the surety, if he paid it after the beginning of the proceedings against his bankrupt principal. He might, by a bill in equity after or accompanied by payment, require the creditor to prove, or be subrogated to his proof; and, if he paid the debt, he could recover from the creditor any dividends afterwards received by him.2 These remedies were difficult for the surety, and his right of election was unjust to the debtor. In 1809 a statute was passed which has been followed generally in later statutes in England and this country, by which any person liable as bail, surety, guarantor, or otherwise, for the bankrupt, who shall have paid the debt, or any part thereof, in discharge of the whole, may prove, or stand in the place of the creditor if he has proved. Our late statute added, in conformity with the practice before existing, that any person so liable, who has not paid, may prove in the name of the creditor or otherwise, as may be provided by the general orders, if the creditor fails to prove. The purpose is to enable the surety to obtain the advantage of the dividend, though the debt is not yet payable.

We have the authority of Lord Eldon that the words "persons liable" were introduced into the statute "for the convenient latitude of comprehending all those who could not be strictly considered as sureties, and yet might meet the protection they were entitled to under those general words." 5

In Massachusetts the statute concerning living insolvents, which permits sureties to prove, is held not to include a retired partner, a somewhat narrow decision. Even in that State, assets of a deceased

6

however, partners may prove against the insolvent partner, subject to the priority of joint creditors.

1 Ex parte Atkinson, Cooke, 7th ed., 210; Beardmore v. Cruttenden, ib. 221; Wright v. Simpson, 6 Ves. 714; Ex parte Rushforth, 10 Ves. 409; Wright v. Morley, 11 Ves. 12; Re Babcock, 3 Story, 393, Fed. Cas. No. 696.

2 Selfridge v. Gill, 4 Mass. 95.

8 49 Geo. III., c. 121, § 8. This act omitted to mention bail, who were added by a late statute, and are specially mentioned in most modern laws. See act of 1898, § 57 i, infra, § 520.

R. S. § 5070; Act of 1898, § 57 i. [In England a surety can prove before pay. ing: Re Herepath, 7 Morrell, 129; but cannot vote for trustees: Re Parrott, 8 Morrell, 49.]

5 Ex parte Young, 2 Rose, 40, 46; Ex parte Lobbon, 17 Ves. 334.

6 Morton v. Richards, 13 Gray, 15, though a retired partner has the rights of a surety; Oakeley v. Pasheller, 4 Cl. & F. 207.

7 Wilby v. Phinney, 15 Mass. 116;

* Act of 1867, § 19; 14 Stat. 525; Johnson v. Ames, 11 Pick. 173.

"Persons liable" includes solvent partners who have paid more than their share of just debts, or who have retired with an undertaking by the remaining partners to pay the debts;1 and so of drawers, indorsers, or any other parties to commercial paper, who are, as between themselves and the bankrupt, entitled to be indemnified by him, whatever may be their situation on the paper; 2 and, of course, the executor or assignee of a dead or bankrupt surety succeeds to his rights.3

The surety, or person liable, must usually pay or satisfy the debt before he can prove in his own right, or be subrogated to that of the creditor; mere indemnity, or offer of indemnity, is not enough; but any arrangement which the creditor accepts in full exoneration of the bankrupt will do; and the court has power to accept indemnity, if the surety is prevented from paying the debt by obstacles beyond his control.5 Payment by the surety in discharge merely of his own liability gives him no right of proof. If the surety does not choose to pay the debt, he cannot object to the creditors signing an assent to the bankrupt's discharge. If he does pay it, he is subrogated to all rights of the creditor under the proceedings. If the

1 Ex parte Taylor, 2 Rose, 175; Ex parte Watson, 4 Madd. 477; Wood v. Dodgson, 2 M. & S. 195; Ex parte Carpenter, Mont. & McA. 1; Aflalo v. Fourdrinier, 6 Bing. 306; Ex parte Ogilby, 3 Ves. & B. 133; Butcher v. Forman, 6 Hill, 583; Crafts v. Mott, 5 Barb. 305, and 4 N. Y. 603; Fisher v. Tifft, 12 R. I. 56. This last decision is criticised by an able writer, 18 Am. Law Reg. N. s. 9, but is entirely sound. Fisher v. Tifft, 127 Mass. 313; Fernald v. Clark, 84 Me. 234.

