses of the
512 THE BANKRUPT LAW. [§ 5045.

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 a petition fied 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. 8.
Stevens, 5 B. R. 298; 8. c. 2 Biss. 373.) -

A sale after the tiling of the petition in bankruptcy, of property exempt
both by the bankrupt act and the State law, undera levy made prior to the
‘commencement of proceedings in bankruptcy, will be set sside. (Jn re Griffin,
2B. KR. 264; 5.0.2 L. T. B. 23.)

A bankrupt is entitled to an exemption of his household furniture and
other necessary articles, although they were tuken under an execution prior
to the commencement of the proceedings in kankruptey. (In re Nicholas
Martin, 13 B. R. 397; in re John Owens, 12 B. R. 518; s.c. 7 C. L. N. 371.)

If the bankrupt, after filing his petition in bankruptcy, takes the bencfit
‘of the State insolvent liw, be 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; 8. c. 46
N. Y. 236.)

The estate of the bankrupt may be all personal property, and every article
may be subject to a lien to secure a debt owimg to some one or another cred-
itor. By the operation of the bankrupt law, no such lien, except at the
option of its holder, would be extinguished. Every such lien would consti-
tute for the person holding it a special property in the thing covered by the
lien, and might be the must 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 bankrupt act should override cases of that nature. (Jn re Perdue, 2
B. R. 183; s.c. 2 W. J. 279; in re Whitehead, 2 B. R. 599; in re Brown, 8
B. R. 250; sc. 2 L. T. B.122; s.c. 10. L. N. 409; in re Hutto, 3 B. R. 787;
s.c. 1 L. T. B, 226; 8. c. 3L. 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 respective rights
by themselves, (Jn 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 hs doae nothing by proof of his debt or otherwise 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. (TZ'uesley v.
Robinson, 103 Mss. 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 against
him, and in attempting to place his property beyond the reach of bis cred-
itors, he placed his exemption beyond bis own reach. (Jn re Grabam. 2 Biss.
449; Keating v. Necfer, 5 B. R. 188: 8. c. 1 L. T. B. 268: 5.0.4 L.T. B. 162;
in re Dillard, 9 B. R. 8; 8.0. 6 L. T. B. 490; contra, Bartholomew v. West,
8 B.R. 12; 8. c, 2 Dillon, 290; Cox v. Wilder, 5 B. R. 448; 8. 0. 7 B. RB. 241;
§ 5045. | NOTES OF DECISIONS, 513

6. Cc. 2 Dillon, 1382; 8.¢.5 L. T. B. 500; Penny v. Tuylor, 10 B. R. 200; Me-
Farland vy. Goodman, 11 B. R. 134; s.c. 13 A. L. Reg. 697.)

If a transfer of exempted property is surrendered as a preference by the
grantee, the debtor may claim his exemption. (Jn re Detert, 11 B. R. 298;
s.¢.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. (/n re C. Hunt, 5 B. R. 493; 5.¢c.2L T. B. 197; 8.6. 4
C.L.N.5; s.c. 2 Pac. L. R. 146; in ve Fetherston, 5 C. L. N. 193; s. oc. 20
Pitts. L. J. 77; in re Jared Everett, 9 B. R. 90; vide in re 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, sub-
ject 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 jurisdiction, 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. (Jn re C. H. Preston, 6 B. R. 545; contra, in re Wylie, 5 L. T. B.
330.)

A State court can not review the action of the bankrupt court in directing
the assignee to sell exempted property to satisfy a mortgage existing thereon.
(Maawell v. McCune, 10 B. R. 806; s. c. 87 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. (Jn re Sauthoff & Olson, 14 B. R. 364; 5. c. 8
C. L. N. 370; s. c. 3 Cent. L. J. 544; 3.0.5 A. L. Rev. 173.)

The assignee in bankruptcy is not a judicial officer. Wis 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 bankrupt act, does not divest the valid
lien of a judgment creditor, nor invalidate the title of a purchaser at a
i 's sale under execution upon that judgment. (Fehley v. Barr, 66 Penn.

96.)

The allotment of property by the assignee as exempt does not impair the
lien of a judgment. (Haworth v. Travis, 13 B. R. 145; s. c. 67 Ml. 301.)

If a mortgagee neither appears in the bankrupt court nor is brought in by
adverse proceedings, he may foreclose his mortgege in a State court although
the property has been set apart to the bankrupt as exempt. (Hatcher v. Jones,
14 B. R. 887; s. c. 58 Geo. 208; Cumming v. Clegg, 14 B. R. 49; 8. c. 52
Geo. 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. (Jn re Noakes, 1 B. R. 592; a re
Ruth, 1 B. R. 154; 5c. 7 A. L. Reg. 157.)

The sheriff can not protect himself from an action for levying upone
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 any order of the court, to take exempted prop-
erty which has been levied upon by the sheriff, and compel the bankrupt to

33
514 THE BANKRUPT LAW. [§ 5045.

abandon his remedy against the sheriff, and follow the assignee into the dis~
trict court. Nothing which transpires after the taking of the property 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 Bankrupt Act.

The true construction of this clause will allow the bankrupt the following
exemptions without qualifications, viz. :

1. Necessary household and kitchen furniture to an amount not exceed-

ing $500.
eo Wearing apparel of the bankrupt, his wife, and children.

8. Uniform, arms, und 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.

Tn addition to the foregoing, it is the duty of the assignee, in the exercise
of a sound legal discretion, taking into consideration ‘‘ the family, condition,
and circumstances of the baukrupt,” to set apart other articles and necessa-
ries, 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 em-
ployed, 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; im re Edward H. Ludlow, 1 N. Y. Leg. Obs. 322.)

The words import a limitation upon the amount to be allowed to the
bankrupt. Itis 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 full sum. (Jn 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 bankrupt 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 household may consist
of servants, or any person residing with him and under his control. In ex-
empting other articles, the assignee has a discretionary power, but his discre-
tion must be a sound legal discretion. The furniture and the other exempted
articles must not exceed $500. (Jn ve Cobb, 1 B. R. 414; s.c.1 L. T. B. 59;
in re Noakes, 1 B. R. 592; in re Ruth, 1 B. R. 154; s.c. 7 A. L. Reg. 157.)

The act evidently intends that every bankrupt householder shall be per-
mitted to retain as much household and kitchen furniture as may be reason-
ably necessary to enable him to keep house ina plain and convenient manner.
The fact that his wife may have, as her separate property, 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 bankrupt act does not intend to
make a man depencent upon his wife for tne necessary means of keeping
§ 5045. ] NOTES OF DECISIONS. 515:

house. (Jn ve Cobb, 1B. R. 414; 8. c. 1 L. LT. B. 59; in re D, H. Tonne, 13.
B.R. 170.)

This action, so far as it relates to ‘‘necessary household and kitchen fur
niture,” is imperative on the assignee, though he must judge and determine:
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 {ull amount of $500 should not be made without discrimina-
tion. The allowance is conditional, and is measured with reference not
merely to value, but also to subjects and their suitableness to personal re-
quirements. (/nre Ruth, 1 B. R. 154; 8s. co. 7 A. L. Reg. 157.)

In making an allowance for “ other articles and necessaries,” the assignee
should not allow anything of mere luxury or ornament. Gold watches, sil-
ver watches, pianos, and the like, are not embraced in the discretionary
power of the assignee. (Jn re Cobb, 1 B. R. 414; s.c. 1 L. 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. 822; 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. (Jn re E. D. Comstock, 1 N. Y.
Leg. Obs. 226; in ve 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. (Jn 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 rela-
tion to things not precisely furniture or wearing apparel, but manifestly useful
to the individual or his family in a like sense. (Jn re Edward H. Ludlow, 1
N. Y. Leg. Obs. 322.)

‘‘ Other articles or necessaries ” do not include articles of mere fancy, taste.
or convenience. (Ja re Edward H, Ludlow, 1 N. Y. Leg. Obs. 322.)

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. (dn 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.” (Jn re
W. H. Thiell, 4 Biss. 241.)

The phrase ‘‘ other articles” does not include manufactured articles kept
for sale. (In re W. H. Theill, 4 Biss, 241.)

__ A cow may or may not be necessary, according to circumstances, (Jn 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. (Jn re Edward H. Ludlow, 1 N. Y.
Leg. Obs. 322.)

Clocks and desks which are not peculiar to the bankrupt’s employment,
can mot be set apart, for they are mere conveniencies. (Ja re Edward H.
Ludlow, 1 N. Y. Leg. Obs. 322.)

A fowling piece, fishing tackle, paintings or breast-pins are not neces-
saries. (Jn re Edward H. Ludlow, 1 N. Y. Leg. Obs. 322.)
DIG THE BANKRUPT LAW. L$ 5045.

The common implements or tools of trade by which a daily support is
gained, may justly be ranked as necessaries. (Jn ve Edward H. Ludlow, 1 N.
Y. Leg. Obs. 822.)

A clock is not a necessary. (Jn re Ziba Williams, 5 Law Rep. 155.)

Silver spoons may or may not be necessary, according to circumstances.
- (In re Ziba Williams, 5 Law Rep. 155.)

A family sewing machine may be set apart as a necessary article. (Jn re
‘Graham, 2 Biss, 449.)

Provisions may be allowed as necessary articles. (Jn re Cobb, 1 B.R. 414;
8.c,1L. T. B. 59; in re Edward H. Ludlow, 1 N. Y. Leg. Obs, 322.)

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 exemp-
tion. (In re Thornton, 2 B. R. 189; 8. 0. 8 A. L. Reg. 42; contra, in re Ea-
wards, 2 B. R. quarto, 109.)

Under the head of other articles and necessaries, money may be allowed,
for it not unfrequently happens that money is quite as nece:sary to the tem-
porary subsistence of a bankrupt and his family as any articles that can be
mentioned. (Jn re Thornton, 2 B. R, 189; 8. ¢. 8 A. L. Reg. 42; in re Law-
son, 2 B. R.54; in re Iva Hay, 7 B. R. 344; in re Benjamin B. Grant, 1 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.” (Jn re Welch, 5 B. R. 348; s. c. 5 Ben. 230.)

A gold watch or breast-pin is not wearing apparel. (Jn re Edward H.
Ludlow, 1 N. Y. Leg. Obs. 322.)

The exemption should be so made as not to operate adversely to the inter-
ests of the creditors. (Jn re Edwards, 2 B. R. quarto, 109.)

When the property is incapable of division, it may be sold, and the exemp-
tion allowed out of the proceeds. (Jn re Brown, 3 B. R. 250; s.c. 2 L. T.B.
122; 3.c.10. 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; 8. ¢, 7 ALL, Reg. 157; in re Appold, 1 B. R. 621;

s. ©. 6 Phila. 469; s,c.1L. T. B. 83.)

If no rule has been adopted by the Federal court of the State, no exemp-
tion can be claimed under section 986. (Jn re E. A. Vogler, 8 B. R. 182.)

The property exempt by the territorial statutes from levy and sale on exe-
cution may be allowed. (Jn re McKercher & Pettigrew, 8 B. R. 409.)

Exemptions under State Laws.

The words ‘‘other property not included 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 differ-
ent kind, which is by State law exempted from forced sale. (In re Erwin
Davis, 2 Saw. 255.)

The assignee can not set apart to the bankrupt, under the State law, any
property specifically exempted by the bankrupt act, but he may set apart any
§ 5045. ] NOTES OF DECISIONS. B17

property not so designated. It is not necessary that the State law should name
specifically the articles of property exempted by it. (Ja re Feely, 3 B. R. 66;
sc, 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 have
been available to the recourse of execution creditors if the bankrupt law had
never been passed. Though the States vary in the extent of their exemptions,
yet what remains the bankrupt law distributes equally among the creditors,
The bankrupt 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 attained by the bankrupt law, it is uniform. (Jn re Beckerford,
4B. R. 208; 8. c. 1 Dillion, 45; 3.0. 1 L. T. B. 241; inre Jordan, 8 B. R. 180;
in re Appold, 1 B. R. 621; s. c. 6 Phila. 469; s.c.1L. T. B. 88; én re Ruth,
1B. R. 154; sc. 7 A. L. Reg. 157; in re Wylie, 5 L. T. B. 330; in re Daniel
Deckert, 10 B.R.1; 3c. 1 ALL. T. [N.8.] 886; 8.0. 9ALL. J. 890; 3.0.60
L. N. 810.)

A bankrupt law to be constitutional must be uniform, and whatever rule
it prescribes for one, it must forall. [fit provides that certain kinds of prop-
erty shall not be assets under the law in one place, it must make the same pro-
vision 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 ex-
empted by virtue thereof or not, shall be exempted, is unconstitutional and
void. (Jn ve Daniel Deckert, 10 B. R. 1; s.c.1 A. L. T. [N.S8.] 836; 8.0. 9
A. L. J. 390; s.c.6 ©. L. N. 810; im 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; contra, in re Kean et al. 8 B. R. 8367; in re John W, Smith, 8 B. R.
401; s.c. 6 C. LN. 33; in re Willis A. Jordan, 10 B. R. 427; in re John W.
A, Smith, 14 B. R. 205; s.c.8C. L. N. 315.)

The uniformity required is as to the general policy and operation of the
law. The bankrupt act in some minor particulars must necessarily operate
differently in the different States. Thus, the bankrupt law regards 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
he in some respects be different in the different States. (Jn re Jordan, 8 B.

. 180.)

When the property is encumbered by a lien, it is only the bankrupt’s sub
modo, The lien creditor has a vested intcrest in it also, and the bankrupt can
only be allowed an exemption out of such estate as remains to him after the
vested interests of others have been satisfied. (Jn re Geo. W. Dillard, 9 B. R.
8; 3.¢.6L. T. B.490; inre Daniel Deckert, 10 B.R. 1; s.c.1A.L. T.[N.S.]
836; s.c.9 A. L. J. 390; s.c.6 C0. LN. 810; contra, in re Jordan, 8 B. R.
180; in re Kean et al. 8 B. R. 367; in re John W. Smith, 8 B. R. 401; 8.0.6
C.L. N. 38; tn 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,
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 dis-
charge antecedent obligations, Congress may, if it chooses, insert a home-
stead provision, making it good against debts already contracted, although
its inevitable effect would be to impair the obligation of contracts, for the
518 THE BANKRUPT LAW. [§ 5045.

simple reason that the power to such an end is expressly given by the Consti-
tution. Congress, in the enactment of a bankrupt law, has the power to
make exemptions embracing past as well as future debts. (Jn re Wylie, 5 L.
T. B. 330; in re Kean et al. 8 B. R. 367; im re BE. A. Vogler, 8 B. R. 132; in
re John W. Smith, 8 B. R. 401; s.c.6 C. L. N. 83; in re Jared Everett, 9 B.
R. 90.)

The relation of the bankrupt to his property is fixed in voluntary bank-
ruptey 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 dis-
tributed, and what is then exempt he may retain. (In re Geo. W. Dillard, 9
B.R. 8; sc. 6L. T. B. 490; Kerr v. Roach, 9 B. R. 566; contra, in re E. A.
Vogler, 8 B. R. 1382; in re Kean e¢ al. 8 B. B. 367; in re Wylie, 5 L. T. B.
330.) ,

When Congress chooses to add to its own list of exemptions further ex-
emptions under the State laws, it refers the Federal courts, in their action
thereupon, to the State laws. A statute consists not merely of its terms, but
of the judicial expositions thereof. Ifa law of the State has been construed
by the highest court of the State, the Federal courts are bound by that con-
struction. (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. (Jn 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. (Jn ve 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. (Jn re E. A.
Vogler, 8 B. R. 132.)

Where an allotment has not been made previous to the commencement of
proceedings in bankruptcy, tbe homestead may be ascertained and set apart
by. the assignee. (Jn re BK. A. Vogler, 8 B. R. 132.)

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, complicity, or
irregularity are alleged and established by proper special proceedings, the al-
lotment of homestead may be set aside in the State courts, and in such cases
similar relief will be furnished in the bankrupt court. Mere excess of value
in the allotment is not fraud, and to successfully impeach such proceedings
it must be shown that the debtor by some fraudulent representation or de-
ception, or by complicity with the appraisers, procured such excessive al-
lotment. (Jn 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 commencement of pro-
ceedings in bankruptcy, the assignee should become a party to the proceed-
§ 5045. ] NOTES OF DECISIONS. 519

ings on appeal if he desires to contest it. (In ve Moseley, Wells & Co. 8 B.
R. 208.)

The property exempted by this clause is in addition to that exempted by
the preceding clauses, (Jn re Ruth, 1 B. R. 154; 5.0.7 A. L. Reg. 157; in
re Cobb, 1B. R, 414; 8. c. 1 L. T. B. 59.)

If the State law allows personal property to a certain amount to be se-
lected by the debtor, he may claim that amount in addition to what is al-
lowed by the bankrupt law itself. (dn re Hezekiah, 11 B. R. 573; s. c. 2
Dillon, 551.)

The bankrupt act expressly limits the exemptions to be allowed a bank-
rupt in bankruptcy to the State exemption laws in force in 1871. When his
wife makes an application in the State court to have the homestead 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. (Jn 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. (Jn
re W. 8. Stevens, 5 B. R. 298; 8. 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 see-
ing to it, he should proceed as conformably to the laws of the State as may
be possible. (Jn re Ruth, 1B. R. 154; 8.c.7 A. L. Reg, 157; Fehley v.
Barr, 66 Penn. 196; in re Feely, 3 B. R. 66; 8. 0c. 15 Pitts, L. J. 291; in re
Kean et al. § 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
operate in their favor. The bankrupt is therefore entitled to his exemption,
although the land is subject to a mortgage wherein the homestead is waived.
(In re Poleman, 9 B. R. 376; 8. c. 5 Biss. 526; in re Jones, 2 Dillon, 2438;
Riz v. Cupitol Bank, 2 Dillon, 367.)

If the homestead is subject to a mortgage, the amount will be allowed out
of the equity of redemption. (Jn re Poleman, 9 B. R. 376; s. c. 5 Biss. 526;
in re Charles C. Pratt, 1 Cent. L. J. 290; s.c. 7 Pac. L. R. 202.)

No exemption can be allowed to a partner out of the firm property until
all the partnership creditors are paid in full. (dn re J. 8. & J. Price, 6 B. R.
400; in re Handlin & Venny, 12 B. R. 49; s. c. 2 Dillon, 290; in re Blodgett
& Sandford, 10 B. R. 145; a 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, 4B. R. 95; 8. c. 2 L. T. B. 128; in re Young et al. 3B. R. 440; in re
McKercher’& Pettigrew, 8 B. R. 409; in re 8. H. Richardson & Co, 11 B. R.
1148, ¢.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. (Jn re Boothroyd & Gibbs,
14 B. R. 223.)

One of two or more partners can not havea portion of the partnership
effects set apart to him as his personal property exemption without the con-
sent 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 partner-
ship effect sfor their debts than creditorsof 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
520 THE BANKRUPT LAW. [§ 5045.

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 copart-
ner 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 reimburse-
ment. (Inve J. F. & C. R. Parks, 9 B. R. 270.) :

The cwnership 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 ho!d his part in severalty. (Bartholomew v.
West, 8 B. R. 12; s. c, 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. (Jn 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. (Jn re Erben,
2B. R.181; s.c. 8 A. L. Reg. 34; in re Bennett, 2 B. R. 181; s.c. 8 A. Ly.
Reg. 34; 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, and the
bankrupt has failed to comply, no property can be claimed as exempted under
that law. (dn re Farish, 2 B. R. 168; in ve Jackson & Pearce, 2 B. R. 608;
in re Gainey, 2 B. R. 525.)

A Jaw which exempts property from debts existing at the time when the
homestead is set apart is woconstitutional and void, as it impairs the obliga-
tion of contracts. (Kelly v. Strange, 8 B. R. 8.)

A homestead law is constitutional so far as it affects debts contracted after’
ils adoption. (Jn re Henkel, 2 B. R. 546; 2 Saw. 305.)

If a decree for alimony is a lien on land, the exemption will be made sub-
ject to the wife’s right of alimony. (Jn re Edward Garrett, 11 B. R. 498.)

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 bankrupt act. (Jn ve Brown, 3 B.
R, 250; s. c.2 L. T. B. 122; 8s. c. 1 0. 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. (Jn re Jones, 2
Dillon, 243.)

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 residence is where
te oad reside, (Jn re Charles E. Pratt, 1 Cent. L. J. 290; s. c. 7 Pac. L.

. 802.

As the title to the homestead does not pass to the assignee, a subsequent
§ 5045. ] NOTES OF DECISIONS, 521

abandonment of it by the bankrupt gives no right to the assignee. (Ria v.
Capitol Bank, 2 Dillon, 367.)

The proof of an intention to abandon the homestead should be clear and
decisive. (fix v. Capitol Bank, 2 Dillon, 367.)

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. 8. 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. (Jn 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 homestead,
for he has no right to shift his homestead to the prejudice of his creditors and.
in violation of the principles of fair dealing. (Jn re Geo. C. Wright, 8 B. R.
430; s. c. 8 Biss. 859.) f

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 ex-
empt under the laws of Wisconsin. (Jn re Lammer, 14 B. R. 460; 8. o. 8 C.
L.N. 886; 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 vy. 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. (Jn re Jones, 2
Dillon, 243.)

If a party who has executed a mortgage to secure future advances subse-
quently 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. (Jn re Haake, 7 B. R. 61; 8. 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. They should receive such fair construction as will best
promote the beneficent intention of the legislature. (Jn re Jones, 2 Dillon,
243; in re McKercher & Pettigrew, 8 B. R. 409; in ve E. A. Vogler, § B. R.
132.)

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 vend-
or’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 that the exemption laws
passed to give effect to that are to become operative from that date. (In re
Daniel Deckert, 10 B. R. 1; 8.c.1 A. L. T. [N. 8.] 336; 8. c. 6C. L. N. 310;
8.0.9 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 se-
522 THE BANKRUPT LAW. [§ 5045.

lected by him. Whether he will make his claim or not is optional with him.
He may, therefore, waive his right to the exemption. (Jn re J oseph Solomon,
10B.R.9;80 1A. L. T. [N.8.] 851; 8. ¢. 9A. LJ. 391.)

The act of Congress, passed June 25th, 1868 (15 Stat. 73), approving of
the constitution of the State of North Carolina, did not alter or affect the
provision of this section in respect to exemptions. No amendment of the
bankrupt law was intended by the act of acceptance, nor did that act have
that effect. (In re McLean, 2 B. R. 567.)

In North Carolina, the law of February, 1867, entitled ‘‘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 life-
time of the husband, is only an effort to create a new and additional exemp-
tion, 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. 8.)

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 property
which has been set apart to the bankrupt is property that was exempt, and
that the bankrupt court saw to it that all the requisites necessary to make its
judgment binding were complied with. A judgment rendered 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 Geo. 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 family
to a homestead does not stand on the footing of an equitable title or lien,
which follows the property into the hands of a purchaser with notice. _ It is
a right which depends for its existence upon the judgment of a court. Ifthe
husband is declared a bankrupt before a homestead is set apart, the right of
the wite and family is a matter for the adjudication of the bankrupt court,
and the State courts have no jurisdiction over the same. The true course for
them to pursue is to present their claims to the bankrupt court, not as an
exemption of the husband’s property, but asa claim of their own. (Wool-

Solk v. Murray, 10 B. R. 540; 8. c. 44 Geo. 133; Lumpkin v. Eason, 10 B. R.
549; s. co. 44 Geo. 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 be claimed as exempt from the claim of the mortgagee until
the mortgage debt is paid; such property can not be exempted. (Jn re White-
head, 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 orachild. If he residesina
house of which he is proprietor, and has no other inmates than hired serv-
ants, 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 he
is not entitled to any enlargement of his exemption on account of the
children, (Jn re 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 Cent. L J. 361.)

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 constitute a
8 5045. ] NOTES OF DECISIONS. 523

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, (Jn ve Geo. T.
Duerson, 13 B. R. 183.)

Under the State law in Texas, an unmarried man who keeps a house, and
has orphan children apprenticed to him, is not entitled to the homestead al-
lotted 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 bankrupt
to the prejudice of a vendor’s lien thereon. (Jn re Hutto, 3 B. R. 787; 8. ¢.
TL. 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 tothe land. (Inve Henkel,
2B. R. 546; s. c. 2 Saw. 305.)

A person indebted, or even insolvent, may apply his property to the acquisi-
tion of a homestead, or the discharge of incumbrances thereon, without
depriving it of the exemption from forced sale by law. (Zn re Henkel, 2 B.
R. 546; s. c. 2 Saw. 305; contra, in ve Boothroyd & Gibbs, 14 B. R. 223.)

Under the Jaws 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 complies 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. (/n re Watson, 2 B. R. 570; 8 co. 2 L.
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.7 C0. L. N. 871.)

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. (Jn ve Beckerford, 4 B. R. 203; s.c.1 Dillon, 45; s.c.
1L. TB. 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 partnership property until
partnership debts are paid, yet his right of exemption in his indiyidual prop-
erty disregards the otherwise legal rights of his creditors. (Jn re Young etal.
3 B. R. 440.)

In Kansas, a merchant is not entitled to an exemption of four hundred
dollars out of his stock in trade. (Jn re Schwartz, 4 B. R. 588.)

A merchant tailor who does not sell goods as merchants usually do, but
manufactures them for customers upon special orders under his own superin-
tendence, is entitled to the exemption of four hundred dollars, under the laws
of Kansas. The fact that he did not do all the work himself, but employed
workmen, makes no difference. (Jnre Jones, 2 Dilloa, 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. (Jn re Tertelling, 2
Dillon, 389.)
524 THE BANKRUPT LAW. [§ 5045.

In order to come within the provisions of the homestead laws of Michi-
gan, 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. B. 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 seld 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 ben-
efit of the homestead exemption. (Burtholomew v. West, 8 B. R. 12; 8. c. 2
Dillon, 299.)

Practice in Making Exemptions, and Exceptions thereto.

The register does not hold a court auxiliary to the Gistrict court. His du-
ties are purely ministerial, and he can not vass upon questions of fact, except
when a special case is referred tohim. 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 reg-
ister. 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 dis-
cretion and judgment exercised by the assignee in setting aside and issuing
his certificate for property claimed to be exempt under State laws, or other-
wise. If the court docs not have upon its files a report, duly and properly
returned according to law, all proceedings resting thereon are irregular. (du
ve Cordes, 1 Pac. L. R. 165.)

Where a doubt exists as to whether the bankrupt has made full disclosures
of all his property in his schedules, he is not entitled to his exemption until
after his last examination. (Jn re Mastbaum, 2 W. N. 379.)

A proper and reasonable construction of the rule requiring the assignee to
make a report of the exempted property within twenty days after receiving
the assignment, demands that, where the property to be exempted is in liti-
gation, the time shall be computed from the date of the final decision of the
court, so as to give twenty days after the property is adjudged to be within
or under the control of the assignee. (Jn re Shields, 1 B. R. 844.)

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. (dn re Graham, 2 Biss. 449.)

The provisions of Rule XIX, requiring the assignee to report to the court
the “articles set eff 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 necessaries not ex-
ceeding $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. (Zn re C.

Hunt, 5 B. R. 4938; 5. ¢. 2 L. T. B. 197; 8.¢c. 4 C.L. N. 5; s,¢. 2 Pac. L.
R. 146.)

p The auxiliary ‘ may,” iu Rule XIX, allowing creditors to file exceptions,
is not to be taken in an imperative sense. The supreme court intended to
leave a discretion with the circuit and district courts, to permit them to re-

pair accidents, correct mistakes, and prevent frauds. (Jn ve Perdue, 2 B. R.
183; 8. 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 excep-
tions 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
§ 5046. ] NOTES OF DECISIONS. 525

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 himself with the value of

such property. (Un re Gainey, 2 B. R.525; in re Jackson & Pearce, 2 B. R.
508; in ve 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

he made in the way, and also in the time, prescribed. (Jn re Gainey, 2 B. R.
525.)

Where the exceptions go to the title to the exempted property, they need
not be filed within the required time. (Jn ve Perdue, 2 B. R. 188; 5, c. 2 W.
J. 279.)

Quere. Should the assignee give nctice to the creditors that he has filed

his report of articles set apart to the bankrupt ? (dn re Perdue, 2 B. R, 183;
8.0. 2 W. J. 279.)

The assignee is not obliged to designate articles on which there is no lien.
If he were, the bankrupt might have nothing exempted. The assignee,
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
fulfil 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. (Jn re C, H. Preston, 6
B. R. 545.) ,

Where the exemption under the State law is absolute, it is not necessary
in order to preserve the exemption that the bankrupt shall apply to the as-

signee to have the property selected and set apart as a homestead. (Ria v.
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 ve
Richard Pryor, 4 Biss. 262; in re W. H. Thiell, 4 Biss. 241.)

The court will deem the allowance made by the assignee to be reasonable
and suitable until the contrary is shown by some appropriate facts and proofs.
Cn ve Ziba Williams, 5 Law Rep. 155.)

The court will not reyerse the decision of the assignee, unless it plainly
appears that he has abused the discretionary power confided to him. (In re
W. H. Thiell, 4 Biss. 241.)

Sxc. 5046.—All the property conveyed by the bankrupt in
fraud of his ereditors; all rights in equity, choses in action, pat-
ent rights and copyrights; all debts due him, or any person for
lis 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 axthority 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 of bankruptcy and the appoint-
526 THE BANKRUPT LAW. [§ 5046.

ment of his assignee, but subject to the exceptions stated in the
preceding section, be at once vested in such assignee.

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 property, or for injuries thereto, and not causes of action for merely per-
sonal injuries, (Noonan v. 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 property, 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. (Dil-
lard vy. Collins, 25 Gratt. 348.)

An action for an abuse of an attachment or garnishee process is an action
for a personal injury, and does not pass to the assignee, although the wrong
injured the bankrupt’s business, (Woonan 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 v. Collins, 25 Gratt. 343.)

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. 0c. 2 L.
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 in-
tended to reach frauds on the bankrupt act. (Bradshaw v. Klein, 1B. R. 542;
8. 0. 2 Biss, 20; s.c. 1 L. T. B. 72; Knowlton v. Moseley, 105 Mass, 136; Allen
v. Montgomery, 10 B. R. 503; s. c. 48 Miss. 101; Hyde v. Sontag, 8 B. R. 225;
8. c. 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 vy. Bean, 8 B. R.
228; 8. c. 11 B. R. 495; s. c. 10 Blatch. 361; s, c. 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 incum-
brance fraudulent. It simply clothes the assignee with the entire title, not-
withstanding such conveyance or incumbrance, and makes it his duty to in-
voke the proper jurisdiction to annul the fraudulent proceedings. ‘(In re
Wynne, 4 B, R. 28; s. c. Chase, 227; s. 0. 2 L.T. B. 116; Bradshaw v. Klein
§ 5046. ] NOTES OF DECISIONS. 527

eal. 1 B. R. 542; s. c. 2 Biss. 20; s.c. 1 L. T. B. 72; tn re Metzger, 2 B. R.
355; in re Meyers, 1 B. R. 581; s. c. 2 Ben. 424; Boone v. Hall, 7 Bush, 66;
Pratt v. Curtis, 6 B. R. 139; Cur v. Gale, 3 W. & M. 88; 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.)

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 bankrupt 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. (Hdmondson v. Hyde, B.R. 1; s.
c. 2 Saw. 205; s.c. 5 L. T. B. 380; Allen v. Massey, 4 B. R. 248; 3.6.7
R. 401; s.c. 17 Wall. 351; s. c. 2 Abb. C. C. 60; s.c¢. 1 Dillon, 40; 8. c. 1
T. B, 218; in re Geo. P. Morrill, 8 B. R. 117; s. c. 2 Saw. 356.)

The declaration of a homestead is in no sense a conveyance. He who de-
clares land which he already owns to be a homestead, does not convey it.
He merely avails himself of a legal right to place it in a condition where it
will not be liable to forced sale. The right of property 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 concurrence 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 provisions allowing exemptions, such construction is inadmissible.
(In re Henkel, 2 B. R. 546; s. c. 2 Saw. 305.)

An assignee may maintain an action toset aside fraudulent conveyances.
made by the debtor before he was adjudged a bankrnupt, and even before the
bankrupt act was passed. (Bradshaw v. Klein, 1 B. R. 542; 8. c. 2 Biss. 20;
s.c.1L. 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 conveyance
made by the bankrupt. (Jn re Meyers, 1 B. R. 581; s. c. 2 Ben, 424; Stewart
v. Isidor et al. 1 B. R. 485; s. c. 5 Abb. Pr. [N. $.] 56; Goodwin v. Sharkey,
3 B. R. 558; s.c. 5 Abb. Pr. [N. 8.] 64; Allen v. Montgomery, 10 B. R. 5038;
s. c. 48 Miss. 101; Hdwards v. Coleman, 2 Bibb, 204; Z'hurmond v. Andrews,
13 B. R. 157; s. c. 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. c. 2 Dillon, 519;
in re Win, 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.)

B.
L.

If the assignee refuses to institute proceedings to set aside a fraudulent
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. (Hreelander vy. Hollomun, 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. 3313.
Alien y. Montgomery, 10 B. R. 503; s.c. 48 Miss. 101; Sands v. Codw’se, 4
Johns. 536.)

A creditor can not file a bill in a State court to set aside a fraudulent con-
veyance without making the assignee a party. (Alsabrook v. Cates, 5 Tenn.
271.)
528 THE BANKRUPT LAW. [§ 5046.

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 proceedings in
bankruptcy, if the assignee has taken no steps to reach the property. (Barber
v. Terrell, 54 Geo. 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 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, a3 beneficiaries, 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 sct aside a fraud-
ulent conveyance of a bankrupt, he may continue the suit so as to enforce
his lien. (Sedgwick v. Minck et al. 1B. R. 675; 8. c. 6 Blatch. 156; Stewart v.
Isidor et al. 1 B. R. 485; 8. c. 5 Abb, Pr. [N. 8.]-68; Carr v. Fearington, 638
N. ©. 560; Wooten v. Clark, 28 Miss. 75; Fetter v. Cirode,4 B. Mon, 482;
Stormv. Waddell, 2 Sandf. Ch. 494; contra, Sinith v. Gordon, 2 N. Y. Leg.
Obs. 825; 8. c. 6 Law Rep. 313.)

A petition to set aside a deed of trust not contrary to other provisions of
the bankrupt act should allege that the property was conveyed by the bank-
rupt 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. (Jn 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 conducting the business, it is
a continuous fraud. (Martin v. Smith, 4 B. R. 275; s. c. 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 he
fraudulent. It is not enough simply that he is aware of the fact of the trans-
fer, 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. (Murtin v. Smith, 4B.
R. 275; s. c. 1 Dillon, 85; 8. c. 3 L. T. B. [C. R.] 199.)

A mortgage upon a stock of goods which authorizes the moitgagor to sell
them and replace them with others, at such times 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 under-
standing 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
wriling or in the mortgage. It may be proven by parol, or inferred from cir-
cumstances and the conduct of the parties. (Jn re Kahley et al. 4 B. R. 378;
8. 0, 2 Biss. 383; Harvey v. Crane, 5 B. R. 218; 8. ©. 2 Biss. 496; in re Per-
§ 5046.] NOTES OF DECISIONS. 529

rin ef a7. 7 B. R. 283; in re Samuel Cantrell, 6 Ben. 482; Smith v. McLean, 10
B. R. 260; Smith v. Bly, 10 B. R. 553; Lobins m v. Hllistt, 11 B. R. 553; in re
Manly, 3 B. R. 291; 8. c. 2 Bond, 261; sc. 2 L. T. B. 89; contra, Brett v.
Curter, 14 B. R. 801; Barron vy, Morris, 14 B. R. 371.)

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. (Smithy. Hly,10 B. R. 553;
ftobinson vy. Elliott, 11 B. R. 553; inre William D. Forbes, 5 Biss. 510.)

A mortgage may be in operation as to a portion of the property, and
fraudulent us to the residue. (Jn re Kahley, 4 B. R. 378; s. 0. 2 Biss. 383; in
re Perrin et al. 7 B. R. 283; in re Geo. P. Morrill, 8B. R. 117; 8. c. 2 Baw.
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 cred-
itors. 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 was 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, 2 B. R. 338; 8. c. 1 Dil-
lon, 462; contra, in re Wm. 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 con-
tinued change of possession, and there was no delivery or change of posses-
sion 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; 8.c¢.1 Dillon, 40; s.c. 2 Abb. C.C. 693,
s.¢.17 Wall. 351; 3.c.1L. T. B. 218; Hilmondson v. Hyde, 7 B. R. 1; 8. ¢.
2 Saw. 205; s.c.5 L. T. B. 380.) 3

If the change of possession does not accompany the transfer, it is not suf-
ficient that a change is made before a creditor acquires a lien on the goods.
(dn re George P. Morrill, 8 B. R. 117; s. c. 2 Saw. 356.)

From Twyne’s, down to the very latest case, no sale has ever been up-
held by any court where the vendor has remained in possession, performing
all the offices of an absolute owner, and continuing so for many months in
every beneficial use and enjoyment which ordinarily appertain to the owner-
ship of property. No state of facts can be made out of sufficient force to
repel the inference of fraud. (Jn re Hussman, 2 B. R. 437; s.c. 2 L. T. B.
53; s.c.1C. L. N. 177; in re Manly, 3B R. 291; s. c. 2 Bond, 261; s. c. 2
L. T. B. 89; Foster vy. Hackley & Sons, 2B. R. 406; 5.6.2 L. T. B. 8; s.01
C. L. N. 187.)

The publicity attributed to an involuntary transfer of personal property
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 avoidavle by his creditors,
though it was a transfer for a valuable consideration. But the exception

34
530 THE BANKRUPT LAW. [§ 5046.

ceases as soon as the demands of the judgment creditors are paid. When
these demands are paid the general rule becomes applicable. (/n re Long, 3

B. R. quarto, 66.)

If such change of possession is made as the nature of the subject admits
of, nothing more is in general required. (Mitchell v. McKibbin, 8 B. RB. 548;

s. c. 29 Leg. Int. 412.)

The retention of the possession of fixtures after the execution of a mort-
gage is merely prima facie evidence of fraud. (Howard v. Prince, 11 B. R.
322.)

In Kentucky, an actual change of possession, 8o far as the thing sold is
susceptible of it, is absolutely necessary to the validity of the sale, as to cred-
itors and subsequent purchasers, whenever the vendor at the time of the sale
is in the 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. (/n re Hussman, 2 B,
R. 487; 3.0.2 L. T. B. 53; 8.0.1 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 an-
other presumptively fraudulent as to existing creditors, and raise a trust in
favor of such creditors when the presumption of fraud is not disproved, prop-
erty 8o purchased passes to the assignee of the party whose money was so !n-
vested, and he can sue for and recover the same. (Jn re Meyers, 1 B. R. 581;
s. c. 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 forsuch 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 cred-
itors. The relationship of the parties and the conveyauce of all property that
is subject to execution are evidence 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 conveyance. (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 v.
Smith, 7B. R. 97; 8. c, 10 B. R. 49; s. c. 2 Dillon, 50; s. c. 20 Wall. 81.)

The relinquishment of a contingent right of dower, without any agree-
ment for compensation therefor, is not a valuable consideration for a subse-
quent conveyance. (Kehr vy. Smith, 7B. R. 97; 8. c. 10 B. R. 49; 8. c. 2 Dil-
lon, 50; s. c. 20 Wall. 31.)

A promise which is not founded upon a valuable consideration is volun-
tary, and not a sufficient consideration for a transfer. (Kehr v. Smith, 7B. R.
97; s.c.10 B. R. 49; s. c. 2 Dillon, 50; sc. 20 Wall. 31.)

_ A voluntary settlement by a debtor who is insolvent is fraudulent. (Keat-
ing V. Keefer, 5 B. R. 133; 8.0.1 L. T. B. 266; 5.0.4 L. T. B. 162; Kehr v.
Smith, 7 B. R. 97; 8. c. 10 B. R. 49; s. c. 2 Dillon, 50; 8. 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
§ 5046.] NOTES OF DECISIONS. 53L

-does not furnish a standard or measure for city transactions. (Sedgwick v.
Place, 10 B. R. 28; 8. c.5 B. R. 168; s. c. 5 Ben. 184; 8. c. 12 Blatch. 163.)

If the subsequent expenditures in improving the property are in pursuance
of a plan formed at the time of the gift thereof, the whole will be taken as one
transaction. (Sedgwick v. Pluce, 10 B. R. 28; 8.c. 5 B. R. 168; 8. c. 5 Ben.
184; s. c. 12 Blatch. 163.)

A voluntary conveyance made by a person who is indebted is prima facie
fraudulent, and the burden is on the grantee to show that the debtor had
abundant means, besides the property conveyed, to pay all hisdebts. (Pratt
vy. Curtis 6. B. R. 139.)

The assignee alone can impeach a voluntary conveyance, and work out the
equity of antecedent creditors. (Pratt v. Curtis, 6 B. R. 139.)

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 creditur. (Mitchell v. Mc-
Kibbin, 8 B. R. 548; 8. 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 contract-
ing other obligations which finally result in insolvency. (.luérim 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 consideration
fora conveyance. (Keating v. Keefer, 5 B. R. 183; s.c. 1 L. T. B. 266; s. c.
41. T. B. 162.)

The payment by a feme covert of her money towards 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 money to the hus-
band, without any right on her part to reclaim any interest in the land or in
its proceeds as against him or his creditors. (Keating v. Keefer, 5 B. R. 133;
s.c. 1L. T. B. 266; s,c.4 L. T. B. 162.)

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 con-
veyed to him, and then by him to her. (Keating v. Keefer, 5 B. R. 133; s. c.
IL. T. B. 266; 8.¢.4 L. T. B. 162.)

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 execution 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. 133; 8.6.1 L. T.
B. 266; 8. c. 4 L. T. B. 162; in re Rainsford, 5 B. R. 381.)

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. (Jn re Rainsford, 5 B. R. 881.)

The assignee claims not under but adversely to a fraudulent deed. He
claims tbat the deed is void as to creditors, and on this ground alone attacks
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 fraudu-
lent and void at his instance, he can not set it up to defeat the right of the
532 THE BANKRUPT LAW. [§ 5046.

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; 8.0. 5 B. R, 443; 8. c. 2 Dillon, 182; 8. 0.5L. TB.
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. (Edmonson v. Hyde, 7 B. R.
1; s. c. 2 Saw. 205; 8.0.5 L. T. B. 880; contra, Kehr v. Smith, 7 B. R. 97;
s. c. 10 B. R. 49; s. c. 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 ang
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 presumptions are all
in her favor. (Driggs v. Russell, 3 B. R. 161; s.c.1L. T. B. 161; 5.0.1 C.
L.N. 853; in re Eldred, 3 B. R. 256; s.c. 1 0. L. N. 389.)

Tf the personal labor and capacity of the husband have contributed largely
to the accumulation of property held as his wife’s separate estate, or if a suc-
cessful 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 relative rights of husband and
wife, even the proceeds of her labor and industry ordinarily belong to bim,
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 ex-
ception, however, that the skill, care, or labor of either husband or wife be-
stowed 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 transactions
in real estate in her name until he accumulates property of considerable value
‘by his skill and energy, the property is liable to his assignee. (Muirhead v.
Aldridge, 14 B. R. 249.)

According to the laws of New York, as interpreted by the courts, a mar-
ried woman may ‘own property of every description in the same manner 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 hushand, nor the fact that the labor and skill of the
husband contribute to the success of the business, nor the fact that the hus-
band and his family are supported out of the profits of the business, will
make the business or its profits the property of the husband. (Voorhies v.
Bonesteel, 7 Blatch. 495; s. c. 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 os with such earnings is not fraudulent. (@leun 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. 636; s. c. 8 Blatch. 488.)

Parties who have taken transfers from the fraudulent vendee are necessary
parties. (Cookingham v. Ferguson, 4 B. R. 686; s. c. 8 Blatch. 488.)
§ 5046. ] NOTES OF DECISIONS. 533

By the laws of Florida, an assignment appropriating the property to such
-creditors as shall sign a compromise agreement, and none others, with a direc-
tion 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. ( Jn 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 docs it constitute a mere
tight 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 they would
have if a general liability instead of a resulting trust had been declared. So
debts are an equitable lien upon property fraudulently transferred 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 enforce the lien before a spe-
cific charge creating an incumbrance is created. A creditor can not enforce
the liability of a resulting tiust under the statute without a preliminary judg-
ment and executivn. Before the equitable interests of a debtor can be reached
in equity, all available legal remedies must be exhausted. Neither a judg- -
ment nor execution constitutes a lien upon equitable interests. The com-
mencement of the equitable action and the filing of the dis pendens is necessary
for that purpose. (Ocean Nat'l Bank v. Olcott, 46 N. Y. 12.)

It is an easy matter for parties to go through the torm of paying and re-
‘ceiving money in the presence of witnesses. This is the common device 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 frecing 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. (Jn re Hussman, 2 B. R. 487; 8. c.2 L. T. B. 538; s.c. 1 OC. L. N.
177.)

A conveyance which is made by an insolvent to a relative of nearly all
this 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. (Jn 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, andis admissible. (Knowlton 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 transfer
is valid when there is no evidence that a creditor or a purchaser has been
misled or deceived thereby. (Jenkins v. Mayer, 3 B. R. 776; 8. c. 2 Biss.
803.)
534 THE BANKRUPT LAW. [§ 5046.

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 upon an actual
existing debt. The bankrupt 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 bankrupt as to enable them, or the
assignees for them, to attack such a judgment as fraudulent in law or fact,
even though their claims do not consist of judgments. (Jn re Fuller, 4 B. R.
115; s. co. 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. Jt would bea serious drawback to all trading opera-
tions, 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 hisown. (Jn re Manly, 3 B. R. 291; s c, 2 Bond, 261; s.c. 2 L. T.
B. 89; Robinson v. Hiliott, 11 B. R. 553.)

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
ae can not be held liable to the assignee for rent. (Steadman y. Jones, 65
N. C. 388.)

Although an indorsement on a mortgage to the effect that it shall cover
property acquired after its execution is made for the purpose of defrauding
creditors, yet it will not affect the validity of the original mortgage. (Whit-
hed v. Pillsbury, 13 B. R. 241.)

The assignee has no greater rights than a judgment creditor, and a bona
Jide purchaser from a fraudulent grantee will be protected, although his pur-
chase was made after the appointment of the assignee. (Beall v. Harrell, 7
B. R. 400; s.c. 1 Wood, 476; Murray v. Jones, 50 Geo. 109.)

If the purchaser has notice of facts sufficient to put him on the inquiry,
he is not a bona fide purchaser. (Harrell v. Beal, 7 B. R. 400; 8. c. 9B. R.
49; sc. 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; 8. 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. (Sedgwick v. Place, 10 B. R. 28; s. c. 12 Blatch. 163.)

A party who, after the commencement of proceedings in bankruptcy, pur-
chases at a sale under a fraudulent cxecution, does not obtain a valid title as
against the assignee. (Sedgwick y. Place, 10 B. R. 28; s. c. 12 Blatch. 163.5.

If the donee has sold the property, the assignee may recover the value:
from him. (Sedgwick v. Place, 10 B. R. 28; s. c. 12 Blatch. 163.)

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 actual
§ 5047.] NOTES OF DECISIONS. 535

payment of the consideration. (Marsh v. Armstrong, 11 B. R. 125; s. c. 20
Minn. 81.)

The lien of a judgment rendered after the making of a fraudulent convey-
ance, and before the commencement of the proceedingsin bankruptcy, is pre-
served and is entitled to priority when the conveyance is set aside. (Codwise
v. Gelston, 10 Johus. 507.)

When a fraudulent deed is set aside, the property should be turned over
to the assignee. (Sands v. Codwise, 4 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 v. Keefer,
5 B. R. 133; s.c.1 L. T. B. 266; 8.0.4 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. 586.)

Expenditures may be set off against rents and profits. (Sands v. Codwise,
4 Johns. 536.)

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. (Brooks v.
D Orville, 7 Ben. 485.)

Sxc. 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 com-
mencement 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 assign-
ment, 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.

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; 8. c. 34 Wis. 259.)

The statement in a complaint that the plaintiff is assignee may be treated
as surplusage, or at most as descriptio persone, and may be disregarded.
(Dambmann v. 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 execu-
tor or administrator, it is only necessary to state - , assignee of the estate
of , duly adjudged a bankrupt according to the statute in such case
made and provided. (Hthridge v. Jackson, 19 1. R. R. 134; 8. c. 7 Pac. L. R.
132; Wheelock vy. Lec, 10 B. R. 863; Hastings v. Fowler, 2 Ind. 216.)

 

 
536 THE BANKRUPT LAW. [§ 5047.

The assignee’s title to the bankrupt’s estate, and right to sue therefor, Is
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 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 v. Adams, 2 Day, 70; vide
Fales v. Thompson, 1 Mass. 34.)

In proceedings in bankruptcy, the legal title vests in the assignee unde!
the assignment. Whatever right the bankrupt had is assigned to and vests
in the assignee, who thereby becomes, for the purpose of maintaining or de-
fending suits, possessed, as of his own property, of the estate assigned to him.
It is true, he holds the title of the property when recovered in trust for cer-
tain purposes specified in the statute; but as between 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 v. While, 12 B. R. 438; 8. c. 48 Cal. 489.)

So far as a removed executor has claims against the estate of a decedent,
they may be asserted in the probate court by his assignee. (Appling v. Bailey,
44 Ala. 383.)

A party who takes an assignment of a chose in action from the bankrupt
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 acfion. (Kline v. Bauendahl, 13 B.
R. 375; s. c.6 N.Y. Supr. 546; s.c. 11 Supr. [Hun], 263.)

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 bankruptcy
can not be avoided by an averment that he is a trustee for his wife, she not
being made a party. (Muller v. Erich, 5 Pac. L. R. 223.)

The assignee is clothed with the legal title as well as the beneficial inter-
est in a judgment rendered in favor of the bankrupt, and must proceed in
his own name against a sheriff for neglecting to return an execution issued
thereou, although the execution was issued in the name of the bankrupt after
Cae of the proceedings in bankruptcy. (Gary v. Bates, 12

a, 544.)

The bankrupt can not institute an action of trover forthe conversion of
property belonging to the estute after the commencement of the proceedings
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 v. Gould, 7 Blackf. 361.)

In the absence of all proof, the presumption is that the equitable interest
is united with and follows the legal title, and, under such circumstances, a
suit can not be instituted in the name of the bankrupt on a note made paya-
ble to him prior to the commencement of the proceedings in bankruptcy, al-
though the suit is entered to the use of a third party. (Griswold vy, Me-
Millan, 15 TI. 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. Hemp-
stead, 2 Day, 3872; 8. 0. 2 Day, 293.)

A right of action against a sheriff for negligence in the levy of an execu-
§ 5047.] NOTES OF DECISIONS. 537

tion, whereby the claim was lost, vests in the assignee of the judgment cred-
itor. (Sullivan v. Bridge, 1 Mass. 511.)

A suit on a judgment in tho name of the bankrupt can not be maintained,
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 creditors 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. O.] 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. (erry 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. Itis not necessary for him to produce a certificate of exemption,
for what the law requires to be done it presumes has been done, until the
contrary isshown. (Seiling v. Gunderman, 35 Tex. 345.)

The bankrupt may institute an action for a levy on property which was
exempt from execution, although the property was sold after the commence-
ment of the proceedings in bankruptcy and before the allowance of the ex-
emption by the assignee. (Williams v. Miller, 16 Conn. 144.)

A creditor may file a bill in equity to reach certain assets of the bankrupt,
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 beneticial 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 v. 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, 464.)

The bankrupt may institute an action at law in his own name on a claim
which was not placed on bis schedules. (Steele v. Towne, 28 Yt. 771.)

If the judgment was assigned prior to the commencement of the proceed-
ings in bankruptcy, asci. fv. may be maintained in the name of the bankrupt
for the benefit of the owner of the judgment. (Boone v. Stone, 8 Ill. 537.)

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 it
by his indorsement. (Birch v. 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 con-
sidered as reinstated in his original right, and may sue thereon in his own
name. (Drury v. Vanneaver, 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. (Drury v. Vanneaver, 59 Mass. 442 )
538 THE BANKRUPT LAW. [§ 5047.

If the bankrupt made an equitable assignment of a chose in action before
the commencement of the proceedings in bankruptcy, he may maintain 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 secu-
rity prior to the commencement of the proceedings in bankruptcy, can not in-
stitute 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. (Ontario Bank v. Mumford, 2
Barb. Ch. 596.)

The purchaser of a chose in action from the assignee takes merely an equita-
ble title, and must sue in the name of the assignee for his use. (Camack v.
Bisquay, 18 Ala. 286.)

The purchaser of a chose in action from the assignee can not maintain an
action thereon in his own name. (Leach v. Greene, 12 B. R. 376; 8. 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 authority 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. 6 L. T. B. 576; Mims v. Swartz, 10 B. R.
305; 8. c. 87 Tex. 17.)

The purchaser may also sue in his own name. (Mims v. Swartz, 37 Tex.
17.)

The act of the assignee in selling a chose in action can not be collaterally
impeached in a State court. (lfims v. Swartz, 10 B. R. 305; s. c. 87 Tex. 17.)

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 action
to be in the assignee agreeably to the declaration. Suffering judgment 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 untess 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 assignee. (Fulweiler
y. 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 considera-
tion was an indebtedness that accrued before the bankruptcy. (Beacon v.
Howard, 11 B. R. 486; s. c. 44 Ind. 413)

e
A plea that after the rendition of the judgment, and before the issuing of
a sei, fa., the plaintiff became a bankrupt, is « good plea, for a sci. fu. to
revive a judgment, can only be maintained in the name of the assignee.
(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, 8 Day, 264.)
§ 5047.] NOTES OF DECISIONS. 539

The plaintiff must prove himself to be duly appointed assignee by pro-
ducing a certified copy of the record or of the assignment. (Jn re McIver &
Moore, 1 Cranch C. 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 superseded
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 vy. Beach, 1 Mich.
N. P. 94.)

If the adjudication of bankruptcy is established, the appointment of an
assignee may be presumed. (Mims y. Swartz, 10 B. R. 805; 8. c. 87 Tex. 17;
Janes y. Beach, 1 Mich. N. P. 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 presumuntur 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 as-
signee to prove the assignment. (Zantzinger v. Ribble, 4 B. R. 724; 8. c. 36
Md. 32.)

If a party permits the transcript from the records of the bankrupt court
to establish the presumption of the execution of an assignment, without an
objection as to the non-production of the deed, he can not raise that ques-
tion for the first time in the appellate court. (Crayton v. Hamilton, 3% 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 Pennsylvania, appeal
from an award without paying the costs or entering in recognizance. (Morse
v. Grittman, 10 B. R. 182; 8. c. 81 Leg. Int. 246.)

The bankruptcy of the plaintiff may be proved under the general issue,
where the action has been instituted since the commencement of the proceed-
ings in bankruptcy. (Sims v. Ross, 16 Miss. 557; Berry v. Gillis, 17 N. H.
9; Lefler v. Hunt, 8 Blackf. 195.)

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 bankrupt proceedings, under certain
prescribed limitations, is recognized by the bankrupt act itself. ‘Ihe jurisdic-
tion of the State courts is pot extinguished, except in those cases where the
creditor proves bis debt or claim. The bankrupt 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 accoiding to
law, subject to the final judgment of the proper appellate tribunal. (Jn re
Clark et al. 8 B. R. 491; 8. c. 4 Ben. 88; Samson v. Burton, 4 B.R.1; 8. 06,5
540 THE BANKRUPT LAW. [§ 5047.

Ben. 325; Clark v. Binninger, 5 B. R. 254; s. c. 29 How. Pr.j863; Pech v. Jen-
ness, "7 How. 612 ; Hewett v. Norton, 13 B.R. 276; 8. c. 1 Wood, 68.)

The provision that the assignee may prosecute and defend all suits pend-
ing at the time of the adjudication of bankruptcy to which the bankrupt isa
party does not oblige him to seek a remedy in that way. (Traders Nutional
Bank vy. Campbell, 3 B. RB. 498; 8. c. 6 B. R. 353; 8. 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 demands it,
of which the assignee is, in the first instance, the judge. (Reade v. Waterhouse,
10 B. R. 277; 8. c. 12 Abb. Pr. [N. 8.] 255; s. c. 52 N. Y. 587; 8. c. 385 N. Y.
Sup. 78.)

“The bankrupt may continue to prosecute an action of replevin in his own
name for an article which bas 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 assign-
ment made to him, the title to the property remains in the bankrupt. Until
that time the bankrupt may prosecute pending actions, for there is no one to
take his place. (Sutherlund v. Davis, 10 B. R. 424; s. c. 42 Ind. 26.)

The bankrupt can not prosecute an action in chancery to obtain satisfac-
tion of a judgment, although he did not place it on the schedules. (Planters’
Bank vy. Conger, 20 Miss. 527.)

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 him-
self or another, All his rights of property pass by the assignment to the as-
‘signee, in whose name alone can the suit be prosecuted. (Cunnon v. Welford,
22 Gratt. 195; Lacy v. Rockett, 11 Ala. 1002; contra, Noonan v. Orton, 12B.
R. 405; 8. 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, (Cottrell 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 ver-
dict in the name of the plaintiff for the use of his assignee in bankruptcy.
The verdict and judgment will be a sutlicient 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; 8. c. 44 Geo. 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, although
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, although
it is pending in a State court. (Ames v. Gilmun, 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 render a
verdict against him it must be for the use of the assignee. (Southern Express
Co. v. Connor, 12 B. R. 53; 8. c. 49 Geo, 415.)

The suit is not abated by the substitution of the plaintiff's assignee. ( Wise
v. Decker, 1 Cranch C, 0. 190; Hammond vy. Rice, 18 Vt. 353.)

The substitution of the assignee, when actually made, relates back to the
§ 5047.] NOTES OF DECISIONS. 541

commencement of the proceedings in bankruptcy. (Browne v. Ins. Oo. 4
Yeates, 119.)

_ A State court can not proceed to hear and decide a case for the specific
performance of a contract to convey land, if the vendor becomes bankrupt
after the commencement of the suit, unless the assignee is made a party.
(Swepson v. Rouse, 65 N. OC. 84.)

The assignee is the only persun who can move to set aside an execution
after the judgment debtor is declared bankrupt. (Maris v. Duren, 1 Brews. 428.)

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
rigut 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. 3 B, R. 7380;
s. c. 8 Abb. Pr. [N. 8.] 191.)

If the plaintiff summon the assignee to appear and take upon himself the:
defense of the action, the assignee, if he appears, may plead the discharge
of the defendant, and the action will then be barred, for the plaintiff can not
take a judgment against the assignee as the basis of his claim for a dividend.
(Minot v. Brickett, 49 Mass. 560.)

Where property of the bankrupt has been sold, and the proceeds paid to-
the complainant under a decree which is subsequently reversed, the com-
plainant 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 v.
Pil:her, 7B. Mon. 651.)

The commencement of proceedings in bankruptcy does not affect the ju-
risdiction of a State court over an action then pending to foreclose a mort-
gage, and a sale under a decree entered after the appointment of an assignee
will pass a valid title to the purchaser. (Hyster v. Gaff, 13 B. R. 546; in re
Mary Irving ¢ 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;
8.0. 27 Barb. 252; Lenihan v. Haman, 8 B. R. 557; 3.c. 11 B. R. 471; s. c.
14 Abb. Pr. [N. 8.] 274; s. c. 55 N. Y. 652; contra, Anon. 10 Paige, 20; On-
tario Bank v. Mumford, 2 Barb. Ch. 596; Johnson v. Fitzhugh, 3 Barb. Ch.
360; 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.)

Tt 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 bankruptey of
the mortgagor. It is not sufficient for the assignee to merely file a certificate
of his appointment without any motion or plea to be made a party or to take
part in the case. (Hyster v. Gaff, 13 B. R. 546; 8. c. 1 Otto, 521.)

Where a sale is made after the commencement of proceedings in bank-
ruptcy under a decree entered before the adjudication in an action to fore-
close a mortgage in a State court, and a decree for the deficiency is entered
against the bankrupt, the decree is a bar to the right of the assignee to raise
the question of usury in regard to the mortgage. (Cutter v. 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 court
of bankruptcy has authorized the continuance of the suit before judgment
and sale. (Lenihan v. Human, 8 B, R. 557; 8. c. 11 B. R, 471; 8. c. 14 Abb.
Pr. [N. 8.] 274; s. 0. 55 N. Y. 652.)

The mere filing of a petition in bankruptcy does not of itself constitute a
542 THE BANKRUPT LAW. [§ 5047.

sufficient reason for the dismissal of an action pending in a State court.
(Hobert 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. (Wellows v. Hall, 3 McLean,
281.)

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 creditor is
entitled to payment in full out of the proceeds. (Smith v. Gordon, 2N. Y.
Leg. Obs. 825; s. c. 6 Law Rep. 313.)

A party to whom a claim has been assigned prior to the bankruptcy of
the plaintiff may afterwards intervene. The question of the bankruptcy of
the plaintiff is not properly before the court upon a motion to intervene,
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 proceed-
ings in bankruptcy, the plaintiff becomes a trustee for the purchaser, and
may continue the suit in his own name. His subsequent bankruptcy does
not affect the right of his cestui gue 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 vy. 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 v. Hdwards, 50 Ala. 63.)

If the assignee declines to intervene, an action of replevin may be prose-
cuted in the name of the bankrupt by the surety on the replevin bond to
whom the goods were delivered as security for his liability on the bond.
(Sawtelle v. Rollins, 23 Me. 196.)

A party who has taken a transfer of the note may intervene and prosecute
the suit in the name of the bankrupt. (Converse v. Sorley, 39 Tex. 515.)

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 assignee.
(Penniman vy. Norton, 1 Barb. Ch. 246.)

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. (ale 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. (Gale v. Vernon, 1 Sandf. Ch. 679.)

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 appointment.
(Home Ins. Co. v. Hollis, 14 B. R. 337; s. c. 53 Geo. 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 proceedings in
bankruptcy. (Home Ins. Co v. Hollis, 14 B. R. 887; 3, c. 58 Geo. 659.)

When a suit is settled after the commencement of the proceedings in
bankruptcy, it is not incumbent on the assignee to show that the settlement

was wrong in order to have the case reinstated. (Home Ins. Co. v. Hollis, 14
B. R. 387; 8. c. 53 Geo. 659.)

If the complainant becomes bankrupt while a suit in equity is pending,
§ 5047.] NOTES OF DECISIONS. 543

the bill may, on motion of the defendant, be dismissed unless the assignee
intervenes within a certain time. (Bailey v. Smith, 10 R. I. 29.)

If the assignee declines to intervene and prosecute a bill filed against a
conventional trustee alleging a mismanagement of the trust fund, the bank-
rupt can not make him a party by a supplemental bill. (Badley v. Smith, 10
R. I. 29.)

The assignee may intervene in an action commenced by the bankrupt by
an original bill in the nature of a supplemental bill. (Worthman v. Ins. Co.
1 Tenn. Ch. 312, 319.)

If a demurrer is entered to a plea setting up the bankruptcy of the plaint-
iff 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. 148.)

A plea of the bankruptcy of the plaintiff pendente lite need make no alle-
gation in respect to the jurisdiction of the bankrupt court, for it will be in-
tended 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.
(Lacy v. Ruckett, 11 Ala. 1002.)

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.)

The defendant may plead that the plaintiff has been declared a bankrupt
by the proper Gistrict court subsequent to the institution of the suit. Such a
plea is a pleain bar. (Lacy v. Rockett, 11 Ala. 1002; Hynson v. Burton, 5
Ark. 492; Hing 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 v. Hd-
mondson, 9 Ill. 120.)

The question whether the person who claims to be assignee of the plaint-
iff 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 en™
tertain 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 bankrupt court. If the aid of the State court is sought and de-
manded by an assignee to recover property, he must submit to the terms pre-
scribed, and recover or not recover as the principles of law and equity bear-

_ ing on the rights of the contesting parties demand. He is estopped in such
a case to deny the jurisdiction of the State court to decide the merits of the
controversy. (Pindeli v. Vimont, 14 B. Mon. 400.)

When the assignee appears to defend a pending action, he may adopt the
answer already filed. (Hritsch v. Van Miltledorfer, 2 Cinn. 261.)

A plea that.a part only of the plaintiffs have become bankrupts pendente
liteis a good plea. (Lacy v. Rocktt, 11 Ala. 1002; Sims v. Ross, 15 Miss.
557.)

The bankruptcy of the plaintiff can not be proved by parol evidence.
(Moore v. Voss, 1 Cranch ©. U. 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
544 THE BANKRUPT LAW. [8$ 5048-9.

of ajudgment. The proper practice in such a case is to move for security for
costs at thie {ime of his appearance, or prior to the termination of the proceed-
ings. (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 vy. Waterhouse, 10 B. R. 277;
g c, 12 Abb. Pr. [N. 8.] 255; 8. c, 52 N. ¥. 587; s.c. 85 N. Y. Sup. 78.)

If a party who has recovered a judgment takes the benefit of the bankrupt
act and afterward dies, the suit in the appellate court should be revived
against the assignee in bankruptcy, and not against the administrator.
(Moffit v. Cruise, 7 Cold. 137.)

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 the proper party to bring a writ of error, aud he alone can do it.
(Know v. Exchange Bank, 12 Wall. 879; Day v. Laflin, 47 Mass. 280; Vairin
vy. Edmondson, 9 Ill. 120; Sandford v. Sandford, 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 ap-
peal. (Sandford v. Sandford, 12 B. R. 565; 8. c. 58 N. Y. 67.)

Where the judgment of a justice ina summary proceeding against the
bankrupt under the landlord and tenant act is reversed on appeal, the assignee
who has been appointed since the commencement of the proceeding is en-
titled to a writ of restitution, although he never was in possession, for he is
entitled to all the rights of the bankrupt in respect to his property. (MeMil-
lan vy. 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 ap-
peal and before the dismissal thereof, will be deemed to be waived unless it
, eri and can only be pleaded in abatement. (McSpedon v. Bouton, 5

aly, 30.

The kankrupt may sue out a writ of error in his own name to remove a
judgment rendered against him after the commencement of the proceedings
in bankruptcy. (Dormire v. Cogly, 8 Blackf. 177.)

If the defendant is declared a bankrupt lefore 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 guard-
ian 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 peti-
tion. (/n re Patterson, 1 B. R. 125; 8. oc. 1 Ben. 509.)

Suc. 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.

Src. 5049.—A copy, duly certified by the clerk of the court,
under the seal thereot, of the assignment, shall be conclusive evi-
dence of the title of the assignee to take, hold, sue for, and re-
cover the property of the bankrupt.
§ 5050. ] NOTZS OF DUCISIONS. 545

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; s. co. 40 How. Pr. 282; s.c. 9 Wall. 664; Knox v. Exchange Bank,
12 Wall. 379.)

An uncertified copy of the petition to be declared bankrupt and a certifi-
cate of discharge are no evidence of the appointment of an assignee. (Alez-
ander v. McCullough, 32 Leg. Int. 336.)

Oral testimony to prove an assignment, is not admissible until evidence is
given toshow that the original or a certified copy thereof can not be produced.
(Burk v. Winters, 28 Ark. 6.)

The right of the assignez to maintain a suit does not depend on the instru-
ment 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. (Zant-
zinger v. Ribble, 4 B. R. 724; 386 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 assignment,
for a duly certified copy of the assignment is made conclusive evidence of the
tight 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 con-
clusive 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; 8. 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 pro-
ceedings 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 collat-
erally 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 v. West, 1 Binn. 263; Burelay v. Carson, 2 Hay [N. C.] 243; Lovett v.
ae 1 Mass. 67; Livermore v. Swazey, 7 Mass. 213; Den v. Wright, Pet. C.

. 64.)

Src. 5050.—No person shall be entitled, as against the assignee,
to withhold from him possession of any books of account of the
bankrupt, or claim any lien thereon. \

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 inteuts, 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 pro-
duce them to be used on the examination as evidence. (Jn ve William W.
Hulst, 7 Ben. 40.),

35
546 THE BANKRUPT LAW’ [S$ 5051-3.

Seo. 5051.—The debtor shall, at the request of the assignee
and at the expense of the estate, make and execute any instru-
ments, deeds, and writings which may be proper to enable the
assignee to possess himeelf fully of all the assets of the bankrupt.

The bankrupt 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 asthey might have been prosecuted by the bankrupt; 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; 8. c. 4 Ben. 88;
Samson v. Burton, 4 B. R. 1; s.c.5 Ben. 825; Clark v. Binninger, 5 B. R. 255;
s. c. 89 How. Pr. 363.)

Sxc. 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 pur-
suant to any statute of the United States or of any State, shall be
invalidated or affected by an assignment in bankruptcy.

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
yalid. 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, asif it be executed in a State having
no statute upon the subject, or if the record is not required between the par-
ties, the provision will not defeat it. (Jn re Griffiths, 3 B. R. 731; s. c. Lowell,
481; Potter et al. v. Coggeshall, 4B. R. 73; in re Dow, 6 B. R. 10.)

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 any-
thing as to deeds of trust or conveyances of analogous character. It leaves
all deeds and instruments of writing not expressly saved to the general prin-
pe jurisprudence. (Jn re Wynne, 4 B. R, 23; 8. c. Chase, 227; s.c.2 L.

’. B. 116.)

Mortgages which are not otherwise valid or duly recorded are not enumer-
ated as protected in favor of the mortgagee, but, on the contrary, are carefully
excluded. The attention of Congress was specially called to chattel mortgages,
and the language of the act is carefully framed, so as to recognize 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 vnius est exclusio alterius, apphes to other cases. (Edmondson v. Hyde,
7B. R.1; 8. c. 2 Saw. 205; sc. 5 L. T. B. 880; in re Geo. P. Morrill, 8B. R,
117; s. c. 2 Saw. 856; Moore v. Young, 4 Biss. 128.)

Src. 5053.—No property held by the bankrupt in trust shall
pass by the assignment.

The trustee meant by this clause can only bea 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.)
§ 5053.) NOTES OF DECISIONS. 547

A purchase by the bankrupt at a sale of property in which his wife is in-
terested, under a parol promise to hold it for her benefit, does not vest a re-
sulting trust in her so that she can hold it against his assignee. (O'Hara v.
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. (Misher 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. (Misher v. Henderson, 8 B. R. 175.)

The statute applies to all estates where the trust can be legally esta blished,,
and is effectual against one claiming under the assignee who is not in the po-
sition of a purchaser without notice. Information of a fact coming from a
source which ought to be heeded, is sufficient notice. (Faxon v. Foley, 110
Mass. 392.)

Land held by the bankrupt under an agreement to reconvey upon the pay-
ment of a certain note, is held in trust and does not pass to the assignee.
(Fazon v. Folvey, 110 Mass. 392.)

If a bankrupt insurance company reinsures in another company, and in
case of a loss receives the amount of the reinsurance from the latter, under
an express trust to pay it over to the assured, the amountis 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 forcollection is not kept separate and distinct from his other
money, there is no trust attached to this money in favor of the banker who so.
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. (Jn re Robert Hosie, 7 B. R. 601; s. c. 6 L. T. B.
89; s. c. 5 Pac. L. R. 193.)

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. (dn re Janeway, 4
B. R. 100; 8. c. 4 Brews. 250; s. c. 2 L. T. B. 124.)

If the debtor, acting as a factor, sells goods of his principal, and in vio-
lation 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 with-
out notice of any violation of any trust, the fund which may be recovered 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 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 distinguished.
There must be some ear-mark by which it can be recognized. As, for in-
stance, where goods are sent to a factur'to be disposed of, and the factor be-
548 THE BANKRUPT LAW. [$ 5054.

comes a bankrupt, and the goods yet in his possession can be distinguished
frum the general mass of his property, the principal may recover them in
specie, and is not obliged to prove his debt under the commission. 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, however, 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. (Jn re Janeway, 4 B. R. 100; s. c. 4 Brews. 256; s.c. 2 L. T. B.
124; Wood M. & R. Co. v. Brooke, 9 B. R. 395; in re Coan & Ten Brocke,
Mfg. Co. 12 B. R. 203; s.c. 7 C. L. N. 260.)

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, 33 Leg. Int. 402.)

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. (Voight v.
Lewis, 33 Leg. Int. 404.)

If the consignment is a consignment on sale, as distinguished from a con-
signment on del credere guaranty, the consignor can not reserve a special prop-
erty in the proceeds of the goods as against the assignee of the consignee.
(In re Chamberlaizes, 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 proceeds of the
original property. It is sufficient if the newly acquired property is acquired
by direct exchange with it. The real question is, What has taken the place
of the property ia its original form ? Whenever that can he ascertained, the
property in the changed torm may be claimed by the original owner or cestui
que trust. (Cook v. Tullis, 9 B, R. 433; s. c. 18 Wall. 332.)

Jf the bankrupt deposited the trust funds in bank with his own in his
own name, the mode of ascertaining how much belongs to the trust estate, 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. (/n re Hapgood, 14 B. R.)

Sec. 5054.—The assignee shall immediately give notice of his
appointment, by publication at least once a week for three suc-
cessive weeks in such newspapers as shall for that purpose 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 certi-
fied copy thereof, shall be evidence thereof in all courts.

* So amended by act of Feb. 18, 1875.
§ 5054. ] NOTES OF DECISIONS. 549

Publication,

A requircment that a notice shall be published once a week for three suc-
cessive weeks, is a requirement that it shall be published in every seven days
for three successsive periods of seven days each; that the interval between
any two publications shall not be less than seven days; that the interval be-
tween the last publication and any proceeding dependent upon the publica-
tion shall be not less than seven days; and that the publications shall be
three in number. (Jn re Bellamy, 1 B. R. 64; 8. c. 1 Ben. 390; 5.c.1L. 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. (Jn re Littlefield, 3
B. R. 57; s. c. Lowell, 381; s.c. 1 L. T. B. 164.)

Record,

The purpose in requiring the assignee to cause the assignment to be re-
corded 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 claim 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 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 recourse 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.¢.3 L. T. B. 295; Hol-
brook v. Coney, 25 Ill. 543.)

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 sheriffs deeds, yet by the paramount law is a complete transfer and con-
veyance of all the bankrupt’s real and equitable interest, with the exceptions
named in the act. That instrament is not signed by the bankrupt, or ac-
knowledged by him, but is signed by the register or judge. When the as-
signment 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 commencement of the proceedings, and
all subsequent purchasers are affected accordingly, whether they purchased
before assignment actually made or afterwards, and consequently the record-
ing 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 pur-
chase being of what the bankrupt debtor had at the time, and all his interest
having passed to the assignee previously, the purchaser acquires no title as
against the assignee. (Davis v. Anderson, 6 B, R. 145; Phillips v. Helmbold,
26 N. J. Eq. 202.)
550 THE BANKRUPT LAW. [&§ 5055-7.

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 dcbtor hag no title to or
interest in the property sold, the purchaser at the sheriff's sale acquires no
title. (Stuart vy. Hines, 6 B. R. 416; 8. ©. 33 Iowa, 60; 5, 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. (ddolbrook v.
Dickinson, 56 Ml. 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.) :

The title of a party who claims under the assignee will prevail against a
party who obtained a conveyance trom the bankrupt after the commencement
of the proceedings in bankruptcy with notice of such title, although tle as-
signment to the assignee was not acknowledged and recorded according to
the laws of the State where the land was situated. (Brady v. Otis, 14 B. R.
345; s. 0, 40 Iowa, 97.)

Src. 5055.—The assignee shall demand and receive, from all
persons lolding the saine, all the estate assigned or intended to be
assigned. ,

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. (Jn re
Noakes, 1 B. R. 592.)

Src. 5056.—No person shall be entitled to maintain an action
against an assignee in bankruptey for anything done by him as
such assignee, without previously giving him twenty days’ notice
of such action, specilying the cause thereof, to the end that such
assignee may have an opportunity of tendering amends, should he
see fit tu do so.

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. Maawell, 2 Cinn. 136.)

This section does not apply to an action of replevin to recover property
which the assignee took from the possession of the plaintiff. (Leighton v.
Harwood, 12 B. R. 360; 8. c, 111 Mass. 67.)

No notice need be given to an assignee before bringing a bili to enjoin a
judgment recovered by the bankrupt by his fraudulent contract. (Weakley 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. (Weakley v. Miller, 1 Tenn. Ch, 523.)

By appearing and filing a plea the assignee waives the want of notice be-
fore bringing the suit. (Rowey. Page, 13 B. R. 866; s. c. 54 N. H. 190.)

Sro. 5057.—Nov suit, either at law or in equity, shall be main-
tainable in any court between an assignee in bankruptey and a
person claiming an adverse interest, touching any property or
rights of property transferable to or vested in such assignee, un-
less brought within two years from the time when the cause of
action accrued for or against such assignee. And this provision
shall not in any case revive a right of action barred at the time
when an assignee is appointed.
§ 5057. ] NOTES OF DECISIONS. BBL

The cause of action accrues to the assignee on the execution of the
assignment, and the limitation begins to run from that time. (Lathrop v.
Drake, 30 Leg. Int. 141.)

On all matured claims and demands the cause of action accrues to the
assignee 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. (Vorton v. De la Villebeuve, 18 B. R. 304; s. c. 1 Wood, 163.)

This section applies equally to courts of equity and courts of law. (Bui-
dey 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. MeCord, 11 Ala. 982;
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 formis 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 hands of
the assignee, and to which adverse claims existed while in the hands of the
bankrupt and before assignment. These disputes or 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 cred-
itors. A short bar by limitation to suits brought either by the assignee or the
adverse claimant, furnishes a fit and appropriate remedy against delay where
compromise is impracticable. (Jn re Frederick J. Conant, 5 Blatch. 54; Ste-
vens v. Hauser, 89 N. Y. 302; s. c. 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 appoint-
ment—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 section, to actions brought ‘‘ in
any court whatsoever ;” therefore in any court, State or Federal. (Peiper v.
Harmer, 5 B. R. 252; 8. 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 the time
provided in the State statute of limitations. Thus if at the time of the ap-
pointment of the assignee but a few days remain of the time necessary to
compiete the bar, the time will be extended; or, if the statute has just com-
menced running, and under the State law would have ten years to run, it
would be complete within two years. (Mreelander 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. (Jn 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 com-
eee of the proceedings in bankruptcy. (Philips v. Helmbold, 26 N. J.

q. 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 interest
as against the assignee in bankruptcy. A claim against the bankrupt’s es-
552 THE BANKRUPT LAW. [§ 5057.

tate, 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 cer
poration is not barred, for the corporation is not an adverse claimant. (Union.
Canal Co. v. Woodside, 11 Penn. 176.)

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 v. 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 pro-
ceedings in bankruptcy, without making the assignee a party thereto, will
not be rendered valid by the lapse of two years, unless he takes actual pos-.
session 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 vy. Boerum, 24 N.
Y. 618; 8. c. 23 Barb. 201; 8. c. 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, 82 Me. 245.)

If a party buys ajudgment 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 statute begins
to run from the time when he receives the proceeds, (Hyde v. Ely, 8 Pac. L.
R. 147.)

If the assignee is not made a party toa pending action until more than
two years after his appointment, his claim will be barred, for the amendment.
by which he is made a party will not relate back, and thereby make him a
party « initio, and thereby defeat the limitation. (Cogdell v. Hrum, 10 B.
R. 827; s. c. §9 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 ap-.
pointment of the assignee. (Mreelander y. Holloman, 9 B. R. 381; Botts v..
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 ona
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 prop-
erty, or right of property, of the bankrupt, transferable to or vested in the
§ 5057. ] NOTES OF DECISIONS. 553:

plaintiff as assignee; nor does the defendant claim any interest adverse to
the plaintiff in cr 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 does the plaintiff claim
any ownership of or title to any specific property, or right of property, as
having passed to him by virtue of his appointment, which the defendant 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 con-
troversies of which the circuit court of the district has concurrent juris-
diction with the district court of the same district. (Sedgwick v. Casey, 4 B.
R. 496; 8.¢c.3 C.L.N.177; Smith v. Crawford, 9 B. R. 38; 8. c. 6 Ben.
497; Carr v. Lord, 29 Me. 51; contra, Harris v. Collins, 13 Ala. 888; 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. Lathrop,
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
v. 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 aright of action which he has suffered ‘to-
expire, and thus avoid the limitation. (Cleveland v. Boerum, 23 Barb. 201;
8. C. 27 Barb. 252; 8. c. 24 N. Y. 613.)

The limitation has no application to suits which are pending at the time
of the commencement of the proceedings in bankruptcy. (Kane y. Pileher, 7
B. Mon. 651.)

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. (Ja 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. (Stevens
v. Hauser, 39 N. Y. 302; 8. c. 1 Robt. 50.)

If an assignee, after instituting a suit, dies, and the new assignee institutes
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. Go. 8
Cranch, 84.)

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. (Deadrich 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
Grat. 15.)

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 dis-
covery of the fraud. (Clark v. Hackett, 1 Cliff. 269.)
554 THK BANKRUPT LAW. [§§ 5058-9.

When there has been no negligence or laches on the part of 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 discovered by, or
becomes known to, the party suing, or those in privity with him. (Bailey v.
Weir, 12 B. R. 24; s.c. 21 Wall. 842; Carr v. Hilton, 1 Curt. 230; Pritchard
y. Chandler, 2 Curt. 488.)

The limitation bars the action, although the assignee was ignorant of his
rights, for the court can not engraft un exception on the statute. (Norton v.
Dela Villebeuve, 13 B. R. 304; 8. c. 1 Wood, 163.)

This rule applies to suits at law as well as in equity. (Bailey v. Weir, 12
B. R. 24; s. c. 21 Wall. 342.)

The statute begins to run from the time when the assignee could have dis-
covered 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 action
to the assignee, something more than silence on his part must be proved in
order to sustain a charge of fraudulent concealmert. (Pritchard 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 concealment
must exist at the moment when the assignee’s title accrued. (Pritchard v.
Chandler, 2 Curt. 488.)

A bill which states a case of secret fraud does sufficiently aver that the
cause 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, It. 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 pos-
session of the money. (Clark v. Clark, 17 How. 815.)

A bill, which is in theory and in fact an original bill, can not, for the pur-
pose 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 atuswer so as to
set up the statute of limitations, the amendment must afterwards be deemed
to have been duly and properly allowed. (Clark v. Hackett, 1 Cliff. 269.)

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 notilying the respondent
that he would have to account for certain rents, is not a sufficient 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.)

Src. 5058.—[This section is superseded by act of 22 June,
1874, § 4.]

Sro. 5059.—The assignee shall, as soon as may be, after receiv-
ing any money belonging to the estate, deposit the same in some
bauk in his name as assignee, or otherwise keep it distinct from
§§ 5060-2.] NOTES OF DECISIONS. 555

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 distinguished, and
may not be liable to be taken as his property or for the payment
of his debts.

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. (Jn re Stillman Thorp, 4 N. Y. Leg. Obs.
377.) ‘

Sec. 5060.—When it appears that the distribution of the
estate may be delayed by litigation or other cause, the court may
direct the temporary investinent 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.

Src. 5061.—The assignee, under the direction of the court,
may submit any controversy arising in the settlement of demands
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 componnd and settle any
such controversy, by agreement with the other party, as he thinks
proper and most for the interest of the creditors.

The assignee must apply to the court by petition, and not to the register.
Un re Graves, 1 B. R. 237; s. c. 2 Ben. 100.)

An order authorizing the assignee to rompromise any and all debts due
the bankrupt’s estate with the consent of certain persons selected by the
creditors, is not authorized by this section. (Jn re Diblee et al. 3 B. R. 12;
s. 0. 8 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. (Jn 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. (Jn
re Franklin Fund Saving Society, 31 Leg. Int. 173.)

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. C.
16.) ‘

The act of one assignee will not bind a co-assignee 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. (Blight v.
Ashley, Pet. C. C. 15.)

Suc. 5062.—The assignee shall sell all such unincumbered es-
tate, real and personal, which comes to his hands, on such terms
556 THE BANKRUPT LAW. [§ 5062.

ashe thinks most for the interest of the creditors; but, wpon pe-
tition of any person interested, and for cause shown, the court
may make such order concerning the time, place and manner of
salé as will, in its opiuion, prove to the interest of the creditors.

The State laws in regard to the transfer of estates are subject to the ple-
nary power of Congress over bankruptcy, and there can be no doubt of the
complete force of the bankrupt law to dispose of the bankrupt’s property tor
all the purposes designated or implied by it. The rights of the assignee are
broad enough to dispose of all the property, if such disposition be needed.
(Stevens v. Harles, 25 Mich. 40.)

The assignee has the authority to sell unincumbered assets without an
order from court. (In re White et al. 1 B. R. 218; 3. c. 2 Ben. 85; Mims v.
Swartz, 10 B, R. 305; s. c. 87 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 v. Palmer, 10 Bosw.
60.)

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 vy. 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 bankrupt act, and hy 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 an order to sell for the high-
est price he can obtain, he must accept the highest bid, although he has pre-
viously 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 ex-
pired at the time of receiving a better bid. (dn re Ryan & Griffin, 6 B. R.
235.)

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. (Jn ve Samuel
Schapter, 9 B. R. 324.)

The court may authorize a private sale of land so far as the authorization
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 obtain-
eae best price for the property. (Jn re Knott Rooney, & Dibest, 1 W. N.

fe

If a sale is fairly made, and the Inds are understood by the auctioneer and
the bystanders, it will be valid, although the assignee is present and in con-
sequence of his negligence and inattention fails to understand the terms
thereof. (ves v. Tregent, 14 B. R. 60; s. c. 29 Mich, 390.)

If'an assignce makes a sale of property, but refuses to deliver the possession
thereof, he may be sued at law if the sale has never been brought to the
attention of the bankrupt court nor in any manner acted on by it, (Ives v.
Tregent, 14 B, R. 60; 8. c. 29 Mich. 390.)

The solicitor of the assignee can not purchase at a sale made by the
§ 5062. ] NOTES OF DECISIONS. 557

assignee, for he is not the personal counsel of the assignee, but of the assignee
as the representative of the creditors. ( Citizens’ Bunk v. Ober, 18 B. R. 328 ;
s c. 1 Wood, 80.)

An agreement by a party who expects to become a purchaser at an
assignee’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. (Citizens? Bunk y. Ober, 13 B. R. 328; s. c. 1 Wood, 80.)

When the terms are cash on the day of sale, a party who expects to
purchase may agree with another party, that in case he becomes purchaser,
he will sell the property to him at anamed price on terms of credit, especially
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.
( Citizens’ Bank vy. Ober, 13 B. R. 828; s. c. 1 Wood, 80.)

The bankrupt may purchase property at an assignee’s sale. (Arnold v.
Leonard, 20 Miss. 258.) ‘

The district court has the power to set aside a sale made by an assignee.
When a portion of the creditors unite ina purchase for the joint benefit of
themselves, it ought to appear that the sale has been so conducted 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 dis-
pute may file a petition to set aside a sale. (Jn 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 ap-
proval 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. (Jn re O'Fallon, 2
Dillon, 548.)

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 v. Olurk, 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. (Jn re Jacob H. Mott, 1 B.
R. 9.) .

A purchaser is not bound by a subsequent decree for a sale of the premises
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.)

The purchaser at an assignee’s sale is entitled to the rents from the day of
sale. (Hall v. Scovil, 10 B. R. 295.)

A purchaser from an assignee takes no higher right than the bankrupt
himself had. (Anderson v. Miiler, 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 pur-
chaser no other title than a sale by the bankrupt himself before his bank-
ruptcy would confer. If the bankrupt could not give a legal title by his sale,
the assignee can not. (Cumack 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 |
558 THE BANKRUPT LAW. [§ 5062.

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. (MeKiernan v. Fletcher, 2 La. An. 438.)

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 v.
Clawson, 10 Il. 346.)

A purchaser of a note at an assignee’s sale takes it subject to a prior law-
tul transfer thereof by the bankrupt. (Converse v. Sorley, 39 Tex. 515.)

A person who purchases from the assignee can not impeach a prior con-
veyance ior 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 al! the
rights of action which the assignee could exercise in respect of such property,
and he may impeach a prior fraudulent conveyance. (Williams v. 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 sub-
ject only to legal and valid incumbrances, and may impeach an incumbrance
for fraud. (Murray v. Jones, 50 Geo. 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 posses-
sion legally, and the owner, if there is a better title, can not recover the prop-
erty by a possessory warrant. He must bring trover, or other proper action,
to try the title. (Bryan v. Whitsett, 39 Geo. 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 re-
payment of the advance, as well as the original bid, as a condition 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 establish
the regularity of the proceedings in bankruptcy, he may rely upon a subse-
quent 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,
§ 5062 A.] NOTES OF DECISIONS. 559

set off a debt obtained by him after the commencement of the proceedings i in
bankruptcy. (Judson v. Lathrop, 6 La. An. 587.)

A debtor to a bankrupt firm can not, in an action by a purchaser, set off a
debt due to him by one of the bankrupts. (Judson v. Lathrop, 6 La. An. 587.)

Acclaim against the bankrupt before his bankruptey can not be set off
against an indebtedness for goods purchased from the assignee. (Moran v.
Bogert, 14 B. R. 398; s. c. 16 Abb. Pr. [N. S.] 303; 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. (Moran
v. Bogert, 14 B. R. 393; s. c. 16 Abb. Pr. [N. 8.] 803; s.c. 10 N. Y. Supr.
603.)

The defendant in an action brought by the purchaser to recover the prop-
erty, can not impeach the pr oceedings i in bankruptcy for defects or irregulari-
ties. (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. (Stevens v. Hauser, 39 N. Y. 3023; s. c. 1 Robt. 50.)

A purchaser is not liable for an injury caused by the negligence of the as-
signee in the management of the property, after the sale and before the rati-
fication of the sale and conveyance of the cee: (Metz v. Buffalo, Corry
& P.R. R. Co. 12 B. R. 559; s. 0. 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 as-

signee, he may prove the proceedings in bankruptcy by parol evidence if the:
records are destroyed. (Lhumas v. Cruttenden, 4 Cranch C. C. 71.)

Sno. 5062 4 (22 June, 1874, § 1).--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 trom the time the debtor
shall have been declared a bankrupt. Provided, that such order
shall not be made until the conrt 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-
asalable condition. The assignee should endeavor to setile 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 ona trade. Butif, 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 te a moral certainty insure the creditors.
560 THE BANKRUPT LAW. [§ 5062 B.

against loss and insure them a large gain withina reasonable time. (Foster
v. Ames, 2 B. R. 455; 8. c. Lowell, 313.)

If a receiver institutes a suit to recover the value of property sold by the
bankrupt in fraud of the bankrupt law prior to the commencement of pro-
ceedings 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 baukrupt in fraud of the bankrupt law prior to the commencement of
proceedings in bankruptcy. (Lansing v. Manton, 14 B. R. 127.)

Src. 5062 B (22 June, 1874, § 4)._That, unless otherwise or-
dered by the court, the assignee shall sell the property of the
bankrupt, whether real or personal, at public anction, 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 designated by the judge,
which, in his opinion, shall be best calculated to give general no-
tice of the sale. And the court, on the application of any party
in interest, shall have complete supervisory power over such sales,
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 bankrupt,
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
reasonable 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 forteit all fees
and emoluments to which he might be entitled in connection with
such sale. And if any assignec shall in any manner, in violation
of his daty aforesaid, 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 wrong-
fully sell or dispose of the property committed to his charge, he
shall, upon proof thereof, be removed, and fortcit 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 imprisonment 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 afore-
said, shall upon conviction, be liable to a like punishment. That

\
§ 5063. ] NOTES OF DECISIONS. 56L

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 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 received, 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 afti-
davit 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 advantage
from the use or deposit of such funds; and such assignee may be
examined orally upon the same subject, and if he shall willtully
swear falsely, either in such affidavit or examination, or to his re-
port provided for in this section, he shall be deemed to be guilty
of perjury, and on conviction thereof, be punished by imprison-
ment in the penitentiary not less than one and not more than
five years.

The assignee’s might to convey depends entirely upon the statute which
ives 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, 82 Me. 197; Osborn v. Buster, 58
Mass. 406; Joy v. Berdell, 25 Tll. 537; Holbrook v. Brenner, 31 Ill. 501; vide
Crowley v. Hyde, 116 Mass. 589.)

.

Src. 5063.—Whenever it appears to the satisfaction of the
court that the title to any portion of an estate, real or personal,
which has come into possession of the assignee, or which is
claimed by him, is in dispute, the court may, upor 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 re-
cevived 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.

This section intrusts the court with a discretion which can only be exer-
cised by the court itself, and can not be delegated to any officer of the court.
(In re Wm. Major, 14 B. R. 71; én re Graves, 1 B. R. 237; s. c. 2 Ben. 100.)

An order of ¢ register authorizing a private sale without notice is null and
void. (Jn 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. (In re Wm. Major, 14 B. R. 71.)

An approval by the court of a sale can not be regarded as a confirmation,
36
562 THE BANKRUPT LAW. [§ 5063.

where it is private and does not become a part of the record until some time
afterwards. (Jn re Wm. Major, 14 B. R. 71.)

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. (Jn re Wm. Major, 14
B. R. 71,),

A sale can only be made after such notice to those claiming adversely as
the’ court in its discretion may deem proper. (Zn re Wm. Major, 14 B. R.
71.)

The sale must be public after public notice. (Jn 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 in a fiduciary
relation to the estate, and can not be a purchaser. (March v. Heaton et al. 2
B. BR. 180; 8. c. Lowell, 278.)

Quere. Does this clause apply to mortgaged property? Its language is
better adapted to claims made by title paramount. (oster v. Ames et al. 2
B. R. 455; s. c. 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 controversy, 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 de-
livered to the assignee, and held subject to the rights of the party who may
prove himself entitled to it. (Bill v. Beckwith, 2B. R. 241; Foster v. Ames
et al. 2 B. R. 455; 8, c. Lowell, 318; in ve Hunt, 2 B. R. 5389; s.c. 10. LN.
169.)

Taken literally, the phrase ‘‘or which is claimed by him” appcars to
afford some support to the theory that the power of sale extends to any por-
tion of an estate, the title to which is in dispute, where the same is claimed
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 in-
habitant of his judicial district, and to direct the assignee to hold the funds
received from the sales in the place of the estate 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 annul 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 mere 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 discovered in the possession of the bankrupt which was not
transferred to the assignee, and other cases of like character. Other exam-
ples might be put, but these are sufficient to show that the power of sale
even as enlarged 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
§§ 5064-5. ] NOTES OF DECISIONS. 563

the debtor, or any other former owner. (Knight v. Cheney, 5 B. R. 805; s. 0.
2L. 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 y.
Heaney, 4 B. R. 510; s. c. 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 commence-
ment 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 bankrupt court, or in the circuit court. But an action of re-
plevin, brought in a State court, to recover specific property after such prop-
erty has been taken into custody by the bankrupt court, is not, within this
section, a “proper action.” (Jn re Vogel, 2 B. R. 427; s.c.3 B. R. 198; 8. ¢.
7 Blatch. 18; s.c.2L, T. B. 154; in ve 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. (Jn re Noakes,
1B. 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. 860; s. c. 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 sold. (Doll v. Harlow, 11 B. R. 350; s.c. 5 N. Y. Supr. 699;
s.c.9N. Y. Supr. [Hun], 659.)

Src. 5064.—The assignee may sell and assign under the direc-
tion of the court, and in such manner as the court shall order, any
outstanding claims or other property, in his hands, due or be-
longing to the estate, which can not be collected and received by
him without unreasonable or inconvenient delay or expense.

Sec. 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
the saine to be sold, in such manner as may be deemed most ex-
pedient, under the direction of the messenger or assignee, as the
ease may be, who shall hold the funds received in place of the
estate disposed of.

The parties must apply to the court, and not to the register. (Jn re Graves,
1B. R. 287; 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. (Jn re Metzler et ai. 1 B. R. 38;
8. ¢. 1 Ben. 356.)

It is the duty of the court, from the moment that the property is sub-
nitted 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 assented to by
the bankrupt. (Jn re James Vila, 5 Law Rep. 17.)

The filing of a petition for a stay of the sale of certain property as perish-
564 THE BANKRUPT LAW. [§§ 5066-7.

able does not make the petitioner a party to the proceedings. (Marsh v. Arm-
strong, 11 B. R. 125; 8. ¢. 20 Minn. 81.)

If a sale is made before the appointment of an assignee, it should not be
made by the bankrupt. (Jn ve James Vila, 5 Law Rep. 17.)

The bankrupt can not sell any of his property without authority from the
court. (Jn re Richard Prior, 4 Biss. 262.)

Tf 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 sale
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 newspaper a suffi-
cient time before the sale to enable them to act if they see fit. (Jn re James
Vila, 5 Law Rep. 17.)

Src. 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.

Quere. Can the assignee redeem before the debt is payable? (Foster v.
Ameset al. 2B. R. 455; 8. c. Lowell, 313.) ;

Sxc. 5067.—All debts due and payable from the bankrupt 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
bankrupt. 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 bankrupt 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 datnages to be assessed in such mode as it may deem
best, and the sum so assessed may be proved against the estate.

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. (Jn re Prescott, 9 B. R. 385; s. c. 5 Biss, 523; in re Robert
Pittock, 8 B. R. 78; s.c. 2 Saw. 416.)

The assignee may set up any defense to aclaim which the debtor himself
could set up. (Jn re Prescott, 9 B. R. 385; 8. c. 5 Biss. 523.)

Any debt which may be proved by complying with the provisions of tbe
bankrupt act is a provable debt. It is true that asecured creditor can be ad-
mitted 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 conveys his
§ 5067. | NOTES OF DECISIONS. 465

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 admitted 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.
(Un re Bloss, 4 B. R. 147; s. 0. 2 L. T. B. 126; Rankin & Pullan et al. v.
Florida, Atlantic & G. 0. R. R. Co. 1 B.R. 647; 8. co. 1 L. T. B, 85; contra,
Sigsby v. Willis, 3 B. R. 207; s.c. 3 Ben. 871; s.c.1 L. T. B. 71)

The time of the adjudication of bankruptcy is the time of filing the peti-
tion. (Jn re Patterson, 1 B. R. 125; s. c. 1 Ben. 508; contra, in re Hennocks-
burgh & Block, 7 B. R. 87; 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 proved. If
it exists then, but is not payable till 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 before that time, and bears in-
terest, 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 bank-
tuptcy. (Jn re Orne, 1 B. R. 57; 8. c. 1 Ben. 361; in re Crawford, 3 B. R.
698; 3c. 3 L. T. B. 169; s.c. 5 B. R. 301; in re Port Huron Dry Dock Co.
14B. R. 253.)

The accrued interest constitutes part of a debt provable against the bank-
rupt’s estate. (Sloan v. Lewis, 12 B. R. 173; 8. c. 22 Wall. 150.)

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 provis-
ion of the contract. Interest can not be allowed on interest in such cases.
(in re Geo. A. Bartenbach, 11 B. R. 61; sc. 2 A. L. T. [N. 8.] 33.)

No interest can be allowed on the bills of a bankrupt bank until payment
has been demanded thereon and refused. (Jn 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.
(In re Bank of North Carolina, 10 B. R. 289.)

Claims will draw interest from the time of the adjudication up to the pay-
ment 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 as-
‘sets 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 simul-
taneously 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. (Jn re
Haake, 7 B. R. 61; 8. 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 ve Frank F. New-
land, 9 B. R. 62; 8. c. 7 Ben. 68.)

If judgment is recovered before the commencement of proceedings in
bankruptcy, the costs are a part of the debt, and may be proved. Interest
566 THE BANKRUPT LAW. [§ 5067.

on the judgment is also provable. (Hz parte O’Neil, 1 B. R. 677; 8. ¢. Lowell,,
162.

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 bankruptcy,.
or is payable at the domicile of the debtor, damages for the non-payment
thereof can not be allowed. (Jn re Oliver Bugbee, 9 B. R. 258.)

Drafts drawn and accepted after the commencement of proceedings in
bankruptcy are not provable, although the acceptor paid the money to ex-
tinguish claims that existed prior to that time. He is not entitled to be sub-
rogated to the rights of the creditors to whom the drafts were given, unless
he has taken an assignment of their claims. (Jn 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. (Gébson v.
Lewis, 11 B. R. 247; s.c. 9 Pac. L. R. 75; 8. c. 82 Leg. Int. 22.)

The liability of a stockholder for the debt of a corporation is not a prov-
able 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 indorser or guarantor.
(Holleman v. Dewey, 7 B. R. 269.)

If a policy of insurance contains a clause authorizing the assured to sur-
render 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 company becomes insoly-
ent, and before it becomes bankrupt, and the return premium wlil be a provable
debt. (Jn re Independent Ins. Co. 7 A. L. Rev. 362.)

The right to maintain an action for money had and received, does not al-
ways depend on privity of contract, or upon contract at all. It is enough to
prové 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 in-
quiry is not concerning priority of contract, but concerning identity of prop-
ecty. Ifa party fraudulenty 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 hasa claim for the bank bills which were drawn out upon the fraud-
ulent checks by the parties themselves. The same result will follow whenever
the proceeds or fraudulent checks 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 somewhat more difficult to say that the money of the bank
comes to the hands of the parties themselves, (In re Eureka Manuf. Co.
Lowell, 500.)

The debt of the wife contracted dum sola is a provable debt. ( Vander-
heyden v. Mullory, 1 N. Y. 452.)
§ 5067. ] NOTES OF DECISIONS. 567

A note given to compensate another for indorsing a note for the maker is
valid. (Providence Co. Savings Bank v. Frost, 13 B. R, 856.)

A subscription for a religious or charitable institution given in considera-
tion of a similar subscmption by another party, and not revoked until the in-
stitution has incurred new expenses on the faith of it, is a valid promise, and
founded on good and sufficient consideration. (Capelle v. Trinity Church, 11
B. R. 536.)

If the bankrupt agrees to pay the 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. (Jn 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 it is justly chargeable, the holder can not prove the claim against
the indorser, even for the amount paid for the notes. (Jn 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. (Jn 7e Leonard L.
Hook, 11 B. R. 283.)

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 provable debt. (Chandler
y. Windship, 6 Mass. 310; McMullin v. Bank, 2 Penn. 343.)

If a creditor assigns 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; 3. c. 4 Dall. 370.)

If one of several joint makers of a promissory note takes it up by giv-
ing his individual note therefor, and thus satisfies the holder, it is imma-
terial how he satisfies him, and he has a demand for contribution, whetier
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. (Jn re Rundle eé al. 2 B. R. 118.)

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 otber credit-
ors, merely a provable debt to the amount of the value of the stock so di-
rected to be purchased for him. (Ungewitter v. Von Sachs, 3B. R. 723; 8. ¢.
4 Ben. 167; 8.c.1 L. T. B. 224; s.c. 3 L. T. B. 195.)

A claim for services rendered by counsel for the bankrupt in opposing the
petition in involuntary proceedings, is a provable debt. (Jn re N. Y. Mail
Steamship Co. 2 B. R. 74, 5543's. o. 38 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. (Jn re Evans, 3 B.R,
261.)

A person who has taken charge of the bankrupt’s property under a deed
568 THE BANKRUPT LAW. [§ 5067.

of trust, which was subsequently declared void under the provisions of the
bankrupt 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; 8. c. 1 Saw. 37; s. 0.1 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, al-
though 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. (Jn 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 association
can be said to exist de facto. An association must be shown to be a corpora-
tion de facto within this rule before a party dealing with it will be deemed
to be estopped from showing that it had no legal corporate existence. In
such case a creditor may treat the association as a partnership, and his claim
will constitute a debt provable against the members. (Jn re Richard J. Men-
denhall, 9 B. R. 497.)

If a note on its face purports to make the promise that of the bankrupt
corporation, and bears the impression of the seal of the corporation, it is
provabie against the estate, although the signature is merely that of the
president as president. (Jn ve Kansas City Manuf. Co. 9 B. R. 76.)

‘When the common seal of a corporation appears to be affixed to an instru-
ment, and the signatures of the proper officers are proved, the presumption is
that the officers did not exceed their authority, and the seal itself is prima
facie evidence that it was affixed by proper authority. (Jn re Kansas City
Manuf. Co. 9 B. R. 76.)

Parol evidence is admissible to prove that a note executed by an officer of
a corporation was intended as the promise of the corporation. (Zn 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. (Jn re Frear, 1 B. R. 660; s. o. 35 How. Pr. 249; 8. ¢.
2 Ben, 467.)

Where one partner, in fraud of the firm, issues firm notes for the purpose
of obtaining his share of the capital, an accommodation indorser who subse-
quently 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 uncon-
oa HS the current business of the firm. (In re Dunkle & Driesbach, 7

. 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 in-
quiry. There must be knowledge of facts impeaching the validity of the note
The fault of the partner’s meditated fraud must be implanted in the holder's
title, so that his assertion of a claim against the firm would necessarily subject
§ 5067. ] NOTES OF DECISIONS. 569

him to the imputation of bad faith. (Bush v. Crawford, 7 B. R. 299; 8. c. 2
L. T. B. 239.)

An agreement made by a member of a firm who are the payees of an ac-
commodation 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 account,
and the indorsement will bind the firm, unless it appears that the holder had
notice that the indorsement was outside of partnership affairs. (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 part-
ners, either express or implied, from the firm’s course of dealing. (Lemoins
v. Bank, 3 Dillon, 44.)

The possession of a note by the maker before its maturity raises a pre-
sumption that an indorsement thereon is an accommodation indorsement.
(Lemoins v, Bank, 8 Dillon, 44.)

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 ratification, so
as to bind a partner who had no knowledge of the indorsement or of the
drawing of the check. = (Lemoins v. Bank, 3 Dillon, 44 )

If a party advances money to one partner for a purpose entirely outside
of the partnership business, and takes a firm note therefor, the burden is on
bim to prove the consent of the other partner; and if he fails to do so, the
a is not provable against the joint estate. (Zn re Forsyth & Murtha, 7 B.

. 174.)

An indebtedness growing out of partnership transactions, of which no set-
tlement has been made between the parties, in a case where the partnership
debts have not all been paid nor all the partnership property disposed of, and
being in part for assets that have never been disposed of, is not a provable
debt. But a claim arising from the fraudulent misappropriation of the part-
nership 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 misappropriation as entirely for-
eign to the partnership business, and prove the debt for his share of such
funds precisely the same as though the partnership had never existed. (Sigs-
by v. Willis, 3 B. R. 207; s. c. 3 Ben. 871; 8.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 exp1-
ration 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 ber 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 procecds of his individual estate. The knowledge of

‘ the husband, of facts affecting the wife’s property, which he is managing by
her consent, must be regarded as the knewledge of the wife, and she must be
charged with notice of all facts known to him which may affect his transac-
tions on her behalf. (Jn re Frost et al. 3 B. R. 786.)

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
570 THE BANKRUPT LAW. [§ 5067.

times after the first publication, at an interval of seven days between each of
the four times. (Jn re King e¢ al. 7B. 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. (Zaylor 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. (Taylor v. Rasch, 11 B. R. 91.)

Equitable Debts.

Equitable debts are within the scope of the bankrupt act. It isthe 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 liquidated or capable of liquidation. In respect to
both debtors and creditors, the act is highly remedial, and the district court
is vested with most ample equitable powers to enable it to work out full rem-
edies to all persons. This section makes provabie 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 depend on the reme-
dies given in the several States, in one of which the very same debt might be
sued at law, which in another must be prosecuted in equity, and in some of
which there is no distinction between law and equity. (dn re Blandin, 6 B.R.
89; 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, de-
mands arising from such business may be considered as equitable debts of the
bankrupt, and proved against his estate. (Jn re Wm. H. Long, 3 B. R. quarto,
66.)

Claims by Bankrupt’s Wife.

Money loaned by the wife of the bankrupt to him out of her separate es-
tate 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 husband. The court being satisfied that the
money was the separate property of the wife, and was placed in the husband’s
hands as a loan or trast 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. (Jn re Bigelow et al. 2B. R. 556; s.c. 3 Ben.
198; in re Blandin, 5 B. R. 39; s. c. Lowell, 543; s, c,2 L. T. B. 198; in re
David W. Jones, 9 B. R. 56; s. c. 6 C. L. N. 271.)

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 re Bigelow é
al. 2B. R. 556; 8. ©. 3 Ben. 198.)

A mortgage taken in the name of the wife merely for the sake of conven-
ience will not be deemed a settlement or advancement, and a subsequent use
of the notes by the husband will not give the wife a valid claim against his
estate. (Ja re David W. Jones, 9 B. R. 56; 8c. 6 C. L. N. 271.)

Where the husband, by the consent of his wife, is in the habit of receiving
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
§ 5067.] NOTES OF DECISIONS. 571

does not therefore imply a promise to repay them. (Jn re David W. Jones,
9B. R. 56; s.c.6 C. L. N. 271.)

A note given by the bankrupt to his wife for a legacy previously reduced
to possession, is without consideration and can not be enforced. (Canby v.
MeLear, 13 B. R. 22.)

Defenses,

Where a foreign creditor has obtained a judgment and levied an execu-
tion 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 acquired, and come in equally
with the rest of the creditors, or not at all. (Jn 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. (In re Oliver Bughee, 9 B. R.
258.)

If a foreign corporation transacts husiness within the limits of a State be-
fore the appointment of an agent upon whom process may be served, where
such appointment is required by the laws of the State as a condition prece-
dent to the right to transact such business, all contracts so made are void.
(In re Comstock & Co. 12 B. R. 110; 8. ¢..8 Pac. L. R. 124.)

A debt contracted by a feme covert in a case where she was not authorized
to incur it by the law of her domicile, is not provable. (Jn 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. (Zn re Hinds e al. 3 B. R. 351.)

A receipt given by the bankrupt to a sheriff for certain property taken
under an attachment is a provable demand. (Fowles v. 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, fora 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 re-
mote 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 indemnity 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. (/oose-
velt v, Mark, 6 Johns. Ch. 266.)

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 prom-
ise. There is no legal obligation or duty which a promise 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; s.c.
6 B. R. 305; s. c. 9 Blatch. 114; s.c, 2 L. T. B. 220.)

In order to entitle a third party to prove a note which was given without
572 THE BANKRUPT LAW. [§ 5067.

any valuable consideration, there must be some present consideration at the
time of the transfer. He mast show that he paid value when he took it, or
incurred some responsibility, or relinquished some right, or granted some in-
dulgence, or discharged a precedent debt, upon the faith and credit of the pa-
per. (Jn re Howard, Cole & Co. 6 B. R, 372; s. c. 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 fulfil 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. R. 15.)

A debt incurred by the loan of Confederate notes is not provable. (Jn re
Milner, 1 B. R. quarto, 19; s.c. 1 B. R. 419; s. c, 35 Geo. 330; 8.0. 1 Abb. C.
. 261; sc. 1 L. T. B. 15.)

The acceptance of Confederate notes or bonds as payment was a sufficient
consideration to liquidate or discharge a contract debt. (Holleman v. Dewey,
7B. 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. (Ja re Hatje, 12
B. R. 548.)

A savings bank which is prohibited from making a loan on personal secu-
rity, 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.)

A savings bank which is prohibited from making loans on personal security
can not prove claim for money so loaned. (In re Jaycox & Green, 13 B. R.
122; s. 0, 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. (Jn re Edward
Burt e¢ 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. (lJiller 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. (Brook-
mire v. Bean, 12 B. R. 217; s. c. 3 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 de-
liver the grain, but only at the utmost to settle the differences, 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 recovered. (Jn re P. K. Chandler, 9 B.
R. 514.)

