KF 
 
Cornell University Library 
 KF 1524.C69 1899 
 
 The law of bankruptcy and the national B 
 
 3 1924 019 343 189 
 
Cornell University 
 Library 
 
 The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924019343189 
 
THE 
 
 L-WV OF BANKRUPTCY 
 
 The National Bankruptcy Act 
 
 1898. 
 
 A TREATISE ON THE PRINCIPLES AND PRACTICE OF THE 
 
 LAW OF BANKRUPTCY AS EMBODIED IN THE 
 
 NEW NATIONAL BANKRUPTCY ACT. 
 
 With Citations to all Applicable Cases Decided under the Former United 
 
 States Bankruptcy Acts, many English Decisions, and 
 
 Extended Notes and Comments upon the 
 
 New Statutory Provisions, 
 
 AND containing 
 
 The Official Rules, Forms and General Orders in Bankruptcy, as Pre- 
 scribed BY THE Supreme Court of the United States, Cross- 
 Referenced, Annotated and Indexed; ' 
 
 and also 
 
 The Rules in Equity of the United States Courts; and also a List op the 
 
 Judges and Clerks of the Courts of Bankruptcy. 
 
 WM. MILLER COLLIER, 
 
 Of tke Auburn^ N. V., Bar, and One of the Referees in Bankruptcy for the 
 Northern District of Nezu York. 
 
 ALBANY, N. Y.: 
 
 MATTHEW BENDER 
 
 1899 
 
Copyright, 1898, 
 
 BY 
 
 WM. MILLER COLLIER. 
 
 Copyright, 1899, 
 
 BY 
 
 WM. MILLER COLLIER. 
 
 WEED-PARSONS PRINTING COMPANY, 
 
 PRINTERS AND ELECTROTYPERS, 
 
 ALBAMY, N. V. 
 
PREFACE TO ENLARGED EDITION 
 
 CONTAINING 
 
 Official Forms and Rules 
 
 AND 
 
 U. a EQUITY RULES. 
 
 In presenting to the profession and to the public, an enlarged 
 edition of my work on bankruptcy, it is but proper that the 
 character and extent of the additions be explained. In this 
 edition the forms which appeared in the original edition have 
 been superseded by the official forms just promulgated by the 
 Supreme Court; and the rules and orders in bankruptcy pre- 
 scribed by the same court have been inserted. Not only is the 
 full text of these rules and forms given, but an exhaustive index 
 of them has been made, and. they have been annotated and 
 cross-referenced as far as their nature permits. The fact that 
 by rule XXXVII it is provided that in proceedings in equity 
 instituted for the purpose of carrying into effect the provisions 
 of the bankruptcy act, or for enforcing the rights and remedies 
 given by it, the rules of equity practice prescribed by the U. S. 
 Supreme Court shall be followed, has led me to insert these rules ; 
 and a detailed index accompanies them. 
 
 A list of the judges of the U. S. District Courts and of the 
 clerks thereof, and the addresses of the clerks, has been inserted 
 for the convenience of attorneys. 
 
 The almost universal tendency on the part of practitioners, — 
 in some cases enforced by local rulings of district courts — 
 
PREFACE. 
 
 to withhold proceedings in bankruptcy until the promulga- 
 tion of the official rules, has resulted in an almost complete 
 absence of adjudications under the new law. Consequently 
 the enlarged edition contains, besides the additions above 
 mentioned, no changes in the text of the original edition 
 except the correction of a few typographical errors, and the 
 changing of the abstract of the exemption laws of Louisiana to 
 correspond with a new statute of that state recently passed and 
 to go into effect upon January first, 1899. I* '^ believed, how- 
 ever, that everything affecting the law and practice of bank- 
 ruptcy is embodied in the book. 
 
 The marked favor shown to the work, — the original edition 
 of which was exhausted on the day of issue and of which there 
 have been already four reprints, — is a matter for which the 
 author tenders his sincerest thanks. That the book, — now 
 more full and complete than ever before and embracing, in one 
 volume, the statute itself, the official rules, forms and orders, the 
 exemption laws of all the states, the equity rules, exhaustive 
 comment, and full citation of all authorities now applicable, — 
 may be of further aid to the members of the profession and may 
 assist them in the construction and application of the law and in 
 practice under its provisions, is the wish of 
 
 THE AUTHOR. 
 
 Auburn, N. Y., November 29th, 1898. 
 
PREFACE. 
 
 The Law of Bankruptcy is purely statutory both in its origin 
 and in its development. Underneath it lies the one great funda- 
 mental principle that when a person's property is insufficient to 
 pay in full all of his creditors, it shall be equitably divided pro rata 
 among them; but there is probably no other principle which can 
 be said to be fixed and permanent and fundamental. Even in 
 England, where there has been a continuous system of bankruptcy 
 for over three hundred years, that system has been developed 
 rather by parliamentary legislation than by judicial decision; 
 while in the United States so infrequent and spasmodic has been 
 the exercise by Congress of its constitutional powers upon the 
 subject that we can hardly claim that bankruptcy is a part of our 
 system of jurisprudence. It has been, in the past, rather in the 
 nature of fragmentary statutory legislation, the various enact- 
 ments on the subject being separated by intervals of decades, and 
 each presenting important features not appearing in those pre- 
 ceding it, and often the later acts containing provisions which 
 evidenced a different purpose and policy than those of the earlier 
 acts. So entirely unstable and unfixed is bankruptcy as a system 
 of law that under the last two statutes, as will be seen by refer- 
 ence to the notes under section 12 of the present work, the courts 
 have very frequently been called upon to determine what is a 
 bankruptcy law, and what the "subject of bankruptcy" includes. 
 The successive statutes have affected different classes of persons, 
 have materially changed the manner of procedure, have differed 
 radically as to the acts to be regarded as acts of bankruptcy and 
 have at times enlarged and at other times restricted the rights of 
 creditors, or the benefits conferred and the duties imposed upon 
 bankrupts. Not only have there been changes, but the changes 
 
iv PREFACE. 
 
 have not always tended toward any one end or indicated any fixed 
 purpose. Like all laws of statutory creation the development of 
 the American bankruptcy system has not been harmonious and 
 symmetrical. 
 
 The study of bankruptcy, then, is a matter of statutory con- 
 struction. The law must be considered and applied and enforced 
 as it appears enacted, not as general notions of equity may seem 
 to indicate as proper. The aim of the author of this book has 
 been to study the bankruptcy act of 1898, to analyze its provi- 
 sions and terms ; in fine to ascertain the expressed will and inten- 
 tion of Congress. Following the general principle of the law of 
 construction that each part of a statute or document is to be con- 
 strued with reference to the whole, each section has been con- 
 sidered in connection with all others on the same or kindred 
 topics, and copious cross-references have been given under the 
 various sections. 
 
 But it is not to be denied that the present bankruptcy act, 
 though presenting many points of dissimilarity, is substantially 
 like that passed in 1867, and also bears many resemblances to 
 those passed in 1800 and 1841. The fact has not been overlooked 
 that the adjudicated cases decided under those acts not only shed 
 light on the meaning of terms and provisions of the present act, 
 but that in very many cases they are indisputably clear authori- 
 ties. In so far as these cases are applicable we have cited them, 
 and for every legal proposition unqualifiedly stated, judicial 
 authority is given. Many of the cases cited are now analogous 
 rather than decisive; but it is believed they sustain the points 
 made. The reader will, of course, bear in mind that when a case 
 is cited upon a given point, it is by us claimed to be applicable 
 or analogous only as to that particular point. Upon other matters, 
 by reason of differences between the present and former acts, it 
 may be entirely inapplicable and incorrect as an exposition of the 
 present law. While an attempt has been made to give all appli- 
 cable decisions, we have also endeavored to omit all that would 
 mislead and confuse. To show to what extent the cases may still 
 be considered authorities, special pains have been taken to point 
 out the differences between the statutes, and with this aim in 
 view under each section we give the analogous provisions in all 
 
PREFACE. V 
 
 the former acts, and as an appendix have inserted, for purposes 
 of comparison, the full text of the act of 1867 with all amend- 
 ments up to the time of its repeal. 
 
 While the authority of decided cases is cited for every legal 
 proposition which is stated without qualification, we have felt 
 that we would fail in properly performing the work undertaken 
 if, because of the lack of adjudicated cases, no study should be 
 given to and no comment made upon the great number of ques- 
 tions which spring up from the new and changed provisions 
 of the act. In considering these we have not, however, always 
 felt called upon to answer them dogmatically ; but they have all 
 been discussed and treated, and everything bearing upon them 
 laid fully and fairly before the reader. 
 
 We take this opportunity of publicly extending our thanks to 
 H. Noyes Greene, Esq., of the Troy, N. Y., bar, for assistance 
 in preparing the index to this book and the table of cases ; also 
 to William H. Hotchkiss, Esq., of Buffalo, N. Y., referee in 
 bankruptcy for Erie county, for his assistance in the preparation 
 of the forms. 
 
 In presenting the work to the profession we do so with hesi- 
 tancy. Of its shortcomings and failings few will be more keenly 
 conscious than ourselves, but we ask that those who use it will 
 bear in mind that the book is in the nature of a pioneer undertak- 
 ing. It could without question be made more accurate, full and 
 complete if its publication could be delayed until the courts 
 should have construed the provisions of the statute and judicially 
 answered all the questions that might arise, and if then it were 
 made a mere digest of their decisions. But the demand of the 
 bar is for a work that will to some extent, at least, aid them in 
 the solution of the questions that will arise in the early months of 
 practice under the act, before adjudications are plentiful. This 
 task of "blazing the way" is here undertaken, and in proportion 
 to the difficulty of the task we ask the leniency of the critic. 
 
 WM. MILLER COLLIER. 
 
 Auburn, N. Y., Sept. 10, 1898. 
 
TABLE OF CONTENTS. 
 
 PAGH. 
 
 Preface TO Original Edition iii 
 
 Preface to Enlarged Edition vii 
 
 Table of Cases xi 
 
 CHAPTER I. 
 
 Definitions. 
 
 SBCTIOH, 
 
 I. Meaning of words and phrases , i 
 
 CHAPTER II. 
 
 a. Creation of Courts of Bankruptcy and their jurisdiction .... 6 
 
 CHAPTER III. 
 Bankrupts. 
 
 3. Acts of Bankruptcy 34 
 
 4. Who may become Bankrupts 51 
 
 5. Partners 57 
 
 6. Exemptions of Bankrupts 70 
 
 7. Duties of Bankrupts 79 
 
 8. Death or Insanity of Bankrupts 90 
 
 9. Protection and Detention of Bankrupts 91 
 
 10. Extradition of Bankrupts 99 
 
 11. Suits By and Against Bankrupts 100 
 
 1 2. Compositions, when Confirmed 114 
 
 13. Compositions, when Set Aside 132 
 
 14. Discharges, when Granted 133 
 
 15. Discharges, when Revoked 138 
 
 16. Co-debtors of Bankrupts 148 
 
 17. Debts not Affected by a Discharge 154 
 
 [vii] 
 
via TABLE OF CONTENTS. 
 
 CHAPTER IV. 
 Courts and Procedure Therein. 
 
 SSCTIOH. PAGE. 
 
 1 8. Process, Pleadings, and Adjudications i95 
 
 19. Jury Trials 201 
 
 20. Oaths, Afl&rmations *o* 
 
 21. Evidence 204 
 
 22. Reference of Cases after Adjudication 209 
 
 23. Jurisdiction of United States and State Courts 210 
 
 24. Jurisdiction of Appellate Courts 221 
 
 25. Appeals and Writs of Error 225 
 
 36. Arbitration of Controversies 229 
 
 27. Compromises.. . 229 
 
 28. Designation of Newspapers 230 
 
 29. Offenses 230 
 
 30. Rules, Forms, and Orders , 233 
 
 31. Computation of Time 233 
 
 32. Transfer of Cases 234 
 
 CHAPTER V. 
 Officers, Their Duties and Compensation. 
 
 33. Creation of two Officers 236 
 
 34. Appointment, Removal, and Districts of Referees 236 
 
 35- Qualifications of Referees 237 
 
 36. Oaths of Office of Referees 237 
 
 37. Number of Referees 238 
 
 38. Jurisdiction of Referees 238 
 
 39. Duties of Referees 240 
 
 40. Compensation of Referees. 243 
 
 41. Contempts before Referees 244 
 
 42. Records of Referees 245 
 
 43. Referee's Absence or Disability 246 
 
 44. Appointment of Trustees 246 
 
 45. Qualifications of Trustees 248 
 
 46. Death or Removal of Trustees 248 
 
 47. Duties of Trustees 252 
 
 48. Compensation of Trustees 260 
 
 49. Accounts and Papers of Trustees 261 
 
 50. Bonds of Referees and Trustees 261 
 
 5 1 . Duties of Clerks 263 
 
TABLE OF CONTENTS. ix 
 
 ""•<»•• PACE 
 
 52. Compensation of Clerks and Marshals 263 
 
 53. Duties of Attorney-General 266 
 
 54. Statistics of Bankruptcy Proceedings 266 
 
 CHAPTER VI. 
 Creditors. 
 
 55. Meetings of Creditors 267 
 
 56. Voters at Meetings of Creditors 272 
 
 57. Proof and Allowance of Claims 274 
 
 58. Notice to Creditors 289 
 
 59. Who may File and Dismiss Petitions 292 
 
 60. Preferred Creditors 298 
 
 CHAPTER VII. 
 Estates. 
 
 61. Depositories for Money 334 
 
 62. Expenses of Administering Estates 334 
 
 63. Debts which may be Proved 337 
 
 64. Debts which have Priority 366 
 
 65. Declaration and Payment of Dividends 369 
 
 66. Unclaimed Dividends 372 
 
 67. Liens 372 
 
 68. Set-Off s and Counterclaims 39 1 
 
 69. Possession of Property 401 
 
 90. Title to Property 403 
 
 The Time when this Act shall go into Effect 427 
 
 Operation of State Insolvency Laws Suspended 427 
 
 Laws as to General Assignments not Suspended 430 
 
 Laws as to Dissolution of Corporations 431 
 
 APPENDIX A. 
 
 The Bankruptcy Act of 1867 433 
 
 APPENDIX B. 
 Abstracts of the Exemption Laws of the Different States 
 
 and Territories , . . . . 473 
 
 APPENDIX C. 
 
 The Rules in Equity of the United States Courts 493 
 
 Index to the Rules in Equity of the United States Courts. . 521 
 
X TABLE OF CONTENTS. 
 
 APPENDIX D. 
 
 List of the Judges and Clerks of the Courts of Bankruptcy, with 
 
 OfiScial Addresses of the Clerks 533 
 
 The General Orders in Bankruptcy, Annotated and Cross- 
 referenced „ , 537 
 
 Index to General Orders in Bankruptcy , 573 
 
 Official Forms , 583 
 
 Index to Forms 659 
 
 General Index 665 
 
TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 Abbe, In re, 162. 
 Absedo, In re, 206. 
 Adam, Ex parte, 53. 
 Adams. J. L., In re, 84. 
 V. Mills, 203. 
 V. Myers, 425. 
 V. Storey, 428. 
 Adier Bros, In re, 223, 249. 
 Afflalo V. Foudrinier, 161, 364. 
 Ala. & Chat. R. R. Co. v. Jones, 54, 
 
 225. 
 Albrecht, In re, 150. 
 Alcott V. Avery, 169. 
 Alderdice v. Bank, 318. 
 Aldrich v. Campbell, 394. 
 Alexander, In re, i8, 223. 
 
 W., In re, 296, 358. 
 Alisbury v. Troughton, 94. 
 AUeman v. Booth, 219. 
 Allen V. Ferguson, 191, 192, 193. 
 V. Massey, 420, 423. 
 V. Merchants' Bank, 322. 
 V. Soldier's B. M. & D. Co., no. 
 V. Ward, 109. 
 Almon V. Hamilton, 127. 
 Alsager v. Currie, 395. 
 Alsberg, In re, 97, 98. 
 Alston V. Robinett, 140, 141, 145. 
 American Ex. Bank v. Brandreth, 169. 
 Ames, In re, 376. 
 
 V. Oilman, 113, 114. 
 Amory v. Lawrence, 419. 
 Amoskeag Mfg. Co. v. Barnes, 186. 
 Amsinck v. Bean, 61, 161, 308. 
 Anderson, In re, 283, 390. 
 V. Hampton, 92. 
 V. Rountree, 94. 
 Angier, In re, 256, 415. 
 Anon, In re, 82, 268. 
 Anshall v. Denby, 128. 
 Ansonia B. & C. Co. v. Babbitt, 21. 
 V. N. L. Chimney Co., 105, no. 
 Anstill V. Crawford, 180, 183. 
 
 [X 
 
 Apperson v. Stewart, 192, 193. 
 Archenbrown, In re, 141, 156, 291. 
 Arding v. Flower, 94, 95. 
 Argall V. Jacobs, 173, 189. 
 Armstrong v. Rickey, 49. 
 Arnold v. Leonard, 258. 
 
 V. Maynard, 44, 137. 
 
 V. Oliver, 167. 
 Ashby V. Steere, 137. 
 Ashley v. Robinson 82. 
 Aspinwall, In re, 206. 
 Astley V. Gurney, 393. 
 Atkins, Ex parte, 398, 425. 
 Atkinson, In re, 32. 
 
 V. Bank, 43, 137. 
 Atty.-Gen. v. Siddon, 322. 
 
 V. Skinners Co., 95. 
 Auriol v. Mills, 350. 
 Austin V. Caverley, 428. 
 Avery v. Hackley, 326. 
 Ayers, In re, 288, 343. 
 Ayr V. Brastow, 61, i6i. 
 
 B. 
 
 Babbitt V. Burgess, 407. 
 
 v. Walburn, 327. 
 Babcock v. Echler, 39. 
 Bachman v. Packard, 211, 212. 
 Bacon v. Heathcote, 408. 
 Badenheim, H., In re, 325. 
 Badger v. Gilmore, 192. 
 Bage, Ex parte, 259. 
 Bailey, Ex parte, 396. 
 
 V. Loeb, 350. 
 
 V. Weir, 113. 
 Baker, In re, 49. 
 
 Ex parte, 249. 
 
 V. Mount, 164. 
 
 V. Taylor, 189. 
 
 V. Vining, 257. 
 Baldwin v. Hale, 428. 
 
 V. Rosseau, 55. 
 Ballin v. Ferst, 69, 386. 
 Ballou, In re, 26. 
 
 i] 
 
Xll 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 Bank v. Cooper, 225. 
 
 V. Onion, igo. 
 
 V. Sherman, 406. 
 
 of England, Ex parte, 273. 
 
 of Madison, In re, 185, 400. 
 
 of U. S. V. Davis, 321. 
 Banning v. Bleakley, 180. 
 Barker v. Smith, 421. 
 Barnard v. Norwich & Worcester R. R. 
 
 Co., 378. 
 Barnett, In re, 247, 248, 279. 
 Barron v. Morris, 228. 
 
 V. Newbury, 414. 
 Barrow, In re, 140. 
 
 Ex parte, 53. 
 Barry, Ex parte, 98. 
 Barstow v. Hansen, 187, 188. 
 Bartenbach, In re, 347. 
 Bartholomew v. West, 77. 
 Bartholow v. Bean, 330. 
 Bartusch, In re, 271. 
 Barwise, Ex parte, 53. 
 Bass, In re, 75. 
 Batchelder, In re, 42, 302. 
 
 V. Low, 142. 
 Bateman v. Bailey, 38. 
 Bates. Ex parte, 249. 
 
 V. Tappan, 151. 
 Beal, In re, 83. 
 Beals V. Quinn, 51. 
 Bean v. Amsinck, 128, 129. 
 
 V. Bookmier (4 B. R. 196), 129, 
 309. 
 
 V. Bookmier (7 B. R. 568), 128. 
 Beardsley v. Hall, 141. 
 Beaston v. Farmers' Bank, 367. 
 Beattie v. Gardner, 43, 45, 384. 
 Bechet, In re, 130. 
 Beck V. Parker, 430. 
 Beckerford, In re, 71. 
 Beckham v. Drake, 415. 
 Beebe v. Pyle, 131. 
 Beecher v. Clark, 39, 423. 
 Beeneman, Ex parte, 137. 
 Belden, In re, no. 
 
 & Hooker, In re, 84. 
 Bell, Ex parte, 256. 
 
 V. Bird, 125. 
 
 V. Carey, 393. 
 Bellamy, In re, 134. 
 
 V. Woodson, 167. 
 Belle V. Simpson, 307. 
 Bellis V. Milligan, In re (3 B. R. 199), 
 206. 
 
 V. Milligan, In re (3 B. R. 496), 
 137, 138. 
 Bellows V. Peck, In re, 103, 104. 
 
 Belton V. Hodges, 53. 
 Benfield v. Solomons, 329. 
 Benham, In re, 197. 
 Bennett, In re, 82, 377. 
 
 V. Alexander, 153. 
 
 V. Avant, 99. 
 Benson, In re, 417, 
 Bentley v. Wells, 307. 
 Bernasconi, Ex parte, 104. 
 Bernstein, In re, 22, 378, 380. 
 Betts, In re, 27. 
 
 V. Bagley, 428. 
 Bevan, Ex parte, 66. 
 Biddle, In re, 24. 
 Briesenthal, In re, 303, 325. 
 Bigelow & Kellogg, In re, 66. 
 Bill V. Beckwith, 24, 25. 
 Bird V. Brown, 315. 
 
 V. Harold, 32. 
 Birmingham Gas Light Co., Ex parte,. 
 
 125- 
 
 Bishop V. Church, 396. 
 Bissell V. Conchane, 185. 
 Bisson, Ex parte, 107. 
 Bittel, In re, 276. 
 Bittlestone v. Temmsi, 393. 
 Black V. Blazo, 141, 117. 
 
 V. McClelland, 343. 
 
 & Secor, In re, 41, 47, 384. 
 Blake v. Bigelow, 164. 
 
 V. Williams, 30. 
 Blakes, Ex parte, 29. 
 Blanchard v. Paschal, 76. 
 
 V. Russell, 30, 117, 428. 
 Blandin, In re, 359. 
 Bliss, In re, 250. 
 Blodgett & Sandford, In re, 251. 
 Bloomer v. Statly, 71. 
 Bloss, In re, 284, 295. 
 Bloxham v. Sanders, 426. 
 Blue Ridge R. R. Co., In re, 958. 
 Blum V. Ellis, 156. 
 Blumenthal v. Anderson, i6g. 
 Bodington v. Costello, 424. 
 Bolander v. Gentry, 333, 40a. 
 Bolton, Ex parte, 60, 64. 
 
 V. Martin, 94. 
 Bond, Ex parte. 66. 
 
 V. Gardner, 150. 
 Bonesteel, In re, 27. 
 Bonsall v. Comly, 76. 
 Book, In re, 52, 134. 
 Boone v. Hall, 218, 328. 
 
 V. Revis, 21. 
 Booth V. Middlecoat, 160. 
 Boothroyd, In re, 76, 77. 
 Borden v. Cuyler, 66. 
 
TABLE OF CASES CITED. 
 
 XUL 
 
 The numbers refer to the pages. 
 
 Bosanquett v. Dashwood, 417. 
 Bosler v. Kuhn, 350. 
 Bouton, In re, 294. 
 Bovill V. Wood, 160. 
 Bowser, Ex parte, 250. 
 Boyd, In re, 418. 
 
 V. Vanderkamp, 322. 
 Boylan, In re, 62. 
 Bracken v. Johnston, 221, 387, 390. 
 Brackett v. Watkins, 77. 
 Bradbury, In re, 86, 87. 
 Bradford v. Rice, 165, 356. 
 Bradley, In re, 67. 
 
 V. Healey, 26. 
 Bradner v. Strang, 173, 182. 
 Bradsbaw v. Klein, 389 
 Bradstreet v. Everson, 322. 
 Braley V. Boomer, 150. 
 Bramwell v. Eglinton, 407. 
 
 V. Lucas, 2q6. 
 Brand, In re, 283, 284. 
 Brandon v. Robinson, 410, 413. 
 
 Mfg. Co. V. Frazer, 105. 
 Brandreth, In re, 169. 
 Brandt, In re, 418. 
 
 G., In re, 88, 290. 
 Buck V. Cole, 129. 
 Brent v. Bank of Wash., 367. 
 Brett V. Brown, 93. 
 
 V. Carter, 377. 
 Brewer, In re, 232. 
 
 V. Boynton, 191. 
 
 V. Dew, 415. 
 Brichia v. N. Y.Lafayette Ins. Co., 412. 
 Bridgman, In re. 372. 
 Briggs. In re, 403. 
 
 V. McCuUough, 73. 
 
 V. Stevens. 24. 
 
 V. Thompson, 416. 
 Brigham v. Clafiin, 217, 218. 
 Brinkman, In re. 24. 140. 
 Bristol V. Sandford. 424. 
 Britten, Ex parte, 95. 
 Brix V. Braham. 193. 
 Broadway Bank v. Adams, 427. 
 Brock V. Terrell, 23. 
 Broich, In re, 283, 295, 296, 343, 390. 
 Brombey v. Smith, 416. 
 Bromley, In re, 81, 85, 88, 290. 
 
 V. Holland, 94. 
 Brooke v. Hewitt, 413. 
 
 V. McCracken, 332. 
 Broome, In re, 75. 
 Brown, In re, 78. 
 
 Ex parte, 69. 
 
 Stephen, In re, 356. 
 
 T. Bank, 401. 
 
 Brown v. Broach, 173, 189. 
 
 V. Heathcote, 375. 
 
 V. Wood, 414. 
 Browne v. Carr, 128, 149. 
 Bruner v. Sherley, 376. 
 Brunquest, In re, 380, 391. 
 Bruteston v. Cooke, 307. 
 Bryant, Ex parte, 282. 
 Buchanan v. Findley, 395. 
 
 V. Smith, 47, 302, 318, 324, 384. 
 Buchstein, In re, 147. 
 Buck V. Colbath, 22, 221. 
 Buckingham v. McLean, 23, 49, 137. 
 Buckner & Co., In re, 69. 
 
 V. Calcote, 69. 
 
 V. Jewell, 27. 
 Bucyrus Machine Co., In re, 64. 
 Bugbee, In re, 286, 363. 
 Bullymore v. Cooper, 74. 
 Burbank v. Bigelow, 213, 215. 
 Burch, In re, 297. 
 Burdick v. Jackson, 44. 
 Burgen v. Patterson, 182. 
 Burk, In re, 138. 
 Burkholder v. Stump, 336. 
 Burn, Ex parte, 283. 
 Burnhisel v. Firman, 45, 304, 326. 
 Burns, In re, 21. 
 
 V. Harris, 76. 
 Burnside v. Brigham, 140. 
 Burper v. Sparhawk, 141. 
 Burr V. Carr, 152. 
 
 V. Hopkins, 287. 
 Burt V. Mould, 61. 
 Bush V. Lester, 74. 
 Butcher v. Forman, i6i, 364. 
 Butler, Ex parte, 426. 
 Butt, Ex parte, 127. 
 
 V. Haughwout, 331. 
 Butterfield, In re, 198. 
 Byrne, In re, 63, 65, 68. 
 Byrne, 95. 
 
 c. 
 
 Cady V. Whaling, 333. 
 
 Caldecott, Ex parte, 88. 
 
 Cal. Pac. R. R. Co., In re, 9, 198. 
 
 Cambridge Institution v. Littlefield, 
 
 192. 
 Camp V. Gifford, 154. 
 Campbel', In re, 21, 22. 
 
 Ex parte, 207. 
 
 V. Perkins, 209. 
 Canfield, In re, 293. 
 Cannon v. Dennerd, 55, 56. 
 
 V. Wellford, 61. 
 Capell V. Trinity Church, 358. 
 
XIV 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 Card V. Walbridge, 328. 
 Carpenter v. Terrill, 150. 
 Carr v. Gale, 407. 
 
 V. Hilton, 328, 426. 
 Carrington, Ex parte, 53. 
 Carroll v. Shields, I2g. 
 Carson v. Osborn, 193. 
 Carter, Ex parte, 250. 
 
 V. Abbott, 417. 
 
 V. Dimmick, 26. 
 
 V. Goodrich, 167. 
 Casey, In re, 25, 225. 
 Cassard et al. v. Kroner, 140. 
 Cassidy v. Stewart, 94. 
 Cathie, In re, 393. 
 
 V. Hoffman, 45, 306, 378. 
 Chadwick v. Starrett, 159. 
 Chamberlain, In re, 122. 
 
 V. Gurney, 164. 
 
 V. Perkins, 429. 
 Chandler, In re, 55, 56, 358. 
 
 Ex parte, 60. 
 
 V. Siddle, 431. 
 
 V. Winship, 156. 
 Chapman v. Brewer, 407. 
 
 V. Forsyth, 135, 179, iSo, 181, 183, 
 185. 
 Chase v. Scales, 145. 
 Chauvun v. Alexandre, 94. 
 Chemung Bank v. Judson, 8, 114. 
 Cheney, In re, 92. 
 Childerston v. Barrett, 94. 
 Christy, Ex parte, 9, 11, 12, 14, ig, 23, 
 
 24, 218, 222, 227, 375, 397. 
 City Bank, In re, 393, 399. 
 City of Boston v. Shaw, 140. 
 Claflin V. Houseman, 217, 218. 
 Clairmont, In re, 247, 248. 
 Clapp V. Thomas, 73. 
 Clarion Bank v. Jones, 44, 302, 332, 420. 
 Clark, In re, 81, 85. 
 
 V. Atkinson, 193. 
 
 V. Binninger, 8, 23, 222, 224, 284, 
 381. 
 
 V. Hawkins. 394. 
 
 V. Iselin, 45, 49, 50, 227, 304, 306, 
 313, 321, 378, 381, 391, 400. 
 
 V. Rist, 430. 
 
 V. Rowling, 166, 167. 
 
 V. White, 129. 
 Clason V. Morris, 376. 
 Clay, Ex parte, 60. 
 Cleland, In re, 56. 
 Clendening, In re, 360. 
 Cleveland v. Boerum, 112, 114. 
 Clinton v. Mayo, 296. 
 Clopton V. Spratt, 149, 153. 
 
 Clough, In re, 345. 
 Coale V. Williams, 324. 
 Cobb, Ex parte, 130. 
 
 V. Becke, 322. 
 
 V. Symonds, 55. 
 Cockerell v. Dickens, 363. 
 Coe V. Witbeck, 61. 
 Cogburn v. Spence, 169. 
 Coggeshall v. Potter, 5. 
 Cogswell, In re, 268, 269. 
 Cohn, J., In re, 336. 
 Coit V. Robinson, 138, 227. 
 Cole V. Duncan, 24. 
 
 V. Hawkins, 94. 
 Coleman v. Davis, 186. 
 Collier, Taylor & Co., In re, 58, 62, 63, 
 
 64. 
 Collins, In re, 53, 421. 423. 
 
 V. Gray, 309. 
 
 V. Hood, 45, 137. 
 
 V. Jones, 392. 
 Colt V. Netterville, 56. 
 Colwell, In re, 335. 
 Comly V. Fisher, 332. 
 Cammercial Bank of Manchester T. 
 Buckner, 144, 180. 
 
 of Penn. v. Union Bank, 322. 
 Commonwealth v. Baldwin, 158. 
 
 v. Brady, 232. 
 
 V. Hutchinson, 158. 
 
 V. O'Hara, 429. 
 Comstock, In re, 206. 
 
 Edson, In re, 164. 
 
 & Co., In re, 288, 306. 
 Connard v. Ins. Co., 367. 
 Connell, In re, 83. 
 Connor, In re, 44. 
 
 V. Long, 406. 
 Conrad v. Ins. Co., 332. 
 Constantien v. Blache, 129. 
 Cook and Gleason, In re, 24, 63. 
 Cook V. Barnes, 327. 
 
 V. Farrington, 284. 
 
 V. Rogers, 324, 325, 326, 430, 431. 
 
 V. TuUiss. 45, 305, 315, 316, 375, 
 409. 
 
 V. Waters, 421. 
 
 V. Whipple, 218. 
 Cookingham v. Ferguson, 333, 389. 
 
 V. Morgan, 332. 
 Cooley V. Cook, 233, 316. 
 Coolong v. Noyes, 127. 
 Cooper V. Troy Woolen Co., no. 
 Copeland, Ex parte, 250, 424. 
 
 V. Stevens, 412, 418, 419. 
 Corey v. Ripley, 140, 141, 145, 291. 
 Corliss v. Shepherd, 193. 
 
TABLE OF CASES CITED. 
 
 XV 
 
 The numbers refer to the pages. 
 
 Corn Exchange Bank, In re, 279. 
 Cornell v. Dakin, 152, 189. 
 Cornforth v. Rivett, 395. 
 Cornwall, In re, 199, 277, 362. 
 Cossens, Ex parte, 88. 
 Cotterel, S. P. v. Hooka, 350. 
 Cotten, In re, 52, 164, 
 Cottrell, Ex parte, 358. 
 Coulter, In re, 380. 
 Courtney v. Beale, 186. 
 Cowen, Ex parte, 125, 130. 
 Cowie V. Harris, 316. 
 Cowles, In re, 38, 55, 56. 
 Cox V. Dorwin, III. 
 
 V. Wilder, 77, 415. 
 Coxe V. Hale, 45, 294. 
 Craft, In re (i B. R. 378), 47. 
 
 In re (2 B. R. ni), 201. 
 Cragin v. Thompson, 303, 326, 337. 
 Craig V. Seitz, 192. 
 Crane, In re, 282, 342, 390. 
 Cramer, In re, 287. 
 Crawford v. Atty.-Gen., 157. 
 Crippen v. Heimance, 327. 
 Crisfield, In re, i86. 
 Crispe, Ex parte, 64. 
 Crocker v. First National Bank, 416. 
 Crocket v. Jewett, 58, 83. 
 Crockett, In re, 415. 
 Crompton v. Conklin, 162. 
 Cronan v. Cotting, 182, 185. 
 Crouch V. Gridley, 165, 170, 343. 
 Crump V. Chapman, 321. 
 Cullingworth v. Loyd, 129. 
 Cumming v. Clegg, 75. 
 Curran v. Munger, 41. 
 Currier, In re, 288, 294, 296. 
 Cutter V. Evans, 107. 
 
 V. Folsom, 189. 
 
 D. 
 
 Dambmann v. White, 255. 
 
 Damon, In re, 429. 
 
 Daniels, Ex parte, 358. 
 
 Darby v. Boatman's Savings Inst., 303. 
 
 Dauglish v. Tennent, 127, 129. 
 
 Davenport, In re, 335. 
 
 Ex parte, 279, 284. 
 David v. Bemis, 322. 
 Davidson, C A., In re, 287, 293. 
 Davis, In re, 376. 
 
 V. Anderson, 22, 105, 208. 
 
 V. Railroad Co., 21. 
 Dawes v. Boylston, 30. 
 
 V. Head, 30. 
 Daws V Glasgow, 203. 
 Dean v. Garrett, 39. 
 
 De Chapeauronge, Ex parte, 250. 
 
 Decker v. Kitchen, 192. 
 
 Deckert, In re, 71, 75. 
 
 Deeze, Ex parte, 395. 
 
 De La Vega v. Vianna, 363. 
 
 Denman v. Boylston, 400. 
 
 Dennett v Mitchell, 137. 
 
 Derby, In re 52, 53, 200. 
 
 Desobry v. Morange, 167. 
 
 Detert, In re, 77. 
 
 Devos, In re, 97. 
 
 Dewdney, Ex parte, 359, 360. 
 
 Dewey, In re, 251, 272. 
 V. Moyer, 328, 330. 
 
 Dexter v. Snow, 128. 
 
 Dey, In re, 379, 380. 
 V. Dunham, 417. 
 
 Diack, Ex parte, 104. 
 
 Dibblee, In re, 41, 44, 47, 50, 230. 
 
 Dickerson v. Spaulding, 388. 
 
 Dickson, Ex parte, 363. 
 V. Cast, 399. 
 V. Evans, 398, 399. 
 
 Dillard, In re, 71, 75, 77, 78. 
 
 Dimock v. Revere Copper Co., 131, 167, 
 
 187. 
 Dingee v. Becker 102, 105, no, 155. 
 Dingman, Ex parte, 125. 
 Dingwell v. Edwards, 125. 
 Dixon V. Ely, 95. 
 Doan V. Compton, 41, 50, 60, 200. 
 D'Obree, Ex parte, 29, 316. 
 Dodge V. Com'rs, 141. 
 
 V. Sheldon, 324, 325. 
 Doe V. Bevan, 412. 
 V. Childress, 20. 
 V. Smith, 412. 
 Dole In re, 85. 
 
 Dollar Sav. Bank v. U. S., 158. 
 Dolson v. Pierce, 139. 
 Dommett v. Bedford, 410, 412. 
 Donaldson v. Farwell, 375, 408, 426. 
 Donnell v. Swain, 194. 
 Doremus v. Walker, 21. 
 Dorr, Ex parte, 221. 
 Doty V. Strong, 94. 
 Dow, In re, 393, 394, 398, 408. 
 
 V. Sargent, 321. 
 Downe v. Fuller, 282. 
 Downer v. Brackett, 376. 
 
 V. Rowell, 26. 
 Downing, In re, 58, 63, 64, 67, 153, l6a. 
 
 v. Traders' Bank, 342, 352. 
 Downs, Ex parte, 284. 
 Doyle v. Sharp, 402. 
 Drake v. RoUo, 393, 396. 
 Dresser, In re, 32. 
 
XVI 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 Dresser v. Brooks, ii8. 
 
 V. Norwood, 323. 
 Driggs V. Moore, 41. 
 Drummond, In re, 41. 
 Dudley v. Easton, 409. 
 
 V. Mayhew, 140. 
 Duerson, In re, 71. 
 Duncan, In re, 107, 297, 422. 
 Dunham & Orr, In re, 37, 40. 
 Dunkerson, In re, 68, 283, 381, 390. 
 Dupee, In re, 145. 
 Dupont V. Beck, 183. 
 Dupuy V. Harris, 207. 
 Durant v. Mass. Hosp. Life Ins. Co., 
 
 427. 
 Dusenbury v. Hoyt, 167, 190, ig8. 
 Dutcher v. Bank, 255, 424. 
 
 V. Wright, 234, 316. 
 Dutton V. Morrison, 64, i6i. 
 Duy V. Knowlton, 266. 
 Dyer v. Cleveland, 153, 342. 
 
 Eames, Lucius, In re, 429. 
 Easman v. Cato, 395. 
 Eastabrook v. Scott, 129. 
 Eby V. Schumacher, 332. 
 Ecfort V. Greely, 38. 
 Eckler v. Galbraith, 193. 
 Edmundson v. Hyde, 78. 
 Edwards, Ex parte, 66, 250. 
 
 V. Coombe, 131. 
 Eeles, In re, 55. 
 Egbert v. McMichael, 193. 
 Eland v. Carr, 394. 
 Elder, In re, 278, 281. 
 Eldridge, In re, 362. 
 EUerhorst, In re, 258. 
 Elliot V. Higgins, 186. 
 Elliott, In re, 135. 
 
 V. Keith, 99. 
 Ellis, In re, 69, 77, 380. 
 
 V. Ham, 164, 170, 343. 
 Elton, Ex parte, 60. 
 Emery v. Canal Bank, 67, 352. 
 Emison, In re, 279. 
 English V. Key, 350. 
 Esen V. Carto, 395. 
 Evans, In re, 26. 
 
 V. Carey, 192. 
 
 V. Eaton, 71. 
 Evelyn v. Lewis, 220. 
 Everett, In re, 72, 74, 75, 77. 
 
 V. Derbv, 294. 
 
 V. Stone, 137, 325. 
 
 V. Schwarz, 109. 
 Exley V. Inglis, 407. 
 
 Eyster v. Gaff, 19, 21, 23, «4, 2$, I02, 
 107, 108, 215, 218, 254, 414. 
 
 F. 
 
 Factors' Ins. Co. v. Murphy, 257. 
 
 Fair v. Mclver, 399. 
 
 Farmers & Merchants' Bank v. Joslyn, 
 
 327. 
 Farnsworth, In re, 400. 
 Farnum, In re, 66. 
 Farquhar, Ex parte, 316. 
 Farren v. Crawford, 42, 44. 
 Farris v. Richardson, 52. 
 Farrish, In re, 74. 
 Fay, In re, 206. 
 Feak, In re, 88. 
 Fehley v. Barr, 21, 74. 
 Feinberg, In re, 205. 
 Fellows v. Hall, 187. 
 
 v. Kittredge, 169. 
 Ferguson & Peckham, In re, 26. 
 Field v. Baker, 49. 
 Fillinqui v. Thornton, 293. 
 First Nat. Bank of Troy v. Cooper, 328. 
 Fisher v. Currier, 49. 
 
 V. Hepborn, 11 1. 
 Fiske V. Hunt, 408. 
 Fitchburg Factory v. Malone, 350. 
 Fitzgerald v. Alexander, 193. 
 Flagg v. Ely, 180. 
 
 V. Tyler, 152. 
 Flanagan v. Pearson, 109, 174, 186. 
 Fleckner v. Bank, 314. 
 Fleming v. Lullman, 193. 
 Foot, In re, 306, 426. 
 Foote, In re, 6g. 
 Forbes v. Howe, 44, 318, 321. 
 Forsaith v. Merritt, 61. 
 Fort Stanwix Bank v. Leggett, 328. 
 Fortuna, The, 145. 
 Foster, Ex parte, 19, 407. 
 
 v. Ames, 257, 258. 
 
 V. Goulding, 137. 
 
 V. Hackley, 352, 384, 403. 
 Fowler, In re, 282, 358, 379. 
 
 V. Kendall, 186, 356. 
 Fox V. Adams, 30. 
 
 V. Gardner, 332. 
 
 V. Hill, 39. 
 
 V. Mayer, 39. 
 Foxall V. Levi, 92. 
 Fraley v. Kelly, 193. 
 Franklin Savings Soc, In re, 27. 
 Franklyne v. Fern, 328. 
 Franks, Ex parte, 53. 
 Frear, In re, 162. 
 Fredenberg, In re, 206. 
 
TABLE OF CASES CITED. 
 
 XVll 
 
 The numbers refer to the pages. 
 
 Freedlander & Gerson v. HoUoman, 
 
 113- 
 Freeman, In re, 137. 
 
 V. Deming, 328. 
 
 V. Howe, 22, 221. 
 French v. Morse, 342. 
 Frere v. Perret, 99. 
 Frisbie, In re, 90. 
 Frost, In re, 295, 298. 
 
 V. Carter, 350. 
 Frostman & Hicks, In re, 108. 
 Fuller, In re, 22, 40. 
 
 Ex parte, 414. 
 Fulton Bank v. N. Y. & S. C. Co., 321. 
 Funkenstein, In re, 297. 
 
 Gainey, In re, 74. 
 Gale V. Halfknight, 55. 
 Gallagher, In re, 413. 
 Gallinger, In re, 47, 49, 201, 301. 
 Gardner v. Adams, 415. 
 
 V. Bowen, igo. 
 Gardnerr, Ex parte, 56. 
 Garland, Ex parte, 54. 
 Garrett, In re, 75, 164. 
 Garrison v. Markley, 206. 
 Gary v. Bates, 253. 
 Gates V. Frazer, 258. 
 Gattman v. Honea, 44, 307. 
 Gay, In re, 41. 
 Gaylord v. Imhoff, 76. 
 Gebhardt, In re, 198. 
 Geery v. Bucknor, 193. 
 Geisreiter v. Sevier, 239. 
 Genge & Proctor, In re, 153. 
 Georgia R. R. Co. v. Cubbedge, 183. 
 Gettleson, In re, 134. 
 Geyer v. Irwin, 94. 
 Ghiradelli, In re, 103, no. 
 Gibson v. Carruthers, 426. 
 
 V. Dobie, 46, 308. 
 
 V. Gorman, 186. 
 
 V. Warder, 375. 
 Giddings v. Dodd, 43, 44, 302. 
 Gilbert, In re, 89, 90. 
 
 V. Lynch, 372. 
 
 V. Priest, 218. 
 Gilmore v. Bangs, 113. 
 Gilpin V. Cohen, 94. 
 Gimmingham v. Laing, 55. 
 Givens v. Robbins, 107. 
 Glaser, In re, 95, 97. 
 Glenny v. Langdon, 257, 328, 329, 330, 
 
 420. 
 Globe Ins. Co. v. Cleveland Ins. Co., 
 50, 303. 
 
 NAT. BANKRUPTCY LAW — b 
 
 Goddard v. Weaver, 19, 21, 375. 
 Godden v. Crawhurst, 411. 
 Goedde, In re, 67, 68. 
 Goldie, Ex parte, 92. 
 Goldney, Ex parte, 414. 
 
 V. Lording, 131. 
 Goldschmidt, In re, 38, 39, 137. 
 Goodall V. Tuttle, 10, 18, 79. 
 Goodman, In re, 54, 358. 
 Goodrich v. Wilson, 217. 
 Gordon & Co. v. Scott & Allen, 138. 
 Gormey v. Warren, 412. 
 Grady, In re, 162. 
 Graham, In re, 77. 
 
 V. Meyer, 127. 
 
 V. O'Hern, 192. 
 
 V. Pierson, 168, 351. 
 
 V. Stark, 43, 45, 318. 
 Granger, In re, 284. 
 
 & Sabin, In re, 390. 
 Grant, In re, 247. 
 
 V. National Bank, 319. 
 Graves, In re, 268. 
 
 Ex parte, 283. 
 
 V. Winter, 54. 
 Gray, Ex parte, 251. 
 
 V. Bennett, 417. 
 
 V. Heslep, 256. 
 
 V. RoUo, 397. 
 Green, In re, 358. 
 
 V. Blunt, 73. 
 
 V. Chilton, 184. 
 Gregg, T., In re, 336. 
 Grehir, Ex parte, 369. 
 Greigson v. Gerard, 284. 
 Griel v. Solomon, 193. 
 Griffin, In re, 76. 
 
 V. Borst, 203. 
 
 V. Sutherland, 73. 
 Grimes v. Byrne, 77. 
 Grissel v. Marlow, 141. 
 Griswold v. Haven, 322. 
 
 v. Pratt, 429. 
 Groom v. West, 394. 
 Grover v. Clinton, 181, 183, 184. 
 Guilfoyle v. Anderson, 184. 
 Guise V. State, 73. 
 Gunike, In re, 90. 
 Guptil V. McFee, 76. 
 
 H. 
 
 Haake, In re, 347, 348, 349. 
 Haas & Simpson, In re, 247. 
 
 V. O'Brien, 303. 
 Hadley, In re, 99, 197. 
 Hagan, In re, 372. 
 Haggerty v. Morrison, 190. 
 
XVIU 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 Haliday v. Rtt, 94. 
 Hall, Ex parte, go, 12 
 
 V. Cooley, 55, 56. 
 
 V. Dyson, 128. 
 
 V. Fowler, 152. 
 
 V. Scovel, 258. 
 Hallack v. Tritch, 306. 
 Halsey v. Norton, 61. 
 
 V. Stewart, 94. 
 Hambright, In re, 76. 
 Hamilton v. Bryant, 150. 
 Hamlin v. Hamlin, 105. 
 Hammond v. Atwood, 329. 
 Hampton v. Rouse, 406. 
 Handell, In re, 369. 
 Handlin, In re, 76. 
 Hankey v. Jones, 56. 
 Hanson, Ex parte, 397. 
 
 V. Herrick, 333, 402. 
 Hapgood, In re, 305. 
 Harden, In re, 82, 362. 
 Hardenbrook v. Colson, 180, 183. 
 Hardenburgh, Ex parte, 363. 
 Hardy v. Binninger, 5, 41, 43. 
 
 V. Clark, 5, 41, 200. 
 Harley v. Greenwood, 105. 
 Harris, In re, 80. 
 
 Ex parte, 369. 
 
 V. Peck, ig2. 
 
 V. Rickett, 307. 
 Harrison, Ex parte, 127. 
 
 V. McLaren, 5. 
 
 V. Sterry, 30, 367. 
 Hart V. Farmers' Bank, 323. 
 
 V. Smith, 130. 
 Hartel, In re, 132. 
 Harthill, In re, 402. 
 Harthorn, In re, 369. 
 Hartz, In re, 58. 
 Harvey v. Palmer, 410. 
 Haskell, In re, 124, 126. 
 Hastings v. Fowler, 255. 
 Hatch V. Seely, 284. 
 Hatcher v. Jones, 75. 
 Hathaway v. Brown, 325. 
 Hathorn, In re, 58. 
 Hatje, In re, 297. 
 Hatton, In re, 131. 
 Haughey v. Albin, 321, 325. 
 Haughton, In re, 47. 
 Havens, In re, 402, 410. 
 Hawkins, Geo. A., In re, 430. 
 
 Ex parte, 92. 
 
 V. Blake, 409. 
 
 V. Hastings, 228. 
 
 V. Whittier, 399. 
 Hawley, Ex parte, 88. 
 
 Haworth v. Travis, 74. 
 Haxtun v. Corse, 103, 104, 105. 
 Hayden v. Palmer, 164. 
 Hayes v. Ford, 8. 
 
 V. Dickinson, 408. 
 
 V. Shields, 94. 
 Hayman v. Pond, 180, 183. 
 Hayne v. Lucas, 220. 
 Haynes, In re, 269. 
 Hayton v. Wilkinson, 153. 
 Hazleton v. Valentine, 92, 0. 
 Healey, In re, 94. 
 Heanny v. Birch, 55. 
 Heard v. Arnold, 291. 
 
 V. Jones, 284. 
 Heath, Ex parte, 88. 
 
 V. Chad wick, 329. 
 
 V. Hall, 66. 
 Heller, In re, 83, 301. 
 Helsby, Ex parte, 93. 
 Henderson, Ex parte, 53. 
 Hendricks v. Judah, 355. 
 Henkel, In re, 77. 
 Henly v. Lanier, 74, 193. 
 Hennequin v. Clews, I/8, 180, 181, 183, 
 
 185. 
 Hennocksburg, In re. 343. 
 Hepburn v. Griswold, 71. 
 Herndon v. Ridgeway, 10. 
 Hernthall v. McRae, 193. 
 Herrick, In re, 64. 
 Hester, In re, 74, 256, 415. 
 
 v. Baldwin, 364. 
 Heyman, Ex parte, 99. 
 Hicken, Ex parte, 369. 
 Hicklin, Ex parte, 107. 
 Higden v. Williamson, 414, 
 Hinds, In re, 68, 379. 
 Hill, In re, 138. 
 
 Ex parte, 68. 
 
 v. Harding, 107, 151. 
 
 V. Robbins. 291. 
 
 V. Simpson, 318. 
 Hirsch. In re. 10, 106. 108. 
 Hirschberg, In re. 369. 
 Hiscock V. Green, 63. 
 Hitchcock V. RoHo. 399, 400. 
 Hitchcox V. Sedgwick, 406. 
 Hobart v. Haskell, 103, 104. 
 Hodgson, Ex parte, 64. 
 Holbrook v. Foss. 165. 
 Holland, Ex parte, 251. 
 
 v. Palmer, 127. 
 
 v. Seaver, 113. 
 Holmes v. Remsen, 30. 
 Holyland v. De Mendez, 412. 
 Holyoke v. Adams, 149, 187, 188. 
 
TABLE OF CASES CITED. 
 
 XIX 
 
 The numbers refer to the pages. 
 
 Home Ins. Co. v. HoUis, II2. 
 Hood V. Karper, 287. 
 Hoover v. Greenbaum, 323. 
 
 V. Wise, 322. 
 Hopkins v. Ward, 192. 
 Hornblower v. Proud, 425. 
 Hornby, Ex parte, 284. 
 Horner v. Speed, 192, 193. 
 
 V. Spellman, 187. 
 Hosmer v. Jewett, 425. 
 Houghton, S. S., In re, 137. 
 Housberger, In re, 380, 388. 
 House, In re, 42. 
 Houston V. Moore, 430. 
 Hovey v. Ins. Co., 399. 
 Howard, Cole & Co., In re, 67, 283, 352. 
 Howard v. Crampton, 407. 
 
 V. Crowther, 415. 
 Howe V. Sheppard, 368. 
 
 V; Stow, 399. 
 
 V. Ward, 39. 
 Howes, In re, 316. 
 Howland, In re, 54. 
 Hoyt, In re, 55. 
 
 V. Freel, 105, no. 
 Hubbard, In re, 284. 
 
 V. Allaire, 309. 
 Huber v. Steiner, 361. 
 Huddeson v. Prezer, 94. 
 Hudgins v. Lane, 58, 160, 162. 
 Hudson V. Bingham, 139, 141, 144. 
 Hufnagel, In re, 379. 
 Humble v. Carson, 168. 
 Humphries v. Blight, 398. 
 Hunt, In re, 74, 75. 
 
 J. D., In re, 27, 321. 
 
 & Hornell, In re, 294. 
 
 V. Mortimer, 307. 
 
 V. Pooke, 61, 90, 198. 
 Hunter v. Potts, 29, 363. 
 
 V. U. S., 367. 
 Hurst, In re, 96, 121, 131. 
 
 V. Teft, 25, 26. 
 Hussman, In re, 38, 82, 403. 
 Hutchins v. Taylor, 137. 
 Hutten V. Crutwell, 307. 
 Hutto, In re, 75, 78, 381. 
 Hyde, In re, 258. 
 
 V. Bancroft, 23. 
 
 V. Seine, 332. 
 
 V. Sontag, 389. 
 
 V. Tufts, 415. 
 
 V. Woods, 413, 414. 
 Hymes, In re, 297, 298. 
 
 I. 
 Imrie v. Castrique, 26. 
 
 Independent Ins. Co., In re, 54, 432. 
 Ingalls, In re, 65. 
 
 V. Morgan, 321. 
 Ingraham v. Geyer, 30. 
 Iron Mountain Co., In re, 24. 
 Irving V. Humphrey, 127 
 Isett V. Stuart, 217. 
 Israel, In re, 294, 296. 
 
 J- 
 
 Jack, In re, 200. 
 Jackman v. Mitchell, 129. 
 Jackson, In re, 95, 271, 280. 
 
 Iron Co., In re, 44. 
 
 & Pearce, In re, 74. 
 
 V. Allen, 75. 
 
 V. Burke, 99. 
 
 V. Lomas, 127. 
 
 V. McCulIoch, 303. 
 
 V. Miller, 372. 
 Jacops, Ex parte, 131, 149, 191. 
 Jacobson v. Myers, 39. 
 
 V. Williams, 415. 
 Jacoby, In re, 107. 
 Jacques v. Short, 350. 
 Jakington v. Combes, 399. 
 James, Ex parte, 251. 
 
 V. Atlantic Delaine Co., 54, 60, aoo. 
 
 V. Beach, 388. 
 
 V, Whitbread, 324. 
 Janson, Ex parte, 68. 
 Janvrin v. Smith, 145. 
 Jaycox, In re, 420. 
 
 & Green, In re, 284, 358. 
 Jeffo v. Wood, 365. 
 Jelsh v. Dunnebacke, 200. 
 Jemison v. Blowers, 342. 
 Jenkins v. Armour, 396. 
 
 v. Bank (106 U. S. 571), 114. 
 
 v. Bank (97 111. 568), 256. 
 
 V. Pierce, 408. 
 
 v. Smith, 94. 
 Jenks V. Opp, 154, 155. 
 Jerome v. McCarter, 375, 381, 409. 
 Jersey City Ins. Co. v. Archer, 193, 357. 
 Jewett, In re, 68, 297. 
 Jewson v. Moulson, 408. 
 Jeyes, Ex parte, 98. 
 Jobbins v. Montague, 8, 10, 19, igg. 
 Johnson v. Ball, 189. 
 
 V. Bishop, 20, 21, 107, 108, 220, 954, 
 386. 
 
 V. Collins, 150. 
 
 V. Hunt, 30. 
 
 V. Rogers, 326. 
 Jones, In re (6 West. Jur. 71), 73. 
 
 In re (6 B. R. 386), 85. 
 
XX 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 Jones, D., In re, 280. 
 
 Ex parte, 358. 
 
 V. Clark, 172. 
 
 V. Kinney, 337. 
 
 V. Knauss, 95. 
 
 V. Knox, 186. 
 
 V. Leach, 380. 
 
 V. Marshall, 95. 
 
 V. Russell, 185. 
 
 V. Sleeper, 36, 49, 137. 
 Jordan, In re (8 B. R. 180), 71, 72, 76. 
 
 In re (9 B. R. 416), 286. 
 
 V. Downey, 217. 
 Joseph, In re, 95. 
 Joy V. Berdell, 256. 
 Judson, In re, 86. 
 Juneau Bank v. McSpedan, 94. 
 
 Kahley, In re, 326. 
 Kallish, In re, 147. 
 Kane v. Ingraham, 153. 
 
 V. Rice, 422. 
 Kansas City Stone & Marble Mfg. Co., 
 
 In re, 314. 
 Kaufman v. Alexander, 184. 
 Kean, In re, 76. 
 
 & White, In re, 71. 
 Keating v. Keeper, 77. 
 Keime v. Graff, 183. 
 Kellogg V. Schuyler, 164, 165, l66, 343. 
 Kelly V. Scott, 408. 
 
 V. Strange, 415. 
 Kelso, In re, 256. 
 Kennedy, Ex parte, 68. 
 Kennier v. Kennier, 139. 
 Kensington, Ex parte, 67, 68, 349. 
 Kent V. Downing, 386. 
 Kenyon, In re, 40, 56. 
 Kerosene Oil Co., In re, 23. 
 Kerr, In re, 78. 
 Key V. Flint, 396. 
 Kidder v. Horrobin, 216, 217. 
 Kimball, In re, 94. 
 
 G. W., In re, 96, 97. 
 
 J. H., In re, 97, 180, 183. 
 King, In re (i N. Y. Leg. Obs. 391), 55, 
 56, 134- 
 
 In re (10 B. R. 103), 49. 
 
 Ex parte (7 Ves. Jr. 312), 94, 95. 
 
 V. Central Bank, 153. 
 Kingsland v. Spalding, 185. 
 Kingsley, In re, 82, 157, 362, 400. 
 
 V. Cousins, 193. 
 Kinkeade, In re, 53, 68. 
 Kinzie v. Winston, 409. 
 Kipp, In re, 287. 
 
 Kirby, Ex parte, 88. 
 
 V. Garrison, 153. 
 Kirkpatrick v. Tattersall, 193. 
 Klancke, In re, 325. 
 Klein, In re, 117. 
 Knapp V. Anderson, 152, 153. 
 
 V. Hoyt, 193. 
 Knight, In re, 67. 
 
 V. Cheney, 212, 214. 
 
 V. Hunt, 128. 
 Knoepfel, In re, 281. 
 Knowlton v. Moseby, 129, 389. 
 Knox V. Bank, 112. 
 Koch, In re, 88. 
 Kunzler v. Kohans, 118. 
 Kyle, In re, 95. 
 Kyler, In re, 281, 366. 
 
 Lacey, Ex parte, 250. 
 
 Lake, In re, 407. 
 
 Lake Superior S. C. R. R., In re, 271, 
 
 273- 
 Lalor V. Wattles, ir8. 
 Lamb v. Brown, 156, 171. 
 
 V. Damron, 19. 
 Lambert, In re, 74, 75, 78. 
 Lamkin v. Starkey, 94. 
 Lane, In re, 397. 
 
 & Co., In re, 308. 
 Lang, J. B., In re, 233. 
 Langdon, In re, 120. 
 Langley v. Perry, 303, 430. 
 Lanier, In re, 84, 85. 
 Lansing v. Prendergast, 350. 
 Latham v. Lafone, 125. 
 Lathrop v. Drake, lo, i8 19, 96, 108, 
 217, 218. 
 V. Stuart, 209. 
 Laurie, In re, 418. 
 Lavender, Ex parte, 55. 
 
 V. Gosnell & Tripolett, 429. 
 Lawrence v. Harrington, 182, 184, 192. 
 Layton, Ex parte, 53. 
 Lazarus v. Commonwealth Ins. Co., 
 
 412. 
 Leachman. In re, 86. 
 Leaf, Ex parte, 68. 
 Lee, J., In re, 287. 
 
 & Armstrong, In re, 68. 
 Lee V. Hart, 307. 
 
 V. Phillips, 167. 
 Leeds, In re, 50. 
 Leers, Ex parte, 283. 
 Legal Tender Cases, 72, 118. 
 Legge, Ex parte, 86. 
 Lehman v. Strassberg, 358. 
 
TABLE OF CASES CITED. 
 
 XXI 
 
 The numbers refer to the pages. 
 
 Leicester v. Rose, 127,128. 
 Leigh, Ex parte, g2. 
 Leighton, In re, 199. 
 Leland, In re, 68, 162. 
 
 et al., In re, 422, 423. 
 
 Simeon, In re, 287. 
 Lenke v. Booth, 180, 183. 
 Lenihan v. Haman, 112, 414. 
 Leo V. Joseph, i6g. 
 Leonard, In re, 201. 
 Lerow v. Wilmarth, 193. 
 Levy, In re, 85, 86. 
 
 & Co., Ex parte, 125. 
 
 & Levy, In re, 148. 
 Lewis, In re (i B. R. 239), 59. 
 
 In re (14 B. R. 144), 120. 
 
 V. Bun, 418. 
 
 V. Hawkins, 156. 
 
 V. Peck, 322. 
 
 V. Sloan, 217. 
 
 V. U. S., 65. 
 Libby v, Hopkins, 395. 
 Lincoln v. Batelle, 322. 
 Lingan v. Bayley, 92. 
 Linkman v. Wilcox, 43. 
 Linn v. Smith, 296. 
 List, Ex parte, 94, 95. 
 Little, In re (1 B. R. 341), 160, 162. 
 
 In re (2 B. R. 294), 135, 199. 
 
 V. Alexander, 302. 
 Littlefield v. D. & H. C. Co., 147, 225. 
 Livingston v. Bruce, 45, 304, 306, 336. 
 Lloyd, In re, 295. 
 Locke, In re, 36. 
 Loder, In re, 340. 
 Lombard v. Thorp, 413. 
 Long, In re, 58, 63, 64. 
 Longley v. Swayne, 189. 
 Lord, Ex parte (11 Jurist 186), 87. 
 
 Ex parte (Buck, no.), 206. 
 
 V. The Watchman, 30. 
 Loring, J. C In re. 289. 
 Loud V. Pierce, n8. 
 Louden v. Blanford, 112. 
 Love V. Blair, 76. 
 Lowe V. Waller, 358. 
 Ludlow V. Browning, 426. 
 Luther v. Deys, 164. 
 Lyall V. Miller, 414. 
 Lyell V. Goodwin, 94, 96. 
 Lyon, In re, 53. 
 
 J. H., In re, 426. 
 
 V. Isett, 187. 
 
 M. 
 MacDonald v. Moore, 325, 336. 
 Macey v. Jordan, 164. 
 
 Macintire, In re, 84. 
 Mackay, In re, 137. 
 Mackersy v. Ramsey, 322. 
 Madison v. Dunkle, 187. 
 Major v. Aukland, 329. 
 Mallory, In re, 23, 249, 251. 
 Maltbie v. Hotchkiss, 326, 430. 
 Mann, In re, 295. 
 Manwarring v. Kouns, 167, 187. 
 March v. Heaton, 407. 
 Marks, In re, 402. 
 
 V. Barker, 394. 
 
 V. Upton, 350. 
 Markson v. Heaney, 10, 19, 23, 140. 
 
 V. Hobson, 321. 
 Marrett v. Atterbury, 366. 
 
 V. Murphy, 63. 
 Marsh, In re, 223. 
 
 V. Armstrong, 25, 402. 
 
 V. Chambers, 398. 
 Marshall v. Knox, 17, 19, 20, 21,25, 26, 
 212, 214, 258, 332, 378, 381, 387, 
 410. 
 
 V. Tray, 192. 
 Marston, In re, 135. 
 Martha, The, 145. 
 Martin, In re, 87. 
 
 V. Berry, 429, 430. 
 
 V. Black, 418. 
 
 V. Hunter's Lessee, 219. 
 
 V. Nightingale, 55, 56. 
 Marvin, In re, 53. 
 
 V. Chambers, 306, 376. 
 Marwick, In re, 68. 
 Mason, Ex parte, 283. 
 
 & Hamlin Organ Co. v. Bancroft, 
 131, 149, 191. 
 
 V. Warthens, 106. 
 Matteson v. Kellogg, 180, 185. 
 Matthews v. Tufts, 93, 94. 
 
 V. Westphal, 313. 
 Mankin v. Chandler, 26. 
 Maxim v. Morse, 192. 
 May & Merwin, In re, 349, 365, 417. 
 Mayer v. Hellman, 431. 
 
 v. Hermann, 321, 324. 
 Mayor v. Nias, 395. 
 
 V. Walker, 185, 186. 
 Mays V. Fritton, 20. 
 
 V. Man. Nat. Bank, 218, 406,407,417. 
 McAdoo V. Lumiss, 186. 
 McBrien, In re, 85. 
 McClusky V. McNeeley, 73. 
 McCombs V. Allen, 150. 
 McConnell, In re, 284. 
 McCormick v. Pickering, 189. 
 
 V. Sullivan, 30. 
 
XXll 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 McCracken v. San Francisco, 315. 
 McCulloch V. Maryland, 118. 
 McDonald, D. A., In re, 137, 149. 
 
 V. Bauendahl, 330. 
 
 V. Davis, 102, 103, 108, 109, 131, 
 166, 167, 16S, 187. 
 McDougal V. Carpenter, 158. 
 McEwen, In re, 67, 68, 69. 
 McFarland, In re, 58. 
 
 V. Goodman, 77. 
 McFerran v. Wherry, 94. 
 McGilton, In re, 24. 
 McGlynn, In re, 249. 
 McHaney v. Cawthorn, 99. 
 McHenry v. Societe Francaise, 409, 419. 
 McKay, In re, 43, 44. 
 
 & Aldus, In re, 307, 408. 
 
 V. Funk, 106. 
 McKenna v. Simpson, 217. 
 McKibben, In re, 99. 
 McKinsey v. Harding, 279. 
 McKircher, In re, 76. 
 McLaren v. Pennington, 394. 
 McLean, In re, 69. 
 
 V. Ihmsen, 61. 
 
 V. Lafayette Bank, 381. 
 
 V. Maline, 19, 324, 325. 
 
 V. Rockey, 407. 
 McNair, In re, 86, 279. 
 
 V. Gilbert, 193. 
 McNaughton, In re, 198. 
 McNeil, Ex parte, 219. 
 McNulty V. Frame, 209. 
 Mead v. Bank, 66, 69, 352. 
 Meador v. Sharp, 180. 
 Mear, Ex parte, 53. 
 Mechanics' Bank v. Hazard, 167. 
 
 V. Lawrence, 168. 
 Medbury v. Swan, 187. 
 Medomac Bank v. Curtis, 394. 
 Meech v. Stoner, 417. 
 Melick, [n re, 60, 62, ig8. 
 Mendell, Ex parte, 318. 
 Mendelsohn, In re, 40, 200. 
 Mendenhall, In re, 85. 
 Merchants' Bank v. Comstock, 284. 
 
 Ins. Co., In re, 54, 430. 
 Merrill, In re, 277. 
 Merriman, In re, igi. 
 Merritt v. Glidden, 106. 
 Metcalf & Duncan, In re, loi, 106, 107. 
 Meyer, In re, 322. 
 
 V. Aurora Ins. Co., no. 
 Meyers, L., In re, 107. 
 
 V. Farrell, 99. 
 Meymott, Ex parte, 55. 
 Michaels v. Post, 26, 199. 
 
 Michener v. Payson, 207. 
 Mifflin, In re, 95. 
 Migel, In re, 95, 97, 105, 107. 
 Miles V. McCuUough, 94. 
 Miller, In re, 64. 
 
 V. Dungan, 94. 
 
 V. Gillespie, 154. 
 
 V. Jones, 423. 
 
 V. Keys, 41. 
 
 V. O'Brien, 407. 
 
 V. O'Kain, 105. 
 Mills, In re, 63, 67. 
 
 V. Auriel, 342. 
 Milne v. Moreton, 30. 
 Minon v. Van Nostrand, 92, 106. 
 Mitchell, In re, 390. 
 
 V. Great Works, 19. 
 
 V. Mfg. Co., II, 212. 
 
 V. Winslow, 375, 378, 408. 
 Mitford V. Mitford, 408. 
 Monarch, The, 145. 
 Monroe v. Upton, 156, 166, 167, 168, 
 
 187, 356. 
 Montgomery H. B., In re, 287, 289, 
 
 357- 
 
 V. Bucyrus Mach. Co., 408. 
 Montgomery Co. Bank v. The Albany 
 
 City Bank, 322. 
 Moody V. Wright, 378. 
 Mooney, In re, 87. 
 Moore, In re, 59. 
 
 V. Booth, 94. 
 
 V. Horton, 158. 
 
 V. Jones, 416. 
 Moors V. Albro, 415. 
 Morgan v. Campbell, 407. 
 
 V. Thornhill, 12, 211, 212, S24. 
 
 & Co. V. Mastick, 41, 42. 
 Montz & Pinner, In re, 58. 
 Monell, In re, 95. 
 Morrill V. George, 93, 
 Morris, In re, 121, 122, 124, 128. 
 
 V. Beach, 93. 
 Morrison v. Woolson, 209. 
 Morrison's Assignee v. Bright, 394. 
 Morse, In re, 250, 251, 254. 
 
 Ex parte, 249. 
 
 V. Gloyes, 209. 
 
 V. Godfrey, 41, 137, 199, 331. 
 
 V. Grittman, 255. 
 
 V. Hovey, 118. 
 
 V. Hutchins, 182. 
 Mosby V. Steele, 103, 104. 
 Moses Taylor, 'The, 219. 
 Moule. Ex parte, 53, 55. 
 Mountague v. Harrison, 95. 
 Mountford v. Scott, 323. 
 
TABLE OF CASES CITED. 
 
 xxut 
 
 The numbers refer to the pages. 
 
 Moyer v. Dewey, 148, 329, 420. 
 
 Mudie, Ex parte, 282. 
 
 MuUer & Bretano, In re, 36, 197, 402, 
 
 403. 
 Mumford, Ex parte, 358. 
 Munger v. Albany Bank, 392, 396. 
 Murdock, In re, 147, 279. 
 Murphy, In re, 53. 
 Murphy's Case, 365. 
 Murphy v. Crawford, 191, 193. 
 Murray, In re, 363. 
 
 V. De Rottenheim, 156, 158, 355. 
 
 V. Murray, 60, 61, 161. 
 
 V. Riggs, 393. 
 Musgrave v. Sherwood, iii. 
 Mutual Bldg. Fund v. Boussieux, 254. 
 Mutual Life Ins. Co. v. Cameron, 168. 
 Myers v. Day. 394. 
 Myrick, In re, 427. 
 
 N. 
 
 Naoroji v. Chartered Bk. of India, 393. 
 
 Nash, Ex parte, 249. 
 
 National Bank v. Hunt, 44, 423. 
 
 V. Taylor, 107, 187. 
 
 V. Warren, 301. 
 Nat. Bank of Fredericksburg v. Con- 
 way, 314. 
 Nat'l Iron Co., In re, 257. 
 Neal V. Clark, 172, 177, 181. 
 
 V. Scruggs, 172, 181. 
 Neale, In re, 208. 
 Nebe, In re, 203. 
 Nelson v. Carland, 117. 
 Newall V. Van Praagh, 131. 
 New England, The, 145. 
 Newhall, Ex parte, 408. 
 New Lamp Chimney Co. v. Ansonia, 
 
 25- 
 Newland, In re, 348. 
 
 V. Bell, 55. 
 Newman, In re, 137. 
 
 V. Cordell, 38. 
 
 V. Stretch, 38. 
 Newton v. Askew, 94. 
 Nicholas v. Murray, 362. 
 Nichols V. Bellows, 416. 
 
 V. Eaton, 410, 411. 
 Nicholson, Ex parte, 125. 
 Nickodemus, In re, 40, ig8, 300. 
 Noakes, In re, 258. 
 Noble V. Hammond, 184. 
 Nolson, In re, 362. 
 Noke V. Ingham, 160. 
 Noonan, In re, 59, 60, 162. 
 Noonan and Connolly, In re, 138. 
 Noonan v. Orton, 415. 
 
 Norcross, In re, 83. 
 
 Norris, In re, 8, 9. 
 
 Northern Iron Co., In re, 271, 273, 280. 
 
 North River Bank v. Aymar, 322. 
 
 Northwestern Ins. Co. v. Hopkins, 145. 
 
 Norton v. Boyd, 17, 19, 21, 23. 
 
 V. Switzer, 112, 113. 
 
 V. Walker, 96. 
 Nowlan, Ex parte, 87. 
 Noyes, In re, 335. 
 Nugent V. Boyd, 218. 
 N. Y. C. Ins. Co. V. Nat. Prot. Co., 323. 
 N. Y. Mail Steamship Co., In re, 371, 
 381. 
 
 O. 
 Oakes, Ex parte, 250. 
 Oakey v. Corry, 256. 
 Oates V. Parrish, 141. 
 O'Bannon, In re, 55, 82. 
 O'Brien, In re, 53, 227. 
 
 V. Weld, 24, 26, 410. 
 Ocean National Bank v. Olcott, 140, 
 
 141. 
 Ockendon, Ex parte, 395. 
 Odell V. Wootten, 152. 
 O'Donnell v. Segar, 77. 
 O'Fallon, In re, 258. 
 O'Farrell, In re, 90. 
 Ogden V. Coweley, 399. 
 
 V. Saunders, 30, 117, 428. 
 Okell, In re, 86. 
 O'Kell, In re, 138. 
 Olcott V. Lilly, 153. 
 Oliver v. Townes, 30. 
 Oliver Jordan, The, 221. 
 O'Mara, In re, 95. 
 O'Neil, In re, 351, 421. 
 
 Ex parte, 282, 358, 379. 
 
 V. Glover, 38. 
 Oregon Bulletin Co., In re, 225. 
 Oregon Printing Co., In re, 5, 41, 42, 
 
 51- 
 Orem v. Harley, 197. 
 Orne, In re, 83, 95, 347, 351. 
 Osage R. R. Co., In re, Igg. 
 Osborn v. Adams, 30. 
 
 v. McBride, 63. 
 Otis V. Glazen, 192, 193. 
 
 V. Hadley, 217, 318. 
 Ouimette, In re, 199, 200, 296, 321. 
 Owens, In re, 76. 
 Owsley V. Cobin, i8i, 183. 
 Oxford Iron Co. v. Slafter, 43. 
 
 Pj 
 
 Paddock, In re, 94. 
 Page V. Way, 410. 
 
XXIV 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to tlu pages. 
 
 Paine v. Caldwell, lo. 
 Palen v. Johnson, 416. 
 Palmer v. Hussey, 175, 182. 
 
 V. Hutchins, 189. 
 
 V. Lord, 417. 
 • V. Merrill, 108. 
 Park V. Casey, 167. 
 Parker v. Atwood, 141. 
 
 V. Bradford, 356. 
 
 V. Cousins, 326. 
 
 V. Hotchkiss 94. 
 
 V. Muggridge, 61, 161. 
 Parkes, In re, 284. 
 Parnedee v. Simpson, 314. 
 Partridge v. Dearborn, 358, 421. 
 Patman v. Vaughn, 55. 
 Patten v. Brown, 56. 
 Patterson, In re (i B. R. 100), 84, 95, 
 280, 288. 
 
 In re (i B. R. 125), 242. 
 
 In re (i B. R. 147), 86, 88, 417. 
 
 In re (i B. R. 307), 98, 105, 171. 
 
 V. Boehm, 129. 
 Pattison v. Wilbur, 158, 291. 
 Payne v. Able, 141, 148, 151, 291. 
 
 V. Drew, 220. 
 Payson v. Coffin, 114. 
 
 V. Dietz, 10, 218. 
 
 V. Payson, 140. 
 Peacock, Ex parte, 283. 
 Peake, Ex parte, 68. 
 Peale v. Phippe, 22. 
 Pease, In re, 65. 
 Peck V. Jenness, 22, 221, 376. 
 Peckham v. Burrows, 318. 
 Peel V. Ringgold, 61. 
 Pegues, In re, 336. 
 Peiper v. Harmer, 113. 
 Penn, In re, 59, 60, 135, 199. 
 Pennell v. Percival, 209. 
 Penniman v. Norton, 113. 
 Pennington v. Sale, 23, 140, 380. 
 Pennock v. Coe, 378. 
 Penny v. Taylor, 77, 169. 
 People V. Brennan, 26. 
 
 V. Duncan, 412. 
 
 V. Herkimer, 158. 
 
 V. Palmer, 73. 
 
 V. Spalding, 164, 346. 
 People's Steamship Co., In re, 23. 
 Perdu, In re, 74, 78. 
 Perkins, In re, 223, 249, 250, 259. 
 
 V. Gay, 141. 
 Perrin, In re, 44, 376. 
 Perrott, Ex parte, 87. 
 Perry, In re, 82. 
 
 V. Aldrich, 350. 
 
 Perry v. Jones, 414. 
 
 V. Langley, 38, 41, 50, 294, 429. 
 
 V. Lorillard, 412. 
 Person v. Grier, 94. 
 Persse v. Persse, 94. 
 Petrie, In re, 400. 
 Pfromm, In re, 274. 
 Phelps V. Borland, 159. 
 
 V. Clasen, 294. 
 
 V. Curtis, 328. 
 
 V. Rice, 394. 
 Phelps, Caldwell & Co., In re, 62, 247, 
 
 270, 272. 
 Phillips, In re, 206. 
 
 V. Dicas, 127. 
 
 V. Hunter, 29, 363. 
 
 V. Solomon, 148. 
 Phipps V. Sedgwick, 426. 
 Pickett V. McGavick, 141, 145. 
 Picquet v. Swan, 10. 
 Pierce, In re, 27. 
 
 & Holbrook, In re, 82. 
 
 V. Jackson, 282. 
 
 V. Wilcox, 24. 
 Purcy V. Roberts, 410. 
 Pierson, In re, 134. 
 Pike V. Mc Donald, 165. 
 Pillow V. Langtree, 414. 
 Pinner v. Higgins, 129. 
 Pioneer Paper Co., In re, 84, 94, 206. 
 Pipon V. Pipon, 29. 
 Piatt V. Archer, 432. 
 
 V. Parker, 171, 2gi. 
 Plestero v. Abraham, 30. 
 Plumb, In re, 61. 
 Poillon V. Lawrence, 141, 142. 
 Poleman, In re, 73 
 Pollard V. U. P. R. Co., 94. 
 Pond V. Kimball, 73, 76. 
 Pool V. McDonald, 119. 
 Popham V. Barneto, 169. 
 Poppenhausen v. Seely, 152. 
 Port V. Turton, 56. 
 Porter v. Lazear, 256. 
 
 V. Porter, igi. 
 Potter V. Brown, 29. 
 Powell, In re, 248, 250, 251. 
 Prankard, In re, 59. 
 Pratt, In re, 53, 78. 
 Prescott, In re, 358. 
 
 Ex parte (i Atk. 230), 392, 396. 
 
 Ex parte (i M. D. & De G. 199), 
 283. 
 Preston, In re (3 B. R. 103), 83. 
 
 In re (6 B. R., 545), 75. 
 
 Ex parte, 53. 
 Price, In re, 76. 
 
TABLE OF CASES CITED. 
 
 XXV 
 
 The numbers refer to the pages. 
 
 Prince v. Bartlett, 367. 
 Pringle v. Leverich, 208. 
 Prynne v. Roe, 203. 
 Pryor, In re, 407. 
 PuUiam v. Osborne, 221. 
 Pulver, In re, 81. 
 Purvis, In re, 273. 
 Pusey V. Bradley, 293. 
 
 Queline v. Morisson, 29. 
 R. 
 
 Radclifl V. Woods, 76. 
 
 Radcliffe Investment Co., Ex parte, 125. 
 
 Rado, In re, 294. 
 
 Randall, In re, 407. 
 
 & Sutherland. In re, 5, 37, 197, 
 198. 
 
 V. BufBngton, 77. 
 Rank, In re, 92. 
 Rathbone, In re, 135. 
 Ray, In re, 82, 95, 360.. 
 
 V. Knowlton, 266. 
 
 V. Norseworthy, 257. 
 Rayl V. Lapham, 171, 291. 
 Rayner, In re, 198. 
 Read, Ex parte, 161. 
 
 V. Sowerby, 105. 
 Reade v. Waterhouse, iii, 113, 254. 
 Reavis v. Cowell, 203. 
 Receivers v. Paterson Gas Co., 394. 
 Reed, In re, 107. 
 Reed, C, In re, 362. 
 
 V. Bullington, 139, 141, 155. 
 
 V. Taylor, 429, 430. 
 
 V. Vaughn, 8. 
 Reeves v. State Bank of Ohio, 32a. 
 Regan v. Zeebe, 78. 
 Regina v. Edwards, 158. 
 Reiman, In re, 116. 
 
 & Friedlander, In re, 119, 120, 122, 
 124, 125, 128, 131. 
 Reitz V. People, 186. 
 Remsen v. Holmes, 30. 
 Republic Ins. Co., In re, 279. 
 Revere Copper Co. v. Dimock, 131, 
 
 167, 168, 187. 
 Rex V. Cole, 53. 
 Reynolds, In re, 428, 429. 
 Rhodes v. Williams, 76. 
 Rice, In re, 58, 68. 
 
 v. Melendy, 318. 
 
 V. Welling & Fake, 327. 
 Richards, In re, 88. 
 
 V. Nixon, 209. 
 
 NAT. BANKRUPTCY LAW — C 
 
 Richardson, In re (2 B. R. 202), ig, 107, 
 
 108. 
 
 In re (2 Story, 571), 316. 
 
 Ex parte, 54. 
 
 & Co., In re, 76. 
 
 V. Mclntyre, 153. 
 Richmond Hill Hotel Co., In re, 125. 
 Richter, In re, 286, 287. 
 Ridge, Ex parte, 56. 
 Riggin V. Magwire, 342. 
 Riggs V. Roberts, 192. 
 
 V. White, 189. 
 Ring V. Eickerson, 158. 
 Riordan, J., In re, 287. 
 Rippon V. Norton, 410. 
 Rison V. Knapp, 42, 320, 331. 
 
 V. Powell, 217. 
 Rix V. Bank, 46, 73, 74. 
 Roach V. Great Western R. R., 38. 
 Robert Fulton, The Ship, 221. 
 Roberts v. Morgan, 193. 
 Robertson, In re, 82. 
 Robinson, In re, 97, 105. 
 
 Ex parte, 221. 
 
 & Chamberlain, In re, 90. 
 
 V. Denny, 414. 
 
 V. Pesant, 355. 
 Rob Roy, In re, 158, 172. 
 Robson V. Calze, 127. 
 Rockford, R. I. & St. L. R. Co., In re, 
 
 254- 
 Rockford v. Hackman, 410. 
 Roddin, In re, 64. 
 Rogers, In re, 234. 
 
 Ex parte, 398. 
 
 v. Allen, 30. 
 
 V. Palmer, 49, 302, 321. 
 
 v. Stone, 257. 
 
 V. Winsor, 381. 
 Rolb V. White, 206. 
 Rose V. Hart, 393, 394, 395. 
 Roseberry, In re, 306. 
 Rosenberg, In re, 22, 407. 
 
 M., In re, loi, 104, 105, 106, 107, 
 no, 159. 
 Rosenfeld, In re, 138. 
 Rosenfield, In re (i B. R. 319), 85. 
 
 In re (l B. R. 575), 135. 
 Rosenfields, In re, 198, 297. 
 Rosey, In re, 356, 368. 
 Ross, Ex parte, 92. 
 
 V. Jordan, 193. 
 Rourke v. Story, 322. 
 Rowlandson, Ex parte, 66. 
 Roxby, Ex parte, 66. 
 Royal Bank v. Cuthbert, 29. 
 Rucker v. Hanna, 193. 
 
XXVI 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 Ruckman v. Cowell, 8, i68. 
 Rudge V. Rundle, i8o. 
 Rugeley v. Robinson, 24, 419. 
 Ruiz V. Eickerman, 158. 
 Runel, Ex parte, 232. 
 Rupp, In re, 76, 78. 
 Russel V. Cheatam, 19. 
 Russell, Ex parte, 130. 
 
 V. Bell, 394- 
 
 V. East Anglien R. Co., 220. 
 
 V. Falryar, 350. 
 
 V. Jackson, 206, 
 
 V. Owen, 401. 
 
 V. Rogers, 129. 
 Ryan, In re, 37. 
 Ryland, Ex parte, 329. 
 
 S. 
 
 Sabin, In re, 27. 
 Sacchi, In re, 140, 251, 377. 
 Sackett v. Andross, 117, 118. 
 Sadler, Ex parte, 67. 
 
 V. Leigh, 316. 
 Sage V. Wynkoop, 301, 321. 
 Salhinger v. Adlar, 95. 
 Salkey, In re, 32. 
 
 & Gerson, In re, 85, 87. 
 Salmons, In re, 140. 
 Samson v. Blake, 22, 26. 
 
 V. Burton, 21, 41, 81, 107, no, 218. 
 
 V. Clark, 23. 24. 
 Sanderson v. Bowles, 55. 
 Sandford v. Chase, 93. 
 
 V. Lackland, 427. 
 
 V. Sandford, 112. 
 Sands v. Codwise, 328. 
 
 V. Perry, 167. 
 Sandusky v. Bank, 27. 
 Sargent, In re, 198. 
 Sartees, Ex parte, 251. 
 Satterlee v. Matthewson, 71. 
 Saulkawf, In re, 76. 
 Saunders v. Williams, 30. 
 Sauthoff, In re, 75. 
 Savory v. Stocking, 350, 355. 
 Sawyer, In re, 127, 128. 
 
 V. Hoag, 255, 392, 396, 399, 420. 
 
 V. Turpin, 5, 41, 44, 45, 304, 306, 
 
 313- 
 Scammon, In re, 197, 295, 297. 
 
 V. Cole, 43, 318. 
 
 V. Kimball, 396. 
 Scheiffer & Garrett In re, 62. 
 Schick, In re, 47. 
 Schlichter, In re, 53. 
 Schlitz V. Schatz, 46. 
 Schnepf, In re, 21, 23, 257, 378, 380. 
 
 Schroeder v. Fry, 173. 
 Schuchardt, In re, 343. 
 Schulenberg v. Kabureck, 320. 
 Schulze V. Bolting, 306. 
 Schuman v. Fleckenstein, 331, 33a. 
 Schuyler, In re, 135, 294. 
 Schwartz, In re, 107. 
 Scofield. In re, 153. 
 
 Scott, Collins & Co., In re, 116, 119 
 123, 128. 
 
 & McCarthy, In re, 287. 
 
 V. Porter, 182, 183. 
 
 V. Surnam, 425. 
 Scrafford, In re, 199, 200, 296, 297. 
 Scull, In re, 197, 198. 
 Seaman v. McReynolds, 169. 
 
 V. Stoughton, 325, 328. 
 Seaver v. Spink, 313. 
 Second Nat. Bank v. State National 
 
 Bk., 155, 419. 
 Sedgwick v. Fridenberg, 228. 
 
 V. Place, 423, 430. 
 
 V. Sheffield, 318. 
 Seihel v. Simeon, 2i. 
 Selling V. Gunderman, 253. 
 Selby V. Hills, 94, 95. 
 Selkrig v. Davies, 29. 
 Selkrigg v. Davis, 363. 
 Seving v. Gale, 127. 
 Seymour, In re, 96, 180. 
 
 v. Street, 141. 
 Sharman v. Howell, 21. 
 Shaw, Ex parte, 250. 
 Shawhan v. Wherritt, 26, 139, 199, 209. 
 Shay V. Sessaman, 418. 
 Shearman v. Bingham, 10, 19. 
 Sheehan, In re, 294, 346. 
 Sheldon v. Clews, 182, 207. 
 
 V. Rothschild, 392. 
 Shellington v. Howland, 109. 
 Shelton v. Pease, 342. 
 Shepherd v. Murrill, 73. 
 Sheppard, In re, 58, 61, 162, 308. 
 
 L., In re, 134, 147, 361. 
 Sherwood v. Mitchell, 174. 
 Shields, In re, 119. 
 Shipping V. Henderson, 193. 
 Shomo V. Zeigler, 207. 
 Shouse, In re, 294, 307. 
 Shryock v. Bashore, 326, 429, 431. 
 Shuman v. Straus, 98, 194. 
 Shurtleff v. Thompson, 167. 
 Sidener v. Klier, 309. 
 Sidle, In re, 164, 346. 
 Sigourney v. Williams, 149. 
 Sigsby V. Willis, 359, 364, 365. 
 Sill V. Norswick, 29, 363. 
 
TABLE OF CASES CITED. 
 
 xxvu 
 
 The numbers refer to the pages. 
 
 Silverman, In re, 36, 41, 42, 43, 119. 
 
 V. Bagley, 38. 
 Simmons, S., In re, 198. 
 Simpson, In re, 95. 
 Sixth Ave. R. R. v. Gilbert, in 
 Slcelley, In re, 200. 
 Slaughter v. Detiney, 73. 
 Sleek V. Turner, 49. 
 Sloan v. Lewis, 295, 347. 
 Smedley, In re, 52. 
 Smith, In re (i B. R. 599), 21, 379, 380. 
 
 In re (2 B. R. 297), 27. 
 
 In re (3 B. R. 377), 41, 42. 
 
 In re (13 B. R. 500), 68. 
 
 In re (18 B. R. 24), 181, 183. 
 
 In re (6 Ben. 187), 345. 
 
 In re (2 Deac. & Chitt. 239), 88. 
 
 In re (5 Ves. 189), 256. 
 
 B. K., In re, 372. 
 
 J. O., In re, 242, 270. 
 
 John W., In re. 71, 76. 
 
 John W. A., In re, 72. 
 
 & Bickford, In re, 147. 
 
 v. Brinkerhoff, 398, 399. 
 
 v. Bromley, 129. 
 
 V. Buchanan, 29. 
 
 V. Ely, 333. 
 
 v. Engle, 132. 
 
 V. Fox, 419. 
 
 V. Gordon, 113, 418, 419, 420. 
 
 V. Hill, 399. 
 
 V. Hodson, 395. 
 
 V. Kehr, 77. 
 
 V. Mason, 12. 20, 24, 25, 26, 212 
 213, 214, 223, 410. 
 
 V. McLean, 5. 
 
 V. Nelson, 167. 
 
 V. Putnam, 412. 
 
 V. Ramsey, 141. 
 Snedaker, In re, 140, 377. 
 Solarte, Ex parte, 206. 
 Solis, In re, 84. 
 Solomon, In re, 137. 
 
 Ex parte, 284. 
 
 V. Underhill. 94. 
 Solomons v. Ross, 29. 
 Somerset Pottery Co. v. Minot, 67. 
 Southcote V. Braithwaite, 152. 
 South Side R. R. Co., In re, 32. 
 Spades, In re, 120. 
 Sparhawk v. Drexel, 6g, 326, 396. 
 
 V. Richards, 44. 
 Speake v. Kinard, 256. 
 Speyer, In re, 245. 
 Spillman, In re, 119. 
 Spindle v. Shreve, 411, 427. 
 Spiro V. Paxton, 76. 
 
 Spitley V. Frost, 73. 
 
 Stamp, In re, 53. 
 
 Stansel, In re, 295. 
 
 Stansfield, In re, 156. 
 
 Starkweather v. Cleveland Ins. Co., 
 
 412. 
 Stanton, Ex parte, l6i. 
 State V. Kenan, 76. 
 
 V. Rollins, 95. 
 
 V. Spencer, 76. 
 
 Bank v. Wilborn, 118. 
 Steadman, In re, 22. 
 Steele v. Graves, 186. 
 Stephens, Ex parte, 397. 
 
 V. Brown, 141. 
 Stephenson, In re 67. 
 Stern v. Nussbaum, 141, igi. 
 Stetson V. The City of Bangor, 140. 
 Stevens, In re (5 B. R. 112), 58, 162. 
 
 In re (5 B. R. 298), 76, 78. 
 
 V. Brown, 140. 
 
 V. Evans, 140. 
 
 V. Mechanics' Savings Bank, 219, 
 407. 
 
 V. Middlesex C. Co., 141. 
 Stevenson v. Jackson, 67. 
 
 v. McLaren, 402. 
 Steward v. Green, 167. 
 Stewart, In re, 76. 
 
 R., In re, 293. 
 
 V. Brown, 76. 
 
 V. Emerson, 174. 
 
 V. Hargrove, 413. 
 
 V. Isidor, 104, 284. 
 
 V. Piatt, 389, 408, 423. 
 Stickney v. Davis, 145. 
 
 V. Wilt, 228. 
 Stienmetz v. Anshe, 355. 
 Stillwell, In re, 390. 
 
 V. Coope, 193. 
 Stinson v. McMurray, 19. 
 Stoddart, In re, 314. 
 Stokes, In re, 135. 
 
 V. Mason, 105. 
 StoU V. Wilson, 189. 
 Stone, Ex parte, 88. 
 
 V. Bank, 108. 
 
 V. B. & M. R. R., 164. 
 Storrs V. City of Utica, 322. 
 
 V. Plumb, III. 
 Stowers, In re, 58. 
 Strain v. Gourdin, 44, 315. 
 Strang v. Bradner, 173. 
 Stratford v. Jones, 182. 
 Streeter v. Sumner, 352, 419. 
 Strong V. Clawson, 257, 408. 
 Stucky V. Masonic Savings Bank, 319. 
 
xxvm 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 Sturgis, In re, I2g. 
 
 V. Crowninshield, 117, 140, 428, 430. 
 Stuyvesant, In re, 375. 
 
 Bank, In re, 84, 206, 250, 257. 
 Sumner v. Richie, 182. 
 Sutherland, In re (i B. R. 531), 47. 
 
 In re (3 B. R. 314), 346. 
 
 Israel, In re, 413. 
 
 V. Davis, 113. 
 
 V. Kellogg, 225. 
 
 V. L. S. C. Co., 257. 
 Swan V. Stephens, 73. 
 Sweatt V. Boston R. R. Co., 227. 
 Sweet, In re, 336. 
 Sykes, In re, 200. 
 Symonds v. Barnes, 141, 291. 
 
 T. 
 Talcott V. Dudley, 61. 
 Taylor, In re (16 B. R. 40), 95. 
 
 In re (8 Ves. 328), 87. 
 
 Ex parte, 283, 359. 
 
 V. Corryl, 22, 221. 
 
 V. Hatch, 203. 
 
 V. Plumer, 409. 
 
 V. Robinson, 314. 
 Tenth National Bank v. Sanger, 23. 
 Terry, In re, 50. 
 
 V. Cleaver, 41. 
 Thames v. Miller, 22. 
 The Distilled Spirits, 323. 
 Thelusson v. Smith, 367. 
 Thomas, V., In re, no. 
 
 v. Desanges, 316. 
 
 V. Harding, 160. 
 
 v. Hudson, 96. 
 
 V. Hunter, 145. 
 Thompson's Case, 94. 
 Thompson v. Alger, 118. 
 
 V. Frere, 61. 
 
 V. Hill, 166. 
 Thorne v. Brown, 153. 
 Thornhill v. The Bank of Louisiana, 
 
 429. 431. 
 Thorpe, In re, 132. 
 Thrasher v.' Bentley, 303. 
 Thurmond v. Andrews, 291. 
 Tiffany v. Boatman's Sav. Inst., 45, 
 
 307, 416. 
 Tillinghast v. Bradford, 410. 
 Tobias v. Rogers, 154. 
 Tobin V, Trump, 429. 
 Todd, Ex parte, 283. 
 Toenes v. Moog, 73. 
 Toland v. Sprague, 10. 
 Tonkin, In re, 286, 287, 300. 
 Tonne, In re, 76. 
 
 Toof V. Martin, 5, 42, 318, 321, 384. 
 Tooker, In re, 131. 
 
 v. Doane, 194. 
 Toorle v. Smith, 203. 
 Tracy, In re, 135. 
 Traders' Bank v. Campbell, 41, 43, 49, 
 
 III, 254, 302, 332, 400, 419, 420. 
 Trafton, In re, 131. 
 Traphagen, In re, 134. 
 Trask, In re, 206. 
 Treadwell v. Halloway, 180, 183. 
 Trimble v. More, 162, 169. 
 
 V. Woodhead, 329. 
 Trisony v. Orr, 332. 
 Troy Woolen Co., In re, 228, 258, 352, 
 
 398. 
 Truitt v. Truitt, 24. 
 Trust Co. V. Sedgwick, 426. 
 Tuck V. Fyson, 419. 
 Tucker v. Oxley, 60, 397. 
 Tupper, Ex parte, 426. 
 Turner v. Richardson, 418. 
 Turquand v. Knight, 206. 
 Twiss v. Massey, 64. 
 Twogood, Ex parte, 397. 
 Twopenny v. Peyton, 411. 
 Tyrrel, In re, 138. 
 
 U. 
 
 Ulrich, In re (3 B. R. 133), 26. 
 
 In re (8 B. R. 15), 23, 27, "199. 
 Ungewitter v. Sachs, 321, 355. 
 Union Canal Co. v. Woodside, 114. 
 United States v. Bayer, 232. 
 
 v. Block, 232. 
 
 V. Bryan, 367. 
 
 v. Connor, 232. 
 
 V. Davis, 158. 
 
 V. Dickey, 232. 
 
 V. Fisher, 118, 367. 
 
 V. Hack, 367. 
 
 V. Herron, 157, 158, 368. 
 
 V. Hoar, 158. 
 
 V. Hool, 367. 
 
 V. Howland, 367. 
 
 V. King, 158. 
 
 V. Knight, 158. 
 
 V. Lewis, 368. 
 
 V. Nichols, 232. 
 
 V. State Bank, 367, 368. 
 
 V. Throckmorton, 158. 
 
 Bank v. Cooper, 147. 
 
 V. 
 
 Vail V. Durant, 184. 
 
 Valk, In re, 97. 
 
 Valliant v. Childress, 387. 
 
TABLE OF CASES CITED. 
 
 XXIX 
 
 The numbers refer to the pages. 
 
 Vanderheyden v. Mallory, 159. 
 Vanderhorst v. Bacon, 73. 
 Van Lieuw v. Johnson, 94. 
 Van Nostrand v. Barr, 429. 
 Van Tuyl, In re, 90. 
 Van Tuyle, In re, 85. 
 Van Wickland v. Paulson, 350. 
 Van Wyck v. Seward, 38, 39. 
 Varnum v. Wheeler, 189 
 Vary v. Godfrey, 203. 
 Vetterlein, In re, 69, 84. 
 Vogel, In re (2 B. R. 427; 3 B. R. 198), 
 22, 25, 402, 410. 
 In re (5 B. R. 393), 86, 88, 89. 
 Vogle V. Lathrop, 322. 
 Vogler, In re, 72. 
 Von Heim v. Elcus, 431. 
 Voorhees v. U. S. Bank, 140. 
 Voorhies v. Frisbie, 217, 218. 
 
 W. 
 
 Waddell, In re, 376. 
 Wadham v. Marlowe, 29. 
 Wadsworth v. Tyler, 307. 
 Wager v. Hall, 42, 318, 384. 
 Waggoner, In re, 138. 
 Wagstaff, Ex parte, 392. 
 Wait V. Morris, 193. 
 Waite, In re, 43, 308. 
 Wakeman v. Hoyt, 55, 137. 
 Walbrun v. Babbitt, 320. 
 Walker, In re, 92. 
 
 V. Reister, 410. 
 
 V. Towner, 114. 
 Wallace, In re, 23. 
 Wallis V. Paterson, 30. 
 Walpole V. Alexander, 95. 
 Walton, F., In re, 278. 
 Ward V. Fuller, 414. 
 
 V. Tunstall, 189. 
 Warner v. Cronkhite, 171. 
 Warren, In re, 64. 
 
 V. Bank, 43, 44. 
 Warrick v. Warrick, 323. 
 Washington Ins. Co., In re, 54. 
 Watson, In re, 74. 
 
 Ex parte, 53, 364. 
 
 V. Taylor, 49, 
 Watts, In re, 84. 
 
 Ex parte, 251. 
 Watrous, In re, 278. 
 Way V. Howe, 26, 140, 141, 143, 145. 
 Weaver's Appeal, 73. 
 Webb, In re, 64. 
 
 V. Sachs, 41, 44. 
 Weber Furniture Co., In re, 119, 120, 
 122, 124, 125. 
 
 Webster v. Woolbridge, 378. 
 Weeks, In re, 379. 
 Weitzel, In re, 53. 
 Weld V. O'Brien, 24. 
 Welge, In re, 336. 
 Wellman, In re, 316. 
 Wells, In re, 5. 
 
 V. Hacon, 125. 
 West V. Pryer, 396. 
 
 V. Skip, 161. 
 Westbrook Mfg. Co. v. Grant, 234. 
 Westenberger v. Wheaton, 169. 
 West Phila. Bk. v. Gerry, 162, 169. 
 Wetherell v. Seitzinger, 95. 
 Weyhausen, In re, 198. 
 Wheeler v. Simmons, 192. 
 
 V. Wheeler, 194. 
 Wheelock v. Hastings, 255. 
 
 V. Lee, 255, 416. 
 Whipple, In re (11 B. R. 524), 122, 124, 
 125. 
 
 In re (13 B. R. 373), 21, 107. 
 Whitaker v. Chapman, 180, 183. 
 White V. Piatt, 186. 
 Whitehead, In re, 75. 
 Whitehouse, In re, 98, 171. 
 Whiteside v. Hyman, 127. 
 Whitfield V. Brand, 424. 
 Whiting, Ex parte, 393, 394, 398. 
 Whitney, In re, 127, 128. 
 
 V. Crafts, 155. 
 Whyte, In re, 278. 
 Wicker v. Comstock, 73. 
 Wickersham v. Nicholson, 406. 
 Wickham v. Valle, 418. 
 Wieland, Ex parte, 26. 
 Wiggers, In re, 95. 
 Wiggin V. Bush, 129. 
 Wight V. Muxlow, 302. 
 Wilbur, In re, 21. 
 Wiley, In re, 63. 
 Wilkes, Ex parte, 55. 
 Wilkins V. Davis, 160, 162, 364. 
 Wilkinson v. Wilkinson, 412. 
 Willard v. Judd, 203. 
 Williams, In re f2 B. R. 229), 356, 357. 
 
 In re (3 B. R. 286), 5, 38, 200, 296. 
 
 In re (5 Law Rep. 402), 65. 
 
 Ex parte (L. R. 9 Ch. 290V 125. 
 
 Ex parte (L. R. 10 Eq. 55), 130. 
 
 E. G., In re, 199, 200, 294, 297. 
 
 & McPheeters, In re, 95, 96, 97. 
 
 V. Atkinson, 151. 
 
 V. Benedict, 22. 
 
 V. Butcher, 291. 
 
 V. Vermeule, 257. 
 Williamson, Ex parte, 359. 
 
XXX 
 
 TABLE OF CASES CITED. 
 
 The numbers refer to the pages. 
 
 Willingham v. Joyce, 413. 
 
 V. Matthews, 94. 
 Wilson, In re, 29. 
 
 V. City Bank, 36, 45, 47, 49. 50, 
 301, 378. 
 
 V. Harper, 207. 
 
 V. McElroy, 78. 
 Winch V. Keeley, 424. 
 Windsor v. Kendall, 46. 
 Winkins, In re, 160, 162. 
 Winn, In re, 140. 
 Winter, In re, 22. 
 
 V. R. R. Co., 40, 45. 
 Winslow V. Clark, 24, 46. 
 Winsor v. McLellan, 375, 408. 
 Wisner v. Brown, 256. 
 Wiswall V. Samson, 22. 
 Withrow V. Fowler, 308. 
 Wiskowski, In re, 85. 
 Wolf V Stix, 151, 167, 172, 189. 
 Wolcott V. Hodge, 186. 
 Wood, In re, 44. 
 
 V. Bailey, 248. 
 
 V. Barker, 129. 
 
 V. Brooke, 25, 26. 
 
 V. Dodgson, 161, 364. 
 
 V. Hunt, 39. 
 
 V. Jenkins, 218. 
 
 V. McCain, 314. 
 
 V. Neale, 94. 
 
 V. Owings, 313. 
 
 V. Pardridge, 350. 
 Woodford & Chamberlain, In re, 294. 
 Wood M. & R. Co. V. Brooke, 425. 
 Woodruff V. Taylor, 26. 
 Woods, In re, 5, 49, 50, 55, 56. 
 
 V. De Mattos, 157. 
 Woodward, In re, 207, 245. 
 Woolley V. Cobbe, 153. 
 Woolsey v. Cade, 181, 183, 184 
 Wooten V. Clark, 376. 
 
 Worrall v. Marlur, 408. 
 Worthington, In re, 26. 
 Wright, In re (2 B. R. 41), 135. 
 
 In re (2 B. R. 490), 49, 318. 
 
 In re (8 B. R. 430), 77. 
 
 In re (6 Biss. 317), 82, 362. 
 
 In re (36 How. Pr. 167), 159. 
 
 J. S., In re, 105. 
 
 V. Bank of Greensburg, 4x5, 416. 
 
 V. Bird, 55. 
 
 V. Muxlaw, 49. 
 
 V. Pratt, 76. 
 
 V. Steele, 193. 
 Wrompelmeir v. Moses, 99. 
 Wydown, In re, 316. 
 Wynne, In re, 257, 313, 423. 
 
 Yale, Ex parte, 160. 
 
 Yea V. Fouraker, 193. 
 
 Yeatman v. Savings Inst., 375, 381, 390^ 
 
 408. 
 Yewens v. Robinson, 329. 
 Yonge, Ex parte, 365. 
 York & Hoover, In re, 224, 228, 234 
 Young, In re (3 B. R. 440), 76. 
 
 In re (6 Biss. 53), 356. 
 
 V. Bank of Bengal, 393, 394, 398. 
 
 V. Hunter, 66. 
 
 V. Ridenbaugh, 90. 
 
 V. Young, 203. 
 Yost V. Heffner, 73. 
 
 Z. 
 
 Zahn V. Fry, 12, 50, 287. 
 Zarage, In re, 29, 31. 
 Zarega, In re, 359. 
 Zeperink v. Card, 183. 
 Ziegenfuss, Ex parte, 429, 430. 
 Zimmer v. Schleehauf, 106, 343. 
 ZoUer V. Janvrin, 150. 
 
THE 
 
 NATIONAL BANKRUPTCY LAW. 
 
 CHAPTER I. 
 
 DEFINITIONS. 
 
 Section i. Meaning of Words and Phrases. — a The words 
 and phrases used in this act and in proceedings pursuant hereto 
 shall, unless the same be inconsistent with the context, be con- 
 strued as follows: (i) "A person against whom a petition has 
 been filed" shall include a person who has filed a voluntary 
 petition; (2) "adjudication" shall mean the date of the entry of 
 a decree that the defendant, in a bankruptcy proceeding, is a 
 bankrupt, or if such decree is appealed from, then the date when 
 such decree is finally confirmed; (3) "appellate courts" shall 
 include the circuit courts of appeals of the United States, the 
 supreme courts of the Territories, and the Supreme Court of the 
 United States; (4) "bankrupt" shall include a person against 
 whom an involuntary petition or an application to set a com- 
 position aside or to revoke a discharge has been filed, or who has 
 filed a voluntary petition, or who has been adjudged a bankrupt; 
 
 (5) "clerk" shall mean the clerk of a court of bankruptcy; 
 
 (6) "corporations" shall mean all bodies having any of the powers 
 and privileges of private corporations not possessed by individuals 
 or partnerships, and shall include limited or other partnership 
 associations organized under laws making the capital subscribed 
 alone responsible for the debts of the association; (7) "court" 
 shall mean the court fef bankruptcy in which the proceedings are 
 pending, and may include the referee ; (8) "courts of bankruptcy" 
 shall include the district courts of the United States and of the 
 
 [I] 
 
THE NATIONAL BANKRUPTCY LAW. 
 
 Meaning of Words and Phrases. [Ch. I, 
 
 Territories, the supreme court of the District of Columbia, and 
 the United States court of the Indian Territory, and of Alaska ; 
 (9) ' ' creditor' ' shall include anyone who owns a demand or claim 
 provable in bankruptcy, and may include his duly authorized 
 agent, attorney, or proxy; (10) "date of bankruptcy," or "time 
 of bankruptcy," or "commencement of proceedings," or "bank- 
 ruptcy," with reference to time, shall mean the date when the 
 petition was filed ; (i i) "debt" shall include any debt, demand, or 
 claim provable in bankruptcy; (12) "discharge" shall mean the 
 release of a bankrupt from all of his debts which are provable in 
 bankruptcy, except such as are excepted by this act; (13) "docu- 
 ment" shall include any book, deed, or instrument in writing; 
 (14) "holiday" shall include Christmas, the Fourth of July, the 
 Twenty-second of February, and any day appointed by the Presi- 
 dent of the United States or the Congress of the United States 
 as a holiday or as a day of public fasting or thanksgiving; (15) a 
 person shall be deemed insolvent within the provisions of this 
 act whenever the aggregate of his property, exclusive of any 
 property which he may have conveyed, transferred, concealed, or 
 removed, or permitted to be concealed or removed, with intent to 
 defraud, hinder or delay his creditors, shall not, at a fair valua- 
 tion, be sufHcient in amount to pay his debts ; (16) "judge" shall 
 mean a judge of a court of bankruptcy, not including the referee; 
 (17) "oath" shall include affirmation; (18) "officer" shall include 
 clerk, marshal, receiver, referee, and trustee, and the imposing of 
 a duty upon or the forbidding of an act by any officer shall 
 include his successor and any person authorized by law to per- 
 form the duties of such officer; (19) "persons" shall include 
 corporations, except where other^vise specified, and officers, 
 partnerships, and women, and when used with reference to the 
 commission of acts which are herein- forbidden shall include per- 
 sons who are participants in the forbidden acts, and the agents, 
 officers, and members of the board of directors or trustees, or 
 other similar controlling bodies of corporations; (20) "petition" 
 shall mean a paper filed in a court of bankruptcy or with a clerk 
 or deputy clerk by a debtor praying for the benefits of this act, 
 
DEFINITIONS. 
 
 § I.] Meaning of Words and Phrases. 
 
 or by creditors alleging the commission of an act of bankruptcy 
 by a debtor therein named; (21) "referee" shall mean the referee 
 who has jurisdiction of the case or to whom the case has been 
 referred, or anyone acting in his stead; (22) "conceal" shall 
 include secrete, falsify, and mutilate; (23) "secured creditor" 
 shall include a creditor who has security for his debt upon the 
 property of the bankrupt of a nature to be assignable under this 
 act, or who owns such a debt for which some indorser, surety, or 
 other persons secondarily liable for the bankrupt has such 
 security upon the bankrupt's assets; (24) "States" shall include 
 the Territories, the Indian Territory, Alaska, and the District of 
 Columbia; (25) "transfer" shall include the sale and every other 
 and different mode of disposing of or parting with property, or 
 the possession of property, absolutely or conditionally, as a pay- 
 ment, pledge, mortgage, gift, or security; (26) "trustee" shall 
 include all of the trustees of an estate; (27) "wage-earner" shall 
 mean an individual who works for wages, salary, or hire, at a rate 
 of compensatitn not exceeding one thousand five hundred dollars 
 per year; (28) words importing the masculine gender may be 
 applied to and include corporations, partnerships, and women; 
 (29) words importing the plural number may be applied to and 
 mean only a single person or thing ; (30) words importing the 
 singular number may be applied to and mean several persons or 
 things. 
 
 Analogous Provisions of Former Acts. — R. S., § 5013; act of 1867, g 48. 
 
 The Definitions. — The numerous definitions of the words and phrases used 
 in the banliruptcy act which are given in section i, are worthy of the most 
 careful study. Many of them embody decisions of the courts as to the construc- 
 tion of the same words as used in previous acts, while others give the words a 
 meaning different from that which they formerly had. These definitions in 
 reality largely determine the scope of the whole act. In many cases words are 
 used in a manner at variance with their ordinary meaning. Thus " a person 
 against whom a petition is filed " includes one who files a voluntary petition. 
 So explicit are the statutory definitions that they admit of little comment in the 
 
THE NATIONAL BANKRUPTCY LAW. 
 
 Meaning of Words and Phrases. [Ch. I, 
 
 way of additional explanation, but he who would successfully practice in bank- 
 ruptcy must thoroughly acquaint himself with the terms here defined. 
 
 The fact that such expressions as " date of bankruptcy," " time of bank- 
 ruptcy," and " bankruptcy," when used with reference to time, mean the time 
 of the filing of the petition, and not the time of the adjudication, should never 
 be overlooked. So a " bankrupt " is one against, or by whom a petition is 
 filed, as well as one who has been adjudged a bankrupt; also, one as to whom 
 an application to set aside a composition or to revoke a discharge has been filed. 
 One must also always bear in mind the limited meaning given to the words 
 " creditor " and " debt." It should be noted, too, that one is not a " secured 
 creditor," unless the security held by him is property assignable under this act 
 and belonging to the bankrupt; or unless some person secondarily liable to 
 him, holds as security, property of the bankrupt. If the security is the property 
 of another, or if it is exempt property of the bankrupt, it does not fall within 
 the terms of the word " security " as used in the act. This definition simply 
 declares a well-established principle of the law of bankruptcy, but it must be 
 borne in mind in considering the rights of that class of creditors. So the fact 
 that " transfer " includes the sale and every mode of disposing of, or parting 
 with property, or the possession of property, either absolutely or conditionally, 
 as payment, pledge, mortgage, gift, or security, is of importance in construing 
 the many sections of the act as to preferential transfers, and especially those 
 relating to acts of bankruptcy. The present act in the form in which it passed 
 the House of Representatives, included in " transfer," the " creation of a lien 
 by any means other than by compulsory process prosecuted in good faith; " but 
 in the conference between the House and Senate arising on account of the 
 opposition of the latter body to many of the provisions as to involuntary bank- 
 ruptcy, the words quoted were stricken out and the bill passed as here stated. 
 
 Most important of all the definitions is number (15) on insolvency, because 
 that definition makes the present law radically different from the former act as 
 to cases when one can be put into bankruptcy involuntarily. The judicial defi- 
 nition of the word " insolvency " as established by the decisions under the 
 former act was, " an inability to pay debts as they mature and become due and 
 payable in the ordinary course of business, as persons carrying on that business 
 usually do, in that which is made, by the laws of the United States, lawful 
 money or 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 
 even certainty, that at a future time, on the settlement and winding up of all 
 
DEFINITIONS. 
 
 § I.] Meaning of Words and Phrases. 
 
 his affairs, his debts will be paid in full out of his property." It was also held 
 that " the amount of the trader's property was of no conseauence, if he was 
 unable to pay his debts in lawful money as they matured." (Hardy v. Clark, 
 3 B. R. 385; affirmed in Hardy v. Binninger, 7 Blatch. 262; s. c. 4 B. R. 262; 
 Sawyer v. Turpin, 91 U. S. 114; s. c. 13 B. R. 71; in re Williams, i Lowell, 406; 
 s. c. 3 B. R. 286. Compare in re Woods, 7 B. R. 126; in re Oregon Printing 
 Co., 13 B. R. 503; in re Randall & Sutherland, 3 B. R. 18; s. c. Deady, 557; 
 Toof V. Martin, 13 Wall. 40; s. c. 6 B. R. 49; in re Wells, 3 B. R. But 
 under the present act the value of the property must be considered. If 
 at a fair valuation, it equals the debtor's debts, he is not insolvent. This 
 provision was one of the concessions made in the passing of the bill to those 
 who first opposed it on the ground that its provisions would make a debtor 
 liable unnecessarily to have his property taken from him, because of a mere 
 temporary embarrassment. What is here meant by property sufficient to pay 
 " debts? " Must one's property be sufficient to pay all his debts, those not due 
 as well as those that are due, in order that he be solvent? If the word " debts " 
 is here used in accordance wijh the statutory definition, the answer to the ques- 
 tion must be in the affirmative; for debts not due as well as those due are prov- 
 able, and all provable claims are included in " debts." (Sec. 63.) Compare 
 Coggeshall v. Potter, 4 B. R. 73; s. c. 6 B. R. 10; s. c. i Holmes, 75. What 
 value must be considered? — The statute says a " fair valuation." This would 
 seem to exclude taking the sacrifice price liable to be realized if the property 
 were sold on execution as the valuation thereof. (Compare in re Randall & 
 Sutherland, supra; in re Wells, supra; Harrison v. McLaren, 10 B. R. 244; 
 Smith V. McLean, 10 B. R. 260.) 
 
CHAPTER II. 
 
 CREATION OP COURTS OF BANKRUPTCY AND THEIR 
 JURISDICTION. 
 
 Sec. 2. That the courts of bankruptcy as hereinbefore defined, 
 viz., the district courts of the United States in the several States, 
 the supreme court of the District of Columbia, the district courts 
 of the several Territories, and the United States courts in the 
 Indian Territory and the District of Alaska, are hereby made 
 courts of bankruptcy, and are hereby invested, within their 
 respective territorial limits as now established, or as they may be 
 hereafter changed, with such jurisdiction at law and in equity as 
 will enable them to exercise original jurisdiction in bankruptcy 
 proceedings, in vacation in chambers and during their respective 
 terms, as they are now or may be hereafter held, to (i) adjudge 
 persons bankrupt who have had their principal place of business, 
 resided, or had their domicile within their respective territorial 
 jurisdictions for the preceding six months, or the greater portion 
 thereof, or who do not have their principal place of business, 
 reside, or have their domicile within the United States, but have 
 property within their jurisdictions, or who have been adjudged 
 bankrupts by courts of competent jurisdiction without the United 
 States and have property within their jurisdictions; (2) allow 
 claims, disallow claims, reconsider allowed or disallowed claims, 
 and allow or disallow them against bankrupt estates ; (3) appoint 
 receivers or the marshals, upon appHcation of parties in interest, 
 in case the courts shall find it absolutely necessary, for the preser- 
 vation of estates, to take charge of the property of bankrupts 
 after the filing of the petition and until it is dismissed or the 
 trustee is qualified ; (4) arraign, try, and punish bankrupts, offi- 
 cers, and other persons, and the agents, officers, members of the 
 board of directors or trustees, or other similar controlling bodies 
 of corporations for violations of this act, in accordance with the 
 
 [6] 
 
COURTS OF BANKRUPTCY. 
 
 § 2.] Jurisdiction. 
 
 laws of procedure of the United States now in force, or such as 
 may be hereafter enacted, regulating trials for the alleged viola- 
 tion of laws of the United States ; (5) authorize the business of 
 bankrupts to be conducted for lin^iited periods by receivers, the 
 marshals, or trustees, if necessary in the best interests of the 
 estates ; (6) bring in and substitute additional persons or parties in 
 proceedings in bankruptcy when necessary for the complete 
 determination of a matter in controversy ; (7) cause the estates of 
 bankrupts to be collected, reduced to money and distributed, and 
 determine controversies in relation thereto, except as herein other- 
 wise provided ; (8) close estates, whenever it appears that they 
 have been fully administered, by approving the final accounts and 
 discharging the trustees, and reopen them whenever it appears 
 they were closed before being fully administered ; (9) confirm or 
 reject compositions between debtors and their creditors, and set 
 aside compositions and reinstate the cases; (10) consider and 
 confirm, modify or overrule, or return, with instructions for 
 further proceedings, records and findings certified to them by 
 referees; (11) determine all claims of bankrupts to their exemp- 
 tions ; (12) discharge or refuse to discharge bankrupts and set aside 
 discharges and reinstate the cases; (13) enforce obedience by 
 bankrupts, officers, and other persons to all lawful orders, by fine 
 or imprisonment or fine and imprisonment ; (14) extradite bank- 
 rupts from their respective districts to other districts; (15) make 
 such orders, issue such process, and enter such judgments in 
 addition to those specifically provided for as may be necessary 
 for the enforcement of the provisions of this act; (16) punish per- 
 sons for contempts committed before referees; (17) pursuant to 
 the recommendation of creditors, or when they neglect to recom- 
 mend the appointment of trustees, appoint trustees, and upon com- 
 plaints of creditors, remove trustees for cause upon hearings and 
 after notices to them; (18) tax costs, whenever they are allowed 
 by law, and render judgments therefor against the unsuccessful 
 party, or the successful party for cause, or in part against each of 
 the parties, and against estates, in proceedings in bankruptcy; 
 and (19) transfer cases to other courts of bankruptcy. 
 
THE NATIONAL BANKRUPTCY LAW. 
 
 Construction of the Section. [Ch. IL 
 
 Nothing in this section contained shall be construed to deprive 
 a court of bankruptcy of any power it would possess were certain 
 specific powers not herein enumerated. 
 
 Analogous Provisions of Former Acts. — 
 
 As to courts of bankruptcy: R. S., §§ 563, 711, 4972, 4973, 4974, 4975. 4977, 
 4978, 4978A, 4978B; act of 1867, §§ I, 49; act of 1841, §§ 6, 16. 
 
 As to specific powers: compare Analogous Provisions of Former Acts, given 
 under the several sections of this act, cited in the cross-references given in the 
 notes to this section. 
 
 Courts of Bankruptcy. — In providing for the administration of a system 
 of bankruptcy Congiess has invariably availed itself of an existing organization, 
 namely, the district courts of the United States. These courts are denominated 
 and constituted courts of bankruptcy, but it has been held that although the 
 same persons hold relatively the same offices, and the territorial jurisdiction of 
 the courts as courts of bankruptcy is co-extensive with their jurisdiction as 
 United States district courts, they are nevertheless, distinct and separate courts 
 with powers and jurisdiction distinct and separate. As bankruptcy courts, they 
 are statutory in their origin, and have no powers, authority or jurisdiction 
 except that which is expressly conferred upon them by the statute, or that which 
 is necessarily implied. (Clark v. Binninger, 38 How. Pr. 341; s. c. 3 B. R. 518; 
 in re Norris, 4 B. R. 35; Jobbins v. Montague, 6 B. R. 509.) 
 
 But the courts of bankruptcy are not inferior courts in the sense that their 
 jurisdiction must necessarily appear upon the face of the papers. An adjudi- 
 cation in bankruptcy is a proceeding in rem and the jurisdiction of the court over 
 the person will be presumed if it does not appear upon the record. (Hayes v. 
 Ford, 15 B. R. 569, citing Ruckman v. Cowell, i N. Y. 505. See also Chemung 
 Bank v. Judson, 8 N. Y. 254; Reed v. Vaughn, 10 Mo. 447.) 
 
 Construction of the Section. — This section, first, confers upon courts of 
 bankruptcy, jurisdiction at law and in equity, in chambers and at regular 
 terms, of all proceedings in bankruptcy. This is a general vesting of jurisdic- 
 tion. After that the section goes on and enumerates certain specific classes of 
 cases to which the jurisdiction shall be deemed to extend. This is not by way 
 of limitation, but of explanation and illustration of the generality of the preced- 
 
COURTS OF BANKRUPTCY. 
 
 § 2.] Territorial Extent of Jurisdiction. 
 
 ing language. The final clause of the section that nothing in it contained shall 
 be construed to deprive the court of bankruptcy of any power it would possess, 
 were certain specific powers not therein enumerated, is a statutory declaration 
 as to its construction which is in harmony with the judicial construction given 
 to similar provisions in the former bankruptcy acts. These specific declarations 
 as to jurisdiction are doubtless limits of the jurisdiction of the court in these 
 particular matters, but furnish no presumption that general powers in bank- 
 ruptcy not specifically mentioned are not reposed in the courts. {Ex p. Christy, 
 3 How. 292.) Accordingly, it has been held that the section is not to be strictly 
 construed in the manner that a statute giving a court power to do a particular 
 thing would be construed; but, on the contrary, that inasmuch as it is the evi- 
 dent intent of Congress to give to the court full and complete jurisdiction over 
 an extensive subject, it is to be construed liberally, and that it must be pre- 
 sumed that Congress, in adding to the range of the employment of the district 
 courts intended, unless it was otherwise provided in the statute, that those 
 courts should continue to exercise their customary powers and to follow their 
 usual course of procedure. (In re Cal. Pac. R. R. Co., 11 B. R. 193; s. c. 3 
 Saw. 240. Compare to the contrary, in re Norris, supra.) A general review of 
 the section necessarily compels the conclusion that except where expressly 
 excepted Congress has intended to clothe the courts of bankruptcy with the 
 most ample powers to conduct and settle all proceedings in bankruptcy. 
 
 Territorial Extent of Jurisdiction. — The act provides that the courts of 
 bankruptcy are vested with jurisdiction " within their respective territorial 
 limits." Under the former act, the equivalent words " in their respective dis- 
 tricts " were construed differently by the different courts. The question arose 
 most frequently in cases where assignees brought suits to recover assets of the 
 bankrupt in district courts other than those by which they were appointed. The 
 Supreme Court of the United States held that the jurisdiction of the bankruptcy 
 court was confined to its respective district only in so far as the exercise of it 
 was concerned. Each court could exercise its jurisdiction and powers only 
 within its own district, but its powers extended to all matters of bankruptcy 
 without limitation. 
 
 The jurisdiction by that act conferred upon courts of bankruptcy was of a 
 two-fold nature; first, a jurisdiction over bankruptcy proceedings as such, that 
 is, the proceedings instituted by petition, and ending in the distribution of the 
 assets among creditors and the discharge or refusal to discharge the bankrupt; 
 
lO THE NATIONAL BANKRUPTCY LAW. 
 
 Powers to Entertain Suits Against Debtors of the Bankrupt. Ch. IL 
 
 secondly, jurisdiction as an ordinary court of law, over suits at law or in equity, 
 brought by or against the assignee in reference to the alleged property of the 
 bankrupt or to claims alleged to be owing from or to him. In non-professional 
 language, this might be said to be, first, a jurisdiction over bankruptcy proceed- 
 ings, and, second, a jurisdiction over actions growing out of bankruptcy pro- 
 ceedings. It was held that the jurisdiction over bankruptcy proceedings as 
 such was necessarily limited to the court of the district which acquired jurisdic- 
 tion over the person of the bankrupt, pursuant to the statute; but the exclusion 
 of other district courts from jurisdiction over bankruptcy proceedings as such, 
 did not prevent the courts of bankruptcy of other districts from exercising juris- 
 diction in matters growing out of, or connected with that identical bankruptcy, 
 , so far as it did not conflict with or trench upon the jurisdiction of the court in 
 which the case was pending. That the courts of other districts might exercise 
 jurisdiction in such cases, was held by the Supreme Court to be a necessary 
 result of the general jurisdiction conferred upon bankruptcy courts, and was in 
 harmony with the scope and design of the act. (Lathrop v. Drake, 91 U. S. 
 516; s. c. 13 B. R. 472, citing Shearman v. Bingham, 7 B. R. 490; s. c. 3 ClifE. 
 552; Goodall V. Tuttle, 7 B. R. 193; Payson v. Dietz, 8 B. R. 193.) It is, how- 
 ever, to be noted in connection with this case that by the present statute the 
 trustee can bring suits only where the bankrupt might have brought them, had 
 not bankruptcy occurred. The limitation that bankruptcy courts shall exercise 
 their powers only within their own districts prevents them from summoning 
 parties from without their districts. It does not limit their power over the sub- 
 ject-matter of which they are given jurisdiction. Thus when they make an 
 adjudication of bankruptcy, and a trustee is chosen, the bankrupt's property 
 wherever situated passes to him, and all his debts wherever the creditors reside 
 are affected by the orders and decrees of the bankruptcy court. The property 
 passes to the trustee who is the officer of the bankruptcy court appointing him, 
 and it is thus in the custody of that court, so that all creditors holding claims 
 are affected by all of its decrees, whether they come into the proceeding vol- 
 untarily or involuntarily, or fail to enter any appearance whatever. (Markson 
 V. Heaney, i Dill. 497; s. c. 4 B. R. 510; Paine v. Caldwell, 6 B. R. 558, citing 
 Picquet v. Swan, 5 Mason, 35; Toland v. Sprague, 12 Pet. 327; Herndon v. 
 Ridgeway, 17 How. 424; in re Hirsch, 2 B. R. 3; s. c. 2 Ben. 493; Jobbins v. 
 Montague, 6 B. R. 509.) 
 
 Jurisdictional Powers to Entertain Suits Against Debtors of the 
 
 Bankrupt. — Under the Act of 1867, it was repeatedly said by the courts that 
 
COURTS OF BANKRUPTCY. II 
 
 §2.] Powers to Entertain Suits Against Debtors of the Bankrupt. 
 
 so complete and am'ple was the jurisdiction by statute conferred upon the 
 courts of bankruptcy that the assistance and co-operation of the state courts 
 was unnecessary, if the parties interested should choose to rely on the national 
 courts; and that Congress meant by that act to provide a system capable of 
 entire execution by the national tribunals; that the powers conferred upon the 
 district court were sufficient to enable it to entertain any action brought by the 
 assignee for the purpose of collecting a debt due to the bankrupt, and also 
 afforded ample remedy and relief to all persons having claims against the estate 
 whether such claims were secured by liens or unsecured. This is, doubtless, 
 still true; but a most important modification is to be noted. It is the provision 
 of section 23 (i), that suits by a trustee shall only be brought or prosecuted in 
 the courts where the bankrupt, whose estate is being administered by such 
 trustee, might have brought or prosecuted them, if proceedings in bankruptcy 
 had not been instituted, unless by consent of the parties defendant. The last 
 clause implies that some other court possesses such jurisdiction if the proposed 
 defendant consents to the case being tried in it. Does the Court of Bankruptcy 
 also possess this jurisdiction? If so, it must be implied from the general juris- 
 diction conferred on it and from the clause by which jurisdiction is given to it 
 " to cause the estates of bankrupts to be collected, reduced to money and dis- 
 tributed, and to determine controversies in relation thereto." (7) The proviso 
 in that subdivision (7), to wit, the words" except as herein otherwise provided," 
 manifestly has reference to the jurisdiction conferred on the circuit courts of 
 the United States and the state courts, by section 23, and to the implied enact- 
 ment in section II to the effect that suits pending by or against the bankrupt at 
 the time of the filing of the petition may continue to be prosecuted or defended 
 by the trustee. We believe the effect of section 23 is not to exclude or deprive 
 courts of bankruptcy, (vested with general jurisdiction), of jurisdiction over 
 such matters, but to prohibit the trustee from bringing his action without the 
 defendant's consent in any court other than in such court as the bankrupt him- 
 self might have brought it in. The object of the provision as stated by the 
 framers of the bankruptcy bill was to save a defendant from incurring the addi- 
 tional expense and annoyance of litigating in federal courts, which, on account 
 of their larger territorial jurisdiction, in most cases, hold their terms at greater 
 distances from the residence of the parties than do the state courts. Compare 
 section 23 as to suits in state courts, and as to jurisdiction of Circuit Courts. 
 Compare notes below in this section as to jurisdiction of suits at law and in 
 equity. Compare Mitchell v. Mfg. Co., 2 Story, 648; in re Christy, 3 How. 
 
12 THE NATIONAL BANKRUPTCY LAW. 
 
 Jurisdiction to Determine the Rigiits of Lienors. Ch. II. 
 
 292; Zaiim V. Fry, 9 B. R. 546; Smith v. Mason, 14 Wall. 419; s, c. 6 B. R. i; 
 Morgan v. Thornhill, 11 Wall. 65; s. c. 5 B. R. i. 
 
 Jurisdiction to DeteFmine the Rights of Lienors. — Many differences of 
 great importance exist between section i of the original bankruptcy act of 1867, 
 defining the jurisdictional powers of the courts of bankruptcy, and the present 
 section, the provisions of which are on the same subject. Chief of these are 
 certain omissions from the present act with reference to the power of the courts 
 over creditors holding liens. In the act of 1867 it was provided not only that 
 the jurisdiction of the court extended to all cases and controversies arising 
 between the bankrupt and any creditor or creditors who should claim any debt 
 or demand under the bankruptcy, and to the collection of all the assets of the 
 bankrupt; but it was also expressly provided that this jurisdiction extended to 
 the ascertainment and liquidation of the liens and other specific claims thereon. 
 By one section the assignee was authorized to pay off or redeem the bankrupt's 
 property from any lien, although the indebtedness secured by it was not due; 
 and by still another provision, courts of bankruptcy were expressly authorized 
 to order encumbered property to be sold subject to the lien, or free from the lien, 
 the lien thus being transferred to the proceeds. These three provisions just 
 referred to with reference to the rights of lienors and their enforcement by 
 courts of bankruptcy are wanting in the present act. Moreover, there are 
 affirmative provisions in the present statute which further go towards raising 
 serious questions as to the powers which courts of bankruptcy now have over 
 lienors and their liens. Section 67 (d) provides that liens given or accepted in 
 good faith and not in contemplation of or in fraud of the act, and for a present 
 consideration, which have been recorded according to law, if record thereof was 
 necessary in order to impart notice, shall not be affected by the act. Section 
 23 (a) provides that the United States Circuit Courts shall have jurisdiction of 
 all controversies at law and in equity as distinguished from proceedings in 
 bankruptcy between trustees as such and adverse claimants concerning the 
 property acquired or claimed by the trustees, in the same manner and to the 
 same extent as though bankruptcy proceedings had not been instituted and 
 such controversies had been between the bankrupts and such adverse claim- 
 ants. Whether the expression " adverse claimants " is to be construed as 
 including lienors has been queried by no less eminent a jurist than Judge 
 Story. {Ex. p. Christy, 3 How. 292.) 
 
 The first question then that presents itself is: Have courts of bankruptcy 
 jurisdiction to ascertain and liquidate the liens held by creditors, which are not 
 
COURTS OF BANKRUPTCY. 1 3 
 
 § 2.] Jurisdiction to Determine the Rights of Lienors. 
 
 invalidated by the bankruptcy act? Can they determine their validity? Can 
 they order a sale of the property free from the liens, and make the lienor resort 
 only to the proceeds? If they have this jurisdiction it must result from the 
 general grant of power to them to exercise original jurisdiction in bankruptcy 
 proceedings and from the specially mentioned powers to " allow and disallow 
 claims, to bring in and substitute additional persons or parties in proceedings 
 in bankruptcy when necessary for the complete determination of the matter in 
 controversy; " and especially from that clause which empowers them " to 
 cause the estates of bankrupts to be collected, reduced to money and distributed 
 and to determine controversies in relation thereto; " and also from the some- 
 what vague provision that they " may make such orders, issue such processes 
 and enter such judgments in- addition to those specifically provided for as may 
 be necessary for the enforcement of the provisions of this act." It is manifest 
 that while the adjudications under the act of 1867 may furnish sources of infor- 
 mation, they must be considered as furnishing no authoritative answer to any 
 of these questions, the provisions of that statute differing so materially from 
 this. The provisions of the act of 1841 were much more like those of the present 
 act. The act of 1841 declared that the jurisdiction of the courts of bankruptcy 
 should " extend to all cases and controversies in bankruptcy arising between 
 the bankrupt and any creditor or creditors who should claim any debt or 
 demand under the bankruptcy; to all cases and controversies between such 
 creditor or creditors and the assignee of the estate, whether in office or 
 removed; to all cases and controversies between such assignee and the bank 
 rupt; and to all cases, matters and things to be done under and in virtue of the 
 bankruptcy, until the final distribution and settlement of the estate of the bank- 
 rupt to the close of the proceedings." The tenth section of that act declared 
 that in order to insure a speedy settlement and close of the proceedings in each 
 case, it should be the duty of the court to " order and direct a collection of the 
 assets and a reduction of the same to money and a distribution thereof, at as 
 early a period as appeared practicable." The assignee by the third section of 
 that act was " vested with all the right, title, power and authority to sell, man- 
 age, and dispose of the estate and the property of the estate of the bankrupt of 
 every name and nature, and to so have and defend the same subject to the 
 orders and directions of the court as fully as the bankrupt might before his 
 bankruptcy;" and all sales by the assignee were to be made by him " at such 
 times and in such manner as should be ordered and appointed by the court," 
 and he was expressly authorized " under the order and direction of the court to 
 
14 THE NATIONAL BANKRUPTCY LAW. 
 
 Jurisdiction to Determine the Rights of Lienors. [Ch. IL 
 
 redeem and discharge any mortgage or lien upon any property, real or personal, 
 and to tender a due performance thereof." Under these provisions of the act 
 of 1841 there was a great diversity of opinion and decision as to the true nature 
 and extent of the jurisdiction of the bankruptcy court, especially as to whether 
 it had power to enforce liens and to direct the sale of property free from liens, 
 and, second, as to whether, if those powers existed in the court of bankruptcy, 
 the court had the further power to restrain by injunction persons who held 
 liens, from proceeding to enforce them in state courts. These questions were 
 most exhaustively considered in the case. Ex p. Christy, 3 How. 292. The 
 court (the United States Supreme Court), was divided in its opinion, the major, 
 ity opinion being delivered by Judge Story, two judges dissenting and criticis- 
 ing, with force, the opinion, in so far as it dealt with the question of the extent 
 of the jurisdiction of bankruptcy courts, as being uncalled for by the case, and 
 as an unjustifiable oKter dictum. 
 
 The minority of the court held that the validity of a mortgage or other lien 
 was submitted to no other test than this: the laws of the state and the restrict- 
 ive provisions of the bankruptcy act as to liens; that all liens valid by the laws 
 of the state and not in violation of the bankruptcy act were preserved. This is 
 a correct proposition of law under the present act as well as under the act of 
 1841. The minority further held that the assignee of the bankrupt could not 
 take the property bound by the lien, on any other terms than those on which it 
 was held by the bankrupt himself, before the adjudication in bankruptcy had 
 vested the latter's rights in his asignee, and that lienors had rights paramount 
 to those vested in the assignee. From these propositions of law they drew the 
 further deduction that if a lien was not paid off by the assignee, the rights of the 
 lienor remained incapable of being impaired by any authority conferred by 
 the bankruptcy act and that they stood perfect as if that act had not been 
 passed, so that if valid by the law of the state and not inconsistent with the 
 bankruptcy act, such liens might be enforced by a sale or by other process con- 
 formable to the existing laws of the state for enforcing liens, which laws no 
 court could annul, destroy or impair by any proceeding in bankruptcy. They 
 further held that the right and power of a lienor to sell was not an empty right, 
 but an important one, and the statute was not to be construed as depriving one 
 of his remedies in the state courts or the right given him by state laws to sell 
 the property covered by his lien unless the statute actually required it, and that 
 there being no provision in that act expressly interfering with the laws of the 
 state which created and defended the obligation of a contract which was a Hen 
 
COURTS OF BAlSfKRUPTCY. 1 5 
 
 § 2.] Jurisdiction to Determine the Rights of Lienors. 
 
 on property, and there being nothing in the act professing to affect the remedies 
 of the lienor in a state court, one incident of which was the power of a creditor 
 to sell the property, the statute could not be construed as taking away the 
 lienor's rights. Nothing short of a clearly expressed enactment showing that 
 Congress intended to exercise its plenary and unlimited power over the whole 
 subject of bankruptcy and to take from the state courts the administration of 
 remedies for the enforcement of liens, and above all to prohibit the creditor 
 from resorting to his remedies under the law of the state which prescribed it, 
 could be construed as taking away from the state courts such powers. It was 
 admitted that Congress might deprive a state court of such power over the liens 
 and delegate it to a court of its own creation, but it was insisted that the law 
 enacted for this purpose must be in plain terms, leaving no doubt as to the 
 intention of Congress. The question then under this law, as under that law, is 
 whether Congress intends by the bankruptcy act to take away from state courts 
 this authority over liens which they had prior to the bankruptcy act, and 
 whether it intends to confer it upon some federal court, and if so whether the 
 latter court is the circuit court or the court of bankruptcy. It is a question of 
 statutory construction. 
 
 The opinion of the majority of the court in re Christy is probably the 
 adjudication which is most nearly an authoritative construction of the present 
 act, on account of the terms of this act resembling so strikingly the terms of the 
 act of 1841, under which that decision was rendered. We have given an 
 abstract of the dissenting opinion of the minority. 
 
 The majority of the court held that it was manifest that the purposes essen- 
 tial to the just operation of the bankrupt system could scarcely be accomplished 
 except by clothing the courts of the United States sitting in bankruptcy with 
 the most ample powers and jurisdiction to accomplish them; and that since 
 Congress had thus required a certain end, it could hardly be deemed to have 
 intended to withhold the means by which alone the end could be successfully 
 reached; also that the general provision giving to the courts general jurisdic- 
 tion at law and in equity in bankruptcy proceedings (which provision is almost 
 identical with the beginning of the section under consideration), must be con- 
 strued as giving to the courts power over all cases where the rights, claims and 
 property of the bankrupt or those of his assignee are concerned, since they were 
 necessarily involved in the administration and settlement of the bankrupt's 
 estate; and that this construction of the act was further required by the clause 
 above quoted, conferring jurisdiction on the court to hear all cases and contro- 
 
1 6 THE NATIONAL BANKRUPTCY LAW. 
 
 Jurisdiction to Determine the Rights of Lienors. [Ch. H. 
 
 versies arising between the bankrupt and any creditor who should claim any 
 debt or demand under the bankruptcy, and to all cases and controversies 
 between the creditor or creditors and the assignee; and that the reference to 
 " any creditor or creditors who shall claim any debt or demand under bank- 
 ruptcy ■' did not exclude secured creditors, or creditors holding liens; that cred- 
 itors holding liens might apply to the bankruptcy court to have encumbered 
 property sold and the proceeds thereof applied toward the payment of their 
 debts pro tanto, and to prove for the residue; or, on the other hand, that the 
 assignee (trustee) might contest the claims of alleged lienors in the bankruptcy 
 court, and seek to ascertain the true amount thereof, and have the residue of 
 the property after satisfying their claims applied for the benefit of the other 
 creditors. With reference to the effect of that statute on liens, the court said 
 that the provision in the act that " nothing in it should be construed to annul, 
 or destroy, or impair any liens, mortgages or other securities which were valid 
 by the laws of the state, and which were not inconsistent with the provisions of 
 the bankruptcy act," could not be construed as taking such liens, mortgages 
 and securities out of the jurisdiction of the bankruptcy court. The meaning of 
 that provision was that the rights of the lienors, mortgagees and holders of 
 securities were not annulled or destroyed or impaired; but that they were to be 
 held of equal validity in the courts of the United States as they were in the state 
 courts, and that courts of bankruptcy were bound to respect and protect them; 
 but that this clause did not interfere with the jurisdiction and right of the bank- 
 ruptcy court to inquire into and ascertain the validity and extent of such liens, 
 mortgages and other securities, and to grant the same remedial justice and 
 relief to all the parties interested therein as the state courts might or ought to 
 grant. The present act in addition to having provisions analogous to those 
 above mentioned also declares (section 57 \e\ ), that claims of secured creditors 
 and those who have priority may be allowed to enable such creditors to partici- 
 pate in the proceedings at creditors' meetings held prior to the determination of 
 the value of their securities or priorities, but shall be allowed for such sums 
 only as to the courts seem to be owing over and above the value of the securi- 
 ties and priorities. The last clause implies an authority in the court to ascertain 
 and determine whether or not the security exists; also to determine the value of 
 it, and also the amount of the debts so secured. Section 56 {S) contains a similar 
 provision. Section 63 makes debts, whether payable or not, provable in bank- 
 ruptcy. Section 57 (K) provides that the value of securities held by secured 
 creditors shall be determined by converting the same into money according to 
 
COURTS OF BANKRUPTCY. 1 7 
 
 § 2.] Jurisdiction over Adverse Claimants. 
 
 the terms of tlie agreement pursuant to which such securities were delivered to 
 such creditors, or by sucu creditors and the trustee by agreement, arbitration, 
 compromise or litigation as the court may direct, and the amount of such value 
 shall be credited upon such claims and a dividend shall be paid only on the 
 unpaid balance. This last section would clearly seem to show that the secured 
 creditor was under the jurisdiction of the bankruptcy court; that that court 
 might restrain a party from enforcing his lien in a state court if it could not 
 give ample protection to all parties; or, on the other hand, the bankruptcy court 
 might authorize the parties to litigate a disputed claim, secured by a lien, in the 
 state court. 
 
 In re Christy was followed in Norton v. Boyd, 3 How. 426, where it was said: 
 " Where a creditor, by virtue of a special mortgage, elects to foreclose that 
 mortgage before a state tribunal, the bankruptcy court is not called upon to 
 interpose, except in cases where from the nature of the case, wrong or injustice 
 may be done to other creditors in interest, or where the mortgage itself may 
 be contested. The bankruptcy court of the United States is vested with jurisdic- 
 tion over mortgaged property belonging to the bankrupt, and when a proper case 
 is shown, it has power to foreclose a mortgage, and to do all other acts necessary 
 to bring about a final distribution and settlement of the bankrupt estate. 
 Where a creditor calls in question the validity of a mortgage held by another 
 creditor, it is the duty of the said court to exercise jurisdiction over the ques- 
 tions involved, and, if necessary, to declare the mortgage null and void." 
 
 Jurisdiction Over " Adverse Claimants." —As will be seen below, a court 
 of bankruptcy cannot in a summary proceeding determine disputes as to 
 adverse claims as to title and possession of property, and this includes cases 
 where there is a dispute as to the right of possession under a lien giving such a 
 right, the validity of which is disputed. (Marshall v. Knox, 8 B. R. 97; 
 s. c. 16 Wall. 551.) Any dispute of this character must be adjudicated not sum- 
 marily but in a regular suit at law or in equity. The bankruptcy court has 
 jurisdiction to entertain a regular suit at law or in equity under the present 
 statute. The first sentence of this section is an express provision giving it 
 jurisdiction at law and in equity. Under the former act there was no provision 
 expressly conferring jurisdiction on a court of bankruptcy to try a formal action 
 at law or in equity. But there was an implied conferring of it by section 2 of 
 that act (R. S., § 4979), which provided that the circuit court should have within 
 each district concurrent jurisdiction with the district courts of all suits at law or 
 in equity brought by an assignee against any person claiming an adverse inter- 
 [nat. bankruptcy law — s.] 
 
THE NATIONAL BANKRUPTCY LAW. 
 
 Jurisdiction over Adverse Claimants. [Ch. IL 
 
 est or owing any debt to such bankrupt, or by any person against the assignee 
 touching any property and rights of the bankrupt. The present act in the cor- 
 responding section (23), simply vests circuit courts with a jurisdiction over such, 
 suits at law or in equity as distinguished from the proceedings in bankruptcy, 
 between trustees as such and adverse claimants concerning the property 
 acquired or claimed by the trustees, in the same manner and to the same extent 
 only as though bankruptcy proceedings had not been instituted and such con- 
 troversies had been between the bankrupts and such adverse claimants. The 
 jurisdiction here conferred on circuit courts is by no means entirely exclusive 
 of the exercise of jurisdiction over the same class of cases by courts of bank- 
 ruptcy. The conferring of jurisdiction in this class of cases upon the circuit 
 courts without any express conferring of it on the courts of bankruptcy and the 
 absence of the word " concurrent" do not necessarily deprive the latter of 
 jurisdiction over such actions. Entirely independent of the clanse in the act 
 of 1867, declaring that the jurisdiction of the circuit courts over such cases 
 was concurrent with the district courts, and notwithstanding there was no 
 express conferring of this jurisdiction upon the district courts, it was said that 
 this jurisdiction " might be well enough held to be included in the general 
 grant of jurisdiction given by the first section of this act." (/« r? Alexander, 
 3 B. R. 29; s. c. Chase, 295, opinion by Chase, Chief Justice, holding 
 circuit, District of Virginia.) This case was followed in (joodall v. Tuttle, 
 7 B. R. 193; s. c. 3 Biss. 219, where it was said that while the section giving 
 the circuit courts concurrent jurisdiction with the district courts in suits at law 
 and in equity, assumed that the latter courts had such jurisdiction, that section 
 did not confer it, and such jurisdiction did not exist unless somewhere else 
 conferred, but that such jurisdiction must be held to be conferred in the express 
 and general power given to such courts " to collect the assets of the bankrupt." 
 In the case of Lathrop v. Drake, 91 U. S. 516; s. c. 13 B. R. 472, with reference 
 to the jurisdiction of courts of bankruptcy over suits at law or in equity, it was 
 stated that it was conferred upon bankruptcy courts under the last act, by lan- 
 guage, " very broad and general." If, then, courts of bankruptcy under the 
 last act had jurisdiction over suits against adverse claimants; if it was implied 
 in the general jurisdiction conferred, independently of the implication resulting 
 from the use of the word " concurrent," then the absence of that word from the 
 present act is not sufficient to divest them of it, and they will have such juris- 
 diction if the defendant consents to the case being tried by them, even though in 
 certain cases the circuit courts may have a similar jurisdiction. (Compare 
 
COURTS OF BANKRUPTCY. 19 
 
 §2-] Jurisdiction: Is it Exclusive ? 
 
 Lathrop v. Drake, supra, citing Shearman v. Bingham, 7 B. R. 490. See 
 also in re Christy, 3 How. 292; Stinson v. McMurray, 6 Humph. 339; Rus- 
 sel V. Cheatam, 8 S. & M. 703; McLean v. Meline, 3 McLean, 199; Mitchell 
 V. Great Works, 2 Story, 648; Ex p. Foster, 2 Story, 131; Norton v. Boyd, 3 How. 
 426. Compare, however, Jobbins v. Montague, 6 B. R. 509; in re Richardson, 
 2 Ben. 517; s. c. 2 B. R. 202; Goddard v. Weaver, i Woods, 257; s. c. 6 B. R. 
 440; Markson v. Heaney, i Dill. 497; s. c. 4 B. R. 510; Lamb v. Damron, 7 B. 
 R. 509; Marshall ». Knox, 8 B. R. 97; s. c. 16 Wall. 551.) 
 
 Jurisdiction: Is it Exclusive ? — Courts of bankruptcy, then, having juris- 
 diction over suits to collect debts due to the bankrupt, when the defendant con- 
 sents that they be therein tried; and having jurisdiction over liens existing 
 upon the property of the bankrupt, and power to take such property under their 
 control and order its sale free from the liens (the liens being transferred to the 
 proceeds), the next question that arises is: Is this jurisdiction exclusive? 
 Secondly; May the court restrict lienors from attempting to enforce their reme- 
 dies in the state courts? If so, when and under what circumstances? 
 
 The jurisdiction of state courts over pending actions is in nowise interfered 
 with. Actions pending against the bankrupt may in certain cases be stayed. 
 (See section 11.) In other cases, that is, in suits instituted by the trustee, it will 
 frequently happen that no court other than a state court can obtain jurisdiction 
 over the defendant unless he consents. (Compare section 23 [i].) Pending 
 actions which are not stayed, and pending actions which cannot be stayed, may- 
 proceed to judgment, and the judgment of the state court is a binding and valid 
 adjudication. (Eyster v. Gaff, gi U. S. 521; s. c. 2 Col. 28; s. c. 13 B. R. 546.) 
 It is a mistake to suppose that the bankrupt law avoids of its own force, all 
 judicial proceedings in the state or other courts, the instant that one of the par- 
 ties is -adjudged a bankrupt. There is nothing in the act to sanction such a 
 proposition. Unless the trustee intervenes and demands and asserts his rights, 
 the state court, which has acquired jurisdiction previous to the bankruptcy, is in 
 duty bound to go on with the case. Its jurisdiction is not divested by the adju- 
 dication of bankruptcy. In Eyster v. Gaff, 91 U. S. 521, the Supreme Court 
 said: " The opinion seems to have been quite prevalent in many quarters at 
 one time, that, the moment a man is declared bankrupt, the district court which 
 has so adjudged, draws to itself by that act not only all control of the bank- 
 rupt's property and credits, but that no one can litigate with the assignee con- 
 tested rights in any other court, except in so far as the circuit courts have 
 
20 THE NATIONAL BANKRUPTCY LAW. 
 
 Jurisdiction: Is it Exclusive. [Ch. II. 
 
 concurrent jurisdiction, and that other courts can proceed no further in suits of 
 which they had at that time full cognizance, and it was a prevalent practice to 
 bring any person, who contested with the assignee any matter growing out of 
 disputed rights of property or of contracts, into the bankrupt court by the serv- 
 ice of a rule to show cause, and to dispose of their rights in a summary way. 
 This court (the Supreme Court) has steadily set its face against this view. The 
 debtor of a bankrupt, or the man who contests the right to real or personal 
 property with him, loses none of his rights by the bankruptcy of his adversary. 
 The same courts remain open to him in such contests, and the statute has not 
 divested those courts of jurisdiction in such actions. If it has for certain 
 classes of actions conferred a jurisdiction for the benefit of the assignee in the 
 circuit and district courts of the United States, it is concurrent with and does 
 not divest the state courts." Citing Smith v. Mason, 14 Wall. 419; s. c, 6 B. R. 
 r; Marshall v. Knox, 16 Wall. 551; s. c. 8 B. R. 97; Mays v. Fritton, 20 Wall. 
 414; Doe V. Childress, 21 Wall. 642. See also Johnson v. Bishop, 8 B. R. 57; 
 s. c. Woolworth, 324. 
 
 Where jurisdiction has been acquired by a state court before an adjudication 
 in bankruptcy, it is not divested thereby, thus, if a levy of an execution is made 
 before the commencement of the proceedings in bankruptcy, the possession of 
 the sheriff cannot be disturbed by the trustee. The latter in such a case is only 
 entitled to that which may remain after the sale upon execution. It is 
 the duty of the sheriff to go on and sell the property, unless enjoined by the 
 court of bankruptcy and such injunction should not be issued merely on the 
 ground that the bankruptcy court has since the levy on the property adjudi- 
 cated the owner bankrupt. So if a receiver has been appointed by a State 
 court in an action instituted therein, prior to the adjudication of bankruptcy, 
 the property of the bankrupt is in the custody of that officer of the State court, 
 and he should not be enjoined from making a sale thereof. The State court 
 having acquired jurisdiction, the bankruptcy court, should not interfere with 
 it, unless there are equitable grounds for so doing. So if proceedings have 
 been instituted in a State court, prior to the adjudication, for the purpose of 
 foreclosing a mortgage, the bankruptcy court should not in general enjoin the 
 prosecution of the action to judgment and sale. Whatever may be the particu- 
 lar nature of the suit if the State court has acquired jurisdiction and the prop- 
 erty has come into its custody, no other court, not even a bankruptcy court, can 
 properly interfere with its possession. The bankruptcy court has no authority 
 tc compel the officers of the State courts which have thuse acquired jurisdiction 
 
COURTS OF BANKRUPTCY. 21 
 
 § 2-] Enjoining Proceedings in State Courts. 
 
 and control over the bankrupt's property to deliver it over to the trustee in 
 bankruptcy. (Ansonia B. & C. Co. v. Babbitt, i8 Hun, 157; Davis v. Railroad 
 Co., 13 B. R. 258; s. c. I Woods, 661; in re Burns, i B. R. 174; Marshall v. 
 Knox, 8 B. R. 97; s. c. 16 Wall. 551; Fehley v. Barr, 66 Penn. 196; Norton 
 V. Boyd, 3 How. 426; Goddard v. Weaver, 6 B. R. 440; s. c. i Woods, 257; in re 
 Smith et al., i B. R. 599; s. c. 2 Ben. 432; in re Wilbur, 3 B. R. 276; s. c. 
 I Ben. 527; Doremus v. Walker, 8 Ala. 194; in re Campbell, i B. R. 165; 
 s. c. I Abb. C. C. 185; in re Schnepf, i B. R. 190; s. c. 2 Ben. 72; 
 Sbarman v. Howell, 40 Geo. 257; in re R. M. Whipple, 13 P. R. 373; s. c. 
 6 Biss. 516.) And not only should courts of bankruptcy not interfere where 
 another court has acquired the custody of the property, but not even where it has 
 acquired jurisdiction of an action, whether it be an action to collect a debt or 
 an action to enforce a lien. The court of bankruptcy has no authority to with- 
 draw to itself cases which have previously been instituted in a state court, and 
 attempt itself to hear and determine the claims of the parties. There 
 may be cases when it will be proper for it to enjoin the litigant from pro- 
 ceeding in the action, but it has no authority over the state courts themselves, 
 and cannot set aside a foreclosure sale of mortgaged property of a bankrupt on 
 a bill filed in a state court to foreclose a mortgage, or any other judgment ren- 
 dered by the state court which is within its jurisdictional power. (Norton v. 
 Boyd, 3 How. 426; Samson v. Burton, 5 Ben. 325; s. c. 4 B. R. i; Eyster v. Gaff, 
 91 U. S. 516; s. c. 13 B. R. 546; s. c. 2 Col. 28; Seibel v. Simeon, 62 Mo. 255; 
 Boone v. Revis, 44 Tex. 384; Marshall v. Knox, 16 Wall. 551; s. c. 8 B. R. 97; 
 Johnson v. Bishop, 8 B. R. 533; s. c. Woolworth, 324.) 
 
 Enjoining Proceedings in State Courts. —But although the jurisdiction 
 of state courts is in no way impaired; although in cases where the officers of 
 state courts prior to an adjudication in bankruptcy have seized property of the 
 bankrupt under state process, such a levy cannot be interfered with unless it is 
 fraudulent or contrary to the bankruptcy act or upon some equitable ground; 
 yet the moment that an adjudication of bankruptcy has been made, the title to 
 all the property of the bankrupt, as of that date, passes to the person who is 
 subsequently chosen trustee. From the time of adjudication (at the latest) the 
 property is in the custody and under the control of the bankruptcy court, and 
 upon the very same principle upon which that court refuses to interfere with a 
 levy made by a sheriff under process of a state court, or refuses to interfere with 
 
2.2 • THE NATIONAL BANKRUPTCY LAW. 
 
 Enjoining Proceedings in State Courts. [Ch. II. 
 
 the possession of a receiver theretofore appointed by a state court or with any 
 other person who is an officer of such court, so from the time that such property 
 by the adjudication of bankruptcy comes into the custody of the bankruptcy 
 court, that court demands in return that no other person, even though he be an 
 officer of a state court acting under its process, shall interfere with the posses- 
 sion by the bankruptcy court or its officers of the property thus in its custody, 
 whether that possession be actual or constructive. (/« re Winter, i B. R. 
 481; in re Vogel, 2 B. R. 427; s. c. on appeal, 3 B. R. 198; s. c. 7 Blatch. 
 18.) The adjudication in bankruptcy ipso facto passes the bankrupt's 
 property into the custody and under the protection of the bankruptcy 
 court. Being in the custody of that court no other court and no person 
 acting under any such process from any other court, can, without the per- 
 mission of the bankruptcy court, interfere with it, and to so interfere is a 
 contempt of the bankruptcy court (Peck v. Jenness, 7 How. 612-625 ; Williams 
 V. Benedict, 8 How. 107-112; Wiswall v. Samson, 14 How. 526; Peale v. 
 Phippe, Id. 368, 374; Taylor u. Corryl, 20 Id. 583, 594 to 597; Freeman v. 
 Howe, 24 Id. 450; Buck v. Colbath, 3 Wall. 334); and this is true even although 
 the property may actually remain in the hands of the bankrupt. (/» re Rosenberg, 
 3 B. R. 130; s. c. 3 Ben. 366.) The bankruptcy court will thus protect its posses- 
 sion over the property by punishing all interference with it as a contempt («» re 
 Vogel, 2 B. R. 427; s. c. on appeal, 3 B. R. 198; s. c. 7 Blatch. 18); even 
 although the person interfering acts under state process (Samson v. Blake, 6 B, 
 R. 410; s. c. 9 Blatch. 379); and the court may thus punish one interfering with 
 it even although no injunction order has been issued forbidding the interfer- 
 ence. {In re Steadman, 8 B. R. 319.) If the property has been in the possession 
 of the trustee, and a person takes it from him although under a claim of right, 
 the court will summarily order its return. While title cannot be summarily 
 passed upon, the claimant should bring a formal action and not endeavor to 
 secure the property by recaption. (Samson v. Blake, 6 B. R. 410; s. c. 9 
 Blatch. 379.) It has been held that a court may set aside a sale of the property 
 and treat it as utterly void, if made after adjudication. This must necessarily 
 be the effect of such a sale, unless it is pursuant to the order of a court which 
 has acquired jurisdiction before the adjudication, because the adjudication 
 transfers all the title from the bankrupt to the trustee. (Davis v. Anderson 6 
 B. R. 145. Compare in re Fuller, 4 B. R. 115; s. c. i Saw. 243; Thames v. 
 Miller, 2 Woods, 564; in re Campbell, i B. R. 165; s. c. t Abb. C. C. 185- 
 in re Bernstein, i B. R. 199; s. c. 2 Ben. 44.) The court will further 
 
COURTS OF BANKRUPTCY. 23 
 
 % 2.] Enjoining Proceedings in State Courts. 
 
 piotecc its officers in their possession of the property that ha$ come into the 
 cusxody of the court by enjoining the person who threatens to interfere with 
 it. Thus the bankruptcy court has frequently enjoined a sheriff from selling 
 the property upon an execution which was not levied until after title passed to 
 the trustee. (Compare the following cases, bearing in mind, however, that they 
 were decided at a time when the law made the title pass as at the time of the 
 filing of the petition. Pennington v. Sale, I B. R. 572; in re Wallace, 2 B. R, 
 134.) And the court has often enjoined a mortgagee from proceeding to fore- 
 ckise his mortgage by an action in the state court or by a sale under a power 
 therein contained. {In re Kerosene Oil Co., 2 B. R. 528; s. c. 3 Ben. 35; s. C, 
 6 Blatch. 521; Markson v. Heaney,4 B. R. 510; s. c. i Dill. 497; BuckinghSim v. 
 McLean, 3 McLean, 105; s. c. 13 How. 151.) 
 
 In like manner they have enjoined the institution of any proceeding legal or 
 equitable, to enforce rights against the property, such as the filing of a libel in, 
 rem against a vessel; or proceedings to collect rent by distraint. (/» re People's 
 Steamship Co., 2 B. R. 553; s. c. 2 B. R. 226; Brock v. Terrell, 3 B. R. 643.) 
 In all these cases they enjoin not the courts but the litigants, and they exercise 
 the power whenever it becomes necessary in order to give force and effect to th* 
 jurisdiction conferred upon them by the bankruptcy act, and it has been held 
 that such a course in general becomes necessary when the collection and reduc- 
 tion to cash of all the assets is imposed upon one court, and that such a. course 
 is eminently proper when one court has been charged with the duty of adjusting 
 all the conflicting claims and priorities and of accomplishing an equitable /r0 
 rata distribution of the entire estate of the bankrupt among: his various credit- 
 ors. (/« re Christy, 3 How. 292; Hyde v. Bancroft, 8 B. R. 24: s, c. 6 Ben. 392; 
 in re Mallory, 6 B. R. 22; s. c. i Saw. 88; Samson v. Clark, 6 B. R. 403; s. c. 9 
 Blatch. 372; in re Ulrich, 6 Ben. 483; s. c. 8 B. R. 15; in re Schnepf, i B. R. 
 igo; s. c. 2 Ben. 72. But it is not necessary that they enjoin such pro- 
 ceedings unless they deem it for the best interests of all creditors. (Clark v. 
 Binninger, 3 B. R. 518; s. c. 38 How. Pr. 341; Tenth National Bank v. Sanger, 
 42 How. Pr. 179; Norton v. Boyd, 3 How. 426. And compare Eyster v. Gaff, 91 
 U. S. 521; s. c. 13 B. R. 546; s. c. 2 Col. 28, and cases above cited as to injunc- 
 tions.) These injunctions are issued, not on the ground that state courts have 
 not jurisdiction to try the questions, but that the bankruptcy court can better 
 settle and adjust the rights of all parties. When it is believed that equal justice 
 can be done to all parties in state courts, then these actions may be there main- 
 tained, the court giving its permission by an order to that effect or by its failure 
 
24 THE NATIONAL BANKRUPTCY LAW. 
 
 Exercise of Jurisdiction. [Ch. 11. 
 
 to enjoin. If such actions are not enjoined, state courts in whicli they may be 
 brought have jurisdiction to entertain them and their judgments are binding 
 upon all parties. (Samson v. Clark, 6 B. R. 403; s. c. 9 Blatch. 372; in re 
 Christy, 3 How. 292; in re McGilton, 7 B. R. 294; s. c. 3 Hiss. 144; Eyster v. 
 Gaff, 91 U. S. 521; s. c. 13 B. R. 546; s. c. 2 Col. 28; Cole v. Duncan, 58 111. 
 176; Truitt V. Truitt, 38 Ind. 16; in re Cook and Gleason, 3 Biss. 116; Pierce v. 
 Wilcox, 40 Ind. 70; Winslow v. Clark, 47 N. Y. 261; in re Brinkman, 7 B. R. 
 421: s. c. below, 6 B. R. 541; in re Iron Mountain Co., 9 Blatch. 320; s. c. 4 B. 
 R. 645.) If the property has left the custody of the bankruptcy court, that 
 court will no longer protect one in his possession of it, not even though he be a 
 purchaser from the assignee. (Briggs v. Stevens, 7 Law Rep. 281.) And 
 where property has been abandoned by the trustee, the court will take no steps 
 to interfere with others who may lay claim to it. (Rugeley v. Robinson, 19 Ala. 
 404.) If the state court obtains jurisdiction and obtains possession of property 
 it may retain it until' it is finally disposed of. Thus if a sheriff holds money 
 received on an execution sale he may retain it until distributed according to the 
 orders of the court from which the process issues. (Weld v. O'Brien, 4 A. L. J. 
 364; s. c. sub. nom, O'Brien v. Weld, 92 U. S. 8i.) And if it has jurisdiction 
 to enforce a lien and decree a sale of property it may distribute any surplus to 
 subsequent lien creditors. (/» re Biddle, 9 B. R. 144.) 
 
 Exercise of Jurisdiction: Summary Proceedings. — The district courts 
 as courts of bankruptcy are always open for business ; they may transact it either 
 during their respective terms, or at their chambers during vacation. In gen- 
 eral the manner of their procedure is summary, but in accordance with general 
 equity principles. (Smith v. Mason, 14 Wall. 419; Bill v. Beckwith, 2 B. R. 
 241.) But there are many rights which cannot be summarily adjudicated, and 
 many persons who cannot be brought into a summary proceeding without their 
 consent. Bankruptcy courts should not by summary proceedings attempt to 
 adjudicate questions arising between the trustee as such, and adverse claimants 
 concerning the property acquired or claimed by the trustee; but such matters 
 if litigated in the federal courts, should be in the United States Circuit Courts, to 
 whom jurisdiction of all such controversies, at law and in equity, as distin- 
 guished from proceedings in bankruptcy, is given by section 23; or else in 
 actions at law instituted in the bankruptcy courts, such courts having jurisdiction 
 to entertain such formal actions. (See foregoing paragraphs of this section.) 
 Only such matters as may fall within the expression " in bankruptcy proceed- 
 
COURTS OF BANKRUPTCY. 2$ 
 
 § 2.] Parties to Proceedings before the Courts. 
 
 ings as such," should be disposed of in a summary way. Under the former 
 act this expression was held to include all proceedings for the collection of 
 assets, or for the ascertainment and liquidation of liens or other specific claims 
 upon the bankrupt's property, or for adjusting the various priorities and con- 
 flicting interests, or for marshaling the different funds and assets, or for direct- 
 ing sales of the praperty in such manner as should best subserve the interests 
 ol all concerned, or for preventing by injunction any creditor having an 
 adverse interest from obtaining an unjust or inequitable preference by an 
 improper use of his rights or remedies in the state tribunal, or for making a 
 distribution of the assets. (Bill v. Beckwith, 2 B. R. 241; in re Vogel, 3 B. R. 
 198; s. c. 7 Blatch. 18.) Whether it would now include all such proceedings, 
 query, but even under that act it was held that where there was an adverse 
 claim as to title of property, the matter could not be adjudicated in summary 
 proceedings. (Marsh v. Armstrong, 11 B. R. 125; s. c. 20 Minn. 81; Smith v. 
 Mason, 14 Wall. 419; s. c. 6 B. R. 1; Wood v. Brooke, 9 B. R. 395; Marshall v. 
 Knox, 16 Wall. 551; s. c. 8 B. R. 97; Hurst v. Teft, 12 Blatch. 217; s. c. 13 B. 
 R. 108; Eyster v. Gaff, 91 U. S. 521; s. c. 13 B. R. 546; s. c. 2 Col. 28, and 
 cases there cited.) So where a party adversely claims the right to retain the 
 possession of property on account of a lien giving him this right, the validity of 
 the Hen cannot be summarily determined, nor can he be deprived in this way 
 of his possession. (Marshall v. Knox, 16 Wall. 551; s. c. 8 B. R. 97.) So, also, 
 the right of a mortgagee to foreclose a mortgage upon the estate of a bankrupt, 
 is not a power to be exercised summarily. (In re Casey, 10 Blatch. 376; s. c. & 
 B. R. 71.) 
 
 Parties to Proceedings Before the Court. — Debtors and adverse 
 
 claimants to the property are not like creditors parties to the proceeding, 
 unless jurisdiction over them has been obtained by the service of personal pro- 
 cess or by their voluntary appearance. The bankrupt and all his creditors, 
 wherever they may reside, and whether or not all of the latter are served with 
 individual notice, are parties subject to the jurisdiction of the court and bound 
 by its proceedings, unless the law especially provides to the contrary; so, also, 
 the trustee. (Marsh v. Armstrong, 20 Minn. 81; s. c. ir B. R. 125.) An adju- 
 dication in bankruptcy is in the nature of a decree in rem as respects the status 
 of the bankrupt and cannot be impeached in a collateral action, if the record 
 shows that the court making it has jurisdiction over the person of the bankrupt 
 and over the subject-matter. (New Lamp Chimney Co. v. Ansonia, 91 U. S. 
 
26 THE NATIONAL BANKRUPTCY LAW. 
 
 Parties to Proceedings before the Courts. [Ch. II. 
 
 656; s. c. 13 B. R. 385; Michaels v. Post, 21 Wall. 398; s. c. 12 B. R. 152; 
 Downer ». Rowell, 2 Deane, 336 (25 Vt.); Way v. Howe, 4 B. R. 677; s. c. 108 
 Mass. 502; jEx J>. Wieland, L. R. 5 Ch. Apps. 486; Woodruff v. Taylor, 20 Vt. 
 65; Maukin v. Chandler, 2 Broek. 125; Shawhan v. Wherritt, 7 How. 627; Imrie 
 V. Castrique, 8 C. B. N. S. 407; Carter v. Dimmick, 4 H. L. Cas. 346.) The 
 jurisdiction of the court over creditors is rather in the nature of a jurlsdictioa 
 over the subject-matter of their claims than over them personally. All persons 
 other than the trustee, the bankrupt and creditors, and parties voluntarily 
 appearing, are strangers to the proceedings unless brought in by process. No 
 order of the court can affect their rights unless they are so served. (Marshall v. 
 Knox, 16 Wall. 551; s. c. 8 B. R. 97.) They cannot be summarily brought into 
 the court by a petition for a rule to show cause (Marshall v. Knox, 16 Wall. 
 551; s. c. 8 B. R. 97; Smith v. Mason, 14 Wall.; s. c. 6 B. R. i); but if they 
 voluntarily appear in summary proceedings, if they ask the relief of the court 
 in such way or consent that their interests be determined by such a proceediag, 
 then they are bound by it. The court has jurisdiction to hear the subject-mat- 
 ter in this way, and strangers to the proceedings themselves may give it juris, 
 diction of their persons. (Samson v. Blake, 9 Blatch. 379; s. c. 6 B. R. 410.) If 
 they appear by attorney, they thus confer a jurisdiction of their persons upon 
 the court. If they thus appear generally, they cannot thereafter withdraw their 
 appearance or object to the court's jurisdiction in such a proceeding (/« re 
 Ulrich, 3 B. R. 133; s. c. 3 Ben. 355; in re Worthington, 14 B. R. 388; People v. 
 Brennan, 12 B. R. 567; s. c. 3 Hun, 666; in re Ferguson & Peckham, 6 B. R. 
 569; O'Brien w. Weld, 92 U. S. 81; s. c. 15 B. R. 405.) Whether a party claiming 
 adversely to the trustee can, without the latter's consent, have his claim 
 adjudicated, in a summary proceeding, is a question as to which the authorities 
 are not in harmony. That he cannot, see Hurst v. Teft, 12 Blatch. 217; a. c. 
 13 B. R. io8; Bradley v. Healey, 1 Holmes, 451 ; Wood v. Brooke, 9 B. R. 395; 
 to the contrary, holding that if the claimant chooses to have his rights deter- 
 mined summarily he may do so, whether or not the trustee consents to such 
 proceedings, because the latter is merely an officer of the court which passes upon 
 the question; in re Evans, i Lowell, 525. Objection that a proceeding should 
 be by action at law, or by a bill in equity, ought to be taken as soon as the 
 party appears. If not raised upon the first appearance, it will be deemed to be 
 waived. {In re Ulrich. 3 B. R. 133; s. c. 3 Ben. 355.) It is purely an objection 
 to the jurisdiction of the person, not to the jurisdiction of the subject-matter. 
 Compare, however, in re Ballou, 3 B. R. 717; s. c. 4 Ben. 135; following in re 
 
COURTS OF BANKRUPTCY. 27 
 
 § 2.] Jurisdiction to Adjudge Persons Bankrupt. 
 
 Bonesteel, 3 B. R. 517. It is always discretionary with the court to require 
 parties to resort to formal proceedings if thereby justice can better be attained. 
 (Buckner v. Jewell, 2 Woods, 220; s. c. 14 B. R. 246; in re Hunt, 2 B. R. 539; 
 in re Betts, 15 B. R. 536.) Section 19 {e) expressly provides that the right to 
 submit matters in controversy, or an alleged offense under this act, to a jury, 
 shall be determined and enjoyed, except as provided by this act, according to 
 the United States laws now in force, or such as may be hereafter enacted in 
 relation to trials by jury. Although the rights of strangers and adverse claim- 
 ants ordinarily cannot be determined summarily, yet, in cases where such pec- 
 sons attempt to interfere with the property of the bankrupt, the court may 
 summarily issue an injunction against their so doing, and this without notice to 
 them. (In re Ulrich, 6 Ben. 483; s. c. 8 B. R. 15.) And this is the usual way 
 of exerting the authority of the court over the bankrupt and the trustee. (In re 
 Franklin Saving Soc, 31 Leg. Int. 173; in re Pierce, 15 B. R. 449. The way to 
 institute summary proceedings is by a petition signed and verified by the 
 petitioner, and not by a motion made by attorney. (In re Sabin, 9 B. R. 383; 
 in re Smith, 2 B. R. 297.) 
 
 Courts Always Open. — The proceeding in bankruptcy from the time of 
 filing the petition to the final order of distribution or the settlement of the 
 trustee's accounts, is one continuous, entire proceeding. Whether the matters 
 are heard at chambers during vacation or in court during term time, the court 
 is always open and the proceedings may be re-opened and re-examined at any 
 time during their pendency, unless rights have become vested. Such applica- 
 tion for re-examination is only » part of the original proceedings. (Sandusky 
 V. Bank, 23 Wall. 289; s. c. 12 B. R. 176.) By subdivision (2) of this section, 
 express authority is given to the court to reconsider allowed or disallowed 
 claims, and by subdivision (8) they may re-open closed estates, whenever it 
 appears that they were closed before being fully administered; they may also 
 set aside compositions and re-instate the cases (9), and may set aside dis- 
 charges and re-instate the cases (12). 
 
 Jurisdiction to Adjudge Persons Bankrupt. — Many differences are to be 
 noted between the provisions of (i) of this section, and the corresponding provi- 
 sions under former acts as to the facts giving the bankruptcy court jurisdiction 
 to adjudicate one bankrupt. Under the act of 1867, it was provided that the 
 courts might adjudge as bankrupt persons who " had resided or carried on 
 business for the six months next preceding the time of filing such petition, or 
 
28 THE NATIONAL BANKRUPTCY LAW. 
 
 Foreign Bankruptcies. [Ch. II. 
 
 for the longest period during such six months." There was nothing in the act 
 in regard to domicil, and consequently frequent questions arose as to place of 
 residence, when the place of residence differed from the place of domicil. The 
 present act by inserting the word "domicil," sets those questions at rest. The 
 use of the words " principal place of business " instead of the words " carried 
 on business " will also prevent the arising of many questions which frequently 
 sprang up under the former act, where persons conducted a business in a, cer- 
 tain place and in connection with it had agencies or branches in other places. 
 The expression " for the preceding six months or the greater portion thereof," 
 should also be noted. The words " for the six months next preceding or for 
 the longest period during such six months " in the former act, were construed 
 as giving the court jurisdiction to adjudge one bankrupt if he had resided only 
 one day in the district, provided he had not resided a longer period in any other 
 district; but the words " for the preceding six months or the greater portion 
 thereof," would seem to imply that unless a debtor had resided within the dis- 
 trict for at least three months, the court has no jurisdiction to adjudge him 
 bankrupt. Aliens whether resident or non-resident, may be adjudged bank- 
 rupt, the only requirement being that they shall either have property within the 
 jurisdiction of the court, and have neither a residence, domicil, nor principal 
 place of business in the United States, or else that they shall have such prop- 
 erty within the jurisdiction of the court, and shall have theretofore been 
 adjudged bankrupt by a foreign court, and regardless of whether they do reside 
 or have a domicil, or a principal place of business in the United States. Under 
 the former act only resident aliens could take the benefit of it. 
 
 Foreign Bankruptcies. — There is a conflict of the law of nations, as to the 
 extent to which effect shall be given to proceedings in bankruptcy instituted 
 in a foreign court. This conflict embraces the question, how far a discharge by 
 the courts of one country will be by the courts of another country recognized as 
 a release of the debts of the bankrupt due to citizens of the latter country; but 
 more especially the conflict is on the question as to the rights and title acquired 
 by the assignee or trustee, by virtue of an adjudication of bankruptcy and an 
 assignment under the laws of one country, in and to property situated in a for- 
 eign country where there are creditors of the bankrupt. By most of the courts 
 of Continental Europe, and also by the English courts, it is held that a transfer 
 in bankruptcy operates in the same way as a sale, or other voluntary assign- 
 ment for value by the insolvent, and effectually conveys all his property wher- 
 ever it may be, in the same manner and with the same consequences as if he 
 
COURTS OF BANKRUPTCY. 29 
 
 § 2] Foreign Bankruptcies. 
 
 had sold it; and in these countries il is also held that the discharge of a bankrupt 
 under the laws of either country operates in all other places whatsoever, and, 
 that in any of these countries, if a bankrupt has received a discharge in the 
 courts of his own country, he may plead it in the courts of the others, with the 
 same effect as he could plead it in his own. These countries on principles of 
 international comity allow this privilege to the citizens of other countries recipro- 
 cally. (Sill V. Worswick, i H. Bl. 665; Royal Bank v. Cuthbert, i Rose's Cases, 
 462; in re Wilson, I H. Bl. 691; Ex p. Blakes, i Cox, 298; Smith v. Buchanan, i 
 East, 6; Selkrig v. Davies, 2 Rose, 291; Queline v. Moisson, i Knapp, 265; s. c. 
 2 Dow. 230; Ex p. D'Obree, 8 Ves. 82; Pipon v. Pipon, Ambler, 25; Solomons z/. 
 Ross, Id. 131; Hunter v. Potts, 4 T. R. 182; Potter v. Brown, 5 East, 124-131; 
 Wadham v. Marlowe, i H. Bl. 437, 439; s. c. 8 East, 314, 316; Philips v. Hunter, 
 2 H. Bl. 402; and as to discharges, in re Zaraga, 4 Law Rep. 480.) The English 
 rule as summed up by Judge Story in his Conflict of Laws, is that in England 
 the following propositions are firmly established: first, that an assignment 
 under the bankrupt law of a foreign country passes all the personal property of 
 the bankrupt situate in England, and debts owing in England; second, that an 
 attachment of such property by an English creditor, after such bankruptcy, with 
 or without notice to him, is invalid to overreach the assignment; third, that in 
 England the same doctrine holds under assignments by her own bankrupt laws, 
 as to personal property and debts of the bankrupt in foreign countries; fourth, 
 that, upon principle, all attachments made by foreign creditors, after such 
 assignment in a foreign country, ought to be held invalid; fifth, that at all 
 events a British creditor will not be permitted to hold the property acquired by 
 -a, judgment under any attachment made in a foreign country after such assign- 
 ment; and sixth, that a foreign creditor, not subjected to British laws, will be 
 permitted to retain any such property acquired under any such judgment, if the 
 local laws (however incorrectly upon principle) confer on him an absolute title. 
 But th£: American courts disregarding the principles of comity, and solicitous 
 rather for the rights of American creditors of foreign bankrupts, have generally 
 held that it would be prejudicial to the rights and remedies of its own citizens 
 in its own courts, to suffer the assignments under a foreign bankrupt law, to 
 prevail over attachments secured by the diligence of creditors, and that statutory 
 assignments as to creditors should apply intra-territorially only. The estab- 
 lished American rule then is, that any American creditor, may by process of 
 law retain any property of his debtor (who has been adjudged a foreign bank- 
 rupt), which he can get a legal hold upon by transfer, attachment or levy. 
 
30 THE NATIONAL BANKRUPTCY LAW. 
 
 Foreign Discharges. [Ch. II. 
 
 against the claims of any foreign assignee in bankruptcy. This is the general 
 rule in America whether the foreign assignment is voluntary or involuntary. 
 But the American creditor to have a paramount right over the foreign assignee 
 must obtain title or procure his attachment or make his levy before the foreign 
 assignee has taken possession. (Ingraham v. Geyer, 13 Mass. 146; s. c. cited, 6 
 Pick. 307; Oliver v. Townes, 6 Pick. 97 to loi; Milne v. Morelon, 6 Binn. R. 
 353; Remsen v. Holmes, 20 Johns. 229; Blake v. Williams, 6 Pick. 286; 2 Kent. 
 Com. Lect. 37, pp. 406 to 408, 3d ed. ; Oliver v. Townes, 14 Martin, 93, 99; 
 Harrison v. Sterry, 5 Cranch R. 289; Ogden w. Saunders, 12 Wheaton R. 218; 
 Saunders v. Williams, 5 N. H. 515; Lord v. The Watchman, Ware, 232; Dawes 
 V. Head, 3 Pick. 128; Dawes v. Boylston, 9 Mass. 337; Blanchard v. Russell, 13 
 Mass. i; Johnson v. Hunt, 23 Wend. 90; Plestero v. Abraham, i Paige, 237; 
 s. c. 3 Wend. 538; Fox v. Adams, 5 Greenl. 245; Wallis v. Paterson, i Harr. & 
 McHen. R. 236, 463; s. c. Wheat. R. 213, 239, 260, 361, 362. The Ameri- 
 can courts instead of considering the transfer of the property by an assign- 
 ment as the voluntary act of one divesting himself of personal property, which 
 by a fiction of the law follows the person of the owner, seem inclined 
 to lay stress on the fact that the bankrupt is civiliter mortuus; and just 
 as in cases of persons dying by an actual death, the established rule of law 
 is that their property has for purposes of administration and distribution, as its 
 locality the place of its actual situs and must be administered according to the 
 laws of that place, so the American courts are inclined to rule, that a bankrupt's 
 property must have a similar situs, (Holmes v. Remsen, 4 Johns. Ch. 460); or 
 at least that the title of the foreign assignee is inferior to the rights of local 
 creditors procuring liens by attachment or otherwise. American courts also are 
 inclined to regard an assignment of the bankrupt's property, even in voluntary 
 proceedings as an act in invitum. (Compare on this subject, Story on Conflict 
 of Laws, ch. 9.) Real property being always governed by the laws of the place 
 of its situation as to transfer, etc., does not by an assignment or adjudication 
 in bankruptcy become vested in a trustee appointed by a foreign court. (McCor- 
 mick V. Sullivan, 10 Wheat. 202; Ingraham v. Geyer, 13 Mass. 147; Rogers tj. 
 Allen, 3 Ohio, 488; Osborn v. Adams, l8 Pick. 245.) Hence the provision in 
 section 7 (5) requiring the bankrupt to execute to his trustee transfers of all his 
 property in foreign countries. 
 
 Foreign Discharges. — As to the question of the discharge of an indebted- 
 ness due to a citizen of one country, when the discharge is granted by a foreign 
 court, the American rule is, that a discharge given by the courts of such for- 
 
COURTS OF BANKRUPTCY. 3 1 
 
 § 2.] Transfer of Jurisdiction — Allowing Claims. 
 
 eign country is not deemed in America a bar to any action that may be brought 
 in American courts by American creditors. The discharge is considered local, 
 and does not release or act as a bar to debts contracted in this country or due to 
 citizens of this country, notwithstanding a foreign assignee may sue as such 
 in our courts. (In re Zaraga, 4 Law Rep. 480.) Prof. Parsons, in his work on 
 Contracts, Chapter on Bankruptcy and Insolvency, says: " It may be said to 
 be well established, that the statutory discharge of a debt not made nor to be 
 performed within the state where it is discharged, has no force elsewhere; and 
 that the discharge of a debt in the state in which it was made and is to be per- 
 formed, and of which both parties are citizens, is valid everywhere. But if 
 made in one state, to be performed in another, the laws of the first state cannot 
 operate against those of the second. So, if made between citizens of two states, 
 the debtor may be discharged by the laws of his own state, and yet be amenable 
 under the laws of the other." Section 65 (</) of the present bankruptcy act, pro- 
 vides that whenever a person shall have been adjudged a bankrupt by a court 
 without the United States and also by a court of bankruptcy, creditors residing 
 within the United States shall first be paid a dividend equal in amount to that 
 received in the court without the United States by other creditors, before the 
 other creditors who have received a dividend in such court shall be paid any 
 amount. 
 
 Transfer of Jurisdiction. — The statute provides that a person may be 
 adjudged bankrupt either in the district where he has resided for six months or 
 the greater portion thereof, or the district where he has had his principal place 
 of business, or the district where he has had his domicil. The court of any 
 one of these districts has jurisdiction. When proceedings have once been com- 
 menced in one district, it follows that like proceedings cannot be commenced 
 in any other. The jurisdiction of the court first acting is exclusive, unless pur- 
 suant to the power vested in it by (19), it chooses to transfer the case to some 
 other court of bankruptcy. Section 32, provides that in the event petitions are 
 filed against the same person, or against different members of a partnership, in 
 different courts of bankruptcy each of which has jurisdiction, the cases shall be 
 transferred, by order of the court relinquishing jurisdiction, to and be consoli- 
 dated by the one of such courts which can proceed with the same for the greater 
 convenience of parties in interest. 
 
 Allowing Claims. — Compare, as to proof of claims, section 57; as to prov- 
 able debts, section 63. 
 
32 THE NATIONAL BANKRUPTCY LAW. 
 
 Power to Take Charge of Property — Contempts. Ch. II. 
 
 Power to Take Charge of Property. — The right of the court to appoint 
 receivers or marshals to preserve the estate of the bankrupt and to take charge 
 of the property between the filing of the petition and the adjudication upon it, 
 or the qualification of the trustee, relates doubtless to the same subject as sec- 
 tion 6g. If so, such an order should never be made without requiring the bond 
 in that section provided for. This subdivision (3) did not appear in the bank- 
 ruptcy bill until after the conference between the House and the Senate. It 
 was doubtless inserted for the purpose of clearing up any questions that might 
 arise as to the jurisdiction of the bankruptcy court over the property before 
 adjudication. It is to be borne in mind that under the present act, the title to 
 the property which is vested in the trustee, does not relate back to the time of 
 the filing of the petition, but only to the time of adjudication; but from the time 
 of the filing of the petition in bankruptcy, the property of the bankrupt, the 
 subject-matter of the action, comes into the prehensory power of the court as 
 fully as if it were in the actual and visible presence of the court, and conse- 
 quently it is under its protection and control. This power is used not for the 
 purpose of determining rights to it or divesting any one of his rights, but merely 
 to preserve the subject-matter of the action. (Compare Bird v. Harold, 18 B. 
 R. 433.) This subdivision was no doubt al-so inserted to impress upon the court 
 the fact that it is the intention of the law-makers, that an alleged bankrupt 
 shall not be interfered with in his control or his possession and management 
 of his property unless the case is one of absolute necessity. 
 
 Contempts. — The punishment of a contempt is a proceeding of a quasi- 
 criminal character. Therefore, one member of a firm is not to be punished as 
 for contempt for the violation of an injunction restraining the firm, when the 
 act of disobedience is actually done by another member of the firm without his 
 consent or collusion. {In re South Side R. R. Co., 7 Ben. 391; s. c. 10 B. R. 
 274.) One cannot excuse his contempt by claiming to have acted under the 
 authority of a state court. {In re Atkinson, 7 B. R. 143.) One may be punished 
 as for contempt if he refuses to pay over money when ordered by the bankruptcy 
 court or to deliver assets; or to answer any questions properly asked him at the 
 time of any of the examinations provided for in section 7 (9). {In re Dresser 
 3 B. R. 557; in re Salkey, 11 B. R. 423; s. c. on appeal, 11 B. R. 516.) As to 
 the practice in punishing contempts committed before a referee, compare 
 section 41. 
 
 Appointment of Trustees. — This subdivision (17) would seem to imply that 
 the right of creditors in the choice of a trustee is merely the right to recom- 
 
COURTS OF BANKRUPTCY. 33 
 
 § 2.] Appointment of Trustees — Cross References. 
 
 mend to the court. By section 44, the creditors are given the right of electing 
 the trustee and there is in it no provision qualifying or limiting the right. 
 That it was not originally the intention of the law-makers to qualify this right 
 may be gathered from an extract from a speech by the Hon. David B. Hender- 
 son, the chairman of the judiciary committee, during the pendency of the bill 
 before Congress. He said: " The fact that the trustee is to be chosen by the 
 creditors of each estate, will prevent one of the abuses which reached very con- 
 siderable proportions in the administration of the last bankruptcy law, viz., 
 that of having a standing assignee." The provisions of subdivision (17) of the 
 section under consideration were added after the speech was made. It makes 
 it now doubtful if the election of a trustee by the creditors is sufficient without 
 the approval of the court. * As to the election of a new trustee after the removal 
 of one, or in other cases in which vacancies occur, compare section 44, 
 
 CrOSS-References. — (4) As to offenses, compare section 29; as to the right 
 to a j ury trial, compare section 19 {c), 
 
 (8) As to accounts of trustees, compare section 47. 
 
 (g) As to compositions, compare sections 12 and 13. As to the title vesting 
 in trustee appointed after a composition is set aside, see section 70 (tf); as to 
 the election of a trustee after a composition is set aside, see section 44. 
 
 (10) As to referee's powers, duties and records, see sections 38, 39, 41 and 42. 
 
 (11) As to exemptions, see section 6; as to bankrupt's duty to claim exemp- 
 tions, see section 7 (8); as to trustee's duty to set apart exemptions, see section 47. 
 
 (12) As to discharge, the granting of it, revocation, and effect, see sections 14, 
 15, 16 and 17. As to the title of a trustee appointed after a discharge is set 
 aside, see section 70 ^ ; as to the appointment of a trustee after a discharge is 
 »et aside, see section 44. 
 
 (14) As to extraditions, see section 10. 
 
 (19) Transfer of cases. Compare section 32. 
 
 * Addenda. — By Bankruptcy Rule No. XIII, promulgated since the above 
 was written, the approval of the referee or judge is required. 
 
 [NAT. BANKRUPTCY LAW 3.] 
 
CHAPTER III. 
 
 BANKRUPTS. 
 
 Sec. 3. Acts of Bankruptcy. — a Acts of bankruptcy by a 
 person shall consist of his having, (i) conveyed, transferred, con- 
 cealed, or removed, or permitted to be concealed or removed, any 
 part of his property with intent to hinder, delay, or defraud his 
 creditors, or any of them ; or (2) transferred, while insolvent, any 
 portion of his property to one or more of his creditors with intent 
 to prefer such creditors over his other creditors ; or (3) suffered or 
 permitted, while insolvent, any creditor to obtain a preference 
 through legal proceedings, and not having at least five days 
 before a sale or final disposition of any property affected by such 
 preference vacated or discharged such preference ; or (4) made a 
 general assignment for the benefit of his creditors ; or (5) admitted 
 in writing his inabiHty to pay his debts and his willingness to be 
 adjudged a bankrupt on that ground. 
 
 b A petition may be filed against a person who is insolvent and 
 who has committed an act of bankruplscy within four months 
 after the commission of such act. Such time shall not expire 
 until four months after (i) the date of the recording or registering 
 of the transfer or assignment when the act consists in having 
 made a transfer of any of his property with intent to hinder, 
 delay, or defraud his creditors or for the purpose of giving a pref- 
 erence as hereinbefore provided, or a general assignment for the 
 benefit of his creditors, if by law such recording or registering is 
 required or permitted, or, if it is not, from the date when the 
 beneficiary takes/ notorious, exclusive, or continuous possession 
 of the property unless the petitioning creditors have received 
 actual notice of such transfer or assignment. 
 
 c It shall be a complete defense to any proceedings in bank- 
 ruptcy instituted under the first subdivision of this section to 
 allege and prove that the party proceeded against was not insolv- 
 ent as defined in this act at the time of the filing the petition 
 
 [34] 
 
BANKRITI'TS. 35 
 
 § 3.] Act5 of Bankruptcy. 
 
 against him, and if solvency at such date is proved by the alleged 
 bankrupt the proceedings shall be dismissed, and under said sub- 
 division one the burden of proving solvency shall be on the alleged 
 bankrupt. 
 
 d Whenever a person against whom a petition has been filed 
 as hereinbefore provided under the second and third subdivisions 
 of this section takes issue with and denies the allegation of his 
 insolvency, it shall be his duty to appear in court on the hearing, 
 with his books, papers, and accounts, and submit to an examina- 
 tion, and give testimony as to all matters tending to establish 
 solvency or insolvency, and in case of his failure to so attend and 
 submit to examination the burden of proving his solvency shall 
 rest upon him. 
 
 e Whenever a petition is filed by any person for the purpose of 
 having another adjudged a bankrupt, and an application is made 
 to take charge of and hold the property of the alleged bankrupt, 
 or any part of the same, prior to the adjudication and pending a 
 hearing on the petition, the petitioner or applicant shall file in the 
 same court a bond with at least two good and sufficient sureties 
 who shall reside within the jurisdiction of said court, to be 
 approved by the court or a judge thereof, in such sum as the court 
 shall direct, conditioned for the payment, in case such petition 
 is dismissed, to the respondent, his or her personal representatives, 
 all costs, expenses, and damages occasioned by such seizure, 
 taking, and detention of the property of the alleged bankrupt. 
 
 If such petition be dismissed by the court or withdrawn by the 
 petitioner, the respondent or respondents shall be allowed all 
 costs, counsel fees, expenses, and damages occasioned by such 
 seizure, taking, or detention of such property. Counsel fees, 
 costs, expenses, and damages shall be fixed and allowed by the 
 court, and paid by the obligors in such bond. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., § 5021 (amended by act of June 22, 1874, ch. 390, § 12, and by act of 
 July 26, 1876, ch. 234, § i); act of 1867, § 39 (amended by act of July 27, 1868, 
 § 2); act of 1841, § 7; act of 1800, §§ i, 2. 
 
36 THE NATIONAL BANKRUPTCY LAW. 
 
 Construction of the Section — Acts of Bankruptcy. [Ch. III. 
 
 Construction of the Section. — There was some conflict of authority as to 
 the proper construction to be given to similar provisions in former bankruptcy 
 acts. On principle and highest authority, though, we should say that as the 
 section sets forth acts which justify a court in depriving one of his property, 
 being in derogation of common-law rights, it should be construed strictly. 
 Though the general purpose of the act is remedial, yet this section is almost 
 penal in character. It ought not to be enlarged by construction to include acts 
 that may be within the reason of the law, but which are not within the words 
 of the statute according to a reasonable construction. The facts and circum- 
 stances justifying one person in instituting a proceeding to take from another 
 all possession and control of his property and to stop him in the pursuit of his 
 business, ought to be defined by law with exactness, and the law should not be 
 construed to include cases not clearly within its scope. (Wilson v. City Bank, 
 17 Wall. 473; s. c. 9 B. R. 97; s. c. below, i Dill. 476; s. c. 5 B. R. 270; Jones 
 V. Sleeper, 2 N. Y. Leg. Obs. 131; Act of 1841.) But many of the courts favor 
 a liberal construction. (In re Locke, 2 B. R. 123; s. c. 1 Lowell, 293; in re 
 MuUer & Bretano, 3 B. R. 329; Deady, 519.) In the case last cited the court 
 said: " Counsel have insisted that this is a special proceeding, purely statu- 
 tory, and that the bankruptcy act is to be construed most strictly against the 
 petitioning creditor and in favor of the bankrupt. In the opinion of the court 
 this view of the matter is not supported by reason or authority. The act does 
 not attempt to punish the bankrupt, but to distribute his property fairly and 
 impartially among his creditors, to whom in justice it belongs. It is remedial 
 and seeks to protect the honest creditor from being over-reached and defrauded 
 by the unscrupulous. It is intended to relieve the honest but unfortunate 
 debtor from the burden of liabilities which he cannot discharge, and allow 
 him to commence the business of life anew. Such a statute is not to be con- 
 strued strictly, but according to the fair import of its terms with a view to efifect 
 its objects and to promote justice." (See also favoring a liberal construction, 
 In re Silverman, 4 B. R. 523; s. c. 2 Abb. C. C. 243.) 
 
 Acts of Bankruptcy. — The acts which under the present law are grounds 
 for putting one into bankruptcy involuntarily are fewer in number than those 
 prescribed by previous laws upon the subject. In considering them, it is to be 
 noticed that they are of two general classes: first, those in which an intent is an 
 essential element; and, second, those in which intent is immaterial. With 
 
BANKRUPTS. 37 
 
 § 3.] Fraudulent Transfers and Concealments. 
 
 regard to the acts mentioned in the first three subdivisions of the section, it is 
 also to be noted either that insolvency is an essential element, or that solvency 
 is a complete defense. Solvency at the time of the filing of the petition, whether 
 or not it existed at the time of the doing of the act, is always a complete 
 defense. Insolvency at the time of the doing of the forbidden act is made an 
 essential element only in cases (2) and (3) although presumably it will exist as 
 a matter of fact in cases {4) and (5). It is not an essential element in the cases of 
 transfers or concealments with intent to hinder, delay or defraud creditors, 
 although as has been stated, solvency at the time of filing the petition is a 
 complete defense even to a proceeding founded upon such fraudulent transfer or 
 conveyance. The present act nowhere makes the doing of any act" in contem- 
 plation of insolvency " or " in contemplation of bankruptcy," an act of bank- 
 ruptcy. These words frequently appear in the former statutes, and as a result 
 many acts were acts of bankruptcy under these laws which now are not. 
 
 Fraudulent Transfers and Concealments. — The word "transfer" is 
 defined in section i (25). The acts of bankruptcy specified in this subdivision 
 are those transfers or conveyances made with intent to defraud, delay or hinder 
 creditors which under the statute of 13 Eliz., ch. 5, were declared void, which 
 statute has been adopted with few changes in nearly every state of the Union. 
 Concealment with a like fraudulent intent is also made an act of bankruptcy. 
 Not only is the actual doing of these fraudulent acts an act of bankruptcy, but 
 the permitting of them is equally so. These acts, independently of the bank- 
 ruptcy law, are void under nearly all state laws. They include all those trans- 
 fers in which the lack of a change of possession or of delivery, or the want of 
 consideration, as well as other facts, prove or tend to prove an intent to 
 defraud, delay or hinder creditors. Just what acts and circumstances attend- 
 ing the transactions will furnish a legal presumption of the existence of this 
 fraudulent intent, is largely a question, not of the law of bankruptcy, but of 
 the law of fraudulent assignments, and the decisions upon cases of that charac- 
 ter will be applicable. These acts, fraudulent in themselves, independently of 
 the bankruptcy statute, are acts of bankruptcy whether or not insolvency exists 
 at the time of their commission. (/» re Ryan, 2 Saw. 411; in re Dunham & 
 Orr, 2 Ben. 488; s. c. 2 B. R. 17; in re Randall & Sunderland, Deady, 557; s. c. 
 3 B. R. i8.) But under paragraph c of this section, solvency at the time of filing 
 the petition is a complete defense to the bankruptcy proceedings, although, of 
 
38 THE NATIONAL BANKRUPTCY LAW. 
 
 Concealment — Permitting a Removal or Concealment. [Ch. Ill- 
 course, it could not affect any proceedings pursuant to a state law to invalidate 
 the transfer. A transfer includes a contingent or conditional conveyance, as 
 well as one which is absolute. A mortgage given for the purpose of hindering 
 or delaying creditors in the collection of their demands is therefore fraudulent, 
 and an act of bankruptcy. (/« re Cowles, i B. R. 280.) 
 
 Concealment. — The word is defined in section i (22). In includes secret- 
 ing, falsifying and mutilating. It has been held to include not only physical 
 concealment, but the actual concealment of the real title and position of prop- 
 erty; as, for instance, by procuring an attachment of it upon a fictitious debt 
 for the purpose of misleading another as to the true extent of the owner's inter- 
 est in it. (/» re Williams, 3 B. R. 286; s. c. i Lowell, 406, citing O'Neill v. 
 Glover, 5 Gray, 144; in re Hussman, 2 B. R. 437.) But it has also been held 
 that a concealment in order to constitute an act of bankruptcy, must be actual, 
 not constructive, and by the bankrupt himself or by his procurement while the 
 property continues to be, in his intention, his own. (Silverman v. Bagley, 3 
 Mass. 487.) 
 
 Permitting a Removal or Concealment. — The permitting of the removal 
 
 or the concealment must be accompanied by an intent to hinder, delay, or to 
 defraud. Intent is a fact to be proven (In re Cowles, i B. R. 280; in re 
 Goldschraidt, 3 B. R. 165; s. c. 3 Ben. 379; Ecfort v. Greely, 6 B. R. 433; 
 Perry v. Langley, 2 B. R. 596; s. i.. 8 A. L. Reg. 427); but it need not 
 be established by direct proof; in fact, it is hardly susceptible of direct proof. 
 As the mind manifests itself only by outward acts, intent must be inferred from 
 other facts which are proven. (Van Wyck v. Seward, 18 Wend. 374, 395 ; New- 
 man V. Cordell, 43 Barb. 456.) Intent can be evidenced only by one's acts or 
 admissions. Oral or written admissions that an intent exists, are almost con- 
 clusive evidence. All the circumstances accompanying the act and tending to 
 explain the intent, are admissible in evidence. The intention may be inferred 
 from the act itself as a necessary consequence of it, or it may be established by 
 admissions and declarations of the actor, and such admissions and declarations, 
 although not contemporaneous with the commission of the act, if they are so 
 connected with it as to form part of the res gestce, are admissible. (Roach v. 
 Great Western R. R., i Q. B. 51; Bateman v. Bailey, 5 T. R. 512; Newman v. 
 Stretch, M. & M. 388.) A presumption raised by circumstances may, however, 
 
BANKRUPTS. 39 
 
 § 3-] Voluntary Transfers— Transfer with Intent to Prefer. 
 
 be rebutted by proof of other circumstances showing the absence of such intent. 
 (Compare notes on Intent to Prefer, subd. (2) of this section.) 
 
 Voluntary Transfers. — Voluntary conveyances, that is, conveyances 
 made where good will and friendship are the only considerations, are generally 
 held to be prima facie fraudulent and void, and throw the burden of proof upon 
 the transferrer, to overcome the legal presumption of a fraudulent intent thus 
 raised. (Van Wyck v. Seward, i8 Wend. 374, 395 ; Wood v. Hunt, 38 Barb. 
 302; Babcock v. Echler, 24 N. Y. 623.) When a voluntary transfer of property 
 is attacked by creditors, it is not always sufficient for the donor to show that at 
 the time of making it he retained sufficient property to pay his debts. It must 
 also be shown that he made it without intent to defraud creditors. Such trans- 
 fers are peculiarly suspicious where one is engaged in business involving great 
 risks, or which is in a failing condition. (Beecher v. Clark, 10 B. R. 385, citing 
 Fox V. Mayer, 54 N. Y. 125, at 133.) 
 
 Delay. — A transfer which will merely delay a creditor in enforcing his 
 rights, if made with that intent, is void and is an act of bankruptcy. Thus it 
 has been held that a sale of all one's property for a very small sum in cash and 
 the balance on -a very long credit, made with intent to delay creditors, is an act 
 of bankruptcy; that such a sale inevitably delaying creditors, the intent to delay 
 may be presumed. (Dean v. Garrett, 2 B. R. 89; in re Goldschmidt, 3 B. R. 
 165; s. c. 3 Ben. 379.) 
 
 Creditors— "Any One of Them." — The statutory provision that a trans- 
 fer is an act of bankruptcy when made with intent to defraud one creditor as 
 well as when made with intent to defraud all creditors settles a. disputed point 
 which arose under the former act. It is immaterial whether a creditor's claim 
 be one based upon a debt which is provable in bankruptcy. A transfer to 
 hinder the collection of a debt in tort, though such a debt is not provable, is, 
 nevertheless, an act of bankruptcy. (Fox v. Hill, i Conn. 295; Howe v. Ward, 
 I Greenl. 195; Jacobson v. Myers. 18 Johns. 425.) 
 
 Transfer With Intent to Prefer. — The acts, by subdivision (2) declared 
 
 to be acts of bankruptcy, are not in themselves illegal or fraudulent. The com- 
 mon law, which throughout this country is on this point generally unchanged, 
 does not deem it wrong for a debtor, although he is in failing circumstances, to 
 pay one creditor Jn full, notwithstanding the result may be that other creditors 
 go unpaid. But it is to avoid this partiality in paying creditors that a bank- 
 
40 THE NATIONAL BANKRUPTCY LAW. 
 
 The Transfer — Intent to Prefer. Ch. III. 
 
 ruptcy law is enacted. Its fundamental purpose is to secure the equal or pro 
 rata distribution among creditors of the property of one who is unable to pay 
 all in full. This subdivision is to be considered in connection with section 60 
 which defines " preferences," and declares the circumstances under which they 
 will be invalidated. But, although that section and this subdivision are in pari 
 materia, it would seem that in determining what is an act of bankruptcy, this 
 subdivision is to be considered alone and independently of section 60, except in 
 so far as that section defines " preference." (Compare in re Nickodemus, 3 
 B. R. 230; in re Fuller, 4 B. R. 115; s. c. i Saw. 243.) Insolvency is an 
 essential element of the act of bankruptcy herein set forth. Under the act of 
 1867 (section 39), transfers made with an intent to create preferences, were acts 
 of bankruptcy if made by an insolvent, or by one contemplating insolvency, or 
 by a bankrupt, or by one contemplating bankruptcy. The present law limits it 
 to cases of insolvency. 
 
 The Transfer. — To constitute an act of bankruptcy it is necessary that 
 there be more than an attempt to transfer. Thus it has been held that a con- 
 veyance attempted to be made by an instrument which is void for want of 
 proper execution, is not an act of bankruptcy (In re Dunham & Orr, 2 
 Ben. 488; s. c. 2 B. R. 17); and also that an unexecuted agreement 
 to make a transfer is not such a transfer as constitutes an act of bank- 
 ruptcy. (Winter v. R. R. Co., 2 Dill. 487; s. c. 7 B. R. 289.) To the contrary, 
 holding that a mere attempt, coupled with intent, is sufficient although the 
 instrument is void. {In re Mendelsohn, 12 B. R. 533; s. c. 3 Saw. 342.) It has 
 also been held that a preference made in favor of employees, who by the law 
 itself are made preferred creditors is, however, an act of bankruptcy, on the 
 ground that this preference of employees thus provided for must be secured 
 through the bankruptcy proceedings. (/» re Kenyon, 6 B. R. 238.) In principle, 
 this would seem to conflict with the generally recognized principle that a 
 transfer which does not impair or lessen the rights of creditors of the estate 
 is not a violation of the bankruptcy act. This decision, if it can be approved, 
 must be justified by the fact that the preferred employees had no right of 
 preference independently of the bankruptcy act. (See paragraph " Even 
 Exchange," below in this section.) 
 
 Intent to Prefer, — These words evidently mean the same as intent to give 
 a preference. Section 60 declares what is a preference and under what circum- 
 stances it can be invalidated, but it is to be noted that although it may not be 
 
BANKRUPTS. 41 
 
 § 3.] Intent Must be Proved. 
 
 voidable, a preference may yet be an act of bankruptcy. To make it such, 
 although intent on the part of the transferrer is an essential element, the intent 
 or motive of the transferree is absolutely immaterial. (In re Oregon Printing 
 Co., 13 B. R. 503.) 
 
 Intent Must Be Proved. — As in the cases of intent to defraud or delay 
 (which see) intent to prefer must be proven as a fact. (Morgan & Co. v. Mas- 
 tick, 2 B. R. 521; Miller v. Keys, 3 B. R. 224; Doan v. Compton, 2 B. R. 607; 
 Perry v. Langley, 2 B. R. 596; s. c. 8 A. L. Reg. 427.) Compare paragraph on 
 Intent to Defraud (supra). But it is a fact which may be inferred from other 
 proven facts. In law one is presumed to intend to do that which is the neces- 
 sary consequence of his acts, both the natural and the legal consequence. The 
 presumption may be conclusive or disputable, depending upon the nature of 
 the act and the character of the intention. When by law the consequence must 
 necessarily follow the act done, the presumption is ordinarily conclusive, and 
 generally cannot be rebutted by any evidence of a want of any such intention. 
 (In re Smith, 4 Ben. 1, 3 B. R. 377; Miller v. Keys, 3 B. R. 224; in re Gay, 2 
 B. R. 358; Hardy v. Clark, 3 B. R. 385; affirmed sub. nom. Hardy i/. Binninger, 
 7 Blatch. 262 ; s. c. 4 B. R. 262 ; Sawyer v. Turpin, 5 B. R. 339 ; s. c. i Hoi mes, 25 1 ; 
 affirmed, 91 U. S. 114; s. c. 13 B. R. 271; Webb v. Sachs, 15 B. R. 168; in re Black 
 & Secor, I B. R. 353; in re Silverman, 4 B. R. 523.) As one is presumed to know 
 the law, he is presumed to know the legal results of his acts and there is a conse- 
 quent presumption that he intends the legal results of those acts. (Morse v. God- 
 frey, 3 Story, 391; Traders' Bank v. Campbell, 14 Wall. 87; s. c. 6 B. R. 353; s. c. 
 below, 2 Biss. 423; s. t. 3 B. R. 498; Samson v. Burton, 5 Ben. 325; s. c. 4 B. R. 
 i; Terry v. Cleaver, 2 Biss. 356; s. c. 4 B. R. 126.) So there is a presumption 
 that one intends the probable consequences of his acts, that is, those conse- 
 quences which would naturally follow, and which a person of ordinary intelli- 
 gence would expect as the natural results. (In re Dibblee, 3 Ben. 354; s. c. 2 
 B. R. 617; in re Drummond, i B. R. 231; Curran v. Munger, 6 B. R. 33; and 
 see cases above cited in this paragraph.) The principles just stated are general 
 rules of the law of evidence, but in the cases cited, their application was to 
 bankruptcy cases. Further applying those principles in such cases, it has been 
 held that payments by one knowing himself to be insolvent raise a conclusive 
 presumption of an intent to prefer if they are in excess of the pro rata share of 
 the payee. (In re Silverman, 4 B. R. 523; s. c. i Saw. 410; Driggs v. Moore, 3 
 
42 THE NATIONAL BANKRUPTCY LAW. 
 
 Intent Must be Proved. [Ch. III. 
 
 B. R. 6o2; s. c. I Abb. C. C. 440; Farren v. Crawford, 2 B. R. 602; Rison v. 
 Knapp, I Dill. 187; s. c. 4 B. R. 349; Toof «/. Martin, 4 B. R. 488; s. c. i Dill. 
 203; in re Oregon Printing Co., 13 B. R. 503; in re Smith, 3 B. R. 377; in re 
 Batchelder, 3 B. R. 150.) Further a debtor is presumed to know his financial 
 condition, and if he is in fact insolvent, the burden of proof is upon him to 
 establish his want of knowledge. (/» re Silverman, supra; in re House, i N. Y. 
 Leg. Obs. 348.) But if a debtor honestly believes himself to be solvent, if he 
 establishes his want of knowledge as to his financial condition, he then rebuts 
 the presumption of an intent to prefer which arises from the fact of actual 
 insolvency. This doctrine was applied in a bankruptcy case by the highest 
 court in the land, the U. S. Supreme Court, in the case of Toof v. Martin, 13 
 Wall. 40; s. c. 6 B. R. 49; s. c. below, i Dill, 203; s. c. 4 B. R. 488. In its 
 opinion that court said: " It is a general principle that every one must be pre- 
 sumed to intend the necessary consequences of his act. The transfer in any 
 case by the debtor of a large part of all 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 in bankruptcy." See 
 also Morgan & Co. v. Mastick, 2 B. R. 521; Wager w. Hall, 16 Wall. 599; s. c. 
 below, 3 Biss. 28; s. c. 5 B. R. 181.) These cases cited, as to the presumption 
 of law that a person has knowledge as to his own solvency are, we believe, still 
 applicable notwithstanding the new and changed definition of insolvency. It 
 will, of course, be conceded that one may not always in fact know the fair 
 valuation of his property, and whether or not it equals the amount of his debts, 
 which is necessary, in order to know whether insolvency exists as the word is 
 now used. When insolvency meant inability to pay debts as they matured, it 
 was, of course, difficult to conceive of one being an insolvent and not knowing 
 it, but the presumption which the law indulges in is not so much a presumption 
 of actual knowledge of insolvency as it is a general arbitrary rule that a person 
 is chargeable with knowledge of his financial condition. (In re Silverman, 
 supra; Wager v. Hall, 16 Wall. 599; s. t. 5 B. R. 181; s. c. 3 Biss. 28.) Any 
 fact which tends to establish the existence or non-existence of intent is admis- 
 sible evidence. Thus it has been held that it may be shown that the transferrer 
 
BANKRUPTS. 43 
 
 § 3.] Intent to be Distinguished from Motive. 
 
 has made other preferential transfers at about the same time (Atkinson v. 
 Bank, Crabbe, 529); and intent may be inferred from any conduct of the debtor 
 or any circumstance connected with the transaction, provided the facts are suffi- 
 cient to justify the inference. (Linkman v. Wilcox, i Dill. 161 ; Beattie v. 
 Gardner, 4 B. R. 323; s. c. 4 Ben. 479; Giddings v. Dodd, 4 B. R. 657; s. c. i 
 Dill. 115.) The testimony of a party himself that he had not a preferential 
 intent is entitled to very little weight. (Oxford Iron Co. v. Slafter, 13 Blatch. 
 455; s. t. 14 B. R. 380.) Such testimony alone cannot overcome the strong 
 proof which the transaction itself affords. Actions in this case speak louder 
 than words. (Traders' Bank v. Campbell, 14 Wall. 87; s. c. 6 B. R. 353; s. c. 
 below, 2 Biss. 423; s. c. 3 B. R. 498.) The fact that there are no other debts 
 then due and payable does not conclusively negative an intent to prefer. (War- 
 ren V. Bank, 10 Blatch. 493; s. c. 7 B. R. 481.) It would be useless to cite any 
 further cases showing facts which have led courts to infer from them the exist- 
 ence of an intent to prefer. All the circumstances in connection with a trans- 
 action, the declarations and statements of the parties, their situation and the 
 relation which they bear to each other, — all these go towards the forming of a 
 proper inference as to the intent. Transfers of all one's property afford a vio- 
 lent, almost conclusive presumption of an intent to prefer, if there are creditors 
 unprovided for. (/« re Waite, I Lowell, 407.) It has been held that the giving 
 of a chattel mortgage by a debtor upon all his property in trade, inasmuch as it 
 puts an end to further credit and unavoidably tends to terminate and break up 
 his business, is necessarily a preference, and that the existence of an intent is to 
 be inferred from it. (Graham v. Stark, 3 Ben. 520; s. c. 3 B. R. 357; in re 
 McKay, I Lowell, 561; s. c. 7 B. R. 230; Scammon v. Cole, 3 B. R. 393.) 
 But this seems to be an inference hardly justifiable even under the old defi- 
 nition of insolvency, and the cases are of doubtful applicability under the new 
 definition. 
 
