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In all cases of mutual debts or mutual credits between the estate of a bankrupt and a creditor, the account must be stated and one debt set off against the other, and the balance only shall be paid or allowed. (Sec. 68, a.) A lien given or accepted in good faith and not in contemplation of or in fraud upon this act, and for a present consideration, which have been recorded according to law, if a record is necessary, are not affected by this act. (Sec. 67, d.)

d. If 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 transaction shall be reexamined 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.

Payments and transfers to attorneys.- Payment of attorney's fees for services previously rendered and to be rendered does not constitute a preference, even as to the services to be rendered, if the amount is reasonable. (In re Sidle, 2 N. B. R. 77; Fed. Cas. 12844.) If an insolvent debtor pays a retainer to counsel to assist him in the proper discharge of his duty under the bankrupt law, the payment is valid, but it is void if made with a view to prevent his property from being distributed under the act and the attorney knows him to be insolvent. (Goodrich v. Wilson, 14 N. B. R. 555.) But where a bankrupt gave a mortgage, after commencement of proceedings in bankruptcy, to secure pay for the services of mortgagee in resisting creditor's petition, it was held that the mortgage might be summarily set aside without a bill in equity. (In re Sims, 16 N. B. R. 251; Fed. Cas. 12888.) Where a bankrupt made an assignment to S., whose attorney was also attorney for the bankrupt and for a creditor, and payments were made by the attorney from the proceeds of the assigned estate to S. and the creditor, it was held that the assignment was void, and the attorney, S. and the creditor must deliver such estate or the proceeds thereof to the assignee in bankruptcy. (In re Meyer, 2 N. B. R. 137; 1 Chi. Leg. News, 210; Fed. Cas. 9515.) Before filing a voluntary petition in bankruptcy, the debtors assigned a number of claims to their attorneys and paid them one hundred and fifty dollars for services rendered and to be rendered in the bankruptcy proceedings. The attorneys collected some of the claims, and upon the suit for the money, and after issue joined, the assignee applied to compromise the claim. The court held it was not a proper case for compromise. (In re Rowe et al., 18 N. B. R. 428; Fed. Cas. 12092.)

CHAPTER VIL

ESTATES.

Sec. 61. Depositories for money.-a. Courts of bankruptcy shall designate, by order, banking institutions as depositories for the money of bankrupt estates, as convenient as 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.

[Act of 1867. SEC. 17. 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.]

Trustees are required to deposit all moneys received by them in one of the designated depositories and disburse the same only by check or draft on the same. (Sec. 47, a.) No moneys 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 the purpose, or by the clerk or his assistant, under an order from the judge. The name of any referee or judge authorized to countersign such checks must be furnished to the depository. (Orders XXIX.)

A bank in which funds are deposited to the credit of an assignee in bankruptcy has no power to pay out any of said funds except upon proper warrant under the authority of the court of bankruptcy. A state court has no authority to order such a bank to pay out of such funds a judgment rendered against the assignee. (Havens v. Bank, 13 N. B. R. 95.)

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.

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[Act of 1867. SEC. 28. If at any time, there shall not be in his (assignee's) hands a sufficient amount of money to defray the necessary expenses required for the further execution of his trust, he shall not be obliged to proceed therein until the necessary funds are advanced or satisfactorily secured to him.

SEC. 47. . . 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 the section in classes of cases to be named in their rules and orders.]

The compensation of referees (sec. 40), trustees (sec. 48), clerks and marshals (sec. 52) and stenographers (sec. 38) are fixed by law. The cost of preserving the estate subsequent to filing the petition is one of the debts entitled to priority of payment. (Sec. 64, b.)

The compensation allowed by the act is in full for the services performed by clerks, referees and trustees, but does not include certain expenses necessarily incurred in the performance of their duties and allowed upon the settlement of their accounts. (Orders XXXV.)

Care and preservation of property.- An assignee may be allowed all sums necessarily expended in caring for the property, and included in such allowance may be sums for repaying others who had advanced money to pay off pressing liens and to put the property in marketable condition. (In re Gregg, 3 N. B. R. 131; 1 Hask. 173; Fed. Cas. 5796.) A sheriff, having in his hands property of a bankrupt taken under an execution prior to commencement of proceedings in bankruptcy, is entitled to the expenses incurred in keeping such property from the date of filing the petition until their delivery to the assignee. (Zeiber v. Hill, 8 N. B. R. 239; 1 Sawy. 268; Fed. Cas. 18206.)

Auctioneer's fees.-In view of the fact that all sales must be by public auction unless otherwise ordered by the court (Order XVIII, 1), the fees of auctioneers is without doubt an allowable expense, while under the act of 1867 the courts held that the law contemplated that the assignee himself should sell the property of the bankrupt, and the necessity for the employment of an auctioneer should be affirmatively shown before fees were to be allowed the assignee. (In re Pegues, 3 N. B. R. 19; Fed. Cas. 10907; In re Sweet et al., 9 N. B. R. 48; 21 Pittsb. Leg. J. 82; Fed. Cas. 13688.)

