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- In re

trust-fund for the benefit of the general creditors of the corporation, and cannot be set-off against an ordinary debt of the corporation. Ibid.

3. A claim for unliquidated damages may be made available as a defence to show that the defendant is not indebted to the petitioner, who must have a claim, after all just credits, exceeding the amount of $250, to entitle him to raise the inquiry as to the facts of bankruptcy and solvency of the defendant. Osage Valley, &c., R. R., 9 N. B. R. 281.

4. An insurance company became bankrupt, holding notes, received from the payee in the regular course of its business, made by A. jointly with B. The company, at the same time, owed A. and C. jointly for losses on policies. A. claimed to set off his half of the liability on the notes against the loss due him and C.; C. assenting to and authorizing such appropriation. Held, no mutuality of debt or credit under the Bankrupt Act, and set-off refused. - Gray v. Rollo, 9 N. B. R. 337.

5. A debtor who owes a debt to several creditors jointly cannot discharge it by setting up a claim which he has against one of those creditors, for the others have no concern with his claim, and cannot be affected by it; and no more can one of several joint creditors, who is sued by the common debtor for a separate claim, set off the joint demand in discharge of his own debt, for he has no right thus to appropriate it. Equity will not allow him to pay his separate debt out of the joint fund. And, if it had the assent of his co-obligees to do this, it would be unjust to the suing debtor, because he has no reciprocal right to do the same tbing. -- Ibid.

6. Claims against a creditor of an insolvent may be purchased by him prior to the petition in bankruptcy, and will be allowed in set-off in a bankruptcy court, although purchased for the purpose of being used as a set-off. Horey v. Home,Ins. Co., 10 N. B. R. 224.


STATE COURTS. 1. The state courts are bound to take judicial notice of the existence of the federal courts; it is also supposed they will know something of the laws of Congress, though not generally called upon to administer them. Morris v. Swartz, 10 N. B. R. 305.

2. The state courts will not recognize or enforce a right or title acquired under foreign bankrupt law or foreign bankrupt proceedings, so far as affects property within their jurisdictions, or demands against residents of this state (New York). - Mosselman v. Caen, 10 N. B. R. 512.

3. The effect of bankruptcy on suits pending in the state courts is to stay or suspend them. They may, with leave of the Bankrupt Court, be prosecuted to judgments for the single purpose of determining the amount due. Final process to procure satisfaction cannot be issued and executed. — Allen v. Montgomery, 10 N. B. R. 503.

4. When, in the exercise of the discretion left to the assignee and the general creditors by the Bankrupt Act, they voluntarily abandon all claim to incumbered property, the state courts may tħen subject such property to the satisfaction of the creditor's claims, and may afford him any relief touching such property as he would

have been entitled to, if the proceedings in bankruptcy had never been instituted. Bank of Louisville v. Bank of Newark, 11 N. B. R. 49.

5. The statement in a declaration or complaint, made by a party in a state court, does not bind the Bankrupt Court; and whether the complaint sets out a claim originating in fraud, and so not affected by bankruptcy, is a question for the Bankrupt Court to determine. — In re Williams, 11 N. B. R. 145.

6. A state court cannot by any process prevent a party from applying to the District Court for the benefit of the provisions of the Bankrupt Law. – Watson v. Savings Bank, 11 N. B. R. 161.



STATUTE OF LIMITATIONS. 1. Plaintiff brought suit, afterwards became bankrupt, but his assignee was not made a party to it till more than two years after his appointment. Held, that, under $ 2 of the act, the action was barred, and there must be judgment for defendant. Cogdell v. Exum, 10 N. B. R. 326.

2. An acknowledgment of a debt by the debtor before the time of limitation had expired, which was sufficient to prevent the statute from running, might be sufficient before the bar, although it would not amount to a new promise after the debt was barred. — In re Reed, 11 N. B. R. 91.

3. The state Statute of Limitations to a proof of claim, set up by an assignee, will be allowed, wherever that defence might have been made in a suit in the state where the debtor resides. - Ibid.


STOCK. 1. Primarily the amount due on subscriptions to capital.stock of a corporation is a debt to the corporation, which it alone can enforce; and unless the corporation is without other assets to meet its obligations, and fails to make the needed calls, creditors cannot interpose. Myers v. Seeley, 10 N. B. R. 411.

2. Unpaid subscriptions to the capital stock of a corporation are assets applicable to the payment of corporate debts, which the corporate authorities may call in for corporate purposes.

- Ibid. 3. The transfer of the certificate of stock in a national bank as a sale or pledge passes at least the beneficial ownership of the stock, and the delivery of the possession is as complete as the nature of the property will admit of.

Bank of Louisville v. Bank of Newark, 11 N. B. R. 49.

See Action, 1; CONPORATION, 10.

STOCKHOLDER. 1. The purchaser of a certificate who surrenders it, and has one issued to him directly, and has his name entered upon the stock books, becomes subrogated to the rights, and assumes the liability, of an original subscriber to stock; and that the acceptance of the certificate of which eighty per cent was unpaid, and sub

ject to future call, created an implied obligation on his part to


such balance. Upton v. Hansbroagh, 10 N. B. R. 368.

2. The individual liability of the stockholders in a corporation for the payment of its debts is always a creature of statute. At common law it does not exist. - Pollard v. Bailey, 11 N. B. R. 276.

3. Where a bank charter provides that the stockholders “ shall be bound respectively for all the debts of the bank in proportion to their stock holden therein,” each stockholder is bound for the debts in proportion to his stock; bis liability is not limited to the par value of his stock, nor is he bound absolutely for the payment of the full amount of that. He must pay a sum which shall have the same proportion to the whole indebtedness that his stock bears to the whole capital, and is not required to pay more. Ibid. See Action, 2; BANKRUPTCY COURT; CORPORATION, 6, 11; REMEDY.


