ment of a claim not filed within a year of the adjudication is filed in due time the claim may be amended after the year.109 But an amendment amounting to the presentment of a new claim will not be allowed after a year has elapsed.110 And where the claim has been unconditionally withdrawn, a like claim, but for a different amount, cannot be filed after the expiration of the year, upon the theory that it is an amended claim.111 Nor will an amendment be allowed where it changes a claim from one against a partnership to one against the estate of an individual partner,' nor will an amended claim be allowed where the original was returned by the referee on the ground that it was defective.113

112

n. Withdrawal of claim. The right to permit a withdrawal of a claim seems clear; for instance where a creditor files a claim based upon notes containing clauses waiving the bankrupt's homestead exemption, he will be permitted to withdraw such claim so as to proceed in the State court to subject the bankrupt's exempt property to the payment of the notes.114

o. Filing proofs of claims.- Before a claim can be regarded as proven the written proof called for by § 57-n must at least have been filed or lodged with the court or some officer thereof. That such written proof has been completed is not enough so long as the proof remains in the hands of the creditor or his attorney.115 If filed with the clerk of the district court, it becomes his duty to transmit it to the referee.116 Where proof of claim has been delivered to the trustee the claim is sufficiently filed and it is the duty of the trustee to

66

proof of its unsecured indebtedness
only but filed nothing with reference
to the secured claim, the bank cannot,
after the expiration of the one year
period when its security had failed,
file an
amended or substituted " proof
of claim, so as to include the balance
due on its secured indebtedness after
applying the proceeds of its security.
In re Daniel (Ref., Tex.), 29 Am. B.
R. 284.

109. Bennett v. American Credit Indemnity Co. (C. C. A., 6th Cir.), 20 Am. B. R. 258, 159 Fed. 624.

110. Hutchinson v. Otis (C. C. A., 1st Cir.), 8 Am. B. R. 382, 115 Fed. 937; affd. 10 Am. B. R. 135, 190 U. S. 552; In re McCallum & McCallum (D.

C., Pa.), 11 Am. B. R. 447, 127 Fed. 768. But see also In re Moebius (D. C., Pa.), 8 Am. B. R. 590, 116 Fed. 47.

111. In re Stevens (D. C., Vt.), 5 Am. B. R. 806, 107 Fed. 243; In re Thompson's Sons (D. C., Pa.), 10 Am. B. R. 581, 123 Fed. 174.

112. In re McCallum & McCallum (D. C., Pa.), 11 Am. B. R. 447, 127 Fed. 768.

113. Matter of Booth (D. C., N. Y.), 33 Am. B. R. 183, 216 Fed. 575. 114. In re Strickland (D. C., Ga.), 21 Am. B. R. 734, 167 Fed. 867.

115. In re Back Bay Automobile Co. (D. C., Mass.), 19 Am. B. R. 835, 158 Fed. 679, revg. 19 Am. B. R. 33. 116. General Order XX.

deliver it to the referee,117 and if the trustee does not deliver such proofs of claims to the referee, the creditor should not be charged with the failure.118 Proofs on receipt are usually stamped with a filing stamp, showing the day and hour received, but are not allowed until called at a meeting of creditors.

p. Proof as evidence; prima facie case.—A claim proven as required by the act should be received and filed by a referee receiving it, and amounts to a prima facie case;" ;119 thus proving the debt for

all purposes in the proceeding, unless objected to or continued for consideration. If objections are made to the allowance of a claim, the formal proof of it raises a presumption as to its validity which must be rebutted by affirmative proof.120 If proof is properly made by witnesses who are competent to testify, the claim may be received. It is a serious matter to reject a claim upon the ground that the witnesses are unworthy of belief.121

III. PROOF OF SECURED, PRIORITY AND PREFERRED CLAIMS a. In general. Subsections e, g and h relate specifically to the proof of claims of secured, priority and preferred creditors. Secured or priority creditors need not surrender their securities, but the value thereof may be determined and deducted, and dividends paid on unpaid balances. Preferred creditors, on the other hand, must surrender their advantage and place themselves on an equality with the other creditors before they will be permitted to share in the estate.

