557. It was held that upon a con-version by a firm, no proof could be made against the individual members upon an implied contract therefrom arising. Reynolds V. N. Y. Trust Co., C. C. A., 39 L.R.A. (N.S.) 391, 188 Fed. 611. It was so held of the conversion of chattels, Reynolds v. N. Y. Trust Co., C. C. A., 39 L.R.A. (N.S.) 391, 188 Fed. 611, of an embezzlement of money, Burgoyne v. McKillip, C. C. A., 182 Fed. 452; Clarke v. Rogers, C. C. A., 183 Fed. 518; and of the sale through fraudulent representation of commercial paper drawn by the firm, Schall v. Camors, 251 U. S. 239. Where a firm, after accepting bills of lading, converted money which they were bound to apply to the payment thereof, the holder of the bills was allowed to prove two claims, one against the firm upon the acceptance and the other against the firm and its individual members upon an implied contract to repay the money which they thus converted. Re Coe, C. C. A., 183 Fed. 745. It has been held that a creditor cannot rescind any part of a contract for fraud, so as to recover or retain specific property; and then prove his claim for the purchase price of the rest, upon a contract, express or implied, Re Heinsfurter, 97 Fed. 198; Standard Varnish Works v. Haydock, C. C. A., 143 Fed. 318; but he has been allowed to petition the Bankruptcy Court for an order for the return of part of the property, which is in the court's possession, and at the same time to present a claim for the value of that already sold. Re Hildebrant, 120 Fed. 992. See Re Hirschman, 104 Fed. 69. These

cases are criticized in Remington on Bankruptcy, § 638. It has been said that claims upon the same instrument are to be regarded as single; and, if one of them is unliquidated, the whole is to be treated as an unliquidated claim. Re Big Meadows Gas Co., 113 Fed. 974. Where a creditor who had sold goods to the bankrupt, for which a stranger became surety, afterwards received from the latter as security a note of the bankrupt arising upon a separate transaction, it was held that he might prove both claims, Re H. V. Keep Shirt Co., 200 Fed. 80. Contra, First Nat. Bank of Beaumont v. Eason, C. C. A., 149 Fed. 204. Where a note does not mature until after the filing of the petition in bankruptcy, the provision for an attorney's fee for its collection cannot be proved. Re T. H. Thompson Milling Co., 144 Fed. 314; Re Hersey, 171 Fed. 1004; Re Hershberger, 208 Fed. 94; British & American Mortgage Co. v. Stuart, C. C. A., 210 Fed. 425. For cases where less than the stipulated attorney's fee was allowed, see Re Fabacher, 193 Fed. 556; Re Hershberger, 208 Fed. 94, $100. Nor, it has been held, if they previously matured, but no attorney has been employed, Re Garlington, 115 Fed. 999; Re Keeton, Stell & Co., 126 Fed. 429; Re Gebhard, 140 Fed. 571. But where they matured and were placed in the hands of an attorney before the petition in bankruptcy was filed, the attorney's fee is provable. Merchants' Bank v. Thomas, C. C. A., 121 Fed. 306; Re Edens Co., 151 Fed. 940. But see Re V. & M. Lumber Co., 182 Fed. 231. Contra, McCabe v.

Patton, C. C. A., 174 Fed. 217. So where the attorney defended the validity of the mortgage which was attached in the bankruptcy proceedings, Re Liberty Doll Co., C. C. A., 242 Fed. 695. Fees for an attorney for services not connected with the bankruptcy proceeding, which were rendered after the filing of the petition and before the adjudication, cannot be proved, Re Burka, 107 Fed. 674; although, when they have benefited the estate, the court might perhaps make an allowance for the same. Where the mortgage gave a right to attorneys' fees upon notice of intention to foreclose at a specified term, and bankruptcy intervened before the beginning of the suit, they were not allowed. Re Weiland, 197 Fed. 116. Where a mortgage contained a covenant for the payment of attorneys' fees in case the mortgagee was required to employ counsel, and the attorney proved the claim and lien against the estate, the mortgagee was given a priority of payment for the same. Re Ferreri, 188 Fed. 675. Where there was a covenant for attorneys' fees in ease legal services became necessary to protect the interest of the mortgagee, he was allowed those incurred for filing petition of foreclosure, subsequent to the petition in bankruptcy and appearance upon the petition by the trustee, for leave to sell free from liens. Re Holmes Lumber Co., 189 Fed. 178.

