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The claim of a creditor who has proved his debt and had the same allowed by the register after the appointment of a trustee to wind up the bankrupt's affairs will be refused unless he applies directly to the court for its allowance. (In re Trowbridge, 9 N. B. R. 274; Fed. Cas. 14191.) Where a creditor has fraudulently proved a debt against the estate, and the assignee neglects or refuses to contest it, any creditor who has proved his debt may obtain the annulment of such fraudulent proof in a court of equity. First Nat. Bank of Troy v. Cooper et al., 9 N. B. R. 529; 20 Wall. 171.)

Allowance of counsel fees.- Where an assignee is substituted for a bankrupt in a suit, but afterward withdraws and assigns all interest to another, a claim for counsel services against the assignee will be allowed only for the period that the assignee occupies the place of the bankrupt. (In re Litchfield, 18 N. B. R. 347; 26 Pittsb. Leg. J. 76; Fed. Cas. 8386.) Where an assignee obtains authority from the court to employ counsel to prosecute a claim on a contingent contract for fees, but suppresses facts known to the attorneys, and which if known to the court would have prevented the giving of such authority, the contract may be set aside, but a reasonable compensation should be paid counsel for services actually rendered. (Maybin v. Raymond, Ass., 15 N. B. R. 353; 4 Amer. Law T. Rep. (N. S.) 21; Fed. Cas. 9338.) Assignees under a state law cannot receive allowance for attorney's fees nor compensation for their own services where the debtor has been adjudged a bankrupt. (In re Colm, 6 N. B. R. 379; Fed. Cas. 2966.) A petition filed by a bankrupt after his discharge, asking that the share of attorneys under contract for contingent fees be paid them, is not a bill in equity, and a decree directing payment of such claim is not an allowance of a claim against the estate. (Maybin v. Raymond, Ass., 15 N. B. R. 353; Fed. Cas. 9338.)

e. Claims of secured creditors and those who have priority may be allowed to enable such creditors to participate 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 their securities or priorities.

A "secured creditor" includes a creditor who has a security for his debt upon the property of the bankrupt of a nature to be assignable under this act, or who owes such a debt for which some indorser, surety or other person, secondarily liable for the bankrupt, has such security upon the bankrupt's assets. (Sec. 1-23.) Such claims are not to be counted in computing either the number of the creditors or the amount of their claims, unless the amount of such claims exceeds the value of such securities or priorities, and then only for such excess. (Sec. 56, b.)

The allowance of secured claims.- Where the attachment is a security and the bankrupt is a mere accommodation acceptor, the creditor has a right to proceed against the bankrupt for his debt in bankruptcy and also against the other parties to the bill under his attachment, until he has received the full amount of his debt, for it is a security obtained by the creditor against other parties to the bill by a proceeding in invitum. (In re Cram, 1 N. B. R. 133; 1 Hask. 89; 1 Amer. Law T. Rep. Bankr. 65, 120; Fed. Cas. 3343.) The creditor who has a lien on property for the payment of his debt is admitted as a creditor only for the balance of the debt after deducting the value of such property. (In re Winn, 1 N. B. R. 131; 1 Amer. Law T. Rep. Bankr. 17; Fed. Cas. 17876.)

Where a landlord takes a note to cover rent, and it is protested, and on the same day a distress warrant is issued for the rent for other months, and a few days later an assignment is made under the state law, the landlord is entitled to the payment of his claim for rent as a secured debt. (In re Bowne & Ten Eyck, 12 N. B. R. 529; 1 N. Y. Wkly. Dig. 100; Fed. Cas. 1741.) Advances made on the faith of a security presently to be given will be protected, notwithstanding changes in the condition of the borrower pending the consummation of the agreement, by actual delivery of the security. (Sparhawk et al. v. Richards et al., 12 N. B. R. 74; 1 Wkly. Notes Cas. 510; Fed. Cas. 18205.) Security for the payment of a note, by way of a deed of trust, given on the property of wife of a bankrupt, by the husband and wife jointly, is security within the meaning of the Bankrupt Act, and the claim should be allowed as secured, although the wife may have died leaving heirs; and the court will, on proper motion, attend to the application of the security and to the interests of the assignees in realty. (In re Hartel, 7 N. B. R. 559; Fed. Cas. 6157.) Where the defense is that securities were fraudulently obtained by the creditor, the burden of proof is upon the debtor to establish the fraud and the identity of the securities by a fair preponderance of evidence. (Payne et al. v. Solomon, 14 N. B. R. 162; Fed. Cas. 10856.) Where after the holder of a note signed by the bankrupt has made proof in full against the estate, an indorser secured by the bankrupt pays the amount to the holder and disposes of the security, he should give credit for the amount realized from his security and take a dividend upon the excess only of the original debt as proved. (In re Baldwin, 19 N. B. R. 52; Fed. Cas. 796.) A secured creditor is entitled to interest after the time specified for payment of the principal, by operation of law and not by any provision of the contract. (In re Bartenbach, 11 N. B. R. 61; Fed. Cas. 1068.)