2 Stedman v. Martinnant, 13 East, 427; Bassett v. Dodgin, 9 Bing. 653; Haigh v. Jackson, 3 M. & W. 598; Mace v. Wells, 7 How. 272; Hunt v. Taylor, 108 Mass. 508; Fulwood v. Bushfield, 14 Penn. St. 90; Hardy v. Carter, 8 Humph. 153; Van Sandau v. Corsbie, 8 Taunt. 550; Filbey v. Law. ford, 3 M. & G. 468, explaining a dictum

in Yallop v. Ebers, 1 B. & Ad. 698; Liebke v. Thomas, 116 U. S. 605.

8 Ex parte Johnson, 3 De G. M. & G. 218.

4 Ex parte Moore, 2 Gl. & J. 166; Ex parte Allen, 3 De G. & J. 447; Fox v. Eckstein, 4 N. B. R. 373, Fed. Cas. No. 5009; Abbott v. Bruere, 5 Bing. N. C. 598; Re Morrill, 8 N. B. R. 117, Fed. Cas. No. 9821.

5 Ex parte Webster, De G. 414.

6 Soutten v. Soutten, 5 B. & Ald. 852. This case was wrongly decided, but the point now in question was rightly stated. See infra, § 446.

7 Browne v. Carr, 7 Bing. 508, and 2 Russ. 600; Ratcliffe v. Gunson, 6 Madd. 193; Ex parte Herbert, 2 Gl. & J. 66; Ex parte Taylor, 1 Gl. & J. 399; Cooper v. Jenkins, 32 Beav. 337; Sigourney v. Williams, 1 Gray, 623; Guild v. Butler, 122 Mass. 498.

time for proof is limited by the statute, it is no excuse for the surety who does not apply within the time that he was contesting his liability to the creditor.1

Co-sureties.

Two

§ 174. Proof by Co-promisors and classes of decisions were made under former statutes in England which appear unsound under the existing statutes. They were cases in which the supposed debt accrued after the beginning and before the close of the bankruptcy:

1. That one of two joint and several promisors paying the whole debt could not prove against the estate of his bankrupt co-promisor.2

2. That co-sureties cannot prove against each other.3

But a co-promisor or a co-surety seems to be "a person liable," not only to the creditor for the whole debt, but to his fellow promisor or surety, for a share which the latter has paid beyond his proportion. Such is the better opinion in this country, and there is authority for it in England.*

Privity of contract is not always essential. An agent or broker who, in the course of business, has made himself personally liable for his principal, though without his knowledge or request, and has paid the debt since the bankruptcy of the principal, has been permitted to prove " as a person liable" for him.5

That when a co-surety had become liable to pay the debt before the bankruptcy of his fellow surety, his demand would be provable, though he paid afterwards, was held by a learned Chancellor, in an opinion of great ability: Eberhardt v. Wood." And, by the existing law in England, it would be provable if

1 French v. Hayward, 16 Gray, 512; Sears v. Wills, 7 Allen, 430.

2 Ex parte Porter, 4 Dea. & Ch. 774, well criticised in Griffith & Holmes on the Bankrupt Law, Vol. I., p. 564.

8 Clements v. Langley, 5 B. & Ad. 372; Wallis v. Swinburne, 1 Ex. 203. See Swain v. Barber, 29 Vt 292; Goss v. Gibson, 8 Humph. 197; Dole v. Warren, 32 Me. 94.

4 See Judge Hare's note to Mills v. Auriol, 2 Smith L. C. (7th Am. ed.)

1236; Tobias v. Rogers, 13 N. Y. 59; Dean v. Speakman, 7 Blackf. 317; Clarke v. Porter, 25 Penn. St. 141; Ex parte Hunter, Buck, 552; Ex parte Moore, 2 Gl. & J. 166; Ex parte Plowden, 2 Dea. 456; Miller v. Gillespie, 59 Mo. 220.

6 Ex parte Robinson, Buck, 113; Ex parte Hustler, ib. 171; Re Schenk, 33 L. T. 246.

62 Tenn. Ch. 488.

the contingency happened before the close of the proceedings, or if the court found it capable of liquidation, which it would be if the debt had become payable and was not paid.

If the debt of the principal is not payable before the close of the bankruptcy, and he remains solvent, the weight of authority still is that the liability of a surety to the creditor, and, by consequence, that of a co-surety to his fellows, would not be capable of liquidation.

Chancellor Cooper, in the case last cited, is inclined to admit that if the suretyship is for the faithful performance of the duties of an office, and the default is unknown while the surety is bankrupt, the debt is not one which can be considered certain enough to be provable; differing from a money debt, the maturing of which is known to the surety.

