"When a debt from one partner to the firm was incurred by the consent or privity of the other partners, proof of the joint creditors against the separate estate will not be admitted in a court of bankruptcy." In re McEwen et al., 6 Biss. 294; 16 Fed. Cas. 82.

The claimant had obtained a divorce from her husband, and he and his partner had executed a bond for the payment of alimony. It was held that she was not entitled to be paid from the firm assets as against firm creditors. In re Roddin et al., 6 Biss. 377; 20 Fed. Cas. 1084.

J. bought the interest of his partner in the firm of J. & B., which was indebted for some of the goods so sold to J. The firm had no assets. Proceedings of involuntary bankruptcy having been commenced against J., it was held that the creditors of the partnership were entitled to share on equal terms with the individual creditors. In re Jewett, 1 N. B. R. 491; 13 Fed. Cas. 583. In a later case growing out of the same bankruptcy, it was held that B. could not receive dividends from the assignee on the notes which he received for his interest in the firm, until all the partnership debts were paid. In re Jewett, 1 N. B. R. 495; 13 Fed. Cas.

594.

The estate of the firm was exhausted in the expenses incurred in collecting it. The court decided, under section 36 of the Act of 1867, that the firm creditors could share equally with the individual creditors in the individual estate. In re Slocum et al., 22 Fed. Cas. 328.

The rule that firm assets shall be first applied to the payment of firm debts, and individual assets to the payment of individual debts, except that when there are no firm assets the firm creditors shall share equally with individual creditors in the individual assets, applies where petitions have been filed against the partners separately. When firm assets are only sufficient to pay the costs and expenses of the proceeding, firm creditors have a right to share with individual creditors under the above rule; but neglect by the firm creditors to avail themselves of a fund whereby it was dissipated deprives them of this right. In re Litchfield, 5 Fed. Rep. 47.

While joint creditors have priority over separate creditors in firm assets, and separate creditors over joint, as to the individual assets of partners, yet when there are no partnership assets, the firm creditors are entitled to share in the separate assets; and where one partner has assumed the firm debts the firm creditor may share in his estate equally with separate creditors. In re Lloyd, 22 Fed. Rep. 28.

Construing the Act of 1867 (sections 5075 and 5121, R. S.), Judge Deady held that the property of a partnership is to be first applied to a payment of the partnership debts, and the property of each partner to the payment of his individual debts. In re Estes et al., 3 Fed. Rep. 134.

Section 14 of the Act of 1841 was held to be simply the rule of equity as to the distribution of the assets of a partnership, and the individual members. In re Warren, 2 Ware, 322; 29 Fed. Cas. 266 (1847).

Held, under the Act of 1867, that the rule that the property of a firm must be applied to the partnership debts, and the separate estate of the

partners to their individual debts, only applies when the joint estate as well as the separate estate is before the court for distribution. U. S. v. Lewis et al., 13 N. B. R. 33; 26 Fed. Cas. 920.

In proceedings against a partnership, joint and individual assets are separate funds for the payment of joint and personal creditors respectively. Where there are balances of the separate estates, they should be added to the joint estate for the payment of joint creditors, and after these have been paid, if any balance remains, it should be divided among the partners. In re South Boston Iron Co., 4 Cliff. 343; 22 Fed. Cas. 812.

Held, under the Act of 1867, that firm creditors cannot share in the individual estate of bankrupts when there are partnership assets. In re Smith et al., 13 N. B. R. 500; 22 Fed. Cas. 402.

A firm "jointly and severally" guaranteed the payment of an obligation. On the question whether it could be proved against the joint estate in bankruptcy, the court said: "The creditors are at liberty, therefore, to go to proof to show the liability of the bankrupt to the creditor to have been of a partnership character, and proceedings on the dividend will be stayed until the report of the commissioner and the judgment of the court thereon." Ex parte Miller, 1 N. Y. Leg. Obs. 38; 17 Fed. Cas. 292 (1842).

Act of 1841 construed. The provision devoting joint assets to firm creditors and separate estate to separate creditors was held not to apply where there were no joint assets. In re West, 39 Fed. Rep. 203.

If there is any balance of partnership assets after deducting its share of the costs of the proceedings, the partnership creditors cannot share pari passu with the individual creditors in the distribution of the separate estates. In re Blummer, 12 Fed. Rep. 489.

