Co.'s assets. Carroll v. Stern (1915) 223 Fed. 723, 139 C. C. A. 253. Although the bankrupt's bookkeeper prepared a financial statement which was submitted to a bank as a basis for credit, and the statement did not show that the bankrupt was indebted to the bookkeeper for his salary, this does not estop the latter to file a claim for unpaid salary, in the absence of evidence that credit was extended on the faith of the statement. In re Cox (D. C. 1912) 199 Fed. 952, 29 Am. Bankr. Rep. 456. Where the only claim filed by a brother of the bankrupt against his estate was based on notes and a mortgage which were clearly fraudulent, he was held bound by such action, and not permitted to prove the claim as one for wages of labor and so entitled to priority. In re Hemstreet (D. C. 1903) 139 Fed. 958, 14 Am. Bankr. Rep. 823. 4. Fraud barring proof of claim.-To constitute such fraud as will estop a creditor from sharing with other creditors in the distribution of the estate of his debtor in bankruptcy, he must have been guilty of some moral turpitude or breach of duty whereby the other creditors were deceived to their damage. No fiduciary or confidential relation exists between creditors of an insolvent debtor such as will preclude the allowance, against the estate of the debtor in bankruptcy, of the claim of a creditor who, though knowing of the debtor's insolvency, fails to inform the other creditors thereof. Crowder v. Allen-West Commission Co. (1914) 213 Fed. 177, 129 C. C. A. 521, affirming decree In re Hawks (D. C. 1913) 204 Fed. 309. Where a creditor of a bankrupt actively participates or assists him in the execution of a scheme to delay or defraud his other creditors, and in furtherance thereof advances money or incurs expense, the entire transaction is contaminated by the fraud, and the court of bankruptcy will not aid the conspirators by allowing claims for such advances or expenses against the estate. Butcher v. Werksman (D. C. 1913) 204 Fed. 330, 30 Am. Bankr. Rep. 332; In re Friedman (D. C. 1908) 164 Fed. 131, 21 Am. Bankr. Rep. 213; In re L. M. Alleman Hardware Co. (D. C. 1909) 172 Fed. 611, 22 Am. Bankr. Rep. 871; In re Lansaw (D. C. 1902) 118 Fed. 365, 9 Am. Bankr. Rep. 167; In re Knox (D. C. 1900) 98 Fed. 585, 3 Am. Bankr. Rep. 371; In re Hugill (D. C. 1900) 100 Fed. 616, 3 Am. Bankr. Rep. 686; In re Hatje (D. C. 1875) 12 N. B. R. 548, Fed. Cas. No. 6,215. But see In re Medina Quarry Co. (D. C. 1910) 179 Fed. 929, 24 Am. Bankr. Rep. 769. And compare In re L. M. Alleman Hardware Co. (C. C. A. 1910) 181 Fed. 810, 25 Am. Bankr. Rep. 331. So also, where money is loaned or advances made for the pur pose of establishing a fictitious credit for the bankrupt and so enabling him to cheat others. In re Friedman (D. C. 1908) 164 Fed. 131, 21 Am. Bankr. Rep. 213; In re Royce Dry Goods Co. (D. C. 1904) 133 Fed. 100, 13 Am. Bankr. Rep. 257. And so where a creditor has attempted to gain an advantage over other creditors by including in his proof fictitious items or exaggerated amounts, or by including fraudulent or illegal and non-provable claims, his proof will not be allowed even to the extent of an honest debt which may be included in it, but will be rejected as an entirety. In re Friedman (D. C. 1908) 164 Fed. 131, 21 Am. Bankr. Rep. 213; In re Flick (D. C. 1900) 105 Fed. 503, 5 Am. Bankr. Rep. 465; In re Elder (D. C. 1870) 3 N. B. R. 670, Fed. Cas. No. 4,326; Marrett v. Atterbury (C. C. 1874) 11 N. B. R. 225, Fed. Cas. No. 9,102. Fraudulent conduct barring proof of a claim in bankruptcy occurred where a creditor holding collateral security under a pledge, took the opportunity, as soon as a petition in bankruptcy had been filed, to sell the security to himself at a pretended auction at a small fraction of its face value, and without notice to any party in interest. In re Mertens (D. C. 1905) 134 Fed. 101, 14 Am. Bankr. Rep. 226. But see Turner v. Metropolitan Trust Co. (C. C. A. 1913) 207 Fed. 495, where a purchase of pledged collateral by the pledgee was held, under the particular circumstances, not to prevent proof against the estate in bankruptcy. There is nothing illegal in endeavoring to buy up all the claims against the estate of a bankrupt, for the purpose of staying the bankruptcy proceedings altogether; and if the purchaser fails in this, he should nevertheless be allowed to prove such claims as he has acquired as though he were an original creditor. In re Pease (D. C. 1871) 6 N. B. R. 173, Fed. Cas. No. 10,880; In re Strachan (D. C. 1872) Fed. Cas. No. 13,519. An agreement by one of an insolvent's creditors to advance funds with