§ 175. Subrogation when Surety and Principal are both Bankrupt. After the creditor proving against both estates is fully paid, the assignee of the surety or other "person liable" will be subrogated to the creditor's proof against the estate of the principal, and will share future dividends equally with other creditors, until he has received all that he has paid in dividends on that debt, or, in other words, until the creditors of the surety are indemnified; 2 and this extends to the assignees of co-sureties whose estates have paid more than their proportion, and to those of co-partners after the joint debts have been fully paid.2 It has been decided that a surety paying the debt may hold the full proof which the creditor has made against the estate of his co-surety; but in Massachusetts the rule is otherwise.

§ 176. Proof of Bills and Notes. The bankruptcy of the acceptor of a bill or maker of a note will not excuse presentment to him, and notice to the drawer and indorsers; nor will

1 Eberhardt v. Wood, 2 Tenn. Ch. 488.

2 Ex parte Marshal, 1 Atk. 129; Ex parte Stokes, De G. 618; Ex parte Johnson, 3 De G. M. & G. 218; Re Parker (1894), 3 Ch. 400.

Lidderdale v. Robinson, 2 Brock. 159, Fed. Cas. No. 8337; 12 Wheat. 594; Hess' Estate, 69 Pa. St. 272; Ex parte Stokes, De G. 618.

4 New Bedford Inst. v. Hathaway, 134 Mass. 69.

the bankruptcy of the drawer or indorser excuse notice to him or his assignee.1

If the person entitled to notice is bankrupt, he is still the proper person to be notified, unless his assignees have been appointed; and by a recent decision even afterwards, though a notice to his assignees would, undoubtedly, be equally valid. If a firm, and one or more of the partners, are severally parties to the paper, and all are jointly bankrupt, no notice is necessary, because the assignees represent them all; and if the late case above cited is sound, it would be immaterial whether they have the same assignee or not, because no notice to the bankrupts themselves would be necessary if they were not bankrupt. When a bankrupt is entitled to notice, he has power to waive it.6

It seems, too, that holders of notes and bills, or other debts, will discharge the estate of the surety in bankruptcy by giving time to the principal without the consent of the bankrupt or of his assignees.

§ 177. Proof of Judgments and Awards. Judgments and final awards for money, entered or published before the bankruptcy, are provable, though the cause of action was a tort or a demand not provable; and so of a completed judgment for

1 Russel v. Langstaffe, Doug. 514; Ex parte Wilson, 11 Ves. 410; Ex parte Rhode, Mont. & McA. 430, and Rhode v. Proctor, 4 B. & C. 517; Ex parte Johnston, 3 Dea. & Ch. 433; Ex parte Bignold, 1 Dea. 712; Lawrence v. Langley, 14 N. H. 70.

2 Ex parte Moline, 19 Ves. 216; Ex parte Johnson, 3 Dea. & Ch. 433; Re Loder, 4 N. B. R. 190, Fed. Cas. No. 8457; Ex parte Tremont Bank, 2 Lowell, 409, Fed. Cas. No. 14,169. 3 Ex parte Baker, 4 Ch. D. 795. 4 Fuller v. Hooper, 3 Gray, 334; Ex parte Russell, 16 N. B. R. 476, Fed. Cas. No. 12,148.

7 Act of 1898, § 63 (1), infra, § 525; Packer v. Whittier, 81 Fed. Rep. 335; Ex parte Lingood, 1 Atk. 240; Baker's Case, 2 Str. 1152; Ex parte Hill, 11 Ves. 646; Robinson v. Vale, 2 B. & C. 762; Greenway . Fisher, 7 B. & C. 436; Ex parte Harding, 5 De G. M. & G. 367; Re Comstock, 5 Law Reporter, 163, Fed. Cas. No. 3073, and 22 Vt. 642; Comstock v. Grout, 17 Vt. 512; Ex parte Thayer, 4 Cow. 66; Hayden v. Palmer, 24 Wend. 364; Re Book, 3 McLean, 317, Fed. Cas. No. 1637; Re Hennocksburgh, 7 N. B. R. 37, Fed. Cas. No. 6367; Re Wiggers, 2 Biss. 71, Fed. Cas. No. 17,623; Manning v.

Porthouse v. Parker, 1 Camp. 82; Keyes, 9 R. I. 224; Howland v. Carson, Rhett v. Poe, 2 How. 457. 16 N. B. R. 372; Hays v. Ford, 55 Ind. 52.

6 Brett v. Levett, 13 East, 212; Ex parte Tremont Bank, 2 Lowell, 409, Fed. Cas. No. 14,169.