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 cases the
contract is to be governed by the law of the place where the goods are ,ac-
cepted, and when it is illegal there, on account of a law prohibiting the sale
of liquor, it is not pruvable. In Michigan payments can not be applied to the
older items in point of time, so as to extinguish tbe items for spirituous liquors.
A note given for the balance of an account of which items for liquor consti-
tute a part, being founded in part on an illegal consideration, is totally void.
Cn re Paddock, 6 B. R. 182; s. c. 2 L. T. B, 214; in re Town ef al. 8 B. R.
38.)

A verbal contract is not within the statute of frauds, unless it expressly
§ 5967. ] NOTES OF DECISIONS. 573:

shows that it was not to be performed within a year from the making thereof.
(Capelle v. 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 ot the latter State. (Jn re Town et al. 8 B. R. 88.)

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 bankruptcy being by virtue and
authority of the act of Congress, which authorizes 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. (Jn 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 serv-
ices, The claim against the bankrupt exists independently of such an agree-
ment. The agreement is a collateral matter. Under such circumstances it
has never been held that an agreement made by a 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 justice, can be used to defeat the creditor in
establishing a claim otherwise valid. (In re Lathrop et al. 3B. R. 413; 3. o.
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. (Jn re Ray, 1 B. R. 203; s.
c. 2 Ben. 53; in re Sheppard, 1 B. R. 439; s.c.1 L.T.B.49; 30.7 ALL.
Reg, 484; contra, in re Kingsley, 1 B. R. 329; s.c. Lowell, 216; in re Harden,
1B.R. 395; s.c.1L. T. B. 48; in re Cornwall, 6 B. R. 305; s.c 9 Blatch.
114; 8.c.2L. T. B. 220; inve C. W. Reed, 11 B. R. 94; 30.70. L. N. 76;
gc. 8 Pac. L. R. 183.)

Where a debt is already barred by the statute of limitations, a promise by
the debtor to pay it when he is able is regarded as conditional, and not ‘to
create un 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. (Jn re Cornwall, 6 B. R. 305;
8. c. 9 Blatch. 114; s. c. 2 L. T. B. 220.)

The filing of the petition in bankruptcy creates a trust, and the statute 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 commence-
ment of the proceedings in bankruptcy. (Jn re Eldridge & Co. 12 B. R. 540;
vide in re Robert Morris, Crabbe, 70.)

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. 586.)

Usury.

The assignee may set up the defense of usury against any claim presented
for proof. The paaciples adopted in a court of equity where a debtor seeks
574 THE BANKRUPT LAW. [§ 5067.

relief from a usurious contract do not apply, for the creditor is seeking to en-
force his contract. (Jn re Prescott, 9 B. R. 385; s. c. 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 juris-
diction to enforce a penalty imposed by a State law on account of an act
making any such claim illegal. (Jn re Robert Pittock, 8 B. K. 78; 8. c. 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. (Jn re Pres-
cott, 9 B. R. 885; s. c. 5 Biss. 523.)

Where acreditor seeks to prove his claim, a forfeiture of all interest for
usury may be enforced. (Jn ve Prescott, 9 B. R. 383; 8. c. 5 Biss. 523.)

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 not 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. (Jn re Conrad, 4 L, T. B.
189; 8. c. 28 Leg. Int. 824; Providence Co. Savings Bank v. Frost, 13 B. R.
356.)

The principal of money loaned by a national bank upon usurious interest
isa provable debt. (Moore vy. National Exchange Bank of Columbus, 1B. R.
470; 8. c. 2 Bond, 170; s. oc. 1 L. T. B. 74.)

If the usury laws of the State do not apply to loans made to corporations,
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 United States. (Zn re Wild, 10 B.
R. 568; 5.0. 8 A. L. J, 235.)

A mere accomodation indorser is entitled to all the protection which his
principal may obtain, and can set up the defense of usury. (Zn re Wild, 10
B. R. 568; s,c. 8 A. L. J. 235.)

The Amount that may be Proved.

When a party holds, as collaterals, notes of the bankrupt which are in-
valid as between the bankrupt and the payee, and is a bona jide holder, he
may prove the full amount of the notes, or as much thereof as may be neces-
sary to entitle him to a dividend equal to the full sum of his claim. (Bailey
v. Nichols et al. 2B. R. 478; 3.0.2 L. T. B. 60;8.0.1 OLN. 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 collateral can
not be enlarged after bankruptcy, nor will a good title as pledgee be merged
in a defective titleas 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 re-
covered 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. (Jn re Storms & Co. Lowell, 34.)

A party who has compromised his claim with the bankrupt after the
§ 5067. ] NOTES OF DECISIONS. 575

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 compromise. 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 received
under the compromise and prove a claim for the balance. He can not affirm
one-half of the contract and disaffirm the other. (Jn re Lathrop et al. 3 B.R.
413; 8. c. 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 dividend can be de-
manded unless the result would be to overpay the note. (Jn re George 8.
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. (dn re George S. Weeks, 13 B. R.
263.)

Effect 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 bank-
rupt’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 obligation from the bankrupt in substitution for the debt existing at the
time 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 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. If this were
not so, the judgment would destroy itself by extinguishing the very founda-
tion upon which it is built. The debt was founded upon contract; it isnow
founded on judgment, but it is, nevertheless, the same debt. A judgment
operates to extinguish a debt only when it produces the fruits of a judgment.
It operates as a change ofremedy merely. It is a security of a higher nature.
It is still but a security for the original cause of action, The theory that the
debt is so merged in the judgment as to be extinguished, has no applicability
under the bankrupt act. (/n re Crawford, 3 B. R. 698; s.c. 1 L. T. B, 211;
sc. 3 L. T. B. 169; 5. c. 5 B. R. 3801; in ve Vickery, 3 B. R. 696; in re 8.
Brown, 3 B. R. 584; 8. c. 5 Ben. 1; Barnes v. U. 8. 211. 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. (Jn re Williams, 2 B. R. 229; s.c. 1 L. T. B.
107, 118; s.c. 3 A. L. Reg. 374; Bradford v. Rice, 102 Mass. 472; in re Gal-
lison et al. 5 B. R. 368; s. c.2 L. T. B. 195; in ve 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. (Jn re Vickery,3 B. R. 696; in re 8. Brown,
3B, R. 584; 5. c.5 Ben. 1; im ve Louis H. Rosey, 8 B. R. 509; s. c. 6 Ben.
507.)

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
576 THE BANKRUPT LAW. [§ 5067

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 divi-
dends are to be declared. (Jn ve Crawford, 3 B. R. 698; s. c. 1 L. T..B. 211;
s.c.3L. T. B. 169; 3.¢.5 B. R. 301; Monroe v. Upton, 50 N. Y. 593; 8. 6.6
Lans. 255.)

It is not necessary for a creditor who recovered judgment after the adjudi-
cation of bankruptcy to strike out his judgment before he can prove the claim
on which the judgment was recovered. (dn re Stevens, 4 B. R. 367; 8.0. 4
Ben. 513; 3.0.2 L. T. B. 121.)

Torts and Damages.

A claim for damages for a purely personal injury is not provable, unless
liquidated and transmitted into a legal debt by a judgment obtained before
the adjudication of bankruptcy. (Jn re Hennocksburgh & Block, 7 B. R. 87;
s. C. 6 Ben. 150.)

A mere verdict in an action for a personal tort is not a provable debt.
(Black v. Mc Clelland, 12 B. R: 481; 8. c.7C. L. N. 420.)

A judgment entered after the commencement of the proceedings in bank-
ruptcy upon a verdict rendered before that time in an action for a personal
tort is not a provable debt. (Black v. McClellund, 12 B. R. 481; 8. c.7C. L.
N. 420.)

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 any-
thing to the contrary, must be presumed to have been given as a punishment
for the commission of a crime. (/n 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. (Ju 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. 8. 211. R. R. 213.)

If the bankrupt wrongfully converted the property of another while he
was legally in the possession thereof, a claim for damages for the conversion
constitutes a provable debt. (Oole v. Roach, 10 B. R. 288; s. c. 37 Tex. 418.)

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, although
the bankrupt is also liable as indorser to the holder. (Jn re Morse & Co. 11
B. R. 482.)

If the original ground of action is founded on contract, but the immediate
cause of the action arises ez delicto, and is a claim for damages unliquidated
by an express agreement, it is not a provable claim. (Dusar v. Murgatroyd,
1 Wash. 13.)

_ A decree for damages in a suit for the specific performance of a contract
is a present debt, and therefore provable, although the amount remains 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 ascertained, the
demand is provable. (Monroe v. Upton, 50 N. Y. 593; 8. 0. 6 Lans, 255.)
§ 5068. ] NOTES OF DECISIONS. B77

A judgmentiobtained fora breach of a promise to marry is provable. (In re
Sidle, 2 B. R. 220; zn 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 judgment
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 is a provable debt. (Jn re Daniel Sheehan,
8 B. R. 345.)

Where the claim is for unliquidated damages, there must be an assessment,
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 un-
liquidated damages, and can not be proved without an assessment, (Jn re
W. Fleming Smith, 6 Ben. 187.)

Sec. 5068.—In all cases of contingent debts and contingent
liabilities contracted by the bankrupt, and not herein otherwise
provided for, the creditor may make claim therefor, and have his
claim allowed, with the right to share in the dividends, if the con-
tingency 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 shail then
be done in such manner as the court shall order, and he shall be
allowed to prove for the amount so ascertained.

The only contingent debts and contingent liabilities allowed to be proved
are those contracted by the bankrupt. (Zimmer v. Schleehauf, 11 B.R. 3138,
8. c. 115 Mass. 52.)

A bankrupt law mdy be so framed as to avoid and annul all contracts ex-
isting at the time of the bankruptcy, whether the liability of the bankrupt
upon such contracts was fixed at the time of the bankruptcy or depended
entirely upon contingencies which might afterwards arise. (Shelton v. Pease,
10 Mo. 473.)

The phrase * contingent debt”? means not demands whose existence de-
pends 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 « present claim exists
or where it is certain to arise in future, and is only appropriate when there is
no claim én presenti, 2nd when it is uncertain whether any in fact will arise.
(Jemison vy. Blowers, 5 Barb. 686.)

It is necessary to distinguish between a contingent demand and a contin-
gency whether there ever will be a demand. (Woodard v. 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. (Woodard v. Herbert, 24 Me. 358.)

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 v. Speakman, 7 Blackf. 817; Frentress v. Markle, 2
Greene, 553: Clarke v. Porter, 25 Penn. 141.)

37
578 THE BANKRUPT LAW. [§ 5068.

As long as it remains wholly uncertain whether a contract or engagement
will ever give rise to an actual duty or liability, and there is no means of re-
moving the uncertainty by calculation, such contract or engagement 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 v. Magwire, 8 B. R. 484; 8. c. 15
Wall. 549.)

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 prin-
cipal 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; 8. c. 53
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 dividend, the court
may by some metliod determine the value to Le placed by the claimant on
such value and admit him to prove it. (U. 8S. v. Throckmorton, 8 B. R. 309;
s.c.5 C. L. N. 520; s.c. 6 Pac. L. R. 102; s.¢. 18 I. R. R. 54.)

A bond 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. (lS. v. ob Roy, 13 B. R. 235; s. c. 1
Wood, 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. Hnor, 8 BR. 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 a coa-
tingent 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 ora debt. (Large v. Bosler, 3
Penn. L. J. 246.)

A covenant in a deed to warrant the title against all liens or incumbrances
isa provable demand. (Shelton v. Pease, 10 Mo. 473.)

A covenant against incumbrances is not a provable debt, unless the breach
occurs before the discharge of the bankrupt. (French vy. Alorse, 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
tae claim is provable, although the breach occurs after the commencement of
the proceedings in bankruptcy. (Jemison v. Blowers, 5 Barb. 686.)

A note,which is deposited in the hands of a third party, for the sole pur-
pose 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 demand.
(Kingston v. Wharton, 2S. & 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 contin-
gent liability. (/n ve Am. Glass Ins. Co. 12 B. R. 56)

If a policy of insurance contains a stipulation that the insured may sur-
§ 5068.] NOTES OF DECISIONS. 579

render it any time, and that thereupon the company shall retain the cus-
tomary 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, count-
ing a month which has been begun as a whole month. (#2 parte Derry Mills,
VA. L, Rev. d73. :

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 accrued, bar3 the claim as effectually as would the failure
to sue if the company were not in bankruptcy. (Jn re Fireman's Ins. Co. 8
B. R. 128; s. c. 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. (dn
re Fireman’s Ins, Co. 8 B, R. 123; s. c. 3 Biss. 462.)

Ifthe 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 his proof
in bankruptcy as the equivalent or substitute for the commencement of a suit
within twelve months. The assignee has no right to make an express prom-
ise 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 foliow up the preliminary proof
by proving his debt in bankruptcy, his claim will be barred by the “ year
clause.” (Jn re Fireman’s Ins. Co. 8 B. R. 123; s..c. 8 Biss, 462.)

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 examination 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 performance 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 adjustment. (Jn re Fireman’s Ins. Co. 8 B. R. 123; 8. ©. 8
Biss. 462.)

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 in-
quiry made into all the facts touching such alleged waiver. (Jn re Fireman’s
Ins. Co. 8 B. R. 123; s.c. 8 Biss. 462.)

_ 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 company 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, sv that the liability of the reinsuring company shall be coextensive
only with the liability of the original company. ‘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
580 THE BANKRUPT LAW. [§ 5069.

for the full loss, although it has only paid a certain per cent. to the original
policy holders. (/a re Republic Ins. Co. 8 B. R. 197; s. c. 3 Biss. 504.)

If a policy is to he 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; 8. 0. 7 C. LN. 282.)

If the company that granted a reinsurance receives copies of the prelimi-
nary proofs from the company that granted the original policy without ob-
jection, this is a waiver of any right to demand original proof. (Jn re Re-
public Ins. Co, 8 B. R. 197; 8. c. 3 Biss. 504.)

Src. 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
hability 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.

A claim against a bankrupt as drawer, indorser, surety, bail, or guarantor,
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. (dn re Loder, 4 B. R. 1903,
8. 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. (Jn re Crawford, 5
B. R. 301.)

If a note is passed to the holder for a loan made by him to the bankrupt
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 indorser, (da re Elliott
Felting Mills, 13 B. R. 160.)

A representation that a note hus been paid does not operate as an estop-
pel in favor of an indorser unless there has been some actual loss. (In re El-
liott Felting Mills, 18 B. R. 160.)

The giving of time to a maker does not release an indorser, unless there
was a valid contract which could be enforced. (Jn ve Elliott Felting Mills,
13 B. R. 160.)

A valid agreement for extension of time between the holder of a note
and the maker, without reservation, discharges the indorser. If a valid ex-
tension 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. (Jn re Granger &
Sabin, 8 B. R. 30.)

Whenever an indorser’s liability has become fixed, such hability consti-
tutes a debt due and payable from him, and may be proved against his estate.
(In re Nickodemus, 3b. R. 230; 8c. 1 L. T. B. 140: 5.0.36. LN, 49; 8.
c. 16 Pitts. L. J. 288; in re Cram, 1 B. R. 504; s.c.1L. 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 be-
§ 5069.) NOTES OF DECISIONS. 581

come 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. (/n re
Cram, 1 B. R. 504; s.c. 1 L. T. B. 65.)

Indorsers who are liable in the second instance are included in the s:atute,
and such a claim is provable. (d/c.Veil v. Knott, 11 Geo. 142.)

If the holder of a note indorses it to be liable in the second instance, the
right of action accrues immediatcly upon the indorsement if the maker has
paid the note while in the hands of a prior holder. (McNeil v. Knott, 11
Geo. 142.)

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 com-
mencement of the, proceedings in bankruptcy. (Dyer v. 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 atter the
ee of the proceedings in bankruptcy. (Woodard v. Herbert, 24

e. 358.)

The omission to file an account is a mere formal breach of a probate bond,
and furnishes a claim for nominal damages only, and so is not a claim prova-
ble 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 proceed-
ings in bankruptcy. (Wartmough v. Gilliams, 1 Phila. 572.)

A bond conditioned for the faithful performance of the duty of a public
officer, is not, prior to breach, a debt either in presenti or in futuro, and is
not provable against the surety. (Loring v. Kendall, 67 Mass. 303; Turner vy.
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 prov-
able debt, although the breach occurred before that time. (Goss v. Gibson, 8
Humph. 197; Dole v. 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. (Zn re Cosmore G. Bruce, 6 Ben. 515.)

A covenant to pay the debt due to another, is for a debt certain or capa-
ble of being reduced to certainty, and is provable, (Murray v. De Rottenham,
‘6 Johns. Ch. 52.)
582 THE BANKRUPT LAW. [§ 5070.

Sec. 5070.--Any person liable as bail, surety, guarantor, or
otherwise for the bankrupt, who shall have paid the debt, or any
art 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 provided by the general orders and subject to such
regulations and limitations as may be established by such gencral
orders.

This provision contemplates two cases, Ist. 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 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 cred-
itor shall fail or omit to prove such debt, prove the same cither 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 indispensable for the protection of the surety,
for if he has not satisfied the whole Gebt, he cannot 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 receiving 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 cred-
itor, who has the double security of the bankrupt’s liability, 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 cred-
itor’s name, that proportion 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 case
of omission by the creditor proves in bis name, to make like proof and receive
like dividends. (Zn re Ellerhorst & Co. 5 B. R. 144.)

A surety has a provable claim against the principal, although he has not
paid the debt for which he is liable. (Mace y. Wells, 7 How. 272: s. c. 17 Vt.
503; Ayle v. Bostick, 10 Ala, 589; Fulwood v. Bushfield, 14 Penn. 90; Tubbs v.
Williams, 9 Ired. 1; Morse v. Hovey, 1 Sundf. Ch. 187; s. c. 1 Barb. Ch. 404;
contra, MeMullin y. 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 bank-
ruptey. (Crayts v. Mctt, 4 N. Y. 603; s. c. 5 Barb. 805.)
§ 5070. | NOTES OF DECISIONS. 583

The claim of an indorser against the principal is provable, although the
indorser does not pay the note until after the commencement of the proceed-
ings in bankruptcy. (Hardy v. Carter, 8 Humph. 158; Zunno v. Bethune, 2
Dessau. 285.)

If the drawer is not a cosurety with the payee of a billof exchange drawn
for the accommodation of the acceptor, the claim of the payee isa provable
debt. (Dunn v. Sparks, 7 Ind. 490.)

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. (Jn 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 giv-
ing the holder his own individual note, he is entitled to prove his debt. (In
re Geo. P. Morrill, 8 R. B. 117; s. c. 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 thg dividends will
depend upon his having paid any or all of the note. (Jn re 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 pay-
ments made by him thereon. (Downingv. Traders’ Bank, 11 B. R. 871; s. ¢.
2 Dillon, 136.)

This clause does not authorize proof by the party so liable, only in a case
where the real creditor could prove his claim. (Sigshy v. Willis, 3 B. R. 207;
s.c. 3 Ben. 871; s.c.1 L. T. B. 71.)

A surety upon an official bond has no claim against the officer until he
has suffered an injury in consequence of becoming surety. (Hllis v. Ham, 28
Me. 885.)

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. (Hillis v. Ham, 28 Me.
385.)

A bond to indemnify a party against a mortgage signed by the creditor
jointly with the bankrupt is a provable debt, although the installments which
the holder is compelled to pay fall due after the commencement of the pro-
ceedings 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. (Jn re Howard, Cole & Co. 4 B. R. 571; s. ¢.
2.1L. 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
5&4 THE BANKRUPT LAW. [§ 5071.

to be treated as proving in part for the benefit of the acceptor. (Downing v.
Traders’ Bank, 11 B. R.371; 8. 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 maker
without giving credit for what le 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. (#2 parte Talcott, 9 B. R. 502.)

Src. 5071.—Where the bankrupt is liable to pay rent or other
debt falling due at fixed and stated periods, the creditor may
prove fora proportionate part thereof up to the time of the bank-
ruptey, as if the same grew due from day to day, and not at such
fixed and stated periods.

The words ‘‘the time of bankruptcy” mean the time when the petition
was filed to which time the adiudication relates. Rent for the time after the
commencement of proceedings in bankruptcy is not a provable debt. Where
an article 1s purchased, the consideration is, or is as~umed 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 v. Merwin, 9
B. R. 419; s.c. 47 How. Pr. 37; 8. c. 7 Ben. 238; Bailey v. Loeb, 11 B.R.
271; sc. 2 Cent. L. J. 42; in re Lynch & Bernstein, 7 Ben. 26; in re Peter
Hufnagel, 12 B. R. 554.)

Where the property has been condemned for public uses, and a certain
sum allowed to the bankrupt, upon the theory that he would remain liable 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. (Jn 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 before the property can be otherwise disposed
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, Kentucky, New Jersey,
South Carvlina, Mississippi and Louisiana. (Jn re Wynne, 4 B. R. 23; 8. ¢.
Chase, 227; s.c. 2L. T. B. 116; in ve Dunham & Hawks, 27 Leg. Int. 404: in re
Trim eé al. 5 B. R. 23; in re Webb & Co. 6 B. RB. 302; Walker v. Barton, 3
B. R. 265; s.c.1 B.L. T. 625; Marshall v. Knox, 8 B. R. 97; s. c. 16 Wall.
551; Austin v. O'Riley, 12 B.R. 329; s.¢c.8 B. R. 129; sc. 2 Cent. L. J.
455; contra, Batley v. Loeb, 11 B. R. 271; s. c. 2 Cent. L. J. 42.)

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; s.c. 1B. L. T. 625.)

Where the statute of 8 Anne, ch, xiv, or similar statutory provision pre-
vail, the landlord, by making « demand upon the assignee, before the re-
moval 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; Walker v. Barton,
3B. R. 265; s.c. 1 BLL. T. 625; én re Trim e¢ al. 5 B, R. 23; Longstreth v.
Pennock, 20 Wall. 575; s.c. 7 B. R. 449; s. c. 12 B. R. 95; contra, in re H.
L. Butler, 6 B. R. 501; s. c. 19 Pitts. L. J. 146.)

Ifatrustee 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. (Jn re Bowne & Ten Eyck, 12 B. R. 529.)
§ 5071.] NOTES OF DECISIONS. 585

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. 543; 8. c. 76 Penn. 50.)

The landlord’s right to rent against the bankrupt’s estate expires on’ the
day of adjudication. (In re Webb & Co.6 B. R. 302.)

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
warrant has been issued and levied, prior to the granting of the certifi-
cate 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 land-
lord has a priority over the general creditors. Where no distress warrant has
been issued prior to the filing of the petition in bankruptcy, the landlord can
have no priority or preference over the general creditors. (Jn ve Joslyn et al.
3B. R. 473; s.c. 2 Biss. 235; Morgan v. Campbell, 11 B. R. 529; s. c. 22
Wall. 381.) ;

A mortgage to secure the rent under a lease which provides for its termina-
tion, 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 to take the lease,
Ho more than ten days have elapsed. (dn re R. F. Yeaton, Lowell,

0.

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, 113.)

A lease containing a covenant that the lease shall operate as a mortgage
upon all property placed on the premises to secure the rent accruing there-
under, is void as against the creditors of an assignee of the lease, although
it is properly recorded as a chattel mortgage, unless it is accompanied 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 ifthe assignee takes posses-
sion before the landlord does. (Zn re Dyke & Marr, 9 B. R. 480.)

A lease which contains a covenant that the Jease shall constitute a mort-
gage on the property placed on the premises to secure the rent accruing there-
under, is void unless it is properly recorded as a chattel mortgage. (Jn re
Dyke & Marr, 9 B. R. 430.)

If the assignee clects not to accept tke lease, the landlord can not prove
for the damages suffered by himin 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. (Hz parte Houghton, 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. (#2 parte Houghton,
Lowell, 554.)

Damages for alterations, made in violation of a covenant contained in a
lease, constitute a provable demand. (Hv parte Houghton, Lowell, 554.)

A covenant to pay taxes assessed during the term, where they are assessed.
as of the first day of May in each year, includes only those taxes which were
586 THE BANKRUPT LAW. [§ 5071.

assessed in the months of May during the continuance of the term. (2 parte
Houghton, Lowell, 554.)

If the bankrupt, as sub-lessee, 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, a part of the
rent, As the taxes were not assessed to the bankrupt, the State had no right
to prove them in bankruptcy. (Hx parte Houghton, Lowell, 554.)

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
game manner as if the note had never been given. (Jn 71¢ Bowne & Ten Hyck,
12 B. R. 529.)

A distress warrant can not be issued against the property of the bankrupt
after the commencement of proceedings in bankruptcy. No lien can be re-
quired or enforced by any proceedings in a State court after the petition has
been filed. (In re Wynne, 4B. R. 23; s. c. Chase, 227; s. c. 2 L. T. B. 116;
Brock v. Terrell, 2B. RB. 643; Morgan v. Campbell, 11 B. R. 529; s. c, 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. (Jn 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. (Jn re Ten Eyck & Choate, 7 B. R. 26.)

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 renunciation. (Jn re R. F. Yeaton,
Lowell, 420.)

If a joint lease to the bankrupt and another reserves the right to re-enter
for the non-payment of the rent, and the tenants, by a sub-agreement, appor-
tion 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 sub-agreement 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
eeuenee pays the arrears of rent. (Jn re Hotchkiss, 9 B. R. 488; s. c. 7 Ben.

5.)

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. (Jn 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; 8. c.6 Phila. 469; s.c. 1 L. T. B. 83; Walker v. Barton
3B. R. 265; s.c 1B. L. T. 625; in re Merrifield, 8 B. R. 98; in re Laurie &
al. 4 BR. 82; s. c. Lowell, 404; in ve Dunham & Hawks, 27 Leg. Int. 404;
in re Webb & Co, 6 B. R. 302; iv re H. L. Butler, 6 B. R. 561; s. c. 19 Pitts.
a . ee in re Lynch & Bernstein, 7 Ben. 26; in re Peter Hufnagel, 12 B.

. 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 bankruptcy to
the date of the surrender. (Jn 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. (Batley v. Loeb, 11 B. R. 271; 8. c. 2 Cent. L. J. 42.)

The fact that an injury to the building was prevented by not removing
the machinery, is not a circumstance that can be considered in determining
§§ 5072-3.] NOTES OF DECISIONS. 587

the amount of the compensation for the use of premises. (Jn re William P.
Breck et al. 12 B. R. 215; s.c. 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, where
the estate has received a benefit to that amount. (Jn re William P. Breck e¢
al, 12 B. R. 215; 8. 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
Jobrs. 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. 58 N. Y. 419.)

Src. 5072.—No debts other than those specified in the five
preceding sections shall be proved or allowed against the estate.

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 provahie, nor
does a discharge release them. If a debt is provable, it comes in for a divi-
dend, and can, unless it is an excepted debt, be discharged. If it is not
provahle, it does not come in for a dividend, and will not be discharged.
Cn re May & Merwin, 9 B. R. 419; s. c. 47 How. Pr. 37; s. co. 7 Ben. 238.)

If creditors whose debts arose subsequent to the hankruptcy 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, there-
fore, of creditors to prove and of the bankrupts to be discharged from debis

is wisely made coextensive and commensurate. (Rathbone v. Blackford, 1
Caines, 588.)

Sec. 5073.—In all cases of mutual debts or mutual credits be-
tween the parties, the account between them shall be stated, and
cne 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 atter the filing of the petition,* or in cases of compulsory
bankruptcy, after the act of bankruptey upon or in respect of
which the adjudication shall be made, and with a view of making
such set-off,

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 mutual, and must
be in the same right. (Sawyer v. Hoag, 9 B. R. 145; s. ©. 3 Biss. 293; s. c.
17 Wall. 610.)

 

* So amended by act of 22 June, 1874, § 6.
588 THR BANKRUPT LAW. [§ 5073.

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 sec-
tion. (Tucker v. Oxley, 5 Cranch, 34; s. c. 1 Cranch, C. C. 419.)

The term ‘‘ mutual credits” in the bankrupt act is more comprehensive
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 action of the bankrupt
put in his hands before bankruptcy, by a valid contract, by the terms of which
the deposit will result in a debt, as if they are depcsited for sale or collection,
the case of mutual credit has arisen within the meaning of the bankrupt act.
(Ez parte Caylus et al. Lowell, 550; Cutlin v. Foster, 3 B.R. 540; 8.c. 1 Saw.
37; 8.c.1L. T. B. 192; Murray v. Riggs, 15 Johns. 571.)

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. (Jn 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 bankruptcy,
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. (Jn re Dow et al. 14 B.
R. 307.)

Where the same persons conduct business under two different names in
different places, there is no implied ulterior lien upon the surplus of the se-
curities deposited with one house for any deficiency in the value of the securi-
‘ties 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 be-
lief upon each side, that either house may control the securities deposited
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.
(Sparhawk v. Drevel, 12 B. R. 450.)

A partnership can not retain the surplus arising from the sale of securities
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. (Sparhawk v. Drexel, 12 B. R. 450.)

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
acco unt of his own claim. (Sparhawk v. Drewvel, 12 B. R. 450.)

If a banker in the regular course of business receives drafts for collection,
he may retain the amount so collected to pay an indebtedness due to hin,
although the money was collected after the commencement of the proceed-
ings in bankruptcy. (Jn re Farnsworth, Brown & Co. 14 B. R. 148; sc. 5
Biss. 224.)

The words ‘‘ mutual credit” are broad enough to include an indorser on
a bill of exchange which was protested before the commencement of the pro-
ceedings in bankruptcy, although he did not pay it until afterwards. (Marks
v. Barker, 1 Wash. 178.)

Before an indorser can offset a liability on a draft indorsed for the bank-
rupt, he must show the debt to be subsisting in him alone, for the debt at-
tempted to be set off must be a good and subsisting one at the time the action
is brought. (Marks v. Barker, 1 Wash. 178.) -

_ The claim may be set off by the holder, although he has never proved it
in bankruptey. (Tucker v. Oxley, 5 Cranch, 34; 8. c. 1 Cranch C. C. 419.)
§ 5073. ] NOTES OF D3OISIONS. 589

A stockholder can not set off a claim held by him wpon the corporation
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 appropriated
by the debtor to the exclusive payment of his own claim. (Sawyer v. Hoag,
9 B. R. 145; s. c. 3 Biss, 293; 3, ¢. 17 Wall. 610; Scammon v. Kimball, 8 B.
R. 887; 8. c. 18 B. R. 445; so. 5 Biss. 481; s.¢. 6 L. T. B.424; Jenkins v.
Armour, 14 B. R. 276.)

A claim for a loss on a policy of insurance may be set off against an in-
debtedness from the holder to the company for money deposited with him as
abanker. (Scammon v. Kimball, 13 B. R. 445; 8. c. 8 B. R. 837; s. c. 5 Biss.
431; s.¢.6 L. T. B. 424.)

If a stockholder purchases a claim against the corporation and accepts.
his stock note in return therefor, he is liavle for interest from the date of the
conversion, (Jenkins vy. Armour, 14 B. R. 276; s. c. 8 C. L. N. 267.)

Losses upon policies of insurance may be set off against money borrowed.
from the insurance company. (Drake v. Rollo, 4 B. R. 689; 3. c. 3 Biss.
273.)

A party who has acted under a deed of trust, for the benefit of creditors,
declared void as being contrary to the provisions of the bankrupt act, is en-
titled to set off the value of the services rendered by him under such decd
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, 3 B. R. 540; s.
c. 1 Saw. 37; s.c. 1 L. ‘I. 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. Ifa debt is due to A. and
B. how can any court compel the appropriation of it to pay the indebtedness
of A. to the common debtor, without committing injustice towards 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 creditors, for the others
have no concern with his claim, and can not be affected 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. (@ray v. Rollo, 9 B, R. 337; 8. ¢. 18
Wall. 629; s.c.1 A. L. T. [N. 8.] 195; Hitchcock v. Rvilo, 4 B. R. 699; s. c.
3 Biss. 276.)

If A. and B. are indebted upon a joint note to a bankrupt insurance com-
pany, and B. and C. bave 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 v. Lollo, 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. (Gray v.
Rollo, 9 B. R. 8387; 3. c. 18 Wall. 629; 8.0.1 A. L. T. [N.S.] 195.)

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 marshalled makes no difference. The joint debtors are severally
liable in solido for the whole debt. (Gray v. Rollo, 9 B. R. 887; s.c. 18 Wail.
629; s.c. 1A. L.T. (N.8.] 195; Lucker v. Oxley, 5 Cranch, 84; s.c. 1 Cranch
C. C. 419; contra, Wright v. Foster, 3 McLean, 229.)
590 THE BANKRUPT LAW. [§ 5073.

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 demand 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; 8. c. 11 Wall. 484.) -

An unliquidated demand against the bankrupt, as-supercargo, for violating
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 s‘nce the bankruptcy
can not be set off against the assignee. (Barclay v. 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. (Mclver v. Wilson, 1 Cranch C. C. 423.)

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. (dfurks 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 indorse-
ments, 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 pre-
senti, Though there are not debts mutually payable between the parties,
there are mutual credits, and the case is within the equity of the statute. (Jn
re City Bank, 6 B. R. 71; s.c.4C. L. N. 81; Drake v. Qoullo, 4 B. R. 689; s.
c. 8 Biss. 273.)

Acclaim for unliquidated damages can not be set off by the bankrupt
against the claim of a creditor. The creditor has the right to prove his
claim in full. (Jn re Orne, 1B. R. 57; s. c.1 Ben. 361.)

Quere. Can a party, by way of defense to an action by the as:ignee,
plead and set off a claim which has been once presented for proof, and re-
jected? (Catlin v. Foster, 3 B. R. 540; 8. c. 1 Saw. 37; 8. c. 1 L. T. B. 192.)

When the assignee brings an action upon a demand due to the bankrupt,
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. (Catlin v. Foster, 3 B.
R. 540; s.c. 1 Saw. 37; 8. c. 1 L. T. B, 192.)

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 recovered from
him. (Winslow v. Bliss, 2 Lans. 220.)

A bank may set off the amount due ona protested draft, against a deposit
§ 5073. | NOTES OF DECISIONS. 591

made by the bankrupt, and necd not pay such deposit to the assignee. (Jn re
H. Petrie, 7 B. R. 332.)

Any collections in excess of the advances for which they were specifically
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 v. Iselin, 9 B. R. 19; 8. c. 11 B. R. 337; 8. 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. (Clark v. Iselin, 9 B. R. 19; s. ¢.
11 B. R. 337; s. c. 10 Blatch. 204; s.c. 21 Wall. 360.)

A creditor who has received and sold the goods of the bankrupt under an
agreethent 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. (Jn re Troy Woolen Co. 8 B. R. 412.)

A claim purchased before the filing of the petition in voluntary cases, or be-
fore the act of bankruptcy upon which the adjudication was made in invol-
untary 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; 3. c.4.C. L. N. 81; contra, Hitchcock v. Rollo, 4 B. R.
690; 8. c. 8 Biss. 276.)

A consent to an assignment of an open account given after the commission
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 a mut-
ual debt or credit in the hands of the assignee, so as to be a matter of set-off.
(Rollins v. Twitchell, 14 B. R. 201.)

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. 43.)

If a debtor makes an assignment, and afterwards becomes bankrupt, an
agreement made between him and one member of a firm before the assign-
ment 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 pro-
ceedings 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 indorse-
ment, 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, 4 Dall. 370; s. c. 1 Wash. C. C. 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
tights 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 agaiust 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
592 THE BANKRUPT LAW. [§§ 5074-5.

of which he is supposed to be connusant. It would be unjust if one person
who happencd 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 destroy the debt due to the bank-
rupt by an act ee post facto. Such an act would be a fraud en the equality
of the bankrupt act. (Ogden v. Cowley, 2 Johns. 274.)

A party who goes into a court of equity to have an assigned claim
allowed as a set-off, must show that he is more than the nominal owner.
(Hitcheock 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.
278.)

The bankruptcy of the payee of a note taken for a debt due to his princi-
pal will not affect the right of the maker to such offsets as he acquired ‘under
the honest belief that the payee was the owner of the note. (Garborough 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 bank-
rupt proceedings, and the subsequent assertion of part of the same debt by
a plea of set-of in an action against the creditor is equivalent to the prosecu-
tion of an original suit upon the claim, against the prohibition of the bank-
rupt law. (Lrown v. Farmers’ Bunk, 6 Bush, 198; Russell v. Owen, 61 Mo.

185.)

Sec. 5074.—When the bankrupt, at the time of adjudication,
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.

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 Cistinct trades, and having distinct
estates to be wound up in bankruptcy; 2d, or as a sole trader and also asa
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 together, and the
last part provides that the circumstance that such firms are, in whole or in
part, composed of the same individnals, or that the sole contractor is also one
of the joint contractors, shall not prevent such proof, and the reccipt of divi-
dends, 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. (mery v. Canal Natl Bunk, ? BR. 217; sc. 5 L. 'T. B. 419.)

Sxc. 5075.—When a creditor has a mortgage or pledge of real
or personal property of the bankrupt, or a Hen thereon tor secur-
ing the payment of a debt owing to him from the bankrupt, be
§ 5075.) NOTES OF DECISIONS. 593

shall be admitted as a creditor only for the balance of the debt
after deducting 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 prop-
erty, 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 de
livered up, the creditor shall not be allowed to prove any part of
his debt.

Construction. »

The general purpose and policy of the act is to produce equality among
the creditors of insolvent debtors with the exceptions provided for in the act,
and to attain that end its provisions should in case of extreme doubt be con-
strued beneficially for the general unsecured creditors. (Jn re Jaycox & Green,
8B. R. 241.)

The term “lien” comprehends all privileges and charges upon the thing
recognized by local statutes or long established usages or the principles 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. Brackeit, 21 Vt. 599;
s. c.5 Law Rep. 392; Storm v. Waddell, 2 Sandf. Ch. 494.)

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 property
as those existing at the common law. ‘These liens or securities, peculiar to
the several States, are preserved as well as common-law liens. It is of no im-
portance 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 common-
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 he has in equity and potentially a mortgage, pledge or
lien upon the property of the bankrupt for securing the payment of his debt
Aye the intent and meaning of this provision. (dn re Jaycox & Green, 8

. R. 241)

The provision in regard to the proof of secured claims applies only to
securities upon property real or personal of the bankrupt. (Jn re Anderson,
12 B. R. 502.)

A claim that is secured by the guaranty indorsement or collateral liability

38
594 THE BANKRUPT LAW. [$ 5075.

vof a third person may be proved as unsecured. (Jn re Anderson, 12 B. R.
502.)

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 consent.
In the latter case he may prove his debt in bankruptcy without surrendering
“the security of the third person which he holds, and may notwithstanding
ssuch proof, proceed to enfcrce his security against such third person, pro-
‘vided, however, that he does not take under the bankruptcy and the security
more than the full amount of his debt. (Inve Cram, 1 B. R. 504; 8. c. 1 L.
T. B.65; in re Dunkerson & Co. 12 B. R. 418; 8. 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 cred-
itor may prove his full claim‘against the firm without a valuation of the secu-
tities. (dn re Dow etal. 14 B. R. 307.)

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 conclu-
sion for the benefit of the bankrupt’s estate, as far as regards any surplus which
may remain after the creditor has received from the dividends 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 choose 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. (Jn re Samuel H. Babcock, 3 Story, 393.)

What Liens are Preserved.

All vested legal or equitable rights and interests in property created 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 alien or security. (Jn re Stuyvesant Bank, 9 B. R. 318; 3. c. 10 B. R.
399; 8. c. 49 How. Pr. 153; s. co. 12 Blatch. 179.)

_ There is no distinction in the bankrupt law between different kinds of
liens. Its provisions apply equally to all liens, of whatever kind, character, or

description, (Davis, Assig. of Bittel e¢ al. 2 B. R. 392; Peck vy. Jenness,7
How. 612.)

The bankrupt act does not divest liens acquired and consummated before
the adjudication of bankruptcy. When it speaks of the estate of the bank-
rupt, it means such estate with all the incumbrances existing upon it at the
time of the bankruptcy; in other words, the net value of the property after

the liens upon it are satisfied. (Jn re Hambright, 2 B. R. 498; s. c. 2 L. T.
B. 61; 8.¢.1C. 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 incumbered,
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,
'§ 5075. ] NOTES OF DECISIONS. 595

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. (Jn re Wynne, 4 B. R.
28; s, c. Chase, 227; s.c. 2 L. T. B. 116.)

The wife’s right of dower is preserved, and will prevail against her hus-
band’s assignee. (Jn re Angier, 4 B. R. 619; s.c. 10 A. L. Reg. 190; 3. a 1
L. T. B. 48; in ve Bairlie, 4 B. R. quarto, 103, 127; in ve Hester, 5 B. R. 285;
contra, Hill y. Bowers, 4 Heisk. 272; Bosteck 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. (Hiscock v.
Green, 12 B. R. 507.)

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 proceeds
which each is entitled to receive. (dn re Geo. A. Bartenbach, 11 B. R. 61;
s.c.2 A. L. T. [N. 8.] 33.)

If the lien expires by the statute of limitations after the commencement
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
land is sold under the mortgage, his wife is not entitled, as against his as-
signee, to a dower interest in the surplus that remains after paying off the
mortgage debt. At any time betore 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 fore-
closure and a conversion of the estate into money, it is too late for an appli-
cation on her part to share in the proceeds. She is as much barred of her
right as if forclosure 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 mortgage, it belongs to those who are entitled
to his personal estate. (Wewhall v. suvings Bank, 101 Mass. 428.)

A creditor, by filing a bill in chancery to reach the equitable or other as-
sets of the debtor, obtains a lien thereon from the time of the service of the
process. (Clarke v. Rist, 3 McLean, 494; Fetter v. Cirode,4 B. Mon, 482;
Storm v. Waddell, 2 Sandf. Ch. 494; in re Abner H. Allen, 1 N. Y. Leg. Obs.
115; 3. 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.)

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. (Jn ve Frank F. Newland, 9 B. R. 62; s. c. 7 Ben. 63.)

If the creditor, after the value of the policy held by him as a 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. (Jn re Frank F.
Newland, 9 B. R. 62; 8. c. 7 Ben. 63.)

_ _ Each partner has a specific lien upon the partnership property for the sat-
isfaction of the partnership debt, and for the payment of any surplus that
may remain to him after the adjustment of the rights and equities between
596 THE BANKRUPT LAW. [§ 5075.

themselves; and a suit instituted ina State court of equity to enforce such
lien, wherein a receiver has been appointed, is not terminated or discontinued
by the partnership’s being adjudged bankrupt under proceedings subse-
quently commenced, but the suit may be continued, and the property dis-
tributed, in the State court. (Clark v. Binninger, 3 B. R. 518; s. c. 88 How.
Pr, 341; 3.¢. 31. T. B. 49.)

The assignment to the assignee is for the benefit of the creditors, and is
net affected by secret unrecorded liens. (Brock vy. Terrell, 2B. R. 643.)

Tf the by-laws of a bank provide that no transfer of stock 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 tak-
ing a note with an indorser. (Jn re Thomas Morrison, 10 B. R. 105; s. c. 6
C. 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; 3. c¢ 10
Bush, 867; contra, in re Robert Dunkinson & Co. 4 Biss. 227; in re Bigelow
et al. 1 B. R. 667; 8. 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. (Jn 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 fer other debts. (Jn re Lemuel Peebles, 13 B.
R. 149.)

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 unreason-
able period after that time and then sells them without notice, he must sus-
tain the loss. (/n ve John H. Daniels, 13 B. R. 46; s3.c. 8C. L. N.173 8.
10 Pac. L. R. 50.)

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 extinguishment of
the ground rent until he is personally charged with it. (Jn re Mark Banks,
1N. Y. Leg. Obs. 250; s. c. 5 Law Rep. 371.)

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. (Jn re J. C. Mitchell, 8 B. R. 47; s.c.5 C. L. N. 271.)

In West Virginia, the State bas 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. (Jn re Brand, 3.8. R. 324;
s. 0.2L. T. B. 66.)

The State of New York has alien upon the machinery and tools of a
contractor which are used by him on the prison premises for operating a con-
tract for the services of convicts. (Jn re Edward Burt et al. 13 B. R. 187; s.
c, 12 Blatch. 252.)

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 v. Schnugg, 7
Ben. 399.)

The power of marshalling assets will not be exercised to the material in-
jury or prejudice of the creditor holding both funds. (Jn re Sauthoff &
Olson, 14 B, R. 364; 8. c. 8 C. L. N. 370; sc. 38 Cent. L. J. 544; 5. c. 5 AL
L. T, 178.)

A mere delay or postponing of payment is not regarded as a material in-
§ 5075. ] NOTES OF DECISIONS. 597

jury, for the interest of the claim is deemed an adequate compensation to the
party for such delay. (dn ve Sauthoff & Olson, 14 B. R. 364; s.c. 80. L. N.
370; s. c. 3 Cent. L. J. 544; s.c.5 A. L. T. 173.)

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.
Un re Sauthoff & Olson, 14 B. R. 864; s.c. 8 C. L. N. 870; s. c. 3 Cent. L. J.
544; 8.0.5 A. L. Rec. 173.)

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 bank.
rupt upon which he has aclaim before proceeding against the property so
assigned. (In re Sauthoff & Olson, 14 B. R. 364; 3.0. 8 C. L. N. 370; 8. c.
8 Cent. L. J. 544; s.c. 5 A. L. T. 173.)

Where a third party has assigned his property to a creditor to secure the
debt, the creditor is not required to exhaust such securlty before he can en-
force his remedies against the baukrupt’s estate. (Jn re Sauthofi & Olson,
14 B. R. 364; s.c. 8 C.L. N. 370; 8.0. 3 Cent. L. J. 5445 58.0 SAL. Ty
173.)

If the United States holds collaterals, it may assert its claim against the
estate without first exhausting the collaterals. (Lewis v. U.S. 13 B. R. 333.
s.c. 14 B. R. 64; s.c.2 W.N. 31; s. co. 82 Leg. Int. 371.)

Attorney’s Lien.

An attorney’s lien on the papers of the 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. (dn re New York Mail Steamship Co. 2 B. R. 74.)

Tn adjusting and liquidating such a lien the following points must be as-
certained :

1. What suits ought to be proceeded with by the assignee, either in pros-
ecution 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
2 such papers to the assignee. (Jn re New York Mail Steamship Co. 2 B.

. 14.)

The statement of the notes on the schedule as part of the bankrupv’s estate
by the attorney is not « waiver of his lien, thereon. (Jn re Orrin Brown, 5
Law Rep. 324.) :

Pledges.

In order to constitute a mortgage, the legal title must pass to the cred-
itor. If the transaction is merely a pledge, the creditor will waive his lien
by surrendering the possession to the debtor. (Jn re Harlow, 10 B. R. 280.)

A party who loans money to a party on a note indorsed by him, does not
take it asa pledge. (In re George S. Weeks, 13 B. R. 263.)

Where a promissory note is pledged by a debtor to secure a debt, the spe-
cial 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, 11 B. R 387; 8. c. 21 Wall. 360.)
598 THE BANKRUPT LAW. [§ 5075.

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.
(Jn re William H. Wiley, 4 Biss. 171.)

A past consideration is a sufficient consideration for a pledge, if there still
remains a subsisting liability. (dn ve William H. Wiley, 4 Biss. 171.)

Commercial paper deposited by the bankrupt as security, is personal prop-
erty 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 ¢an 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, ard he will then have no security
for his debt. (He parte Farnsworth, Lowell, 497.)

Tf, 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 the
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. (Jn re Thomas Morrison, 10 B. R. 105; s.c. 6 C. 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 bankrupt
which is still pending, may hold the same until his liability is terminated.
(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.
Cn re William H. Wiley, 4 Biss. 171.)

Vendor’s Lien.

The vendor’s lien for unpaid purchase money will prevail against the as-
signee under the bankrupt law. The lien is not extinguished by taking
notes, nor by obtaining judgment upon the notes. (In re Perdue, 2 B. R.
183; 8. 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. (Jn re 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 mortgage.
(Un re Bryan, 3 B. R. 110.)

A vendor's lien is not waived or in any manner affected by taking a mort-
gage upon the property therefor. (Jn re Hutto, 4 B. R. 787; 8. c.1L. T. B.
226; 8. c. 3.L. T. B. 197.)

A vendor has no lien on the rents for the unpaid purchase money. (Zail
y. Scovel, 10 B. R. 295.)

If the vendor of land sold to the bankrupt, collects the rents, he is enti-
tled to credit them on the unpaid purchase money. (Hall vy. Scovel, 10 B. R.
295.)

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:

‘
§ 5075. ] NOTES OF DECISIONS. 599

vendor may collect them, and apply them to the unpaid purchase money is
thereby terminated. (Hall v. Scovel, 10 B. R. 295.) :

Mechanics’ Liens,

The laws of Massachusetts, Oregon, New Jersey, Pennsylvania, Nevada,
and Wisconsin create a lien ag 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 proceedings in bankruptcy. These steps are
necessary to keep the lien alive, and can not be deemed encroachments upon
the authority of the bankrupt court. No sale can be made during the pend-
ency of the proceedings in bankruptcy. The State court will order the suit
to stand continued to await the result of the action in the bankrupt court.
(Clifton et al. v. Foster et al. 3 B. R. 656; 8. c. 103 Mass. 233; in re Coulter,
5 B. R. 64; s.c.2 Saw. 42; 8. c. 1 L. T. B. 257; in re Cook & Gleason, 3 Biss,
122; inre Dey, 3 B. R. 805; sc. 3 Ben. 450; 8. 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 com-
mencement of a suit within a prescribed period, is not preserved as a valid
incumbrance on the property when no suit is commenced in the State court,
and no step taken in the bankrupt court equivalent to such suit, within the
time limited by the statute for the preservation and enforcement of thie lien,
altbough proceedings in bankruptcy are commenced within that period. (Jn:
re William Brunguest, 14 B. R.)

To preserve a statutory lien, dependent for its continued existence upon the
observance of the terms of the statute, those terms must be complied with by
performance of the required act or its equivalent. (Jn re William Brunguest,
14 B. R.)

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. (Jn re William Brunguest, 14 B. R.)

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. (Jn re Cook & Gleason,
3 Biss. 122.)

The amount required to finish a contract should be deducted from the
stipulated price. (Jn re Cook & Gleason, 8 Biss. 122.)

No claim can be allowed for work done after the filing of the petition in
bankruptcy. (Jn re Cook & Gleason, 3 Biss. 122.)

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. (Jn 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. (Jn re Hoyt, 3 Biss. 436.)

Hauling quartz to be crushed in a mill is performing labor in carrying on
the mill. (Jn 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. (Jn re Hope Mining Co. 7 B. R. 598.)
600 THE BANKRUPT LAW. [§ 5075.

Where a legislature in one act consolidates all the old laws on the subject
of mechanics’ liens and repeals the former laws, the new act is to be con-
sidered as substituted for and continuing in force the provisions of the old
laws rather than as abrogating and annulling them. (Jn 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 obliga-
tion of the contract. (Jn re Hope Mining Co, 1 Saw. 710.)

The proceeds arising from the sale of a vesscl are subject to the following
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 ton-
nage and wharlage in foreign ports.

2d. Mortgage liens under mortgages made and recorded according to the
requirements of section 4192. (In re Scott, 8 B. R. 742; s.c. 1 Abb. C. ©.
136.)

A maritime lien is not divested by the proceedings in bankruptcy. (The
Tronsides, 4 Biss. 518.)

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)

Material-men have alien upon domestic vessels for repairs made in the
home port. (dn 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. (Jn ve Kirkland, Chase & Co. 12 A. L.
Reg. 300.)

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. ({n re Kirkland, Chase & Co. 12 A. L. Reg. 300.)

Judgments,

The lien of a judgment is preserved. (Livingston v. Livingston, 2 Caines,
300; Haworth v. Travis, 13 B. R. 145; 8. c. 67 Il. 801.)

The bankrupt 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.
Cn re Kerr, 2 B. R. 888; s.¢c. 2 L. T. B. 39; in re Campbell, 1 B. R. 165; 3.
c.1 Abb. C. C, 185; s.¢.1 L. T. B. 30; 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 bankrupt court. (Jn re McIntosh, 2 B. R. 506; in re Cozart,
3 B. R. 508.)

The docketing of a judgment on a day that is declared a holiday by
statute is void and confers no lien, for the term holiday imports dies non
juridicus. (In ve Worthington, 14 B. R. 388; s.c.8 CL. N. 362; 30. 3
Cent. L. J. 526.)

An indorser who pays the judgment against him may take an assigninent
of the judgment against the maker of the note, and claim the lien thereby
secured. (Clas v. Morris, 10 Johns, 524.)

Where a judgment has been obtained ina State court by fraudulent con-
duct on the part of the plaintiff, its yalidity, can not be contested in the
§ 5075. ] NOTES OF DECISIONS. 601

bankrupt court. Assignees and creditors must resort to the State court in
which the judgment was rendered to test its validity. (dn re Burns, 1 B. R.
174; s.c.7 A. L. Reg. 105; 8. c. 24 Leg. Int. 857; in re Campbell, 1 B. R.
165; s.c. 1 Abb. G: C. 185; s.c. 1 L. T. B. 30.)

The objection that there is usury in the consideration of the debt upon
which the judgment is founded can not be raised in the bankrupt court.
The district court can not go behind the judgment of a State court and in-
quire 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 et al. 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 fora sum due may be
enforced by execution; but if the creditor neglects or forbears to use 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. (Jn re Fuller, 4 B. R. 115; 8. c. 1 Saw, 248.)

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 vy. Williamson, 49 Ala. 525.)

Under the laws of New York, a judgment confessed to secure future ad-
vances 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. (la re Smith et al. 1 B. R. 599; s.
c. 2 Ben. 122; s. c. 2 Ben. 432; 8, 0.1L. 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 per-
son 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 the purchase money was fur-
nished by one of the other joint debtors whom it binds. Nor wiil 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 execu-
tion 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 evi-
dence 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 ob-
tained upon equitable interests or choses in action by judgment and execution
alone. In order to obtain a lien, the creditor must have his execution re-
turned unsatisfied, and file a bill in equity, or take other legal proceedings to
ie such choses in action or equitable interests. (Jn re Hinds ef al. 3 B. R.

51.)

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 situated.
A deed made before, but recorded after, the rendition of a judgment, passes
602 THE BANKRUPT LAW. [§ 5075.

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 relating
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 bankrupt.
The bankrupt’s assets must be divided in accordance with the provisions of
the bankrupt apt. (Jn re Erwin & Hardee, 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 were
in force and the rebellion existed during a portion of that time. (dn 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 lands
and the fact of the levy on the back of the execution, without going near the
land, and such a levy becomes a valid lien on the land. (Armstrong v. Rickey
Brothers, 2 B. R. 478; 8s. c.1 C0. 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 de-
fendant until a levy was actually made. Without the levy there was no lien.
(In re McIntosh, 2 B. R. 506; im 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. (Jn re Kerr, 2 B. R. 888; 8. c. 2 L. T. B.
39.)

In Mississippi, the enrolment of a judgment makes the judgment a lien
upon all the estate, real and personal, of the defendant situated in the county
where the enrolment is made. (Penningtony. 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 cannot be decided on ex parte affi-
davits. (In re Hafer & Bro, (in re Beck), 1 B. R. 586; s, c. 25 Leg. Int. 164 )

Executions,

A levy that is good, and creates a valid lien under the State laws, will be
held valid in the bankrupt court. (McLean v, Rockey, 3 McLean, 235; in re
Dudley, 1 Penn. L. J. 802; inre Winn, 1 B. R. 496; s.c.1L. T.B.17; Arm-
strong v. Rickey Brothers, 2B. R. 473; 8.c.1C. L. N. 145.)

The lien of a levy is not affected by the fact that the execution creditor
held further securities for the judgment. (Jn 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 before
the commencement of proceedings in bankruptcy, is preserved. (Jn re Bern-
stein, 1 B. R. 199; 8, c. 2 Ben. 44; in re Smith e¢ al. 1 B. R. 599; 8.c.1 L.
T. B, 112; 8. c. 2 Ben. 122; s. c. 2 Ben. 432; én re Kerr, 2 B. R. 888; 8. c. 2
L. T. B. 39; in re Campbell, 1 B. R. 165; s.c. 1 Abb. C.C, 185; sc. 1 L. T.
B. 30; in re Schnepf, 1 B. R. 190; 8. 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. 8883
s.c. 2 L. T. B. 39.)

‘n the absence of fraud, or preference in obtaining a judgment and exe-
cution, 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
§ 5075. ] NOTES OF DECISIONS. 603

comes into the hands of the sheriff. (Jn re Weeks, 4 B. R. 364; 8. c, 2 Biss.
259.)

The sheriff has no lien upon goods under the levy of an execution issued
upon a judzment obtained in violation of the bankrupt law, and thus rendered
void. (/n 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 bankrupt
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 euforce it. (Haughey v. Albin, 2 B. R. 399; 8. c. 2 Bond,
244; 8. c. 2L. T. B. 47.)

The mere delivery of an execution to the sheriff does not give to the judg-
ment creditor a lien which will prevail over the title acquired by the assignee
to the personal effects of the defendant in the execution. (Jn ve Elam Rust,
1N. Y. Leg. Obs. 326.)

Where writs are in the hands of different officers, they take priority accord-
ing 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. 7 C. L. N. 162.)

As between different writs issued from different courts, the one first act-
ually executed binds the property, without regard to the priority of lien
created by the delivery of the writ to the officer. The warrant issued in a
case of involuntary 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. (Jn re Smith et al. 1B. R. 599; sc. 2
Ben. 122; 8. c. 2 Ben. 482; s. c. 1 L. T. B. 112.)

A general description of the property is sufficient when the legal import
of the return is that the sheriff took possession. ‘The lien ofa 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 afterwards seized
by the marshal. (Swope vy. Arnold, 5 B. R. 148.)

A levy does not create a valid lien unless the sheriff designates the prop-
erty seized uncer the execution either in the body of the return or by refer-
ence to a schedule accompanying it. (Barnes y. Billington, 1 Wash. C. C. 29;
8. c. 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. Woolbridge, 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 there-
for. (Jn 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 1t. (Barnes
v. Billington, 1 Wash. C. C. 29; s. c. 4 Day, 81, note.)

Ifthe levy has been actually made, the execution is a lien on the property,
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; 8.c.7 0. L. N. 162.)

The lien of an execution is lost unless the execution is renewed from
604 THE BANKRUPT LAW. [§ 5075.

term to term until the proceedings in bankruptcy are commenced. (Stewurt
y. 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 indefensi-
ble. (Doremus vy. 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 returned.
(Blake v. Bigelow, 5 Geo. 487; Powell v. Knox, 16 Ala, 364; in re Winds et al.
3B. 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 re-
turn is false, the sheriff is answerable for it to the proper party in a 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; 8. c. 1 C. LN.
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 was
alien. (In re Tills & May, 11 B. R. 214.)

The plaintiff in a judgment obtained in a Federal court on which an ex-
ecution was issued, and under which the marshal sold property of the de-
fendant, is entitled to the proceeds of such sales, although that judgment,
execution, and levy under it were subsequent to a judgment, execution, 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 con-
veyance. His conveyance transfers no more or greater interest to the pur-
«chaser than the law, by virtue of the process and the proceedings upon
which the same is based, allows to pass. If a prior lawful 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 in-
ae existing by a mortgage, or in any other way. (Jn re Jordan, 8

RB. 182.)

The sheriff is entitled to poundage fee on a levy at the time he makes the
levy. Asale is not necessary. (Jn re Black & Secor, 2 B. R. 171.)

Poundage can be allowed only on the amount which the property brought,
and is a lien thereon. (Jn 7e William Welch, 5 Ben. 278.)

If the sheriff acts in good faith, he is entitled to be paid, without reference
to the validity of the judgment. (dn re William Welch, 5 Ben. 278.)

The taxation of costs by a State court, without notice either to the bank-
Tupt 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. (Jn re J. Hartel, 7 B. R. 559.)

The assignment of a lease by the lessor and the execution of a power of
§ 5075.] NOTES OF DECISIONS. 605

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 situated 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. (Jn re Soldiers”
Business Messenger and Dispatch Co. 2 B. R. 519; s. c. 8 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 mortgagee,
and account for the proceeds thereof until the mortgage debt is paid, the
proceeds of all sales made subsequent to the execution of the mortgage must
be credited pro tanto toward the payment of the mortgage 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. Nutional Bank of Hastings, 2 B. R. 338; 8. c.
1 Dillon, 462; Smith v. Hly, 10 B. R. 553.)

If the mortgagee never had any such notes as those described in the mort-.
gage, the mortgage is ineffectual. (Jewett v. Preston, 27 Me. 400.)

A mortgage of real property by a corporation must be under the corporate:
seal or it will be of no effect. (Jn re St. Helen’s Mill Co. 10 B. R. 414; s. c.
8 Pac. L. R. 78.)

A mortgage executed by the officers without due authority from the cor-
poration does not bind the corporation even as an equitable mortgage. (In
re St. Helen’s Mill Co. 10 B. R. 414; s.c, 8 Pac. L. R. 78.)

The distinction between real and personal property and between the means.
which are necessary to affect them, is well settled. Personal property, accord-
ing to the common law, could always be transferred or incumbered 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 absence of that formality
is wholly immaterial. (Gibson v. Warden, 11 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 character:
or effect. The seal may be regarded as surplusage. (Gibson v. Warden, 14
Wall. 244; Hawkins v. National Bank of Hastings, 2 B, R. 3388; s. 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. (Gibson y.

Warden, 14 Wall. 244; Hawkins v. National Bank of Hastings, 2 B. R. 3838 ; s.
c. 1 Dillon, 462.)

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 instrument under
seal. (Jenkins v. Mayer, 3 B. R. 776; 8. c. 2 Biss. 308.)

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. (dn re York &
Hoover, 3 B. R. 661.)
606 THE BANKRUPT LAW. [§ 5075.

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, prepara-
tory thereto, the notes were made and a mortgage, declaring the existence of
a debt, executed and inscribed, and both mortgage and notes 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 obliga-
tion ; but the agent, from the date of inscription, was in the possession of all
the means to the making of a perfect contract by the delivery of the securi-
ties to a bona fide holder. These securities, by such a delivery, become oper-
ative from their date, and are binding ad initio. (In re York & Hoover, 3 B.
R. 661.)

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 dur-
ing the pendency of the mortgage, secures all notes of the kind mentioned
until it is given up, or in some way canceled or abrogated. It is not ter-
minated by the payment of the described note and of all notes given or in-
dorsed within nine months after its date. (Jn re Griffiths, 3 B. R. 731; 8. ¢.
Lowell, 431.)

A mortgage made in good faith tosecure future advances is valid to the
extent of the advances actually made. (Marvin v. Chambers, 13 B. R. 77;
s. 0. 12 Blatch. 495.)

Where a mortgage made by a railroad corporation provides thts it shall
include all property subsequently acquired by the mortgagor, it will include
a railroad with its appurtenances subsequently leased by the mortgagor, and
the title thereto will be valid as against the assignee of the mortgagor. (Ber-
nard 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 dif-
ferent 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. c. Chase, 227;
s. 0.2 L. T. B. 116; im re Jordan, 9 B. R. 416; s. c. 7 Pac, L. R. 194; Bar-
ron Vv. Morris, 14 B. R. 371.)

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. (Jn 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 isin the nature of a revocable license to take
possession. Under some circumstances, the term ‘‘ goods and merchandise,”
may include fixtures, but the facts of the case may limit the construction of
the language. (Jn re Eldridge, 4 B. R. 498; s. c. 2 Biss, 362.)

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, (Jn re Haake, 7 B. R. 61;
8. 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 commissions for collection may be allowed. (Maus v.
McKellip, 38 Md. 231.)
§ 5075. ] NOTES OF DECISIONS. 607

The fee paid to counsel for resisting a suit by the assignee to scll the
property free from all liens, can not be allowed. (Maus v. McKellip, 38 Md.
231.)

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. 409.)

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 mortgagor or his legal representa-
tives in possession. The filing of the petition in bankruptcy fixes the rights
of the several parties in interest; and the rights, equitable or otherwise, not
actually acquired by lien, in virtue of a bill 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. (Jn re Snedaker, 4 B. R. 168; s.c. 2 L. T. B. 152; Hillis v. Bost. &
Hart. R. R. Co. 107 Mass. 1; Foster v. Rhodes, 10 B. R. 523; in re J. 8. K.
Bennett, 12 B. R. 257; in re Mark Banks, 1 N. Y. Leg. Obs. 250; s. c. 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. (Jn re J. 8. K. Ben-
nett, 12 B. R. 257.)

A mortgagee is not entitled to have the rents which fell due after the com-
mencement of the proceedings in bankruptcy, and were collected by the as-
signee, applied to his mortgage claim, although the mortgage also conveys
the rents, issues and profits of the land. (foster v. Rhodes, 10 B, R. 528.)

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
prior lien of the mortgage upon the land, and the equitable right of the mort-
gagee 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 pay-
ment of other debts, or even to the expenses of the assignee or his fees. (Jn
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 mortyagee a reasonable compensation for the use of the mortgaged
premises, as rents and profits. (Hutchings v. Muzzy Iron Works, 8 B. R. 458;
8.0.6 C. L. N. 27.)

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 mort-
gagee, 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 shall 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. (Zn re Sands’ Brewing Co. 6 B. R. 101; 8. ¢. 3 Biss.
175.)

When changes are made after acknowledgment, the mortgage should be
reacknowledged. (Harvey v. Crane, 5 B. R. 218; s. o. 2 Biss. 496.)

Under the laws of Texas, a mortgage executed and recorded after the
608 THE BANKRUPT LAW. [§ 5075.

rendition of a judgment, but before the recording of the same, is entitled to.
priority over the lien of the judgment. (Jn re Lacy, 4 B. R. 62; s.c.1 L,
'L. B. 226.)

Tf 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 a 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. (Jn re Edith, 6 B. R. 449; 8. 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 bankrupt act does not provide that
a sale of the property shall operate as a release of the mortgage, and attach it
to the proceeds, (State v. Recorder, 21 La. An. 401.)

A mortgage of personal property to be subsequently acquired, constitutes
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 én esse or not, the lien attaches in equity as soon as the
contractor acquires a title thereto. (Mitchell v. Winslow, 2 Story, 630;
Barnard v. N. & N. R. ke. Co. 14 B. R. 469; 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; s. c. 5 Law Rep.
362.)

Possession is not necessary to create or support an equitable lien. (Parker
v. Muggridge, 2 Story, 334.)

Every 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. (Wletcher v. Morey, 2 Story, 555.)

It is a universal maxim that, wherever persons agree concerning a partic-
ular subject, in a court of equity, as against the party himself and any claim-
ing 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 jurisprudence
in the State courts. (Mletcher v. Morey, 2 Story, 555.)

An agreement that goods to be purchased witb future advances are pledged
and hypothecated for the repayment thereof, constitutes an equitable lien on
the goods, (Fletcher v. Morey, 2 Story, 555.)

Sale Free from Incumbrances.

On the application of the aesignee, the district court may order incum-
bered property to be sold free from incumbrances, the lien being transferred
to the fund in court. (i re T. R. Stewart, 1B. R. 278; s3.c.1 L. TB. 16;
in re Barrow, re Loeb, Simon & Co, re Winter, 1 B. R. 481; s.c.1L. T. B.
63; in ve McClellan, 1 B. R. 889; in ve Columbian Metal Works, 3 B R, 75;
in re Salmons, 2 B. R. 56; inre Alabama & Florida Railway Co. 1B. R. quarto,
100; Conrad y. Prieur, 5 Rob. [La.| 49; Benjamin v. Prieur, 8 Rob. [La.]
13; Duervs vy. Fortin, 8 Rob. [La] 165; Foster v. Ames et al. 2B. R. 455; s.
§ 5075.) NOTES OF DECISIONS. — 609

c. Lowell, 813; 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; 8. c. 6 W. J. 123; tn ve Nat'l Iron Co.
8 B. R. 422; s. co. 20 Pitts. L. J. 208; 8. c. 30 Leg. Int. 272; Sutherland v.
Lake Superior Canal Co. 9 B. R. 298; s. 0. 1 Cent. L. J, 127; Houston v. City
Bank, 6 How. 486.)

The d'sposition of the securities is a matter resting in the sound discretion
of the district court, upon all the circumstances of each particular case. 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 creditor to take any one or
more or all of the securities at their nominal value, if that is ascertained to be
the true and highest value of the security. (Jn re Benjamin B. Grant, 5 Law
Rep. 303.)

The liens, mortgages and other securities within the purview of this pro-
vision, so far as they are valid, are not to be annulled, destroyed or impaired
under the proceedings in bankruptcy, but they are to he held of equal obli-
gation and validity in the Federal courts as they would be in the State courts.
The district court, sitting in bankruptcy, is bound to respect 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. (/n ve William Christy, 3 How.
292.)

If it be ascertained that the property of a bankrupt is incumbered by lien
or mortgage, the assignee may, if he shall believe it to be to the interest of
that class of creditors whom he especially represents—for instance, the class
entitled to pro rat» distribution—file his petition and obtain an order direct-
ing him to sell the property incumbered on such terms as to the court may
seem proper, and convey the property free from such incumbrance. The
court will then protect the lien creditors by a proper distribution of the pro-
ceeds. But it is not a part of the duty of the assignee 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. (Jn re
Mebane, 3 B. R. 347; in re McCiellan, 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. (Duecros v. Fortin, 5 Rob. [La.] 165.)

A secured creditor does not have absolutely the election to stand outside
of the operation of the bankrupt 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 bis lien, and to have the court make such equitable orders as to
the disposition of the property as seems best. The court of bankruptcy 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; 5.0. 1 Dillon,
497, 511, note; Bromley v. Smith, 5 B. R. 152; 8. co. 2 Biss. 511; Clark v.
Rosenda, 5 Rob. [La.] 27.)

The bankrupt 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. (Jn re Kahley, 4 B. R.
878; s. 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 bankrupt court, have been in-
curred, and incurred by the action of the assigaee while a party to such suit
in sutlering proceedings to go on without applying to the bankrupt court to
restrain them, the petition for leave to sell the property free from incum-

39
6L0 THE BANKRUPT LAW. [§ 5075..

brances will be denied. (Jn re H. Brinkman, 6 B. R. 541; 8. c. 7 B. R. 4215
Augustine v. McFarland, 13 B. R. 7.)

When an order is made to sell property against which a judgment of fore-
closure 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. (Jn re Hanna, 4 B. R. 4115,
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 where the 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. (F ster et al. v. Ames et al. 2 B.
R. 455; s. c, Lowell, 318; in re Kahley, 4 B. R. 878; 8. c. 2 Biss. 883; an re
Jacob F. Hahnlen, 1 Penn. L. J. 10.)

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. Brigham,
12 B. R. 145; s. c. 25 La. An. 600: 8. 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 et al. v. Ames et al.2B. R.
455; s. c. Lowell, 313; Houston v. City Bank, 6 How. 486; Fowler v. Hart,
18 How. 378.)

If the mortgagee is not made a party to the proceeding to sell the prop-
erty free from incumbrances, his rights will be unaffected thereoy. (Jtay v.
Brigham, 12 B. R. 145; 8. c. 25 La, An. 600; 8. c. 23 Wall. 128; Meeks v.
Whatley, 10 B. R. 498; contra, Wilson v. Turpin, 5 Gill, 56.)

The assignee ough: not to be permitted to make private sales, or sales on
credit, without first submitting the price and terms of sale to the court on

notice to the mortgagee for approval and confirmation. (Jn 7¢ Frederick 8.
Kirtland, 10 Blatch. 515.)

_ Asale by the assignee of property free from all incumbrances will not
divest ihe right of the State to enforce the payment of taxes on the property
wherever it may be found, and the purchaser takes it subject to that right.

ee v. State, 9 B. R. 191; 8. c. 46 Geo. 412; Meeks v. Whatley, 4 B. R..

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, wil! be at tbe peril of
throwing the cost of any effort to secure a better price upon the other credit-
ors. 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

mortgigee, will be most bencticial to all the parties interested. (Za re Eller-
horst ct al. 7 B. R. 49; 8. c. 2 Saw. 219.)

The selling of property free from incumbrances is a matter of judicial dis-
cretion, The apportionment of costs is also a mattcr, to some extent, of ju-
dicial discretion, The district court, as incident to its power to adjust and
liquidate the lien, is authorized to adjust the costs of the proceedings neces-
§ 5075. ] NOTES OF DECISIONS. G11

gary 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 preceedings adopted to enforce and liquidate the specific lien. The
costs of the sale, including commissions to the assignee, may be charged upon
the proceeds. (Jn re Ellerhorst e¢ al. 7 B. R. 49; 8. c. 2 Saw. 219.)

Where property is sold free from incumbrances, under a proceeding insti-
tuted before the expiration of a lien, the rights of the lienor are deemed to be
fixed from the commencement of the proceeding, and he need not renew or
continue his lien. (d/oran v. Schnugg, 7 Ben. 399.)

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. (Jn ve 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 appoint-
ment 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 empowers
him to act. (Zeigler v. Shomo, 78 Penn, 357.)

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. (Jn re Hambright, 2 B. R. 498; s.c.2L.T. B. 61; 5.01
C.L. N. 201; im re Davenport, 3B. R. 77; s. oc. 2 L. T. B. 136; in re Eld-
ridge, 4 B. R. 498; s.c 2 Biss. 8362; in re Blue Ridge R. R. Co. 13 B. R.
315.)

In a proceeding to sell property free from incumbrances, the bankrupt.
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 continued 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 creclitors, and the creditors act upon such suspicion or
belief, they should be reimbursed their costs and expenses out of the mort-
gage fund, notwithstanding the mortgage is eventually 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 fraudilent, and creditors who have en-
deavored 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. (Jn re Dumont, 4 B. R. 17; 3. c. 2 L. 1. B. 114.)

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, beycnd the reach anc influence of any
Tetrospective action of the law caused by such change. (Jn re Henry M. Dun-
ham, 29 Leg. Int. 389; s. c. 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 per-
612 THE BANKRUPT LAW. [§ 5075.

sonally and not out of the estate. (Jn re H. Brinkman, 6 B. R. 541; 8. c. 7
B. R. 421.)

If the estate is sold free from incumbrances, the State court may grant a
mandamus against the State officer, directing an erasure of the mortgages.
(Conrad vy. 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. (Conrad v. Prieur, 5
Rob. [La.] 49.)

Surrender to Creditor.

The assignee is invested with the right, independent of the sanction of the
‘court, to release the bankrupt’s right of redemption to the secured creditor.
(Second Nutional Bank vy. State Nutional Bunk, 11 B. R. 49; 8. c. 10 Bush,
367.)

The powers of an assignee are in no sense judicial, and his acts 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 con-
clude the rights of no one else. The act of the assignee in allowing a cred-
iter to retain an alleged security, after deducting the value of the same from
the amount of the claim, does not include other creditors claiming the same
security, if they have not proved their claims. (Second National Bank vy.
State National Bank, 11 B. R. 49; s. c. 10 Bush, 367.)

When the assignee, in the exercise of the discretion left to him, abandons
all claim to incumbered property, then the Stace courts may subject such
property to the satisfaction of the secured creditor’s claim, and may afford
him any relief touching such property as he would have been entitled to if
the proceedings in bankruptcy had never been instituted. (Second National
Bank vy. State National Bunk, 11 B. R. 49; s. c. 10 Bush, 367.)

Sale Subject to Incumbrances,

The assignee may sell, without petitioning 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 knowledge of the incumbrances. (Jn re Mebane. 3 B. R. 347; in re
McClellan, 1 B. R. 889; Kelley v. strange, 8 B. R. 8; King v. Bowman, 24
La. An. 506; Second National Bank v. State National Bank, 11 B. R. 49; 8. ¢.
10 Bush, 367; Ray v. Lrigham, 12 B. R. 145; s. c. 25 La. An. 600; 8. ¢. 2
Wall. 128; Wicks & Co. v. Perkins, 13 B. R. 280; s. c. 1 Wood, 383.)

When property subject to an mcumbrance 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 v. Strange, 3 B. R. 8; Mceks v. Whatley,
4B. R. 488.)

' Where property is sold subject to liens, the purchaser takes the title sub-
ject 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 balance of the pro-
ceeds that remain atter the payment of the costs of sale and the lawful com-
missions of the assignee. (Jn re Mebane, 3 B. R. 847.)

_ Asa general rule of equity jurisprudence, there is an equity of redemption
in chattel mortgages. In Massachusetts, the statute remedy is not exclusive.
§ 5075.) NOTES OF DECISIONS. 613

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
‘y, Ames et al, 2 B. R. 455; 8s. o. 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 incumbrances, (/n re Lambert, 2 B. R. 426;
in re Bowie, 1 B. R. 628; s. 0.1 L. T. B. 97; 8. o. 15 Pitts. L. J. 448.)

If the petition asks for leave to sell the property subject to certain speci
fied incumbrances, and the report sets forth that the property was sold free
from all incumbrunces, except those specified, the report will not be adopted
by a mere confirmation of the sale. It should explicitly appear in the order
of confirmation that the report was confirmed, and that.the sale as such con-
firmed, so as to show that the court acted upon that part of the report, and
confirmed the sale by making it free aud clear from all other incumbrances.
That is 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. (Jn re McGilton ef al, 7 B. R. 294; 8. 6. 3
Biss, 144.)

Tf a lien creditor is present at a sale by an assignee, he is present in con-
templation 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 question-
able whether he would be bound by an unauthorized statement of the as-
signee. (In re McGilton e¢ al. 7 B. R. 294; 8. c. 3 Biss. 144.)

If the assignee sells the property without an order of the court, a secured
creditor may enforce his claim against the property in a State court,although
he has proved his debt. (ing v. Bowman, 24 La, An. 506.)

The fact that land against which a mortgagee seeks to enforce his mort-
gage has been sold by the assignee, does not deprive the State tribunal of
jurisdiction over the suit. (King v. Bowman, 24 La. An. 506.)

If the property is sold subject to a lien, the lien claimant may proceed in
the State court to enforce his lien. (Dvuglass v. St. Louis Zine Co. 56 Mo.
388.)

Where hypothecary proceedings are instituted after the sale of the prop-
erty by the assignee, it 1s not necessary to serve notices of the proceedings on
the assignee or the bankrupt. The assignee has no interest in the hypothe-
cated property, and the discharged bankrupt is no longer bound for the debt.
(Ray v. Brigham, 12 B. RK. 145; 8. c. 25 La. An. 600; s. c. 23 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 bankrupt court, can only be enforced in the district court
sitting as a court of bankruptcy. (Jn re People’s Mail Steamship Co. 2 B. R.
558; 8c. 3 Ben. 226; Davis, assig. of Bittel, e¢ al. 2 B. R. 392; Jones v.
Leach et al. 1 B.R 595; in ve Vogel, 2 B. R. 427; Lee v. Hranklin Av. 8.
Inst. et al, 3 B. R. 218; 3.0.10. L. N. 870; én ve Kerosene Oil Co. 2 B. R.
528; s.c. 3B. BR. 125; s.c. 3 Ben. 35; s. c. 6 Blatch. 521; s.c. 2L, T. B.
79; in re Rosenberg, 8 B. R. 130; 3. c. 3 Ben. 366; in re Snedaker, 3 B. R.
629; in re High et al. 8B. R. 192; 3 01 LT. B. 175; 8. ¢, 20. L. N. 9)

The filing of a petition in bankruptcy operates from the time of such
614 THE BANKRUPT LAW. [§ 5075.

filing as a practical restraint on a pledgee of the property of the bankrupt,
who is notified of such filing, from disposing of it otherwise than at bis own
risk, until the bankrupt court can act in the premises. (Jn re Grinnell & Co.
9B. R. 29.)

A judgment which is a lien upon land must be proved, and can only be
enforced through the bankrupt court. (Davis v. Anders, 6 B. R. 145.)

For just and equitable purposes and to guard against fraud, the act right-
fully takes the pledged property or lien out of the power of the secured
creditor’s control or management in reducing it to money in his chosen
way without responsibility, and places it in the hands of the assignee of the
bankrupt, who, being an agent to the court, and at the same time the repre-
sentative 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 con-
vert such mortgaged or pledged property 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 mortgage, 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 exact justice, and to see that the rights of all the
creditors are secured’ to them under the proof. of claims, and under the law.
(dn re 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 fdebt need
not obtain an order of the court for leave to sell the same. (Jn re Geo. B.
Grinnell, 9B. R. 187.)

A secured creditor may apply to the district court to have the incumbered
property sold, and the proceeds applied pro tanto toward the payment of bis
debt. (Jn re Stewart, 1 B. R. 278; s. c. 1 L. T. B. 16; in ve Bigelow e¢ al. 1
B. R. 632; s. c.2 Ben. 480; 8.c.1L. T. B. 95; Davis, assg. of Bittel et al. 2
B. R. 892; in re Ruehle, 2 B. R. 577; s. c. 1 L. T. B. 59; 8.0.1 C. 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 exist-
ence of facts which may never be made to appear. For it can not otherwise
be known that the creditor ha3 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 bankrupt act, made dependent. (Jv re Bigelow ¢ al.
1 B. R. 682; 3. c.2 Ben. 480; s.c.1 L. T. B. 95; in ve Bridgman, 1 B. R.
812; s.c.2 B. R. 252; in ve Frizelle, 5 B. R. 119; in re Grinnell & Co. 9 B.R.
ae ie: in re High et al. 3 B.R. 192; s.c.1 L. T. B. 175; 3.0. 2 0.

. N. 9.)

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 desir-
ing to enforce the same, must institute an original proceeding for tbat pur-
be and make the other claimants paities thereto. (Jn re C. Dean, 3 B. R.

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
aoe to a sale or in claiming the proceeds, (Fvuler v. Hart, 18 How.

73.)
_ The sale can not take place before an assignee is appointed. . The as-
signce is the only person who can represent tbe creditors other than the
§ 5075.] NOTES OF DECISIONS. 615

particular secured creditor. Whether such other creditors are wholly un-
secured 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 ascertuined by agreement between such particu-
lar 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. (Jn re Grinnell &
Co. 9 B. R. 187.)

Notice of the application should be given to the assignee. (Jn re J. O.
Smith, 2 B. R. 297; s. c. 2 Ben. 118; in ve High et al. 8 B. R. 192; 5.0.1 L.
T. B. 175; 8. c. 2 C0. L. N. 9; in ve 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 to the
creditors, though exceptions might be allowed to this rule in some cases very
properly. (Jn ve High et al. 3 B. R. 192; 8.¢c.1 L. T. B. 175; 30.20. L.
N. 9.)

A secured creditor can not apply to have his lien satisfied until something
has been realized out of the property subject to his lien. (Jn re Fallon, 2 B.
R. 277.)

The difference between the net proceeds of the sale of mortgaged prop-
erty 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. (Zn re Purcell e¢ al. 2 B. R. 223 8. ¢.
2 Ben. 485; s. c. 36 How. Pr. 42; in re Ruehle, 2 B. R. 577; s.c. 2 L. T. B.
59; s.c. 10. L. N. 186; s.c. 16 Pitts, L. J. 5; in re Winn, 1 B. R. 496; 8.0¢.
1L. 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 administra-
tion, in which he has no concern, and in which he can have no interest until
his lien is either satistied or realized, it would be inequitable to require him
to bear the burden of them. (Jn ve Hambright, 2 B. R. 498; s. o. 2 L. T. B.
61; 5.c.1 0. L. N. 201; én re Davenport, 3 B. R. 77; s.c. 2 L. T. B. 136.)

The fund should be charged with the costs and expenses of sale and orders
-relative thereto, and its proportion of the general expenses of theestate. (Jn
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 as his attorney is not affected by the bankruptcy of the mortgagor,
‘for it is a power coupled with an interest. (Hall v. Bliss, 14 B. R. 829; s. ¢.
118 Mass. 554; contra, Lockett v. Hill, 9 B. R. 167; 8. c. 1 Wood, 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; 8. c. 1 Wood,
552.)
616 THE BANKRUPT LAW. [§ 5075.

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. (Lockett v. Hill, 9 B. R. 167; s. ¢. 1 Wood, 552.)

If the power to sell is limited to a certain period, it is lost by a failure to
exercise it during that period. (Lockett v. Hill, 9 B. R. 167; s. c. 1 Wood,
552.)

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. (Lockett v. Hill, 9 B. R. 167; s. c. 1 Wood, 552.)

Where the right to purchase is provided for in the mortgage, a mortgagee
may purchase at a sale made by him in pursuance of a power contained in a
mortgage. (Hall v. Bliss, 14 B. R. 229; 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 incapa-
ble in law to execute a deed of conveyance. (Lockett v. Hill, 9 B. R. 167; s.
c. 1 Wood, 552.) .

A power of sale in a mortgage is merely cumulative, and does not bara
foreclosure. (Lockett v. Hill, 9 B. R. 167; 3. c. 1 Wood, 552.)

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. (McG@ready v.
Harris, 9 B. R. 135; 8. c. 54 Mo. 187; Roden v. Jaco, 17 Ala. 344.)

A mortgagee holding a mortgage of personal property may take posses-
sion of the property after the commencement of proceedings in bankruptcy.
(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 ef 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 redemption 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 mort--
gage 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 bea mere expense to the estate, producing noth-
ing. Under such circumstances, the district court may exercise a discretion
on the subject, and may decline interference. (Jn re Iron Mountain Co, 4
B. R. 645; s. c. 9 Blatch, 820; in re Bowie, 1 B. R. 628; 3.c. 1 L. T. B. 97;
s. c. 15 Pitts. L. J. 448; Tichenor v. 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 interests to be
put at hazard by a proceeding to whick the general creditors are not parties,
and in respect to which they have no protection but through the proceedings
in bankruptcy. (Jn re Iron Mountain Co. 4 B. R. 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 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 bya district court in another State, sitting-
as a court of bankruptcy, In such a case, the State court where the land is
§ 5075. ] NOTES OF DECISIONS. 617

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. (Jn ve Iron Mountain Co. 4 B. R. 645; s.c. 9 Blatch. 320;
Brown v. Gittons, 13 B. R. 407; 8. c. 37 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. o. 2 Lans. 877; Barron v. Newberry, 1 Biss. 149;
Truitt v. Truitt, 38 Ind. 16; City Bank v. Walton, 5 Rob. [La.] 158; Cole v.
Dunean, 58 Ill. 176 ; Pierce v. Phillips, 8 Robt. 488.)

A proceeding instituted in a State court to foreclose a mortgage after the
commencement of the proceedings in bankruptcy, without making the as--
signee of the mortgagor a party thereto, is valid as against those who are
parties thereto. (Brown v. Gibbons, 13 B. R, 407; s. c. 87 Lowa, 654; Hul--
verson Y. Hutchinson, 39 Iowa, 316.)

After a surrender in bankruptcy, the bankrupt has no interest in property
mortgaged by him, and can not be proceeded against by the appointment 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 Tl.
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 v. Perkins, 13 B. R. 280; s. c. 1 Wood, 383.)

If the assignee does not seek to redeein the mortgaged property, the mort-
gagee may institute an action in a State court to foreclose the mortgage.
(Brown v. Gibbons, 87 lowa, 654; McKay v. Funk, 13 B. R. 334; 8. c. 37
Towa, 661 )

When the bankrupt court consents, a mortgagee may foreclose the mortgage
ina State court. (Societe D’ Espargnes vy. 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 v. Jones, 23 Ark.
193.)

Where no action is taken by the assignee or the creditor in the bankrupt.
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 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. Fitton,
11 B. R. 229; 8. c. 20 Wall. 414; Scott v. Kelly, 12 B. R. 95; s. c. 22 Wall.
57.)

A fi. fa. may be issued after the commencement of proceedings in bank-
ruptcy to enforce the lien of the judgment. (/tussedl v. Cheatham, 16 Miss.
103; MeCuncev. 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. 852; Blum v. Hllis, 13 B. R. 345.)

The bankruptcy court will treat the enforcement of a lien in the State
618 THE BANKRUPT LAW. [§ 5076.

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. (Phe'ps
vy. Sellick, 8 B. R. 890.)

A purchaser from the mortgagee is a necessary party to a bill to redeem:
(Winslow v. Clark, 47 N. Y. 261; 8. c. 2 Lans. 877.)

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. (Winslow v. Clark, 47
N. Y. 261; s. c. 2 Lans. 377.)

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. 7 B. R. 294; 8. 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 Gate 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 prcperty, with a full descrip-
tion of such incumbrances if any. It must be made to appear that the estate
bas no ultimate interest in the mortgaged property, and to this end the peti-
tion 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 incum-
brances, it must be made to appear that the rights of the petitioner can not be
fully protected by asale of the property by the assignee under the bankruptcy
proceedings, either subject tothe 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. (Jn re Philo R.
Sabin, 9 B. R. 383.)

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. (Murkson v. Heany, 12 B. R. 484; s. c. 47 Ind.
31.)

Sec. 5076.—Creditors residing within the judicial district
where the proceedings in bankruptcy are pending shall prove
their debts before one of the registers of the court, or before a
commissioner of the circuit court within the said district. Cred-
itors residing without the district, but within the United States,
may prove their debts before a register in bankruptcy or a com-
missioner of a circuit court in the judicial district where such
creditor or either one of joint ereditors reside; but proof taken
befure a commissioner shall be subject to revision by the register
of the court.

A proof of a debt taken before a justice of the peace is not duly proved,
and must be rejected. (Jn re Strauss, 2 B. R. 48.)

The proof of a debt in bankruptcy may be taken by a register or by a com-
missioner, in all cases, whether of a resident or non-resident 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
§ 5076 A.] NOTES OF DECISIONS. 619

the creditor resides or in which the proceedings are pending. The law never
did require, nor does it seem to have cuntemplated, that such proof should
be taken before the register to whom the case in bankruptcy has been refsrred,
to the exclusion of all others. (Jn ve W. B. Merrick, 7 B. R. 459; in re Shep-
pard, 1 B. R, 439; s.c.1L. T. B. 49; s. o. 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 liabilities as he may
see fit, and the creditor may then be saved the trouble of being afterward sum-
toned before the court to submit to an examination in regard to his claim.
But all the court can do is to commend that course to creditors as the wiser
policy. (In ve 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 proof 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. (Jn ve W. B. Merrick, 7 B. R. 459.)

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 authorizes tobe done. (ln re
W. B. Merrick, 7 B. R. 459)

A proof made by the creditor before his own attorney can not be allowed.
(Un re Henry Nebe, 11 B. R. 289.)

Sec. 5076 a (22 June, 1874, § 20)—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 regulations provided by law;
such proof to be certified by the notary and attested by his signa-
ture 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 Oo. 14 B.
R. 253.)

The requisites of a notarial seal are determined by the law of the locality
from which he derives his authority. (Jn re Wm. W. Phillips, 14 B. R. 219;
8.c.8C. 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. (dn re Wm. W.
Phillips, 14 B. R. 219; s.c. 8 C. L. N. 409.)

_ Inthe absence of express legislation, an officia! seal need not contain the
name of the official. (Jn re Wm. W. Phillips, 14 B. R. 219; 8. c.8C. LN.
409.) iS

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
ree the jurat. (In re William W. Phillips, 14 B. R. 219; s.c.8C. L. N.

09.)
620 THE BANKRUPT LAW. [§ 5076 B-7.

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. (Jn re William W. Phillips, 14 B. R. 219; 8. ¢. 8 C. L. N.
409.)

The presumption is that a seal is the official seal of the person it purports
to be, and who subscribed the jurat. (cn re William W. Phillips, 14 B. R.
219: 8. c. 80. L. N. 409.)

The power given to notaries to take proof of debts carries with it the in-
cidental power to take acknowledgments of letters of attorney. (In re Butter-
field & Burr, 14 B. R. 195; in re McDuffee, 14 B. R. 336.)

Src. 5076 w (Act of Angust 15, 1876).—Be zt enacted by the
Senate and House of Representatives of the United States of
America in Congress assembled, That notaries public 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 cirenit court may now lawfully take or do.

Src. 5077.—To entitle a claimant against the estate of a bank-
rupt to have his demand allowed, it must be verified by a deposi-
tion in writing, under oath, and signed by the deponent, setting
forth the demand, the consideration thereof, whether any and what
securities are held therefor, and whether any and what payments
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 satisfaction
whatever other than that by him set forth; that the claim was not
procured for the purpose of influencing the proceedings in bank-
ruptcy; 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 proceedings, is or shall be in any way affected, in-
fluenced, or controlled. No claim shall be allowed unless all the
statements set forth in such deposition shall appear to be true.

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 counter-claims and offsets. The debt must be proved by the
oath of the creditor. This applies to a lien creditor as well as to an un-
secured creditor. (Duvis, assg. of Bittel et al. 2 B. 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. (Jn re Patterson, 1 B. R. 100; s. c. 1 Ben. 448.)
8 5077.) NOTES OF DECISIONS, 621

A ‘deposition ” by a debtor, proving his claim against the estate of the
bankrupt, is neither an affidavit nur a deposition, as known in the ordinary
practice of law. Itis the result of an examination of the creditor ma‘le by
the officer of the law authorized to make it. The creditor is not only re-
quired to testify to the amount of his claim, but he must testify to its con-
sideration, 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. (Jn ve Strauss, 2 B. R. 48; in re Elder, 8 B. R. 670;
8.0.1 Saw. 73; 8.c. 1 L. T. B. 198; 8.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 anc 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 touching the matter specified, and himself re-
duce the depositions to writing, or fill up the printed blank, if such is used.
(In re W. D. Merrick, 7 B. R. 459.)

The proof of a debt against a firm should state that the firm or company,
describing it by its firm name, and the individuals who composed it, was in-
debted to the creditor, and how and for what amount. It should not be un-
certain whether the demand is a firm debt, or a joint claim against the indi-
viduals who compose the firm. (Jn re Walton ¢ al. 1 Deady, 510.)

When partners are adjudged bankrupts, the result is, or may be, that sev-
eral distinct estates are to be administered in that proceeding. There is 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 jvined 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. (Jn re Walton et al. 1 Deady,
510.)

A proof of debt can not be filed unless it is correctly entitled in the cause.
Cn re Pius Walther e¢ ai. 14 B. R. 273.)

The proof should contain at least one full christian name of the creditor
as well as his surname. (Jn re William IL. Valentine, 12 B. R. 339; 5.0.4
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 hear-
ing in equity. (Jn re Northern Iron Company, 14 B. R, 358.)

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. (Jn re Port Huron Dry Dock Co. 14 B. R. 253.)

The amount of interest to which a claimant is entitled is not to be deter-
mined by himself, but the data must be furnished by him under oath, and
the computation is to be made by the register. (Jn re Port Huron Dry Dock
Co. 14 B. R. 252.)

A proof in due form makes outa 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.)
622 THE BANKRUPT LAW. [§ 5077.

Where a claim consists of a promissory note, the creditor must produce
the note, or a copy thereof. (Jn 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. (Jn 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 the liability of the bankrupt
has been fixed by demand and notice. (Zn re Port Huron Dry Dock Co. 14
B. R. 253.)

When the debt is evidenced by a promissory note, the note must be pro-
duced and exhibited when required ly the register, the assignee, or the bank-
rupt, on proper occasions. Forms Nos. 31 and 33 distinctly show that a bill
or note er 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 ex-
hibited before a dividend is paid on it. When the note is merged in a judg-
ment, it need not be produced. (Jn re Knoepfel, 1 B. R.70; s.c. 1 Ben, 298;
in re Jaycox & Green, 7 B. R. 308.)

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. (Jn re Knoepfel, 1 B. R. 70; s. c. 1 Ben. 398.)

A transfer of a claim is valid unless it is fraudulent or oppressive. (Jn
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 bank-
rupt 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 frand or illegality
of the claim, if any exist. The requirement 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 consideration 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 statement 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, anc the time of delivery, if delivered at one time, or
if delivered continuously through a period of time, that period should be
stated. If the proof falls short of this, the register ought not to consider it
satisfactory, and should withhold his approval. (ln re Elder, 3 B. R. 670;
s.c. 1 Saw. 73; 8 c.1L. T.B. 198; s.c. 3L. T. B. 140; in re Northern
Tron Co. 14 B. R. 3856.)

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. (Ju re Loder, 2 B. R. 512; s. c. 3 Ben. 211; s. c.
1L. T. B. 159; in ve Jaycox & Green, 7 B. R. 803; in ve Lake Superior 8. C.
RR. &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.
(Un re E. R. Stephens, 6 B. R. 533; s, c. 3 Biss, 887.)
§ 5077. ] NOTES OF DECISIONS. 623°

The assignee of a simple chose in action or contract for the payment of '
money must state the consideration which passed between the original par-
ties. (In re Lake Superior 8. C. R. R. GI. Co. 10 B. R. 76.)

The holder of a negotiable paper, who took it for value in good faith be-
fore the maturity thereof, need only state the consideration which he gave
for such paper. (Ja re Lake Superior 8. C. R. R. & I. Co. 10 B. R. 76.)

The creditor must make the proof simpliciter, and he is not at liberty to
interpose any protest or qualification or reservation. (Dutton v. Freeman, 5
Law Rep. 447.)

Where a party has a demand by its terms payable ia 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 en-
titled to receive his dividend thereon in the stipulated currency. (Jn re
Elder, 3 B. R. 670; 8.c. 1 Saw. 73; s.c.1L. T. B. 198; 3.c. 8 L. T. B. 140.)

A note dated March 18th, 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 conld not have contemplated
payment in treasury notes. (Jn re Whittaker, 4 B. R. 160.)

Proof of Secured Debt,

A secured creditor can resort to one of three remedies: 1st. He may rely
-upon his security; 2d. He may abandon it, and prove the whole debt as un-
secured; 3d. He may be admitted only as a creditor for the balance remain-
ing 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, shonld be disregarded
by him. (Jn re Brand, 3 B. R. 324; s.c. 2 L. T. B, 66.)

A secured creditor should always prove his claim; any other theory is en-
tirely irreconcilable with the provisions of the bankrupt act. If the enforce-
ment of his lien satisfies his demand, the debt will be discharged; but if it
does not, then the balance remains as a general claim against the estate, like
all other unsecured claims. (Davis, assg. of Bitte] e¢ al. 2 B. R. 392; in re
Ruehle, 2 B. R. 577; 38.¢c. 1 L. T. B. 59; 8.c.1C. L. N. 186; 8. c. 16 Pitts..
L. J. 5; iz re Winn, 1 B. R. 496; 8, c. 1 L. T. B. 17.)

The bankrupt court has jurisdietion over the debtor and all his creditors,
and also over all demands affecting the bankrupt’s estate. The secured cred-
itor must prove his demand, and obtain the aid of the bankrupt 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 »mount upon which
the dividend is to be computed, and the phrase “ proved his debt,” is equiva-.
lent to the phrase “share in the distribution of the assets.” (Jn re Bigelow
et al. 1B. R. 632; 8. c. 2 Ben. 480; 3.0. 1 L. T. B. 95; Jervis v. Smith, 3 B.
R. 594; 3. c. 7 Abb, Pr. [N. 8.] 217.)

This rule that a creditor, having security for hig debt, is to be admitted as
a creditor only for the balance of his debt, remaining after the deduction 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 his debt out of the estate of his
624 THE BANKRUPT LAW. [§ 5077. .

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 intervening equity, become the primary
fund for the payment of the debt, there is nothing in reason or natural jus-
tice which requires the creditor to procecd against the securities in the first
place. But the lord ‘chancellor, in the exercise of his summary }owers over
suitors and the commissioners of bankruptcy, long belore any statutory pro-
vision, 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; 8. c. 7 Abb. Pr. (N.
8.] 217.)

A deposition, according to Form No. 21, is sach a proof as is allowed by
this section, even though the value of the security is not determined, nor the
property sold. (Jn re Bridgman, 1 B. R. 312; im re Bigelow e¢ al. 1 B. R.
632; 8. c. 2 Ben. 480; s.c.1 L. T. B. 95; in ve Ruehle, 2 B. R. 577; 5.c.1
L. T. B. 59; s.c.1C. L. N. 186; 8. c. 16 Pitts. L. J. 5.)

The value of the securities held by the creditor is not required by the
bankrupt 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 exhib-
ited in his deposition, when against that indebtedness are set out securities
held therefor, the value of whieh, when ascertained, the court is asked to
deduct from the indebtedness, in erder to arrive at the balance, for which
balance alone the creditor seeks to be admitted to share in the distribution
of the assets. (Jn re Bigelow et al. 1 B. R. 632; 8. c. 2 Ben. 480; 8. c. 1 L.
T. B. 95.)

The proof of a claim by a secured creditor differs from that of an unse-
cured creditor in this: the latter at once steps into the column of geveral
creditors who are to be paid out of the assets of the bankrupt pro rata, ac-
cording 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.
Cn re Bridgman, 1 B. R. 312.) ©

The proof of a secured claim, according to Form No. 21, does not invali-
date the right of the creditor to the securities which he is found to hold.
Un re Bigelow et al. 1 B. R. 632; sc. 2 Ben. 480; s.c. 1 L. T. B. 95; in ve
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 bank-
rupt is not a mortgage or pledge of real or personal property of the, bank-
rupt, 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. (dn re Newland, 7 B. R. 477; 8. ¢. 6
Ben. 342.)

If a secured creditor also has an unsecured claim, he may prove such
claim, and vote for an assignee. (Jn re. Hanna, 7 B. R. 502; s.c. 5 Ben. 5;
inre 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 amonnt on which he may be
admitted to vote for assignee. The ascertainment of such value must rest in
§ 5077.) NOTES OF DECISIONS. 625

abeyance until after the election of an assignee. (Jn re 8. 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 he found to be actu-
ally due. (Jn re Nounnan & Co. 6 B. R. 579; 8. c. 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 intervention 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 opposition to the release. (Jn re Jaycox & Green,
8B. R. 241; 8. c. 7 B. R. 3038.)

Effect of Proving Secured Claim as Unsecured.

A secured creditor who proves his claim without reference to bis lien or
security, and without apprising the bankrupt court of its existence, thereby
waives his lien, and relinquishes it to the assignee. (Stewart v. Isidor et al. 1
B. R. 485; s.c. 5 Abb. Pr. [N. 8.] 68; in ve Bloss, 4 B. R. 147; 5.6.2 L. 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. Cuwood, 40 Ind. 289; 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.
(McKinsey et al. 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 creditor from
setting up the mortgage against the assignee, but the assignee alone cin avail
himseif of the rights which this provision is intended to secure. Third par-
ties can derive no right or advantage therefrom. (Cook v. Farrington, 104
Mass. 212.) :

There is no provision in the bankrupt act that the claim of a proving cred-
itor against joint debtors with, or sureties for, the bankrupt, shall be assigned
or given up by the creditor to the assignee. Indeed, such a provision 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 bankrupt’s estate, arising from
a contract made by the bankrupt and certain others, as joint cuntractors, with-
out stating in his-proof that the same was in any manner secured, may, oever-
theless, maintain an action upon such contract against the other joint con-
tractors. (Hoyt et al. v. Freel et al, 4 B. R. 131; 8.0.7 Abb. Pr. [N. 8.] 220;
8.021. 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. (Jn re Brand, 3 B. R. 324; s.c.2L. T. B. 66;
Hitch vy. Seely, 18 B. R. 380; s. c. 37 Iowa, 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 parties, that will

40
626 THE BANKRUPT LAW. [§ 5077.

be considered as having been done which ought to have been done. ( Wallace
v. Cunrad, 3 B. R. 41; 8. c. 3 Brews. 329; s.c. 7 Phila. 114.)

If an indorser takes a mortgage from the maker to secure the payment of
all notes indorsed by bim 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 tuke the benefit of azy 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 him-
self of the security. If the maker, therefore, becomes bankrupt, the holder
docs not lose his right of action against the indorser by proving the debt
as unsecured. (Merchants Navl Bank v. Comstock, 11 B. R. 235; s. c. 55 N.
Y. 24.)

If the holder of a note, the indorser whereof is protected by a mortgage,
proves his claim as unsecured, this does not extinguish the mortgage, for the
assignee is subrogated to the rights of the holder. (Hiscock v. Green, 12 B.
R. 507.)

_ It will not be presumed that a creditor fraudulently concealed the fact of
his lien in proving bis claim. (Hatch v. Seely, 18 B. R. 380; 8. c. 87 Iowa,
493.)

Merely proving a secured claim as a general claim does not waive the
security. (Hatch v. Seely, 13 B. R, 380; s. c. 87 Iowa, 493.)

Amendment of Proof,

Proofs of debt can not be taken from the file. (Jn re Loweree, 1 B. R.
74; 8. c. 1 Ben. 405; in re McIntosh, 2 B. R. 506; in re Emison, 2 B. R. 595;
contra, Morse v. 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, gen-
eral distribution of assets, but will be allowed, if he elects to do so, to with-
draw or amend the proot, and rely upon his security. (Jn re Brand, 3 B. R.
824; s.c.2L. T. B. 66; see Rulel; 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 evi-
dence 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 influenced
by any fraudulent intent. In the absence of evidence, the presumption is
that none existed. (In re William McConnell, 9 B. R. 387: s. c. 31 Leg.
aoe King v. Bowmun, 24 La. An. 506; inre J. F.&C.R. Parkes, 10 B.

. 82.)

If the secured creditor has received a dividend, he may be allowed to
amend, upon condition that he refunds the dividend, with interest. Cn re J,
F. & C. R. Parkes, 10 B. R. 82.)

Where a creditor has been guilty of laches 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 seliing the security, of a portion

of the costs and expenses of the proceedings. (Jn re William McC 11. 9
B. RB. 887; s. 0. 31 Leg. Int. 61.) é Bs. ( Ueam, shevonnen,

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
§ 5078.] NOTES OF DECISIONS. 627

withdrawal, if there has been a mistake and no want of diligence. The
proof may be withdrawn for the purpose of proceeding against a dormant
partner of the bankrupt. (Jz re Edward Hubbard, | B. R. 679; s. c. 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. (In
re Edward Hubbard, 1 B. R. 679; s. c. Lowell, 190.)

Where a proof is sworn to and filed, and afterwards, upon the objection
of other creditors, is postponed, the creditor has no :ight to withdraw it upon
his mere demand. (Jn ve Abraham Halle, 7 Ben. 182.)

A creditor will 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. (Jn 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. (Jn:7e Wiener, 14 B. R.
218.)

It is the policy and purpose of the act to do equal and exact justice be-
tween 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 cor-
rection 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 equi-
table consideration of the court, and great discretion is exercised in disposing
of them. (Jn re Montgomery, 2 B. R. 429; s. c. 38 Ben. 565.)

A creditor can not authorize an attorney to alter a proof without having
it sworn to again after such alteration. (Jn 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. (Jn re Myrick, 3 B. R. 154; in re Montgomery, 3 B. R.
429; s. c. 3 Ben. 565.)

When the proof is defective, « party may be allowed, and ought to be re-
quired, to amend it. (In re Loweree, 1B. R. 74; 3. c. 1 Ben. 406 ; in re My-
rick, 3 B. R. 154.)

The register has the right, and it is his duty, to permit and require a de-
fective proof to he amended; but if, in such case, an issue of law or fact is
raised, he must «djourn the same into court for decision. (Jn re Elder, 3 B. R.
670; s.c. 1 Saw. 78; 1 L. T. B, 198; 3 L. T. B. 140.)

When the amendment sought relates to a new and different claim from any
one of those embraced in the existing proof of debt, leave to amend the exist-
ing proof must be denied. The proper course is for the creditor to prove his
newly discovered debt independently. (Jn re Montgomery, 3 B. R. 429; 8. ¢.
8 Ben. 565.)

Src. 5078.—Suach oath shall be made by the claimant, testify-
ing 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 presi-
dent, cashier, or treasurer. The court may require or receive
628 THE BANKRUPT LAW. [§ 5078...

further pertinent evidence either for or against the admission of
any claim.

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 Barrett, 2B. R. 583; s.c.1L. T. B. 144; 5.0.1
C. L. N. 202.)

A receiver appointed in one State may file a proof of claim in the district
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 ina
representative capacity as trustee, assignee, receiver, executor, administrator
or in avy other of the various representative capacities which the law pro-
vides for the administration of human affairs. (Jn re Republic Ins. Co. 8 B.
R. 197; 8. 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 al! 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 acticn or proceeding in the cause 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 originalcreditor. (Jn
re Fortune, 3 B. R. 312; s. c. Lowell, 384; 8. 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 commencement
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 section to avoid areal and honest transfer
without any purpose of influencing the proceedings in bankruptcy, but rather
an implication that it may be done if there is po such purpose. (Jn re Mur-
dock, 3 B. R. 146; s. c. Lowell, 362; s.c. 2 L. T. B. 97; in re Frank, 5 B.R.
194; 8s. c. 5 Ben. 164; s.c. 2L. 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 bank-
rupt act. The bankrupt 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 debts, for the purpose
of giving him time to convert his property into money to pay them, he may
do so. The bankrupt 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 pro-
ceedings under this act, does not relate to transfers after the filing of the peti-
tion 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 purpose of influencing the proceedings in bankruptcy. 1f the person who
honestly undertakes to purchase up the debts, fails, he may prove the claim
and participate in the estate. (Jn re Strachan, 8 Biss. 181; in ve Pease ct al.
6B. R. 178.)

There must be an assignment of the claim. A receipt of payment is not
'§ 5079. ] NOTES OF DECISIONS. 629

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. (Jn 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. (Jn re Pease et al. 6 B. R. 178.)

An agent can not make oath to 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 knowl-
edge, 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: (Jn ve H. F. Barnes, Lowell, 560.)

If ove partner is sick and the other is out of the State, this is not a sufii-
scient reason for allowing an agent to make the proof, although his knowl-
edge is superior to that of the absent partner. (Jn 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 hes no knowledge of the matter at all, the former
may prove the debt. (Jn ve 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. (/n re W. S. Saunders, 13 B. R. 164.)

Mere absence from the State or the locality where the proof is made, is
not alone regarded as cause tor proof by an agent. (Jn re George Jackson ¢¢
al, 14 B. R. 449.)

If the creditor is confined to his house by sickness, go that he is unable to
testify, this is a sufficient reason for allowing an agent to make the proof. (Ia
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 coaid not have made the de-
position, 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 et
al, y. Harding, 4 B. R. 39.)

A person who has acted as the agent of the bankrupt in purchasing
claims against the baukrupt’s estate, can not prove them. (Jn re Lathrop et
al. 3B. R. 413; 8. 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 bankrupt act. (Jn re Sheppard, 1 B. R. 439;
-8C14L. T. B. 49; 3.0.7 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. (Jn re Levi
Bean, 14 B. R. 182; s. c, 1 W. N. 4382.)

Sro. 5079.—Such oath may be taken in any district before any
register or any commissioner of the circuit court authorized to
administer oaths; or, if the creditor is in a toreign country, before
-any minister, consul, or viee-consul of the United States. When
630 THE BANKRUPT LAW. [§ 5980..

the proof is so made it shall be delivered or sent by mail to the
register having charge of the case.

Sue. 5080.—If the proof is satisfactory to the register it shall
be delivered or sent by mail to the assignee, who shall examine
the same and compare it with the books and accounts of the bank.
rupt, and shall register, in a book to be kept by him for that pur-
pose, 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.

The officer taking the proof, should append it to a certificate, that it is sat-
isfactory to him. (Jn re Belden & Hooker, 4 B. R. 194)

The register who has charge of the proceedings in bankruptcy, may reject
a proof taken before another register, when the same cloes 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. Proofs so rejected should be returned for amendment. (Jn re Loder,
8B. R. 665; s. c. 4 Ben. 125.)

The register has the power to pass upon the satisfactory or unsatisfactory
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 ad-
journed into court fora decision. (Jn re Bogert et al. 2 B. R. 485; s. c. 38
How. Pr. 111.)

