to recover damages instead of a return of the securities, where they have depreciated in value and where defendant authorized to sell the securities in its discretion had exercised its judgment not to sell. National City Bank of New York v. Hotchkiss (1913) 34 Sup. Ct. 20, 231 U. S. 50, 58 L. Ed. 115, affirming decree Ernst v. Mechanics' & Metals Nat. Bank of City of New York (1912) 201 Fed. 664, 120 C. C. A. 92. If the property transferred to the preferred creditor has been sold by him, or it is otherwise out of his power to return it, the trustee is entitled to a judgment for its value. McElvain v.

Hardesty (1909) 169 Fed. 31, 94 C. C. A. 399, 22 Am. Bankr. Rep. 320; Andrews v. Kellogg (1907) 41 Colo. 35, 92 Pac. 222; Claridge v. Kulmer (C. C. 1880) 1 Fed. 399; Cookingham v. Morgan (C. C. 1870) 5 N. B. R. 16, Fed. Cas. No. 3,183; Drummond v. Smith (1909) 118 N. Y. Supp. 718. And where the bankrupt had given two mortgages on his stock of goods, both preferential, and the first mortgagee took possession, sold enough to pay his claim, and turned over the rest to the second mortgagee, and was then sued by the trustee in bankruptcy and his mortgage held void as a preference, it was held that he was liable for the value of the entire stock, and not merely for the value of the goods sold while the stock was in his possession. Whitson v. Farber Bank (1904) 105 Mo. App. 605, 80 S. W. 327.

If the preference consisted in a sale of the bankrupt's property to a creditor for less than half its value, but the amount received by the bankrupt has been turned over to the trustee, the latter is entitled to recover from the preferred creditor the difference between the amount so received and the value of the property. Stern v. Louisville Trust Co. (1901) 112 Fed. 501, 50 C. C. A. 367, 7 Am. Bankr. Rep. 305. For the purposes of a judgment in such cases, the value of the property preferentially transferred is to be taken as its actual market value at the time of the transfer, and not the sum which it brought on a sale of it by the preferred creditor or under process issued at his suit. First Nat. Bank v. Jones (1874) 21 Wall. 325, 22 L. Ed. 542. But if it appears that he sold the property to as good advantage as the trustee could have done, the creditor should not be held to account for more than he received. Allen v. McMannes (D. C. 1907) 156 Fed. 615, 19 Am. Bankr. Rep. 276. And if the parties, at the trial, stipulate the market value of the property at the time of the transfer, the sum so fixed will be the measure of the defendant's liability. Gering v. Leyda (1911) 186 Fed. 110, 108 C. C. A. 222, 26 Am. Bankr. Rep. 137. Where one to whom a brick plant was transferred by a

bankrupt, within four months before his bankruptcy, made large expenditures in putting in new machinery and otherwise improving the plant, any property thus added was no part of the estate in bankruptcy. Sieg v. Greene (C. C. A. 1915) 225 Fed. 955.

If the preference consisted in a judgment procured or suffered by the bankrupt, under which the creditor issued execution and sold property, he may be allowed credit for the actual expenses of the sale, but not including the officer's fees. Sedgwick v. Millward (D. C. 1871) 5 N. B. R. 347, Fed. Cas. No. 12,618.

Ben

The preferred creditor should also be charged with interest, but only from the time when demand was made on him for the surrender of the preference, as, after that time, he holds the property or fund as a trustee ex maleficio. jamin v. Chandler (D. C. 1905) 142 Fed. 217, 15 Am. Bankr. Rep. 439; Ommen v. Talcott (D. C. 1909) 175 Fed. 261, 23 Am. Bankr. Rep. 572; Cookingham v. Morgan (C. C. 1870) 5 N. B. R. 16, Fed. Cas. No. 3,183. According to some of the authorities, he should be charged with interest from the commencement of the action. Capital Nat. Bank v. Wilkerson (1873) 36 Ind. App. 467, 75 N. E. 837; Utah Ass'n of Credit Men v. Boyle Furniture Co. (Utah, 1913) 136 Pac. 572.