 Intent to be Distinguished from Motive. — Whatever may have been the 
 motives of the debtor in making a transfer, they are immaterial. •Motive is not 
 to be confounded with intent. What one purposes to do rather than what 
 prompts him to do it, is what the law considers. However honest or proper 
 may be the motives, yet if the intent to prefer exists, and is coupled with the 
 other essential elements, an act of bankruptcy is the result. (Hardy v. Bin- 
 ninger, 7 Blatch. 262; s. c. 4 B. R. 262; in re Silverman, 4 B. R. 523; s. c. 2 
 
44 THE NATIONAL BANKRUPTCY LAW. 
 
 Intent to be Distinguished from Motive. [Ch. III. 
 
 Abb. C. C. 243; !>. t. I Saw. 410; Farren v. Crawford, 2 B. R. 602; Warien v. 
 Bank, 10 Blatch. 493; s. c. 7 B. R. 481; Webb v. Sachs, 15 B. R. 168.) Accord- 
 ingly a. transfer is none the less a preference because given in answer to a 
 request, or in fulfillment of a prior promise made at the time of contracting the 
 debt. (Arnold v. Maynard, 2 Story, 349.) An agreement to give security is a 
 mere executory contract, and not a. conveyance. Such an agreement creates 
 no higher legal obligation than the promise of payment inplies in contracting 
 the debt. (Forbes v. Howe, 102 Mass. 427; Sawyer v. Turpin, 91 U. S. 114; s. i.. 
 13 B. R. 271; Nat. Bank v. Hunt, 11 Wall. 391; s. c. 4 B. R. 616.) These cases 
 must be considered as overruling to the contrary. (Burdick v. Jackson, 7 Hun, 
 488; s. c. 15 B. R. 318; in re Wood, 5 B. R. 421, and others.) But a distinction 
 has been taken between an agreement to give security generally and an agree- 
 ment for the delivery of certain specific property, a conveyance in fulfillment of 
 an agreement of the latter character having been held not a preference if only a 
 reasonable time has elapsed. (Gattman v. Honea, 12 B. R. 493. Compare in re 
 Jackson Iron Co., 15 B. R. 438.) And when the period which has elapsed 
 between the promise to give the security (if made at the time of the loan), and 
 the giving of it, is so short that the two acts can be Regarded as one transaction, 
 then in determining the intent with which it was made, the whole thing is to be 
 considered as if it were transacted at one time, and as if the security were for a 
 present, not for an antecedent consideration. The intent is to be inferred from 
 the circumstances attending the whole transaction, not from the mere giving of 
 the security itself. (Sparhawk v. Richards, 12 B. R. 74; Gattman v. Honea, 12 
 B. R. 493; in re McKay, 7 B. R. 230; a. u. I Lowell, 561; in re Perrin, 7 
 B. R. 283; in re Connor, Lowell, 532.) A transfer is no less a preference, 
 if made with intent to prefer, simply because the transferrer yielded to 
 coercion. (Arnold v. Maynard, 2 Story, 349.) It is wholly immaterial 
 whether the preference is made willingly, or by reason of threats. The intent 
 to prefer may concur with pressure on the part of a creditor. (Clarion Bank v. 
 Jones, 21 Wall. 325; s. c. 11 B. R. 381; Sawyer v. Turpin, 91 U. S. 114; s. c. 13 
 B. R. 271; Giddings v. Dodd, i Dill. 115; s. c. 4 B. R. 657.) Even although 
 the transferrer made the transfer because advised that he would be liable to a 
 criminal prosecution if he did not do so, the transfer is an act of bankruptcy. 
 (Strain v. Gourdin, 2 Woods, 380; s. c. 11 B. R. 156.) A transfer to a creditor 
 in payment of a fiduciary claim which cannot be proved in bankruptcy, may 
 yet be a preference. (/« re Dibblee, 2 B. R. 617; s. v.. 3 Ben. 354.) 
 
BANKRUPTS. 45 
 
 § 3.] Intentions of Agents — Manner of Transfer. 
 
 Intentions of Agents. — The intention of an agent to make a preferential 
 transfer or payment is in law imputed to the principal. (Beattie v. Gardner, 4 
 B. R. 323; s. c. 4 Ben. 479; Graham v. Stark, 3 B. R. 357; s. c. 3 Ben. 520.) 
 
 Failure to Defend an Action. — Failure to defend an action properly 
 brought, founded on a just debt actually owing, is not in itself evidence of an 
 intent to prefer. (Wilson v. Bank of St. Paul, 9 B. R. 97; s. c. 17 Wall. 473.) 
 Whether it is an act of bankruptcy under subdivision (3) see below. 
 
 Even Exchange. — The exchange of one set of securities by an insolvent, or 
 of one article of property for another of equal value is not a preference. An 
 even exchange is no robbery. If the result of a transfer is, that the one mak- 
 ing it gets back property of equal value so that the creditors of his estate are 
 not injured, there is no preferential intent. A debtor may properly give secur- 
 ity for a loan if given at the time the debt is created, and if the transaction be 
 free from fraud, and the value which the debtor obtains is equal to that with 
 which he parts, and if the security is not disproportionate to the loan. In gen- 
 eral it may be said that a preference can arise only in cases of transfers to pay 
 or to secure an antecedent debt. (Burnhisel v. Firman, 22 Wall. 170; s. c. 11 
 B. R. 505; Clark v. Iselin, 21 Wall. 360; s. c. 11 B. R. 337; Tiffany v. Boat- 
 man's Sav. Inst., i8 Wall. 376; Cook v. TuUiss, 18 Wall. 332; s. c. 9 B. R. 433; 
 Sawyers. Turpin, gi U. S. 114; s. c. 13 B. R. 271.) There is no preference if no 
 harm is done creditors (Winter v. R. R. Co., 2 Dill. 487; s. c. 7 B. R. 289); as, 
 for instance, when property is transferred by a debtor to a creditor having a 
 mortgage upon it for an amount greater than its value. (Livingston v. Bruce, 
 I Blatch. 318; Coxe v. Hale, 10 Blatch. 56; s. c. 8 B. R. 562: Catlin v. Hoffman, 
 9 B. R. 342.) As to payments made to wage earners who by statute are 
 preferred creditors, see above in this section. (Compare also cases cited under 
 section 60.) 
 
 Manner of Transfer. — If a transfer is actually made with intent to prefer 
 creditors, it is immaterial in what way it is made, or whether it is directly or 
 indirectly made to the preferred creditor. Thus a transfer of firm property by 
 one partner to the other, made for the purpose of enabling the individual cred- 
 itors of the transferee to secure a preference, is an act of bankruptcy (Collins 
 V. Hood, 4 McLean, 186); and if one who is insolvent conveys his property to 
 another who executes a mortgage thereon in favor of a creditor of an insolvent. 
 
46 THE NATIONAL BANKRUPTCY LAW. 
 
 Suffering or Permitting Preferences through Legal Proceedings. [Ch. IIL 
 
 it may be shown to be a preference. (Gibson v. Dobie, 5 Biss. 198; s. c. 14 
 B. R. 157.) 
 
 "His" Property. — The bankruptcy act gives no heed to any payments or 
 transfers which may be made by a third party as payments to creditors of an 
 insolvent. As such a payment does not take away anything from the fund to 
 which creditors of the insolvent may look, they cannot complain if a friend of 
 the insolvent pays in full certain of his debts. (Winslow v. Clark, 47 N. Y. 261; 
 Windsor v. Kendall, 3 Story, 507.) [Compare sec. i, subd. (25) as to secured 
 creditors.] Transfers in order to be preferences roust convey property liable to 
 be administered in bankruptcy. A transfer by an insolvent of exempt property, 
 though made with intent to prefer, is not an act of bankruptcy. (Rix v. Bank, 
 2 Dill. 367; Schlitz V. Schatz, 2 Biss. 248.) 
 
 Suffering or Permitting Preferences through Legal Proceedings. — 
 
 The most important fact to be noticed in connection with this subdivision (3) is 
 that intent is not expressly made an essential element to the commission of the 
 act of bankruptcy herein defined. Next to that, it should be noted that the' 
 words used are" suffered or permitted," not" procured," — the word which 
 was used in the act of 1841. To correctly understand this subdivision and to 
 ascertain how far the cases decided under the last bankruptcy act are appli- 
 cable, -a. quotation from it is necessary. By section 39 of the bankruptcy act of 
 1867, it was provided, among other things, that " a person who being bankrupt 
 or insolvent, or in contemplation of insolvency, should permit or suffer his 
 property to be taken on legal process with intent to give a preference to one or 
 more of his creditors, or with intent to defeat or delay the operation of the act " 
 was guilty of an act of bankruptcy; and by the thirty-fifth section of the same 
 statute providing for the invalidating of preferential transfers, it was declared 
 that any attachment or seizure under execution of such person's property, " pro- 
 cured by him " with a view to give a preference, should be void. Under that act 
 it was at first held by many of the district courts, that when an insolvent debtor 
 was sued by one creditor whose action would necessarily result in his securing 
 judgment and subsequently levying upon and obtaining all the property of the 
 insolvent debtor to the exclusion of olher creditors, if the debtor did not take 
 steps to go into voluntary bankruptcy and thereby prevent the prosecuting 
 creditor from obtaining the preference which his action would give him, then 
 the debtor must be presumed to have intended that a preference be secured. 
 These courts held that there was a clearly recognized distinction between pro- 
 
BANKRUPTS. 47 
 
 § 3.] Suffering or Permitting Preferences through Legal Proceedings. 
 
 curing and suffering; that where a person permits what he can prevent, he 
 suffers or allows the thing to be done. They also held that a debtor who is 
 threatened with an action at law can prevent the taking of his property by legal 
 proceedings, by going into voluntary bankruptcy, and if he does not do so, he 
 clearly suffers or allows or permits the taking. According to these decisions, 
 the word " procure " has an active signification while the word " suffer " is 
 merely passive. A man suffers a thing to be done when he has the means of 
 preventing it and yet fails to use all those means. Applying this reasoning 
 to the cases which came before it, these courts decided that if an insolvent, 
 against whom a creditor brought an action, the result of which would be that 
 the insolvent's property would all be taken on execution upon the debt to 
 the exclusion of other creditors, refrained from going into bankruptcy volun- 
 tarily, — then, in judgment of law he suffered his property to be taken on 
 legal process; because if, prior to the entry of that judgment and the issuing of 
 the execution thereon, he had gone voluntarily into bankruptcy, the bankruptcy 
 court would have taken the property, and the judgment and execution would 
 have no force or effect. Therefore in judgment of law, if the defendant in an 
 action omitted to go into bankruptcy he suffered his property to be taken on 
 legal process. Unless this construction was given to the word, it was held that 
 " suffered " must be construed as meaning no more than " procured." (In re 
 Gallinger, i Saw. 224; s. c. 4 B. R. 729; citing in >-^ Black & Secor, i B. R. 353; 
 s. c. 2 Ben. 196; in re Craft, i B. R. 378; s. c. 2 Ben. 214; in re Suther- 
 land, I B. R. 531 ; s. c. Deady, 344; in re Dibblee, 2 B. R. 617; s. c. 
 3 Ben. 354; in re Schick, i B. R. 177; in re Haughton, i B. R. 460. See also 
 Buchanan v. Smith, 4 B. R. 397; s. t. 8 Blatch. 153.) So far the decisions of 
 these courts must be considered an absolutely correct exposition of the law, and 
 to this extent they are authorities for a similar construction of the subdivision 
 under consideration. But they went further than this, and either considered an 
 intent as necessarily implied by the suffering of the creation of a preference; or 
 else overlooked the fact that an intent to prefer was an essential element to 
 make the sufferance of a preference by legal proceedings, an act of bankruptcy. 
 The result was that notwithstanding the correctness of their reasoning as given 
 above, their further deductions were erroneous; and in the Supreme Court of 
 the United States in the case of Wilson v. City Bank, 17 Wall. 473; s. c. 9 B. R. 
 97; s. c. below, I Dill. 476; s. c. 5 B. R. 270, the decisions of these judges of 
 the district courts in the cases above cited were overruled, and it was held that 
 no intent whatever could be inferred from the mere neglect of a defendant 
 
48 THE NATIONAL BANKRUPTCY LAW. 
 
 Suffering or Permitting Preferences through Legal Proceedings. [Ch. IIL 
 
 properly sued upon a just claim to interpose a defense when there was no 
 valid defense; that while, when a person does a positive act, the consequences 
 of which he knows beforehand, he must be deemed to intend those conse- 
 quences, it cannot be inferred that a man intends the consequences of other per- 
 sons' acts, (for instance, the act of the plaintiff), when he contributes nothing 
 to their success. Therefore, under the act of 1867 the mere neglect of a defend- 
 ant lo interpose a defense when no good defense existed, was not an act of 
 bankruptcy, under the section which made the suffering of the creation of a 
 preference by virtue of legal proceedings with intent to prefer, an act of bank- 
 ruptcy. But a study of the case of Wilson v. City Bank shows most clearly 
 that it turned upon the fact that intent under that statute was an essential ele- 
 ment. None of the reasoning of the court in the decision in that case justifies 
 the conclusion that under the present statute of i8g8, mere suffering or permit- 
 ting by an insolvent of the obtaining of a preference by a creditor through legal 
 proceedings, is not an act of bankruptcy. In re Gallinger, and the cases cited 
 under it, must then be considered authorities for the statement that mere suffer- 
 ance without intent is sufficient to constitute an act of bankruptcy as the statute 
 now stands; while Wilson v. City Bank is inapplicable owing to a difference 
 between the present and the former statute. Perhaps it also ought to be noted 
 that in Wilson v. City Bank it was said: " It is very strongly to be inferred 
 that the act of ' suffering ' the debtor's property to be taken on legal process as 
 the word is used in section 39 of the act of 1867, is precisely the same as 
 ■ procuring,' as the latter word is used in section 35 of that act." Section 39 
 was the section declaratory of what constituted acts of bankruptcy. Section 35 
 was in pari materia setting forth what preferences were voidable. The corre- 
 sponding sections in this act are sections 3 and 60. In section 35 of the act of 
 1867 as to the avoidance of preferences obtained through legal proceedings, 
 only those " procured " were voidable; and possibly the court was justified in 
 its dictum in Wilson v. City Bank, above quoted, to the effect that " procur- 
 ing" and" suffering" meant practically the same thing. But there is noth- 
 ing in the corresponding section of this act (section 60), to lead one to such a 
 conclusion. By that section one is deemed to have given a preference, if being 
 insolvent, he has either procured or suffered a judgment to be entered against 
 him, etc. In the act of 1841, the word " procured " alone appeared. The rule 
 laid down with reference to that word was that something more than passive 
 submission was necessary. Mere failure to defend a suit was not " procur- 
 ing " a judgment against one's self, but slight acts on the part of a person sued 
 
BANKRUPTS. 
 
 49 
 
 § 3-] Warrant to Confess Judgment. 
 
 were held sufficient to make his conduct a " procuring." Thus if a suit was 
 commenced with the debtor's knowledge and consent, and as a result of infor- 
 mation voluntarily communicated to the plaintiff by him for the purpose of 
 inducing the plaintiff to bring an action, then it was a " procuring " of a. judg- 
 ment. (Jones V. Sleeper, 2 N. Y. Leg. Obs. 131.) If the debtor in any way 
 aided the plaintiff in obtaining his judgment or lien, it was a " procuring." 
 (Fisher v. Currier, 5 Law Rep. 217; Wright v. Muxlaw, 8 Ben. 52; Rogers v. 
 Palmer, io2 U. S. 263.) But the admission of the service of a summons was not 
 sufficient to make the act a " procuring," there being no collusion between 
 the parties. (/« re King, 10 B. R. 103.) The confession of a judgment is always 
 regarded as an act of "procuring." (/» re Woods, 7 B. R. 126; in re Gallin- 
 ger, 4 B. R. 729; Traders' Bank v. Campbell, 14 Wall. 87; s. c. 6 B. R. 353; 
 s. c. below, 2 Biss. 423; s. c. 3 B. R. 498.) If it should be held that suffering 
 the creation of a preference by legal proceedings must be accompanied by an 
 intent, it is to be remembered that the slightest overt act on the part of a 
 defendant who fails to put in a defense to an action brought against him tend- 
 ing to aid the plaintiff in obtaining judgment, is considered sufficient to estab- 
 lish the existence of an intent. (Wilson v. City Bank, 17 Wall. 437; s. c. 9 
 B. R. 97; s. c. below, i Dill. 476; s. c. 5 B. R. 270; in re Baker, 14 B. R. 433 ) 
 
 Warrant to Confess Judgment. — The act of 1867 in terms made the giv- 
 ing of a warrant to confess judgment an act of bankruptcy. The present 
 statute has no express provision, but doubtless such an act under certain cir- 
 cumstances would be a preferential transfer. If regarded as a transfer, an 
 intent to prefer would be essential to make it an act of bankruptcy. On prin- 
 ciple and authority it would seem that the intent is to be determined and 
 inferred from the circumstances existing at the time of the giving of the war- 
 rant rather than at the time of its execution. The debtor's acts are completed 
 with the giving. In general, after thai, he has no power or control over the 
 warrant. If the warrant is given at a time when the debtor is solvent and the 
 giving of it is not tainted with fraud, then it is a valid transfer, and is not an 
 act of bankruptcy, even though the warrant be unexecuted by the person to 
 whom given until insolvency has taken place. (Field v. Baker, 11 B. R. 415; 
 s. t. 12 Blatch. 36; Clark v. Iselin, 21 Wall. 360; s. i.. 11 B. R. 337; s. c. below, 
 10 Blatch. 204; s. c. 9 B. R. 19; inre Wright, 2 B. R. 490; Sleek v. Turner, 76 
 Penn. 142; s. c. 10 B. R. 580; Buckingham v. McLean, 10 How. 151; s. t. 
 below, 3 McLean, 185; Armstrong v. Richey, 2 B. R. 473; Watson v. Taylor, 
 
 [NAT. BANKRUPTCY LAW — 4.] 
 
50 THE NATIONAL BANKRUPTCY LAW. 
 
 Assignment for Benefit of Creditors — Insolvency. [Ch. III. 
 
 21 Wall. 378.) Cases to the contrary, (among them, in re Terry, 2 Biss. 356; 
 3. t. 4 B. R. 126; Zahm v. Fry, 9 B. R. 546; in re Dibblee, 3 Ben. 354; s. u. 2 
 B. R. 617), must be considered as overruled by the authorities cited. But if a 
 debtor after becoming insolvent, in any way assists the party to whom the war- 
 rant to confess judgment is given, to obtain judgment, then he may be said to 
 procure it, and his conduct will be an act of bankruptcy. (Clark v. Iselin, 
 supra. Compare in re Leeds, i B. R. 521; s. c. 7 A. L. Reg. 693; in re Woods, 
 7 B. R. 126.) 
 
 Assignments for Benefit of Creditors. — The provisions contained in 
 subdivision (4) settle a question as to which there was great conflict of author- 
 ity under the former act which contained no express enactment upon the sub- 
 ject. Although late in the history of that act the majority of the courts were 
 inclined to hold any assignment for the benefit of creditors an act of bank- 
 ruptcy, whether such assignment created preferences or not, yet for a long 
 period there was an array of authority of almost equal number and weight 
 which held a contrary opinion, and the question could hardly be considered a 
 settled one under that act. Compare The Globe Ins. Co. ». Cleveland Ins. Co., 
 14 B. R. 311, holding that any general assignment was an act of bankruptcy 
 under that statute, because it necessarily tended to defeat and delay the 
 operation of the act. See also to the contrary, Perry v. Langley, 2 B. R. 596; 
 s. c. 8 A. L. Reg. 427, reversing Perry v. Langley, 7 A. L. Reg. 429; s. c. i 
 B. R. 559- 
 
 Allegation of Insolvency. — By paragraph b, it is requisite that at the time 
 the petition is filed the debtor shall be an insolvent. The fact that insolvency 
 exists at the time of the petition must then be alleged and established. Insolv- 
 ency at the time of the commission of the act must also be alleged in those 
 cases where insolvency at that time is essential to the commission of the act of 
 bankruptcy. 
 
 Limitation of Time. — Compare section 60, *, as to limitation of time for 
 bringing an action to invalidate a preference. 
 
 Solvency as a Defense. — Mere insolvency in itself is never a sufficient 
 cause for involuntarily adjudging one bankrupt, unless under subdivision (5) of 
 paragraph (a) of this section, which is really a case of voluntary bankruptcy. 
 (Wilson V. City Bank, 17 Wall. 489; s. c. 9 B. R. 97; s. c. below, 1 Dill. 476; 
 s. c. 5 B. R. 270; Doan v. Compton, 2 B. R. 607.) Where insolvency is an 
 
BANKRUPTS. J I 
 
 § 4.] Who May Become Bankrupts. 
 
 essential element, proof that there is danger of insolvency, viz., that the 
 party is in failing circumstances, and that in all probability his business is 
 such that he will soon become insolvent, is not sufficient. (Beals v. Quinn, loi 
 Mass. 262.) Although, except in a case falling under subdivision (i), and in a 
 case where the alleged insolvent fails to attend in court and submit to exami- 
 nation, and fails to bring to court with him his books, papers and accounts, the 
 burden of proving the insolvency is upon the petitioner; yet»when the latter 
 has given evidence which tends to show insolvency, and which if unexplained 
 would establish it, the burden is then shifted. (In re Oregon Printing Co., 13 
 B. R. 503.) 
 
 The Bond. — The provision requiring the filing of a bond is new. Such a 
 bond is necessary only when an application is made to lake charge of and hold 
 the property of an alleged bankrupt, prior to the adjudication, and pending a 
 hearing on the petition. (Compare section 69.) There is no authority any- 
 where under this act, for a surety company acting as surety on this bond. 
 Section 50 (g) authorizes it only in the cases of bonds of referees and trustees. 
 Doubtless the execution of a bond by a surety would make him a party to the 
 proceedings, subject to the jurisdiction of the bankruptcy court. If such is the 
 case, the court can summarily hear and determine as to the damages which the 
 alleged bankrupt may have sustained by the taking of his property in case the 
 petition against him is dismissed, and such court may make a summary order 
 requiring the sureties to pay the same. This, at any rate, was the express pro- 
 vision of this paragraph of this section in the bankruptcy bill as it first passed 
 the House and until it came out of the hands of the Conference Committee. 
 
 Sec. 4. Who May Become Bankrupts. — a Any person who 
 owes debts, except a corporation, shall be entitled to the benefits 
 of this act as a voluntary bankrupt. 
 
 b Any natural person, except a wage-earner or a person engaged 
 chiefly in farming or the tillage of the soil, any unincorporated 
 company, and any corporation engaged principally in manufac- 
 turing, trading, printing, publishing, or mercantile pursuits, owing 
 debts to the amount of one thousand dollars or over, may be 
 adjudged an involuntary bankrupt upon default or an impartial 
 trial, and shall be subject to the provisions and entitled to the 
 
52 THE NATIONAL BANKRUPTCY LAW. 
 
 Who May Become Bankrupts — Infants. [Ch. III. 
 
 benefits of this act. Private bankers, but not national banks 
 or banks incorporated under State or Territorial laws, may be 
 adjudged involuntary bankrupts. 
 
 Analogous Provisions of Former Acts: — 
 
 As to Voluntary Bankruptcy: R. S., § 5014; act of 1867, § iij act of 1841, 
 
 §7. 
 
 As to Involuntary Bankruptcy: See Analogous Provisions given under 
 section 3 of this act. 
 
 Who May Become Bankrupts? — Any person owing debts as defined in 
 section i (11) may file a voluntary petition. The present act does not in express 
 terms require that the person shall be insolvent or unable to pay all his debts 
 in full, as did the act of 1867; and there seems to be no reason why, if a solvent 
 person cares to have his property distributed among his creditors in bank- 
 ruptcy, he should not be allowed to do so. It will not be necessary to allege 
 insolvency in the petition, nor to prove it to procure an adjudication. 
 
 Debts. — Debts, though not yet due, may be made the foundation of a peti- 
 tion in bankruptcy, either voluntary or involuntary. See section 63 (a). 
 
 Infants. — Under the act of 1841 it was held that infants were entitled to the 
 benefits of the act, and that the proceedings might be had in their own name 
 without the appointment of a next friend. This decision was made on the 
 ground that the act did not exempt infants from its operation. (/« re Book, 3 
 McLean, 317; in re Cotton, 2 N. Y. Leg. Obs. 370. See also in re Smedley, 10 L. 
 T. N. S. 432.) On the other hand, the District Court for the Southern District 
 of New York held that, under the act of 1867, infants were not the subject of 
 either involuntary or voluntary bankruptcy in respect to their general contracts, 
 because the terras of the act did not embrace them. (In re Derby, 8 B. R. 106; 
 s. c. 6 Ben. 232.) With reference to contracts for necessities the court in this 
 case expressly declined to give any opinion. But general contracts of an infant, 
 having no force or validity if disaffirmed by the infant on coming of age, it 
 would be a frivolous act for courts to permit the institution and prosecution of 
 proceedings which might afterwards be practically annulled by such disaffirm- 
 ance. As to bankruptcy of an infant liable upon contracts for necessities, there 
 is no known adjudication expressly passing upon that particular question. In 
 re Derby and in re Cotton and in Farris v. Richardson, 6 Allen, ii8, the ques- 
 tion was referred to, but not decided. In each of them contrary to in re Book, 
 
BANKRUPTS. 53 
 
 5 4-] Insane Persons — Married Women. 
 
 it was said that no adjudication against an infant under bankruptcy or insolv- 
 ency acts would be valid, unless the infant was represented at the proceedings 
 by aprochein ami or a guardian ad litem. It is doubtful if an infant can commit 
 any act of bankruptcy which involves a transfer of property, his transfers being 
 voidable; also doubtful if a general contract creditor of his can prove a debt in 
 bankruptcy. If a transfer is made by an infant which would be an act of bank- 
 ruptcy if committed by an adult, and the transfer is aflSrmed upon his attaining 
 his majority, then a liability exists and proceedings in bankruptcy voluntary or 
 involuntarily may be instituted. But if the transfer is not affirmed, then it 
 seems that it is no act of bankruptcy and no proceedings can be instituted by or 
 against the person who did it, even after he becomes of age. If proceedings 
 are instituted upon it during the infancy of the alleged bankrupt, no affirmance 
 of the act after coming of age will give the court jurisdiction of the proceeding; 
 but the proceeding must be instituted de novo. (In re Derby, 8 B. R. 106; s. c, 
 
 6 Ben. 232; Belton v. Hodges, 2 M. & Scott, 496; Ex p. Watson, 16 Ves. 265; 
 Ex p. Moule, 14 Ves. 603; Ex p. Barwise, 6 Ves. 5oi; Rex v. Cole, i Ld. Ray- 
 mond, 443; Ex p. Barrow, 34 Ves. 554; Ex p. Henderson, 34 Ves. 163; Ex p. 
 Adam, i Ves. & B. 494.) 
 
 Insane Persons. — Cannot commit acts of bankruptcy, (in re Weitzel, 14 
 B. R. 466); but if such an act has been committed by a person while sane, who 
 afterwards becomes insane, he may be adjudged a. bankrupt in involuntary 
 proceedings. (In re Pratt, 6 B. R. 276, citing Robson on Bankruptcy, 84; 
 Anon., 13 Ves. Sgo; Sumner's note to in re Stamp, DeGex, 345; in re Marvin, i 
 Dillon, 178; Ex p. Layton, 6 Ves. 440.) In the matter of Pratt, a guardian had 
 been appointed for the insane person. Compare in re Murphy, 10 B. R. 48. 
 
 HaiTied Women. — May become bankrupts either in voluntary or involun- 
 tary proceedings where the laws of the states of their residence have so far 
 changed the common-law rule as to make them liable upon their contracts or 
 where they trade 3.5 feme sole. (Ex p. Mear, 2 Bro. 266; in re Kinkeade, 3 Biss. 
 405; s. c. 7 B. R. 439; in re O'Brien, i B. R. 176; in re Lyon, i Cent. L. J. 133; 
 Exp. Franks, 7 Bing. 764; Ex p. Carrington, i Atk. 206; Ex p. Preston, t 
 Cooke, 40; in re Collins, 10 B. R. 335; s. u. 3 Biss. 415.) But wherever her 
 coverture would be a good defense to an action upon a debt, such debt cannot 
 be made the basis of a proceeding in bankruptcy, (in re Schlichter, 2 B. R. 336); 
 and where she is liable only when she expressly charges her own separate 
 estate, or where the indebtedness is incurred in relation to her own separate 
 
54 THE NATIONAL BANKRUPTCY LAW. 
 
 Aliens — Wage Earners — Executors — Corporations. [Ch. III. 
 
 estate, — then it must clearly appear in the petition that such debts were so 
 charged or were for such estate, else the petition will be dismissed. (In re 
 Howland, 2 B. R. 357; in re Goodman, 8 B. R. 380; s. t. 5 Biss. 401.) 
 
 Aliens. — Aliens may be adjudged bankrupts, either voluntary or involun- 
 tary, whether resident or not in the United States, if they have property therein- 
 and otherwise come within the terms of section 2 (i). In this latter respect the 
 present act differs from the act of 1867. See section 65 d of this act. If the court 
 cannot get jurisdiction of the person of a non-resident alien, it can at least get 
 jurisdiction of the property within its district. 
 
 "Wage Earner." — The word is defined in section i (27). 
 
 Executors. — An executor who as such has carried on business and incurred 
 debts pursuant to the will of his testator may in England be adjudged a bank- 
 rupt, or may voluntarily petition. (£jr /. Garland, 10 Ves. no; Exp. Richard- 
 son, Madd. 138.) But in America the bankruptcy law does not extend to 
 executors and trustees, and persons acting in a fiduciary capacity, and although 
 such persons are authorized by a will or otherwise to carry on a business as a 
 part of the administration of an estate, they are not liable to be adjudged bank- 
 rupt as such. (Graves v. Winter, 7 Pac. L. R. 165; s. c. 9 B. R. 357.) 
 
 Corporations. — Under the bankruptcy law of 1867, any business, moneyed, 
 or commercial corporation might become bankrupt voluntarily as well as 
 involuntarily. Under the present act it cannot become a voluntary bankrupt, 
 and in order that a corporation may be involuntarily adjudged bankrupt it is 
 necessary that it be actually and principally engaged in one of the lines of busi- 
 ness mentioned in the section. The fact that by its charter it may engage in 
 that business, is not sufficient. (Ala. & Chat. R. R. Co. v. Jones, 5 B. R. 97.) 
 The corporation itself may be adjudged bankrupt, but not its directors and 
 stockholders, even although by statute they are jointly and severally liable for 
 its debts. (James v. Atlantic Delaine Co., 11 B. R. 390.) Notwithstanding its 
 dissolution in an action in a state court, if there are undistributed assets or 
 unpaid debts, a corporation may be put into bankruptcy. Like a partnership, 
 a corporation, even after dissolution, exists for the purpose of paying debts and 
 distributing the surplus among the persons entitled thereto. (/» re Merchants' 
 Ins. Co., 3 Biss. 162; s. c. 6 B. R. 43; in re Independent Ins. Co., 6 B. R. 
 169; a. c. 6 B. R. 260; in re Washington Ins. Co., 2 Ben. 292; s. c. 2 B. R. 
 648.) 
 
BANKRUPTS. 55 
 
 § 4-] Trading. 
 
 Trading. — The majority of cases as to who are traders have arisen in the 
 English courts. Until the act of 24 and 25 Vict., ch. 134, no person but a 
 trader could be made bankrupt. The question occasionally arose under the 
 last American bankruptcy act, and also under the act of 1841. An elaborate 
 note in Parsons on Contracts, 7th ed., volume 3, ch. on Insolvency and Bank- 
 ruptcy, collates all the English cases. The question is not so likely to be a 
 puzzling one when it arises in the case of a corporation as in the case of an indi- 
 vidual, since the latter may pursue many occupations, while corporations are 
 by their charter given a more limited range of powers; but it is thought the 
 following cases may be of service. To constitute trading, the transaction must 
 not be isolated; there must be an intention to carry on the particular pursuit as 
 a livelihood or as a regular business; one single act of trading is not sufficient; 
 but nevertheless the intention to trade, rather than the quantity or frequency, 
 is the test. (Heanny v. Birch, 3 Camp. 233; £x p. Moule, 14 Ves. 602; Ex p. 
 Wilkes, 2 Mont. & Ayr. 667.) But a single act may be enough if done with the 
 intention of making a business of trading. (Gimmingham v. Laing, i Rose, 
 472; Ex p. Lavender, 4 Deac. & C. H. 487; 2 Mont. & Ayr. ii; Newland v. 
 Bell, Holt, 221; Gale v. Halfknight, 3 Starke, 56; Patman v. Vaughan, 17 R. 
 572.) 
 
 It has been held in many English cases that it is immaterial whether or not 
 the trade is legal. (Ex p. Meymott, i Atk. 197; Wright v. Bird, i Price, 20; 
 Cobb V. Symonds, 5 B. & Aid. 516; Sanderson v. Bowles, 4 Burr. 2066.) By 
 analogy it would seem that if a corporation engaged in trading beyond the 
 powers conferred upon it by its charter, it would still be liable to be put into 
 bankruptcy if it committed an act of bankruptcy. Generally speaking no 
 person is <t trader who does not buy as well as sell. (Hall v. Cooley, 3 
 N. Y. Leg. Obs. 282; in re Chandler, 4 B. R. 213; s. c. i Lowell, 478.) 
 Merely selling the product of one's labor, especially if it is an agricultural pro- 
 duct, does not make one a trader; but the purchase of material, for the purpose 
 of manufacturing it and selling it in its manufactured state, must be considered 
 as constituting one a trader, or at least a person engaged in mercantile busi- 
 ness. (In re Hoyt, I N. Y. Leg. Obs. 132; Wakeman v. Hoyt, 5 Law Rep. 309; 
 Baldwin v. Rosseau. I N. Y. Leg. Obs. 391. Compare also as to what consti- 
 tutes one a trader: in re Eeles, i N. Y. Leg. Obs. 84; s. c. 5 Law Rep. 273; 
 in re King, I N. Y. Leg. Obs. 276; in re Cowles, i B. R. 280; in re O'Bannon, 2 
 B. R. 15; Cannon v. Dennerd, 10 Bing. 292; Martin v. Nightingale, 3 Bing. 
 421 ; in re Woods, 7 B. R. 126.) 
 
56 THE NATIONAL BANKRUPTCY LAW. 
 
 Who are Manufacturers. L^h. IIL 
 
 Persbns who buy and sell shares of stock have in England been held to be 
 brokers not traders (in re Cleland, 2 Ch. App. 466; Colt v. Netterville, 2 P. 
 Wms. 308); and in that country one who buys and sells land is not a trader, the 
 word trader being limited to one dealing in goods or commodities. (Port v. 
 Turton, 2 Wils. 169; Patten v. Brown, 7 Taunt. 409.) These cases have been 
 followed in this country, notwithstanding land with us is the subject of frequent 
 transfers by purchase and sale. Our courts have held that where the word 
 " trader" is used in a bankruptcy act it must be given the same meaning it had 
 in the early English bankrupt laws; and as under the English law, land is not 
 liable to be sold for the owner's debt, and the products of land are not there 
 considered the subject of trade, the purchase and sale of land will not consti- 
 tute one a trader («» re Woods, 7 B. R. 126; and this is true even although 
 the product so sold has been received by the seller as rent for land owned 
 by him but worked by another. (Compare in re Chandler and in re King, 
 supra^ 
 
 It has further been held that the following cannot be considered traders: Per- 
 sons engaged in the quarrying of stone (e« re Cleland, 2 Ch. App. 466); owners 
 or lessees of coal mines, (Ex p. Gardnerr, Rose, 377; Port v. Turton, 2 Wils. 
 169); persons engaged in burning lime (Ex p. Ridge, i Rose, 316); but possibly 
 the latter might be regarded as manufacturers. A keeper of a livery stable is 
 not a trader (in re Hall v. Cooley, 3 N. Y. Leg. Obs. 282) ; but if he buys and 
 sells hay and oats, even though the sales be to persons keeping horses in his 
 livery, then he is thereby constituted a trader. (Cannon v. Dennerd, 10 Bing. 
 292; Martin v. Nightingale, 3 Bing. 421.) 
 
 Who Are ManufactUPerS ? — One who works up lumber into timber 
 although he purchases the land as well as the standing timber. (In re Cowles, 
 I B. R. 280; Hankey v. Jones, Cowp. 745; in re Chandler, 4 B. R. 213; 
 s. c. t Lowell, 478; Hall v. Cooley, 2 N. Y. Leg. Obs. 282.) It was also 
 held under the last act that one engaged in printing and publishing a news- 
 paper is a manufacturer («'« re Kenyon, 6 B. R. 238; s. c. I Utah Ter. 47); but 
 corporations engaged in printing and publishing, are by the present statute 
 expressly made liable to be adjudged involuntary bankrupts. 
 
 Debts. — As to the time when the debt must have accrued, compare section 
 59 (*)■ 
 
BANKRUPTS. $7 
 
 § 5.] Partners. 
 
 Sec. 5. Partners. — a A partnership, during the continuation 
 of the partnership business, or after its dissolution and before the 
 final settlement thereof, may be adjudged a bankrupt. 
 
 b The creditors of the partnership shall appoint the trustee ; in 
 other respects so far as possible the estate shall be administered 
 as herein provided for other estates. 
 
 c The court of bankruptcy which has jurisdiction of one of the 
 partners may have jurisdiction of all the partners and of the 
 administration of the partnership and individual property. 
 
 d The trustee shall keep separate accounts of the partnership 
 property and of the property belonging to the individual partners. 
 
 e The expenses shall be paid from the partnership property 
 and the individual property in such proportions as the court shall 
 determine. 
 
 / The net proceeds of the partnership property shall be appro- 
 priated to the payment of the partnership debts, and the net pro- 
 ceeds of the individual estate of each partner to the payment of 
 his individual debts. Should any surplus remain of the property 
 of any partner after paying his individual debts, such surplus 
 shall be added to the partnership assets and be applied to the 
 payment of the partnership debts. Should any surplus of the 
 partnership property remain after paying the partnership debts, 
 such surplus shall be added to the assets of the individual partners 
 in the proportion of their respective interests in the partnership. 
 
 g The court may permit the proof of the claim of the partner- 
 ship estate against the individual estates, and vice versa, and may 
 marshal the assets of the partnership estate and individual estates 
 so as to prevent preferences and secure the equitable distribution 
 of the property of the several estates. 
 
 h In the event of one or more but not all of the members of a 
 partnership being adjudged bankrupt, the partnership property 
 shall not be administered in bankruptcy, unless by consent of 
 the partner or partners not adjudged bankrupt ; but such partner 
 or partners not adjudged bankrupt shall settle the partnership 
 business as expeditiously as its nature will permit, and account 
 for the interest of the partner or partners adjudged bankrupt. 
 
58 THE NATIONAL BANKRUPTCY LAW. 
 
 Who May be Adjudged — Who Must Petition. [Ch. IIL 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., § 5121; act of 1867, § 36; act of 1841, § 14. 
 
 After Dissolution. — The express provision in this section that a partnership 
 may be adjudged bankrupt even after its dissolution and before the final settle- 
 ment thereof, although it is simply declaratory of <t general principle of law 
 that a partnership continues as to creditors until all its assets are applied to the 
 payment of any existing debts, yet settles a much mooted question which arose 
 under the former act. It is immaterial in what manner the dissolution is occa- 
 sioned, whether it be by action of the partners or by the institution of legal pro- 
 ceedings in a state court and the appointment of a receiver in these proceedings. 
 (/» re Hathorn, 2 Woods, 73; in re Noonan, 3 Biss. 491; s. c. 10 B. R. 331.) In 
 case it be occasioned by the death of one of the partners, the surviving partner 
 may be adjudged a bankrupt if he has committed an act of bankruptcy with 
 respect to the joint property and in the course of administering the estate. (In 
 re Stevens, 5 B. R. 112; s. c. i Saw. 397.) A firm may be adjudged bankrupt 
 provided there are unpaid debts and undisposed of assets. (Hudgins v. Lane, 
 II B. R. 462; in re McFarland, 10 B. R. 381; Crocket v. Jewett, 2 Ben. 514; s. \.. 
 2 B. R. 208.) Bankruptcy itself is a dissolution of a firm. (Story on Partner- 
 ship, ch. 378.) 
 
 Who May be Adjudged? — All the members of the firm may be adjudged 
 bankrupt, although one member prior thereto may have assumed the firm 
 debts, and purchased the firm assets. {In re Sheppard, 3 B. R. 172; s. c. 3 Ben. 
 347; in re Stowers, Lowell, 528.) But in such cases the firm creditors may take 
 advantage of the continuing partner's assumption of the firm debts, and may 
 prove as if they were his individual creditors. (In re Long, 9 B. R. 227; s. c. 7 
 Ben. 141; in re Downing, 3 B. R. 748; s. c. I Dill. 33; in re Collier, Taylor & 
 Co., 12 B. R. 266; in re Rice, 9 B. R. 373.) 
 
 Who Must Petition ? — The section contains no express provision as to who 
 may be petitioners in proceedings to adjudge partners bankrupt. The statute 
 of 1867 provided that the petition might be made by the partners, or any one of 
 them, or by any creditor. Under the act of 1841, it was held that no number 
 less than the whole of the firm could file a voluntary petition. (In re Moritz & 
 Pinner, 5 Law Rep. 325 ; in re Hartz, i N. Y. Leg. Obs. 39.) The present act 
 does not in terms authorize one partner to institute voluntary proceedings that 
 will put the whole firm into bankruptcy, and it may be questioned whether on 
 general principles such authority exists. I( the proceeding in bankruptcy is 
 
BANKRUPTS. 59 
 
 § 5'] The Act of Bankruptcy. 
 
 to be regarded as an assignment of all one's property (which is one of its neces- 
 sary results), then it would certainly be questionable whether the institution of 
 such proceedings by one member of a firm is within the scope of the power 
 delegated to him. The cases as to the right of one member to make a sale or 
 assignment of all of the firm property would then be analogous. Unfortunately 
 even on this point the authorities are not in harmony. (Compare the case cited 
 in James on Bankruptcy, under sections 36 and 37, pages 192 and 193). One 
 partner may undoubtedly institute involuntary proceedings against his firm, if 
 other members of it have committed acts of bankruptcy; but independent of 
 statutory provision, it may still be considered an open question whether he can 
 institute voluntary proceedings without his partners joining in with him. The 
 cases under the act of 1867 are not decisive of the question, as the statute then 
 expressly authorized such proceedings. Under that act it was held that copart- 
 ners might be adjudged bankrupt on petitions of three different descriptions: 
 first, where all united in a voluntary petition; second, where a creditor filed an 
 involuntary petition; third, where one of the copartners petitioned. It was 
 further held that in the last case the proceedings could not be deemed wholly 
 voluntary or wholly involuntary. It was also held that a petition by one partner 
 where the others refused to join might be voluntary in the sense that it was not 
 necessary for him to allege the commission of an act of bankruptcy; that it 
 might be asked for solely on the ground of insolvency; in other words, that one 
 partner may, without the assent of his copartner, file <s voluntary petition; 
 but it is involuntary in the sense that notice must be given to the other partners 
 and they may oppose the adjudication, if they so desire. (/« re Penn, 5 Ben. 
 89; s. c. 5 B. R. 30; in re Noonan, 10 B. R. 331: s. c. 3 Biss. 491; in re Lewis, i 
 B. R. 239; in re Prankard, i B. R. 297; in re Moore, 5 Biss. 79.) But as has 
 been said, the act of 1867 expressly authorized this. Where a creditor attempts 
 to have a partnership adjudged bankrupt and files a petition to have the whole 
 firm so adjudged, he must establish a joint or firm debt due from it to him, 
 besides establishing the commission of an act of bankruptcy. 
 
 The Act of Bankruptcy. — To what extent an act of one partner which is an 
 act of bankruptcy may be imputed to the whole firm has been somewhat ques- 
 tioned by the authorities. It would seem that for any act done by one member 
 which is within any possible scope of delegated authority, the firm and all its 
 members would be liable in all civil proceedings, including bankruptcy proceed- 
 ings; but if an act of any one member of the firm, although it is an act of bank- 
 
6o THE NATIONAL BANKRUPTCY LAW. 
 
 Bankruptcy of One or All. [Ch. IIL 
 
 ruptcy, is not within the scope of his authority, and has not been sanctioned or 
 ratilied by his copartners, and was not done by their direction or authority, 
 then it can not be considered a firm act, and they can not all be put into bank- 
 ruptcy because of it. Generally it will be found that the members of the firm 
 can all be charged with knowledge, or at least with a tacit sanction of the act 
 of the offending member. The circumstances attending the transaction may be 
 such that the law will conclusively presume that it was authorized or ratified by 
 all the members of the firm. But if there has been no firm act of bankruptcy 
 and no individual act ratified by the other members of the firm, and no act of 
 any one member which was within the scope of a partner's authority, still all 
 the members of the firm may be adjudged bankrupt, if each of them individu- 
 ally has committed an act of bankruptcy. Compare in re Penn, 5 B. R. 30; 
 s. c. 5 Ben. 89; in re Noonan, 10 B. R. 331; s. c. 3 Biss. 491; Doan v. Comp- 
 ton, 2 B. R. 607; James w. Atlantic Co., 11 B. R. 390.) 
 
 Bankruptcy of One or All. — One member of a firm may be adjudged 
 bankrupt individually. It is not difficult to imagine cases where a firm might 
 be perfectly solvent, but one of its members insolvent. Subdivision (K) of this 
 section makes provision for just such cases. But where a firm goes into bank- 
 ruptcy it is a proceeding against each and every member, and both the firm and 
 individual assets must be administered in bankruptcy. If an individual mem- 
 ber of the firm becomes bankrupt and the firm is not so adjudged, a discharge 
 granted to the individual member is nevertheless, a discharge and release of all 
 his debts, firm as well as individual. His individual assets will come into the 
 possession of his trustee for administration and also his interest in the surplus 
 of the firm assets after their administration by the solvent partners. As the 
 discharge releases firm debts as well as individual, firm creditors should be 
 given notice of the proceedings. One member of the firm may thus be adjudged 
 bankrupt on the petition of a creditor whose only claim against him is as a 
 member of the firm. This was the rule long ago established in England, and 
 uniformly adhered to, and it was held in our country that such was the rule 
 here, even under section 36 of the bankruptcy act of 1867, which in this respect 
 was like the section under consideration. {In re Melick, 4 B. R. 97, citing 
 Ex p. Elton, 3 Ves. 242; Ex p. Clay, 6 Ves. 633; Ex p. Chandler, 4 Ves. 35; 
 Ex p. Bolton, 2 Rose, 389; Tucker v. Oxley, 5 Cranch, 34; Murray v. Murray, 
 5 Johns. Ch. 60.) 
 
BANKRUPTS. 6l 
 
 § 5'] Rights of Trustee — Choice of Trustee. 
 
 Rights of Trustee. — independently of the express provision contained in 
 subdivision h of this section, where only one member of the firm has become 
 bankrupt, the solvent partner has the control and custody of the assets of the 
 firm for the purpose of winding up the business. The trustee has no right to 
 change the possession or to make any specific division of the joint effects. The 
 only interest which he has in the property is an interest in the surplus which 
 may exist after the payment of all debts and expenses. This interest is subject 
 to all the rights and liens of the other partners. (Story on Partnership, section 
 375.) The bankruptcy works a dissolution of the firm, and the bankrupt mem- 
 ber is civiliter mortuus, and the solvent partners have the same right to close up 
 the business as if the firm had been dissolved by actual death of the bankrupt. 
 The only way in which the assets of the firm can be administered in bankruptcy 
 by the trustee is by putting all the members into bankruptcy. In re Shepard, 3 
 B. R. 172; s. c. 3 Ben. 347; Amsinck v. Bean, 22 Wall. 395; s. t. 11 B. R. 495; 
 s. c. below, 10 Blatch. 361; 3. t. 8 B. R. 228; Forsaith w. Merritt, 3 B. R. 48; s. 
 c. Lowell, 336.) If one member of the firm has been so adjudged, the other 
 member may thereafter become bankrupt. (Hunt v. Pooke, 5 B. R. i6i. Com- 
 pare, however, the following case to the contrary; in re Plumb, 9 Ben. 279.) 
 The solvent partner and the trustee are tenants in common of the firm assets; 
 but the courts deem the solvent partner's equities as the stronger, and will not 
 disturb him in his possession, nor prevent him from retaining or distributing the 
 funds, collecting the firm accounts and paying the firm debts, or selling the 
 firm assets, if he does so without fraud. (Murray v. Murray, 5 Johns. Ch. 60; Ayr 
 V. Brastow, 5 Law Rep. 498 ; Talcott v. Dudley, 5 111. 427.) If the solvent part- 
 ner is obliged to institute a suit at law and the trustee is a necessary party to 
 the record, he may be made such. In fact, the action should be so brought. 
 (Thompson v. Frere, 10 East, 418; Burt v. Mould, 3 Tyr. 569; Cannon v. Well- 
 ford, 22 Gratt. 195; Coe v. Whitbeck, 11 P. 42; Halsey v. Norton, 45 Miss. 703; 
 Peel V. Ringgold, 6 Ark. 546.) While the right of a solvent partner to adminis- 
 ter the firm assets in cases where only one member is adjudged bankrupt is 
 generally recognized, yet, the court of bankruptcy will give its equitable aid by 
 its usual remedies in cases where he does not promptly and faithfully adminis- 
 ter the same. (McLean v. Ihmsen, i West. L. J. 189; Parker v. Muggridge, 2 
 Story, 334; Ayr v. Brastow, 5 Law Rep. 498.) 
 
 Choice of Trustee. — if a firm is adjudged bankrupt, the creditors of the 
 individual members have no vote whatever in the election of a trustee. This 
 matter is by statute left entirely to the firm creditors. This is true although 
 
62 THE NATIONAL BANKRUPTCY LAW. 
 
 What are Firm Assets and What are Individual Assets. [Ch. III. 
 
 there may be no firm assets. (/» re Phelps, Caldwell & Co., i B. R. 525; in re 
 Scheiffer & Garrett, 2 B. R. 591.) 
 
 Jurisdiction. — Although the section provides that the court of bankruptcy 
 which has jurisdiction of one of the partners may have jurisdiction of all the 
 partners and of the administration of the partnership and individual property, 
 this it seems is only true when the proceeding is to adjudge all the members as 
 a firm bankrupt. It does not justify a proceeding against one member who 
 may be a resident in the district, and later another individual proceeding 
 against another member, if the latter is not a resident of the district or does not 
 in some other way come within the provisions of section 2 (i). (/« re Boylan, 
 I B. R. 2.) 
 
 Marshaling Assets. — The provisions of this section as they appeared in 
 former acts, were held by the court to be merely declaratory of the general 
 equitable principle upon which courts distribute the assets of bankrupt partner- 
 ships. The object of the enactment according to this decision was to settle a 
 disputed question as to the right of a bankruptcy court (which is a court of 
 special statutory creation), to exercise the general powers of a court of equity 
 in regard to marshaling assets. (/» re Collier, Taylor & Co., 12 B. R. 266: 
 in re Melick, 4 B. R. 97.) Hence, in distributing the assets of bankrupt partner- 
 ships, unless it is plainly evident that this law makes a change, the general rule 
 of equity that partnership creditors have priority of payment from partnership 
 assets and individual creditors priority of payment from individual assets, is to 
 be followed; and it is equally true that all of the established exceptions to that 
 rule apply in bankruptcy as well as in equity. 
 
 What are Firm Assets and What are Individual Assets ? — Questions 
 
 frequently arise as to whether assets are partnership or individual. These 
 spring up sometimes from the nature of the property, but more often from 
 transactions between the several partners, or between the firm and one partner. 
 Real estate held by members of a firm, is in law generally held by them as ten- 
 ants in common; yet in equity, if purchased with partnership funds and held as 
 a firm asset, it will be treated as such rather than as individual property of the 
 several members. It will be so treated as firm property as long as there are 
 unpaid firm creditors and until the partnership business, even as between the 
 partners themselves, is finally settled. If it has been purchased with firm 
 money upon an understanding that if sold profits and losses are to be divided 
 among the members of the firm in the same proportion as their several inter- 
 
BANKRUPTS. 63 
 
 § 5 ] What are Partnership and What are Individual Debts. 
 
 ests in the firm property or if it is so purchased and used in the firm business, 
 it is presumptively firm property and not individual property. (Hiscock v. 
 Green 12 B. R. 507; Osborn v. McBride 16 B. R. 22; s. c. 3 Saw. 570.) When 
 the circumstances connected with its purchase, or use, or tenure, make it firm 
 property, it will be so treated in the marshaling of the assets. Firm creditors 
 will have prior right to payment from its proceeds, even as against individual 
 creditors who may have procured judgments which are liens upon the interests 
 of the individual members. (Marrett v. Murphy, 11 B. R. 131.) Questions as 
 to what are partnership and what are individual assets more frequently arise 
 where there have been transfers of property once belonging to the firm to one 
 member thereof. If -1. firm is solvent, it is perfectly legal and proper for one 
 member to purchase the firm assets upon an agreement to pay the firm debts, or 
 for other valuable consideration. If such a transfer is made in good faith by a 
 solvent firm, the property becomes, both in law and equity, the individual 
 property of the purchasing member. Firm creditors may still look to all of the 
 members for payment of their claims; or, if they choose, they may accept the 
 assuming member as their sole debtor. {In re Collier, Taylor & Co., 12 B. R. 
 266; in re Long, 7 Ben. 141; s. c. 9 B. R. 227; in re Downing, i Dill. 33; 
 s. t. 3 B. R. 748; in re Wiley, 4 Biss. 214; in re Mills, 11 B. R. 74.) But 
 if a firm is insolvent and if a sale to one partner is made with the intention 
 of enabling the individual creditors of the purchasing partner to obtain payment 
 from a larger fund, thereby giving them a preference; or, if for any other 
 reason, the transfer is inequitable, it will be treated by the court of bankruptcy 
 as null and void, and the property will be disposed of as if it were still partner- 
 ship assets. {In re Cook & Gleason, 3 Biss. 116; in re Byrne, i B. R. 464; s. c. 
 7 A. L. Reg. 499.) This, in fact, is nothing more than the invalidating of a pre- 
 ferential transfer, and distribution accordingly. 
 
 What are PartneFShip and What are Individual Debts? — This ques- 
 tion arises frequently under two dififerent sets of circumstances: first; where a 
 member of a firm has assumed the firm indebtedness. Where such has been 
 the transaction, firm creditors, according to the well-established rule in the United 
 States, may avail themselves of the promise of the assuming member, and treat 
 him as their individual debtor. If the transaction is by a solvent firm and is not 
 tainted with fraud, then just as the purchase of firm assets by one member is 
 valid, as set forth in the foregoing paragraph, so the assuming of the firm debt 
 is equally valid and the firm creditors may elect to become individual creditors; 
 
64 THE NATIONAL BANKRUPTCY LAW. 
 
 Rights of Firms Creditors in Individual Assets. [Cli. III. 
 
 and in this case they share equally with the other individual creditors in the dis- 
 tribution of the individual assets. (See in re Downing, supra; in re Collier, Tay- 
 lor & Co., supra; in re Long, supra.) The question whether an indebtedness is 
 a firm or individual indebtedness also often arises in cases where all the mem- 
 bers of a firm have incurred a written obligation by signing their respective 
 individual names, instead of the firm name. Where this is the case, the weight 
 of authority is, that it is an individual indebtedness of each of the members 
 of the firm, not a partnership indebtedness. (/« re Webb, i B. R. 614; 
 in re Bucyrus Machine Co., 5 B. R. 303; in re Miller, I N. Y. Leg. Obs. 
 38; in re Herrick, 13 B. R. 312; in re Roddin, 6 Biss. 377; contra, holding 
 that in such cases there is merely a presumption that the obligation is indi- 
 vidual rather than firm, but that the presumption may be rebutted, if in fact, it 
 is a firm obligation; in re Warren, 2 Ware, 322.) The decisions of these ques- 
 tions is important in bankruptcy as it affects the question of the marshaling of 
 assets and the priority of creditors of the different classes. 
 
 Bights of Firm Creditors in the Individual Assets. — We have already 
 
 seen that a. firm creditor may elect to become the individual creditor of one 
 member of the firm who purchases the property and assumes the firm debts. 
 We have also seen in this section that one member of the firm may be adjudged 
 bankrupt involuntarily upon the petition of a creditor whose sole claim against 
 him is one incurred by the firm. This rests upon the general principle of the 
 law of partnership, that each individual member is severally liable for all the 
 debts of the firm. In England, when a firm creditor has thus instituted pro- 
 ceedings in bankruptcy against one member of the firm, based upon the latter's 
 individual liability, there is a well-established exception to the general rule that 
 partnership creditors are to be paid from partnership assets, and that individual 
 creditors are to have a priority of payment out of individual assets. This 
 exception is that the petitioning partnership creditor may share pari passu with 
 the individual creditor. This right is limited to the petitioning creditor and 
 does not extend to all the firm creditors. The exception is an arbitrary one, 
 difficult to justify. It has been criticised even by English judges, but is regarded 
 as a fixed rule. Twiss v. Massey, i Atk. 67; Ex p. Crispe, i Atk. R. 133- 
 Collyer on Part. B. 4, ch. 2, § 3, pp. 625 and 626, 2d ed.; Exp. Hodgson, 2 Bro. 
 Ch. R. 5; Dutton V. Morrison, 17 Ves. 207; Ex p. Bolton, 2 Rose R. 389.) We 
 know of no American cases following it and its limitations, but it is regarded 
 by Judge Story in his work on Partnership as law even here. But if a firm 
 
BANKRUPTS. 65 
 
 § 5.] Rights of Creditors Holding Joint and Several Obligations. 
 
 creditor institutes a proceeding against all the partners, he can resort only to the 
 joint funds of the partnership. Although the rule above given does not seem 
 to have been adopted in the United States in any adjudicated case, it has been 
 held that the general rule as to marshaling assets applies only to cases where 
 the joint estate, as well as the separate estate, is before the court for distribu- 
 tion; and where there are joint creditors as well as separate creditors. If only 
 the separate estate is being administered in bankruptcy, then a partnership 
 creditor may still prove against the individual estate, inasmuch as each member 
 is individually liable to him for the debt; and therefore, as by coming into the 
 proceeding in individual bankruptcy he makes himself an individual creditor, 
 he shares pari passu with all the other individual creditors. (In re Pease, 13 
 B. R. 168; Lewis v. U. S., 92 U. S. 618; s. c. 14 B. R. 64.) This practically 
 extends the exception above noted so as to put not only the petitioning partner- 
 ship creditor, but all the partnership creditors who prove their claims, on an 
 equality with individual creditors, if the bankruptcy is individual. But the 
 authorities are not agreed upon this, it having been held, to the contrary, that 
 where only one partner goes into bankruptcy, the individual creditors must 
 first be paid in full from the individual assets. {In re Byrne, i B. R. 464; in re 
 Williams, 5 Law Rep. 402; in re Ingalls, 5 Law Rep. 401.) The case of a part- 
 nership creditor, having the right as such to sue either all or any one of the 
 members of the firm, is to be distinguished from the case of a creditor holding 
 a firm obligation, secured by the individual obligation of one of the members of 
 the firm. Rights of creditors of the latter class will be treated of in the next 
 paragraph. 
 
 Rights of Creditors Holding Joint and Several Obligations. — In 
 
 England the rule was formerly established that a creditor holding the joint obli- 
 gation of a firm secured by the individual obligation of one or more members 
 thereof, could not avail himself in bankruptcy of his double security, but must 
 elect which of :he two he would hold. He could prove either against the firm 
 and become entitled to share in the firm assets, or he could prove against the 
 individual who was personally liable to him; but, he could not prove against 
 both. According to this rule when creditors have once elected they are excluded 
 from any dividend from the other fund, unless there remains a surplus after 
 the discharge of all the debts having preference therefrom; but such a creditor 
 is entitled to a reasonable time to examine into and ascertain the true state of 
 each fund, and even after he has made an election, will sometimes be allowed 
 to recall it under equitable circumstances, when it will not interfere with the 
 
 [NAT. BANKRUPTCY LAW — 5.] 
 
66 THE NATIONAL BANKRUPTCY LAW. 
 
 Rights of Creditors Holding Joint and Several Obligations. [Ch. IIL 
 
 positive rights actually acquired by others. (Story on Part., § 384; Gow. on 
 Part., ch. 5, § 3, p. 286, 3d ed.; Cooke's Bankrupt Law, 259, 4th ed.; Ex p. 
 Rowlandson, 3 P. Will. 405; Ex p. Bond, i Atk. 98; Collyer on Part., B. 4, ch. 
 2, § 8, p. 651, 2d ed.; Id. B. 4, ch. 2, § 4, p. 630, etc.; Watson on Part., ch. 5, 
 p. 289; Ex p. Edwards, i Mont. & McArth. n6.) This rule has long been fol- 
 lowed by the English courts and applies not only to creditors holding partner- 
 ship claims secured by the individual obligation of the members thereof, but ta 
 any joint creditor who takes the separate security of one of the debtors as a col- 
 lateral to the joint obligation. (Ex p. Roxby, i Mont, on Part. 124; Collyer on 
 Part., supra; Gow. on Part., supra.) This rule has been greatly criticised even 
 by the English courts as being arbitrary and unfounded on principle, but has 
 been followed by them in obedience to the maxim stare decisis. (Ex p. Be van, 
 9 Ves. 223.) But this rule even in England has always been subject to the 
 exception that if a partnership creditor takes out a commission in bankruptcy 
 against one of the members and receives the dividend under that commission 
 out of the joint estate, he may bring an action for the residue against the other 
 partner. (Young v. Hunter, 16 East, 258; Heath v. Hall, 4 Taunt. 326; Gow. 
 on Part., supra; Collyer on Part., supra; Story on Part., § 387.) It is to be 
 noticed that Judge Story cites no American cases following this rule; we know 
 of none. The weight of American authority favors the right of a creditor who 
 has a contract joint as to the firm and several as to one or more partners to 
 prove against the firm and the individual partners or partner, and to receive 
 dividends from the joint and individual assets (in re Bigelow & Kellogg, 2 
 B. R. 371, citing in re Farnum, 6 Law Rep. 21), holding that " a party who has 
 demanded and obtained two obligations, one joint and one several, has the 
 right to enforce both, and that that right should not be denied on account of an 
 arbitrary English rule reprobated by the most eminent judges and jurists in 
 England, and never recognized in this country.'' In Massachusetts, after 
 considerable discussion, the question has been settled in favor of double 
 proof and double dividends. (Bank v. Hall, 160 Mass. 171 [1893]). Com- 
 pare Borden v. Cuyler, 10 Cush. 478. See also Mead v. Bank, 2 B. R. 
 178; s. c. 6 Blatch. 180. It is a daily occurrence that creditors before 
 making loans or entering into contracts, require firm contracts to be secured 
 by the endorsement of individual members of the firm, for the very pur- 
 pose of having the individual security of the individual property in addition 
 to the security of the firm property. Since such endorsers could be sued 
 upon their liability if they were not bankrupt, and the firm could also be 
 sued, there seems no valid reason why in bankruptcy proceedings the creditor 
 
BANKRUPTS. 6/ 
 
 § 5-] Rights of Firm Creditors where there are No Firm Assets. 
 
 should not prove his claim and receive a dividend from both the partnership 
 and the individual assets. (/» re Stephenson, 9 B. R. 256.) Any other decision 
 would nullify the extra security that a creditor has obtained by procuring an 
 individual endorsement. Such a creditor is entitled to the advantage gained 
 by his caution and diligence, and can receive dividends from both funds. 
 (Emery v. Canal Bank, 7 B. R. 217, holding that the English rule as stated by 
 Judge Story was exploded even in that country. See also in re Howard, 
 Cole & Co., 4 B. R. 571.) The claim of a joint and several creditors 
 may then be proved for its full amount against both the funds. Even 
 though, in cases where partnerships and the individual members thereof are 
 adjudged bankrupt, all the property vests in one trustee to administer in bank- 
 ruptcy, the joint and separate estates are considered as distinct estates. A joint 
 creditor having security upon the separate estate of individual members, is 
 entitled to prove against the joint estate without giving up his security upon the 
 separate estate, and tnce versa. He may prove against each for the full amount 
 of the claim and receive a dividend from each, provided he does not receive 
 from both in the aggregate more than the full amount of his claim. (In re 
 Howard, Cole & Co., supra; in re Bradley, 2 Biss. 515; Stevenson v. Jackson, 
 9 B. R. 255.) 
 
 Rights of Finn Creditors wliere there are No Firm Assets and No 
 Solvent Partner. — A third exception to the general rule as to the distribution 
 of a bankrupt's assets, recognized and followed both by the English and Ameri- 
 can courts, is that when there are no firm assets and no solvent living partner, 
 then the firm creditors share pari passu with the individual creditors. By the 
 English rule, to give firm creditors this right, two things are requisite; viz., an 
 entire lack of firm assets; second, no living solvent partner. If there is a solv- 
 ent partner who is dead, the exception nevertheless exists. (Story on Part., 
 § 380; Ex p. Sadler, 15 Ves. 52; Ex p. Kensington, 14 Ves. 447.) The rule has 
 been followed in America, although some of the courts seem inclined to overlook 
 the necessity of the existence of a living solvent partner. {In re Mills, n B. R. 
 74; in re Downing, 3 B. R. 748; ». t. i Dill. 33; in re Goedde, 6 B. R. 295; in re 
 Knight, 8 B. R. 436; s. c. 2 Biss. 518, disapproving Somerset Pottery Co. v. 
 Minot, 10 Cush. 592; in re McEwen, 12 B. R. 11.) There is some conflict among 
 the authorities as to whether there must be absolutely no assets belonging to 
 the partnership or whether the fact that the assets of the partnership are insuffi- 
 cient to pay expenses of administration is sufficient. Both on authority and 
 
68 THE NATIONAL BANKRUPTCY LAW. 
 
 Marshaling of Assets where One is a Member of Two Firms. [Ch. IIL 
 
 principle, it would seem that, where the firm assets are not of sufficient value 
 to leave any fund whatever for distribution after the expense of their reduction 
 to cash, it should be deemed that there are no partnership assets. In other 
 words, after the payment of the expenses there must be some net proceeds from 
 the partnership assets. (In re Goedde, supra; in re McEwen, supra; Story on 
 Part., § 380; in re Marwick, 8 Law Rep. 169; s. c. 2 Ware, 233; s. c. 3 N. Y. 
 Leg. Obs. 286; Collyer on Part., B. 4, ch. 2, § 3, pp. 626 and 627, 2d ed.; Exp. 
 Leaf, 1 Deacon R. 176; in re Lee & Armstrong, 2 Rose, 54; Ex p. Peake, 2 Rose, 
 54; Ex p. Hill, 5 Bos. & Pull, igi, A; Ex p. Janson, 3 Madd. R. 229; Ex p. 
 Kensington, 14 Ves. 447.) In re Marwick it was held that an individual cred- 
 itor might purchase an actually worthless asset for the express purpose of creat- 
 ing a slight partnership fund, and thus securing to individual creditors priority 
 of payment from individual assets. However small may be the net proceeds of 
 the partnership assets, if there are any net proceeds whatever, then partnership 
 creditors cannot share with the individual creditors in the individual assets. 
 (Ex p. Kennedy, 19 Eng. Law & Eq. 150; in re Smith, 13 B. R. 500.) In the 
 first of the two cases last cited ;f 13, or $65.00, was held such a sum as deprived 
 partnership creditors of this right. The burden of proving that there are part- 
 nership assets rests upon the individual creditors who claim a right of priority 
 in the individual assets. (In re Rice, 9 B. R. 373; in re Jevrett, I B. R. 491; 
 s. c. 7 A. L. Reg. 291.) This is one of the few cases where it seems the law 
 imposes upon a party the duty of establishing facts showing that an exception 
 to a general rule does not exist. (Contrary to the cases last cited; in re Byrne, 
 I B. R. 464; s. c. 7 A. L. Reg. 499.) The converse of the rule heretofore given 
 is not law. Where there is partnership property, but no individual estate, the 
 separate creditors do not shate pari passu with the firm creditors in the firm 
 assets. (In re Kinkeade, 7 B. R. 439; s. c. 3 Biss. 405.) 
 
 Harshaling of Assets Where One is a Member of Two Firms. — In 
 
 such cases the assets of the bankrupt will be so marshaled that the creditors of 
 each firm will have priority in the distribution of the assets of the firms of 
 which they are respectively creditors. It would seem that if there is any surplus 
 after paying the creditors of one firm, it should go to the individual creditors of 
 the bankrupt, rather than to the creditors of the other partnership. (Compare 
 in re Leland, 5 Ben. 168; s. c. 5 B. R. 222; in re Hinds, 3 B. R. 351.) If there 
 is a surplus of individual assets it should be distributed pro rata among the 
 creditors of both firms. (In re Dunkerson, 12 B. R. 391.) 
 
BANKRUPTS. 69 
 
 § 5.] Proving Claims of the Partnership Estate against Individual Estates. 
 
 Proving Claims of the Partnership Estate Against the Individual 
 
 Estates. — Any claim which one member of the firm has against it may be 
 proven in bankruptcy and vice versa. In the case of Mead v. Bank, 2 B. R. 
 173; s. c. 6 Blatch. 180, (see above) it was queried by the court whether 
 in a case, where a creditor has a firm obligation secured by the endorse- 
 ment of the individual partners which he proves against the individual 
 estates and secures a dividend from, the trustee as representing the estate of 
 the endorsing members could not prove the payment of that dividend as a 
 claim against the partnership estate and recover for the benefit of the indi- 
 vidual estate a dividend from the partnership estate. This would seem to be 
 legal and equitable. (Compare in re Foote, 12 B. R. 337.) Unless the trustee 
 has the right to recover from the individual estate a debt owing to the partner- 
 ship estate, the firm creditors cannot have recourse to the separate estate for 
 money advanced by the firm to one of the partners. (In re McLean, 15 B. R. 
 333; "« ''^ McEwen, 12 B. R. 11; s. c. 6 Biss. 294. Compare, apparently to the 
 contrary. Ex p. Brown, 2 Mont. D. & D. 718; s. c. Jur. 1021.) Where the part- 
 nership estate is indebted to another firm one of whose members is also a mem- 
 ber of the bankrupt firm, the court should hold back from the payment due the 
 creditor firm the proportion to which the bankrupt member would be entitled. 
 (In re Ellis, 5 Ben. 421.) If the same persons carry on business in different 
 places under different names, they will be treated as one firm in the distribution 
 of the assets. (In r^ Vetterlein 4 B. R. 599; s. c. 5 Ben. 311; Ballin v. Ferst, 
 55 Geo. 546; in re Buckner & Co., 28 Miss. 447; Buckner v. Calcote, 28 Miss. 
 432. Compare, however, Sparhawk v. Drexel, 12 B. R. 450, apparently contra.) 
 
 Transferring of Cases From One Jurisdiction to Another. — (Compare 
 
 section 32,) 
 
 As to Effect of Discharge of One Partner on Copartners. — (Compare 
 
 section 16.) 
 
 As to Effect of Discharge Where One Partner Only is Adjudged Bank- 
 rupt. — (Compare sections 14 and 17.) 
 
 Rights of Partners to Exemption from Firm Assets.— (Compare sec- 
 tion 6.) 
 
70 THE NATIONAL BANKRUPTCY LAW. 
 
 Exemptions of Bankrupts. [Ch. IIL 
 
 Sec. 6. Exemptions of Bankrupts. — a This act shall not 
 affect the allowance to bankrupts of the exemptions which are 
 prescribed by the State laws in force at the time of the filing of 
 the petition in the State wherein they have had their domicile for 
 the six months or the greater portion thereof immediately pre- 
 ceding the filing of the petition. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., § 5045; act of 1867, § 14 (amended by act of June 8th, 1872, ch 330. 
 and by act of March 23, 1873, ch. 235); act of 1841, § 3; act of 1800, §§ 18, 34, 
 35. 53. 
 
 Exemptions. — The act of 1867 was more liberal than the present act in the 
 exemptions allowed a. bankrupt, for it gave him, first, certain specific articles 
 necessary for a householder, such as are usually declared exempt by the laws 
 of all states; second, such other property as is exempt by the laws of the U. S. 
 from levy and sale upon execution; and, thirdly, such other property not 
 included in the foregoing as was exempted from levy and sale upon execution 
 by the laws of the state in which the bankrupt had his domicile. The present 
 act allows only those exemptions to which the bankrupt would be entitled by 
 the laws of the state wherein he has had his domicile for the six months, or the 
 greater portion thereof, preceding the filing of the petition. The greater por- 
 tion of six months would necessarily be a period of at least three months, and 
 thus it will be seen that cases may arise where a bankrupt cannot claim as 
 exempt from the action of the bankruptcy laws, property which would be 
 exempt from levy and sale upon execution under the laws of the state. Such 
 will be the case apparently if he has lived in the state less than three months. 
 The statement often made that in bankruptcy the debtor is divested only of the 
 property which could be taken on execution, is not then strictly true. But it 
 cannot be contended, on the other hand, that one could claim the exemption 
 allowed by the state from which he has removed within six months, although he 
 may have lived there three of the six months prior to the filing of the petition; 
 for the bankruptcy law does not create any new exemptions, but simply 
 declares that it will not affect the allowance of those which are prescribed by 
 the state laws. A person who has removed from a state certainly cannot claim 
 that any exemptions are allowed to him by the laws of the state. 
 
BANKRUPTS. 71 
 
 § 6.] Constitutionality. 
 
 Constitutionality. — The provisions of the former bankruptcy act as to 
 exemptions were frequently assailed upon the ground of being unconstitutional, 
 because of a lack of uniformity. The constitution of the United States gives to 
 Congress the power to establish a uniform system of bankruptcy. As the 
 exemptions prescribed by the various state laws differ greatly in their character, 
 value and requirements, it was frequently contended that this occasioned a. 
 lack of uniformity in the bankruptcy law, and that therefore it was unconstitu- 
 tional. Though the question was often raised, and was in more than one 
 instance carried to the higher courts, we know of no adjudication holding that 
 a statute is unconstitutional because of a provision in it that the exemption 
 laws of the several states as then existing should be operative and have effect 
 under the bankruptcy law. On the contrary, where such is the character of the 
 enactment (and that is expressly the character of the section now under considera- 
 tion), the decisions of the courts all uphold the constitutionality of such provi- 
 sion. The leading case upon the subject is in re Beckerford, i Dill. 45; s. c. 4 
 B. R. 203, a decision by the United States Circuit Court, Judge Krekel sitting, 
 and with him Justice Miller of the Supreme Court. (See also in >-^ John W. Smith, 
 8 B. R. 401, citing in re Kean & White, 8 B. R. 367; in re Jordan, 8 B. R. i8o.) 
 There were certain decisions made under the former act which, unless they are 
 carefully studied in connection with the statutory provisions, would seem to 
 hold to the contrary. Among them are in re Deckert, i A. L. T. [N. S.] 336; 
 s. c. 10 B. R. i; s. c. 6 C. L. N. 310; in re Duerson, 13 B. R. 183; in re Dillard, 
 ^ B. R. 8, and others. But these cases in reality are authorities for the princi- 
 ple first stated; viz., that the declaration by Congress, that the bankruptcy act 
 shall not effect the allowance of exemptions prescribed by state laws, is not 
 unconstitutional. These decisions apparently contra^ in fact, simply held that 
 a certain act passed in 1873, amendatory of the bankruptcy law and declaring 
 that there should be allowed to a bankrupt the same exemptions as were pre- 
 scribed by state laws, was unconstitutional, in so far as it attempted to give to 
 the bankrupt the exemptions prescribed by these state laws which were them- 
 selves in many cases unconstitutional. The power of Congress to grant exemp- 
 tions to the bankrupt, or to discharge one from the obligation of his contract is 
 plenary, and has no limitation but the discretion of Congress and uniformity. 
 (In re Kean v. White, 8 B. R. 367; in re John W. Smith, 8 B. R. 401, citing 
 Evans v. Eaton, Peters, C. C. R. 323; Bloomer v. Statly, 5 McLean, 158; 
 Satterlee v. Matthewson, 2 Peters, 330; Hepburn v. Griswold, 8 Wall. 603; 
 
72 THE NATIONAL BANKRUPTCY LAW. 
 
 The Trustee's Rights in Exempt Property. [Ch. III. 
 
 Legal Tender Cases, 12 Wall. 457; in re Jordan, 8 B. R. 180; in re John W. A. 
 Smith, 14 B. R. 295; s. c. 2 Woods, 458; in re Vogler, 8 B. R. 132; in re 
 Everett, 9 B. R. go.) Congress has the power to adopt state exemption laws 
 or to grant new exemptions, or by a uniform rule to adopt state exemptions 
 with restrictions. It has power to exempt property from debts incurred subse- 
 quent to the law, or to pass a law exempting property from levy and sale on 
 execution issued upon a judgment recovered on a debt incurred prior to the 
 passage of the exemption law. 
 
 The Trustee's Rights in Exempt Property. — Section 70 («) expressly 
 
 excepts exempt property from that, the title to which passes to the trustee. 
 That ofBcer is charged by law with the duty of designating or setting apart the 
 exempt property for the bankrupt, [section 47<z(ii)] and the bankrupt is 
 required by section 7 (8) to make a claim in his schedule for the exemptions to 
 which he may be entitled. By section 2 (11), the court of bankruptcy is given 
 jurisdiction to determine all claims of a bankrupt to exemptions. The proper 
 practice then, in designating and securing exempt property, is clearly indi- 
 cated in the statute, and if followed there can be no question as to the rights 
 therein of the trustee and of the bankrupt. The trustee should have the prop- 
 erty appraised pursuant to section 70 [b) and at that time should proceed to set 
 apart exempt property, first setting apart any articles which are specifically 
 exempt, regardless of their value or the situation of the bankrupt; and after- 
 wards setting apart those whose value must be estimated. It will be hazardous 
 for him in making an estimate as to the value of those articles to use any other 
 figures than those given by the appraisers who take the inventory of the estate. 
 After a report has been made by him, if the bankrupt is dissatisfied he should 
 appeal to the court which will finally determine the question. The decision of 
 the court will of course be a binding adjudication on all parties unless reversed 
 on review by a higher court. While it is clear what should be the practice, and 
 what are the rights of the parties if the law is observed, many questions arise 
 as to the rights of the parties if the practice stated is not followed. If the bank- 
 rupt does not in his schedule make a claim for his exempted property, does he 
 thereby lose his title to it? If a trustee sets apart property which is not exempt 
 by law, is his action binding upon creditors; or, if on the other hand, he fails to 
 set apart property which by law is exempt, and the bankrupt neglects to bring 
 the matter before the court, does the trustee thereby acquire a title, and is the 
 
BANKRUPTS. 73 
 
 § 6.] The Trustee's Rights in Exempt Property. 
 
 bankrupt as a result deprived of his rights? If the exemption is of property of 
 a certain kind which the bankrupt is entitled to specifically, regardless of the 
 amount of it, or of its value, or of his own circumstances, then it has been held 
 that his failure to claim it will not deprive him of his right to it. But the gen- 
 eral principle applicable to such cases would seem to be that he is bound to 
 claim his rights, and if he does not do so he will be deemed to have waived 
 them. (Green v. Blunt, 59 Iowa, 79; Wicker v. Comstock, 52 Wis. 315; Pond 
 V. Kimball, loi Mass. 105; Spitley v. Frost, 15 Fed. Rep. 299; People v. Palmer, 
 46 111. 398; s. c. 95 Am. Dec. 418. Compare Vanderhorst v. Bacon, 38 Mich. 669; 
 s. t. 31 Am. Rep. 328; Clapp v. Thomas, 5 Allen (Mass.) 158.) But the bankrupt 
 may make his claim to exempt property at any time before a sale of it. Shepherd 
 V. Murrill, 90 N. Car. 208; Slaughter v. Detiney, 15 Ind. 49; McClusky v. 
 McNeeley, 8 111. 578. Compare Weaver's Appeal, i8 Pa. St. 307; Yost v. Heffner, 
 69 Pa. St. 68; Toenes v. Moog, 78 Ala. 558. A waiver iri favor of one particular 
 creditor does not give any rights to his general creditors. Thus, if a person has 
 given a mortgage upon exempt property, and in or by his mortgage has waived 
 his right to it as an exemption, no one but the mortgagee can take advantage 
 of it. (Rix o. Bank, 2 Dill. 367; in re Poleman, 5 Biss. 526; o. t. 9 B. R. 376.) 
 Although a law allowing exemptions is always to be construed liberally and in 
 favor of the debtor, yet, the burden of proving that property comes within the 
 list of exemptions rests upon the claimant. He must bring himself and his 
 property clearly within the statute. (Guise v. State, 41 Ark. 249; Briggs v. 
 McCuUough, 36 Cal. 542; Swan v. Stephens, 97 Mass. 7; Griffin v. Sutherland, 
 14 Barb. (N. Y.) 456. But an exemption is a matter of right, not in the 
 discretion of the trustee. {In re Jones, 6 West. Jur. 71.) These general princi- 
 ples as to an exemption being waived if not claimed, are, we believe, as true in 
 bankruptcy cases as in any other; although it seems that many of the courts by 
 their decisions, regard it as absolutely impossible for a bankrupt by failing to 
 claim his exemptions, to give his trustee any title. These decisions seem to 
 be based upon a very strict construction of the sections of the bankruptcy act 
 defining the title with which the trustee becomes vested. As his sole source of 
 title is found in provisions of the statute, and as they expressly except 
 exempt property from that, the title to which is vested in the trustee, these 
 courts have held in effect, that in no way whatever could the trustee procure any 
 title to the exempt property, not even by the failure of the bankrupt to 
 claim it, and, on the other hand, that the trustee could in no way lose his title 
 
74 THE NATIONAL BANKRUPTCY LAW. 
 
 Jurisdiction of the Bankruptcy Court Over Exempt Property. [Ch. IH. 
 
 to non-exempt property, except in some one of the ways prescribed in the act. 
 Thus it has been held by these courts of bankruptcy that the title to exempt 
 property is in the bankrupt and passes on his death to his personal representa- 
 tives, even though in his life-time he has failed to claim his right of exemption; 
 that the trustee at no time has any title to the exempt property (In re Hester, 5 B. 
 R. 285; in re Lambert, 2 B. R. 426; Bullymore v. Cooper. 46 N. Y. 236; Rix v. 
 Bank, 2 Dill. 367; in re Everett, 9 B. R. 90; Fehley v. Barr, 66 Penn. 196; in re 
 Hunt, 5 B. R. 493; s. c. 2 Pac. L. R. 146; s. c. 2 L. T. B. 197; Henly v. Lanier, 15 
 B. R. 280); that the trustee therefore cannot so handle or interfere with 
 exempt property as to divest the liens which creditors may have upon it, even 
 if the bankrupt should fail to set up his claim to the exemption (Haworth v. 
 Travis, 13 B. R. 145; s. c. 67 111. 301; Bush v. Lester, 55 Geo. 579; s. t. 15 
 B. R. 36; Fehley -u. Barr, 66 Penn. 196); and that while the assignee can 
 acquire no title to exempt property, on the other hand, if he erroneously sets 
 apart to the bankrupt as exempt, property which is not exempt by law, he gives 
 to the latter no good title, and that no exceptions to this futile attempt need be 
 filed with the court by creditors, but they may raise the objection at any time 
 upon an accounting by the trustee, and that he will at that time be charged 
 with the value of the property; that the title of property so attempted to be 
 exempted passes by operation of law to the trustee and remains in him until 
 divested in some of the ways provided by statute, and the attempt to exempt 
 is a mere nullity, and passes no title. (In re Perdu, 2 B. R. 183 ; in re Farrish, 
 2 B. R. 168; in re Gainey, 2 B. R. 525; in re Jackson & Pearce, 2 B. R. 508.) 
 Frequently exemption laws provide that certain property shall be exempted for 
 a certain period, as for instance, while one continues a minor or during widow- 
 hood, or, as long as one is a householder with a family to support. The title of 
 the bankrupt to this exempt property is thus a contingent or conditional title, 
 and not an absolute one. There is a sort of reversionary interest in the prop- 
 erty, and it has been held that this interest passes to the trustee as an asset and 
 that he should sell it as he would other assets. (In re Watson, 2 B. R. 570. 
 Compare Rix v. Bank, 2 Dill. 367.) 
 
 Jurisdiction of the Bankruptcy Court Over Exempt Property. — 
 
 A court of bankruptcy has no jurisdiction over exempt property other than 
 to hear and determine the claims of the bankrupt, if disputed. It may 
 restrain its own officials from interfering with it, but that is a jurisdiction over 
 
BANKRUPTS. 75 
 
 § 6.] Liens on Exempt Property. 
 
 them, not over the property. It will not give any aid to the bankrupt in 
 enforcing his rights as to the exempt property, beyond preventing the trustee 
 from interfering with it. To the state courts is left the decision of all questions 
 that may arise between parlies as to such property. The bankruptcy court can- 
 not properly entertain a proceeding to enforce a lien upon such property. (/« 
 « Preston, 6 B. R. 545; in re Bass, 15 B. R. 453; in re Everett, 9 B. R. 90; in re 
 Hunt, 5 B. R. 493; Gumming v. Clegg, 52 Geo. 605; s. c. 14 B. R. 49; Hatcher 
 V. Jones, 53 Geo. 208; s. c. 14 B. R. 387.) But it has been held that where a 
 creditor holds two liens, one on exempt property and the other on non-exempt 
 property, a court of bankruptcy might enforce the general equitable rule that 
 where one creditor has a security upon two funds, he can be compelled first 
 to exhaust his remedy against the fund upon which other creditors have no lien. 
 It is doubtful if a court would exercise a power so oppressive to a debtor; and 
 at any rate this would hardly be an exercise of jurisdiction over the property. 
 It is rather a jurisdiction over the person of the lienor. (/« re Sauthoff, 14 B. 
 R- 364.) 
 
 Liens on Exempt Property. — From the fact that a court of bankruptcy has 
 no jurisdiction whatever over the exempt property (other than to hear and 
 •determine the claims of the bankrupt, if disputed) and that such property is 
 not within the contemplation of the act or affected by any of the proceedings 
 pursuant thereto, it follows that all liens upon exempt property remain unim- 
 paired and unaffected; that transfers of such property though made with an 
 Intent to give one creditor an advantage over others are not " preferences; " in 
 short, that all interests in, and title to, the property remain unchanged and 
 undisturbed. The rights of a lienor upon exempt articles are a special property 
 right which Congress does not intend to confiscate. {In re Garrett, 11 B. R. 
 493; Jackson v. Allen, 30 Ark. no; in re Preston, 6 B. R. 545; in re Lambert, 
 
 2 B. R. 426; in re Dillard, 9 B. R. 8; in ;-^ Whitehead, 2 B. R. 599; in re Hutto, 
 
 3 B. R. 787; in re Bass, 15 B. R. 453; in re Deckert, 10 B. R. i; s. c. 9 Alb. L. J. 
 390; s. c. I A. L. T. [N. S.] 336; in re Broome, 3 B. R. 343; s. c. 3 Ben. 488.) 
 But it must be admitted there are decisions to the contrary, holding that the 
 securing of an exemption is in the nature of a purchase by the bankrupt of the 
 exempt property, the consideration being the surrender of all the rest of his 
 estate, and that the supreme law of the land gives him this exempt property by 
 a title, free and clear of the claims of all creditors, even though the claims be 
 
Jd THE NATIONAL BANKRUPTCY LAW. 
 
 Right of Exemption in Property Fraudulently Conveyed. [Ch. III. 
 
 perfected liens. This can hardly be true under the present statute; it was 
 questionable under the act of 1867. (See in re Hambright, 2 B. R. 498; in re 
 Griffin, 2 B. R. 254; in re Owens, 12 B. R. 518; s. c. 6 Biss. 432; in re Stevens, 
 2 Biss. 373; s. c. 5 B. R. 298; in re Smith, 8 B. R. 401, citing in re Kean, 8 B. R. 
 367; in re Jordan, 8 B. R. 180.) 
 
 Exemption from Partnership Assets. — The right of a partner to be 
 allowed exemptions out of the partnership assets, is a question as to which 
 there has been very great conflict of authority, not only in bankruptcy proceed- 
 ings, but in proceedings at law. Certain of the courts applying the well-recog- 
 nized principle that laws allowing exemptions are to be liberally construed, 
 have held that the exemptions might be allowed from the partnership 
 assets. (In re Rupp, 4 B. R. 95; in re Young, 3 B. R. 440; Radcliff v. Woods, 
 25 Barb. 52.) Others have modified this rule so as to allow such exemptions 
 from partnership assets only when there are no individual assets. [In re 
 Richardson & Co., 11 B. R. 114; in re McKircher, 8 B. R. 409.) Still others 
 have further modified the rule, but admit that partners may claim exemptions 
 from the partnership assets if there is a surplus after paying the firm 
 creditors. (In re Stewart, 13 B. R. 295; in re Tonne, 13 B. R. 170; in re 
 Price, 6 B. R. 400.) Still other courts have held that individual partners 
 have no right whatever to claim exemptions from partnership assets. (In re 
 Handlin, 12 B. R. 49; s. c. 3 Dill. 290.) The true rule would seem to be that 
 neither partner owns any specific article comprising the assets of the firm until 
 the firm property is divided between them. Until such separate ownership of 
 specific articles exists, no exemption can be claimed therefrom. (Pond v. Kim- 
 bal, loi Mass. 105; Burns v. Harris, 67 N. C. 140; Wright v. Pratt, 31 Wis. 104; 
 in re Boothroyd, 14 B. R. 223; Gaylord v. Imhoff, 26 Ohio St. 317; in re Saul- 
 kawf, 16 B. R. 181; Love v. Blair, 72 Ind. 281; Guptil v. McFee, 9 Kan. 30; 
 Rhodes v. Williams, 12 Nev. 20; Spiro v. Paxton, 3 Lea (Tenn.) 75; s. c. 31 
 Am. Rep. 630; State v. Spencer, 64 Mo. 355; Bonsall v. Comly, 44 Pa. St. 44a; 
 contra. Blanchard v. Paschal, 68 Geo. 32; s. c. 45 Am. Rep. 474; State ». 
 Kenan, 94 N. C. 296; Stewart v. Brown, 37 N. Y. 350.) 
 
 Right of Exemption in Property Fraudulently ConTeyed. — On this 
 
 subject there is also conflict of authority. Two principles of law here clash; 
 first, that the trustee has no title to exempt property; second, that a conveyance 
 
BANKRUPTS. ^^ 
 
 § 6.] Exemption of Property Subject to a Lien Dissolved by Adjudication. 
 
 fraudulent as to creditors is nevertheless valid between the parties thereto, and 
 that by such a conveyance the fraudulent grantor loses all his title and interest 
 in the property, although the trustee representing creditors may bring an action 
 to invalidate the transfer. If property is not specially exempt, the trustee 
 may, perhaps, bring suit. As the trustee in bringing such suit represents 
 not the bankrupt, who has lost all his title, but represents the creditors, who 
 by law are vested through the trustee with such property, we should say that a 
 bankrupt cannot claim any of such property as exempt in case the trustee 
 should invalidate the fraudulent transfer. Authorities for this proposition are: 
 Keating v. Keefer, 5 B. R. 133; in re Dillard, 9 B. R. 8; in re Graham, 2 Biss. 
 449; in re Everett, 9 B. R. go. The contrary has been held in Penny v. Taylor, 
 10 B. R. 200; Smith v. Kehr. 7 B. R. 97; Cox v. Wilder, 2 Dill. 132; s. v.. 7 B. R. 
 241; in re Detert, 11 B. R. 293; Bartholomew v. West, 2 Dill, ago; s. c. 8 B. R. 
 12; McFarland v. Goodman, ii B. R. 134; s. c. 6 Biss. iii. 
 
 Purchasing Exempt Property on the Eve of Bankruptcy. — Here 
 again we find a conflict of authority. On the one hand, it has been held that if 
 ■a. bankrupt purchases exempt property on the eve of bankruptcy, so as to 
 secure the exemption, he commits a fraud upon his creditors which will give to 
 the trustee a right to take the property from him, free from any claim of exemp- 
 tion; that is, the transfer of the assets, given in exchange for the exempt prop, 
 erty, will be voidable as being made with intent to defraud creditors. (In re 
 Boothroyd, 14 B. R. 223, citing Brackett v. Watkins, 21 Wend. 68; Grimes v. 
 Byrne, 2 Minn. 89; in re Wright, 8 B. R. 43°; to the contrary, O'Donnell 
 V. Segar, 25 Mich. 367; in re Henkel, 2 B. R. 546; s. t. 2 Saw. 305; Randall v. 
 Buffington, 10 Cal. 491.) 
 
 Exemption of Property Subject to a Lien Dissolved by Adjudication 
 
 of Bankruptcy. — It has been held that where 'property of a bankrupt has been 
 made subject to a lien obtained pursuant to an action, which lien is dissolved by 
 the adjudication of bankruptcy, pursuant to section 67,— if such property has been 
 sold before the dissolution of the lien, the bankrupt is entitled to the same 
 exemption out of the proceeds as he would have had in the property. (In re 
 Ellis, I B. R. 154.) But it would seem that the adjudication of bankruptcy 
 ought in no way to a£fect the lien if it was on exempt property only. 
 
78 THE NATIONAL BANKRUPTCY LAW. 
 
 Exemption — State Law. [Ch. IH. 
 
 Rights Fixed by Petition. — The rights of a bankrupt as to exemptions are 
 fixed by the laws existing at the time of the filing of the petition. Any change 
 in the laws, or even a change of residence, will in no way affect his rights. 
 (Compare in re Kerr, 9 B. R. 566; in re Dillard, 9 B. R. 8.) The exemptions 
 must thus be allowed by the laws of the state of his residence (if he 
 has been a resident the greater part of six months), not by the laws of the 
 state where the property is located. (/» re Stevens, 5 B. R. 298 ; s. c. 2 Biss. 
 373.) But as the title to a bankrupt's property does not now vest in the trustee 
 till adjudication, it would seem as if, in case the bankrupt had in good faith 
 acquired exempt property between the filing of the petition and the adjudica- 
 tion, he might claim it as exempt. The filing of the petition determines merely 
 what law shall apply; it does not affect the title. (Compare section 70 a.) 
 
 Exempting Encumbered Articles. — As it is universally admitted that 
 exemption laws should be liberally construed so as to make generous provision 
 for the unfortunate debtor, if a bankrupt owns property which is unencumbered 
 and which may be exempt by the laws of his state, then such property should 
 be set apart to him. Encumbered property may be set apart, but only when 
 there is none other, and the exemption of the latter class of property does not 
 destroy liens; the bankrupt merely receives the articles so set apart, subject to 
 the liens. {In re Rupp, 4 B. R. 95; in re Brown, 3 B. R. 250; in re Hutto, 3 
 B. R. 787; in re Perdue, 2 B. R. 183; in re Lambert, 2 B. R. 426.) 
 
 Right of Exemption is Personal to Bankrupts. — The bankrupt or his 
 family alone can claim the right of exemption. If they do not claim it, a mort- 
 gagee of exempt property cannot assert it, unless the exemption is waived in or 
 by the mortgage. (Edmondson v. Hyde, 7 B. R. i; s. c. 2 Saw. 205.) The wife 
 and children of a bankrupt may claim the exemption, the law being intended 
 as much to protect them as the husband; thus the husband cannot deprive the 
 family of the right to an exempt homestead merely by absconding, so long as 
 he leaves his family in it. (In re Pratt, 7 Pac. L. R. 202.) The bankrupt may 
 claim his exemption through his attorney or agent. (Wilson v. McElroy, 32 
 Pa. St. 82; Regan u. Zeeb, 28 Ohio St. 483.) 
 
 The State Laws. — As has been said the bankruptcy act does not enact that 
 any new exemptions shall be allowed a bankrupt. It merely provides that the 
 allowance of those prescribed by state laws shall not be affected, hence the 
 
BANKRUPTS. 
 
 79 
 
 8 7-] Duties of Bankrupts. 
 
 statutes of the state of residence of a banlcrupt must be studied in each case and 
 followed; and not only is the statutory law of the state to be recognized and 
 followed, by the courts of bankruptcy and the trustee in bankruptcy in setting 
 apart such exemptions, but the decisions of the courts of those states as to the 
 meaning and construction of their respective laws are also to be followed. 
 (Goodall V. Tuttle, ^ B. R. ig3.) It is an established and well-recognized prin- 
 ciple that when a legislature adopts a statute of another state, it is presumed to 
 have adopted the judicial construction given thereto. (Sedgwick on Slat, and 
 Con. Law, 428-431; Goodall v. Tuttle, supra) For an abstract of the exemp 
 tion laws of each state and territory of the Union, revised and corrected to July 
 1st, i8g8, see Appendix No. 2. 
 
 Sec. 7. Dnties of Bankrupts. — a The bankrupt shall (i) attend 
 the first meeting of his creditors, if directed by the court or a 
 judge thereof to do so, and the hearing upon his application for 
 a discharge, if filed ; (2) comply with all lawful orders of the court ; 
 (3) examine the correctness of all proofs of claims filed against his 
 estate ; (4) execute and deliver such papers as shall be ordered by 
 the court ; (5) execute to his trustee transfers of all his property 
 in foreign countries; (6) immediately inform his trustee of any 
 attempt, by his creditors or other persons, to evade the provisions 
 of this act, coming to his knowledge; (7) in case of any person 
 having to his knowledge proved a false claim against his estate, 
 disclose that fact immediately to his trustee ; (8) prepare, make 
 oath to, and file in court within ten days, unless further time is 
 granted, after the adjudication, if an involuntary bankrupt, and 
 with the petition if a voluntary bankrupt, a schedule of his prop- 
 erty, showing the amount and kind of property, the location 
 thereof, its money value in detail, and a list of his creditors, show- 
 ing their residences, if known, if unknown, that fact to be stated, 
 the amounts due each of them, the consideration thereof, the 
 security held by them, if any, and a claim for such exemptions 
 as he may be entitled to, all in triplicate, one copy of each for 
 the clerk, one for the referee, and one for the trustee ; and (9) when 
 present at the first meeting of his creditors, and at such other 
 
8o THE NATIONAL BANKRUPTCY LAW. 
 
 Duty to Obey Orders of the Court. [Ch. III. 
 
 times as the court shall order, submit to an examination concern- 
 ing the conducting of his business, the cause of his bankruptcy, 
 his dealings with his creditors and other persons, the amount, 
 kind, and whereabouts of his property, and, in addition, all mat- 
 ters which may affect the administration and settlement of his 
 estate ; but no testimony given by him shall be offered in evidence 
 against him in any criminal proceeding. 
 
 Provided, however, That he shall not be required to attend a 
 meeting of his creditors, or at or for an examination at a place 
 more than one hundred and fifty miles distant from his home or 
 principal place of business, or to examine claims except when 
 presented to him, unless ordered by the court, or a judge thereof, 
 for cause shown, and the bankrupt shall be paid his actual expenses 
 from the estate when examined or required to attend at any place 
 other than the city, town, or village of his residence. 
 
 Analogous Provisions of Former Acts. — As to duty to obey orders and 
 execute necessary papers: R. S., section 5104; act of 1867, section 26; act of 
 1800, sections 21, 33. As to executing transfers: R. S., section 5051 ; act of 
 1867, section 14. As to voluntary bankrupt's duty to file schedule: R. S., sec- 
 tion 5014; act of 1867, section ii. As to involuntary bankrupt's duty to file 
 schedule: R. S., section 5030; act of 1867, section 42; amended, act of July 27, 
 i868, ch. 258, section 2. As to contents of schedule: R. S., section 5015; act of 
 1867, section 11; act of 1841, section i; also, R. S., section 5016; act of 1867, 
 section. 11. As to verification: R. S., section 5017; act of 1867, section 11. As 
 to amendment of schedules: R. S., section 5020; act of 1867, section 26. As to 
 examination of bankrupt: R. S., section 5086; act of 1867, section 26; act of 1841, 
 section 4; act of 1800, sections i8, 23, 52. As to provisions analogous to the 
 matters mentioned in the other subdivisions, consult "Analogous Provisions," 
 under the sections cross-referenced to those subdivisions. 
 
 Duty to Obey Orders of the Court. — The moment a person voluntarily 
 files a petition in bankruptcy he submits himself personally to the jurisdiction 
 of the court and becomes bound to obey its orders and directions, even before 
 adjudication. {In re Harris, 3 N. Y. Leg. Obs. 152.) By section i (4) the term 
 " bankrupt " includes a person against whom an involuntary petition has been 
 
BANKRUPTS. 8 1 
 
 *5 7-] Executing Necessary Papers — The Schedules. 
 
 filed, and it would seem that such a bankrupt also, even before adjudication, 
 is subject to the orders of the court. (In re Bromley, 3 B. R. 686.) Diso- 
 bedience to the order of the court is punishable as a contempt. For the prac- 
 tice in punishing contempts before referees, see section 41. 
 
 Executing Necessary Papers. — Although the trustee becomes vested by 
 law, without any formal assignment, with title to the bankrupt's property, 
 including his rights of action, frequently it is necessary or advisable that there 
 should be a record for filing. Any paper which the court thus deems necessary 
 or advisable, it may order the bankrupt to execute; for instance, he maybe 
 required to execute such papers as will enable the trustee to be admitted to 
 prosecute in his own name a suit pending in a state court, under the power con- 
 ferred on him by section 11; and the court may enjoin the bankrupt from prose- 
 cuting such action or taking any steps therein. (Samson v. Burton, 5 Ben. 325 ; 
 fl. c. 4 B. R. i; in re Clark, 4 Ben. 88; s. c. 3 B. R. 491.) 
 
 Executing Transfers — Compare " Foreign Bankruptcies," section 2, as 
 to title of the trustee to property in foreign countries. 
 
 THE SCHEDULES. 
 Schedule to be Filed. — The filing of a schedule, if neglected, may be 
 ordered by the court; and disobedience to the order will be punished as a con- 
 tempt. The provisions of section 39 (6), that the referee shall prepare and file 
 the schedules when the bankrupt neglects to do so, imposes upon that officer 
 that duty, only in those cases where the bankrupt cannot be compelled per- 
 sonally to do it. The Supreme Court of the United States, pursuant to section 
 30, will undoubtedly prepare forms for schedules. 
 
 Contents of Schedule — Inserting Names of Creditors. — The purpose 
 of the requirement is to give to creditors and the trustee full, accurate and 
 early information as to the condition of the estate. With regard to debts, 
 although the act only requires that the residence of the creditor shall be stated, 
 it will be advisable to state the post-office address as well. If the residence 
 cannot be ascertained, that fact must be stated, and the proper practice requires 
 that the bankrupt shall state what efforts he has made to ascertain the fact. 
 (In re Pulver, i Ben. 381; s. c. i B R. 46.) The insertion of the name of a 
 creditor is not an admission of his claim, which in any way binds the trustee or 
 the other creditors. The creditor must still prove his claim and have it allowed, 
 in order to secure a dividend. Although a partnership is not a legal entity, in 
 
 NAT. BANKRUPTCY LAW — 6 
 
82 THE NATIONAL BANKRUPTCY LAW. 
 
 The Schedules. [Ch. IIL 
 
 inserting deb(s due to a firm, they should be stated as due to the firm and not 
 to the individual partners (Anon., i B. R., 123); but it would be well to give 
 the names of the individual members of the firm. Whether debts barred by the 
 statute of limitations are provable in bankruptcy or not, see notes to sections 63 
 and 17. It has been held, however, that such debts should be inserted in the 
 schedule. Even creditors whose claims are outlawed are entitled to notice of 
 the bankruptcy proceedings, and for this reason their claims should appear in 
 the schedule. Placing such claims upon the schedule does not revive the obli- 
 gations so as to take them out of the statute of limitations; but in order that in 
 no way may it appear to be in the nature of a promise to pay, or an admission 
 of an existing indebtedness, it will be proper for the bankrupt in his schedules 
 to mention that these claims are barred by limitation. (/» re Kingsley, i B. R. 
 329; in re Perry, i B. R. 220; in re Ray, i B. R. 203; s. c. 2 Ben. 253; in re 
 Wright, 6 Biss. 317; in re Harden, i B. R. 395.) Under the statute of 1841 it 
 was held that a judgment previously confessed though without consideration 
 was proper to be inserted in the schedule, though not binding on the assignee. 
 (/» re Robertson, i N. Y. Leg. Obs. 20.) 
 
 Omission of Creditors From the Schedule.— As to its effect upon their 
 claims, see section 17 (3) and notes. Whether it is an offense when willfully 
 done, see section 29 (2); if an offense, then it bars a discharge, section 14* (i). 
 
 The Inventory of the Property. — The schedule of the bankrupt's property 
 should be an itemized list of all the articles, title to which vests in the trustee 
 under section 70; and it has been held that it is the bankrupt's duty to insert 
 not only that to which he himself might claim title, but also all his property 
 which might come into the hands of his trustee as the representative of credit- 
 ors, although the bankrupt theretofore has conveyed that property in trust for 
 the benefit of creditors, if the trust is one which would be voidable under the 
 bankruptcy act (m re Pierce & Holbrook, 3 B. R. 258; Ashley v. Robinson, 29 
 Ala. 112); also property fraudulently conveyed. (In re O'Bannon, 2 B. R. 
 15; in re Hussman, 2 B. R. 437.) But under the act of 1841 it was held 
 that the bankrupt is bound to set forth in his schedules only such property 
 as he has a right and interest in at the time of petitioning, and if prior to that 
 time he has lost his property rights in it, though by negligence, gaming, dona- 
 tion, extravagance or even fraud, it need not be set forth in the schedule. (/« 
 re Robertson, i N. Y. Leg. Obs. 20.) Vested interests in remainder should be 
 Included (.'» re Bennett, 8 A. L. Reg. 34; s. c. 2 B. R. 181); and all contingent 
 
BANKRUPTS. 83 
 
 § 7-] The Schedules. 
 
 interests. {In re Connell, 3 B. R. 443.) All rights of action which are assign- 
 able, even though the damages are unliquidated, should be inserted in the 
 schedules (»« re Orne, i Ben. 361; s. c. i B. R. 57), but not rights of action 
 which die with the person. (Crockett v. Jewett, 2 Ben. 514; s. c. 2 B. R. ,208.) 
 It seems that the bankrupt should include all property as to which he has or 
 claims title, even although another may adversely claim it. (Compare in re 
 Beal, 2 B. R. 587; s. c. i Lowell, 323.) Property which one owns should be 
 included in the schedules, even though it has been levied upon, as there is still 
 a property right in it. The interest which one has in a firm should be 
 stated, but not any of the specific articles, unless they are held in such a way 
 as to show that the property right in them has been transferred from the firm to 
 the partner. (/» ;-,• Norcross, i N. Y. Leg. Obs. 100; in re Beal, 2 B. R. 587; 
 s. c. 1 Lowell, 323.) 
 
 VePifleation of Schedules. —The schedule may be verified before any 
 officer mentioned in section 20. 
 
 Amendment of Schedules. — Amended schedules should be filed whenever 
 there have been material errors or omissions. It may be done voluntarily 
 or it may be required. Section 39 (2) makes it the duty of the referee to examine 
 all schedules of property and lists of creditors filed by the bankrupts, and cause 
 such as are incomplete or defective to be amended. This power should be exer- 
 cised, even although creditors or the trustee do not seek the aid of the referee. 
 (/« re Orne, i Ben. 420; s. c. i B. R. 79.) If there are errors or omissions it 
 will be to the interest of the bankrupt to request permission to amend his sched- 
 ules. Omissions are no longer a ground for refusing a discharge to the bank- 
 rupt unless the circumstances are such that the act becomes an offense under 
 section 29. The schedules must be verified, and by the second subdivision of 
 that section one may be punished by imprisonment if he has made a false oath 
 or account in or in relation to any proceeding in bankruptcy. It would seem 
 that a verification of a schedule known to be incorrect or false would constitute 
 an offense under this clause and would be a ground for refusing a discharge. 
 The bankrupt should promptly correct such errors and supply such omissions. 
 If he does not do so as soon as they come to his knowledge it will be strong evi- 
 dence of an intent to falsify. Amendments may be made before the bankrupt's 
 discharge, even after objections to his discharge have been filed by creditors. 
 (In re Heller, 5 B. R. 46; in re Connell, 3 B. R. 443; in re Preston, 3 B. R. 
 103.) It seems that the bankrupt can amend his schedules without an order from 
 
84 THE NATIONAL BANKRUPTCY LAW. 
 
 The Examination. [Ch. IIL 
 
 the referee or the judge permitting it, and that the application is ex parte, and 
 that no notice is necessary to creditors, and that no creditor has a right to oppose 
 the application to amend. (In re Watts, 2 B. R. 447; s. c. 3 Ben. 166.) 
 
 THE EXAMINATION. 
 Examination of tlie Bankrupt. — The statute contains no express provision 
 as to who may apply for an order requiring the bankrupt to submit to an exam- 
 ination; doubtless any party in interest may do so. Under the former act only 
 creditors whose claims had been proved and allowed could make the application. 
 The court may make such an order of its own motion and the referee is included 
 in the word " court." {In re Belden & Hooker, 4 Ben. 225; in re Patterson, I 
 Ben. 448; s. c. 1 B. R. 100; in re Macintire, i B. R. ii; in re Pioneer Paper 
 Co., 7 B. R. 250; in re Lanier, 2 B. R. 154.) By section I2 no composition with 
 creditors can be effected unless the bankrupt has been examined. 
 
 Obtaining tlie Examination. — The examination is similar in its nature to 
 an ordinary examination in supplementary proceedings, as conducted under the 
 laws of the State of New York. {In re Pioneer Paper Co., 7 B. R. 250; in re 
 Stuyvesant Bank, 7 B. R. 445.) The intent of the law seems to be that the 
 bankrupt shall be subject, at the request of his creditors, to at least one 
 thorough, complete and exhaustive examination. The trustee may properly ask 
 the court to direct such an examination to be held, and he need not set forth any 
 grounds in his application other than his desire to ascertain fully the condition 
 of the estate. {In re Lanier, 2 B. R. 154.) But it seems that if any other party 
 asks for the examination he must show good cause for his application. (In re J. 
 L. Adams, 2 Ben. 503; s. c. 2 B. R. 95; in re Lanier, supra.) The court should 
 guard against the examination being used as a means of oppressing or annoying 
 the bankrupt. The right of a creditor to examine the bankrupt is not an abso- 
 lute one. {In «Vetterlein, 5 Ben. 7; s. u. 4 B. R. 599; in re Solis, 4 Ben. 143; 
 a. t. 4 B. R. 68; and cases cited.) In advance of any rules as to practice it is 
 somewhat hazardous to suggest method of procedure. Under the former act it 
 was held that it was not necessary to apply by formal petition for an order 
 directing the bankrupt to submit to an examination. An oral motion, even with, 
 out an affidavit setting forth the reasons or necessity of the examination, was 
 sufficient. {In re Solis, 4 B. R. 68; s. .. 4 Ben. 143.) But a written petition duly 
 verified is better practice, and may be required. {In re}.L. Adams, 503; s. c. 2 
 B. R. 95.) As to the first examination, at least, it has been held that the partic- 
 ular matters upon which one desires to examine, need not be mentioned in the 
 
BANKRUPTS. 85 
 
 8 7-] The Examination. 
 
 petition or motion. (In re Lanier, 2 B. R. 154.) The bankrupt is entitled to a 
 reasonable time to prepare for examination if he is to be examined upon com- 
 plicated matters, but not to time to consult counsel if the questions to be asked 
 him do not require anything more than a knowledge of affairs. Reasonable 
 time will be allowed him to shape his affairs so as to attend the examination. 
 If he is present in court, the court may, upon request of a creditor or on its own 
 motion, require him forthwith to answer any pertinent questions. {In re Brom- 
 ley & Co., 3 B R. 686.) Even before adjudication it is within the power of the 
 court to require one against whom a petition has been filed to appear for exam- 
 ination. A proper case for such an examination might arise where the bankrupt 
 has refused to deliver over property (which it is claimed he possesses) to a 
 marshal holding a warrant issued pursuant to section 69. But this power should 
 be sparingly exercised. It ought to be clearly shown that the bankrupt really 
 possesses such property. Compare in re Mendenhall, 9 B. R. 285; in re Salkey 
 & Gerson, 9 B. R. 107; s. c. 5 Biss. 486. A voluntary bankrupt may also be 
 examined before adjudication. By his petition he submits himself to the abso- 
 lute control of the court. The discharge of the bankrupt, it was held, termi- 
 nates the proceeding in so far as he himself is concerned. After that the court 
 has no jurisdiction over him to order him to submit to examination. (In re 
 Jones, 6 B. R. 386; in re Witkowski, 10 B. R. 209; in re Dole, 9 B. R. 193; s. 
 c. II Blatch. 499.) But these cases, we believe, are no longer authorities. 
 They are, in part at least, based upon provisions which do not appear in the 
 present statute. 
 
 Subject-matter of the Examination. — The matters as to which the bank- 
 rupt may be examined are set forth in detail in this section. Very little need 
 be added. While he cannot be asked as to property acquired after the adjudi- 
 cation, that being his own free from the claims of creditors; nor as to business 
 done after that time (compare in re Levy, i B. R. 136; s. t. i Ben. 496; in re 
 Rosenfield, i B. R. 319); and while he cannot be examined as to property which 
 he does not own (j.n re Van Tuyle, I B. R. 636); yet questions upon these mat- 
 ters are proper when they will tend to shed light upon the bankrupt's own prop- 
 erty rights or his business dealings, or if it is probable that he has any interest 
 in such property which by law vests in the trustee, or when there is a connec- 
 tion between his ownership of the property mentioned and of the property pass- 
 ing to the trustee. (In re Clark, 4 B. R. 237; in re McBrien, 3 B. R. 345.) As 
 the referee in bankruptcy under the present act is not prevented from hearing 
 and determining contested matters (section 39 [5]), it would seem that when the 
 
86 THE NATIONAL BANKRUPTCY LAW. 
 
 The Examination. [Ch. IH. 
 
 examination is before him he might pass upon the materiality, relevancy and 
 propriety of any question asked. Refusal to answer any proper question, as 
 well as leaving the examination before its conclusion, will be a contempt of the 
 referee. (Section 41; in n? Vogel, 5 B. R. 393.) The bankrupt may undoubt- 
 edly be attended by counsel. He may be cross-examined by any creditor. (/« 
 re Levy, i B. R. 136; in re Leachman, i B. R. 391.) His counsel, after the 
 examination on the part of the creditors has been concluded, may undoubtedly 
 ask him any questions tending to explain his answers or to give further informa- 
 tion explanatory of his acts. Under the former act the register could not pass 
 upon the materiality or propriety of questions asked, and if there was an issue 
 raised, he was obliged to adjourn the matter into court for the decision of the 
 judge. The examined party under that practice frequently felt a desire to con- 
 sult with his counsel, and the existence and the extent of the right of consulta- 
 tion was a subject of dispute. It was generally held that whether or not he 
 should be permitted to consult his counsel was entirely within the discretion of 
 the register. Under the present act, if the referee can pass upon the propriety 
 of questions, it would seem as if there were very few cases when it would be 
 proper to allow any consultation. If the question is improper the bankrupt's 
 attorney may state his objections. (Compare, however, in re Judson, 2 Ben. 
 zio; s. c. I B. R. 364; in r^ Patterson, i Ben. 508; ». c. i B. R. 147.) While in 
 attendance upon his examination the bankrupt is performing one of the duties 
 which entitles him to protection under section 9, but he is not a witness in the 
 technical sense of the word. He may be entitled to his expenses as set forth in 
 the proviso to this section, but he cannot exact witness fees under the proviso to 
 section 41. He does not fall within the class of persons mentioned in that 
 proviso. (Compare in re Okell, 2 Ben. 144; s. c. I B. R. 303; in re McNair, 2 
 B. R. 219.) Section 38 (5), authorizing the referee, upon the application of the 
 trustee to order the employment of a stenographer, shows that the examination 
 should be reduced to writing. 
 
 Refusal to Answer. — Unsatisfactory Answers. —A refusal to answer 
 
 lawful questions is a contempt, and is punishable accordingly. So, also, is a false 
 answer. The court has a right to demand a complete and satisfactory answer if 
 it is within the power of the examined party to give it. If a fact is necessarily 
 within the knowledge of the bankrupt, his statement that he cannot recollect it 
 may in some cases be a contempt. (Compare Ex p. Legge, 22 L. J. Q. B. 345- 
 s. c. 17 Jur. 415; in re Bradbury, 25 Eng. Law & Eq. Rep. 252.) The cases 
 last cited were decided in the English courts and lay down the rule that when a 
 
BANKRUPTS. 87 
 
 § 7.] The Examination. 
 
 bankrupt says, in answer to a question, that " he does not remember," or " does 
 not recollect," he must give some reason for not remembering, else, if all the cir- 
 cumstances tend to contradict his statement as to his lack of memory, he may 
 be punished for contempt, as if he had given a false answer; but no commitment 
 can be made in such cases unless the examination has been full, fair and 
 searching. (/» re Bradbury, 18 Jur. i8g.) In England it has also been held 
 that a bankrupt may be committed by the court for answers upon his examina- 
 tion, which, on the whole, are unsatisfactory, and which do not really and truly 
 impart information the bankrupt must possess; as where his answers are so 
 clearly of an improbable character that they cannot be believed. (/» re Martin, 
 II Jurist, 461; Ex p. Lord, ii Jurist, 186; 10 Mees & W. 462; 16 L. J. Exc. 
 118.) There are few American cases upon the extent of the power of the court 
 to punish one for contempt because his answers are unsatisfactory. The Eng- 
 lish cases are reviewed in re Salkey & Gerson, 11 B. R. 423. In that case it 
 was shown that there was in the possession of the bankrupts at a certain time 
 property worth twenty thousand dollars which was not contained in their 
 schedule, and of which they gave no account. It appeared that the parties had 
 concealed the twenty thousand dollars' worth of property so as to defraud their 
 creditors and had refused to account for the same. Upon examination the par- 
 ties said that " they had no account to render," that they " had told all that they 
 knew upon the subject," and refused to answer any further because they " knew 
 no more about the matter." The district court punished them for contempt, 
 and the circuit court, before whom the matter was brought on a writ of habeas 
 corpus, upheld the district court. The following English cases are additional 
 authorities upholding the right of the court to punish for contempt when the 
 answer is manifestly false, or is such as is suflBcient to satisfy the mind of any 
 reasonable person that it is not as full and complete as the bankrupt can give. 
 (Ex p. Nowlan, 6 Durn. and East, 58; in re Taylor, 8 Ves. 328; Exp. Lord, 16 
 Mees. & W. 462; in re Bradbury, 78 Eng. Com. Law, 15; s. c. 14 Com. B. 15; 
 Ex p. Perrott, 2 Burrough, 1122.) See also in re Mooney, 15 B. R. 456, show- 
 ing the limitations of the English cases cited, and holding that on an applica- 
 tion to review the decision of the district court upon the question whether the 
 bankrupt has made full disclosure in obedience to an order requiring it, the 
 court must be satisfied that the testimony given by the bankrupt is such that a 
 reasonable man would not be able to credit it, but would be satisfied of its sub- 
 stantial untruth. 
 
88 THE NATIONAL BANKRUPTCY LAW. 
 
 The Examination. [Ch. IIL 
 
 Criminating Questions. — The express provision at the end of this section 
 that no testimony given by one upon examination shall be offered in evidence 
 against him in any criminal proceeding, is not an enactment in itself excusing 
 him from answering such questions. It is a general principle of the common 
 law that no man is bound to criminate himself, but this rule seems to have 
 suffered some modification and qualification in bankruptcy matters, and it 
 seems to be well settled that a bankrupt is bound to answer all questions 
 respecting his debts and property, and his dealings with his property, etc., no 
 matter what the consequences are, except that he cannot be required to answer 
 a question, if his answer would disclose the commission of any distinct criminal 
 act. {Ex p. Kirby, i Mont. & Mac. 212; in re Smith, 2 Deac. & Chitt. 239; 
 Ex p. Hawley, 20 L. J. 258; 1 Deac. & Chitt. 415; 2 Id. 465; Ex p. Cossens, 
 Buck. 531.) The bankrupt is given an extraordinary right; namely, the right 
 under certain circumstances to be fully absolved from his debts, and when he 
 voluntarily or involuntarily is put into a position to avail himself of this 
 extraordinary privilege he surrenders himself to be dealt with in an extraordinary 
 way. He cannot, when examined touching his estate, his property, his debts or 
 the conduct of his business, refuse to give any information merely because such 
 information might show that he has been guilty of some crime or misdemeanor. 
 (In re Brandt, 2 B. R. 215; In re Vogel, 5 B. R. 393.) According to the English 
 rule he cannot refuse to reveal all his property and effects, and the full particu- 
 lars as to all his business dealings, even though his revelations tend to show 
 that he has been guilty of fraudulent concealment, or that he has illegally 
 obtained property, or that he has committed perjury, or become liable to be 
 fined, or otherwise violated the law. (Ex p. Cossens, Buck. 531; Exp. Calde- 
 cott, Mont. 55; Ex p. Stone, I Glyn & J. 7; in re Smith, 2 Deac. & Chit. 230; in 
 re Feak, Id. 226.) This has been held to be true, even though an indictment 
 was at the time pending against the bankrupt for the concealment of his prop- 
 erty. (Ex p. Heath, 2 Deac. & Chit. 214.) And this doctrine has been substan- 
 tially adopted in America. (In re Bromley, 3 B. R. 686; contra, in re Koch, t B. 
 R. 549; in re Patterson, i B. R. 147; s. c. i Ben. 508.) So a bankrupt cannot 
 refuse to answer a question on the ground that it tends to discredit or degrade 
 him. (In re Richards, 4 Ben. 303.) 
 
 Second Examination. — if the right to examine a bankrupt is to be granted 
 in the same cases and on the same conditions as the right to examine a judg- 
 ment debtor in supplementary proceedings is granted in the State of New York, 
 then after he has been once fully examined, a second examination will not be 
 
BANKRUPTS. 8^ 
 
 § 7-] The Examination. 
 
 allowed unless the necessity of it is shown; as, for instance, where there is evi- 
 dence which tends to show that the answers on the first examination were not 
 truthful, or that without the fault of the examining party some subject of 
 examination was overlooked, or for other cause of this nature. The rule is not 
 applied so strictly in bankruptcy proceedings for various reasons; first, because 
 the bankrupt is given an extraordinary remedy, viz., an absolute discharge from 
 his debts, and he is therefore held to be bound to submit himself to be dealt 
 with in an extraordinary way; and, second, the parties entitled to the informa- 
 tion are so numerous that there is greater possibility that the first examination, 
 though satisfactory to some, may not be complete and exhaustive enough to 
 satisfy other creditors; third, because each creditor has the right to examine. 
 It was said in in re Vogel, 5 B. R. 393, that " A creditor has the right ta 
 examine the bankrupt, although the assignee may have already examined him. 
 And 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, exacting the second examination, because of the previous 
 examination of the bankrupt. Omitting all account of the right, which, under 
 reasonable regulation, the examining counsel has on cross-examination or on an 
 examination in the nature of a cross-examination, of testing the memory and 
 veracity of a person under examination by putting questions previously 
 answered, this statute would become of little or no practical efiBcacy if every 
 creditor, on examining a bankrupt, should be required to investigate all previ- 
 ous examinations of the bankrupt and so to shape every question that they 
 would not be liable to the objection that the bankrupt has answered that ques- 
 tion on such previous examination. Each creditor must, without reference to- 
 anything which may have been done by any other creditor, be allowed to put 
 his question in his own way; otherwise, the creditor first examining the bank- 
 rupt monopolizes, perhaps, in a very large measure, the rights by the section 
 of the statute in terms conferred upon all the creditors of the bankrupt. The 
 time, manner and cause of the examination are, it is true, to be regulated so as 
 to protect the bankrupt from oppression, unnecessary annoyance and mere 
 delay {«« re Gilbert, 3 B. R. 152); but the bankrupt is asking, under the bank- 
 rupt act, at the hands of the court, a discharge from his debts. In view of the 
 object for which he has invoked the statute, the bankrupt is not warranted in 
 regarding it as oppressive or unduly annoying if every one of his creditors exer- 
 cises his right under the statute of investigating the condition, affairs and deal- 
 ings of the bankrupt, and ascertaining whether he has brought himself within 
 
90 THE NATIONAL BANKRUPTCY LAW. 
 
 Death or Insanity of Bankrupts. [Ch. III. 
 
 the remedial provision of this statute and is entitled to its benefit." But a 
 second examination will be ordered by the court only after notice of the appli- 
 cation has been given to the bankrupt. (/» r^ Gilbert. 3 B. R. 152; in re Va.a 
 Tuyl, 2 B. R. 70; in re Robinson & Chamberlain, -^ B. R. 516; in re Frisbie, 
 13 B. R. 349.) 
 
 Examinations of Third Parties. — Compare section 21 (a). 
 
 Sec. 8. Death or Insanity of Bankrupts. — a The death or 
 
 insanity of a bankrupt shall not abate the proceedings, but the 
 same shall be conducted and concluded in the same manner, so far 
 as possible, as though he had not died or become insane : Provided, 
 That in case of death the widow and children shall be entitled to 
 all rights of dower and allowance fixed by the la^rs of the State of 
 the bankrupt's residence. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., section 5ogo; act of 1867, section \i\ act of 1800, section 45. 
 
 No Abatement. — The former act provided that the proceedings should not 
 be abated by the death of the bankrupt after the issuing of the warrant which 
 followed the adjudication. Under the present act, proceedings do not abate if 
 they have been commenced, that is, if the petition has been filed. Proceedings 
 against a partnership do not abate by reason of the death of one partner, and it 
 was held under the former act that they did not, even if the death occurred 
 before the adjudication. (Hunt «/. Pooke, 5 B. R. 161. Compare Ex p. Hall, i 
 De Gex, 332.) 
 
 Can a Discharge be Granted After the Death of a Bankrupt. — By the 
 
 former act it was provided that one could not obtain a discharge without taking 
 certain oaths. It was held that the word " proceedings," in the section provid- 
 ing that proceedings should not be abated by the death of the bankrupt, did not 
 include a discharge, that is, that it did not include any proceeding unless there 
 could be a compliance with the requirements of the act, and that as a deceased 
 bankrupt could not take the oaths which entitled him to a discharge, his per- 
 sonal representatives could not continue that special proceeding and obtain a 
 discharge. {In re Gunike, 2 Biss. 354; s. c. 4 B. R. g2; inre O'Farrell, 3 Ben. 
 igi; s. c. 2 B. R. 484; contra. Young v. Ridenbaugh, 11 B. R. 563.) Under the 
 
BANKRUPTS. 91 
 
 § 9.] Protection and'Detention of Bankrupt. 
 
 present act a. discharge may be granted unless objections to it are sustained, 
 and there is no express statutory provision requiring that an application for a 
 discharge shall be verified, or that any oaths shall be taken by the bankrupt. 
 There would seem, then, to be no statutory obstacles in the way of personal 
 representatives procuring a discharge of the estate of the bankrupt if they so 
 desired. 
 
 Rigrhts of Dower and Allowance. — The proviso in this section is a new 
 enactment. It seems to give to the widow and children of a bankrupt who dies 
 after the institution of a proceeding, not only the common-law dower right of 
 the widow, of which she cannot be deprived without her consent, but those rights 
 of dower and allowance from the estate of her husband which are given by the 
 laws of the various States, and which until his death, are neither a vested nor 
 inchoate right of property. Just how these rights may be awarded to them, 
 after all the title of the bankrupt's property has been vested in the trustee pur. 
 suant to section 70, and what may be the rights of purchasers who have secured 
 property which would, by the laws of the State, be an allowance to the widow 
 and children, are interesting questions which the profession and the courts will 
 undoubtedly have to solve. 
 
 Sec. 9. Protection and Detention of Bankrupts. — a A bank- 
 rupt shall be exempt from arrest upon civil process except in the 
 following cases: (i) When issued from a court of bankruptcy for 
 contempt or disobedience of its lawful orders; (2) when issued 
 from a State court having jurisdiction, and served within such 
 State, upon a debt or claim from which his discharge in bank- 
 ruptcy would not be a release, and in such case he shall be exempt 
 from such arrest when in attendance upon a court of bankruptcy 
 or engaged in the performance of a duty imposed by this act. 
 
 6 The judge may, at any time after the filing of a petition by 
 or against a person, and before the expiration of one month after 
 the qualification of the trustee, upon satisfactory proof by the 
 affidavits of at least two persons that such bankrupt is about to 
 leave the district in which he resides or has his principal place of 
 business to avoid examination, and that his departure will defeat 
 the proceedings in bankruptcy, issue a warrant to the marshal, 
 directing him to bring such bankrupt forthwith before the court 
 
92 THE NATIONAL BANKRUPTCY LAW. 
 
 Protection from Arrest : Not a Release. [Ch. IIL 
 
 for examination. If upon hearing the evidence of the parties it 
 shall appear to the court or a judge thereof that the allegations 
 are true and that it is necessary, he shall order such marshal to 
 keep such bankrupt in custody not exceeding ten days, but not 
 imprison him, until he shall be examined and released or give bail 
 conditioned for his appearance for examination, from time to 
 time, not exceeding in all ten days, as required by the court, 
 and for his obedience to all lawful orders made in reference 
 thereto. 
 
 Analogous Provisions of Former Acts. — As to protection from arrest: R. 
 S., section 5107; act of 1867, section 26; act of 1800, sections 22, 38, 60. 
 As to arrest of bankrupt: R. S., section 5024; act of 1867, section 40. 
 
 Protection Fpom Arrest : Not a Release. — The protection given to 
 a bankrupt is a protection from arrest after bankruptcy. It does not entitle 
 one to a release, if he has been arrested prior to that time. (/« re Walker, i B. 
 R. 318; s. c. I Lowell, 222; Minon v. Van Nostrand, 4 B. R. 108; s. c. i Lowell, 
 458.) The weight of American authority is that one out on bail is not only in 
 reality, but theoretically under arrest; and the bankruptcy court cannot order his 
 release, and the statute does not prevent his surrender to the jailor by his bail. 
 (7« re Cheney, 5 Law Rep. 19; Hazleton v. Valentine, 2 B. R. 31; in re Rank, 
 Crabbe, 493. See, however, to the contrary, Foxall v. Levi, i Cranch C. C. 139; 
 Lingan v. Bayley, i Cranch C. C. 112.) 
 
 The English rule is that a bankrupt at large on bail is not in custody, and 
 that where he is entitled to his discharge upon arrest, he will be discharged also 
 from all detainers lodged against him after such arrest took place. But if in 
 custody at the time of the commencement of the proceedings it is otherwise. 
 (Ex p. Ross, I Rose, 260; Ex p. Goldie, 2 Rose, 343; Ex p. Hawkins, 4 Ves. 
 691.) An officer may, of course, recapture a prisoner who has escaped if he was 
 arrested before his bankruptcy. (Anderson v. Hampton, i B. and A. 308. As 
 to the right of bail to surrender principal, see Ex p. Leigh, i Glyn & J. 264.) 
 
 Purpose and Character of the Protection. — An examination of the sec- 
 tion shows that one purpose of the protection afforded is to preserve unimpaired 
 the authority of the bankrupt court over the subject-matter and also over the 
 persons of the parties to the proceeding. This is shown by the exception which 
 allows an arrest under process from that court. It is further shown by the fact 
 
BANKRUPTS. 93 
 
 § 9.] Purpose and Character of the Protection. 
 
 that an arrest founded upon a debt which would be released by a discharge can- 
 not be made at any time; and still further shown by the fact that an arrest in 
 an action whether founded upon a debt which would be released or not released 
 by a discharge, cannot be made at times when it would interfere with proceed- 
 ings in bankruptcy; that is, while the bankrupt is in attendance upon a court 
 of bankruptcy or engaged in the performance of a duty imposed upon him by 
 the bankruptcy law or by an order of the bankruptcy court. Protection from 
 arrest in actions founded upon dischargeable debts is simply in accordance with 
 the general scope and purpose of the bankruptcy act. Protection from arrest 
 while performing duties required by the act or by orders of the court, is in 
 accordance with the general principle that courts will protect witnesses who 
 come in obedience to their subpoena, and parties to actions pending before 
 them, and oflScers who are obeying or serving their mandates. The bankrupt 
 and all necessary parties and all witnesses who come pursuant to the command 
 of the court are protected from arrest while in attendance upon court. Both the 
 going and returning are included in the " attendance." A person who comes 
 from another State to attend a meeting of creditors at the office of a referee, solely 
 as a creditor and witness, or as attorney in fact for other creditors, is privileged 
 from arrest while so attending. (Matthews v. Tufts, 87 N. Y. 568; s. c. 62 
 How. Pr. 508.) Independently of express statutes, o. court is bound to protect 
 its witnesses in coming and returning. (Morris v. Beach, 2 Johns. 294.) This 
 results from the general authority conferred upon courts to compel the attend- 
 ance of witnesses. The privilege from arrest is an absolute one. The party is 
 entitled to his discharge unconditionally. The court cannot impose terms as, 
 for instance, that the bankrupt shall not bring an action, nor will it order the 
 costs of an application for a release to be paid out of the estate. (Ex p. Helsby, 
 Mont, and Bligh. 79.) It has been held that an arrest of one attending as a 
 witness under process issuing from another court, does not even confer jurisdic- 
 tion. So held in a case where a witness was returning from attendance before 
 duly appointed arbitrators. (Sandford v. Chase, 3 Cowen, 381.) A nonresident 
 witness coming within the jurisdiction of a court to attend it is privileged not 
 only from arrest, but from the commencement of an action against him, even 
 although he is attending as a witness in his own behalf. (Morrill v. George, 23 
 How. Pr. 331.) Such a witness has a reasonable time within which to return, 
 during which time he is exempt from arrest and also from the service of a sum- 
 mons upon him. (Brett v. Brown, 13 Abb. Pr. [N. S.] 295.) The tendency of 
 the courts is to construe all statutes affecting the rights of witnesses to exemp- 
 
94 THE NATIONAL BANKRUPTCY LAW. 
 
 Purpose and Character of the Protection. [Ch. IIL 
 
 tion from arrest and from service upon them of summons or other process, so 
 as to preserve unimpaired, if not to extend the right. (Lamkin v. Starkey 7 
 Hun, 479.) The provisions of the bankruptcy act as to the protection of wit- 
 nesses do not restrict the common-law rule. (Lamkin &. Starkey, 7 Hun, 479.^ 
 This right to protection extends not only to witnesses, but to persons appearing 
 as parties, especially if they are parties defendant. It includes also the attor- 
 neys in fact for such parties. (Matthews v. Tufts, 87 N. Y. 568, citing Person 
 V. Grier, 66 N. Y. 124; also Van Lieuw v. Johnson, decided by the New York 
 Court of Appeals, March, 1871; Cole v. Hawkins, Andr. 275-, s. c. 2 Str. 1094; 
 Arding v. Flower, 8 T. R. 534; Miles v. McCullough, i Binn. 77; Hayes v. 
 Sheilds, 2 Yeates, 222; Parker v. Hotchkiss, i Wall. Jr. 269; Juneau Bank v. 
 McSpedan, 5 Biss. 64; Halsey v. Stewart, i South [N. J.], 366; Miller v. Dun- 
 gan, 8 Vr. [N. J.] 182; in re Healey, 53 Vt. 694.) It includes parties attending 
 bankruptcy proceedings simply as creditors. (Ex p. List, 2 Ves. & B. 373; 
 Ex p. King, 7 Ves. Jr. 312; Selby v. Hills, 8 Bing. 166; Arding v. Flower, 8 
 T. R. 534; Matthew v. Tufts, 87 N. Y. 568.) See also upon the general subject 
 of the exemption of parties and witnesses from arrest and from liability to be 
 served with process while attending before a judicial officer, following cases 
 and authorities cited by the appellant in the case of Matthews v. Tufts: In re 
 Kimball, 2 Ben. 38; in re Pioneer Paper Co., 7 B. R. 250; Newton v. Askew, 6 
 Hare, 319, 323; Exp. List, 2 V. & B. 373; Arding v. Flower, 8 T. R. 534; Exp. 
 King, 7 Ves. J . 312; Willingham o. Matthews, 6 Taunt. 356; Chauvun ». Alex- 
 andre, 31 L. J. (N. S.) 79; Wood V. Neale, 5 Gray, 538; Thompson's Case, 122 
 Mass. 428; Moore v. Booth, 3 Ves. 350; in re Paddock, 6 B. R. 396; Com. Dig., 
 tit. Priv. (a 3); Haliday v. Pitt, 2 Stra. 985; Cole v. Hawkins, Andr. 275, 2 Stra. 
 1094; Gilpin V. Cohen, L. R. 4 Exch. 134; Miles v. McCullough i Binn. 77; Hayes 
 V. Shields, 2 Yeates (Pa.) 222; Huddeson v. Prezer, 9 Phila. 65; Parker v. 
 Hotchkiss, I Wall. Jr. 269; Juneau v. McSpedan, 5 Biss. 64; Lyell -j. Good- 
 win, 4 McL. 29; McFerran v. Wherry, 5 Cr. C. C. 677; Halsey v. Stewart, i 
 South. [N. J.] 366; Miller v. Dungan, 8 Vr. [N. J.] 182; in re Healy, 53 Vt. 694; 
 Co. Inst. 424, tit. Privilege of Parliament; Bolton v. Martin, i Dall. 296; Geyer 
 V. Irwin, 4 Id. 107; Anderson v. Rountree, i Pinn. (Wis.) 115; Doty v. Strong, 
 Id. 84; Cassidy v. Stewart, 2 Scott, [N. R.] 432; Com. Dig., tit. Parliament 
 (d 17); Pollard V. U. P. R. Co., 7 Abb. Pr. [N. S.] 70; Jenkins v. Smith, 57 
 How. Pr. 171; Person v. Grier, 66 N. Y. 124; Alisbury v. Troughton, i Ch. 92; 
 Solomon v. Underhill, i Camp. 229; Childerston v. Barrett, 11 East, 439; 
 Persse v. Persse, 5 H. L. Cas. 671; Bromley v. Holland, 5 Ves. 2; Gilpin v. 
 
BANKRUPTS. 95 
 
 § 9.] When the Right of Protection Begins. 
 
 Cohen, L. R. 4 Exch. 131; Arding v. Flower, 8 T. R. 534; Exp. List, 2 V. & B. 
 373; Ex p. King, 7 Ves. Jr. 312; Selby </. Hills, 8 Bing. 66; Mountague v. Har. 
 risen, 3 C. B. [N. S.] 298; i Bro. Abr., tit. Priv. i; Jones v. Marshall, 2 C. B. 
 [N. S.] 615; Atty.-Gen. v. Skinners' Co., 8 Sim. 377; Ex p. Britten, 4 Jur. 943; 
 in re Joseph, 2 Woods, 390; in re Kyle, 2 Ben. 414; in re Patterson, I Id. 448; in 
 re Orme, Id. 361, 365; in re Morrell, 16 B. R. 35; in re Jackson, 14 Id. 449; 
 in re Ray, 2 Ben. 53; Walpole v. Alexander, 3 Doug. 45.) One is privileged 
 from the service of process on him, although he attends voluntarily and is not 
 examined, and although he might have been examined out of the State. (Dixon 
 V. Ely, 4 Edw. Ch. 557; Walpole v. Alexander, 3 Doug. 45; Byrne, i V. & B. 
 316; Jones V. Knauss, 31 N. J. Eq. 211; Salhinger v. Adiar, 2 Robt. 237; 
 Wetherell v. Seitzinger, i Miles [Pa.] 237.) 
 
 It is immaterial whether the process upon which the arrest is made is mesne 
 or final; a bankrupt is exempt from either. (/« yu Wiggers, 2 Biss. 71; in re 
 Mifflin, I Penn. L. J. 146.) A State court has no right to issue a warrant for the 
 arrest of a bankrupt upon the assumption that the bankrupt has done such acts 
 as will prevent his securing a discharge. 
 
 When the Right of Protection Begins. — " Bankrupt " includes one 
 against whom a petition has been filed. It does not necessarily mean one 
 against whom there has been an adjudication; section i (4). From the time of 
 the filing of the petition the bankrupt is protected from arrest. (State v. Rol- 
 lins, 13 Mo. 179.) 
 
 How is the Right of Protection Enforced. — It is the duty of the State 
 court which has issued the warrant of arrest to order the release of the bank- 
 rupt, if a motion for such release is made. (/» re Migel, 2 B. R. 481 ; in re 
 Wlggers, 2 Biss. 71; in re O'Mara, 4 Biss. 506; in re Simpson, 2 B. R. 47) 
 But the duty of ordering the release is imposed upon the bankruptcy court if 
 the State court refuses to grant the right. (In re Wiggers, 2 Biss. 71; »« re Wil- 
 liams & McPheeters, 11 B. R. 145; s- <=• 6 Biss. 233; in re Simpson, 2 B. R. 47; 
 in re Glaser, 2 Ben. 180; s. c. i B. R. 336; in re Taylor, 16 B. R. 40.) The 
 application may indeed be made to the bankruptcy court first if the bank- 
 rupt so desires. The usual practice is for the bankruptcy court to issue 
 a writ of habeas corpus and on the hearing make an order for the dis- 
 charge if the bankrupt is entitled to it. The refusal of the State court to 
 order the discharge of the bankrupt is no reason for the bankruptcy court's 
 refusing to entertain a motion for the same order. (/» re Wiggers, 2 Biss. 
 
96 THE NATIONAL BANKRUPTCY LAW. 
 
 Determination Whether the Debt is Dischargeable. [Ch. IIL 
 
 71; in re Williams & McPheeters, II B. R. 145.) The order for the dis- 
 charge is directed to the officer or person holding the bankrupt under arrest. 
 Disobedience to the order is punishable as a contempt. An officer of the State 
 court, notwithstanding he holds a valid warrant, is obliged to release the bank- 
 rupt when so ordered by the bankruptcy court, and he will not be punished 
 therefor by the State court. (In re G. W. Kimball, i B. R. 193; in re Hurst, 4 
 Dallas, 387; Lyell v. Goodwin, 4 McLean, 32.) The bankruptcy court of one dis- 
 trict may order the release of a person held under arrest in another district, if 
 the person detaining him is within the jurisdiction of the court making the 
 order. {In re Seymour, i Ben. 348; s. c. i B. R. 29. Compare Lathrop v. 
 Drake, 91 U. S. 516; s. c. 13 B. R. 472; Hazleton v. Valentine, 2 B. R. 31; s. c. 
 I Lowell, 270.) No action for an escape will lie against an officer who has 
 released a prisoner pursuant to an order of the bankruptcy court. (Thomas 
 V. Hudson, 13 Mees. & W. 353, 816, 884; Norton v. Walker, 3 Excheq. 480.) 
 
 Determination Whether the Debt is Dischargeable. — There is a con- 
 flict of authority upon the question whether courts of bankruptcy in considering 
 applications of bankrupts for release from arrest will go behind the face of the 
 papers and consider disputed questions of fact; in other words, whether they 
 will determine whether the particular debt, upon which the action is based, in 
 which the order of arrest has been granted, is released or not by the discharge. 
 The majority of the cases decided under the act of 1867 clearly hold that the 
 bankruptcy court will not try such disputed questions of fact; and if it appears 
 upon the face of the papers, that is, if it is alleged that a debt is not discharge- 
 able, the bankruptcy court will not pass upon the question of fact and decide 
 to the contrary. This is in accordance with the general principle that while 
 courts of bankruptcy determine whether or not a bankrupt is entitled to a dis- 
 charge, all questions as to whether any particular debt is released by that dis- 
 charge are left to be determined by the State courts in which thereafter an 
 action upon the debt may be brought. In examining the papers to see whether 
 or not they state all the facts showing that a debt is not dischargeable 
 the court will look not only at the order of arrest, but at the affidavit used on the 
 motion, and at the complaint in the action if it is in any way connected with the 
 other papers or referred to in them. According to the rule mentioned the bank- 
 ruptcy court examines the papers, not to see if the order was granted, in an 
 action founded on a debt which is in fact dischargeable, but to see if the State 
 court in granting the order of arrest, intended to found it on a debt which was 
 
BANKRUPTS. 97 
 
 § 9.] Determination Wtiether the Debt is Dischargeable. 
 
 not dischargeable; that is, it would seem, it examines to see if the State court 
 granted the order upon allegations setting forth facts which would show that a 
 debt was not dischargeable. (/» re Robinson, 2 B. R. 342; s. c. 36 How. Pr. 
 176; s. c. 6 Blatch. 253; in r^ Valk, 3 B. R. 278; s. c. 3 Ben. 431; in re J. H. 
 Kimball, 2 B. R. 354; s. c. 6 Blatch. 292; s. c. below, 2 B. R. 204; s. c. 2 Ben. 
 554 [in which case Judge Blatchford disapproved of his own previous decisions, 
 in re Glaser, i B. R. 336; a. t. 2 Ben. 180; and also in re George W. Kimball, r 
 B. R. 193]. Seealsoj»r^Devoe, 2 B. R. 27; !» r^Migel, 2B. R. 481.) Theauthori- 
 ties holding the contrary doctrine, viz., that the bankruptcy court may examine 
 into the merits of the arrest and hear the disputed facts which will determine 
 whether or not the debt is one which would be released by the discharge are, in 
 re Williams & McPheeters, 11 B. R. 145; s. c. 6 Biss. 233; in re Glaser, I B. R. 
 336; s. c. 2 Ben. 180; in re George W. Kimball, i B. R. 193 (the latter two 
 afterwards disapproved by the same judge who rendered the decisions); 
 and in re Alsberg, 16 B. R. 116. In the last case all the others were 
 reviewed and it was held that: It was the duty of the court to examine dili- 
 gently all legal evidence brought before it from any quarter whatever, tend- 
 ing to show that a debt not dischargeable by the discharge of the bankrupt had 
 been contracted; that the question whether one was properly under arrest was 
 a question of fact; that the liability to imprisonment or the immunity from 
 imprisonment depended upon the fact whether the debt for which he was 
 arrested was released by the discharge of the bankrupt; that Congress intended 
 to prevent the arrest of the bankrupt where a debt was dischargeable, and the 
 bankruptcy courts who were charged with the duty of protecting the bankrupt, 
 were in duty bound to inquire into all the facts; and that no ex parte evidence 
 made in the State courts as to the character of the debt contracted would be 
 permitted to interfere with the full examination of all sources of evidence on 
 the simple fact, whether the debt was dischargeable under the bankruptcy act; 
 that it was the character of the debt which was the subject of investigation and 
 not the grounds of arrest which were stated in the order of arrest and the other 
 papers; that the provisions of law in reference to the writ of habeas corpus con- 
 tained in the U. S. Revised Statutes were conclusive on the judge or court 
 hearing the case, to determine all legal evidence touching the right to retain in 
 custody, whenever the petitioner claimed the protection. Substantially the 
 same was the opinion of the court in re Williams & McPheeters, 11 B. R. 145. 
 If the debt is one that is not dischargeable, the bankruptcy court cannot order 
 the release of the bankrupt even although it is shown that the State courts had 
 
 NAT. BANKRUPTCY LAW — 7 
 
98 THE NATIONAL BANKRUPTCY LAW. 
 
 Detention of the Bankrupt. [Chap. III. 
 
 no authority under the State laws to order such arrest. (/» re Alsberg, supra.\ 
 The order of arrest specifying as grounds therefor, facts which make a debt not 
 released by discharge, is equivalent to an adjudication that these facts exist; 
 and the courts which hold to the first of the two rules mentioned, consider that 
 it is improper for them to go behind this adjudication and inquire into the 
 facts. They consider the duty of the bankruptcy court fulfilled when it 
 examines the papers to see if the State court has determined that the facts do 
 exist which will justify the arrest; and this adjudication is given full credit, 
 although based on ex parte affidavits. But although, as has been seen, there is 
 a conflict of authority as to whether the bankruptcy court should be bound by 
 the determination of the State court as set forth in an order of arrest based on 
 the allegations of parties in ex parte aflSdavits, it is universally conceded that 
 when the arrest is based on a judgment, the determination by the judgment of 
 all facts alleged in the complaint in the action in which the judgment was ren- 
 dered and which were material and traversable and the decision of which was 
 necessary to the adjudication, is conclusive upon the bankruptcy court and all 
 parties. Thus one of the exceptions to the rule that all provable debts are 
 released by the discharge, is a debt created by the fraud of the bankrupt. If 
 there has been a judgment in an action for fraud, the bankruptcy court is bound 
 by the judgment and cannot hear the bankrupt allege that he was not guilty of 
 a fraud. In such cases all that the court needs to do is to look at the record of 
 the case and see if anywhere therein material and traversable allegations 
 of fraud appear which must necessarily have been found true in order to 
 render the judgment. (In re Whitehouse, 4 B. R. 63; s. c. i Lowell, 429; Shu- 
 man V. Strauss, 52 N. Y. 404; in re Patterson, i B. R. 307; s. c. 2 Ben. 155.) 
 
 In What Actions is One Kxempt From Arrest. — Compare section 17 as 
 to debts not released by discharge. It has been held in England that a bank- 
 rupt is exempt from arrest under an attachment for the nonpayment of money. 
 (Exp. Jeyes, 3 Deac. & Chit. 764; 3 Mont. D. & D. 309; Ex p. Barry, 7 Jur. 406.) 
 Compare carefully the cases under section 17 (4) as to debts created by fraud 
 and debts created by one acting in a fiduciary capacity. 
 
 Detention of the Bankrupt. — The bankrupt's sole purpose in leaving the 
 district must be to avoid examination. In presenting its report on the bank- 
 ruptcy bill to the 55th Congress, on December 16, 1897, the judiciary commitR. 
 of the House said, with reference to this section (then section 8), which had 
 been amended in committee, so that this provision with reference to the motives 
 
BANKRUPTS. 99 
 
 § 10.] Extradition of Bankrupts. 
 
 of the bankrupt in leaving the district read exactly as it here appears: " In the 
 section where provisions are made for taking into custody the bankrupt when 
 he was about to leave the district and where his departure would tend to delay 
 the proceedings in bankruptcy, an amendment has been made limiting the 
 departure to cases in which the bankrupt was leaving for the sole purpose of 
 avoiding the examination. If he left for other purposes, such as to better his 
 condition, the provisions of the law will not apply to him." Every particular 
 fact required in order to give one a right to move for the arrest of the bankrupt 
 must be clearly shown to exist. The language of the section implies that 
 before the court can issue a warrant it must not only find it to be true that the 
 bankrupt leaves to avoid examination, but that it is necessary that he be 
 detained, that it is necessary that he be examined, and that in no other way 
 than by detention by the marshal can his presence be secured. All these facts 
 must be established by satisfactory proof. Mere conclusions and opinions of 
 the affiant are not sufficient in the absence of a statement of the facts and cir- 
 cumstances upon which the belief of the witness is based. (/» re McKibben, 12 
 B. R. 97; in re Hadley, Id. 366; Ex p. Hey man, 26 L. T. N. S. 339.) As to 
 what facts are sufficient to show that one is " about " to leave the district, see 
 Am. & Eng. Encyc. of Law, 2d ed., tit. "About," and the following cases 
 therein cited: Elliott v. Keith, 32 Mo. App. 585; Bennett v. Avant, 2 Sneed 
 (Tenn.), 152; Frere v. Ferret, 56 La. Ann. 500; also Jackson v. Burke, 4 
 Heisk. (Tenn.) 614; Meyers v. Farrell, 47 Miss. 283; McHaney v. Cawthorn, 4 
 Heisk. (Tenn.) 509; Wrompelmeir ». Moses, 3 Baxt. (Tenn.) 467. 
 
 Seizing Possession of PFoperty of Bankrupt. — Compare section 69; 
 also section 2 (3). 
 
 Sec. 10. Extradition of Bankrupts. — a Whenever a warrant 
 for the apprehension of a bankrupt shall have been issued, and 
 he shall have been found within the jurisdiction of a court other 
 than the one issuing the warrant, he may be extradited in the 
 same manner in which persons under indictment are now extra- 
 dited from one district within which a district court has jurisdic- 
 tion to another. 
 
 No Analogous Provisions in Former Acts. 
 
lOO THE NATIONAL BANKRUPTCY LAW. 
 
 Suits by and against Bankrupts. [Ch. IIL 
 
 Sec. II. Suits by and against Bankrupts. — a A suit which 
 is founded upon a claina from which a discharge would be a 
 release, and which is pending against a person at the time of the 
 filing of a petition against him, shall be stayed until after an 
 adjudication or the dismissal of the petition; if such person is 
 adjudged a bankrupt, such action may be further stayed until 
 twelve months after the date of such adjudication, or, if within 
 that time such person applies for a discharge, then until the ques- 
 tion of such discharge is determined. 
 
 b The court may order the trustee to enter his appearance and 
 defend anj' pending suit against the bankrupt. 
 
 c A trustee may, with the approval of the court, be permitted 
 to prosecute as trustee any suit commenced by the bankrupt prior 
 to the adjudication, with like force and effect as though it had 
 been commenced by him. 
 
 d Suits shall not be brought by or against a trustee of a bank- 
 rupt estate subsequent to two years after the estate has been 
 closed. 
 
 Analogous Provisions of Former Acts. — 
 
 As to right to maintain an action against a bankrupt: R. S., section 5105; 
 act of 1867, section 21; act of 1841, section 5. As to stay of suits against o. 
 bankrupt: R. S., section 5106; act of 1867, section 21. As to trustees' continu- 
 ance of pending suits against a bankrupt: R. S., section 5047; act of 1867, sec; 
 tions 14 and 16; act of 1841, section 3; act of 1800, section 13. As to limitations 
 of actions against the trustee: R. S., section 5057; act of 1867, section 2; act 
 of 1841, section 8. Also R. S., section 5056; act of 1867 section 14, 
 
 Statutory Provisions, Old and New. — There are marked differences 
 between the provisions of the former and the present act with regard both to 
 the maintenance and continuance of actions against a bankrupt. The former 
 act as it appeared in the Revised Statutes contained two provisions. Section 
 5105 in substance enacted that the proving of a debt was a waiver of all right of 
 action, and that thereafter the creditor should not be allowed to maintain any 
 suit at law or in equity. This, it will be seen, prevented the institution of new 
 actions as well as the continuance of pending actions, provided the debt was 
 proved. Section 5106 of the Revised Statutes declared that no creditor whose 
 
BANKRUPTS. lOI 
 
 § II.] Rights of Action upon Provable Claims. 
 
 debt was provable should be allowed to prosecute to final judgment any suit at 
 law or in equity therefor, against the bankrupt until the question of his dis- 
 charge should have been determined, and that all such suits must be stayed 
 until the question of discharge was considered by the court, provided there was 
 no unreasonable delay on the part of the bankrupt in attempting to obtain his 
 discharge, and provided also that, if there was a dispute as to the amount of the 
 debt, a court of bankruptcy might allow the action to proceed to judgment for 
 the purpose of ascertaining the amount due, which amount might be proved in 
 bankruptcy, but execution was to be stayed. Comparing those provisions 
 (which appear more fully in the copy of the act printed as an appendix to this 
 book) with the provisions of the section under consideration, it will be seen 
 that the present act expressly provides only for the stay of pending actions; 
 that it makes no reference to the institution of new actions; that a suit will not 
 be stayed simply because it is founded upon a debt which is provable, but the 
 debt must be one which would be released by a discharge. It will be further 
 seen that the present statute makes a stay from the time of filing the petition 
 until an adjudication or the dismissal of the petition, compulsory; but that after 
 that time it is discretionary. Moreover there are no express grounds required for 
 the court to give as its reason for permitting the continuance of the action. It 
 will be further seen that the old act, in cases where creditors did not prove 
 their claims and thereby waive all right of action, only required that the action 
 should not be allowed to be prosecuted to final judgment, and that even to this 
 there were some express exceptions; but under the present act, if a. stay is 
 granted no further proceedings whatever can be taken. 
 
 Rights of Action upon Provable Claims. —As has been above noted the 
 present statute contains no express provision forbidding the institution of a 
 new action by a creditor against a bankrupt. This section merely authorizes 
 the stay of pending suits. Has a creditor who does not prove his claim a right 
 to commence an action against the bankrupt ? Has a creditor who does prove 
 his claim such a right? Will courts of bankruptcy ever allow such actions ? 
 If so what is the effect of the action? The general purpose and object of these 
 laws authorizing the stay of actions against a bankrupt are to prevent his 
 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 it is either 
 granted or refused. Another purpose is to prevent a race of diligence between 
 creditors. (/» re Metcalf & Duncan, i B. R. 201; s. c. 2 Ben. 78; « « M. 
 
102 THE NATIONAL BANKRUPTCY LAW. 
 
 Rights of Action upon Provable Claims. [Ch. IIL 
 
 Rosenberg, 2 B. R. 236; ». c 3 Ben. 14.) It is, then, evident that this being 
 the intention and purpose of the law, it ought to apply exactly as much to the 
 institution of new actions as to the continuance of old ones. The law intends 
 that creditors having provable claims shall secure their remedy in bankruptcy 
 proceedings, and that if the claim is dischargeable the bankrupt shall not be 
 annoyed by proceedings in any other court pending the application for a dis- 
 charge. If he receives the discharge he may of course plead it as a defense. 
 If he is refused a discharge, the right of a creditor to sue for his debt or the 
 balance of it over and above any dividend received, remains unimpaired. But 
 still the question remains: Has a creditor, between the time of the filing the 
 petition and the granting of the discharge, a right to institute a new suit upon 
 his claim against the bankrupt, simply because the act does not in terms pro- 
 vide that new suits shall not be instituted, nor that a new suit if instituted 
 shall be stayed? When will the courts allow such suits? If such a suit were 
 instituted and prosecuted to judgment, it would in no way give the creditor 
 any right or lien upon the property with which the trustee becomes vested by 
 law. If prosecuted to judgment, and a discharge is thereafter granted, the dis- 
 charge may be pleaded as a defense to any further action on the judgment or 
 any proceedings to enforce it. (McDonald v. Davis, 105 N. Y. 508.) If a dis- 
 charge is granted, there is then no advantage accruing to the creditor by 
 reason of the institution of his action, unless it be to liquidate his claim so that 
 the amount may be proven under section 63 (5). He would have incurred the 
 expense of his litigation to reap only this advantage, because under the pro- 
 vision of section 63, his costs incurred in the suit would not be a provable debt. 
 But if the discharge were refused, then any judgment which he recovered 
 would be a prior lien upon the subsequently acquired property of the bankrupt. 
 Will the courts allow creditors in this way to keep up a race of diligence and to 
 harass the debtor with suits? It i; clear that any adjudication made under 
 the prior act, is not an authoritative answer to the question, because that statute 
 expressly forbade the maintenance of such suit but there may be dicta in these 
 cases which will give information. In Dingee v. Becker, g B. R. 508 at 512, it 
 was said, " The creditor who has not proved his debt has no status in the court 
 of bankruptcy; he has never submitted himself to its jurisdiction, and his right 
 to proceed in suits is no further affected than it is affected by the restraining 
 words of the statute." In Eyster v. Gaff, gi U. S. 521; s. c. 13 B. R. 546, the 
 Supreme Court of the United 'States said, " The debtor of a bankrupt or the 
 man who contests the right to a lien or to personal property with him loses none 
 
BANKRUPTS. 103 
 
 § II.] Rights of Action upon Provable Claims. 
 
 of these rights by the bankruptcy of his adversary." " The same courts remain 
 open to him in such contests, and the statute has not divested those courts of 
 jurisdiction in such actions." (Compare section 2.) Under the bankruptcy act 
 of 1841, it was held that the act contemplated that a creditor might maintain a 
 suit in a State court, on a demand provable in bankruptcy, although the debtor 
 might have filed his petition to be declared a bankrupt. (Hobart v. Haskell, 14. 
 N. H. 127.) Other cases decided under that act seem to recognize the right of 
 a creditor to maintain the usual legal actions, if he did not prove his claim in 
 bankruptcy. (Compare Haxtun v. Corse, 4 Edw. Ch. 585.) In McDonald v, 
 Davis, 105 N. Y. 508, it was said that under the act of 1841, there was no pro- 
 vision for a stay of proceedings in an action prior to the discharge of one in 
 bankruptcy. But where a creditor levied an execution upon property acquired 
 by the debtor after he had been declared a bankrupt under the act of 1841, and 
 before it had been decided whether a certificate of discharge should be granted, 
 a court of equity interfered by injunction to protect his rights and restrained 
 proceedings under the execution until the question of his discharge was decided 
 (Mosby V. Steele, 7 Ala. 299); and in this case it was held that the State and not 
 the Federal court was the proper tribunal to afford relief in such action. Under 
 the same act it was held that the bankruptcy court, upon the application of the 
 bankrupt or his assignees, before the discharge was granted, might issue an 
 injunction to the creditor staying the proceedings until the further order of the 
 court; and if the creditor, his agents or attorneys, proceeded in the suit not- 
 withstanding the injunction, they were liable to be committed for contempt. 
 If the bankrupt did not obtain his discharge, the creditor might petition for 
 a dissolution of the injunction, and, if it was granted, he might then proceed in 
 his suit to judgment and execution. (In re Bellows & Peck, 3 Story, 428.) 
 Under the act of 1867, which provided in the case of creditors who did not 
 prove their claims, only, that the courts should not allow the prosecuting of 
 suits to judgment, it was held that the act did not in terms prohibit the com- 
 mencement of a suit to enforce provable debt, and that therefore a court of 
 bankruptcy might in its discretion refuse to enjoin the commencement or the 
 prosecution of such action. {In re Ghiradelli, 4 B. R. 164; s. c. i Saw. 343.) 
 The rule, then, independent of statutory provisions, would seem to be, that a 
 creditor not proving his claim may institute an action thereupon, even against 
 one who has been adjudged bankrupt, but courts of equity and the bankruptcy 
 court as a court possessing general equity powers, may enjoin the prosecution 
 of such actions whenever they would tend to harass the person who had sought 
 
I04 THE NATIONAL BANKRUPTCY LAW. 
 
 Effect of Proof of Claim on Right of Action. [Ch. III. 
 
 the aid of the banlcruptcy court; and these courts should exercise this power of 
 injunction in all cases, unless there are equitable reasons for permitting the 
 institution and prosecution of such suits. The court of bankruptcy has juris- 
 diction over all creditors of the bankrupt, in so far as they hold provable claims, 
 whether or not such creditors personally appear. While a bankruptcy proceed- 
 ing is not a proceeding to collect a debt, it is, nevertheless, a proceeding which 
 affects all provable debts, and a person invoking the aid of the bankruptcy court 
 and turning over his property pursuant to the bankruptcy act for pro rata dis- 
 tribution among his creditors, has a right to appeal to the bankruptcy court for 
 protection from oppressive suits. (/« re Rosenberg, 2 B. R. 236; s. c. 3 Ben. 
 14.) But if not enjoined, a creditor may institute a suit and prosecute it to 
 judgment. 
 
 Effect of Proof of Claim on Right of Action. — Where a creditor 
 
 proves his debt, all the authority of decided cases is that by such a proceeding 
 he has made an election of remedies by choosing to enforce his debt through 
 the bankruptcy proceedings, and that he thereby waives his right to enforce his 
 claim by any other legal proceedings unless a discharge is refused to the bank- 
 rupt. These decisions do not all appear to be based upon statutory provisions; 
 they seem rather in many cases to rest upon a general principle, that if the 
 creditor elects to pursue one of two remedies he thereby waives the right to 
 pursue the other. Thus, in England, it has been held that the proof of a debt 
 is to be considered an election not to proceed against the bankrupt, by action; 
 such proof operates as a statutory discontinuance of all other legal and equi- 
 table remedies in respect to the debt proven; and the courts of that country 
 will enjoin the proving creditor from any other legal proceedings, or require 
 him to expunge his proof {Ex p. Diack, 2 Mont. & Ayr. 675; Ex p. Bernasconi, 
 2 Glyn & J. 381); and the same was the decision of the United States courts 
 even under the bankruptcy act of 1841. Thus, in Haxtun v. Corse, 4 Edw. Ch. 
 585; s. c. aflSrmed 2 Barb. Ch. 506, at 531, and in Stewart v. Isidor, 5 Abb. Pr 
 (N. S.) 68, it was held that a creditor who proved his debt, elected to become a 
 party to the proceedings in bankruptcy, and although he had a judgment pre- 
 viously recovered, he could not institute a judgment creditors' action. (See 
 also Mosby v. Steele, supra; Hobart v. Haskell, supra; in re Bellows v. Peck, 
 supra.) Under the act of 1867, there were numerous decisions to the same 
 effect: but these, it is to be noted, were required by the express terms of the 
 act, the only question under that act being whether the proof of a debt was an 
 absolute waiver of the claim which would by the terms of the statute prevent the 
 
BANKRUPTS. I05 
 
 § II.] Effect of Proof of Claim on Right of Action. 
 
 creditor from instituting any further proceedings, even in cases where a dis- 
 charge was refused. The weight of authority was that it was only a suspen- 
 sion of action until the time of discharge, and if a discharge was refused, then 
 the creditor might institute legal proceedings to collect the balance of his claim 
 over and above dividends received. (Miller v. O'Kain, 14 B. R. 145; Hoyt v. 
 Freel, 4 B. R. 131; Brandon Mfg. Co. v. Frazer, 13 B. R. 362; Dingee v. 
 Becker, 9 B. R. 508; Stokes v. Mason, 12 B. R. 498; in re Robinson, 2 B. R. 
 342; s. c. 6 Blatch. 253; in re Rosenberg, 2 B. R. 236; s. c. 3 Ben. 14; in re J. S. 
 Wright, 2 B. R. 142; s. c. 36 How. Pr. 167; in re Migel, 2 B. R. 481; Ansonia B. 
 Co. V. N. L. Chimney Co., 91 U. S. 656; s. c. 13 B. R. 385; s. c. below, 53 N. Y. 
 123; s. c. 10 B. R. 355; s. c. below, 64 Barb. 435; inre Patterson, I B. R. 307; s. c. 
 2 Ben. 155; Davis z/. Anderson, 6 B. R. 145.) This construction of the statute was 
 afterwards embodied in an amendment of the section, passed in 1874, which 
 appears in the Revised Statutes. Under the act of 1841, it was likewise held that 
 a creditor who took a dividend under the estate of a bankrupt was not thereby 
 estopped from collecting the remainder of his debt if the bankrupt was refused 
 a discharge. (Haxtun v. Corse, 4 Edw. Ch. 582; s. c. on appeal, 2 Barb. Ch. 
 506; Hamlin v. Hamlin, 3 Jones Eq. Rep. [N. C] 191.) It is difficult to say how 
 far the courts in making these decisions (that proving a claim was an election 
 of remedies) were governed by general principles, and how far by express 
 statutory requirements. In England, statutes on the subject were early 
 enacted, and decisions under them have greatly influenced American courts. 
 The English bankrupt act, 49 Geo. III., ch. 121, section 14, provided that it 
 should not be lawful for a creditor who had brought an action against a 
 bankrupt upon a provable debt, to prove his claim without relinquishing such 
 action, and that the proof of such debt should be deemed an election by the 
 creditor to take the benefit of the commission with respect to the debt so proved 
 or claimed. In an action on such a debt, the bankrupt pleaded the proof of the 
 debt in bar and the plea was held to be good (Read v. Sowerby, 3 Maule & 
 Sfelw. 78); and it was said that the proper practice for such a party if he wished 
 to bring a suit was to apply for permission to withdraw his proof. (Harley v. 
 Greenwood, 5 B. & Aid. 95.) See Brandon Mfg. Co. v. Frazer, 13 B. R. 362, for 
 a review of cases under this English act, and of cases decided under the United 
 States bankruptcy acts of 1841 and 1S67. But under the present act, proof of a 
 debt which is not released by a discharge, is probably no waiver of the right 
 to institute or continue another action thereon even pending the bankruptcy 
 proceedings. 
 
I06 THE NATIONAL BANKRUPTCY LAW. 
 
 What Suits May be Stayed. [Ch. III. 
 
 What Suits May Be Stayed. — The intent of the act would seem to entitle 
 the bankrupt to a stay of actions at law, actions in equity, and in fact any legal 
 proceedings, whatever their nature, if they were instituted to recover upon a 
 claim which would be released by a discharge. The word "suit" is wide 
 enough in its scope to embrace all forms of procedure. The act of 1867 author- 
 ized a stay of suits at law or in equity. It was queried whether it included 
 proceedings in admiralty, and seizure of future acquired property upon execu- 
 tion. (Minon v. Van Nostrand, 4 B. R. 108.) It was held that it applied to all 
 cases where the personal liability of the debtor was sought to be fixed or deter- 
 mined by a final judgment, pending the determination of the question of dis- 
 charge. (In re M. Rosenberg, 2 B. R. 236; s. c. 3 Ben. 14.) But where an action 
 by a creditor did not tend to enforce any claim against the debtor, and did not 
 deprive the trustee of any right or control over the property, proceedings taken 
 after the injunction order were not a disobedience to it. (In re Hirsch, 2 B. R. 3; 
 compare McKay v. Funk, 13 B. R. 334; s. c. 37 Iowa, 661.) The proceedings which 
 will be stayed are those instituted to enforce a personal liability of the debtor, 
 not those instituted to enforce a valid lien. (Mason v. Warthens, 14 B. R. 341.) 
 But even an action to foreclose a mortgage may be stayed in so far as the aim is 
 to enforce a personal liability of the mortgagor, as for instance, for a deficiency. 
 (McKay v. Funk, supra.) As to continuance of actions to enforce liens, compare 
 section 2. An action cannot be stayed unless it is founded upon a claim which 
 would be released by a discharge. The mere fact that the claim is provable is 
 not sufficient as under the former act. Proceedings supplementary to execution 
 may be stayed. (Zimmer v. Schleehauf, 115 Mass. 52; s. c. 11 B. R. 313.) And 
 it would seem that appeals might be stayed. Under the former act, there was 
 some conflict of authority as to this class of cases, but it arose over the question 
 whether a judgment by a subordinate court from which an appeal had been 
 taken should be considered " a final judgment," the law requiring courts of 
 bankruptcy not to allow the prosecution of suits to final judgment. It was held 
 that such appeals might be stayed if the bankrupt was the appellant; and that 
 motions for further security on such appeals were proceedings which could be 
 stayed. (In re Metcalf & Duncan, 2 Ben. 78; s. c. i B. R. 201.) Contra, 
 holding that "it is not the purpose of the statute to suspend the right of the 
 plaintiff to maintain in the appellate court the correctness and validity of a 
 judgment from which a bankrupt might choose to take an appeal, until the 
 determination of the question of his discharge," and the proceedings on appeal 
 will not be stayed when the bankrupt is the appellant. (Merritt v. Glidden, 39 
 
BANKRUPTS. loy 
 
 § II.] To What Court is the Application for a Stay to be Made. 
 
 Cal. 559; s. c. 5 B. R. 157; s. c. 2 Am. Rep. 479, with notes.) A suit in the 
 nature of -a. judgment creditor's bill may also be enjoined. (/« re Whipple, 13 
 B. R. 373.) The fact that the creditor who is bringing the action has been omit- 
 ted from the list of creditors on the bankrupt's schedule, does not necessarily 
 prevent his action from being stayed, for his claim is still released by discharge, 
 if he has notice or knowledge of the bankruptcy proceedings. If an arrest 
 has been made before bankruptcy upon a debt from which a discharge would 
 be a release, it seems that the court may, nevertheless, stay all further proceed- 
 ings, under the provisions of this section. (Compare in re Migel, 2 B. R. 481; 
 in re M. Rosenberg, 2 B. R. 236; in re Duncan, 14 B. R. l8; in re Schwartz, 15 
 B. R. 330.) In England it has been held that when the bankrupt is in custody, 
 at the suit of a creditor who has proved his debt, the court upon petition will 
 order his discharge. This is because the creditor who has proved his debt is 
 deemed to have elected to pursue another remedy than his action in which the 
 arrest was made, and thereby to have waived the latter. {Ex p. Hicklin, i 
 Cook, 156; Exp. Bisson, i Cook, 157; 13 Ves. 183.) Compare, however, cases 
 under section 9 as to release from arrest. Compare also section 17 as to what 
 debts are excepted from the effect of a discharge; and section 63 as to what 
 debts are provable. 
 
 To What Court is the Application for a Stay to Be Made. — The bank- 
 ruptcy law is binding upon State courts as well as federal courts and it is to be 
 applied by both in all matters coining before them; hence a State court should 
 stay the action if application is made to it to do so. {In re M. Rosenberg 2 
 B. R. 236; s. c. 3 Ben. 14; National Bank v. Taylor, 120 Mass. 124; Hill v. 
 Harding, 107 U. S. 631; Samson v. Burton, 5 Ben. 325; s. c. 4 B. R. i; in re 
 Metcalf V. Duncan, 2 Ben. 78; s. t. i B. R. 201. Compare, however, Johnson 
 -u. Bishop, 8 B. R. 533; Woolworth, 324; Eyster v. Gaff, gi U. S. 521; =. u. 13 
 B. R. 546; the latter case holding that the mere filing in the State court of a 
 certificate of the appointment of an assignee with no plea or motion to be made 
 a party or to take part in the case, deserves no attention from the court. 
 See also, holding that the State court is not the tribunal to which to apply for 
 a stay, Givens v. Robbins, 5 Ala. 676. And see in re H. Richardson, 2 B. R. 
 202; Cutter V. Evans, 11 B. R. 448.) In general the application is made to the 
 court of bankruptcy, which issues an order directed to the suitor, restraining him 
 from the further prosecution of his suit. {In re L. Meyers, i B. R. 581; in re 
 Reed i B. R. i; in re Jacoby, i B, R. 118, and cases above cited.) 
 
 The application for a stay may be made by the affidavit of the bankrupt and 
 
I08 THE NATIONAL BANKRUPTCY LAW. 
 
 State Courts do Not Lose Jurisdiction Even if Action is Stayed. [Ch. IIL 
 
 when presented to the court in which the action is pending ought to entitle him 
 to a stay until his application for a discharge is determined, unless there are 
 good reasons for the continuance of the suit. (/» re Frostman & Hicks, 15 
 B. R. 41.) The application may also be made by the trustee, but it has been 
 held that it cannot be made by the plaintiff in the action. If the bankrupt 
 declines to avail himself of the privilege granted to him, the cause must proceed 
 to trial or be dismissed, with like effect as if the bankrupt had not been so 
 adjudged; the plaintiff has no more right to suggest the bankruptcy of the 
 defendant as a reason for staying the suit than he would have to plead the 
 bankrupt's certificate of discharge. If an action is not stayed, but proceeds to 
 judgment and a discharge is granted before judgment, the bankrupt cannot 
 afterwards set it up as a release from the judgment. If the discharge be 
 granted after the judgment, he may use it as a defense. (McDonald -v. Davis, 
 105 N. Y. 508.) It has further been held that the suggestion of bankruptcy is 
 not like the suggestion of the death of a party; that notwithstanding the 
 defendant's bankruptcy, a valid judgment may be entered against him unless 
 he avails himself of the right to have the action stayed. (Palmer v. Merrill, 57 
 Me. 26.) And furthermore, it is not the duty of the State court to stay the pro- 
 ceeding merely because the bankruptcy of the defendant has been suggested to 
 it (Eyster v. Gaff, supra; Stone v. Bank, 39 Ind. 284); and the court is under 
 no duty to take judicial notice of the bankruptcy of any of the parties to pro- 
 ceedings before it. It must be informed of the facts by proper pleadings, and 
 if the allegations of bankruptcy are denied, they must be proven by the record. 
 (Johnson v. Bishop, 8 B. R. 533.) It has been held that only the bankruptcy 
 court in which the petition is filed has the right to stay actions {in re H. Rich- 
 ardson, 2 Ben. 517; s. c. 2 B. R. 202); but this would seem to be contrary to the 
 doctrine laid down in Lathrop v. Drake, 91 U. S. 516; s. c. 13 B. R 472. If the 
 suitor lives outside of the district and has not made himself a party to the pro- 
 ceedings by appearing or proving his debt or otherwise, it is questionable 
 whether the court in which the petition is filed has jurisdiction over him and 
 even if it has, the difficulties that lie in the way of enforcing the order are 
 great. (/« re Hirsch, 2 B. R. 3. 
 
 State Courts do Not Lose Jupisdietion Even if Action is Stayed. — The 
 
 injunction is addressed to the suitor, not to the court. If the suitor disobeys it 
 he may be punished for contempt, but the State court does not lose jurisdiction 
 to proceed. It has been held that the court in which the action was pending 
 was not bound to take notice of the fact that the suitor had been enjoined and 
 
BANKRUPTS. 109 
 
 § II-] Stay is Discretionary. 
 
 that in prosecuting the action he was in contempt of the bankruptcy court, but 
 that if he moved the cause, it must proceed to judgment, and the only effect 
 would be that the suitor was liable to punishment. (Ewart v. Schwarz, 48 N. Y. 
 Superior, 390.) Failure to obtain a stay or the setting aside of a stay, once secured, 
 with permission to plaintiff to proceed with his action as if never restrained, and 
 in case he obtains judgment permitting him to take any other proceedings that 
 the law and practice of the State courts allow, does not prevent the defendant, 
 who, after the judgment has been obtained, is discharged in bankruptcy, from 
 setting up the discharge for the purpose of stopping supplementary proceedings 
 on the judgment, or other proceedings to enforce it. (McDonald v. Davis, 105 
 N. Y. 508; compare section 2 as to Stale courts retaining jurisdiction over 
 actions instituted before bankruptcy to enforce liens against the bankrupt's 
 property.) The rule that the court does not lose jurisdiction over the pending 
 proceeding and that the suit will proceed unless the bankruptcy of the defend- 
 ant is brought to its notice, applies equally to appeals. If a defendant is ad- 
 judged bankrupt after he has taken an appeal, an affirmance of the judgment in 
 the absence of a suggestion of his bankruptcy is not a nullity. (Flanagan u. 
 Pearson, 14 B. R. 37; s. c. 42 Tex. :.) 
 
 Stay Is Discretionary. — With the exception of the period intervening 
 between the filing of the petition and the adjudication it is discretionary with the 
 court whether or not to grant a stay. In general, suits should not be allowed 
 to be prosecuted. A good reason must be shown before an exception will be 
 made. The fact that the amount of the debt is in dispute would be such a 
 reason. It was expressly so declared in the act of 1867. So, too, one should 
 not be restrained from prosecuting a suit against a bankrupt, if thereby he 
 would lose a claim against others. Thus, one should not be restrained from 
 prosecuting a suit against a bankrupt corporation, if thereby he would lose his 
 claim upon the personal liability of the stockholders; and further, one should 
 not be restrained from prosecuting an actionagainstabankrupt and those jointly 
 liable with him if by the law of the State all the joint debtors must be made 
 defendants. Whether, indeed, such actions are necessarily stayed during the 
 time between the filing of the petition and the adjudication, is questionable. 
 Under the act of 1867, which forbade actions to be prosecuted to judgment, it 
 was held that the necessities of the case made suits against a bankrupt corpora- 
 tion an exception to the rule, when the obtaining of a judgment against a corpora- 
 ion was necessary to perfect one's rights against the stockholders individually. 
 <Compare Shellington v. Howland, 53 N. Y. 371 ; Allen v. Ward, 36 N. Y. Superior, 
 
no THE NATIONAL BANKRUPTCY LAW. 
 
 The Duration of the Stay. [Ch. III. 
 
 290; Ansonia Co. v. N. L. Chimney Co., 10 B. R. 355; Meyer w. Aurora Ins. 
 Co., 7 B. R. 191; Cooper v. Troy Woollen Co., 11 Abb. Pr. [N. S.] 353 n; Allen 
 V. Soldier's B. M. & D. Co., 4 B. R. 537.) And where the laws of a State re- 
 quired that every one of several joint debtors be made a party to proceedings it 
 was held under that act that the bankruptcy of one of them would not authorize 
 a stay, and that it should be prosecuted to judgment as against all, but a stay 
 of execution against the property of the bankrupt debtor should be granted. 
 (Hoyt <j. Freel, 4 B. R. 131; o. v,. 8 Abb. Pr. [N. S.] 220.) So the court may 
 decline to stay an action if the suitor shows that it is doubtful if the debtor can 
 secure a discharge, and that if the suitor is not permitted to institute or con- 
 tinue his action he will lose an opportunity to make service of summons, or to 
 procure testimony, or that the statute of limitations will bar his claim. (In re 
 Ghiradelli, 4 B. R. 164; s. c. i Saw. 343. It has been held that while the 
 provision was intended for the benefit of the debtor yet the court might stay 
 the proceedings upon application of the trustee. (Samson v. Burton, 4 B. R. I ; 
 s. c. 5 Ben. 325.) 
 
 The Duration of the Stay. — Proceedings must be stayed from the time of 
 the filing of the petition until the adjudication. " Adjudication " means the 
 time of the entry of the decree that the defendant in a bankruptcy proceeding 
 is a bankrupt, or if such decree is appealed from, then the time when such 
 decree is finally affirmed. (Section i [2].) The filing of a petition against one 
 includes the filing of a petition by him. (Section i [1].) The language of the 
 injunction should be in accordance with the statute, that is, it seems it should 
 be in the alternative; viz., a stay of twelve months from the time of the adjudi- 
 cation "or if within that time such person applies for a discharge, then until 
 the question of such discharge is determined." The injunction only continues 
 in force as long as the question of discharge is undetermined. The granting of 
 a discharge gives to the bankrupt an absolute defense. The refusal to grant 
 him a discharge terminates the stay. It has been held that no motion for a dis- 
 solution of the injunction is necessary after the application for a discharge has 
 been passed upon; that no order is required to show that the stay is terminated. 
 (/» re Rosenberg, 2 B. R. 236; s. c. 3 Ben. 14; in re V. Thomas, 3 B. R. 38; in 
 re Belden, 6 B. R. 443; Dingee v. Becker, 9 B. R. 508.) The right of a creditor 
 of a bankrupt to maintain an action against him revives immediately upon the 
 rendition of a judgment by the court of bankruptcy passing upon the bankrupt's 
 application for a discharge, and the right to bring and maintain such action is 
 not restricted by the fact that the bankrupt has filed a petition to review the 
 
BANKRUPTS. 1 1 1 
 
 § II.] Continuance of Pending Suits. 
 
 judgment refusing him a discharge and that the proceedings for such review 
 are still pending. (Storrs v. Plumb, 30 Hun, 319, citing as to judgments being 
 final though appealed from, Fisher </. Hepborn, 48 N. Y. 41; Sixth Ave. R. 
 R. ti. Gilbert, 71 N. Y. 430, and distinguishing Musgrave v. Sherwood, 76 N. Y. 
 194.) A stay of proceedings " until the further order of the court," is vacated 
 by the bankrupt's subsequent discharge /^r se\ and a creditor whose action has 
 been stayed thereby, may proceed. (Cox v. Dorwin, 29 Hun, 293.) 
 
 Inquiry as to Whether Debts are Released by Discharge. — The existing 
 act makes it necessary for the bankruptcy court, when an application for a stay 
 is made, to inquire whether the claim on which the suit is founded, is dis- 
 chargeable or not. It is submitted that the court will not look beyond the 
 papers and pleadings in the action. If they set forth a cause of action which is 
 not dischargeable, then we believe no stay will be granted. We doubt if 
 the bankruptcy court would hear allegations contradicting the allegations 
 of the complaint. That would be virtually to try the cause. It would not 
 save the bankrupt annoyance and would be manifestly improper. In such 
 cases the proper practice would be for the bankruptcy court to decline ta 
 restrain the prosecution of the action in the State court. Compare notes to sec- 
 tion 9, as to the protection from arrest in actions founded upon claims released 
 by a discharge. 
 
 Continuance of Pending Suits. — Unless ordered by the court the trustee 
 is not bound to enter an appearance and defend a pending suit; without its 
 approval he will not be permitted to prosecute any pending suit. Unless 
 ordered, he must exercise his own discretion as to the wisdom of defending any 
 pending suit. He is not obliged to seek his remedy in these actions. (Trader's 
 Bank v. Campbell, 14 Wall. 87; s. c. 6 B. R. 353; s. t. below, 2 Biss. 423; s. c. 
 3 B. R. 498.) The language of the present act differs in some details from the 
 act of 1867, but it would seem that the words were still permissive rather than 
 mandatory, and that a trustee, unless ordered, is not obliged to either prose- 
 cute or defend an action unless it is for the interest of the estate. (Reade v. 
 Waterhouse, 10 B. R. 277; s. c. 52 N. Y. 587; s. c. below, 28 Hun, 78.) It would 
 seem that the trustee could not be made a party against his will except by order 
 of the court; but if a suit is pending against a party at the time he is adjudged 
 a bankrupt, notice may be given to the trustee that it will be prosecuted against 
 him in his representative capacity, and if he makes no objection to the jurisdic- 
 tion and the bankruptcy court does not arrest the oroceedines. the case mav be 
 
112 THE NATIONAL BANKRUPTCY LAW. 
 
 Rights of Bankrupt to Maintain Pending Actions. [Ch. III. 
 
 prosecuted to judgment. Such a judgment may be filed with the trustee as an 
 ascertainment of the amount due to the creditor by the bankrupt, and as a basis 
 of dividends, but it is effectual and operative for that purpose only. (Norton v. 
 Switzer, 93 U. S. 355.) If the action which has been instituted is one affecting 
 property which vests in the trustee, and he does not make himself a party 
 thereto, he is affected by the judgment in the same way as any purchaser 
 pendente lite. The State court will not stay a foreclosure already commenced 
 against the owner of the equity of redemption, who is thereafter adjudged a 
 bankrupt, unless the bankruptcy court actually issues an injunction order. The 
 suit does not become defective for lack of parties, even though the trustee is not 
 made a party. (Lenihan v. Haman, 55 N. Y, 652; Cleveland v. Boerum, 24 N. 
 Y. 613, and cases cited in section 2.) 
 
 In What Suits Can Trustees Intervene. — It has been held the trustee 
 
 may intervene in any pending legal proceeding affecting the property of the 
 bankrupt or the rights of creditors. If a fund is in the hands of a receiver 
 appointed by a State court, he may as the representative of the bankrupt and 
 his creditors make himself a party to the proceedings, and contest any claim 
 against the fund. (Louden v. Blanford, 56 Geo. 150.) He may bring a writ of 
 error to review a judgment which was entered against the bankrupt before the 
 adjudication, and he alone can bring such writ; he may also take an appeal 
 from such judgment. (Knox v. Bank, 12 Wall. 379; Sandford v. Sandford, 58 
 N. Y. 67; s. c. 17 Am. Rep. 206, with notes.) 
 
 Bights of Bankrupt to Maintain Pending Actions. - There is some con- 
 flict of authority as to the right of the bankrupt to continue pending actions 
 brought by or against him. All his rights of action except those causes of action 
 which are for personal injuries and which die with the person pass to the trustee. 
 From the time that the latter acquires them the bankrupt has no further interest 
 in them. It has been accordingly held that after that time neither the bank- 
 rupt nor his attorney has any authority to settle a suit which is then pending in 
 his name; that if such a suit is dismissed after the title vests in the trustee in 
 bankruptcy, the trustee may move to have the same reinstated, and need show 
 only that the settlement was made without his authority. (Home Ins. Co. v. 
 Hollis, 53 Geo. 659.) On the other hand, just as the trustee may abandon 
 worthless property or may refuse to accept a lease which would prove unprofit- 
 able, he may decline to continue the prosecution of a worthless cause of action. 
 Further than this it has been held that until the appointment of a trustee the 
 
BANKRUPTS. I13 
 
 § II.] In Whose Name is the Action Continued — Limitation of Actions. 
 
 title to all the property, including rights of action, remains in the bankrupt, not- 
 withstanding it may afterwards relate back to the adjudication, and that until 
 some one with a better right to prosecute appears, he may continue the prosecu- 
 tion. (Gilmore v. Bangs, 55 Geo. 403; Sutherland v. Davis, 42 Ind. 26.) 
 
 In Whose Name Is the Action Continued. — If the trustee intervenes, the 
 suit will be continued in his name, and this seems to be the rule even where the 
 tommon-law doctrine prevails, that an assignee must sue in the name of the 
 assignor. (Ames v. Oilman, 51 Mass. 239.) 
 
 Liability of the Substituted Trustee for Costs. — Costs cannot property 
 be taxed to the trustee before he becomes a party to the suit. After that time 
 he is liable for the costs. (Norton v. Switzer, 93 U. S. 355; citing Reade v. Water- 
 house, 12 Abb. Pr. [N. S.] 255); s. c. 52 N. Y. 588; s. c. 10 B. R. 277; Holland 
 V. Seaver, i Fost. 387 ; Penniman v. Norton, i Barb. Ch. 248, and Smith v. Gordon, 
 •6 Law Rep. 314.) But he is not personally liable unless the court shall direct 
 the same to be personally paid by him because of his mismanagement or bad 
 faith in the action. (Reade v. Waterhouse, supra.) As to his personal liability 
 for the amount of a judgment, see Norton v. Switzer, 93 U. S. 355. 
 
 Limitation of Actions. — The provisions of the present act as to the limita- 
 tion of actions against or by a trustee are totally different from those of the act 
 of 1867. This section is an absolute, arbitrary rule, forbidding the commence- 
 ment of any suit or action after two years from the time of the closing of the 
 estate. It is immaterial when the right of action accrued, or whether it sprang 
 from the fraud of another, or is founded on contract. The maxim, interest rei 
 publica sit finis Htium, is here embodied in this section; and no exceptions are 
 allowed. It is within the power of Congress to pass such a statute of limita- 
 tions and it necessarily supersedes all State laws of limitations which would 
 otherwise affect the same actions. (Peiper v. Harmer, 5 B. R. 252.) It has 
 been held that this statute is an independent provision having no connec- 
 tion with any State statute on the subject; that regardless of the time when 
 an action would be barred by a State statute, it extends until two years after 
 the estate is closed whether the State statute would terminate the right to 
 bring suit at an earlier or later date. (Freelander & Gerson v. Holloman, 
 9 B. R. 331.) Suits in State and Federal courts both fall within the terms of 
 the statute. In the term suit as used in the bankruptcy act are included all prose- 
 cutions of a demand in courts of justice whether the proceedings be at law or in 
 equity (Bailey v. Weir, 21 Wall. 342); and regardless of the nature of the pro- 
 
 NAT. BANKRUPTCY LAW — 8 
 
114 THE NATIONAL BANKRUPTCY LAW. 
 
 Compositions, when Confirmed. [Ch. IIL 
 
 ceedings or the character of the tribunal. Thus a venire to assess damages for 
 land taken under the right of eminent domain is a proceeding which will be 
 barred by this statute. (Union Canal Co. v. Woodside, ii Penn. 176.) The 
 limitation exists notwithstanding action is brought in the name of the trustee 
 for the use of a third person. (Ames v. Oilman, 51 Mass. 239.) It applies also 
 to writs of error sued out to review a State judgment, as well as to suits originally 
 commenced. (Jenlcins v. Bank, io6 U. S. 571 ; Walker v. Towner, 4 Dill. 165; 
 Payson v. Coffin, 4 Dill. 386.) 
 
 Does Not Affect Jurisdiction. — Failure to bring the suit within the time 
 herein prescribed is a good defense to an action when brought, if pleaded; but it 
 does not affect the jurisdiction of the court. (Chemung Bank v. Judson, 8 N. 
 Y. 254.) 
 
 Assignment of Causes of Action. — Where the trustee has a claim against 
 which the statute of limitations has run, he cannot by assignment confer a right 
 of action upon another and thus avoid the statute. (Cleveland v. Boerum, 24 
 N. Y. 613.) 
 
 When is the Estate Closed. — The only provision of the statute as to when 
 an estate is closed is that in section 2 (8), which implies that the estate is closed 
 when an order is made approving the final account of the trustee and discharg. 
 ing him. 
 
 Sec. 12. Compositions, when Confirmed. — « A bankrupt may 
 offer terms of composition to his creditors after, but not before, 
 he has been examined in open court or at a meeting of his cred- 
 itors, and filed in court the schedule of his property and list of his 
 creditors, required to be filed by bankrupts. 
 
 b An application for the confirmation of a composition may be 
 filed in the court of bankruptcy after, but not before, it has been 
 accepted in writing by a majority in number of all creditors 
 whose claims have been allowed, which number must represent a 
 majority in amount of such claims, and the consideration to be 
 paid by the bankrupt to his creditors, and the money necessary 
 to pay all debts which have priority and the cost of the proceed- 
 ings, have been deposited in such place as shall be designated by 
 and subject to the order of the judge. 
 
BANKRUPTS. IIJ 
 
 § 12.] History of Composition as an Incident of Bankruptcy Proceedings. 
 
 c A date and place, with reference to the convenience of the 
 parties in interest, shall be fixed for the hearing upon each appli- 
 cation for the confirmation of a composition, and such objections 
 as may be made to its confirmation. 
 
 d The judge shall confirm a composition if satisfied that (i) it 
 is for the best interests of the creditors ; (2) the bankrupt has not 
 been guilty of any of the acts or failed to perform any of the 
 duties which would be a bar to his discharge ; and (3) the offer 
 and its acceptance are in good faith and have not been made or 
 procured except as herein provided, or by any means, promises, 
 or acts herein forbidden. 
 
 e Upon the confirmation of a composition, the consideration 
 shall be distributed as the judge shall direct, and the case dis- 
 missed. Whenever a composition is not confirmed, the estate 
 shall be administered in bankruptcy as herein provided. 
 
 Analogous Provisions of Former Acts. — 
 R. S., section 5103 A (passed June 22, 1874), 
 
 History of Composition as an Incident of Bankruptcy Proceedings. — 
 
 The bankruptcy acts of i8oo and 1841 and the original act of 1867 contained no 
 provision for a composition by a bankrupt with his creditors. The first United 
 States statute on the subject was section 5103 A, Revised Statutes, passed in 1874 
 The first English statute permitting an arrangement with creditors was that of 6 
 Geo. IV., ch. 16, passed in 1825, but that did not release the compounding party 
 from the debts due creditors who dissented. The first English statute permit- 
 ting a composition which would act as a discharge of all debts, those of dis- 
 senting as well as assenting creditors, was that of 12 & 13 Vict., ch. 106, passed 
 in 1849. That act required, however, that the compounding bankrupt must 
 make a cessio bonorum — that is, must turn over all his property to his creditors, 
 In order to make the composition valid in case there were dissenting creditors. 
 The act of 1861, 24 & 25 Vict. 134, permitted a composition without a cessio 
 bonorum. Our act of June 22, 1874, was modeled on the 126th section of the 
 English bankruptcy act of 1869 (32 & 33 Vict., ch. 71), which authorized such a 
 composition without the institution of a bankruptcy proceeding, but which in all 
 other respects was substantially adopted in the U. S. act. The section of the 
 
Il6 THE NATIONAL BANKRUPTCY LAW. 
 
 Constitutionality of the Section. [Ch. III. 
 
 present act differs in many details, especially in regard to procedure, from the 
 act of 1874. In particular the present act permits a composition only after 
 adjudication of bankruptcy, while the act of 1867 permitted it after petition and 
 before or after adjudication. (Compare in re Reiman, 11 B. R. 21; s. c. 7 Ben. 
 455; s. c. on appeal, 12 Blatch. 562; s. c. 13 B. R. 128.) The sections of the Eng- 
 lish act as to composition and those of the U. S. act of 1874 appear in parallel 
 columns in the opinion in re Scott, Collins & Co., 15 B. R. 73. 
 
 Constitutionality of the Section. — The analogous section of the former 
 act (section 5103 A, R. S.) was assailed as unconstitutional on the ground that the 
 power given to Congress to establish a. uniform system of bankruptcy was a 
 power to enact laws of bankruptcy as the word " bankruptcy " was understood 
 at the time of the adoption of the Constitution. It was urged that a bankruptcy 
 law necessarily required that all the property of the bankrupt should be turned 
 over for distribution in some uniform manner among his creditors, and that an 
 act which discharged a person from his debts without the consent of his cred- 
 itors, when the debtor was not required to make a cessio bonorum, was not a 
 " bankruptcy " law, and that Congress had no power to enact such a law. But 
 the constitutionality of the law was upheld by the District Court for the South- 
 ern District of N. Y., which held that the power of Congress to legislate on the 
 subject of bankruptcy was not limited to passing only such laws of bankruptcy 
 as had been passed by the British Parliament at the time we adopted our Con- 
 stitution, and that a law authorizing one's release from all his debts if a com- 
 position agreement is made with a majority of his creditors, is valid if by the 
 provisions of the composition and of the proceedings under which it is con- 
 ducted the property of the debtor is substantially appropriated to his creditors, 
 and if each creditor obtains substantially as great a pro rata share of such prop- 
 erty as it can pay or can reasonably be expected to pay. If there is such a cessio 
 bonorum as the practical result of th6 composition, although there is no inter- 
 vention of an assignee or trustee, and even though such cessio bonorum is the 
 result only of a provision requiring that the composition is not binding until 
 ratified, and that it shall not be ratified by the court unless it appears for the 
 interest of all the creditors, then the law is constitutional, because unless the 
 composition does substantially appropriate all the debtor's property to the pay- 
 ments of his debts, the court will be obliged to refuse to confirm it. 
 
 What Are Banlcruptey and What Are Insolvency Laws. — The ques- 
 tion, what laws are to be deemed bankruptcy laws within the meaning of the 
 
BANKRUPTS. 11/ 
 
 § 12.] Power of Congress over the Subject of Bankruptcy. 
 
 Constitution of the United States has been a matter of much discussion in the 
 courts. Attempts have been made to distinguish between bankruptcy and 
 insolvent laws; but this distinction, although it existed in the earliest English 
 statutes, — bankrupt laws providing an involuntary proceeding against traders 
 only, which ended in granting them a discharge from their debts; while insolv- 
 ency laws operated upon debtors of all classes, but upon none involuntarily, and 
 ended not in discharging them from their indebtedness, but in protecting them 
 from further legal process against the person of the debtor — this distinction, 
 although it existed in England, never was recognized in America. It has been 
 claimed by eminent authorities that no law was ever passed by the American 
 Colonies and technically called a " bankruptcy law," but that laws co-extensive 
 with the English bankruptcy system were frequently passed by the colonial and 
 State legislatures, and were called insolvent laws. In Sturgis v. Crowninshield, 
 4 Wheaton 122, 195, it was said: "The difBculty 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." (Compare 2 Kent 394; Blanchard v. Russell, 13 Mass. i; 
 s. c. 7 Am. Dec. 106, with notes; Ogden v. Saunders, 12 Wheat. 213 ) Because 
 of this supposed distinction between a bankruptcy and an insolvency law many 
 judges held the bankruptcy act of 1841 to be unconstitutional as not being a 
 "bankruptcy" law, inasmuch as it applied to others than traders, and because 
 it contained voluntary features, and because it discharged debts without the cqn- 
 sent of the creditor in any form, and because it placed the whole power in the 
 hands of the debtor without any means of coercion on the part of the creditor. 
 See the learned dissenting opinion of Bronson, J., in Sackett v. Andross, 5 Hill 
 (N. Y.)327; and also in re Klein (2 N. Y. Leg. Obs. 184), which arose in the U. S. 
 District Court of Missouri, in which that act was declared unconstitutional upon 
 the grounds above mentioned. The latter decision was overruled by the U. S. 
 Circuit Court. See in re Klein, reported in note to Nelson v. Carland, i How- 
 ard 277. These cases are important not only in determining the constitutionality 
 of the bankruptcy law as a whole, but also of the special provisions as to 
 composition. 
 
 Power of Congress over the Subject of Bankruptcy. — It is now 
 
 settled law that the power conferred on Congress is an unrestricted authority 
 over the entire subject as the Parliament of Great Britain had it, and as 
 the sovereign States of the Union had it before the time when the constitution 
 
Il8 THE NATIONAL BANKRUPTCY LAW. 
 
 Power of Congress over the Subject of Bankruptcy. [Ch. III. 
 
 was adopted. It includes the power to pass laws providing for voluntary as 
 well as involuntary proceedings, and embracing not only traders but all debtors 
 to whom Congress may deem it wise to extend the privileges of the act; which 
 proceedings may result in a release of the debtor from his debts, as well as from 
 liability to be personally seized; and the consent of creditors may be entirely 
 dispensed with. The discharge may be given, no matter how great the debts 
 and notwithstanding the bankrupt may have no property whatever. It is a 
 plenary power, and extends to all cases where the law causes the property of a 
 debtor to be distributed among his creditors. All legislation affecting the sub- 
 stance and form, but tending to further the great end of the subject; viz., dis- 
 tribution of the bankrupt's assets and discharge of the bankrupt from his debts 
 — is in the discretion of Congress. In Story on The Constitution (section 1113), 
 it is said; " As satisfactory a description of a bankruptcy law as can be framed 
 is that it is a law for the benefit and relief of creditors and their debtors, in cases 
 in which the latter are unable or unwilling to pay their debts; and a law on the 
 subject of bankruptcies, in the sense of the Constitution, is a law making pro- 
 visions for persons failing to pay their debts." See the following authorities 
 upholding the constitutionality of bankruptcy acts embracing all classes of debt- 
 ors and providing for proceedings both voluntary and involuntary: Thompson 
 ■V. Alger, 12 Met. (Mass.) 428; State Bank v. Wilborn, i Eng. (Ark.) 35; Loud v. 
 Pierce, 25 Me. 233; Morse v. Hovey, i Barb. Ch. 404; Lalor v. Wattles, 3 Gil" 
 man (111.) 225; Dresser v. Brooks, 3 Barb. 429; also the majority opinion in 
 Sackett v. Andross, 5 Hill (N. Y.) 327; Kunzler v. Kohaus, 5 Hill (N. Y.) 317. 
 
 The fact that in composition proceedings the determination of the question 
 whether the bankrupt shall be released from his debts is left to the majority of 
 his creditors does not make the law unconstitutional. Congress has plenary 
 power to legislate on the subject of bankruptcy. The " subject of bankruptcy " 
 is not, properly, anything less than the subject of the relations between an 
 insolvent or non-paying debtor and his creditors. "It is a well-established 
 principle that in making laws necessary and proper to carry into execution the 
 powers vested by the Constitution, Congress possesses the choice of means, and 
 may use any means which are in fact conducive to the exercise of a power 
 granted by the Constitution." (United States v. Fisher, 2 Cranch 358, 396, 
 McCulloch V. Maryland, 4 Wheat. 316, 321; the Legal Tender Cases, 12 Wallace 
 457. 539-) The subject of bankruptcy includes the distribution of the property 
 of the insolvent debtor among his creditors, and the discharge of the debtor 
 from his contracts and legal liabilities, as well as the intermediate and inci- 
 
BANKRUPTS. II9 
 
 § 12.] Construction — How is Consent of Creditors to be Obtained ? 
 
 dental matters tending to the accomplishment or promotion of these two prin- 
 cipal ends. Congress has full power over this subject, with the one qualification 
 that its laws must be uniform throughout the United States. (In re Silverman, 
 4 B. R. 523; s. c. I Saw. 4.10; in re Reiman & Friedlander, 11 B. R. 21; s. c. 
 7 Ben. 455; s. c. affirmed, 13 B. R. 128; s. c. 12 Blatch. 562.) 
 
 ConstFUCtion. — This section, being in derogation of common-law rights, as 
 it compels the dissenting minority of creditors to accept the terms agreed upon 
 between the debtor and the majority, is to be strictly construed. {In re Shields, 
 15 B. R. 532.) 
 
 What Bankrupts May Make Compositions With Credltops?— The act 
 
 restricts the right to no particular class. Corporations and partnerships as well 
 as individuals may make such arrangements with creditors. A corporation 
 under this law may apply for and secure a discharge, a right not accorded under 
 the act of 1867. {In re Weber Furniture Co., 13 B. R. 529; s. c. on appeal, 13 
 B. R. 559.) In the case of partnerships or other joint debtors the composition 
 and application for its confirmation may be made by any one of the several 
 joint debtors; it is not necessary that it be made by the entire firm. (Pool v. 
 McDonald, 15 B. R. 560.) 
 
 When May a Composition be Made? — Under the present act a composi- 
 
 tion can be made only after the filing of the schedules, and after examination 
 of the bankrupt, and after the claims of at least some of his creditors have been 
 allowed; hence, not till after adjudication of bankruptcy, in this respect differ, 
 ing from the former act. 
 
 How is Consent of Creditors to be Obtained ? — The present act provides 
 
 no special manner in which the consent of the creditors is to be obtained. As 
 the purposes for which a meeting was called under the provisions of the act of 
 1874, viz., the examination of the bankrupt and the filing of a schedule of assets, 
 must, under the terms of the present act, be accomplished before even the offer 
 to make a composition is made, there would be no advantage in a meeting, 
 unless for the purpose of conference. Under the act of 1874, which required 
 first a meeting of creditors and thereafter a confirmation of the action of the 
 meeting, evidenced by the signatures of a certain number of creditors, it was 
 held that such confirmation need not be obtained at a meeting, but the debtor 
 might procure it within any reasonable time thereafter. {In re Spillman, 13 B. 
 R. 214; in re Scott, Collins & Co., 15 B. R. 73-) The consent, it would seem, 
 
I20 THE NATIONAL BANKRUPTCY LAW. 
 
 Proceedings Preliminary to Application for Confirmation. [Ch. III. 
 
 might now be obtained by personally and privately circulating the paper among 
 creditors. The rights of those who are not called upon or who choose to dissent 
 will be fully protected at the hearing which must be appointed by the judge, to 
 hear objections to the confirmation of the composition. 
 
 What Consent Must be Obtained. — The debtor's offer of composition must 
 be accepted by a majority both in number and in amount of all creditors whose 
 claims have been allowed. There are no restrictions whatever upon any class 
 of creditors; however large or small their claims, they will be entitled to vote 
 and to be counted both in considering the number of creditors and the amount 
 of allowed claims. In this respect the present act differs from the former one. 
 But only creditors whose claims are allowed can join in the composition, and 
 the majority must be of all which have been allowed, not of those assembled at 
 any particular meeting as under the former act. 
 
 Creditors may act through their duly appointed attorneys in fact. See section i 
 (9); in re Weber Furniture Co., 13 B. R. 529; a. t. on appeal. Id. 559. In cases 
 of composition offered by a bankrupt partnership and accepted by an instrument 
 which the partnership and the individual creditors have signed without any 
 classification, the court will not refuse to confirm the same for that reason, 
 unless it appears or is objected that the composition worked injustice to one 
 class as compared with the other; if so, the acceptance should show to which 
 class of creditors the signers belong. {In re Spades, 13 B. R. 72; s. c. 6 Biss. 
 448.) As to proof and allowance of claims, see section 57. 
 
 Proceedings Ppelimlnary to Application for Confirmation. — The act 
 
 requires that the consideration to be paid by the bankrupt to his creditors as well 
 as the money necessary to pay all costs and all debts having priority, shall first 
 be deposited. What is meant by consideration? The use of the word 
 " money " with reference to the deposit for claims having priority and for costs 
 would seem to imply that something other than money could be deposited as 
 the consideration for compounding creditors. The act of 1874 requiied that the 
 composition should provide for a payment or satisfaction in money, in contra- 
 distinction to satisfaction in other property, but it was held that that permitted 
 a composition to be effected by giving notes payable in money at specified dates. 
 (In re Reiman & Friedlander, n B. R. 21; s. c. 7 Ben. 455; s. c. afiSrmed, 13 B. 
 R. 128; s. c. 12 Blatch. 562; in re Langdon, 13 B. R. 60; in re Lewis, 14 B. R. 
 144.) The use of the word " paid " and the use of the word " deposit " would 
 seem, however, to exclude the idea of a consideration being anything else than 
 
BANKRUPTS. I2I 
 
 § 12.] Proceedings Preliminary to Application for Confirmation. 
 
 money or negotiable instruments — orders for the payment of money. The act 
 further requires that the consideration shall be distributed by the judge, and 
 that as soon as distributed the case is to be dismissed. As the composition can- 
 not be made before adjudication, and examination of the creditor, and the filing 
 of the schedules and the allowance of some claims, it will in practice, at least, 
 rarely be made before the appointment of a trustee, by which time all the prop- 
 erty of the bankrupt will have become vested in the trustee. As this title 
 remains in the trustee until after the composition is confirmed, and as a compo- 
 sition cannot be confirmed until the property has been deposited for distribution, 
 it would seem that the " consideration "to be paid to compounding creditors 
 could not be the property of the bankrupt in specie. This inference is further 
 required by the provision that the consideration shall be distributed. The act 
 permits the composition to be effected before the trustee has converted the 
 bankrupt's property into cash ; indeed, the very purpose of a composition is to 
 save the expense of the administration of the estate in bankruptcy, to prevent a 
 sacrifice sale, and to save that margin which can usually be saved by the man- 
 agement of a business by one familiar with it instead of by one a stranger to it, 
 even although the latter may possess, in general, greater capacity. (Compare in 
 re Morris, ii B. R. 443.) If the bankrupt's property is real estate, it is not 
 susceptible of distribution; and it is equally clear that his personal chattels are 
 not to be distributed among his creditors. If, then, the debtor's property is 
 not to be the consideration to be distributed among his creditors, the considera- 
 tion must be either after acquired property, which in the ordinary case will be 
 a mere pittance; exempt property, which will rarely be of greater value, or 
 money borrowed by the bankrupt from some friend; or else the bankrupt's own 
 notes. Under the act of 1874, which required a payment in money, it was held 
 that the money might be paid in instalments, and that notes might be accepted 
 as promises to pay in money, but not as an absolute payment {j,n re Hurst, 13 
 B. R, 455); but under that act the proceeding was not dismissed as soon as the 
 composition was confirmed. The court retained jurisdiction to enforce the pro- 
 visions of the composition. The present act makes the confirmation of the com- 
 position operate as a dismissal of the proceeding; it is at an end, although the 
 court may, under certain circumstances, set aside the composition and reinstate 
 the case just as courts in general may open judgments. It cannot, however, en- 
 foite promises to pay. But that promises to pay may constitute the consideration 
 is implied by the provision in 14 (c) to the effect that the confirmation of the 
 composition shall discharge the bankrupt from his debts other than those 
 
122 THE NATIONAL BANKRUPTCY LAW. 
 
 Deposit of Money to Pay Debts Having Priority. [Ch. 111. 
 
 agreed to be paid by the terms of a composition and those not affected by a 
 discharge. As to the effect of non-payment of such notes, see below, paragraph 
 on Effect of a Composition. 
 
 Amount of the Consideration, — Whatever is the nature of the considera- 
 tion, it must, in value, be substantially as much as the property of the bankrupt 
 can reasonably be expected to yield to the creditors; else the court will be in 
 duty bound to refuse to confirm the composition on the ground that it is not for 
 the interest of creditors. Indeed, unless the courts were thus by the statute 
 bound to protect creditors and secure to them substantially as much as the 
 bankrupt's property would amount to, it seems that the law authorizing such 
 compositions and making them binding on dissenting creditors would be uncon- 
 stitutional. See notes on " Constitutionality," supra, this section. (In re 
 Reiman & Friedlander, ii B. R. 21; s. c. 7 Ben. 455; s. c. on appeal, 12 Blatch. 
 562; s. c. 13 B. R. 128.) If the consideration offered does equal the amount 
 which the bankrupt's property will probably yield when administered by the 
 trustee in bankruptcy, then, in the absence of fraud, the judge should not refuse 
 to confirm the composition simply because the bankrupt might have offered 
 more. " As it is established by all experience that a man can make more out of 
 his own assets than assignees of more general capacity than he, and entirely 
 honest can realize, there is an undoubted margin in many cases which the 
 debtor may save by offering less than he might offer, but more than his creditors 
 could obtain by process of law." {In re Morris, 11 B. R. 443; in re Whipple, 11 
 B. R. 524. As to amount of margin, see in re Weber Furniture Co., 13 B. R. 
 529; s. c. on appeal, 13 B. R. 559.) 
 
 Deposit of Money to Pay Debts Having Priority. — The present act pro- 
 vides that before the application for the confirmation of the composition shall be 
 filed in a court, the money necessary to pay all debts which have priority and 
 the cost of the proceedings shall have been deposited pursuant to the order ot 
 the judge. What sum must be deposited before a composition can be made, if 
 the assets of the estate are insufficient to pay in full the creditors having pri- 
 ority? Is one prevented from making a composition in such cases unless he 
 procures from some source, by borrowing or otherwise, enough money to pay 
 in full these claims having priority and these costs? The former act provided 
 that " the composition should, subject to the priorities declared in said act, pro- 
 vide for 2.pro rata payment, etc." In re Chamberlin, decided in the southern dis- 
 trict of N. Y. in 1876, and reported in 17 B. R. 49, it was held by Judge Blatch- 
 
BANKRUPTS. 123 
 
 § 12.] Parties in Interest — Papers on Application. 
 
 ford, that all that was meant by this provision of the Revised Statutes, and all 
 that was preserved by the composition law, was a priority of payment out of the 
 assets of the debtor. Further than that there was no priority, and when there 
 were no assets and the composition money was to be advanced by other parties 
 and from other sources than the property of the bankrupt, the preferred debt 
 under the statute had no higher claim than that of general creditors. In this 
 case the State of New York, as a creditor, contended that the composition could 
 not be confirmed without first paying it in full, whether the assets were suffi- 
 cient or not for that purpose. The differences between the two statutes render it 
 doubtful if the case cited is any longer applicable. Compare, however, sec- 
 tion 65 e. 
 
