legal debts, unless when there is some positive equitable defence.1 It does not touch those cases which hold that a bond or judgment given as security for a debt of the obligor or judgment debtor himself can only be proved for the actual amount of the debt.2

A voluntary note cannot be proved by the first holder; nor can a note given merely in exchange for such a one.3

But a bond given in consideration of forbearance to sue a voluntary bond has a valuable consideration, and could always be proved. So a barrister's fees, which are gratuitous in England, could not be proved; but if an attorney received fees for a barrister, and became bankrupt, the amount was provable by the barrister against the assets of the attorney.4

§ 192. Debts bought after Bankruptcy. - Debts bought after the bankruptcy may be proved in full, and not merely for the amount paid for them, which is no concern of other creditors; but the buyer can only prove for so much as the seller might have proved for, even though the evidence of debt is a negotiable note not due, because the proof relates back to the beginning of the proceedings, which are to be taken notice of by all the world. A case is often cited as deciding that a note bought after the bankruptcy cannot be proved, but the decision was that the buyer could not prove in his own name.7 The English practice and that of Massachusetts 8 required the proof to be made in the name of the owner at the time the proceedings were begun, and the buyer could

1 Ex parte Pottinger, 8 Ch. D. 621; Fortune, 1 Lowell, 306, Fed. Cas. No. Re Coates, 9 Morrell, 87. 4955; Re Strachan, 3 Biss. 181, Fed. Ves. 449; Cas. No. 13,519; Green v. Hood, 42 Ill. Ap. 652.

2 Ex parte Bloxham, Ex parte Reader, Buck, 381.

Robson, 7th ed., 262; Re Vere, 2 Mont. & A. 123; Re Cornwall, 4 N. B. R. 400; Fed. Cas. No. 3251.

Ex parte Berry, 19 Ves. 218; Re Hookins, 3 De G. & Sm. 549; Re Hall, 2 Jur. N. s. 1076. [Gambling debts cannot be proved. Re Deerhurst, 8 Morrell, 97; Re Cronmire, 5 Manson, 30.]

5 Humphreys v. Blight, 4 Dall. 370, Fed. Cas. No. 6870; Re Murdock, 1 Lowell, 362, Fed. Cas. No. 9939; Re

Ex parte Deey, 2 Cox, 423; Ex parte Rogers, Buck, 490; Ex parte Atkins, ib. 479; Re Lane, 2 Lowell, 305, Fed. Cas. No. 8043.

7 Ex parte Isbester, 1 Rose, 20. [In England now a debt cannot be proved if it was incurred after notice of an act of bankruptcy. Buckwell v. Norman (1898), 1 Q. B. 622.]

8 Re Murdock, 1 Lowell, 362, 365, Fed. Cas. No. 9939.

require such proof to be made; under the act of Congress the proof was in the name of the true owner.1

§ 193. Amount for which Proof may be made. The general rule is that proof is to be made for the amount for which a judgment or decree might have been obtained in court at the time of the bankruptcy; understanding always that equitable defences are admitted in bankruptcy. It follows that when the bankrupt is the principal debtor no greater sum than his actual debt can be proved, though he may have given his direct or collateral obligations, or promise not secured by pledge or mortgage, for a much larger amount.2 Where two partners pledged notes of the firm which were justly due them for advances, it was held that the creditor could prove them.3 If the creditor holds bonds or notes secured by mortgage or pledge, he may prove for the whole amount as against the property.4

This general rule does not apply to persons who are collaterally liable, as I shall show in the next section.

§ 194. Proof for more than could be recovered at Law. - A creditor may prove in full against all the parties to notes, bills, and other securities excepting his own debtor, although they may have been assigned to him as collateral security for a less amount, and though the equities between his debtor and the other parties are such that, at law, he could have obtained judgment for only the true amount of his debt; because he

1 Re Murdock, 1 Lowell, 362, Fed. Cas. No. 9939.

2 Ex parte Reader, Buck, 381; Ex parte Bloxham, 6 Ves. 449, per Eldon, L. C.; Ex parte Farnsworth, 1 Lowell, 497, Fed. Cas. No. 4672; Third Nat. Bank v. E. R. R. Co., 122 Mass. 240; Re Blakely Ordnance Co., L. R. 8 Eq. 244. [A creditor can prove against the guarantor of a debt only the amount still due. Re Blakeley, 9 Morrell, 173.] 8 Miller's River Bank v. Jefferson, 138 Mass. 111.