A register, in examining proofs of debt for admission, acts not only asa
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.
(/n re Port Huron Dry Dock Co. 14 B R. 253.)

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 present
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. (Jn 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 prim sucie case is made out by the affidavit
of the creditor. (Ja re Colman, 2 LB. R. 563; in re Fortune, 3 B. R. 312; 8. ©.
2L. T. B. 99.)

_ Quere. Can a creditor who has omitted to take his appeal from the re-
jection of his proof within the prescribed time, set up the rejected claim in any
other action? (Catlin v. Hosler, 3 B. R. 540; 8. o. 1 Saw. 87; 8. 0. TL. '.
B. 192.)

All proofs of debts are to be sent to the assignee for him to report them.
§ 5081.] NOTES OF DECISIONS. 631

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 ve Sheppard, 1 B. R. 489; s,c. 1 L. T. B. 49; s.c.7 A. L. 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, 50 Ind. 490.) :

Ifa 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 disatlirming the contract, and demanding his 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; 8.0.5 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 negotiable
paper. The claim is transferable neither by delivery nor indorsement; 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. (Jn re
John Sime & Co. 12 B. R. 315.)

Sec. 5081.—The court may, on the application of the assignee,
or of any creditor, or of the bankrupt, or without any application,
examine upon oath the bankrupt, orsany person tendering 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, ille-
gality, or mistake.

Under this clause the court has 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. (Jn re Patterson, 1 B. R. 100; 8. c. 1 Ben. 448; in ve
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 objec-
tion. (Jn re Walton e¢ al. 1 Deady, 442.)

The creditor stands before the court in the attitude of a plaintiff invoking
its jurisdiction, and ample provision is made for adjudication and determina-
tion of his claim in a court of law and by a jury, of which be may avail him-
self by taking an appeal to the circuit court. (Jn re Paddeck, 6 B. R. 182;
8.0, 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 conclusive
upon other creditors that be 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 grogsest injustice. (ln re
Cormwall, 6 B. R. 305; s. c. 9 Blatch. 114.)

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. (Jn re
J. O, Smith, 1 B. R. 248; s. c. 2 Ben. 113.)
632 THE BANKRUPT LAW. [§ 5081.

Persons who are not creditors can not question the right of another to
prove aclaim. That right must be questioned otherwise. (Jn re Lathrop et
al. 8B. R. 418; 8. 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; 8. c. 3 Ben.
236.)

The court may make an examination of a creditor without any applica-
tion therefor, and when it sees, from testimony before it, that certain claims
are improperly proved, it will reject them. (Jn re Lathrop et al, 3 B. R, 413;
s. c. 3 Ben. 490.)

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 touch-
ing his alleged debt. In case of his disobedience of its orders, the court can
deprive him of all the benefits of the bankrupt 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 exam-
ined in the district where proceedings are pending, without bardship to
him, owing to the distance of his residence, or other similar reasons, the
court will provide by order for the taking of bis examination before a regis-
ter of the district in which he resides. (Jn re Kyler, 2 Ben. 414.)

s
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. (/n re
Theodore E. Baldwin, 6 Ben. 196.)

The words ‘‘any creditor” must be held to mean uot only a creditor who
_has proved a debt, but a creditor who has tendered proof of a debt which
has not yet been allowed. (dn re Ray, 1 B. R. 208; s. c. 2 Ben. 58.)

A note given by the bankrupt for more than was actually due, in pursu-
ance 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 makcs the whole note void and unavailable, so far at
least as the interests of creditors are concerned. (Jn re Elder, 3 B. R. 610;
s. c. 1 Saw. 73; 8.¢c. 1 L. T. B. 198; s.c. 8 L. T. B. 140.)

Tn a 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 en-
larges his claim by taking fictitious notes, both the real and fictitious claims
will be disallowed. Fraud corrupts avd destroys the whole debt. Every
party to proceedings under the bankrupt 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. (Jn ve Elder,
3B. R. 670; s.c. 1 Saw. 78; s.c.1L. T. B. 198; s.c. 3 L. T. B. 140.)

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. (Jn re E. R. Stephens, 6 B. R. 533;
s. ©. 3 Biss. 387.)

A claim which is valid independently of a fraudulent transfer, is not
merged thereby. When the trans!cr is set aside, the claim is revived, and
may be proved. (Jn ve E. R. Stephens, 6 B. R. 588; s. c. 8 Biss, 387.)
§ 5081.) NOTES OF DECISIONS. 633

Claims which are purchased by an agent of the binkrupé are illegal and
must be rejected. (Jn re Lathrop et al. 3 B. R. 413; s.¢. 3 Ben. 490; 8. 0.5
B. R. 43; s. c. 5 Ben. 199.)

If 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 there-
for, and falsely claims that it as well as other sums were advanced to the
firm, he forfeits his right to prove for his real advances. (Marrett v. Alter-
bury, 11 B. R. 225; s. c. 3 Dillon, 444.)

A proof ofa judgment which is subsequently set aside should be expunged.
(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 attempts
to support it by his own oath, he is estopped from claiming them as security.
(Willis v. Curpenter et al. 14 B. R.)

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 balauce will not be
turned over to the bankrupts without providing for such money so used in
the purchase of the claims. (Jn re Lathrop et al. 5 B. RB. 43; s. c. 5 Ben. 199.)

The prehibition of the allowance of a claiin founded in illegality is only
-in affirmance of the common law. What is or is not an illegal transaction
depends upon the law of the place where thecontract was made or the trans-
action had. (Jn re Robert Pittock, 8 B. R. 78; s. c. 2 Saw.'416.)

If a mortgage is merely constructively fraudulent, the mortgagee may
prove for his actual advances when the mortgage is set aside. (Auppner 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 judg-
ment was rendered. (McKinsey et al. 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 contesting a judg-
ment 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 judgment against him for
the very purpose of affecting the proceedings in bankruptcy, or a judgment
may be obtained for a just debt, but under circumstances which would make
it a fraudulent preference. In all such cases it must be open to other cred-
itors to object to the judgment when offered for proof against the assets. On
the other hand, where the court rendering the judgment has jurisdiction, and
there has been no fraud and no preference, no owe can examine into the con-
sideration of a judgment, 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 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 chvose to defend an action to which be has a legal delense,
and of which he 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
634 THE BANKRUPT LAW. [§ 5082.

discharge in bankruptcy. When, therefore, the judgment is either void or
voidable as of right, by the debtor or by creditors, it may be examined into
when offered for proof. Where it is valid aguinst the debtor, and no fraud
on creditors is shown, it is valid for the purpose of proof, If there is an in-
termediate case in which it would be discretionary with the court which ren-
dered the judgment to vacate it upon the ground of mistake, the assignee
might be allowed to pursue that remedy, the proof iu the mean time being
postponed. (£z parte O'Neil, 1 B. R. 677; 8. c. 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. (Hz parte O'Neil, 1 B. R. 677; 3. ¢.
Lowell, 163.)

Under section 4998 and Rule V, the register has the power to take the evi-
dence 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 reg-
ister ought to investigate the question so raised, and not allow the claim
merely because the creditor swears to it. (Jn ve Orne, 1B. 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. (Jn re Herman et al. 3 B. R. 618; 8. ©. 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 be-
fore the court shows the consideration to be legal and sufficient, the claim
will not be rejected. If defects in the deposition have justified tke applica-
tion, costs can be imposed upon the parly in fault. (/n ve Elder, 3 B. R. 676;
s.c. 1 Saw. 73; 3.¢. 1L.T. B. 188; 3c. 3L.T. B. 140.)

‘When a creditor presents his claim for proof, be 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 provisicns of
the bankrupt act. When he is examined in respect to his claim, he is ex-
amined 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, he disallowed. (Zn re S. Paddock, 6 B. R.
182; 8.c.2L. T. B. 214; im re Kyler, 2 Ben. 414.)

When the claim of a creditor, who has proved his debt without surrender-
ing 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 deeree of the district court in expunging a proof is in the nature of
a judgment binding upon all the parties to it. and prevents a subsequent
prosecution of the claim in a State court. (Pease v. Bennett, 17 N. H. 124.)

Src. 5082.—A bill of exchange, promissory note, or other in-
strument used in evidence upon the proof of a claim, and leit in
court or deposited in the clerk’s office, may be delivered, by the
register or clerk having the custody thercof, 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.

The instrument proven may be withdrawn, in pursuance of the provisions
of this section. (Jn re Emison, 2 B. R. 595 )
§ 5083. ] NOTES OF DECISIONS. 635.

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. (/n re McNair, 2 B. R. 219, 341.)

Sec. 5083.—When a claim is presented for proof before the:
election of the assignee, an the judge or register entertains doubts
of its validity or of the right of the ercditor to prove it, and is of
opinion that such validity or right onght to be investigated by the
assignee, he may postpone the proof of the claim until the assignee
is chosen.

The purport of this section is that it is the duty ofa 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 investigated
by the assignee, to postpone the proof of a claim until the assignee is chosen.
(Un re Orne, 1 B. R. 57; 3. c. 1 Ben. 351; in re Herman e¢ al. 3 B. R. 618; s.
c 4 Ben. 126; in re Noble. 3 B. R. 93; 8. c. 3 Ben. 882; 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 there—
of has been produced to, and filed with, the register. (Jn re 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 Jones, 2 B. R. 59.) ‘

The claim of a creditor who has accepted a preference should be post-
poned. (Jn re Herman eé a/.3 B. R. 618; s.c. 4 Ben, 126; in re Stevens, 4
B. R. 867; s. c. 4 Ben. 513; 8. c. 2 L. T. B. 121; in re Walton e¢ al. 1 Deady,
442.) ;

A creditor who has accepted a conveyance prohibited by the bankrupt
law should not be allowed to prove his debt until an assignee is chosen. (Jn
re Chamberlain e¢ al. 3 B. R. 710.)

When a conveyance prohibited by the bankrupt law has been made to a
third person, for the benefit of creditors, creditors who had no knowledge
whatever of the facts that make u> the intent to defeat the bankrupt act
until after the conveyance was executed and delivered, aud 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. (in re
Chamberlain e¢ al. 8 B. R. 710.)

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 be-
fore him positive evidence that the claim is invalid or that the creditor has
no right to prove it. (Jn re George Jackson ef al, 14 B, It. 449.)

Io order to postpone a claim, there must be such investigation as will in-
fluence the mind io a conclusion as to whether there is such doubt of the
validity of the claim or of the creditor’s right to prove it. (Ju re George
Jackson e¢ al. 14 B. R. 449.)

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 cred-
itor’s right, it is his duty to postpone the claim for imvestigation. (In re:
George Jackson et al. 14 B. R. 449.)
636 THE BANKRUPT LAW. [§ 5084.

Mere relationship to the bankrupt will not alone justify the postponement
ofaclaim. (Jn re George Jackson ef al. 14 B. R. 449.)

The register can not postpone a claim or. mere objections. (Zn 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. (Jn re George
Jackson e¢ 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. (Jn re Elijah Milwain, 12 B. R. 358; s.¢. 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 cred-
itor should be accorded the opportunity toexplain them. A suspicion within
the statute arises when the claim is not susceptible of a ready and simple
explanation. (Jn re Northern Iron Company, 14 B. R. 356.)

When a creditor objects to the postponement of bis claim he should have
the objection entered and the question certified before any further action
‘transpires before the register. (Jn re George Jackson et al. 14 B. RR. 449.)

When the power of postponement is erroneously exercised by a register,
the creditor may have the judgment of the court on the question. (Jn re
George Jackson ef al. 14 B. R. 449.)

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. (Jn re Lake Superior 8. C. R. R. & I. Co. 7 B. R. 876;
in re Northern Iron Co. 14 B. R. 356.)

The proof of a claim which has been postponed is to be treated in all re-
spects as if the claim had not been tendered before the election of an assignee
and postponed. (Jn ve Herman et al. 3 B. R. 649.)

Sec. 5084.—-Any person who, since the second day of March,
eighteen hundred and sixty-seven, has accepted any preference,
having reasonable vause 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 hun-
dred 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 theretrom until he shall first surrender to
the assignee all property, money, benctit, or advantage received
by him under such preference. ;

Payment of a judgment or decree recovered against a creditor on account
of a fraudulent preference, is not a surrender within the meaning of this sec-
tion. To surrender, clearly implies action on the part of the person receiving
the preference. To recover, as clearly implies action against the person re-
ceiving the preference. Under this section, it is left to the option of the per-
son receiving the preference whether he will give up the property he has re-
ceived 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 dpooses to pursue the latter course. In case of a recovery
he has no such option, From this analysis it clearly appears that the recovery
§ 5084. ] NOTES OF DECISIONS. 637

provided for in section 5128 is the alternative of the surrender provided for
iv this section. But when does this alternative arise, and in what case may
it be resorted to? 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 judg-
ment, 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 surren-
der. (Jn re Tonkin & Trewartha, 4 B. R. 52; 8. c. 1 L. T. B. 232; 8.6.3 L.
T. B. 221; tm re Richter’s Estate, 4 B. R. 221; s. c. 1 Dillon, 544; zn ve John
F, Lee, 14 B. R. 89; inve Cramer, 13 B. R. 225; s. c. 8C. L. N. 108.)

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 construction
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 property makes him-
self conclusively a party to the fraud by resisting the claim of the assignee to
recover the property, in case the assignee is successful; but that, where the
creditor avails himself of the locus penitentia, by voluntarily surrendering the
property to the assignee, he ceases to bea party to the fraud, and may prove
his debt. (In re C. A. Davidson, 3 B. R. 418; s. c. 4 Ben. 10; in re H. B.
Montgomery, 3 B. R. 429; s. c. 8 Ben. 565; in re Scott & McCarty, 4 B. R.
414; in re Hunt & Hornell, 5 B. R. 433; in re Reece & Brother, 2 Bond, 359 ;
in re BH. R. Stephens, 6 B. R.5338; s.c. 8 Biss. 387; in ve Walton e al. 1
Deady, 442; Coxe v. Hale, 8 B. R. 562; s.c. 10 Blatch. 56; in re Clark &
Daughtrey, 10 B. R. 21; iz re John T. Drummond, 4 Biss. 149; contra, Bing-
ham vy. Richmond, 6 B. R. 127; Binghamv. 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 surren-
dered to the assignee the preference received by him, When such surrender
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 pro-
hibition 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 existed. (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 statute itself, but by
what the debtor may see fit subsequently to do. It must be a strong neces-
sity growing out of positive and unmistakable provisions of the law that
would induce a court to adopt a construction leading to such unreasonable
and inconsistent results. (Jn re Scott & McCarty, 4B. R. 414; in re E.R.
Stevens, 6 B. R. 583; s. c. 33 Biss. 387.)

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; 8.0.70. L. N. 266.)

It makes no difference whether the transfer is constructively fraudulent
638 THE BANKRUPT LAW. [$ 5084.

under the statute of Elizabeth or under the special provisions of the bankrupt
law. (Purr vy. Hopkins, 12 B. R. 211; 8.6.7 C. L. N. 236.)

Until a recovery bas 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 revived
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. (Jn re Kipp, 4 B. R.
5938: 3.0.11. T. B. 246; 3.0.4 L. T. B. 69; in re Simeon Leland e¢ al. 9 B.
R. 209.)

Mere possession of the property by the assignee is not a recovery of it
unless he obtains such an adjudication as to the preference. (Jn re Simecn
Leland 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 jurisdiction over the sub-
ject and the parties is sufficient. (Jn re Simeon Leland, 9 B. R. 209.)

Where the fraud is only constructive and not actual, the creditor should
in equity have a reasonable opportunity of considering whether he will sur-
render his preferences and pay all the costs and charges, but his decision
must precede the final decree. The entry of the final decree may be sus-
pended for a brief period to give bim such an opportunity. (Hood v. Karzer,
5 B. R. 358; s. c. 8 Phila. 160; s.c.2L. T. B. 201; Zahm v. Fry, 9 B. R.546;
s. Cc. 21 Pitts. L. J. 155; s. c. 61 Leg. Int. 197.) ,

It may be a matter of discretion with the court whether a party sball be
allowed to surrender after suit brought, and particularly after the testimony
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 succeeded, then
to plead guilty and make a surrender. Such a practice ought not to be tol-
erated. A party ought to elect, and having elected, will he held to his elec-
tion. A surrender can not be made after suit brought except under very
peculiar circumstances. (In re E. R. Stephens, 6 B. R. 533; s. c. 3 Biss. 387.)

In order to be allowed to prove a debt unlawfully preferred, the party
must surrender the unlawful pre‘erence wholly, and wipe out the security en-
tirely, even though a p:rt of property is exempt from execution. (Jn re E.
R. Stephens, 6 B. R. 533; 8. ©. 3 Biss. 387.)

A creditor may, of course, if he chooses, accept a preference. In doing
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 bank-
ruptecy, and to his standing on an equal footing with the other creditors,
is simply to surrender euch advantage to the assignee. (Jn ve 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 debtors 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.

Cn re Joseph I. Horton eé al. & Ben, 562.)

If a creditor who has proved his claim as unsecured, afterwards unitcs in
a proceeding to assert the validity of a security held by him for tbe claim
§ 5084. ] NOTES OF DECISIONS. 639

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 assiznee may waive. If the creditor fails to sustuin b's right to the se-
curity, he can not afterwards set up his proof to avoid the forfeiture imposed
by the statute. (Ja re Simzon Leland ef al. 9 B. R. 209.)

The court will not, ina proceeding to recover the preference, enter a de-
eres prohibiting the preferred creditor from proving his debt. (Wager v. Hull
etal. 5 B. RB. 181; s.c. 3 Biss. 23; 8. c. 16 Wall. 584.)

A creditor who has received a prefereace may surrender it and prove his
claim at the first meeting. (/n ve 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. (In re W.
A. Saunders, 13 B. R. 164.)

Tf the preferred creditor asks leave to prove his debt, the court can not in
suzh proceeding render a judgment or decree directing the payment to the
as3ignee 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 sp2cial examiner to whom the action has been referred, and dismisses his
suit upon payment of costs, this is a surrender and the creditor may prove his
debt. (arc John Riorden, 14 B. R. 332.)

The Jaw has not determinzd 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. (Je Detert, 11 B. R. 393; 3. ¢.
70, L. N. 180; s. c. 14 A. L. Reg. 166.)

Where the creditor is allowed to surrender after the bringing of a suit,
he may be required to pay the compensation of the asaignee’s counsel and the
expenses to which the assignee may have been subjected in consequence of
the suit, before he is allowed to prove his debt. (Burr v. Hopkins, 12 B. R.
211; 8c. 7C. L. N. 266.)

No part of the debt can be proved, although a prior mortgage securing
the debt in part was surrendered when the mortgage was taken. (Jn re
James Jordan, 9 B. R. 416; 8. 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 entirety, and after-
ward applied to certain notes constituting only a portion thereof, the prefer-
ence affects the whole debt. To permit a creditor to avoid the effects of the
acceptance of such a preference, by a subsequent application and indorse-
meat of the amount of such preference upoa particular notes, nearly paying
the same in full, would defeat the provisions of the law. (Jn ve Kingsbury
eal. 3 B. R. 818.)

If the preferred debt is single and entire, the illegal preference affects the
whole of it, though the property received does not equal ition 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 cred-
itor receives a preference distinctly as to 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 bankrupt 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
640 THE BANKRUPT LAW. [§§ 5085-6.

a decision upon an appeal from an order disallowing the claim. The effect
of a 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. (Jn 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 sepurate and distinct preferences, he may surrender as to some, and

prove and receive dividends as to them, without surrendering as to the
others. (Zn 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. (Jn 7¢ 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. (Inre
William D. Forbes, 5 Biss. 510.)

When the conduct of a creditor in holding on to his preference is without
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. 184)

When the unprovable character of the claim is founded largely upon pre-
sumptions, the preof may be expunged, without costs to either party. (In re
Forsyth & Murtha, 7 B. R. 174.)

Src. 5085.—The court shall allow all debts duly proved, and
shall cause a list thereot’ to be made and certified by one of the
registers.

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 have 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.
(ia re Mittledorfer & Co. 3 B. R. 39; 8. c. Chase, 276.)

The list is the list shown by Forms Nos. 82 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. (Jn re Dean, 1 B. R. 249; s.c. 1 L. T. B. 9.)

Suc. 5086.—The court may, on the application of the assignee,
or of any creditor, or without any application, at all times require
the bankrupt, upon reasonable notice, to attend and submit 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 duc to or claimed
from him, and to all other matters concerning his property and
estate and the due settlement thereof according to law. Such ex-
amination shall be in writing, and shall be signed by the bankrupt
and filed with the other proceedings. :

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. (/n re Ray, 1 B. R. 203; 8. c. 2 Ben. 53.)
§ 5086. ] NOTES OF DECISIONS. 641

Such order may be made, and such examination may be had, on the appli-
cation 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 applica-
tion at any time after he has proved his debt. (Jn re Baum, 1 B. RB. 5; 3. c.
1 Ben, 274; in re:Patterson, 1 B, R. 100; s. c. 1 Ben. 448; tn ve Brandt, 2
B. R. 215.)

Ifa protest is entered against the allowance of the claim of a ereditor who
asks for an examination, the register or the court may make the order, as they
have the power tu make it at all times without any application. (Jn re Bel-
den & 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. (Jn re Solis, 4
B. R. 68; s.c. 4 Ben. 143; s. c.2 L. T. B. 158; in re Adams, 2 B. R. 95; 8.
c. 86 How. Pr. 51; s. c.2 Ben. 503; in re Vetterlein, 4 B. R. 599; s. c. 5
Ben. 7.)

The proper way to make application is by a petition. (Jn re Adams, 2
B. R. 95; s c. 2 Ben. 503; s. c, 86 How. Pr. 51; in re Brandt, 2 B. R. 215;
in re Lanier, 2 B. R. 151.)

The petition need not specify the particular matters to which the examin-
ation is to be directed. (Jn re Lanier, 2 B. R. 154.)

The petition on the part of a creditor should ghow good cause for grant-
ing the order, and be verified by affidavit. (dn re-Adams, 2 B. R. 95; 8. c. 2
Ben. 503; s. c. 86 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 the
court in each case, it is only necessary that the court should be satisfied of
the bona fides of the assiguee’s application. (Jn 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 ap-
plication 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. (Zn re Brandt, 2 B. R. 215.)

Every creditor has the 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 an-
other creditor. Yet the time, manner, and course of the examination should
be so regulated as to protect the bankrupt from annoyance, oppression, and
mere delay, while at the same time full and fair opportunity is allowed to the
creditors to inquire as to the matters apecitied in this section. (Jn ve Adams,
2B. R. 272; s. c. 86 How. Pr. 270; 3. c. 38 Ben. 7; in re Gilbert, 3B. R. 152;
8. c. Lowell, 340.)

Ifa fall examiaation 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. (/n re James W. Frisbie,
13 B. R. 349.)

Whether the court in the exercise of its discretion will direct a second
41
642 THE BANKRUPT LAW. [§ 5086.

examination, depends on the facts of each particular case. (In re James W.
Frisbie, 13 B. -R. 349.)

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 prop-
erty, but more especially to elicit facts upon which objections to the discharge
of the bankrupt can be alleged. A creditor, therefore, has the right to ex-
amine 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 investi-
gate all previous examinations of the bankrupt, and so to shape every ques-
tion as not to be liable to an objection that the bankrupt has answered that
question on a previous examination. Each creditor, without reference to any-
thing 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 un-
duly annoying, if every one of his creditors exercises his rights, under the
statute, of investigating the condition, affairs, and dealings of the bankrupt,
and ascertaining whether he has brought himself’ within the remedial pro-
visions of the act, and is entitled to its benefit. An answer to the same ques-
tion on a previous examination does not exempt him from answering again
when the question is put by another creditor on a subsequent examination.
Cn re Vogel, 5 B. R. 393.)

When a party inadvertently makes default under one order, he may apply
for a second order, and pmwceed to examine the bankrupt. The right to ex-
amine the bankrupt, however, is not to be abused. (Jn ve Van Tuyl, 2 B. R.
70; in re Robinson et al. 2 B. R. 516.)

When the bankrupt has been examined at considerable length by the as--
signee, and none of the creditors ask for an examination until the day ap-
pointed 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. (Jn re Isidor et al. 1 B. R. 264;
s. C. 2 Ben. 123; in re Frizelle et al. 5 B. R. 122.)

A party will not be entitled to a second order for examination, except
upon notice and cause shown. (Jn re Gilbert, 3 B. R. 152; s. c. Lowell, 340.)

A voluntary bankrupt may be examined, even prior to an adjudication of
bankruptcy. (Jn re Thomas D. Lee. 1 N. Y. Leg. Obs. 83; 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 sufficient
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 he is shown prima facie to have property which he has, in disobedience
to an order of the court, refused to surrender to the marsbal. For some pur-
poses, the distinction between ‘‘ debtor” and ‘* bankrupt "—the former ap-
plying to a defendant before adjudication, and the latter to a defendant after
adjudication—is used and observed in the bankrupt act; yet, for other pur-
poses, 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 Mend-
enhall, 9B. R. 285; im 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
§ 5086. ] NOTES OF DECISIONS. 643.

course, but only under such exigences as seem to require its exercise for the
purpose of promoting justice and the rights of creditors. (Jn 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. (Jn re Solis, 4 B. R. 68; 8. c. 4 Ben. 148;
s.c,2 L. T. B. 158; in re Long, 3 B. R. quarto, 66.)

The words “at all times” must be read in connection with the subsequent
clauses of the statute. All these provisions tend to show that it is only until
his discharge that the bankrupt is under the summary jurisdiction of the
court, to be proceeded against by order in its discretion, and to be punished
for neglect or refusal to obey by imprisonment, as for a contempt of court.
He can not, therefore, be required to submit to an examination after he has
obtained his discharge. (Jn re Nathaniel Dole, 7 B. R. 538; s.c. 9 B. R. 198;
s.c. 11 Blatch. 499; in re G. C. Jones, 6 B R. 386; in re C. Dean, 8 B. R.
769; in re Witkowski, 10 B. R. 209; contra, in re Heath & Hughes, 7 B. R.
448.) ;

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, aud should be permitted to do so,
unless there is no ground or reason for the request. (dn 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 application
for the order. The order is to be made ev parte. (dn re Mackintire, 1 B. R.
11; 8. c. 1 Ben. 277.)

The order may be made by the register. (Jn re Mackintire, 1 B. R.11; s.
c.1 Ben. 277; in re Lanier, 2 B. R. 154; in re Brandt, 2 B. R. 215; in re
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, (Jn re Lanier, 2 B. R. 154; ine Brandt,
2B. R. 215.)

The register is not entitled to charge any fee for making the order. (dn re
Mackintire, 1 B. R. 11; 8. 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 applica-
tion, be furnished to the register. (Jn ve Bellamy, 1 B. R. 64; s. c. 1 Ben.
390; s.c. 1 L. T. B. 22.)

It is not necessary that a subpcena 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; 3.
c.1L. T. B, 99; 8. c. 7 A. L. Reg. 749.)

The service of the order should be personal. (In re Joseph 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. (Jn re Joseph Hodges, 11 B. R. 369.)

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 bankrupt; 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 rea-
sonable time would, manifestly, be much’ longer than in a case where the no-
i

644 THE BANKRUPT LAW. [§ 5086.

tice 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 pockets when serv-
ice 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 oppor-
tunity 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. (Jn 7¢ Bromley & Co. 3 B. R. €86.)

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 an-
other district. (In re Joseph Hodges, 11 B. R. 369.)

The bankrupt is bound to appear, and is not entitled to fecs as a witness.
(In re Okell, 1B, R. 303; s. c. 2 Ben. 144; 8. c. 1 L. T. B. 32; in re McNair,
2B. R. 219.)

As an order for an examination is made ex parte, the bankrupt, on appear-
ing 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 be-
fore the order was granted. (Jn re James W. Frisbie, 13 B. R. 349.)

It is for the creditor to see that due appointments are made with the reg-
ister 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 ex-
amined on due notice. (/n re Littlefield, 3 B. R. 57; s. c. Lowell, 331; 8. ¢.
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. 186; 8. c. 1 Ben. 496; in re Dean, 1 B. R. 249; 8. c.
1L. 7. B.9.)

The bankrupt is a witness, and subject to cross-examination like any other
witness. (Jn re Levy et al. 1 B. R. 186; s. c. 1 Ben. 496; in ve Leachman, 1
B. R. 891; in ve 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 be-
half beyond and out of the subject-matter of his examination. (Jn re May-
nard 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 shall be reduced to writing.
Cn re Tanner, 1 B. R. 316; 3. c. 2 Ben. 211; 8. c. Lowell, 215.)

The answers of the bankrupt are to be made orally to the court or to a
duly appointed officer of the court. (Jn re Bromley & Co. 3 B. R. 686.)

The register has no power to decide upon the competency, materiality, or
relevancy of a question. (Jn re Levy et al, | B. R. 186; 8. c. 1 Ben. 496; in
re Rosenfield, 1 B. R. 319; 8,c.1 L. T. B. 81; s.c. 15 Pitts. L. J. 245; in re
Koch, 1 B. R. 549; in re Lyon, 6 I. BR. R. 185.)

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, immaterial, or
irrelevant, shall be answered, and that when the deposition is closed, the
§ 5086. ] NOTES OF DECISIONS. 645

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 bankrupt
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. Then, on appli-
cation 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 competency, materiality, and rele-
vancy, and that neither question, nor answer, nor testimony, is to be held
ultimately incompetent, immaterial, or irrelevant, unless objected to on the
record for some ground of incompetency. immateriality, or irrelevancy, stated
on the record. (Jn re Levy et al. 1 B, R. 186; 8. c. 1 Ben. 496; in ve Bond,
3B. R. 7.)

The register should declare his opinion when an 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 re-
ported. (Cn 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 objection ;
and the ground of objection must be directed to the competency, materiality,
or relevancy of that which is objected to. (ln re Levy eal. 1 B. R. 136;
8. c. 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. (Jn re Patterson, 1 B.
R. 125; s. c. 1 Ben. 508; in re Levy e¢ al. 1 B. R. 186; 8. c. 1 Ben. 496.)

Whether the hankrupt 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 to the register to
decide according to the circumstances of each particular case. Generally, he
should not allow consultation. (Jn re Patterson, 1B. R. 147; s. c.1 Ben. 508;
in re Tanner, 1 B. R. 816; s. c. 2 Ben. 211: s. c. Lowell, 215; in re Judson,
1B. R. 364; s.c. 2 Ben. 210; s. c. 35 How. Pr. 15; in ve Collins, 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. (Zn re Edwin K. Winship, 7 Ben. 194.)

The examination 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. (Jn re G. W. Kimball, 1 B. R. 198; 8. 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. (Jn re Nathaniel
Dole, 7 B. RB. 588; s.c. 9 B. R. 198; 8. c. 11 Blatch. 499.)

When the bankrupt refuses to be sworn on account of a preliminary ob-
jection 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
tight to have the question decided, and his declining to be sworn after raising

‘
646 THE BANKRUPT LAW. [§ 5086,

the objection is not an act constituting a contempt of court. (Jn re Nathaniel
Dole, 7 B. R. 588; sc. 9 B. R. 193; s. c. 11 Blatch, 499.)

So long as the debt of a creditor stands proved and unimpeached, the
claim that it has been extinguished by an offset, or does not exist, furnishes
no ground for a refusal by the bankrupt to be sworn andexamined. (InreN.
W. Kingsley, 7 B. R. 558; s. c. 6 Ben. 800; in re Edwin K. Winship, 7 Ben.
194.)

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.
Un 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 criminate himself. (Jn 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 ele-
ment in the administration of the bankrupt law. Without such power, pro-
ceedings 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 refusing to discover all his estate and effects, and the full par-
ticulars 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 an indictment was pending against him for the corccal-
ment of such property. It has veen 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 pen-
alties by concealing 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
eee charged in the involuntary petition. (Jn re Bromley & Co. 3 B.

. 686.)

The bankrupt must state whether or not he has played cards, faro, or any
other game of chance with a certain person named in the interrogatory, 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 bim-
self. (Jn re Richards, 4 B. R. 93; 8. c. 4 Ben. 303.) i

If the purpose of the examination be to elicit facts to be used in opros-
ing 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 per-
tinent, 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 information 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
§ 5086. ] NOTES OF DECISIONS. 647

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 peti-
tion, 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 sur-
renders himself to be dealt with in an extraordinary way, if the court shall
see proper to exercise that power to the ends of justice. (dn 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. (Jn re Van Tuyl, 1 B. R. 638; in re Carson et al. 2 2B. R. 107.)

But he may be examined in regard to property in which it may possibly
be shown that he has an interest. (Jn re Bonesteel, 2 B. R. 330; in re Car-
son et al. 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. (Zn re Craig, 4
B. R. quarto, 50; in re Clark, West e¢ 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. (Jn re Rosenfie!d, Jr., 1B. R. 319; s.c.1L. T. B. 81; in
re Patterson, 1 B, R. 125; s.c. 1 Ben. 508; in re Levy et ul. 1 B. R. 136; 8. 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 circum-
stantially 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, (Jn re McBrien, 3 B. R. 845; s. c. 3 Ben. 481.)

The bankrupt may be examined in regard to matters which transpired be-
fore the creation of the debt of the creditor. (Zn re D. Craig, 3 B. R. 100;
-8. ¢. 8 Ben, 353.) :

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, 2B. R.
142; sc. 86 How. Pr. 167; s.c. 2 Ben. 509; in re Tallman, 1 B. R. 462; s.
Cc. 2 Ben. 348; contra, in re Koch, 1 B. R. 549.)

The conduct of the bankrupt, in withdrawing from the office of the regis-
ter before the completion of his examination, is a contempt of court. (In re
Vogel, 5 B. R. 398.)

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. & 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. 83.)

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 fraudulently
«conveyed by the bankrupt to such vendee. (Bradley v. Hunter, 50 Ala. 265.)
648 THE BANKRUPT LAW. [§§ 5086 A~7.

Sec. 5086 a (22 June, 1874, § 8).—That in all causes and trials
arising or ordered under this act, the alleged bankrupt, and any
party thereto, shall be a competent witness.

This section only applies to civil causes. The bankrupt is not a compe-.
tent witnees in a criminal proceeding against him. (U. 8. v. Black, 12 B. R.
840; s.c. 10 Pac. L. R. 41.)

Src. 5087.—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 com-
pel his attendance by warrant directed to the marshal, command-
ing him to arrest such person, and bring him forthwith before the
court, or before a register in bankruptcy, for examination as a
witness.

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 examination
by an assignee, and an examination by creditors, are two independent pro-
ceedings, and ene may be conducted without reference to the other. (ln 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. (ln re
Fredenburg, 1 B. R. 268; s. c. 2 Ben. 183; iz ve Blake, 2 B. R. 10.)

A receiver appointed by a State court may be examined as 2 witness. (Jn
re William W. Hulst, 7 Ben. 40.)

An assignee may be subpenaed and required to testify in the same man-
ner as any other witness, and the register has authority to make the requisite
order. (dn re Elmer C. Smith, 14 B. R. 482.)

An assignee is not subject as of course to an examination by any creditor
whenever the latter may desire it, but will be protected against -unnecessary
annoyance by refusing an application for his examination unless upon some
issue regularly referred to the register. (Jn ve Elmer C. Smith, 14 B. R. 482.)

One creditor has no right to interpose objections to the ceurse of the ex-
amination of a witness by another creditor. The only person who properly
has an opposing interest in such an examination is the bankrupt himself, and
to him is preserved and allowed the right of cross-examination. (Jn re Stuy-
vesant 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. (Jn re Comstock &
Co. 13 B. R. 193; s.c. 8 C. L. N. 82.)

' 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 hundred
miles from tbe place where he is required to attend. (Jn re Wm. S. Wood-
ward, 12 B. R. 287; s.c. 7 C. L. N. 87.)

The witness may be cxamined, even though he is a party to proceedings
instituted by the assignee to recover property alleged to belong to the bank-
rupt’s estate. (Jn ve Feinberg et al. 2 B. R. 475; s. c. 8 Ben. 162.)

A witness must answer questions put to him so fer as they relate to any
matter of examination specified in this section. (Jn re Belden & Hooker, 4
B. R. 194; in re Stuyvesant Bank, 7 B. R. 445; s. c. 6 Ben. 38.)
§ 5087.] NOTES OF DSO1SIONS. 649

A witness must state where he got the money with which he purchased
certain claims against the bankrupt’s estate. (Jn re Lathrop, Cady & Burtis,
4 B. R. quarto, 39.)

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 in-
terposed until a question is asked which invades the privilege. (Jn re Wood-
ward e¢ 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 mis-
take 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 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 any thing whatever which his clients ever com-
municated to him. These acts were not professional, 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 tue proceeds which were the subject of investigation and
inquiry. (Jn re O’Donobue, 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 bankrupt,
must answer questions touching such conveyances. In such a case the rights
and privileges of the attorney, and his duty to bis client, are entirely separate
and distinct from his rights and duties as purchaser and vendor, the transac-
tion in relation to the real estate not.beivg 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 ct al. 3 B. R.199; s. c. 88 How. Pr. 79; s.c. 3 Ben. 886; s.
c.1L. T. B. 178.)

An attorney for the bankrupt may be required to state whether, at a cer-
tain 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.
(a re Aspinwall, 10 B. R. 448; s. c. 7 Ben. 483.)

An attorney for the bankrupt may be required to state whether he drew
or directed the drawing of a certain deed from the bankrupt. (Jn re Aspin-
wall, 10 B. R. 448; s.c. 7 Ben. 433.)

An attorney of the bankrupt may be required to state what effairs 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 received froin persons
to whom he was referred by the bankrupt for the purpose of obtaining such
information as counsel for the bankrupt. (Jn re Aspinwall, 10 B. R. 448; s.
c. 7 Ben. 433.)

A witness must answer all proper questions on matters relating to his trade
and dealings withthe bankrupt prior to the commencement of proceedings in
bankruptcy; and if, to answer properly, fully, and truthfully any such ques-
tion, 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. (/n 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 pend-.
ing. (Jn re Benjamin J. H. Trask, 7 Ben. 60.)
650 THE BANKRUPT LAW. [§ 5088.

A witness can not refuse to answer questions concerning his dealings, etc.,
with the bankrupt, on the ground that his answer may furnish evidence
against him in a civil case brought, or to be brought, on behalf of the as-
signee. 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. 8 B. R. 660;
in re Dantorth, 1 Penn. L. J. 148.)

The assignee can compel the examination of a preferred creditor, and ob-
tain a full disclosure. (Garrison v. Markiey, 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. (Jn re Pioneer
Paper Co. 7 B. R. 250.)

A witness on cross-examination is not bound to answer a question not re-
lating 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. Cn re H.
Lewis, 3 B. R. 621; s. c. 4 Ben. 67.)

A mere witness can not have the assistance of counsel. (In 7¢ Freden-
burg, 2 B RB, 268; s. c. 2 Ben. 183; in re Feinberg ef al. 2 B. R. 475; 8.0. 3
Ben, 162; in ve Stuyvesant Bank, 7 B. R.445; s.c. 6 Ben. 33; in ve Comstock
& Co. 13 B. R. 193; s.¢. 8 C. L. N. 82.)

The fees to which witnesses are entitled are 5 cents a mile for coming and
returning, and $1.50 for each day’s attendance. , The “ traveling expenses,”
mentioned in Rule XXIX, mean no more than the traveling fees allowed by
section 848. (Jn re Griffen, 1 B. R. 871; 8. c. 2 Ben. 209.)

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 afforded for
the examination of witnesses. (In re Seckendorf, 1 B. R. 626; s.c. 2 Ben.
462; in re Mawson, 1 B. R. 271.)

The answers of a witness made by him in an examination under oath be-
fore 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 tes-
timony, but does not render it incompetent. The answers which are reduced
to writing by his agent at his dictation are admissible as bis statements.
(Knowlton v. Mosel-y, 105 Mass. 186.)

Src. 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 specitied 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.

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 may be refused. (Jn 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 aftidavit; 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
§ 5089. ] NOTES OF DECISIONS. 651

usual and proper confidence between husband and wife any more than be-
tween attorney and clients. The cases in which the wife may be examined
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 haye participated actively in other frauds upon the statute.
In that case, conversations may be of the ves gestw, and may be inquired into.
She is a party to a fraud, and may be fully examined concerning 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. (Jn 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 Griffen, 1 B. R. 871; s. c. 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. (Jn 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. (Jn re Van Tuyl, 2 B. R. 579; 8. c. 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. (Jn re Woolford, 3 B. R. 444;
s. c. 4 Ben. 9.)

When the reasons assigned for the non-attendance of the bankrupt’s wife
Telate to the legal right of the court, under the circumstance of the case, to
compel her te attend, the proper proceeding to enforce attendance is to pass
an order to show cause why a warrant should not issue. (Jn re Belis e¢ al. 3
B. R. 270; 8. c. 88 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. (Jn re J. A. Schonberg, 7 Ben. 211.)

When a 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. (Jn re J. A. Schonberg, 7 Ben.
211.)

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 circumstances
of the transaction, and concerning the money used to pay for the house. (Jn
re J. A. Schonberg, 7 Ben. 211.)

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 Craig, 4B. R. quarto, 50, 52.)

Suc. 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 examination to be had, taken, and certified at such time and
652 _,THE BANKRUPT LAW. [§§ 5090-1.

place and in such manner as the court may deem proper, and
with like effect as if such examination had been had in court.

Sxo. 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.

The word “ proceedings” does not include a discharge, unless there is a
compliance with the requirements of section 5113, in regard to the applica-
tion 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 as-
signee or other parties in settling the estate. (/n re O’Farrell e al. 2 BR.
484; s.c. 3 Ben. 191; sc. 1 L. T. B. 159; in re Quinike, 4 B. R. 92; s.c. 2
Biss, 354.)

The decease of one partner pnor to any adjudication upon the question
in bankruptcy under an involuntary petition, is not a legal cause for a dis-
missal of the petition as against the surviving partners. (Hunt v. Pooke, 5
B. R. 161.)

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. Proceed-
ings in involuntary bankruptcy are analogous to actions at law for torts,
which abate on the death of the party. (Jn re John V. McDonald, 8 B. R.
237; 3. c. 30 Leg. Init. 332; 8. c. 20 Pitts. L. J. 185; s.c,5 C. L. N. 504; s.c.
6 Pac. L. R. 94.)

Proceedings in involuntary bankruptcy do not abate by the death of the
bankrupt alter the entry of the order of adjudication, but before the actual
issuing of the warrant, The warrant is required to be issued forthwith. 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 con-
templates 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
aninvoluntary case. (dn re E. 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 im 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. Whitaker, 5 B. R.
128.)

Sec. 5091.—All ereditors 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, ex-
cept as allowed by section fifty-one hundred and one. No debt
proved by any person liable, as bail, surety, guarantor, or other-
wise, 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 benetit of the party entitled thereto, as the court may
direct.
§ 5092.) NOTES OF DECISIONS. 653

This section simply provides that when the creditors who are entitled to
share in the distribution are determined they shall take pro ruta. (In re
Byrne, 1 B. R. 464; s.c. 7 A. L. Reg. 499.)

The State laws in relation to the distribution of the estates 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 bank-
ruptact. (Jn re Erwin et al. 3 B. R. 580.)

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. o. 12 Blatch.
341.)

Seo. 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, veritied by his oath, and he shall also pro-
duce and file vonchers for all payments for which vouchers are
required by any rule of the court; he shall also submit the sched-
ule of the bankrupt’s creditors and property as amended, duly
veritied by the barkrupt, and a statement of the whole estate of
the bankrupt as then ascertained, of the property recovered and
of the property outstanding, specitying the cause of its being out-
standing, 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 determine whether any aud what
part of the net proceeds of the estate, after deducting and retain-
Ing 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 un-
less 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 deterinine.

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, &c.; 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. (Jn re Littlefield, 3 B. R.57;
8. c. Lowell, 331; s.c. 1 L. T. B. 164.)

No second meeting of creditors under section 5092, and no third or other
meeting under section 5098, ought to be called unless the assignee has in his
hands some money out of which a dividend can be made. (/n re Son, 1 B.R.
310; s.c. 2 Ben. 158; in re Dean, 1 B. R. 249; s.c. 1 L. T. B. 9)

But they can not be dispensed with except by an order of court predicated
upon a report of the assignee showing that there are no assets. (Jn re A.
Alexander, 3 B. R. quarto, 20.)
654 THR BANKRUPT LAW. [§ 5092.

Where the assignee, at the expiration of three months from the date of the
adjudication of bankruptcy requests the court so to do, a second general meet-
ing of the creditors must be called. (Jn re Louis H. Rosey, 6 Ben. 137.)

When the register states at the meeting that the accounts of the assignee
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. (ln 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 re-
port and exhibit. Jn order to arrive at the net sum to be divided, the out-
standing 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 aud passing the ac-
counts, 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. (dn
re Clark & Binninger, 6 B. R. 197; s.c. 5 Ben. 389.)

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 part
of his accounts, at the meeting of creditors where the assignee’s accounts are
required to be presented. The intention is that the disbursemeats 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 gen-
eral meeting, and be audited by the register as a part of the business of audit-
ing the accounts of the assignee. (Jn re Hubbell & Chapel, 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 services
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 practice is
one not to be encouraged. (Jn re Hubbell & Chappel, 9 B. R. 523; s. c. 19
I. R. R. 150.)

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.)

‘Tt 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 con-
troversy, and for unproven claims 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 creditors to guard the
rights of the absent. (Zn re William Mills, 11 B. R. 117; s.c. 7 Ben. 452.)

_ When a receiver has been appointed in a suit pending between the as-
signee 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 re-
cciver 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
§ 5093.] NOTES OF DECISIONS. 655.

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 paic 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 bankruptcy as do not appear in such
schedule. (Sedgwick v. Place et al. 3 B. R. 302.)

Src. 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 after-
ward come to the hands of tle 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 as often as occasion requires; and after the
third meeting of creditors no further meeting shall be called,
unless ordered by the court.

The court of bankruptcy, for all purposes of the auditing, settlement, and
adjustment of the assignee’s account, and of distributton, is held provision-
ally by the register, whose acts are, of course, subject to exception. 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 omis-
sions to occur in these respects may, through neglect of his duty to creditors,
lose the right to a discharge. 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 afterward received by the court. Jf no exception is certified, the
acts of the register are, in themselves, acts of the court without any formal
judgment of confirmation. In all cases, the register should so report as to-
show particularly how notices and opportunity for exception have been
given. (Jn 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 ap-
plication 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 dis-
tribution. 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 call-
ing or not calling a meeting, as the facts may warrant. (Jn re Binninger, 6
B. R. 193.)

‘The ‘court may restrain the register and the assignee from taking any
furthér steps toward making or payiug dividends, with a view to give an
Opportunity to any person interested to apply to the court om proper papers
656 THE BANKRUPT LAW. [8§$ 5094-5.

and on proper notice, to vacate the order of dividend. (Jn re N. Y. Mail
Steamship Co. 3 B. R. 280.)

Src. 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.

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 creditors.
Cn re William Mills, 11 B. R. 117; 8. 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. (Jn re William Mills, 11 R. R. 117; s. c. 7 Ben. 452.)

Src. 5095.—Any creditor may act at all meetings by his duly
constituted attorney the same as though personally present.

In order to vote for an assignee, the attorney must be an attorney in fact,
and must be appointed by a power of attorney. (Jn re Purvis, 1 B. R. 163;
s.c.1L. T. B. 19.)

One member of a firm may execute a power of attorney authorizing a per-
son to vote for assignee in the name of the firm, and bind all the other mem-
bers 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 in-
jury might result to a firm in prosecuting their claims against a debtor, when
it is important to proceed without delay. (Jn re Barrett, 2 B. R. 533; s. c.
1L. 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. (dn re Knoepfel, 1 B. R. 23; 8. c. 1 Ben. 330.)

A power of attorney; made before the passage of the bankrupt 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 accurding to Form No. 14. (Jn re Knoepfel, 1 B. R. 70;
s.c. 1 Ben. 398.)

There is no law which requires powers of attorney of this sort to be ac-
knowledged. It is true that the foot note to Form No. 26 provides that they
may be acknowledged, but the supreme court would have prescribed 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 particular State; and it is, therefore, pointed out that,
in case of acknowledgment, it may be before certain officers. The foot note is
not a rule that the letter appointing such an attorney must be acknowledged,
nor even that it must be a deed. (Jn re H. F. Barnes, Lowell, 560; in re
Powell, 2 B. R. 43.)
§ 5096.] NOTES OF DECISIONS. 657

The power of attorney does not require a stamp. (Jn re Myrick, 3 B. R.
154; contra, see 6 I. R.R. 68.)

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; 8. co. 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. (Jn re Frank, 5 B. R. 194; s.c. 5 Ben. 164; 5,
c. 2L. T. B. 188.)

A power of attorney, not containing a power of substitution, does not con-
fer any authority upon any other ihan 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. (Jn re C. N. Palmer, 3 B. R. 301.)

Only the bankrupt or a creditor can appear by attorney, unless where a
witness is made a party toa new collateral proceeding by being cited to an-
swer for an alleged contempt. (Jn re Fredenburg, 1 B. R. 268; s. c. 2 Ben.
133; in re Feinberg et al. 2 B. R. 475; s. c. 8 Ben. 162.)

The register can not, at the instance of the bankrupt, inquire into the au-
thority given to an attorney at law who has been admitted to practice in the
circuit or district court. (dn re W. D. Hill, 1 B. R. 16; s.c. 1 Ben. 321.)

The statement of an attorney in regard to his authority must be taken ag
conclusive, unless some proof to the contrary is shown. (Alabama R. Rk. Co.
v. Jones, 5 B. R. 97.) :

An attorney who has appeared for a defendant can not withdraw his ap-
pearance 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.
Cin re Ulrich, 3 B. R. 133; s. c. 3 Ben. 355.)

When an attorney unreasonably refuses to proceed, the case must proceed
without him. (Jn re Hyman, 2 B. R. 333; s. c. 36 How. Pr. 282; s. c. 3 Ben.
28)

Suc. 5096.—Preparatory to the final dividend, the assignee
shall snbmit his account to the court and file the same, and give
noticé to the creditors of such filing, and shall also give notice
that be will apply for a settlement of his account, and for a dis-
charge from all liability as assignee, at a time to be specified in
such notice, aud 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 sliall 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.

Where no assets have come to the hands of the assiznee, Form No. 35 is
the account. Where assetsshave come to the hands of the assignee, Forms
Nos, 87 and 38 constitute the account. (Jn re Bellamy, 1B. R. 64; s.c. 1
Ben. 380; s.c. 1 L. T. B. 22.)

42
658 THE BANKRUPT LAW. [S$ 5097-9.

The return is a deposition, and the register is entitled to charge for it as
such. (Jn re Dean, 1 B. R, 249; 8.c. 1. 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 whvever may
be entitled to the proceeds. (Conner v. Express Co. 9 B. R. 138; 8. c. 42 Geo.
37.)

Src. 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.

Sxo. 5098.—If, by accident, mistake, or other cause, without
fault of the assignee, either or both of the second and third mect-
ings 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 mecting
Jhad been duly held.

Sec. 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.

Application for Allowance.

This allowance is in the discretion of the court, and can be made only
upon a specific application to the court, and ashowing that the disbursements
and eervices for which such allowance is asked were necessary and are reason-
able inamount. It is preferable that the hearing should be had before the reg-
ister, 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. (Jn re B. L. Noyes,
6 B. R. 277.)

This allowance can not be made till after the services have been rendered,
because, until the court is advised what the services have been, it can not de-
termine whether any particular amount of compensation is or is not reasonable.
If there is any money in the hands of the assignee, the allowance may be re-
tained out of the monry. If there is no money in the hands of the assignee,
the allowance may le secured by withholding the discharge until the bank-
tupt pays it, on the ground that until then he has not in all things conformed
to his duty under the act. (Jn re Hughes, 1 B. R. 226; 8 c. 2 Ben. 85; 5. ©
1L. T. B. 45; in re Dean, 1 B. R. 249; 8. c. 1 L. T. B. 9.)

The court will determine whether or not the disbursements are necessary.
Cin 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 execution of his trust

until the same shall have been first duly allowed by the court. (Jn 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
§ 5099.] NOTES OF DECISIONS.

659

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 making such assistance necessary.
Such authority the assignee already possesses under his general powers, sub-

ject, 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 under-
standing that any abuse of it will be corrected by the court when applied to
for authority to charge the estate for such assistance. (Jn re B. B. Noyes, 6
B. R. 277.)

It would be difficult and impracticable to prescribe any general rule defin-
ing the circumstances under which and the extent to which an assignee is at
liberty to charge the assets of the estate in his hands for professional and cler-
ical services in the execution of his trust. This must be left to be decided in
each individual case according to its peculiar exigencies. (Jnre B. B, Noyes,

6B. R. 277.)

When the assignee desires to pay for any professional or clerical assist-
ance out of funds in his hands belonging to the estate, before submitting 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 reasona-
ableness of the amounts charged. (Jn re B. B. Noyes, 6 B. R. 277.)

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 pro-
fessional or clericl assistance, and the assignee’s own services arose, and from
which the reasonapleness of the amounts claimed therefor may appear, and
should be verified Ly the assignee. (Jn re B. B. Noyes, 6 B. R. 277.)

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 in-
quiry may be dispensed with. (dn re B. B, Noyes, 6 B. RB. 277.)

What may be Allowed.

An allowance by the day is a convenient mode of getting ata proper
allowance for the services of an assignee, but it is hardly a fair mode where
the {ime chirged for is very large, and the estate very small. Five dollars ig
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 reasonable judgment as to the amount of time to be devoted to
the execution of the trust. (Jn re Jones, 9 B. R. 491.)

The following decisions have been made in regard to fecs and expenses of
assignees. The abbreviations used are as follows: a, allowed; d, disullowed;
7, 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,................... 1 50a
660 THE BANKRUPT LAW. [§ 5099.

Recording assignment......-..-...ee scree eens 1 2a

Stationery, postage, etC..... 2.6... ee eee eee eee 1 50a

Writing and delivering deed to purchaser........ 5 00d

Commission at the rate of five per cent........-... 66 56a

For each day employed in selling property, collect-
ing accounts, examining papers, aad preparing
advertisements.............0eee cere eeeeeee 7 00 rto proper comp.

Services of auctioneer........---. eee eee eee 2 00d

Attorney’s fees ....... cee cee neces cece ee teense proper compensation.

(In re Davenport, 3 B. RB. 77; 8. c, 2L. T. B. 136; in re Pegues, 3 B. R. 80;
8. 0.2L. T. B. 136; in re Tulley, 3 BR. 82; 5. c. 2 L. T. B. 137.)

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..... 0.006.666 .e cece eee e eee $1 00
Each subsequent insertion, per square ......... 662s cece eee eee 50

(In re Downing, 3 B. R. 741.)

The assignee can not employ an auctioneer without first obtaining an
order authorizing such employment. (Jn re Pegues, 3 B. R. 80; s.c. 21. T.
B. 186; 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. 136; im re Tulley, 3 B. R. 82; s.c.2L.T.
B. 1387.)

Fees for the assistance of an attorney will not be allowed without the
most satisfactory evidence guing to show the necessity for legal aid on the
part of the assignee and the actual rendition of the services charged for. (Jn
re Davenport, 3B. R 77; s. c. 2 L. T. B. 186; in re Pegues, 3 B. R. 80; s. c.
2L. T. B. 185; in re Tulley, 3 B. R. 82; 3.c. 2 L. T. B. 187; in re Warshing,
5 B. R. 350.)

The compensation of the assignee’s attorney must be reasonable and pro-
portioned to the value of the estate, (Jn 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 cir-
cumstances, services may be included which are rendered as far back as the
oe of bankruptcy. (dn re New York Mail Steamship Co. 2 B. R.
554.

The assignee should pay all reasonable and necessary expenses incurred
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 fulfilment 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 atfect the bankrupt, if he were asserting his rights and interests 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
§ 5099. ] NOTES OF DECISIONS. 66L

justified such advances and expenditures, are an equitable claim and lien upon
the estate. (/n re Gregg, 3 B. R. 529; s.c.1 L. T. B. 298.)

The bankrupt court may, in the exercise of its equitable jurisdiction, re-
quire 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 receives the benefit,
and should sustain the burden. (Jn 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 volun-
tary 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. (Jn re Nounnan & Co. 6 B. R. 579; 8. c.4 L. T. B.
228.)

The claim of a referee rests in contract between himself and the parties
before him. If he decides in favor of the defendant, who was declared bank-
rupt 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 assignee 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. (Jn re Louis Rosey, 43
How. Pr. 471.)

The estate is liable for the keeping of cattle from the institution of bank-
Tuptcy proceedings. (Jn re J.C. Mitchell, 8 B. R. 47; 3.0.5 0. L. N. 271;
Moran v. Bogart, 14 B. R. 393; s. c.10 N. Y. Supr. 603; s. c. 16 Abb. Pr. [N.
8.] 303.)

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 peti-
tion in bankruptcy, although the judgment and execution is not a lien.
(Platt v. Stewart, 11 B. R. 191.) :

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 as-
signee 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. (Jn re Samuel H. Babcock, 1
W. & M. 26.)

The usual and ordinary expenditures made in the delivery of the cargo of
4 vessel owned by the bankrupt in order to enable her to free herself from
Jiability on her existing contract of affreightment, and to collect her freight,
are entitled to priority out of the freight and the proceeds of the vessel com-
ing 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. (Jn 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 importance, for in
the absence of a positive acceptance he is not liable. (J2 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, (Jn re
662 THE BANKRUPT LAW. [§ 5100..

Walton, 1 B. R. 557; in re Appold, note, 1 B. R. 621; 8. c. 6 Phila. 469; s.
c.1L. T. B. 83; Walker v. Burton, 3 B. R. 265; mre Merrifield, 3 B. R. 28;
in ve Laurie et al. 4 B. R. 32; s.c. Lowell. 404; Buckner v. Jewell, 14 B.R,
286: 8. c. 8 C. L. N. 330; sc, 1 L. L. J. 176; contra, McGrath & Hunt, 5 B.
R. 254; 8. c. 5 Ben. 183.)

As soon ag the marshal takes possession, it is the duty of the landlord 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; s.c. 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 pro-.
ceeds of the goods on the premises, whether they are sufficient to pay the
other expenses of the proceedings or not. (Buckner v. Jewell, 14 B. R. 286;
s.¢c.8C. L. N. 330; sc. 1 L. L. J. 176.)

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. (Barnes Brother & Herron, 1 W. N. 21.)

Expenses incurred by the assignee in putting property into a salable con-
dition may be allowed. (Foster v. Ames et al. 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 settlement
it is their duty to look after the payment of all proper expenses incurred sub-
sequent to that date. Before they consent toa 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 neglect—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, 27 Leg. Int. 404.)

When the sheriff, by an amicable arrangement, is allowed to remain in
possession of goods duly attached after the dissolution of the attachment, the
expenses so incurred should be allowed and paid in full as incident to the set-
tlement of the estate. (In re Williams, 2 B. R. 229; 8. c.1L. T. B. 107, 113;
g.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. (Jn re George S. Ward,
9 B. R. 349.)

A State court bas no jurisdiction to direct that a judgment in an action
against the assignee shall be paid in full out of the estate. (Jn re Central
Bank, 12 B. R. 286; s.c. 7 C. L. N. 871.)

An agreement by the creditors to pay a person a certain sum in addition
to his legal fees if he will act as assignee 1s illegal and void. (Cowing Y.
Aliman,1T. & C. 494; sc. 12 N. Y. Supr. 556.)

No State can tax the funds belonging to a bankrupt’s estate in the hands
of the assignee. (Zn ve John K. Booth, 14 B. R. 282.)

Suc. 5100.—In addition to all expenses necessarily incurred by
him in the execution of his trust, in any case, the assignee shall be
entitled to an allowance for lis services in such case on all moneys
received and paid out by him therein, for any sum not excecding
one thonsand 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
§ 5101.] NOTES OF DECISIONS. 6635

larger sum, one per centum on the excess over five thousand dol-
lars, If, at any time, there is not in his hands a sufficient amount
of money to detray 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.

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 centwm, graduated by the amount. (Jn re Dean, 1 B.
R. 249; 8.0.1 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. (Jn re Davenport, 3
B.R.77; 0.2L. 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 reason-
able to allow him commissions based upon the speculative idea that possibly,
if continued in oftice and permitted, for the mere purpose of earning comis-
sions, to litigate the validity of a mortgage against the will of all who are
interested in that question, he might establish its invalidity. The bankrupt
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. (Jn re Sacchi, 6 B. R. 497; 8. 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 allowed to as-
signees under this section. (Jn re Loder Brothers, 2 B. R. 517; s. c. 3 Ben.
211; s.c. 1 L. 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. (Jn re Hughes, 1 B. R.
226; s.c. 2 Ben. 85; 8. c.1 L. T. B. 45.)

Sec. 5101.—In the order for a dividend, the following claims
shall be entitled to priority, and to be first paid in full, in the fol-
lowing order:

First. The fees, costs (@) 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 (6) to the United States, and all taxes
and assessments under the laws thereof.

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-serv-
ant, to an amount not exceeding tifty dollars, for labor performed
within six months next preceding the first publication of the no-
tice of proceedings in bankruptcy.

Fifth. All debts due to any persons (e) who, by the laws of
the United States, arc, 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 assess-
664 THE BANKRUPT LAW. ($ 5101.

ment and collection of taxes by the authority of the United States
or any State.

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 pro-
ceedings for services or disbursements in connection with such proceedings
jn voluntary bankruptcy. (Jn re Heirschberg, 1 B. R. 642; s. c. 2 Ben. 466;
in re New Lamp Chimney Co. 2 A. L. J. 843; in re Hale & Wiggins, 5 Law
Rep. 403; inre R. Frederick Gies, 12 B. R. 179; s.c. 7 C. L. N. 879; 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 bankrupts 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. (Jn re R. Fred-
erick Gies, 12 B. R. 179; s.0. 7 C. L. N. 879.)

An application by the attorney for the bankrupt to have certain sums ad-
vanced as costs in the case refunded to him out of the estate, should be by
petition. (Jn re Rosenberg, 3 B. R. 73.)

In cases of voluntary bankrupicy, the docket fee of $20 to the attorney of
the successful party is not allowable. (Gordon McMillan & Co. v. Scott &
Allen, 2B. R. 86; s.c.1 L. T. B. 99; 5,¢.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 concurrence
with the other creditors of the bankrupt. (ln re Jaycox & Green, 7 B. 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 necessarily rendered
for the purpose of benefiting or preserving the estate of the 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 neces-
sity a such services should be clearly shown. (Jn re Jaycox & Green, 7 B.
R. 140.)

If there is no satisfactory proof upon which the court can fix and allow
any specific sum for services rendercd by an attorney after the adjudication,
the petition may be dismissed, without prejudice to any subsequent applica-
tion for payment for services necessarily rendered in protecting the estate of
the bankrupt. (Jn re Jaycox & Green, 7 B. R. 140.)

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. (Jn re Ham-
bright, 2B. R. 498; 8. c 2. L. T. B. 61; s. c.1C. L. N. 201; in re Whitehead,
2B. R. 599; in re Davenport, 3 B. R. 77; s.c. 2L. 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 licu against the assignee. (Jn re Hope
Mining Co. 2 Saw. 351.) -
§ 5101.] NOTES OF DECISIONS. 665

Costs and Expenses in Involuntary Bankruptcy.

*

The reasonable expenses incurred by the petitioning creditor in the pros-
ecution of the petition may be allowed out of the fund. (/n re Mittledorter,
3B. R. 1; s. c. Chase, 288; im 7¢ Schwab, 2 B. R. 488; s.c. 3 Ben. 231; s. c.
2L. T. B. 106.)

In involuntary proceedings, counsel fees for the attorneys of the petition-
ing 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 te 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, counsel 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 pro-
vided for by the statute. (Jn re D. Williams, 2 B. R. 83; in re O'Hara, 1 L.
T. B. 123; s.c.8 A. L. Reg. 113; s.c. 16 Pitts. L. J. 184; in re Waite &
Crocker, 2 B. R. 452; s. c. Lowell, 821; s.c. 2L. T. B. 77; in re Schwab, 2
B. R. 488; 8. c. 3 Ben, 231; s.c.2L. T. B. 106; in re Mittledorfer ct al. 8 B.
R. 1; s. c. Chase, 288; in re New York Mail Steamship Co. 2 B. R. 554; 8. c.
3 B. R. 627; s.c. 7% Blatch. 178; in re Eugene Comsteck, 9 B. R. 88; in re
John C, King, 4 Biss. 319.)

What are reasonable expenses must depend upon the circumstances of each
case. The expression has reference to necessary disbursments made in con-
neetion with the steps proper to be taken by the petitioning creditor prelimi-
nary to, and attendant upon the adjudication of bankruptcy. No allowance
can be made to the petitioning creditor for his time and services, (Jn re
Mead & Co. 8 Phila. 174; in re John G. King, 4 Biss. 319.)

Allowance for counsel fees should be guarded by the most cautious regard
for the rights and interests of the creditors at large, lest, under the form of
necessary expenses, undue liberality to counsel should be sanctioned in reduc-
tion of the fund. (Jn re New York Mail Steamship Co. 3 B. R. 627; s. c. 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 compensation.
(Ja re Jones, 9 B. R. 491.)

Fifty dollars may be allowed to the attorney for the petitioning creditor,
and twenty-five dollars for the necessary preliminary investigations. (Jn re
Jones, 9 B. R. 491.)

The allowance should only be for services rendered by the attorney in pro-
ceedings for the common benefit of all the creditors. Where the petitioning
creditor attempts, after adjudication, to exclude other creditors from partici-
pating either in the choice of an assignee, or in the assets of the estate, and
fails, the allowance will be refused. The question is not whether the attor-
ney has acted with a proper sense of delicacy and honor, but whether the
petitioning creditor has incurred a liability in instituting proceedings fgr the
pecuniary advantage of the other creditors. A reasonable fee for filing the
petition and obtaining the order of adjudication should be allowed. When
there is no denial and no contest, sixty dollars is a reasonable compensation
for such services. (Jn 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. (Jn re Sanger &
Scott, 5 B. R. 54.)

After adjudication the petitioning creditor has no preference over any
666 THE BANKRUPT LAW. [§ 5101.

other creditor as to the allowance of expenses incurred by him in connection
with the proceedingse (Jnre Eugene Comstock e¢ 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. (Jn re Diblee et al. 3B, R. 754; 8. ©. 4 Ben. 187.)

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. (Jn re Julius A. Robinson, 48 How.
Pr. 25.)

An opportunity should be allowed to the assignee to examine and con-
test the claim or any items thereof. (Jn re Mittledorfer e¢ al. 3 B.R. 1; 8. c.
Chase, 288; in re Montgomery, 3 B. R. 426; 8. c. 8 Ben. 364; in re Hale &
Wiggin, 5 Law Rep. 403.)

Only the fees for two counsel can generally be allowed. (Jn re Waite &
Crocker, 2 B. R. 452; s. c. Lowell, 321; s.c. 2 L. 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 Smith et al. 2 Ben. 122.)

The amount which the bankrupt gets by exemption is in most cases tri-
fling, and in no case is it so much but that he and his family are dependent
for support on his personal effortsand earnings. Thus the law takes tne bank-
rupt’s property, and leaves him in no condition to pay an attorney for serv-
ices rendered in contesting any doubtful questions as to the acts of bank-
ruptcy 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 may 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 dol-
lars may be allowed for resisting the adjudication. For services in securing
the allowance of an exemption refused by the assignee, the sum of twenty-five
dollars has been allowed. (Jn re Comstock & Young, 5 B. R. 191; s.¢. 2 L.
T. B. 186; in re Portsmouth Savings Fund Society, 11 B. R. 303; inre John
Mansfield, 6 Ben. 284.)

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. ‘Ihe services were
not rendered to the assignees. (Jn re New York Mail Steamship Co. 2 B.
R. 74.)
§ 5101.] NOTES OF DECISIONS. 667

In order to obtain an allowance out of the fund, it must be shown that
the efforts of counsel were not directed towards obtaining delay or hindering
the bankruptcy proceedings. (Jn re John Mansfield, 6 Ben. 284.)

When it is shown that the services rendered by the counsel for the bank-
rupt saved the estate considerable expense, and expedited the conversion of
the same into money, the counsel may be allowed compensation for such serv-
ices out of the funds in the hands of the assignee. (Jn re H. B. Montgomery,
3 B. R. 426; s.c. 3 Ben. 364; tn re Abraham B. Clark, 438 How. Pr. 70; in ve
John Mansfield, 6 Ben. 284.)

A bill by counsel for the bankrupt, for services in attending on the return
of the order to show cause, and resisting the grounds on which the adjudica-
tion was sought, and «also for services in preparing the inventories and sched-
ules, is not chargeable against the estate of the bankrupt in the hands of the
assignee. (In re Bigelow et al. 2 B. R. 871; 8. c. 3 Ben. 146; 8. c. 2L. 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, '

(5) The priority allowed by section 3466 attaches to a penalty incurred in
selling matches without stamps. (Jn re Louis H. Rosey, 8 B. R. 509; s. c. 6
Ben. 137; 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. Stervry, 5 Cranch, 289; 3. c. Bee, 244.)

An assignment which was made under circumstances that make it void un-
der the bankrupt law, is no bar to the claim of the United States to priority.
(Harrison v. Sterry, 5 Cranch, 289; 8. c. Bee, 244.)

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. 8.14 B. R. 64; 5s. c. 18 B. R. 83; 8.0.2 W.N. 813 5. ¢.
32 Leg. Int. 871.)

The United States is entitled to priority of payment without regard to the
form of the indebtedness, (Lewis v. U. 8.14 B. R. 64; 3. c. 13 B. R. 33; 8.
c.2 W.N. 31; 3. c. 82 Leg, Int. 371.)

The United States need not exaust collaterals held by it before claiming
priority of payment out of a bankrupt estate. (Lewis v. U. 8. 14 B. R. 64;
s.c. 13 B. R. 88; 8.c. 2 W. N. 31; s. c. 32 Leg. Int. 371.)

_ The United States is entitled to priority, although it does not prove its
claims, (Lewis v. U. 9.14 B. R. 64; 8. c. 13 B. RB. 83; 8.0.2 W.N. 315 3.0.
82 Leg. Int. 371.)

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 en-
tilled to be subrogated to the priority cf the United States. (Jn re Kirkland,
Chase & Co. 14 B. R. 139.)

A party who purchased an imported article, duty free, and was compelled
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. o. 22 Pitts. I. J. 207; 8. 0. 8 C. L. N. 410.)
668 THE BANKRUPT LAW. [§ 5101.

(c) A State may come into the bankrupt court and claim taxes due to it,
but it can not be compelled todo so. (Stokes v. State, 9B. R. 191; 8 c. 46
Geo. 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 a citi-
zen, 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. (Jv re Brand, 3 B. R. 324; 3. c. 2 L. T.
B. 66.)

The failure of the bankrupt to comply with his covenant to pay the taxes
assessed upon the demised premises, dov3 not give the lessor a right to claim
a priority upon the payment thereof. (Jn re Parker & Peck, 6 Ben. 286.)

(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, uader the
laws of New Jersey, be allowed to share pro rata. (Jn re William McConnell,
9 B. R. 387; s. c. 31 Leg. Int. 61.)

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 de-
mand this priority on each claim so held by him, and the balance that re-
mains after the payment of his advances will be paid to the laborers. (In re
8. Brown, 3 B, R. 720; s. c. 4 Ben. 142.)

A claim by a father for services rendered by his minor son as an operative
to the bankrupt is entitled to priority to the amount of fifty dollars. (Inre
Harthorn, 4 B. R. 103.)

A surveyor of wood is not entitled to a preference as an operative for his
services. (/n re Blackman Bros. 6 C. L, N.,18.)

If the claim arises under an entire contract for the labor of the claimant
and the services of his team, it can not be apportioned, and the claimant is
not entitled to a preference as an operative. (Jn re Blackman Bros. 6 C. L.
N. 18.)

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 en-
titled to priority as the claim of an operative. (Ja re Steiner, 1 Penn. L. J.
368.)

(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. (Cn re Stuyvesant Bank, 9 B. R. 318; s. v. 10 B. R. 399;
s. c. 49 How. Pr. 133; 8. c. 12 Blatch. 179.)

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 in-
valid. (In re Stuyvesant Bank, 9 B. R. 318; s. c. 10 B. R. 399; sc. 49 How.
Pr. 133; s. c. 12 Blatch. 179.)

The surety on a custom house bond is entitled to priority of payment out

of the estate of the principal. (A©ott v. Muris, 9 Wash. 196; Champneys v.
Lyle, + 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 v.
Maris, 2 Wash. 196.) ‘
§ 5102.) NOTES OF DECISIONS. 669

If the trustee of the prinvipal in a duty bond receives the funds of the
principal and then mingles them with his own, the surety can not claim pri-
ority of payment out of the estate of the trustee in bankruptcy. (Pollock v.
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 rela-
tion 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, 9B. R. 535; 3. c. 20 Wall. 251; 5.c. 1 ALL. T.
[N. 8.] 274.)

Src. 5102.—Whenever a dividend is ordered, the register shall,
within ten days after the meeting, prepare a list of creditors en-
titled 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 in such manner as the court may
direct.

The list is the list shown by Forms Nos. 32 and 33. (Anon. 1 B. R. 219;
tn re 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 the sections on the subject
expressly or by necessary intendment refer to crediturs who have verified
their debts in the mode required by law. (Jn re Hoyt, 3 B. R. 55.)

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 as-
signee. This construction is the only one that can yive consistency to the
proceedings. If additional debts may be brought into the computation, no
pro ruta can ever be fixed, as it would be subject to incessant fluctuations
and renewals. (In re Edmund H. Miller, 1 N. Y. Leg. Obs, 180.)

Every creditor who proves his debt is entitled te a dividend, whether he
is an individual creditor or a creditor of a firm of which the bankrupt was a
member. (Zucker v. Oxley, 5 Cranch, 34; 8. c. 1 Cranch C. CO. 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 sus-
pended, as shall be indicated by the exigencies of the judgment on the writ
of error. (Jn 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. (Jn re Haynes, 2 B. R. 227; s.c. 1 L. T. B. 121; i re James, 2 B.R.
227; 8.0. 1 L. T. B. 121.)

If there is a surplus fund after the payment of all the debts of a bankrupt
bank, the holders of its bills may be allowed interest from the date of the
670 THE BANKRUPT LAW. [§ 5102.

adjudication. (Jn re Bank of North Carolina, 10 B. R. 289; s. 0. 12 B. R.
129.)

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. (Jn re Edward Hagan, 10 B. R. 383 ;
in re R. M. & 8. 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, 2 B. R. 252; Jackson v. Miller, 9 B. R. 143;
s. c. 6 L. T. B. 85.)

The assignee in an action to recover a dividend can not deny the authority
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 s0 long as
any creditors remain unpaid and choose to insist upon payment. (Jn re Peter
Blight, 1 Peon. L. J. 225.)

If dividends remain unclaimed, they will, after a certain time, fall into
the general fund, and a new dividend may be made. (Jn re Peter Blight, 1
Penn. L. J. 225.)

If the holder of a note which is indorsed by two persons receives payment
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 divi-
-dend for the use of the second indorser. (Selfridge v. Gill, 4 Mass. 93.)

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. (Jn re Haynes, 2 B. R. 227; s.c.1 L. T.B. 121; in ve James, 2 B. R.
227; s.c.1L. T. B. 121.)

After the debts are paid, the assignee is trustee forthe bankrupt; and the
‘debts are those which have been duly proved to be such. The balance that
remains after such debts are paid may be given to the bankrupt. (Steevens v.
Eurles, 25 Mich. 40; in re Hoyt, 3 B. R. 55; in ve Lathrop e¢ al. 5 B. R. 48;
s. c. 5 Ben. 199; Steen v. Aylesworth, 18 Conn. 244; Cromwell v. 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. Hurles, 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 remains
to him as surplus is the sume 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 termination 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. (S’cevens v. Hurlis, 25
Mich. 40; Colze v. Jamison, 18 B. R. 1; 8. 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 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. (Jn re Hoyt, 3 B. R. 55; in ve Lathrop et al. 5 B. RB.
43; 8. c. 5 Ben. 199.)
§ 5103. ] NOTES OF DECISIONS. 671

When the declaration of a dividend was on the face of the deposition un-
authorized, the assignee may withhold its payment. (Jn ve Hugh T. Her-
rick, 13 B. R. 812.)

Sno. 5103.—If, at the first mecting of creditors, or at any meet-
ing 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 es-
tate of the bankrupt shall be settled by trustees, under the inspee-
tion 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 bankrupt and such creditors as desire to be heard, that
the resolution was duly passed, and that the interests of the ercd-
itors will be promoted thereby, the court shall confirm it; and
upon the execution and filing, by or on behalf of three-fourths in
value of all the creditors 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 as-
signee shall, under the direction of the court, and under oath,
convey, transfer, and deliver all the property and estate of
the bankrupt to the trustecs, 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 bank-
rupt would have had or held the same if no proceedings in bank-
ruptey had been taken, or as the assignee in bankruptcy would
have done had such resolution not been passed. Such consent and
the proceedings under it shall beas binding in all respects on any
ereditor 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 carry into effect
such resolution of the creditors, and the trustees shall proceed to
wind up and settle the estate under the dircction 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 bankruptey. The court, on the application of such
trustees, shall have power to summon and examine, on oath or
otherwise, the bankrupt or any ereditor, 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 trustecs in the execution of their
trust, and to compel the attendance of such persons and the pro-
duction of books and papers, in the same manner as in other pro-
672 THE BANKRUPT LAW. [§ 5103.

ceedings in bankruptcy ; and the bankrupt shall have the like right
to apply for and obtain a discharge after the passage of such reso-
lution and the appointment of such trustees as if such resolu-
tion had not been passed, and as if all the proceedings had con-
tinued 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
necessary orders for resuming the proceedings. And the period
of time which shall have elapsed between the date of the reso-
lution and the date of the order for resuming proceedings shall
nee be reckoned in calculating periods of time prescribed by this
itle.

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. (Jn re
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. c. 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, and to a member
of the conmittee that he has become a creditor by the purchase of claims. It
is an insuperable objection that the trustee is one of the committee, which
consists only of two. The action of the trustee would neutralize the opposi-
tion of the other member, and there is in substance no committee. (dn re
Stillwell, 2 B. R. 526.)

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 cred-
itor or to the bankrupt, can not be regarded as a disqualification. Other
facts may, however, concur with such relationship to make a confirmation
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 dis-
trict is immaterial. (Jn re Zinn e al. 4 B. R. 486; s. c. 4 Ben. 500; 5. c. 40
How. Pr. 461; s. c. 48 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
whose 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 inter-
ests 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 creditors, to the exclusion
of the non-signing creditors, will not be approved. (Jn re Theodore H. Vet-
terlein, 6 B. R. 518.)

A person who has been appointed a receiver in a proceeding in a State
court, which is voidable under the bankrupt law, can not be a trustee. If he
is to account to the bankrupt court at all, he must account to the trustee 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 incom-
§ 5103. ] NOTES OF DECISIONS. 673

patibility which the court can not permit one of its officers to occupy. If he
is to be trustee, he must lonk to the bankrupt court alone as the source of his
authority. If he is to hold and administer as receiver under the State laws
the property which he reccived as receiver, he must so administer it without
looking to the bankrupt court for any authority or direction. If he is to ad-
minister such property as trustee, he must so administer it without looking
to the State court or any other court but the bankrupt court for authority or
direction. (Jn re Stuyvesant Bank, 6 B. R. 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 committee is the president of a corporation which claims a
preference that is disputed by other creditors, the resolution will not be ap-
proved. (ln re Stuyvesant Bank, 6 B. R. 272; Platt v. Archer, 6 B. R. 465;
s. c. 9 Blatch. 559.)

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 will not pass until the conveyance is so approved. (Potter
vy. Wright, 1 W. N. 637.)

The title vested in a trustee chosen under this section is the same in all
respects as the title vested in an assignee regularly appointed in proceedings
in bankruptcy. (Jn re Williams, 2 B. R. 229; s.c.1L. T. B. 107, 113; 8.
3A. L. 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
liability. . (Hallam v. Maawell, 2 Cin. 136.)

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. (Hullam v.
Maxwell, 2 Cin. 136.)

The bankrupt may be examined by a creditor, although the proceedings
have been superseded by the appointment of a trustee. (Jn re Jay Cook &
Co. 10 B. R. 126.)

The intent and effect of this section is that all the ordinary processes and
proceedings under the act are for the time being absolutely superseded and
suspended, excepting so far as such processes and proceedings are retained
by express words or necessary implication. (Jn 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 pre-
servation and enforcement of the rights of all parties concerned. The trustee
and committee have full power to arrange, and by mutual agreement to ad-
just 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. (Jn re Trowbridge, 9
B, R. 274.)

A creditor who proves his claim before the selection of a trustee and com-
mittee, thereby establishes his right prina facie to participate in the distri-
bution of assets under those proceedings. If, in such a case, the claim is
disputed, the only way in which tbe dispute can be adjudicated is by an
application to the court to expunge or abate theclaim, in which application the
trustee must, of course, be the moving party. (Jn re Trowbridge, 9 B. R. 274.)

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 adjudication 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

43
674 THE BANKRUPT LAW. [§ 5103.

witnesses under oath, &c., 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,
wherever the trustees and committee are satisfied 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 sett'e 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 ultimately closed by the formal decree of the court.
The register should allow no claims except such as are disputed or are sub-
mitted to him for decision by the trustees. (In re Darby, 4 B. R. 211, 309;
in re Zinn ef al. 4 B. R. 436; s. c. 40 How. Pr. 461; 8. c. 4 Ben. 500; 8. c. 43
How, Pr. 64; in re Trowbridge, 9 B. R. 274; contra, in re Bakewell, 4 B. R.
619: 5.0. 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 facts stated
in the petition make out a prima facie case, the court will make an order re-
quiring the trustee to answer the same. Upon the coming in of the answer,
the court will proceed by reference to take proofs or othérwise to a final dis-
position 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 proceed-
ings 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 cer-
tain representatives of the ereditors. ‘The district court can not, therefore,
direct the calling of a meeting for purposes of distribution. (Jn re Jay
Cooke & Co. 11 B. R. 1; 8. o. 31 Leg. Int. 857; s. c. 1 Cent. L. J. 580; 8. 0.
22 Pitts. L. J. 59; 8. c. 1 W. N. 51.)

If the committee exercise their discretion mala fide, they may be controlled
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 ap-
pointment. (Jn re Jay Cooke & Co. 11 B. R. 1; 8. c. 81 Leg. Int. 357; 8. ¢.
1 Cent. L. J. 580; s, c. 22 Pitts. L. J. 59; 8. c. 1 W. N. 51.)

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; s. c. 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, (Gibson v. Lewis, 11 B, R. 247; s. c. 32 Leg.
Int. 22; s.c. 9 Pac. L. R. 75.)

The committee are entitled to compensation for their services. (Jn 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. (Ja
re Treat, 10 B. R. 310.)

The estate in the bands of a trustee is not liabie for the register’s fees in-

cident to a second general meeting of creditors, (Jn re Richard H. Hinsdale,
12 B. R. 480; 8. c. 6 Ben. 231.)
/

§ 5103 a.] NOTES OF DECISIONS. 675

Sxo. 5103 a (22 June, 1874, § 17).—That in all cases of bank-
ruptey now pending, or to be hereafter pending, by or against
any person, whether an adjudication 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 personal or other-
wise, as the court may direct, resolve that a composition 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 mecting
either in person or by proxy, and shall be confirmed by the signa-
tures thereto of the debtor and two-thirds in number and one-half
in value of all the creditors of the debtor. And in calculating 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 number; 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 whose debts are fully secured shall not be entitled
to vote upon or to sign such resolution without first relinquishing
such security fur 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
auswer any inquirics made of him; and he, or, if he is so pre-
vented from being at such meeting, some one in his behalf, shall
produce to the meeting a statement showing the whole of his as-
sets 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 reso-
lution 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 hereinafter contained, and upon being satisfied that the
saine 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 resolu-
tion 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 preju-
dice 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
676 THE BANKRUPT LAW. [§ 5103 a.

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 dune,
the name of the acceptor and of the person to whom it is payable,
and any other particulars within his knowledge respecting the
saine; and the insertion of such particulars shall be deemed a suf-
ficient description by the debtor in respect to such debt.

Auy mistake made inadvertently by a debtor in the statement
of his debts may be corrected upon reasonable notice, and with the
consent of a genera] meeting of his creditors.

Every such composition shall, subject to priorities declared in
said act, provide for a pro rata payment or satistaction, in money,
to the creditors of such debtor, in proportion to the amount of their
unsecured debts, or their debts in respect to which any such sccu-
rity shall have been duly surrendered and given up.

The provisions of any composition made in pursuance of this
section may be enforced by the court, on motion made in a sum-
mary manner by any person interested, and on reasonable notice ;
and any disobedience of the order of the court made on such mo-
tion shall be deemed to be a contempt of court. Rules and regu-
lations uf court may be made in relation to proceedings of compo-
sition herein provided for in the same manner and to the same
extent as now provided by law in relation to proceedings in bank-
Tuptcy.

If it shall at any time appear to the court, on notice, satisfac-
tory evidence, and hearing, that a composition under this section
cau not, in consequence of legal difficulties, or for any sufficient
cause, proceed 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 be 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.

A corporation as well as a natural person is entitled to the benefits of the
provisions for a composition. (Jn re Weber Furniture Co. 13 B. R. 529; s.
c. 13 B. R. 559.)

A case in bankruptcy must be pending to authorize proceedings for a
§ 5103 a.] NOTES OF DECISIONS. 677

composition. (Jn ve Reiman & Friedlander, 11 B. R. 21; s. c. 13 B. R. 128;
8, C. 7 Ben. 455; s. o. 12 Blatch. 562.)

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 jurisdic-
tion of the court. (Zn 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. (Jn re Michael H. Spades, 13
B.R. 72; s.c. 8 CO. L. N. 82.)

The register should keep a docket and minutes, but need not send mem-
oranda to the court, because the report includes them. (Jn 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. (dn re
Haskell, 11 B. R. 164; s.c. 9 Pac. L. R. 86; s.c. 1 Cent. L. J. 531.)

Where the sworn schedules have been filed, they may be used as the
written statement. (Jn re Haskel, 11 B. R. 164; 3. c. 9 Pac. L. R. 36; 8. ©.
1 Cent. L. J. 531.)

The testimony of the debtor given at the mecting constitutes a part of his
statement. (In re Reiman & Friedlander, 11 B. R. 21; 8.0.13 B. R. 128; s.
c. 7 Ben. 455; s. c. 12 Blatch. 562.)

The inquiry may be made by any person entitled to inquire, although the
other creditors object. (Jn re Morris, 11 B. R. 443.)

The examination of the debtor is for the purpose of arriving at a true ex-
hibit 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. (Jn re Holmes & Lissberger, 12 B. R. 86; 8. c. 49
How. Pr. 142.)

If any creditor desires a postponement of the vote until after the examina-
tion is completed, it should be postponed. (Jn re Holmes & Lissberger, 12
B. R. 86; s. c. 49 How, Pr. 142.)

If the debtor has kept books in his business, they must be produced on
the demand of any inquiring creditor, and the debtor must answer al! in-
‘quiries in reference to any entry in such books which bears upon the ques-
tion of the exact condition of his affairs. (Jn re Holmes & Lissberger, 12 B.
R. 86; s. c. 49 How. Pr. 142.)

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. (Jn re Holmes & Lissberger,
12 B. R. 86; s, c. 49 How. Pr. 142.)

If it seems necessary that time shall be given to have the books examined
by an expert, the register must regulate the matter of adjournment in his
‘sound discretion. (Jn re Holmes & Lissberger, 12 B. R. 86; s. c. 49 How.
Pr. 142.)

When the books have been previously examined by a committee of cred-
itors, that circumstance is entitled te consideration on the question of grant-
‘ing time for a further examination of the books. (Jn re Holmes & Lissberger,
12 B. R. 86; s. c. 49 How. Pr. 142.)
678 THE BANKRUPT LAW. [§ 5103 a.

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 creditor
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 examina-
tion should he reduced to writing and be signed and sworn to by him. (In
re Holmes & Lissberger, 12 B. R. 86; 8. c. 49 How. Pr. 142.)

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. (Jn re Holmes & Lissberger, 12 B. R. 86; 8. c. 49 How. Pr. 142.)

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. (Jn re Holmes & Lissberger, 12
B. R. 86; s. c. 49 How. Pr. 142.)

A creditor who has bought up claims against the debtor may vote on
them against the adoption of the resolution. (Jn 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. (Jn re Michael H. Spades, 138 B. R. 72; s.¢.
8C. L. N. 33.)

A creditor who has personal security may vote as an unsecured creditor.
(In re Michael H. Spades, 18 B. R. 72; 3. c. 8 C. L. N. 33.)

Where a partnership proposes a composition, all the creditors, both part-
nership 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 ia.
about to force an unjust composition upon him, he may demand a separate
vote. (In re Michael H. Spades, 13 B. R. 72; 8.0.8 C. L. N. 33.)

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 ratifi-
cation. (dn re Michael H. Spades, 13 B. R. 72; 8. c. 8 C. L. N. 38.)

Where the letter of attorney especially authorizes the attorney to sign
a compromise for a precise sum, and the attorney Las but a ministerial duty
to perform, there is no incompatibility in the same person appearing as at-
torney for the debtor upon the record and also as attorney in fact authorized
to compromise for the sum named in the power of attorney itself. (Jn re
Weber Furniture Co. 18 B. R. 529; 8. c. 13 B. R. 559.)

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 & Liss-
berger, 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 at-
rived at by calculation. It embraces the ‘ majority in number” of the credit-
ors 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, (Jn re John B. Gilday, 11 B.R. 108; s.c.
7 Ben. 491.)

Creditors whose claims do not exceed fifty dollars are to be disregarded in
computing 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 & Aechle, 12 B.R.491;8.64.7C.LN. 26; s.c. 1 Cent. L. J.
531; in re Michael H. Spades, 18 B. R. 72; s.c. 86. L. N. 33.)

_ The statute means that in making the calculation to see whether the twe-
thirds in number of all the creditors have signed the composition, the cred-
itors whose debts do not exceed fifty dollars shall not be reckoned in any part
§ 5103 A.] NOTES OF DECISIONS. 679

of the process of calculating whether, as a part of the whole number of ¢red-
itors, or as a part of the necessary two-thirds in number. (Jn 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 fifty dollars each, they can not vote on the question whether a resolution of
composition shall be adopted or not, except to the extent of their respective
debts above fifty dollars. (Jn re O'Neil, 14 B. R. 210.)

Creditors who are fully secured need not be reckoned in computing the
proportion who must join in a composition. (Jn re Aaron Van Anken, 14 B.
R. 425.)

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 con-
firm it. (in re Michael H. Spades, 13 B. R. 72; 8. 0. 8 C. L. N. 33.)

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. (Jn re Benjamin F. Spillman, 13 B. R.
214.)

The court has a discretion to accept or reject the composition, as may be
for “ the best interests of all concerned.” This means the besi interest at the
time being, all things considered. (Jn re Haskell, 11 B. R. 164; s, c. 1 Cent.
L. J. 531; s.c. 9 Pac. L. R. 36.)

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, accident or mis-
take. Such a contingency as would incline the court in any other case of
ordinary practice to refuse ¢x mero motu to proceed, ard upon notice to all
parties concerned, require the exceptional and suspicious circumstances to
be explained. (Jn re Weber Furniture Co. 13 B. R. 529; 8, c. 18 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 testimony which
shows that it ought to be rejected. (in re Weber Furniture Co. 13 B. R. 559.)

The presumption isin 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. (Jn re Weber Furniture Co. 13 B. B. 529; 8. c. 13 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 compromise to
the debtor, and the relative number of creditors whose individual opinions are
expressed in person by the resolution, as compared with those who dissent.
(In re Weber Furniture Co, 13 B. R, 529; s. c. 13 B. R. 559.)

Whether a great or small number of creditors assented to the resolution
is only a circumstance which may be taken into consideration in connection
with others in a doubtful case where fraud or gross inadequacy appears. (Jn
re Weber Furniture Co. 183 B. R. 529; s. c, 18 B. R. 559.)

Where there is no fraud or concealment the omission to include an as-
set 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; 3. c. 13 B. R. 28; 3. c. 7 Ben. 505; s. c.
12 Blatch. 562.)

A resolution can not be recorded where the statement of assets and of
680 THE BANKRUPT LAW. [§ 5103 a.

debts shows that the requisite proportion of creditors have not confirmed it;-
although the statement is inaccurate. (Jn re B. C. Asten, 14 B. R. 7.)

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. (Jn re
James M. Sawyer, 14 B. R. 241.)

Tf a vote is influenced by the expectation of advantage, though without
any positive promise, this can not be considered an unbiased vote. (Jn re
James M. Sawyer, 14 B. R. 241.)

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 undoubted
evidence against it. (Jn re James M. Sawyer, 14 B. R. 241.)

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 Auken, 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. (In re Aaron Van Anken, 14 B. R. 425.)

A provision that the debtor may retain his assets does not defeat a compo-
sition, for it is surplusage, and on the application of a creditor a warrant may
be issued, notwithstanding the terms of the provision. (Jn re Aaron Van
Anken, 14 B. BR. 4235.)

The fact that the debtor has preferred a creditor does not necessarily pre-
vent the ratification of the resolution. (Jn re Haskell, 11 B. R. 164; 8. c.1
Cent. L. J. 5381; 8. ¢.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, aad can not proceed
without injustice to the creditors, and will not beconfirmed. (Jn re Reiman
& Friedlander, 11 B. R. 21; s.c.13B.R. 128; s.c. 7 Ben. 455; s. c. 12 Blatch.
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. (Jn re Morris, 11 B. R. 443; in re Whipple, 11
B. R. 524.)

The statute does not intend that no debtor can compound with his cred-
itors 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 cred-
itors, 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. c. 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 instalments. A composition
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 evi-
denced by notes, to be indorsed if desired, the notes being payable in money.
(in re Reiman & Friedlander, 11 B. R. 21; s.c.13 B. R.128; s.c. 7 Ben. 455;
8. c. 12 Blatch. 562; in re Langdon, 13 B. R. 60.)

_ A composition which provides for a payment in indorsed notes is defect-
ive and will not be ratified. (Zn re Langdon, 18 B. R. 60.)

Although a resolution provides literally for payment in indorsed notes, yet
§ 5103 A.] NOTES OF DECISIONS. 681

it will be ratified if it can be construed to mean a payment in cash. (Jn re
James T. Hurst, 13 B. R. 455; 8. c.8 C. L. N. 147; 8. c. 3 Cent. L. J. 78.)

When the notes for the deferred payments are to be indorsed, the resolu-
tion should provide for ascertaining the satisfactory character of the indorser,
either by naming him or by providing for his being definitely named. (Jn re
Reiman & Friedlander, 11 B. R. 21; s. c. 13 B. R. 128; s. c. 1 Ben. 455; 8. 0.
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 committee
of the creditors is sufficient. (Jn re Solomon Louis, 14 B. R. 144; 3.6.7
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. (Jn re W. D. Clapp & Co. 14
B. R. 191.)

When a debtor has had his proposition fora settlement duly considered
aud passed upon, he should abide by the decision then had, and not be per-
mitted to annoy creditors by requiring their attendance at further meetings.
(In re McDowell & Co. 10 B. R. 439; s. o. 6 C. L. N. 413.)

The court should afford all proper facilities for correcting mistakes or en-
abling the parties most interested to carry out their wishes. Where the fail-
ure to accept the offer arose from a failure to properly instruct the attorneys,
anew meeting may be called. (Jn re McDowell & Co. 10 B. R. 439; 8. c. 6
C. L. N. 413.)

A defect in the resolution can only be cured by an additional resolution
passed in the same way as the original resolution. (Jn re Reiman & Fried-
lander, 11 B. R. 21; s.c. 18 B. R. 128; s.c. 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 cap
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 res-
olution has been passed in the manner directed by the statute. (Jn re Rei-
man & Friedlander, 11 B. R. 21; s. c. 13 B. R. 128; 3. c.7 Ben. 455; 8. c. 12
Blatch. 562.)

Where there has been a composition in an involuntary case before adjudi-
cation, it does not necessarily follow that there must be a d’scontinuance
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. (Jn re Thomas Mc-
Keon, 11 B. R. 182; s. c. 7 Ben. 513.)

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 adjudica-
tion of hankruptcy, until the terms of the composition have been complied
with. (Jn re Thomas McKeon, 11 B. R. 182; 5. c. 7 Ben. 513.)

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 creditois, without notice to other creditors. (in re Thomas
McKeon, 11 B. R. 182; s. c. 7 Ben. 513.)

A composition will not be effective to discharge a debtor, unless the
amount agreed upon is actually paid. (James T. Hurst, 18 B.R. 455; 8. c. &
C. L. N. 147; 8. 0. 3 Cent. L. J. 78; in re Reiman & Friedlander, 11 B. R. 21;
8. 0. 13 B. R. 128; 8. c. 7 Ben. 455; s,c. 12 Blatch. 562.)
682 THE BANKRUPT LAW. [§ 5103 a.

No further recording of the resolution is necessary than to record the de-
cree containing the resolution. (Smith vy. Engle, 9 C. L. N. 46.)

If a resolution of composition has been duly ratified, it confines the se-
cured creditor to his security aud discharges the debtor from personal liabil-
ity for the secured debt. (in re J. L. Lytle & Co. 14 B. R. 457; s. c, 24 Pitts,
L. J. 14; 8. c. 33 Leg. Int. 349.)

If a composition is entered into for cash payments secured by a mortgage
on real estate, the district court has no jurisdiction to restrain a creditor from
levying an execution on personal property, although the name of such cred-
itor was properly placed on the list of creditors. (Jn re J. L. Lytle & Co. 14
B. R. 457; s. c. 24 Pitts. L. J. 14; s. c. 33 Leg. Int. 349.)

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 ccurt. (/n 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
cischarge. (Jn re Alphonse Bechet, 12 B. R, 201; s.c. 7 C. L, N. 248; s.¢.
10 Pac, L. R. 245; in re Knight, 2 W. N. 479.)

Where there is no defect in the proceedings for a composition, the admis-
sion of a discharge in evidence does not prejudice the adverse party. (Simith
y. Engle, 9 OC. L. N. 46.)

A decision that a proper proportion of the creditors have confirmed a resc-
lution can not be impeached in a collateral action. (Smith v. Engle, 9 C. L.
N. 46.)

A decision that a resolution which provides for payment in notes is valid,
is conclusive in a collateral action. (Smith v. Engle, 9 O. L. N. 46.)

If the jurisdiction of the bankrupt 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 bind-
ing and conclusive in a collateral action. (Smith v. Engle, 9 C. L. N. 46.)

If the notice to creditors of the meeting to consider a proposition of com-
promise was properly given, the omission to give a proper and sufficient no-
tice to the creditors of the hearing to determine whether the resolution has
been properly passed, does not render the order ratifying the resolution void
in a collateral action. (Smith v. Engle, 9 C. L. N. 46.)

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 resolution
itself, (Smith vy. Engle, 9 C. L. N. 46.)

Where the decree requires the statement of debts and assets to be filed,

the presumption in a collateral action is that it was done as directed. (Smith
v. Engle, 9 C. L. N. 46.)

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. (Smith v. Hngle, 9 C. L. N. 46.)
CHAPTER FIVE.

PROTECTION AND DISCHARGE OF BANKRUPTS.

Suc. Src.
5104.—Bankrupt subject to orders of 5112a—Not required of involuntary bank-
court, rupts.
5105.—Waiver of suit by proof of debt. 5118.—Final oath of bankrupt.
5106.—Stay of suits, 5114.—Court to grant discharge.
5107.—Exemption from arrest, 5115.—Form of certificate of discharge.
5108,.—Application for discharge. 6116,—Second bankruptcy.
5109.—Notice to creditors, 5117.—Debts not released,
5110.—Grounds for opposing discharge.  6118,.—Liability of other persons not re-
5111.—Specification of grounds of oppo- leased.
sition. 5119.—Effect: of discharge.
5112,—Assets equal to thirty per cent. 5120.—Application to annul discharge.
required.

Src. 5104.—The bankrupt shall at all times, until his dis-
charge, be subject to the order of the court, and shall, at the ex-
pense of the estate, execute all proper writings and instruments,
and do all acts required by the court touching the assigned prop-
erty 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 bank-
rupt may be committed and punished as for a contempt of court.
If the bankrupt is without the district, and unable to return and
personally 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.

If the bankrupt on examination admits the possession of property, he
must clearly account for the same to the satisfaction of the court, otherwise
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. (Jn re Salkey & Gerson, 11 B. R. 423, 516; 8. c. 7
C. L. N. 178, 195.)

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 enforce 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 adjudication upon the petition, subject to any
and all orders that may be deemed necessary under the act to secure such dis-
tribution to the creditors. (In re Bromley & Co. 3 B. R. 686.)
684 THE BANKRUPT LAW. [§ 5105.

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. (Jn 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 ad-
mitted 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 effect as
it might have been prosecuted by the bankrupt, and may order the bankrupt
to refrain from prosecuting said action, or from applying for eny order or de-
cree therein. (Jn re Clark ef al. 3 B. R. 491; 8. 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. (Ja re Carpenter, 1 B. R. 299.)

Sxo. 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 bank-
rupt 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 of action or suit against the bankrupt where a
discharge has been refused or the proceedings have been deter-
mined without a discharge.

This provision does not interfere with the right of any creditor to proceed
against the assignee under the bankruptcy to have the benefit of any mort-
gage, pledge, or other security pro tanto, if he elects to do so, or with the
right of the assignee to redeem the same. (Jn ve 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 recov-
ery 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 debi
operates as a surrender ipso jure, of the action, and is a bar to any further
proceedings in the suit. (Hverett v. Derby, 5 Law Rep. 225.)

As this section is a part of a general system of statutory regulation, it
raust be read and applied in connection with every other section appertaining
to the same features of the general system, so that each and every other sec-
tion of the act may, if possible, have their due and conjoint effect without re-
pugnancy or inconsistency. (New Lamp Chimney Co. v. Ansonia Brass and
a Co. 13 B. R. 3885; 3. c. 10 B. R. 855; 8. c. 64 Barb. 435; 8. c. 53 N.Y.

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 pen-
alty 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 dis-
charged by proof thereof. (Jn re W. E. Robinson, 2 B. R. 842; s.c. 6 Blatch.
253; s. c. 86 How. Pr. 176; s.c. 2 L. T. B. 18; in re Rosenberg, 2 B. R. 236;
s. c. 8 Ben. 14; in re J. 8. Wright, 2 B. R. 142; s. c. 86 How. Pr, 167; 8. ¢.
2 Ben. 509; in re Migel, 2 B, R. 481.)

The proof of the debt does not extinguish, but simply suspends the right

 

*So amended by act of 22 June, 1874, § 7.
§ 5105. ] NOTES OF DECISIONS. 685:

of action. (Hoyt v. Freel, 4 B. R. 181; 8. c. 8 Abb. Pr. [N. §.] 220; 8. c, 2
L. T. B. 144; Smith v. Dispatch Co. 35 N. J. 60; Hamlin v. Hamlin, 3 Jones
Eq. 191; Haztun v. Corse,4 Edw. Ch. 585; s. c. 2 Barb. Ch. 506; Brandon
Manuf. Co. v. Frazr, 13 B, R. 362; 8. 0. 47 Vt. 88; Cook v. Coyle, 113 Mass.
252; contra, Bennett v. Goldthwaite, 109 Mass. 494; Commercial Bank vy.
Buckner, 20 How. 108; Pray v. Torr, 18 N. H. 188.)

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 man-
ner, without the leave of the court which has acquired jurisdiction of their
claims. They must await the result of the bankrupt’s application for his dis-
charge. If it is refused, they are then free to pursue their claims by other
means and in other tribunals. Ifthe bankrupt unreasonably delays his appli-
cation for a discharge, or is guilty of laches in his efforts to bring it to a con-
clusion, the creditor who has proved his debt is still incapable of proceeding
elsewhere, without the permission of the court of bankruptcy. In sucha
case he must expedite the proceedings in bankruptcy or obtain leave of the
bankrupt court to proceed to collect his debt by due course of law. (Dingee
v, Becker, 9 B. R. 508; 8. c. 31 Leg. Int. 156.) ‘

If a judgment creditor who has proved his debt issues a jf. fa. on his
judgment, without first obtaining leave of the bankrupt court, the 7. fa.
will be set aside. (Dingee v. Becker, 9 B. R. 508; s. c. 81 Leg. Int. 1565,
Frazier vy. Bank, 11 La. An. 31.)

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 Oo. 85 N. J. 60;
Buckner v. Calcote, 28 Miss. 482; contra, Wilson v. Cupuro, 4 B. R. 714; 8. c.
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.
855; 8. c. 13 B. R. 385; 8. c. 64 Barb. 485; s. c. 538 N. Y. 123; s. c. 1 Otto,
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, recog-
nized by the bankrupt act. The jurisdiction of the State courts is not extin-
guished except in those cases where the 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 v. Burton et al. 4B. R.1; s.c.
5 Ben. 325.)

There is a distinction between persons and corporations and members
thereof, because no discharge can be granted to any corporation or joint 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 stock-
holders 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 to indirectly accom-
plish what the bankrupt act declares shall not beattained. (Allen v. Soldiers’
686 THE BANKRUPT LAW. [§ 5106.

Business Messenger and Dispatch Co. 4 B. R. 537; 8. c.2L. T. B. 158; Shell-
ington v. Howland, 58 N. Y. 871; Ansonia Co. v. New Lamp Chimney Co. 10
B. R. 355; s.c. 18 B. R. 385; 8. 0. 64 Barb. 435; 8.0. 53 N. ¥. 123; 8. o. 1 Otto,
656.)

The proof of the debt against the corporation does not bar an action
against a stockholder upon his contingent liability. (Skellington v. Howland,
53 N. Y. 871; Allen v. Ward, 36 N. Y. Sup. 296.)

The proof of the debt against the corporation is partially equivalent to
the commencement and prosecution of an action, and a proximate compliance
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. (ln re
Schepeler & Co. 4 Ben. 68.)

The court may allowa proof of a debt provisionally, and authorize the con-
tinuance of a pending suit for the purpose of liquidation, although the ques- .
tion involved is whether the bankrupt is liable at all upon the contract al-
leged to have been broken. (Jn re Jay Cooke & Co. 1 W.N. 30.)

Src. 5106.—No creditor whose debt is provable shall be al-
lowed 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 pro-
ceedings shall, upon the application of the bankrupt, be stayed to
await the determination of the court in bankruptcy on the ques-
tion of the discharge, provided 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 dis-
pute, 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 bankruptcy, but execution shall
be stayed.

The object of this section is to prevent a race of diligence between credit-
ors, and to protect 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. It ap-
plies to all cases where the personal liability of the debtor is sought to be
fixed or ascertained by a final judgment, pending the determination of the
question of his discharge. (Zn re Rosenberg, 2 B. R. 236; s. c. 3 Ben. 14; ir
re Metcalf e¢ al. 1 B. R. 201; 8. c. 2 Ben. 78.)

An action to recover a provable debt is to be stayed until a determination
is had as to the discharge, whether the debt be one that will be discharged
or one that will not be discharged. There is no good reason why the bank-
rupt 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, and whose deter-
mination will be a binding judgment on the question between the parties.
(In re Rosenberg, 2 B. R. 236; s. c. 3 Ben. 14; in re Migel, 2B. R. 481; in re
Seymour, 1 B. R. 29; 8. c. 1 Ben. 348; in re W. B. Duncan, 14 B. R. 18.)

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
§ 5106.] NOTES OF DECISIONS. 687

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 prohibit the com-
mencement of a suit to entorce a provable debt. Whenever it appears that
the suit is one to which a discharge would be no bar, and that, if not com-
menced 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 determination 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 neces-
sary to secure his rights. (Jn re Ghiradelli, 4 B. R. 164; 3. o. 1 Saw. 348; 8.
c.2L. T.B 135.)

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 bank-
tupt. (/n 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, provided that
no execution is levied upon any property which belonged to the bankrupt at
the commencement of the proceedings in bankruptcy. (Jn 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 bankrupt court is conclu-
sive evidence in a State court that the bankrupt has lost his immunity 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 bankrupt tribunals, and are to be
applied and enforced by the former quite as much as by the latter. (In re’
Rosenberg, 2 B. R. 286; s. c. 3 Ben. 14; in re Metcalf ef al. 1 B. R. 201; 8. c.
2 Ben. 78; Samson v. Burton, 4 B. R. 1; 3. c. 5 Ben. 825; Delavergue v. Far-
rand, 1 Mich. N. P. 90; contra, Garrett v. Carow, 83 Houst. 652; Givens v.
Robbins, 5 Ala. 676.)

The discharge when granted relates back to the commencement of the
procedings in bankruptcy, and protects all the subsequent acquisitions from
coercive appropriation to the satisfaction of antecedent debts. The State
courts may therefore grant an injunction to protect the bankrupt’s property
until he can obtain a discharge. (Turner v. Gatewood, 8 B. Mon. 613; Mosby
v. Steele, 7 Ala. 299.)

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
et al. v. Fazxton et al. 4 B. R. 210; s. c,18 Pitts. L. J.107; contra, in re Brom-
ley & 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 onsuch judgment. 2d. That the bankrupt shall not be need-
lessly subjected to actions and suits. 38d. And, perhaps, to enable the bank-
rupt to claim protection as against such actions and suits through his dis-
charge, if he obtains it. These are the only purposes and objects which the
provisions for a stay can, by any possibility, be supposed designed to carry
out. But such provisions must be construed in connection with the clause in
section 5117, which provides that ‘‘no discharge granted under this act 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.
688 THE BANKRUPT LAW. [§ 5106.

Since it is necessary, in cases of partners and joint contractors, that an action
shall be brought against all the partners and all the joint contractors to pro-
ceed 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 dis-
charged from the obligation of the contract or indebtedness. by operation 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 judg-
ment, and an order entered staying all proceedings against the bankrupt upon
the judgment. This course does not interfere with the attainment of the ob-
jects sought by the bankruptlaw. Nor will a stay of the procecdings against
the other joint defendants be granted, since the filing of a petition in bank-
ruptey can not have a greater effect than the discharge. (Hoyt et al. v. Freel
et al. 4B. R. 131; 8. c. 8 Abb. Pr. [N. 8.] 220; 3.0.2 L. T. B. 144; Givens v.
Robbins, 5 Ala. 676; contra, Tinkum v. O’ Neale, 5 Nev. 98.)

If one of two partners become bankrupt while an action for the conversion
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 enforced
against the partnership property and the property of the solvent partner.
(Lomme v. Kintzing, 1 Mont. 29v.)

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 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 judgmert 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 Company v. Brooks, 3 B. R. 588;
s.c. 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. (Jn
re Wm. Archenbraun, 11 B. R. 149; 8. c. 7 C. L. N. 99.)

Quere. Do the words ‘any such suit or proceedings” include something
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 proceedings for its recovery pend-
ae ie bankruptcy. (Minon v. Van Nostrand et al, 4 B. R. 108% s. c. Lowell,

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 himself 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 proccedings
under it, and which are instituted at the debtors instance to be conducted
in any particular manner, or to be 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
§ 5106.] NOTES OF DECISIONS. 689:

charging in execution, or any other matter incidental to the lawful arrest..
(Ahinon v. Van Nostrand et al. 4 B. R. 108; s. c. Lowell, 458.)