 Parties in Interest. — " Parties in interest " is a broader term than " cred- 
 itors," which was the word used in the former act. Not only creditors whose 
 claims are allowed may object, but any one who would be adversely affected. 
 But creditors who are fully secured cannot be injuriously affected and therefore 
 have no standing in court entitling them to object. {In re Scott, Collins & Co., 
 15 B. R. 73.) 
 
 Papers on Application. — If no meeting of creditors has been had to act on 
 the question of accepting the offer of composition, then the only papers would 
 seem to be the application of the debtor, accompanied by the offer, which should 
 embody the proposed deed of composition or the substance of its terms, and the 
 acceptance of the assenting creditors, showing the amount of their claims. The 
 proceedings must be before the judge. Section 38 (4) expressly excepts ques- 
 tions arising out of the applications of bankrupts for compositions from the 
 questions which can be determined by referees. 
 
 Confirmation of the Composition. — In general, the composition should 
 be confirmed unless there are objections. If the papers show the requisite con- 
 sent has been given, and there is on their face no fraud, a prima facie case is 
 made, and unless the confirmation is opposed and evidence produced showing 
 the existence of valid grounds for refusing to confirm, confirmation should be 
 granted as of course. If the decision of the creditors is to be reviewed, it must 
 be done on notice and hearing and the opinion of the creditors as evidenced by 
 the decision of the majority in number and amount will not be disturbed by the 
 court unless evidence is produced which will sustain the court in such action. 
 Where no evidence aliunde the offer and the acceptance of the offer is presented, 
 the composition, as -c nearly universal rule, should .be confirmed. The only 
 
124 THE NATIONAL BANKRUPTCY LAW. 
 
 Specific Grounds for Refusing to Confirm. [Ch. III. 
 
 exception 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 ex mero motu, to refuse to proceed, and upon notice to all 
 parties concerned require the exceptional and suspicious circumstances to be 
 explained. Unless such fraud appears it is the duty of the objecting creditors 
 to show by evidence sufficient grounds why the court should refuse to confirm. 
 The duty is cast upon the dissenting creditors to show that the action of the 
 majority should not be confirmed. The presumption exists that the action of 
 the majority is for the interests of all the creditors until it is attacked by those 
 who are interested in showing it to be erroneous. (So held in re Weber Furni- 
 ture Co., 13 B. R. 559.) But however small the number of dissenting creditors 
 as compared with the number who assent, the composition will not be con- 
 firmed if not to the interest of creditors. (/« re Whipple, 11 B. R. 524.) 
 
 Specific (xrounds for Refusing to Confirm. — (i) Not for the Interest of 
 Creditors. The composition should not be confirmed if the amount offered does 
 not equal that which is likely to be yielded to creditors if the proceeding in 
 bankruptcy is carried through and the property administered in it, taking into 
 consideration the fact that at a forced sale it will probably bring less than at a 
 private sale, and also taking into consideration the delay which will ensue. (In 
 re Reiman & Friedlander, n B. R. 21: s. c. 7 Ben. 455; s. c. on appeal, 13 B. R. 
 128; s. c. 12 Blatch. 562; in re Morris, II B. R. 443; in re Whipple, 11 B. R. 
 524; in re Weber Furniture Co., 13 B. R. 529 at 535.) The consideration offered 
 to creditors must \>e pro rata among the creditors. This was the express pro- 
 vision of the former act. The interest to be considered is that of all the cred- 
 itors, and a composition will not fail of confirmation because if not confirmed 
 one creditor may thereby secure some peculiar benefit. {In re Scott, Collins & 
 Co., 15 B. R. 73.) The interest to be considered is the interest of creditors at the 
 time of the acceptance. (In re Haskell, 11 B. R. 164.) There is no provision in 
 this act, as there was in the former, authorizing the court to set aside a composi- 
 tion after confirming it, if it is satisfied that it cannot proceed without injustice or 
 undue delay to the creditors. How far the act intends to protect creditors 
 against each other and how far the courts are to inquire into the terms of a com- 
 position, and to reject it if it does not appear to be to the interest of creditors, 
 although the majority favor its confirmation, is a question which provoked a 
 conflict of decision under the former act, and cannot now be considered as 
 settled. The American law as to composition in bankruptcy proceedings was 
 borrowed from England, which in turn borrowed it from Scotland. In the latter 
 
BANKRUPTS. 125 
 
 § 12.] Specific Grounds for Refusing to Confirm. 
 
 country the courts] were required at one time to pass upon the reasonableness of 
 the offer, but in England the decision of the creditors was final, if it was not pro- 
 cured by fraud. The tendency of the Scottish courts has always been to uphold 
 as reasonable any composition that was fairly adopted, while in England the 
 tendency has always been to consider a composition which was grossly unreason- 
 able as presumptively procured by fraud. (£x p. Williams, L. R. 9, Ch. 290; 
 in re Whipple, 11 B. R. 524.) 
 
 The American statute clearly imposes upon the judge the duty of examining 
 the offer and acceptance, and ascertaining whether the composition will be bene- 
 ficial to the parties. As was said by Judge Lowell (in re Morris, 11 B. R. 443): 
 " A burden is cast upon the court that is not easily sustained of instructing 
 parties concerning their own interests. 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 would pay more in bankruptcy. The Eng- 
 lish statute makes the determination of the creditors final on that point in the 
 absence of fraud, and I dare say it will be found that the practical application of 
 our law must be very similar." This judge intimated that a gross difference 
 between the probable value of the assets and the consideration offered in com- 
 position would require the court of its own motion to refuse to confirm the com- 
 position. (/» « Whipple, II B. R. 524; compare in re Reiman & Friedlander, 
 II B. R. 21, at page 40; s. c. 7 Ben. 455.) In re Weber Furniture Co. (13 B. R. 
 529), which arose in the bankruptcy court for the eastern district of Michigan, 
 it was held that a composition which is palpably opposed to the best interests of 
 the creditors as a body will not be confirmed, The court cited Latham v. 
 Lafone, L. R. 2 Exch. 115, and also the following English cases, laying down 
 the rule that where the composition offered was so unreasonable as to be evi- 
 dence that the creditors who signed it were induced, by reason of their friendli- 
 ness towards the debtor, to accept a composition greatly disproportionate to the 
 assets, the court was bound to reject it: Ex p. Cowen, L. R. 2 Ch. App. 563; 
 Dingwell V. Edwards, 4 Best & S. 738; Wells z-. Hacon, 5 Best & S. 196; Rich- 
 mond Hill Hotel Co.. L. R. 4 Eq. 566; Exp. Nicholson, L. R. 5 Ch. App. 332; «» 
 re Richmond Hill Hotel Co., L. R. 3 Ch. App. 10; Ex p. Radcliffe Investment 
 Co., L. R. 17 Eq. I2i; Ex /. Dingman, L. R. 11 Eq. 604; Ex p. Birmingham 
 Gas Light Co., L. R. 11 Eq. 204; Ex p. Levy & Co., L. R. 11 Eq. 619; Bell v. 
 Bird, L. R. 6 Eq. 635. In the case of The Weber Furniture Co. it was held, in 
 the decision given in the district court, that while it is sufficient /«»«a/o«V evi- 
 dence that the composition was for the best interests of all, to show that the 
 
126 THE NATIONAL BANKRUPTCY LAW. 
 
 Performance of Acts or Failure to Perform Duties, Bar a Disctiarge. [Ch. IIL 
 
 requisite majority of creditors have accepted, and that the burden of proof is 
 then thrown upon the dissenting creditors, still where the record (the schedules) 
 shows upon its face that an estate is able to pay a much larger dividend, the 
 dissenting creditors may rely upon this statement and are not bound to prove 
 the facts by affidavit; while they are not bound by the debtor's statements, yet 
 if they desire they may accept them as true. But in the decision of the Circuit 
 Court, to which this case was appealed, it was held that the mere fact that there 
 is a discrepancy between the estimated value of the assets as appearing in the 
 schedules and the terms of composition offered, even if that discrepancy is so 
 great as to make the composition appear unreasonable, does not justify the court 
 in refusing absolutely to confirm. It would be in the last degree inconvenient 
 if whenever an apparent discrepancy existed between the stated value of the 
 assets and the terms of the composition, the court was required to examine inta 
 the matter and inquire as to the reasonableness of the offer, and act as the 
 guardian of the interests of creditors, who, as a rule, must be capable of taking 
 care of themselves. 
 
 Performance of Acts or Failure to Perform Duties Which would Bar 
 
 a Discharge. — The provision that a composition by a bankrupt, who has 
 done acts or failed to perform duties which would be a bar to a discharge, shall 
 not be confirmed, is new. Compare in re Haskell, ii B. R. 164. As to 
 what will be a bar to a discharge, see section 14 (b). There does not seem 
 to be anything to prevent one making a composition merely because the 
 statutory time within which he must apply for a discharge has expired, 
 provided he has done nothing which would prevent his getting a discharge 
 if applied for, and has not failed to perform any of the duties, failure to 
 perform which would be a bar lo securing a discharge. The evident intent of 
 the act is to prevent one from making a composition with creditors, and thereby 
 gaining a discharge by virtue of the action of a majority of his creditors, if he 
 has done anything which would prevent his getting it in court. The statute 
 fixes no time within which a composition must be made, other than the pro- 
 vision that it cannot be till after examination, etc. The acts which will prevent 
 one from securing a discharge are those mentioned in section 14 (b). There 
 seems to be no ground for assuming that the provisions of that section as to the 
 time within which an application for a discharge must be made, apply to an 
 application to confirm a composition. The refusal to confirm a composition must 
 be because of acts done or failure to perform duties, which would be a bar to a 
 discharge, not because a discharge cannot be applied for. 
 
BANKRUPTS. 12/ 
 
 § 12.] Good Faith — No Improper Influences. 
 
 Good Faith — No Improper Influences. — Fraud is made a sufficient cause 
 for the revocation of a composition which has been confirmed; u. fortiori, is it a 
 cause for refusing to confirm a composition. The knowledge of the debtor that 
 the composition is procured by fraud is not always necessary, in order to induce 
 the court to refuse to confirm. Compositions are agreements not only between 
 the debtor and the creditors, but between the several creditors, each with the 
 others. Fraud on the part of any one of them or improper means, acts, or prom- 
 ises by any of them, or want of good faith by any of them, vitiates the compo- 
 sition, at least so far as injured creditors are concerned {la re Sawyer, 14 B. 
 R. 241; s. c. 4 Cent. L. J. 470; in re Whitney, 14 B. R. I.) The courts require 
 very slight evidence to induce them to impute to the debtor a fraud perpetrated 
 by another when the fraud works to the interest of the debtor. {In re Sawyer, 
 supra; in ?-^ Whitney, supra; Robson v. Calze, Doug. 228; Holland -v. Palmer, 
 I Bos. & P. 95; Exp. Butt, 10 Ves. 359; Exp. Hall, 17 Ves. 62.) In such cases, 
 if it is shown that the bankrupt is absolutely innocent, the courts will some- 
 times permit him to make a new offer of composition and file a new acceptance. 
 {Ex p. Harrison, 2 Buck. 247 n.) Independently of any statute and without 
 regard to who makes the payment, the giving of money to one creditor to induce 
 him to sign the composition, vitiates it. (Jackson v. Lomas, 4 Term R. 166; 
 Leicester v. Rose, 4 East 372; Dauglish v. Tennent, L. R. 2 Q. B. 49; Phillips 
 ■u. Dicas, 15 East 248.) Whether or not our present bankruptcy act, in sub- 
 division 3 of paragraph d of this section, changes these general principles of law 
 as to composition, and authorizes the court to refuse to confirm them only when 
 the bad faith or the improper conduct is directly imputable to the bankrupt may 
 be a question. (Compare in re Whitney, 14 B. R. I.) But it seems doubtful if 
 the act intends in any way to alter the fact that a composition is an agreement 
 between the several creditors themselves as well as between the creditors and 
 the debtor, or whether there is anything in it intended to disturb the funda- 
 mental principle that fraud by any party to a contract makes it voidable by any 
 of the defrauded parties. The good faith required of the debtor is of the highest 
 order. Misrepresentations as to the amount of his debts or the value of his 
 assets, or as to the willingness of other creditors to enter into the composition, 
 or as to any matter which would influence their action, vitiate the composition 
 and render it liable to be rejected by the court. See Almon v. Hamilton, 
 100 N. Y. 527; Irving -j. Humphrey, Hopk. Ch. (N. Y.) 284-; Graham v. Meyer, 
 99 N. Y. 611; Whiteside v. Hyman, 10 Hun 218; Coolong v. Noyes, 6 T. R. 263; 
 Sevlng V. Gale, 28 Ind. 486. Any secret advantage given to one creditor to 
 
128 THE NATIONAL BANKRUPTCY LAW. 
 
 Good Faith — No Improper Influences. [Ch. III. 
 
 induce him to assent to the composition vitiates it and a court is justified in 
 presuming if such action was for the benefit of the bankrupt that it was done by 
 him or through his agency. (In re Sawyer, 14 B. R. 241; s. c. 4 Cent. L. J. 470; 
 in re Whitney, 14 B. R. i; Bean v. Amsinlt, 8 B. R. 228; Knight i/. Hunt, 5 
 Bing. 432; Anshall u. Denby, 6 Hurl & N. 788; Bean v. Bookmier, 7 B. R. 568.) 
 Improperly inducing one to withdraw opposition is equally as fraudulent as to 
 induce one to assent. (In reSawyer, 14 B. R. 241; s. c. 4 Cent. L. J. 470; citing 
 Browne v. Carr, 7 Bing. 508, 516; Hall v. Dyson, 17 Q. B. 785; Dexter v. Snow, 
 66 Mass. 594.) This rule is based on the fact that one ought not oppose a com 
 position unless there are good reasons for opposing it, and that, if this oppo- 
 sition has to be bought off, it must be presumed that there were good grounds 
 for opposing it. Purchasing claims for the purpose of using them in favor of a 
 composition may or may not be fraudulent according to the circumstances of the 
 case, there being a strong tendency to regard it as fraudulent, or at least to 
 require very little evidence to establish the fact. Unless there is clear proof that 
 the motive was proper, there will always exist a presumption that it was done 
 in behalf of the debtor and for improper purposes. (In re Whitney, supra; in re 
 Morris, 12 B. R. 170; in re Sawyer, supra.) There is less tendency to look with 
 suspicion on the purchase of -a. claim by one who votes in opposition to the 
 acceptance of an offer of composition. In the case of a purchase of a claim by 
 one in favor of a composition from one opposed to it, there is a presumption that 
 it was done for the purpose of preventing the setting up of valid objections, but 
 in the case of a purchase by one opposed to the composition, as there is little 
 possibility of any advantage accruing to the dissenting creditor over other cred- 
 itors, the presumption is against the purchase being fraudulent. (In re Morris, 
 12 B. R. 170.) If a vote is influenced by the expectation of an advantage with- 
 out any positive promise, it cannot be considered an unbiased vote. (In re 
 Sawyer, supra.) A mere omission of assets or the names of creditors from the 
 schedules or the insertion of debts which in reality do not exist is no ground for 
 refusing to confirm a composition, if the errors are not in amount so great as to 
 require an alteration in the terms of the composition and provided that there 
 was no fraudulent intention, especially if the creditors knew of the error at the 
 time of the composition. (In re Reiman & Friedlander, 11 B. R. 21; s. c. 7 Ben. 
 455; s. c. affirmed, 12 Blatch. 562; s. c. 13 B. R. 128; in re Scott, Collins & Co.. 
 15 B. R. 73.) A secret agreement giving one creditor a special advantage 
 is a fraud, even although the effect of it is not to secure the payment of more 
 money, but only better security for the same sum (Leicester v. Rose, 4 East 
 
BANKRUPTS. 1 29 
 
 § I2-] Good Faith by the Creditors. 
 
 372; Eastabrook v. Scott, 3 Ves. 456; Constantien v. Blache, i Cox Ch. Cas. 
 287; Cullingworth v. Loyd, a Beavan, 385), and although all the other cred- 
 itors may have signed the composition before it was signed by the creditor 
 receiving the extra advantage; and although the latter would not have signed 
 except for the extra inducement. (Patterson v. Boehm, 4 Pa. St. 507.) But it 
 has been held that where an insolvent has been legally released from his obli- 
 gations by a composition with his creditors, the debt of one of such creditors, 
 who accepted the composition on the express condition that none of the other 
 creditors should receive a larger sum, is not revived by the payment by the 
 insolvent after such release of additional sums to other creditors, there being no 
 previous agreement to make the additional payments. (In re Sturgis, 16 B. R. 
 _304.) For one creditor to secure fifty per cent, in cash at once, instead of seventy 
 per cent, on time, is a fraud which will void the composition. (Bean v. Am- 
 sink, 10 Blatch. 361; s. u. below, 8 B. R. 228.) Such fraudulent agreements 
 not only vitiate the composition, but the agreements themselves are unen- 
 forceable. On grounds of public policy the courts will give no aid to the 
 suitor. (Bean v. Amsink, supra, citing I Story's Eq. Juris., sections 378 & 379. 
 Clark V. White, 12 Peters 178 & 199; Russell v. Rogers, 10 Wendell. 473 & 479; 
 Wigginw. Bush, 12 Johns. 306 & 309; Bean v. Bookmier, 4 B. R. 196; s. c. i Dill. 
 151; Dandgleish v. Tennent, Law Rep. 2 Q. B. 48 and 54; Breck v. Cole, 4 Sandf. 
 79; Carroll v. Shields, 4 E. D. Smith 466; Pinneo v. Higgins, 12 Abb. Pr. 334.) 
 And the consideration of the fraudulent agreement may be recovered even by the 
 debtor who paid it (Bean v. Amsink, supra, citing Smith v. Bromley, Doug. R. 6g6; 
 Jackman v. Mitchell, 13 Ves. 581; Wood v. Barker, Law Rep. i Eq. Cases 139), 
 or by the trustee in bankruptcy. (Bean v. Amsink, supra, citing Bean v. Book- 
 mier, 4 B. R. 196; s. c. I Dill. 151; also Knowlton v. Moseby, 105 Mass. 136.) 
 Such is the common-law rule, and such were the adjudications under the act of 
 1874. Whether that rule is altered by section 13, which provides the cases in 
 which compositions may be set aside, and which prevents them being collaterally 
 attacked ; and whether it is in any way affected by section 21 (f), which provides 
 that a certified copy of an order confirming or setting aside a composition or 
 granting or setting aside a discharge not revoked, shall be evidence of the juris- 
 diction of the court, the regularity of the proceedings and the fact that the order 
 was made, quare. It would seem that under section 13 the composition could 
 be attacked, even for fraud, only in the bankruptcy court and only in the time 
 and manner specified therein. Compare notes to section 15. 
 
 Good Faith by the CreditOFS. — Good faith on the part of those who accept 
 
 NAT. BANKRUPTCY LAW — 9 
 
I30 THE NATIONAL BANKRUPTCY LAW. 
 
 Dismissal of the Case — Effect of Composition. [Ch. IIL 
 
 the composition implies that their motive shall be to do that which is for the 
 best interests of the creditors. If they are actuated by motives inconsistent 
 with this; for instance, if they, through friendship for or sympathy with the 
 bankrupt, and to enable him to procure a discharge, consent to take less than 
 the creditors would probably receive if the estate is administered in bankruptcy, 
 or to take that which would not be for the interests of all the creditors, bearing 
 in mind the expense and the delay of administration in the regular way, then 
 they are guilty of bad faith to the dissenting creditors, and the court is bound 
 to refuse to confirm the composition. The chief duty of the creditors in this 
 respect is towards each other, not towards the debtor. In the leading case (Ex 
 f. Williams L. R. lo Eq. 55), it was said: " Benevolence, generosity and forbear- 
 ance may well be exercised, but not at the expense of other people;" and in 
 that case it was decided that as the composition provided for the acceptance of 
 a shilling to the pound when the assets were worth seven shillings to the pound, 
 either the debtor must have fraudulently concealed the true state of his affairs, 
 or else the assenting creditors, knowing the value of the assets, must have been 
 guilty of bad faith towards the other creditors. Compare Ex p. Russell, 10 
 Chan. App. 255; Ex f. Cowen, L. R. 2 Ch. 563; Hart v. Smith, 4 Q. B. 61; Ex 
 p. Cobb, L. R. 8 Ch. App. 727. 
 
 Dismissal of the Case. — The composition being confirmed and the con- 
 sideration distributed, the case is to be dismissed. All proceedings are then at 
 an end, unless the composition thereafter is set aside under the provisions of 
 section 13. The trustee's office expires; the title of the bankrupt's property 
 revests in the bankrupt. (Section 70 [f].) 
 
 Effect of Composition. — The confirmation of the composition releases the 
 bankrupt from all his debts other than those agreed to be paid by the compo- 
 sition and those not released by a discharge. (Section 14 [c].) No other dis- 
 charge is needed than the order confirming the composition. (In re Bechet, 12 
 B. R. 201; s. c. 2 Woods 173.) As to what debts are not released by a dis- 
 charge, see section 17. Although creditors' names do not appear in the 
 schedules, and are not included in the composition, their claims are barred 
 if they had notice or actual knowledge of the proceedings in bankruptcy. 
 But if fraudulently omitted, the composition may be set aside under sec- 
 tion 13. Under the act of 1874 creditors omitted from the composition were 
 not affected by it. Partners, sureties and guarantors are not released because 
 their joint debtor or principal has made a composition which has been con- 
 
BANKRUPTS. 13I 
 
 § 12.] Conclusiveness of Decree of Composition. 
 
 firmed. (Section 16; Mason & Hamlin Organ Co. v. Bancroft, i Abb. N. C. 415; 
 s. c. 4 Cent. L. J. 295; Ex p. Jacobs, 44 L. J. B. 34.) The general rule of law 
 that a creditor who by a composition releases the principal debtor also releases 
 the surety, unless he expressly reserves his rights against the latter, is thus 
 modified in bankruptcy. If the principal is discharged by operation of law by 
 becoming bankrupt, the liability of the surety is not affected. A discharge of a 
 debtor under a composition is a discharge by operation of law. {Ex p. Jacobs, 
 44 L. J. B. 34.) Debts are not unaffected by the composition simply because 
 the amount of the debt is incorrectly stated in the schedule; the error must have 
 been substantial or intentional. (Beebe v. Pyle,i Abb. N. C. 412; in re Trafton, 
 14 B. R. 507.) The composition is not effective to discharge the debtor from the 
 debts agreed to be paid, unless the amount is actually paid. In all cases, deeds 
 of composition or accord and satisfaction must be completely executed to be 
 operative. The delivery of notes pursuant to a composition does not of itself 
 cancel the debt. The effect and meaning that must be given to the language 
 in section 14(c) that " a composition shall discharge the bankrupt from his debts, 
 other than those agreed to be paid by the terms of the composition." is that 
 those which are agreed to be paid, if not paid according to the terms of the com- 
 position are payable in their original amount. {In re Hurst, 13 B. R. 455 at 
 465; in re Reiman & Friedlander, li B. R. 21; s. c. 7 Ben. 455; s. c. affirmed, 
 13 B. R. 128; s. t. 12 Blatch. 562; Edwards v. Coombe, 7 L. R. Com. Pleas. Div. 
 519; in re Hatton, L. R. 7 Ch. App. 723; Newall u. Van Praagh, 9 L. R. Com. 
 Pleas Div. 96; Goldney v. Lording, L. R. 8 Q B. 182. j 
 
 Pleading the Composition. — The composition, like a discharge, is a 
 defense that may be waived. If not pleaded, when one is sued upon a debt 
 after it is confirmed, it is deemed to be waived. The court will not thereafter 
 relieve the party from the result of his laches. {In r^Tooker, 14 B. R. 35; com- 
 pare McDonald u. Davis, 105 N. Y. 508; Dimock v. Revere Copper Co., 117 U. 
 S. 559; Revere Copper Co. v. Dimock, 90 N. Y. 33.) 
 
 Conclusiveness of Decree of Confirmation. — The confirmation cannot be 
 impeached collaterally, if the decree was made by a court having jurisdiction of 
 the subject-matter and of the persons. Where jurisdiction is shown to have 
 attached all the subsequent proceedings are presumed to be regular, as much 
 as those of a court of general jurisdiction, and its decision as to whether or not 
 the sufficient number of signatures have been obtained, and upon every other 
 question that properly arises in the proceeding is valid and binding in all courts 
 
132 THE NATIONAL BANKRUPTCY LAW. 
 
 Compositions, when Set Aside fCh. IIL 
 
 till reversed by an appellate court. Every presumption is in favor of the regu- 
 larity of the proceedings. Such questions conclusively settled by the order of 
 confirmation are that the proper number of consents have been obtained, that 
 proper and suflBcient notice has been given, that the consideration deposited is 
 valid, that the papers are properly executed and that every act required by the 
 statute has been duly and properly done. (Smith v Engle, 14 B. R. 481.) 
 
 Sec. 13. Compositions^ when Set Aside. — a The judge may, 
 upon the application of parties in interest filed at any time within 
 six months after a composition has been confirmed, set the same 
 aside and reinstate the case if it shall be made to appear upon a 
 trial that fraud was practiced in the procuring of such composition, 
 and that the knowledge thereof has come to the petitioners since 
 the confirmation of such composition. 
 
 Analogous Provisions of Former Acts. — 
 R. S., section 5103 A. 
 
 Fraud the Sole Ground. — The sole ground upon which, under the present 
 statute, a composition may be set aside, is fraud in procuring it, unknown to the 
 petitioner at the time of the confirmation. See notes to section 12 as to what 
 constitutes fraud in such cases and also what acts, means and promises are for- 
 bidden. The act of 1874 authorized the court to set aside a composition if it was 
 shown that the agreement could not be carried out without injustice or delay to 
 the creditors; but now, fraud is the only ground for revoking. The cases 
 decided upon the analogous subject, the revocation of discharges (compare 
 section 15), would seem to be authorities for the proposition that the composition 
 cannot be assailed in any other court than the bankruptcy court, and at no time 
 subsequent to six months after the confirmation, even though the composition 
 is procured by fraud. See also in re Thorpe, L. R. 8 Ch. App. 743; Exp. 
 Hartel, 28 L. T. N. S. 530. 
 
 Parties in Interest. — See notes to section 12 paragraph. Parties in Interest. 
 
 Proceedings After Re-instatement. —Compare sections 2 (9), 44, 70 d. 
 
BANKRUPTS. 1 33 
 
 § 14.] Discharges, when Granted. 
 
 Sec. 14. Discharges, when Granted. — a Any person may, 
 after the expiration of one month and within the next twelve 
 months subsequent to being adjudged a bankrupt, file an applica- 
 tion for a discharge in the court of bankruptcy in which the pro- 
 ceedings are pending; if it shall be made to appear to the judge 
 that the bankrupt was unavoidably prevented from filing it within 
 such time, it may be filed within but not after the expiration of 
 the next six months. 
 
 b The judge shall hear the application for a discharge, and such 
 proofs and pleas as may be made in opposition thereto by parties 
 in interest, at such time as will give parties in interest a reasona- 
 ble opportunity to be fully heard, and investigate the merits of 
 the application and discharge the applicant unless he has (i) com- 
 mitted an offense punishable by imprisonment as herein provided; 
 or (2) with fraudulent intent to conceal his true financial con- 
 dition and in contemplation of bankruptcy, destroyed, concealed 
 or failed to keep books of account or records from which his true 
 condition might be ascertained. 
 
 c The confirmation of a composition shall discharge the bank- 
 rupt from his debts, other than those agreed to be paid by the 
 terms of the composition and those not affected by a discharge. 
 
 Analogous Provisions of Former Acts. — 
 
 As to application for discharge: R. S., section 5108 (amended act of July 
 26th, 1876, ch. 234, section l); act of 1867, section 29; act of 1841, section 4. 
 As to the hearing upon application: R. S., section 5109; act of 1867, section 
 29; act of 1841, section 4. As to grounds for refusing a discharge: R. S., 
 section 5110; act of 1867, section 29; act of 1841, section 4; act of 1800, sec- 
 tions 36 and 37. As to proofs and pleadings in opposition, R. S., section 511 1; 
 act of 1867, section 21; act of 1841' section 4. Compare, also, as to assets of 
 one asking for a discharge, R. S., section 5112; act of 1867, section 33; act of 
 1868, ch. 258, section i. Also R. S., section 5112 A. As to oaths and verifica- 
 tion: R. S., section 5113; act of 1867, section 29. As to proceedings, certificate 
 of discharge and second applications: R. S., sections 5114, 5115, 5116; act of 
 1867, sections 30 and 32; act of 1841, section 12; act of 1800, section 57. 
 
134 THE NATIONAL BANKRUPTCY LAW. 
 
 Discharges, when Granted — Notice. [Ch. III. 
 
 Discharges, When Granted. — The time is fixed by the adjudication. The 
 application cannot be till one month has expired; it may be made as of course 
 within the next twelve months subsequent to the adjudication. If the bankrupt 
 has been unavoidably prevented from making an application within that time 
 on establishing that fact to the satisfaction of the judge, it may be made within 
 the next six months. Unlike the requirements of the former act it is immate- 
 rial whether any assets have come into the hands of the assignee or whether 
 any debts have been proven against the bankrupt. 
 
 Applications by Partners. — It is not necessary that one partner in apply- 
 ing for his discharge should expressly ask for a discharge from his partnership 
 obligations. If he asks for a discharge from all his provable debts, that is 
 equivalent to an application for a discharge from his partnership as well as indi- 
 vidual liabilities. {In re Pierson, lo B. R. 107.) Compare notes to sections 5, 
 16 and 17, as to Discharge of Partners. 
 
 Hearing Must Be Before the Judge. — By section 38 (4), questions arising 
 on the bankrupt's application for i± discharge or composition are expressly 
 beyond the jurisdiction of referees. But there would seem to be nothing to 
 prevent the referee from issuing the order fixing the time when creditors should 
 appear before the judge to show cause why a discharge should not be granted. 
 {Compare in re Gettleson, i B. R. 604 with in re Bellamy, i B. R. 96; s. c. i 
 Ben. 426.) 
 
 Who to Have Notice. — Parties in interest are to have an opportunity to be 
 heard; the right is not limited, as under the former statute, to creditors. Even 
 uuder that act there were many decisions holding that any person showing by 
 affidavit or otherwise, that he was a creditor, could appear and oppose a dis- 
 charge even though his debt was not proven. {In re L. Sheppard, i B. R. 439.) 
 Under the act of 1841 which contained the expression " other persons in inter- 
 est," it was held, that creditors who had not proved their debts were included 
 and being interested in the administration of the estate could object to a dis- 
 charge {in re Book, 3 McLean, 317, approving 5 Law Rep. 263, and disapproving 
 Ex p. King, 1 N. Y. Leg. Obs. 22; s. c. 5 Law Rep. 320); also thata person having 
 a contingent and unliquidated claim such as could not be proved, or a right in 
 surplus moneys without any claim against the bankrupt, may appear and object 
 to the bankrupt's discharge. {In re Traphagan, i N. Y. Leg. Obs. 98, So. Dist. 
 of N. Y. 1842.) 
 
 Notice. — As to time, method of giving, publication and other particulars as 
 
BANKRUPTS. 135 
 
 § 14.] Date of the Commission of an Act Which Will Prevent a Discharge. 
 
 to notice, see section 58 ; and as to designation of newspapers in which notices 
 are to be published, see section 28. All notices are to be given by the referee. 
 
 Refusing a Discharge — In General. — A discharge can be refused only 
 because the existence of one of the two grounds mentioned in this section it> 
 established, or else because it is shown that the court has no jurisdiction. The 
 mere fact that the only debt is one which the discharge will not affect, for 
 instance, that it was due from the debtor in a fiduciary capacity, or was created 
 by his fraud, is no reason for refusing the discharge. The question bow the 
 discharge aSects particular debts is to be determined thereafter by the court in 
 which the bankrupt may be sued upon the debt, should the bankrupt in that 
 suit interpose the discharge as defense. (/» re Elliott, 2 B. R. no; in re Rath, 
 bone, I B. R. 324; s. c. 2 Ben. 138; in re Rosenfield, i B. R. 575; in re Wright, 
 2 B. R. 41; in re Stokes, 2 B. R.212; in re Tracy, 2 B. R. 298; Chapman v. For- 
 syth, 2 How, 202.) 
 
 Discharge Refused If It Appears that the Court Never Acquired 
 Jurisdiction of the Bankrupt. — Notwithstanding an adjudication has been 
 made, if creditors show, when a discharge is asked for, that at the time of the 
 filing of the petition the bankrupt had not resided or had a domicile or a place 
 of business within the district for the length of time required by section 2, and 
 that the facts giving the court jurisdiction did not exist at the time of adjudica- 
 tion, although the proceedings may have progressed to an application for a dis- 
 charge, a discharge must be refused. The question of jurisdiction may be 
 raised at any stage of the proceedings. If the court has not acquired jurisdic- 
 tion it cannot grant a discharge, although in ignorance of the facts it may have 
 made many orders in the proceeding. (In re Little, 2 B. R. 294; s. c. 3 Ben. 25; 
 in re Penn, 3 B. R. 582; s. \.. 4 Ben. 99.) 
 
 Discharge Will Be Refused Only When Objections Are Raised. — Not- 
 withstanding the existence of any of the grounds for refusing a discharge, the 
 court will not refuse it unless parties appear and object. If they do not appear 
 and raise objections, they will be deemed as assenting to the discharge, and the 
 court will act as though such grounds did not exist. (In re Schuyler, 2 B R- 
 549; s. c. 3 Ben. 200; in re Rosenfeld, 2 B. R. 117; s. t. 8 A. L. Reg. 44.) 
 
 Date of the Commission of an Act Which Will Prevent a Discharge. — 
 
 The present statute in prescribing as the only causes which will prevent the 
 granting of a discharge, first, the commission of an offense against the bank- 
 ruptcy act, punishable by imprisonment; second, the failure to keep honest 
 
136 THE NATIONAL BANKRUPTCY LAW. 
 
 Specific Grounds for Refusing a Discharge — Books of Accounts. [Ch. IIL 
 
 books of account by one contemplating bankruptcy, necessarily limits the acts 
 which will prevent a discharge, to acts committed after the passage of the law, in 
 this respect differing from the former statute. 
 
 Specific Grounds for Refusing a Discharge. — Under the bankruptcy 
 act of 1867, there were ten distinct grounds for refusing a discharge. In the 
 bankruptcy bill which was afterwards enacted as the bankruptcy law of 1898 
 (the present law), during all the legislation on the subject down to the time of 
 the report of the conferees, there were also nine or ten grounds for a refusal of 
 a discharge. In fact in the original bill, the failure by the bankrupt to perform 
 almost any of the several duties imposed upon him by section 7 was a sufficient 
 ground for denying a discharge. The reduction of this number to the two 
 grounds specified in the section under consideration was one of the many con- 
 cessions made by those advocating the bill to those who at first opposed it upon 
 the ground that it was oppressive towards the unfortunate debtor. 
 
 Statutory Offenses. — Compare section 29. It is to be observed that the 
 mere commission of the offense is a ground for refusing a discharge. Convic- 
 tion is not necessary. 
 
 Books of Account. — • To constitute a. failure to keep books of account or 
 records a sufficient cause for denying an application for a discharge, it is abso- 
 lutely necessary that the failure shall have been accompanied by a fraudulent 
 intent and also that it shall have been in contemplation of bankruptcy. In the 
 act of 1867 there were two provisions with reference to books of account; one, 
 that if a merchant or tradesman failed to keep proper books of account after the 
 passage of that act, a discharge should be refused him, independently of his 
 intent; the other applying to all debtors and providing that a destroying, muti- 
 lating, altering, or falsifying of books of account with intent to defraud credit- 
 ors, should be a bar to a discharge. Under the present act the intent as well as 
 the contemplation of bankruptcy must be proved. (Compare in re Marston, 
 5 Ben. 313.) The intent is not to be inferred. Compare notes to section 3 (i) 
 and (2). Failure to keep books, if done with fraudulent intent and in contem- 
 plation of bankruptcy, is under the present law a bar to a discharge, even 
 though the bankrupt is not a merchant or trader; on the other hand, even 
 though he is a merchant or trader, it is no bar to a discharge unless the intent 
 existed and bankruptcy was in contemplation. In these respects the present 
 law differs from that of 1867. It is to be noted that the failure which consti- 
 tutes this offense is a failure to keep such books or records as will reveal the 
 
BANKRUPTS. 1 37 
 
 § 14.J Contemplation of Bankruptcy — Pleadings and Proof. 
 
 true condition of the debtor's affairs. Hence false entries made with a fraudu- 
 lent Intent and In contemplation of bankruptcy would bar a discharge; so 
 would willful omissions. Under the act of 1867, which required that a trades- 
 man or merchant should keep proper books of account, it was held that it was 
 unnecessary that the books be of any prescribed form. If from them, a compe- 
 tent person was able to ascertain the true condition of the bankrupt's affairs, 
 they were sufficient, even although the accounts had been kept upon detached 
 sheets, but such accounts should show receipts, payments, assets, and liabilities, 
 as well as stock on hand. (/» re Mackay, 4 B. R. 66; in re Solomon, 2 B. R. 
 285; in re Newman, 2 B. R. 302; a. c. 3 Ben. 20; in re Bellis & MiUigan, 3 
 B. R. 496; s. c. 4 Ben. 53.) 
 
 "Contemplation of Bankruptcy." — It is not sufficient that the debtor 
 shall have contemplated a state of insolvency; he must have contemplated an 
 act of bankruptcy, or an application by himself to be declared a bankrupt." 
 (Buckingham v. McLean, 13 How. 151, overruling the following cases, so far as 
 they hold to the contrary: Arnold v. Maynard, 2 Story. C. Ct. 349; Hutchins v. 
 Taylor, 5 Law Rep. 289; Wakeman v. Hoyte, Id. 310: Morse v. Godfrey 
 3 Story, C. Ct. 364; Everett v. Stone, Id. 446; Ashby v. Steere, 2 Woodb. & M. 
 347; Collins v. Hood, 4 McLean, 186; Ex p. Beeneman, Crabbe, 456; Atkinson 
 ■V. The Farmers' Bank, Crabbe, 529; Dennett v. Mitchell, i N. Y. Leg. Obs. 
 356; Jones V. Sleeper, 2 Id. 132.) The expression " in contemplation of becom- 
 ing 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 declares an act of bankruptcy. A debtor may become a 
 bankrupt or commit an act of bankruptcy by filing a petition or by doing some 
 aCt which is declared by the statute to be the commission of an act of bank- 
 ruptcy. It is not necessary in order that one should have contemplated becom- 
 ing a. bankrupt, that he should have contemplated having a petition filed 
 against him, and being adjudged a bankrupt thereon, provided he contem- 
 plated committing an act which is defined as an act of bankruptcy, or contem- 
 plated filing a petition voluntarily. (In re Goldschmidt, 3 B. R. 165; s. c. 3 
 Ben. 379, followed in re Freeman, 4 B. R. 64; s. c. 4 Ben. 245.) 
 
 Pleadings and Proof. — If a. party in interest who files objections to the 
 granting of the discharge, afterwards declines to prove them, other creditors 
 may be allowed to do so. (In re S. S. Houghton, 10 B. R. 337, citing Foster v. 
 Goulding, 9 Gray, 50; contra, in re D. A. McDonald, 14 B. R. 477.) Compare sec- 
 
138 THE NATIONAL BANKRUPTCY LAW. 
 
 Discharges, when Revoked. [Ch. III. 
 
 tion 59(f) as to the right of creditors other than original petitioners to join in the 
 petition to have one adjudged a bankrupt involuntarily. While the objections are 
 not to be pleaded with the strictness of common-law pleading, yet it is necessary 
 that the facts be alleged, and that such allegations be distinct, specific, and definite 
 so as to clearly inform the bankrupt what he is to disprove. If they are vague 
 and general, the court will dismiss them or compel the objecting party to be 
 more definite. (In re Hill, i B. R. 275; s. c. 2 Ben. 136; in re Burk, 3 B. R. 296; 
 in re Bellis & Milligan, 3 B. R. 496; in re Waggoner, I Ben. 532; in re Tyrrel, 2 
 B. R. 200.) The bankrupt may answer or demur, or may move for a dismissal of 
 the objections for insufficiency appearing on the face of the papers. (In re 
 Burk, supra; in re Rosenfeld, 8 A. L. Reg. 44; s. c. 2 B. R. 117.) 
 
 Jury Trial. — Whether objections to a discharge constitute one of the mat- 
 ters in controversy, as to which a jury trial may be demanded, see section ig (c) 
 and compare Gordon & Co. v. Scott & Allen, 7 A. L. Reg. 749; s. c. 2 B. R. 86.) 
 That a jury trial could not be demanded under the former act, see Coit ». Rob- 
 inson, 9 B. R. 289. The burden of proof is on the objector. (In ?-^0'Kell, 2 B. 
 R. 105; in re Noonan and Connolly, 3 B. R. 267; in re Hill, 2 Ben. 136; s. c. I 
 B. R. 275.) 
 
 Sec 15. Discharges, when Beroked. — a The judge may, 
 upon the application of parties in interest who have not been 
 guilty of undue laches, filed at any time within one year after a 
 discharge shall have been granted, revoke it upon a trial if it shall 
 be made to appear that it was obtained through the fraud of the 
 bankrupt, and that the knowledge of the fraud has come to the 
 petitioners since the granting of the discharge, and that the actual 
 facts did not warrant the discharge. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., section 5120; act of 1867, section 34; act of 1841, section 4; act of 
 1800, section 34. 
 
 History. — In its general provisions as to the grounds upon which a decree 
 of discharge may be impeached and the courts in which impeachable, the act of 
 1898 is similar to the act of 1867, but both differ materially from the acts of 1841 
 and 1800. The act of 1841 provided that a discharge might be impeached " in 
 all courts of justice " for certain causes and in a manner in the act stated. The 
 
BANKRUPTS. 139 
 
 § '5-] Discharge Cannot be Collaterally Attacked. 
 
 act of 1800 in effect provided that a discharge might be impeached when 
 pleaded as defense, by proving the same facts as would have prevented the 
 granting of it, had they been shown in a court of bankruptcy. Neither act con- 
 tained any provision for a direct proceeding to annul the discharge in the court 
 of bankruptcy. 
 
 Disebarge Cannot be Collaterally Attacked. — Although the decisions 
 of the courts under the act of 1867 were not all in harmony, the weight of 
 authority was that a discharge once granted by a court having jurisdiction was 
 unassailable in any court except the court of bankruptcy, for any cause which 
 would have prevented the granting of it, or which would have been sufficient 
 ground for annulling it. It was further held that even in the bankruptcy court 
 a discharge could be set aside and revoked only on the grounds mentioned in 
 the section corresponding to the one under discussion, and only if the proceed- 
 ing to annul was instituted within the statutory period. That a discharge shall 
 not be collaterally impeached for any cause which might have been urged 
 against granting it, is but an application of the general principle of law that a 
 judgment of a court of competent jurisdiction is conclusive of all matters 
 adjudged, as between the parties thereto, and cannot be collaterally attacked or 
 questioned before any tribunal. A discharge in bankruptcy is an adjudication 
 between the bankrupt and all the defendants, his creditors, a decree binding 
 and conclusive on all who are made parties in accordance with the provisions of 
 the act. The creditors having had notice of the proceedings must be treated as 
 also having had opportunity to make objections; and having neglected to do 
 so, they ought not to be allowed to impeach the adjudication collaterally. 
 Bankruptcy proceedings are in the nature of proceedings in rem before a court 
 of record having jurisdiction, and it is well settled that in proceedings in rem a 
 decree is conclusive against all parties having the right under the proceedings 
 to control the decree. To the State courts the decree of the courts of bank- 
 ruptcy granting a discharge is a decree of a court of competent jurisdiction over 
 the whole question, and unless void on its face can never be attacked or disre- 
 garded. The regularity of all the proceedings is presumed. Jurisdiction con- 
 fers the power to render the judgment and it is binding (even if irregularities 
 or errors exist), until set aside by the court in which it was rendered, or some 
 court of appeal or review, in an action for that purpose. (Hudson v. Bingham, 
 [Sup. Ct. Tenn.] 8 B. R. 494, citing Shawhan v. Wherritt, 7 How. 627; Dolson 
 V. Pierce, 12 N. Y. 156, and Kinnier v. Kinnier, 45 N. Y. 535: Reed v. Bulling- 
 
I40 THE NATIONAL BANKRUPTCY LAW. 
 
 Jurisdiction to Revoke Exclusive. [Ch. Ill, 
 
 ton, II B. R. 408; s. t. 49 Miss. 223, citing Voorhees v. U. S. Bank, 10 Pet. 449; 
 Sturges V. Crowninshield, 4 Wheat. 122; in re Winn, i B. R. 499; Pennington 
 V. Sale, et al., i B. R. 572; in re Barrow, et al., i B. R. 481; Cassard, et al. v. 
 Kroner, 4 B. R. 569; Markson, et al. v. Heany, 4 B. R. 510; in re Snedaker, 
 3 B. R. 629; in re Salmons, 2 B. R. 56; in re Brinkman, 7 B. R. 421; in re 
 Sacchi, 6 B. R. 497; Stevens v. Brown, 11 B. R. 568, citing Ocean National 
 Bank v. Olcott, 46 N. Y. 15; Alston v. Robinett, 9 B. R. 74; s c. 37 Tex. 56; 
 Stetson V. The City of Bangor, 56 Me. 286.) 
 
 Jurisdiction to Revoke Exclusive. — Not only is the discharge a conclu- 
 sive judgment as to all matters which might have been urged as an objection 
 to granting it, but the jurisdiction conferred by the bankruptcy act upon 
 courts of bankruptcy to revoke a discharge, prevents any other court from 
 revoking it upon any of the grounds upon which it may be revoked by the 
 bankruptcy court. The authority conferred upon courts of bankruptcy to set 
 aside and annul the discharge granted by them, is held to be incompatible with 
 the exercise of the same power by the State courts. The mode of impeaching 
 the validity of a discharge, prescribed by the statute excludes all other modes. 
 The impeaching tribunal being specified, this designation, according to well 
 established principles of interpretation, forms a part of the remedy and excludes 
 all others. (Corey v. Ripley, 4 B. R. 503; s. t. 57 Me. 69, citing Dudley v. 
 Mayhew, 3 N. Y. lo; Stevens v. Evans, 2 Barr, 1157; City of Boston v. Shaw, i 
 Met. 130.) Unless the jurisdiction of the bankruptcy court was exclusive, 
 there would be a possibility of one creditor in an action in a State court having 
 the discharge declared invalid, and of another creditor in a. proceeding insti- 
 tuted in a court of bankruptcy having it adjudged valid. (Corey v. Ripley, 4 
 B. R. 503; s. c. 57 Me. 69, citing Sturges v. Crowninshield, 4 Wheat. 122; Stet- 
 son -b. City of Bangor, 56 Me. 286; Dudley v. Mayhew, 3 N Y. 10; Boston v. 
 Shaw, I Met. 130; Stevens v. Evans, 2 Barr, 1157.) Congress under the power 
 conferred upon it to establish a uniform system of bankruptcy, may prescribe 
 not only the conditions on which a discharge may be granted, but the effect of 
 it. (Way V. Howe, 4 B. R. 677; s. c. 108 Mass. 502, citing Payson v. Payson, i 
 Mass. 283; Burnside v. Brigham, 8 Met. 75.) Instead of subjecting the bank- 
 rupt to the liability of having the validity of his discharge called in question in 
 any and all suits that should be brought against him, the act of 1867 and the 
 present act were intended to limit all contestants to the period (stated in the 
 act) and to the tribunal specified, in respect to the time and mode of annulling 
 
BANKRUPTS. 141 
 
 § 15.] Impeaching the Discharge by One Creditor for Fraud. 
 
 the discharge. The act in effect gives to creditors a year within which they 
 may assail the discharge because of any fiaud used in procuring it, of which 
 they were ignorant at the time the discharge was granted, provided they bring 
 their action in the court specified. After that time they must remain forever 
 silent; interest reipublicce est sit finis litium. To this maxim, " It is for the inter- 
 est of the commonwealth that there shall be an end of litigation," by a fair con- 
 struction of the act, all other considerations of supposed public policy must 
 yield. (Corey v. Ripley, 4 B. R. 503; s. c. 57 Me. 69; Way v. Howe, 4 B. R. 
 677; s. t. 108 Mass. 502 [disapproving Beardsley v. Hall, 36 Conn. 270]; Hud- 
 son V. Bingham, 8 B. R. 494; s. t. 12 A. L. Reg. 637 [disapproving Perkins v. 
 Gay, 3 B. R. 772]; Alston v. Robinett, 9 B. R. 74; s. c. 37 Tex. 56; Reed v. 
 Bullington, 11 B. R. 408; s. c. 49 Miss. 223; Stevens v. Brown, ii B. R. 568; 
 s. c. 49 Miss. 597; Smith v. Ramsey, 15 B. R. 447; s. t. 27 Ohio St. 339 [citing 
 Grissel V. Marlow, 15 Ohio St. 114; s. c. 8 Ohio St. 590; Dodge ^l. Com'rs, 3 Met. 
 380; Stevens v. Middlesex C. Co., 12 Mass. 466]; Symonds v. Barnes, 6 B. R. 
 377; s. c. 59 Me. 191; Burper v. Sparhawk, 4 B. R. 685; s. c. 108 Mass. iii; 
 Payne v. Able, 4 B. R. 220; s. c. 7 Bush [Ky.] 344; Black v. Blazo, 13 B. R. 195; 
 s. c. 117 Mass. 17; Ocean National Bank w. Olcott, 46 N. Y. 12; Parker z;. Atwood, 
 52 N. H. 181; Oates v. Parrish, 47 Ala. 157; Seymourw. Street, 5 Neb. 85; Stern 
 V. Nussbaum, 5 Daly [N. Y.] 382; in re Archenbrown, 11 B. R. 149; Pickett v. 
 McGavick, 14 B. R. 236.) 
 
 Impeaching the Discharge by One Creditor, for Fraud. — It is to 
 be noted, however, that under the act of 1867 the discharge was revocable 
 for what were termed fraudulent acts, but which were in fact acts done, not 
 in procuring the discharge, but done prior to it, and made by law grounds 
 for refusing a, discharge. While the law said that the discharge could be 
 revoked " if fraudulently obtained," it limited the right of revocation to one of 
 the acts specified as grounds for refusing a discharge. In other words the 
 effect of that section was to permit a proceeding to re open the judgment of dis- 
 charge if new evidence was discovered, which tended to establish any ground 
 for refusing a discharge; rather than a proceeding to revoke the decree because 
 of fraud in its procurement. These fraudulent acts, considered with reference to 
 the proceeding to secure a discharge, were fraudulent only in so far as the appli- 
 cant had to swear in his application for a discharge that he was guilty of none of 
 them. As was said in the case of Poillon v. Lawrence, 77 N. Y. 207, at 214, " There 
 is no provision authorizing (under the act of 1867) an application to annul a dis- 
 charge on the general ground that the discharge was fraudulently obtained." 
 
142 THE NATIONAL BANKRUPTCY LAW. 
 
 Impeaching the Discharge by One Creditor {or Fraud. [Ch. III. 
 
 And in this case it was held that the remedy by an application to the bankruptcy 
 court for a revocation of the discharge was exclusive only when the invalidity 
 of the discharge was based upon some of the grounds upon which a discharge 
 could have been refused; that in the latter cases the jurisdiction of the bank- 
 ruptcy court was doubtless exclusive, but where the fraud was of a peculiar and 
 exceptional nature, not one of those specified in the act as a ground upon which 
 the bankruptcy court could revoke the discharge, and not one which necessarily 
 affected the validity of the discharge except as to the creditor upon whom the 
 fraud was specially practiced, then in those cases it was competent for the 
 defrauded party to impeach the discharge for such fraud. And following 
 Batchelder v. Low, 43 Vt. 662; s. c. 8 B. R. 571, a distinction was taken between 
 a proceeding in the bankruptcy court to set aside the discharge in toto, and an 
 impeaching of the discharge by one individual creditor, when the discharge 
 was pleaded as a defense to his action. And further commenting on the right 
 of a party to impeach a judgment for fraud practiced upon him. Judge Rapallo 
 who delivered the opinion of the court, said: " It certainly could not have been 
 the intention of the bankrupt act to provide that whatever fraud or artifice the 
 bankrupt might resort to for the purpose of keeping knowledge of the proceed- 
 ings from a particular creditor, or preventing him from opposing them, the dis- 
 charge should nevertheless be valid as to such creditor. It is argued that 
 because no such case is provided for in section 5120 (the section analogous to 
 the one under consideration), therefore no redress can be had in any tribunal. 
 But I think the more rational construction of the act is, that the particular mat- 
 ters provided for in section 5120, and which go to annul the discharge in toto, 
 shall be litigated in the United States courts, and that the principles which 
 prevailed before the passage of the act, giving to creditors protection in the 
 courts in which they prosecute their claims, against a discharge which the 
 defendant ought not in law or morals to be permitted to set up against their par- 
 ticular claims, are not abrogated, so long as their enforcement by the State 
 courts does not interfere with the jurisdiction which has been specially reserved 
 to the United States courts, over certain classes of frauds, nor with the power of 
 those courts to adjudge a discharge void as to all creditors. The right of a 
 creditor, in an action brought for the rfecovery of his debt, to contest the validity 
 of the discharge on the ground of fraud, has always been recognized under 
 former bankrupt laws, and I see no reason why it does not still exist, except 
 so far as exclusive jurisdiction in the United States courts can be claimed in 
 the cases provided for by section 5120." And further the court said: ' A=?um- 
 
BANKRUPTS. 1 43 
 
 § 15.] Impeaching the Discharge by One Creditor for Fraud. 
 
 ing that the bankrupt has committed an offense which would have been ground 
 for annulling his discharge, yet if in addition to that he has practiced a fraud 
 upon a particular creditor, which is not one of those reached by section 5120, 
 the creditor should not be barred from setting up that (additional) fraud." A 
 comparison of section 5120 of the Revised Statutes and the section of the present 
 act now under consideration will show that although there are some verbal . 
 changes, yet the bankruptcy courts are still limited in their power of revocation 
 to cases where a discharge would have been refused. In so far as Poillon v. 
 Lawrence holds that there is a right in the State court to impeach discharges for 
 frauds for which the bankruptcy court has no authority to revoke a discharge, 
 it may be considered as still applicable, although its correctness as an exposition 
 of the law, even under the former act, is somewhat questionable. In so far as 
 it holds that there is any authority in a State court to declare a discharge in- 
 valid as against any one individual creditor who may be considered particularly 
 defrauded, it is at variance with the great majority of the cases. 
 
 The intention of Congress in giving a proceeding by which any creditor, whose 
 debt was proved or provable, may upon proving a fraudulent act of the bank- 
 rupt, have the discharge set aside or annulled, if that act was unknown to him 
 before the discharge was granted, but not otherwise, appears to have been, that 
 the question of the discharge of the bankrupt from all debts and claims what- 
 ever (except of those classes which are declared not to be affected by any certifi- 
 cate of discharge) shall be finally and conclusively settled by the court of 
 bankruptcy within a moderate time, leaving the bankrupt, if he prevail in such 
 trial of that issue, free from future suit, molestation, or embarrassment on 
 account thereof; and that every creditor shall be obliged to try the question 
 of the validity of the discharge, if at all, while the facts upon which it depends 
 are comparatively recent, and in such manner as to inure to the benefit of all 
 the creditors if the discharge is annulled, and shall not be allowed to wait 
 until the period prescribed by the general statutes of limitations has nearly 
 expired, and the bankrupt has perhaps established himself anew in business 
 and suffered the means of disproving the charges against him to pass beyond 
 his reach, and then bring a suit to which the other creditors are not parties, and 
 thus harass him on account of his old debts and obtain an inequitable advant- 
 age over him. It follows that the remedy given by application to a bankruptcy 
 court to revoke the discharge is exclusive of any other mode of impeaching the 
 validity of a discharge, either in the federal or in the State courts. (Way v. 
 Howe, 4 B. R. 677; s. c. 108 Mass. 502.) It will undoubtedly be conceded by 
 
144 THE NATIONAL BANKRUPTCY LAW. 
 
 Circuit Court Cannot Revoke Discharges — Time Limit. [Ch. IH. 
 
 all that nowhere is there any authority or principle of law permitting a pro- 
 ceeding to revoke the discharge in toto except under the terms of this section. 
 That one single creditor should not be allowed in any other court to show that 
 it is inoperative as to him; in other words, that the law will not allow a piece- 
 meal revocation, will, we think, also be conceded when the effect of such a 
 practice is considered. To allow such individual attempts to impeach the judg- 
 ment, will be to destroy all uniformity. With reference to this right of the 
 individual creditor to impeach the decree in an action in a State court, it was 
 said by the court in the opinion in Hudson v. Bingham, 8 B. R. 494; s. t. 
 12 A. L. Reg. 637: " The bankrupt may have had the very same grounds 
 urged against the granting of his discharge by one creditor and the mat- 
 ter have been decided in his favor, or there may have been an attempt by 
 another creditor to annul his discharge within the statutory period, and the 
 court may have decided that issue again in his favor; yet if the discharge is 
 assailable in a State court, another creditor may still require him to try the 
 same question over again. Further than this, his discharge may have been, 
 under this view of the law, contested and declared void by a State court within 
 the year, and yet on proceedings instituted under the statute by other creditors 
 in the bankruptcy court having full jurisdiction over the whole question, it may 
 have been adjudged valid and not subject to be annulled fgr the causes stated. 
 Which judgment is to be held correct, and which shalT relieve him from his 
 embarrassments? This view of the law enables the Stale courts, having no 
 jurisdiction over the original question, to practically nullify the effect of the 
 adjudication of the courts of the United States, having exclusive jurisdiction 
 over the whole subject, and is incompatible with the powers granted to the 
 federal government to grant a discharge in bankruptcy. No such construction 
 ought to be given to the act of Congress unless its terms imperatively demand it." 
 
 Circuit Court Cannot Revoke Discharges. — The Circuit Court cannot 
 annul a discharge for frauds on the statute. The jurisdiction conferred by the 
 statute on the bankruptcy court is exclusive. (Commercial Bank of Manchester 
 V. Buckner, 20 How. 108, decided under the act of 1841.) 
 
 Time Limit. — The bankruptcy court cannot revoke a discharge after one 
 year. However flagrant may be the frauds committed in procuring the dis- 
 charge, and notwithstanding they may not have been discovered till after the 
 expiration of the year, and even though not to revoke the discharge will work a 
 great injustice, the bankruptcy court cannot extend the rule and revoke the dis- 
 
BANKRUPTS. 145 
 
 § I5-] Opening Defaults. 
 
 charge. The time commences to run from the time of the discharge, not from 
 the discovery of the fraud. (Pickett v. McGaviclc, 14 B. R. 236; Corey v. 
 Ripley, 4 B. R. 503; s. c. 57 Me. 69; Way v. Howe, 4 B. R. 677; s. c. 108 Mass. 
 502; Alston V. Robinett, 9 B. R. 74; s. c. 37 Tex. 56.) And even though the 
 year has not expired, yet if the creditor has been guilty of undue laches, he can- 
 not have the discharge revoked. This provision in the present law is new. 
 So, too, under no circumstances can a creditor have a discharge revoked if he 
 knew of the fraud at the time the discharge was granted. 
 
 This statute then must be regarded in the light of an arbitrary statute of 
 limitations. While many may feel that a cause of action springing from the 
 fraud of another should never be barred by the lapse of time, yet that is a ques- 
 tion of public policy. The legislature which gives the remedy has the right to 
 insist that the suitor shall bring his action, even for causes of this kind, within 
 a prescribed time, if it considers it to be for the best interests of the community, 
 and it may make the right of action accrue as of the date when it actually 
 arose, and not as of the date when the suitor learned of the existence of his 
 rights. 
 
 Opening Defaults. — There is nothing in the bankruptcy act which directly 
 bears on the question of opening defaults, except this section under discussion, 
 and this might lead one to think that a default on the part of creditors to oppose 
 an application for a discharge could not be reopened. But as courts possess 
 the inherent right to recall their own decrees, and to vary or annul them as 
 justice may require, and as they exercise this power when it is the only 
 remedy, especially if the application to reopen be made at the same term, it 
 would seem that courts of bankruptcy are not deprived of this power, and that 
 they should exercise it in cases where the creditors were prevented by unavoid- 
 able causes from appearing and opposing the application for the discharge. 
 The limitation of their right to revoke an adjudication once made after hearing 
 all parties, need not be construed as taking away from them the right to reopen 
 defaults where there has been no appearance. Such power to reopen was 
 exercised by the judge of the U. S. District Court for Massachusetts, in re 
 Dupee, 6 B. R. 89, [citing Stickney v. Davis, 17 Pick. 169; Janvrin v. Smith, i 
 Sprague, 13; Northwestern Ins. Co. v. Hopkins, 14 A. L. Reg. 44; The Mon- 
 arch, I W. Rol. 21; The Fortuna, 4 Rob. 278; Chase v. Scales, to M. & W. 488; 
 The New England, 3 Sumner, 506; The Martha, B. & H. 171.] See also Thomas 
 V. Hunter, 3 McLean, 297, decided under the act of 1841. 
 
 NAT. BANKRUPTCY LAW — ID 
 
146 THE NATIONAL BANKRUPTCY LAW. 
 
 Grounds for Revocation. [Ch. IIL 
 
 Grounds for Revocation. — The court can revoke a discharge, only if it 
 shall be made to appear that it was obtained through the fraud of the bankrupt, 
 and that the knowledge thereof has come to the petitioners since the granting of 
 the discharge, and that they have not been guilty of undue laches. The lan- 
 guage of the act of 1867 was somewhat more specific. " The application (to 
 revoke) shall be in writing and shall specify which in particular of the several 
 acts mentioned in section 5110 it is intended to prove against the bankrupt, and 
 set forth the grounds of avoidance." " If the court finds the fraudulent acts or 
 any of them set forth by the petitioner are proved, etc., then the discharge shall 
 be revoked." It is manifest that under that section any of the acts mentioned 
 in section 5 no (which were the acts which would prevent one from securing a 
 discharge) were considered fraudulent acts, and if established, the discharge 
 was annulled. As that act required that the bankrupt before securing a dis- 
 charge should take an oath that he had 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, it is also manifest that if such acts did 
 exist, then he could not get a discharge without committing a fraud, without, 
 in fact, committing deliberate perjury. The present act requires no such oath, 
 and if the application for a discharge is verified even then there will not be any 
 false swearing, unless the bankrupt shall be required by the rules and forms to 
 be prescribed by the U. S. Supreme Court, to negative the existence of any act 
 or thing that is a bar to a discharge. If they shall not so prescribe, the question 
 arises: Does the mere discovery by a creditor of an act, matter or thing, 
 unknown to him at the time of the discharge, which if then urged would have 
 prevented a discharge from being granted, if presented to the court within a 
 year without undue laches on his part, authorize the revoking of the discharge, 
 when the bankrupt has done nothing improper to conceal the same from being 
 presented to the court but has merely failed to negative it, — when in fact there 
 was no fraud on his part. It can hardly be claimed that even an applicant 
 for a discharge is obliged, unless there is some express statutory requirement or 
 express rule, to set up and prove that he has been guilty of no act which would 
 deprive him of the relief asked for; or that there would be any fraud in mere 
 silence as to the matters which might be urged by the creditors in opposition 
 Under the act of 1867, there was no possible silence, for the statute required the 
 oath above mentioned, and if any cause for refusing a discharge existed, then a 
 discharge granted was necessarily fraudulent, because secured by perjury. 
 But under the present act, it would seem that causes for refusing the applica- 
 
BANKRUPTS. 147 
 
 §15.] Parties in Interest — Laches. 
 
 tion for a discharge might exist, and yet if not urged, a discharge could be 
 granted which could not, in any ordinary sense of the word, be considered as 
 procured by fraud, and therefore could not be impeached. It should be further 
 noted that the language of the statute is not that the discovery of a fraudulent 
 act, which would have barred a discharge, is a ground for annulling it when 
 once granted, but that it may be revoked if " obtained through fraud." (Com- 
 pare the notes to section 13, " Compositions, When Set Aside.") 
 
 Parties in Interest. — Under the former act the fraudulent omission of a 
 creditor's name from the schedules was a sufficient ground for revoking a dis- 
 charge. Whether or not it would be under the present act is questionable, even 
 though such omission was the means of procuring the discharge, for by section 
 17 (3). debts which have not been duly scheduled in time for proof and allow- 
 aace, with the name of the creditor if known by the bankrupt, unless such 
 creditor had notice or actual knowledge of the bankruptcy proceedings, are not 
 released by the discharge. An omitted creditor without such notice or knowl- 
 edge would hardly be a party in interest. (Compare in re Kallish, Deady, 
 575; in re Smith & Bickford, 8 Blatch. 461; s. c. 5 B. R. 20: in re Murdock, 
 3 B. R. 146; s. c. I Low. 362; mr^Sheppard, 7 A. L. Reg.484; s. c. i B. R.439. 
 
 Laches. — A party desiring to set aside a discharge must proceed within a 
 reasonable time. The courts require that the creditor shall be diligent; if he is 
 not, no aid will be given to him. Even if the court will not regard the rights 
 of the bankrupt they will at least respect the rights of third parties who have 
 dealt with him upon the faith of the discharge. A strict application of the rule 
 that laches on the part of the creditor will prevent his moving to set aside a dis- 
 charge, was made in re Buchstein, 17 B. R. i, in which it was held that where 
 the specifications filed in opposition to a discharge had been overlooked and a 
 discharge granted without a trial, such error or irregularity was one which was 
 the subject of review by the Circuit Court; that when proceedings for a review 
 were not taken within the time prescribed by the rules of the Circuit Court, 
 and the bankrupt had in the meantime acted upon his discharge, the discharge 
 would not be set aside for the purpose of having a trial of the specifications- and 
 that ignorance of the fact that a discharge had been granted was no excuse for 
 a delay in making application to set it aside. (Compare U. S. Bank v. Cooper, 
 20 Wall. 171, and Littlefield v. Delaware and Hudson Canal Co., 4 B. R. 257.) 
 
148 THE NATIONAL BANKRUPTCY LAW. 
 
 Co-debtors of Bankrupts. [Ch. IH. 
 
 Sec. 16. Co-debtors of Bankrupts. — a The liability of a per- 
 son who is a co-debtor with, or guarantor or in any manner a 
 surety for, a bankrupt shall not be altered by the discharge of 
 such bankrupt. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., section 5118; act of 1867, section 33; act of 1841, section 4; act of 1800, 
 section 34. 
 
 Declaratory of General Legal Principles. — The contract of suretyship 
 
 as it is understood in the commercial world is always conditioned that the surety 
 shall not be discharged by the bankruptcy of his principal. The provisions of 
 this section are only declaratory of what would have been true had they not 
 been put in the act. 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 
 that was done, not so much to establish the law as by way of caution to prevent 
 the act from being construed in a way that was not required by its terms and 
 was not in harmony with general bankruptcy principles and legislation. (Phil- 
 lips V. Solomon, 42 Geo. 192.) 
 
 The Discharge a Release Only of the Bankrupt's Personal Liability. 
 
 — The discharge does not affect the liability of others who are jointly or as sure- 
 ties liable with the bankrupt. Legal proceedings against the former need not be 
 discontinued because of the bankruptcy. Judgments obtained against them or 
 security received from them or liens on their property by way of mortgage or 
 otherwise may be enforced. (/» re Levy & Levy, i B. R. 327; s. c. 2 Ben. 169; 
 Payne v. Able, 4 B. R. 220; s. c. 7 Bush. [Ky.] 344.) 
 
 A discharge releases only the personal liability of the bankrupt; it does not 
 affect the debt as to other persons. No one else can plead it. So purely per- 
 sonal is the privilege that it is not available to a grantee to whom the bankrupt 
 has fraudulently conveyed property, to defeat a judgment creditor's suit brought 
 against the debtor and the transferee, where the judgment debtor(the bankrupt) 
 fails to appear and plead his discharge. (Moyer v. Dewey, 103 U. S. 301.) 
 Even if a creditor assents to the discharge of his debtor in a case where he might 
 have urged an objection which would have induced the court to refuse a dis- 
 charge, and even although the creditor is requested by the surety of the bank- 
 rupt to oppose the discharge, the creditor loses only his rights against the 
 principal, not against the surety, because the discharge is deemed to be by 
 
BANKRUPTS. 149 
 
 § i6.] Creditor's Failure to Prove — Attachment Bonds. 
 
 operation of law, and not of the debtor's own volition. {Ex p. Jacobs, 44 L. J. 
 B. 34; Mason & Hamlin v. Bancroft, i Abb. N. C. 415; s. c. 4 Cent. L. J. 
 295; contra, in re McDonald, 14 B. R. 477.) Where a discharge of the principal 
 is entirely independent of any judicial proceeding, the well-established principle 
 of law is that the surety will be discharged. (Ex p. Jacobs, 44 L. J. Bank. 
 34; Brown u. Carr, 7 Bing. 508; s. c. 5 M. & P. 497; Sigourney v. Williams, i 
 Gray 623; Mason & Hamlin v. Bancroft, i Abb. N. C. 415; s. c. 4 Cent. 
 L. J. 295.) Compare notes to section 12. 
 
 Creditor's Failure to Prove. — The creditor's failure to prove his claim does 
 not release the joint obligor or surety. There is no obligation resting on the 
 creditor to make himself a party to the bankruptcy proceeding and to collect 
 what he can from the estate. (Clopton v. Spratt, 52 Miss. 251.) The surety 
 may protect himself under the provisions of section 57 (z), which see. 
 
 Attachment Bonds. — The question of the effect of a discharge on the 
 liability of sureties on bonds given by the bankrupt to release property of his 
 which has been attached, where the suit is pending at the time of the bank- 
 ruptcy, was one which was variously decided under the act of 1867. The 
 decisions of the state courts and the courts of bankruptcy were almost equally 
 divided. As the condition of o. bond to dissolve an attachment is to pay any 
 judgment that may be rendered against the principal, there can be no liability 
 until a judgment is secured. The variance between the courts arose over this 
 question: When a discharge has been granted to a bankrupt pending a suit in 
 which an attachment on his property has previously been dissolved by the giv- 
 ing of a bond, can a judgment be subsequently entered up against him or his 
 sureties, so that the latter may be holden on the bond; or must the bankrupt 
 be permitted to plead his discharge by supplemental answer so that no judg- 
 ment can be entered up against him, and no liability accrue against the sureties? 
 The Supreme Court of New York, in the case of Holyoke v. Adams, 10 B. R. 
 270; s. c. I Hun (N. Y.) 223; (affirmed in 59 N. Y. 233), took the ground that as 
 the attachment was valid under its laws and was not invalidated by the bank- 
 ruptcy law, the bond given to dissolve it was in the nature of a substituted 
 security; that a perpetual stay of the action pending proceedings in bankruptcy 
 would not be allowed, as it would work injustice to the creditors, the obligees 
 in the bond; and also that it would not allow a subsequently granted discharge 
 to be set up in a supplemental answer, as the effect would be to prevent the 
 judgment from being entered. The court further he]4 that upon motions for 
 
150 THE NATIONAL BANKRUPTCY LAW. 
 
 Attachment Bonds. [Chap. III. 
 
 leave to interpose a supplemental answer, the court should exercise its discre. 
 tion, and deny the motion whenever it would work an injustice, and that to 
 permit the pleading of discharge which would prevent the accruing of the liability 
 of the sureties on a bond given to dissolve a valid lien, and which would deprive 
 the lienor of all rights, would be an act of injustice. On this latter ground the 
 case was affirmed in the Court of Appeals; followed in McCombs v. Allen, i8 
 Hun igo; affirmed 82 N. Y. 114; to same effect, Bond v. Gardner, 4 Binn. 269. 
 The U. S. District Court for the eastern district of Michigan (in re Albrecht, 17 B. 
 R. 287), held that inasmuch as a plaintiff in an action in which there had been 
 garnishment proceedings (which had been discontinued by the giving of a bond), 
 would, under the bankruptcy law, have had a right to prosecute his suit, at least 
 so far as to protect his lien upon the property which has been taken in garnish- 
 ment, a fair construction of the statute demanded that he should be allowed to 
 prosecute his action to judgment, so as to hold the sureties upon the bond which 
 he had taken in lieu of his security. (Compare Zoller v. Janvrin, 49 N. H. 114.) 
 On the other hand, the courts of Massachusetts repeatedly laid down a different 
 rule. By them it was held that the bond was a mere personal obligation; it 
 was not substituted property subject to a lien. If the debtor obtained a dis- 
 charge in bankruptcy he had a right to plead it, and as no final judgment could 
 be entered against him the bond was discharged by the determination of the 
 contingency upon which it was made to depend. The liability of the surety 
 was not avoided by it; no liability ever accrued. " The bond does not restore 
 the property to the possession of the debtor subject to the attachment; it dis- 
 solves the attachment utterly. It is not given for the property itself nor as 
 security for its value, but for the payment absolutely of the judgment when 
 recovered in the suit, whatever may be the amount of the judgment. The bond 
 does not become of the nature of a debt until the contingency arises on which it 
 is to be made operative, to wit: a judgment against the principal which he is 
 bound to pay. A final judgment against the defendant is necessary in order 
 that the bond may be enforced, and that judgment the court cannot enter if 
 a discharge is pleaded." The Massachusetts courts (unlike the courts of New 
 York and Michigan) never appear to have felt justified in refusing to the bank- 
 rupt the right to plead such discharge by supplemental or amended answer. 
 Such was the Massachusetts rule as laid down, first in the case of Carpenter v. 
 Terrill, too Mass. 450, and followed by the same court in Hamilton v. Bryant, 
 14 B. R. 479; s. t. 114 Mass. 543; Braley v. Boomer, 12 B. R. 303; s. c. 116 
 Mass. 527, and Johnson v. Collins, 12 B. R. 70; s. c. 117 Mass. 343; the last 
 
BANKRUPTS. 151 
 
 ^ i6.] Attachment Bonds. 
 
 three cases even holding that if the bond to dissolve the attachment was not 
 given till after adjudication of bankruptcy, still the sureties could not be held 
 to have incurred liability. If, however, it was not given till after judgment 
 was rendered, then the liability had been incurred and could not be divested by 
 a discharge of the principal. Compare also to the same effect Payne v. Able, 4. 
 B. R. 220; s. I.. 7 Bush (Ky.) 344; Williams v. Atkinson, 36 Tex. 16; Bates v. 
 Tappan, 3 B. R. 647; s. c. gg Mass. 376. There was no express adjudication on 
 this question by the U. S. Supreme Court, but there are two dicta apparently 
 contradictory of each other. In Wolf v. Stix, 99 U. S. i, it was said: " The 
 cases are numerous in which it has been held, and we believe correctly, that if 
 one is bound as surety for another to pay any judgment that may be rendered 
 in a specified action, if the judgment is defeated by the bankruptcy of the per- 
 son for whom the obligation is assumed, the surety will be released. The obvi- 
 ous reason is that the event has not happened on which the liability of the surety 
 was made to depend. Of this class of obligations are the ordinary bonds in 
 attachment suits, to dissolve an attachment, appeal bonds, and the like." 
 
 In the case of Hill v. Harding, 107 U. S. 631, the Supreme Court of the United 
 States held that under section 5106 R. S., which prohibited the prosecution of a 
 suit to judgment against a bankrupt, pending his application for a discharge, a 
 State court in which an action against the bankrupt upon a debt provable in 
 bankruptcy was pending, must, on the bankrupt's application, stay all proceed- 
 ings to await the determination of the bankruptcy court upon his application for 
 a discharge, even if an attachment had been made in the action more than four 
 months before the commencement of the proceedings in bankruptcy, and had 
 been dissolved by giving a bond with sureties to pay the amount of the judg- 
 ment to be recovered. But the court said {obiter): " If a discharge is granted, 
 the court in which the suit is pending may then determine whether the plaintiff 
 is entitled to a special judgment for the purpose of enforcing an attachment 
 made more than four months before the commencement of the proceedings in 
 bankruptcy, or for the purpose of charging the sureties upon a bond given to 
 dissolve such an attachment." 
 
 The whole force of the argument of the New York and Michigan and kindred 
 cases is that, as the bankruptcy act does not invalidate the lien of the attach- 
 ment if that lien bona fide exists, the courts ought not to prevent a creditor from 
 enforcing the personal obligation of others, given to release the property from 
 the attachment. They seem to regard the bond as a substituted security. The 
 complete answer to their proposition is that the bankruptcy law protects certain 
 
152 THE NATIONAL BANKRUPTCY LAW. 
 
 Sureties on Appeal Bonds — Replevin Bonds. Ch. III.] 
 
 bona Jide liens created pursuant to State laws, but that these State laws so far as 
 attachment proceedings are concerned usually provide that the lien may be 
 destroyed if one gives a personal obligation. After the bond is given there is no 
 lien in existence, nothing but a contingent personal liability. 
 
 Sureties on Appeal Bonds. — As in the case of attachment bonds, the ques- 
 tion here is not whether a discharge of the principal releases the liability of the 
 sureties, but whether the discharge prevents the happening of the contingency 
 upon which the liability of the sureties is to arise. If a discharge can be 
 pleaded in the appellate court and is so pleaded, so that no judgment can be 
 rendered against the defendant, then no liability ever exists on the part of the 
 surety. The discharge of the bankrupt principal prevents the surety from 
 incurring liability rather than releases him. (Odell v. Wootten, 4 B. R. 
 183; s. c. 38 Geo. 225.) But, on the other hand, in those States where the 
 practice is such that the discharge does not affect the appeal, or stay 
 proceedings upon it, or prevent a judgment of affirmance — where the 
 appellant cannot set up any matters in the appellate court other than those 
 set up in the case in the court of original jurisdiction, as, for instance, in 
 New York, there the liability attaches, and the discharge of the principal does 
 not prevent the sureties incurring liability. (Knapp v. Anderson, 15 B. R. 316; 
 s. c. 7 Hun 295; affirmed 71 N. Y. 466; citing Cornell v. Dakin, 38 N. 
 Y. 253; Poppenhausen v. Seely, 3 Abb. Ct. of App. Dec. 615; Hall v. 
 Fowler, 6 Hill (N. Y.) 630; Flagg -v. Tyler, 6 Mass. 33; Burr v. Carr, 7 Bing. 
 508; Southcote V. Braithwaite, i T. R. 624.) 
 
 Replevin Bonds. — The discharge of the principal in a replevin bond, where 
 the replevied articles have passed into the hands of his trustee, does not pre- 
 vent his sureties from becoming liable, nor in any way release them when that 
 liability has been incurred, because a judgment may still be obtained determin- 
 ing the title to the property and the determination of that question, is what fixes 
 the liability. (Flagg v. Tyler, 6 Mass. 33.) 
 
 Bonds to Release One from Arrest — " Jail Liberty Bonds "— " Poor 
 Debtors' Bonds." — In all these bonds one condition, express or implied, is 
 that the sureties may be released by a surrender of the principal before there has 
 been a breach of the other conditions of the bond. The question which arises 
 is, whether the discharge in bankruptcy of the principal makes a surrender 
 unnecessary. As in the case of attachment bonds and appeal bonds, the dis- 
 
BANKRUPTS. 1 53 
 
 § 16.] Partners. 
 
 charge will not release the sureties from any liability which they may have 
 actually incurred, but it may in some cases prevent the contingency which is to 
 fix that liability. If there has been a breach of the conditions of these bonds 
 before a discharge of the bankrupt principal has been granted, the liability of 
 the sureties has become fixed and is unaffected by the subsequent discharge in 
 bankruptcy of the debtor (Dyer i/. Cleveland, 18 Vermont 241), notwithstand- 
 ing the breach did not occur till after bankruptcy proceedings had begun. 
 The correct rule is that if the discharge in bankruptcy is received 
 before there has been a breach of the terms of the bond, the sureties may be 
 released on motion because they may at any time terminate their liability by 
 surrendering their principal; and inasmuch as he, upon his surrender by them, 
 would be entitled to an immediate release because of his discharge in bank- 
 ruptcy, courts to avoid circuity of action release such sureties on motion without 
 requiring the formality of a surrender which is useless. But after the liability 
 has become fixed they are not released by the discharge of their debtor. (Knapp 
 V. Anderson, 71 N. Y. 466; same case in lower court, 7 Hun 295; s. c. 15 B. 
 R. 316. See also Kirby v. Garrison, 21 N. J. 176, holding that if the bankrupt 
 leaves jail limits after his discharge, the discharge is a good defense to an action 
 against the sureties.) Thus it will be seen that the general rule is that the dis- 
 charge of the principal in bankruptcy acts as an exoneretur, if the liability of the 
 surety has not become fixed, and the surety (bail) may plead such a. discharge of 
 the principal during the time in which he has the right to surrender the princi- 
 pal. (Richardson v. Mclntyre, 4 Wash. C. C. 412; Kane v. Ingraham, 2 John. 
 Cas. 403; Hayton v. Wilkinson, i Hall's Am. L. J. 260; Olcott v. Lilly, 4 Johns. 
 407; Thorne v. Brown, 9 Watts, 288.) But if the liability has become fixed, as 
 for instance, if the time allowed for a surrender has expired before the discharge 
 is granted, then the discharge will not release the sureties from their liability. 
 (Woolley V. Cobbe, i Barr. 244; Olcott v. Lilly, 4 Johns. 409; Bennett v. Alex- 
 ander, I Cranch C. C. 90.) 
 
 Partners. — This section in itself alone is an implied provision that one 
 member of a firm may obtain a discharge, although a discharge is refused his 
 CO- partner. Such, indeed, is the rule. (In re George & Proctor, i Lowell 409; in 
 re Scofield, 3 B. R. 551.) A discharge granted to one member of the firm 
 releases him from all his debts, partnership as well as individual. (/« re Down- 
 ing, 3 B. R. 748; s. u. I Dill. 33.) Compare cases cited under the next section. 
 
 Endorsers. — The discharge of the maker in no way affects the endorsers. 
 (Clopton V. Spratt, 52 Miss. 251; King v. Central Bank, 6 Gee. 257.) 
 
154 THE NATIONAL BANKRUPTCY LAW. 
 
 Debts not ASected by a Discharge. [Ch. III. 
 
 Joint Debtors as Necessary Parties. — One of several joint debtors dis- 
 charged In bankruptcy may still be made a party. The discharge is a privilege 
 that may be pleaded; if not pleaded, there is nothing to prevent the entry of 
 judgment. No court takes judicial notice of a discharge. The discharged 
 debtor is as necessary a party as if he had not been discharged. His discharge 
 simply gives him an additional defense. (Jenks v. Opp, 12 B. R. ig; s. t. 43 
 Ind. 108; Camp v. Gifford, 7 Hill 169.) 
 
 Discharge of One of Several Co-sureties. — If one of several co-sureUes is 
 himself discharged in bankruptcy so that he is released from his liability as 
 such, be is also released from the duty of contribution to his co-surety, for the 
 right to contribution in the absence of express agreement depends upon the 
 payment by one of the sureties of a demand against the principal which all the 
 co-sureties were equally under legal obligation to pay. (Tobias v. Rogers, 13 
 N. Y. 59.) Compare, however, apparently to the contrary. Miller v. Gillespie, 
 59 Mo. 220.) 
 
 Sec. 17. Debts not Affected by a Discharge. — a K discharge 
 in bankruptcy shall release a bankrupt from all of his provable 
 debts, except such as (i) are due as a tax levied by the United 
 States, the State, county, district, or municipality in which he 
 resides ; (2) are judgments in actions for frauds, or obtaining prop- 
 erty by false pretenses or false representations, or for willful and 
 malicious injuries to the person or property of another; (3) have 
 not been duly scheduled in time for proof and allowance, with 
 the name of the creditor if known to the bankrupt, unless such 
 creditor had notice or actual knowledge of the proceedings in 
 bankruptcy ; or (4) were created by his fraud, embezzlement, mis- 
 appropriation, or defalcation while acting as an officer or in any 
 fiduciary capacity 
 
 Analogous Provisions of Former Acts. — 
 
 As to the discharge as a release: R. S., section 5119; act of 1867, section 34; 
 act of 1841, section 4; act of 1800, section 34. As to debts not affected by a 
 discharge: R. S., section 5117; act of 1867, section 33; act of 1841, section i. 
 As to taxes: R. S., section 5101; act of 1867, section 28; act of 1800, section 62. 
 
BANKRUPTS. 1 55 
 
 § 17.] Discharge Releases Only the Personal Liability. 
 
 The Discharge Not an Extinguishment of the Debt. — The discharge 
 is not per se an extinguishment even of the bankrupt's liability. It is a release 
 which may be pleaded. No court other than the court of bankruptcy is bound 
 to take judicial notice of the discharge. When the bankrupt is sued upon a 
 debt if he fails to plead and prove his discharge, he thereby waives it as a 
 defense, and a valid and unimpeachable judgment may be entered against him. 
 {Jenks V. Opp, 12 B. R. ig; s. c. 43 Ind. 108.) Compare notes on " Discharge 
 Waived unless Pleaded; " and on " Pleading the Discharge," infra, this 
 section. 
 
 No Release unless There Is a Discharge. — The present law contains no 
 provision, as did certain former laws that the proving of a claim in bankruptcy, 
 shall be a waiver of all other suits and proceedings to enforce it. Unless there 
 has been a discharge which is thereafter pleaded and proved, a. creditor who 
 has proved his claim in bankruptcy and taken a dividend may still obtain judg- 
 ment in an action, upon the balance due him and enforce the same. Nothing 
 arising in the proceedings can protect the bankrupt from subsequent suit except 
 a discharge. The payment of a dividend on a proved claim is merely equiva- 
 lent to a payment in part. The taking of the debtor's property in bankruptcy 
 and applying it pro rata on the claims of creditors have no greater effect than 
 the taking of property on execution and applying the proceeds on a judgment. 
 It is a satisfaction /ro tanto, not a discharge. Consequently a plea of an adju- 
 dication in bankruptcy is not a good defense to an action. The proving of the 
 debt is neither an absolute extinguishment nor a satisfaction. If the discharge 
 is refused the creditor is remitted to all his former rights and remedies. 
 {Dingee v. Becker, 9 B. R. 508; Whitney v. Crafts, 10 Mass. 23.) 
 
 Discharge Releases Only the Personal Liability. — Nothing but the 
 
 bankrupt's personal liability is released by the discharge. Liens upon his 
 property are in no way affected. Whatever their character if they are valid by 
 the laws of the State, and not rendered void by the provisions of section 67 or 
 other sections of the bankruptcy act, the bankrupt's discharge will not prevent 
 their enforcement. Thus, in actions to foreclose mortgages the discharge may 
 be pleaded as a defense to the demand for a judgment for any deficiency which 
 may exist, but not as a bar to the foreclosure proceedings. (Second Nat. Bank 
 V. State National Bk., 11 B. R. 49; Reed u. BuUington, 11 B. R. 408; s. c. 49 
 Miss. 223.) Judgments in certain cases will be released by a discharge in so 
 far as they evidence the personal liability of the debtor, but if they are liens 
 
156 THE NATIONAL BANKRUPTCY LAW. 
 
 Debts Barred by Statutes of Limitations. [Ch. IIL 
 
 upon his property they continue to be so. (Blum v. Ellis, 13 B. R. 345; s. c. 
 73 N. Car. 293.) So a vendor's lien for the purchase price of the property sold, 
 where such a lien is recognized by the laws of the State, may still be enforced 
 after a discharge. (Lewis v. Hawkins, 23 Wall. 119.) Any proceeding to 
 enforce a right against the bankrupt's property may be maintained which does 
 not seek to enforce the personal liability of the debtor. Compare section 67 as 
 to the effect of bankruptcy upon liens, and section 70 as to the trustee taking 
 title subject to liens. 
 
 All Provable Debts are Released. — No debts are re'leased by a discharge 
 unless they are provable. The foregoing statement is so clearly put in the stat- 
 ute itself that it needs few authorities to support it. (See, however, Murray v. 
 DeRottenham, 6 Johns. Ch. 52; Monroe u. Upton, 50 N. Y. 593.) The statute 
 further provides (with certain exceptions to be discussed hereafter) that all prov- 
 able debts are released by the discharge. Even where a debt of the bankrupt is 
 payable in specific articles it may be proved, as the assignee takes title to all the 
 bankrupt's property and is trustee for him as well as the creditors, and the 
 proving of the debt is equivalent to the making of a demand of payment. 
 A discharge, if granted, bars the debt; if refused, the creditor may maintain his 
 action. (Chandler v. Winship, 6 Mass. 310.) As to what debts are provable, 
 compare notes to section 63. 
 
 Provable Debts are Released Even if Not Proved. — The failure of the 
 creditor to prove his debt, if it is provable, does not prevent it from being 
 released by the discharge; not even in those cases where it was omitted from 
 the schedules of debts and where the creditor was not served with a notice of 
 the proceedings; unless the creditor can bring himself within the provisions of 
 exception (3) of this section, which is new. (Compare in re Stansfield, 16 B. R. 
 268; s. c. 4 Sawyer, 234; in re Archenbrown, 11 B. R. 149; Lamb z. Brown, 12 
 B. R. 522.) 
 
 Debts Barred by Statutes of Limitations. — In the notes to section 63 on 
 
 provable debts will be found a discussion of the question, whether debts barred 
 by statutes of limitations are provable in bankruptcy. It will be seen that there 
 is a great conflict of authority on the question. But even those courts which 
 hold that such a debt is not provable, and that a creditor holding such a claim 
 cannot share in the dividends maintain that such debts are affected by the dis- 
 charge. The distinction taken by them is between debts provable by nature, 
 and debts which cannot be proved because of some lack of evidence or for other 
 
BANKRUPTS. 1 57 
 
 § 17.] Debts to the United States. 
 
 cause. Thus, in the matter of D. P. Kingsley (i B. R. 329; s. c. i Lowell, 216), 
 the judge of the District Court for the Eastern District of Massachusetts, in 
 spealcing of a debt barred by the statute of limitations, said: " There can be 
 no doubt that this is a provable debt, and that it will be discharged by the cer- 
 tificate, if the bankrupt obtains one. All debts which by nature are provable, 
 are discharged, whether they in fact could be proved or not. Thus, debts due 
 to an alien enemy, or to one dead or insane, or who accidentally failed to prove, 
 or was not notified, — all these, and many others that could be mentioned, 
 would be barred, though it might be impossible that they could be proved. 
 Because this debt is provable, it does not follow that it can be proved. The 
 question is, whether it is a debt at all. A debt that has been paid cannot be 
 proved, but it will be discharged; that is to say, the payment need not be relied 
 on after the certificate has been obtained. It would be a singular reply, to a 
 plea of discharge in bankruptcy, that the debt was not discharged because it 
 could not have been proved, and that it could not have been proved because it 
 had been paid, or because the court of bankruptcy found rightly or otherwise 
 that it had been paid. Yet, that is all that the rejection of this proof (proof of a 
 claim barred by the statute of limitations) amounts to. Applying the law of 
 the forum, I find as a presumption of law, that this provable debt has been 
 paid. All provable debts are discharged; but all supposed debts to which n 
 certificate of discharge would be a bar, are not necessarily provable." 
 
 Debts to the United States. — Under the act of 1867 it was finally decided 
 by the U. S. Supreme Court, in U. S. v. Herron (9 B. R. 535; s. c. 20 Wall. 
 251), that debts due the U. S. were not provable in bankruptcy and consequently 
 not released by a discharge. This decision was put upon various grounds, 
 among them that many of the provisions of the statute describing the rights, 
 duties, and obligations of creditors were inapplicable in their nature to the 
 United States, and that if held to include the United States, could not fail to 
 become a constant and irremediable source of inconvenience and embarrass- 
 ment. It was also held that the United States, not being named in any of the 
 provisions of the act (except in one which provided that all debts due the United 
 States and all taxes and assessments under the laws thereof should be entitled to 
 priority or preference) under a generally recognized principle of construction 
 the United States, as the sovereign power enacting the law, could not be held to 
 be bound by it; citing as to this last proposition: i Deacon on Bankruptcy (3d 
 ed.), 784; Shelford on Bankruptcy, 303; Crawford v. Atty.-Gen., 7 Price, 5; Rob- 
 son on Bankruptcy (2d ed.), 553; Eden on Bankruptcy, 143; Woods v. DeMattos, 
 
158 THE NATIONAL BANKRUPTCY LAW. 
 
 Debts Due to Aliens. [Ch. IIL 
 
 3 Hurlst. & Colt. 995; U. S. u. King, Wall. Circ. Ct. i8; People v. Herkimer, 
 
 4 Cow. 348; Com. V. Hutchinson, 10 Barr. 406; Hilliard on Bank. (2d ed.), 295; 
 U. S. V. Knight, 14 Pet. 315; U. S. v. Hoar, 2 Mass. 311; Com. v. Baldwin, 
 Watts. 54; Regina v. Edwards, 9 Exch. 50; Dollar Sav. Bank v. U. S., 19 Wall. 
 227. To the same effect: In re Rob Roy, 13 B. R. 235; s. c. i Woods, 42. 
 U. S. V. Herron must, of course, be regarded as establishing the law of the 
 land under the act of 1867 and thus overruling U. S. v. Throckmorton, 8 B. R. 
 309, which followed U. S. ^. Davis, 3 McLean, 483, decided under the law of 
 1841. But U. S. V. Herron is not applicable to the present act. On the con- 
 trary, the sections of this act are such as to make it inconsistent with the rule 
 laid down in U. S. v. Herron. Section 57/, provides for what amount the 
 United States, a State, county, district or municipality, shall be allowed to prove 
 a debt owing to them as a penalty or forfeiture, thus clearly showing that it was 
 the intent of Congress that the United States and other political divisions shall 
 be treated as creditors. The first exception (i) of section 17, which provides 
 that debts due as taxes levied by the United States or the State, county, district or 
 municipality in which the bankrupt resides, shall not be released by a discharge 
 would, on the principle of expressio unius, exclusio alius, be fairly construed as 
 a provision that as to debts other than taxes, the United States and the other 
 political divisions therein mentioned are in the position of other creditors, and 
 that all debts due the United States except taxes, are released. 
 
 Debts Due to Aliens. — A discharge in bankruptcy is as much a release of a 
 debt due to an alien as of one due to a citizen of the United States. The pur- 
 pose of the statute is to relieve the unfortunate bankrupt of all his provable 
 debts upon his complying with the terms of the act, and as the alien may if he 
 desires prove his claim, it is discharged whether or not he proves it. There is 
 no need of any express provision extending the act to debts due to aliens. 
 (Ring V. Eickerson, 2 McCrary, 259; Murray v. De Rottenham, 6 Johns. Ch. 52; 
 Ruiz w. Eickerman, 12 Cent. L. J. 60; Pattison v. Wilbur, 12 B. R. 193; s. c. 10 
 R. L 448. Compare McDougal v. Carpenter, 17 Cent. L. J. 476.) And the dis- 
 charge is a bar to the debt due an alien even though he was not a party to the 
 proceeding, refused to consent to a discharge, and in the courts of his own 
 country prosecuted his claim to judgment and even though in that action in the 
 foreign country the bankrupt failed to plead his discharge as a defense, which, 
 in fact, he could not do. (Moore v. Horton, 32 Hun, 393.) And in a suit brought 
 in the United States on the foreign judgment the discharge may be pleaded and 
 will be a bar to a further recovery. But a foreign discharge is no defense in an 
 
BANKRUPTS. 1 59. 
 
 § 17.] Effect of a Discharge Granted to a Member of a Firm. 
 
 American court to the claim of a creditor who resides in one of the States and 
 who was not a party and did not appear in the foreign proceedings. (Phelps v. 
 Borland, 103 N. Y. 406.) Compare section 2, paragraph on Foreign Discharge. 
 Debts of Harried Women. — Probably there are few States where the com- 
 mon-law rule as to the husband's liability for his wife's debts incurred by her 
 dum sola, has not been altered by statute. But wherever that rule exists, it 
 may be said that a discharge granted to the husband releases him from the 
 debts of his wife, incurred by her before marriage; and as long as he lives and 
 his liability to pay those debts continues, not only is he discharged, but the 
 wife's separate estate cannot be talsen in payment of them. The marriage sus- 
 pends her liability; the discharge releases him from his liability. (Vanderhey- 
 den V. Mallory, i N. Y. 452.) So if a woman marries after filing a petition in 
 bankruptcy and thereafter procures a discharge, such discharge will not only 
 release her but also her husband. The status of the claim is fixed at the time 
 of the petition. (Chadwick v. Starrett, 27 Me. 138.) 
 
 Effect of a Discharge Determined by the Court in Which Subsequent 
 
 Action is Brought. — Although a discharge can no more be impeached in a 
 collateral proceeding than any other judgment of a court of competent jurisdic- 
 tion, yet the extent of its operation, that is, the question whether or not any 
 particular debt is released by it, is left to be determined by the court in which 
 an action is brought to enforce that particular claim. Such court will pass upon 
 the question, if the discharge is pleaded, and its determination will be binding 
 as between the parties thereto. The bankrupt court determines whether or not 
 a discharge shall be granted, and thereafter it has exclusive jurisdiction to 
 entertain a proceeding to annul the same; but it is not within its powers or 
 duties to pass in a plenary manner upon the question whether or not any par- 
 ticular claim will be released by the discharge; that question is reserved for 
 determination by the court in which action may be brought on the claim and in 
 which the discharge may be pleaded as a defense to that action. (/« re Rosen- 
 berg, 2 B. R. 236; s. c. 3 Ben. 14; in re Wright, 36 How. Pr. 167- s. c. 2 Ben. 
 509.) 
 
 Effect of a Discharge Granted to a Member of a Firm. — Whether or 
 not a discharge granted to one member of a firm who individually goes into 
 bankruptcy releases him from partnership as well as individual liabilities, is 
 one upon which the authorities under the act of 1867 were greatly at variance. 
 Both on principle and authority it would seem to be law that a discharge 
 
l6o THE NATIONAL BANKRUPTCY LAW. 
 
 Effect of a Discharge Granted to a Member of a Firm. [Ch. III. 
 
 granted to one member of the firm, releases him from all his provable debts and 
 liabilities, both from those incurred individually and from those incurred as a 
 member of the partnership. The few cases which held to the contrary under 
 the former act, seem to have been based upon a misconception of the extent of 
 the rights of an assignee in the bankrupt's property, and as to the effect upon 
 the firm of the banlcruptcy of one member. These cases just referred to held 
 that a discharge granted to one member of the firm, if he alone was adjudged a 
 bankrupt, did not release him from the firm debts if there were firm assets, 
 Ijecause the assignee could not take possession of and administer the assets of 
 the firm. The courts rendering these decisions seem to have overlooked the 
 fact that the bankruptcy of one member was per se a dissolution of the firm, and 
 that while the solvent partners would be allowed by courts of equity to adminis- 
 ter the partnership estate, yet the assignee in bankruptcy was entitled to the 
 bankrupt's share in the surplus. The majority of casps, however, held that a 
 discharge of the bankrupt was a release of both individual and firm indebted- 
 ness, whether or not there were firm assets. One of the most exhaustive opin- 
 ions delivered upon the subject was in Wilkins v. Davis, 15 B. R. 60, from 
 which we here quote in extenso. The court said: " It has been announced of 
 late chiefly in dicta^ that all the members of a firm must become bankrupt in 
 order that the assignees should be able to deal with the joint stock, or that a 
 discharge should be obtained from joint debts. (In re Little, i B. R. 341 ; in re 
 Winkins, 2 lb. 349; Hudgins v. Lane, 11 lb. 462.) Such, however, is not the 
 law, as I understand it. 
 
 First. It has been settled for more than a century and a half, that if one 
 member of a firm becomes bankrupt and obtains his discharge, he is released 
 from all his debts joint and separate. {Ex p. Yale, 3 P. Wms. 24, note A.) 
 This leading case is the law of England to-day; it has not been necessary to 
 reaffirm it; but the doctrine has been acted on and applied in various ways. 
 Where the bankrupt was a member of a company which was for some purposes 
 a partnership, the court extended the rule to him. (Thomas v. Harding, 3 
 C. B [N. S.] 254.) So the proceedings and pleadings in such cases have repeat- 
 edly recognized the law that one partner is discharged by his separate certifi- 
 cate; such as Bovill v. Wood, 2 Maule & S. 23; Noke v. Ingham, i Wils. 89 ; 
 Booth V. Middlecoat, 6 Bing. 445. In this last case, it does not distinctly 
 appear whether the bankrupt was a partner or a joint contractor, but the very 
 absence of information shows the point to be immaterial. (See Lindley, Part- 
 nership; CoUyer, Part. (5 Am. ed.), section 858; Mont. & Ayr. Bankrupt Law 
 
BANKRUPTS. l6l 
 
 § 17.] Effect of a Discharge Granted to a Member of a Firm. 
 
 (2d ed.), 748; I Deacon, Id. 797; Robson, Id. (2d ed.), 554.) If a creditor, who 
 had proved his debt against a bankrupt partner, brought an action at law 
 against the solvent members of the firm, and joined the bankrupt as a defend- 
 ant, which at law he was bound to do, for reasons not now necessary to be 
 stated, yet the Lord Chancellor would require him to give security to the bank- 
 rupt against all damages and costs. (Ex p. Read, i Rose, 460; ex p. Stanton, 
 I M. D. & De G. 273.) Not only will the joint creditors be bound, but the bank- 
 rupt's co-partners equally; because they may pay the joint debts and prove 
 against the bankrupt's estate the equitable debt arising from any deficiency in 
 his accounts. (Wood v. Dodgson, 2 Maule & S. 195 ; Afflalo v. Foudrinier, 6 
 Bing. 306; Butcher v. Forman, 6 Hill, 583.) 
 
 Second. It is equally well settled, and is a necessary part of the theory, that 
 the bankruptcy of one partner dissolves the partnership, except for the purpose 
 of closing their affairs, and that the assignee is tenant in common with the 
 solvent partner of the joint stock. It usually happens that the latter will be in 
 possession of the stock, and his possession will not be disturbed excepting for 
 good reasons; and, on the other hand, if, as in this case, the assignee is in pos- 
 session, he will not be disturbed without good cause. A court of equity has 
 undoubted power to intrust either the solvent partner or the assignee with the 
 exclusive control of the settlement; but if no order is made, the assignee, hav- 
 ing possession, will go on and collect the joint assets, and pay the joint debts, 
 by way of dividends to those joint creditors who come in and prove. See West 
 V. Skip, I Ves. (Sen.) 239; Dutton v. Morrison, 17 Ves. 193; Murray v. Murray, 
 5 Johns. Ch. 60; Parker v. Muggridge, 2 Story, 334; Ayer v. Brastow, 5 Law 
 Rep. 498; Amsinck v. Bean, 11 N. B. R. 495, 22 Wall. 395. 
 
 It is argued that the assignee of one partner cannot interfere with the affairs 
 of the firm, unless the decree in bankruptcy or the assignment expressly confers 
 upon him such a right or convey to him such a title. But no point of the sort 
 was taken in any of the cases above mentioned. On the contrary, the facts in 
 all of them simply show that one partner was bankrupt. This, of necessity, 
 disposes of all his property, and one part of that is his interest in any firm or 
 any number of firms of which he was a member. It seems to be thought that 
 one may be bankrupt and not bankrupt at the same time; bankrupt as an indi- 
 vidual and not so as a member of a firm. This is impossible. A man may be 
 bankrupt when the other members of his firm are solvent, and when the joint 
 assets are in excess of the joint debts, because he may owe separate debts 
 beyond the amount of his separate property added to his share in a solvent 
 
 NAT. BANKRUPTCY LAW — II 
 
l62 THE NATIONAL BANKRUPTCY LAW. 
 
 Effect of a Discharge Granted to a Member of a Firm. [Ch. IIL 
 
 joint business. In such a case, the assignee may properly make a settlement 
 with the solvent partner, by which the joint debts are paid by the latter, and the 
 value of the bankrupt's interest in the firm is paid over to the assignee for dis- 
 tribution among his separate creditors. If the balance is against the bankrupt, 
 the solvent partner, upon paying the joint debts, could have proved for it and 
 have received a dividend from the separate estate, as I have already shown. 
 But the partner would be no less bankrupt in either case, and his assignee 
 would have no other or different title, so far as his estate was concerned, than 
 if all the members of the firm were bankrupt." 
 
 If only one partner is adjudged bankrupt, then in his schedules he should 
 include not only his individual assets, but also his interest in the firm, stating 
 his proportionate share and mentioning in whose possession the property is at 
 that time. Further adjudications sustaining the right of one partner to a dis- 
 charge from firm as well as individual debts, are In re Downing, 3 B. R. 748; 
 s. c. I Dill. 33; in re R. Stevens, 5 B. R. 112; s. c. i Saw. 397; in re Frear, I 
 B. R. 660; in re Grady, 3 B. R. 227; in re Abbe, 2 B. R. 75; in re Leland, 
 5 B. R. 222; West Phila. Bk. v. Gerry, 106 N. Y. 467. But contrary, besides 
 the three cases disapproved in Wilkins v. Davis, 15 B. R. 60 («'» re Little, 
 Hutchins v. Lane, and in re Winkins) are, Crompton v. Conkling, 15 B. R. 
 417; Trimble v. More, 15 J. & S. (N. Y. Superior Court), 340; in re Shepard, 
 3 B. R. 172; in re Noonan, 10 B. R. 331. It would seem that even under 
 the former act those courts, which held that partnership claims were provable 
 against the estate of any member of a firm who was individually adjudged a 
 bankrupt and that by a discharge he was released from partnership as well as 
 individual liabilities, were correct. Under the present act there can hardly be 
 a doubt that this is the true rule of law. The provision of section 5 {h) that 
 where one member of a firm, but not all of the members, become bankrupt, the 
 partners not adjudged bankrupt shall wind up the business and account to the 
 trustee for the bankrupt interest, although it introduces no new rule of law, 
 does however clearly show that all of the bankrupt's property, — his individual 
 assets and also his beneficial interest in the partnership assets, — passes to the 
 trustee. As that section provides a means for realizing this beneficial interest, 
 there is now no reason for refusing the bankrupt a discharge which will release 
 him from his partnership liabilities, on the ground that his partnership assets 
 are not under the control of his trustee to be used for the benefit of his part- 
 nership creditors, because the trustee having a right to his beneficial interest 
 in the partnership assets, and the law providing a means for the collection of 
 
BANKRUPTS. 163 
 
 § 17.] Effect of a Discharge upon Judgments against the Bankrupt. 
 
 that interest, everything in which the partnership creditors might have an inter- 
 est passes to the trustee by virtue of the adjudication of the individual as a 
 bankrupt. It is impossible, we think, to consider the provisions of section 5 (/<), 
 with the general intent of the law to release a bankrupt from all his indebted- 
 ness existing at the time of the commencement of the proceedings in bank- 
 ruptcy, and especially with the provisions of section 16 providing that the 
 release of a bankrupt by a discharge shall not alter the liability of a partner of 
 the bankrupt, without reaching the following conclusions; that one member of 
 a firm may be adjudged a bankrupt; that partnership creditors may prove their 
 claims against him; and that a discharge granted to one member of a firm 
 releases him from all liabilities, partnership as well as individual. 
 
 Effect of a Discharge upon Judgments against the Bankrupt. — In con- 
 sidering this subject we will treat: first, judgments entered before the filing of 
 the petition; second, judgments entered between the filing of the petition and 
 the granting of the discharge; third, judgments entered after the granting of 
 the discharge. First. Judgments entered before the filing of the petition : By 
 section 63 (i) all such judgments, whether granted in actions ex delicto or ex con- 
 tractu, are provable. There is still, we think, some doubt, whether damages 
 for purely personal torts are provable claims in bankruptcy; but a judgment 
 for such damages merges the damages and becomes a debt of record and is 
 provable. Under the former statutes such a judgment was not only provable, 
 but dischargeable, unless it was a judgment upon a debt created by fraud, 
 embe2zlement or defalcation of a public officer, or by one acting in a fiduciary 
 capacity. The present act contains an exception (2) which embraces not only 
 judgments for fraud, but also for obtaining property by false pretenses, or 
 false representations, and for willful and malicious injuries to the person or 
 property of another. 
 
 The result is that under the present statute one who is creditor in a judgment 
 coming within the terms of subdivision (2) may prove his claim and take his 
 dividend; and yet his right to enforce his judgment for the balance, against the 
 after-acquired property of the bankrupt will be unaffected. It will be noted 
 that the exception of subdivision (2) of this section is " judgments in actions for 
 frauds, or obtaining property by false pretenses or false representations, or for 
 willful and malicious injuries to the person or property of another." It 
 does not expressly except all judgments for torts and cannot be construed so 
 as to include all such judgments. It can hardly be said, for instance, that 
 judgments for negligence are included ; and there may be many other exceptions. 
 
164 THE NATIONAL BANKRUPTCY LAW. 
 
 Effect of a Discharge upon Judgments against the Bankrupt. [Ch. III. 
 
 As the subdivision tends to limit the right of a bankrupt to a discharge and 
 thus to impair the remedy, the statute being highly remedial, the exception 
 should be so construed as to impair the remedy as little as required by its 
 express terms. The division of torts made by Mr. Bigelow in his work on that 
 subject is worthy of consideration in this connection. His division of the subject 
 is as follows: " Looking to one class of cases, a tort is a breach of duty com- 
 mitted by fraud or by malice. Looking to a second, a tort is a breach of duty 
 absolute, regardless of fraud, malice, intention, or negligence (in other words, 
 these elements may or may not exist). Looking to a third class, a tort is a 
 breach of duty committed by negligence." (Bigelow on Torts, 6th Stud, ed., 
 p. 15.) As to judgments in the second class of torts, the circumstances of each 
 case will have to be considered, in determining whether they are released 
 by a discharge. And it must be borne in mind that unless a judgment ren- 
 dered before the petition is filed, comes within the exceptions of subdivi- 
 sion (2) or subdivision (4) it is provable even though for tort, and is dis- 
 chargeable. (Ellis V. Ham, 28 Me. 385; Stone v. B. & M. R. R., 7 Gray, 539; 
 Luther v. Deys, ig Wend. 629; Kellogg v. Schuyler, 2 Denio, 73; Blake v. Bige- 
 low, 5 Geo. 437; Hayden v. Palmer, 24 Wend. 364; in re Edson Comstock, 22 
 Vt. 642.) So are all other judgments entered prior to the filing of the petition 
 (with a few exceptions in the nature of fines or penalties to be noted below); and 
 a perpetual stay of execution will be granted on motion. (Baker v. Mount, i 
 How. Pr. 238; Chamberlain v. Gurney, i How. Pr. 238.) Under the former act 
 a judgment for a breach of promise to marry was held to be dischargeable. {In 
 re Sidle, 2 B. R. 220.) But certain judgments have uniformly been held to be 
 exceptions as not being in reality debts. Such, for instance, are judgments 
 directing the bankrupt to pay alimony (in re Garrett, 11 B. R. 493); judgments 
 directing the payment of a certain sum periodically for the support of a bastard 
 child {in re Cotton, 2 N. Y. Leg. Obs. 370); judgments in actions for seduction. 
 {In re Cotton, 2 N. Y. Leg. Obs. 370.) In all these cases it is held that the pay- 
 ments provided for by the judgments and decrees are of the nature of penalties 
 or fines imposed for wrongful or criminal acts or to enforce a moral or natural 
 duty, rather than of the nature of debts. So also a decree imposing a fine for 
 contempt in violating an injunction is not affected by a discbarge, (People v. 
 Spalding, 10 Paige, 284. See also 4 How. Pr. 21), even though the court 
 decreed that the fine should be paid to the party who procured the injunction 
 order, as an offset to the damages which he suffered by reason of the violation 
 of the injunction. (Macey ?'. Jordan, 2 Den. (N. Y.) 570,) 
 
BANKRUPTS. l6$ 
 
 § 17.] Judgments Entered After the Filing of the Petition. 
 
 Judgments Entered After the Filing of the Petition, but Before the 
 Granting of the Discharge. — Whether a discharge will be a release of such 
 a judgment depends on the nature of the claim which was the foundation of the 
 action in which the judgment was procured. Under the old act it was held 
 that if the cause of action was a tort, a. judgment entered subsequent to the 
 petition was not released by a discharge. Under that act whether one was to 
 look into the nature of the original claim, or was to regard the judgment itself, 
 in neither case was the debt affected by the discharge, for if the original claim 
 was to be considered, it was not dischargeable, being a claim for unliquidated 
 damages in tort and not a debt in any proper sense of the word; if, on the other 
 hand, the judgment was considered as the debt, then it was a newly created 
 debt, not existing at the time of the petition, and therefore not affected by any 
 of the proceedings in bankruptcy. For a judgment must be perfected and 
 entered before it is provable, and even then it is not released by a discharge if it 
 is within the very broad exception of subdivision (2). If not within the provi- 
 sions of that exception or exception (4) it is released by the discharge. Under 
 the old law it was held that the fact that a verdict had been rendered in an 
 action in tort thus liquidating the damages, was not sufficient to make the claim 
 provable. It was not yet a judgment. (Kellogg v. Schuyler, 2 Denio, 73.) So 
 where the action had been sent to a referee to hear and report findings, his 
 report did not constitute a judgment and make the claim provable. (Crouch o. 
 Gridley, 6 Hill, 250.) Whether damages in tort can now be proven in bank- 
 ruptcy compare section 63b. 
 
 But, if the judgment rendered .between the filing of the petition and the grant- 
 ing of a discharge is upon a provable claim, then such judgment is released by 
 the discharge to the same extent that the provable claim itself would have 
 been. Under the old act there was much conflict of authority on this point. 
 One line of authorities held that the provable debt was merged in the judg- 
 ment; that the provable debt no longer was in existence to be affected by the 
 discharge; and the judgment was not a debt existing at the time of the petition 
 and was therefore not affected by any of the bankruptcy proceedings. (Brad- 
 ford V. Rice, 102 Mass. 472; Holbrook v. Foss, 27 Me. 441; Pike v. McDonald, 
 32 Me. 418.) On the other hand, an almost equal array of authorities held that 
 while the debt was merged in the judgment, the latter did not become to all 
 intents a new debt, and that the merger was not so complete that a court could 
 not look behind the judgment and see on what it was founded, for the purpose 
 of protecting the defendants in the right to be released from the debt: and that 
 
l66 THE NATIONAL BANKRUPTCY LAW. 
 
 Judgments Entered After the Granting of the Discharge. [Ch. III. 
 
 if the original debt was dischargeable, the judgment would be similarly affected. 
 (Clark V. Rowling, 3 N. Y. 216; Monroe v. Upton, 50 N. Y. 593 [distinguishing 
 Thompson v. Hill, and Kellogg v. Schuyler, supra]; McDonald v. Davis, 105 
 N. Y. 508.) The question is now definitely settled in accordance with the rule 
 as laid down in the cases last cited, by the new provision in the statute, appear- 
 ing as subdivision (5) of section 63, which puts into the list of provable debts, 
 all claims founded on provable debts reduced to judgment after the filing of 
 the petition and before the consideration of the bankrupt's application for a dis- 
 charge, less costs incurred and interest accrued after the filing of the petition, 
 and up to the time of the entry of judgment. But the language of the section 
 limits this to judgments entered before the consideration of the bankrupt's 
 application for a discharge, not to those entered before the time of the granting 
 of the discharge. 
 
 Judgments EnteFed After the Granting of the Discharge. — Such 
 
 judgments are not affected by a previously granted discharge even though they 
 be rendered in actions upon provable claims. The discharge is not per se a 
 release of the debt; no court takes judicial notice of it. The granting of the 
 discharge does not affect the jurisdiction of a State court. If it acquired juris- 
 diction before proceedings in bankruptcy or at any other time, it may proceed 
 to judgment unless the suit is dismissed. If the discharge is not pleaded, it is 
 waived; and the judgment will not ordinarily be opened to let in the defense, 
 nor can execution thereon be stayed. If the discharge is pleaded and judg- 
 ment is yet given against the bankrupt, the judgment cannot be impeached in 
 a collateral proceeding or stayed except pending an appeal. It absolutely fixes 
 the rights of the parties at the time of the recovery. 
 
 If the discharge is pleaded, and judgment is nevertheless rendered against 
 the bankrupt, it is equivalent to an adjudication that it is not a sufficient 
 defense. In any case the judgment fixes the rights of the parties to it; it is 
 conclusive as to all matters of defense existing at the time of the recovery, 
 and a bankrupt can no more claim thereafter that it is affected by a dis- 
 charge which he had at the time (provided he was able to plead the dis- 
 charge), than he could set up in opposition to the judgment that the debt 
 had been previously paid or that at the time of the judgment he had some 
 other good and complete defense. Against such a judgment there is no 
 longer any defense, assuming, of course, that it was procured in a court of 
 competent jurisdiction and without fraud. And a bankrupt cannot interpose 
 his previously received discharge as a defense to a subsequent action on the 
 
BANKRUPTS. 167 
 
 ^ 17.] Opening Judgments to Permit Plea of a Discharge. 
 
 judgment, nor use it to procure a stay of execution; nor (with certain excep- 
 tions not peculiar to bankruptcy) can he have the judgment opened and leave 
 given him to plead the discharge. (Mechanics' Bank v. Hazard, g Johns. 392; 
 Desobry v. Morange, 18 Johns, 336; Revere Copper Co. v. Dimock, 90 N. Y. 33; 
 ». u. affirmed as Dimock v. Revere Copper Co., 117 U. S. 559; McDonald v. 
 Davis, 105 N. Y. 508; Park v. Casey, 35 Tex. 586.) If the bankrupt had a dis- 
 charge granted to him before the judgment was entered, and was unable to plead 
 it, he may get relief by applying to the court that entertained the action, to open 
 it and let him plead, or he may procure a perpetual stay, or bring an action in 
 equity to have the judgment annulled. If he had the opportunity to plead his 
 discharge in the original action, a court of equity will give him no relief. (Stew- 
 ard V. Green, 11 Paige, 535; Wolf v. Stix, 99 U. S. 1.) A judgment will never be 
 opened to enable one to set up a discharge which he has negligently failed to plead 
 in the original action. He is obliged to excuse his failure to plead his discharge. 
 Relief, if granted at all, is granted to him in view of all the circumstances 
 of the case, and is based upon grounds which authorize interference in such cases 
 in general, such as fraud, imposition, mistake, etc., or that he has a defense 
 which he was unable to plead in the original action. (Revere Copper Co. v. 
 Dimock, go N. Y. 33 [citing Smith v. Nelson, 62 N. Y. 286; Monroe v. Upton, 
 50 N. Y. 593; Clark v. Rowling, 3 N. Y. 216; Wolf v. Stix, gg U. S. i; Dusen- 
 bury V. Hoyt, 53 N. Y. 521; Arnold v. Oliver, 64 How. Pr. 452]. Compare Lee 
 V. Phillips, 6 Hill, 246; Sands v. Perry, 38 Hun, 268; Carter v. Goodrich, i 
 How. Pr. 239.) 
 
 Opening Judgments to Permit Plea of a Discharge. — The judgment 
 maybe opened and the case re-tried, if there has been mistake, accident or other 
 cause preventing an appearance, (Shurtleff v. Thompson, 12 B. R. 524; s. c. 63 
 Me. 118; Manwarring v. Kouns, 35 Tex. 171), or if there has been fraud. But 
 the mere fact that a plaintiff, who commenced his action before the proceedings 
 in bankruptcy, has not taken judgment by default because of the failure of the 
 bankrupt to appear, but has adjourned the case from term to term till a dis- 
 charge was granted, and then has entered up judgment, is not a fraud on the 
 bankrupt defendant. It is his duty to watch the course of litigation against 
 him, he cannot insist that one enter up judgment at any particular time; if he 
 fail to demand that the case be prosecuted with diligence or else dismissed, he 
 cannot object to the delay of his adversary. (Bellamy v. Woodson, 4 Geo. 175.) 
 If a judgment is entered up against the bankrupt without his knowledge or 
 acquiescence, provided there is no negligence it may be opened. In New York 
 
1 68 THE NATIONAL BANKRUPTCY LAW. 
 
 Validity of Execution Issued on a Judgment Released by Discharge. [Ch. III. 
 
 in one case it was held that where one was made a party to a foreclosure for the 
 purpose of making him liable for any deficiency, and failed to defend because 
 there was an apparent impossibility that a judgment for deficiency could be 
 entered against him, but later the judgment by an intermediate modification 
 adjudged him liable to pay a deficiency, he would be allowed to come in and 
 have the decree opened and plead his discharge. (Mutual Life Ins. Co. v. 
 Cameron, i Abb. N. C. 424.) And regardless of the grounds on which a judg- 
 ment may be opened, if opened and a new trial is had, the bankrupt may set 
 up his discharge whether granted to him prior or subsequent to the entry of the 
 judgment which was set aside. In the face of the discharge no judgment can 
 be entered against him on a claim which is released by it. (Humble v. Carson, 
 6 B. R. 84.) 
 
 Remedies Against Judgments Entered Before a Discharge, Which are 
 Released by It — Perpetual Stay of Execution. — If execution is issued, 
 
 the proper remedy is to apply to the state court, out of which ' . was issued, for 
 a perpetual stay thereof. If the judgment is released by tht d scharge, such a 
 stay will be granted. (Revere Copper Co. v. Dimock, 90 N. Y. 33; Monroe v. 
 Upton, 50 N. Y. 593; Graham v. Pierson, 6 I^ill, 247.) The judgment creditor 
 is entitled to notice so that he may show, if possible, that the judgment is not 
 affected by the discharge, and being entitled to notice and co oppose, it has 
 been held that the motion will be granted only on payment of costs of opposing. 
 (Mechanics' Bank v. Lawrence, 1 Sandf. Ch. 659.; Ir one is sued on such a 
 judgment, he may plead his discharge as a defense m the suit on the judgment. 
 (McDonald v. Davis, 105 N. Y. 508.) 
 
 Validity of an Execution Issued on a Judgment Released by a Dis- 
 charge. — Such an execution if regular on its face, issued by the proper 
 authority and executed by the person to whom directed, is a protection to the 
 officer executing it. (Ruckmann v. Cowell, i N. Y. 505.) But in this case it 
 was said that, with regard to the judgment creditor, the judgment is extin- 
 guished by the discharge and furnishes to him no protection, if the bankrupt's 
 property is taken on execution on such a judgment, even though the judgment 
 creditor is ignorant of the discharge. As there is no authority for the levy, it 
 is a trespass and he must answer for it however innocent his intentions. But 
 to us the true rule seems to be that a judgment debt is no more absolutely 
 extinguished by a discharge than a debt not of record, and until the debtor sets 
 up his discharge as a defense, the creditor may pursue all his remedies. If he 
 
BANKRUPTS. 1 69. 
 
 § 17.] Canceling a Discharged Judgment of Record. 
 
 issues execution on a discharged judgment, he is protected till it is set aside. 
 Then he would undoubtedly be liable to the judgment debtor for all damages 
 he has occasioned him. Compare Cogburn v Spence, 15 Ala. 549; Westen- 
 berger v. Wheaton, 8 Kan. 169. It has further been held, and is undoubtedly a 
 safe rule of practice, that execution should not be issued upon a judgment, 
 after the debtor has obtained a discharge without an order from the court allow 
 ing it, made upon notice to the bankrupt. (Alcott v. Avery, i Barb. Ch. 
 347.) The bankruptcy court has no jurisdiction to enjoin a judgment creditor 
 from issuing execution on a judgment released by the discharge. The dis- 
 charge terminates the duties of the bankruptcy court towards the , bankrupt. 
 The bankrupt must protect his rights under the discharge, in the courts of the 
 State. (Penny v. Taylor, 10 B. R. 200.) 
 
 Canceling a Discharged Judgment of Record. — Some States, among 
 them New York (see Code Civ. Proc, section 1268), have statutes providing 
 that after the lapse of a certain period, (usually the period fixed by the bank- 
 ruptcy act within which a discharge may be revoked), a judgment debtor 
 who has received a discharge in bankruptcy may move the court to 
 direc the cancellation of a judgment of record against him, and the court 
 will so direct if the discharge is a release of the judgment. (American 
 Ex. Bank v. Brandreth, 12 Hun, 384; Leo v. Joseph, 31 N. Y. St. Reporter, 
 152; s. c. 9 N. Y. Supp. 512; in re Brandreth, 14 Hun, 585; Blumenthal 
 V. Anderson, 28 Hun, 93.) But it has been held in that State that a judg- 
 ment will not be canceled if to do so will impair a lien on real estate, for the 
 bankrupt act of 1867 (and the present act) do not intend to invalidate liens 
 which are bona fide. (Popham v. Barveto, 20 Hun, 299.) Compare, however, 
 seemingly to the contrary. Fellows v. Kittredge, 56 How. Pr. 498, holding that 
 the period fixed by the statute is intended to be a limit on the time within 
 which to enforce the lien, and supersedes the time otherwise fixed by statute; 
 and that after that period has expired, the right to have the judgment canceled 
 is absolute. Judgments entered against joint debtors or partners will be dis- 
 charged as to any one partner who has secured a discharge in bankruptcy, 
 whether or not the entire firm went into bankruptcy, and whether or not 
 there were firm assets. (West Phila. Bk. v. Gerry, 106 N. Y. 467, overruling 
 Trimble v. Moore, 15 J. & S. [N. Y. Superior] 340. Compare Seaman v. 
 McReynolds, 65 How. Pr. 521.) 
 
 Exceptions to the Rule that Provable Debts are Released by a Dis- 
 charge — Taxes. — The statute does not expressly declare that assessments 
 
I70 THE NATIONAL BANKRUPTCY LAW. 
 
 Need Taxes be Proved in Bankruptcy? [Ch. IIL 
 
 for local improvements shall not be released by a discharge. Whether assess- 
 ments are included in the word " tax " when the latter word is used in a stat- 
 ute, will depend ordinarily upon the subject-matter of the act, and the context; 
 but on the general principle of law that a statute is not to be construed in dero- 
 gation of the prerogative of the sovereign, it would follow that assessments by 
 the sovereign State or any of its political divisions would not be released by a 
 discharge, unless expressly stated in the statute. The fact that taxes due to 
 municipalities are not released would also go somewhat towards showing that 
 assessments were included in the word tax as here used, since the levies and 
 impositions by municipalities are largely in the form of assessments. 
 
 Need Taxes be Proved in Bankruptcy ? — A comparison of this section 
 
 with section 64 (a), which provides that the trustee shall pay all taxes in advance 
 of any dividends to creditors would seem to show that it is the intent of the 
 law to provide for the payment of taxes out of the property of the bankrupt, 
 but in case they are not so paid, to leave the bankrupt's personal liability for 
 them unaffected. The language of this subdivision (i) certainly is a strong 
 implication that taxes are provable debts; but as all the provisions of the stat- 
 ute are to be considered together in construing any one, and as section 64(a) 
 makes taxes neither a preferred claim, nor an ordinary claim, but simply directs 
 their payment in advance of the payment of dividends to creditors, we have a 
 counter implication that the government which has assessed a tax cannot 
 with respect to it be considered a creditor; and the two paragraphs taken 
 together would show that it is not the intent of the act that authorities whose 
 duty it is to collect a tax are to be compelled to prove the same and have it 
 allowed in the manner of creditors having provable debts, but that the 
 imposition and collection of taxes by governmental agencies is not to be 
 affected in any way. 
 
 Judgments in Actions for Fraud, for Obtaining Property by Fraudu- 
 lent and False Representations, and for Wilful and Malicious Injuries. 
 
 — Under the former act a j udgment even in an action for tort, if rendered 
 before the commencement of the proceedings in bankruptcy, so merged the 
 cause of action that it became a debt of record, and not only was provable but 
 was released by =< discharge, except judgments upon debts created by fraud or 
 by one acting in a fiduciary capacity. (Crouch i: Gridley, 6 Hill, 250; Ellis v. 
 Ham, 28 Me. 385.) But under the present act, although such judgments are 
 provable, all judgments for torts that fall within the terms of subdivision 2 are 
 unaffected by a discharge. The judgment creditor may prove his claim and 
 
BANKRUPTS. I71 
 
 § I7-] Omitted Claims. 
 
 accept a dividend, and still enforce his judgment for the balance, even though 
 the debtor receives the discharge. (Compare notes to paragraph on Effect of 
 Discharge on Judgments Recovered before Filing of the Petition, supra, this 
 section.) 
 
 Charaeter of the Debt to be Determined by the Record. — The fact that 
 
 the judgment was in an action for fraud or willful or malicious injury may, 
 perhaps, not appear by the judgment itself. That is not necessary; it is suffi- 
 cient if it appear from the record of the case. If the record show that the 
 action was for any of the causes specified, then the judgment is not barred by a 
 discharge. (Compare in ;-^ Patterson, i B. R. 307; in /-^ Whitehouse, i Lowell, 
 429; Warner v. Cronkhite, 13 B. R. 52; s. c. 6 Biss. 453.) The action must 
 have been based on the fraud or the willful or malicious injury. It is not enough 
 that there may have been incidental or immaterial, false and fraudulent repre- 
 sentations in connection with the transaction, if the action is not based on them. 
 
 Omitted Claims. — The provisions of subdivision (3) are new and form 
 one of the most important changes made by the present law. To fully appreciate 
 their extent and application it will be well first to consider the general rule as to 
 the necessity of notice to creditors in order that the court may acquire jurisdiction 
 over them. The preponderance of authority under the Act of 1867 was that 
 jurisdiction in bankruptcy proceedings, and in the special proceeding to grant a 
 discharge, did not depend on the correctness of the schedules, nor even on the 
 giving of notice to the creditors, but on the petition and adjudication. If the 
 court acquired jurisdiction of the bankrupt, and had jurisdiction of the subject 
 matter, then its decrees were binding on all creditors whether or not they had 
 actual notice, the proceeding in bankruptcy being in the nature of a proceeding 
 in rem. (Rayl v. Lapham, 27 Ohio St. 452; Thurmond v. Andrews, 13 B. R. 
 157; s. c. 10 Bush, 400; Piatt V. Parker, 13 B. R. 14; s. c. 11 N. Y. Supreme 
 135; s. c. 6 N. Y. Supr. 377; Lamb v. Brown, 12 B. R. 522; s. c. 7 C. L. N. 363; 
 Black V. Blazo, 117 Mass. 17; s. c. 13 B. R. 195.) Hence, according to these 
 cases just cited, under the act of 1867 a discharge duly granted by a court hav- 
 ing jurisdiction of the bankrupt, was a release of all provable debts (other than 
 the excepted ones), whether or not they appeared on the schedules and whether 
 or not the creditors received personal notice of the proceedings in bankruptcy or 
 of the application for => discharge. In so far as the cases just cited laid down 
 the rule that the court has jurisdiction to grant a discharge which would be a 
 release of omitted claims held by creditors who do not have personal notice of 
 
172 THE NATIONAL BANKRUPTCY LAW. 
 
 Fraud Must Exist at the Inception of the Debt. [Ch. III. 
 
 the proceedings in bankruptcy, they apply equally by the present law, for though 
 these creditors have not been served with notice, yet if they have actual knowl- 
 edge of the proceedings, their claims are released by the discharge. But unless 
 they do have actual notice or personal knowledge, then their claims, if omitted 
 from the schedules, are, by the present law, unaffected. In this latter respect 
 the act being diametrically opposed to the Act of 1867. 
 
 Debts Created by Fraud. — The word fraud as used in this section means 
 positive fraud, or fraud in fact, involving moral turpitude or intentional wrong, 
 and not implied fraud or fraud in law which may exist without the imputation 
 of bad faith or immorality. Thus, where an executor sold at a discount certain 
 bonds which he had received as part of the property belonging to the estate of 
 his decedent, and which the will directed him to distribute in a certain way, the 
 sale of the bonds was held by the state court to have been a misappropriation of 
 them amounting to a devastavit, in which the purchaser was held to be a partici- 
 pant and liable to account for the value of the bonds purchased, not because he 
 was guilty of any actual fraud, but because in view of the circumstances attend- 
 ing his purchase he had committed constructive fraud. The U. S. Supreme 
 Court held that he was released, by his subsequent discharge in bankruptcy, 
 from such liability. The debt or liability was not created by such fraud as the 
 act contemplated. (Neal v. Clark, 95 U. S. 704; s. c, sub nom. Neal v. Scruggs, 
 17 B. R. 102, reversing same case, sub nom. Jones v. Clark, 25 Gratt. 642.) 
 
 Neither does the term " fraud " as here used include such fraud as is implied 
 by law from the purchase of property from a debtor with the intent thereby to 
 hinder and delay his creditors. (Wolf v. Stix, gg U. S. i.) 
 
 Fraud Must Exist at the Inception of the Debt. — The statute expressly 
 
 says that the debt must have been created by fraud. Subsequent fraudulent con- 
 duct in connection with it, or immaterial fraudulent representations at the time of 
 the creation are insufficient to take the debt out of the statute and to prevent 
 its being discharged. Thus it has been held in a case where a claimant of a 
 ship, against which the U. S. has filed a libel and which has been seized as 
 liable to forfeiture for violation of the rules of war, has given a bond to procure 
 its release, and his defense was unsuccessful, that the debt on the bond was not 
 created by fraud; nor did the fact that in his defense he introduced the evidence 
 of false witnesses make the debt upon the bond one created by fraud. On 
 other grounds it was decided that, under the statute of 1867, the debt was not 
 released by a discharge, but it was expressly held that the subsequent fraud 
 did not affect it. (/« re Rob Roy, 13 B. R. 235; s, c. i Woods, 42.) 
 
BANKRUPTS. 173 
 
 § 17.] Actions in Assumpsit for Debt Created by Fraud. 
 
 So, too, it has been held that where the bankrupt has bought the business of 
 another in consideration of his paying the debts of the seller, his discharge in 
 bankruptcy thereafter releases him from his debt to the seller, even though he 
 falsely stated to him that the debt had been paid, and thereby dissuaded the 
 seller from proving his claim. The fraud did not exist at the inception of the 
 debt. The debt was not created by fraud. (Brown v. Broach, 52 Miss. 536.) 
 
 Partnership Debts Created by the Fraud of One Member. — If in the 
 
 conduct of partnership business, and with reference thereto, one partner makes 
 false and fraudulent misrepresentations of fact to the injury of innocent persons 
 who deal with him as representing the firm and without notice of any limitations 
 upon his general authority, his partners cannot escape pecuniary responsibility 
 therefor on the ground that such misrepresentations were made without their 
 knowledge; especially if the partnership has had the benefit of the fraudulent 
 act, although the other partners were all innocent of any wrong in the matter. 
 The debt being one created by fraud and by actual fraud, even the innocent 
 partners are not released from it by a discharge in bankruptcy. (Strang v. 
 Bradner, 114 U. S. 555, aflSrming s. c. suh nom. Bradner v. Strang, 89 N. Y. 299; 
 Schroeder v. Fry, 60 Hun, 58: s. c. 37 N. Y. St. Reporter, 945; s. v.. 35 N. Y. St. 
 Reporter, 987; s. c. affirmed, 114 N. Y. 265.) 
 
 Actions in Assumpsit for Debts Created by Fraud. — The action on a 
 debt created by fiaud need not be in tort, in order to prevent a discharge from 
 being a release. The plaintiff need not base his action upon the fraud or set up 
 the fraud in his complaint. He may sue on the debt or upon notes given there- 
 for, and if a discharge is set up as a defense, he may meet it by proof of the 
 fraud. In New York, under the Code, he need not even reply in order to set up 
 the fraud, unless the court has directed a reply. It is to be noted that it is not 
 a " cause of action for fraud " which by the statute is excepted from the opera- 
 tion of the discharge, but " a debt created by fraud;" so that the form of the 
 remedy is immaterial. (Argall v. Jacobs, 21 Hun, 114; s. c. 56 How. Pr. 167; 
 affirmed, 87 N. Y. no.) And it has been held that where, under the old system 
 of pleading, a plaintiff must reply, the fact that he sues in assumpsit on the 
 contract does not estop from setting up in his reply that the debt was created 
 by fraud, if in the plea the defendant has set up the discharge as a defense. It 
 is not necessary that the plaintiff should sue in tort on the fraud, in order to be 
 able to set up the fraud in reply to a plea of discharge. A claim arising from 
 fraud may be prosecuted in any proper form of suit. While it is a general rule 
 
174 THE NATIONAL BANKRUPTCY LAW. 
 
 Judgment for a Debt Created by Fraud. [Ch. IIL 
 
 of law that where the party has an election between two inconsistent rights or 
 remedies (for instance where he can rely upon a contract, or can renounce the 
 contract and bring action for the fraud), and knowing his rights chooses one of 
 the remedies, he renounces the other; yet as under the provisions of section 
 17, subdivision (4), a debt created by fraud is not released, the plaintiff may sue 
 on the contract, and if the discharge is pleaded as a defense, may reply that the 
 debt was created by the fraud, because he sets up the fraud, not for the purpose 
 of renouncing the contract, but as a reason why his action upon the debt is not 
 barred by a discharge. He sues to recover his damages upon the breach of the 
 contract, not to recover the damages occasioned by the defendant's fraud, and 
 only alleges the fraud in his replication as a ground for showing that the defend- 
 ant's defense is not good. He asserts not that the debt was void for fraud, but 
 that because of the fraud the defendant is not discharged from the debt by a 
 discharge in bankruptcy. He asserts the fraud, not for the purpose of rescind- 
 ing the contract, but to show that the defendant has not been relieved from his 
 obligation to perform his part of the contract; not to show that by reason of the 
 fraud no debt was created; but that being created by fraud, it was not dis- 
 charged by the bankruptcy act. There is thus no inconsistency between the 
 replication and the declaration. (Stewart v. Emerson, 8 B. R. 462; s. c. 51 N. H. 
 301.) 
 
 Burden of Proof. — After a discharge in bankruptcy the burden of proving 
 that the debt was created by fraud, or by one acting in a fiduciary capacity, is 
 on the plaintiff. (Sherwood v. Mitchell, 4 Den. 435.) If he fails to make proof, 
 judgment must go against him. 
 
 Judgment for a Debt Created by Fraud. — The debt is not released by a 
 discharge, although in the form of a judgment. But the record must show that 
 the debt is so created. If a judgment is rendered in an action, the record of 
 which shows that the issue whether the defendant acted in a fiduciary capacity 
 was raised and tried, or shows material traversable allegations of fraud which 
 were necessarily determined, then the judgment is conclusive. (Flanagan v. 
 Pearson, 14 B. R. 37; s. c. 42 Tex. i.) But inasmuch as the conclusive character 
 of a judgment extends only to identical issues, and as they must be such not 
 only in name, but in fact and substance, if the issues in the later case are 
 different from those in the original case, though capable of being described by 
 the same words, the judgment is not conclusive. Hence a judgment based 
 upon findings that the defendant incurred a certain debt in a fiduciary capacity. 
 
BANKRUPTS. 1 75, 
 
 § 17.] Debts Created by Misappropriation. 
 
 or a judgment based on a finding of fraud may be inquired into, to see whether 
 the fiduciary capacity was such as comes within the term as used in the bank- 
 ruptcy act, or to see whether the fraud was actual fraud, that is such " fraud " 
 as Is meant by the word as used in subdivision (4) of section 17, or merely 
 implied fraud; for a determination by the judgment that the debt was incurred 
 by one acting in a fiduciary capacity or that it was created by fraud, is not neces- 
 sarily a determination of the question of fraud or of fiduciary capacity as the 
 terms are used in the bankruptcy act. (Palmer v. Hussey, 87 N. Y. 303.) 
 
 Debts Created by Misappropriation. — One of the most important dif.. 
 ferences between the present act and the act of 1867 is that occasioned by the 
 insertion in subdivision (4) of this section of the word "misappropriation," 
 thereby making debts thus incurred not released by a discharge. Whatever 
 may be the construction which the courts will give to this word, its embodiment 
 in the act is sure to raise many questions as to the remedies in bankruptcy of 
 all those classes of persons who act as factors, commission-men, collection 
 agents, auctioneers, or who in any way make a business of handling the money 
 or property of others. It will affect not only these classes of persons, but also 
 all individuals in so far as they may be pledgees of the property of others, 
 which they hold as collateral or otherwise. As will be seen by the paragraphs 
 which follow this, under the former acts (both that of 1867 and 1841), the debts 
 of persons of the classes mentioned, incurred by their failure to return to the 
 rightful owner the pledged property or the proceeds of the property consigned 
 to them for sale, were held by the highest courts of the land not to be debts 
 incurred by " fraud," nor debts incurred by persons acting in a fiduciary 
 capacity; and these debts were therefore held to be released by a discharge. 
 The Act of 1867 (§ 33, R. S., § 5117), was as follows: " No debt created by the 
 fraud or embezzlement of the bankrupt, or by his defalcation as a public officer, 
 or while acting in any fiduciary character, shall be discharged by proceedings in 
 bankruptcy; but the debt may be proved, and the dividend thereon shall be a 
 payment on account of such debt." It will be noticed that debts created by 
 misappropriation were not mentioned. The Act of 1841 provided that " debts 
 created in consequence of a defalcation as a public officer or as executor, admin- 
 istrator, guardian, or trustee, or while acting in any fiduciary capacity," should 
 not be released by a discharge. It will be noticed that this act, like the Act of 
 1867, made no mention of debts created by misappropriation. The change that 
 has been made is important, not only from the fact that it affects large numbers 
 of business men, but because of its great variance in purpose and policy from 
 
1/6 THE NATIONAL BANKRUPTCY LAW. 
 
 Debts Created by Misappropriation. [Ch. III. 
 
 all former American bankruptcy legislation. A peculiar fact connected with 
 the legislation in connection with this subdivision is that in all the years of the 
 legislation in Congress, which finally resulted in the present bankruptcy law, 
 no proposal was made looking to the insertion of the word " misappropriation " 
 in this subdivision. Several bills on this subject were passed by the House 
 and several by the Senate, but none contained any reference to debts created by 
 misappropriation until the present law was evolved by the conferees, whose 
 report was made June 15th, i8g8. Most of the opposition to the bankruptcy law 
 arose from a belief that its provisions were oppressive towards the unfortunate 
 debtor and that certain acts were made acts of bankruptcy which would unneces- 
 sarily tend to throw one who was only temporarily financially embarrassed into 
 bankruptcy, and that the requirements of the proposed law as to conditions 
 upon which discharges would be granted were too stringent. The consequence 
 was that in order to secure the passage of any bankruptcy law at all, its advo- 
 cates among the conferees made many concessions. Several proposed acts of 
 bankruptcy were stricken out. The grounds for refusing a discharge were 
 reduced in number from nine to two, and were limited to acts which m ust neces- 
 sarily be done since the passage of the bankruptcy law. Seven classes of acts 
 by the bankrupt were made offenses punishable by imprisonment, by the terms 
 of the bill as it appeared when the conferees began their labors, and not more 
 than two applicable solely to bankrupts are left in the law as it passed. The 
 general tendency, then, of the legislation of Congress, and the net result of the 
 labors of the conferees were to mollify the bill; to make it more difficult to force 
 one involuntarily into bankruptcy; to place fewer restrictions on the bankrupt 
 and to be more lenient in granting his application for a discharge. The single 
 exception to this tendency, the one striking variance from this liberal policy, 
 was the incorporation into the subdivision under consideration of the word 
 " misappropriation," forming an additional class of debts which are not to be 
 released by a discharge. Another peculiarity of this change is that to this date 
 it has received no extended discussion or consideration. In none of the de Dates 
 in Congress, in none of the reports of the several committees to which the bill 
 was referred, not even in the report of the conferees, is there any mention of the 
 change, or of its purpose, or of its effect. It is, of course, posssible that the 
 courts may construe the word as synonymous with fraud, embezzlement, and 
 defalcation, the associated words in the context. But certainly the word would 
 seem to require some constraction. Its insertion by Congress in the act must 
 be deemed to mean something, even though it was not a subject of public 
 
BANKRUPTS. 1 77 
 
 § 17.] What is Misappropriation ? 
 
 discussion. The fact that former laws, which must have been in the minds of 
 legislators, in framing the present law, did not contain the word " misappro- 
 priation," is only an argument tending to prove that a change in policy was 
 intended. The more striking the difference, the stronger is the inference of that 
 intent. 
 
 What is Misappropriation ? — The word misappropriation has never 
 received judicial construction in connection with any bankruptcy act. The defi- 
 nitions of it given in The Century Dictionary are: '" Wrong appropriation; 
 application to a wrong use." Webster's definitions are: " Wrong appropria- 
 tion," " wrongful use." The Century Dictionary's definition of " misappropri- 
 ate " is: " To appropriate wrongfully; put to a wrong use; as to misappropriate 
 funds intrusted to one." Webster's definitions are: " To appropriate wrongly; 
 to use for a wrong purpose.'' In ordinary speech a bailee or pledgee who con- 
 verts the property intrusted to him would be said to " misappropriate " it. The 
 same would probably be said of a factor, commission-man, auctioneer, or other 
 person to whom were consigned the goods of another to be sold as the property 
 of the consignor, if the factor, commission-man or auctioneer should use the 
 proceeds as his own and fail to remit. So in ordinary speech, doubtless, agents 
 authorized to collect the moneys of another would be said to " misappropriate " 
 the moneys, if they should use them in their own business or mingle them with 
 their own and fail to account for them. Such acts, it will be seen by succeeding 
 paragraphs, were held under former statutes not to be acts done by one in a 
 fiduciary capacity, and the debts thus arising were held not to be debts created by 
 fraud. They would seem, however, to be debts created by misappropriation, 
 and therefore not released. But we apprehend that the word " misappropria 
 tion," as here used, will receive a variety of construction; and doubtless there 
 will be a conflict of judicial opinion as to what debts are so created. The tend- 
 ency of judicial construction of all the words in the analogous provisions in 
 former statutes has been to limit the words to acts manifesting positive, if not 
 heinous, criminality. Thus it has been determined that " fraud," as used in 
 provisions analogous to this subdivision, means positive, actual fraud, not 
 implied fraud, and the reason given for this construction in Neal v. Clark, 95 U. 
 S. 704, the case in which it was first laid down by the U. S. Supreme Court, was 
 that the context in the Act of 1867 required it. The proximate words were 
 " defalcation " and " embezzlement." It was held that the grouping together 
 of these three words showed that they all referred to kindred acts; that in con- 
 struing the word " fraud " as it was used in that connection, the maxim 
 
 NAT. BANKRUPTCY LAW — 12 
 
178 THE NATIONAL BANKRUPTCY LAW. 
 
 Conversion is Not a Fraud. [Ch. III. 
 
 noscitur ab sociis must be followed. It is not improbable that " misappro- 
 priation " may receive a similar construction; a-nd be applied only to acts 
 which in reality would constitute embezzlements, or whirh would, at least 
 fall within the term " fraud " as judicially defined by the courts under the 
 Act of 1867. In that case it would become specially necessary to know in 
 full the decisions of the courts as lo " fraud " and " fiduciary capacity," 
 and as to the nature of acts of conversion by pledgees and bailees, and of 
 failures by factors and commission-men to remit to their principals the proceeds 
 of property sold for their account, and of defaults by collecting agents to 
 account for the moneys of those by whom they are employed. We therefore 
 consider it not irrelevant, even with the change in the act in mind, to discuss in 
 succeeding paragraphs the questions whether conversion is a " fraud," and 
 what persons act in a " fiduciary capacity," cautioning the reader that the 
 statements in those paragraphs as to the debts incurred in that manner being 
 released by a discharge are asserted upon judicial authority only in so far as 
 the question of " fraud " and " fiduciary capacity " is concerned. Whether or 
 not the insertion of the word " misappropriation " in the act will make those 
 statements no longer true, and those authorities no longer applicable, depends 
 on the construction to be given to the word. 
 
 ConveFSion is not a Fraud. — Although there has been much conflict of 
 judicial opinion as to whether the conversion of property, held by pledgees and 
 other persons in similar capacities, creates a debt which should be considered 
 " a debt created by fraud or by one acting in a fiduciary capacity," yet the 
 decisions of the courts of last resort under the Act of 1867, as well as under the 
 Act of 1841, hold that such conversions do not fall within the term " fraud " as 
 used in those acts; and that they are to be considered breaches of contract rather 
 than violations of trust. Consequently, under those statutes the damages 
 springing from such acts constitute debts not only provable in bankruptcy but 
 released by discharge. In so far as the question of conversion being a fraud 
 is concerned, the law must be considered to be settled by the decisions of 
 the U. S. Supreme Court rendered under the Act of 1867. The leading case 
 decided under that act was Hennequin v. Clews, iii U. S. 676, afiBrming 77 N. 
 Y. 427; s. ... 84, N. Y. 676. It is decisive not only of what constitutes " fraud " 
 as the word is used in the act, but also of what is meant by the expression 
 '■ a fiduciary capacity." The precise question determined in that case was whether 
 a discharge in bankruptcy operated to release a bankrupt from a debt or 
 obligation which arose from his appropriating to his own use certain bonds left 
 
BANKRUPTS. 179 
 
 § 17.] Conversion is Not a Fraud. 
 
 with him as collateral security for the payment of money or the discharge of a 
 duty, and subsequently failing or refusing to return the same after the money 
 had been paid or the duty performed; or whether it was a debt " created by 
 fraud or while acting in a fiduciary capacity." The New York Court of Appeals 
 had decided that the giving of the bonds as collateral was an ordinary commer- 
 cial transaction, and inasmuch as it did not appear that there had been any 
 misrepresentation or deceit used to obtain possession of the property afterwards 
 converted, the only fraud was such as was implied by the violation of the duty 
 to return the property when the debt for which it was collateral was paid. The 
 relation between the pledgor and the pledgee of the security rested entirely in 
 contract, and the breach of duty was to be considered as a breach of contract 
 rather than a breach of trust. 
 
 The case was taken on a writ of error to the U. S. Supreme Court, which 
 affirmed the decision of the New York Court of Appeals, basing its own decision 
 to a great extent upon cases decided under the Act of 1841, especially upon 
 Chapman v. Forsyth, 2 How. 202. The latter was a case in which a cotton 
 factor had received cotton on commission to sell the same as property of the 
 consignor and remit the proceeds. He sold it and converted the proceeds to his 
 own use; failed to make any remittance; afterwards went into bankruptcy and 
 procured a discharge and pleaded it in answer to an action brought against him 
 on the debt. The contention of the plaintiff in the case was that the debt, being 
 created by fraud and while the debtor was acting in a fiduciary capacity, was 
 not released by a discharge, the bankruptcy act of 1841 providing that " debts 
 created in consequence of a defalcation as a public officer, or as executor, 
 administrator, guardian or trustee, or while acting in a fiduciary capacity," 
 were not released by a discharge; and further providing that " no person should 
 be entitled to a discharge who should apply trust funds to his own use." In the 
 Circuit Court the judges were equally divided in opinion as to whether a com- 
 mission merchant or factor who sells for others is indebted in a fiduciary capacity 
 within the terms of the act, if he sells the property, receives the money on the 
 owner's account, but fails to pay it over. But the Supreme Court in rendering 
 its decision in this case (Chapman v. Forsyth) declared that such debts were not 
 created by one acting in a fiduciary capacity, saying: " If the act embrace such 
 a debt, it will be difficult to limit its application. It must include all debts aris- 
 ing from agencies, and indeed all cases Virhere the law implies an obligation from 
 the trust reposed in the debtor. In almost all the commercial transactions of 
 this country confidence is reposed in the punctuality and integrity of the debtor 
 
l80 THE NATIONAL BANKRUPTCY LAW. 
 
 Conversion is Not a Fraud. [Ch. III. 
 
 and a violation of these is, in a commercial sense, a disregard of a trust. But 
 this is not the relation spoken of in the act. (Act of 1841.) The cases 
 enumerated, viz., ' the defalcation of a public officer,' ' executor," ' adminis- 
 trator,' ' guardian,' or ' trustee,' are not cases of implied trusts, but of 
 special trusts, and the " other fiduciary capacity ' mentioned must mean the same 
 class. The act speaks of technical trusts, not those which the law implies from 
 the contract." Such was the authoritative decision of the highest court of the 
 land under the Act of 1841; and it was followed in Hayman v. Pond, 7 Met. 
 328; Austin Z-. Crawford, 7 Ala. 333; Commercial Bank v. Buckner, 2 La. 
 Ann. 1023; and must be considered as overruling Matteson v. Kellogg, 15 111. 
 S47, and Flagg v. Ely, i Edm. Sel. Cas. 206. 
 
 But the present act (act of 1898) does not contain any reference to those tech- 
 nical trusts, the mention of which in the act of 1841, led the court to determine 
 that by reason of their juxtaposition to the phrase " other fiduciary capacity," 
 that phrase should be construed as embracing only technical trusts; and the 
 question naturally arises: " Does the act of 1898 require a different construc- 
 tion of ' fiduciary capacity ' than the act of 1841?" But that question, too, 
 must be considered as settled by authority and must be answered in the nega- 
 tive, by reason of the decision in Hennequin v. Clews (supra, iii U. S. 676). 
 The act of 1867 in many respects resembled the present act. No specific trusts 
 were mentioned in either. The act of 1867 provided that " No debt created by the 
 fraud, or embezzlement of the bankrupt, or by his defalcation as a public 
 officer, or while acting in any fiduciary capacity shall be discharged." It was 
 under that provision that Hennequin v. Clews was decided. Up to the time of 
 that decision there had been much conflict of authority; the majority of the 
 courts holding that the construction of the act of 1841, given in Chapman v. 
 Forsyth, was not applicable to the act of 1867, on account of the differences in 
 the language of the two acts; other courts holding that as the U. S. Supreme 
 Court had given to the words " other fiduciary capacity " a certain construction 
 or definition. Congress, in enacting the bankruptcy act of 1867, must be consid- 
 ered as having adopted that construction or definition. The cases holding the 
 former doctrine were: In re Seymour, i Ben. 348; s. c. I B. R, 29; in re Kim- 
 ball, 2 B. R. 204; s. c. 2 Ben. 554; s. c. 6 Blatch, 292; Banning v. Bleakley, 
 27 La. An. 257; Meador v. Sharpe, 14 B. R. 492; s. c. 54 Ga. 128; Rudge v. 
 Rundle, i N. Y. Supreme, 649; Treadwell v. Halloway, 12 B. R. 61; s. c. 46 
 Cal. 547; Hardenbrook v. Colson, 24 Hun, 475; Lenke v. Booth, 5 B. R. 
 351; s. c. 47 Mo. 385; Whitaker v. Chapman, 3 Lans. 155. To the con- 
 
BANKRUPTS. l8l 
 
 § 17.] Conversion is Not a Fraud. 
 
 trary were Woolsey v. Cade, 15 B. R. 238; s. c. 4 Cent. L. J. 202; Owsley v. 
 Cobin, 2 Hughes, 433; s. t. 15 B. R. 489; Hennequin v. Clews, 77 N. Y. 427; 
 s. c. 84 N. Y. 676; Grover v. Clinton, 8 B. R. 312; in re Smith, 18 B. R. 24. 
 These cases, or the great majority of them, were referred to by the U. S. Supreme 
 Court in its decision in Hennequin v. Clews. It did not comment on them, but 
 declared that the question at issue had been fully considered in Neal v. Clark 
 (supra, 95 U. S. 704; s. c. sub. nam. Neal v. Scruggs, 17 B. R. 102). But that case 
 decided nothing more than that " fraud " must be actual instead of constructive in 
 order to prevent a debt created by it from being released. The question of what 
 was a " fiduciary capacity " was not before the court in that case. Neither was 
 the fraud in that case one springing from or implied by a conversion by one of the 
 property of another. Yet the court in Hennequin v. Clews, declared that the ques- 
 tion was res adjudicata by Neal v. Clark ; and further, without noticing or com- 
 menting upon the differences between the statutes of 1841 and 1867, declared that 
 the case before them could not be distinguished in principle from Chapman v. 
 Forsyth; and they accordingly held that the damages springing from the con- 
 version by a pledgee of the property pledged to him did not constitute a debt 
 created by " fraud," or a debt created " by one while acting in a fiduciary 
 capacity." That decision was of course final and authoritative on all courts 
 under the Act of 1867, and must be considered as decisive under the present act 
 of what constitutes " fiduciary capacity " and of what is " fraud."- 
 
 The rule as laid down in this case is not limited to cases of conversion of 
 collateral security or pledges by a pledgee. It has been extended to other cases 
 of conversion and the Court of Appeals of New Ifork has said: "Conversion 
 is not a fraud, within the meaning of the bankrupt act, and the expression 
 ' fiduciary character ' has reference to cases of technical trust actually and 
 expressly constituted and does not include those which the law implies from 
 the contract of the parties. The fraud intended by the law is a positive 
 fraud, or fraud in fact, as distinguished from constructive fraud, founded 
 upon some breach of duty. Where parties come rightfully into the pos- 
 session of n. chattel, though they are in duty bound to return it or its pro- 
 ceeds, and though if they violate that duty by appropriating the chattel or its 
 proceeds to their own use, they are guilty of a breach of duty, guilty of con- 
 version, they are not guilty of such a fraud as will prevent the claim of the 
 owner of the chattel from being released by the subsequent discharge in bank- 
 ruptcy of the party guilty of the conversion." The effect of the decisions, then. 
 
l82 THE NATIONAL BANKRUPTCY LAW. 
 
 No Discharge in Cases of Actual Deceit. [Ch. IH. 
 
 is to treat every failure to return property, which has come rightfully into one's 
 possession, as a breach of contract rather than as a breach of a trust. 
 
 See Lawrence v. Harrington, 122 N. Y. 408, a case in which the defendant 
 received a note with instructions to get it discounted and to remit the proceeds 
 to the sender, but converted the proceeds to his own use; also Palmer v. Hus- 
 sey, 87 N. Y. 303, a case of hypothecation of bonds pledged to one as collateral; 
 also Bergen v. Patterson, 20 Hun, 250; also Stratford v. Jones, 97 N. Y. 586, a 
 case of the unauthorized sale by a broker of his customer's stock. Compare 
 also Scott V. Porter, 93 Penn. St. 38; Sumner v. Richie, 54 Iowa, 554; Cronan 
 V. Cotting, 104 Mass. 245. 
 
 No Discharge in Cases of Actual Deceit. — But it would seem that in 
 some cases the conversion may take place under such circumstances as to make 
 it a fraud. Thus, if the person converts the property of another at a time when 
 he is insolvent and knows that he will be unable upon the payment to him of 
 the debt secured by the converted property to return it, then it would seem that 
 the conversion of it certainly was an act involving moral turpitude — an act 
 whith, as far as immorality was concerned, was hardly short of larceny. This 
 point arose in New York, in the case of Stratford v. Jones, 97 N. Y. 586, but 
 was unnecessary to the decision of the case. The court intimated that such a 
 state of insolvency at the time of the conversion would be a fact to be considered 
 by the jury in determining whether there had been actual fraud. The act of a 
 banker in receiving money for his customer's account when he knows he is 
 insolvent, with intent to defraud him thereof, is such a fraud as will prevent the 
 debt from being discharged in bankruptcy, although in general the relation 
 between a banker and his depositor is that of debtor and creditor rather than 
 a relation of trust. (Sheldon v. Clews, 13 Abb. N. C. 40.) And wherever an ac- 
 tion for fraud or deceit will lie, there is such " fraud " as is contemplated by the 
 section. If the elements of the action for deceit exist, namely, false representa- 
 tions made with Intent to deceive which did actually deceive one to his damage, 
 and such representations were material, then the fraud which is a necessary 
 element in such actions is such fraud as will prevent the discharge of the debt 
 in bankruptcy. Occasionally such fraudulent representations occur in connec- 
 tion with cases of conversion. If the fraud induced one to part with his prop- 
 erty, then as an action for fraud or deceit lies, the debt is to be considered as 
 one created by fraud and consequently not released by a discharge. (Bradner 
 V. Strang, 89 N. Y. 299; s. ... affirmed, 114 U. S. 555; Morse v. Hutchins, 102 
 Mass. 439.) 
 
BANKRUPTS. 1 83 
 
 § 17.] Factors, Commissionmen, and Agents. 
 
 Character of the Debt Not Determined by State Laws. — The character 
 of the debt is to be determined in accordance with the construction to be given 
 to the words and terms used in the bankrupt lanr, and that law, applying to the 
 whole country the construction of it, as well as the operation of it, should be the 
 same all over the country and not varied by local laws of the several States. 
 
 The mere fact that the law of the State where the contract was made and 
 where it was to be performed, and where the parties resided, punishes crim- 
 inally the conversion by a factor of the moneys of his principal, does not fix the 
 character of the debt incurred by the factor, nor determine the relation he bears 
 to his principal. (Woolsey v. Cade, 15 B. R. 238; s. c. 4 Cent. L. J. 202.) 
 
 Factors, Commissionmen, and Agents. — A study of the cases above cited 
 on Conversion not a Fraud will show that in many of them the courts were nec- 
 essarily obliged to consider not only the question of fraud, but also of fiduciary 
 capacity; and that several of them were cases of factors, commissionmen and 
 agents. The weight of authority, as has been seen, is that the phrase 
 " fiduciary capacity," relates only to technical trusts. Whether factors, com- 
 missionmen and agents occupy fiduciary capacities, like the question of what 
 is " fraud," has provoked a conflict of judicial authority. The cases holding 
 that such persons do occupy that position (see Whitaker v. Chapman, 3 Lansing, 
 155; Hardenbrook v. Colson, 24 Hun, 475; s. c. 61 How. Pr. 426; in re]. H. 
 Kimball, 2 B. R. 204; s, c. 6 Blatch. 292; Lenke v. Booth, 47 Mo. 385; Tread- 
 well V. Holloway, 46 Cal. 547), must, we think, be considered as outborne by 
 those to the contrary (Keime v. Graff, 17 B. R. 319; Owsley v. Cobin, 2 
 Hughes, 433; s. c. 15 B. R. 489; Zeperink v. Card, 3 McCrary, 549; Chapman 
 V. Forsyth, 2 How. 202 [and the cases under the Act of 1841, which followed it, 
 viz., Hayman v. Pond, 7 Mete. 328; Austill v. Crawford, 7 Ala. 335]; Woolsey 
 V. Cade, 54 Ala. 378; s. c. 15 B. R. 238; s. c. 4 Cent. L. J. 202; Grover v. Clin- 
 ton, 8 B. R. 312; in re Smith, i8 B. R. 24; Scott «/. Porter, 93 Pa. St. 38; Du- 
 pont V. Beck, 81 Ind. 271; Georgia R. R. v. Cubbedge, 75 Ga. 321). There 
 was no case decided by the U. S. Supreme Court, under the Act of 1867, 
 expressly passing upon the question of the relation of factors to their principals; 
 but the fact that in Hennequin v. Clews (iii U. S. 676), the Supreme Court of 
 the United States in determining that the relation of a pledgee to the pledgor 
 was not fiduciary, said that the case in principle could not be distinguished from 
 Chapman v. Forsyth (2 How. 202), which was a case determining that a cotton 
 factor did not bear towards his principal a fiduciary relation, must be considered 
 
1 84 THE NATIONAL BANKRUPTCY LAW. 
 
 Agents. [Ch. IIL 
 
 if not an adjudication, at least as expressive of the opinion of the court of last 
 resort. 
 
 Course of Dealing as Determining Fiduciary Capacity. — The courts 
 
 have at times endeavored to show the peculiar circumstances which make 
 factors occupy a position different from other trustees. In Woolsey v. Cade 
 (supra), which was a case of cotton factors, the court said: " The business of a 
 factor is not confined to a single transaction with a single individual. It 
 extends to a number of persons and to varied transactions. A cotton factor 
 seldom sells and seldom can in one sale dispose of the cotton of one person 
 only. In the ordinary course of business he sells the cotton of several persons 
 at certain prices varying according to the quality, and the aggregate proceeds 
 of the sale are paid to him. The cotton is the property of the several persons 
 to whom he must, after the sale, separately account, in proportion to their 
 several interests when it is ascertained, how much of the differing qualities of 
 cotton each owned. Until then he must deposit the funds in his own name. 
 If lost because of such deposit it cannot be properly said that he is guilty of 
 defalcation which imports a breach of duty, legal or moral. (Vail v. Durant, 7 
 Allen, 408.) In the usual course of business factors make advances on consign- 
 ments; oftentimes these advances are in amount so great that the forwarder is 
 indebted to them; hence the course of dealings is one in which mutual debts 
 are incurred; one of them may be the debtor at one time, the other at another 
 time." 
 
 This explanation may perhaps not be satisfactory, but it is evidently an aim 
 to show that the course of business affects and determines the relation of factors 
 to their principals, and that that course of business is such that their liability is 
 one of contract, not of trust. 
 
 Agents. — If factors are not fiduciary debtors, agents clothed with similar 
 powers cannot be regarded as fiduciary debtors. Thus agents authorized by 
 agreement to make sales and to collect moneys and carry them into account 
 and pay over monthly or at other regular intervals, are to be treated as debtors, 
 not as trustees. They do not occupy a fiduciary capacity. (Grover v. Clinton, 
 8 B. R. 312; s. c. 5 Biss. 324; Kaufman v. Alexander, 53 Texas, 562; Guilfoyle 
 V. Anderson, g Daly [N. Y] 64.) And persons who were made the agents of 
 others to procure the discount of certain notes and then to pay the proceeds over 
 have been held not to act in a fiduciary capacity, and their act of converting the 
 proceeds to their own use is not a " fraud." (Compare Lawrence v. Harrington, 
 122 N. Y. 408; Green v. Chilton, 57 Miss. 598; Noble v. Hammond, 129 U. S. 65.) 
 
BANKRUPTS. 1 85 
 
 § 17.] Auctioneers. 
 
 And a deposit of bills of exchange, with instructions to collect, apply the pro- 
 ceeds upon certain indebtedness, and remit the balance, does not create a 
 fiduciary relation between the depositor and the bailee. (Cronan v. Cotting, 4 
 B. R. 667; s. c. 104 Mass. 245, holding that the fiduciary relation must have 
 existed prior to and independently of the particular transaction from which the 
 debt arose, in order to fall within the term as here used.) It has further been 
 held that if a maker of a promissory note gives money to his surety to pay the 
 note and the latter does not so apply it, this does not create a fiduciary debt. 
 (Bissell u. Couchane, 15 Ohio 58.) Contra to this last case, Matteson v. Kellogg, 
 15 111. 547; Kingsland v. Spalding, 3 Barb. Ch. 341, holding that where one 
 receives money to be used in a particular way or for a particular purpose for the 
 use of the principal, then the money is held in a fiduciary capacity; as, for 
 instance, where he receives money for the purpose of investment or for the pur- 
 pose of paying the debt of another. But the rule laid down in the two cases 
 last cited cannot be considered as correct, if the agent or bailee, by agreement 
 of the parties or by the usual course of dealing, is allowed to handle the property 
 and deal with it as his own, subject only to the duty of returning it on demand. 
 And even when applied to other cases the rule would seem to be opposed to that 
 established by the weight of authority. Both of the cases mentioned have been 
 criticised or disapproved in many of the cases cited in this paragraph and in 
 the paragraph on Conversion is Not a Fraud. See in particular. Chapman v, 
 Forsyth, 2 How. 202, and Hennequin v. Clews, iii U. S. 676. 
 
 In general, the relation between a banker and his depositor is that of debtor 
 and creditor, and is not fiduciary (Bank of Madison, 9 B. R. 184); and this rule 
 applies to any bailee with whom money is deposited to be mixed with his own 
 and to be used by him till asked for by the depositor. Such a deposit creates 
 merely an ordinary indebtedness. 
 
 Auctioneers. — Where such persons receive goods to be sold by them at 
 auction, the proceeds to be remitted, though they may be called auctioneers, it 
 is difficult to see how they sustain towards the persons whose goods they sell 
 any relation different than commissionmen would. Their liability would seem 
 to be the same, — a mere indebtedness dischargeable in bankruptcy. The case 
 of Mayor v. Walker (11 B. R. 478; s. c. sub nom. Jones v. Russell), holding a 
 contrary doctrine, was a case in which the auctioneer -was a city officer; and 
 though the decision was not expressly based on that ground, in so far as it is an 
 authority for the statement that auctioneers act in a fiduciary capacity, it 'seems 
 to be opposed to the reasoning of the opinion in Hennequin v. Clews (in U. S. 
 
1 86 THE NATIONAL BANKRUPTCY LAW. 
 
 Testamentary Trustees, Guardians. [Ch. IIL 
 
 676), and the other cases cited in the notes above as to liability of factors and 
 commissionmen and as to conversion not being a "fraud." Expressly opposed 
 to Mayor v. Walker, is Gibson v. Gorman, 44 N. J. 325. 
 
 Attorneys. — An attorney, who in his professional character collects a debt 
 for his client, acts in a fiduciary capacity. (White &. Piatt, 5 Denio, 274; Flan- 
 agan V. Pearson, 14 B. R. 37; s. c. 42 Tex. Contra, Wolcott v. Hodge, 81 
 Mass. 547.) But if the attorney is not employed in a professional capacity, then 
 he incurs only the liability of an ordinary agent or bailee. (McAdoo v. Lumiss, 
 43 Tex. 227.) In Flanagan v. Pearson, the court declared that the relation of 
 attorney and client was similar to the express trusts mentioned in the Act of 
 1841, viz., those of executor, administrator, guardian and trustee. 
 
 OiBcers. — The term officer does not include those who are sureties for 
 officers. Sureties are not officers, neither do they act in a fiduciary capacity, 
 even though their principals are persons filling public offices or occupying tech- 
 nical trusts. A discharge granted to the surety releases him from any liability 
 actually incurred upon his bond, even though his principal is guilty of a defal- 
 cation. Jones V. Knox, 46 Ala. 53; Fowler v. Kendall, 44 Me. 448; Reitz v. 
 People, 72 111. 435; Steele v. Graves, 68 Ala. 21.) Mere negligence of n. public 
 officer in collecting moneys which it is his duty to collect is not a defalcation. 
 (Courtney v. Beale, 84 Va. 692.) 
 
 Testamentary Trustees, Guardians. — Whenever a debt is due by a 
 testamentary trustee, executor, administrator or guardian, as such, it is not 
 released by a. discharge. These are the "' technical trusts" referred to in the 
 Act of 1841, and uniformly held to create obligations not affected by a discharge. 
 But the debt must be one due from the trustee as such, not an individual indebted- 
 ness of his, even though connected with the trust estate. Thus a sum of money 
 due from an executor to a legatee is a fiduciary debt, and is not released by his 
 discharge in bankruptcy. (In re Crisfield, 55 Md. 192.) Where an executor gave 
 his personal guarantee of a claim of a creditor against his testate's estate, the 
 guarantee was rightly held to be an ordinary debt, not one created while acting 
 in a fiduciary capacity. (Amoskeag Mfg. Co. v. Barnes, 49 N. H. 312.) And 
 where an accounting trustee gave his note under seal (importing a considera- 
 tion) which was accepted in satisfaction, and a release given, it was held that 
 the note was not a fiduciary debt. (Coleman v. Davis, 45 Ga. 489; compare 
 Elliot v. Higgins, 83 N. C. 459.) If the note had not been accepted in satisfac- 
 tion and a release given, it would seem that the note would constitute simply 
 
BANKRUPTS. 1 87 
 
 § 17.] Right to Plead a Discharge Received Pendente Lite. 
 
 a new evidence of the old debt and would not be released by the discharge. 
 (Madison v. Dunkle, 114 Ind. 262.) 
 
 The Discharge as a Defense Must be Pleaded. — A court does not lose 
 jurisdiction of an action pending before it because the defendant has been dis- 
 charged in bankruptcy. It may, unless the suit is stayed, proceed to final judg- 
 ment. The discharge must be pleaded if the defendant would avail himself of 
 it. No court will take judicial notice of it and protect his rights because he has 
 this defense, any more than they will protect him because he may have some 
 other valid defense. (Horner v. Spellman, 78 111. 206, 410; McDonald v. Davis, 
 105 N. Y. 508; Revere v. Dimock, 90 N. Y. 33; s. «,. affirmed as Dimock v. 
 Revere, 117 U. S. 559; Monroe ». Upton, 50 N. Y. 593; Manwarring v. Kouns, 
 35 Tex. 171.) See also cases cited heretofore in notes to this section, paragraphs 
 on The Discharge not an Extinguishment of the Debt, Judgments Entered after 
 Granting of the Discharge, Remedies against Judgments, and Effect of a Dis- 
 charge to be Determined by Court in which the Action is Brought. 
 
 Right to Plead a Discharge Received Pendente Lite. — If the bankrupt 
 receives a discharge pending a suit against him, and the discharge might be a 
 defense to such suit, in general he will be allowed to plead it. (National Bank 
 V. Taylor, 120 Mass. 124.) Where there is a system of Code Pleading he must 
 apply for leave to set it up by a supplemental answer and generally will be 
 permitted to do so. (Lyon v. Isett, 34 N. Y. Supr. 41; Holyoke v. Adams, 59 
 N. Y. 233; s. c. 13 B. R. 413.) And if the defendant would avail himself of this 
 defense, it must be pleaded in actions in equity as well as those at law. It can- 
 not be taken advantage of by motion. (Fellows v. Hall, 3 MacLean 281.) But 
 the permission to set up the defense by a supplemental answer will be denied 
 if there has been great and inexcusable delay; and the court may in its discre- 
 tion impose terms as a condition of allowing one to plead it. (Medbury v. Swan, 
 8 B. R. 537; s. c. 46 N. Y. 200; Barstow v. Hansen, 2 Hun, 333.) In Med- 
 bury V. Swan, a delay of fifteen months was held sufficient to justify a court 
 in refusing permission to plead a discharge by supplemental answer. The 
 application for leave to plead a discharge by means of a supplemental answer 
 like all other applications for leave to put in a supplemental answer is addressed 
 to the discretion of the court. On motions for such leave the court has the same 
 discretion as under the former practice a court had upon a motion to strike from 
 the file of the court a plea puis darrein continuance. Leave may be denied, 
 although the defense sought to be interposed is strictly legal, where in the 
 
THE NATIONAL BANKRUPTCY LAW. 
 
 How Pleaded and Evidenced. [Ch. IIL 
 
 judgment of the court, laches or fraud is shown, or it appears that injustice will 
 be wrought by allowing the defense. Thus in New York, where in an action, an 
 attachment, had been issued and levied upon property of defendants, which 
 attachment had been released by the giving of an undertaking by sureties, con- 
 ditioned for the payment of any judgment recovered therein against the defend- 
 ant, the court denied a subsequent motion of the defendant to be allowed to plead 
 by supplemental answer a subsequent discharge in bankruptcy, since the effect 
 would be to prevent a judgment being entered against him, and as the recovery 
 of a judgment was the contingency on which the sureties were to become liable 
 to the plaintiff upon the bond given to dissolve the attachment, to prevent the 
 entry of such judgment would be to work an injustice against the plaintiff, and 
 to deprive him of a proper advantage lawfully obtained by his attachment. 
 (Holyoke v. Adams, 59 N. Y. 233; s. c. 13 B. R. 413.) Compare the notes to 
 section 16, showing that the course of practice in Massachusetts is different. 
 Where a defendant, prior to bankruptcy, has suffered judgment by default to be 
 taken against him, and such judgment is a valid lien on his land, if afterwards 
 he institutes proceedings in bankruptcy and procures a discharge he will not be 
 allowed to set up the discharge by a supplemental answer, the court in the 
 meantime having opened the default and given him leave to answer, but hav- 
 ing directed the judgment to stand as security; for to order that leave be given 
 to plead the discharge by supplemental answer would be to destroy the lien, 
 and this the plaintiff was entitled to under the provisions of the bankrupt act. 
 (Barstow v. Hansen, 2 Hun, 333.) 
 
 How Pleaded and Evidenced. — The present act provides for a discharge 
 which is evidenced only by the record of a decree to that effect. There is no 
 provision for any instrument in the nature of a certificate of discharge. The 
 decree is the discharge, and it may be evidenced by the record or by a certified 
 copy. By section 21 (/) such certified copy is made evidence not only of the fact 
 that such order was made, but of the regularity of the proceedings and of the 
 jurisdiction of the court. The act contains no express provision as to the man- 
 ner in which the discharge may be pleaded. The provision just referred to 
 establishes only the evidentiary value of the certified copy. Section 5 119 of the 
 R. S. contained a provision as to the manner of pleading the discharge under 
 that law, and further provided that the certificate should be conclusive evidence 
 of the fact and regularity of such discharge. Under that act it was held that 
 the plea should set forth facts showing that the court had jurisdiction, but need 
 not set forth facts showing the regularity of the proceedings. Regularity was 
 
BANKRUPTS. 1 89 
 
 § 17.] Proceedings in Appellate Courts After a Discharge. 
 
 presumed when jurisdiction was proven. (Stoll v. Wilson, 14 B. R. 571; s. c. 
 38 N. J. 198; see also, as to practice under act of 1841, McCormick v. Pickering, 
 4 N. Y. 276; Varnum v. Wheeler, i Denio, 331.) 
 
 Replication — Under the old system of pleading if the debt is excepted from 
 the operation of a discharge, the plaintiff need not set up that fact in his declara- 
 tion. The proper practice is to declare as if there were no discharge, and when 
 the discharge has been set up in the plea, to set forth in a replication the facts 
 to avoid the discharge. (Brown v. Broach, 52 Miss. 536; Johnson v. Ball, 15 
 N. H. 407.) If the plaintiff seeks to avoid the discharge on the ground that the 
 debt was created by fraud, or while the defendant was acting in a fiduciary 
 capacity, he must set up the fact in his replication. (Cutter v. Folsom, 17 N. 
 H. 139.^ But under the Code, in New York, a reply is never necessary to the 
 allegations in an answer, unless directed by the court or unless a counterclaim 
 has been set up in the answer. The plaintiff need not allege that the debt 
 which is his cause of action was created by fraud and need not reply to an 
 answer setting up a discharge; and yet may show that his debt was one created 
 by fraud. (Argall v. Jacobs, 87 N. Y. no.) 
 
 Proceedings in Appellate Courts After a Discharge. — If a discharge 
 has been granted to a person after the entry of judgment against him but while 
 the case is in the appellate court, the enforcement of his remedies depends on 
 the practice of the State where the suit is brought. In New York the mere sug- 
 gestion of the discharge of the defendant while his appeal is pending can have 
 no effect. The appellate court will proceed as if no discharge had been granted; 
 and if the judgment is affirmed, the defendant may then apply to the proper 
 court for a perpetual stay of execution. (Cornell v. Dakin, 38 N. Y. 253, citing 
 Palmer z/. Hutchins, i Cow. 42; Baker v. Taylor, i Cow. 165.) In Tennessee, 
 it seems that the proper remedy for enforcing the right to a discharge as against 
 a judgment entered before the discharge was granted but which at that time 
 was on appeal, is by an equitable action instituted after the appellate court 
 has pronounced its judgment of affirmance. There is no way in which the 
 matter can be brought before the appellate court. (Wolf v. Stix, gg U. S. I- 
 Wolf u. Stix, 96 U. S. 541; Longley v. Swayne, 4 Heisk. (Tenn.) 506; Riggs ti. 
 White, 4 Heisk. 503; Ward v. Tunstall, 58 Tenn. 319.) The rule in that State is: 
 " On the record when presented, to which alone the appellate court can look, 
 a judgment can be rendered and then if the debtor desires to be relieved he will 
 find no difficulty in being protected from payment of improper judgments, either 
 
igO THE NATIONAL BANKRUPTCY LAW. 
 
 Revival of Discharged Debt by a New Promise. [Ch. III. 
 
 in the banljruptcy court or by an original proceeding in the State court where 
 he can make such issues as will raise the question. As he is precluded from 
 interposing in the appellate court his defense arising out of his discharge in 
 bankruptcy, the judgment of affirmance will not interfere in any way with his 
 subsequent action for relief from it." In that State, as in New York, there is 
 no authority for the appellate court to entertain a petition to set aside a judg- 
 ment entered by it after the granting of the discharge. If the court were to 
 receive a petition the opposite party ought to have the right to controvert the 
 facts stated in the petition and to show that the discharge was not operative upon 
 the judgment, and thus issues would be raised which would constitute a new 
 lawsuit. Neither in the States mentioned and in others whose practice is 
 similar, can the discharge be made available in the appellate court by a plea 
 in abatement, though it was granted after the original judgment. But in sev- 
 eral States a discharge may be used in proceedings on appeal. Thus, in Ver- 
 mont, if a discharge is obtained after the granting of the original judgment, the 
 appellate court may, in its discretion, reverse the judgment pro forma, if the 
 discharge is suggested to it, and will do so in order to enable the defendant to 
 plead his discharge. (Bank v. Onion, i6 Vt. 470.) In Missouri it is within the 
 power of the appellate court to order that the appellant be discharged from the 
 judgment. (Haggerty ii. Morrison, 59 Mo. 324.) In other States the appellate 
 court will either order a perpetuil stay or dismiss the appeal. 
 
 Revival of Discharged Debt by a New Promise. — The moral obligation 
 
 to pay a discharged debt is a good consideration for a new promise to pay it. The 
 legal obligation of the bankrupt is by force of positive law discharged, and the 
 remedy of the creditor to enforce payment of it by suit is barred. But the debt 
 is not paid, the moral obligation to pay remains, and a promise based on it is 
 upon sufficient consideration. (Dusenbury v. Hoyt, xo B. R. 313; s. c. 53 N. Y. 
 521; s. c. 14 Abb. Pr. [N. S.] 132; Gardner v. Bowen, 23 Weekly Digest, 252.) 
 This is an application of the general rule thai if a debtor is released from his 
 debt by provisions of positive law, his subsequent express promise to pay the 
 debt will be enforced, but where the subsequent promise is to pay a debt 
 released by the voluntary act of the creditor, the promise will not be enforced. 
 A discharge under a composition made and confirmed under the provisions of 
 the bankruptcy act is a discharge by operation of law, and not a. voluntary dis- 
 charge; and this is as true of the claim of a creditor voluntarily signing the 
 composition as of the claim of one who dissented. An indebtedness thus dis- 
 charged is a good consideration for a subsequent promise to pay the original 
 
BANKRUPTS. I9I 
 
 § 17.] Expressions of an Intention to Pay. 
 
 debt. (/« re Merriman, 44 Conn. 587; s. c. 18 B. R. 411; Mason & Hamlin 
 Organ Co. v. Bancroft, i Abb. N. C. 415; s. t. 4 Cent. L, J. 295; Exp. Jacobs, 
 44 L. J. Bank. 34.) 
 
 New Promise Must be Express, Definite, Unambiguous. — The promise 
 must be definite, express, distinct, unambiguous. (Stern v. Nussbaum, 5 Daly 
 [N. Y.] 382; s. c. 47 Howard Pr. 489; Allen v. Ferguson, 9 B. R. 481; s. c. 18 
 Wall. I.) The mere subsequent acknowledgment of the justice of the debt or 
 of its existence cannot be considered a promise to pay. It is nothing but a 
 recognition of that which does in fact exist, — viz., the moral obligation to pay. 
 (Porter v. Porter, 31 Me. 169; Murphy v. Crawford, 114 Pa. St. 496; Brewer v. 
 Boynton, 71 Mich. 254.) 
 
 Expressions of an Intention to Pay. — A mere expression of an intention 
 to pay is not a promise to that effect. In the case of Allen v. Ferguson, the 
 U. S. Supreme Court held (9 B. R. 481, s. c. 18 Wall, i), that where a dis- 
 charged bankrupt had written to his creditor " Be satisfied; all will be right. 
 I intend to pay my just debts if money can be made from hired labor. All will 
 be right between me and my just creditors," — this language could not be con- 
 sidered a promise to pay the debts. The promise by which a discharged debt 
 may be revived must be clear and unequivocal. The rule is different in regard 
 to the defense of the statute of limitations against a debt barred by lapse of 
 time. In that case acts or declarations recognizing the existence of the debt as 
 still an obligation, have often been held to take a case out of the statute ; not so 
 in the case of debts discharged in bankruptcy. Nothing is sufficient to revive 
 such debts unless the jury is authorized by it to say that there was an expres- 
 sion by the debtor of the intention to bind himself to the payment of the debt. 
 Thus partial payments do not operate as a new promise to pay the residue of 
 the debt; nor is the payment of interest a promise to pay the principal. The mere 
 expression of an intention to pay is not sufficient. And in the same case the 
 court said, with reference to an expression of intention to do " what was right " 
 and to pay " just debts," that the determination of what was " right " or 
 " just " in such cases was so impracticable that courts of law could not under- 
 take to ascertain the rights of parties under such an expression. But it is not 
 necessary that the word " promise " be used to create an obligation. It has 
 been said the true test is: Did the party mean that he would pay the debt? If 
 he did and his words are susceptible of no other construction, then in law his 
 words amount to an express promise to pay. The question would seem to be 
 
192 THE NATIONAL BANKRUPTCY LAW. 
 
 Must the Action be on the Original Debt or the New Promise. [Ch. IIL 
 
 one of fact for the jury, whether from the words used, considered in the light 
 of all the circumstances of the case, there was, as was said in Allen v. Fergu- 
 son (9 B. R. 481; s. c. 18 Wall. 1), " the expression by the debtor of a clear 
 intention to bind himself to the payment of the debt." The inquiry is: " Did 
 the party express his intention to reassume his legal obligation." (Harris v. 
 Peck, I R. I. 262; Craig v. Seitz, 63 Mich. 727.) In deciding this question not 
 only the words used may be considered but all the attendant circumstances, 
 such as whether they were addressed to the debtor or to third persons, and also 
 the cause and occasion of the use of the words. (Evans v. Carey, 29 Ala. 99; 
 Horner v. Speed, 2 Pat. & H. 616.) 
 
 Subsequent Payments upon Discharged Debts. — Subsequent payments 
 
 do not revive the debt so as to make the debtor liable for the residue, nor does 
 the payment of interest make one liable for the principal. Neither will such 
 payments be evidence which alone will justify a jury in finding that a new 
 promise was made to pay the debt. (Allen v. Ferguson, 9 B R. 481; s. t. 18 
 Wall, i; Lawrence v. Harrington, 122 N. Y. 408; Wheeler -v. Simmons, 60 
 Hun, 404; s. c. 39 N. Y. St. Rep. 797; Cambridge Institution v. Littlefield, 60 
 Mass. 210.) 
 
 Must the Action be on the Original Debt or the New Promise. — There 
 
 is much conflict of authority on this point. One line of cases holds that the dis- 
 charge bars the debt sub modo only, and the new promise operates merely as a. 
 waiver of the defense which the discharge gave, and that when the bankrupt 
 has made a subsequent promise to pay the debt, the creditor may bring the 
 action upon the original demand and may set up in his reply (if a reply is 
 necessary) the new promise in avoidance of the discharge set out in the answer 
 or plea. This is the rule in New York. (Dusenbury v. Hoyt, 10 B. R. 313; 
 s. c. 53 N. Y. 521; s. t. 14 Abb. Pr. [N. S.] 132. To same effect, Maxim v. 
 Morse, 8 Mass. 127; Riggs v. Roberts, 85 N. C 151; Graham v. O'Hern, 24 
 Hun, 221; Marshall v. Tray, 74 111. 379; Hopkins v. Ward, 67 Barb. 452; 
 Badger v. Gilmore, 33 N. H. 361; Otis v. Glazen, 31 Me. 567; Apperson v. 
 Stewart, 27 Ark. 619.) Considering the new promise merely as a waiver of the 
 defense of a release by the discharge, the rule as laid down by the New York 
 courts is that a subsequent promise to pay, made any time before the rendering 
 of a verdict, even after the commencement of an action on the old debt, and 
 even though the discharge may have been previously pleaded, is good as a 
 waiver. (Decker v. Kitchen, 33 Hun, 268; s. c. 19 Weekly Dig. 379, citing 
 
BANKRUPTS. I93 
 
 *^ 17.] Parol Promise — Date of the Promise. 
 
 Rucker v. Hanna, 4 East, 604; Yea v. Fouraker, 2 Burrows, 1099; Wright v. 
 Steele, 2 N. H. 53. See also Clark v. Atkinson, 2 E. D. Smith, 112; Shipping 
 V. Henderson, 14 J. R. 178; McNair v. Gilbert, 3 Wend. 344; Wait v. Morris, 6 
 Wend. 394; Fitzgerald v. Alexander, 19 Wend. 402.) But in many Stales the 
 original debt is considered as wholly extinguished; an action, if brought, must 
 be on the subsequent promise. (Eckler v. Galbraith, I2 Bush, 71; Carson v. 
 Osborn, 10 B. Mon. 155; Murphy v. Crawford, 114 Pa. St. 496; Eghert v. 
 McMichael, 9 B. Mon. 44; Fleming v. LuUman, 11 Mo. App. 104; Ross v. Jor- 
 dan, 62 Ga. 298.) In Horner v. Speed, 2 Pat. & H. 616, it was held that the 
 creditor might elect to sue on the new promise or on the original debt. 
 
 Parol Promise. — Unless required by the statute of the State where the 
 action is brought on the new promise, there is no law requiring that such 
 promise shall be in writing in order to be valid. It may be by parol and be 
 binding. (Henly v. Larrier, 10 B. R. 280; s. c. 75 N. C. 172; Apperson v. 
 Stewart, 27 Ark. 619; Fraley v. Kelly, 67 N. C. 78; Hernthall v. McRae, 57 
 N. C. 21.) But if a State law does require such promise to be in writing in 
 order that the promise may be proved, the law is valid even though the promise 
 was in fact made before the passage of the law requiring a written promise, as 
 the law prescribes merely the kind of evidence necessary to establish a fact and 
 regulates only the remedy. (Kingsley v. Cousins, 47 Me. gi.) 
 
 Date of the Promise. — It is immaterial whether the promise be made 
 between the filing of the petition and the granting of the discharge, or after the 
 discharge. A promissory note, given in payment of an old debt, after the peti- 
 tion is filed, and before the discharge, is not affected by the discharge. The 
 discharge relates back to the filing of the petition, but the moral obligation to 
 pay exists at all times, and before the discharge as well as after it forms a sufiB- 
 cient consideration for the new promise. It is not necessary that the bankrupt 
 receive his discharge before his new promise, in order that it be based on 
 a good consideration. (Jersey City Ins. Co. v. Archer, 122 N. Y. 376, [citing 
 Fraley v. Kelly, 67 N. C. 78; Hornthal v. McRae, 67 N. C. 21; Kirkpat- 
 rick V. Tattersall, 13 M. & W. 766; Brix a. Braham, i Bing. 281; Knapp v. 
 Hoyt, 57 Iowa, 591; Lerow |j/. Wilmarth, 7 Allen, 463; Still well v. Coope, 4 
 Den. 225; Geery v. Bucknor, 4 N. Y. Leg. Obs. 344; Allen v. Ferguson, 9 B. R. 
 481; s. c. 18 Wall. i]. See also Otis v. Gazlin, 31 Me. 567; Griel v. Solomon, 
 82 Ala. 85; Corliss v. Shepherd, 38 Miss. 550; Roberts v. Morgan, 2 Esp. 736; 
 
 NAT. BANK RHPTCY LAW — I3 
 
194 THE NATIONAL BANKRUPTCY LAW. 
 
 New Promise to Pay a Discharged Judgment. [Ch. IIL 
 
 Tooker v. Doane, 2 Hall, 538; Donnell v. Swaim, 3 Penn. L. J. 393; Wheeler v. 
 Wheeler, z8 111. App. 385.) 
 
 New Promise to Pay a Discharged Judgment. — It may well be doubted 
 if a new promise would give a right to a judgment creditor to issue execution 
 on a judgment released by a discharge. It would seem that the plaintiff should 
 sue on the judgment. The court cannot, however, on a motion for leave to 
 issue execution, hear and determine whether or not there has been a new prom- 
 ise, the evidence being conflicting. (Shuman v. Strauss, 10 B. R. 300; s. c. 52 
 N. Y. 404.) 
 
CHAPTER IV. 
 COURTS AND PKOCEDUEE THEREIN. 
 
 Sec. 1 8. Process, Pleadings, and Adjudications. — a Upon 
 the filing of a petition for involuntary bankruptcy, service thereof, 
 with a writ of subpoena, shall be made upon the person therein 
 named as defendant in the same manner that service of such pro- 
 cess is now had upon the commencement of a suit in equity in 
 the courts of the United States, except that it shall be returnable 
 within fifteen days, unless the judge shall for cause fix a longer 
 time ; but in case personal service cannot be made, then notice 
 shall be given by publication in the same manner and for the 
 same time as provided by law for notice by publication in suits in 
 equity in courts of the United States. 
 
 b The bankrupt, or any creditor, may appear and plead to the 
 petition within ten days after the return day, or within such 
 further time as the court may allow. 
 
 c All pleadings setting up matters of fact shall be verified under 
 oath. 
 
 d If the bankrupt, or any of his creditors, shall appear, within 
 the time limited, and controvert the facts alleged in the petition, 
 the judge shall determine, as soon as may be, the issues presented 
 by the pleadings, without the intervention of a jury, except in 
 cases where a jury trial is given by this act, and make the 
 adjudication or dismiss the petition. 
 
 e If on the last day within which pleadings may be filed none 
 are filed by the bankrupt or any of his creditors, the judge shall 
 on the next day, if present, or as soon thereafter as practicable, 
 make the adjudication or dismiss the petition. 
 
 / If the judge is absent from the district, or the division of the 
 district in which the petition is pending, on the next day after 
 the last day on which pleadings may be filed, and none have 
 
 [195] 
 
196 THE NATIONAL BANKRUPTCY LAW. 
 
 Equity Rules as to Process. [Ch. IV. 
 
 been filed by the bankrupt or any of his creditors, the clerk shall 
 forthwith refer the case to the referee. 
 
 g Upon the filing of a voluntary petition the judge shall hear 
 the petition and make the adjudication or dismiss the petition. 
 If the judge is absent from the district, or the division of the dis- 
 trict in which the petition is filed at the time of the filing, the 
 clerk shall forthwith refer the case to the referee. 
 
 Analogous Provisions of Former Acts. — 
 
 As to service of process: R. S., section 5024; act of 1867, section 40; also 
 R. S., section 5025; act of 1867, section 40; act of 1841, section i; act of 1800, 
 section 3. As to appearances, pleadings, trial, and adjudication: R. S., sec- 
 tion 5026; act of 1867, sections 41 and 42; act of 1841, section i; act of iSco, 
 section 3; also R. S., section 5028; act of 1867, section 42. 
 
 Equity Rules as to Process. — Rule 7. The process of subpoena shall consti- 
 tute the proper mesne process in all suits in equity, in the first instance, to 
 require the defendant to appear and answer the exigency of the bill; and, 
 unless otherwise provided in these rules, or specially ordered by the Circuit 
 Court, a writ of attachment, and, if the defendant cannot be found, a writ of 
 sequestration, or a writ of assistance to enforce a delivery of possession, as the 
 case may require, shall be the proper process to issue for the purpose of com- 
 pelling obedience to any interlocutory or final order or decree of the court. 
 
 Rule II. No process of subpoena shall issue from the clerk's office in any suit 
 in equity until the bill is filed in the office. 
 
 Rule 12. Whenever a bill is filed, the clerk shall issue the process of subpoena 
 thereon, as of course, upon the application of the plaintiff, which shall be 
 returnable into the clerk's office the next rule-day, or the next rule-day but one, 
 at the election of the plaintiff, occurring after twenty days from the time of the 
 issuing thereof. At the bottom of the subpoena shall be placed a memoran- 
 dum, that the defendant is to enter his appearance in the suit in the clerk's 
 office on or before the day at which the writ is returnable; otherwise, the bill 
 may be taken pro confesso. Where there are more than one defendant, a writ 
 of subpoena may, at the election of the plaintiff, be sued out separately, for each 
 defendant, except in the case of husband and wife defendants, or a joint sub- 
 poena against all the defendants. 
 
COURTS AND PROCEDURE THEREIN. I97 
 
 § i8.] The Petition — Pleadings. 
 
 Rule 13. The service of all subpoenas shall be by a delivery of a copy thereof 
 by the officer serving the same to the defendant personally, or by leaving a 
 copy thereof at the dwelling house or usual place of abode of each defendant, 
 with some adult person who is a member or resident in the family. 
 
 Rule 14. Whenever any subpoena shall be returned not executed as to any 
 defendant, the plaintiff shall be entitled to another subpoena, toties quoties, 
 against such defendant, if he shall require it, until due service is made. 
 
 Rule 15. The service of all process, mesne and final, shall be by the marshal 
 of the district or his deputy, or by some other person, specially appointed by the 
 court for that purpose, and not otherwise. In the latter case the person serving 
 the process shall make affidavit thereof. 
 
 Rule 16. Upon the return of the subpoena as served and executed upon any 
 defendant, the clerk shall enter the suit upon his docket as pending in the court, 
 and shall state the time of the entry. 
 
 The Petition. — Among the material allegations of an involuntary petition in 
 bankruptcy are ; first, that the petitioners are creditors having claims which are 
 provable in bankruptcy and of the amount required by section 59; second, that 
 the person against whom the petition is filed has committed one of the acts 
 of bankruptcy specified in section 3 and is .at the time of the filing of the 
 petition, an insolvent; third, that the person against whom the petition is filed is 
 subject to the jurisdiction of the court as specified in section 2 (i); fourth, if the 
 debtor is a corporation, that it falls within the terms of section 4*/ all these mat- 
 ters must be set forth definitely and specifically, so that the debtor may know 
 what he is to disprove or explain. {In >-f Randall & Sutherland, Deady, 557; s. c. 
 3 B. R. 18.) Under the former act it was held that the petition might be upon in- 
 formation and belief, especially if the grounds of belief and sources of information 
 were stated. (In re MuUer v. Bretano, 3 B. R. 329; in re Scammon, 10 B. R. 66; 
 s. c. 6 Hiss. 130; in re Scull, 7 Ben. 371; Orem v. Harley, 3 B. R. 263.) Facts 
 and not conclusions of law must be stated. Thus the nature of the petitioner's 
 debt must be set forth so far as to show that it is a provable claim. An allega- 
 tion that the petitioner " has a provable claim " for a certain amount is insuffi- 
 cient. (/» re Hadley, 12 B. R. 366.) 
 
 Pleadings. — The defendant may answer, or, in a proper case, may demur. 
 (Orem v. Harley, 3 B. R. 263.) If he demurs and the court overrules the 
 demurrer, an absolute adjudication of bankruptcy may be entered up. (In re 
 Benham, 8 B. R. 94.) But the court, in its discretion, may allow him to plead 
 
198 THE NATIONAL BANKRUPTCY LAW. 
 
 Jurisdiction by Voluntary Appearance. [Cti. IV. 
 
 anew. If the allegations of the petition are indefinite and uncertain, the 
 defendant may decline to plead, and may move the court to dismiss the peti- 
 tion. The court, in its discretion, may dismiss or may enter an order requiring 
 the petitioner to file a more definite petition. (In re Melick, 4 B. R. 97; in re 
 Randall & Sunderland, i Deady, 557; ». u. 3 B. R. 18.) It has been held that 
 the debtor may file an answer to the allegations of the petition denying the 
 acts of bankruptcy, and at the same time demur on the ground of the insuffi- 
 ciency of the petition. (In re Nickodemus, 3 B. R. 230.) 
 
 Verifleation. — Where more than one party is necessary to the petition, it 
 must be verified by as many of the signers to it as are required by section 56. 
 (In re Scull, 7 Ben. 371; s. c. 10 B. R. 165.) Whether such petitions may be 
 verified by the agents or attorneys of the creditors, quare. Compare section 
 I (9). It would seem under the present act that an agent might verify. (Compare 
 in re Rayner, II Blatch. 43.) Under the former act the verification could be made 
 bv the agent if the petitioner resided without the district, but there was some con- 
 flict of authority as to whether when the verification was made by such an agent he 
 should or should not be obliged to make proof of his authority. (Compare 
 in re Rosenfields, 11 B. R. 86; s. c. i Cent. L. J. 583, with in re Cal. Pac. R. R. 
 Co., II B. R. 193; s. c. 3 Saw. 240.) The tendency was to require proof of his 
 authority. A verification though required is not a jurisdictional essential. It 
 is waived, if the opposing party proceeds to plead in answer to it or to go to 
 trial. (In re McNaughton, 8 B. R. 44; in re S. Simmons, 10 B. R. 253; in re 
 Sargent, 13 B. R. 144.) The weight of authority under the former act was that 
 except where the statute expressly empowered an agent to verify (in- the case 
 where the principal did not live in the district), a verification could not be by an 
 agent. (Hunt v. Pooke, 5 B. R. 161 • in re Butterfield, 6 B. R. 257; contra, in re 
 Rayner, 11 Blatch. 43.) 
 
 Jurisdiction by Voluntary Appearance. — The person against whom a 
 petition is filed may appear by attorney. He need not appear in person. (In re 
 Weyhausen, i Ben. 397.) He may appear in person without the service of a 
 subpoena upon him, or may waive any irregularity in the service, and by his 
 voluntary appearance, give the court jurisdiction over him. (In re McNaugh- 
 ton, 8 B. R. 44.) After the expiration of the ten days after the return day, he 
 cannot appear or plead except by the special leave of the court, on giving a 
 proper excuse for his failure to appear earlier. (Compare in re Scull, 7 Ben. 
 371; ». c. 10 B. R. 165; in re Gebhardt, 3 B. R. 268.) If a person once appears 
 
COURTS AND PROCEDURE THEREIN. I99 
 
 § 18.] Jurisdiction Cannot be Collaterally Attacked — Defenses. 
 
 generally, he cannot afterwards withdraw his appearance so as to divest the 
 court of jurisdiction. (In re Ulrich, 3 Ben. 355.) A voluntary appearance con- 
 fers jurisdiction of the person only, not of the subject-matter. If a person does 
 not reside, or have a domicile or a principal place of business in the district, 
 and does not otherwise come within the provisions of section 2 (i), his appear- 
 ance will not give the court jurisdiction to adjudge him bankrupt. The ques- 
 tion of jurisdiction in such cases is in the nature of a question of jurisdiction of 
 the subject-matter, that is, of the right of the court to establish a status. The 
 establishing of the status of the bankrupt in a sense establishes the status of his 
 creditors. Consequently a court cannot adjudge one a bankrupt whose resi- 
 dence or place of business is not such as to give the court jurisdiction under 
 section 2 (i), merely because the debtor submits his person to the jurisdiction of 
 the court. Such questions affecting jurisdiction of the subject-matter may be 
 raised at any time in the court of bankruptcy. Thus they may be raised as an 
 objection to the court's granting a discharge, notwithstanding it has previously 
 without jurisdiction made an adjudication of bankruptcy in the case. (In re 
 Penn, 4 Ben. 99; s. c. 3 B. R. 582; in re Little, 3 Ben. 25; s. c. 2 B. R. 294; 
 in re Leighton, 5 B. R. 95; Jobbins v. Montague, 6 B. R. 509.) 
 
 Jurisdiction Cannot be Collaterally Attacked. —An adjudication in 
 bankruptcy is in the nature of a decree in rem. It establishes the status of the 
 bankrupt, and is in itself notice to all the world. It cannot be attacked col- 
 laterally. It is conclusive evidence that all the proceedings were regular. 
 Notice to the creditors is not necessary to confer jurisdiction. (Michaels v. Post, 
 21 Wall. 398; Shawhan ». Merritt, 7 How. 627; Morse v. Godfrey, 3 Story, 364.) 
 
 Defenses. — Any party who may oppose the adjudication, whether he be the 
 debtor or one of his creditors, may interpose any defense that exists. Any 
 defense available to the bankrupt is available to a creditor. Thus either may 
 show that the petitioners are not creditors or that they do not possess provable 
 claims of the amount required by section 59. (In re Cornwall, 9 Blatch. 114; 
 s. c. 6 B. R. 305; in re Ouimette, 3 B. R. 566; s. t. i Saw. 47; in re Scrafford, 
 14 B. R. 184.) The debtor may prove any set-off which he has against the peti- 
 tioner's claim. (In re Osage R. R. Co., 9 B. R. 281.) And there would seem to 
 be no reason why any creditor opposing the adjudication might not also set up 
 the same set-off to show that the petitioner's claim was not of the required 
 amount. So a party may oppose the adjudication on the ground of lack of 
 jurisdiction by the court (In re E. G. Williams, 14 B. R. 132); and may, of 
 
200 THE NATIONAL BANKRUPTCY LAW, 
 
 Who May Oppose Adjudication — Burden of Proof. [Ch. IV. 
 
 course, deny the commission of the act of bankruptcy. (/» re Skelley, 5 B. R. 
 214; s. c. 3 Biss. 260.) That the party has made tender of payment of the peti- 
 tioner's debt is not a sufficient defense. If insolvent, he has no right to make a 
 tender. (In re Williams & Co., i Lowell, 406; s. c. 3 B. R. 286; in re Ouimette, 
 3 B. R. 566; s. c. I Saw. 47.) But payments, though made since the petition,^ 
 may be proven to show that the petitioner's claims are not of sufficient amount, 
 or that the bankrupt's debts do not amount to $1,000. {In re Skelley, 5 B. R. 
 214; s. c. 3 Biss. 260. 
 
 Who May Oppose Adjudication. — The section expressly provides that the 
 bankrupt or any creditor may plead to the petition. That a person is a creditor 
 may at this stage of the proceedings be established by affidavits or verified 
 pleadings. (In « Jack, 13 B. R. 296.) Creditors who have received preferences 
 and creditors who have secured liens, which would be rendered void or voidable by 
 the adjudication, have this right as well as other creditors. (In re Mendelsohn, 
 12 B. R. 533; s. c. 3 Saw. 342; in re E. G. Williams, 14 B. R. 132; in re "VI. S. 
 Derby, 6 Ben. 232; s. c. 8 B. R. 106; in re Scrafford, 14 B. R. 184.) 
 
 Burden of Proof. — The burden of proof, except in the cases provided for by 
 section 3 c, and section 3 d, rests upon the petitioner. There being no statutory 
 provision to the contrary, this must be considered to be the only course in har- 
 mony with our system of administering justice. By section 41 of the act of 
 1867, (until amended by the act of June 22, 1874, R. S.), the burden of proof was 
 thrown upon the debtor. The bankruptcy court has a right to direct the jury, 
 in case a jury trial has been allowed, to bring in a verdict, if there is no 
 question of fact which may properly be submitted. (Hardy v. Clark, 3 B. R. 
 385.) Yet it will not be error even in such cases if it refuses to take the 
 case from the jury. (Jelsh v. Dunnebacke, 9 B. R. 412.) The issues which the 
 court can try and upon which it can base its adjudication are those which are 
 presented by the pleadings. It cannot permit the petitioner to prove any act of 
 bankruptcy other than that set up in the petition. (In re Sykes, 5 Biss. 113.) 
 If the petitioner asks that a partnership be adjudicated bankrupt, it is necessary 
 to show the commission of an act of bankruptcy by the firm. It is not suffi- 
 cient to show that an act of bankruptcy has been committed by one member 
 of the firm unless it can be imputed to all. (James v. Atlantic Delaine Co., 
 II B. R. 390; Doan v. Compton, 2 B. R. 607.) Compare notes on Acts of Bank- 
 ruptcy by Partners, under section 5. 
 
 Proceedings on Default. — The referee has jurisdiction to pass upon an 
 
COURTS AND PROCEDURE THEREIN. 20r 
 
 § ig.] Jury Trials. 
 
 involuntary petition only when no pleadings are filed in answer thereto. (Com- 
 pare section 38 [i].) 
 
 Amendment of Petition. — Bankruptcy courts have the usual power of 
 courts of justice upon motion and for good cause, to authorize amendments of 
 pleadings, including petitions. They will rarely do so if the purpose of the 
 amendment is to introduce allegations setting up an additional or new act of 
 bankruptcy. But even such an amendment will be allowed if clearly in fur- 
 therance of justice, and if its omission from the original petition is properly 
 excused. (In re Craft, 6 Blatch, 177; s. t. below, 2 B. R. iii; in re Gallinger, 
 4 B. R. 729; in re Leonard, 4 B. R. 563.) 
 
 Cross References. — As to who may be petitioners, as to the amount and 
 character of their claims, as to the right of other creditors than the petitioners 
 to intervene and support the petition, as to the duty of the court to refuse to 
 permit the withdrawal of a petition without notice to creditors and as to estop- 
 pel of petitioners, see section 59. As to the designation of newspapers in which 
 notices shall be published, see section 28. As to the districts in which the peti- 
 tion may be filed, see section 2 (i). 
 
 Sec. 19. Jury Trials. — a K person against whom an invol- 
 untary petition has been filed shall be entitled to have a trial hy 
 jury, in respect to the question of his insolvency, except as herein 
 otherwise provided, and any act of bankruptcy alleged in such 
 petition to have been committed, upon filing a written applica- 
 tion therefor at or before the time within which an answer may 
 be filed. If such appHcation is not filed within such time, a trial 
 by jury shall be deemed to have been waived. 
 
 3 If a jury is not in attendance upon the court, one may be 
 specially summoned for the trial, or the case may be postponed, 
 or, if the case is pending in one of the district courts within the 
 jurisdiction of a circuit court of the United States, it may be 
 certified for trial to the circuit court sitting at the same place, or 
 by consent of parties when sitting at any other place in the same 
 district, if such circuit court has or is to have a jury first in 
 attendance. 
 
202 THE NATIONAL BANKRUPTCY LAW. 
 
 Oaths, Affirmations. [Ch. IV. 
 
 c The right to submit matters in controversy, or an alleged 
 offense under this act, to a jury shall be determined and enjoyed, 
 except as provided by this act, according to the United States 
 laws now in force or such as may be hereafter enacted in relation 
 
 to trials by jury. 
 
 Analogous Provisions of Former Acts. — 
 
 As to jury trials in involuntary proceedings: R. S., section 5026; act of 1867, 
 sections 41 and 42; act of 1841, section i. As to jury trials upon specifications 
 filed against the granting of a discharge: R. S., section 5111; act of 1867, sec- 
 tion 31; act of 1841, section 4. 
 
 The Issue of Insolvency. — Compare section 3(c) and ((/). 
 
 statutory Provisions as to Jury Trials. — U. s. Revised Statutes, section 
 566, provides that " the trial of issues of fact in the district courts in all causes 
 (except cases in equity and cases of admiralty and maritime jurisdiction, and 
 except as otherwise provided in proceedings in bankruptcy), shall be by jury." 
 That part of the statute within the parentheses, in so far as it affects cases in equity 
 concerning patents, and admiralty proceedings, has been amended. Section 648 
 provides that " the trial of issues of fact in the Circuit Court shall be by jury 
 {except in cases of equity and of admiralty and of maritime jurisdiction), and 
 except as otherwise provided in proceedings in bankruptcy and by the next sec- 
 tion." The words in parentheses have been amended as mentioned above. 
 Section 649 provides that " issues of fact in civil cases in any Circuit Court may 
 be tried and determined by the court, without the intervention of a jury, when- 
 ever the parties, or their attorneys of record, file with the clerk a stipulation in 
 writing waiving a jury. The finding of the court upon the facts, which may be 
 either general or special, shall have the same effect as the verdict of a jury." 
 
 Sec 20. Oaths, Affirmations. — a Oaths required by this act, 
 except upon hearings in court, may be administered by (i) 
 referees; (2) ofificers authorized to administer oaths in proceed- 
 ings before the courts of the United States, or under the laws of 
 the State where the same are to be taken ; and (3) diplomatic or 
 consular ofificers of the United States in any foreign country. 
 
 b Any person conscientiously opposed to taking an oath may, 
 in lieu thereof, affirm. Any person who shall affirm falsely shall 
 be punished as for the making of a false oath. 
 
COURTS AND PROCEDURE THEREIN. 203 
 
 § 20.] Proof of Claim not to be Made before -the Attorney of the Claimant. 
 
 Analogous Provisions of Former Acts. — 
 
 As to verification of schedules and inventory: R. S., section 5017; act of 1867, 
 section 11. As to oaths and proof of claims: R. S., section 5079; act of 1867, 
 section 22; act of July 27, i868, ch. 258, section 3; also R. S., section 5076; act 
 of 1867, section 22; act of July 27th, 1868, ch. 258, section 3; act of 1841, sec- 
 tions 5 and 7; also R. S. section 5076 a. 
 
 Taking Oaths under the Former Act. — The liberal provisions of this act 
 as to taking oaths did not prevail under the act of 1867. Not until that act was 
 amended by section 5076 A, Revised Statutes (passed June 22, 1874), could nota- 
 ries public take proof of claims. Before that time oaths in proof of claims by 
 residents of the United States were required to be taken before the district 
 judges, the registers or commissioners of the Circuit Court; and only those 
 officers could take the verification of the schedule or inventory. 
 
 Proof of Claim Not to be Made Before the Attorney of the Claimant. 
 
 — Under the former act it was held that the proof of a claim in bankruptcy 
 should not be taken before one's own attorney in that matter, because under 
 that act a proof of a claim was something more than a mere aflSdavit. It was a 
 judicial proceeding, and it was expressly required that the proof should be 
 " satisfactory" to the officer taking it. (In re Nebe, n B. R. 289.) Although 
 under the present act proof is little more than an affidavit, we think it should 
 not even now be taken by one's own attorney, it being a general rule in the 
 United States, that an aflidavit should not be taken before one's own attorney 
 even although he be authorized ex officio to take it. Proceedings based on such 
 an aflidavit may be set aside as an irregularity, if the other party moves before 
 judgment. (Taylor v. Hatch, 12 Johns. [N. Y.] 340; Toorle v. Smith, 34 Kan. 
 27; Prynne v. Roe, 8 Dowling's Pr. Cas. 340; Vary v. Godfrey, 6 Cowan [N. Y.] 
 587.) But this rule is not followed in California, Minnesota, and Wisconsin. 
 (Reavis v. Cowell, 56 Cal. 588; Young v. Young, i8 Minn. 90; Daws v. Glas- 
 gow, I Burn. 8; s. c. i Pin. 171.) Where one has both an attorney and a coun- 
 sel who are different persons, he may take an aflidavit before his counsel. 
 (Willard v. Judd, 15 Johns. [N. Y.] 531.) To invalidate an affidavit taken by an 
 attorney, he must be the attorney at the time it is taken. (Vary v. Godfrey, 6 
 Cowan [N. Y.] 587.) Compare Amer. and Eng. Encyc. of Law (ist ed.), title 
 "Affidavits." Compare, also. Griffin v. Borst, 4 Wendell (N. Y.) 195; Adams 
 < . Mills, 3 How. Pr. (N. Y.) 219. 
 
204 THE NATIONAL BANKRUPTCY LAW. 
 
 Evidence. [Ch. IV. 
 