SUBSTITUTION. A banker, having in special deposit certain bonds, appropriated them without the knowledge of his customer, substituting in their place a note and mortgage. After the banker's failure, the customer ratified the banker's acts in making the substitution. Upon bill brought by the assignee to compel an assignment of the note and mortgage, the court held, that there was no preference of one creditor over another, it was a mere exchange of one species of property for another; that there is nothing in the Bankrupt Act which prevents an insolvent from selling or exchanging his property, if he leaves it in as good plight and condition as previously. – Cook v. Tullis, 9 N. B. R. 433.


SUSPENSION OF PAYMENT. Where a merchant stopped payment of his commercial paper, and before the expiration of fourteen days made an assignment of all his property under the state law, for the benefit of his creditors, such assignment did not discontinue the suspension; but at the expiration of the fourteen days a complete act of bankruptcy was made. — In re Laner, 9 N. B. R. 494.

Taxes. An assignee by the sale of property cannot divest the right of a state to enforce payment of her taxes on the property, wherever found. The state cannot be compelled to come in and prove its claim. Stokes v. State of Georgia, 9 N. B. R. 191. See LIEN, 7.

TAX TITLE. A mortgagee out of possession, the holder of a mechanic's lien, or a party deriving title through an assignee in bankruptcy, have such“ a claim of legal

as entitles them to appear and contest the confirmation and establishment of the tax title. Meeks v. Whatley, 10 N.B. R. 498.




TESTIMONY. The Bankrupt Act authorizes the taking of testimony on commission, and excludes the taking of testimony on mere notice as provided in the Act of 1789. — In re Dunn, 9 N. B. R. 487.


TRUST FUND. Beneficiaries may follow a trust fund into the hands of any one receiving with notice of its trust character. - In re Tesson, 9 N. B. R. 378.

TRUSTEE The intent and effect of § 43 is that, pending proceedings under it, all the ordinary processes and proceedings under the act are, for the time being, absolutely superseded and suspended, excepting so far as such processes and proceedings are retained by the express words or by the necessary implication of the provisions of that section, which is entirely silent in regard to proof of debts presented after the institution of proceedings under it; and there are none of its provisions that cannot be fully carried out and enforced without the proof required by $ 22 in the case of debt so presented that the proceeding contemplated by $ +3 evidently intended to be one by arrangement. The trustee and committee have full power to arrange, and by mutual agreement to adjust, every thing relating to the settlement and winding up of the estate; but they cannot adjudicate or decide any disputed matter. A creditor is a proper party to move to require the trustee to admit a claim to participation in the distribution of the estate ; but his petition is insufficient, if the prayer for relief is based alone upon the fact that his claim has been proven under $ 22, his right so to prove having ceased to exist. — In re Trowbridge, 9 N. B. R. 274.


UNITED STATES MARSHAL. An action may be maintained in the state court against the United States Marshal, for the unlawful taking and detention of property seized by him under a warrant of seizure of a bankrupt's property. — Marsh v. Armstrong, 11 N. B. R. 125.. See EQUITY, 2; REGISTER, 2, 3.


USURY. 1. A creditor, seeking to prove a debt against the estate of a bankrupt, stands in the position of a plaintiff, in a suit at law, seeking to enforce such claim, and if he has taken or received usurious interest, he forfeits all interest. - In re Prescott, 9 N. B. R. 385.

2. The assignee stands in the place of the bankrupt, and can avail himself of the provision of the statute in relation to usury, and recover the penalty prescribed. It is not a personal privilege. Wheelock v. Lee, 10 N. B. R. 363.

3. The force and effect of chapter 172 of the Acts of New York, 1850, which forbids corporations from interposing the defence of usury to their contracts, are

to make the dealings of corporations as borrowers, and their contracts or obligations for loans, unaffected by any laws of the State of New York regulating interest; that as to contracts made by corporations, whether foreign or domestic, whether made in the State of New York or elsewhere, they stand, in the State of New York, as if no usury laws existed. Receivers, &c. v. Wild, 10 N. B. R. 568. PLEADINGS, 1, 6.


VERIFICATION. 1. A bill filed by creditors of a bankrupt, before his adjudication, praying for an injunction to restrain a party charged with receiving goods of the bankrupt in fraud, is sufficiently verified, if sworn to by an agent. — In re Fendley, 10 N. B. R. 250.

2. Where several petitioners join in the petition in separate and distinct rights, each stands as a separate and distinct party to the litigation so far as the right in which he prosecutes is concerned, and a verification by each petitioner is as necessary as if he had filed a separate petition. - In re Simmons, 10 N. B. R. 253. See PETITION, 20.

VOLUNTARY CONVEYANCE. If the grantor in a voluntary conveyance knows himself to be insolvent, that he is giving to his wife that which he knows was intended for the payment of his debts, that he intends thereby to secure to himself a future provision and support from the property which justly belonged to his creditors, the fact that the wife received such conveyance in ignorance of these facts will not make the conveyance a valid one, and the fact that the deed was unrecorded for more than a year

is important only as an evidence of fraud. Beecher v. Clark, 10 N. B. R. 385.


WAIVER. Where an adjudication in bankruptcy was rendered by bankrupt's consent, without the number of creditors and amounts, as required by the amended act, it was an irregularity which the bankrupt might waive. — In re William, 11 N. B. R. 145. See HOMESTEAD, 4.


WARRANT. In judgment of law the warrant is issued simultaneously with the entry of the order of adjudication. Whenever it is physically issued, it relates back for the purposes of the twelfth section to such entry. The death of the bankrupt after the order, though the warrant did not issue for a month after, will not operate to discontinue the proceedings. — In re Litchfield, 9 N. B. R. 506.


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