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proving and securing the allowance of such claims shall be paid dividends equal in amount to those already received by the other creditors if the estate equals so much before such other creditors are paid any further dividends. (d) Whenever a person shall have been adjudged a bankrupt by a court without the United States and also by a Court of Bankruptcy, creditors residing within the United States shall first be paid a dividend equal to that received in the court without the United States by other creditors before creditors who have received a dividend in such court shall be paid any amounts. (e) A claimant shall not be entitled to collect from a bankrupt estate any greater amount than shall accrue pursuant to the provisions of this act." 3

“(a) Dividends which remain unclaimed for six months after the final dividend has been declared shall be paid by the trustee into court. (b) Dividends remaining unclaimed for one year shall, under the direction of the court, be distributed to the creditors whose claims have been allowed but not paid in full, and after such claims have been paid in full the balance shall be paid to the bankrupt : Provided, that in case unclaimed dividends belong to minors, such minors may have one year after arriving at majority to claim such dividends." 4 "The value of securities held by secured creditors shall be determined by converting the same into money according to the terms of the agreement pursuant to which such securities were delivered to such creditors or by such creditors and the trustee, by agreement, arbitration, compromise or litigation, as the court may direct, and the amount of such value shall be credited upon such claims, and a dividend shall be paid only on the unpaid balance.” 6

2 Where a creditor fails to prove his claim until after a dividend has been paid, he can only claim to share pro rata in those subsequently paid. Re Stein, 94 Fed. 124; Re Scott, 96 Fed. 607, for claims to interest on dividends. It seems that an order declaring a dividend may be revoked before any payment thereunder, upon the proof of a large claim not previously presented. Re Henry Siegel Co., 216 Fed. 943.

3 30 St. at L. 544, 563, 8 65. “A dividend in bankruptcy is a parcel of the fund arising from the assets of the estate, rightfully allotted to a creditor entitled to share in the fund, whether in the same proportion with other creditors or in a different proportion.” Re Barber, 97 Fed. 547, 550, per Lochren, J.

430 St. at L. 544, 563, § 66.

530 St. at L. 544, $ 57, subd. h, as amended 32 St. at L. 797. But

"Whenever a claim shall have been reconsidered and rejected, in whole or in part, upon which a dividend has been paid, the trustee may recover from the creditor the amount of the dividend received upon the claim if rejected in whole, or the proportional part thereof if rejected, only in part.”6 A Court of Bankruptcy has jurisdiction to determine the question whether, because of inequitable conduct, the claim of one creditor to a dividend should be postponed to that of another. It has been held: that exceptions to the proposed distribution of a bankrupt's estate must be filed before the final decree of confirmation is entered; that if not filed until thereafter and after the distribution of the final dividend, they will not be considered, although accompanied by a petition for review, and that, where a bankrupt's estate is ready for final dividend, it may be closed at any time after four months from the adjudication, upon notice to all persons scheduled as creditors or appearing as such in any way in the proceedings. Any surplus left after payment of the expenses of the administration and the number of the claims that are proved, should be applied to the payment of interest upon the latter. 10

see Washington-Alaska Bank v. Dexter Horton Nat. Bank, C. C. A., 263 Fed. 304. The value can be fixed, after a hearing, by the referee. Re Davison, 179 Fed. 750, where the bank was not required to surrender the security to the trustee after the value thereof had been deducted from the amount claimed, upon which the dividend was declared. A creditor holding an endorsement or guarantee by another is not considered as secured, Young v. Gordon, C. C. 219 Fed. 168; Re Bash, 245 Fed. 808; supra, $$ 608, 645. The holder of a claim against several parties, one or more of whom become bankrupt, may prove his claim for the full amount against the estate of each bankrupt and pursue other obligors in actions at law. He may collect dividends upon the full amount of his claim, with such interest as he may be entitled to, up to the time of the filing of the petition, against each estate in bankruptcy, until he has collected the full payment thereof from any or all sources, but no longer. Board of County Com ’rs of Shawnee County, Kan. v. Hurley, C. C. A., 169 Fed. 92, Re Simon, 197 Fed. 105. Where a creditor has security for a claim that can be proved in the bankruptcy proceedings, and other that cannot, he may marshal his security against the unprovable claim, and, if that exhausts the same, prove all of the other against the estate. Hiscock v. Varick Bank, 206 U. S. 28, 37, 51 L. ed. 945, 951. When the security is insufficient, the