In the case where the money or property preferentially transferred would have been more than sufficient to pay in full all the remaining creditors of the bankrupt, only so much may be recovered by the trustee as is necessary for that purpose and for the costs and expenses of the bankruptcy proceedings. Rogers v. Page (1905) 140 Fed. 596, 72 C. C. A. 164, 15 Am. Bankr. Rep. 502.

Where the suit is brought and judgment recovered in the bankruptcy court, the bill containing a prayer for general relief, the court is not limited to the entry of a money judgment against the preferred creditor, but may issue an order commanding him to pay the amount of the judgment to the trustee in bankruptcy, and may commit him for contempt until compliance. In re Plant (D. C. 1906) 148 Fed. 37, 17 Am. Bankr. Rep. 272. And the defendant is not entitled to have judgment withheld until he has proved his claim and a dividend in his favor has been declared, and to have the amount thereof deducted from the judgment. Templeton v. Kehler (D. C. 1909) 173 Fed. 574, 23 Am. Bankr. Rep. 39. The court of bankruptcy, possessing the full powers of a court of equity, may also enforce equities of the defendant as against any other creditor who would be entitled otherwise to share in the recovery. Allen v. McMannes (D. C. 1907) 156 Fed. 615, 19 Am. Bankr. Rep. 276. On the other hand, the dismissal of a bill by the trustee to set aside an alleged

(D. C. 1906) 146 Fed. 923, 17 Am. Bankr. Rep. 112.

This whole section should be so construed as to make all debts fairly within its meaning provable debts, in order to effectuate the purpose of the act in relieving insolvent debtors, and any doubt whether a debt is provable, or whether it is an unliquidated demand which may be made provable, should be resolved in favor of its provability. Dycus v. Brown (1909) 135 Ky. 140, 121 S. W. 1010, 28 L. R. A. (N. S.) 190.

2. Creditors entitled to prove claims. -The court may permit the bankrupt himself, acting in a representative capacity as the administrator of an estate, to prove an equitable debt, arising from a loan of funds borrowed from the estate of his intestate, whether such loan was lawful or not. Warner v. Spooner (C. C. 1880) 3 Fed. 890. One to whom the bankrupt had previously made a general assignment for the benefit of his creditors may be permitted to prove a claim. In re Rudd (D. C. 1910) 180 Fed. 312, 25 Am. Bankr. Rep. 35. A surety for the bankrupt may prove a claim. Sessler v. Paducah Distilleries Co. (C. C. 1909) 168 Fed. 44, 21 Am. Bankr. Rep. 723. A committee representing the bondholders of a bankrupt corporation may prove a claim against its estate. In re Medina Quarry Co. (D. C. 1910) 179 Fed. 929, 24 Am. Bankr. Rep. 769. But a corporation which is a mere agent of another corporation cannot prove claims against the estate of the latter in bankruptcy. Clere Clothing Co. v. Union Trust & Savings Bank (1915) 224 Fed. 363, 140 C. C. A. 49.

Mere accommodation paper, not based on any actual consideration does not constitute a provable claim in bankruptcy. Merchants' & Manufacturers' Nat. Bank v. Galbraith (1907) 157 Fed. 208, 84 C. C. A. 653, 19 Am. Bankr. Rep. 319. One who has dealt with a bankrupt corporation, but has agreed to accept shares of its stock in satisfaction of his claim, has no demand provable in bankruptcy. In re Le Sueur County Co-operative Co. (C. C. A. 1912) 195 Fed. 926, 27 Am. Bankr. Rep. 882.

A claim cannot be allowed where it is shown that the money in question was not advanced by the claimant personally, but by a corporation in which he was a stockholder. In re Watkinson (D. C. 1906) 143 Fed. 602, 16 Am. Bankr. Rep. 245. Where a bank furnished money or credit with which certain imported wool was purchased in a foreign country, taking bills of lading and trust receipts in its own name, and, when the wool was sold by the importer, became the owner of the account, it alone was entitled to prove the claim against the estate of the purchaser in bankruptcy. Assets Realization Co. v. Sovereign Bank of Canada (1914) 210 Fed. 156, 126 C. C. A. 662, affirming

judgment In re Dunlap Carpet Co. (D. C. 1913) 206 Fed. 726.

