§ 183. Solvent Partner paying Debts. -If a partner who has been fully exonerated by bankruptcy, or otherwise, takes up joint debts beyond his proportion, he may prove in respect to them; so, if the retiring partner has a bond, or other promise, from the remaining partners, and creditors have agreed to look to the latter alone, or so much time has elapsed that it may be presumed that there are no creditors of the former firm.2 In a recent case the offer of proof by a retired partner, who had not paid the joint debts, was properly rejected, on the ground that the undertaking to indemnify him did not create a contingent debt or liability; but the court criticised a decision holding a retired partner barred by the discharge of the remaining partners, which is equally sound, because he might have paid the joint debts and have proved for the balance. If the liability of one partner to another or to the firm arises from his fraudulent abstraction of funds, it can be proved against his separate estate, because no credit had been consciously given, and though provable as a debt, it is not a debt in the ordinary sense.5 If, however, the other partners have assented, or have condoned the offence, or, having knowledge or the means of knowledge, have failed to complain, the exception does not arise. § 184. Debts between Trade and Trade. In England, if one or more members of a firm carry on a distinct trade, and debts are contracted "between trade and trade" for goods sold, one firm may prove the amount against the other, that is to say, their assignees may settle the accounts as if one were the creditor; but this does not apply to an advance of money, even by a partner who exercises the separate trade of a banker.7 This exception has not been recognized in the United States, 1 Ex parte Atkins, Buck, 479; Re Hepburn, 14 Q. B. D. 394. 2 Ex parte Hill, 1 Dea. 123. 6 McCauly v. McFarlane, 2 Desaus. Ch. 239. 7 Ex parte St. Barbe, 11 Ves. 413; 8 Fernald v. Johnson, 71 Maine, 437. Ex parte Sillitoe, 1 Gl. & J. 374; Ex 4 Fisher v. Tifft, 12 R. I. 56. 5 Ex parte Butterfield, De G. 570; Ex parte Westcott, L. R. 9 Ch. 626. parte Williams, 3 M. D. & De G. 433; Ex parte Maude, L. R. 2 Ch. 550; Re Ridgway, 9 Morrell, 269. where it is held, in the few cases which have arisen, that the distinction between a debt for goods and one for money is not well founded, and that a debt by one partner to another for either is only a part of the general account between the partners.1 § 185. Proof between Estates when some Partners are the same. Proof is admitted where the creditor firm contains a partner who is not a member of the debtor firm, because the former firm is not competing with its own creditors, but proving a debt which in equity is distinct from the accounts of either firm, inter sese, but not where the debtor firm consists of the creditor firm and some others, because the latter are liable for all debts.3 Where there are equitable grounds against the proof, it is refused, though the law has otherwise been complied with, as where the treasurer of a charitable society deposited the money with his firm, who were bankers, and he was bound as principal, and his co-partner as surety, for the safe investment of the money, and all were bankrupt, but the separate estate of the surety turned out to have a surplus; his estate was not permitted to prove against the separate estate of the principal for any part of the dividend paid upon the bond, because the proof would enure to the benefit of the joint estate, which had been the real defaulter. § 186. Torts.-Damages for personal injuries, or for libel and slander, or for injuries to property, excepting the conversion of goods and chattels, or for negligence, or for false representations of the credit of a third person, have never been included within the class of debts provable against a bankrupt's estate, unless judgment has been entered or a final 1 Somerset Potters Works v. Minot, 10 Cush. 592; Re Lane, 10 N. B. R. 135, Fed. Cas. No. 8044. 