A claim in tor¢ for a personal injury can not be stayed, for it is not prov-
able until final judgment is obtained. (Jn re Hennocksburg & Block, 7 B. R.
87; 8. c. 6 Ben. 150.)

If a verdict is rendered in an action for a personal tort prior to the com-
mencement of the proceedings in bankruptcy, the proceedings for the entry
of a judgment on the verdict will not be stayed. (Zimmer v. Schlechauf, 11.
B. R. 313; s. c, 115 Mass. 52.)

A suit against a corporation will not be stayed. (Meyer v. Aurora Ins. Co..
7B. R. 191.)

A proceeding to revive a judgment so that it may operate as a lien on real
estate is a proceeding that may be stayed. (Bratton v. Anderson, 14 B. R. 99;
8. c. 5 Rich. [N. §.] 504.)

A judgment entered after a motion for a stay of proceedings is erroneous,,
although it provides that no execution shall issue without a further order of
the court. (McKay v. Funk, 13 B. R. 384; 8. c, 87 Iowa, 661.)

If a motion is made for a stay of the proceedings in an action to foreclose a
mortgage, that portion thereof looking to a personal judgment against the
mortgagor should be stayed. (McKay v. Funk, 13 B. R. 334; 8. c. 87 Iowa,
661.)

Where an attachment was issued more than four months before the com-
mencement of the proceedings in bankruptcy, the proceedings for a judgment.
inrem against the property will not be stayed. (Mason v. Warthens, 14 B. R..
341; s.c. 7 W. Va. 532.)

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 stockholder, the latter can not, in a suit against him, object.
that no judgment has been obtained. (Shellington v. Howland, 53 N.Y. 371.).

The suggestion of bankruptcy is one to be made by the bankrupt. The
continuance by the bankrupt law is to be granted ‘‘ upon the application 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 statute, 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 obtains one. He can no more file one plea for him than he can another.
The defendant is the judge of his own defense. The suggestion of bank-
ruptcy 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. (Pulmer 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, c. 157, that a defendant, whether alone or one of many detendants, |
taking advantage of his bankruptcy, should not recover costs if the plaintiff
should elect to strike his name from the writ. The striking of the defend-
ant’s name from the writ is a discontinuance. It is not necessary 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
44
690 THE BANKRUPT LAW. [§ 5106.

that the debtor has filed his petition in bankruptcy, whether asked to do s0
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.)

Where the eveditor 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. (Stone v. Nat’l Bank,
39 Ind, 284.)

A suggestion of the bankrupcy 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 adjudi-
cation 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 v. 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 evidence of
the troth of the plea was shown to the court, unless the contrary 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 proceeding must
le deemed void while the injunction continues. (Penny v. Taylor, 10 B. R.
200.)

This provision is especially addressed to the bankrupt 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 defend all uncleter-
mined personal actions, is a right given to a debtor by the bankrupt act under
the Constitution of the United States, and he is entitled to be protected in
that right by the bankrupt court. (Jn re Rosenberg, 2 B. R. 236; s.c. 3
Ben. 14; in re Metcalf et al. 1 B. R. 201; s. c. 2 Ben. 78: in re Reed, 1 B. R.
1; in re Jacoby. 1 B. R. 118; tn ve Meyers, 1 B. R. 581; s. c. 2 Ben. 424;
Samson v. Burton, 4 B. R. 1; 8. 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 proceed-
ing 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 mat-
ter resting in the discretion of the court, and will be refused when it would
lead to embarrassment and delay. (S.mson v. Burton, 4 B. R. 1; s. c. 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 cudeavor 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 discharge 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. (Zn re Rosenberg, 2 B.
R. 236; s.c. 3 Ben. 14.)

The language of the injunction should be in accordance with the statute.
The injunction only continues in force until the question of discharge 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 re-
8 5106.] NOTES OF _ DECISIONS. 691

quired. The bankrupt must use his discharge as his protection in cases
thereby affected. (Ju 7¢ Thomas, 3 B, R. 38.) :

Ifa motion was made for a continuance upon a suggestion of the defend-
ant’s bankruptcy before judgment, a discharge may be pleaded on the allow-
ance of a writ of review. (Zodd v. Barton, 13 B. R. 197; 3.c. 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. (Yodd v. Larton, 13 B. R. 1973 8. 0.117
Mass. 291.)

An affirmance of a judgment by an appellate court where no suggestion of
the bankruptcy of the appellant is mace, is valid although the proceedings
are then pending. (Mlunagan v. Pearson, 14 B. R. 87; 3. c. 42 Tex. 1.)

If the defendant is adjudged bankrupt after the rendition of a judgment
against him in an action of ejectment, this is no ground for staying pro-
ceedings in an appellate court. (Alston v. Wingfield, 53 Geo. 18.)

An action pending in the court of appeals of the State, to which an ap-
peal was taken by the bankrupt prior to the commencement of proceedings
in bankruptcy, may be stayed. In such a case there is no final judgment
within the meaning of the bankrupt act. A motion for further security in
such a suit on the part of the creditor is a proceeding against the bankrupt.
(In re Metcalf et al. 1B. R. 201; s.c. 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 sus-
pend the right of a plaintiff to maintain in the appellate court the cor-
rectness and validity of a judgment from which the bankrapt 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 submis-
sion. (Booker v. Adkins, 48 Ala. 529.)

If the sheriff, acting under an execution issued upon a judgment rendered
after the commencement of the proceedings in bankruptcy, proceeds 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. Me-
Murray, 6 Humph. 339; Turner v. 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. (Jn ve Hirsch, 2 B. R. 8; 3. c. 2 Ben. 493; 8.c. 1 L. T.
B. 92.)

The power conferred upon the district court by this section, of granting
injunctions to stay suits and proceedings to recover debts from a bankrupt,
is not granted to any other court than the ‘‘court in bankruptcy,” which
means the court where the proceedings in bankruptcy are pending. When
the bankrupt applies for the benefit of the bankrupt 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 Richardson et al, 2 B. R. 202;
8. 0. 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 et al. 2 B. R. 118; in re Richardson et
al. 2 B. R. 202; s. c. 2 Ben. 517; s.c. 2 L. T. B. 20.)
692 THE BANKRUPT LAW. [§ 5107..

So long as the adjudication of bankruptcy stands unrevoked, all inquiry
as to the validity or existence of the debt claimed to be due to the petition-
ing 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. (Jz re Fallon, 2 B. R. 277.)

The order staying proceedings will be vacated when there is unreasonable
delay in procuring a discharge. (Jn re W. Belden, 6 B. R. 443; s.c. 5 Ben.
476.)

A creditor who has not proved his debt bas no status in the court of bank-.
ruptcy. He does not submit himself to its jurisdiction, and his right to pro-
ceed 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 con-
dition, 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 unreasonable 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 suck
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, 9B. R. 508; 8. c. 31 Leg. Int. 156.)

Src. 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.

The district courts are competent to relieve the bankrupt from arrest on
process from a State court, provided the arrest was founded upon a debt
from which a discharge in bankruptcy would release him. (Jn re L. Glaser,
1 B. R. 336; s.c, 2 Ben. 180; 5. ¢. 1 L. T. B. 57; in re Boyst, 2B. R. 171;
State v. Rollins, 18 Mo. 139; U. 8. v. Dobbins, 1 Penn. L. J. 91; s. 0. 5 Law
Rep. 81; i re Mifflin, 1 Penn. L. J. 146; in re Grenville T. Winthrop, 5 Law
Rep. 24; vide in re Edson Comstock, 22 Vt. 642; Robb v. Powers, 7 Ala. 658.)

The district courts must necessarily inquire into that question and decide
it for themselves. The question is one of fact, which can not be decided on
ex parte testimony, (dn re L. Glaser, 1 B. R. 836; s. c. 2 Ben. 180; s.c.1 L.
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. (Jn re Williams & McPheeters, 11 B. R.
145; 3.0.70. L. N. 49.)

_ The bankrupt should apply in the first instance to the State court, for that
will avoid a conflict of jurisdiction. (Jn re Michael O’Mara, 4 Biss. 506.)

a Evidence can not be introduced to show that the averments in the declara-
tion upon which the arrest is founded are false. (In re Devoe, 2 B. R. 273

s. c. Lowell, 251; s.c.1L. T. B. 90; in ve J. H. Kimball, 2 B. R. 204; 8. 0.
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 relieved.
It is not necessary that this should appear from the declaration. It is suffi-
cient if it appear from the affidavit and order of arrest, even though these are
ew parte, Their verity can not be called in question in the bankrupt court.
§ 5107.] NOTES OF DECISIONS. 693

"They are entitled to as much credit as more formal and specific proceedings.
Cn re J. H. Kimball, 2 B? R. 204, 354; s. c. 2 Ben. 554; s. c. 6 Blatch. 292;
-an re W.E. Robinson, 2 B. R. 342; s.c. 86 How. Pr. 176; s. c. 6 Blatch,
253; s.c.2L. T. B. 18; in ve Migel, 2 B. R. 481; in ve Leibenstein, 4 C. L.
N. 309; contra, in re’ Williams & McPheeters, 11 B. R. 145; s.c.7 0. L. N.
49.)

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 question on affidavits or by proofs. (In
ve Valk e¢ al. 3 B. R. 278; s. c. 3 Ben. 431.)

The bankrupt should move for a discharge in the State court, and contro-
vert the facts on that motion. (Jn 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. (Jn re Patterson, 1
B. R. 307; s. c. 2 Ben. 155; in re Seymour, 1 B. R. 29; 8. c. 1 Ben. 848; in
ve Pettis, 2B. R. 44; 8.0.7 A. L. Reg. 695.)

A judgment rendered in an action for deceit does not so merge the origi-
nal cause of action as to make the demand dischargeable. The record of the
action in which the execution issues may be looked at, and if it shows a ma-
terial 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. (Jn re Whitehouse, 4 B. 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. (Inve L Glaser, 1 B. R. 336;
.8. c. 2 Ben. 180; s.c.1L. T. B. 57; in re Patterson, 1 B. R. 307; s.c. 2 Ben.
155; in re Seymour, 1 B. R. 29; s. c. 1 Ben. 348; in re Pettis, 2 B. R. 44; s.
c. 7A. L. Reg. 695; in re G. W. Kimball, 1 B. R. 193; s. c. 2 Ben. 58; in re
Devoe, 2 B. R. 27; s. c. Lowell, 251; s.c.1L. T. B. 90; Horter v. Harlan, 7

_ B. RB. 288; 8. c. 29 Leg. Int. 229.)

Though the State court would provably release the debtor, it is the duty
‘of the district court to see that he is released, and to protect him. (Jn 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 ard
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. 864.)

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 jurisdic-
ition to release a person held in custody beyond its jurisdiction. (Hualeton v.
Valentine, 2 B. R. 81; s. c. Lowell, 270; s.c. 1 L. T. B. 108.)
694 THE BANKRUPT LAW. [§ 5107.

Rule XXVII applies only to the court in which the proceedings in bank-
ruptey are pending. (Jn re Seymour, 1 B. R. 29; s. c. 1 Ben. 348.)

The authority of the district courts to release a bankrupt from imprison-
ment applies only to cases where the arrest is made after the commencement
of proceedings in bankruptcy. (dn re W. A. Walker, 1 B. R. 318; 8. c.
Lowell, 222; Huzleton v. Valentine, 2 ¥. R. 81; s. c. Lowell, 270; 8. o. 1 L.
T. B. 105; Minon v. Van Nostrand et a7. 4 B. R. 108; 5. c. Lowell, 458; in re
Hoskins, Crabbe, 466; Shulz v. Fleisher, 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 proccedings before him under the act relating to poor debtors, and was
therefore permitted to go at large pending the appeal, docs 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 within the contemplation of this clause. (Stock-
well y. Silloway, 100 Mass. 287.)

A prisoner out on bail is theoretically and practically in arrest, substan-
tially, to all intents and purposes, the same as if he had not been released on
bail. (Hazleton v. Valentine, 2 B. R. 31; s. c. Lowell, 270; s.c.1 L. T. B.
105; in re Rank, Crabbe, 493; in re Jonathan H. Cheney, 5 Law Rep. 19;
vide Foxall y. Levi, 1 Cranch C. C. 139; Lingan v. Bayley, 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
tke termination of proceedings for the discharge of the bankrupt. (ln reJ.
H. Kimball, 2 B, R. 204; s.c.2 Ben. 554; s. c. 6 Blatch. 292; in re Nathaniel
Dole, 7 B. R. 538; 8. c. 9 B. R193; s. c. 11 Blatch. 499.)

Where a debtor files his petition in one district, the district court of an-
other district may, ia a proper case, release him from arrest under the pro-
visions of section 753, (Jn 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, aud will prevent his obtaining a discharge under them.
An account of his property, which only includes what remains after the as-

signment 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 assignment
of his prcperty, 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 be re-
quired 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, £87.)

After the bankrupt has received his discharge, the State Court will, on a
proper application, release him from arrest. (Cumstock 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 bankrupt from custody..
(/n re Jonathan H. Cheney, 5 Law Rep. 19.)
§ 5108. ] NOTES OF D5CISIONS. 695

Sec. 5108.*—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.

The law allows the bankrupt to apply for his discharge after the expira-
tion 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. (Jn 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 preceeds out of the assets thereof. (In re Dodge, 1B. R.
435 ; 8. c. 2 Ben. 347; in re Hughes, 1 B. R. 226; s.c. 2 Ben. 85; 8. ¢.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 act-
ually produced anything, and for which the only offer made is an 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 be-
come afterward. (Jn re Solis, 3 B. R. 761; 8. c. 4 Ben. 143.)

Notes, accounts, and claims against others, on which no money has been
reccived, are not considered as assets. (Jn re Dodge, 1 B. R. 435; s.c. 2 Ben.
347; in re Hughes, 1 B. R. 226; s.c. 2 Ben. 85; 8. 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 assigaee has not received or paid
out any money on account of the estate. (Ju re Dodge, 1 B. R. 435; s. c. 2
Ben. 347.) :

Tt is not necessary, on presenting a petition for discharge to produce the
assignee’s return, nor ang certificate from the assignee that no assets have
come to his hands, nor any other evidence than the mere statement in the
petition that no debts have been proved, or that no assets have come to the
hands of the assignee. Of course, upon the return cf 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 high-
est evidence as to debts, and the highest evidence as to assets, are in the
hands of the assignee. The evidence, therefore, must com? from him. (In
re Bellamy, 1 B. R. 64; s.c. 1 Ben. 390; s.c. 1 L, T. B. 22.)

The assignee, when requested hy 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. (ln re
Hughes, 1 B. R. 226; s. c. 2 Ben. 85; s.c.1L. T. B. 45.)

 

*So amended by Act of July 26, 1876.
696 THE BANKRUPT LAW. [§ 5109.

The register has the power to pass an order requiring the assignee to make
areturn. (Jn re Bellamy, 1 B. R, 64; 8. c. 1 Ben. 390; 8. o. 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. (Jn re Bodenheim ef al. 2 B. R. 419; s.c. 2 L. T. B. 64; tn
ge 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 expira-
tion of six months. (Jn re Cannaday, 3 B. R.1; 8. c. 2 Biss. 75; a re Vor-
beck, 1 Pac. L. R. 100; ix 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
ve Franklin A. Sloan, 12 B. R. 59; in re Martin, 2 B. R. 548; in re Gallison
a4 al.5 BR. 353; 5. c.2L. T. B. 195; én ve Schenck, 5 B. R. 93; én ve Far-
rell, 5 B. R. 125; im re Barrett, 11 B. R. 527: 8. c.1 Cent. L. J. 556; in re
Greenfield, 2 B. R. 298,311; s. c. 6 Blatch. 287; in 7e Watson & Reynolds, 1
W.N. 86, 334; s.c, 2 W. N. 356; in ve Lowenstein, 13 B. R. 479; s. c. 3 Dil-
Jon, 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
js entitled to a discharge. (In reS. D. Clark, 3 B. R. 16; 8, c. 2 Biss. 73; in
re Diblee et al. 2 B. R. 617; s.c. 3 Ben. 283; in ve Bunster, 5 B. R. 82; 8. €.
41 How. Pr. 406; s. c. 5 Ben. 242.)

The bankrupt is not required to pray for a discharge from his partnership
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. (Zn re
Wm. H. Pierson, 10 B. R. 107.)

Src. 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 pur-
pose, and show cause why a discharge should not be granted to
the bankrupt.

The register may pass the order to give notice to the creditors to appear
sand show cause against the discharge of the bankrupt. (Jn re Gettleson, 1
BR. 604.) Contra; but he may, if the court authorizes him to do so. (/n
ve Bellamy, 1B. R. 64, 96, 113; s.c. 1 Ben. 299, 426,474; s.c.1L, T. B. 22.)

The order in Form No. 51, although the register is to direct it to be is-
‘sued 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 requirements of this
section, and from among the newspapers named in the rules of the court in
bankruptcy. (Jn re Bellamy, 1 B. R. 64, 113; 8, ¢.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 credit-
‘ors, (Anon. 1 B. R. 219.)
§ 5110.] ‘ NOTES OF DECISIONS. 697

The notices are to be sent only to the creditors who have proved their
debts. (Jn re McIntyre, 1 B. R. 151; s.c. 1 Ben. 548; Morse v. Presby, 25 N.
H. 299.)

Jf 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 suflicient evidence of the fact. (Jn re Bel-
lamy, 1 B. R. 64, 113; s.c. 1 Ben. 426, 474; in re Townsend, 1 B. R. 216; s.
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 vy, Stanton, 4 La. An. 401; Beach v. 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 ad:lresses of the creditors with sufficient
particularity to enable the notices to be served properly. (Zn re Bellamy, 1
B. R. 113; s. co. 1 Bev. 474.)

If the assignee refuses to give a certificate of the names of the creditors
who have proved their debts, the register, upon the application of the bank-
rupt, 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. (Jn re Blais-
dell e¢ al. 6 B. R. 78; 3. 0. 42 How. Pr. 274; 8. c. 5 Ben. 420.)

The proof of publication may be by the usual affidavit of the printer. (Jn
re Bellamy, 1 B. R. 96; s. c. 1 Ben. 426.)

The allegation in the record that due proofs of the publication of the no-
tices were given can not be impeached in a collateral action. (Linton v. Stan-
ton, 4 La, An. 401.)

Sc. 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 (6) sworn falsely in his affi-
davit annexed to his petition, schedule, or inventory, or upon any
examination in the course of the proceedings in bankruptey, in
relation to any material fact.

Second. If the bankrupt has concealed (c) any part of his es-
tate or effects, or any books or writings relating thereto ; or has
been guilty of any fraud or negligence in the care, custody, (@) 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 (/) the second day of March,
eighteen hundred and sixty-seven, the bankrnpt has destroyed,
nutilated, altered, (g) or falsified any of his books, documents, pa-
pers, writings, or securities, or has made or been privy to the
making of any false or fraudulent entry in any book of account or
698 THE BANKRUPT LAW. [§ 5110.

other document, with intent to defrand his creditors; or has re-
moved (A) or cansed to be removedany part of his property from
the district, with intent to defraud his creditors. .

Fifth. If the bankrupt has given any fraudulent (¢) preference
contrary to the provisions of the act of March two, eighteen hun-
dred and sixty-seven, to establish a uniform system of bankruptcy,
or to the provisions of this Title, or has made any fraudulent (/)
payment, gift, transfer, conveyance, or assignment of any part of
his property, or has lost any part thereof in gaming, (4) or has
admitted (2) 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.

Eighth. If the bankrupt, or any person in his behalf, has pro-
cured the assent (7) 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
vankrupt, made any pledge, payment, transfer, assignment, or
conveyance of any part of his property, directly or indirectly,
absolutely or conditionally, for the purpose of preferring any cred-
itor or person having a claim against him, or who is or may be
under liability for him, or for the purpose of preventing the prop-
erty trom coming into the hands of the assignee, or of being dis-
tributed in satisfaction of his debts.

Tenth. If the bankrupt has been convicted of any misdemeanor
under this Title.

Grounds for Withholding a Discharge.

(a) The acts enumerated in this section are not in the nature of offenses,
created and defined by the bankrupt law, the penalty for the commission of
which by the bankrupt is the forfeiture of his right to a discharge. The
bankrupt act was intended to operate, and has been uniformly held to operate
upou and provide for the discharge of debts created before as well as alter its
passage, and in respect to debts contracted before its passage, it is clearly a
retrospective 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 dis-
charge 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 forieiture of an existing right
denounced as the penalty for a newly created offense, for the simple and ob-
vious reason that a right to a discharge in the cases provided for did not
exist when the act was passed, und therefore the provisions are not retroactive
or retrospective in the proper sense of those terms. The act gives a debtor
aright 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 bankrupt act, the pro-
visions 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
§ 5110.) NOTES OF DECISIONS. 699

can, in any case not excepted from its operation, assert a right toa discharge.
(In re Cretiew, 5 B. R. 423; s. c. 2 L. T. B. 137.)

Congress has an undoubted right to annex such conditions as it chooses to
the grant of adischarge. Such a condition is not a punishment nor retroactive.
It is simply a condition precedent. (xn re Goodfellow, 3 B. R. 452; 4.6.
Lowell, 510; s.c. 1 L. T. B. 179; s.c. 38 L. T. B, 69.)

The question of withholding a discharge for any of the reasons specified
in this section, when the bankrupt has taken the required oath, and hus con-
formed to all the modal requirements of the bankrupt 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 as-
senting to it, and the grounds for withholding a discharge specified in this
section are regarded as not existing in respect to the particular bankrupt.
(Un re Schuyler, 2 B. R. 549; 3. c. 3 Ben. 200; s.c.2 L. T. B. 85; in re Rosen-
field, 2B. R. 117; s.c.8 A. L. Reg. 44; 5. c.1L. T. B. 100.)

If the formal requirements of the bankrupt 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 adischarge. (Jn re Elliott, 2 B. R. 110; in re Tracy et al. 2B. BR.
298; Chapman v. Forsyth, 2 How. 202; in re George Brown, 5 Law Rep. 258;
in re John OC. Tebbetts, 5 Law Rep. 259; im re Levi H. Young, 5 Law Rep.
128; vide in re Parker e¢ al. 1 Penn. L. J. 370; in ve John 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 discharge.
(In re Rathbone, 1 B. R. 824; s. c. 2 Ben. 188; in re Rosenfield, 1 B. R. 575;
s.c.1L. T. B. 100; in re Wright et al. 2B. R. 41; 8. 0. 15 Pitts. L. J. 553;
in re Bashford, 2 B. R. 74; in ve Clarke, 5 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. (Jn re Rogers, 3 B. R. 564; 8. ¢.
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 dis-
charge. The propriety of the assignee’s action in this respect should have
been contested at the proper time, and in the proper manner, (Jn re Hidom,
3B. 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. (Jn re Little,.
2B. BR. 294; sc. 3 Ben. 25; in re Penn et al. 3 B. R. 582; s.c. 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 with-
holding the discharge. (In re Burk, 3 B. R. 296; s. c, 1 Deady, 4253 8. c. 2
L. T. B. 45.)

An averment that the bankrupt has not resided or carried on business in
the district where the petition is filed for six months next preceding the filing,
700 THE BANKRUPT LAW. [§ 5110.

of the petition, is too broad. It may be true, and yet the bankrupt 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; 8. 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 wnich he is lia-
ple 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. Cn re
Cretiew, 5 B. R. 428; 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. 138; in re Beardsley, 1 B. R.
804: in re Wyatt, 2 B. R. 288; in re Sidle, 2 B. R. 220; in re Robinson ef al.
3 B.R. 70; in re Wm. H. Pierson, 10 B. R. 107; in re John C. Tebbetts, 5
Law Rep. 259; in re Robert H. Shoemaker, 4 Biss. 245; in re Wm. Archen-
braun, 12 B. R.17; 3.0.70. L. N, 2381.)

An allegation that the bankrupt willfully omitted property from his sched-
ule is entirely insufficient, for the reason that it does not allege that the bank-
rupt willfully swore falsely in his affidavit annexed to bis schedule or inven-
tory. (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
must have been in fraud of the law. Mere oversight or mistake is not suffi-
cient; these are infirmities to which all are liable, and for the correction of
which ample remedy is afforded to all parties. (Jn re McVey, 2 B. 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 questionable,
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 omis-
sion or falsehood concerning it. (Jn re Kallish, 1 Deady, 575.)

The omission of the name of a creditor from the schedule with his consent
can not be availed of by other creditors whom it has not injured as 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. (Jn re Needham, 2 B. R.
387; 8s. c. Lowell, 309; s.c.2L. T. B. 39.)

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 posi-
tively determined whether the bankrupt has any interest or not, is no ground
for withholding the discharge. (Jn re Wyatt, 2 B. R. 283; in ve Penn et al.
f B, R. 988; 8. c. 2 L. T. B. 193; in ve Smith, 18 B. R. 256; 8. c. 1 Wood,

78.)

When a bankrupt is informed that a certain debt exists, by his partner,
who had exclusive management of the business to which that debt relates, he
has the right to believe the statement to be true, and to place it upon his
schedules, (Jn re Schofield et al. 3 B. R. 551.)
§ 5110.] NOTES OF DECISIONS. 701

Transactions entered into in blind confidence may be explained by the
manifest presence of good faith. (Jn re Beatty et al. 2 B. R. 582; 3. c. 3 Ben.
233.)

There is a distinction between willfully swearing false and the crime of
perjury. Perjury is the willfully and corruptly swearing false. Corruption 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. (Jn re Mawson, 1 B. R. 437: 8. c. 2 Ben. 332; in re
Rathbone, 1 B. R. 324; s. c, 2 Ben. 133; in ve Beardsley, 1 B. R. 804; 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 vy. Brooks, 3 Barb. 429.)

An allegation of concealment which describes certain property, and charges
the concealment of other property without any description whatever, 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 evi-

dence that may be offered under the general words. (Brereton y. 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 as-
ee or creditors. The act of concealment must be shown to be intentional.
(In re Wyatt, 2 B. R. 288; im re George Wilson, 6 Law Rep. 272; in re Mark
Banks, 1 N. Y. Leg. Obs. 274; Dresser v. Brooks, 3 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. (Jn re Renslow 8. Parker, 4
Biss. 501.)

A mere failure on the part of the bankrupt to render in property possessed
by him. on his schedules, is not made a ground by the act for refusing 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. (Jn re Eidom, 8 B. R. 106; in re Connell, 8 B. R. 443; in
re Smith, 13 B. R. 256; s. c. 1 Wood, 478.)

An omission of property by accident or mistake will not prevent a dis-
charge. (Loud v. Pierce, 25 Me. 233; Suydamv. Walker, 16 Ohio, 122; Crooker
v. Trevett, 28 Me. 271.)

A bankrupt can not be held to be guilty of a willful concealment of prop-
erty, by omitting to specify in his schedules a mass of obsolete and worthless
demands, upon which no action whatever can be maintained. (Jn re Alonzo
Pearce, 21 Vt. 611.)

A concealment of property from a person entitled to its possession is not
702 THE BANKRUPT LAW. [$ 5110.

the less a concealment because he knows that it is concealed, if he does not
also know where it is concealed. (Ja re Beal, 2 B. R. 587; s. c. Lowell, 823;
8. c, 2L. T, B. 95.) '

The concealment denounced by this section embraces a concealment of
title to property, as wellas 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 dangerous 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 granting of a discharge. (Jn
re Hussman, 2 B. R. 437; s.c. 2 L. T. B. 538; 8.0.1 U. LN. 177; Hduards
v. Gibbs, 39 Miss. 166.)

It is concealment to leave out of the schedules 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 cred-
itors, the conveyance was void, and the title remained in the vendor. Con-
cealment is a continuous act. (Jn ré Hussman, 2 B. R. 437; s.c. 2L. T. B,
58; s.c.1C. L. N. 177; in re Rathbone, 1B. R. 536; 2 B. R. 260; 5.¢.38
Ben. 50; s.c.1 L. T. B. 70, 114; in re W. D. Hill, 1 B. R. 431; 8. c. 2 Ben.
349; s.c. 1 L. T. B. 56; in re Goodbridge, 2 B. R. 324; in re Goodfellow, 3
B. R. 452; s. c. Lowell, 510; s.c.1 L. T. B. 179; 3 6.3 L. T. B. 69; Peter-
son v. Speir, 29 Penn. 478; King v. Dietz, 12 Penn. 156; contra, Stute v.
Bethune, 8 Ired. 189; Porter v. Dougluss, 27 Miss. 379; in re David H. Robert-
son, 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 not
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 property which the
creditors may appropriate in satisfaction of their claims. (Jn re Hussman, 2

B. R. 4387; sc. 2L. T. B. 53; s.c, 1 C. 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 be-
fore the commencement of proceedings in bankruptcy, there is no conceal-

ment of assets by omitting it from the schedules. (Jn ve J. H. C. Lutgens, 7
Pac. L. R. 89.)

When property is, in'fact concealed, im specie, or where the title is con-
cealed by a colorable conveyance, the discharge can not be granted; but there
are many doubtful cases, in which justice seems to demand that the assignee
should be entitled to try his rights, but in which unfairness 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 pro-
ceedings in bankruptcy, and at a time when he is alleged to have been solv-
ent, is no ground for withholding a discharge. Such a conveyance does not
stand on the footing of a mcre 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 advantage from it, but it would be a perversion
of terms te say that there was any concealment about it. Whether the con-
veyance can be avoided by the essignee is a different question. (Ju re Mur-
dock, 3 B, R. 146; 8. c. Lowell, 862; 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,
§ 5110.] NOTES OF DECISIONS. 703

nor make any attempt to repair the error, it will be difficult to belicve that
the transfer was a mere mistake. (Jn 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 bankruptey, 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 assignee
from obtaining them, but their existence denied, the charge of concealment
is sustained. It is not necessary that they should have been put in any
unusual or out of-the-way place. (Hammond & Coolidge, 8 B. R. 278; s. c.
Lowell, 381.)

A judgment rendered in a suit instituted in a State court to which the op-
posing creditors and the bankrupt were parties, and in which the fraudulent
character of the conveyance was litigated and determined, is conclusive. (Zn
re Hussmann, 2B. R. 487; s. c. 2.1L. T.B. 53; 8. c. 1 C. L. N. 177.)

Concealment of property involves not only a 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 or am-
biguous presumptions, nor upon any state of facts which do not clearly, and
indeed almost necessarily, call for such an inference. (Rugely v. Robinson, 19
Ala. 404; State v. Bethune, 8 Ired. 189; in re Alonzo Pearce, 21 Vt. 611; Loud
v. Pierce, 25 Me. 233; Carey v. Esty, 20 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 generally the only
witnesses, ard if their stories are to be believed as told, no fraud can be estab-
lished. 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 suffi-
cient to overbear such positive testimony. (Jn re Goodridge, 2 B, R. 324; in
re Rathbone, | B. R. 586; 2 B. R. 260; s. c. 3 Ben. 50; 5. c. 2 L. T. B. 70,
114; in re W. D. Hill, 1 B. R. 631; s. c. 2 Ben. 349; s.c.1L. T. B. 56; in re
Doyle, 3 B. R. 782; in re Long, 3 B. R. quarto, 66 ; Preston v. Speer, 29 Penn.
a ; City Bank v. Banks, 1 La. An. 418; in re Daniel J. Perley, 4 N. -Y. Leg.

3. 254.) ,

The mere omission of property from the schedule is not sufficient evidence
of a willful concealment of it. (Steene v. Aylesworth, 18 Conn. 244.)

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 v. Robinson, 19 Ala. 404.)

The circumstances to establish concealment must depend more or less on
the circumstances of each particular case. (Petty v. Walker, 10 Ala, 879;
Hargroves vy. Cloud, 8 Ala. 173.)

The magnitude of a note is evidence of anintentional concealment. (Cwé-
ter v. Taylor, 1 Sandf. 593.)

Proof that the debts owing to the bankrupt, and included in his schedeles,
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 sur-
rendered all his property. (Cook v. Moore, 65 Mass. 213.)
704 THE BANKRUPT LAW. [§ 5110.

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.
(Cook v. Moore, 65 Mass. 213.)

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 records
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 ad-
vised him in making up his inventory, and the advice of his counsel thereon,
are admissible under a specification alleging a concealment of property.
(Robinson v. 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 op-
posing creditor must prove that the bankrupt has willfully sworn falsely. (Jn
re Hummitsh, 2 B. R. 12; 8.c. 15 Pitts. L. J. 494; in re Pomeroy, 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 y. 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 representative in value
at any subsequent time, and if the two periods are brought into close prox-
imity, and no known change of his affairs occurs, the evidence 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 presump-
tion weakens, (Jn re John Bailey, 1 N. Y. Leg. Obs. 18; s.c.5 Law Rep.
820.)

Proof of ownership of preperty prior to the commencement of the pro-
ceedings in bankruptcy, and of possession after that time, raises a presump-
tion of ownership at that time, and makes it the duty of the bankrupt to
show what disposition had been made of it. (Powell vy. Knox, 16 Ala. 364;
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 afterwards
that no business or industry could reasonably have created a fund by which
the property might have been obtained, it rests on the creditor to create the
presumption of fraud, by showing that the business or industry of the bank-
rupt could not reasonably furnish the means to acquire the property held by
him as owner. (Petty v. Walker, 10 Ala. 379; Powell v. Know, 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 so great as
to make it improbable that it was earned by him since that time, it devolves
upon him to show how he became the proprietor of such property, whether
by inheritance, bequest, or purchase. The burden of proof is thrown on him
who is best acquaainted with the origin and nature of his title. (Hargroves
i ears Ala. 173; Ashley v. Robinson, 29 Ala. 112; Gilbert v. Bradford, 15

a. 769. i

After the bankrupt has proved that he was engaged in a certain business
during a certain period, he can not prove what another wholly disconnected
from him may have lost while engaged in a similar business. (Edgar v. Me-
Arn, 22 Ala. 796.)
§ 5110.]} NOTES OF DECISIONS. 705

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. (Hdgar v. McArn, 22 Ala, 796.)

Custody of Property after Filing Petition.

(d) Under the bankrupt 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 v. Heaton et ul, 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 et al. 1 B. [R. 595;
in re Schnepf, 1 B. R. 190; s. c. 2 Ben. 72; in re Wallace, 2 B. R. 184; 8. .
1 Deady, 433.)

A specification alleging that the bankrupt permitted the destruction of
certain property should state the time of such destruction, the amount de-
stroyed, and aver that the bankrupt was in charge of the property at the
time of its loss, or responsible for it. (Jn re Eidom, 3 B. R. 106.)

A specification that the bankrupt, prior to the commencement of proceed.
ings in bankruptcy, caused and permitted less, 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 bankrupt act,
unless the loss, etc., occurred after the filing of the petition. Every kind of
fraud is carefully prohibited, but not extravagance or waste, except gaming.
(In re Rogers, 3 B. R. 564; s. c. Lowell, 423; in re Rosenfield, 2 B. R. 117;
‘s.c 1 L. 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 useless,
and the omission was without fraud on the part of the bankrupt. (dn re
Wu. H. Pierson, 10 B. R. 107.)

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. (Jn re James Thomp-
son, 13 B. R. 300.)

The collection of moneys after the commencement of proceedings in bank-
ruptcy and applying them to his own use, is a ground for withholding a dis-
charge. (In re Michael Finn, 8 B. R. 525.)

The bankrupt must account to the assignee fairly for any moncy, etc., on
‘hand, and credits outstanding at the commencement of the proceedings in
bankruptcy, and for all subsequent profits. (Jv re Long, 3 B. R. quarto, 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 proceedings in
bankruptcy, may, after being cited before court, under an order to show cause,
be committed for contempt. (Jn re Dresser, 3 B. R. 5577.)

Attachment.

(€) When the property of the bankrupt has been attached without his
knowledge or consent by a hostile creditor, the omission to dissolve an attach-
ment by an application in bankruptcy can not by retrospective effect supply
the intent to give a fraudulent preference, which is essential in order to pre-
vent the bankrupt from obtaining a discharge. (Jn re Belden, 2 B. R. 42; 8.
2A. L. Rev. 771; 8. c. 15 Pitts. L. J. 547.)

45
706 THE BANKRUPT LAW. [$ 5110.

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 annexed to them must be
construed with reference to the principle applicable to law generally, which
is that they take effect from the time of their passage. (Jn re Rosenfield, 1
B. R. 575; 2B. R. 117; 8.c.1 L. T. B. 81, 100; 8.c. 8 A. L. Reg. 44; in re
Hussman, 2 B. R. 487; 3c. 2 L. T. B. 53; s.c. 1 C.L. N.177; an re Scho-
field, 3 B. R. 551; im re Hollenshade, 2 B. R. 651; 8. c. 2 Bond, 210; wa re
J. H. C. Lutgens, 7 Pac. L. R. 89; contra, in re Burk, 3 B. R. 296; s.¢.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 character
of the acts therein described requires that they should have been committed
after the passage of the bankrupt 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 months before the commencement of pro-
ceedings in bankruptcy, and as a petition could have been filed at the end of
three months after the passage of the act; it car hardly be said that the act
referred to in this clause must have been committed after the passage of the
bankrupt 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 limitation 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 pre-
ceding 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, as to remove it from the limitation of time éxpressed in the sixth
clause. The subsequent insertion in the thirteenth clause of the words ‘‘sub-
sequently to the passage of this act,” is also a significant indication that the
legislature intended no such or similar limitations te the clauses where no
limitation was expressed, or necessarily to be implied from the nature or
character of the acts described, and 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. (Jn re Cretiew, 5 B.
R. 423; s. 0. 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. (Jn 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. (Jn re Wm. H. Pierson, 10 B. R. 107.)
§ 5110. ] NOTES OF DECISIONS. 707

Removal Beyond the District.

(4) 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 objections of
mere form; and if this removal was made with a view, at the time, of be-
coming bankrupt, and with intent to keep the property from the assignee, it
is, in substance, a sufficient 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. (Jn re Hammond & Coolidge, 3B. R. 273; s.
c. Lowell, 381.)

Fraudulent Preferences,

(i) By the term “ fraudulent preference” is meant a preference contrary
te the provisions of this act. (Jn re Rosenfield, 1 B. R. 575; 3. c. 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 not enjoy. (In
re Aspinwall, 3 Penn. L. J. 212.)

It is not necessary to allege that the persons to whom the payments were
made were creditors of the bankrupt. The ordinary and obvious construction
of the allegation is, that the preferences, or payments, or transfers, were
made to the persons named as creditors, real or supposed, of the bankrupt, or
as persons to whom he was or might become liable. (Jnre Smith & Bickford,
5B. 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. (Jn re Locke, 2 B. R. 382; s. c.
Lowell, 298; in re Burgess, 3 B. R. 196; in re Freeman, 4 B. R. 64; 5. 0. 4
Ben. 245; in re Warner, 5 B. R. 414; in re John B. Harper, 6 C. 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 case,
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 particular creditor, when
he was not able to pay all his debts in the usual and ordinary course of busi-
ness, 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 accom-
plishing his fraudulent purpose, he was shrewd enough to conceal from the
other party his insolvent condition. (Zn re Gay, 2 B. R. 358; s.c.1L. T. B.
13; in re Lewis et al. 2 B. R. 449; s. c. 8 Ben. 153; 5.0.2 L. T. B. 75; in re
Foster, 2 B. R. 232; s.c.1L.T. B. 127; in re Rosenfield, 2 B. R. 117; s. c.1
L. T. B. 100; s.c. 8 A. L. Reg. 44; in re L. J. Doyle, 3 B. R, 640; Hverett 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 relatiog to the avoidance of the payment or security. (Jn re
Perry & Allen, 20 Pitts. L. J. 184; 8. c. 7 W. J. 379.)
708 THE BANKRUPT LAW. [§ 5110.

No preference can be fraudulent, under the act, unless it is made within
four months before the filing of the petition in bankruptcy. (Jn re John B.
Harper, 6 C. L. N, 279; in ve Wm. H. Pierson, 10 B. R. 107.)

An allegation of a preference should describe the ale eas 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, is bad, because it is in the.
alternative. (Brereton v. Hull, 1 Denio, 75.)

Where a preference has been fully condoned, so far as the preferred cred-
itor is concerned, by a surrender. and the general creditors have been restored
to the position they would have occupied if there had been no preference, the
law does not intend the pre'erence to be regarded as still subsisting against
the bankrupt. The general creditors are not technically 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 creditor 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, all
* 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 settle-
ment 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 bankrupt may share, and he may lawfully reply to the specifi-
cation that there was no preference, but only an attempted preference, aban-
doned before it was too late. (Jn re Connor & Hart, Lowell, 532; 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 con-.
templated a preference of that creditor ; and the other is, that a debtor who
pays an honest debt, with a part only of his assets, does not commit a tech-
nical fraud which will render the payment void, if the act was done in conse-
quence of threats or demands on the part of the creditor. The baukrupt 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 makesthe 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 preier-
ence. It is a very important circumstance, and almost decisive. But the
presumption 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 suspicious
afact. (Jn re Batchelder, 3 B. R. 150; s. c. Lowell, 873; in re Connor &
Hart, Lowell, 582; in re Ephraim Chase, 22 Vt. 649.)

The payment of a debt through inadvertence, or undera mistaken sense
of duty, and without any fraudulent intent, will not deprive a bankrupt of:
his discharge. (Zn re Rosenfield, 2 B. R. 117; s.c.1L. T. B. 100; 8. 0.8 A.
L. Reg. 44; in re Locke, 2 B. R. 382; 8. c. Lowell, 293; in re Sidle, 2 B. 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. (dn re Michael Finn,
8 B. R. 525.)

The mere making of payments in the course of his business, with the bona
Jide, though mistaken, expectation that he can keep along without going into
§ 5110. | NOTES OF DECISIONS. 709

bankruptcy, there being no actual design to favor or prefer, 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; 8. c. 2 Dillon, 129; in 7¢ Geo. M. Gar-
wood, Crabbe, 516; in ve Alonzo Pearce, 21 Vt. 611.)

A preference made by an alien, when he was a resident of a foreign coun-
try, is a ground for opposing the discharge, for he must show that he has
complied with the conditions impesed by law, although he was not aware of
them, and 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 perfectly 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; 8. c. Lowell, 510; s.c.1L. T. B. 179; 8. 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 be-
comes due. (Jn re 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. (Jn re George M, Gar-
wood, Crabbe, 516.)

The mere giving of a consent to a sale under a valid attachment *s not a
preference where the creditor only got what he would ultimately obtain in
due course of law. (Jn 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 objec-
tion 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. (Jn re Christopher C. Rowell, 21 Vt.
620.)

An assignment exacting releases as a condition of receiving a dividend is
a ground for refusirg a discharge, because it isa preference. (Jn re Aspin-
wall, 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 betore the filing of the petition is no
ground for withholding a discharge. (Jn re Oliver L. Jones, 13 B R. 286.)

Fraudulent Transfers.

(j) Quere. Does a specification which not only avers a fradulent assign-
ment, made in 1861, with the intent to enable the assignor to retain the con-
trol 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 control 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 con-
trol, a large amount of property aud assets pretended to have been included
in the assignment; 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 trans-
fer within the meaning of this clause? (Jn re C. W. Moore, 2 Ben. 325 ; in
te Cretiew, 5 B. R. 423; 8. c. 2 L. T. B. 137.)

An allegation that the bankrupt had made a fradulent conveyance of his
710 THE BANKRUPT LAW. [§ 5110.

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 bankrupt law
is ground for withholding a discharge. (Jn re Cretiew, 5 B. R. 428; 8. ¢. 2
L. T. B. 187; Peterson v. Speer, 29 Penn. 478; contra, in re Keefer, 4 B. R.
389; s. 0. 3 C. L. N. 125; im re Charles P. Houghton, 4 Law Rep. 482; in re
Charles H. Delavan, 5 Law Rep. 170; Gove v. Lawrence, 26 N. H. 484; Por-

ter 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; 8.0.5
Law Rep. 320.)

When the least degree of concert or collusion is shown between the bank-
rupt 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 bankrupt 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. (Jn re Jorey & Sons, 2 B. R. 668; 8. 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 defraud his
creditors, is not a fraud'of such a character as will bar a discharge. (Jn re
John B, Harper, 6 UC. L. N. 279.)

The fraudulent payment, gift, transfer, conveyance and assignment must
be such,as are denominated frauds by the terms of the bankrupt law, and
particularly described in sections 5128 and 6129. (Jn re John B. Harper, 6
C. L. N. 279.)

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 with-
holding a discharge. (Jn re Oliver L. Jones, 13 B. R. 286.)

Gaming.

(&) Property acquired in gaming is assets, and, if the bankrupt spend it-
in gaming, he loses his right to a discharge. It is impossible to look into
the mode in which such property as the statute speaks of has been acquired.
Tf property, once in the possession of the bankrupt 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 that creditors are no worse off on the whole.
Such losses can not be distinguished 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 is a mere question of legal right. (Jn 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 discharge, but the burden of proof is.
§ 5110.] NOTES OF DECISIONS. TL

on the creditors to show that the debt is false and fictitious. (Jn re Orcutt,
4B. R. 588; 3, 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 of set-off, or
asserts that it has been satisfied. The distinction is between fabricating a
debt where none exists in fact and stating a debt unquestionably outstanding
with the claim of defense to it. (Jn re Mark Banks, 1 N. Y. Leg. Obs. 274.)

A judgment confessed by the bankrupt without any valuable considera-
tion, 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 creditors. (In re David
H. Robertson, 1 N. Y. Leg. Obs. 20.) ? ;

In order to bar the discharge the debt must be falsely admitted in pro-
ceedings under the act. Merely giving a preference to a fictitious debt in an
assignment is not sufficient. (Jn 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 meaning of the
statute. (Jn re Chas. H. Delavan, 5 Law Rep. 370.)

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. (Jn re Rosenfield, 1 B.
R. 575; 8. c.1 L. T. B. 81.)

If the objection is that certain entries are wanting, or that there are irreg-
ularities in the mode of keeping proper books, they ought to be pointed eat
in the specifications ; but where objection is, that a cash account is wholly
wanting, a general specification is sufficient. (Jn re Littlefield, 3 B. R. 57;
s. c. Lowell, 331; 8.c.1L. T. B. 164; in ve Hammond & Coolidge, 3 B. R.
273; 8. 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 ve Belis e¢ al. 3 B. R. 496; s, oc, 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 credit-
orsas wellas to himself. By keeping such books in a proper manner, a debtor
can not but be aware of his standing, his property and effects, and his liabili-
ties. On the other hand, his books should exhibit to his creditors his posi-
tion, so that, when placed before them for investigation, they may at once
ascertain his standing and property and the result of his business, and
whether everything bas been fair and honest on his part. (Jn re Gay, 2 B.R.
358; s.c. 1 L. T. B. 73; in ve Newman, 2 B. R. 302; 8. c. 3 Ben. 20; in re
Solomon, 2 B. R. 285; s.c. 25 Leg. Int. 364; in ve Keach, 3 B. R. 18; s. cc.
Lowell, 335; s.c. 1 L. T. B. 167; tm re William Archenbraun, 12 B. R. 17;
s.¢c.7 0. L. N. 231.)

The word ‘‘tradesman” has substantially the seme meaning as shop-
keeper. (In re Cote, 14 B. R.)

As the section is almost penal, the term ‘‘ tradesman ” should be confined
to those who belong to that class with some degree of permanence. (Jn re
Cote, 14 B. R.)

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 tradesmen.
(in re Cote, 14 B. R.)
712 THE BANKRUPT LAW. [§ 5110.

Manufacturers of and dealers in shoes are tradesmen. (Jn re Jorey & Son,
2B. R. 668; s, c. 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.
(dn re William Marston, 5 Ben. 313.)

A stair-builder is a merchant or tradesman. He is none the less a trades-
man because he is also a manufacturer of the 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. (Jn re Edward Garri-
son, 7 B. R. 287; s. c. 5 Ben. 430.)

A person buying and selling goods for the purpose of gain, though only
occasionally, is a merchant and trader. (Jn re O’Bannon, 2 B. R. 15.)

The distinction taken in England, whether every one who buys and sells
goods is guoad 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, ifa
farmer should buy stock or grain in addition to what he had raised, perhaps
such a person could not be described as a tradesman. (Jn 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 inten-
tion 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 in-
tent to deal generally. (Jn re Rogers, 3 B. R. 564; s. c. Lowel}, 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, is a
tradesman. (Jn ré Cocks, 3 Ben. 260.)

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 Win. H. Pierson, 10 B. R. 107.)

When the business has been wholly closed, so that no rights or interests
can be subject to examination or decision iu the bankrupt court, and there is
nothing left outstanding in the way of asscts 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 con-
struction of the bankrupt act. The hooks are not the only proper evidence
that the business is thus wholly closed and past. This may be proved aliunde.
The schedules, proofs of debr, and all the proceedings in the case, may be
admitted for that purpose, together with oral testimony. (Jn ve Keach, 3 B.
R. 13; s. c. 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 everything
has been so fully ended that no such account could affect his standing, or
touch the interests of his creditors at the time of his bankruptcy, the omis-
sion 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.)
§ 5110.] NOTES OF DECISIONS. 713

Tf there was no continued trading, the bankrupt was not required to keep
regular books. (Jn 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. (Ja re Mark Banks, 1 N. Y. Leg.
Obs. 274.)

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 prop-
erty, 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 beable to carry out the law. (Jn ve George &
Proctor, Lowell, 409.)

The intent of the non-keeping of books is of no importance. The mere
omission is the thing plainly interdicted, Such omission prevents a discharge,
whether the intcnt was fraudulent or not. (Jn reSolomon, 2 B. R. 285; 8. ¢,
22 Leg. Int. 364; in re Newman, 2 B. R. 302; s. oc. 3 Ben. 20; in re Jorey &
Son, 2 B. R. 668; s. c. 2 Bond, 336; in re Schumpert, 8 B. R. 415; in ve Wil-
liam Archenbreun, 2 B. R. 17; 8.¢.7C. L. N. 281.)

No excuse, however true, and no innocence of intention, will avail to sup-
ply the deficiency. (Jn re George & Proctor, Lowell, 409.)

Whether the books of account are properly kept is a question which must
be decided in each case upon the facts as they appear, and not upon any strict
rule that such and such books and such and such entries are essential in all
cases, (Jn re Perry & Allen, 20 Pitts. L. J. 184; 8. 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 business of some
kinds, any contemporaneous written memorials, formel or informal, of a trades-
man’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 expo-
sition of his affairs. The question of what are proper books must be in cach
case a question of evidence. What would be proper and sufficient books in
one case would be improper and insufficient in another. (Jn re Solomon, 2
B. R. 285; s. c. 25 Leg. Int. 364; in ve Newman, 2 B. R. 302; 8. c.3 Ben. 20;
in re White, 2 B. R. 590; s.c. 2 L. T. B. 105; 8, c. 16 Pitts. L. J. 110; an re
Batchelder, 3 3. R. 150; 8. c. Lowell, 373.)

It is not sufficient that the bankrupt employed a book-keeper whom he
considered competent, and left the whole charge of the books to him. The
law does not require traders to keep a book-keeper, but to keep books, and
they are responsible to see that this is done. (Jn re Hammond & Coolidge, 3
B. R. 273; 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 permanent character,
If the beoks were lost, and there was no reasonable expectation of finding
them, or if they were not found within a reasenable time, it was the duty of
the bankrupt to supply their place with others. (Jn re Hammond & Coolidge,
3B. R. 273; s. c. Lowell, 381.)

A retail dealer who keeps the usual books and all his invoices keeps proper
books of account, although he kept no invoice book. (Jn re J. K. P. Reed,
12 B. R. 390.)
714 i THE BANKRUPT. LAW, [§ 5110.

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 bal-
ances to be made at any fixed periods, or the books to be kept in any particu-
lar mode. (Jn 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 ex-
hibit to a person of competent skill the true state of his dealings and affairs.
(in re Hammond & Coolidge, 2 B. R. 278; s, c. Lowell, 381; im re Solomon,
2 B. R. 285; 8. 0. 25 Leg. Int. 364; in re Jorey & Son, 2 B. R. 668; 8. c. 2
Bond, 886; 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 bankrupt’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. (Jn re George & Proctor, Lowell, 409; in re Hammond
& Coolidge, 3 B. R. 278; 9. c. Lowell, 381; in re Schumpert, 8 B. R. 415; in
re J. K. P. Reed, 12 B. R. 390.)

Where the day-book and the ledger taken together show all the transac-
tions of the bankrupt, a discharge may be granted, although there are some
meaningless mutilations in each. (Jn re William 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. (Jn re Gay, 2 B. R.
858; 8. c. 1 L. T. B. 78; in re Solomon, 2 B. R. 285; 8. c. 25 Leg, Int. 364;
in re Littlefield, 8 B. R. 57; 8. c. Lowell, 381; s,c. 1 L. T. B. 164; én re Belis
et al. 3 B. R. 496; 8. c. 4 Ben. 53.)

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. (Jn re Mackay e¢¢ al. 4B. R. 67; 8. c. 2 C. 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 White, 2 B. R. 590;
sc. 2 L.T. B. 105; 8. c. 16 Pitts. L. J. 110.)

Careless omissions or mistakes, without fraud, in books themselves proper, -
may be overlooked. (Jn re White, 2 B. R. 590; 3.c. 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 tem-
porary 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 pur-

pose for a reasonable time would be. (dn re Hammond & Coolidge, 3 B.
R. 273; 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 discharge
will be granted when the evidence shows that no fraud was done to the cred-
itors by the change, and that the accounts were all collected as far as collect-
ible. (Jn re Noonan & Connolly, 3 B. R. 267.)

Persons who buy on credit, and sell again in such wise as to be merchants
or tradesmen, must see to it, in order to be in a position when misfortune
overtakes them to obtain the benefits of the bankrupt 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 account to be made up from memory or from sources other than
such books. (Jn re Edward Garrison, 7 B. R. 287; s. c. 5 Ben. 480.)

A discharge will not be refused to a bankrupt for not keeping proper
§ 5110.) NOTES OF DECISIONS. 715

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. (Jn re Batchelder, 3 B. R. 150;«s. c. Lowell,
373.)

A canceled check is admissible in evidence in connection with the stump.
of the check book, to show how the dook was kept. (Jn ve W. E. Brockway,
7B. BR. 695.)

Assent of Creditor to Discharge.

(n) A specification which avers that the bankrupt or some person in his
behalf has procured the assent of certain creditors to his discharge and influ-
enced their action by a pecuniary consideration is too vague to be triable.
(In re Freeman, 4 B. R. 64; 8. c. 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 dis-
charge, nor is he forbidden to influence the action of a creditor. The pro-
hibition is against procuring ‘such assent or influencing such action by any
pecuniary consideration or obligation. (Jn re Mawson, 1B. R. 437, 548; s.
c. 2 Ben. 332, 412; Fox v. Paine, 10 Ala. 523; 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. (ln re E. V. Palmer, 14 B. R. 432.)

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 pre-
sumption is that the purchase was made in behalf of the bankrupt, and the
discharge will be refused. (Jn re Whitney etal. 14 B. R. 1;'8.¢c.8 C. LN.
195.)

Transfers in Contemplation of Becoming Bankrupt.

(0) An examination of the act, in connection with the Forms, shows that
the expression, ‘‘ becoming bankrupt,” means committing an act of bank-
tuptcy, and that the expression, “in contemplation of becoming bankrupt,”
means in contemplation of committing an act of bankruptcy. The act of
bankruptcy, the commission of which must be contemplated, is such an act
as the statute dec!ares to be an act of bankruptcy. A debtor may become
bankrupt 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
contemplated having a petition filed against him, and being adjudged a
bankrupt thereon, provided he contemplated committing an act which is de-
fined by section 5021 to be an act of bankruptcy, or filing a petition under
section 5014. (In re Goldschmidt, 3 B. R. 165; 8. c. 8 Ben. 379; in re Free-
man, 4 B. R. 64; s.c.4 Ben. 245; in re Lawson, 2 B. R. 113; in re Cretiew,
5B. R. 423; s. 0.2L. T. B..187; in re J. H. C. Lutgens, 7 Pac. L. R. 89; in
ve Wm. H. Pierson, 10 B. R. 107; in re Alonzo Pearce, 21 Vt. 611; in re
Christopher C. Rowell, 21 Vt. 620; Swan v. Littlefield, 58 Mass. 574; Caryl
v. Russell, 13 N. Y. 194; 8. c. 18 Barb. 420; North Am. 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 not
sell at a sacrifice, and that the sum so raised is reasonable in amount. (In re
716 THE BANKRUPT LAW. [$ 5111.

Keefer, 4 B. R. 889; 5. c.8 C. L. N. 125; Flournoy v. Newton, 8 Geo. 306;
Lyon v. Marshail, 11 Barb. 241.)

Where ati insolvent debtor makes an assignment for the benefit of credit-
ors three days before the filing of his petition in bankruptcy, his denial of
any intention, at the time of making the assignment, to take the benefit of
the bankrupt act, however positive, is not, in the absence of confirmatory
circumstances, sufficient to repel the presumption arising from the facts, and
a discharge must be refused. A system which would thus, in practice, per-
mit a discharge of the debtor, without a simultaneous administration and
distribution of the property among the creditors, would be a monstrosity.
(in re Brodhead, 2 B. R. 278; s. c.. 3 Ben. 106.)

An assignmentefor 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 property in satisfaction of his
debts through the agency of an assignee selected by himself. This neces-
sarily involves the existence of a purpose to prevent the same property from
being distributed under the bankrupt act in satisfaction of the same debt.
There could be no other purpose. (Jn re Goldschmidt, 3 B. R. 165; sc. 8
Ben. 379; contra, in re Pierce & Holbrook, 3 B. R. 258; s. c. 16 Pitts. L. J.
204; ix re John M. Quackenboss, 1 N. Y. Leg. Obs. 146; Smith v. Hly, 10 B.
R. 5538.)

This clause does not include consignments which do not change the title,
but are merely the employment of an agent. (fu 7e Hammond & Coolidge,
3 B. R. 273; s. c. Lowell, 381.)

The filing of a bill in equity against a copartner, and procuring the ap-
pointment of a receiver is nct such a transfer as is contemplated by this sec-
tion. (Jn ve Robert H. Shoemaker, 4 Biss, 245.)

Seo. 5111.—Any creditor opposing the discharge of any bank-
rupt may file a specification in writing of the grounds of his oppo-
sition, 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.

Filing Specifications.

Any person who shows by affidavit or otherwise that he is a creditor, has
the right to appear and oppose the discharge, without being in technical
strictness a creditor who has proved hisdebt. To entitle him to oppose the
discharge, he must have a pecuniary interest in the matter, and that interest
must be satisfactorily shown. (Jn re Sheppard, 1 B. R. 439; s.c.1L. T. B.
49; 8.c.7 A. L. Reg. 484; in ve Smith & Bickford, 8 Blatch. 461; in re Mur-
dock, 8 B. R. 146; s. c. Lowell, 362; s. c. 2.L. T. B. 97; in re Boutelle, 2 B.
R. 129; s. c. 15 Pitts. L. J. 616; im ve Samuel Book, 3 McLean, 317; contra,
in ve Levy et al, 1 B. R. 827; 8. c. 2 Ben. 169; in re W. D. Hill, 1 B. R. 16;
s. c.1 Ben. 821; in re Burk, 3 B. R. 296; 8. c. 1 Deady, 425; s.c. 2 L. T. B.
45; in re C.N. Palmer, 3 B. R. 301; in ve Brown King, 1 N. Y. Leg. Obs.
22; 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 ob-
§ 5111.] NOTES OF DECISIONS. ave

taining judgment, may keep his proof and oppose the discharge if he will
file a stipulation to release his judgment in case the final decision in bank-
ruptcy shall grant the bankrupt his discharge. (Jn re Gallison e¢ al. 5 B. R.
358; s.0. 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.
Cn re John C. Tebbetts, 5 Law Rep. 259.)

If a creditor who held the bankrupt’s bond assigned it as a collat-
eral 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. (Jn re Traphagan, 1 N. Y. Leg. Obs. 98;
s. c. 5 Law Rep. 823.)

The appointment of a receiver and an assignment of the claim to him does
not divest the creditor of his interest in the claim go but that he can oppose
the discharge. (Jn re Traphagen, 1 N. Y. Leg. Obs. 98; s.c. 5 Law Rep.
323.)

The specifications may be filed with the register. Form No. 53 contem-
plates that they may be addressed to him. (Jn re Bellamy, 1 B. R. 96; 8. .
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 determined by
the court after the bankrupt has applied for his discharge. If the specifica-
tions are filed, the case is then ipso facto removed from before the register and
taken into court. (Jn re Mawson, 1 B. R. 265; 8. c. 2 Ben. 122; in re Puffer,
2B. R. 43.):

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; 8. c. 1 Ben. 274.)

The orderly conduct of the proceedings requires that the trial of all ques-
tions so raised shall be postponed till the hearing of the petition fur discharge.
The register will proceed with the case, notwithstanding the specifications.
(In re Paffer, 2B. R. 43; in re Brisco, 2 B. R. 226; inre W. D. Hill, 1 B. R.
16; s.c.1 Ben. 821; 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. (Jn 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 ad-
journed day are the same in all respects as upon the return day. (dn re
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. 8. Houghton, 10 B.
R. 337.)

On the entry of an appearance of a creditor to oppose a discharge, all pro-
ceedings upon the petition for a discharge are suspended until specifications
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 before the register. The
proceeGing for an examination must be taken under section 5086. Un re
Frizelle e¢ al. 5 B. R. 119.)

The time to file objections to a discharge may be kept open by adjourning
any day which may be fixed for showing cause against a discharge until a
718 THE BANKRUPT LAW. [§ 5111.

full, reasonable opportunity is afforded for the examination of the bankrupt
and his wife and other witnesses. (Jn 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 protest has
been made against the allowance of his claim, until the examination 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 dillgence,
(dn 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. (Jn 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. (ln re W.
E. Robinson, 2 B. R. 342; s, c. 86 How. Pr.176; 8. c. 6 Blatch. 253; 8. c, 2
L. 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. Untilsuch
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. (Jn 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 ver-
bally ; but an entry of such opposition should be made on the docket, and
suspend further procedings 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 McVey, 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 at-
torney and his place of business upon the docket, with the date of entry.
Cin re James M. Seabury, 10 B. R. 90.)

An appearance entered after the return day must be disregarded. (In re
McVey, 2 B. R. 257; in re Smith & Bickford, 5 B. R. 20; @reditors v. Wil-
tiams, 4B. R. 580; 8. c. 2L. T. B. 166; in re Robert A. Sutherland, 1 Deady,
ai in re James M. Seabury, 10 B. R. 90; in re Joseph Buxbaum, 13 B. R.

7.) ue

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. (Jn re
Chauncey J. Filley, 2 Cent. L. J. 419.)

The district court may, in its discretion, allow a creditor to enter his ap-
pearance and file specifications in opposition to a discharge, although the
time for entering an appearance in opposition thereto has expired. (Jn re
Lewis Levin, 14 B. R. 385.)

Specifications not filed within the prescribed time can not be entertained.
(In re McVey, 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 con-
taining 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 bebalf of a creditor. (In reC. N. Palmer,
3B. R. 301; Cred tits y. Williams, 4B. R. 580; s. c. 2 L. T. B. 166.)
§ 5111.) NOTES OF DECISIONS. 719

When a creditor has regularly entered his appearance on the return day,
but has failed, through inadvertence, to file specifications within the pre-
acribed time, the court, on cause shown, will allow him to file them nune pro
tune. (In re Grefe, 2 B. R. 829.)

The filing of an opposition to a bankrupt’s discharge is the commencement
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 proceedings. It
involves pleadings, costs, and attorncy’s fees; it may involve a trial by a jury.
The quettion 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 dis-
charge of the bankrupt, and involve him in sucha controversy. (Creditors v.
Willhiams, 4 B. R. 580; s. c. 2 L. T. B. 166.)

The proceeding for a discharge depends on the proceedings in bankruptcy,
and is inseparably connected with them. In fact and in law it must be con-
sidered as a continuation of the former proceedings. (Jn re Ankrim, 8 Mc-
Lean, 285.)

If the original objector declines to prosecute his specifications, other cred-
itors may be permitted to enter their appearance and be heard in support of
the objections, although the time for entering an appearance is past. (In re
8. 8. Houghton, 10 B. R. 337.)

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 ap-
pointment does not fix the day for hearing the application for a discharge.
(In re Robert A. Sutherland, 1 Deady, 573.)

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. (Jn 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 allegations so
general as really not to advise the bankrupt what facts he must be prepared
to meet and resist. (Jn re Rathbone, 1 B. R. 294, 824; s. o. 2 Ben. 138; in
re Beardsley, 1 B. R. 304; in ve W. D. Hill, 1 B. R. 275; 8. c. 2 Ben. 136; in
re Mawson, 1 B. R. 487; 8. c. 2 Ben. 332; in re Waggoner, 1 Ben. 532; in re
Burk, 3 B. R. 296; 8. c. 1 Deady, 425; 8. c. 2L. T. B. 45; in re Butterfield,
14. B. R. 147; 8. 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. (Jn re Smith & Bickford, 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, &c. A specification containing. a
reference to facts supposed to be shown upon an examination of the bank-
Tupt, is, in that respect, faulty. The facts alone should be set forth, without
reference to any matter aliunde. (Jn re Hidom, 3 B. R. 106.)

The specifications may be amended. (In re W. D. Hill, 1 B. R. 275; s. ¢.
720 THE BANKRUPT LAW. [§ 5111.

2 Ben. 136; in re Rathbone, 1 B. R. 294; s.c. 2 Ben. 188; in re Burk, 3 B.
R. 296; 5. c. 1 Deady, 425; 3. 0. 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. (Jn re 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. (Jn re Belis ¢¢ al.
3B. R. 496; s. c. 4 Ben. 53.)

Vague and general specifications may be stricken out. (Jn re Waggoner,
1 Ben. 582.)

Vague specifications may be disregarded. (Jn re Rathbone, 1 B. R. 294;
8. c. 2 Ben. 188; in re Son, 1 B. R. 310; s. c. 2 Ben. 153; im re Tyrell, 2 B.
R. 200; am re Hanson, 2B. R. 211; im 7e Dreyer, 2 B. R. 212.)

Trial of Specifications.

The bankrupt may question the sufficiency in law of the grounds of op-
position to his discharge by a demurrer, or by exceptions analogous to those
allowed in equity. (dn re Rosenfield, 2 B. R. 117; 1 L. T.B. 100; 3.0.8 A.
L. Reg. 44; in re McVey, 2 B. R, 257; in re Burk, 3 B. R. 296; s. c. 1 Deady,
425; 3.0.2 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 successtul party is tax-
able as part of the costs. The word “trial” means a trial by jury. The
pleadings may he 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.0. 1 L.
T. B.99; s.c. 7 A.L, Reg. 749; in re Kidom, 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 hearing.
The remedy of the creditor is to move the court to set down the matter for
hearing upon the petition and his objections thereto. (Jn re Robert A. Suth-
erland, 1 Deady, 573.)

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. (dn re Lawson, 2 B. R. 113.)

The burden of proof is on the creditor to show that the bankrupt has for-
feited his title to a discharge by having done some of the things specified 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; 8.0. 2 Ben. 412; in re Okell, 2
B. R. 105; im 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 prime 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. (Jn re Diblee et al. 2
B. R. 617; 3. c. 8 Ben. 283.)

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, (nm re Lathrop, Luddington & Co. 3 B. R. 46 ;30.2L.T.B
1245 contra, in re Schoo, 2B. R. 215.)

Evidence in support of the specifications is the only evidence that can be
§ 5111.) NOTES OF DECISIONS. 721

a

introduced. The creditor is bound by his specifications. He can not go he-
yond them, or produce evidence outside of them, (Jn ve Rosenfield, 2 B.
R. 117; s.c.1 L. T. B. 100; 3c. 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 dis-
charge. (Jn re Schuyler, 2 B. R. 549; s. c. 3 Ben. 200; 3. c. 2 L. T. B. 85;
in re Whetmore, 1 Deady, 585; s.c.1 L. T. B. 136; ia re Jones & Hoyt, 12
B.R. 48; s.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. (Jn re Burk, 3 B. R. 296; s, c. 1 Deady, 425; s. c.
2L. 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; s.c.8 A. L. Reg. 44; in re Schuyler, 2 B. R. 549; s. c. 3 Ben. 200; s. c.
2L. T. B. 85.)

The assertion of a fact by the bankrupt’s wife, in his presence and denied
by him, can not be given in evidence to impeach the testimony of the bank-
rupt. (Jn re John Q. McCarty, 5 Law Rep. 322.)

An exemplification of the sworn answer of the bankrupt to a bill brought
against him in chancey is admissible against him. (Anon. 1 N. Y. Leg. Obs.
349; in re Maynard Bragg, 1 N. Y. Leg. Obs. 119; s. co. 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 instrament must
be produced, although its contents can be proved by the declarations of the
bankrupt. (Flournoy v. Newton, 8 Geo. 306.)

It is not competent for the bankrupt to repel acharge 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 geste, which res geste is his possession, but such declarations 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 re-
quired to pay his own costs. (Jn ve 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. (Jn re
Eidom, 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. (Jn re Olds et al.
4B. R. 146; s. c. 2 L. T. B. 125; in re Diblee et al. 4 Ben. 304; in re Moses
Guild, 1 W. & M. 29.)

A discharge granted after trial upon a specification charging the conceal-
46
722 THE BANKRUPT LAW. [§§ 5112-124.

ment of certain property, is not a bar to a suit by the assignee to recover 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 assignee,
and which were then held not 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. (/n re Penn et al. 8 B. R.
98; s.c. 5 Ben. 500.)

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. (Zn 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
operate 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-
rupt court may make it nune pro tunc,if no rights of third parties have in-
tervened which can be prejudiced thereby. (dn re Drisko, 13 B. R. 112; 8. ¢.
14 B. R.)

A bankrupt whose discharge has been refused, may, upon the repeal of
the bankrupt law, apply for the benefit of a State insolvent law. (Fisher
v. 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. (Misher v. Currier, 48 Mass. 424.)

If the debtor whose discharge has been refused, takes the benefit of the
State insolvent law upon the repeal of the bankrupt law, the creditors whose
debts were provable in bankruptcy may prove their debts in insolvency, but
in that case their debts will be barred by a discharge. (Fisher v. Currier, 48
Mass. 424.)

Szc. 5112.—In all proceedings in bankruptcy commenced alter
the first day of January, eighteen hundred and sixty-nine, no dis-
charge shall be granted to a debtor whose assets shall not be equal
to fifty per centum of the claims proved against his 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 pro-
vision 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.

Suc. 5112 a (22 June, 1874, § 9).—That in cases of compulsory
or involuntary bankruptcy, the provisions of said act, and any
amendment thereof, or of any supplement thereto, requiring the
$5112 a.) NOTES OF DECISIONS. 723

’

payment of any proportion of the debts of the bankrupt, or the
sassent of any portion of his creditors, as a condition of’ his dis-
charge 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 jive 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 pro-
visions. (Zn re King, 10 B. R. 556; s. c. 3 Dillon, 3; in re Griffiths, 10 B. R.
456; s.c. 1A. L. T. [N. 8.] 476; 8.¢c.10 A. L. J. 249; s.c. 1 Cent. L. J. 507;
im re Perkins, 10 B. R. 529; s. c. 6 Biss. 185; 8. c. 22 Pitts. L. J. 48; 5.
ce. 1 Cent. L. J. 507; s.c. 7 C.L. N. 9; in ve Louis Cerf, 11 B. R. 143; s. c.
TC. LN. 79; in re Jones & Hoyt, 12 B. R. 48; 8. co. 7 C. L. N. 162; contra,
in re Charles J. Francke, 10 B. R. 438; s.c. 7 Ben. 420; s.c.1A. L. T. [N.
8.] 476; in re George H. Shelden, 12 B. R. 63.)

In voluntary cases pending at the time of the passage of the amendment,
the bankrupt need not show any percentage of assets, nor any assent of cred-
itors in respect to debts contracted prior to January 1, 1869. (Jn ve George
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. (Jn 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 propor -
tion of the creditors, for such a proceeding is not involuntary or compulsory.
(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 sec-
‘tien points to this signification. Nothing else could pay debts. In this sec-
tion the word ‘‘ assets’ is not synonymous with estate. (Jn re Friederick, 3
B. R. 465; 8. c.1L. T. B. 181; 3.0.20. L. N. 139.)

The term “ assets” is as comprehensive as “estate” or “effects.” It in-
cludes 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 dis-
tributed 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 to the requisite thirty
per cent., the costs and expenses of the proceedings are not first to be de-

ducted. (In re Kahley et a/. 6 B. R. 189; 3. ¢. 3 Biss. 169; contra, in re Vin-
ton, 7 B. R. 188.)

What sum the estate or assets may be appraisd at is by no means a true
criterion of their value, or rather what they are ‘equal to.” There may be
724 THE BANKRUPT LAW. [§ 5112 a.

as many differing opinions as to the value of a given piece of property, 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 creditors and costs of proceedings,
money being the only thing with which such payments can be made. (In re
Van Riper, 6 B. R. 573.)

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 bankrupt law, he is entitled
to a discharge if, at the time he filed his 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 cir-.
cumstances over which he has no control. (Jn re Lincoln & Cherry, 7 B. R.
334; 8. c. 2L. T. B. 241; s. c. 20 Pitts. L. J. 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. (Jn 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, sub-
ject 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 assent of his cred-
itors as provided fur in this section. (In re Webb et al. 3 B. R. 720; 8. c. 2
C. 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 con-
trary, if the assets are at a fair and just estimate and va!uation 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 creditors to convert the
assets into cash, or because of the absorption of so large a 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 Friederick, 3 B. R. 465; s.c.1L. T. B. 181; sc. 20. 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
liability of an indorser, from being contingent, becomes absolute and fixed,
it does not thereby become the liability of a principaldebtor. When it is
put into the shape of a judgment, the liability on such judgment becomes
the liability of a principal debtor; hut until then the fixed liability of an in-
dorser 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 necessarily be shown
to be the liability of an indorser. None of the contingent liabilities, or con-
tingent 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 bave un-
8 §113.] NOTES OF DECISIONS. 725

dergone some other change than merely becoming absolute and fixed in con-
tradistinction of being contingent. (Jn re Loder, 4 B. R. 190; 8. 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 consent
to a discharge. The words principal debtor are to be taken in their ordi-
nary legal acceptation, and do not include such an indorser. The liability of
an indorser is secondary to that of the maker, who is the principal debtor,
and the character of the obligation remains unchanged notwithstanding it
may have become fixed by demand and notice of non-payment. (Jn re Lewis
B, Loder, 4 Ben. 328.)

The time of the hearing of the application for a discharge is tie 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 as-
sent 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 comput-
ing the number requisite to a discharge. (Jn re Jolin 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. (Jn ve Chas. P. Houghton, 5 Law Rep. 321.)

A discharge can not be granted without the assent of the requisite propor-
tion of the creditors whose debts are existing and unpaid at the time of the
hearing. Creditors who have given releases in pursuance of an assignment
made prior to the commencement of the proceedings in bankruptcy, can not
be recognized as creditors. (Jn re Aspinwall, 8 Penn. L. J. 212.)

When a creditor has once given his assent in writing, and the bankrupt
has acted upon it, and other creditors have given theirs, and presumptively
been influenced by each other’s action in this respect, and the assent of the re-
quisite 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. (Jn re Brent, 8 B. R. 444; 8. c. 2
Dillon, 129.)

If the holder of a note assents to the discharge of the maker, without the
consent of the indorser, he thereby releases the indorser. (/n ve David A.
McDonald, 14 B. R. 477; s. co. 24 Pitts. L. J. 42.)

Sxc. 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 withholding such discharge, or as invalidating such
discharge if granted.

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. (Jn re

' Bellamy, 1 B. R. 113; 8. c. 1 Ben. 426; in ve E. Pulver, 2 B. R. 313; 8. ¢. 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. (Jn re Machad,
2B. R, 352.)

When a bankrupt dies before he has taken this oath, a discharge can not
be granted. (Jn re O’Farrell et al. 2 B. R. 484; 8. c. 8 Ben. 191; s. co. 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
ithe bankrupt is not entitled to his discharge, and it is sufficient if it be pro-
duced and filed on the hearing. (Jn re Robert A. Sutherland, 1 Deady, 573.)
726 THE BANKRUPT LAW. [§ 5114..

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 discharge as.
on a date when the bankrupt was in life. (Young v. Ridenbaugh, 11 B. R.
563; 8. 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. (Young v. Ridenbaugh, 11 B. R. 568; s. c. 2 Dillon, 289.)

Sec. 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.

The provisions of this section, as to the prerequisites to a discharge, mear
that all 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 asa pre-
requisite 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 complied with all
the requirements of the act. (Jn re Bellamy, 1 B. R. 64, 96; s. c. 1 Ben. 390,
426; s.c.1L. T. B. 22; in re Orne, 1 B. R. 79; s. c. 1 Ben. 420; én re Harris,
2B. 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. (Jn re
Bellamy, 1 B. R. 96, 118; 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 certifi-
cate of the proceedings, stating the opposition, and return the papers into
court in like manner as if there were no opposition. (Jn re Hughes, 1 B. R.
226; s. c. 2 Ben. 85; s.c.1L. T. B. 45; im re Bellamy, 1 B. R. 96; s. 0.1
Ben. 4261)

When specifications have been filed, the certificate of conformity should
except the particulars covered by the specifications. (én reE. Pulver, 2 B. R.
313; s. c. 3 Ben. 65.)

It is the duty of the court to examine the record before granting the dis-
charge, 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 bank-
rupt act, lost money at gambling, the discharge must be refused. (Jn re
Wilkinson, 3 B. R. 286; s.c.2 W. J. 250; s. c. 16 Pitts. L. J. 237.)

No discharge can be granted when notice of the assignee’s appointment
has not been duly published. (Jn re Bellamy, 1 B. R. 64; s. c. 1 Ben. 890;
s.c.1L. T. B. 22; wm re Strachan, 3 B. R. 601; contra, in re Littlefield, 3 B.
R. 5%; s. c. Lowell, 821; s.c.1L. 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. (Jn re 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 refused; so,
probably, as a matter of practice, the meetings ought to be duly warned and
§ 5115.) NOTES OF DECISIONS. 727

held before the discharge can be granted. (Jn re Littlefield, 3 B. R. 57; 5. c.
Lowell, 831; 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. (Jn re Littlefield, 3 B.
R. 57; s. c. Lowell, 831; 8. c. 1 L. T. B. 164; contra, in re Bushey, 2 B. 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. c. 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
eo he shall have properly amended his schedules. (/n re Connell, 8 B. R.

43.)

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. (Jn ré 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. (dn re John H. H.
Cushman, 7 Ben. 482.)

When an order for the hankrupt’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. (Jn re Van Tuyl, 2 B. R. 579; s.c.3 Ben.
287.)

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 dis-
trict court. (Jn re Bellamy, 1B. R. 98; s. c. 1 Ben. 426.)

The omission of the assignee to obtain the assignment, or have it recorded,
is no ground for withholding a discharge. (Ju re Wm. H. Pierson, 10 B.
R. 107.)

If the filing of specifications was unauthorized and null, a discharge may

be granted nune pro tune as.of the time when by law the bankrupt was ea-
titled to it. (Creditors v. Williams, 4 B. R. 580; 8. c. 2 L. T.B. 166.)

The bankrupt is in no manner or degree reinvested by the discharge with
control over the estate which he surrendered in bankruptcy. (Jn 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 Dean, 1 B.
R, 249; s.c.1 L. T. B. 9%)

Src. 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 Jaw in that
.

728 THE BANKRUPT LAW. [§§ 5116-17.

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 , in the
said district, this day of ‘
(Seal.) , Judge.

Src. 5116.—No person who has been discharged, and after-
wards becomes 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 dis-
charge; but a bankrupt who proves to the satisfaction of the court
that be has paid all the debts owing by him at the time of any
previous bankruptcy, or who has been voluntarily released there-
trom 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.

Suc. 5117.—No debt created by the fraud or embezzlement of
the bankrupt, or by his defaleation as a public officer, or while
acting in any fiduciary character, shall be discharged by proceed-
ings in bankruptcy ; but the debt may be proved, and the divi-
dend thereon shall be a payment on account of such debt.

The word “ debt” is used as synonymous with “claim.” (Stokes v. Mason,
ae B. R. 498; s. c. 10 R. I. 261.)
Fraudulent Debts.

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. I[t therefore includes implied fraud.
(Jones v. Clark, 25 Gratt. 642.) :

_ In order to render a debt fraudulent when contracted under a representa-
tion of the bankrupt, the intention to deceive is an essential element of the
fraud. (Broadnaz v. Bradford, 50 Ala. 270.)

_ A-claim for deceit on account of certain false and fraudulent representa-
tions and inducements, whereby the bankrupt procured from the plaintiff an
assignment of a complete stock in trade, including goods, choses in action, &.,
in exchange fora note of much less value than was represented, if not wholly
worthless, is not discharged. (In r¢ Devoe, 2 B. R. 27; s. c. Lowell, 251; 8.
c.11L.T. B. 90.)

: A claim against a purchascr of property from an executor on account of
his having fraudulently participated with the latter in a devastavit, is a debt
as by fraud, and is not released by a discharge. (Jones v. Clark, 25 Gratt.
§ 5117.] NOTES OF DECISIONS. 729

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. Lob Roy, 13 B. R. 235; s. c. 1 Wood, 42.)

A certificate of discharge in bankruptcy will not defeat the plaintiff's right
of action in tort for the defendant’s jalse and fraudulent representations.
(Morse v. Hutchins, 102 Mass. 439.)

A purchase of goods with the intent. never to pay for them is sucha fraud
as prevents the discharge from releasing the purchaser from the debt. (Stew-
art v. Emerson, 8 B. R. 462; s. c, 52 N. H. 301; s.c, 6 L. T. B. 250.)

A judgment in a court of law obtained in an action of tort, is a debt dis-
chargeable under the bankrupt act. (Manning v. Keyes, 9 R. I. 224; in re
Wiggers, 2 Biss. 71; in re Samuel Book, 8 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.
(Flanngan v. 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. (Jn re Whitehouse, 4 B. R. 63; s. c. Lowell, 429; in ve Patterson,
1 B.R. 307; s.c. 2 Ben. 155; Flanagan v. Cary, 37 Tex.67; Warner v. Cronk-
hite, 13 B. R. 52; 8. c. 6 Biss. 453; Reid v. Martin, 11 N. Y. Supr. 590;
Taylor v. Renn, 8 C. L. N. 410; Horner v, Spilman, 78 Tl. 206.)

Whether a judgment was for fraud or not is a question to be determined
by the court from the record, and should not be submitted toa jury. (Flanagan
v. Pearson, 14 B. R. 37; 8. c. 42 Tex. 1.) 7

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, 13 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 rescind,
or invalidate, or renounce the contract, but he affirms it, and claims that the
debt isa valid subsisting debt. In the declaration he asserts a 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
bankrupt 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. 301; 8. 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 v.
Preston, 45 Vt. 154; Shuman v. Strauss, 10 B. R. 800; 8. c. 34 N. Y. Sup. 6;
s, 0. 52 N. Y. 404.)

Whether the debt was created by fraud will not be determined upon con-
flicting affidavits, on a motion for leave to issue an execution. (Shuman v.
Strauss, 10 B. R. 300; s. c. 52 N. Y. 404; 5. co. 84 N. Y. Sup. 6.)

A claim arising from fraud may be prosecuted in any proper form of suit
730 THE BANKRUPT LAW. [§ 5117.

after the question of discharge has been determined, although it has been
proved. (Stokes v. Mason, 12 B. R. 498; 8. 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. (Stokes v. Mason, 12 B. R.
498; s.c. 10 R. I. 261.)

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. (Stokes v.
Mason, 12 B. R. 498; s.c. 10 R. I. 261.)

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 fidu-
ciary 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 bankrupt. 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 mean-
ing in the common law, and not in the local law of the State where the bank-
rupt may happen to be domiciled. (Austdll v. Crawford, 7 Ala. 335.)

‘The phrase implies a fiduciary relation existing previously to, or independ-
ently of, the particular transaction from which the debt arose. A deposit of
bills of exchange, with instructions to collect and apply the proceeds 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 mean-
ing 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,
4B. 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 contracted
by him in a fiduciary capacity. (Jn re Seymour, 1 B. R. 29; s. c. 1 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; 3. c. 1 L. T. B. 249; s.c.4 L. T. B. 92;
Lemeke v. Booth, 5 B. R. 851; s. c.47 Mo. 885 ; Rudge v. Rundle, 1 N. Y.Supr.
649; Gray v. Farran, 2 Cin. 426; Meador v. Sharp, 54 Geo. 128; contra,
Chapman v. Forsyth, 2 How. 202; Commercial Bank v. Buckner, 2 La. An.
1023; Hayman v. Pond, 48 Mass. 328; Austill v. Crawford, 7 Ala. 835.)

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 moncy 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. Kellogg, 15 Ill. 547; Flagg v. Ely,
1 Edm. Sel. Cas. 206.) :

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
§ 5117.] NOTES OF DECISIONS. 731.

own and use it until applied for by the depositor, does not create a fiduciary
_ debt. (Hervey v. Devereux, 72 N. C. 4638.)

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. 385; 8. 0. 47 Vt. 457.)

A conditional vendor by proving his debt does not lose his claim for the
conversion of the property. (Johnson v. Worden, 13 B. R. 335; s. c. 47 Vt.
457.)

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 cousignment of goods to the debtor to sell
under an agreement that he shall have ag commissions all that can be realized
above a certain sum, isa fiduciary debt. (Treadwell v. Holloway, 12 B. R. 61;
s. c. 46 Cal. 547.)

An auctioneer acts in a 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 Geo. 460; in re Horace
Lord, 5 Law Rep. 358.)

A discharge does not relieve a guardian from his fiduciary obligations as.
such, and if the surety discharges these and obtains a judgment therefor, he
may levy upon the property of the bankrupt acquired atter his discharge.
(Carlin v. Carlin, 8 Bush, 41; Halliburton v. Carter, 10 B. R. 359; 8. c. 55
Mo. 435.)

The surety upon the bond of a public officer is not liable in a fiduciary
capacity. (Suunders 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 obligation
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; 8. c. 46 Ala. 53; Boute v. Pucket, 7 Humph. 169.)

If the guardian gives his note under seal to the ward’s husband, in settle-
ment of his account, and receives a release from them, he is not liable thereon
in a fiduciary capacity. (Coleman v. Davies, 45 Geo. 489.)

An agreement by an executor guaranteeing the payment of a demand.
against 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 executor,
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 v. Allen, 67 N. C. 181.)

An attorney who collects a debt for a client acts in a fiduciary capacity,
and will not be released trom 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 Ben. 269; Flanagan v. Pearson, 14 B. R. 37; 8, ¢. 42 Tex.
1; contra, Walcott 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.)
732 THE BANKRUPT LAW. [$ 5118.

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 vy. Clinton, 8 B. B. 312; s. c. 5 Biss. 324.)

If a fiduciary debt was merged in a judgment prior to the commencement
of the proceedings in bankruptcy, it is released by a discharge. ( Wolcott v.
Hodge, 81 Mass. 547.) : ‘

The fiduciary creditor may sue the debtor, although he did not appear
before the bankrupt 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 pleadings raised the issue
whether the defendant acted in a fiduciary capacity is conclusive evidence
that the debt was so contracted. (Flanagan v. Pierson, 14 B. R. 87; s. c. 42
Tex. 1.)

A replication to a plea of a discharge, that the debt is of a fiduciary char-
-acter, is bad, for it states a legal conclusion instead of specially disclosing the
facts, so that the court may determine whether the debt is founded on sucha
trust as is expected from the operation of the statute. (Mabry v. Herndon, 8
Ala. 848.)

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, 485.)

Sxc. 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.

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 lia-
bility at law or in equity. (Zn re David A. McDonaid, 14 B. R. 477; s. c. 24
Pitts. L. J. 42.)

The creditor may still 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 surrendered
by proving the debt. (Jn re Levy e¢ al. 1 B, R. 827; s. c. 2 Ben. 169; Payne
et al. v. Able et al. 4 B. R. 220; 8.0.7 Bush, 844; 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 of the assignor. (Booth v. Storrs, 3
C. 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 bankrupt act does not re-
lieve 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 v.
Leming etal. 8 I. R. R. 132.)

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. (Jn re Downing, 3 B.
R. 748; s. c. 1 Dillon, 33; s. c.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 dis-
charge of the surviving partner will not operate to release the estate of the
deceased partner from lability. (Jn re R. Stevens, 5 B. R. 112; s. c. 1 Saw.
397.)

If the obligation is joint, an obligor is a necessary party to the suit, al-
though he has received a discharge in bankruptcy. (Camp v. Gifford, 7 Hill,
§ 5118.] NOTES OF DECISIONS. 133°

169; contra, Dorn v. O'Neil, 6 Nev. 155; Jenks v. Opp, 12 B. R. 19; 8, ¢. 43:
Ind. 108.)

If the fact of discharge arises after suit brought, and is pleaded by the bank-
rupt 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
v. 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; 8. c. 44 Geo. 460 )

The discharge of the principal obligor in a forthcoming bond does not re-
lease the sureties. (Garnett v. Roper, 10 Ala. 842.)

The discharge of the debtor does not release the sureties upon a jail bond
from liability for a breach which occurred after the commencement of the
proceedings in bankruptcy. (Dyer v. Cleaveland, 18 Vt. 241.)

The surety on an appeal bond remains liable, although the principal be-
comes a bankrupt and obtains his discharge while the appeal is pending.
(Hall v, Fowler, 6 Hill, 630; Knapp v. Anderson, 14 N. Y. Supr. 295.)

The discharge of the maker of a note does not release the indorser from
his liability. (King v. Centrul Bank, 6 Geo. 257.)

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 v. 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 replevied 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, 40 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 Geo. 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 action. 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 defend-
ant, a surety on an appeal bond conditioned to pay such judgment as might
be entered in the appellate court, is released. As no judgment was rendered
against his principal, no liability attached to him. (Odell v. Wootten, 4 B.
R. 188; s. c. 88 Geo. 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 be-
come 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 defendant upon a
plea of a discharge in bankruptcy, the bond is discharged, not by the pro-
ceedings in bankruptcy, but by the determination of the contingency upon
734 THE BANKRUPT LAW. [§ 5119

which the obligation of the bond is made to depend. (Carpenter et al. v.
Turrell et al. 100 Mass. 450; Puyne et al. v. Able et al. 4 B. R. 220; 3. ¢.7
Bush, 344; Williams v. Atkinson, 37 Tex. 16; contra, Holyoke v. Adams, 10
B. R. 270; 8.c. 2 N. Y. Supr. 1; 8,0. 8 N. Y. Supr. [Hun], 223.)

The discharge of a debtor in bankruptcy, after a bond requiring him to
take the poor debter’s oath has become absolute by breach of the condition,
can not avail the sureties as a defense. After such breach, the right to sur-
render 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.)

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 understood in the
commercial world, is always conditioned that the surety shall not be dis-
charged 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 principal. (Phillips v.
Solomon, 42 Geo. 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 expira-
tion 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 tle sureties in an action on the
jail bond. (Kirby v. Garrison, 21 N. J. L. 176.)

The discharge does not extinguish the debt, but merely relieves the bank-
rupt from his personal liability. It does not therefore release a party who
bas covenanted to pay a certain rate of interest until the principal 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 dis-
charge of the debtor whose property is so attached. (Towle v. Robinson, 15
N. H. 408.)

The surety on on administrator’s bond is not released by the discharge of
the principal. (Moore vy. 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.
Alezander, 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 discharge
the sureties. (Flagg v. Tyler, 6 Mass. 33.)

When the bankrupt is discharged, the court will on motion discharge his

bail by ordering an exmeretur to le entered. (Comm. v. Huber, 5 Penn. L. J.
331; McCausland v. 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, 5§ Mo. 220.)

Src. 5119.—A discharge in bankruptcy duly granted shall,
subject to the limitations imposed Ly the two preceding sections,
§ 5119.] NOTES OF DECISIONS. 735

-release the bankrupt from all debts, claims, liabilities, and de-
mands 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 furth in its terms as a full and
complete bar to all suits brought on any such debts, claims, lia-
bilities, or deinands. The certificate shall be conclusive evidence
in favor of such bankrupt of the fact and regularity of such dis-
charge.

It was not intended by any of the provisions of the bankrupt act that the
bankrupt court should pass, in a plenary manner, upon the question whether
a particular claim will or will not be released by a discharge. 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 bankrupt, 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 determination will be a binding judgment be-
tween the parties, (Jn re J. H. Kimball, 2 B. R. 204; s, c. 2 Ben. 554; s. ¢.
6 Blatch. 292; in re Rosenberg, 2 B. R. 236; s. c. 3 Ben, 14; in re J.8,
Wright, 2 B. R. 142; s. ¢. 86 How. Pr. 167; s. 0. 2 Ben. 509.)

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 proceedings
in bankruptcy can protect the bankrupt but a certificate of discharge duly
obtained. (Whitney v. Crafts, 10 Mass. 23.)

The proving of a note payable in specific articles is equivalent to a de-
mand 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 execu-
tion, which, like private executions, takes the property of the bankrupt to-
wards the satisfaction of his debts without discharging them. (Lummus v.
Fairfield, 5 Mass. 249; Pesoa v. Passmore, 4 Yeates, 189.) ,

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. v. Ketterlinus,
1 W. N. 130.)

Impenching the Discharge.

It is competent for Congress to declare what shall be the force and effect
of a discharge. (Reed v. 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 collat-
erally, 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 require-
ments of the law in regard to notice to creditors, were complied with, and,
consequently, that they were parties to the proceedings in bankruptcy. (La-
throp v. Stuart, 5 McLean, 167,)
736 THE BANKRUPT LAW. [§ 5119.

The district court must be presumed to have proceeded regularly accord-
ing to the jurisdiction granted, urtil the contrary appears. (Morrison v. Wool-
son, 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 discharge.
( Wright v. Watkins, 2 Greene [Iowa], 547; Beach v. Miller, 15 La. An. 601;
MeNulty 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,
8N. Y¥. 480; Morrison v. Woolson, 29 N. H. 510; Richards v. 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. Gupton, 11
Humph. 820; Downer v. Rowell, 25 Vt. 336; Wales v. Lyon, 2 Mich. 276; Lyon
yv. Marshall, 11 Barb. 241; Humphreys v. Swett, 31 Me. 192; contra, Gupton v.
Connor, 11 Humph. 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 re-
fused 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 ina collateral action. (Morrison y. Woolson, 23 N. H. 11.)

If the notice required by the statute has been duly published, the dis-
charge 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, 6 B. R.
377; s. c. 59 Me. 191; Payne v. Able et al. 4 B. R. 220; s. c. 7 Bush, 344;
Randall v. Sutton, 2 Houst. 510; Knabe v. Hayes, 71 N. C. 109; Stern v. Nuss-
baum, 47 How. Pr. 489; s. c. 5 Daly, 382; in +e William Archenbravn, 11
B. R. 149; 8.0.7 C. L. N. 99; Williims 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. Oliver, 12 B.R. 193; 8.0.10 R.1. 448; Burnside v. Brig-
ham, 49 Mass. 75; Shelton v. Pease,10 Mo. 478; Fox v. Paine, 10 Ala. 523;
Brown v. Rebb, 1 Rich. 874; 8. c. 1 Strob. Ch. 296; Strong v. Clawson, 19 Dl.
346; Muagoon v. Warfield, 3 Greene [Iowa], 293; Hubbell v. Cramp, 11 Paige,
310; Campbell v. Perkins, 8 N. Y. 430; Mitchell v. Singletary, 19 Ohio, 291;
Downer v. Dana, 22 Vt. 887; Lamb v. Brown, 12 B. R. 522; 8. c. 7 C.L.
N. 363; Platt v. Parker, 13 B. R. 14; s. o. 11 N. Y. Supr. [Hun], 135; 6
N. Y. Supr. 877; Thurmond vy. Andrews, 13 B. R. 157; 8. c. 10 Bush, 400 ;
Thomas v. Jones, 39 Wis. 124; contra, Morse v. Presby, 25 N. H. 299; Rus-
sell _v. Cheatham, 16 Miss. 703; Barnes v. Moore, 2 B. R. 573; s.c. 2 L. T.
B. 92; Anon. 1 B. R. 123; Hill vy. Robbins, 1 Mich. [N. P.] 805; s* c. 22
Mich. 475 ; Thornton v. Hogan, 3 Cent. L. J. 719.)

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. Oliver, 12 B, R. 193; s. c.10 R. 1.448; Thurmond vy. Andrews, 13 B.
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 the discharge,
voluntarily makes himself a party to the proceedings, and can not impeach
the discharge by any other suit or proceeding. (Burpee v. Sparhawhk, 4 B. R.
685; s.c. 108 Mass. 111.)

A discharge granted by a district court which had no jurisdiction over
§ 5119.] NOTES OF DECISIONS 737

the person of the bankrupt because neither his residence nor place of business
was within the district, is void. (Stiles v. Lay, 9 Ala. 795.)

Every bankrupt or insolvent system in the world must partake of the
character of a judicial investigation. Purties whose rights are to be affected
are entitled to a hearing. Hence every system professes to summon the cred-
itors before some tribunal to show cause against granting a discharge to the
bankrupt. (Day v. Burdwell, 3 B. R. 455; 8. c. 97 Mass, 246.)

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. (Jn
re Penn ef al. 3 B. R. 582; s.c. 4 Ben. 99.)

A fact which goes to defeat the jurisdiction of the court of bankruptcy
may be shown by plea and proof in any court by a person not estopped to
show it. (dn re Goodfellow, 3 B. R. 452; s. c. Lowell, 510; s.c.1L. 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, be-
ing an alien, came to this country and took up a temporary residence for the
purpose of seeking the benefit of the bankrupt law. (Tompkins v. Bennett, 3
Tex. 36.)

What Claims are Barred.

The certificate of discharge is a bar only to debts and demands which were
or maight have been proved, but not as against personal covenants and engage-
ments which were not provable. If a demand is not provable, it is not barred
by the certiftcate. This is the just and settled rule. (Murray v. De Rotten-
ham, 6 Johns. Ch. 52.)

If the debt is provable, the action is barred, although it was not actually
proved. (Hardy v. Carter, 8 Humph. 158; Rogers v. West. Ins. Co. 1 La. An.
161.)

The words “creditor or creditors,” as used in the several provisions of
the bankrupt act, do not include the United States. (U.S. v. Herron, 9 B. R.
585; 8. c. 20 Wall. 251; 8c. 1 A. L. T. [N.8.] 274; US. v. King, Wall.
Sr. 12; contra, U. 8. v. Davis, 3 McLean, 483; U. 8. v. Throckmorton, 8 B. R.
309; s. c. 6 Pac. L. R. 102; s.c.5 C. LN, 520; 8. ¢c. 18 I. R. R. 54.)

A surety for the faithful performance of the duties of a public officer is not
released from his obligation by a discharge. (U. 8. v. Herron, 9B. R. 585;
s.c. 20 Wall. 251; 8. c. 1A. L. T. [N. 9.] 274; contra, U. 8. v. Throckmorton,
8 B. R. 309; s.¢c. 5C. L. N. 520; 8c. 6 Pac. LR. 102; s.c.18 LR. R. 54;
U. 8. v. Davis, 3 McLean, 483.)

Debts due to the United States are not within the provisions of the bauk-
rupt law. (U. S.v. King, Wall. Sr. 12; U. S.v. Rob Roy, 13 B. R. 230; s.
c. 1 Wood, 42.)

A bankrupt law will not be construed as intended to bind a State, unless
the intent is manifested-by express words or irresistible implication. The
statute discloses no purpose on the part of Congress to bind a State. A dis-
charge will not, therefore, release the bankrupt from a debt due to the State.
(Saunders v. Comm. 10 Gratt. 494; Comm. v. Hutchinson, 10 Penn. 446.)

A discharge releases a bail from his liability 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.)

47
738 THE BANKRUPT LAW. [§ 5119.

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-
ruptcy, the certificate of discharge will not defeat or avoid the proceedings 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 sentenced and
imprisoned, as prescribed by statutes, upon such conviction. (Stochwell v.
Silloway, 105 Mass, 517.) 3

A discharge does not release the bankrupt from a fine imposed by a State
court for the violation of an injunction. (Spaulding v. New York, 4 How. 21;
s. c. 7 Hill, 801; s. c. 10 Paige, 284.)

The discharge does not release the bankrupt from his liability for a con-
tempt in violating an injunction. (Macy vy. Jordan, 2 Denio, 570.)

The discharge of a partner on his individual petition does not release him
from his liability for a firm debt. (Hudgins v. Lane, 11 B. R. 462.)

An action of covenant on a warranty title is barred, although the cove-
nant is not broken until after the discharge is granted. (Bates v. West, 19 III.
184; Shelton v. Pease, 10 Mo. 473: Bailey v. Moore, 21 Ill. 165; Jemison v.
Blowers, 5 Barb. 686; contra, Bush v. Cooper, 18 How. [Miss.] 82; 8. c. 26
Miss. 599; Burrus v. Wilkinson, 31 Miss. 537; Reed v. Pierce, 36 Me. 455.)

If acreditor 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 warranty 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, C. 194.)

The certificate of discharge is a complete defense to an action by an in-
doser against the bankrupt, who was the acceptor of a bill of exchange, 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. 419.)

If the bankrupt indorses a note between the time of the commencement
of proceedings in bankruptcy and the date of his discharge, he will be liable
to s 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 v. 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 inquir-
ing 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 creditors to release the
bankrupt as it is against any other creditor. (J re Cornwall, 6 B. R. 305;
s. Cc, 9 Blatch. 114; im re Ray, 1 B. R. 203; s. c. 2 Ben. 53; in ve Kingsley, 1
B. R. 829; 8. c. Lowell, 216; tx re Harden, 1 B. R. 395; s.c. 1 L. T. B. 48;
in re Sheppard, 1 B. R. 439; 8. o. 1 L. T. B. 49; 3.0.7 A. L. Reg. 484.)

A covenant against incumbrances is broken by thé existence of an incum-

brance at the time of the conveyance, and is released by a disch Reed
v. Pierce, 36 Me. 455.) : Raa ange a

The discharge of the hus)and releases him from the debts of his wife con-
§ 5119.] NOTES OF DECISIONS. 739

tracted dum sola, and the creditors can not have her separate estate applied to
the payment of their debts during his life. (Vanderheyden y. Mallory, 1 N.
Y. 453.)

If a feme sole marries after the filing of a petition for a discharge, but be-
fore 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. 138.)

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 a covenant
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 resort 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 de-
mand capable of being proved, the covenantee is entitled to his remedy not-
withstanding 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; Kingsley v.
Prentiss, 6 Penn. L. J. 479.)

The discharge does not release the bankrupt from the rent that accrued
after the commencement of the proceedings in bankrupicy and before the
discharge. (Savory v. Stocking, 58 Mass. 607; Prentiss v. Kingsley, 10 Penn.
120.)

A discharge is no bar to an action upon a covenant in a ground rent deed
for an instalment that became due atter the granting of the discharge.
(Bosler v. Kuhn, 8 W. & 8. 183.) 5

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 feli
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 immediate
cause arises 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 ac-
tion. (Dusar v. Murgatroyd, 1 Wash. 13; Hughes v. Oliver, 8 Penn. 426.)

The only rule prescribed is the 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. 430; 8. c. 5
Barb, 699; Hughes v. Oliver, 8 Penn. 426; contra, Williamson v. Dickens, 5
Tred. 259.)

A person who received money prior to his bankruptcy, under a promise
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, 6 Barb. 699; s. c. 8 N. Y. 480;
vide Dusar v. Murgatroyd, 1 Wash. 13)
740 THE BANKRUPT LAW. [§ 5119.

A claim arising from the neglect of an officer is a tort, and is not dis-
charged. (Hillis v. Ham, 28 Me. 385.)

A suit against an agent for a breach of duty.in the management of his
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
alien 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 tle goods
of the former were injured, is not barred by a discharge. (Dusar v. Murga-
troyd, 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 mort-
gaged 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. Emerson, 1 W. & M.195; Smith v. Babcock, 2
W. & M. 246.)

If the bankrupt as claimant signed a bond conditioned to restore the ves-
sel 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. 8. v. Rob Roy, 13 B. R. 235; 8. c. 1 Wood, 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.
(U. 8. v. Rob Roy, 13 B. R. 235; s. c. 1 Wood, 42.)

: Suretics,

The surety on a custom house bond, in case of the discharge of the prin- _.

cipal in bankruptcy, is, like other creditors, barred of his action for a debt due
before the bankruptcy. (feed v. Emory, 18. & R. 839; 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. 0. 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 bankruptcy,
and in regard to which there was then no reason to presume that any demand.
for money would ever exist. The discharge does not release a surety from lia-
bility on a bond given by an officer for the faithful performanee of his duties,
where the breach occurred after the discharge was granted, (Loring v. Ken-
dail, 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. (Hastman v. Hibbard, 13 B.
R. 360; s.c. 54 N. H. 504.)

A bond to secure the faithful performance of official duties is a continuing
indemnity, and every breach of it is a good cause of action, affording a rem-
edy when, and only when, each severally occurs. A discharge releases the
surety for all breaches that occurred prior to the commencement of the pro-
ceedings in bankruptcy. (Howler y. Hendall, 44 Me. 448.)

A discharge does not release the bankrupt from his liability to his surety
-§ 5119.] NOTES OF DECISIONS. TAL

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 oc-
curred 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. //am, 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 instalments fell due and were puid by the
surety after the granting of the discharge. (Lullwvod v. Bushjield, 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 lia-
ble before his discharge. His claim is contingent, and may be ‘proved.
(Lipscomb v. Grace, 26 Ark. 231; Mace v. Wells, 7 How. 272; s.c. 17 Vt. 503;
contra, Greenleaf vy. 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 contri-
bution is barred, although judgment is not rendered in the replevin suit until
after the discharge is granted. (Tobias v. Rogers, 13 N. Y. 59.)

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 liubility for
contribution to his cosurety. (Dole v. Warren, 32 Me. 94.)

Judgments,

A demand er delicto is not discharged unless a judgment was obtained
upon it before the commencement of the proceedings in bankruptcy, thereby
changing its character from tort to debt. (Hillis 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 judg-
ment is a debt of record. (Blake v. Bigelow, 5 Geo. 437.)

A judginent of separation of property is released by a discharge. (Alling
y. Egan, 11 Rob. [La.] 244.)

A judgment in an action in tort is barred by a discharge.. (Comstock v.
‘Grout, 17 Vt. 512; in re Edson Comstock, 22 Vt. 642.)

A judgment obtained upon a breach of promise to marry is barred. (Jn re
‘Sidle, 2 B. R. 220.)

A judgment in an action for seduction, rendered prior to the commence-
ment of the proceedings in bankruptcy, is not barred. (/n re Samuel 8. Cot-
ton, 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 main-
tenance of abastard 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
ithe character of a debt except the duty to pay money to another. (Comm. v.
Erisman, 21 Pitts. L. J. 69; in re Samuel 8. Cotton, 2 N. Y. Leg. Obs. 370.)
742 THE BANKRUPT LAW. [§ 5119.

Where a decree directs the payment of a certain sum every month as ali-
mony, the monthly payments which fall due after the commencement of the
proceedingsin bankruptcy are due by natural obligation and not by contract,
and are not affected by a discharge. (Jn re Edward Garrett, 11 B. R. 493.)

The certificate of discharge is no bar to a judgment for a prior debt ob-
tained after the granting thereof. (Selfridge v. Lithgow, 2 Mass. 374.)

The discharge may be pleaded to a sei. fa. to revive a judgment. (Dun-
can v. Hargrove, 22 Ala. 150.)

The discharge is no defense to a sci. fa. to revive a judgment of revivak
entered after the granting of a discharge. (Stewart v. Colwell, 24 Penn. 67.)

A judgment entered after the commencement of the proceedings in bank-
ruptey in an action in tort iy 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 commencement.
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 dis-
charge, 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 not change the nature of the de--
mand. That remains the same until it is extinguished by the judgment, 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, with-
out a report, does not change the nature of the demand. So long as the re-
port remaius incomplete there is nothing but the original tort. (Crouch v.
Gridley, 6 Hill, 250.)

If a judgment by default is entered before the granting of a discharge iu
an action pending at the time of the commencement of the proceedings in:
bankruptcy, and a final judgment entered after the granting of the discharge,
the discharge is a bar to the demand, for the bankrupt was net bound to sub-
mit to the discretion of the court by applying to have the default set aside.
(Hwing 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. Abbott, 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 v. Upton,
6 Lans, 255; 8. 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 proceedings 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 sus--

tain his suit, his discharge will uot release him from such judgment. (Wilkins:
v. Warren, 27 Me. 438.)

The costs which accrue after the commencement of the proceedings in.

bankruptcy rest upon the original debt, and a plea puis darrein continuance

operates as a discharge of the action for the costs as well as the debt. (Har--

rangton v. MeNuughton, 20 Vt. 293; Clurk v. Rowling, 3 N. Y. 216.)
§ 5119.] NOTES OF DECISIONS. 743

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 his 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. 360; McDonald v.
Ingraham, 30 Miss. 389; Clark v. Rowling, 3 N. Y. 216; Rogers v. West. Ins.
Oo, 1 La. An. 161; For v. Woodruff, 9 Barb. 498; Dick v. Powell, 2 Swan,
632; Downer v. Rowell, 26 Vt. 397; contra, Bradford v. Rice, 102 Mass. 472;
Ellis v. Ham, 28 Me. 385; Thompson v. Hewitt, 6 Hill, 254; Kellogg v. Schuy-
ler, 2 Denio, 73; Woodbury v. 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. 871; 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 simi-
lar 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. (Hag-
gerty 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 regu-
larly given until the contrary appears. (Morse v. Presby, 25 N. H. 299; Ruck-
man v. 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. 381.)

If application is seasonably made, a judgment by default will be stricken
off upon terms to allow a party to plead his discharge in bar to the further
maintenance of the suit. The bankrupt law is to be treated with the same
respect as if it were astutute of the State. (Savings Bank v. Webster, 48
N. H. 21; Lee v. Phillips, 6 Hill, 246; Carter v. Goodrich, 1 How. Pr. 289.)

If the bankrupt’s attorney fails by mistake to appear: and plead his dis-
charge, and judgment is entered by default, a review may be granted. (Shurt-
leff v. Thompson, 12 B. R. 524; 8. c. 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 court
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 de-
fault will be opened to let in the plea. (Park v. Casey, 35 Tex. 536.)

A new trial will not be granted if the bankrupt has been guilty of laches
744 THE BANKRUPT LAW. [§ 5119.

in pleading his discharge. (Manwarring v. Kowns, 35 Tex. 171; Purk v. Gu-
sey, 85 Tex. 536.)

A judgment obtained against a discharged bankrupt in a pending action
under circumstances going to show fraud, trick, or contrivance, may be en-
joined. (Manwarring v. Kouns, 85 Tex. 171; Park v. Casey, 35 Tex. 536.)

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 default against him. (Manwarring v. Kouns, 35
Tex. 171.)

If the judgment is set aside to permit the defendant to plead a discharge,
the plaintiff may discontinue without costs. (Lee v. Phillips, 6 Hill, 246.)

When a judgment is set aside by the granting of a new trial, the defend-
ant may plead a discharge obtained since the rendition of the judgment.
The court can not render a judgment against the defendant in the faee 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 prejudice, leaving the parties
to their remedies under the bankrupt law. (Humble v. 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 pas-
sive. (Brown v. Branch Bank, 20 Ala. 420.)