Attorney's fees.- An assignee cannot charge assets of estate in his hands for professional and clerical services rendered him as such until first duly allowed by the court, upon a showing that the same are recessary and reasonable. (In re Noyes, 6 N. B. R. 277; Fed. Cas. 10371.) An assignee has the right to seek professional advice and to employ counsel in necessary and proper cases. But the necessity for counsel must be apparent and the charge reasonable. (In re Davenport, 3 N. B. R. 18; Fed. Cas. 3587; In re Colwell, 15 N. B. R. 92.) It was also held that counsel fees are within the discretion of the trustee and the committee chosen to assist him, and in the absence of bad faith will not be interfered with by court. (In re Baxter et al., 19 N. B. R. 295; Fed. Cas. 1122.)

Assignee under state law. An assignee under state law cannot be allowed an attorney's fee, nor compensation for his own services, but may be allowed the actual expenses incurred in doing that satisfactorily which the assignee in bankruptcy would have had to do in reference to the estate of the bankrupt. (In re Cohn, 6 N. B. R. 379; Fed. Cas. 2966; MacDonald, Ass., v. Moore, 15 N. B. R. 26; 8 Ben. 579; Fed. Cas. 8763; Burkholder v. Stump, 4 N. B. R. 191; Fed. Cas. 2165.)

Rent. An assignee is personally liable for rent, but where his occupation was for the benefit of the estate he will be credited the amount which he was obliged to pay. (In re Webb & Co., 6 N. B. R. 302; Fed. Cas. 17315; In re Merrifield, 3 N. B. R. 25; Fed. Cas. 9465; In re Breck & Schermerhorn, 12 N. B. R. 215; 8 Ben. 93; Fed. Cas. 1822.) The assignee is bound to pay a reasonable compensation for the portion of a lot actually used, but he does not become an assignee of the lease and is not bound by its covenants. (In re Ives et al., 18 N. B. R. 28; Fed. Cas. 7116; In re Hufnagel, 12 N. B. R. 554; Fed. Cas. 6837.) Rent for the time an assignee occupies leased premises after adjudication is a preferred claim. (In re Butler, 6 N. B. R. 501; 19 Pittsb. Leg. J. 146; Fed. Cas. 2236.) If the officers of the court keep possession of the premises of a bankrupt, the landlord is entitled to a reasonable compensation for the time they are so occupied. (In re Hamburger & Frankel, 12 N. B. R. 277; 1 N. Y. Wkly. Dig. 53; Fed. Cas. 5975.) A landlord's claim for marshal's use of premises for keeping and storing goods is a cost of administration to be paid in full if the assets are sufficient; if not, to be paid pro rata with other claims of same class. (In re Hoagland, 18 N. B. R. 530; Fed. Cas. 6545.) Although the claim of a landlord is not strictly a lien, as it does not attach to any specific article of property, yet under the laws of Mississippi it is entitled to priority of payment out of the estate. (Austin v. O'Reilly, Ass., etc., 12 N. B. R. 329; 2 Woods, 670; 2 Cent. Law J. 455; 1 N. Y. Wkly. Dig. 36; Fed. Cas 665.) The expenses of the estate cannot be deducted and allowed before the payment of rent that accrued after the commencement of the proceedings in bankruptey and while the assignee occupied the premises. (Buckner v. Jewell et al., 14 N. B. R. 286.) Where goods of a bankrupt merchant had been left in the store rented by the bank

rupt some months before the assignee took possession, but the assignee immediately removed them, the owner of the store could claim what was a reasonable price for storage of the goods, but not the value of the store as a salesroom. (In re The Lucius Hart Mfg. Co., 17 N. B. R. 459; Fed. Cas. 8592.) The estate is liable for the pasturage of the stock from the date of the institution of proceedings in bankruptcy. (In re Mitchell, 8 N. B. R. 47; 5 Chi. Leg. News, 271; Fed. Cas. 9657.) Without an order of the court, and without ascertaining whether the assets are sufficient to discharge all the expenses of administration of the same class, the assignee cannot pay a claim for use and occupation of premises. (In re Hoagland, 18 N. B. R. 530; Fed. Cas. 6545). The prevention of injury to the premises, by not removing machinery, is not a circumstance to be considered in determining the compensation to the landlord for the use of the premises by the assignce. (In re Breck & Schermerhorn, 12 N. B. R. 215; 8 Ben. 93; Fed. Cas. 1822.)

Wages.- Workmen should be first paid, and charges connected with litigation disallowed. (In re Sawyer, 16 N. B. R. 460; 2 Lowell, 551; 15 Alb. Law J. 280; Fed. Cas. 12396.)

Taxes.- Funds in the hands of an assignee are liable to taxation by the state. (In re Mitchell, Ex parte Sherwin, 16 N. B. R. 535; 17 Alb. Law J. 26; Fed. Cas. 9658.)

Cost of improvident suit.- Where a bill of complaint had been filed by an assignee without sufficient cause, but the circumstances are not so clear as to require any imputation upon the good faith of the assignee in the prosecution of the suit, the costs will be paid out of the estate in the hands of the assignee. (Coxe v. Hale, 8 N. B. R. 562; 21 Pittsb. Leg. J. 77; Fed. Cas. 3310.)

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,

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