b. Secured claims.-(1) IN GENERAL.-The act contemplates that secured creditors may and shall prove their claims, and they are to set forth the claim, the consideration therefor, and whether any, and, if so, what securities are held therefor, etc. Claim of secured creditors and those having priority may also be allowed for certain purposes, thus, for the purpose of fixing the sum on which a dividend from the general estate is to be paid and also for limiting the voting power or voice of the secured creditor, or creditor having a priority, at creditors' meeting." Secured claims must be proven on one of the forms provided for that purpose.123 A bill of sale to secure the purchase price of goods purchased by the bankrupt may be unenforce

122

fact that from the evidence it does not appear the breach of contract by the Company was not brought about by strikes, labor difficulties, fires, acts of the elements, panics, or other causes beyond its control. In the sworn proof of claim these negatives were clearly alleged, and, in the absence of proof to the contrary, are held to be sufficiently proved under the Bankruptcy Act, since such allegations are prima facie evidence and the sworn proof of claim is some evidence, even when it is denied. Whitney v. Dresser, 200 U. S. 532, 15 Am. B. R. 326, 26 Sup. Ct. 316, 50 L. Ed. 584. These designated VOL. II- -5

exceptions and contingencies are all matters which were peculiarly within the knowledge of the company. Under such circumstances the prima facie proof of the proof of claim itself must stand, unless the one against whom the averment was made shows an excuse from compliance by proving the causes named."

120. See under this section post, subtitle "Objections before allowance."

121. Matter of Rome (D. C., N. J.), 19 Am. B. R. 820, 162 Fed. 971. 122. In re Cramwood (D. C., N. Y.), 17 Am. B. R. 22, 145 Fed. 566.

123. Forms Nos. 32 and 36.

able against the other creditors, because unrecorded, but a claim for the unpaid purchase price is nevertheless provable as an unsecured claim against the bankrupt's estate.124

(2) WHAT CONSTITUTES A SECURED CREDITOR.— Section 1, subdivision 23, defines a secured creditor as one who "has security for his debt upon the property of the bankrupt of a character to be assignable under this act, or who owns such a debt for which some indorser, surety or other person secondarily liable for the bankrupt has such security upon the bankrupt's assets." The reader is referred to that section for a complete discussion of the question.'

125

(3) CLAIM SECURED BY OTHER FUND OR ESTATE OR BY THIRD PARTY.— The question pertains in each case to the security which a creditor has upon the property of the bankrupt. No matter how great may be the security which one may have, if it be property of another than the bankrupt, the creditor may prove his entire claim against the bankrupt estate, and receive a dividend thereon, and thereafter institute proceedings to enforce his claim upon the security for the balance.126 As where a creditor has a claim against two bankrupt estates, he may assert his claim against one unimpaired by the fact that he held security against the other, and he may recover dividends. from the two estates upon the full amount of his claim, until from

124. In re Burlage Bros. (D. C., Iowa), 22 Am. B. R. 410, 169 Fed. 1006.

125. See section 1, ante, subtitle "What constitutes a secured creditor."

126. In re Headley (D. C., Mo.), 3 Am. B. R. 272, 97 Fed. 765, citing Collier on Bankr. (1st ed.), p. 283. Haas-Baruck & Co. v. Portuondo (D. C., Pa.), 15 Am. B. R. 130, 138 Fed. 949; Matter of Thompson (D. C., N. Y.), 31 Am. B. R. 236, 208 Fed. 207; Gorman v. Wright (C. C. A., 4th Cir.), 14 Am. B. R. 135, 136 Fed. 164; Matter of Ballard (D. C., Tex.), 44 Am. B. R. 651, affd. 48 Am. B. R. 458, 279 Fed. 600.

The equitable rule that a creditor having a lien upon two funds must exhaust that one upon which other creditors have no lien, does not apply in cases where it operates to the injury of the party having the double lien, and this rule has in substance been made part of the bankruptcy act. One

who has been allowed to prove his claim as an unsecured creditor against a bankrupt indorser must realize and credit the proceeds of collateral securities held by him against the principal debtor, before he will be allowed to participate in the distribution of the estate of such indorser. Gorman v. Wright (C. C. A., 4th Cir.), 14 Am. B. R. 135, 136 Fed. 164.