2 Ex parte Thompson, 3 Dea. & Ch. 612; Ex parte Cama, L. R. 9 Ch. 686; Re Buckhause, 2 Lowell, 331, Fed. Cas. No. 2086; Lindley, Partnership (6th ed.), 743; Adams Eq. (5th Am. ed.), 464, note 1; 1 Story Eq. (13th ed.), § 680 ; Crampton v. Kent, 69 Vt. 228. [Under the act of 1898 a bankrupt firm may prove against the estate of the bankrupt partners, and vice versa. § 5g, infra, § 468.] 3 Re Savage, 16 N. B. R. 368, Fed. Cas. No. 12,381. award made against him before the bankruptcy, a verdict not being enough. Our late statute logically and wisely included among provable debts all demands on account of goods and chattels wrongfully converted, taken, or withheld by the bankrupt.2 This provision was taken from the statute of Massachusetts, in which it was adopted to save the "absurdity and injustice" of leaving to the election of the creditor whether his claim should be a debt or a tort, and be discharged or not.3 Goods and chattels in this connection include, I suppose, bills of exchange and other choses capable of conversion. It was the opinion of the bar that under the late statute damages for the breach of a promise to marry were provable, though those damages are of a somewhat peculiar nature closely resembling a tort. They were formerly not provable in England, but that was because they were unliquidated. Of course if the parties have agreed to settle a right of action for a tort, and convert it into a debt before the bankruptcy, the debt may be proved. § 187. Proof of Costs against a Plaintiff. Costs incurred by the bankrupt as plaintiff, in an action in which the judgment of nonsuit was not entered at the time of his bankruptcy, could not formerly be proved in England, and have never been proved in this country, because they could not be considered a debt before judgment; but actual taxation of the costs need not precede the bankruptcy;5 and so of costs, which depend 1 Crouch v. Gridley, 6 Hill, 250; Kellogg v. Schuyler, 2 Denio, 73; Black v. McClelland, 12 N. B. R. 481, Fed. Cas. No. 1462; Zimmer v. Schleehauf, 115 Mass. 52; Buss v. Gilbert, 2 M. & S. 70; Ex parte Charles, 16 Ves. 256; Re Newman, 3 Ch. D. 494; Re Seager, 8 Morrell, 216. 2 Act of 1867, § 19; 14 Stat. 525; R. S. § 5067. There is no such provision in the act of 1898. See the report of the very able commissioners who framed the insolvent law of Massachusetts, in Cutler (ed. 1853), 153 et seq. 4 Ex parte Baum, L. R. 9 Ch. 673 ; Re Scarth, L. R. 10 Ch. 234; Re Newman, 3 Ch. D. 494; Ex parte Goodier, 22 L. T. N. s. 426; Zinn v. Ritterman, 2 Abb. N. s. 261; Kellogg v. Schuyler, 2 Den. 73; Hun v. Cary, 82 N. Y. 65; Re Hennocksburgh, 7 N. B. R. 37, Fed. Cas. No. 6367; Black v. McClelland, 12 N. B. R. 481, Fed. Cas. No. 1462; Re Schuchardt, 15 N. B. R. 161, Fed. Cas. No. 12,483; Hodges v. Chace, 2 Wend. 248. [Under the act of 1898 costs are provable if the trustee refuses to carry on the action. § 63 (2), infra, § 526.] Holding v. Impey, 7 Moore, 614. upon no debt, imposed on a defendant, such as costs upon a special decree in equity.1 Under the very liberal terms of the English law of 1869, such costs, in an action of contract, are considered a liability incurred by the debtor, and are provable. It is otherwise if the action is for a trespass or other wrong.3 On the same principle a creditor may, under that statute, add to his provable debt arising by contract the costs of attempting to recover it, though unascertained at the bankruptcy.1 § 188. Proof of Costs against a Defendant. In respect to a plaintiff's costs, the somewhat artificial rule obtained in England before 1869 that if the creditor, having a provable debt, had obtained a verdict before the bankruptcy, he might add the costs as an increment; but if his case had not advanced to verdict, he could not.5 A provable debt will