and, therefore, cannot be set off under the act of congress." McIver v. Wilson, 1 Cranch C. C. 423; 16 Fed. Cas. 154 (1807).

A bankrupt had given accommodation notes to a creditor, and the latter discounted them, and they were proved by the holder against the estate. A composition having been effected, it was held that the dividends paid upon the notes could be set off against the dividends due the creditor to whom the accommodation notes were originally given. In re Purcell, 18 N. B. R. 447; 20 Fed. Cas. 61.

The claim of an insuree for a loss under a policy of insurance can be set off against his indebtedness to the company. The rights of the parties are to be determined by the facts as they existed at the time of the loss. Drake v. Rollo, 3 Biss. 273; 7 Fed. Cas. 1053.

The I. Fire Insurance Co. had issued eight policies to different parties, and subsequently the H. Fire Insurance Co. issued to the I. Co. policies of reinsurance on the same risks. The property was destroyed by fire. The I. Co. was adjudged bankrupt, and the assignee sued the H. Co. on the policies of reinsurance. In the meantime, and before the filing of the petition, the H. Co. had bought up five of the original policies, and in the action by the assignee filed notice of a set-off for the amount. It was held that the set-off must be allowed. Hovey et al. v. Home Ins. Co., 10 N. B. R. 224; 12 Fed. Cas. 604.

In a composition case the bankrupt stands as to a set-off in the position of an assignee, if none has been appointed. Ex parte Howard; In re North et al., 2 Low. 487; 12 Fed. Cas. 653.

A debtor of the bankrupt who purchased a claim against him after his insolvency cannot set it off against his debt, but can only prove his claim and share with other creditors in the dividends. Mattocks et al. v. Lovering et al., 16 Fed. Cas. 1149.

A creditor opened a new account with his debtor under an agreement to turn over the cash or notes received for goods thereafter forwarded. Held, that he could not set off the amount due from him under the new account against the amount due to him on the old account. In re Troy Woolen Co., 8 N. B. R. 412; 24 Fed. Cas. 245.

It was held in the case cited that one partner had the right to set off against the amount due from him to his bankrupt partner on the partnership transactions the independent debts due from the bankrupt to himself on transactions not connected with firm business. In re Voetter, 4 Fed. Rep. 632.

While the bankrupt law recognized the right of set-off, it is not equitable that a stockholder in an insurance company should set off his losses on insurance policies against his liability for the payment of the stock of the bankrupt company. Scammon v. Kimball, 8 N. B. R. 337; 21 Fed. Cas. 641 (1873).

It was held that a party had no right to set off claims under insurance policies executed by a bankrupt company against funds which he held as the treasurer of the company. His position as treasurer was unquestionably that of trustee, and, although he had the right to use the

་་

treasury money in payment of interest, he was still a trustee, and not an ordinary debtor. Ibid.

The right of the assignee to property acquired by the bankrupt by descent after the petition is filed, and before decree, is subject to a set-off in favor of the administrator of the intestate of a debt due by the bankrupt to the intestate. Ex parte Newhall, 2 Story, 360; 18 Fed. Cas. 75-76. It was held that a debtor of the bankrupt could set off against his indebtedness notes of the bankrupt which he had purchased before the filing of a petition in voluntary proceedings, although he had knowledge that the bankrupt was insolvent when he purchased the note. Mattox et al. v. Cady et al., 7 Am. Law Rec. 613; 16 Fed. Cas. 1154.

A debtor of the bankrupt, before the commencement of proceedings, but after insolvency, had purchased a demand against the bankrupt. It was held that it could not be set off against a negotiable note payable to the bankrupt, which had passed into the hands of the assignee in bankruptcy. Rawlins v. Twitchell et al., 2 Hask. 66; 20 Fed. Cas. 1137. The bankrupt was indebted to a creditor on two distinct debts, and one of them was secured by a pledge with power to sell. Held, on the principle of set-off, that he could apply the surplus of the proceeds of the sale to the payment of the second debt. Ex parte Whiting, 2 Low. 472; 29 Fed. Cas. 1053.