which to make a composition with his creditors, on consideration that the insolvent would pay such creditor's debt in full, held not fraudulent, so as to preclude the creditor from subsequently proving its whole debt against the insolvent's estate in bankruptcy. In re Hawks (D. C. 1913) 204 Fed. 309. That a person adjudged a bankrupt in 1910 made a composition agreement with his creditors in 1899, and made a secret agreement with A., one of them, to pay his claim in full in consideration of a loan of the money required to pay the other creditors the composition percentage, held not ground for disallowance of A.'s claim against the bankrupt's estate, where the creditors never rescinded the composition, and the debtor, after execution of the composi tion, had voluntarily paid A. the mon was closed, held entitled to fee not exceeding 2 per cent. on the first $1,000 and one half of 1 per cent. on the balance. In re Griesheimer (D. C. 1913) 209 Fed. 134. Under this section and § 9586, subd. 5, ante, where a bankrupt's receiver turned over to the trustee $1,739.92, together with the bankrupt's stock, fixtures, and uncollected book accounts, the receiver was only entitled at that time to an allowance of $148.56 for his services, and was not entitled to an allowance on the property turned over in kind until the trustee had realized thereon. In re Falkenberg (D. C. 1913) 206 Fed. 835. The requirement of notice to creditors of the receiver's application for compensation is imperative, and no allowance of fees can rightfully be made until after such notice. In re Falkenberg (D. C. 1913) 206 Fed. 835, 30 Am. Bankr. Rep. 718. A notice of hearing of an application for an allowance of fees to a bankrupt's receiver and his counsel, specifying the amount asked in dollars and cents, was not objectionable for failure to ask for an additional allowance. In re Cash-Papworth, Grow-Sir (1913) 210 Fed. 24, 126 C. C. A. 604. Creditors desiring to object should promptly file exceptions with the referee, and may bring the matter before the court by petition for review of the decision of the referee on the questions thus raised. Reliance Storage & W. Co. (D. C. 1900) 100 Fed. 619, 4 Am. Bankr. Rep. 49. In re If the receivership was obtained by fraud or imposition practiced upon the court, and was in no way beneficial to the estate, the court will be justified in refusing to make any allowance for the services of the receiver. In re Desrochers (D. C. 1911) 183 Fed. 991, 25 Am. Bankr. Rep. 703. Where the court of bankruptcy, upon the filing of a petition in involuntary bankruptcy, orders the marshal to take possession of the property of the bankrupt and hold the same until a trustee is appointed, the marshal is entitled to receive, out of the estate, compensation for his services under such order, in addition to the costs and expenses incurred. In re Adams Sartorial Art Co. (D. C. 1900) 101 Fed. 215, 4 Am. Bankr. Rep. 107. A marshal, placed in charge of the property of the bankrupt, may hire a competent watchman or store-keeper, if he considers it necessary for the preservation of the property, and the reasonable pay of such a keeper will be allowed out of the estate. In re Scott (D. C. 1900) 99 Fed. 404, 3 Am. Bankr. Rep. 625; In re Lowenstein (D. C. 1869) 3 N. B. R. 268, Fed. Cas. No. 8,572; In re Comstock (D. C. 1874) 9 N. B. R. 88, Fed. Cas. No. 3,075; In re Pace (D. C. 1878) Fed. Cas. No. 10.640; In re Johnston (D. C. 1875) 12 N. B. R. 345, Fed. Cas. No. 7,421. The expenses incurred by a receiver, in counsel and witness fees, in resisting a motion for his removal, will be allowed as a charge upon the fund or estate, where it appears that, although there were apparent grounds for the motion, yet the receiver had acted in good faith and with integrity of purpose. Cowdrey v. Railroad Co. (C. C. 1870) Fed. Cas. No. 3,293. § 9633. (Act July 1, 1898, c. 541, § 49.) Accounts and papers of trustees. Accounts and Papers of Trustees.- -a The accounts and papers of trustees shall be open to the inspection of officers and all parties in interest. (30 Stat. 558.) § 9634. (Act July 1, 1898, c. 541, § 50.) Bonds of referees and trus tees. Bonds of Referees and Trustees.