Until the debt or liability of a pledged creditor is discharged, he cannot be compelled to surrender his security. (In re Buse, 3 N. B. R. 52; Fed. Cas. 2221.) Where his proof shows that his debt is secured by a mortgage on the bankrupt's homestead, he is entitled to vote on his whole claim for the choice of assignee. (In re Stillwell, 7 N. B. R. 226; Fed. Cas. 13448.) He may vote for assignee on so much of his debt as is

unsecured, where the security applies only to a specific portion of his debt. (In re Parkes et al., 10 N. B. R. 82; Fed. Cas. 10754.)

See Proof of Secured Claims, under subdivision a of this section.

f. 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.

The determination of objections to claims.-A creditor who contests the validity of the claim of another is liable, upon the decision being adverse to him, for the taxable costs and disbursements of the creditor whose claim is contested, and the fees, costs and expenses of the referee. (In re Troy Woolen Co., 8 N. B. R. 412; Fed. Cas. 14203.) A claim which has been rejected by the assignee and returned to the register for further proof should not be ordered paid without notice to the assignee and opportunity given to answer the creditor's petition. (In re Mittledorfer & Co., 3 N. B. R. 9; Fed. Cas. 9674.) Where written objections are filed to a proof of debt with the register, he is required to certify the same to the court upon request of either party, although no proof be offered against the validity of the debt upon testimony being taken. (In re Clark & Bininger, 6 N. B. R. 202; Fed. Cas. 2808.) A creditor holding collateral security is entitled to have his claim referred to the register for investigation, and the assignee is not justified in rejecting it until proofs have been taken and the matter fully inquired into. Where the assignee moves that the claim of a creditor be rejected on the ground that he has received and sold collateral security, the claim will be referred to the register for examination and report. (In re Nounnan & Co., 6 N. B. R. 579.) A creditor is not bound, upon a mere objection to his claim, to produce such evidence thereof as would be necessary at an ordinary trial. (In re Saunders, 13 N. B. R. 164; 2 Lowell. 444; Fed. Cas. 371.)

If the other creditors and the court be fully informed of a dispute between a debtor and his creditor as to the amount that is actually owing, and of the claims of the respective parties before their final action in composition is taken, they cannot complain if, when he is called upon to pay, the debtor insists upon what he claimed were his rights in the premises. (In re Lissberger, 18 N. B. R. 230; Fed. Cas. 8384) The fact that the petitioning creditor and the debtor are brothers warrants the court in scrutinizing the claim closely, but not in inferring fraud from this fact alone. Objecting creditors have a right to be heard in opposition to the allowance of the claim. (In re Mendelsohn, 12 N. B. R. 533; 3 Sawy. 342; Fed. Cas. 9420.) The amount claimed by a creditor in his proof, although accepted by the creditors and the court in composition proceedings, does not conclude the debtor, who may show that it exceeds what he actually owes. (In re Lissberger, 18 N. B.

R. 230; Fed. Cas. 8384.) An order for the examination of the wife of a bankrupt will be made when a prima facie case is made out by affidavit that she has in her possession property which should have been surrendered to her husband's creditors, or has actively participated in any other fraud upon the statute; and when she professes to be a creditor to her husband's estate, if she offers her debt for proof, she may be fully examined in regard to it like any other creditor. (In re Gilbert, 3 N. B. R. 37; 1 Lowell, 340; Fed. Cas. 5410.) An assignee cannot object to a judgment creditor's claim on the ground that the judgment was for a debt procured by fraud on the bankrupt, and was secured by default, as such defense should have been set up at the trial when judgment was had. (Stillwell v. Walker, Ass., etc., 17 N. B. R. 569; 6 Cent. Law J. 406;

Fed. Cas. 13451.)