It is no objection to the allowance of a claim against a bankrupt corporation for money lent that it passed through several hands, where the claimant furnished the money with the intention that it should be a loan to the corporation, and the latter received it and used it as such. In re American Specialty Co. (C. C. A. 1911) 191 Fed. 807, 27 Am. Bankr. Rep. 463. But one furnishing materials to a subcontractor of a general contractor of the United States, who gave bond in conformity with the act of Congress of Feb. 24, 1905, will be required to pursue the remedy prescribed by that act, and cannot prove a claim under the bankruptcy law against the estate of the bankrupt contractor. In re Hawley (D. C. 1912) 194 Fed. 751, 28 Am. Bankr. Rep. 58.

Where a new company is organized to take over and carry on the business of a failing corporation, which afterwards becomes bankrupt, one who, being a director in both the old and the new company, takes an active part in organizing the new concern, and subscribes and pays for some of its stock in cash, may be considered as a creditor of the bankrupt corporation to that extent. In re Holbrook Shoe & Leather Co. (D. C. 1908) 165 Fed. 973, 21 Am. Bankr. Rep. 511. An order of the court in bankruptcy proceedings against a company owning the stock of another company held to authorize a creditor to establish his claim against the proceeds of the latter company. Carroll v. Stern (1915) 223 Fed. 723. 139 C. C. A. 253. Nor can a creditor who lent money to the bankrupt, be debarred from proving his claim by the fact that he himself borrowed the money from a bank, pledging as collateral the note and security given him by the bankrupt. Ohio Valley Bank Co. v. Mack (1906) 163 Fed. 155, 89 C. C. A. 605, 20 Am. Bankr, Rep. 40.

One who sells property on credit to a third person, who turns it over to a corporation which does not become a party to the contract of sale, does not thereby become a creditor of the corporation so as to be entitled to prove a claim against its estate in bankruptcy. In re Builders' Lumber Co. (D. C. 1906) 148 Fed. 244, 17 Am. Bankr. Rep. 449.

The rule that one may take advantage of a contract to which he was not a party, but which was made for his benefit between two other persons, is also effective in bankruptcy, but his assent to the agreement must have been made effective before the bankruptcy of the promisor. Blake v. Atlantic Nat. Bank (1912) 33 R. I. 464, 82 Atl. 225, 39 L. R. A. (N. S.) 874.

It is also a rule that a creditor of a bankrupt, who is also his debtor in a larger amount, will not be permitted to prove his claim against the estate so

long as his own debt remains unpaid. In re Gerson (D. C. 1901) 105 Fed. 893, 5 Am. Bankr. Rep. 850; In re Wiener & Goodman Shoe Co. (D. C. 1899) 96 Fed. 949, 3 Am. Bankr. Rep. 200.

Where the father of a bankrupt, to whom the bankrupt was indebted, died after his adjudication, the right of the executor to prove the full indebtedness against the estate in bankruptcy is not affected by the fact that the father, by his will, left the bankrupt a share of his estate, from which any indebtedness due from the bankrupt was directed to be deducted. In re Woods (D. C. 1904) 133 Fed. 82, 13 Am. Bankr. Rep. 240.

