'Any person liable as bail, surety, guarantor, or otherwise for the bankrupt, who shall have paid the debt, or any part thereof, in discharge of the whole, shall be entitled to prove such debt or to stand in the place of the creditor if the creditor has proved the same, although such payments shall have been made after the proceedings in bankruptcy were commenced. And any person so liable for the bankrupt, and who has not paid the whole of such debt, but is still liable for the same or any part thereof, may, if the creditor fails or omits to prove such debt, prove the same either in the name of the creditor or otherwise, as may be provided by the general orders, and subject to such regulations and limitations as may be established by such general orders.'

Sec. 57 of the Act of 1898 states that the surety may prove the claim in the name of the creditor in case the latter does not make such proof, and enables the surety, in case he discharge the debt in whole or in part, to be subrogated to the rights of the creditor. The construction would be permissible that the surety is subrogated to the rights of the creditor to the extent to which he has paid the debt, but, if he has paid nothing, he must await the action of the creditor; and, in default of such action, the surety may act for the creditor in the matter of proving the claim. The construction placed upon sec. 19 of the Act of 1867 leads to a contrary conclusion. That section states in terms that the surety who has discharged the debt in whole or in part shall be entitled to prove the debt, or if the creditor has proved it, to stand in his place. That section further states, that, if the surety has not paid the whole of the debt. but is still liable for the same, or any part thereof, he may, if the creditor omits to prove the debt, prove the same either in the name of the creditor or otherwise, as may be provided, etc. These two sentences of sec. 5070, Rev. St. on certain state of facts might not entirely accord, but it is considered that the section is the full equivalent, and no more than an equivalent, of subd. I of sec. 57 of the Act of 1898. In such case it seems suitable to follow the interpretation placed upon sec. 5070. Rev. St. From the decisions relating to the former act, it appears that the creditor is entitled to prove his full claim in preference to a surety, who has discharged a part of his indebtedness. The authorities tending to establish this holding are: In re Ellerhorst, 5 N. B. R 144; Fed. Cas. 4381; in re Hollister, 3 Fed. 452; Stewart v. Armstrong, 56 Fed. 171; in re Souther, 2 Low. 322, Fed. Cas, 13184; 9 N. B. R. 502; Bank v. Pierce, 137 N. Y. 444; 33 N. E. 557. See Downing v. Bank, 11 N. B. R. 372; Fed Cas. 4046..

But irrespective of the provisions of any particular statute a surety paying the debt of his principal after bankruptcy may set off the amount so paid against his debt to the bankrupt. See recent case of In re Dillon (4 Am. B. R. 63; 100 Fed. 931), in which it was held that where upon the dissolution of a firm one partner agrees with his retiring co-partners to become responsible for the payment of all firm debts and liabilities, the retiring partners become in equity sureties for the remaining partner, and

§ 57.]

Debts to the United States

Reconsideration.

this relationship is recognized in bankruptcy. Hence where the retiring partner is compelled to pay a debt of a firm in whole or in part he becomes subrogated to the claim of the creditor, pro tanto. Where the original creditor has not proved his claim the surety seeking to prove it must be required to prove it in the creditor's name. As to whether, when the surety is unable to prove the creditor's claim which he has paid, on account of its being a preference, the surety may set it off against his debt due to the principal, quaere.

On the same general subject see G. O. 21 (4).

Debts to the United States. Section 57j.-Compare commentary under section 17 on this subject. As to the rights of the United States to a priority of payment, compare section 64.

Reconsideration. Section 57k.-The right given by this paragraph and also by G. O. 21 (6) quoted ante under this section to reconsider claims which have been allowed, and to reallow or reject them, is merely declaratory of the law. It is a matter within the discretion of the court, and the only limitation is that provided for in the statute itself, namely, that claims shall not be reconsidered after the estate has been closed. Up to that time the court has ample power to investigate a claim and to make any corrections which equity or justice demands. It may reduce the amount if it is too large, or may increase it, if by mistake it was proven for too small a sum, but the court will reconsider under this section only claims against the bankrupt that were in existence when the petition was filed and not claims for expenses of administration, such as a receiver's account. Such expenses should be promptly objected to and an exception filed when the question is raised before the referee. (In re Reliance Co. 4 Am. B. R. 49: 100 Fed. 619.) In a proceeding to reconsider, the burden of proof rests upon the petitioner. The original allowance establishes a prima facie case. It has been held that the bankruptcy court may expunge or dismiss a claim on account of matters occurring after the proof is made. (In re J. C. Loring, Fed. Cas. 8,512; 1 Holmes, 483.)

Effect of Proving a Claim — Allowance, etc.— Notice to Creditors. [Ch. VI.

Effect of Proving a Claim Upon a Continuance of Other Proceedings to Enforce It. Section 571.-(Compare section II, paragraph on EFFECT OF PROOF ON RIGHTS OF ACTION.)

Appeals from the Allowance or Disallowance of Claims.-Compare section 25 a (3), and section 25 b.

