In re Siegel-Hillman Dry Goods Co.

Citations

• 111 F. 980
• 1901 U.S. Dist. LEXIS 110

Syllabus

<p>1. Bankruptcy—Equity Powers of Court—Adjustment of Equities between Creditors.</p> <p>A district court sitting in bankruptcy can exercise the full powers of a court of equity for the ascertainment and enforcement of the rights and equities of the various parties interested in the bankrupt estate, and the adjustment of equities between creditors arising out 'of the provisions of the bankruptcy act is peculiarly within the rule requiring the exercise of such powers.</p> <p>Same—Surrender of Preferences.</p> <p>A bank held notes of a corporation, indorsed before delivery by a partnership, which thereby became liable as a joint maker. A short time before the corporation became bankrupt, and while Insolvent, it made a payment on the notes, which was received by the hank in the nsual course of business, and without notice, actual or constructive, of the corporation’s insolvency. After the bankruptcy the indorser paid - the remainder due on the notes. Both the hank and the partnership held other large claims against the bankrupt estate. Held, that if the hank was required, under the provisions of the bankruptcy act, to surrender the payment received from the corporation as a condition precedent to proving its remaining claims against the estate, the effect would be to leave the notes to that extent unpaid, and a subsisting liability not only of the estate, hut also, in equity, of the partnership, as indorser, and that the court of bankruptcy, in the exercise of its power to adjust the equities between such creditors, would transfer the obligation to surrender the amount of such payment from the bank to the partnersiiip, as a condition to the proving of its remaining claims; the circumstances of the particular case being such that the rights of general creditors would not be affected thereby.</p> <p>8. Same—Proof of Ci.aim by Indorsee.</p> <p>An indorser of notes of a bankrupt given to a bank, who pays the same after the bankruptcy, thereby extinguishing the claim of the