-a Referees, before assuming the duties of their offices, and within such time as the district courts of the United States having jurisdiction shall prescribe, shall respectively qualify by entering into bond to the United States in such sum as shall be fixed by such courts, not to exceed five thousand dollars, with such sureties as shall be approved by such courts, conditioned for the faithful performance of their official duties. b Trustees, before entering upon the performance of their official duties, and within ten days after their appointment, or within such further time, not to exceed five days, as the court may permit, shall respectively qualify by entering into bond to the United States, with such sureties as shall be approved by the courts, conditioned for the faithful performance of their official duties. c The creditors of a bankrupt estate, at their first meeting after the adjudication, or after a vacancy has occurred in the office of trustee, or after an estate has been reopened, or after a composition has been set aside or a discharge revoked, if there is a vacancy in the office of trustee, shall fix the amount of the bond of the trustee; they may at of the guardian are in course of settlement in the probate court of the state. Bourne v. Maybin (C. C. 1877) Fed. Cas. No. 1,700. The government if it holds a claim against a debtor in bankruptcy, may and should file proof of the same. U. S. v. Murphy (C. C. 1883) 15 Fed. 589. In the case of a bankrupt insurance company, under the former statute, it was held that a claim founded on a covenant to repay part of the premium paid for insurance on cancellation of the policy was provable. In re Independent Ins. Co. (D. C. 1872) Fed. Cas. No. 7,019. But see In re Western Ins. Co. (D. C. 1872) Fed. Cas. No. 17,435. And although money advanced to the bankrupt was purely in the form of a bonus, to induce him to erect and operate a manufacturing plant in a given locality, yet on his failure to do so and his ensuing bankruptcy, the amount so paid constitutes a provable claim. Sturgiss v. Meurer (1911) 191 Fed. 9, 111 C. C. A. 551, 26 Am. Bankr. Rep. 851. Where a subscriber for an increase of stock paid in advance the price thereof, under the agreement that such payment should be treated as loan until issuance of the stock, and before that the corporation was adjudged a bankrupt, the subscriber was entitled to have his claim allowed as a general claim against the bankrupt. Clark v. Hamilton (1914) 217 Fed. 229, 133 C. C. A. 223. Where claimant advanced money to a corporation on its agreement to pay dividends as on regular stock, to pay interest, to educate claimant's son in the business, and to issue stock therefor when the corporation's capital should be increased, the elements of the consideration except the last were valid and sufficient; and hence claimant could not prove his claim for the whole amount advanced on the theory that the contract was invalid for want of mutuality of obligation. In re Desnoyers Shoe Co. (D. C. 1914) 210 Fed. 533. In Although the debt was not originally contracted by the bankrupt, yet if he assumed and agreed to pay it (as in the case of one buying a going business and taking the assets and liabilities together, or buying mortgaged land with an assumption of the mortgage), it will be provable against his estate. re Baumblatt (D. C. 1907) 153 Fed. 485, 18 Am. Bankr. Rep. 720; Begein v. Brehm (1890) 123 Ind. 160, 23 N. E. 496. So where a sale by an insolvent person, the proceeds of which were used to pay certain creditors in full, was set aside as constructively fraudulent as to other creditors. the vendee has a valid claim against the vendor's trustee in bankruptcy for the amount of the money he paid, less the. expenses of setting aside the sale. Barber v. Coit (1906) 144 Fed. 381, 75 C. C. A. 319, 16 Am. Bankr. Rep. 419. In those states where the separate property of a married woman is liable in equity for her business obligations, though under the local law she is not technically a free trader, if she engages in business on her own account, her obligations contracted in the business are provable debts in bankruptcy. MacDonald v. Tefft-Weller Co. (1904) 128 Fed. 381, 63 C. C. A. 123, 65 L. R. A. 106, 11 Am. Bankr. Rep. 800. The amount contributed by a partner to the capital of the partnership cannot, on the bankruptcy of the firm, be proved as a debt entitled to share ratably with the claims of the general creditors. In re W. J. Floyd & Co. (D. C. 1907) 156 Fed. 206, 19 Am. Bankr. Rep. 438. Where one induces others to join with him in a purchase of property, by representations as to its value which prove to be incorrect, but without any express promise to reimburse them for any loss which they may sustain, the law will not raise such a promise by implication, so as to create a liability as on an implied contract provable against his estate in bankruptcy. Switzer v. Henking (1908) 158 Fed. 784, 86 C. C. A. 140, 15 L. R. A. (N. S.) 1151, 19 Am. Bankr. Rep. 300. Owelty