4 Duncomb v. N. Y. etc. R. R. Co., 84 N. Y. 190; Tod v. Land Co., 57 Fed. Rep. 47; Furness v. Union Bank, 147 Ill. 570.

Ex parte Newton, 16 Ch. D. 330, s. c. nom. Ex parte Griffin, 29 W. R. 407; Ex parte Crossley, 3 Bro. C. C. 237; Ex parte Wildman, 1 Atk. 109; Ex parte King, Cooke, 7th ed., 168; English v. Darley, 2 B. & P. 61, per Ld. Eldon; Ex parte Adam, 2 Rose, 36; Ex parte Martin, ib. 87; Ex parte Sammon, 1 Dea. & Ch. 564; Ex parte Bloxham, 6 Ves. 449, 600; Ex parte Fairlie, 3 Dea. & Ch. 285; Ex parte Solarte, ib. 419; Ex parte Vere, 4 Dea. & Ch. 295; Re Babcock, 3 Story R. 393, Fed. Cas. No. 696; Bailey v. Nichols, 2 N. B. R. 478, Fed. Cas. No. 741; Downing v. Traders' Bank, 2 Dill.

holds a just debt for the full amount, and the reason he could not recover it against a solvent person not primarily liable is that he would be a trustee for that very person for the excess above the debt for which he held it as collateral.

So, where A. is bound for a debt of B., by an agreement between themselves to which the creditor is not a party, and A. becomes bankrupt, and the creditor proves against his estate, A.'s assignee may prove the full amount against B.'s estate in bankruptcy, and not merely the amount of dividend.1

Where two out of four partners were bankrupt, and a third was insolvent, and the fourth paid all the debts, he was admitted to prove for one-half the deficiency against the separate estate of each of his co-partners.2

The rule of proof in full does not apply to sureties upon a bond. The penalty is not their real debt any more than it is that of their principal; and sureties upon any sort of contract are liable for only what is due thereon by the principal.

These cases depend upon the equitable doctrine that proof is not payment. When the creditor has received actual payment for dividends, the several estates will settle future dividends according to the equities between them.

The surety can prove

$195. Amount of Proof by Surety. for a debt only when he has paid the whole, or a part in satisfaction of the whole. It follows that the creditor is to prove the whole when he has received a part not in satisfaction of the whole. How the dividends are to be apportioned is no

136, Fed. Cas. No. 4046; Ex parte Kelty, 1 Lowell, 394, Fed. Cas. No. 7681; Ex parte Farnsworth, 1 Lowell, 497, Fed. Cas. No. 4672; Ex parte Schofield, 12 Ch. D. 337; Re Weeks, 13 N. B. R. 263, Fed. Cas. No. 17,349; Sohier v. Loring, 6 Cush. 537; Nat. Mt. Wollaston Bank v. Porter, 122 Mass. 308; Bank v. Kendrick, 92 Tenn. 437; Citizens' Bank v. Patterson, 78 Ky. 291; So. Mich. Bank v. Byles, 67 Mich. 296; In re Meyer, 78 Wis. 615; In re Hobson (la.), 46 N. W. 1095; Benning v. Thibaudeau, 20 Can. S. C. 110.

1 Ex parte Norwood, 3 Biss. 504, Fed. Cas. No. 10,364; In re Sass (1896), 2 Q. B. 12.

2 Ex parte Watson, 4 Mad. 477.

3 Ex parte Hunter, 2 Gl. & J. 7; Ex parte Sarjeant, ib. 23; Re Ellerhorst, 5 N. B. R. 144, Fed. Cas. No. 4381; Downing v. Traders' Bank, 11 N. B. R. 371, Fed. Cas. No. 4046; Re Souther, 2 Lowell, 320, Fed. Cas. No. 13,184; In re Rea, 82 Ia. 231, contra. See Boltz Est., 133 Pa. St. 77.

concern of the creditors of the principal; nor is it for them to say that the surety's money has paid the debt of the principal.

There are decisions in England that if a surety has paid part of a debt, after the beginning of the bankruptcy, he can prove for the remainder only against the principal debtor.1 The question is, in reality, one of fact, namely, whether the payment was made on account of the principal debtor. If so, it is a part payment of the debt; if not, not

In the United States it is held that a payment by the surety of money on account, or for his own release, after the bankruptcy of his principal, is not a payment of the debt, and is not to be credited when proof is offered against the estate of the principal.2

I understand the earliest cases in England to have taken the true distinction,3 and this will be the law of that country when the case is fully argued. The creditor may prove in full, if the parties have so agreed beforehand. And the law should imply such an agreement when it is essential to the justice of the case.