 Sec. 21. Evidence. — a A court of bankruptcy may, upon 
 application of any officer, bankrupt, or creditor, by order require 
 any designated person, including the bankrupt, who is a compe- 
 tent witness under the laws of the State in which the proceedings 
 are pending, to appear in court or before a referee or the judge 
 of any State court, to be examined concerning the acts, conduct, 
 or property of a bankrupt whose estate is in process of adminis- 
 tration under this act. 
 
 b The right to take depositions in proceedings under this act 
 shall be determined and enjoyed according to the United States 
 laws now in force, or such as may be hereafter enacted relating 
 to the taking of depositions, except as herein provided. 
 
 c Notice of the taking of depositions shall be filed with the 
 referee in every case. When depositions are to be taken in oppo- 
 sition to the allowance of a claim notice shall also be served upon 
 the claimant, and when in opposition to a discharge notice shall 
 also be served upon the bankrupt. 
 
 d Certified copies of proceedings before a referee, or of papers, 
 when issued by the clerk or referee, shall be admitted as evi- 
 dence with like force and effect as certified copies of the records 
 of district courts of the United States are now or may hereafter 
 be admitted as evidence. 
 
 e A certified copy of the order approving the bond of a trustee 
 shall constitute conclusive evidence of the vesting in him of the 
 title to the property of the bankrupt, and if recorded shall impart 
 the same notice that a deed from the bankrupt to the trustee if 
 recorded would have imparted had not bankruptcy proceedings 
 intervened. 
 
 f A certified copy of an order confirming or setting aside a 
 composition, or granting or setting aside a discharge, not revoked, 
 shall be evidence of the jurisdiction of the court, the regularity of 
 the proceedings, and of the fact that the order was made. 
 
 g A certified copy of an order confirming a composition shall 
 constitute evidence of the revesting of the title of his property in 
 the bankrupt, and if recorded shall impart the same notice that a 
 deed from the trustee to the bankrupt if recorded would impart. 
 
COURTS AND PROCEDURE THEREIN. 20$ 
 
 § 21.] To be Examined. 
 
 Analogous Provisions of Former Acts. — 
 
 As to depositions and the taking of evidence by commission: R. S., sections 
 5003, 5004, 5005 and 5006; act of 1867, sections 5, 7, and 38; act of 1841, sec- 
 tion 7; act of 1800, sections 14, 15. As to examination of third parties: R. S., 
 section 5087; act of 1867, section 26; act of 1800, sections 14, 15. As to certified 
 copies of proceedings, being evidence: R. S., section 4992; act of 1867, section 
 38. As to nature of evidence, of certified copy of order of discharge: R. S., 
 section 5119; act of 1867, section 34. As to purpose of recording certified copy 
 of bond: R. S., section 5054; act of 1867, section 14; act of 1800, section 11. 
 
 To be Examined. — The act of 1867 contained two provisions somewhat 
 analogous to paragraphs a and b of the section under consideration. Sections 
 5003 to 5006, R. S., both inclusive, provided that evidence or examination in 
 any proceeding might 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 might direct a reference to a register in bank- 
 ruptcy or other suitable person to take and certify such, examination, and might 
 compel the attendance of witnesses and 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 section under consideration, in paragraphs b and c, manifestly 
 permits the taking of evidence before the officers named therein, in practically 
 the same manner. The other provision of the act of 1867 was contained in 
 Revised Statutes, section 5087, which provided that the bankruptcy court might 
 require the attendance of any person as a witness to be examined in the same 
 way in which the bankrupt might be examined pursuant to section 5086 of the 
 Revised Statutes, the latter being the provision corresponding to section 7 (9), 
 of the present act. It is clear that paragraph a of the section of the present act 
 under consideration intends to provide a proceeding for such an examination of 
 third parties, similar to the examination of the bankrupt. It expressly enacts 
 that any person who is a competent witness may be examined " concerning the 
 acts, conduct or property of the bankrupt." It does not say that such person 
 may be subpoenaed as a witness and be compelled to give his testimony only where 
 there is a trial of issues, but evidently contemplates an examination independent 
 of and perhaps preliminary to any trial. All parties who are competent wit- 
 nesses are liable to undergo it, though they may be parties to proceedings 
 which the trustee in bankruptcy has instituted or intends to institute for the 
 purpose of setting aside liens procured by them, or preferential transfers made 
 to them. (/« re Feinberg, 3 Ben. 162; s. c. 2 B. R. 425.) Such parties will be 
 
206 THE NATIONAL BANKRUPTCY LAW. 
 
 To be Examined. [Ch. IV. 
 
 obliged to answer any and all questions relating to the acts, conduct or property 
 of the bankrupt, and their dealings with him even though their answers will 
 give to the trustee, evidence which he may use in a subsequent civil action 
 against the examined party. (In re Fay, 3 B. R. 660; in re Pioneer Paper Co., 
 7 B. R. 250; Garrison v. Markley, 7 B. R. 246. But the rule in England seems 
 to be to the contrary, it being held in that country under a power in their bank- 
 ruptcy acts similar to the power conferred by this section, that a question to 
 ascertain the truth of a. plea to an action which has been commenced by an 
 - assignee against the witness is not authorized. (Exp. Solarte; in re Absedo, I 
 Mont. 495. Compare Rolt v. White, 3 DeG. J. & Sm. 360,) Such si party must 
 answer all questions relating to the matters mentioned in the section as subjects 
 of examination. (In re Stuyvesant Bank, 6 Ben. 33; s. c. 7 B. R. 445.) If he is 
 examined with reference to property of the bankrupt which he has bought, he 
 cannot refuse to testify on the ground that it would reveal his own private busi- 
 ness, and that it did not affect the bankrupt's estate. (In re Trask, 7 Ben. 6o.> 
 A person undergoing this examination is a mere witness and is not entitled to 
 counsel; he is not a party to the proceedings and has no rights at stake. (In re 
 Comstock, 13 B. R. 193; in re Fredenburg, 2 Ben. 133; s. c. i B. R. 268.) Under 
 the former act there were several decisions as to the extent of the privilege of a 
 witness to refuse to answer questions, upon the ground that his answers would 
 disclose matters revealed to him in professional confidence. While the courts 
 protect a lawyer in refusing to answer questions as to matters which he ascer- 
 tains in his capacity as counsel, and which are of a confidential nature, they 
 nevertheless will compel him to testify as to dealings with the bankrupt as a pur- 
 chaser and in any other than a strictly professional capacity. Thus where an 
 attorney took a conveyance of land from the bankrupt and afterwards re-con- 
 veyed to the wife of the bankrupt, and also, where he acted as agent in receiv- 
 ing and disbursing moneys of the bankrupt, he was compelled to answer fully 
 concerning all such matters. (In re Aspinwall, 10 B. R. 448; in re Bellis & 
 Milligan, 3 B. R. 199; s. c. 38 How. Pr. 79.) In the first of the cases above 
 cited it was held that an attorney might be compelled to state whether or 
 not he had drawn a certin deed for the bankrupt. Compare the following Eng- 
 lish decisions in which the extent to which communications made by a bankrupt 
 to his attorney are privileged as confidential, was discussed and considered: 
 in re Phillips, 20 L. J. 16; Russell v. Jackson, 21 L. J. Chan. 146; Turquand v. 
 Knight, 2 Mees. & W. 98; Exp. Lord, Buck, no; Bramwell v. Lucas, 2 B. & 
 C. 743. A witness on an examination of this nature may be asked as to the 
 
COURTS AND PROCEDURE THEREIN. 20/ 
 
 § 2I.J Copies of Proceedings as Evidence. 
 
 name and residence o£ any other person who can give the desired testimony 
 with regard to the bankrupt's property. (Exp. Campbell, L. R. 5 Ch. App. 703.) 
 
 Summons Runs into Other Districts. — U. s. Revised Statutes, section 
 
 876, provides: " Subpoenas for witnesses who are required to attend a court of 
 the United States, in any district, may run into any other district; Provided, 
 that in civil cases the witnesses living out of the district in which the court is 
 held do not live at a greater distance than one hundred miles from the place of 
 holding the same." The above section applies to a subpoena issued in a bank- 
 ruptcy proceeding as well as in an ordinary civil case. (In re Woodward, 8 
 Ben. 112; s. c. 12 B. R. 297.) Subpoenas form an exception to the general rule. 
 Other process of the district court does not run beyond the limits of the judicial 
 district. 
 
 Copies of Proceedings as Evidence. — It has been held that the record of 
 proceedings in bankruptcy is not one integral record, but that a duly certified 
 copy of any portion thereof may be introduced in evidence, (Michener v. Pay- 
 son, 13 B. R. 49; compare, however, Shorao v. Zeigler, 78 P'enn. 357), but where 
 one desires to introduce a portion of the record, for instance, an order made during 
 the proceedings, it is necessary to introduce the whole record of all the pro- 
 ceedings with reference to the particular order. The schedule and inventory 
 may be introduced in evidence separate from the record of the rest of the pro- 
 ceedings. (Dupuy V. Harris, 6 B. Mon. 534.) As against persons who were 
 not parties to the proceedings, it seems that a copy of the record is not admissi- 
 ble unless it is a copy of the complete record, except in cases especially pre- 
 scribed in paragraphs e, /, and g of this section. The schedule of debts and 
 assets filed in bankruptcy proceedings in which a defendant and his partner 
 were discharged individually and as partners, was, however, held to be receiv- 
 able in evidence against the defendant, although signed only by the partner. 
 (Sheldon v. Clews, 13 Abb. N. C. 40.) The schedule cannot be introduced to 
 prove anything therein stated unless it can be considered as an admission by 
 the party against whom it is offered. It may be received as against a partner, 
 in cases like the one just cited, because by taking a. discharge in the proceed- 
 ings in which it is filed, the partner thereby makes the statements contained in 
 it his own. But a copy of the bankrupt's schedule admitting a liability cannot 
 be introduced in evidence against a joint obligor. (Wilson v. Harper, 5 Rich. 
 [N. S.] 294.) The introduction of the petition and schedules in evidence for the 
 purpose of proving the bankruptcy does not make them evidence against the 
 
208 THE NATIONAL BANKRUPTCY LAW. 
 
 Copy of Order Approving Bond. [Ch. IV. 
 
 party producing them, of the facts therein stated. (Pringle v. Leverich, 97 
 N. Y. 181.) 
 
 Copy of Order Approving Bond. — The present act, unlilce the act of 1867, 
 does not require the drafting of any formal written instrument assigning the 
 bankrupt's property to his trustee. The title vests by operation of law. The 
 adjudication itself transfers the title. The former act (R. S., section 5054; act of 
 1867, section 14), required such an assignment in writing, and further provided 
 that the assignee should " within six months cause the assignment to him to be 
 recorded in every registry of deeds or other office within the United States, where 
 a conveyance of any lands owned by the bankrupt ought by law to be recorded, 
 and the record of such assignment or a duly certified copy thereof should be evi- 
 dence thereof in all courts." Under that section it was held as follows: " The 
 assignment itself passes the property with relation back to the commencement of 
 proceedings; and all subsequent purchasers are affected accordingly, whether 
 they purchased before assignment actually made or afterwards, and conse- 
 quently the recording of the assignment is not essential to the validity of the 
 transfer, and is not designed to operate as under State registry acts. 
 The purchaser from the bankrupt, after adjudication in bankruptcy or com- 
 mencement of proceedings, although he had no notice thereof, would take no 
 title. The question of notice could not therefore arise. The purchase being of 
 what the bankrupt debtor had at the time, and all of his interest having passed 
 to the assignee previously, the purchaser acquired no title as against the 
 assignee." (Davis v. Anderson, 6 B. R. 145.) In re Neale (3 B. R. 177), it 
 was said: " 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 might never be 
 recorded. The assignee may use it as evidence of his title in the courts, though 
 the same may not have been registered. » * » The purpose in requiring the 
 assignee to ' cause the assignment to be recorded in every county or registry 
 in the United States in which lands of the bankrupt are situate,' is that every 
 purchaser of land at an assignee's sale, may have recourse to a certified copy 
 from 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 properly which he, or his heirs, 
 or others claiming under him, may desire to bring thereafter. Registration is 
 necessary for the safety of such purchaser; for there is but one original assign- 
 ment, which is filed in the District Court clerk's office. It might be destroyed or 
 lost, and often most inconvenient to have recourse to. Where this law is 
 observed, the loss of the original would work no damage, or work inconvenience 
 
COURTS AND PROCEDURE THEREIN. 209 
 
 § 22.] Reference of Cases after Adjudication. 
 
 to the purchaser or any others claiming under him, for they have recourse to a 
 ■ certified copy ' from the registry convenient, and which the act declares ' shall 
 be evidence thereof in all courts,' " But the language of the present act, to wit, 
 that the certified copy of the order approving the bdhd, if recorded, " shall impart 
 the same notice that a deed from the bankrupt to the trustee, if recorded, would 
 have imparted had not bankruptcy proceedings intervened," seems to imply 
 that such record is necessary to protect the trustee's title against the claims of 
 subsequent purchasers or lienors obtaining the property in good faith, for 
 value, and without notice of the assignment. The fact that the adjudication 
 vests the trustee with the title and that thenceforth the bankrupt has nothing 
 which he can convey, does not seem to alter the case. That objection, with 
 equal force, might be urged against the rights of any subsequent purchaser 
 obtaining property after a transfer has once been made, but of which he has no 
 actual notice, and no constructive notice by record. 
 
 Certified Copy of Order Granting a Discharge. — The former act 
 required that the court should issue a written certificate of discharge, and that 
 this certificate should be conclusive evidence in favor of the bankrupt of the 
 fact, and regularity of the discharge. Nothing, under the present act, is needed 
 beyond the order of discharge itself. The provision that a copy of the order 
 shall be evidence saves the trouble of proving the entire proceedings. (Pennell 
 ■o. Percival, 13 Penn. 197; Morse v. Gloyes, 11 Barb. loo.) The discharge can- 
 not be impeached collaterally for any error or irregularity. Every presumption 
 exists that the proceeding was regular. Compare notes to sections 13 and 15. 
 (Morrison v. Woolson, 29 N. H. 11; Shawhan v. Wherritt, 7 How. 627; McNulty 
 V. Frame, i Sandf. 128; Campbell ■</. Perkins, 8 N. Y. 430; Lathrop v. Stuart, 5 
 McLean, 167; Richards v. Nixon, 20 Penn. 19. 
 
 Sec 22. Reference of Cases after A^ndication. — a After a 
 person has been adjudged a bankrupt the judge may cause the 
 trustee to proceed with the administration of the estate, or refer 
 it (i) generally to the referee or specially with only limited 
 authority to act in the premises or to consider and report upon 
 specified issues ; or (2) to any referee within the territorial juris- 
 diction of the court, if the convenience of parties in interest will 
 
 NAT. BANKRUPTCY LAW — I4 
 
2IO THE NATIONAL BANKRUPTCY LAW. 
 
 Jurisdiction of United States and State Courts. [Ch. IV. 
 
 be served thereby, or for cause, or if the bankrupt does not da 
 business, reside, or have his domicile in the district. 
 
 b The judge may, at any time, for the convenience of parties 
 or for cause, transfer a case from one referee to another. 
 
 Analogous Provisions of Former Acts. — 
 
 As to one referee acting in the place of another: R. S., § 5007; act of 1867, §4.. 
 As to powers, jurisdiction and duties of a referee, compare " Analogous Provi- 
 sions of Former Acts," given under the sections of this act, cross-referenced in 
 the note below. 
 
 CFOSS-References. — As to the jurisdiction and powers and duties of a 
 referee, see sections 34 to 43, both inclusive; also section 58 (c). As to the power 
 of the court to consider and confirm, modify or overrule or return with instruc- 
 tions for further proceedings, all records and findings certified to them by 
 referees, see section 2 (10); and compare section 38 (a). As to a referee's power 
 to hear and pass upon contested matters, compare section 39 (5). 
 
 Sec. 23. Jurisdiction of United States and State Courts. — 
 
 a The United States circuit courts shall have jurisdiction of all 
 controversies at law and in equity, as distinguished from proceed- 
 ings in bankruptcy, between trustees as such and adverse claim- 
 ants concerning the property acquired or claimed by the trustees, 
 in the same manner and to the same extent only as though bank- 
 ruptcy proceedings had not been instituted and such contro- 
 versies had been between the bankrupts and such adverse 
 claimants. 
 
 b Suits by the trustee shall only be brought or prosecuted in 
 the courts where the bankrupt, whose estate is being adminis- 
 tered by such trustee, might have brought or prosecuted them if 
 proceedings in bankruptcy had not been instituted, unless by con- 
 sent of the proposed defendant. 
 
 c The United States circuit courts shall have concurrent juris- 
 diction with the courts of bankruptcy, within their respective ter- 
 ritorial limits, of the offenses enumerated in this act. 
 
COURTS AND PROCEDURE THEREIN. 211 
 
 § 23.] Who are Adverse Claimants. 
 
 Analogous Provisions of Former Acts. — 
 
 As to jurisdiction of Circuit Courts: R. S., section 4979; act of 1867, section 
 2; act of 1841, section 8; act of June 8th, 1872, ch. 340. 
 
 Who are Adverse Claimants. — To determine the meaning of the phrase 
 *' adverse claimants concerning the property acquired or claimed by the 
 trustee," and to understand how far the cases construing similar words which 
 appeared in the former act are applicable, a knowledge of the history of the 
 legislation in connection with that act is desirable. The original act of 1867 
 provided that the circuit courts should have concurrent jurisdiction with the 
 district courts of the same district of all suits at law or in equity which might 
 be brought by the assignee against any person claiming an adverse interest or 
 by any such person against such assignees, touching any property or rights of 
 property of said bankrupt, transferable to or vested in such assignee. 
 When that section was re-embodied in the Revised Statutes, it gave to the 
 circuit courts concurrent jurisdiction with the District Court of any district, 
 not only of suits by or against persons claiming adverse interests, but also 
 of suits by the assignee against a person owing a debt to the bankrupt. 
 Prior to that amendment it was held that the Circuit Court had no juris- 
 diction of a suit by the assignee to collect a debt; and the act of 1867 
 was in this respect distinguished from the act of 1841. (Bachman v. Packard, 
 7 B. R. 353; s. c. 2 Saw. 264.) The omission from the bankruptcy act of 1898 of 
 any provisions giving the circuit courts jurisdiction over actions to collect a debt 
 due the bankrupt, must have been intentional on the part of Congress, and it 
 must be concluded that the jurisdiction of the circuit courts extends only to 
 suits against adverse claimants concerning the property acquired or claimed by 
 the trustee and that an indebtedness claimed by the trustee to be owing 
 to the bankrupt's estate, but which is denied by the alleged debtor, is not 
 a matter for determination by the Circuit Court. In construing the phrase 
 " any person claiming an adverse interest," as it appeared in section 2 of 
 the original Act of 1867, it was said by Justice Clifford, of the United 
 States Supreme Court, in rendering the opinion in Morgan v. Thornhill 
 (11 Wall. 65; s. c. 5 B. R. i): " Controversies, in order that they may be cog- 
 nizable under this section, either in circuit or district courts, must have respect 
 to some property or rights of property of the bankrupt transferable 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 parties described in the clause and against the other. 
 All three of these conditions must concur to give the jurisdiction." It was 
 
212 THE NATIONAL BANKRUPTCY LAW. 
 
 Who are Adverse Claimants. [Ch. IV. 
 
 further said; " Where all three of these conditions do concur, the party suing 
 may at his election commence his suit either in Circuit or District Court." And 
 this language was used almost verbatim in the case of Knight v. Cheney, 5 B. 
 R. 305, although it was not expressly quoted. In Bachman v. Packard {supra, 
 criticising Mitchell v. Mfg. Co., 2 Story, 648, a case under the law of 1841), the 
 United States Circuit Court for the district of Oregon, said that Mitchell v. Mfg. 
 Co., in holding that one opposing a claim of indebtedness made by the assignee 
 of the bankrupt estate was thereby a party having an adverse interest, was 
 based on an unfounded assumption, and the court in Bachman v. Packard held 
 that a debtor to the bankrupt's estate who resisted the claim was not a party 
 having an adverse claim. An adverse party is not necessarily a " party 
 having an adverse claim." 
 
 Several cases, besides Morgan v. Thornhill (supra), as to what, under the act 
 of 1867, was to be considered an adverse interest, were carried to the United 
 States Supreme Court. A leading case was Smith v. Mason, 14 Wall. 419; s. c. 
 6 B. R. I. In that case a party claimed absolute title to a fund which was also 
 claimed by the assignee in bankruptcy, and the court held that beyond all doubt 
 the case was one falling within the jurisdiction of the circuit court as being a 
 case between adverse claimants, and that although the district court as a court 
 of bankruptcy had concurrent jurisdiction over the matter with the circuit court 
 and could exercise it by means of a formal suit at law or in equity, it could not 
 hear and determine the matter in a summary proceeding. This case was fol- 
 lowed in Marshall v. Knox (16 Wall. 551; s. u. 8 B. R. 97), and a further defi- 
 nition of "adverse interest " was given. The court said in this case: "The 
 adverse claim is not to the absolute property of the fund in dispute as was the 
 case in Smith -v. Mason, but relates to a mere lien and to possession by way of 
 pledge under the Hen. In Smith v. Mason, it was held that the bankruptcy 
 court could not by a mere rule make the adverse claimant a party to the bank- 
 ruptcy proceedings and adjudge his rights in a summary way, but that the 
 assignee must litigate the claim in a plenary suit either at law or in equity." 
 Further commenting on the difference between the case before them and the 
 case of Smith u. Mason, the court said: " It may, with some plausibility, be 
 said that as the property in this case is conceded to be in the bankrupt, and the 
 question has respect only to the right of possession under the lien, the district 
 court, which has express jurisdiction of the ' ascertainment and liquidation of 
 the liens, and other specific claims,' on the bankrupt's property, might assume 
 control of the property itself. The claim, however, is to the right of the pos- 
 
COURTS AND PROCEDURE THEREIN. 213 
 
 § 23.] In What Circuit Court the Suit may be Brought. 
 
 session, and that right 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. It is the opinion of the court, therefore, that the case is not 
 substantially different from that of Smith v. Mason." In the case of Burbank 
 v. Bigelow (g2 U. S. 179), a party claimed a right to the proceeds of a judgment, 
 and the assignee denied the claim. The Supreme Court of the United States 
 held that this was a controversy over which the circuit court had jurisdiction 
 under the bankruptcy law. The language of the court in substance was; " That 
 this is a case of controversy between adverse claimants does not seem to be at 
 all in doubt. A right of property is controverted, the complainant contending 
 that the funds of the judgment recovered by the bankrupt against a third party 
 belonged to the firm of which complainant's intestate was a partner. If the 
 bankrupt and his assignee deny this, it is a controversy the determination of 
 which is clearly embraced within the jurisdiction conferred upon the circuit 
 courts by the second clause of section 2 of the original bankrupt act of 1867." 
 
 Jurisdietion of Circuit Courts Not Exclusive of Courts of Bankruptcy. 
 
 — Although the present statute does not in express terms provide that the juris- 
 diction conferred on the circuit court is concurrent with jurisdiction over the 
 same matters by courts of bankruptcy, yet the latter courts have jurisdiction 
 at law and in equity over all bankruptcy matters by the express provisions of 
 section 2, and as there is nothing in the statute providing that the jurisdiction 
 given to circuit courts shall exclude the bankruptcy courts, the latter must be 
 deemed to have such jurisdiction in all cases in which the parties choose to bring 
 their suits in them, with the limitation that actions brought by the trustee cannot 
 be brought therein, except by consent of the proposed defendant. Compare 
 paragraph on Jurisdiction of Circuit Courts, Is It Exclusive ? under section 2. 
 Of course, where two courts have concurrent jurisdiction over the same subject- 
 matter, that court which first acquires jurisdiction in a case acquires it in that 
 particular case, to the exclusion of every other court. 
 
 In What Circuit Court May the Suit be Brougrht. — The jurisdiction con- 
 ferred is a jurisdiction " upon the United States Circuit Courts." It is not 
 expressly limited as in the original Act of 1867 to the circuit court for the dis- 
 trict in which the bankruptcy proceedings are instituted; neither is it expressly 
 provided, as in the Revised Statutes (section 4979), that the jurisdiction may be 
 exercised by the circuit courts concurrently with the district courts of any 
 
214 THE NATIONAL BANKRUPTCY LAW. 
 
 At Law and in Equity. [Ch. IV. 
 
 district; but the jurisdiction here conferred is to be exercised to the same extent 
 only, and in the same manner only as though bankruptcy proceedings had not 
 been instituted, and as if such controversies had been between the bankrupt 
 and such adverse claimants. In other words, this is an enactment that the cir- 
 cuit courts shall have jurisdiction of such controversies only in cases where they 
 would have jurisdiction of the parties in any other suit, in which they have 
 jurisdiction of the subject matter; that is, they now have jurisdiction only if 
 the bankrupt and the adverse claimant are citizens of different States, and if the 
 amount in controversy exceeds $2,000. 
 
 At Law and in Equity. — The statute gives to the circuit court jurisdiction 
 of controversies at law and in equity. Jurisdiction of similar suits was con- 
 ferred upon them by the former act, and it was held that wherever an assignee 
 could pursue his remedies by a plenary suit, he could not seek a. remedy 
 in another form; thus, he could not institute a summary proceeding in a 
 bankruptcy court. In a leading case the Supreme Court of the United States 
 said that, although power and jurisdiction in all matters and proceedings in 
 bankruptcy were conferred upon the district courts, and these courts as courts 
 of bankruptcy were authorized to hear and adjudicate upon the same, and 
 although such powers, according to the statute, might be exercised as well in 
 vacation as in term time, and by a judge sitting in chambers, as well as by the 
 court itself, yet all the power and jurisdiction of the bankruptcy courts were not 
 to be exercised in a summary way. It was held that while most matters and 
 proceedings might be heard in that way, yet the section giving to the circuit 
 court concurrent jurisdiction with the bankruptcy court to hear and determine 
 suits at law or in equity, brought by the assignee in bankruptcy against adverse 
 claimants, was an implied enactment that such controversies should be deter- 
 mined only in formal actions; and that such actions, whether at law or in 
 equity, might be commenced either in the district or circuit court at the election 
 of the party suing, but that the controversies could not be determined summarily 
 in the bankruptcy court. (Smith v. Mason, 14 Wall. 419; s. c. 6 B. R. i, citing 
 Knight V. Cheney, 5 B. R. 305.) In Marshall v. Knox (i6 Wall. 551; s. c. 8 B. 
 R. 97), il was said that although the bankruptcy law did not distinguish in what 
 cases the district court might proceed summarily and in what cases by plenary 
 suit, yet the provision that the circuit court should have concurrent jurisdiction 
 with it, over suits at law or in equity, between the assignee and adverse claim- 
 ants, indicated that wherever there is a claim to an adverse interest in the prop. 
 
COURTS AND PROCEDURE THEREIN. 21$ 
 
 § 23.] Jurisdiction of Federal Courts over Matters in Bankruptcy. 
 
 erty a suit at law or in equity is the proper mode of redress. Compare section 
 ■2, paragraph on Manner of Exercise of Jurisdiction. 
 
 Jurisdiction of State Courts. — Under the Act of 1867 there was no express 
 provision conferring upon State courts jurisdiction over actions brought by or 
 against assignees in banlcruptcy, and there was a great conflict of opinion as to 
 whether or not such jurisdiction existed. Until the decision by the United 
 States Supreme Court in Eyster v. Gaff, rendered in October, 1875, eight years 
 after the passage of the bankruptcy act, there was no authoritative judicial 
 determination. That decision (gi U. S. 521 ; s. c. 13 B. R. 546), established the 
 law; and it was followed in several cases decided shortly afterwards, among 
 them Burbank v. Bigelow, 92 U. S. 179; s. c. 14 B. R. 445. Compare the 
 abstract from the opinion in Eyster v. GaS, given under section 2, paragraph 
 on Jurisdiction, Is It Exclusive? 
 
 The Exclusive Jurisdiction of Federal Courts Over Hatters and Pro- 
 ceedings in Bankruptcy. — The decisions denying to the State courts any juris- 
 diction over causes of action arisingout of the bankruptcy proceedings, to a great 
 extent were based upon the provision of the United States Revised Statutes, 
 section 711, which declares that " 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. * * *; 6th; of all matters and 
 proceedings in bankruptcy." 
 
 It must be borne in mind that the law of 1867 contained no express provision 
 authorizing State courts to entertain actions brought by or against assignees in 
 bankruptcy; and in deciding whether they in reality had this power, all the 
 provisions of the act had to be considered, and then it had to be determined 
 whether or not, in case the provisions of the act required a construction 
 giving the State courts this jurisdiction, that act could be reconciled 
 with section 711 of the Revised Statutes, and if not, whether the bank- 
 ruptcy act repealed this provision of the Revised Statutes. It is clear not 
 only that the express terms of the present bankruptcy act recognize that State 
 courts have jurisdiction over actions arising out of bankruptcy proceedings, but 
 that without the consent of the proposed defendant, few of the actions to be 
 brought by trustees can be brought in any other courts. But still the manifestly 
 inconsistent provisions of U. S. Revised Statutes remain a law of record, not in 
 terms repealed. For this reason some study of that section is proper, as it 
 may show the limits of the two conflicting jurisdictions, that of the State courts 
 
2l6 THE NATIONAL BANKRUPTCY LAW. 
 
 What are "AH Matters and Proceedings in Bankruptcy" ? [Ch. IV. 
 
 and that of the Federal courts. If the two acts cannot be construed so as to 
 harmonize, then the bankruptcy act, as being the later, repeals the provisions of 
 R. S., section 711. The questions that arise, then, are: First. What is the 
 exclusive jurisdiction conferred on bankruptcy courts by U. S. R. S., section 
 711? Second. Does it conflict with the exercise of the jurisdiction conferred by 
 section 23 b of the bankruptcy act on the State courts, and if so, is section 711. 
 R. S. repealed by that act? Third. Are the provisions of section 23 b of the 
 bankruptcy act constitutional? 
 
 What are " All Matters and Proeeedlngs in Bankruptcy " ? — The con- 
 struction of the phrase " all matters and proceedings in bankruptcy " in section 
 711 of the United States Revised Statutes giving to the Federal courts Exclusive 
 jurisdiction in such matters and proceedings, is one which has occasioned con- 
 siderable discussion by the courts, but there have been comparatively few com- 
 prehensive definitions or constructions of the expression. As a rule, the courts 
 have contented themselves with deciding whether or not the particular proceed- 
 ing or action before them fell within the meaning of the phrase. An attempt to 
 define the phrase was made in Kidder v. Horribon, 72 N. Y. 159, in which it 
 was said: " It may be difficult to make a complete definition of what are mat- 
 ters and proceedings in bankruptcy, within section 711, but it may be stated 
 in general terms that they are the matters and proceedings which pertain to the 
 special and peculiar jurisdiction of the Federal courts as courts of bankruptcy. 
 The adjudication of bankruptcy; the appointment of the assignees and other 
 agents for the administration of the system ; the vesting of the title to the bank- 
 rupt's property in the assignee; the marshaling and distribution of the assets; the 
 discharge of the bankrupt from his debts; these and other like powers belong 
 to the jurisdiction in bankruptcy, and are matters and proceedings in bank- 
 ruptcy of which State courts have no jurisdiction. But when a common-law 
 action is an appropriate remedy to enforce a right asserted by an assignee in 
 bankruptcy, whether the right is given by the bankruptcy act, or existed in 
 favor of the bankrupt before the bankruptcy, an action to enforce or vindicate 
 the right is not a matter or proceeding in bankruptcy within section 711, The 
 exercise of the original and ordinary jurisdiction of the State courts in such 
 cases is in no proper sense an exercise of jurisdiction in bankruptcy. The fact 
 that the plaintiff makes his title under the Bankrupt Act by assignment from the 
 debtor, or by force of operation of the act itself, does not make the suit a matter 
 or proceeding in bankruptcy any more than would a suit brought by an assignee 
 
COURTS AND PROCEDURE THEREIN. 21/ 
 
 § 23.] Is Section 711 (6), U. S. Revised Statutes, Repealed by Implication. 
 
 appointed under the State insolvent law to recover a debt owing to the insolvent 
 be a proceeding or matter in insolvency." 
 
 Practically this is the same distinction as was taken by the United States 
 Supreme Court in Lathrop v. Drake (91 U. S. 516; s. c. 13 B. R. 472), in classify- 
 ing the jurisdiction conferred upon courts of bankruptcy, although the distinc- 
 tion was taken for another purpose. In speaking of the jurisdiction of those 
 courts, the Supreme Court in that case said: " Of the jurisdiction of bankruptcy 
 courts there are two distinct classes: first, jurisdiction as a court of bankruptcy 
 over the proceedings in bankruptcy initiated by the petition and ending in the 
 distribution of assets among the creditors and the discharge or a refusal of a 
 discharge to the bankrupt; secondly, jurisdiction as an ordinary court of 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 from or to him." The 
 proceedings mentioned in the first class would seem to be the " matters and 
 proceedings in bankruptcy " over which the jurisdiction of the bankruptcy 
 courts is exclusive. IVIatters and actions of the second class would appear not 
 to be ■■ matters and proceedings in bankruptcy," but to use the language of the 
 Supreme Court in Lathrop v. Drake, " matters growing out of or connected 
 with that identical bankruptcy." It has been held that an action by an 
 assignee to set aside a conveyance made in fraud of the bankruptcy act cannot 
 be maintained in a State court, because the right is conferred by a Federal stat- 
 ute and can be determined only by a Federal court. (Voorhies v. Frisbie, 25 
 Mich. 476; Brigham v. Clafiin, 31 Wis. 607.) Bui these two cases were expressly 
 disapproved by the U. S. Supreme Court in Clafiin v. Houseman, 93 U. S. 130; 
 and the weight of authority is against them. (Jordan v. Downey, 40 Md. 401; 
 Otis V. Hadley, 112 Mass. 100; McKenna v. Simpson, 129 U. S. 507; Goodrich 
 V. Wilson, 119 Mass. 429; Lewis -o. Sloan, 68 N. C. 557; Kidder v. Horrobin, 
 72 N. Y. 159; Isett V. Stuart, 80 111. 404; Rison %,. Powell, 28 Ark. 427.) 
 
 Is Section 71 1 (6), U. S. Revised Statutes, Repealed by Implication ? — 
 
 The answer to this question must depend largely on the construction given to 
 the phrase " matters and proceedings in bankruptcy." But whatever that 
 phrase may be held to mean, it is clear that, if inconsistent with the jurisdiction 
 expressly recognized in section 23 {]>) of this act as existing in State and other 
 courts, it is repeated by implication. That was the practical effect of the deci- 
 sion in Clafiin v. Houseman, 93 U. S. 130, in which it was said: " The Revised 
 Statutes, whether inadvertently or not, have made the jurisdiction of the United 
 States courts exclusive in ' all matters and proceedings in bankruptcy,' (section 
 
2l8 THE NATIONAL BANKRUPTCY LAW. 
 
 Constitutionality of Statutes Conferring Jurisdiction on State Courts. [Ch. IV. 
 
 711.) Whether this regulation will or will not affect the cognizance of plenary 
 actions and suits, it is not necessary now to determine. At all events, the 
 question of such cognizance must be met in this case; and, being important in 
 the principles involved, would require much deliberate consideration, had it not 
 been already in effect decided by the court. In the opinion of the court in 
 Lathrop v. Drake (91 U. S. 516; s. c. 13 B. R. 473), it was taken for granted, 
 and stated, that the State courts had jurisdiction, but as the question was not 
 directly involved in that case, it was more fully considered in Eyster v. Gaff, gi 
 U. S. 521; and it was there decided that a State court is not deprived of juris- 
 diction of a case by the bankruptcy of the defendant, but may proceed to judg. 
 ment without noticing the bankruptcy proceedings, if the assignee does not 
 cause his appearance to be entered, or proceed against him if he does appear. 
 The same conclusion has been reached in other courts, both Federal and State, 
 which hold that the State courts have concurrent jurisdiction with the United 
 States courts of actions and suits in which a bankrupt or his assignee is a party. 
 See Samson v. Burton, 4 B. R. i; Payson v. Dietz, 8 Id. 193; Gilbert v. Priest, 
 8 Id. 159; Stevens v. Mechanics' Savings Bank, loi Mass. 109; Cook v. Whipple, 
 55 N. Y. 150; Boone v. Hall, 7 Bush, 66; Mays v. Man. Nat. Bank, 64 Penn. 
 74; there are contrary cases, it is true, as Brighton v. Claflin, 31 Wis. 607; 
 Voorhees t. Frisbie, 25 Mich. 476, and others; but we think that the former 
 cases are founded on the better reason. Under the bankrupt law of 1841, with 
 substantially the same provisions on this subject as the law of 1867, it was held 
 that the assignee could sue in the State courts. {Ex p. Christy, 3 How. 292; 
 Nugent Z-. Boyd, Id. 426; Wood v. Jenkins, 10 Met. 583.)" 
 
 Constitutionality of Statutes Conferring Upon State Courts Jurisdic- 
 tion over Matters Arising Under Federal Statutes. — The contention that 
 under the former act State courts might entertain suits by and against assignees 
 in bankruptcy, was assailed not only on the ground of not being authorized by 
 the statute, but also as being unconstitutional, it being contended that the 
 jurisdiction of the courts of the United States is exclusive in all cases arising 
 under the constitution, laws, or treaties of the United States. (U. S. Constitu- 
 tion, article 3, sections i, 2.) Notwithstanding the present law recognizes the 
 State courts as having jurisdiction, it is manifest that however clearly expressed 
 the intention of Congress, it is a nullity, if unconstitutional. The decisions on 
 this point must then be examined. This point also was fully considered in 
 Claflin V. Houseman {supra, 93 U. S. 130). The court in that case said: 
 
 " The general question, whether State courts can. exercise concurrent juris- 
 
COURTS AND PROCEDURE THEREIN. 219 
 
 § 23.] Constitutionality of Statutes Conferring Jurisdiction on State Courts. 
 
 diction with Federal courts in cases arising under tlie Constitution, laws, and 
 treaties of the United States, has been elaborately discussed, both on the bench 
 and in published treatises — sometimes with a leaning in one direction and 
 sometimes in the other — but the result of these discussions has, in our judg- 
 ment, been to affirm the jurisdiction where it is not excluded by express provi- 
 sions, or by incompatibility in its exercise arising from the nature of the par- 
 ticular case. When we consider the structure and true relations of the Federal 
 and State governments, there is really no just foundation for excluding the 
 Stale courts from all such jurisdiction. The laws of the United States are laws 
 in the several States, and just as much binding on the citizens and courts thereof 
 as the State laws are. The United States is not a foreign sovereignty as regards 
 the several States, but is a concurrent, and, within its jurisdiction, paramount 
 sovereignty. Every citizen of a State is a subject of two distinct sovereignties, 
 having concurrent jurisdiction in the State — concurrent as to place and persons, 
 though distinct as to subject-matter. Legal or equitable rights, acquired under 
 either system of laws, may be enforced in any court of either sovereignty, com- 
 petent to hear and determine such kind of rights and not restrained by its con 
 5titution in the exercise of such jurisdiction. Thus, a legal or equitable right 
 acquired under State laws may be prosecuted in the State courts, and also, if 
 the parties reside in different States, in the Federal courts. So rights, whether 
 legal or equitable, acquired under the laws of the United States, may be prose- 
 cuted in the United States courts, or in the State courts, competent to decide 
 rights of the like character and class; subject, however, to this qualification, 
 that where a right arises under a law of the United States, Congress may, if it 
 sees fit, give to the Federal courts exclusive jurisdiction." (The Moses Taylor, 
 4 Wall. 429; Martin t,. Hunter's Lessee, i Wheat. 334; Exp. McNeil, 13 Wall. 
 236; AUeman ». Booth, 21 How. 506.) Other analogous cases have occurred, 
 and the same result has been reached; the general principle being that where 
 jurisdiction may be conferred on the United States courts it may be made exclu- 
 sive where not so by the Constitution itself; but if exclusive jurisdiction be 
 neither express nor implied, the State courts have concurrent jurisdiction 
 whenever, by their own constitution, they are competent to take it. Thus, the 
 United States itself may sue in the State courts, and often does so. If this may 
 be done, assuredly, on the principle that the greater includes the less, an officer 
 or corporation created by United States authority may be enabled to sue in such 
 •courts. Nothing in the Constitution, fairly considered, forbids it." 
 
220 THE NATIONAL BANKRUPTCY LAW. 
 
 Conflict of Jurisdiction. [Ch. IV. 
 
 Conflict of Jupisdietion. — Although in certain cases the State courts and 
 courts of bankruptcy may have a concurrent jurisdiction, yet, where either of 
 the courts has once acquired jurisdiction and has taken into its custody the 
 property of the bankrupt, then its jurisdiction over that matter should not be 
 interfered with. If the property has come into the hands of any officer of a 
 court acquiring jurisdiction, whether the officer be a sheriff or a receiver, or 
 even an executor, the possession of the court should not be interfered with. 
 This is true, even although the property is held by virtue of an attachment or 
 other process, or by virtue of a lien, which would be voidable under section tT(f) 
 of the bankruptcy act. The court which has acquired jurisdiction should be 
 allowed to continue the action and determine all questions properly arising 
 therein. One of the leading cases on this subject is Johnson v. Bishop, S B. R. 
 533; s. c. Wool. 324. That was an action in which property had been attached 
 by an officer of the State court by mesne process within four months prior to the 
 commencement of proceedings in bankruptcy. As a consequence the attach- 
 ment was dissolved by the bankruptcy law. But the Supreme Court held that the 
 assignee in bankruptcy must apply to the State court to have the officer turn 
 over the property and not to the Federal court. The language of the court in 
 that case was: "The property is held by the sheriff under writs rightfully 
 issued, and his possession is the possession of the court by command of whose 
 writ he seizes it. And so long as the proceedings, in virtue of which it was 
 taken, are pending, that possession will not be interfered with by any other 
 court. This general principle has been acted upon in England in many cases 
 in which two courts of concurrent jurisdiction were sought to be brought into 
 collision. (Payne v. Drew, 4 East 523; Evelyn v. Lewis, 3 Hare, 472; Russell 
 V. East Anglien R. Co., 3 M'Naughton & Gordon, 104.) By this salutary rule 
 harmony is maintained between the several superior courts of law and chancery, 
 which have co-extensive and concurrent jurisdiction in a great variety of cases. 
 The importance of the rule and of scrupulously obeying it in this country is 
 greatly increased by the fact that the Federal and State courts, though exercis- 
 ing their jurisdiction in the same territory, over the same subjects, and often over 
 the same class of litigants, draw their existence from different sources, and are 
 to one another foreign tribunals. In no other way can unseemly and mischiev- 
 ous collisions be avoided. In Hayne v. Lucas, lo Pet. 400, property had been 
 taken in attachment by the State sheriff and released on bail, when the marshal 
 of the United States seized it on execution out of the Federal court. It was 
 held that the latter could not levy on the property, because it was in the pos- 
 
COURTS AND PROCEDURE THEREIN. 221 
 
 § 24,] Jurisdiction of Appellate Courts. 
 
 session of the State court by virtue of its writs first levied. In Peck v. Jenness. 
 7 How. 612, the property had been taken in attachment out of the State court 
 after which the debtor was discharged under the banlcrupt act of 1841. The 
 question was whether, under the law, this discharge dissolved the attachment. 
 And it was held that it did not. In Pulliam v. Osborne, 17 How. 471, it was 
 held that When co-ordinate liens were obtained by one judgment in a State 
 court and another in a United States court, a seizure by a sheriff under an 
 execution on the former gave priority over the latter. In Taylor v. Carryl, 20 
 How. 583, a vessel had been attached on State process, and afterwards arrested 
 in admiralty. Sales being made in each suit to different persons, the purchaser, 
 under the decree in admiralty, brought replevin against the purchaser under the 
 attachment proceedings in the State court. It was held that the admiralty 
 process and proceedings and decree and sale were ineffectual to makfe a title, 
 because that court could not take the property from the State court which had 
 possession of it. And the rule was so held in the similar cases of The Oliver 
 Jordan, 2 Curt. C. C. 414; the ship Robert Fulton, i Paine's C. C. 620, and in 
 Freeman v. Howe, 24 How. 450; Ex p. Robinson, 6 M'Lean, 355; Ex p. Dorr, 
 3 How. 103; Buck V. Colbath, 3 Wall. 334. In the last mentioned case it is said 
 that ' it is only while the property is in possession of the court, either actually 
 or constructively, that the court is bound or professes to protect that possession 
 from the process of other courts. Whenever the litigation is ended, or the 
 possession of the officer or court is discharged, other courts are at liberty to deal 
 with it according to the rights of the parties before them, whether those rights 
 require them to take possession of the property or not.' " Compare section 2, 
 paragraph on Enjoining Proceedings in State Courts; compare also Bracken v. 
 Johnston, 15 B. R. 106; s. i.. 4 Cent. L. J. 9. 
 
 Sec. 24. Jurisdiction of Appellate Courts. — a The Supreme 
 Court of the United States, the circuit courts of appeals of the 
 United States, and the supreme courts of the Territories, in vaca- 
 tion in chambers and during their respective terms, as now or as 
 they may be hereafter held, are hereby invested with appellate 
 jurisdiction of controversies arising in bankruptcy proceedings 
 from the courts of bankruptcy from which they have appellate 
 jurisdiction in other cases. The Supreme Court of the United 
 States shall exercise a like jurisdiction from courts of bankruptcy 
 
222 THE NATIONAL BANKRUPTCY LAW. 
 
 Revisory Powers of Circuit Court — Extent. [Ch. IV. 
 
 not within any organized circuit of the United States and from 
 the supreme court of the District of Columbia. 
 
 b The several circuit courts of appeal shall have jurisdiction in 
 equity, either interlocutory or final, to superintend and revise in 
 matter of law the proceedings of the several inferior courts of 
 bankruptcy within their jurisdiction. Such power shall be exer- 
 cised on due notice and petition by any party aggrieved. 
 
 Analogous Provisions of Former Acts. — 
 
 As to appeals; R. S., section 4980; act of 1867, section 8. As to supervisory 
 jurisdiction of circuit courts of appeal; R. S., section 4986; act of 1867, section 
 2; act of June 8th, 1872, ch. 340; act of 1841, section 6; also R. S., sections 4987 
 and 4988; act of 1867, section 49; act of June 30th, 1870, ch. 177, section i. 
 
 "Revisory Powers of the Cipcuit Court; History. — The former bank- 
 ruptcy acts of 1841 and 1867, provided that the Circuit Courts should have cer- 
 tain revisory powers over the proceedings of the courts of bankruptcy. Under 
 the act of 1841 that revisory power could be exercised whenever the court of 
 bankruptcy itself cared to adjourn any point or objection into the Circuit Court 
 to be there heard and determined. (In re Christy, 3 How. 292; Clark v, Bin- 
 ninger, 7 Blatch. 159; s. t. 3 B. R. 487.) 
 
 The Act of 1867, by section 2 (R. S., section 4986), gave to the Circuit Court for 
 each district " general superintendence of all cases and questions arising in the 
 District Court for such district when sitting as a court of bankruptcy, 'and further 
 provided that " except when special provision was otherwise made, such circuit 
 courts might, upon bill, petition or other proper process presented by any party 
 aggrieved, hear and determine the case as in a court of equity." During the 
 pendency of the legislation in Congress which resulted in the present bank- 
 ruptcy bill, provisions giving Circuit Courts of Appeals this revisory power were 
 incorporated and adopted, only to be stricken out, and then to be re-incorpor- 
 ated in the law as finally adopted. The objection to giving these courts this 
 power was that it would tend to delay proceedings in bankruptcy and to 
 increase expense. 
 
 Extent of the Power. — Many differences between the former act and the 
 present are to be noted. Chief is the fact that the present law permits this 
 revisory power to be exercised only in matters of law. There seems to be no 
 method of reviewing questions of fact other than by an appeal pursuant to the 
 
COURTS AND PROCEDURE THEREIN. 223, 
 
 § 24..] Appeal Taken — Merely a Power to Review. 
 
 provisions of the next section, and only in the cases therein provided. Neither 
 does this section give to the Circuit Court of Appeals any power to revise pro- 
 ceedings in the bankruptcy court which involve the exercise of discretion on the 
 part of that court, unless indeed there has been such an abuse of discretion that 
 in reality a question of law comes before the Circuit Court of Appeals. Thus it 
 ■was held under the act of 1841, that the Circuit Court could not in this manner 
 revise an order of the District Court denying a motion for a new trial. (/» re 
 Marsh, 6 Law Rep. 67.) And in one case it was held that an order removing an 
 assignee, being in the discretion of the court, could not be thus reviewed. (/» 
 re Adler Bros., 2 Woods, 571. Compare in re Perkins, 5 Biss. 254; s. c. 8 B. 
 R. 56). 
 
 Revision Wliere an Appeal Can be Taken. — Another important differ- 
 ence between the former and the present act with regard to this revisory power 
 of the Circuit Court of Appeals is that the former act expressly excepted from 
 matters which could thus be reviewed, all for which special provision as to 
 review was otherwise made; while this act does not in terms provide that the 
 Circuit Courts of Appeals shall not review in this manner the same questions 
 which may come before them upon appeal as provided for by section 25. Under 
 the express provision contained in the act of 1867 it was held that a circuit court 
 could not revise a proceeding in this way, if it was one in which an appeal could 
 be taken from the District Court to the Circuit Court, or where a writ of error 
 would lie from the Circuit Court to the District Court. (Smith v. Mason, 14 
 Wall. 419; s. t. 6 B. R. I.) In re Alexander, 3 B. R. 29, it was stated l^y Chief 
 Justice Chase that the only way in which due effect could be given to the provi- 
 sions of the former act as to appeals and review was so to construe it as to hold 
 that where a formal appeal could be taken or where a writ of error would lie, 
 that was the proper and only method of review; but that in all other cases 
 the review must be by a revisory proceeding in the Circuit Court. Whether the 
 absence of any provision expressly denying to the Circuit Courts of Appeals the 
 right by a revisory proceeding to review proceedings from which formal appeals 
 can be taken, is to be construed as not depriving them of that right is doubtful. 
 Upon the principle of exfressio unius, expressio alius, we should say that even 
 under this act their revisory power could not be exercised when an appeal 
 could be taken. 
 
 Merely a Power of Review. — The power thus conferred upon the Circuit 
 Court of Appeal is simply the power to review proceedings which have been 
 had. It does not give this court the right to divest the District Court of juris- 
 
224 THE NATIONAL BANKRUPTCY LAW. 
 
 What May be Reviewed. [Ch. IV. 
 
 diction, and to assume to itself jurisdiction over bankruptcy proceedings as 
 such, and to undertake the administration of the bankrupt estate. It does not 
 give to it any original jurisdiction. The law still recognizes the two courts as 
 separate and distinct, and if a decree is affirmed it continues to be the decree of 
 the district court, not of the circuit court, and is to be enforced by the district 
 court. (Clark v. Binninger, 7 Blatchf. 165; s. c. 3 B. R. 489.) 
 
 What May Thus Be Reviewed. — The statute further provides that these 
 circuit courts of appeal shall have jurisdiction " in equity " to superintend and 
 revise in matters of law the proceedings of the inferior courts of bankruptcy. 
 This is not to be construed as limiting the right of review to proceedings cogniz- 
 able in the district court only in equity. All questions of law, whether they 
 arose in a proceeding at law or in equity, are thus reviewable unless, perhaps, 
 they are such that a formal appeal might be taken. {In re York & Hoover, i 
 Abb. C. C. 503; B. t. 4 B. R. 479-) Subject to the limitation that a review 
 extends only to matters of law, and also to the possible limitation that it does 
 not embrace questions which may be heard upon appeal, and also to the excep- 
 tion of matters, which rest entirely in the discretion of thg court of bankruptcy, 
 all questions which arise may be thus reviewed. The language of the section 
 is perhaps not quite so definite as that of the act of 1867. It does not expressly 
 say that " all questions and cases " may thus be reviewed. But the language 
 that is used (" either interlocutory or final ") taken with the context, and in the 
 absence of any restrictions, shows clearly that Congress has intended to provide 
 -a summary method for the review of all questions of law for which it has not 
 provided a more formal method cf review under the terms of section 25. (Com- 
 pare Morgan v. Thornhill, ii Wall. 65; s. c. 5 B. R. 1.) The act of 1867 
 expressly provided that this jurisdiction might be exercised by the circuit justice 
 in vacation, as well as by the court in term time. The proceedings which may 
 thus be reviewed are those of the " inferior courts of bankruptcy." The dis- 
 tinction in this statute between " courts of bankruptcy " and the word " court " 
 (compare section i [8], [7]), would of itself show that the acts and proceedings 
 of referees were not thus subject to review. The word " court " may include 
 referee, but the expression " court of bankruptcy " does not. But independent 
 of any definition fixed by the statute it is clear that only decisions and proceed- 
 ings of the court of bankruptcy itself, not of the referee or the trustee, are the 
 subjects of review. Not until the acts of these officers have been passed upon 
 by the court of bankruptcy can the matter be brought before the Circuit Court 
 of Appeals. Thus a sale by a trustee cannot be reviewed by the Circuit Court of 
 
COURTS AND PROCEDURE THEREIN. 22$ 
 
 § 25.] Appeals and Writs of Error. 
 
 Appeals and set aside, until the matter has first been passed upon by the court 
 of bankruptcy. 
 
 ProeeedingS to Seeure a Revision. — The section expressly provides that 
 the power of revision shall be exercised by the court on due notice and petition. 
 There is no provision authorizing it to be instituted by bill as under the former 
 act. The petition should set forth specifically the error of the court of bank- 
 ruptcy, and enough of the facts to enable the reviewing court to decide all the 
 questions of law. (/« re Edward Casey, lo Blatch. 376; s. c. 8 B. R. 71.) The 
 petition may be amended. (Sutherland v. Kellogg, 2 Biss. 405.) The petition 
 to review does not operate as a stay /^>- j« of proceedings in the inferior court, 
 but the Circuit Court of Appeals in its discretion may order a stay, and will do 
 so, if the aggrieved party will suffer further damage in case the application for a 
 stay is denied. (/« re Oregon Bulletin Co., 3 Saw. 529; s. c. 14 B. R. 394.) Notice 
 must be given; this is an express statutory provision; but it has been held 
 that the proceeding to review is but one of the steps in the bankruptcy proceed- 
 ing, and that for the purpose of review the parties are still in court, and conse- 
 quently that notice on one who has theretofore appeared as attorney is suffi- 
 cient. (Ala. & Chat. R. R. Co. v. Jones, 5 B. R. g;.) Unreasonable delay in 
 filing a petition justifies the court in refusing to entertain the proceeding, but 
 in general if a petition is filed within the period within which an appeal in a 
 bankruptcy matter may be taken, it is in due time. (Bank v. Cooper, 20 Wajl. 
 171, citing Llttlefield v. Delaware and Hudson Canal Co., 4 B. R. 257.) In 
 another case it was held that if a petition was filed before the order which it 
 was alleged was erroneous was carried into execution, then the petition was in 
 due time; but there is no ruling that if delayed until after that time, it is 
 necessarily too late. (In re Edward Casey, 10 Blatch. 376; s. c. 8 B. R. 71.) 
 
 Sec 25. Appeals and Writs of Error. — a That appeals, as 
 in equity cases, may be taken in bankruptcy proceedings from 
 the courts of bankruptcy to the circuit court of appeals of the 
 United States, and to the supreme court of the Territories, in 
 the following cases, to wit, (i) from a judgment adjudging or re- 
 fusing to adjudge the defendant a bankrupt ; (2) from a judgment 
 granting or denying a discharge ; and (3) from a judgment allow- 
 ing or rejecting a debt or claim of five hundred dollars or over. 
 
 NAT. BANKRUPTCY LAW — 1$ 
 
226 . THE NATIONAL BANKRUPTCY LAW. 
 
 Appeals Under the Former Bankruptcy Act. [Ch, IV. 
 
 Such appeal shall be taken within ten days after the judgment 
 appealed from has been rendered, and may be heard and deter- 
 mined by the appellate court in term or vacation, as the case 
 may be. 
 
 b From any final decision of a court of appeals, allowing or re- 
 jecting a claim under this act, an appeal may be had under such 
 rules and within such time as may be prescribed by the Supreme 
 Court of the United States, in the following cases and no other : 
 
 1. Where the amount in controversy exceeds the sum of two 
 thousand dollars, and the question involved is one which might 
 have been taken on appeal or writ of error from the highest court 
 of a State to the Supreme Court of the United States ; or 
 
 2. Where some justice of the Supreme Court of the United 
 States shall certify that in his opinion the determination of the 
 question or questions involved in the allowance or rejection of 
 such claim is essential to a uniform construction of this act 
 throughout the United States. 
 
 c Trustees shall not be required to give bond when they take 
 appeals or sue out writs of error. 
 
 d Controversies may be certified to the Supreme Court of the 
 United States from other courts of the United States, and the 
 former court may exercise jurisdiction thereof and issues writs of 
 certiorari pursuant to the provisions of the United States laws 
 now in force or such as may be hereafter enacted. 
 
 Analogous Provisions of Former Acts. — 
 
 As to appeals to the circuit courts: R. S., sections 4980, 4981, 4982, 4983 and 
 4984; act of 1867, sections 8 and 24. As to appeals to the Supreme Court from 
 the circuit courts of appeal: R. S., section 4985; act of 1867, section 24; also R. 
 S., section 4989; act of 1867, section 9. 
 
 Appeals Under the Former Bankruptcy Act. — There are several marked 
 
 differences between the provisions of the present act and those of the act of 
 1867 as to cases in which appeals may be taken and also as to procedure. The 
 latter act provided (see section 8; R. S., section 4980) that appeals might be 
 taken in all cases in equity, and that writs of error might be allowed in all cases 
 
COURTS AND PROCEDURE THEREIN. 227 
 
 § 25.] Appeals Under the Present Act. 
 
 at law, but in both instances only if the debt or damages claimed amounted to 
 more than five hundred dollars. That statute also provided that an appeal 
 might be taken from a decision allowing or rejecting, in whole or in part, any 
 claim made against the estate, and this regardless of the amount of the claim. 
 Under that provision it was held that only final decrees in equity were appeal- 
 able, not interlocutory. (Clark v. Iselin, 9 Blatch. 196.) But subject to the 
 limitation that the amount involved was five hundred dollars, all final decrees 
 in equity might be appealed from ; and writs of error might be granted in all 
 cases where a judgment for five hundred dollars had been recovered. 
 
 Appeals Under the Present Act. — The provisions of the present act differ 
 greatly from those just mentioned. Judgments of three different classes are 
 mentioned as appealable; and a fair inference is that from others no appeal can 
 be taken and no review can be had except pursuant to the provisions of section 
 24 giving the circuit courts revisory power. Congress is under no obligation to 
 furnish to a suitor the right to appeal from all final decrees. Whether it shall 
 permit any appeal, and if so to what extent, is entirely within its discretion. 
 (Ex p. Christy, 3 How. U. S. 292.) The three classes of judgments from which 
 appeals can be taken are, it is to be noted, in at least two instances, cases in 
 which an appeal or a writ of error did not lie under the former statute. For 
 instance, the present act expressly permits an appeal to be taken from a judg- 
 ment adjudging or refusing to adjudge the defendant a bankrupt. It was other- 
 wise under the former act, as that proceeding was held to be neither a suit in 
 equity nor an action at law. (In re O'Brien, i B. R. 176.) But some of the 
 cases held that it was a matter to be reviewed by the circuit court in the exer- 
 cise of its revisory power, if a bill to revise was brought by a creditor. (Sweatt 
 V. Boston R. R. Co., 5 B. R. 234.) So the present act expressly allows an 
 appeal to be taken from a judgment denying or granting a discharge. But no 
 such appeal was allowed under the former act, as such a case was not a suit in 
 equity or an action at law. (Coit v. Robinson, 19 Wall. 274; s. c. g B. R. 289.) 
 An appeal may now be taken from a judgment allowing or rejecting a claim of 
 five hundred dollars or over. Whether this gives one the right to appeal in case 
 his claim is for five hundred dollars or over, and is allowed for a reduced 
 amount, for instance, for four hundred and ninety dollars, qucere. The language 
 of the section would seem to give the right to appeal if the amount involved in 
 the litigation was five hundred dollars or more, even although the claim was 
 allowed at a sum less than five hundred dollars, and even although the differ- 
 
228 THE NATIONAL BANKRUPTCY LAW. 
 
 Who May Take the Appeal — Time Within Which to Appeal. fCh- IV. 
 
 ence between the amount claimed and the amount allowed was less than five 
 hundred dollars. Under the former act, although five hundred dollars must 
 have been the amount of the damages or debt, in a case in equity or an action 
 at law, in order to give one the right to appeal, there was no sum fixed as the 
 value of claims upon which an appeal could be taken. The right to an appeal 
 from a decision allowing or rejecting a claim does not give a creditor the right 
 to appeal from a decision that the claim of another creditor has a right of pri- 
 ority of payment over his claim. There is an evident distinction made by the 
 bankruptcy act between a claim upon a debt or demand against a bankrupt and 
 priority as to other creditors. " A claim of priority is not a claim asserted 
 against the bankrupt, but a right asserted against other creditors." (/« re York 
 & Hoover, i Abb. C. C. 503; s. c. 4 B. R. 479.) 
 
 Who May Take the Appeal. — Under the former act it was held that an 
 appeal from a decision allowing a claim could not be taken by an objecting 
 creditor, but should be taken by the assignee. (/» re Troy Woolen Co., 9 
 Blatch. 191; s. c. 6 B. R. 16.) This is evidently still true. But it would seem 
 that an appeal from a judgment granting a discharge, can be taken by object- 
 ing creditors. And that creditors are the only persons who can take an appeal 
 from a judgment refusing to adjudge the defendant a bankrupt, if any appeal 
 in such cases is taken, is sufficiently evident. 
 
 Time Within Which toAppeal. — An appeal cannot be taken after the 
 time specified in the statute. No court has the power to enlarge the right. 
 Unless taken within the ten days the appellate court obtains no jurisdiction- 
 (Sedgwick v. Fridenberg, 11 Blatch. 77; Hawkins v. Hastings, i Dill. 453; 
 Wood V. Bailey, 21 Wall. 640; s. c. iz B. R. J32; in re York v. Hoover, 4 B. R. 
 479; s. c. I Abb. C. C. 503.) Jurisdiction does not exist if the appellant fails to 
 comply with any of the requirements of the statute. But this does not apply to 
 rules of the court, as the court, in its discretion, may overlook a breach of its own 
 rules. (Compare Barron v. Morris, 14 B. R. 371; s. c. 2 Woods, 354.) Where 
 one omitted to take an appeal within the statutory time, and the omission resulted 
 from a mistake in the choice of remedies, the United States Supreme Court 
 held that the District Court might grant a review of the decree so as to enable the 
 party to take an appeal in time. (Stickney z/. Wilt, 11 B. R. 97; s. c. 23 Wall. 150.) 
 
 Appeals to the Supreme Court. — Under the present act the only appeal 
 that lies to the Supreme Court is from a final decision of the Circuit Court of 
 Appeals, allowing or rejecting a claim, and even this is subject to two qualifi- 
 
COURTS AND PROCEDURE THEREIN. 229 
 
 §§ 26, 27.] Arbitration of Controversies — Compromises. 
 
 cations. It is to be noticed that in subdivision i of paragraph b, of this section, 
 the language that is used with reference to amount is that the amount" in con- 
 troversy " shall exceed two thousand dollars. This is a different phraseology 
 than that appearing in subdivision 3, of paragraphs. Under the act of 1867, one 
 might take an appeal from the Circuit Court to the Supreme Court in any case 
 of equity, or in any action at law if the amount exceeded two thousand dollars, 
 (afterwards amended to five thousand dollars). Such appeals could be taken 
 from any final decree or any final judgment where this amount was involved. 
 The purpose of the present act in limiting the right of appeal to the very few 
 instances mentioned in this section, according to the report of the judiciary com 
 mittee of the house, is to expedite and cheapen proceedings in bankruptcy. 
 
 Sec 26. Arbitration of ContrOTersies . — a The trustee ma)% 
 pursuant to the direction of the court, submit to arbitration any 
 controversy arising in the settlement of the estate. 
 
 b Three arbitrators shall be chosen by mutual consent, or one 
 by the trustee, one by the other party to the controversy, and 
 the third by the two so chosen, or if they fail to agree in five 
 days after their appointment the court shall appoint the third 
 arbitrator. 
 
 c The written finding of the arbitrators, or a majority of them, 
 as to the issues presented, may be filed in court and shall have 
 like force and effect as the verdict of a jury. 
 
 Analogous Provisions of former Acts, — 
 
 R. S., section 5061; act of 1867, section 14; act of 1841, section 11; act of 1800, 
 section 43. 
 
 Sec 27. Compromises. — a The trustee may, with the ap- 
 proval of the court, compromise any controversy arising in the 
 adhiinistration of the estate upon such ternis is he may deem for 
 the best interests of the estate. 
 
 Analoj|;ous Provisions of Former Acts. — 
 
 R. S., section 5061; act of 1867, section 14; act of i8o6, section 43. 
 
 Approval of the Court Necessary In Each Case. — Under the analogous 
 
 provisions of the former act, it was held that this section did not authorize the 
 
230 THE NATIONAL BANKRUPTCY LAW. 
 
 Designation of Newspapers — Offenses. [Ch. IV. 
 
 court to malce an order permitting the assignee, with the approval of a commit- 
 tee of creditors duly appointed, to compromise any and all debts that to him 
 seemed best. Each case should be brought before the court by the trustee and 
 the special facts which make it proper to compromise, should be set forth. 
 {In re Dibblee, 3 Ben. 354.) 
 
 Sec. 28. Designation of Newspapers. — a Courts of bank- 
 ruptcy shall by order designate a newspaper published within 
 their respective territorial districts, and in the county in which 
 the bankrupt resides or the major part of his property is situated, 
 in which notices required to be published by this act and orders 
 which the court may direct to be published shall be inserted. 
 Any court may in a particular case, for the convenience of par- 
 ties in interest, designate some additional newspaper in which 
 notices and orders in such case shall be published. 
 
 Analogous Provisions of Former Acts. — 
 
 As to publication of notices: act of 1867, section 11, amended by R. S., section 
 5019; act of 1841, section 7. 
 
 Cross-reference. — As to publication of notice to creditors, of the first 
 meeting, see section 58 (/). 
 
 Sec. 29. OfiTenses. — a A person shall be punished, by impris- 
 onment for a period not to exceed five years, upon conviction of 
 the offense of having knowingly and fraudulently appropriated to 
 his own use, embezzled, spent, or unlawfully transferred any 
 property or secreted or destroyed any document belonging to a 
 bankrupt estate which came into his charge as trustee. 
 
 b A person shall be punished, by imprisonment for a period 
 not to exceed two years, upon conviction of the offense of having 
 knowingly and fraudulently (i) concealed while a bankrupt, or 
 after his discharge, from his trustee any of the property belong- 
 ing to his estate in bankruptcy; or (2) made a false oath or 
 account in, or in relation to, any proceeding in bankruptcy; (3) 
 presented under oath any false claim for proof against the estate 
 
COURTS AND PROCEDURE THEREIN. 23 1 
 
 g 29.] Offenses. 
 
 of a bankrupt, or used any such claim in composition personally 
 or by agent, proxy, or attorney, or as agent, proxy, or attorney ; 
 or (4) received any material amount of property from a bankrupt 
 after the filing of the petition, with intent to defeat this act ; or 
 {5) extorted or attempted to extort any money or property from 
 any person as a consideration for acting or forbearing to act in 
 bankruptcy proceedings. 
 
 c A person shall be punished by fine, not to exceed five hun- 
 dred dollars, and forfeit his office, and the same shall thereupon 
 become vacant, upon conviction of the offense of having know- 
 ingly (i) acted as a referee in a case in which he is directly or 
 indirectly interested; or (2) purchased, while a referee, directly 
 or indirectly, any property of the estate in bankruptcy of which 
 he is referee; or (3) refused, while a referee or trustee, to permit 
 a reasonable opportunity for the inspection of the accounts relat- 
 ing to the affairs of, and the papers and records of, estates in his 
 charge by parties in interest when directed by the court so to do. 
 
 d A person shall not be prosecuted for any offense arising 
 under this act unless the indictment is found or the information 
 is filed in court within one year after the commission of the 
 offense. 
 
 Analogous Provisions of Former Acts. — 
 
 As to offenses of the bankrupt: R. S., section 5132; act of 1867, section 44. 
 As to offenses of officers of the court R. S., section 5012; act of 1867, section 45. 
 
 CFOSS-refereneeS. — The word "document" is defined in section i (13). 
 As to what courts have jurisdiction to try offenses, compare sections 2 (4) and 
 23 c. " Concealed " is defined in section i (22). As to the effect of the com- 
 mission of an offense upon an application for a discharge, see section 14 i (i). 
 
 Offenses. — The present act makes not only the bankrupt and the officers of 
 the court punishable for certain offenses, but also makes criminal various acts 
 of third parties, in this latter respect differing from the act of 1867. In all of 
 the offenses mentioned in paragraph i, essential elements, which must be 
 stated in the indictment and found upon the trial, are that the act is done 
 knowingly and fraudulently. Inasmuch as the schedules required by section 
 7 (8) must be verified, a willful and fraudulent omission of a material asset or a 
 
232 THE NATIONAL BANKRUPTCY LAW. 
 
 Defendant may be a Witness — Proceeding by Information. [Ch. IV, 
 
 material debt, would seem to be an offense punishable by imprisonment. 
 (Compare U. S. v. Nichols, 4 McLean, 23.) A bankrupt who submits the facts in 
 regard to his property fairly to the advice of his counsel, and who, acting under 
 the advice thus given, withholds certain items from his schedule, is not guilty 
 of perjury, the fraudulent intent being wanting. (U. S. v. Conner, 3 McLean, 
 573.) But if he makes false statements in regard to it, in answer to interroga- 
 tories proposed to him in his examination, it is perjury. (U. S. v. Dickey, i 
 Morris, 412.) False swearing to a fact, to the best of the opinion of the witness, 
 which the witness, though without any reasonable cause, believes to be true, is 
 not perjury. (Commonwealth v. Brady, 5 Gray [Mass.] 78.) 
 
 Conspirators. — U. S. Revised Statutes, section 5440, provide : " If two or 
 mose persons conspire either to commit any offense against the United States, 
 or to defraud the United States in any manner or for any purpose, and one or 
 more of such parties do any act to effect the object of the conspiracy, all the par- 
 ties to such conspiracy shall be liable to a penalty of not less than one thousand 
 dollars and not more than ten thousand dollars, and to imprisonment not more 
 than two years." Under this section it was held that a person who conspired 
 with another to commit an offense against the bankruptcy act of 1867 was liable 
 to prosecution. (U. S. v. Bayer, 4 Dill. 407.) 
 
 Defendant May Be a Witness. — " The act of March 16, 1878, chapter 37 
 
 (20 Stat. L. 30), provides that in the trial of all indictments, informations, com- 
 plaints, and other proceedings against persons charged with the commission of 
 crimes, offenses, and misdemeanors, in the United States courts. Territorial 
 courts, and courts-martial, and courts of inquiry, in any State or Territory, 
 Including the District of Columbia, the person so charged shall, at his own 
 request but not otherwise, be a. competent witness. And his failure to make 
 such request shall not create any presumption against him." This statute 
 must be considered as overruling various decisions to the contrary rendered 
 before its enactment. 
 
 PFOceedingr by Information Not Indictment. — Under the former act 
 
 which made the willful and fraudulent omission of assets from the schedule 
 a misdemeanor, it was held that such an offense was not an infamous crime, 
 and that a proceeding against the offender might be by information an(i not 
 indictment. (U. S. v. Block, 15 B. R. 335.) 
 
 Inspection of AecOUntS. — As to what is a reasonable opportunity of 
 inspecting accounts, compare In re Brewer; Exf. Runel, i DeGex, M. & G. 491.) 
 
COURTS AND PROCEDURE THEREIN. 233 
 
 §§ 3O1 3I-] Computation of Time. 
 
 Sec. 30. RnleSj Forms, and Orders. — a All necessar)' rules, 
 forms, and orders as to procedure and for carrying this act into 
 force artd effect shall be prescribed, and may be amended from 
 time to time, by the Supreme Court of the United States. 
 
 Analogous Provision of Former Acts. — 
 
 Act of 1867, section 10. 
 
 The Date of Promulgation. — The Supreme Court of the United States, 
 having adjourned until October 10, i8g8, no rules, forms and orders will be 
 promulgated by the court until after that date. 
 
 Sec 31. Gompatation of Time. — a Whenever time is 
 enumerated by days in this act, or in any proceeding in bank- 
 ruptcy, the number of days shall be computed by excluding the 
 first and including the last, unless the last fall on a Sunday or 
 holiday, in which event the day last included shall be the next 
 day thereafter which is not a Sunday or a legal holiday. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., section 5013; act of 1867, section 48. 
 
 Time by Months and Tears. — Although the statute expressly provides 
 only for a method of computing time when the enumeration is by days, it was 
 held under the former act which was substantially similar in its provisions, 
 that a fair construction of it required that the same rule should be applied when 
 the time was enumerated by months or years. Under that statute, which per- 
 mitted one to apply for a discharge within a year from the adjudication, it was 
 ielii that where one bad been adjudicated bankrupt on the 26th of November of 
 a certain year, and the 26th of November of the following year came upon 
 Thanksgiving Day, it being a legal holiday, the application could be filed on the 
 27th of November. (7» « J. B.Lang, 2 B. R. 480.) To same effect: Cooley 
 V. Cook, 125 Mass. 406. But the general rule of law is that wHen a 
 thing must be done within a. certain number of months or years if the 
 last day falls on Sunday or a holiday, it cannot be doiie on the next day. 
 (Comt)are Amer. and Eng. Encyc. of Law fist ed.], title, time.) In another case 
 in bankruptcy it was held that ah attachment made on the 8th of March, at 
 
234 THE NATIONAL BANKRUPTCY LAW. 
 
 Transfer of Cases. [Ch. IV. 
 
 seven o'clock in the afternoon was voidable, if the petition in bankruptcy was 
 filed on the 8th of July at two o'clock in the afternoon, the court in that case 
 not applying the rule which requires that the last day should be included, but 
 holding that the general common-law rule that fractions of a day are not to be 
 considered did not apply, and that in ascertaining whether or not a petition in 
 bankruptcy had been filed within four months from the time of securing 
 such an attachment, hours and minutes might be counted to see whether 
 the time had been expired. (Westbrook Mfg. Co. v. Grant, 60 Me. 88.) In a 
 similar case it was held that the day on which the petition was filed must be 
 •excluded. (Dutcher v. Wright, 16 Albany Law Journal, 100; s. c. 94 U. S. 553.) 
 When Sunday or a holiday is one of the intervening days, it is to be counted. 
 (/« re York v. Hoover, 4 B. R. 479.) The filing of a petition which will establish 
 the date from which is to be determined the validity of liens and preferential 
 transfers, which are in some cases voidable under this act, must be the filing of a 
 petition which alleges the necessary jurisdictional facts. If no adjudication 
 can be made on it, it will not mark the date from which time is to be measured. 
 (/» re Rogers, 10 B. R. 444.) A petition is filed at the time when presented to 
 the clerk for action by the court, not at the time when the clerk presents it to 
 the judge to obtain a subpoena or a show cause order thereon. 
 
 Cross-reference. — Compare notes to section 60, paragraph on When Do 
 the Four Months Expire. 
 
 Sec 32. Transfer of Gases. — a In the event petitions are 
 iiled against the same person, or against different members of a 
 partnership, in different courts of bankruptcy each of which has 
 jurisdiction, the cases shall be transferred, by order of the courts 
 relinquishing jurisdiction, to and be consolidated by the one of 
 such courts which can proceed with the same for the greatest 
 convenience of parties in interest. 
 
 Analogous Provisions of Former Acts. — 
 
 As to transfers in cases of two petitions being filed against one partnership: 
 Rule XVI. of Orders in Bankruptcy, under the act of 1867. 
 
 Where May the Petition be Filed. — The petition may be filed at the 
 option of the petitioner in any one of three districts, viz., the districts in which 
 
COURTS AND PROCEDURE THEREIN, 235 
 
 § 31.] Where May the Petition be Filed. 
 
 the bankrupt for the greater portion of the six months previous to the filing of 
 the petition has resided, or has his domicile or has had his principal place of 
 business. In the case of nonresident aliens having no principal place of busi- 
 ness in the United States, or in the case of persons who have been adjudged 
 bankrupt by courts of competent jurisdiction without the United States, it may 
 be in any district in which they have property. (Section 2 [i].) Jurisdiction over 
 one partner gives the court a right to adjudge all the members of the firm bank- 
 rupts section 5 {c); but does not give it jurisdiction to adjudge each member of 
 the firm individually a bankrupt, unless it has jurisdiction over him personally. 
 
CHAPTER V. 
 
 OFFICERS, THEIR DUTIES AND COMPENSATION. 
 
 Sec. 33. Creation of Two Officers. — a The offices of referee 
 and trustee are hereby created. 
 
 Analogous Provisions of Former Acts. — 
 
 Compare " Analogous Provisions of Former Acts " given under sections 34. 
 to 49, both inclusive. 
 
 Under the FormeF Aet. — Duties corresponding to those by this statute 
 imposed upon the referee and the trustee, were under the former act imposed 
 upon officers known respectively as register, and assignee. 
 
 Sec. 34. Appointment, BemoTal, and Districts of Referees. 
 
 — a Courts of bankruptcy shall, within the territorial limits of 
 which they respectively have jurisdiction, (i) appoint referees, 
 each for a term of two years, and may, in their discretion, remove 
 them because their services are not needed or for other cause; 
 and (2) designate, and from time to time change, the limits of 
 the districts of referees, so that each county, where the services 
 of a referee are needed, may constitute at least one district. 
 
 Analogous Provisions of Former Acts. — 
 
 As to appointment: R. S., section 4993; act of 1867, section 3; act of 1841, 
 section 5; act of 1800, section 2. As to removal: R. S., section 4997; act of 
 1867, section 5. 
 
 Appointment. — The law clearly intends that there shall be at least one 
 referee for each county, more if necessary. The fixing of definite limits for the 
 districts of referees would seem to be absolutely necessary; otherwise serious 
 jurisdictional questions may arise, inasmuch as the act provides that the referee 
 
 [236] 
 
OFFICERS,\ THEIR DUTIES AND COMPENSATION. 237 
 
 §§ 35. 36] Qualifications of Referees — Oath of Office. 
 
 must reside or have an office in the territorial district for which appointed. 
 (Section 35.) Further, numerous provisions of the statute provide that various 
 matters may be referred to " the " referee. These provisions make it very 
 doubtful whether more than one referee should be appointed for any single 
 referee district. Compare section 18 (/) and (g.) 
 
 Sec. 35. Qualifications of Referees. — a Individuals shall not 
 be eligible to appointment as referees unless they are respectively 
 (i) competent to perform the duties of that office; (2) not holding 
 any office of profit or emolument under the laws of the United 
 States or of any State other than commissioners of deeds, justices 
 of the peace, masters in chancery, or notaries public; (3) not 
 related by consanguinity or affinity, within the third degree as 
 determined by the common law, to any of the judges of the 
 courts of bankruptcy or circuit courts of the United States, or 
 of the justices or judges of the appellate courts of the districts 
 wherein they may be appointed ; and (4) residents of, or have 
 their offices in, the territorial districts for which they are to be 
 appointed. 
 
 Analogous Provisions of Former Acts. — 
 
 As to qualifications: R. S., sections 4994 and 4995; act of 1867, section 3. 
 
 Within the Third Degree. — In determining degrees of relationship the rule 
 of the common law, as well as the ci»il law, is to count up from either of the 
 persons related to the common ancestor, and then down to the other person 
 related, reckoning a degree to each person ascending and descending. 
 (Redfield's Surrogate's Practice, 5th ed., p. 669.) In computing, the common 
 ancestor is counted but once, and one of the persons related is excluded and the 
 other included. 
 
 Sec. 36. Oaths of Office of Referees. — a Referees shall take 
 the same oath of office as that prescribed for judges of United 
 States courts. 
 
 Analogous Provisions of Former Acts. — 
 R. S., section 4995, act of 1867, section 3. 
 
238 THE NATIONAL BANKRUPTCY LAW. 
 
 Number of Referees — Jurisdiction. [Ch. V. 
 
 Oath of Offlee. — U. S. Revised Statutes, section 712, provides: " The 
 justices of the Supreme Court, the circuit judges, and the district judges, here- 
 after appointed, shall take the following oath before they proceed to perform the 
 
 duties of their respective offices: ' I, do solemnly swear (or 
 
 affirm) that I will administer justice without respect to persons, and do equal 
 right to the poor and to the rich, and that I will faithfully and impartially dis- 
 charge and perform all the duties incumbent on me as , according to 
 the best of my abilities and understanding, agreeably to the Constitution and 
 laws of the United States: so help me God.' " 
 
 Sec. 37. Namber of Referees. — a Such number of referees 
 shall be appointed as may be necessary to assist in expeditiously 
 transacting the bankruptcy business pending in the various courts 
 of bankruptcy. 
 
 Analogous Provisions of Former Acts. — 
 R. S., section 4993; act of 1867, section 3. 
 
 How Many in a District. — As to whether the court should appoint more 
 than one referee for a single referee district, compare section 34. 
 
 Sec. 38. Jurisdiction of Referees. — a Referees respectively 
 are hereby invested, subject always to a review by the judge, 
 within the limits of their districts as established from time to 
 time, with jurisdiction to (i) consider all petitions referred to 
 them by the clerks and make the adjudications or dismiss the 
 petitions ; (2) exercise the powers vested in courts of bankruptcy 
 for the administering of oaths to and the examination of persons 
 as witnesses and for requiring the production of documents in 
 proceedings before them, except the power of commitment ; (3) 
 exercise the powers of the judge for the taking possession and 
 releasing of the property of the bankrupt in the event of the 
 issuance by the clerk of a certificate showing the absence of a 
 judge from the judicial district, or the division of the district, or 
 his sickness, or inability to act ; (4) perform such part of the 
 duties, except as to questions arising out of the applications of 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 239 
 
 § 38.] Jurisdiction — Contested Matters. 
 
 bankrupts for compositioivs or discharges, as are by this act con- 
 ferred on courts of bankruptcy and as shall be prescribed by rules 
 or orders of the courts of bankruptcy of their respective districts, 
 except as herein otherwise provided ; and (5) upon the applica- 
 tion of the trustee during the examination of the bankrupts, or 
 other proceedings, authorize the employment of stenographers at 
 the expense of the estates at a compensation not to exceed ten 
 cents per folio for reporting and transcribing the proceedings. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., section 4998; act of 1867, section 4; also R. S., sections 5009 and 5010; 
 act of 1867, sections 4 and 6. 
 
 JUFisdlction. — A referee is a subordinate judicial officer, appointed for a 
 definite term, but subject to removal for cause. All his acts are subject to 
 review by the judge. Whether he has any jurisdiction over a case until there 
 has been an order of reference to him pursuant to section 22, except in those 
 cases where the statute expressly authorizes him to act in the absence of the 
 judge, is doubtful. Certainly section 22 clearly implies that the court may 
 divest him of all right to act in certain matters and may refer them to some other 
 referee. Although all his acts are subject to review by the court, in all cases 
 where the statute does not give to the judge alone jurisdiction to make an 
 order, an order of the referee cannot be collaterally assailed merely because it 
 does not show that it was approved bv the court. (Geisreiter v. Sevier, 33 
 Ark. 522.) 
 
 Contested Matters. — Although in general the territorial jurisdiction of 
 referees under the present act is less extensive than that of registers under the 
 former act, as to subject-matter their jurisdiction greatly exceeds that of the 
 former register, for a referee may hear and determine contested matters (with 
 certain exceptions), while the registers, when issues of fact or of law arose 
 before them, were compelled to certify them to the court for determination. In 
 considering the authority, jurisdiction, powers and duties of a referee it must 
 be borne in mind that wherever in the bankruptcy act the word " court" is 
 used, the word means the court of bankruptcy in which the proceedings are 
 pending, and may include the referee. (Section i [7].) Subject to review by the 
 judge, the referee has jurisdiction to consider all petitions referred to him by 
 
240 THE NATIONAL BANKRUPTCY LAW. 
 
 Duties of Referee. [Ch. V. 
 
 the clerk, and to make adjudication or dismiss the petition. And it is the duty 
 ■of the court to consider, and to confirm, or modify or overrule, or return with 
 instructions for further proceedings, any records or findings certified to it by the 
 referee. (Section 2 [lo].) The only petitions in bankruptcy which can be 
 referred to a referee are voluntary petitions and involuntary petitions in cases 
 in which no pleadings have been filed by the bankrupt or by his creditors. 
 (Section i8 [/] and [g].) In no case can he pass upon a petition to adjudge one 
 bankrupt unless the judge is absent from the district at the time the matter is 
 referred. As to referee's jurisdiction to take the examination of witnesses, 
 compare section 21 (a) , (i), and (c). As to the taking of possession of the bank- 
 rupt's property, compare section 69. The powers and duties of a referee may 
 be restricted by rules or orders of the courts of bankruptcy prescribed for the 
 district. Except for these restrictions upon his jurisdiction, and the statutory 
 restrictions set forth in this section he may, in general, perform all the duties 
 conferred on courts of bankruptcy. His authority to pass upon issues of fact 
 arising in the proceedings is clear. (Section 39 [a], 5.) 
 
 Place of Refepence- — The statute contains no express provision as to the 
 place where the referees shall act upon the matters arising in the several cases 
 referred to them. Doubtless rules as to their conduct will be prescribed by the 
 Supreme Court of the United States, pursuant to the authority conferred upon 
 that court by section 30, and special rules will also be prescribed by the courts 
 of bankruptcy of the respective districts, in accordance with section 38 (4). The 
 court may undoubtedly fix the place where the referee shall sit, or direct him to 
 attend anywhere within the referee's district throughout which he has jurisdic- 
 tion. 
 
 Sec. 39. Duties of Referees. — a Referees shall (i) declare 
 dividends and prepare and deliver to trustees dividend sheets 
 showing the dividends declared and to whom payable ; (2) ex- 
 amine all schedules of property and lists of creditors filed by 
 bankrupts and cause such as are incomplete or defective to be 
 amended ; (3) furnish such information concerning the estates in 
 process of administration before them as may be requested by 
 the parties in interest ; (4) give notices to creditors as herein pro- 
 vided ; (5) make up records embodying the evidence, or the sub- 
 stance thereof, as agreed upon by the parties in all contested 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 24I 
 
 ^ 39-J Duties, Administrative and Judicial- 
 
 matters arising before them, whenever requested to do so by 
 either of the parties thereto, together with their findings therein, 
 and transmit them to the judges; (6) prepare and file the sched- 
 ules of property and lists of creditors requii-ed to be filed by the 
 bankrupts, or cause the same to be done, when the bankrupts 
 fail, refuse, or neglect to do so; (7) safely keep, perfect, and 
 transmit to the clerks the records, herein requireil to be kept by 
 them, when the cases are concluded; (8) transmit to the clerks 
 such papers as may be on file before them whenever the same are 
 needed in any proceedings in courts, and in like manner secure 
 the return of such papers after they have been used, or, if it be 
 impracticable to transmit the original papers, transmit certified 
 copies thereof by mail; (9) upon application of any party in 
 interest, preserve the evidence taken or the substance thereof as 
 agreed upon by the parties before them when a stenographer is 
 not in attendance; and (10) whenever their respective offices iare 
 in the same cities or towns where the courts of bankruptcy con- 
 vene, call upon and receive from the clerks all papers filed in 
 courts of bankruptcy which have been referred to them. 
 
 b Referees shall not (i) act in cases in which they are directly 
 or indirectly interested ; (2) practice as attorneys and counselors 
 at law in any bankruptcy proceedings; or (3) purchase, directly 
 or indirectly, any property of an estate in bankruptcy. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., sections 4998, 5000 and 5001; act of 1867, sections 4 and 5. 
 
 Duties, Administrative and Judicial. — Althouf^h the duties of referees 
 largely pertain to routine matteirs, and although every act of his is subject to a 
 review by the judge, his duties are judicial as well as administrative. In so 
 far as his duties are administrative he may, of course, employ assistants or 
 servants; but he cannot delegate to another the performance of any duty which 
 is judicial, and in this last class all duties are to be included which require the 
 exercise of discretion. Even when the questions before him are not of a legal 
 character, they are referred to him personally, and as he is chosen because of 
 his personal competency and fitness, he cannot delegate to another the perforin- 
 ance of such duties. Thus it has been held that he must personalty examine 
 
 NAT. BANKRUPTCY LAW — l6 
 
242 THE NATIONAL BANKRUPTCY LAW. 
 
 Care of Property — Restrictions — Examination of Schedules. [Ch. V. 
 
 the schedules of property and list of creditors, and cannot leave such work to 
 be done by his clerk or assistant. He should always maintain a, strict judicial 
 impartiality. He is required to preside over the first meeting of creditors, if 
 the judge does not preside. At such meeting the trustee is chosen. The 
 referee should not in any way influence or endeavor to influence, or even present 
 the semblance of attempting to influence the choice of the trustee. (In re J. O. 
 Smith, I B. R. 243.) 
 
 Care of Property. — The present statute contains no provision authorizing 
 or requiring a referee to accept the surrender of the property of a bankrupt after 
 adjudication, a power conferred upon the register under the old practice. It 
 seems to be contemplated now that the bankrupt is to retain the custody and 
 control of the property until the trustee takes possession. The court of bank- 
 ruptcy may. if it is absolutely necessary, appoint a receiver or marshal to take 
 charge of it until the trustee is qualified. (Section 2 [3].) Whatever duties the 
 referee may now have concerning it, would seem to be judicial in their char- 
 acter. 
 
 Restrictions. — The provisions of the statute forbidding the referee from act- 
 ing in any case in which he is directly or indirectly interested, and from prac- 
 ticing as attorney and counselor at law in any bankruptcy proceeding whatever, 
 restrict him in this respect more than the former act restricted the register. 
 A violation of either of the matters mentioned in b (i) or (3), is an offense under 
 section 29. 
 
 Examination of Schedules. — This section not only authorizes but requires 
 a referee to order an amendment of schedules when the same are defective, 
 whether or not the bankrupt or any creditor makes application for an amend- 
 ment. Although the bankrupt is required to file these schedules with his peti- 
 tion, the schedules are not a part of the petition, and the fact that they are 
 defective is no reason for postponing an adjudication of bankruptcy. (In re 
 Patterson, i Ben. 517; s. c. I B. R. 125.) Compare section 7 (8). Although the 
 referee is required to prepare and file the schedules, in case a bankrupt does 
 not do so, this provision does not necessitate that he should do so until all pro- 
 ceedings have been taken to compel the bankrupt to file them. If the latter 
 neglects to file them within the time mentioned in section 7 (8), the court may 
 direct them to be filed, and may punish the bankrupt for contempt if he there- 
 after fails to obey the order. It is the referee's duty to prepare them only 
 where the order above mentioned cannot be enforced. 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 243 
 
 § 40.] Compensation of Referees. 
 
 Cross-references. — As to the furnishing of information, concerning the 
 estate, to all parties in interest, compare section 291: (3); also section 49; also 
 section 47 (5). As to notices, compare section 58 <.. As to records, compare 
 section 42. As to findings and their confirmation or modification by the court, 
 compare section 2 (10). As to the transmission of papers, compare section 
 51 a (3). As to the employment of a stenographer, compare section 38 a (5). It 
 would seem that a stenographer could not be employed except at the request of 
 the trustee, or upon the order of the judge himself. 
 
 Sec. 40. Compensation of Referees. — a Referees shall receive 
 as full compensation for their services, payable after they are 
 rendered, a fee of ten dollars deposited with the clerk at the time 
 the petition is filed in each case, except when a fee is not required 
 from a voluntary bankrupt, and from estates which have been 
 administered before them one per centum commissions on sums 
 to be paid as dividends and commissions, or one-half of one per 
 centum on the amount to be paid to creditors upon the confirma- 
 tion of a composition. 
 
 b Whenever a case is transferred from one referee to another 
 the judge shall determine the proportion in which the fee and 
 commissions therefor shall be divided between the referees. 
 
 c In the event of the reference of a case being revoked before 
 it is concluded, and when the case is specially referred, the judge 
 shall determine what part of the fee and commissions shall be paid 
 to the referee. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S. sections 5008 and 5125; act of 1867, sections 4 and 5. 
 
 On Dividends and Commissions. — The basis of commissions is not receipts 
 and disbursements, but the sum left for distribution as dividends and as com- 
 missions. The commissions and the fee are not payable to the referee until the 
 estate is closed; that is, not until he has sent all the records to the clerk. (Com- 
 pare sections 51 [4] and 39 [7].) The purpose of these provisions, according to 
 the report of the judiciary committee of the House, is to induce officers to expe- 
 dite the administration of estates in their charge and to keep down expenses. 
 As to cases in which a voluntary bankrupt is excused from paying a fee com- 
 pare section 51 [2]. 
 
244 THE NATIONAL BANKRUPTCY LAW. 
 
 Contempts before Referees. [Ch. V. 
 
 Sec. 41. Contempts before Referees. — a A person shall not, 
 in proceedings before a referee, (i) disobey or resist any lawful 
 order, process or writ ; (2) misbehave during a hearing or so near 
 the place thereof as to obstruct the same ; (3) neglect to produce, 
 after having been ordered to do so, any pertinent document ; or 
 (4) refuse to appear after having been subpoenaed, or, upon 
 appearing, refuse to take the oath as a witness, or, after having 
 taken the oath, refuse to be examined according to law • Provided, 
 That no jJerson shall be required to attend as a witness before a 
 referee at a place outside of the State of his residence, and more 
 than one hundred miles from such place of residence, and only in 
 case his lawful mileage and fee for one day's attendance shall be 
 first paid or tendered to him. 
 
 b The referee shall certify the facts to the judge, if any person 
 shall do any of the things forbidden in this section. The judge 
 shall thereupon, in a summary manner, hear the evidence as to 
 the acts complained of, and, if it is such as to warrant him in so 
 doing, punish such person in the same manner and to the same 
 extent as for a contempt committed before the court of bank- 
 ruptcy, or commit such person upon the same conditions as if the 
 doing of the forbidden act had occurred with reference to the 
 process of, or in the presence of, the court. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., sections 5002, 5005 and 5006; act of 1867, sections 5 and 7; act of 1800, 
 sections 14 and 15; also R. S., section 4999; act of 18^7, section 4. 
 
 Disobedience to Subpcana. — To justify a person who is properly sub- 
 poenaed and to whom has been paid the required mileage and fees, in refusing 
 to attend, it would seem from this section that he must show that he not only 
 lives outside of the State, but more than one hundred miles from the place 
 where he is required to attend. (Compare, however, U. S. R. S., section 876.) 
 The fact that he lives in a different judicial district will not excuse him. A 
 referee's subpoena reaches beyond the limits of the judicial district. In this 
 respect it differs from other process. The referee to whom a case is referred 
 has all the powers of the court which appoints him for the purpose of summon. 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 245 
 
 § 42.] Records of Referees. 
 
 ing and examining witnesses, except the power of commitment. (/« re W. S. 
 Woodward, 10 Pac. L. R. 214; s. t., 8 Ben. 112; 3. c. 12 B. R. 297.) 
 
 Contempt Proceedings. — Although a register (like a referee) could not 
 punish for contempt, yet in the case of Speyer (6 B. R. 255), arising under the 
 act of 1867, where a party moved the court before the judge for an order to 
 punish a bankrupt for contempt for disobeying an order of the register, the 
 court referred the matter back to the register to take such testimony as the 
 bankrupt might offer in order to purge himself of the contempt. 
 
 Witness Fees. — U. S. Revised Statutes, section 848, provides: " For each 
 day's attendance in court, or before any officer pursuant to law, one dollar and 
 fifty cents, and five cents a mile for going from his place of residence to the 
 place of trial or hearing, and five cents a mile for returning. When a witness is 
 subpoenaed in more than one cause between the same parties, at the same 
 court, only one travel fee and one per diem, compensation shall be allowed for 
 attendance. Both shall be taxed in the case first disposed of, after which the 
 per diem attendance fee alone shall be taxed in the other cases in the order in 
 which they are disposed of. When a witness is detained in prison for want of 
 security for his appearance, he shall be entitled, in addition to his subsistence, 
 to a compensation of one dollar a day." U. S. Revised Statutes, section 849, 
 provide: " No officer of the United States courts, in any State or Territory, or in 
 the District of Columbia, shall be entitled to witness fees for attending before 
 any court or commissioner where he is officiating." 
 
 Sec. 42. Records of Referees. — a The records of all proceed- 
 ings in each case before a referee shall be kept as nearly as may- 
 be in the same manner as records are now kept in equity cases in 
 circuit courts of the United States. 
 
 b A record of the proceedings in each case shall be kept in a 
 separate book or books, and shall, together with the papers on 
 file, constitute the records of the case. 
 
 c The book or books containing a record of the proceedings 
 shall, when the case is concluded before the referee, be certified 
 to by him, and, together with such papers as are on file before 
 him, be transmitted to the court of bankruptcy and shall there 
 remain as a part of the records of the court. 
 
246 THE NATIONAL BANKRUPTCY LAW. 
 
 Referee's Absence or Disability — Appointment of Trustees. [Ch. V. 
 
 Analogous Provisisions of Former Acts. — 
 R. S., section 5000; act of 1867, section 4. 
 
 Records as Evidence. — As to a certified copy of any of the records being- 
 admissible in evidence, compare section 21 (</). 
 
 Sec. 43. Referee's Absence or Disability. — a Whenever the 
 office of a referee is vacant, or its occupant is absent or disqualified 
 to act, the judge may act, or may appoint another referee, or 
 another referee holding an appointment under the same court 
 may, by order of the judge, temporarily fill the vacancy. 
 
 Analogous Provisions of Former Acts. — 
 R. S., section 5007; act of 1867, section 4. 
 
 Transfer of Cases for Cause. — As to the power of the judge to transfer a 
 case from one referee to another for convenience of parties or for cause, see sec- 
 lion 22 b. 
 
 Sec. 44. Appointment of Trustees. — a The creditors of a 
 bankrupt estate shall, at their first meeting after the adjudication 
 or after a vacancy has occurred in the office of trustee, or after an 
 estate has been reopened, or after a composition has been set 
 aside or a discharge revoked, or if there is a vacancy in the office 
 of trustee, appoint one trustee or three trustees of such estate. 
 If the creditors do not appoint a trustee or trustees as herein 
 provided, the court shall do so. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., section 5034; act of 1867. section 13. As to appointment of an assignee 
 to fill a vacancy: R. S., section 5041; act of 1867, section 18. 
 
 The Right Of Appointment. -This section seems to give to creditors an 
 absolute right to appoint a trustee. There is no express provision, as in the 
 former act, requiring the approval of the judge. That it was the intention of 
 the legislature not to require such approval, compare the extract from the 
 speech of the chairman of the judiciary committee of the House, quoted under 
 section 2 (17). Whether that subdivision of that section (which, by the way did 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 247 
 
 § 44. Number to be Chosen. 
 
 not appear in the House bill until after it came out of the conference committee) 
 was intended to modify section 44, is doubtful. In case the power of approval 
 should be claimed, then it is to be borne in mind that this power is a judicial 
 discretion, and the choice of the creditors is not to be disapproved, unless there 
 is some evidence that the person chosen by the creditors is incompetent or is 
 unfit by reason of his character or his relation to the parties. Even under the 
 former act which required the approval of the court, it was held that an assignee 
 chosen by the creditors must be approved by the court and was entitled by 
 virtue of law to the position unless the objections just mentioned were urged 
 against him. (/» re Barrett, 2 B. R. 533; in re Grant, 2 B. R. 106.) Whether 
 or not the judge is required to pass upon the appointment made by the credit- 
 ors, he undoubtedly may set aside any person chosen by them if there has been 
 fraud or improper influence in the election. An offer to pay the claim of a cred; 
 itor in full, in order to procure his vote, was held under the former act to be a 
 sufficient reason for refusing to approve. {In re Haas & Sampson, 8 B. R. 189.) 
 Great-weight will be given by the court to the creditors' expression of a choice, 
 and when objection is made to one who has been chosen by them, the burden 
 of proof lies upon the objector, but reasonable cause of suspicion of the integrity 
 or competency of the person chosen has been held sufficient to justify the court 
 in disapproving. (In r^Clairmont, I Lowell 230; s. c. i B. R. 276.) The court 
 has no right under the present statute, as under the former one to appoint a 
 trustee additional to the one elected by the creditors; and when the trustee has 
 once been chosen by the creditors, the latter have no authority by vote to remove 
 him, in this latter respect the act also differing from the former act. Trustees 
 of bankrupt partnerships are to be chosen by the partnership creditors, creditors 
 of the individual members of the firm having no vote, even though it should 
 happen that there are no firm assets. (Section 5(*); in re Phelps, Caldwell & 
 Co., I B. R. 525.) 
 
 Number to be Chosen. — The act authorizes creditors to choose one or three 
 trustees. There is no authority given them to choose two or more than three. 
 The act evidently contemplates that such a number shall be chosen as will pre- 
 vent any possible deadlock. If three are chosen, the assent of at least two of 
 them is necessary to the validity of any act concerning the administration of 
 the estate. (Section 47 [*].) Whether when one of three trustees has died, it 
 may be said that a vacancy has occurred which should be filled, quare. Section 
 46 authorizes the survivor to continue the prosecution or defense of any pending 
 action and would seem to imply that the vacancy need not be filled. 
 
248 THE NATIONAL BANKRUPTCY LAW. 
 
 Qualification of Trustees — Death or Removal. [Ch. V. 
 
 CFOSS-refereneeS. — As to time and manner of election, as to all proceedings 
 at the first meeting of creditors, as to the number necessary to constitute a 
 quorum and as to adjournments of the meeting, compare section 55. As to 
 voters and their qualifications, as to the mode of voting and the right of credit- 
 ors to appear ty proxy or by agents or attorneys in fact, compare section 56. 
 
 Sec. 45. Qualifications of Trustees. — a Trustees may be (i) 
 individuals who are respectively competent to perform the duties 
 of that office, and reside or have an office in the judicial district 
 within which they are appointed, or (2) corporations authorized 
 by their charters or by law to act in such capacity and having an 
 office in the judicial district within which they are appointed. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., section 5035; act of 1867, section 18. 
 
 Who May Be TFUStee. — The present act, in making one eligible to election 
 as trustee, even although he does not reside within the judicial district in which 
 he is appointed, provided he has an office therein, differs from the former law. 
 There are no express statutory restrictions as to who may be trustee, other than 
 those herein given. Any person of sufficient capacity and residing in or having 
 an office in the judicial district may be chosen. A creditor may be appointed, 
 but when he has received a preference which is or might be voidable, he should 
 not be chosen as his duties as trustee are incompatible with his interests as 
 preferred creditor. And the director of a corporation which has received a 
 preference should not be chosen. (In re Powejl, 2 B. R. 45.) An attorney for 
 a creditor may be chosen. (/« re Barrett, 2 B. R. 533.) An attorney of the 
 bankrupt may be chosen, but in that case he cannot be permitted to continue to 
 act as attorney for the bankrupt; his duties in the two positions might become 
 inconsistent. (In re Clairmont, i Lowell, 230; s. u. i B. R. 276.) 
 
 Sec. 46. Death or Bemoval of Trustees. — a The death or 
 removal of a trustee shall not abate any suit or proceeding which 
 he is prosecuting or defending at the time of his death or removal, 
 but the same may be proceeded with or defended by his joint 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 24^ 
 
 § 46.] Death of One of Three Trustees — Removal of Trustees. 
 
 trustee or successor in the same manner as though the same had 
 been commenced or was being defended by such joint trustee 
 alone or by such successor. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., section 5042; act of 1867, section 18. As to removal of the assignee by 
 the court: R. S., section 5036; act of 1867, section 13; also R. S., section 5039; 
 act of 1867, section 18. As to removal of assignee by vote of the creditors in 
 meeting assembled: R. S., section 5039; act of 1867, section 18. 
 
 Death of One of Three Trustees. — Compare sections 44 and section 47 (*) as 
 to whether the death or removal of one of three trustees creates a vacancy which 
 must be filled. 
 
 Removal of Trustees. — The power to remove a trustee is given by section 
 2 (17), which provides that the courts may, " upon complaints of creditors, 
 remove trustees for cause, upon hearings and after notices to them." The mat- 
 ter is left to the discretion of the judge; his action cannot be reviewed and 
 reversed by the Circuit Court. (/« r^ Adler Brothers, 2 Woods, 571; compare 
 in re Perkins, s Biss. 254; s. c. 8 B. R. 56.) So in England it has been held 
 that the exercise of this discretion will not be interfered with upon appeal, 
 unless it is perfectly clear that there has been an abuse of discretion {Ex p. 
 Bates, 21 L. J. Bank, 20; 16 Jurist, 459); but the discretion is a judicial discre- 
 tion, to be exercised only when there is sufficient cause. (In re Mallory, 4 B. 
 R. 153.) It must be shown that the removal is expedient or "lecessary. The 
 statute does not say that a bankrupt may ask for the removal of his trustee. 
 There is little possibility of there being any surplus in such proceedings, and 
 he can have little interest in the matter; yet in England his petition for the 
 removal of the assignee will be entertained (Ex p. Baker, 2 Mont. D. & D. 60); 
 and there would seem to be no reason under our statute why he should not 
 have a similar right. It was expressly held under the act of 1867 that he had 
 this right. (In re McGlynn, 2 Low. 127.) Creditors may ask for the removal, but 
 even if objections in reality exist, they must bring them to the attention of the 
 court within a reasonable time. If they have knowledge of any objections, either 
 to the fitness or eligibility of the assignee, and do not within a reasonable time 
 bring them to the attention of the court they will be estopped from urging the 
 objections afterwards. (Ex p. Nash, i Mont. 50.) The court may remove an 
 assignee or trustee if there has been fraud in his election (Exp. Morse, n Jur. 
 
250 THE NATIONAL BANKRUPTCY LAW. 
 
 Removal of Trustees. [Ch. V. 
 
 482; Ex p. Carter, 3 D. & J. 116); or if the bankrupt has improperly attempted 
 to influence the election. (Ex p. Shaw, i G. & J. 154.) Compare in re Bliss, i 
 B. R. 78; s. c. I Ben. 407, in which the court refused to approve an election of 
 an assignee because of such improper influence. In England it has further 
 been held that where a large number of creditors have been excluded from vot 
 ing by reason of improper rejection of their claims, so that the election 
 expressed the wishes of only a small portion of the creditors, then the court may 
 remove the assignee (£'x/. Edwards, Buch. 411); and in that country it has also 
 been held that the trustee may be removed, if by reason of an unavoidable acci- 
 dent a large portion of the creditors have been deprived of their right to vote. 
 {Ex p. De Chapeaurouge, M. & Mac. 174.) The last three cases mentioned 
 would certainly be authorities for refusing to approve a choice made under such 
 circumstances, if the approval of the court was required. The trustee may, of 
 course, be removed, if he has been guilty of any misconduct in the discharge 
 of his duties, or any breach of trust. Neglect of duty is misconduct. If he is 
 not diligent in collecting the assets and disposing of the property, he is liable 
 to be removed. {In re Morse, 7 B. R. 56.) A refusal to furnish information 
 concerning the estate, when a reasonable request is made, will be grounds 
 for removal. (Perkins, 5 Biss. 254; s. c. 8 B. R. 56; see section 47 (5) for 
 abstract of this case.) Courts will also remove a trustee if his interests are 
 adverse to those of the great body of creditors; for instance, if he has received 
 a preference which by any possibility might be declared void {Ex p. Oakes, 2 
 Mont. D. & D. 60; compare in re Powell, 2 B. R. 45); also, if the trustee is an 
 accounting party to the estate, as where he is a receiver of the same estate 
 appointed prior thereto by another tribunal. {In re Stuyvesant Bank, 6 B R. 
 272; Exp. Lacey, 6 Ves. 625.) It is not likely that a court will remove a trustee 
 because of his poverty and the insuflSciency of his estate to answer in damages 
 for any breach of his trust. In England subsequent insolvency or bankruptcy 
 of the assignee has been held a ground for removal {Ex p. Copeland, i Mont. & 
 Ayr, 306; Exp. Bowsar, i Mont. D. & D. 194); but even under those circum- 
 stances it would hardly seem necessary for the interests of creditors that the 
 trustee under our present bankruptcy law be removed, because the estate 
 ordinarily should be amply protected by the bond which the trustee is required 
 to give. The trustee is in duty bound to use due diligence and must possess 
 competency, but he is not chargeable for mere errors of judgment, unless those 
 errors manifest a want of such competency as a person accepting the position of 
 trustee may be considered as holding himself out as possessing. (Compare in 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 25 1 
 
 ij 46.] Resignation — Removal by Vote of Creditors. 
 
 re Sacchi, 6 B. R. 497; s. t. 43 How. P. 250; s. c. 6 B. R. 398.) Although resi- 
 dence within the district is no longer required, provided the trustee has an office 
 therein, there is no doubt that if the trustee removes both his residence and 
 office from the district and remains absent therefrom so that the court could not 
 acquire jurisdiction over his person, the court would order his removal. {Ex p. 
 Gray, 13 Ves. 274.) The trustee is given his office not for his own profit, but to 
 care for the interests of the creditors. Whenever his interests are adverse to 
 theirs he will be removed. (Ex p. Holland, 2 M. D. & D. 469; in re Powell, 2 B. 
 R. 45 ; Ex p. Sartees, 12 Ves. 10.) And the court will sometimes remove a 
 trustee not for any fault of his own, but because there is an irreconcilable dis- 
 agreement between the trustee and a large portion of the creditors; or where 
 there is a disagreement between the trustees themselves, so that they cannot act 
 for the best interests of the estate. (/» re Mallory, 4 B. R. 153),' but the court 
 in such cases should exercise its discretion and need not remove the trustee, 
 even though a large portion of the creditors request his removal. (In re 
 Dewey, 4 B. R. 412; s. c. i Lowell, 493.) It has been held that the trustee 
 is justified in attempting to disprove the charges made against him, and 
 that in doing so he acts as an officer of the court and in his capacity as 
 trustee, and that, if successful, the expenses of his defense may be made a 
 charge upon the estate. In re Mallory, 4 B. R. 153; followed in re Blodget & 
 Sandford, 5 B. R. 472.) On the other hand, being a party within the jurisdiction 
 of the court, if removed for cause, the court may impose costs upon him pursu- 
 ant to the power conferred upon it by section 2 (18). Compare in re Morse, 7 B. 
 R. 56.) 
 
 Resignation. — This statute nowhere gives the trustee the right to resign. 
 After he once accepts the office, he cannot do so without the consent of the 
 court; if he is permitted to resign as a favor to himself, he must pay the costs 
 of the proceedings, but where he is removed by the court for the benefit of the 
 estate without any fault or dereliction of his own, he is entitled to have all his 
 costs and all the expenses which he may have incurred, paid to him out of the 
 estate. (Exp. Watts, i Deac. & Chitt. 22; Exp. James, i Deac. & Chitt. 372.) 
 
 Removal by Vote of Creditors. — The present statute does not give to 
 creditors the right by vote to remove a trustee with the approval of the court- 
 in this respect the statute differs from the former act. 
 
252 THE NATIONAL BANKRUPTCY LAW. 
 
 Duties of Trustees. [Ch. V. 
 
 Sec. 47. Daties of Trustees. — a Trustees shall respectively 
 (i) account for and pay over to the estates under their control all 
 interest received by them upon property of such estate ; (2) col- 
 lect and reduce to money the property of the estates for which 
 they are trustees, under the direction of the court, and close up 
 the estate as expeditiously as is compatible with the best interests 
 of the parties in interest ; (3) deposit all money received by them 
 in one of the designated depositories ; (4) disburse money only 
 by check or draft on the depositories in which it has been 
 deposited ; (5) furnish such information concerning the estates of 
 which they are trustees and their administration as may be 
 requested by parties in interest ; (6) keep regular accounts show- 
 ing all amounts received and from what sources and all amounts 
 expended and on what accounts ; (7) lay before the final meeting 
 of the creditors detailed statements of the administration of the 
 estates ; (8) make final reports and file final accounts with the 
 courts fifteen days before the days fixed for the final meetings of 
 the creditors ; (9) pay dividends within ten days after they are 
 declared by the referees ; (10) report to the courts, in writing, the 
 condition of the estates and the amounts of money on hand, and 
 such other details as may be required by the courts, within the 
 first month after their appointment and every two months there- 
 after, unless otherwise ordered by the courts ; and (i i) set apart 
 the bankrupt's exemptions and report the items and estimated 
 value thereof to the court as soon as practicable after their 
 appointment. 
 
 b Whenever three trustees have been appointed for an estate, 
 the concurrence of at least two of them shall be necessary to the 
 validity o<^ their every act concerning the administration of the 
 estate. 
 
 Analogous Provisions of Former Acts. — 
 
 As to setting apart bankrupt's exemptions: Rule XIX. of Orders in Bank- 
 ruptcy under the act of 1867. As to deposits of money: R. S., section 5059; 
 act of 1867, section 17; act of 1841, section 9; act of 1800, section 54. As to 
 submission of accounts to court, preparatory to the final dividends: R. S. sec- 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 253 
 
 §47.] Interest — Collection of Assets. 
 
 tion 5096; act of 1867, section 28. As to the other duties of trustees, compare 
 *" Analogous Provisions of Former Acts," given under the other sections of this 
 act relating to such duties. As to assignee's duty to account for all interest: 
 R. S., section 5062 B. 
 
 Interest. — ^The requirement that the trustee shall keep account of and pay over 
 ail interest received by him, doubtless has reference to temporary investments 
 of funds in his hands made pursuant to the order of the court. Although the 
 present act contains no express provision authorizing, in any case, such tem- 
 porary investment, but does, on the other hand, require that the trustee shall 
 deposit the money in one of the designated depositories, yet, whenever by 
 reason of litigation or other cause, the distribution of the estate will be delayed, 
 it is the duty of the trustee to bring the matter before the attention of the court 
 and procure an order authorizing him to temporarily invest or at least to deposit 
 upon interest. Such was the express provision of the former statute. Failure 
 of the trustee to deposit with reasonable promptness will be a cause for removal 
 and will further subject him to the payment of such interest as would have 
 been secured. Lilce all trustees, if he uses the money in his own business, he 
 will be liable for interest at the legal rate ; or in excess of that, if he has made 
 a greater profit from it. 
 
 Collection of Assets. — AH the property of the bankrupt which is of an 
 assignable nature (except exempt property) vests, by virtue of the adjudication, 
 in the trustee; this includes all rights of action other than those which die with 
 the person, such as claims for damages in tort for purely personal injuries. 
 Whenever a cause of action would pass to an executor it passes to the trustee. 
 Thus he may sue and recover for trespass to the property of the bankrupt, even 
 although the offense occurred before the adjudication (Selling v. Gunderman, 35 
 Tex. 345); or for the negligence of any person affecting the property rights of the 
 bankrupt, as where the negligence consisted in the failure of a sheriff to return 
 an execution within the statutory time, and notwithstanding the execution was 
 issued in the name of the bankrupt and not of the trustee. (Gary v. Bates, 
 12 Ala. 544.) 
 
 Further, the trustee acquires certain rights which the bankrupt does not have. 
 Thus, as the representative of creditors, he may sue to set aside transfers and 
 conveyances and incumbrances made in fraud of creditors, except as to pur- 
 chasers in good faith and for a present fair consideration ; and by section 67 (e) 
 all property so conveyed by the bankrupt in fraud of his creditors becomes, by 
 virtue of the adjudication, a part of the assets of the bankrupt and passes to the 
 
254 THE NATIONAL BANKRUPTCY LAW. 
 
 Legal Remedies — When Should He Sue. [Ch. V. 
 
 trustee, whose duty it is to recover and reclaim the same by legal proceedings 
 or otherwise for the benefit of the creditors. So all levies, judgments, or other 
 liens obtained in violation of the bankruptcy act as specified in section 67 (/), 
 are invalidated by an adjudication in bankruptcy and the property affected by 
 them passes to the trustee free and clear from the liens. Subject to the excep- 
 tions just mentioned, in which the trustee as the representative of creditors has 
 rights of property in addition to those of the bankrupt, he acquires no better 
 title than that person had at the time of the adjudication. If he acquires title 
 pendente lite, the trustee stands in the same position as any other purchaser 
 pendente lite . He is affected by the judgment which may be recovered, whether 
 or not notice is given to him. (Johnson v. Bishop, 8 B. R. 533; Eysterw. Gaff, 
 13 B. R. 546; s. c. 2 Col. 28; s. c. 91 U. S. 521.) The trustee, except in the 
 cases of the fraudulent transfers above mentioned, will be estopped, if the bank- 
 rupt would be estopped. (In re Rockford, R. I. & St. L. R. Co., i Low. 345.) 
 Compare section 70 as to the property, title to which is vested in the trustee. 
 The trustee must use due diligence in collecting and disposing of the property 
 of the bankrupt and in distributing its proceeds among the creditors. If he is 
 guilty of gross negligence of duty he may be removed (In re Morse, 7 B. R. 56), 
 and he will be personally chargeable with any loss which the estate suffers by 
 his negligence. 
 
 Legal Remedies. — If the trustee cannot collect the assets by demand he 
 may institute legal proceedings therefor or may avail himself of any remedy 
 given him by the statute. Thus, he may, with the approval of the court, com- 
 promise (section 27) or submit to arbitration (section 26). He may institute new 
 suits when necessary, and may continue the prosecution or defense of pending 
 actions. (Compare section 11.) 
 
 When Should He Sue. — The trustee should neither institute an original suit 
 nor continue a pending one unless in his judgment it is for the interests of the 
 estate, or unless he has been ordered by the court so to do. He is in the first 
 instance the judge of the wisdom of pursuing remedies in this manner. If the 
 cause of action be one not worth the expense of litigation, it is his duty to 
 abandon it. (Mutual Bldg. Fund v. Boussieux, 4 Hughes, 387; Traders' Bank 
 V. Campbell, 14 Wall. 87.) The trustee need not sue if he has not money on 
 hand sufficient to meet all the expenses of the suit. (Reade v. Waterhouse, 52 
 N. Y. 587; s. c. 10 B. R. 277; s. c. 12 Abb. Pr. [N. S.] 255.) He is never 
 obliged to sue unless the property to be recovered would be assets of the estate. 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 255 
 
 § 47-] How and Where He Should Sue. 
 
 Thus, it has been held it is not his duty to institute a suit upon the individual 
 liability of the stockholders of the bankrupt corporation of which he is the 
 trustee. The liability of the stockholders is to the creditors, not to the bank. 
 (Dutcher v. Bank, 12 Blatch. 435; s. c. ii B. R. 457; distinguishing Sawyer v. 
 Hoag, 9 B. R. 145; s. c. 17 Wall. 610; s. c. below, 3 Biss. 293.) 
 
 How Should He Sue. — The trustee should always sue in his own name. 
 He has the legal title to the property owned by the bankrupt; the latter, it has 
 been held, has not even an equitable interest therein. In Dambmann &. White, 
 12 B. R. 438; s. c. 48 Cal. 439. it was said: " In suits by or against executors or 
 administrators, their representative character must be averred in pleading, for 
 their right to sue and be sued results by operation of law from the relation 
 which they occupy toward the estate; and this relation must be averred, and 
 proved if denied. But in proceedings in bankruptcy the legal title vests in the 
 assignee under the assignment. Whatever right the^ bankrupt had is assigned 
 to and vests in the assignee, who thereby becomes, for the purpose of maintain- 
 ing or defending suits, 'possessed as of his own property ' of the estate assigned 
 to him. It is true he holds the title, and the property, when recovered, in trust 
 for certain 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." " The statement in the complaint that the plaintiff is assignee 
 in bankruptcy may be treated as surplusage, or at most as descriptio persontse, and 
 may be disregarded without impairing the sufficiency of the complaint. Under 
 the general averment in the complaint that ' the plaintiff was possessed as of his 
 own property ' of the goods and chattels enumerated, he was entitled to show, 
 by proof, that he had acquired the title by means of the proceedings in bank- 
 ruptcy. These were probative facts, not necessary to be averred in the com- 
 plaint. The ultimate fact to be proved, and which was averred, was that the 
 title was in the plaintiff, and it was unnecessary to state in the complaint how 
 he acquired it." Compare, however, the following cases as to whether the 
 trustee should allege that he sues as trustee: Morss a. Grittman, 10 B. R. 132; 
 Wheelock v. Lee, 64 N. Y. 242; Hastings v. Fowler, 2 Ind. 216; Wheelock v. 
 Hastings, 45 Mass. 504. Starkey on Evidence, vol. 31 [Am. ed]., pp. 1483 & 1484. 
 Section 21 (e) provides that a certified copy of the order approving the bond of a 
 trustee shall constitute conclusive evidence of the vesting in him of the title to 
 the property of the bankrupt. 
 
 Where Should He Sue. — Except as restricted by the provisions of section 
 33 (a) and (b) the trustee may sue in any court having jurisdiction over the parties 
 
256 THE NATIONAL BANKRUPTCY LAW. 
 
 Power to Sell — What Title Passes. [Ch. V. 
 
 and the subject-matter. There is no longer any question of the right of State 
 courts to entertain actions brought by the trustee. Indeed, most actions under 
 the present law will necessarily be brought in the State courts. 
 
 What Suits May Be Brought, — The trustee may not only prosecute and 
 -defend pending actions (section 11) and institute new actions, but he may bring 
 a writ of error to review a judgment rendered against the bankrupt prior to the 
 adjudication. (Jenkins v. Bank, 97 111. 568.) The trustee may institute sum- 
 mary proceedings in the bankruptcy court, whenever the rights of the parties 
 can properly be determined in that manner. (Compare section 2, paragraph on 
 Manner of Exercise of Jurisdiction.) 
 
 Reduction to Money : Sales. — The present statute contains very few pro- 
 visions as to the manner of making sales of the property of the bankrupt. Sec- 
 tion 70 {b) provides, that both real and personal property shall when practicable 
 be sold subject to the approval of the court, and that it shall not be sold other- 
 wise than subject to the approval of the court, for less than seventy-five per 
 cent of its appraised value. That is the only provision of the act in any way 
 prescribing the proceedings for the disposing of the bankrupt's property, other 
 than the provisions of section 57 (h) which, however, are not definite as to details 
 ■of procedure. The former statute most minutely prescribed how sales should 
 be conducted and what notice thereof should be given, and what should be the 
 effect thereof. There were special provisions as to the sale of unincumbered 
 property and perishable property and as to terms of sale which might be 
 allowed. (Compare R. S., sections 5062, 5062 A, 5062 B, 5063, 5064 and 5065.) 
 
 Power to Sell. — The power of the trustee is such that he can sell the prop- 
 erty wherever it is situated. (Oakey v. Corry, 10 La. Ann. 502.) The trustee is 
 bound to comply with the requirements of section 70 (*), and if he should sell 
 contrary thereto, his action would be a nullity His right to convey depends 
 entirely upon the statute which gives him the power. (Joy v. Berdell, 25 111. 
 537; Wisner v. Brown, 50 Mich. 553; Gray v. Heslep, 33 Mo. 238.) 
 
 What Title Passes. — No sale by a trustee will divest the dower of the bank- 
 rupt's wife. It seems there is no way under the act by which a court can 
 compel the wife to accept a gross sum in lieu of her dower right, or provide that 
 a portion of the funds shall be invested for her benefit. (M re Angier, 4 B. R. 
 619: s. c. lo A. L. Reg. 190; in re Hester, 5 B. R. 285; Porter v. Lazear, 109 
 U. S. 84; in »-« Kelso, 102 Pa. St. 7; Exp. Bell, i Glyn & J. 232; in re Smith, 5 
 Ves. 189; Speake v. Kinard, 4 Rich. [N. S.] 54.) The trustee may sell the title 
 
OFFICERS, THEIR DtfTIES AND COMPENSATION. 257 
 
 § 47.J Sales of Encufflbered P^opirtjr. 
 
 ■whhU the bahftrUtit had and afeo the title Which as representative of the credit- 
 oh he himself has secured. It has been held that if he sells " all the trustee's 
 right, title and interest in arid to the property," the purchaser will have all the 
 rights of actioil *hich the trustee could Have exercised in respect to such prop- 
 erty; for instance, such a purchaser may institute an action to set aside a prior 
 conveyance for fraud. (Williams v. Vermeule, 4 Sandf. Ch. 388.) But if the 
 purchaser buys simply the right which the bankrupt had in the premises and 
 not the rights of the trustee in the property, it has been held that the purchaser 
 could not institute any action to avoid such fraudulent conveyances. (Baker v. 
 Vining, 30 Me. 121.) Compare, however, Glenny v. Langdon, g8 U. S. 20. See 
 also Rogers v. Stone, 134 Mass. 31. If the trustee has no rights in the property 
 other than those which the bankrupt had, that is, if there has been no fraudulent 
 conveyance or voidable preference or lien, then the trustee possesses and can 
 convey only such title as the bankrupt possessed, and purchasers take the 
 property subject to all existing liens and equities. (/» re Stuyvesant Bank, 
 10 B. R. 399; s. c. 12 Blatch. 179; in re Wynne, 4 B. R. 23; Strong v. Clawson, 
 10 111. 346.) 
 
 Sales of Eneombered Property. — Unencumbered property, the trustee 
 may undoubtedly sell subject to the approval of the court, whenever he receives 
 therefor the best price obtainable, provided it is at least seventy-five per cent of 
 the appraised value. Doubtless under the same circumstances, he may sell 
 encumbered property if the sale is made subject to the lien. Encumbered prop- 
 erty may be sold free from liens by order of the court of bankruptcy, the lien 
 being transferred to the proceeds. This results from the jurisdiction of the 
 court to collect and reduce to money and to distribute the estates of bankrupts. 
 (Compare section 2, paragraph on Jurisdiction to Determine the Rights of Lien- 
 ors; in re Nat'l Iron Co., 8 B. R. 422.) But such a. sale can never be made, 
 except by order of the court and upon the petition of the trustee, setting forth 
 all the facts which make it for the best interests of all parties. {In re Schnepf, 2 
 Ben. 72; s. t. I B. R. igo; Sutherland v. L. S. C. Co., 9 B. R. 298.) 
 
 In order that the court may order property sold free from liens, notice to the 
 lienor is absolutely essential, and the court must consider the lienor's interests 
 as well as the interests of the unsecured creditors. If the lienor will be injuri- 
 ously affected the order should be refused. (Foster ». Ames, 2 B. R. 455 ; s. c. 
 I Lowell, 313.) If notice is not given to the lienor, his lieri is unaffected and a 
 purchaser takes subject to it. (Ray v. Norse worthy, 23 Wall. 128; s. c. 12 B. R. 
 145; Factors' Ins. Co. v. Murphy, iii U. S. 738.) If the validity of the Hen is 
 
 NAT. BANKRUPTCY LAW — 17 
 
258 THE NATIONAL BANKRUPTCY LAW. 
 
 Approval of the Court — Who May Purchase. [Ch. V. 
 
 called into question, the matter cannot be determined in a summary proceed- 
 ing, but must be in a formal action. (Marshall v. Knox, 8 B. R. 97; s. c. 16 
 Wall. 551.) The proceedings to sell the property free and clear from the lien 
 being in part at least a proceeding to enforce the lien, the court in its discretion 
 may charge the costs of the sale and of the proceedings, upon the sum realized. 
 (In re Blue Ridge R. R. Co., 13 B. R. 315; in re EUerhorst, 2 Saw. 219.) In 
 imposing these costs, the court is not governed by fixed rules, but has the usual 
 discretion in the matter possessed by courts of equity. 
 
 AppFOVal of the Court. — The court is not restricted as to the grounds 
 upon which it may disapprove a sale. It need not be shown that there has been 
 any improper conduct in the sale, or that the price is so inadequate as to indi- 
 cate fraud. If it is evident to the court that a substantially larger sum will be 
 realized by a new sale, it is justified in disapproving the first sale and ordering 
 a new one. (In re O'Fallon, 2 Dill. 548.) The court may disapprove a sale if it 
 has been conducted to the prejudice of the creditors, even although all pre- 
 scribed formalities have been technically complied with. (In re Troy Woolen 
 Co., 4 B. R. 629; s. u. 8 Blatch. 465.) A person by purchasing submits himself 
 to the jurisdiction of the bankruptcy court, and that court may exercise its 
 powers over him summarily as to questions concerning the purchase. Thus it 
 may compel him to surrender deeds improperly given him by the trustee. 
 (In re Hyde, 19 Blatch. 115.) If the sale is confirmed, the title relates back so 
 that the purchaser is entitled to the rents from the date of sale. (Hall ». 
 Scovel, 10 B. R. 295.) The trustee may with the consent of the court surrender 
 to a creditor an equity of redemption of the bankrupt if it is absolutely value- 
 less. The trustee may put property in a salable condition. Thus, if articles 
 are in an unmanufactured state, he may complete them if it is certain that they 
 will thereby bring a better price; but to do so, if the amount to be expended is 
 at all large, he should procure an order from the court. (Foster v. Ames, 2 B. R. 
 455; s. c. I Lowell 313.) The trustee should surrender to the lawful owner 
 property in his hands which was in possession of the bankrupt, but to which, 
 it is clear, the bankrupt had no title. (In re Noakes, i B. R. 592.) 
 
 Who Hay Purchase. — This act contains no restrictions as to who may pur- 
 chase. The bankrupt may do so and the purchase will be valid, if free from 
 fraud. The consideration paid by him may be subsequently acquired property 
 or money loaned him by persons having confidence in his ability to repay. 
 (Arnold v. Leonard, 20 Miss. 258; Gates v. Frazer, 9 111. App. 624.) The trustee 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 259 
 
 § 47.] Duty to Furnish Information — Exemptions. 
 
 cannot ordinarily be a purchaser, but under exceptional and peculiar circum- 
 stances the court may with the sanction of all the creditors give him the right 
 to purchase, but this permission of the court must always be obtained by him 
 before he can legally bid or purchase. (Ex p. Bage, 4 Madd. 459; compare 8 
 Ves. 351; I Glyn & J. 112.) A solicitor or attorney of the assignee is also 
 barred from purchase; but a solicitor of the bankrupt is not barred. The 
 trustee not only should not buy property of the estate, but should not buy up 
 the claims of creditors. 
 
 Depositories. — Compare section 61, as to the duty of the court to designate. 
 Compare notes to subdivision (i), supra, as to interest. 
 
 Duty to Furnish Information. — /» re Perkins, 8 B. R. 56; s. c. 5 Biss. 
 254, it was said by the U. S. Circuit Court for the Northern District of Illinois: 
 " It is the duty of an assignee to disclose to the creditors, upon inquiry, and 
 where it appears they are ignorant thereof, the main facts known to him relat- 
 ing to the condition and assets of the bankrupt estate. Where he knows there 
 is a large sum of money on deposit in a bank, belonging to the estate, against 
 which the bank claimed and were purchasing set-offs, it is his imperative duty 
 to state these facts to creditors inquiring concerning the value of their claims. 
 It is not a sufficient excuse that he could not give definite estimates as to what 
 the estate would pay, or that he says he did not intend to mislead any one. He 
 is presumed to intend the necessary consequences of his own acts, and the sup- 
 pression of the existence of this large deposit must mislead creditors and affect 
 their action. Nor is it a sufficient answer or excuse that the books of the bank- 
 rupt could be examined by the creditors. The assignee should also make, in 
 season, the reports prescribed by the rules in bankruptcy. When an assignee 
 has failed in properly informing creditors in regard to their rights and the value 
 of the assets, and the information has been suppressed in the interest of one 
 class of creditors, it is the duty of the court to remove him. On >x revisory peti- 
 tion to the Circuit Court, the proper practice is to direct the District Court to 
 remove the assignee and to appoint some other competent person in his place." 
 As to failure to permit an opportunity to inspect accounts being an offense, 
 compare section 29 (c). 
 
 Dividends. — Compare sections 64, 65 and 66. 
 
 Exemptions. -As to the bankrupt's duty to make claim therefor in his 
 schedule, compare section 7 (8). As to the effect of failure by the trustee to 
 
26o THE National bankruptcy law. 
 
 Compensation of Trustees. [Ch. V. 
 
 designate and set apdrt the exemptions, compate section 6, paragraph on Trus- 
 ties' Rights in Exempt Property. 
 
 ConcuPFence of Two Trustee's. — The requireifient that at least tWo of the 
 trustees must concur to malce any act valid, is but one of many facts whicli 
 imply that where one or more of the trustees die, a <racancy will be considered 
 as occurring, which will make it the duty of the creditors to elect a successor. 
 Compare, however, notes to sections 44 and 46. 
 
 Sec. 48. Compensation of Trustees. — a Trustees shall receive, 
 as full compensation for their services, payable after they are ren- 
 dered, a fee of five dollars deposited with the clerk at the time the 
 petition is filed in each case, except when a fee is not required 
 from a voluntary bankrupt, and from estates which they have 
 administered, such commissions on sums to be paid as dividends 
 and commissions as may be allowed by the courts, not to exceed 
 three per centum on the first five thousand dollars or less, two 
 per centum on the second five thousand dollars or part thereof, 
 arid one per centuiil on such sums in excess of ten thousand 
 dollars. 
 
 b In the event of an estate being administered by three trustees 
 instead of one trustee or by successive trustees, the court shall 
 apportion the fees and commissions between them according to the 
 services actually rendered, so that there shall not be paid to trus- 
 tees for the administering of any estate a greater amount than 
 one trustee would be entitled to. 
 
 c The court may, in its discretion, withhold all compensation 
 from any trustee who has been removed for cause. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., section 5099; act of 1867, section 28; act of 1800, section 29; also R. S., 
 section 5127; act of 1867, section 47; also R. S., section 5I27A; also R. S., sec- 
 tion 5124; act of 1867, section 47, amended by act of July 27th, 1868, ch. 258, 
 section 2; act of 1800, section 47. 
 
 After Services Are Rendered. - As in the case of referees, the law pro- 
 vides that the trustees shall receive no compensation until their services are 
 
OFFICERS, THEIR pyXIES AND COMPENSATION, 2,6l 
 
 §§ 49, SO'] Accounts of Trustees — Bonds of Referees and Trustees 
 
 rendered, and that then the amount paid them as commissions shall be upon 
 the sums paid out as dividends and commissions, not upon the amount of thejr 
 receipts and disbursements. As to cases in which a voluntary bankrupt is 
 excused from paying a fee, compare section 51 a (2). 
 
 Sec. 49. Acconnts and Papers of Trustees. — a The accounts 
 and papers of trustees shall be open to the inspection of officers 
 and all parties in interest. 
 
 i^nalogous Provisions of Former Acts. — 
 R. S., section 5062B. 
 
 Beasonable OppoFtunlty for Inspeetion. — Compare notes to secti<^D 
 
 29 c (3), as to failure to permit a reasonable inspection of accounts being an 
 offense punishable by imprisonment. 
 
 Sec. 50. Bonds of Referees and Trustees. — a Referees, before 
 assuming the duties of their offices, and within such time as the 
 district courts of the United States having jurisdiction shall pre- 
 scribe, shall respectively qualify by entering into bond to the 
 United States in such sum as shall be fixed by such courts, not 
 to exceed five thousand dollars, with such sureties as shall be 
 approved by such courts, conditioned for the faithful performance 
 of their official duties. 
 
 b Trustees, before entering upon the performance of their offi- 
 cial duties, and within ten days after their appointment, or within 
 such further time, not to exceed five days, as the court may per- 
 mit, shall respectively qualify by entering into bond to the United 
 States, with such sureties as shall be approved by the courts, con- 
 ditioned for the faithful performance of their official duties. 
 
 c The creditors of a bankrupt estate, at their first meeting after 
 the adjudication, or after a vacancy has occurred in the office of 
 trustee, or after an estate has been reopened, or after a compo- 
 sition has been set aside or a discharge revoked, if there is a 
 vacancy in the office of trustee, shall fix the amount of the bond 
 
262 THE NATIONAL BANKRUPTCY LAW. 
 
 Bonds of Referees and Trustees. [Ch. V. 
 
 of the trustee ; they may at any time increase the amount of the 
 bond. If the creditors do not fix the amount of the bond of the 
 trustee as herein provided the court shall do so. 
 
 d The court shall require evidence as to the actual value of the 
 property of sureties. 
 
 e There shall be at least two sureties upon each bond. 
 
 f The actual value of the property of the sureties, over and 
 above their liabilities and exemptions, on each bond shall equal 
 at least the amount of such bond. 
 
 g Corporations organized for the purpose of becoming sureties 
 upon bonds, or authorized by law to do so, may be accepted as 
 sureties upon the bonds of referees and trustees whenever the 
 courts are satisfied that the rights of all parties in interest will be 
 thereby amply protected. 
 
 h Bonds of referees, trustees, and designated depositories shall 
 be filed of record in the office of the clerk of the court and may 
 be sued upon in the name of the United States for the use of any 
 person injured by a breach of their conditions. 
 
 i Trustees shall not be liable, personally or on their bonds, to 
 the United States, for any penalties or forfeitures incurred by the 
 bankrupts under this act, of whose estates they are respectively 
 trustees. 
 
 j Joint trustees may give joint or several bonds. 
 
 k If any referee or trustee shall fail to give bond, as herein pro- 
 vided and within the time limited, he shall be deemed to have 
 declined his appointment, and such failure shall create a vacancy 
 in his office. 
 
 / Suits upon referees' bonds shall not be brought subsequent 
 to two years after the alleged breach of the bond, 
 
 m Suits upon trustees' bonds shall not be brought subsequent 
 to two years after the estate has been closed. 
 
 Analogous Provisions of Former Acts. — 
 
 As to the right of a creditor to demand that the assignee give a bond: R. S., 
 section 5036; act of 1867, section 13; act of 1841, section 9. As to duty of the 
 register to give a bond: R. S., section 4995; act of 1867, section 3. 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 263 
 
 §§ 51, 52.] Duties of Clerks — Compensation of Clerks and Marshals. 
 
 Bonds Under the Act of 1867. — Under the act of 1867, registers were 
 always required to give bonds, but assignees were not obliged to do so, unless 
 the court on motion of a creditor expressly ordered it. 
 
 Sec 51. Duties of Clerks. — a Clerks shall respectively 
 (i) account for, as for other fees received by them, the clerk's fee 
 paid in each case and such other fees as may be received for certi- 
 fied copies of records which may be prepared for persons other 
 than officers ; (2) collect the fees of the clerk, referee, and trustee 
 in each case instituted before filing the petition, except the 
 petition of a proposed voluntary bankrupt which is accompanied 
 by an affidavit stating that the petitioner is without, and cannot 
 obtain, the money with which to pay such fees; (3) deliver to the 
 referees upon application all papers which may be referred to 
 them, or, if the offices of such referees are not in the same cities 
 or towns as the offices of such clerks, transmit such papers by 
 mail, and in like manner return papers which were received from 
 such referees after they have been used ; (4) and within ten days 
 after each case has been closed pay to the referee, if the case was 
 referred, the fee collected for him, and to the trustee the fee col- 
 lected for him at the time of filing the petition. 
 
 Analogous Provisions of Former Acts. — 
 
 As to duty to account for moneys received ; Rule XXVIII of General Orders 
 in Bankruptcy, under the act of 1867. As to general duties of the clerk: Rule I 
 of Orders in Bankruptcy, under the act of 1867. 
 
 Close of the Case. — It would seem that a case is not closed so as to justify 
 the clerk in paying the referee his fees until the latter has transmitted to the 
 clerk all the records required to be kept by him. (Compare section 39 a [7].) 
 
 Sec 52. Compensation of Clerks and Marshals. — a Clerks 
 shall respectively receive as full compensation for their services 
 to each estate, a filing fee of ten dollars, except when a fee is not 
 required from a voluntary bankrupt. 
 
264 THE NATIONAL BANKRUPTCY LAW. 
 
 Marshal's Fees. [Ch. V. 
 
 b Marshals shall respectively receive from the estate where an 
 adjudication in bankruptcy is made, except as herein otherwise 
 provided, for the performance of their service in proceedings in 
 bankruptcy, the same fees, and account for them in the same 
 way, as they are entitled to receive for the performance of the 
 same or similar services in other cases in accordance with laws 
 now in force, or such as may be hereafter enacted, fixing the 
 compensation of marshals. 
 
 Analogous Provisions of Former Act. — 
 
 R. S., sections 5124, 5125, 5127, 5127A, 5127B; act of 1867, sections 5 and 47; 
 act of 1841, section 13; act of iSoo, sections 46, 47; act of July 27th, 1868, ch. 25)5, 
 section 2. As to deposit of guarantee of amount of fees: R. S., section 5124. 
 
 Marshals' Fees. — U. S. Revised Statutes, section 829, provide: " For serv- 
 ice of any warrant, attachment, summons, capias, or other writ, except execu- 
 tion, venire, or a summons or subpoena for a. witness, two dollars for each 
 person on whom service is made. For the keeping of personal property 
 attached on mesne process, such compensation as the court, on petition setting 
 forth the facts under oath, may allow. For serving venires and summoning 
 every twelve men as grand or petit jurors, four dollars, or thirty-three and one- 
 third cents each. In States where by the laws thereof jurors are drawn by lot, 
 by constables, or other officers of corporate places, the marshal shall receive for 
 each jury, two dollars for the use of the officers employed in drawing and sum- 
 moning the jurors and returning each venire, and two dollars for his own serv- 
 ices in distributing the venires. But the fees for distributing and serving 
 yenires, drawing and summoning jurors by township officers, including the mile- 
 age chargeable by the marshal for each service, shall not at any court exceed 
 fifty dollars. For holding a court of inquiry or other proceedings before a jury, 
 including the summoning of a jury, five dollars. For serving a writ of sub- 
 poena on a witness, fifty cents; and no further compensation shall be allowed 
 for any copy, summons, or notice for a witness. For serving a writ of posses- 
 lion, partition, execution, or any final process, the same mileage as is allowed 
 for the service of any other writ, and for making the service, seizing or levying 
 on property, advertising and disposing of the same by sale, set-off, or other- 
 wise, according to law, receiving and paying over the money, the same fees 
 and poundage as are or shall be allowed for similar services to the sheriffs of 
 
OFFICERS, THEIR DUTIES AND COMPENSATION. 265, 
 
 § 52.] Compensation of Clerks and Marshals. 
 
 the States, respectively, in which the service is rendered. For each bail-bond, 
 fifty cents. For summoning appraisers, fifty cents. For executing a deed pre- 
 pared by a party or his attorney, one dollar. For drawing and executing a 
 deed, five dollars. For copies of writs or papers furnished at the request of any 
 party, ten cents a folio. For disbursing money to jurors and witnesses, and 
 for other expenses, two per centum. For expenses while employed in endeavor- 
 ing to arrest under process, any person charged with or convicted of a crime 
 the sum actually expended, not to exceed two dollars a day, in addition to his 
 compensation for service and travel. For every commitment or discharge of a 
 prisoner, fifty cents. For transporting criminals, ten cents a mile for himself 
 and for each prisoner and necessary guard; except in the case provided for in 
 the next paragraph. For transporting criminals convicted of a crime in any 
 district or territory where there is no penitentiary available for the confinement 
 of convicts of the United States, to a prison in another district or territory 
 designated by the attorney-general, the reasonable actual expense of transpor 
 tation of the criminals,%he marshal, and the guard, and the necessary subsist- 
 ence and hire. For attending the Circuit and District Courts, when both are in 
 session, or either of them when only one is in session, and for bringing in and 
 committing prisoners and witnesses during the term, five dollars a day. For 
 attending examinations before a commissioner, and bringing in, guarding, and 
 returning prisoners charged with crime, and witnesses, two dollars a day; and 
 for each deputy not exceeding two, necessarily attending, two dollars a day. 
 For traveling from his residence to the place of holding court, to attend a term 
 thereof, ten cents a mile for going only. For travel, in going only, to serve any 
 process, warrant, attachment, or other writ, including writs of subpoena in civil 
 or criminal cases, six cents a mile, to be computed from the place where the 
 process is returned to the place of service, or, when more than one person is 
 served therewith, to the place of service which is most remote, adding thereto 
 the extra travel which is necessary to serve it on the others. But when more 
 than two writs of any kind required to be served in behalf of the same party on 
 the same person might be served at the same time, the marshal shall be 
 entitled to compensation for travel on only two of such writs; and to save 
 unnecessary expense, it shall be the duty of the clerk to inseit the names of as 
 many witnesses in a cause in such subpoena as convenience in serving the same 
 will permit. In all cases where mileage is allowed to the matshal he may 
 elect to receive the same or his actual traveling expenses, to be proved on his 
 oath, to the satisfaction of the court. 
 
266 THE NATIONAL BANKRUPTCY LAW. 
 
 Duties of Attorney -General — Statistics. [Ch. V. 
 
 Special Provisions. — In a few of the far western States, it is provided that 
 the marshal may receive double fees. 
 
 Payment in Advance. — The marshal has a right to demand in advance 
 the payment of his fees for the service of process. (Ray v. Knowlton, ii Biss. 
 C. C. 360; Duy V. Knowlton, 14 Fed. Rep. 107.) 
 
 Sec. 53. Daties of Attoraey- General. — a The Attorney-Gen- 
 eral shall annually lay before Congress statistical tables showing 
 for the whole country, and by States, the number of cases during 
 the year of voluntary and involuntary bankruptcy ; the amount 
 of the property of the estates ; the dividends paid and the expenses 
 of administering such estates ; and such other like information as 
 he may deem important. 
 
 No Analogous Provisions in Former Acts. 
 
 Sec. 54. Statistics of Bankruptcy Proceedings. — a Officers 
 ^hall furnish in writing and transmit by mail such information as 
 is within their knowledge, and as may be shown by the records 
 and papers in their possession, to the Attorney-General, for sta- 
 tistical purposes, within ten days after being requested by him to 
 ■do so. 
 
 No Analogous Provisions in Former Acts. 
 
CHAPTER VI. 
 
 CBEDITOBS. 
 
 Sec. 55. Meetings of Creditors. — a The court shall cause the 
 first meeting of the creditors of a bankrupt to be held, not less than 
 ten nor more than thirty days after the adjudication, at the 
 county seat of the county in which the bankrupt has had his 
 principal place of business, resided, or had his domicile ; or if that 
 place would be manifestly inconvenient as a place of meeting for 
 the parties in interest, or if the bankrupt is one who does not do 
 business, reside, or have his domicile within the United States, 
 the court shall fix a place for the meeting which is the most con- 
 venient for parties in interest. If such meeting should by any 
 mischance not be held within such time, the court shall fix the 
 date, as soon as may be thereafter, when it shall be held. 
 
 b At the first meeting of creditors the judge or referee shall 
 preside, and, before proceeding with the other business, may 
 allow or disallow the claims of creditors there presented, and may 
 publicly examine the bankrupt or cause him to be examined at 
 the instance of any creditor. 
 
 c The creditors shall at each meeting take such steps as may be 
 pertinent and necessary for the promotion of the best interests of 
 the estate and the enforcement of this act. 
 
 d A meeting of creditors, subsequent to the first one, may be 
 held at any time and place when all of the creditors who have 
 secured the allowance of their claims sign a written consent to 
 hold a meeting at such time and place. 
 
 e The court shall call a meeting of creditors whenever one-fourth 
 or more in number of those who have proven their claims shall 
 file a written request to that effect ; if such request is signed by a 
 majority of such creditors, which number represents a majority 
 in amount of such claims, and contains a request for such meet- 
 ing to be held at a designated place, the court shall call such 
 
 [267] 
 
268 THE NATIONAL BANKRUPTCY LAW. 
 
 Order and Notice — Quorum. [Ch. VI. 
 
 meeting at such place within thirty days after the date of the 
 filing of the request. 
 
 / Whenever the affairs of the estate are ready to be closed a 
 final meeting of creditors shall be ordered. 
 
 Analogous Provisions of Former Acts. — 
 
 As to notice to creditors of the time and place of first meeting: R. S., section 
 S019; act of 1687, section 11; act of 1841, section 7; also R. S., section 5032; 
 act of 1800, section 6. As to presiding officer: R. S., section 5033; act of 1867, 
 section 12. As to choice of trustee at first meeting : compare Analogous Pro- 
 visions of Former Acts, given under section 44 of this act. As to the second 
 meeting specially provided for by the act of 1867, and the purpose thereof, and 
 the proceedings thereat: R. S., section 5092; act of 1867, section 26; act of 1800, 
 section 2g. As to the third meeting specially provided for by the act of 1867: 
 R. S, section 5093; act of 1867, section 28; act of 1800, section 30. As to other 
 meetings, and notice thereof: R. S., section 5094; act of 1867, section 17. 
 
 Order and Notice. — The order should properly be made at the time of the 
 adjudication, or as soon thereafter as possible. If the matter has been referred 
 generally to the referee, it would seem that he might make the order as he is 
 included in the word " court " unless otherwise provided by the statute or 
 unless otherwise required by the context. Notice of the meeting should be 
 given pursuant to the provisions of section 58 a 3, and 58 b. The referee gives 
 the notices. (Section 58 c.) 
 
 Quorum. — Nowhere in the present act is there any provision as to the num- 
 ber of creditors which will constitute a quorum at a meeting, and there have 
 been no provisions on the subject in previous acts. The chief object of the 
 meeting is to elect a trustee. The law contemplates that a trustee shall be 
 chosen even if no creditors prove claims, («'» re Cogswell, i Ben. 388; s. t. i 
 B. R. 62; in re Anon, I B. R. 123); also in cases where there are no known 
 assets, one object of the appointment of a trustee being to search for and dis- 
 cover assets. (/» re Graves, 5 Law Rep. 25; s. c. 1 N. Y. Leg. Obs. 213.) As 
 creditors may be indifferent about proving their claims in cases of bankruptcy, 
 where there are apparently no assets, it is evident that -a. provision requiring 
 any specified number to constitute a quorum would often defeat the election of 
 a trustee by the creditors; and hence the act provides that at all meetings of 
 creditors they shall pass upon the matters submitted to them by a majority 
 
CREDITORS. 269 
 
 § 55.] The Business of the Meecihg. 
 
 vote, in number and in amount of claiitis, of all creditors whose claims have 
 been allowed and who are present. Hence if only one creditor Whose claim has 
 been allowed should attend the meeting, he constitutes a quorum and he alone 
 may vote for and he alone may elect a trustee. (/» re Haynes, 2 B. R. 227.) 
 According to the decisions rendered under the former act, if no creditor 
 appears, but the judge or the referee appointed to preside at the meeting, is 
 present, it nevertheless constitutes <t meeting and there being no choice of a 
 trustee by creditors possible, the appointment of a trustee devolves upon the 
 ■court. {In re Cogswell, i Ben. 388; s. c. i B. R. 62.) It is true that the present 
 act provides in this section, that if the first meeting of creditors should by any 
 mischance not be held within the prescribed time, the court shall fix a date, as 
 soon as may be thereafter, when it shall be held. But a construction of the 
 several provisions of the act would seem to indicate that this refers to cases 
 where the meeting was not properly called, or where notice had not been given 
 in time so that a legal meeting could be held, even if creditors were present; or 
 it may refer to cases where both the j udge and referee are unavoidably absent. 
 The presence of no person except the judge or referee seems to be absolutely 
 necessary in order to constitute a meeting; on the other hand, if they are both 
 absent, it seems that no legal meeting can be held. The law provides that one 
 or the other of them shall preside; no one else is authorized to act in their 
 place. The meeting is more than an election. It is a judicial proceeding, the 
 very first proceeding of which is the allowance or disallowance of claims pre- 
 sented to them, which in itself necessitates the hearing and determining of 
 issues both of fact and of law As judicial ofiicers, the presence of either the 
 judge or referee is essential, but no other persons are necessary to make the 
 meeting a judicial proceeding, nor to make it constitute the " first meeting of 
 creditors " as the term is here used. 
 
 The Business of the meeting. — One of the chief matters to come before 
 the meeting will be the election of the trustee. (Section 44.) The consideration 
 of claims is a matter which may be preliminary to this, and the creditors may, 
 in general, take action upon any matter affecting the estate. The referee's 
 duties at the meeting are purely of a judicial character, and he should maintain 
 an attitude of strict impartiality. In the choice of a trustee, he not only should 
 not attempt to influence the creditors, but should avoid even the semblance of 
 partiality towards any candidate or person suggested, or of prejudice and oppo- 
 sition against any rival candidate. Failure to observe this judicial attitude was 
 
270 THE NATIONAL BANKRUPTCY LAW. 
 
 Postponement of Consideration of Claims to which Objection in Made. [Ch. VI. 
 
 held, (in re J. O. Smith, i B. R. 243), to be a sufficient cause for transferring 
 the case to another referee. 
 
 Postponement of Consideration of Claims to Which Objection is 
 
 Made. — The law contemplates an early choice of a trustee; it also contem- 
 plates that the choice shall be made by creditors and that every creditor who 
 has a just claim provable in bankruptcy may have it allowed and may vote at 
 the election of the trustee. Claims may be proven and allowed before the first 
 meeting, but in practice few of them will be presented for allowance until that 
 time. If objection to the allowance of a claim is made by any party in interest 
 the objections shall be heard and determined as soon as the convenience of the 
 court, and the best interests of the estate and the claimants, will permit. 
 Under the present statute the question will often arise whether in cases where 
 objection is made to the allowance of claims, the referee should postpone the 
 determination of the objections and of the validity of the claim until after a 
 trustee has been chosen, thus depriving the person claiming to be a creditor of 
 the right to vote; or whether it is his duty at once to hear all the evidence that 
 may be produced by the claimant and objecting parties and to decide as to the 
 allowance or disallowance of the claim, thereby, perhaps, necessitating fre- 
 quent postponements of the meeting and a delay in the choice of a trustee. It 
 is clear that the present act intends that the claims of creditors presented at the 
 first meeting should be then and there allowed or disallowed, so they may vote. 
 It expressly says that this may be done before proceeding with other busi- 
 ness; but it is not mandatory. Unless the determination shall then be made, 
 one set of creditors by urging objections which may be utterly groundless, can 
 prevent other creditors from securing an allowance of their claims, and can 
 deprive them of their right to vote for trustee. It will follow that a power 
 which the statute contemplates shall be exercised by a greater part in number 
 and value of all the creditors will actually be exercised by only a few of them 
 representing but a small portion of the debts. The plainest principles of justice 
 would seem to require such an adjournment of the meeting from day to day as 
 would furnish proper opportunity to all the creditors to secure the allowance 
 of their claims and thus qualify them to join in the election of a trustee. 
 {In re Phelps, Caldwell & Co., i B. R. 525.) The summary nature of bank- 
 ruptcy proceedings and the fact that the court may impose costs upon a 
 creditor who makes an unfounded objection to a claim, (section 2 [18]), ought 
 to prevent the hearing of disputed claims from dragging on for a great length 
 of time, and also ought to deter rival creditors from making groundless objec 
 
CREDITORS. 271 
 
 § 55.] Subsequent Meetings— Power of the Creditors Over the Trustee. 
 
 tions. (Compare in re Bartusch, 9 B. R. 478.) Further, while any determina- 
 tion as to the validity of a claim should be made only after due consideration 
 of all the evidence which may be produced, yet it is to be borne in mind that 
 any error resulting from a hasty decision may be corrected, as the court has 
 power to reconsider the allowance or disallowance of claims. (Section 2 [2].) 
 It is true that under the former act it was repeatedly held that that act nowhere 
 directed, nor did it contemplate the postponement of a vote for assignee while a 
 dispute was pending as to the allowance of a claim to which objection was 
 made; that on the contrary it contemplated the utmost practical expedition in 
 chosing an assignee, and that the creditors whose claims were allowed weie in 
 no way obliged to postpone the election of assignee until the determination of 
 disputed claims. {In re Northern Iron Co., 14 B. R. 356; in re G. Jackson, 14 
 B. R. 449; in re Lake Superior S. C. R. R., 7 B. R. 376.) But it is to be noted 
 that that act expressly provided (act of 1867, section 13), that " when a claim is 
 presented for proof before the election of an assignee and a judge entertains 
 doubts of its validity and the right of a 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; " while the present 
 act expressly provides that before proceeding with the other business (election 
 of trustee) the court may allow or disallow the claims of creditors there pre- 
 sented. Although in cases where objections are made, the objections may be 
 heard at the convenience of the court, yet it must also be at such time as is for 
 the best interests of the estate and also of the claimants. (Section 57 [/].) 
 
 Subsequent Meetings. — The subsequent meetings of creditors seem to be 
 purely business meetings, and not to partake of the judicial character of the 
 first meeting. There is no statutory provision requiring the presence of the 
 judge or the referee. The difference between the language of paragraphs (</) 
 and if) as to the calling of meetings, is to be noted. One provides that a meeting 
 may be held, whenever all who have secured the allowance of their claims con- 
 sent; the other that a meeting may be called at the request of a certain propor- 
 tion of those whose claims have been proved. Allowance of claims is not 
 expressly required in the last case. 
 
 Power of the Creditors Over the Trustee. — Although the act provides that 
 
 the creditors at each meeting shall take such steps as may be pertinent and 
 necessary for the promotion of the best interests of the estate and the enforce- 
 ment of this act, yet their action is not binding upon the trustee. He is 
 
272 THE NATIONAL BANKRUPTCY LAW. 
 
 Voters at Meetings of CredittWS. [Ch. VI. 
 
 responsible to tbe coui't notwithstanding he is chosen by the creditors. It is bis 
 duty to use his own judgment unless he is directed otherwise by the court. He 
 is not authorized to follow the judgrtieni of any other persons, if his own judg- 
 ment differs ttom theirs. Under the former act the creditors might, with the 
 consent of the court, remove an assignee by such a vote as was necessary for 
 the choice of an assignee. It was held under that act that it was not the inten- 
 tion of the law that the majority should have absolute control over the rights 
 and interests of the minority. The court would protect a faitiiful and compe- 
 tent assignee, even though the majority of the creditors desired a different way 
 of Managing the estate. (/>i re Dewey, 4 B. R. 412; s. c. i Lowell, 493.) Com- 
 pare Parsons on Contracts, Part II, ch. XII, section VII. 
 
 Adjournments. — If the business of the first meeting cannot all be trans- 
 acted on one day, the meeting may be adjourned from day to day, and it ^ill 
 still constitute the " first meeting." (/» re Phelps, Caldwell &Co., i B. R. 52^.) 
 
 CFOSS-Feferences. — As to examination of the bankrupt, compare section 
 7 (q). As to notice of final meeting, compare section 58 a (3). As to proceedings 
 at the final meeting, compare section 47 a (7). As to proceedings preliminary to 
 final meeting, compare section 47 a (8). 
 
 Sec. 56. Voters at Meetings of Creditors. — a Creditors shall 
 pass upon matters submitted to them at their meetings by a 
 majority vote in number and amount of claims of all creditors 
 whose claims have been allowed and are present, except as herein 
 otherwise provided. 
 
 b Creditors holding claims which are secured or have priority 
 shall not, in respect to such claims, be entitled to vote at creditors' 
 meetings, nor shall such claims be counted in computing either 
 the number of creditors or the amount of their claims, unless the 
 amounts of such claims exceed the values of such securities or 
 priorities, and then only for such excess. 
 
 Analogous Provisions of Former Acts. — 
 
 As to voters in general: R. S., section 5034; act of 1867, section 13. As to 
 preferred creditors being deprived of a vote under the act of 1867: R. S. sec- 
 tion 5035; act of 1867, section 18. 
 
CREDITORS. 273 
 
 § 56.] Vote Required — How Cast — Mode of Voting. 
 
 Vote RequlPed. — Only persons whose claims have been allowed and who 
 are present may vote; mere proof of claims is not sufficient, as under the 
 former act. The vote required under this act is the majority in number and 
 amount of all whose claims have been allowed and who are present. Under 
 the former act a majority of all who had proved their claims, whether pres- 
 ent or not, was required. Secured creditors may now vote even at the first 
 meeting; in this respect also, the present law differs from the formei- law. 
 As to the manner of determining the excess of their claims over the value 
 of their securities, compare section 57 (e.) 
 
 How Cast. — The definition of creditor given in section i (9) as including the 
 creditor's duly authorized agent, attorney or proxy, would indicate that credit- 
 ors might be present al meetings by such agents, attorneys, or proxies, and by 
 them might cast their votes. Under the former act it was held that attorneys 
 in fact, filing with the court or with the register duly executed powers of attor- 
 ney, might vote, but not attorneys at law. {In re Purvis, I B. R. 163.) 
 Whether under the present act agents could vote without such a power of attor- 
 ney is doubtful. It would seem at least that they would be required to file 
 some evidence of their authority. Any one of the partners may cast the vote 
 of a firm upon its claim, but in considering the number of creditors, the 
 firm is counted as one person. (In re Purvis, I B. R. 163.) It has been held 
 that an officer of the bankrupt corporation may vote in the choice of a trustee 
 of the corporation if he has an individual claim. (In re Northern Iron Co., 14 
 B. R. 356.) Corporations which are creditors cast their votes by their officers, 
 or by any person duly authorized. (Ex p. Bank of England, i Swanst. 10.) 
 
 Mode of Voting. — The statute prescribes no particular manner for taking 
 the vote. The former statute was similarly deficient. Under it, it was held 
 that any means of ascertaining the wishes of the creditors could be used, which 
 would show whether the number required by the statute had expressed their 
 choice. It may be by ballot or viva voce, or a roll may be prepared showing 
 the names of the creditors whose claims have been allowed and also the amount 
 at which they have been allowed, and the creditors may answer to the call of 
 this roll and state their choice. (In re Lake Superior Co., 7 B. R. 376.) This 
 latter mode, to us, seems preferable, as it clearly is a. vote showing at the same 
 time both the number of creditors who vote, and the amount of their claims. 
 The practice under the former act was to prepare a certificate of election con- 
 taining the names of all proved creditors, their places of residence and the 
 
 NAT. BANKRUPTCY LAW — 1 8 
 
274 THE NATIONAL BANKRUPTCY LAW. 
 
 Proof and Allowance of Claims. [Ch. VI. 
 
 amounts of their claims, and to have it signed by the assenting creditors and 
 then filed by the register as one of his records. (/« re Pfromm, 8 B. R. 357.) 
 Prior to the certificate the creditors could vote in any manner they wished, as a 
 means of ascertaining the sentiment of their meeting, and up to the time of the 
 execution of the certificate, it was held that any creditor was at liberty to 
 change his vote, the certificate being regarded as the formal expression of a 
 choice, {in re Pfromm, 8 B. R. 357); but after adjournment no vote could be 
 changed, and no creditor thereafter proving a claim against the estate could 
 come in and participate in the election. 
 
 Cross-reference. — As to quorum, compare section 55. 
 
 Sec 57. Proof and Allowance of Claims. — a Proof of claims 
 shall consist of a statement under oath, in writing, signed by a 
 creditor setting forth the claim, the consideration therefor, and 
 whether any, and, if so, what securities are held therefor, and 
 whether any, and, if so, what payments have been made thereon, 
 and that the sum claimed is justly owing from the bankrupt to 
 the creditor. 
 
 b Whenever a claim is founded upon an instrument of writing, 
 such instrument, unless lost or destroyed, shall be filed with the 
 proof of claim. If such instrument is lost or destroyed, a state- 
 ment of such fact and of the circumstances of such loss or destruc- 
 tion shall be filed under oath with the claim. After the claim is 
 allowed or disallowed, such instrument may be withdrawn by 
 permission of the court, upon leaving a copy thereof on file with 
 the claim. 
 
 c Claims after being proved may, for the purpose of allowance, 
 be filed by the claimants in the court where the proceedings are 
 pending, or before the referee if the case has been referred. 
 
 d Claims which have been duly proved shall be allowed, upon 
 receipt by or upon presentation to the court, unless objection to 
 their allowance shall be made by parties in interest, or their con- 
 sideration be continued for cause by the court upon its own 
 motion. 
 
 e Claims of secured creditors and those who have priority may 
 
CREDITORS. 275 
 
 § 57.] Proof and Allowance of Claims. 
 
 be allowed to enable such creditors to participate in the proceed- 
 ings at creditors' meetings held prior to the determination of the 
 value of their securities or priorities, but shall be allowed for such 
 sums only as to the courts seem to be owing over and above the 
 value of their securities or priorities. 
 
 / Objections to claims shall be heard and determined as soon 
 as the convenience of the court and the best interests of the estates 
 and the claimants will permit. 
 
 g The claims of creditors who have received preferences shall 
 not be allowed unless such creditors shall surrender their 
 preferences. 
 
 h The value of securities held by secured creditors shall be 
 determined by converting the same into money according to the 
 terms of the agreement pursuant to which such securities were 
 delivered to such creditors or by such creditors and the trustee, 
 by agreement, arbitration, compromise, or litigation, as the court 
 may direct, and the amount of such value shall be credited upon 
 such claims, and a dividend shall be paid only on the unpaid 
 balance. 
 
 i Whenever a creditor, whose claim against a bankrupt estate 
 is secured by the individual undertaking of any person, fails to 
 prove such claim, such person may do so in the creditor's name, 
 and if he discharge such undertaking in whole or in part he shall 
 be subrogated to that extent to the rights of the creditor. 
 
 i Debts owing to the United States, a State, a county, a dis- 
 trict, or a municipality as a penalty or forfeiture shall not be 
 allowed, except for the amount of the pecuniary loss sustained by 
 the act, transaction, or proceeding out of which the penalty or 
 forfeiture arose, with reasonable and actual costs occasioned 
 thereby and such interest as may have accrued thereon according 
 to law. 
 
 k Claims which have been allowed may be reconsidered for 
 cause and reallowed or rejected in whole or in part, according to 
 the equities of the case, before but not after the estate has been 
 closed. 
 
 / Whenever a claim shall have been reconsidered and rejected, 
 
276 THE NATIONAL BANKRUPTCY LAW. 
 
 Necessity of Proof. [Ch. VL 
 
 in whole or in part, upon which a dividend has been paid, the 
 trustee may recover from the creditor the amount of the dividend 
 received upon the claim if rejected in whole or the oroportional 
 part thereof if rejected onlj' in part. 
 
 m The claim of any estate which is being administered in bank- 
 ruptcy against any like estate may be proved by the trustee and 
 allowed by the court in the same manner and upon like terms as 
 the claims of other creditors. 
 
 n Claims shall not be proved against a bankrupt estate subse- 
 quent to one year after the adjudication ; or if they are liquidated 
 by litigation and the final judgment therein is rendered within thirty 
 days before or after the expiration of such time, then within sixty 
 days after the rendition of such judgment: Provided, That the 
 right of infants and insane persons without guardians, without 
 notice of the proceedings, may continue six months longer. 
 
 Analogous Provisions of Former Acts. — 
 
 As to manner of proof: R. S., § 5077; act of 1867, § 22; act of 1841, g§ 5 and 
 7. As to who may make proof: R. S., § 5078; act of 1867, § 22; act of 1841, 
 § 5. As to who may take proof: R. S., § 5079; act of 1867, § 22; amended by 
 act of July 27, 1868; ch. 258, § 3; act of 1841, § 5. As to assignee's right to 
 inspect proof: R. S., § 5080: act of 1867, § 22. As to examination and allow- 
 ance of claims: R. S., § 5081; act of 1867, § 22; act of 1841, §§ 5 & 7; act of 
 1800, §§ 16, 37, 39. As to proof of instruments in writing: R. S., § 5082; act of 
 1867, § 24. As to postponing allowance of claims to which objection is made: 
 R. S., § 5083; act of 1867, § 23. As to proof by preferred creditors: R. S.. 
 § 5084; act of 1867, § 23. As to making a list of allowed claims: R. S., § 5085; 
 act of 1867, § 23. 
 
 Necessity of Proof. — In order to obtain a dividend upon a provable claim, it 
 is absolutely necessary that the person holding it shall prove it, and obtain an 
 allowance of the same. The fact that the debtor has included the claim in his 
 schedules does not make it binding upon the trustee or other creditors. (/» re 
 Bittel, 2 B. R. 391.) Even the claims of petitioners in involuntary proceedings 
 must be proven and allowed. Although no adjudication can be made unless 
 the court finds as a fact that the petitioner has a provable claim against the 
 
CREDITORS. 277 
 
 § 57.] Statement as to the Consideration. 
 
 bankrupt, it is not such an allowance of the claim as will entitle the petitioner 
 to a dividend. (/« re Cornwall, 9 Blatch. 114; s. c. 6 B. R. 305.) 
 
 The Nature of Proof. — The present statute provides that the proof shall 
 consist of a statement under oath setting forth certain facts. This proof is little 
 more than such a. verification as is required by the laws of many States to the 
 claim of a creditor of the estate of a decedent. In reality it is a mere affidavit. 
 The oath may be taken before any officer mentioned in section 20. This 
 authorizes proof to be taken before any officer authorized to administer oaths 
 in proceedings before the courts of the United States, or under the laws of the 
 State where the same are to be taken; also before referees and diplomatic or 
 consular officers. As to the right of a creditor to make his proof before a notary 
 who is his own attorney in the matter, compare notes to section 20. The present 
 statute not expressly requiring that a notarial seal shall be affixed to the proof, 
 the absence of it will not invalidate the proof unless the laws of the State, in 
 which the oath is taken, make the affixing of the seal essential. Under the act 
 of 1867, the proof of the debt was a judicial or guasi judicial proceeding. It was 
 more than an affidavit, in that the law required that the proof should be to the 
 satisfaction of the officer taking it; and it was held that this required him to 
 examine the debtor upon the matter. Under that act, until amended by the act of 
 June 22, 1874, proofs of claims by creditors within the United States could be 
 made only before registers in bankruptcy or the commissioners of the circuit 
 courts. By the amendatory act of 1874 notaries were permitted to take the proofs, 
 but were required to affix their notarial seal. Where the bankrupt has died pend- 
 ing the proceedings, a, creditor may nevertheless make proof of his claim, even 
 if his sworn statement is considered as evidence or testimony in a proceeding. 
 He is still a competent witness in his own behalf to prove the contract out of 
 which his claim arose. The provisions of section 858 of the United States 
 Revised Statutes do not debar such a creditor from being a witness. (/» re 
 Merrill, 9 Ben. 165.) 
 
 Statement as to the Consideration. — One of the most important require- 
 ments is that the proof shall contain a statement of the consideration. Similar 
 language in the former act was construed as requiring the claimant to state in 
 detail the nature of his claim, and the cause from which it arose. It was held 
 that an officer taking proof might require the holder of a note to state what 
 value, in dollars and cents, he gave for the note and whether it was received 
 before or after maturity. A mere statement that the note was " for value " 
 
278 THE NATIONAL BANKRUPTCY LAW. 
 
 Proof by Whom Made. [Ch. VL 
 
 was held not to be a sufficient statement of the consideration. In re Elder (3 
 B. R. 670; s. c. I Saw. 73), the court, in deciding what was a sufficient state- 
 ment of the consideration, held that the facts must be stated with so much cer- 
 tainty and particularity and detail that upon its face, without extrinsic proof, 
 the deposition should appear to the register to be true; and further said: 
 " Looking then at the object of the law and the reasons for requiring a state- 
 ment of the consideration in the deposition, a. general statement that the con- 
 sideration of a demand is goods, wares and merchandise, or hay, barley and 
 board is not sufficient; but the kind of goods, the quantity, the price, and the 
 date of sale should be stated ; and the quantity of hay or barley, the price and 
 the time of delivery, if delivered at one time, or if delivered continuously 
 through a period of time, then the period should be stated; and if the proof falls 
 short of this, the register ought not to consider it satisfactory, and should with- 
 hold his approval." This rule as to the sufficiency of the statement may still 
 be considered as laying down the proper practice, although on account of the 
 changed provisions of the statute the effect of insufficient statement would be 
 different. In proving claims against firms, care should be taken to show that 
 it is a firm claim and not one against the several members jointly, or jointly 
 or severally. It should be distinctly stated to be a claim against the firm giv- 
 ing its business name, but adding that it is composed of individuals, giving 
 their names. (In re F. Walton, Deady, 510.) Claims against the individual 
 members should not be included in a proof of claims against the firm. 
 
 Proof by Whom Made. — The former act contained explicit provisions as to 
 the cases in which proof could be made by agents of the creditors. As a rule, 
 it was limited to cases when the claimant was absent from the United States or 
 otherwise prevented from testifying. Section i Cg) of the present statute defines 
 " creditor " as including any one who owns a demand or claim provable in 
 bankruptcy, and further provides that it may include a duly authorized agent, 
 attorney or proxy. Whether this will authorize a creditor to make proof by 
 such persons, qu(2re. It would seem that if the agent had personal knowledge 
 of all the facts which must necessarily appear in the statement, required by 
 paragraph a of this section, he might make the proof. It was held, even under 
 the provisions of the act of 1867, in a case where the creditor himself did not 
 have as great a knowledge of the facts connected with the claim as did the 
 agent, that the agent might make the proof. {In r^Watrous, 14 B. R. 258.) So 
 if the agent has positive knowledge, and the creditor for any reason is unable 
 to make the proof, the agent may make it («« re Whyte, 9 B. R. 267); and in one 
 
CREDITORS. 279 
 
 § 57.] Instruments in Writing — Filing of Claims. 
 
 <ase under that act it was held that when an agent testified of his own knowl- 
 edge it was not necessary for him to state the sources of his knowledge, nor in 
 his proof to give any reason for the failure of the defendant to make the proof. 
 <McKinsey v. Harding, 4 B. R. 39.) The claims of partnerships may be proved 
 by any one of the several members, and in general, corporations, whether busi- 
 ness, municipal, or political, may prove by those officers who would be author- 
 ized to receipt for money. So persons acting in representative capacities, such 
 as executors, guardians, administrators, assignees and receivers may prove 
 claims due to them in such capacities. (Compare as to partners, in re Barrett, 
 2 B. R. 533; as to municipal and political corporations, in re Corn Exchange 
 Bank, 15 B. R. 216; as to persons in representative capacities, in re Republic 
 Ins. Co., 3 Biss. 452; s. c. 8 B. R. 197.) There is nothing, either in the lan- 
 guage or the spirit of the bankruptcv act which prevents a creditor from hon- 
 estly assigning his claim, or which prevents his assignee from making proof 
 thereof. (In re Murdock, 3 B. R. 146; s. c. i Lowell. 362.) The assignee may 
 make the proof; it is not necessary that the assignor should make it. (Ex p. 
 Davenport, i Low. 384.) 
 
 Instruments in Writing'. — Although the law provides that after the allow- 
 ance of a claim, the original instrument may be withdrawn by the permission 
 of the court, if the party leaves a copy on file, yet the trustee has a right \a 
 demand that the original shall be produced at the time of the payment of divi- 
 dends in order that the payment may be indorsed thereon. (In re Emison, 2 B. 
 R. 595; in re McNair, 2 B. R. 219.) 
 
 Filing of Claims. — The present act contains no provisions as to the practice 
 upon the filing of the claims. It would seem to permit the claimant, at his 
 pleasure, to file the claim in court. There is no provision as to giving notice to 
 other creditors of the fact of its presentation, or of the time when it will be con- 
 sidered by the court. Neither is there any requirement that the claim shall be 
 delivered to the trustee for inspection, before the court passes upon it. In so 
 far as there are provisions in the statute, the claimant may, at his pleasure, 
 present the claim to the court, and the court upon receipt may immediately 
 allow it, if objections are not made. If objections are made, the court will be 
 bound to give notice to the claimants and objectors, and possibly to all creditors 
 of a time and place for hearing the objections, and at that time to pass upon the 
 claims. The former act regulated the practice by requiring that after the proof 
 had been made before the register, it should be sent to the assignee to be by 
 
28o THE NATIONAL BANKRUPTCY LAW. 
 
 Allowance of Claims. [Ch. VL 
 
 him compared with the books and accounts of the bankrupt, and to be regis- 
 tered in a book kept for that purpose. (R. S., § 5080; act of 1867, § 22.) Doubt- 
 less, when the rules and forms referred to in section 30 are prescribed by the 
 Supreme Court, the practice will be established. 
 
 Allowance of Claims. — The assignee, the bankrupt, or any creditor may 
 object to the allowance of the claim. (In re Patterson, i B. R. 100; in re 
 Jones, 2 B. R. 59 ) As to the power of the referee or judge to postpone the con- 
 sideration of claims to which objection is made at the first meeting, until after 
 an election of trustees, compare notes to section 55. While the present statute 
 does not contain any express provision authorizing a postponement till after the 
 election, yet doubtless it lies in the discretion of the court or referee whether or 
 not to do so. The two things to be taken into consideration are: First, the 
 intention of the law that all creditors presenting claims for proof may vote for 
 trustee; secondly, the necessity of an early election of a trustee. Even if no 
 party objects to the allowance of a claim, it is evident that where the proof 
 itself shows facts which may excite the suspicion of the court, it is the duty of 
 the court, on its own motion, to direct that the consideration of the claim be 
 continued for a time for cause. What will constitute sufficient cause for such 
 postponement of consideration by the court of its own motion is perhaps ques- 
 tionable. A somewhat similar duty was imposed upon registers in bankruptcy 
 under the former act. When objection was made to the proving of a claim at 
 the first meeting, if the registers entertained doubts of the validity of the claim, 
 or of the right of the creditor to prove it, and if they were of the opinion that 
 such validity or right ought to be investigated, they were expressly empowered 
 to postpone the proof of the claim until the assignee was chosen. The right of 
 a court under paragraph b of the section under consideration to postpone the 
 allowance of claims in cases where creditors do not object, is probably to be 
 exercised under circumstances of a similar nature. Speaking of " the doubt of 
 the validity of the claim," which must exist in the mind of the former register, 
 in order to justify him in postponing the consideration of a claim offered for 
 proof, the court, in re G. Jackson (14 B. R. 449) said: " The doubt in the mind 
 of the register should be a reasonable, substantial doubt resulting from a judi- 
 cial consideration of the inquiry; such investigation is therefore required as 
 will influence the mind to a conclusion as to whether there is a doubt of the 
 validity of the claim or of the creditor's right to prove it." In re Northern Iron 
 Co. (14 B. R. 356), the court said: " There is no right to postpone a claim unless 
 the register has suspicion that it is unfounded. Such suspicion cannot be enter- 
 
CREDITORS. 281 
 
 § 57.] Allowance of Claims. 
 
 tained judicially in the court below or recognized here unless predicated upon 
 facts which legitimately excite it. If they existed with prima facie force, 
 beyond question the creditor must be accorded the opportunity of removing 
 them. A suspicion within the statute arises when the claim is not sustainable 
 without a ready explanation." It would seem that under similar circumstances 
 the courts would be allowed, if not required, to postpone the consideration of 
 claims. By section 7 (3), the court may require the bankrupt to examine the 
 correctness of all proofs of claims filed against the estate. Any person present- 
 ing a claim for allowance thereby submits himself to the jurisdiction of the 
 court. Even if he does not reside in the judicial district, he undoubtedly may 
 be required to appear before the court and be examined in regard to it, and if 
 he fails to sustain it, the court will be justified in disallowing the claim. There 
 is, it is true, no express statutory provision, as in the former act, authorizing 
 an examination of the claimant, but it would seem as if none were needed. A 
 claimant stands in the position of a party plaintiff charged with the burden of 
 proof, and it is clear that if he fail to establish his case, he cannot receive a 
 remedy. Thus it was held, in re Kyler (2 Ben. 414), that 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 to its orders, the court can 
 deprive him of all the benefits of the bankruptcy act given to creditors, and can 
 reject and expunge his claim. But where it would be a hardship to compel the 
 personal attendance of the claimant, it would be the duty of the court to require 
 the creditor to appear for examination before one of the officers mentioned in 
 section 21 (a) of this act. Under the former act it was held that a proof of claim 
 was not open to objections, because it appeared on its face that the statute of 
 limitations, if set up, would be a good defense to the claim; that the claimant 
 was not obliged to anticipate the defense, or give proof of facts to take the case 
 out of the statute. (/« re Knoepfel, i Ben. 398; 3. c. i B. R. 70.) In consider- 
 ing this decision it is to be borne in mind that many of the courts held that 
 claims barred by the statute of limitations were nevertheless provable in bank- 
 ruptcy; but the weight of authority was to the contrary. If a claim is tainted 
 with fraud the creditor can obtain no relief in a bankruptcy court. Where a 
 fictitious debt was attempted to be created by the bankrupt by his giving a note 
 for a sum greatly in excess of what was actually due from him, the illegality 
 of the portion was held to be a fraud contaminating and nullifying the whole 
 debt. (In re Elder, i Saw. 73; s. c. 3 B. R. 670.) 
 
282 THE NATIONAL BANKRUPTCY LAW. 
 
 Questioning the Validity of Judgments Presented for Allowance. [Ch. VI. 
 
 Questioning the Validity of Judgments Presented for Allowance. — 
 
 The extent to which bankruptcy courts may examine into the validity of judg- 
 ments which have been rendered against the bankrupt prior to the proceedings 
 and which the judgment creditor attempts to prove, was exhaustively considered 
 in re Fowler; Ex p. O'Neil (i B. R. 677; s. c. 1 Low. 161. In that case it was 
 said: " 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. (Pierce v. Jackson, 6 Mass. 244: Downe v. Fuller, 2 Met. 135.) In 
 bankruptcy the creditors are interested in contesting <t judgment which is 
 offered for proof in competition with their own debts; they may show by any 
 appropriate evidence that the judgment is void or voidable for fraud or irregu- 
 larity. 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 prefer- 
 ence. In all such cases it must be open to other creditors to object to the judg- 
 ment when offered for proof against the assets. On the other hand, when the 
 <;ourt rendering the judgment has jurisdiction, and there has been no fraud and 
 no preference, no one can examine into the consideration of a judgment, and 
 show by evidence outside the record that the judgment ought not to have been 
 rendered, or not for so large a sum. While the debtor is not a bankrupt, nor 
 acting in contemplation of bankruptcy, he binds all the world by his acts and 
 omissions in relation to his own affairs; and if he does not choose to defend an 
 action to which he has a legal defense and of which he has had full notice his 
 estate will be committed by his act or neglect, just as it would be by any improvi- 
 dent bargain he might make, or by any new promise to pay a debt barred by 
 the lapse of time or a former discharge in bankruptcy. When, therefore, the 
 judgment is either void or voidable as of right by the debtor or by creditors, 
 it may be examined into here if offered for proof; where it is valid as agaiilst 
 the debtor, and no fraud on creditors is shown, it is valid here. If there be 
 an intermediate case, in which it would be discretionary with the court which 
 rendered the judgment to vacate it upon the ground of mistake, the court 
 would probably authorize the assignee to pursue that remedy, postponing 
 the proof in the meantime. In England it has been said that the bank- 
 ruptcy court will inquire into the consideration of any judgment attempted to 
 be proved in bankruptcy, but the extent of the right seems to be limited by the 
 power of courts of equity to re-examine judgments at law and to grant new 
 trials or restrain executions. {Ex p. Mudie, 3 M. D. & De G. 66; Exp. Bry- 
 
CREDITORS. 283 
 
 § 57.] Secured Creditors. 
 
 ant, I V, & B. 211- Exp. Mason. 2 Dea. 245; Exp. Prescott, i M. D. & De G. 
 199.)" 
 
 SeeUFed Creditors. — Section i (23) declares that the term ' secured cred- 
 itor " shall include a creditor who has security for his debt upon the property of 
 the bankrupt of a nature to be assignable, under this act or who owns such a 
 •debt, for which some indorser, surely, or other person secondarily liable for the 
 bankrupt has such security upon the bankrupt's assets. No matter how great 
 may be the security which one may have, if it be property of another than the 
 bankrupt, the creditor may prove his entire claim against the bankrupt estate, 
 and receive -a. dividend thereupon, and thereafter institute proceedings to 
 enforce his claim upon the security for the balance. (/» re Anderson, 12 B. R. 
 502; Ex p. Todd, 2 Rose, 202; Ex p. Taylor, 3 Jur. N. S. 753; Ex p. Burn, 2 
 Rose, 55; in re Dunkerson, 12 B. R. 413; in re Broich, 15 B. R. 11; Ex p, 
 Leers, 6 Ves. 644; in re Ctam, 1 B. R. 504.) And this rule applies even where 
 the security that is held is security for a partnership debt but is property of 
 individual members of the firm, the partnership and the individual estates being 
 considered distinct and separate. {Ex p. Graves, 2 Jur. N. S. 651; Ex p. Pea- 
 cock. 2 G. & J. 67; in re Howard, Cole & Co., 4 B. R. 571; compare cases cited 
 under section 5, paragraph on Rights of Creditors Holding a Joint and Several 
 Obligation.) Under the act of 1867 there was no method by which the secured 
 creditor could prove his claim in time to take part in the proceedings at the first 
 meeting. The provisions of paragraph e of this section were specially intended 
 to save to that class of creditors this important right of participating in such 
 proceedings, but the allowance that is then made is made only for a special pur- 
 pose, and is not such an allowance of the claims as entitles them to dividends. 
 After their claims have been allowed by the court at such sums as to the court 
 seem to be owing over and above the value of their securities or priorities, they 
 must still procure an exact determination of the value of the securities in the 
 manner prescribed in paragraph A, in order that their claims may be allowed so 
 as to entitle them to dividends. There is no provision of law requiring them 
 to prove at all, if they are content with what they may receive by enforcing 
 their rights in the security. If they do not choose to do this, they may sur- 
 render the security to the trustee absolutely and prove their claims as if 
 unsecured, or they may follow the practice outlined in paragraph h. and obtain 
 the value of the security and a dividend upon the excess. \Jn re Brand, 3 B. 
 R. 324.) Where they elect to rely only on their security, it must be borne in 
 
284 THE NATIONAL BANKRUPTCY LAW. 
 
 Proving as Unsecured — Proofs by Preferred Creditors. [Ch. VL 
 
 mind that as the property is in the custody of the bankruptcy court, that court 
 will have the right, in its discretion, to control the proceedings to enforce the 
 lien as an incident of the power to collect and distribute the assets of the estate. 
 If the State court has not already acquired jurisdiction in the matter, the bank- 
 ruptcy court may, if it deems best, enjoin the secured creditor from attempting 
 to enforce his rights in any court other than the court of bankruptcy. (Compare 
 section 2, paragraphs on Jurisdiction to Determine the Rights of Lienors, and 
 Enjoining Proceedings in State Courts; compare also section 67 on Liens.) 
 
 Proving as Unsecured. — If a creditor, in proving his debt, fails to make 
 mention of his security, he will, as a general rule, be deemed to have elected la 
 prove it as unsecured and to have surrendered his security. (In re Bloss, 4 B. 
 R. 147; Heard v. Jones, 15 B. R. 402; Ex p. Solomon, i G. & J. 25; Stewart v. 
 Isidor, I B. R., 485; Hatch v. Seely, 13 B R. 380; Ex p. Downs, i Rose, 96; in 
 r^ Brand, 3 B. R. 324; in re Granger, 8 B. R. 30; Ex p. Hornby, Buch. 351.) 
 But it has been held that proof without mention of the security does not of itself 
 operate as a. discharge of the mortgage, a mortgage being the security; that 
 while the creditor was prevented from setting up the same against the assignee, 
 no one but the assignee could avail himself of the fact. (Cook v. Farrington, 
 104 Mass. 212.) Where the security is the property of the bankrupt held by an 
 indorser, or a person secondarily liable, it is not necessary that the creditor 
 should prove as a secured creditor in order to retain his rights as against the 
 indorser. (Merchants' Bank v. Comstock, 55 N. Y. 24.) Where, from igno- 
 rance or inadvertence, a claim has been proved as unsecured, the court, in the 
 exercise of its discretion, may permit the creditor to have his proof expunged so 
 that he may take steps to have the value of the security determined and to 
 prove for the excess only. This right will generally be accorded to one asking 
 it and excusing his mistake, if neither the bankrupt nor any other party will be 
 injured; that is, if their rights after the granting of an order to expunge the 
 proof will not be less or different than they would have been had not the mis- 
 take been made of proving the claim as unsecured. (/« re Hubbard, i Low. 
 190; s. c. I B. R. 679.) The court may impose terms and conditions in grant- 
 ing an order permitting an amendment of proof. (In re Parkes, 10 B. R. 82; 
 compare also in r^ Jaycox & Green, 8 B. R. 241; in re Claik & Bininger, 5 B. 
 R. 255; Greigson w Gerard, 4 T. & C. [N. Y.] 419; Ex p. Davenport, M. D. & 
 D. 313; in re McConnell, 9 B. R. 387.) 
 
 Proofs by Ppeferred Creditors. — Several material differences are to be 
 
CREDITORS. 285 
 
 § 57-] Proofs by Preferred Creditors. 
 
 noted between the act of 1867 and the present act as to the rights of preferred 
 creditors. The former act (act of 1867, § 23; Revised Statutes, § 5084), provided 
 that persons who had received preferences, having reasonable cause to believe 
 they were given contrary to the provisions of the act, could not prove the debt 
 on account of which the prefeirence was given until they should first surrender 
 the preference to the assignee. An examination of paragraph g of the present 
 act will show that in terms its provisions are not limited to preferred creditors 
 who have reasonable cause to believe that the transferrer intended to violate 
 the bankruptcy law. Neither is it in express terms limited to the particular 
 claim on account of which the preference was given. Section 60 a defines a 
 preference; the intent of the transferee is immaterial, neither does the date of 
 the transfer affect its character as a preference. This is true, even though it 
 must be conceded that only those preferences which have been created within 
 four months prior to the time of the filing of the petition in bankruptcy can be 
 set up as acts of bankruptcy in order to secure an adjudication, and notwith- 
 standing the further fact, that the law invalidates only those preferences which 
 have been received within four nionths prior to the time of the filing of the 
 petition, and where the creditors had reasonable cause at the time to believe 
 that an intent to prefer existed in the mind of the transferrer. The language 
 of paragraph g would seem to deprive all those persons who have received 
 preferences, from making any proof of their claims, although these preferences 
 could not be alleged as acts of bankruptcy, and although they could not be 
 invalidated. Whether or not the fact that in other cases the bankruptcy law 
 overlooks all preferential transfers made more than four months before the filing 
 of the petition, requires that such a construction of this paragraph shall be given 
 that a preferred creditor may prove his claim without surrendering his security 
 if the transfer would not be voidable, is a question which will probably occasion 
 more or less discussion But we see nothing either in the language of the act, 
 or in its purpose and scope, that requires such a construction, Certain prefer- 
 ences may be alleged as acts of bankruptcy, but not all preferences which 
 are acts of bankruptcy are voidable; so it follows that certain preferences 
 may, by the statute, prevent a creditor from proving his claim, which the 
 law does not deem it wise to make acts of bankruptcy. The limitation of 
 four months prescribed in sections 3 and 60 may have been a wise limita- 
 tion to impose upon parties desiring to allege preferences as acts of 
 bankruptcy, or as grounds of avoiding preferences; but it does not follow that 
 when the preferred creditor institutes a proceeding he should be allowed to 
 
286 THE NATIONAL BANKRUPTCY LAW. 
 
 Two Preferences — What is a Surrender. [Ch. VL 
 
 claim the benefit of a limitation not expressly given to him by statute. 
 Although the courts may hold that on grounds of public policy, preferences 
 received more than four months prior to the filing of the petition need not be 
 surrendered, there still remains the question whether one who has received a 
 preference in fact, but which he did not at the time have reasonable cause to 
 believe to have been intended as a preference, may nevertheless hold it and yet 
 prove for the balance of his claim. To do so would be manifestly inequitable, 
 notwithstanding his preference could not be invalidated. Though an action to 
 invalidate the preference may not lie, yet when the preferred creditor invokes 
 the equitable aid of the bankruptcy court, it would seem as if he must first 
 " do equity " by surrendering his preference. Compare the somewhat analo- 
 gous case of the duty of a foreign creditor who has obtained a. preference by 
 means of a valid attachment of the bankrupt's property in a foreign country, 
 to first surrender his attachment before proving for the balance of his claim. 
 (/» re Bugbee, 9 B. R. 258, and numerous English cases there cited; compare 
 abstract from this case under section 63, paragraph on Debts to Aliens.) 
 
 Two Preferences. — Under the old law it was held if a creditor had two or 
 more separate debts and received a fraudulent preference as to some one or 
 more of them, but not as to all of them, he could, without surrendering the 
 preference, prove as to those upon which no preference had been received; and 
 also that he might surrender his preference as to certain claims and receive 
 dividends upon them, though retaining it as to others. (/» re Richter, i Dill. 
 544; s. c. 4 B. R. 221; compare in re Jordan, 9 B. R. 416.) The express terms 
 of that act, of course, required that construction. It is not clear, under the 
 provisions of this paragraph (g) of the new statute that this would now be a 
 correct statement of the law. 
 
 What is a Surrender. — The question, what constitutes a surrender, has 
 received much discussion. It is admitted by all that if the assignee is compelled 
 to bring an action to invalidate a transfer, and if he recovers and enters up 
 judgment, no subsequent payment of that judgment by the preferred creditor 
 and no subsequent compliance by him with its terms can be considered a sur- 
 render. By his judgment the trustee has " recovered " the property. In legal 
 effect, the transferee no longer has anything to surrender. {In re Tonkin 
 4 B. R. 52; in re Richter, 4 B. R. 221; s. ... i Dill. 544.) But how far the 
 proceedings instituted to recover may proceed, and the right still be left 
 in the transferee to surrender, is a. point upon which the authorities are greatly 
 
CREDITORS. 287 
 
 § 57-] What is a Surrender. 
 
 at variance. Thus, in re J. Lee, 14 B. R. 89, Judge Wallace of the Northern 
 District of New York said: " I have repeatedly held that a voluntary surrender 
 (by a preferred creditor) is a prerequisite to the right to prove, and that it is too 
 late for the creditor to avail himself of the privilege after he has elected to con- 
 test the assigee's title to the money or property preferentially received." Judge 
 Blatchford of the Southern District of New York, however, held, in many cases, 
 views somewhat different from those of Judge Wallace. In re J. Riorden (14 B. 
 R. 332), was a case which came before him, in which the preferred creditor sur- 
 rendered his preferences pending the action. The court said: " That surrender 
 was accepted, and the assignee discontinued the suit voluntarily, and thereby is 
 estopped from alleging that there was no surrender. The assignee might have 
 refused to accept the surrender or to discontinue the suit, except on condition 
 that he should have the same benefit of objecting to the proof of debts as if the 
 money had been obtained as a result of a recovery. But he imposed no such 
 condition. If he had imposed it, and it had been refused, he might have gone 
 on with the suit, in order, in case of his recovering it, to exclude the proof of 
 the debt. Having waived a recovery, he thereby waived the right to exclude the 
 proof of debt." On the other hand, numerous decisions laid down the rule that 
 a preferred creditor might surrender his preference at any time before the actual 
 entry of judgment against him. (Compare the following cases cited in the brief 
 by attorneys for preferred creditors in re J. Riorden, supra : in re H. B. 
 Montgomery, 3 Ben. 565; s. c. 3 B. R. 137, 429; in re Kipp, 4 B. R. 593; in re 
 Tonkin, 4 B. R. 52; in re C. A. Davidson, 3 B. R. 418; in re Scott & McCarty, 
 4 B. R. 414; compare also in re Richter, 4 B. R. 221; s. c. i Dill. 544; in re 
 Cramer, 13 B. R. 225; in re Simeon Leland, g B. R. 209.) In the case of Burr 
 V. Hopkins, 12 B. R. 211, a preferred creditor surrendered his preference after 
 an opinion had been given by the court and after findings of fact had been 
 made, but before the actual entry of judgment. It was held by the United 
 States Circuit Court for the Eastern District of Wisconsin, that this was a sur- 
 render authorizing the one making it to prove his claim. The extent to which 
 courts have admitted the right of a preferred creditor to surrender may be seen 
 by a consideration of the decisions in Zahm v. Fry, g B. R. 546, and Hood v. 
 Karper, 5 B. R. 358, in which cases it was held that where there was no actual 
 fraud on the part of the preferred creditor, he should in equity have an oppor- 
 tunity of considering whether he would surrender his preference and pay the 
 costs and expenses of the suit, and that the court might properly suspend the 
 entry of the decree to give him an opportunity to do so. The surrender must 
 
288 THE NATIONAL BANKRUPTCY LAW. 
 
 Debts to the United States — Reconsideration of Claims. [Ch VI. 
 
 be to the trustee, not to the bankrupt. {In re Currier, 13 B. R. 68.) It is not 
 necessary to surrender a preference except in order to enable one to prove his 
 claim against the party who made the preferential transfer. Thus, if a creditor 
 has received a preference from a firm composed of two persons, but has an 
 individual claim against one of them, he may prove the latter without surrender- 
 ing his preference {In re Comstock & Co., 12 B. R. no.) 
 
 Debts to the United States, — The provisions of paragraph {j) strongly 
 imply that the United States and the Sovereign States, and all political divisions, 
 in bankruptcy proceedings under the present act, are to prove their claims like 
 ordinary creditors. The common-law rule is that the sovereign is not affected 
 by a statute unless he is specially mentioned, but this clause must be considered 
 as indicating an intent on the part of Congress to subject the United States as 
 a creditor to the provisions of the bankruptcy law. Compare notes under sec- 
 tion 17. As to the right of the United States to a priority of payment, compare 
 section 64. 
 
 When Proof May be Made. — There is nothing in the provisions of the act 
 which prevents the proving or the allowing of a claim even prior to the first 
 meeting. (Compare in re Patterson, i Ben. 448; s. c. i B. R. 100.) But para- 
 graph (») is an absolute, arbitrary limitation, which prevents proof after one 
 year from the time of the adjudication of bankruptcy. The only exceptions 
 that can be allowed are those provided for in that paragraph. 
 
 Subrog'ation. — The right of a surety of a. debtor to prove the claim of a 
 creditor when the latter neglects to do so, and to be subrogated to the rights of 
 the creditor, if he discharges the indebtedness in whole or in part, is an equitable 
 right. It exists only when the principal creditor could prove. If he, by accept- 
 ing a preference and refusing to surrender it, cannot prove the claim, the sure- 
 ties cannot prove it. {In re Ayers, 6 Biss. 48.) 
 
 Reconsideration of Claims. — The right given by paragraph {It) to recon- 
 sider claims which have been allowed, and to reallow or reject them, is merely 
 declaratory of the law. It is a matter within the discretion of the court, and the 
 only limitation is that provided for in the statute itself, namely, that claims 
 shall not be reconsidered after the estate has been closed. Up to that time the 
 court has ample power to investigate a claim and to make any corrections which 
 equity or justice demands. It may reduce the amount if it is too large, or may 
 increase it, if by mistake it was proven for too small a sum, but the court will 
 
CREDITORS. 289 
 
 § 58.] Notice to Creditors. 
 
 not allow an amendment which, in fact, introduces a new claim. The proper 
 procedure in such a case is to prove as for a separate claim. {In re H. B. Mont- 
 gomery, 3 Ben. 565; s. c. 3 B. R. 429.) As has been seen in the paragraph on 
 Proof of Secured Claims as Unsecured, the court may permit the withdrawal of 
 such proof to enable the creditor to establish them as secured claims, and to 
 prove for the excess above the value of his securities. In a proceeding to recon- 
 sider, the burden of proof rests upon the petitioner. The original allowance 
 establishes a. prima fade case. It has been held that the bankruptcy court may 
 expunge or dismiss a claim on account of matters occurring after the proof was 
 made. (/» re J. C. Loring, i Holmes, 483.) 
 
 Effect of ProTin? a Claim upon a Continuaiiee of Other Proceedings 
 to Enforce It. — (Compare section 11, paragraph on Effect of Proof on Rights 
 of Action.) 
 
 Appeals ftom the Allowance or Disallowance of Claims. — Compare 
 section 25 a (3), and section 25 b. 
 
 Sec 58. Notice to Creditors. — a Creditors shall have at least 
 ten days' notice by mail, to their respective addresses as they 
 appear in the list of creditors of the bankrupt, or as afterwards 
 filed with the papers in the case by the creditors, unless they 
 waive notice in writing, of (i) all examinations of the bankrupt ; 
 (2) all hearings upon applications for the confirmation of compo- 
 sitions or the discharge of bankrupts ; (3) all meetings of creditors ; 
 (4) all proposed sales of property ; (5) the declaration and time of 
 payment of dividends ; (6) the filing of the final accounts of the 
 trustee, and the time when and the place where they will be 
 examined and passed upon ; (7) the proposed compromise of any 
 controversy, and (8) the proposed dismissal of the proceedings. 
 
 b Notice to creditors of the first meeting shall be published at 
 least once and may be published such number of additional times 
 as the court may direct ; the last publication shall be at least one 
 week prior to the date fixed for the meeting. Other notices may 
 be published as the court shall direct. 
 
 c All notices shall be given by the referee, unless otherwise 
 ordered by the judge. 
 
 NAT 3ANKRUPTCY LAW — Ig 
 
290 THE NATIONAL BANKRUPTCY LAW. 
 
 The Giving of Notice. [Ch. VL 
 
 Analogous Provisions of Former Acts. — 
 
 As to notices of first meeting: R. S., § 5019; act of 1867, § 11; As to notice 
 of filing of trustee's account: R. S., 5096; act of 1867, g 28. As to notice of 
 dividends: R. S., § 5102; act of 1867, § 27; act of 1841, § 9; act of 1800, § 29. 
 As to notice of application for discharge: R. S., § 5109; act of 1867, § 29; act of 
 1841, § 4. As to notice of application for confirmation of composition : R. S., 
 § 5103 A. As to notice of meetings in general: R. S., § 5094; act of 1867, § 17. 
 
 The Giving of Notice. — A comparison of the several subdivisions of para- 
 graph a with the sections of this act relative to the several proceedings to which 
 they refer shows that the proper practice with reference to notice is as follows: 
 Notice of the examination of the bankrupt required by section 7 (9) can be given 
 only after the court shall have fixed the time; but then must be given for at 
 least ten days. This requirement, it is believed, will not interfere with the 
 right of the court to order a bankrupt present in court to answer forthwith 
 any inquiries which the court may then desire put to him, or which any creditor 
 at that time may desire to ask. (Compare in re Brandt, 2 B. R. 215; in re 
 Bromley, 3 B. R. 686.) Likewise notice of the hearing of an application for the 
 confirmation of a composition, or for a discharge of the bankrupt, cannot be 
 given until the applications have been filed, and the time for hearing them shall 
 have been fixed by the court pursuant to sections 12 (f) and 14 (*) respectively. 
 Notice of all meetings of creditors should be given to each creditor by mail. 
 The direction in paragraph b, that notice of the first meeting shall be published, 
 would seem to provide for an additional public notice, and not to be an alterna- 
 tive manner of giving notice. The language of subdivision (4) that notice of alt 
 proposed sales of property shall be given, should be construed in connection 
 with section 70 if). Whether this prevents a trustee from selling property at 
 private sale without notice, or applies only to public sales at auction, quare. 
 The notice of the declaration and time of payment of dividends which is required 
 would seem to include a notice of the proposed declaration to be made by the ref- 
 eree in accordance with the requirements of section 39(1); " ten days notice " is 
 manifestly a notice for that length of time prior to the doing of the act and not sub- 
 sequent thereto. Whether it is necessary to give an additional notice of the 
 time when dividends will be payable, is a question. The statute seems to 
 require but one notice of both the declaration and the time of payment. Sec- 
 tion 47 (9) requires that a trustee shall pay dividends within ten days after they 
 are declared by the referee; clearly, then, a ten days' notice of the time of pay- 
 
CREDITORS. 291 
 
 § 58.] Necessity of Notice to Give Jurisdiction. 
 
 ment of dividends could not be given, if given after the declaration. It is 
 equally clear that no positive notice of the time of payment could be given 
 before the declaration had been made. The notice then is in effect simply a 
 notice that at a given day, not less than ten days after the time of the giving of 
 the notice, the referee will determine the question of the declaration of divi- 
 dends pursuant to section 30 (i). But a subsequent notification of the amount 
 of the dividend may properly be sent to each creditor. (Compare R. S., § 5102.) 
 Notice of the filing of the final accounts of the trustee, and the time and the 
 place where they will be examined, is clearly a notice to be given after the 
 filing of the account. Compare § 47 (8); also R. S., § 5096. Notice of the pro- 
 posed compromise of the controversy must be notice of the application of the 
 trustee for an order from the court permitting such compromise. Compare 
 section 27. As to notice of the proposed dismissal of the proceedings, compare 
 section 59 (g). As to the newspaper in which notice of the first meeting shall be 
 published, compare section 28. 
 
 Necessity of Notice to Give Jurisdiction. — The courts hold that a pro- 
 ceeding in bankruptcy is in the nature of a proceeding in rem; that jurisdiction 
 is obtained by the petition, adjudication, and the taking of the property into 
 the custody of the court. Actual personal notice to the creditors, though 
 required by the statute, is not necessary to give the court jurisdiction over the 
 creditors. In Rayl v. Lapham (27 Ohio St. 452; s. c. 15 B. R. 508), it was said: 
 " The statute directs certain acts to be done and publication to be made for the 
 purpose of affording a reasonable opportunity of notice to the creditors, but the 
 proceedings are so far in rem that actual notice to the creditors is not essential 
 to the jurisdiction of the court, nor will the want of it invalidate the discharge 
 which the court is empowered to grant to a bankrupt." 
 
 The question as to the effect of want of notice has most frequently arisen in 
 determining the effect of a discharge in bankruptcy upon the claims of creditors 
 to whom no personal notice was given, and the rule enunciated in Rayl. v. 
 Lapham is in harmony with the decision of nearly all the courts under the 
 former act. (Thurmond ». Andrews, 13 B. R. 157; s. c. 10 Bush [Ky.] 400; 
 Piatt V. Parker, 13 B. R. 14 [citing Payne v. Able, 4 B. R. 220; s. c. 7 Bush 
 (Ky.) 344]; Heard v. Arnold, 15 B. R. 543; s. c. 56 Geo. 570; Pattison v. Wilbur, 
 10 R. I. 448; s. c. 12 B. R. 193; Williams v. Butcher, 12 B. R. 143; in re 
 Archenbrown, 11 B. R. 149 [citing Hill v. Robbins, 22 Mich. 475]; Symonds v. 
 Barnes, 6 B. R. 377; Corey v. Ripley, 4 B. R. 503.) 
 
292 THE NATIONAL BANKRUPTCY LAW. 
 
 Who may File and Dismiss Petitions. [Ch. VI. 
 
 Sec. 59. Who may File and Dismiss Petitions. — a Any quali- 
 fied person may file a petition to be adjudged a voluntary bank- 
 rupt. 
 
 b Three or more creditors who have provable claims against 
 any person which amount in the aggregate, in excess of the value 
 of securities held by them, if any, to five hundred dollars or over ; 
 or if all of the creditors of such person are less than twelve in 
 number, then one of such creditors whose claim equals such 
 amount may file a petition to have him adjudged a bankrupt. 
 
 c Petitions shall be filed in duplicate, one copy for the clerk and 
 one for service on the bankrupt. 
 
 d If it be averred in the petition that the creditors of the bank- 
 rupt are less than twelve in number, and less than three creditors 
 have joined as petitioners therein, and the answer avers the exist- 
 ence of a larger number of creditors, there shall be filed with the 
 answer a lijt under oath of all the creditors, with their addresses, 
 and thereupon the court shall cause all such creditors to be notified 
 of the pendency of such petition and shall delay the hearing upon 
 such petition for a reasonable time, to the end that parties in 
 interest shall have an opportunity to be heard ; if upon such hear- 
 ing it shall appear that a sufficient number have joined in such 
 petition, or if prior to or during such hearing a sufficient number 
 shall join therein, the case may be proceeded with, but otherwise 
 it shall be dismissed. 
 
 e In computing the number of creditors of a bankrupt for the 
 purpose of determining how many creditors must join in the 
 petition, such creditors as were employed by him at the time of 
 the filing of the petition or are related to him by consanguinity 
 or affinity within the third degree, as determined by the common 
 law, and have not joined in the petition, shall not be counted. 
 
 / Creditors other than original petitioners may at any time 
 enter their appearance and join in the petition, or file an answer 
 and be heard in opposition to the prayer of the petition. 
 
 g A voluntary or involuntary petition shall not be dismissed 
 by the petitioner or petitioners or for want of prosecution or by 
 consent of parties until after notice to the creditors. 
 
CREDITORS. 293 
 
 § 59.] Voluntary Petitioners — Petitioners in Involuntary Proceedings. 
 
 Analogous Provisions of Former Acts. — 
 
 As to voluntary petition: R. S., § 5044; act of 1867, | 11; act of 1841, § 7. As 
 to involuntary petitions, and the necessary amount of petitioners' claims: R. 
 S., I 5021; act of 1867, § 39; act of 1841, § 7; act of 1800, §§ i and 2. 
 
 Voluntary Petitioners. — There is some conflict of authority as to the right 
 of a person to file a voluntary petition after an involuntary petition has been 
 filed against him. It was held that this could be done, in re Canfield (i N. Y. 
 Leg. Obs. 234; s. c. 5 Law Rep. 415), a case decided under the act of 1841. The 
 contrary was held in re R. Stewart (3 B. R. 108), decided under the act of 1867, 
 In this case an adjudication was made upon the voluntary petition by the regis> 
 ter, but the same was set aside by the court on motion. The court, in granting 
 the motion, said: " It was never intended by the bankrupt act, and no correct 
 rule of practice can tolerate, that when a creditor has instituted proceedings to 
 force his debtor into bankruptcy, such debtor should be allowed to become a 
 bankrupt, and be adjudicated as such on his own petition before the determina- 
 tion of the creditor's petition. To permit such a practice might'work a most 
 flagrant wrong upon the rights of the petitioning creditor." In re C. A. David- 
 son (3 B. R. 418), a case arising in the southern district of New York, it appears 
 from the facts stated in the opinion that creditors filed an involuntary petition ; 
 that the debtor denied the facts of the petition, and upon a trial was adjudged a 
 a bankrupt upon the petition of the creditors; but in the meantime the bankrupt 
 filed in the same court his voluntary petition to be adjudged a bankrupt, and 
 was so adjudged prior to the adjudication upon the involuntary petition, and 
 the usual proceedings subsequent to an adjudication followed the adjudication 
 on the voluntary petition, and none of these proceedings were assailed or 
 were questioned by the court. 
 
 Who May Become Bankrupts. — Compare notes to section 4. A State 
 court has no right to enjoin a party from applying to the court of bankruptcy 
 to be adjudged a voluntary bankrupt. (Fillingin v. Thornton, 49 Geo. 384; ». 
 c. 12 B. R. 92.) 
 
 Petitioners in Involuntary Proceedings. — It has been held that a State 
 court has the power to restrain, by injunction, a creditor from prosecuting a 
 fraudulent and oppressive petition in bankruptcy against a debtor, especially 
 in cases where the petitioning creditor has, prior to filing the petition, sought 
 the aid of the State court with reference to the claim held by him. (Pusey v. 
 
294 THE NATIONAL BANKRUPTCY LAW. 
 
 Creditors Who Can Not Petition. [Ch. VI. 
 
 Bradley, 46 How. Pr. 255 ; s. c. i N. Y. Supr. [T. & C] 661, citing 3 Edw. Ch. 
 203, 205; 17 How. Pr. 464; 6 Abb. Pr. 239.) 
 
 A person may request his creditors to institute proceedings in bankruptcy 
 against him, and the adjudication will not be assailable as being fraudulently 
 obtained. (/« re Bouton, 5 Saw. 427.) 
 
 A person may lawfully buy up claims so that he may enable himself to join 
 in a petition in bankruptcy, and make up the necessary amount of claims. (In 
 r^ Shouse, Crabbe, 482; in re Woodford & Chamberlain, 13 B. R. 575.) It is 
 not necessary that the debt of the petitioning creditor be one existing at 
 the time of the act of bankruptcy which is alleged in the petition. (Phelps v. 
 Clasen, 3 B. R. 87; s. c. Wool. 204.) As to the right of a creditor holding a 
 claim which is barred by the statute of limitations to file a petition based 
 thereon, there is a conflict of authority. Those courts which hold that such a 
 debt is provable would, in consistency, be obliged to hold that it might be the 
 foundation of a petition. Compare section 63, paragraph on Debts Barred by 
 the Statute of Limitations. 
 
 CredltOPS Who Can Not Petition. — Even creditors holding provable 
 claims may not always be petitioners in bankruptcy. Like parties to legal pro- 
 ceedings in general, they are subject to the principles and doctrines of estoppel. 
 Applying these principles, it has been generally held that a creditor who has 
 given his consent to an act is estopped from thereafter urging it as an act of 
 bankruptcy. (In re Israel, 12 B. R. 204; s. c. 3 Dill. 511; in re Schuyler, 2 B. R. 
 549; s. c. 3 Ben. 200; in re Currier, 13 B. R. 68; s. c. 2 Lowell, 436; Perry ». 
 Langley, i B. R. 559; s. c. 7 A. L. Reg. 429; Everett v. Derby, 5 Law Rep. 225.) 
 In general, a creditor who assents to a preferential transfer to himself, or who 
 accepts the benefits of a general assignment for the benefit of creditors, is 
 estopped from alleging it as an act of bankruptcy. (In re E. G. Williams, 14 
 B. R. 132.) But the mere receiving of a preference, not being in itself a fraud, 
 and not being even voidable at the time, and never voidable unless the petition 
 in bankruptcy is filed within four months thereafter, does not estop one from 
 filing a petition if he surrenders his preference. (In re Hunt & Hornell, 5 B. R. 
 433; in re Rado, 6 Ben. 230.) In re Sheehan, 8 B. R. 345, it was held that the 
 levy by a creditor of an execution on property of his debtor does not estop him 
 from petitioning to have his debtor adjudged a bankrupt; but the filing of the 
 petition in bankruptcy will be held to be a waiver of the levy and an election by 
 the creditor to proceed in the bankruptcy court. In Coxe v. Hale, decided by 
 the United States Circuit Court for the Northern District of New York (10 Blatch. 
 
CREDITORS. 295 
 
 § 59.] Secured Creditors — Amount of Claims. 
 
 56; s. c. 8 B. R. 562), it was held that a creditor knowing his debtor to be insolv- 
 ent might prosecute his debtor to judgment, issue execution, and levy on the 
 property of his debtor, and afterwards have the debtor adjudicated bankrupt for 
 allowing his property to be taken on the execution. The court in this case based 
 its decision upon the fact that there was no evidence of an intent on the part of 
 the judgment creditor to secure a preference; and held that one was not 
 estopped from proceeding to put his debtor into bankruptcy by taking a trans- 
 fer, unless he took it with an intention to secure a preference. So the weight 
 of authority is that creditors who have secured attachments or other liens pur- 
 suant to legal proceedings, within four months prior to the filing of the petition, 
 may be petitioners in involuntary proceedings against the debtor whose prop- 
 erty they have attached or subjected to a lien. Their petition is deemed a 
 waiver of the lien. {In re Broich, 15 B. R. II [citing in re Bloss, 4 B. R. 147; 
 in re Stansell, 6 B. R. 183; and distinguishing in re Frost, 11 B. R. 69; s. c. 6 
 Biss. 213].) As to whether preferred and secured creditors are to be counted in 
 computing the number of creditors, in cases other than where they are petition- 
 ers, see below, this section. 
 
