§ 62.] Auctioneer's Services - Sums Paid for the Preservation of Property.

Courts require satisfactory evidence going to show the necessity of legal aid on the part of the assignee. In re Davenport (3 N. B. R. 77; Fed. Cas. 3,587), Judge Duval of the U. S. District Court for the Western District of Texas said that while in prosecuting 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 N. 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.

See section 64b on the subject of attorney's fees.

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 N. B. R. 80; Fed. Cas. 10,907), 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 (Fed. Cas. 13,688; 9 N. B. R. 48).

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 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,

Allowances to Assignees for the Benefit of Creditors.

[Ch. VII. 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. (In re T. Gregg, Fed. Cas. 5,976; 3 N. B. R.

529.)

And in the case of In re Lesser (3 Am. B. R. 815; 100 Fed. 433), it was held that where creditors have secured a lien of which they are deprived by the operation of the Bankruptcy Law and the full benefit of their litigation accrues to others, the bankruptcy court may make a reasonable allowance as an indemnity for the costs and expenses through which such benefit has been obtained. See also In re Little River Lumber Co. (3 Am. B. R. 682; 101 Fed. 558).

The compensation of a receiver in bankruptcy lies in the sound discretion of the court. This rule also applies to marshals in taking care of property where the allowance is not given for the time of employment but in consideration of the surrounding cir(See in re Scott, 3 Am. B. R. 625; 99 Fed. 404.)

cumstances.

Allowances to Assignees for the Benefit of Creditors.-Where a general 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 N. B. R. 26; s. c. 1 Abb. N. C. 53; Burkholder v. Stump, 4 N. B. R. 597; Fed. Cas. 2,165; in re J. Cohn, 6 N. B. R. 379; Fed. Cas. 2,966.) 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 assignment, he has paid over to the creditors. (Cragin v. Thompson, 2 Dill. 513; s. c. 12 N. B. R. 81; Fed. Cas. 3.320; Jones v. Kinney, 5 Ben. 259; s. c. 4 N. B. R. 649; Fed. Cas. 7,473.)

And see opinion of Referee Hotchkiss, in re Pauley (2 Am. B.

§ 63.]

Examination of Accounts Under this Section - Provable Debts.

R. 333), which holds that a general assignee in possession prior to bankruptcy will be allowed, out of the estate, his disbursements in preserving the same, and that he will also be allowed reasonable fees as custodian of the estate, but he cannot be given fees as assignee, and that the attorneys of such assignee should not be allowed, except in unusual circumstances, anything out of the estate.

Examination of Accounts Under this Section. Upon the accounting by the trustee the account must be examined by the court (which means the referee). While creditors have the right to examine the trustee's account and urge any objection and be heard upon the same, the duty of examining in detail the items of the account devolves upon the referee. (See opinion of Gurley, Ref. in re Baginsky, 2 Am. B. R. 243.)

SEC. 63. Debts which may be Proved.-a Debts of the bankrupt may be proved and allowed against his estate which are (1) a fixed liability, as evidenced by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such as were not then payable and did not bear interest; (2) due as costs taxable against an involuntary bankrupt who was at the time of the filing of the petition against him plaintiff in a cause of action which would pass to the trustee and which the trustee declines to prosecute after notice; (3) founded upon a claim for taxable costs incurred in good faith by a creditor before the filing of the petition in an action to recover a provable debt; (4) founded upon an open account, or upon a contract, express or implied; and (5) founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt's application for a discharge, less costs incurred and interests accrued after the filing of the petition and up to the time of the entry of such judgments. b Unliquidated claims against the bankrupt may, pursuant to application to the court, be liquidated in such manner as it shall direct, and may thereafter be proved and allowed against his.

estate.

Differences Between the Old and New Law.

Analogous Provisions of Former Acts.

[Ch. VII.

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, § 19; act of 1841, § 5; act of 1800. § 39. As to proof of bankrupt's liability as a surety: R. S., § 5069; act of 1867 § 19; act of 1841. § 5. As to proof of claim of a surety of a bankrupt: R. S., § 5070; act of 1867 § 19; act of 1841, § 5.

Differences Between the Old and New Law.-The provisions of the present Bankruptcy Act as to provable debts differ materially from those of preceding 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 damages 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 a 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 provable. It is not meant, however, by the statement that the present statute contains 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 notwithstanding the lack of

863-]

Date of Debt - Contingent Liabilities.

express provisions. These cases will be considered below in the notes to the several subdivisions of the section.

ings until

Time When the Debt Must Have Come Into Existence in Order to be Provable.-It will be noted that nowhere in the section is there any express 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 proceedin bankruptcy, and all debts then existing, but not payable a future day, were provable; but under this act, while four of the subdivisions contain provisions as to the time when the debts therein mentioned must have come into existence in order to be provable, there is no express provision as to the time when debts founded upon an open contract or upon a contract express or implied, must have come into existence. But the manifest intent and policy of the act must be held in this case as in the cases mentioned in the other subdivisions, to limit provable debts to those existing at the time of the petition.

Incleed it is clear that the only debts which can be proved under the Present Bankruptcy Act are those which were in existence at the time of the filing of the petition, although it is also clear that, under subdivision b, where such a debt is in existence at the time of the filing of the petition unliquidated but otherwise provable, it may be liquidated under the direction of the court, subsequent to the petition. (In re Bingham, 2 Am. B. R. 223; 94 Fed. 796; in re McBryde, 3 Am. B. R. 729; 99 Fed. 686; in re Silverman, 4 Am. B. R. 89; 101 Fed. 219.)

Contingent Liabilities.-It follows from what has been said that while contingent liabilities in certain cases were provable under U.S. R. S. section 5069 (act of 1867, section 19), they are presumably not in general provable under the present Bankruptcy Act. The provisions of the act of 1898 concerning the proof contingent claims differ materially from those contained in the acts of 1841 and 1867. Section 63a (1) provides for fixed

of