A creditor had sought to obtain a preference by purchasing property of the bankrupt through an agent, and tendering the notes of the bankrupt in payment. The court held that in an action by an assignee to recover the value of such property the creditor could not set off the notes of the bankrupt. Fleming et al. v. Andrews, 3 Fed. Rep. 632.

A vendor had written to his vendee refusing to deliver goods on credit as he had previously agreed unless an old debt were paid. The vendee went into bankruptcy, and his assignee did not offer to complete the contract. Held, that the notice was not such a repudiation of the contract as would authorize its value being set off against the vendor's previous indebtedness. In re Wheeler, 2 Low. 252; 29 Fed. Cas. 873.

A debtor of an insurance company, knowing it to be insolvent, secured the assignment to himself of a policy. Subsequently, proceedings in bankruptcy were commenced against the company and the party claimed a set-off for the amount due on the policy. It was held that to allow it under such circumstances would be a substantial fraud on the statute and give an unjust preference to one creditor. Hitchcock v. Rollo, 3 Biss. 276; 12 Fed. Cas. 231; Hitchcock v. Rollo, 6 Chi. Leg. News, 9; 12 Fed. Cas. 237.

The term "mutual credits" is one which is not generally used in the statutes of the different states relating to set-off, and is peculiar to the bankrupt laws of England and the United States. It has a more extensive meaning than the term "mutual debts." Goods deposited as a pledge er collateral security are not a mutual credit; but if held before the filing of the petition in good faith, the excess above the debt for which they are security becomes a debt of the assignee or the bankrupt

capable of being set off like any other mutual debt. If such goods are sold after the filing of the petition, the excess belongs to the assignee. Goodrich v. Dobson, 43 Conn. 576; 30 Fed. Cas. 1081 (1876).

In September, 1876, H. & B. recovered judgment against H. H. & B. had suspended payments in October, 1875, and in December of that year a petition in involuntary bankruptcy was filed against them. Subsequently they offered a composition, which H., acting as the representative of a company which was a creditor, opposed; it was confirmed and H. accepted the money and indorsed notes provided for by the terms of the composition. H. having in the meantime bought up some claims against H. & B., brought this suit for an injunction against further proceedings on the judgment against him and for a set-off of the claims which he had bought against the judgment. It was decided that a court of equity will not aid a debtor to a bankrupt's estate to set off debts bought on speculation, and that H. having failed to assert his set-off when the composition was made, and having received payments under the composition, could not afterward ask a court of equity to enforce a set-off. Hunt v. Holmes et al., 16 N. B. R. 101; 12 Fed. Cas. 916.

WARRANTS TO SEIZE PROPERTY.

§ 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 further orders. Before such warrant is issued the petitioners applying therefor shall enter into a bond in such an amount as the judge shall fix, with such sureties as he shall approve, 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 property, or pay the value thereof in money to the trustee, in the event he is adjudged a bankrupt pursuant to such petition.

After adjudication the bankrupt remained in possession of his assets, sold parts of them, and announced his purpose to go to Europe to settle his business there. The court ordered that a provisional warrant be issued. In re Hale, 18 N. B. R. 335; 11 Fed. Cas. 180.

The fact that the marshal took possession of property not belonging to the alleged bankrupt under a provisional warrant is not sufficient ground

for vacating the order by which the warrant was issued. In re Muller et al., Deady, 513; 17 Fed. Cas. 971.

In voluntary bankruptcy, under the Act of 1867, the court could take possession of the bankrupt's property on the filing of the petition and before the election of the assignee. The Ironsides, 4 Biss. 518; 12 Fed. Cas. 103.

An involuntary bankrupt after adjudication, but before the issuance of the warrant to the marshal, surrendered his property to the register. On the application of the marshal, after receiving the warrant, the court ordered the register to deliver the property to him. In re Howes, 7 Ben. 102; 12 Fed. Cas. 712.