 Secured Creditors. — By the express provision of the statute, secured cred- 
 itors may now be petitioners; but only the excess of their claim over the value 
 of the securities held by them is considered as the debt due to them. 
 
 Amount of Claims. — If the petition is filed by one person, he must allege 
 that all the creditors of the debtor are less than twelve in number, and that his 
 own claim equals or exceeds five hundred dollars. It has been held that it is 
 not necessary that this allegation be made positively, but that it may be upon 
 information and belief. {In re Scammon, 10 B. R. 66; s. t. 6 Biss. 130; in 
 re Mann, 14 B. R. 572; s. c. 13 Blatch. 401; s. c. 51 How. Pr. 174.) Where a 
 petition is filed against one who is a member of a partnership, his debts due as 
 a member of the firm and those due individually are both to be taken into con- 
 sideration in determining the number and amount. {In re Lloyd, 15 B R. 257.) 
 In the same case it was held that a debt due by the partner to the firm could not 
 be computed in ascertaining the number and amount of his debts, and that 
 where he is a member of two firms, one of which owed the other, that debt could 
 not be counted. In ascertaining whether the debt of the petitioning creditors 
 equals the amount required by the statute, the interest as well as the principal 
 of the indebtedness may be taken in consideration. (Sloan v. Lewis, 22 Wall. 
 150; s. c. 12 B. R. 173.) Debts not due, as well as those that are due, may be 
 
296 THE NATIONAL BANKRUPTCY LAW. 
 
 Attaching Creditors. [Ch. VL 
 
 made the foundation of a petition in bankruptcy; they are provable claims, 
 although not then payable. (/« re W. Alexander, 4 B. R. 178; s. c. i Low. 470; 
 Linn v. Smith, 4 B. R. 46.) If the debt of the petitioning creditor is equal to 
 the amount required by the statute, and his petition alleges the other material 
 facts, he has an absolute right to have an adjudication upon it by the court. 
 Although he may be the only creditor and may have ample remedies in courts 
 of law or equity, that fact furnishes no ground for refusing to adjudicate (in re 
 W. Alexander, 4 B. R. 178; s. c. i Low. 470); and this is true, even although it 
 be shown that the proceedings in bankruptcy would be detrimental to the 
 interests of the debtor. If the petitioner's debts really amount to the sum men- 
 tioned in the statute, the fact that the debtor has tendered payment is insuffi- 
 cient to prevent an adjudication. This results in part from the fact that if the 
 debtor is insolvent, payment in full would be a preference. (In re Ouimette, 3 
 B. R. 566; s. c. I Saw. 47; in re Williams, 3 B. R. 286; s. c. i Low. 406.) But 
 if a payment of the indebtedness is actually accepted after the filing of the 
 petition, it may be set up and is a sufBcient defense. If it is a preference 
 accepted knowingly, it estops the petitioner. 
 
 Counting Preferred Creditors in Computing the Number of Creditors. 
 
 — The question whether preferred creditors are to be counted in determining 
 the number and amount of outstanding claims against the bankrupt differs 
 somewhat from the question whether such creditors may be petitioners. The 
 courts which hold that they may be petitioners have imposed as the condition of 
 their doing so the surrender by them of the property preferentially transferred; 
 and further hold that the filing of a petition by a preferred creditor is in itself a 
 waiver of the preference. But until they do surrender their preference, under 
 section 57 (g), their claims are not provable, and therefore, on principle and 
 authority, and in accordance with the statutory definition in section i (9), they 
 should not be regarded as creditors. (In re Israel, 12 B. R. 204; s. c. 3 Dill. 
 511; in re Currier, 13 B. R. 68; Clinton v. Mayo, 12 B. R. 39.) 
 
 Attaching Creditors. — Under the former act there was a conflict of 
 authority as to whether creditors, who had secured attachments upon the bank- 
 rupt's property within four months prior to the filing of the petition, were to be 
 counted in the number of creditors. It was held in re Scrafford (15 B. R. 104; 
 8. c. reversing the same case, 14 B. R. 184), that they could not be so reckoned; 
 the contrary was held in re Broich (15 B. R. II). In both of these cases the 
 attaching creditors appeared in opposition to the petition and claimed the right 
 
CREDITORS. 297 
 
 § 59] Debtor's List of Creditors. 
 
 to oppose the adjudication, even without a surrender of their liens. We consider 
 the rule laid down in re Scrafford as more just. A creditor who has secured an 
 attachment or other lien pursuant to legal proceedings is substantially a preferred 
 creditor, if the proceedings were instituted within four months before the 
 petition. It is true, such liens are made void by the adjudication of bankruptcy 
 /;?■« (section 67 [<r]); but until that time, at least, they have all the elements of 
 preferential transfers. Until there is a surrender of the property attached or sub- 
 jected to the lien, the attaching creditor would probably not be allowed to prove 
 his claim in bankruptcy. Until he could prove it, he would not be a '■ cred- 
 itor," as that word is used in the bankruptcy act. (Compare section i [9].) 
 
 Debtor's List of CreditOPS. — When one creditor alone petitions unless it is 
 averred in the petition that the creditors are less than twelve in number, the 
 court must dismiss the petition. In such a case it has been held that the court 
 has no right to hold the matter open in order to give other creditors a right to 
 intervene. (In re Burch, 10 B. R. 150.) When the debtor files his list of creditors, 
 the petitioning creditors have a right to have him examined fully as to the matters 
 embraced in the list. {In re Hymes, 10 B. R. 433; s. c. 7 Ben. 427.) The court 
 must pass upon the question as to the number of creditors, but its adjudication, 
 when once made, is final and cannot be impeached collaterally. {In re W. 
 Duncan, 8 Ben. 365; s. c. 14 B. R. 18; in re Scammon, 6 Biss. 130; s. t. 10 B. 
 R. 66.) Allegations and averments in the petition showing that the petitioner 
 has the necessary amount of claims, and in case only one creditor petitions, that 
 there are not more than twelve creditors, have been held necessary to confer 
 jurisdiction upon the court. In re Scammon, supra; contra in « Jewett, 2 Low. 
 393. If such allegations do not appear in a petition, the debtor need not file an 
 answer, and no adjudication made will be valid. But if issue is joined the 
 determination of the court as to the existence of the number and amount is con- 
 clusive and binding, even though it be erroneous . {In re Funkenstein, 3 Saw. 
 605; s. c. 3 Cent. L. J. 448; s. c. 14 B. R. 213; in re Burch, 10 B. R. 150; in re 
 Rosenfields, 11 B. R. 86.) Any person interested in the proceedings may oppose 
 the adjudication on the ground that a sufficient number of creditors have not 
 united in the petition. The debtor or any creditor, even though he be one who 
 has secured an attachment or preference, may set. up this defense. And this 
 right he should have, although he could not be counted in the number of credit- 
 ors. {In re E. G. Williams, 14 B. R. 132; in re Scraflord, 15 B. R. 104; s. c. 
 below 14 B. R. 184; in re Hatje, 6 Biss. 436; s. c. 12 B. R. 548.) When the 
 bankrupt denies that his creditors are less than twelve in number, or denies the 
 
398 THE NATIONAL BANKRUPTCY LAW. 
 
 Preferred Creditors. [Ch. VI. 
 
 amount of the petitioner's debt, the burden of proof as to both the amount of the 
 petitioner's claim, and as to the number of other creditors, is upon the petitioner. 
 (/« re Hymes, 10 B. R. 433; s. c. 7 Ben. 427; in re Frost, 11 B. R. 69; s. c. 6 
 Biss. 213) 
 
 Exclusion of Employees. — The statute provides that the claims of 
 employees and of relatives within the third degree shall be excluded in comput- 
 ing the number of creditors. Under an analogous provision in the former act 
 excluding creditors holding claims amounting to less than two hundred and fifty 
 dollars, it was held by nearly all the courts that there was nothing in the 
 language of the act excluding such persons from being counted in computations 
 as to the amount of the bankrupt's debts. But under the present act the 
 amount of the claims of creditors, other than the petitioners, is entirely imma- 
 terial. Only the number is considered; and even that is not material, if there 
 are three petitioners with claims aggregating five hundred dollars. It will be 
 noted that by the terms of the present statute such persons are excluded only 
 in case they have not joined in the petition. The manifest purpose of the stat- 
 ute is to prevent an insolvent debtor from stopping an adjudication against him- 
 self by the creation of a. number of small debts to persons related to or 
 dependent upon him. As to the determination of degrees of relationship by the 
 rule of the common law, compare notes to section 35. 
 
 Sec. 60. Preferred Creditors. — a K person shall be deemed 
 to have given a preference if, being insolvent, he has procured or 
 suffered a judgment to be entered against himself in favor of any 
 person, or made a transfer of any of his property, and the effect 
 of the enforcement of such judgment or transfer will be to enable 
 any one of his creditors to obtain a greater percentage of his debt 
 than any other of such creditors of the same class. 
 
 b \i 2. bankrupt shall have given a preference within four 
 months before the filing of a petition, or after the filing of the 
 petition and before the adjudication, and the person receiving it, 
 or to be benefited thereby, or his agent acting therein, shall have 
 had reasonable cause to believe that it was intended thereby to 
 give a preference, it shall be voidable by the trustee, and he may 
 recover the property or its value from such person. 
 
CREDITORS. 299 
 
 § 6a] Sections in Pari Materia. 
 
 c If a creditor has been preferred, and afterwards in good faith 
 gives the debtor further credit without security of any kind for 
 property which becomes a part of the debtor's estates, the amount 
 of such new credit remaining unpaid at the time of the adjudica- 
 tion in bankruptcy may be set off against the amount which 
 would otherwise be recoverable from him. 
 
 d li a. debtor shall, directly or indirectly, in contemplation of 
 the filing of a petition by or against him, pay money or transfer 
 property to an attorney and counselor at law, solicitor in equity, 
 or proctor in admiralty for services to be rendered, the transac- 
 tion shall be re-examined by the court on petition of the trustee 
 or any creditor and shall only be held valid to the extent of a 
 reasonable amount to be determined by the court, and the excess 
 may be recovered by the trustee for the benefit of the estate 
 
 Analogous Provisions of Former Acts. — 
 
 As to voidable preferences: R. S., § 5128; act of 1867, § 35; act of 1841, § 2: 
 act of 1800, § 28; also, R. S., § 5129. As to transfers out of the ordinary course 
 of business being presumptively fraudulent: R S., § 5130; act of 1867, § 35. 
 
 Sections in Pari Materia. — This section is closely related to section 3, in 
 which many of the same words and phrases appear, and which makes the acts 
 here defined as preferences acts of bankruptcy if done with an intent to prefer. 
 It is also closely related to section 67 on Liens; in fact, that section must be 
 considered as in a sense supplementary to this, since certain liens, namely, 
 mortgages, fall within the word " transfer" as defined in section i (25). The 
 construction then, which is given to any one of these sections, must more or 
 less influence the construction to be given to the others; but especially is this 
 true of the section under consideration and the third section, as they are both in 
 pari materia. It may be noted, however, that while all, or nearly all, 
 preferences are acts of bankruptcy (if accompanied by an intent to prefer), and 
 may be the foundation of an adjudication of involuntary bankruptcy, provided 
 the petition is filed within the required time, yet by no means all preferences 
 which are acts of bankruptcy, are voidable. In determining, then, whether a 
 preference is an act of bankruptcy, and determining whether it is voidable, the 
 provisions of each section must be carefully considered. Under the former act 
 
300 THE NATIONAL BANKRUPTCY LAW. 
 
 Intent as an Element of a Preference. [Ch. VI. 
 
 it was held that the two sections analogous to sections 3 and 60 of the present act 
 were in pari materia, and in so far as possible were to be construed so as to 
 harmonize {in re Tonkin, 4 B. R. 52); but the correct rule would seem to be the 
 one expressed in re Nickodemus (3 B. R. 230), which declared that in determin- 
 ing what constituted an act of bankruptcy, the section relating to that subject 
 should alone be followed, and in determining what Dreferences were voidable, 
 the section relating to that subject should alone be followed. 
 
 The Elements of a PrefeFenee. — There are many differences between the 
 language of the present act and the former acts as to what are to be deemed 
 preferences. The provisions of the section under consideration make insolvency 
 an essential element. Contemplation of insolvency or contemplation of bank- 
 ruptcy is not sufficient as under the former acts. The present statute, by 
 declaring (section i [15]) that insolvency means the state of one whose property 
 is not sufficient in amount at a fair valuation to pay his debts, gives to the word 
 a meaning different from that generally given to it by judicial definition in 
 cases decided under the former act, where it was held to mean inability to pay 
 debts in the ordinary course of business as they matured. Consequently the 
 cases under that statute, deciding what acts are evidence of an intent to give a 
 preference, have only a modified applicability. It is apparent that an act done 
 by one whose property is in reality insufficient in amount at a fair valuation to 
 pay his just debts, may manifest a different intent from the same act done by 
 one who cannot pay his bills as they mature. A person in the latter condition 
 may make a transfer fully believing, and perhaps justified in the belief, that 
 his property, when turned into money, will eventually pay all his debts. Under 
 the former act many a person was an insolvent as the word was then defined 
 by the courts, who would not be under the definition fixed by the present stat- 
 ute; and the reverse is equally true. 
 
 Intent as an Element of a Ppeferenee. — Intent is not expressly made 
 an essential element of a preference. The present law seems to judge a 
 preference by its effect. If a transfer of the bankrupt's property is made by 
 him, or if he procures, or suffers a judgment against himself, and if the effect 
 of the enforcement of such judgment or transfer will be to enable any one of his 
 creditors to obtain a greater percentage of his debt than any other of such cred- 
 itors of the same class, then the transferrer is deemed to have given preference. 
 In failing to expressly require the existence of an intent in order to constitute 
 a preference, the present law differs from all bankruptcy laws which have pre- 
 
CREDITORS. 301 
 
 § 60.] Intent as an Element of a Preference. 
 
 ceded it. It is not, however, to be inferred from this that because intent is not 
 essential to the creation of a preference, it is not essential to constitute such 
 preference an act of bankruptcy. A review of section 3 will show that in the 
 case of certain transfers an intent to prefer must exist, otherwise, the transfer 
 is not an act of bankruptcy. But there is no express provision either in that 
 section or in this requiring the existence of an intent to prefer, on the part of 
 one who suffers, or procures, or permits a creditor to obtain a preference through 
 legal proceedings; or on the part of one who suffers a judgment to be obtained 
 against himself in favor of any other person. In the case of judgments so 
 suffered, an intent is unnecessary to constitute such suffering an act of bank- 
 ruptcy, and is unnecessary to constitute a preference. In this particular the 
 present law differs from the former, and we have shown in the paragraph on 
 Suffering or Permitting Preferences Through Legal Proceedings, under section 
 3, the inapplicability to the present statute of the doctrine laid down in the 
 leading case of Wilson v. The City Bank, 17 Wall. 473; 3. u. 9 B. R. 97; s. t. 
 below I Dill. 476; s. u. 5 B. R. 270; (followed in Sage v. Wynkoop, 104 U. S. 
 319; Nat. Bank v. Warren, 96 U. S. 539, and in many cases thereafter decided 
 both in the bankruptcy courts and in the higher Federal courts). These cases 
 held that mere inactivity on the part of one sued upon a just cause of action and 
 his failure to interpose a defense did not constitute an act of bankruptcy nor 
 make it a case of suffering <x judgment with intent to prefer, even although the 
 result of his failure to defend the action was to permit the taking of judgment 
 and a levy under execution upon his property, which, in fact, gave to the 
 judgment creditor a preference. This doctrine, though unquestionably a cor- 
 rect exposition of the law under the act of 1867, seems to be no longer 
 applicable owing to the differences between that act and the present. Such 
 was the conclusion required by the language of section 3, and the absence 
 from section 60 of any provision requiring an intent to prefer, as essen- 
 tial to the creation of a preference, would further seem to necessitate the 
 same conclusion. The true rule under the present law would appear to be 
 that which was laid down in re Gallinger, i Saw. 224; s. c. 4 B. R. 729, 
 and in re Heller, 3 Biss. 153, and in other cases decided by various courts of 
 bankruptcy, and cited under section 3, which held that " suffering " must be 
 construed as having a different signification from, •' procuring;" that where one 
 failed to use means which he possessed to prevent a thing, he thereby " permit- 
 ted " or •• suffered " it to be done. " Procuring," of course, implies some 
 active conduct; but the slightest overt act on the part of an insolvent debtor 
 
302 THE NATIONAL BANKRUPTCY LAW. 
 
 Intent to Defeat Operation of Bankruptcy Act no Preference. [Ch. VI. 
 
 tending to hasten the entering of a judgment against himself, has been held to 
 constitute a " procuring;" and it is immaterial whether these acts be such as 
 to hasten the time of the entry of the judgment of the preferred creditor, or acts 
 undertaken for the purpose of delaying a rival creditor in his action and post- 
 poning his recovery of a judgment until after a recovery in the usual course of 
 procedure by the creditor whom the debtor seeks to prefer. (Rogers v. Palmer, 
 I02 U. S. 263; Wight V. Muxlow, 8 Ben. 52; Little v. Alexander, 21 Wall. 500; 
 s. c. 12 B. R. 134; Buchanan v. Smith, 8 Blatch. 153; Traders' Bank v. Camp- 
 bell, 14 Wall. 87, and cases cited under section 3, paragraph on Suffering Prefer- 
 ences Through Legal Proceedings. 
 
 Transfers Made Under Coercion. — A preference being determined by the 
 effect of the transfer, the fact that the transferrer yielded to coercion is imma- 
 terial. (Clarion Bank v. Jones, 21 Wall. 325; Giddings v. Dodd, i Dill. 115; s. 
 c. 4 B. R. 657; in re Batchelder, I Low. 373; compare notes to section 3, para- 
 graph on Intent to be Distinguished from Motive. 
 
 Intent to Defeat the Operation of tlie Bankruptcy Act Does Not Con- 
 stitute a Preference : General Assignments Not Necessarily Prefer- 
 ences. — All general assignments are made acts of bankruptcy by sections; 
 but if they do not actually create preferences, there is nothing in the bankruptcy 
 act declaring them to be " preferences" as the word is used in this act. And 
 although they are acts of bankruptcy if they do not create preferences, 
 unless they can be invalidated under the provisions of section 67 {e), upon the 
 ground that they were made with the intent and purpose of delaying, hind- 
 ering or defrauding creditors, there would seem to be no means of invali- 
 dating them. Such bona fide general assignments without preferences would 
 be, like many other transfers, acts of bankruptcy, and yet not voidable. 
 This conclusion is required by a construction of the express terms of the 
 statute, notwithstanding it may. appear to some that to invalidate them 
 would produce a more harmonious working of the law. It must be borne 
 in mind that there is nothing in the present act declaring that an intent " to 
 defeat the operation of the bankrupt act" shall avoid a transfer so made, or 
 constitute a transfer made with such intent, a preference. Former acts con- 
 tained such provisions, and so did the bill which became the present bankruptcy 
 law, up to the time it came out of the hands of the conference committee. 
 Because of the clause in the former acts declaring that a transfer made with 
 intent " to defeat the operation of the bankruptcy act should be voidable," many 
 
CREDITORS. 303 
 
 § 60.] Transfers Not Giving Advantages to the Transferees. 
 
 of the courts held that under that act a general assignment for the benefit of 
 creditors, though containing no preferences, was voidable. But even with this 
 clause in the former act, there was much conflict of authority upon the question. 
 That such assignments were voidable, see Jackson v. McCuUoch, i Woods, 433; 
 s. c. 13 B. R. 283; Globe Ins. Co. v. Cleveland Ins. Co., 14 B. R. 311; Cragin v. 
 Thompson, 12 B. R. 81; in re Biesenthal, 14 Blatch. 146; s. c. 15 6. R. 228; to 
 the contrary, Haas v. O'Brien, 66 N. Y. 597; Thrasher v. Bentley, 59 N. Y. 649; 
 Langley v. Perry, 8 A. L. Reg. 427; s. c. 2 B. R. 596. In the absence of any 
 clause declaring that transfers made with intent to defeat the operation of the 
 act are voidable, the mere fact that a general assignment without preferences 
 is an act of bankruptcy does not require that it be invalidated, nor that it be 
 deemed a " preference." The bankruptcy act is to be construed according to 
 the provisions which it contains, and not according to those which may be con- 
 sidered as necessary to make it a harmonious and consistent piece of legislation. 
 
 Transfers Not Giving Advantages to the Transferees. — The law aims 
 to prevent and it invalidates as preferences only those transfers the effect of 
 which is to enable one creditor to secure an advantage over others. By another 
 section (67 [e]), it avoids all transfers which are made with intent to hinder, delay, 
 or defraud creditors ; but these are invalidated, not as preferences, but as fraud- 
 ulent conveyances. If a transfer does not lessen the fund distributable among 
 creditors, it is not a preference. Sales made at a fair price (and not as a pay- 
 ment upon an antecedent indebtedness) or equal exchanges of property, if made 
 fairly and in good faith, do not injure creditors, and are not prohibited by the 
 bankruptcy law. So there is nothing in that act which restrains one from loaning 
 money to an insolvent and from taking his notes in return, or from taking, in 
 good faith, ample secuiity for the payment of such note. Such security is not 
 invalidated by the bankruptcy act, if the effect of taking it is not to lessen the fund 
 or to diminish the property which would otherwise go to creditors. It was 
 observed by the court in Darby v. Boatman's Savings Inst, (i Dill. 141 ; s. c. 4 B. R. 
 601) that the cardinal idea of the bankruptcy law is that all the property of a 
 person who is insolvent ought to be appropriated for the equal and indiscriminat- 
 ing benefit of all his creditors, and that he ought not to fraudulently diminish the 
 amount of his assets nor give one creditor a preference ; but it is not the intent 
 of the act to forbid a. person who is insolvent from making proper efforts to 
 extricate himself from his embarrassments, where such attempts do not dimin- 
 ish his property; an insolvent may, therefore, borrow money and give at the 
 time security therefor; and advances made in good faith to a debtor to carry 
 
304 THE NATIONAL BANKRUPTCY LAW. 
 
 Exchanges of Securities and Other Property. [Chap. VL 
 
 on business, upon security taken at the time, do not violate either the terms or 
 the policy of the act; that act recognizes that the power to borrow money may 
 save an embarrassed debtor from bankruptcy, and since, whenever the bank, 
 rupt receives an equivalent for that with which he parts, his creditors suffer no 
 wrong, the law does not invalidate the transfer of property as security for the 
 payment of such borrowed money. On the contrary, it expressly recognizes 
 such transfers as valid when they take the form of liens (compare section 67 [rf]); 
 and when they take the form of absolute sales or exchanges, they are no less 
 valid if the effect of them is not to give an advantage to one creditor over 
 another. 
 
 Exchanges of Securities and Other Property. — The general principles 
 laid down in the last paragraph have received application in several cases which 
 have come before the United States Supreme Court; and as the circumstances 
 of each case largely determine the character of the act, we here refer at some 
 length to these leading cases. In Clark v. Iselin (21 Wall. 360; s. c. 11 B. R. 
 337; s. t. below 10 Blatch. 204; s. c. 9 B. R. 19), it was held that when a person 
 borrowed money of another and pledged with him as collateral for the loan, a 
 number of bills receivable, and subsequently took them out for the purpose of 
 collection and replaced them with other bills receivable, but not to such an 
 amount as to impair the estate of the debtor, the transaction not being con- 
 ducted with any purpose of delaying or defrauding the pledger's creditors or 
 giving a preference to any one, the facts that the pledgor was very shortly 
 thereafter adjudged a bankrupt did not avoid the transaction. In the same case 
 it appeared that a creditor had obtained by execution a valid lien on the debtor's 
 stock of goods, which were in value much greater than the amount of the lien, 
 and it was held that payments applied on the execution could not be considered 
 preferential, as each payment released property of equivalent value. To the 
 same effect was Livingston v. Bruce, i Blatch. 318. In Sawyer v. Turpin (91 
 U. S. 114; s. c. 13 B. R. 271; s. c. below i Holmes, 251; s. c. 2 Low. 29; s. u. 
 5 B. R. 339), the facts were that a chattel mortgage was taken by a creditor who 
 knew of the insolvency of the mortgagor, but who took it in exchange for a 
 prior valid bill of sale of the same property, executed more than four months 
 prior to the filing of the petition. It was held not to be a preference voidable 
 under the act, since it was merely an exchange of one security for another of 
 equal value; and this was held to be the result of the exchange notwithstanding 
 the exchange itself was made within the four months prior to the filing of the 
 petition. In Burnhisel v. Firman (22 Wall. 170-. s. c. 11 B. R. 504). it was hel4 
 
CREDITORS. 305 
 
 § 60.] Exchanges of Securities and Other Property. 
 
 that where a person owed money, principal, and interest for some time overdue, 
 but secured by mortgage, and afterwards had an accounting with the mort- 
 gagee and gave in place of the old mortgage a new mortgage for the sum found 
 to be due as principal and interest, the new mortgage being upon the same 
 property as the old mortgage, such a person could not be considered as creating 
 by this transaction a preference, the old security being a valid and unimpeach- 
 able lien and being surrendered upon the execution of the new mortgage. 
 
 In Cook V. Tullis (18 Wall. 332; s. c. 9 B. R. 433), it appeared that a depos- 
 itary of certain government bonds used some of them without the permission of 
 the owner, and substituted in their place a bond and mortgage, and the owner 
 of the bonds, upon hearing of the transaction, ratified it. The court held that 
 the ratification by one of the unauthorized acts of another operates upon the act 
 ratified precisely as though authority to do the act had been previously given, 
 except where the rights of third parties have intervened between the act and the 
 ratification; the retroactive eflScacy of the ratification is only subject to this 
 qualification; that intervening rights of third persons are not defeated by the 
 ratification, and the court in the following language reiterated the doctrine that 
 an even exchange of property by an insolvent debtor is no preference: " A 
 fair exchange of values may be made at any time, even if one of the parties to 
 the transaction be 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 be conducted 
 without any purpose to defraud, or delay his creditors, or give preference to any 
 one, and does not impair the value of his estate. An insolvent is not bound, in 
 the misfortune of his insolvency, to abandon all dealing with his property; his 
 creditors can only complain if he waste his estate, or give preference in its dis- 
 position to one over another. His dealing will stand if it leave his estate in as 
 good plight and condition as previously." On the principle that transfers which 
 do not give one creditor an advantage over another are not preferences, it has 
 been held that the payment by an insolvent of a percentage on certain of his 
 debts, which did not tend to lessen the percentage that others would receive, 
 was not a preference. (In re Hapgood, 2 Low. 200.) By analogy a general 
 assignment without preferences, although it would be an act of bankruptcy 
 under the present statute, would not be a " preference." In accordance with 
 this general principle that a transfer the effect of which is not to diminish the 
 debtor's estate is not voidable if the estate is not impaired in value, it has been 
 
 NAT. BANKRUPTCY LAW — 20 
 
306 THE NATIONAL BANKRUPTCY LAW. 
 
 Preferences Arise Only in Cases of Antecedent Debts. [Ch. VI. 
 
 held that where there was a prior conditional contract to deliver goods to a 
 trader upon payment for them, an arrangement to carry out such a contract is 
 not fraudulent. (Sawyer v. Turpin, 2 Low. 29; a. i.. i Holmes, 251; s. c. 91 U. 
 S. 114; s. c. 13 B. R. 271.) So a mortgage made in good faith to secure future 
 sales of goods to the mortgagor is valid to the extent of the advances actually 
 made (Marvin v. Chambers, 12 Blatch. 495; Schulze v. Bolting, 17 B. R. 167; s. 
 c. 8 Biss. 174); and to such extent is protected by the bankrupt act. So a mere 
 accounting or settlement between an insolvent debtor and creditor, not fol- 
 lowed by any actual change or transfer of property rights or credits, to the pre- 
 judice of other creditors, is not contrary to the provisions of the bankruptcy 
 act; although such a settlement does not debar the trustee from showing that it 
 was actually fraudulent or erroneous. (In re Comstock, 12 B. R. iio; s. c. 3 
 Saw. 517.) And inasmuch as a transfer in good faith, which does not impair 
 the value of the bankrupt's estate, is not against the law; and as the law recog- 
 nizes and preserves valid existing liens, a transfer of property made to the lienor 
 when his lien is of greater value than the value of the property is not a prefer- 
 ence. (Catlin V. Hoffman, 2 Saw. 486; s. i.. 9 B. R. 342; Hallack v. Tritch, 17 
 B. R. 293; inre Roseberry, 16 B. R. 340; s. v.. 8 Biss. 112.) 
 
 Stoppage in Transitu. — As has been seen in Clark v. Iselin and in Living- 
 ston V. Bruce {supra), payments made to release property from a valid lien are 
 not preferential if the property is worth more than the lien. So creditors may, 
 in a proper case, exercise the right of stoppage in transitu. So long as the 
 goods have not come into the possession of the purchaser, that right exists; and 
 if the debtor permits and assents to such resumption on the part of the vendor, 
 it does not operate as a preference. It is not giving a preference to a creditor, 
 if a debtor, peaceably and for convenience, assents to the doing by the creditor 
 of what the creditor could lawfully do if objection were made. (In re Foot, 11 
 Blatch. 530; s. c. II B. R. 153.) 
 
 Preferences Arise Only in Cases of Antecedent Debts. — As a corollary 
 to the proposition that only transfers which diminish the estate of the bankrupt 
 are preferences, it may be stated that preferences arise only in the case of ante- 
 cedent debts. The distinction between a security and a preference is determined 
 In accordance with that corollary. Property transferred by a borrower at the 
 time of receiving the loan, and for the purpose of making the loanor safe, is a 
 security. Its validity, if unaccompanied by positive fraud, is recognized and 
 enforced in bankruptcy. But a transfer intended to enable one to secure pay- 
 
CREDITORS. 307 
 
 § 60.] Mode of Transfer Immaterial. 
 
 ment of antecedent debt is a preference, if its effect is to give that creditor an 
 advantage over others. If that is not its effect, it is a valid payment. The dif- 
 ference between preferences in payment of antecedent debts, and securities 
 given at the time of incurring liabilities was clearly stated by Justice Davis of 
 the United States Supreme Court in Tiffany v. Boatman's Savings Inst. (18 Wall. 
 376; s. c. 9 B. R. 245), who said: " Neither the terms or policy of the bankrupt 
 act are violated if these collaterals be taken at the time the debt is incurred. 
 His (the bankrupt's) estate is not impaired or diminished in consequence, 
 as he gets a present equivalent for the securities he pledges for the repayment 
 of the money borrowed. Nor in doing this does he prefer one creditor over 
 another, which it is one of the great objects of the bankrupt law to prevent. 
 The preference at which this law is directed can only arise in case of antecedent 
 debts. To secure such a debt would be a fraud on the act, as it would work an 
 unequal distribution of the bankrupt's property; and, therefore, the debtor and 
 creditor are alike prohibited from giving or receiving any security whatever for 
 a debt already incurred, if the creditor had good reason to believe the debtor to 
 be insolvent. But the giving of securities 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 them until the debt is paid. In the administration of the 
 bankrupt law in England this subject has frequently come before the courts, 
 who have uniformly held that advances may be made in good faith to a debtor 
 to carry on his business, no matter what his condition may be, and that the 
 party making these advances can lawfully take securities at the time for their 
 repayment. And the decisions in this country are to the same effect. (Hilliard 
 on Bankruptcy, 333, ch. 10, § 10; Hutten v. Crutwell, i El. & Bl. 15; Harris v. 
 Rickett, 4 Hurl. & N. i; Bruteston v. Cooke, 6 E. & B. 296; Lee v. Hart, 34 
 Eng. Law and Eq. 569; Belle v. Simpson, 2 H. & N. 410; Hunt v. Mortimer, 10 
 B. & C. 44; Ex p. Shouse, Crabbe R. 482; Wadsworth v. Tyler, 2 N. B. R. loi; 
 quarto.)" See also Gattman v. Honea, 12 B. R. 493; in re McKay & Aldus, i 
 Low. 561; s. c. 7 B. R. 230; Bentley v. Wells, 61 111. 59. 
 
 Mode of Transfer Immaterial. — If the transfer does diminish the assets 
 of the bankrupt's estate, and does tend to give one creditor an advantage over 
 another, then whatever may be the mode of transfer, or however indirect or cir- 
 cuitous the means by which it was carried into execution, it will constitute a 
 preference; and if the transferee has reasonable cause to know a preference was 
 intended, it will be voidable unless the rights of third parties have intervened. 
 Thus, where a debtor conveyed property to his wife without any consideration 
 
308 THE NATIONAL BANKRUPTCY LAW. 
 
 Voidability of Preferences in General — Partnership Preferences. [Ch. VL 
 
 and she mortgaged it in favor of his creditors, it was held to be a preference by 
 the debtor. (Gibson v. Dobie, 5 Biss. 198; s. >,. 14 B. R. 156.) So a transfer of 
 the firm assets to one partner, for the purpose of enabling the individual creditors 
 of the purchasing partner to obtain an advantage over firm creditors, constitutes 
 a preference. {/» re Waite, I Low. 207.) And where a creditor through another 
 person purchased certain property of his debtor, and through the purchaser 
 gave notes of the debtor in payment, it was held to be a preference. 
 
 Voidability of PrefeFenees in General. — However strong the intent of 
 the bankrupt to create a preference, however great the advantage given to the 
 preferred creditor, no preference is voidable or void, unless the transferee has 
 reasonable cause to believe that the transfer was made with intent to give a 
 preference. A transfer cannot be invalidated unless all the following elements 
 concur. First, there must have been a transfer made while the transferrer was 
 insolvent, the effect of which was to enable one creditor to obtain a greater per- 
 centage of his debt than other creditors of the same class. Secondly, the trans- 
 feree must have had at the time of the transfer, reasonable cause to believe that 
 the transferrer intended thereby to give a preference. This would involve that 
 the transferee had reasonable cause to believe, (a) that at the time of the trans- 
 fer the transferrer was insolvent; and (b) that the transferrer intended to create 
 a preference. Third, the transfer must have been made within four months 
 before the filing of the petition in bankruptcy. The insolvency must exist 
 at the time of the transfer, so must the reasonable cause to believe that a 
 preference was intended. Subsequent grounds for reasonable cause are not 
 sufficient. 
 
 Partnership Preferences. — If preferential transfers are made by a firm, 
 only one member of which is adjudged bankrupt, the transfers are not voidable. 
 The transfer being a firm act, to invalidate it, the firm, that is, all of the 
 partners, must be put into bankruptcy within four months. It has even been 
 held that it is not sufficient to put the surviving members into bankruptcy; the 
 firm itself must be adjudged bankrupt. And if the transfer is of firm property, 
 though made as a payment of an individual debt of one of the partners, the firm 
 itself must be put into bankruptcy before the transfer can be invalidated. 
 (Withrow V. Fowler, 7 B. R. 339; «» r? Lane & Co., 10 B. R. 135.) Compare j« 
 re T. S. Shepard, 3 Ben. 347; s. c. 3 B. R. 172; Amsink v. Bean, 22 Wall. 395; 
 s. c. II B. R. 495; s. c. below, 10 Blatch. 361; s. c. 8 B. R. 228. 
 
CREDITORS. 309 
 
 § 60.] Date of the Transfer: Effect of Failure to Record Deeds, etc. 
 
 LLmitatiOn of Time. — The transfers made voidable by this section are not 
 in themselves fraudulent, as the term is ordinarily used. They are not such as 
 are forbidden by the common law or generally by the statutes of the States. 
 In this respect they differ from the transfers mentioned in section 67 (e). By the 
 common law, to pay one creditor in full is no wrong, and the payment is not 
 fraudulent, even if the result is that other creditors are unpaid. But the bank- 
 rupt law aims to produce equality, and to this end it provides that if a preferen- 
 tial payment or transfer has been made, and the grantee had reasonable cause 
 to know of the intent to prefer, it may be avoided if proceedings in bankruptcy 
 are instituted within four months. To make such transfers liable for an indefi- 
 nite or even a great length of time to be assailed and questioned, would be to 
 Tender all business transactions, matters of great uncertainty and would be 
 against public policy. Therefore, the law properly limits the time to four 
 months. This limitation is not a limitation of the time within which the action 
 to nullify the transfer must be brought, but the time within which the petition 
 in bankruptcy must be filed. That petition, whether filed by the debtor himself 
 or by some creditor other than the one preferred, calls in the aid of a court of 
 equitable powers to equally distribute the assets of the bankrupt, and if that aid 
 is invoked within the four months, then proceedings may be taken thereafter to 
 annul the transfer. But if no petition is filed within the four months, however 
 apparent the intent to prefer or to defeat the operation of the act, however active 
 the participation in that intent by the transferee, the transfer cannot be assailed 
 under the provisions of the statute. (Bean v. Brookmire, 4 B. R. 196; s. c. i 
 Dill. 25; Hubbard v. Allaire, 7 Blatch. 284; s c. 4. B. R. 623; Collins v. Gray, 
 8 Blatch. 483; Sidener v. Klier, 4 Biss. 391.) The right, then, to invalidate a 
 transfer, because of its being a preference, is purely statutory, and is in deroga- 
 tion of the common law. The statute authorizing it must be construed strictly. 
 
 Date of the Transfer : EfiTeet of Failure to Record Deeds, etc. — Section 
 
 60 provides that preferential transfers may be avoided if " the bankrupt shall 
 b2.ve given the preference within four months before the filing of the petition." 
 Since by the common law and by the statutes of most States, the recording of a 
 deed is not essential to its validity, in all those States the transfer is complete 
 upon the delivery of a deed executed with the proper formalities. If section 60 
 were the only section to be considered, in determining within what time a peti- 
 tion must be filed in order to entitle one thereafter to take steps to invalidate a 
 preferential transfer, the question would be easy to answer. It would then 
 have to be admitted that the statute contains nothing to change the common- 
 
3IO THE NATIONAL BANKRUPTCY LAW. 
 
 Date of the Transfer: Effect of Failure to Record Deeds, etc. [Ch. VL 
 
 law rule that the transfer is consummated by a delivery of the deed, and that 
 failure to record does not extend the time in which the petition may be filed. 
 But in answering the question as it presents itself in cases arising under the 
 present act, we must also consider the effect of the provision in section 3 (i), as 
 to the time within which a petition must be filed setting up an act of bank- 
 ruptcy. That section provides: " A petition may be filed against a person who 
 is insolvent and has committed an act of bankruptcy, within four months after 
 the commission of such act. Such time shall not expire till four months after 
 the date of the recording or registering of the transfer or assignment when the 
 act consisted in having made a transfer of any of his property with intent to 
 hinder, delay or defraud, if by law such recording or registering is required or 
 permitted, or if it is not, from the date when the beneficiary takes notorious, 
 exclusive, or continuous possession of the property, unless the petitioning cred- 
 itors have received actual notice of such transfer or assignment, etc." Are the 
 provisions of section 60 as to time to be construed as if the same effect were to 
 be given to it as to section 3? Does it authorize proceedings to invalidate a 
 transfer, if the petition in bankruptcy is filed within four months from the time 
 of the record of the transfer. It can hardly be questioned, but that such con- 
 struction would harmonize the two sections and bring them both into touch with 
 the manifest purpose of the act. This purpose is to nullify preferences so that 
 all creditors shall share alike. The arguments in favor of a construction which 
 will permit preferential transfers to be invalidated, if the petition in bankruptcy 
 is filed within four months from the time of the record of the transfer, are cer- 
 tainly worthy of serious consideration. Thus, it may be said that it is incon- 
 sistent to hold that if a person makes a transfer against the policy of the law in 
 which the transferee shares the guilty intent or knows of it, he may be adjudged 
 a bankrupt for it, and yet that his creditors who may set it up as a ground for 
 putting him into bankruptcy are unable to procure the invalidation of the trans- 
 fer and have a remedy for the wrong done them. The institution by them of 
 the proceedings in bankruptcy is for the purpose of securing a.pra rata payment 
 upon their debt. If the particular transfer which is made the basis of their 
 petition cannot be avoided, then in so far as that particular transfer is concerned 
 the petition and a subsequent adjudication are mere nullities, the institution of 
 a proceeding which can neither harm the wrongdoer or aid the wronged cred- 
 itors. Of course, if the transfer is of only a part of the property of the bankrupt, 
 the unlawful transfer may be a ground for adjudicating him bankrupt, and thus 
 securing to the creditors an opportunity to share in the remaining property. 
 
CREDITORS. 311 
 
 § 60.] Date of the Transfer: Effect of Failure to Record Deeds, etc. 
 
 But the very purpose of the bankrupt act is to enable all creditors to share alilce 
 and prevent transfers of all or any of the property as preferences. When a 
 transfer of the entire estate and property of the bankrupt is considered, one sees 
 the full force of the contention that the right to petition within four months 
 from the time of the record of the transfer is worthless unless it is accompanied 
 with the right, within the same period of time, to invalidate the preferential 
 transfer. If the latter right does not exist, then where one has made a preferen- 
 tial transfer of all his property, his creditors could come into court and have 
 the transferrer adjudged bankrupt because of thus disposing of his property, 
 and yet there would be no property for distribution. They would have a right 
 to institute a legal proceeding which could afford no remedy. But plausible as 
 this argument may be and notwithstanding the construction suggested above 
 would seem to be in harmony with the spirit and policy of the bankruptcy act, 
 we believe that it is hardly justified by the express provisions of the statute. 
 There are but few of the arguments just advanced which cannot be answered 
 more or less satisfactorily, if not clearly refuted. It must be conceded in the 
 first place that the transfers called preferential are not in themselves fraudulent 
 in the strict legal sense. They are not voidable except under the provisions of 
 this act, and as this act impairs common-law rights and is in derogation of 
 common-law rules, it must be construed with strictness. Unless there is an 
 express provision in the statute in terms authorizing the invalidation, or a pro- 
 vision which necessarily implies it, the validity of the transfer must be upheld. 
 In reply to the argument that since a preference may be set up as an act of 
 bankruptcy at any time within four months from the record thereof, it should 
 therefore be voidable as a preference if the petition is filed within four months 
 from the same date, it may be said that the bankruptcy act does not aim to be 
 harmonious and consistent in this respect. Any preference made with intent 
 to prefer is an act of bankruptcy, but by no means every preference is voidable. 
 To make it voidable there must exist in addition to all the elements constituting 
 it an act of bankruptcy, the additional element of reasonable cause on the part 
 of the transferee to believe that it was given as a preference. In reply to the 
 other argument advanced, namely, that unless such preferences are voidable 
 an opportunity will be given to failing creditors who are anxious to prefer their 
 creditors, to make secret transfers to them, with the result that though the 
 debtor may be put into bankruptcy the trustee can recover no property for dis- 
 tribution among the other creditors; it may be said that such a. result is liable to 
 happen even should the construction above suggested be adopted. Many cases 
 
312 THE NATIONAL BANKRUPTCY LAW. 
 
 Date of the Transfer: Effect of Failure to Record Deeds, etc. [Ch. VI. 
 
 may arise in which creditors may have their debtor adjudged a bankrupt 
 because of a preferential transfer, and yet no property come into the hands of 
 the trustee for administratioa Thus, suppose a debtor preferentially transfers 
 all his property in parcels to various creditors who have no reasonable cause 
 for believing the transfer given with an intent to prefer; other creditors certainly 
 have the right to petition that he be adjudged bankrupt, but they cannot invali- 
 date the transfers. The existence or non-existence of assets has no effect on the 
 right to institute proceedings, either voluntary or involuntary. 
 
 Further, a most important fact to be noticed is that on at least one occasion in 
 prior bankruptcy legislation. Congress has prescribed one period within which 
 a petition might be filed after the commission of an act of bankruptcy, for 
 the purpose of securing an adjudication of bankruptcy; another period 
 within which the petition must have been filed in order to invalidate trans- 
 fers made with intent to prefer, and another period within which the petition 
 must have been filed in order to invalidate transfers made with intent 
 to defeat the operation of the act. Thus, by the act of 1867, section 39 
 (R. S., § 5021), preferences and transfers made with an intent to defeat 
 the operation of the bankruptcy act were made acts of bankruptcy, and 
 could be set up in a petition filed within six months from the time of the com- 
 mission of the act; but if the transfers were made with an intent to give one 
 creditor an advantage over another, by section 35 of the act of 1867 (R. S. 5128) 
 the petition must have been filed within four months in order to invalidate them; 
 but if made with an intent to defeat the operation of the act, then (§ 35 of act of 
 1867; R. S., § 5129), within six months. It is true in none of these sections 
 was there any reference to the question of the recording of transfers; but 
 they are referred to as showing that Congress has not in former legislation 
 deemed that it is necessary in order to have a good working bankruptcy system, 
 that the period within which a. petition might be filed in order to secure an 
 adjudication of bankruptcy, should be the same as that within which the same 
 petition must be filed in order to avoid the preferential transfer set up in the 
 petition as the ground for the adjudication. There is no greater inconsist- 
 ency in the present law, if it prescribes that a petition in order to procure an 
 adjudication, may be filed within four months from the time of the record of a 
 deed, etc., which is a preferential transfer, and yet declares that to invalidate that 
 transfer the petition must have been filed within four months from the time 01 
 the transfer itself. It simply prescribes a shorter statute of limitations in one 
 case than in another. For these reasons and chiefly because the statute, in so 
 
CREDITORS. 313 
 
 § 60.] The Delivery Must be Genuine. 
 
 far as it annuls these transfers, is in derogation of the common law and disturbs 
 property rights honestly acquired, and therefore ought to be construed with the 
 greatest strictness, we are inclined to believe that in order to invalidate preferen- 
 tial transfers the petition in bankruptcy must have been filed within four months 
 from the time of the transfer itself, and that the failure to record does not extend 
 the time. If Congress has any different intent, it can, by subsequent legislation, 
 easily manifest that intent by clear, positive, and unambiguous language. 
 
 This question as to the effect of the failure to record a transfer, upon the lira- 
 itation of time within which it could be invalidated, arose in various cases under 
 the former act, and although that act contained no clause requiring the record 
 of the transfer in order to fix the running of the time within which a petition 
 might be filed setting up the transfer as an act of bankruptcy, yet these cases 
 did recognize and apply the common-law rule that the transfer took effect as of 
 the date of delivery, not as of the date of record, and held that a proceeding to 
 invalidate must be brought within four months from the time of delivery, even 
 although record did not take place until long afterward. (Matthews v. Westphal, 
 I McCrary, 446; Sawyer v. Turpin, 91 U. S. 114; s. c. 13 B. R. 271; s. v,. below, 
 I Holmes, 251; s. c. 5 B. R. 339; s. c. 2 Low. 29; Clark v. Iselin. 21 Wall. 360; 
 s. c. II B. R. 337; s. v.. below, 10 Blatch. 204; s. c. g B. R. 19.) This question 
 of record came up even more clearly before the court in re Wynne, 4 B. R. 23; 
 s. c. Chase, 227, which was followed in Seaver v. Spink, 8 B. R. 218; s. c, 65 
 111. 441, and in both of these it was held that in order to invalidate the transfer, 
 the petition in bankruptcy must be filed within four months from the time of 
 the delivery of the deed, not of the time of record. And where acknowledgment 
 is unnecessary to the validity of the deed, but is necessary only to entitle it to 
 be recorded, if delivery is made before acknowledgment, the time begins to run 
 from delivery, not from the subsequent acknowledgment. (Wood v. Owings, i 
 Cranch, 239; Seaver v. Spink, supra.) We do not think that the mere fact that 
 Congress has fixed a certain rule for determining the date when the four months 
 within which the petition setting up the act of bankruptcy may be filed impairs 
 these decisions as authorities for our statement that to invalidate preferences, 
 the petition must be filed within four months from the date of actual transfer. 
 
 The Delivery Must Be Genuine. — The delivery must be genuine and irrev- 
 ocable. If at the time when the deed was signed and acknowledged there was 
 a tacit agreement between the grantor and the grantee that the writing was not 
 to be deemed as passing title until the grantee should so elect, and the grantee did 
 not make the election until within four months, the deed is voidable. It cannot 
 
314 THE NATIONAL BANKRUPTCY LAW. 
 
 Ratification of Unauthorized Acts of Agents. [Ch. VL 
 
 be considered as having been actually and absolutely delivered till the time of 
 election. (Nat. Bank of Fredericksburg v. Conway, 14 B. R. 175, 513.) 
 
 Ratifleation of Unauthorized Acts of Agents. — Since, then, there is 
 nothing in the present bankruptcy law changing the common-law rule that a 
 transfer takes place as of the date of delivery, and since there is no express pro- 
 vision declaring that the four months within which a preferential transfer may 
 be invalidated shall run from the time of the record of the transfer, the ascer- 
 tainment of the time of actual delivery becomes important. This delivery may 
 be by the grantor or by his agent, and in certain cases the delivery may be an 
 unauthorized act subsequently ratified by the principal. The doctrine of subse- 
 quent ratification of the unauthorized acts of agents received extended consid- 
 eration in re Kansas City Stone & Marble Mfg. Co., 9 B. R. 76. As it contains 
 a review of many of the authorities, we here quote from it. " It is the general 
 doctrine that ratification relates back to the inception of the transaction, and has 
 a complete retroactive efficacy, and that the ratified act is to be treated as if it 
 were originally authorized by the principal. But this doctrine is a fiction of the 
 law, for the act of one cannot 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 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 cannot be extended to the prejudice of strangers to 
 the transaction. In Fleckner v. Bank of the United States (8 Wheat. 338), there 
 had been a ratification, and Judge Story, delivering the opinion of the court, 
 held the act binding upon the bank, and upon all other persons who had not an 
 adverse interest; that no maxim is better settled, in reason and law, than omnis 
 ratihabitio retrotrahitur, etc., at all events, where it does not prejudice the rights 
 of strangers. The language of Judge Story is adopted by Mr. Broom, in his 
 Legal Maxims. In re Stoddart, 4th Ct. of Claims R. 511, it was held the law 
 will not admit a ratification of the acts of an agent which will defeat the inter- 
 vening rights of a third party. See Wood v. McCain, 7 Ala. 800; Taylor z/. 
 Robinson, 14 Cal. 396; Parnedee v. Simpson, 5 Wall. 81. This must be the 
 law, else that doctrine which has been built for the protection of those dealing 
 with agents will be converted into an instrument of fraud to defeat the equities 
 of others. The strangers and third parties in the present case are the other 
 creditors of the bankrupt. Of these the assignee is the trustee, and for their 
 benefit the ratification will not be permitted to relate back so as to bind him. 
 As the doctrine of relation is a fiction of the law, and the law will not feign a 
 fiction to make valid an invalid act, the act of ratification, to relate back, must 
 
CREDITORS. 315 
 
 § 60.] Ratification of Unauthorized Acts of Agents. 
 
 take place at a time and under circumstances when the ratifying party might 
 himself have lawfully done the act which he ratifies. In McCracken v. San 
 Francisco, i6 Cal. 624, Field, C. J., said: ' It follows also from the general 
 doctrine that a ratification is equivalent to previous authority; that a ratification 
 can only be made when the principal possesses at the time the power to do the 
 act ratified. He must be able, at the time, to make the contract to which by his 
 ratification he gives validity. The ratification is the first proceeding by which 
 he becomes a party to the transaction, and he cannot acquire or confer the rights 
 resulting from that transaction unless in a position to enter directly upon a sim- 
 ilar transaction himself;' and the very forcible illustration is given that a con- 
 tract made upon an assumed agency for a single woman cannot be ratified by 
 her alone after marriage, for her power to contract alone ceases with her mar- 
 riage. The doctrine here stated is fully discussed in Bird v. Brown, 4 Welsby, 
 H. & G. 786." 
 
 The principles just enunciated were applied in the case of Strain v. Gourdin, 
 II B. R. 156; s. c. 2 Woods, 380, decided by the United States Circuit Court for 
 the Southern District of Georgia. The facts in that case were as follows: S. 
 had a sum of money on deposit with K. & H., bankers, who, in April, 1873, 
 became satisfied that they must stop payment, and took legal advice as to the 
 propriety and duty of providing for the payment of their depositors, and were 
 advised that they would be liable to a criminal prosecution if they failed to pay 
 their depositors. K. & H. thereupon procured certificates of deposit on a cer- 
 tain bank for the amount due S. The next day they telegraphed him that they 
 had stopped payment, and wanted to know where to deposit his funds. He 
 replied, and in accordance therewith his certificate was placed to his credit in 
 another bank which he named. It was held by the court that the procuring by 
 K. & H. of a certificate of deposit on the bank for the amount due to S., and 
 payable to his order, was not a payment, and could not be made to relate back 
 to the date of the certificate instead of the date of the ratification, so as to make 
 it a payment before S. had notice of the failure of K. & H. In rendering its 
 opinion the court quoted from Cook v. TuUis, g B. R. 433; s. c. 18 Wall. 332: 
 " The general rule as to the effect of a ratification by one of the unauthorized 
 act of another respecting the property of the former is well settled. The ratifi- 
 cation operates upon the act ratified precisely as though authority to do the act 
 had been previously given, except when the rights of third parties have inter- 
 vened between them and the ratification. The retroactive eflScacy of the ratifi- 
 cation is subject to this qualification. The intervening rights of third persons 
 
3l6 THE NATIONAL BANKRUPTCY LAW. 
 
 When Do the Four Months Expire — Reasonable Cause. [Ch. VI. 
 
 cannot be defeated by the ratification." The facts in Cook v. Tullis were that 
 a depositary of certain government bonds used some of them without the per- 
 mission of the owner, and substituted in their place a bond and mortgage. It 
 was held that the owner might lawfully ratify his act, and that even if the ratifi- 
 cation were within four months before the filing of the petition in bankruptcy 
 by the depositary, the ratification would relate back to the time of the substitu- 
 tion; but this was distinctly put upon the ground that no rights of creditors had 
 intervened — that is, that no rights of creditors had been injured by the ratifica- 
 tion; it was a case of mere exchange of securities. 
 
 When Do the Four Months Expire. — In computing the four months before 
 filing the petition in bankruptcy within which time a preference is voidable, the 
 day on which the petition was filed must be excluded. (Dutcher v. Wright, 94. 
 U. S. 553.) In the case just cited the confusion that exists in regard to the com- 
 putation of time was commented upon at length, and the opinion quotes Lord 
 Mansfield's statement that the cases for two hundred years had only served to- 
 embarrass a point which a plain man of common sense and understanding would 
 find no difficulty in construing. The extent of the uncertainty of this point may 
 be seen by a reference to the closing sentence of the opinion in Dutcher z/. Wright, 
 which was: " It must be admitted as difficult, if not impossible, to deduce from 
 the reported decisions any rule which will apply in all cases." Without 
 attempting to lay down any rule, the court simply decided that in the case 
 before them, the day on which the petition was filed must be excluded. In 
 Cooley ■V. Cook (125 Mass. 406), it was held that the four months before the 
 bankruptcy must be reckoned exclusive of the first day, and if the last day is 
 Sunday, exclusive of that also. Further authorities for excluding the day of the 
 filing of the petition are Cowie v. Harris, i Moody & N. 141 ; Ex p. Farquhar. 
 I Mont. & McA. 7. Authorities for considering parts of a day are: in re Rich- 
 ardson, 2 Story, 571; Sadler v. Leigh, 4 Camp. 197; Ex p. Farquhar, supra; 
 Exp. D'Obree, 8 Ves. 82; in re Wydown, 14 Ves. 87; Thomas v. Desanges, 2 B. 
 & Aid. 586; contra in re Howes, 6 Law Rep 297; in re Wellman, 7 Law Rep. 25. 
 Compare notes to section 31, on Computation of Time. 
 
 Reasonable Cause. — The present statute does not make any preferences 
 voidable unless the transferee had reasonable cause at the time of the transfer 
 to believe that a preference was intended. It is to be noted that the reasonable 
 cause is cause to believe, not that the transferrer is insolvent, but cause to 
 believe that a preference was intended. This would, however, seem to require 
 
CREDITORS, 317 
 
 § 60.] What is Reasonable Cause. 
 
 reasonable cause to believe that insolvency existed, and also reasonable cause 
 to believe there was a preferential intent. The former act as amended (R. S., 
 §§ 5128, 5129), required that the transferee should have reasonable cause to 
 believe the transferrer insolvent, and that he should also know that the transfer 
 was made as a preference or to defeat the object of the act. Now no positive 
 knowledge of any fact is required, but simply a reasonable cause to believe 
 that a preference was intended. 
 
 What is Reasonable Cause. — The expression reasonable cause is one diffi- 
 cult to explain. It is a question of degree rather than of quality; it admits 
 more easily of determination by comparison than of exact definition. One may 
 be said to have reasonable cause to believe a fact when he has such knowledge 
 as would induce belief of the facts, in the mind of a man of ordinary intelligence 
 and capability. Further, if there is such a state of facts known to the transferee 
 that a person of ordinary prudence would make inquiries, the transferee is 
 chargeable with the duty of making the inquiry, and he has reasonable cause 
 to believe all that he might have learned by inquiry. His willful ignorance 
 is no defense. If he has knowledge of facts which would lead a person of 
 ordinary intelligence to believe that the transferrer was insolvent, and that the 
 transfer was made to give him a preference, then the transferee has reasonable 
 cause to believe that a preference was intended. Ordinary prudence is required 
 of a purchaser in respect to the title of the seller, and if he fails to investigate 
 when facts come to his knowledge which would make an ordinarily prudent 
 man inquire, then the purchaser is chargeable with knowledge of all which it is 
 reasonable to suppose he would have learned had he made inquiry. Actual 
 knowledge is not necessary; neither is actual belief. If the person has con- 
 structive notice that a preference was intended, that is sufficient. But some 
 fact must first actually come to his knowledge in order to give him constructive 
 notice. That fact is such a fact as would induce a man of ordinary prudence, 
 engaged in a like transaction, to make inquiry. If such a fact actually comes 
 to a man's knowledge then he is chargeable with the duty of making inquiry, 
 and he has constructive notice of all which he could learn by inquiries pursued 
 with ordinary diligence. 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 third parties will be affected, an inquiry as to the effect is a moral 
 duty; hence, if a party has actual knowledge of any fact which would cause an 
 ordinary man to make further inquiry, or lead an ordinary man to believe that 
 a preference was intended, and if the means of knowing whether or not a 
 
3l8 THE NATIONAL BANKRUPTCY LAW. 
 
 Reasonable Cause a Question of Fact. [Ch. VI. 
 
 preference was really intended, are at hand, and the transferee willfully or neg- 
 ligently fails to make use of those means, and makes no inquiry, he is charge- 
 able with knowledge of all that he might have learned by diligent inquiry. 
 The question for determination, if an action is brought to invalidate the transfer 
 is not whether the transferee had actual knowledge or even actual belief of the 
 intent lo give a preference, but whether the transferee as a business man, acting 
 with ordinary prudence, sagacity and discretion, had reasonable cause to believe 
 that the debtor was insolvent, and that by the transfer he intended to give an 
 advantage to one creditor over the others. (Rice v. Melendy, 41 Iowa, 399; 
 Graham v. Stark, 3 Ben. 250; b. c. 3 B. R. 357; Toof v. Martin, 13 Wall. 40; s 
 c. below, I Dill. 203; Scammon v. Cole, 3 Cliff. 472; s. c. 5 B. R. 257; Wager 
 V. Hall, 16 Wall. 584; s. c. 3 Biss. 28; Otis v. Hadley, 112 Mass. 100; Ex f. 
 Mendell, i Low. 506; Buchanan v. Smith, 7 B. R. 513; s. c. 16 Wall. 277; s. i.. 
 below, 8 Blatch. 153; Alderdicew. Bank, i Hughes, 47; s. c. 11 B. R. 398; Peck- 
 ham V. Burrows, 3 Story, 544; in re Wright, 2 B. R. 490; Sedgwick v Sheffield, 
 6 Ben. 21; Hill v. Simpson, 7 Ves. 170.) 
 
 Reasonable Cause a Question of Fact. — The question whether or not 
 
 there was reasonable cause to believe that a preference was intended, is one of 
 fact for the jury. It may be inferred from all the facts and circumstances of 
 the case, but their determination must be something more than a guess, and 
 the transferee must have had more than reasonable cause to suspect. (Forbes 
 V. Howe, 102 Mass. 427.) In the case of Wager v. Hall {supra,) it was said: 
 " All experience shows that positive proof of fraudulent acts between debtor 
 and creditor is not generally to be expected, and it is for that 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 coincidences, 
 be sufficient to constitute conclusive proof." As a question of fact, " reasonable 
 cause to believe " is surrounded with uncertainty; as a question of law, it is 
 one of fine distinctions. This may be seen by comparing two opinions of the 
 U. S. Supreme Court. In Buchanan v. Smith (supra), it is stated in the opinion: 
 " A creditor securing a preference from his debtor over the other creditors of 
 the debtor cannot be said to have had reasonable cause to believe that his debtor 
 was insolvent at the time unless such was the fact; but if it appears that the 
 debtor giving the preference was actually insolvent, and that the means of 
 knowledge on the subject were at hand, and that facts and circumstances were 
 
CREDITORS. 319 
 
 § 60.] Reasonable Cause a Question of Fact. 
 
 known to the creditor securing the preference which clearly ought to have put 
 him as a prudent man upon inquiry, it would seem to be a just rule of law to 
 hold that he had reasonable cause to believe that the debtor was insolvent, if it 
 appears that he might have ascertained the fact by reasonable inquiry. 
 Ordinary prudence is required of a debtor under such circumstances, and if he 
 fails to investigate when put upon inquiry, he is chargeable with all the knowl- 
 edge it is reasonable to suppose he would have acquired if he had performed his 
 duty." It would seem to be a corollary of this proposition that if one has had 
 facts brought to his attention, that would excite strong suspicion of the debtor's 
 intent to prefer, he would be bound to make inquiry and would be chargeable 
 with all the knowledge he might gain by inquiry. But in another case decided 
 by the U. S. Supreme Court (Grant v. National Bank, 97 U. S. 80, followed in 
 Stucky I/. Masonic Savings Bank, 108 U. S. 74), it was said: " Some confusion 
 exists in the cases as to the meaning of the phrase, ' having reasonable cause to 
 believe such a person is insolvent.' Dicta are not wanting which assume that 
 it has the same meaning as if it had read ' having reasonable cause to 
 suspect that such a person is insolvent.' But the two phrases are distinct in 
 meaning and effect. It is not enough that a creditor has some cause to suspect 
 the insolvency of his debtor; he must have such a knowledge of facts as to 
 induce a reasonable belief of his debtor's insolvency, in order to invalidate a 
 security taken for his debt. To make mere suspicion a ground for nullity would 
 render the business transactions of the community altogether too insecure. It 
 was never the intention of the framers of the law to establish any such rule. 
 A man may have many grounds for suspicion that his debtor is in failing cir- 
 cumstances, and yet have no cause for a well-grounded belief of the fact. He 
 may be unwilling to trust him further; he may feel anxious about his claim and 
 have a strong desire to secure it, and yet such belief as the act requires be 
 wanting." This doctrine was applied to the facts of the case before it, and a 
 decision rendered that the transfer was not voidable. Those facts should be 
 studied as illustrative of the extent of the rule, for the court clearly set them all 
 forth in its opinion, and yet held them to be grounds merely for suspicion, not for 
 belief. These facts which appeared in Grant v. National Bank were that the 
 debtor borrowed money frequently from the defendants; that he was obliged to 
 renew his notes; that he was in the habit of overdrawing his account; that he 
 was addicted to incorrect habits; that he was reckless in his business methods; 
 that he seemed to be pressed for money. He was in fact insolvent, but the last 
 fact was not shown to have been brought to the knowledge of the defendant. 
 
320 THE NATIONAL BANKRUPTCY LAW. 
 
 Reasonable Cause Must Have Existed at the Time of the Transfer. [Ch. VL 
 
 and most of his indebtedness was owing to parties living in a different county 
 than the one where the defendants resided. The court held that the facts known 
 to the defendants were grounds for suspicion, but not of belief, of the debtor's 
 insolvency. 
 
 Transfers Out of the Ordinary Course of Business. — By the former 
 bankruptcy act (§ 35 of act of 1867; § 5130, R. S.), the fact that a transfer was 
 not made in the usual and ordinary course of business of the debtor, was made 
 prima facie evidence of fraud. The present statute contains no such provision, 
 but it has been said by very eminent authority: " 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 fraudulent when it is not delivered in 
 the usual course of trade or of the accustomed dealings between the parties." 
 (Rison V. Knapp, 4 B. R. 349; s. t. i Dill. 186, citing Deacon on Bankruptcy.) 
 
 It was held by the United States Supreme Court (Walbrun v. Babbitt, 16 Wall. 
 577; s. c. g B. R. i.): " The presumption of fraud arising from the unuusal 
 nature of the transaction 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 means pursued in good faith must be used for this purpose." 
 And this would be equally applicable under the present law whenever there 
 was a presumption arising from the nature of the transaction, that the trans- 
 feree had reasonable cause to believe a preference was intended. The degree 
 of diligence required on the part of the transferee in making the inquiry depends 
 upon the circumstances of the transaction; the more suspicious they are, the 
 more diligent in his inquiries must the transferee be. (Schulenberg v. Kabu- 
 reck, 2 Dill. 132.) This decision is, in fact, nothing more than an application 
 of the rule above stated that where one has notice of facts tending to show 
 fraud, he is chargeable with all knowledge which he might have obtained by 
 reasonable inquiry, and such reasonable inquiry is that which an ordinary man 
 would make under the circumstances. 
 
 Reasonable Cause Must Have Existed at the Time of the Transfer. — 
 
 The transfer is voidable only if the transferee had at the time of the transfer 
 reasonable cause to believe that a preference was intended. It is absolutely 
 necessary that this reasonable cause of Jbelief must have existed at the time of 
 the transfer. Unless there is then reasonable cause to believe that it is made 
 with intent to prefer, no matter what may subsequently develop, the transfer 
 cannot be avoided. Compare the following cases, bearing in mind that at the 
 
CREDITORS. 321 
 
 § 60.] Knowledge of the Agent. 
 
 time they were decided, other facts than those now essential to the invalidating 
 of a preference would make it voidable, and that, therefore, the cases are cited 
 only as authorities for the statement that the reasonable cause to believe a 
 preference was intended must be simultaneous with the transfer, in order to 
 invalidate it: Dow v. Sargent, 15 N. H. 115; Toof v. Martin, 13 Wall. 40; s. c. 
 6 B. R. 49; Clark v. Iselin, 21 Wall. 360; s. c. 11 B. R. 337; s. c. below, 10 
 Blatch. 204; s. I.. 9 B. R. 19; Haughey v. Albin, 2 Bond, 244. 
 
 In an action to invalidate the transfer, evidence is not even competent and 
 admissible unless it tends to show that this cause for belief existed simultane- 
 ously with the transfer. And if the complaint or declaration does not contain 
 a specific allegation that the reasonable cause existed at the time of the trans- 
 fer, it is demurrable, or judgment may be asked for on the pleadings. (/« re J. 
 D. Hunt, 2 B. R. 539; Crump v. Chapman, 15 B. R. 571.) But evidence of the 
 debtor's financial condition and reputation within a limited period previous to 
 the transfer is competent as tending to show what means the creditor had to 
 know, or what cause to believe that the debtor was insolvent. (Forbes v. Howe, 
 102 Mass. 427.) But it ought to be shown that such reputation was general, or 
 else that it was brought actually or constructively to the notice of the transferee. 
 In accordance with the rule above set forth, that the reasonable cause to believe 
 that the transfer was made with preferential intent must exist at the time of the 
 transfer, it has been held that where one gave to his creditor notes of a third 
 party, which by the law as laid down by the courts of New York and most of 
 the other States, and also by the Federal courts, are only a conditional payment 
 — that is, a payment if the same shall be collected (unless the transfer has been 
 made expressly as a payment), yet even in cases of such conditional payment to 
 render them voidable the reasonable cause to believe that they were given with 
 intent to prefer must exist at the time the notes were accepted, not at the time 
 they were payable. {In re Ouimette, 3 B. R. 566; s. t. i Saw. 47.) 
 
 Knowledge of the Agent. — The statute makes preferences voidable if the 
 agent of the transferee had reasonable cause to know a preference was intended. 
 Independently of any statute, the principal would be chargeable with all the 
 knowledge that his agent had at the time of the transaction, which the latter 
 might properly communicate to him. (Rogers z/. Palmer, 102 U. S. 263; Sage 
 V. Wynkoop, 16 B. R. 363; s. t. 104 U. S. 319; Markson v. Hobson, 2 Dill. 
 327; Mayer v. Hermann, 10 Blatch. 256; Bank of U. S. v. Davis, 2 Hill 
 fN. Y.] 451; Ingalls I/. Morgan, ro N. Y. 178; Fulton Bank v. N. Y. & S. 
 C. Co., 4 Paige, 127; Ungewitter v. Sachs, 3 B. R. 723; s. c. 4 Ben. 167; 
 
 NAT. BANKRUPTCY LAW^ — 21 
 
322 THE NATIONAL BANKRUPTCY LAW. 
 
 Sub-agents and Collection Agencies. [Ch. VI. 
 
 Griswold v. Haven, 25 N. Y. 595; North River Bank v. Aymar, 3 Hill, 262; 
 David V. Bemis, 4 N. Y. 453; Vogle v. Lathrop, 4 B. R. 439; in re Meyer, 2 B. 
 R. 432; Atty.-Gen. v. Siddon, i Cromp. & Jer. 220.) 
 
 Sub-agents and Collection Agencies. — Where an agent has power to 
 employ a sub-agent, the latter's knowledge is deemed to be the knowledge of 
 the original principal. (Story on Agency, § 4.52, 454; Storrs v. City of Utica, 
 17 N. Y. 104; Boyd v. Vanderkamp, i Barb. Ch. 273; Rourke v. Story, 4 E. D. 
 Smith, 54; Lincoln v. Batelle, 6 Wend. 475.) But because of the legal principle 
 that, although the acts of a sub-agent have the same effect as if done by the 
 principal, the acts of the agent of an intermediate independent employer do not 
 bind the original employer, it was held by the Court of Appeals of New York 
 and by the Supreme Court of the United States, that where one gave a claim to 
 a collection agency for collection, and the latter employed attorneys to collect 
 the claim, and the attorneys with full knowledge of the debtor's insolvency 
 induced him to make a preferential transfer by confessing a judgment in favor 
 of the creditors (not in favor of the collection agency), the creditor was not 
 chargeable with the knowledge of the debtor's insolvency which the attorneys 
 had, the creditor never having received the proceeds of the judgment. It was 
 further held that the attorneys were agents of the collection agency, and that the 
 agency was not an agent of the creditor, but an independent contractor. (Hoover 
 V. Wise, 91" U. S. 308; s. I.. 14 B. R. 264, citing, as to the relations of commer- 
 cial agencies to creditors whose claims they take for collection: Reeves v. 
 State Bank of Ohio, 80 Ohio St. 465; Mackersy v. Ramsay, g Clark & Fin. 818; 
 Montgomery Co. Bank w. The Albany City Bank, 7 N. Y. 459; Com. Bank of 
 Penn. v. Union Bank, 11 N. Y. 203; Allen u. Merchant's Bank, 22 Wend. 215; 
 Bradstreet !<. Everson, 72 Penn. 124; Lewis ». Peck. 10 Ala. 142; Cobb v. Becke, 
 6 Ad. & Ellis, N. S. 930. As has been said in the case above discussed (Hoover 
 V. Wise), the proceeds of the judgment had not been paid over to the creditors. 
 Whether any moneys had, in fact, been collected does not appear, but the court 
 decided the case on the ground that the collection agency was a debtor to the 
 creditor, and added that whether a different conclusion would be reached if the 
 money had come to the hands of the creditors was a question they were not 
 called on to consider. It is interesting to note that this decision was rendered 
 by a divided court, three of the justices dissenting from the opinion of the 
 court, and in their dissenting opinion clearly setting forth the dangers which 
 would result from the rule laid down by the majority. It appears that the 
 attorneys appeared as attorneys of record for the creditors ; that the collection 
 
CREDITORS. 323 
 
 § 60.] Knowledge of Attorney of Creditor Derived as Attorney of Debtor. 
 
 agency had no interest in the notes collected; that the notes were not indorsed 
 over to it; that it did not appear as a party to the action in which the judgment 
 was confessed, and had no control over the proceedings of the attorneys, but 
 that the creditors had full power to control the action. That in the face of all 
 these facts the majority of the court should hold that the creditors were not 
 chargeable with knowledge of the acts of the attorneys, is of the greatest 
 importance. As was said in the dissenting opinion ; " The effect of the decision 
 is that a non-resident creditor, by sending his claim to a lawyer through some 
 indirect agency, may secure all the advantages of priority and preference which 
 the attorney can obtain from the debtor, well knowing his insolvency, without 
 any responsibility under the bankrupt law. Very few creditors, when this 
 becomes well known, will fail to act on this politic suggestion." The case was 
 reported below in 61 N. Y. 305; sub nom. Hoover v. Greenbaum. 
 
 Knowledge of an Attorney of the Creditor Derived as Attorney of 
 
 the Debtor. — It is a general rule of law that the knowledge of the agent to be 
 imputed to the principal must be knowledge acquired in the transaction of the 
 business of the principal, or else knowledge acquired in a prior transaction then 
 present to his mind, and which could properly be communicated to his principal. 
 Some question arises, then, as to when the knowledge of an attorney of a cred- 
 itor, acquired when the attorney was the attorney of the debtor or of another, 
 can be imputed to the creditor. This question is one which will often come up 
 in bankruptcy proceedings, since, in cases of preferential transfers, not infre- 
 quently one attorney will act for both debtor and creditor. Indeed, these trans- 
 fers being more or less collusive, such will generally be the case. The general 
 rule that a principal is bound by the knowledge of his agent, is based on the 
 principle of law that it is an agent's duty to communicate to the principal, the 
 knowledge which he has respecting the subject-matter of negotiation. When 
 it is not the agent's duty to communicate, when it would be unlawful for him 
 to do so, for example, when it has been acquired confidentially as attorney for a 
 former client in a prior transaction, the reason of the rule ceases, and as the 
 agent would not be expected to do that which would involve a betrayal of his 
 professional confidence, the principal is not bound by the agent's secret and 
 confidential information. (The Distilled Spirits, 11 Wall. 356; [citing Dresser 
 V. Norwood, 17 Common Bench, N. S. 466; Warrick v. Warrick, 3 Atkyns, 291; 
 Mountford v. Scott, Turner & Russell, 274; Hartz/. Farmers' Bank, 33 Vermont, 
 252; N. Y. C. Ins. Co. V. Nat. Prot., Co., 20 Barb. 468.J) But if a person retains 
 one with knowledge that he is retained in the same transaction by another, 
 
324 THE NATIONAL BANKRUPTCY LAW. 
 
 The Preference May Be Voidable: It is Not Void. [Ch. VI. 
 
 then he cannot expect the attorney to treat his information as confidential. If 
 knowing that the other party has a right to the full and complete services, knowl- 
 edge, and skill of the attorney, he also retains him and imparts information to 
 him, it must be considered as done with the understanding that the information' 
 imparted shall be imparted or used for the benefit of the other client also. 
 " Where the attorney of a creditor is prosecuting a debtor to enforce payment 
 of a debt, and by reason thereof the debtor discloses to him that he is insolvent 
 and asks his advice, although the attorney may possibly find himself involved 
 in some conflict of duty, for he certainly has no right to accept in confidence 
 from the adverse party information which his client ought to know, yet he can- 
 not by accepting such retainer evade the operation of the rule. In every step 
 of the prosecution of the claim to collection he is the agent of the creditor; the 
 performance of his duty to that creditor involves the gaining of knowledge of 
 the debtor's insolvency, and no proffered confidence put in him by the adverse 
 party can make that information less his client's property or less information 
 acquired in his agency and imputable to such client." Woodruff, J., in Mayer 
 V. Herrman, 10 Blatch. 256. We would add that the debtor could not properly 
 claim that this information ought not be imparted, for by retaining one who, he 
 knows, has been hired to gain the information which he imparts, he must be 
 deemed to have voluntarily imparted the information to the attorney to use for 
 the purpose for which he was originally hired to obtain it. 
 
 The Preference May Be Voidable: It is Not Void. — The distinction 
 
 between voidable and void acts is often overlooked, but is most important, as 
 on it, to a great extent, depend the rights of innocent third parties, besides the 
 rights of the parties themselves in case no proceedings are taken. The prefer- 
 ences which the bankrupt act discountenances are voidable, not absolutely void. 
 As against all persons but the trustee as representative of creditors, such trans- 
 fers are valid. The preferential transfer or assignment being voidable only by 
 the assignee or trustee, it has been held that after such assignment or transfer, 
 no one can seize the property upon execution or attachment, or acquire a lien 
 upon it by judgment or otherwise, or procure a good title thereto by subsequent 
 purchase. (Cook v. Rogers, 13 B. R. 97; a. c. 31 Mich. 391 [citing James v. 
 Whitbread, 11 C. B. 406; Coale v. Williams, 7 Exch. 205; and distinguishing 
 and limiting Buchanan v. Smith, 7 B. R. 513; s. c. 16 Wall. 277; and McLean ». 
 Meline, 3 McLean igg]; see also Dodge v. Sheldon, 6 Hill, 8.) If property 
 which has been preferentially transferred has thereafter been levied upon by a 
 sheriff, or if taken by any other party, the transferee may, until his title is 
 
CREDITORS. 325 
 
 § 60.] The Preference May Be Voidable: It is Not Void. 
 
 invalidated, maintain an action for such unlawful taking. (Hathaway v. Brown, 
 18 Minn. 414.) The preferential transferee, if an assignee for the benefit of 
 creditors, cannot excuse his failure to account as assignee, on the ground that 
 the assignment to him was void. As to all parties except the creditors as repre- 
 sented by the trustee in bankruptcy, the transfer is valid. (Seaman v. 
 Stoughton, 3 Barb. Ch. 344.) If preferential transfers are invalidated by the 
 trustee, the annulment does not make valid any levy or attachment, or other 
 attempt to procure title to the property made after the preferential transfer 
 which has been voided. The original transfer being good as to all but the 
 assignee, the debtor has no interest or title in the property subject to levy or 
 transfer. The title of the trustee relates back to the transfer which is avoided, 
 and subsequent execution and judgment creditors, and subsequent transferees 
 are not let in to intercept and take precedence of the rights of the trustee in 
 bankruptcy. Intervening judgment creditors cannot avail themselves of a fraud 
 under the bankrupt act to defeat the very policy of the act itself. The acts of 
 the trustee in bankruptcy do not inure to increase the rights of the judgment 
 and execution creditors. The judgment, execution or attaching credito takes 
 under his levy all that then rightfully belongs to his debtor and no more, inas- 
 much as he stands merely in the place of his debtor. A preferential transfer 
 being valid as respects the transferrer, one thereafter attaching or levying on 
 this property gets no title, for the debtor's interest has all been transferred. 
 The right of the trustee in bankruptcy to have the transfer invalidated is a right 
 to take the property and all the interests of the debtor at the time of the 
 transfer. The right of a subsequent attaching creditor is to take what the 
 debtor has at the time of attachment. (In re S. Biesenthal, 15 B. R. 228; Sea- 
 man V. Stoughton, 3 Barb. Ch. 344; [see also Dodge v. Sheldon, and Cook v. 
 Rogers, suprd\\ in re Klancke, 4 B. R. 648; s. c. 4 Ben. 326; in re H. Badenheim, 
 15 B. R. 370; Everett v. Stone, 3 Story, 454 and 455.) Contrary to the rule laid 
 down by these cases are: McLean v. Meline, 3 McLean, 201, and MacDonald v. 
 Moore, 15 B. R. 26; the latter case holding that when the assignment is set 
 aside it becomes void from the time it was made against all persons who, after 
 the time of the transfer, took steps to acquire rights against the property trans- 
 ferred, and who, but for the transfer, would have secured such right free from 
 any obstruction ; such rights arrange themselves in order according to priorities. 
 To same effect, Haughey v. Albin, 2 B. R. 399; s. c. 2 Bond, 244.) Of course 
 if the transfer by the debtor is one which is fraudulent as to all creditors or as 
 to any person beside the trustee in bankruptcy, and is consequently void, such 
 
326 THE NATIONAL BANKRUPTCY LAW. 
 
 Revival of Merged Liens by Annulment of Preferential Transfers. [Ch. VL 
 
 persons may acquire liens thereon and riglits tlierein, and unless such rights 
 and liens so secured are voidable under the provisions of the bankrupt act, they 
 may be enforced, and must be recognized by the trustee in bankruptcy. (John- 
 son V. Rogers, 15 B. R. i.) 
 
 In accordance with the principles mentioned, assignments for the benefit of 
 creditors, with preferences, are voidable, not void. Where the common-law 
 rule that assignments which give preferences are not void, remains in force 
 unaffected by statute, such assignments can be declared void only when in vio- 
 lation of the bankruptcy act, and in these cases they are voidable, not void 
 per se. Such assignments may, perhaps, conclusively prove the existence of an 
 intent on the part of the assignor to prefer, and the existence of reasonable 
 cause on the part of the assignee, and each person accepting benefits under the 
 assignment, to believe that such was the intent, but still they are not absolutely 
 void, but only voidable. (Shryock v. Bashore, 82 Penn. St. 159; s. c. 15 B. R. 
 283; Cragin v. Thompson, 2 Dill, 513; ». c. 12 B. R. 81; Sparhawk u. Drexel, 
 12 B. R. 450; Maltbie v. Hotchkiss, 38 Conn. 80; Cook v. Rogers, 31 Mich. 391; 
 s. c. 13 B. R. 97.) 
 
 Revival of Merged Liens by Annulment of Preferential Transfers. — 
 
 When one has a valid lien which is merged, or which is surrendered by 
 him, when a transfer is made to him, if the transfer is thereafter declared 
 void, his lien may be revived; and he will have a right to assert it, so far 
 as it would have been valid had there been no transfer. It is manifest that 
 if the transfer is declared invalid, the lien can not be said to be merged, 
 for merger only occurs when a lesser title and a greater are united in one 
 and the same person, and if the greater title is void, it is precisely as if no 
 transfer had ever taken place. The creditors through the trustee in bankruptcy 
 electing to avoid the transfer, take the property as though no transfer had ever 
 been made, and subject to all lawful liens upon it. (Avery v. Hackley, 20 Wall. 
 407; citing in re Kahley, 4 B. R. 378; o. c. 2 Biss. 383.) 
 
 On the same principle, if old securities are given in exchange for new, if the 
 new are adjudged invalid, the cancellation and surrender of the old ones having 
 been without consideration, a court of equity will annul the cancellation and 
 revive the old securities. Thus, it is well settled that if a security founded upon 
 a prior one be fatally tainted with the vice of usury, and if the prior one be 
 given up and canceled, and the latter one be thereafter adjudged void, the prior 
 one will be revived and may be enforced as if the latter had never been given. 
 (Burnhisel v. Firman, 22 Wall. 170; s. c. 11 B. R. 505 [citing Parker v. Cousins, 
 
CREDITORS. 327 
 
 § 60.] No Recovery Except by the Trustee. 
 
 2 Grattan, 389; Farmers' and Merchants' Bank r. Joslyn, 37 N. Y. 353; Cook v. 
 Barnes, 36 N. Y. 521; Rice v. Welling & Fake, 5 Wendell. 595]-) A vendor's 
 lien may be revived under the same circumstances. (Crippen v. Heermance, 
 ■9 Paige, 211.) 
 
 Special Action to Annul the Transfer. — A separate action or proceeding 
 
 for the purpose of annulling the transfer must be brought by the trustee. The 
 adjudication in bankruptcy does not per se annul any transfer, except in the 
 case of liens acquired pursuant to actions or proceedings at law, as provided 
 by section 67; and even in those cases, it would probably be necessary in the 
 petition to procure an adjudication of bankruptcy to set up the facts bringing 
 the lien within the class of those made void by an adjudication per se, and to ask 
 either in connection with or as a part of the adjudication of bankruptcy a further 
 judgment declaring the liens void, or else to bring a special action to procure 
 a decree declaring the liens annulled or dissolved. Compare notes to section 
 67 (c) and (/). But as to all transfers other than the liens mentioned in section 
 •67 (it) and (/), the proceedings and adjudication of bankruptcy do not in any 
 manner determine their validity. The questions involved in a suit brought 
 by the trustee against a preferred creditor, and those involved in an adjudica- 
 tion of bankruptcy are different. That the preferred creditor had reasonable 
 cause to believe a preference was intended, is essential as a part of the proof in 
 an action to annul; but upon proceedings to adjudicate one a bankrupt it would 
 be immaterial. Hence, even if the preferred creditors were parties to the pro- 
 ceeding to adjudicate the debtor bankrupt, that adjudication could not be put 
 in evidence to show that they had reasonable cause to believe a preference was 
 intended. As the trustee in bankruptcy is never a party to the proceeding to 
 adjudicate the debtor a bankrupt, that adjudication cannot be put in evidence 
 for the purpose of proving the existence of a preferential intent. 
 
 The record of the adjudication in bankruptcy is evidence only of what it 
 effects. It may be introduced to show the status of the debtor as an adjudged 
 bankrupt, but not as evidence that a voidable preference had been created. 
 <Babbitt v. Walbrun, 6 B. R. 359.) 
 
 No Recovery Except by the Trustee. — The provision of the statute that 
 a preferential transfer may in certain cases be voidable by the trustee would of 
 itself seem clearly to show that no one but the trustee could bring such an 
 action. Such, indeed, is the rule of law, not only as laid down in the statute, 
 but as repeatedly stated by the U. S. Supreme Court. It is true that other 
 
328 THE NATIONAL BANKRUPTCY LAW. 
 
 No Recovery Except by the Trustee. [Ch. VL 
 
 courts have held a contrary doctrine. Compare Dewey v. Moyer, 72 N. Y. 70, 
 at page 78, where it is said: " If the assignee should refuse or neglect to sue for 
 and reclaim property fraudulently transferred, it is abundantly established that 
 the creditors may commence an action to reach the property, making the 
 assignee, the debtor and his transferees parties defendant. And in such an 
 action the property will be administered directly for the benefit of the credit- 
 ors;" citing Sands v. Codwise, 2 J. R. 487; Freeman :-. Deming, 3 Sandf. Ch. 
 R. 327; Seaman v. Stoughton, 3 Barb. Ch. R. 344; Fort Stanwix Bank v. Leg- 
 gett, 51 N. Y. 552; Card v. Walbridge, 18 Ohio, 411; Phelps v. Curtis, 80 111. 109; 
 Franklyne v. Fern, Barnardson, 30; First Nat. Bank of Troy v. Cooper, 9 B, R. 
 529, in U. S. Supreme Court; Boone v. Hall, 7 Bush, 66. But the rule first 
 above mentioned, which must now be regarded as firmly established, was laid 
 down in Glenny v. Langdon, 98 U. S. 20, where the court held that creditors 
 can have no remedy which will reach property fraudulently conveyed, except 
 through the assignee, for three reasons: first, because all such property, by the 
 express words of the Bankruptcy Act, vests in the assignee by virtue of the 
 adjudication in bankruptcy and of his appointment; secondly, because they 
 cannot sustain any suit against the bankrupt; and, thirdly, because their reme- 
 dies are absorbed in the great and comprehensive remedy under the commis- 
 sion, by virtue of which the assignee is to collect and distribute among them 
 the property of their debtor, to which they are justly and legally entitled. (Carr 
 V. Hilton, I Curt. C. C. 234.) 
 
 The Bankrupt Act makes it the express and positive duty of the trustee to col- 
 lect and distribute all the assets of the bankrupt, including property fraudu- 
 lently conveyed prior to the decree of bankruptcy; and that authority is given 
 to him to sue for the same under the direction and control of the court, which 
 may in its discretion and for good cause shown, require him by a specific order 
 to take any proper step to secure the due administration of the bankrupt law, 
 and the full and complete protection of the rights of the creditors interested in 
 the proceedings. Ample means are placed in the hands of the creditors to 
 enable them to inform the court of the necessity of any particular proceeding to 
 be taken for that purpose, and the power of the court to compel a compliance 
 with any such order is plenary and beyond question. If the trustee fails to 
 bring an action when ordered by the court to do so, the court has power to 
 punish him for contempt, or to remove him and appoint another in his place 
 who will bring the action. Further commenting on the exclusive right of the 
 assignee (trustee) to bring such actions, the court, in Glenny v. Langdon, said: 
 
CREDITORS. 329 
 
 § 60.] No Recovery Except by the Trustee. 
 
 " Plenary as the powers granted to the bankrupt courts are, there is no occasion 
 for any departure from them in order to the complete execution of the duties 
 imposed. Neither the assignee nor any creditor can have any greater right 
 under the Banlcrupt Act than the act itself confers. Nor is that the only objec- 
 tion to the contention that creditors have the right to sue; for if one creditor 
 may sue in such a case, then all may sue, and the result might be that the 
 proceedings in bankruptcy would be transferred not only to the Circuit Court, 
 but to every State court within whose jurisdiction a defendant may reside. Even 
 if the case referred to by the complainants as holding that creditors may bring 
 such suits, and others of like character, were good law in the courts of the 
 country where they were made, still it is clear that the question must be con- 
 trolled by the provisions of our Bankrupt Act; but the doctrine of that case has 
 long since been overruled, and is no longer regarded as correct, even in the 
 jurisdiction where it was made, of which there is abundant evidence. ' Cred- 
 itors of an insolvent,' said Lord Cottonham, ' cannot maintain a suit to recover 
 the property or rights which belong to the insolvent, and the same rule applies 
 to suits for a similar object brought by the insolvent himself.' (Heath u. Chad- 
 wick, 2 Ph. 649.) Prima facie the bankrupt is divested of the whole estate, nor 
 have the creditors any right to sue; but if it be represented that the assignees 
 will not sue, the court having jurisdiction of the matter may direct the recusant 
 assignee to proceed, or may give the bankrupt or a creditor the right to institute 
 the suit in the name of the assignee, first indemnifying the assignee against 
 costs. (Benfield v. Solomons, 9 Ves. 83.) Attempt to maintain such a suit 
 was made in Yewens v. Robinson (11 Sim. 105); but the assignee demurred to 
 the bill of complaint, and the court sustained the demurrer, holding that the 
 true method to proceed in such a case was to apply to the court of insolvency 
 to have the assignees removed and others appointed in their places. Applica- 
 tion was made to the court in the case of Ex parte Ryland, and the petitioning 
 creditor was allowed by the court to sue in the name of the assignee, first giving 
 the assignee indemnity against cost and damage. (2 Deac. & Chit. 393.) Cor- 
 responding decision was made in the case of Hammond v. Atwood (3 Madd. Ch. 
 158), the court holding that the proper course was to apply to the court by 
 petition to have the assignee removed and new assignees appointed. (Major 
 V. Aukland, 3 Hare, 77.)" 
 
 The case from which we have just quoted in extenso (Glenny v. Langdon) was 
 expressly followed in Moyer v. Dewey, 103 U. S. 301, and in Trimble v. Wood- 
 head, 102 U. S. 647. They must be considered as establishing the correct rule. 
 
330 THE NATIONAL BANKRUPTCY LAW. 
 
 Recovery From the Party Benefited. [Ch. VL 
 
 and the dictum from Dewey v. Moyer, ^2 N. Y. 70, quoted at the beginning of 
 this paragraph, must be considered as no longer a correct statement of the law 
 on the point. 
 
 In accordance with the principles established in Glenny v. Langdon, it has 
 been held that where a bankrupt, after the adjudication, assigned a chose in 
 action, and no assignee was appointed, and the proceedings in bankruptcy were 
 discontinued, the assignment was valid. (McDonald v. Bauendahl, 4 Hun, 
 205; s. c. 6 N. Y. Supreme Court. 546; on appeal, 64 N. Y. 638.) 
 
 Recovery from the Party Benefited. — The statute provides that the 
 property or its value may be recovered from the person receiving it or to be 
 benefited thereby. A study of paragraph a of this section will show that a 
 transfer need not be made directly to the person to whom it is intended to give 
 the advantage over others, in order to make it a preference in his favor. Thus, 
 payments may be made by the maker of a note to the holder of it, and such pay- 
 ment may constitute a preference in favor of the surety. In fact, such a pay- 
 ment may be a practical advantage to the surety alone. Such will be the case 
 where the surety is a person of ample means and ability to pay the note, and 
 the maker of it is insolvent. In such cases the holder receives no practical 
 benefit, inasmuch as he can collect the amount from the surety, but the surety 
 is benefited by the payment made by the debtor to the holder, as it releases 
 him from his liability. If the result of such a payment is to give the surety an 
 advantage over other creditors, then it constitutes a preference, and if he has 
 reasonable cause at the time to know that a preference was intended, a recovery 
 of the amount paid may be had from him, although the payment was made 
 only to the holder. Under the former act there was some question as to the 
 right of such recovery inasmuch as it permitted a recovery by the assignee only 
 where a preference was given to a " creditor," or a. person having a claim 
 against the one making the transfer. The word creditor in that act had only its 
 usual popular signification, but the courts held that a fair construction of all the 
 provisions of the statute gave the trustee the right to recover from the preferred 
 indorser or surety, in cases where the circumstances were of the character just 
 mentioned; and the highest authority was to the effect that such payments were 
 preferences to the holder of the note as well as to the indorser, and that it was 
 a preference to both, regardless of the ability of the indorser to pay the note, 
 and regardless of the fact that the holder on account of this ability to collect 
 in full from the indorser really received no advantage. (Bartholow v. Bean, 18 
 Wall. 635.) Under the present act the word " creditor " includes anyone hav- 
 
CREDITORS. 331 
 
 § 60.] Recovery of the Property or its Value. 
 
 ing a demand or claim provable in bankruptcy, and since the statute provides 
 that where a person has a claim against the bankrupt for which another person 
 is secondarily liable, and fails to prove the same, the latter may prove it and be 
 subrogated to the rights of the creditor; indorsers and sureties may fairly be 
 considered as creditors, and there can be no question of the applicability of the 
 cases just cited. 
 
 Subsequent Transferees : Bona Fide Purehasers. — The title acquired 
 by a preferred transferee being, at the most, voidable only, not void per se, if the 
 preferred creditor transfer the property to a subsequent purchaser who takes 
 the property in good faith and without notice and for a valuable consideration, 
 the latter's title is not voidable. (Rison v. Knapp, 4 B. R. 349; s. c. i Dill, 186; 
 [citing Morse v. Godfrey, 3 Story, 389; Willard's Eq. Jur. 256]; Butter v. 
 Haughwout, 42 111. 9.) 
 
 Recovery of the Property or its Value. — Although the bankruptcy act 
 
 declares that the trustee may recover the property or its value, an action to 
 recover the value of property can only be maintained when the property itself 
 has been actually or constructively converted to the use of the defendant, and 
 the complaint must allege a conversion in terms or its legal equivalent, a 
 demand and refusal. A transfer of property as a preference being not void but 
 voidable, the receipt of the property by the party taking the transfer is not 
 tortious, and unless the subsequent detention became wrongful for some other 
 reason, there must be a demand and refusal. Until such demand and refusal 
 the transferee cannot be considered a tort feasor. The right given to the trustee 
 to recover the property or its value is in effect a right to maintain replevin for 
 the specific property or to recover for the conversion of the same. The trans- 
 feree coming into the possession of the property rightfully, a demand and 
 refusal are necessary unless there has been an actual conversion. The 
 demand must be for the goods and property transferred, not of the value of the 
 goods. This necessity of a demand and refusal, if there has been no actual 
 conversion, exists equally under the new code practice as under the old prac- 
 tice. The clause empowering the trustee " to recover the property or its value " 
 is a mere legal conclusion or result from the annulment of the transfer. It 
 neither restricts nor enlarges the remedy of the trustee. If action of replevin is 
 brought, the trustee may also recover in the same action damages for injury to 
 or for the detention of the goods. So held in Schuman v. Fleckenstein, 15 B. R. 
 
332 THE NATIONAL BANKRUPTCY LAW. 
 
 Debtor's Collusion in Preferential Transfers. [Ch. VL 
 
 224; s. c. 4 Saw. 174 (citing Brooke v. McCraken, 10 B. R. 461; Hyde v. Sime, 
 Chitty, p. 170; s. t. 2 Hen. Black, 135; Trisony v. Orr, 49 Cal. 617). 
 
 Measure of Damages. — If the transferee has himself parted with title to 
 the property, the true measure of damages recoverable by the trustee is the 
 value of the property, and not the amount realized upon the sale by him, and 
 this is so even though the property was taken on execution and sold at pub- 
 lic sale and only the proceeds of it came to the person preferentially transferred. 
 (Clarion Bank v. Jones, 21 Wall. 325; [citing Conrad v. Ins. Co., 6 Pet. 274; 
 Comly V. Fisher, Taney's Decs. I2i; Marshall v. Knox, 16 Wall. 559; Eby j/. 
 Schumacher, 29 Penn. St. 40; Sedgw. on Dam. (6th ed.)634; Mayne on Dam. 
 (2d ed.) 317].) But this does not prevent the plaintiff from adopting the sale; 
 he may do so if he chooses and then sue for the proceeds as for money had and 
 received to his use, but he is not limited to the amount of the proceeds unless 
 he chooses to adopt the sale. (Schuman u. Fleckenstein, supra,) If the 
 trustee adopts the sale and treats the proceeds as money had and received to his 
 use, he is entitled to interest from the time of the receipt of the money by the 
 transferee, or at least from the time of the trustee's demand for it. He is 
 further entitled to the gross proceeds. (Cookingham v. Morgan, 7 Blatch. 480; 
 Traders' Nat. Bank v. Campbell, 14 Wall. 87; s. i,. below, 2 Biss. 423.) 
 
 Debtor's Collusion in Preferential Transfers. — In the case of Fox v. 
 Gardner (21 Wall. 475), the United States Supreme Court held that where a 
 debtor, knowing that his creditor is insolvent, accepts a draft drawn on him by 
 such creditor, the draft being drawn and accepted for the purpose of giving a 
 preference, the transaction is a fraud on the Bankrupt Act, and the assignee in 
 bankruptcy can recover from the acceptor the amount of the draft. In render- 
 ing its opinion the court said: " The language of the statute authorizing the 
 assignee ' to recover the property or the value of it from the person receiving it 
 or so to be benefited,' does not create a qualification or limitation of power. 
 There is no implication that the party paying is not also liable. The words are 
 those of caution merely, and give the assignee no power that he would not pos- 
 sess had they been omitted from the statute. In the present case the property 
 or value attempted to be transferred belonged originally to the bankrupt. On 
 the adjudication of bankruptcy the possession and ownership of the same were 
 transferred to the assignee. The attempted transfer by the bankrupt was fraud- 
 ulent and void. It follows logically that the debtor yet holds it for the 
 assignee, and that the assignee may sue him for its recovery." (Citing 
 
CREDITORS. 333 
 
 § 60.] Annulling Fraudulent Transfers. 
 
 Bolander v. Gentry, 36 Cal. 105 ; Hanson v. Herrick, 100 Mass. 323.) Though 
 a valid agreement to substitute another person as creditor may be made and 
 pleaded as a discharge of a debt in the nature of a payment, it is not payment 
 in fact, and is binding only when the contract is fair and honest. If a debtor 
 agrees to pay not his creditor, but a creditor of his creditor, the consideration of 
 his paying the substituted creditor is his release from the indebtedness due to 
 his original creditor. If his promise to pay the substituted creditor is made 
 knowing that it is to accomplish a purpose forbidden by law, the consideration 
 for his release fails, it being an illegal consideration. It is an attempt to pay a 
 debt in a manner the law forbids, and it is therefore no payment. The debt 
 still remains. The right of the assignee in bankruptcy to recover from the 
 debtor in such case is a right to collect an indebtedness which is unpaid and 
 still due and owing to the bankrupt. 
 
 Annulling FFaudulent Transfers. — It may not be improper to add by 
 way of caution that the trustee may bring action as the representative of the 
 creditors to annul any transfer, which, because of its being fraudulent as to 
 creditors, may be annulled independently of the bankruptcy act. Under the 
 former act it was held that such transfers might be annulled, though more than 
 four months had transpired. (Smith v. Ely, 10 B. R. 553; Cady v. Whaling, 7 
 Biss. 430; Cookingham v. Ferguson, 8 Blatch. 488.) But whether the provi- 
 sions of section 67 (?) have changed the rule so as to make these decisions inap- 
 plicable, quaere ; compare notes to section 67 (e) and section 70 (4). 
 
CHAPTER VII. 
 
 ESTATES. 
 
 Sec. 6i. Depositories for Money. — a Courts of bankruptcy 
 shall designate, by order, banking institutions as depositories for 
 the money of bankrupt estates, as convenient cis may be to the 
 residences of trustees, and shall require bonds to the United 
 States, subject to their approval, to be given by such banking 
 institutions, and may from time to time as occasion may require, 
 by like order increase the number of depositories or the amount 
 of any bond or change such depositories. 
 
 No Analogous Provisions in Former Acts. — 
 
 Cross-reference. — As to the duty of the trustee to deposit all funds in the 
 designated depositories, and as to the requirement that all disbursements shall 
 be made only by check or draft on the designated depositories, compare section 
 47 o (3 & 4). 
 
 Sec. 62. Expenses of Administering Estates. — a The actual 
 and necessary expenses incurred by officers in the administration 
 of estates shall, except where other provisions are made for their 
 payment, be reported in detail, under oath, and examined and 
 approved or disapproved by the court. If approved, they shall 
 be paid or allowed out of the estates in which they were incurred. 
 
 Analogous Provision of Former Acts. — 
 
 R. S. § 5099; act of 1867, § 28; act of 1800, § 29; also R. S., §§' 5127A, 5127B. 
 
 Services of Attorneys. — The general rule as to the employment by the 
 trustee of persons to render professional and clerical services is, that such serv- 
 ices may be procured when necessary, and that reasonable compensation there- 
 for will be allowed. It is a, subject as to which it is almost impossible to lay 
 
 [334] 
 
ESTATES. 335 
 
 § 6a.] Services of Attorneys. 
 
 down any exact rule. The circumstances of each particular case must be con- 
 sidered, and it is then in the sound discretion of the court to allow a reasonable 
 sum to be paid for such services as were needed and were properly rendered. 
 The language of the court in re Noyes (6 B. R. 277), shows how vague and 
 indefinite are the rulings of the court upon this subject. In rendering the 
 opinion in that case, Judge Longyear of the U. S. District Court for the Eastern 
 District of Michigan said: " It would be di£Scult, and I think impracticable, to 
 prescribe any general rule defining 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 clerical services in the execution of his trust. 
 This must be left to be decided in each individual case according to its peculiar 
 exigencies. The assignee is not at liberty to charge the assets of the estate in 
 his hands for professional or clerical services rendered him in the execution of 
 his trust, until the same shall have been first duly allowed by the court. The 
 assignee may, of course, apply to the court in the first instance for authority to 
 employ professional or clerical assistance, but in such case the court could do 
 but little more than grant such authority in general terms, leaving the instances 
 in and to which such assistance may be employed, largely to the discretion of 
 the assignee, as emergencies shall 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 understand- 
 ing that any abuse of it will be corrected by the court when applied to for 
 authority to charge the estate' for such assistance." 
 
 Courts require satisfactory evidence going to show the necessity of legal aid 
 on the part of the assignee. In re Davenport (3 B, R. 77), Judge Duval of the 
 U. S. District Court for the Western District of Texas said that while in prose- 
 cuting or defending suits the assignee had the right to employ counsel, and also 
 had the right to obtain legal advice whenever really necessary to enable him to 
 act for the interests of the estate or of creditors, still an allowance to an assignee 
 for the services of counsel in connection with the compromise of an ordinary 
 claim could not be allowed, it being a proceeding of such a character that an 
 assignee of ordinary intelligence would be able to act for himself and without 
 the aid of an attorney. But in re Colwell (15 B. R. 92), the U. S. District Court 
 for Massachusetts held that an allowance was proper to the trustee for procuring 
 the services of counsel to investigate as to the affairs of the estate, although no 
 litigation resulted. 
 
336 THE NATIONAL BANKRUPTCY LAW. 
 
 Allowances to Assignees for the Benefit of Creditors. [Ch. VII. 
 
 Auctioneer's Services. — The courts are reluctant to allow a trustee any 
 sum in payment of the fees of an auctioneer. In re Pegues (3 B. R. 80), it was 
 said: " The law contemplates that the assignee shall himself sell the property 
 of the estate. There may be cases in which it will be proper to employ an 
 auctioneer, but the necessity for so doing should be first shown to the court and 
 leave obtained." This language was quoted with approval by Judge Longyear 
 of the U. S. District Court for the Eastern District of Michigan in re Sweet, 9 B. 
 R. 48, 
 
 Extra Services by the Trustee. — Under the former act the court, in its 
 discretion, might allow the trustee additional compensation where he had ren- 
 dered special services, in addition to those usually rendered by the trustee; as, 
 for instance, where he had acted as attorney in several actions for the benefit of 
 the estate. {In re Welge, I McCrary, 46.) But in view of the provisions of 
 section 48 a, providing that the filing fee and commissions shall be the full com- 
 pensation of the trustee, it is doubtful if this decision is applicable. 
 
 Sums Paid for the Preservation of Property. — The trustee may be 
 allowed for all sums necessarily paid for the preservation of the property. If 
 such sums have been paid by other parties, he may, with the approval of the 
 court, repay them, especially if they had an interest in the preservation of the 
 property, and if there were circumstances which necessitated prompt action on 
 their part. Thus, if creditors, prior to the appointment of a trustee, should pay 
 off liens which were being enforced, in order to save the property for the estate, 
 they would be subrogated to the rights of the lienors. (/« re T. Gregg, 3 B. R. 
 529.) 
 
 Allowances to Assignees for the Benefit of Creditors. — Where a gen- 
 eral assignment for the benefit of creditors is set aside, the weight of authority 
 is that the trustee in bankruptcy may properly allow to the assignee for the 
 benefit of his creditors, his expenses in converting the property into money, but 
 to the extent only to which his conversion of it into money has saved the estate 
 in bankruptcy similar expenditure. (MacDonald v. Moore, 15 B. R. 26; s. c. i 
 Abb. N. C. 53; Burkholder v. Stump, 4 B. R. 597; in re J. Cohn, 6B. R. 379.) 
 The money paid by an assignee for the benefit of creditors to discharge valid 
 liens upon the property may certainly be allowed him. (Livingston v. Bruce, 
 I Blatch. 318.) And it has further been held that the assignee for the benefit 
 of creditors may be allowed sums which, pursuant to the terms of the assign- 
 
ESTATES. 337 
 
 § 63.J Debts which may be Proved. 
 
 ment, e has paid over to the creditors.' (Cragin v. Thompson, 2 Dill. 513; s. c. 
 12 B. .. 81; Jones v. Kinney, 5 Ben. 259; s. c. 4 B. R. 849-) 
 
 Cp jS-FefeFence. — As to allowances to the attorneys for the petitioning 
 <:rec .ors and to the attorney for the bankrupt, compare section 64 b (3). 
 
 Sec. 63. Debts which may be Proved. — a Debts of the 
 bankrupt may be proved and allowed against his estate which are 
 (i) a fixed liability, as evidenced by a judgment or an instrument 
 in writing, absolutely owing at the time of the filing of the peti- 
 tion against him, whether then payable or not, with any interest 
 thereon which would have been recoverable at that date or with 
 a rebate of interest upon such as were not then payable and did 
 not bear interest ; (2) due as costs taxable against an involuntary 
 bankrupt who was at the time of the filing of the petition againstj . 
 him plaintiff in a cause of action which would pass to the trustee 
 and which the trustee declines to prosecute after notice; (3) 
 founded upon a claim for taxable costs incurred in good faith by 
 a creditor before the filing of the petition in an action to recover 
 a provable debt ; (4) founded upon an open account, or upon a 
 contract express or implied ; and (5) founded upon provable debts 
 reduced to judgments after the filing of the petition and before 
 the consideration of the bankrupt's application for a discharge, 
 less costs incurred and interests accrued after the filing of the 
 petition and up to the time of the entry of such judgments. 
 
 b Unliquidated claims against the bankrupt may, pursuant to 
 application to the court, be liquidated in such manner as it shall 
 direct, and may thereafter be proved and allowed against his 
 estate. 
 
 Analogous Provisions of Former Acts. — 
 
 As to provable debts in general: R. S., § 5067; act of 1867, § 19; act of 1841, 
 § 5; act of 1800, § 39. As to proof of contingent claims: R. S., § 5068; act of 
 1867, § ig; act of 1841, § 5; act of 1800, § 39. As to proof of bankrupt's lia- 
 bility as a surety: R. S., § 5069; act of 1867, § 19; act of 1841, § 5. As to 
 
 NAT. BANK RUPTCY LAW — 22 
 
338 THE NATIONAL BANKRUPTCY LAW. 
 
 Time When Debt Must Have Come into Existence to be Provable. [Ch. VII. 
 
 proof of claim of a surety of a banlcrupt: R. S., § 5070; act of 1867, § 19; act 
 of 1841, § 5. 
 
 Differences Between the Old and New Law. — The provisions of the pres- 
 ent bankrupcty 391 as to provable debts differ materially from those of preced- 
 ing acts. The following are the most important differences; first, omission from 
 the present act of any express provision authorizing the proving of contingent 
 debts and liabilities, or the liability of the bankrupt as surety, indorser or 
 guarantor; second, omission of any express provision as to the proving of dam- 
 ages resulting from a conversion or trespass by the bankrupt; third, omission 
 of any express provision as to apportionment of rent and proving for the same; 
 fourth, the embodiment in the present act of an express provision as to proving 
 n. judgment recovered after the commencement of proceedings in bankruptcy 
 upon a debt at that time provable; fifth, the embodiment of express provisions 
 making costs incurred by the bankrupt in certain suits by and against him 
 provable debts; sixth, the embodiment of a provision that unliquidated claims 
 against the bankrupt may, pursuant to application to the court, be liquidated in 
 such a manner as it shall direct, and may thereafter be proved and allowed 
 against the bankrupt's estate; seventh, the lack of any general provision as to 
 the time when a debt must have become fixed and owing in order to be prov- 
 able. It is not meant, however, by the statement that the present statute con- 
 tains no express provision for the proof of debts of the classes mentioned in the 
 first three points of difference, that such debts are in no cases provable under 
 the present law. The language of this entire section is materially different 
 from that used in the analogous sections of previous laws, and in certain cases 
 the construction demanded by the act makes some of the debts, mentioned in 
 the first three points of difference given above, provable notwithstandinjf the 
 lack of express provisions. These cases will be considered below in the notes 
 to the several subdivisions of the section. 
 
 Time When the Debt Must Have Come Into Existence in Order to be 
 
 Provable. — It win be noted that nowhere in the section is there any general 
 provision as to the time when a debt must have come into existence in order to 
 be provable. The former act provided (R. S., § 5067, act of 1867, § 19), that all 
 debts due and payable by the bankrupt at the time of the commencement of 
 the proceedings in bankruptcy, and all debts then existing, but not payable 
 until a future day, were provable; but under this act, while four of the sub- 
 divisions contain provisions as to the time when the debts therein mentioned 
 
ESTATES. 339 
 
 §63.] Liabilities of Sureties: Contingent Liabilities. 
 
 must have come into existence in order to be provable, there is no express pro- 
 vision as to the time when debts founded upon an open contract or upon a con- 
 tract express or implied, must have come into existence. In so far as that sub- 
 division alone is concerned, there is nothing in the act which will prevent the 
 proving of a claim thus founded, which came into existence after the petition 
 but before the final closing of the estate. But the manifest intent and policy 
 of the act must be held in this case as in the cases mentioned in the other sub- 
 divisions, to limit provable debts to those existing at the time of the petition. 
 The exceptions to this rule which existed under the act of 1867 by express pro- 
 visions of the statute, namely, the right to prove contingent liabilities which 
 became fixed and absolute after the petition, but before final dividend, do not 
 exist under the present statute. Subdivision i, as will be seen below, limits 
 the proving of contingent liabilities to those which have become fixed and abso- 
 lute at the time of filing the petition. Some point of time must be adopted as 
 the date prior to which the debts must have been incurred by the bankrupt in 
 order that they be provable, and that time, it is evident from a perusal of the 
 whole statute, is the time of the commencement of the proceedings. 
 
 Liabilities of Sureties : Contingent Liabilities. — The effect of sub- 
 division (i) would seem to be to exclude from proof and allowance under the 
 present act many debts provable under the acts of 1867 and 1841. The expres- 
 sion a " fixed liability absolutely owing " must have been used in contradistinc- 
 tion to a liability which is contingent, a liability which is uncertain and 
 undetermined, until the happening of some contingency; and in contradistinc- 
 tion to the liability incurred by the drawer of a bill, a, surety, indorser, bail, or 
 guarantor, before that has happened which will make him an absolute debtor. 
 That these terms were intended by Congress to be used in this sense is evident 
 from a comparison of them with Revised Statutes, section 5069, (section 19 
 of the act of 1867), which reads: " 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 liabilitv does not 
 became absolute until after the adjudication of bankruptcy, the creditor may prove 
 the same after such liability becomes fixed axvA before final dividend is declared." 
 Clearly, then, in enacting this paragraph (subdivision i). Congress must have 
 had in mind this liability of sureties and other persons in similar relations, as 
 well as other contingent liabilities, and under the present law such claims or 
 debts cannot be proved unless the liability has become fixed and absolutely 
 owing before the commencement of the proceedings in bankruptcy. The Ian- 
 
340 THE NATIONAL BANKRUPTCY LAW. 
 
 Liabilities of Sureties: Contingent Liabilities. [Ch. VIL 
 
 guage of this subdivision is so clear that it will probably not be disputed that 
 such liabilities of sureties, unless fixed at the time of the petition, are not provable 
 under the terms of this subdivision. But are they provable under the terms of 
 subdivision 4 ? It seems clear that they are not. That subdivision provides 
 that " debts are provable which are founded upon an open account or upon a 
 contract express or implied." The liabilities of sureties are indeed founded 
 upon contract, but they are not debts until those liabilities have become fixed in 
 accordance with the terms of the contract. If the liability is fixed and absolutely 
 owing, and is evidenced, as the liability of indorsers necessarily is, by an instru- 
 ment in writing or by a judgment, then it is a provable debt. But until a claim 
 against a surety, indorser, drawer, bail, or guarantor has become fixed, the 
 liability is not a debt. " It is not a debt due and payable; it is not even a debt 
 existing, but payable at a later date. The liability may never become a debt. 
 It is like a contingent liability, a. mere possibility of debt." (In re Loder, 4 B. 
 R. 190; s. c. 4 Ben. 305.) Contingent liabilities are not in any proper sense 
 debts; they are mere contracts, and do not become debts until the contingencies 
 happen on which demand for payment can be made. Those contingencies may 
 indeed happen pending proceedings in bankruptcy, but there is no provision in 
 the present act for the proof of such a debt if the liability becomes fixed after 
 the commencement of proceedings but before final dividend. The statute of 1867 
 did permit proof in such cases, but it is believed that under the present statute 
 it cannot be done. Inasmuch as in all previous bankruptcy acts legislators 
 have thought it necessary to insert an express provision in order to give to one 
 the right to prove for such contingent debts and contingent liabilities, one is 
 justified in considering the omission of such provisions from the present act as 
 showing an intention on the part of Congress to leave the liability of the bank- 
 rupt on such contracts unaffected. Such constructon of the statute cannot be 
 assailed as not in conformity with the spirit and tendency of bankruptcy legisla- 
 tion. It is true that such liabilities, if not provable, are not in any way affected 
 by a discharge. And there may be many liabilities which, in consequence, will 
 remain outstanding against the bankrupt after the proceedings in bankruptcy. 
 But to a certain extent that was true under the former act. Under all bank- 
 ruptcy laws there is a certain date fixed after which debts which come into exist- 
 ence may be collected from the after-acquired property of the bankrupt. That 
 time, under the present act, is the date of filing the petition. The bankrupt's 
 property at that time (§ 70 [5]), is applied by the officers of the law to pay cer- 
 tain liabilities owing by him at that time. To construe sub-division 4 of this 
 
ESTATES. 341 
 
 §63.] Liabilities of Sureties: Contingent Liabilities. 
 
 section as authorizing the proving of contingent liabilities which become fixed 
 after the filing of the petition but before proof of the same, would require that 
 any debt created between the time of the filing of the petition and the time of 
 proof might be proved. But this we believe will be conceded as being incon- 
 sistent with the general intent and purpose of the statute. 
 
 Although contingent liabilities may ripen into debts pending the bankruptcy 
 proceedings, and though by subdivision 4 debts " founded on contract" are 
 provable, it can hardly be deemed that the law intends that liabilities which do 
 not become fixed till after the petition can be proved. It is only fair to suppose 
 that Congress, in enacting a subdivision as to the provability of liabilities, and 
 in it providing only for the proof of those liabilities which were fixed and abso- 
 lutely owing at the time of the filing of the petition, expressed in that sub- 
 division its full intention and will as to the proving of liabilities, and by pro- 
 viding only for the proof of those which were fixed and absolutely owing at the 
 time of the petition, intended that no other liabilities should be proven. If they 
 intended otherwise, there would have been an express provision permitting the 
 proof of liabilities when they became fixed. The result is that if the bankrupt 
 is a surety, an indorser, a guarantor, or a drawer, and his liability is not fixed 
 until after the petition, he is not released from it. His creditor may pursue his 
 usual remedies against him and enforce them against his after-acquired prop- 
 erty. But not only does the language of subdivision i have reference to the 
 liability of sureties and indorsers and guarantors, it excludes proof of any con- 
 tingent liability. The provision that only a fixed liability absolutely owing can 
 constitute a provable debt is to be compared not only with section 5069, of the 
 Revised Statutes, as to the proof of liabilities of sureties, but also with the pro- 
 visions of section 5068 of the Revised Statutes (section 19 of the act of 1867), which 
 read : " 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 
 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 
 liquidated, which shall then be done in such manner as the court shall 
 order, and he shall be allowed to prove for the amount to be ascertained." 
 Similar provisions were contained in the earlier acts. Why they were omitted 
 from the present act is a question difficult to answer. It may have been due 
 to the fact that the courts seem to have found difficulty in the liquidation of 
 many of these contingent demands, in fact determined that many of them were 
 
342 THE NATIONAL BANKRUPTCY LAW. 
 
 Proof by a Surety of the Bankrupt. [Ch. VIL 
 
 not susceptible of valuation. Further, the authorities seem to have been at 
 variance to as what demands were embraced in the terms contingent debts and 
 contingent liabilities. 
 
 Thus, under the former act, which allowed the proving of contingent claims 
 and the right to a dividend if the contingency happened before the order for a 
 final dividend, or in the alternative allowed the contingent creditor to apply to 
 the court to have the present value of the contingent liability ascertained and 
 liquidated, it was held by the Massachusetts courts that the term " con- 
 tingent debt " meant not a demand whose existence depended upon a con- 
 tingency, but an existing demand upon which the cause of action depended 
 upon the contingency. (French v. Morse, 68 Mass. iii.) But the New York 
 courts held that the words " contingent demand " did not apply where a present 
 claim existed, or when a claim was certain to arise in the future, but only when 
 there was no claim in pmsenti, and when it was uncertain whether in fact there 
 would be no claim. (Jemison v. Blowers, 5 Barb. 686.) And the Supreme 
 Court of the United States in Riggin v. Magwjre, 15 Wall. 549, in construing the 
 5th section of the bankruptcy act of 1841, which authorized all creditors having 
 uncertain or contingent demands, to come in and prove them and to have them 
 allowed when they became absolute, said: " As long as it remained wholly 
 uncertain whether a contract or engagement would ever give rise to an actual 
 debt or liability, and there was no means of removing the uncertainty by calcu- 
 lation, such contract or engagement was not provable under the act of 1841." 
 (Citing Mills v. Auriel, i Smith's Leading Cases. See also Shelton v. Pease. 10 
 Missouri, 475, cited in brief of the plaintiff in error in Riggin v. Magwire.) 
 
 But if the indorser's liability has become fixed before the filing of the petition, 
 then of course it may be proven under the express provisions of the statute. 
 The holder of a note has the right to prove it as against all parties against 
 whom he could have brought an action. (Downing v. Trader's Bank, 2 Dill. 
 136; s. u. II B. R. 371.) If a partial payment has been made by the maker, then 
 all that can be proved against the bankrupt's estate is the unpaid balance. (In re 
 Cram, i B. R. 504, at page 515.) So if there has been a breach of the conditions 
 of a bond before the filing of the petition, then the liability of the surety is fixed 
 and absolutely owing, and may be proved. (Dyer w. Cleveland, 18 Vt. 241.) 
 
 Proof by a Surety of the Bankrupt. — What has been said about the 
 liability of sureties not being provable until it has become fixed and absolute 
 has reference only to those cases where the surety is himself the bankrupt. 
 Where the bankrupt is the principal debtor, and there is a fixed liability on his 
 
ESTATES. 343 
 
 § 63.] Fixed Liability Evidenced by a Judgment — Unliquidated Claims. 
 
 part, even though the liability of his surety to the creditor is not fixed, and 
 though, as a consequence, the liability of the banlcrupt principal to the surety is 
 not fixed, yet the surety by the provisions of section 57 (i) may prove the claim 
 if the creditor does not do so. But in this case it is the fixed liability of 
 the bankrupt to the creditor which is proved, not the contingent liability of the 
 bankrupt to the surety. The surety proves not his contingent claim, but the 
 claim of the creditor, and he must prove it in the creditor's name. If he makes 
 such proof and discharges such undertaking in whole or in part, he is to that 
 extent subrogated to the rights of the creditors. 
 
 But the sureties have no better or greater right than the creditor. Thus, the 
 guarantors of a note have no right to prove against the estate of the bankrupt, 
 if the holder has in any way forfeited his claim against the bankrupt; as, for 
 instance, by accepting and refusing to surrender a preference. (In re Ayers, 6 
 Hiss. 48.) But if the liability of their principal is unaffected and the holder of 
 the obligation accepts payment from them, even after he has proved the claim, 
 he can no longer remain a party to the proceeding. (/« re Broich, 15 B. R. 11; 
 s. c. 7 Biss. 303.) But section 57 (z) gives to the surety the right to prove in 
 the name of the creditor only in cases where the creditor himself fails to make 
 the proof. 
 
 Fixed Liability Evidenced by a Judgment. — The provision that a fixed 
 
 liability absolutely owing at the time of the petition, evidenced by a judgment, 
 is a provable debt, includes judgments for torts as well as upon contracts. 
 Under the former bankruptcy acts it was held that damages in tort unless 
 reduced to judgment, were not provable claims. (Crouch v. Gridley, 6 Hill 250; 
 Kellogg V. Schuyler, 2 Denio, 73; in re Hennocksburg, 6 Ben. 150; s. c. 7 B. R., 37; 
 Black V. McClelland, 12 B. R. 481; Ellis v. Ham, 28 Me. 385; in re Schuchardt, 
 8 Ben. 585; s. c. 15 B. R. 161.) But these decisions seem to have been based 
 more upon the fact that until a judgment liquidating the amount of the damages 
 there was no debt in the sense in which that word was used in the statute. It 
 was further held, under the former statutes and in the cases just cited, that the 
 rendering of a verdict before the filing of the petition in bankruptcy was not 
 sufficient to constitute damages in tort a provable debt. (See also Ziramer v. 
 Schleehauf, 115 Mass. 52; s. u. 11 B. R. 313.) But the provisions of paragraph 
 * of this section (which see), which permit the liquidation of damages, should 
 be studied in this connection, as they apparently change the rule. 
 
 Unliquidated Claims. — The provisions of paragraph b differ considerably 
 
344 THE NATIONAL BANKRUPTCY LAW, 
 
 Unliquidated Claims. [Ch. VII. 
 
 from those of the former act. Section 5067 of the Revised Statutes (act of 1867, 
 § 19), provided: " When the bankrupt is liable for unliquidated damages arising^ 
 out of any contract, or promise, or on account of any goods or chattels wrong- 
 fully taken, converted or withheld, the court may cause such damages to be 
 assessed in such a mode as it way deem best, and the sum so assessed may be 
 proved against the estate." Whether, indeed, this new provision in paragraph Ir 
 of the present statute is intended to permit the proving of claims in contra- 
 distinction to or in addition to the debts mentioned in the various subdivisions in 
 paragraph a of the section, or whether, on the other hand, it is a mere rule of pro- 
 cedure, enacted for the purpose of defining the mode in which the amount of cer- 
 tain debts, the right to prove which is given by paragraph a, shall be ascertained, 
 is not altogether free from question. If the former view is to be taken, then 
 strictly construing the provisions of the statute, claims (as distinguished from 
 debts) which may be proved, would not be dischargeable under section 17, since 
 that authorizes only the release of provable " debts." To say that unliquidated 
 claims for damages may be proved and allowed is, to say that the statute in par- 
 agraph a of this section authorizes the proving of debts and in paragraph * 
 authorizes the proving of certain claims. Occasions will arise where debts 
 provable under the provisions of paragraph a will first have to be liquidated 
 before they can be proven. Cases of conversion and of trespass in which the 
 injured party might sue, as upon implied contracts, would be causes requiring 
 a liquidation of the amount of the damages before proof of the claim could be 
 made; so, also, cases where there have been breaches of contracts. These are 
 the very cases which, under section 5067 of the Revised Statutes (act of 1867, 
 § 19), the courts were authorized to liquidate, and whether the present section 
 intends that other unliquidated claims, as, for instance, for damages arising 
 from torts committed against the person, shall be liquidated and allowed as 
 claims, depends entirely upon the determination of the question whether para- 
 graph b is intended to allow the proof of any debts or claims other than those 
 mentioned in paragraph a, or whether it merely authorizes a certain proceeding 
 with reference to the determination of the amount of the indebtedness in cases 
 arising under those subdivisions. The language of paragraph i itself seems to 
 be broad enough and free enough of ambiguity to justify the conclusion that all 
 unliquidated claims may be liquidated and proven and allowed, and there would 
 seem to be no more reason for denying to a person injured by the tort of another 
 a right to receive a. pro rata payment upon the damages awarded to him than 
 for denying to a contract creditor the dividend upon the debt due to him, although 
 
ESTATES. 345 
 
 g 63.] Judgments Imposing Fines. 
 
 there are ample reasons for refusing to release the tort feasor from the debt 
 incurred by his tort. But, on the other hand, subdivision (5) of paragraph (a) 
 provides that a judgment recovered after the filing of the petition, if upon a 
 provable debt existing at the time of the petition, may be proved. This would 
 seem to exclude proving any judgment recovered after that date unless it was 
 upon a provable claim. If so, to permit the liquidation of damages for any and 
 all torts, by means of a judgment, and to permit the proof of the judgment, 
 would be inconsistent with subdivision (5). 
 
 But the statute authorizes the claim to be liquidated in such manner as the 
 court shall direct. If this is to be construed as permitting the liquidation of claims 
 arising from torts, by any means other than by a. judgment, it produces an 
 effect not in harmony with section 17 (2), which provides that judgments in 
 actions for frauds, or obtaining property by false pretense or false representa- 
 tion, or for willful and malicious injury to the person or property of another, 
 shall not be released by a discharge. We think it will be conceded that there is 
 in principle no more reason for releasing a tort feasor from the amount due to 
 another as damages, when it has been liquidated by some special mode of 
 assessment, than when it has been liquidated by a judgment. The reason for 
 making a discharge in bankruptcy no release of a judgment in an action for any 
 of the torts mentioned in section 17 (2) is because of the nature of the debt — 
 because of the element of wrong existing in it — and not because that claim has 
 been put into the form of a judgment. Unless, then, a bankruptcy court, in 
 liquidating claims arising from tort, would be limited to ordering their liquida- 
 tion by judgment, to authorize the liquidation of claims for damages in tort and 
 the proof of such liquidated claims, would appear to be inconsistent with the 
 intention and purpose of the act. 
 
 But whatever may be the character of the torts, damages arising from which 
 are provable, under the present statute no damages are provable until liqui- 
 dated. If the damaged party does not move the court for an order directing their 
 liquidation, his claim for any specified sum will be rejected, though proved in 
 due form. He cannot procure the allowance of his claim by claiming a fixed 
 sum. The damages are to be liquidated by the court, not by the claimant. 
 (In re Smith, 6 Ben. 187 ; in re Clough, 2 Ben. 508.) 
 
 Judgments Imposing Fines. — Such judgments entered before commence- 
 ment of proceedings in bankruptcy do indeed evidence a fixed liability abso- 
 lutely owing at the time, but we feel confident that they are not provable. They 
 are within the letter of the law, but not within the spirit of it. Under all former 
 
346 THE NATIONAL BANKRUPTCY LAW. 
 
 Penalties and Forfeitures. [Ch. VIL 
 
 acts they have been considered as not provable. Such fines imposed as a pun- 
 ishment are not to be considered debts. (/» re Sutherland, 3 B. R. 314; s. c. 
 Deady, 416; People v. Spalding, 10 Paige, 284; affirmed by Court of Errors, 7 
 Hill, 301; affirmed by the United States Supreme Court, 4 How. 21.) The first 
 case cited was one. in which a fine was imposed as a penalty; the second, 
 one in which a. fine was imposed for a contempt of an injunction order, the fine 
 being a punishment for the contempt, though payable to the party who sued 
 out the injunction and who was damaged by the violation of it. It would thus 
 seem that a fine imposed by a judgment is not a provable debt if imposed nom- 
 inally as a punishment, although in reality as a compensation to the creditor 
 for the pecuniary injury he has sustained by reason of the commission of the act 
 constituting the offense. To hold that fines imposed as punishment are prov- 
 able and consequently dischargeable, would be in effect to make the discharge 
 a pardon of the offense punished. Such debts are not among the classes which 
 by section 17 are declared as not released by a discharge. Consequently, if 
 provable, they would be dischargeable, and a person guilty of a felony or a 
 gross misdemeanor, and fined therefor, would be released from punishment, 
 while those who had incurred debts by fraud or in manners certainly more 
 venial, would still be holden under the provisions of section 17. It can hardly 
 be supposed that any such result was intended by the law-makers. 
 
 Judgments in the Nature of Punishments. —Judgments directing one to 
 
 pay alimony, or to support a bastard child, and judgments in actions for seduc- 
 tion have been held not to create debts, but to be rather in the nature of punish- 
 ments. See cases cited in note to section 17, " Effect of Discharge on Judg- 
 ments." But a judgment for a breach of promise to marry is a provable debt. 
 (/« re Sidle, 2 B. R. 220; in re Sheehan, 8 B. R. 345.) 
 
 Penalties and Forfeitures. — Under section 17 we have shown that debts 
 due to the United States, or to a State, or to any political subdivision, are under 
 the present act provable and dischargeable. The terms of section 57 (/) show 
 that the claims of the United States, a State, etc., for penalties or forfeitures, 
 are to be considered as provable debts. They are in their nature similar to 
 claims for damages for conversion. One who violates a revenue tax law so that 
 the government is deprived of a certain amount may not improperly be consid- 
 ered as having converted that amount to his own use, and therefore a debtor to 
 the government. 
 
ESTATES. 347 
 
 § 63 ] Debts Not Yet Due. 
 
 Debts Not Yet Due. — A debt is provable if absolutely owing at the time of 
 filing the petition, though not then payable. The use of the term " at the time of 
 the filing of the petition," instead of " the time of adjudication," clears up a point 
 as to which in the early cases under the act of 1867 there was much conflict of 
 authority. When that act was amended and incorporated in the Revised Stat- 
 utes, it was provided as in this subdivision that the time of the filing of the 
 petition was to be the date when the liabilities and debts must exist in order to 
 be provable. The liability must be fixed or the debt must be owing at the time 
 of the petition, otherwise it is not provable. If then owing, but not due, a 
 rebate of interest must be allowed from the time of the petition to the time of 
 maturity of the debt. As to interest-bearing debts, the provision of the statute 
 is that principal and interest thereon, which would have been recoverable at 
 that date, shall be provable. While this is not a definite statement that accrued 
 interest not due shall be provable, yet it is manifest that the intent of the act is 
 that such interest which has accrued up to the time of the petition is provable. 
 An interest-bearing debt not due is a debt to become due at some future time 
 for the amount of the principal plus the interest. Rebating the unearned 
 interest produces the same result as allowing the accrued interest. (Sloan v. 
 Lewis, 22 Wall. 150.) The provision that any interest which would have been 
 recoverable at the time of the petition is provable must then be construed as 
 meaning the interest that would have been recoverable if at that time there had 
 been a right of action. As a matter of fact, if the claim is not due, no right of 
 action exists for either the principal or the interest, but if owing the principal 
 is provable, and if the principal, then also the accrued interest. Interest may 
 be proved as a claim whenever the party is entitled to demand it, whether or 
 not there is an express agreement to pay it. After maturity of the contract, it will 
 be at the legal rate, rather than the agreed rate. (In re Bartenbach, 11 B. R. 61.) 
 As against the bankrupt's general estate interest can be allowed only to the date 
 of filing the petition. (In re Haake, 7 B. R. 61; s. c. 2 Saw. 231; in re Orne, I 
 B. R. 57; s. c. I Ben. 361; Robson on Bankruptcy, 106.) But where a creditor 
 holds property of the bankrupt as security for a debt due him, which by the 
 terms of the contract he is authorized to appropriate to the satisfaction of the debt 
 with interest till payment, the property passes to the trustee subject to the 
 lien, and this being intended to secure interest as well as principal, it would 
 seem the lienor is entitled out of the proceeds of the sale to the amount due as 
 principal and as interest to the date of the payment of the principal. If the 
 trustee should sell the property subject to the lien, it is clear that the vendee 
 
348 THE NATIONAL BANKRUPTCY LAW. 
 
 Debts Not Yet Due. [Ch. VII. 
 
 would take it subject to the lien for the interest till the time of payment of 
 principal; and there seems to be no valid reason for holding that where the sale 
 is made free of incumbrances there should be any different rule. In so far as 
 the property is security for a sum of money, the secured creditor is entitled to 
 the whole sum secured, to be paid out of the proceeds of the property, if they 
 are sufficient for the purpose. (/» re Newland, 7 Ben. 63; in re Haake, 7 B. R. 
 61; s. c. 2 Saw. 231.) 
 
 The propositions just stated with reference to a lienor's right as against the 
 property, subject to his lien, to interest on his claim till time of payment, were 
 applied in the case last cited, though the court, in so doing, intimated that it was 
 departing from the English rule. In the opinion it was said: " 'The rule in 
 England as to stoppage of interest at the time of the adjudication applies, says 
 Mr. Robson [in his work on Bankruptcy], to mortgagees who come to the court 
 for assistance, but if the mortgagee relies on his security, the trustee cannot 
 redeem without paying the interest then due.' " But if a mortgagee who relies 
 on his security is entitled to interest until payment, it would seem that in every 
 case in bankruptcy he would be entitled to it unless he proved his claim as 
 unsecured. A mortgagee cannot be said to waive his security by delivering the 
 property over to the trustee in accordance with the mandate of a law which 
 requires him to do so, but which at the same time recognizes the existence of his 
 lien. If he proves only for the amount of his debt in excess of the value of the 
 security, instead of waiving the security, he certainly relies on it. If he makes 
 no proof he certainly must be deemed to be content to seek his recovery out of 
 the mortgaged property — a most perfect and absolute reliance on the security. 
 Even if upon his motion, the court directs a sale of the property free from 
 incumbrances, with a direction that his lien be transferred to the proceeds, he 
 can hardly be said to seek the assistance of the court; he merely sets in motion 
 the very court which would otherwise have to act upon the motion of some other 
 interested party, and make that or a similar order, and which in making any 
 order in the matter would have to recognize his right as a lienor. The lienor 
 in these cases certainly does not fail to rely upon his security; on the contrary, 
 the very proceeding is in reliance upon it. It is only when he waives his 
 security, and proves as if unsecured, and takes his place among the general 
 creditors that he can truly be said to seek the assistance of a court of bank- 
 ruptcy. 
 
 A deficiency existing after applying proceeds of the sale of mortgaged prop- 
 erty may be proved and is an allowable claim, even, it seems, where the deficiency 
 
ESTATES. 349 
 
 § 63.] Provability of Claims for Rent. 
 
 is less in amount than the interest on the principal indebtedness from the time 
 of the petition to the sale and subsequent payment. If it could be said that 
 such deficiency was interest, then it would follow that not being a debt existing 
 at the time of the petition, it was not provable, but the deficiency may be treated 
 as an unpaid portion of principal rather than as unpaid interest. Where a party 
 has a security covering debts in general, some of which are provable and some 
 are not, the security may be applied by him in payment of the debts not prov- 
 able. Thus, in Ex p. Kensington, 2 M. & A. 362, quoted in re Haake (supra), 
 a party having a lien on merchandise, delayed at the instance of the assignee, 
 a sale of it, by means whereof a greatly enhanced price was realized. He was 
 allowed to apply the proceeds first to the payment of the interest which had 
 accrued since theyfa/. In that case it was said: " The petitioner may be con- 
 sidered as having a security for a debt, part of which, viz., the principal and 
 interest before theyfa^is provable, and part, viz., the interest since ihe fiat, is 
 not provable, and he applies the security to the part not provable. There is 
 nothing in this which disturbs the rule that interest stops at the bankruptcy; the 
 circumstances take it out of that rule." 
 
 Provability of Claims for Rent. — The former act contained a provision 
 for the apportionment of rent and for proving the claim for such amount as was 
 thus found to be earned. It was as follows: " Where the bankrupt is liable to 
 pay rent or other debt falling due at stated and fixed periods, the creditor may 
 prove for a proportionate part thereof up to the time of the bankruptcy, as if the 
 same grew due from day to day, and not at such fixed and stated periods." 
 (Section 5071 of the Revised Statutes; § 16 of the act of 1867.) The present act 
 contains no such provision. The question has been raised. Can the several 
 installments of rent which by a lease are to be paid between the time of the 
 petition and the termination of the lease be considered as debts then actually 
 owing but payable at fixed times thereafter, and therefore provable with a 
 rebate of interest on each installment; or are they of the nature of contingent 
 debts, a mere liability to pay certain sums at certain fixed periods, provided the 
 tenant is not evicted, or his tenancy terminated by act of law or by the act of 
 the lessor? In the matter of May & Merwin (7 Ben. 238; s. c. 9 B. R. 419; s. c. 
 47 How. Pr. 37), it was contended by the lessors that the installments which were 
 to become due under the terms of the lease were provable, as a debt owing but 
 not payable, a rebate being allowed. But the contention in that case was not 
 sustained, because the language of the former bankruptcy act in permitting the 
 apportionment of rent and allowing the lessor to prove for the proportionate 
 
350 THE NATIONAL BANKRUPTCY LAW. 
 
 Costs. [Ch. vn. 
 
 amount and in further declaring tliat no claims were provable other than those 
 expressly provided for by the statute, was clearly opposed to the contention. But 
 independently of those statutory provisions, future installments of rent are not 
 provable. Rent to accrue in the future cannot be called a debt owing. In fact, 
 it is well settled that it is not a debt at all, contingent or otherwise. (Bailey v. 
 Loeb, II B. R. 271; s. c. 2 Woods, 578, citing Auriol v. Mills, 4 T. R. 94; Bosler 
 V. Kuhn, 8 Watts & S. 183; Lansing v. Prendergast, 9 Johns. 127; Savory v. 
 Stocking, 4 Cush. 607; English v. Key, 39 Ala. 115.) In the case last cited it 
 was said by R. W. Walker, J.: " Except where it is payable in advance, no 
 claim for rent arises until the lessee has enjoyed the premises for the whole time 
 for which the payment of rent is stipulated to be made." Lansing v. Prendergast 
 is a leading case. It was an action of covenant for the recovery of seven years' 
 rent brought upon a durable lease, executed by plaintiff to defendant. Defend- 
 ant pleaded a discharge in bankruptcy. The opinion of the court in full was: 
 " There is no distinguishing this case in principle from Frost v. Carter, I Johns. 
 Cas. 73. The rent sued for had not accrued at the time of the discharge. Rent 
 afterwards to accrue and grow due could not in any sense be considered a pres- 
 ent debt at the time of the insolvent's assignment, and for which the plaintiff 
 might have become a petitioning creditor. It must be debitum in prcBsenti, 
 though it be solvendum in future. A discharge under the English bankruptcy 
 acts or insolvency acts has never been considered a bar to an action of covenant 
 on an express covenant to pay rent. (Citing i H. Bl. 433; 4 Term. Rep. 94; 
 Auriol V. Mills, 8 East, 318; S. P. Cotterel v. Hooke, Doug. 97; Marks v. Upton, 
 7 Terra. Rep. 305.) Until the end of the term or until the installment period when 
 the rent is payable, there is no debt; no debt payable, not even a debt owing. 
 (Perry v. Aldrich, 13 N. H. 350; Russell v. Falryar, 28 N. H. 545; Wood w. 
 Pardridge, 11 Mass. 488; Fitchburg Factory v. Melom, 15 Mass. 268; Van 
 Wickland v. Paulson, 14 Barb. 654; Jacques v. Short, 20 Barb. 269 & 279.) Each 
 sum of annual rent is a distinct debt." There being no provision in the present 
 act authorizing an apportionment of rent, only those installments which have 
 become due and payable before the filing of the petition are provable. No 
 matter how large a portion of the installment period has transpired, unless it 
 has been fully completed, and the installment of rent has become due, there is 
 no provable claim. The lessor's rights against the bankrupt are unaffected; 
 but he can collect payment from after-acquired property only. He cannot share 
 in the assets administered in bankruptcy. 
 
 Costs. — If a judgment for costs has been entered before the filing of the 
 
ESTATES. 351 
 
 § 63.] Debts Founded on Contract, Express or Implied, or on Open Account. 
 
 petition, it is a provable debt, though the action may not have been upon a prov- 
 able debt; and where judgment is recovered before the filing of the petition, the 
 costs are part of the debt. (Graham v. Pierson, 6 Hill, 247; in re O'Neil, i 
 Lowell, 162.) The provisions of subdivisions 2 and 3 of the present bank- 
 ruptcy act provide, however, for the proving and allowing of costs incurred in 
 certain cases, though not at the time of the petition, reduced to the form of a 
 judgment. Although in subdivision 2 they are spoken of as " due," the word 
 " due " must be construed as permitting the proof not only of such costs 
 as were then actually due, but also of such costs as had been incurred prior 
 to the filing of the petition and which would then have been taxable if the suit 
 had been discontinued upon a. stipulation that each party would pay the usual 
 taxable costs; but there is no provision for proof and allowance in favor of a 
 defendant of any costs where the plaintiff afterward goes into voluntary bank- 
 ruptcy, if the trustee declines to prosecute the suit. In such case the costs not 
 being provable are not dischargeable. If after the petition the plaintiff's 
 (bankrupt's) action is dismissed and a judgment for costs entered against him, 
 his liability to pay it remains unaffected by his bankruptcy. If the bankrupt 
 was the plaintiff in the action, it is immaterial whether or not the cause of action 
 was a provable debt or otherwise. But if the creditor was the plaintiff, he can 
 recover his taxable costs up to the time of the petition, only if the action was 
 brought on a. provable debt. If a provable debt is reduced to judgment after 
 the petition, and before the consideration of the bankrupt's application for a 
 discharge, the judgment may be proved, less interest from the time of the 
 petition and less costs incurred since the filing of the petition. Compare sub- 
 division 5. 
 
 Debts Founded on Contract, Express or Implied or on Open Account. 
 
 — No debt can be proved unless it exists at the time of the filing of the petition. 
 It is true that under this subdivision there is no requirement that the debt must 
 be owing at the time of the petition, but that is the manifest intent of the act. 
 Such debts need not, however, be payable at that time. {In re Orne, i B. R. 57; 
 s. c. I Ben. 361.) That which is provable is the debt founded on the contract, 
 not the contract liability. There is no method of proving a mere contract 
 liability unless there is something owing, either because of a breach of the con- 
 tract before the petition was filed, or because of performance. The bankruptcy 
 act does not intend to release one from his contracts and obligations. The 
 trustee is vested with the property of the bankrupt, and this includes all the 
 bankrupt's rights in contracts which in their nature are assignable at the time 
 
352 THE NATIONAL BANKRUPTCY LAW. 
 
 Claims Against More Than One Person — Implied Contracts. [Ch. VII. 
 
 of the petition. Unless the contract is one which is of that purely personal 
 character, that it can be said that the parties contracted for personal services or 
 personal skill, then the assignee has the right to adopt the contract, and to per- 
 form the services which the bankrupt has contracted for, and to succeed to his 
 rights thereunder. But the trustee need never accept a damnosa hereditas. He 
 need no more adopt a contract of the bankrupt with all its obligations than he 
 need accept a lease with its burdens, or a devise with its charges. He may- 
 adopt the contract and perform its terms, or refuse to adopt it, according as 
 either course in his best judgment, after investigation, shall promise to be to the 
 advantage of the estate. If he does not adopt it, the contractual liability and 
 rights of the bankrupt remain unaffected by the bankruptcy. (Compare Foster 
 V. Hackley, 2 B. R. 406; Parsons on Contracts, vol. IIL, part II, Ch. XII, § g; 
 Streeter v. Sumner, 31 N. H. 542.) 
 
 Claims Against More Than One Person. — If the debt is of such a nature 
 
 that an action upon contract to collect it could be brought against the bankrupt, 
 it is provable, although it might be collected from others. Thus, a party dealing 
 with an agent has a right to hold the principal liable for the agent's acts within 
 the scope of his authority. This rule of law also applies, although the agent 
 contracts in his own name without disclosing his principal, and the other party 
 supposes the agent to be contracting for himself. In such a case the party con- 
 tracting may sue either the agent or the principal. If the principal has become 
 bankrupt, then the claim may be proved in bankruptcy against him. (/» re 
 Troy Woolen Co., 8 B. R. 412.) So the holder of a joint obligation can prove his 
 claim against any and every person whom he could have sued. A holder of a 
 note which has become due and has been protested, if protest was necessary, 
 may prove against the maker or any indorser. Downing v. Trader's Bank, 3 
 Dill. 136; s. c. II B. R. 371.) If one holds a firm obligation indorsed by one or 
 more of the individual members, all of whom as a firm and as individuals after- 
 wards go into bankruptcy, he may prove his entire claim against the partner- 
 ship estate, and the estate of each individual indorser, but in the aggregate can 
 recover no more than his full claim. {In re Howard, Cole & Co., 4 B. R. 571' 
 Mead v. Bank, 6 Blatch. 185; s. c. 2 B. R. 173; Emery v. Bank, 7 B. R. 217; s. 
 c. 3 Cliff. 507.) Compare notes to section 5. 
 
 Implied Contracts. — It is a well recognized rule of law that one whose 
 property has been converted by another, or wrongfully taken or used, has in 
 many cases the privilege of waiving his right to sue for damages in tort and of 
 
ESTATES. 353 
 
 § 63.] Implied Contracts. 
 
 suing the tort feasor for the value of the property which the latter has wrong- 
 fully acquired, as upon a promise to pay for the same. If such property has 
 been sold and the proceeds have come into the hands of the tort feasor, it is 
 universally admitted that an action for money had and received will lie. The 
 right to this latter remedy is based on the fact that the tort feasor has acquired 
 something which he cannot rightfully retain, and the right is limited to those 
 cases of tortious injuries to property where the tort feasor has enriched himself. 
 It should be firmly borne in mind that one can sue as upon an implied contract 
 only when the defendant has unjustly enriched himself; the mere fact that the 
 other party has been impoverished by the tort is insufficient. Thus, where one 
 by his fraud has induced another to part with his money to a third person, there 
 is no implied promise of the defrauding party to pay therefor, and no action as 
 for money had and received will lie. These principles will most frequently 
 have to be applied in bankruptcy to cases of conversion and trespass. But 
 there is a question whether in all cases of conversion a party has a remedy upon 
 implied contract. When money has been received by the tort feasor, it is uni- 
 versally admitted that an action as for money had and received will lie; but 
 where the property is wrongfully retained or consumed, there is conflict of 
 authority as to the ri^ht to sue as for goods sold and delivered. If the defend- 
 ant has converted the plaintiff's property and in the act of conversion sells the 
 same, or thereafter sells the same, the plaintiff may waive his right to sue in 
 tort and sue in assumpsit, using the count for money had and received to 
 recover the proceeds of the sale. Having the right to sue in assumpsit, he 
 may, under this subdivision of this section of the bankruptcy act, prove his 
 claim for the proceeds. Further, it is laid down by writers on the subject of 
 Implied Contract that since the right to recover money which has been stolen, 
 fraudulently obtained, or wrongfully converted to another's use rests on the 
 equitable principle of unjust enrichment, the claim may be asserted not only 
 against the immediate tort feasor, but against any one into whose possession 
 the money may be traced, until it reaches the hands of a holder without notice. 
 (Keener on Quasi-Contracts, ist ed., chapter on " Waiver of Tort.)" And in 
 Prof. Keener's excellent treatise it is stated that as the claim is maintained only 
 on strict equitable principles, it cannot be asserted against a holder for value 
 without notice. So, if the property has been wrongfully taken and used, though 
 afterwards returned, one may waive his action for a trespass and sue on a count 
 for use and hire. Thus, if a servant of one is enticed away by another and the 
 latter makes use of his services, the facts existing which would sustain an. 
 
 NAT. BANKRUPTCY LAW — 23 
 
3S4 THE NATIONAL BANKRUPTCY LAW. 
 
 Claims for Damages for Conversion Have no Right of Priority. [Ch. VIL 
 
 action in tort, the tort may be waived and the injured party sue for the value of 
 the services; but no action will lie for the wrongful use and occupation of real 
 property. The lack of this remedy in cases of the wrongful use of land is due 
 to purely historical reasons. Further, it is said that logically it would seem 
 that where one has tortiously taken or retained the goods of another and has not 
 disposed of them, an action as for goods sold and delivered should lie against 
 him to recover their value. But in many jurisdictions this remedy as against 
 the tort feasor is denied, but is allowed in others. Thus, in Keener on Quasi- 
 Contracts, chapter on " Waiver of Tort," page 194, of first edition, it is stated 
 that such an action has been allowed in California, Georgia, Illinois, Indiana, 
 Kansas, Michigan, Mississippi, New York, North Carolina, Tennessee, Texas, 
 West Virginia, Wisconsin; but has been disallowed in Alabama, Arkansas, 
 Delaware, Maine, Massachusetts, Missouri, New Hampshire, Pennsylvania, 
 South Carolina, Vermont. Under the act of 1867, section 19, section 5067 of the 
 R. S., it was provided: " 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." 
 
 If it be held that the terms of paragraph b of this section permit the liqui- 
 dation of damages arising from torts of any and every kind (and that would 
 seem to be the construction which that section must receive), then the question 
 as to what torts may be waived, and action brought as upon implied contracts, 
 loses its practical importance. But if the paragraph is not so construed, then 
 the determination of that question is of vital importance, because in that case 
 only those torts which may be waived and for which actions as upon implied 
 contracts may be brought would be provable. Those actions, it has been seen, 
 do not, at least in all jurisdictions, embrace all actions for trespass and con- 
 version, and hence many claims arising from such torts will have to be proved, 
 if proved at all, under the terms of paragraph b, and not under subdivision 
 4 of paragraph a. 
 
 Creditors Whose Claims are foF Damages for ConveFSion Have no 
 Rigllt of Priority. — If the bankrupt has converted another's property, and 
 the latter elects to prove his claim for damages as if it were upon contract, he is 
 not preferred over the creditors. Thus where one had advanced money to another 
 who afterwards became bankrupt, to buy stock for him which was purchased by 
 the bankrupt, and wrongfully taken in his own name, and by him hypothecated 
 for money loaned to him, as against other creditors, the one whose property has 
 
ESTATES. 355 
 
 § 63.] Open Accounts — Continuing Contracts. 
 
 been converted has merely a provable debt to the amount of the value of the 
 stock so directed to be purchased. Not being able to receive his money in 
 specie, he has now merely a claim for damages. (Ungewitter v. Von Sachs, 4. 
 Ben. 167; s. c. 3 B. R. 723.) And a creditor whose claim consists of liquidated 
 damages for any other tortious injury is not entitled to a right of priority. He 
 receives merely a. pro rata share, although in many instances his claim will not 
 be released by a discharge under section 17. 
 
 Open Accounts. — Compare section 68 as to mutual debts and mutual cred- 
 its and set-off. 
 
 Continuing Contracts. — The bankrupt's liability to fulfill his contract is 
 not released by the discharge. It is only the debt which may have been 
 incurred by him by reason of the contract which is affected. If there are cove- 
 nants in the contract which are of a continuing character, he remains liable to 
 fulfill those covenants; if the covenants are of such a continuing character that 
 there may be successive breaches of the covenants, then the discharge simply 
 releases the bankrupt from his indebtedness upon the breaches which have 
 occurred prior to the petition in bankruptcy. A discharge does not operate upon 
 a contract of a continuing character in such a manner as to permit the bankrupt 
 to enjoy the benefits arising therefrom after the filing of the petition, and at the 
 same time exempt him from liability to pay for such subsequent enjoyment. 
 (Robinson v. Pesant, 8 B. R. 426; s. c. 53 N. Y. 419, citing Stienmetz v. 
 Ainslie, 4 Denio, 573.) Among contracts of a continuing nature are leases, 
 warehouse and storage agreements, where the term of the lease is indefinite. 
 Liability for rent or storage which has become due previous to the petition is a 
 provable and dischargeable debt, but that which becomes due after the petition 
 is a new indebtedness and unaffected by proceedings in bankruptcy. (Hen- 
 dricks V. Judah, 2 Caines, 25; Savory v. Stocking, 58 Mass. 607.) Of course it 
 would be different, if by the terms of the contract the rent was all payable in 
 advance and had become due before the petition, although the term extended 
 beyond that time. So a continuing covenant to pay taxes as they might be 
 assessed throughout a period of years to come, would not be provable in bank- 
 ruptcy. Failure to pay instalments prior to the petition would give rise to a 
 debt which would be provable, but it would not release the covenantor from 
 liability to pay subsequent assessments. (Murray v. DeRottenham, 6 Johns. 
 Ch. S2.) So since covenants that one will warrant and defend a title are not 
 broken until a paramount title is asserted and established, there is no provable 
 
356 THE NATIONAL BANKRUPTCY LAW. 
 
 Judgment Recovered on Provable Debts After Filing Petition. [Ch. VIL 
 
 debt until that time, notwithstanding there may be adverse claimants; and there 
 being no provable debt, the covenantor is not released from the obligation. But 
 if the covenant has been broken, then the party may prove his claim in bank- 
 ruptcy. A covenant against incumbrances being broken at the time of the con- 
 veyance, if an incumbrance did then exist, is a debt provable in bankruptcy. 
 The bankruptcy court has ample power to liquidate the damages. (Parker v. 
 Bradford, 45 Iowa, 311.) Bonds to secure the faithful performance of the duties 
 of another, an officer, are of a continuing nature. There is a cause of action 
 for each breach. The liability, because of those breaches which have occurred 
 before the filing of the petition, is provable and is released, but this does not 
 destroy the continuing obligation of the bond. (Fowler v. Kendall, 44 Me. 448.) 
 
 Judgments Recovered on Provable Debts, After the Filing of 
 
 Petition. — We have before stated (notes to section 17, Effect of Discharge on 
 Judgments,) that this provision, which is new, settles a point as to which there 
 was formerly great conflict of authority. It also introduces an apparent but not 
 a real exception to the general rule that only those debts existing at the time of 
 the filing of the petition are provable. Under the former laws, which contained 
 no express provision on this subject, many of the courts held that a debt was 
 merged in a judgment, and therefore the debt itself was not capable of proof, 
 it being no longer in existence; and if the judgment was rendered after the 
 petition was filed, not being in existence at the time of the commencement of 
 the bankruptcy proceedings, the judgment was not provable. {In re Williams, 
 2 B. R. 229; Bradford v. Rice, 102 Mass. 472.) On the other hand, other courts 
 reasoned that the debt, though merged for many purposes in a judgment, still 
 remained a debt; the debt was not extinguished, but remained a subsisting debt 
 though appearing in a changed form; the instrument, or obligation, or contract 
 upon which the debt arose was extinguished by the judgment, but not the debt 
 itself; unless that remained there was no foundation for a judgment; and these 
 courts held that the debt was provable. (/« re Stephen Brown, 3 B. R. 584; s. 
 c. 5 Ben. i; in re Rosey, 8 B. R. 509; s. c. 6 Ben. 507.) But still other courts 
 held that, though the debt was provable, it must be proved in the changed form, 
 that is, the judgment must be proved, not the debt in the original form. (Mon- 
 roe V. Upton, 50 N. Y. 593.) The present subdivision also settles this dispute 
 as to whether the proof should be of the debt or of the judgment. The present 
 act clearly provides that the debt founded upon the judgment, less costs and 
 interest from the time of the petition, shall be proved, not the debt which is 
 
ESTATES. 357 
 
 i5 63.] Changes in the Form of the Debt After Filing the Petition. 
 
 the foundation of the judgment. In other words, it is the judgment less the 
 costs and interest incurred or accrued since the petition that should be proved. 
 
 Changes in the Form of the Debt After Filing the Petition.— Somewhat 
 
 analogous to the question of the provability of a debt existing at the time of the 
 petition, but afterwards reduced to the form of a judgment, is the question of 
 the provability of a debt evidenced by a note made prior to the filing of a 
 petition, but taken up thereafter by the giving of a new note. Under the former 
 act it was held in re Montgomery, 3 B. R. 426, that a new note thus given in the 
 place of an old one was a new debt or obligation, and therefore not provable in 
 bankruptcy. This decision was based on the decision in re Williams, 2 B. R. 
 229, which held that a debt existing at the time of filing the petition and thereafter 
 reduced to a judgment, was merged in the judgment and could not be proved, 
 and that the judgment could not be proved, inasmuch as it was not a debt owing 
 at the time of the petition. That decision was of doubtful correctness under 
 the old act, and would be at variance with the statutory rule laid down in sub- 
 division 5 of this section. The weight of authority before there was any stat- 
 utory provision was that a change in the form did not extinguish the debt, but 
 left it provable, and this, as has been seen, applied to a debt merged into a 
 judgment. If so, why not to a debt for which a note was given after the filing 
 of the petition, or to a debt evidenced by a note taken up by a new note? Com- 
 pare also Anson (Knowlton) on Contracts, page 273 (star paging), as to the effect 
 of the delivery of a negotiable instrument as a payment of a precedent indebted- 
 ness. It is there stated that according to the rule laid down by our Federal 
 courts, and most of our State courts, a promissory note of the debtor or of a 
 stranger, does not discharge the precedent debt for which it is given unless such 
 be the agreement of the parties to it. The note only extends the time of pay- 
 ment of the debt. If the note is given contemporaneously with the debt, and 
 is the note of a third party, it is presumptively in payment of the indebtedness; 
 if the note of the debtor, it is presumptively not a. payment. 
 
 But the giving of a new note in place of a note existing at the time of the 
 filing of a petition presents another question, and that is the question of the 
 reviving of an indebtedness by a new promise. There are numerous decisions 
 to the effect that a new note, although given between the time of filing the 
 petition and the time of the discharge, is a new promise reviving the discharged 
 debt, since the discharge, although it may be granted later, relates back to the 
 time of the filing of the petition. (Compare Jersey City v. Archer, 122 N. Y. 
 
358 THE NATIONAL BANKRUPTCY LAW. 
 
 Impeaching Judgments — Effect of a Foreign Discharge. [Ch. VII. 
 
 376, and cases cited under section 17, paragraph on Revival of a Discharged 
 Debt by a New Promise. 
 
 Impeaching Judgments. — Judgments entered against the bankrupt prior 
 to proceedings in bankruptcy, when offered for proof or allowance, may be 
 impeached by creditors and other parties in interest, for fraud or irregularity, 
 or because of being preferences in violation of the bankruptcy act. (/» re 
 Fowler, Ex p. O'Neil, i B. R. 677; s. c. I Low. 163; Partridge v. Dearborn, 
 2 Low. 286; s. c. 9 B„ R. 474. Compare notes to section 57.) 
 
 Provable Debts In General. — In general every existing claim upon which 
 an action at law or in equity could be maintained at the time of the filing of the 
 petition, is provable in bankruptcy, and any defense which might have been 
 urged had action been brought on the claim, may be urged against its allowance 
 in bankruptcy. {In re Prescott, 5 Biss. 523; s. c. 9 B. R. 385.) Thus, & feme 
 covert may set up her coverture as a defense to a claim made against her estate. 
 (In re Rachel Goodman, 5 Biss. 401; s. c. 8 B. R. 380.) And if a corporation 
 enters into a contract ultra vires, upon which it could not bring an action, it 
 cannot prove a claim arising thereon in bankruptcy. {In re Jaycox & Greene, 
 12 Blatch. 209.) So contracts void because of the consideration being illegal, 
 or because the contract is against public policy, cannot be the foundation of a 
 debt provable in bankruptcy. (Ex p. Jones, 17 Ves. 332; Lowe v. Waller, Doug. 
 736; In re Chandler, 6 Biss. 53; ». t. g B. R. 514; in re Young, 6 Biss. 53; Ex p. 
 Mumford, 15 Ves. 289; Lehman v. Strassberg, 2 Woods, 554; in re Green, 15 
 B. R. 198; Ex p. Cottrell, Cowp. 742; Ex p. Daniels, 14 Ves. igi.) So, if the 
 statute of frauds would be a defense to an action it may be set up as an 
 objection to the allowance of a claim. (Capell v. Trinity Church, ii B. R. 
 536.) In addition to claims upon which actions could be brought, debts existing 
 at the time of the filing of the petition, but not then payable, are provable in 
 bankruptcy, and being provable, the holder of such debts may be a petitioner 
 to have the debtor involuntarily adjudged a bankrupt. {In re Alexander, 4 B. 
 R. 178; s. c. I Low. 470.) 
 
 Effect of a Foreign Discharge. — A discharge as a bankrupt in a foreign 
 country is not deemed here a bar to any action that may be brought (the suing 
 creditor not having voluntarily made himself a party to the foreign bankruptcy 
 proceeding). The discharge is considered as local, and although an assignee of 
 an individual who has become a bankrupt in a foreign country will, in most of 
 the courts of this country, be allowed to maintain an action in his own name as 
 
ESTATES. 3S9 
 
 § 63.] Claims Cognizable Only in Equity. 
 
 assignee, yet our courts will not recognize the discharge as a bar to debts con- 
 tracted in this country or due to citizens of this country. But a discharge under 
 •our laws operates on debts due to citizens of another country, to this extent 
 that such aliens will not be permitted to sue therefor in the courts of our 
 country. (In re Zarega, i N. Y. Leg. Obs. 40. Compare notes on Effect of 
 Discharge on Debts Due Aliens, supra, under section 17.) If a debt due from 
 an alien is released by a foreign discharge, it may nevertheless be proved 
 against him, if thereafter he is adjudged a bankrupt by an American court. 
 
 Claims Co^izable Only in Equity. — Not only may debts which are cog- 
 nizable in courts of law be proven in bankruptcy, but also those which are 
 cognizable only in courts of equity. In re Blandin, 5 B. R. 39; s. c. I Low. 543, 
 Judge Lowell of the District of Massachusetts decided that the wife of a bank- 
 rupt might prove in bankruptcy as a creditor of the estate of her husband, for 
 money realized by him out of property which she held as her separate estate, 
 under the statutes of Massachusetts, the evidence clearly showing that the 
 transaction between her and her husband was intended to be a loan and not a 
 gift. In rendering his opinion the judge said: " It seems to be the intent of the 
 statute to give all creditors an equal share of the assets without regard to the 
 mode in which their rights might have been enforced if there had been no bank- 
 ruptcy. 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 remedies to all persons. It has always been the law of England 
 that equitable demands may be proved in bankruptcy. {Ex p. Williamson, 2 
 Ves. (Sen.) 252; Ex p. Taylor, i Rose, 175.) ' A commission in bankruptcy,' 
 said Lord Eldon, ' is nothing more than a substitution of the authority of the 
 Lord Chancellor, enabling him to work out the payment of those creditors who 
 could by legal action or equitable suit have compelled payment.' (Ex p. 
 Dewdney, 15 Ves. 498. Our statute makes provable all debts and liabilities, in 
 language broad enough certainly 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 the 
 bankruptcy, would be properly cognizable in a court of admiralty. If this be 
 not so, I do not see how the law can be uniform ; for proof of debts will depend 
 on the remedies given in the several States, in one of which the very same debt 
 might be sued at law which in another must be prosecuted in equity, and in some 
 of which there is no distinction between law and equity." That equitable 
 debts may be proved and allowed, see also Sigsby w. Willis, 3 B. R. 207 ; s. c. 3 
 Ben. 371. 
 
360 THE NATIONAL BANKRUPTCY LAW. 
 
 Claims Affected by the Statute of Limitations. [Ch. VIL 
 
 Claims AfiFeeted by the Statute of Limitations. —A conflict of opinion is 
 found in the decisions of the court on the question whether after a debtor has 
 been adjudged a bankrupt, a claim to which the statute of limitations would 
 have been a good defense had an action been brought thereon in a State court, 
 is provable in bankruptcy. The bankruptcy courts for both the Northern and 
 Southern Districts of New York held, under the last act, that such debts were 
 provable unless they were debts payable in States where the statute of limita- 
 tions was an absolute bar to the claim and a complete extinguishment of the 
 indebtedness, so that nowhere could an action be maintained upon it. Where 
 the statute of limitations merely affected the remedy in one particular jurisdic- 
 tion, but did not prevent a suit thereupon in other jurisdictions, the debt, being 
 still in existence, was held by these courts to be provable in bankruptcy, and 
 the creditor was considered entitled to a dividend upon it. The leading case 
 stating this doctrine was in re Ray (i B. R. 203; s. c. 2 Ben. 53), Judge Blatch- 
 ford writing the opinion, from which we quote at length in order that the full 
 force of his argument may be appreciated: " The bankrupt act (act of 1867) is 
 silent as to the operation of any statute of limitations. The igth section provides 
 that ' all debts due and payable from the bankrupt at the time of the adjudication 
 of bankruptcy ' may be proved against his estate. This language is broad enough, 
 on its face, to include all debts, no matter of how long standing. I have not 
 met with any decision under any former bankrupt act of the United States on 
 the question presented. But in England it has always been held, under the 
 bankrupt law, that a debt which cannot be recovered in an action, against a 
 plea of the statute of limitations, cannot be proved in bankruptcy. {Ex parte 
 Dewdney, 15 Vesey, 479; in re Clendening, g Irish Eq. R. N. S. 287.) And in 
 England a dividend paid on such a. debt was ordered to be repaid. (Ex parte 
 Dewdney, supra.) The principle involved is, that the debtor is under no obliga- 
 tion to pay such a debt, and that, therefore, it cannot be said to be " due and 
 payable.' The rule in England continues to be the same, and the ground on 
 which it is put by elementary writers is, that the bankrupt has no option as to 
 defending or not defending a claim against his estate in bankruptcy, save 
 through the action of the assignee, and the assignee is bound, in the interests 
 of the body of creditors, to set up any legal defense which the bankrupt could 
 have set up if he were not bankrupt, (i Archibold's Law of Bankruptcy, by 
 Griffith & Holmes, edition of 1867, p. 533; 2 Dorir& Macrae's Law and Practice 
 in Bankruptcy, p. 787.) I think that is the proper rule, and that, under section 19 
 of the bankrupt act, no debt can be considered " due and payable," which is 
 
ESTATES. 361 
 
 § 63.] Claims Affected by the Statute of Limitations. 
 
 barred by limitation, and that a debt so barred cannot be proved in bankruptcy. 
 Is the debt in the present case so barred? The Code of Procedure of New York 
 provides (sections 74, 91), that a civil action in causes of action such as those in 
 this case can only be commenced within six years after the causes of action 
 accrued, but that the objection that the action was not commenced within the 
 time limited can only be taken by answer. The whole scope of the statute is 
 one affecting the remedy merely, and not the contract. A complaint setting 
 out a cause of action which appears to have accrued more than six years before 
 the action was commenced is not objectionable on its face, or open to demurrer. 
 The defense of the limitation must be set up by answer. If it is not so set up, 
 it is waived. Now, the distinction between a law which affects the rights and 
 merits of a contract and extinguishes it and makes it null and void, as a result 
 of a prescription or limitation, and a law which does no more than limit the 
 time within which an action must be brought upon the contract in the courts of 
 the country which enacts the law, is well settled. A law of the latter descrip- 
 tion is wholly confined to the country enacting it. A law of the former descrip- 
 tion may, under certain circumstances, so affect the contract and its construc- 
 tion as to be capable of being invoked as a bar to an action on it in another 
 country. (Huber v. Steiner, 2 Bingham, N. C. 202; Story, Conflict of Laws, 
 § 582.) The statute of limitations of New York goes exclusively to the remedy in 
 the courts of New York, and could neverbe invoked as a bar to an action in another 
 State on the contracts in question in this case. This principle is sought by the 
 creditors in this case to be applied to their claim, and they insist that as they 
 would have a right, notwithstanding anything found in the law of New York, 
 to sue the bankrupt ori their claim if they find him within the jurisdiction of 
 another State, they ought not to be deprived of the privilege of proving their 
 claim in bankruptcy under a law of the United States, whose operation is 
 coextensive with the limits of the United States, unless it is shown that the 
 claim is barred throughout the limits of the United States. The English bank- 
 ruptcy law is coextensive as to territorial operation with the English statute of 
 limitations. The bankrupt act of the United States operates in all the States 
 as well as in New York. Under these circumstances I think that a debt, to be 
 barred by limitation so as not to be provable under the bankrupt act as not 
 being ' due and payable,' must be shown to be so barred throughout the United 
 States." 
 
 To the same effect as the decision just cited was in re Sheppard, i B. R. 439; 
 s. c. 7 A. L. Reg. 484, which was decided by the District Court for the Northern 
 
362 THE NATIONAL BANKRUPTCY LAW. 
 
 Proving Debts Which Are Not Actionable in State Courts. [Ch. VIL 
 
 District of New York. But the weight of authority is clearly opposed to the rule 
 laid down in these cases. (See in re D. Kingsley, i B. R. 329; s. c. i Low. 216; 
 followed ««r^ Hardin, I B. R. 395; and also z'« >-if Noeson, 12B. R.422; s. c. 6 Hiss. 
 443; 2« ?-« C. Reed, II B. R. 94; s. u. 6 Biss. 250; /»>-« Cornwall, 6 B. R. 305 ; s. u. 
 9 Blatch. 114.) These latter cases hold that a debt barred by the statute of limi- 
 tations where the bankrupt resides, cannot be proved against his estate in bank- 
 ruptcy; and in re Kingsley, the court went so far as to hold that if the claim was 
 barred by the laws of the State of the debtor's residence, it could not be proved in 
 bankruptcy, even if not barred by the laws of the State of residence of the credi- 
 tor, notwithstanding at the time of the creation of the debt both parties resided 
 therein. The decisions in the cases last cited are based upon the fact that by the 
 statutes and rules of practice of the United States courts, when an action against 
 a resident of a particular State is brought in a Federal court, embracing that State 
 within its jurisdiction, the Federal court is governed by the statute of limitations 
 of that particular State. (See 8 Peters, 372.) If a debt is not barred by the stat- 
 ute of limitations at the time of the filing of the petition, the weight of authority 
 is that it may be proved against the estate at any time within the period allowed 
 for proving claims, even though the time within which an action could be 
 brought thereon would have expired earlier. The statute of limitations ceases 
 to run against the creditor of a bankrupt from the commencement of the pro- 
 ceeding in bankruptcy. (In re Eldridge, 12 B. R. 540; in re Wright, 6 Biss. 317; 
 compare, however, to the contrarv, Nicholas v. Murray, 5 Saw. 320; s. c. 18 B. 
 R. 469-) 
 PFOving Debts Which Are Not Actionable in State Courts. — Somewhat 
 
 analogous to the question of the right to prove claims as to which the statute of 
 limitations could be pleaded as a defense, is the question of the right to prove 
 claims, which by positive provisions of statutory laws are not enforceable in 
 the State courts. Such a claim may be proved if the State statute affects 
 only the remedy and not the validity of the contract. Thus if two persons 
 enter into a contract of sale, valid by the laws of the State where the con- 
 tract is made, but which cannot be enforced as against the purchaser in the 
 courts of the State of his residence, yet the contractual liability existing and 
 the person being liable to be sued thereon if jursdiction is obtained over him 
 elsewhere, there is such a debt as is provable in bankruptcy. The mere fact 
 that the courts of the State will not give a seller the right to sue, goes only to 
 the remedy, not to the existence of the contractual obligation. So held where a 
 resident of the State of Maine bought liquors in another State by a contract 
 
ESTATES. 363 
 
 § 63.] Debts Due to Aliens. 
 
 valid in the State of purchase, but which the court of Maine would not enforce 
 because of their prohibitory laws. (/« re Murray, 3 B. R.. 765.) 
 
 Debts Due to Aliens. — There is nothing in the bankruptcy law to prevent 
 an alien creditor from making himself a party to the proceedings in bankruptcy. 
 If there has been a proceeding in bankruptcy in a foreign jurisdiction against a 
 person afterwards adjudged bankrupt in the United States, it is provided by 
 section 65 d that before creditors who have received dividends in the foreign 
 proceeding shall receive any dividend under the proceeding here, creditors 
 residing within the United States shall first receive a dividend equal to that 
 which the other creditors received in the foreign proceeding. A foreign creditor 
 who makes himself a party to a bankruptcy proceeding pending in the United 
 States Court, having theretofore levied upon property of the bankrupt situated 
 and being in the foreign country, cannot be permitted to prove his claim for the 
 balance due him after deducting the proceeds of the property levied upon. He 
 must first surrender to the trustee in bankruptcy the property which he has 
 taken, if it was taken under such circumstances as would require a creditor resi- 
 dent in the United States to surrender it. This is true, notwithstanding the 
 American courts, contrary to the practice of the English and Dutch courts, do 
 not recognize an assignment in bankruptcy as giving to the assignee or trustee 
 any title to property located in a foreign country as against creditors residing 
 in a foreign country who may procure an attachment or other lien thereupon 
 before the trustee or assignee acquires actual possession. While admitting the 
 right of foreign creditors thus to attach the property of an American bankrupt 
 located in a foreign country, American courts cannot concede that such attach- 
 ing creditors may make such levies and thus secure preferences, and thereafter 
 come in and prove for the balance of their claims; they must first surrender the 
 property so obtained, in order that all creditors in the bankruptcy proceeding 
 may share alike. {In re Bugbee, 9 B. R 258. ; citing Westlake on Private Inter- 
 national Law, page 271 ; De La Vega v. Vianna, i Barn, and Adolph, 284; Cock- 
 erell v. Dickens, 3 Mo. P. C. C. 132; s. c. Mont. D. & De G. 45; Selkrigg v. 
 Davis, 2 Rose, 97 & gg; Phillips v. Hunter, 2 H. Bl. 402, 414; Hunter v. Potts 
 4 Term Rep. 218; Sill v. Worswick, Id. 665.) 
 
 And in re Bugbee it was also held that where a foreign creditor had two 
 claims and attached the property of an American bankrupt upon one of them 
 only, he must nevertheless surrender the attachment before he would be allowed 
 to prove either of his claims. (Exp. Dickson, i Rose, 98; Exp. Hardenburgh, 
 
364 THE NATIONAL BANKRUPTCY LAW. 
 
 Debt of One Partner to the Other. [Ch. VIL 
 
 Rose, 204.) Compare notes to section 2, paragraph on Foreign Bankruptcies- 
 also notes to section 17, paragraph on Discharges to Aliens. 
 
 Claims Against Partnerships. — As to the right of a creditor holding a 
 claim against a. firm to prove the same against a member of the firm who has 
 individually gone into bankruptcy, compare section 17, paragraph on Dis- 
 charges of Partners, and also section 5, paragraph on Rights of Firm Creditors 
 against Individual Assets. As to the right of creditors holding a firm obligation 
 indorsed by one or more of the individual members of the firm to prove their 
 claim against the partnership estate, or the estate of any one of the indorsing 
 members, compare section 5, paragraph on Rights of Creditors holding a Joint 
 and Several Obligation. 
 
 Debt of One Partner to the Other. — If the partnership debts have all 
 been paid and all the partnership assets disposed of, then anything due by one 
 partner to another is a legal claim provable in bankruptcy. It has been said 
 that until a partner pays the partnership debts, and the assets are all disposed 
 of, he has no claim, contingent or otherwise, against his copartner. (Hester v. 
 Baldwin, 2 Woods, 433.) But in Wilkins v. Davis (15 B. R. 61), it was said that 
 partners might pay the joint debts and prove against the estate of the bankrupt 
 copartner the equitable debt arising from any deficiency in his account; citing 
 Wood V. Dodgson, 2 Maule & S. 195; AfBalo v. Foudrinier, 6 Bing. 306; Butcher 
 V. Forman, 6 Hill, 583. By the provisions of section 5, where all the members 
 of the partnership are adjudged bankrupt, a claim of the partnership estate may 
 be proved against the individual estate, and vice versa. And the true rule would 
 seem to be that where one, but not all, of the partners was adjudged bankrupt, 
 the solvent partners winding up the partnership affairs are entitled to prove 
 against the estate of the bankrupt partners the share of the loss which such 
 bankrupt partners ought to bear. (Exp. Watson, 4 Haddock's Rep. 477; Eden 
 on Bank, 177; and the authorities above cited; also Sigsby v. Willis, 3 B. R. 
 207; s. c. 3 Ben. 371.) This rule is based not on the theory that such debts are 
 contingent, but on the principle that solvent partners of the bankrupt, having 
 paid all the joint debts of the firm, are to be regarded as standing In the light 
 of sureties or persons liable for him, and therefore entitled to come in and prove 
 in respect to the bankrupt's share of the partnership debts. If such claims were 
 contingent, we believe they would not be provable under the present act. If 
 regarded, however, as debts of the bankrupt for which the creditor has the per- 
 sonal obligation of the solvent partners as sureties, then the proof of them 
 
ESTATES. 365 
 
 § 63.] Proof of Claim Subjects the Creditor to All Orders of the Court. 
 
 would be in accordance with section 57 i. The fact that the solvent partner 
 could enforce his claim only in equity, not in law, does not render it not prov- 
 able. Equitable debts are provable. (Ex p. Yonge, 3 Vesey & Beames, 31; 
 Jeffo V. Wood, 2 P. Wms. 128; Murphy's Case, i Sch. & LeFroy, 44; 2 Chris- 
 tian's Bankr. 473, 474; and cases cited supra, on Claims Cognizable Only in 
 Equity.) Such equitable debts, by the English rule, are provable, but cannot be 
 made the basis of a petition in bankruptcy against the equitable debtor. 
 According to that rule, although equitable debts are provable for the purpose 
 of leceiving a dividend, only legal debts, debts enforceable by an action at law, 
 can be made the basis of a petition. (Sigsby v. Willis, 3 B. R. 208; s. c. 3 Ben. 
 371 ; and cases there cited.) 
 
 Debt of One Partner to Another Provable When Not Arising Out of 
 Partnership Transactions. — The fraudulent misappropriation of copartner- 
 Iship assets, as where one draws out firm money to a large extent, and fraudu- 
 ently fails to charge himself with the amount on the books of the firm, is in the 
 nature of an embezzlement of the firm funds. Both common sense and judicial 
 authority justify the proof of the amount of the interest of the other partner 
 whose funds have been thus misappropriated, against the estate of the wrong- 
 doer. {Ex p. Yonge, 3 Vesey & Beames, 31.) The partner thus wronged is 
 entitled to treat the misappropriation as entirely foreign to the copartnership 
 business, and he may prove the debt precisely as though his personal funds 
 had been taken; for in no proper sense can a debt created by such fraudulent 
 misappropriation be tonsidered as arising out of partnership transactions. 
 (Sigsby V. Willis, 3 B. R. 207; s. c. 3 Ben. 371.) 
 
 Debts Not Provable, Unaffected by Bankruptcy Proceedings. — ' ' The 
 
 provisions in regard to what debts may be proved are arbitrary, but do not 
 affect the existence or validity of such debts as are not provable, nor does a dis- 
 charge release them. If a debt is provable, it comes in for a dividend, and can, 
 unless it is an excepted debt, be discharged. If it is not provable, it does not 
 come in for a dividend, but it will not be discharged." (In re May & Merwin, 
 9 B. R. 419; s. c. 47 How. Pr. 37; s. c. 7 Ben. 238.) Compare section 17 a. 
 
 Proof of Claim Subjects the Creditor to All Orders of the Court. — The 
 
 creditor, wherever he may reside, by proving his debt, su bmits himself person- 
 ally to the jurisdiction of the court of bankruptcy, and becomes suoject to all 
 its orders in so far as they affect his claim, and the bankruptcy court may 
 deprive him of all the benefits which otherwise he would have, and may 
 
366 THE NATIONAL BANKRUPTCY LAW. 
 
 Debts which Have Priority. [Ch. VII. 
 
 expunge his proof as a punishment for offenses of which he may be guilty. 
 {In re Kyler, 2 Ben. 414.) A creditor proving his debt makes himself a party 
 to an equitable proceeding, and the court may deny him relief, in cases where a 
 court of equity would be justified in so doing. Thus, if knowingly and with 
 intentional fraud, a creditor includes in his claim a claim which is invalid and 
 illegal, and not owing to him, it has been held that the court may refuse to give 
 him any relief whatever; it may even refuse to allow the valid portion. (Mar- 
 rett V. Atterbury, 11 B. R. 225; s. c. 3 Dill. 444.) 
 
 Cross-referenees. — As to claims against partnerships, compare section 5. 
 As to manner of proof, compare section 57. As to provable debts which are 
 not released by a discharge, compare section 17. As to dividends on proved 
 claims, compare section 65. As to set-off of mutual debts and credits, compare 
 section 68. 
 
 Sec. 64. Debts which have Priority. — a The court shall order 
 the trustee to pay all taxes legally due and owing by the bankrupt 
 to the United States, State, county,, district, or municipality in 
 advance of the payment of dividends to creditors, and upon filing 
 the receipts of the proper public officers for such payment he 
 shall be credited with the amount thereof, and in case any ques- 
 tion arises as to the amount or legality of any such tax the same 
 shall be heard and determined by the court. 
 
 b The debts to have priority, except as herein provided, and to 
 be paid in full out of bankrupt estates, and the order of payment 
 shall be (i) the actual and necessary cost of preserving the estate 
 subsequent to filing the petition^ (2) the filing fees paid by credit- 
 ors in involuntary cases ; (3) the cost of administration, including 
 the fees and mileage payable to witnesses as now or hereafter pro- 
 vided by the laws of the United States, and one reasonable 
 attorney's fee, for the professional services actually rendered, 
 irrespective of the number of attorneys employed, to the petition- 
 ing creditors in involuntary cases, to the bankrupt in involuntary 
 cases while performing the duties herein prescribed, and to the 
 bankrupt in voluntary cases, as the court may allow ; (4) wages 
 due to workmen, clerks, or servants which have been earned 
 
ESTATES. 367 
 
 I 64.] Priority of the United States. 
 
 within three months before the date of the commencement of 
 proceedings, not to exceed three hundred dollars to each claim- 
 ant ; and (5) debts owing to any person who by the laws of the 
 States or the United States is entitled to priority. 
 
 c In the event of the confirmation of a composition being set 
 aside, or a discharge revoked, the property acquired by the bank- 
 rupt in addition to his estate at the time the composition was con- 
 firmed or the adjudication was made shall be applied to the pay- 
 ment in full of the claims of creditors for property sold to him on 
 credit, in good faith, while such composition or discharge was in 
 force, and the residue, if any, shall be applied to the payment of 
 the debts which were owing at the time of the adjudication. 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., § 5101; act of 1867, § 28; act of 1841, § 5; act of 1800, § 62. 
 
 Priority of the United States. — Section 3466 of tiie U. S. Revised Statutes 
 provides: " Whenever any person indebted to the United States is insolvent, or 
 whenever the estate of any deceased debtor, in the hands of the executors or 
 administrators, is insufficient to pay all the debts due from the deceased, the 
 debts due to the United States shall be first satisfied, and the priority hereby 
 established shall extend as well to cases in which a debtor, not having sufficient 
 property to pay all' his debts, makes a voluntary assignment thereof, or in 
 which the estate and effects of an absconding, concealed, or absent debtor are 
 attached by process of law as to cases in which an act of bankruptcy is com- 
 mitted." 
 
 This section has been construed in the following cases: U. S. v. Fisher, 
 Cranch, 358; U. S. v. Hooe, 3 Cranch, 73; Harrison v. Sterry, 5 Cranch, 289; 
 Prince v. Bartlett, 8 Cranch, 431; U. S. v. Bryan, 9 Cranch, 374; Thelusson v. 
 Smith, 2 Wheaton, 396; U. S. v. Rowland, 4 Wheaton, 108; Connard v. Insur- 
 ance Co., Pet, 386; Hunter v. U. S., 5 Pet. 173; U. S. v. State Bank, 6 Pet. 29; 
 U. S. V. Hack, 8 Pet. 271; Brent v. Bank of Washington, 10 Pet. 596; Beaston 
 V. Farmer's Bank, 12 Pet. 102. Is this section impliedly repealed by the pro- 
 visions of the bankruptcy act? We think not. It is true that paragraph a of 
 the section under consideration provides for the payment of taxes due to the 
 United States, and to States and other political divisions, prior to the payment 
 
368 THE NATIONAL BANKRUPTCY LAW. 
 
 Other Priorities. [Ch. VII. 
 
 of dividends, but this is hardly sufficient to justify the inference that as to 
 other claims the United States has no priority. The well recognized principle 
 that a statute is not to be construed as limiting the prerogative of the sov- 
 ereign and that the sovereign is not afiected by the provisions of a statute, 
 unless expressly so declared, necessitates the belief that the section of the Re- 
 vised Statutes above quoted is still in force, and that debts due to the United 
 States have a priority over all claims other than taxes. 
 
 Section 3466 was construed by the United States Supreme Court in the case of 
 the U. S. z-. Lewis, 92 U. S. 618; s. c. below, 13 B. R. 33, and it was there said; 
 " The language of that section is general, and it is without qualification. The 
 form of the indebtedness is immaterial. It may be by simple contract, speci- 
 alty, judgment, decree, or otherwise by record. The debt may be legal or 
 equitable, and may have been incurred in this country or abroad. A valid 
 indebtedness is as effectual in one form as in another. No discrimination 
 is made by the statute." In that case it was held that the United States 
 was not in any wise bound by the bankruptcy act of 1867, and the fact that 
 it did not prove its claim in bankruptcy proceedings was immaterial and did 
 not affect its right to a priority; but it is to be borne in mind that the con- 
 struction given by the courts to the act of 1867 was that the United States was 
 not a creditor bound to prove its claim. (U. S. v. Herron, 20 Wall. 251.) 
 But in section 17 (i) we have shown that the provisions of section 57 (>) of the 
 present bankruptcy act imply that the United States now should prove its 
 claim in like manner as other creditors. The fact that it may have to prove its 
 claim does not, however, furnish any inference that it no longer has a right of 
 priority. It was also held in U. S. v. Lewis, in accordance with the general 
 principles of equity, that where the United States had collaterals for its claim, 
 it was not obliged to apply them before enforcing its direct remedy against the 
 personal liability of the debtor. The other creditors could not compel such 
 application of the collateral. In re Rosey (6 Ben. 507; s. c. 8 B. R. 509), it was 
 held that the priority of the United States attached to penalties for violation of 
 the revenue laws, the court saying: " Such priority attaches to all debts equit- 
 able as well as legal (Howe v. Sheppard, 2 Sumner, 133-142), and 10 debts 
 created and owing, although payable only in the future. (U. S. v. State Bank 
 of North Carolina, 6 Pet. 29.)" 
 
 Other Priorities. — Unlike the act of 1867, the present act gives no priority 
 to debts due to a Staf other than for taxes, and such priority cannot be con- 
 strued as existing, except in cases where there is a State law expressly giving 
 
ESTATES. 369 
 
 § 65.] Declaration and Payment of Dividends, 
 
 such a right of priority, in which case it will be recognized pursuant to sub- 
 division (5). 
 
 It should be noted that the provisions of subdivision I of paragraph b limit 
 the expense incurred in preserving the estate, which can be allowed as a prior 
 claim, to that incurred subsequent to the filing of the petition; and that by sub 
 division 2, creditors in involuntary cases are allowed only the filing fees. 
 
 Whether the expression " workman, clerk, and servant" is to be construed 
 as co-extensive with the term wage-earner as defined in section I (27), quart. 
 It would seem, however, that the statutory definition of wage-earner makes the 
 word include persons who are not entitled to priority of payment; only those 
 receiving wages in the ordinary acceptation of the term could claim this right of 
 priority. Under a provision in the English bankruptcy act corresponding to the 
 provision in this section, it has been held that workmen who are paid by the job, 
 without being hired for any specific time, are not entitled to a priority. (Ex f. 
 Grelier, Mont. 264.) But if a person has been hired to act as a clerk for the 
 bankrupt on wages or salary, the mere fact that his clerkship is coupled with 
 some other business arrangement between the parties for their mutual benefit, 
 which does not create the relation of wage-earner and wage-payer, will not 
 deprive him of his right to priority as a person working for wages. {Ex p. 
 Hicken, 3 D. & Sm. 662; Ex p. Harris, De G. 165.) If a workman entitled to a 
 priority for wages is a minor, his father, having the right to his services, is 
 a creditor entitled to priority. {In re Harthorn, 4 B. R. 103.) 
 
 Claims of attorneys for services rendered in connection with the filing of the 
 petition are not regarded as entitling them to claim a priority of payment. {In 
 re Hirschberg, 2 Ben. 466; in re Handell, 15 B. R. 71.) 
 
 Sec. 65. Declaration and Payment of Dividends. — a Divi- 
 dends of an equal per centum shall be declared and paid on all 
 allowed claims, except such as have priority or are secured. 
 
 b The first dividend shall be declared within thirty days after 
 the adjudication, if the money of the estate in excess of the 
 amount necessary to pay the debts which have priority and such 
 claims as have not been, but probably will be, allowed equals five 
 per centum or more of such allowed claims. Dividends subse- 
 quent to the first shall be declared upon like terms as the first 
 and as often as the amount shall equal ten per centum or more and 
 
 NAT. BANKRUPTCY LAW — 24 
 
370 THE NATIONAL BANKRUPTCY LAW. 
 
 Proceedings Preliminary to Declaration of Dividends. [Ch. VII. 
 
 upon closing the estate. Dividends may be declared oftener and 
 in smaller proportions if the judge shall so order. 
 
 c The rights of creditors who have received dividends, or in 
 whose favor final dividends have been declared, shall not be 
 affected by the proof and allowance of claims subsequent to the 
 date of such payment or declarations of dividends ; but the credit- 
 ors proving and securing the allowance of such claims shall be 
 paid dividends equal in amount to those already received by the 
 other creditors if the estate equals so much before such other 
 creditors are paid any further dividends. 
 
 d Whenever a person shall have been adjudged a bankrupt by 
 a court without the United States and also by a court of bank- 
 ruptcy, creditors residing within the United States shall first be 
 paid a dividend equal to that received in the court without the 
 United States by other creditors before creditors who have 
 received a dividend in such court shall be paid any amounts. 
 
 e A claimant shall not be entitled to collect from a bankrupt 
 estate any greater amount than shall accrue pursuant to the 
 provisions of this act. 
 
 Analogous Provisions of Former Acts. — 
 
 As to first dividend: R. S., § 5092; act of 1867, § 27; act of 1841, § 10; act of 
 1800, § 29. As to subsequent dividend: R. S., § 5093; act of 1867, § 28; act of 
 1841, § 10; act of 1800, § 30. As to filing of accounts preparatory to final 
 dividend: R. S., § 5096; act of 1867 § 28. As to rights of creditors whose 
 claims are allowed after first dividend: R. S., § 5097; act of 1867, § 28; act of 
 1841, § 10. 
 
 Proceedings Preliminary to Declaration of Dividends. — Compared 
 
 with the act of 1867, the present act contains few provisions as to the manner of 
 procedure with reference to the declaration and payment of dividends. Section 
 39 a (i) provides that the referee shall declare the dividends and prepare and 
 deliver to the trustees dividend sheets showing the dividends declared and to 
 whom payable. This duty evidently includes the duty imposed upon the former 
 register by section 5102 of the Revised Statutes, viz.: the duty of computation 
 and calculation as to the amounts; and further would seem to authorize the 
 
ESTATES. 371 
 
 § 65.] Proceedings Preliminary to Declaration of Dividends. 
 
 referee to fix and determine the rate of the dividend after deciding whether or 
 not one should be paid. 
 
 Under the former act, by section 5092, it was provided that at the second gen- 
 eral meeting of the creditors to be held within three months from the time of the 
 adjudication of bankruptcy, the assignee should report to the court and to the 
 creditors the amount of all his receipts and payments, verified by oath, and 
 should file the proper vouchers and submit the schedules to the creditors and a 
 statement of the whole estate of the bankrupt as then ascertained, and that the 
 majority in value of the creditors present should determine whether any, and if 
 any, what part of the net proceeds of the estate, after deducting and retaining 
 a sum sufficient to provide for all undetermined claims, which for sufficient 
 reason had not been proved, and for other expenses and contingencies, should be 
 divided among the creditors. Section 58 a (5) of the present act provides that 
 the creditors shall have ten days' notice of the declaration and time of the pay- 
 ment of dividends. But the statute is obscure as to whether this refers to a 
 meeting which is to be held, and if so, as to whether creditors have any manda- 
 tory or directory powers as to the declaration of dividends. 
 
 It would seem as if, under section 39 a (i), the declaration of dividends was 
 to be a judicial act to be performed by the referee. Section 47 a (g) requires the 
 trustee to pay dividends within ten days after they are declared by the referees. 
 The whole practice and procedure in this matter will undoubtedly be chaotic 
 until the Supreme Court shall promulgate its rules pursuant to section 30. 
 
 Under the former act it was held that at the second meeting of the creditors 
 (the first meeting at which dividends were declared), the creditors might vote in 
 favor of the disposition of all the funds as dividends other than those needed 
 for the payment of expenses and those needed for claims then undetermined, 
 which, by reason of the distant residence of the creditor, or for other sufficient 
 reason, had not been proved; but they were not obliged to leave any funds in 
 the hands of the assignee to pay claims of creditors whose names appeared upon 
 the schedule, but for whose failure to prove, there appeared no sufficient excuse. 
 Comparing the words " such claims as have not been, but probably will be 
 allowed," in paragratjh b, with the provisions of paragraph c, it would seem 
 as if a similar construction of the present act would not be improper. If the 
 dividend has been declared, the court has power in a proper case to restrain the 
 payment of it by the trustee in order to give to parties in interest an opportunity 
 to move to have the order of dividend vacated. {In re N. Y. Mail, S. S. Co ^ 
 B. R. 280.) But a dividend so declared cannot be disturbed except for some 
 
372 THE NATIONAL BANKRUPTCY LAW. 
 
 Unclaimed Dividends — Liens. [Ch. VIL 
 
 error or other cause. It cannot be opened for the purpose of paying an expense 
 which would have been allowed, had it been brought to the attention of the 
 court before the declaration of the dividend. (In re B. K. Smith, 15 B. R. 97.) 
 Neither can a State court in any way interfere with the bankruptcy court in 
 its distribution of the assets of the bankrupt. (In re Bridgman, 2 B. R 252.) 
 Where the assets are more than sufficient to pay all the claims which have been 
 allowed, interest upon them may be allowed. (In re Hagan, 10 B. R. 383.) 
 
 Sec. (^. Unclaimed Dividends. — a Dividends which remain 
 unclaimed for six months after the final dividend has been 
 declared shall be paid by the trustee into court. 
 
 b Dividends remaining unclaimed for one year shall, under the 
 direction of the court, be distributed to the creditors whose claims 
 have been allowed but not paid in full, and after such claims have 
 been paid in full the balance shall be paid to the bankrupt: Pro- 
 vided, That in case unclaimed dividends belong to minors such 
 minors may have one year after arriving at majority to claim 
 such dividends. 
 
 No Analogous Provisions in Former Acts. — 
 
 Unclaimed Dividends Not Subject to Attachment. — In Jackson v. 
 
 Miller (9 B. R. 143), it was held (following in re Bridgman, 2 B. R. 252), that 
 dividends in the hands of the trustee were not subject to attachment by a cred- 
 itor of the dividend creditor. To the same effect, Gilbert v. Lynch, 17 Blatch. 
 402, holding that when a dividend is declared in favor of a. creditor it is not 
 property, but a right to secure property. Tlie former act contained no express 
 provision as to the method of disposing of unclaimed dividends, but the 
 decisions of the court established substantially the same rules which now appear 
 in statutory form. 
 
 Sec. 67. Liens. — a Claims which for want of record or for 
 other reasons would not have been valid liens as against the claims 
 of the creditors of the bankrupt shall not be liens against his 
 estate. 
 
ESTATES. 373 
 
 § 67.] Liens. 
 
 b Whenever a creditor is prevented from enforcing his rights as 
 against a lien created, or attempted to be created, by his debtor, 
 who afterwards becomes a bankrupt, the trustee of the estate of 
 such bankrupt shall be subrogated to and may enforce such rights 
 of such creditor for the benefit of the estate. 
 
 c A lien created by or obtained in or pursuant to any suit or 
 proceeding at law or in equity, including an attachment upon 
 mesne process or a judgment by confession, which weis begun 
 against a person within four months before the filing of a petition 
 in bankruptcy by or against such person shall be dissolved by the 
 adjudication of such person to be a bankrupt if (i) it appears that 
 said lien was obtained and permitted while the defendant was 
 insolvent and that its existence and enforcement will work a pref- 
 erence, or (2) the party or parties to be benefited thereby had 
 reasonable cause to believe the defendant was insolvent and in 
 contemplation of bankruptcy, or (3) that such lien was sought and 
 permitted in fraud of the provisions of this act ; or if the dissolu- 
 tion of such lien would militate against the best interests of the 
 estate of such person the same shall not be dissolved, but the 
 trustee of the estate of such person, for the benefit of the estate, 
 shall be subrogated to the rights of the holder of such lien and 
 empowered to perfect and enforce the same in his name as trustee 
 with like force and effect as such holder might have done had not 
 bankruptcy proceedings intervened. 
 
 d Liens given or accepted in good faith and not in contempla- 
 tion of or in fraud upon this act, and for a present consideration, 
 which have been recorded according to law, if record thereof was 
 necessary in order to impart notice, shall not be affected by this 
 act. 
 
 e That all conveyances, transfers, assignments, or incumbrances 
 of his property, or any part thereof, made or given by a person 
 adjudged a bankrupt under the provisions of this act subsequent 
 to the passage of this act and within four months prior to the 
 filing of the petition, with the intent and purpose on his part to 
 hinder, delay, or defraud his creditors, or any of them, shall be 
 null and void as against the creditors of such debtor, except as to 
 
374 THE NATIONAL BANKRUPTCY LAW. 
 
 Liens. fCh. VIL 
 
 purchasers in good faith and for a present fair consideration ; and 
 all property of the debtor conveyed, transferred, assigned, or 
 encumbered as aforesaid shall, if he be adjudged a bankrupt, and 
 the same is not exempt from execution and liability for debts by 
 the law of his domicile, be and remain a part of the assets and 
 estate of the bankrupt and shall pass to his said trustee, whose 
 duty it shall be to recover and reclaim the same by legal proceed- 
 ings or otherwise for the benefit of the creditors. And all convey- 
 ances, transfers, or incumbrances of his property made by a debtor 
 at any time within four months prior to the filing of the petition 
 against him, and while insolvent, which are held null and void as 
 against the creditors of such debtor by the laws of the State, 
 Territory, or District in which such property is situate, shall be 
 deemed null and void under this act against the creditors of such 
 debtor if he be adjudged a bankrupt, and such property shall pass 
 to the assignee and be by him reclaimed and recovered for the 
 benefit of the creditors of the bankrupt. 
 
 / That all levies, judgments, attachments, or other liens, 
 obtained through legal proceedings against a person who is insol- 
 vent, at any time within four months prior to the filing of a 
 petition in bankruptcy against him, shall be deemed null and void 
 in case he is adjudged a bankrupt, and the property affected by 
 the levy, judgment, attachment, or other lien shall be deemed 
 wholly discharged and released from the same, and shall pass to 
 the trustee as a part of the estate of the bankrupt, unless the 
 court shall, on due notice, order that the right under such levy, 
 judgment, attachment, or other lien shall be preserved for the 
 benefit of the estate ; and thereupon the same may pass to and 
 shall be preserved by the trustee for the benefit of the estate as 
 aforesaid. And the court may order such conveyance as shall be 
 necessary to carry the purposes of this section into effect : Pro- 
 vided, That nothing herein contained shall have the effect to 
 destroy or impair the title obtained by such levy, judgment, 
 attachment, or other lien, of a bona fide purchaser for value who 
 shall have acquired the same without notice or reasonable cause 
 for inquiry. 
 
ESTATES. 375 
 
 § 67.] Liens in General Unaffected. 
 
 Analogous Provisions of Former Acts. — 
 
 As to liens being unaffected: R. S., § 5075; act of 1867, § 20; act of 1841, § 2; 
 acts of 1800, § 63. As to the dissolution of attachment liens : R. S.,§5044; act of 
 1867, § 14. 
 
 Liens in General Unaffected. — In general the trustee in bankruptcy 
 becomes vested only with the title, which the bankrupt himself has. With cer- 
 tain exceptions to be discussed hereinafter, he takes the property subject to all 
 existing liens, claims, charges and equitable rights. He is not a purchaser for 
 value, but stands in the shoes of the bankrupt himself except in so far as the 
 statute has given to him, as the representative of creditors, the right to avoid 
 fraudulent and preferential transfers and the liens voidable under the provisions 
 of this section. Unless liens are voidable under the provisions mentioned, the 
 persons possessing them retain all their rights against the property, after it 
 passes to the trustee. Courts of bankruptcy may in certain cases compel the 
 lienors to enforce their rights in these courts, but the rights themselves con- 
 tinue unimpaired and unaffected. [Exp. Christy, 3 How. 292; t» ^-if Stuyvesant 
 Bank, 12 Blatch. 179; s. c. 10 B. R. 399; s. c. 49 How. Pr. 133.) The general 
 doctrine on this subject was laid down by the United States Supreme 
 Court, in Yeatman v. Savings Inst., 95 U. S. 764; s. t. 17 B. R. 187, in 
 which the court said: " The established rule is that, [except in certain 
 cases] the assignee takes the title subject to all equities, liens, or incum- 
 brances, whether created by operation of law or by act of the bankrupt, 
 which existed against the property in the hands of the bankrupt. (Brown 
 V. Heathcote, i Atk. i6o; Mitchell v. Winslow, 2 Story, 630; Gibson v. 
 Warder, 14 Wall. 244; Cook v. Tullis, i8 Id. 332; Donaldson v. Farwell, 93 U. 
 S. 631; Jerome v. McCarter, 94 Id. 734.) He takes the property in the same 
 ■ plight and condition ' that the bankrupt held it. (Winsor v. McLellan, 2 Story, 
 492.) In Goddard v. Weaver, i Woods, 260, it was well said that the assignee 
 takes only the bankrupt's interest in property. He has no right or title to the 
 interest which other parties have therein, nor any control over the same, further 
 than is expressly given to him by the bankrupt act, as auxiliary to the preser- 
 vation of the bankrupt estate for the benefit of the creditors. It would be 
 absurd to contend that the assignee in bankruptcy hecomes ipso facto seized and 
 possessed in entirety, as trustee, of every article of property in which the bank- 
 rupt has any interest or share." Applying that doctrine to the case before it, 
 the court, in Yeatman v. Savings Inst., held that a pledgee is entitled to the 
 possession of the property which he holds under a valid pledge as the security 
 
376 THE NATIONAL BANKRUPTCY LAW. 
 
 Mortgages to Secure Future Advances: Liens on Rents and Profits. [Ch. VII. 
 
 for his claim against the pledgor, notwithstanding a subsequent adjudication of 
 bankruptcy against the latter; and the refusal of the pledgee to surrender the 
 pledged property to the assignee in bankruptcy is not a conversion of it. 
 
 The liens that are preserved unaffected by the bankruptcy proceedings 
 include all which are recognized by State laws. It is immaterial whether 
 they be statutory or be based on usage and custom, or whether they be 
 legal or equitable. Whatever the character or description or name of the 
 lien, provided it is a privilege or charge upon property, recognized by the 
 statutes or usages of the State or by common-law principles as a security 
 for a means of enforcing the payment of a debt or the fulfilment of a duty, it is 
 a " lien " affecting the property after it passes to the trustee, to the same extent 
 as it affected it while in the hands of the bankrupt himself. (/« re Davis, 2 B. 
 R. 391; in re Waddell, i N. Y. Leg. Obs. 53; Peck v. Jenness, 7 How. 612; 
 Downer v. Brackett, 21 Vt. sqg.) The provisions of paragraph d might seem to 
 imply that only the liens therein mentioned, viz., those given for a present 
 consideration, were recognized and enforceable in courts of bankruptcy, but 
 such a construction would be inconsistent with the general tenor of the whole 
 section. The several provisions declaring that certain liens shall be invalidated 
 or deemed null and void, or dissolved, so clearly imply that liens not so invali- 
 dated, annulled or dissolved are recognized and enforced in courts of bank- 
 ruptcy, that it is not fair to infer from the language of paragraph d that only 
 the liens therein mentioned are enforceable against the bankrupt's property^ 
 That paragraph may be considered as laying down only one more ground upon 
 which they can be invalidated, viz., want of record when record is necessary to 
 impart notice, but it cannot be considered as invalidating all liens other than 
 those mentioned therein. Under the law of 1841 all liens valid by State laws 
 were preserved in bankruptcy, unless the party waived his lien and proved his 
 claim as unsecured. (Wooten v. Clark 23 Miss, [i Cush.J 75 ; Clason v. Morris, 
 10 Johns. 524; Bruner v. Sherley, 27 Miss. [5 Cush.] 407.) 
 
 Mortgages to Secure Future Advances ; Liens on Rents and Profits.— 
 
 The lien of a mortgage is preserved. (/» re Perrin, 7 B. R. 283; in re Ames, 7 
 B. R. 230.) So, where a mortgage is given to secure future sales of goods to 
 the mortgagor and is shown to be executed in good faith it is protected by the 
 bankrupt law, and to the extent of the advances actually made is valid as 
 against the trustee in bankruptcy. (Marvin v. Chambers, 12 Blatch. 495; s. c. 
 13 B. R. 77.) So the equitable right of the mortgafjee to obtain the rents and 
 profits of the mortgaged property when the property itself is insufficient security 
 
ESTATES, 377 
 
 § 67.] Mortgages of Property to be Acquired. 
 
 is recognized by the courts of bankruptcy when such right exists. There is no 
 dispute about this right in cases where prior to the bankruptcy proceedings the 
 mortgagee has had a receiver appointed in order to obtain such rents and 
 profits. That is recognized by all courts as giving to him a valid and enforce- 
 able lien but the weight of authority is that until such a receiver is appointed 
 there is no lien upon the rents and profits. (/» re Bennett, 12 B. R. 257; in re 
 Snedaker, 4 B. R. 168.) In the latter case the authorities as to the nature of 
 the right of a mortgagee over the rents and profits of the mortgaged property 
 were exhaustively reviewed, and it was held that where a mortgagee fails to 
 secure the appointment of a receiver and thereby neglects to acquire a lien on 
 the products or rents of the mortgaged premises, before the petition in bank- 
 ruptcy is filed, even though the premises sell for less than his claim at a sale by 
 the mortgagor's assignee in bankruptcy, he will only be entitled out of the 
 bankrupt's assets to a. pro rata share on the deficiency of his claim; if the 
 trustee in bankruptcy reduces to possession the products of the mortgaged 
 estate prior to the sale of the mortgaged estate, such products are to be 
 treated as assets to be distributed under the bankrupt act, and the mortgagee 
 cannot claim that a deficiency after sale on his mortgage shall be paid 
 therefrom in preference to the claims of other creditors. But other courts of 
 bankruptcy have recognized the equitable right of the mortgagee to take the 
 rents and profits in case the security is insufficient, as a right which may ripen 
 into a specific lien by proceedings instituted even after bankruptcy. Thus, in re 
 Sacchi, 6 B. R. 497; s. c. 43 How. Pr. 250, it was said: " If there be doubt 
 whether the mortgaged premises are adequate security for the payment of the 
 debt and interest (when finally adjudged due upon a valid mortgage) the court 
 will recognize the prior lien of the mortgage upon the land and the equitable 
 right of the mortgagee to have the rents separated from the general estate of 
 the bankrupt by a receivership or otherwise, and not permit them to be applied 
 to the payment of olher debts or even to the expenses of the assignee or his 
 fees; and on the obvious ground that he is only entitled to the interest which 
 the bankrupt has in the premises. Nor will any delay be permitted without just 
 reference to the interest of all who are concerned, the mortgagees as well as 
 other creditors." 
 
 Mortgages of Property to be Acquired. — As to the nature and character 
 of the lien obtained by a mortgage of property to be subsequently acquired, and 
 as to whether or not it is an equitable lien which may be enforced against the 
 rustee, compare Brett v. Carter, 14 B. R. 301, citing and reviewing numerous 
 
378 THE NATIONAL BANKRUPTCY LAW. 
 
 Liens by Judgment and Execution. [Ch. VII. 
 
 authorities and distinguishing Moody v. Wright, 54 Mass. 17; from Mitchell v. 
 Winslow, 2 Story, 630. The weight of modern authority is, that a mortgage of 
 property to be subsequently acquired gives to the mortgagee an equitable title 
 to the property, which may be enforced against the assignee. In the case of 
 Barnard v. Norwich & Worcester R. R. Co. (14 B. R. 469), decided in the United 
 States Circuit Court for Massachusetts, Justice Clifford, in delivering the opinion 
 of the court, said: "Assignees in bankruptcy, except in cases of fraud, take 
 only such rights and interests in the property of the bankrupt as he himself had, 
 and could himself have claimed and asserted at the time of his bankruptcy, and 
 they are affected with all the equities which would affect the bankrupt himself 
 if he were asserting those rights and interests. No person can sell a thing 
 which he does not own unless as the duly authorized agent of the owner. Nemo 
 dat quod non habet. Nor can he convey in prasenti property not in existence, the 
 rule being that every such deed or mortgage is inoperative and void. Authori- 
 ties to support those propositions are not wanting; but the law will permit the 
 grant or conveyance to take effect upon property when it is brought into exist- 
 ence, and comes to belong to the grantor, in fulfilment of an express agreement, 
 if the agreement is founded on good and valuable consideration, unless it 
 infringes some rule of law, or will prejudice the rights of third persons. (Pen- 
 nock V. Coe, 23 How. 117 & 138.) Whenever the parties, by their contract, 
 intend to create a lien or charge, either upon real or personal property, whether 
 then owned by the assignor or contractor or not, or, if personal property, 
 whether it is in esse or not, it attaches in equity as a lien or charge upon the 
 particular property as soon as the assignor or contractor acquires a title thereto 
 against the latter, and against all persons asserting a claim to the same under 
 him, either voluntarily or with notice, or in bankruptcy. (Mitchell v. Wins- 
 low, 2 Story, 630 & 644.)" 
 
 Liens by Judgment and Execution. — Liens obtained by judgment or 
 
 execution, unless obtained within four months prior to the filing of the petition, 
 and invalidated by some one of the provisions of this section, are enforceable 
 in bankruptcy. If by the laws of the State in which the property is situated a 
 judgment or an execution or a levy creates a valid and enforceable lien, the 
 lienor's rights are not impaired by the subsequent bankruptcy of his debtor. 
 (In re Schnepf, i B. R. 190; Webster v. Woolbridge, 3 Dill. 74; Marshall v. 
 Knox, 16 Wall. 551; s. c. 8 B. R. 97; Clark v. Iselin, 2i Wall. 360; s. t. ii B. 
 R. 337; Catlin v. Hoffman, 9 B. R. 342; Wilson v. City Bank, 9 B. R. 97; s. c. 
 17 Wall. 473; in re Bernstein, 2 Ben. 44; s. c. i B. R. 199.) As to the right of 
 
ESTATES. 379 
 
 § 67.] Mechanics' Liens. 
 
 the trustee to bring proceedings to impeach and set aside a judgment rendered 
 against the bankrupt prior to the petition, upon grounds other than those set 
 forth in paragraphs « and /of this section, compare abstract from the opinion in 
 re Fowler, ex p. O'Neil (i Lowell, 163; s. c. i B. R. 677), under section 57. In 
 cases where the State law makes the lien to attach from the time of the delivery 
 of the writ of execution to the sheriff or other o£Scer, the lien is recognized in 
 the bankruptcy court as existing from that date. Actual levy is not necessary 
 in order to create a lien, unless made so by the laws of the State. (Jn re Smith, 
 2 Ben. 432; in re Weeks, 2 Biss. 259; s. c. 4 B. R. 364.) The first test in deter- 
 mining the validity of any lien under the bankruptcy act is the State law. Is 
 there a lien recognized by the law of the State where the property is situated? 
 If so, it is valid as against the trustee in bankruptcy unless he can procure its 
 invalidation as a preferential transfer, or unless it has been secured within four 
 months prior to the filing of the petition, and is invalidated by the provisions of 
 this section. Compare in re Hufnagel, 12 B. R. 554. The lien obtained by 
 judgment or execution or levy is thus, in most cases, enforceable in bankruptcy, 
 and so is a lien obtained by the filing of a judgment creditor's bill. (In re 
 Hinds, 3 B. R. 351.) 
 