§ 648. 130 St. at L. 544, 565,

§ 68; Germania Sav. Bank & Tr. Co. v. Loeb, C. C. A., 188 Fed. 285; Re Howe Mfg. Co., 193 Fed. 524; Re White, 17 Fed. 723. It has been held, that there can be no set-off of a claim for a tort not reduced to judgment, Pindel v. Holgate, 221 Fed. 342; supra, § 647. Set-off was allowed of a claim by the bankrupt because of unlawful possession taken by his mortgagees against their claim upon the mortgage debt, Roger v. J. B. Levert Co., C. C. A., 237 Fed. 737; and of a right of action againt a creditor for injury to the bankrupt's property. Re Harper, 175 Fed. 412. For a case of bailment where it was held that the right of set-off might be enforced, see Walther V. Williams Mercantile Co., C. C. A., 169 Fed. 270. The owner of the equity of redemption although not personally liable for the mortgage debt may offset against interest a previous judgment against the bankrupt mortgagee, Re Colwell Lead Co., 241 Fed. 922. It has been held that there can be no set-off which requires a general accounting with a stranger to the proceeding, Re Dunlap Carpet Co., 206 Fed. 726.

2 Western Tie & Timber Co. v. Brown, 196 U. S. 502, 49 L. ed. 571; Chicago Title & Tr. Co. v. Federal Tr. & Sav. Bank, 192 Fed. 967; Continental & C. T. & S. Bank v. Chicago T., & T. Co., C. C. A., 199 Fed. 704; Mason v. Nat. Herkimer County Bank, C. C. A., 172 Fed. 529.

330 St. at L. 544, § 60. A deposit may be set off against the promissory notes held by the bank which is the depositary of the bankrupt, N. Y. County Nat. Bank v. Massey, 192 U. S. 138, 48 L. ed. 380; Re Myers, 99 Fed. 691; Chicago Title & Tr. Co. v. Federal Tr. & Sav. Bank, 192 Fed. 967; Toof v. City Nat. Bank of Paducah, Ky., C. C. A., 206 Fed. 250; Re Radley Steel Const. Co., 212 Fed. 462; Walsh v. First Nat. Bank of Maysville, Ky., C. C. A., 201 Fed. 522. See Shutts v. Florida Nat. Bank of Jacksonville, C. C. A., 193 Fed. 1022; Clearwater County v. Pfeffer, C. C. A., 236 Fed. 183; although made within four months before the petition and while the bankrupt was insolvent; when the bank had no reason to believe that a preference was intended. Studley v. Boylston Bank, 229 U. S. 523; Germania Sav. Bank & Tr. Co. v. Loeb, C. C. A., 188 Fed. 285; Fourth National Bank v. Smith, C. C. A., 240 Fed. 19; Re Octave Mining Co., 212 Fed. 457; German-American State Bank v. Larimer, C. C. A., 235 Fed. 501. When the deposits were made under such circumstances to constitute preference there can be no set-off; Re Wright-Dana Hardware Co., C. C. A., 212 Fed. 397; Re National Lumber Co., C. C. A., 212 Fed. 928; Wilson v. Citizens' Trust Co., 233 Fed. 697; German-American State

Bank v. Larimer, C. C. A., 235 Fed. 501. See Chicago Title & T. Co. v. Federal Tr. & Sav. Bank, 192 Fed. 967; Continental & C. T. & S. Bank v. Chicago T. & T. Co., C. C. A., 199 Fed. 704, supra, § 644, nor can there be a set-off against a general account of a special deposit for specified purposes, Continental & C. T. & S. Bank v. Chicago T. & T. Co., C. C. A., 19 Fed. 704; Farmers' & Merchants' State Bank of Waco, Tex. v. Park, C. C. A., 209 Fed. 613; or deposits made subsequent to the petition in bankruptcy in ignorance by the bank and the depositor of such petition, Re Michaelis & Lindeman, 196 Fed. 718. The set-off may be made against notes or other obligations of the depositor which are not yet due, Germania Sav. Bank & Tr. Co. v. Loeb, C. C. A., 188 Fed. 285; William De Long v. The Mechanics and Metals Nat. Bank of the City of N. Y., 168 App. Div. (N. Y.) 525. It seems that a surety who pays the debt of his principal after the latter's adjudication in bankruptcy may offset such payment, Re Dillon, 100 Fed. 627; but it has been held that a person jointly indebted with the bankrupt, who pays the debt after the adjudication, cannot set it off against a debt due by him to the latter, although he is subrogated to the right of the payee to dividends. Re Bing