An execution should not issue upon a judgment after the debtor has ob-
tained 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.
L, 210; Alcott v. Avery, 1 Barb. Ch. 347.)

If execution is issued upon a judgment which is released by the discharge,
it will be set aside, on motion, and a perpetual stay entered. (Huber v. Hly,
4A. L. J. 185; Monroe v. Upton, 6 Lans. 255; s. c. 50 N. Y. 593; Thomas v.
Shaw, 2 Cin. 97; Graham v. Pierson, 6 Hill, 247; McDougald v. Reid, 5 Ala.
810; Stewart v. Hargrove, 23 Ala. 429; Alcott v. Avery, 1 Barb. Ch. 347; Cur-
tis v. Slosson, 6 Penn, 265; Chambers v. Neale, 13 B. Mon. 256.)

‘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 creditor 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 commencement of the proceedings in bankruptcy, but the entry of
the judgment was suspended by a motion for a new trial, but finally made be-
fore the granting of the discharge. (Mechanics’ Bank v. 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. (Thomp-
son v. 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 acopy. (Thompson v. Hewitt, 6 Hill, 254.)

As the creditor is entitled to appear and oppose, the motion will only be

granted upon the payment of the costs of opposing. (Huber y. Ely, 4 A. L.
J. 185; Mechanics’ Bunk y. Lawrence, 1 Sandf. 659.)
§ 5)19.] NOTES OF DECISIONS. 745

Whether the property which is taken on the execution was fraudulently
transferred to another prior to the commencement of the proceedings in bank-
ruptcy, is a question which will not be tried on the 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 ren-
dered 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 judgment in favor of
any other defense. (Bellamy v. Woodson, 4 Geo. 175; Stewart v. Green, 11
Paige, 535.)

The mere postponement of a cause from term to term, until the defendant
obtains his discharge, and the taking of a judgment at that time, do not con-
stitute a fraud in the obtaining of the judgment, or entitle the defendant to
relief in equity. (Bellamy v. Woodson, 4 Geo. 175.)

Where a judgment by default was rendered against the bankrupt prior to
the commencement of the proceedings in bankruptcy, and the case then con-
tinued from term to term, until a discharge was granted, his negligence in
omitting to plead his discharge will prevent him from obtaining relief in
equity against a final judgment subsequently rendered against him. (Bellamy
v. Woodson, 4 Geo, 175.) '

A discharge extinguishes a judgment which existed before the commence-
ment 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. ‘Fhe remedy is in the court out of which the
execution issued, by a summary application, when the discharge 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 a3
against his debt, and, when necessary, 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 dis-
cretion. (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 judgment 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 ajudgment rendered after the commencement of
proceedings in bankruptcy. The jurisdiction of the bankrupt 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 execution
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. Al-
though he is ignorant of the discharge, yet, if he takes the bankrupt’s prop-
erty without authority, it is a trespass for which he must answer, however
innocent he may be of any intention to do an illegal act. (Ruckman v. Cowell,
IN. Y. 505.)

A judgment creditor may issue an execution on his judgment, and the
execution is not absolutely void but voidable only; that 1s, it is a valid writ
until the bankrupt shows it to be erroneous. The execution will afford pro-
746 THE BANKRUPT LAW. [§ 5119.

tection 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 bankrupt law when the lan-
guage of the statute is otherwise sufficiently general and comprehensive, and
when the evident policy of the law is to embrace all debts that can be proved,
and to give the unfortunate merchant who conducts himself fairly, new credit
in the commercial world and new capacity for business. (Murray v. De
Rottenham, 6 Johns. Ch. 52; in re Augustus Zarega, 1 N. Y. Leg. Obs. 40; 3
c. 4 Law Rep. 480; Pattison & Co. v. Wilbur, 12 B. R. 193; 8. ¢. 10 RL
448; contra, Lizardi vy. Oohen, 3 Gill, 480; McMenomy v. Murray, 3 Johns.
Ch. 485.)

Liens,

In order to give full effect to all the provisions of the act, the bankrupt’s
certificate must be made to operate as a discharge of his person 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
tolien. (Peck v. Jenness, 7 How. 612.)

If a vendee who has taken a bond of conveyance sells the Jand to another
whv 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.)

The certificate of discharge does not prevent those entitled from recover-
ing any specific property held by the bankrupt in a fiduciary capacity. (Wal-
ler v. Hdwards, 6 Litt. 348.)

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 possessory action
to recover the possession of land. (Crosby v. Wentworth, 48 Mass. 10.)

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 pro-
ceedings in bankruptcy to recover property taken as distress for rent. (But-
ler v. Morgan, 8 W. & §. 53.)

The discharge can not be pleaded to a sci. fa. to enforce a mechanic’s lien,
for the proceeding is strictly in rem. (McCullough v. Culdwell, 5 Ark. 237.)

The discharge does not affect the lien of a judgment. (MeCance v. Taylor,
10 Gratt. 580.)

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 an absolu-

tion of the personal obligation. (Reed v. Bullington, 11 B. R. 408; 8, c. 49
Miss. 223.)

If an action of covenant is brought against the bankrupt on an express
covenant in a ground rent deed, for rent that fell due prior to the commence-
ment 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 alien on the land. (Large v. Bosler, 8 Penn. L. J. 246.)

_ When an attachment has been laid upon the property of the bankrupt
prior to the period of four months next preceding the commencement of pro-
§ 5119.] NOTES OF DECISIONS. TAT

ceedings in bankruptcy, a judgment may be entered in the cout 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. c. $9 Mass. 376; Bowman v. Harding,
4 B. R. 20; 5. ¢. 56 Me. 559; Leighton v. Kelsey et al. 4 B. R. 471; 8. 0. 57
Me. 85; Ingraham v. Phillips, 1 Day, 117.)

A party having a judgment lien upon property conveyed by the bank-
rupt, before the tiling of his petition, to another, may enforce it by a ji. 7a,
even after a discharge has been granted, when neither the judgment nor the:
property has ever been before the bankrupt court for adjudication. (Jones v.

Lellyett et al. 39 Geo. 64; contra, Blum v. Hillis, 13 B. R. 845.)

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 bankrupt court. (Phillips v. Bowdoin, 14 B. R.
43; s. c. 52 Geo, 544.)

A judgment creditor may enforce his lien against land sold by the bank-
rupt before the commencement of the proceedings in bankruptcy, although
he 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 the hands
of the assignee. (Winship v. Phillips, 14 B. R. 50; 8. c. 52 Geo. 593.)

A party who has a lien upon property fraudulently conveyed away by the
bankrupt may prosecute a suit to entorce it, instituted before the commence-
ment of proceedings in bankruptcy, even though the discharge is pleaded in
bar of the suit. (Payne et al.v. Able et al. 4 B. R. 220; 8. c. 7 Bush, 344;,
Fetter v. Cirode, 4 B. Mon. 482; Lowry v. 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 bankrupt may then
by plea or answer set up his discharge in bar of the suit so far as he is con-
tinued 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 foreclose:
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, 88 Ind. 16; City Bank v.
Walton, 5 Rob. [La.] 158; Stewart v. Anderson, 10 Ala. 504; Second Nutional
Bank vy. State National Bank, 11 B. R. 49; s. co. 10 Bush, 887; Roderts v.
Woods, 38 Wis. 60.)

When the bankrupt has received « discharge, he may apply to the State
court for an erasure of the conventional and judicial mortgages. (Diggs v..
Prieur, 11 Rob. [La.] 54.)

A creditor can not file a bill in equity to set aside a fraudulent conveyance:
after a discharge has been granted, for the debt is thereby discharged. (Botts
vy. Patton, 10 B. Mon. 452.) s

A bill in 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 ob-
tain a discharge. (Dick v. Powell, 2 Swan, 682; Ingalls vy. Savage, 4 Penn..
224.) :

If the assignee repudiates a particular piece of property because it is so-
748 THE BANKRUPT LAW. [§ 5119.

hedged about with difficulty and embarrassments as to render it doubtful
whether it would be profitable to endeavor to acquire it, a creditor may sub-
ject it to the payment of his claim, although the bankrupt has obtained his
discharge. (Augely v. Robinson, 19 Ala. 404.)

If a party who has taken the benefit of a State insolvent law under a stat.
ute which gives the trustee or the creditors a right to claim future acquist-
tions, subsequently takes the benefit of the bankrupt law, bis discharge will
release his future acquisitions from the claims of those creditors whose debts
existed prior to the filing of his petition. (Beach v. Miller, 15 La. An. 601.)

If a debtor who has obtained a discharge under a State insolvent law, sub-
‘sequently obtains a discharge under the bankrupt law, the discharge in bank-
ruptcy will not affect the right of the insolvent trustee to property acquired
by inheritence after the granting thereof. (Lavender v. Gosnell, 12 B. R. 282.)

If a surety enters into a covenant to pay the amount that may be recov
ered against the principal in a certain action, and the principal subsequently
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 shail 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 Biun. 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 otherwise 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 in-
cumbrances, 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. 82; s. ©. 26 Miss. 599; Stewart v. Anderson, 10 Ala. 504.)

A discharge under the bankrupt law does not prevent the creditor from
proving his debt in a proceeding previously commenced under a State insolv-
ent law, and receiving a dividend from the insolvent estate. (Minot v.
Thacher, 48 Mass. 348.)

New Promise.

There is no law that requires a promise to pay a debt discharged by pro-
ceedings in bankruptcy, to be made in writing to be valid. Therefore such
@ promise may be proved by parol, and when proved is binding. (Barron vy.
Benedict, 44 Vt. 518; Hill v. Robbins, 22 Mich. 475; s. ©. 1 Mich. N. P. 305;
Apperson v. Stewart, 27 Ark. 619.)

If the 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. (Kingslonv. Wharton, 28. & R. 208.)

The legal obligation of the bankrupt is by force of positive law discharged,
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 dis-
charge. 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. 318; s. 0.53 N. Y, 521; s.c. 14 Abb.
Pr. [N. §.] 132; s. 0.386 N.Y. Sup. 94; Yates v. Hollingsworth, 5 H.& J. 216;
Mawim v. Morse, 8 Mass. 127; Stewart v. Reckless, 24 N. J. L. 427; Spooner v.
Russell, 30 Me. 454; Williams v. Robbins, 82 Me, 181; Fletcher v. Neally, 20
N. H. 464; Herndon vy. Givens, 16 Ala. 261; Blane v. Banks, 10 Rob. [La.]
115.)

The promise by which a discharged debt is revived must be clear, dis-
§ 5119. ] NOTES OF DECISIONS. TAD

tinct, and unequivocal. There must be an expression by the debtor of a clear
intention to bind himself to the peyeant of the debt. (Allen v. Ferguson, 9
B. R. 481; 8. c. 18 Wall. 1; Fraley v. Kelly, 67 N. C. 78; Linton v. Stanton,
4 La. An. 401; Branch Bunk 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, c. 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. (Yozt-
heimer v. Keyser, 11 Penn. 864; Pratt v. Russell, 61 Mass. 462; Bennett v,
Everett, 3 R. 1. 152; Horner v. Speed, 2 Pat. & WH. 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 pur-
pose a man forms in his own mind; a promise is an express undertaking or
agreement to carry that purpose into effect. (Allen v. Ferguson, 9 B. R. 481;
s.¢. 18 Wall. 1; Dearing v. Moffitt, 6 Ala. 776; Stewart v. Reckless, 24 N. J.
L. 427; Church v. Winkley, 73 Mass. 460; Youtheimer 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 principle
is impracticable as a rule of action to be administered by the courts. (Allen
v. Ferguson, 9 B. R. 481; 8. 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. (Hvans v. Carey, 29 Ala. 99; Bennett
y. Hverett, 3 R. I. 152.)

A declaration that he expects to pay as fast ashe can pay in money is the
expression of a mere hope, without any words of promise ur manifestation 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 admissions, or the mere expression of the obligation in foro conscientia,
they are insufficient. (Bartlett v. Peck, 5 La. An. 669; Prewett v. Caruthers,
20 Miss. 491; Bennett v. Hverett, 3 R. I. 152.)

A declaration that he is able and willing to pay the debt amounts to an
express promise to pay it. (Hvansv. 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
“Tintend 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 ‘ prom-
ise” 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 preposition 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 construed 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 promise to-
pay the existing note. (Underwood v. Hastman, 18 N. H. 582; Pratt v. Russell,
61 Mass. 462; vide Horner v. Speed, 2 Pat. & H, 616.)
750 THE BANKRUPT LAW. (§ 5119.

Partial payments on a debt are not in law a rew promise to pay the debt,
nor do they constitute evidence from which a jury may infer a new promise
to pay the debt. (Stark v. Stinson, 28 N. H. 259; Viele v. Ogilvie, 2 Greene,
326.)

The mere payment of the interest on the note does not revive the debt.
( Cumbridge 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 Den. 225.)

The new promise, like every other contract, must have the assent of both
parties, (Samuel vy. 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 v. Peck, 1 BR. I. 262.)

It is not necessary that the new promise shall be made by the bankrupt to
the creditor or his authorized agent. It may be made to a third person.
(Haines v. Stauffer, 18 Penn, 541; McKinley tv. O’Keson, 5 Penn. 369; Evans
v. Carey, 29 Ala. 99; Bennett v. Everett, 8 R. 1. 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 evidence, for the
sense of the words may best appear from them, and the cause and occasion of
speaking them considered together. (Hvans v. Carey, 29 Ala. 99; Prewett v.
Caruthers, 20 Miss. 491; Horner v. 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 creditor,
does not raise a presumption of a promise to pay the debt. (Bach y. Chon, 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 under-
taking, to entitle the creditor to a recovery. As if the bankrupt should say
that be would pay when he was able, the creditor must show an ability to
pay. (Yates v. Hollingsworth, 5 H. & J.216; Brown v. Collier, 8 Humph. 510;
Mason v. Hughart, 9 B. Mon. 480; La Tourrette v. Price, 28 Miss. 702;
Samuel v. Cravens, 10 Ark. 880; Sherman v. Hobart, 26 Vt. 60; Tuylor v.
Nizon, 4 Sneed, 352; Ingersoll v. Rhoades, Hill & D. Supp. 371; Apperson v.
Stuart, 27 Ark. 619.)

The ability to pay must be clearly proven. The mere opinion of witnesses
that a party has means sufficient wherewith to discharge the debt can 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 out of the proceeds of certain work, the plaintiff
must prove that the bankrupt has received the proceeds. (Dearing v. Moffitt,
6 Ala. 776.)

There is no Cistinction 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. (Hornthal v. McRae, 67
N. C. 21; Fraley v. Kelly, 67 N. C. 78; Donnell v. Swuim, 8 Penn. L. J. 393;
Corliss v. Shepherd, 28 Miss, 550; Otis v. Gazlin, 31 Me. 567; Stillwell v Coope,
A Denio, 225; contra, Stebbins v. Sherman, 1 Sandf. 510; Ingersoll v. Rhoades,
Hill & D. Supp. 371.)

If the bankrupt, after the filing of his petition, continues to deal with a
§ 5119.] NOTES OF DECISIONS. 751

creditor whose name is not placed upon his schedules, and makes payments
without directing that they shall be applied to the subsequent purchases,
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.)

The statute of limitations only commences to run from the time of the new
promise. (Llorner v. Speed, 2 Pat. & H. 616.)

A State law requiring the new promise to be in writing is valid, although
it applies to a promise made before its adoption, for it prescribes the kind of
evidence necessary to establish a fact, and regulates the remedy. (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. (Masoa v. Hughurt, 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 negotiable.
( Wardell v. Foster, 31 Me. 558; White v. Cushing, 30 Me. 267; Walbridge v.
Harr oon, 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 sub-

sequent indorsee. (Way v. Sperry, 60 Mass. 238: Underwood v. Hastman, 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

forthe 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. The new promise places the debt in the same
condition as it was before the discharge, and is a full and complete answer to
the discharge. (Otis v. Gazlin, 31 Me. 567; Mazim 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. 800; 8. c. 52 N. Y. 404; 8. c. 34 N. Y. Sup. 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 swb modo only, and the new promise operates as a waiver of the
defense which the discharge gave. (Dusenbury v. Hoyt, 10 B. R. 318; s. c.
53 N. Y. 521; s.c.14 Abb. Pr. [N. S.] 132; 8.¢. 36 N. Y. Sup. 94; Maxim
v. Morse, 8 Mass. 127; contra, Hgbert v. McMichael, 9 B. Mon. 44; Carson vy.
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. & I. 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.
(L£gbert v. McMichael, 9 B. Mon. 44.)

A declaration on a conditional promise need not state in what the defend-
ant’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. (Horner v. Speed, 2 Pat. & H. 616.)
752 THE BANKRUPT LAW. [§ 5119.

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.
(Hgbert v. McMichael, 9 B. Mon. 44.)

Af 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 de-
murrer, 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. Hverett, 3 R. I. 152.)

Where the evidence is conflicting, it is for the jury to determine whether
the promise was absolute or conditional. (La Tourette v. Price, 28 Miss. 702.)

If a verdict is found in favor of the plaintiff, and the cause of action is
based on the original debi instead of the new promise, the verdict will not
authorize the court to enter a judgment against the defendant. (Carson vy.
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 the
verdict, although the defendant moves in arrest of judgment. (Mazim v.
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 judgment 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. 685; Seymour v. Browning, 17 Ohio, 362; Zaylor v. Henn,
8C.L. N. 410; Horner v. Spelman, 78 M1. 206.)

A discharge should be pleaded both at Jaw and in equity, and can not be
taken advantage of by motion. (fellows v. Hall, 8 McLean, 281.)

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 supple-
mental answer. (Lyon v. Isett, 84 N. Y. Supr. 41.)

An application for leave to set up a discharge by a supplemental answer
is addressed to the discretion of the court, and will be denied when there
has been unreasonable delay in making it. (Medbury vy. Swan, 8 B. R. 587;
s. c. 46 N. Y. 200; Barstow v. Hansen, 4 N. Y. Supr. 569; s. c. 9 N. ¥. 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 dis-
cretion as to granting or withholding it. (Holyoke v. Adams, 13 B. R. 413;
s.c. 59 N. Y. 2383.)

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, 4.N. Y.
Supr. 569; s.c. 9 N. Y. Supr. [Hun], 333.)

A discharge is a matter which a court may allow to be set up by an
amendment of the proceedings. (Richards v. Nizun, 20 Penn. 19.)

- Ifa 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 McLean, 281.)
§ 5119.] NOTES OF DECISIONS. 753

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 happening
after the last continuance. If a long delay afterwards intervenes, it can not
be pleaded unless a good excuse is given for the delay and on suitable terms.
(Doggett v. 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. (Kuns-
ler 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 instance, and before any
other plea filed, pleaded in bar, it need not be alleged to be puis darrein con-
tinuance, (Cutter v. Folsom, 17 N. H. 189.)

A plea puis darrein continuance need not state the time when the defend-
ant pleads. (Keene v. Mould, 16 Ohio, 12.)

If a plea of a discharge in bankruptcy is put in as a plea puis darrein con-
tinuance, 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 vy.
Wilson, 38 N. J. 198.)

A plea of a discharge in bankruptcy is sufficient if it sets out a discharge
duly authenticated. (Lathrop v. Stewart, 5 McLean, 167; White v. How, 3
McLean, 291; McNeil v. Knott, 11 Geo. 142; Rowan v. Holcomb, 16 Ohio, 463;
Downer v. Chumberlin, 21 Vt. 414; Reed v. Vaughn, 10 Mo. 447; Morrison v.
Woolson, 28 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 have 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 juris-
diction of the case and granted the discharge. (Johnson v. Ball, 15 N. H.
407; Morrison v. Woolson, 23 N. H. 11; McCormick v. Pickering, 4 N. Y. 276;
Price v. Bray, 21 N. J. L. 13.) ,

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: ist. 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 petition 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. Woolsow, 29 N. H. 510.)

Tt is not sufficient fo 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
48
154 “THE BANKRUPT LAW. [§ 5119.

discharge. (Hayes v. Flowers, 25 Miss. 169; contra, Viele v. Blanchard, 4
Greene, 299; Magoon v. Warfield, 3 Greene, 293.)

A plea of the commencement of proceedings in bankruptcy which does
not set forth.a discharge is bad. (Atkinson v. Hortinberry, 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 ex-
istence 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 jurisdiction
to grant it. It is not enough to say in general terms that the court had juris-
diction, 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, 38 N. J. 198.)

The plea need not aver that the court granting the discharge had jurisdic-
tion tu entertain the proceedings. (Lathrop vy. Stuart, 5 McLean, 167.)

No direct and formal admission of the cause of action is necessary in 4
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 sup-
posed cause of action, if any there was,” is sufficient. (Morrison v. Woolson,
28 N. H. 11.)

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 bankruptcy, it
need not aver that the debt was provable. (Morrison v. Woolson, 23 N. H. !1.)

The plea need not allege that the debt was provable where the debt al-
leged in the declaration is prima facie provable. If there is any peculiarity
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, 84 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. L.
13; Kirby v. Garrison, 21 N. J. L.176; Downer v. Chamberlin, 21 Vt. 414;
Preston v. Simons, 1 Rich, 262.) ls

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 plead-
ing is allowed. (Campbell v. Perkins, 8 N. Y. 480; 8. c.5 Barb, 699.)
§ §119.] NOTES OF DECISIONS. 755

The plea of a discharge in bankruptcy introduces new matter in confes-
‘sion and avoidance of the plaintiffs 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 bankrupt act, he can raise
the question by a demurrer. (Mayer v. Gimbel, 30 Leg. Int. 5; Stoll v. Wilson,
38 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. Cleaveland, 18 Vt. 241;
Hall v. Fowler, 6 Hill, 630.)

A defective plea of a discharge in bankruptcy may be amended, (Stoll v.
Wilson, 38 N. J. 198.)

A defective plea may be deemed to be cured by a replication and a ver-
dict. (Dresser v. 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. (Campy. Gif-
Jord, 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.

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.) i

The suggestion of the pendency of the proceedings in bankruptcy sus-
pends the cause until the final action of the bankrupt court granting or deny-
ing a final discharge. If a demurrer to a plea of a discharge subsequently
entered is sustained, the discharge is virtually out of the case, and the cause
again stands suspended upon the suggestion of pending proceedings in bank-
ruptcy, and the entry of a personal judgment against the bankrupt is irregu-
lar. (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 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 repli-
cation to the plea, (Stow v. Parks, 1 Chand. 60; Rowan v. Holeomb, 16 Ohio,
463; Dick v. Powell, 2 Swan, 682; Cutter v. Folsom, 17 N. H. 139; MeCabe v.
Cooney, 2 Sandf. Ch. 314; contra, Sackett v. Andross, 5 Hill, 327; Maples v.
Burnside, 1 Denio, 3382; Frost v. Tibbetts, 30 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 XN. J. L. 18.)
756 THE BANKRUPT LAW. [§ 5119.

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, 630; Reed vy. Vaughan, 15 Mo.
187; vide Stiles v. Lay, 9 Ala. 795.)

The plaintiff can not aver that the defendant did not become a bankrupt,
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 that the cause of action has accrued
since the commencement of the proceedings in bankruptcy, or a new promise.
(Price v. Bray, 21 N. J. L, 18.)

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 substantially
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 arepleader. (Jenkins v. Stanley, 10 Mass. 226.)

A replication which sets forth several distinct allegations, each of which
standing alone would be a sufficient answer to the pe is bad, for duplicity.
(McNulty v. Frame, 1 Sandf. 128; Downer v. Rowell, 26 Vt. 397.)

Evidence.

Parol testimony is not admissible to prove a discharge without sufficient
excuse for the non-production 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 v.
Strong, 1 Denio, 619.)

A discrepancy of dates in a certificate of discharge is no reason for exclud-
ing 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 prelim-
inary 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 y. Cloyes, 11 Barb. 100; Pennell v. Percival, 18 Penn. 197.)

The certificate of discharge is admissible in evidence, although the plaint-
iff produces a full record of the proceedings, which does not contain any dis-
charge, for the clerk may have neglected to make the entry of the final
discharge. (King v. Dietz, 12 Penn. 156.)

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 exempli-
fication is in due form of law. (Pennell v. Percival, 13 Penn. 197.)

_ Acertified 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.)

A copy of the entire and full record of the proceedings is competent evi-
dence of the discharge. The law prescribes no particular form in which the
certificate of the clerk shall be made, and the part of the record not abso-
lutely required is only surplugage. (Tompkins v. Bennett, 3 Tex. 36.)
§ 5119.] NOTES OF DECISIONS. 757

If the replication merely denies that the discharge was granted in manner
and form as alleged in the plea, the defendant, upon the production 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 re-
‘quired by the objection. (Dresser vy. Brooks, 3 Barb, 429.)

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 v. Madren, 83 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; 8. 0. 44 Geo. 161.) 3

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. 188.)

When the discharge is given in evidence without being pleaded, jurisdic-
tion to grant it is presumed until the contrary appears. (Rucknam v. Cowell,
IN. 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 execu-
‘tion 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. (Hzchange Bank v. Knox, 19 Grat. 789.)

When a party against whom a judgment has been rendered, takes an ap-
peal, and gives bond with surety to pay such judgment as may be entered in
the appellate court, where the case is brought up for a new trial before a
Special jury, and after appeal taken is adjudged a bankrupt, and duly obtains
a discharge, he may plead such discharge in the appellate 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 contract, and his liability was terminated.
(Odell v. Wootten, 4 B. R. 183; s. c. 88 Geo. 225.)

An appellate court can not entertain a petition to set aside a judgment
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 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 occurred and the discharge
758 THE BANKRUPT LAW. [§ 5120.

have been granted before the filing of the record for writ of error. (Longley
‘y. Swayne, 4 Heisk. 508, 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 bankrupt,
who is defendant in the case. (Hor 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 v.
Morrison, 59 Mo. 324.)

The appellate court, after a discharge, can render no judgment in a case,
except that of dismissal, (Viosca v. Weed et al. 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 mo-
tion for a perpetual stay of execution. (Corneil v. Dakin, 38 N. Y. 253.)

If a discharge is obtained after the rendition of the judgment in the
subordinate 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, neglects 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 @
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 willbe granted, although the de-
fendant waives the benefit of his discharge. (Sandford v. Sinclair, 6 Hill,
248.)

The plaintiff in error may discontinue his suit without costs, if the de-
fendant in error becomes bankrupt after the joinder in error. (Labron v.
Woram, 5 Hill, 373.)

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—
cae comet after the rendition of the judgment. (Doster v. Hinckley, 40-

e, 54.

When judgment has been rendered against the plaintiff, he can not have
leave to discontinue without costs on the bankruptcy of the defendant,
although a writ of error is pending. He can only discontinue on the reversak
of the Judgment. (Sandford v. Sinclair, 6 Hill, 248.)

Src. 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
fraudulently 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
§ 5120.] NOTES OF DECISIONS. 759

fifty-one hundred and ten it is intended to prove against the
bankrupt, and set forth the grounds of avoidance; and no evi-
dence shall be admitted as to any other of such acts; but the ap-
plication shall be subject to amendment at the discretion of the
court. The court shall canse 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 fraudu-
lent acts, or any of them, set forth by the creditor against the
bankrupt, are proved, and that the creditor 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 bank-
rupt shall be annulled. But if the court finds that the fraudu-
lent 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.

The authority to set aside and annul a discharge in bankruptcy conferred
upon the Federal courts by this section is incompatible with the exercise of
the same power by a State court; and the former is paramount. 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
suffic:.ent ground for annulling it under this section. Proceedings in bank-
ruptcy are statutory proceedings. The powers exercised and the remedies
provided in bankruptcy are given by statute. The impeaching tribunal is
specified, and this designation, according 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 afterwards. The
authority of Congress over the subject-matter is the same in both cases.
(Corey et al. v. Ripley, 4 B. R. 503; 8. c. 57 Me. 69; Parker y. Atwood, 51 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; 3. c. 108 Mass. 502; Alston v. Robinett, 9 B.
R. 74; s. c. 87 Tex. 56; Hudson v. Bingham, 8 B. R. 494; 8. c. 6 L. T. B. 326;
s.c. 12 A. L. Reg. 687; Dusenbury v. Hoyt, 10 B. R. 318; 14 Abb. Pr. [N. 8.]
182; 8. c.53 N. Y. 521; s. c. 36 N. Y. Sup. 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;
emtra, Perkins v. Gay, 3B. R. 772; 8.c. 1 L. T. B. 221; 8. c. 2 C. L. N. 279;
s. c. 18 Pitts, L. J. 98; Beardsley v. Hull, 36 Conn. 270; Smith v. Ramsay, 26
Ohio St.)

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 v. Blazo, 18 B. R. 195; 8. c, 117
Mass, 17; Rayl v. Lapham, 9 C.L. N.52; contra, Barnes v. Moore, 2 B. R. 573;
8.0. 2L. T.B. 92; Batchelder vy. Low, 8 B. R. 571; s. 0. 48 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. (Com-
mercial Bank v. Buckner, 20 How. 108.)
760 THE BANKRUPT LAW. [§ 5120.

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 require. 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 attend-
ance of the creditor’s counsel at the hearing, the court will reopen the decree
granting the discharge. The decree, however, will only be opened upon
good cause shown, and for a trial upon the merits, and not upon any mere
technical matter. (Jn re Dupee, 6 B, R. 89; Thomas y. 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 afterwards, because the bankrupt ‘had
fraudulently concealed it. (Pickett v. McGavick, 14 B. R. 236.)

The certificate is, prima facie, conclusive as to the validity of the dis
charge, subject, however, to be impeached for fraud, if any was perpetrated
in obtaining it. (Gupton v. Connor, 11 Humph. 287.)

The specifications must be precise and definite. (dn re McIntire, 1B. R. .
436; s. c. 2 Ben. 845; én re Rainsford, 5 B. R. 881; 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.] 258.)

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 re-
lied on the same acts as a ground of opposition to the granting of the dis-
charge. (Beekman v. 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 impeach it
for other and further instances of fraud. The estoppel is limited to the spe-
cifications that were passed upon. (Downer v. Rowell, 25 Vt. 336.)

Under a specification of a judgment for $132 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 applica-
tion of a creditor who had no knowledge of the act until after the granting
of the discharge. (Jn ve 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 specified.
(Tenney v. Collins, 4 B. R. 477; s. c. 1 Dillon, 66.) :

The wife of a bankrupt can not be made a witness for or against her hus-
band on a motion to set aside a discharge. (Tenney v. Collins, 4 B. R. 477;
s. c. 1 Dillon, 66, note.)

_ The dying declarations of an alleged fraudulent grantee are not competent
evidence against the bankrupt. (Jn re A. P. Marionneaux, 13 B. R. 222; 8.
c. 1 Wood, 37.)

he conspiracy must be established before the declarations of an alleged
conspirator are competent evidence against the bankrupt. (Jn re A. P. Ma-
rionneaux, 13 B. R. 222; s. c. 1 Wood, 87.)
CHAPTER SIX.

PROCEEDINGS PECULIAR TO PARTNERSHIPS AND CORPO-

RATIONS.
Sec. SEo.
5121.—Bankruptcy of partnerships. 5123,—Authority of State courts proceed-
5122—OFf corporations and joint stock ing against corporations.

companies.

_ Seco. 5121.—Where two or more persons who are partners in
trade are adjudged bankrupt, either on the petition of such part-
ners, ‘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 copart-
nership, and also all the separate estate of each of the partners,
shall be taken, excepting such parts thereof as are hereinbefore
excepted. 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 deducting 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 cred-
itors 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 separate 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 partner as the same would or ought to be if the
proceedings had been against him alone. In all other respects
the proceedings against partners shall beconducted in the like
manner as if they had been commenced 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.
762 THE BANKRUPT LAW. [§ 5121.

When Partnerships may be adjudged Bankrupts.

Two or more persons ‘“‘ who are partners” in trade may be adjudged bank-
rupt on the petition of the partners or any one of them. This language can
only apply to a subsisting partnership. But a mere formal dissolution of the
partnership, so long as there are partnership debts and partnership assets ex-
isting, the partners being joint debtors and the assets being joint property,
will not prevent the operation of the act upon the partners, either in a volun-
tary or an involuntary case. Where there are assets as well as debts of the
partnership remaining, the partnership may properly be considered as subsist-
ing quoad its creditors, and for the purpose of applying its joint stock and
property to the payment of its creditors, (Crockett et al. v. Jewett, 2 B. R.
208; sc. 2 Ben. 514; s.c, 2 L. T. B. 21; im re Foster, 3 B. R. 236; 3.0.3
Ben. 386; s. c.1L. 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 partuers 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 remain to be distributed.
A like result must also follow if there are joint debts outstanding. I¢ 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 fora 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
ve Joseph A. Noonan, 10 B. R. 331; s. c. 8 Biss. 491; contra, Crockett et al. v.
Jewett, 2B. R. 208; 8. c. 2 Ben. 514; 8.¢c.2L. T. B. 21; in re Moritz & Pin-
ner, 5 Law Rep. 825; in re Mark Hartz ct 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 et al. 1 B. R. 373; 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 subsequently
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. McFarland & 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 part-
ner 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 the
partnership property is absolute, and the remaining partner merely agrees to
pay and assume the debts of the partnership. (Jn re T. 8. Sheppard, 3 B. R.
172; 8. c. 3 Ben. 347.)

Although one partner has taken the partnership property, under an agree-
ment to pay all the partnership debts, either of them may, after such dissolu-
tion, 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 partners 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 deprived of the very im-
§ 5121.] NOTES OF DECISIONS. 763

portant 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. (Jn re J. R. Stowers e¢ 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 pe-

tition 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. (In re J. R. Stowers e¢
al. Lowell, 528.)

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 in-
solvency of his copartner. (Jn re Bennett et al. 12 B. R. 181.)

_An assignment which transfers all the right, interest, property and claims
of the retiring partner in and to the partnership and firm business, terminates.
the partnership. Persons who are vot 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.)

A member of a firm may commit a separate act of bankruptcy and become
bankrupt without joining his copartners. When two persons who have been
partners under one firm name file their joint petition in bankruptcy, the pro-
ceedings 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 convenience to creditors shall be arrived
at with the least expense. The rights of all classes of creditors are the same,
under all forms of proceedings. (Jn re Mitchell e al. 3 B. R. 441; in re
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 bankrupt court
from taking jurisdiction. (Jn re Joseph A. Noonan, 10 B. R. 381; s. c. 3 Biss.
491.)

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 bankruptcy, the creditors may in-
voke the aid of a court of bankruptcy to take out of his hands the joint assets.
as well as his separate estate, and distribute them among hiscreditors. Such
proceeding can be taken against him by either a joint or separate creditor.
Cin re Stevens, 5 B, R. 112; s. 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 administering in
the probate court, the district court may, in its discretion, refuse to adjudge
the partnership bankrupt. (in re Daggett, 8 B. R. 483; s. c. 8 B. R. 287; s.
c. 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 co-
partners. 8d. The petition of a creditor of the copartners. The proceeding
by the petition of all the. copartners is purely voluntary, and where they all
764 THE BANKRUPT LAW. [§ 5121.

unite, the jurisdiction of the court over all of them, cither 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 copart-
ners to have such copartners adjudicated bankrupts is a proceeding which
necessarily is neither wholly voluntary nor wholly involuntary, but is partly
voluntary and partly involuntary. So far as the petitioner is concerned, it is
voluntary; so far as the copartners not petitioning are 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 may
be involuntary in the sense of not being voluntary, under section 5014.
Where it is not involuntary in the sense of section 5021, the adjudication may
be asked on the ground that the members of the copartnership 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 bank-
rapt, because of his inability to pay his debts, and to have his copartners
adjudged bankrupts because of the commission by them of an act of bank-
ruptcy to which he was not a party. (In re Penn et al. 5 B. R. 30; 0.5
Ben. 89; s. c. 2L. T. B. 190; ia re Joseph Noonan, 10 B, R. 331; 8. ¢. 3 Biss.
491.)

The firm can not be adjudged a bankrupt upon the petition of one partner
if the other partners do not consent, and neither reside nor carry on business
‘in the district. (Jn re Henry Martin, 6 Ben. 20.)

Where a petition is filed to have a firm declazed 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 join 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 thefirm. (In re Lewis,
1B. R. 239; s. c. 2 Ben. 96; én re Prankard et al. 1 B, R. 297; in re Moritz &
Pinner, 5 Law Rep. 325; in re Rufus E. 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 effects a 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
sae Jan re Lewis, 1 B. R. 239; s. c. 2 Ben. 96; in ve Horace Hall, 5 Law

ep. 269.

If the administrator of the deceased partner has given the necessary bond
and taken charge of the partnership property, which he is administering in
the probate court, the district court may, in its discretion, refuse to adjudge
ithe partnership bankrupt. (Jn re Daggett, 8 B. R. 287; s.c. 8 B. R. 483; 8.
©. 8 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
ule on are adjudged bankrupts. (Jn re Boylan, 1 B. R. 2; 3.0.1

en. 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 ap-
plicable to the estate and debts of a single firm, and the separate property and
individual debts of the members of such firm, are only declaratory of the ac-
knowledged principles of equity upon which the court would marshal the
§ 5121.) NOTES OF DECISIONS. 765

assets in the absence of such provisions. When the firm which embraces the
members of such separate firm has been declared bankrupt, it is improper to
proceed to an adjudication against the separate firm while the former proceed-
ings are pending. (/nreW. Leland et al. 5 B. R. 222; s. c. 5 Ben. 168; 8. c.
1L.T. B. 284; s.c.4 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 non-resident partner
can not be adjudged a bankrupt upon his own petition until he shall have
a a petition in the district where he resides. (Jn re Prankard et al. 1 B.

. 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 dis-
tributed by the bankrupt court. Ifthe 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 bankruptcy on their part.
When one member of the firm has asked for the benefit of the bankrupt act,
the question before the court becomes a purely legal one, and the firm must
of necessity be adjudged bankrupt. (dn re Grady, 3 B. R. 227; in re Green-
field, 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. (Jn re Little, 1B. R. 341; 5. c. 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
bankrupt court. (/n re Grady, 3B. R. 227.)

This applies to partnerships actually existing, or where there are assets
belonging to the firm, and not to partnerships terminated by bankruptcy, in-
solvency, assignment, or otherwise. (Jn 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. (Jn re Abbe, 2 B. R. 75; s.c. 7 A.
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 petition
with a view to a separate adjudication in favor of each applicant. A petition
by two petitioners conjointly, when they can not petition as partners, can not
avail them individually. (Jn re Moritz & Pinner, 5 Law Rep. 325.)

Persons can not join or be joined ina 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.)

No number less than the whole of a firm can file a voluntary petition. (in
ve Moritz & Pinner, 5 Law Rep. 825.)

Partners are not liable to be adjudged bankrupts upon the petition of
their creditors, upon mere proof of their insolvency, without other proof of
the commission of an act of bankruptcy. (Jn 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. 1N. Y. Leg. Obs. 5. note.)
766 THE BANKRUPT LAW. [§ 5121.

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. 20; in re Scheiffer
& Garrett, 2B. R. 591; s.c.1C. 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 separate debts.
It puts joint creditors and joint debts in antithesis, and separate creditors
and separate debts. This it does, although necessarily the copartners are
jointly and severally liable to the creditors of the copartnership for the joint
debts. The separate debts must, therefore, be regarded 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. (Jn re Walter P. Long & Oo. 9 B.
R. 227; s. o. 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.
(Stephenson 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 sep-
arate estates according to such proof. (Meade v. National Bank of Fayetteville
et al, 2B. R. 178; 8. c. 6 Blatch. 180; s.c.1L. T. B. 108.)

Although by this section, where partners in trade shall. be adjudged bank-
rupts, all the joint property of the partnership and~ also all the separate
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 ameunt of his debt. A creditor holding a note indorsed both
by the firm and by one of the copartners, may prove his claims against both
estates. (dn re Howard, Cole & Co. 4 B. R. 571; 8. 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,c. 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 tke 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
cra against their individual estate. (Jn 7e Bucyrus Machine Co. 5 B. R.

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 char-
acter, it becomes liable therefor, and the beneficiaries may prove their claim
either against the partnership estate or against the individual estate of the
partner who was executor. (Jn re BE. P. & E. M. Tesson, 9 B. R. 378.)

_ if 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

Hf a obtained a judgment on the note. (Jn ve Hugh T, Herrick, 13 B. R.
2.
§ §121.] NOTES OF DECISIONS. 767

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. (Jn re Hugh T. Herrick, 18
B. R. 312.)

Where the deposition on its face shows a several debt, the creditor can not
be held to have proceeded against the joint estate, although the proof is in
that form. (Jn re Hugh T. Herrick, 13 B. R. 312.)

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.
Cn re Hugh T. Herrick, 13 B. R. 312.)

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 Big-
elow et al. 2 B. R. 371; s. c. 3 Ben. 146; 8.0. 2 L. T. B. 41.)

A joint agreement given by two members of a firm to indemnify a retiring
partner may be proved for the full amount against the separate estate of each
partner. (Jn 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. (Jn re Webb & Co. 2B. R.
614; s.c. 21. T. B. 87; 8. c. 16 Pitts. L. J. 43; in re Edmund H. Miller, 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 another
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 con-
tracting with each other in equity. (Jn re Buckhause & Gough, 10 B. R.
206.)

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. (Jn re Henry War-
ren, 2 Ware, 322.)

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 partners jointly, or with the firm name, or by one partner alone. (In
ve 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. (dn re Henry Warren, 2 Ware, 322.) :

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. (Jn re Henry Warren, 2 Ware, 322.)

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; s. c. 2
Dillon, 169.)

An’‘assignee of a firm may recover property transferred by one partner in
violation of the bankrupt.law. (Barnewall 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.
Cin re Paulson, 1 N. Y. Leg. Obs. 6, cited.)

Upon the bankruptcy of one partner, his private property and his interest
768 THE BANKRUPT LAW. [§ 5121.

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 ten-
ants in commen, 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. (Murray v. Murray, 5
Johns. Ch. 60; Ayer v. Brastow, 5 Law Rep. 498; in re Shanahan & West, 6
Biss. 39.)

Where partners agree to give another an interest in the assets after the pay-
ment 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.
(dn re Shanahan & West, 6 Biss. 39.)

The solvent partner has generally the right to retain the control and pos-
session 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; Talcott v. Dudley,

. 5 TL 427.) :

The solvent partner, upon the dissolution of the partnership by bank-
ruptcy, being a tenant in common, may retain and distribute the funds in his
possession, and may sell the partnership effects for a valuable consideration
and without fraud. They can not be called out of his possession 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 dona, 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 bank-
rupt himself had. Before the bankruptcy, his power over it was that of a
partner; it was a joint terancy. 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
ine) partner, but as a tenant in common. (Ayer vy. Brastow, 5 Law Rep.
_ _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
ne ao of the firm in a purchaser at his sale. (Buckner v. Calcote, 28 Miss.

Where one partner becomes bankrupt, the district court may take into its
own hands the exclusive management and administration of all the partner-
ship 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. (Parker vy. Muggridge,
2 Story, 384; Ayer v. Brastow, 5 Law Rep. 498.)

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 issuing of
the execution. (Tulleott vy. Dudley, 5 Ill. 427.) :

__ If one partner, who owns all the property, is declared a bankrupt, his as-

signee 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.)
§ 5121.] NOTES OF DECISIONS. 769.

The appropriation of the firm property to pay an individual debt of one-
partner, where he becomes bankrupt, does not bind the firm unless the solvent
partners assent to.it prior to the commencement of the proceedings in bank-
ruptcy. (Anshute v. Fitesimmons, 9 Penn. 180.)

The assignee of a liquidating partner is merely a mandatary of the inter--
est 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. 432.)

Where one partner becomes bankrupt, his assignee can take only that por-
tion of the partnership assets which would belong to the bankrupt after pay-
ment 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 v. 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 respective.
interests of the partners inter se. (Buckner v. Calcote, 28 Miss. 482.)

Where an individual partner applies alone and surrenders partnership as-
sets, a sale by his assignee will pass the entire interest of the firm. (Jud-on
vy. 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 pos-
session of what was due from the debtor for the purpose of distribution, in-
asmuch 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 or his assignee when the suit is prosecuted to collect a demand
due to the firm. (Cannon v. Wellford, 22 Gratt. 195.)

Where the partnership 1s 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 belong
ing to the firm should be brought in the name of the solvent partner and the
assignee.. (Peel v. Ringgold, 6 Ark. 546; Coev. Whitbeck, 11 Paige, 42; Hal-
sey 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 declaration.
If the non-joinder of the solvent partner is relied on to nonsuit the assignee,
the defendant must prove the existence of sucha partner. (Hulsey v. Norton,
45 Miss. 703.)

If upon the declaration of the firm one partner takes the firm assets and
undertakes to pay the firm debts, and the retiring partner subsequently pays
firm debts to an ameunt more than sufficient to cover the deficiency that
might remain after applying the joint assets to pay the joint debts, the as-
signee of the latter is entitled to the surplus of the firm assets in the hands of
the former. (Aydev. 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 be-
fore any step can be taken to reach the partnership assets in bankruptcy.

49
770 THE BANKRUPT LAW. [§ 5121.

The partnership property can not be taken and administered by the bankrupt
court unless all the persons who have an interest as copartners in such prop-
erty are adjudged bankrupt. An assignee of the individual and separate
estate of one partner has no title to call third parties to an account for part-
nership 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. (Jn re'T. 8. Shepard, 3 B. R. 172; 8. c. 3 Ben. 847: Forsaith
v. Merritt, 3 B. R. 48; s.c. Lowell, 386; 3.c.1 L.T. B. 168; Withrow v.
Fowler, 7 B. R. 339; 8.c. 5 Pac. L. R. 102; Amsinck v. Bean, 11 B. R. 495;
s. c. 8 B. R. 228; s. c. 10 Blatch. 861; 8. 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 afirm creditor, in fraud of the rights
of other creditors, under a compromise. (Amsinck v. Bean, 11 B. R. 495; 8.
c. 8B. R. 228; s.c. 10 Blatch. 361; s. c. 22 Wall. 395.)

Distribution of Assets.

This section was inserted simply to indicate the correct and equitable
mode of administration of the partnership property and separate estates of
each partner when two or more persons who are partners in trade shall be ad-
judged 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 tue courts had
adopted in the distribution of the bankrupt’s assets. It was, nevertheless,
proper and useful in this respert—that it put to rest the long mooted and
much ‘discussed question of the power of the bankrupt court, in administering
the bankrupt’s estate, to make orders for the marsbaling of assets and the
payment of partnership debts with partnership funds, and separate debts with
separate funds, without the intervention of proceedings by billin 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 only applies where the joint estate as well as the separate is be-
fore the court for distribution, and where there are joint creditors and also
separate creditors. (Lewis v. U. 8.13 B. R. 33; s.c. 14 B. R. 64; 8.0. 2 W.
N.81; 8. 6. 32 Leg. Int. 877; inre R. 8. 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 part-
ners or only one. Everything is conducted in the same way and the rights
of creditors and all others are precisely the same. (Jn 7e 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 partnership cred-
itors are entitled solely to be paid out of the partnership estate. (Jn re Wil-
liant Ingalls, 5 Law Rep. 401; in ve Henry B. Williams, 5 Law Rep. 402.)

_Premises used by partners for the purpose of carrying on their trade are
Eine ane apart of the partnership property. (Osborn v. McBride, 11 Pac.
. RB. 105.)

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 accounts of the partners have been settled. (Hiscock v. Green,
12 B. R. 507.)

If real estate is purchased as a speculation in wh‘ch 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. (ZZiscock v. Green, 12 B. R. 507.) ,

If a partner, after a formal dissolution, coutinues to carry on business
§ 5121.] NOTES OF DECISIONS. 771

under the firm name, with the consent of his copartner, his trade assets
should be treated as joint assets. (Ji 7e Edward P. Morse, 13 B. R. 876.)

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 ratw with the individual cred-
itors. (dn ve 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 claims 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 bankruptcy. They may assent
to and claim the benefit of it at any time, either before or after the bankruptcy
of their debtor. (Jn re Downing, 3 B. R. 748; 8. c. 1 Dillon, 38; s.c. 11.
T. B. 207; in re George Rice, 9 B. R. 373; in re Walter P. Long & Co. 9 B.
R. 227; 8. 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 sepa-
rate creditor, who has not acceded in any way to the arrangement, to prove
in bankruptcy as a joint creditor of the firm. (dn re Isaacs & Cohn, 6 B. R.
92.)

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 part-

ner, in case of his separate application for the benefit of the bankrupt 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 bankrupt 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 marshaleq according to the equity rule, firm creditors to
have priority as respects the joint assets, and individual creditors as re-
spects the separate estate of their debtor. (Jn re Downing, 8 B. R. 748;
s. c. 1 Dillon, 83; s. c. 1 L. T. B. 207; in re Jewett, 1 B. R. 491; 8.0. 7 A. L.
Reg. 291; 8.c. 15 Pitts. L. J. 354; in re Goedde & Co. 6 B. R, 295; in re
George Rice, 9 B. R. 873; in re Knight, 8 B. R. 436; 8. c. 2 Biss. 518; in re
William Mills, 11 B. R. 74; Tucker v. Oxley, 5 Cranch, 34; 8. c. 1 Cranch C,
C. 419; contra, in re Byrne, 1 B R. 464; sc. 7 A. L. Reg. 499; an re
Frear, 1 B. R. 660; s. c. 35 How. Pr. 249; 8. o. 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 receive dividends from the separate estate. (In re Albert Marwick, 2
Ware, 233; s.c. 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 belong-
ing to the joint fund for a small sum in order to defeat the right of the joint
creditors to share in the separate estate. (Jn re Albert Marwick, 2 Ware,
238; s.c. 3N. Y. Leg. Obs. 286.)

Where there are partnership assets, the partnership creditors can not
share in the individual estate although the partners were declared bankrupts
on separate petitions. (In re Edward P. Morse, 13 B. R. 376.)
772 THE BANKRUPT LAW. [§ 5121.

Where there are assets of a firm and of the individual members thereof,
each estate must pay its proportion of the entire expenses of administering”
the estate. (Jn re Elijah E. Smith, 18 B. R. 500; in re William Ingalls, 5.
Law Rep. 401.) : ;

If the firm assets are only sufficient to pay the costs of the proceedi
the firm creditors may sbare 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 dis-
tribution 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.
(dn re Collier, Taylor & Co. 12 B. R. 266.)

The burden of proving that there is a joint fund rests upon the in di-
vidual creditors. The partnership creditors can not be required to prove a
negative. (In re Jewett, 1B. R. 491; s.c. 7A. L. Reg. 291; 8. c. 15 Pitts.
L. J. 354; contra, in re Byrne, 1 B. R. 464; s. 0. 7 A. L. Reg. 499.)

The court will not presume that the other partner is solvent and has prop-
erty that can be reacbed by the joint creditors. His pecuniary responsibility
ig a matter of affirmative proof by the individual creditors who object to the
firm creditors sharing in a dividend from the bankrupt’s estate. (Jn re George
Rice, 9 B. R. 373.)

If a petition is filed against a firm, and an adjudication is thereupon en-
tered against the firm and one partner, but no adjudication is entered against
the other partner, the separate creditors of the partner so declared bank-
rupt can not participate in the firm assets. An adjudication against the
other partner can only be necessary for the purpose of reaching his indi-
vidual property, and may be made at any subsequent time, if it becomes
necessary in the course of the proceedings. (Jn 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
tbis 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 creditors,
and the court wiil set aside such sale, and distribute the property as firm
property to the payment of the firm debts. If the legal effect of such trans-
fer is to change the order of payment and prefer certain creditors, the pri-
vate 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 hon-
estly andin 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. 411.)

Where 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 partnership cred-
itors, and the property so transferred was held to bea joint fund. (In re
Byrne, 1B. R. 464; s.c. 7 A. L. Reg. 499.)

When firm property has been transferred to a partner under an agreement
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 property in such
$5121.) NOTES OF DECISIONS. 778

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. (dn re H. B, Montgomery, 3 B. R. 874; 8. o. 3 L. T.
B. 40.)

The separate estate of a partner is that in which he is separately interested
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. (Jn re Lowe &
Richards, 11 B. R. 221.)

If the surviving partner, with the knowledge and consent of the ad-
ministrator of the deceased partner, converts the firm assets to his own use,
the property belongs to his individual estate. (Jn re William Mills, 11 B. R.
74.)

“If one partner in good faith sells the partnership property to his copartner,
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. (Jn re William H. Wiley, 4 Biss. 214.)

When the bankrupt has been a member of two separate firms, the property
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. (Jn ve Hinds ef al,
3B. 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. (Jn 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. (Jn 7e R.
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. Cal-
cote, 28 Miss. 482; 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 credit-
ors, and the rest paid to the other members of the firm. (Jn 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, (Jn re G. H. Lane & Co. 10B.
R. 185; in re McEwen & Son, 12 B. R. 11; s. ©. 6 Biss. 294.)

The firm creditors can not have recourse to the separate estate for goods
‘sold by the firm to one of the partners. (Jn 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 shure of the profits. (Jn
ve Jay Cooke & Co, 12 B. R. 30.)

If a creditor, having a firm note indorsed by a partner and holding prop-
174 THE BANKRUPT LAW. [$ 5121.

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. (Jn re Norman B. Foote e¢ 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.
(in re Norman B. Foote et al. 12 B. R. 337.)

Real estate purchased with the intention that it shall be held as partner-
ship property, will be deemed to be personalty as 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 there-
cn. (Marrett v. Murphy, 11 B.R. 181; s. c. 1 Cent. L. J. 554.)

‘If partners purchase land with partnership funds, and take a deed to them-
celyes jointly as tenants in common, and the orphans’ court, upon the death
of one of them, orders his interest in the land to be sold, the proceeds 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.
(dn re Cook & Gleason, 3 Biss. 122.)

Tf the judgment of a partnership creditor against the firm is priorin 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 part--
nership assets must be first applied as a credit on his judgment against the
separate partner, in relief of the fund of such separate partner, for the benetit.
of the separate creditor. (Jn 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, ard if prior in point of time to a judgment obtained against an
individual partner by an individual creditor of such partner, is to be preferred
to such subsequent judgment. (Jn re A. T. Lewis, 8 B. R. 546.)

_ 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 exch
partner on an equal footing with the separate creditors. (/n re John M.
Berrian et al. 44 How. Pr. 216; s. c. 6 Ben. 297.)

The assignee may settle an indebtedness of the partnership by canceling 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 disputed, the assignee
may retain im 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. (Jn re Atkinson & Kellogg, 10 B. R. 585; s.c. 7 C0. 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 re-

spective partners, and not properly a partnership demand. (Jn re Kahley, 4
B. R. 878; s. c. 2 Biss, 383.) z : a

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
§ 5121.] ; NOTES OF DECISIONS 715

use, is entered into by both parties in fraud of the partnership. This pre-
sumption may be rebutted by showing an express or implied assent of the
other partners, but without such proof tle arrangemert is void, (Zuylor y.
Rasch, 5 B. R. 399.)

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 part-
ners. 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. (Z’hompson vy. Spittle, 102 Mass. 207.)

The fact that a note secured by a mortgage is also secured by the signa-
ture of a surety who gave the payee a mortgage of his property as additional
security, imposes no obligation en 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,
(Thompson v. Spittle, 102 Mass. 207.) ,

If the separate estate of one partner is more than enough to pay his sepa-
rate debts, at the amounts proved as they stood at the time of the adjudica-
tion 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. (Ja 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 dividend
on notes given to him by the bankrupt for his share in the firm at the time of
the dissolution thereof until the joint creditors are paid in full. (Jn re Jewett,
1B. R. 495; s.c. 7 A. L. Reg. 294.)

Discharge.

Upon an application fora discharge, there are in reality two cases, and
the petition of each partner for a discharge, and the objections 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. (Zn re George & Proctor, Lowell, 409; in re George
M. Garwood, Crabbe, 516.)

Specifications which apply to one partner alone will not prevent the dis-
charge 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. (Jn 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 entertained on
the hearing of their petition fora discharge. (fn re Gilbert & Lamphier, 1
N. Y. Leg. Obs. 327.)

Proceedings where Partners Reside in Different Districts.

This section applies only to a case where two or more persons who are
partners are adjudged bankrupts. The clause which provides that where
‘such copartners 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
776 THE BANKRUPT LAW. [§ 5122.

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 to do what
this section allows and requires to be done in a case where two or more
persons who are partners are adjudged bankrupts, (Jn re Boylan, 1B. R. 2;
8, c. 1 Ben. 266; in ve 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 petitioner, shall
have exclusive jurisdiction over the case; that is, over the subject-matter of
the petition and over all the copartners, if the non-petitioning copartners
are brought in by appropriate process. (Jn re Penn et al. 5 B. R. 30; 8. 6. 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 busi-
ness 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. 80; 8. c. 5 Ben. 89; 8. 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 in 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 district, 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 pro-
ceeding by one partner in another district is void. (Cannon v. Wellford, 22
Gratt. 195.)

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 void. (Jn re
Greenfield, 42 How. Pr. 469; s. c. 5 Ben. 552.)

Src. 5122.—The provisions of this Title shall apply to all
moneyed, business or commercial corporations and joint stock
conipanics, and upon the petition of any officer of any such cor-
poration 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 proceedings shall be had and taken as are provided in
the case ot debtors. All the provisions of this Title which apply
to the debtor, or set forth his duties in regard to furnishing sched-
ules and inventories, executing papers, submitting to examina-
tions, 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 payments, conveyances,
§ 5122.) NOTES OF DECISIONS. 777

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 cor-
poration or company. Whenever any corporation 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 this 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.

Construction.

Only such portions of the bankruptcy system as are expressly or impliedly
adopted by this section are applicable to corporations or joint stock com-
panies. (New Lamp Chimney Co. v. Ansonia Brass & Oopper Co. 18 B. R.
ey c. 10 B. R. 355; s. c. 64 Barb, 435; s. c. 538 N. Y. 128; s. 0. 1 Otto,
656.

What Corporations,

A corporation created for the purpose of carrying on or pursuing any law-
ful 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 bankrupt act. (Rankin & Pullan v. Florida, Atlantic & G. CO. &. RB. Co.
1B. R. 647; s.c. 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 provisions
of the act. The words, ‘‘ moneyed, business, or commercial corporations,”
are intended to embrace all those classes of corporations that deal in or with
money or property in the transactions of money, business, or commerce, for
pecuniary gain, and not for religious, charitable, or educational 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 cor-
poration is private. The question whether railroad corporations are subject
to be dealt with under the provisions of the bankrupt 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 applying them to the payment of the corporate debts. As
the system of bankruptcy 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 Company, 4 B. R. 314; s.c. 6 A. L. Rev. 865; Sweat v.
Railroad Co. 5 BR. 234; s. 0.1 L. T. B. 273; im ve Southern Minn. R. R.
Co. 10 B. R 86; contru, Tucker v. Opelousas & Great Western R. R. Co. 3 B.
R. quarto, 31.) :

Railways are created for the purpose of carrying passengers and freight,
aud they are everywhere regarded as common carriers, when engaged in
transporting merchandise and the baggage of their passengers. Steamship
7718 THE BANKRUPT LAW. [§ 5122.

and steamboat companics, when incorporated and engaged in accomplishing
the purpose for which they are created, and canal corporations not of a pub-
lic character, are undoubtedly commercial corporations. Created as railways
are for the same general purpose as the other corporations named, they are
legally known ‘by the same denomination, and are properly included in the
same classification. All such corporations contract immense amounts of busi-
ness, and may, perhaps, in view of that fact be well enough called business
corporations, but their true legal and constitutional 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 inter-
course and an interchange of commodities. Every corporation which trans~
acts 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 intention of Congress to give such a scope to the word busi-
ness 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, manufacturing
or business corporations, Doubtless some such corporations are more con-
venient and useful than others, but the question is not affected by the degree
of.importance which attaches to the corporation. (Sweat vy. Boston BR. R. Co,
5 B. R. 284; s.c.1L. T. B. 278; Ala. & Chat. R. R. Co. v. Jones, 5 B. R. 97;
Winter v. R. R. Oo. 7B. R. 289; 8. c. 2 Dillon, 487; in re Greenville & Col.
R.R. Co. 6 A. L. J. 422; 8. . 5 C. L. N. 124; in re California Pacific R. R.
Co. 11 B. R. 198; s.c. 1 Cent. L. J. 582.)

_ The business of insurance is included within the definitions of the section.
(In ve Merchants’ Ins. Co. 6 B. R. 43; 8. c. 3 Biss. 162; 8. ¢. 2 L. T. B, 243.)

Inasmuch as the general bankrupt law has not yet expressly repealed the
specific provisions relating to the administration of the affairs of insolvent
national banks, and does not necessarily cont: adict them, it must be presumed
that it was the intention of Congress to except this class of corporations from
the operation of the law. (Smith v. Manuf. Nat'l Bauk, 9 B. R. 122; 8.0.5
Biss. 499.)

The jurisjiction of the bankrupt court is not ousted because the State is
acreditor, (In ve Greenville & Col. R. R. Co. 6 A. L. J. 422; 2.0.50. 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 purpose. A “ corporator,”
as understood both ia the law respecting corporations and in common speech,
is one who is a member of a corporation; that is to say, one of the constitu-
ents 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 attainment, and when prescribed, these conditions
roust be complied with. The action of a board of trustees which, by the laws
of the State, has the management of the ordinary business of the corporation,
can not be regarded as the action of the corporators. The corporators them-
selves must act in amecting called for that purpose. (Jn re Lady Bryan
Mining Co. 4 B. R. 144, 394; 8. ¢. 2 Abb. C. C. 527; s.c. 1 Saw. 349; An-
sonia Brass Co. v. Chimney Co. 10 B, R. 355; 8. ¢. 18 B. R. 885; 8. c. 64
Barb. 435; s. c. 53 N. Y. 123; 8. c. 1 Otto, 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
§ 5122.] NOTES OF DECISLONS. 779

shares of the capital stock may authorize the filing of a petition. When a
corporation seeks to avail itself of the provisions of the bankrupt 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 ata legal meeting called for that express purpose.
Where the commencement of proceedings was unauthorized and void, no
subsequent ratification by the corporators can make the proceedings valid.
It is pot a matter of agency but of jurisdiction. (Jn re Lady Bryan Mining
Co, 4 B. R. 144, 894; s.c. 2 Abb. C. C. 527; 8. c. 1 Saw. 849.)

Where all practicable measures have been taken to havea jair stock-
holders’ meeting, the vote will be deemed sufficient although there was an
irregularity in the call on account of the contumacy of some of the directors.
(Davis v. Railroad, 18 B. R. 258; 8. 0. 1 Wood, 661.)

-When the petition of a corporation has been filed without the cousent of
the corporators legally obtained, an attaching creditor may file a petition
asking to have the proceedings dismissed. (Jn re Lady Bryan Mining Co. 4
B. R. 144, 394; s. o. 2 Abb. C. C. 527; s. 0. 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.
(Jn re Baltimore County Dairy Association, 11 B. R. 253; 5, 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 in-
validity 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 juris-
diction. (Ansonia Brass Co.v. Chimney Co. 10 B. R. 355; s, c. 18 B. R. 385;
3. c. 64 Barb, 435; 8. c. 53 N. Y. 128; s. c. 1 Otto, 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. (New Lamp Chimney Co. v.
Ansonia Brass & Copper Co. 10 B. R. 355; 8. 0c. 13 B. R. 885; s. c. 64 Barb.
485; s. c. 53 N. Y. 128; 8. c. 1 Otto, 656.)

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 Wood, 661.)

Even though the petition is filed upon the authority of a vote of the di-
rectors 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 question 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 bankrupt court ; and whilst the proceedings
in bankruptcy are én 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 appointment by the bankrupt court, and to that
court alone is he responsible for its custody and disposition. (Newman v.

_ Fisher, 37 Md. 259 ) 2

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 ap at-
torney to appear for the corporation, and admit the alleged acts of bankruptcy
and consent to an adjudication. (Leiter vy. Payson, 8 B. R. 317; s.¢. 9 BR.
205; 3. c.6 C. L. N. 157.)
780 THE BANKRUPT LAW. [§ 5122.

Effect 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 that proposition, and the ulte-
rior 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. 537; 8. c. 2 L. T. B. 158.)

A corporation for all essential purposes is as effectually 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 creditors 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 negligence
of an assignee or receiver. (Metz v. Buffalo, Corry & P. &. R. Co. 12 B. R, 559;
8. c. 58N. Y. 61.)

The purchasers of the 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. (Metz v. Buffalo, Corry
& P. R. RB. Co. 12 B. R. 559; 8.0. 58 N. Y. 61.)

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 sub-
scriptions, there must be either corporate action tou fix, or a judicial ascertain-
ment of, the defendant’s liability. (Payson 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 instalments on stock in
such corporation. (Payson v. Brooke, 1 W. N. 89.)

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 unpaid
subscriptions. (Myers v. Seeley, 10 B. R. 411; 8. c. 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. (Jn re Republic Ins, Co. 3 Biss.
aes Sanger v. Upton, 18 B. R. 226; 8. c. 1 Otto, 56; Webster v. Upton, 1
tto, 65.)

If the certificate of stock provides that the balance unpaid thereon shail
be paid on the call of the directors when ordered by a vote of the majority
of the stockholders themselves, the bankrupt eourt may make or direct any
assessment or call necessary or preliminary to the collection of the assets, a8
fully to all intents and purposes as the stockholders or directors could have
done if the company had not gone into bankruptcy. After the commence-
ment 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 und the assets of the company became
thereby vested in the bankrupt court, which then had the power and control
over the assets that was previously vested in cither the chartered officers of
the company, or the stockholders, or both collectively. (Upton v. Hans-
brough, 10 B. R, 369; 8. c. 8 Biss. 417; Sunger v. Upton, 18 B. R. 226; 8. ¢.
1 Otto, 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,”
§ 5122.] NOTES OF DECISIONS. 781

yet the clause does not limit the right of the company or court to make an
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 pur-
poses, either to pay debts already contracted or to create a new fund for the
purpose of a business basis. (Jn ve Republic Ins. Co. 8 Biss. 452.)

Every stockholder is bound to take notice of what the bankrupt court
does in winding up the affairs of the company, and it is in the discretion of
the bankrupt court whether to direct notice to be given to the stockholders
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; 8, ¢.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 dissatistied with it, they have such a stand-
ing in the bankrupt 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 amit to do so, they are concluded in a collateral action.
Neither can the question whether the call is for a larger amount than is.
necessary be inquired into collaterally. (Upton v. Hansbrough, 10 B. R. 369;
s. c. 8 Biss. 417; Upton v. Burnham, 8 B. R. 221; s. c. 8 Biss, 520; Sanger v.
Upton, 13 B. R. 226; s. c. 1 Otto, 56; Michener v. Puyson, 13 B. R. 49; s. 0.8
C. L. N. 17; s. c. 2 W. N. 389.)

Not only the corporation, but its entire constituency, is before the court,
and full justice can be done not only to creditors, but between 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 ac-
count between stockholders. The district court, having all the powers of a
court of equity in the premises, can compel each stockholder to pay what in
equity and good conscience he ought to pay, and distribute the proceeds of
such payment among those entitled to receive it, whether creditors or stock-
holders who have paid more than their ratable share. (Jn re Republic Ins.
Co. 3 Biss. 452.)

An assessment may be made to pay the unearned premiums, to cancel poli-
cies yet unexpired. (Jn re Republic Ins. Co. 3 Biss. 452.)

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. (Jn re Republic Ins.
Co. 3 Biss. 452.)

An assignee of a bankrupt corporation may sue at law to recover the
balance due on subscription for stock. (Sanger vy. Upton, 13 B. R. 226; s. c.
1 Otto, 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 pro-
ceedings that culminated in the decree are not certified and there is no offer
to prove their contents. (Paysan v. Brooke, 1 W. N. 89.)

An assessment by the bankrupt court does not preclude a policy holder
from making a defense to an action on the premium note which shows that it.
is void. (Lamb v. Lamb, 13 B. R. 17; 8. ¢. 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. 1 Otto, 56.)

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, 18 B. R. 17; 8. c. 6 Biss. 420.)
782 THE BANKRUPT LAW. [$ 5122.

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. (Farral v. Walker, 13 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 repre-
sentation in regard to the establishment of a Jocal office which was never
carried out. (Michener v. Payson, 13 B. R. 49; 8.c. 8C. L. N. 17; 8. c. 2 W.
N. 339.)

A plea that a subscription was obtained by a fraudulent misrepresentation
must show that the defendant made use of reasonable diligence to make him-
self 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 wisrepresentation 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 dis-
covering the fraud and repudiating the subscription. (Upton v. Englehart, 3
Dillon, 496.)

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 as 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 pubtic. (Upton
v. Hansbrough, 10 B. R. 869; s. c, 8 Biss. 417.)

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
words “ non-assessable’’ are written or printed across the face of the certifi-
cates, 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. Up-
ton, 1 Otto, 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 stock-
holders, 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 stockholder 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 are the terms of the act 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
»

§ 5123. ] NOTES OF DECISIONS. 783

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 obliga-
tions which the legislature of that State has imposed upou the corporation,
and 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 corparation is liable for calls
for the unpaid portion made during his ownership without proof of any ex-
press promise made by him to pay such calls. (Webster v. Upton, 1 Otto, 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 purchaser
becomes liable for subsequent calls. (Webster v. Upton, 1 Otto, 65.)

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 pur-
‘chaser may waive it, and be held liable, without either a certificate or registry
of hisname. (Upton v. Burnham, 3 Biss. 481.)

An indebtedness on stock subscription is a debt that prevents a transfer
‘of the stock. (Jn 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. (Jn re Bachman, 12 B. R. 223; s. c. 2 Cent. L. J. 119.)

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. (dn
ve Bachman, 12 B. R. 228; s. c. 2 Cent. L. J. 119.)

The provision requiring the transfer to be upon the books of the company
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; s. c. 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 astock certificate, by assignment and blank trans-
fer to him, becomes thereby clothed, not only with all the rights, but with all
the obligations of a stockholder. (Upton v. Burnham, 8 B. R. 221; 8. ¢. 3
Biss. 520.)

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 re-
cover the amount. (Main v. Mills, 6 Biss. 98.)

Sxc. 5123.—Whenever a corporation created by the laws of
any State, whose busiuess 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 proceedings duly commenced against such corporation or
company before the courts of such State for the purpose of wind-
ing up the affairs of such corporation or company and dividing its
assets ratably among its creditors and lawfully among those enti-
tled thereto, prior to proceedings having been commenced against
such corporation or company under the bankrupt 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 ercditors of such corpo-
784 THE BANKRUPT LAW. (§ 5123.

ration or company while such State court shall remain actually
or constructively in possession or control of the assets of such cor-
poration or company shall be deemed valid notwithstanding pro-
ceedings in bankruptey may have been commenced and be pend-
ing against such corporation or company.

“The State laws relating to insolvent corporations are superseded by the
bankrupt 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 decree
of forfeiture the jurisdiction ends. It cannot go on and administer upon the
property of the corporation, for the insolvent laws of the State touching in-
solyent corporations, by virtue of which the court can alone act, are no longer
in force. The fact that the corporation hasexpired, 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 froma receiver appointed by a State court in an action.
to forfeit its charter. (Thornhill v. Bank of Louisiana et al. 3 B. R. 485; s. c.
1L. T. B. 156; s.c. 3L. T. B. 38; s.c. 20. 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 bank-
ruptcy 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. c, 5 Rich. [N. 8.] 159.)

An attorney of a corporation who advises it to apply for the benefit of the
bankrupt law, after the passing of an order by a State court restraining it
from disposing of its funds, is guilty ofa contempt to the State court. (Wat-
son v Citizens’ Savings Bank, 9 B. R. 458; s. c. 5 Rich. [N. 8.] 159.)

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 par-
ticular statute relating to insolvent corporations and its proceedings 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 cor-
poration, 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 en-
oe ae disposing of its property. (Watson v. Citizens’ Savings Bank, 11

RB. 161.)

This section 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 adju-
dication in bankruptcy. (Watson v. Citizens’ Savings Bank, 11 B. R. 161; in
ve Nat. 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 prevent
o adjudication of bankruptcy. (Jn 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 bankruptcy against a
co poralion (Adams v. Railroad Company, 4 B. R. 314; 8. c. 6 A. L. Rev.

9) ;
CHAPTER SEVEN.

FEES AND COSTS.

‘Sxo, Szo. i

5124.—Fees. 5127.—Justices of the Supreme Court
$126.—Traveling and incidental ex- may change tariff of fees.

enses, 5127 a.-Reduction of fees.
5126.—Marshal’s fees, 5127 p.—Returns.

Src. 5124.—In each case there shall be allowed and paid, in
addition (a) to the fees of the clerk of the court as now estab-
lished by law, or as may be established by general order for fees
in bankruptcy, the following fees, which shall be applied to pay-
ing for the services of the registers :

First. For issuing every warrant, (6) two dollars.

Second. For each day in which a meeting (¢) is held, three
dollars.

Third. For each order for a dividend, three dollars.

Fourth. For every order substituting an arrangement by trust
deed for bankruptcy, two dollars.

Fifth. For every bond with sureties, two dollars. es

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, (¢) 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.

(a) The fees for necessary services performed by the clerk in bankruptcy
proceedings, which are not provided for by the bankrupt act or the rules, but
are provided for by section 828, may rightfully be taxed and allowed under
the latter. (Jn re Alexander, 3 B. R. quarto, 20.)

The register is not entitled to the fees of clerk in addition to the fees given
by the act to the register. (In re Dean, 1 B. R. 249; s.c. 1 L. T. B. 9; in re
A. Alexander, 3 B. R. quarto, 20.)

 

* So amended by act of 18 February, 1875.
50
786 THE BANKRUPT LAW. [§ 5124.

The order of reference is not a process, and the clerk is not entitled to
a fee of one dollar for issuing it. (In re Dean, 1 B. R. 249; s.c. 1 L. T.
B. 9.)

Form No. 45 is a process. (Jn re Dean, 1 B. R. 249; s.c. 1 L. T. B. 9.)

(6) The register is not entitled to any fee for the list of creditors that ‘ac-
companies the warrant. (Jn re J. H. Robinson, 1 B. R. 285; s. c. 2 Ben. 145;
sc. 1 L. T. B, 25.)

(c) Where two meetings are held in the same case on one day, the register
is only entitled to three dollars. (Jn re J. H. Robinson, 1 B. R. 285; s. c. 2
Ben. 145; s.c. 1 L. T. B. 25.)

The word “ meeting,” wherever used in this section and elsewhere, means
a meeting of creditors, such.as is spoken of in sections 5033, 5092, 5093.
Cn re Macintire, 1B. R. 11; s.c. 1 Ben. 277; contra,in re Sherwood, 1 B. R.
344; s. c. 25 Leg. Int. 76.)

Whenever the register orders the creditors to meet, he is entitled to this
fee. (In re Dean, 1 B. R. 249; s.c. 1 L. T. B. 9; contra, in re J. H. Robin-
son, 1 B. R. 285; s. c. 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. (Jn 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. c. 2 Ben. 145; s.c. 1 L. T. B. 25.)

(d) The register is entitled to five dollars a day while acting under an
order to examine the papers and report upon their regularity. (Jn re Dean,
1B. R. 249; s.c. 1 L.T.B.9; in re J. H. Robinson, 1 B. R. 285; s. c. 2 Ben.
1453°s.c. 1 L. T. B. 25.)

The register is entitled to five dollars a day while acting under a special
order of court to take charge of the bankrupt’s property, and superintend
sales thereof. (Jn re Loder Brothers, 3 B. R. 517; s.c.8 Ben. 211; s.c.1L.
T. B. 159.)

The order of reference is not a special order, and the register is not enti-
tled to five dollars a day while acting under it. (Jn re Dean, 1 B. R. 249;
s.c.1L. T. B. 9; im re J. H. Robinson, 1 B. R. 285; s. c. 2 Ben. 145; 8. c. 1
L. T. B, 25; in re Sherwood, 1 B. R. 344; s. c. 25 Leg. Int. 76.)

Where the bankrupt appears in pursuance of an order for his examination,
and the examination is postponed without doing anything, the register is not
entitled to five dollars as for a day’s service. (Jn re I. Clark, 1 B. R. 188;
8. c. 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 deposited

as security for the fees of the clerk and register must be returned to the peti-
tioner. . (In re Magie, 1 B. R. 522; s. c. 2 Ben. 369.)

The balance that remains after deducting the fees of the register is to be
paid to the assignee. (Jn ve Sherwood, 1B. RB. 344; 8. 0. 25 Leg. Int. 76; in
re Appold, 1 B. R. 621; s. c. 6 Phila. 469: s.c.1L. T. B. 83; Anon. 1 B. R.
123; im re James, 2 B. R. 227; 8. c. 1 L. T. B. 121.)

If the assets are insufficient in an involuntary case, the court may order
i eae to pay the fees of the clerk and the register. (In re McBride, t
N. 42.)

When the register applies for an order for the payment of bis fees in ex-
§ 5124.] NOTES OF DECISIONS. 787

ceas of the deposit where there are no assets, it will be set down for hearing
upon notice to the petitioning creditors and the bankrupt. (Jn 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 ; a, 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; 8. c. 1 L. T. B. 23.)

REGISTER’S FEEs.

Examining schedules and certifying same correct........... $5 00d
Certified copy of adjudication of bankruptcy............... 0 45 rto0 33
Application for first meeting of creditors.................. 100d
Certified list of creditors for warrant...............0e000ee 0 95a
Supplemental warrant. .... 0.0.0... cece eee eee eee ee eeee 2 00a
Certified copies of schedules for assignees.... .......-.005 4 45 a
One day’s service under special order of reference upon peti-

tion for final discharge ........... cee sce e eee ee eee 5 00a
Application for meeting at the same time..... ..... -... 100d
Order to show cause and certifying copy for clerk.......... 1 00d
Application for second and third meetings........ ........ 2 00r toi 00
Deposition of assignee on his return...............0.e0 eee 0 Gd a
Service under special order to show cause why the bankrupt

should not be discharged ........... 00. c eee cece eee 5 00a
Second and third meetings of creditors............ ase ers 6 00 r to 3 00
Services, examination of bankrupt and proceedings, and for

making a certificate of conformity................ +. 5 00a
Discharge without opposition............... ees eee eee ee 2 00a

Cn re Dean, 1 B. R. 249; 8. c. 1 L. T. B. 9.)

ReaisTer’s FEEs.

Examining schedules and certifying same correct.......... $5 00d
Certified copy of adjudication of bankruptcy............. 0 45 rto 0 35 B
Certified copy of memorandum.......... 060s eee eens 0 45 r to 0 35
Certified list of creditors who have proved their debts, for

COE aise veered ne wags ye hae Shee ene eee 0 35a

Certified list of creditors who have proved their debts, for
assignee, not to be furnished except for dividend.... 035d

Order: Porm), Noy 1. ioscan ccdae te oe eee en eet ds anes not stated. a
Order appointing assignees and notice...............-65- not stated. a
Assignment of bankrupt’s effects.....0 6. feces eee creas not stated. a
Certified copy of schedules for assignee........--2+..-00- not stated. a
Taking bond of assignce..... 06.0... e cee e cece teen ee neee 2 00a
Applications for-second and third meetings.............. 2 00r tol 00
Final meeting under order to show cause.............+--6 3 00d
Second and third meetings.........-+. sce seer eee en eeee 6 00 r to 3 00
Final examination, 10 folios at 20c., certificate 25c., charge

for certificate... 0.6.0 eee ec eee eect tee eee e eens rto0 15
Examination of papers and certificate of conformity...... 5 00a
Discharge iceecasas ¢ grenade dees See once een eee wien 2 00 a

Stationery, postage, ‘rent, incidental expenses, clerk hire
GCs ses peawawodn Wie Waa iaNsices a iakein le bib GER aN WA AEE EOE ORY not stated. d
788 THE BANKRUPT LAW. [§ 5124.

CLERK’s FEES.

Filing and entering petition and schedules, and oaths A

and B,at 100 2.0... cc ccc ce cence eta e rece cee $0 30 a
Issuing order, Form No. 4............. Miia. heael Sims ue pan ee 1004
Drawing assignment and affixing seal of court........ .. 0 65 4
Issuing order, Form No, 45......... see eeee ve ee ne eeeeee 1 00a
Certificate of discharge and seal. .........2- +. +e eee eens not stated. a
Entering on six papers, certificate of day and hour of filing,

Bt L565 10 10110 wise ace semua sania est: nard rye he oye peed F not stated. a B,
Clerk’s certificate and seal to judge’s signature............ not stated. a B.

“To certificate of discharge..........-+..+++- Sager Geneas not stated. a B.

ASSIGNEE’s FEES.

Services rendered, Actual disbursements and............ $19 00a
(In re A. Alexander, 3 B. R. quarto, 20.)

CLERK’s FEEs.

Filing certificate, and entry of order to record assignment, $0

40 a
Filing, certifying, and entry of assignment............... 1 05a
Certified copy of assignment..............eee esse ee ees . 100d
VOSUUN Ee WALTAM Cis x 2ccisscase.g2z-peeeeersoleyand x Si arelen@ineg doe 6 bers ns TO 1 50 a
REGISTER’s FEEs.

Filing three papers, viz.: petition, assignment, and order of

Teleren Ce ins cess bc/an ees. Oecgetns eee a Sie ea, Ae e ence $0 75 r to 0 45
Certifying correctness of petition and schedules........... 0 55 a
Issuing orders of adjudication...............0..0-eeaeee 1 00 tr to1 60
Certifying same to clerk....... 2.0.0... cee cee eee eee eee 1 00
Entering case and proceedings in docket.............-.. 100d
Certifying abstract of same to clerk...................-- 0 25a
Certifying copy of petition and schedules................ 6 50 a
‘One hour’s employment order special order................ 0 40a
One day’s service at meeting of creditors................ 5 00 r to 3 00
Oath upon return of warrant........... 0.2.0. cee ese eens 0 50 a
Issuing order appointing assignee................200.05- 1 00) 4601 00
Certifying same to clerk............ 00.0.2 eee eee eee 1 00 ve
Application for meeting of creditors............. 2 bpasSieye 1 00
Issuing order calling the same............... 0.000.200 e ee 1 00 1 00
Certifying same to clerk............... 0.00.0. . eee ee eee 1 20 ane
Affidavit to order calling meeting. ....................4. 0 50 a
Affidavit to assignee’s report............. Keke Nalbed exct cigeaty 0 50a

Cn re Sherwood, 1 B. R, 344; 8. c. 25 Leg. Int. 76.)

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 three dollars were allowed. Also three dollars
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 apportioned like the traveling
expenses. Five dollars for each day employed at the following three stages,
to wit: the time preceding the issuing of the warrant, the first meeting, and
§§ 5125-6.] NOTES OF DECISIONS. 789

the final discharge, might be a reasonable allowance. As the cause was ev
parte, the last two points were not definitely decided.

Suc. 5125.—The traveling and incidental expenses of the reg-
ister, and of any clerk or other officer attending him, shall be set-
tled 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 apportioned by the judge.

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 Dean, 1 B. R. 249; 8. c. 1 L. T. B. 9.)

The expenses of the register should be apportioned among all the cases
attended to at the same time. (Jn re Sherwood, 1 B. R. 344; s. c. 25 Leg.
"Int. 76.)

Sec. 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 same to be taxed or adjusted by the court, and the oath of the
messenger shall not be conclusive as to the necessity of such ex-
penses,

For cause shown and upon hearing thereon, such further allow-
ance may be made as the court, in its discretion, may determine.

The marshal has the right to charge mileage for serving the order to show
cause, the injunction, and the adjudication. The travel so charged for must
be necessary travel. The language of the act precludes all constructive mile-
age 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. Ifhe has two or more processes in his hand at the
same time, and in the same matter or proceeding, 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 additional travel necessary, he may charge for
such additional travel, but no more. (Jn re Donahue eal. 8 B. R. 458; contra,
in re Talbot, 2 B..R. 280; 8. 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 two dollars for service of war-
rant, without adding, ‘‘and travel,” would preclude any charge for travel in
790 THE BANKRUPT LAW. [§ 5126.

serving that particular process, but that the payment of the marshal’s actual
and aecessary expenses in making such service were intended to be provided
for by the fourth clause, under the phrase ‘‘and other services.” (Jn re
Donahue e¢ al. 8 B. R. 453.)

The warrant is the warrant provided for by section 5019 and 5028 to be
issued after adjudication, and may perhaps include the provisional warrant
provided for by section 5024. (Jn re Donabue et al. 8 B. R. 458.)

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 toa deputy at the
place of service, and returned in the same manner. The manner of getting
the process there and back is 4 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 uny consequent failure of official duty. (Jn 7¢ Donahue cet al. 8
B. R. 458.)

When the notices are served by mail, the marshal can not charge for con-
structive mileage. (Jn 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 papev.
(In ve Dean, 1 B. R. 249; s.c.1L. T. B. 9; in re Talbot, 2 B. R. 280; s. c.
2L. T. B. 15.)

The amount paid to the printer for printing these notices may be allowed
as expenses for other services provided for by Rule XII. (Jn 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 affirma-
tively 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 justified the marshal in
placing a keeper over it, that the keeper actually continued 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. (Jn re Lowenstein et al.
3 B. R. 269; 8. c. 8 Ben, 422; im re Anon. 4 C. L. N. 210; in re Eugene Com-
stock, 9 B. R. 88.)

The marshal may appoint a watchman, although the goods could be safely
stored. (Jn 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 allow-
ance. (Jn ré Hare, 43 How. Pr. 86.)

There is no rule of law or practice authorizing the marshal to charge a
commission upon his own cost bill. (Jn 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
of fees, covering all the acts which he may be called upon to perform, 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 tax-
ing the costs of the marshal are: 1st. To allow him such fees as are specif-
ically 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 de-
termined by analogy to those allowed for similar services rendered by him
in the district court in cases at common law and in chancery. If he sends
§ 5126. ] NOTES OF DECISIONS. 791

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, heis en-
titled to be paid the reasonable expenses of such deputy, but, in that event,
he is not entitled to mileage. (Jn re Anon. 4 C. L. N. 210.)

Mileage may be allowed without an affidavit that the same was necessary
and actually performed, All that is necessary is, that the place of service be
‘stated in the return, so that the correctness of the distance 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 re-
late 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. (Jn ve Donahue et al. 8 B. 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 inter-
est or otherwise for such advances. (Jn ve Donahue et al. 8 B. R. 453.)

The following list shows the decisions that have been made in the most
important cases. These abbbreviations have been used to wit: a, allowed; d,
disallowed.

Service of Warrant........ ccc cee cee cece e cence eeaes $2 00 a
Necessary travel, 592 miles, at 5¢............c00 cece ee 29 GO d } Necermry oe
Notices to creditors, 27, at 10c............ eee eee ee . 270 a
Actual and necessary expenses in publication of notices

—advertising $4, preparing same, 90c., postage, en-

VOLOPCS: icc. cco gens dares Teed Nines wae ee 498 a
Preparing 27 notices, 118 folios, at 10c................ 11 80d
Stamps and envelopes, 27 notices, at 4c..... .......... 1 08 a
Furnishing two copies of advertisements, at 5c........ 0 10a
Making affidavit to warrant............ 2c cece eens 0 50 a
Draft and copy costs, 1 folio............ eee eee eee 010 a
Attendance sss a3 cess dere ede che bos Vaasa es 1 50a

(In re Talbot, 2 B. R. 280; s. c.2L.T. B. 15.)

Serving five defendants and parties in Mercer Co. with

OLGED site sas gis ees em. oe Vans wet te puis 25a ws kee $10 00 a
Three copies of petition on defendants, $6 00; copies

Pe: Die aagcetigromlaca maid siden cae aera sedge Seay eee 8 25 a
Warrant of seizure, $2 00; one copy, $1 50........... 3 50a
Expenses of deputy sent to Mercer Co., $29 30; tele-

TAM: «was ess nas sd nme «swine s siete eas tea wanes 81 90 a

Wages of deputy in possession 9 days after seizure, at $200 18 00 a
Serving order of adjudication on two parties, $4 00;

copy, 50c.; mileage, $17 00...........200ee eee ae 21 50 a
Preparing notice publication, 40c.; paid printers, $9 60. 10 00 a
Preparing notice 1st meeting, $7 60; services, $3 00;

postage, $1 00........ cece cece cece cere eee nee 11 60 a
Serving orders on two keepers to deliver, $400; copy,50c. 4 50 a
Copies of inventories... 0.20.66. cee cence teens 5 76 a
90 days keepers’ fees, at $2 00.....-....-. cee eee eee 180 00 a

Cn re Anon. 4 C. L. N. 210.)
Service of warrant.... 2. es cceeee eee e eee eee eneees $2 00 a
Each written notice to creditors in schedules, at 10c.... 6 90 a

Necessary expenses in publication of notices,........-. 4 00a
792 THE BANKRUPT LAW. [S§ 5127-27 B.

(In re A. Alexander, 3 B. R. quarto, 20.)

Sro. 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
bankruptey, or from reducing the fees prescribed in the three pre-
ceding sections, in classes of cases to be named in their general
orders.

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 pro-
vision 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 provision is so made.
(in re Donahue et al. 8 B. R. 453.)

Sec. 5127 «a (22 June, 1874, § 18).—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 regis-
ters 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 pro-
vision shall be and remain in force until the justices of the Su-
preme Court of the United States shall make and promulgate new
rules and regulations in respect to the matters aforesaid, under
the powers conferred upon them by sections four thousand nine
hundred and ninety [ten] and os thousand one hundred and
twenty-seven [forty-seven] of said act, and no longer, which duties
they shall perform as soon as may be.

Bon reduction applies to the fees of the clerk. (Jn re Hunt, 1 Cent. L. J..

Suc. 5127 B (22 June, 1874, § 19)—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 justices of the
Supreme Court of the United States, as well as such other or
further information as may be required by said justices,

Lrst, the number of cases in bankruptcy in which the war-
rant 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 ;

Thirdly, the total amount of all other fees, costs, expenses,.
§ 5127 B.) NOTES OF DECISIONS. 793:

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
emoluments, exclusive of actual disbursements'in bankruptcy, re-
ceived 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 bankrupts ; ;

Thirdly, the amount and rate per centum of all dividends de-
clared ;

Fourthiy, the disposition of all such cases ;

Fifthly, the number of compulsory cases in bankruptey com-
ing 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 ;

Highthly, the amounts and rate per centum of all dividends.
declared in such cases ;

Ninthly, the total amount of fees, charges, costs, and emolu-
ments 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, re-
spectively and separately, in his charge during said year ;

Secondly, the amount of assets and liabilities therein, respect-
ively and separately ;

Thirdly, the total receipts and disbursements therein, respect-
ively 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 emolu-
ments, of every kind therein, earned or received ;

Sixthly, the total amount of expenses incurred by him for
legal proceedings and counsel fees ;

Seventhly, the disposition of the cases respectively ;

Fighthly, a summarized statement of both classes as afore-
said.

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 bankruptey pending at the beginning of the
said year ;
794 THE BANKRUPT LAW. [§ 5127 B.

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 ;

Siathly, 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 dur-
ing said year.

And he shall make a classified statement, in tabular form, of
all his fees, charges, costs, and emoluments, respectively, earned
or accrued during said year, giving each head under which the
same accrued, and also the sum of all moneys paid into and dis-
bursed 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 statement 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-gen-
eral, 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.
CHAPTER EIGHT.

PROHIBITED AND FRAUDULENT TRANSFERS.

Sec. SEo,
5128.—Preferences by insolvent. 5130a.-Limitations in involuntary bank-
5129.—Transfers of property to defeat the ruptcy.

act. 513],—Fraudulent agreements,
5130,—Presumptive evidence of fraud. 5132.—Penalties against fraudulent bank-

rupt. ;

Sxo. 5128.—If any person, being insolvent, or in contempla-
tion 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 persou 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 property, either directly or indirectly, abso-
lutely or conditionally, the person receiving such payment,
pledge, assignment, transfer, or conveyance, or to be benefited
thereby, or by such attachment, having reasonable cause to be-
lieve such person is insolvent, and* knowing that such attach-
ment t sequestration, seizure, payment, pledge, assignment, or
conveyance is made in fraud of the provisions of this Title, the
same shall be void, and the assignee may recover the property, or
the value of it, from the person so receiving it, or so to be bene-
fited.t 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.

Rules of Construction,

Sections 5128 and 5021 are very nearly related to each other in their pro-
visions, and must be construed together in pari materia. Section 5128 in ex-
press language applies equally to voluntary and involuntary cases. Therefore
all the qualifications and conditions prescribed by section 5128, not inconsist-
ent with the provisions of section 5021, will apply to proceedings under the
latter section ; and all the qualifications, conditions, and prohibitions of sec-
tion 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 pro-

 

* So amended by act of 22 June, 1874, § 11.
+ So amended by act of 22 June, 1874, § 11.
t So amended by act of 22 June, 1874, § 11.
796 THE BANKRUPT LAW. [§ 5128.

ceedings under section 5128. (Jn re Tonkin & Trewartha, 4 B. R. 52; 8. c. 1
L. T. B. 232; 8c. 3 L. T. B. 221; in re Richter’s Estate, 4 B. R. 221; 8.0. 1
Dillon, 544; in re Black & Secor, 1 B. R. 353; s. c. 2 Ben. 196; 8. ¢. 1LT.
B. 89; Wadsworth y. Tyler, 2 B. R. 316; 8. c. 2 L. T. B. 28.)

It is the intention of the bankrupt act to prevent all preferences by an in-
solvent 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 “in-
solvency, or contemplation of insolvency.”. (In re Arnold, 2B. R. 160; Haughey
vy, Albin, 2 B. R. 399; s. c. 2 Bond, 244; s.c. 2L.T.B. 47; Foster v. Hackley
& Sons, 2B. R. 406; s.c. 2L. T. B. 8; 8.0.10. L.N. 187; in re Kingsbury,
3B. R. 318.)

It is as much the policy of the bankrupt act to uphold liens and trusts
when valid, as it istoset them aside when invalid. (In re Wynne, 4 B. R. 23;
s. c. Chase, 227; s.c.2L. T. B. 116; Potter et al. v. Coggeshall, 4 B. R. 73.)

What Facts bring a Transfer within the Provisions of this
Section.

This section is designed to defeat a preference toa creditor, while the next
is designed to defeat any transfer of property. To make a transfer void the
following facts must concur:

ist. 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 bankrupt 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. (TZoof v. Martin, 6 B. R. 49; s c. 13 Wall. 40; Foster v. Hackley &
Sons, 2 B. R. 406; 8. c.2 L. T. B. 8; 5.c. 1 C. L. N. 187; in re Hunt, 2 B.
R, 589; s.c. 1 0. L. N. 169; Street v. Dawson, 4 B. R. 207; 8.c.1 L. T.B.
369; Haughey v. Albin, 2 B. R. 399; s.c. 2 Bond, 244; 5. c. 2 L. T. B. 473
Scammon v. Cole, 5 B. R. 257; Forbes v. Howe, 102 Mass. 427; Dow v. Sargent,
15 N. H. 115; Rice v. Melendy, 41 Iowa, 895.)

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 proceeds or follows the preference. (Clark v. Iselin, 11B.
R. 837; 8. c. 21 Wall. 360.)

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 vy. 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. (Jn
re Hunt, 2 B. R. 589; 8, c. 1 C. L. N. 169; im re Hafer & Bro. ; in re Beck, 1
B. R. 586; s. c, 25 Leg. Int. 164.)
.

§ 5128.] NOTES OF DECISIONS. 797

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. (Jn re Drummond, 1 B. R. 231; s. 0c. 1 L. T.B.
7; in re Dibblee et al. 2 B. R. 617; 8. c. 3 Ben. 283; in re Schick, 1 B. R. 177;
8.0. 2 Ben. 5; s.c. 1 L. T. B. 28; in re Dunkle & Dreisbach, 7 B. R. 72;
Lewis v. Sloan, 68 N. C. 557; Love v. Love, 21 Pitts. L. J. 101; Atkinson v.
Farmers’ Bank, Crabbe, 529; Brooks 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 vol-
untary petition. It follows that an adjudication does not, per se, affect the
title of a purchaser. (Jn re Williams & Co. 3 B. 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. co. 2 Lans. 377.)

Insolvency.

The term insolvency is not always used in the same sense. It is some-
times 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 inability 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 persons not engaged in trade or commerce,
the term.may, perhaps, have a less restricted meaning. The bankrupt act
does not define what shall constitute insolvency, or the evidence of insolvency
in every case. (oof v. Martin, 6 B. R. 49; 5. c. 138 Wall. 40; 3.0.4 B. R.
488; s. c. 1 Dillon, 203.)

Insolvency, as used in the bankrupt act, does not mean an absolute inabil-
ity to pay one’s debts, at afuture time, upona settlement and winding up of
all a trader’s concerns ; but a trader may be said to be in insolvent circum-
stances 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. RB. 271; 8. c. 1 Otto, 114; Merchants’ National Bank of
Hastings v. Truax, 1B. R. 545; s.c.1L. T. B. 73; in re Gay, 2B. R. 858; 8.
c.1L. T. B. 73; in re J. B. Wright, 2 B. B. 490; Wadsworth v. Tyler, 2B. R.
816; s. oc. 2L. T. B: 28; Graham v. Stark et al. 3 B. R. 357; 3. c. 3 Ben. 520;
Scammon vy. Cole et al. 3 B. R. 393; 3. ¢. 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,
7B. R.174; in re Walton et al. 1 Deady, 442; Wager v. Hall, 5 B. R. 181;
8. c. 8 Biss. 28; 8. c. 16 Wall. 584.)

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 dan-
ger 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
cases, inasmuch as the determination of each case rests largely upon its own
peculiar facts. It is generally held by the bankrupt 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
798 THE BANKRUPT LAW. [§ 5128.

bankrupt 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 to narrow ;
while if would be quite too narrow and restricted to hold that failure to pay
some one debt when due is evidence of insolvency in all cases under the act.
Whether a single instance of non-payment of a debt at maturity would be evi-
dence in a given case of insolvency depends somewhat upon the magnitude of
the debt, the locality of the debtor, and what is the ordinary course of busi-
ness and custom, in that respect, of the locality where the debtor resides, and.
upon such other facts and circumstances as will bear upon the question of in-
solvency. A different course would ignore the usage and course of business
recognized between the debtor and creditor class in that particular locatity,
and would present the spectacle of the mercantile class saying the trader 1s
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 ordi-
nary course, as persons carrying on trade there usually do. Hence it may be,
and undoubtedly is, true that insolvency in commercial centers is not insolv-
ency 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 what is evidence of insolvency in London,
or Paris, or New York, is not evidence of insolvency everywhere. (Driggs
v. Moore, Foote & Co. 3 B. R. 602; s. c. 1 Abb. C. C. 440; Wager v. Hall, 5
B. R. 181; 8. c. 3 Biss. 28; s.c. 16 Wall. 584.)

A debtor is legally insolvent when he has not sufficient property subject to
execution to pay all his debts if sold under legal process, and commercially
insolvent when he has not the means to pay off and discharge his commercial
obligations as they become due in the ordinary course of business. (Hurrison
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 insolvent
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 procuring 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 untar-
nished, his credit as good, his friends as numerous and zealous, and, finally,
the business enterprise in which he has just engaged as promising, in pros-
pectu, as ever before. (Potter et al. v. Coggeshall, 4B. R. 73.)

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 ac-
cepted or sound definition of that term as used in the bankrupt 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 v. City Bank, 5 By
R. 270; 8. c. 9 B. R. 97; s. c. 1 Dillon, 476; sc. 17 Wall. 473.) ;

The commission of an act of bankruptcy is considered as a test of insolv-
ency, showing conclusively the inability of the debtor to pay his debts or
carry on his trade. (Shawhan vy. 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; sc. 9B. R. 97; 8. c, 1 Dillon, 476; 8. c. 17 Wall. 473.)

The statute does not require that the debtor should know that he isin-
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:
§ 5128.] NOTES OF DECISIONS. 799

scope of this section, if the other elements contemplated by the statute to.
render the transaction a nullity coexist. (Haughey vy. Albin, 2 B. R. 899; s.
c. 2 Bond, 244; 8. c.2L. T. B. 47; Rison v. Knapp, 4 B. R. 849: s. c. 1 Dil-
lon, 186; Wager v. Hall, 5 B. R. 181; s. c. 8 Biss. 28; s. c. 16 Wall. 584; in
re Clark & Daughtrey, 10 B. R. 21.)

The fact that paper secured by a deed of trust is permitted to remain past
due fora length of time, indicates cither 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; 8. c. 8 B. R. 49; 8. c.
1 Dillon, 164; 8. 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 isnot binding on any of the creditors unless all accept it, and
will not relieve the debtor from insolvency. (Kinsing v. Bavtholew, 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 satisfac-
tion of the debt. (Burpee v. Nat’l Bunk, 9 B.R. 314; s. c. 5 Biss. 405.)

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 bé aware of the legal definition of insolvency.
(Graham v. Stark et al. 3 B. R. 357; 8. c. 3 Ben. 520; Scammon v. Cole et al.
3B. R. 393; s.¢c.2 L. T. B. 103; Warren v. Tenth Nat'l Bank, 7 B. R. 481;
s. c. 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 vy. Hvans,
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 proceed-
ings in bankruptcy, the jury may find that he was insolvent when he made
the transfer. (Clarion Pank v. Jones, 11 B. R. 381; s. ¢. 21 Wall. 325; 8. o.
2A. L. T. [N. §.] 135.)

The bankrupt may be asked whether on the day of the transfer he be-
lieved 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. (O¢is v. Hadley, 112 Mass.
100.)

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 dishonest. Although a prefer-
ence of creditors of an insolvent may sometimes be unjust to other creditors,
it is not morally wrong. But the tramers of the bankrupt 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 creditors. But they found that the general principle
could not, without hardship, be made of universal application. When a
creditor had obtained, by fair means, a lien upon any property of the bank-
800 THE BANKRUPT LAW. [§ 5128.

rupt, 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 bankrupt law. _ Congress, there-
fore, adopted a conventional rule to determine the validity of preferences.
Tn 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 prefer-
ence, 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 action
for four months, the transaction, being otherwise honest, will stand; but if,
by the debtor himself, or by any of his creditors, that law is invoked within
four months, the transaction will not stand, but the money or property re-
ceived by the party becomes a part of the common fund for distribution.
(Bean v. Brookmire et al. 4 B. R. 196; s. c. 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.
(Potter et al. v. Coggeshall, 4 B. R. 73; in re Wynne, 4 B. R. 23; s. c. Chase,
227; sc. 2L. T. B. 116; in re Fuller, 4 B. R. 115; 8. c. 1 Saw. 243; Bean v.
Brookmire et al. 4 B. R. 196; s. c. 1 Dillon, 24; in ve Butler, 4 B. R. 303; 8.
co. Lowell, 506; Maurer v. Frantz, 4 B. R. 481; s. c. 8 Phila. 505; Hubbard
v. Allaire Works, 4 B. R. 623; s.c. 7% Blatch. 284; in re Dow, 6 B. R. 10;
Hail vy. Hayner, 8 OC. L. N. 402; Collins v. Gray, 4 B. R. 631; s. c. 8 Blatch.
483; Israel v. Ayer, 2 Rich. [N. 9.] 244; Hislop v. Hoover, 68 N. C. 141; in
re G. H. Lane & Co. 10 B. R. 135; Sidener v. Klier, 4 Biss. 391; Dennett v.
Mitchell, 6 Law Rep. 16; s.c. 1 N. Y. Leg. Obs. 356.)

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 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 necessary 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 de-
livery of it for record was in no sense his act, but theirs. The preference
which the law condemns is a preference made within the limited time by the
bankrupt, and not a priority lawfully gained by a creditor; 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. (Jn re Wynne, 4 B. R.
23; 8. c. Chase, 227; s.c. 2L. T. B. 116; Seaver v. Spink, 8 B. R. 218; 8. ©.
65 Ill. 441; Cragin v. Carmichael, 11 B. R. 511; 8. c. 2 Dillon, 519; Folsom
v. Olenvence, 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.
a. v. Spink, 8 B. R. 218; s.c. 65 Ill, 441; Gibson v. Warden, 14 Wall.

If a deed is sealed and delivered on one day, and acknowledged on a suh-
sequent day, the time begins to run from the day of the delivery, and not from
the time of the acknowledgment. (Wood vy. Owings, 1 Cranch, 239.)

If an insolvent debtor conveys property to a creditor to hold in trust for.
§ 5128.] NOTES OF DECISIONS. 801

5 °
such uses as shall be designated before a certain time in any composition be-
tween the debtor and the other creditors, but if no composition is made before
that time, then absolutely to his own use, whereby the debt is to be dis-
charged, the limitation runs only from the time so stipulated if no composi-
tion is made. (Haskill vy. Frye, 14 B. R.) ;

The ratification by one of the unauthorized act of another operates upon
the act ratified precisely as though authority to do the act had Leen previ-
ously given, except where the rights of third parties have intervened between
the act and the ratification. If the depositary of a bond appropriates 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 without the substitution. (Cook v. Tullis, 9 B.
R, 433; 8, 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 be is informed of the debtor’s insolvency and of the deposit 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.)

If the president of a corporation executes a deed without authority, the
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 ratifi-
cation to relate must take place at a time and under circumstances when the
ratifying party may himself lawfully do the act which he ratifies. (Cn re
Kansas 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
tohim. (Brooks v. Scoggins, 11 B. R. 258; 8. c. 9 Pac. 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 re-
ceived and accepted by him. (Brooks v. Scoggins, 11 B. R. 258; 8. c. 9 Pac,
L. R. 12.)

A preference given by a firm, of which only one member subsequently goes
into bankruptcy, can not be avuided 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 specified period, or the
preference becomes merely the payment of a just debt. (Forsaith v. Merritt
et al. 3 B. R. 48; 8. c. Lowell, 336; s.c. 1 L. T. B. 168; in re T. 8. Shepard,
3 B. R. 172; 8. 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; 8. 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. (Jn ve G. H. Lane
& Co. 10 B. R. 135.)

Intent to Prefer.

The present bankrupt act avoids a sale made with a view to give a prefer-
ence, 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

51
802 THE BANKRUPT LAW. [§ 5128.

‘e
a preference,” must be construed ¢o as to include an intent to give one cred-
itor 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 is the necessary aud 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, 2B. R. 406; 8. c. 2 L. T. B. 8;
5. c.10C. L. N. 137; Adi e¢ al. v. Thorner, 3 B. R. 118; 8. c. 2 Bond, 287; 8.
c.1 L. T. B. 129; Brock v. Terrell, 2 B. R. 643; Sawyer v. Turpin, 5 B. R,
339; s.c. 18 B. RB. 271; s.c. 1 Otto, 114; im re Forsyth & Murtha, 7 B. R.
174; in re George & Proctor, Lowell, 409; Arnold v. Maynard, 2 Story, 349;
Morse v. Godfrey, 3 Story, 364; Hvereit v. Stone, 8 Story, 446; Peckham v.
Burrows, 3 Story, 544; Dennett v, Mitchell, 1 N.Y. Leg. Obs. 356; s.c. 6 Law
Rep. 16; 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 hisacts. His mere private intention can not overcome
the legal intention and purport of his acts. (Arnold v. Maynard, 2 Story, 349;
Morse v. Godfrey, 3 Story, 364.)

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. 8 B. R. 602; 8.0.1 Abb. C. C. 440; Rison v. Knapp, 4 B. RB. 349;
s.c. 1 Dillon, 186; in re Gregg, 4 B. R. 456.) 4

The intentions of parties are to be judged by the legal effect of their acts.
(Samson v. Burton et al. 4 B. R. 1; 3.¢. 5 Ben. 325; Traders’ National Bank v.
Campbell, 3 B. R. 498; s. c. 6 B. R. 353; 8. c. 2 Biss. 423; 14 Wall. 87.)

The intent to prefer may be inferred from the fact of preference. (Rison
vy. Knapp, 4 B. R. 349; s. c. 1 Dillon, 183.)

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. Wilcoz,
1 Dillon, 161; Giddings v. Dodd, 4 B. R. 657; s. c. 1 Dillon, 1135.)

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.
Cin re George & Procter, Lowell, 409. :

Motive and intent are not identical. An intent often exists where motive
is wholly wanting and indifference exists. (Wurren v. Tenth Nat'l Bunk, 7 B.
R. 481; s. c. 10 Blatch. 493.)

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.c. 4B. R. 488; s. c. 1 Dillon, 203; s.c. 13 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 in-
tend 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 v. City Bank,
5 B. R. 270; 8. c. 9B. R. 97; 8. c. 1 Dillon, 476; 8. c. 17 Wall. 473.)

Ifthe intent of the debtor is to give a legal quality to a transaction, it
must be an intent accompanying an act doue by himself, and not an intent or
§ 5128.) NOTES OF DECISIONS. 803

purpose arising in his mind afterwards, while third persons are acting. Where
a judgment is obtained by means ofa power of attorney, the inquiry as to his
inteot must be limited to the time when he executed the power. (Buckingham
v. McLean, 13 How. 151; 8. 0. 8 McLean, 185.)

Some payments may be preferences though made in what seems to be the
ordinary course of business, and others may not be though made out of it.
It is a questioa of intent in each case. The mode in which payments are
made is usually important, but only as evidence of intent. (In re George &
Proctor, Lowell, 409.)

The act does not require the debtor to kyow 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. Heis ,
presumed to know and is chargeable with knowledge of it, and neither igno-
ance nor willful blindness will exonerate him from the operation of its pro-
visions. When he is insolvent in fact, he is chargeable by law with knowledge
of ‘such condition, and it.follows as a logical sequence, that if he pays or se-
cures One creditor in full, not having enough to pay all, the transfer or pay-
meat necessarily operates as a preference, and he is held to intend the natural
and logical consequences of his acts. (Wager v. Hall, 5 B. R. 181; 8. 6. 3
Biss. 28; s. c. 16 Wall. 584.)

Every person is presumed to know his pecuniary condition. The presump-
‘tion, however, may be rebutted, and a person may show that he was innocently
mistaken as to hia true condition, but the burden is upon the person setting
up such a claim. (Jn re Warner et al. 5 B. R. 414; Sedgwick v. 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. 323; 8. c. 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 o taining a judgment
where the information was not given with that view or design. (Britton v.
Payen, 9 B, R. 445; 8. c. 7 Ben. 219.)

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 Bunk, 7 B. 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 busi-
ness, The natural and inevitable effect of thus incumbering his property is
to give the secured creditors a fraudulent preference. (Graham v. Stark et al.
3 B. R. 357; s.c. 8 Ben. 520; Scammon v. Cole et al. 3 B. R. 398; 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 preter-
ence that it would be almost impossible to explain it away. (Jn re McKay &
Alaus, 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 traxs-
ferring 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
804 THE BANKRUPT LAW. [§ 5128.

and obviously had the effect to give a preference to a creditor, was not in-
tended to have that effect. (Jn re Kingsbury et al. 3 B. R. 318.)

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 preé-
erence. (Haughey v. Albin, 2 B. R. 399; 8. c. 2 Bond. 244; s.c.2 L. TB.
47; in re Hater & Bro. ; in re Beck. 1 B. R. 586; 8. c. 25 Leg. Int. 164; Clarion
Bank v. Jones, 11 B. R. 881; 8. 0, 21 Wall. 825; 8. c. 2A. L. T. [N. 8.] 185.)