A subcontractor, who has a preferential right to moneys due the contractor, does not waive his right thereto by filing his proof of claim in the bankruptcy proceedings of the contractor and receiving dividends thereon. Baker Lumber Co. v. Clark Co. (Utah Sup. Ct.), 43 Am. B. R. 193, 178 Pac. 764.

Claim against warehouseman.Where it appeared that a bankrupt warehouseman had issued storage tickets for grain stored in his warehouse but he did not have sufficient grain on hand to satisfy such storage tickets,

127

all sources he has received full payment of his claim." And this rule applies even where the security that is held is security for a partnership debt but is property of individual members of the firm, the partnership and the individual estates being considered distinct and separate.128 A trust company which holds as collateral security for the note of a bankrupt company certain debenture bonds issued by the bankrupt as security for the note, but not secured by mortgage or other means, is not a secured creditor.129 But it is, of course, otherwise where the bonds are secured by a special fund set apart to provide for their payment when due; in such a case the bondholders may participate in such fund, independent of their right to prove an unsecured balance against the general assets.130 A creditor whose claim is secured or partly paid by an accommodation indorser may prove the claim to its full amount, and exclude from the bankrupt estate the avails of such security or part payment.131 Where a creditor has a claim which is guaranteed by a third person, who turns over a note of the bankrupt to the creditor, such creditor may prove both the claim and the note and receive dividends on both.18

132

(4) SURRENDER OF SECURITY.-A secured creditor may or may not surrender his security, as he chooses.133 If he does, it inures to the

holders of such .tickets, by filing their proof of claim in the bankruptcy proceedings, did not waive their right to the security furnished by the warehouseman's surety bonds, the liability of such sureties not being property of the bankrupt within the meaning of the Act. Sommer v. Interstate Surety Co. (S. Dak. Sup. Ct.), 49 Am. B. R.

44.

127. Matter of New York Commercial Co. (C. C. A., 2d Cir.), 36 Am. B. R. 769, 233 Fed. 906; Board of Commissioners of Shawnee County v. Hurley (C. C. A., 8th Cir.), 22 Am. B. R. 209, 169 Fed. 92; Matter of Shatz (D. C., Pa.), 41 Am. B. R. 576, 251 Fed. 351.

128. Ex parte Graves, 2 Jur. N. S. 651; Ex parte Peacock, 2 G. & J. 67; In re Howard, Cole & Co., 4 N. B. R. 671, Fed. Cas. 6,750; In re Coe (Ref., Ohio), 1 Am. B. R. 275.

129. Matter of Matthews (D. C., N. Y.), 26 Am. B. R. 19, 188 Fed. 445.

130. Butterfield v. Woodman (C. C.

A,, 1st Cir.), 34 Am. B. R. 510, 223
Fed. 956, modfg. 33 Am. B. R. 154.
See also Matter of Alburtes (D. C.,
Pa.), 40 Am. B. R. 113, 243 Fed. 777.

131. In re Noyes Bros. (C. C. A., 1st
Cir.), 11 Am. B. R. 506, 127 Fed. 286;
In re Matthews (D. C., N. Car.), 13
Am. B. R. 91, 132 Fed. 274.

a

132. In re Keep Shirt Co. (D. C., N. Y.), 28 Am. B. R. 765, 200 Fed. 80. 133. Proof of Claims by secured creditors. Mortgage creditors of bankrupt corporation are entitled to prove their claims without surrendering their lien, and if on foreclosure the proceeds of the sale were insufficient to pay the debts in full, they are not barred from sharing pro rata in the distribution of the general assets. So also mortgage creditors may surrender their security and elect to file their claims in the bankruptcy court, which entitles them to participate in the distribution of the assets as general creditors. In re Medina Quarry Co. (D. C., N. Y.), 24 Am.