 Mechanics' Liens. — The questions which in bankruptcy frequently arise in 
 connection with claims of lienors under mechanics' lien laws relate not to the 
 rights of lienors to enforce liens whose existence is admitted, but go to the exist- 
 ence of the lien in particular cases. If the lien is a perfected one, then it is 
 conceded by all the authorities that it is not impaired by the bankruptcy of the 
 person upon whose property it exists. If the lien exists, and some further pro- 
 ceeding must be taken for the purpose of preserving it, such proceeding may be 
 taken by the lienor after the bankruptcy, as well as before; and the bankruptcy 
 court will then protect the rights of the lienor. But if there is no lien existing 
 at the time of filing the petition, although there may have then existed a right 
 10 acquire a lien, there is no valid lien which can be asserted against the trustee. 
 (Jn re Dey, 9 Blatch. 285; s. c. below, 3 Ben. 450; s. c. 3 B. R. 305.) In that 
 case it appeared that by the laws of the State of New Jersey the statutes pro- 
 vided that when a claim was filed by a person rendering services upon prem- 
 ises or buildings thereon, it constituted a lien, and became by relation a lien as 
 of the time of the commencement of the building, but inasmuch as until the 
 claim was filed the lien rested only in posse and was not a lien in esse, the court 
 held that it was not such a lien as could be enforced in bankruptcy, and that 
 the assignee must distribute the estate without preference to the claims of those 
 
380 THE NATIONAL BANKRUPTCY LAW. 
 
 Miscellaneous Liens Enforceable in Bankruptcy. [Ch. VII. 
 
 asserting this lien or right to a lien. And the foUonring cases were cited as 
 authorities in support of the general principle that a lien to be recognized by 
 the bankruptcy court as a valid lien on property must be a lien at the time of 
 the commencement of the proceedings in bankruptcy. (In re Bernstein, i B. 
 R. 199; in re Schnepf, i B. R. 190; in re Smith, I B. R. 599; Pennington v. 
 Sale, I B. R. 572; Jones v. Leach, i B. R. 595; in re Ellis, i B. R. 555; in re 
 Housberger, 2 B. R. 92.) In re Dey (above cited) was, however, distinguished 
 in re Coulter, 5 B. R. 64; s. c. 2 Saw. 42, by Judge Deady of the United States 
 District Court for the District of Oregon. In that case it was held that under 
 the laws of Oregon a mechanic's lien arises from the doing of the work or the 
 furnishing of the material and attaches to the building from that time, but upon 
 the condition that the lien creditor within three months from the completion of 
 the building shall file a notice of his intention to claim his lien. Under that 
 law it was held since the notice required to be filed did not create the lien, but 
 was necessary to preserve or continue it beyond three months after the comple- 
 tion of the building, the commencement of proceedings in bankruptcy between 
 the doing of the work or furnishing of material and the filing of such notice, 
 did not impair or affect the lien or the right of the lien creditor to continue it 
 by filing the notice. In re Brunquest, 14 B. R. 529, was a case which arose 
 in the Eastern District of Wisconsin, and the decision of the district court was 
 afterwards affirmed by the circuit court. In that case it appeared that the com- 
 mencement of a suit within a certain period after the filing of the lien was by 
 the State law necessary to its continuance, and the court in its opinion said: 
 " To preserve a statutory lien dependent for its continuing existence upon an 
 observance of terras of the statute, those terms must be complied with by per- 
 formance of the required act or its equivalent. The assignee, it is true, takes 
 the property subject to all liens thereon, but they must be kept valid and living 
 liens." * * * " Now, if these lien claimants had, in addition to filing their 
 petition, as the statute creating the liens required, commenced suits or done 
 that in this court which would be equivalent to suits for enforcement and to 
 prevent a lapse of such liens, so that they could be regarded as standing in the 
 position of mortgagees or lien claimants having subsisting, living liens upon 
 the property, then * » * these liens could be recognized, the amount 
 thereof ascertained and liquidated and the whole question as between these lieu 
 claimants and the bankrupt and the creditors of the bankrupt could be fully 
 adjusted." 
 
 Miscellaneous Liens Enforceable in Bankruptcy. — Wherever by State 
 
ESTATES. 381 
 
 § 67.] Liens Dissolved by Adjudication of Bankruptcy, etc. 
 
 law the lien of a vendor upon the property sold for the purchase price thereof is 
 recognized, there the court of bankruptcy will recognize and enforce such lien. 
 {In re Hutto, 3 B. R. 787.) So the lien of an attorney upon the papers of his 
 client which he has prepared will be recognized and enforced in bankruptcy; 
 and this notwithstanding the fact that by the terms of section 70 the books and 
 papers and documents relating to a bankrupt's property pass to the trustee. (In 
 re N. Y. Mail Steamship Co., 2 B. R. 74; Rogers v. Winsor, 6 B. R. 246.) So 
 the lien of a. pledgee is not only recognized, but is unimpaired, and he has the 
 right to retain the property until it is released by a payment of his claim; 
 (Jerome v. McCarter, 15 B. R. 546; Yeatman v. Savings Inst., 95 U. S. 764 
 Clark V. Iselin, 21 Wall. 360; s. c. 11 B. R. 337.) So the lien of a partner upon 
 the partnership property for the surplus which may be due to him after the 
 partnership debts have been paid, will be recognized by the bankruptcy court; 
 and if prior to the proceedings in bankruptcy a receiver has been appointed in 
 an action to dissolve the partnership and procure an accounting, and has taken 
 possession of the property, the possession of the State court through its officer 
 will not be disturbed. (Clark v. Bininger, 38 How. Pr. 341; s. c. 3 B. R. 518.) 
 So the lien which a bank may have upon the shares of its stockholders for the 
 payment of any indebtedness due by the stockholder is good as against the 
 trustee in bankruptcy of the latter. A bank has the power to establish a rule 
 providing that the shares of stockholders shall be considered as subject to a lien 
 for the unpaid indebtedness to it, but unless there is such an express rule or 
 statute, no such lien exists. (In re Dunkerson, 4 Biss. 227.) So a lessor's right 
 of distraint for rent may, by virtue of State statutes, be a lien enforceable in 
 bankruptcy. (Marshall v. Knox, 8 B. R. 97; s. c. 16 Wall. 551.) 
 
 Trustee Has No Interest in Lienors' Relative Riglits of Priority. — 
 
 Inasmuch as the trustee takes subject to all liens (with exception of those void- 
 able by this section) he cannot object to arrangements made between the vari- 
 ous lienors as to their respective rights of priority. He cannot object that one 
 of the lienors is entitled to payment in preference to the other, questions as to 
 priorities being entirely and exclusively questions affecting the lienors them- 
 selves. (Jeromes. McCarter, 15 B. R. 546; s. k.. 94 U. S. 734.) Compare, how- 
 ever, McLean v. Lafayette Bank, 3 McLean, 587. 
 
 Liens Dissolved by Adjudication of Bankruptcy and Liens Deemed 
 Null and Void. — The provisions of paragraphs c and / of this section make 
 the present statute greatly different from the former statute as to liens obtained 
 
382 THE NATIONAL BANKRUPTCY LAW. 
 
 Liens Dissolved by Adjudication of Banljruptcy, etc. [Ch. VII. 
 
 in or pursuant to legal proceedings. Under the former statute (R. S., § 5044, act 
 of 1867, § 14), it was provided that the assignment in bankruptcy should vest 
 in the assignee the title to all the bankrupt's property and estate, both real and 
 personal, although the same vpas then attached on mesne process, as the property 
 of the debtor, and that such assignment should dissolve any such attachment 
 made within four months next preceding the commencement of the bankruptcy 
 proceedings. All liens other than attachments and those which could be 
 avoided as preferential transfers were valid under the former act, even though 
 the lienor in obtaining his lien knew of the insolvency of his debtor. But it 
 will be noted that the present act in two paragraphs of this section, which bear 
 to each other a marked similarity, declares that the proceedings in bankruptcy 
 shall affect not only attachments, but judgments, levies and all other liens 
 created by or obtained pursuant to legal proceedings. Considered separately, 
 either of these paragraphs, though presenting many serious questions as to the 
 rights of such lienors, would not be impossible of construction; but it is difficult 
 to construe the two so as to make one apply to many cases not also affected by 
 the other. Paragraph / would seem to include, as a rule, nearly all cases which 
 might arise under paragraph c. It is possible that there might be some cases 
 arising under the third subdivision of the latter paragraph {c) which would not fall 
 within the terms of paragraph f, but aside from these possible instances the 
 liens which by paragraph c are declared to be dissolved by an adjudication in 
 bankruptcy if certain facts appear, would seem to be absolutely void under the 
 terms of paragraph / whether or not those facts existed. Both paragraphs 
 relate to the same subject-matter. Each is an enactment concerning judg- 
 ments, attachments, and, in general, all liens created by or obtained in or pursu- 
 ant to legal proceedings. Paragraph c, it will be noted, imposes certain 
 limitations as to the liens which will be dissolved by its terms, which do not 
 appear in the provisions of paragraph /. Thus, to dissolve a lien under the 
 terms of paragraph c it is necessary that it be one created pursuant to a legal 
 proceeding commenced within the four months prior to the filing of the petition. 
 If the action was commenced earlier, although the lien was perfected within the 
 four months, it would not be dissolved under the terms of paragraph c. But by 
 paragraph /, if the lien itself was obtained within four months, it is to be 
 deemed null and void. By paragraph c the liens which are dissolved are those 
 existing on the property of one thereafter adjudged bankrupt. By paragraph / 
 the lien which is to be deemed null and void must have been obtained against 
 one who was insolvent at the time of the lien. This fact, that insolvency at the 
 
ESTATES. 383 
 
 § 67.] Circumstances Under Which Dissolution of Liens Will Take Place. 
 
 time of obtaining the lien is not in express terms required to exist in all cases 
 in order that the subsequent adjudication may act as n. dissolution, possibly 
 makes certain liens liable to dissolution which could not be deemed null and 
 void under the terms of paragraph /, But inasmuch as at least two of the three 
 subdivisions of paragraph t, declaring in what instances the dissolution may 
 occur, require the existence of insolvency at the time of the creation of the lien, 
 the possible instances in which a lien may be dissolved but not deemed null 
 and void, are limited to those set up in subdivision three. If liens can be sought 
 and permitted in fraud of the provisions of the present bankruptcy act, when 
 the person upon whose property the lien is acquired is not insolvent, then such 
 liens would fall within the terms of 'paragraph c, but not of paragraph /. With 
 reference to the appearance in the present statute on bankruptcy of two para- 
 graphs so similar in their effect, it may be noted that in the House bill which, 
 with the changes made by the conference committee, became the present bank- 
 ruptcy law, paragraphs e and / of this section did not appear. Paragraph c was 
 the only paragraph or provision in that bill invalidating liens obtained through 
 legal proceedings, other than the provisions of section 60 invalidating preferen- 
 tial transfers. The word " transfer " in that bill included " the creation of a lien 
 on property by any means other than by compulsory process, prosecuted in 
 good faith." Paragraphs ^ and /of the present law, in substance, were section 
 7 of the Senate bill. It, therefore, appears that in the compromise between the 
 House and Senate the provisions of both bills were incorporated into the pres- 
 ent statute without any attempt to enact all the law upon the subject of the 
 invalidation or dissolution of liens obtained by legal proceedings, in one concise, 
 clear and comprehensive paragraph. 
 
 Circumstances under Which Dissolution of Liens Will Take Place. — 
 
 Nearly all of the words and phrases appearing in subdivisions i, 2, and 3 
 of paragraph ■ have been defined or discussed in previous sections. Compare 
 section 3, paragraph on Suffering or Permitting Preferences through Legal 
 Proceedings, as to the phrase " obtained and permitted." " Insolvency " has 
 been defined in section i (15). " Reasonable cause to believe that one is insolv- 
 ent " was considered under paragraph 60. The expression " in contemplation 
 of bankruptcy " was defined in section 14. The phrase " in fraud of the provi- 
 sions of this act " should now be considered. That phrase appeared in section 
 5128 of the Revised Statutes, transfers made " in fraud of the provisions of that 
 act " being voidable in the same manner as preferences. The general purpose 
 of the bankruptcy act is to insure the equitable /ri; rata distribution among cred- 
 
384 THE NATIONAL BANKRUPTCY LAW. 
 
 Proceedings to Annul and Proceedings to Dissolve. [Ch. VIL 
 
 itors of the property of one unable to pay all creditors in full. Anything which 
 is undertaken for the purpose of defeating this purpose must be considered as 
 a fraud upon the act. Courts are invariably reluctant about giving any exact 
 definition of the word " fraud," fearing that if a definition were framed it 
 would give an opportunity to the unscrupulous to commit fraud and yet upon 
 technicalities to escape punishment, enabling them to do acts which would be 
 fraudulent in spirit, although perhaps not within the letter of the definition. 
 Similarly the courts have been careful not to attempt to frame a comprehensive 
 definition for the phrase " in fraud of the provisions of this act," but have con- 
 tented themselves with determining for each particular case in which the ques- 
 tion arose whether or not the fraud existed. The answer must always depend 
 upon the special circumstances of each case. But under the old law acts to be 
 " in fraud of the provisions of the bankruptcy act " were not limited to cases 
 where the fraud was committed by one who was actually insolvent. Transfers 
 made by one in contemplation of bankruptcy, 01 in contemplation of insolvency, 
 if made with the intention to prevent an equitable and equal distribution of his 
 property among his creditors were frauds upon the act, and all such transfers 
 were void. It would seem difficult, even under the terms of the present act, to 
 deny that such transfers were frauds on the act, although acts done in contem- 
 plation of bankruptcy or in contemplation of insolvency are no longer causes 
 for adjudging one a bankrupt. It is true that an absolute transfer is not con- 
 sidered a preference unless it is made by one who is insolvent, even though 
 it contains all the other elements of a preference. If, however, it should be held 
 by the courts that there can be no fraud upon the provisions of this act except by 
 one who is insolvent, then it would seem that there is no lien which is dissolved 
 by the provisions of paragraph c, which is not also declared null and void by the 
 provisions of paragraph /. Compare the following cases decided under the 
 former act in which the question arose whether or not certain acts constituted 
 frauds upon the bankruptcy law. (Wager v. Hall, 16 Wall. 584; s. c. below, 5 B. 
 R. 181 ; s. c. 3 Biss. 28; Beattie v. Gardner, 4 B. R. 323; s. c. 2 Ben. 479; Toof 
 V. Martin, 13 Wall. 40; s. c. 6 B. R. 49; s. c. below, i Dill. 203; s. c. 4 B. R. 
 488: Buchanan v. Smith, 16 Wall. 277; s. c. 7 B. R. 513; s. c. below, 8 Blatch. 
 153; s. c. 4 B. R. 397; in re Black & Secor, i B. R. 353; s c. 2 Ben. 196; Foster 
 V. Hackley ,2 B. R. 406.) 
 
 Proceedings to Annul and Proceedings to Dissolve. — An examination 
 of the two paragraphs under discussion shows that while the adj adication in 
 bankruptcy seems per se to dissolve or annul the liens, yet in each case this 
 
ESTATES. 385 
 
 § 67.] Proceedings to Annul and Proceedings to Dissolve. 
 
 occurs only when some other facts appear. The facts which must appear in 
 order to make an adjudication of bankruptcy a dissolution of liens, are set forth 
 in detail under paragraph c. In contrast with paragraph c, it is to be noted that 
 under the terms of pararaph / nothing need be shown in order that the liens 
 obtained through legal proceedings shall be deemed null and void unless it be 
 the fact of the insolvency, at the time of the creation of the lien, of the 
 person on whose property the lien exists, and the subsequent adjudication in 
 bankruptcy. The intentions of the debtor, the intentions and the knowledge 
 or the reasonable cause of belief of the lienors, the effect of the enforcement of 
 the lien, and the motives of the parties, are all alike immaterial. The rule is 
 fixed and arbitrary that all liens obtained through legal proceedings against a 
 person who is insolvent, if obtained within four months prior to the filing of a 
 petition in bankruptcy against him shall be deemed null and void in case he is 
 adjudged a bankrupt. Congress evidently took it for granted that any lien 
 thus obtained must in fact be a preference. The only exception is that in the 
 proviso at the end of the section, saving the rights of bona fide purchasers for 
 value, who have purchased without notice and without reasonable cause for 
 inquiry. It might at firs^ seem as if under paragraph / no fact other than the 
 adjudication or those facts established by the adjudication need be shown in 
 order to make certain liens deemed null and void. But it is not to be for- 
 gotten that paragraph / refers only to liens obtained against a person who 
 is insolvent. Not all liens obtained against one afterwards and within four 
 months adjudged bankrupt are deemed null and void. It must appear 
 that the person whose property is subject to the lien was insolvent at the 
 time of the creation of the lien. It is evident a lien might be obtained 
 against one who is adjudged bankrupt within four months thereafter, but 
 who was not insolvent at the time the lien was obtained. The act of bank- 
 ruptcy and the insolvency might have occurred at some period subsequent to 
 the creation of the lien. If so, the adjudication of bankruptcy would in no way 
 determine whether or not the party was insolvent at the time the lien was 
 created. Conceding that by an adjudication of bankruptcy all liens obtained 
 against an insolvent within four months prior to the time of the filing of the 
 petition against him are to be deemed null and void, the fact remains that after 
 the adjudication there is still to be determined the further question of insolvency 
 at the time of the creation of the lien. So in cases of liens dissolved under the 
 terms of paragraph c, although the section declares that the adjudication in 
 bankruptcy shall act as a dissolution of the lien, it does so act only when one 
 
 NAT. BANKRUPTCY LAW — 25 
 
386 THE NATIONAL BANKRUPTCY LAW. 
 
 Proceedings to Annul and Proceedings to Dissolve. [Ch. VIL 
 
 or more other facts appear. Comparing these provisions with R. S,, § 5044 (act of 
 1867, § 14), it is to be noted that the sections o£ that law provided that the 
 assignment in bankruptcy should dissolve all attachments (obtained within four 
 months prior to the filing of the petition) which existed against the property of 
 one who was adjudged a bankrupt. It was not necessary to show any facts 
 other than the adjudication of bankruptcy. But the terms of the present law 
 necessitate the determination of certain other questions in a subsequent proceed- 
 ing or action. Whether that action should be brought in the bankruptcy court, 
 or should be in the court where the proceedings may be pending in which the 
 lien was obtained, is perhaps not free from question. If the property is in 
 the hands of an officer of the court, the proper practice would seem to be for the 
 trustee to intervene and make himself a party to the proceedings in which the 
 action is pending, and in which the lien was obtained. Compare Ballin v. 
 Ferst, 55 Geo. 546; Kent v. Downing, 10 B. R. 538; Johnson v. Bishop, i Wool- 
 worth, 324; s. c. 8 B. R. 533 ) In the last case it was held, under the provisions 
 of the former bankruptcy act, that where property had been attached by an 
 officer of the State court on mesne process within four months prior to the com- 
 mencement of proceedings in bankruptcy, the attachment was dissolved, but 
 that the assignee in bankruptcy must apply to the State court and not to the 
 Federal court to have the officer directed to turn over the property to the bank- 
 ruptcy court. In that case Mr. Justice Miller, in rendering the opinion of the 
 court, said: " If the matters set forth in the assignee's petition are true, the title 
 to the goods attached vested in the assignee as soon as the assignment to him 
 was executed, and with this title he acquired a right to immediate possession. 
 This possession he could recover in a court of justice; but to what court should 
 he apply? Had this property been in the possession of a party who could not 
 shelter himself behind the jurisdiction of a court of law, undoubtedly the Fed- 
 eral court would have had jurisdiction of the case. * * * But does the fact 
 that at the time the bankruptcy proceedings were instituted the property was 
 in the hands of the sheriff, under attachments issued out of the State courts 
 deprive the Federal court of its jurisdiction?" In answer to this query and to 
 the claim of the plaintiff in that action, which was that by reason of the attach- 
 ment being dissolved by the adjudication of bankruptcy, the officer of the 
 State court who had seized it under the attachment no longer had any authority to 
 hold it, and that the district court, on motion, could order the sheriff to surrender 
 the possession of the property to the assignee, Mr. Justice Miller observed- 
 It may be true that the attachments have ceased to have any binding force. 
 
ESTATES. 387 
 
 § 67.] Proceedings to Annul and Proceedings to Dissolve. 
 
 but whether they have or not is the question. And this question depends not 
 upon a proposition of law, but on two questions of fact, one of them being 
 whether there has been an adjudication of bankruptcy. Of that question of fact 
 the State court is not bound to take notice. It must be informed thereof by 
 pleadings, and if there is a denial of the allegations in the pleadings they must 
 be proven. The State court can have no knowledge or even notice of the pro- 
 ceedings in the bankruptcy court by which its right to possess and adjudicate 
 the property in question is affected. It should be informed in a proper way of 
 those proceedings before its possession 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. Information of the facts requiring a 
 surrender of the property by an officer of the State court should be communi- 
 cated to the court. 
 
 If it were true under the former act that the State court was in no way bound 
 to take notice of the fact of the adjudication of bankruptcy, and if it was neces- 
 sary that the fact be established in that court, much more does it seem neces- 
 sary under the present act that the facts which work a dissolution of a lien shall 
 be established in that court if the property is at the time held by an officer of 
 that court pursuant to a writ or process which issued from it. And if not in the 
 possession of a State court, if the facts making the lien dissolved or annulled 
 are denied, it would seem the questions could be litigated only in a formal 
 action. Compare Marshall v. Knox, 8 B. R. 97; s. c. 16 Wall. 551. Compare 
 also Valliant v, Childress, 21 Wall. 643; s. c. xi B. R. 317. But where a party 
 proceeds by writ of attachment and seizes the goods of his debtor and realizes 
 by judgment and sale under execution, the whole or part of his debt he is 
 liable to the trustee in bankruptcy of the debtor appointed under proceedings 
 instituted in the bankruptcy court within four months of the levy of the attach- 
 ment, though no appearance or defense was made by the trustee in the attach- 
 ment proceedings nor any attempt made to stay or arrest such proceedings. 
 (So held by the United States Circuit Court for Iowa in Bracken v. Johnston, 15 
 B. R. 106.) The language of the present act, though differing from that of the 
 former act would seem to make liens obtained through legal proceedings null 
 and void, in such a manner that no rights acquired under them other than the 
 rights of bona fide purchasers for value should possess any validity. Although 
 certain facts may have to be established in addition to the adjudication of bank- 
 ruptcy, when established they annul the lien and make it void from the adjudi- 
 cation, if not void ab initio. In giving the decision in Bracken v. Johnston, 
 
388 THE NATIONAL BANKRUPTCY LAW. 
 
 Conveyances and Encumbrances in Fraud of Creditors. [Ch. VIL 
 
 the court said that the language of section R. S. 5044 was intended to mean that 
 in the contingency mentioned — an adjudication of bankruptcy within four 
 months from the time of the attachment — the attachment is ipso facto d.i&. 
 solved, and the property attached becomes freed from the effects of the suit, 
 and that it requires no judicial proceedings to restore it to that condition. This 
 decision and the decision in Johnson v. Bishop were rendered by the same jus- 
 tice. In this connection another difference is to be noted between paragraph/ 
 of the section under consideration and section 5044 of the former act. That 
 difference is that in the present statute the provision is that the liens shall be 
 deemed null and void, while under the former act the provision (which was lim- 
 ited to liens by attachment) was that the lien should be dissolved. This change 
 is to be borne in mind in considering the rights and liabilities of the lienors, 
 and of oflScers executing the process by which the liens are created, and also in 
 determining the validity of all proceedings to enforce those liens, up to the 
 time of the adjudication upon these questions. Under the provisions of the 
 former act it was held (in re Housberger, 2 B. R. 92; ». c. 2 Ben. 504), that 
 where an attachment was dissolved by the commencement of proceedings in 
 bankruptcy, the title of the property attached vests in the assignee, but subject 
 to all subsisting liens then existing on the property, and that where the pro- 
 ceedings of a sheriff or other officer under an attachment up to the commence- 
 ment of proceedings in bankruptcy were regular and valid, he had a lien on the 
 property for his fees which accrued prior to such commencement, but to no 
 greater extent. This decision was put expressly upon the ground that the 
 attachment under the former act was not vacated or made void, but was simply 
 dissolved. That decision would undoubtedly be applicable to paragraph c, but 
 would not seem to be a fair construction of paragraph /. Compare also Dicker- 
 son V. Spaulding, 15 B. R. 313; s. c. 7 Hun, 288; James -v. Beach, i Mich. N. 
 P. 94. 
 
 Conveyances and Eneumbpanees in Fraud of Creditors. — An examin- 
 ation of paragraph e shows that the transfers and incumbrances therein declared 
 void are those made with an intent to hinder, delay or defraud creditors. The 
 provision that such transfers and incumbrances, if made within four months 
 prior to the filing of the petition shall be null and void, might seem to imply 
 that the trustee cannot bring action to invalidate any fraudulent transfers made 
 earlier than that time, but the right given to him by section 70 (4) is not in 
 express words limited but appears to be co-extensive with the right which cred- 
 itors prior to the bankruptcy proceedings had of invalidating fraudulent trans- 
 
ESTATES. 389 
 
 § 67.] Claims Void for Want of Record. 
 
 fers. We cannot persuade ourselves that Congress intended to limit this right 
 to a period of four months. To do so would be to make the bankruptcy law, 
 which was intended to defeat fraud and to protect creditors, an effectual instru- 
 ment to further fraud and to injure creditors. 
 
 What is true of the right to invalidate fraudulent transfers is equally true as 
 to the right to invalidate conveyances and incumbrances which are held null 
 and void by the laws of the State in which the transferred or incumbered prop- 
 erty is situated. Under the former act the question arose whether the right 
 given to a trustee to avoid preferential transfers if a petition in bankruptcy was 
 filed within four months, did not limit to the same period the trustee's right to 
 bring action to invalidate fraudulent transfers. There was nothing else in that 
 act as there is in this, implying that there was any intention on the part of Con- 
 gress to restrict a trustee's right to set aside fraudulent transfers. And it was 
 held that any statute or any construction of a statute denying to an assignee 
 the right to impeach fraudulent transfers would be repugnant to the purpose 
 and object of bankruptcy legislation. That is still so evident that we feel that 
 in the absence of any express provision denying the trustee's right to invalidate 
 fraudulent transfers, and in the absence of any statute expressly and absolutely 
 limiting this right, he is not prevented by the terms of section 67 (?) from invali- 
 dating any fraudulent transfers which creditors could have avoided. The only 
 limitation as to such actions is, we believe, the general statute of limitations. 
 On the subject compare Cookingham v. Ferguson, 8 Blatch. 488; Knowlton v. 
 Moseley, 105 Mass. 136; Bradshaw v. Klein, 2 Biss. 20; s. c. i B. R. 542; Hyde 
 V. Sontag, 8 B. R. 225; s. c. i Saw. 249. 
 
 Claims Void for Want of Record. — Paragraph u of this section as an 
 express statutory provision is new. Under the former act there was a conflict 
 of authority as to the effect upon the title of the assignee of unrecorded deeds 
 and incumbrances, even in those cases where such unrecorded deeds and incum- 
 brances were valid only between the parties to them. It would seem as if 
 under the. provision of paragraph a, a lien could be avoided only when it is 
 void as to all creditors, not in cases where it is void simply as to a particular 
 creditor or a particular class of creditors, but in cases of the latter kind ample 
 remedy is offered by the provision of paragraph b. As to the rights of parties 
 in sure cases under the act of 1867, compare Stewart v. Piatt, loi U. S. 731. 
 Compare also section 70, paragraph on Rights of Action Vesting in the Trustee 
 as the Representative of Creditors. 
 
390 THE NATIONAL BANKRUPTCY LAW. 
 
 The Lienor's Rights Not Increased by the Bankruptcy. [Ch. VII. 
 
 The Effect of Dissolving the Lien. — Nothing but the lien is affected by the 
 dissolution provided for by paragraph c. That paragraph provides that the Hen 
 shall be dissolved, but this does not affect the debt which the lien secures, nor 
 does it annul the process or judgment, nor act as a dismissal of the cause. A 
 judgment creditor may lose his lien upon the property passing to the trustee, 
 but his judgment continues to be a judgment establishing the indebtedness due 
 him and conclusive on all parties privy to it and their assigns; and it remains 
 unaffected, except as a lien, until the bankrupt is released from it by a dis- 
 charge. If not barred by a discharge there is no question but that the judg- 
 ment creditor can enforce it from the after-acquired property of the debtor. 
 (Bracken v. Johnston, 15 B. R. io6.) Whether the provisions of paragraph / 
 will annul the judgment to any greater extent, is doubtful. The language of 
 the paragraph would seem to indicate that all judgments recovered within the 
 four months were null and void, but on the other hand it is clear that only liens 
 are within the contemplation of the lawmakers. 
 
 Lienors are Secured Creditors. — Lienors fall within the expression 
 " secured creditor," as used in the statute. That expression is defined in 
 section i (23). As is there shown, it is necessary that in order that property 
 be considered " security " it shall be property of the bankrupt assignable 
 to his trustee. If it is property of another, or if it is exempt property, 
 then the creditor is not regarded as secured; he may prove his claim for the 
 full amount, and still resort to his security. If he proves in such a case for 
 the full amount, he is not deemed to have waived his security. {In re Dunker- 
 son, 12 B. R. 413; in re Cram, l B. R. 504; in re Broich, 15 B. R. II; in re 
 Anderson, 12 B. R. 502; in re Stillwell, 7 B. R. 226.) So a lienor or a secured 
 creditor need not prove his claim if he chooses to rely solely upon his security. 
 (Yeatman w. Savings Inst., 95 U. S. 764; compare notes to section 57 [A].) 
 But if a lienor does prove his claim without making mention of his Hen, he 
 is deemed to have waived his security if his security is property of the 
 bankrupt. (In re Granger & Sabin, 8 B. R. 30.) 
 
 The Lienor's Rights Not Increased by the Bankruptcy. — If a Hen is 
 
 dependent upon one's retaining possession, it is lost if the property is volun- 
 tarily surrendered to the trustee or to the debtor. (/« re Mitchell, 8 B. R. 47.) 
 But the surrender in order to terminate the lien must be made with intent to 
 surrender. Thus, if a note has been pledged to one as collateral, he may give it to 
 the pledgor to collect for his account, and his Hen then attaches to the proceeds. 
 
ESTATES. 391 
 
 g 68.] Set-offs and Counterclaims. 
 
 and can be asserted against the trustee if the funds come into the latter's 
 hands. (Clark v. Iselin, 9 B. R. 19; s. c. 10 Blatch. 204; s. c. affirmed, 11 B. 
 R. 337; s. c. 21 Wall. 360.) Further, if the lienor would have been obliged to 
 take any steps to preserve his lien as against the bankrupt, he is not excused 
 from taking the same steps as against the trustee in bankruptcy. Thus in 
 many States it is provided that a mechanic shall have a lien upon a building 
 upon which he performs labor, the lien to attach upon the completion of the 
 work, but that the same shall be dissolved unless a notice of the lien is filed within 
 a specified time. In such cases after proceedings in bankruptcy, the notice must be 
 filed. Although it is recognized by a court of bankruptcy, and though the trustee 
 takes subject to it, yet if it is not kept alive, he acquires an absolute title. The 
 lienor's rights are neither impaired nor increased by the bankruptcy. So, if the con- 
 tinuance of the lien depends upon the bringing of a suit within a fixed time, 
 such suit must be brought unless it is positively forbidden by the bankruptcy 
 law, in which case some equivalent proceeding must be taken in the bank- 
 ruptcy court. (/» re Brunquest, 14 B. R. 529.) 
 
 Cross-references. — As to the trustee's title being subject to all liens, 
 incumbrances and equities, compare section 70. As to the power of bankruptcy 
 courts to enforce the rights of lienors and secured creditors, and to restrain 
 lienors from enforcing their rights in other courts, compare section 2, para- 
 graph on Jurisdiction to Determine the Rights of Lienors. Compare also sec- 
 tion 57 (A), and notes thereto. As to sales of encumbered property free from 
 liens, compare section 47. 
 
 Sec. 68. Set-off's and Counterclaims. — a: In all cases of 
 mutual debts or mutual credits between the estate of a bankrupt 
 and a creditor the account shall be stated and one debt shall be 
 set off against the other, and the balance only shall be allowed or 
 paid. 
 
 b A set -off or counterclaim shall not be allowed in favor of any 
 debtor of the bankrupt which (i) is not provable against the 
 estate ; or (2) was purchased by or transferred to him after the 
 filing of the petition, or within four months before such filing, 
 with a view to such use and with knpwledge or notice that such 
 bankrupt was insolvent, or had committed an act of bankruptcy. 
 
392 THE NATIONAL BANKRUPTCY LAW. 
 
 Debts Which May Be Set-o£E. [Ch. VIL 
 
 Analogous Provisions of Former Acts. — 
 
 R. S., § 5073; act of 1867, § 20; act of 1841, § 5; act of 1800, § 42. 
 
 Section Declaratory of General Legal Principles. — In Sawyer v. Hoag^ 
 
 17 Wall. 610; s. c. 9 B. R. 145, it was said by the United States Supreme Courts 
 with reference to Revised Statutes, section 5073 (act of 1867, § 20), the section 
 analogous to the one now under consideration: " This section was not intended 
 to enlarge the doctrine of set-off, or to enable the party to make a set-off in 
 cases where the principles of legal or equitable set-off did not previously author- 
 ize it. The debts must be mutual; must be in the same right.'' It would be 
 well, in considering this statement, to consider also the provision of this section 
 which declares that claims which have been purchased within four months prio 
 to the filing of the petition, if purchased with a view to use them as set-offs and 
 with notice or knowledge of the insolvency of the debtor cannot be so used. That 
 provision impliedly enacts that claims purchased more than four months before 
 the filing of the petition may be used as set-offs, however much the use of the 
 claims as a set-off may tend to give one a preference over other creditors. It 
 has been observed by the New York Court of Appeals that equity does not allow 
 a set-off unless there is a recognized rule of law or a recognized equitable 
 reason that requires it. It does not interfere to declare either a set-off or a 
 stoppage unless there is one debt contracted on the faith of another, or an 
 agreement between the parties that one should be discounted from the other, or 
 unless there is a rule of law on which to base its action, or unless some inter- 
 vening equity that renders the interposition of the court necessary for the pro- 
 tection of the demand. Equity sometimes allows a set-off when law will not, 
 because of the insolvency of one of the debtors and the willingness of the other 
 to anticipate the time for the payment of the debt owing by him if the whole 
 or a part of that owing to him may be applied as a set-off. (Munger v. Albany 
 Bank, 85 N. Y. 580, citing with approval the above quotation from Sawyer v. 
 Hoag.) 
 
 Debts Wllich May Be Set-off. — The term " debt "must be construed in 
 accordance with the definition given in section i (ii) as including any debt, 
 demand or claim provable in bankruptcy. Any debt which may be proved, 
 and to the owner of which a dividend must be paid, may be a set-off against a 
 claim held by the bankrupt's estate. Consequently, a debt payable in future 
 may be a set-off against a debt payable in prasenti. (Collins v. Jones, 10 B. & 
 C. 777; ^xp. Wagstaff, 13 Ves. 65; Sheldon v. Rothschild, 8 Taunt. 157; Exp. 
 
ESTATES. 393 
 
 § 68.] Mutual Credits. 
 
 Prescott, I Atk. 230; Drake v. RoUo, 3 Biss. 273; s. c. 4 B. R. 689; in re City 
 Bank, 6 B. R. 71 ; Bittlestone v. Temmis, I C. B. 389.) If a debt payable in 
 futuro be owing by the bankrupt, it is clear that it is a debt provable under the 
 terms of the present statute, but it is no less a set-off if the debt payable in 
 futuro be one owing by the creditor to the bankrupt. There is no set-off of 
 unliquidated damages. (Bell v, Carey, 8 C. B. 887.) But where one who has 
 been injured by a tort has a right to waive the tort and sue in assumpsit, the 
 damages, if liquidated, may be set off against a. debt due to the tort feasor. 
 And under the present act, which permits the liquidation of all unliquidated 
 claims, doubtless damages for any tort could be set off against claims of the tort 
 feasor, even though it was not such a tort that one could sue upon an implied 
 contract. 
 
 Mutual Credits. — It has been said: " The term " mutual credits' in the 
 bankruptcy act has a more comprehensive meaning than the term ' mutual 
 debts ' in the statutes of set-off. The term credit is synonymous with trust, 
 and the trust need not be of money on both sides, but if one party intrusts the 
 other with goods or value, it will be a case of mutual credit." (In re Catlin, 3 
 B. R. 540, at 545; citing 7 Bac. Ab. 170; also citing Rose v. Hart, 8 Taunt. 499.) 
 In Rose v. Hart, which is one of the leading cases on the law of set-off, it was 
 ruled that where cloth was deposited with a fuller to dress, by a party who after- 
 wards became bankrupt, there was a case of mutual credit to the value of the 
 service for dressing the cloth, but not for a general balance due from the bank- 
 rupt, and in that case the general rule was laid down that the credits intended 
 by the act were only such as must, in their very nature, terminate in cross 
 debts. This rule has continued to be settled law from the time of that decision. 
 Applying this rule, it has been held that where a debt is due from one party and 
 credit is given by him on the other, for a sum of money payable at a future 
 date, and which will then become a debt; or where there is a debt owing by 
 one and a delivery of property by him to his creditor with directions to turn it 
 into money; or a delivery of a chose in action with power to collect, in all these 
 cases mutual credits spring up; but where there is a mere deposit of property 
 without authority to turn it into money, no debt can ever arise out of it, and 
 therefore it is not a credit within the meaning of the statute. Compare Murray 
 V. Riggs, 15 Johns. Rep. 571. The subject of mutual credits was also 
 exhaustively considered in re Dow, Ex p. Whiting, 14 B. R. 307, citing and 
 reviewing the following cases: Young v. Bank of Bengal, I Moore P. C. 150; s. 
 c. I Deac. 622; Naoroji v. Chartered Bank of India, L. R. 3 C. P. 444; Astley 
 
394 THE NATIONAL BANKRUPTCY LAW 
 
 Mutual Credits. [Ch. VII. 
 
 V. Gurney, L. R. 4 C. P. 714; American Notes to Rose v. Hart, 2 Smith's Lead. 
 Cas. ; McLaren v. Pennington, i Paige, 102; Receivers v. Paterson Gas Co., 23 
 N. J. 283; Aldrich v. Campbell, 70 Mass. 284; Clark v. Hawkins, 5 R. I. 219; 
 Medomac Bank v. Curtis. 24 Me. 36; Phelps v. Rice, 51 Mass. 128; Myers i;. 
 Day, 22 N. Y. 489; Morrison's Assignee v. Bright, 20 Mo. 298. A study of 
 these cases shows that the courts in the United States, following the English 
 courts, liberally construe the laws on the subject of set-off in the matter of mutual 
 credit in cases of bankruptcy and insolvency. The rule then, it is said, in re 
 Dow (supra), " is that a creditor, who at the time of 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 any debt whch the bankrupt owes him (at time of bankruptcy), and this 
 although the power to sell or collect would have been revocable by the bankrupt 
 before his bankruptcy; in other words, the very fact of bankruptcy, in such 
 cases, gives a sort of a lien which did not exist before." Before the decision 
 in Rose y. Hart, 8 Taunt. 499, set-off was admitted even where there was no 
 power of sale. Since that decision it has been settled law that set-off can be 
 had only when the mutual credits are such as must terminate in debts. 
 /Groom v. West, 8 Ad. & E. 758; Russell v. Bell, 8 Mees. & W. 277.) The case 
 of Young V. Bank of Bengal (supra) established as a limitation to the rule that 
 a. mutual credit arises if a creditor is intrusted by his debtor with goods to sell, 
 that if the right to sell does not arise until after the bankruptcy, then there is no set- 
 off for the surplus, for the reason that the assignee in bankruptcy may redeem 
 instantly and before any such power existed, and the creditors shall not be 
 prejudiced by any failure on his part to redeem. The rights of the parties are 
 fixed at the date of the bankruptcy; if the credit does not exist at that time, then 
 there can be no set-off. Applying these principles, it was held in re Dow 
 {supra), that where securities have been deposited with one as collateral to a 
 debt owing to him, with a power of sale existing at the time of bankruptcy, 
 notwithstanding there was a promise implied by law, if not express, to return 
 the surplus, yet such surplus might be set off against a debt due by the person 
 holding the collateral to the one depositing it; that a promise, even express, to 
 return the surplus did not prevent the surplus from being held and used as a 
 set-off unless the property had been intrusted to one for a particular purpose, 
 inconsistent with such application of the surplus, so that to retain it would be a 
 fraud or breach of trust. (/« re Dow, Ex p. Whiting, 14 B. R. 307; see also 
 cases cited therein, viz., Marks v. Barker, i Wash. 178; Eland v. Carr, i East, 
 
ESTATES. 395 
 
 ^ 68,] Knowledge of the Indebtedness and Intent to Give Credit Must Exist. 
 
 175; Mayor v. Nias, 8 Moore, 275; Cornforth v. Rivett, 2 M. & S. 510.) For 
 an instance of a deposit creating a trust, see in re Troy Woolen Co., 8 B. R. 
 412. 
 
 Entrusting Property to One for a Specific Purpose Does Not Create a 
 
 Mutual Credit. — To constitute mutual credits there must have actually been 
 a credit given by one with an understanding that it could or might be used as 
 an offset to a debt due by the one giving the credit. If property is intrusted 
 by one to another for a specific purpose, not with an intent lo create a debt, this 
 is no giving of a credit which can be set off. Compare Alsager v. Currie, 12 
 Mees. & W. 758. The bankruptcy act being intended to prevent fraud, will not 
 allow one to avail himself of an indebtedness created by his own wrongful 
 conduct, and set it up in reduction or as a payment of a claim due to him. 
 Thus, in England it has been held that an attorney with whom bills of exchange 
 have been deposited for a specific purpose cannot convert the proceeds to his 
 own use and claim that he retains them as a payment on a debt due to him. 
 Buchanan v. Findley, g B. & C. 738. 
 
 The matter of " mutual credit " was considered in the case of Libby v. Hop- 
 kins, 104 U. S. 303. The facts in that case were that A being indebted to B 
 upon a note secured by a mortgage, and also upon account, sent to B money 
 with instructions to credit it upon the note. Afterwards A was adjudged a 
 bankrupt. The U. S. Supreme Court in this case held that the money which B 
 received was received in trust by him to apply it pursuant to certain instruc- 
 tions, and that having refused to make such application of the funds, he could 
 not set it off against the account, but was liable to the assignee in bankruptcy 
 for the amount received by him. The money was sent by A to B in the form of 
 drafts, and the contention of plaintiff was that this was a deposit of property on 
 one side with authority to turn it into money, and that that authority enabled 
 him to retain the money and incur by so doing an indebtedness, which could be 
 offset against his claim. The court disapproving of this contention, laid down 
 the rule that the term " mutual credits " includes only such where a debt might 
 have been within the contemplation of the parties; citing and approving Smith 
 V. Hodson, 4 T. R. 211 ; Esen v. Cato, 5 Barn. & Aid. 261 ; Rose v. Hart (supra); 
 Easman v. Cato, 5 Barn. & Aid. 861 ; ex p. Ockendon, i Atk. 235; and criticising 
 the dictum of Lord Hardwick, in Ex p. Deeze, i Atk. 228, to the effect that the 
 words ■• mutual credit" have a larger meaning than " mutual debts." 
 
 Knowledge of the Indebtedness and Intent to Give Credit Must Exist. 
 — Mutual credits do not exist where there is not a connection between the 
 
396 THE NATIONAL BANKRUPTCY LAW. 
 
 Debts Must Be in the Same Right. [Ch. VIL 
 
 claims. A mutual credit is a knowledge on both sides of an existing debt due 
 to one party and a credit by the other party founded on and trusting to that 
 debt as a means of discharging it. (Hunger v. Albany Bank, 85 N. Y. 
 580; Exp. Prescott, 1 Atk. 231; Key z/. Flint, 8 Taunt. 23.) Applying this 
 principle, it has been held that where the same persons constituted separate 
 firms doing business under different names, if a party has a credit with one firm 
 and an indebtedness with the other, the indebtedness due to the latter cannot 
 be set off against the credit with the former unless the party knew that both 
 firms were composed of the same persons, and the course of business between 
 him and them showed that his transactions with each firm were considered as 
 having a connection. (Sparhawk v. Drexel, 12 B. R. 450.) 
 
 Debts Must Be in the Same Right. — Mutual debts must be in the same 
 right. To be mutual, debts between parties must be owing to and be due in 
 the same rights and capacities. (West v. Pryer, 2 Bing. N. C. 455; Ex p. 
 Bailey, i M. D. & D. 263.) Thus, a debt due one as a guardian or trustee can- 
 not be set off against a debt due him individually. (Bishop v. Church, 3 
 Atk. 5io.) And upon the principle that the capital of a corporation is a trust 
 fund for the payment of the debts due to general creditors, it has been held that 
 one could not set off an indebtedness due to him personally against a claim for 
 an unpaid subscription to the stock. And where to evade this liability he had 
 made a nominal payment of his subscription, but at the same time had with- 
 drawn an equivalent amount from the company's treasury as a loan and given 
 his note therefor, the purpose being to turn the stock liability into a contract 
 liability, the whole transaction was held to be fraudulent. (Sawyer v. Hoag, 
 17 Wall. 610; s. c. 9 B. R. 145; followed in Jenkins v. Armour, 6 Biss. 312; s. 
 c. 14 B. R. 276; see also Drake v. Rollo, 3 Biss. 276; s. c. 4 B. R. 689; Scam- 
 mon V. Kimball, 5 Biss. 431; s. c. 8 B. R. 337.) The cases just cited not only 
 authoritatively established the principle that trust debts cannot be set off against 
 individual claims, but also show that all debts incurred between parties in the 
 same rights and capacities are subject to set-off. Thus, in Drake v. Rollo, and 
 Scammon v. Kimball, while the court refused to allow a set-off of <t personal 
 claim against an indebtedness upon an unpaid stock subscription, in each of 
 these cases personal claims were set off against personal debts. Claims for 
 indemnity under insurance policies were allowed as set offs against debts for 
 money borrowed in good faith. But where the money was loaned with the intent 
 to change the liability of the stockholder as one of the trustees of the capital 
 for the benefit of general creditors into a mere contract liability, claims for 
 
ESTATES. 397 
 
 § 68.] Set-off of Joint and Partnership Claims Against Individual Indebtedness. 
 
 indemnity under insurance policies were not allowed to be set off against notes 
 given for the purpose stated. So where the ownership of a. claim is merely- 
 nominal and no more than a bare legal title, and not an actual interest, it cannot 
 be set off against a debt due by the owner having this bare legal title. (In re 
 Lane, 2 Low. 305.) 
 
 Set-off Of Joint and Partnership Claims Against Individual Indebted- 
 ness. — One who has a claim against several persons jointly and owes one of 
 them individually may set off his claim against his indebtedness against the 
 estate of either of the joint debtors who may become bankrupt. The fact that 
 it may be subject to be marshaled makes no difference. The joint debtors are 
 liable in solido for the whole debt. (Tucker v. Oxley, 5 Cranch, 34.) But a joint 
 claim, that is, a debt due to several joint creditors, cannot, it seems, be set off 
 against a debt due by one of them. Thus, if the debt is due to A and B it 
 cannot be appropriated to pay the indebtedness of A to the common debtor. 
 The debtor who has incurred an indebtedness to several persons jointly cannot 
 discharge it by setting up a claim which he has against one of those persons, if 
 the others have no concern with his claim and cannot be affected by it. No 
 more can one of several joint creditors, against whom an action is brought by 
 the common debtor upon a claim which the latter has against him, use the joint 
 claim as an offset to his own debt, for he has no right thus to appropriate it. 
 Equity will not permit him to pay his individual debt out of the joint property, 
 and if he had the assent of his co-obligees to do this, it would be unjust to the 
 suing debtor because he has no reciprocal right to do the same thing. So held 
 in Gray v. RoUo, 18 Wall. 629; s. c. 9 B. R. 337, citing and distinguishing 
 Tucker v. Oxley, 5 Cranch, 34. The facts in the case of Gray v. RoUo, to which 
 the doctrine jusl stated was applied, were as follows: A and B were joint makers 
 of certain notes which were transferred to an insurance company. B and C 
 held policies in the same company which became due in consequence of loss by 
 fire. The company afterwards becoming bankrupt, its assignee claimed the 
 full amount of the notes from A and B. B sought to set off against his half of 
 the liability the claim due to him and C on the policies of insurance, the latter 
 consenting thereto. But it was held in accordance with the principles above 
 stated that the two obligations had not been contracted with reference to each 
 other, and hence it was not a proper case for set-off. 
 
 Compare on the subject of the offset of partnership debts against individual 
 debts, Exp. Twogood, 11 Ves. 517; Exp. Christie, 10 Ves. 105; Exp. Hanson, 
 12 Ves. 346; Ex p Stephens, 11 Ves. 24. 
 
398 THE NATIONAL BANKRUPTCY LAW. 
 
 Claims Purchased After Filing Petition or Within Four Months Prior. [Ch. VIL 
 
 Claims Purchased After the Filing of the Petition or Within Four 
 Months Prior Thereto. — Under the present act, if a claim has been purchased 
 by the debtor of the bankrupt after the filing of the petition or within four 
 months prior to that time, it cannot be used as a set-off if it was procured with 
 a view to such use and with knowledge or notice that such bankrupt was 
 insolvent or had committed an act of bankruptcy. The intent or " view to such 
 use " and the knowledge or notice of the act of bankruptcy or of insolvency 
 must concur or else the claim can be used as a set-off. Strictly construed, the 
 language of the section would permit a debt purchased after the filing of a 
 petition to be used as a set-off, unless purchased with the '' view to such use," 
 but to allow such a set-off would certainly seem to be inconsistent with the pur- 
 pose and policy of the bankrupt act, and would open the gates to the obtaining 
 of improper advantages. The commencement of the proceedings in bankruptcy 
 is in law notice to all the world, and if all persons are chargeable with this 
 notice, it would follow that any purchase of a claim made after that time must 
 be admitted to have been made with a view to use it as a set-off. The 
 rights of all parties, it must be conceded, are fixed at the time of the petition. 
 (In re Dow; Exp. Whiting, 14 B. R. 307; Young v. Bank of Bengal, i Moore, 
 P. C. 150; 3. t. I Deacon, 622; Dickson v. Evans, 6 T. R. 57; Marsh v. Cham- 
 bers, Strange, 1234.) Unless the credit then exists there can be no set-off. 
 After the filing of the petition the rights of creditors of the bankrupt cannot be 
 enlarged. If a set off then exists against a creditor's claim, any subsequent 
 assignee takes subject to that equity. This is true even if the assigned 
 chose be a negotiable instrument not yet due, and though it be taken 
 in good faith and for value and without notice or knowledge of the set 
 off. The petition in bankruptcy is notice to all the world of the com- 
 mencement of the proceedings. The note is subject to the same offsets when 
 in the hands of the indorsee, as existed against the one who held it at the time 
 of the commencement of the proceedings, and it cannot be set off by an indorsee 
 who took it after petition was filed, against a claim of the bankrupt against the 
 indorsee. (Smith v. Brinkerhoff, 6 N. Y. 305; s. c. below, 18 Barb. 519; 
 Humphries w. Blight, 4 Dill. 370; s. c. i Wash. C. C. 44. To same effect, Dick- 
 son V. Evans, 6 T. R. 57.) But the indorsee is subrogated to the rights of the 
 indorser, and can prove the claim in his name and be allowed what the indorsee 
 would have been allowed. {Exp. Atkins, Buch. 479; Exp. Rogers, Buch. 490. 
 In the original act of 1867, section 20, it was provided that no set-off should be 
 allowed in favor of a creditor of the bankrupt of a claim in its nature not prov- 
 
ESTATES. 399 
 
 § 68.] Claims Purchased After Filing Petition or Within Four Months Prior. 
 
 able against the estate of the bankrupt or of a claim purchased by one or trans- 
 ferred to him after the filing of the petition. When this section was embodied 
 in the Revised Statutes (section 5073), there was added to it a clause that no set- 
 off should be allowed in favor of a debtor upon a claim purchased by him or 
 transferred to him in cases of compulsory bankruptcy after the act of bank- 
 ruptcy upon or in respect to which the adjudication shall be made, and with a 
 view of making such set-ofit. Before that amendment was made it was held in 
 re City Bank, 6 B. R. 71, and in Hovey v. Insurance Co., 10 B. R. 224, that a 
 debt of one who was insolvent which was purchased by his debtor immediately 
 prior to the filing of the petition in bankruptcy and purchased in order to use 
 the same as an offset against his indebtedness, is protected by the bankruptcy 
 act, inasmuch as that act (the original act of 1867) only forbade the set-off of 
 claims purchased after the petition was filed. Compare Hawkins v. Whittier, 
 10 B. & P. 217; Dickson v. Cast, i B. & Ad. 343. Contrary to in re City Bank 
 and Hovey v. Ins. Co. was Hitchcock v. Rollo, 4 B. R. 689; s. c. 3 Biss. 276, 
 holding that where one purchased a claim with knowledge of the insolvency of 
 the debtor, and with a view to use it as a set-off, it could not be considered a 
 case of mutual credit, and that the allowance of such purchased claim as a set- 
 off against a pre-existing indebtedness would be inequitable and would act in a 
 manner contrary to the manifest spirit and intent of the bankruptcy act, and 
 that set-off would be allowed in bankruptcy only where one had good grounds for 
 equitable relief. It was further held that the bankruptcy act should be so con- 
 strued as to further its manifest purpose of an equitable pro rata distribution of 
 the bankrupt's assets, and not in such a manner as to permit one creditor to 
 obtain an advantage by purchasing a claim and using it as an offset. See the 
 following cases and authorities cited in Hitchcock v. Rollo: Smith v. Hill, 8 
 Gray, 572; Hilliard on Bankruptcy, 224; Avery & Hobbs on Bankruptcy, 157; 
 Waterman on Set-off, 141. Compare the following cases under the English 
 act: Hawkins v. Whitten, 10 Barn. & Cress. 217, 21 Eng. Com. Law. lo; Fair 
 V. Mclver, 16 East, 130; Jakington v. Combes, 6 Bing. 71, 37 Eng. Com. Law. 
 51; Howe V. Stow, 3 Allen, 113. See also Ogden v. Coweley, 2 Johns. 274; 
 Dickson V. Evans, 6 Term Rep. 57; Smith v. Brinkerhoff, 8 Barb. 519. 
 
 Under the present act the question cannot arise except in the cases of claims 
 purchased more than four months prior to the filing of the petition. With 
 reference to these cases, the decisions in Hovey v. Insurance Co. and in re City 
 Bank seem to us to lay down the correct rule of law. Notwithstanding the 
 dictum in Sawyer v. Hoag (17 Wall. 610), to the effect that the section was not 
 
400 THE NATIONAL BANKRUPTCY LAW. 
 
 Claims of a Provable Nature and Claims Which Can Be Proved. [Ch. VIL 
 
 intended to enlarge the doctrine of set-ofi, it seems evident that the fixing of the 
 period of four months evidenced an intent on the part of Congress to permit 
 all assignments of claims before that time to be set off against existing indebted- 
 ness, notwithstanding they might have been taken with full knowledge of the 
 insolvency of the debtor, and for the purpose of using them as an offset. Just 
 as the law refuses to avoid preferential transfers made more than four months 
 prior to filing the petition in bankruptcy, it does not intend to inquire into the 
 equities of assignments and purchases of claims made more than four months 
 before that time. For a complete history of the provisions as to set-off, in the 
 successive English and American statutes, consult the brief of Hitchcock, attor- 
 ney pro se, in Hitchcock v. Rollo, as reported in 4 B. R. at 692; and also briefs 
 of opposing attorneys. 
 
 Banker's Right to Offset Loans Against Deposits. — The relation 
 
 between a banker and a depositor is that of debtor and creditor. Hence a 
 banker may offset the debt due to him on loans, overdrafts, or otherwise against 
 deposits which are made with him. (In re Bank of Madison, g B. R. 184; in re 
 Petrie, 7 B. R. 332; Denman v. Boylston, 5 Cush. 194.) So if the banker has 
 received drafts for collection the proceeds of which afterwards came into his 
 hands, he may offset them against debts due to him. {In re Farnsworth, 14 
 B. R. 148.) In Traders' Bank v. Campbell, 14 Wall. 87; s. c. 6 B. R. 353, it 
 appeared that insolvents upon the eve of bankruptcy gave to their banker a 
 check upon funds to their credit in that bank to apply upon the indebtedness 
 due to the bank, although the banker and the bankrupts knew of the insolvency 
 of the latter. The Supreme Court held the transaction to be a preference and 
 voidable by the assignee in bankruptcy and that he had the right to recover 
 the amount so paid, and further held that although possibly had the bank stood 
 upon its right of offset, that right might have been available to them, yet when 
 they treated the money as the bankrupt's own property, taking his check and 
 crediting the amount as a payment on the indebtedness, the transaction became 
 a voidable preference. 
 
 Claims of a Provable Nature and Claims Which Can Be Proved. — 
 
 There is a distinction between claims provable in their nature and claims which 
 can be proved. A claim may be of the former character and yet because of lack 
 of evidence not fall within the last category. (In re Kingsley, i B. R. 329; s. c. 
 I Low. 216.) Between the language of the old act and of the present this differ- 
 ence is to be noted; the former act provided that claims in their nature provable 
 
ESTATES. 401 
 
 §69.] Possession of Property. 
 
 can be set oB against a debt due the bankrupt. The present act says provable 
 claims. Whether a provable claim is the same as a claim provable in its 
 nature quare ; we think the terms are synonymous. Under the former act it 
 was held that where a debtor of the bankrupt was also a creditor holding a 
 claim upon which he had attempted to obtain a preference, which, under that 
 act, debarred him from proving his claim, he could, however, use it as a set-ofi 
 because it was provable in its nature. (Clark v. Iselin, 21 Wall. 360; s. c. 11 
 B. R. 337; s. t. below, 10 Blatch. 204; s. t. 9 B. R. 19.) 
 
 Waiver of Set-off. — Under the former act, it was held that a creditor who, 
 in making proof of his claim in bankruptcy, fails to show that the bankrupt has 
 an unsatisfied claim against him, cannot when sued by the trustee in ban]E- 
 ruptcy on the unsatisfied claim which he omitted to make mention of in his 
 proof, plead as a set>off the amount at which his claim was allowed. (Russell 
 V. Owen, 61 Mo. 185; s. c. 15 B. R. 322, citing Brown v. Bank, 6 Bush [Ky.] 
 198.) The decision in that case was placed upon the provision of the statute 
 prohibiting one who had proved a claim in bankruptcy from bringing any 
 action or suit to enforce it; an express provision not contained in the present 
 law. The court considered the pleading of an offset as a defense, the equiva- 
 lent of bringing an action upon it. 
 
 Sec. 69. Possession of Property. — a A judge may, upon 
 satisfactory proof, by affidavit, that a bankrupt against whom an 
 involuntary petition has been filed and is pending has committed 
 an act of bankruptcy, or has neglected or is neglecting, or is about 
 to so neglect his property that it has thereby deteriorated or is 
 thereby deteriorating or is about thereby to deteriorate in value, 
 issue a warrant to the marshal to seize and hold it subject to fur- 
 ther prders. Before such warrant is issued the petitioners apply- 
 ing therefor shall enter into a bond in such an amount as the 
 judge shall fix, with such sureties as he shall approve, conditioned 
 to indemnify such bankrupt for such damages as he shall sustain 
 in the event such seizure shall prove to have been wrongfully 
 obtained. Such property shall be released, if such bankrupt shall 
 give bond in a sum which shall be fixed by the judge, with such 
 sureties as he shall approve, conditioned to turn over such prop- 
 
 NAT. BANKRUPTCY LAW — 26 
 
402 THE NATIONAL BANKRUPTCY LAW. 
 
 Marshal's Liability in Serving the Warrant. [Ch. VII. 
 
 erty, or pay the value thereof in money to the trustee, in the 
 event he is adjudged a bankrupt pursuant to such petition. 
 
 Analogous Provisions of Former Acts. — 
 R. S. § 5024; act of 1867, § 40 
 
 Taking Possession of the Property. — The remedy provided for in this 
 section is provisional. It can be used only during the pendency of the petition, 
 and it is limited to cases where there is a neglect by the alleged bankrupt of bis 
 property, causing a deterioration thereof. It does not in express terms authorize 
 the seizure of property upon the ground that the bankrupt is about to remove 
 the same, or to conceal it, or to preferentially transfer it; neither is there any 
 authority under this act as under the former act for arresting one against whom 
 a petition has been filed, because of attempts to remove, or conceal, or fraudu- 
 lently to dispose of his property. The provisions requiring the giving of a bond 
 are new. The section should be read in connection with section 3 (e). 
 
 marshal's Liability in Serving the Warrant. — If the warrant is in gen. 
 eral terms to seize and take possession of the property of the bankrupt, it will 
 be the duty of the marshal to take possession of all the assignable property and 
 effects of the bankrupt. The responsibility of determining the ownership of 
 seized property rests upon him. He must determine for himself whether or 
 not the property which he takes is the property of the bankrupt or of another. 
 If he should seize the property of another, although he acts in good faith, he is 
 liable to the injured party for any damages which the latter may sustain. The 
 warrant is no protection to him in seizing the property of any person other than 
 the bankrupt. (Marsh v. Armstrong, 11 B. R. 125; s. c. 20 Minn. 81; in re Mul- 
 ler V. Brentano, 3 B. R. 329; s. c. Deady, 513. Compare, however, in re Vogel, 
 7 Blatch. 18; s. c. 3 B. R. 198; in re Havens, 8 Ben. 309; in re Marks, 2 B. R. 575. 
 
 The weight of authority is that he cannot seize property belonging to a person 
 other than the debtor, even although the transfer to the latter by the bankrupt 
 may be one voidable under the bankruptcy act. The bankruptcy court has no 
 authority under such a provisional warrant to order the seizure of property from 
 such transferee. Until the adjudication at least the title of the transferee 
 will not be questioned. {In re Harthill, 4 Ben. 448; Doyle v. Sharp, 34 Hun [N. 
 Y.] 312, Compare, however, to the contrary, Stevenson v. McLaren, 14 B. R. 
 403, citing Bolander v. Gentry, 36 Cal. 105; Hanson v. Herrick, 100 Mass. 323; 
 
ESTATES. 403 
 
 § 70.] Title to Property. 
 
 and in re MuUer & Bretano, supra; Foster v. Hackley, 2 B. R. 406; in re Huss- 
 man, 2 B. R. 437; in re Briggs, 3 B. R. 638.) 
 
 Sec. 70. Title to Property. — a The trustee of the estate of a 
 bankrupt, upon his appointment and qualification, and his suc- 
 cessor or successors, if he shall have one or more, upon his or their 
 appointment and qualification, shall in turn be vested by opera- 
 tion of law with the title of the bankrupt, as of the date he was 
 adjudged a bankrupt, except in so far as it is to property which 
 is exempt, to all (i) documents relating to his property ; (2) inter- 
 ests in patents, patent rights, copyrights, and trade-marks; 
 
 (3) powers which he might have exercised for his own benefit, but 
 not those which he might have exercised for some other person ; 
 
 (4) property transferred by him in fraud of his creditors ; (5) prop- 
 erty which prior to the filing of the petition he could by any 
 means have transferred or which might have been levied upon and 
 sold under judicial process against him : Provided, That when any 
 bankrupt shall have any insurance policy which has a cash sur- 
 render value payable to himself, his estate, or personal representa- 
 tives, he may, within thirty days after the cash surrender value 
 has been ascertained and stated to the trustee by the company 
 issuing the same, pay or secure to the trustee the sum so ascer- 
 tained and stated, and continue to hold, own, and carry such 
 policy free from the claims of the creditors participating in the 
 distribution of his estate under the bankruptcy proceedings, other- 
 wise the policy shall pass to the trustee as assets ; and (6) rights 
 of action arising upon contracts or from the unlawful taking or 
 detention of, or injury to, his property. 
 
 b All real and personal property belonging to bankrupt estates 
 shall be appraised by three disinterested appraisers ; they shall be 
 appointed by, and report to, the court. Real and personal prop- 
 erty shall, when practicable, be sold subject to the approval of 
 the court; it shall not be sold otherwise than subject to the 
 approval of the court for less then seventy -five per centum of its 
 appraised value. 
 
404 THE NATIONAL BANKRUPTCY LAW. 
 
 Date as of Which the Trustee's Title Vests. [Ch. VII. 
 
 c The title to property of a bankrupt estate which has been 
 sold, as herein provided, shall be conveyed to the purchaser by 
 the trustee. 
 
 d Whenever a composition shall be set aside, or discharge 
 revoked, the trustee shall, upon his appointment and qualification, 
 be vested as herein provided with the title to all of the property 
 of the bankrupt as of the date of the final decree setting aside the 
 composition or revoking the discharge. 
 
 e The trustee may avoid any transfer by the bankrupt of his 
 property which any creditor of such bankrupt might have avoided, 
 and may recover the property so transferred, or its value, from 
 the person to whom it was transferred, unless he was a bona fide 
 holder for value prior to the date of the adjudication. Such 
 property may be recovered or its value collected from whoever 
 may have received it, except a bona fide holder for value. 
 
 f Upon the confirmation of a composition offered by a bank- 
 rupt, the title to his property shall thereupon revest in him. 
 
 Analogous Provisions of Former Acts. — 
 
 As to property in general passing to the trustee: R. S., section 5044; act of 
 1867, section 14; act of 1841, section 3; act of 1800, sections lo, 11, 17, 27, 50. 
 As to rights of action, patent rights, copyrights, and kindred rights, and the right 
 to recover property fraudulently conveyed: R. S., section 5046; act of 1867, 
 section 14; act of 1841, section 3; act of 1800, sections 13, 17. 
 
 Date as of Which the Trustee's Title Vests. — The act of 1867, section 14, 
 R. S. section 5044, provided that after the adjudication the register should 
 execute a written assignment of the estate of the bankrupt to the assignee and 
 " such assignment should relate back to the commencement of the proceedings 
 in bankruptcy and by operation of law should vest the title to all such property 
 and estate, both real and personal, in the assignee." Under the act of 1841, there 
 was much conflict of authority as to whether the assignee's title related back 
 earlier than the decree. The provisions of the present act as to time of the vesting 
 of the title are somewhat peculiar, since the general provision is that the assignee 
 shall be vested by operation of law with the title of the bankrupt as of the date he 
 was adjudged a bankrupt ; and yet subdivision (5) provides that he shall be vested 
 
ESTATES. 405 
 
 6 70.] Date as of Which the Trustee's Title Vests. 
 
 with title to all property which prior to the filing of the petition the bankrupt 
 could by any means have transferred or which might have been levied upon or 
 sold under judicial process against him. The two provisions, at first, seem 
 difficult to reconcile. The statement of the framers of the bill may be of aid in 
 ascertaining their intention. In submitting its report to the Fifty-fourth Con- 
 gress (House Report, number 1228), the judiciary committee said with reference 
 to section 70 of House Bill, number 8110, the provisions of which as to the 
 trustee's title were the same as those of the present law: " Under section 70 an 
 important change has been made from the former laws, as well as from proposed 
 legislation. Under the act of 1867, as interpreted by the courts, it was held that 
 the title to the bankrupt's property vested by operation of law as of the date of 
 the filing of the petition. By the proposed bill it is provided that the trustee 
 shall be vested with the title of the bankrupt as of the date he was adjudged a 
 ■bankrupt. By this change the alleged bankrupt can sell and convey a perfect 
 title up to the date of the adjudication, and the purchaser does not buy at his 
 own risk and in danger of having secured an imperfect title by reason of an 
 adjudication which may be made subsequent to the purchase. It does not follow 
 that because a petition is filed against a person in a bankruptcy court he will be 
 adjudged a bankrupt, and it seems but proper that the public in dealing with 
 him until he is adjudged a bankrupt should deal without fear of loss or danger 
 as to title. It may be suggested that this is too liberal a provision, and that the 
 bankrupt may neglect his business or estate as soon as bankruptcy proceedings 
 are commenced against him, and that he may allow it to deteriorate in value. 
 But this is provided for in section 69, where it is provided that ' a judge may, 
 upon satisfactory proof, by affidavit, that a bankrupt against whom an involun- 
 tary petition has been filed and is pending has committed an act of bankruptcy, 
 or has neglected, or is neglecting, or is about to so neglect his property, that it 
 has thereby deteriorated, or is thereby deteriorating, or is about thereby to 
 deteriorate in value, issue a warrant to the marshal to seize and hold it subject 
 to further orders.' " Whether, indeed, the provisions of section 69 are adequate 
 to protect the bankrupt's estate, is a question as to which there may be some 
 dispute; but to us they would seem to be totally inadequate. They may be 
 sufficient to prevent a deterioration of the property while it remains in the hands 
 of the bankrupt; it can hardly be said that they will restrain a conveyance 
 which one may wish to make. Greater protection will, we think, be found in 
 an application for a receivership under the provisions of section 2 (3). But what- 
 ever means are afforded by the statute for the preservation of the property 
 
406 THE NATIONAL BANKRUPTCY LAW. 
 
 Bankrupt's Title and Interest After the Adjudication. [Ch. VII. 
 
 it is clear that the bankrupt's title is divested as of the date of the adjudica- 
 tion ; but only property owned at the time of the petition passes to the trustee. 
 
 Bankrupt's Title and Interest After the Adjudication and Before the 
 Appointment of the Trustee. — The trustee's title, it thus appears, under 
 the present act, does not relate back beyond the time of the decree. But 
 although his appointment may be some time subsequent to the adjudication, 
 when once appointed his title does relate back to the time of the adjudication in 
 such a manner as to make any transfer by the bankrupt after that date a nullity. 
 Even after the adjudication until the appointment of the trustee, the title 
 remains in the bankrupt. The decree itself does not, as under the act of 1841, 
 divest the bankrupt's title. Its date, however, marks the point of time to 
 which the title subsequently acquired by the assignee relates back. The title 
 of the bankrupt in the interval between the adjudication and the appointment 
 exists, but is defeasible; and when the appointment of the trustee is made it is 
 divested as of the time of the adjudication. All titles derived under or through 
 him subsequent to that date are by force of law, and without regard to the knowl- 
 edge or the motives of the one claiming title, overreached and defeated. (Com- 
 pare Connor ii. Long, 104 U. S. 228; citing Bank v. Sherman, loi U. S. 403; 
 also Hampton v. Rouse, 22 Wall. 263.) In the case last ciled (Hampton v. Rouse), 
 it was held that after the adjudication, but before the assignment, the bank- 
 rupt retained such title that he had authority to redeem real estate belonging 
 to him, from a sale for taxes. This defeasible title which the bankrupt has 
 between the adjudication and the appointment of the trustee exists in the case 
 of personal property as well as of real estate, and likewise the trustee's title as 
 to such property when acquired relates back to the date of the adjudication. 
 Hence it has been held that if payments are made by a debtor of the bankrupt 
 to the bankrupt personally after the adjudication, and before the appointment 
 of the trustee, they become, upon the appointment of the trustee, mere nullities; 
 and although they were made in good faith and without knowledge, the trustee 
 may sue and compel the bankrupt's debtor to make payments again to him. 
 (Mays V. Manufacturers' Nat. Bank, 64 Penn. [14 Smith] 74; s. c. 4 B. R. 660.) 
 The adjudication in bankruptcy is notice to all the world. (Hitchcox v. Sedgwick, 
 2 Vernon, 156; Wickersham v. Nicholson, 14 S. & R. 118.) Hence, although the 
 one making the payment may have no actual knowledge of the bankruptcy of 
 his creditor, he has constructive notice, and payments made by him after the 
 date as of which the creditor's title is divested, are in law payments made not 
 to the owner of the debt, and are also payments made with notice of the fact of 
 
ESTATES. 407 
 
 § 70.J Bankrupt's Title and Interest After the Adjudication. 
 
 the change of ownership of the claim. Compare Exp. Foster, 2 Story, 158; Carr 
 Ti. Gale, 3 Woodb. & M. 67; Bramwell v. Eglinton, Law Rep. i Q. B. 494; Exley 
 V. Inglis, Law Rep. 3 Exch. 247. Compare also the following American cases 
 as to the invalidity of titles acquired from the bankrupt after the date to which 
 the trustee's title when vested relates back : Stevens «/. Bank, loi Mass. log; 
 Miller ». O'Brien, 9 Blatch. 270; s. c. 9 B. R. 26; in re Lake, 3 Biss. 204; s. c. 
 6 B. R. 542. Chapman v. Brewer, 114 U. S. 158; Morgan v. Campbell, 22 
 Wall. 381; McLean v. Rockey, 3 McLean, 235; in re Pryor, 4 Biss, 262; 
 in re Randall, I Sawy. 56. It is apparent that the rule laid down in Mays ». 
 Manufacturers' Bank {supra), is technical and liable to work injustice, but 
 it seems to be required by the provisions of the law. In Babbitt ». 
 Burgess, 2 Dill. 169; s. c. 7 B. R. 561, it was said: " It is not necessary for this 
 court to take the extreme position held by the Supreme Court of Pennsylvania 
 (Mays V. Manufacturers' Bank), and rule that all payments made to a debtor 
 after a petition is filed [the dale as of which under the act of 1867 title vested in 
 the assignee] against him in bankruptcy, are to be adjudged void, if the debtor 
 is subsequently declared bankrupt. This court, however, holds that payments 
 thus made mala fide, or with a view of defeating the bankruptcy act in any of 
 its essential requirements, are void, and the person by whom such payment 
 was made can be held to answer for the original demand of the assignee, whose 
 title relates back to the day of commencing proceedings in bankruptcy." 
 Compare also Howard v. Crompton, 14 Blatch. 328. In examining the cases 
 above cited and applying them, it is to be borne in mind that the decisions 
 were rendered under the act of 1867, which made the title of the assignee relate 
 back to the time of the filing of the petition, and not merely to the time of the 
 adjudication, as under the present act. 
 
 During the time between the adjudication and the appointment of the trustee, 
 the bankrupt is a trustee of the property. The property is in the custody of the 
 court, although the officer who is to take charge of it may not have been desig- 
 nated. (/» re Rosenberg, 3 B. R. 130; s. c. 3 Ben. 366; March v. Heaton, 2 B. 
 R. 180; s. c. I Lowell, 278.) In case the bankrupt attempts to remove or 
 destroy or injure the property or neglects to preserve it, the court may exercise 
 the usual powers of a court of equity for the preservation of the subject-matter 
 of the action pending before it. Under the terms of section 2 (3) it may in 
 such cases appoint a receiver to take charge of the property, and it may unques- 
 tionably enjoin the bankrupt from improper use of the property. 
 
408 THE NATIONAL BANKRUPTCY LAW. 
 
 Title Subject to all Equities. [Ch. VII. 
 
 Title Subject to all Equities. — In the absence of any fraud giving to the 
 trustee as the representative of creditors the right to avoid transfers and incum- 
 brances made by the bankrupt, the trustee talces only such rights and interest 
 in the property as the bankrupt himself could have asserted at the time of the 
 bankruptcy. The trustee is affected with every equity which would affect the 
 bankrupt himself if he were asserting those rights and interests. (In re Dow, 6 
 B. R. 10, quoting from Bacon v. Heathcote, i Atk. i6o: " The ground that the 
 court goes upon is this, that assignees of bankrupts, though they are trustees 
 for the creditors, yet stand in the place of the bankrupt, and they can take in 
 no better manner than he could.") See also Stewart v. Piatt, loi U. S. 731; 
 Yeatman v. Savings Inst., 95 U. S. 764; Montgomery v. Bucyrus Mach. Co., 92 
 U. S. 257; Strong!;. Clawson, 5 Gilman, 346; and cases cited under section 67; 
 also Jewson v. Moulson, 2 Atk. 417; Mitford v. Mitford, 9 Ves. 87; Worrall v. 
 Marlur, i P. Wms. 459; Mitchell v. Winslow, 2 Story, 630; Winson v. 
 McLellan, 2 Story, 495; Ex p. Newhall, 2 Story, 363; Fiske v. Hunt, 2 
 Story, 584. Thus, where a party fraudulently induces an owner to part 
 with his title to goods, the defrauded party having the right to disafGrm 
 the contract and to recover the goods, may assert that right against the 
 trustee in bankruptcy as well as against the bankrupt himself. (Donaldson 
 V. Farwell, 15 B. R. 277; s. c. 5 Biss. 451; s. c. affirmed 93 U. S. 631.) So where 
 there was an action to foreclose a mortgage, and proceedings for the appoint- 
 ment of a receiver of the rents and profits were instituted before the adjudica- 
 tion of the mortgagor as bankrupt, and there was a deficiency on the sale of 
 the mortgaged premises, it was held that the assignee in bankruptcy could not 
 claim the fund in the receiver's hands, as against the mortgagee. (Hayes v. 
 Dickinson, 15 B. R. 350; s. c. 9 Hun 277.) So where the bankrupts agreed to 
 build a locomotive for certain parties and notified them that it was completed 
 and had been shipped, and thereupon were paid the price, it appearing that no 
 engine existed at the time it was represented as having been shipped, but that 
 subsequently two were bulit, either of which would answer the contract, it was 
 held that the bankrupt and his assignee were both estopped by the fraud of the 
 bankrupt from denying that one of the engines then in their possession was the 
 property of the parties who had thus been defrauded. (/« re McKay & Aldus, 
 r Lowell, 345; s. c. 3 B. R. 50.) Compare Kelly v. Scott, 49 N. Y. 595, citing 
 Mitchell V. Winslow, 2 Story, 630. So where a right of action passes to the 
 trustee any defense, legal or equitable, which might have been raised against 
 the bankrupt's claim may be raised against the trustee. (Jenkins v. Pierce, 98 
 
ESTATES. 409' 
 
 § 70.] Property Transferrable or Subject to Levy. 
 
 III. 646.) If property is impressed with a trust in the hands of the bankrupt it 
 passes to the trustee subject to the same trust; thus, where a broker was 
 intrusted with money to invest in exchequer bills for his principal, but mis- 
 appropriated the money, and invested it in stock and thereafter, upon being 
 detected, surrendered the stock to his principal, it was held that although he 
 became bankrupt on the day of the misappropriation and although the title of 
 his assignee related back to the time of the act of bankruptcy, yet the assignee 
 could not recover the stock from the principal to whom it had been surrendered, 
 since the property was affected by the trust. The original trust created by the 
 delivery of the money for an express purpose was not divested by the change 
 of the form of the security. (Taylor v. Plumer, 3 Maule & Selw. 562; to the 
 same effect. Cook v. Tullis, 18 Wall. 332; Hawkins v. Blake, io8 U. S. 422.) 
 Except in so far as controversies among lienors may affect directly or indirectly 
 the funds or property passing to him, the trustee has no interest in such contro- 
 versies. He cannot object to the order in which the priorities of lienors are 
 fixed by a decree. Jerome v. McCarter, 94 U. S. 734; Dudley v. Easton, 104 
 U. S. gg; McHenry v. Societe Francaise, 95 U. S. 58. 
 
 Property Transferable or Subject to Levy. — In considering the property 
 
 rights which become vested in the trustee by virtue of the provisions of sub- 
 division 5 it is not advisable to attempt an enumeration. However exhaustive 
 it might be, it would necessarily be incomplete. The subdivision is so general 
 in its terms that it must be held to include every vested right and interest 
 attaching to or growing out of property. It furnishes the test that must be 
 applied in determining whether or not the property vests in the trustee. Could 
 the property by any means have been transferred, or was it subject to levy? If 
 it could have been transferred or levied upon, then it passes to the trustee. It 
 is immaterial that the property may be considered as having no market value. 
 (Kinzie v. Winston, 4 B. R. 84.) If it is a property right it passes to the trustee; 
 he may decline, however, to accept it if it would prove a burden to the estate. 
 As has been shown (section 2, paragraph on Foreign Bankruptcies), real estate 
 situate in a foreign country does not pass by virtue of proceedings in bank- 
 ruptcy. A title to this kind of property can be acquired by the trustee only by 
 virtue of a transfer made to him by the bankrupt as required by section 7 (5). 
 So, by reference to the same paragraph, it will be seen that according to 
 the American rule the bankruptcy proceedings do not give to an assignee 
 or trustee A title to personal property of the bankrupt situate in foreign 
 country, superior or paramount to the rights which creditors of the bank- 
 
4IO THE NATIONAL BANKRUPTCY LAW. 
 
 Validity of Conditions Restricting Passing of Property to Trustee. [Ch. VII 
 
 rupt in that country may have obtained by judgment or levy or attachment 
 made before the trustee takes possession. 
 
 The trustee can acquire no rights of property (except in case of fraud) greater 
 than the bankrupt himself possessed at the time of the adjudication, but inas- 
 much as he acquires just as great a title and right as the bankrupt has at that 
 time, it has been held that he should take and seize all the property which is 
 then in the possession of the bankrupt, and that if it is claimed that other parties 
 have rights therein, they must come in and assert them in the bankruptcy court. 
 (In reVogeX, 7 Blatch. 18; s. c. 3 B. R. ig8.) Upon principle, it is somewhat 
 difficult to justify this decision. If it can be sustained at all, it would seem 
 to be only upon the fact that the bankrupt at the time had a right of possession, 
 and this right of possession passed to the trustee. But the real owner upon 
 petition and proof may have his property restored to him. {In re Havens, 8 
 Ben. 309.) Compare Walker v. Reister, 102 U. S. 467. As to the legal remedies 
 of the trustee to recover property passing to him, but as to which there are 
 adverse claimants, compare Smith v. Mason, 14 Wall. 419; Marshall v. Knox, 
 16 Wall. 551; O'Brien v. Weld, 92 U. S. 81; and cases cited under section 233. 
 
 Validity of Conditions Restricting the Passing of Property to a 
 
 Trustee in Bankruptcy. — The subject of the validity of conditions upon a 
 devise or transfer providing that upon the bankruptcy of the devisee or transferee 
 his interest shall terminate, was considered by the United States Supreme Court in 
 Nichols v. Eaton, 91 U. S. 716. The court held in that case that a devise of the 
 income of property which provided that the payment of the income should cease 
 upon the insolvency or bankruptcy of the devisee is good; and a limitation over 
 to other persons upon the happening of the contingency of insolvency or bank- 
 ruptcy is valid, and the entire interest passes to the remainderman, and nothing 
 passes to the trustee in bankruptcy. Compare also the several cases cited in 
 that opinion. (Dommett v. Bedford, 3 Ves. 149; Brandon v. Robinson, 18 Ves. 
 433; Rockford v. Hackman, 9 Hare, 475; Tillinghast v. Bradford, 5 R. I. 205; 
 See also Harvey v. Palmer, Eng. Law & Eq. Rep. 248.) But if a devise be to 
 a bankrupt and his wife or children, or if he has any vested interest therein, 
 that interest may be separated from the interests of the other beneficiaries and 
 paid over to the assignee or trustee in bankruptcy. (Page v. Way, 3 Beav. 
 20; Piercy v. Roberts, i Myl. & K. 4; Rippon v. Norton, 2 Beav. 63.) But 
 where the devise over is for the support of the bankrupt and his family, and is 
 in the discretion of the trustee, then the weight of authority is that there is 
 no interest assignable to the trustee in bankruptcy. (Nichols v. Eaton, supra. 
 
ESTATES. 41 1 
 
 § 70.] Personal Privileges. 
 
 citing Twopenny v. Peyton, 10 Sim. 487; Godden v. Crowhurst, 10 Sim. 642.) 
 To the same effect, Spindle v. Shreve, 9 Biss. 199. In Nichols v. Eaton 
 (supra), it appeared that real estate was devised to trustees who were directed 
 to pay the income to one who was afterwards adjudged a bankrupt, and the 
 devise contained the condition and proviso that if the said beneficiary should 
 become bankrupt, the trust should cease; and thereafter the trustees in their dis- 
 cretion were to apply the income to the support of the beneficiary and to his family ; 
 and the trustees were empowered in their discretion to transfer any portion of 
 the trust fund to the beneficiary. The court held that the bankruptcy terminated 
 all of the bankrupt's legal and vested rights in and to the estate and left nothing 
 to which his assignee in bankruptcy could assert a claim, and that the discre- 
 tionary power vested in the trustees to pay sums to the bankrupt could not be 
 subjected to the control of the assignee in bankruptcy, the court saying: " No 
 case is cited; none is known to us which goes so far as to hold that an absolute 
 discretion in the trustee, a discretion which, by the express language of the 
 will, he is under no obligation to exercise in favor of the bankrupt, confers such 
 an interest on the latter that he or his assignee can successfully assert it in a 
 court of equity or in any other court." 
 
 Personal Privileges. — There are many property rights which by the terms 
 of their creation are expressly or impliedly restricted to the person originally 
 acquiring them, or which are by an express provision made non-assignable 
 without the consent of the other party to their creation. Thus, leases often 
 contain a clause forbidding an assignment; and licenses are usually considered 
 as personal privileges, even though not expressly so declared. Memberships in 
 associations of various characters, and in particular in boards of exchange and 
 business associations are often declared non-assignable without the consent of 
 the other members of the exchange. Franchises are considered in many cases 
 personal privileges non -assignable; and contracts from their nature or by the 
 terms of the creation frequently call for personal services which cannot be rendered 
 by an assignee. So insurance policies often contain conditions providing that an 
 assignment of the property shall terminate all rights under the policy. With 
 reference to leases, the general rule, both in America and England, is that an 
 assignment in an involuntary proceeding in bankruptcy is not a breach of a 
 covenant in a lease agreeing not to make an assignment thereof. Property may 
 be limited or leased to be void or revert back in the event of bankruptcy, and 
 if a lease to a person contain such proviso the lease does not pass to his trustee 
 in bankruptcy, but reverts back. But to prevent its passing to the trustee there 
 
412 THE NATIONAL BANKRUPTCY LAW. 
 
 Personal Privileges. [Ch. VIL 
 
 must be an express proviso to that effect. The usual covenant or proviso not 
 to let, assign, or transfer without consent, etc., will not be sufficient. If that is 
 the only covenant restricting an assignment, the lease will, notwithstanding it, 
 pass to the trustee without the lessor's consent. The distinction, however, is 
 taken in England that, unlike bankruptcy, which is an involuntary proceeding, 
 insolvency, being a voluntary proceeding on the part of the debtor himself, is a 
 breach of the covenant against assignment, and works a forfeiture. (Hilliard 
 on Bankruptcy, page 141; see also Doe v. Bevan, 3 Maule & S. 353; Doe v. 
 Smith, 5 Taunt. 795; s. c. i Marshall, 359; Gorney v. Warren, 2 Eq. Cas. Abs. 
 100; Dommett v. Bedford, 3 Ves. 149; Wilkinson v. Wilkinson, 10 Eng. Ch. 258- 
 s. c. 2 Wils. Ch. 57; s. c. Cooper, 2oi; Holyland v. De Mendez, 3 Meriv. 184; 
 and also Starkweather v. Cleveland Ins. Co., 4 B. R. 341; s. c. 10 A. L. Reg. N. 
 S. 333; s. c. 2 Abb. U. S. 67. Compare Smith v. Putnam, 3 Pick. 220; Copeland 
 V. Stevens, I B. & Aid. 592.) But many American courts consider that an assign- 
 ment of the lease, made in a proceeding in voluntary bankruptcy (inasmuch as 
 the transfer is still by operation of law) is not such an assignment of the interest 
 of the lessee as to be a breach of his covenant not to assign, and they hold that 
 upon the bankruptcy of the lessee his leasehold interest passes to his assignee 
 or trustee in bankruptcy notwithstanding there is a covenant in the lease not to 
 assign. Compare Starkweather z/. Cleveland Ins. Co., 4 B. R. 341; s. c. 10 A. L. 
 Reg. N. S. 333; s. c. 2 Abb. U. S. 67; Perry v. Lorillard, 61 N. Y. 214, Brichta v. 
 N. Y. Lafayette Ins. Co., 2 Hall, 372; Lazarus v. Commonwealih Ins. Co.. 5 Pick. 
 76; Parsons on Contracts, Part II., chapter XII., section IX. An examination 
 of the American cases cited in the treatise just mentioned shows that while the 
 rule may not be settled, there is at least a tendency on the part of the American 
 courts to disregard the distinction taken by the English courts between the nature 
 and effect of assignments in voluntary and involuntary proceedings. The ques- 
 tion whether a franchise or license is assignable must depend greatly upon the 
 nature of the franchise or the license, and also upon the express terms by which 
 it was created. If it is of such a nature that it may be considered as calling for 
 the exercise of personal skill or personal discretion, then it cannot be considered 
 assignable. The same principles of law which prevent the assignment of con- 
 tracts of that character will pre vent the assignment of the franchise or the license. 
 Thus, in People v. Duncan, 41 Cal. 507, it was held that a franchise to construct 
 a turnpike road, and to collect the tolls was a personal trust and did not pass to the 
 assignee in bankruptcy since the person who had the franchise could not vol- 
 untarily assign it, the consent of the party conferring the franchise being neces- 
 
ESTATES. 413 
 
 § 70.] Title to Real Estate. 
 
 sary by reason of the personal character of the work to be performed. But in 
 Stewart v. Hargrove, 23 Ala. 429, it was held that a franchise which gave to one 
 the right to take tolls from persons crossing a certain bridge was assignable 
 property. The question of the assignability of seats or memberships in stock 
 exchanges has occasionally arisen in bankruptcy proceedings. Such member- 
 ships are notoriously of great value, and although the consent of the other 
 members of the exchange is necessary to give one the right to membership and 
 the right cannot be conferred by a mere assignment, yet since in practice it is 
 customary for these seats to be sold by one party to another, the purchaser 
 taking his chances of a subsequent election, it has been held that they consti- 
 tuted a species of property passing to the trustee in bankruptcy. Compare in 
 re Gallagher, 16 Blatch. 410. But in re Israel Sutherland, 6 Biss. 596, it was 
 held that a certificate of membership in a board of trade where no profits were 
 given to the members further than what was derived from the incidental use 
 made by a member of the privileges which his membership gave him was a 
 mere personal privilege and did not pass to his assignee. A case affecting prop- 
 erty of this character was Hyde v. Woods, 2 Saw. 655; s: c. 10 B. R. 54; after- 
 wards affirmed in 94 U. S. 523; but the question of the assignee's title did not 
 arise in that case. Contracts which from their nature or by their express terms 
 call for services, skill or discretion which are peculiar to the person contracting 
 to furnish them cannot be fulfilled by any other person, and so the bankrupt's 
 rights under them do not pass to his trustee in bankruptcy. These cases are 
 governed by principles of the law of contracts, not of the law of bankruptcy. 
 Compare an extensive citation of English cases in support of this proposition 
 in Parsons on Contracts, Part. II., chapter XII., section IX. 
 
 Title to Real Estate. — All the interest of the bankrupt in real estate passes 
 to the trustee, and with it all the rights which the bankrupt could have exer- 
 cised in connection therewith. Thus the right to compel the specific perform- 
 ance of a contract for the sale of lands passes to the trustee. (Lombard v. 
 Thorp, 6 Cow. [N. Y.] 46; Brooke v, Hewitt, 3 Ves. 253; Willingham v. Joyce, 
 3 Ves. 168.) So all property that comes to the bankrupt prior to the adjudication 
 by devise or inheritance passes to the trustee. (Brandon v. Robinson, i Rose, 
 197.) And if the devise is of a beneficial character, the devisee will no more 
 be allowed to refuse to accept it in order to defeat the title of the trustee 
 than he will be allowed to preferentially transfer his property. The bankruptcy 
 court will order him to do that which is necessary to perfect his title. So if the 
 devise is subject to some charge or condition, the trustee may elect to accept 
 
414 THE NATIONAL BANKRUPTCY LAW. 
 
 Title to Real Estate. [Ch. VIL 
 
 it. The rule is that the failure of the bankrupt to signify his acceptance of a 
 valuable devise can no more prevent it passing to the trustee than will the bank- 
 rupt's wilful abandonment of his property divest him and his trustee of title. 
 (Compare Ex p. Fuller, 2 Story, 327; Brown v. Wood, 17 Mass. 68; Ward v. 
 Fuller, 15 Pick. 185.) Vested interests in remainder or reversion pass to the 
 trustee, and it has also been held that contingent interests pass, provided they 
 are of such a character that they would be assignable. (Higden v. Williamson, 
 3 P. Wms. 132; Ex p. Goldney, 3 Deac. 570; Perry v. Jones, 3 T. R. 88.) An 
 equity of redemption passes to the trustee, and the latter has the right either to 
 sell the equity or to pay off the mortgage. (Pillow v. Langtree, 5 Humph. 
 389; Lyall V. Miller, 6 McLean, 482.) He cannot be divested of his title to 
 the real estate by any proceedings instituted after the bankruptcy proceedings, 
 unless he is made a party thereto. (Barron v. Newbury, i Biss. 149; Robinson 
 V. Denney, 57 Ala. 492.) If the trustee acquires \X\X& pendente lite, he is subject 
 to the decree which may be made in the action, although no notice was given to 
 him. He occupies no better position than any other party acquiring title 
 pendente lite. (Eyster v. Gaff, gl U. S. 521; s. c. 13 B. R. 546; s. c. 2 Col. 28; 
 Lenihan v. Haman, 55 N. Y. 652; s. c. II B. R. 471; s. c. below, 14 Abbott's Pr. 
 [N. S.] 274.) Where a bankrupt owned a seat in a stock exchange, the pro- 
 visions of whose by-laws were that upon the failure of any member to perform 
 his contract his seat should be sold, and that debts due to other members of the 
 exchange should have a priority of payment in the nature of a lien upon the 
 proceedings, it was held that upon the bankruptcy of a member of such an 
 exchange his seat would pass to his assignee subject to those conditions, since 
 they were in the nature of a lien or mortgage thereon; and this was held to 
 be the law notwithstanding membership in the exchange could be secured 
 only by vote of the other members. (Hyde -o. Woods, 94 U. S. 523, affirming 
 2 Saw. 655; s. c. 10 B. R. 54.) The trustee has no better or greater title 
 than the bankrupt himself had, except in so far as being the representative 
 of creditors, he may avoid fraudulent transfers or other matters voidable 
 under the terms of the statute. Thus, if the bankrupt has failed to record his 
 title and subsequently some one else has purchased the property in good 
 faith and for a valuable consideration before the bankrupt has recorded the deed 
 to himself, the title of the trustee is void as to the subsequent purchaser if by 
 the recording acts of the State where the property is situated the bankrupt's 
 title would have been void as against the subsequent purchaser. On the other 
 hand, the trustee acquires all the title of the bankrupt to the real estate, even 
 
ESTATES. 415 
 
 § 70.] Rights of Action. 
 
 although it be not a record title. Thus, if a bankrupt has conveyed property 
 by an instrument absolute upon its face, but with a contemporaneous 
 unrecorded agreement of defeasance, this gives him an equity of redemption 
 which passes to the trustee. (Moors v. Albro, 129 Mass. 9.) So it has been held 
 that a tenancy by the curtesy initiate will pass to the trustee. (Jacobson v. Wil- 
 liams, I P. Wms. 383.) Under section 2, paragraph on Foreign Bankruptcies, 
 we have shown that the trustee acquires no title to real estate situated in a 
 foreign country. The bankruptcy law applies only inter-territorially as to real 
 estate. Property of this kind as to its transfer is always governed by the lex 
 loci; hence, as before noted, the requirement of section 7 (5), that the bankrupt 
 shall execute to his trustee transfers of all his property in foreign countries. 
 
 As to wife's dower not being affected by the bankruptcy of her husband, 
 compare notes to section 67; also Cox v. Wilder, 7 B. R. 241; in re Angier, 4 B. 
 R. 199; s. c. 10 A. L. Reg. N. S. igo; Kelly v. Strange, 3 B. R. 2; in re Hester, 
 5 B. R. 285. 
 
 Rights of Action. — Subdivision 6, limiting the rights of action which vest 
 in the trustee to those arising upon contracts or from the unlawful taking or 
 detention of, or injury to, the bankrupt's properly, is simply declaratory of the 
 general principle of law that assignees and trustees cannot enforce those rights 
 of action which are of a peculiarly personal character — those which, to use the 
 common expression, die with the person. Causes of action for personal injuries, 
 such as assault and battery, slander, seduction, and the like, do not vest in the 
 assignee. (Beckham v. Drake, 8 M. & W. 846; Noonan v. Orton, 12 B. R. 405; 
 Howard v. Crowther, 8 M. & W. 601 ; Brewer z/. Dew, 11 M. & W. 625.) Causes 
 of action for deceit and fraud seem to occupy debatable ground. Thus, in rt 
 Crockett, 2 Ben. 514, it was held that a suit brought for fraudulently recommend- 
 ing a person as worthy of trust and confidence is not a claim which vests as an 
 asset in the assignee. But in Hyde v. Tufts, 45 Sup. Ct. (N. Y.) 56, where 
 one who afterwards became a bankrupt was induced by false representations, 
 to engage in a business venture in which, by reason of the false representations, 
 he incurred great loss, it was held that the cause of action for the fraud vested 
 in his assignee in bankruptcy. The right to sue for penalties is analogous to 
 the right to sue for damages for tort. In the absence of a statute authorizing 
 it, a right to a penalty cannot be assigned. (Wright v. First National Bank of 
 Greensburg, 18 B. R. 87; citing Gardner v. Adams, 12 Wend. 297.) But in that 
 case it was held that the right of action given by the banking act of the United 
 States to recover back usurious interest was a claim or debt passing to the 
 
4l6 THE NATIONAL BANKRUPTCY LAW. 
 
 Rights of Action. [Ch. VIL 
 
 assignee in bankruptcy; that while the right of action given by that act was 
 penal, yet the exacting of the usurious interest was in its nature an injury to 
 the property rights of the bankrupt, and that the sections of the bankrupt law 
 must be construed as giving the trustee the right to sue for and recover such 
 usurious interest. To the same effect was Crocker v. First National Bank, 3 
 Cent. L. J. 527. But in Brombey v. Smith, 5 B. R. 152; s. c. 2 Biss. 511, and in 
 Nichols V. Bellows, 22 Vt. 581 (both commented upon in Wright v. First National 
 Bank of Greensburg), the right of a trustee in bankruptcy to recover usurious 
 interests was denied upon the ground that the right given by the statute was in 
 the nature of a right to redress a personal injury done to the borrower himself, 
 and that, like rights of action for personal torts, it did not pass to the trustee. 
 Other cases holding that a trustee can recover usurious interest are: Moore v. 
 Jones, 23 Vt. 73g, and Tiffany v. Boatman's Sav. Inst., 18 Wall. 276; s. c. below, 
 I Dill. 141. In Wheelock v. Lee (64 N. Y. 242), the trustee in bankruptcy was 
 Tield to have the right to recover money exacted usuriously ; but the court based 
 its decision upon the fact that independent of the statutory right of recovery 
 there existed a right to recover upon principles of the common law, saying; 
 " It is claimed by the defendant that the right of the borrower to recover back 
 usurious interest paid by him is strictly a personal right, and did not pass by 
 the assignment to the plaintiff. Interest paid by the borrower to the lender 
 "beyond the lawful rate is received by the latter without right, and in violation 
 of the statute. It is regarded as having been exacted from the borrower by 
 duress, and the payment is not voluntary, so as to bring the transaction within 
 the principle which precludes a recovery back of money voluntarily paid. The 
 borrower never parted with his title to the money which he seeks to recover. 
 It belonged to him after the payment as before, and the lender wrongfully 
 deprived him of it. The law allows him to maintain the action to reclaim the 
 money, not as a penalty against the usurer, but because the usurer never 
 acquired any title to it. The right of the borrower to recover the excessive 
 interest paid on a usurious loan is expressly affirmed by our (the New York) 
 statute of usury. But this statute did not give the remedy. It existed before 
 upon the principles of the common law. (Doug. 697, notes; Briggs v. Thomp, 
 son, 20 J. R. 292; Palen v. Johnson, 50 N. Y. 49.) In Palen v. Johnson it was 
 conceded that the principal, if not the only, change made by our statute, was to 
 limit the time within which the borrower could bring the action. The cause 
 of action in favor of the borrower is founded upon the unlawful possession by 
 the lender of the borrower's money. The claim has relation to his property. 
 
ESTATES. 417 
 
 § 70. J After Acquired Property — Choses in Action of the Bankrupt's Wife. 
 
 and it is entirely unlike a strictly personal injury where the cause of action does 
 not survive, and is not assignable. The language of the bankrupt act is broad 
 enough to vest in the assignee a right of action of this character, and our 
 statute was not intended to confine this remedy to the borrower alone and to 
 exclude those who stood, in respect to the claim, in privity with him." See 
 also Bosanquett v. Dashwood, Cas. Temp. Talbot, 38; Dey v. Dunham, 2 
 J. Ch. 181; Palmer w. Lord, 6 J. Ch. 95. Upon the same principle of a common- 
 law right of recovery, it has been held that an assignee can maintain an action 
 to recover money lost at faro, although there was also a statute which gave a 
 right of action to the loser. (Meech v. Stoner. 19 N. Y. 26; Carter v. Abbott, i 
 Barn & Cress. 444; Gray v. Bennett, 3 Met. 522.) 
 
 AfteP Acquired Property. — The bankruptcy act intends that the property 
 of the bankrupt belonging to him at a certain time shall be set apart as a fund 
 for the payment of his debts. That time is evidently the time of the com- 
 mencement of the proceedings, the time of the filing of the petition. This would 
 seem to follow from the provision of subdivision 5, although the title vests as 
 of a later date, namely, as of the time of the adjudication. The manifest pur- 
 pose of the act is to take the property owned by the bankrupt at the time of the 
 filing of the petition, and with it to pay the debts then owing. After-acquired 
 property is not subject to the payment of debts then existing, other than those 
 which may not be released by a discharge. If he does not obtain any discharge, 
 then his after-acquired property may be taken in payment of his debts, whether 
 they were incurred previous to the filing of the petition or subsequent thereto. 
 (Mays V. Manufacturers' Nat. Bank, 64 Penn. 74; s. c. 4 B. R. 660; in re Patter- 
 son, 1 Ben. 508; in re Benson, 8 Biss. 116; s. c. l6 B. R. 377; May v. Merwin, 
 7 Ben. 238; s. <.. 47 How. Pr. 37; s. c. 9 B. R. 419.) And it has been held thai 
 a bankrupt who has subsequently acquired property may purchase the assets 
 of his own estate from his trustee. Compare notes to section 47. 
 
 Choses in Action of the Bankrupt's Wife. — There has always been much 
 conflict of authority as to whether the trustee in bankruptcy took the husband's 
 right to reduce to possession the wife's choses in action. In Parsons on Con- 
 tracts, Part II., chapter XII., section IX., it was said: " Whether insolvency 
 operated a reduction to possession or only transferred to the assignee the right 
 to reduce was much disputed. But the better reason and the better authority 
 favored the view that it gave onlv a right to reduce, and therefore the assignee 
 had no property in the thing until actually reduced." The authorities both. 
 
 NAT. BANKRUPTCY LAVy — 2^ 
 
4l8 THE NATIONAL BANKRUPTCY LAW. 
 
 Burdensome Property. [Ch. VII. 
 
 English and American are collated in a note to the text of that work. The dis- 
 cussion seems to have turned around the point whether the husband's right is a 
 right of property conditional upon a reduction of the choses in action to pos- 
 session, or is a mere power. Those which regard it as a conditional title have 
 held that it passed to the assignee in bankruptcy, but those which regard it as a 
 mere power have held that the power did not pass to the assignee in bank- 
 ruptcy. But as under the provisions of subdivision 3 of section 70 of the pres- 
 ent bankruptcy act, powers which the bankrupt might have exercised for his 
 own benefit pass to his trustee, there would now seem to be no principle upon 
 which it could be held that the trustee was prevented from reducing to posses- 
 sion the wife's choses in action. Upon this subject compare the following 
 cases, decided under former acts: In re Brandt, 5 Biss. 217; in re Boyd, 5 B. R. 
 199; Wickham v. Valle, 11 B. R. 83; Shay v. Sessaman, lo Pa. St. 432. 
 
 Burdensome Property. — Although the trustee is vested by operation of 
 law with title to all the property of the bankrupt, he is not obliged to accept 
 any property which may prove a burden to the estate. He acts as trustee for 
 the benefit of creditors, and should refuse to accept anything which would 
 diminish instead of increasing the fund distributable among creditors. To 
 accept all property is not within the scope of the trust and duty imposed upon 
 him. The rule of law has been settled in numerous decisions both by the Eng- 
 lish and American courts that leasehold estates form one species of property 
 which an assignee in bankruptcy is not bound to accept. The rule has thus 
 been stated by one of the judges of the American bankruptcy courts: " An 
 assignee in bankruptcy, unless restrained by the terms of the lease itself may 
 adopt or reject a lease on behalf of the estate as he finds most beneficial for the 
 creditors and can take a reasonable time for the decision. If the assignee take 
 the lease, he makes himself liable on behalf of the estate for the rent, including 
 certainly that of the current quarter, and this he must consider in determining 
 whether to take or reject the term." As long as he is in possession he must 
 pay the full rent, not a dividend on it. (/« re Laurie, 4 B. R. 32; Smith v. 
 Gordon, 6 Law Rep. 313.) Until a trustee elects to accept the lease as assignee 
 thereof, he does not become liable for rent. (Turner v. Richardson, 7 East R. 
 335; Copeland v. Stephens, i Barn. & Aid. 593; Martin v. Black, 9 Paige, 641; 
 Lewis V. Bun. Bosw. L. R. 213.) In Turner v. Richardson (7 East R. 336), it 
 was said that assignees of a bankrupt are not bound to take a damnosa hereditas, 
 property of the bankrupt which, so far from being valuable, would be a charge 
 to the creditors, but they may h^ve their election. If, however, they do elect. 
 
ESTATES. 419 
 
 § 70.] Burdensome Property. 
 
 however badly the bargain may turn out, they cannot thereafter renounce it. 
 The assignees are bound to consider whether it is for the benefit of the creditors 
 that they should accept the lease or reject it. If they accept and enter into pos- 
 session they become liable to be sued upon the bankrupt's covenants for repair 
 and rent which may amount to more than the value of the lease; on the other 
 hand, the lease may be valuable, and if they do not take it the creditors will 
 have a right to call them to account for neglect of duty." In the last case to 
 justify their action they will have to show that they used that measure of dili- 
 gence and judgment in the matter which one with ordinary business ability 
 would have used. Until the trustee in bankruptcy signifies his acceptance of 
 the lease, the leasehold interest remains in the bankrupt, with all its advant- 
 ages and burdens, and free from all claims or rights either of the assignee or of 
 the creditors. (Tuck v. Fyson, 6 Bing. 321.) But the rule that the trustee in 
 bankruptcy need not assume burdensome interests is not limited to leases. It 
 applies to all property, and to all property rights, and is based upon a general 
 principle that the purpose of the bankruptcy proceedings being the payment 
 of the bankrupt's debts, no property need be accepted by the trustee which 
 will tend to diminish the distributable fund. (Copeland v. Stevens, i B. & Aid. 
 593; Amory v. Lawrence, 3 Cliff. 523.) Thus, while not only leasehold interests, 
 but contractual rights and rights of action, pass to the trustee, he not only 
 need not accept leases when burdensome, but if a contract which is to be per- 
 formed would entail burdens and losses upon the estate, he may decline to 
 accept it. (Streeter v. Sumner, 31 N. H. 542; Rugely v. Robinson, 19 Ala. 404.) 
 So the trustee need not continue the prosecution of any pending suit if in his 
 opinion it would subject the estate to losses. (Traders' National Bank v. 
 Campbell, 14 Wall. 87; s. c. 6 B. R. 353; s. c. below, 2 Biss.423; s. c. 3 B. R. 498.> 
 
 If property of the bankrupt is encumbered for an amount in excess of its value 
 he may surrender it to the person holding the encumbrance. (Second National 
 Bank v. State National Bank, 11 B. R. 49. To same effect, McHenry v. La 
 SocietS Francaise, 95 U. S. 58.) Whatever may be the nature of the property, if 
 the trustee does accept it he accepts it with all its charges and obligations and 
 burdens, and must fulfill them all. If, on the other hand, he does not accept 
 them, then whatever may be the nature of the property, the title remains in 
 the bankrupt, whose rights and remedies with reference to it are unimpaired 
 and unaffected. (Smith v. Gordon, 6 Law Rep. 313; Smith v. Fox, 7 T. R. 391.) 
 
 The trustee has a reasonable time within which to decide whether or not he 
 will accept the property, and it has been held that if he stands by for an 
 
420 THE NATIONAL BANKRUPTCY LAW. 
 
 Rights of the Trustee as Representative of Creditors. [Ch. VII. 
 
 unreasonable length of time, without asserting any claim to the property, and 
 allows third persons to claim interests therein, he is deemed to have waived his 
 rights to the property. (Smith v. Gordon, 6 Law Rep. 313.) 
 
 Rights of the Trustee as Representative of Creditors. — The trustee not 
 only succeeds to the title to the property which the bankrupt has, but as the 
 representative of creditors he may enforce rights which the bankrupt has lost. 
 Thus the trustee is, by subdivision 4, expressly vested with the title to all the 
 property transferred by the bankrupt in fraud of his creditors, and by paragraph e 
 he may avoid any transfer by the bankrupt of his property which any creditor 
 of such bankrupt might have avoided. So by sections 60 and 67 the trustee is 
 given the power of recovering the property preferentially transferred, or encum- 
 bered by liens which are void for want of record, as well as property which has 
 been subjected to liens obtained through legal proceedings within four months 
 prior to the time of the filing of the petition in bankruptcy. These rights of 
 property and these rights of action vest exclusively in the trustees. The creditors 
 themselves have no right of action, even although the trustee negligently fails 
 to perform his duty. The remedy of the creditors in such cases is to apply to 
 the bankruptcy court for an order requiring the trustee to commence such 
 action, or to ask for the removal of the trustee and the appointment of another 
 in his place who will perform his duties. (Glenny v. Langdon, g8 U. S. 20. 
 Compare abstract of this case under section 60. See also Moyer v. Dewey, 
 103 U. S. 301.) The trustee is not only the representative of the creditors as 
 a body, but he is subrogated by various provisions of the statutes to the rights 
 of individual creditors or creditors of a particular class. (Compare sections 
 67 b and 70 ^.) The provisions of subdivision 4 imply that the trustee's right 
 to recover property transferred by the bankrupt in fraud of his creditors is 
 not limited as to time, otherwise than by general statutes of limitations. 
 (Compare, however, section 67 [?].) Whenever the creditors could have con- 
 tested the validity of a conveyance, the trustee, as their representative, can 
 and should do so. No lien or conveyance which is invalid as to creditors 
 has any validity as against a trustee. As the representative of creditors, the 
 trustee of the bankrupt may sue debtors of his bankrupt whose claims have 
 been preferentially and collusively released. The trustee is in no way affected 
 by the illegal or fraudulent acts of the bankrupt if creditors would not be 
 affected by them. (Sawyer v. Hoag, 17 Wall. 6io; in re Jaycox, 12 Blatch. 209; 
 Allen V. Massey, 17 Wall. 351; Traders' Bank v. Campbell, 14 Wall. 87; Clar- 
 ion Bank v. Jones, 21 Wall. 325.) Compare, however, paragraph on Title 
 
ESTATES. 421 
 
 g 70.] Rights of the Trustee as Representative of Creditors. 
 
 Subject to All Equities, supra. So the trustee in bankruptcy, being the repre- 
 sentative of creditors, is not bound by judgments which have been obtained 
 against the bankrupt; and he may inquire into their validity. (Compare abstract 
 of in re O'Neil, i Low. 163; s. c. I B. R. 677, under section 57. See also Part- 
 ridge V. Dearborn, 2 Low. 286; s. c. 9 B. R. 474.) 
 
 Although the undisputed rule is that wherever conveyances, incumbrances 
 or transfers are invalid as to creditors in general, the trustee as their represent- 
 ative may bring an action to recover the property, yet under the former statute 
 there was much conflict of authority as to the rights of the assignee in cases 
 where transfers had been made or liens created, which, by the laws of the State, 
 were void only as to subsequent purchasers or creditors who procured judg- 
 ments. The majority of the courts claimed that the assignee, in so far as he 
 was the representative of creditors, was to all intents and purposes a judgment 
 creditor, and in behalf of creditors who, by reason of the bankruptcy proceed- 
 ings, could not obtain a judgment so as to assert their rights, he might assert 
 their rights for them. On the other hand, many judges of eminent authority 
 dissented from that doctrine. Thus, in Cook v. Waters (55 N. Y. 150; s. c. 9 B. 
 R. 155), it was said by the New York Court of Appeals that the assignee was 
 not a judgment creditor and that the bankruptcy act nowhere conferred upon 
 him the rights of such creditors; and in re Collins, 12 B. R. 379, the United 
 States Circuit Court for the Eastern District of New York, Justice Hunt deliver- 
 ing the opinion, held that an assignee in bankruptcy could not impeach the 
 validity of a chattel mortgage which was void only as against those creditors who 
 afterwards procured a judgment against the mortgagor, and that where the cred- 
 itor had been unable to obtain judgment he could not impeach the transfer, neither 
 could the assignee, as the latter was neither a subsequent purchaser or mort- 
 gagee nor a representative of judgment creditors. But the contrary doctrine 
 was laid down in Barker v. Smith (12 B. R. 474), decided by the U. S. Circuit 
 Court for Louisiana, Judge Woods delivering the opinion, from which we quote: 
 " The general rule is that a creditor cannot proceed to set aside a conveyance 
 of real estate, either really or constructively fraudulent, unless he has a lien 
 thereon, or has reduced his claim to judgment, and the fraudulent conveyance is 
 an obstacle to a sale on execution. Conceding that a general creditor having 
 no lien or judgment could not file a bill to set aside as void an unrecorded con- 
 veyance of real estate, and to subject the property to the payment of his debts, 
 does this rule apply to an assignee in bankruptcy? * * » it would appear 
 that an adjudication of bankruptcy removes the necessity for a lien or judg- 
 
422 THE NATIONAL BANKRUPTCY LAW. 
 
 Rights of the Trustee as Representative of Creditors. [Ch. VII. 
 
 ment before a bill can be filed to subject the property fraudulently conveyed, 
 or when the transfer is for other reasons invalid. If the rule were otherwise, 
 then no property conveyed by a bankrupt in fraud of his creditors, or by any 
 void or invalid conveyance, unless the creditors had reduced their claims to 
 judgment, could be subjected by the assignee in bankruptcy, to the payment 
 of debts. For after an adjudication of bankruptcy, no creditor whose debt is 
 provable is allowed (under the act of 1867) to prosecute to final judgment any 
 suit at law or in equity therefor against the bankrupt, until the question of the 
 bankrupt's discharge shall be determined. The question under consideration 
 was decided by Woodruff, Circuit Judge {in re Leland et al., 10 Blatch. 503), in 
 the case of an unrecorded mortgage of chattels. The learned judge says: ' It is 
 claimed, because the mortgage is valid, without being properly filed, as against 
 the bankrupts, it is, therefore , good as against their assignee in bankruptcy, 
 and that no creditor but a judgment creditor can impeach or deny its validity. 
 The proceedings in bankruptcy arrest the ordinary proceedings of creditors to 
 obtain judgments, and thereby to secure an appropriation of the debtor's prop- 
 erty to their use, and the assignee in bankruptcy represents them. He is trustee 
 for them, and whatever right they might assert, if they had obtained judg- 
 ments, he may, for their benefit assert, whether it be to set aside conveyances 
 by the bankrupts, which are fraudulent and void as against creditors or which 
 are otherwise as against them invalid.' " 
 
 So in Kane v. Rice (10 B. R. 469), it was said by the U. S. District Court for 
 the Eastern District of Michigan : " The assignee represents the creditors as well 
 as the bankrupts, and has the right and power, and it is his duty, to enforce the 
 rights of the former as well as to observe and carry out the obligations and con- 
 tracts of the latter. He occupies the position of judgment creditor to all intents 
 and purposes, so far as his relations in that regard are concerned; and when- 
 ever such creditor could enforce rights which the debtor could not, the assignee 
 can. « * * The rule that none but a judgment creditor can attack such 
 transactions does not mean that such creditor must have had a judgment and 
 an execution when such transactions were taking place. It is suflScient for the 
 right to attach to him that he was a creditor. A judgment is necessary only to 
 enable him to exercise the right; and as already seen, the assignee in bank- 
 ruptcy occupies the position of such judgment creditor." 
 
 And in re Duncan (14 B. R. 18, at page 33), Judge Blatchford of the U. S. 
 District Court for the Southern District of New York held that unless the 
 assignee could thus act as the representative of judgment creditors, the pro- 
 
ESTATES. 423 
 
 § 70.] Rights of the Trustee as Representative of Creditors. 
 
 visions of the statute would be rendered nugatory. In reviewing the cases he 
 said; " Whatever authority may be found in re Collins, 12 Blatch. 548, for so 
 holding (that is, that the assignee in bankruptcy did not have the rights of a 
 judgment creditor to impeach transfers and incumbrances that certain creditors 
 could have impeached had the bankruptcy proceedings not prevented their 
 securing a judgment) would seem to be a departure from what was done in 
 Sedgwick 7j. Place, 10 B. R. 28; s. c. 12 Blatch. 163; and in Beecher v. Clark, 
 10 B. R. 385; s. c. 12 Blatch. 256; and to be in conflict with the cases of Allen 
 V. Massey, 4 B. R. 248; s. c. 7 B. R. 401; s. c. i Dill. 40; s. c. 17 Wall. 351; in 
 -re Wynne, 4 B. R. 23; National Bank of Leavenworth v. Hunt, 4 B. R. 616; s. 
 c. II Wall. 391, and with the decision of Judge Woodruff, holding tTie Circuit 
 Court for this district, in re Leland, lo Blatch. 503." In Miller v. Jones, 15 B. 
 R. 150, decided by the U. S. Circuit Court for the District of New Jersey, it was 
 «aid: " Notwithstanding some decisions to the contrary, an assignee in bank- 
 ruptcy of the mortgagors stands in the position of such (judgment) creditors 
 with equal rights, the adjudication of bankruptcy being equivalent to the 
 recovery of a judgment and a levy." This same question as to the right of the 
 assignee or trustee to assert in behalf of the general creditors the rights of judg- 
 ment creditors, in cases where creditors had failed to obtain judgments prior 
 to the bankruptcy proceedings and consequently could not impeach transfers 
 or encumbrances which might otherwise have been invalidated by them, arose 
 in the case of Stewart v. Piatt, decided by the United States Supreme Court, 
 and reported in loi U. S. 731. In that case certain creditors had obtained judgments 
 prior to the commencement of the proceedings in bankruptcy, so that they were 
 in a position to question the validity as to themselves of certain unfiled chattel 
 mortgages. The facts of the case in detail were that a, chattel mortgage was 
 not filed pursuant to the terms of the statute, and was therefore void as against 
 creditors of the mortgagors and as against subsequent purchasers and mort- 
 gagees in good faith, there having been no change of possession of the mort- 
 gaged articles. But this right they could not assert until they obtained judg- 
 ment. The court held that since the failure so to file the mortgage did not 
 impair its validity as between the mortgagee and the mortgagor, or the as- 
 signee in bankruptcy of the latter, and since the mortgage was valid as 
 between the parties thereto and was assailable only by judgment creditors, 
 the assignee took the property subject to the equities, liens and encumbrances 
 of the mortgagee; and that while the rights of creditors, who had actually 
 obtained judgment, in the proceeds derived from a sale of the mortgaged prop- 
 
424 THE NATIONAL BANKRUPTCY LAW. 
 
 Property Held in Trust. [Ch. VH. 
 
 erty were properly adjudged to be superior to any rights which passed to the 
 assignee by operation of law, the balance of the proceeds belonged to the mort- 
 gagee, and not to the assignee for the purpose of his trust. And the court 
 said: " The latter (the assignee) representing general creditors cannot dis- 
 pute such claim since, had there been no adjudication, it could not have been 
 disputed by the mortgagors. The assignee can assert in behalf of the general 
 creditors no claim to the proceeds of the sale of that property which the bank- 
 rupts themselves could not have asserted in a contest exclusively between them 
 and their mortgagee." But although the right of the trustee as the representa- 
 tive of creditors to impeach conveyances which are void only as to judgment 
 creditors, was disputed under the former act, there would seem to be no question 
 of his right under the present act to institute any action or proceeding in behalf 
 of one or more creditors who, by reason of the bankruptcy proceedings, are 
 prevented from enforcing their rights, since by section 67 b it is provided that 
 " whenever a creditor is prevented from enforcing his rights as against a lien 
 created or attempted to be created by his debtor, who afterwards becomes a 
 bankrupt, the trustee of the estate of such bankrupt shall be subrogated to and 
 shall enforce such rights of such creditor for the benefit of the estate." And 
 section 70 ' authorizes the trustee to avoid any transfer which any creditor of 
 the bankrupt might have avoided. 
 
 But the assignee of a bankrupt does not represent the creditors so as to be able 
 to prosecute for them any claim which they have against persons other than 
 the bankrupt himself. Thus, the assignee of a bankrupt corporation cannot 
 prosecute the claims of creditors against officers of the corporation, who have 
 become individually liable to them for filing false reports. (Bristol v. Sandford, 
 12 Blatch. 341.) Neither is it the duty of the trustee in bankruptcy to bring a 
 suit to enforce the individual liability of stockholders to creditors. (Dutcher v. 
 Bank, 12 Blatch. 435; s. c. 11 B. R. 457.) 
 
 Property Held, in Trust. — Unlike the former act, the present act contains 
 no provision that property held in trust by the bankrupt will not pass to the 
 trustee in bankruptcy, but irrespective of any such provision, since trust prop- 
 erty is not transferable by the one holding it in trust, in payment of his debts. 
 It does not pass to his trustee in bankruptcy. (Bodington v. Costello, 17 Tur. 
 781; Winch V. Keeley, i T. R. 619.) And this is equally true of property which 
 is in the possession of a person for a specific purpose and impressed with a 
 trust. (Ex p. Copeland, 3 D. & C. 199; Whitfield v. Brand, 16 M. & W. 282: 
 Parsons on Contracts, Part. H., chapter XII., section VIII.) In considering 
 
ESTATES. 425 
 
 § 70.] Property Held in Trust. 
 
 what property is held for specifc purposes or impressed with trusts, it is to be 
 borne in mind that the weight of authority in construing the American bank- 
 ruptcy acts, is that fiduciary capacity includes only technical trusts. Com- 
 pare cases cited under section 17 (4). But while the general principle that 
 trust property does not pass to the trustee in bankruptcy is so clearly axio- 
 matic that it seems unnecessary to cite many authorities in support of it, 
 questions will arise as to the rights of trustees in bankruptcy to take posses- 
 sion of property which is apparently owned by the bankrupt, but which is 
 mixed with his own moneys or other property in such a way as to be incapable 
 of identification, or which bears no evidence of being trust property. Where 
 there has been this mingling of the trust property with the individual property 
 of the bankrupt, in such manner as to prevent identification the trustee in 
 bankruptcy will acquire title to all the property which is apparently property of 
 the bankrupt. The beneficiary under the trust may have his claim against the 
 trustee, and may be able to punish him criminally; but his interest in the bank- 
 rupt estate is that of a general creditor. Thus, where a miller converted to 
 his own use grain which had been deposited with him for a special purpose, 
 so that it could not be identified, it was held that the interest of the depositor 
 was that of a general creditor. (Adams v. Myers, i Saw. 306; Scott v. Sur- 
 nam, Willes, 400. Compare also Wood Mowing and Reaping Co. v. Brooke, 9 
 B. R. 395. Compare .ff^/. Atkins, 2 Mont. D. & D. 103; Hornblower v. Proud, 
 2 B. & Aid. 327.) In Hosmer v. Jewetl, 6 Ben. 208, it appeared that a bankrupt 
 insurance company reinsured in another company, and received upon certain 
 losses a sum of money as reinsurance from the latter, under an express trust 
 to pay it over to the assured. It was held by (he court that the amount so 
 received was held in trust, and did not pass to the assignee. But in the same 
 case, with reference to the rights of the trustee in bankruptcy to take posses- 
 sion of funds held by trustees of express trusts, which could not be distin- 
 guished from individual and personal property of the trustee, the court said that 
 money due from the bankrupt as trustee of an express trust which could not 
 be distinguished from any moneys in his possession or under his control, or 
 which was only due from him because he had used trust funds for his own 
 purposes or otherwise misapplied them, could not be considered as property 
 held by the bankrupt in trust; that it was only where property was sepa- 
 rately kept and retained as trust property and was, so to speak, " ear- 
 marked," that it would not pass to the trustee in bankruptcy. But although a 
 trustee may have misappropriated trust funds and converted them to his own 
 
426 THE NATIONAL BANKRUPTCY LAW. 
 
 Property Acquired Fraudulently or Conditionally. [Ch. VII. 
 
 use, although the form of the security may have been changed, and although 
 that property may be in the name of the trustee individually or may otherwise 
 have the appearance of being his individual property, and although in such 
 cases it will come into the hands of the trustee in bankruptcy, yet if the original 
 trust fund can in any way be traced to property coming into the hands of the 
 trustee in bankruptcy, the latter takes it subject to the equities of the beneficiary 
 under the trust and acquires no greater title than the defaulting bankrupt him 
 self had. Compare notes under the paragraph entitled, Title Subject to All 
 Equities. Compare, also. Ex p. Tupper, i Rose, 179; Ex p. Butler, i Atk. 213; 
 Ludlow V. Browning, 11 Mod. 138, 
 
 Property Acquired Fraudulently or Conditionally. — In accordance 
 
 with the fundamental principle that the trustee in bankruptcy takes title subject 
 to all legal and equitable claims of others, when the property which comes into 
 his hands is property which was acquired by the bankrupt by fraud, the 
 defrauded parties have the same right to rescind or disaffirm the contract of sale 
 or the transfer when in the hands of the trustee as they would have had while 
 it was held by the bankrupt himself. (Carr v. Hilton, i Curtis C. C. 230.) 
 Thus in Donaldson v. Farwell (5 Biss. 451; s. c. affirmed, 93 U. S. 631), it 
 appeared that a party by fraudulently concealing his insolvency and his 
 intent not to pay for goods, induced the owner to sell to him on credit. It was 
 held that the vendor was entitled to disaffirm the contract and recover the 
 goods, and that the defeasible title of the vendee to the goods vested in his 
 assignee in bankruptcy, but was subject to be determined by the prompt dis- 
 affirmance of the contract by the vendor. Compare Trust Co. v. Sedgwick, 97 
 U. S. 304; Phipps v. Sedgwick, 95 U. S. 3. So where the bankrupt, prior to bank- 
 ruptcy, had bought goods upon a conditional contract whereby it was agreed 
 that the title of the property sold should remain in the vendor until fully paid 
 for, it was held that ' ' the title of the assignee in bankruptcy was defeasible. ' ' {In 
 re}. H. Lyon, 7 B. R. 182.) So if at the time the title vests in the trustee in 
 bankruptcy a vendor could have exercised the right of stoppage in transitu he 
 may exercise that right at any time before the goods come into the possession 
 of the trustee in bankruptcy. (In r^ Foot, 11 Blatch. 530; Bloxhara v. Sanders, 
 4 B. & C. 949; Smith's Leading Cases, 432; compare Gibson v. Carruthers, 8 
 Mees. & W. 321.) Where a merchant relying upon wilful, false representations 
 of one of three partners of a firm was induced to sell them goods of great value, 
 and was thereby greatly damaged, it was held that the misrepresentation being 
 a fraud on the vendor, on account of which he could have rescinded the con- 
 
ESTATES. 427 
 
 § 70.] The Time when this Act shall go into effect. 
 
 tract of sale and followed the goods wherever he could find them, the assignee 
 in bankruptcy of the firm acquired no title to the goods. So where, upon the 
 sale of goods the right to take possession of them in case they were not fully 
 paid for was reserved by the seller, it was held that if he did take possession 
 before proceedings in bankruptcy, the title of the seller was valid as against the 
 assignee in bankruptcy, although the right to repossess himself of the goods 
 was contained in a secret, unrecorded agreement. 
 
 Beneficial Interests Under Trusts. — Beneficial interests under trusts pass 
 to the assignee in bankruptcy. (/» re Myrick, 3 B. R. 38; Sandford v. Lack- 
 land, 2 Dill. 6.) But where there is no fixed and certain right which in equity 
 could be enforced by the beneficiary, then nothing passes to his trustee. 
 Thus, if the payment of principal or income is discretionary in the trustee, 
 the assignee in bankruptcy can assert no valid claim. And it has been held 
 that where by the terms of a trust it was provided that the income of a cer- 
 tain fund was to be paid to the bankrupt for the support of himself and his wife 
 and family, the bankrupt did not have such a personal interest in the fund as 
 could be assigned. (Durant v. Mass. Hosp. Life Ins. Co., 15 Albany Law J. 
 436; s. c. 2 Low. 575; s. c. 16 B. R. 324.) But in this case the trust expressly 
 provided that the principal and annuity both should be inalienable and not sub- 
 ject to debts. To the same effect. Spindle v. Shreve, g Biss. 199; Broadway 
 Bank v. Adams, 133 Mass. 170. Compare cases cited under paragraph on 
 Validity of Conditions Restricting the Passing of Property to a Trustee in Bank- 
 ruptcy. 
 
 THE TIME WHEN THIS ACT SHALL GO INTO EFFECT. 
 
 The present Bankruptcy Law was approved by the president, July ist, 1898. 
 
 a This act shall go into full force and effect upon its passage : 
 Provided, however, That no petition for voluntary bankruptcy 
 shall be filed within one month of the passage thereof, and no 
 petition for involuntary bankruptcy shall be filed within four 
 months of the passage thereof. 
 
 b Proceedings commenced under State insolvency laws before 
 the passage of this act shall not be affected by it. 
 
 The Bankruptcy Law Suspends the Operation of State Insolvency 
 Laws. — The Constitution of the United States gives to Congress the power to 
 
428 THE NATIONAL BANKRUPTCY LAW. 
 
 The Bankruptcy Law Suspends Operation of State Insolvency Laws. [Ch. VII. 
 
 establish a uniform system of bankruptcy, but since the adoption of the Consti- 
 tution, Congress has only upon four occasions exercised that power, and the 
 laws passed pursuant to it have been in force, in all, not more than eighteen 
 years. When Congress does not exercise that authority, the State legislatures 
 are not restrained from passing laws upon the same subject, although the 
 powers given to them are limited by the constitutional provision that they shall 
 pass no law impairing the obligation of contracts. But when Congress does 
 exercise its power of establishing a system of bankruptcy, then the law enacted 
 by it is paramount and superior to other laws relating to the same subject- 
 matter. The State laws upon the subject of insolvency are not repealed by the 
 bankruptcy law, but their operation and effect is suspended as long as the 
 national bankruptcy law remains a statute. This doctrine was clearly stated 
 by Chief Justice Marshall in the following language in Sturgis v. Crownin- 
 shield, 4 Wheat. 122: " It is not the mere existence of the power, but its exer- 
 cise, which is incompatible with the exercise of the same power by the States. 
 It is not the right to establish these uniform laws, but the actual establishment, 
 which is inconsistent with the partial acts of the States. It has been said that 
 Congress has exercised this power, and by doing so has extinguished the power 
 of the States, which cannot be revived by repealing the law of Congress. We 
 do not think so. If the right of the States to pass a bankrupt law is not taken 
 away by the mere grant of that power to Congress, it cannot be extinguished, 
 it can only be suspended by the enactment of a general bankrupt law. The 
 repeal of that law cannot, it is true, confer that power upon the States; but it 
 removes a disability to its exercise which was created by the act of Congress." 
 
 See also Baldwin d. Hale, i Wall. 223; Blanchard v. Russel, 13 Mass. I; Ogden 
 V. Saunders, 12 Wheat. 213; Betts v. Bagley, 29 Mass. 572; in re Reynolds, 8 
 R. I. 845; 5. c, 9 B. R. 50; Adams v. Storey, i Paine, 79. As soon as the bank- 
 ruptcy act is repealed, the several State insolvency laws again go into operation 
 and have full effect, and a debt contracted while the insolvency law was sus- 
 pended by the national bankruptcy may be discharged under the insolvency 
 law which is revived when the bankruptcy law was repealed, even though not 
 dischargeable under the bankruptcy law. (Austin v. Caverley, 10 Met. 332.) 
 
 There has been some conflict of authority as to the extent of this suspension 
 of the operation of the State insolvency laws. In two cases at least it has been 
 held that the State insolvency laws continue to exist and to operate with full 
 vigor until the bankruptcy law attaches upon the person and property of the 
 bankrupt, and that until it is judicially ascertained that the petitioner is a per- 
 
ESTATES. 429 
 
 § 70.] The Bankruptcy Law Suspends the Operation of State Insolvency Laws. 
 
 son entitled to the benefits of the bankruptcy law by being adjudged a bank- 
 rupt by a decree of the court, he is subject to the insolvency laws. {Ex p. 
 Ziegenfuss [Supreme Court of North Carolina], 2 Ired. 463. See also substan- 
 tially, to the same effect. Reed v. Taylor, 32 Iowa, 209.) But the weight of 
 authority is that after the passage of the bankruptcy act the insolvency law is 
 in entire abeyance. Such laws may be passed during that period and are not 
 invalid, but they have no operative effect. {In re Damon, 70 Me. 153.) From the 
 time of the approval of the bankruptcy act (except in so far as cases instituted 
 previous thereto under State insolvency laws may be continued pursuant to the 
 final clause of the bankruptcy act), the operation of the insolvency laws is sus- 
 pended in so far as they relate to the same subject-matter and affect the same 
 persons as the bankruptcy act. If suits are thereafter commenced under the 
 provisions of such State insolvency laws, they are null and void. (Van Nostrand 
 V. Barr, 30 Md. 128; Griswold v. Pratt, 9 Met. [Mass.] 16; Perry v. Langley, i 
 B. R. 559; s. c. 5 Law Rep. 117; in re Reynolds, 8 R. 1. 845; s. c, 9 B. R. 50; 
 Martin v. Berry, 2 B. R. 629; s. c. 37 Cal. 208.) As we have just stated, although 
 the general principle that when Congress enacts a bankruptcy law the operation 
 of State insolvency laws is suspended, is universally conceded, there is 
 a variance of opinion as to the extent of that suspension. The cases 
 upon this point were exhaustively studied and classified in the opinion 
 in Shryock v. Bashore, 13 B. R. 481. It was there said that the decided 
 cases arranged themselves in three classes, and we here give the classifi- 
 cation as set forth in that opinion: "I. Those which held that the passage 
 of the bankrupt law ipso facto suspended the State laws upon the same 
 subject, so that they could no longer operate upon persons or cases within 
 the purview of the bankrupt act. This was the doctrine of Story in re Lucius 
 Eames, 2 Story, 322; and of Kent in note (rf) to page 690, vol. i. Com.; of the 
 Supreme Court of Massachusetts, in Griswold v. Pratt, 9 Mass. 16. The same 
 view is held by the Supreme Court of Rhode Island in re Gideon Reynolds, g B. 
 R. 50; s. c. 8 R. I. 485; by the Court of Appeals of Maryland in Van Nostrand 
 V. Barr, 2 B. R. 485; s. c. 30 Md. 128; reaffirmed in Lavender w. Gosnell & 
 Tripolett, 12 B. R. 282; by the Supreme Court of California in Martin v. Berry, 
 2 B. R. 629; s. c, 37 Cal. 208; by the Supreme Court of New Hampshire, in 
 Chamberlain v. Perkins, 51 N. H. 336. All these are decisions on the precise 
 question. To these may be added in Pennsylvania: Commonwealth v. O'Hara, 
 6 Phila. 402; s. c. i B. R. 86; s. c. 6 Am. Law. Reg., N. S. 765, 772, and Tobin v. 
 Trump, 7 Phila. 123; and of cases in the United States courts: Thornhill v. The 
 
430 THE NATIONAL BANKRUPTCY LAW. 
 
 Laws as to General Assignments Not Suspended. [Ch. VIL 
 
 Bank of Louisiana, 3 B. R. 435; s. c.,5B. R. 367; s. c, i Woods, ij and jk r? Mer- 
 chants' Ins. Co., 6 B. R. 43. The grounds seem to be : First, that Congress is not 
 authorised merely to pass laws the operation of which shall be uniform, but to 
 establish uniform laws on the subject throughout the United States. That this 
 establishment of uniformity Is incompatible with State legislation on that part 
 of the subject to which the acts of Congress may extend: Per Marshall, C. J., 
 in Sturges v. Crowninshield. Second, that two statutes having the same gen- 
 eral object, and acting upon the same persons and cases by different modes and 
 in different jurisdictions, must be in conflict with each other: Per Saunders, J., 
 in Martin v. Berry; and see,^er Washington, J., in Houston v. Moore, cited i 
 Kent's Com., star page 389. 
 
 " II. The second class of cases are those which are supposed to assert that, 
 though a State law provides for cases within the purview of the bankrupt law, 
 if it is not in its operation repugnant to the latter act, but squares with its main 
 purpose, it is not in conflict until the bankrupt law is put into force in the courts 
 of the United States; for until then it does not impede the operation of the 
 bankrupt law. To this effect may be cited Beck v. Parker, 65 Penn. 262; Cook 
 et al. V. Rogers, 13 B. R. 97; Reed v. Taylor, 4 B. R. 710; 32 Iowa, 209; 
 Sedgwick v. Place, 1 B. R. 673; Langley v. Perry, 2 B. R. 596; in re Geo. A. 
 Hawkins, 2 B. R. 378; 34 Conn. 548. 
 
 " III. Those which assert that the State laws (repugnant or not) exist and 
 operate with full vigor until the bankrupt law attaches upon the person or prop- 
 erty of the bankrupt, and that is not until it is judicially ascertained that the 
 petitioner is a person entitled to the benefit of the bankrupt law by being 
 declared a bankrupt by decree of the court. Before that the bankrupt act does 
 not come in conflict with the State law. The principal cases usually adduced in 
 support of this theory are the following, namely, Ex p. John Zeigenfuss, 24 N. 
 C. 463 [2 Ired. 463]; Clark v. Rist, 3 McLean, 494; Reed v. Taylor, 4 B. R. 
 710; s. c, 32 Iowa, 207, and Maltbie v. Hotchkiss, 5 B. R. 485; s. c, 38 Conn. 80." 
 
 Laws as to General Assignments Not Suspended. — It will be seen from 
 a study of the above classification of cases that the weight of authority is that the 
 bankruptcy law suspends any State insolvency law whose general object is the 
 same as that of the bankruptcy law, and which acts upon the same persons and 
 has practically the same scope and effect. If the subject-matter and the per- 
 sons affected are substantially the same, then the fact that the national law 
 does not contain certain provisions which appear in the State law does not leave 
 these provisions in operation. But upon the theory that general assignments 
 
ESTATES. 431 
 
 § 70.] Laws as to Dissolution of Corporations. 
 
 for the benefit of creditors, valid by the common law, were not in their object 
 and end similar to bankruptcy proceedings it was held by the United States 
 Supreme Court in Mayer v. Hellman, 91 U. S. 496, that a State statute which 
 merely attempted to regulate such assignments but did not create the right, was 
 not suspended by the bankruptcy act. In the case cited it was said: " In the 
 argument of the counsel of the defendant in error, the position is taken that the 
 bankrupt act suspends the operation of the act of Ohio regulating the mode of 
 administering assignments for the benefit of creditors, treating the latter as an 
 insolvent law of the State. The answer is that that statute of Ohio is not an 
 insolvent law in any proper sense of the term. It does not compel, or in 
 terms even authorize assignments; it assumes that such instruments were con- 
 veyances previously known, and it only prescribes a mode by which the trust 
 created shall be enforced. It provides for the security of the creditors by 
 exacting a bond from the trustees for the discharge of their duties; it requires 
 them to file statements showing what they have done with the property, and 
 afiords in various ways the means of compelling them to carry out the purposes 
 of the conveyance. There is nothing in the act resembling an insolvent law. 
 It does not discharge the insolvent from arrest or imprisonment; it leaves his 
 after-acquired property liable to his creditors precisely as though no assignment 
 had been made. The provisions for enforcing the trust are substantially such 
 as a court of chancery would apply in the absence of any statutory provision. 
 The assignment in this case must, therefore, be regarded as though the statute 
 of Ohio, to which reference is made, had no existence." To the same effect, 
 see Cook v. Rogers, 31 Mich. 91, and Von Heim v. Elcus, 8 Hun, 516. And it 
 is undoubtedly still true that the common-law right to make general assign- 
 ments although it may be regulated by statute, exists notwithstanding by sec- 
 tion 3 a general assignment is an act of bankruptcy. If such an assignment 
 is not made the basis of a petition in bankruptcy within four months, it is 
 probably unaffected by the bankruptcy act. 
 
 Laws as to Dissolution of Corporations. — Whether state laws which 
 provide a procedure for the winding up of the affairs of insolvent corporations 
 are suspended by the bankruptcy act is not entirely free from question. In 
 Shryock v. Bashore (13 B. R. 481), it was held that a State law providing for 
 the distribution of the assets of an insolvent bank was suspended by the bank- 
 ruptcy law; but in Chandler v. Siddle, decided by the U. S. Circuit Court for 
 the Southern District of Illinois (3 Dill. 477), it was held that the bankrupt act 
 did not divest the States of power to pass laws for the distribution of the assets 
 
432 THE NATIONAL BANKRUPTCY LAW. 
 
 Laws as to Dissolution of Corporations. [Ch. VIL 
 
 of insolvent corporations; that the jurisdiction conferred upon the courts of 
 bankruptcy in that respect was superior but not exclusive to that of the State 
 courts. That decision was based upon the act of Congress of February 13th, 
 1873, 17 Stat, at Large, 436, which was afterwards embodied in R. S., § 5123, 
 which see in the appendix to this volume. 
 
 Independently of any provision authorizing the institution of proceedings in 
 State courts for the distribution among creditors, of the assets of an insolvent 
 corporation, the weight of authority is that such State laws in so far as they 
 provide a means of distributing the assets among creditors and administering 
 the estate are suspended by the bankruptcy act, and that such distribution and 
 administration should be by proceedings in bankruptcy. (Piatt v. Archer, 9 
 Blatch. 559; citing in re Independent Ins. Co., 6 B. R. 260, in which was 
 cited Thornhill v. Bank of Louisiana, 5 B. R. 375 [367].) The rule as laid down 
 by these cases is that after dissolution, a corporation, like a partnership, exists 
 for the purpose of the settlement of its affairs. It exists as to its creditors. 
 The jurisdiction of the bankruptcy court to administer upon and to distribute 
 its assets is exclusive of the exercise of jurisdiction by a State court under any 
 State statute, whether or not that statute is called an insolvency or a bank- 
 ruptcy law. The fact that a State law does not in terms give to the corporation 
 a discharge is immaterial if it provides for the dissolution of the corporation, 
 inasmuch as by the dissolution the corporation ceases to exist, and there is, 
 therefore, after that time no power to collect from it any existing debt, even 
 although it is not nominally discharged. For all practical purposes it receives 
 a discharge if the proceedings result in its dissolution. 
 
APPENDIX A. 
 
 THE BANKRUPTCY ACT OF 1867. 
 
 Note. — It will be apparent to the practicing attorney that for the first year or 
 so of practice under the present bankruptcy act, the vast majority of adjudicated 
 cases which will be available to serve as authorities, will be those decided under 
 the provisions of former bankruptcy acts of the United States, the English acts, 
 or the various insolvency laws of the several states of the Union. Nearly all of 
 these, as appears by the numerous citations in the foregoing work, were 
 decided under the law enacted in 1867. To understand how far they are 
 applicable under the present law, a knowledge of the former law is essential — 
 in fact, second only in importance to a knowledge of the present law. For that 
 reason it has been deemed wise to insert here a copy of the law for convenience 
 of reference by the user of the book. The act of 1867 continued the sole law 
 upon the subject from that time until June, 1874. Amendments of very little 
 importance were made during all that period of seven years. In June, 1874, 
 the act was revised and embodied in the Revised Statutes, the sections being 
 arranged in an order which was considered more logical, and some of them 
 being subdivided so as to form more than one section. A few amendments of 
 substance were made, but in general the law continued the same as to its pro- 
 visions, and even as to its language. To insert both of these laws would be 
 useless tautology, and would probably serve no good purpose. We give here 
 the former bankruptcy law as enacted in 1867, rather than as it was embodied 
 in the Revised Statutes, because under it in that form the vast majority of cases 
 were decided. This resulted from two causes: first, from the fact that in the 
 form in which it was originally adopted it continued law for a longer period 
 than it did in the form in which it appeared as part of the Revised Statutes, the 
 law having been entirely repealed in 1879; a second reason why the great 
 majority of cases were decided under it in its original form is, because under 
 any bankruptcy act there are more cases arising within the first two or three 
 years after its enactment than in the subsequent two or three years. This is 
 because the great number of persons who have met with financial reverses 
 during the years prior to the passage of the law when there has been no bank- 
 ruptcy law, hasten to take advantage of the voluntary provisions of the act, in 
 order to obtain a discharge from their indebtedness. In printing this act of 1867 
 we give every amendment affecting its substance, with date of enactment. We 
 have stated this much, not as an apology for printing this law, but as our reason 
 for doing so. Experience has shown that a knowledge of the former act is 
 indispensable to a proper understanding of the present law. 
 
 NAT. BANKRUPTCY LAW — 28 [433] 
 
434 APPENDIX. 
 
 THE BANKRUPTCY ACT OF 1867. 
 
 (with amendments.) 
 COURTS OF BANKRUPTCY. 
 
 Be it enacted by the Senate and House of Representatives of the United States 
 of America in Congress assembled, That the several District Courts of the 
 United States be, and they hereby are, constituted courts of bankruptcy, and 
 they shall have original jurisdiction in their respective districts in all matters 
 and proceedings in bankruptcy, and they are hereby authorized to hear and 
 adjudicate upon the same according to the provisions of this Act. 
 
 The said courts shall be always open for the transaction of business under this 
 Act, and the powers and jurisdiction hereby granted and conferred shall be 
 exercised as well in vacation as in term time; and a judge sitting in chambers 
 shall have the same powers and jurisdiction, including the power of keeping 
 order and of punishing any contempt of his authority, as when sitting in court. 
 
 And the jurisdiction hereby conferred shall extend — 
 
 To all cases and controversies arising between the bankrupt and any creditor 
 or creditors who shall claim any debt or demand under the bankruptcy; 
 
 To the collection of all the assets of the bankrupt; 
 
 To the ascertainment 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 marshalling and disposition of the different funds and assets, so 
 as to secure the rights of all parties and due distribution of the assets among 
 all the creditors; 
 
 And to all acts, matters, and things to be done under and in virtue of the 
 bankruptcy, until the final distribution and settlement of the estate of the bank- 
 rupt, and the close of the proceedings in bankruptcy. 
 
 {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 contra- 
 distinguished from equitable demands, shall, when such debt does not exceed 
 five hundred dollars, be collected in the courts of the state where such bank- 
 rupt resides, having jurisdiction of claims of such nature and amount.)* 
 
 The said courts 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. 
 
 Said courts 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. 
 
 § 2. And be it further enacted. That the several Circuit Courts of the United 
 States within and for the districts where the proceedings in bankruptcy shall 
 be pending shall have a general superintendence and jurisdiction of all cases 
 
 • So amended by act of 23 June, 1874, ch. 390, § a, 18 Stat. 178. 
 
THE BANKRUPTCY ACT OF 1 867. 435 
 
 and questions arising under this Act; and, except when special provision is 
 otherwise made, may, upon bill, petition, or other proper process of any party 
 aggrieved, hear and determine the case as a court of equity. 
 
 The powers and jurisdiction hereby granted may be exercised either by said 
 court, or by any justice thereof, in term time or vacation. 
 
 * Said Circuit Courts shall also have concurrent jurisdiction with the District 
 Courts of the same district, of all suits at law, or in equity, which may or shall 
 be brought by the assignee in bankruptcy against any person claiming an 
 adverse interest, or by such person against such assignee, touching any prop- 
 erty or rights of property of said bankrupt transferable to, or vested in such 
 assignee ; 
 
 (R. S., § 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 bank- 
 ruptcy against any person claiming an adverse interest or owing any debt to 
 such bankrupt, or by any such person against an assignee, touching any prop- 
 erty or rights of the bankrupt, transferable to or vested in such assignee.) 
 
 But no suit at law or in equity shall in any case be maintainable by or 
 against such assignee, or by or against any person claiming an adverse 
 interest, touching the property and rights of property aforesaid, in any court 
 whatsoever, unless the same shall be brought within two years from the time 
 the cause of action accrued, for or against such assignee: Provided, That noth- 
 ing herein contained shall revive a right of action barred at the time such 
 assignee is appointed. 
 
 OF THE ADMINISTRATION OF THE LAW IN COURTS OF BANK- 
 RUPTCY. 
 
 § 3. And be it further enacted. That it shall be the duty of the judges of 
 the District Courts of the United States within and for the several districts to 
 appoint in each Congressional District in said districts, upon the nomination 
 and recommendation of the Chief Justice of the Supreme Court of the United 
 States, one or more registers in bankruptcy, to assist the judge of the District 
 Court in the performance of his duties under this Act. 
 
 No person shall be eligible to such appointment unless he be a counsellor of 
 said court, or of some one of the courts of record of the State in which he 
 resides. 
 
 Before entering upon the duties of his office, every person so appointed a 
 register in bankruptcy shall give a bond to the United States, with condition 
 that he will faithfully discharge the duties of his office, in a sum not less than 
 one thousand dollars, to be fixed by said court, with sureties satisfactory to 
 said court, or to either of the said justices thereof. 
 
 And he shall, in open court, take and subscribe the oath prescribed in the 
 act entitled "An Act to prescribe an oath of office, and for other purposes," 
 approved July second, eighteen hundred and sixty-two, and also, that he will 
 not during his continuance in office be, directly or indirectly, interested in, or 
 
 * As amended by act of June 22, 1874, this D^iragraph appears in R. S., § 4979. 
 
436 APPENDIX. 
 
 benefited by the fees or emoluments arising from any suit or matter pending in 
 bankruptcy in either the District or Circuit Court in his district. 
 
 § 4. And be it further enacted. That every register in bankruptcy, so 
 appointed and qualified, shall have power, and it shall be his duty — 
 
 To make adjudication of bankruptcy; 
 
 To receive the surrender of any bankrupt; 
 
 To administer oaths in all proceedings before him; 
 
 To hold and preside at meetings of creditors; 
 
 To take proof of debts; 
 
 To make all computations of dividends, and all orders of distribution, and to 
 furnish the assignee with a certified copy of such orders, 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 a creditor does not oppose; 
 
 And to sit in chambers and dispatch t here such part of the administrative 
 business of the court and such uncontested matters as shall be defined in gen- 
 eral rules and orders, or as the district judge shall in any particular matter 
 direct; 
 
 And he shall also make short memoranda of his proceedings in each case in 
 which he shall act, in a docket to be kept by him for that purpose, and he shall 
 forthwith, as the proceedings are taken, forward to the clerk of the District 
 Court a certified copy of said memoranda, which shall be entered by said clerk 
 in the proper minute book, to be kept in his office; 
 
 And any register of the court may act for any other register thereof. 
 
 Provided, however. That nothing in this section contained shall empower a 
 register to commit for contempt, or to hear a disputed adjudication, or any 
 question of the allowance or suspension of an order of discharge; 
 
 But in all matters where an issue of fact or of law is raised and contested by 
 any party to the proceedings before him, it shall be his duty to cause the ques- 
 tion or issue to be stated by the opposing parties in writing, and he shall 
 adjourn the same into court for decision by the judge. 
 
 * No register shall be of counsel 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, nor in an appeal therefrom, nor shall he be executor, adminis- 
 trator, guardian, commissioner, appraiser, divider, or assignee of or upon any 
 estate within the jurisdiction of either of said courts of bankruptcy, hor be 
 interested in the fees or emoluments arising from either of said trusts. 
 
 (R. S., Sec. 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 register or clerk of 
 court shall have any interest in respect to any matter in bankruptcy, shall be o( 
 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 
 
 *So amended by act of 22 June, 1874, ch. 390, sec. iS, 18 Stat. 184. 
 
THE BANKRUPTCY ACT OF 1867. 437 
 
 an appeal therefrom. Nor shall they, or either of them, be executor, adminis- 
 trator, guardian, commissioner, appraiser, divider, or assignee of or upon any 
 estate within the jurisdiction of either of said courts of bankruptcy; nor be 
 interested, directly or indirectly, in the fees or emoluments arising from either 
 of said trusts.) 
 
 The fees of said registers, as established by this Act, and by the general 
 rules and orders required to be framed under it, shall be paid to them by the 
 parties for whom the services may be rendered in the course of proceedings 
 authorized by this Act. 
 
 § 5. And be it further enacted. That 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 this Act as may not be opposed; of attending 
 any meeting of creditors, or receiving any proof of debts, and, generally, for 
 the prosecution of any bankruptcy or other proceedings under this Act; and the 
 travelling and incidental expenses of such register, and of any clerk or other 
 officer attending him, incurred in so acting, shall be settled by said court in 
 accordance with the rules prescribed under the tenth section of this Act, and 
 paid out of the assets of the estate in respect of which such register has so 
 acted; or, if there be no such assets, or if the assets shall be insufficient, then 
 such expenses shall form a part of the costs in the case or cases in which the 
 register shall have acted in such journey, to be apportioned by the judge; and 
 such register, so acting, shall have and exercise all powers, except the power of 
 commitment, vested in the District Court for the summoning and examination 
 of persons or witnesses, and for requiring the production of books, papers, and 
 documents: 
 
 Provided always. That all depositions of persons and witnesses taken before 
 said 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- 
 Such register shall be subject to removal by the judge of the District Court; 
 
 And all vacancies occurring by such removal, or by resignation, change of 
 residence, death, or disability, shall be promptly filled by other fit persons, 
 unless said court shall deem the continuance of the particular office unnecessary 
 
 § 6. And be it further enacted. That any party shall, during the proceedings 
 before a register, be at liberty to take the opinion of the district judge upon any 
 point or matter arising in the course of such proceedings, or upon the result of 
 such proceedings, which shall be stated by the register in the shape of a short 
 certificate to the judge, who shall sign the same if he approve thereof; and such 
 certificate, so signed, shall be binding on all the parties to the proceeding; but 
 every such certificate may be discharged or varied by the judge at chambers or 
 in open court. 
 
 In any bankruptcy, or in any other proceedings within the jurisdiction of the 
 court under this Act, the parties concerned, or submitting to such jurisdiction, 
 may, at any stage of the proceedings, by consent, state any question or ques- 
 tions in a special case for the opinion of the court; and the judgment of the 
 court shall 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 this Act. 
 
 The parties may also, if they think fit, agree, that upon the question or ques- 
 
438 APPENDIX. 
 
 tions 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. 
 
 § 7. And be it farther enacted. That parties and witnesses summoned before a 
 register shall be bound to attend, in pursuance of such summons, at the place 
 and time designated therein, and shall be entitled to protection, and be liable 
 to process of contempt in like manner as parties and witnesses are now liable 
 thereto in case of default in attendance under any writ of subpoena; 
 
 And all persons wilfully and corruptly swearing or affirming falsely before a 
 register shall be liable to all the penalties, punishments, and consequences of 
 perjury. 
 
 If any person examined before a register shall refuse or decline to answer, or 
 to swear to or sign his examination when taken, the register shall refer the 
 matter to the judge, who shall have power to order the person so acting to pay 
 the costs thereby occasioned, if such person be compellable by law to answer 
 such question or to sign such examination ; and such person shall also be liable 
 to be punished for contempt. 
 
 §8. And be it further enacted. That appeals maybe taken from the District 
 to the Circuit Courts in all cases in equity, and writs of error may be allowed 
 to said Circuit Courts from said District Courts in cases at law under the juris- 
 diction created by this act when the debt or damages claimed amount to more 
 than five hundred dollars; and any supposed creditor, whose claim is wholly or 
 in part rejected, or an assignee who is dissatisfied with the allowance of a 
 claim, may appeal from the decision of the District Court to the Circuit Court 
 for the same district; but no appeal shall be allowed in any case from the Dis- 
 trict to the Circuit Court unless it is claimed, and notice given thereof to the 
 clerk of the District Court, to be entered with the record of the proceedings, and 
 also to the assignee or creditor, as the case may be, or to the defeated party in 
 equity, within ten days after the entry of the decree or decision appealed from. 
 
 The appeal shall be entered at the term of the Circuit Court which shall be 
 first held within and for the district next after the expiration of ten days from 
 the time of claiming the same. 
 
 But 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. 
 
 And no appeal shall be allowed unless the appellant, at the time of claiming 
 the same, shall give bond in manner now required by law in cases of such 
 appeals. 
 
 No writ of error shall be allowed unless the party claiming it shall comply 
 with the statutes regulating the granting of such writs. 
 
 §9. And be it further enacted. That in cases arising under this Act, no appeal 
 or writ of error shall be allowed in any case from the Circuit Courts to the 
 Supreme Court of the United States, unless the matter in dispute in such case 
 shall exceed * (two thousand dollars). 
 
 * Amended by act of Feb. 6th, 1875, ch. 77, sec. 3, to $5,000.00. 
 
THE BANKRUPTCY ACT OF 1867. 439 
 
 § 10. And be it further enacted. That the Justices of the Supreme Court of the 
 United States, subject to the provisions of this Act, shall frame general orders 
 for the following purposes: 
 
 For regulating the practice and procedure of the District Courts in bank- 
 ruptcy, and the several forms of petitions, orders, and other proceedings to be 
 used in said courts in all matters under this Act; 
 
 For regulating the duties of the various officers of said courts; 
 
 (*For regulating the fees payable, and the charges and costs to be allowed, 
 except such as are established by this Act or by law, with respect to all pro- 
 ceedings in bankruptcy before said courts, not exceeding the rate of fees now 
 allowed by law for similar services in other proceedings). 
 
 For regulating the fees payable and the charges and costs to be allowed, 
 with respect to all proceedings in bankruptcy before such courts, not exceeding 
 the rate of fees now allowed by law for similar services in other proceedings. 
 
 For regulating the practice and procedure upon appeals; 
 
 For regulating the filing, custody, and inspection of records; 
 
 And generally for carrying the provisions of this Act into effect. 
 
 (f And said justices shall have power under said sections, by general regula- 
 tions, to simplify, and so far as in their judgment will conduce to the benefit of 
 creditors, to consolidate the duties of the register, assignee, marshal, and clerk, 
 and to reduce fees, costs, and charges, to the end that prolixity, delay, and 
 unnecessary expense may be avoided.) 
 
 After such general orders shall have been so framed, they, or any of them, 
 may be rescinded or varied, and other general orders may be framed in manner 
 aforesaid; 
 
 And all such general orders so framed shall, from time to time, by the Jus- 
 tices of the Supreme Court, be reported to Congress, with such suggestions as 
 said Justices may think proper. 
 
 VOLUNTARY BANKRUPTCY— COMMENCEMENT OF PROCEEDINGS. 
 
 § II. And be it further enacted. That if any person residing within the juris- 
 diction of the United States, owing debts provable under this Act 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 immediately 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 the benefit of this Act; 
 
 And shall annex to his petition a schedule (words " and inventory and valua- 
 tion " added by act of June 22, 1874), verified by oath before the court, or before 
 a register in bankruptcy, or before one of the commissioners of the Circuit 
 Court of the United States, containing a full and true statement of all his debts, 
 and, as far as possible, to whom due, with the place of residence of each cred- 
 
 * Amended by act of 22 June, 1874, ch. 390, sec. 18, 18 Stat. 184, to read as in 
 the following paragraph. 
 f So added by act of 22 June, 1874, ch. 390, sec. i8, 18 Stat. 184. 
 
440 APPENDIX. 
 
 itor, if known to the debtor, and, if not known, the fact to be so stated, and the 
 sum due to each creditor; also the nature of each debt or demand, whether 
 founded on written security, obligation, contract, or otherwise, and also the true 
 cause and consideration of such indebtedness in each case, and the place where 
 such indebtedness accrued, and a statement of any existing mortgage, pledge, 
 lien, judgment, or collateral or other security given for the payment of the same; 
 
 And shall also annex to his petition an accurate inventory,* verified in like 
 manner, of all his estate, both real and personal, assignable under this Act, 
 describing the same, and stating where it is situated, and whether there are 
 any, and, if so, what encumbrances thereon; 
 
 The filing of such petition shall be an act of bankruptcy, and such petitioner 
 shall be adjudged a bankrupt; 
 
 Provided, That all citizens of the United States petitioning to be declared 
 bankrupt shall, in filing such petition, and before any proceedings thereon, take 
 and subscribe an oath of allegiance and fidelity to the United States, which oath 
 shall be filed and recorded with the proceedings in bankruptcy. 
 
 And the judge of the District Courts, or, if there be no opposing party, any 
 register of said court, to be designated by the judge, shall forthwith, if he be 
 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 
 of said district, authorizing him forthwith, as messenger, to publish notices in 
 such newspapers as the warrant specifies; to serve written or printed notice, 
 by mail or personally, on all creditors upon the schedule filed with the debtor's 
 petition, or whose names may be given to him in addition by the debtor, and to 
 give such personal or other notice to any persons concerned as the warrant 
 specifies, which notice shall state: 
 
 First. That a warrant in bankruptcy has been issued against the estate of the 
 debtor. 
 
 Second. That the payment of any debts and the delivery of any property 
 belonging to such debtor to him or for his use, and the transfer of any property 
 by him, are forbidden by law. 
 
 Third. That a meeting of the creditors of the debtor, giving the names, resi- 
 dences, and amounts, so far as known, to prove their debts and choose one or 
 more assignees of his estate, will be held at a court of bankruptcy, to be holden 
 at a time and place designated in the warrant, not less than ten nor more than 
 ninety days after the issuing of the same. 
 
 (■j-But whenever the creditors of the bankrupt are so numerous as to make 
 any notice now required by law to them, by mail or otherwise, a great and dis- 
 proportionate expense to the estate, the court may, in lieu thereof, in its discre- 
 tion, order such notice to be given by publication in a newspaper, or news- 
 papers, to all such creditors, whose claims, as reported, do not exceed the 
 sums, respectively, of fifty dollars.) 
 
 *"And valuation," so amended Act of June 22, 1874. 
 
 \ So amended by act of 22 June, 1874, ch. 390, sec. 5, 18 Stat. 179. 
 
THE BANKRUPTCY ACT OF I867. 441 
 
 OF ASSIGNMENTS AND ASSIGNEES. 
 
 § 12. And be it further enacted. That 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. 
 
 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. 
 
 § 13. And be it further enacted, That 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 etate of the debtor; the choice 
 to be made by the greater part in value and in number of the creditors who have 
 proved their debts. 
 
 If no choice is made by the creditors at said meeting, the judge, or, if there 
 be no opposing interest, the register, shall appoint one or more assignees. 
 
 If an assignee, so chosen or appointed, fails within five days to express in 
 writing his acceptance of the trust, the judge or register may fill the vacancy. 
 
 All elections or appointments of assignees shall be subject to the approval of 
 the judge; and when in his judgment it is for any cause needful or expedient, 
 he may appoint additional assignees, or order a new election. 
 
 The judge at any time may, and upon the request in writing of any creditor 
 who has proved his claim shall require the assignee to give good and sufficient 
 bond to the United States, with a condition for the faithful performance and 
 discharge of his duties; 
 
 The bond shall be approved by the judge or register by his endorsement 
 thereon, shall be filed with the record of the case, and inure to the benefit of 
 all creditors proving their claims, and may be prosecuted in the name and for 
 the benefit of any injured party. 
 
 If the assignee fails to give the bond within such time as the judge orders, 
 not exceeding ten days after notice to him of such order, the judge shall remove 
 him and appoint another in his place. 
 
 § 14. And be it further enacted, That as soon as said assignee is appointed and 
 qualified, the judge, or, where there is no opposing interest, the register, shall, 
 by an instrument under his hand, assign and convey to the assignee all the 
 estate, 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 said proceedings in bankruptcy, and thereupon, by operation of law, the title 
 to all such property and estate, both real and personal, shall vest in said 
 assignee, although the same is then attached on mesne process as the property 
 of the debtor, and shall dissolve any such attachment made within four months 
 next preceding the commencement of said proceedings: 
 
 Provided, however. That there shall be excepted from the operation of the 
 provisions of this section — 
 
 The necessary household and kitchen furniture, and such other articles and 
 necessaries of such bankrupt as the said assignee shall designate and set apart, 
 having reference in the amount to the family, condition, and circumstances of 
 
44? APPENDIX. 
 
 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 chil- 
 dren; 
 
 And the uniform, arms, and equipments of any person who is or has been a 
 soldier in the militia or in the service of the United States; 
 
 And such other property as now is, or hereafter shall be exempted from 
 attachment, or seizure, or levy on execution by the laws of the United States; 
 
 And such other property not included in the foregoing exceptions as is 
 exempted from levy and sale upon execution or other process, or order of any 
 <:ourt, 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 not 
 exceeding that allowed by such State exemption laws in force in the year 
 eighteen hundred and sixty-four: 
 
 Provided, That the foregoing exception shall operate as a limitation upon the 
 conveyance of the property of the bankrupt to his assignees; 
 
 And in no case shall the property hereby excepted pass to the assignees, or 
 the title of the bankrupt thereto be impaired or affected by any of the provisions 
 of this Act; 
 
 And the determination of the assignee in the matter shall, on exception 
 taken, be subject to the final decision of the said court: 
 
 And provided further , That no mortgage of any vessel or of any other goods 
 or chattels, made as security for any debt or debts, in good faith and for pres- 
 ent considerations, and otherwise valid, and duly recorded, pursuant to any 
 statute of the United States or of any State, shaill be invalidated or affected 
 hereby. 
 
 And all the property conveyed by the bankrupt in fraud of his creditors; 
 
 All rights in equity, choses in action, patents and patent rights and copy- 
 rights ; 
 
 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 the bankrupt had againsi any person arising from 
 contract or from the unlawful taking or detention or of injury to the property 
 of the bankrupt; and all his rights of redeeming such property or estate, with 
 the like right, title, power, and authority to sell, manage, dispose of, sue for, 
 and recover or defend the same, as the bankrupt might or could have had if no 
 assignment had been made, shall, in virtue of the adjudication of bankruptcy 
 and the appointment of his assignee, be at once vested in such assignee; 
 
 And he may sue for and recover the said estate, debts, and effects, and may 
 prosecute and defend all suits at law or in equity, pending at the time of the 
 adjudication of bankruptcy, in which such bankrupt is a party in his own 
 name, in the same manner and with the like effect as they might have been 
 presented or defended by such bankrupt. 
 
 And a copy, duly certified by the clerk of the court, under the seal thereof, of 
 the assignment made by the judge or register, as the case may be, to him as 
 assignee, shall be conclusive evidence of his title as such assignee to take, hold, 
 
THE BANKRUPTCY ACT OF 1 867. 443 
 
 sue for, and recover the property of the bankrupt, as hereinbefore mentioned; 
 but no property held by the bankrupt in trust shall pass by such assignment. 
 
 No person shall be entitled to maintain an action against an assignee in 
 bankruptcy for anything done by him as such assignee, without previously giv- 
 ing him twenty days' notice of such action, specifying the cause thereof, to the 
 end that such assignee may have an opportunity of tendering amends, should 
 he see fit to do so. 
 
 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 ; 
 
 And no suit in which the assignee is a party shall be abated by his death or 
 removal from office, but the same may be prosecuted and defended by his suc- 
 cessors, or by the surviving or remaining assignee, as the case may be. 
 
 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 encumbrances. 
 
 The debtor shall also, at the request of the assignee, and at the expense of 
 the estate, make and execute any instruments, deeds, and writings which may 
 be proper, to enable the assignee to possess himself fully of all the assets of the 
 bankrupt. 
 
 The assignee shall immediately give notice of his appointment by publica- 
 tion, at least once a week for three successive weeks, in such newspaper 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 convey- 
 ance of any lands owned by the bankrupt ought by law to be recorded; 
 
 And the record of such assignment, or a duly certified copy thereof, shall be 
 evidence thereof in all courts. 
 
 § 15. And be it further enacted. That the assignee shall demand and receive 
 from any and all persons holding the same, all the estate assigned, or intended 
 to be assigned, under the provisions of this Act; 
 
 And he shall sell all such unencumbered estate, real and personal, which 
 comes to his hands, on such terms as he thinks most for the interest of the 
 creditors ; 
 
 (R. S., sec. 5062a (22 June, 1874, ch. 390, sec. i, 18 Stat. 178.) — That the 
 court may, in its discretion, on sufficient cause shown, and upon notice and 
 hearing, direct the receiver or assignee to take possession of the property, and 
 carry on the business of the debtor, or any part thereof, under the direction of 
 the court, when in its judgment, the interest of the estate as well as of the 
 creditors will be promoted thereby, but not for a period exceeding nine months 
 from the time the debtor shall have been declared a bankrupt. Provided That 
 such order shall not be made until the court shall be satisfied that it is 
 approved by a majority in value of the creditors.) 
 
 But upon petition of any person interested, and for cause shown, the court 
 
444 APPENDIX. 
 
 may make such order concerning the time, place, and manner of sale, as will, 
 in its opinion, prove to the interest of the creditors; 
 
 And the assignee shall keep a regular account of all money received by him 
 as assignee, to which every creditor shall, at reasonable times, have free resort. 
 
 (R. S., sec. 5062b (22 June, 1874, ch. 390, sec. 4, 18 Stat. 178.) — That, unless 
 otherwise ordered by the court, the assignee shall sell the property of the bank- 
 rupt, whether real or personal, at public auction, in such parts or parcels, and 
 at such times and places, as shall be best calculated to produce the greatest 
 amount with the least expense. All notices of public sales under this act by 
 any assignee or officer of the court shall be published once a week for three 
 consecutive weeks in the newspaper or newspapers to be designated by the 
 judge, which, in his opinion, shall be best calculated to give general notice of 
 the sale. And the court on application of any party in interest, shall have com- 
 plete 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 bank- 
 rupt, 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 faith- 
 fully discharge his duties in the sale or disposition of property as above contem- 
 plated, it shall be the duty of the court to remove such assignee, and he shall 
 forfeit all fees and emoluments to which he might be entitled in connection 
 with such sale. And if any assignee shall in any manner, in violation of his 
 duty aforesaid, unfairly or wrongfully sell, or dispose of, or in any manner, 
 fraudulently or corruptly combine, conspire, or agree with any person or per- 
 sons, with intent to unfairly or wrongfully sell, or dispose of the property com- 
 mitted to his charge, he shall, upon proof thereof, be removed, and forfeit all 
 fees or other compensation for any and all services, in connection with such 
 bankrupt's estate, and upon conviction thereof, before any court of competent 
 jurisdiction, shall be liable to a fine of not more than ten thousand dollars, or 
 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 com- 
 bining, conspiring, or agreeing with such assignee for the purpose aforesaid, 
 shall, upon conviction, be liable to a like punishment. That the assignee shall 
 report under oath, to the court, at least as often as once in three months, the 
 condition of the estate in his charge and the state of his accounts in detail, and 
 at all other times when the court, on motion or otherwise, shall so order. And 
 on any settlement of the account 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 affidavit declaring, according to the truth, whether he has 
 or has not, as the case may be, received, or is or is not, as the case may be, to 
 
THE BANKRUPTCY ACT OF 1 867. 445 
 
 receive, directly or indirectly, any interest, benefit, or advantage from the use 
 or deposit of such funcls; and such assignee may be examined orally upon the 
 same subject, and if he shall wilfully swear falsely, either in such affidavit or 
 examination, or to his report provided for in this section, he shall be deemed to 
 be guilty of perjury, and on conviction thereof, be punished by imprisonment 
 in the penitentiary not less than one and not more than five years.) 
 
 § 16. And be it further enacted. That the assignee shall have the like remedy 
 to recover all said estate, debts, and effects in his own name, as the debtor 
 might have had if the decree in bankruptcy had not been rendered, and no 
 assignment had been made. 
 
 If, at the time of the commencement of the proceedings in bankruptcy an 
 action is 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 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 com- 
 menced by him. 
 
 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. 
 
 In suits prosecuted by the assignee a certified copy of the assignment made 
 to him by the judge or register shall be conclusive evidence of his authority to 
 sue. 
 
 § 17. And be it further enacted. That the assignee shall, as soon as may be 
 after receiving any money belonging to the estate, deposit the same in some 
 bank in his name as assignee, or otherwise keep it distinct and apart from all 
 other money in his possession; and shall, as far as practicable, keep all goods 
 and effects belonging to the estate separate and apart 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 exposed or liable to be taken as his prop- 
 erty or for the payment of his debts. 
 
 When it appears that the distribution of the estate may be delayed by litiga- 
 tion 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 said 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 con- 
 tract with the assignee to pay thereon. 
 
 He shall give written notice to all known creditors, by mail or otherwise, of 
 all dividends, and such notice of meetings, after the first, as may be ordered by 
 the court. 
 
 He shall be allowed, and may retain, out of money in his hands, all the neces- 
 sary disbursements made by him in the discharge of his duty, and a reasonable 
 compensation for his services, in the discretion of the court. 
 
 He may, under the direction of the court, submit any controversy arising in 
 the settlement of demands against the estate, or of debts due to it, to the deter- 
 mination of arbitrators, to be chosen by him and the other party to the contro- 
 versy, and may, under such direction, compound and settle any such contro- 
 
446 APPENDIX. 
 
 versy by agreement with the other party, as he thinks proper and most for the 
 interest of the creditors. 
 
 § l8. And be it further enacted. That the court, after due notice and hearing, 
 may remove an assignee for any cause which, in the judgment of the court, 
 renders such removal necessary or expedient. 
 
 At a meeting called by order of the court in its discretion for the purpose, or 
 which shall be called upon the application of a majority of the creditors in num- 
 ber and value, the creditors may, with consent of the court, remove any 
 assignee by such a vote as is hereinbefore provided for the choice of assignee. 
 
 An assignee may, with the consent of the judge, resign his trust, and be dis- 
 charged therefrom. 
 
 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 credit- 
 ors, in the manner hereinbefore provided, at a regular meeting, or at a meeting 
 called for the purpose, with such notice thereof, in writing, to all known credit- 
 ors, and by such person as the court shall direct. 
 
 The resignation or removal of an assignee shall in no way release him from 
 performing all things requisite on his part for the proper closing up of his trust 
 and the transmission thereof to his successors, nor shall it affect the liability of 
 the principal or surety on the bond given by the assignee. 
 
 When, by death, or otherwise, the number of assignees is reduced, the estate 
 of the debtor not lawfully disposed of shall vest in the remaining assignee or 
 assignees, and the persons selected to fill vacancies, if any, with the same 
 powers and duties relative thereto as if they were originally chosen. 
 
 Any former assignee, his executors or administrators, upon request, and at 
 the expense of the estate, shall make and execute to the new assignee all deeds, 
 conveyances, and assurances, and do all other lawful acts requisite to enable 
 him to recover and receive all the estate. 
 
 And the court may make all orders which it may deem expedient to secure 
 the proper fulfillment of the duties of any former assignee, and the rights and 
 interests of all persons interested in the estate. 
 
 No person who has received any preference contrary to the provisions of this 
 Act shall vote for or be eligible as assignee. 
 
 But no title to property, real or personal, sold, transferred, or conveyed by 
 an assignee, shall be affected or impaired by reason of his ineligibility. 
 
 An assignee refusing or unreasonably neglecting 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. 
 
 OF DEBTS AND PROOF OF CLAIMS. 
 
 § 19. And be it further ena-.ted. That all debts due and payable from the bank- 
 rupt at the time of the adjudication of 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 contract, may be proved against the estate 
 of the bankrupt. 
 
 All demands against the bankrupt for or on account of any goods or chattels 
 
THE BANKRUPTCY ACT OF 1 867. 447 
 
 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. 
 
 If the bankrupt shall be 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, and his liability shall not have become absolute until after the 
 adjudication of bankruptcy, the creditor may prove the same after such liability 
 shall have become fixed, and before the final dividend shall have been declared. 
 
 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 contingency shall happen 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 lia- 
 bility ascertained and liquidated, which shall then be done in such manner as 
 the court shall order, and he shall be allowed to prove for the amount so ascer- 
 tained. 
 
 Any person liable as bail, surety, guarantor, or otherwise for the bankrupt, 
 who shall have paid the debt or any part thereof in discharge of the whole, shall 
 be entitled to prove such debt, or to stand in the place of the creditor if he shall 
 have 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 said debt, but is still liable for the same or any part thereof, may, if the 
 creditor shall fail or omit to prove such debt, prove the same, either in the name 
 of the creditor or otherwise, as may be provided by the rules, and subject to 
 such regulations and limitations as may be established by such rules. 
 
 Where the bankrupt is liable to pay rent, or other debt falling due at fixed 
 and stated periods, the creditor may prove for a proportionate part thereof up 
 to the time of the bankruptcy, as if the same grew due from day to day, and 
 not at such fixed and stated periods. 
 
 If any bankrupt shall be liable for unliquidated damages arising out of any 
 contract or promise, or on account of any goods or chattels wrongfully taken, 
 converted, or withheld, the Court may cause such damages to be assessed in 
 such mode as it may deem best, and the sum so assessed may be proved 
 against the estate. 
 
 No debts other than those above specified shall be proved or allowed against 
 the estate. 
 
 § 20. And he it further enacted. That in all cases of mutual debts or mutual 
 credits between the parties the account between them shall be stated, and one 
 debt set off against the other, and the balance only shall be allowed or paid, 
 but no set-off shall be allowed of a claim in its nature not provable against the 
 estate: Promded, That no set-off shall be allowed in favor of any debtor to the 
 bankrupt of a claim purchased by or transferred to him after the filing of the 
 petition. 
 
 (*Or in cases of compulsory bankruptcy, after the act of bankruptcy upon or 
 
 * So added by act of 22 June, 1874, ch. 390, sec. 6, 18 Stat. 179. 
 
448 APPENDIX. 
 
 in respect of which the adjudication shall be made, and with a view of making 
 
 such set-off.) 
 
 When a creditor has a mortgage or pledge of real or personal property of the 
 bankrupt, or a lien thereon for securing the payment of a debt owing to him 
 from the bankrupt, he shall be admitted as a creditor only for the balance of the 
 debt after 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 
 property, and be admitted to prove his whole debt. 
 
 If the value of the property exceeds the sura for which it is so held as secur- 
 ity, 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 con- 
 summate the transaction. If the property is not so sold or released and 
 delivered up, the creditor shall not be allowed to prove any part of his debt. 
 
 § 2T. And be it further enacted. That 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 and suit 
 against the bankrupt, and all proceedings already commenced, or unsatisfied 
 judgments already obtained thereon, 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 determined without a discharge.) 
 
 And no creditor whose debt is provable under this act shall be allowed to 
 prosecute to final judgment any suit at law or in equity therefor against the bank- 
 rupt, until the question of the debtor's discharge shall have been determined. 
 
 And any such suit or proceeding shall, upon the application of the bankrupt, 
 be stayed to await the determination of the court in bankruptcy on the question 
 of the discharge: Provided, There be no unreasonable delay on the part of the 
 bankrupt in endeavoring to obtain his discharge: And provided, also. That if the 
 amount due the creditor is in dispute, the suit, by leave of the court in bank- 
 ruptcy, may proceed to judgment for the purpose of ascertaining the amount 
 due, which amount may be proved in bankruptcy, but execution shall be stayed 
 as aforesaid. 
 
 If any bankrupt shall, at the time of adjudication, be 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 
 
 *So added by act of 22 June, 1874, ch. 390, sec. 7, 18 Stat. 179.) 
 
THE BANKRUPTCY ACT OF 1 867. 449 
 
 of such distinct contracts against the estates respectively liable upon such con- 
 tracts. 
 
 g 22. And be it further enacted, That all proofs of debts against the estate of the 
 bankrupt, by or in behalf of creditors residing within the judicial district where 
 the proceedings in bankruptcy are pending, shall be made before one of the 
 registers of the court in said district, and by or in behalf of non-resident debtors 
 before any register in bankruptcy in the judicial districts where such creditors, 
 or either of them, reside, or before any commissioner of the Circuit Court 
 authorized to administer oaths in any district. 
 
 (Sec. 5076 a (22 June 1874, ch. 390, sec. 20, i8 Stat. 186). — That in addition to 
 the officers now authorized to take proof of debts against the estate of a bank- 
 rupt, 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 signature and official seal.) 
 
 (Sec. 5076 b (Act of August 15, 1876, ch. 304, 19 Stat. 206). — Be it enacted by 
 the Senate and House of Representatives of the United States of America in Congress 
 assembled, That notaries public of the several States, Territories, and the Dis- 
 trict of Columbia be, and they are hereby, authorized to take depositions, and 
 do all other acts in relation to taking testimony to be used in the courts of the 
 United States, take acknowledgments and affidavits, in the same manner and 
 with the same effect as commissioners of the United States Circuit Court may 
 now lawfully take or do.) 
 
 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, 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 proceed- 
 ings under this act ; 
 
 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 
 said claim, or any part thereof, against such bankrupt, or 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 under this act, is or shall be in any way 
 affected, influenced, or controlled; 
 
 And no claim shall be allowed unless all the statements set forth in such 
 deposition shall appear to be true. 
 
 Such oath, or solemn affirmation shall be made by the claimant testifying of 
 his own knowledge, unless he is absent from the United States, or prevented by 
 some other good cause from testifying, in which cases the demand may be veri- 
 fied in like manner by the attorney or authorized agent of the claimant testify- 
 
 NAT. BANKRUPTCY LAW — 29 
 
450 APPENDIX. 
 
 ing to the best of his knowledge, information, and belief, and setting forth his 
 means of knowledge, or, if in a foreign country, the oath of the creditor may be 
 taken before any minister, consul, or vice-consul of the United States; and the 
 court may, if it shall see fit, require or receive further pertinent evidence, either 
 for or against the admission of the claim. 
 
 Corporations may verify their claims by the oath or solemn affirmation of 
 their president, cashier, or treasurer. 
 
 If the proof is satisfactory to the register or commissioner, it shall be signed 
 by the deponent, and delivered or sent by mail to the assignee, who shall 
 examine the same and compare it with the books and accounts of the bankrupt, 
 and shall register, in a book to be kept by him for that purpose, the names of 
 creditors who have proved their claims, in the order in which such proof is 
 received, stating the time and receipt of such proof, and the amount and nature 
 of the debts, which books shall be open to the inspection of all the creditors. 
 
 The court may, on the application of the assignee, or of the bankrupt, or 
 without any application, examine upon oath the bankrupt, or any person ten- 
 dering or who has made proof of claims, and may summon any person capable 
 of giving evidence concerning such proof, or concerning the debt sought to be 
 proved, and shall reject all claims not duly proved, or where the proof shows 
 the claim to be founded in fraud, illegality, or mistake. 
 
 § 23. And be it further enacted. That when a claim is presented for proof 
 before the election of the assignee, and the judge entertains doubts of its valid- 
 ity, or of the right of the creditor to prove it, and is of opinion that such valid- 
 ity or right ought to be investigated by the assignee, he may postpone the proof 
 of the claim until the assignee is chosen. 
 
 Any person who, after the approval of this Act, shall have accepted any 
 preference, having reasonable cause to believe that the same was made or 
 given by the debtor contrary to any provision of this Act, shall not prove the 
 debt or claim on account of which the preference was made or given, nor shall 
 he receive any dividend therefrom until he shall first have surrendered to the 
 assignee all property, money, benefit, or advantage received by him under such 
 preference. 
 
 The court shall allow all debts duly proved, and shall cause a list thereof to 
 be made and certified by one of the registers; 
 
 And any creditor may act at all meetings by his duly constituted attorney the 
 same as though personally present. 
 
 § 24. And be it further enacted. That a supposed creditor who takes an appeal 
 to the Circuit Court from the decision of the District Court rejecting his claim, 
 in whole or in part, shall, upon entering his appeal in the Circuit Court, file in 
 the clerk's office thereof a statement in writing of his claim, setting forth the 
 same substantially, as in a declaration for the same cause of action at law, and 
 the assignee shall plead or answer thereto in like manner, and like proceedings 
 shall thereupon be had in the pleadings, trial, and determination of the cause, as 
 in an action atlaw commenced and prosecuted, in the usual manner, in the courts 
 of the United States, except that no execution shall be awarded against the 
 assignee for the amount of a debt found due to the creditor. The final judg' 
 ment of the court shall be conclusive, and the list of debts shall, if necessary. 
 
THE BANKRUPTCY ACT OF 1 867. 45 1 
 
 be altered to conform thereto. The party prevailing in the suit shall be entitled 
 to costs against the adverse party, to be taxed and recovered as in suits at law; 
 if recovered against the assignee, they shall be allowed out of the estate. 
 
 A bill of exchange, promissory note, or other instrument used in evidence 
 upon the proof of a claim, and left in court, or deposited in the clerk's ofSce, 
 may be delivered, by the register or clerk having the custody thereof, to the 
 person who used it, upon his filing a copy thereof, attested by the clerk of the 
 court, who shall endorse upon it the name of the party against whose estate it 
 has been proved, and the date and amount of any dividend declared thereon. 
 
 § 25. And be it further enacted. That when it appears to the satisfaction of the 
 court that the estate of the debtor or any part thereof, is of a perishable 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 messen- 
 ger or assignee, as the case may be, who shall hold the funds received in place 
 of the estate disposed of; 
 
 And 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 claimant, his agent, or 
 attorney, as the court shall deem reasonable, order it to be sold, under the 
 direction of the assignee, who shall hold the funds received in place of the 
 estate disposed of; 
 
 And the proceeds of the sale shall be considered the measure of the value of 
 the property in any suit or controversy between the parties in any courts. 
 
 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. 
 
 § 26. And be it further enacted. That the court may, on the application of the 
 assignee in bankruptcy, 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, 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; 
 
 Which examination shall be in writing, and shall be signed by the bankrupt, 
 and be filed with the other proceedings. 
 
 And the court may, in like manner, require the attendance of any other per- 
 son as a witness; and if such person shall fail to attend on being summoned 
 thereto, the court may compel his attendance by warrant directed to the mar- 
 shal, commanding him to arrest such person, and bring him forthwith before 
 the court, or before a register in bankruptcy for examination as such witness. 
 
 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 certified, at such 
 
452 
 
 APPENDIX. 
 
 time and place and in such manner as the court may deem proper, and with like 
 effect as if such examination had been in court. 
 
 The bankrupt shall, at all times until his discharge, be subject to the order of 
 the court, and shall, at the expense of the estate, execute all proper writings 
 and instruments, and do and perform all acts required by the court touching the 
 assigned property or estate, and to enable the assignee to demand, recover, and 
 receive all the property and estate assigned, wherever situated; and for neglect 
 or refusal to obey any order of the court, such bankrupt 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 specified or 
 required pursuant to this section, and if it appears that such absence was not 
 caused by wilful 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. 
 
 He shall also be at liberty, from time to time, upon oath, to amend and cor- 
 rect his schedule of creditors and property so that the same shall conform to the 
 facts. 
 
 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 
 shall not be entitled to a discharge unless he shall prove to the satisfaction of 
 the court that he was unable to procure the attendance of his wife. 
 
 No bankrupt shall be liable to arrest during the pendency of the proceedings 
 in bankruptcy in any civil action unless the same is founded on some debt or 
 claim from which his discharge or bankruptcy would not release him. 
 
 § 27. And be it further enacted. That all creditors whose debts are duly proved 
 and allowed shall be entitled to share in the bankrupt's property and estate/™ 
 rata, without any priority or preference whatever, except that wages due from 
 him to any operative, or clerk, or house servant, to an amount not exceeding 
 fifty dollars, for labors performed within six months next preceding the adjudi- 
 cation of bankruptcy, shall be entitled to priority, and shall be first paid in full; 
 
 Provided, That any debt proved by any person liable as bail, surety, guar- 
 antor, or otherwise for the bankrupt, shall not be paid to the person so proving 
 the same until satisfactory evidence shall be produced of the payment of such 
 debt by such person so liable, and the share to which such debt would be 
 entitled may be paid into court, or otherwise held for the benefit of the party 
 entitled thereto, as the court may direct. 
 
 At the expiration of three months from the date of the adjudication of bank- 
 ruptcy 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 credit- 
 ors just and true accounts of all his receipts and payments, verified by his oath; 
 
 And he shall also produce and file vouchers for all payments for which 
 vouchers shall be required by any rule of the court; 
 
THE BANKRUPTCY ACT OF 1867. 453 
 
 He shall also submit the schedule of the bankrupt's creditors and property as 
 amended, duly verified by the bankrupt, and a statement of the whole estate of 
 the bankrupt, as then ascertained, of the property recovered and of the prop- 
 erty outstanding, specifying the cause of its being outstanding, also what debts 
 or claims are yet undetermined, and stating what sum remains in his hands. 
 
 At such meeting the majority in value of the creditors present shall deter- 
 mine whether any and what part of the net proceeds of the estate, after deduct- 
 ing 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 shall 
 attend such meeting, either in person or by attorney, it shall be the duty of the 
 assignee so to determine. 
 
 In case a dividend is ordered the register shall, within ten days after such 
 meeting, prepare a list of creditors entitled to dividend, and shall calculate and 
 set opposite to the name of each creditor who has proved his claim, the dividend 
 to which he is entitled out of the net proceeds of the estate set apart for divi- 
 dend, and shall forward by mail to every creditor a statement 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. 
 
 § 28. And be it further enacted. That the like proceedings shall be had at the 
 expiration of the next three months, or earlier if practicable, and a third meet- 
 ing of creditors shall then be called by the 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 afterwards come to the hands of the 
 assignee, in which case the assignee shall, as soon as may be, convert such 
 estate or effects into money, and within two months after the same shall be so 
 converted the same 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. 
 
 If at any time there shall be in the hands of the assignee any outstanding 
 debts or other property, due or belonging to the estate, which cannot be collected 
 and received by the assignee without unreasonable or inconvenient delay or 
 expense, the assignee may, under the direction of the court, sell and assign 
 such debts or other property in such manner as the court shall order. 
 
 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 fur- 
 ther payment is made to the latter. 
 
 Preparatory to the final dividend, the assignee shall submit his account to the 
 court, and file the same, and give notice to the creditors of such filing, and shall 
 also give notice that he will apply for a settlement of his account, and for a 
 discharge from all liability as assignee, at a time to be specified in such notice, 
 and at such time the court shall audit and pass the accounts of the assignee, 
 and such assignee shall, if required by the court, be examined as to the truth 
 
454 
 
 APPENDIX. 
 
 of such account, and, if found correct, he shall thereby be discharged from all 
 liability as assignee to any creditor of the bankrupt. 
 
 The court shall thereupon order a dividend of the estate and effects, or of 
 such part thereof as it sees fit, among such of the creditors as have proved their 
 claims, in proportion to the respective amount of their said debts. 
 
 In addition to all e.^penses necessarily incurred by him in the execution of 
 his trust, in any case, the assignee shall be entitled to an allowance for his 
 services in such case, on all moneys received and paid out by him therein, for 
 any sum not exceeding one thousand dollars, five per centum thereon; for any 
 larger sum, not exceeding five thousand dollars, fwo 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; and if, at any time, there shall not be 
 in his hands a suflScient amount of money to defray the necessary expenses 
 required for the further execution of his trust, he shall not be obliged to pro- 
 ceed therein until the necessary funds are advanced or satisfactorily secured to 
 him. 
 
 If, by accident, mistake, or other cause, without fault of the assignee, either 
 or both of the said second and third meetings should not be held within the 
 times limited, the court may, upon motion of an interested party, order such 
 meetings, with like effect as to the validity of the proceedings as if the meeting 
 had been duly held. 
 
 In the order for a dividend, under this section, the following claims shall be 
 entitled to priority or preference, ^d to be first paid in full in the following 
 order: — 
 
 Jnrst. The fees, costs, and expenses of suits, and the several proceedings in 
 bankruptcy under this act, and for the custody of property, as herein provided. 
 
 Second. All debts due to the United States, and all taxes and assessments 
 under the laws thereof. 
 
 Third. 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. 
 
 Fourth. 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 first publication of the notice of proceedings in bankruptcy. 
 
 Fifth. 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 this act 
 had not been passed: Always provided. That nothing contained in this act shall 
 interfere with the assessment and collection of taxes by the authority of the 
 United States or any State. 
 
 OF THE BANKRUPT'S DISCHARGE AND ITS EFFECT. 
 
 §29. And be it further enacted. That at any time after the expiration of six 
 months from the adjudication of bankruptcy, or if no debts have been proven 
 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 within one year from the 
 
 * Amended so as to read " and before the final disposition of the cause." 
 (Act of July 26, 1876, ch. 234, sec. i.) 
 
THE BANKRUPTCY ACT OF 1 867. 455 
 
 adjudication of bankruptcy, the bankrupt may apply to the court for a dis- 
 cbarge from his debts, and the court shall thereupon order notice to be given 
 by mail to all creditors who have proved their debts, and by publication at least 
 once a week in such newspapers as the court shall designate, due regard being 
 had to the general circulation of the same in the district, or in that portion of 
 the district in which the bankrupt and his creditors shall reside, to appear on a 
 day appointed for that purpose, and show cause why a discharge should not be 
 granted to the bankrupt. 
 
 No discharge shall be granted, or, if granted, be valid — 
 
 If the bankrupt has wilfully sworn falsely in his affidavit annexed to his peti- 
 tion, schedule, or inventory, or upon any examination in the course of the pro- 
 ceedings 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 books or writ- 
 ings relating thereto; 
 
 Or if he 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 per- 
 mitted to retain under the provisions of this Act; 
 
 Or if he has caused, permitted, or suffered any loss, waste, or destruction 
 thereof; 
 
 Or if, within four months before the commencement of such proceedings, he 
 has procured his lands, goods, money, or chattels to be attached, sequestered, 
 or seized, on execution; 
 
 Or if, since the passage of this act, 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 defraud his creditors; 
 
 Or if he has given any fraudulent preference contrary to the provisions of 
 this Act; 
 
 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, he has not, subsequently to the pass- 
 age of this Act, 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, pay- 
 ment, transfer, assignment, or conveyance of any part of his property, directly 
 or indirectly, absolutely or conditionally, for the purpose of preferring any 
 
45 6 APPE^fDIX. 
 
 creditor or person having a claim against him, or who is or may be under lia- 
 bility for him, or for the purpose of preventing the property from coming into 
 the hands of the assignee, or of being distributed under this act in satisfaction 
 of his debts; 
 
 Or if he has been convicted of any misdemeanor under this Act, or has been 
 guilty of any fraud whatever contrary to the true intent of this Act; 
 
 And before any discharge is granted, the bankrupt shall take and subscribe 
 an oath to the effect that he has not done, suffered or been privy to any act, 
 matter, or thing specified in this act as a ground for withholding such dis- 
 charge, or as invalidating such discharge if granted. 
 
 § 30. And be further enacted, That no person who shall have been discharged 
 under this Act, and shall afterwards become bankrupt, on his own application, 
 shall be again entitled to a discharge, whose estate is insufficient to pay seventy 
 per centum of the debts proved against it, unless the assent in writing of three- 
 fourths in value of his creditors who have proved their claims, is filed at or 
 before the time of application for discharge. 
 
 But a bankrupt, who shall prove to the satisfaction of the court that he has 
 paid all the debts owing by him at the time of any previous bankruptcy, or who 
 has been voluntarily released therefrom by his creditors, shall be entitled to a 
 discharge in the same manner and with the same effect as if he had not previ- 
 ously been bankrupt. 
 
 § 31. And be it further enacted. That any creditor opposing the discharge of 
 any bankrupt may file a specification in writing of the grounds of his opposi- 
 tion, 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. 
 
 § 32. And be it further enacted. That if it shall appear to the Court that the 
 bankrupt has in all things conformed to his duty under this act, 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, in substance as 
 follows : 
 
 District Court of the United States, District of . 
 
 Whereas , has been duly adjudged a bankrupt under the Act of Con- 
 gress establishing a uniform system of bankruptcy throughout the United 
 States, and appears to have conformed to all the requirements of law in that 
 behalf, it is therefore ordered by the Court that said be forever dis- 
 charged from all debts and claims which by said Act are made provable against 
 
 his estate, and which existed on the day of , on which day the petition 
 
 for adjudication was filed by or [or against] him excepting such debts, if any, 
 as are by said Act 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 , A. D. . 
 
 [Seal.] Judge. 
 
 § 33. And be it further enacted. That no debt created by the fraud or embezzle- 
 ment of the bankrupt or by his defalcation as a public officer, or while acting in 
 any fiduciary character, shall be discharged under this Act; but the debt may 
 
THE BANKRUPTCY ACT OF 1867. 457 
 
 be proved, and the dividend thereon shall be a payment on account of said 
 debt; 
 
 And 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. 
 
 And in all proceedings in bankruptcy commenced after one year from the 
 time this Act shall go into operation, no discharge shall be granted to a debtor 
 whose assets do not pay fifty per centum of the claims against his estate, 
 (" upon which he is liable as the principal debtor." So amended. Act of July 
 27, 1868, ch. 258, sec. i), unless the assent in writing of a majority in number 
 and value of his creditors who have proved their claims, is filed in the case at 
 or before the time cf application for discharge. 
 
 (R. S., sec. 5112 a (22 June, 1874, ch. 390, sec. 9, 18 Stat. 180). — That in cases 
 of compulsory or involuntary bankruptcy, the provisions of said act, and any 
 amendment thereof, or of any supplement thereto, requiring the payment of 
 any proportion of the debts of the bankrupt, or the assent of any portion of his 
 creditors, as a condition of his discharge from his debts, shall not apply; but he 
 may, if otherwise entitled thereto, be discharged by the court in the same man- 
 ner and with the same effect as if he had paid such per centum of his debts, or 
 as if the required proportion of his creditors had assented thereto. And in cases 
 of voluntary bankruptcy, no discharge shall be granted to a debtor whose 
 assets shall not be equal to thirty per centum of the claims proved against his 
 estate, upon which he shall be liable as principal debtor without the assent of 
 at least one-fourth of his creditors in number, and one-third in value. And the 
 provision in section five thousand one hundred and twelve (thirty-three of said 
 act of March second, eighteen hundred and sixty-seven) requiring fifty per cen- 
 tum of such assets is hereby repealed.) 
 
 § 34. And be it further enacted. That a discharge duly granted under this Act 
 shall, with the exceptions aforesaid, lelease the bankrupt from all debts, 
 claims, liabilities, and demands which were or might have been proved against 
 his estate in bankruptcy, and may be pleaded, by a simple averment that on the 
 day of its date such discharge was granted to him, setting the same forth in 
 hac verba, as a full and complete bar to all suits brought on any such debts, 
 claims, liabilities, or demands, and the certificate shall be conclusive evidence 
 in favor of such bankrupt of the fact and the regularity of such discharge; 
 
 Always provided. That any creditor or creditors of said bankrupt, whose debt 
 was proved or provable against the estate in bankruptcy, who shall see fit to 
 contest the validity of said 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. 
 
 Said application shall be in writing; shall specify which, in particular, of the 
 several acts mentioned in section twenty-nine it is intended to give evidence of 
 against the bankrupt, setting forth the grounds of avoidance, and no evidence 
 shall be admitted as to any other of the said acts; but said application shall be 
 subject to amendment at the discretion of the court. 
 
 The court shall cause reasonable notice of said application to be given to said 
 
458 APPENDIX. 
 
 bankrupt, and order him to appear and answer the same, within such time as 
 to the court shall seem fit and proper. 
 
 If, upon the hearing of said parties, the court shall find that the fraudulent 
 acts, or any of them, set forth as aforesaid by said creditor or creditors against 
 the bankrupt, are proved, and that said creditor or creditors had no knowl- 
 edge of the same until after the granting of said discharge, judgment shall 
 be given in favor of said creditor or creditors, and the discharge of said 
 bankrupt shall be set aside and annulled. But if said court shall find that said 
 fraudulent acts, and all of them, set forth as aforesaid, are not proved, or that 
 they were known to said creditor or creditors before the granting of said dis- 
 charge, then judgment shall be rendered in favor of the bankrupt, and the 
 validity of his discharge shall not be affected by said proceedings. 
 
 PREFERENCES AND FRAUDULENT CONVEYANCES DECLARED VOID. 
 
 § 35. And be it further enacted. That if any person, being insolvent, or in con- 
 templation of insolvency, within four months before the filing of the petition by 
 or against him, with a view to give a preference to any creditor or person hav- 
 ing a claim against him, or who is under any liability for him, procures 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, absolutely 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 
 believe such person is insolvent * (and that such attachment, payment, pledge, 
 assignment, or conveyance, is made in fraud of the provisions of this Act — 
 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 benefited). 
 
 And if any person being insolvent, or in contemplation of insolvency or bank- 
 ruptcy, within six months before the filing of the petition by or against him, 
 makes any payment, sale, assignment, transfer, conveyance, or other disposi- 
 tion 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, 
 andf that such payment, sale, assignment, transfer, or other conveyance is 
 made with a view to prevent his property from coming to his assignee in bank- 
 ruptcy, or to prevent the same from being distributed under this Act, or to 
 defeat the object of, or in any way impair, hinder, impede, or delay the opera- 
 tion and effect of, or to evade any of the provisions of this Act, 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. And if such sale, 
 
 •Amended so as to read: " Knowing that such attachment, 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 
 benefited. And nothing in said section five thousand one hundred and twenty- 
 eight (thirty-five) shall be construed to invalidate any loan of actual value, or 
 the security therefor, made in good faith, upon a security taken in good faith on 
 the occasion of the making of such loan." — Act of June 22, 1874. R- S. § 5128. 
 
 t(The word " knowing " inserted by act of June 22, 1874, ch. 390, sec. n.) 
 
THE BANKRUPTCY ACT OF 1 867. 459 
 
 assignment, transfer, or conveyance is not made in the usual and ordinary 
 course of business of the debtor, the fact shall be prima facie evidence of fraud. 
 
 Any contract, covenant, or security made or given by a bankrupt or other 
 person with, or in trust for, any creditor, for securing the payment of any 
 money as a consideration for, or with intent to induce the creditor to forbear 
 opposing the application for discharge of the bankrupt, shall be void; 
 
 And if any creditor shall obtain any sum of money or other goods, chattels, 
 or security from any person as an inducement for forbearing to oppose, or con- 
 senting to such application for discharge, every creditor so offending 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. 
 
 (R. S., sec. 5130 a (22 June, 1874, ch. 390, sec. 10, 18 Stat. 180). — 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 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 sec- 
 tion five thousand one hundred and twenty-nine (thirty-five) is hereby changed 
 to three months, but this provision shall not take effect until three months after 
 the passage of this act.) 
 
 BANKRUPTCY OF PARTNERSHIPS AND OF CORPORATIONS. 
 
 § 36. And be it further enacted. That where two or more persons who are part- 
 ners in trade shall 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, a 
 warrant shall issue in the manner provided by this Act, upon which all the 
 joint stock and property of the copartnership, and also all the separate estate of 
 each of the partners, shall be taken, excepting such parts thereof as are herein- 
 before excepted; 
 
 And all the creditors of the company, and the separate creditors of each part- 
 ner, shall be allowed to prove their respective debts; 
 
 And the assignee shall be chosen by the creditors of the company, and shall 
 also 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 such assignee the 
 whole of the expenses and disbursements, the net proceeds of the joint stock 
 shall be appropriated to pay the creditors of the copartnership, and the net pro- 
 ceeds of the separate estate of each partner shall be appropriated to pay his 
 separate creditors; 
 
 And if there shall be any balance of the separate estate of any partner, after 
 the payment of his separate debts, such balance shall be added to the joint 
 stock for the payment of the joint creditors; 
 
 And if there shall be any balance of the joint stock after payment of the joint 
 debts, such balance shall be divided and appropriated to and among the sepa- 
 
460 APPENDIX. 
 
 rate estates of the several partners, according to their respective right and 
 interest therein, and as it would have been if the partnership had been dis- 
 solved 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; 
 
 And 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 
 under this Act; 
 
 And in all other respects the proceedings against partners shall be conducted 
 in the like manner as if they had been commenced and prosecuted against one 
 person alone. 
 
 If such copartners reside in different districts, that court in which the petition 
 is first filed shall retain exclusive jurisdiction over the case. 
 
 § 37. And be it further enacted. That the provisions of this Act shall apply to 
 all moneyed, business, or commercial corporations and joinl-stock companies, 
 and that upon the petition of any officer of any such corporation or company 
 duly authorized by a vote of a majority of the corporators present, at any legal 
 meeting called for the purpose, or upon the petition of any creditor or creditors 
 of such corporation or company, made and presented in the manner hereinafter 
 provided in respect to debtors, the like proceedings shall be had and taken as 
 are hereinafter provided in the case of debtors;- 
 
 And all the provisions of this Act which apply to the debtor, or set forth his 
 duties in regard to furnishing schedules and inventories, executing papers, 
 submitting to examinations, disclosing, making over, secreting, concealing, 
 conveying, assigning, or paying away his money or property, shall in like 
 manner, and with like force, effect, and penalties, apply to each and every 
 officer of such corporation or company in relation to the same matters concern- 
 ing the corporation or company, and the money and property thereof. 
 
 All payments, conveyances, and assignments declared fraudulent and void 
 by this Act, 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 corpo- 
 ration or company. No allowance or discharge shall be granted to any corpo- 
 ration or joint-stock company, or to any person, or officer, or member thereof; 
 
 Provided, That whenever any corporation by proceedings under this Act 
 shall be declared bankrupt, all its property and assets shall be distributed to the 
 creditors of such corporation in the manner provided in this Act in respect to 
 natural persons. 
 
 OF DATES AND DEPOSITIONS. 
 
 g 38. And be it further enacted. That the filing of a petition for adjudication in 
 bankruptcy, either by a debtor in his own behalf, or by any creditor against a 
 debtor, upon which an order may be issued by the court, or by a register, in 
 the manner provided in section four, shall be deemed and taken to be the com- 
 mencement of proceedings in bankruptcy under this act; 
 
 The proceedings in all cases of bankruptcy shall be deemed matters of record, 
 but the same shall not be required to be recorded at large, but shall be carefully 
 filed, kept, and numbered in the office of the clerk of the court, and a docket 
 
THE BANKRUPTCY ACT OF 1 867. 461 
 
 only, or short memorandum thereof, kept in books to be provided for that pur- 
 pose, which shall be open to public inspection. 
 
 Copies of such records, duly certified under the seal of the court, shall in all 
 cases he prima facie evidence of the facts therein stated. 
 
 Evidence of examination in any of the proceedings under this Act 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 compel the attend- 
 ance of witnesses, the production of books and papers, and the giving of testi- 
 mony, in the same manner as in suits in equity in the Circuit Court. 
 
 INVOLUNTARY BANKRUPTCY. 
 
 § 3g. And be it further enacted. That any person residing and owing 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 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 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 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 any State, district or Territory 
 within which such debtor resides or has property, founded upon a demand in 
 its nature provable against a bankrupt's estate under this Act, and for a sum 
 exceeding one hundred dollars, and such process is remaining in force and not 
 discharged by payment, or in any other manner provided by the law of such 
 State, district, or Territory applicable thereto, for a period of seven days; 
 
 Or has been actually imprisoned for more than * (seven) days in a civil action, 
 founded on contract, for the sum of one hundred dollars or upwards. 
 
 Or who, being bankrupt or insolvent, or in contemplation of bankruptcy or 
 insolvency shall make any payment, gift, grant, sale, conveyance, f (or transfer 
 of money, or other property, estate, rights, or credits, or give any warrant to 
 confess judgment, or procure or suffer his property to be taken on legal pro- 
 cess), with intent to give a preference to one or more of his creditors, or to any 
 person or persons who are or may be liable for him as indorsers, bail, sureties, 
 or otherwise, or with the intent, by such disposition of his property, to defeat 
 or delay the operation of this Act; 
 
 *(Amended to " twenty." R. S., sec. 5021; Act of June 22, 1874). 
 
 t Amended so as to read, " Or transfer of money or other property, estate 
 rights, or credits, or confess judgment, or give any warrant to confess judg- 
 ment, or procure his property to be taken on legal process." 
 
462 
 
 APPENDIX. 
 
 *(0r who, being a banker, merchant, or trader, has stopped or suspended and 
 not resumed payment of his commercial paper, within a period of fourteen 
 days); 
 
 Shall be deemed to have committed an act of bankruptcy, and, subject to the 
 conditions hereinafter prescribed, shall be adjudged a bankrupt, on the petition 
 of one or more of his creditors,! (the aggregate of whose debts provable under 
 this Act amount to at least two hundred and fifty dollars, provided such petition 
 is brought within six months after the act of bankruptcy shall have been com- 
 mitted.) 
 
 I And if such person shall be adjudged a bankrupt, the assignee may recover 
 back the money or other property so paid, conveyed, sold, assigned, or trans- 
 ferred contrary to this Act: Provided, the person receiving such payment or 
 conveyance had reasonable cause to believe that a fraud on this Act was 
 intended, or that the debtor was insolvent; 
 
 And such creditor shall not be allowed to prove his debt in bankruptcy. 
 
 * Words in parentheses amended so as to read, " or who, being a bank, 
 banker, broker, merchant, trader, (j) manufacturer, or miner, has fraudulently 
 stopped payment, or who, being a bank, banker, broker, merchant, trader, 
 manufacturer, or miner, has stopped, or suspended and not resumed payment, 
 within a period of forty days of his commercial paper, (made or passed in the 
 course of his business as such), or who, being a bank or banker, shall fail for 
 forty days, to pay any depositor upon demand of payment lawfully made. 
 R. S., sec. 5021, Act of June 22, 1874.) 
 
 f Words in parentheses amended so as to read, " who shall constitute one- 
 fourth thereof, at least, in number, and the aggregate of whose debts (i) prov- 
 able under this act amounts to at least one-third of the debts so provable. 
 R. S. sec. 5021, Act of June 22, 1874.) 
 
 X In the Revised Statutes, section 5021, the following was inserted before 
 and instead of this paragraph: 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 
 creating any preference, and valid, according to the law of the State where 
 made, shall of itself, in the event of his or their being subsequently adjudicated 
 bankrupts in a proceeding of involuntary bankruptcy, be a bar to the discharge 
 of such debtor or debtors. And the provisions of this section shall apply to all 
 cases of compulsory or involuntary bankruptcy commenced since the first day 
 of December, eighteen hundred and seventy-three, as well as to those com- 
 menced hereafter. And in all cases commenced since the first day of 
 Di'cember, eighteen hundred and seventy-three, and prior to the passage of 
 this Act, as well as those commenced hereafter, the court shall, if such allega- 
 tion 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 forth- 
 with 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 satisfied that the admis- 
 sion 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 reasonable time, not exceeding in cases heretofore commenced, twenty 
 days, and in cases hereafter commenced ten days, within which other creditors 
 may join in such petition. And if, at the expiration of such time so limited. 
 
THE BANKRUPTCY ACT OF 1 867. 463 
 
 § 40. And be it further enacted. That upon the filing of the petition authorized 
 by the next preceding section, if it shall appear 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, vfhy the 
 prayer of the petition should not be granted; 
 
 And may also, by its injunction, restrain the debtor, and any other person, 
 in the meantime, from making any transfer or disposition of any of the debtor's 
 property not excepted by this Act from the operation thereof, and from any 
 interference therewith; 
 
 And if it shall appear that there is probable cause for believing that the 
 debtor is about to leave the district, or to remove or conceal his goods and 
 chattels or his evidence of property, or make any fraudulent conveyance or dis- 
 position thereof, the court may issue a warrant to the marshal of the district, 
 commanding him to arrest the alleged 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 decision of the court upon the peti- 
 tion or the further order of the court, and forthwith to take possession provi- 
 sionally of all the property and effects of the debt or, andsafely keep the same 
 until the further order of the court. 
 
 A copy of the petition and of such order to show cause shall be served on 
 such debtor by delivering the same to him personally, or leaving the same at 
 his last or usual place of abode; 
 
 Or, if such debtor cannot be found, or his place of residence ascertained, 
 service shall be made by publication, in such manner as the judge may direct. 
 
 No further proceedings, unless the debtor appear and consent thereto, shall 
 
 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 sec- 
 tion, the proceedings shall be dismissed, and in cases hereafter commenced, 
 with costs. And if such person shall be adjudged a bankrupt, the assignee may 
 recover back the money (m) or property so paid, conveyed, sold, assigned, or 
 transferred contrary to this act: Provided, That the person receiving such pay- 
 ment or conveyance had reasonable cause to believe that the debtor was insolv- 
 ent, and knew that a fraud 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 moiety of his debt; and this limitation on the proof of debts shall 
 apply to cases of voluntary as well as involuntary bankruptcy. And the peti- 
 tion of creditors under this section may be sufficiently verified by the oaths of 
 the first five signers thereof, if so many there be. And if any of said first five 
 signers shall not reside in the district in which such petition is to be filed, the 
 same may be signed and verified by the oath or oaths of the attorney or attor- 
 neys, agent or agents, of such signers. And in computing the number of cred- 
 itors, as aforesaid, who shall join in such petition, creditors whose respective 
 debts do not exceed two hundred and fifty dollars shall not be reckoned. But 
 if there be no creditors whose debts exceed said sum of two hundred and fifty 
 dollars, or if the requisite number of creditors holding debts exceeding two 
 hundred and fifty dollars fail to sign the petition, the creditors having debts 
 of a less amount shall be reckoned for the purpose aforesaid. So amended by 
 act of July 26, 1876, ch. 234, sec. i, 19 Stat. 102. 
 
464 APPENDIX. 
 
 be had until proof shall have been given, to the satisfaction of the court, of 
 such service or publication ; 
 
 * And if such proof be not given on the return day of such order, the proceed- 
 ings shall be adjourned and an order made that the notice be forthwith so 
 served or published. 
 
 § 41. And be it further enacted. That on such return day, or adjourned day, 
 if the notice has been duly served or published, or shall be 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 proceed- 
 ings from time to time, on good cause shown, and shall, if the debtor on the 
 same day so demand in writing, order a trial by jury at the first term of the 
 court at which a jury shall be in attendance, to ascertain the fact of such 
 alleged bankruptcy; 
 
 f (Or, at the election of the debtor, the court may, in its discretion, award a 
 venire facias 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 for cause.) 
 
 And if, upon such hearing or trial, the debtor proves to the satisfaction of the 
 court or of the jury, as the case may be, that the facts set forth in the petition 
 are not true, or that the debtor has paid and satisfied all liens upon his prop- 
 erty, in case the existence of such liens were the sole ground of the proceeding, 
 the proceedings shall be dismissed and the respondent shall recover his costs. 
 
 §42. And be it further enacted. That if the facts set forth in the petition are 
 found to be true, or if default be made by the debtor to appear pursuant to the 
 order, upon due proof of service thereof being made, the court shall adjudge 
 the debtor to be a bankrupt, and, as such, subject to the provisions of this act, 
 and shall forthwith issue a warrant to take possession of the estate of the debtor. 
 
 The warrant shall be directed, and the property of the debtor shall be taken 
 thereon, and shall be assigned and distributed in the same manner and with 
 similar proceedings to those hereinbefore (See amendment. Act June 22, 1874), 
 providing for the taking possession, assignment, and distribution of the prop- 
 erty of the debtor upon his own petition. 
 
 The order of adjudication of bankruptcy shall require the bankrupt forth- 
 with, 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 
 
 * Amended by act of 22 June, 1874, ch. 390, sec. 13, 18 Stat. 182, to read: 
 " And if, on return day of the order to show cause as aforesaid the court 
 shall be satisfied that the requirement of section five thousand and twenty-one 
 (thirty-nine) of said act, as to the number and amount of petitioning creditors, 
 has been complied with, or it within the time provided for in section five thou- 
 sand and twenty-one (thirty-nine) of this act, creditors sufficient in number and 
 amount shall sign such petition so as to make a total of one-fourth in number 
 of the creditors, and one- third in the amount of the provable debts against the 
 bankrupt, as provided in said section, the court shall so adjudge, which judg- 
 ment shall be final; otherwise it shall dismiss the proceedings, and in cases 
 hereafter commenced, with costs." ' 
 
 f So amended by act of 22 June, 1874, ch. 390, sec. 14, 18 Stat. 182.) 
 
