counsel. It has always been the rule in this country that a bankrupt could give a reasonable sum to an attorney for legal services. The English law is more strict and limits the sum to a payment for services up to the time of adjudication. This depends largely on the fact that bankruptcy is a revocation of a solicitor's authority to pay money.3 1 See supra, § 88. 2 Re Pollitt, 9 Morrell, 309. See Re Beyts, 1 Manson, 56; Re Charlwood (1894), 1 Q. B. 643; Re Whitlock, 1 Manson, 33; Re Simonson (1894), 1 CHAPTER VII. ESTATES. § 524. Act of 1898. 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. Under the Act of 1867, Rule XXVIII. of the Supreme Court provided that the district courts should designate depositories for money. They were required to be national banks if possible. There is nothing in the present act or the General Orders of the Supreme Court which requires this. It was probably intended that the depositories should usually be national banks, since in the only place where they are mentioned they are described as national banks.1 § 525. Act of 1898. 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, 1 See Form 61. 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. The cost of administering the estate is to be paid in full after taxes, cost of preserving the estate and filing fees (§ 64 b (3)). The clerk, marshal or referee need not incur any expense unless he is given indemnity for it.1 § 526. Act of 1898. 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, or upon a contract express or implied; and (5) founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt's application for a discharge, less costs incurred and interests accrued after the filing of the petition and up to the time of the entry of such judgments. 1 Rule X. b. Unliquidated claims against the bankrupt may, pursuant to application to the court, be liquidated in such manner as it shall direct, and may thereafter be proved and allowed against his estate. this section is very different from that The first and most important question They are not 3 The phraseology of of the preceding act. is whether contingent debts are provable. expressly mentioned as they were in the acts of 18411 and 1867.2 But, as we have seen, one class of contingent debts - that of persons secondarily liable may be proved. This is an indication that Congress did not mean to exclude such debts altogether. Clause 4 of § 63 is expressed in terms broad enough to cover contingent debts, and in paragraph b there is a provision for liquidation of debts. This would also apply to debts absolutely due, but it is significant in this connection. that in § 19 of the Act of 1867 the term "liquidation" was applied to contingent debts as well as others. For these reasons, and because it is necessary to the establishment of a satisfactory bankruptcy system that the court should have power to wind up all the affairs of a bankrupt, it would seem that Congress intended to include contingent debts. Supreme Court has taken this view of the act, as they have provided for the proof of such debts. But if a contingent liability is not capable of valuation, it will not be provable. 5 Future rent can not be proved." The Section 63 omits an important class of debts which were included under the last act. Demands for goods converted by the debtor are not included. The unfortunate result is, that it is in the power of the creditor to waive the tort and prove for the value of the goods, or sue the debtor on a cause of action to which his discharge is not a bar.7 Clause 1 will include bills, notes and judgments. It makes no difference whether the action on which the judgment was recovered was for a debt provable in bankruptcy. A judgment in an action of tort is provable.1 Clause 2 has changed the former rule in this country.2 There was no provision like clause 3 in the last act, but the courts allowed such claims in some cases. 3 Clause 4 will include many demands against the estate of the bankrupt and should be construed to cover contingent liabilities. In case of demands founded on an open account where it is not clear what the amount is, the demand may be liquidated by the court. Contingent liabilities are to be proved in the name of the creditor if possible, and in no case will a dividend be paid unless it be proved that the original debt will be thereby diminished. The proof of debts on open account shall state when they will mature, and if there are debts maturing at different dates, the average due date shall be stated. 5 6 Equitable debts have been proved under most systems of bankruptcy. It is evident that Congress contemplated the proof of some equitable debts because it made provision for the proof of the estate of partners against the partnership estate (§ 5 g). Cases in which there is really a contract, though for technical reasons the remedy is in equity, would be covered by this clause. Thus the right of a wife to recover for money lent her husband. The terms of clause 4 relate only to contracts made by the parties themselves. This clause will not therefore cover that large class of actions on contracts implied in law which are sometimes called "implied contracts." Liabilities of this kind are imposed on the parties irrespective of any contract between them. They are not really contracts at all and are now more usually called quasi-contracts. 8 The precise point arising under this clause has been decided in New York, where it was held that a statute containing the phrase con 1 Supra, § 177. 2 Supra, § 187. 8 Supra, § 343. 4 Rule XXI. 4. 5 Rule XXI. 1. 6 Supra, § 179. 7 Supra, § 181. 8 For a very able treatment of this subject, see Keener on Quasi-Contracts. |