SEC. 58. Notice to Creditors.—a Creditors shall have at least ten days' notice by mail, to their respective addresses as they appear in the list of creditors of the bankrupt, or as afterwards filed with the papers in the case by the creditors, unless they waive notice in writing, of (1) all examinations of the bankrupt; (2) all hearing upon applications for the confirmation of compositions or the discharge of bankrupts; (3) all meetings of creditors; (4) all proposed sales of property: (5) the declaration and time of payment of dividends; (6) the filing of the final accounts of the trustee, and the time when and the place where they will be examined and passed upon; (7) the proposed compromise of any controversy, and (8) the proposed dismissal of the proceedings.

b Notice to creditors of the first meeting shall be published at least once and may be published such number of additional times as the court may direct; the last publication shall be at least one week prior to the date fixed for the meeting. Other notices may be published as the court shall direct.

c All notices shall be given by the referee, unless otherwise ordered by the judge.

Analogous Provisions of Former Acts

As to notices of first meeting: R. S. section 5019: act of 1867, section 11. As to notice of filing of trustee's account: R. S. 5096; act of 1867. section 28. As to notice of dividends: R. S. section 5102; act of 1867, section 27: act of 1841 section 0; act of 1800, section 20. As to notice of application for discharge: R. S. section 5109; act of 1867, section 29; act of 1841. section 4. As to notice of application for confirmation of composition: R. S. section 5103A. As to notice of meetings in general: R. S. section 5094; act of 1867. section 17.

The statute is so clear in its statement as to need very little commentary. A few matters, however, should be taken into ac

count in connection with the section. Thus by G. O. 4 it is provided that notices and orders not required by the Act or by the General Orders to be served on the party personally may be served on his attorney. And by G. O. 21 (2) it is provided that any creditor may file with the referee a request that all notices to which he may be entitled shall be addressed to him at such place as he shall designate and until some other designation shall be made all notices shall be so addressed. As to notice of re-examination of claim see G. O. 21 (6). The notice of hearing on the bankrupt's petition for discharge is given by the clerk upon Form No. 57; other notices are given by the referee.

As notice by mail of all examinations of the bankrupt is required by this section it is important that where such examination is to take place upon his application for discharge, the notice of such application for discharge should contain a notice of the examination of the debtor to avoid the necessity of further notice. (In re Price, 1 Am. B. R. 419; 91 Fed. 635.) But the court may, by section 7 (9), order an examination at any time during the pendency of proceedings upon ten days' notice. Id. The language of subdivision 4 respecting notice of proposed sales of property should be read in connection with section 70b. In this connection attention should be called to G. O. 18, subdivision 3, which provides as follows:.

Upon petition by a bankrupt, creditor, receiver or trustee. setting forth that a part or the whole of the bankrupt's estate is perishable, the nature and location of such perishable estate, and that there will be loss if the same is not sold immediately, the court, if satisfied of the facts stated and that the sale is required in the interest of the estate, may order the same to be sold. with or without notice to the creditors, and the proceeds to be deposited in court.

The provision in regard to the notice of declaration and time of payment of dividend is exemplified in Form No. 41, by which it will appear that notice is given by the trustee after the lists. of claims and dividends has been delivered to him by the referee and addressed to each creditor stating that such creditor may receive a warrant for the dividend due to him on the day named; that if he cannot personally attend the warrant will be delivered

Notice to Creditors - Necessity of Notice to Give Jurisdiction. [Ch. VI.

to his order upon his filling up and signing a form which is attached to the notice. The provision in regard to the notice to creditors of the first meeting implies that such notice shall be published as well as served. (Form No. 18.) Notice of the filing of the final accounts of the trustee, and the time and the place. where they will be examined, is clearly a notice to be given after the filing of the account. Compare sec. 47(8); also R. S. sec. 5,096. Notice of the proposed compromise of the controversy must be notice of the application of the trustee for an order from the court permitting such compromise. Compare section 27. As to notice of the proposed dismissal of the proceedings, compare section 59 (g). As to the newspaper in which notice of the first meeting shall be published, compare section 28.

Except so far as additional notice may be required by the General Orders or by the practice of a particular district, or by the Rules of Equity, this section is practically exclusive and notice is not required in other cases. Thus it has been held that the Judge of the bankruptcy court may appoint a special as well as a general referee without any notice to any of the parties. (Bray v. Cobb, I Am. B. R. 153; 91 Fed. 102.) No notice is required to creditors before the referee may settle attorney's fees, and presumably costs of administration. (In re Stotts, I Am. B. R. 641; 93 Fed. 438.)

Necessity of Notice to Give Jurisdiction.-The courts hold that a proceeding in bankruptcy is in the nature of a proceeding in rem; that jurisdiction is obtained by the petition, adjudication, and the taking of the property into the custody of the court. Actual personal notice to the creditors, though required by the statute, is not necessary to give the court jurisdiction over the creditors. In Rayl v. Lapham (27 Ohio St. 452; s. c. 15 N. B. R. 508), it was said: "The statute directs certain acts to be done and publication to be made for the purpose of affording a reasonable opportunity of notice to the creditors, but the proceedings are so far in rem that actual notice to the creditors is not essential to the jurisdiction of the court, nor will the want of it invalidate