THE BANKRUPTCY ACT OF 1 867. 465 
 
 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 of a petitioning debtor by section thirteen. 
 
 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 hereinbefore provided for the service of the order to show cause; 
 
 And if the bankrupt is absent or cannot be found, such schedule and inven- 
 tory shall be prepared by the messenger and the assignee from the best infor- 
 mation they can obtain. 
 
 If the petitioning creditor shall not appear and proceed on the return day, or 
 adjourned day, the court may, upon the petition of any other creditor to the 
 required amount, proceed to adjudicate on such petition, without requiring a 
 new service or publication of notice to the debtor. 
 
 § 43. And be it further enacted. That if, at the first meeting of creditors, or at 
 any meeting of creditors to be specially called for that purpose, and of which 
 previous notice shall have been given for such length of time and in such man- 
 ner as the court may direct, three-fourths in value of the creditors whose claims 
 have been proved shall determine and resolve that it is for the interest of the 
 general body of the creditors that the estate of the bankrupt should be wound 
 up and settled, and distribution made among the creditors by trustees, under 
 the inspection and direction of a committee of the creditors, it shall be lawful 
 for the creditors to certify and report such resolution to the court, and to nomi- 
 nate one or more trustees to take, and hold, and distribute the estate, under the 
 direction of such committee. 
 
 If it shall appear to the court, after hearing the bankrupt and such creditors 
 as may desire to be heard, that the resolution was duly passed and that the 
 interests of the creditors will be promoted thereby, it shall confirm the same ; 
 
 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 be wound up and settled by said trustees, according to the terms 
 of such resolution, the bankrupt, or his assignee in bankruptcy, if appointed, 
 as the case may be, shall, under the direction of the court, and under oath, 
 convey, transfer, and deliver all the property and estate of the bankrupt to the 
 said trustee or trustees, who shall, upon such conveyance and transfer, have 
 and hold the same in the same manner, and with the same powers and rights, 
 in all respects, as the bankrupt would have had or held the same if no proceed- 
 ings in bankruptcy had been taken, or as the assignee in bankruptcy would 
 have done had such resolution not been passed; 
 
 And such consent and the proceedings thereunder shall be as binding in all 
 respects on any creditor, whose debt is provable, who has not signed the same, 
 as if he had signed it, and on any creditor whose debt, if provable, is not 
 proved, as if he had proved it; 
 
 And 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 said trustees shall pro- 
 
 (* Words " and valuation " added. Act of June 22, 1874.) 
 
 NAT. BANKRUPTCY LAW — 30 
 
466 APPENDIX. 
 
 ceed to wind up and settle the estate under the direction and inspection of such 
 committee of the creditors, for the equal benefit of all such creditors; 
 
 And the winding up and settlement of any estate under the provisions of this 
 section shall be deemed to be proceedings in bankruptcy under this Act; and 
 the said trustees shall have all the rights and powers of assignees in banlcruptcy. 
 
 The court, on the application of such trustees, shall have power to summon 
 and examine, on oath or otherwise, the bankrupt and any creditor, and any 
 person indebted to the estate, or known or suspected of having any of the estate 
 in his possession, or any other person whose examination may be material or 
 necessary to aid the trustees in the execution of their trust, and to compel the 
 attendance of such persons and the production of books and papers, in the same 
 manner as in other proceedings in bankruptcy under this act; 
 
 And the bankrupt shall have the like right to apply for and obtain a dis- 
 charge after the passage of such resolution and the appointment of such trus- 
 tees as if such resolution had not been passed, and as if all the proceedings had 
 continued in the manner provided in the preceding sections of this Act. 
 
 If the resolution shall not be duly reported, or the consent of the creditors 
 shall not be duly filed, or if, upon its filing, the court shall not think fit to 
 approve thereof, the bankruptcy shall proceed as though no resolution had been 
 passed, and the court may make all necessary orders for resuming the proceed- 
 ings; 
 
 And the period of time which shall have elapsed between the date of the 
 resolution and the date of the order for resuming proceedings shall not be 
 reckoned in calculating periods of time prescribed by this Act. 
 
 (R. S., sec. 5103 a (22 June, 1874, ch. 390, sec. 17, 18 Stat. 182). — That in all 
 cases of bankruptcy 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 
 otherwise, 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 meeting either in person or by proxy, and shall be confirmed 
 by the signatures thereto of the debtor and two-thirds in number and one-half 
 in value of all the creditors of the debtor. And in 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 credit- 
 ors 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 assign such 
 resolution without first relinquishing such security for the benefit of the estate. 
 
 The debtor, unless prevented by sickness or other cause satisfactory to such 
 meeting, shall be present at the same, and shall answer any inquiries made of 
 him; and he, or, if he is so prevented from being at such meeting, some one in 
 
THE BANKRUPTCY ACT OF 1 867. 467 
 
 his behalf, shall produce to the meeting a statement showing the whole value 
 of his assets and debts, and the names and addresses of the creditors to whom 
 such debts respectively are due. 
 
 Such resolution, together with the statement of the debtor as to his assets and 
 debts, shall be presented to the court; and the court shall, upon notice to all 
 the creditors of the debtor of not less than five days, and upon hearing, inquire 
 whether such resolution has been passed in the manner directed by this sec- 
 tion; and if satisfied that it has been so passed, it shall, subject to the provisions 
 hereinafter contained, and upon being satisfied that the same is for the best 
 interest of all concerned, cause such resolution to be recorded and statement of 
 assets and debts to be filed ; and until such record and filing shall have taken 
 place, such resolution shall be of no validity. And any creditor of the debtor 
 may inspect such record and statement at all reasonable times. 
 
 The creditors may, by a resolution passed in the matter and under the circum- 
 stances aforesaid, add to or vary the provisions of, any composition previously 
 accepted by them, without prejudice to any person taking interest under such 
 provisions who do not assent to such addition or variation. And any such 
 additional resolution shall be presented to the court in the same manner and 
 proceeded with in the same way and with the same consequences as the resolu- 
 tion by which the composition was accepted in the first instance. The provi- 
 sions of a composition accepted by such resolution in pursuance of this section 
 shall be binding on all the creditors whose names and addresses and the 
 amounts of the debts due to whom are shown in the statement of the debtor 
 produced at the meeting at which the resolution shall have been passed, but 
 shall not affect or prejudice the rights of any other creditors. 
 
 Where a debt arises on a bill of exchange or promissory note, if the debtor 
 shall be ignorant of the holder of any such bill of exchange or promissory note 
 he shall be required to state the amount of such bill or note, the date on which 
 it falls due, the name of the acceptor and of the person to whom it is payable, 
 and any other particulars within his knowledge respecting the same ; and the 
 insertion of such particulars shall be deemed a sufficient description by the 
 debtor in respect to such debt. 
 
 Any mistake made inadvertently by a debtor in the statement of his debts 
 may be corrected upon reasonable notice and with the consent of a general 
 meeting of his creditors. 
 
 Every such composition shall, subject to priorities declared in said act, pro- 
 vide for 3. fro rata payment or satisfaction 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 security 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 summary manner by any person 
 interested, and on reasonable notice; and any disobedience of the order of the 
 court made on such motion shall be deemed to be a contempt of court. Rules 
 and regulations of court may be made in relation to proceedings of composition 
 herein provided for in the same manner and to the same extent as now provided 
 by law in relation to proceedings in bankruptcy. 
 
468 APPENDIX. 
 
 If it shall at any time appear to the court, on notice, satisfactory evidence, 
 and hearing, that a composition under this section cannot, 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 con- 
 firm 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.) 
 
 PENALTIES AGAINST BANKRUPTS. 
 
 § 44. And be it further enacted. That from and after the passage of this act, if 
 any debtor or bankrupt shall, after the commencement of proceedings in bank- 
 ruptcy, — 
 
 Secrete or conceal any property belonging to his estate; 
 
 Or part with, conceal, or destroy, alter, mutilate, or falsify, or cause to be 
 concealed, destroyed, altered, mutilated, or falsified, any book, deed, document, 
 or writing relating thereto, or remove, or cause to be removed, the same, or any 
 part thereof, out of the district, or otherwise dispose of any part thereof, with 
 intent to prevent it from coming into the possession of the assignee in bank- 
 ruptcy, or to hinder, impede, or delay either of them in recovering or receiving 
 the same; 
 
 Or make any payment, gift, sale, assignment, transfer, or conveyance of any 
 property belonging to his estate with the like intent; 
 
 Or spend any part thereof in gaming; 
 
 Or shall, with intent to defraud, wilfully and fraudulently conceal from his 
 assignee, or omit from his schedule, any property or effects whatsoever; 
 
 Or if, in case of any person having, to his knowledge or belief, proved a false 
 or fictitious debt against his estate, he shall fail to disclose the same to his 
 assignees within one month after coming to the knowledge or belief thereof; 
 
 Or shall attempt to account for any of his property by fictitious losses or 
 expenses; 
 
 Or shall, within three months before the commencement of proceedings in 
 bankruptcy, under the false color and pretense of carrying on business and 
 dealing in the ordinary course of trade, obtain on credit from any person any 
 goods or chattels with intent to defraud ; 
 
 Or shall with intent to defraud his creditors, within three months next before 
 the commencement of proceedings in bankruptcy, pawn, pledge, or dispose of, 
 otherwise than by bona fide transactions in the ordinary way of his trade, any 
 of his goods or chattels which have been obtained on credit and remain unpaid 
 for; 
 
 He shall be deemed guilty of a misdemeanor, and, upon conviction thereof in 
 any court of the United States, shall be punished by imprisonment, with or 
 without hard labor, for a term not exceeding three years. 
 
 § 45. And be it further enacted. That if any judge, register, clerk, marshal, 
 messenger, assignee, or any other officer of the several courts of bankruptcy 
 
THE BANKRUPTCY ACT OF 1 867. 469 
 
 shall, for anything done or pretended to be done under this Act, or under color 
 of doing anything thereunder, wilfully demand or take, or appoint or allow any 
 person whatever to take for him or on his account, or for or on account of any 
 other person, or in trust for him or for any other person, any fee, emolument, 
 gratuity, sum of money, or anything of value whatever, other than is allowed 
 by this act, or which shall be allowed under the authority thereof, such person, 
 when convicted thereof, shall forfeit and pay the sum of not less than three 
 hundred dollars, and not exceeding five hundred dollars, and be imprisoned not 
 exceeding three years. 
 
 § 46. And be it further enacted. That if any person shall forge the signature of 
 a judge, register, or other officer of the court, or knowingly concur in using any 
 such forged or counterfeit signature or seal for the purpose of authenticating 
 any proceeding or document, 
 
 Or shall tender in evidence any such proceeding or document with a false or 
 counterferit signature of any such judge, register, or other officer, or a false or 
 counterfeit seal of the court, subscribed or attached thereto, knowing such sig- 
 nature or seal to be false or counterfeit, any such person shall be guilty of fel- 
 ony, and upon conviction thereof shall be liable to a fine of not less than five 
 hundred dollars, and not more than five thousand dollars, and to be imprisoned 
 not exceeding five years, at the discretion of the court. 
 
 FEES AND COSTS. 
 
 §47. And be it further enacted. That in each case there shall be allowed and 
 paid, in addition to the fees of the clerk of the court as now established by law, 
 or as may be established by general order, under the provisions of this Act, for 
 fees in bankruptcy, the following fees, which shall be applied to the payment 
 for the services of the registers: 
 
 For issuing every warrant, two dollars. 
 
 For each day in which a meeting is held, three dollars. 
 
 For each order for a dividend, three dollars. 
 
 For every order substituting an arrangement by trust deed for bankruptcy, 
 two dollars. 
 
 For every bond with sureties, two dollars. 
 
 For every application for any meeting in any matter under this Act, one 
 dollar. 
 
 For every day's service while actually employed under a special order of the 
 court, a sum not exceeding five dollars, to be allowed by the court. 
 
 For taking depositions, the fees now allowed by law. 
 
 For every discharge where 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 senior 
 register of the court, or with the clerk, to be delivered to the register, fifty dol- 
 lars 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 payment to the register. 
 
470 APPENDIX. 
 
 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 had 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 said 
 expenses. 
 
 For cause shown, and upon hearing thereon, such further allowance may be 
 made as the court, in its discretion, may determine. 
 
 The enumeration of the foregoing fees shall not prevent the judges, who 
 shall frame general rules and orders in accordance with the provisions of section 
 ten, from prescribing a tariff of fees for all other services of the officers of courts 
 of bankruptcy, or from reducing the fees prescribed in this section in classes of 
 cases to be named in their rules and orders. 
 
 (R. S., sec. 5127 a (22 June, 1874, ch. 390, sec. 18, 18 Stat. 184) — That from 
 and after the passage of this act, the fees, commissions, charges, and allow- 
 ances, excepting actual and necessary disbursements, of, and to be made by the 
 officers, agents, marshals, messengers, assignees, and registers in cases of 
 bankruptcy, shall be reduced to one-half of the fees, commissions, charges, and 
 allowances heretofore provided for or made in like cases; Provided, That the 
 preceding provision shall be and remain in force until the justices of the 
 Supreme Court of the United States shall make and promulgate new rules and 
 regulations in respect to the matters aforesaid, under the powers conferred 
 upon them by sections four thousand nine hundred and ninetv (ten) and five 
 thousand one hundred and twenty-seven (forty-seven) of said act, and no 
 longer, which duties they shall perform as soon as may be. 
 
 § 5127 * (22 June, 1874, ch. 390, sec. 19, 18 Stat. 184). — That it shall be the 
 duty of the marshal of each district, in the month of July of each year, to report 
 to the clerk of the district court of such district, in a tabular form, to be pre- 
 scribed 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. 
 
 First, the number of cases in bankruptcy in which the warrant prescribed in 
 section five thousand and nineteen (eleven) of said act has come to his hands 
 during the year ending June thirtieth, preceding; 
 
 Secondly, how many such warrants were returned, with the fees, costs, 
 expenses, and emoluments thereof, respectively and separately; 
 
 Thirdly, the total amount of all other fees, costs, expenses, and emoluments, 
 respectively and separately, earned or received by him during such year, from 
 or in respect of any matter in bankruptcy; 
 
 Fourthly, a summarized statement of such fees, costs, and emoluments, 
 exclusive of actual disbursements in bankruptcy, received or earned for such 
 year; 
 
 Fifthly, a summarized statement of all actual disbursements in such cases 
 for such year. 
 
THE BANKRUPTCY ACT OF 1 867. 471 
 
 And in like manner every register shall, in the same month, and for the same 
 year, make a report to such clerk; of 
 
 First, the number of voluntary cases in bankruptcy coming before him during 
 said year; 
 
 Secondly, the amount of assets and liabilities, as nearly as may be, of the 
 bankrupt; 
 
 Thirdly, the amount and rate per centum of all dividends declared; 
 
 Fourthly, the disposition of all such cases; 
 
 Fifthly, the number of compulsory cases in bankruptcy coming before him, 
 in the same way; 
 
 Sixthly, the amount of assets and liabilities, as nearly as may be, of such 
 bankrupts; 
 
 Seventhly, the disposition of all such cases; 
 
 Eighthly, the amounts and rate per centum of all dividends declared in such 
 cases ; 
 
 Ninthly, the total amount of fees, charges, costs, and emoluments of every 
 sort, received or earned by such register during said year, in each class of cases 
 above stated. 
 
 And in like manner every assignee shall, during said month make like return 
 to such clerk ; of. 
 
 First, the number of voluntary and compulsory cases, respectively and sepa- 
 rately, in his charge during said year; 
 
 Secondly, the amount of assets and liabilities therein, respectively and sepa- 
 rately; 
 
 Thirdly, the total receipts and disbursements therein, respectively and 
 separately ; 
 
 Fourthly, the amount of dividends paid or declared, and the rate per centum 
 thereof, in each class respectively and separately; 
 
 Fifthly, the total amount of all his fees, charges and emoluments of every 
 kind therein, earned or received. 
 
 Sixthly, the total amount of expenses incurred by him for legal proceedings 
 and counsel fees; 
 
 Seventhly, the disposition of the cases respectively; 
 
 Eighthly, a summarized statement of both classes as aforesaid; 
 
 And in like manner, the clerk of said court, in the month of August in each 
 year, shall make up a statement for such year, ending June thirtieth, of. 
 
 First, all classes in bankruptcy pending at the beginning of the said year; 
 
 Secondly, all of such cases disposed of; 
 
 Thirdly, all dividends declared therein ; 
 
 Fourthly, the number of reports made from each assignee therein; 
 
 Fifthly, the disposition of all such cases; 
 
 Sixthly, the number of assignees' accounts filed and settled; 
 
 Seventhly, whether any marshal, register, or assignee has failed to make 
 and file with such clerk the reports by this act required, and if any have failed 
 to make such report, their respective names and residences. 
 
 And such clerk shall report in respect of all cases begun during said year. 
 
 And he shall make a classified statement, in tabular form, of all bis fees. 
 
472 APPENDIX. 
 
 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 disbursed out of court in bankruptcy, and the balance in 
 hand or on deposit. 
 
 And all the statements and reports herein required shall be under oath, and 
 signed by the persons respectively making the same. 
 
 And said clerk shall in said month of August, transmit every such statement 
 and report so filed with him, together with his own statement and report as 
 aforesaid, to the attorney-general of the United States. 
 
 Any person who shall violate the provisions of this section shall on motion 
 made, under the direction of the attorney-general, be by the district court dis- 
 missed 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.) 
 
 OF MEANING OF TERMS AND COMPUTATION OF TIME. 
 
 § 48. And be it further enacted. That the word " assignee " and the word 
 "creditor" shall include the plural also; and the word " messenger" shall 
 include his assistant or assistants, except in the provision for the fees of that 
 officer. The word " marshal " shall include the marshal's deputies; the word 
 "person" shall also include "corporation;" and the word "oath" shall 
 include " afiirmation." 
 
 And in all cases in which any particular number of days is prescribed by this 
 Act, or shall be mentioned in any rule or order of court, or general order which 
 shall at any time be made under this Act, for the doing of any act, or for any 
 other purpose, the same shall be reckoned, in the absence of any expression to 
 the contrary, exclusive of the first and inclusive of the last day, unless the last 
 day shall fall on a Sunday, 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 
 
 § 49. And be it further enacted. That all the jurisdiction, power, and authority 
 conferred upon and vested in the District Court of the United States by this act 
 in cases in bankruptcy are hereby conferred upon and vested in the Supreme 
 Court of the District of Columbia. 
 
 And in and upon the Supreme Courts of the several Territories of the United 
 States, when the bankrupt resides in the said District of Columbia or in either 
 of the said Territories. 
 
 And in those judicial districts which are not within any organized circuit of 
 the United States, the power and jurisdiction of a Circuit Court in bankruptcy 
 may be exercised by the district judge. 
 
 § 50. And be it further enacted. That this act shall commence and take effect, 
 as to the appointment of the officers created hereby and the promulgation of 
 rules and general orders, from and after the date of its approval : Provided^ 
 That no petition or other proceeding under this act shall be filed, received, or 
 commenced before the first day of June, Anno Domini eighteen hundred and 
 sixty-seven. 
 
APPENDIX B. 
 
 EXEMPTION LAWS. 
 
 Note. — The author takes this occasion to extend his thanks publicly to the Mercantile 
 Agency of Messrs. R. G. Dun & Co., of New York City, for their kind permission given 
 him, to use the abstracts of the exemption laws of the several states and territories of the 
 Union, which appear in their Reference Book of July 1, 1898. 
 
 ALABAMA. 
 
 Homestead and Exemptions. — Homestead of house and lot in city, town, etc., or 
 one hundred and sixty acres in country, in either case not to exceed two thousand dollars 
 in value. Personal property of one thousand dollars in value, and certain specified articles, 
 and wages to the amount of twenty-five dollars per month. Waiver of exemptions of per- 
 sonalty may be included in any instrument of writing, but intention to waive must be clearly 
 expressed. Waiver of homestead must be by separate instrument, attested by one witness ; 
 if by a married man, waiver not valid without the voluntary signature and assent of the 
 wife shown by separate acknowledgment. If by a married woman, executed by the hus- 
 band, joining in the aheoation, but separate acknowledgment of wife not necessary. Form 
 of certificate of separate acknowledgment is as follows : 
 State of Alabama, I 
 Cownty of | ' 
 
 I (name and style of officer) do hereby certify that on the day of ,18 , 
 
 came before me the within named , known (or made known) to me to be the wife of 
 
 the within named , who being examined separate and apart from the hus- 
 
 band touching her signature to the within , acknowledged that she signed 
 
 the same of her own free will and accord, and without fear, constraints or threats on the 
 part of the husband. 
 
 In witness hereof I hereunto set my hand, this day of , 18 . 
 
 A. B. 
 Judge (or as the case may be). 
 
 An unmarried person is entitled to the same exemptions as if married. 
 
 ARIZONA. 
 
 Exemptions. — The following property is exempt from execution : (1) There shall be 
 reserved to every family exempt from attachment and execution, and every species of 
 forced sale for the payment of debts, personal property not to exceed in value the sum 
 of one thousand dollars. (2) Every person who is the head of a family may hold as a 
 homestead, exempt from execution and forced sale, real property to be selected by him or 
 her not exceeding in value the sura of four thousand dollars. (3) Exemption of homestead 
 to be made under oath and takes effect from time of filing with county recorder as to sub- 
 sequent liens. The earnings of the debtor for his personal services for thirty days next 
 preceding the day of the levy, when it shall be made to appear by the debtor's affidavit or 
 otherwise that such earnings are necessary for the use or a family, supported wholly or 
 partly by hia labor, shall be exempt. The property of counties, cities and towns owned 
 and held only for public purposes, such as public buildings and sites therefor, fire engines 
 and the furniture thereof, and all property used or intended for extinguishing fires, public 
 grounds and other property devoted exclusively to the use and benefits of the public, shall 
 also be exempted from forced sale, also all public libraries. 
 
 [473] 
 
474 
 
 APPENDIX. 
 
 ARKANSAS. 
 
 Exemptions.— For single person, personal property, in addition to wearing apparel, 
 $200. For head of a family, personal property to the value of $500. This, however, is 
 only applicable to actions ex contractu. As to torts and frauds there are no personal ex- 
 Homestead.— For a head of a family outside of any town or city, 160 acres of land 
 not to exceed $2,500 in value, or not less than 80 acres without regard to value. In city 
 or town, »ot exceeding one acre of the value of $2,500, or not less than one-fourth of an 
 acre without regard to value. — (Const. Art. ix, §§ 1 to 5). 
 
 CALIFOENIA. 
 
 ExemptiOHS.- The homestead, not exceeding $5,000 in value, if declaration of home- 
 stead is properly filed in the recorder's office of tne county where situate, by a husband or 
 wife, or other head of a family, is exempt from execution except in the following cases; 
 1st, where the judgment was obtamed before the declaration of homestead ; 2d, on judg- 
 ment for liens of mechanics, laborers, or vendors of the land; 8d, on debts secured by 
 mortgage on the land executed by husband and wife or an unmarried claimant; 4th, on 
 debts secured by mortgage on the land before the declaration of homestead. The other 
 exemptions are — except for the purchase price: chairs, tables, desks and books, to the 
 value of $200, necessary household, table and kitchen furniture— including one sewing 
 machine, stoves, stovepipes and stove furniture, wearing apparel, beds, bedding, and bed- 
 steads, hanging pictures, oil paintings and drawings drawn or painted by any member of 
 the family, and family portraits and their necessary frames, and provisions actually pro- 
 vided for individual or family use, sufficient for three months, and three cows and their 
 sucking calves, four hogs with their sucking pigs, and food for such cows and hogs for 
 one month; the farming utensils or implements of husbandry of the judgment debtor; 
 also, two oxen, or two horses, or two mules, and their harness, one cart or wagon, and 
 food for such oxen, horses, or mules, for one month ; also, all seed grain, or vegetables 
 actually provided, reserved, or on hand for the purpose of planting or sowing at any time 
 within the ensuing six months, not exceeding in value the sum of $200, and seventy-five 
 beehives, and one horse and vehicle belonging to any person who is maimed or crippled, 
 and the same is necessary in his business ; the tools and implements of a mechanic or 
 artisan, necessary to carry on trade; the notarial seal, records and oflRce furniture of a 
 notary public ; the instruments and chests of a surgeon, physician, surveyor, or dentist, 
 necessary to the exercise of their profession, with their scientific and professional 
 libraries and necessary office furniture; the professional libraries of attorneys, 
 judges, ministers of the gospel, editors, school teachers and music teachers, 
 and their necessary office furniture; also, the musical instruments of music teachers actu- 
 ally used by them in giving instructions, and all the indexes, abstracts, books, papers, 
 maps, and office furniture of a searcher of records, necessary to be used m bis profession ; 
 the cabin or dwelling of a miner, not exceeding in value the sum of $500; also ois sluices, 
 pipes, hose, windlass, derrick, cars, pumps, tools, implements, and appliances necessary 
 for carrying on any mining operations, not exceeding in value the aggregate sum of $500; 
 and two horses, mules or oxen, with tbeir harness, and food for such horses, mules, or 
 oxen, for one month, when necessary to be used in any whim, windlass, derrick, car, pump, 
 or hoisting gear; and also his mining claim actually worked by him, not exceeding in 
 value the sum of $1,000; two horses, two oxen, or two mules, and their harness, and one 
 cart or wagon, one dray or truck, one coupe, one hack or carriage, for one or two horses, 
 by the use of which a cartman, drayman, truckman, huckster, peddler, hackman, team- 
 ster, or other laborer habitually earns his living; and one horse, with vehicle and harness 
 or other equipments, used by a physician, surgeon, constable, or minister of the gospel, in 
 the legitimate practice of his profession or business, with food for such oxen, horses, or 
 mules for one month; poultry not exceeding in value $25; the earnings of the judgment 
 debtor for his personal services, rendered at any time within thirty days next preceding 
 the levy of execution or levy of attachment, when it appears by the debtor's affidavit, or 
 otherwise, that such earnings are necessary for the use of his family, residing in this State, 
 supported wholly or in part by his labor; but where the debts are incurred by anv such per- 
 son or his wife or family for the common necessaries of life, the one-half of such 
 earnings above mentioned are, nevertheless, subject to execution, garnishment, or attach- 
 ment, to satisfy debts so incurred; the shares held by a member of a homestead association 
 duly incorporated, not exceediug in value $1,000, if the person holding the shares is not 
 the owner of a homestead under the laws of this State; all the nautical instruments and 
 wearing apparel of any master, officer, or seaman of any steamer or other vessel; all 
 moneys, benefits, privileges, or immuuities accruing, or in any manner growing out of any 
 life insurance on the life of the debtor, if the annual premiums paid do not exceed $500; 
 
EXEMPTION LAWS. 475 
 
 all fire engines, hooks and ladders, with the carts, trucks and carriages, hose, buckets, 
 implements, and apparatus thereunto appertaining, and all furniture and uniforms of any 
 lire company or department organized under any law of this State ; all arms, uniforms, and 
 accoutrements required by law to be kept by any person, and also one gun to be selected 
 by the debtor; all courthouses, jails, public offices and buildings, lots, grounds and personal 
 property, the fixtures, furniture, books, papers, and appurtenances belonging and per- 
 tainma to the courthouse, jail and public offices belonging to any county of this State; 
 and all cemeteries, public squares, parks and places, public buildings, town halls, markets, 
 buildings for the use of fire departments and military organizations, and the lots and 
 grounds thereto belonging and appertaining, owned or held by any town or incorporated 
 city, or dedicated by such town or city to health, ornament or public use, or for the use of 
 any fire or military company organized under the laws of this State. 
 
 COLORADO. 
 
 Exemptions. — The following property, when owned by any person being the head 
 of a family and residing with the same, is exempt from levy and sate upon any execution 
 or writ of attachment, and such articles continue exempt while the family of such person 
 are removing from place of residence to another within the State, namely: (1) family 
 pictures, school books and library ; (2) a seat or pew in any place of worship ; (3) the sites 
 of burial of the dead; (4) all wearing apparel of the debtor and his family; all beds, bed- 
 steads and bedding, kept and used by the debtor and his family ; all stoves and appen- 
 dages, kept for the use of the debtor and his family; all cooking utensils and all household 
 furniture not herein enumerated, not exceeding $100 in value; (5) provisions for the 
 debtor and his family, necessary for six months, and fuel necessary for six months ; (6) 
 tools and implements or stock in trade of any mechanic, miner or other person, used and 
 kept for the purpose of carrying on his trade or business not exceeding $200 in value ; (7) 
 the librarv and implements of any professional man, not exceeding $300; (8) working 
 animals of the value of $200; (9) one cow and calf, ten sheep and the necessary food for 
 all the animals herein mentioned for six months, one farm, wagon, cart or dray, one plow, 
 one harrow and other farming implements, including harness and tackle for team, not 
 exceeding $50 in value ; (10) tools, implements, working animals and stock in trade, not 
 exceeding $300 in value, of any mechanic, miner, or other person not being the head of a 
 family, used and kept for the purpose of carrying on his trade and business while such 
 person is a ionafidt resident of this State. Sixty dollars of the amount due for wages 
 or earnings of any debtor at the time of the levy are also exempt; provided such 
 debtor is at the time of the levy the head of a family or the wife of the head of a family, 
 and such family is dependent in whole or in part upon such earnings for support. All 
 money received by any person, resident of this State, as a pension from the United States 
 government, whether the same be in his actual possession, or deposited or loaned, is also 
 exempt from execution or attachment, whether such pensioner be the head of a family or 
 not ; when the debtor dies or absconds, and leaves his family, the money thus exempted 
 s exempt to his wife and children, or either of them. 
 
 CONNECTICUT. 
 
 Exemptions. — Necessary apparel and bedding, household furniture necessary for 
 supporting life, arms, military equipments, implements of the debtor's trade, one cow, ten 
 sheep (not exceeding $150) are protected, and certain specified amounts of family stores, 
 one stove, the horse, saddle and bridle, buggy and harness (not exceeding in value $250) 
 of any practicing physician or surgeon, one sewing machine in use, one pew in church in 
 use, and a library (not exceeding m value $500), one boat used in fishing, not exceeding 
 $200 in value. A dwelling house and the land used in connection therewith while actually 
 occupied by the owner to the extent of one thousand dollars in value, provided the purpose 
 to use the same as a homestead appears either in a declaration to tbat effect made by the 
 owner, and executed and recorded like a deed, or in the conveyance of such property. 
 Such right of exemption may be released by the husband and wife joining in a declaration 
 of release, and the value of such property over the exemption can be reached by creditors 
 
 DELAWARE. 
 
 Exemptions. — New Castle County — No real estate exemption ; $75 worth of personal 
 property, consisting of the tools and fixtures, is exempted, and the defendant being the 
 head of a family shall have exempt in addition $200. The above exemption does not affect 
 a debt or contract incurred or made prior to July 4, 1873 ; wages are also exempt. Keat 
 County — Same as New Castle County except $50 worth of personalty and $150 for heads 
 
4/6 APPENDIX. 
 
 of families ia exempt. Sussex County — There is no exemption in this county except 175 
 worth of personal property consisting of tools and fixtures. No exemption apphcable to 
 goods and chattels of a merchantable character bought to be sold and trafficked m. 
 
 WASHINGTON, D. C. 
 
 Exemptions. — The following property of a householder is exempt from distraint, 
 attachment or sale on execution, except for servaots' or laborers' wages due : Wearing 
 apparel; household furniture to the amount of $800; provisions and fuel for three months; 
 mechanics' tools or implements of any trade to the value of $200, with stock to the same 
 amount; the library and implements of a professional man or artist to the value of $300; 
 a farmer's team and other utensils to the value of $100 ; family pictures and library, in 
 value $400. 
 
 FLOKIDA. 
 
 Exemptions! — Homestead of one hundred and sixty acres of land and improvements 
 if in the country, and which cannot be reduced in area without owner's consent, by reason 
 of its being subsequently included in a city or town ; a residence and one-half acre of 
 ground if in an incorporated city or town, together with $1,000 worth of personal property. 
 
 GEORGIA. 
 
 Exemptions. — Each head of a family, every aged or infirm person, or person having 
 care and support of dependent females of any age, who is not head of a family, or guardian, 
 or trustee of a family of minor children, is entitled to a homestead of realty or personalty, 
 or both, to the value in the aggregate of sixteen hundred dollars. The exemption may be 
 waived in writing, except as to $o00 of weaiing apparel and furniture, to be selected by the 
 debtor and his wire, if he has a wife. The homestead cannot be claimed as against debts 
 for (1) taxes, (2) purchase money, (3) labor done upon or material furnished for the prop- 
 erty, (4) for removal of ircumbrances thereon. — (Constitution of 1877.) 
 
 IDAHO. 
 
 Exemptions. — The following properly is exempt from attachment or levy and sale 
 on execution: 1st, chairs, tables, desks and books, to the value of two hundred dollars, 
 belonging to the judgment debtor; 2d, necessary household, table and kitchen furniture 
 belonging to the judgment debtur, including stove, stovepipe, and stove furniture of what- 
 ever kiud, wearing apparel, beds, bedding and bedsteads, and provisions actually provided 
 for individual or family use sufficient for three months ; 3d. the farming utensils or imple- 
 ments of husbandry of the judgment debtor ; also, two oxen, or two horses, or two mules, 
 and their harness ; two cows, with their sucking calves, and two hogs with their sucking 
 pigs, one cart or wagon, and food for such oxen, horses, cows or mules sufficient for one 
 month; also all seed, grain or vegetables actually provided, reserved, or on hand for the 
 purpose of planting or sowing at any time within the ensuing six mouths, not exceeding 
 in value the sum of two hundred dollars; the tools and implements of a mechanic necessary 
 to carry on his trade; the instruments and chests of a surgeon, physician, surveyor, and 
 dentist necessary to the exercise of their profession, with the professional library, and the 
 law libraries of an attorney and counselor; also, the wardrobe aud books of an actor; 4th, 
 the tents aud furniture, including a table, camp stools, bed and bedding of a miner ; also, 
 his rocker, shovels, spades, wheelbarrow,s, pumps, and other instruments u^ed in mining, 
 with provisions necessary for his support for three months; 5th, two oxen, two horses, 
 or two mules, and their harness, and one cart or wagon, by the use of which acartman, 
 teamster, or other laborer habitually earns his living, and the food for such oxen, horses, 
 or mules, for one month; and a horse used by a physician in making his professional visits; 
 6th, all fire engines, with carts, buckets, hose, and apparatus thereto appertaining, of any 
 fire company or department organized under any law of this State ; 7th, all arms and 
 accoutrements required by law to be kept by any person; 8th, all court-houses, jails, public 
 offices and buildings, lots, ti round aud personal prbperty, the fixtures, furniture, books 
 papers, and appurtenances, belonging to any county in this State, and all cemeteries, pub- 
 lic squares, parks and public buildings, town halls, markets, buildings appertaining to the 
 fire departments, and the lots and grounds thereto belonging and appertaining, owned 
 or held by any town or incorporated city, or dedicated by such town or city to health, 
 ornament, or public use; 9th, the homestead, consisting of a quantity of land, together 
 with the dwelling house thereon and its appurtenances, not exceeding in value the sum of 
 five thousand dollars, to be selected by the husband and wife, or eiuier of them or other 
 
EXEMPTION LAWS. 477 
 
 head or family; 10th, earnings of judgment debtor, for personal servicea rendered at anj 
 time within thirty days next preceding the levy of execution or levy of judgment, when it 
 appears by the debtor's affidavit or otherwise, that such earnings are necessary for the use 
 or nis family residing in the State, supported wholly or in part by his labor. The usual 
 declarations must be made, acknowledged, and recorded by person or persona claiming 
 homestead. No article above-mentioned shall be exempt from execution issued upon a 
 judgment recovered for its price, or upon a mortgage tnereon. A single person not the 
 head of a family may claim a homestead, not to exceed $1,000 in value. 
 
 ILLINOIS. 
 
 Exemptions. — Lot of ground and buildings thereon occupied as a residence by the 
 debtor, and held by him by lease or otherwise, Deing a householder and having a familv, 
 to the value of $1,000. Exemption continues after the death of the householder for the 
 benefit of surviving wife or husband so long as she or he continues to occupy the home- 
 stead, and for the benefit of the children until youngest child shall become twenty-one 
 years of age. No release or waiver of exemption is valid, unless in writing and subscribed 
 by such householder and wife or husband (if he or she have one) and acknowledged as con- 
 veyances of real estate are required to be acknowledged, or possession is abandoned or 
 given pursuant to the conveyance, or if the exemption is continued to a child or children 
 without an order of court directing a release thereof. The following articles of personal 
 property owned by the debtor are exempt from execution, writ of attachment, and distress 
 tor rent: the necessary wearing apparel, bibles, school books and family pictures of every 
 person; $100 worth of other property to be selected by the debtor; and in addition, when 
 the debtor is the head of a family and resides with the same, $300 of other property, 
 also to be selected by the debtor. To avail himself of exemptions, the debtor must pre- 
 sent a sworn schedule of bis personal property to the officer having the execution, attach- 
 ment writ, or distress warrant, within ten days after the officer notifies him in writing so to 
 do. Provided, such selection shall not be made from money, salary or wages due the 
 debtor. Provided, however, that money due debtor from sale of personal property which 
 was exempt at the time of such sale, shall be exempt to the same extent as the property 
 would be if not sold. Except the wages of a defendant, the head of a family and residing 
 with the aame, to the amount of eight dollars per week shall be exempt from garnishment. 
 
 INDIANA. 
 
 Exemptions. — Any resident householder has an exemption from levy and sale under 
 execution and attachment of real and personal property, or both, as he may select, to the 
 value of $600, on demands on contracts. The law further provides that no property shall 
 be sold by virtue of an execution for less than two-thirds of its appraised cash value. The 
 provisions of this law as to valuation or appraisement can be waived in contracts. To do 
 this the note or contract should read, ** Payable without relief from valuation or appraise- 
 fnent laws.^' But the right to exemption cannot be waived by contract. 
 
 IOWA. 
 
 Exemptions. — The homestead must embrace the house used as a home by the owner 
 thereof, and if he has two or more houses thus used by him at different times and places, 
 he may select which he will retain as his homestead. If within a town plat, it must not 
 exceed one-half acre in extent; and if not in a town plat, it must not embrace in the 
 aggregate more than forty acres. But if, when thus limited in either case, its value is less 
 than $500, it may be enlarged till its value reaches that amount. If the debtor is a resi- 
 dent of the State and head of a family, all wearing apparel kept for actual use, and suit- 
 able to the condition of the debtor and family, and trunks and other receptacles to contain 
 the same ; one musket or rifle, and a shot gun ; all private libraries, family bible, portraits, 
 pictures, musical instruments, and paintings — not kept for sale; seat or pew in church, 
 and interest in public or private bunal grounds — not exceeding one acre ; the proper tool.", 
 instruments, or books of any farmer, mechanic, surveyor, clergyman, lawyer, physician, 
 teacher or professor ; the horse, or the team — consisting of not more than two horses or 
 mules— or two yoke of cattle, and the wagon or other vehicle with the proper harness or 
 tackle, by use of which any physician, public officer, farmer, teamster, or other laborer, 
 habitually earns his living; two cows, two calves, one horse (unless a horse has been 
 exempted under the preceding ction), fifty sheep and the wool therefrom, five hogs and all 
 pigs under six months, the necessary food for all animals exempt from execution for six 
 months, one bedstead and the necessary bedding for every two in the family, all cloth 
 
478 
 
 APPENDIX. 
 
 manufactured by the defendant— not exceeding one hundred yards in quantity — household 
 and kitchen furniture not exceeding $200 In value, all spinning wheels and looms, one 
 sewing machine, and other instruments of domestic labor kept for actual use, and the 
 necessary provisions and fuel for the use of the family for six months, and to the debtor, 
 if a printer, there shall also be exempt a printing press and the types, furniture, and 
 material necessary for the use of such printing press and a newspaper office connected there- 
 with, not to exceed in all the value of twelve hundred dollars. The word family does not 
 inc. ude strangers or boarders lodging with the family. The earnings of such debtor for 
 the personal service or those of his family, at any time within ninety days next preceding 
 the levy, are also exempt from attachment and execution. None of the foregoing exemp- 
 tions are for the benefit of a single man not the head of a family, nor of non-residents, 
 nor of those who have started to leave this State ; but their property is liable to execu- 
 tion, with the exemption in the two former cases of ordinary wearing apparel and trunks 
 to contain the same, and in the latter case of such wearing apparel and such other prop- 
 erty in addition as the defendant may select — not to exceed f75— to be celected by the 
 debtor and appraised ; but any person coming to this State with the intention of remain- 
 ing, is a resident. Pensions and investments of funds therefrom are also exempt. 
 
 KANSAS. 
 
 Exemptions* — A homestead to the extent of one hundred and sixty acres of farming 
 land, or of one acre within the limits of an incorporated town or city, occupied as a resi- 
 dence by the family of the owner, together with all the improvements on the same, shall 
 be exempt from forced sale under any process of law, and shall not be alienated except by 
 joint consent of husband and wife when that relation exists. Not exempt, however, for 
 taxes or purchase money obligations or liens for improvements. No value is affixed to the 
 homestead. It may be worth a million dollars. No personal property is exempt from 
 execution for the wages of a servant, mechanic, laborer, or clerk. Every person residing 
 in this State, and being the head of a family, shall have exempt from seizure upon attach- 
 ment or executioner other process issued from any court in this State: Family bible, 
 school books, and family library ; family pictures and musical instruments used by the 
 family ; a seat or pew in auy church or place of public worship, and a lot in any burial 
 ground ; all wearing apparel of the family, all beds, bedsteads, and bedding used by the 
 debtor and his family, one cooking stove and appendages, and all other cooking utensils, 
 and all other stoves and appendages necessary for the use of the debtor and his family, one 
 sewing machine, spinning wheels and looms, and all other implements of industry, and 
 all other household furniture not herein enumerated, not exceeding in value $500, two 
 cows, ten hogs, one yoke of oxen, and one horse or mule, or in lieu of one yoke of oxen 
 and one horse or mule, a span of horses or mules ; and twenty sheep and their wool, either 
 in raw material or manufactured into cloth ; necessary food for the support of the stock 
 for one year, one wagon, cart, or dray, two plows, drag, and other farming utensils, not 
 exceeding in value $300; grain, meat, vegetables, groceries, etc., and fuel on hand 
 necessary for the family for one year, the tools and implements of any mechanic, miner, 
 or other person, kept and used for the purpose of carrying on his business, and in additiou 
 thereto stock in trade not exceeding $400 in value, library, implements, and office furni- 
 ture of any professional man. Any person not the head of a family may have exempt: 
 The wearing apparel of the debtor, a seat or pew in any church or place of public worship, 
 and a lot in any burial ground, the necessary tools and instruments of any mechanic, 
 miner, or other person used and kept for the purpose of carrving on his trade or business, 
 and in addition thereto stock in trade not exceeding $400 in value, and the library, imple- 
 ments, and office furniture of any professional man. The earnings of a debtor, who is a 
 resident of the State, for his personal services at any time within three months preceding 
 the issuing of the execution, or attachment, or garnishment process, must be released 
 froni such process when it appears, from the debtor's aflBdavit or otherwise, that such 
 earnings are necessary for the maintenance of a family supported wholly or partly by such 
 debtor s labor. The claim of this exemption presents a question of fact which may be 
 contested. So also the money received by anv debtor as pensioner of the United States 
 within three months preceding the issuing of execution, attachment, or garnishment pro- 
 cess, must be released when it is shown in like manner that said money is necessary for 
 the maintenance of a family supported wholly or in part by such pension. 
 
 KENTUCKY. 
 
 Exemptions. — The following personal property of persons with a family resident In 
 this commonwealth is exempt from execution, attachment, distress, or fee bill- Two 
 work beasts or one work beast, and one yoke of oxen; two plows and gear, one wagon and 
 
EXEMPTION LAWS. 479 
 
 set of gear or cart or dray, two axes, three hoes, one spade and one shovel, two cows and 
 calres, oeds, bedding and furniture sutiicient for family use; one loom and spinning wheel 
 and pair of cards, all the 8pi;in yarn and manufactured cloth manufactured by the family 
 necessary for family use, carpeting for all family rooms in use, one table, all books not lo 
 exceed $50 in value, two saddles and their appendages, two bridles, six chairs or so many 
 as shall not exceed $10 ia value, one cradle, aUthe poultry on bund, ten head of sheep not 
 to exceed $25 in value, all wearing apparel, sufficient provisions, including breadstuff and 
 animal food, to sustain the family for one year, if not on hand other personal property, 
 wages, money, or growing crop not to exceed $40 in value for each member of the family ; 
 provender suitable for live stock, if there be any such stock, not to exceed $70 in value, 
 and it such provender be not on hand such other property as shall not exceed such sum io 
 value; all washing apparatus not to exceed $60 in value, one sewing machine, all family 
 portraits aud pictures, one cooking stove and appendages, and other cooking utensils not 
 to exceed in value $25. The tools of mechanics not exceeding $100 in value, libraries of 
 ministers of the Gospel and professional libraries of attorneys, and of physicians and 
 surgeons and their instruments not exceeding $500 in value. Ministers, lawyers, physi- 
 cians and surgeons are entitled to only one work beast and to no wagon, cart or dray. 
 Wages not to exceed $50 of all persons who work for wages except for food, raiment, 
 fuel, medicine or bouse rent for the family. To an actual bona Jide resident house- 
 keeper with a family against debts incurred or created after June 1, 1866, there ia also a 
 homestead exemption of $1,000, but not if the liability existed prior to the purchase of the 
 land or the erection of improvements thereon. 
 
 LOUISIANA. (To Takb Effbot Janoaet 1st, 1899.) 
 
 Exemptions. — The sheriff or constable cannot seize the linen, or clothing belonging to 
 the debtor or his wife ; or his bed, bedding, or bedstead, or those of his family, or sewing 
 machine ; or his arms or military accoutrements ; or the tools and instruments, and books 
 necessary for the exercise of his or her calling, trade or profession, by which he or she 
 makes a living ; nor shall he in any case seize the rights, of personal servitude, of use, and 
 habitation, of usufruct to the estate of a minor child, nor the income of dotal property ; 
 nor money due for the salary of any ofBoer; nor laborers' wages; nor recompense for 
 
 Eersonal services, nor the cooking stove or utensils for said stove, nor the plates, dishes, 
 nives and forks and spoons, nor the dining table and dining chairs, nor washtubs, nor 
 smoothing irons and ironing furnaces, nor family portraits belonging to the debtor, nor 
 the musical instruments played or practiced on by any member of tie family. 
 
 Homestead Exemptions.— There shall be exempt, from January 1st, 1899, from 
 seizure by any process whatever, the homestead, bona fide owned by the debtor and occu- 
 pied by him, consisting of land not exceeding 160 acres, buildings and appurtenances, 
 ' rural or urban, of every head of a family, or person having a mother or father, or a person 
 or persons dependent on him or her for support; also two work horses, one wagon, or 
 cart, one yoke of oxen, two cows and calves, twenty-five head of hogs, or one thousand 
 pounds of bacon, or its equivalent in pork, whether these be attached to the homestead or 
 not; and on a farm the necessary farming implements, to the value of $2,000.00. The 
 husband does not have the benefit of the exemption, if his wife owns, and is in actual 
 enjoyment of property to the amount of $2,000. 
 
 The exemption does not apply to the following debts: To purchase price of any part 
 thereof; to labor, money and materials furnished for in]proving homestead; to liability of 
 any public officer, or fiduciary, or attorney at law, for money collected or received on 
 deposit; to taxes or assessments; to rent which bears a privilege on the property. 
 
 The owner may sell the property exempt as homestead, but not to the prejudice of 
 creditors ; and may waive his right, by signing with his wife, not separated from bed and 
 board, and registering in the office of the recorder of mortgages, a written waiver, in whole 
 or in part, which may be general or special, and shall have effect from time of registering. 
 The homestead must be registered in the Parish of Orleans, but need not be elsewhere. 
 
 MAINE. 
 
 Exemptions. — By complying with certain statutory provisions (not often taken 
 advantage of), there is exempted a lot of land, dwelling house, etc.,, not exceeding $500 in 
 value. Necessary apparel ; a bed, bedstead and bedding for every two members of a 
 family; a cooking stove, all stoves used for warming buildings, and other necessary furni- 
 ture to the value of $100 ; one sewing machine for use not exceeding $100 in value ; all 
 tools necessary for the debtor" s occupation ; and materials and stock necessary to be used in 
 his business to value of $50; all bibles and school books for use of the family, one copy of 
 
48o 
 
 APPENDIX. 
 
 the statutes of the state, and a library not exceeding $150 in value ; one cow and one beifer, 
 two swine, ten sheep and the wool and lambs from them, one pair of working cattle, or 
 instead thereof one pair of mules or two horses, not exceeding |800 in value ; all produce 
 of farms until harvested, corn and grain for use of debtor and family, not exceeding thirty 
 bushels; all potatoes raised or purchased for use in family j one barrel of flour; a sufficient 
 quantity of hay to wmter all exempted stock; all flax raised for use on one-half acre of 
 land; lumber to the amount of $10, twelve cords of fire wood, five tons of anthracite coal, 
 fifty bushels of bituminous coal, and all charcoal for use in the family; one pew in meeting 
 house where debtor worships; one horse sled or ox sled, twenty dollars in value ; one bar- 
 ness worth twenty dollars, for epch horse or mule ; one cart or truck, or express wagon, 
 one harrow, one plough, one yoke, two chains and one mowing machine ; for fisherman, 
 one boat not exceeding two tons burthen ; a lot in a cemetery. 
 
 MARYLAND. 
 
 Exemptions. — The constitution of the state directs the legislature to pass laws 
 exempting from judicial sales, a reasonable amount of property not exceeding $600. One 
 hundred dollars is the amount fixed and exempted in pursuance of this constitutional 
 requirement, and in addition thereto, " all wearing apparel, books, and the tools of 
 mechanics, except books or tools kept for sale.*' 
 
 MASSACHUSETTS. 
 
 Exemptions. — Every householder, having a family, is entitled to an estate of homestead, 
 to the extent and value of $800, in the farm or lot of land and buildings thereon owned, or 
 rightly possessed by lease or otherwise, and occupied by him as a residence. To consti- 
 tute a homestead and entitle it to exemption, it must be set forth in the deed of convey- 
 ance by which the property is acquired, that it is designed to be held as a homestead; or 
 after the title is acquired, such design must be declared in writing, and recorded in the 
 registry of deeds for the county or district where the property is situated. The homestead 
 estate may be conveyed or released by a deed duly acknowledged and recorded, in which 
 the wife joins for the purpose of releasing the right of homestead. The estate or right of 
 homestead of any householder existing at his death, continues for the benefit of bis widow 
 and minor children, and may be held and enjoyed by them, if some one of them occupies 
 the premises, until the youngest child is twenty-one years of age, and until the death or 
 marriage of the widow. All chattels, real or personal, and all other goods which by the 
 common law are liable to be taken on execution may be taken and sold thereon, i-xcept the 
 following articles of the debtor, which are exempt: The necessary wearing apparel of 
 himself and of his wife and children; one bedstead, bed, and the necessary bedding for 
 every two persons of the family; one iron stove used far warming the dwelling house, and 
 fuel not exceeding the value of $20, procured and designed for the use of the family; one 
 sewing machine, of a value not exceeding $100, in actual use by each debtor, or the 
 family of the debtor- other household furniture necessary for him and his family, not 
 exceeding $300 in value; the bibles, school books, and library used by him or his family, 
 not exceeding $50 in value; one cow, six sheep, one swine, and two tons of hay; the tools, 
 implements, and fixtures, necessary for carrying on his trade or business, not exceeding 
 $100 in value; materials and stock designed and procured by him, and necessary for 
 carrying on his trade or business and intended to be used or wrought therein, not 
 exceeding $100 in value; provisions necessary and procured and intended for the use of 
 the family, not exceeding $50 in value; the boats, fishing tackle, and nets of fishermen, 
 actually used by them in the prosecution of their business, to the value of $100; the 
 uniform of an officer or soldier in the militia, and the arms and accoutrements required 
 by law to be kept by him; shares in certain co-operative associations to an amount not 
 exceeding $20. 
 
 MICHIGAN. 
 
 Exemptions. — Any quantity of land not exceeding forty acres, and the dwelling 
 house thereon, with its appurtenances, to be selected uy the owner thereof, and not 
 included in any recorded town plat, city, or village, or instead thereof, at the option of the 
 owner, a quantity of land not exceeding in amount one lot, being within a recorded town 
 plat, or city, or village, and the dwelling house thereon and its appurtenances, owned and 
 occupied by any resiaentof the State, not exceeding in value $1,500, is exempt from levy 
 and sale on execution. Household furniture to the amount of $250 ; a stock in trade, a 
 team or other things which may be necessary to carry on the pursuit of particular business, 
 up to ?2.'50; library and school books not exceeding $150; to a householder, ten sheep, 
 two cows, five swine, are also exempt from levy and sale on execution. 
 
EXEMPTION LAWS. 48 1 
 
 MINNESOTA. 
 
 Exemptions. — No property hereinafter mentioned or represented shall be liable to 
 attachment or sale on any final process, issued from any court in this State: (1) the 
 family bible j (2) family pictures, school books or library, and musical instruments for use 
 of family ; (3) a seat or pew in any house or place of public worship ; (4) a lot in any 
 burial ground; (5) all wearing apparel of the debtor and his family; all beds, bedsteads 
 and bedding, kept and used by the debtor and his family ; all stoves and appendages put 
 up or kept for the use of the debtor and his family ; all cooking utensils and all other 
 household furniture not herein enumerated, not exceeding $500 in value ; also all moneys 
 arising from insurance of any property exempted from sale on execution, when such 
 property has been destroyed by nre ; (6) three cows, ten swine, one yoke of oxen and a 
 horse, a span of horses or mules^ twenty sheep and the wool from the same, either in the 
 raw material or manufactured into yarn or cloth; the necessary food for all the stock 
 mentioned in this section for one year's support, either provided or growing, or both, as 
 the debtor may choose ; also one wagon, cart or dray, one sleigh, two plows, one drag and 
 other farming utensils, including tackle for teams, not exceeding $300 in value ; (7) the 
 provisions for the debtor and his family necessary for one year's support, either provided 
 or growing, or both, and fuel necessary for one year ; (8) the tools and instruments of any 
 mechanic, miner or other person, used and kept for the purpose of carrying on his trade, 
 and, in addition thereto, stock in trade, including articles of goods manufactured in whole 
 or in part by him, not exceeding $iOO in value ; the library and implements of any pro- 
 fessional man ; all of which articles hereinbefore intended to be exempt shall be chosen by 
 the debtor, his agent, clerk or legal representative, as the case may be. In addition to the 
 articles enumerated in this section, all the presses, stones, type, cases and other tools and 
 implements used by any copartnership, or by any such printer, publisher or editor, or by 
 any persons hired by him to use them, not to exceed in value the sum of $2,000, together with 
 stock in trade not exceeding $400 in value, shall be exempt from attachment or sale, on any 
 final process issued from any court in this State ; (9) one sewing machine, one bicycle, one 
 type-writing machine ; (10) necessary seed grain for the actual personal use of debtor, for one 
 season, to be selected by him ; not, however, in any case to exceed the following kinds and 
 amounts, respectively, viz : one hundred bushels of wheat, fifty bushels of oats, one hun- 
 dred bushels of potatoes, ten bushels of corn, and one hundred bushels of barley, and bind- 
 ing material sumcient for use in harvesting the crop raised from the seed grain above 
 specified; (11) the wages of any person, or of his or her minor children, in any sum not 
 «xceeding $26, due for services rendered by him or them, for any person, for and during 
 thirty days preceding the issue of process of attachmemt, garnishment, or execution in 
 any action against snch person; (12a) all moneys derived or received by any surviving 
 wile or child from any form of life insurance upon the life of any deceased hnsband ot 
 father not exceeding ten thousand dollars; (12b) the library, philosophical and chemical 
 or other apparatus used in instruction belonging to and in use in any University, college, 
 seminary 01 learning, or school for the instruction of youth open to the public. Whenever 
 any proceedings are commenced in any court of this State to subject the wages due to any 
 non-resident debtor to garnishment, if it shall appear that the wages earned by him were 
 earned outside of this State, such debtor is allowed the same exemption as is'at the time 
 allowed to him by the law of the State in which he so resides. The exemptions' provided 
 for and embraced in subdivisions six, seven, eight, nine, ten and eleven, extend only to 
 debtors having an actual residence in this State. The property enumerated is not exempt 
 from process issued in an action for the purchase money of the same property. In addi- 
 tion to the above it is provided that when any benevolent association or fraternal co-opera- 
 tive society shall set apart or appropriate a beneficiary fund to be paid over f the families 
 of deceased members, any such fund, not exceeding five thousand dollars, shall be exempt 
 from seizure for any debt of the deceased or beneficiary. (See Homesteads.) 
 
 MISSISSIPPI. 
 
 Exemptions. — The following property is exempt from seizure under execution or 
 attachment, to wit: First — The tools of a mechanic necessary for carrying on his trade. 
 Second — The agricultural implements of a farmer necessary for two male laborers. 
 Third — The books of a student required for the completion of his education. Fourth — 
 The wearing apparel of every person. Fifth — The libraries of all persons not exceediUg 
 two hundred and fifty dollars in value; also the instruments of surgeons and dentists used 
 in their profession, not exceeding two hundred and fifty dollars in value. Sixth — The 
 arms and accoutrements of each person of the militia of the State. Seventh — All globes 
 and maps used by the teachers of schools, academies and colleges. Eighth — The follow- 
 ing property of each head of a family, to be selected by the debtor, to wit : (a) Two Work 
 horses or mules, and one yoke oxen ; (b) two cows and calves ; (c) twenty head of hogs ; 
 
 NAT. BANKRUPTCY LAW — 3I 
 
482 
 
 APPENDIX. 
 
 (d) twenty sheep or goals : (e) all poultry : (f) all colts under three years old raised in this 
 State by the debtor ; (g) two hundred and fifty bushels of corn ; (h) ten bushels of wheat 
 or rice ; (i) five hundred pounds of pork, bacon or other meat ; (j) one hundred bushels of 
 cotton seed ; (k) one wagon, and one buggy or cart, and one set of harness ; (1) five hun- 
 dred bundles of fodder, and one thousand pounds of hay ; (m) forty gallons of sorghum or 
 molasses ; (n) one thousand stalks of sugar cane ; (o) one sugar mill and equipments, not 
 exceeding one hundred and fifty dollars in value ; (p) one bridle and saddle and one side 
 saddle; (q) one sewing machine; (r) household and kitchen furniture not exceeding in 
 value two hundred dollars. Ninth — And all the following property shall be exempt 
 from garnishment or other legal process, to wit : (a) The wages of every laborer or person 
 working for wages, being the head of a family, one hundred dollars; every other person 
 to the amount o! twenty dollars ; (b) the proceeds of insurance on property, real and per- 
 sonal, exempt from execution or attachment, and the proceeds of the sale of such prop- 
 erty. Homestead Exemptions — Every citizen of this State, being a householder and 
 having a family, shall be entitled to hold as exempt from execution or attachment the 
 land and buildings owned and occupied as a residence by him or her, not to exceed one 
 hundred and sixty acres in quantity or two thousand dollars in value. The exemptionist 
 may, however, increase the value of his exemption to three thousand dollars by making 
 what is called a " homestead declaration," which declaration is recorded in the office of 
 the clerk of the chancery court of the county where he lives. The proceeds of a life 
 insurance policy, to an amount not exceeding ten thousand dollars upon any one life, is 
 exempt to the beneficiaries named therein against the debts of the insured, and the pro- 
 ceeds of a policy not exceeding five thousand dollars payable to the executor or adminis- 
 trator, inures to the heirs or legatees free from liability for debts ; but if life is insured 
 for the benefit of heirs or legatees otherwise, and they collect the same, the sum collected 
 can be deducted from the five thousand dollars, and the excess of the latter only is exempt. 
 No property is exempt as against the purchase money, or for labor performed on it or 
 material furnished therefor. 
 
 MISSOURI. 
 
 Exemptions. — Resident married men and heads of families are allowed a homestead 
 of one hundred and sixty acres of land to the value of $1,500. In cities of forty thou- 
 sand inhabitants or over, homestead shall not include more than eighteen square rods of 
 ground nor exceed in value |3, 000. In cities of less than forty thousand and over ten 
 thousand, homestead shall not include over thirty square rods nor exceed $1, 500 in value. 
 In cities and towns less than ten thousand, not more than five acres not exceeding $1,500 
 in value. Personal property or real estate to the amount of not less than $300, in addition 
 to wearing apparel, beds, bedding, household and kitchen furniture of the value of $100, 
 and other specific articles are allowed to the heads of families. Wages for last 30 days' 
 service are exempt to heads of families. When judgment is obtained for the purchase 
 money of personal property, that specific property is not exempt, if property is found in 
 hands of a debtor. A debtor who is a married woman may invoke all exemption and 
 homestead laws for the protection of the head of a family except where the husband has 
 claimed such exemption and homestead rights for the protection of his own property. 
 Those not the head of a family are entitled to hold as exempt all wearing apparel and the 
 necessary tools and implements of his trade, if a mechanic. 
 
 MONTANA. 
 
 ExemptionSa — All clothing of the debtor and family, and chairs, tables, desks and 
 books, to the value of two hundred dollars; also allnecessary household, table and kitchen 
 furniture, and provisions and fuel actually provided for individual or family use, sufiicient 
 for three months ; also one horse, two cows and their calves, four swine, and fifty domestic 
 fowls. In addition to the above there is exempt to the farmer his farming utensils, not 
 exceeding six hundred dollars in value, two oxen, or two horses or mules, and their har- 
 ness, one cart or wagon, and food for such stock for three months; two hundred dollars' 
 worth of seed, grain or vegetables actually provided for the purpose of sowing or plant- 
 ing. The proper tools, booKS or instruments, of any mechanic, physician, lawyer, dentist 
 or clergyman. To a miner, his dwelling, and all his tools and machinery necessary for 
 carrying on his avocation, not to exceed in value one thousand dollars, and one horse, 
 mule, or two oxen, vehicle and harness, by which the debtor habitually earns his living. 
 One horse, with vehicle or harness, of physician or clergyman, used in making his profes- 
 sional visits, with food for such stock for three months. All arms, uniform, etc., required 
 l^ law to be kept by any person. All property generally held by the county or town for 
 the benefit of the county or the public, except as against a vendor's lien or a mortgage. The 
 
EXEMPTION LAWS. 483 
 
 wages of a debtor earned at any time within thirty days next preceding the levy, prorided 
 they are necessary for the use of his family residing in the state, supported wholly or in 
 part by his labor. None but bonajide residents can claim the benefits of this law. A 
 homestead not to exceed in value twenty-five hundred dollars if agricultural land, it is 
 not to exceed one hundred and sixty acres of land ; if within the limits of a town plat, city 
 or village, not to exceed one-fourth of an acre. The debtor has his option of the two and 
 may select either, with all improvements thereon, which are included in the valuation. 
 Such exemption does not aSect the lien of any mechanic or laborer, or extend to any 
 mortgage lawfully obtained. The exemptions above specified apply only to married men 
 or the head of a family, and none of the personal property is exempt from attachment or 
 execution for the wages of any clerk, mechanic, laborer or servant. In order to secure 
 the homestead the claimant must execute and record in the county clerk's office a declara- 
 tion of homestead. Failure to do this renders the property subject to execution. 
 
 NEBRASKA. 
 
 Exemptions. — A homestead consisting of any. quantity of land, not exceeding one 
 hundred and sixty acres, and the dwelling house thereon and its appurtenances, to be 
 selected by the owner thereof and not included in any incorporated city or village; or, instead 
 thereof, at the option of the owner, a quantity of contiguous land, not exceeding one-half 
 an acre with buildings thereon and appurtenances, all not over $2,000 in value, being within 
 an incorporated town, city or village; or, in lieu of the above, alot or parcel of contiguous 
 land, not exceeding twenty acres, being within the limits of an incorporated town, city or 
 village, the said parcel or lot of land not being laid off into streets, blocks and lots, owned 
 and occupied by any resident of the State, being the head of a family, shall not be subject 
 to attachmeut, levy or sale, upon execution or other process issuing out of any court in this 
 State, so long as the same shall be occupied by the debtor as a homestead, provided, how- 
 ever, that such farm lands, lots, etc., do not exceed in value $2,000. All heads of families 
 who have neither lands, town lots, nor houses subject to exemption as a homestead, under 
 the laws of this State, shall have exempt from forced sale on execution the sum of $500 in 
 personal property. No property hereinafter mentioned shall be liable to attachment, exe- 
 cution or sale, or any final process issued from any court of this State, against any person 
 being a resident of this State and the head of a family: The family bible, family pictures, 
 school books and library for use of the family; all necessary wearing apparel of the 
 debtor and his family; all beds, bedsteads and bedding necessary for the use of such 
 family; all stoves and appendages put up or kept for the use of debtor's family, not to 
 exceed four; all cooking utensils and all other household furniture not herein enumerated, 
 to be selected by the debtor, not exceeding in value $100; one cow, three hogs, and all 
 pigs under six months old; and if the debtor be at the time actually engaged in the busi- 
 ness of agriculture, in addition to the above, one yoke of oxen, or a pair of horses in lieu 
 thereof, ten sheep, and the wool therefrom, either in the raw material or manufactured 
 into yarn or cloth; the necessary food for the stock mentioned in this section for the period 
 of three months; one wagon, cart or dray, two plows and one drag; the necessary gearing 
 for the team herein exempted, and other farming implements not exceeding $50 in value; the 
 provisions for the debtor and his family necessary tor six months' support either provided 
 or growing, or both, and fuel necessary for six months; the tools and instruments of any 
 mechanic, miner or other person, used and kept for the purpose of carrying on his trade 
 or business; the library and implements of any professional man. Unmarried child residing 
 on homestead, is allowed it exempt if both parents are dead. The widow or widower, 
 together or either one without the other, and wtth or without a child living with them, or 
 if all children are dead, are entitled to homestead, provided the person claiming homestead 
 has some relative living with him or her, dependent upon him or her for support. A con- 
 veyance or encumbrance of homestead by the owner is of no validity unless the husband 
 and wife, if the owner is married, concur in and sign the same jointinstrument. The home- 
 stead is subject to execution on forced sale in satisfaction of judgments obtained: First, on 
 debts secured by mechanics,' laborers' or venders' liens upon the premises. Second, on 
 debts secured by mortgage upon the premises, executed and acknowledged by both husband 
 and wife, or an unmarried claimant. Homestead descends discharged from debts. 
 
 NEVADA. 
 
 Exemptions. — The following property of the judgment debtor is exempt from execu- 
 tion. Chairs, tables, desks, and books to the value of $100. Necessary household furni. 
 ture, wearing apparel, beds, bedding, provisions, and firewood sufficient for one month. 
 Farming utensils ; also two oxen or two norses, or two mules and their harness ; two cows 
 and one cart or wagon ; and food for such oxen, horses, cows or mules, for one month ; 
 
484 
 
 APPENDIX. 
 
 also all seed grain or vegetables actually provided, reserved, or on hand for the purpose of 
 planting or sowing, at any time within the ensuing six months, not exceeding in value $400. 
 The tools and implements of a mechanic or artisan necessary to carry on his trade ; the in- 
 struments and chests of a surgeon, physician, surveyor, and dentist, necessary to the exer- 
 cise of their profession, with their scientific and professional libraries, and the libraries of 
 an attorney or counsellor, and the libraries of ministers of the gospel. The cabin or 
 dwelling of a miner, not exceeding in value $500 ; also all tools and implements necessary 
 for carrying on any mining operation not exceeding in value $500; and two horses, mules, 
 or oxen, with their harness, and food for the same for one month, when necessary to be 
 used in such mining operations. Two oxen, two horses, or two mules, and their harness, 
 and one cart or wagon, by the use of which a cartman, huckster, peddler, teamster, or 
 other laborer, habitually earns his living; and one horse, with vehicle and harness, or other 
 equipments, used by aphysician, or surgeon, or minister of the gospel in making his pro- 
 fessional visits, and food for such oxen, mules, or horses, fur one month. One sewing 
 machine, not exceeding in value $150, in actual use by tbe debtor or his family. All fire 
 engines, hooks and ladders, and all apparatus and furniture belonging to any fire company 
 or department. All arms, uniforms, and accoutrements required by law to be kept by any 
 person. All court houses, jails, public offices and buildings, lots, grounds, and personal 
 property; the fixtures, furniture, books, papers, and appurtenances nelonging and pertain- 
 ing to the court house, jail, and public olfices belonging to any county in this State, and 
 allcemeteries, public squares, parks and places, public buildings, town halls, public mar- 
 kets, buildings for the use of the fire departments and military organizations, and the lots 
 and grounds thereto belonging and appertaining, owned or held by any town or incorpor- 
 ated city, or dedicated by such town or city to health, ornameut, or public use, or for the 
 use of any fire or military company organized under the laws of this State. None of the 
 above articles or species of property are exempt from execution issued upon a judgment 
 recovered for its price, or upon a mortgage thereon. The earnings of a judgment debtor 
 arising from his personal services for the calendar month during which process has been 
 issued (in supplemental proceedings), not exceeding fifty dollars, are exempt, when it shall 
 be made to appear by the debtor's affidavit, or otherwise, that such earnings are necessary 
 for the use of a family supported wholly or partially by his labor. Homestead not ex- 
 ceeding $5,000 in value, to be selected by husband or wife, or other head of a family. 
 
 NEW HAMPSHIRE. 
 
 Exemptions. — Homestead to the value of $500 ; necessary apparel and bedding, and 
 household furniture to the value of $100 ; bibles and school booKs in use in the family 
 library to the value of $200; one cow, one hog, and one pie, and pork of same when 
 slaughtered; tools of occupation to the value of $100; six sheep and their fleeces, one 
 cooking stove and its furniture ; provisions and fuel to the value of $50, and one sewing 
 inachine ; beasts of the plow, not exceeding one yoke of oxen, or a horse, when required 
 for farming or teaming purposes or other actual use, hay not exceeding four tons, and 
 domestic fowl to the value of $50. 
 
 NEW JERSEY. 
 
 Exemptions. — Every resident head of a family has or is entitled to an exemption of 
 property (exclusive of wearing apparel) of the value of $200 as against creditors in all 
 cases where such property has not been pledged or mortgaged to secure indebtedness. 
 The family of a decedent may claim the same exomption and have set apart for their use 
 property of the decedent of said appraised value. Household goods and furniture of 
 every kind, not exceeding in value $200, of any absconding debtor having a family resid- 
 ing in this State, are reserved for the use of the family, and are not liable to seizure under 
 any writ of attachment or other civil process, unless the debt or demand sued on be one 
 for which such property was sold and delivered . 
 
 NEW MEXICO. 
 
 Exemptions. — Every person who has a family, and every widow or widower living 
 with an unmarried daughter or unmarried minor son ; homestead to value of $1,000; aU 
 wearing apparel of family, beds, bedsteads and bedding necessary for use of same; cook 
 stove and pipe, and heating stove and fuel for sixty days; one cow, two swine, six sheep, 
 or in lieu, furniture to stated value; all relisious books, etc., aud pictures; fifty dollars, 
 worth of provisions, and kitchen and household furniture to $200 in value; one sewing 
 machine, one knitting machine, and all tools and implements necessary to carry on debt 
 or's trade up to value of $150; the personal earnings of debtor and bis minor children for 
 
EXEMPTION LAWS. 485 
 
 three months ; all cabinets of specimens not intended for gain. In addition, every dray- 
 man holds his horse and dray ; every farmer, being the head of a family, two horses, one 
 yoke cattle and gearing necessary, and one wagon ; every doctor his horse, saddle, bridle, 
 and books, instruments, etc., up to $100 in value ; every lawyer a library not over $500 in 
 value. Every unmarried woman holds exempt clothing to value of $150, one sewing 
 machine, oue knitting machine, and, if music teacher, one piano or organ and books to 
 value of $50. All beneficiary funds not over $5,000 paid by any benevolent association to 
 family of any member are not liable to member's debts, 
 
 NEW YORK. 
 
 Exemptions and Homestead. — If the judgment debtor is a householder, or has a 
 family for which he provides, necessary household furniture, working tools or team, pro- 
 fessional instruments, furniture and library, not exceeding $220 in value, and food for the 
 team for ninety days, are exempt, except in actions for the purchase pi'ice thereof, or the 
 purchase price of various household exempt articles specified in the statute. Even in sup- 
 plementary proceedings the judgment debtor cannot be ordered to apply upon the judg- 
 ment his earnings for his personal services within sixty days preceding the order if such 
 earnings are necessary for the support of a family wholly or partly supported by his labor, 
 the lot and buildings not exceeding in value $1,000, owned and occupied as a residence by 
 a householder, having a family, and recorded as homestead property, are exempt as 
 against all debts but debts for purchase price thereof, and those contracted before the 
 property was recorded as exempt. 
 
 NORTH CAROLINA. 
 
 Exemptions, — Every homestead and dwellings and buildings used therewith, not 
 exceeding in value $1,000, to be selected by the owner thereof ; or in lieu thereof at the 
 option orthe owner, any lot in any city, town or village, with the dwellings used thereon, 
 owned and occupied by any resident of the State, ana not exceeding the value of $1,000. 
 Personal property of the value of $500. 
 
 NORTH DAKOTA. 
 
 Exemptions. — The following property is absolutely exempt to ahead of family as 
 defined in homestead from attachment on mesne process and from levy and sale on 
 execution ; All family pictures, a pew or any other sitting in any house of worship ; a lot 
 or lots in any burial ground ; the family bible and all school books used by the family and 
 all other hooks not exceeding in value one hundred dollars ; all wearing apparel and 
 clothing of the debtor and his family ; provisions for the debtor and his family necessary 
 for oue year's supply, and also fuel necessary for one year, and the homestead as created, 
 defined and limited by law. Aside from these absolute exemptions, the debtor may select 
 from all other of his personal property, goods, chattels, merchandise, or money not to 
 exceed in the aggregate fifteen hundred dollars ; or in lieu thereof he may select books 
 and musical instruments of the value of five hundred dollars; kitchen and household 
 furniture and bedding of the value of five hundred dollars ; three cows, ten swine, one 
 yoke of cattle, two horses or mules, one hundred sheep and their lambs under six months 
 old, and all wool therefrom, and all cloth or yarn manufactured from such wool and the 
 food necessary to keep such animals for one year; also one wagon, one sleigh, two plows, 
 one harrow and farming utensils, including tackle for teams, not exceeding three hundred 
 dollars in value ; the tools of any mechanic used and kept for the purpose of carrying on 
 his trade, and, in addition thereto, stock in trade of the value of two hundred dollars ; the 
 library and instruments of any professional person not exceeding six hundred dollars in 
 value. None but the absolute exemptions above specified are allowed to either a cor- 
 poration for profit, a non-resident, a debtor who is in the act of removing from the State 
 with his family, a debtor who has absconded, taking his family with him, or any person 
 against whom an execution or other process issues upon a debt incurred for property 
 obtained under false pretenses, or as against an execution issued for the recovery of 
 laborers' or mechancs' wages or physicians' bills. No exemption exists as against 
 execution issued for the purchase money of property, real or personal. A partnership firm 
 can claim but one exemption of fifteen hundred dollars, or the alternative property, and 
 not a several exemption tor each partner. 
 
486 
 
 APPENDIX. 
 
 OHIO. 
 
 Hxemptionsa — ThefELmilT homestead of each head of a family is esem^t from sale oa 
 execution on any decree or judgment rendered in any cause of action, provided that such 
 homestead does not exceed one thousand dollars in value. When the homestead consists 
 of a house and lot of laud that will not bear a division, the plaintiff in execution shall 
 receive, in lieu of the proceeds of a sale of the homestead, the amount oyer and above $100 
 annually, vphich shall be adjudged by appraisers as a fair and reasonable rent for the same, 
 until the debt, interest, and costs are paid, the same being payable quarterly. In default of 
 rent being paid quarterly, or within ten days after each payment shall become due, 
 it is the duty of the sheriff to proceed and sell said homestead. It cannot be sold for less 
 than its appraised value. The wearing apparel of such family, bed, bedsteads, bedding 
 necessary for the use of the family ; one stove and pipe, fuel sufficient for sixty days, tools 
 necessary for carrying on his or her trade or business, not exceeding $100 in value; the 
 personal earnings of the debtor and his or her minor child or children for three months 
 when neceseary to the support of debtor. In case the debtor is not the owner of a home- 
 stead, he is entitled to hold exempt from levy and sale personal property not exceeding 
 $500 in addition to the amount of chattel property aforesaid. The defendant may hola 
 exempt from execution ninety per cent, only of his personal earnings as provided above, 
 when the debt, demand or claim is for necessaries furnished to the defendant, his wife or 
 family after April 26th, 1898. 
 
 OKLAHOMA TERRITORY. 
 
 Exemptions* — To head of a family, outside of city or town, not to exceed 160 acres, 
 which must be in one tract, with the improvements thereon, and in a city or town not 
 more than one acre ; all household and kitchen furniture ; lot in cemetery ; all implements 
 of husbandry, tools, apparatus and books used in trade or profession ; family library, por- 
 traits and wearing apparel ; five milch cows and their calves, one yoke of oxen, with 
 yokes and chains; two horses or mules, and wagon, or cart, or dray, carriage or buggy; 
 gun ; ten hogs, twenty sheep ; saddles, bridles and harness for use of family ; provisions, 
 forage on hand or growing for home consumption, and for the use of exempt stock for one 
 year ; current wages and earnings for personal and professional services within last ninety 
 days. These exemptions do not apply to corporation for profit; to anon-resident; to a 
 debtor who is in the act of removing his family from the Territory, or who has absconded 
 taking with him his family. To a single person : lot or lots in cemetery held for sepulchre ; 
 all wearing apparel ; tools, apparatus and books belonging to any trade or profession ; one 
 horse, bridle and saddle or one yoke of oxen ; current wages for personal services. 
 Exemption of homestead shall not apply where debt is due for purchase money, or part of 
 same ; taxes due thereon ; work and material used in constructing improvements thereon ; 
 lien given by the owner. Exemption of personal property shall not apply when debt is 
 due tor rents and advances of landlord to tenant, or to debts secured by lien. No personal 
 property is exempt from execution or attachment for wages of clerk, mechanic, laborer or 
 servant. All pension money is exempt, and judgment debtor has right to select $600 
 worth of property exempt from an^ levy. 
 
 OREGON. 
 
 Homesteads. — The homestead of a family is exempt from judicial sale, but such 
 homestead must be the actual abode of or owned by such family or some member thereof. 
 It cannot exceed in value $1,500 nor exceed 160 acres in extent if located outside 
 of a town or city. If in a town or city, then such homestead cannot exceed one block. 
 A homestead cannot be reduced to less than twenty acres nor one lot, regardless 
 of value. The homestead Act does not apply to decrees for the foreclosure of any mort- 
 gage, properly executed, but such mortgage must be executed by both husband and wife. 
 A creditor may have the premises claimed as a homestead appraised, and if found to 
 exceed the value of $1,500, all of said property in excess of $1,500 may be sold by lots, or 
 smallest legal subdivisions; but the sheriff is required to offer the same in the manner 
 directed by the judgment debtor, if he chooses to so direct, otherwise said sheriff shall sell 
 the same so as to leave the portion thereof appraised at $1,500, which is then designated 
 as the homestead, as compact as possible. In lieu of the proceedings for an appraisement 
 and sale, as above stated, the execution creditor may at any time pay the execution debtor 
 the sum of $1,500 and proceed to sell the homestead, as he might have done but for said 
 homestead act, adding the said $1,500 to his lien, but the money is exempt from execution. 
 The homestead is also exempt from sale on judicial process, after the death of the person 
 entitled thereto, for the collection of any debt for which the same could not have been sold 
 during bis lifetime. 
 
EXEMPTION LAWS. 487 
 
 PENNSYLVANIA. 
 
 Exemptions. — Inexeoutions issued oa judgments "obtained upon contract and dis- 
 tress for rent," property, real or personal, to the value of $300. The exemption may be 
 waired in note or contract. Under assignments for the benefit of creditors, household 
 furniture and things of domestic use to the amount of $300. The widow or children of a 
 deceased resident of the State can retain as against creditors $300 in money, lands or 
 personality. 
 
 RHODE ISLAND. 
 
 Exemptions* — The following property is exempt from attachment : The necessary 
 wearing apparel of a debtor or his family, if he have a family ; the working tools of a 
 debtor necessary to his or her usual occupation, not exceeding in value the sum of $200, 
 and the professional library of any professional man in actual practice; the household 
 furniture and family stores of a housekeeper, not exceeding in value the sum of $300; one 
 cow and one aud a half tons of hay of a housekeeper; one hog, and one pig of a house- 
 keeper and pork of such hog and pig when slaughtered; debts secured by bills of exchange 
 or negotiable promissory notes; the salary or wages dne or payable to any debtor, not 
 exceeding the sum of $10, except when the cause of action is for necessaries furnished 
 the defendant. For certain other exemptions see Chapter 255 of the General Laws of 
 1896. There is no homestead exemption. 
 
 SOUTH CAROLINA. 
 
 Exemptions. — The following amendment to Art.II ., Sec. 32, of the Constitution, 
 was formally ratified in December, 1880, and an act was passed carrying it into effect; 
 " The General Assembly shall enact such laws as will exempt from attacnment and sale 
 under any mesne or final process issued from any court to the head of any family residinz 
 in this State, a homestead in lands, whether held in fee or any lesser estate, not to exceea 
 in value 81,000, with the yearly products thereof and every head of a family residing in 
 this State, whether entitled to a homestead exemption in lands or not, personal property 
 not to exceed in value the sum of $500: Provided that in case any woman having a 
 separate estate shall be married to the head of a family who has not of his own sufficient 
 property to constitute a homestead as hereinbefore provided, said married woman shall be 
 entitled to a like exemption as provided for the head of a family : Provided fv/riher, that 
 there shall not be an allowance of more than $1,000 worth of real estate and more than 
 $500 worth of personal property to the husband and wife jointly: Provided, that no prop- 
 erty shall be exempt from attachment, levy, or sale for taxes, or for payment of obliga- 
 tions contracted for the purchase of said homestead or the erection of improvements 
 thereon : Provided fwther, that the yearly products of said homestead shall not be 
 exempt from attachment, levy or sale for the payment of obligations contracted in the 
 production of the same. Any person not the head of a family shall be entitled to a like 
 exemption as provided for the head of a family, in all necessary wearing apparel, and 
 tools, implements of trade not to exceed in value the sum of $300. It shall be the duty of 
 the General Assembly at their first session to enforce the provisions of this section by 
 suitable legislation." A homestead right cannot be waived. It appears that a debtor has 
 the right to sell or mortgage his homestead. (Elliott v. Mackorell, 19 S. C. 244.) A 
 childless widow is construed as being at the head of a family, as also it appears that any 
 person who, whether married or not, nas honajide some relative living with and supported 
 by him. 
 
 SOUTH DAKOTA. 
 
 Exemptions. — Absolute exemptions are : All family pictures ; a pew or other sitting 
 in any house of worship; lot or lots in burial ground; family bible and all school books 
 used by family, all other books used as part of family library, not exceeding $200; all 
 wearing apparel and clothing of debtor and family, provisions and fuel necessary for one 
 year's supply for himself and family; and the homestead. In addition, debtor, if head of 
 family, may select $750 worth of other personal property; and, if single person, $300. 
 Any debtor wishing to avail himself of this last exemption must prepare a verified schedule 
 of all his personal property and deliver it to the officer having the execution or other writ 
 within three days from the date of the levy. Any property owned by the debtor and not 
 included in this schedule shall not be exempt. The appraisement of the personal property 
 must be at the actual value of the articles at the place where situated. The appraisement 
 is made by three disinterested persons, one chosen by each of the parties, and tliey select- 
 ing the third. If they cannot agree upon the third, the sheriff or officer having the writ 
 selects him. Instead of the $750 exemption the debtor may select property as follows : 
 
488 
 
 APPENDIX. 
 
 books and musical instruments for use of family, not exceeding $200 in value ; household 
 and kitchen furniture, not exceeding $200 ; two cows, five swine, two yoke of oxen or one 
 span of horses or mules, twenty-five sheep and their lambs under six months old, all wool 
 of the same, and all cloth or yarn manufactured therefrom, necessary food for the animals 
 mentioned for one year ; also one wagon, one sleigh, two plows, one harrow, and farming 
 utensils, including tackle for teams, not exceeding $1,250 in value ; the necessary tools 
 and implements of a mechanic, and in addition stock in trade not exceeding $200 in value; 
 the library and instruments of a professional man, not exceeding $300 in value. But no 
 exemptions except the absolute ones are allowed against an execution or other process is- 
 sued upon a debt incurred for property obtained under false pretenses. The same is true 
 as to a judgment for laborers' or mechanics' wages; and also for physicians' bills, with 
 certain restrictions ; and no exemptions are allowed against an execution levied on property 
 for the purchase money of such property. A corporation for profit, a non-resident, a 
 debtor, who is in the act of removing with his family from the State, or who has absconded, 
 taking with him his family, cannot claim any but absolute exemptions. A partnership 
 firm can claim but one exemption of $750, and not several exemptions for each partner. 
 (Sej Homestead.) 
 
 TENNESSEE. 
 
 £zeinptions< — A homestead to the value of $1, 000 is exempt. Debtor has the right 
 to elect what property shall be set apart for the purpose. It is not necessary that he 
 should reside upon it. Also two beds, bedsteads, and necessary clothing for each, and for 
 each three children an additional bed, bedstead, and clothing, such bedstead not exceed- 
 ing $25 in value ; one cow and calf, and if family consists of six persons, two cows and 
 calves; one dozen knives and forks, one dozen plates, half dozen dishes, one set table- 
 spoons, one set teaspoons, one bread tray, two pitchers, one waiter, one coflfeepot, one 
 teapot, one canister, one cream jug, one dozen cups and saucers, one dining table and two 
 table cloths, one dozen chairs, one bureau not exceeding $40 in value, one safe or press 
 one wash basin, one bowl and pitcher, one washing kettle, two washing tubs, one churn, 
 one looking glass, cue chopping axe, one spinning wheel, one loom and gear, one pair cot- 
 ton cards, one pair wool cards, one cooking stove and utensils not exceeding $25 in value, 
 one cradle, one bible and hymn book, all school books, two horses or mules, or one of 
 each, or one yoke of oxen, one ox cart, ring, staple, and log chain, one two. horse or one- 
 horse wagon not exceeding $75 in value, and harness, one man's saddle, one woman's saddle, 
 two riding bridles, twenty-five barrels of corn, twenty bushels of wheat, five hundred bun- 
 dles of oats, five hundred bundles of fodder, one stack of hay not exceeding $20 in value, 
 and in family of less than six persons one thousand pounds of pork, slaughtered or on foot, 
 or six hundred pounds of bacon, and if the family consists of more than six persons 
 twelve hundred pounds of pork or nine hundred pounds of bacon, all the poultry on hand 
 and fowls up to $25, a home-made carpet, and six cords of wood or one hundred bushel 
 of coal, and if the head of the family be engaged in agriculture, two plows, two hoes, one 
 grubbing hoe, one cutting knife, one harvest cradle, one set plow gears, oue pitchfork, one 
 rake, one iron wedge, five head of sheep, and ten head of stock hogs ; also, in hands of a 
 mechanic, one set of mechanics' tools, such as are usual and necessary in pursuit of his 
 trade ; also, in hands of every male citizen, or female if head of family, one guu ; also, in 
 hands of head of family, or single female using in earning a livelihood, one sewing 
 machine; and in hands of heads of families, fifty pounds of picked cotton, twenty-five 
 pounds of wool, and enough upper and sole leather to provide shoes for family ; one hun- 
 dred gallons of sorghum molasses, five bee hives and the products of the same, one hun- 
 dred pounds of soap, fifty pounds of lard, one hundred pounds of flour, fifty pounds of 
 salt, one hundred pounds of beef or mutton, one pound of black pepper, one pound of 
 spice, one pound of ginger, twenty pounds of coffee, fifty pounds of sugar, three bushels 
 of meal, one bushel of dried beans, one bushel of dried peas, fifty busaels of Irish pota- 
 toes, fifty bushels of sweet potatoes (provided they be kept for family use, and not for 
 sale or merchandise), ten busnels of turnips, one pair of andirons, one clock, all the canned 
 fruits put up for the use of the family, not to exceed twenty dollars in value, and twenty 
 bushels of peanuts, three strings of red pepper, and two gourds, two puuger gourds, a 
 carpet in actual use by the family, not exceeding in value twenty-five dollars ; fifty head 
 of sheep and the fleece that may be shorn from the same, twenty-five stand of bees and 
 the product of the same. In the hands of each mechanic who is the head of a family, 
 two hundred dollars worth of lumber, or material or products of his labor, in a finished or 
 unfinished state. 
 
EXEMPTION LAWS. 4^9 
 
 TEXAS. 
 
 Exemptions, — The bomeatead of a family is exempted and protected from forced 
 sale for the payment of all debts, except the purchase money thereof, or a part of such 
 purchase money, the taxes due thereon, or for work and material used in constructing 
 improvements thereon; nor shall the owner, if a married man, sell the homestead without 
 the consent of the wife, given in such manner as may be prescribed by law. No mortgage, 
 trust deed, or other lien on the homestead shall ever be valid, except for the purchase 
 money therefor, or improvements thereon, as herein before provided, whether such mort- 
 gage or trust deed or other lieu shall have been created by the husband alone, or together 
 with his wife, and all pretended sales of the homestead involving any conditions of 
 defeasance shall be void. The homestead not in a town or city shall consist of not more 
 than 200 acres of land, with the improvements thereon. The Homestead in a city, town or 
 village shall consist of lot or lots not exceeding in value $5,000 at the time of their desig- 
 nation as the homestead, without reference to the value of any improvements thereon ; 
 provided that the same shall be used for the purposes of a home, or as a place to exercise 
 the calhng or business of the head of a family. There is also exempt to every family 
 all household and kitchen furniture; all implements of husbandry; any lot or lots in a 
 cemetery; all tools, apparatus and books belonging to any trade or profession; the family 
 library and all family portraits and pictures; five milch cows and their calves; two yoke of 
 work oxen, with necessary yokes and chains; two horses and one wagon; one carriage or 
 buggy; one gun; twenty lioas; twenty head of sheep; all saddles, bridles and harnesa 
 necessary for the use of family; all provisions and forage on hand for home consumption; 
 and all current wages for personal services. The following property shall be exempt^ to 
 persons who are not constituents of a family : A lot or lots in a cemetery ; all wearing 
 apparel; all tools, apparatus and books belonging to any trade or profession; one horse, 
 saddle and bridle, and current wages for personal services. 
 
 UTAH. 
 
 Exemptions, — Chairs, tables, desks, and books amounting to $200; necessary house- 
 hold and kitchen furniture amounting to $300, also one sewing machine and family pictures 
 provisions and fuel for three months. Farming implements not exceeding $300 of a 
 farmer; also two oxen, two mules or two horses and their harness, two cows with sucking 
 calves, two hogs and all sucking pigs, all wearing apparel, also all beds and bedding, cart 
 or wagon, food for such horses, mules, oxen, and cow for sixty days, also seeds, etc., for 
 planting amounting to $200, and crops of same amount. Tools of mechanics not exceed- 
 ing $500, Instruments of physicians, surgeons or dentists with professional library, law 
 library of attorney, cabin of miner not exceeding $500, tools, derricks, etc., $200, two 
 oxen, horses or mules, carts and harness by which drayman etc., habitually earns his living, 
 a horse, harnes and vehicle, etc., used by physician, surgeon or minister in making profes- 
 sional calls, with hay and grain sufficient for three months, one-half the earnings of the 
 debtor within sixty days next preceding the levy, one dollar or less a day is absolutely 
 exempt. If the debtor is head of family there is exempt homestead, valued $1,000, $500 
 additional valuation allowed for wife and $250 for each other member of family. Court 
 housess, public buildings, property of fire companies, cemeteries, parks and churches. No 
 property is exempt owned by non-residents or for purchase price of the thing sold. 
 Jiedempiion — Leasehold estate, less than two years unexpired, sale shall be absolute. In 
 all other cases real property shall be subject to redemption: First, the judgment debtor, 
 or his successor in interest in the whole or any part of the property ; secoud, a creditor 
 having a lien by judgment or mortgage on the property sold, or ou some part thereof, 
 subsequent to that on which the property was sold within six months after sale of the 
 property, by paying the purchase money in kind as specified in the judgment (gold or 
 currency) with six per cent, thereon added, together with any assessment or tax which 
 the purchaser may have paid since the purchase, and if the purchaser be also a creditor, 
 having a lien prior to that of a redemptioner other than the judgment under which the 
 purchase was made, the amount of such lien with interest. If the property be so redeemed 
 by a redemptioner either the judgment debtor or another redemptioner may, within sixty 
 days of the last redemption, again redeem it from the last redemptioner on paying the sum 
 paid on such last redemption, with three per cent, thereon in addition, and the amount of any 
 assessment or tax which the last redemptioner may have paid thereon after the redemp- 
 tion made by him, with interest on such amount, and in addition, the amount of any liens 
 held by said last redemptioner prior to his own with interest, provided that the judgment 
 undeT which the property was sold need not be paid as a hen. The property may be 
 again redeemed as often as a debtor or redemptioner is so disposed, from any previous 
 redemptioner, within sixty days after the last redemption, with three per cent, thereon in 
 addition, and amount of any assessment or tax which the last redemptioner paid after the 
 
490 APPENDIX. 
 
 redemption by him, with interest thereon and the amount of any liens other than the 
 judgment under which the property was sold, held by the said last redemptioner previous 
 to his own with interest. Sale under deed of trust of real property may be redeemed by 
 the grantor or assigns, or any legal redemptioner within six months after sale on payment 
 of debt and interest and legal charges and costs. 
 
 VERMONT. 
 
 Exemptions. — Homestead to the value of $500, and products, such suitable apparel, 
 bedding, tools, arms, and articles of furniture as may be necessary for upholding life; one 
 sewing machine kept for use, one cow, not exceeding $100 in value, the best swine, or the 
 meat of one swine, ten sheep, not exceeding $100 in value for the ten, and one yeai^s prod- 
 uct of said sheep in wool, yarn or cloth ; forage sufficient for keeping not exceeding ten 
 sheep and one cow through one winter; ten cords of firewood, twenty Dushels of potatoes, 
 such military arms and accoutrements as the debtor is required bylaw to furnish; all 
 growing crops, ten bushels of grain, one barrel of flour, three swarms of bees and hives, 
 together with their produce in honey ; two hundred pounds of sugar, and all lettered 
 gravestones; the bibles and other books used in a family ; one pew or slip in a meeting 
 house or place of religious worship ; live poultry not exceeding in amount or value the 
 sum of $10; the professional books or instruments of physicians, and the professional 
 books of clergymen and attorneys-at-law, to the value of $200, and also one yoke of oxen 
 •or steers as the debtor may select, or two horses kept in use for team work, and such as 
 the debtor may select, in lieu of oxen orsteers, but notexceeding in valuethe sum of $200, 
 'with sufficient forage for the keeping of the same through the winter; also one two-horse 
 wagon with whiffletrees, and one neck-yoke, or one ox-cart, as the debtor may choose, one 
 sled or one set of tram-sleds, either for horses or oxen, as the debtor may select, two har- 
 nesses, two halters, two chains, one plow and one ox-yoke, which with the oxen, or steers, 
 or horses, which the debtor may select for team work, shall not exceed in value $250; pro- 
 vided that the exemption of said one two-horse wagon with whiffletrees and one neck-yoke, 
 or one ox-cart, as the debtor may choose, one sled or set of tram-sleds, harnesses, hatters, 
 plow and ox-yoke are not to extend to or affect any attachment in any suit founded on any 
 contract made on or before the 1st day of December, a. r>. 1878, or to any execution issued 
 on a judgment founded on any such contract; provided, however, the exemption, as to 
 one yoke of oxen or steers and the forage therefor, is not to extend to any attachment 
 issued on any contract made on or before the twenty-first day of November, 1859, or the 
 exemption as to two horses and the forage therefor, on or before the 1st day of December, 
 1866, or any execution issued on a judgment founded on any such contract. But property 
 is not exempt in a suit brought for the purchase price thereof. 
 
 VIRGINIA. 
 
 Exemptions. — Every householder or head of a family shall be entitled, in addition to 
 the articles mentioned below, to hold exempt from levy his real and personal property, or 
 either, including money or debts due him, to a value not exceeding $2,000, to be selected 
 by him. In case of husband, parent, or other person, who is a housekeeper and head of 
 a family, there are also exempt, family bible, family pictures, hooks, etc., not exceeding 
 $100 in value; a pew in a church, lot in a burial ground, necessary wearing apparel of 
 debtor and family, necessary beds, bedding, etc., stoves for necessary use of family, not 
 exceeding three; one cow, one horse, six chairs, one table, six knives, six forks, six 
 plates, one dozen spoons, two dishes, two basins, one pot, one oven, six pieces of wood or 
 earthenware, one loom, one safe or press, spinning-wheel, pair of cards, one axe, two hoes, 
 five barrels of corn, five bushels of wheat or one barrel of flour, two hundred pounds of 
 bacon, three hogs, $10 worth of forage ; one cooking stove and utensils for cooking ; one 
 sewing machine ; and in case of a mechanic, the tools of his trade to the value of $100 ; if 
 debtor at the time is actually engaged in agricultural pursuits, there are exempt, whilst so 
 engaged, one yoke of oxen, or a pair of horses or mules in lieu thereof, one wagon, two 
 plows, one drag, one harvest cradle, one pitchfork, one rake, two iron wedges. The fore- 
 
 foing list of exemptions, except the item of $2,000, applies to debts contracted since 
 ebruary 20, 1867; the exemptioh, affecting debts contracted before that time, embraces 
 but a small proportion of the above described articles. The benefit of a homestead 
 ($2,000) can only be secured by deed duly recorded in the county where the property, or 
 the greater part thereof, is situated, declaring an intention to claim such homestead, with 
 a description of the property so claimed as such homestead. The homestead continues 
 after death of the householder or head of a family for the benefit of the widow and children 
 of the deceased until her death or marriage, and after her death or marriage for the exclusive 
 benefit of the minor children until the youngest child becomes twenty-one years of age • 
 after which period it shall pass, according to tlie law of descent, as other real estate' 
 
EXEMPTION LAWS. 49I 
 
 or as may be devised by said householder, not being subject to dower, yet subject 
 to all the debts of the said householder or head of a family. The Court of Appeals 
 of Virginia has decided that the provision of the State Constitution and the act of 
 the General Assembly passed in pursuance thereof, known as the " Homestead Exemption 
 Laws," 80 far as they apply to contracts entered into or debts contracted before their 
 adoption, are in violation of the Constitution of the United States, and therefore void. 
 
 WASHINGTON. 
 
 Exemptions. — The homestead consists of the dwelling-house in which the claimant 
 resides, and the land on which the same is situated, selected as provided by law. The 
 homestead is exempt from execution or forced sale, except on debts secured by mechanic's 
 liens, labor liens, vendors' liens, debts secured by mortgage on the premises, executed and 
 ackuowledged by the husband and wife, or by an unmarried claimant. The homestead of 
 a married person cannot be conveyed or incumbered, except by instrument signed by both 
 husband and wife. A hooiestead can be abandoned only by a declaration of abandonment, 
 or a grant therefor executed and aclcuowledged by the husband and wife, if claimant is 
 married, or by claimant if unmarried, and a declaration of abandonment is effectual only 
 from the date it is filed for record. Whenever property, which is exempt by the laws of 
 the State, is destroyed by fire, then the insurance money coming to or belonging to the 
 person thus insured to an amount equal to the property thus destroyed shall De exempt 
 from Execution and attachment. The following property shall be exempt from execution 
 and attachment (1) all wearing apparel of every person and family j (2) all private libraries, 
 not to exceed $500 in value, and all family pictures and keepsakes ; (3) to each householder 
 one bed and bedding, and one additioaal bed and bedding for each additional member of 
 the family, and other household goods and utensils and furniture, not exceeding $500 coin 
 in value ; (4) to each householder two cows, with their calves, five swine, two stands of 
 bees, thirty-six domestic fowls, and provisions and fuel for the comfortable maintenance 
 of such household and family for six months, also feed for such animals for six mouths 
 (provided that in case such householder shall not posses^, or shall not desire to retain the 
 animals above named, he may select from his property and retain other property not to 
 exceed $250 coin in value; (5) to a farmer, one span ot horses or mules with harness, or 
 two yoke of oxen with yokes and chains, and one wagon ; also farming utensils actually 
 used about the farm, not exceeding in value $500 in coin ; also 150 bushels of wheat, 150 
 bushels of oata or barley, 50 bushels of potatoes, 10 bushels of corn, 10 bushels of peas, 
 and 10 bushels of onions for seeding purposes ; (fi)to a mechanic, the tools and instruments 
 need to carry on his trade for the support of himself and family, also material used in his trade 
 not exceeding in value $500 in coin ; (1) to a physician, his library, not to exceed in value 
 $500 in coin, also one horse with harness and buggy, the instruments used in his practice, 
 and medicines not exceeding in value $200 in coin; (8) to attorneys, clergymen and other 
 
 Professional men, their libraries, not exceeding $1,000 in coin value, also office furniture, 
 uel and stationery, not exceeding in value $200 in coin ; (9) all firearms kept for the use of 
 any person or family ; (10) to any person, a canoe, skiff, or small boat, with its oars, sails and 
 rigging, not exceeding in value $250 ; (11) to a person engagedin lightering for his support 
 or that of his family, one or more lighters, barges or scows, ana a small boat with oars, 
 sails and rigging, not exceeding in the aggregate $250 in coin value ; (12) to a teamster or 
 drayman engaged in that business, for the support of himself or his family, his team, con- 
 sisting of one span of horses or mules, or two yoke of oxen, or a horse and mule with 
 harness, yokes, one wagon, truck, cart or dray ; (13) to a person engaged in the business 
 of logging for his suppport or that of his family, three yoke of work cattle and their yokes, 
 and axes, chains, implements for the business, and camp equipments not exceeding $300 
 coin in value ; (14) a sufficient quantity of hay, grain, or feed to keep the animals men- 
 tioned in the several subdivisions of this chapter, for six weeks. But no property shall be 
 exempt from an execution issued upon a judgment for the price thereof, or any part of the 
 price thereof, or for any tax levied thereon or for clerk's, laborer's or mechanic's wages 
 earned within this State, nor shall any property be exempt from execution issued upon a 
 judgment against an attorney on account of any liability incurred by such attorney to his 
 client on account of any moneys, or other property coming into his hands, from or 
 belonging to his client. Each person shall be entitled to select the property which he is 
 entitled to claim as exempt. Any money received by any citizen of the State as a pension 
 from the Government of the United States, whether the same be in the actual possession 
 of such person or be deposited or loaned by him shall be exempt from execution, attach- 
 ment or seizure by or under any legal process whatever, when any debtor dies or 
 absconds, and leaves his family any money exempted by this act, the same shall be 
 exempt to his family. The proceeds or avails of all life insurance is exempt from all lia- 
 bility for debt. In addition to the above exemption, the law of 1897 exempts to every 
 householder in the State, personal property to the amount and value of $1,000 and defines 
 
492 APPENDIX. 
 
 a householder as designated in all statutes relating to exemptions to be : (1) the husband 
 and wife, or either ; (2) every person who has residing with him or her, and under his or 
 her care and maintenance, either: (a) his orherminor child, or the minor child of his or her 
 deceased wife or husband; (b) a minor brother or sister, or the minor child of a deceased 
 brother or sister; (c) a father, mother, grandfather or grandmother; (d) the father, 
 mother, grandfather, or graudmother of deceased husband or wife; (e) an unmarried sis- 
 ter, or any other of the relatives mentioned in this section who have attained the age of 
 majority, and are unable to take care of or support themselves. 
 
 WEST VIRGINIA. 
 
 Bxemptlons. — Homestead to the value of $1,000 is exempt, where the debtor, being 
 a husband or parent, and resident in the State, previously to contracting the debt or 
 liability, has placed a declaration of his intention to keep the property as a nomestead on 
 the laud records of the county in which the real estate is situate. Personal property to 
 the value of ?200 is also exempted, provided debtor is a resident, and husband or parent, 
 or a married woman. Also $50 worth of tools of a mechanic, artisan or laborer, whether 
 he is a husband or parent or not. 
 
 WISCONSIN. 
 
 Exemptions. — A homestead consisting of any quantity of land not exceeding forty 
 acres, used for agricultural purposes, and the dwelling house thereon and its appurtenances, 
 to be selected by the owner thereof, and not included in any city or village; or instead 
 thereof, at the option of the owner, a quantity of land not exceedmg in amount one-fourth 
 of an acre, being within a city or village, and the dwelling house thereon and its appur- 
 tenances, owned and occupied by any resident of the State, shall not be subject to forced 
 sale on execution, or any other final process from a court, for any debt or liability except 
 mechanics' liens, mortgages and taxes; but if testator leave no widow or minor children 
 the homestead is liable for expense of last sickness, funeral and administration, and if he 
 leave no widow, children or grandchildren, it is liable for all debts after other property is 
 exhausted. Family bible, family pictures and school books, library of debtor, and every 
 part thereof, but not circulating libraries, wearing apparel of debtor and family, all beds, 
 bedsteads and beddings kept and used for the debtor and his family, all stoves 
 put up and kept for use, all cooking utensils, and all other household furniture 
 not herein enumerated, not exceeding $200 in value; two cows, ten swine, one yoke of 
 oxen and one horse or mule, or instead of oxen two horses and two mules; ten sheep and 
 the wool from same, either raw or manufactured; the necessary food for above stock for a 
 year's support; one wagon, cart, or dray, one sleigh, one plow, onedrag, and other farming 
 utensils, including tackle for teams, not exceeding $200 in value, provisions and fuel for one 
 year ; tools and implements or stock in trade of a mechanic, miner, merchant, trader, or other 
 person, not exceeding $200 in value; all moneys from insurance of exempt property; all 
 sewing machines kept for use ; any swords, plate, books, or other articles presented by 
 Congress or any legislature; printing materials and press, or presses used in the business 
 of any printer or publisher, not exceeding $1,500 in value; but not more than $400 shall 
 be exempt as against employees; fire engines and equipments, and everything con- 
 nected with fire departments, including houses and lots, etc. ; abstract books and 
 patents. All private property shall be exempt from seizure and sale upon any exe- 
 cution, issued to enforce any judgment or decree of any court, which shall have 
 been rendered against any county, town, village, city, or school district. The earnings 
 of married persons and persons having a family to support, for three months prior 
 to issue of process, to the amount of $60 per month, are also exempt. Said earn- 
 ings shall not exceed $180 for the three months, including such parts or share thereof paid 
 the debtor during said time. 
 
 WYOMING. 
 
 Exemptions.— -The necessary wearing apparel of every person not exceeding in value 
 $150. Household property when owned by any person being the head of a family to the 
 amount of $500. Tools, teams, implements, or stock in trade of any mechanic, miner or 
 other person, used and kept for the purpose of carrying on his trade or business, not ex- 
 ceeding in value $300, and homestead occupied by the owner or his or her family not 
 exceedmg in value $1, 500, and the earnings of a debtor for his personal services not ex- 
 ceeding $100, when it is shown that the earnings are needed for the support of a family 
 supported wholly or partly by his labor. No article of personal property is exempt from 
 attachment or sale on execution for the purchase money of said article. Personsclaim- 
 ing exemption must be lonafide residents of this State. No property of any person 
 about to remove or abscond from the State is exempt. 
 
APPENDIX C. 
 RULES OF PR^OTICE. 
 
 FOR THE 
 
 COURTS OF EQUITY OF THE UNITED STATES-* 
 
 PKELIMINART REGULATIONS. 
 
 Rule I. — The Circuit Courts, as courts of equity, shall be deemed 
 always open for the purpose of filing bills, answers, and other plead- 
 ings, for issuing and returning mesne and final process and commis- 
 sions, and for making and directing all interlocutory motions, orders, 
 rules, and other proceedings, preparatory to the hearing of all causes 
 upon their merits. 
 
 Rule II. — The clerk's office shall be open, and the clerk shall be in 
 attendance therein, on the first Monday of every month, for the pur- 
 pose of receiving, entering, entertaining, and disposing of all motions, 
 rules, orders, and other proceedings, which are grantable of course, 
 and applied for, or had by the parties, or their solicitors, in all 
 causes pending in equity, in pursuance of the rules hereby prescribed. 
 
 Rule III. — Any judge of the Circuit Court, as well in vacation as in 
 term, may, at chambers, or, on the rule days, at the clerk's office, 
 make and direct all such interlocutory orders, rules, and other pro- 
 ceedings, preparatory to the hearing of all causes upon their merits, 
 in the same manner and with the same effect as the Circuit Court 
 could make and direct the same in term, reasonable notice of the 
 
 * " In proceedings in equity instituted for the purpose of carrying into effect 
 the provisions of the [Bankruptcy] 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 followed as nearly as may be." .... 
 
 See General Order in Bankruptcy, No. XXXVII., November, 1898. 
 
 [493] 
 
494 
 
 APPENDIX C. 
 
 application therefor being first given to tiie adverse party, or his 
 solicitor, to appear and show cause to the contrary at the next rule 
 day thereafter, unless some other time is assigned by the judge 
 for the hearing. 
 
 Rule IV. — All motions, rules, orders, and other proceedings made 
 and directed at chambers, or on rule days, at the clerk's oflfice, whether 
 special or of course, shall be entered by the clerk in an order book, 
 to be kept at the clerk's office, on the day when they are made and 
 direcited; which book shall be open, at all office hours, to the free 
 inspection of the parties in any suit in equity, and their solicitors. 
 And except in cases where personal or other notice is specially 
 required or directed, such entry in the order book shall be deemed 
 sufficient notice to the parties and their solicitors, without further 
 service thereof, of all orders, rales, acts, notices, and other proceed- 
 ings entered in such order book, touching any and all the matters in 
 the suits to and in which they are parties and solicitors. And notice 
 to the solicitors shall be deemed notice to the parties for whom they 
 appear and whom they represent, in all cases where personal notice 
 on the parties is not otherwise specially required. Where the solici- 
 tors for all the parties in a suit reside in or near the same town or 
 city, the judges of the Circuit Court may, by rule, abridge the time 
 for notice of rules, orders, or other proceedings, not requiring per- 
 sonal service on the parties, in their discretion. 
 
 Rule V. — All motions and applications in the clerk's office for the 
 issuing of mesne process and final process to enforce and execute 
 decrees, for filing bills, answers, pleas, demurrers, and other plead- 
 ings; for making amendments to bills and answers; for taking bills 
 pro confesso; for filing exceptions, and for other proceedings in the 
 clerk's office, which do not, by the rules hereinafter prescribed, 
 require any allowance or order of the court, or of any judge thereof, 
 shall be deemed motions and applications, grantable of course by 
 the clerk of the court. But the same may be suspended, or altered, 
 or rescinded, by any judge of the court, upon special cause shown. 
 
 Rule VI. — All motions for rules or orders and other proceedings, 
 which are not grantable of course, or without notice, shall, unless a 
 different time be assigned by a judge of the court, be made on a rule 
 day, and entered in the order book, and shall be heard at the rule 
 day next after that on which the motion is made. And if the 
 
U. S. EQUITY RULES. 495 
 
 adverse party.or his solicitor, shall not then appear, or shall not show 
 good cause against the same, the motion maybe heard by any judge 
 of the court ex parte, and granted as if not objected to, or 
 refused, in his discretion. 
 
 PROCESS. 
 
 Rule VII. — The process of subpoena shall constitute the proper 
 mesne process in all suits in equity, in the first instance, to require 
 the defendant to appear and answer the exigency of the bill; and 
 unless otherwise provided in these rules, or specially ordered by the 
 Circuit Court, a writ of attachment, and if the defendant cannot be 
 found, a writ of sequestration, or a writ of assistance to enforce a 
 delivery of possession, as the case may require, shall be the proper 
 process to issue for the purpose of compelling obedience to any inter- 
 locutory or final order or decree of the court. 
 
 Rule VIII. — Final process to execute any decree may, if the decree 
 be solely for the payment of money, be by a writ of execution, in the 
 form used in the Circuit Court in suits at common law in actions of 
 assumpsit. If the decree be for the performance of any specific act, 
 as, for example, for the execution of a conveyance of land, or the 
 delivering up of deeds, or other documents, the decree shall in all 
 cases, prescribe the time within which the act shall be done, of which 
 the defendant shall be bound, without further service, to take notice ; 
 and upon affidavit of the plaintiff, filed in the clerk's office, that the 
 same has not been complied with within the prescribed time, the 
 clerk shall issue a writ of attachment against the delinquent party, 
 from which, if attached thereon, he shall not be discharged, unless 
 upon a full compliance with the decree and the payment of all costs, 
 or upon a special order of the court, or of a judge thereof, upon 
 motion and affidavit, enlarging the time for the performance thereof. 
 If the delinquent party cannot be found, a writ of sequestration shall 
 issue against his estate upon the return of non est inventus, to compel 
 obedience to the decree.* 
 
 Rule IX. — When any decree or order is for the delivery of pos- 
 session, upon proof made by affidavit of a demand and refusal to 
 obey the decree or order, the party prosecuting the same shall be 
 entitled to a writ of assistance from the clerk of the court. 
 
 * See Rule XCII. 
 
4g6 APPENDIX c. 
 
 Rule X. — Every person, not being a party in any cause, who 
 has obtained an order, or in whose favor an order shall have been 
 made, shall be enabled to enforce obedience to such order by the 
 same process as if he were a party to the cause ; and every person, 
 not being a party in any cause, against whom obedience to any order 
 of the court may be enforced, shall be liable to the same process for 
 enforcing obedience to such order as if he were a party in the cause. 
 
 SERVICE OF PROCESS. 
 Rule XL — No process of subpoena shall issue from the clerk's 
 office in any suit in equity until the bill is filed in the office. 
 
 Rule XII. — Whenever a bill is filed, the clerk shall issue the pro- 
 cess of subpoena thereon, as of course, upon the application of the 
 plaintiff, which shall be returnable into the clerk's office the next 
 rule day, or the next rule day but one, at the election of the plaintiff, 
 occurring after twenty days from the time of the issuing thereof. 
 At the bottom of the subpoena shall be placed a memorandum, that 
 the defendant is to enter his appearance in the suit in the clerk's 
 office, on or before the day at which the writ is returnable ; other- 
 wise, the bill may be taken J>ro confesso. Where there are more 
 than one defendant, a writ of subpoena may, at the election of the 
 plaintiff, be sued out separately for each defendaint, except in the 
 case of husband and wife defendants, or a joint subpoena against 
 all the defendants. 
 
 Rule XIII. — The service of all subpoenas shall be by a delivery 
 of a copy thereof by the officer serving the same to the defendant 
 personally, or by leaving a copy thereof at the dwelling-house or 
 usual place of abode of each defendant, with some adult person, who 
 is a member or resident in the family. 
 
 Rule XIV. — Whenever any subpoena shall be returned not exe- 
 cuted as to any defendant, the plaintiff shall be entitled to another 
 subpoena, toties quoties, against such defendant, if he shall require 
 it, until due service is made. 
 
 Rule XV. — The service of all process, mesne and final, shall be 
 by the marshal of the district, or his deputy, or by some other per- 
 son specially appointed by the court for that purpose, and not other- 
 
U. S. EQUITY RULES. 497 
 
 wise. In the latter case, the person serving the process shall mak& 
 affidavit thereof. 
 
 Rule XVI. — Upon the return of the subpoena as served and exe- 
 cuted upon any defendant, the clerk shall enter the suit upon his 
 docket as pending in the court, and shall state the time of the entry. 
 
 APPEAEANCE. 
 
 Rule XVII. — The appearance day of the defendant shall be the 
 rule day to which the subpoena is made returnable, provided he has 
 been served with the process twenty days before that day; other- 
 wise, his appearance day shall be the next rule day succeeding the 
 rule day when the process is returnable. 
 
 The appearance of the defendant, either personally or by his 
 solicitor, shall be entered in the order book on the day thereof by 
 the clerk. 
 
 BILLS TAKEN PRO CONFESS©. 
 
 Rule XVIII. — It shall be the duty of the defendant, unless the 
 time shall be otherwise enlarged, for cause shown, by a judge of the 
 court, upon motion for that purpose, to file his plea, demurrer, or 
 answer to the bill, in the clerk's office, on the rule day next succeed- 
 ing that of entering his appearance. In default thereof, the plaintiff 
 may, at his election, enter an order (as of course) in the order book, 
 that the bill be taken pro confesso; and thereupon the cause shall be 
 proceeded in ex parte, and the matter of the bill may be decreed by 
 the court at any time after the expiration of thirty days from and 
 after the entry of said order, if the same can be done without an 
 answer and is proper to be decreed ; or the plaintiff, if he requires 
 any discovery or answer to enable him to obtain a proper decree, 
 shall be entitled to process of attachment against the defendant, to 
 compel an answer ; and the defendant shall not, when arrested upon 
 such process, be discharged therefrom, unless upon filing his answer, 
 or otherwise complying with such order as the court or a judge 
 thereof may direct, as to pleading to or fully answering the bill 
 within a period to be fixed by the court or judge, and undertaking 
 to speed the cause. 
 
 Rule XIX. — When the bill is taken pro confesso, the court may 
 proceed to a decree at any time after the expiration of thirty days 
 
 NAT. BANKRUPTCY LAW. — 32 
 
498 APPENDIX C. 
 
 from and after the entry of the order to take the hill J>ro con/esso, 
 and such decree rendered shall be deemed absolute, unless the court 
 shall, at the same term, set aside the same, or enlarge the time for 
 filing the answer, upon cause shown upon motion and affidavit of 
 the defendant. And no such motion shall be granted, unless upon 
 the payment of the costs of the plaintiff in the suit up to that time, 
 or such part thereof as the court shall deem reasonable, and unless 
 the defendant shall undertake to file his answer within such time as 
 the court shall direct, and submit to such other terms as the court 
 shall direct, for the purpose of speeding the cause. 
 
 FRAME OF BILLS. 
 
 Rule XX. — Every bill, in the introductory part thereof, shall 
 
 contain the names, places of abode, and citizenship, of all the parties, 
 
 plaintiffs and defendants by and against whom the bill is brought. 
 
 The form, in substance, shall be as follows: " To the judges of the 
 
 Circuit Court of the United States for the district of : A. B., 
 
 of , and a citizen of the State of , brings this his bill against 
 
 C. D., of , and a citizen of the State of , and E. F., of , 
 
 and a citizen of the State of . And thereupon your orator 
 
 complains and says, that," etc. 
 
 Rule XXI. — The plaintiff, in his bill, shall be at liberty to omit, 
 at his option, the part which is usually called the common con- 
 federacy clause of the bill, averring a confederacy between the 
 defendants to injure or defraud the plaintiff; also what is com- 
 monly called the charging part of the bill, setting forth the matters 
 or excuses which the defendant is supposed to intend to set up by 
 way of defence to the bill; also what is commonly called the juris- 
 diction clause of the bill, that the acts complained of are contrary to 
 equity, and that the plaintiff is without any remedy at law; and the 
 bill shall not be demurrable therefor. And the plaintiff may, in the 
 narrative or stating part of his bill, state and avoid, by counter aver- 
 ments, at his option, any matter or thing which he supposes will be 
 insisted upon by the defendant, by way of defence or excuse, to the 
 case made by the plaintiff for relief. The prayer of the bill shall ask 
 the special relief to which the plaintiff himself supposes himself 
 entitled, and also shall contain a prayer for general relief; and if an 
 injunction, or a writ of ne exeat regno, or any other special order 
 pending the suit is required, it shall also be specially asked for. 
 
U. S. EQUITY RULES. 499 
 
 Rule XXII. — If any persons, other than those named as defend- 
 ants in the bill, shall appear to be necessary or proper parties thereto, 
 the bill shall aver the reason why they are not made parties, by show- 
 ing them to be without the jurisdiction of the court, or that they 
 cannot be joined without ousting the jurisdiction of the court as to 
 the other parties. And as to persons who are without the jurisdic- 
 tion and may properly be made parties, the bill may pray that pro- 
 cess may issue to make them parties to the bill if they should come 
 within the jurisdiction. 
 
 Rule XXIII. — The prayer for process of subpoena in the bill shall 
 contain the names of all the defendants named in the introductory 
 part of the bill, and if any of them are known to be infants under 
 age, or otherwise under guardianship, shall state the fact, so that 
 the court may take order thereon as justice may require, upon the 
 return of the process. If an injunction, or a writ of ne exeat regno, 
 or any other special order, pending the suit, is asked for in the 
 prayer for relief, that shall be sufficient without repeating the same 
 in the prayer for process. 
 
 Rule XXIV. — Every bill shall contain the signature of counsel 
 annexed to it, which shall be considered as an affirmation on his 
 part, that upon the instructions given to him and the case laid before 
 him, there is good ground for the suit, in the manner in which it is 
 framed. 
 
 Rule XXV. — In order to prevent unnecessary costs and expenses, 
 and to promote brevity, succinctness, and directness in the allega- 
 tions of bills and answers, the regular taxable costs for every bill 
 and answer shall in no case exceed the sum which is allowed in the 
 State court of chancery in the district, if any there be ; but if there 
 be none, then it shall not exceed the sum of three dollars for every 
 bill or answer. 
 
 SCANDAL AND IMPERTINENCE IN BILLS. 
 
 Rule XXVI. — Every bill shall be expressed in as brief and suc- 
 cinct terms as it reasonably can be, and shall contain no unnecessary 
 recital of deeds, documents, contracts, or other instruments, in hcsc 
 verba, or any other impertinent matter, or any scandalous matter 
 not relevant to the suit. If it does, it may on exceptions be referred 
 
500 APPENDIX C. 
 
 to a master by any judge of the court for impertinence or scandal; 
 and if so found by him, the matter shall be expunged at the expense 
 of the plaintiff, and he shall pay to the defendant all his costs in the 
 suit up to that time, unless the court or a judge thereof shall other- 
 wise order. If the master shall report that the bill is not scandalous 
 or impertinent, the plaintiff shall be entitled to all costs occasioned 
 by the reference. 
 
 Rule XXVII. — No order shall be made by any judge for referring 
 any bill, answer, or pleading, or other matter, or proceeding depend- 
 ing before the court for scandal or impertinence, unless exceptions 
 are taken in writing and signed by counsel, describing the particular 
 passages which are considered to be scandalous or impertinent; nor 
 unless the exceptions shall be filed on or before the next rule day 
 after the process on the bill shall be returnable, or after the answer 
 or pleading is filed. And such order, when obtained, shall be con- 
 sidered as abandoned, unless the party obtaining the order shall, 
 without any unnecessary delay, procure the master to examine and 
 report for the same on or before the next succeeding rule day, or 
 the master shall certify that further time is necessary for him to 
 complete the examination. 
 
 AMENDMENT OP BILLS. 
 
 Rule XXVIII. — The plaintiff shall be at liberty as a matter of 
 course, and without payment of costs, to amend his bill in any 
 matters whatsoever, before any copy has been taken out of the clerk's 
 office, and in any small matters afterwards, such as filling blanks, 
 correcting errors of dates, misnomer of parties, misdescription of 
 premises, clerical errors, and generally in matters of form. But if 
 he amend in a material point (as he may do of course) after a copy 
 has been so taken, before any answer or plea, or demurrer to the 
 bill, be shall pay to the defendant the costs occasioned thereby, and 
 shall, without delay, furnish him a fair copy thereof, free of expense, 
 with suitable reference to the places where the same are to be 
 inserted. And if the amendments are numerous, he shall furnish in 
 like manner, to the defendant, a copy of the whole bill as amended; 
 and if there be more than one defendant, a copy shall be furnished 
 to each defendant affected thereby. 
 
 Rule XXIX. — After an answer, or plea, or demurrer is put in. 
 
U. S. EQUITY RULES. 50I 
 
 and before replication, the plaintiff may, upon motion or petition, 
 without notice, obtain an order, from any judge of the covtrt, to 
 amend his bill on or before the next succeeding rule day, upon pay- 
 ment of costs or without payment of costs, as the court or a judge 
 thereof may in his discretion direct. But after replication filed, the 
 plaintiff shall not be permitted to withdraw it and to amend his bill, 
 except upon a special order of a judge of the court, upon motion or 
 petition, after due notice to the other party, and upon proof by affi- 
 davit that the same is not made for the purpose of vexation or delay, 
 or that the matter of the proposed amendment is material, and could 
 not with reasonable diligence have been sooner introduced into the 
 bill, and upon the plaintiff's submitting to such other terms as may 
 be imposed by the judge for speeding the cause. 
 
 Rule XXX. — If the plaintiff, so obtaining any order to amend his 
 bill alter answer, or plea, or demurrer, or after replication, shall 
 not file his amendments or amended bill, as the case may require, in 
 the clerk's office, on or before the next succeeding rule day, he shall 
 be considered to have abandoned the same, and the cause shall pro- 
 ceed as if no application for any amendment had been made. 
 
 DEMURRERS AND PLEAS. 
 
 Rule XXXI. — No demurrer or plea shall be allowed to be filed to 
 an" bill, unless upon a certificate of counsel, that in his opinion it is 
 well founded in point of law, and supported by the affidavit of the 
 defendant, that it is not interposed for delay; and if a plea, that it 
 is true in point of fact. 
 
 Rule XXXII. — The defendant may, and any time before the bill 
 is taken for confessed, or afterwards, with the leave of the court, 
 demur or plead to the whole bill, or to part of it, and he may demur 
 to part, plead to part, and answer as to the residue; but in every 
 case in which the bill specially charges fraud or combination, a plea 
 to such part must be accompanied with an answer fortifying the 
 plea, and explicitly denying the fraud and combination, and the facts 
 on which the charge is founded. 
 
 Rule XXXIII. — The plaintiff may set down the demurrer or plea 
 to be argued, or he may take issue on the plea. If, upon an issue, 
 the facts stated in the plea be determined for the defendant, they 
 shall avail him, as far as in law and equity they ought to avail him. 
 
502 APPENDIX C. 
 
 Rule XXXIV. — If, upon the hearing, any demurrer or plea is 
 overruled, the plaintiff shall be entitled to his costs in the cause up 
 to that period, unless the court shall be satisfied that the defendant 
 had good ground in point of law or fact to interpose the same, and 
 it was not interposed vexatiously or for delay. And upon the over- 
 ruling of any plea or demurrer, the defendant shall be assigned to 
 answer the bill, or so much thereof as is covered by the plea or 
 demurrer, the next succeeding rule day, or at such other period as, 
 consistently with justice and the rights of the defendant, the same 
 can, in the judgment of the court, be reasonably done; in default 
 whereof, the bill shall be taken against him, pro confesso, and the 
 matter thereof proceeded in and decreed accordingly. 
 
 Rule XXXV. — If, upon the hearing, any demurrer or plea shall 
 be allowed, the defendant shall be entitled to his costs. But the 
 court may, in its discretion, upon motion of the plaintiff, allow him 
 to amend his bill upon such terms as it shall deem reasonable. 
 
 Rule XXXVI. — No demurrer or plea shall be held bad and be 
 overruled upon argument, only because such demurrer or plea shall 
 not cover so much of the bill as it might by law have extended to. 
 
 Rule XXXVII. — No demurrer or plea shall be held bad and over- 
 ruled upon argument, only because the answer of the defendant may 
 extend to some part of the same matter, as may be covered by s".ch 
 demurrer or plea. 
 
 Rule XXXVIII. — If the plaintiff shall not reply to any plea, or 
 set down any plea or demurrer for argument, on the rule day when 
 the same is filed, or on the next succeeding rule day, he shall be 
 deemed to admit the truth and sufficiency thereof, and his bill shall 
 be dismissed as of course, unless a judge of the court shall allow 
 him further time for the purpose. 
 
 ANSWERS. 
 
 Rule XXXIX. — The rule, that if a defendant submits to answer 
 he shall answer fully to all the matters of the bill, shall no longer 
 apply in cases where he might by plea protect himself from such 
 answer and discovery. And the defendant shall be entitled in all 
 cases, by answer, to insist upon all matters of defence (not being 
 matters of abatement, or to the character of the parties, or matters 
 
U. S. EQUITY RULES. S03 
 
 of form) in bar of or to the merits of the bill, of which he may be 
 entitled to avail himself by a plea in bar; and in such answer he 
 shall not be compellable to answer any other matters than he would 
 be compellable to answer and discover upon filing a plea in bar, and 
 an answer in support of such plea, touching the matters set forth in 
 the bill, to avoid or repel the bar or defence. Thus, for example, 
 a bona fide purchaser for a valuable consideration, without notice, 
 may set up that defence by way of answer instead of plea, and shall 
 be entitled to the same protection, and shall not be compellable to 
 make any further answer or discovery of his title than he would be 
 in any answer in support of such plea. 
 
 Rule XL. — A defendant shall not be bound to answer any state- 
 ment or charge in the bill, unless specially and particularly interro- 
 gated thereto; and a defendant shall not be bound to answer any 
 interrogatory in the bill, except those interrogatories which such 
 defendant is required to answer; and where a defendant shall answer 
 any statement or charge in the bill, to which he is not interrogated, 
 only by stating his ignorance of the matter so stated or charged, 
 such answer shall be deemed impertinent. 
 
 Ordered (December term, 1850), that the fortieth rule, heretofore 
 adopted and promulgated by this court as one of the rules of practice 
 in suits in equity in the Circuit Courts, be and the same is hereby 
 repealed and annulled. And it shall not hereafter be necessary to 
 interrogate a defendant specially and particularly upon any state- 
 ment in the bill, unless the complainant desires to do so to obtain a 
 discovery. 
 
 Rule XLI. — The interrogatories contained in the interrogating 
 part of the bill shall be divided as conveniently as may be from each 
 other, and numbered consecutively i, 2, 3, &c. ; and the interroga- 
 tories which each defendant is required to answer shall be specified 
 in a note at the foot of the bill, in the form or to the effect follow- 
 ing; that is to say — " The defendant (A. B.) is required to answer 
 the interrogatories numbered respectively i, 2, 3, &c. ; " and the 
 office copy of the bill taken by each defendant shall not contain any 
 interrogatories except those which such defendant is so required to 
 answer, unless such defendant shall require to be furnished with a 
 copy of the whole bill. 
 
 If the complainant, in his bill, shall waive an answer under oath. 
 
504 APPENDIX C. 
 
 or shall only require an answer under oath with regard to certain 
 specified interrogatories, the answer of the defendant, though under 
 oath, except such part thereof as shall be directly responsive to such 
 interrogatories, shall not be evidence in his favor, unless the cause 
 be set down for hearing on bill and answer only; but may neverthe- 
 less be used as an affidavit, with the same effect as heretofore, on a 
 motion to grant or dissolve an injunction, or on any other incidental 
 motion in the cause; but this shall not prevent a defendant from 
 becoming a witness in his own behalf under section 3 of the act of 
 Congress of July 2, 1864.* 
 
 Rule XLII. — The note at the foot of the bill, specifying the 
 interrogatories which each defendant is required to answer, shall be 
 considered and treated as part of the bill ; and the addition of any 
 such note to the bill, or any alteration in or addition to such note 
 after the bill is filed, shall be considered and treated as an amend- 
 ment of the bill. 
 
 Rule XLIII. — Instead of the words of the bill now in use, preced- 
 ing the interrogating part thereof, and beginning with the words 
 " To the end, therefore," there shall hereafter be used words in the 
 form or to the effect following: " To the end, therefore, that the 
 said defendants may, if they can, show why your orator should not 
 have the relief hereby prayed, and may, upon their several and 
 respective corporal oaths, and according to the best and utmost of 
 their several and respective knowledge, remembrance, information 
 and belief, full, true, direct, and perfect answer make to such of the 
 several interrogatories hereinafter numbered and set forth, as by the 
 note hereunder written, they are respectively required to answer ;, 
 that is to say — 
 
 " I. Whether, &c. 
 
 "2. Whether, &c." 
 
 Rule XLIV. — A defendant shall be at liberty, by answer, to 
 decline answering any interrogatory or part of an interrogatory, 
 from answering which he might have protected himself by demurrer; 
 and he shall be at liberty so to decline, notwithstanding he shall 
 answer other parts of the bill, from which he might have protected 
 himself by demurrer. 
 
 * See Rev. Stat. § 858. 
 
U. S. EQUITY RULES. 505 
 
 Rule XLV. — No special replication to any answer shall be filed. 
 But if any matter alleged in the answer shall make it necessary for 
 the plaintiff to amend his bill, he may have leave to amend the same 
 with or without the payment of costs, as the court, or a judge 
 thereof, may in his discretion direct. 
 
 Rule XLVI. — In every case where an amendment shall be made 
 after answer filed, the defendant shall put in a new or supplemental 
 answer, on or before the next succeeding rule day after that on 
 which the amendment or amended bill is filed, unless the time is 
 enlarged or otherwise ordered by a judge of the court; and upon 
 his default the like proceedings may be had as in cases of an omission 
 to put in an answer. 
 
 PARTIES TO BILLS. 
 
 Rule XL VII. — In all cases where it shall appear to the court that 
 persons, who might otherwise be deemed necessary or proper parties 
 to the suit, cannot be made parties by reason of their being out of 
 the jurisdiction of the court, or incapable otherwise of being made 
 parties, or because their joinder would oust the jurisdiction of the 
 court as to the parties before the court, the court may, in their dis- 
 cretion, proceed in the cause without making such persons parties; 
 and in such cases the decree shall be without prejudice to the rights 
 of the absent parties. 
 
 Rule XLVIII. — Where the parties on either side are very numer- 
 ous, and cannot, without manifest inconvenience and oppressive 
 delays in the suit, be all brought before it, the court, in its discre- 
 tion, may dispense with making all of them parties, and may pro- 
 ceed in the suit, having sufficient parties before it to represent all 
 the adverse interests of the plaintiffs and the defendants in the suit 
 properly before it. But in such cases the decree shall be without 
 prejudice to the rights and claims of all the absent parties. 
 
 Rule XLIX. — In all suits concerning real estate, which is vested 
 in trustees by devise, and such trustees are competent to sell and 
 give discharges for the proceeds of the sale, and for the rents and 
 profits of the estate, such trustees shall represent the persons bene- 
 ficially interested in the estate or the proceeds, or the rents and 
 profits, in the same manner, and to the same extent, as the executors 
 
506 APPENDIX C. 
 
 or administrators in suits concerning personal estate represent the 
 persons beneficially interested in such personal estate; and in such 
 cases it shall not be necessary to make the persons beneficially 
 interested in such real estate, or rents and profits, parties to the 
 suit; but the court may, upon consideration of the matter on the 
 hearing, if it shall so think fit, order such persons to be made parties. 
 
 Rule L. — In suits to execute the trusts of a will, it shall not be 
 necessary to make the heir at law a party; but the plaintiff shall be 
 at liberty to make the heir at law a party, where he desires to have 
 the will established against him. 
 
 Rule LI. — In all cases in which the plaintiff has a joint and 
 several demand against several persons, either as principals or sure- 
 ties, it shall not be necessary to bring before the court as parties to 
 a suit concerning such demand, all the persons liable thereto; but 
 the plaintiff may proceed against one or more of the persons 
 severally liable. 
 
 Rule LII. — Where the defendant shall, by his answer, suggest 
 that the bill is defective for want of parties, the plaintiff shall be at 
 liberty, within fourteen days after answer filed, to set down the cause 
 for argument upon that objection only; and the purpose for which 
 the same is so set down shall be notified by an entry, to be made in 
 the clerk's order book, in the form or to the effect following, (that 
 is to say:) " Set down upon the defendant's objection for want of 
 parties." And where the plaintiff shall not so set down his cause, 
 but shall proceed therewith to a hearing, notwithstanding an objec- 
 tion for want of parties taken by the answer, he shall not, at the 
 hearing of the cause, if the defendant's objection shall then be 
 allowed, be entitled as of course to an order for liberty to amend his 
 bill by adding parties. But the court, if it thinks fit, shall be at 
 liberty to dismiss the bill. 
 
 Rule LIII. — If a defendant shall, at the hearing of a cause, 
 object that a suit is defective for want of parties, not having by plea 
 or answer taken the objection, and therein specified by name or 
 description the parties to whom the objection applies, the court (if 
 it shall think fit) shall be at liberty to make a decree saving the 
 rights of the absent parties. 
 
U. S. EQUITY RULES. $Oy 
 
 NOMINAL PARTIES TO BILLS. 
 
 Rule LIV. — Where no account, payment, conveyance, or other 
 direct relief is sought against a party to a suit, not being an infant, 
 the party, upon service of the subpoena upon him, need not appear 
 and answer the bill, unless the plaintiff specially requires him so to 
 do by the prayer of his bill ; but he may appear and answer at his 
 option; and if he does not appear and answer he shall be bound by 
 all the proceedings in the cause. If the plaintiff shall require him 
 to appear and answer, he shall be entitled to the costs of all the 
 proceedings against him, unless the court shall otherwise direct. 
 
 Rule LV. — Whenever an injunction is asked for by the bill to stay 
 proceedings at law, if the defendant do not enter his appearance 
 and plead, demur, or answer to the same within the time prescribed 
 therefor by these rules, the plaintiff shall be entitled as of course, 
 upon motion without notice, to such injunction. But special injunc- 
 tions shall be grantable only upon due notice to the other party by 
 the court in term, or by a judge thereof in vacation, after a hearing, 
 which may be ex parte, if the adverse party does not appear at the 
 time and place ordered. In every case where an injunction, either 
 the common injunction or a special injunction, is awarded in vaca- 
 tion, it shall, unless previously dissolved by the judge granting the 
 same, continue until the next term of the court, or until it is dissolved 
 by some other order of the court. 
 
 BILLS OP EEVIVOB AND SUPPLEMENTAL BILLS. 
 
 Rule LVI. — Whenever a suit in equity shall become abated by 
 the death of either party, or by any other event, the same may be 
 revived by a bill of revivor, or a bill in the nature of a bill of revivor, 
 as the circumstances of the case may require, filed by the propier 
 parties entitled to revive the same; which bill may be filed in the 
 clerk's office at any time; and upon suggestion of the facts, the 
 proper process of subpoena shall, as of course, be issued by the clerk, 
 requiring the proper representatives of the other party to appear 
 and show cause, if any they have, why the cause should not be 
 revived. And if no cause shall be shown at the next rule day which 
 shall occur after fourteen days from the time of the service of the 
 same process, the suit shall stand revived, as of course. 
 
So8 APPENDIX C. 
 
 Rule LVII. — Whenever any suit in equity shall become defective, 
 from any event happening after the filing of the bill, (as, for example, 
 by change of interest in the parties,) or for any other reason a sup- 
 plemental bill, or a bill in the nature of a supplemental bill, may be 
 necessary to be filed in the cause, leave to file the same may be 
 granted by any judge of the court on any rule day, upon proper 
 cause shown, and due notice to the other party. And if leave is 
 granted to file such supplemental bill, the defendant shall demur, 
 plead, or answer thereto on the next succeeding rule day after the 
 supplemental bill is filed in the clerk's office, unless some other time 
 shall be assigned by a judge of the court. 
 
 Rule LVIII. — It shall not be necessary in any bill of revivor, or 
 supplemental bill, to set forth any of the statements in the original 
 suit, unless the special circumstances of the case may require it. 
 
 ANSWERS. 
 
 Rule LIX. — Every defendant may swear to his answer before 
 any justice or judge of any court of the United States, or before 
 any commissioner appointed b)' any Circuit Court to take testimony 
 or depositions, or before any master in chancery appointed by any 
 Circuit Court, or before any judge of any court of a State or Terri- 
 tory, or before any notary public. 
 
 AMENDMENT OF ANSWERS. 
 
 Rule LX. — After an answer is put in, it may be amended as of 
 course, in any matter of form, or by filling up a blank, or correcting 
 a date, or reference to a document or other small matter, and be 
 re-sworn, at any time before a replication is put in, or the cause is 
 set down for a hearing upon bill and answer. But after replication, 
 or such setting down for a hearing, it shall not be amended in any 
 material matters, as by adding new facts or defences, or qualifying 
 or altering the original statements, except by special leave of the 
 court or of a judge thereof, upon motion and cause shown after due 
 notice to the adverse party, supported, if required, by affidavit. 
 And in every case where leave is so granted, the court, or the judge 
 granting the same, may, in his discretion, require that the same be 
 separately engrossed and added as a distinct amendment to the 
 original answer, so as to be distinguishable therefrom. 
 
U. S. EQUITY RULES. 5^9 
 
 EXCEPTIONS TO ANSWERS. 
 
 Rule LXI. — After an answer is filed on any rule day the plaintiff 
 shall be allowed until the next succeeding rule day to file in the 
 clerk's office exceptions thereto for insufficiency, and no longer, 
 unless a longer time shall be allowed for the purpose, upon cause 
 shown to the court or a judge thereof; and if no exception shall be 
 filed thereto within that period, the answer shall be deemed and 
 taken to be sufficient. 
 
 Rule LXII. — When the same solicitor is employed for two or 
 more defendants, and separate answers shall be filed, or other pro- 
 ceedings had by two or more of the defendants separately, costs shall 
 not be allowed for such separate answers or other proceedings, 
 unless a master, upon reference to him, shall certify that such 
 separate answers and other proceedings were necessary or proper, 
 and ought not to have been joined together. 
 
 Rule LXIII. — Where exceptions shall be filed to the answer for 
 insufficiency within the period prescribed by these rules, if the 
 defendant shall not submit to the same and file an amended answer 
 on the next succeeding rule day, the plaintiff shall forthwith set 
 them down for a hearing on the next succeeding rule day thereafter, 
 before a judge of the court, and shall enter, as of course, in the 
 order book, an order for tfiat purpose. And if he shall not so set 
 down the same for a hearing, the exceptions shall be deemed 
 abandoned, and the answer shall be deemed sufficient: Provided, 
 however. That the court, or any judge thereof, may, for good cause 
 shown, enlarge the time for filing exceptions, or for answering the 
 same, in his discretion, upon such terms as he may deem reasonable. 
 
 Rule LXIV. — If at the hearing the exceptions shall be allowed, 
 the defendant shall be bound to put in a full and complete answer 
 thereto on the next succeeding rule day; otherwise, the plaintiff 
 shall, as of course, be entitled to take the bill, so far as the matter 
 of such exceptions is concerned, as confessed, or, at his election, he 
 may have a writ of attachment to compel the defendant to make a 
 better answer to the matter of the exceptions; and the defendant, 
 when he is in custody upon such writ, shall not be discharged there- 
 from but by an order of the court, or of a judge thereof, upon his 
 
5IO 
 
 APPENDIX C. 
 
 putting in such answer and complying with such other terms as the 
 court or judge may direct. 
 
 Rule LXV. — If, upon argument, the plaintiff's exceptions to the 
 answer shall be overruled, or the answer shall be adjudged insuffi- 
 cient, the prevailing party shall be entitled to all the costs occasioned 
 thereby, unless otherwise directed by the court, or the judge thereof, 
 at the hearing upon the exceptions. 
 
 REPLICATION AND ISSUE. 
 
 Rule LXVI. — Whenever the answer of the defendant shall not 
 be excepted to, or shall be adjudged or deemed sufficient, the plain- 
 tiff shall file the general replication thereto on or before the next 
 succeeding rule day thereafter; and in all cases where the general 
 replication is filed the cause shall be deemed to all intents and pur- 
 poses at issue, without any rejoinder or other pleading on either 
 side. If the plaintiff shall omit or refuse to file such replication 
 within the prescribed period, the defendant shall be entitled to an 
 order, as of course, for a dismissal of the suit; and the suit shall 
 thereupon stand dismissed, unless the court, or a judge thereof, 
 shall, upon motion for cause shown, allow a replication to be filed 
 nunc pro tunc, the plaintiff submitting to speed the cause, and to 
 such other terms as may be directed. 
 
 TESTIMONY — HOW TAKEN. 
 
 Rule LXVII. — After the cause is at issue, commissions to take 
 testimony may be taken out in vacation as well as in term, jointly 
 by both parties, or severally by either party, upon interrogatories 
 filed by the party taking out the same in the clerk's office, ten days' 
 notice thereof being given to the adverse party to file cross-inter- 
 rogatories before the issuing of the commission; and if no cross- 
 interrogatories are filed at the expiration of the time, the commission 
 may issue (?.r/flr^f. In all cases the commissioner or commissioners 
 may be named by the court, or by a judge thereof; and the presid- 
 ing judge of the court exercising jurisdiction may either in term time 
 or vacation vest in the clerk of the court general power to name 
 commissioners to take testimony. Either party may give notice to 
 the other that he desires the evidence to be adduced in the cause to 
 be taken orally, and thereupon all the witnesses to be examined 
 
U. S. EQUITY RULES. 511 
 
 shall be examined before one of the examiners of the court, or before 
 an examiner to be specially appointed by the court, the examiner, 
 if he so request, to be furnished with a copy of the pleadings ; such 
 examination shall take place in the presence of the parties or their 
 agents, by their counsel or solicitors, and the witnesses shall be sub- 
 ject to cross-examination and re-examination, all of which shall be 
 conducted as near as may be in the mode now used in common-law 
 courts. 
 
 The depositions taken upon such oral examination shall be reduced 
 to writing by the examiner, in the form of question put and answer 
 given ; provided, that, by consent of parties, the examiner may take 
 down the testimony of any witness in the form of narrative. 
 
 At the request of either party, with reasonable notice, the depo- 
 sition of any witness shall, under the direction of the examiner, be 
 taken down either by a skillful stenographer or by a skillful type- 
 writer, as the examiner may elect, and when taken stenographically 
 shall be put into typewriting or other writing ; provided, that such 
 stenographer or typewriter has been appointed by the court, or is 
 approved by both parties. 
 
 The testimony of each witness, after such reduction to writing, 
 shall be read over to him and signed by him in the presence of the 
 examiner and of such of the parties or counsel as may attend; pro- 
 vided, that if the witness shall refuse to sign his deposition so taken, 
 then the examiner shall sign the same, stating upon the records the 
 reasons, if any, assigned by the witness for such refusal. 
 
 The examiner may, upon all examinations, state any special mat- 
 ters to the court as he shall think fit; and any question or questions 
 which may be objected to shall be noted by the examiner upon the 
 deposition, but he shall not have power to decide on the competency, 
 materiality, or relevancy of the questions, and the court shall have 
 power to deal with the costs of incompetent, immaterial, or irrele- 
 vant depositions, or parts of them, as may be just. 
 
 In case of refusal of witnesses to attend, to be sworn, or to answer 
 any question put by the examiner, or by counsel or solicitor, the 
 same practice shall be adopted as is now practiced with respect to 
 witnesses to be produced on examination before an examiner of said 
 court on written interrogatories. 
 
 Notice shall be given by the respective counsel or solicitors to the 
 opposite counsel or solicitors or parties of the time and place of the 
 
512 APPENDIX C. 
 
 examination for such reasonable time as the examiner may fix by 
 order in each cause. 
 
 When the examination of witnesses before the examiner is con- 
 cluded, the original depositions, authenticated by the signature of 
 the examiner, shall be transmitted by him to the clerk of the court, 
 to be there filed of record in the same mode as prescribed in section 
 865 of the Revised Statutes. 
 
 Testimony may be taken on commission in the usual way by 
 written interrogatories and cross-interrogatories, on motion to the 
 court in term time, or to a judge in vacation, for special reasons 
 satisfactory to the court or judge. 
 
 Where the evidence to be adduced in a cause is to be taken orally, 
 as before provided, the court may, on motion of either party, assign 
 a time within which the complainant shall take his evidence in sup- 
 port of the bill, and a time thereafter within which the defendant 
 shall take his evidence in defence and a time thereafter within 
 which the complainant shall take his evidence in reply; and no fur- 
 ther evidence shall be taken in the cause, unless by agreement of 
 the parties or by leave of court first obtained, on motion for cause 
 shown. 
 
 The expense of the taking down of depositions by a stenographer 
 and of putting them into typewriting or other writing shall be paid 
 in the first instance by the party calling the witness, and shall be 
 imposed by the court, as part of the costs, upon such party as the 
 court shall adjudge should ultimately bear them. 
 
 Upon due notice given as prescribed by previous order, the court 
 may, at its discretion, permit the whole, or any specific part, of the 
 evidence to be adduced orally in open court on final hearing. 
 
 Rule LXVIII. — Testimony may also be taken in the cause, after 
 it is at issue, by deposition, according to the acts of Congress. 
 But in such case, if no notice is given to the adverse party of the 
 time and place of taking the deposition, he shall, upon motion and 
 affidavit of the fact, be entitled to a cross-examination of the witness 
 either under a commission or by a new deposition taken under the 
 acts of Congress, if a court or a judge thereof shall, under all the 
 circumstances, deem it reasonable. 
 
 Rule LXIX. — Three months, and no more, shall be allowed for 
 the taking of testimony after the cause is at issue, unless the court 
 
U. S. EQUITY RULES. 5 13 
 
 or a judge thereof shall, upon special cause shown by either party, 
 enlarge the time ; and no testimony taken after such period shall be 
 allowed to be read in evidence at the hearing. Immediately upoa 
 the return of the commissions and depositions, containing the testi- 
 mony, into the clerk's office, publication thereof may be ordered in 
 the clerk's office, by any judge of the court, upon due notice to the 
 parties, or it may be enlarged, as he may deem reasonable under all 
 the circumstances. But, by consent of the parties, publication of 
 the testimony may at any time pass into the clerk's office, such con- 
 sent being in writing, and a copy thereof entered in the order books 
 or indorsed upon the deposition or testimony. 
 
 TESTIMONY DE BENE ESSE. 
 
 Rule LXX. — After any bill filed, and before the defendant hath 
 answered the same, upon affidavit made that any of the plaintiff's 
 witnesses are aged or infirm, or going out of the country, or that any 
 one of them is a single witness to a material fact the clerk of the 
 court shall, as of course, upon the application of the plaintiff, issue 
 a commission to such commissioner or commissioners as a judge of 
 the court may direct, to take the examination of such witness or 
 witnesses de bene esse, upon giving due notice to the adverse party 
 of the time and place of taking his testimony. 
 
 FORM or THE LAST INTEEEOGATOEY. 
 
 Rule LXXI. — The last interrogatory in the written mterroga- 
 tories to take testimony now commonly in use shall in the future be 
 altered, and stated, in substance, thus: "Do you know, or can 
 you set forth, any other matter or thing which may be a benefit or 
 advantage to the parties at issue in this cause, or either of them, or 
 that may be material to the subject of this your examination, or the 
 matters in question in this cause ? If yea, set forth the same fully 
 and at large in your answer." 
 
 CEOSSBIIL. 
 
 Rule LXXII. — Where a defendant in equity files a cross-bill for 
 discovery only against the plaintiff in the original bill, the defendant 
 to the original bill shall first answer thereto, before the original 
 plaintiff shall be compellable to answer the cross-bill. The answer 
 of the original plaintiff to such cross-bill may be read and used by 
 
 NAT. BANKRUPTCY LAW — 33 
 
5 14 APPENDIX C. 
 
 the party filing the cross-bill, at the hearing, in the same manner 
 and under the same restrictions as the answer praying relief may 
 now be read and used. 
 
 REFERENCE TO AND PROCEEDINGS BEFORE MASTERS. 
 
 Rule LXXIII. — Every decree for an account of the personal 
 estate of a testator or intestate shall contain a direction to the 
 master, to whom it is referred to take the same, to inquire and state 
 to the court what parts, if any, of such personal estate are outstand- 
 ing or undisposed of, unless the court shall otherwise direct. 
 
 Rule LXXIV. — Whenever any reference of any matter is made 
 to a master to examine and report thereon, the party at whose 
 instance or for whose benefit the reference is made shall cause the 
 same to be presented to the master for a hearing on or before the 
 next rule day succeeding the time when the reference was made; if 
 he shall omit to do so, the adverse party shall be at liberty forthwith 
 to cause proceedings to be had before the master, at the cost of the 
 party procuring the reference. 
 
 Rule LXXV. — Upon every such reference H shall be the duty of 
 the master, as soon as he reasonably can after the same is brought 
 before him, to assign a time and place for proceedings in the same, 
 and to give due notice thereof to each of the parties or their solici- 
 tors; and if either party shall fail to appear at the time and place 
 appointed, the master shall be at liberty to proceed ex parte, or in 
 his discretion, to adjourn the examination and proceedings to a future 
 day, giving notice to the absent party or his solicitor of such 
 adjournment; and it shall be the duty of the master to proceed 
 with all reasonable diligence in every such reference, and with the 
 least practicable delay ; and either party shall be at liberty to apply 
 to the court, or a judge thereof, for an order to the master to speed 
 the proceedings, and to make his report, and to certify to the court 
 or judge the reason for any delay. 
 
 Rule LXXVI. — In the reports made by the master to the court, 
 no part of any state of facts, charge, affidavit, deposition, examina- 
 tion, or answer, brought in or used before them, shall be stated or 
 recited. But such state of facts, charge, affidavit, deposition, 
 examination, or answer shall be identified, specified, and referred to, 
 
U. S. EQUITY RULES. $15 
 
 SO as to inform the court what state of facts, charge, affidavit, depo- 
 sition, examination, or answer, were so brought in or used. 
 
 Rule LXXVII. — The master shall regulate all the proceedings in 
 every hearing before him, upon every such reference; and he shall 
 have full authority to examine the parties in the cause upon oath 
 touching all matters contained in the reference; and also to require 
 the production of all books, papers, writings, vouchers, and other 
 documents applicable thereto; and also to examine on oath, vivd 
 voce, all witnesses produced by the parties before him, and to order 
 the examination of other witnesses to be taken, under a commission 
 to be issued upon his certificate from the clerk's office, or by depo- 
 sition according to the acts of Congress, or otherwise, as hereinafter 
 provided; and also to direct the mode in which the matters requir- 
 ing evidence shall be proved before him; and generally to do all 
 other acts, and direct all other inquiries and proceedings in the mat- 
 ters before him, which he may deem necessary and proper to the jus- 
 tice and merits thereof and the rights of the parties. 
 
 Rule LXXVIII. — Witnesses who live within the district may, 
 upon due notice to the opposite party, be summoned to appear 
 before the commissioner appointed to take testimony, or before a 
 master or examiner appointed in any cause, by subpoena in the usual 
 form, which may be issued by the clerk in blank, and filled up by 
 the party praying the same, or by the commissioner, master, or 
 examiner, requiring the attendance of the witnesses at the time and 
 place specified, who shall be allowed for attendance the same com- 
 pensation as for attendance in court; and if any witness shall refuse 
 to appear, or give evidence, it shall be deemed a contempt of the 
 court, which being certified to the clerk's office by the commissioner, 
 master, or examiner, an attachment may issue thereupon, by order 
 of the court or any judge thereof, in the same manner as if the con- 
 tempt were for not attending, or for refusing to give testimony in 
 the court. But nothing herein contained shall prevent the examina- 
 tion of witnesses vivd voce when produced in open court, if the court 
 shall in its discretion deem it advisable. 
 
 Rule LXXIX All parties accounting before a master shall bring 
 
 in their respective accounts in the form of debtor and creditor; and 
 any of the other parties, who shall not be satisfied with the accounts 
 
5l6 APPENDIX C. 
 
 SO brought in, shall be at liberty to examine the accounting party 
 vivd voce, or upon interrogatories in the master's office, or by depo- 
 sition, as the master shall direct. 
 
 Rule LXXX. — All affidavits, depositions, and documents, which 
 have been previously made, read, or used in the court, upon any 
 proceeding in any cause or matter, may be used before the master. 
 
 Rule LXXXI. — The master shall be at liberty to examine any 
 creditor or other person coming in to claim before him, either upon 
 written interrogatories, or vivd voce, or in both modes, as the nature 
 of the case may appear to him to require. The evidence upon such 
 examinations shall be taken down by the master, or by some other 
 person by his order and in his presence, if either party requires it, 
 in order that the same may be used by the court, if necessary. 
 
 Rule LXXXII. — The Circuit Courts may appoint standing mas- 
 ters in chancery in their respective districts (a majority of all the 
 judges thereof, including the justice of the Supreme Court, the cir- 
 cuit judges, and the district judge for the district, concurring in the 
 appointment) ; and they may also appoint a master firo hac vice in 
 any particular case. The compensation to be allowed to every 
 master in chancery for his services in any particular case shall be 
 fixed by the Circuit Court, in its discretion, having regard to all the 
 circumstances thereof, and the compensation shall be charged upon 
 and borne by such parties in the cause as the court shall direct. 
 The master shall not retain his report as security for his compensa- 
 tion ; but when the compensation is allowed by the court, he shall be 
 entitled to an attachment for the amount against the party who is 
 ordered to pay the same, if, upon notice thereof, he does not pay it 
 within the time prescribed by the court. 
 
 EXCEPTIONS TO REPORT OF MASTER 
 
 Rule LXXXIII. — The master as soon as his report is ready, shall 
 return the same into the clerk's office, and the day of the return 
 shall be entered by the clerk in the order book. The parties shall 
 have one month from the time of filing the report to file exceptions 
 thereto; and if no exceptions are within that period filed by either 
 party, the report shall stand confirmed on the next rule day after 
 the month is expired. If exceptions are filed, they shall stand for 
 
U. S. EQUITY RULES. 517 
 
 hearing before the court if the court is then in session; or if not, 
 then at the next sitting of the court which shall be held thereafter 
 by adjournment or otherwise. 
 
 Rule LXXXIV. — And in order to prevent exceptions to reports 
 from being filed for frivolous causes, or for mere delay, the party 
 whose exceptions are overruled shall, for every exception overruled, 
 pay costs to the other party, and for every exception allowed shall 
 be entitled to costs — the costs to be fixed in each case by the court, 
 by a standing rule of the Circuit Court. 
 
 DECREES. 
 
 Rule LXXXV. — Clerical mistakes in decrees, or decretal orders, 
 or errors arising from any accidental slip or omission, may, at any 
 time before an actual enrollment thereof be corrected by order of 
 the court or a judge thereof, upon petition, without the form or 
 expense of a re-hearing. 
 
 Rule LXXXVI. — In drawing up decrees and orders, neither the 
 bill, nor answer, nor other pleadings, nor any part thereof, nor the 
 report of any master, nor any other prior proceeding, shall be recited 
 or stated in the decree or order; but the decree and order shall 
 begin, in substance, as follows: " This cause came on to be heard 
 (or to be further heard, as the case may be) at this term, and was 
 argued by counsel; and thereupon, upon consideration thereof, it 
 was ordered, adjudged, and decreed as follows, viz: " [Here insert 
 the decree or order.] 
 
 GUARDIANS AND PROCHEIN AMIS. 
 
 Rule LXXXVII. — Guardians ad litem to defend a suit may be 
 appointed by the court, or by any judge thereof, for infants or other 
 persons who are under guardianship, or otherwise incapable to sue 
 for themselves; all infants and other persons so incapable may sue 
 by their guardians, if any, or by \h€\.r prochein ami; subject, however, 
 to such orders as the court may direct for the protection of infants 
 and other persons. 
 
 Rule LXXXVIII. — Every petition for a rehearing shall contain 
 the special matter or cause on which such rehearing is applied for, 
 shall be signed by counsel, and the facts therein stated, if not appar- 
 
5l8 APPENDIX C. 
 
 ent on the record, shall be verified b)' the oath of the party, or by some 
 other person. No rehearing shall be granted after the term at which 
 the final decree of the court shall have been entered and recorded, 
 if an appeal lies to the Supreme Court. But if no appeal lies, the 
 petition may be admitted at any time before the end of the next 
 term of the court, in the discretion of the court. 
 
 Rule LXXXIX. — The Circuit Courts (a majority of all the judges 
 thereof, including the justice of the Supreme Court, the circuit 
 judges, and the district judge of the district, concurring therein) 
 may make any other and further rules and regulations for the prac- 
 tice, proceedings, and process, mesne and final, in their respective 
 districts, not inconsistent with the rules hereby prescribed, in their 
 discretion, and from time to time alter and amend the same. 
 
 Rule XC. — In all cases where the rules prescribed by this court 
 or by the Circuit Court do not apply, the practice of the Circuit 
 Court shall be regulated by the present practice of the High Court 
 of Chancery in England, so far as the same may reasonably be 
 applied consistently with the local circumstances and local con- 
 venience of the district where the court is held, not as positive rules, 
 but as furnishing just analogies to regulate the practice. 
 
 Rule XCI. — Whenever under these rules an oath is or may be 
 required to be taken, the party may, if conscientiously scrupulous of 
 taking an oath, in lieu thereof, make solemn affirmation to the truth 
 of the facts stated by him. 
 
 Rule XCII. — Ordered (December Term, 1863), That in suits in 
 equity for the foreclosure of mortgages in the Circuit Courts of the 
 United States, or in any court of the Territories having jurisdiction 
 of the same, a decree may be rendered for any balance that may be 
 found due to the complainant over and above the proceeds of the 
 sale or sales, and execution may issue for the collection of the same, 
 as is provided in the eighth rule of this court regulating tne equity 
 practice, where the decree is solely for the payment of money. 
 
 INJUNCTIONS. 
 Rule XCIII. — When an appeal from a final decree in an equity 
 suit, granting or dissolving an injunction, is allowed by a justice or 
 
U. S. EQUITY RULES. S19 
 
 judge who took part in the decision of the cause, he may in his dis- 
 cretion, at the time of such allowance, make an order suspending or 
 modifying the injunction during the pendency of the appeal, upon 
 such terms as to bond or otherwise as he may consider proper for 
 the security of the rights of the opposite party. 
 
 BILL BY STOCKHOLDER. 
 
 Rule XCIV. — Every bill brought by one or more stockholders in 
 a corporation against the corporation and other parties, founded on 
 rights which may properly be asserted by the corporation, must be 
 verified by oath, and must contain an allegation that the plaintiff 
 was a shareholder at the time of the transaction of which he com- 
 plains, or that his share had devolved on him since by operation of 
 law, and that the suit is not a collusive one to confer on a court of 
 the United States jurisdiction of a case of which it would not other- 
 wise have cognizance. It must also set forth with particularity the 
 efforts of the plaintiff to secure such action as he desires on the part 
 of managing directors or trustees, and, if necessary, of the share- 
 holders, and the causes of his failure to obtain such action. 
 
 See also the following sections of the act of June i, 1872: 
 Sec. 7. That whenever notice is given of amotion for an injunction 
 out of a Circuit or district court of the United States, the court or 
 judge thereof may, if there appear to be danger of irreparable injury 
 from delay, grant an order restraining the act sought to be enjoined 
 until the decision upon the motion. Such order may be granted 
 with or without security, in the discretion of the court or judge: 
 Provided, That no justice of the Supreme Court shall hear or allow 
 any application for an injunction or restraining order except within 
 the circuit to which he is allotted, and in causes pending in the cir- 
 cuit to which he is allotted, or in such causes at such place outside 
 of the circuit as the parties may in writing stipulate, except in causes 
 where such application cannot be heard by the circuit judge of the 
 circuit, or the district judge of the district. 
 
 Sec. 13. That when in any suit in equity, commenced in any court 
 in the United States, to enforce any legal or equitable lien or claim 
 against real or personal property within the district where such suit 
 is brought, one or more of the defendants therein shall not be an 
 
520 APPENDIX C. 
 
 inhabitant of or found within the said district, or shall not voluntarily 
 appear thereto, it shall be lawful for the court to make an order 
 directing such absent defendant to appear, plead, answer, or demur 
 to the complainant's bill at a certain day therein to be designated, 
 which order shall be served on such absent defendant, if practicable, 
 wherever found ; or where such personal service is not practicable, 
 such order shall be published in such a manner as the court shall 
 direct ; and in case such absent defendant shall not appear, plead, 
 answer or demur within the time so limited, or within some further 
 time to be allowed by the court, in its discretion, and upon proof of 
 the service or publication of said order, and of the performance of 
 the directions contained in the same, it shall be lawful for the court 
 to entertain jurisdiction, and proceed to the hearing and adjudica- 
 tion of such suit in the same manner as if such absent defendant had 
 been served with process within the said district; but such adjudica- 
 tion shall, as regards such absent defendant without appearance, 
 affect his property within such district only. 
 
INDEX TO EQUITY RULES. 
 
 Note. — The figures refer to the numbers of the rules. 
 
 A. 
 Account. 
 
 of decedent's estate, decree to contain what, 73. 
 form of, on reference to master, 79. 
 
 Afflrmation. 
 
 permissible instead of oath, 91. 
 
 Amendments. 
 
 when applications for filing, grantable of course, 5. 
 to bills, as of course, when, 28. 
 
 before answer, 28. 
 
 after answer, 29, 46. 
 
 after replication, 29. 
 when to be filed, after leave granted, 30. 
 when deemed abandoned, 30. 
 supplemental answer, when necessary, 46. 
 when not allowable, of course, for defect of parties, 52. 
 to answer, as of course, when, 60. 
 
 by leave, when, 60. 
 
 if exceptions for insufficiency allowed, 63. 
 
 Answer. (See Pleadings.) 
 
 courts always open for filing, when, i, 
 
 when applications for filing, grantable of course, 5. 
 
 when to be filed, 18. 
 
 how compelled, 18. 
 
 costs upon, 25. 
 
 when necessary to fortify plea, 32. 
 
 answer to part, demurrer or plea to part, 3a. 
 
 may insist on defenses available by plea, 39, 
 
 what it need not contain, 39. 
 
 what interrogatories need not be answered, 44. 
 
 when supplemental answer to be filed, 46. 
 
 (See Supplemental Pleadings.) 
 by nominal parties, when necessary, S4. 
 
 [521] 
 
522 INDEX TO EQUITY RULES. 
 
 The figures refer to the numbers of the rules. 
 Answer — (Continued). 
 
 before whom to be sworn to, 59. 
 when amendable, 60. 
 exceptions to, when to be filed, 61. 
 when deemed sufficient, 61. 
 separate answers, costs when allowed, 62. 
 right to amend after exceptions filed, 63. 
 exceptions to, hearing to be set down, 63. 
 (See Exceptions.) 
 bill to be taken /ro confesso, on allowance of exceptions to, 64. 
 right of plaintiff to full answer, how enforced, 64. 
 costs on determination of exceptions to, 65. 
 not to be recited in decree, 86. 
 
 Appeal. 
 
 suspending injunction, on appeal, 93. 
 
 Appearances. 
 
 appearance day of defendant, 17. 
 
 how made, 17. 
 
 to be entered in order book, 17. 
 
 when unnecessary by nominal parties, 54. 
 
 Applications. (.See Motions.) 
 
 Attachment — writ of. 
 
 proper process to compel obedience to order or decree, 7. 
 
 when proper final process, 8. 
 
 when grantable to compel answer, 18. 
 
 to compel full answer, after allowance of exceptions, 64. 
 
 B. 
 Bills. (See Pleadings, Revivor, Supplemental Pleadings.) 
 
 courts always open for filing, preliminary, i. 
 
 applications for filing, when grantable of course, 5. 
 
 when taken /ro confesso, 18, 19. 
 
 frame and form of, 20. 
 
 introductory part of, 20. 
 
 what may be omitted from, 21. 
 
 common confederacy clause, 21. 
 
 charging clause, 21. 
 
 jurisdiction clause, 21. 
 prayer of, contents, 21, 23. 
 
 when necessary and proper parties may be omitted, 32. 
 to be signed by counsel, 24. 
 costs, 25. 
 to contain no unnecessary recitals, 26, 85. 
 
INDEX TO EQUITY RULES. 523 
 
 The figures refer to the numbers of the rules. 
 BaiS —(Continueif). 
 
 impertinence in. (See Impertinent Matter.) 
 scandalous. {See Scandalous Matter.) 
 when amendable, of course, 28. 
 
 {See Amendments.) 
 when copy to be furnished, 28. 
 
 when copy of whole amended bill to be furnished, 28. 
 when amendable on motion, but without notice, 29. 
 when amendable only on notice, 29. 
 amending before answer or plea, 28. 
 amending after answer, 29, 46. 
 amending after replication, 29. 
 
 to be dismissed, if demurrer or plea is not set down for argument, 38. 
 amendable if demurrer or plea allowed, 35. 
 interrogatories in. {See Interrogatories.) 
 nominal parties need not answer, unless, 54. 
 bill of revivor, when to be filed, 56. 
 
 {See Revivor.) 
 supplemental bills, 57. 
 when allowed, 57. 
 need not repeat original statements, 58. 
 
 {See Supplemental Pleadings.) 
 to what extent may be taken pro con/esso, if no answer filed, after excep- 
 tions allowed, 64. 
 not to be recited in decree, 86. 
 by stockholders against corporation, 94. 
 what to contain, 94. 
 to be verified, 94. 
 
 c. 
 
 Cestnls Que Trust. 
 
 when unnecessary but proper parties, 49. 
 Cbambers. 
 
 motions, rules and orders at, 3, 4. 
 CleFk. 
 
 when to be in attendance, 2. 
 
 when office of, open, 2. 
 
 motions grantable by, as of course, 5. 
 
 Commissions. 
 
 court always open for issuing, i. 
 
 to take testimony, when issuable ex parte, 67, 
 
 commissioners, how chosen, 67. 
 
 notice to file cross-interrogatories, 67. 
 
 {See Interrogatories.) 
 
524 INDEX TO EQUITY RULES. 
 
 The figures refer to the numbers of the rules. 
 Commissions — (Continued). 
 
 refusal to attend or testify before commissioners, 67. 
 
 to take testimony de bene esse, 67. 
 
 form of last interrogatory, 67. 
 
 to be issued on certificate of master, 67. 
 
 Contempt of Court. 
 
 refusal to attend before master, examiner or commissioner, 67, 78. 
 Costs. 
 
 of bills and answers, 25. 
 
 on determination of exceptions to scandalous or impertinent matter, 26. 
 
 amendment without, 28. 
 
 amendment upon payment of, 28, 29. 
 
 when granted on hearing of demurrer or plea, 34, 35. 
 
 if plaintiff requires answer from nominal party, 54. 
 
 when separate answers are filed, 62. 
 
 on exceptions to master's report, 84. 
 
 Counsel. 
 
 to sign every bill, 24. 
 
 certificate of, to be filed with plea or demurrer, 31. 
 
 Cross-bill. 
 
 not necessary to answer, before original bill is answered, 72. 
 
 D. 
 Decree. 
 
 when to be entered on default, 18, 19. 
 
 on what conditions set aside, ig. 
 
 for accounting of estates, what to contain, 73, 
 
 clerical errors, how corrected, 85. 
 
 not to recite pleadings, 86. 
 
 what to contain, 86. 
 
 on foreclosure, to provide for deficiency, 92. 
 
 Default. 
 
 practice on default in appearing, 18. 
 
 Defendants. 
 
 (See Cestuis que Trust, Incompetent Persons, Infants, Parties.) 
 to be named in introductory part of bill, 20. 
 
 in prayer for subpoena, 21. 
 nominal defendants, — . 
 
 (See Nominal Parties.) 
 service upon by publication, act of June i, 1872, sec. 13. 
 omitted from bill when jurisdiction over not obtainable, 22, 47. 
 omitted when too numerous, 48. 
 
INDEX TO EQUITY RULES. 525 
 
 The figures refer to the numbers of the rules. 
 Defendants —(C»»ft«a^i^. 
 
 heirs-at-law as, 50. 
 
 joint and several- obligees as, 51. 
 
 Deficiency. 
 
 on foreclosure, decree to provide for, 92. 
 
 Demurrer. 
 
 application for filing, grantable of course, 5. 
 when to be filed, i8. 
 certificate of counsel to accompany, 31. 
 affidavit of defendant to accompany, 31. 
 demurrer to part, plea or answer to part, 32. 
 costs, if overruled, 34. 
 
 if sustained, 35. 
 for what not to be overruled, 36, 37. 
 may extend to matter covered by answer, 37. 
 plaintiff's failure to set down for argument, 38. 
 
 Discovery. 
 
 how obtained when default in answering, 18. 
 how far is defendant bound to make, 39. 
 special interrogatories necessary to obtain, 40. 
 
 Docket. 
 
 when suit to be entered in, 16. 
 
 E. 
 Examiners. 
 
 testimony before, how taken, 67. 
 
 stenographers employed by, expenses of, 67. 
 
 no power as to relevancy or competency of questions, 67. 
 
 duties if witnesses refuse to sign deposition, 67. 
 
 refusal to testify before, 67. 
 
 notice of examination to be given, 67. 
 
 time within which to take testimony, 67, 69. 
 
 Exceptions. 
 
 to scandalous and impertinent matter, 26, 27. 
 
 must be specific, 27. 
 
 to be determined, 26, 27. 
 to answers, for insufficiency, 61, 62, 63, 64, 65. 
 
 when to be filed, 61. 
 
 if filed, defendant may amend, 63. 
 
 plaintiff to set down for hearing, 63. 
 effect of failure, 63. 
 
 if allowed, bill may be taken />■» confesso, 64. 
 plaintiff may require full answer, 64. 
 
 costs upon determination, 65. 
 
526 INDEX TO EQUITY RULES. 
 
 The figures refer to the numbers of the rules 
 Exceptions — (Continued). 
 to master's report, 83, 84. 
 when to be filed, 83. 
 failure to file, 83. 
 costs, upon determination, 84. 
 
 Execution. 
 
 to collect deficiency on foreclosure, 92. 
 
 Estate. 
 
 of decedent, accounting, 73. 
 
 F. 
 
 Foreclosure. 
 
 decree for deficiency, execution to issue, g2. 
 
 G. 
 Guardian ad Litem. {See Incompetent Persons, Infants.) 
 when to be appointed, 87. 
 
 H. 
 Heir at Law. 
 
 when unnecessary, though proper party, 50. 
 
 High Court of Chancery in England. 
 
 practice of to regulate, when, go. 
 
 L 
 
 Impertinent Matter. 
 
 may be expunged, 26. 
 
 Incompetent Persons. 
 
 need of guardianship to be stated in prayer for process, 23. 
 guardians ad litem for, 87. 
 
 {See Prochein Ami.) 
 Infancy. 
 
 of defendants to be stated in prayer for process, 23. 
 guardians ad litem for, 87. 
 
 {See Prochein Ami.) 
 
 Injunction. {See Restraining Order.) 
 to be specially asked for in bill, 21. 
 
 not necessary to repeat request in prayer for process, 23. 
 when granted, 55. 
 how long it continues, 55. 
 suspending or modifying on appeal, 93. 
 by what judge allowed, act of June i, 1872, section 7, 
 
INDEX TO EQUITY RULES. 5^7 
 
 The figures refer to the numbers of the rules. 
 Interlocutory Orders. 
 
 when and where made by judge, 3. 
 
 Interrogatories. 
 
 to be divided and numbered, 41. 
 
 foot note to specify which to be answered, 41. 
 
 office copy to contain what, 41. 
 
 words preceding the interrogatories, 43. 
 
 what interrogatories need not be answered, 44. 
 
 commission upon, 67. 
 
 cross-interrogatories, notice to file, to be given, 67. 
 
 form of last interrogatory, 71. 
 
 master at liberty to examine upon, 81. 
 
 Issue. 
 
 joined by filing of replication, 66. 
 
 J. 
 Joint and Several Obligees. 
 
 not all necessary parties, 51. 
 
 Judge. 
 
 orders by, at chambers, in vacation, 3. 
 
 Jurisdiction. 
 
 parties not within may be omitted, 22, 47. 
 
 to what extent obtained by service by publication, act of June I, 1872, sec- 
 tion 13. 
 
 M. 
 Masters in Chancery. (See References, Reports.) 
 
 references to, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 
 
 powers of, on reference, 77, 78, 81. 
 
 accountings before, form, 79. 
 
 right on reference to use all documents, 80. 
 
 circuit courts may appoint standing masters, 82. 
 
 compensation of, how enforced, 82. 
 
 notions. {See Interlocutory Orders, Orders, Rules.) 
 courts always open for making interlocutory, i. 
 grantable of course, when entertained by clerk, 2. 
 to be entered in order book, 4. 
 what are grantable of course, 5. 
 
 power of judge to rescind or suspend, 5. 
 not grantable of course, where made and heard, 6, 
 
 Ne Exeat Regno, writ of. 
 
 to be specially asked for, 21. 
 
528 INDEX TO EQUITY RULES. 
 
 The figures refer to the numbers of the rules. 
 Nominal Parties. 
 
 Need not answer, when, 54. 
 Notice. (See Amendments, Motion, Order.) 
 of interlocutory orders, etc., before judge, 3. 
 entry of order, etc., when notice, 4. 
 to solicitors, is notice to parties, 4, 
 personal, may be directed, 4. 
 time of, when abridged, 4. 
 
 0. 
 
 Oath. 
 
 affirmation, instead of, gi. 
 Order Book. 
 
 to be kept by clerk, 3. 
 entry of order in, is notice, 3. 
 appearances to be entered in, 17. 
 entry of objection of defect of parties, 52. 
 
 Orders. 
 
 court always open for making interlocutory, I. 
 grantableof course, when entertained by clerk, 2. 
 to be entered in order book, 3, 
 entry of, is notice, 3. 
 
 P. 
 Parties. 
 
 persons not parties, rights and duties of, how enforced, 10. 
 necessary and proper, when omitted from bill, 22, 47, 48. 
 
 omitted when numerous, 48. 
 when trustees represent cestuis que trust, 49, 
 cestuis que trust, when unnecessary, 49. 
 heirs-at-law, when unnecessary, 50. 
 joint and several obligees, not all necessary, 51. 
 objection of defect of, 52, 53. 
 
 failure to set down for argument, 52. 
 
 when first raised at hearing, 53. 
 nominal, need not appear, when, 54. 
 rights of absent not prejudiced, 47, 48. 53. 
 service upon by publication. Act of June i, 1872, section 13. 
 
 Pleadings. {See Amendments, Answer, Bill, Demurrer, Plea.) 
 courts always open for filing, i. 
 when to be filed, 18. 
 not to be recited in decrees, 86. 
 
 Pleas. 
 
 applications for filing, when grantable of course, 5. 
 
INDEX TO EQUITY RULES. 529 
 
 The figures refer to the numbers of the rules. 
 Pleas — {Continued). 
 when to be filed, 18. 
 certificate of counsel to accompany, 31. 
 affidavit of defendant to accompany, 31. 
 plea to part, answer or demurrer to part, 32. 
 when to be fortified by an answer, 32. 
 may be argued, or issue joined, 33. 
 of what avail to defendant, 33. 
 costs if over-ruled, 34. 
 
 defendant to answer, if over-ruled, 34. i 
 
 costs if allowed, 35. 
 
 plaintiff's right to amend, if plea allowed, 35. 
 when not to be over-ruled, 36, 37. 
 
 right to plea or demur to matter covered by answer, 37. 
 plaintiff's failure to reply, or set down plea for argument, 38. 
 what defenses available by plea may be insisted on in answer, Jg. 
 
 Practice. (See Rules.) 
 
 Process. (Sff Attachmbnt, Execution, Sxjbpcena.) 
 
 preparatory to hearing on merits, courts always open for issuing, I. 
 
 what applications for, grantable of course, 5. 
 
 writ of subpoena, in first instance, 7, 
 
 writ of attachment to compel obedience to decree, 7, 8, 
 
 writ of sequestration, when proper, 7, 8. 
 
 writ of assistance, when proper, 7, g. 
 
 final process, proper writs, 8, 9. 
 
 mesne and final, how served, 15. 
 
 (See Service of Process.) 
 Proehein Ami. 
 
 infant or incompetent person may sue by, 87. 
 Publication. 
 
 service by, when'; act of June i, 1872, section 13. 
 
 of testimony taken by commission, 69. 1 
 
 H. 
 
 References. {See Masters in Chancery, Reports.) ^ 
 
 for accounting of decedent's estate, 73. I 
 
 who to present to master, 74. 
 duties of master on, 75. 
 notice of hearing on, to whom given, 75. 
 when to proceed ex parte, 75. 
 report upon. {See Report.) 
 powers of master on, 77. 
 accountings, form of, 79. 
 
 NAT. bankruptcy LAW — 34 
 
530 INDEX TO EQUITY RULES. 
 
 The figures refer to the numbers of the rules. 
 References —{Continued). 
 
 what documents may be used on, 80. 
 
 examination of claimant upon, 81. 
 
 exceptions to report upon. (See EXCEPTIONS, REPORT.) 
 
 Rehearing. 
 
 petition for, what to contain, 88. 
 when granted, 88. 
 
 Rejoinder. 
 
 not necessary, 66. 
 
 Replication. 
 
 withdrawing, and amending bill, 89. 
 no special replication allowed, 45. 
 general, when to be filed, 66. 
 
 filing joins issue, 66. 
 
 failure to file, effect, 66. 
 
 Report of Master. {See Exceptions, Master in Chancery, References.) 
 
 what not to contain, 76. 
 
 what to refer to, 76. 
 
 not to be retained as security for compensation, 82, 
 
 exceptions to, 83, 84. 
 
 when to be filed, 83. 
 
 costs if over-ruled or allowed, 84. 
 not to be recited in decree, 85. 
 
 Restraining Orders. 
 
 issuable when and by whom, act of June I, 1872, sec. 7. 
 
 Revivor. {See Bill.) 
 
 when bill of, to be filed, 56, 57, 58. 
 
 Rule Days. 
 
 motions and orders on, 3. 
 
 Rules. (And Orders.) {See Motions, Orders.) 
 
 courts always open for directing interlocutory, r. 
 grantable of course, when entertained by clerk, 2. 
 to be entered in order book, 4. 
 entry of, is noticed, 4. 
 
 Rules, (of Practice.) 
 
 additional may be made by circuit courts, 8g. 
 
 in default of, practice of High Court of Chancery in England to regulate, 90. 
 
 S. 
 Scandalous Matter. 
 
 expunged if exceptions are taken, 26, 27. 
 
INDEX TO EQUITY RULES. 531 
 
 The figures refer to the numbers of the rules. 
 Service of Process. 
 
 how made, 13. 
 
 by whom made, 15. 
 
 how proved, 15. 
 
 when by publication, act of June, 1, 1872, section 13. 
 
 Stenographers. 
 
 may take oral testimony before examiners, 67. 
 how chosen, 67. 
 expense of, 67. 
 
 Stockholders. 
 
 bills by, against the corporation, 94. 
 
 Subpoena. (See Process.) 
 when proper process, 7, 8. 
 when to issue, 11, 12, 14. 
 when returnable, 12. 
 memorandum at bottom, 12. 
 iu case of more than one defendant, 12. 
 how served, 13. 
 by whom served, 15. 
 prayer for, to contain what names, 23. 
 infancy of defendants to be stated in, 23. 
 issuable of course, by clerk on bill of revivor, 56. 
 
 Suit. 
 
 when to be entered on docket, 16. 
 
 when revived, 56. 
 
 collusive, by stockholders, 94. 
 
 in what suits, may service be by publication, act of June I, 1872, section 13. 
 
 Supplemental Pleadings. 
 
 supplemental answer, after amendment of bill, 46. 
 
 when to be filed, 46. 
 
 default in filing, 46. 
 supplemental bill, when allowed, 57. 
 
 unnecessary to repeat original statements, 58. 
 
 Testimony. (See Commissions, Examiners, Interrogatories, Stenographers, 
 Witnesses.) 
 how taken, 67, 68. 6g, 70, 78. 
 by commission, 67. 
 
 notice to file cross-interrogatories, 67. 
 how commissioners chosen, 67. 
 
532 INDEX TO EQUITY RULES. 
 
 The figures refer to the numbers of the rules. 
 Testimony — (Continued). 
 when taken orally, 67. 
 
 before an examiner, 67. 
 form of deposition, 67. 
 employment of stenographer, 67. 
 time within which to be taken, 67, 68. 
 taken on commission may be adduced in open court, 67. 
 by deposition pursuant to acts of congress, 68. 
 publication of, if taken by commission, 69. 
 may be taken de bene esse, 70. 
 form of last interrogatory, 71. 
 
 Trustees. 
 
 when as parties they represent cestuis que trust, 49, 
 
 Typewriter. 
 
 may be employed by examiner, 67. 
 how chosen, expenses of, 67. 
 
 V, 
 Vacation. 
 
 powers of judge during, 3. 
 
 Verification. 
 
 answer sworn to, before whom, 59. 
 
 of petition for rehearing, 88. 
 
 of bill by stockholders against corporation, 94. 
 
 w. 
 
 WltjneS.Si^S, {Se^ G0MMX§SIQN, ]&?C4MmERS, Tbstimqnt.) 
 may be examined on commission, 67. 
 
 before examiner orally, 67. 
 refusal of, to attend and testify, 67, 78. 
 when testimony of, taken de bene esse, 70. 
 powers of master over, on reference, 77, 78. 
 
JUDGES AND CLERKS OF THE COURTS OF BANKRUPTCY. 533 
 
 
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Supreme Court of the United States. 
 
 OCTOBER TERM, 1898. 
 
 In pursuance of the powers conferred by the Constitution and 
 laws upon the Supreme Court of the United States, and particularly 
 by the act of Congress approved July i, 1898, entitled " An act to 
 establish a uniform system of bankruptcy throughout the United 
 States," it is ordered, on this 28th day of November, 1898, that the 
 following rules be adopted and established as general orders in bank- 
 ruptcy, to take effect on the first Monday, being the second day, of 
 January, 1899. And it is further ordered that all proceedings in 
 bankruptcy had before that day, in accordance with the act last 
 aforesaid, and being in substantial conformity either with the pro- 
 visions of these general orders, or else with the general orders estab- 
 lished by this court under the bankrupt act of 1867 and with any 
 general rules or special orders of the courts in bankruptcy, stand 
 good, subject, however, to such further regulation by rule or order 
 of those courts as may be necessary or proper to carry into force 
 and effect the bankrupt act of 1898 and the general orders of this 
 court. 
 
 Power to Make Rules. 
 
 Bankruptcy Act, section 30. — The Supreme Court of the United States to pre- 
 scribe rules, forms and orders in bankruptcy. Compare Collier on Bankruptcy, 
 page 233. 
 
 In every court there exists an inherent power, independently of any statute, 
 to prescribe rules as to procedure and practice in matters coming before it. 
 (Havemeyer v. Ingersoll, 12 Abb. Pr. N. S. [N. Y.] 301 ; Snyder v. Bauchman, 
 8 S. & R. [Pa.] 336; Angel v. Plume, 73 111. 412; FuUerton v. U. S. Bank, i 
 Peters, 604; Hill v. Barney, 18 N. H. 607; Thompson v. Pershing, 86 Ind. 303; 
 
 [537] 
 
538 GENERAL ORDERS IN BANKRUPTCY. 
 
 Texas Land Co. v. Williams, 48 Tex. 602; and see an exhaustive citation of 
 authorities in Am. & Eng. Encyc. of Law [zd ed.], title, Courts, vol. 8, page 29.) 
 To the Supreme Court of the United States has been given by section 30 of the 
 banlcruptcy act, power to prescribe necessary rules, forms and orders as to pro- 
 cedure, and for carrying this act into force and effect. It has been held that 
 where a law is incomplete in its details and yet is possible of execution, a court 
 may supply the incompleteness of detail, by prescribing rules. (Cochran v. 
 Loring, 17 Ohio, 409.) Pursuant to this general principle, as well as to the 
 authority expressly conferred upon it by the statute, the Supreme Court of the 
 United States undoubtedly has the right by rules, not only to regulate matters 
 that are strictly matters of procedure, but to provide a plan of executing the 
 statute, if there is an incompleteness in its details. But the recognized limit to 
 the powers of a court to prescribe rules, is that the rules prescribed shall not be 
 inconsistent with the laws of the land. Rights acquired either under statutes, 
 or by virtue of common-law principles universally recognized, cannot be 
 divested or altered by rules prescribed by a court. (Ward v. Chamberlin, 2 
 Blackf. [U. S.] 437; Saylor v. Taylor, 77 Fed. 476; Fisher v. Bank, 73 111. 34; 
 Gormerly v. McGlynn, 84 N. Y. 284; Atlantic Express Co. v. Wilmington, 32 
 Am. St. Rep. 805; in re Glaser, 2 Ben. 180; s. c. I B. R. 236; Patterson v. 
 Winn, 5 Peters, 233; The Illinois, i Brown, 13; Gray v. Chicago, i Wool worth, 
 63.) Compare notes and comments to Bankruptcy Rule, No. 30, post. 
 
 Effect of Rules. 
 
 When a court prescribes rules pursuant either to its inherent powers or to 
 powers conferred upon it by statute, the rules should be made to apply to all 
 cases falling within their terms. The authorities, however, do not appear to be 
 harmonious in their decisions as to the right of a court to suspend the operation 
 of a rule in a particular case, when a discretionary power to suspend the rule 
 has not by the rule been given to the courts. In Massachusetts it was held 
 that a rule once adopted has the force of law and is binding upon the courts as 
 well as the parties, until rescinded, and should not be dispensed with to suit the 
 circumstances of any particular case; and that a rule once made must be 
 applied to every case until it is rescinded by the authority which made it. 
 (Thompson v. Hatch, 3 Pick. [Mass.] 512.) This doctrine was laid down in a 
 case in which it was conceded that obedience to the rule worked a hardship, if 
 not an injustice; and that the circumstances of the case would have made it per- 
 fectly proper for the court to have suspended the operation of the rule, had it 
 possessed the power to suspend the rules. This case was followed in Tripp ». 
 Brownell, 2 Gray (Mass.) 402. See also Hughes v. Jackson, 12 Md. 450; Han- 
 son V. McCue, 43 Cal. 178. But the United States Supreme Court, in United 
 States V. Breitling, 20 How. 254, held that it is always in the power of a court 
 to suspend its own rules or to except a particular case from their operation 
 whenever the purposes of justice require it. To the same effect is Deming w. 
 Foster, 42 N. H. 165. See also Am. & Eng. Encyc. of Law, as cited above. It 
 would seem that the doctrine laid down by the U. S. Supreme Court in United 
 
SUPREME COURT OF THE UNITED STATES. 539 
 
 States V. Breitling must be conceded to be the correct statement of the principle, 
 or else the inherent power of a court to make rules must be denied. If, as is 
 admitted by all the authorities, a court may rescind or repeal its rules, it may 
 do so at any time. The suspension of a rule, or the act of excepting a case 
 from its operation, practically amounts merely to a repeal of the rule, followed 
 by a subsequent re-enactment of it. The ruling in Thompson v. Hatch very 
 clearly shows the necessity and propriety of a stringent application of rules; 
 but to hold that the court prescribing them cannot suspend their operation is, 
 we believe, a denial of the inherent powers of the court, and is opposed not only 
 to the weight of authority, but to an equitable and fair administration of justice. 
 Thus it has frequently been held that rules prescribing the time within which 
 bills of exceptions must be presented or settled, are rules of procedure which 
 may be dispensed with in the discretion of the trial judge and that such rules 
 do not absolutely control the action of the judge, but that he is at liberty to 
 depart from their terms to subserve the ends of justice. (Southern Pacific Co. 
 V. Johnson, 69 Fed. 559, citing U. S. v. Breitling, 20 How. 254; Dredge v. For- 
 syth, 2 Black, 568; MuUer v. Ehlers, 91 U. S. 249; Hunnicutt v. Peyton, 102 
 U. S. 350; Chateaugay Ore & Iron Co., 128 U. S. 544, 9 Sup. Ct. 150; Hume v, 
 Bowie, 148 U. S. 245, 13 Sup. Ct. 582; Southern Pac. Co. v. Hamilton, 4 C. C. 
 A. 441, 54 Fed. 468, 474; and also citing and distinguishing Bank v. Eldred, 
 143 U. S. 293, 12 Sup. Ct. 450; U. S. V. Jones, 149 U. S. 262, 13 Sup. Ct. 840; 
 Morse v. Anderson, 150 U. S. 156, 14 Sup. Ct. 43; Ward v. Cochran, 150 U. S. 
 597, 14 Sup. Ct. 230; Railway Co. v. Russell, 9 C. C. A. 108, 60 Fed. 501; Miller 
 V. Morgan, 14 C. C. A. 312, 67 Fed. 82.) 
 
 But the right to suspend the rules, like the right to repeal them, unless 
 specially conferred, can exist only in fhe court which has authority to prescribe 
 the rules. By the bankruptcy act this authority is conferred upon the Supreme 
 Court of the United States. It is therefore difficult to find any principle upon 
 which it can be claimed that the courts of bankruptcy or the judges or referees 
 thereof have any authority for suspending the operation of the rules in bank- 
 ruptcy. Unless somewhere in these rules that power is given to them, it does not 
 exist. By Bankruptcy Rule XXXVII, which declares that in proceedings in 
 equity, instituted for the purpose of carrying into effect the provisions of the bank- 
 ruptcy 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 
 followed as nearly as may be; and that in proceedings at law instituted for the 
 same purpose the practice and procedure in cases at law shall be followed as 
 nearly as maybe; it is also provided that the judge may by special order in 
 any case vary the time allowed for return of process, for appearance and plead- 
 ing, 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. 
 
 Scope of the Rules. 
 
 Bankruptcy Rule, No. XXXVII. — Proceedings at law instituted for the pur- 
 pose of carrying the bankruptcy act into effect, to follow practice and procedure 
 
540 GENERAL ORDERS IN BANKRUPTCY. 
 
 « 
 in cases at law. Proceedings in equity instituted for same purpose, to follow 
 Equity Rules. 
 
 Equitv Rule, No. LXXXIX, — Circuit Courts may prescribe additional rules 
 for practice, etc., in their respective districts. 
 
 Equity Rule, No. XC. — Practice of the High Court of Chancery in England 
 to regulate practice in equity in the absence of express rules. 
 
 For the Equity Rules and an index to them, see Collier on Bankruptcy. 
 
 Practice in United States Courts. 
 
 The practice, pleadings and forms and modes of procedure in civil causes, 
 other than those in equity and admiralty, in the Circuit and District Courts, 
 must conform as near as may be to the practice, pleadings and forms and modes 
 of proceeding existing at the time in like causes in courts of record of the state 
 within which such Circuit or District Courts are held. (Rev. Stat., section 914.) 
 The jurisdiction and practice of these courts in equity is, however, the same in 
 all the states, and the rule of decision is the same in all of them. As Courts 
 of Equity, the United States Courts are not regulated by the law or practice of 
 the states, but equitable procedure in them is according to the principles and 
 usages which belong to courts of equity in the mother country, England, except 
 when it is otherwise provided by statute, or rule of court made in pursuance 
 thereof. The procedure is, however, always subject to alteration by the 
 Supreme Court by rules prescribed from time to time, to any circuit or district 
 court, not inconsistent with the laws of the United States. (Rev. Stat., section 
 913-) 
 
 I. DOCKET. 
 
 The clerk shall keep a docket, in which the cases shall be entered 
 and numbered in the order in which they are commenced. It shall 
 contain a memorandum of the filing of the petition and of the action 
 of the court thereon, of the reference of the case to the referee, and 
 of the transmission by him to the clerk of his certified record of the 
 proceedings, with the dates thereof, and a memorandum of all pro- 
 ceedings in the case except those duly entered on the referee's certi- 
 fied record aforesaid. The docket shall be arranged in a manner 
 convenient for reference, and shall at all times be open to public 
 inspection. 
 
 [Latter part of Rule I, 1867, with changes specifying more fully the entries 
 to be made in the docket.] 
 
 The Docket, Its Contents. 
 
 Bankruptcy Act, section i (10). — " Commencement of proceedings " defined. 
 Equity Rule No. XVI. — When clerk to enter a suit upon the docket. 
 Bankruptcy Rule, No. IV. — Name of attorney and place of business to be 
 entered in docket. 
 
SUPREME COURT OF THE UNITED STATES. 54I 
 
 Records of Referees. 
 
 Bankruptcy Act, section 42. — Records of referees to be kept, to be certified and 
 to be transmitted to the clerk. 
 
 Bankruptcy Act, section 39 (7). — Dutv of the referee to keep, perfect and 
 transmit records to the clerk. 
 
 Open to Public Inspection. 
 
 Bankruptcy Act, section 29 c (3). — Duty of referee or trustee to permit inspec- 
 tion of records. 
 
 Bankruptcy Act, section 49. — Accounts and papers of trustees open to inspec- 
 tion. Compare Collier on Bankruptcy, page 232, title. Inspection of Accounts. 
 
 Rule No. I, under the old Bankruptcy Act of 1867 required the clerk of the 
 court to keep not only a docket similar to the one here required, but also 4 
 minute book in which was to be entered a minute of all proceedings either 
 of the court or the register. 
 
 II. FILING OF PAPERS. 
 
 The clerk or the referee shall indorse on each paper filed with him 
 the day and hour of filing, and a brief statement of its character. 
 
 [Part of Rule I, 1867, but not so full.] 
 
 Filing of Papers. 
 
 Bankruptcy Rule, No XX. — Filing of papers after a reference to the referee. 
 Compare Collier on Bankruptcy, pages 233 and 234, notes to section 31 of the 
 Bankruptcy Act, as to when a petition is filed. 
 
 III. PROCESS. 
 
 All process, summons and subpoenas 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 applica-* 
 tion, be furnished to the referees. 
 
 [Rule II, 1867, except the word " referees " is substituted herein for thp 
 word " registers."] 
 
 Torms : Nos. 5, 30. 
 Proeess and Service Thereof. 
 
 Bankruptcy Act, secHon 18 a. — The petition in involuntery cases to be served, 
 and also a writ of subpoena. 
 
 Equity Rules, Nos. 7, 11-16. — Process, how and by whom served. Compare 
 Collier on Bankruptcy, pages 195-197. 
 
 IV. CONDUCT OF PROCEEDINeS. 
 
 Proceedings in bankruptcy may be conducted by the bankrupt 
 person in his own behalf, or by a petitioning or Qppo$ing creditor; 
 
542 GENERAL ORDERS IN BANKRUPTCY. 
 
 but a creditor will only by allowed to manage before the court his 
 individual interest. Every party may appear and conduct the pro- 
 ceedings by attorney, who shall be an attorney or counsellor author- 
 ized to practice in the circuit or district court. The name of the 
 attorney or counsellor, with his place of business, shall be entered 
 upon the docket, with the date of the entry. All papers or proceed- 
 ings 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 motion. Notices and orders which 
 are not, by the act or by these general orders, required to be served 
 on the party personally may be served upon his attorney. 
 
 [Rule III, 1897, without substantial change, except that the old rule required 
 the entry of the attorney's place of residence as well as his place of business.] 
 
 Parties Appearing in Person. 
 
 Bankruptcy Act, section 4. — Who may become bankrupts. Compare Collier 
 on Bankruptcy, pages 52-56, titles. Who May Become Bankrupts, Infants, 
 Insane Persons, Married Women, Aliens, Wage Earners, Executors, Corpora- 
 tions, Trading, Who Are Manufacturers. 
 
 Bankruptcy Act, section 5. — Partners as bankrupts. Compare Collier on 
 Bankruptcy, pages 58 and 59, title. Who Must Petition. 
 
 Bankruptcy Act, section 18. — Appearances in bankruptcy proceedings; right 
 of the bankrupt or any creditor to appear and to oppose; proceedings after 
 appearance and also in cases of default. Compare Collier on Bankruptcy, 
 pages 198 and 199, title. Jurisdiction by Voluntary Appearance. 
 
 Bankruptcy Act, section 59. — Who may file and dismiss petitions. Compare 
 Collier on Bankruptcy, pages 293-298, titles. Voluntary Petitioners, Who May 
 Become Bankrupts, Petitioners in Involuntary Proceedings, Creditors Who Can- 
 not Petition, Secured Creditors, Amount of Claims, Attaching Creditors, Pre- 
 ferred Creditors, etc. 
 
 Appearance by Attorney. 
 
 Bankruptcy Act, section 64 b (3). — One reasonable attorney's fee allowed for 
 the professional services actually rendered irrespective of the number of attor- 
 neys employed, to the petitioning creditors in involuntary cases, to the bank- 
 rupt in involuntary cases while performing the duties required by the 
 bankruptcy act, and to the bankrupt in voluntary cases, as the court may allow. 
 
 Admission to Practice in United States Courts. 
 
 Each court of the United States is a separate and distinct organization in so 
 far as admission to practice is concerned. Each district court and each circuit 
 court as well as each circuit court of appeals may have its own peculiar rules as 
 to the admission of attorneys, and may impose different conditions and require- 
 ments. Usually attorneys and counselors who are admitted to practice in the 
 
SUPREME COURT OF THE UNITED STATES. 543 
 
 courts of the state and have been engaged in such practice for a limited time 
 are admitted to any of the district courts upon motion, and upon subscribing 
 the roll and taking the proper oath of office, and usually upon the payment of a 
 small fee which generally amounts to $5.00. The rules of the respective dis- 
 tricts with reference to this matter should be consulted by those seeking 
 admission. 
 
 Notice. 
 
 Bankruptcy Act, section 58. — Notice of certain proceedings to be given by 
 mail to creditors; may be published; by whom given. Compare Collier on 
 Bankruptcy, pages 290-291,' title. The Giving of Notice. 
 
 Bankruptcy Rule. No XXIII. — Order of referee, to recite the mode in which 
 notice was given. Compare Equity Rule No. IV as to notice of motion in 
 equity proceedings. 
 
 It is to be noted that the only express statutory provision as to notice in bank- 
 ruptcy cases is that contained in section 58, and such notice is given only in 
 certain specified proceedings. It does not provide a method of giving notice of 
 motions in general, nor is there any bankruptcy rule as to that point of proce- 
 dure other than the one under consideration and Equity Rule No. IV in so far 
 as the latter rule may be deemed adopted by Bankruptcy Rule No. XXXVII. 
 
 V. FRAME OF PETITIONS. 
 
 All petitions and the schedules filed therewith shall be printed or 
 written out plainly, without abbreviation or interlineation, except 
 where such abbreviation and interlineation may be for the purpose 
 of reference. 
 
 [First part of rule XIV, 1867, without change.] 
 
 Forms : Nos. i, 2, 3. 
 
 The Petition and the Schedules. 
 
 Bankruptcy Act, section 18. — Process, pleading and adjudication. Compare 
 Collier on Bankruptcy, page 197, title. The Petition. 
 
 Bankruptcy Act, section 7 (8). — Form and contents of the schedules. Compare 
 Collier on Bankruptcy, pages 81-84, chapter. The Schedules. 
 
 Bankruptcy Act, section 39 (6). — Duty of Referee in certain cases to make out 
 the schedules. 
 
 Bankruptcy Rule, No. IX. — Duty of the petitioning creditor in certain cases 
 to file a schedule. 
 
 Plainly Written. 
 
 Under Rule XIV of 1867, which was like the one under consideration, it was 
 held by the U. S. District Court for the Northern District of New York, in a 
 case reported anonymously in i B. R. 215, that an illegible petition could not 
 be filed; and i« r? Orne, I Ben. 420; s. c. i B. R. 79, it was held by Judge 
 Blatchford of the Southern District of New York that dots or ditto marks could 
 not, consistently with the rule, be used for the purpose of indicating anything 
 necessary to be stated. 
 
544 GENERAL ORDERS IN BANKRUPTCY, 
 
 TI. 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 dis- 
 trict in which the debtor has his domicil, and the petition may be 
 amended by inserting an allegation of an act of bankruptcy com- 
 mitted 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 partnership in different courts, each hav- 
 ing jurisdiction over the case, the petition 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 adjudi- 
 cation 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 shall be filed in different districts by different 
 members of the same partnership for an adjudication of the bank- 
 ruptcy of said partnership, 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 petitions shall be filed in the same district, action shall be 
 first had upon the one first filed. But the court so retaining juris- 
 diction shall, if satisfied that it is for the greatest convenience of 
 parties in interest that another of said courts should proceed with 
 the cases, order them to be transferred to that court. 
 
 [Rule XVI, 1867, withom change, except that the last sentence of Rule VI 
 under co(isi4eration, is new.] 
 
 Jurisdiction to Adjudge Uidivlduals Bankrupt. 
 
 Bankruptcy Act, section 2 (1). — Jurisdiction of courts of bankruptcy to adjudge 
 a person bankrupt either in the district in which he has for a certain time 
 resided or had his domicil or had his principal place of business. Compare 
 Collier on Bankruptcy, pages 27 and 28, title, Jurisdiction to Adjudge Persons 
 Bankrupt; also pages 234-?35. title. Where May the Petition Be Filed. 
 
 Jurisdiction Over Partners. 
 
 Bankruptcy Act, section 5 c. — The court of bankruptcy which has jurisdiction 
 of one partner has jurisdiction of all partners. 
 
SUPREME COURT OF THE UNITED STATES. 545 
 
 Transfer of Cases. 
 
 Bankruptcy Act, section 2 (ig). — Power of one court of bankruptcy to transfer 
 cases to another court of bankruptcy. 
 
 Bankruptcy Act, section yi. — In case of two or more petitions in different dis- 
 tricts against the same person or partnership, the case to be transferred to the 
 court which can administer the estate with the greatest convenience to the par- 
 ties. Compare Collier on Bankruptcy, page 31, title, Transfer of Jurisdiction. 
 
 It is familiar practice in courts of equity acting under the same general 
 jurisdiction, when their jurisdiction is invoked for the distribution of the same 
 fund by different complainants, to permit the court first obtaining jurisdiction 
 of the fund by the institution of a suit, to proceed therewith to its full and com- 
 plete disposal. In the main, the new bankruptcy rules adhere to that general 
 principle, there being, however, this exception, that in the case of two petitions 
 filed against an individual the first hearing shall be by the court of the district 
 where the bankrupt has his domicil. 
 
 VII. PRIORITY OF PETITIONS. 
 
 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 four months prior to the 
 filing of said petitions, and the debtor shall appear and show cause 
 against an adjudication of bankruptcy against him on the petitions, 
 that petition shall be first heard and tried which alleges the com- 
 mission 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 hear- 
 ing as upon one petition; 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 hearing upon 
 the remaining petitions, unless proceedings be taken by the debtor 
 for the purpose of causing such adjudication to be annulled or 
 vacated. 
 
 [Rule XV, 1867, without change other than that " four months " appears in 
 the new rule in place of " six months.") 
 
 VIII. PROCEEDINGS IN PARTNERSHIP CASES. 
 
 Any member of a partnership, who refuses to join in a petition to 
 have the partnership declared bankrupt, 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 
 
 NATL. BANKRUPTCY LAW — 35 
 
546 GENERAL ORDERS IN BANKRUPTCY. 
 
 of the petition shall be given to him in the same manner as provided 
 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 partnership is not insolvent or has not committed an act of 
 bankruptcy, and to make all defences which any debtor proceeded 
 against is entitled to take by the provisions of the act; and in case 
 an adjudication of bankruptcy is made upon the petition, such part- 
 ner shall be required to file 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. 
 
 [Rule XVIII, 1867, with no substantial changes.] 
 
 Form : No. 2. 
 
 Bankruptcy Proceedings against Partners. 
 
 Bankruptcy Act, section 5. — Proceedings against partners. Compare Collier 
 on Bankruptcy, paeres 58-59, titles, Who Must Petition, The Act of Bankruptcy. 
 
 Proceedings upon Involuntary Petitions in Bankruptcy. 
 
 Bankruptcy Act, section 18. — Service of Petition and writ of subpoena. 
 Equity Rules, Nos. 7, 11-16. — Process, how and by whom served. 
 Bankruptcy Act, section 3. — Acts of Bankruptcy. Compare Collier on Bank- 
 ruptcy, pages 35-50. 
 
 Defences. 
 
 Bankruptcy Act, section 3 c. — Solvency at the time of filing the petition a 
 defense, when. Compare Collier on Bankruptcy, pages 199-200, titles. Defences, 
 Who May Oppose Adjudications, Burden of Proof, Filing of Schedules. 
 
 Bankruptcy Act, section 7 (8). — Duty of bankrupt to make out and file schedule 
 and inventory. Compare Collier on Bankruptcy, pages 81-84, chapter. The 
 Schedules. 
 
 Bankruptcy Act, section 39 a (6). — Duty of the referee to compile schedules in 
 certain cases. 
 
 Bankruptcy Rule, No. IX. — Duty of petitioning creditor in certain cases to 
 furnish schedule. 
 
 The adoption of this rule which is substantially the re-adoption of Rule XV 
 prescribed under the act of 1867, virtually makes the decisions as to petitioners 
 in partnership cases cited in Collier on Bankruptcy at page 59, decisive authori- 
 ties under the new law, and yet the rule would seem clearly to imply that unless 
 an act of bankruptcy could be proven, a partnership could not be adjudged 
 bankrupt except upon the petition of all the partners. 
 
 IX. SCHEDULE IN INYOLUNTART BANKUPTCT. 
 
 In all cases of involuntary bankruptcy in which the bankrupt is 
 absent or cannot be found, it shall be the duty of the petitioning 
 
SUPREME COURT OF THE UNITED STATES. 547 
 
 creditor to file, within five days after the date of the adjudication, a 
 schedule giving the names and places of residence of all the creditors 
 of the bankrupt, according to the best information of the petitioning 
 creditor. If the debtor is found, and is served with notice to furnish 
 a schedule of his creditors and fails to do so, the petitioning creditor 
 may apply for an attachment against the debtor, or may himself 
 furnish such schedule as aforesaid. 
 
 [New.] 
 
 Filing of Schedules. 
 
 Bankruptcy Act, section 7 (8). — Duty of bankrupt to file schedules and inven- 
 tory. 
 
 Bankruptcy Act, section 39 a (6). — Duty of the referee in certain cases to com- 
 pile the schedules. Compare Collier on Bankruptcy, page 242, title, Examina- 
 tion of Schedules. 
 
 It is to be noted that the requirement of this rule is that in certain cases the 
 petitioning creditor shall file a list of the creditors of the bankrupt. There is no 
 requirement that he file an inventory of the property. There is no reason for 
 supposing that the imposition of this dufy upon the petitioning creditor excuses 
 the referee from performing the duty imposed upon him by section 39 a (6) of the 
 bankruptcy act. It is more reasonable to suppose that this requirement is one 
 means of enabling the referee to secure the information or part of the informa- 
 tion which will enable him to compile the schedule and inventory. 
 
 X. INDEMNITY FOR EXPENSES. 
 
 Before incurring any expense in publishing or mailing notices, or 
 in traveling, or in procuring the attendance of witnesses, or in per- 
 petuating testimony, the clerk, marshal or referee may require, from 
 the bankrupt or other person in whose behalf the duty is to be per- 
 formed, indemnity for such expense. Money advanced for this 
 purpose by the bankrupt or other person shall be repaid him out of 
 the estate as part of the cost of administering the same. 
 
 [Rule XXIX, 1867, with changes.] 
 
 Duties of the Referee InTOlvlng Expense. 
 
 Bankruptcy Act, section 58. — Referee in certain cases to mail notices to cred- 
 itors. 
 
 Bankruptcy Act, section 65. — Referee (or judge) to preside at first meeting of 
 creditors, to be held at the county seat of the county in which the bankrupt has 
 his domicil or residence or in which he did business. 
 
 Bankruptcy Rule, No. XXVI. — Referee's account of expenses. 
 
548 GENERAL ORDERS IN BANKRUPTCY. 
 
 Fees and Services of Marshal. 
 
 Bankruptcy Act, section 52. — Compensation of the marshal. 
 As to the marshal's right to demand payment of his fees in advance, compare 
 Collier on Bankruptcy, page 266, title. Payment in Advance. 
 
 Expenses of OfBcials in General. 
 
 Bankruptcy Rule, No. 35. — Compensation of officers not to cover expenses. 
 
 Bankruptcy Act, section 62. — Expenses of officers to be reported to the court 
 under oath. 
 
 Bankruptcy Act, section 64 b. — Necessary cost of preserving estate and costs of 
 administration treated as debts having a priority. 
 
 XI. AMENDMENTS. 
 
 The court may allow amendments to the petition and schedules on 
 application of the petitioner. Amendments shall be printed or 
 written, signed and verified, like original petitions and schedules. 
 If amendments are made to separate schedules, the same must be 
 made separately, with proper references. In the application for 
 leave to amend, the petitioner shall state the cause of the error in 
 the paper originally filed. 
 
 [The last sentence is new. The rest of the rule is substantially the same as a 
 part of rule XIV, 1867.] 
 
 Amendments. 
 
 Bankruptcy Act, section 39 a (2). — Duty of the referee to examine and cause 
 defective schedules to be amended. Compare Collier on Bankruptcy, page 242, 
 title, Examinatioa of Schedules; also pages 81-84, chapter. The Schedules; and 
 in particular the title. Amendment of Schedules, page 83. 
 
 As to amendment of petitions, compare Collier on Bankruptcy, pages 197-198, 
 titles. The Petition, Pleading. 
 
 XII. DUTIES OF REFEREE. 
 
 I . The order referring a case to a referee shall name a day upon 
 which the bankrupt shall attend before the referee ; and from that 
 day the bankrupt shall be subject to the orders of the court in all 
 matters relating to his bankruptcy, and may receive from the referee 
 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. A copy of the order shall forthwith be sent by 
 mail to the referee, or be delivered to him personally by the clerk or 
 other officer of the court. And thereafter all the proceedings, except 
 
SUPREME COURT OF THE UNITED STATES. 549 
 
 such as are required by the act or by these general orders to be had 
 before the judge, shall be had before the referee. 
 
 2. The time when and the place where the referees shall act upon 
 the matters arising under the several cases referred to them shall 
 be fixed by special order of the judge, or by the referee; and at such 
 times and places the referees may perform the duties which they are 
 empowered by the act to perform. 
 
 3. Applications for a discharge, or for the approval of a compo- 
 sition, or for an injunction to stay proceedings of a court or ofiScer 
 of the United States or of a State, shall be heard and decided by the 
 judge. But he may refer such an application, or any specified issue 
 arising thereon, to the referee to ascertain and report the facts. 
 
 [Paragraph I. except the last sentence, is the second paragraph of Rule IV, 
 1867, with slight changes. Paragraph 2 is derived from Rule V, 1867. The 
 changes are in accordance with the increased power given to referees, they hav- 
 ing the power, subject to review by the court, to hear and determine contested 
 matters; while the registers, in cases in which issues arose, were compelled to 
 certify the same to the court for determination. Paragraph 3 is new.] 
 
 Ordeps of Reference. 
 
 Bankruptcy Act, sections 18 f and g. — References by the clerk to the referee in 
 case of absence of the judge. Compare Collier on Bankruptcy, pages 200-201, 
 title. Proceedings on Default. 
 