of partition is a legal charge on the land, but not created by the contract of the parties but by the law, and therefore is not provable in bankruptcy. Ex parte Walker (1890) 107 N. C. 340, 12 S. E. 136. Where one institutes a suit against his debtor and against another as garnishee, and the latter goes into bankruptcy before the recovery of any judgment, the creditor has no provable claim against the garnishee's estate. Ex parte Columbian Ins. Co. (D. C. 1871) Fed. Cas. No. 3,037. A claim for an account of profits against an infringer of a patent-right is not provable against his estate in bankruptcy. In re Boston & F. Iron Works (C. C. 1885) 23 Fed. 880, citing Root v. Railway Co. (1881) 105 U. S. 189, 214, 26 L. Ed. 975. Where a bankrupt's agent without authority exchanged certain of its notes for bonds, which the bankrupt's trustee sold without knowledge of the agent's lack of authority, the trustee could repudiate the transfer on returning the bonds, if possible, or to permit the other party to file an amended claim for their value. In re Charles R. Partridge Lumber Co. (D. C. 1914) 215 Fed. 973. A pledgee of the bonds of a bankrupt corporation pledged to secure its own note, which purchased the bonds when sold at public auction, held, under the facts shown, entitled to prove the same against the estate. Turner v. Metropolitan Trust Co. of City of New York (C. C. A. 1913) 207 Fed. 495. 6. Amount of claim provable.-On a claim by one member of a syndicate of banking firms against the estate of a BANKRUPTCY (§ 63) bankrupt member, the court will ex- In Where a corporation gave its note to a bank for the indebtedness of a third party, for which it was not responsible, and also for its own debt, the note was invalid in the hands of the bank (having knowledge of the facts) to the extent of the amount of the debt of the third party, and it was held that the bank's claim against the estate of the corporation in bankruptcy must be reduced to the amount which the corporation itself owed when the note was given. Mapes v. German Bank of Tilden (1910) 176 Fed. 89, 99 C. C. A. 609, 23 Am. Bankr. Rep. 713. Where a manufacturer consigned An indorsee before maturity of a ne- § 9647 the bankrupt's estate for its whole claim. In re Venstrom (D. C. 1913) 205 Fed. 325. In a case where the fund to be distributed among the creditors of a bankrupt storage company consisted entirely of the proceeds of insurance on the property of such creditors, burned while in storage, the amount of which bad been determined by an agreement between the insurers and the respective owners as to the value of the property of each, it was held that the creditors were bound by such valuations as between themselves, and one cannot be permitted to prove a larger claim. In re Reliance Storage & Warehouse Co. (D. C. 1900) 105 Fed. 351, 5 Am. Bankr. Rep. 249. So, where the bankrupt's brokers were carrying stocks on a margin, and, at the commencement of the bankruptcy proceedings, could have sold them out at a profit, but carried the stocks until a decline and finally sold them at a loss, all without application to the court, it was held that they could not prove their claim for differences against the estate. In re Daniels (D. C. 1875) Fed. Cas. No. 3,566. Where the general manager of a trading corporation (who was also a stockholder and director) had been allowed a salary for his services at a fixed monthly rate, but by the mere agreement of the board of directors without any bylaw or resolution or entry of record, it was held that he was not entitled to prove a claim against the estate of the corporation in bankruptcy for arrears of salary at the rate so fixed, but only for the reasonable value of his services as determined by the court. In re Grubbs-Wiley Grocery Co. (D. C. 1899) 96 Fed. 183, 2 Am. Bankr. Rep. 442. For a buyer's breach of a contract for the manufacture and sale of certain articles of merchandise, the measure of the seller's damage, on the allowance of his claim against the bankrupt estate of the buyer, is the difference between the cost of manufacture and the contract price, notwithstanding the entire lot of goods were not n:anufactured or ready for delivery. In re Duquesne Incandescent Light Co. (D. C. 1910) 176 Fed. 785, 24 Am. Bankr. Rep. 419; Pratt v. Auto Spring Repairer Co. (1912) 196 Fed. 495, 116 C. C. A. 261, 28 Am. Bankr. Rep. 483. Where an agreement indemnifying a contractor's surety, containing an assignment of the contractor's plant on the work in case he should be unable to carry out the contract, was executed more than four months before the