Of course, when he who appears to be surety is, in truth, the principal, a payment by him must be deducted when proof is afterwards made against the actual surety; because, though the creditor may have the right to treat him as the principal, yet a payment of part of the debt by the real principal cannot be treated as anything less than a satisfaction pro tanto.

§ 196. Credits after Proof. When proof has been made against several estates, the creditor draws dividends for the full amount from each, whether principals or sureties, notwithstanding payments from the others, until he has received his debt with interest.5 But when the debt proved consists in

1 Taylor v. Mills, Cowp. 525; Paul v. Jones, 1 T. R. 599; Howis v. Wiggins, 4 T. R. 714.

2 Re Ellerhorst, 5 N. B. R. 144, Fed. Cas. No. 4381; Downing v. Traders' Bank, 2 Dillon, 136, Fed. Cas. No. 4046; Ex parte Talcott, 2 Lowell, 320, Fed. Cas. No. 13,184; 1 Ames, Select Cases on Bills and Notes, 878 and note; Re Pulsifer, 14 Fed. Rep. 247, per Blodgett, J.

8 Ex parte Ryswicke, 2 P. Wms. 89, 1 Atk. 108, note. See Ex parte Turner, 3 Ves. 243; Ex parte Lefebvre, 2 P. Wms. 407. See remarks of Eldon, L. C., in Ex parte Leers, 6 Ves. 644.

4 Ex parte Hope, 3 M. D. & De G. 720; Midland Bank v. Chambers, L. R. 7 Eq. 179; L. R. 4 Ch. 398.

5 Ex parte Martin, 2 Rose, 87 (the marginal note is inaccurate); Ex parte

whole or in part of bills or notes having several names, it is treated as several proofs; and if any one bill or note is paid by one who is bound to indemnify the bankrupt, the creditor's aggregate proof must be diminished to that extent, in justice to the creditors of the bankrupt, who was only a surety.1

On the other hand, if the bill or note has been paid or satisfied by a surety, he has a right to hold the proof by subrogation.2

§ 197. Surety for Part of Debt entitled to Share of Dividends. - It follows from the right of subrogation that when a banker proves a balance of account consisting in or secured by notes or bills made, accepted, or indorsed by third persons who hold the relation of sureties or quasi sureties to the bankrupt, if those persons pay the bills or notes, each stands subrogated, pro rata, to the creditors' proof, and may require him to pay them a proportionate part of the dividend.3

So a surety or guarantor for part of a debt, or for goods or advances to a certain amount, is subrogated to a proportionate dividend, when he pays that amount to the creditor who has proved his larger debt.4

This right the surety may waive by agreeing that dividends shall not be credited to him, and he then, in effect, becomes surety for the ultimate balance.

Reed, 3 Dea. & Ch. 481; Ex parte Vere, 4 ib. 295, 321; Re Warrant Finance Co., L. R. 4 Ch. 643; Re Joint Stock Co., L. R. 5 Ch. 86 and note 2; Re Humber Co., ib. 88. Two cases before Sir J. Leach, V. C., were decided otherwise. Ex parte Paton, 1 Gl. & J. 332; Ex parte Gass, ib. 338, note. In both these cases the bankrupt was surety only, though this should make no difference, the settlement between the different parties liable to the creditor being immaterial to him. The cases may be distinguishable by the fact that in both the principal was solvent; if not, they are inconsistent with those above cited.

1 Ex parte Burn. 2 Rose, 55; Ex parte Barratt, 1 Gl. & J. 327; Ex parte Hornby, De G. 69.

It has been lately held that

564; Ex parte Turner, 3 Ves. 243; Ex parte Rushforth, 10 Ves. 409; Ex parte May, Mont. & Ch. 18, 31, per Sir G. Rose.

3 Ex parte Turner, 3 Ves. 243; Ex parte Holmes, 4 Dea. 82.

4 Ex parte Brook, 2 Rose, 334; Thornton v. McEwan, 1 Hem. & M. 525; Ex parte Rushforth, 10 Ves. 409; Paley v. Field, 12 Ves. 435; Bardwell v. Lydall, 7 Bing. 489; Hobson v. Bass, L. R. 6 Ch. 792; Gray v. Seckham, L. R. 7 Ch. 680; Raikes v. Todd, 8 A. & E. 846.

5 Ex parte Miles, De G. 623; Ex parte Hope, 3 M. D. & De G. 720; Gee v. Pack, 33 L. J. Q. B. 49; Midland Bank v. Chambers, L. R. 7 Eq. 179; L. R. 4 Ch. 398; Ex parte Nat. Prov.

2 Ex parte Sammon, 1 Dea. & Ch. Bank, 17 Ch. D. 98.