Tt 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 up 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 conclusion necessarily
follows, from such a state of facts, that he does intend to do what is the nec-
essary consequence of what he does; or, according to the oft-repeated state-
ment of the books, a man is supposed to know what is the necessary conse-
quence of his acts. (Trader's National Bank v. Campbell, 3 B. R. 498; s. c-
6 B. R. 353; 8. 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 judgment
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; 8. c. 7 Pac. L, R. 121; in re Gregg, 4 B. R.
456; Wager v. Hall, 5 B. R. 181; s. c. 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, an 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 indedtedness 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 previously
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. Howe, 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 wholly
untenable to say that a trader who knows himself to be insolyent can mort-
gage his property to secure a pre-existing debt without entertaining 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 appears 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
§ 5128.] NOTES OF DECISIONS. 805

hoped to do so. It matters not what was his principal motive, if he was act-
ually 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 subsequent good or ill fortune in business enter-
prises. This view is in harmony with the spirit and intention of the bankrupt
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 8B. R. 602; 8c. 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 escaze, every act of an insolvent that tends to defeat that purpose
should be construcd strictly as against him, and courts should indulge every
presumption that is permissible, according to well settled rules of law, to se-
cure 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 cnergetic and hopeful debtor struggling with an honest intent to
pay all his debts; but to allow every embarrassed debtor to go on and sus-
tain his act, because he says he thought he could go through, and hold as
valid his payments and securities, would be to defeat altogether the object
and provisions of the bankrupt act. (Wager v. Hal/, 5 B. R.181; 8. c. 3 Biss.
28; sc. 16 Wall. 584; 7 7e Warner, 5 B. R. 414; Jones v. Howland, 49 Mass.
877; Clark v. Iselin, 11 B. R. 387; 8. 0. 21 Wall. 360.)

The transfer by a debtor who is insolvent of his property or a considerable
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. Hatt, 5 B. R. 181; 8. c. 3 Biss. 28; s. 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 intention not
to stop payment may make valid a security, which is partly given for money
previously advanced, if coupled with sufficient present advantages to the
debtor; and there muy even be cases where the purpose and expectation to
keep on are so manifest that no intent to prefer can be found, though the in-
solvency is well known to both parties. (Jn re McKay & Aldus, 7 B. R. 230;
‘8. Cc. Lowell, 561.)

The mere omission by an insolvent dehtor, when he is sued fcr a just debt,
to file a petition in bankruptcy, is not sufficient evidence of an intent to pre-
fer or deteat the operation of the act. (Wilson v. City Bank, 5 B. BR. 270;
:8.¢. 9B. R. 97; s.c. 1 Dillon, 476; s. c. 17 Wall. 473.)

To make an effort by dilatory and false pleas to delay a judgment in a
State court, when he is sued for a just debt and has no defense, is a moral
wrong and a fraud on the due administration of the law. There is no obli-
gation on him to do this, cither in law or in ethics. If the debtor neither
hinders nor facilitates a creditor in the prosecution of his suit, an intent to
prefer can not be inferred from his conduct. (Wilson v. City Bank, 5 B. RB.
27; s.¢c. 9B. R. 97; s.c¢. 1 Dillon, 476; 8. ¢. 17 Wall. 473.)

There is no legal or moral obligation upon aa insolvent, when sued by one
creditor in an 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 peti-
tion under any circumstances. (Wilsen v. City Bank, 5 B. R. 270; 8.¢.9 B. °
R. 97; s. c. 1 Dillon, 476; s. c. 17 Wall. 478.)

It is wholly immaterial whether the preference was voluntary, or by reason
806 THE BANKRUPT LAW. [$ 5128.

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 cred-
itor. Our law does not adopt this presumption as conclusive. It defines a
preference in the statute itself; or, rather, it has language which is inconsist-.
ent with the English definition. It makes the intent to prefer or give an ad-
vantage 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; 8.¢.2L. T. B. 8; 8.¢c.1C.L.N. 187; Wilson v. Brinkman et al, 2 B.
R. 468; 8.0.10. L. N. 198; én re Batchelder, 3 B. R. 150; s.c. Lowell, 373;
Giddings v. Dodd, 4 B. R. 657; 8. c. 1 Dillon, 115; Sawyerv. Turpin, 5 B.R.
399; s. c. 18 B. R. 271; s. c. 1 Otto, 114; in re McKay & Aldus, 7 B. R. 230;:
s. c. Lowell, 561; Clarion Bank v. Jones, 11 B. R. 881; 8. c. 21 Wall. 325; 8.
c.2A.L. T. [N. $.]185; Atkinson v. Farmers’ Bank, Crabbe, 529; vide Ashley
v. Steere, 2 W.& M. 347; McMechen v. Grundy, 3 H. & J. 185; Taylor v.
Whitthorn, § Humph. 340; Phenix v. Ingraham, 5 Johns. 412; Wilkinson's:
Appeal, 44 Penn. 284.)

An agreement for a future security 1s 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, im-
poses no higher legal obligation upon the debtor than his promise of pay-
ment involved in the contracting of the debt. His fulfilment of the one is:
equally open to objection as a preference as is his fulfilment of the other.
(Forbes vy. Howe. 102 Mass. 427; Second National Bank v. Hunt, 4 B. R. 616;
8. ©. 11 Wall. 891; Sawyer v. Turpin, 5 B. R. 339; s. c. 18 B. R. 271; 8. ¢.
1 Otto, 114; Graham v. Stark, 3 B. R. 357; s.c. 3 Ben. 520; Harvey v. Crane,
5 B. R. 218; 8. 0. 2 Biss. 496; contra, in re Wood, 5 B. R. 421; in re McKay
& Aldus, 7 B. R. 230; s. c. Lowell, 561; in ve Connor & Hart, Lowell, 538 ;.
vide McMechen v. Grundy, 3 H. & J. 185.)

When an agreement 1s made that certain and specific property shall be
conveyed, and the conveyance is made within a reasonabie time thereafter,
the advance is considered as a present consideration for the conveyance.
(Gattman v. Honea, 12 B. R. 493; 8.0.7 C. L. N. 395; 8. c. 10 Pac. L. R. 4.)

A mortgage upon real estate executed immediately before the commence--
ment of proceedings in bankruptcy, in pursuance of a parol agreement made
long before that time, is not a preference, and is valid as against the assignee
of the mortgagor. (Burdick v. Jackson, 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.)

Where the contract of sale contemplates that the payment and transfer
shall be synchronous, the vendee does not receive a preterence by accepting 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 prepara-
tion, and the debtor fails in the mean time. (Jn re McKay & Aldus, 7 B. R.
2380; s.c. Lowell, 561; im re Connor & Hart, Lowell, 532; im re Perrin et al.
7 B. R, 283.)

_ Asa 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.
§ 6128.) NOTES OF DECISIONS. 807

of creditors under the bankrupt law must depend upon its effect upon the
property at the time the act was done which might be supposed to operate as
_atransier. This was the taking of possession under the license contained in
the mortgage. It is not competent for a party to give his authority in rela-
tion to property which he may afterwards acquire, and thus prefer a creditor
who shall take possession when he is known to be insolvent, and thus avoid
the effect of the bankrupt law, because, literally, he has not made a transfer.
That would be a facile method of evading the scope and spirit of the law.
Tn legal effect the transaction was a continuing act from the date of the au-
thority to the taking of possession, 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. (Jn re Eld-
ridge, 4 B. R. 498; 8. ©, 2 Biss. 8362; Smith v. Ely, 10 B. R. 558; Robinson v.
Ellwtt, 11 B. R. 553.) :

A mortgagee who has ‘omitted to record his mortgage obtains a preference
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 unsecured creditor.
(Kune v. Rice, 10 B. R. 469.)

Tf 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, how-
ever, to be defeated by any intervening right before record is made or pos-
session 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; 8. c. 18 B. R. 2713; 8, c. 1 Otto, 114.)

A mortgage is not a preference where the debt is secured by a prior mort-
gage covering goods subsequently acquired, if both mortgages cover the same
goods. (Brett v. 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 included in
the latter. (Brett v. Carter, 14 B. R. 801; Barron v. Morris, 14 B. R. 371.)

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 instrument gave hima
preference. (Jn re Abram Barman, 14 B. R. 125.)

Where the consequences of an act are penal and a fair and honest motive
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. Shilton,
201. 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 preference,
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; 3. 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. (Jn re Joseph Horton eé 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 pay-
£08 THE BANKRUPT LAW. [§ 5128.

ment of his creditors in the board, an assignment of the seat before 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. 2 Saw. 655.)

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 thanthe mortgage debt. (Ooze v. Hale,
8 B. R. 562; s. c. 10 Blatch. 56; Catlin v. Hoffman, 9 B. R. 842; s. 0. 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 the time
of the conveyance was paid to obtain the conveyance rather than as a consid -
eration 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 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. Soat-
man’s Sav. Inst. 4 B. R. 601; 5. c. 9 B. R. 245; s. c.1 Dillon, 14; s.c. 18
Wall. 376; Clark v. Iselin, 9B. R. 19; s. c. 10 Blatch. 204; Bentley v. Wells,
61 Ill. 59; am re Thomas Morrrison, 10 B. R. 105: s. c. 6 C. L. N. 110; Piper
v. Brady, 10 B. R. 517; s.c. 81 Leg. Int. 316; Clark vy. Iselin, 11 B. R. 337;
8. c. 21 Wa’l. 360.)

The exchange of one set of securities for another of equal value is not a
preference. (Burnhisel v, Firman, 11 B. R. 505; s. c. 22 Wall. 170.)

A creditor and debtor have a right to state an account and strike a bal-
ance, although tbe former may know that the latter is then insolvent. A
mete accounting between the parties does not prefer the creditor or diminish
the assets of the debtor. (Jn ve Comstock & Co. 12 B. R. 110; s. c. 9 Pace.
L. R. 124.)

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.)

If a mortgage is executed to secure an indorser at the time of the discount-
ing 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,
86 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. (Living-
ston v. Bruce, 1 Blatch. 318.)

_ Fhe mere consent of the debtor to the revival of a judgment so as to con-
tinue 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 non-pay-
ment of the price warrants a rescission, and such rescission is not a preference.
(/n re Norman B. Foot, 11 B. R. 158; s. c. 11 Blatch. 530)

The surrender of a pledge by another creditor upon a promise by the pre-
ferred creditor to pay him out of the procceds of the property does not affect
the validity of the transfer. (Ogden v. Jackson, 1 Johus. 370.)

_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
§ 5128.] NOTZS OF DECISIONS. 809
other property. (Riv v. Capitol Bink, 2 Dillon, 867; Schlitz v. Schatz, 2 Biss.
248.)

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 conveyed to a firm
creditor, with the intent to give a preference. (Patrick v. Bank, 1 Dillon,
303.)

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. Burrows, 13
'B.. R.. 289; 8. c. 1 Otto, 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. McLean, 14 B.
R. 879; s. c.50 How. Pr. 455.)

Tf an insolvent debtor conveys his property to another, and the latter
. executes a mortgage thereon to a creditor, the transfers may be set aside, for
the legal effect is the same as if the mortgage had been given directly by the
debtor himself. (Gibson y. Dobie, 14 B. R. 157; s. c. 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 bankrupt act. There is no
loan made or credit given. It is a case of an exchange of one species of prop-
erty 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 sub-
stituting property equivalent in value as the investment of the property con-
verted. (Cook v. Tullis, 9 B. R. 433; 8. c. 18 Wall. 332.)

An agreement at the time of discounting a note that a part of the pro-
ceeds shall be held to meet the note at maturity, is not a preference, or void
under the bankrupt 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 com-
plaint to the creditors of the vendee. (Sawyer v. Turpin, 5 B. R. 889; s.c. 13
B. R. 271; s. c. 1 Otto, 114.)

A change in the form, or even in the substance, of securities will be pro-
tected, if no greater value is put into the creditor’s hands than he had before.
(Sawyer v. Turpin, 5 B. R. 389; s.c. 13 B. R. 271; 8. o. 1 Otto, 114.)

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 sub-
sequently collects the amount from the maker is immaterial. Creditors can
not question the right of the indorser tu take up the note by payment or set-
off, and they have no interest in his remedy over against the maker. (Winslow
v. Bliss, 8 Lans. 220.)

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 creclitors, because it in no way affects the other
creditors. The fund to which they looked for payment is in no way dimin-
ished by it. (Repplier v. Bloodgood, 1 Sweeny, 34; Winsor vy, Kendall, 8
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 vy. Olark, 2 Lans. 877; 8. c. 47 N.Y.
261.)
810 THE BANKRUPT LAW. [§ 5128.

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 bankrupt law
are to seize and appropriate the property of the bankrupt 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 tu pay a part of his creditors,
would be as fatal to tbe rights of his other creditors—as palpable a violation
of the objects, as well as of the letter of the act—as if he was permitted to
create new liens for the same purpose. The bankrupt law itself, as well as.the
general principles alluded to, prohibit any such revival. (Winslow v. Clark, 2
Lans. 377; 8. c. 47 N. Y. 261.)

The acts, knowledge, and intentions of the agent are, in law, the acts,
knowledge, and intentions of his principal. (Graham v. Stark et al. 3 B. R.
357; 3. c. 3 Ben. 520; Beatty v. Gardner, 4 B. R. 323; s. c. 4 Ben. 479.)

If payment is made in the ordinary course of dealing between the parties,
the circumstance tends to show that some other motive actuated the debtor,
rather than an intent to prefer. (Ashby v. Steere, 2 W. & M. 547.)

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 con-
veyance is done secretly, or if it is out of the usual course of business, 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. Farmer's 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 itself affords.
(Oxford Iron Co. v. Slafter, 14 B. R. 380.)

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 subsequently
applies the amount to a pre-existing debt. (Rice v. Grafton, 13 B. R. 209; 8.
c. 117 Mass, 228.)

Evidence of other transfers about the same time may be considered in de-

termining whether there was an intent to prefer. (Atkinson v. Farmers’ 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. (Jn re Comstock & Co. 12 B. R. 110; 8. c. 9 Pac. L. R. 124.)

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.)

A transfer of firm property with the intent to prefer an individual creditor
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 bankrupt act is a generic term, including
all proceedings to dispose of or incumber property in derogation of the equal-

‘
§ 5128.] NOTES OF DECISIONS. Sil

ity of creditors, with intent by such disposition to give a preference, or to de-
feat or delay the operation of the act. It includes mortgages. (Bingham v.
Frost, 6 B. RB. 180.)

The assignee may maintain a bill to have a mortgage declared void as a
preference, although the hankrupt conveyed away the equity of redemption
prior to the commencement of proceedings in bankruptcy. (Burpee vy. Natl
Bank, 9B. R. 314; 8. 0. 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 receiving it.
The transfers and titles based thereon are thereby made void. Hence the
right of recovery. (Cook v. Whipple, 9 B. R. 155; 55 N.Y. 150; Tinker, v..
Van Dyke, 14 B. R, 112; 3. c. 8 C. L. N. 285.)

The declarations of the bankrupt in regard to a transfer made as a prefer-
ence, 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. (Mudd
v. Burrows, 13 B. R. 289; 8. c. 1 Otto, 426.)

_ The declarations of an alleged partner of the bankrupt are not admissible
in favor of a preferred creditor. (Mudd v. Burrows, 13 B. R. 289; 8. c. 1
Otto, 426.)

Judgments.

The statute being within the express powers of Congress is supreme, and
overrides all State legislation on the subject. If therefore a judgment is en-
tered in contravention of the law, it is void. (Atkinson v. Purdy, Crabbe, 551.)

The amount received as a preference may be recovered, although it wag
‘received by virtue of a sale under an execution. (Clarion Bank v. Jones, 11
B. R. 381; 8. c. 21 Wall. 325; 3.c.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 creditor is lia-
ble to refund the money thus received to the assignee. (Shawhan v. Wherritt,
7 How. 627.)

There is notbing 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 con-
clusive 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 judgment, and that the illegal
preference consisted in this lien, and not in the mere judgment itself. (Catlin
v. Hoffman, 9 B. R. 842; 3. c. 2 Saw. 488.)

Merely allowing a creditor to obtain a judgment by default in an action
for a debt to which there is no defense, does not, ag 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.9B. R. 97: s. c. 1 Dillon, 476; 8. c. 17 Wall. 473; in re Kerr,
2B. RB. 388; 8c. 2 L. T. B. 39; in ve J. B. Wright, 2 B. R. 490; Huughey v.
Albin, 2B. R. 399; s. c. 2 Bond, 244; 8. c. 2L. T. B.47; tn re Moulton ef al.
4 Pac, L. R. 127; Bullou v. Minard, 2 Brews. 560; Britton v. Payen et al. 9
B. R. 445; 8. c. 7 Ben. 219; Partridge v. Dearborn, 9 B.R.474,; Clarke v. Piet,
3 McLean, 494; in re Uriah Krum, 7 Ben. 5; contra, in re Black & Secor, 1 B.
R. 353; 3. c. 2 Ben. 196; s.c.1L. T. B. 39: McGie [ew parte Sanger], 2 B. R.
581; 8. c. 2 Biss. 163;9.¢.2 L.T B. 80; Kohlsaat v. Hoguet, 5 B. R. 159; 8.
c. 4 Ben. 565; in re C. A. Davidson, 3B, R. 418; 3. c. 4 Ben. 10; Linkman
y. Wileoz, 1 Dillon, 161; Catlin v. Huffman, 9B, R. 342; 8, c, 2 Saw. 486.)
812 THE BANKRUPT LAW. [§ 5128.

Something more than the passive non-resistance of an insolvent debtor to
regular judicial proceedings in‘ which a judgment and levy on his property
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 purpose to defeat or delay
the operation of the bankrupt law. (Wilson v. City Bank, 5 B. R. 270; 8. ©.
9B. RB. 97; s. c. 1 Dillon, 476; 8. o. 17 Wall. 473.)

Very slight evidence of an affirmative character of the existence of a de-
sire to prefer one creditor, or of acts done with a view to secure such prefer-
ence, 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 bankrupt act will
color acts or decisions otherwise of uo significance. These cases must rest on
their own circumstances. (Wilson v. City Bank, 5 B. R. 270; 8. c. 9B. R.
97; 8. c. 1 Dillon, 476; 8. c. 17 Wall. 473; Buchanan vy. Smith, 4 B. R. 397;
s.c. 7 B. R. 518; s.c. 8 Blatch. 153; s. c. 16 Wall. 277; Traders’ Navl Bank
v. Campbell, 3B. R. 498; s. c.6 B. R. 853; s. c. 2 Biss. 423; s.c. 14 Wail.
87; Beattie v. Gardner, 4 B. R. 828; 8. c. 4 Ben. 479; Wilson v. Brink-
man, 2B. R. 468; 8.c.1C.L. N. 193; Ford v. Keyes, 15 1. R. R. 59; in re
Dunkle & Driesbach, 7 B. R. 72; Shaffer v. Fritchery, 4 B. R. 548; Vogle v.
Lathrop, 4 B. R. 489; 8. 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. Alewander, 12 B. R. 1384; s. c. 21 Wall. 500.)

Though a judgment creditor, who has obtained a judgment by default
through the mere passive non-resistance of the debtor, may know the insolv-
ent condition of the debtor, his levy and seizure under such circumstances are
not void nor any violation of the bankrupt law. (Wilson v. City Bank, 5 B.
R. 270; s.c. 9B. R. 97; 8. 0. 1 Dillon, 476; 3. c. 17 Wall. 473.)

There is no distinction in this respect between involuntary and voluntary
bankruptcy. (Haskell v. Ingalls, 5 B. R. 205; in re O. A. Davidson, 3 B. R.
418; s.c. 4 Ben. 10.)

_ Ifa judgment is confessed at a time when the debtor is solvent, an execu-
tion may be subsequently issued when the debtor is insolvent. (field v. Laker,
11 B. R. 415; s. c. 12 Blatch. 486.) ‘

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, 11 B. R. 837; s. c. 21 Wall. 360.)

The slightest solicitation on the part of the creditor will protect the judg-
ment. 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. (Halde-
man v. Michael, 6 W. & 8. 128; Wilkinson’s Appeal, 4 Penn. 284.)

A security or priority gained bya suit in a State court has no better claim
to protection than a payment by the debtor himself. (Shuwhan v. Wherritt,
4 How. 627.) ra

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 issu-
ing an execution for the same, (Witt v. Hereth, 13 B. R. 106; s. c. 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 establish collu-
sion between the creditor and the bankrupt. (Witt v. Hereth, 13 B. R. 106;
8. 0. 6 Biss. 474.)

A party who claims that a levy was void under the bankrupt law must
§ 5128.] NOTES OF DECISIONS. 813

allege the facts necessary to made the levy invalid. (O’Harra 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. Henszey, 77 Penn. 805.)

A preference may be set aside, although it is obtained by virtue of a war-
rant to confess judgment. (Clarion Bank v. Jones, 11 B. R. 381; 8. o. 24
Wall. 325; s.c, 2A. L. T. [N. 8.] 185.)

The mere entry of a judgment by virtue of a warrant of attorney giver
when the debtor was solvent, is not such a preference as the statute avoids,
although it is entered just before the commencement of the proceedings in
bankruptcy, and when the creditor knows that the debtor is insolvent, and
though it is followed by an execution. (Clark v. Iselin, 11 B. R. 887; 8. o.
21 Wall. 860; s.c. 9 B. R.19; s.c. 10 Blatch. 204; Buckingham v. McLean,
13 How. 151; s. c. 3 McLean, 185; Piper v. Brady, 10 B. R. 517; 8. ©. 31
Leg. Int. 316; Sleek v. Turner, 10 B. R. 580; 76 Penn. 142; 5.c.1 A. L. T.
[N. $.1 485; in re J. B. Wright, 2 B. R. 490; Armstrong v. Rickey & Brothers,
2B. R. 473; 8s c.1 C0. L. N. 145; Love v. Love, 21 Pitts. L. J. 101; Watson
v. Taylor, 21 Wall. 878; contra, Golson v. Neihoff, 5 B. R. 56; 8. c. 2 Biss.
484; Hood vy. Karper, 5 B. R.:358; 8 Phila. 160; s.c. 2 L. T. B. 201; in re
F. C. Lord, 5 B. R. 318; in ve Terry & Cleaver, 4 B. R. 126; s. c.2 Biss, 356 ;
Vogel v. Lathrop, 4 B. R. 489; s. c. 4 Brews. 253; Zahm v. Fry, 9 B. R. 546;
g, c. 81 Leg. Int. 197; s.c.21 Pitts, L. J. 155.)

The execution undcr the warrant of attorney will be valid, although the
creditor’s son was the bankrupt’s book-keeper, and gave his father balance
sheets from time to time, showing the bankrupt’s condition. (McCormick v.
Buckner, 2 W. N. 480.)

This section defines acts that may render other persons liable to actions at
the suit of the assignee for the recovery of assets. Section 5021 only detines.
the acts of a debtor for which he may be involuntarily adjudged a bankrupt.
The latter section makes the mere giving, under certain circumstances, of a
warrant to confess judgment an act of involuntary bankruptcy. This applies
to the debtor only. This section, which affects other persons, does not men-
tion 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. 358; s. c. 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 and
vitiate them, because this section abrogates only the instrumentality by which
a preference is sought to be obtained, and all interests or advantage 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;
8. 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 judgment debtor to the judg-
ment creditor. (Catlin v. Hoffman, 9 B. R. 342; 3. 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, 9B. R. 474.)

An agreement discontinuing several suits in a State court, and transferring
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
814 THE BANKRUPT LAW. [§ 5128.

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 isa party. The assignes
has the right to be substituted 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 effectual relief against the use of such agreement, and secure to
the assignee the free and untrammeled exercise of all the rights which the
bankrupt 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; 5. ¢,
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 debto1’s property
under the bankrupt act. (Mills v. Davis, 10 B. R. 840; 8.c. 35 N. Y. Sup. 355.)

Evidence that the entry of a judgment under a warrant to confess judg-
ment was a surprise on the bankrupt is immaterial and inadmissible.
(Clarion Bank v. Jones, 11 B. R. 381; 5. c. 21 Wall. 825; 8.0.2 A.L. T. [N.
8.] 185.)

When property of the bankrupt has been sold under judgment confessed,
with a view to give fraudulent preferences, the assignce 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 un-
necessary that the judgment should be opened. The act of Congress 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 bankrupt act. His claim is adverse to the credit-
-ors only in the sense that they are postponed, and he supersedes them, and
comes in upon the fund, and not the property, on account of the rightful
jurisdiction of the State court, 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 bankrupt act does not require that the party receiving the transfer
shall know, &c., 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; 8.c.2L. T.
B.8; s8.c.1 C. L. N. 137; Graham v. Stark, 3 B. R. 357; 8. c. 8 Ber. 520;
Sedgwick v. Sheffield, 6 Ben. 21; Otis v. Hadley, 112 Mass. 100.)

It should be averred that the creditor, at the time of the transfer, had
reasonable cause to believe, &c. (In re Hunt, 2 B.R.589;8.c1CLN.
169.)

“ Reasonabie cause to believe,” means a state of facts or circumstances
which would lead any prudent may 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. (Jn re J. B. Wright, 2B. R. 490; in re
Arnold, 2B. R. 160; White v. Raftery, 3B R. 221; 8. c.1C. L. N. 861; 8.0.
16 Pitts. L. J. 110; Merchants’ National Bank of Hastings v. Truaz, 1 B. R.
545; 8.1L. 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 sub-
ject. 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 pecuniary condition
of the debtor, as would lead prudent business men to the conclusion that the
§ 5128.] NOTES OF DECISIONS. 815

debtor can not mect 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, 208;
s 0.18 Wall. 40; Buchanan v. Smith, 4 B. R. 397; s.c.7 B. R. 518; 8.6.8
Blatch. 153; s.c. 16 Wall. 277; Wager v. Hall, 5 B. R. 181: 8. c. 8 Biss. 28:
8. 0.16 Wall. 584; in ve Clarke & Daughtrey, 10 B.R. 21; Burpee v. National
Bank, 9 B. R. 314; s. c. 5 Biss. 405.)

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 insolv-
ent; but the true inquiry is, whether the creditor, as a business man acting
with ordinary prudence, sagacity, and discretion, had reasonable cause to be-
lieve that the debtor was insolvent, in view of all the facts and circumstances
known to him at the time he received the transfer of the property. If it ap-
pears that the debtor was actually insolvent, and that the means of knowl-
edge upon the subject were at hand, and that 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 investi-
gate, when put upon inquiry, he is chargeable with all the knowledge which
it is reasonable to suppose he would have acquired, if he had performed his
duty. Constructive 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 inquiry 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 trans-
fer on conveyance, he does so at his peril, as he is chargeable with a knowl-
edge of all the facts which, by a proper inquiry, he might have ascertained.
(Scammon v. Cole, 5 B. R. 257; 8. 0. 3 B. R, 393; s. co. 2 L. T. B. 108; Bu-
chanan v. Smith, 4 B. R. 397; 8.c. 7 B. R. 518; s.c. 8 Blatch. 153; 6. 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 cred-
itor himself, is at least sufficient to put a party upon the inquiry as to the
debtor’s solvency. (Jn re Forsyth & Murtha, 7 B. R. 174.)

Willing ignorance, as where a party wilfully shuts his eyes to the means
of information which he knows are at hand, is regarded as equivalent to act-
ual knowledge. (Scammon v. Cole, 5 B. R. 257; Wager v. Hall, 5 B. R. 181;
8. 0. 3 Biss. 28; s.c. 16 Wall. 584; Peckhum v. Burrows, 3 Story, 644.)

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 con-
dition were at hand. (Wager v. Hall, 5 B. R. 181; 5. 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 relevant
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 circumstances 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, sa-
816 THE BANKRUPT LAW. [$ 5128.

gacity and discretion, had good ground to believe that the debtor was in-
solvent. This is the ouly legitimate subject of inquiry. It was not intended
by the statute to make the actual belief of the party concerning the solvency
of the debtor, one of the standards by which to test the validity of the trans-
fer 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 sat-
isfy one man, would be wholly insufficient to 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 person
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 v. Cole et al. 8 B. R. 893; 5. c. 2L. 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 undoubtedly 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 unlawful preference. But when. the evi-
dence has a tendency to show that there were apparent indications that in-
solvency was a probable and approaching 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. (Bedls v.
Quinn, 101 Mass. 262.)

Evidence of the debtor’s financial condition and reputation a year previous
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. 42'7.)

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. (Otis v.
Hadley, 112 Mass. 100.)

The defendant can not prove that he has made similar purchases from
others in the same trade. (Otis v. Hadley, 112 Mass. 100.)

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 believe or
not. (Fourbes v. Howe, 102 Mass. 427.)

The declarations or acts of the debtor subsequent to the transfer are not
admissible as against the creditor. (Phenix v. Ingraham, 5 Johns. 412.)

The creditor is not of necessity affected by a misrepresentation or Acceit
of the bankrupt in regard to the transaction. (Brooks’y. 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 ia regard to the transaction, when made by the creditor, casts
§ 5128.] NOTES OF DECISIONS. 817

suspicion on the transaction. (Brooks v. Scoggins, 11 B. R. 258; s. c. 9 Pac.
L. R. 12.)

The validity of a preference dces not depend on the moral good faith
with which it was accepted by the creditor. (Alderdice v. State Bank, 11 B.
R. 898.)

The creditor’s belief that he is entitled to the preference is not material.
The intent to receive a oo should not be confounded with corrupt
motive. (Bingham v. Richmond, 6 B. R. 127.)

The bankrupt act disarms the vigilance of creditors generally, by declar-
ing that no vigilance can be rewarded by a preference, if obtained contrary
to its provisions within four months prior to the filing of the petition in bank-
ruptcy. 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 preferences, 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 separately considered, may by
their number and joint operation, especially when corroborated by moral co-.
incidences, be sufficient to constitute conclusive proof. (Wager v. Hall, 5 B.
R. 181; s. c. 3 Biss, 28; 8. 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 compel
payment of debts maturing in his current business, this is very high evidence
of 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. (Jn re Clark & Daughtrey, 10
B. R. 21.)

A creditor may be affected by rumors which he has heard about the
debtor's embarrassments. (Post v. Corbin, 5 B. R. 11; Golson v. Miehaff,
5 B. R. 56; 8. c. 2 Biss, 484; Hyde v. Corrigan, 9 B. R. 466; 8. c, 7 Pac. L.
R. 121.)

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, 11 B. R. 387; 8. c. 21 Wall.
360.)

A conveyance out of the ordinary course of business is sufficient evidence,
if uncontrolled, to establish a knowledge of the debtor’s insolvency. The
purchaser is put upon theinquiry, and should take steps to ascertain the con-
dition of the debtor, or at least his general reputation as to solvency. (Tuttle
v. Truaz, 1 B. R. 601; in re Palmer, 3 B. R, 283; s.c. 1 L. T. B. 189; in re
E, Meyer, 2 B. R. 422; s.c.1 C. L. N. 210; in re Colman, 2 B. R. 563;
Dean & Garrett, 2 B. R. 89; in re Hafer & Bro.; in re Beck, 1 B. R. 586;
8. c. 25 Leg. Int. 164; Scammon v. Cole, 5 B. R. 257; North v. House, 6 B. R.
365.)

Independent of the express provisions of the bankrupt act, the general rule
of law is, that the transfer or delivery of property will be considered fraudu-
lent 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. 849; s.c. 1 Dillon,
186.)

52
818 THE BANKRUPT LAW. [§ 5128;

“+ A’ereditor who has beforé him what the bankrupt act. declares’ shall be
prima facie evidence of fraud must, in law, be deemed to have reasonable cause
to believe in the existence of such fraud, unless this legal presumption is over-
“borne by opposing evidence. (In, re Kingsbury et al. 3 B. R. 818; Wilson, y.
Stoddard, 4B. R, 254; 8.0.20. L.N. 161.) ~ rH

This prima facie evidence is present to every creditor who accepts a secu-
rity 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
te believe that the security is fraudulent and void under the bankrupt 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 prepared without any previous comi-
munication 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 consequences of this provision. When he accepts a'security, he is
conclusively presumed: to know what appears upon its face, and to: have rea-
sonable cause to believe it was intended to accomplish what must be. its or-
dinary, and necessary effect ; and no masterly inactivity, no self-imposed igno-
rance 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. v. Stark. et
al, 3 B. R. 357; 8,.c. 8 Ben. 520.) -. | Reiter “5 dead
'Transfers: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 creditor. isin
possession of such facts and, circumstances,in reference to. his debtor's stand-
| Ing, as, arouse suspicion with. regard to. his solvency or ability to meet -hjs
indebtedness, the creditor is so far put. upon inquiry that he will not he
allowed to shut his eyes to those facts and circumstances, and obtain payment
of a debt otherwise than as it matures, or take security or a transfer of prop-
erty from the debtor to the prejudice of other creditors. 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 & Oo. 3 B. R. 602; 8.0.1

Abb. C..0.440.) 0

0% ge a ah ; , Cah t jas id
It is a sound rule that, when a person suspects the solvency of a debtor,
and, in consequence of. that suspicion, obtains property or money, and thereby
a preference, ‘and it turns out in fact that his debtor is insolvent, he may be
‘ gaid to be in the predicament contemplated by the bankrupt law; he has rea-
‘sonable 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 operations between mah 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 creditors generally, and if so, the bankrupt law de-
- clares that‘he can not avail himself of money'or property thus obtained. But,
- when a man acts.without: knowledge of the'condition of the party, or of any
. thing to create. suspicion; of his solvency, and, in good faith obtains a pay-
_ nent or security, then the bankrupt law will not interfere with it. (Zraders’
National Bank vy. Campbell, 3 B. R. 498; s.c. 6 B. R. 353; 8.0. 2 Biss. 428; 8.
©. 14 Wall. 87.) Bobs

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 convey-
$ 5128.) NOTES OF DECISIONS. 819

ance, 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,,
(Windsor vy. Kendall, 3 Story, 507.) if

Mere knowledge that a claim of less than one hundred dollars 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.) ps nets. |

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.) a OTE eS ee:

ie Sh etheg 3 BE deal

The taking of a debtor's property on legal process is not in the ordinary

course of his business. When a creditor makes repeated demand for pay-

ment, and is compelled to resort to legal process to obtain satisfaction, he has’

reasonable cause to believe the debtor 'to’ be insolvent. | (Hasiell v. Ingalls, 5
B. R. 205.) Re ig ge SL a

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 overcome this presumption.
Cin re Walton et al. 1 Deady, 442.) ~~, ia ee et

When an execution must necessarily stop:the debtor’s: business, the execu~
_tion creditor, in general; has reasonable cause to believe the debtor to be
insolvent. (Hood v. Karper, 5 B. R. 358; 8. c. 8 Phil. 160; s. c.2L. T. B.!
he Zahn v. Fry, 9 B.R. 546; 8. c. 21 Pitts. L. J. 155; 3, c. 31 Leg. int)
97.) i :

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 te have had reasonable cause to believe that the debtor was in-
solvent. (Buchanan v. Smith, 4B. R. 397; 3. c. 7B. R. 513; 3, 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, is not in the ordinary course of his business. (Mark-
on v. Hobson, 2 Dillon, 327.) a - ;

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 transactions between:
them to be scrutinized with care. (Rankin v. Third Nat'l Bank, 14 B. R. 4.)

Pa 1 J ve ake NE wee a 4) aig BE at
The debtor’s remonstrances, that the giving of the security wil] 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; 8, ¢.
7 Pac, L, R. 121.)

If @ transfer was not in the usual and ordinary course of business of ‘the,
bankrupt, that fact is prima facie evidence,that a fraud was committed upon,
the bankrupt act by the transfer, and the burden of proof will. be upon the
creditor receiving it to show the validity of the transaction 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!

4
820 THE BANKRUPT LAW. [§ 5128.

the assignee. (Obilins et al. v. Bell et al. 8 B. R. 587; Scammon v. Cole et al..
3B. R. 393; 8. 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 pro-
duce an immediate absolute bankruptcy. Nothing remains 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 et al. 2B. R. 254; 5.0.1 L. T. B. 111; Brock v. Terrell, 2 B. R. 648;
Davis & Green v. Armstrong, 8 B. R. 84; 8. ¢. 2 L. T. B. 138; Foster v. Hack-
ley & Sons, 2B. R. 406; 3.2L. T. B. 8; 8.¢c. 10. L. N. 137; in re Batch-
elder, 3 B. R. 150; s. c. Lowell, 3738; Graham v. Stark, 3 B. R. 357; 8. 6. 3
Ben. 520; Rison v. Knapp, 4 B. R. 349; s.c.1 Dillon, 186; Cookingham v.
Morgan, 5 B. R. 16; s. c. 7 Blatch. 480; Walbrun v. Bubbitt, 6 B. R. 539; s. c.
9B. R.1; 8. c,16 Wall. 577; Peckham v. Burrows, 3 Story, 544.)

A conveyance of all the debtor’s property to a creditor who has no knowl-
edge that there are any other creditors is valid. (Wadsworth v. Tyler, 2 B.
R, 816; 3,0. 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 storehouse
in which they are kept, and putting others into possession with authority to
sell all his stock and apply the proceeds to the payment ef debts in execu-
tion, is not in the usual course of business; does break up his business; and
is not only some, but very strong evidence of anintent tc p:efer his creditors,
he being at the time insolvent. What is the usual course of a retail mer-
chant’s business? It is to sell his goods at his usual place cf business to
customers as they come, to keep up an ordinary stock, and continue in busi-
ness in the usual way that such merchants do, Certainly it is not in the
usual course of a retail merchant’s business when in a state of actual insolv-
ency, to confess judgment to certain creditors, suffer executions to be levied
by them, and then to assign over to them all his steck, and his place of busi-
ness, put them in possession, and provide that the surplus over the payment
of their claims shall be returned to himself. Such a state of facts undoubt-
edly 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 con-
trary to the provisions of the bankrupt law. (Pierce v. Hvans, 61 Penn, 415;
Meyer 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 demands, known
to him are left unsecured, and that by the arrangement debts not due are
anticipated, and thereby the discount which bas been paid is lost, he has
reasonable cause to believe that a preference is intended. Knowledge of
overdue debts, and the fact that a large amount of firm property is applied
to the discharge of the persenal 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. 898; s. c. 5 B.R.
257; s.c. 2 L. T. B. 103.)

A transfer of All the debtor’s property subject to execution, leaving other
creditors to obtain payment out of the debts due to him constitutes a reason-
able cause to believe him to beinsolvent. (Smith v. McLean, 10 B. R. 360.)

The rule that insolvency consists in present inability to pay debts might
apply if the debtor is present and the negotiations are with him. But when
he ig absent, and that absence is alleged as the sole reason for the non-pay-
§ 5128. ] NOTES OF DECISIONS. 821

ment 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 appli-
cation. Clerks and agents are not supposed to have entire control of the re-
sources of their principal to such an extent as to make their failure to meet
an obligation of their principal an act of bankruptcy against him. Security
given by an agent after demand and non-payment of a debt under such cir-
cumstances will be valid. (Jenkins v. Meyer, 3B. B. 776; s. c. 2 Biss. 303.)

When a merchant fails to pay his notes or other 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 non-payment 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, non-payment prima facie imports
inability to pay in due course of business. (Meyer v. Hermann, 10 Blatch.
256; Dunning v. Perkins, 2 Biss. 421; Bartholew v. Bean, 10 B. R. 241; 8. c.
18 Wall. 635; Shaffer v. Fritchery, 4 B. R. 548; Golson v. Niehof, 5 B. R.
56; s.c.2 Biss. 4384; Wilson v. City Banh, 5 B. R. 270; s. c.9 B. R. 97; 8.
«. 1 Dillon, 476; s.c. 17 Wall. 473; Warren v. Del. L. & West. R. Co. 7 B.R.
451; 3.0.5 0. L. N. 205; Warren v. Tenth Nat'l Bank, 7 B. R. 481; s. c. 10
Blatch. 493; Harrison v. McLaren, 10 B. R. 244.)

Notice of the non-payment of a judgment note is not notice of the insoly-
ent condition of the maker. (Love v. Love, 21 Pitts. L. J. 101; Piper v. Brudy,
10 B. R. 517; s. c. 31 Leg. Int. 316.)

The non-payment of an account for goods sold when there is no circum-
stance warranting any other inference than that the debtor can not pay for
the want of means, indicates insolvency, and affords a reasonable cause to be-
lieve him to be insolvent. (Meyer v. Hermann, 10 Blatch. 256.)

The existence of the required reasonable cause for belief may be inferred
from all the circumstances of the transaction. (Jn 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.c. 7 B. R. 514; 8. c. 8 Blatch. 153; s. c. 16 Wall.
277; Alderdice v. State Bank, 11 B, R. 898; Brooks v. Scoggins, 11 B. R. 258;
s. 6. 9 Pac. L. R. 12.)

The making of subsequent advances does not negative the existence of a
reasonable cause to believe the debtor to he 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.c. 1 Dillon,
186; Toof v. Martin, 4 B. R. 488; s.c. 6B. R. 49; s. c. 18 Wall. 40; s.c. 1
Dillon, 208; Warren v. Del. L. & West. R. Co. 7 B.R, 451; 3.¢.5 C. L. N
205.)

Equity pays no regard to the forms resorted to by parties in fraud of the
law. (Zoof v. Martin, 4 B. R.488; s. c. 6 B. R. 49; s. c. 13 Wall. 40; 5. c, 1
Dillon, 203.)

The principal is chargeable with all the knowledge which his agent had
at the time of the transaction. (Jn re E. Meyer, 2 B. R. 422; 8.c. 10. LN.
210; Ungewitter v. Von Sachs, 3B. R. 723; s.c. 4 Ben. 167; s.c. 1 L. T. B, 224;
3.0.8 L. T. B.195; Graham v. Stark et al. 8 B. R. 357; 8. c. 3 Ben. 520; Vogle
vy. Lathrop, 4 B. R. 439; s.c.4 Brews. 258; Markson v. Hobson, 2 Dillon, 327 ;
Meyer v. Hermann, 10 Blatch, 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
822 THE BANKRUPT LAW. [§ 5128.

forward for collection, the creditor is not chargeable with the knowledge of
a sub-agent employed by the latter if he does not receive the proceeds of a
judgment by confession obtained by him, although the proceeds were remit.
ted to the collection agent. (Hoover v. Wise, 14 B. R. 264; 8. c. 61 N. Y,
305; 8, c. 1 Otto, 308.)

Where the attorney of a creditor is prosecuting a debtor to enforce pay~
ment of a debt, and by reason thereof the debtor discloses to him that he is
insolvent and,asks his advice, and he assumes to give it, he can not. by ac-
cepting such retainer evade the operation of the rule that the knowledge of
the agent acquired in the conduct of his employer’s business 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 in-
volves 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

is client’s property, or less information acquired in his agency, and imput~
able to such client. (Mayer vy. Hermann, 10 Blatch. 256.)

A general authority, with subsequent tacit acquiescence, is sufficient proof
that an agent had authority to accept a preference. (Jn re Colman, 2 B.
R. 563.) 7

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 vy. 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 judg~
ment will be declared void. (McGie [ex parte Sanger], 2 B. R. 531; 8. c. 2
Biss. 163;-8..c. 2 L. T. B. 80; in re Kerr, 2B. R. 388; 8. 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. c. 5 B. R, 479;
3, c,. 42 How. Pr. 169; s. c. 5 Ben, 895; s, o. 10 Blatch. 493.)

, Money received upon notes of third parties accepted by a creditor as con-
ditional 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 converts it into an abso-
Jute one. The question of preference in the receipt and collection of the
note would have to be determined by the facts as they existed when the con-
ditional 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 insolv--
ent, or that he has ‘since learned, or has good reason to believe, that th
debtor was insolvent at the time of the transfer. (Jn re Ouimette, 3 B. R.
568; 8. 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 prefer-
ence, in fraud of the policy and provisions of the bankrupt 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; 8. c. 10 Blatch..

¢
§:5128.] NOTES OF DECISIONS. 823,

The mere fact that the preferred creditor may have. paid a valuable con-
sideration, or advanced money on the deed, ai not validate it, if he had
reasonable cause to believe the debtor, insolvent at the’ time of its execution.
(Worth v. House, 6B. R., 365.) |

pads We §

7 Sud Knowledge.

“Thare is'a difference between “knowirg”’ and ‘‘having reasonable causé
to ‘believe. ” (Singer v. Sloan, 11 B.R. 433; s.c. 12 B. R. 408; 8.0.3 Dillon,
110; contra, Hamlin v. Pettibone, 10 B. R. 172; 8. c. 81 Leg. Int. 293; 8. C. 10
ACL. J. 141; 8.c. 1 Cent. L. J. 404; 8, c. 6 Biss. 167; Brooke v. ‘MeCracken,
10 B. R. 461; s. c..8 Pac. L. R102; 8. 0. 7.C. L. N.'10.) , ae

.. The amendment to this, section does: not apply to, transactions that oc-
curred prior to December 1st,.1873. . (Ozford Lron' Co,.v. Slafter,.14 B. Re.
880;. Tinker v. Van Dyke, 14 B. R. 112; s.c.8 C. L. N. 335 ; Barnewall v.
Tones, 14 B. R. 278; in re John F. Lee, 14 B. R. 89; Slafter v. Sugar Refin-,
ing Co. 13 B. R. 320; Hamlin v. Pettibone, 10 B. i. 172; 8. c. 81 Leg. Int.
293; 8. c. 10 A. In J. 141; 8.°c. 1 Cent.’ L. J. 404; ’s. C: 6 Biss, 167;
Brooke v. McCracken, 10 B. R. 461; s.¢. 7 ©. L. N. 10; 8.0. 8 Pac. L. R.
102; contra, Booth v. "Neely, 12 B. R. "398; Singer’. Sloan, 11 & Be 461; 6. ©.
12:B. R. 208; 8: c..3 Dillon, 110.) |. nobea

a “Phe creditor's knowledge of'the fraud may be established - circumstan-’
tial evidence, (@attman v. Honea, 12 BR. 498 5) 7 0. LN. 395; “8, G.
10 ‘Pac. LR. 4)"

xfs » The, circumstances aionting a transaction may. be es that ie creditor

will.not be justified. in relying on the debtor’s false statement asto his condi-

tion.. i Bueinan Xv. Goss, 13 B. ms AG): igh i

seed

ee Definition of Fraud upon the Act.

Ws Phy

a ‘The act was designed to secure an aa, ‘distribution of tlle ‘property

among the.creditors; and any:transfer made with a view‘to secure the property)

of any part of it to one, and thus prevent such equal distribution, is a transfer

in fraud of the.act... (Loof-v.; Martin, 4:B. R. 488 ;:s..c..6 By R. 49; 8.0.1

Dillon, 208; 8. Cc. 18 Wall. 40; Wager v. Hail, 5B. R. 181:-s... 3 Biss. 28;

t & 16 ‘Wall. 584; ‘Shawhan v., Wherritt, 7 How, 627; in re Rufus Hoyt, 1 N.
Obs..122; ‘Locke'v. ‘Winning, 3 Mass, 825; Wakeman \V. Hoyt, 5 Law Rep..

ee Hackley & Sons, 2 B. R. 406; o2LT ‘B. 8; 3.0.10. L.

N. 137 + Havghey v. ‘Albin, 2 B. R. 399; 's: c. 2 Bond, 244; a.:c. OL. TB. AR ;

in're Black'&' Secor, 1 B. R. 858; 8, 0. 2 Ben. gee 0.1 Ly Te B. ney an, re

Kingsbury a al, 3B. R. 318.) ae.

Tei is immaterial whether the parties | nae ‘the provisions of the 2 panieenge
att ant fp contemplation or not. (Hoser v.  Hachley '& Sans, 2B. # 406; 8. Cc. 2
B.8; 8.6.1. L. N. 187.) , wh Re ee

Ignorance of the provisions of the statute eetiee no excuse, , (Lewis
¥, Sloan, 68 N. C. 57.) fei ot

bP UAE cone al a je hate

An act which directly ‘aid manifestly tends to defeat. the purpose and.
Te of, the, bankrupt act, and which js done jn, contravention of and with
he intent to defeat such purpose and policy, i is fraudulent and void. ‘A fraud,
lent. contrivance, with a yiew to defeat the bankrupt law, is void. ‘When a a,
person has shown his ‘inability to meet his’ engagements, one creditor can not,
fy collusion with him, obtain a preference to the injury of others, Such con-
duct is considered a fraud on the act, whose aim is to divide the assets equal-

ly and therefore equitably. (Beattie'v. Gardiner, 4 B. R. 323; s. c. 2 Ben. 479;

in re Guegg, 4 B. Ri 456; Buchanan vy. Smith, 4 B. R. 397; 8. 0..7B. R. 513;
3-8 Bla ch, 1535, "8, ¢., 16 Wall, 277.) ale re
$24 THE BANKRUPT LAW. [$ 5128.

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, fraudulent 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 de-
mand of the maker, and notice of non-payment; yet, in the statutory sense
of the term, there is a liability of the indorser from the date of the indorse-
ment. 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. (AAJ et al. v. Thorner, 3 B.
R. 118; s.¢. 2 Bond, 287; s.c. 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 be-
fore maturity without any action on his part, he is not liable. (Bean v. Laflin,
5 B. R. 883.)

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 indorser
can not be sustained as a mortgage given for a present consideration. If it
could be, all an indorser or surety need do to obtain valid security 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 proceed-
ing, within the purview of the bankrupt act, is nothing more than an ex-
change or substitution of securities—a mere attempt and contrivance to re-
lieve or protect an indorser or surety; and, whatever means may be adopted
to accomplish this purpose, it will prove invalid under the bankrupt law
when it is designed and used to obtain a preference for the party who is un-
der a liability for the bankrupt. Under such circumstances, the security
would, in all respects, have been equally valid if it had been so drawn as, in
terms, to indemnify the indorsers or sureties on the notes for which they
were liable. (Scammon v. Cole et al. 3 B. R. 393; s.c. 5 B. R. 257; 8. c. 2 L.
T. B. 108; Cookingham 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 et al. 3 B. R. 357; s. c. 3 Ben. 520.)

The payment of an overdue note to the holder may be avoided as a pref-
erence, although the indorser was solvent. The statute intended, in pursuit
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. c. 18 Wall. 635.)

If an accommodation indorser merely induces the bankrupt to give a
check on 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 bankrupt
without expressly making the debt a charge upon her separate estate, she is
ne a for money paid as a preference to the bolder. (Flanders v. Abbey,
6 Biss. 16.)

Transfer merely Voidable.

Until the debtor becomes amenable to the bankrupt court by the com-
mencement of proceedings in bankruptcy, the question whether a conveyance
§ 5128.] NOTES OF DECISIONS. 825

is in violation of the provisions of the bankrupt law can not be raised.
(Atkins vy. Spear, 49 Mass, 490.)

A judgment or attaching creditor is entitled to take under his levy or at-
tachment all that then rightfully belongs to his debtor, and no more, inas-
much as he stands merely in the place of the debtor. If the property is then
covered by a conveyance which is valid under the State laws, but void only
under the bankrupt 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. (Hverett v. Stone, 3 Story, 446.)

When the property upon which a mortgage was given by the debtor has
been sold by the assignee, the preferred creditor car not foreclose the mort-
gage, even though he was not made a party to the proceedings for a 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 main-
tain an action against the sheriff for a levy thereon, although the transfer is
void under the bankrupt 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 bankrupt 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 execution.
and also to secure a pre-existing debt, being void in part as to the pre-exist-
ing debt, is void as to the whole. (7'uttle 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. (Jn re Stowe, 6 B. R. 429.)

If a 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, itis entirely void. (Bucknam v. 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, 18 B. R. 472; s.c. 1
Otto, 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 creditor
can not, in an action of replevin by the bailor, set up a title subsequently ac-
quired by kim from the debtor’s assignee. (Nudd v. Montange, 88 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 re-
vived. (Burnhisel v. Firman, 11 B. R. 505; 8. c. 22 Wall. 170.)

If a purchase by a mortgagee of the mortgaged property is set aside as a
preference, he has the right to assert his lien by virtue of his mortgage so
far as that is valid. His purchase does not impair his rights under the mort-
gage, but on the failure of the title which he supposed that he got by the
purchase, he will be restored to his rights as mortgagee as they existed be-
fore he attempted to purchase. He will lose his title under the purchase,
and nothing more. (Jn ve 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.
826 THE BANKRUPT LAW. [§ 5128.

Where the judgment is apparently.a valid lien under the State law, con;
structive notice of the pendency of proceedings in bankruptcy will not affect
his title. (Zahm, y. Fry, 9B. R. 546; s.c. 21 Pitts. L. J. 155; 8. c. 81 Leg.
Int. 197.) ae , “4
« A person who purchases from a preferred creditor will not be protected
unless he is a dona fide purchaser without notice and for value. He is nota
bona fide purchaser without notice, if he knows facts snffiicient 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 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,
4B. R. 849; s, c. 1 Dillon, 186.) ; . .

Where the security for a note is void under the bankrupt law, an indorseé
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
a beenin the hands of the payee. (Jn re Kansas City Manut’g Co. 9 B,
_, 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 infirm,
ities of the original title, and-can claim as against the assignee no more than
the grantee himself could.. (Morse v. Godfrey, 3 Story, 364.) a

A party! who pays no new consideration upon- the faith of. the transfer;
but merely takes it ag an auxiliary security for an antecedent debt or. liability,
BOL), a purchaser for a, valuable consideration. (Morse v. Godfrey, 3, Story,

hoy Bee vets

1

_ The pendency, of the proceedings in pankruptey is constructive notice
thereof to all purchasers from the grantee, and, they are affected, thereby;
(Morse v. Godfrey, 3 Story, 364.) i ett

‘ \ .  . « What may be Recovered.

! The language of the statute, authorizing the assignee ‘‘to recover the
roperty, or the value of it, from the person so receiving it, or’so to be bene:
ted,” 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. (For v. Gardner, 12
B. R187.) °° " ad 2 oo pease
"When property is’ levied upon and’ sold under execution, before the pro-
ceedings in’bankruptcy begin, the State court has a rightful jurisdiction at
the time to seize and sell the same, and the assignee can not follow the’ prop
erty, but. must; resort; to the State court to lay in his claim as the rightful
er of the fund against the preferred creditors. . (Rohrer’s Appeal, 62 Penny
: CH WR a hae ee eae oy BBs sey ae P

; , 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 obr
tained on execution, without any deduction for the costs and expenses of the
creditor. The sum appropriated as costs and fees for attorneys must be con;
sidered as having been paid by the creditor, after it was received under the
judgment. (Street v. Dawson, 4 B, R. 207; Bill v. Beckwith, 2 B. R. 2415
raders’’ Nwtl Bank vy. Campbell, 3 B. R. 498; 3. c..6 B, R, 353; s. ¢. 2, Biss,
428; 8, 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. c. 21 Wall. 825; 8c. 2A. L. T.(N.8.] 185.) wy
§: 5128. } NOTES OF DECISIONS. 827

 1€ 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 v. Strasburger, 6 Ben. 372.)" pS ee m3

ee 7

.. If the evidence does not show what the value of the property was, the as-
signee, where the property has been sold by the sheriff, can only recover the
amount indorsed upon the execution. (Christman v. Haynes, 8 B. R. 528;
Anderson v. Berasberger, 6'Ben. 872.) 0 ees 8

¢

“’ When the proceedings‘are in the nature of equity proceedings; the court
may, in its discretion, make 4 decree for the net, instead of the gross, amount
teceived. . (Wilson v. Brinkman et al..2 B. R. 468;.8,.0. 1 C. L. N..193; Brock
v. ferrell, 2B. R. 648.) oe

‘ The court'can not allow, by way of reduction,-the amount paid to other
uhpreferred creditors out of the proceeds of property conveyed in fraud of
the bankrupt act, nor so much thereof as they would have been entitled. to re~
ceive 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 hig estate.. (White v. Raftery, 3 B. R.
221; 3.0.1 C. L. N. 361; s. 6,16, Pitts, L. J. 110; Bill. v. Beckwith, 2 B.R.
241; North v. House, § B. R. 365.) ged ‘ ‘

« Money paid by a ‘check drawn on the creditor himself; and money held by
an attachment laid by the creditor in his own hands, may be recovered. If
the‘ creditor: had: stood ‘on his right of set-off, it might possibly have been
available; but when he treats it asthe 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, (Zraders’ Nat'l Bank v. Campbell, 3 B. R. 498; 8.0.6 B. R. 853;
#0. 2 Biss, 423; s.d.:14 Wall. 87.) " eee ety SRE pg fats

Hy eee cept Soe ee ee PCR he ee Re me
., he creditor ig also, liable for the interest from, the time of the, receipt of
fhe money. (Traders' Nat'l Bank v. Camptell, 8B. R. 498; 8.0. 6 B. R. 353;

‘ i
ti

8, 'c, 2 Biss, 423 58) 0. 14 Wall. 87.) °° ae
Oe ae liad: se ARES Lal SECT aS tao Cae ONES ea Geo ts ip heir Me

: ,,@ibe creditor, is. .only liable. to, the assignee for what came into, his hands
fro n oF through t Sea cape andl Me eetretmtie ts him or his represent-
ative . the assignée. ' He nay employ the debtor at a reasonablé compensation
td‘ take charge of the’ property transferred, and deduct ‘the anount, actually
paid from ithe som that comes into bis‘hands. In case of avoid assignment,
he may {also deduct, compensation for hig own services, | (Catlin v. Poster, &
B, R.:540;,8, c. 1 Saw, 87; 8,0..1.L, T, B. 192.)
| (The assignee holds the title tothe property,conveyed by way of preference,
and thé bankrupt.Jaw entitles him; to recover it, or the value of it, Ifa con-
veyance has been made, or incumbrance imposed, on. the property, by the
person claiming it as purchaser under the bankrupt, the Jaw permits the
assignee to, sue for and recover the value. It thus enables the assignee to:
Ydtify'and confirm the’ sale, prevents litigation, and ‘at ‘the same’ time fully
Secures the tights'of creditors. “He may release of quitclaim to the purchaser
his interest as assignee} sb‘as effectually to cute any defect there might be in
the title by réason of the proceedings in “bankruptcy and the assignment to
Tim,’ “(Winslow v. Clark, 2 Lans. 877; 8. ¢. 47.N.Y. 261.) TE
-. .[fta transfer is'sét aside on technical or other grounds entirely consistent
with ‘good! faith in the transferee, and he appears to‘ have acted under an
honest mistake, it mayibe proper to allow him the amount of the liens which:
che has paid in order-to obtain the benefit of the transfer, but no such allow-
ance will be made-where he obtains the property by means which are a clear
fraud upon the bankrupt act, and under circumstances which make it a fraud

CAT eae lee 3
828 THE BANKRUPT LAW. [§ 5129.

upon other creditors, and afford a presumption of an unlawful intent on his
part. (Cookingham v. Morgan, 5 B. R. 16; s. c. 7 Blatch. 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; 8. ¢.
8 Blatch. 483.)

Where a commission merchant continues to deal with the debtor after he
has reasonable cause to believe bim to be insolvent, he may be compelled 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 v. Hricthery, 4 B. R. 548; Tiffany v.
Boatman’s Saving Institution, 4 B. R. 601; 8. c. 9 B. R. 245; 8. c. 1 Dillon,
14; s. c. 18 Wall. 376.) :

When the transfer includes articlef?exempt from levy and sale on execu-
tion, 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 cred-
jtor have any claim to or interest in them. (Grow v. Ballard et ul. 2 B.R.
254; 8.0.1 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 drawing of a check does
not transfer the fund. (Strain v. Gourdin, 11 B. R. 156.) -

Src. 5129.—If any person, being insolvent, or in contempla-
tion 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 property to any person who then has reasonable cause to
believe him to be insolvent, or to be acting in contemplation of
insolvency, 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,t 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.

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 pur-
chase 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 con-
fined 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

 

* So amended by act of 22 June, 1874, § 11.
t+ So amended by act of 18 February, 1875.
§ 5129. ] NOTES OF DECISIONS. 829:

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 considera-
tions: ist. The sale, or other transfer of property mentioned in it, need not
be in preference of a creditor 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
petition 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 insolvent
party, and whose reasons for further dealing with him were more pressing, in
order thet he might be saved from an impending loss, the time which should
secure the transaction from the effect of the bankrupt act should be less
by two months than in the case of one who has no such incentive to action,
because he is a volunteer purchaser of an insolvert’s property, with knowl-
edge of his insolvency. (Bean v. Brookmire et al. 4 B. R. 196; s. ¢. 1 Dillon,
24.)

The preceding section was intended to refer to the past, and this section
to the present. The language employed in the preceding section imports
clearly that the consideration must be one growing out of a former transac-
tion, 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 be-
tween the parties which had gone before it. It is only by this construction
that the two sectiens can be made to harmonize, and full and distinct effect.
be given to each. A mortgage for a present consideration is within this sec-
tion. (Gibson v. Warden, 14 Wall. 244.) »

This and the preceding sections must be censtrued together, and a scope
of operation given to each of them if possible. Some effect must be given to
the four months’ limitation. If 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 transaction done with a view to give a pref-
erence 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 intended 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 also
be 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 preceding
section. (Hubbard v. Allaire Works, 4 B. R. 628; s.c. 7 Blatch. 284; Potter
et al. v. Coggeshall, 4 B. R. 73; Babbitt v. Walbrun & Co. 4B. R. 121; 8. c. 6
B. R. 359; s. c. 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 y. 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 be-
830 THE BANKRUPT LAW. [$ 5129.:

lieve the debtor to be insolvent, or to be acting in contemplation of insolv4
ency. iy ay ' ow tw J i “ahhh 4
Ba. And knows that the sale was made by the debtor with a view to
prevent, etc., or to defeat, ete., or to evade, etc., the provisions of the bank-
rupt act. ‘ : e ort » eg

pales so made are void, and in fraud of creditors and their rights under
the ‘bankrupt law. And,.as against the immediate vendee, and all actual
participators, such sales, if made out of the usual and ordinary course of busi-
ness—as when an insolvent merchant sells out all his stock and property—
are prima facie evidence of fraud; that is, of the foregoing elements constitut-
ing a fraudulent sale. But it is only prema facie, and the presumption may
be rebutted by!evidence aliunde to'be produced by the vendee. An instruc+
tion to the jury which omits. some of the essential elements of frauds, or de-
clares'a'sale out of the ordinary course of the debtor’s: business necessarily,
‘instead of presumptively, fraudulent, is erroneous.  (Badbitt v. Walbrun .&
Vo. 4 B. R. 121; 8: c. 1 Dillon, 19; 's. c.6 B, R. 859; Andrews v. Graves, 5
B. R. 279; s.c, 1 Dillon, 108.) be a “

‘The presumption of fraud arising from the unusual 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 reasonable méans
pursued in’ good faith must be used for this purpose. Merely inquiring/the
object of the debtor in selling is not sufficient. (Walbrun v. Babbitt, 6 B. R,
539; 8. ¢. 9B, Rel; 8... 16 Wall. 577.) fd

. The degree of inquiry which devolves a3 a duty upon a person who pro-
poses to make a purchase out of the usual course of business of the seller de-
pends 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. (Sehulenberg v. Kabureck, 2 Dillon, 132.) ' i

Where the circumstances are very suspicious, the purchaser may be held
to make diligent inquiry. (Schulenberg v. Kabureck, 2 Dillon, 182.) _

The mere fact of sales at low prices does not make them sales out ef ‘the
usual and ordinary course of business of the vendor, and so prima facie: evil
dence 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’ ob-
Iigations at exorbitant rates of interest. (Sedgwick v. Lynch, 8B. R. 289;
8. 0.5 Ben. 489.) wie EN MS ee eee ye

-

. 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 contemplation
of insolvency: merely because he was selling his goods at a sacrifice, if hei at
the time had reasonable cause to believe that he would be able to avoid: a
failure. (Sedgwick v.. Lynch, 8 B. R. 289; 8. 0. 5 Ben. 489.) ills, Seo aay

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 beneficial by him,
and still not be insolvent. (Tiffany v. Lucas,5 B. R. 487; 8. c. 8B. R. 49;
8.0. 1 Dillon, 164; s.c. 15 Wall. 410.) nH :

The presumption is'that street brokers act for others and not themselves’
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 bua
‘discounted, the purchaser, in thé: absence of other evidence, will be “pre-
sumed to know that it is accommodation paper. (Tiffany v. Boatman’s Sav.
Inst. 4 B, R. 601; 8. c. 9 B, R. 245; 8, c. 1 Dillon, 14; 8. c. 18 Wall. 876.)
§ 5129.] NOTES OF DECISIONS. 831

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. » (Seabenugih v. Mills, 8
B. R. 361; 8. 6.5 C. L. N. 526.) ; 2 ty

A Losi advancing his own money to a trader or other person in-business,
and taking security from him out of the ordinary course of business, 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. (Jn re Butler, 4 B. R. 303; 8. c. Lowell, 506.)

If security is taken for a loan made for the purpose of extinguishing liens
pon the debtor’s property, and the money is actually so applied, it is valid.
(Gagfney v. Signaigo, 1 Dillon, 158.) te

_ If the debtor’s father-in-law, when the debtor is known by h'm to be in-
solvent, purchases his property, and applies the purchase money to pay off a
mortgage upon the property of the debtor’s wife, the transaction 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 v. Graves, 5 B. R. 279; 8. c. 1 Dillon, 108.) a

__ The bankrupt law, conceived and enacted in the belief that it provided
‘the best mode of administering the estate of an insolyent, will tolerate no
attempt by individuals to devise and carry into effect some other plan incon-
‘sistent therewith, nor-permit such an attempt to be justified by the excuse that
they thought such ether plan wiser or better. ' (Cookingham v. Morgan, 5 B.
R. 16; s.c. 7 Blatch. 480.) © Lee Ps Wale a

©

_. 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; 8. c. 88 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; 8. c. 82 Iowa, 209; in re
Pierce & Holbrook, 3 B. R. 258; 8. c. 16 Pitts. L. J. 204; in re Cohn, 6 B.
R. 879; Sedgwick v. Place et al. 1B, R..673; 8. 0.3 B. R. 139; 8. c. 3 Ben.
360; s,c.1L. T. B. 97; in ve Hawkins e¢,al, 2 B. R. 878; 8. c. 34 Conn. 548;
in re Broome, 3 B. R. 343; 8. c. 3 Ben. 488; Cragin v. Thompson, 12 B. R.
81; s..c. 2 Dillon, 513;. Thrasher v. Bentley, 2 N. ae 309; 8..c. 59 N. Y.
‘649; McLean v. Meline, 3 McLean, 199; McLean v. Johnson, 8 McLean, 202;
‘Cornwell’s' Appeal, 7 W. & 8. 305;’ in re Charles W. Holmes, 1 N. Y. Leg.
Obs. 211; Weiner v. Farnum, 2 Penn. 146; 8. c. 3 Penn. L. J. 440; in re
Anon. 1 Penn. L. J. 323; Sparkawk v. Drexel, 12 B. R. 450.)

An assignment for the benefit of creditors made more than six months be-
‘fore the commencement of the proceedings in eo tcy is valid as against
the assignee. (Mayer v. Hellman, 13 B. R. 440; 8. c. 1 Otto, 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 part-
nership creditors may be set aside under this section. (Barnewall v. Jones,
14.B, R278.) ve os pe i ms
An assignment for the benefit of creditors by an insolvent. debtor, is con-
clusive evidence of an intent to defeat the operation of the bankrupt law, and
may be'set aside at the instance of the assignee: (Jackson v. McCulloch, 18
'B. B.'283;.8. 0. 1 Wood, 483.) bude Pog. Sl i Bs eM
_ The trustee and all persons claiming under an assignment are chargeable
with knowledge of the terms thereof, and consequently with knowledge of
the insolvency of the debtor, and his purpose to evade the operation of ‘the
bankrupt law. (Jackson vy. McCulloch, 13 B. R. 283; '8. c. 1 Wood, 433.)'
832 THE BANKRUPT LAW. [§ 5129.

As the intent of an assignment is to be legally inferred from its necessary
tendency, the words, “ with intent to delay or defeat the operation of this
act,” melude 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 con-
structively fraudulent under the bankrupt law, is not void, but voidable; and
is voidable only at the suit of the assignee in bankruptcy. In the United
States, the reasons for considering 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 mean time, become various in the several States, The abrogation
of such local differences at the election of any non-assenting creditor is an es-
sential part of ‘‘an act to establish a uniform system of bankruptcy through-
out the United States.” (Barnes v. Rettew, 8 Phila. 133.)

Acts done under it previously in good faith may besustained. An injunc-
tion 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; 8. 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 assignment, the assignee may elect to come in and prosecute the suit in
hisname. (Mreeman v. 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 bank-
tuptcy. Although the decree annuls the assignment, and orders a surrender
of the estate, yet the conveyance, by a deed of surrender, may effectuate or
facilitate the purposes of the decree. (Burkholder v. Stump, 4 B. R. 597; 8. c.
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. c. 2
Dillon, 513.)

If the trustee surrenders the property to the assignee, he should be pro-
tected in so doing by the State court. (Cragin v. Thompson, 12 B. R. 81; s.
c. 2 Dillon, 513.)

A surrender of a part of the property to the debtor prior to the commence-
ment of proceedings in bankruptcy will not relieve an assignee from the legal
effect of the deed of trust, and he must account therefor. (Stobaugh v. Mills,
8B. R. 861; s.c.5C. L. N. 526.)

_ Where the assets have been changed by the trustee, the assignee may re-
ceive the money or other proceeds in lieu thereof. (McLean vy. Johnson, 3
McLean, 202.)

Money paid by the trustee to discharge valid liens on the property, in pur-
suance of the terms of the trust, can not be recovered from the secured cred-
itor. (Livingston v. Bruce, 1 Blatch. 318.)

The trustee is entitled to be credited with the payments to lawful credit-
ors made by him in accordance with the terms of the assignment, before the
institution of a suit by the assignee, and is not liable to the assignee therefor.
(Jones v. Kinney, 4 B. R. 649; 8. c.5 Ben. 259; Cragin v. Thompson, 12 B. R.
81; s. c. 2 Dillon, 513.)

The trustee is liable for the balance that remains in his hands undistrib-
§ 5129.] NOTES OF DECISIONS. 833

uted. (Jones y. Kinney, 4 B. R. 649; 8.c.5 Ben, 259; Everett v. Stone, 8 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. 0 Ben. 259; Cragin
v. Thompson, 12 B. R. 81; 8. c. 2 Dillon, 513.)

The expenses of converting the property into money may be allowed to a
trustee under an assignment, (Jn re J. 58. Cohn, 6 B. R. 379; Stobaugh vy. Alills,
8 B. R. 861; 8. ¢. 5 CL. N. 526; contra, in ve Stubbs, 4 B. R. 376.)

Every person receiving an assignment, ought to know that itis 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 pre-
vent any injurious duplication of charges. In some of the judicial 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; 8. ¢. 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. Marz, 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
y. Bashore, 13 B. R. 481.)

As assignment is valid as against a judgment creditor who lays an attach-
ment in the hands of the trustee. (Cook v. Rogers, 13 B. R. 97.)

A creditor can not levy upon the property transferred by an assignment,
although it is void under the bankrupt 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 bankrupt law, without
showing that the property has been recovered from him by the assignee.
(Seaman vy. Stoughtcn, 8 Barb. Ch. 844.)

If the debtor, after making an assignment, takes the benefit of a State in-
solvent 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, proceedings subse-
quently commenced, (Sullivan yv. Hieskill, Crabbe, 525; 8. 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 itis made after an assignment
which is void under the bankrupt law. (MeLean vy. Meline, 3 McLean, 199.)

The money paid by a trustee to an attorney can not be allowed. (In re
J. 8. Cohn, 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 eject-
ment. (Reeser v. Johnson, 10 B. R. 467; s. c. 76 Penn. 313.)

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

53
834. THE BANKRUPT LAW. [§ 5129.

to his wife; and she, being fully cognizant of his application for the benefit
of the bankrupt 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 bankrupt 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 in-
tention to defeat the provisions of the bankrupt act. It is not difficult to see
that in a season of pressure, the power to raise ready money, may he of immense
value to a man in embarrassed circumstances. With it he might he saved
from bankruptcy, and without it financial ruin would be inevitable. If the
struggte to continue his business, be an honest one, and not for the fraudulent
purpose of diminishing his assets, it is not only not forbidden, but is com-
mendable, 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 repayment, and this security is usually in the shape of collaterals. Neither
the terms or policy of the bankrupt act, are violated, if these collaterals be
taken at the time the debt is incurred. His estate is not impaired or dimin-
ished, as he gets a present equivalent for the securities he pledges for the re-
payment of the money borrowed. (Tiffany v. Boatman’s Sav, Inst. 4B. R.
601; s.c. 9B. B. 245; 8. c. 1 Dillon, 14; s. c. 18 Wall. 8376; Bentley v. Wells,
61D. 59; inre McKay & Aldus, 7B. R. 230; 8, 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 regard
to its character. A policy leading to such a result would be an excellent con-
trivance for paralyzing business, and can not be imputed to Congress without
an express declaration to that effect. The interdiction applies to sales fora
fraudulent object, 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 bankrupt act. If it were so, no one would know with whom
he could safely deal, and a person in this condition would have no encour-
agement 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; 8. c. 8 B. R. 49; s.c. 1 Dillon, 164; 8. c. 15 Wall. 410; Wadszorth v.
Tyler, 2B. R. 316; 8. c. 2L.T. B. 28; inre A. Pusey, 7 B. R. 45; Gillenwater
v, Miller, 49 Miss. 150.)

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. 487; s. c. 8 B. R.
49; s.c. 1 Dillon, 164; 8. c. 15 Wall. 410.)

A fair exchange of value may be made at any time, even if one of the par-
ties to the transaction is insolvent. There is nothing in the bankrupt 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 bis -
estate in as good plight and condition as previously. (Cook v. Tullis, 9 B.
R, 483; 8. 0. 18 Wall. 332; Clark v. Iselin, 11 B. R. 337; 8. c. 21 Wall. 360.)

Ifa party who owes money to an insolvent debtor pays him in good faith,
§ 5129.] NOTES OF DECISIONS. 835

without having reasonable cause to believe that the latter intends to make
fraudulent preferences or percths therewith, the assignee can not recover
the sum so paid. (Borland v. 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.)

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 preference,
he will be deemed to still hold the money, and is liable to the assignee there-
for. (How v. Gardner, 12 B. R. 187.)

There is no arbitrary rule by which the good faith of a transaction can be
tested. (Tiffany v. Lucas, 5 B. R. 437; s.c. 8 B. R. 49; 8. 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 bankrupt act, must be satisfactorily
proved to render a deed void. (Tiffany v. Lucas, 5 B. R. 437; 8.c. 8B. R.
49; 8. c. 1 Dillon, 164; s.c. 15 Wall. 410; Judson v. Kelty, 6 B. R. 165; s.c.
5 Ben. 348; 8. 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 prescribed,
to a party who is subsequently declared to be bankrupt, and takes securities
theréfor, 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
corperation is under a liability to the assignee. (Tiffany v. Boatman’s Sav.
Inst. 4 B. R. 601; s. c. 9 B, R. 245; 8. c. 1 Dillon, 14; 8. c. 18 Wall. 376.)

Every case must be decided on its own facts, and it will never be possible
to lay down any general formula applicable to all cases. The intent to pre-
fer a creditor necessarily involves the idea of an expectation of paying 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 anticipa-
tion of stopping payment, which, indeed, may often be inferred from insolv-
ency 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, pro-
hibiting insolvent persons from borrowing money on a mortgage, even of their
stock in trade, or requiring mortgagees to see to the application of the money
they lend. (42 parte D. C. Packard, Lowell, 523.)

A sale by an insolvent person, though known to be insolvent, is not there-
fore 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 cred-
itor. The claim of a lawyer for professional services, no matter how meri-
torious or necessary such services may have been, is not a preferred one, (Jn
ve Evans, 3 B. R. 261; in ve Mallory, 4 B. R. 153; 6. o. 2 L. T. B. 130; contra,
in re Sidle, 2 B. R. 220; in re Rosenfield, 2 B. R. 117; 6. c. 1 L. T. B. 100;
8.0. 8A, L. Reg. 44; Triplett v. Hanly, 1 Dillon, 217.)

A declaration which avers that the debtor did on a certain day transfer,
836 © THE BANKRUPT LAW. [§ 5130.

assign and convey certain property to the defendant, covers any transfer, as-
signment, or conveyance during the six months prior to the filing of the peti-
tion. (Andrews v. Graves, 5 B. R. 279; 8. c. 1 Dillon, 108.)

When the record of the proceedings in bankruptcy is produced and rec-
ognized as in evidence, and no objection is made that they are not formally
read or offered in evidence, they are evidence. (Andrews v. Graves, 5 B. R.
279; s. c. 1 Dillon, 108.)

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 3, 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 pay-
ment made after the service of an order for aninjunction. (Babbitt v. Burgess,
7 3B. R. 461; 8. 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 au-
thority to administer oaths, and when, by the assent of parties, he takes a
deposition to be used as evidence in a cause, the same becomes a sworn state-
ment 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 concerned, 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. 0. 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. (Andrews v. Graves, 5 B. R.
279; 8. c. 1 Dillon, 108.)

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 ven-
dee can only be impeached when it is shown that he participated in the fraudu--
lent 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 jides 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. 121; s. c.1 Dillon, 19; Rahilly v. Wilson, 8 Dillon, 420.)

_ Ifa 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
plate in some other suit based upon its validity. (Sedgwick v. Wormser, 7 B.

. 186.)

Where the purchase is joint, the judgment’should be joint, and not a sep-
arate judgment agaiust each proportioned to the sum which they separately
paid for the property. (Schulenberg v. Kabureck, 2 Dillon, 182.)

Suc. 51380.—The fact that such a payment, pledge, sale, assign-
ment, transfer, conveyance, or other disposition of a debtor’s
property as is described in the two preceding sections is not made
§ 5130 A.) NOTES OF DECISIONS. 837

in the usual and ordinary course of business of the debtor shall
be prima facie evidence of fraud.

The words, “ sale, assignment, transfer, or conveyance,” employed in this
clause, are of comprehensive import, and embrace almost every disposition of
the property, whether absolute or conditional. Both the antecedent para-
graphs refer to and are designed to protect the property of the insolvent, 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 pro-
tect property of insolvents from fraudulent disposals. (Scammon v. Cole et al.
3B. R. 393; 3.¢c.5 B. R. 257; 5.0. 2L.T. B. 103; Driggs v. Moore, Foot & Oo.
3B. R. 602; s.c. 1 Abb. C. C. 440; Babbitt v. Walbrun & Co. 4 B. R. 121; 8.
c. 1 Dillon, -19.)

Ifa 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, hav-
ing 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 pur-
chase, 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 in-
volving 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. (Jn re
Hunt, 2 B. R. 539; s.c. 1 C.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 accord-
ing to the usual course of business of the particular person whose conveyance
is the subject of investigation. And if it isa departure from his usual and
ordinary course of business, the statute intends that the party taking the con-
veyance from him shall be put upon inquiry. (Rison v. Knapp, 4 B. R. 349;
s. c. 1 Dillon, 186.)

To bring this clause into operation. it is necessary to show that the trans-
fer 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 isnot 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 v. Kelty, 6 B. R. 165; s. o. 5 Ben. 348; s. c. 2 L. T. B.
218; Tiffany v. Lucas, 5 B. R. 487; s. c. 8 B. R. 49; s. c. 1 Dillon, 164; s. c.
15 Wail. 410.)

A sale of a store for the purpose of curtailing business can not be regarded
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 verdee the burden of proof to show
its fairness and validity. (Smith v. McLean, 10 B. R. 260.)

Suc. 5180 a (22 June, 1874, § 10).—That in cases of involuntary
or compulsory bankruptcy, the period of four months mentioned
in section five thousand one hundred and twenty-eight [thirty-five]
of the act to which this is an amendment, is hereby changed to
838 THE BANKRUPT LAW. [§ 5131.

two months, but this provision shall not take effect until two
months after the passage of this act, and in the cases aforesaid, the
period of six months mentioned in said section 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.

Sec. 5181.— Any contract, covenant, or security made or given
by a bankrupt or other person with, or in trust for, any creditor,
for securing the okra of any money as a consideration for or
with intent to induce the creditor to forbear opposing the applica-
tion for discharge of the bankrupt, shall be void; and any creditor
who obtains any sum of money or other goods, chattels, or se-
curity, 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.

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 il-
legal consideration, nor void as against the policy of the bankrupt act. (Rep-
plier y. 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 bankrupt, is il-
legal and void. Even without the statute it would be void. Such a promise
is a fraud upon the other creditors, and is contrary to public policy. (Austin
v. Markham, 10 B. R. 548; s. o. 44 Geo. 161; Rice v. Alaxwell, 21 Miss. 289;
vide Bell v. Leggett, 2 Sandf. 450.)

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 ob-
ligation 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 v. Parker, 4 B. R. 713; 8. c.23 Mich.
22; Noble v. Scofield, 44.Vt. 281; Dalrymple v. Hillenbrand, 62 N. Y. 53 8. c.
5 N.Y. Supr. 57.)

If a party sigas a note as surety, and takes property from the principal to
indemnify him for his liability, the fact that the property is subsequently
taken from him by the assignee of the principal, on the ground that the
transfer was void under the bankrupt law, does not constitute a valid defense
to the note. (Noble v. Scofield, 44 Vt. 281.)

Ifa 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 excepticn
is made in favor of innocent holders of negotiable securities made in violation
of the law. (Du/rymple vy. Hillenbrand, 62 N.Y. 5; s.c. 5 N. Y. 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 bank-
rupt’s discharge. is founded on an illegal consideration, and is void. (Bell
v. Leggett, 7 N.Y. 176.) Ts

A note given in consideration of a promise by the payee to dismiss pro-
§ 5132.] NOTES OF DECISIONS. 839

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 v. Torlina, 11
B. R. 521; s. 0. 55 Mo. 369.)

An agreement between creditors who have received preferences to con-
tribute proportionately such sum as may be necessary to induce other credit-.
ors to forbear to put the debtor into bankruptcy is valid. (Perryman v.
Allen, 50 Ala. 5'73.)

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 bankrupt law, and the debtor may recover the con-
sideration therefor. (Sanford v. Huaford, 32 Mich. 313.)

Sxc. 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, muti-
lated, 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 intu the possession of the assignee in bankruptcy, or
to hinder, inypede, or delay him in recovering or receiving the
same; or,

Fourth. Who makes any payment, gift, sale, assignment,
transfer, or conveyance, (8) of any property belonging to his estate
with the like intent; or,

Fitth. Who spends any property belonging to his estate in
gaming; or,

Sixth. Who, with intent to defraud, wilfully and fraudulently
conceals from’ his assignee, or omits (¢) from his inventory, any
property 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 dis-
close the same to his assignee within one month after coming to
the knowledge or belief thereof; or, ;

Kighth. 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 bankruptey, under the false color and _pre-
tense (d) of carrying on business and dealing in the ordinary
ecurse of trade, obtains on eredit from any person any goods or
chattels with intent to defraud ; or,. ;

Tenth. Who, within three months next before the commence-’
ment of proceedings in bankruptcy, with intent to defraud his

!
840 THE BANKRUPT LAW. [$ 5132.

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 obtamed on credit

and remain unpaid for, ;
Shall be punishable by imprisonment, with or without hard

labor, for not more than three years.

(a) A person is not criminally liable for the payment of fair current ex-
penses for the support of his family between the commencement of proceed-
ings in bankruptcy against him and the final adjudication. (Jn re Brooks, 5
Pac. L. R. 191.)

If the bankrupt has been examined before the register in regard to the
property which is cbarged to have been concealed, no demand before the in-
dictment is necessary. (U. S.v. Smith, 13 B. RB. 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 commenced
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, pursu-
ant to the act, without in any way describing the proceedings, 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 wit!
reference to which the accused made the alleged conveyance of property, nor
allege any adjudication or proceedings in bankruptcy before a court of com-
petent jurisdiction, nor set forth any facts from which it can be seen that any
court bad jurisdiction of the proceedings alluded to. (U. 8. v. Latorre, 8
Blatch. 184.)

(c) This clause is not qualified by the original limitation of time. Itis 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. Itis complete without a final examination.
In practice, there is no last examination in bankruptcy, 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 eath of allegiance. If the defendant was a citizen, and neglected to
take the oath, he must show it in defense. (U.S. v. Clarke, 4B. R. 59; 8. 6.
1L. T. B. 2387; 8. 0. 3 L. T. B. 223.)

(d) Neither as to the proceedings nor jurisdiction of the court in bankruptcy
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 com-
menced. Jt must be pleaded and proven, in order to convict, that a petition
in bankruptcy was presented to the district court by a certain creditor, nam-
ing him, ‘and also the amount of the debt of such petitioning 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 commenee and prosecute proceedings in bankruptcy. The amount of his
delt must appear, otherwise the court would have no jurisdiction. It must
appear that the bankrupt obtained goods within three months of the bank-
ruptcy by means of arepresentatioa, which he knew to be false, that he was
carrying on business and dealing in the ordinary course of trade, and such
§ 5132.] NOTES OF DECISIONS. 841

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 quautity. This can be ascertained from the bills of sale. The de-
scription of the goods in an indictment should be as definite as in a declara-
tion 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. 8. v. Prescott et al. 4 B. R, 112; s. c. 2 Abb. C. C.
169; s. c. 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.

8. Such goods and chattels must be obtained on credit as aforesaid with
intent to defraud.

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 extraordinary
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 ereditors 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 subter-
fuges and acts resorted to by him to keep his creditors quiet, are circum-
stances to be considered as tending to show a fraudulent intent. The crim-
inal 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 insufficiency of the evidence for the prosecution to estab-
lish a belief of guilt. In other words, it must be unreasonable to believe
him guilty under all the proofs in the case. (U. 8. v. Hyank, 3 B. R. quarto,
175; s. c. 2. Biss. 268; U. S.v. Geary, 4 B. BR. 584; U7. 8. v. Thomas,7 B. BR.
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 dealing
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. (U. 8. v. Penn, 13
B. R. 464.)

This section does not reach an offense which consists in a conspiracy to
obtain govds 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. It the
goods were obtained upon credit with the intent of disposing of them to
842 THE BANKRUPT LAW. [§ 5182,

raise money, the fraud on the seller would be the most obvious one; but the
object of the statute seems to be to punish frauds 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 trade, and at that time the fraud would not be of one
creditor more than of the rest. (U. 8. v. Clark, 4B. R. 59; 8.c.1L. T.B.
287; 8. ¢.3 L. T. B. 223; U8. v. Penn, 13 B. R. 464.)

When there is a several finding on each count, the verdict can not be set
aside if either of the counts is good. (U. 8. v. Clark, 4 B. R. 59; 8, 0.1
L. T. B, 237; 3. 0. 3.L. T. B, 223.)

The making of a fraudulent chattel mortgage renders a party liable under
this provision. (U. 8. 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 commencement
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.
8. v. Penn, 13 B. R. 464.)

The intent to defraud may be inferred from allthe circumstances of the
case. (U. 8. v. Smith, 13 B. R. 61; UV. 8. v. Bayer, 13 B. R. 88.)

Tt must be shown that the intent existed in the mind of the defendant at
the time the sale was made. (U. 8. v. Penn, 13 B. R. 464.)

Every man is presumed to intend the usual and ordinary consequences of
an act. (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 re-
turn. (U.S. v. Penn, 13 B. R. 464.)

_ The defendant may put in evidence his former. good character in rela-
tion to the particular crime with which he stands charged. (U. 8. v. Penn,
13 B. R. 464.)

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. (U. Sv.
Penn, 13 B. R. 464.)

Quere. Can Congress legislate for frauds committed by a debtor on a sin-
gle creditor within the same State, unless the act relates to bankruptcy or to
some other matter within the Federal jurisdiction? (U.S. v. Clark, 4 BR.
59; 8.c,1L. T, B. 2387; 3. 0.3 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 throughout
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 ‘+ necessary and proper”
for carrying the bankrupt law into effect, it comes within the latter power
named, and is constitutional, The subject of bankruptcy, 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 prop-
erty to the payment of his debts pro tanto or in full, as the case may be, and
the relief of honest debtors. To accomplish 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 prop-
erty, and the rights of others dealing with him in regard thereto, in many
§ 5132.] NOTES OF DECISIONS. 843

particulars, before any proceedings in bankruptcy shall have been com-
menced 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,” ‘‘conducive to.” The end sought by a
bankrupt 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 con-
ducive and plainly adapted to the end sought. The proceedings in bank-
ruptcy merely constitute the machinery by which the appropriation of the
debtor’s property to the payment of his debts is attained, The prevention of
the fraud denounced by the clause being conducive to that end, it makes no
difference whether it relates toa fraud committed before or after the ma-
chinery 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 ‘‘ bankrupt,” are used, and in the disjunctive, it must be held
that the former is used in the clause as descriptive of a person who isa
debtor, but who has not at the time of committing the offense, become a
bankrupt. The ‘‘ subject of bankruptcies,” however, as used in the Consti-
tution, 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.S. v. Pusey, 6 B. R.
264; 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 com-
mitted 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 pursuance of such con-
spiracy to effect its object, they are liable to indictment under section 5440.
(U. 8. v. Bayer, 13 B. R. 400.)
NOTES TO RULES.

RULE I.

THE entry required by this rule should be made on every paper filed with
the clerk, whether filed with him in the first instance, or with the register
first and then with him. Such entry is a certificate for which he is entitled
to charge fifteen cents. (Jn re Dean, 1 B. R. 249; 8. co. 1 L.T. B. 9.)

RULE IV.

The proceedings which are required to be had before a register are pro-
ceedings which are to take place after an adjudication in involuntary bank-
ruptcy, or after the filing of a voluntary petition whereon an adjudication can
be immediately had. (Jn re Holmes & Lissberger, 12 B. R. 86; s. c.49 How.
Pr. 142.)

When the petitioner fails to appear on the day appointed in the order of
reference, he may appear at any subsequent day, but should file a written
affidavit explaining the delay. (Jn re Hatcher, 1 B. R. 390.)

RULE V.

Registers may take cognizance of uncontested petitions filed by an attorney
against the assignee to compel the payment of his fees and disbursements.
(in re Heury H. Stafford, 18 B. R. 378.) ~

RULE VII.

The register’s certificate of correctness is not conclusive. (In re W. D.
Hill, 1B. R. 16; 8. c. 1 Ben. 321.)

RULE XII.

All the effect that can be given to this rule, so far.as it relates to the mar-
shal’s fees, is that he must accompany his return with vouchers whenever
practicable. (Jn re Donahue, 8 B. R. 458; contra, in re Talbot, 2 B. R. 280;
8.c. 2L. T. B, 15.)

Whenever vouchers are emitted, the marshal must state in his return the
reasons for such omission, or produce other testimony for that pnrpose, in
order that the court may judge of the practicability of his obtaining vouch-
ers. (Jn re Eugene Comstock et ai. 9 B. R. 88.)

The court may exercise a discretion in the matter, and act upon the ac-
count without insisting upon the production of the vouchers, where it is made
to appear that they were omitted by oversight, and it is impracticable to ob-
tain them, (Ja re Eugene Comstock et al. 9 B. R. 88.)
NOTES TO RULES. 845

RULE XI.

This rule, as far as it relates to the seizure of property by the marshal,

applies only to involuntary cases. (Jn ve Hasbrouck, 1 B, R.75; s. c. 1 Ben.
402.)

This rule provides a particular course of procedure in all cases of contro-
verted possession, both when the property has already come to the hands of
the marshal as when it isin the hands of the adverse claimant, and the as-
signee or petitioning creditor seeks its possession. The amendment was un-
doubtedly made on account of the too general terms of the original rule to
meet vexed questions of possession, pendente lite. (In re Hunt, 2B. RB. 539;
s.c.1C. LN. 169; iw7e Briggs, 3 B. R. 688; s.c. 2C. L. N. 218.)

RULE XIV.

This rule prohibits the use of dots to indicate anything necessary to be
stated. (In re Orne, 1 B. R. 79; s.c. 1 Ben. 420.) :

An illegible petition can not be filed. (Anon, 1 B. R. 215; in re Robert
Malcolm, 4 Law Rep. 488.)

Tllegible schedules should be amended. (Jn re Hall, 2 B. R. 192; s. c. 16
Pitts. L. J. 52.)

RULE XVI.

If no express rule were prescribed no doubt would exist as to the proper
practice where the jurisdiction of two different courts, to adjudge the debtor
bankrupt and administer his estate, should be invoked. The familiar practice
of courts of equity acting under the same general jurisdiction would require
them, when their jurisdiction should be invoked for the distribution of the
same fund by different complainants, to admit the court first obtaining juris-
diction of the fund by the institution of a suit, to proceed therewith to its
full and complete disposal. The district courts are Federal tribunals acting
under Federal laws, constituting a single system operating alike in both juris-
dictions, and necessarily governed by the same rules, and proceeding to the
same identical result. There is but one bankrupt law. The authority and
jurisdiction of the courts are derived from one source, and the reasons for con-
fining the administration of the estate to a single tribunal are of great force.
If the character of the case is anomalous, not precisely answering the descrip-
tion of the Rule or the act, the Rule, from its obvious fitness and propriety,
should be the guide, to avoid complication, embarrassment and expense, if
not inevitable conflict. It may not follow that the court in which the latest
petition is filed must or ought to dismiss the proceeding lawfully and reg-
ularly instituted, but it should at least, on proper application, stay the pro-
ceedings until some adjudication touching the bankruptcy be had in the
tribunal in which the petition was first filed, or, if the debtor has already been
adjudged bankrupt there, abstain from an apparent interference with the
title of the assignee to the estate. (In re Boston R. R. Co. 6 B. R. 209, 222;
8. c. 9 Blatch. 101, 409.)

RULE XIX.

Where there is litigation concerning the property to be exempted, the
twenty days is to be computed from the termination of the suit. (ln re
Shields, 1 B. R. 344.)

The auxiliary ‘‘may” in this rule is not to be taken in an imperative
sense. The supreme court intended to leave a discretion to the district and
circuit courts, to permit them to repair accidents, correct mistakes, and pre-
vent frauds, (Jn re Perdue, 2 B. R. 183; 8. c. 2 W. J. 279.)
846 THE BANKRUPT LAW.

Where the exceptions go to the title of the exempted property, they need
not be filed within the required time. (Jn re Perdue, 2 B. R. 183; 8. c. 2 W.
J. 279; in re Jackson & Pearce, 2 B. R. 508.)

Where the exceptions relate to articles included in the terms “household
and kitchen furniture or other articles,” they must be filed within the pre-
scribed time. (Jn ve Gainey, 2 B. R. 525.)

RULE XXIv.

This rule is enabling, not prohibitory. A creditor who does not file his
specifications within the prescribed time will lose the opportunity of doing
so. But he has the right to file them at any stage of the proceedings. (Jn re
Baum, 1 B. R. 5; 8. c. 1 Ben. 274; in re McVey, 2 B. R. 257.)

Where a creditor regularly enters his appearance, but fails through inad-
vertence to file his specifications within the prescribed time, the court, on
cause shown, will allow him to file them nune protunc. (In re Grefe, 2 B. RB.

329.)
RULE XXVII.

This rule only applies to the court in which the proceedings in bank-
ruptcy are pending. (Jn re Seymour, 1 B. R. 29; s.c. 1 Ben. 348.)

RULE XXVIII.

When an assignee fails to make a report to the court, of funds received by
him, it must be assumed that no funds have been received by him, and that
no deposits have been made byhim. In order to warrant proceedings against
an assignee for not complying with Rule XXVIU, it must be shown at least
by prima facie evidence that he has received funds or made deposits in respect
to which he ought to have made a report under Rule XXVIII. (Jn re Good-
win, 3 B. R. 417.)

RULE XXX.

The following fees may be charged by the register in composition cases:
For office and incidental expenses. ..............--.--- $5 00
For general meeting of creditors ..................-+-- 3 00
For service under order of court, per day. .............. 5 00
For filing papers not before filed with clerk, each ....... 10
For examination of bankrupt, each folio .............. 20
Por affidavits, Gach. 2... icc ccc seen ce 9 ect este eee eieee bes 25
For ordering adjourned meeting...............-...0005 1 00
For holding adjourned meeting. ..................-... 3 00
For each folio in the report. .........0 02... cece eee eee 10

(in re Benjamin F. Spillman, 13 B, R. 214.)

An allowance for the attention of the marshal in taking care of property
can only be made when the marshal himself in person actually and necessarily
gives his personal attention in taking care of the bankrupt’s property, and
does not cover personal attention by a deputy. (Jn re Johnston & Hall, 12
B. R. 345.)

For the custody of property the marshal is entitled to be allowed what is
necessarily and actually disbursed and paid by him to a keeper or keepers,
but the entire amount can not exceed two dollars and fifty cents a day. (In
re Johnston & Hall, 12 B. R. 345.)
NOTES TO RULES. 847

A party who is in the employ of the marshal, and in receipt of his usual
salary, can not be allowed compensation for services rendered in making out
- the bankrupt’s schedules. (Jn re Barnes Brother & Herron, 1 W. N. 21.)

If the keeper is employed during any part of the time in taking an in-
ventory, and is entitled to be paid therefor, that ought to diminish his al-
lowance as keeper. (Jn re Johnston & Hall, 12 B. R. 345.)

At the rate of $2 50 per day the marshal can only be allowed for the serv-
ices of one keeper. (Jn re Johnston & Hall, 12 B. R. 345.)

The marshal has a right to be allowed one dollar per hour for the time of
persons whom he employs to take an inventory which is necessarily employed
in taking it. (Jn re Johnston & Hall, 12 B. R. 345.)

No allowance can be made for the time spent by the marshal in verifying
the inventory with the assignee. (Jn re Johnston & Hall, t2 B. R. 345.)

The marshal may charge for a copy of the inventory furnished to the as-
signee at the rate of ten cents a folio. (In re Johnston & Hall, 12 B. R. 345.)

The marshal is entitled toa fee of two dollars for serving a copy of the
petition, as well as a copy of the order to show cause on the debtor in an
involuntary case. (Jn re Burnell Bros. 14 B. R.; s. c. 8 Cent. L. J. 450.)

The marshal may be allowed a commission on money collected by him
under the warrant. (Jn re Frederick Pfaff, 7 Ben. 61.)

The marshal is entitled to two per centum on the disbursements made by
him. (Jn re Johnston & Hall, 12 B. R. 345; in re Burnell, 14 B. R.; s.¢. 3
Cent. L. J. 450.)

The marshal is not entitled to an allowance by way of commissions on the
value of property for its custody. (Jn re Johnston & Hall, 12 B. R. 345; in
re Burnell, 14 B. R.; 8, c. 8 Cent. L. J. 450.)

Where the case is settled, the marshal is entitled to a commission of one
per centum on the first five hundred dollars, and one-half of one per centum
on the excess over five hundred dollars, for the custody of property and
money. (In re Johnston & Hall, 12 B. R. 345.)

When the marshal has concluded his serviccs, he may have his bill taxed,
if there is an assignee, without waiting for the presentation of the final ac-
count. (Jn re Philip Rein, 13 B. R. 551.)

Notice of the taxation may be given to the assignee, and it is not neces-
sary to give notice to the creditors. (Jn re Philip Rein, 13 B. R. 551.)

The assignee should examine the bill, and if he is satisfied that it is law-
fully taxable at a certain amount, he may consent to its being taxed at that
amount. (In re Philip Rein, 13 B. R. 551.)

The consent of the assignee is a sufficient warrant for the clerk to tax a
pill for the amount so consented to. (Jn re Philip Rein, 13 B. R. 551.)

When the taxation is made, it is conclusive on the marshal and the as-
signee for the time being, and the marshal is entitled to receive the amount
of his bill so taxed, unless it is shown that there is some fraud or bad faith
on the part of the marshal or the assignee. (Jn re Philip Rein, 13 B. R. 551.)

RULE XXXII.

The petitioner need only use such of the forms as are appropriate to
and descriptive of the debts and property he is required to list. He should
state, however, the reason why the other forms are omitted. (Anon. B. R.
Sup. 27.)
848 THE BANKRUPT LAW.

The petitioner is not restricted to the letters printed on the schedules.
He may exhaust the alphabet, and use other marks, if he can thereby set
forth his property more lucidly. (Jn re Sallee, 2 B. R. 228.)

t

RULE XXXIV.

If the creditor fails to appear and submit to examination, the register
may expunge or diminish the claim by default. The citation throws upon
the creditor the burden of supporting his claim by further proof than that
already filed. If the creditor is unable to attend in pursuance of' the notice,
he should take steps to procure a postponement until he can attend or the
taking of the examination elsewhere before another register or commis-
sioner if need be. (dn re Ira A. & Chas. W. Lount, 11 B. R. 315; 8. c. 7
C. L. N. 155.)

When an assignee files a petition for the re-examination of a proof, the
creditor need only offer himself for cross-examination, and the assignee, if
he wishes to contest the proof, must offer such opposing evidence as he may
have. (in re Wm. L. Robinson, 14 B. R. 180.)

The exhibits annexed to the answer can not be used as evidence, unless
they are proved in the usual manner. (Canby 7. McLear, 13 B. R. 22.)

The answer to a motion to expunge a proof can not be used as evidence.
(Canby v. McLear, 13 B. R. 22.)

Where a motion is made to expunge a proof, the burden of proof rests on
the parly making the motion, and he is entitled to the opening and reply.
(Cunby v. McLear, 13 B. R. 22.)

Upon a motion to expunge a proof, the testimony of the bankrupt is not
competent unless he is produced asa witness. (Canby v. McLear, 13 B. R. 22.)

A party who has obtained an order for forniing an issue can not have it
revoked if the other party did not object to the order but does object to the
revocation. (Jn re James 8. Aspinwall, 7 Ben. 154.)

The register has no authority to require the parties to form an issue if
either of them objects until it appears to the register that the claim ought to
be expunged or diminished, and until objection is then made to his making
an order to that effect. (in re James 8. Aspinwall, 7 Ben. 154.)

The justices of the supreme court did not intend to make this mode of
proving or acknowledging letters of attorney exclusive. (Jn re Butterfield &
Burr, 14 B. R. 195.)

A power of attorney which is not acknowledged before a register in bank-
ruptcy, or a commissioner of a circuit court is not sufficient to authorize the
agent to act. (In re Wm. C. Christley, 10 B. R. 268.)

RULE XXXVI.

This Rule is entirely prospective in its operation, and purports to refer only
to proceedings for composition initiated after its adoption. (Jn re Holmes &
Lissberger, 12 B. R. 86; s. c. 49 How. Pr. 142.)
NOTES TO FORMS.

 

FORM No. 4.

Tus furm is not a special order. The authority conferred by it, ‘to take
such other proceedings as are required by the act,” means such other proceed-
ings as the act requires the register to take. (Jn re Bellamy, 1B. R. 118; 3,
e. 1 Ben. 474.)

FORM No. 6,

The marshal has no discretion, but must serve all notices by mail, unless
otherwise specially directed. It is competent for the register to strike out
the words ‘‘ or personally.” (Anon. 1 B. R. 216.)

FORM No. 15.

The register has no power to approve or confirm the choice of an assignee
elected by the creditors. (Jn re J. O. Smith, 1 B. R. 243; s. c. 2 Ben. 113;
in re Scheiffer & Garrett, 2 B. R. 591; s.c.10C. L. N. 261.)

FORM No. 18.

The word “is” in the form before the word ‘“ possessed,” is probably a
misprint. The form is evidently copied almost verbatim from the form of
assignment used under the Massachusetts insolvent law. (dn re Patterson, 1
B. R. 125; s. c. 1 Ben. 508.)

FORM No. 26.

There are no general words in the power. Throughout the whole instru-
ment there are only three things authorized to be done by the attorney: Ist.
To attend meetings or sittings ; 2d. To vote at the same; and, 3d. To accept,
for the signer of the letter of attorney, the appointment of assignee. No
other power is granted; no other act is specified to do which authority is
given, and there are no general words whatever, which will include any
other act. (Creditors v. Williams, 4 B. R. 580; s. c. 2 L. T. B. 166.)

FORM No. 34.

The note to this form contemplates that a petition for the sale of property
subject to a mortgage may be presented to the court by the assignee, but the
assignee may sell the property subject to the mortgage without such an order,
(in ve McClellan, 1 B. R. 389.)

/

FORM No. 51.

The words “ other persons in interest,’ in the order of this form, author-
izes a party having a pecuniary interest, though not a creditor who has proved
his debt, to appear and oppose the discharge. (Jn re Bcutelle, 2 B. R. 129;

54
850 THE BANKRUPT LAW.

8. c. 15 Pitts. L. J. 616; in re Murdock, 3 B.R. 146; s. c. Lowell, 362; 5.0. 2
L. T. B. 97.)

FORM NO. 52.

This notice is to be sent by the clerk when served by mail. (Jn re Bellamy,
1B. R. 118; 8. c. 1 Ben. 474.)

FORM No. 53.

The recital in this form that the creditor ‘‘has proved his debt,” shows
that no creditors except those who have proved their debts can oppose the
discharge. (Jn re Burk, 3 B. R. 296; 8. c. 1 Deady, 425; 8. c. 2 L. T. B. 45.)
ADDENDA. .

Article I, Section 8.

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, 33 Leg. Int. 383.)

Section 563.

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, 62 Mo. 412.)

Section 711.

The jurisdiction of a State court over a pending action to enforce a me-
chanic’s lien is not divested by proceedings in bankruptcy. (Siebel v. Simeon,
62 Mo. 255.)

Section 4972.

If a creditor claims that a sale of his claim is void, on account of fraud,
the controversy may be determined by the bankrupt court that has control of
the fund. (frank v. Tolman, 75 Ill. 748.)

This clause does not confer or take away jurisdiction of the State courts,
but simply allows the Federal courts to decline to entertain actious at com-
mon law to which the assignee is a party in which the debt demanded is less
than five hundred dollars. (Goodrich v. Wilson, 119 Mass. 429.)

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 bankrupt court, he can not maintain an action against
the sheriff to recover the proceeds after the latter has complied with this
order. (O'Brien v. Weld, 92 U.S. R. 81.)

A State court has jurisdiction of an action brought by an assignee to
recover money received by a creditor from the bankrupt as a preference.
(Claflin v. Houseman, 14 A. L. J. 378; Goodrich v. Wilson, 119 Mass, 429.)

Section 4979.
A bill in equity may be filed to recover money paid by the bankrupt to the
defendant asa preference. (Hlanders v. Abbey, 6 Biss. 16.)
Section 4986.

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
852 ADDENDA.

is shown that the plaintiff in the review will otherwise be prejudiced or
seriously endangered in his rights. (Jn re Oregon B, P. & P. Co. 14 B. R.
394.)

Section 5021.

The appointment of a receiver in a proceeding in a State court to wind
up an insolvent corporation is no bar to a proceeding in involuntary bank-
ruptcy against the corporation. (Jn re National Life Ins. Co. 6 Biss. 35.)

An allegation upon belief without charging either information or know-
ledge that the petitioners constitute the requisite proportion of creditors is
sufficient. (In re Henry A. Mann, 51 How. Pr. 174.)

Section 5024.

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 vy. 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. (Jn re 8. 8. Miller, 6 Biss. 30.)

Section 5044.

A certificate of membership in a board 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 per-
sonal privilege, and does not pass tu the assignee. (Jn re Israel Sutherland, 6
Biss. 526.)

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 understanding 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 demand duly made on
execution, the bill of sale is valid. (Parsons v. Yopliff, 119 Mass. 245.)

Section 5046.

A creditor who is precluded from assailing an assignment as fraudulent
can not obtain alien on the property which will be valid as against the
assignee. (Johnson v. Rogers, 14 B. R.)

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. (Johnson v. Rogers, 14 B. R.)

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. (Johnson v. Rogers, 14 B. R.)

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 assign-
ment, (Johnson vy. Rogers, 14 B. R.)

A ereditor who purchases property from the trustee in ignorance of the
ue A os precluded from impeaching the assignment. (Johnson v. Rogers,

A party who purchases a judgment has no higher right to impeach a
fraudulent assignment than his assignor had. (Johnson v. Rogers, 14 B. R.)
ADDENDA. 853

Section 5075.

The lien acquired by filing a creditor’s bill extends only to property which
cap not be reached on execution. (Johnson v. Rogers, 14 B. R.)

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 up-
‘held as against the assignee. (Johnson v. Rogers, 14 B. R.)

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 commencement of
the proceedings in bankruptcy, is valid as against the assignee. (Johnson
v. Rogers, 14 B. R.)

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, 14 B. R.)

ie

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, 14 B. R.)

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.)

Section 5084.

If the creditor is precluded from proving his claim, on account of receiv-
ing a preference and refusing to surrender it, a guarantor can not prove it.
(In re OC. B. Ayers, 6 Biss, 48.)

Section 5092.

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. (Jn 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 per-
formed, 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. (/n re Merchants’ Ins. Co. 6 Biss. 252.)

The assignee’s account may be submitted to the creditors’ meeting for
examination, discussion, explanation, and approval before it is audited. (Jn
re Merchants’ Ins. Co. 6 Biss. 252.) .

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. (Jn re Merchants’ Ins. Co. 6

Biss, 252.)

Section 5102.

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. (Jn re John8,
Wright, 6 Biss. 317.)
854 ADDENDA.

Section 5106.

A proceeding on an attachment issued more than four months before the
commencement of the proceedings in bankruptcy may be stayed. (Hay v.
Wight, 119 Mass, 426.)

Section 5128.

Statements made by the bankrupt in regard to his condition at the time
of getting the money are not admissible. (Goodrich v. Wilson, 119 Mass .429.)

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, 119 Mass. 429.)

Section 5129.

If an insolvent debtor pays a fee to an attorney for the purpose of hinder
ing, delaying’, or impeding the provisions of the act, and the attorney know
that the debtor is insolvent, and that such is his purpose, the fee} may be
recovered by the assignee. (Goodrich v. Wilson, 119 Mass, 429.)
GENERAL ORDERS

WITH THE

FORMS IN BANKRUPTCY,

8 PROMULGATED BY

THE SUPREME COURT OF THE UNITED STATES.
GENERAL ORDERS IN BANKRUPTCY.

Ocroprr Trrm, 1874.

 

 

It is hereby ordered by the Chief Justice and Associate Justices of
the Supreme Court of the United States, in pursuance of the powers
conferred upon them by the several acts of Congress in that behalf, that
the general orders in bankruptcy heretofore established by the court be,
and they are hereby, amended so as to read as follows:

I.
DUTIES OF CLERKS OF DISTRICT COURTS.

The clerks of the several district courts shall enter upon each petition
in bankruptcy the day, and the hour of the day, upon which the same
shall be filed; and shall also make a similar note upon every subsequent
paper filed with them, except such papers as have been filed before the
register, and so indorsed by him; and the papers in each case shall be
kept in a file by themselves. No paper shall be taken from the files for
any purpose except by order of the court. Every paper shall lave in-
dorsed upon it a brief staternent of its character. The clerks shall keep
a docket, in which the cases shall be entered and numbered in the order
in which they are commenced; and the number of each case shall be in-
dorsed on every paper. The docket shall be so arranged that a brief
memorandum of every proceeding in each case shall be entered therein,
in a manner convenient for reference, and shall at all times be open for
public inspection. The clerks shall also keep separate minute-books for
the record of proceedings in bankruptcy, in which shall be entered a min- ;
ute of all the proceedings in each case, either of the court or of a register
of the court, under their respective dates.

If.
PROCESS.

All process, summons, and subpcenas shall issue out of the court
under the seal thereof, and be tested by the clerk; and blanks, with the
signature of the clerk and seal of the court, may, upon application, be
furnished to the registers.

Ill.

APPEARANCE.