contractor became barkrupt and while he was solvent, the amount of the surety's claim against the bankrupt is not the amount which the latter might have paid by reason of his liability on the bonds, independent of the plant so assigned, but the amount of the loss the 35 (§ 9614, ante), an order for the payment out of the estate of the filing fees, or an order to the bankrupt to pay them, can be made only by the judge, not by the referee. In re Plimpton (D. C. 1900) 103 Fed. 775, 4 Am. Bankr. Rep. 614. General Order No. 10 (§ 9614, ante), providing that clerks and other officers, before incurring expenses of certain kinds, may require the bankrupt or other person in whose behalf the duty is to be performed to furnish indemnity for such expenses, and that money advanced by the bankrupt or other person for this purpose shall be repaid him out of the estate, does not apply to the filing fees prescribed by this section, and such fees, paid by a voluntary bankrupt on the filing of his petition, are not to be repaid to him. In re Matthews (D. C. 1899) 97 Fed. 772, 3 Am. Bankr. Rep. 265. 2. In partnership cases.-Upon the voluntary application of a partnership for the benefit of the act, only one petition need be filed, and all that is done thereupon constitutes one proceeding, although it involves granting a discharge to each of the partners, and only one deposit of the filing fee is required; it cannot be demanded of the partners, as a prerequisite to discharging them, that they should each separately deposit a like fee. In re Langslow (D. C. 1899) 98 Fed. 869, 1 Am. Bankr. Rep. 258; In re Gay (D. C. 1899) 98 Fed. 870, 3 Am. Bankr. Rep. 529. But compare In re Farley (D. C. 1902) 115 Fed. 359, 8 Am. Bankr. Rep. 266. But where a partnership files a voluntary petition for the adjudication in bankruptcy of the firm as such, and also separate petitions for the adjudication of the several partners, each petition, with the accompanying schedules, constitutes a separate and distinct "case," within the meaning of the statute, and a deposit of the statutory filing fees must be made, not only for the partnership, but also for each member of the firm who seeks an adjudication. In re Barden (D. C. 1900) 101 Fed. 553, 4 Am. Bankr. Rep. 31. but 4. Clerk's docket.-The clerk's docket, required to be kept by General Order No. 1 (§ 9614, ante), should show not only the fact and the date of the filing of each petition in bankruptcy, also that it was filed in duplicate, as required by the statute, if this was done. In re Stevenson (D. C. 1899) 94 Fed. 110, 2 Am. Bankr. Rep. 66; In re Dupree (D. C. 1899) 97 Fed. 28. As a court of bankruptcy is always open for the transaction of business and has no regular terms, it is not necessary for the clerk to make an entry showing the opening and closing of the court on days when he enters proceedings in bankruptcy cases. Keatley v. U. S. (1909) 45 Ct. Cl. 36. § 9636. (Act July 1, 1898, c. 541, § 52.) Compensation of clerks and marshals. Compensation of Clerks and Marshals.-a Clerks shall respectively receive as full compensation for their service to each estate, a filing fee of ten dollars, except when a fee is not required from a voluntary bankrupt. b Marshals shall respectively receive from the estate where an adjudication in bankruptcy is made, except as herein otherwise provided, for the performance of their services in proceedings in bankruptcy, the same fees, and account for them in the same way, as they are entitled to receive for the performance of the same or similar services in other cases in accordance with laws now in force, or such as may be hereafter enacted, fixing the compensation of marshals. (30 Stat. 559.) Notes of Decisions 1. Fees of clerks.-Where the local rule of court provides that the notice of final meeting shall be issued by the clerk in accordance with Official Form No. 57 ($ 9614, ante), which includes the petition for the bankrupt's discharge, the order of notice, jurat, etc., it is held that the clerk is not entitled to charge a fee of 25 cents for each notice sent to creditors, on petition for discharge, but is only entitled to the actual items of expense thereon for postage, stationery, and clerical assistance. In re Dunn Hardware & Furniture Co. (D. C. 1905) 134 Fed. 997, 14 Am. Bankr. Rep. 186. Sections 1383, 1405, ante, held not to entitle clerks of federal courts in Washington to fees for sending out copies of the petition and notice of an application for a bankrupt's discharge; he being entitled only to charge necessary expense therefor under section 9642, post, and General Bankruptcy Or |