Where there are assets of a firm, the adjudication of a member of the copartnership does not discharge him from the firm liabilities. In re Plumb, 9 Ben. 279; 19 Fed. Cas. 886.

Real estate purchased with partnership funds is treated as personal property, and is subject to the payment of firm debts as against a judg ment creditor of an individual member of the firm. Marrett v. Murphey et al., 11 N. B. R. 131; 16 Fed. Cas. 782.

Section 36 of the Act of 1867 contemplated that assets were to be marshaled between the joint and separate creditors of partners only when there were joint and separate assets, and proceedings had been instituted against the firm and the individual members. In re Downing, 1 Dill. 33; 7 Fed. Cas. 1005.

A partnership desiring an extension of time, the individual members of the firm agreed to convey land to the creditor, the same to be sold and applied to the debt. The firm becoming bankrupt, it was held that the agreement was simply a security for the original firm debt, and that the debt was provable against the firm, and was not an individual debt. Gauss v. Schrader, 48 Fed. Rep. 816.

Where there are both joint and separate debts proved on a separate petition, the latter must be paid first. In re Byrne, 1 N. B. R. 464; 4 Fǝd. Cas. 951.

Where there are firm assets, the creditors of a partnership cannot be allowed to prove their debts against the separate estate of a partner; and this is true without regard to the amount of the assets, or how they were produced. So held under the Act of 1841. In re Marwick, 8 Law Rep. 169; 16 Fed. Cas. 929 (1845).

The holder of commercial paper signed by a firm and indorsed by one of the members can prove his debt in bankruptcy against both the firm and the individual indorser, and share in the dividends of each estate. Emery et al. v. Canal N. Bank, 3 Cliff. 507; 8 Fed. Cas. 644.

A firm creditor is not estopped from asserting the liability of a special partner by an adjudication against the firm and the members in whose name the firm conducted its business. Abbendroth v. Van Dolsen, 131 U. S. 66.

An accommodation note indorsed by one member of a partnership for the benefit of a third person without the knowledge or consent of the other partner cannot be proved up against the firm. In re Irving et al., 17 N. B. R. 22; 13 Fed. Cas. 110.

A party purchased a note of a firm, and afterward proved it as a claim in bankruptcy against the signers alone. It was held that he could not recover from secret partners who belonged to the firm without his knowledge at the time of the purchase. In re Munn, 3 Biss. 442; 17 Fed. Cas. 989.

A decree had been entered against a firm upon a joint obligation as sureties for a debt, and it was paid out of the firm assets. Later, the firm was dissolved, and one of the partners was indebted to another. The debtor partner having gone into bankruptcy, the solvent partner sought to be subrogated to the rights of the creditor of the firm under the decree mentioned against the individual estate of the bankrupt partner. Held, that he could not be subrogated. In re Smith, 16 N. B. R. 113; 22 Fed. Cas. 408.

The bankrupts carried on business in different places under different names. Held, that the two firms were to be treated as one; that no notice was to be taken of the indebtedness of one firm to the other, and that the proceeds of the separate estates of the partners, after paying their individual debts, were to be added to the joint stock. In re Vetterlein et al., 5 Ben. 311; 28 Fed. Cas. 1170.

In a case where a trust fund had been invested in a partnership business, the copartner of the executor having knowledge of the source of the money, the court used this language: "When the copartnership as such received and used the fund with full knowledge of its character, the partnership became liable therefor. The creditors or beneficiaries could, therefore, pursue one or the other; the only doubtful proposition is whether they can pursue both." It was thereupon held that the parties entitled to the fund could prove their debts against the partnership, notwithstanding they had already proved it against the executor. In re Tesson et al., 9 N. B. R. 378; 23 Fed. Cas. 866.

Judge Bond held that a party holding the note of a firm indorsed by one of its members may prove his claim against both, and elect out of which fund it will be paid. Stephenson v. Jackson, 2 Hughes, 204; 22 Fed. Cas. 1307

Where the consideration for a note is treated as copartnership funds. it is a liability of the firm, though signed by the members with their individual names. In re Thomas et al., 8 Biss. 139; 23 Fed. Cas. 923. Under the Law of 1867 a joint creditor could prove his debt against the separate estate of the bankrupt, vote for assignee, examine the debtor and appear in opposition to his discharge. He could not, however, participate in the distribution of separate assets as against separate creditors. Wilkins v. Davis, 2 Low. 511; 29 Fed. Cas. 1348.