creditor may charge against the principal thereof interest that has accrued upon the debt prior to the filing of the petition; Sexton v. Dreyfus, 219 U. S. 339, 55 L. ed. 244; Re Fabacher, 193 Fed. 556; but not interest subsequently accruing, Sexton v. Dreyfus, 219 U. S. 339, 55 L. ed. 244; reversing Re Kessler, C. C. A., 180 Fed. 979, 171 Fed. 751. See Harv. Law Rev., XXIII, 219; although he may charge such subsequently accruing interest against dividends and interest that accrue upon the security subsequent to the institution of the bankruptcy proceedings. Re Graves, 182 Fed. 443. See Sexton v. Dreyfus, 219 U. S. 339, 55 L. ed. 274. Where mortgaged land, subject to mechan. ies' and judgment liens, was sold by the trustee free from liens, which were transferred to the proceeds, it was held that interest was payable upon the mortgage' debt until the date of the payment of the principal thereof, but that this was not the case as regards the liens of mechanies and judgment creditors. Re Torchia, 185 Fed. 576. Where the creditor bought his security at a foreclosure sa le for less than the amount of his claim, his dividend was estimated upon the difference between the amount of his debt and the value of the property so obtained. Re Progressive Wall Paper Co., 224 Fed. 143, reversed on another point, 229 Fed. 489; Re J. G. Reichard & Bro., 230 Fed. 525; Re McAusland, 235 Fed. 173; Re Clark Realty Co., C. C. A., 253 Fed. 938.


6 30 St. at L., 544, $ 57, subd. 1, as amended 32 St. at L. 797. No ohjection to the payment of a dividend to anyone can be made by a person whose claim has been disallowed, Re Blanton, 219 Fed. 679; Re Stringer, 244 Fed. 629; Re Schloss, 257 Fed. 876.

7 Western Tie & Timber Co. v. Brown, 196 U. S. 502, explained supra, $ 614; Re Headley, 97 Fed. 765; Re Knox, 98 Fed. 585; Re Cannon, 121 Fed. 582; Re Royce Dry Goods Co., 133 Fed. 100; Re Ewald & Brainard, 135 Fed. 168. An estoppel may be enforced in favor of all, Re Cloverdale Creamery Co., C. C. A., 279 Fed. 194; or a part of the creditors, Courtney v. Croxton, C. C. A., 239 Fed. 247. Where a debt barred by the statute of limitations is included in the bankrupt's schedules, a creditor is entitled to a dividend after the payment of expenses of administration and the full amount of all other claims that are proved and allowed. Re Currier, 192 Fed. 695; Re W. A. Silvernail Co., 218 Fed. 977; supra, § 647. It has been held that a partner who has loaned money to the firm may prove a claim therefor, but that he cannot share in the distribution of the partnership assets until all the firm creditors are paid. Re Effinger, 184 Fed. 728. Contra, Re Walker, 176 Fed. 455. See $ 647, supra. A surety of part of a debt of the bankrupt cannot receive a dividend upon his payments thereupon until the

creditor whose debt was partly secured by him has been paid in full. Re Am. Product Co., 221 Fed. 126. The creditor may compel payments by the surety before the termination of the proceedings in bankruptcy; but he must thereupon assign to the latter his rights to divi. dends, U. S. Fidelity & Guaranty Co. v. Eichel, C. C. A., 241 Fed. 357. A trustee may in a proper case be subrogated to the rights of certain creditors to dividends. Searle v. Mechanics' Loan & Trust Co., C. C. A., 249 Fed. 942. Dividends due an assignee whose assignor was indebted to the estate and had be. come a bankrupt were first applied to the payment of the sum owed by the assignor and no payment was made to the assignee until the other's debt had been paid in full. Boatman's Bank v. Laws, C. C. A., 257 Fed. 299. Creditors who had participated in a fraudulent transfer of assets were not allowed to share in the proceeds thereof after such assets had been recovered. Wells v. Lincoln, C. C. A., 214 Fed. 227, reversing Re Wenatchee Heights Orchard Co., 209 Fed. 84. Payment of the dividends due solvent stockholders, who were liable only to creditors thereby defrauded for the difference between the par value of their stock and the amount they had paid therefor, was not postponed until after the payment of other creditors. Courtney V. Croxton, C. C. A., 239 Fed. 247.

