Wagner v. Burnham

Citations

• 224 Pa. 586
• 73 A. 990
• 1909 Pa. LEXIS 845

Syllabus

<p>Bankruptcy — Set-off—Sec. 68 of Federal act — Mechanics’ liens.</p> <p>1. Where a contractor for a building is adjudicated a bankrupt and it appears that subcontractors’ liens had become fixed upon the building at the commencement of the work before the adjudication in bankruptcy, and had been perfected by the filing of liens after the adjudication in bankruptcy, but within the statutory period, and it also appears that the owners had paid the liens, such payments may be set off by the owners in an action brought by the trustees of the bankrupt to recover a balance due the bankrupt on the building contract.</p> <p>2. While the primary debtor of the subcontractors was the contractor whose duty it was to pay the claim, the property of the defendants, and hence the defendants themselves, were the statutory sureties for the payment of the debt of the bankrupt to the subcontractors. A surety paying the debt of his principal after the bankruptcy may, under the bankrupt act of 1898, set off the amount so paid against his debt to the bankrupt.</p> <p>3. The rules relating to set-off which prevail in the federal courts, must be observed by the state courts in construing the bankrupt act.</p> <p>4. A counterclaim provable against the estate of a bankrupt by his debtor in an action brought by the trustee, is such claim as is provable in its nature at the time the set-off is sought to be enforced. The status of the claim at that date determines its provability in contemplation of the bankruptcy act.</p> <p>5. The counterclaim which may be set off in an independent action brought by a trustee in bankruptcy is one that is provable in its nature, and need not necessarily be one that has been or may yet be proved in the bankruptcy proceeding.</p>