 Bankruptcy Act, section 22 a. — References by the judge to the referee after 
 adjudication; what matters referable. 
 
 Forms : Nos. 14, 15. 
 
 Duties and Powers of Referees. 
 
 Bankruptcy Act, section 39. — Duties of referees enumerated. Compare Collier 
 on Bankruptcy, pages 240-243. 
 
 Bankruptcy Act, section 55. — Referee to preside at first meeting of creditors. 
 Compare Collier on Bankruptcy, pages 268-269, title. Quorum. 
 
 Bankruptcy Act, section 38. — Jurisdiction and powers of referees. Compare 
 Collier on Bankruptcy, pages 239-240, titles. Jurisdiction, Contested Matters, 
 Place of Reference. 
 
 Bankrupt's Subjection to Orders of the Court. 
 
 Bankruptcy Act, section 7 (2). — Duty of bankrupt to comply with all lawful 
 orders of the court. Compare Collier on Bankruptcy, page 80, title. Duty to 
 Obey Orders of the Court. 
 
 Although by the rule under consideration it might seem that the bankrupt is 
 subject to the orders of the court only from the day, upon which he is ordered 
 to attend before the referee, yet we feel confident that the power of the court 
 over the bankrupt, as set forth in the cases referred to in Collier on Bankruptcy, 
 
550 GENERAL ORDERS IN BANKRUPTCY. 
 
 in the title last above cited, is not impaired. A voluntary petitioner in bank- 
 ruptcy by his petition submits himself to the jurisdiction of the court and 
 becomes bound to obey its orders and directions even before adjudication. There 
 •would hardly seem to be any question as to the duty of one involuntarily 
 adjudged bankrupt, to obey orders of the court from the time of adjudication. 
 And as a study of the title above cited vfill show, there are cases holding that an 
 involuntary bankrupt even before adjudication is subject to the orders of the 
 court. The language of the statute, construed in accordance with the defi- 
 nition given in section i (4) of the Bankruptcy Act, would seem to be in harmony 
 with the decisions just referred to. 
 
 Arrest of the Bankrupt. 
 
 Bankruptcy Act, section 9 a. — Exemption of bankrupt from arrest in certain 
 cases. Compare Collier on Bankruptcy, pages 92-98, titles. Protection from 
 Arrest, Not a Release; Purpose and Character of the Protection, When the 
 Right of Protection Begins, How is the Right of Protection Enforced. 
 
 Bankruptcy Rule, No. XXX. — Imprisoned debtor, when court will allow his 
 release. 
 
 The term " bankrupt " includes one by or against whom a petition has been 
 filed as well as one who has been adjudged a bankrupt and such a person from 
 the time of the filing of the petition is entitled to protection from arrest, in the 
 cases mentioned in the statute. Compare Collier on Bankruptcy, page 95, title, 
 When the Right of Protection Begins. 
 
 Time and Place of Performing Duties. 
 
 Bankruptcy Act, section 55. — First meeting of creditors to be held at the county 
 seat of the county in which bankrupt resided or had his domicil or principal 
 place of business. 
 
 Limitations on Powers of Referees. 
 
 Bankruptcy Act, section 38(4). — Questions arising out of the applications of 
 bankrupts for compositions or discharges not within the jurisdiction of referees. 
 
 Bankruptcy Act, section 38 (4). — Powers of referees as prescribed by rules or 
 orders of the courts of bankruptcy of their respective districts. 
 
 Bankruptcy Act, section 12 d. — Confirmation of compositions to be by the 
 judge. 
 
 Bankruptcy Act, section 14 b. — Applications for a discharge to be heard by the 
 judge. 
 
 Bankruptcy Act, section 22. — Power of the court to refer a bankruptcy case to 
 the referee, generally or specially, with only limited authority to act in the 
 premises, or to consider and report upon specified issues. 
 
 An examination of the rule under consideration shows that the Supreme 
 Court in prescribing it, has endeavored to carry out the intention of Congress 
 to bring home the administration of the bankruptcy act close to the people, and 
 has left with the referees, with one or two exceptions, all the power and author- 
 ity which by the terms of the act could be conferred on them. One restriction 
 
SUPREME COURT OF THE UNITED STATES. 551 
 
 upon their authority which is not expressly contained in the Bankruptcy Act 
 itself, is a restriction of the right to grant injunctions, and it is to be noted that 
 this does not in terms forbid their issuing restraining orders and requiring the 
 restrained party from showing cause before the court why an injunction should 
 not issue. Compare section 7 of the act of June i, 1872, printed as addenda to 
 the equity rules in Collier on Bankruptcy. By Rule XVII it is provided that a 
 trustee can be removed only by the judge. It is to be noted that the restrictions 
 upon the powers of referees as to questions arising out of applications of bank- 
 rupts for compositions or discharges do not, as shown by paragraph 3 of the 
 rule under consideration, prevent the judge from referring to referees such 
 applications or specified issues arising thereon, to ascertain and report the facts. 
 
 XIII. APPOINTMENT AND REMOVAL OF TRUSTEE. 
 
 The appointment of a trustee by the creditors shall be subject to 
 be approved or disapproved by the referee or by the judge; and he 
 shall be removable by the judge only. 
 
 [As a rule of bankruptcy. Rule XIII is new; but the former Bankruptcy Act 
 itself contained similar provisions as to the approval of the choice of a trustee. 
 (R. S., section 5034; Act of 1867, section 13.) Under that act a trustee could be 
 removed not only by order of the court, but in some cases by a vote of the cred- 
 itors with the approval of the court. (R. S., section 5039; Act of 1867, section 
 18.)] 
 
 Appointment of Trustees. 
 
 Bankruptcy Act, section 2 (17). — Courts of Bankruptcy have jurisdiction pur- 
 suant to the recommendation of creditors, or when they neglect to recommend 
 appointments, to appoint trustees. 
 
 Bankruptcy Act, section 44. — Creditors' right to appoint trustees. 
 
 Bankruptcy Act, section 45. — Qualifications of trustees. Compare Collier on 
 Bankruptcy, page 248, title, Who May be Trustee; also page 246, title, The Right 
 of Appointment; also pages 32-33, title. Appointment of Trustees. 
 
 The adoption of the rule under consideration effectually clears any doubt that 
 previously existed as to whether or not the choice of a trustee by the creditors 
 was subject to the approval or disapproval of the courts. 
 
 Forms : Nos. 22, 23. 
 
 Removal of Trustees. 
 
 Bankruptcy Act, section 2 (17). — Power of the court of bankruptcy to remove 
 a trustee on complaint of creditors, for cause, after notice and hearing. 
 
 Bankruptcy Act, section 46. — Effect of removal of the trustee. 
 
 Compare Collier on Bankruptcy, pages 249-251, titles, Removal of Trustees, 
 Removal by Vote of Creditors. 
 
 Bankruptcy Rule, No, XVII. — Notice and practice upon proceedings t<» 
 remove a trustee. 
 
552 GENERAL ORDERS IN BANKRUPTCY. 
 
 XIV. NO OFFICIAL OR GENERAL TRUSTEE. 
 
 No official trustee shall be appointed by the court, nor any general 
 trustee to act in classes of cases. 
 
 [Part of Rule IX, as amended in 1874, without substantial change.] 
 
 XV. TRUSTEE NOT APPOINTED IN CERTAIN CASES. 
 
 If the schedule of a voluntary bankrupt discloses no assets, and if 
 no creditor appears at the first meeting, the court may, by order 
 setting out the facts, direct that no trustee be appointed ; but at any 
 time thereafter a trustee may be appointed, if the court shall deem 
 it desirable. If no trustee is appointed as aforesaid, the court may 
 order that no meeting of the creditors other than the first meeting 
 shall be called. 
 
 [New.] 
 
 Form : No. 27. 
 
 Appointment of Trustees. 
 
 Bankruptcy Act, section 2 (17). — Jurisdiction of courts of bankruptcy to appoint 
 trustees. 
 
 Bankruptcy Act, section 44. — Creditors' right to appoint trustees. 
 
 The rule under consideration introduces a new practice. Under the former 
 laws, as will be seen by reference to the cases cited in Collier on Bankruptcy, 
 pages 268-269, title, Quorum, it was held that a trustee should be chosen even if 
 no creditors proved their claims and even although there were no known assets; 
 it being further said that the purpose of the appointment of a trustee was to 
 seek and discover assets. But the new rule provides that no trustee need be 
 chosen if no creditor appears and if there are no assets. It is to be noted that 
 by the rule, in order to dispense with a trustee, not only must assets be want- 
 ing, but also all creditors must absent themselves from the first meeting. 
 Doubtless, if any creditor appears and demands the election of a trustee, he 
 may by his vote appoint one, subject to the approval of the court. 
 
 XVI. NOTICE TO TRUSTEE OF HIS APPOINTMENT, 
 
 It shall be the duty of the referee, immediately upon the appoint- 
 ment and approval of the trustee, to notify him in person or by mail 
 of his appointment; and the notice shall require the trustee forth- 
 with to notify the referee of his acceptance or rejection of the trust, 
 and shall contain a statement of the penal sum of the trustee's bond. 
 
 [Rule IX, 1867, with some slight additions as to the contents of the notice 
 and with other minor changes.] 
 
 Form : No. 24. 
 
SUPREME COURT OF THE UNITED STATES. 553 
 
 Bonds of Trustees. 
 
 Bankruptcy Act, section 50 a-j. — Miscellaneous provisions as to bonds of 
 referees and trustees. 
 
 Bankruptcy Act, section 50 k. — Failure of trustee to file bond within time lim- 
 ited, deemed to be a declination of appointment. 
 
 Form ; No. 25, 
 
 XVII. DUTIES OF TRUSTEE. 
 
 The trustee shall, immediately upon entering upon his duties, pre- 
 pare a complete inventory of all the property of the bankrupt that 
 comes into his possession. The trustee shall make report to the 
 court, within twenty days after receiving the notice of his appoint- 
 ment, of the articles set off to the bankrupt by him, according to 
 the provisions of the forty-seventh section of the act, with the esti- 
 mated value of each article, and any creditor may take exceptions to 
 the determination of the trustee within twenty days after the filing 
 of the report. The referee may require the exceptions to be argued 
 before him, and shall certify them to the court for final determina- 
 tion at the request of either party. In case the trustee shall neglect 
 to file any report or statement which it is made his duty to file or 
 make by the act, or by any general order in bankruptcy, within five 
 days after the same shall be due, it shall be the duty of the referee 
 to make an order requiring the trustee to show cause before the 
 judge, at a time specified in the order, why he should not be removed 
 from office. The referee shall cause a copy of the order to be served 
 upon the trustee 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 trustees shall be referred as of course to the referee 
 for audit, unless otherwise specially ordered by the court. 
 
 [Rule XIX as amended, with several slight changes.] 
 
 Duties of Trustees in General. 
 
 Bankruptcy Act, section 47. — Duties of trustees enumerated. Compare 
 Collier on Bankruptcy, pages 253-260. 
 Bankruptcy Act, section 70 b. — Real and personal property to be appraised. 
 
 Duties as to Exemptions. 
 
 Bankruptcy Act, section 7 (8). — Duty of bankrupt in his schedules to claim 
 exemptions. 
 
 Bankruptcy Act, section 6. — Exemptions allowed to bankrupts. Compare 
 Collier on Bankruptcy, pages 70-79. »" particular the title, The Trustee's Rights 
 in Exempt Property. 
 
554 GENERAL ORDERS IN BANKRUPTCY. 
 
 Bankruptcy Act, section 2 (ii). — Jurisdiction of bankruptcy courts to determine 
 all claims of bankrupts to their exemptions. 
 
 Bankruptcy Act, section I (7). — The word " court " may include referee. 
 
 Bankruptcy Act, section 38 a. — Acts and orders of referees also subject to 
 review by the judge. 
 
 Bankruptcy Act, section 39 a (10). — Duty of referee to preserve evidence in 
 contested cases. 
 
 Bankruptcy Rule, No. XXVII. — Review of order of referee by the judge; 
 referee's duty to certify the question. 
 
 Form : No. 47. 
 
 Removal of Trustee. 
 
 Compare cross-references ana comments to Bankruptcy Rule No. XIII. 
 
 It is to be noted that the rules restrict the referee from entering an order 
 removing the trustee. The extent of his power in this matter is to enter an 
 order requiring the trustee to show cause before the judge why he should not 
 be removed from office. 
 
 Forms : Nos. 52, 53, 54. 
 
 Exceptions to Exemptions Set-off by the Trustee. 
 
 Under the former rule which was substantially like the rule under considera- 
 tion, it was held in re Perdue, 2 B. R. 183, at 188, that the auxiliary " may " as 
 used in that part of the rule which provides that exceptions " may be filed," 
 was not to be taken in an imperative sense, but that, on the contrary, the 
 Supreme Court intended to leave a discretion with the district and circuit courts 
 to permit them to repair accidents, correct mistakes and prevent frauds; and 
 further it was held in that case that where the objections to the exemptions as 
 set-off by the assignee or trustee, are based upon a denial of title in the banKrupt, 
 the exceptions need not be filed in the time prescribed by the rule. In re 
 Shields, i B. R. 603, it was held that the rule requiring the assignee to make a 
 report of exempted property within twenty (20) days is to receive such a con- 
 struction as to prevent injustice to the bankrupt, and it may be extended by the 
 court, and leave may be granted to the assignee to make a further report. In 
 this case it appeared that the bankrupt's property had been seized by the sheriff 
 and had not come into the possession of the assignee, and that there was a 
 question as to the assignee's right in it, pending in court. Applying the doc- 
 trine above laid down, it was held that the time within which the assignee was 
 to make his report was to be computed from the date of the final decision of the 
 court, so as to give twenty (20) days after the property was adjudged to be 
 within, or under, the control of the assignee. 
 
 XVIII. SALE OF PROPERTY. 
 
 1. All sales shall be by public auction unless otherwise ordered by 
 the court. 
 
 2. Upon application to the court, and for good cause shown, the 
 trustee may be authorized to sell any specified portion of the bank- 
 
SUPREME COURT OF THE UNITED STATES. 555 
 
 rupt's estate at private sale; in which case he shall keep an accurate 
 account of each article sold, and the price received therefor, and to 
 whom sold; which account he shall file at once with the referee. 
 
 3. Upon petition b)' a bankrupt, creditor, receiver or trustee, set- 
 ting forth that a part or the whole of the bankrupt's estate is perish- 
 able, the nature and location of such perishable estate, and that 
 there will be loss if the same is not sold immediately, the court, if 
 satisfied of the facts stated and that the sale is required in the 
 interest of the estate, may order the same to be sold, with or with- 
 out notice to the creditors, and the proceeds to be deposited in court. 
 
 [Paragraph i, is new; paragraph 2 is part of Rule XXI, 1867, withoat change; 
 paragraph 3 is Rule XXII, 1867, with various changes.] 
 
 Sales. 
 
 Bankruptcy Act, section 70 b. — Duty of the trustee to collect and reduce to 
 money the property of the estate. Compare Collier on Bankruptcy, pages 256- 
 25g, titles Reduction to Money, Sales, Power of Sale, What Title Passes, Sales 
 of Encumbered Property, Approval of the Court, Who May Purchase. 
 
 Bankruptcy Act, section 58 a (4). — Creditors to have ten (10) days' notice by 
 mail of all proposed sales of property. Compare Collier on Bankruptcy, page 
 290, title. The Giving of Notice. 
 
 Forms : Nos. 42, 43, 44, 45, 46. 
 
 Is Notice of Sale Always Necessary ? 
 
 Whether the provisions of the second paragraph were intended to dispense 
 with actual notice of the sale, in cases in which a private sale is ordered, may 
 be perhaps not altogether free from question, when the unqualified provision of 
 section 58 a (4) of the bankruptcy act itself, is considered. But it would seem 
 that this rule was intended to dispense with notice of the sale in certain cases. 
 That notice of the application for authority to sell at private sale is to be given, 
 is undoubtedly true and if such notice is given and an order is made directing a 
 private sale, especially if the order fixes the terms upon and the price at which 
 the sale is to be made, it would seem as if further notice of the sale itself would 
 not only be unnecessary, but that it is inconsistent with the notion of a private 
 sale. A notice of sale must be either for the purpose of giving the notified 
 party an opportunity to attend the sale and to bid thereat, — a privilege which can 
 hardly be held to exist in the case of private sales; or else it is for the purpose 
 of enabling one to oppose the act of selling. But the order directing a private 
 sale conclusively settles the right to sell. 
 
 Paragraph (3) shows that the court has with foresight, provided for sales of 
 perishable property immediately; that is, without notice. Under the former 
 bankruptcy system there was a provision of law to this effect as well as a rule. 
 The rule authorized a sale of property liable to deterioration as well as of. 
 perishable property. 
 
556 GENERAL ORDERS IN BANKRUPTCY. 
 
 XIX. ACCOUNTS OF MARSHAL. 
 
 The marshal shall make return, under oath, of his actual and 
 necessary expenses in the service of every warrant addressed to him, 
 and for custody of property, and other services, and other actual 
 and necessary expenses paid by him, with vouchers therefor when- 
 ever practicable, and also with a statement that the amounts charged 
 by him are just and reasonable. 
 
 [Latter part of Rule XII, 1867, without any substantial change.] 
 
 Fees and Expenses of Marshal. 
 
 Bankruptcy Act, section 52 b. — Compensation of marshal. Compare Collier on 
 Bankruptcy, pages 264-266, titles. Marshal's Fees, Marshal's Right to Demand 
 Payment in Advance. 
 
 Bankruptcy Rule, No. X. — Right of marshal and other oflScials to demand 
 indemnity for expenses. 
 
 Services of the Marshal. 
 
 Bankruptcy Act, section 2 (3). — Power of courts of bankruptcy to appoint 
 receivers and marshals to take charge of property of bankrupt. Compare 
 Collier on Bankruptcy, page 32, title. Power to Take Charge of Property. 
 
 Bankruptcy Act, section 69. — Power of court to issue warrant to marshal to 
 take bankrupt's property into custody. 
 
 Bankruptcy Act, section 2 (5). — Power of courts of bankruptcy to authorize 
 marshal to conduct the business of the bankrupt. 
 
 Under the rule of 1867," similar to the one under consideration, it was held 
 that if the marshal did not furnish vouchers he should state in his report why 
 he failed to do so; and that if the court found that it was impracticable for him 
 to obtain them at the time of his report, it might nevertheless pass and allow his 
 accounts, although the failure to get them was primarily due to ignorance of the 
 rule requiring vouchers. In re Comstock, 9 B. R. 88. 
 
 XX. PAPERS FILED AFTER REFERENCE. 
 
 Proofs of claims and other papers filed subsequently to the refer- 
 ence, except such as call for action by the judge, may be filed either 
 with the referee or with the clerk. 
 
 [New.] 
 
 Papers Filed with the Referee. 
 
 Bankruptcy Act, section 39 a (7). — Duty of referee to safely keep, perfect and 
 transmit records to the clerk when the case is concluded. 
 
 Bankruptcy Act, section 39 a (8). — Duty of referee to transmit to clerk records 
 or copies, whenever needed, for proceedings in court; and to secure their 
 return. 
 
SUPREME COURT OF THE UNITED STATES. 557 
 
 Bankruptcy Act, section 39 a (10). — Duty of referee residing in same place as 
 clerk to call and receive all papers filed. 
 
 Bankruptcy Act, section 51 (3). — Duty of clerk to deliver or transmit to 
 referees all papers in matters referred to them. 
 
 Bankruptcy Act, section 42 b. — The records of referees and the papers on file 
 constitute the records of the case. 
 
 XXI. PROOF OF DEBTS. 
 
 1. Depositions to prove claims against a bankrupt's estate shall 
 be correctly entitled in the court and in the cause. When made to 
 prove a debt due to a partnership, it must appear on oath that the 
 deponent is a member of the partnership; 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 corporatioh, 
 the deposition shall be made by the treasurer, or, if the corporation 
 has no treasurer, by the officer whose duties most nearly corre- 
 spond to those of treasurer. Depositions to prove debts existing in 
 open acount 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 trustee 
 shall be delivered to the referee to whom the cause is referred. 
 
 2. Any creditor may file with the referee 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. 
 
 3. Claims which have been assigned before proof shall be sup- 
 ported by a deposition of the owner at the time of the commence- 
 ment of proceedings, setting forth the true consideration of the debt, 
 and that it is entirely unsecured, or if secured, the security, as is 
 required in proving secured claims. Upon the filing of satisfactory 
 proof of the assignment of a claim proved and entered on the 
 referee's docket, the referee shall immediately 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, or within further 
 
5S8 GENERAL ORDERS IN BANKRUPTCY. 
 
 time allowed by the referee, he shall make an order subrogating the 
 assignee to the original claimant. If objection be made, he shall pro- 
 ceed to hear and determine the matter. 
 
 4. The claims of persons contingently liable for the bankrupt may 
 be proved in the name of the creditor when known by the party con- 
 tingently liable. When the name of the creditor is unknown, such 
 claim may be proved in the name of the party contingently liable; 
 but no dividend shall be paid upon such claim, except upon satis- 
 factory proof that it will diminish pro tanto the original debt. 
 
 5. The execution of any letter of attorney to represent a creditor, 
 or of an assignment of claim after proof, may be proved or acknowl- 
 edged before a referee, or a United States commissioner, or a 
 notary public. When executed on behalf of a partnership or of a 
 corporation, the person executing the instrument shall make oath 
 that he is a member of the partnership, or a duly authorized officer 
 of the corporation on whose behalf he acts. When the person exe- 
 cuting is not personally known to the officer taking the proof or 
 acknowledgment, his identity shall be established by satisfactory 
 proof. 
 
 6. When the trustee or any creditor shall desire the re-examina- 
 tion of any claim filed against the bankrupt's estate, he may apply 
 by petition to the referee to whom the case is referred for an order 
 for such re-examination, and thereupon the referee 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 referee 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 expunged or 
 diminished, the referee may order accordingly. 
 
 [Rule XXXIV, 1874, with slight changes.] 
 
 Proof of Debts. 
 
 Bankruptcy Act, section 63. — Debts which may be proved. Compare Collier 
 on Bankruptcy, pages 337-366, various titles. 
 
 Bankruptcy Act, section 57 a. — Proof and allowance of claims; of what is proof 
 to consist. 
 
 Bankruptcy Act, section 57 b. — Proof of claims founded on instruments in 
 writing. 
 
 Bankruptcy Act, section 57 c-1. — Allowance of claims. 
 
SUPREME COURT OF THE UNITED STATES. 559 
 
 Bankruptcy Act, section 57 m. — Proof of claim of one bankrupt estate against 
 another bankrupt estate. 
 
 Bankruptcy Act, section 57 n. — Proof when to be made. 
 
 Compare Collier on Bankruptcy, pages 276-289, titles, Necessity of Proof, 
 Nature of Proof, Statement as to Consideration, Proof by Whom Made, Instru- 
 ments in Writing, Filing of Claims, Secured Creditors, Proof as Unsecured, 
 Proof by Preferred Creditors, etc. 
 
 The rule under consideration supplies certain defects of the statute which 
 were referred to in Collier on Bankruptcy, at page 278, as to the cases in which 
 and the circumstances under which an agent of a creditor might make proof of 
 a claim. It is also to be noted that by the rule, proof of a claim by a corpora- 
 tion must be made by the treasurer or the officer whose duties most nearly corre- 
 spond to those of treasurer. 
 
 Forms : Nos. 31-37. 
 
 Notice. 
 
 Bankruptcy Act, section 58. — Creditors to have notice by mail of various pro- 
 ceedings. 
 
 Assigned Claims. 
 
 Bankruptcy Act, section 68. — When a claim against a bankrupt purchased 
 by or transferred to a debtor of the bankrupt, is not a proper set-off or counter- 
 claim. 
 
 It should be borne in mind that this rule requires that proof of a claim which 
 has been assigned before proof shall be supported by a deposition of the owner 
 of the same at the time of the commencement of the proceedings. The phrase 
 " commencement of the proceedings " by section i (10) of the bankruptcy act, 
 refers to the time of the filing of the petition. 
 
 Claims of One Contingently Liable for the Bankrupt. 
 
 Bankruptcy Act, section 57 i. — Right of a surety of a bankrupt to prove a 
 claim of the creditor when the creditor fails to make proof. Compare Collier on 
 Bankruptcy, page 275; also Collier on Bankruptcy, page 342, title, Proof by a 
 Surety of the Bankrupt; and also compare Collier on Bankruptcy, pages 339- 
 342, titles. Liabilities of Sureties, Contingent Liabilities. 
 
 Letters of Attorney. 
 
 The express terms of this rule (paragraph 5) seem to require not only an 
 acknowledgment of the execution of powers of attorney, but also in the cases of 
 corporations and partnerships an oath as to the position therein or the connec- 
 tion therewith of the person executing the instrument. It is to be noted that 
 any officer of a corporation may by the rule make this oath, while paragraph i 
 limits proof by a corporation so that it can be made only by the treasurer 
 thereof. There is some doubt whether the mode of acknowledging the execu- 
 tion of a power of attorney as outlined in this rule is compulsory or not; that is, 
 whether it is exclusive of other modes or not. Under the authorities under 
 Rule XXXIV of 1874 which, as to this point, provided that a letter of attorney 
 
$6o GENERAL ORDERS IN BANKRUPTCY. 
 
 might be acknowledged before a register in bankruptcy or a United States cir- 
 cuit court commissioner, but wliich did not provide that the execution might be 
 before a notary public, it was held by the court in re Butterfield, 14 B. R. 195, 
 that the mode of execution provided for by that rule was not exclusive and that 
 an acknowledgment could be taken before a notary public. By the present 
 rule, it is expressly provided that the acknowledgment may be before a notary 
 public; but whether the reasoning i» re Butterfield maybe applied and it be 
 held that a letter of attorney may be acknowledged before a judge of a state 
 court or any other person by law of the state authorized to take acknowledg- 
 ments, is perhaps open to question. Contra to in re Butterfield was in re Christ- 
 ley, 10 B. R. 268, decided by the United States District Court for Indiana, which 
 held that a power of attorney was insufficient to authorize an agent to act for 
 a creditor in proving a claim, unless acknowledged before the officers mentioned 
 in Rule XXXIV of 1874. The fact that, under the present rule certain state 
 officers are mentioned as being authorized to take acknowledgments to powers 
 of attorney furnishes a strong presumption that all others are without authority 
 to take such acknowledgments. The principle of expressio unius, exclusio alius 
 would seem applicable. 
 Forms : Nos. 20, 21. 
 
 Re-examination of Claims. 
 
 Bankruptcy Act, section 57 k. — Claims which have been allowed may be recon- 
 sidered and re-allowed or rejected. 
 
 Bankruptcy Act, section 57 1. — If dividends have been paid upon claims which 
 are afterwards rejected, they may be recovered. 
 
 Bankruptcy Act, section 2 (2). — Jurisdiction of Courts of Bankruptcy to recon- 
 sider allowed or disallowed claims. Compare Collier on Bankruptcy, page 288, 
 title, Reconsideration of Claims. 
 
 In proceedings to reconsider allowed claims, the burden of proof rests upon 
 the person seeking the reconsideration. (Canby v. McLear, 13 B. R. 22.) But 
 it is the duty of the creditor to attend and submit to an examination as to his 
 claim when ordered to do so, {In re Robinson, 14 B. R. 130); and if he fails to 
 do so, his claim may be expunged. (In re Lount, 11 B. R. 315.) 
 
 Forms : Nos. 38, 39 
 
 XXII. TAKING OP TESTIMONY. 
 The examination of witnesses before the referee may be conducted 
 by the party in person or by his counsel or attorney, and the witnesses 
 shall be subject to examination and cross-examination, which shall 
 be had in conformity with the mode now adopted in courts of law. 
 A deposition taken upon an examination before a referee shall be 
 taken down in writing by him, or under his direction, in the form of 
 narrative, unless he determines that the examination shall be by ques- 
 tion and answer. When completed it shall be read over to the 
 witness and signed by him in the presence of the referee. The 
 
SUPREME COURT OF THE UNITED STATES. 561 
 
 referee shall note upon the deposition any question objected to, with 
 his decision thereon; 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. 
 
 [Rule X, 1867, with changes, recognizing the right of the referee to decide 
 objections raised as to the competency, relevancy and materiality of questions; 
 and with other slight changes.] 
 
 Referee's Power on Examinations. 
 
 Bankruptcy Act, section 38 a. — Jurisdiction of referees to exercise powers 
 vested in courts of bankruptcy for administering oaths, examining witnesses 
 and requiring production of documents. 
 
 Bankruptcy Act, section 21 a, b, c. — Evidence in bankruptcy cases, how 
 adduced; power to order persons to appear to be examined; manner of taking 
 depositions. Compare Collier on Bankruptcy, pages 205-206, title, To be Exam- 
 ined. 
 
 One of the most important respects in which referees have been given powers 
 in excess of those formerly conferred on registers is in the right now given them 
 to determine objections raised upon examinations, as to the materiality, compe- 
 tency, and relevancy of questions. Their powers upon the examination of wit- 
 nesses are co-extensive with the powers of the court, except that they do not 
 have the power of commitment. By section 39 a (5), in all contested matters 
 they may be required to make up a record embodying the evidence and to trans- 
 mit the same with their findings thereof to the judge. By section 41 refusal to 
 appear, to be sworn, or to testify, is a contempt and upon certification of the 
 facts to the court it may be punished by the judge as if it had occurred in the 
 presence of the court. 
 
 Costs. 
 
 Bankruptcy Act, section 2 {18). — Power of courts of bankruptcy to tax costs. 
 Hquity Rule, No. 67. — Power of courts of equity to deal with the costs of 
 incompetent, immaterial or irrelevant depositions. 
 
 XXIII. OBDEBS OF BEFEBEE. 
 
 In all orders made by a referee, it shall be recited, according as 
 the fact may be, that notice was given and the manner thereof; or 
 that the order was made by consent; or that no adverse interest was 
 represented at the hearing; or that the order was made after hear- 
 ing adverse interests. 
 
 [Rule VIII, 1867, with verbal changes.] 
 
 NATL. BANKRUPTCY LAW — 36 
 
562 GENERAL ORDERS IN BANKRUPTCY. 
 
 Ifotice. 
 
 As has teen observed in the comments upon an earlier rule the only statutory 
 provision of the bankruptcy system as to notice to creditors is that contained in 
 section 58, providing that notice by mail shall be given in certain cases to the 
 creditors by the referee. It is not a general provision as to notice of motions or 
 applications for orders or other relief. 
 
 XXIV. TRANSMISSION OF PEOTED CLAIMS TO CLERE. 
 
 The referee shall forthwith transmit to the clerk a list of the claims 
 proved against an estate, with the names and addresses of the prov- 
 ing creditors. 
 
 [Compare Rule XI, 1867.] 
 
 Under the old system of bankruptcy, by Rule XI, the register was required 
 to forward to the clerk a memorandum of every official act not later than the 
 next day af'er it occurred. 
 
 XXT. SPECIAL MEETING OF CREDITORS. 
 
 Whenever, by reason of a vacancy in the office of trustee, or for 
 any other cause, it becomes necessary to call a special meeting of 
 the creditors in order to carry out the purposes of the act, the court 
 may call such a meeting, specifying in the notice the purpose for 
 which it is called. 
 
 [New.] 
 
 Choice of a New Trustee. 
 
 Bankruptcy Act, section 44. — Creditors to choose a new trustee at the first 
 meeting after a vacancy has occurred and in certain other cases. 
 
 Meeting of Creditors. 
 
 Bankruptcy Act, section 55 a-c. — Meeting of creditors. 
 
 Bankruptcy Act, section 55 d. — Subsequent meetings held by consent of the 
 creditors. 
 
 Bankruptcy Act, section 55 e. — Subsequent meetings when called by the court. 
 
 Bankruptcy Act, section 55 f. — Final meeting of creditors. 
 
 Compare Collier on Bankruptcy, pages 268-272, in particular, title, Subse- 
 quent Meetings. 
 
 XXVI. ACCOUNTS OF REFEREE. 
 
 Every referee shall keep an accurate account of his traveling and 
 incidental expenses, and of those of any clerk or any officer attend- 
 ing him in the performance of his duties in any case which may be 
 
SUPREME COURT OF THE UNITED STATES. 563 
 
 referred to him ; and shall make return of the same under oath to 
 the judge, with proper vouchers when vouchers can be procured, on 
 the first Tuesday in each month. 
 
 [First part of Rule XII, 1867, with substantial change.] 
 
 Expenses of Referee. 
 
 Bankruptcy Rule, No. X. — Right of referee and other officers to demand 
 indemnity before incurring expense. 
 
 Bankruptcy Rule, No. XXX V (2). — Compensation of referees as provided for 
 in bankruptcy act does not cover all expenses. 
 
 The language of the rule under consideration seems to imply that the referee 
 as such may employ a clerk. The statute makes no provision for this assist- 
 ance, the necessity of which will be conceded by those familiar with the amount 
 of business done by referees in large cities. While the rule does not expressly 
 authorize the employment of a clerk and in fact goes no farther than to provide 
 for payment of the expenses incurred by the clerk, yet the existence of the right 
 of a referee to have a clerk being admitted, it must follow that in some way the 
 clerk is to be paid. Although neither the statutes nor the rules provide for his 
 compensation and although it may be difficult to apportion the expense among 
 the estates administered, yet the payment of the clerk of the referee from the 
 funds of administered estates would seem to be a difficulty of administration 
 rather than something beyond the power of the court and the referee. 
 
 XXTII. BEVIEW BY JUDGE. 
 
 When a bankrupt, creditor, trustee, or other person shall desire 
 a review by the judge of any order made by the referee, he shall file 
 with the referee, his petition therefor, setting out the error com- 
 plained of; and the referee shall forthwith certify to the judge the 
 question presented, a summary of the evidence relating thereto, and 
 the finding and order of the referee thereon. 
 
 [Rule VIII as amended, 1874, with changes.] 
 
 Review by the Judge. 
 
 Bankruptcy Act, section 38 a. — All proceedings by the referee subject to review 
 by the judge. 
 
 Bankruptcy Act, section 39 a (5). — Referee to make up records embodying the 
 evidence in contested matters, together with findings. 
 
 Although the referee is a subordinate judicial officer and although his pro- 
 ceedings are subject to review, none of his acts need confirmation in order to 
 make them valid or final adjudications. If the parties do not petition for a 
 review the acts of the referee are binding and conclusive as much as are the 
 acts of any subordinate or inferior court. 
 
 Form : No. S^- 
 
564 GENERAL ORDERS IN BANKRUPTCY. 
 
 It is to be noted that neither the bankruptcy act nor the rules fix a time 
 within which a petition for review of proceedings by the referee must be filed. 
 Rule VIII under the old system did provide a time limit. 
 
 XXTIII, REDEMPTION OF PROPERTY AND COMPOUNDING OF 
 
 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 or lien, upon any property, real or personal, or to relieve 
 said property from any conditional contract, and to tender perform- 
 ance of the conditions thereof, or to compound and settle any debts 
 or other claims due or belonging to the estate of the bankrupt, the 
 trustee, or the bankrupt, or any creditor who has proved his debt, 
 may file his petition therefor; and thereupon the court shall appoint 
 a suitable time and place for the hearing thereof, notice of which 
 shall be given as the court shall direct, 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 trustee. 
 
 [Rule XVII, 1867, with slight changes.] 
 
 Redemption of Property from Liens. 
 
 Bankruptcy Act, section 2 (7). — Jurisdiction of bankruptcy courts to cause 
 estates of bankrupts to be collected, reduced to money and distributed and to 
 determine controversies in relation thereto. Compare Collier on Bankruptcy, 
 pages 12-17, title. Jurisdiction to Determine the Rights of Lienors, also pages 
 257-258, title. Sales of Encumbered Property. 
 
 Bankruptcy Act, section 67 d. — Liens given in good faith, not in fraud of the 
 bankruptcy act, for a present consideration, and duly recorded, not to be afiected 
 by the bankruptcy act. 
 
 Form : No. 43. 
 
 Compoundingr Claims. 
 
 Bankruptcy Act, section 27. — Trustee's power, with approval of the court, to 
 compromise debts or claims. Compare Collier on Bankruptcy, page 229, title. 
 Approval of Court is Necessary in Each Case. 
 
 Bankruptcy Act, section 58. — Notice by mail to be given to each creditor of al' 
 proposed compromises. Compare Collier on Bankruptcy, pages 290-291, title. 
 The Giving of Notice. 
 
 Bankruptcy Rule, No. XXXIII. — Petition for authority to compound claims, 
 what to state. 
 
SUPREME COURT OF THE UNITED STATES. $65 
 
 XXIX. PAYMENT OF MONEYS DEPOSITED. 
 
 No moneys deposited as required by the act shall be drawn from 
 the depository unless by check or warrant, signed by the clerk of the 
 court, or by a trustee, and countersigned by the judge of the court, 
 or by a referee designated for that purpose, or by the clerk or his 
 assistant under an order made by the judge, 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 trustee or his clerk ; 
 and 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 general order shall be furnished to the 
 depository, and also the name of any referee or clerk authorized to 
 countersign said checks. 
 
 [Latter half of Rule XXVII, 1867, without material change.] 
 
 Deposits. 
 
 Bankruptcy Act, section tl. — Depositories of money to be designated by the 
 court. 
 
 Bankruptcy Act, section 47 a (3;. — Trustees to deposit all moneys in one of the 
 designated depositories. 
 
 Bankruptcy Act, section 47 a (4). — Trustees to disburse moneys only by check 
 or draft on the depository. 
 
 XXX. IMPRISONED DEBTOR. 
 
 If, at the time of preferring his petition, the debtor shall be 
 imprisoned, the court, upon application, may order him to be pro- 
 duced upon habeas corpus, by the jailor or any officer in whose 
 custody he may be, before the referee, for the purpose of testifying 
 in any matter relating to his bankruptcy; and, if committed after 
 the filing of his petition upon process in any civil action founded 
 upon a claim provable in bankruptcy, the court may, upon like 
 application, discharge him from such imprisonment. If the petitioner, 
 during the pendency of the proceedings in bankruptcy, be arrested 
 or imprisoned upon process in any civil action, the district court, 
 upon his appHcation, 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 
 
566 GENERAL ORDE"RS IN BANKRUPTCY. 
 
 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. 
 
 [Rule XXVII, 1867, without substantial change.] 
 
 Release from Arrest. 
 
 Bankruptcy Act, section 9 a (i) and (2). — Cases in which bankrupt is exempt 
 from arrest. Compare Collier on Bankruptcy, pages 92-98, titles. Protection 
 from Arrest, Not a Release; Purpose and Character of the Protection, When 
 the Right of Protection Begins, How is the Right of Protection Enforced, 
 Determination Whether the Debt is Dischargeable, In What Actions is One 
 Exempt from Arrest. 
 
 Bankruptcy Rule, No. XII (l). — Power of the referee to furnish protection to 
 the bankrupt. 
 
 The rule under consideration differs in a marked manner from the provisions 
 of the bankruptcy act as to the exemption of the bankrupt from arrest. The 
 statute itself (section 9 a), in language which is almost as clear as can be used, 
 provides that a bankrupt shall not be released from arrest when the arrest is 
 founded upon a debt or claim which is, not dischargeable in bankruptcy. But 
 it is to be noted that the rule, if it could be enforced, would entitle the bank- 
 rupt to a release from arrest if the arrest was made in an action founded upon 
 a claim provable in bankruptcy. Many claims are provable in bankruptcy 
 which are not released by a discharge. The language of the rule under con- 
 sideration in this respect is the same as the language of Rule XXVII under the 
 old system. In so far as it in terms gives to the bankrupt a release from a debt 
 provable in bankruptcy which is not released by a discharge, it is a nullity. 
 The limit of the power of the Supreme Court to prescribe rules in bankruptcy 
 is that those rules shall not contradict the provisions of law. The rule certainly 
 is contradictory of the statute in some cases. Under the old law it was held 
 in re Glaser, i B. R. 336; s. c. 2 Ben. 180, by Judge Blatchford of the Southern 
 District of New York, that " the provisions of general orders number 27, so far 
 as they authorize the discharge from arrest or imprisonment of a bankrupt 
 arrested on process founded on a claim provable in bankruptcy, where the 
 claim is one from which his discharge in bankruptcy will not release him, are 
 not warranted by the bankruptcy act." And in repeated decisions the rule 
 was laid down that if the debt was one from which a discharge was not a 
 release, the bankrupt could not be released from imprisonment if the arrest 
 was based upon such a debt. (In re Robinson, 6 Blatch. 253; s. c. 36 How. Pr. 
 176; in re Patterson, 2 Ben. 155; s. c. i B. R. 307; in re Boyst, 2 B. R. 171; 
 in re Kimball, 6 Blatch. 292; s. c. below, 2 Ben. 554; s. c. 2 B. R. 204; in re 
 Whitehouse, i Lowell, 429; s. c. 4 B. R. 63; in re G. W. Kimball, 2 Ben. 38; 
 
SUPREME COURT OF THE UNITED STATES. 567 
 
 s. c. I B. R. 193; in re Migel, 2 B. R. 481; in re Seymour, i Ben. 348; s. c. i B. 
 R. 29; j« >-« Williams, 6 Biss. 233; s. c. ii B. R. 145. Compare cases cited la 
 Collier on Bankruptcy, pages 96-98.) 
 
 XXXI. PETITION FOR DISCHARGE. 
 
 The petition of a bankrupt for a discharge shall state concisely, in 
 accordance with the provisions of the act and the orders of the court, 
 the proceedings in the case and the acts of the bankrupt. 
 
 [New.] 
 
 Form : No. 57. 
 
 Discharges, when Granted. 
 
 Bankruptcy Act, section 14 a. — Applications for discharge. Compare Collier 
 on Bankruptcy, pages 134-135, titles. Discharges, When Granted ; Applications 
 by Partners, Hearing Must be Before Judge, Who to Have Notice, Notice. 
 
 XXXII. OPPOSITION TO DISCHARGE OR COMPOSITION. 
 
 A creditor opposing the application of a bankrupt for his discharge, 
 or for the confirmation of a composition, shall enter his appearance 
 in opposition thereto on the day when the creditors are required to 
 show cause, and shall file a specification in writing of the grounds of 
 his opposition within ten days thereafter, unless the time shall be 
 enlarged by special order of the judge. 
 
 [Rule XXIV, 1867, in part.] 
 
 Form : No. 58. 
 
 Opposition to Discharge or Composition. 
 
 Bankruptcy Act, section 12 c. — A date and place for the hearing of applications 
 for the confirmation of the composition to be fixed by the court. Compare 
 Collier on Bankruptcy, pages 123-132, titles. Confirmation of a Composition, 
 Specific Grounds for Refusing to Confirm, etc. 
 
 Bankruptcy Act. section 14 b. — The judge to hear applications for a discharge 
 and proofs and pleas made in opposition thereto at such time as will give par- 
 ties in interest a reasonable opportunity to be fully heard. Compare Collier on 
 Bankruptcy, pages 135-138, titles. Refusing a Discharge, Discharge Refused if 
 the Bankruptcy Court Never Acquired Jurisdiction Over the Bankrupt, Dis- 
 charge Refused Only When Objections are Raised, Date of the Commission of 
 an Act which Will Prevent a Discharge, Specific Grounds for Refusing a Dis- 
 charge, Statutory Offenses, Failure to Keep Books of Account, Contemplation 
 of Bankruptcy, Pleas and Proof. 
 
 Bankruptcy Act, section 58 a (2). — Creditors to have ten days' notice by mail 
 of all hearings upon applications for the confirmation of compositions or the 
 discharge of bankrupts. 
 
568 GENERAL ORDERS IN BANKRUPTCY. 
 
 Appearances. 
 
 Bankruptcy Rule. No. IV. — Appearances may be in person or by attorney. 
 
 XXXIII. AEBITBATION. 
 
 Whenever a trustee shall make application to the court for 
 authority to submit a controversy arising in the settlement of a 
 demand against a bankrupt's estate, or for a debt due to it, to the 
 determination of arbitrators, or for authority to compound and settle 
 such controversy by agreement with the other party, the application 
 shall clearly and distinctly set forth the subject-matter of the con- 
 troversy, and the reasons why the trustee thinks it proper and most 
 for the interest of the estate that the controversy should be settled 
 by arbitration or otherwise. 
 
 [Part of Rule XX, 1867.] 
 
 Arbitration and Compromise. 
 
 Bankruptcy Act, section 26. — Arbitration of controversies. 
 
 Bankruptcy Act, section 27. — Compromise of controversies. Compare Collier 
 on Bankruptcy, pages 229-230, title. Approval of the Court Necessary in Each 
 Case. 
 
 Bankruptcy Rule, No. XXVIII. — Redemption of property and compounding 
 of claims. 
 
 Bankruptcy Act, section 58. — Creditors entitled to ten days' notice by mail of 
 every proposed compromise. 
 
 The old bankruptcy Rule No. XX, 1867, did not require that notice should be 
 given in every case of a proposed controversy, as is now required by section 58 
 of the bankruptcy act. 
 
 XXXIT. COSTS IN CONTESTED ABJUDICATIONS. 
 
 In cases of involuntary bankruptcy, when the debtor resists an 
 adjudication, and the court, after hearing, adjudges the debtor a 
 bankrupt, the petitioning creditor shall recover, and be paid out of 
 the estate, the same costs that are allowed to a party recovering in 
 a suit in equity; and if the petition is dismissed, the debtor shall 
 recover like costs against the petitioner. 
 
 [Part of Rule XXXI, 1867, without change.] 
 
 Costs. 
 
 Bankruptcy Act, section 2 (18). — Power of courts of bankruptcy to tax costs 
 and render judgment therefor against the parties or the estate. 
 
SUPREME COURT OF THE UNITED STATES. 569 
 
 Bankruptcy Act, section 3 e-f. — Allowance to debtor, if the petition against 
 him is dismissed, of all costs and expenses occasioned by the seizing of his 
 propert) under a warrant issued from the court. 
 
 XXXV. COMPENSATION OF CLERKS, REFEREES AND TRUSTEES. 
 
 1. The fees allowed by the act to clerks shall be in full compensa- 
 tion for all services performed by them in regard to filing petitions 
 or other papers required by the act to be filed with them, or in certi- 
 fying or delivering papers or copies of records to referees or other 
 officers, or in receiving or paying out money ; but shall not include 
 copies furnished to other persons, or expenses necessarily incurred 
 in publishing or mailing notices or other papers. 
 
 2. The compensation of referees, prescribed by the act, shall be 
 in full compensation for all services performed by them under the 
 act, or under these general orders ; but shall not include expenses 
 necessarily incurred by them in publishing or mailing notices, in 
 traveling, or in perpetuating testimony, or other expenses neces- 
 sarily incurred in the performance of their duties under the act and 
 allowed by special order of the judge. 
 
 3. The compensation allowed to trustees by the act shall be in full 
 compensation for the services performed by them; but shall not 
 include expenses necessarily incurred in the performance of their 
 duties and allowed upon the settlement of their accounts. 
 
 4. In any case in which the fees of the clerk, referee and trustee 
 are not required by the act to be paid by a debtor before filing his 
 petition to be adjudged a bankrupt, the judge, at any time during 
 the pendency of the proceedings in bankruptcy, may order those fees 
 to be paid out of the estate; or may, after notice to the bankrupt, 
 and satisfactory proof that he then has or can obtain the money 
 with which to pay those fees, order him to pay them within a time 
 specified, and, if he fails to do so, may order his petition to be 
 dismissed. 
 
 [New.] 
 
 Expenses. 
 
 Bankruptcy Rule, No. X. — Right of officers to demand indemnity for 
 expenses. 
 
 Clerks, Fees and Services. 
 
 Bankruptcy Act, section 52 a. — Compensation of clerks. 
 
570 GENERAL ORDERS IN BANKRUPTCY. 
 
 Bankruptcy Act, section 51 a (3). — Duty of clerk to deliver or transmit to 
 referees all papers referred to them. 
 
 Bankruptcy Act, section 51a (i). — Duty of clerk to account for fees received by 
 him including fees received for certified copies of records furnished for persons 
 other than oflBcers. 
 
 Referee's Compensation. 
 
 Bankruptcy Act, section 40. — Compensation of referees. Compare Collier on 
 Bankruptcy, page 243, title. On Dividends and Commissions. 
 
 Trustee's Compensation. 
 
 Bankruptcy Act, section ^S. — Compensation of trustee. Compare Collier on 
 Bankruptcy, page 260, title After Services are Rendered. 
 
 Non-payment of Filing Fees. 
 
 Bankruptcy A ct, section 51a (2). — Circumstances and conditions which excuse 
 a bankrupt from depositing the oflScial fees when filing his petition. 
 
 Three facts are to be borne in mind by those seeking to take advantage of the 
 provisions of the statute which in certain cases permit the institution and prose- 
 cution of proceedings in bankruptcy without depositing the fees for the officers 
 at the time of filing the petition. One of these facts is that an affidavit must be 
 taken to the effect that the petitioner is not only without the moneys to pay the 
 fees, but that he cannot obtain them ; another is that the making of a false oath in 
 or in relation to any proceeding in bankruptcy is not only made a criminal offense 
 (section 29 b [2]) punishable by imprisonment for a period not to exceed two years, 
 but that the commission of any offense punishable by the terms of the bank- 
 ruptcy act by imprisonment, is a ground for refusing a discharge in bank- 
 ruptcy. A third fact to be borne in mind by a debtor who would prosecute 
 a bankruptcy proceeding in forma pauperis is that he can be compelled to sub- 
 mit to an examination under oath as to his affairs, his conduct of his business, 
 his dealings with his creditors and other persons, and the amount, kind and 
 whereabouts of his property; and such examination can be held at such time or 
 times as the court may order. 
 
 In various districts, we are informed, rules have been promulgated which 
 tend to expedite the cases in which the fees have been paid, in preference to 
 those which are prosecuted in forma pauperis. We believe it may be safely 
 asserted that a bankrupt by paying the small fees imposed by the law not only 
 will be paying a debt morally as well as legally due, — the payment of which 
 any person, however insolvent he may be, can accomplish by borrowing from 
 his friends, — but he will undoubtedly find that by paying such fees he will be 
 advancing his own interests. 
 
 XXXYI. APPEALS. 
 
 I. Appeals from a court of bankruptcy to a circuit court of appeals, 
 or to the supreme court of a Territory, shall be allowed by a judge 
 of the court appealed from or of the court appealed to, and shall be 
 
SUPREME COURT OF THE UNITED STATES. 571 
 
 regulated, except as otherwise provided in the act, by the rules gov- 
 erning appeals in equity in the courts of the United States. 
 
 2. Appeals under the act to the Supreme Court of the United 
 States from a circuit court of appeals, or from the supreme court of 
 a Territory, or from the Supreme Court of the District of Columbia, 
 or from any court of bankruptcy whatever, shall be taken within 
 thirty days after the judgment or decree, and shall be allowed by a 
 judge of the court appealed from, or by a justice of the Supreme 
 Court of the United States. 
 
 3. In every case in which either party is entitled by the act to 
 take an appeal to the Supreme Court of the United States, the court 
 from which the appeal lies shall, at or before the time of entering 
 its judgment or decree, make and file a finding of the facts, and its 
 conclusions of law thereon, stated separately; and the record trans- 
 mitted to the Supreme Court of the United States on such an appeal 
 shall consist only of the pleadings, the judgment or decree, the 
 finding of facts, and the conclusions of law. 
 
 [Practically New. Compare, however, Rule XXVI, 1867.] 
 Appeals. 
 
 Bankruptcy Act, section 24 a. — Jurisdiction of appellate courts. 
 
 Bankruptcy Act, section 24 b. — Revisory powers of circuit courts of appeal. 
 Compare Collier on Bankruptcy, pages 222-225, titles. Revisory Powers of the 
 Circuit Court, etc. 
 
 Bankruptcy Act, section 25 a. — Appeals from courts of bankruptcy to circuit 
 courts of appeal. 
 
 Bankruptcy Act, section 25 b. — Appeals from circuit courts of appeal to the 
 Supreme Court of the United States. Compare Collier on Bankruptcy, pages 
 226-229, titles, Appeals Under the Former Act, Appeals Under the Present Act, 
 Who to Take the Appeal, Appeals to the Supreme Court. 
 
 XXXVII. GENERAL PBOTISIONS. 
 
 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 followed as nearly as 
 may be. In proceedings at law, instituted for the same purpose, the 
 practice and procedure in cases at law shall be followed as nearly as 
 
572 GENERAL ORDERS IN BANKRUPTCY, 
 
 may be. But the judge may, by special order 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. 
 
 [Last half of Rule XXXII, 1867, without material change.] 
 
 Equity Rules. 
 
 For the equity rules and index to the same, see Collier on Bankruptcy. 
 Compare notes to Preamble to the Bankruptcy Rules. 
 
 XXXVIII. FORMS. 
 
 The several forms annexed to these general orders shall be 
 observed and used, with such alterations as may be necessary to 
 suit the circumstances of any particular case. 
 
 Promulgation of Forms. 
 
 The general orders in bankruptcy, that is, the rules, were promulgated by the 
 Supreme Court on November 28th, iSgS. At this date, Dec. 8th, 1898, the Forms 
 have not yet been given to the public. 
 
INDEX TO GENERAL ORDERS IN BANKRUPTCY. 
 
 [The figures refer to the number of the rules.] 
 Abbreviations. 
 
 when permitted, 5. 
 
 AeeOUnt. (Open account.) 
 
 proof of claim existing in, 21 (i). 
 
 Accounts. 
 
 of trustees to be audited by referee, unless, 17. 
 
 Act of bankruptcy. 
 
 inserting allegations of earlier acts, in petition, by amendment, 6. 
 
 Agent. 
 
 proof of debt by, what to contain, 21 (i). 
 
 Amendments. 
 
 by inserting allegation of earlier act of bankruptcy, in case of two petitions, 6. 
 when allowed in petition and schedule, 11. 
 how made, signed and verified, 11. 
 application for, to state the cause of error, 11. 
 
 Appeals. 
 
 to Circuit Court of Appeals, how allowed and regulated, 36 (l). 
 
 to Supreme Court, when to be taken, how allowed, 36 (2). 
 
 findings of fact and law to be filed by court from which appeal is taken to 
 
 Supreme Court, 36 (3). 
 record on appeal to Supreme Court, what to consist of, 36 (3), 
 
 Arbitration. 
 
 petition for leave for, 33. 
 
 Arrest. 
 
 Referee to give bankrupt protection from, 12 (i), 
 
 bankrupt under, to be produced on habeas corpus, to testify, yi, 
 
 release of debtor from, when, 30. 
 
 [573] 
 
574 INDEX TO GENERAL ORDERS IN BANKRUPTCY. 
 
 [The figures refer to the number of the rules.] 
 Assets. 
 
 no trustee, if no assets, 15. 
 
 Assignment. 
 
 of claims after allowance, notice to original claimant, 21 (3). 
 
 order of subrogation, when made, 21 (3). 
 of claims before proof, 21 (3). 
 of claims, before whom proved, 21 (5). 
 
 how executed by partnerships or corporations, 21(5). 
 
 Attachments. 
 
 to enforce bankrupt to file schedule, 9. 
 
 Attorneys. 
 
 in bankruptcy must be admitted to District or Circuit Court, 4. 
 
 name and place of business to be entered on docket, 4. 
 
 to indorse papers, 4. 
 
 name of, when to appear in order, 4. 
 
 notice upon, is sufficient when, 4. 
 
 Bankrupt. 
 
 may conduct proceedings in person, or by attorney, 4. 
 
 when to attend before referee, 12 (i). 
 
 when subject to orders of court, 12 (i). 
 
 entitled to protection from arrest, 12 (i). 
 
 may petition for sale of perishable property, 18 (3). 
 
 petition by, for review, 27. 
 
 petition by, for compounding debts or redeeming property, 28. 
 
 production of, on habeas corpus, if imprisoned, 30. 
 
 release of imprisoned, 30. 
 
 petition of, for a discharge, 31. 
 
 when allowed costs, 34. 
 
 may be required subsequently to pay fees of officials, 35 (4). 
 
 Circuit Court of Appeals. 
 
 appeals to. (See Appeals.) 
 
 Claims. (See Creditors, Proof of Claims.) 
 Clerk. 
 
 of referee, expense of, 26. 
 
 Clerk (of Court). 
 
 to keep docket, i. 
 
 to endorse on papers time of filing, and statement of character, 3. 
 
 process to be tested by, 3. 
 
INDEX TO GENERAL ORDERS IN BANKRUPTCY. 575 
 
 [The figures refer to the number of the rules.] 
 
 Clerk (of Court)— {Continufd). 
 
 to furnish blank process with seal and signature to referees, 3. 
 
 may require indemnity for expenses, 10. 
 
 to forward or deliver to referee order of reference, 12 (l). 
 
 to sign checks, when, 29. 
 
 compensation of, 35 (i), 35 (4). 
 
 when entitled to extra fees for copies of papers, 35 (l). 
 
 Compensation. (See Fees.) 
 
 of officials, 35. 
 
 fees prescribed by act not to cover expenses, 35. 
 
 Composition. (Between bankrupt and his creditors). 
 
 what questions referable to referee on applications to approve, 12 (3). 
 opposition to confirmation, specifications, 32. 
 
 Compounding Debts. 
 
 petition for authority in, 28. 
 what to state, 33. 
 
 Conditional Contract. 
 
 redeeming property from, 28. 
 
 Corporation. 
 
 proof of claim of, by whom made, 21 (l). 
 
 Costs. 
 
 for irrelevant, etc., depositions, 22. 
 in contested adjudications, 34. 
 when allowed to bankrupt, 34. 
 
 Creditor. 
 
 may conduct proceeding in bankruptcy, 4. 
 
 can manage only his individual interest, 4. 
 
 when petitioning creditor to file schedule for bankrupt, 9. 
 
 choice of trustee by, subject to approval, 13. 
 
 may petition for sale of perishable property, 18 (3). 
 
 proof of claim by, — 
 
 (See Agent, Corporation, Partnership, Proof of Claims.) 
 notices to, where to be addressed, 21 (2). 
 when assignee subrogated to original claimant, 21 (3). 
 proof of claims of persons contingently liable, to be made in the name ot, 
 
 21 (4). 
 power of attorney to represent, how proved, 2i (5). 
 
 in case of partnership, or corporation, 21 (5). 
 notice to, if claim is re-examined, 21 (6). 
 
576 INDEX TO GENERAL ORDERS IN BANKRUPTCY. 
 
 [The figures refer to the number of the rules.] 
 Creditor — (Continued). 
 
 may petition to have any claim re-examined, 21 (6). 
 
 names and addresses of those proving claims to be transmitted to clerk, 24. 
 
 meetings of, 15 
 
 (See Meetings of Creditors.) 
 
 petition by, to redeem property, 28. 
 
 to compound debts, 28. 
 
 for review of order, 27. 
 opposing discharge, to file specification in writing, 32. 
 costs awarded to petitioning, 34, 
 
 Debtor. (See Bankrupt). 
 
 Depositions. 
 
 how taken down, 22. 
 
 referee to note determination of objections to questions, 22. 
 
 costs for irrelevant, incompetent or immaterial, 22. 
 
 Depositories. 
 
 how moneys to be withdrawn from, 29. 
 to be furnished with a copy of rule, 29, 29. 
 
 Discharge. 
 
 what questions, on application for, may be referred to referee, 12 (3). 
 petition for, what to state, 31. 
 opposing, entry of appearance, 32. 
 specification when, to be filed, 32. 
 
 District. 
 
 in what district, petition to be heard, 6. 
 
 Dividend. 
 
 when not to be paid on claims of persons contingently liable for bankrupt, 
 
 21 (4). 
 
 Docket. 
 
 to be kept by clerk, 1. 
 
 what to contain, I. 
 
 open to public inspection, i. 
 
 Domlcil. 
 
 when hearing to be in district of, 6, 
 
 Equity Proceedings. 
 
 Equity rules to be followed, 37. 
 
 tower of court to modify application of equity rules, 37. 
 
INDEX TO GENERAL ORDERS IN BANKRUPTCY. 577 
 
 [The figures refer to the number of the rules.] 
 Exemptions. 
 
 trustee to report as to, 17. 
 exceptions to, 17. 
 where argued, 17. 
 where determined, 17. 
 
 Expenses. 
 
 officers may require indemnity for, 10. 
 
 to be repaid to person advancing moneys for, 10, 
 
 of marshal, account of, 19. 
 
 of referee, account of, 26. 
 
 of clerk of referee, account of, 26. 
 
 Fees, (See Compensation). 
 
 when clerk to receive extra for copies, 35 (l). 
 not to include expenses, 35. 
 
 when bankrupt not required to deposit, how pai4, 35 (4). 
 subsequent payment by bankrupt, 35 (4). 
 
 FlUng. 
 
 time of to be endorsed on papers, 2. 
 of papers after reference, where, 20. 
 
 Forms. 
 
 official to be used, 38. 
 
 Imprisonment. (See Arrest). 
 
 Indemnity. 
 
 for expenses, when to be furnished to officers, 10, 
 
 Injunctions. 
 
 against courts or officers, to be granted only by judge, 12 (3). 
 on application for, what matters referable to referee, I2 (3), 
 
 Interest. 
 
 when computation of, unnecessary, 21 (i). 
 
 Inventory. 
 
 to be taken by trustee, 17. 
 
 Judge. 
 
 to fix time and place for referees to act, 12 {2). 
 
 may refer to referees to ascertain and report facts on applications for die- 
 charge, 12 (3). 
 on application to approve compositions, 12 (3). 
 on application to enjoin officers, 12 (3). 
 power of approval of choice of trustee, 13. 
 
 NATL. BANKRUPTCY LAW — 37 
 
578 INDEX TO GENERAL ORDERS IN BANKRUPTCY. 
 
 [The figures refer to the number of the rules.] 
 Jurisdiction. 
 
 in what district, when several petitions filed, 6. 
 
 Letter of Attorney. 
 
 how execution proved, 21 (s). 
 by whom executed, 21 (5). 
 
 Lien. 
 
 redeeming property from, 28. 
 
 Marshal. 
 
 may require indemnity for expenses, 10. 
 accounts of, 19. 
 
 Meetings of Creditors. 
 
 when may be dispensed with, 15. 
 special, when called, 25, 
 
 Moneys on Deposit. 
 
 how withdrawn, 29. 
 
 Mortgage. 
 
 redeeming property from, 28. 
 
 Notice. 
 
 when service of on attorney is sufficient, 4, 
 
 to bankrupt to file schedule, 9. 
 
 expense of publishing or mailing, indemnity, 10. 
 
 of appointment of trustee, contents, 16. 
 
 to creditors, where to be addressed, 21 (2). 
 
 to original claimant, if assignment is filed, 2t (3). 
 
 of re-examination of claim, how and when given, 21 (6). 
 
 mode in which given, to be recited in the order, 23. 
 
 of petition for authority to redeem property, 28. 
 
 to compound debts, 28. 
 to creditor, of bankrupt's application for release from arrest, 3a 
 
 Orders. 
 
 when to contain attorney's name, 4. 
 service of on attorney, when sufficient, 4. 
 bankrupt subject to orders of court, 12 (l). 
 of referee, what to recite, 23. 
 
 Papers. 
 
 time of filing to be indorsed, 2. 
 
 to be indorsed, 4. 
 
 after reference, where filed, 20. 
 
INDEX TO GENERAL ORDERS IN BANKRUPTCY. 579 
 
 [The figures refer to the number of the rules.] 
 Parties. {See Attorney, Bankrupt, Creditor.) 
 may appear by attorr.ey, 4. 
 may examine witnesses in person, or by counsel, 23. 
 
 Partnership. 
 
 proceedings where two or more petitions filed against same, 6. 
 
 by same, 6. 
 right of any one member to resist a petition filed by his copartners, 8. 
 duty of members of, to file schedule and inventory, if adjudged bankrupt, 8. 
 proof of debts by, what to state, 21 (i). 
 powers of attorney to represent, what to state, 21 (5). 
 assignments by, what to state, 21 (6). 
 
 Payment of Moneys on Deposit. 
 
 only by check or warrant properly countersigned, 29. 
 
 Petition, 
 
 docket to show date of filing, I. 
 
 frame of, 4. 
 
 abbreviations or interlineations in, 5. 
 
 when two or more are filed against same individual, hearing to be in district 
 
 of domicil of bankrupt, 6. 
 amending by alleging earlier act of bankruptcy, 6. 
 when two or more filed against same partnership, which first heard, 6. 
 proceedings upon, when stayed, 6. 
 
 when two or more filed by members of same partnership, 6. 
 priority of petition alleging earliest act of bankruptcy, 7. 
 proceedings upon, several, when consolidated, 7. 
 when subsequent petitions to have no hearing, 7. 
 right of any partner to resist petition of copartners, 8. 
 amendment of, 11. 
 for review, where filed, 27. 
 
 for authority to redeem property or compound debts, 28. 
 for discharge, 31. 
 
 Pledge. 
 
 redeeming, 28. 
 Power of Attorney. {See Letter of Attorney.) 
 Proceedings. 
 
 what memorandum of to be in docket, I. 
 conducted in person or by attorney, 4. 
 in equity, governed by equity rules, 37. 
 at law, how governed, 37. 
 
580 INDEX TO GENERAL ORPERS IN BANKRUPTCY. 
 
 [The figures refer to the number of the rules.] 
 Proeess. (See Summons, Subpoenas.) 
 whence to issue, 3. 
 to be sealed and tested, 3. 
 
 blanks with seal and signature to be furnished to referees, 3. 
 time of return of, specified in equity rules may be modified, 37. 
 
 Proof of Claims. 
 
 after reference, where filed, 20. 
 
 to be entitled, 21 (i). 
 
 contents of, 21 (i). 
 
 by member of partnership, what to state, 21 (l). 
 
 by agent, what to state. 21 (i). 
 
 of corporation, by what officer, 21 (i). 
 
 existing in open account, what to state, 21 (i). 
 
 omissions which prevent claim of interest, 21 (l). 
 
 averments as to notes and judgments, 21 (i). 
 
 received by trustee to be delivered to referee, 21 (l). 
 
 address of creditors who have made, 21 (2). 
 
 which have been assigned, before proof, 21 (3). 
 
 proof of assignment of proved claims, notice, 21 (3). 
 
 of persons contingently liable for bankrupt, 21 (4). 
 
 re-examination of, 21 (6). 
 
 expunging on re-examination, 21 (6). 
 
 names of creditors who have made, to be transmitted to clerk, 24. 
 
 Receiver. 
 
 may petition for sale of perishable property, 18. 
 
 Redemption of Property. 
 
 petition for, 28. 
 
 Referee. 
 
 transmission of certified copy of records, i. 
 
 to endorse on papers time of filing and statement of character, 2, 
 
 may apply to clerks for blank process signed and under seal, 3. 
 
 may require indemnity for expenses, 10. 
 
 duties of, 12. 
 
 protection of bankrupt by, 12 (i). 
 
 all proceedings to be before, except, 12 (1). 
 
 place and time for performing duties, 12 (2). 
 
 limited powers of, with reference to applications for discharge, approval of 
 
 compositions, etc., 12 (3). 
 power of approval of choice of trustee, 13. 
 to give to trustee notice of appointment, 16. 
 may hear argument of exceptions to exemptions set off by trustees, 17. 
 
INDEX TO GENERAL ORDERS IN BANKRUPTCY. $81 
 
 [The figures refer to the number of the rules.] 
 Beferee — (Continued). 
 
 may require trustee to show cause "why he should not be removed, 17. 
 to audit trustee's accounts, 17. 
 
 to give notice if assignment of proved claimed is filed, 21 (3). 
 testimony before, how taken, 22. 
 
 power to determine objections to questions asked on examination of wit- 
 ness, 22. 
 orders of, what to recite, 23. 
 to transmit to clerk list of proved claims, 24. 
 expenses of, to be accounted for, 26. 
 clerk of, expenses of, 26, 
 orders of, how reviewed, 27. 
 
 duties of, when application for review is made, 27. 
 when to countersign checks, 29. 
 compensation of, 35 (2), 35 (4). 
 
 (See Compensation, Fees.) 
 imprisoned debtor to be produced before, 30. 
 
 Review. 
 
 of orders of referee, how, 27. 
 
 Roles. 
 
 to take effect January 2, i8gg. Preamble. 
 
 proceedings before that date, pursuant to bankruptcy act or rules of 1867, 
 or local rules, validated. Preamble. 
 
 Sales. 
 
 how made, 18. 
 
 when private sale allowed, 18 (2). 
 
 how conducted, 18 (2). 
 
 of perishable property, 18 (3). 
 
 Schedules. 
 
 to be printed or written, 5. 
 abbreviations or interlineations in, 5. 
 when petitioning creditor to file, 9. 
 how enforced from bankrupt, 9. 
 amendment of, 11. 
 
 Specifications. 
 
 against allowance of discharge or approval of composition, 32. 
 
 Stay. 
 
 of proceedings on petitions, when more than one is filed, 6. 
 
582 INDEX TO GENERAL ORDERS IN BANKRUPTCY. 
 
 [The fiifures refer to the number of the rules.] 
 Subpoana. (See Process, Summons.) 
 
 to be under seal, to be tested by clerk, 3. 
 
 blanks signed and under seal to be furnished to referees, 3. 
 
 Summons. (See Process, Subpcena.) 
 
 seal to be affixed, to be tested by clerk, 3. 
 
 blanks signed and under seal, to be delivered to referees, 3. 
 
 Supreme Court of United States. 
 
 appeals to. 
 
 (See Appeals). 
 Testimony. 
 
 how taken, 22. 
 
 production of bankrupt under arrest, to give, 30. 
 
 Transfer. 
 
 of jurisdiction from one district to another, 6. 
 
 Travelling. 
 
 expenses of, indemnity, 10. 
 referee in, 26. 
 
 Trustee. 
 
 appointment of, subject to approval, 13. 
 
 removable only by judge, 13. 
 
 no official or general trustee to be appointed, 14. 
 
 when none to be appointed, 15. 
 
 notice of appointment of, contents, 16. 
 
 to notify referee of acceptance or rejection of trusts, 16. 
 
 duties of, 17. 
 
 to take inventory, 17. 
 
 to report to court exemptions, 17. 
 
 removable for failure to file reports, etc., 17. 
 
 accounts of, to be audited by referee, 17. 
 
 may petition for sale of perishable property, 18 (3). 
 
 to deliver to referee all proofs of debts, 21 (l). 
 
 choice of, to fill vacancy, 25. 
 
 petition by for review of order, 27. 
 
 petition by to compound debts, 28. 
 
 check of, to be countersigned, 29. 
 
 to keep separate book for entry of checks against deposits, 29. 
 
 application of to arbitrate or compound. 33. 
 
 compensation of, 35 (3), 35 (4). 
 
 Verification. 
 
 of amendments, 11. 
 
 Witnesses. 
 
 expense of procuring attendance, indemnity, lo. 
 
PREFATORY NOTE 
 
 ANNOTATED EDITION OF THE OFFICIAL 
 FORMS IN BANKRUPTCY. 
 
 The purpose of the Annotations to the Official Forms which are 
 given in this edition, is to furnish to the practitioner a means of ready 
 reference to the sections of the Bankruptcy Act and to the Rules or 
 General Orders in Bankruptcy affecting the proceding for which the 
 form is prepared. As a rule no comment is made, the forms being 
 self-explanatory. The two abbreviations used are : B. A. for Bank- 
 ruptcy Act (July ist, 1898) and B. R. for Bankruptcy Rules (a popular 
 synonym for " The General Orders in Bankruptcy prescribed 
 November 28th, 1898.") By turning to any of the sections of the act 
 or to any of the rules to which reference is made, exhaustive discus- 
 sion of the questions arising will be found, besides numerous cross- 
 references. WM. MILLER COLLIER. 
 
 Auburn, N. Y., December 26th, 1898. 
 
 [S83] 
 
FORMS IN BANKRUPTCY. 
 
 [N. B. — Oaths required by the act, except upon hearings in court, 
 may be administered by referees and by officers authorized to 
 administer oaths in proceedings before the courts of the United 
 States, or under the laws of the State where the same are to be 
 taken. Bankrupt Act of 1898, c. 4, § 20.] 
 
 [Form No. 1.] 
 
 Debtor's Petition.^ 
 
 To the Honorable , 
 
 Judge of the District Court of the United States 
 
 for the .... District of : 
 
 The petition of , of , in the county of , 
 
 and district and State of , [state occupatioti], respect- 
 fully represents : 
 
 That he has had his principal place of business [or has resided, or 
 has had his domicil] for the greater portion of six months next 
 
 immediately preceding the filing of this petition at , within said 
 
 judicial district; ^ that he owes debts which he is unable to pay in 
 full ; that he is willing to surrender all his property for the benefit of 
 his creditors except such as is exempt by law, and desires to obtain 
 the benefit of the acts of Congress relating to bankruptcy. 
 
 That the schedule ' hereto annexed marked A, and verified by 
 your petitioner'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 acts : 
 
 «B. A. §§4, 59a;B. R. No. V. 
 •B. A.§2(i). 
 » B. A. § ^a (8). 
 
$86 FORMS IN BANKRUPTCY. 
 
 That the schedule hereto annexed, marked B, and verified by your 
 petitioner's oath, contains an accurate inventory of all his property, 
 both real and personal, and such further statements concerning said 
 property as are required by the provisions of said acts : ^ 
 
 Wherefore your petitioner prays that he may be adjudged ^ by the 
 court to be a bankrupt within the purview of said acts. 
 
 , Attorney. 
 
 United States of America, District of , ss : 
 
 I, , the petitioning debtor mentioned and described 
 
 in the foregoing petition, do hereby make solemn oath that the 
 
 statements contained therein are true according to the best of my 
 
 knowledge, information, and belief. 
 
 , Petitioner. 
 
 Subscribed and sworn to before me this .... day of A D 
 
 i8.... 
 
 {Official character.) 
 
 > B. A. § ^a (8). 
 A. § ifilf. 
 
FORMS IN BANKRUPTCY. 
 
 587 
 
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 Taxes and debts due and 
 owing to the United 
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 Taxes due and owing to 
 
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 Wages- due workmen, 
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 an amount not exceed- 
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 within three months 
 before filing the peti- 
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FORMS IN BANKRUPTCY. 
 
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 FORMS IN BANKRUPTCY. 
 
 
 
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FORMS IN BANKRUPTCY. 
 
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592 
 
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FORMS IN BANKRUPTCY. 
 
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 ■AT. BANKRUPTCY LAW — 38 
 
594 
 
 FORMS IN BANKRUPTCY. 
 
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FORMS IN BANKRUPTCY. 
 
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596 
 
 FORMS IN BANKRUPTCY. 
 
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FORMS IN BANKRUPTCY. 
 
 Schedule B. (6)^ 
 
 597 
 
 BOOKS, PAPERS, DEEDS, AND WRITINGS RELATING TO BANKRUPT'S BUSINESS 
 
 AND ESTATE. (2) 
 
 The following is a true list of all books, papers, deeds, and writings relating 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 cus- 
 tody of any person in trust for me, or for my use, benefit, or advantage; and also of all 
 others which iiave been heretofore, at any time, in my possession, 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. 
 
 Books. 
 
 Deedi. 
 
 Papen. 
 
 ., Pttitioner. 
 
 Oath to Schedule B. 
 
 United States of America, District of , ss : 
 
 On this day of A. D. i8 .., before me personally 
 
 came ■ . . , the person mentioned in and who subscribed to 
 
 the foregoing schedule, and who, being by me first duly sworn, did 
 declare the said schedule to be a statement of all his estate, both real 
 and personal, in accordance with the acts of Congress relating to 
 bankruptcy. 
 
 [Official character. 1 
 
 «B. A., §7a(8); B. R. No. V. 
 »B. A., §700(1). 
 
598 
 
 FORMS IN BANKRUPTCY. 
 
 Summary of Debts and Assets. 
 
 [From the statements of the bankrupt ia Schedule A and B.) 
 
 Schedule A....... 
 
 Schedule A.., 
 Schedule A.. 
 Schedule A... 
 
 Schedule A... 
 
 1 (1) Taxes and debts due United States 
 
 1 (2> Taxes due States, counties, districts and municipalities.. 
 1 (3) Wages 
 
 1 (4) Other debts preferred by law, 
 
 2 Secured claims 
 
 Unsecured claims. 
 
 Schedule B 1 
 
 Schedule B 2-a 
 
 i; 2-h 
 
 Notes and bills which ought to be paid by other parties 
 
 thereto. 
 
 Accommodation paper. 
 
 Schedule A, total , 
 
 Real estate.... 
 
 Schedule B.. 
 
 Schedule B.. 
 Schedule B.., 
 Schedule B... 
 
 Cash on hand „ 
 
 Bills, promissory notes, and securities . 
 
 Stock m trade _ 
 
 Household goods, etc.. 
 
 Books, printe and pictures " 
 
 - i' Horses, cows, and other animals , 
 
 2-s Carriages and other vehicles 
 
 2-h Farming stock and implements 
 
 2-i Shipping and shares in vessels , 
 
 2-k Machinery, tools, etc , 
 
 2-1 Patents, copyrights, and trade-marks 
 
 2-m Other personal property 
 
 3-a Debts due on open accounts 
 
 3-b Stocks, negotiable bonds, etc „ 
 
 3-c Policies of msurance _ 
 
 Unliquidated claims, 
 
 Deposits of money in banks and elsewhere .... 
 Property in reveraion, remainder, trust, etc-. 
 
 Property cliUmed to he excepted 
 
 Books, deeds, and papers _ 
 
 Schedule B, total...«. «- 
 
 [Form No. 2.] 
 
 Partnership Petition.^ 
 
 To the Honorable , 
 
 Judge of the District 2 Court of the United States 
 
 for the District of : 
 
 The petition of respectfully represents: 
 
 That your petitioners and have been partners under 
 
 the firm name of having their principal place of business 
 
 ^t , in the county of , and district and State of , for 
 
 the greater portion of the six months next immediately preceding 
 the filing of this petition ;3 that the said partners owe debts which 
 they are unable to pay in full; that your petitioners are willing to 
 surrender all their property for the benefit of their creditors, except 
 
 ' B. A. §§ 5 and 59; B. R. Nos. VI and VIII. 
 'n.A.% 5<r. 
 ' B. A. § 2 (i). 
 
FORMS IN BANKRUPTCY. 599 
 
 such as is exempt by law, and desire to obtain the benefit of the acts 
 of Congress relating to bankruptcy. 
 
 That the schedule hereto annexed,^ marked A, and verified by 
 
 oath, contains a full and true statement of all the debts of 
 
 said partners,^ and, as far as possible, the names and places of resi- 
 dence of their creditors, and such further statements concerning 
 said debts as are required by the provisions of said acts. 
 
 That the schedule hereto annexed, marked B, verified by .... 
 oath, contains an accurate inventory of all the property, real and 
 personal, of said partners, and such further statements concerning 
 said property as are required by the provisions of said acts. 
 
 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 residence of his creditors, and such further 
 statements concerning said debts as are required by the provisions 
 of said acts; and that the schedule hereto annexed, marked D, veri- 
 fied by his oath, contains an accurate inventory of all his individual 
 property, real and personal, and such further statements concerning 
 said property as are required by the provisions of said acts. 
 
 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 residence of his creditors, and such further 
 statements concerning said debts as are required by the provisions 
 of said acts ; and that the schedule hereto annexed, marked F, veri- 
 fied by his oath, contains an accurate inventory of all his individual 
 property, real and personal, and such further statements concerning 
 said property as are required by the provisions of said acts. 
 
 And said further states that the schedule hereto 
 
 annexed, marked G, 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 residence of his creditors, and such further 
 statements concerning said debts as are required by the provisions 
 of said acts; and that the schedule hereto annexed, marked H, 
 verified by his oath, contains an accurate inventory of all his indi- 
 vidual property, real and personal, and such further statements con- 
 
 'B. A., §7a(8). 
 
 * Compare B. A., § 5*, c, d, e and/. 
 
6oO FORMS IN BANKRUPTCY. 
 
 cerning said property as are required by the provisions of said 
 acts. 
 
 And said further states that the schedule hereto 
 
 annexed, marked J, 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 residence of his creditors, and such further 
 statements concerning said debts as are required by the provisions 
 of said acts, and that the schedule hereto annexed, marked K, veri- 
 fied by his oath, contains an accurate inventory of all his individual 
 property, real and personal, and such further statements concerning 
 said property as are required by the provisions of said acts. 
 
 Wherefore your petitioners pray that the said firm may be adjudged 
 by a decree of the court to be bankrupts within the purview of 
 said acts.^ 
 
 Petitumers. 
 , Attorney. 
 
 , the petitioning debtors mentioned and described in 
 
 the foregoing petition, do hereby make solemn oath that the state- 
 ments contained therein are true according to the best of their 
 knowledge, information, and belief. 
 
 Petitioners. 
 Subscribed and sworn to before me this .... day of 
 
 A. D. l8... 
 
 [Official character.^ 
 
 [Schedules to be annexed corresponding with schedules under 
 Form No. i.] 
 
 ' B. R., Nos. VI, VH, VIII. 
 
FORMS IN BANKRUPTCY. 6oi 
 
 [Form No, 3.] 
 
 Creditors' Petition.^ 
 
 To the Honorable , judge of the District Court of 
 
 the United States for the .... district of : 
 
 The petition of , of , and , of 
 
 and , of , respectfully shows : 
 
 That , of , has for the greater portion of six 
 
 months next preceding the date of filing this petition, had his prin- 
 cipal place of business, [or resided, or had his domicil]^ at , 
 
 in the county of and State and district aforesaid, and owes 
 
 debts to the amount of $i,ooo.^ 
 
 That your petitioners are creditors of said , 
 
 having provable claims amounting in the aggregate, in excess of 
 securities held by them, to the sum of $500.* That the nature and 
 amount of your petitioners' claims are as follows: 
 
 And your petitioners further represent that said is 
 
 insolvent,* and that within four months next preceding the date of 
 
 this petition the said committed an act of bankruptcy,* 
 
 in that he did heretofore, to wit, on the .... day of 
 
 Wherefore your petitioners pray that service of this petition, with 
 
 a subpoena,' may be made upon , as provided in the acts 
 
 of Congress relating to bankruptcy, and that he may be adjudged by 
 the court to be a bankrupt within the purview of said acts. 
 
 Petitioners. 
 • ••-•••» 
 
 AttornPf. 
 
 ■B. A. § 59 ; compare §§ 3 and 4« ; B. R. Nos. VI. and VII. 
 » B. R. § 2 (r). 
 •B. A. §4*. 
 
 *B. A. Ssg^- 
 'B. A. §3*. 
 •B. A. §3a. 
 ' B. A. § i8a ; Equity Rules 7, 11-16. 
 
602 FORMS IN BANKRUPTCY. 
 
 United States of America, District of , ss : 
 
 , , , being three of the 
 
 petitioners above named, do hereby make solemn oath that the 
 statements contained in the foregoing petition, subscribed by them, 
 are true. 
 
 Before me this .... day of 189 — . 
 
 (Official character.) 
 
 [Schedules to be annexed ^ corresponding with schedules under 
 Form No. i.] 
 
 [Form No. 4.] 
 
 Order to Show Cause upon Creditors' Petition. 
 
 In the District Court of the United States for the .... District 
 
 of 
 
 In the matter of 
 
 > In Bankruptcy. 
 
 Upon consideration of the petition of that 
 
 be declared a bankrupt, it is ordered, that the said 
 
 do appear at this court, as a court of bankruptcy, to be 
 
 holden at , in the district aforesaid, on the day of , 
 
 at . . o'clock in the noon, 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 
 
 writ of subpcena,^ be served ^ on said , by delivering 
 
 the same to him personally or by leaving the same at his last usual 
 place of abode in said district, at least five days* before the day 
 aforesaid. 
 
 ' B. A. § ^a (8); compare B. A. § 39a (2) and (6) ; and B. R. No. IX. 
 
 »B. A. §180. 
 
 • Equity Rules, 13-16. 
 
 «B. R. No. XXXVII. 
 
FORMS IN BANKRUPTCY. 603 
 
 Witness the Honorable , judge of the said court, and 
 
 the seal thereof, at in said district, on the ....dayof .. 
 
 , A. D. 18... 
 
 ( Seal of I 
 1 the court f 
 
 Clerk. 
 
 [Form NO. 5.] 
 
 Subpoena to Alleged Bankrupt. 
 
 United States of America District of 
 
 To , in said district, greeting : 
 
 For certain causes offered before the District Court of the United 
 
 States of America within and for the .... district of , as a 
 
 court of bankruptcy, we command and strictly enjoin you, laying all 
 other matters aside and notwithstanding any excuse, that you per- 
 sonally appear before our said District Court to be holden at 
 
 in said district, on the ^ day of , A. D. 189.., 
 
 to answer to a petition filed by in our said 
 
 court, praying that you may be adjudged a bankrupt ; and to do fur- 
 ther and receive that which our said District Court shall consider in 
 this behalf. And this you are in no wise to omit, under the pains 
 and penalties of what may befall thereon. 
 
 Witness the Honorable , judge of said court, and the 
 
 seal thereof, at , this .... day of A. D. 189 . , 
 
 i Seal of 13 
 
 1 the Court, f ' 
 
 Clerk. 
 
 ' B. R. No. III. 
 ' B. A. § i8fl. 
 » B. R. No. III. 
 
604 FORMS IN BANKRUPTCY. 
 
 [Form No. 6.] 
 
 Denial of Bankruptcy. 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 ► In Bankruptcy. 
 
 At , in said district, on the .... day of , A. D. i8 . , . 
 
 And now the said appears, and denies that he has 
 
 committed the act of bankruptcy ^ set forth in said petition, or that 
 he is insolvent,^ 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 
 inquired of by a jury].' 
 
 Subscribed and sworn to before me this .... day of , A. D. 
 
 i8... 
 
 [Official character.'l 
 
 'B. A. §3a. 
 
 »B. A. § 3 *, f and rf. 
 
 »B.A§I9a. 
 
FORMS IN BANKRUPTCY. 
 
 [Form No. 7.] 
 
 Order for Jury Trial. 
 
 In the District Court of the United States for the 
 
 of 
 
 605 
 
 District 
 
 In the matter of 
 
 In Bankruptcy. 
 
 At , in said district, on the .... day of , 18. .. 
 
 Upon the demand in writing^ filed by , alleged to be 
 
 a bankrupt, that the fact of the commission by him of an act of bank- 
 ruptcy, and the fact of his insolvency may be inquired of by a jury, 
 it is ordered, that said issue be submitted to a jury. 
 
 I Seal of 12 
 
 I the Court. J ■ . • • 
 
 [Form No. 8.] 
 
 Special Warrant to Marshal. 
 
 In the District Court of the United States for the 
 
 of 
 
 CUrk. 
 
 District 
 
 In the matter of 
 
 . In Bankruptcy. 
 
 To the marshal of said district or to either of his deputies, greeting: 
 Whereas 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, and said peti- 
 
 ' B. A. § iga. 
 »B. R. No. III. 
 
6o6 
 
 FORMS IN BANKRUPTCY. 
 
 tion is still pending;^ and whereas it satisfactorily appears that said 
 
 has committed an act of bankruptcy [or has neglected or is 
 
 neglecting, or is about to so neglect his property that it has thereby 
 deteriorated or is thereby deteriorating or is about thereby to deterio- 
 rate in value^], you are therefore authorized and required to seize 
 and take possession of all the estate, real and personal, of said 
 
 , and of all his deeds, books of account, and papers, 
 
 and to hold and keep the same safely subject to the further order 
 of the court. 
 
 Witness the Honorable , judge of the said court, 
 
 and the seal thereof, at , in said district, on the , ... of , 
 
 A. D. 189.. 
 
 J Seal of 13 3 
 
 1 the Court. ) > 
 
 Clerk. 
 
 RETURN BY MARSHAL THEREON. 
 
 By virtue of the within warrant, I have taken possession of the 
 
 estate of the within-named , and of all his deeds, books 
 
 of account, and papers which have come to my knowledge. 
 
 Marshal [or Deputy Marshal^ 
 
 Fees and Expenses} 
 
 1. Service of warrant 
 
 9. Necessary travel, at the rate of sU cents a mile each way. 
 
 3. Actual expenses (6) in custody of property and other services, as follows.. 
 
 [Here state the particulars.] 
 
 Marshal [or Deputy Marshal]. 
 
 > B. A. § 2 (3) and (5). 
 
 'B. A.. § 69: compare B. A. § y, 
 
 »B. R. No. III. 
 
 * Equity Rule No. 15. 
 
 'B. A. § 52; compare Collier on Bankruptcy, pages 263-266 
 
 «B. R. Nos. Xand XIX. 
 
FORMS IN BANKRUPTCY. 607 
 
 District of A. D. 18 . . 
 
 Personally appeared before me tne sam , and made 
 
 oath that the above expenses returned by him have been actually 
 incurred and paid by him, and are just and reasonable. 
 
 Referee in Bankruptcy?- 
 [Form No. 9.] 
 Bond of Petitioning Creditor.^ 
 
 Know all men by these presents: That we, , as 
 
 principal, and , as sureties, are held and firmly bound 
 
 unto , in the full and just sum of dollars, to be 
 
 paid to the said ,3 executors, administrators, or assigns, to 
 
 which payment, well and truly to be made, we bind ourselves, our heirs, 
 executors, and administrators, jointly and severally, by these presents. 
 
 Signed and sealed this . . . day of A. D., 189 . . 
 
 The condition of this obligation is such that whereas a petition in 
 bankruptcy has been filed in the district court of the United States 
 
 for the .... district of against the said , and the said 
 
 has applied to that court for a warrant to the marshal of said 
 
 district directing him to seize and hold the property of said 
 
 subject to the further orders of said district court. 
 
 Now, therefore, if such a warrant shall issue for the seizure of said 
 
 property, and if the said shall indemnify the said 
 
 for such damages as he shall sustain in the event such 
 
 seizure shall prove to have been wrongfully obtained, then the above 
 obligation to be void ; otherwise to remain in full force and virtue. 
 
 Sealed and delivered in 
 
 presence of — [seal.] 
 
 [seal.] 
 
 , [seal.] 
 
 Approved this .... day of A. D., 189 . . 
 
 District Judge. 
 
 ' There is nothing in the Bankruptcy Act nor in the rules (see Rule XIX) that 
 requires that this oath be taken only before the referee. Compare,B. A. § 20. 
 The marshal should obtain vouchers whenever obtainable. 
 
 » B. A. §§ 3« and 69. 
 
 'The name of the person against whom the involuntary petition has been 
 filed should be here inserted. 
 
6o8 FORMS IN BANKRUPTCY. 
 
 [Form No. 10.] 
 Bond to Marshal.^ 
 
 Know all men by these presents: That we, , as prin- 
 cipal, and as sureties, are held and firmly bound unto 
 
 , marshal of the United States for the district 
 
 of , in the full and just sum of dollars, to be paid to the 
 
 said , his executors, administrators, or assigns, to which 
 
 payment, well and truly to be made, we bind ourselves, our heirs, 
 executors, and administrators, jointly and severally, by these 
 presents. 
 
 Signed and sealed this .... day of , A. D. 189. .. 
 
 The condition of this obligation is such that whereas a petition in 
 bankruptcy has been filed in the district court of the United States 
 
 for the district of , against the said and 
 
 the said court has issued a warrant to the marshal of the United 
 States for said district, directing him to seize and hold property of 
 
 the said , subject to the further order of the court, and 
 
 the said property has been seized by said marshal as directed, 
 
 and the said district court, upon a petition of said has 
 
 ordered the said property to be released to him. 
 
 Now, therefore, if the said property shall be released^ accordingly 
 
 to the said , and the said , being adjudged 
 
 a bankrupt, shall turn over said property or pay the value thereof in 
 money to the trustee, then the above obligation to be void; other- 
 wise to remain in full force and virtue. 
 
 Sealed and delivered in the 
 
 presence of — [seal.] 
 
 [seal.] 
 
 [seal.] 
 
 Approved this day of , A. D. 189 .. . 
 
 District Judge. 
 
 ■ Compare B. A. g 69. 
 
FORMS IN BANKRUPTCY. 609 
 
 [Form No. 11.] 
 
 Abjudication that Debtor is not Bankrupt.* 
 
 In the District Court* of the United States for the District 
 
 of 
 
 In matter of 
 
 In Bankruptcy. 
 
 At , in said district, on day of , A. D. i8.., 
 
 ■before the Honorable , judge of the .... district 
 
 of 
 
 This cause came on to be heard at in said court, upon the 
 
 petition of that be adjudged a bankrupt within the 
 
 true intent and meaning of the acts of Congress relating to bank- 
 ruptcy, and [here state the proceedings, whether there was no opposition, 
 or, if opposed, state what proceedings were had\ 
 
 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 not proved ; and it is therefore 
 
 adjudged that said was not a bankrupt, and that said petition 
 
 be dismissed, with costs.* 
 
 Witness the Honorable judge of said court, and the 
 
 seal thereof, at , in said district, on the .... day of , 
 
 A. D. i8.. 
 
 J Seal of 1 
 
 ( the court, f ' ' 
 
 Clerk. 
 
 'B. A. §§ 3 and 4; B. A. § lid, e, /, g\ compare B. A. § 59</. 
 »B. A § 2 (i); B. A. § 32; compare B. R. Nos. VI and VII. 
 »B. R. No. IV. 
 *B. A. § 2 (18); B. R. No. XXXIV. 
 
 NAT. BANKRUPTCY LAW — 39 
 
6lO FORMS IN BANKRUPTCY. 
 
 [Form No. 12.] 
 
 Adjudication of Bankruptcy. ^ 
 
 In the District" Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 At , in said district, on the day of , A. D. 
 
 i8.., before the Honorable , judge of said court in 
 
 bankruptcy, the petition of that be 
 
 adjudged a bankrupt, within the true intent and meaning of the acts 
 of Congress relating to bankruptcy, having been heard and duly con- 
 sidered, the said is hereby declared and adjudged 
 
 bankrupt accordingly. 
 
 Witness the Honorable , judge of said court, and 
 
 the seal thereof, at , in said district, on the day of 
 
 , A. D. i8... 
 
 J Seal of I ' 
 
 } the court, f Clerk. 
 
 ' B. A. §§ 3 and 4; B. A. § i8</, «, /, g; compare B. A. § 591/. 
 » B. A. § 2 (i); B. A. § 32; compare B. R. Nos. VI and VII. 
 As to costs see B. R. No. XXXIV. 
 
FORMS IN BANKRUPTCY. 6ll 
 
 [Form No. 13.] 
 
 Appointment, Oath, and Report of Appraisers.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 . In Bankruptcy. 
 
 It is ordered that , of , of 
 
 , and , of , three disinterested persons, 
 
 be, and they are hereby, appointed appraisers to appraise the real 
 and personal property belonging to the estate of the said bankrupt 
 set out in the schedules now on file in this court, and report their 
 appraisal to the court, said appraisal to be made as soon as may be, 
 and the appraisers to be duly sworn. 
 
 Witness my hand this .... day of , A. D. i8. . 
 
 Referee in Bankruptcy. 
 
 District of , ss : 
 
 Personally appeared the within named and severally 
 
 made oath* that they will fully and fairly appraise the aforesaid real 
 and personal property according to their best skill and judgment. 
 
 Subscribed and sworn to before me this .... day of , A. D. 
 
 189-. 
 
 [Official character. '\ 
 
 • B. A. § 70*; B. R. No. XVII. 
 •B. A. §20. 
 
6l2 
 
 FORMS IN BANKRUPTCY. 
 
 We, the undersigned, having been notified that we were appointed 
 to estimate and appraise the real and personal property aforesaid, 
 have attended to the duties assigned us, and after a strict examina- 
 tion and careful inquiry, we do estimate and appraise the same as 
 follows : 
 
 Dollars. 
 
 Cents. 
 
 In witness whereof we hereunto set our hands, at , this 
 
 day of A. D. i8.. 
 
 [Form No. 14.] 
 Order of Reference.^ 
 
 In the District Court of the United States for the 
 
 of 
 
 District 
 
 In the matter of 
 
 Bankrupt . 
 
 ■ In Bankruptcy. 
 
 Whereas , of , in the county of and 
 
 district aforesaid, on the day of , A. D. i8.., was duly 
 
 adjudged a bankrupt upon a petition filed in this court by [or, 
 
 against] him on the day of, A. D. 1 89-, according to 
 
 the provisions of the acts of Congress relating to bankruptcy. 
 
 • B. A. § 220. 
 
FORMS IN BANKRUPTCY. 613 
 
 It is thereupon ordered, that said matter be referred to 
 
 , one of the referees in bankruptcy of this court, to take such 
 
 further proceedings therein as are required by said acts; and that the 
 
 said shall attend before said referee on the day 
 
 of at , and thenceforth shall submit to such orders as 
 
 may be made by said referee or by this court relating to said 
 
 bankruptcy. ^ 
 
 Witness the Honorable , judge of the said court, and 
 
 the seal thereof, at . , . in said district, on the .... day of , 
 
 A. D. 18... 
 
 I Seal of I 
 
 ■) the Court. J ' 
 
 Clerk. 
 [Form No. 15.] 
 Order of Reference in Judge's Absence.' 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 > In Bankruptcy. 
 
 Whereas on the ..,. day of , A. D. i8.., a petition was 
 
 filed to have of , in the county of and 
 
 district aforesaid, adjudged a bankrupt according to the provisions 
 of the acts of Congress relating to bankruptcy; and whereas the 
 judge of said court was absent from said district at the time of filing 
 said petition \or, in case of itwoluntary bankruptcy, on the next day 
 after the last day on which pleadings might have been filed, and none 
 have been filed by the bankrupt or any of his creditors], it is there- 
 upon ordered that the said matter be referred to , one 
 
 ' B. R. No. XII. 
 
 This order of reference is to be used only where an adjudication of bank- 
 Tuptcy has been made by the judge. 
 »B. A. § i8/and^. 
 
6l4 FORMS IN BANKRUPTCY, 
 
 of the referees in bankruptcy of this court, to consider said petition 
 and take such proceedings therein as are required by said acts; and 
 
 that the said shall attend before said referee on the 
 
 ....day of , A. D. 189.., at 1 
 
 Witness my hand and the seal of the said court, at , in said 
 
 district, on the day of , A. D. 189.. 
 
 j Seal of I 
 ■) the Court, f 
 
 Clerk. 
 [Form No. 16.] 
 Referee's Oath of Office.* 
 
 I^ , do solemnly swear that I will administer justice 
 
 without respect to persons, and do equal right to the poor and to the 
 rich, and that I will faithfully and impartially discharge and perform 
 all the duties incumbent on me as referee in bankruptcy, according 
 to the best of my abilities and understanding, agreeably to the Con- 
 stitution and laws of the United States. So help me God. 
 
 Subscribed and sworn to before me this .... day of A. D. 
 
 18.. 
 
 District Judge. 
 
 [Form No. 17.] 
 Bond of Referee.3 
 
 Know all men by these presents: That we, of 
 
 , as principal, and of and 
 
 of , as sureties, 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, our 
 heirs, executors, and administrators, jointly and severally, by these 
 presents. 
 
 Signed and sealed this day of , A. D. 189. . 
 
 'B. R. No. XII. 
 'B. A. § 36. 
 »B. A. § 50. 
 
FORMS IN BANKRUPTCY. 615 
 
 The condition of this obligation is such that whereas the said 
 
 , has been on the ... day of , A. D. 18.., 
 
 appointed by the Honorable , judge of the district 
 
 court of the United States for the district of a referee 
 
 in bankruptcy in and fot the county of , in said district, under 
 
 the acts of Congress relating to bankruptcy. 
 
 Now, therefore, if the said shall well and faithfully 
 
 discharge and perform all the duties pertaining to the said office of 
 referee in bankruptcy, then this obligation to be void; otherwise to 
 remain in full force and virtue. 
 
 Signed and sealed 
 in the presence of 
 
 [LS.] 
 
 [L.L.] 
 
 • ■•....•.••. [_L. S. J 
 
 Approved this day of A. D. 189 . . 
 
 District Judge. 
 
 [FopmNo. 18.] 
 
 Notice 1 of First Meeting of Cpeditors." 
 
 In the District Court of the United States for the District 
 
 of In Bankruptcy. 
 
 In the matter of 
 
 Bankrupt. 
 
 ■ In Bankruptcy. 
 
 To the creditors of of , in the county of , 
 
 and district aforesaid, a bankrupt. 
 Notice is hereby given that on the .... day of . . . ., A. D. j8. ., 
 
 the said was duly adjudicated bankrupt; and that the 
 
 first meeting of his creditors will be held at in , on the 
 
 ' B. A. § 58*; B. R. No. XXI (2). 
 » B. A. § 55»i * and '• 
 
6i6 
 
 FORMS IN BANKRUPTCY. 
 
 day of . A. D. i8 . ., at o'clock in the noon, 
 
 at which time the said creditors may attend, prove their claims, ^ 
 appoint a trustee,* examine the hankrupt,^ and transact such other 
 business as may properly come before said meeting. 
 
 Referee in Bankruptcy. 
 
 ., i8. 
 
 [Form No. 19.] 
 
 List of Debts Proved at First Meeting.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 ■ In Bankruptcy. 
 
 At in said district, on the .... day of A. D. i8. ., 
 
 before , referee in bankruptcy. 
 
 The following is a list of creditors who have this day proved their 
 debts: 
 
 Names of creditors. 
 
 Residence. 
 
 Debts proved. 
 
 
 
 DoUs. 
 
 Cts. 
 
 Referee in Bankruptcy. 
 
 ' B. A. §§ 55*, 57. 
 
 «B. A. §§44. 2 (17); B. R. No. XIII. 
 
 »B. A. § 7a (i) and (9). 
 
 « Compare B. R. XXIV and B. A. § 42. 
 
FORMS IN BANKRUPTCY. 617 
 
 [Form No. 20.] 
 
 General Letter of Attorney in Faet^ when Creditor is not 
 Represented by Attorney at Law.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 ■ In Bankruptcy. 
 
 To 
 
 I, , of , in the county of and State of 
 
 , do hereby authorize you, or any one of you, to attend the 
 
 meeting or meetings of creditors of the bankrupt aforesaid at a court 
 of bankruptcy, wherever advertised or directed to be holden, on the 
 day and at the hour appointed and notified 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 meet- 
 ing or meetings, or any adjournment or adjournments thereof may 
 be held, and then and there from time to time, and as often as there 
 may be occasion, for me and in my name to vote for or against any 
 proposal or resolution that may be then submitted under the acts 
 of Congress relating to bankruptcy ; and in the choice of trustee or 
 trustees of the estate of the said bankrupt, and for me to assent to 
 such appointment of trustee; and with like powers to attend and 
 vote at any other meeting or meetings of creditors, or sitting or sit- 
 tings of the court, which may be held therein for any of the pur- 
 poses aforesaid; also to accept any composition proposed by said 
 bankrupt in satisfaction of his debts, and to receive payment of 
 dividends and of money due me under any composition, and for any 
 other purpose in my interest whatsoever, with full power of substi- 
 tution. 
 
 ' B. A. § I (g) ; B. R. No. XXI (5). 
 • B. A. § I (9) ; B. R. No. IV. 
 
6l8 FORMS IN BANKRUPTCY. 
 
 In witness whereof I have hereunto signed my name and affixed 
 
 my seal the day of , A. D. 189. . . 
 
 [LS.] 
 
 Signed, sealed, and delivered in presence of — 
 
 Acknowledged before me this .... day of , A. D. 189. . 
 
 ...... ...a.., 
 
 [Official character.']^ 
 
 [Form No. 21.] 
 Special Letter of Attorney in Fact.^ 
 
 In the matter of 
 
 Bankrupt . 
 
 "In Bankruptcy. 
 
 To 
 
 I hereby authorize you, o . 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 any adjourn- 
 ment 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 trustee or trustees of the estate of the said bankrupt. 
 
 [L.S.] 
 
 In witness whereof I have hereunto signed my name and affixed 
 
 my seal the day of , A. D. 189. . 
 
 Signed, sealed, and delivered in presence of — 
 
 Acknowledged before me this .... day of A. D. 18. . 
 
 ...... ....... 
 
 [Official character. Y 
 
 > B. A. § 20. 
 
 ' B. A. § I (9) ; B. R. No. XXI (5). 
 
FORMS IN BANKRUPTCY. 619 
 
 [Form No. 22.] 
 
 Appointment of Trustee by Creditors.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 - In Bankruptcy. 
 
 At , in said district, on the day of , A. D. i8. ., 
 
 before , referee in bankruptcy. 
 
 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'^'\, we, whose names are hereunder written, being 
 the majority in number and in amount of claims of the creditors of 
 the said bankrupt, whose claims have been allowed, and who are 
 
 present at this meeting,* do hereby appoint , of 
 
 in the county of and State of ,* to be the trustee. . of 
 
 the said bankrupt's estate and effects. 
 
 Signatures of creditors. 
 
 Residence of tlie same. 
 
 Amount of debt. 
 
 
 
 Dolls. 
 
 Cts. 
 
 Ordered that the above appointment of trustee . . be, and the same 
 is hereby approved.^ 
 
 Referee in Bankruptcy. 
 
 ' B. A. §§ 2 (17), 44; B. R. Nos. XIII, XIV and XV. 
 
 «B. A. §55. 
 
 » B. A. § 58*. 
 
 * B. A. § 56. 
 
 ' B. A. § 45. 
 
 •B. R. No. XIII; B.A. §2(17). 
 
620 FORMS IN BANKRUPTCY. 
 
 [Form No. 23.] 
 Appointment of Trustee by Referee.^ 
 
 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. i8. ., 
 
 before referee in bankruptcy. 
 
 This being the day appointed by the court for the first meeting of 
 creditors under the said bankruptcy, and of which due notice has 
 been given in the \here insert the name of the newspapers in which 
 notice was published'^ I, the undersigned referee of the said court ia 
 bankruptcy, sat at the time and place above mentioned, pursuant to 
 such notice, to take the proof of debts and for the choice of trustee 
 under the said bankruptcy ; and I do hereby certify that the credit- 
 ors whose claims had been allowed and were present,^ or duly repre- 
 sented, failed to make choice of a trustee of said bankrupt's estate, 
 
 and therefore I do hereby appoint , of , in the 
 
 county of and State of , as trustee of the same. 
 
 Referee in Bankruptcy. 
 
 ' B. A. §§ 2 (17), 44- 
 
 » Compare B. R. No. XV. 
 
FORMS IN BANKRUPTCY. 621 
 
 [Form No. 24.] 
 
 Notice to Trustee of His Appointment.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 ► In Bankruptcy. 
 
 Bankrupt . 
 
 To of , in the county of , and district 
 
 aforesaid : 
 
 I hereby notify you that you were duly appointed trustee \or one 
 of the trustees] of the estate of the above-named bankrupt at the 
 
 first meeting of the creditors, on the .... day of A. D. i8. ., 
 
 and I have approved said appointment. The penal sum of your 
 
 bond as such trustee has been fixed at dollars. ^ You are 
 
 required to notify me forthwith of your acceptance or rejection of 
 the trust. 3 
 
 Dated at the .... day of , A. D. i8 . . 
 
 Referee in Bankruptcy. 
 
 [Form No. 25.] 
 Bond of Trustee.* 
 
 Know all men by these presents : That we, , of , 
 
 as principal, and , of , and , of 
 
 , as sureties, are held and firmly bound unto the United States 
 
 of America in the sum of dollars, in lawful money of the 
 
 ' B. R. No. XVI. 
 
 ' Compare B. A. § 50*, c^m. 
 
 ' See B. A. § 50*. 
 
 * B. A. § 50*, c-m. 
 
 Although no form of acknowledgment or justification appears annexed to this 
 form, the absence must be deemed an oversight. See the provisions of B, A. § 
 serf, e, /, g. 
 
622 FORMS IN BANKRUPTCY. 
 
 United States, to be paid to the said United States, for which pay- 
 ment, well and truly to be made, we bind ourselves and our heirs, 
 executors, and administrators, jointly and severally, by these 
 presents. 
 
 Signed and sealed this day of , A. D. 189-. 
 
 The condition of this obligation is such, that whereas the above- 
 named was, on the day of , A. D. 189-, 
 
 appointed trustee in the case pending in bankruptcy in said court, 
 
 wherein is the bankrupt, and he, the said 
 
 , has accepted said trust with all the duties and obligations 
 
 pertaining thereunto: 
 
 Now, therefore, if the said , trustee as aforesaid, 
 
 shall obey such orders as said court may make in relation to said 
 trust, and shall faithfully and truly account for all the moneys, 
 assets, and effects of the estate of said bankrupt which shall come 
 into his hands and possession, and shall in all respects faithfully 
 perform all his official duties as said trustee, then this obligation to 
 be void; otherwise, to remain in full force and virtue. 
 
 Signed and sealed in 
 presence of — 
 
 , [seal.] 
 
 , [seal.] 
 
 [seal.] 
 
FORMS IN BANKRUPTCY. 623 
 
 [Form No. 26.] 
 Order Approving Trustee's Bond.^ 
 
 At a court of bankruptcy, held in and for the District of . . . ., 
 
 at , this day of , 189-. 
 
 Before , referee in bankruptcy, in the District Court 
 
 of the United States for the District of 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 It appearing to the Court , of , and in said 
 
 district, has been duly appointed trustee of the estate of the above- 
 named bankrupt, and has given a bond with sureties for the faithful 
 performance of his official duties, in the amount fixed by the creditors 
 
 [or by order of the court], to wit, in the sum of dollars, it is 
 
 ordered that the said bond be, and the same is hereby, approved. 
 
 Referee in Bankruptcy. 
 
 [Form No. 27.] 
 
 Order that No Trustee be Appointed.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 It appearing that the schedule of the bankrupt discloses no assets, 
 and that no creditor has appeared at the first meeting, and that the 
 
 ' B. A. § 50 b, c, d, I, f, g. 
 »B. R. No. XV. 
 
€24 FORMS IN BANKRUPTCY. 
 
 appointment of a trustee of the bankrupt's estate is not now desir- 
 able, it is hereby ordered that, until further order of the court, no 
 trustee be appointed and no other meeting of the creditors be called. 
 
 Referee in Bankrupt^. 
 
 [Form No. 28.] 
 
 Order for Examination of Bankrupt.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 <■ In Bankruptcy. 
 
 At , on the day of , A. D. i8.. 
 
 Upon the application of , trustee of said bankrupt 
 
 \or creditor of said bankrupt], it is ordered that said bankrupt 
 
 attend before , one of the referees in bankruptcy of 
 
 this court, at on the .... day of , at . . o'clock in the 
 
 .... noon, to submit to examination under the acts of Congress 
 relating to bankruptcy, and that a copy of this order be delivered 
 to him, the said bankrupt, forthwith. 
 
 Referee in Bankruptcy. 
 
 ' B. A. §§ ^a (i) and (9); 21a; compare 12a; B. R. No. XII (i). 
 
FORMS IN BANKRUPTCY. 625 
 
 [Form No. 29.] 
 
 Examination of Bankrupt or Witness.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the Blatter of 
 
 Bankrupt 
 
 In Bankruptcy. 
 
 At , in said district, on the day of A. D. i» . . , 
 
 before , one of the referees in bankruptcy of said court. 
 
 , of , in the county of , and State of 
 
 , being duly sworn and examined ^ at the time and place above 
 
 mentioned, upon his oath says: \Here insert substance of examination 
 ofparty.\ 
 
 Referee in Bankruptcy. 
 
 [Form No. 30.] 
 Summons to Witness. ^ 
 
 To 
 
 Whereas , of , in the county of , and 
 
 State of has been duly adjudged bankrupt, and the proceed- 
 ing in bankruptcy is pending in the District Court of the United 
 States for the District of , 
 
 These are to require you, to whom this summons is directed, 
 
 personally to be and appear before , one of the referees 
 
 in bankruptcy of the said court, at on the day of , 
 
 at . . o'clock in the noon, then and there to be examined in 
 
 relation to said bankruptcy. 
 
 > B. A. §§ ^a (I) and (9), 2i«; B. R. No. XXII; B. A. § 21. 
 ' Compare B. A. § 41a (i) and (4). 
 'B. A. §210; B. R. No. III. 
 
 NAT. BANKRUPTCY LAW — 40 
 
626 FORMS IN BANKRUPTCY. 
 
 Witness the Honorable judge of said court, and the seal 
 
 thereof at , this day of , A. D. 189-. 
 
 Clerk?- 
 Return of Summons to Witness. 
 
 In the District Court of the United Stotes for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 In Bankruptcy. 
 
 On this day of , A. D. 18.., before me came 
 
 , of , in the county of and State of , and 
 
 makes oath, and says that he did, on , the .... day of , 
 
 A. D. 189-, personally serve of in the county 
 
 of and State of ,2 with a true copy of the summons 
 
 hereto annexed, by delivering the same to him; and he further 
 makes oath and says that he is not interested in the proceeding in 
 bankruptcy named in said summons. 
 
 Subscribed and sworn to before me this day of , A. 
 
 D. 18.. 
 
 3 
 
 ' The summons should not only be signed by the clerk, but the seal of the 
 court should be affixed. See B. R. No. III. 
 
 » Compare Collier on Bankruptcy, page 207 ; title " Summons Runs Into Other 
 Districts." 
 
 » B. A. § 20. 
 
FORMS IN BANKRUPTCY. 627 
 
 [FoFm No. 31.] 
 
 Proof of Unsecured Debt.* 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 ^In Bankruptcy. 
 
 At , in said district of , on the .... day of , 
 
 A. D. 189-, came , of ^in the county of , 
 
 in said district of , and made oath, and says that , 
 
 the person by \or against] whom a petition for adjudication of bank- 
 ruptcy has been filed, was at and before the filing of said petition, 
 and still is, justly and truly indebted to said deponent in the sum of 
 dollars; that the consideration of said debt is as follows: . . , 
 
 that no part of said debt has been paid [except 
 
 ]; 
 
 that there are no set-offs or counterclaims to the same [except 
 
 ]; 
 
 and that deponent has not, nor has any person by his order, or to 
 his knowledge or belief, for his use, had or received any manner of 
 security for said debt whatever. 
 
 Creditor. 
 
 Subscribed and sworn to before me this day of , A. 
 
 D. 18., 
 
 2 
 • ••■' ? 
 
 [Official character l\ 
 
 ' B. A. § 57a, *, e, etc. ; B. R. No. XXI (i). 
 
 ' B. A. § 20. If a claim is founded upon an instrument in writing, the original 
 should be filed with the proof. B. A. § 57^. Depositions to prove debts 
 existing in open account should contain an averment that no note has been 
 received for such account, nor any judgment rendered thereon. Rule XXI (i). 
 
628 FORMS IN BANKRUPTCY. 
 
 [Form No. 32.] 
 Proof of Secured Debt.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 At , in said district of , on the .... day of y 
 
 A. D. 1^9-, came " , of , in the county of , 
 
 in said district of , and made oath, and says that , 
 
 the person by \or against] whom a petition for adjudication of bank- 
 ruptcy has been filed, was at and before the filing of said petition, 
 and still is, justly and truly indebted to said deponent, in the sum 
 
 of dollars; that the consideration of said debt is as follows 
 
 ; that no part of said debt has been paid 
 
 [except ] ; that there are no set-offs or counterclaims 
 
 to the same [except ]; and that the only securities 
 
 held by this deponent for said debt are the following: 
 
 Creditor. 
 
 Subscribed and sworn to before me this day of A. 
 
 D 
 
 2 
 ••••••) 
 
 [Official character. '\ 
 
 • B. A. § 57; B. R. No. XXI (i). 
 ' B. A. § zo. See notes to Form 31. 
 
FORMS IN BANKRUPTCY. 629 
 
 [Form No. 33.] 
 Proof of Debt Due Corporation.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 'In xiankruptcy. 
 
 At in said district of on the .... day of , 
 
 A. D. 189-, came , of , in the county of , 
 
 and State of , and made oath and says that he is * 
 
 of the , a corporation incorporated by and under the 
 
 laws of the State of , and carrying on business at , 
 
 in the county of and State of , and that he is duly 
 
 authorized to make this proof, and says that the said , 
 
 the person by \or against] whom a petition for adjudication of bank- 
 ruptcy has been filed, was at and before the filing of the said peti- 
 tion, and still is justly and truly indebted to said corporation in the 
 
 sum of dollars ; that the consideration of said debt is as 
 
 follows: 
 
 ..•••............•...•...«.•........•.......,,,....,,,., 
 
 that no part of said debt has been paid [except 
 
 ] ; that there are no set-offs or counterclaims to 
 
 the same [except ] ; and that said 
 
 corporation has not, nor has any person by its order, or to the 
 knowledge or belief of said depionent, for its use, had or received 
 any manner of security for said debt whatever. 
 
 of said Corporation. 
 
 Subscribed and sworn to before me this day of , A. 
 
 D. 18.. 
 
 3 
 
 [Official character. "] 
 
 ' B. A. § 57; B. R. No. XXI (I). 
 
 ' Rule XXI requires that proof of the claim of a cprporation must be made by 
 the treasurer, or if there is no treasurer, then by the person whose duties most 
 nearly correspond to those of a treasurer. 
 
 * B. A. § 20. See notes to Form 31. 
 
630 FORMS IN BANKRUPTCY. 
 
 [Form No. 34.] 
 
 Proof of Debt by Partnership.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 - In Bankruptcy. 
 
 Bankrupt , 
 
 At , in said district of , on the .... day of , 
 
 A. D. 189-, came , of , in the county of , 
 
 in said district of , and made oath and says that he is one of 
 
 the firm of , consisting of himself and , 
 
 of , in the county of and State of ; that the 
 
 said , the person by \or against] whom a petition for 
 
 adjudication of bankruptcy has been filed, was at and before the 
 filing of said petition, and still is, justly and truly indebted to this 
 deponent's said firm in the sum of dollars; that the con- 
 sideration of said debt is as follows: 
 
 •"•* ... ...... 
 
 that no part of said debt has been paid [except ] ; that 
 
 there are no set-offs or counterclaims to the same [except 
 
 ] ; and this deponent has not, nor has his said firm, nor has any 
 
 person by their order, or to this deponent's knowledge or belief, for 
 their use, had or recived any manner of security for said debt 
 whatever. 
 
 Creditor. 
 
 Subscribed and sworn to before me this .... day of , A. 
 
 D. 18.. 
 
 2 
 •> 
 
 [Official character. "l 
 
 » B. A. § 57; B. R. No. XXI (I). 
 * B. A. § 20. See notes to Form 31. 
 
FORMS IN BANKRUPTCY. 63 1 
 
 [Form No. 35.] 
 Proof of Debt by Agent op Attorney.* 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 1 
 ► In Bankruptcy. 
 
 At in said district of on the day of 
 
 A. D. 189-, came of , in the county of , 
 
 and State of attorney \or authorized agent] of , in the 
 
 county of , and State of , and made oath and says that 
 
 , the person by \or against] whom a petition for adjudi- 
 cation of bankruptcy has been filed, was at and before the filing of 
 
 said petition, and still is, justly and truly indebted to the said 
 
 , in the sum of dollars ; that the consideration of said 
 
 debt is as follows:. 
 
 .•«•..•.>■..■-■.■■■.■..••.•■......••••••..........•,•,.•,,.•,., 
 
 that no part of said debt has been paid [except 
 
 * J» 
 
 and that this deponent has not, nor has any person by his order, or 
 
 to this deponent's knowledge or belief, for his use had or received 
 any manner of security for said debt whatever. And this deponent 
 further says, that this deposition can not be made by the claimant 
 in person because 
 
 and 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 unpaid 
 and unsatisfied. 
 
 Subscribed and sworn to before me this .... day of , A. 
 
 D. 18.. 
 
 2 
 • > 
 
 {Official ckaracier.'\ 
 
 • B. A. § 57; B. R. No. XXI (I) and (5). 
 *B. A. § 20. See notes to Form 31. 
 
632 FORMS IN BANKRUPTCY. 
 
 [Form No. 36.] 
 Proof of Secured Debt by Agent.* 
 
 lo the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 At , in said district of , on the . . , . day of , 
 
 A. D. 189-, came of in the county of , 
 
 and State of , attorney \or authorized agent] of , in 
 
 the county of , and State of , and made oath, and says 
 
 that , the person by \or against] whom a petition for 
 
 adjudication of bankruptcy has been filed, was, at and before the 
 filing of said petition, and still is, justly and truly indebted to the 
 said in the sum of dollars ; that the considera- 
 tion of said debt is as follows: 
 
 - J 
 
 that no part of said debt has been paid [except 
 
 ]; 
 
 that there are no set-offs or counterclaims to the same [except .... 
 
 ]; 
 
 and that the only securities held by said for said debt are the 
 
 following 
 
 and this deponent further says that this deposition can not be made 
 by the claimant in person because 
 
 and that he is duly authorized by his principal to make this deposi- 
 tion, and that it is within his knowledge that the aforesaid debt was 
 incurred as and for the consideration above stated. 
 
 Subscribed and sworn to before me this .... day of , A. 
 
 O. 18.. 
 
 [Official character.'\ 
 
 ' B. A. § 57; B. R. No. XXI (i) and (s). See notes to Fprm 31. 
 
FORMS IN BANKRUPTCY. 
 
 63J 
 
 [Form No. 37.] 
 Affidavit of Lost Bill, or Note.^ 
 
 In the District Court of the United States for the . 
 
 District 
 
 ot 
 
 In the matter of 
 
 Bankrupt 
 
 In Bankruptcy. 
 
 On this day of , A. D. 18.., at , came 
 
 of , in the county of and State of , and 
 
 makes oath and says that the bill of exchange [or note], the particu- 
 lars whereof are underwritten, has been lost under the following 
 circumstances, to wit, 
 
 and that he, this deponent, has not been able to find the same ; 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 belief, negotiated the said bill [or note], nor in any 
 manner parted with or assigned the legal or beneficial interest 
 therein, or any part thereof; and that he, this deponent, is the per- 
 son now legally and beneficially interested in the same. 
 
 Bill or note above referred to. 
 
 Date. 
 
 Drawer or maker. 
 
 Acceptor. 
 
 Sum. 
 
 Subscribed and sworn to before me this .... day of , A. 
 
 D. 18.. 
 
 2 
 ...■•■ ■•■•.•, 
 
 [Official character. '\ 
 
 ' B. A. § 57*. 
 
 * B. A. § 20. See notes to Form 31. 
 
634 FORMS IN BANKRUPTCY. 
 
 [Form No. 38.] 
 
 Order Reducing Claim.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 In Bankruptcy, 
 
 At , in said district, on the .... day of , A. D. i8.. 
 
 Upon the evidence submitted to this court upon the claim of 
 
 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 aflSdavit 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 trustee as 
 the true sum upon which a dividend shall be computed \if with 
 
 interest, with interest thereon from the .... day of , A. D. 
 
 i8..]. 
 
 Referee in Bankruptcy. 
 
 » B. A. §§ 3 (2); i^d, /, k and /. B. R. No. XXI. (6). 
 
FORMS IN BANKRUPTCY. 635 
 
 [Form No. 39.] 
 
 Order Expunging 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. i8, . 
 
 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 trustee's record in said case. 
 
 Referee in Bankruptcy. 
 
 [Form No. 40.] 
 
 List of Claims and Dividends to be Recorded by Referee and 
 by him Delivered to Trustee. 
 
 In the District Court of the United States for the District 
 
 of 
 
 -\ 
 
 In the matter of 
 
 Bankrupt 
 
 In Bankruptcy. 
 
 At 
 
 ., in said district, on the day of , A. D. i8. 
 
 > B. A. §§ 2 (2); 57rf, /, k, and /( B. R. No. 21 (6). 
 
636 
 
 FORMS IN BANKRUPTCY. 
 
 A list of debts proved and claimed under the bankruptcy of 
 
 with dividend at the rate of per cent this day declared thereon bf 
 
 ,a referee in bankruptcy. ' 
 
 No. 
 
 Creditors. 
 
 [To be placed alphabetically, and the names 
 of all the parties to the proof to be care- 
 fully set forth.] 
 
 Sum proved. 
 
 Dividend. 
 
 Dollars. 
 
 Cents. 
 
 Dollars. Cents, 
 
 Referee in Bqnkritfitcy. 
 
 'B. A. § 39a (1); compare § 65. 
 
 Query: Does not § 58a (5) of the bankruptcy act require that the referee 
 should give 10 days' notice by mail before declaring a dividend ? 
 
FORMS IN BANKRUPTCY. 637 
 
 [Form No. 41.] 
 Notice 1 of Dividend.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 In Bankruptcy. 
 
 At , on the day of , A. D. 18. . 
 
 To 
 
 Creditor of , bankrupt : 
 
 I hereby inform you that you may, on application at my office^ 
 
 , on the day of , or on any day thereafter, between 
 
 the hours of , receive a warrant for the dividend due to 
 
 you out of the above estate. If you can not personally attend, the 
 warrant will be delivered to your order on your filling up and signing 
 the subjoined letter. 
 
 Trustee. 
 
 Creditor's Letter to Trustee. 
 
 To , 
 
 Trustee in bankruptcy of the estate of , bank- 
 rupt: 
 
 Please deliver to the warrant for dividend payable 
 
 out of the said estate to me. 
 
 Creditor. 
 
 ' B. A. § 58a (5). 
 
 »B. A. §§39a(i). 47(9);65. 
 
638 FORMS IN BANKRUPTCY. 
 
 [Form No. 42.] 
 
 Petition and Order for Sale by Auction of Real Estate.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 Respectfully represents , trustee of the estate of said bank- 
 rupt, that it would be for the benefit of said estate that a certain 
 portion of the real estate of said bankrupt, to wit: \here describe 
 it and its estimated value~\ should be sold by auction, in lots or par- 
 cels, and upon terms and conditions, as follows : 
 
 Wherefore he prays that he may be authorized to make sale by auc- 
 tion of said real estate as aforesaid. 
 
 Dated this day of A. D. 18. . 
 
 Trustee. 
 
 The foregoing petition having been duly filed, and having come 
 on for a hearing before me, of which hearing ten days' notice was 
 given by mail to creditors of said bankrupt, now, after due hearing, 
 no adverse interest being represented thereat \or after hearing 
 in favor of said petition and in opposi- 
 tion thereto], it is ordered that the said trustee be authorized to 
 sell the portion of the bankrupt's real estate specified in the fore- 
 going petition, by auction, keeping an accurate account of each lot 
 or parcel sold and the price received therefor and to whom sold ; 
 which said account he shall file at once with the referee. 
 
 Witness my hand this .... day of , A. D. 189-- 
 
 Referee in Bankruptcy. 
 
 ' B. R. No. XVIII; compare B. A. §§ -jab ; 58a (4). 
 
FORMS IN BANKRUPTCY. 639 
 
 [Form No. 43.] 
 Petition nd Order for Redemption of Property from Lien.i 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 Respectfully represents , trustee ^ of the estate of 
 
 said bankrupt, that a certain portion of said bankrupt's estate, to 
 wit: \here describe the estate or property and its estimated value"] is sub- 
 ject to a mortgage [describe the mortgage], or to a conditional con- 
 tract {describing it\ or to a lien [describe 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 [describe the nature of the lien], 
 and that it would be for the benefit of the estate that said property 
 should be redeemed and discharged from the lien thereon. Where- 
 fore he prays that he may be empowered to pay out of the assets of 
 
 said estate in his hands the sum of being the amount of said 
 
 lien, in order to redeem said property therefrom. 
 
 Dated this day of , A. D. i8. . 
 
 Trustee. 
 
 The foregoing petition having been duly filed and having come on 
 for a hearing before me, of which hearing ten days' notice was given 
 by mail ^ to creditors of said bankrupt, now, after due hearing, no 
 
 adverse interest being represented thereat [or after hearing 
 
 in opposition thereto], it is ordered that the said trustee be 
 
 authorized to pay out of the assets of the bankrupt's estate specified 
 
 in the foregoing petition the sum of , being the amount of the 
 
 lien, in order to redeem the property therefrom. 
 
 Witness my hand this .... day of , A. D. 189- 
 
 Referee in Bankruptcy. 
 
 « B. R. No. XXVIII. 
 
 ' A creditor or the bankrupt as well as the trustee may make this petition. 
 ° Neither the statute nor the rules require that this notice shall be by mail, nor 
 that it shall be a ten days' notice. 
 
640 FORMS IN BANKRUPTCY. 
 
 [Form No. 44.] 
 Petition and Order for Sale^ Subject to Lien. 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 Respectfully represents , trustee of the estate of 
 
 said bankrupt, that a certain portion of said bankrupt's estate, to 
 wit: \here describe the estate or property and its estimated value~\ is sub- 
 ject to a mortgage [^describe mortgage'], or to a conditional contract 
 [describe it], or to a lien [describe 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 [describe the nature of the lien], and 
 that it would be for the benefit of the said estate that said property 
 should be sold, subject to said mortgage, lien, or other incumbrance. 
 Wherefore he prays that he may be authorized to make sale of said 
 property, subject to the incumbrance thereon. 
 
 Dated this day of , A. D. 189-. 
 
 > 
 
 Trustee. 
 
 The foregoing petition having been duly filed and having come 
 on for a hearing before me, of which hearing ten days' notice ^ was 
 given by mail to creditors of said bankrupt, now, after due hearing, 
 
 no adverse interest being represented thereat [or after hearing 
 
 in favor of said petition and in opposition 
 
 thereto], it is ordered that the said trustee be authorized to sell the 
 portion of the bankrupt's estate specified in the foregoing petition, 
 by auction [or, at private sale], keeping an accurate account of the 
 property sold and the price received therefor and to whom sold; 
 which said account he shall file at once with the referee. 
 
 Witness my hand this .... day of , A. D. 189-. 
 
 Referee in Bankruptcy. 
 
 »B. R. No. XVIII, compare B. R. No. XXVIII. 
 
 > See notes to B. R. No. XVIII; compare B. A. § 70* ; B. A. § 580 (4). 
 
FORMS IN BANKRUPTCY. 641 
 
 [Form No. 45.] 
 
 Petition and Order for Private Sale.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 ' In Bankruptcy. 
 
 Respectfully represents duly appointed trustee of 
 
 the estate of the aforesaid bankrupt. 
 
 That for the following reasons, to wit, 
 
 it is desirable and for the best interest of the estate to sell at private 
 sale a certain portion of the said estate, to wit: 
 
 Wherefore he prays that he may be authorized to sell the said 
 property at private sale. 
 
 Dated this .... day of , A. D. 189-. 
 
 » 
 
 Trustee. 
 
 The foregoing petition having been duly filed and having come 
 on for a hearing before me, of which hearing ten days' notice was 
 given 2 by mail to creditors of said bankrupt, now, after due hearing, 
 
 no adverse interest being represented thereat [or after hearing 
 
 in favor of said petition and in opposition 
 
 thereto], it is ordered that the said trustee be authorized to sell the 
 portion of the bankrupt's estate specified in the foregoing petition, 
 at private sale, keeping an accurate account of each article sold and 
 the price received therefor and to whom sold ; which said account 
 he shall file at once with the referee. 
 
 Witness my hand this .... day of , A. D. 189-. 
 
 » 
 
 Referee in Bankruptcy. 
 
 ' B. R. XVIII (2). 
 
 *See notes to B. R. No. XVIII; compare B. A. § 70J; B. A. § 58a (4). 
 
 NAT. BANKRUPTCY LAW — 4I 
 
642 FORMS IN BANKRUPTCY. 
 
 [Form No. 46.] 
 
 Petition and Order for Sale of Perishable Property .1 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 ► In Bankruptcy. 
 
 Respectfully represents the said bankrupt, \or, a 
 
 creditor, orih& receiver, or the trustee of the said bankrupt's estate]. 
 That a part of the said estate, to wit, 
 
 now in , is perishable, and that there will be loss if the same 
 
 is not sold immediately. 
 
 Wherefore he prays the court to order that the same be sold 
 immediately as aforesaid. 
 
 Dated this .... day of , A. D. 189-. 
 
 The foregoing petition having been duly filed and having come on 
 for a hearing before me, of which hearing ten days' notice ^ was 
 given by mail to the creditors of the said bankrupt, \or without 
 notice to the creditors], now, after due hearing, no adverse interest 
 
 being represented thereat, \or after hearing in favor 
 
 of said petition and in opposition thereto] I find that 
 
 the facts are as above stated, and that the same is required in the 
 interest of the estate, and it is therefore ordered that the same be 
 sold forthwith and the proceeds thereof deposited in court. 
 
 Witness my hand this .... day of , A. D. 189-. 
 
 Referee in Bankruptcy. 
 
 ' B. R. No. XVIII (3V 
 
 'Compare B. A. §§ 70* and 580 (4). 
 
FORMS IN BANKRUPTCY. 643 
 
 [Form No. 47.] 
 
 Trustee's Report of Exempted Property.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 ■ In Bankruptcy. 
 
 At on the day of , i8 . . 
 
 The following is a schedule of property designated and set apart 
 to be retained by the bankrupt aforesaid, as his own property, under 
 the provisions of the acts of Congress relating to bankruptcy. 
 
 General head. 
 
 Particular description. 
 
 Value. 
 
 Milita.ry uniform, arms, and 
 
 
 DoUs. 
 
 Cts. 
 
 Property exempted by State 
 
 
 
 
 
 
 
 ustee. 
 
 Tr 
 
 ' B. R. No. XVII; B. A. § 47 (ii); Compare B. A. §§ 70 (8); 2 (11); ^Qb■, and 
 Form No. 13. 
 » B. A. § 6. 
 
644 FORMS IN BANKRUPTCY. 
 
 [Form No. 48.] 
 
 Trustee's Return of No Assets.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 • In Bankruptcy. 
 
 At in said district, on the .... day of , A. D. i8. . 
 
 On the day aforesaid, before me comes , of , 
 
 in the county of and State of , and makes oath and 
 
 says that he, as trustee of the estate and effects of the above-named 
 bankrupt , neither received nor paid any moneys on account of the 
 estate. 
 
 Subscribed and sworn to before me at , this .... day of 
 
 , A. D. i8.. 
 
 Referee in Bankruptcy. 
 
 » B. A. I 70*; B. R. No. XVII [ B. A. § 47* (lo). Compare B. R. No. XV. 
 
FORMS IN BANKRUPTCY. 
 
 645 
 
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646 FORMS IN BANKRUPTCY. 
 
 LForm No. 50.] 
 Oath to Final Account of Trustee.^ 
 
 In the District Court of the United States for the 
 
 of 
 
 District 
 
 In the matter of 
 
 Bankrupt 
 
 ► In Bankruptcy. 
 
 On this day of , A. D. 18. . , before me comes 
 
 , of , in the county of and State of and 
 
 makes oath, and says that he was, on the .... day of A. D. 
 
 18. ., appointed trustee of the estate and effects of the above-named 
 bankrupt, and that as such trustee he has conducted the settlement 
 of the 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 said 
 
 trustee^ is true, and such account contains entries of every sum of 
 money received by said trustee on account of the estate and effects 
 of the above-named bankrupt , and that the payments purporting 
 in such account to have been made by said trustee have been so 
 made by him. And he asks to be allowed for said payments and for 
 commission and expenses as charged in said accounts.^ 
 
 ...... ■•...., 
 
 Trustee. 
 
 Subscribed and sworn to before me at , in said district 
 
 of , this day of , A. D. 18 . . 
 
 3 
 • • 
 
 [Official character.^ 
 
 'B. A. 47fl(i), (6), (7)and)8); 49- 
 
 'B. A. §§62, 64Ml)- 
 
 * B. A. § 20. See note to Form No. 51. 
 
FORMS IN BANKRUPTCY. 647 
 
 [Form No. 51.] 
 Order Allowing Account ^ and Discharging: Trustee. 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt , 
 
 -In Bankruptcy. 
 
 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 trustee be discharged of his trust. 
 
 Referee in Bankruptcy?' 
 
 [Form No. 52.] 
 Petition for Removal of Trustee.^ 
 
 In the District Court of the United States for the . 
 
 of 
 
 District 
 
 In the matter of 
 
 Bankrupt . 
 
 ► In Bankruptcy. 
 
 To the Honorable , 
 
 Judge * of the District Court for the District of : 
 
 The petition of , one of the creditors of said bank- 
 
 • B. A. § 47a (I), (6), (7) and (8). 
 ' B. R. No. XVII, last sentence. 
 
 As to notice of filing of trustees' accounts and the date and place of examina- 
 tion of the same, see B. A. § 58a (6). 
 
 » B. A. § 2 (17); compare B. R. No. XVII. 
 
 * B. R. No. XVII. 
 
648 
 
 FORMS IN BANKRUPTCY. 
 
 rupt, respectfully represents that it is for the interest of the estate 
 
 of said bankrupt that , heretofore appointed trustee of said 
 
 bankrupt's estate, should be removed from his trust, for the causes ^ 
 following to wit: [Ifere set forth the particular cause or causes for which 
 such removal is requested. ] 
 
 Wherefore pray that notice may be served upon said 
 
 trustee 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. 
 
 [Form No. 53.] 
 
 Notice of Petition for Removal of Trustee.' 
 
 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.. 
 
 To , 
 
 Trustee 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 trustee as aforesaid, according to the prayer of the petition 
 
 of , one of the creditors of said bankrupt, filed in this 
 
 court on the .... day of , A. D. i8. ., in which it is alleged 
 
 \here insert the allegation of the petition^ . 
 
 Clerk.^ 
 
 ' See Collier on Bankruptcy, page 249. 
 «B, R. No. XVII; compare B. A. § 2 (17). 
 •B. R. No. XIII, last clause. 
 
FORMS IN BANKRUPTCY. 649 
 
 [Form No. 54.] 
 
 Order for Removal of Trustee.^ 
 
 la the District Court of the United States for tlte District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 • In Bankruptcy. 
 
 Whereas , of did, on the day of , 
 
 A. D. 1 8.., present his petition to this court, praying that for the 
 
 reasons therein set forth, , the trustee of the estate of 
 
 said , bankrupt, might be removed : 
 
 Now, therefore, upon reading the said petition of the said 
 
 and the evidence submitted therewith, and upon hearing 
 
 counsel on behalf of said petitioner and counsel for the trustee, and 
 upon the evidence submitted on behalf of said trustee. 
 
 It is ordered that the said be removed from the 
 
 trust as trustee of the estate of said bankrupt, and that the costs of 
 
 the said petitioner incidental to said petition be paid by said 
 
 , trustee [or, out of the estate of the said sub- 
 ject to prior charges] .^ 
 
 Witness the Honorable , judge of the said court, 
 
 and the seal thereof, at , in said district, on the .... day of 
 
 , A. D. i8.. 
 
 i Sealof I , 
 
 1 the court. ) ' _ 
 
 CUrk.^ 
 
 'B. A. § 2 (17); compare B. R. No. XVII. 
 
 'B. A. §2(i8). 
 
 ' B. R. No. XIII, last clause. 
 
650 FORMS IN BANKRUPTCY. 
 
 [Form No. 55.] 
 
 Order for Choice of New Trustee.^ 
 
 In the District Court of the United States for the . . 
 
 of 
 
 District 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 At , on the day of , A. D. 18., 
 
 Whereas by reason of the removal \or the death or resignation] 
 
 of , heretofore appointed trustee of the estate of said 
 
 bankrupt, a vacancy exists in the office of said trustee, 
 
 It is ordered, that a meeting of the creditors of said bankrupt be 
 
 held at , in , in said district, on the day of , 
 
 A. D. 18. ., for the choice of a new trustee of said estate. 
 
 And it is further ordered that notice be given to said creditors of 
 the time, place, and purpose of said meeting, by letter to each, to 
 be deposited in the mail at least ten days before that day.^ 
 
 Referee in Bankruptcy? 
 
 ' B. A. §§ 44 and 46. 
 'B. A. §58a{3). 
 SB. A. §58<:. 
 
FORMS IN BANKRUPTCY. 651 
 
 [Form No. 56.] 
 
 Certificate by Referee to Judge.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 I, , one of the referees 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 proceed- 
 ings : \^Ifere state the question, a summary of the evidence relating thereto, 
 and the finding and order of the referee thereon. ] 
 
 And the said question is certified to the judge for his opinion 
 thereon. 
 
 Dated at , the .... day of , A. D. i8 . . 
 
 Referee in Bankruptcy. 
 
 'Compare B. R. No. XXVII; B. A. § 393 (5). It is to be noted that under 
 the present practice, when an issue arises before a referee he has power to 
 determine the question, though his determination is subject to a review by the 
 court. The certificate outlined in the above form is the means used for bring, 
 ing the question up for review. Under the old bankruptcy law the register had 
 no power to determine an issue, if one arose, but it was his duty to certify the 
 facts and the question to the court, though in practice he also stated his opinion 
 and what order he considered should be made. 
 
652 FORMS IN BANKRUPTCY. 
 
 [Form No. 57.] 
 Bankrupt's Petition for Discharge.^ 
 
 In the matter of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 To the Honorable , 
 
 Judge 2 of the District Court of the United States 
 
 for the District of ...... 
 
 , of , in the county of and State of 
 
 in said district, respectfully represents that on the day 
 
 of ,' last past, he was duly adjudged bankrupt under the acts 
 
 of Congress relating to bankruptcy; that he has duly surrendered 
 all his property and rights of property, and has fully complied with 
 all the requirements of said acts and of the orders of the court 
 touching his bankruptcy. 
 
 Wherefore he prays that he may be decreed by the court to have 
 a full discharge from all debts provable against his estate under said 
 bankrupt acts, except such debts as are excepted by law from such 
 discharge.* 
 
 Dated this .... day of , A. D. 189-- 
 
 Bankrupt. 
 Order of Notice Thereon.^ 
 
 District of , ss: 
 
 On this day of , A. D. 189-, on reading the foregoing 
 
 petition, it is — 
 
 Ordered by the court, that a hearing be had upon the same on 
 the day of , A. D. 189-, before said court, at , in 
 
 > B. A. § 140 ; B. R. No. XXXI. 
 
 ' B. A. § nb ; compare B. A. § 380 (4). 
 
 « B. A. § 140. 
 
 <B. A. §17. 
 
 • B. A. § 14*; 580 (2). 
 
FORMS IN BANKRUPTCY. 653 
 
 said district, at o'cloclc in the noon ; and that notice 
 
 thereof be published in ^ , a newspaper printed in said 
 
 district, and that all known creditors and other persons in interest ^ 
 may appear at the said time and place and show cause, if any they 
 have, why the prayer of the said petitioner should not be granted. 
 
 And it is further ordered by the court, that the clerk shall send 
 by mail to all known creditors copies of said petition and this order, 
 addressed to them at their places of residence as stated. 
 
 Witness the Honorable judge of the said court, 
 
 and the seal thereof, at , in said district, on the .... day of 
 
 A .D. 189-. 
 
 J Sealof 1 > 
 
 1 the court, f Clerk. 
 
 .... hereby depose, on oath that the foregoing order was pub- 
 lished in the on the following days, viz: 
 
 On the .... day of and on the day of , in the 
 
 year 189-- 
 
 District of 
 
 , 189-. 
 
 Personally appeared , and made oath that the fore- 
 going statement by him subscribed is true. 
 
 Before me. 
 
 ^3 
 
 [Official character."] 
 
 I hereby certify that I have on this .... day of , A. D. 
 
 1 89-, sent by mail copies of the above order, as therein directed. 
 
 •» 
 Clerk. 
 
 > B. A. § 58i» ; compare B. A. § aS. 
 » B. A. § 14^. 
 » B. A. § 20. 
 
654 FORMS IN BANKRUPTCY. 
 
 [Form No. 58.] 
 
 Speeifleation of Grounds of Opposition to Bankrupt's 
 
 Discharge.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 -In Bankruptcy. 
 
 , of , in the county of and State of 
 
 , a party interested in the estate of said , bank- 
 rupt, do hereby oppose the granting to him of a discharge from his 
 debts, and for the grounds of such opposition do file the following 
 specification: \Here specify the grounds of opposition.^ 
 
 Creditor. 
 
 [Form No. 59.] 
 Discharge of Bankrupt.^ 
 
 District Court of the United States, 
 
 District of 
 
 Whereas, of in said district, has been duly 
 
 adjudged a bankrupt, under the acts of Congress relating to bank- 
 ruptcy, and appears to have conformed to all the requirements of 
 law in that behalf, it is therefore ordered by this court that said 
 
 be discharged from all debts and claims which are 
 
 made provable by said acts against his estate, and which existed on 
 
 the .... day of , A. D. 189-, on which day the petition for 
 
 adjudication was filed him; excepting such debts as are by 
 
 law excepted from the operation of a discharge in bankruptcy.^ 
 
 > B. R. No. XXXII; B. A. § 14*. 
 
 » B. A. § 14*. 
 
 »B. A. § 17. 
 
 The discharge of the bankrupt, under the present law, is evidenced by the 
 
FORMS IN BANKRUPTCY. 655 
 
 Witness the Honorable , judge of said district court, 
 
 and the seal thereof this .... day of , A. D. 189-. 
 
 J Seal of I , 
 
 1 the court, f Clerk. 
 
 [Form No. 60.] 
 Petition for Meeting' to Consider Composition.^^ 
 
 District Court of the United States for the District of 
 
 Bankrupt . 
 
 In Bankruptcy. 
 
 To the Honorable , Judge of the District Court of the 
 
 United States for the District of : 
 
 The above named bankrupt respectfully represent that a compo- 
 sition of per cent upon all unsecured debts, not entitled to a 
 
 priority in satisfaction of debts has been pro- 
 posed by to .... creditors, as provided by the acts of Congress 
 
 relating to bankruptcy, and .... verily believe that the said compo- 
 sition will be accepted by a majority in number and in value of 
 creditors whose claims are allowed. 
 
 Wherefore, he pray that a meeting of creditors may be 
 
 duly called to act upon said proposal for a composition, according 
 to the provisions of said acts and the rules of court. 
 
 Bankrupt. 
 
 order of discharge, not as under the former law by a certificate issued in 
 accordance with the order. 
 
 It is not proper to insert the itemized debts which it is supposed are released 
 by the discharge. The question of the effect of the discharge upon any particu- 
 lar debt is determined, in any suit which may thereafter be brought on that debt. 
 
 ' Compare B. A. § 12a and b. While the call of a meeting for the purpose of 
 considering whether creditors will accept an offer of composition will doubtless 
 greatly facilitate consideration of the question, such a meeting prior to the 
 acceptance of the composition by a majority in number and amount of all 
 creditors, is not required either by the statute or the rules. Query: Can it not 
 
656 FORMS IN BANKRUPTCY. 
 
 [Form No. 61.] 
 Application for Conflrmation of Composition.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt . 
 
 > In Bankruptcy. 
 
 To the Honorable Judge of the District Court of 
 
 the United States for the District of 
 
 At in said district, on the .... day of , A. D. 
 
 189-, now comes , the above-named bankrupt, and 
 
 respectfully represents to the court that, after he had been examined 
 in open court \or at a meeting of his creditors] and had filed in 
 court a schedule of his property and a list of his creditors, as required 
 by law, he offered terms of composition to his creditors, which 
 terms have been accepted in writing by a majority in number of all 
 creditors whose claims have been allowed, which number represents 
 a majority in amount of such claims; that the consideration to be 
 paid by the bankrupt to his creditors, the money necessary to pay 
 all debts which have priority, and the costs of the proceedings, 
 
 amounting in all to the sum of dollars, has been deposited, 
 
 subject to the order of the judge, in the National Bank, of 
 
 , a designated depository of money in bankruptcy cases. 
 
 Wherefore the said respectfully asks that the said 
 
 composition may be confirmed by the court. 
 
 Bankrupt. 
 
 be obtained, notwithstanding the implied rule in this form, by personal solicita- 
 tion of individual creditors ? Does not the notice thereafter given to creditors, 
 of the application for a confirmation of the composition, fully protect their 
 rights ? 
 
 • B. A. § 12 a and b. As to Notice, compare B. A. § 580 (2). As to Opposi* 
 tion, compare B. A. § \2.b, c, d ; and B. R. No. XXXII. 
 
FORMS IN BANKRUPTCY. 657 
 
 [Form No. 62.] 
 
 Order Confirming Composition.^ 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 In Bankruptcy. 
 
 An application for the confirmation of the composition offered by 
 the bankrupt having been filed in court, and it appearing that the 
 composition has been accepted by a majority in number of creditors 
 whose claims have been allowed and of such allowed claims; and 
 the consideration and the money required by law to be deposited, 
 having been deposited as ordered, in such place as was designated 
 by the judge of said court, and subject to his order; and it also 
 appearing that it is for the best interests of the creditors ; and that the 
 bankrupt has not been guilty of any of the acts or failed to perform 
 any of the duties which would be a bar to his discharge, and that 
 the offer and its acceptance are in good faith and have not been 
 made or procured by any means, promises, or acts contrary to the 
 acts of Congress relating to bankruptcy: It is therefore hereby 
 ordered that the said composition be, and it hereby is, confirmed. 
 
 Witness the Honorable , judge of said court, and the 
 
 seal thereof, this .... day of , A. D. 189-. 
 
 ( Seal of (. 
 
 ( the court, f ' 
 
 Clerk. 
 
 Query: Should not this order recite the giving of notice as required by B. A. 
 § 58a (2) ? 
 
 ' B. A. § 12* and d. 
 
 NAT. BANKRUPTCY LAW — 42 
 
658 FORMS IN BANKRUPTCY. 
 
 [Form No. 63.] 
 Order of Distribution on Composition.^ 
 
 United States of America : 
 
 In the District Court of the United States for the District 
 
 of 
 
 In the matter of 
 
 Bankrupt 
 
 ■ In Bankruptcy. 
 
 The composition offered by the above-named bankrupt in this 
 case having been duly confirmed by the judge of said court, it is 
 hereby ordered and decreed that the distribution of the deposit 
 shall be made by the clerk of the court as follows, to wic: ist, to 
 pay the several claims which have priority; zd, to pay the costs of 
 proceedings ; 3d, to pay, according to the terms of the composition, 
 the several claims of general creditors which have been allowed, 
 and appear upon a list of allowed claims, on the files in this case, 
 which list is made a part of this order. 
 
 Witness the Honorable , judge of said court, and 
 
 the seal thereof, this .... day of A. D. 189-- 
 
 ( Seal of I 
 
 *) the court. J » 
 
 Clerk. 
 » B. A. § lar. 
 
INDEX TO FORMS. 
 
 [The letter "/." stands for form, "p." for page.'\ 
 
 Aceount. 
 
 affidavit to, by trustee, f. 50; p. 646. 
 of trustee, f. 49; p, 645. 
 
 order approving, f. 51; p. 647. 
 
 Abjudication. 
 
 that debtor is not a bankrupt, f. 11; p. 609. 
 
 of bankruptcy, f. 12; p. 610. 
 
 subpoena of witness, after, f. 30; p. 625. 
 AfBdavit. (i'^OAXH.) 
 
 to accout by trustee, f. 50; p. 646. 
 
 of lost note or bill, f. 37; p. 633. 
 Agent. 
 
 of creditors, proof of claim by, f. 35; p. 631. 
 
 Answer. (See Denial of Bankruptcy.) 
 
 Application. 
 
 of bankrupt for discharge, f. 57; p. 652. 
 order of hearing on, f. 57; p. 652. 
 notice to creditors of, f. 57; p. 652. 
 for confirmation of composition, f. 61; p. 656. 
 
 Appraiser. 
 
 appointment, oath and report, f. 13; p. 611. 
 
 inventory of, with oath and report, f. 13; p. 611. 
 Assets. 
 
 trustee's return of no assets, f. 48 ; p. 644. 
 Attorney in Fact. 
 
 of creditor, proof of claim by, f. 35 ; p. 631. 
 
 authority of, to appear for creditor. (See Power of Attorney.) 
 
 Bankrupt. 
 
 petition of, for discharge, f. 57 ; p. 652. 
 
 examination of, f. 29 ; p. 652. 
 
 order for hearing, on application of, for discharge, f. 57 ; p. 65a. 
 
 notice to creditors of application of, for discharge, f. 57 ; p. 65a. 
 
 order granting discharge to, f. 57 ; p. 652. 
 
 [659] 
 
66o INDEX TO FORMS. 
 
 [The letter "/." stands for form, "f." for page.'\ 
 
 Bond. 
 
 of petitioning creditor, f . 9 ; p. 607. 
 of trustee, f. 25 ; p. 621. 
 of referee, f. 17 ; p. 614. 
 to marshal, f. 10 ; p. 60S. 
 
 Certificate. 
 
 by referee to judge, f. 56 ; p. 651. 
 
 Claims. (See Proof of Claims.) 
 order expunging, f. 39 ; p. 635. 
 order reducing, f. 38 ; p. 634. 
 
 list of allowed, and entitled to dividends, f. 40 ; p. 635. 
 list of, proved at first meeting, f. 19 ; p. 616. 
 
 Composition. 
 
 petition for meeting to consider, f. 60; p. 655. 
 application for confirmation of, f. 61; p. 656. 
 order confirming, f. 62; p. 657. 
 order of distribution on, f. 63; p. 658. 
 
 Corporation. 
 
 proof of claim by, f. 33; p. 629. 
 
 Creditors. 
 
 petition (involuntary) by, f. 3; p. 601. 
 
 proof of claim by, ff. 31-36; pp. 627-632. 
 
 notice to, of first meeting, f. 18; p. 615. 
 
 choice of trustee by, at first meeting, f. 22; p. 6ig. 
 
 memorandum of, by referee, who have proved their debts, f. 19 j p. 616. 
 
 order of notice to, of application for a discharge, f. 57; p. 652. 
 
 powers of attorney by. (See Powers of Attorney.) 
 Debtor. 
 
 petition of, with schedules, f. i; p. 585. 
 Denial of Bankruptcy, f, 6; p. 604. 
 Diseliarge. 
 
 petition of bankrupt for, f. 57; p. 652. 
 
 order for hearing on application for, f. 57, p. 652. 
 
 notice to creditors of application for, f. 57; p. 652. 
 
 specifications in opposition to; f. 58; p. 654. 
 
 order granting, f. 59; p. 654. 
 
 Dividend. 
 
 list of claims entitled to, f. 40 ; p. 635. 
 Examination. 
 
 of bankrupt or witness, f. 29; p. 625. 
 Exemptions. 
 
 trustee's report, f. 47; p. 643. 
 
INDEX TO FORMS. 66l 
 
 [The Utter "/." ttattds for form, "p." forpage.'\ 
 Inventory. 
 
 of appraisers, f. 13; p. 611. 
 Jupy. 
 
 order for jury trial, f. 7; p. 60s. 
 Letter of Attorney. (See Power of Attorney.) 
 Lien. 
 
 petition and order for redemption of property froin, t, 43. p. 639. 
 Meeting. 
 
 notice to creditors of first meeting, f. 18; p. 615. 
 Memorandtun. 
 
 by referee, of creditors wlio have proved their debts at first meeting, i. 19; p. 
 616. 
 
 by referee, of choice of trustee, at first meeting, f. S3; p. 619. 
 Note. 
 
 affidavit of lost, f. 37; p. 633. 
 
 Ifotiee. 
 
 to creditors of first meeting, f. 18; p. 615. 
 
 of dividend, f. 41; p. 637. 
 
 to trustee of his appointment, t. 24; p. 621. 
 
 to creditors, of application for a discharge, order for, f. S7| p. 653. 
 Oath. {See Affidavit.) 
 
 of trustee, to final account, f. 50; p. 646, 
 
 of appraisers, f. 13; p. 611. 
 
 of office or referee, f. 16; p. 614. 
 Order. 
 
 to show cause upon creditor's involuntary petition, f. 4; p. 6oa, 
 
 of reference by judge, f. 14; p. 613. 
 
 by clerk in judge's absence, f. 15; p. 613. 
 
 that no trustee be appointed, f. 37; p. 633. 
 
 appointing appraisers, f. 13; p. 611. 
 trustee, f. 23; p. 620. 
 
 for examination of bankrupt, f. 38; p. 634. 
 
 expunging claim, f. 39; p. 635, 
 
 discharging trustee, f. $1; p. 647. 
 
 for hearing, on application of bankrupt for discharge, f. 57) p. 65a. 
 
 granting discharge, f. 59; p. 654. \ 
 
 for jury trial, f. 7; p. 605. 
 
 for sales. (Sfe Petition.) 
 
 for removal of trustee, f. 54; p. 649. 
 
 for choice of new trustee, f. 55; p. 650. 
 
 of distribution on composition, t. 63; p. 658. 
 
 Partners. 
 
 petition of, with schedule, f. 2; p. 598. 
 
662 INDEX TO FORMS. 
 
 [TAe letter "/." stands for form, "t." for page. ^ 
 
 Petition. 
 
 of debtor, with schedules, f. i; p. 585. 
 
 schedule A, f. i; pp. 587-591. 
 
 schedule B, f. i. pp. 592-597. 
 
 summary of debts and assets, f. i; p. 598. 
 of copartnership debtors, with schedule, f. 2; p. 598. 
 of creditors to have debtor adjudged bankrupt, f. 3; p. 601. 
 order to show cause upon creditor's petition, f. 4; p. 602. 
 of bankrupt, for discharge, f. 57; p. 652. 
 and order for sale by auction, f. 42; p. 638. 
 and order for redemption of property from lien, f. 43; p. 639. 
 and order for sale subject to lien, f. 44; p. 640. 
 and order for private sale, f. 45; p. 641. 
 and order for sale of perishable property, f. 46; p. 648. 
 for removal of trustee, f. 52; p. 647. 
 for meeting to consider composition, f. 60; p. 655. 
 Power of Attorney. (See Attorney.) 
 special, f. 21; p. 618. 
 general, f. 20; p. 617. 
 Proof of Claim. 
 
 by creditor, without security, f. 31; p. 627. 
 
 by creditor, with security, f. 32; p. 628. 
 
 by corporation, f. 33; p. 629. 
 
 by agent or attorney of creditor, f. 35; p. 631. 
 
 by partnership creditor, f. 34; p. 630. 
 
 of secured debt by agent, f. 36; p. 632. 
 
 Referee. 
 
 adjudication of bankruptcy by, upon debtor's petition, f. 12; p. 6io. 
 notice by, to creditors, of first meeting, f. 18; p. 615. 
 order of reference to, by judge, f. 14; p. 612. 
 
 in judge's absence, f. 15; p. 613. 
 certificate by, to judge, f. 56 ; p. 651. 
 order by, appointing trustee, f . 23 ; p. 620. 
 order by, appointing appraisers, f. 13; p. 611. 
 order by, expunging claim, f. 39 ; p. 635. 
 
 memorandam of, of creditors who have proved their debts, f. 19 : p. 616. 
 memorandum of, of choice of trustee, f. 22 ; p. 619. 
 list of claims allowed and entitled to dividends by, f. 40 ; p. 635. 
 order by, discharging trustee, f. 51 ; p. 647. 
 
 notice by, to creditors, of application for a discharge, f. 57 ; p. 659. 
 bond of, f. 17 ; p. 614. 
 oath of, f. 16 ; p. 614. 
 Reference. 
 
 order of, by judge, f. 14 ; p. 612. 
 in judge's absence, f. 15 ; p. 613. 
 
INDEX TO FORMS. 663 
 
 [TAe letter "/." standi /or form, "p." for page. \ 
 
 Semoval. 
 
 of trustee. (JSee Trustee.) 
 Report. 
 
 of appraisers, f. 13 ; p. 611. 
 of trustee, f. 49 ; p. 645. 
 
 as to exemptions of bankrupt, f. 47 ! p. 643. 
 
 Retom. 
 
 of trustee, wiiere tliere are no assets, f. 48 | p. 644, 
 Sales. {See Petition.) 
 Schedule. {See Petition.) 
 Specifications. 
 
 of opposition to discliarge, f. 58; p. 654. 
 Subpoena. 
 
 to alleged bankrupt, f. 5; p. 603. 
 Summons. 
 
 to witness, f. 30; p. 625. 
 
 Trial. 
 
 order for jury trial, f. 7; p. 605. 
 
 Trustee. 
 
 appointment of, by creditors, f. 22; p. 619. 
 
 by referee, f. 23; p. 620. 
 notice to, of appointment, f. 24; p. 621. 
 bond of, f. 25; p. 621. 
 
 order approving, f. 26; p. 623. 
 order that no trustee be appointed, f. 27; p. 623. 
 return of, where there are no assets, f. 48; p. 644. 
 notice of dividends, f. 41; p. 637. 
 account of, f. 49; p. 645. 
 
 oath to, f. 50; p. 646. 
 order discharging, f. 51; p. 647. 
 order for choice of new, f. 55; p. 650. 
 petition of, to relieve property from liens, f. 43; p. 639, 
 petition for removal of, f. 52; p. 647. 
 
 notice of, f. 53; p. 648. 
 
 "Warrant. 
 
 special to marshal, f. 8; p. 605. 
 
 Witness. 
 
 examination of, f. 29; p. 625. 
 summons to, f. 30; p. 625. 
 
GENERAL INDEX. 
 
 (See Special Indices to Forms, General Orders or Rules in Bankruptcy, and 
 
 Equity Rules. 
 
 A. 
 Action. {See Proceedings in Bankruptcy, Suits.) 
 Acts of Bankruptcy. 
 
 what they consist of, 34, 36. 
 filing petition after, 34. 
 assignment for benefit of creditors, 34, 50. 
 fraudulent transfers and concealments, 37, 38. 
 permitting removal or concealment, 38. 
 voluntary transfers, 39. 
 transfer with intent to delay, 39. 
 transfer with intent to prefer, 39, 40. 
 sufBcient when one creditor is delayed, etc., 39. 
 transfer must be more than an attempt, 40. 
 fraudulent intent must be proved, 41. 
 intent to be distinguished from motive, 43. 
 intent of agent, that of principal, 45. 
 failure to defend action as intent to prefer, 45. 
 exchange of securities not a preference, 45. 
 manner of transfer immaterial, 45. 
 transfer of exempt property not a preference, 46. 
 payment of debt by third party not a preference, 46> 
 permitting preferences through legal proceedings, 46. 
 confession of judgment, as a preference, 49. 
 A4Judleation. (See Proceedings in Bankruptcy.) 
 meaning of, in statute, i. 
 
 Adverse Claimants. 
 
 jurisdiction of bankruptcy courts over, 18, no. 
 
 who are, 211. 
 AfDrmatlon. (See Oath.) 
 Agent. 
 
 intent of, in transfer, that of principal, 45. 
 whether or not in fiduciary capacity, 183. 
 
 (See Fraud.) 
 
 Alabama- 
 exemption laws of, 473. 
 
 [665] 
 
666 INDEX. 
 
 AUen. 
 
 as bankrupt, 54. 
 
 debt due to, not affected by discharge, 158. 
 debt due to, provable as debt of bankrupt, 363. 
 
 {See Debt.) 
 Appeals. (See Appellate Courts, Jurisdiction.) 
 to circuit court of appeals, 225. 
 
 from what judgments, 225. 
 to U. S. Supreme Court, 226, 228. 
 in what cases may be had, 226. 
 trustees not required to give bond, 226. 
 controversies certified to Supreme court, 226. 
 under former bankruptcy act, 226. 
 under present act, 227. 
 who may take, 228. 
 time within which to appeal, 228. 
 Appellate Courts. (See Appeals, Jurisdiction.) 
 what the term includes, i. 
 proceedings in, after discharge, 189. 
 jurisdiction of, 221. 
 Appendix. 
 
 Bankruptcy Act of 1867, 434. 
 
 exemption laws of the states and territories, 473^ 
 
 Alabama, 473. 
 
 Arizona, 473. 
 
 Arkansas, 474. 
 
 California, 474. 
 
 Colorado, 475. 
 
 Connecticut, 475. 
 
 Delaware, 475. 
 
 D. C, Washington, 476. 
 
 Florida, 476. 
 
 Georgia, 476. 
 
 Idaho, 476. 
 
 Illinois, 477. 
 
 Indiana, 477. 
 
 Iowa, 477. 
 
 Kansas, 478. 
 
 Kentucky, 478. 
 
 Louisiana, 479. 
 
 Maine, 479. 
 
 Maryland, 480. 
 
 Massachusetts, 480. 
 
 Michigan, 480, 
 
 Minnesota, 481. 
 
 Mississippi, 481, 
 
INDEX. 6S^ 
 
 Appendix — (Continued). 
 
 exemption laws of the states and territories — {Continued). 
 Missouri, 482. 
 Montana, 482. 
 Nebraslca, 483. 
 Nevada, 483. 
 New Hampstiire, 484. 
 New Jersey, 484. 
 New Mexico, 484. 
 New Yorlc, 485. 
 North Carolina, 485. 
 North Dakota, 485. 
 Ohio, 486, 
 
 Oklahoma Territory, 486. 
 Oregon, 486. 
 Pennsylvania, 487. 
 Rhode Island, 487. 
 South Carolina, 487. 
 South Dakota, 487. 
 Tennessee, 488. 
 Texas, 489. 
 Utah, 489. 
 Vermont, 490. 
 Virginia, 490. 
 Washington, 491. 
 West Virginia, 492. 
 Wisconsin, 492. 
 Wyoming, 492. 
 
 Arbitration. 
 
 of controversies, 229. 
 
 choice of arbitrators, 229. 
 effect of their finding, 229. 
 
 Arizona. 
 
 exemption laws of, 473. 
 
 Arkansas. 
 
 exemption laws of, 474. 
 
 Arrest. (See Bankrupt.) 
 
 Assignment. 
 
 general, as act of bankruptcy, 34, 50 
 as constituting a preference, 302. 
 
 (_See Preference.) 
 allowance to assignee on setting aside, 336. 
 laws as to, not suspended by this act, 430. 
 
668 INDEX. 
 
 Attorney. 
 
 whether or not in fiduciary capacity, 186. 
 
 (See Fraud.) 
 services of, in administering estates, 334. 
 
 {See Estates.) 
 
 Attorney-General. 
 
 duties of, 266. 
 Auctioneer. 
 
 whether or not in fiduciary capacity, 185. 
 
 {See Fraud.) 
 services of, in administering estates, 336. 
 (&f Estates.) 
 
 B. 
 Bankrupt. 
 
 what the term includes, I. 
 who is, 34. 
 who may become, 51. 
 infant as, 52. 
 insane persons as, 53. 
 married women as, 53. 
 aliens as, 54. 
 wage-earner as, 51. 
 executor as, 54. 
 corporation as, 51, 54. 
 partnership as, 57. 
 exemptions of, 70. 
 
 constitutionality of, 71, 
 duties of, 79. 
 
 obey orders of the court, 79, 80. 
 
 execute necessary papers, 79, 81. 
 
 execute transfers of his property, 79, 81. 
 
 file schedules, 79, 81. 
 
 (See Schedules.) 
 
 submit to examination, 79, 84. 
 
 (See Examination.) 
 death of, 90. 
 
 (See Death.) 
 insanity of, 90. 
 I protection of, from arrest on civil process, 91. 
 
 applies only to arrest after bankruptcy, 9a. 
 
 purpose and character of protection, 92. 
 
 when the right of protection begins, 95. 
 
 how the right of protection is enforced, 95. 
 
 determination whether debt was discharged, 96. 
 
 in what actiqns is bankrupt exempt, 98. 
 detention of bankrupt before adjudication, 91, 98. 
 
 seizing property of bankrupt, 99. 
 
INDEX. 669 
 
 Bankrupt — (Continued). 
 extradition of, 99. 
 suits by and against, 100. 
 
 (See SwiTS. ) 
 compositions by, 114. 
 
 discharge of, 133. 
 co-debtors of, 148. 
 
 (See Compositions.) 
 (See DiscHARGB.) 
 
 (See Co-debtors.) 
 
 debts of, not affected by discharge, 154. 
 
 (See Debt.) 
 
 offenses of, how punished, 230. 
 
 ( See Offenses. ) 
 Bankruptcy. (See Acts of Bankruptcy, Bankrupt.) 
 
 dates from filing of petition, 2. 
 
 foreign, effect of proceedings, 28, 30. 
 
 when petition in may be filed, 34. 
 
 power of Congress over subject of bankruptcy, 117. 
 
 jurisdiction in matters of, 215, 216. 
 
 (See Jurisdiction.) 
 Bankruptcy Law. 
 
 meaning of words and phrases in, i. 
 
 as distinguished from insolvency law, 116. 
 
 when act takes effect, 427. 
 
 suspends state insolvency laws, 427. 
 
 laws as to general assignments not suspended, 430. 
 
 laws as to dissolution of corporations, 431. 
 Bankruptcy Proceedings. (See Proceedings m Bankruptcy.) 
 Bond. 
 
 to be filed with petition against insolvent, 35, so. 
 
 of trustee on appeal, 226. 
 
 (See Appeals.) 
 
 of referees and trustees, 261. 
 
 c. 
 
 California. 
 
 exemption laws of, 474. 
 
 Circuit Courts. 
 
 (See Courts of Bankruptcy, Jurisdiction, United Statbs Courts.) 
 Claims. (See Counterclaim, Debt.) 
 proof and allowance of, 31, 274. 
 necessity of proof, 276. 
 nature of proof, 277. 
 statement as to consideration, 277. 
 proof, by whom made, 278. 
 instruments in writing, 279. 
 filing of claims, 279. 
 
670 INDEX. 
 
 Claims — {Continued). 
 
 proof and allowance of — {Continued). 
 
 allowance of claims, 279. 
 
 validity of judgments presented for allowance, t83. 
 
 secured claims, 283. 
 
 proving claim as unsecured, 284. 
 
 proofs by preferred creditors, 284. 
 
 two preferences, 286. 
 
 what is a surrender, 286. 
 
 debts to the United States, 288. 
 
 when proof may be made, 288. 
 
 subrogation, 288. 
 
 reconsideration of claims, 288. 
 ClOFk — (For list of names and addresses of Clerks, see page 533). 
 meaning of term as used in statute, i. 
 duties of, 263. 
 compensation of, 263. 
 
 Co-debtors. 
 
 co-debtor, guarantor or surety not affected by a discharge, 148. 
 
 declaratory of genenal legal principles 148. 
 
 bankrupt's personal liability only released by discharge, 148. 
 
 liability of, not affected by creditor's failure to prove claim, 149. 
 
 liability of surety on attachment bonds, 149. 
 
 liability of surety on appeal bonds, 152. 
 
 liability of surety on replevin bonds, 152. 
 
 liability of surety on "jail liberty" bonds, 152 
 
 partner, effect of discharge of one, 153. 
 
 endorser, effect of discharge of maker, 153. 
 
 discharge of joint debtor to be pleaded, 154. 
 
 discharge of one of several co-sureties, 154. 
 Colorado. 
 
 exemption laws of, 475. 
 
 Commencement of Proceedings. 
 
 meaning of the term, 2. 
 Commissionmen. 
 
 whether or not in fiduciary, capacity, 183. 
 
 (See Fraud.) 
 Compositions. 
 
 when bankrupt may offer terms of, 114, 119. 
 
 application for confirmation of, 114. 
 
 hearing of application, 115. 
 
 confirmation of, 115, 123. 
 
 history of composition, 115. 
 
 constitutionality of, 116. 
 
 bankruptcy as distinguished from insolvency laws, 116. 
 
 power of Congress over subject of bankruptcy, 117, 
 
INDEX. 671 
 
 Compositions — (Continued). 
 
 law as to, to be strictly construed, 119. 
 
 what bankrupts may make, lig. 
 
 how is consent of creditors to be obtained, 119. 
 
 what consent must be obtained, 120. 
 
 proceedings preliminary to application for confirmation, isa 
 
 amount of the consideration, 122. 
 
 deposit of money to pay debts having priority, 122. 
 
 parties in interest, 123. 
 
 papers on application, 123. 
 
 specific grounds for refusing to confirm, 124. 
 
 refusal to confirm because of acts of bankrupt, 126. 
 
 dismissal after confirmation, 130. 
 
 effect of, 130. 
 
 pleading, in subsequent action, 131. 
 
 conclusiveness of decree of confirmation, 131. 
 
 when set aside, 132. 
 
 fraud the sole ground, 132. 
 
 parties in interest, 132. 
 
 proceedings after reinstatement, 132. 
 discharge by confirmation of, 133. 
 
 (See Discharge.) 
 Compromise. 
 
 of controversy by trustee, 229. 
 approval of court, 229. 
 
 Conceal. 
 
 what the term includes, 3. 
 
 Concealment. 
 
 as act of bankruptcy, 34, 37, 38. 
 Confession of Judgment. 
 
 as a preference, 49. 
 
 Congress. 
 
 power of, over subject of bankruptcy, 117. 
 Connecticut. 
 
 exemption laws of, 475. 
 Conspirators. (See Offenses.) 
 Contempts. 
 
 before courts of bankruptcy and punishment, 3s. 
 
 before referees, 244. 
 
 (See Referee.) 
 Controversy. 
 
 arbitration of, 229. 
 
 (See Arbitration.) 
 compromise of. 229. 
 
 See, Compromise. 
 may be certified to U. S. Supreme Court, 226. 
 
 (See Appeals.) 
 
6/2 
 
 INDEX. 
 
 Conversion. {See Fraud.) 
 Corporation. 
 
 meaning of term as used in statute, I. 
 as bankrupt, 51, 54. 
 when engaged in trading, 55. 
 when a manufacturer, 56. 
 
 dissolution of, laws as to how affected by this act, 431. 
 Costs. 
 
 on dismissal of petition against insolvent, 35. 
 judgment for, provable as debt of bankrupt, 350. 
 
 Counsel Fees. 
 
 on dismissal of petition against insolvent, 35. 
 Counterclaim. (See Claims.) 
 
 when allowed between bankrupt and creditor, 391. 
 debts which may be set off, 392. 
 mutual credits, 393. 
 
 entrusting property to a person, is not a, 395. 
 debts must be in the same right, 396. 
 partnership vs. individual clairtis, 397. 
 claims purchased after petition filed, 398. 
 
 four months before petition filed, 398. 
 offset of loans against deposits by banker, 400. 
 claims provable by nature, 400. 
 claims which can be proved, 400. 
 waiver of set-off, 401. 
 
 Court. 
 
 meaning of term as used in statute, i. 
 
 Courts of Bankruptcy. 
 
 what the term includes under the statute, I. 
 
 creation of, 6. 
 
 jurisdiction of, 6. 
 
 territorial extent of jurisdiction, 9. 
 
 power to entertain suits against bankrupt's debtors, xo. 
 
 power to determine lienors' rights, 12. 
 
 jurisdiction over "Adverse Claimants," 18. 
 
 jurisdiction, to what extent exclusive, 19. 
 
 enjoining proceedings in State courts, 21. 
 
 exercise of jurisdiction in summary manner, 24. 
 
 parties to proceedings before, 25. 
 
 are always open during bankruptcy proceeedlng, ay. 
 
 jurisdiction to adjudge persons bankrupt, 27. 
 
 foreign bankruptcies, how treated by, 28. 
 
 foreign discharges, effect of in, 30. 
 
 transfer of jurisdiction, 31. 
 
 allowing claims, 31. 
 
INDEX. 67^ 
 
 Courts of Bankruptcy — {Continued). 
 
 power to take charge o£ property, 32, 401. 
 
 (See PropkhTY.) 
 contempts before, and punishment, 32. 
 appointment of trustees, 32. 
 jurisdiction in partnership proceedings, 57, 62. 
 jurisdiction over exempt property, 74. 
 power to confirm compositions, 114. 
 
 (See Compositions.) 
 discharges, granted by, 133. 
 
 (See Discharge.) 
 procedure in, 195. 
 
 (See Proceedings in Bankruptcy.) 
 jurisdiction of, cannot be attaclced collaterally, igg. 
 evidence and witnesses before, 204. 
 
 (See Evidence.) 
 reference of cases after adjudication, 209. 
 
 (See Referee.) 
 jurisdiction of United States and State courts, 2io. 
 
 (See Jurisdiction.) 
 jurisdiction of appellate courts, 221. 
 
 (See Jurisdiction.) 
 appeals and writs of error, 225. 
 
 (See Appeals.) 
 arbitration of controversies, 229. 
 
 (See Arbitration.) 
 compromise of controversies, 229. 
 
 (See Compromise.) 
 designation of newspapers by, 230. 
 
 (See Newspapers.) 
 offenses, how punished, 230. 
 
 (See Offenses.) 
 rules, forms and orders, 233. 
 transfer of cases in different courts, 234. 
 referees appointed by, 236. 
 designation of depositories by, 334. 
 
 Creditors. (See Compositions.) 
 what the term includes, 2. 
 transfer with intent to defraud, 34^. 
 assignment for benefit of, 34, 50. 
 appointment of trustees by, 246. 
 meetings of, 267. 
 
 order and notice, 268. 
 
 quorum, 268. 
 
 business of the meeting, 269. 
 
674 INDEX. 
 
 Creditors — (Continued). 
 
 meetings of — {Continued). 
 
 postponement of claims objected to, 270. 
 
 subsequent meetings, 271. 
 
 power of creditors over trustee, 271. 
 
 adjournments, 272. 
 voters at meetings of, 272. 
 
 vote required, 273. 
 
 how cast, 273. 
 
 mode of voting, 273. 
 proof and allowance of claims, 274. 
 
 {See Claims.) 
 secured, 283. 
 notice to, 289. 
 
 the giving of, 290. 
 
 necessity of to give jurisdiction, 291. 
 who may file and dismiss petitions, 292. 
 
 {See Petition.) 
 preferred, 298. 
 
 (See Preference.) 
 
 claims of against bankrupt estate, 337, 366. 
 
 (See Debt.) 
 lienors as, 372. 
 
 (See Liens.) 
 
 D. 
 Damages. 
 
 on dismissal of petition against insolvent, 35. 
 
 Date of Bankruptcy. 
 
 meaning of the term, 2. 
 
 Death. 
 
 of bankrupt, effect of, go. 
 proceedings not abated by, 90. 
 rights of widow and children, 90, 91. 
 can a discharge be granted after death, 90. 
 Debt. (See Claims, Counterclaim, Estates, Liens.) 
 what the term includes, 2. 
 
 as foundation of a petition in bankruptcy, 52, 56. 
 not affected by a discharge, 154. 
 
 taxes not released, 154, 169. 
 
 judgments for frauds, etc., not released, 154, 17a 
 (See Judgment.) 
 
 debts not scheduled, not released, 154, 171. 
 
 debts for frauds in public office not released, 154, 173. 
 (See Fraud.) 
 
 discharge not an extinguishment of debt, 155, 189. 
 
 debts not released except by discharge, 155. 
 
IKDEX. 675 
 
 Debt — (Continued). 
 
 not affected by a discharge — (Continued). 
 
 liens on property not released, 155. 
 
 all provable debts released, 156. 
 
 provable debts released even if not proved, 156. 
 
 debts barred by statutes of limitations, 156. 
 
 debts due to the United States, 157. 
 
 debts due to aliens, 158. 
 
 debts of married women, 159. 
 
 effect of discharge to be determined by court subsequently, 159, 187. 
 
 effect of discharge granted to member of firm, 159. 
 
 effect of discharge on judgments against bankrupt, 163. 
 (See Judgment.) 
 
 need taxes be proved in bankruptcy, 170, 
 
 character of debt determined by record, 171. 
 
 character of debt not determined by State laws, 183. 
 
 discharge must be pleaded as defense, 187. 
 
 pleading discharge catercA. pendente lite, 187. 
 
 how discharge pleaded and evidenced, 188. 
 
 pleading by replication, 189. 
 
 proceedings in appellate courts after discharge, 189. 
 revival of discharged debt by new promise, 190. 
 
 new promise must be express, etc., 191. 
 
 expression of intention to pay, 191. 
 
 subsequent payments on discharged debts, 192, 
 
 must action be on original debt or new promise, 193. 
 
 parol promise, 183. 
 
 date of the promise, 193. 
 
 new promise to pay discharged judgment, 194. 
 of bankrupt allowed against his estate, 337. 
 
 what debts may be proved, 337, 358. 
 
 time debt came into existence to be provable, 338. 
 
 liability of sureties, 339, 342. 
 
 contingent liabilities not provable, 339. 
 
 fixed liability evidenced by judgment, 343. 
 
 unliquidated claims, 343. 
 
 judgment imposing fine, 345. 
 
 judgment in nature of punishment, 346. 
 
 penalties and forfeitures, 346. 
 
 debts not yet due, 347. 
 
 rent, provability of claims for, 349. 
 
 judgment for costs, 350. 
 
 contract, debts founded on, 351, 352, 355. 
 
 open account, debts founded on, 351, 355. 
 
 claims against bankrupt and others, 352. 
 
 damages for conversion have no priority, 354, 
 
 judgments recovered after petition filed, 356. 
 
6/6 INDEX. 
 
 Debt — iCauHHuad). 
 
 of bankrupt allowed against his estate — (Continued). 
 
 changes in form of debt after petition filed, 357. 
 
 impeaching judgments, 358. 
 
 effect of foreign discharge, 358. 
 
 claims cognizable only in equity, 359. 
 
 claims affected by statute of limitations, 360. 
 
 debts not actionable in state courts, 362. 
 
 debts due to aliens, 363. 
 
 claims against partnerships, 364. 
 
 debt of one partner to another, 364, 365. 
 
 debt not provable is not discharged, 365. 
 
 proof of claim subjects creditoT to court, 365. 
 which has priority, 366. 
 
 taxes, 366. 
 
 other debts, 366, 368. 
 
 new debts after discharge, 367. 
 
 priority of the United States, 367. 
 
 Defense. 
 
 solvency as defense to petition, 34, so. 
 duty of defendant in the matter of proof, 35. 
 to adjudication of bankruptcy, 199. 
 
 (5« Proceedings in Bankruptcy.) 
 Definitions. 
 
 of terms used in bankruptcy law, i, 3. 
 
 Delaware. 
 
 exemption laws of, 475. 
 Deposition. ( See Evidence.) 
 Depositories. 
 
 for the money of bankrupt estates, 334. 
 
 (See Estates.) 
 Dlscliarge. 
 
 meaning of term, 2. 
 
 by foreign court, effect of, 28, 30, 358. 
 
 after the death of a bankrupt, 90. 
 
 when application for to be filed, 133, X34. 
 
 hearing upon application, 133, 134. 
 
 when discharge to be granted, 133. 
 
 by confirmation of composition, 133. 
 
 applications by partners, 134. 
 
 who to have notice, 134. 
 
 notice of application, 135. 
 
 refusing, in general, 135. 
 
 refusing, for want of jurisdiction, 135. 
 
 refused only when objections are raised, IJJ. 
 
INDEX. ^yj 
 
 Dlseharsre — (Continued). 
 
 date of acts preventing, 135, 
 
 specific grounds for refusing, 136. 
 
 statutory offenses, ground for refusing, 136. 
 
 failure to Iceep books of account, ground for refusing, 136. 
 
 contemplation of bankruptcy, 137. 
 
 pleadings and proof, 137, 
 
 jury trial, 138. 
 
 when revoked, 138. 
 
 cannot be attacked laterally, 139. 
 
 jurisdiction to revoke exclusive, 140. 
 
 impeachment of by one creditor, for fraud, 141. 
 
 Circuit Court cannot revoke, 144. 
 
 time limit for revocation, 144. 
 
 opening defaults, 145. 
 
 grounds for revocation, 146. 
 
 party in interest, who is, 147. 
 
 laches, 147. 
 
 effect of, on co-debtors, 148. 
 
 {See Co-debtors.) 
 debts not affected by, 154. 
 
 (See Debt.) 
 as a defense, must be pleaded, 187. 
 tecciyeA pendente lite, right to plead, 187. 
 how pleaded and evidenced, 188. 
 proceedings in appellate courts after, 189. 
 
 Distriet of Columbia. 
 
 exemption laws of, 476- 
 
 District Courts. 
 
 as courts of bankruptcy, I, 6. 
 
 Dividends. 
 
 on bankrupt's estate, 369. 
 declaration and payment of, 369. 
 
 how often may be declared, 369. 
 
 proof of claims subsequent to dividends, 37a 
 
 when already declared by foreign court, 37a 
 
 claimant limited to dividends, 370. 
 
 proceedings preliminary to, 370. 
 unclaimed, 372. 
 
 paid into court, 372. 
 
 distributed among creditors, 372, 
 
 not subject to attachment, 372. 
 
 Document. 
 
 what the term includes, 2. 
 Equity Rules— (See Appendix C, pages 493-S32). 
 
678 INDEX. 
 
 £. 
 Estates. 
 
 depositories for money of, 334. 
 expenses of administering, 334. 
 services of attorneys, 334. 
 auctioneer's services, 336. 
 extra services by trustee, 336. 
 preservation of property, 336. 
 allowance to assignee for benefit of creditors, 336. 
 debts which may be proved against, 337. 
 
 (See Debt.) 
 debts which have priority against, 366. 
 
 (See Debt.) 
 dividends, declaration and payment of, 369. 
 (See Dividends.) 
 liens against, 372. 
 
 (See Liens.) 
 set-ofis and counterclaims, 391. 
 
 (See Counterclaim.) 
 seizure of property of involuntary bankrupt, 401. 
 (See Property.) 
 Evidence. 
 
 requiring the attendance of witnesses, 204. 
 
 right to take depositions, how determined, 204. 
 
 notice of taking depositions, 204. 
 
 certified copies of papers, etc., 204. 
 
 of proceedings before referee, 204, 207. 
 
 of order approving trustee's bond, 204, 208. 
 
 of orders relating to compositions or discharge, 204, 209. 
 
 examination of witnesses, 205, 
 
 subpoenas run into other districts, 207. 
 Examination. 
 
 of bankrupt, 79, 84. 
 
 who may obtain, 84. 
 
 subject matter of, 85. 
 
 refusal of bankrupt to answer, 86. 
 
 unsatisfactory answers of bankrupt, 86. 
 
 criminating questions, 88. 
 
 second examination, 88. 
 
 of third parties, 90. 
 Execution. (See Judgment.) 
 Executor. 
 
 as bankrupt, 54. 
 Exemption. 
 
 laws of the several States and Territories, 78, 473. 
 (See Appendix.) 
 
INDEX. 679 
 
 Exemption — {Continued). 
 
 of bankrupts, 70. 
 out of partnership assets, 76. 
 right of. in property fraudulently conTeyed, 76. 
 
 of property subject to lien dissolved by adjudication of bankruptcy, 77. 
 rights of, governed by law in force when petition is filed, 78. 
 of encumbered property, 78. 
 right of, is personal to bankrupts, 78, 
 of bankrupt from arrest, gi. 
 allowed by trustee, 259. 
 Exempt Property . 
 
 transfer of, not a preference, 46. 
 rights of trustee in, 72, 
 jurisdiction of court over, 74, 
 liens on, 75. 
 purchasing on eve of bankruptcy, 77. 
 
 Expenses. 
 
 on dismissal of petition against insolvent, 35. 
 of administering estates, 334. 
 
 (See EsTATSS.) 
 
 Extradition. 
 
 of bankrupt, 99. 
 
 F. 
 Factors. 
 
 whether or not in fiduciary capacity, 183. 
 
 (See Fraud.) 
 Fees. 
 
 of witnesses, 245. 
 
 of referees, 243. 
 
 of trustees, 260. 
 
 of clerks, 263. 
 
 of marshals, 263. 
 Fiduciary Capacity. 
 
 of factors, commissionmen, agents, 183. 
 
 (See Fraud.) 
 Florida. 
 
 exemption laws of, 476. 
 
 Foreign Bankruptcy. (See Bankruptcy.) 
 Forms. (See Index to Forms, p. 583.) 
 for procedure in bankruptcy, 233, 493. 
 
 Fraud. 
 
 debts and judgments for, not affected by discharge, 154, 
 must exist at inception of debt, 172. 
 partnership debts created by fraud of one member, 173. 
 action in assumpsit for debts created by, 173. 
 burden of proof after discharge, 174. 
 
68q index. 
 
 Fraad — (^Continued). 
 
 judgment for debt created by, 174, 388. 
 
 {See Judgment, Likms,} 
 debts created by misappropriation, 175. 
 
 what is misappropriation, 177. 
 conversion not a fraud, 178. 
 cases of actual deceit, 182. 
 persons in fiduciary capacity, 183. 
 
 factors, 183, 184. 
 
 commissionmen, 183. 
 
 agents, 183, 184. 
 
 auctioneers, 185. 
 
 attorneys, 186. 
 
 officers, 186. 
 
 testamentary trustees, guardians, 186. 
 Fraudulent Transfer. (See Transfer.) 
 
 G. 
 
 General Orders in Bankruptcy — (See pages 537-572). 
 
 (Compare index to General Orders in Bankruptcy, page 573.) 
 
 Georgia. 
 
 exemption laws of, 476. 
 
 Guarantor. 
 
 of bankrupt not affected by discharge, 148. 
 
 (See Co-debtors.) 
 Guardian. 
 
 in fiduciary capacity, 186. 
 
 (See FRAim.) 
 
 H. 
 Holiday. 
 
 what the term includes, s. 
 
 h 
 
 Idaho. 
 
 exemption laws of, 476. 
 
 Illinois. 
 
 exemption laws of, 477. 
 Indiana. 
 
 exemption laws of, 477. 
 Indictment. (See Offenses.) 
 Infant. 
 
 as bankrupt, 52. 
 Information. (See Offenses.) 
 Insane Persons. 
 
 as bankrupts, 53. 
 
 effect of insanity of bankrupts, 9a 
 
INDEX. 68 1 
 
 Insolveney Law. 
 
 as distinguished from bankruptcy law, ii6. 
 Insolvent. 
 
 when a person is deemed to be, 2. 
 when petition may be filed against, 34. 
 defense of solvency, 34, 50. 
 insolvency must be alleged in petition, 50. 
 Intent. (5« Transfer.) 
 
 to defraud, etc., by transfer, must be proved, 41. 
 
 to be distinguished from motive, 43. 
 
 of agent, that of principal, 45. 
 
 failure to defend action as intent to prefer, 45, 
 
 Involuntapy Bankrupt. (See Proceedings in Bankxuftcy.) 
 
 who may be adjudged such, 51. 
 
 infant as, 52, 
 
 insane person, as, 53. 
 
 married woman as, 53. 
 
 alien as, 54. 
 
 wage-earner cannot be, 51. 
 
 executor cannot be, 54. 
 
 corporation as, 51, 54. 
 
 partnership as, 57. 
 
 who may file petition against, 292. 
 
 (See Petition.) 
 seizure of property of, 401. 
 
 (See Property.) 
 Iowa. 
 
 exemption laws of, 477. 
 
 J. 
 
 Judge — (For list of Judges, see pages 533-536). 
 
 meaning of the term, 2. 
 Judgment. (See Liens.) 
 
 for fraud, not released by discharge of bankrupt, 154, 170, 174. 
 
 effect of discharge upon, 163. 
 
 when entered after petition filed, 165. 
 when entered after discharge granted, 166. 
 
 opening to permit plea of discharge, 167. 
 
 perpetual stay of execution, i68. 
 
 validity of execution, 168. 
 
 canceling a discharged judgment of record, l6g. 
 
 discharged, new promise to pay, 194. 
 
 appeals from, 225. 
 
 (See Appeals.) 
 
 validity of, when presented by creditor for allowance, sSs. 
 
 may be proved as debt of bankrupt estate, 343. 
 
682 INDEX. 
 
 Jurisdiction. 
 
 of courts of bankruptcy, 6. 
 
 territorial extent of, 9. 
 
 over adverse claimants, 18. 
 
 to what extent exclusive, 19, 215. 
 
 enjoining State courts, 21. 
 
 exercise of in summary manner, 24. 
 
 to adjudge persons bankrupt, 27. 
 
 transfer of, 31. 
 
 in partnership proceedings, 57. 
 
 over exempt property, 74. 
 
 cannot be attacked collaterally, 199. 
 of U. S. Circuit Courts, 210. 
 
 controversies as distinguished from bankruptcy proceedings, 3ia 
 
 suits between trustees and adverse claimants, 210, 211, 
 
 suits by trustees, 210. 
 
 of offenses within the act, 210. 
 
 not exclusive of courts of bankruptcy, 213. 
 
 in what Circuit Court suit may be brought, 213. 
 
 controversies at law and equity, 214. 
 of State courts, 210, 215. 
 
 have no jurisdiction in bankruptcy, 215. 
 
 what are matters in bankruptcy, 216. 
 
 section 711 (6) U. S. statutes, 217. 
 
 over matters arising under U. S. statutes, 2i8. 
 conflict of, 220. 
 of appellate courts, 22t. 
 
 what courts have appellate jurisdiction, 221, 22a, 
 
 revising powers of Circuit Court, 222. 
 
 extent of the power, 222. 
 
 revision where an appeal can be taken, 223. 
 
 merely a power of review, 223. 
 
 what may thus be reviewed, 224. 
 
 proceedings to secure a revision, 225. 
 of referees, 238. 
 
 (See Referees.) 
 
 Jury TrlaL 
 
 who is entitled to, 201. 
 
 waiver of, 201. 
 
 summoning a jury, 20i. 
 
 right to, according to IT. S. statutes, 202. 
 
 Kansas. 
 
 exemption laws of, 478. 
 
 JLentucky. 
 
 exemption laws of, 478. 
 
INDEX. 68s 
 
 L. 
 lienors. {See Liens.) 
 
 rights of, determined by courts of banlcruptcy, 13. 
 
 relative rights of priority, 381. 
 
 are secured creditors, 390. 
 
 rights of, not increased by bankruptcy, 390. 
 
 liens. (See Lienors.) 
 
 on exempt property, 75. 
 
 on property not affected by discharge, 155. 
 
 revival of, by annulment of preference, 326. 
 
 against bankrupt's estate, 372. 
 
 when not valid, 372, 389. 
 
 trustee subrogated to creditor in attacking liens, 373. 
 
 dissolved by adjudication of bankruptcy, 373, 381. 
 
 valid liens not affected by act, 373, 375. 
 
 liens and judgments acquired four months before petition filed, nail 
 and void, 373, 374, 381. 
 
 mortgages to secure future advances, 376. 
 
 liens on rents and profits, 376. 
 
 mortgages of property to be acquired, 377. 
 
 liens by judgment and execution, 378. 
 
 mechanics' liens, 379. 
 
 miscellaneous liens enforceable in bankruptcy, 38a 
 
 relative rights of priorty of lienors, 381. 
 
 circumstances attending dissolution of liens, 383. 
 
 proceedings to annul, 384. 
 
 proceedings to dissolve, 384. 
 
 conveyances and encumbrances in fraud of creditors, 388. 
 
 effect of dissolving, 390 
 
 lienors are secured creditors, 390. 
 
 rights of lienors not increased by bankruptcy, 39a 
 
 Louisiana. 
 
 exemption laws of, 479. 
 
 IL 
 Maine. 
 
 exemptionslaws of, 479. 
 Married Woman. (.See Woman.) 
 MarsliaL 
 
 compensation of, 263, 264. 
 liability of, in seizing property by warrant, 403. 
 Maryland. 
 
 exemption laws of, 479. 
 
 Massachusetts. 
 
 exemption laws of, 480. 
 
 Michigan. 
 
 exemption laws of, 480. 
 
684 INDEX. 
 
 Hlnnesota. 
 
 exemption laws of, 481. 
 Misappropriation. (See Fraud.) 
 Mississippi. 
 
 exemption laws of, 481. 
 Missouri. 
 
 exemption laws of, 483. 
 Montana. 
 
 exemption laws of, 482. 
 
 Mortgage. (See Liens.) 
 
 M. 
 
 Nebraska. 
 
 exemption laws of, 483. 
 
 Nevada. 
 
 exemption laws of, 483. 
 
 New Hampsliire. 
 
 exemption laws of, 484. 
 
 Now Jersey. 
 
 exemption laws of, 484. 
 
 New Mexico. 
 
 exemption laws of, 484. 
 
 New Yorli. 
 
 exemption laws of, 485. 
 
 Newspapers. 
 
 designation of, by bankruptcy courts, 930. 
 
 where to be published, 230. 
 
 additional designation of, 230. 
 North Carolina. 
 
 exemption laws of, 485. 
 
 North Dakota. 
 
 exemption laws of, 485. 
 
 Notice. 
 
 to creditors, 289. 
 
 (See Creditom.) 
 
 0. 
 
 Oath. 
 
 to include affirmation, 2. 
 who may administer, 202. 
 affirmation in lieu of oath, 202. 
 punishment for false affirmation, 20a. 
 proof of claim before attorney, 203. 
 of office of referee, 237, 
 
INDEX. 685 
 
 Offenses. 
 
 within this act, jurisdiction of, aio. 
 
 of trustee, 230. 
 
 of bankrupt, 230. 
 
 of referee, 231. 
 
 limit of time for punishment, S3t. 
 
 of conspirators, 232. 
 
 defendant may be a witness, 232. 
 
 proceeding by Information, not indictment, 232. 
 
 inspection of accounts, 232. 
 
 Officer. 
 
 what the term includes, 3. 
 in fiduciary capacity, 186. 
 
 (See Fraud.) 
 duties and compensation, 236. 
 
 (See Rbfirxb, Trustbb.) 
 Ohio. 
 
 exemption laws of, 486. 
 
 Oklahoma. 
 
 exemption laws of, 486, 
 
 Orders. 
 
 as to procedure in bankruptcy, 233. 
 
 Oregon. 
 
 exemption laws of, 486. 
 
 P. 
 
 Parties. 
 
 to proceedings before courts of bankruptcy, 25. 
 
 Partners. 
 
 partnership may be adjudged bankrupt, 57. 
 
 creditors of shall appoint trustee, 57, 61. 
 
 court may have jurisdiction of all partners, 57, 6s. 
 
 trustee to keep separate accounts of partners, 57. 
 
 expenses, how paid, 57. 
 
 proceeds, how appropriated, 57, 
 
 claims between partnership and the indtvidvals, S7> 
 
 when all partners not adjudged bankrupt, 57. 
 
 may be adjudged bankrupt after dissolution, 58. 
 
 all members of firm may be adjudged bankrupt, 58. 
 
 who must make the petition, 58. 
 
 act of bankruptcy of one partner, effect of, 59. 
 
 one partner may be adjudged bankrupt individually, 60, 
 
 rights of trustee, 61. 
 
 marshaling assets, 62. 
 
 what are firm and what are individual assets, 6a. 
 
686 INDEX. 
 
 Partners — {Continued). 
 
 what are partnership and what are individual debts, 63, 
 
 rights of firm creditors in the individual assets, 64. 
 
 rights of creditors holding joint and several obligations, 65. 
 
 rights of firm creditors, when no firm assets and no solvent partner, 67. 
 
 marshaling of assets where one is member of two firms, 68. 
 
 proving claims of partnership estate against individual estate, 69. 
 
 transferring cases from one jurisdiction to another, 69. 
 
 effect of discharge of one partner on copartners, 69, 159. 
 
 effect of discharge where only one partner is adjudged bankrupt, 69, 153, 159. 
 
 rights of partners to exemption from firm assets, 69, 76. 
 
 application of for discharge, 134. 
 
 {Set Discharge.) 
 partnership debts created by fraud of one member, 173. 
 preferences by, 308. 
 
 {See Preference.) 
 claims against, provable as debts of bankrupt, 363. 
 
 {See Debt.) 
 counterclaims between, and individuals, 397. 
 {See Counterclaim.) 
 
 Pennsylvania. 
 
 exemption laws of, 487. 
 
 Persons. 
 
 what the term includes, 2. 
 
 Petition. 
 
 meaning of the term, 2. 
 
 when to be filed against insolvent, 34. 
 
 bond to be filed with, 35. 
 
 costs on dismissal of, 35. 
 
 insolvency must be alleged in, 50. 
 
 in partnership proceedings, who mast make, 58. 
 
 service of, in involuntary bankruptcy, 195, 199. 
 
 (See Proceedings in Bankruptcy.) 
 amendment of, 201. 
 filing and dismissal of, 292. 
 
 voluntary petitioners, 293. 
 
 petitioners in involuntary proceedings, 293. 
 
 creditors who cannot petition, 294. 
 
 secured creditors, 295. 
 
 amount of claims, 295. 
 
 preferred creditors, 296. 
 
 attaching creditors, 296. 
 
 debtor's list of creditors, 297. 
 
 exclusion of employees, 298. 
 
 Pleadings. {See Proceedings in Bankruptcy.) 
 
INDEX, 687 
 
 Preference. (5';^ Tkansfer.) 
 
 exchange of securities not a preference, 45. 
 
 transfer of exempt property does not constitute, 46. 
 
 payment of debts by third party does not constitute, 46. 
 
 permitting preference through legal proceedings, 46. 
 
 confession of judgment as, 49. 
 
 time for bringing an action to invalidate, 50. 
 
 when a person is deemed to have given, 2go. 
 
 when voidable by trustee, 298. 
 
 creditor giving new credit because of, 299. 
 
 money paid to attorney, etc. , how treated, 299. 
 
 elements of a, 300. 
 
 intent as an, 300. 
 transfers made under coercion, 302. 
 general assignments not necessarily preferences, 302. 
 intent to defeat operation of bankruptcy act, 302. 
 transfer not giving advantages to transferees, 303. 
 exchange of securities and other property, 304. 
 stoppage in transitu, 306. 
 arises only in case of antecedent debts, 306. 
 mode of transfer immaterial, 307. 
 voidability of preferences in general, 308. 
 made by partnership, 308. 
 
 must be made four months before petition, 309. 
 effect of failure to record deeds of transfer, 309, 
 delivery must be genuine, 313. 
 
 may be made by agent, 314. 
 when do four months expire, 316. 
 reasonable cause to believe preference intended, 316. 
 
 what is, 317. 
 
 a question of fact, 318. 
 
 must have existed at time of transfer, 320. 
 
 transfers out of ordinary course of business, 320. 
 
 knowledge of agent, 321. 
 
 sub-agent and collection agencies. 322. 
 
 knowledge of attorney, 323. 
 voidable only, not void, 324. 
 revival of merged liens by annulment of, 326. 
 special action to annul, 327. 
 voidable only by trustee, 327. 
 recovery of property from party benefited, 330, 331. 
 title of iona fide purchaser from transferee, not voidable, 331, 
 measure of damages where transferee has parted with property. 33a. 
 debtor's collusion in preferential transfers, 332. 
 annulling fraudulent transfers, 333. 
 
688 INDEX. 
 
 Proceedings In Bankruptcy. 
 
 when petition may be filed against Insolvent, 34, 50. 
 defense of solvency, 34, 50, 
 
 duty of defendant to prove his case, 35. 
 bond to be filed with petition, 35. 
 costs, etc., on dismissal of petition, 35. 
 Insolvency must be alleged in petition, 50. 
 debts as the foundation of the petition, 53. 
 partnership proceedings, 57. 
 
 who must make the petition, 58. 
 duties of bankrupts in, 79. 
 filing schedules, 79, 81. 
 
 {See Schedules.) 
 submitting to examination, 79, 84 
 
 (See Examination.) 
 not abated by death or insanity of bankrupt, go. 
 
 (See Death.) 
 compositions, when confirmed, 114. 
 
 {^See Compositions.) 
 discharges, when granted, 133. 
 
 (See Dischakge.) 
 Involuntary bankruptcy, service of petition, 195, 197. 
 service of subpoena, 195. 
 appearances, 195, 198. 
 pleadings and verification, 195, 197, 198. 
 trial by court with or without jury, 195. 
 adjudication by court, 195. 
 reference of the case by clerk, 195. 
 voluntary bankruptcy, adjudication, 196. 
 equity rules as to process, 196. 
 
 jurisdiction of court cannot be collaterally attacked, 199. 
 defenses to adjudication, 199. 
 who may oppose adjudication, 200. 
 burden of proof, 200. 
 proceedings on default, 200. 
 amendment of petition, 201. 
 jury trials, 201. 
 
 (See Jury Tkial.) 
 oaths and affirmations, 203. 
 
 (See Oath.) 
 evidence in, and witnesses, 204. 
 
 (See EviDBNca.) 
 reference of cases after adjudication, 209. 
 
 (See Rbfkkxx.) 
 appeals and writs of error, 225. 
 
 (See Appeals.) 
 
INDEX. 689 
 
 Proeeedings in Bankruptcy — (Continued). 
 
 arbitration of controversies, 229. 
 
 (See Arbitration.)' 
 
 compromise of controversies, 229. 
 
 (See Compromise.) 
 
 designation of newspapers, 230. 
 
 (See Newspapers.) 
 
 offenses, how punished, 230. 
 
 (See Offenses.) 
 
 rules, forms and orders, 233. 
 
 transfer of cases, 234. 
 
 statistics of, 266. 
 
 who may file petition in, 292. 
 
 dismissal of petition in, 292. 
 
 (See Petition.) 
 
 seizure of property of involuntary bankrupt, 401. 
 (See Property.) 
 Process. (See Proceedings in Bankruptcy.) 
 Property. (See Estates, Exempt Property.) 
 
 power of courts of bankruptcy to take charge of, 32, 401. 
 
 taking possession of, 402. 
 
 marshal's liability in serving warrant, 402. 
 
 title to, vested in trustee, 403. 
 date when title vests, 404. 
 
 title to, before appointment of trustee, 406. 
 
 title to, subject to all equities, 408. 
 
 transferable or subject to levy, 409. 
 
 restrictions as to passing of property to trustee, 41a. 
 
 subject to personal privileges, 411. 
 
 real estate, title to, 413. 
 
 rights of action, 403, 415. 
 
 after-acquired property, 417. 
 
 choses in action of bankrupt's wife, 417. 
 
 burdensome property, 418. 
 
 rights of trustee as representative of creditors, 430. 
 
 held in trust, 424. 
 
 acquired fraudulently or conditionally. 426. 
 
 beneficial interests under trusts, 427. 
 Punishment. (See Offenses.) 
 
 R. 
 Real Estate. (See Property.) 
 Referee. 
 
 meaning of the term, 3. 
 case referred to by clerk, when, 195. 
 reference of cases after adjudication, 2og. 
 what authority is given the referee, 209. 
 
69Q INDEX. 
 
 Referee — {Continued). 
 
 reference of cases after adjudication — {Continued). 
 
 to what referee the case will go, 20g. 
 
 transfer of case from one referee to another, 21a 
 offenses of, how punished, 231. 
 
 {See Offenses.) 
 creation of office of, 246. 
 appointment of, 236. 
 removal of, 236. 
 districts of, 236. 
 qualifications of, 237. 
 
 relationship to judges, 237. 
 oath of office of, 237. 
 number of, 238. 
 jurisdiction of, 238, 239. 
 
 contested matters, 240. 
 
 place of reference, 240. 
 duties of, 240. 
 
 administrative and judicial, 241. 
 
 care of property, 242. 
 
 restrictions, 242. 
 
 examinations of schedules, 242. 
 compensation of, 243. 
 
 on dividends and commissions, 243. 
 contempts before, 244. 
 
 disobedience to subpoena, 244. 
 
 contempt proceedings, 245. 
 records of, 245. 
 absence or disability of, 246. 
 bonds of, 261. 
 Rhode Island. 
 
 exemption laws of, 487. 
 Rules. 
 . of procedure in bankruptcy, 23. 
 
 (See General Orders in Bankruptcy, pages 537-572.) 
 
 ^See Index to General Orders in Bankruptcy, pages 573-582.) 
 
 (For Equity Rules, see pages 493-532.) 
 
 S. 
 Schedules. 
 
 duty of bankrupt as to filing, 78, 81. 
 
 contents of, 79, 81. 
 
 omission of creditors from, 82. 
 
 inventory of the property, 79, 82. 
 
 verification of, 83. 
 
 amendment of, 83. 
 
 Secured Creditor. 
 
 what the term includes, 3. 
 Service. {See Proceedings in Bankruptcy.) 
 
INDEX. 691 
 
 Set-off. [See Counterclaim.) 
 Solvency. 
 
 as a defense to petition against insolvent, 34, 50. 
 
 South Carolina. 
 
 exemption laws of, 487. 
 
 South Dakota. 
 
 exemption laws of, 487. 
 
 State Courts. 
 
 jurisdiction as opposed to national courts, 19, 210. 
 
 (See Jurisdiction.) 
 proceedings in enjoined by U. S. courts, 21. 
 
 (See Suits.) 
 
 States. 
 
 what the term includes, 3. 
 Statistics. 
 
 of bankruptcy proceedings, 266. 
 Stay. {See Suits.) 
 Subpoena. (See Proceedings in Bankruptcy, Referee.) 
 
 Suits. 
 
 by and against bankrupts, 100. 
 
 right of action upon provable claims, loi. 
 effect of proof of claim on right of action, 104. 
 what suits may be stayed, 106. 
 
 to what court is application for stay to be made, 107. 
 jurisdiction of State courts after stay, 108. 
 stay is discretionary, 109. 
 duration of stay, no. 
 
 inquiry as to debts being released by discharge. III. 
 continuance of pending suits, iii. 
 in what suits can trustees intervene, 112. 
 right of bankrupt to maintain pending action, 112. 
 in whose name is action continued, 113. 
 liability of substituted trustee for costs, 113. 
 limitations of actions, 100, 113. 
 failure to bring suit in time, effect of, 114. 
 assignment of causes of action, 114. 
 when the estate is closed, 114. 
 by trustees and with adverse claimants, 210, 252. 
 (See Jurisdiction, Trustee.) 
 Surety. 
 
 of bankrupt not affected by discharge, 148. 
 
 (See Co-debtors.) 
 liability of, not provable as debt of bankrupt, 339. 
 
 (See Debt.) 
 
692 INDEX. 
 
 T. 
 Tax. 
 
 not aSected by discharge of bankrupt, 154, i6g. 
 has priority in payment of bankrupt's debts, 366. 
 
 Time. 
 
 limitation of, for bringing an action to invalidate a preference, 50. 
 computation of, under this act, 233. 
 
 by months and years, 233. 
 when act takes effect, 427. 
 Time of Bankruptcy. 
 
 meaning of the time. 2, 
 
 Tennessee. 
 
 exemption laws of, 488. 
 
 Texas. 
 
 exemption laws of, 489. 
 
 Transfer. 
 
 what the term includes, 3. 
 
 of jurisdiction in bankruptcy proceedings, 31. 
 
 fraudulent, as act of bankruptcy. 34, 37, 38. 
 
 voluntary, prima facie void, 39. 
 
 with intent to delay, 39. 
 
 with inteut to prefer, 39, 40. 
 
 sufficient if one creditor is delayed, etc., 39. 
 
 of cases in different courts, 234. 
 
 must be more than attempt to be fraudulent, 40. 
 
 fraudulent intent must be proved, 41. 
 
 intent to be distinguished from motive, 43. 
 
 intent of agent, that of principal, 45. 
 
 failure to defend action, as intent to prefer, 45. 
 
 exchange of securities not a preference, 45. 
 
 manner of, not material if there is intent to prefer, 45. 
 
 of exempt property not a preference, 46. 
 
 • {See Preference.) 
 
 by confession of judgment, a preference, 49. 
 assignment for benefit of creditors, 50. 
 
 Trial. (See Jury Trial.) 
 
 Trustee. 
 
 what the term includes, 3. 
 
 appointment of, by courts of bankruptcy, 3a. 
 
 in partnership proceeding, 57. 
 
 rights of, in exempt property, 72. 
 
 duties in suits by or against bankrupts, lOO. 
 
 {See Suits.) 
 testamentary, in fiduciary capacity, 186. 
 
 {See Fraud.) 
 
INDEX. 693 
 
 Trustee — (Continued). 
 
 suits between, and adverse claimants. 2IO. 
 suits by, 210. 
 
 (See Jurisdiction.) 
 not obliged to give bond on appeal, 226. 
 
 (See Appeals.) 
 may arbitrate controversies, 229. 
 
 (See Arbitration.) 
 may compromise controversies, 229. 
 
 (See Compromise.) 
 offenses of, how punished, 230. 
 
 (See Offenses.) 
 appointment of, 246. 
 
 right of appointment, 246. 
 number to be chosen, 247. 
 qualifications of, 248. 
 who may be, 248. 
 death or removal of, 248. 
 
 death of one of three, 249. 
 removal of, 249. 
 resignation of, 251. 
 removal by vote of creditors, 251. 
 duties of, 252. 
 
 to pay over interest, 253. 
 collection of assets, 253. 
 legal remedies, 254. 
 when should he sue, 254. 
 how should he sue, 255. 
 where should he sue, 255. 
 what suits may be brought, 256. 
 sales of property, 256. 
 power to sell, 256. 
 what title passes, 256. 
 sales of encumbered property, 257. 
 approval of the court, 258. 
 who may purchase, 258. 
 depositories, 259. 
 duty to furnish information, 259. 
 dividends, 259. 
 exemptions, 259. 
 concurrence of two trustees, 260. 
 compensation of, 260. 
 
 after services are rendered, 260. 
 accounts and papers of, 261. 
 
 reasonable opportunity for inspection 
 bonds of, 261. 
 power of creditors over, 271. 
 
694 INDEX. 
 
 Trustee — (Continued). 
 
 expenses of administering estates, 334. 
 
 {See Estates.) 
 to pay debts having priority, 366. 
 
 (See Debt.) 
 to declare and pay dividends, 369, 372. 
 
 (See Dividends.) 
 has no interest in lienors' relative rights of priority, 381. 
 
 (See Liens.) 
 may void preference, 298. 
 
 (See Preference.) 
 title to property seized, vested in 403. 
 
 (See Property.) 
 
 U. 
 United States. 
 
 taxes due to, not affected by discharge, 154, 170. 
 debts due to, not affected by discharge, 157. 
 debts to, must be proven, 288. 
 debts to, priority of, 366, 367. 
 
 (See Debt.) 
 United States Courts. 
 jurisdiction of, ig, 2io. 
 
 (See Jurisdiction.) 
 
 Utah. 
 
 exemption laws of, 489. 
 
 V. 
 Vermont. 
 
 exemption laws of, 490. 
 
 Virginia. 
 
 Exemption laws of, 490. 
 Voluntary Bankruptcy. (See Proceedings in Bankruptcy.) 
 
 what term of the statute includes, i. 
 
 who may become, 51. 
 
 infant as, 52. 
 
 insane person as, 53. 
 
 married woman as, 53. 
 
 alien as, 54. 
 
 wage-earner as, 51. 
 
 executor can not be, 54- 
 
 corporation can not be, 51, 54. 
 
 partnership as, 57. 
 
 who may file petition to be adjudged, 292. 
 (See Petition.) 
 Voters. 
 
 at meetings of creditors, 272. 
 
INDEX. 695 
 
 W. 
 
 Wage-earner. 
 
 meaning of the term, 3. 
 as bankrupt, 51. 
 
 Washington. 
 
 exemption laws of, 491. 
 Washington, D. C. 
 
 exemption laws of, 476. 
 West Virginia. 
 
 exemption laws of, 492. 
 
 Wisconsin. 
 
 exemption laws of, 492. 
 Witness. (See Evidence, Fees.)] 
 
 Woman. 
 
 married, as bankrupt, 53. 
 
 married, debt due to, how affected by discbarge, 159, 
 
 Words. 
 
 how construed as to gender and number, 3. 
 
 Writ of Error. (See Appeals.) 
 
 Wyoming. 
 
 exemption laws of, 493.