The marshal, under a provisional warrant in bankruptcy, forcibly took property from the possession of a receiver appointed by a state court, and turned it over to the assignee in bankruptcy. The court refused to grant an order of sale to the assignee and ruled that he must enforce his right of possession in a plenary suit. In re Hulst, 7 Ben. 17; 12 Fed. Cas. 864

In the absence of evidence disproving the statements made in the application for a provisional warrant, such a warrant will not be vacated by the court. In re Clark et al., 17 N. B. R. 554; 5 Fed. Cas. 855.

A provisional warrant was refused where the main facts were sworn to on information and belief. The court said that when a petitioner does not possess personal knowledge, the better practice is to file a separate petition supported by the affidavits of several persons having knowledge of the necessary facts. In re McKibben, 12 N. B. R. 97; 16 Fed. Cas. 210.

A provisional warrant commanded the marshal to take possession of the property of the bankrupt, and of all goods lately conveyed to one H. It was held that this was not authorized by section 40 of the Act of 1867, as the warrant could only command the marshal to take possession of the property of the debtor. In re Harthill, 4 Ben. 448; 11 Fed. Cas. 704. Under a provisional warrant, the district court cannot order the seizure of property in the possession of a person to whom the debtor transferred it before the filing of the petition; but it may issue an injunction to prevent the disposal of the property. In re Holland, 12 N. B. R. 403; 12 Fed. Cas. 338.

A marshal who, under a provisional warrant, had taken possession of property conveyed by a voluntary assignment of the bankrupt, was ordered to return it; but upon condition that the voluntary assignee should pay his fees, release him from any claim for damages, and that he should not dispose of any of the property without leave of the court of bankruptcy. In re Manahan, 19 N. B. R. 65; 16 Fed. Cas. 569.

The alleged act of bankruptcy was the removal by the debtor company of its goods and chattels. It appeared that the removal was in fulfillment of a contract made before the commencement of the proceedings in bankruptcy. The court refused to appoint a provisional assignee, and said: "The exercise of this power - appointing a provisional as

signee is one of great delicacy, and should not be called into action unless the court is satisfied that it is necessary for the protection of the property, and that it will inure to the benefit of the creditors." M. & M. Nat. Bank v. Brady's B. I. Co., 5 N. B. R. 491; 16 Fed. Cas. 593.

Under the authority of a provisional warrant in bankruptcy, a United States marshal may levy on the goods of the bankrupt in possession of a third party who claims title to them. Sharp v. Doyle, 102 U. S. 686.

TITLE OF TRUSTEE - SALES.

§ 70. Title to property.- (a.) The trustee of the estate of a bankrupt, upon his appointment and qualification, and his successor or successors, if he shall have one or more, upon his or their appointment and qualification, shall in turn be vested by operation of law with the title of the bankrupt, as of the date he was adjudged a bankrupt, except in so far as it is to property which is exempt, to all (1) documents relating to his property; (2) interests in patents, patent rights, copyrights, and trade-marks; (3) powers which he might have exercised for his own benefit, but not those which he might have exercised for some other person; (4) property transferred by him in fraud of his creditors; (5) property which prior to the filing of the petition he could by any means have 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 surrender value payable to himself, his estate, or personal representatives, he may, within thirty days after the cash surrender value has been ascertained and stated to the trustee by the company issuing the same, pay or secure to the trustee the sum so ascertained and stated, and continue to hold, own, and carry such policy free from the claims of the creditors participating in the distribution of his estate under the bankruptcy proceedings, otherwise the policy shall pass to the trustee as assets; and (6) rights of action arising upon contracts or from the unlawful taking or detention of, or injury to, his property.

(b.) All real and personal property belonging to bankrupt estates shall be appraised by three disinterested appraisers; they shall be appointed by, and report to, the court. Real and personal property shall, when practicable, be sold subject to the approval of the court; it shall not be sold otherwise than subject to the approval of the court for less than seventy-five per centum of its appraised value.

(c.) The title to property of a bankrupt estate which has been sold, as herein provided, shall be conveyed to the purchaser by the trustee.