be discharged, and therefore some means should be given for proving the costs which have accrued upon it, for they will go with it. It would seem that the courts of bankruptcy, which are courts of equity, might have admitted the proof. At least, they might have refused to enjoin the action unless some provision were made for such proof. In this country the practice as to a plaintiff's unascertained costs upon a provable debt has not been settled by decision. They were provable by our late statute.7 § 189. Charges and Expenses. The law concerning the proof of expenses accruing after the beginning of the bankruptcy, such as the costs of protest on bills of exchange, seems 1 Ex parte Hill, 11 Ves. 646; Ex parte Eicke, 1 Gl. & J. 261. B. & P. 134; Ex parte Simpson, 3 Bro. 2 Ex parte Peacock, L. R. 8 Ch. [In Maine a provable debt cannot be 682. 3 Ex parte Newman, 3 Ch. D. 494. Re Gen. So. Am. Co., 7 Ch. D. 637; Re Gillespie, 16 Q. B. D. 702. 5 Ex parte Poucher, 1 Gl. & J. 385; Ex parte Helm, Mont. & McA. 70; Aylett v. Harford, 2 W. Bl. 1317; Ex parte Cocks, De G. 446; Ex parte Ferris, 2 M. D. & D. 746; Watts v. Hart, 1 proved if it is reduced to judgment pending the proceedings. Emery, Appellant, 89 Maine, 544.] 6 See Cothren's App., 59 Conn. 545; Jamison's Estate, 163 Pa. St. 143. 7 Stockwell v. Woodward, 52 Vt. 228. Act of 1898, § 63 (3), allows proof of costs incurred in an action on a provable debt, infra, § 526. to be in some doubt. It is commonly said in the text-books that these charges can be proved only when they accrued before the bankruptcy. But, since the law requires of the holder to make demand and give notice precisely as if the parties were solvent, and since these expenses will be discharged by the certificate, they should be provable as an increment to the debt; and such I consider the sounder doctrine. Damages such as re-exchange can be proved against the estate of the acceptor though arising after his bankruptcy.1 2 § 190. Torts, Fines, and Penalties. - A fine, or penalty, or costs imposed upon the bankrupt as a punishment, is not usually a provable debt; but may be so if any statute makes it a debt, or provides for its being collected by civil process, or gives such an alternative right of collection to the government, or to the person who has suffered the injury.3 Attachments for contempt are treated as civil, if they are merely for the enforcement of a debt, and as quasi criminal, if they are intended as punishment for disobedience.1 § 191. Voluntary Bonds, Notes, etc. It was formerly held in England that money due upon a voluntary bond, given for a good, but not for a valuable consideration, could not be proved. The theory of these decisions was, that as bankruptcy is equitably administered, and equity disregards a seal, it will require an actual consideration. These cases have been overruled upon the ground that such a bond creates a legal debt which will be discharged, and that the courts of bankruptcy cannot discriminate between valid 1 Francis v. Rucker, Ambl. 672; Walker v. Hamilton, 1 De G. F. & J. 602; Re Gen. S. Am. Co., 7 Ch. D. 637; Re Gillespie, 16 Q. B. D. 702. 2 Rex v. Robinson, 2 Burr. 799; Rex v. Norris, 4 Burr. 2142; People v. Spalding, 10 Paige, 284; Re Sutherland, Deady, 416, Fed. Cas. No. 13,639; Bancroft v. Mitchell, L. R. 2 Q. B. 549; Ex parte Graves, L. R. 3 Ch. 642. 8 Cobb v. Symonds, 5 B. & Ald. 516; Re Rosey, 8 N. B. R. 509, Fed. Cas. No. 12,066; Barnes v. United States, 12 N. B. R. 526, Fed. Cas. No. 1023; Reg. v. Hills, 2 E. & B. 176; Lees v. Newton, L. R. 1 C. P. 658; Rex v. Edwards, 9 B. & C. 652. [Proof may now be made for the pecuniary loss sustained on account of penalties imposed by the United States, a State, county, district, or municipality. Act of 1898, § 57j; infra, § 520.] 4 Hendryx v. Fitzpatrick, 19 Fed. Rep. 810 and cases cited. 5 Ex parte Hall, 1 Rose, 30; Ex parte Spurrier, Mont. 246. |