ham, 94 Fed. 796. But see Williams v. U. S. Fidelity & Guaranty Co., 236 U. S. 549. An unliquidated claim held by the bankrupt may be the subject of set-off, provided that it is capable of liquidation in the proceedings in bankruptcy. Re Harper, 175 Fed. 412, damages for false representation, which by the State statute, could have been set up by a counter claim. Nor a claim for the balance due upon a subscription to the stock of a bankrupt corporation when no assessment has been ordered, Re Bass, 215 Fed. 275; Moise v. Scheibel, C. C. A., 245 Fed. 546. Contra, Re Caledonia Coal Co., 254 Fed. 742; but the allowance of the claim may be postponed until an assessment has been made and the termination of a suit brought to collect this; Kiskadden v. Steinle, C. C. A., 208 Fed. 374. A stockholder cannot set-off his claim against such a corporation, against his liability for an unpaid stock subscription, Re Wiener & Goodman Shoe Co., 96 Fed. 949; Babbitt v. Read, 173 Fed. 712. Re Howe Mfg. Co., 193 Fed. 524. The claims set-off against each other must be held by the parties in the same right. Re Howe Mfg. Co., 193 Fed. 524. Money held by the creditor as trustee cannot be applied as a set-off upon its claim. Western Tie & Timber Co. V. Brown, 196 U. S. 502, 49 L. ed. 571; Lehigh Valley Coal Sales Co. v. Maguire, C. C. A., 251 Fed. 581. A debt due a firm cannot be set-off against the individual debt of a partner. Re Neaderthal, 225 Fed. 38; nor vice versa, Re T. M. Lesher & Son, 176 Fed. 650. If the debt has been incurred before the ad

judication in bankruptcy, it may be set-off, although it is not yet due. Re Philip Semmer Glass Co., C. C. A., 135 Fed. 77; but, if it subsequently arises, it cannot be offset, Re Bingham, 94 Fed. 796; Germania Sav. Bank & Tr. Co. v. Loeb, C. C. A., 188 Fed. 285. It has been held that a claim, which was not proved within the year, can be used as a set-off, Norfolk & W. Ry. Co., v. Graham, C. C. A., 145 Fed. 809. But not if it has been barred by the Statute of Limitations; Pindel v. Holgate, 221 Fed. 342. Where the bankrupt's claim exceeds that of his creditors, it has been said that the latter should not attempt to prove his claim in a Court of Bankruptcy, but should assert the same in the court in which proceedings are taken to enforce the claim against him. Re T. M. Lesher & Son, 176 Fed. 650. But where such a creditor filed a claim, it was held that he thereby consented to the jurisdiction of the Court of Bankruptcy to determine the amount due from him and enter judgment therefor. Re White, C. C. A., 177 Fed. 194. The set-off is not automatic, Cumberland Glass Mfg. Co. v. De Witt & Co., 237 U. S. 447; Re Am. Paper Co., C. C. A., 246 Fed. 790. The action of the court of bankruptcy is essential to make it effective, Ibid. After a composition, the bankrupt may collect a debt due from a creditor which is not connected with the claim settled by the composition, and has not been considered in the bankruptcy proceedings, Cumberland Glass Mfg. Co. v. De Witt & Co., 237 U. S. 447. Re Am. Paper Co., C. C. A., 246 Fed. 790.

4 Re Barnes Gear Co., 251 Fed. 764.

§ 649. 1 It has been said: that the word "tax' is used in a broad sense and includes all obligations imposed by the State and general governments under their respective taxing or police power for governmental or public purposes. Re Otto F. Lange Co., 159 Fed. 586. The fact that the tax can only be collected from the property and that no action will lie to recover the same, makes no difference in this respect. Hecox v. Teller County, C. C. A., 198 Fed. 634. It includes assessments for betterments, Dayton v. Stanard, 241 U. S. 588, and duties due the United States, Re Rosenthal Bros., 235 Fed. 315. A franchise tax, which accrued before the adjudication in bankruptcy, must be paid, although the assessment was subsequently made, and the bankrupt has no property within the State. New Jersey v. Anderson, 203 U. S. 483, 51 L. ed. 284, reversing Re Cosmopolitan Power Co., C. C. A., 137 Fed. 858. But not one subsequently accruing, Re Halsey El. Generator Co., 175 Fed. 825.

Nor a bonus paid the State for the privilege of increasing the capital stock of a corporation, Re York Silk Mfg. Co., 188 Fed. 735. Nor assessments of employers due under a Workmen's Compensation Law, Re Farrell, 211 Fed. 212, Washington. And, it has been held, that a State license fee for selling liquor, although denominated a tax, is not. Re Ott, 95 Fed. 274. Contra, Re Otto F. Lange Co., 159 Fed. 586, holding that the word

as

"When

"tax" includes a license to sell cigarettes. It has been held, that the claim of a county against a bankrupt for taxes, received by him a tax collector, is not entitled to a priority. Waller, 142 Fed. 883. This section includes taxes assessed against land after the bankrupt had agreed to sell it although by the State law the only remedy for their collection is against the land. Re Wenatchee Heights Orchard Co., 212 Fed. 787. 2 U. S. R. S. § 3466. ever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied; and the priority hereby established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof, or in which the estate and effects of an absconding, concealed, or absent debtor are attached by process of law, as to cases in which an act of bankruptcy is committed." Comp. St. § 6372. It has been held: that this section has been repealed in part by the Bankruptcy Act. Re Jacobson, C. C. A., 263 Fed. 883. That claims for taxes are not entitled to priority over the expenses of administration. Ibid. The United States have no priority over labor claims for any indebtedness due them, except for taxes. Guar