Proceedings in bankruptcy may be conducted by the bankrupt in
person in his own behalf, or by a petitioning or opposing creditor; but a
creditor will only be allowed to manage before the court his individual
interest. Either party may appear and conduct the proceedings by
858 GENERAL ORDERS IN BANKRUPTCY.

attorney, who shall be an attorney or counsellor authorized to practice in
the circuit or district court. The name of the attorney or counsellor, with
his place of residence and business, shall be entered upon the docket, with
the date of the entry. All papers or proceedings offered by an attorney
to be filed, shall be indorsed as above required; and orders granted on
motion shall contain the name of the party or attorney making the mo-
tion. Notices and orders which are not, by the act or by these rules, re-
quired to be served on the party persuually, may be served upon his
attorney.

IV.
COMMENCEMENT OF PROCEEDINGS.

Upon the filing of a petition in case of voluntary bankruptcy, or as
soon as any adjudication of bankruptcy is made upon a petition filed in
case of involuntary bankruptcy, the petition shall be referred to one of
the registers in such manner as the district court shall direct, and the pe-
titioner shall furnish the register with a copy of the papers in the case,
and thereafter all the proceedings required by the act shall be had before
him, except such as are required by the act to be had in the district
court, or by special order of the district judge, unless some other regis-
ter is directed to act in the case.

The order designating the register to act upon any petition shall
name a day upon which the bankrupt shall attend before the register,
from which date he shall be subject to the orders of the court in all mat-
ters relating to his bankruptcy, 2nd may receive from the register a pro-
tection against arrest, to continue until the final adjudication on his appli-
cation for a discharge, unless suspended or vacated by order of the court.

A copy of the order shall forthwith be sent by mail to the register,
or be delivered to him personally, by the clerk or other officer of the
sourt.

Vv.
REGISTERS.

The time when and the place where the registers shall act upon the
matters arising under the several cases referred to them, shall be fixed
by special order of the district court, or by the register acting under the
authority of a general order, in each case, made by the district court ;
and at such times and places the registers may perform the acts which
they are empowered to do by the act, and conduct proceedings in rela-
tion to the following matters, when uncontested, viz. : making adjudica-
tion of bankruptcy on petition of the debtor; administering oaths ;
receiving the surrender of a bankrupt; granting protection thereon;
giving requisite direction for notices, advertisements, and other ministerial
proceedings ; taking proofs of claims; ordering payment of rates and
taxes, and salary or wages of persons in the employment of the assignee ;
ordering amendments, or inspections, or copies, or extracts of any pro-
ceedings ; taking accounts of proceeds of securities held by any creditor ;
taking evidence concerning expenses and charges against the bankrupt’s
estate ; auditing and passing accounts of assignees ; proceedings for the
declaration and payment of dividends, and generally dispatching all
GENERAL ORDERS IN BANKRUPTCY. 859

administrative business of the court in matters of bankruptey, and
making all requisite uncontested orders and directions therein, which
are not, by the acts of Congress concerning bankruptcy, specifically
required to be made, done, or performed by the district court itself;
all of which shall be subject to the control and review of the said
court: Provided, however, That by the surrender of a bankrupt men-
tioned and referred to in this order and in the act in that behalf is
intended and understood a personal submission of the bankrupt him-
self for full examination and disclosure in reference to his property
and affairs, and not a surrender or delivery of the possession of his.
property.

VI.
DISPATCH OF BUSINESS.

Every register, in performing the duties required of him under the
act, and by these orders, or by orders of the district court, shall use all
reasonable dispatch, and shall not adjourn the business but for good
cause shown. Six hours’ session shall constitute a day’s sitting if the
business requires; and when there is time to complete the proceedings in
progress within the day, the party obtaining any adjournment or post-
ponement thereof may be charged, if the court or register think proper,
with all the costs incurred in consequence of the delay.

Vil.
EXAMINATION AND FILING OF PAPERS.

It shall be the duty of the register to examine the bankrupt’s petition
and schedules filed therewith, and to certify whether the same are correct
in form ; or, if deficient, in what respect they are so; and the court may
allow amendments to be made in the petition and schedules upon the
application of the petitioner, upon proper cause shown, at any time prior
to the discharge of the bankrupt. The register shall indorse upon each
paper filed with him the time of filing, and at the close of the last exam-
ination of the bankrupt, the register having charge of the case shall file
all the papers relating thereto in the office of the clerk of the district
court, and these papers, together with those on file in the clerk’s office,
and the entries in the minute-book, shall constitute the record in each
ease; and the clerk shall cause the papers in each case to be bound
together.

VII.
« ORDERS BY THE REGISTER,

Whenever an order is made by a register in any proceeding in
which notice is required to be given to either party before the order can
be made, the fact that the notice was given, and the substance of the evi-
dence of the manner in which it was given, shall be recited in the pream-
ble to the order, and the fact also stated that no adverse interest was rep-
resented at the time and place appointed for the hearing of the matter
upon such notice ; and whenever an order is made where adverse inter-
ests are represented before the register, the fact shall be stated that the
860 GENERAL ORDERS IN BANKRUPTCY.

opposing parties consented thereto, or that the adverse interest repre-
sented made no opposition to the granting of such order : Provided, how-
ever, if any party interested adversely to such order shall not, before
the hearing of the application therefor, give reasonable notice in writing
to the register that he intends to contest the same, and objects to its
being heard by the register, the same shall be heard by the register as
by consent. But all such orders may be reviewed by the district court
at the request of any party aggrieved, upon his paying the cost of certi-
fying the matter to said court within ten days from the making of the
order ; which request and payment shall be entered by the register on
his docket; and he shall thereupon forthwith certify the said matter to
the court, and said court, upon making its decision, may make such
order with regard to the costs as justice shall require.

IX.
NOTIFICATION TO ASSIGNEE OF HIS APPOINTMENT.

It shall be the duty of the register, immediately upon the appoint
ment of an assignee, as prescribed in sections twelve and thirteen* of the
act (should he not be present at such meeting), to notify him, by per-
sonal or mail service, of his appointment; and in such notification the
assignee so appointed shall be required to give notice forthwith to the
register of his acceptance or rejection of the trust.

No official assignee shall be appointed by the court or judge; nor
any general assignee to act in any class of cases.

No additional assignee shall be appointed by the court or judge un-
der section thirteen + of the act, except upon petition of one-fourth in
number and value of the creditors who have proved their debts, and
upon good and sufficient cause shown.

X.
TESTIMONY, HOW TAKEN,

The examination of witnesses before a register in bankruptcy may be
conducted by the party in person or by his counsel or attorney, and the wit-
nesses shall be subject to examination and cross-examination, which shall be
had in conformity with the mode now adopted in courts of law. The de-
positions upon such examination shall be taken down in writing by or under
the direction of the register in the form of narrative, unless he determines
that the examination shall be by question and answer in special instances,
and when completed shall be read over to the witness and signed by him
in the presence of the register. Any question or questions which may be
objected to shall be noted by the register upon the deposition, but he
shall not have power to decide on the competency, materiality, or rele-
vancy of the question; and the court shall have power to deal with the
costs of incompetent, immaterial, or irrelevant depositions, or parts of
them, as may be just. In case of refusal of a witness to attend, or to
testify before a register, the same proceedings may be had as are now
authorized with respect to witnesses to be produced on examination be-

 

* S$ 5033, 5034, R. 8. + § 5034, R. S.
GENERAL ORDERS IN BANKRUPTCY. 864

fore an examiner of any of the courts of the United States on written
interrogatories.

XI.
MINUTES BEFORE REGISTER, FILING, ETC.

A memorandum made of each act performed by a register shall be
in suitable form to be entered upon the minute-book of the court, and
shall be forwarded to the clerk of the court not later than by mail the
next day after the act has been performed. Whenever an issue is raised
before the register in any proceedings, either of fact or law, he shall
cause the same to be stated in writing in the manner required by the
fourth and sixth* sections of the act, and certify the same forthwith to the
district judge for his decision. The pendency of the issue undecided
before a judge shall not necessarily suspend or delay other proceedings.
before the register or court in the case.

XIi.
ACCOUNTS FOR SERVICES OF REGISTER AND MARSHAL.

Every register shall keep an accurate account of his traveling and
incidental expenses, and those of any clerk or other officer attending him
in the performance of his duties in any case or numberof cases which
may be referred to him ; and shall make return of the same under oath,
with proper vouchers (when vouchers can be procured), on the first
Tuesday in each month; and the marshal shall make his return, under
oath, of his actual and necessary expenses in the service of every war-
rant addressed to him, and for custody of property, publication of notices
and other services, and other actual and necessary expenses paid by him,.
with vouchers therefor whenever practicable, and also with a statement.
that the amounts charged by him are just and reasonable.

XII.
MARSHAL AS MESSENGER.—-SURRENDER OF PROPERTY.

In cases of voluntary bankruptcy, the bankrupt, after being decreed
such, and after the appointment of an assignee or trustee, and assign-
ment duly made, shall, unless the court otherwise direct, deliver posses-
sion of all his property and assets (including evidences of debt and books
of account) to said assignee or trustee, unless at or after such decree and
before said assignment the court, on application of any creditor or cred-
itors, and upon good cause shown by affidavit, shall deem it necessary
for the interest of the creditors that possession of such property and
assets should be sooner delivered up; in which case, as in cases of in-
voluntary bankruptcy, the court may order said property and assets to
be taken possession of by the marshal as messenger, directions for which
may be inserted, in pursuance of such order, in the original warrant in
bankruptcy, or in a special warrant to be issued for that purpose.

It shall be the duty of the marshal as messenger to take possession

 

* $8 5009, 5010, B.S.
862 GENERAL ORDERS IN BANKRUPTCY.

of the property of the bankrupt when required thereto by warrant or
order of the court, and to deliver the same to the assignee or trustes
when appointed and assignment made as aforesaid. The marshal, when
taking possession as aforesaid, shall make an inventory of the property
and assets by him received, and deliver the same, with the said property
and assets, to said assignee or trustee, who shall verify the same, and if
found correct and full, no further inventory shall be required: Provided,
however, That if any goods or effects so taken into possession as the
property of the bankrupt shall be claimed by or in behalf of any other
person, the marshal shall forthwith notify the petitioning creditor, or as-
signee, if one be appointed, of such claim, and may, within five days
after so giving notice of such claim, deliver them to the claimant or his
agent, unless the petitioning creditor or party at whose instance posses-
sion is taken shall by bond, with sufficient sureties, to be approved by
the marshal, indemnify the marshal for the taking and detention of such
goods and effects, and the expenses of defending against all claims there-
to; and, in case of such indemnity, the marshal shall retain possession
of such goods and effects, and proceed in relation thereto as if no such
claim had been made: And provided further, That in case the petition-
ing creditor claims that any property not in the possession of the bank-
rupt belongs to him, and should be taken by the marshal, the marshal
shall not be bound to take possession of the same, unless indemnified in
like manner. He shall also, in case the bankrupt is absent or can not be
found, prepare a schedule of the names and residences of his creditors,
and the amount due to each, from the books or other papers of the
bankrupt that may be seized by him under his warrant, and from any
other sources of information; but all statements upon which his return
shall be made shall be in writing, and sworn to by the parties making
them, before one of the registers in bankruptcy of the court, or a com-
missioner of the courts of the United States. In cases of voluntary
bankruptcy, the marshal may appoint special deputies to act, as he may
designate, in one or more cases, as messengers, for the purpose of caus-
ing the notices to be published and served as required in the eleventh *
section of the act, and for no other purpose. In giving the notices re-
quired by the third subdivision of the eleventh + section of the act, it
shall be sufficient to give the names, residences, and the amount of the-
debts (in figures) due the several creditors, so far as known, and no more.

XIV.
PETITIONS AND AMENDMENTS.

All petitions, and the schedules filed therewith, shall be printed or
written out plainly, and without abbreviation or interlineation, except
where such abbreviation and interlineation may be for the purpose of
reference; and whenever any amendments are allowed, they shall be
written and signed by the petitioner on a separate paper, in the same
manner as the original schedules were signed and verified; and if the
amendments are made to different schedules, the amendments to each
schedule shall be made separately, with proper reference to the schedule

 

* 8 5019, 5032, R. S. + $5032, R.S.; $5, act 1874,
GENERAL ORDERS IN BANKRUPTCY. 863

proposed to be amended, and each amendment shall be verified by the
oath of the petitioner in the same manner as the original schedules.

XV.
PRIORITY OF ACTIONS (INVOLUNTARY BANKRUPTOY).

Whenever two or more petitions shall be filed by creditors against a
common debtor, alleging separate acts of bankruptcy committed by said
debtor on different days within six months prior to the filing of said
petitions, and the debtor shall appear and show cause against an adjudi-
cation of bankruptcy against him on the petitions, that petition shall be
first heard and tried which alleges the commission of the earliest act of
bankruptcy ; and in case the several acts of bankruptcy are alleged in
the different petitions to have been committed on the same day, the court
before which the same are pending may order them to be consolidated,
and proceed to a hearing as upon one petitior®; and if an adjudication of
bankruptcy be made upon either petition, or for the commission of a
single act of bankruptcy, it shall not be necessary to proceed to a hear-
ing upon the remaining petitions, unless proceedings be taken by the
sais ae the purpose of causing such adjudication to be annulled or
vacated.

XVI.
FILING PETITIONS IN DIFFERENT DISTRICTS.

In case two or more petitions shall be filed against the same indi-
vidual in different districts, the first hearing shall be had in the district
in which the debtor has his domicile, and such petition may be amended
by inserting an allegation of an act of bankruptcy committed at an earlier
date than that first alleged, if such earlier act is charged in either of the
other petitions; and in case of two or more petitions against the same
firm in different courts, each having jurisdiction over the case, the peti-
tion first filed shall be first heard, and may be amended by the insertion
of an allegation of an earlier act of bankruptcy than that first alleged, if
such earlier act is charged in either of the other petitions, and, in either
case, the proceedings upon the other petitions may be stayed until an ad-
judication is made upon the petition first heard ; and the court which
makes the first adjudication of bankruptcy shall retain jurisdiction over
all proceedings therein until the same shall be closed. In case two or
more petitions for adjudication of bankruptcy shall be filed in different
districts by different members of the same copartnership for an adjudi-
cation of the bankruptcy of said copartnership, the court in which the
petition is first filed having jurisdiction shall take and retain jurisdiction
over all proceedings in such bankruptcy until the same shall be closed ;
and if such petition shall be filed in the same district, action shall be
first had upon the one first filed.

XVII.
CONCERNING REDEMPTIONS OF PROPERTY AND COMPOUNDING CLAIMS.

Whenever it may be deemed for the benefit of the estate of a-bank-
rupt to redeem and discharge any mortgage or other pledge, or deposit,
864 GENERAL ORDERS IN BANKRUPTCY.

or lien upon any property, real or personal, or to relieve said property
from any conditional contract, and to tender performance of the condi-
tions thereof, or to compound any debts or other claims or securities due
or belonging to the estate of the bankrupt, the assignee, or the bankrupt,
or any creditor who has proved his debt, may file his petition therefor in
the office of the clerk of the district court; and thereupon the eourt shall
appoint a suitable time and place for the hearing thereof, notice of which
shall be given in some newspaper, to be designated by the court, at least
ten days before the hearing, so that all creditors and other persons inter-
ested may appear and show cause, if any they have, why an order should
not be passed by the court upon the petition authorizing such act on the
part of the assignee.

XVII.
PROCEEDINGS IN CASE OF COPARTNERSHIPS.

In case one or more members of a copartnership refuse to join in a
petition to have the firm declared bankrupt, the parties refusing shall be
entitled to resist the prayer of the petition in the same manner as if the
petition had been filed by a creditor of the partnership, and notice of the
filing of the petition shall be given to him in the same manner as pro-
vided by law and by these rules in the case of a debtor petitioned against ;
and he shall have the right to appear at the time fixed by the court for
the hearing of the petition, and to make proof, if he can, that the copart-
nership is not insolvent, or has not committed an act of bankruptcy ;
and to take all other defenses which any debtor proceeded against is en-
titled to take by the provisions of the act; and in case an adjudication
of bankruptcy is made upon the petition, such copartner shall be required
to furnish to the marshal, as messenger, a schedule of his debts and an
inventory of his property, in the same manner as is required by the act
in cases of debtors against whom adjudication of bankruptcy shall be
made.

XIX.
DUTIES OF ASSIGNEES.

The assignee shall, immediately on entering upon his duties, prepare
a complete inventory of all the property of the bankrupt that comes
into his possession, except where an inventory is furnished to him by
the marshal; in which case, having verified the same, he shall add
thereto a certificate that the same is correct, or that the same is correct
as modified by a supplemental inventéry, to be annexed thereto; in
which supplemental inventory he shall state any deficiency of assets
named in the marshal’s inventory, and shall add any property or assets
not contained therein.

The assignee shall make report to the court, within twenty days
after receiving the deed of assignment, of the articles set off to the bankrupt
by him, according to the provisions of the fourteenth section * of the act,
with the estimated value of cach article, and any creditor may take excep-
tions to the determination of the assignee within twenty days after the filing

* $5045, RLS.

 
GENERAL ORDERS IN BANKRUPTCY. 865

of the report. The register may require the exceptions to be argued before
him, and shall certify them to the court for final determination at the request
of either party. The substance of cach monthly return of the assignee shall
be sent by the register to any creditor who shall request it and pay the fee
provided for notices to creditors. In case the assignee shall neglect to
file any report or statement which it is made his duty to file or make by
the bankrupt act, or any general order in bankruptey, within five days
after the same shall be due, it shall be the duty of the register to make
an order requiring the assignee to show cause before the court, at a time
specified in the order, why he should not be removed from office. The
register shall cause a copy of the order to be served upon the assignee at
least seven days before the time fixed for the hearing, and proof of the
service thereof to be delivered to the clerk. All accounts of assignees
are to be referred as of course to the register for audit, unless otherwise
specially ordered by the court.

XX.
COMPOSITION WITH CREDITORS (ARBITRATION).

Whenever an assignee shall make application to the court for author-
ity to submit a controversy arising in the settlement of demands against
the bankrupt’s estate, or of debts due to it, to the determination of arbi-
trators, or for authority to compound and settle such controversy by
agreement with the other party, the subject-matter of the controversy
and the reasons why the assignee thinks it proper and most for the interest
of the creditors that it should be settled by arbitration or otherwise, shall
be set forth clearly and distinctly in the application; and the court, upon
examination of the same, may immediately proceed to take testimony
and make an order thereon, or may direct the assignee to give notice of
the application, either by publication or by mail, or both, to the creditors
who have proved their claims, to appear and show cause, on a day to be
named in the order and notice, why the application should not be grant-
ed, and may make such order thereon as may be just and proper.

XXI.
DISPOSAL OF PROPERTY BY ASSIGNEE.

Upon application to the court, and for good cause shown, the assig-
nee may be authorized to sell any specified portion of the bankrupt’s
estate at private sale; in which case he shall keep an accurate account
of each article soJd, and the price received therefor, and to whom sold;
which account he shall file with his report at the first meeting of credit-
ors after the sale. In making sale of the franchise of a corporation, it
may be offered in fractional parts, or in certain numbers of shares cor-
responding to the numbers of shares in the bankrupt corporation.

XXII.
PERISHABLE PROPERTY.

In all cases where goods or other articles come into possession of the
messenger or assignee which are perishable, or liable to deterioration in

55
866 GENERAL ORDERS IN BANKRUPTCY.

value, the court may, upon application, in its discretion, order the same
to be sold and the proceeds deposited in court.

XXIII.
SERVICE OF NOTICE.

The notice provided by the eighteenth section* of the act shall be
served by the marshal or his deputy, and notices to the creditors of the
time and place of meeting provided by the sectiont shall be given through
the mail by letter, signed by the clerk of the court.

Every envelope containing a notice sent by the clerk or messenger
shall have printed on it a direction to the postmaster at the place to
which it is sent to return the same within ten days unless called for.

XXIV.
OPPOSITION TO DISCHARGE.

A creditor opposing the application of a bankrupt for discharge
shall enter his appearance in opposition thereto on the day when
the creditors are required to show cause, and shall file his specifi-
eation of the grounds of his opposition, in writing, within ten days
thereafter, unless the time shall be enlarged by order of the dis-
trict court in the case, and the conrt shall thereupon make an order as
to the entry of said case for trial on the docket of the district court, and
the time within which the same shall be heard and decided.

XXV.

SECOND AND THIRD MEETINGS OF CREDITORS.

Whenever any bankrupt shall apply for his discharge, within three
months from the date of his being adjudged a bankrupt, under the pro-
visions of the twenty-ninth section { of the act, the court may direct that
the second and third meetings of creditors of said bankrupt, required by
the twenty-seventh and twenty-eighth sections || of said act shall be had on
the day which may be fixed in the order of notice for the creditors to
appear and show cause why a discharge should not be granted such
bankrupt; and the notices of such meeting shall be sufficient if it be
added to the notice to show cause, that the second and third meetings of
said creditors shall be had before the register upon the same day that
ae may be shown against the discharge, or upon some previous days
or day.

XXVI.
APPEALS.

_ Appeals in equity from the district to the circuit court, and from the
circuit to the Supreme Court of the United States, shall be regulated by

 

RS. + S§ 5089, 5041, R. 9.
RS. | $§ 6092, 5093, R. S.
GENERAL ORDERS IN BANKRUPTCY. 867

the rules governing appeals in equity in the courts of the United States,
Any 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,
according to the provisions of the eighth section of the act, shall give
notice of his intention to enter the appeal within ten days from the entry
of the final decision of the district court upon his claim ; and he shall file
his appeal in the clerk’s office of the circuit court within ten days there-
after, setting forth a statement in writing of his claim in the manner
prescribed by said section ; and the assignee shall plead or answer there-
to in like manner within ten days after the statement shall be filed.
Every issue thereon shall be made up in the court, and the cause placed
upon the docket thereof, and shall be heard and decided in the same
manner as other actions at law.

XXVII.
IMPRISONED DEBTOR.

If at the time of preferring his petition the debtor shall be im-
prisoned, the court, upon application, may order him to be produced
upon habeas corpus by the jailor, or any officer in whose custody he may
be, before the register, for the purpose of testifying in any matter relat-
ing to his bankruptcy ; and if committed after the filing of his petition
upon process in any civil action founded upon a claim provable in bank-
ruptcy, the court may, upon like application, discharge him from such
imprisonment. If the petitioner, during the pendency of the proceed-
ings in bankruptcy, be arrested or imprisoned upon process in any civil
action, the district court, upon his application, may issue a writ of habeas
corpus to bring him before the court, to ascertain whether such process
has been issued for the collection of any claim provable in bankruptcy,
and, if so provable, he shall be discharged; if not he shall be remanded
to the custody in which he may lawfully be. Before granting the order
for discharge, the court shall cause notice to be served upon the creditor,
or his attorney, so as to give him an opportunity of appearing and being
heard before the granting of the order.

XXVIIL

DEPOSIT AND PAYMENT OF MONEYS,

The district court in each district’ shall designate certain national
banks, if there are any within the judicial district, or if there are none,
then some other safe depository, in which all moneys received by
assignees or paid into court in the course of any proceedings in bank-
ruptey shall be deposited; and every assignee and the clerk of said
court shall deposit all sums received by them, severally, on account of
any bankrupt’s estate, in one designated depository, and every clerk
shall make a report to the court of the funds received by him, and of
deposits made by him, on the first Monday of every month. On the first
day of each month, the assignee shall file a report with the register, stat-
ing whether any collections, deposits, or payments have been made by
him during the preceding month, and if any, he shall state the gross
868 GENERAL ORDERS IN BANKRUPTCY.

amount of each. The register shall enter such reports upon a book to
be kept by him for that purpose, in which a separate account shall be
kept with each estate; and he shall also enter therein the amount, the
date, and the expressed purpose of each check countersigned by him.
No moneys so deposited shall be drawn from such depository unless
upon a check, or warrant, signed by the clerk of the court, or by an
assignee, and countersigned by the judge of the court, or one of the reg-
isters designated for that purpose, stating the date, the sum, and the
account for which it is drawn; and an entry of the substance of such
check or warrant, with the date thereof, the sum drawn for, and the
account for which it is drawn, shall be forthwith made in a book kept
for that purpose by the assignee or the clerk; aud all checks and drafts
shall be entered in the order of time in which they are drawn, and shall
be numbered in the case of each estate. A copy of this rule shall be
furnished to the depository so designated, and also the name of any
register authorized to countersignsaid checks.

XXIX,
PREPAYMENT OR SECURITY OF FEES.

The fees of the register, marshal, and clerk shall be paid or secured
in all cases before they shall be compelled to perform the duties required
of them, by the parties requiring such service; and in the case of wit-
nesses their fees shall be tendered or paid at the time of the service of
the summons or subpeena, and shall include their traveling expenses to
and from the place at which they may be summoned to attend. The
court may order the whole or such portion of the fees and costs in each
case to be paid out of the fund in court in such case as shall seem just.

The funds deposited with the register, marshal, and clerk shall, in all
cases where they come out of the bankrupt’s estate, be considered as a
part of such estate, and the assignee shall be charged therewith, and
shall not be allowed for any disbursements therefrom, except upon
the production of proper vouchers from such officers, respectively,
given after the due allowance of their respective bills.

XXX,

FEES AND COSTS.

Clerks.

The fees of the clerk shall be the same as now allowed by law
for similar services in the general fee-bill, section 828 Revised
Statutes, except as herein provided; but no charge shall be made
for filing any paper previously filed with the register. Also,

For entering memoranda or minutes of register, each folio...... $0 10
For sending notice to creditors by mail, each...........0. 0000, 15
For inserting notice in newspaper..... ee eer ery eee 50

(The necessary cost of advertising to be paid as an expense of
the estate.)
For taxing the costs in each case.......cceeseeessereeeeresses 100
--and for each folio of taxed Dill... . ccc eee eee e cece ecaes 10
GENERAL ORDERS IN BANKRUPTCY.

Registers.

The following and no other fees shall be allowed to the register :

For filing and entry of the general order of reference, and for
office-rent, stationery, and other incidental expenses of. proceed-
ings, conducted in the usual office of the register, to be allowed
ONG ONIY AN ANY CAUSe is. 5 sus yee Vw sa eee eae ae ee aS

When the proceedings are not conducted in the usual office of the
register, but in some other city or town, he shall be allowed for
each day employed in going, attending, ‘and returning........
Also, in such case, traveling and incidental expenses of himself
and of any clerk or other officer attending him, which expenses
and fees shall be appropriated among the cases, as provided in
section 5 of the act, or section 5125 of the Revised Statutes,

For each day’s service while actually employed under a special
order of the court, a sum to be allowed by the court, not ex-
CROC LI zeae cecets ns Sis trenn Sia, eaineaers te Miele Se atohiefeurs watts Aa aeLo ene

But only one per diem allowance to be made for a single day, and
no duplication of such allowances to be made for different cases
on the same day; and no other allowance shall be made for
clerk hire except | as above stated.

For every affidavit to any petition, schedule, or other proceeding
in bankruptcy, except ‘proof of debt by a creditor or his agent,
for each oath and certifying ther SAM Ging oa. chee simian s sieie 4 swe

For examining petition and schedules, and “certifying to their cor-
rectness....... S ialig Telia a.S0) a. Gi 9 bg Bigeeg SMSai's gee Se Shean aw Be se

For every warrant in bankruptcy, or other process, issued and
directed to the marshal (not including warrants for payment of
money or anything other than process)........ 0.0.00 ee cee

For each day in which a general meeting of creditors is held, and
MEECTIC INS SAMS oes ge coe. suns 9 Bese SN alsa apa B 8 olin daushaee beac wl aue®

For notification to assignee of his appointment...............

For assignment of bankrupt’s effects........ 0... cece eee eee ee

For every bond with sureties.........0 00... e eee eee

For every application for a general meeting of creditors........

For every summons or subpoena requiring the attendance of a
bankrupt, a bankrupt’s wife, or a witness for examination, for
each person SUMMONEd..... cee c eee cent cece ene ee nee eens

For taking depositions, including proofs of debts, and examination
of bankrupt or his wife, for each folio... ..ceceleeeeeeeeee

For certifying proof of debt as satisfactory..... hes ied Savina

For copies of depositions and other papers, each folio..........

For each notice which the register may be required to send to or
serve on any creditor (which shall include for ae ee and
stationery). . uicishosi tin teas eharerataraaenene Geneve arg aewtave

For mileage in making personal service when} necessary, “the same
as allowed by law to the marshal.

For inserting notice in newspaper when required....... alenarecs
(Costs of advertising to be allowed as part of the expenses of

the estate.)

For each order for a general dividend............ sie ees eats

For computation of dividends..... 00... cece cece eee ees

In addition thereto, for each creditor.......... cee eee ee eee

869

wo
ou

3 00

1 00
1 00

10

20
25
10

50

3 00
3 00
10
870 GENERAL ORDERS IN BANKRUPTCY.

For every judicial order made by a register, necessary or proper
to be made by him, and not herein otherwise specially pro-

vidde for, and not including matters merely ministerial ...... $1 Og
For every discharge where there is no opposition .....--++++++- 2 00
For auditing the accounts of assignees...... 26s sere eee e eee +» 100
—and for each additional hour necessarily employed therein,
after the first hour ...... cc cece cece eee cece renee eres 1 00

For every certificate of question to the district court or judge,
under sections four and six of the act, or sections 5009 and

5010 of the Revised Statutes ...........0 ee ee eee aca a0 ese - 100
For preparing such certificate, each folio. ..... sees ee cer eeeees 20
For each folio of memorandum sent to the clerk.....--.-+++++ 10
For countersigning each check of assignee.....--+--++eeeeeees 10
For filing every paper not previously filed by the clerk, and

mark:ng and identifying every exhibit.........-.0+ ++. s eee - 10

(Fees paid by creditors for establishing their debts shall be en-
titled to rank with other fees and costs in the case under section
5101, Revised Statutes.)
2. The deposit of $50 required to be made as security for the fees of
the register, shall be delivered by the clerk to the register to whom the
case is referred, and be by him accounted for at the termination of the case.

Marshals.

The fees of the marshal shall be same as are allowed for similar
services by the general fee-bill in section 829 of the Revised Statutes, as
modified by section 5126, including additional fees allowed by the latter
section for distinct services; but no allowances shall be made under the
last clause of section 5126, commencing with the words “ For cause
shown.”

The marshal shall be allowed for each hour necessarily employed

in making inventory of bankrupt’s property ......2.....06- $1 00

—and for each folio of inventory. 1.1.2... 0... seen cece eee 20
For each hour actually and necessarily employed in personal at-

tention in taking care of bankrupt’s property...........0065 1 00

(No other allowance to be made for custody of property, except for
actual disbursements, which shall in all cases be passed upon by the
court.)

Assignees.

The fees and allowances of. assignees shall be as prescribed and pro-
vided for in sections 5099 and 5100 of the Revised Statutes ; provided
that, in addition to disbursements made, no allowance shall be made
other than the commissions provided for in section 5100, except as here-
inafter specified; and said commissions shall be calculated but once upon
the amount of moneys received and paid, and not upon both the receipt
and payment thereot. Besides which, there shall be allowed to the as-
signee as follows:

For serving or sending notices to creditors, or publishing the
same, when required to be done by the assignee, the same
amount allowed to the register for like services.

For each hour necessarily employed in making inventory or sup-
plemental inventory of bankrupt’s property, or verifying mar-
ShalSANVENtOP yous ii iacciawie ves eeyatametaeeeae naeenee 4 $1 00
GENERAL ORDERS IN BANKRUPTCY. 871

For each folio of inventory or supplemental inventory made by

ASSIONCE. cae eiied sk gre wacom eames wea wana creeeeevece $0 20
For all services in designating the exempt property of a bank-

rupt, and filing report thereon ....... sarod dase veoeeeee 5 00
For attending a general meeting of creditors............ naw awe 3 00
For every deed for real estate sold ........ ccc cece cece ee ees 2 00
For drawing and filing each monthly report..............008. 1 00
For drawing and filing each quarterly report, not exceeding four,

unless specially allowed..... 0... sc cece cece e nee e teen eees 5 00
For each general account submitted to a creditors’ meeting, not

exceeding two, unless specially allowed.............00. see. 10 00

For all services in paying a general dividend, or executing an

order of final distribution, and making report thereon, includ-

ing all disbursements......... sa WS Meda eae ASE RTS eas aiacuierer aie 5 00
In addition, for each creditor to whom a dividend is paid....... 25

Witnesses and Jurors.

The fees of witnesses and jurors shall be the same as prescribed in the
general fee-bill, in sections 848 and 852 of the Revised Statutes.

Aitorneys.

No allowance shall be made against the estate of a bankrupt for
fees of attorneys, solicitors, or counsel, except when necessarily em-
ployed by the assignee, when the same may be allowed as a disburse-
ment; and no allowance shall be made to the assignee for custody of
the bankrupt’s property, except necessary disbursements in relation
‘thereto. The necessity and reasonableness of disbursements shall in all
cases be passed upon by the court.

Any money received by either of the officers mentioned, in excess of
lawful fees or compensation, shall be ordered by the judge to be paid into
court, and such order may be enforced, if necessary, by attachment as for
contempt.

No bankrupt’s discharge shall be refused or delayed by reason of
‘the non-payment of any fees except the fee for his certificate of dis-
charge.

Taxation of Costs.

Ten days before the day fixed for the consideration of the assignee’s
final account, or at any other time fixed by the court on its own motion,
or on the application of any person interested, the clerk, marshal, and
register shall file with the clerk a statement of fees, including prospective
fees for final distribution, which shall exhibit, by items, each service and
the fee charged for it, and the amount received. Said clerk shall tax
each fee-bill, allowing none but such as are provided for by these rules,
which taxation shall be conclusive, reserving to any party interested ex-
ceptions to the bills as taxed, which shall be decided by the court. The
-office of auditor is hereby discontinued.

XXXII.

COSTS IN CONTESTED ADJUDICATIONS.

In cases of involuntary bankruptcy, where the debtor resists an adju-
-dication, and the court, after hearing, shall adjudge the debtor a bank-
872 GENERAL ORDERS IN BANKRUPTCY.

rupt, the petitioning creditor shall recover, to be paid out of the fund,
the same costs that are allowed by law to a party recovering in @ suit in
equity ; and in case the petition shall be dismissed, the debtor may re-
cover like costs from the petitioner.

When a debtor shall be adjudged a bankrupt on the application of a
creditor, and shall be required under the provisions of the act to furnish
a schedule of his creditors, and an inventory and valuation of his estate,
the court, if the estate is large and the required schedule and inventory
are likely to be voluminous or complicated, or other good reason exist,
may, on the application of such debtor, allow him the services of a clerk
or accountant to aid him therein, at such rate of compensation, not to
exceed five dollars per day, as the court may deem reasonable.

XXXII.
AS TO FORMS AND SCHEDULES.

The several forms specified in the schedules annexed to the former
general orders for the several purposes therein stated shall be observed
and used, with such alterations as may be necessary to suit the circum-
stances of any particular case. The tabular forms hereto annexed shall
be used respectively by the several officers named in section nineteen of |
the amendatory act of June 22, 1874, in making the returns required by
said section. In all cases where, by the provisions of the act, a special
order is required to be made in any proceeding, or in any case instituted
under the act in a district court of the United States, such order shall be
framed by the court to suit the circumstances of the particular case ; and
the forms hereby prescribed shall be followed as nearly as may be, and
so far asthe same are applicable to the circumstances requiring such
special order. In proceedings in equity, instituted for the purpose of
carrying into effect the provisions of the act, or for enforcing the rights
and remedies given by it, the rules of equity practice established by the
Supreme Court of the United States shall be tollowed as nearly as may
be. In proceedings at law, instituted for the same purpose, the rules of
the circuit court regulating the practice and procedure in cases at law
shall be followed as nearly as may be. But the court, as the judge there-
of, may, by special rule in any case, vary the time allowed for return of
process, for appearance and pleading, and for taking testimony and pub-
lication, and may otherwise modify the rules for the preparation of any
particular case so as to facilitate a speedy hearing.

XXXII.

OMISSIONS AND AMENDMENTS,

Whenever a debtor shall omit to state in the schedules annexed to
his petition any of the facts required to be stated concerning his debts or
his property, he shall state, either in its appropriate place in the sched-
‘ules or in a separate affidavit to be filed with the petition, the reason for
the omission, with such particularity as will enable the court to deter-
mine whether to admit the schedules as sufficient, or to require the debtor
to make further efforts to complete the same according to the require-
ments of the law; and in making any application for amendment to the
GENERAL ORDERS IN BANKRUPTCY. 873

schedules, the debtor shall state under oath the substance of the matters
proposed to be included in the amendment, and the reasons why the same
had not been incorporated in his schedules as originally filed, or as pre-
viously amended, In like manner, he may correct any statement made
during the course of his examination.

XXXIV.

PROOF OF DEBTS.

Depositions to prove claims against a bankrupt’s estate shall be cor-
rectly entitled in the court and in the cause. hen made to prove a
debt due to a copartnership, it must appear on oath that the deponent
is a member of the creditor firm; when made by an agent, the reason
the deposition is not made by the claimant in person must be stated ;
and when made to prove a debt due to a corporation, and the corporation
has no such officer as cashier or treasurer, the deposition may be made
by the officer whose duties most nearly correspond to those of cashier or
treasurer. Depositions to prove debts existing in open account shall
state when the debt became or will become due; and if it consists of
items maturing at different dates, the average due date shall be stated ;
in default of which it shall not be necessary to compute interest upon it.
All such depositions shall contain an averment that no note has been
received for such account nor any judgment rendered thereon. Proofs of
debt received by any assignee shall be delivered to the register to whom
the cause is referred. The register may decline to file any deposition
until the fee for filing the same is paid. When a proof of debt is sent by
mail to the register, and it shall be accompanied by the fee for filing it,
and the fee for sending a notice to a creditor, the register shall acknowl-
edge the receipt of it, and state the amount at which he has entered it,
and if it shall be insufficient or unsatisfactory to the register he shall
state the reason.

Any creditor may file with the register a request that all notices to
which he may be entitled shall be addressed to him at any place, to be
designated by the post office box or street number, as he may appoint,
and thereafter and until some other designation shall be made by such
creditor, all notices shall be so addressed; and in other cases notices
shall be addressed as specified in the proof of debt.

Claims which have been assigned before proof, shall be supported by
a deposition of the owner at the time of the commencement of proceed-
ings, setting forth the true consideration of the debt, and that it is entirely
unsecured, or if secured, such deposition shall set forth the security, as is
required in proving secured claims.

Upon filing with the register satisfactory proof of the assignment of a
claim proved and entered on the register’s docket, the register shall im-
mediately give notice by mail, to the original claimant, of the filing of
such proof of assignment.

And if no objection be entered within ten days, he shall make an
order subrogating the assignee to the original claimant.

If objection be made within the time specified, or within such further
time as may be granted for that purpose, the register shall certfy the
objection into court for determination. The claims of persons contin-
874 GENERAL ORDERS IN BANKRUPTCY.

gently liable for the bankrupt, may be proved in the name of the cred-
itor, when known by the party contingently liable.

When the name of the creditor is unknown, such claims may be
proved in the name of the party contingently liable; but no dividend
shall be paid upon such claim, except upon satisfactory proof that it will
diminish, pro tanto, the original debt. The execution of any letter of
attorney to represent a creditor, or of an assignment of claim after proof,
or of the consent of a creditor to a bankrupt’s discharge, may be proved
or acknowledged before a register in bankruptcy, or a United States
circuit. court commissioner. When executed on behalf of a copartner-
ship, or of a corporation, the person executing the instrument shall make
oath that he is a member of the firm, or duly authorized officer of the
corporation, on whose behalf he acts.

When the party executing is not personally known to the officer
taking the proof or acknowledgment, his identity shall be established by
satisfactory proof.

When the assignee or any creditor shall desire the re-examination
of any claim filed against the bankrupt’s estate, he may apply by peti-
tion to the register to whom the cause is referred, for an order for such
re-examination ; and thereupon the register shall make an order fixing
a time for hearing the petition, of which due notice shall be given by
mail, addressed to the creditor.

At the time appointed, the register shall take the examination of the
creditor, and of any witnesses that may be called by either party ; and
if it shall appear from such examination that the claim ought to be ex-
punged or diminished, the register, if no objection be made, may order
accordingly. If objection be made, the register shall require the parties
then, or withiu a time to be fixed for that purpose, to form an issue to be
certified into court for determination.

If the petitioner is in default in making up said issue, the petition
shall be dismissed ; if the creditor whose claim is re-examined is in de-
fault in making said issue, the claim may be diminished or expunged
by the register.

All orders thus made by the register may be reviewed by the court
on special petition, and upon showing satisfactory cause for such review.

XXXV.
TRIAL BEFORE MARSHAL.

If the debtor, under the provisions of section fourteen of the amend-
atory act relating to proceedings in bankruptcy, approved June 22, 1874,
shall elect to have a trial of the facts before the marshal, he shall make
such election in writing, and file the same with the clerk of the court;
and thereupon the court, on application of the debtor, may award the
venire facias in said section prescribed, upon and by virtue of which
the marshal shall summon twenty-four good and lawful men, inhabitants
of the vicinity of the place of trial, and indifferent between the parties,
from whom to select a jury to try the said facts; and the names of the
persons so summoned shall be drawn by lot to make the said jury, and
each party shall be entitled to challenge four persons peremptorily ; and
if a sufficient number of jurors unchallenged and free from exception
shall not appear to make the full panel of twelve men (or such less
GENERAL ORDERS IN BANKRUPTCY. 875

number as the parties may agree upon) to try the said cause, the
marshal shall complete the number by forthwith summoning other
proper persons for the purpose. And any person summoned by the
marshal to sit on said jury, and failing to appear without sufficient ex-
cuse, shall be returned by the marshal and subject to be fined by the
court.

The petitioning creditor shall be deemed the actor, give due notice of
trial, and have the opening and close before the jury. Subpoenas may
be issued to witnesses, and objections to evidence shall be decided by
the marshal presiding at the trial, subject to review by the court. The
trial shall be had upon the petition to have the debtor declared a bank-
rupt, and no other pleadings shall be necessary. The debtor may, on
his part, prove any fact or state of facts which will entitle him to have the
case dismissed. The jury, if desired, shall find a special verdict upon
any point or question of fact stated for that purpose in writing by either
party before the case shall have been submitted to them. The verdict
shall be signed by the foreman of the jury and countersigned by the
marshal, who shall immediately return the same to the court with the
venire, and any points or questions raised and decided by him at the
trial. The court, for good and legal cause shown, may set aside the ver-
dict, and award a new venire as often as occasion shall require.

XXXVI.
COMPOSITION UNDER SECTION 1'7 OF AMENDATORY ACT.

If at any time after the filing of a petition for an adjudication in
bankruptcy, a petition duly verified be filed by the debtor or bankrupt,
or by any creditor of such debtor or bankrupt, setting forth that a com
position has been proposed by such debtor or bankrupt, and that h
verily believes that such proposed composition would be accepted by h
two-thirds in number, and one-half in value of the creditors of suc
debtor or bankrupt, in satisfaction of the debts due from such debtor oF
bankrupt, the court shall forthwith order a meeting of the creditors to
be called to consider of the said proposition as provided in the 17th
section of the said amendatory act, whereupon such proceedings shall be
had as are therein directed. The register acting in the case, or, if no
register has been assigned, a register to be designated by the court,
shall, at the time and place specified in the notice for holding such
meeting, hold and preside at the same, and report to the court the pro-
ceedings thereof, with his opinion thereon ; upon the filing of which, the
clerk shall give the notices to creditors required by said section, and the
court shall, at the time therein fixed, proceed to hear and determine the
matter as in said section is prescribed.

In like manner, additional meetings in relation to such proposed com-
Position, or any modification thereof, may, upon like application, be
called and held, and the proceedings returned in like manner.

XXXVII.

REFERENCE TO SECTIONS OF ACT, ETC,

All orders referring specifically to any section or sections of the
original bankrupt act, shall be- deemed and construed to refer to the
876 GENERAL ORDERS IN BANKRUPTCY.

corresponding sections respectively, in the Revised Statutes of the United
States; for example, Order IX, in referring to sections 12 and 13 of the
act, shall be construed to refer to sections 5033 and 5034, respectively,
of the Revised Statutes; and so of the rest. And all forms heretofore
prescrided shall be adapted to any modification of the law, or of these

orders.

 

REPORT OF MARSHAL.

Annual report of marshal of the district of
for the year ending June 30,18 , required by the 19th section of the
amendatory act of Congress, relating to matters of bankruptcy, ap-
proved June 22, 1874.

Number of cases in bankruptcy in which warrants were re-
COIV COs ose wes ee oe de resin oaione-e Sig aia Ri a ahs PS he ace
Number of warrants returned during year.........-+6+ eSeke
Fees for service of warrants so returned ......-2 +--+ se ee eee
For serving creditors with notice......... eee seer eee
Mileage thereon..........- HR eE Nae ee eee GaSe
Expenses of publication thereon.... 6.2... eee ee cece eee
Expenses of postage thereon...........-+ 000s bis fates atone’
Other expenses thereon, such as for........--.. see se eeeee

Other fees, costs, expenses, and emoluments, namely :
For service-fees for serving writs and process .........+++. os
For mileage thereon... .. 0. cece e cece eee e eee e eee ee enees
For serving notices . jisseces ecg ced ee ae Heel weet eee deeee
For mileage thereon... .. 0... cece ene e cree eee e eens
Expenses of publication thereon........ 0... e ee eee eee eee
Expenses of postage thereon....... Bits Gagarin gaye eselaaatass aches
For making inventories of property............ weenie le sees
For taking care of property.......... bgt ae ounke oy sumems eae
Expenses and disbursements thereon.............. aaa DGaI4.3

All other fees and emoluments, such as for:

All other expenses and disbursements, such as for:

e

SUMMARY OF FEES, COSTS, AND EMOLUMENTS, EXCLUSIVE OF ACTUAL

DISBURSEMENTS.
SOFVICE 1608 iia tesa: o oa wig oratenctnlny's hsieacny aime og ae malar
Mileage ....... Weide eH tad wee eRe Ale ge aeeWelealthe eee 8S ce
Making inventories ............. di dhg ea ayo ia sigianiata Ages eres
Care of property 2.0... cece seee seers Sa Sle anced Se Meeps
Other fees and emoluments in bankruptcy...........e00008-
SUMMARY OF ACTUAL DISBURSEMENTS.
For publications.............. is cteda Aarne ereiant aatanstaee ea ated
For postage .....0.e.eee eee eee ele ale ston ieg ete aiarg sae
For custody of property .... 0... cece eee cece Seaseeetewes

For traveling expenses..... 0.00... cece cece eee e eens
For other expenses, such as ....... Se Povgesa ce) Scat Set see.
GENERAL ORDERS IN BANKRUPTCY. 877

REPORT OF REGISTER.

Annual report of , register in bankruptcy in
and for the district of the State and district of
for the year ending June 30,18 , in pursuance of section 19 of the
amendatory act relating to proceedings in bankruptey, approved June
22, 1874.

Number of cases of voluntary bankruptcy referred...... oehetee
Amount of assets of the bankrupts therein..........00...000,
Amount of liabilities of the bankrupts therein................
Amount of dividends declared therein............ 00000000 eee
Average rate per cent. of dividends declared therein...........
Number of cases in which discharge granted........ ....5.0..
Number in which discharge not granted ..........eeeveeeeees
Number of compulsory cases referred........... ce errs
Amount of assets of the bankrupts therein....... mace ates naw
Amount of liabilities of the bankrupts therein..... eae earns we ees
Amount of dividends declared therein............ cece cece ees
Average rate per cent. of dividends declared therein. oie seats ls
Number of cases in which discharge granted..........065 wees
Number in which discharge not granted......... Sheware ew ieeee
Amount of fees, costs, &c., received or earned in cases of volun-

tary bankruptcy sie ial bibaevh care OLAS a eee Re ee ete
Amount of fees, oe &c., received or earned in cases of invol-

untary bankruptcy... imseieeageas Ap othe ars Baga wal waren ee i
878 GENERAL ORDERS IN BANKRUPTCY.

»

REPORT OF ASSIGNEE.

Annual report of , of the , in the State of
assignee in bankruptcy, for the year ending June 80,18 , in pursuance
of section 19 of the amendatory act relating to proceedings in bank-
ruptey, approved June 22, 1874.

Name and number of bankrupts.

Fees, charges, and emoluments
earned or received.
Expenses for legal proceedings
and counsel fees.

| Assets.
| Liabitities.
Receipts.
Disbursements.
Dividends.
Rate per cent.
| Discharged or not discharged.

 

 

VOLUNTARY,

 

 

 

INVOLUNTARY,

 

 

 

 

 

 

 
GENERAL ORDERS IN BANKRUPTCY.

REPORT OF CLERK, No. 1.

Annual statement of
United States for the district of

ruptey pending, &c.

879

, clerk of the district court of the
, for the year ending June,
30,18 , in pursuance of section 19 of the amendatory act relating to
proceedings in bankruptcy, approved June 22, 1874, of all cases of bank

 

Cases pending at beginning of
year. Whether
disposed of.

Names of bankrupts,

Amount of
dividend,

Number of
reports of
assignee.

Disposition
of case.

Number of
assignee’s
accounts
filed and
settled,

 

 

Cases begun during year.

 

 

 

 

 

 
880 GENERAL ORDERS IN BANKRUPTCY.

REPORT, OF CLERK, No. 2.

Names and residence of all marshals, registers, and assignees who
have failed to make and file reports, as required by section 19 of amend-
atory act relating to proceedings in bankruptcy, for the j)ear ending
June 80,18 , furnished in pursuance of said section.

MARSHAL,

[Here insert names and residences of delinquents. |

REGISTERS.
[Here insert names and residences of delinquents. ]
ASSIGNEES.

[Here insert names and residences of delinquents. ]

REPORT OF CLERK, No, 3.

Annual report of , Clerk of the district court of the United
States for the district of , for the year ending June 30,18 ,
of all his fees, charges, costs, and emoluments earned or accrued in bank-
ruptcy cases during said year; and also of all moneys paid into and dis-
bursed out of court in bankruptcy, and the balance in hand or on deposit,
made in pursuance of section 19 of the amendatory act relating to pro’
ceedings in bankruptcy, approved June 22, 1874.

Services. Amount.
For performing all ordinary duties of clerk, such as issuing
process, filing and entering papers, orders, rules, &c., in

bankruptcy cases..... asd iene bas aw Leiwlane She ta Ne awa
For entering memoranda or minutes of registers............
For giving notice to creditors by mail or publication (exclusive

of postage and cost of publication)...........0000ceee ue
For taxing costs........:. 2. eee sta cath U4 pe aS Me WES
For receiving, keeping and paying out money ....... ae see si
For taking examinations............000008 Weave nee ess

For preparing and certifying papers on appeal to circuit court.

Moneys received in court in cases in bankruptey....... staee
Balance on hand at beginning of year ......... Ato bey
Moneys paid out of court in cases in bankruptcy .

Balance on hand at end of year .........0..00 ee
Balance on deposit at end of year..... Seiad Cale Wile eiente

eee aw ea sees
FORMS IN BANKRUPTCY.

 

Form No. 1.
PETITION BY DEBTOR
To the Honorable , Judge of the District Court of the United
States, for the District of —_

Tue Petition of , of the of , in the
County of , and State of , and District aforesaid,
Respectfully Represents :—That he has
for months next immediately preceding the filing of this petition,
at , within said Judicial District ; that he owes debts exceeding

the amount of three hundred dollars, and is unable to pay all of the same in
full; that he is willing to surrender all his estate and effects for the benefit
of his Creditors, and desires to obtain the benefit of the Act entitled “An
Act to Establish a Uniform System of Bankruptcy throughout the United
States,” approved March 2, 1867:

That the Schedule hereto annexed, Marked A, and verified by Your Pe-
titioner’s oath, contains a full and true statement of all his debts, and (so
far as it is possible to ascertain) the names and places of residence of his
creditors, and such further statements concerning said debts as are required
by the provisions of said Act:

That the Schedule hereto annexed, marked B, and verified by Your Pe-
titioner’s oath, contains an accurate inventory of all his estate, both real and
personal, assignable under the provisions of said Act:

WHEREFORE, YOUR PETITIONER PRAYS, that he may be adjudged by the
Court to be a Bankrupt, within the purview of said Act; and that he may
be Decreed to have a Certificate of Discharge from all his debts provable
under the same.

, Solicitor, [or, Attorney,] &e.

Oath to foregoing Petition.
{N. B.—If Petitioner is not a citizen, the last clause of this oath should be omitted.)

Unirep States or AMERICA,
District of 3 88!

I, , the Petitioning Debtor mentioned and described in the fore-
going Petition, do hereby make solemn oath [or, affirmation] that the state-
ments contained therein are true according to the best of my knowledge,
information and belief; and I do further make oath [or, affirmation] that I
am a citizen of the United States of America, and that I will bear true faith

and allegiance to the same.
, Petitioner.

% Subscribed and sworn [or, affirmed] to, before me, this day. of :
.D. 18

 

U. S. District Judge, [Register in Bankruptcy,
56 or, U. 8S. Commissioner.] -
FORMS IN BANKRUPICY.

882

 

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FORMS IN BANKRUPTCY.

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‘ant A “ojo Jooa1oyy sovq qoumnuog, 40 ‘ f ‘

; ; a J Jopun ayy pus ‘uy £q ppey ao ‘tau0y
payewus BuVpat sivpNayAvg [[V Jo yuawaywg puv ‘Auv ji ‘uoaiay} soouviquinougy “Hog Aq poumo dyCIsy [voy [[¥ Jo uordiiosag, «enon

 

 

 

 

(‘sanv] Nr isaugixy]

. ‘uomrng Buypyf fo amp aya mw poynqua se ay yoryn
fo quauholug 10 uorssassog a7 07 40 ‘asn sey sof YsnuT, uz Suossad wayj0 hun fig pjag ato yorya wo ‘uauowniag oy) Jo 70.190.)
aya wapun 10 ‘quowuholug ‘wopssassog 2y) UL goUu aio YoLYn ‘wanowYY spay PUD aDIST JOUOSag pun yoy yo fo quawawig

CD ‘al DIAGHHOS [s0jqeq 4q moped)
888 FORMS IN BANKRUPTCY.

[Petition by Debtor.] SCHEDULE B.

Personal Property.

(2)

 

Dollars, | Cts.

 

ao—Clash on hand.....csccecscseseereeneeseeseeencssenseseneessserseanae ere seaseasnereen enone

b.—Bills of Exchange, Promissory Notes, or Securities of any description,

(cach to be sct out separately)......ccsseeerrersenersenteeceserercereeserentees

c.—Stock in Trade, in my business of » at , of the

Wale Of issssvsenisvwevasinesasedaiears sadsredarescrccncsaledesetinsveseenaresecanai chet

@,—Household Goods and Furniture, Household Stores, Wearing Apparel,

and Ornaments of the Person..........ccssssseevencereseceeeesesereeseseneeeeoes
e.—Books, Prints, and Pictures ............cccssesesneenssecenescseceneerrenseeeasenaees
fi—Horses, Cows, Sheep, and other Animals.............cccccesseeseseneeereenee ees
g-—Carriages, and other Vehicles..........cccecseseeceeeseereceaceereeeeeeeesneeeeneaens
h.—Farming Stock, and Implements of Husband ry.........:...sccseseecseeeeeeeeee

i.—Shipping, and Shares in Vessels.........ccssscsscssessceeeeeseceeeeetaeeeeseeerseees

k,--Machinery, Fixtures, and Apparatus uscd in Business; with the place

where cach is Situated

4—Goods or Personal Property of any other Description, with the place
where each is Situated

 

 

 

 

Petitioner.
FORMS IN BANKRUPTCY.

 

 

 

889
[Petition by Debtor.] SCHEDULE B. (3)
Choses in Action.
Dollars. | Cts.
a,—Debts duc Petitioner on open ACCOUNL .......eeceeeesseeess cece eeeseeeeneneeeeeeee
b.—Stocks in Incorporated Companies, and Interest in Joint-stock Com-
PADICS......ccescece eee eee eeeteeeeetenee anon ese eeea ees eee eee a eae esee see eee tesa eee
e.—Policies of Insurance..........ccecccceeeeeeseeeteeneeenees dia tievacsateaseaiemebawe
d,—Unliquidated Claims of every nature, with their Estimated Value ........-
\
I

 

 

wee ee, Petitioner.
890

(Petition of Debtor.}

FORMS IN BANKRUPTCY.

SCHEDULE B.

(4)

Property in Reversion, Remainder, or Hxpectancy, including Property held.
in Trust for the Petitioner, or subject to any Power or Light to Dispose

of, or to Charge.

{(N. B.—A Particular Description of each Interest must be Entered. Ifall or any of the debtor's pe
has been Conveyed by Deed of Assignment, or otherwise, fur the benefit of Creditors, the date of such
7. the Name and Address of the Person tu whom the Property was Conveyed, the Amount

should be state

eed

realized from the Proceeds thereof, and the Disposal of the Same, as far as known to the Petitioner.)

 

General Interest.

Particular Description.

Supposed Valne
ofmy Interest.

 

Interest in Land ...... seed

Perscnal Property

Property in Money, Stock,
Shares, Bonds, Annuities,
etc., etc.

Rights and Powers..........

Property heretofore conveyed
for beuetit of Creditors.

What portion of Debtor's
Property has_been Con-
veyed by Deed of Assign-
ment, or otherwise, for
Benefit of Creditors; Date
of such Deed, Name and
Address of Party to whom
Conveyed; Amount real-
ized therefrom and Disposal
of same, so far as known to
Petitioner.

 

Real Estate and Leasehold Property, with Locality, Names,
and Descriptions of Parties now Enjoying the Same, and
the Value thereof; also the Nature of my Interest there-
in, and from Whom, and in what Manner it is derived. .

Personal Property, with Locality, Names, and Descriptions
of Persous now Enjoying the Same ; also the Nature cf
my Interest therein, and from Whom, and in what Man-
ner it is derived

Annuities, Money in Public or other Funds, Shares in Rail-
road and other Companies, showing in whose names
the same are standing, with Names and Descriptions of
persons now Enjoying the Same; also the Nature of
my Interest therein, and from Whom, and in what Man-
MEL Ibis WOriVEd, a5 sare aeusssa-se nie ziaeatire dias via are vie-djenie tediaiore

Rights and Powers wherein I, or any other Person or
ersons jin Trust for me or for_my benefit, have any
power to Dispose of, Charge, or Exercise...............

Description of Property of Debtor heretofore conveyed
for benefit of Creditor by deed of assignment, or other-
wise; date of such deed or instrument of conveyance,
with name and address of party to whom made ; amount
realized from eame. and the disposal of such property,
8o far ay known to Petitioner.

 

Dolls. Cts,

Am’nt realized
trom proceeds
of Dre perly
conveyed.

Dolls. Cts.

 

, Petitioner.
FORMS IN BANKRUPTCY. 891

{Petition by Debtor.) SCHEDULE B. (5.)

A Particular Statement of the property claimed as Excepted from the Opera-
tion of said Act, by the provisions of the 14th Section thereof, giving Lach
Item of Property and its Valuation ; and, if any portion of it is Leal Es-
tate, its Location, Description, and Present Use.

{N. B.—The property claimed to be Exempt under the Laws of any State is to be described separately
from the rest, and reference given to the Statute of said State creating the Exception.)

 

Valuation.

Dolls. | Cts,

Property claimed to be Ex-
cepted from the opera-
tions of said Act, and
which may be set apart
by the assignee under
the 14th Section .........

 

Property claimed to be Ex-
empt by State laws; its
Valuation ; whether
Real or Personal Estate;
its Description and
Present Use; and under
what State Law Exemp-
tion is claimed ..........-

 

 

 

 

 

 

Petitioner.
892 FORMS IN BANKRUPTCY.

[Petition of Debtor.] SCHEDULE B. (6.)

The following is a True List of all Books, Papers, Deeds, and Writings re-
lating to my Trade, Business, Dealings, Estate, and Effects, or any Part
thereof, which, at the date of this Petition, are in my Possession or under
my Custody and Control, or which are in the Possession or Custody of
any Person in Trust for me, or for my Use, Benefit, or Advantage ; and
also of All others which have been heretofore, at any time, in my Posses-
sion, or under my Custody or Control, and which are now held by the
Parties whose names are hereinafter set forth, with the reason for their
Custody of the same :—

 

PAPERS, ETC. ... eeeeseeees

 

ao
_~

eee a pict y Ct onEr

 

(N. B -Here fol ows oath to Schedule B, as hereinafter prescribed. }
FORMS IN BANKRUPTCY. 893

OATHS TO SCHEDULES A AND B.

{N. B.—The following forms of oaths to Schedules A and B of the Petition by Debtor are prescribed, and
they are to be annexed to the same, respectively.]

Oath to Schedule A.
Unirep States or AMERICA.
District of 5 88s

On this day of ,A.D.18 __, before me personally came ‘
the person mentioned in and who subscribed to the foregoing Petition and
Schedule, Marked A, respectively, and who being by me first duly sworn
[or, aftirmed], did declare the said Schedule to be a statement of all his
debts, &c., in accordance with the Act of Congress entitled “An Act to
Establish a Uniform System of Bankruptcy throughout the United States,”
approved March 2, 1867.

?

District Fudge, {or, Register ; or, U. S. Commissioner. ]

Oath to Schedule B.
Unirep Srates oF AMERICA.
District of » 8s:

On this day of ,A.D.18 _, before me personally came ;
the person mentioned in and who subscribed to the foregoing Petition and
Schedule, Marked B, respectively, and who being by me first duly sworn
[or, affirmed], did declare the said Schedule to be a statement of all his
estate, both real and personal, in accordance with the Act of Congress en-
titled “ An Act to Establish a Uniform System of Bankruptcy throughout
the United States,” approved March 2, 1867.

?

District Judge, [or, Register, or, U. 8S. Commissioner.] -

Form No, 2.
COPARTNERSHIP PETITION.
[In case of a Copartnership, the form will be as follows :]

To the Honorable Judge of the District Court of the United
States for the District of -

Tue Petition of , and ~ of ;
in the County of , and State of , and District afore-
said, respectfully represents: That the said ,an 5
copartners transacting business at , in the County of 7
and State of , aud in said District, have for the
months.

[ Or,

Tuar the said and members of a copartnership
composed of themselves, and one of ,1n the County of ‘i
and State of , have for the months :—
next immediately preceding the filing of this Petition at within

said Judicial District ; that the members of said copartnership owe debts ex-
894 FORMS IN BANKRUPTCY.

ceeding the amount of three hundred dollars, and are unable to
pay all their debts in full; that they are willing to surrender all their es-
tate and effects for the bencfit of their creditors, and desire to obtain the
benefit of the Act entitled “An Act to Establish a Uniform System of

Bankruptcy throughout the United States,” approved March 2, 1867. ‘

That the Schedule hereto annexed, marked A, and verified by their oaths,
contains 2 Full ani True Statement of all the debts of said Copartnership,
and, as far as possible, the Names and Places of Residence of their Credit-
ors, and the further statements concerning such debts required by the pro-
visions of said Act.

That the Schedule hereto annexed, Marked B, verified by their oaths,
contains an accurate Inventory of all the estate of said Copartnership as re-
quired by the provisions of said Act.

And said further states, that the Schedule hereto annexed.
Marked C, verified by his oath, contains a Full and True Statement of all
his Individual debts; and, as far as possible, the Names and Places of Res-
idence of hig Creditors; and the further Statements concerning such debts
required by the provisions of said Act; and that the Schedule hereto an-
nexed, marked PD, verified by his oath, contains an accurate Inventory of
all his Individual Estate as required by the provisions of said Act.

And said further states, that the Schedule hereto annexed,
Marked E), verified by his oath, contains a Full and True Statement of all
his Individual debts, and, as far as possible, the Names and Places of Resi-
dence of his Creditors, and the further Statements concerning such debts
required by the provisions of said Act; and that the Schedule hereto an-
nexed, Marked F’, verified by his oath, contains an accurate Inventory of
all his Individual Estate as required by the provisions of said Act.

(N. B.—Similar clauses to be added for Individual Schedules of each Cupartner joining in the Petition.)

WHEREFORE, YOUR PrTITIONERS PRAY, that after due proceedings had,
they may be adjudged by a Decree of the Court to be Bankrupts within
the purview of said Act; and upon their compliance with all the require-
ments of the said Act, and all the orders and directions of the Court made
in pursuance thereof, they may be severally decreed to have a CERTIFICATE
‘or DiscttaRGE FROM ALL THEIR Depts provable under said Act, and other-
wise entitled to all the benefits thereof.

>
Y
Petitioners,

[N. B.—The Form of the Oath to the Petition is to be modified hy employing the plural for
the singular number, and by the addition of clauses to cover the Schedules of each Copartner.}

form No. 3.
CORPORATION PETITION.

[N. B.—If a Petition in Bankruptcy is filed by a Corporation, an authenticated copy of a
Vote or other action of the Stockholders, (or, party or parties entided to act in behalf of such
Corporation, ) anthorizing such proceedings should be filed with the Petition, and which, in
substance, should be as follows :]

Statement to accompany Petition of Corporation, (In Bankruptcy.)

AT A MEETING OF THE SrockHorpERs, [o7, of the Board of Directors, or,
Trustees, as the Case may be,] of the Company, [or, Association, or.
FORMS IN BANKRUPTCY. 895

Bank, or, Society,] a Corporation created by , of the State
of , held at , in the county of , and State of )
onthis day of ,A.D.18  , the Condition of the Affairs of said Cor-

poration having been inquired into, and it being ascertained to the Satistaction
of said meeting that the said Corporation was Insolvent, and that its Affairs
ought to be wound up, it was Voted [or Resolved] by a Majority of the Cor-
orators [or, Stockholders, or, Directors, or, Trustees] present at such Meeting,
which was duly called and notified for the purpose of taking action upon the

subject aforesaid ;) that be, and thereby—Authorized,
Empowered, and Required to file a Petition in the District Court of the United
States forthe — District of , within which said Corporation has carried

on its business, for the purpose of having the same adjudged Bankrupt; and

that such proceedings be had thereon as are provided by the Act of Congress

entitled “ An Act to Establish a Uniform System of Bankruptcy throughout
the United States,” approved March 2, 1867.

In WItNESS WHEREOF, I have hereunto subscribed my name as President

saa [or, other officer or agent] of said Corporation, and affixed

{or bee nea the Seal of the same this day of A.D.

18

pees ee eee
President [or, other officer] of said Corporation,

[N.B.—In case of a Corporation, the following changes are to be made in the form of Peti-
tion already prescribed, viz. : The substitution of the Name of the Corporation for that of the
Individual Petitioner, and the omission of the Prayer for a Discharge and the following pas-
sage substituted: ‘* And that like proceedings may be had in the premises as in said act are pro-
vided in respect to natural persons.” The language of the Oath to the Corporation Petition may
be changed to correspond with the form of the Petition. ]

Form No. 4.
ORDER OF REFERENCE TO REGISTER.

In the District Court of the United States,
For the District of .

 

In the Matter of

In BankRUPTCY.

A Petitioner for Adjudication in Bank-
ruptcy of himself.

 

District of , Sse
WHEREAS , of the County of , State of
and District aforesaid, has, on this day of ,A.D.18 ,at

o'clock _m., filed in the office of the Clerk of said Court a Petition for Ad-
judication in Bankruptcy against himself, according to the provisions of the
Act of Congress entitled “An Act to Establish a Uniform System of Bank-
ruptcy throughout the United States,” approved March 2, 1867,

It is thereupon Ordered, That said Petition be referred to ariel ants
one of the Registers in Bankruptcy of this Court, to make Adjudication
. thereon, and take such other proceedings therein as are required by said Act;
896 FORMS IN BANKRUPTCY.

and further, That the said shall, on or before the day of -
at o’clock —m., file with said Register a duplicate copy of said Petition
and the Schedules thereto annexed, and that he attend before said Regis-
ter on said day, and thenceforth as said Register may direct, to submit to
such orders as may be made by said Register, or by this Court relating to
his said Bankruptcy.

And further, that until otherwise ordered by the Court, the said Register

 

shall act upon the matters arising in this case at his office, at -
at such times as he shall fix for that purpose.

Witness the Honorable , Judge of the said Court, and
seat thereof, at ,in said District, on the day of ;
A.D. 18

Seal of a ee

{me Court. R

?
Clerk of District Court, for said District.

Form No. 5.
ADJUDICATION OF BANKRUPTCY UPON DEBTOR'S PETITION.

In the District Court of the United States,
For the District of ‘

 

In the Matter of

In BanxeRvrptcy.

By whom a Petition for Adjudication of
Bankruptcy was filed on the

 

day of ,A.D.18  ,in said Court.
At ,in said District,
on the day of ,A.D.18
Before , one of the Registers,

of said Court in Bankruptey.
I, rar Unpersicnep, a Register of said Court in Bankruptcy, upon good
ad before me , taken, do find, that the said has
ecome a Bankrupt within the true intent and meaning of the Act of Con-
gress entitled “An Act to Establish a Uniform System of Bankruptcy
throughout the United States,” approved March 2,1867; and I do hereby
declare and adjudge him a Bankrupt accordingly.

aa, ean
Register in Bankruptcy.

[N.B.—When a Debtor is declared a Bankrupt upon a Creditor’s Petition, the Order should
be made by the Court and entered as an Order of the Court in substantially the form above
prescribed. ]
FORMS IN BANKRUPTCY. 897

Form No. 6.
WARRANT TO MESSENGER.
(Voluntary Bankrupicy.)
In the District Court of the United States,
For the District of

 

In the Matter of

In Bayxnvptey.
By whom a Petition for Adjudication of
Bankruptcy was filed on the = day of
,»A.D.18  , in said Court.

 

District of 88s
To the Marshal of the District of —

Greetine :-—Whereas, a Petition for Adjudication of Bankruptcy and for
Relief, under the Act of Congress entitled “ An Act to Establish a Uniform
System of Bankruptcy throughout the United States,” approved March 2,
1867, was, on the day of ,18 , filed by , of

,in said District, upon which he hath been found and adjudged
a Bankrupt, there being no opposing party thereto :—You arE, THEREFORE,
HEREBY DIRECTED, AS MESSENGER, to publish times in the—| Here
name the newspapers in which the notice is to be published,] (the first publi-
cation to be made forthwith,) the following notice, to wit :—

Tus 1s To Give Notice: That on the day of ,;Ac DIS uw
Warrant in Bankruptcy was issued against the Estate of , of , in
the county of | , and State of : , Who has been adjudged a Bankrupt, on

his own Petition; that the Payment of any Debts and Delivery of any Property belonging to
such Bankrupt, to him, or for his use, and the Transfer of any Property by him are forbidden
by Law; that a Meeting of the Creditors of the said Bankrupt, to Prove their Debts, and to
Choose one or more assignees of his Estate, will be held at a Court of Bankruptcy, to be holden
[Here designate the Place, and Building, Room, or Office where the Court is to be held,] before
, Register, on the day of ,A.D.18  , at o'clock = M..

AND YOU ARE FURTHER DIRECTED to Serve Written or Printed Notice, forthwith, either
by Mail or Personally, [Those upon whom personal Service is to be made should be designated by
the Court, or Register,| on all Creditors upon the Schedule filed with said Bankrupt’s Petition,
(or, where names may be given you in addition thereto by the Debtor,] at least ten days before
the appointed meeting of said Court, in the following form, to wit :—

To Mr. » of , County of , and State of ; Creditor of ;
Bankrupt.
You are hereby notified that a Warrant in Bankruptcy has been issued out of the District
Court of the United States, for the District of , against the estate of

?
adjudged a Bankrupt, upon his own Petition :—That the Payment of any Debts, and the De-
livery of any Property belonging to said Bankrupt, to him, or for his use, and the transfer of
any Property by him are Forbidden by Law:—That a Meeting of the Creditors of said Bank-
rupt, to wit: [Here insert names of the Several Creditors of Bankrupt, with their places of
residence and amount of their debts, respectively, in the following form, e.g. :—

A.B. §. | BOStON, Mas8a. ci ccsescessoeeneevenses sacs | $500]
to Prove their Debts and Choose one or more Assignees of his Estate, will be held at a Court
of Bankruptcy, to be holden on the’ day of ,A.D.18  , at o’clock,
M., at [Here insert the Place, Building, Room, or Office where the Court will be held,] before
, Register.
And have you then there this Warrant, with your doings thereon.
Witness the Honorable , Judge of the said Court, and
Seal of y the seal thereof, at ,in said District, on the
{a8 Court. day of ; A.D.18 .

ae aes eee
Clerk of District Court, for said District,
57
898 FORMS IN BANKRUPTCY.

Form No. 7.
RETURN OF MESSENGER TO ACCOMPANY WARRANT.
(N. B.—This Return may be Endorsed on the Warrant, or follow the signature of the Clerk.]
District of 4 862
At , on the day of ,A.D.18 .—By virtue of the within
Warrant, I have caused the notice therein ordered to be published, by ad-
vertisement, times, in the Newspapers within mentioned ; the first
publication of which was on the day ot ,A.D.18  ,in [Here men-
tion Newspaper in which first publication was had|:—And I also, on the
day of ,A.D.18 ,sent by mail or served personally upon the credit-
ors and others named in said Warrant a copy of the notice required thereby
to be sent to, or served on them:—And all of the said notices were accord-
ing to the directions set out in said Warrant.

Fres.

 

Ls HGH SERVICSLOE WATEANEcicinscnsaaoadiasssdvomeraesasdecopasetabuce sad caanwesuagenitawne ¢2 | 00
2. For necessary travel miles, at 5 cents per mile, each way...
3. For each written note to Creditor named in the Schedule, 10 cents.........
4. For actual and necessary expenses in publication of notices.............ceee

(N.B.—If there are any other necessary eapenses, the same may be inserted in specific
terms, numbering the sume consecutively.}

 

 

 

 

 

oe a ee eee
: U.S. Marshal, as Messenger,
District of
District of , Ss!
»A.D.18 . Then personally appeared
the , and made oath that the above Expenses returned by

him, in addition to his fees, were actually and necessarily incurred and paid
by him, and that the same are just and reasonable.

Before me, :

District Judge,
[or, Leegister in Bankruptcy. ]

Form No. 8.
REGISTER’S OATH OF OFFICE.
Unirep Srares or AMERICA,
District of , 8s:
eds , having been duly nominated and recommended by the Chief Jus-
tice of the Supreme Court of the United States, and appointed by the District
Judge of the United States for the district of , as a Register
in Bankruptcy under the act entitled “ An Act to Establish a Unitorm System
ef Bankruptcy throughout the United States,” approved March 2, 1867, do
solemnly swear that I have never voluntarily borne arms against the United
States since I have been a citizen thereof; that I have voluntarily given no
aid, countenance, counsel, or encouragement to persons engaged in armed hos-
tility thereto; that I have neither sought nor accepted, nor attempted to exer-
cise the functions of'any office whatever under any authority or pretended au-
thority in hostility to the United States; that Ihave not yielded a voluntary
support to any pretended government, authority, power, or constitution within
FORMS IN BANKRUPTCY. 899

the United States hostile or inimical thereto. And I do further swear, that
to the best of my knowledge and ability, I will support and defend the Con-
stitution of the United States against all enemies, foreign and domestic ;
that I will bear true faith and allegiance to the same; that 1 take this obli-
gation freely, without any mental reservation or purpose of evasion; and
that I will well and faithfully discharge the duties of the office on which I
am about to enter; and also, that I will not, during my continuance in of-
fice, be directly or indirectly interested in, or benefited by, the fees or emol-
uments arising from any suit or matter pending in bankruptcy in either the
District or Circuit Court in this District. So help me God.

Subscribed and to, before me this day of , A.D. 18

 

District Judge.

form No. 9.
OFFICIAL BOND OF REGISTER.

In the District Court of the United States,
For the District of ;

In Banxrvrtcy.

Know ALL MEN BY THESE Presents: That we [Znsert names and rest-
dences in full of Bondsmen] are held and firmly bound to the United States
of America in the sum of dollars, lawful money of the United
States, to be paid to the said United States, for the payment of which, well
and truly to be made, we bind ourselves and each of us, our and each of our
heirs, executors, and administrators, jointly and severally, firmly by these
presents.

Sealed with our seals, and dated this day of , Anno
Domini one thousand eight hundred and -

Whereas the said , having been on the day of ;
A.D.18 ,appointed by the Honorable , Judge of the Dis-
trict Court of the United States for the District of

a Register in Bankuptcy, in and for said District, this Bond is executed pur-
suant to the Third Section of the Act of Congress entitled “An Act to Es-
tablish a Uniform System of Bankruptcy throughout the United States,” ap-
proved March 2, 1867, and is conditioned for the faithful discharge of the
duties pertaining to said office of Register in Bankruptcy.
In witness whereof we have hereunto set our hands and seals this
day of , A.D. one thousand eight hundred and
L. 8.
Sd

Signed, sealed, and filed in office of the Clerk of said District Court.
Attest:

 

 

Clerks’ District of

(N. B.—The above Bond to be endorsed with the approval of the Judge of the District
Court thus: ‘*I HEREBY APPROVE THE WITHIN Bonp, AND DECLARE THE SURETIES THEREON
TO BE SATISFACTORY ;” and the usual certificate of the Clerk of the District, as to the exact
time and date of filing. ]
900 FORMs IN BANKRUPTCY.

Form No. 10.
COMMON ORDER.

%n the District Court of the United States,
For the District of :

 

In the Matter of

In Bankruptcy.
Bankrupt .

 

At , in said District,
on the day of , A.D, 18
Before Mr. , one of the Registers
of said District Court, in Bankruptcy.
District of » 83s
Upon the application of , of , in the County of , and
State of , there being no opposing interest, [or, the party, or parties,
appearing assenting thereto,| Iv 1s Orperep: [ZZere insert the order. |
itness the Honorable , Judge of the said Court, and
the seal thereof, at , in said District, on the
{me*Goen$ day of , A.D. 18

e Court.

fae eh, Ee
Clerk of District Court, for said District.

Form No. 11.
CERTIFIED MEMORANDUM OF FIRST MEETING OF CREDITORS.
In the District Court of the United States,

 

 

For the District of
In the Matter of
In Bankruptcy.
Bankrupt .
At , in said District,
on the day of , A.D. 18
Betore Mr.

+
Register in Bankruptey.
District of 788s : me

Memoranpum.—This being the day appointed by the Court for the First
Meeting of Creditors under the said Bankruptcy, whereof the notice re-
quired in that behalf has been duly given, I, the undersigned, Register of the
said Court in Bankruptcy, sat at the time and place above mentioned, pur-
suant to such notice, to take the proof of debts and for the choice of as-
signee under the said Bankruptcy; and I do hereby certify that the greater
part in number and in value of the creditors who have proved their debts
lar Phare or duly represented, and made choice of , of ,in

e

ounty of , and State of , as the Assignee of the said
Bankrupt’s estate.

| Or,

Failed to make choice of an Assignce of said Bankrupt’s estate, and there
being no opposing interest, I appointed , of , in the County
of , and State of , ag Assigneé of’ the same.
FORMS IN BANKRUPTCY. 901

Or.
Failed to make choice of an Assignee of said Bankrupt’s estate, and there
being no opposing interest, I further certify to the Court the failure to make
such choice of Assignee, in order that the Court may take action in the
premises.

ea ee
Register in Bankruptcy.

{N. B.—When the matter of appointment is referred to the Court, the Register may, if re-
quested, certify the names of the persons proposed at the Creditor’s meeting and the votes
given for each. ]

Form No, 12.

ABSTRACTS OF PROCEEDINGS UNDER SECTION FOUR — FORM OF MEMO-
RANDUM TO BE RETURNED TO CLERK BY REGISTER, OF HIS ACTION IN
EACH CASE.

In the District Court of the United States,

For the District of .

 

In the Matter of
In BANKRUPTCY.

Bankrupt .

 

At , in said District,
on the day of , A.D. 18
Before Mr.

?
Register in Bankruptcy.

District of , os.
Mrmoranpum.—This day attended the first meeting of Creditors of ;
the Bankrupt aforesaid, at said , where choice was made of

assignee as appears by the papers herewith returned. [Jere insert particu-
lar statement of all that was done before the Register.]

a ee
Register in Bankruptcy.
. B.—A memorandum of what is donc in each case respectively must be returned on sep-
arate sheets of paper.]

Form No. 13.
CREDITORS WHO HAVE PROVED THEIR DEBTS AT FIRST MEETING.

In the District Court of the United States,
For the District of :

 

In the Matter of

In Bankruptcy.

Bankrupt .

 

At , in said District, on
the day of , A.D. 18
Before Mr. ‘
Register in Bankruptcy.
902 FORMS IN BANKRUPTCY.

District of 588s
The following is a list of Creditors who have this day proved their debts :~

 

Names of Creditors. Residence. Debts Proved.

 

Dolls. Cts. .

 

 

 

ee
Register in Bankruptcy.

Form No. 14.

FORM OF SPECIAL LETTER OF ATTORNEY.

 

In the Matter of

In Banxrortcy.

Bankrupt .

 

To

Sir: [or, Messrs., o7, Gentlemen,] I, [or, we,]

hereby authorize you, or any one of you, to attend the meeting of Creditors
in this matter, advertised or directed to be holden at , on the

day of , before ,or on the day advertised in the [Vame the
Newspapers,] or any adjournment thereof, and then and there for ‘
and in name to vote for or against any proposal or resolution that
may be lawfully made or passed at such meeting or adjourned meeting ; and
in the choice of Assignee, or Assignees of the Estate of the said Bankrupt, and

for , or , to accept such appointment of Assignee.
Dated this day of yA.D.18 . .

Witness to the signature of ;

Exhibited to me this day of , AD. 18

Se
Register in Bankruptcy.
FORMS IN BANKRUPTCY. 903

Form No. 15.
CHOICE OF ASSIGNEES.
(First Meeting of Creditors.)
In the District Court of the United States,
For the District of ‘

 

In the Matter of
In Bankruptcy.

Bankrupt .

 

At in said District,
on the day of »,AD.18 .

Before Mr. ;

Register in Bankruptcy.
District of 788s

Memoraxpum.—This being the day appointed by the Court for the First
Meeting of Creditors in the above Bankruptcy, and of which due notice has
been given in the [Here insert the names of the Newspapers in which notice was
published,] and by special notice served personally, or through the mail. We,
whose names are hereunder written, being the greater part in number and in
value, of the Creditors of the said ee , Bankrupt aforesaid, pres-
ent at this Meeting, and who have proved our Debts, have chosen, and do
hereby nominate and choose [ Here insert the name, or names of assignecs,
with their places of residence, respectively] to be the assignee of the said
Bankrupt’s Estate and Effects, and we do desire that he [ov, they] may be
appointed such assignee , accordingly :

*

Names of Creditors above men- Residences of the Same. Am't of Debt.
tioned.

 

Dolls. Cts.

 

 

I [or, we] do hereby accept the said Trust, [or, Appointment. |

 

»

?
Assignee .
I, , a Register of the said Court in Bankruptcy, do hereby
approve of, and confirm the said choice of Assignee .

—_—— , Register in Bankruptcy.
hereby appoint Mr. , of , to act
as Solicitor, and Attorney in the above Bankruptcy.

———  -—____,, Register [or, Assignee. |
, District Judge.

*

 

* N. B.—If no attorney be appointed, strike the latter form out, and when the appoint-
ment is made file an appointment as above, signed by the Assignee.

The District Judge will endorse hereon, in case of approval of the above, thus: ‘ Ap-
proved.”
904 FORMS IN BANKRUPTCY.

Form No, 16.
NOTIFICATION OF APPOINTMENT OF ASSIGNEE,

In the District Court of the United States,
For the District of ;

 

In the Matter of
In Bankrurtcy.

Bankrupt .

 

District of 188s
To , of ,in the County of ‘
and State of —

I po HEREBY CERTIFY to you, that you were duly chosen [or, appointed]
assignee [or, one of the assignees] of the Estate and Effects of the above
named Bankrupt, at the first meeting of the Creditors, on the day of

,A.D.18 ,and Ido hereby approve and confirm said election
[or appointment ;] and I do further certify, that the greater part in value and
m number of the Creditors of said Bankrupt who had proved their claims
were present, or were duly represented at said meeting.

Dated at , the day of , A.D. 18

pt es ey
Judge of said District, |or, Register in Bankruptey.]
[N. B.—If the appointment is made by the Judge, the last clause should be omitted. ]

x

Acceptance of Assignee.

(N. B.—To be endorsed on notification, or to follow it.}

To wHom iT may Concern: Be it known, that I hereby signify my ac-
ceptance of the Trust of Assignee of the Estate of the above [or, within!
named Bankrupt this day of , A.D. 18

Form No. 1%.
BOND OF ASSIGNEE.

In the District Court of the United States,
For the District of :

 

In the Matter of

In Bankruptcy,

 

Bankrupt .
District of » 882
KNow ALL MEW BY THESE PRESENTS: That we, , of

of ; and of
are held and firmly bound unto the United States of America in the just and
FORMS IN BANKRUPTCY. 905

full sum of dollars, to the payment whereof, well and truly to be
made, we do bind ourselves, our and each of our heirs, executors, and admin-
istrators.

Signed, Sealed, and Delivered at , this day of ;
AD,18 .

The said , having been, on the day of ,AD.18 ,
by order of the District Court of the United States for the District
of ; In Bankruptcy, appointed assignee of the estate of

7
a Bankrupt, this Bond is executed pursuant to the thirteenth Section of the Act
of Congress entitled “ An Act to Establish a Uniform System of Bankruptcy
throughout the United States,” approved March 2, 1867; and is conditioned

for the due and faithful discharge of all duties by the said ‘i
as such assignee, and in compliance with the Orders and Directions of the
Court in the matter of Bankruptcy of the said :
Signed, Sealed, and Delivered
in presence of— —____- —_-—____.,, [Ls.
St See, EE,
ene » [LS.
(NX. B.—To be Endorsed on the above ‘On the day of ,A.D.18 .”7)
Approved:

District Judge, [or, Register in Bankruptey.]

Porm No. 18.
ASSIGNMENT OF BANKRUPT’S EFFECTS.

In the District Court of the United States,
For the District of :

 

In the Matter of
In Bankruptcy.

Bankrupt .

 

District of 588s

Know ALL MEN BY THESE PRESENTS, that , of the of ;
in the County of , and State of in said District ha been
duly appointed assignee [Zf more than one assignee is appointed, insert ac-
cordingly] in said matter. Now,tnerErorz,J,  ————_—s, Judge of said
District Court, [or, Register in Bankruptcy of said District,] by virtue of
the authority vested in me by the 14th Section of an Act of Congress enti-
tled “An Act to Establish a Uniform System of Bankruptcy throughout the
United States,” approved March 2, 1867, do hereby convey and assign to the
said , assignee, as aforesaid, all the Estate, Real and Personal, of
the said , Bankrupt, aforesaid, including all the property, of
whatever kind, of which he is possessed, or in which he was interested, or
entitled to have on the day of _ » AD. 18, with all
his Deeds, Books, and Papers relating thereto, excepting such property as is
Exempted from the operation of this Assignment by the provisions of said
Fourteenth Section of said Act. ;

To HAVE AND TO HOLD all the foregoing premises to the said a
and his heirs forever, IN TRUST, NEVERTHELESS, for the use and purposes, with
the powers, and subject to the conditions and limitations set forth in said Act.
906 FORMS IN BANKRUPTCY.

In wirNess wHEREOF, I, the said Judge [or, the said Register] have here-
unto set my hand, and caused the seal of said Court to be affixed,

L. 8. :
{or the Sonrt.} this day of , A.D. 18
Os aes
District Fudge, [or, Register in Bankruptcy. ]
Form No. 19.

NOTICE OF ASSIGNEE OF HIS APPOINTMENT.
(In Bankruptcy.)

District of » 88:
At , the day of , A.D. 18
The undersigned hereby gives notice of his appointment asassignee of
of , in the County of , and State of , within said

District, who has been adjudged a Bankrupt upon his own Petition, [o7, on

Creditor’s Petition; or, as the case may be] by the District Court of said Dis-

trict. ee, Assignee, &e.
To) 4 Se,"

Form No. 20,
EXEMPTED PROPERTY.
In the District Court of the United States,
For the District of :

 

In the Matter of

Ixy Bankruptcy.

Bankrupt .
At  ,onthe dayof ,18 .

District of ss:

The following is a Schedule of property designated and set apart to be re-
tained by the Bankrupt aforesaid, as his own property, under the provisions
of the 14th Section of the Act of Congress entitled * An Act to establish a
Unitorm System of Bankruptcy throughout the United States,” approved
March 2, 1867:

 

 

 

General Head. Particnlar Description. Value.
Necessary household and kitchen Dolls. | Cts.
MUNI C ssissiesiccadsedesetancenetene

Other articles and necessarics......

Wearing apparel of Bankrupt and
Hisitaniily scocscespensseeessctases

Equipments, if any, as a Soldier...

Other Property Exempted by the
laws of the United States........

Property Exempted by State Laws.

|

District Judge lor, Register.]

 
FORMS IN BANKRUPTCY. 907

Forin No. 21.
PROOF OF DEBT, WITH SECURITY.

In the District Court of the United States,
For the District of ‘

 

In the Matter of
In Bankruptcy.

Bankrupt .

 

District of » 8S:

On this day of ,A.D.18 , before me , a Reg-
ister in Bankruptcy [or, United States Commissioner, or other proper officer]
of said District, personally appeared , of , in the County
of ,and State of , and who, after being duly sworn [or,
affirmed] and examined, at the time and place aforesaid, upon h oath, says
that , the person by [o7, against] whom a Petition for Adjudica-
tion of Bankruptcy is filed, w at and before the filing of the said Pe-
tition and still , justly and truly indebted to this Deponent, [or, the
firm of , composed of this deponent and , transacting
business at ,| in the sum of dollars and cents, for which
said sum of dollars and cents, or any part theyeof, this Depo-
nent has not nor any person by order, or to this Deponent’s
. knowledge or belief, for use, received any security or satisfaction
whatsoever, save and except the , hereinafter mentioned; that the
claim was not procured for the purpose of influencing the proceedings under
the Act of Congress entitled “An Act to Establish a Uniform System of
Bankruptcy throughout the United States,” approved March 2, 1867; that
no bargain or avreement, expressed or implied, has been made or entered
into by or on behalf of this Deponent to sell, transfer, or dispose of said
claim, or any part thereof, against said Bankrupt, or to take or receive, di-
rectly or indirectly, any money, property, or consideration whatever, where-
by the vote of this Deponent [o7, the firm of which this Deponent is a mem-
ber] for Assignee, or any action on the part of this Deponent, or any other
person, in the proceedings under said act, has been, is, or shall be in any
way affected, influenced, or controlled; [Here insert « particular description
of the debt, and also of the property held as security, and the estimated value

of such property. |

 

2

Deponent.
Subscribed and sworn [or, affirmed] to, at , on the
day of , A.D, 18
Before me

 

District Judge, [or, Register in Bankruptcy,
Or, U. &. Commissioner. ]
Received by me, at this day of , A.D, 18
——_____—__ a)

Assignee.
908 , FORMS IN BANKRUPTCY.

Form No. 22.
DEPOSITION FOR PROOF OF DEBT WITHOUT SECURITY.

In the District Court of the United States,
For the District of ;

 

In the Matter of

In BANKRUPTCY.

 

Bankrupt . |
District of 588s

At ,in the County of ,and State of k
on the day of ,A.D.18  , before me came :
of , in the County of , and State of , and
made oath, [or, afiirmation,| and says, that the said , the per-
son whom a Petition for adjudication of Bankruptcy has been filed,
at and before the filing of the said Petition, and still

justly and truly indebted to this Deponent in the sum of, [Here state the

amount, and describe the consideration of the Debt, and whether any, and

what, payments have been made thereon,| for which said sum of

dollars and cents, or any part thereof, this Deponent says that
he has not, wor has any person by h order, or to this De-

ponent’s knowledge or belief, for usc, had, or received any

manner of satisfaction or security whatsoever.

And this Deponent further says that the said claim was not procured for
the purpose of influencing the proceedings under the Act of Congress en-
titled “An Act to Establish a Uniform System of Bankruptcy throughout
the United States,” approved March 2,1867; that no bargain or agreement,
express or implied, has been made or entered into by or on behalf of this
Deponent, to sell, transfer, or dispose of said claim, or any part thereof,
against said Bankrupt, or to take or receive, directly or indirectly, any
money, property, or consideration whatever, whereby the vote of this De-
ponent for Assignee, or any action on the part of this Deponent, or any
other person in the proceedings under said Act, has been, is, or shall be in
any way affected, influenced, or controlled.

?
Deposing Creditor.
Subscribed and sworn [o7, affirmed] to, before me,

?

Register in Bankruptcy.
FORMS IN BANKRUPTCY. 909

Form No. 23.
DECLARATION FOR PROOF OF DEBT BY OFFICER OF CORPORATION.

In the District Court of the United States,
For the District of ;

 

In the Matter of

In Banxrvrrtcy.

 

Bankrupt .
District of , 8s
I, , of ,in the County of , and State
of , President [or, Cashier, or, Treasurer, or, as the case may be]
of ; , being a Corporation incorporated by and under the laws
of the State of , and carrying on business at , in the State
of , being duly sworn, do solemnly declare that Iam such officer, and

duly authorized to make this proof, and that the statement of the ;
between the said Corporation and the said Bankrupt, hereunto annexed, is a
full true, and complete statement of account between the said Corporation
and the said Bankrupt; and that it is within my own knowledge that the
debt thereby appearing to be due from the estate of said Bankrupt to the
said Corporation was incurred on, or before the day of , and
for the consideration therein stated; and that to the best of my knowledge
and belief the said debt still remains unpaid and unsatisfied. And I do fur-
ther declare that said claim was not procured for the purpose of influencing
the proceedings under said Act, and that no bargain or agreement, express
or implied, has been made or entered into by or on behalf of said Corpora-
tion to sell, transfer, or dispose of the said claim or any part thereof, against
such Bankrupt, or to take or receive, directly or indirectly, any money, prop-
erty, or consideration whatever, whereby the vote of such Corporation, or
of any person in the proceedings under said Act was, is, or shall be, in any
way, affected, influenced, or controlled.

President [or, as the case may be|
of the Company, [or, Association.]
Declared under oath at , this day of , AD. 18

Before me,

Register in Bankruptey.
910 FORMS IN BANKRUPTCY.

Form No, 24.
AFFIDAVIT FOR PROOF OF DEBT BY AGENT OR ATTORNEY.

In the District Court of the United States,
For the District of :

 

In the Matter of

In BANKRUPTCY.

Bankrupt .

 

District of , 8st
On this day of ,A.D.18 , before me, , Register
in Bankruptcy, [or, U. 8. Commissioner, or other proper officer,] of said Dis-
trict, personally appeared , of , in the County of . ‘
and State of , Attorney, [or, Authorized Agent,] of , in the
County of , and State of , and after being by me duly sworn,
[ov, aftirmed,] says that the said , the person by [o7, against] whom
a Petition for Adjudication of Bankruptcy has been filed, , at
and before the filing of the said Petition, and still justly and truly in-
debted to the said , in the sum of dollars and cents,
[Zere particularly describe the consideration of the debt, and whether any,
&c.,] for which said sum of dollars and cents , or any part
thereof, this Deponent says that he has not, nor has any person by
h Order, or to this Deponent’s knowledge or belief, for use had or
received any manner of satisfaction or security whatsoever. And this De-
ponent further says, that the claim was not procured for the purpose of influ-
encing the proceedings under the Act of Congress entitled “An Act to Es-
tablish a Uniform System of Bankruptcy throughout the United States,”
approved March 2, 1867; that no bargain or agreement, express or implied,
has been made, or entered into, by, or on behalf of such creditor to sell, trans-
fer, or dispose of said claim, or any part thereof, against said Bankrupt, or
to take or receive, directly or indirectly, any money, property, or consider-
ation whatever, whereby the vote of such Creditor for assignee, or any ac-
tion on the part of such Creditor, or any other person in the proceedings un-
der said Act, has been, is, or shall be, in any way affected, influenced, or con-
trolled. And this Deponent further says, that he is duly authorized by his
principal to make this Affidavit, and that it is within his knowledge that
the aforesaid debt was incurred, as and for the consideration above stated,
and that such debt, to the best of his knowledge and belief, still remains un-
paid and unsatisfied.
Subscribed and sworn [or, affirmed] to, this day of , A.D. 18

>
before me—

Ss
District Judge, [or, Register in Bankruptcy ;
Or, U. 8. Commissioner. ]

Received by me, this day of , A.D. 18

’
Assignee.
FORMS IN BANKRUPTCY. 911

form No. 25.
PROOF OF DEBT WITH SECURITY BY AGENT.

In the District Court of the United States,
For the District of 3

 

In the Matter of
In Banxrvrtcy.

Bankrupt .

 

At , in said District,
onthe day of , A.D. 18
Before Mr.

>
Register in Bankruptcy.

District of S82

On the day above mentioned, personally came , attorney [or, au-
thorized agent] of , who being duly and examined at the time
and place aforesaid, upon h oath, says that , the per-
son whom a Petition for Adjudication of Bankruptcy is filed, w
at and before the filing of the said Petition, and still justly and
truly indebted to the said , in the sum of dollars and cents,
for which said sum of dollars and cents, or any part thereof,
this Deponent has not, nor any person by order, to this De-
ponent’s knowledge or belief, for the use of said » Te-
ceived any security or satisfaction whatsoever, save and except the
hereinafter mentioned. And this Deponent further says that he is duly au-
thorized by his principal to make this deposition, and that it is within his
knowledge that the aforesaid debt was incurred as and for the consideration
above stated; and that such debt, to the best of his knowledge and belief,
still remains unpaid and unsatisfied; that the claim was not procured for
the purpose of influencing the proceedings under the Act of Coitiness en-
titled “An Act to Establish a Uniform System of Bankruptey throughout
the United States,” approved March 2, 1867; that no bargain or agreement,
expressed or implied, has been made, or entered into, by or on behalf of
such Creditor to sell, transfer, or dispose of said claim, or any part thereof,
against said Bankrupt, or to take or receive, directly or indirectly, any
money, property, or consideration whatever, whereby the vote of such Cred-
itor for Assignee, or any action on the part of such Creditor, or any other
person in the proceedings under said Act, has been, is, or shall be in any
way affected, influenced, or controlled.

[Here insert a description of the debt, and also of the property held as se-
curity, and the estimated value of such property. |

Subscribed and to, this day of , A.D. 18

Before me, ow
Register in Bankruptey.

Received by me, this day of , A.D. 18
—_——— , Assignee.
912 FORMS IN BANKRUPTCY.

Form No. 26.
LETTER OF ATTORNEY TO REPRESENT CREDITOR.

In the District Court of the United States,
For the District of ,

 

In the Matter of

Lin BANKRUPTCY.

Bankrupt . |

 

(Se

 

Sir, [Messrs., or Gentlemen :]—

: , of the of , in the County of <i
and State of , do hereby authorize you [or, either of you] to attend
the meeting, or meetings of Creditors of the Bankrupt aforesaid, advertised,
or directed to be held at a Court of Bankruptcy at > on
the day of ,A.D.18  , the day notified in the Warrant
issued to the Messenger by said Court in said matter, or at such other place
and time as may be appointed by the Court for holding such meeting or
meetings, or at which such meeting or meetings, or any adjournment or ad-
journments thereof, may be held, and then and there, from time to time,
and as often as there may be occasion, for , and in
name to vote for or against any proposal or resolution that may be then
submitted under the 12th, 13th, 14th, 18th, 19th, 21st, 22d, 23d, 27th, 28th,
33d, 36th, 37th, 42d, and 43d Sections of the Act entitled “An Act to Es-
tablish a Uniform System of Bankruptcy throughout the United States,”
approved March 2,1867; and in the choice of assignee, or assignees, of the
Estate of the said Bankrupt, and for , Lov, either of us] to accept
such appointment of assignee ; and with like powers to attend and vote at
any other meeting, or meetings, of Creditors, or sitting, or sittings, of the
Court, which may be held therein for any of the purposes aforesaid, or the

Declaration of Dividend, or for any other purpose in interest
whatsoever.
In witness whereof, have hereunto signed name .
and affixed seal the day of , A.D. 18
Signed, Sealed, and Delivered in —_——_ —_—-—-,, [Lu 5]
presence of— : SSS eel

———, [us]

[Note.—The party executing the above letter of attorney may acknowledge the same be-
fore a Judge, Register, Clerk, or Commissioner of the Court, or any officer authorized to take
the acknowledgment of Deeds or other Instruments in Writing. ]

(N. B.—Upon the above letter of attorney should be endorsed the following Certificate of the
Register, to wit: ‘‘ Exhibited to me, this day of ,A.D. 18 , at 2

Register in Bankruptcy.
FORMS IN BANKRUPTCY. 913

Form No. 27.
AFFIDAVIT OF LOST BILL OR NOTE.

In the District Court of the United States,
For the District of ,

 

In the Matter of

In Banxrvrrcy.

 

Bankrupt .
District of Sse
On this day of ,A.D.18  , at _ , somes
before me , of , in the County of , and State
of , and makes and says that he has made a careful search
for the Bill of Exchange, [or, note,] the particulars whereof are under writ-
ten, and which ha been proved under this estate by , but that he,

this Deponent, has not been able to find the same, and verily believes that
the same has been lost or mislaid; and this Deponent further says that he
has not, nor has the said , or any person or persons,
to their use, to this Deponent’s knowledge or belicf, negotiated the said
Bill, [o7, pote,] nor in any manner parted with, or assigned, the legal or ben-
eficial interest therein, or any part thereof; and that he, this Deponent, is
the person now legally and beneficially interested in the same, and entitled
to receive for his own use all dividends in respect thereof.

Bill or note above referred to..

 

 

 

 

Date. Drawer or Maker. Acceptor. Sum.
Subscribed and to, before me, , on this day of ‘i
A.D. 18

?

Register, or U. S. Commissioner [or, other proper officer. |

Upon the above-named Deponent signing the annexed letter of indemni-
ty, and giving security to the satisfaction of the official assignee, I direct the
dividend to be paid to him. ,

Se
Register in Bankruptcy.
58
914 FORMS IN BANKRUPTCY.

Form of notice of Indemnification to Register.
- Jn the matter of , of ; Bankrupt .

Sm: The Bill [or, Note] mentioned below, proved by , under this
estate, having been lost or mislaid, and the following dividend having been
declared thereon, but not yet paid, viz :— , in consideration of
your paying to or to order the dividend above men.
tioned , hereby undertake to indemnify you against all claims of any
other person to the said dividend, or any part thereof; and from all loss,
damage, and expense, which you or your Executors or Administrators may
sustain by reason of your making such payment to me; and if it should
hereafter appear that the said sum of $ ,or any part thereof, with
the dividend already received or declared up to this day, exceed the amount
of the Bill [or, Note] hereby engage to repay the same to you, or to the as-
signee, or assignees, of the above estate, with interest at the rate of per
cent. per annum from this day.

Dated at , this , A.D. 18

Bill or Note above referred to.

 

Date. Drawer or Maker. Acceptor. : Sum.

 

 

 

a
Suretics of Creditor receiving Dividend.
To Mr, Cs RReGister inn Bankruptcy.

Form No. 28.
NOTICE AND REQUEST OF ASSIGNEE,
(2d meeting of Creditors.)

In the District Court of the United States,
For the District of i

 

Tn the Matter of
In Banxgrvptcy.

Bankrupt .

 

To the Ton, —______, Judge of the District Court,
lor, Register in Bankruptcy] in the above District.
Sr: I, [or, we,] the Assignee of the estate of said Bankrupt, respectfully
represent, that have accepted the appointment of Assignee of said estate ;
FORMS IN BANKRUPTCY. 915

that the period of three months has elapsed since the date of the Adjudica-
tion of Bankruptcy in said case, and request that the Court will order a Gen-
eral Mecting of the Creditors of said Bankrupt , to which may make
report of proceedings in _ trust, according to the provisions of the T'wenty-
seventh Section of the Bankrupt Act of March 2, 1867.

——_—_——_. , Assignee.

Order Thereon—By the Court, or Register.

Upon the foregoing application of , Assignee of the estate of ;
Bankrupt , it is Ordered that a second General Meeting of the Creditors of
said Bankrupt be held at ,in said District,on the dayof ,A.D.
18 ,at o’clock m.,at the office of , one of the Registers in
Bankruptcy in said District, for the purposes named in the Twenty-seventh
Section of the Bankrupt Act of March 2, 1867.

And it is further Ordered, That the Assignee give notice of said meeting
by sending written or printed notices by mail, post-paid, of the time and place
of said meeting to all known Creditors of said Bankrupt; and that also
notify the Bankrupt to be present thereat; and shall also publish notice
of the time and place of said meeting on two different days in the newspaper

called the , printed at , at least days prior to said
meeting.
Witness the Honorable , Judge of the said Court, and
{ Seal of the seal thereof, at , in said District, on the
the Court.§ day of , A.D. 18

ae yee
Clerk of District Court, for said District.

Form No. 29.

FORM OF RETURN OF ASSIGNEE TO BE SUBMITTED TO THE REGISTER IN
RANKRUPTCY PRESIDING AT SAID MEETING.

 

In the Matter of
In BankRUPTCY.

Bankrupt .

 

District of 988s
I,[or, we,] Assignee of the estate of , 2 Bankrupt, do certify that
have caused the notices required by the foregoing order to be published
in the newspaper called the , printed at ,on the |
day of ,A.D.18  ; and that have caused written or printed
notices of the time and place of said meeting to be sent by mail, post-paid, to
all known Creditors of said Bankrupt. Said notices were mailed at the post-
oftice in , on the day of ,A.D.18  , at days
prior to the date appointed for the said meeting.

 

 

—_—_—_—, Assignee.
Subscribed and to, at , this day of , A.D. 18.
Before me, ee
Register in Bankruptcy.

{N.B.—Like forms may be used for the third meeting of Creditors, and for subsequent meetings, if such are
ordered by the Court.)
916 FORMS IN BANKRUPTCY.

Form No. 30.
DIVIDEND MEETING.

In the District Court of the United States,
For the District of .
}

 

In the Matter of
In Bankruptcy.

Bankrupt . |

 

At , in said District,
on the day of , A.D. 18
District of 58S.

Memoranpum.—That at a meeting of the Bankrupt’s Creditors duly called
and held this day for the purposes set forth in the 27th Section of the Act
entitled “An Act to Establish a Uniform System of Bankruptcy throughout
the United States,” approved March 2, 1867, we, the undersigned, being the
majority in value of the Creditors of the said Bankrupt present, or represent-
ed at this eae seeing that it appears by the accounts of the Assignee

 

, now filed, that there is a balance of dollars, standing
to the credit of this estate, in the Bank of , and a balance of
dollars in the hands of the , do Resolve that after payment of

all proper costs, charges, and expenses, and after deducting and retaining a
sum sufficient for all undetermined claims, which, by reason of the distant
residence of the Creditors, or for other reason satistactory to us, have not
been proved, and for other expenses and contingencies, the sum of

dollars remains for distribution among the Creditors of the above-named
Bankrupt, who have proved their debts against the said Bankrupt’s estate.
And it was further Resolved by the undersigned Creditors that the said
sum be divided among the Creditors who have proved their claims against
said estate, and that such proceedings be had for declaring and paying said
dividend as are required by the 27th Section of said Act.

>
J
Creditors.

Thereby certify to the above. pig et ie
Register in Bankruptcy.

[N. B.—In case one half in value of the Creditors shall not be represented at such meeting,
the fact shall be so stated in the Memorandum, and the amount to be divided, and the order
for a dividend, shall be made and signed by the Assignee in accordance with the provisions of
the 27th Section of said Act.]

(N. B.—Like forms may be used for the further proceedings provided for in the 28th Section
of said Act. ]
FORMS IN BANKRUPTCY. 917

Form No, 31.
NOTICE OF DIVIDEND.

In the District Court of the United States,
For the District of :

 

In the Matter of
In Banrgrvrprcy.

Bankrupt .

 

At , on the day of ,AD.18 .

Str: I hereby inform you that you may, on application ‘at my oflice,
, on the day of , or on any day thereafter,
between the hours of ,recelve a Warrant for the Divi-
dend due to you out of the above estate. If you cannot personally attend,
the Warrant will de delivered to your order on your filling up and signing
the subjoined letter. The bills and securities, if any, exhibited at the time
of the proof of your debt must be produced to me before the Warrant of
Dividend can be received.
Tam, sir, your obedient servant,
, Assignee.

 

 

To
Subjoined letter authorizing Assignee to give Warrant to party other than
Creditor.
: 211845
To Mr.
Assignee in Bavkerupts y of the estate of , Bankrupt.
S1r: [or, Messrs.] Please to deliver to the Dividend Warrant
payable to me out of the above estate.
Yours, &c.,
, Creditor.
Form No. 32.

LIST OF PROOFS AND CLAIMS FOR DIVIDEND.

In the District Court of the United States,
For the District of

 

In the Matter of
In Bankruptcy.

Bankrupt .

 

At , in said District,
onthe dayof ,A.D.18
918 FORMS IN BANKRUPTCY.

A list of debts proved and claimed under the Bankruptcy of ’
aforesaid, with Dividend at the rate of per cent. this
day declared thereon by Mr. , one of the Registers in
Bankruptey of said District Court.

Sum proved.

Creditors. a ‘
The claims to be set sea

No.| ‘79 be placed alphabetically, and the names of all the par-| forth in thesame man-| Dividend.

ties to the proof to be carefully set forth. ner at the end of the
whole of the profits.

 

Dollars. Cents.; Dolls. | Cts,

 

 

 

 

 

7

Register in Bankruptcy.
919

FORMS IN BANKRUPTCY.

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"ES OAT UOT :
920 FORMS IN BANKRUPTCY.

Form No. 34.
PETITION OF ASSIGNEE FOR POWER TO RELIEVE PROPERTY FROM LIEN.

In the District Court of the United States
For the District of :

 

In the Matter of
In BANKRUPTCY.

Bankrupt .

 

DQ: os,

, Assignee of the estate of said Bankrupt, respectfully rep-
resents that a certain portion of said Bankrupt’s estate, to wit: [ere describe
the estate or property and its estimated value,] is subject to a mortgage, [De-
scribe the mortgage, | or to a conditional contract, [ Describing it,| or to a lien,
[ Deseribe the origin and nature of the lien,] or, (if the property be personal
property,) has been pledged or deposited and is subject to a lien for, [De-
seribe the nature of the lien,| and that according to the best judgment of
your Petitioner it would be for the interest of the Creditors of said estate
that said property should be redeemed and discharged from the lien there-
on. Wherefore pray that may be empowered to pay out of the assets

of said estate in hands the sum of , being the amount of said lien, in
order to redeem said property therefrom. ;
Dated this day of , A.D. 18

, Assignee.

(N. B.—If the prayer is for a sale of the property, strike out all after the words ‘‘judgment
of your Petitioner,” and insert ‘‘it would be for the interest of the creditors of said estate that
said property should be sold, subject to said mortgage, lien, or other encumbrance. Where-
fore he prays that he may be authorized to make sale of said property, subject to the encum-
brance thereon, in the manner prescribed by the general order for the sale of property not
encumbered.”

Form No. 35.
ASSIGNEE’S RETURN WHERE TIERE ARE NO ASSETS,

In the District Court of the United States,
For the District of ‘

 

—_/

In the Matter of

Ix Baxxgrvurtcy.

 

Bankrupt .
At , in said District,
on the dayof ,AD.18 .
District of 88s
On the day aforesaid, before me comes , of ,in the County

of , and State of , and makes , and says that he, this
FORMS IN BANKRUPTCY. 921

Deponent, as Assignee [or, one of the Assignees] of the estate and effects of
the above-named Bankrupt , neither received nor paid any moneys on ac-
count of the estate.