8 653. Compositions. (a) A bankrupt may offer,1 either before or after adjudication, terms of composition to his creditors 2 after, but not before,4 he has been examined in open court 5 or at a meeting of his creditors 6 and filed in court the schedule of his property and list of his creditors, required to be filed by bankruptcy.? In compositions before adjudication the bankrupt shall file the required schedules, and thereupon the court shall call a meeting of creditors for the allowance of claims,

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8 Re Heebner, 132 Fed. 1003. In the Eastern District of New York it was held to be too late to object to a dividend when ten days had elapsed after the order of the Referee, Re Stringer, 244 Fed. 629.

9 Re Eldred, 155 Fed. 686.

10 Re John Osborn's Sons & Co., C. C. A., 29 L. R. A. (N. S.) 887, 177 Fed. 184; Johnson v. Norris, C. C. A., 190 Fed. 459.

$ 653 1 The offer should not contain arguments in favor of its ac. ceptance or approval. Re Graham & Sons, C. C. A., 251 Fed. 93. The bankrupt may be allowed to amend his offer, Re Kinnane Co., 217 Fed. 488; Re Cockshaw, 220 Fed. 239; but permission to do this may be denied after his first offer has been rejected. Ibid. Re Griffith Stillings Press, 244 Fed. 315. The amended offer should be submitted to the creditors in the same manner as an original offer, Re Kinnane Co., 217

Fed. 488. It has been held that the offer cannot be withdrawn, Re Agree, 247 Fed. 590, where it had been accepted by the requisite number of the creditors.

2 Creditors who have not proved their claims should be notified. Re Rider, 96 Fed. 808; Re Kinnane Co., 217 Fed. 488. See Re Atlantic Const. Co., 228 Fed. 571.

3 It has been held that the composition may be offered after the discharge of the bankrupt and the payment of the first dividend. Re Spiller, 250 Fed. 490.

4 Re Berler Shoe Co., 246 Fed. 1018,

6 The term "in open court'' includes proceedings before the ref

Re Bloodworth-Stembridge Co., 178 Fed. 372.

6 Re Fox, 222 Fed. 135; Supra, $ 637a.

7 Supra, $ 627a.


examination of the bankrupt, and preservation or conduct of estates, at which meeting the judge or referee shall preside; and action upon the petition for adjudication shall be delayed until it shall be determined whether such composition shall be confirmed. (b) An application for the confirmation of a composition may be filed in the Court of Bankruptcy after, but not before, it has been accepted in writing by a majority in number of all creditors whose claims have been allowed, which number must represent a majority in amount of such claims, and the consideration to be paid by the bankrupt to his creditors, and the money necessary to pay all debts which have priority and the cost of the proceedings, have been deposited in such place as shall be designated by and subject to the order of the judge.10


8 The courts have refused to confirm compositions where the votes of relatives of the bankrupt and of an assignee of a claim who had bought this for its face value were essential to the majority. Re McClellan, 204 Fed. 482; Re Goldstein, 213 Fed. 115; Re Weintrob, 240 Fed. 532; and where a majority of the creditors of individual members of a bankrupt firm failed to give their consent, although consent was given by a majority of the creditors of the firm, who were a majority in number and amount of all the creditors of the firm and the individuals. Re Ullman, 180 Fed. 944. It is the safer practice to present the composition to a special meeting of the creditors, called for that express purpose. Re Rider, 96 Fed. 808; Re Frear, 120 Fed. 978; Remington on Bankruptcy, 2358. A creditor whose claim has been withdrawn is not counted in determining the number essential to such a majority. Re M. & H. Gordon, 245 Fed. 905.

9 The consideration. must be cash or notes and not a mortgage. Re Kinnane Co., 221 Fed. 762 ;

stock in a new corporation formed to re-organize the bankrupt's affairs. Re Prudential Outfitting Co., 250 Fed. 504. The proper manner of providing for settlement through a re-organization is a sale at an upset price fixed by the court. Ibid. See supra, $$ 310a, 394e, 641a. When the consideration was part cash and the balance in notes endorsed by a corporation which bought the assets, it was held that these were not subject to a trust in favor of the holders of the notes giving them a priority over other creditors of the endorser. Re Fleig Mercantile Co., C. C. A., 237 Fed. 178. Confirmation denied when the consideration consisted of promissory notes or promises by the bankrupt to deliver merchandise at future day. Re Frear, 120 Fed. 978; or stock, Re Woodend, 133 Fed. 593; or obligations, Re Rosenblatt, 153 Fed. 335; Re J. B. & J. M. Cornell Co., 186 Fed. 859; when no provision was made for the costs of the bankruptcy proceedings, Re Harris, 117 Fed. 575.

10 It is the safer practice to pro




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