That the debts are contingent, in case the contingency happens before the close of the bankruptcy, or that it is difficult to assess damages for a breach of a contract, are not valid objections to the proof of a claim, (Ex parte Pollard, 17 N. B. R. 228; 2 Lowell, 411; Fed. Cas. 11252.)

Where a bankrupt, within four months before bankruptcy, borrows money and gives a mortgage on his stock in trade, a prior note already secured and an overdue note which has been taken up and held by the indorser at whose request it was included in the mortgage, the mortgage may be severed and the valid part paid, notwithstanding that the stock is sold by the assignee, who holds that the mortgage is void as to the overdue note, and that as it is an entirety it is void in toto. (In re Stowe, 6 N. B. R. 429; Fed. Cas. 13513.)

Where application is made to expunge the proof of debt of a corporation on notes discounted for a bankrupt in its regular course of business, on the ground that the notes are not valid because the corporation is not authorized to employ its funds in discounting commercial or accommodation paper, the proof will be expunged and the claim rejected, but without prejudice to the right of the corporation to make proof of a claim for money loaned to the bankrupt. (In re Jaycox & Green, 7 N. B. R. 578; Fed. Cas. 7241.) Assignments of certificates of deposit issued by a banker before his bankruptcy, and delivered to a person as security for an antecedent debt, to be used as a set-off, coming into the hands of third persons, are not negotiable paper and no payment may be made thereon. (In re Sime & Co., 12 N. B. R. 315; 2 Sawy. 305; Fed. Cas. 12861.) Contracts for speculations in "wheat margins" are mere gaming contracts, and claims based thereon may not be proved as for money advanced for such purposes. (In re Green, 15 N. B. R. 198; 7 Biss. 338; Fed. Cas. 5751.)

Foreign judgments are only prima facie evidence of the debt adjudged to be due to the plaintiff, and such a judgment is open to examination, not only to show that the court was without jurisdiction of the subject-matter, but that it was fraudulently obtained. Domestic judg

ments cannot be collaterally impeached if rendered in a court of competent jurisdiction. (Michaels et al. v. Post, Ass., 12 N. B. R. 152; 21 Wall. 398.)

g. The claims of creditors who have received preferences shall not be allowed unless such creditors shall surrender their preferences.

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[Act of 1867. SEO. 23. 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.]

A preference is deemed to have been given where the debtor, while insolvent, 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 whereby any of his creditors would have an advantage over other creditors. (Sec. 60, a.)


Preferences. When a security is given a creditor by the bankrupt, of his own property, the creditor is not allowed to prove his debt unless he surrenders up the security, or it is sold with his consent, when he may prove for the residue of his debt which the security when sold does not discharge. When the security is of a third person, the creditor may prove his debt without surrendering the security and may proceed to enforce his security against such person, provided he does not take from both sources more than the full amount of the debt. (In re Cram, 1 N. B. R. 133; 1 Hask. 89; 1 Amer. Law T. Rep. Bankr. 65, 120; Fed. Cas. 3313; In re Forsythe & Murtha, 7 N. B. R. 174; Fed. Cas. 4948.) Creditors having reasonable cause to believe a debtor insolvent and accepting a chattel mortgage from him to secure their debts, thereby participating in such fraud as to found a proceeding against the debtor in involuntary bankruptcy, will not be permitted to relinquish their intended preferences and claims to prove their debts. (In re Princeton, 1 N. B. R. 178; 2 Biss. 116; 1 Amer. Law T. Rep. Bankr. 125; Fed. Cas. 11433.) One who obtains a preference within four months, having reasonable cause to believe at the time that a fraud was intended and that the debtor was insolvent, loses both his preference and his chance to prove his debt. (Bingham v. Richmond & Gibbs, 6 N. B. R. 127; Fed. Cas. 1415.) Debts proved by one who has taken a mortgage to secure the same within four months of adjudication constitute a fraudulent

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