3. Estoppel to prove claim.-The ordinary principles of estoppel apply to a creditor seeking to prove a claim in bankruptcy. Sledge v. Denton (Tex. Civ. App. 1912) 147 S. W. 281. The rule that a creditor having his choice between two inconsistent remedies must make his election and cannot pursue both, applies to a proof of debt in bankruptcy. Du Vivier & Co. v. Gallice (C. C. A. 1906) 149 Fed. 118, 17 Am. Bankr. Rep. 557. Lender of money to corporation, who received stock under an agreement that he might elect to retain the stock or demand repayment of the loan, but who had not elected prior to bankruptcy, held estopped from demanding his rights as creditor. In re W. A. Silvernail Co. (D. C. 1914) 218 Fed. 977. One cannot rescind a contract and recover the original consideration, and at the same time prove a claim in bankruptcy upon the contract itself. In re Kenyon (D. C. 1907) 156 Fed. 863, 19 Am. Bankr. Rep. 194; Scott v. Abbott (1908) 160 Fed. 573, 87 C. C. A. 475, 20 Am. Bankr. Rep. 335. And see In re Hirschman (D. C. 1900) 104 Fed. 69, 4 Am. Bankr. Rep. 715; In re Howard (D. C. 1900) 100 Fed. 630, 4 Am. Bankr. Rep. 69. But where, prior to the bankruptcy, a claimant sought to replevin the balance of a bill of goods remaining in the bankrupt's possession unsold, in which he was unsuccessful, it was held that he was entitled to file against the bankrupt's estate for his whole claim. In re Venstrom (D. C. 1913) 205 Fed. 325, 30 Am. Bankr. Rep. 569. And see Boden & Haac v. Lovell (C. C. A. 1913) 203 Fed. 234, 30 Am. Bankr. Rep. 353, where certain foreign attachment litigation was held unavailable to sustain an estoppel preventing claimants from asserting claims not involved in such litigation against the bankrupt. A creditor of a bankrupt who, after the bankruptcy, has taken a new promise based on the original debt, is not thereby precluded from maintaining his proof against the estate in bankruptcy and receiving dividends thereon, and at the same time proceeding against the bankrupt on the new obligation, so long as he receives but a single satisfaction

of his debt. In re Sweetser (D. C. 1904) 128 Fed. 165, affirmed, Dowse v. Hammond (1904) 130 Fed. 103, 64 C. C. A. 437. And the fact that a creditor, prior to the bankruptcy, had begun a suit to set aside a deed as fraudulent does not estop him, on the determination of the suit against him, from claiming the benefit of a lien reserved by such deed for his benefit. Maxwell v. McDaniels (C. C. A. 1912) 195 Fed. 426, 27 Am. Bankr. Rep. 692. So where the bankrupt commenced a suit before his bankruptcy, which was tried after the adjudication, and the defendant in that action set up in defense a particular claim as a distinct cause of action, but offered no evidence in support of it, and judgment went in favor of the bankrupt, this does not estop such defendant from proving his claim in the bankruptcy proceedings. In re Peopie's Safe Deposit & Sav. Inst. (D. C. 1878) Fed. Cas. No. 10,971. Where, subsequent to bankruptcy, creditor recovered judgment against bankrupt and surety, such creditor's release and waiver of right to participate in dividends held not to prevent surety's proof of claim. Kilpatrick v. United States Fidelity & Guaranty Co. (C. C. A. 1916) 228 Fed. 587. And though one named as assignee in a general assignment for the benefit of creditors, which is voided by the bankruptcy of the assignor, has accepted the trust, this does not preclude him from proving a bona fide debt which he has against the bankrupt. In re Horton (D. C. 1872) Fed. Cas. No. 6,707. So a mere covenant by a creditor not to sue an accommodation acceptor does not prevent such creditor from proving against the drawer's estate in bankruptcy. Downing v. Traders' Bank (C. C. 1873) Fed. Cas. No. 4,046.

Where the president of a bankrupt corporation had loaned money to it on notes, he is not estopped to claim the allowance thereof against the corporation's estate in bankruptcy because of statements of assets and liabilities made at various times, which did not include the notes, in the absence of any evidence that he had knowledge of their contents, or that credit was extended to the corporation, and the position of creditors changed, on the faith thereof. Spencer v. Lowe (C. C. A. 1912) 198 Fed. 961, 29 Am. Bankr. Rep. 876. Claimant, having contributed $50,000 to a bankrupt corporation, which was thereafter represented as an increase in capital, and held himself out as connected with the business, held estopped, as to creditors who relied thereon, to claim that he was a creditor and not a stockholder. In re Desnoyers Shoe Co. (D. C. 1914) 210 Fed. 533. In bankruptcy proceedings against K. Co., the principal stockholder of D. Co., a seller of goods to D. Co. held not estopped from establishing his claim against proceeds of D.