[For notes on the jurisdiction of courts of bankruptcy over partnerships as dependent on residence or place of business, see section 2.]

EXEMPTIONS.

§ 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 preceding the filing of the petition.

Homesteads.

The rights of parties to a proceeding in bankruptcy are fixed as of the date of the adjudication; and if no homestead exemption could have been allowed at that time, the bankrupt could not claim any by virtue of subsequent laws. In re Kerr et al., 9 N. B. R. 566; 14 Fed. Cas. 386. The right to a homestead exemption may be forfeited by fraud. So where merchants purchased an additional stock of goods, and then traded their whole stock for a house and lot, it was held that they could not claim the premises as a homestead as against the assignee in bankruptcy. Pratt et al. v. Barr, 5 Biss. 36; 19 Fed. Cas. 548.

The assignee in bankruptcy was ordered to intervene in a proceeding whereby the bankrupt had caused a homestead to be set apart to his family a few days before filing a petition, from which order an appeal was then pending. It was further decided that in the meantime the assignee could not take possession of the property. In re Moseley et al., 8 N. B. R. 208; 17 Fed. Cas. 886.

Property exempted as a homestead is not subject to the jurisdiction of a court in bankruptcy, and those who have claims against it must prosecute them in the state courts. This rule is not affected by the fact that the bankrupt had waived his right to the exemption. In re Bass, 3 Woods, 382; 2 Fed. Cas. 1004.

Where an assignee set aside certain property of the bankrupt as a homestead, and the bankrupt was not entitled to the exemption, the assignee was held responsible for his failure to sell the property for the

benefit of the creditors. In re Jackson et al., 2 N. B. R. 508; 13 Fed. Cas. 203.

Three days before a bankrupt firm went into bankruptcy, one of the partners took notes belonging to it and with them purchased a homestead. It was decided that he could not retain it as exempt. In re Boothroyd, 14 N. B. R. 223; 3 Fed. Cas. 872.

Where a creditor of the bankrupt was proceeding to sell certain real estate on an execution issued prior to the bankruptcy, the district court will not entertain a petition for an order setting it apart as a homestead, and an injunction against the sale of the property on the execution. The remedy of the bankrupt is in the state courts. In re Hunt, 5 N. B. R. 499; 12 Fed. Cas. 902.

It is sufficient if a bankrupt claims his homestead exemption when the assignee applies for an order to sell the property. Bartholemew v. West et al., 2 Dill. 290; 2 Fed. Cas. 963.

Under the laws of the state, the bankrupt was entitled to a homestead exemption to the value of $500. The assignee sold the farm belonging to the bankrupt, free from the homestead right. It was held that the bankrupt was entitled to $500 out of the proceeds. In re Beede, 19 N. B. R. 68; 3 Fed. Cas. 62.

A deed in which the wife joined, conveying the farm where the bankrupt resided, was set aside at the suit of the assignee in bankruptcy as a fraud upon creditors. It was held that the giving of the deed did not bar the right of the wife to dower, or the right of the bankrupt to his homestead exemption. Cox v. Wilder et al., 2 Dill. 45; 6 Fed. Cas. 684; reversing s. c. 5 N. B. R. 443; 6 Fed. Cas. 685.

When a debtor made a conveyance which was afterward set aside as a preference under the Bankruptcy Act of 1867, it was held that the right to a homestead and dower both revived. In re Detert, 11 N. B. R. 293; 7 Fed. Cas. 545.

It was held under section 14 of the Act of 1867 that the bankrupt is entitled to a homestead out of lands mortgaged by him to secure a loan. In re Brown, 3 N. B. R. 250; 4 Fed. Cas. 334.

The holder of a note waiving the exemption of a homestead must be paid out of the proceeds, if the homestead has been set apart without notice. In re Judkins, 2 Hughes, 401; 13 Fed. Cas. 1193.

Where the bankrupt's right of homestead in the property on which he resides is cut off by a mortgage, the court in bankruptcy can order the bankrupt to deliver possession to the purchaser on a foreclosure sale without requiring him to bring a suit in ejectment. In re Betts, 4 Dill. 93; 3 Fed. Cas. 314.

A conveyance by the bankrupt of property occupied as a homestead to a trustee for the benefit of his wife was void as against the creditors. The court held that it was, however, good as between the husband and wife, and that the latter was entitled to a homestead allowance out of the proceeds. Smith v. Kehr et al., 2 Dill. 50; 22 Fed. Cas. 584.