Subscribed and to, at , this day of ,AD.18 .

Before me, a eee Ne ee een enee
Register in Bankruptcy.

form No. 36.

ASSIGNEE’S NOTICE FOR SETTLEMENT OF HIS ACCOUNTS PREPARATORY
TO FINAL DIVIDEND.

In the District Court of the United States,
For the District of ‘

 

In the Matter of
In Bankruptcy.

Bankrupt . ;

 

At ,onthe day of , A.D, 18

TO) —— es ey
Sir:

This is to give you notice that I have filed my final accounts as assignee
of the estate of , Bankrupt , in said Court, and that on the
day of next, I shall apply to said Court for the settlement of my
said accounts, and for a discharge from all liability as Assignee of said estate
in accordance with the provisions of the twenty-eighth section of the Bank-
rupt Act of March 2, 1867.

Yours, &e., —_—______ ______, Assignee.

Porm No. 37.
AFFIDAVIT TO BE MADE BY ASSIGNEE.

In the District Court of the United States,
For the District of 5

 

In the Matter of

In BankRUPTCY.

 

Bankrupt .
District of > Sse
On this day of ,A.D.18  , before me comes 5
of , in the county of , and State of , and makes
, and says that he, this Deponent, was, on the day of 5

A.D.18 , appointed Assignee of the estate and effects of the above-named
Bankrupt, and that as such he has conducted the settlement of the
922 FORMS IN BANKRUPTCY.

said estate. That the account hereto annexed containing sheets of
Paper, the first sheet whereof is marked with the letter [ Reference may
here also be made to any prior account filed by Deponent] is true, and such
account contains entries of every sum of money received by Deponent, on
account of the estate and effects cf the above-named Bankrupt , and that
the payments purporting in such account to have been made by Deponent
have been so made by him. And he asks to be allowed for said payments
and for charges of settlement as set forth in said accounts.
, Assignee.

Sworn to and subscribed at , in said District of , this
day of ,AD.18 .
Before me,

Register in Bankruptcy.
923

FORMS IN BANKRUPTCY.

 

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924 FORMS IN BANKRUPTCY.

Form No. 39.
ORDER OF SETTLEMENT AND DISCHARGE OF ASSIGNEE.

In the District Court of the United States,
For the District of :
|

 

In the Matter of

In BANKRUPTCY.
Bankrupt .

District of > 9s:

The foregoing account having been presented for allowance, and having
been examined and found correct, it is Ordered, That the same be allowed,
and that the said Assignee be discharged according to the provisions of the
28th Section of the Bankrupt Act of March 2, 1867.

fe ee
District Judge, (or, Kegister.]

Form No. 40.

PETITION FOR REMOVAL OF ASSIGNEE.

In the District Court of the United States
For the District of

?
2

 

In the Matter of

In BankRUPTCY.

 

Bankrupt .
To the Hon. -
Judge of the District Court, for the District of :
District of , 8s
The petition of , one of the parties interested in the settlement

of said Bankrupt’s estate, petitioning, respectfully represents, that 7
heretofore appomted Assignee of said Bankrupt’s estate, [Here set forth the
particular cause or causes for which such removal is requested. |

Wherefore pray that notice may be served upon said ;
Assignee as aforesaid, to show cause, at such time as may be fixed by the
Court, why an order should not be made removing him from said trust.

ae

Subscribed and sworn for, affirmed] to, this day of , A.D. 18
at in said District.
Before me,

?

|

Register in Bankruptcy.
FORMS IN BANKRUPTCY. 925

form No. 41.
NOTICE OF MOTION FOR REMOVAL.

In the District Court of the United States
For the District of

?

 

In the Matter of
In Banxrurtcy.

Bankrupt .

 

At ,onthe dayof ,AD.18 .
To

Sh
Assignee of the estate of » Bankrupt.

You are hereby notified to appear before this Court, at , on the
day of ,A.D.18 ,at o'clock ~—_—m., to show cause (if any you
have) why you should not be removed from your trust as Assignee as afore-
said, according to the prayer of the Petition of , one of the parties in-

terested in said estate, filed in this Court on the day of , A.D, 18
in which it is alleged, | Here insert the allegation of the Petition. |
Hereof fail not. ———————  ——___.,, Clerh, &c.
[{N. B.—To be served by the Marshal, and return to be made in usual form.]

?

Form No. 42.

ORDER FOR MEETING OF CREDITORS TO CONSIDER QUESTION OF REMO-
VAL OF ASSIGNEE AND APPOINTMENT OF HIS SUCCESSOR.

In the District Court of the United States,
For the District of a

 

In the Matter of

In Bankruptcy.

 

Bankrupt .
At ,onthe dayof ,AD.18 .
District of , sss
WueEreEas , of , has filed his petition in this Court for
the removal of , heretofore appointed Assignee of the estate of
sald , Bankrupt , setting forth, [Here ensert the allegations of

the Petition.]
It is Ordered, That the Clerk of this Court give notice to the Creditors

of , by letter to be mailed to each within days after the date
of this order, that a meeting of said Creditors will be held at ,on
the day of ,A.D.18 ,at o'clock m.,at which Mr. , one

of the Registers of this Court, will preside, for the purpose of considering
the question of recommending such removal, and appointing a successor in
said trust. District Judge.

 

[N. B.—If the meeting is called upon an application of a majority in number and value of
the Creditors of the Bankrupt, the Form may be varied accordingly.

(The vote for removal is substantially the same Form as that for the appointment of As-
signee in Form No. 15, substituting “‘removal” for ‘appointment ;” and the Form of vote for
choice of new Assignee will be substantially the same as the Form referred to.]
926 FORMS IN BANKRUPTCY.

Porm No. 438.
ORDER FOR REMOVAL OF ASSIGNEE.

In the District Court of the United States,
For the District of

 

In the Matter of

In BaNERUPTCY.
Bankrupt .

ae

At ,onthe day of ,AD.18 .
District of 5 8S!

Whereas , of , did, on the day of

A.D.18 , present his Petition to this Court, stating as therein set forth, and
raying that , the Assignee of the estate of said >
Baik ‘upt, might be remoy ed:

Now, THEREFORE, upon reading the said Petition of the said
and the evidence submitted therewith, and upon hearing what was alleged
by Mr. , of counsel on behalf of said Petitioner, and by Mr. ;
of counsel for , Assignee as aforesaid, and upon the evidence sub-
mitted on behalf of said Assignee,

It is Ordered, That the said be removed from the trust of As
signee of the estate of said Bankrupt, and that the costs of the said Petition.
er incidental to said Petition be paid by said , Assignee, [or, out
of the estate of the said , subject to prior charges. |

Witness the Honorable , Judge of the said Court, and

Seal of y the seal thereof, at yin said District, on the

the Court. day of i A.D. 18

 

5 es eh,
Clerk of District Court for said District.
Form No. 44.

FURTHER ORDER.

In the District Court of the United States,
For the District of

 

In the Matter of
In Bankruptcy.

 

Bankrupt .
At , on the day of ,A.D.18 .
District of S8h
‘Wuereas , heretofore appointed Assignee of the estate of
said Bankrupt , has, upon the Petition of yand. after hearing there-

on, been removed from said trust,

It is Or dered, That a meeting of the Creditors of said be held at 5
in in said District, on the day of ,A.D.18  , at
which Mr. , one of the r egisters of this Court, shall pr eside, for the
choice of a new Assignee of said estate,
FORMS IN BANKRUPTCY. 927

al

And it is further Ordered, That the Clerk of this Court give notice to said
Creditors of the time, place, and purpose of said meeting, by letter to each,

to be deposited in the mail within days from the date of this order,
Witness the Honorable , Judge of the said Court, and
{ Seal of the seal thereof, at , in said District, on the
the Court. day of , A.D. 18

 

Clerk of District Court, for said District,

Form No. 45.
ORDER FOR BANKRUPT’S EXAMINATION.

In the District Court of the United States,
For the District of ;

 

In the Matter of
In Bankruptcy.

Bankrupt .

 

At , on the day of , A.D. 18
District of 5 oss

On the application of , Assignee of said Bankrupt, [or, Creditor
of said Bankrupt, as the case may be,] it is Ordered, That said Bankrupt at-
tend before , one of the Registers in Bankruptcy of this Const
at his office, [Describing the place] on the day of ,at —o’clock
m.,to submit to the examination required by the 26th Section of the
Bankrupt Act of March 2, 1867, and that a copy of this order be delivered

to him, the said , forthwith.
Witness the Honorable , Judge of the said Court, and
{ Seal of » the seal thereof, at , in said District, on the
the Court.’ day of , A.D. 18

Se
Clerk of District Court, for said District.

[N. B.—Where the wife of the Bankrupt is to he examined the like form may be used, adding
after the description of the application the words ‘ and for good cause shown to this Court, she
be required to attend before said court, [or, before ,® Register in Bankruptcy.’’]

Form No. 46.

EXAMINATION OF BANKRUPT OR ANY WITNESS EXAMINED RELATIVE TO
THE BANKRUPTCY.

In the District Court of the United States,
For the District of .

 

In the Matter of
In BankKRUPTCY.

Bankrupt .

 

At , in said District, on
the day of , A.D. 18
Before Mr. ;
One of the Registers in Bankruptcy of said Court.
928 FORMS IN BANKRUPTCY.

District of 8s:

, of , in the "County of ,and State of :
being duly and examined at the time and place above mentioned,
uponh “oath says [Here insert substance of examination of party.)

—_———- , Leegister.
/
Form No. 47.

DECLARATION TO BE MADE BY BANKRUPT OR HIS WIFE.

In the District Court of the United States,
For the District of s

 

In the Matter of
In Bankruptcy.

 

Bankrupt .
At , in said District, on
the day of , A.D. 18
District of 785i

The person declared a Bankrupt under a Petition for Adjudication of Bank-
ruptcy, filed on the day of ,in the year of our Lord one
thousand eight hundred and , do solemnly that I will make
true answer to all such questions as may be proposed to me respecting all
the property of the said , and all dealings and transactions relating

thereto, and will make a full and true disclosure of all that has been done
with the said property, to the best of my knowledge, information, and belief.

Bankrupt, [ Or, , the wife of the said : Bankrupt]
Subscribed and to, this day of , A.D. 18
Before me, a eee

Register in Bankruptcy.

Form No. 48.
SUMMONS OF WITNESS AFTER ADJUDICATION.

In the District Court of the United States,
For the District of ; :

 

In the Matter of

In Bankruptcy.
Bankrupt .

 

District of 5 882
Whereas, , of , in the County of , and
State of , has been duly declared and adjudged Bankrupt, within the
true intent and meaning of the Act entitled “ An Act to Establish a Uniform
FORMS IN BANKRUPTCY. 929

System of Bankruptcy throughout the United States,” approved March 2,
1867, and such Bankruptcy is in due course of prosecution in the District
Court of the United States for the District of ) at
in said District,

These are to require you, to whom this summons is directed, personally
to be and appear before , Esquire, one of the Registers im Bank-
ruptcy of the said Court, acting in the matter of the said Bankruptcy, on
the day of ,at o'clock ~—m., precisely, at [Here insert place of
examination | , then and there to be examined in relation to said
Bankruptcy according to the provisions of said Act.

And hereof fail not.

’

Witness the Honorable , Judge of the said Court, and
{ Sealof 1 the seal thereof, at , in said District, on the day
the Court.s of , A.D. 18

Sa ees
Clerk of District Court, for said District.

 

Form No. 49.
RETURN OF THE ABOVE SUMMONS.
In the District Court of the United States,

 

 

For the District of
In the Matter of
In Banxrvrtcy.
Bankrupt .
District of , Se

On this day of ,A.D.18 , before me came ;
of , in the county of , and State of , and
makes , and says that he, this Deponent, did, on , the day
of , one thousand eight hundred and , personally serve ,
of , in the County of , and State of , with a
true copy of the Summons hereto annexed, by delivering the same to :
and he, this Deponent, further makes , and says that he is not inter-

ested in the proceedings in Bankruptcy named in said Summons.

Subscribed and to,this day of ,AD.18 .
Before me, Re eT See OIE,
Register in Bankruptcy.

[N. B.—In case the witness is to be summoned before adjudication, the form may be altered
by substituting for the recital the following words :—‘‘ By virtue of the Petition for Adjudica-
tion in Bankruptcy filed in said Court by » against ,in the District Court
of the United States for the District of ay

59
930 FORMS IN BANKRUPTCY.

Form No. 50.
FORM OF CERTIFICATE UNDER SECTION SIX.

In the District Court of the United ae
For the District of

 

In the Matter of
In Bankruptcy,

Bankrupt .

 

District of 1883
, one of the Registers of said Court in Bankruptcy, do
hereby certify that in the course of the proceedings in said cause before me
the following question arose pertinent to the said proceedings, and was
stated and agreed to by the counsel for the opposing parties, to wit: Mr.
, who appeared for the Bankrupt, and Mr. » who
appeared for , one of the Creditors of said Bankrupt, [4dd “other
names tf others are interested | and [LZere follows a summary of the evidence
upon the point or matter to be submitted to the Court, and the question of law
arising thereon as agreed to by the counsel. |
And the said parties requested that the same should be certified to the
Judge for his opinion thereon.
Dated at , the day of , A.D. 18

age og ee,
Register in Bankrupicy.

Form No. 51.
PETITION OF BANKRUPT FOR HIS DISCHARGE,

 

In the Matter of
In Bankruptcy,

Bankrupt .

 

To the Hon. —————— —————_, Jirdge of the District
Court of the United States, for the District of
A.B., ,in the County of , and State of ‘
in said District, respectfully represents, that on the day of

last past, he was duly declared a Bankrupt under the Act of Congress in
that case made and provided; that he hath duly surrendered all his prop-
erty and rights of property, and fully complied with and obeyed all the or-
ders and directions of the Court tonching his Bankruptey, and is ready to
submit himself to any other and further examinations, orders, and directions
which the Court may require.

(N. B.—If this Petition is filed within Iess than six months after the filing of the original
Petition, it should state that no debts have becn proved against the Bankrupt, or that no assets
have come to the hands of the Assignee. ]
FORMS IN BANKRUPTCY. 931

WHEREFORE HE Prays that he may be decreed by the Court to have a
fall discharge from all‘his debts provable under said Bankrupt Act, and a
certificate thereof granted according to the said Act of Congress.

Dated this day of , A.D. 18
, Bankrupt.

Order of Court thereon.
District of Ao

On this day of ,A.D.18  , on reading the foregoing
Petition, it is Ordered by the Court, That a hearing be had upon the sme
on the day of ,A.D.18  , before said Court, at ;
in said District, at o’clock m.; and that notice thereof be published in

newspapers printed in said District for times once a week; and
that all Creditors who have proved their debts, and other persons in inter-
est, may appear at the said time and place, and show cause, if any they
have, why the prayer of the said Petition should not be granted.

And it is further ordered by the Court, That all such Creditors whose
places of residence are known shall be entitled to a service of notice of the
said Petition and order, either personally or by letter addressed to them at
their known usual place of residence, attested by the Clerk of the Court, or
served at their usual place of abode by the Marshal or his deputy, or sent by
mail, whereof due notice shall be given.

Witness the Honorable , Judge of the said Court, and
{ Seal of the seal thereof, at ,in said District, on the
the Court. day of é A.D. 18

 

Clerk of District Court, for said District.

Form No. 52.

NOTICE BY LETTER TO CREDITOR THAT BANKRUPT HAS PETITIONED
FOR DISCHARGE,

In the District Court of the United States,
For the District of ‘

 

In the Matter of

In Bankruptcy.

Bankrupt .

 

At , in said District, on
the day of , A.D, 18
District of » 93.

Sin: Take notice that a Petition has been filed in said court by 5
of , in said District, duly declared a Bankrupt under the Act
of Congress of March 2, 1867, for a discharge, and certificate thereof, from
all his debts, and other claims provable under said Act, and that the
day of next, at. o’clock _m., is assigned for the hear.
ing of the same, when and where you may attend and show cause, if any
you have, why the prayer of the said Petition should not be granted.

 

 

Clerk of the District Court.
To

 
9382 FORMS IN BANKRUPTCY.

_ [N. B.—The certificate of the Clerk that these letters were duly mailed to each Creditor,
and that the proper postage stamps were placed thereon, will be evidence of the fact of notice.
If any are delivered to the Creditors or left at their usual place of residence, the persons so
delivering or leaving them should make affidavit as follows :

Affidavit of Service of Notice.

District of » oss

I, Marshal, [or, Deputy Marshal, as the case may be,|] make oath, that I
delivered letters of which a copy is hereto annexed to the following named
persons, at the times and places stated in connection with the name of each,
and that I left at the last and usual place of abode in said District copies of
the same letter, with the following named persons, on the day and hour
mentioned in connection with the name of each. [Here insert names and
other required particulars. |

Served personally day of , A.D, 18

ee
Marshal, [or, Deputy.]
[ Or, left at last usual place of abode day of , A.D. 18

Marshal, [or, Deputy.
This day of ,A.D.18 , subscribed and to, be-

fore me.

aS ee,
One of the Registers in Bankruptcy of said Court.

Form No. 538.

CREDITOR’S SPECIFICATION OF THE GROUNDS OF HIS OPPOSITION TO
THE BANKRUPT’S DISCHARGE. —

In the District Court of the United States,
For the District of ;

 

In the Matter of

In Banxrvrptcy,

 

Bankrupt .
; , of , in the County of , and State of ‘
Creditor, having proved ; debt against the estate of
said , Bankrupt, and having received notice of his Petition for

a discharge from his debts, do hereby oppose the granting of said discharge,
and ‘for the grounds of such opposition do file the following specification :
[Here insert one or more of the causes which should prevent the granting of
the Bankrupt’s discharge according to the provisions of Section Twenty-nine
of said Act. |

————-,, Creditor, &e.
To ———_—_ ——_—_—, District Judge,
[or, Register in Bankruptcy] of said District.
FORMS IN BANKRUPTCY. 933

Form No, 54.

CREDITOR’S PETITION.

To the Honorable , Judge of the District Court of the United
States for the District of ;

Tue Petition of , of the , of i
in the County of , and State of , Respectfully
shows :—That he is a Creditor of , who for a period
of months next preceding the date of the filing of this Petition, has re-
sided at , in County of , and State of | 7
and District aforesaid ;—That Your Petitioner’s demand is provable against
the said , in accordance with the provisions of the Act of Con-
gress entitled “An Act to Establish a Uniform System of Bankruptcy through-
out the United States,” approved March 2, 1867; That he believes that
said owes debts to an amount exceeding the sum of Three
Hundred Dollars; That Your Petitioner’s demand exceeds the amount of
Two Hundred and Fifty Dollars; and that the nature of Your Petitioner’s
demand against the said is as follows :—

A certain promissory note signed by said » payable to the order of
Your Petitioner, [or, naming the party to whose order the said note is made payable, ] of
which the following is a Copy, to wit: [o7, set forth evidence of indebtedness in any other
form to a liquidated amount, exceeding Two Hundred and Fifty Dollars, to meet the case. ]

And Your Petitioner further represents, that within the Six calendar Months

next preceding the date of this Petition, the said did com-
mit an act of Bankruptcy within the meaning of said Act, to wit: In that the
said = did heretofore, to wit: on the day of F
A.D.18 , depart out of, and from the State of of which he is

an inhabitant as aforesaid, with intent to defraud his creditors, [or, being
absent during said period, he has, with intent to defraud his creditors, re-

mained absent from said State :]}— ‘
[ Or,

That the said , within the period aforesaid, to wit: On
the day of ,A.D.18  , within said District, did conceal

himself, [or, did disguise himself,] to avoid the service of Legal Process in an
action for the recovery of a debt or demand, provable under said Act, to wit:
‘To avoid the service of Legal Process in a suit brought
by , in the Court, of the State of ;
[or, any other Court] in which such process had been issued, to be served
upon the said , by , Marshal for said District,
[or, Sheriff, Constable, or other Officer, or party, as the case may be,] at which
time the said did conceal himself, and remain secreted, to
avoid the service of said Process, so that the said officer or party having the.
same to serve upon said Debtor was unable to find him, in order to make
proper service of the same :—

[ Or
That the said , within the period aforesaid, to wit:
At , in said District, on the day of

, A.D.
18 , being possessed of certain Property, to wit: [ Here describe the Proper-
ty,| and he, being aware that Legal process had been issued, [or, was about
to be issued,] to be levied thereon at the Suit of some one or more of his
Creditors, did conceal [or, remove; or, destroy the identity] of said Proj.er-
ty to avoid its being Attached, Taken, or Sequestered on such Process :—
934 FORMS IN BANKRUPTCY.

[ Or
That the said , Within the period aforesaid, to wit :—At ;
in said District, on the day of ,A.D.18  , being possessed of

certain Estate, Property, Rights or Credits, to wit: [Here describe the Prop-
erty and where sitwated,| did make an Assignment [or, Gitt, Sale, Convey-
ance, or Transfer, as the case may be] of the same [o7, of any part thereof—

mentioning the part] to , of , in the County of ;
and State of , With intent to delay [or, hinder; o7, defraud] the
Creditors of him, the said —

[ Or,

That the said , Within the period aforesaid, and within said Dis-
trict, to wit: At , has been arrested and held in custody under and
by virtue of mesne process, [ov Execution ; v7, us the case may be,] issued out
of the Court of the United States for the District of

’
[or, of any Court of any State, District, or Territory,] within which such
debtor resides or has property, founded upon a demand, in its nature, prov-
able against the Bankrupt’s Estate under said Act, and for a sum exceeding
One Hundred Dollars; and that such Process is remaining in force, and not
discharged by payment, or in any other manner provided by the Laws of
such State applicable thereto, for a period of Seven days :—

[ Or,
That the said , Within the period aforesaid, and within said Dis-
trict, to wit :—On the ‘day of ,A.D.18 , being Bank-
rupt, [or, insolvent ; 07, in Contemplation of Bankruptcy, or Insolvency, ] did
make to , of ,in the County of , and
State of ,a payment [or, Gift, Grant, Sale, Conveyance, or
Transfer} of money [or, of any other Property, Estate, Rights or Credits,]
[or, did give to , of , in the County of , and
State of ,a Warrant to Contess Judgment, or, did procure, or
Suffer his Property to be taken on Legal Process,] in favor of , of
,in the County of , and State of ; the
said judgment to be confessed, issuing out of the Court of :
with the intent to give a preterence to , of , in the
County of , and State of ; [ev, to one or more of his
Creditors ; or, with the intent, thereby, to give preference to , of
, in the County of , and State of , being a
person, [o7, persons,| who were liable for him as Endorser, Bail, Sureties, or
otherwise, [describing the particular relation, or, with the intent by such
disposition of his Property to Defeat, or Delay the operation of said Act.]

[ Or,
‘That the said , Within the period aforesaid, and within said Dis-
trict, to wit: On the day of »A.D.18  , being a Banker,

[or, Merchant ; or, Trader; 07, as the case may be,] has fraudulently stopped,
or, suspended (and has not resumed) payment of his Commercial Paper
within a period of fourteen days.
thety mate of the acts is relied upon as the act of Bankruptey of Debtor, the same must be particu
Wuerrrort your Petitioner prars that he, the said , may
be declared a Bankrupt, and that a Warrant may be issued to take possession of
his Estate; that the same may be distributed according to law; and that such
further proceedings may be had thereon as the law in such case prescribes.

te Tee er aah hae Se ee ee
Solicitor [or Attorney. ] Petitioner.
FORMS IN BANKRUPTCY. 955

Oath to Foregoing Petition.
Untrep States or America,
District of » ose
I, , the Petitioner above named, do hereby make solemn oath
that the statements contained in the foregoing Petition subscribed by me
are true, so far as the same are stated of my own knowledge, and that those
matters which are stated therein on information and belicf, are true accord-
ing to the best of my knowledge, information, and belief,
(=—— ost are 9
Petitioner.
Subscribed and sworn [o7, affirmed] to, before me, this day of
A.D. 18
——————— —__.,
District Judge, [or, Register in Bankruptcy, or, U. 8. Commissioner. |

(N. B.—In case the parties proceeded against are a Copartnership, or a Corporation, the
above forms may be varied accordingly.]

Form No. 55.
DEPOSITION AS TO PETITIONING CREDITOR'S CLAIM.
[To be filed with Creditor’s Petition.]

In the District Court of the United States,
For the District of ;

 

In the Matter of

.

Against whom a Petition for Adjudi- In BaNenverey,

cation of Bankruptcy was filed on

 

the day of , A.D. 18
At , in said District,
on the day of , A.D. 18
Before , one of the Registers
of said Court, in Bankruptcy.
District of 185
of , in the County of , and State of ;

being duly Sworn [or, affirmed] and Examined, at the Time and Place above
mentioned, upon his Oath, [o7, affirmation,] says that the said

was, [or, were,] on and before the day of ; ,AD.18 , and
still justly and truly indebted unto this Deponent, in the sum of,—[ Here

ive a particular description of the Debt.] ;
M a ——— —., Petitioning Creditor.

 

On the day of , before me personally appeared , the
above-named Petitioning Creditor, and was duly sworn to the truth of the

foregoing statement.
we ————_ ——__, Register in Bankruptcy.
936 FORMS IN BANKRUPTCY.

Form No. 56.
DEPOSITION OF WITNESS TO ACT OF BANKRUPTCY.
[To be filed with Creditor’s Petition. ]

In the District Court of the United States,
For the District of 3

 

In the Matter of

. ¢inB cY.
Against whom a Petition for Adjudi- Renee

cation of Bankruptcy was filed on

 

the day of ,AD.18 . :
At ,in said District, on
the day of , A.D. 18
Before , one of the Registers
of said Court in Bankruptcy :—
District of , 88:

being duly Sworn, [or, Affirmed,] and Examined, upon his Oath, [o7, Affirma-
cont says that, [Here set forth particularly the Witness’s knowledge of the
Act of Bankruptcy alleged to have been committed by the party proceeded
against. | :

On the day of 5 appeared personally , the
above-named Witness, and was duly sworn to the truth of the foregoing
statement.

, Register in Bankruptcy.

Form No. 5%.
ORDER TO SHOW CAUSE, UPON CREDITOR’S PETITION.

In the District Court of the United States,
For the District of ;

 

In the Matter of

: i . 4. }IN Baygre :
Against whom a Petition for Adjudi- a Snr

cation of Bankruptcy was filed on
the day of , A.D. 18

J

District of 5 88!

Upon filing proofs sustaining the allegations of the Petition aforesaid, it 18
Ordered, That the said do appear at this Court, as a Court of
Bankruptcy, to be holden at , in the County of , and
State o , and District aforesaid, on the day of , at

o'clock _ m., and show cause, if any there be, why the Prayer of said
Petition should not be granted; and—

It is further Ordered, That a copy of said Petition, together with a copy

of this order, be served on said , by delivering the same to him

 
FORMS IN BANKRUPTCY. 937

personally, or by leaving the same at his last usual place of abode, in said
district, at least five days previous to the day herein required for his ap-
pearance.

Witness the Honorable , Judge of the said Court, and
eee the seal thereof, at , in said District, on the day
{ime Court. | of , A.D. 18

y

Clerk of District Court, for said District.

Form No. 58.
ADJUDICATION OF BANKRUPTCY—CREDITOR’S PETITION.

In the District Court of the United States,
For the District of ‘

 

In the Matter of
In Banxrvrtcy.

Bankrupt .

 

At ,in said District, on the
day of ,AD.18 .
District of , 8s:
This cause came on to be heard at , in said Court, and

[ Here state the proceedings, whether there was no opposition, or, if opposition,
what proceedings were had, and when and where, and what counsel appeared
Sor the several parties. |

And thereupon, and upon consideration of the proofs in said cause, (and
the arguments of counsel thereon, if any,) it was found that the facts set
forth in said Petition were true, and it is therefore adjudged that
became Bankrupt within the true intent and meaning of the Act entitled
“An Act to Establish a Uniform System of Bankruptcy throughout the
United States,” approved March 2, 1867, before the filing of the said Peti-
tion, and he is therefore declared and adjudged a Bankrupt accordingly.
And it is further ordered that the said Bankrupt shall, within five days atter
the date of this order, make and deliver, or transmit by mail, post paid, to
the Marshal, as Messenger, a Schedule of his Creditors, and Inventory of his
estate, in the form, and verified in the manner required of the Petitioning

debtor by the said Act.

Witness the Honorable , Judge of the said Court, and
rae the seal thereof, at , in said District, on the day
eal O:
the Court. s of , A.D. 18

ee
Clerk of District Court, for said District.
938 FORMS IN BANKRUPTCY.

Form No. 59.

WARRANT OF SEIZURE UPON ADJUDICATION OF BANKRUPTCY ON CRED-
ITOR’S PETITION.

In the District Court of the United States,
For the District of ‘

 

In the Matter of

In BangRvrptcy.

Bankrupt .

 

District of gSee
To the Aarshal of said District, [or, to either of his Deputies,| Greeting -

Wuerzas a Petition for Adjudication of Bankruptcy was, on the
day of ,A.D.18  , filed against , of the County of :
and State of , in said District, under which he has been duly de-
clared and adjudicated Bankrupt; you are therefore, by virtue of the said
Petition and the adjudication thereon, according to the provisions of the Act
entitled “An Act to Establish a Uniform System of Bankruptcy throughout
the United States,” approved March 2, 1867, required, authorized, and em-
powered, as Messenger, to take possession of all the estate, real and personal,
of said , the said Bankrupt, except such as may be by law ex-
empt from the operation of said Act, and of all his deeds, books of account,
and papers, and to keep the same safely until the appointment of an assignee.

And you are also directed to publish notice twice in the newspapers call-
ed and , printed at ,in the County of .
the first publication to be made forthwith as follows:

District Court of the United States,
For the District of a

 

In the Matter of
In Bangrertcy.

Bankrupt .

 

A warrant in Pankruptey has been issued by said Court against the estate of , of the County
of ; , Of the State of » in said District, adjudged a Bankrupt upon the P. tition of
his Creditors, and the payment of any debts and the delivery of any property belonging to sail Bankrapt, to him
or to his nse, and the transfer of any property by lin, are forbidden. bi law. A meeting of the Creditors of said
Bankragt to prove thetr debts and choose one or more Assinnecs of his estate will be held at a Court of Bank-
ruptey to be holden at 2m said District, on the day of aad .D.1S , at
o'clock m., at the office of » [giving the street and number, one of the Registers in Bank-
ruptey of suid Court.

a
Marshal, lor, Deputy Marshal,] Alessenger.
FORMS IN BANKRUPTCY. 939

And you will also serve written or printed notice by mail or personaity
on all Creditors whose names may be given to you by said Bankrupt within
five days from the date of such adjudication, within days after the
date hereof, and also to said , the Bankrupt, which notice shall
be as follows:

In the District Court of the United States,
For the District of ;

 

In the Matter of

In Banxetptoy.

 

Bankrupt .
District of » 88
To , one of the Creditors of said , Bankrupt.
This is to give you notice:
1st. That a Warrant in Bankruptcy has been issued against the estate of , Bankrupt aforesaid.

2d. That the payment of any debts, and the delivery of any property belonging to said Bankrupt, to him
or to his use, and the transfer of any property by him, are forbidden by law.

3d. That a meeting of the Creditors of the debtor to prove their debts and choose one or more Assignees
of the estate will be held at a Court of Bankruptcy to be holden et , in said District, on the
day of at o'clock m., at the office of » (ytving the street and number, }
one of the Registers in Bankruptcy of said Court.

And the following are the names of the creditors ef said Bankrupt and
the amount of their debts as given to me by him.
[Z g.—A. B., (of Boston,) dollars. |
—__,, Messenger.

And have you there this warrant, with your doings thereon.

Iy TESTIMONY WHEREOF, I have hereunto set my hand_and caused the seal
of this Court to be affixed at , this day of » i
the year of our Lord 18 .

 

ae 0g ee
{x. s.] District Judge.
Clerk of the Court.

Return by Marshal thereon.

District of 88s
By virtue of the within warrant, I have taken possession of the estate of
the within named , Bankrupt, except such as is by law ex-

cepted from the operation of said warrant by the act of Congress, and of all
his deeds, books of account, and papers which have come to my knowledge,
and I have published notice by advertisement on two different days in the
newspapers within mentioned, the first publication of which was on the
day of ,A.D.18 . Lalso within days after the date of
the within warrant sent written or printed notice, as within directed, to the
within named , Bankrupt, and to the creditors named on the
schedule delivered to me by him, and herewith returned. The notices sent
by mail were deposited in the post-office at , on the day of
,A.D.18 ,with the proper postage stamp affixed thereto, ard
those delivered personally by me to said creditors were delivered at the
times and the places set opposite to the name of each, and all of said no-
tices were according to the directions set out in this warrant.

 

Marshal, [or, Deputy Marshal,| Messenger.
940 FORMS IN BANKRUPTCY.

Frrs anp Expenses.

2 DCTVICELOP WARTAN Es siesise'cina anit avid surevalvainasie/swecvais ai waivalgugianelssiehsiensevedesaimnens $2 00
. Necessary travel at the rate of 5 cents a mile each way
. Notice to creditors, 10/cents Cach............ceeseeceeceetseneeeees

. Actual expenses in publishing notices as follows

mo bow

 

a

. Actual expenses in custody of property and other services as follows.....

 

 

 

 

[Here render the particulars. |

>

Marshal, [or, Deputy Marshal,| Messenger.

. Affidavit as to Expenses.
District of , A.D. 18

Personally appeared the said , Messenger, and made oath
that the above expenses returned by him under numbers four and five have
been actually incurred and paid by him, and are just and reasonable.

 

7

One of the Registers in Bankruptcy in said District.

form No. 60.
ADJUDICATION WHERE DEBTOR IS FOUND NOT BANKRUPT.

In the District Court of the United States,
For the District of

 

In the Matter of

In Banxrvrtcy,

Bankrupt .

 

At , in said District,
on day of , A.D. 18
Before Honorable _____ _____., Judge of the District of é
District of 5888

This cause came on to be heard at ,in said Court, and [ Here
state the proceedings, whether there was no opposition, or, if opposed, state
what proceedings were had, and when and where, and what counsel appeared
Sor the several parties. |
FORMS IN BANKRUPTCY. 941

And thereupon, and upon consideration of the proofs in said cause, (and the
arguments of counsel thereon, if any,) it was FouND that the facts sect forth in
said Petition were not proved ; and it is therefore Ordered, That said Petition
be dismissed, and that all proceedings under the same be vacated and annulled.

Witness the Honorable , Judge of the said Court, and
Seal of the seal thereof, at ,in said District, on the day
tine Court. of ,AD.18 .

ee
Clerk of District Court, for said District,

[N. B. 1. If default be made by the Debtor to appear pursuant to the order upon a Creditor’s
Petition, the subsequent order may be made by a Register in Bankruptcy.

[N. B. 2. If no Schedule of Creditors shall be delivered to the Messenger by the Bankrupt,
the Messenger shall prepare such Schedule from the best information he can obtain, and send
notices accordingly. ]

Form No. 61.
DENIAL OF BANKRUPTCY, AND DEMAND FOR JURY BY DEBTOR.

In the District Court of the United States,
For the District of 3

 

In the Matter of the Petition

 

of , Creditor,
In Bangrvrtey.
vs.
» Debtor.
At ,in said District,
’ on the day of , A.D. 18
District of 882 4

And now on this return day [or, adjourned return day] for the hearing of
said Petition, the said appears and denies that he has committed the

act of Bankruptcy set forth in said Petition, and avers that he should not
be declared Bankrupt for any cause in said Petition alleged, and this he prays
may be inquired of by the Court, [or, he demands that the same may be in-
quired of by a Jury. ]

Witness the Honorable , Judge of the said Court, and
Seal of the seal thereof, at ,in said District, on the day
Sine Courts of »AD.18 .

y

Clerk of District Court, for said District.
942 FORMS IN BANKRUPTCY.

Lorm No. 62.

ORDER OF COURT UPON DENIAL OF BANKRUPTCY AND DEMAND FOR
JURY TRIAL.

(Involuntary Bankruptcy.)

In the District Court of the United States,
For the District of

 

In the Matter of the Petition

 

s
of , Creditor,
In Bankruptcy.
vs.
, Debtor.
J ;
At , in the said District,

on the day of , 18
District of 788s
Upon the demand in writing filed by the Respondent to said Petition, that
the fact of the commission of an act of Bankruptcy may be inquired of by a
Jury, it is Ordered, That said issue be submitted to a Jury at the present
term of this Court, (if a Jury be in attendance,) or, if in vacation, at the
next term of this Court.

Witness the Honorable , Judge of the said Court, and
{ Seal of the seal thereof, at ,in said District, on the
the Court.S day of , A.D. 18
————

Clerk of District Court, for said District.

dorm No. 63.
APPOINTMENT OF TRUSTEES UNDER SECTION 43,

In the District Court of the United States,
For the District of 4

 

In the Matter of
In BAnKRUptTcy,

Bankrupt .

 

At this mecting of the Creditors of said Bankrupt, called specially by order
of said Court for the purpose of determining in what manner the estate of
said Bankrupt shall be settled, it was resolved by three fourths in value of
the Creditors whose claims have been proved, as follows:

Ist. That it is for the interest of the ecneral hody of the Creditors ofsaid
that the estate of said » Bankrupt, should be wound up and settled,
FORMS IN BANKRUPTCY, 943

and distribution made among the Creditors by trustees under the inspec-
tion and direction of a Committee of Creditors.

2d. That this resolution be certitied and reported to the Court.

3d. That be nominated as trustee to take, hold, and distribute
said estate.

4th. That ,0F 4 @E , be the Committee
of the Creditors under whose direction the said Trustees shall act,

 

 

Creditors. Amount of Debts.

 

Dolls. Cts

 

 

 

Affidavit of Bankrupt.

A. B., the said Bankrupt, being duly sworn, [or, affirmed,] says that the
names of the persons affixed to the foregoing resolution represent three
fourths in value of all his creditors whose claims have been proven against
his estate.

Subscribed and to, before me, this day of ,AD.18 .

 

 

?
Register, [or, U. S. Comnrissioner.]

Certificate of Register thereon.

In the District Court of the United States,
For the District of 3

(In Bankruptcy.)

At , the day of ,A.D.18 ,I hereby certify that
at a meeting of the Creditors of said , held this day in pursuance
of a notice regularly given according to the provisions of the Act of Con-
gress entitled, &c., approved March 2, 1867, [or, according to the order of
the Court, as the case may be,| the above resolutions were adopted and
signed by three fourths in value of the Creditors of said Bankrupt, who
were present or were represented at said meeting.

acacia
Leegister in Bankruptcy.
944 FORMS IN BANKRUPTCY.

Order of the Court on above Proceedings.

In the District Court of the United States,
For the District of 7

 

In the Matter of

In BaNnKRUPTCY.

Bankrupt .

 

The foregoing certificate having been filed and read, it is Ordered, That
the said shall convey, transfer, and deliver all his property or
estate to , as trustee by deed, in the following form:

District of » 8st
In the District Court of the United States for said District.
This indenture made this day of ,A.D.18  , between
» (the Debtor,) of , in the County of ‘
and State of > and , on behalf and with the
consent of , Creditors of the said , WITNESS-
ETH, that the said (the Debtor,) hereby conveys, transfers,
and delivers all his estate and effects to , absolutely, to have
and to hold the same in the same manner and with the same rights in all
respects as the said would have had or held the same if no pro-
ceedings in bankruptcy had been taken against him, to be applied and ad-
ministered for the benefit of the Creditors of said , in like man-
ner as if said had been at the date hereof duly adjudged Bank-
rupt, and the said (trustees) had been appointed assignee in bankruptcy un-
der said act.
In testimony whereof, the said (debtor,) and the said
(trustees,) in acceptance of said trust, have hereunto set their hands and seals
this day of , A.D. 18

Executed in presence of—

?
?

» [ts]
, fe 8]
————,, [L s.]
This day appeared before me, a Register in Bankruptcy, the above-named

eh ai , (Bankrupt,) and acknowledged the foregoing instrument by
him signed to be his free act and deed.

Register in Bankrupicy.
FORMS IN BANKRUPTCY. 945

We hereby give our assent to the execution of the above deed:

 

Names of Creditors. Residence. Amount.

 

Dolls. Cts.

 

 

 

Oath of Bankrupt.

In the District Court of the United States,
For the District of 5

 

In the Matter of
In Bankruptcy.

Bankrupt .

 

, the said Bankrupt, being duly sworn, doth
depose and say that he has conveyed, transferred, and delivered all his prop-
erty to the trustees in the above indenture named, and that the persons sign-
ing their consent to the above conveyance represent three fourths in value
of all his Creditors whose claims have been proved against his estate.

 

 

, Bankrupt.
Subscribed and sworn [or, affirmed] this day of ,A.D.18
Before me, ——— ——,
Register in Bankruptcy.
Witness the Honorable , Judge of the said Court, and the seal
thereof, at , in said District, on the day of , A.D. 18
§ Seal of ams Sate A a Ce
{ the Court. Clerk of District Court, for said District.

Advertisement of Trustee.
In the District Court of the United States,

For the District of ‘
(In Bankruptcy.)
This is to give notice, that by an indenture bearing date the day
of ,AD.18 , of , has
conveyed and assigned all his estate and effects whatsoever to ‘

as trustee, upon trust for the benefit of all the Creditors of 4
and that said conveyance was duly executed according to the provisions of
the 43d Section of the Bankrupt Act of March 2, 1867.

Dated this day of , A.D. 18

?

———_—)»

bd
Trustees.
60
946 FORMS IN BANKRUPTCY.

Order of Court.

The foregoing proceedings under the 43d Section of the Bankrupt Act of
March 2, 1867, having been placed on file and read, it is

Ordered, That all proceedings upon said Petition in Bankruptcy be stayed
until the further order of the Court.

Witness the Honorable , Judge of the said Court, and the seal
thereof, at ,in said District, on the day of , A.D. 18
Sealof . - ee
the Court.f Clerk of District Court, for said District.

Form No. 64.

ORDER CONCERNING SALE OF PROPERTY BY ASSIGNEE.

In the District Court of the United States,
For the District of :

 

In the Matter of

In Bankruptcy.

Bankrupt .

 

At , in said District,
on the day of , A.D, 18
District of 5 882
Upon the representation of , a Creditor of said , and

upon the proofs filed therewith, it is Ordered, That the real estate of said
Bankrupt, when offered for sale by his Assignee, shall be sold in lots or par-
cels as follows, [Here follows the direction by reference to plat or any other
specific description or order in which the property shall be sold.

Witness the Honorable , Judge of the said Court, and
i Sealof t the seal thereof, at , in said District, on the day
the Court.s of : A.D. 18

?

Clerk of District Court, for said District.

Form No. 65.

ORDER CONCERNING SALE OF PROPERTY OF CORPORATION.

In the District Court of the United States,
For the District of :

 

In the Matter of the Bankruptcy of
: In Banxrvrtcy.

A corporation formed under the laws
of the State of

 

At , in said District,
on the day of »,AD18 .
FORMS IN BANKRUPTCY, 947

District of 588s
Upon the representation of . a Creditor, [or, the party in
interest,| and upon the proofs filed therewith, it is Ordered, That the fran-
chise of said corporation be sold in fractional parts according to the number
of shares therein, as follows, [//' there be one thousand shares of’ the cor-
poration, the order may require that the franchise be sold in fractions of
, or, in any other proportion. |

Witness the Honorable , Judge of said Court, and
eect, } the seal thereof, at , in said District, on the day
e ours s of , A.D. 18

 

 

=

Clerk of District Court, for said District.

Form No. 66.
ORDER OF DIMINUTION OF CLAIM.

In the District Court of the United States,
For the District of :

 

In the Matter of

In Bankruptcy.

 

Bankrupt .
At , in said District, on
the day of , A.D. 18
District of 88s

Upon the evidence submitted to this Court upon the claim of 4
against said estate, (and, if the fact be so, upon hearing counsel thereon,) it
is Ordered, That the amount of said claim be reduced from the sum of

, as set forth in the affidavit in proof of claim filed by said
Creditor, in said case, to the sum of , and that the latter-named
sum be entered upon the books of the Assignee as the true sum upon which
a dividend shall be computed, [if with interest, insert, “with interest there-
on from the day of ,AD.18 .

Witness the Honorable , Judge of the said United States
District Court. x

Clerk of District Court, for said District,
948 FORMS IN BANKRUPTCY.

Form No. 67.

EXPUNGING OR ALLOWANCE OF CLAIM.

In the District Court of the United States,
For the District of :

 

In the Matter of

In Bankruptcy.

Bankrupt .

 

At ,in said District,
on the day of -AD.18 ,
District of 5 882
Upon the evidence submitted to the Court upon the claim of
against said estate, (and, if the fact be so, upon hearing counsel thereon,) it
is Ordered, That said claim be disallowed and expunged from the list of
claims upon the Assignee’s record in said case.
é Witness the Honorable , Judge of said United States District
ourt.

a ee ee ae
Clerk of District Court, for said District.

(N. B.—If the claim is found to be good, say, ‘‘ Zt is Ordered, That said claim be established
to the full amount thereof.’’]

Form No. 68.

IN CASE OF DISALLOWANCE THE CREDITOR MAY FILE THE FOLLOWING
NOTICE OE APPEAL.

In the District Court of the United States,
For the District of :

 

In the Matter of
Iy Banxrvptcy,

Bankrupt .

 

At ,onthe = day of , A.D. 18
To —— .

 

fi ed
Assignee of said estate:
You are hereby notified that I claim an appeal from the decision of the

Judge of said Court made on the day of ,A.D.18 , refusing to
allow my claim when presented against the estate of , Bankrupt, to
the Cireuit Court of the United States next to be holden at , in said
District, on the day of , A.D. 18

[If the appeal is from a disallowance of part of the claim, instead of “re
Susing to allow my claim,” say, “reducing my claim.”

 

, Creditor.
GENERAL INDEX.
GENERAL INDEX.

ABATEMENT not caused by death of debtor, 652.
death or removal of assignee, 146, 544.
ACCOUNTS, assignee to keep, 140, 560. *
to allow inspection of, 140, 560.
to exhibit, 235, 653.
to verify, 235, 653.
to apply for settlement of, 240, 657.
of, to be audited, 74, 254, 376.
separate, of joint and separate property, 140, 761.
of sums drawn, 141, 863.
of register, 75, 857.
of marshal, 857.

ACTIONS, bankrupt’s rights of, vest in assignee, 143, 535.
by or against assignee limited to two years, 227, 550.
on assignee’s bond, 476.
none against assignee without notice, 227, 550.
assignee may maintain, in his own name, 143, 535.
not to abate by death or removal of assignee, 146, 544.
assignee may prosecute and defend pending, 148, 535.
when creditors may continue pending, 145, 539.
surrendered by proof of debt, 112, 684.
when stayed, 181, 685.
when allowed to be commenced, 184, 687.
district court can not withdraw pending, from State courts, 213, 539.
may proceed when amount is in dispute, 183, 686.
to set aside fraudulent conveyances, 526.
by summary petition, 220, 333.
by action at law, 224, 341.
by bill in equity, 225, 341.
when, must be by bill in equity, 222, 331.

ACTS OF BANKRUPTCY, filing voluntary petition, 385.
what are, in involuntary bankruptcy, 32, 397.
departing from the State, 32, 397.
remaining absent from the State, 32, 397.
avoiding service of civil process, 32, 397.
removal of goods, 32, 397.
fraudulent conveyances, 32, 397.
arrest on mesn¢ process, 32, 397.
952 GENERAL INDEX.

ACTS OF BANKRUPTUY—continued.

imprisonment, 32, 397.

preferences, 32, 397, 409.

suspension of commercial paper, 33, 358, 419.

fraudulent suspension of payment, 33, 398,

failure to pay depositor, 33, 398.

assignment for benefit of creditors, 397, 416.
ADDENDA (notes of the latest decision), 851.
ADJOURNMENT in discretion of register, 378.

party desiring must pay costs, 855.

when service of warrant is defective, 120, 467.

of meetings of creditors, 122, 469.

of examination, 196. ~

of proceedings on order to show cause, 263, 275, 717.

of proceedings in involuntary bankruptcy, 449.
ADJUDICATION OF BANKRUPTCY, character of, 20, 390.

what found by, 20, 390.

how set aside, 8, 388.

when register may make, 20, 378.

in voluntary bankruptcy, 20, 385.

on petition of creditor, 60, 464.

when debtor is absent, 60, 464.

copy to be served on debtor, 63, 465.
ADVERTISEMENT in voluntary bankruptcy, 24, 394.

of assignee’s appointment, 137, 548.

of sales, 168, 560.

of application for discharge, 268, 696.

of second meeting of creditors, 236, 653.

of third meeting of creditors, 239, 655.

in case of dissolved corporations, 42, 447.

in case debtor is absent, 42, 447.
ALIENS may become bankrupt, 1, 885.

debts of, barred by discharge, 746.
AMENDMENTS, when allowed in voluntary petition, 21, 395.

how made, 22.

do not affect the time of filing, 386.

of proof of claim, 104, 626.

of examination, 205, 868.

of specifications, 281, 719.

of involuntary petition, 53, 437.
APPEALS from district to circuit courts, 287, 353.

when may be taken, 287, 253.

what notice given, 289, 358.

bond in, 289, 358.

in what cases lics, 287, 358.

when entered in circuit court, 289, 858.

from rejection or allowance of claim, 110, 353.

statement made in circuit coart, 111, 359.
GENERAL INDEX. 953

APPEALS—continued.
defense of assignee, 111, 359, 863.
may be waived, 291, 359.
from circuit to supreme court, 800, 368.
how proceedings in bankruptcy may be reviewed, 291, 361.
APPEARANCE, when to be in person, 223, 335.
when by attorney, 656, 853.
in involuntary proceedings, 47, 449.
ARBITRATION, assignee may submit to, 142, 555.
manner or mode of submitting, 142, 861.
ARREST, when bankrupt not liable to, 155, 692.
bankrupt exempt from, attending for examination, 645.
when marshal to make, in involuntary cases, 44, 441.
ASSENT TO DISCHARGE, when procuring, bars discharge, 278, 698.
in case of second bankruptcy, when necessary, £83, 728.
contract for, void, 838.
penalty for procuring, 838.
when necessary, 282, 722.
ASSETS, what are, 13, 480.
what amount necessary to a discharge, 282, 724.
jurisdiction extends to collection of, 207, 324.
how distributed when partnership is bankrupt, 244, 761.
assignee’s return when no, 269, 695.
ASSIGNEE, who may be, 131, 473.
choice of, 123, 468.
who may vote, 123, 468,
in case of partnership, 124, 761.
when appointment may be made, 180, 468.
who may appoint, 130, 469.
approval of, 131, 472.
to accept in five days, 136, 468.
additional appointed, 135, 468.
bond of, 135, 476.
approval of bond, 136, 476.
when new choice ordered, 1385, 469.
give notice of appointment, 137, 548.
what property vests in, 188, 480.
to record assignment, 548.
rights against bankrupt, 481.
third parties, 488.
what property passes to, 434.
rights under contracts, 487.
purchaser with notice of equities, 494.
rights under statutes, 494,
against bankrupt’s wife, 495.
children, 495,
represents creditors, 496.
unrecorded conveyances, 499.
954 GENERAL INDEX.

ASSIGNEE—continued.

may reject property, 500.

property conveyed in fraud, 525.

liable in State court for tort, 563.

bankrupt’s books not withheld from, 545.

to report exemptions within twenty days, 152, 860.

to prosecute ard defend suits, 143, 535.

must be admitted to pending suits, 145, 535.

copy of assignment evidence of right. to sue, 146, 544.

how admitted, 146, 545.

may institute suits, 535.

limitation of suits by and against, 227, 550.

in what court suits must be brought, 222, 831.

not to be sued without notice, 227, 550.

may sell unencumbered property, 167, 555,

to deposit money, 140, 554.

to keep goods separate, 140, 554.

to make temporary investment, 141, 555.

to compound claims, 142, 555.

to submit to arbitration, 142, 555.

to redeem mortgaged property, 170, 564.

to sell property subject to mortgage, 178, 592.

to sell free from encumbrances, 174, 608.

to receive all proofs of debt, 142, 680.

removal of, 147, 477.

vacancies how filled, 150, 479.

no suit to abate by death or removal of, 146, 544.

to call meetings of creditors, 656.

resignation of, 150, 477.

to contest proofs, 106, 631.

to examine bankrupt, 191, 640.

to call second meeting, 235, 653.

to call third meeting, 239, 655.

settlement of account, 240, 657.

to distribate estate, 240, 657.

expenses of, 251, 658.

commissions of, 251, 662.

discharge of, 249, 657.

penalties against, 383.

auditing accounts of, 254, 372.

employment of clerks by, 258, 658.
ASSIGNMENT, when to be made, 137, 480.

need not be acknowledged, 138, 480.

where to be recorded, 139, 548.

certified copy evidence of, 139, 548.

what passes by, 138, 480.

subject to all equities, 494.

property vested under, 481.
GENERAL INDEX. 955

ASSIGNMENT—continued.
not property held in trust, 546.
in trust by debtor, 398, 404, 416.
an act of bankruptcy, 404, 416.
bars discharge, 398, 716.
when set aside, 831.
ATTACHMENT, when dissolved, 480, 501.
lien for costs, 504.
return in, conclusive, 508.
when valid, 507,
how valid lien enforced, 507.
effect of discharge on bond for dissolution, 506.
on final process, 508.
on rent, 507.
no retroactive effect of failure to dissolve, 705.
funds in hands of assignee subject to, 670.
what is mesne process, 501.
is a lien, 502.
lien may be divested, 502.
not dissolved after judgment, 502.
when surplusage, 503.
assignee may appear, 503.
stay of, 504, 689.
when one partner is bankrupt, 506.
liability of receiptor, 599.
when bond may be filed to dissolve, 508.
ATTORNEYS, creditors may act by, 656.
how constituted, 115, 656.
petitioning creditor may act by, 858.
may conduct case for bankrupt, 853,
name indorsed on papers, 853.
what notices served on, 854.
appearance for debtor in involuntary cases, 47, 450.
who may be for assignee, 135, 476.
effect of voluntary appearance by, 208, 331, 334.
appearance, how withdrawn, 334,
when $20 allowed to, 250, 664.
may be assignee, 133, 475.
fees of, for assignee, 254, 660.
for debtor proceeded against, 248, 666.
for petitioning creditor, 248, 665,
for voluntary bankrupt, 249, 664.
lien on papers, 597.
authority conferred by form, 116, 849.

BAIL, demands against, provable, 580.
when may prove, 582.
when debtor may give, 45, 441.
when may share in estate, 241, 652.
956 GENERAL INDEX.

BANKRUPT, who may become, 1, 385.
who may be involuntary, 30, 397.
subject to orders of court, 683.
to execute instruments, 546.
fraudulent conveyances by, 525.
property held in trust by, 546.
may have actions stayed, 181, 686.
hold property acquired after petition, 481.
may be attached for contempt, 376, 683, 705.
may obtain injunction, 229, 529.
to protect estate, 505.
transfer after petition void, 482.
can not purchase estate before appointment of assignee, 562.
may purchase estate, 557.
payment to, after petition, void, 482.
examination of, 191, 640.
on what may be examined, 200, 640.
liable for contempt, 194, 683,
may consult counsel, 200, 645.
questions that would criminate himself, 202, 646.
not entitled to witness fees, 195, 644.
examination of wife of, 191, 650.
wife of, entitled to witness fees, 195, 651.
discharge refused if she does not attend, 650.
may amend examination, 205, 868.
may amend schedules, 22, 395,
not liable to arrest, 185, 692.
when to apply for discharge, 266, 695.
to take final oath, 269, 725.
grounds for opposing discharge of, 277, 697.
obtaining false credit, 839.
to furnish schedules, 638, 465.
penalties against, §39.
selling goods fraudulently, 839.
BONDS, of register, 72, 375.
on appeal or writ of error, 289, 358.
of assignee, 136, 476.
claim under, provable, 577.
no stay of action on joint, 688.
BOOKS, kept by clerk, 75, 378.
by register, 74, 378.
bankrupt’s, pass to assignee, 188, 480,
no right to withhold bankrupt’s, 545.
production of, 74, 379.
witness must produce copies of, 649.
mutilation of, 278, 697.
penalty for mutilation, 839.
omission to keep, 698, 711.
GENERAL INDEX. 957

BOOKS—continued.
what are proper books, 713.
assignee to keep, 140, 560.
penalty for destroying, 839.

CERTIFIED COPIES of assignment, 544.
of records, 548.
not by register, 373.
CERTIFYING QUESTIONS, issues of law, 75, 381.
who may take certificate, 76, 381. .
what may be certified, 76, 382.
effect of decision on, 77, 881.
CLERKS to keep minute books, 75, 878.
duties on filing papers, 17, 853.
process tested by, 853.
1o furnish blanks to register, 853.
to deposit funds, 863.
to keep account of moneys received, 863.
notice to, of appeals, 289, 358.
duties of, 853.
offenses by, 383.
fees of, 259, 785.
to mail notices of meeting, 149.
manner of sending, 149.
to send notice of application for discharge, 268, 696.
COMMENCEMENT OF PROCEEDINGS, what is, 372.
assignment relates to, 480.
COMMISSIONERS may take testimony, 379.
may take proofs, 86, 618, 629.
proofs by, subject to revision, 86, 618,
COMPOSITION, meeting to consider, 675.
acceptance of, 675.
number requisite, 675.
recording, resolution, 675.
varying composition, 675.
statement of debt, 675.
correcting mistake, 676.
pro rata payment, 676.
how enforced, 676.
how set aside, 676.
computation of time, 676.
meeting may be called, though petition defective, 677.
schedules used as statements, 677.
examination of debtor, 675, 677.
adjournment of meeting, 677.
production of books, 677.
who may vote, 678.
mode of computation, 678.
rcjection of composition, 679.
958 GENERAL INDEX.

COMPOSITION—continued.
how defects in composition cured, 681.
when property surrendered to bankrupt, 681.
payment in cash, 680.
injunction from district court, 682.
conclusive in collateral actions, 682.
no discharge necessary, 682.
COMPOUNDING CLAIMS, assignee may, 142, 555.
mode of proceeding, 142, 860.
CONCEALMENT of books bars discharge, 278, 697.
when an act of bankruptcy, 32, 397.
of property an act of bankruptcy, 32, 397.
bars discharge, 278, 697.
CONFESSION OF JUDGMENT, when an act of bankruptcy, 32, 397.
when a preference, 795.
when set aside, 811.
CONSTITUTION, extent of power, 305.
meaning of bankruptcy, 305.
not limited to English laws, 306.
particular class of persons, 306.
voluntary bankruptcy, 306.
obligation of contracts, 306.
selecting tribunals, 306.
suspension of State insolvent laws, 307.
exemption clause, 155, 517.
liens not invalidated, 160, 512.
CONTEMPLATION OF INSOLVENCY, what is, 37.
acts done in, are acts of bankruptcy, 82, 397.
CONTEMPLATION OF BANKRUPTCY. what is, 37, 407.
acts done in, acts of bankruptcy, 32, 397.
bar discharge, 278, 698.
CONTEMPT, district court may punish for, 207, 389.
parties and witnesses liable, 379. '
register can not commit for, 379.
bankrupt punishable for, 682.
assignees liable to, 151, 477.
with notice of injunction, 444.
proceedings for, 207.
when order to show cause, 651.
proceeding for, can not be enjoined, 280, 329.
CONTRACTS, assignee entitled to benefit of, 487.
for not opposing discharge void, 838.
penalty for, 838.
for withdrawing involuntary petition, 838.
CONVEYANCES, unrecorded, 499.
fraudulent, 526.
by way of preference, void, 795.
in fraud of the act, veid, 828.
what, acts of bankruptcy, 32, 397,
GENERAL INDEX. 959

CONVEYANCES— continued.
fraudulent by corporations, 776. *
chattel mortgages, 546.
CORPORATIONS may become bankrupt, 1, 776.
voluntary petition by, 2, 778.
who may authorize, 3, 778.
officers to furnish schedules, 776.
execute papers, 776.
submit to examination, 776.
penalties for concealing property, 776.
no discharge to be granted, 777.
how assets to be distributed, 777.
service on, after dissolution, 447.
effect of proceedings to forfeit charter, 309, 784.
State insolvent laws relating to suspended, 809, 784.
proof of debt, 84, 627.
service on, 447.
when release of stockholders void, 497.
assignee may impeach transactions by, 497.
conventional payment of stock void, 498.
attorney may admit acts of bankruptcy, 779.
assessment on stockholders, 780.
not impeached collaterally, 781.
liability of stockholders, 781.
sued after proof of debt, 685.
no stay of suit against, 689.
bankrt picy is dissolution of, 780.
COSTS in attachment are not a lien, 504.
when not provable, 504.
against assignee, allowed out of estate, 360.
on disputed claim, 360.
on trial of specifications, 721.
bankrupt’s, for discharge, payable out of estate, 721.
what allowed between parties in involuntary bankruptcy, 460.
what allowed between parties in involuntary bankruptcy cut of es-
tate, 248, 665.
party adjourning must pay, 855.
of petitioning creditor, 665.
of attorney for voluntary bankrupt, 248, 664.
of attorney for involuntary bankrupt, 248, 666.
of attorney for petitioning creditor, 248, 666.
of register, 260, 785.
of clerk, 259, 785.
of marshal, 256, 789.
appearance fee, 664.
entitled to priority, 264, 663.
CREDITORS, notice to, of first meeting, 24, 394.
first meeting of, 119, 467.
S60

GENERAL INDEX.

CREDITORS—continued.

who may vote, 123, 469.
how many, necessary to choice of assignee, 128, 468.
may require bond, 136, 476.
may remove assignee, 147, 477.
to be notified of meetings, 656.
what claims are provable, 81, 564.
surrender pending suit by proof, 112, 684.
when, may prosecute pending actions, 145, 535.
when suits of stayed, 181, 66.
when allowed to commence suit, 184, 687.
proof of debt by, 83, 627.
secured, 100, 623.
how proof by, made, 88, 620.
may notify register not to allow claim, 631.
when proof by, postponed, 93, 635.
when to surrender preference, 95, 636.
appeal from rejection cf claim, 110, 353.
how appeal prosecuted, 111, 358.
may appear by attorney, 656.
notice tu, of application for discharge, 268, 696.
may oppose dischurge, 272, 716.
when to file specifications, 274, 717.
when assent to discharge necessary, 281, 722.
assent in case of second bankruptcy, 283, 728.
may vacate discharge, 284, 758.
notice to, of second meeting, 235, 653.
may order first dividend, 237, 653.
notice to, of third meeting, 239, 655.
who entitled to dividend, 241, 652.
in partuership estates, 244, 761.

priority, 241, 663.
may examine bankrupt, 191, 640.
who may file involuntary petition, 28, 397.
no notice to, for dismissal, 47, 449.
may tuke place of petitioning creditor, 48, 463.
may file petition for sale of securities, 177, 618.

DAMAGES, proof of unliquidated, 92, 564.

DATES

assessment of, 92, 676.

creditor must ask for assessment of, 92, 577.
when may ce set off, 91, 590.

AND DEPOSITIONS, filing of petition, 372.
time of filing to be noted, 853.

mode of computing time, 383.

all proceedings matters of record, 878.

how kept, 373.

open to public inspection, 373.
GENERAL INDEX. 961

DEATH of bankrupt no abatement, 652.
no discharge after, 652.
of assignee, 146, 544.

DEBTS, what are provable, 81, 564.
mutual and set-off, 89, 587.
interest on, 82, 564,
secured, should be proved, 100, 623.
proof of, 83, 620.
proof of secured, 101, 623.
proof of, to be handed to assignee, 630.
list of, to be certified, 640.
postponement of proof of, 93, 635.
disputing proof of, 106, 631.
mode of disputing, 106, 631.
diminution of, 109, 632.
expunging, 109, 633.
suits for collection of, 143, 535.
suits for, in district court, 224, 823.
suits for, in circuit court, 227, 341.
sale of uncollectible, 168, 563.
of petitioning creditor, 28, 397.
what to have priority, 241, 663.
compounding, 142, 555.
arbitration, 142, 555.
what not discharged, 728.
need not exist at time of the act of bankruptcy, 28, 434.

matters examined into, 647.
act urged against discharge, 721.

DEPOSITIONS, register may take, 379.
when reduced to writing, 379.
examination is, 644.
fees for, 262.

DEPOSITS, assignee to make, 140, 554.
where made, 141, 863.
how drawn on, 141, 863.
to secure fees, 785, 864.
by clerks, 141, 863.
reports of, 141, 863.

DISCHARGE of assignee on final account, 240, 657.
stay of action to await. 181, 686.
application for, 266, 695.
when may be made, 266, 695.
of involuntary bankrupt, 267, 696,
notice of application, 268, 696.
grounds for withholding, 277, 697.
oath before final, 269, 725.
return on order to show cause, 269, 696.
certificate of conformity, 269, 726.

61
962 GENERAL INDEX.

DISCHARGE—continued.
specifications against, 276, 716.
must be definite, 279, 719.
trial of, 281, 716.
none for misconduct of wife, 191, 650.
willful false swearing, 277, 697.
concealment of estate, books, &c., 277, 697.
fraud or negligence in custody of property, 278, 697
causing or permitting loss, 278, 697.
procuring attachment, 278, 697.
destroying or mutilating books, 278, 697.
making false entries, 278, 697.
removing property from district, 278, 698.
giving fraudulent preference, 278, 698.
loss by gaming, 278, 698.
admitting false or fictitious delts, 278, 698.
not keeping proper books of account, 278, 698.
procuring assent of creditors, 278, 698.
making preferences, 278, 698.
transfers in contemplation of bankruptcy, 278, 698.
conviction of misdemeanor, 279, 698:
in case of partnerships, 761, 775.
of one partner alone, 761, 775.
on appointment of trustee, 672.
none in case of composition, 682.
when granted, 281, 726.
in case of second bankruptcy, 283, 728.
when assets must equal 30 per cent., 282, 722.
when no assets required, 282, 722.
form of, 727.
effect of, 734.
impeaching in collateral action, 735.
to what claims a bar, 737.
debts to United States, 737.
to State, 737.
fine, 738.
warranty of title, 738.
contingent liabilities, 739.
debts of wife dum sola, 739.
rent, 739.
suit in equity, 740.
sureties, 740.
judgments, 741.
in torts, 741.
remedies against judgments, 748,
stay of execution, 744.
no relief in equity from judgment, 745.
debts due to aliens, 746.
GENERAL INDEX.

DIS CHARGE—continued.
claim to property, 746.
lien, 746.
estoppel in mortgage, 748.
new promise, 748.
plea of, 752.
demurrer to plea, 755.
replication, 755.
proof of, 756.
appellate tribunals, 757.
debts not released by, 728.
created by fraud, 728. :
by embezzlement, 728.
by defaleation, 728, 730.
by fiduciary, 728, 730.
not affect parties jointly liable, 732.
how pleaded, 785, 752.
how annulled, 284, 758.
contracts for assent to, void, 838.
notes or securities given therefor void, 838.
penalty for fraudulent agreement, 838.
DISPUTED PROPERTY, sale of, 179, 561.
proceeds measure of value, 179, 561.
recovered from assignee, 563.
proper action for, 563.
when bankrupt can not purchase, 562.
DISTRAINT void after filing petition, 172, 319.
when enjoined, 319.
gives valid lien, 585.
DISTRIBUTION, registers may make, 73, 376.
at second meeting, 237, 653.
at third meeting, 239, 655.
register to make computation for, 239, 659.
who entitled to priority, 241, 663.
who may share on separate petition, 243, 771.
who may share on partnership petition, 244, 761.
when bail, surety, &c., may share in, 241, 662.

963

DISTRICT of Columbia and Territories, power of supreme courts in, 340.
when exercised by judge, 349.

DISTRICT COURTS, courts of bankruptcy, 206, 312.
. jurisdiction of, 206, 312.
exclusive, 210, 316.

to what extends, 207, 323.

to be always open, 206, 338.

power of judges in vacation, 206, 338.

punish for contempt, 207, 339.

sit anywhere in district, 207, 389.
964 GENERAL INDEX.

DISTRICT COURTS—continued.
suits at law, 224, 341.
suits in equity, 225, 341.
how invoked, 223, 333.
by summary petition, 228, 334.
by action at law, 224, 341.
bill in equity, 226, 341.
+ may issue injunction, 227, 325.
revising decisions of, 287, 361.
appeal from, 287, 353.
writ of error, 287, 353,
certificate to, 75, 381.
opinion of judge on, 75, 381.
entertain voluntary petition, 4, 385.
issue warrant, 24, 394.
designate place of deposit, 140, 554.
fix time, place and manner of sales, 168, 556.
remove assignee, 147, 477.
may stay suits, 181, 686.
expunge proofs, 106, 631.
postpone claims, 93, 635.
examine bankrupt, 191, 640.
release bankrupt from arrest, 185, 692.
produce imprisoned debtor, 194, 651.
hear application for discharge, 266, 695.
to grant discharge, 284, 726.
vacate discharge, 284, 758.
may entertain involuntary petition, 28, 397.
issue provisional warrant, 44, 441.
grant temporary injunction, 44, 441.
DISTRICT JUDGE, powers of, in chambers, 206, 338.
to appoint registers, 72, 374.
may remove registers, 72, 375.
to decide issues raised before registers, 75, 381.
to give opinion on certificate, 76, 381.
may compel attendance of witness, 379.
to designate register to take charge of case, 378.
to approve assignee, 131, 468.
when to appoint assignee, 130, 468.
may require bond, 136, 476.
to direct temporary investment, 141, 555.
when to exercise powers of circuit courts, 368.
who to act in case of disability, 340.
DIVIDENDS, registers may compute, 73, 376.
when to be made, 235, 653.
creditors to determine, 237, 658,
registers to give notice, 239, 669,
after third meeting, 240, 655.
GENERAL INDEX. 965

DIVIDENDS—continued.
not disturbed by subsequent proofs, 240, 658.
on separate petition, 243, 771.
partnership petition, 244, 761.
“priority, 241, 663.
final, 240, 657.
assignee must file account before, 240, 657.
who may receive, 241, 652.
register to make computation for, 239, 669.

ELECTION of assignee, 122, 468.
how conducted, 122, 469.
who may vote for, 123, 469.
what votes necessary to a choice, 128, 468.
approval of, 131, 468.
acceptance of, within five days, 136, 468.
notice of appointment, 136, 468.
in case of partnership, 124, 761.
in case of corporation, 776.
on removal of assignee, 147, 477.
EQUITY, PROCEEDINGS IN, in district court, 224, 341.
in circuit court, 227, 341.
for what purposes used, 225, 345.
when action must be by, 222, 331.
appointment of receiver in, 352.
effect of bankruptcy on pending, 143, 535.
to vacate fraudulent conveyances, 526.
when creditor may continue, 539.
rules of practice in, 226, 868.
parties, 348.
pleadings, 349.
practice, 351.
evidence, 3538.
EVIDENCE, how taken, 378.
marshal’s returns are prima facie, 120, 467.
what, of assignment, 544, 548.
of right to sue, 146, 544.
certificate of discharge conclusive, 735, 759.
copies of records prima facie, 373.
sale, etc., out of the usual course of business, prima facie, 836.
on trial of specifications, 721.
in equity, 353.
involuntary bankruptcy, 456.
of discharge, '756.
bankrupt’s wife can not testify, 769.
oral in equity, 353.
EXAMINATION, who may apply for, 191, 640.
how application must be made, 191, 640.
966 GENERAL INDEX.

EXAMINA TION—continued.
when application must be made, 192, 641.
who may order, 190, 641.
when bankrupt is present, 193, 643.
before whom made, 195, 644.
creditor to appoint time, 196, 644.
how conducted, 197, 644.
to be in writing and signed, 198, 644.
on what topics, 200, 646.
of witness, 191, 648. 7
of bankrupt’s wife, 191, 650.
by trustee, 671.
after appointment of trustee, 671.
register to pass final, 74, 376.
when final is made, 377.
how attendance compelled, 194, 379.
when bankrupt is imprisoned, 194, 651.
absent, 194, 683.
may consult with counsel, 200, 645.
privileged communication, 202, 649.
fees for, by whom paid, 204, 380.
bankrupt may amend, 205, 868.
when witness must answer, 201, 648.
witness can not refuse to be sworn, 202, 649.
EXECUTION, when valid, 217, 319.
lien of, 602.
may be stayed, 217, 327.
set aside as a preference, 219, 346.
sheriff may sell under, 217, 319.
none after filing of petition, 211, 319.
against assignee for creditor’s debt, 111, 360.
EXEMPTION, title to, does not pass to assignee, 152, 510.
what property is exempt, 152, 510.
absolutely, 153, 514.
in discretion of assignee, 157, 514.
under State laws, 155, 516.
furniture, 153, 514.
money, 158, 516.
provisions, 158, 516.
e land, 158, 516.
apparel, 153, 514.
arms and equipments, 152, 510.
constitutionality of, under State laws, 155, 517.
as to pre-existing debts, 517.
when subject to liens, 160, 512.
assignee to report within twenty days, 152, 524.
effect of failure to report, 164, 524.
creditors to file exceptions, 164, 524.
GENERAL INDEX. 967

EXEMPTION—continued,
effect of failure to file exceptions, 165, 524.
act of assignee not conclusive, 161.
divesting of liens unconstitutional, 161, 517.
mode of enforcing lien, 163.

EXTORTION, punishment, of, 383.

FEES, justices of the supreme court to regulate, 371.
reduction of, 792.
registers not interested in certain, 72, 875.
by whom to be paid, 380.
what allowed in referred cases, 248, 785.
when to be secured, 785.
of clerk, 259, 785.
marshal, 256, 785.
assignee, 251, 658,
in uncontested cases, 251.
counsel for assignee, 253, 660.
petitioning creditors, 248, 665.
voluntary bankrupt, 249, 664.
involuntary bankrupt, 248, 665.
what to have priority, 241, 663.
deposit of $50 for, 785.
petitioner may be compelled to pay, 785.
when paid out of fund, 660, 665.
FEME COVERT may become voluntary bankrupt, 1, 386.
plead coverture to involuntary bankruptcy, 57, 454.
what property may be retained by, 495.
may employ her husband, 530.
what debts provable against, 570.
when may prove claim against estate of husband, 570.
when affected by husband’s knowledge, 570.
property of bankrupt’s, 495.
FICTITIOUS DEBTS, allowance bars discharge, 278, 698.
penalty for allowing, 839.
FIDUCIARY DEBTS, not barred by discharge, 728.
what are, 730.
no ground for withholding discharge, 699.

FORMS.

ADJUDICATION on debtor’s petition, 896.
on creditor’s petition, 947.
where the debtor is not found bankrupt, 940.
ArripaviTs, register’s oath of office, 898.
proof of debt with security, 905.
without security, 968.
by agent with security, 911.
by agent without security, 910.
by corporation, 909.
to lost bill or note, 913.
to be made by assignee, 921.

.
968 GENERAL INDEX.

FORMS—continued.
Arripavits, examination of bankrupt, 927.
declaration to be made by bankrupt or his wife, 928.
to petitioning creditor’s claim, 935.
to act of bankruptcy, 936.
APPoINTMENT of trustee, 942.
ASsIGNEEs, memorandum of proceedings to choose, 900.
choice of, 903.
notification of appointment, 904.
notice by, of appointment, 904.
notice of second meeting of creditors, 914.
petition to relieve property from lien, 920.
bond of, 904.
return of, at second meeting of creditors, 915.
return of no assets, 920.
affidavit to be made by, 921.
account of, 923.
order of settlement and discharge of, 924.
petition for removal of, 924.
notice of motion for removal, 925.
order of removal, 926.
AssIGNMENT of bankrupt’s effects, 905.
ATTORNEY, special letter, 902.
general letter, 902.
Bonp of register, 909.
of assignee, 904.
CERTIFICATE, 930.
Denrax of bankruptcy, and demand for jury trial, 941.
DiscHareE, 727.
EXAMINATION of bankrupt or witness, 927.
EXEMPTION, 906.
List of creditors at first meeting, 901.
of proofs for dividend, 917.
of proofs to pay dividends, 919.
Memoranpvo of first meeting, 900.
of second meeting, 916.
of proceedings, 901.
Noricer to assignee of his appointment, 906.
of assignee of his appointment, 906.
for second meeting of creditors, 914.
of dividend, 917.
of settlement of account before final dividend, 921.
of motion for removal of assignee, 925.
that bankrupt has applied for his discharge, 931.
of appeal, 948.
OrbDER of reference, 895.
common, 900,
of settlement and discharge of assignee, 924.
for mecting of’ creditors to consider question of removal of
assignee, 925.
for removal] of assignee, 926.
further order, 926.
for examination of bankrupt, 927.
to show cause on petition of creditors, 936.
on denial of bankruptcy, 942.
for sale of property by assignee, 946.
for sale of property of corporation, 946.
for diminution of claim, 947.
expunging or allowing claim, 948.
GENERAL INDEX. 969

FORMS—continued.

PErTITIon by debtor, 881.
by partnership, 893.
by corporation, 894.
to relieve property from lien, 920.
for removal of assignee, 924.
for discharge, 930.
of creditors, 933.

Proor or Dest, with security, 907.
without security, 908.
by agent with security, 911.
by agent without security, 908.
by corporation, 909.

. Report of marshal, 876.

of register, 877.
of assignee, 878.
of clerk, 879, 880.

RETURN ON WARRANT, 898.
of assignee at a second meeting of creditors, 915,
of no assets, 920.
on summons, 929.

SPECIFICATIONS against discharge, 922.

Summons, 928.

WaRRANT on voluntary petition, 897.
on petition by creditors, 938.

FRAUD, claims founded on, provable, 564, 576.
discharge does not release from, 728.
proof rejected for, 106, 631.
evidence of, in contract inadmissible, 647.
property conveyed in, may be recovered, 525.
in creation of debt, no bar to discharge, 277, 699.
discharge obtained by, may be set aside, 284, 758.
conveyances in, of act, are void, 828.
what prima facie evidence of, 836.
FRAUDULENT CONVEYANCES void against assignee, 525.
when creditor may vacate, 527.
unrecorded deeds, 499.
possession by vendor, 529.
possession on sale under judgment, 529.
stipulation in mortgage, of right to sell, 528.
judgment on defective statement, 534.
effect of filing chattel mortgage, 534.
gitt from husband to wife, 530.
fictitious judgment, 404.
a mortgage with fraudulent intent, 404.
sale for long notes, 404.
assignment exacting releases, 533.
retention of benefit, by grantor, 404.
assignment authorizing sale on credit, 405.
an act of bankruptcy, 404.
bar discharge, 398, 726,
in fraud of act void, 828.
970 GENERAL INDEX.

FRAUDULENT CONVEYANCES—continued.
vacated within six months, 828.
against second vendee, 837.
penalty for, 839.

FURNITURE, what exempt, 153, 510.
when deemed necessary, 153, 514.

GAMING, loss by, bars discharge, 278, 698.
although acquired by gaming, 710.
penalty for, 839.
GENERAL ORDERS IN BANKRUPTCY, 657.

HABEAS CORPUS, application for, 185, 692.
what debts release from, 187, 693.
not from arrest before petition, 186, 694.
how made after discharge, 190, 694.
what facts inquired into, 188, 693.
when proceedings on arrest conclusive, 188, 693.
HOMESTEAD, when application for, void, 521, 833.
remainder in, sold, 523.
not defeat vendor's lien, 512.
when allowed, 516.
State law must be complied with, 519.
when contrary to bankruptcy act, 833.
HUSBAND AND WIFE, busband may work for wife, 582.
wife bound by husband’s knowledge, 570.
when transfers between, fraudulent, 530.
bar discharge, 702.
an act of bankruptcy, 403.

IMPRISONED DEBTOR, when imprisonment an act of bankruptcy, 395, 405.
may be produced on habeas corpus, 194, 651.
when released, 185, 692.
while attending for examination, 645,
IMPRISONMENT for twenty days an act of bankruptcy, 395, 405.
to what debts limited, 406.
INDICTMENT, when against bankrupt, 839.
officers, 383,
for omitting report, 794.
how drawn, 840.
INJUNCTION, in involuntary bankruptcy, 42, 441.
who may be enjoined, 43, 442.
allegations of petition for, 48, 442.
no notice of, 43, 442.
when dissolved, 44, 443.
violation with notice of, is contempt, 444.
power to issue, 227, 325.
against State courts, 227, 825,
practice in dissolving, 230, 330.
GENERAL INDEX.

INJUNCTION—continued.
to stay proceedings, 180, 686.
all suits will be stayed, 180, 686.
what is violation of stay, 184, 691.
proceedings to punish contempt, 339, ’
party can not be enjoined from going into bankruptcy, 316.

INSOLVENCY, meaning of, 406, 797.
inability to pay debts, 407, 797.
property worth less than debts, 408, 798,
not matter of definition, 797.
non-payment of one debt not sufficient, 797,
varies with localities, 798,

INSOLVENT LAWS, suspended, 807.
from what time, 310.
proceedings under, void, 307.
what proceedings may be continued, 308.
effect of thirty per cent. clause, 308.
in force as to debts not discharged, 310.
poor debtor’s act, 310.
corporations, 309.
bond to take, 809.
distribution under, 311.
right of trustee, 310.

INTENT, when presumed, 412, 801.
judged by legal effect, 413, 802.
not confounded with motive, 416, 802.
when conclusively presumed, 413, 802.
of agent is that of principal, 810,
in lee of pressure, 805.
what facts show intent, 810.

INTEREST, when provable, 81, 564.
when rebate of, 81, 564.
in case of tort, 81, 564.
when there is surplus, 669.
in case of partnership, 775.

INVENTORY, annexed to debtor’s petition, 13, 3992.
in involuntary proceedings, 62, 465.
returned by marshal, 63, 465.
made by assignee, 63, 465.
submitted at creditors’ meeting, 237, 653.

INVOLUNTARY BANKRUPTCY, who may file petition, 28, 397.
debt of petitioning creditor, 28, 434.
who may be proceeded against, 30, 397.
what are acts of bankruptcy, 32, 597.
petition must be filed within six months, 33, 398.
what petition must state, 33, 427.
pleading in petition, 34, 427.
how many must unite in, 28, 432.

971
972 GENERAL INDEX.

INVOLUNTARY BANKRUPTCY—continued.
when assignment is ground for, 404, 416.
receiver by State court, 417.
suspension of commercial paper, 398, 419.
fraudulent conveyances, 597, 403.
deposition to creditor’s debt, 39, 431.
deposition to act of bankruptcy, 39, 431.
deposition not amendable, 432.
verification, 38, 430.
when amendments of petition allowed, 58, 437,
when order to show cause issued, 41, 441.
service upon debtor, 41, 447.
provisional warrant, 44, 441.
temporary injunction, 42, 441.
discontinuance, 47, 461.
intervention by others, 48, 463,
appearance of debtor, 47, 449.
judgment by default, 50, 464,
demand for jury trial, 53, 449.
mode of taking defense, 58, 451.
trial, 58, 456.
new trial, 61, 458.
costs, 449.
proceedings under warrant, 62, 464.
when first meeting adjourned, 468.
debtor can not file voluntary petition, 458.
exemptions to, 512.
may be discharged, 267, 696.
when default bars discharge, 720.

80 per cent. clause does not apply to, 722.

ISSUES, when adjourned, 75, 381.
what must be adjourned, 76, 381.
effect of adjournment, 80, 857.

JUDGMENT, when proceedings on, enjoined, 227, 325.
when lien of, protected, 217, 319.
how sale under, set aside, 218.
may be enforced in bankruptcy, 172.
when validity of, must be attacked in State court, 600.
when void as a preference, 811.
when set aside by district court, 219.
when confession of, an act of bankruptcy, 397.
presumed to be regular, 411.
power of district court to liquidate, 215.
proof of, when rendered after adjudication, 82, 575.
warrant to confess, effect of, 813.
no presumption of insolvency, 408.
takes effect from entry, 813.
when levy under, valid, 813.
GENERAL INDEX. 973

JURISDICTION of State courts not divested, 145, 539.
over debtor, 4.
in voluntary bankruptcy, 4, 385,
in involuntary bankruptcy, 40, 427.
in cases of partnership, 68, 761.
may be raised on petition, 8.
shown as objection to discharge, 8, 699.
of district court in bankruptey, 206, 312.
to enjoin State courts, 227, 325.
to what extends, 211, 328.
on summary petition, 222, 331.
by suit at law, 224, 341.
by suit in equity, 225, 341.
when parties reside in same district, 224.
extent territorially, 208, 314.
conferred by appearance, 208, 831, 334.
of the supreme court, 300, 368.
supreme court of D. C., 206, 340.
district courts of territories, 206, 340.
to revise decisions, 287, 353.
of circuit courts, 227, 841.
at law, 227, 841.
In equity, 227, 341.
to revise decisions, 291, 361.
how invoked, 295, 366.
to what extends, 292, 361.
on appeal, 287, 353.
on writ of error, 287, 353.
when petitions filed in different districts, 59, 859.
of State courts over suits by assignee, 231, 336.
JURY TRIAL, on summary petitions, 224, 336.
on specifications, 281, 716.
in involuntary proceedings, 58, 455.
JUSTICES OF SUPREME COURT, to frame rules, 371.
can not extend operation of act, 372.

LAW, PROCEEDINGS AT, in district court, 224, 341.
in circuit court, 227, 341.
when must be used, 222, 331.
rules regulating, 226, 868.
writ of error in, 287, 353.
LIENS, definition of, 173.
preserved in bankruptcy, 173, 592.
equitable, 594.
mechanics’, 599.
of partners, 595.
on vessel, 600,
unrecorded, 596.
974 GENERAL INDEX.

LIENS—continued.

judgment, 600.
execution, 602.
of vendor, 598.
of attorney, 597.
mortgage, 604.
pledges, 597.
on profits, 607.
proof of, 100, 623.
when forfeited, 101, 625.
district court may liquidate, 173, 592.
assignee gell free from, 173, 608.

subject to, 178, 612.
lienor may apply for sale, 177, 613.
cost of liquidation, 176, 611.
redemption of, 170, 564.
by bills to set aside fraudulent conveyances, 527.
by creditor’s bill,. 595.
by attachment, 507.
how enforced after discharge, 507.
when rent is, 584.
on exempted property, 160, 512.

LIMITATION, suits by and against assignee, 227, 550.
not revived by appointment of assignee, 227, 550.
debts barred by, to be scheduled, 11, 392.
are provable, 573.
are discharged, 738.

proof need not anticipate defense of, 622.
of six months to act of bankruptcy, 398.
of four months to preference, 795.
of six months to assignments, $28.
in involuntary bankruptcy, 837.

MARRIED WOMEN. See Feme Covert.
MARSHAL to serve warrants in voluntary cases, 25, 394.
order to show cause, 41, 447.
when to arrest debtor, 44, 441.
take debtor’s property, 44, 441.
when seizure by, proper, 46, 445.
may demand indemnity, 46, 445.
liable for trespass, 446.
return at crecitors’ meeting, 119, 467.
makes return of expenses, 119, 857.
fees to be secured, 864.
fees of, 256, 789.
for custody of property, 257, 789.
includes assistants, 888.
MEANING OF TERMS used in the act, 383.
GENERAL INDEX. 975

MEANING OF TERMS—continued.
party, 382,
given, 467.
time of adjudication of bankruptcy, 565.
concealment, 701.
fraudulent preference, 707.
after, 711.
trader, 419, T11.
becoming bankrupt, 715.
bankruptcy, 37, 407.
insolvency, 37, 407.
reascnable cause, 814,
contemplation of bankruptcy, 37, 407.
insolvency, 37, 407.
manufacturer, 419.
commercial paper, 421.
meetings, 786.
lien, 173.
residence, 388.

MEETINGS, the ist, when to be called, 24, 894.
register to fix time of, 25, 467.
preside at, 73, 376.
return of marshal at, 119, 466,
when to be adjourned, 120, 467.
election at, 122, 468.
how long to be held, 122, 469.
the 2d, when to be called, 235, 653.
what to be done, 2387, 653.
the 3d, when to be called, 239, 655.
what to be done, 239, 655.
to remove assignee, 147, 477.
to consider appointments of trustees, 671.
to be called by assignee, 656.
2d and 38d, on discharge, 653.
others, when called, 240, 655.

MINUTE BOOK, clerk to keep, 378, 853.
memorandum, to be entered in, 378, 853.
constitutes record, 373.
what to be entered in, 853.

MORTGAGES of chattels, 546.
chattel when valid, 546,
unrecorded, 499.
on exempted property, 160.
on vessels, 600.
effect on vendor’s lien, 598.
on property in two States, 605.
by partner under seal, 605.
by agent under seal, 605.
976 GENERAL INDEX.

MORTGAGES—continued.
for future advances, 605.
effect of change of note, 606.
change of mortgage, 606.
future profits, 607.
insurance, 607.
district court may liquidate, 173, 592.
assignee may sell free from, 173, 608.

subject to, 173, 612.

mortgagee may apply to district court to sell, 176, 613.
when void as preference, 795.
may be withheld from record, 799.
in pursuance of previous agreement, 806.
when fraudulent, 529.
right of redemption, 170, 564.
mortgagee may surrender, 592.
proof of, 99, 625.

MUTUAL DEBTS to be set off, 89, 587.
when on claim purchased, 89, 587.
not op unliquidated claim, 91, 590.
meaning of term, $0, 588.
by stockholder, 91, 589.
joint against separate, 91, 588.
debt not due, 91, 590.
insurance policy. 91, 589.
not by nominal owner, 591.
effect of proof without, 592.

NOTICE of first meeting, 25. 467.
how served, 25, 467.
by publication, 24, 394.
adjourned without proper, 120, 467.
when new, given, 120, 467.
to assignee before suit brought, 227, 550.
of appointment of assignee, 137, 548.
meetings ordered by court, 656.
for removal of assignee, 147, 477.
second meeting, 236, 656.
third meeting, 239, 655.
final account of assignee, 240, 657.
dividend, 239, 669.
application for discharge, 268, 696.
involuntary petition, 41, 447.
appeal, 289, 358.
revisory proceedings, 296, 366.
applications to sell incumbered property by assignee, 175, 610.
creditor, 178, 615.
petition for counsel fees, 666.
GENERAL INDEX. 977

NOTICE—continued.
of summary petition, 224, 335.
what served on attorney, 854.
how served, 854.

OATH of register, 72, 375.
allegiance, 10, 394.
register may administer, 379.
to debtor’s petition, 16, 394.
to proof of claim, 85, 618, 629.
bankrupt examined on, 191, 640.
of bankrupt before discharge, 269, 725.
fees for deposition, 785.
to creditor’s petition, 38, 480.
debt, 39, 431.
act of bankruptcy, 39, 431.
schedules, 16, 394.
what officers may take, 379.
OFFICER, public, defalcation of, 728.
of corporation to petition, 2, 776.
authority to file petition, 8, 778.
. not to be discharged, 777.
ORDER of sale by court, 168, 560.
for examination, 191, 648.
for dividend, 237, 653.
for debtor to appear, 41, 441.
for creditors to show cause against discharge, 268, 696.
of reference, 17.
what to contain, 17.
not special, 786.
courts may compel obedience to, 207, 339.
of discharge, 284, 727.

PARTNERS, proceedings by, 65, 761.

where petition of, filed, 68, 761.

when may file jointly, 68, 762.

how long partnership subsists, 66, 762.

who may vote on petition of, 124, 766.

how property of, distributed, 244, 770.

proofs against several estates of, 244, 766.

when one may share in estate of another, 773.

when transfer by one to another, void, 772.

proceedings by one against another, 67, 763.
what petition in should state, 67, 763.
where petition may be filed, 68, 761.
defenses in, 70, 763.
when brought in by assignee, 765.
all must be parties, 68, 765.
adjudication in, 70, 765.

62
978 GENERAL INDEX.

PARTNERS—continued.
proceedings by one against encther, return of property in, 71.
when several petitions filed, 70, 859.

petitions filed in different districts, 70, 775.
conveyances by, may be set aside, 762, 801.
discharge of, 761, 775.
on individual petition, 732, 765.
from partnership debts, 66, 732.
discharge of one, does not relezse another, 732.
proceedings by creditors against, 428,
petition. must charge joint act, 428.
act of one is act of all, 428.
one may defend though others make default, 457.
when creditors of, share in separate estate, 243, 771.
when creditors of, share in individual estate, 245, 766.
can not vote on individual petition, 124.
tights of assignee of one partner, 767.

PAYMENT of claims, 237, 653.
fraudulent, prevents discharge, 698.
when a preference, 795.
on contract not to oppose discharge, 838.
what an act of bankraptey, 397.
suspension of, 398.
when a misdemeanor, 839.
of deposited moneys, 141, 863.
of dividends, 141, 863.

PENALTIES, offenses under the act, 839.
concealment of property, 839.
destruction or mutilation of books, 839.
removing books out of district, 839.
fraudulent payments, gifts, &c., 839.
loss by gaming, 889.
concealing property from assignee, 839.
omitting property from schedule, 839.
allowing fictitious debt, 839.
alleging fictitious losses, 839.
obtaining credit fraudulently, 839.
indictment for, 840.
what officers subject to, 383.
what acts of officers punished, 383.

PERISHABLE PROPERTY, or in dispute, may be sold, 179, 561.
when to be sold, 179, 562.
proceeds measure of value, 180, 561.
ordered into possession of assignee, 179, 562.

PETITION in voluntary bankruptcy.
who may file, 1, 385.
what to set forth, 8, 385.
no interlineation or abbreviation, 9, 858.
GENERAL INDEX. ‘979

PETITION in voluntary bankruptey—continued.
how signed, 16.
to be verified, 16, 39-+.
where to be filed, 4, 385.
entries on filing, 17, 858.
can not be dismissed, 19, 387.
order of reference, 17, 854.
adjudication upon, 18, 385.
when warrant under, to issue, 24, 394.
may be amended, 22, 395.
register may order amendments, 21, 396.
creditor may ask for amendments, 21, 396.
bankrupt may amend, 22, 395.
how amendments may be made, 22, 868.
where amendments must be filed, 396.
may be amended before discharge, 396.
PETITION in involuntary bankruptcy.
who may file, 28, 397.
who may. be proceeded against, 80, 397.
what acts necessary to, 32, 397.
what must aver, 33, 427.
must allege proper number have joined, 34, 429.
must be signed, 38, 480. .
must be verified, 88, 430.
where may he filed, 40, 427.
may be amended, 53, 437.
order upon filing, 41, 441.
when dismissed without notice, 47, 461.
at what time dismissed, 47, 461.
can not be dismissed after adjudication, 48, 462.
must be accompanied by depositions, 39, 428.
may be dismissed for want of proper deposition, 482.
how objections to, may be taken, 53, 450.
PETITION, summary.
when may be used, 220, 331.
when the proper remedy, 222, 381.
when objections to, may be taken, 223, 385.
what must aver, 223, 335.
must be signed, 224, 335.
verified, 224, 335.
practice under, 224.
PETITION against assignee.
for removal of, 147, 477.
what must aver, 147, 477.
must be verified, 147.
where may be filed, 147, 477.
service under, 147.
980 GENERAL INDEX.

PETITION against assignee—continued.
when court may remove, 148, 478.
when meeting of creditors called, 149, 477.
PETITION for discharge.
when filed in 60 days, 266, 695.
may be filed at any time, 266, 695.
what must aver, 267, 695.
order upon, 268, 696.
service of notice under, 268, 696.
PETITION, revisory.
when filed in circuit court, 291, 361.
proper mode of revising decrees, 292, 361.
to what decree extends, 292, 361.
jurisdiction of circuit court under, 292, 361.
what must aver, 295, 366.
practice under, 295, 366.
PLEADINGS upon appeal on disputed claim, 111, 359.
what must aver, 111, 359.
to be filed with clerk, 111, 863.
defense of assignee within ten days, 111, 863.
PRACTICE, justices to regulate, 371.
what adopted in equity, 226, 868.
at law, 225, 868.
when summary petition may be used, 222, 331.
suits must be at law or in equity, 222, 331.
decrees may be reviewed on petition, 291, 361.
appeal lies, 287, 353.
writ of error lies, 287, 353.
suits in State courts continued, 181, 686.
State courts enjoined, 227, 325.
what proceedings are void, 211, 319.
on appeal upon disputed claim, 111, 359.
on habeas corpus, 185, 692.
on petition for stay, 181, 686.
PREFERENCE is an advantage, 412.
when an act of bankruptcy, 397, 409.
when void, 795, 807. 229s
what may be set aside, 811. 76°. » { %
what must concur to constitute, 796.
standing four months is valid, 799.
when debtor is insolvent, 797.
standing two months is valid, 837.
what constitutes intent, 801.
made under pressure, 805.
what is reasonable cause, 814.
to an indorser, 824.
to surety, 824.
to principal where there is surety, $24.
GENERAL INDEX. 981

PREFERENCE —-continued.
by warrant of attorney, 813.
by judgment, 811.
when district court may interfere with judgment, 218, 811.
bars a discharge, 698, 707.
when conclusively presumed, 412, 801.
under prior agreement, 806.
present consideration, 806.
knowledge, 823.
merely voidable, 824.
bona fide purchaser, 825.
PREFERRED CREDITOR can not vote for assignee, 124, 476.
can not be assignee, 132, 476.
must surrender preference before proof, 95, 636.
can not surrender after judgment, 99, 637.
may surrender in involuntary cases, 96, 398.
what debts forfeited, 100, 639.
PRIORITY of wages, 241, 663.
what claims to have, 241, 663.
of fees, 785.

of liens, 592.
what petition to have, 859.

PROCEEDINGS IN BANKRUPTCY matter of record, 378.
not recorded, 373.
copies of, 373.
how certified, 374.
what is commencement of, 372.
by whom may be conducted, 8538.
entry of attorney’s name, 854,
how papers indorsed, 854.
what papers may be served on, 854.
PROCESS, how issued, 853.
fees, 259.
PRODUCTION of bankrupt to testify, 194, 651.
of books and papers, 379.
PROOF OF DEBTS, how made, 81, 620.
by whom may be made, 83, 620.
what must contain, 87, 621.
who may take, 85, 619, 629.
postponement of, 93, 635.
of preferred debts, 94, 635.
register may postpone, 93, 635,
not taken from file, 105, 626.
may be amended, 104, 626.
at what time amended, 104, 627.
how far amended, 104, 627.
with security, 100, 623.
when security forfeited by, 101, 625.
982 GENERAL INDEX.

PROOF OF DEBTS—continued.

relinquishment of preference before, 96, 636.

retained by creditor no proof, 104, 470.

to be sent to assignee, 142, 630.

to be filed with clerk, 855.

court has control over, 106, 631.

who may ask for rejection of, 106, 631.

when rejected, 109, 632.

appeal from rejection or allowance of, 110, 354.

notice of appeal, 110, 358.

pleadings on appeal, 111, 359.

when appeal dismissed, 112, 358.

when debtor member of two firms, 83, 592.

actions surrendered by, 112, 684.

how far surrendered, 113, 684.

for unliquidated damages, 92, 564.

for interest, 82, 564.

of judgment, $2, 565.

by bail, surety or guarantor, 93, 582.

for rent, 584,

contingent labilities, 92, 577.
PROPERTY not coilectible to be sold, 168, 558.

procuring, to be attached, 679.

removing from district, 697.

lost by gaming, 698.

conveyed fraudulently, €98.

conveyed as a preference, 698,

conveyed to defeat act, 828.

concealment an act of bankruptcy, 397.

assignment for benefit of creditors, 404, 416.

marshal to take possession of, 44, 441.

taken on provisional warrant, 45, 441.

what passes to assignee, 480.

acquired a'ter petition, 481.

when sale by bankrupt void, 482.
PUBLICATIONS. Sce ADVERTISEMENTS.

REASONABLE CAUSE, what is, 814.
belief of intelligent man, 814.
unusual conveyance, 817.
suspicion, 818.
transfer of all property, 829.
by retail dealer, 820.
knowledge of overdue debts, 821.
warrant of attorney, 819. .
suspceusion, 821.

RECEIVER, when district court may appoint, 352.
when distribution made by, 654.
GENERAL INDEX. 983

RECEIVER. —continued.
appointment of, an act of bankruptey, 417.
when property in possession of, not disturbed, 214, 320.
RECORDS, how kept, 373.
copies to be evidence, 375.
minutes of register to be entered, 378.
of assignment, 146, 544.
in district court, 480.
REDEMPTION, assignee’s right of, 170, 564.
before debt due, 170, 564.
release of creditor, 172, 592.
filing petition for, 170, 859.
order of hearing thereon, 171, 859,
REGISTERS, how appointed, 72, 874.
who eligible, 72, 374.
to give bond, 72, 375,
to take oath of office, 72, 375.
what disqualified for, 72, 375.
removal of, 72,375.
vacancies, how filled, 72, 37-4.
duties of, 73, 376.
to make adjudication, 738, 576.
to administer oaths, 73, 376.
preside at meetings, 75, 376.
take proofs, 73, 376.
to compute dividends, 73, 376.
to make orders of distribution, 73, 376.
audit accounts, 74, 376.
grant protection, 74, 375.
pass exatuination, 74, 376.
direct advertisements, 74, 854.
order payment of taxes, 74, 854.
wages, 74, €54.
to take evidence concerning expenses, 74, 854.
to liquidate securities, 74, 854.
to declare dividends, 74, 854,
to tax costs, 74, 854.
to summon and examine persons, 74, 379.
require the production of books, ete., 74, 379.
dispatch administrative business, 74, 376.
not to commit for contempt, 74, 378.
hear disputed adjudication, 74, 378.
allow discharge, 74, 378.
to make memoranda, 74, 378,
to adjourn issues into court, 75, 381.
may take opinion of judge, 76, 381.
reference of cases to, 77, 383.
take depositions of witnesses, 379.
984 GENERAL INDEX.

REGISTERS—continued.
acts by, to be reduced to writing, 75, 379.
parties summoned before, must attend, 379.
to issue a warrant, 24, 394.
to be impartial, 123, 469.
to preside at first meeting, 123.
duties judicial, 123.
to make assignment, 137, 480.
to hold meetings for distribution, 237, 653.
to prepare list of creditors, 239, 669.
what constitutes a day’s sitting, 855.
to examine bankrupt’s petition, 21.
to give certificate of correctness, 21.
to notify assignee of his appointment, 136, 468.
may order an examination, 190, 643.
examination before, 195, 644.
no power to decide objections, 198, 644.
to note objections, 198, 644,
to forward memoranda by next mail, 74, 878.
to keep account, 75, 857.
to make returns of, 75, 857.
fees of, 260, 785.
fees to be secured, 260, 785.
what expenses allowed, 260.
may order assignee to make return, 267, 697.
when case taken from, 379.
when may appoint assignee, 130, 468.
offenses by, 383.
evidence may be taken before, 379.
can not certify to copies, 373.
proof must be satisfactory, 94, 630.
not to be counsel or attorney, 72, 375.
REMOVAL of register, 72, 375,
of assignee, 147, 477.
who may file petition for, 147, 477.
order on, 147, 478.
of property, bars discharge, 698.
an act of bankruptcy, 39%.
how punished, 839.
RENT, when apportioned, 584.
alien, 584.
to have priority, 584.
part of expenses, 586.
distress for, void, 211, 319.
REPORTS, ANNUAL, by marshal, 792.
by register, 793.
clerk, 793.
assignee, 793.
penaity for omitting, 794.
GENERAL INDEX. 985

SALES, assignee may make, 166, 525.
of unencumbered property, 168, 560.
by public auction, 168, 560.
by private sale, 168, 560.
notice of, 168, 560.
of franchise of corporation, 169, 861.
of real estate, 169, 476.
of uncollectible assets, 168, 563.
of property of corporation, 776.
of encumbered property, 178, 592.
free from encumbrances, 174, 608.
of property subject to encumbrances, 173, 612.
on petition of creditor, 177, 613.
in dispute, 179, 561.
of perishable property, 178, 563.
when auctioneer may be employed, 251, 660.
title of purchaser, 169, 476.
title to encumbered property, 170.
on execution, 172, 319.
when district court can not set aside, 218, 328.
of exempted property, 163.
when bankrupt may purchase, 557, 562.
when by debtor void, 238.
when by bankrupt void, 482.
when a misdemeanor, 839.
when void as preference, 795.
when by debtor valid as preference, 800.
SCHEDULES of debts, 10, 391.
of assets, 18, 392.
may be amended, 22, 395.
to be furnished by involuntary bankrupt, 62, 465.
partners, 71.
made up by marshal, 63, 465.
what must contain, 10, 391.
mode of stating property in, 13.
mode of stating debts, 12.
SECURITIES, proof of, 100, 625.
when forfeited by proof, 101, 625.
mode of liquidating, 172, 592.
may be surrendered, 173, 593.
no vote, 128.
SERVICE of voluntary petition, 24, 394.
of involuntary petition, 41, 447.
when debtor can not be found, 42, 447.
on dissolved corporation, 42, 447.
of petition for discharge, 268, 696.
for removal of assignee, 147, 477.
for dividend meetings, 236, 656.
986 GENERAL INDEX.

SERVICE—continued.

how notices mailed, 862.

of notice on parties, 854.

of notice on attorney, 854.

waived by appearance, 208, 534.
SET-OFF, right of, 89, 587.

of unliquidated claim, 91, 590.

not of claim purchased, 91, 591.

how far allowed, $1, 591.
SPECIFICATIONS, who may file, 272, 716.

when to be filed, 274, 717.

may be filed with register, 276, 717.

must be definite, 279, 719.

what must state, 279, 719.

may be amended, 281, 719.

mode of objecting to, 280, 720.

trial of, 281, 720.

evidence in support of, 281, 721.

what creditors estopped from filing, 281, 721.
STATE COURTS, jurisdiction of, 210, 316.

suits in, may be continued, 213, 539.

when suits in, surrendered, 112, 684.

injunction against, 227, 325.

interference with, by district court, 213.

over suits by assignee, 231, 336.

can not enjoin party from going into bankruptcy, 316.
STAY of what suits, 181, 686.

till what time, 181, 686.

by State court, 182, 687.

by court of bankruptcy, 182, 690.

when amount in dispute, 183, 686.

by debtor proceeded against, 184, 688.

when suits allowed, 184, 687.

after discharge, 185, 744,
SUPERSEDING BANKRUPT PROCEEDINGS by agreement of creditors,

671.

nomination of trustee, 671.

court to confirm, 671.

who are moving parties, 672.

conveyance to, 671.

jurisdiction over trustees, 673.

power of trustees, 674.

examination of bankrupt, 671, 674.

proof of debts, 673.

discharge, 672.

when proceedings continue, 672.
SURETY may prove, 93, 582.

when may receive dividend, 241, 652.
GENERAL INDEX. 987

SURETY—continuel.
preference to, void, 795, 824.
when not released, 732.
released by assent to discharge, 725.
demands against, provable, 92, 580.
on appeal bond, 358.
on assignee’s bond, 476.
on bond to dissolve attachment, 506.
SUSPENSION of commercial paper, 398, 419
what is, 420.
when continued for 40 days, 423.
fraudulent, 426.

TAXES to have priority, 663.
TESTIMONY, how taken, 379.

register may take, 379.

to be filed with clerk, 379.

of bankrupt, 191, 640.

of witnesses, 191, 648.

of bankrupt’s wife, 191, 650.

claim of privilege, 201, 649.
TERRITORIAL COURTS, jurisdiction of, 840.

how held, 340.

how proceedings are revised, 340, 368.
THIRTY PER CENT., when assets must equal, 281, 722.

liens deducted, 282, 724.

no deductions for costs, 282, 724.

when not required, 722.

involuntary bankrupt, 722.

no certificate without, 283.
TIME, computation, 383.
TRADER, who is, 419, 711.

suspension of paper by, 419.

omission to keep books, 698, 711.
TRANSFER, fraudulent, 525.

to give preference, 795.

after filing a petition, 482.

when a misdemeanor, 839.

what constitutes offenses, 839.
TRUST, property held by bankrupt in, 546.

when exists in specie, 547.

claim for conversion of, 547.

conveyances in, when valid, 831.

conveyance in, when an act of bankruptcy, 404, 416.
TRUSTEES to settle estate, 671.

delivery of property to, 671.

powers of, 671.

UNITED STATES, debis due to, 663.
988 GENERAL INDEX.

UNITED STATES—continued.
collection of taxes, 663.
not affected by discharge, 737.
UNLIQUIDATED DAMAGES, claim for, 564, 576.
can not be set off, 590.
assessment of, 577.
USURY, judgment not void for, 601.
judgment can not be vacated for, 601, 603.
by corporation, 835.
assignee can not recover, 494.
defense to claim, 573.
forfeiture for, enforced in bankruptcy, 574.
determined by lex loci contractus, 574.

VOLUNTARY BANKRUPTCY, who may petition, 1, 385.
what residence necessary, 4, 385.
petition for, 8, 385.
schedules in, 10, 391.
in what courts commenced, 3, 385.
commencement, an act of bankruptcy, 372,
oath of allegiance, 10, 394.
adjudication, 20.
issuing of warrant, 24, 394.
publication of notices, 24, 395.
what proper service, 24, 395.
adjournment for defects in service, 120, 467.
VOTE, who may cast, 123, 469.
solicitation of, 184, 474.
none by preferred creditor, 124, 476.
what necessary to choice, 128, 468.
on removal of assignee, 148, 477.
to choose successor, 150,
VOUCHERS, by register, 75, 857.
by assignee, 857.
by marshal, 259, 857.

WAGES to have priority, 241, 663.
WAIVER, of appeal, 359.
of right of action by proof, 684.
WARRANT on debtor's petition, 24, 394.
to be under seal, 24, 394.
by whom issued, 24, 394.
what to contain, 24, 394,
mode of serving, 24, 394.
to be served by marshal, 24, 394.
what is proper service of, 24, 394.
return of, 119, 467,
when new service ordered, 120, 467.
provisional, 44, 441,
GENERAL INDEX. 989

_ WARRANT—continued.
to take possession of property, 44, 441.
to arrest debtor, 44, 441.
on involuntary petition, 63, 464.
oe ek when new, to be issued, 121, 467.
death of debtor after issuing, 652.
against partnerships, 71.
to arrest witnesses, 380, 651.
WARRANT OF ATTORNEY, when an act of bankruptcy, 397.
not evidence of insolvency, 408.
when seizure under, void, 813.
WIFE OF BANKRUPT may prove claim against husband, 570.
separate property of, 582.
bound by husband’s knowledge, 570.
; may be examined, 191, 650.
mr on what topics examined, 200, 650.
effect of failure to attend examination, 650.
can not be made a witness, 760.
property of, 495.
WITNESSES, who may be summoned, 191, 648.
court may compel attendance, 194, 379.
register may summon, 191, 379.
attendance under arrangement, 671.
parties may be, 648.
fees of, 195, 648.
bankrupt’s wife can not be, 760.
fees tendered, 195, 648.
may be examined, 191, 648.
on what topics examined, 200, 648.
deposition of, to act of bankruptcy, 39, 431.
= not amendable, 39, 431.
-,.° “WRIT OF ERROR to district court, 287, 853.
in what cases lies, 286, 353.
notice of, 291, 358.
bond on, 291, 358.
when assignee may maintain, 354.
to circuit court, 300, 368.
be
be

KF 1524 BOQ4 1877

 

Author

Bump, Orlando Franklin

Title

Law and practice in bankruptcy.

Vol.

Copy

 

 

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