́VII. EFFECT OF PROOF AND ALLOWANCE 338 a. In general.— Under the former law, a creditor who proved his claim could not proceed thereon in another court. This is not the law now. He can proceed, though he will usually be halted by a stay.339 He becomes, however, a party to the bankruptcy proceeding, with all that that condition implies.340 If his claim, voluntarily filed, is disallowed it is a bar to a suit against the bankrupt on the same cause of action in another jurisdiction.341 The action of a referee in bankruptcy in allowing a claim is res adjudicata as to all who have been made parties to the proceedings in the bankruptcy court,342 but statement of the court was not essential to the determination of the question at issue and may not be considered controlling upon this question. The language of the subsection clearly indicates that the additional sixty days' time begins to run at the date of the rendition of the judgment. 338. Act of 1867, § 21; In re Meyers, Fed. Cas. 9,518; Cook v. Coyle, 113 Mass. 252. 339. In re Buchan's Soap Corporation (D. C., N. Y.), 22 Am. B. R. 382, 169 Fed. 1017; Roth v. Pechin (Pa. Sup. Ct.), 41 Am. B. R. 845, 103 Atl. 894. 340. Wiswall v. Campbell, 93 U. S. 347. Compare In re Jones, Fed. Cas. 7,447; In re Coffey (Ref., N. Y.), 19 Am. B. R. 148; In re Kenyon (D. C., Ohio), 19 Am. B. R. 194, 156 Fed. 863, citing Collier on Bankruptcy (6th Ed.), 437, and holding that a claimant may not rescind his agreement after proof of his claim. Matter of Kinnane Co. (D. C., Ohio), 33 Am. B. R. 243, 217 Fed. 488, citing Collier on Bankruptcy (10th ed.), 749. Election of remedies.- Proof of claim against the bankrupt bars the claimant from bringing an action against another party on the ground that the bankrupt was acting as agent of such party in incurring the liability. Com. Bank, etc. v. Central Nat. Bank (Mo. Ct. of App.), 41 Am. B. R. 660, 203 S. W. 662. 341. Hagardine, etc., Co. v. Hudson (C. C. A., 8th Cir.), 10 Am. B. R. 225, 122 Fed. 232, affg. 6 Am. B. R. 657; Elmore, Quillian & Co. v. HendersonMizell Mercantile Co. (Sup. Ct., Ala.), 32 Am. B. R. 658, 179 Ala. 548, quoting text with approval. Disallowance of claim as res judicata. Where, in a bankruptcy proceeding, a trial was had upon a claim against the bankrupt corporation for the amount credited on its books to certain stockholders, and the bankruptcy court held that it was not understood that such credit constituted a fixed liability of the corporation, such trial involved the same issue raised in a subsequent suit by the trustee in bankruptcy to recover back moneys paid upon such credits, which was defended upon the ground that the payment was a partial satisfaction of an existing obligation, and prevented further consideration, the other elements necessary to constitute res judicata being present. Underwood v. Lennox (Mass. Sup. Jud. Ct.), 48 Am. B. R. 674, 136 N. E. 343. 342. Elmore, Quillian & Co. v. Henderson-Mizell Mercantile Co. (Sup. Ct., Ala.), 32 Am. B. R. 658, 719 Ala. 548; Spencer Commercial Club v. Bartmess (Ind. App. Ct.), 43 Am. B. R. 569, 123 N. E. 435; Clendening v. Red River Valley Nat. Bank (N. Dak. Sup. Ct.), 11 Am. B. R. 245, 94 N. W. 901; Ayres v. Cone (C. C. A., 8th Cir.), 14 Am. it has been held that a creditor who has proved in bankruptcy a claim. based on a contract and has been paid dividends thereon, may proceed in a State court to recover in tort for the balance due, 343 and that the filing of a proof of claim does not bar the creditor of his right to proceed in an action to have the property fraudulently transferred subjected to the payment of his judgment.344 A reserva B. R. 739, 138 Fed. 778; In re Tiffany (D. C., N. Y.), 17 Am. B. R. 296, 147 Fed. 314; Handlan v. Walker (C. C. A., 8th Cir.), 29 Am. B. R. 4, 200 Fed. 566; Clapp & Son, Inc., v. Knorr (Kan. Sup. Ct.), 45 Am. B. R. 427, 189 Pac. 936. Effect on statute of limitations.Where it does not appear that a bankrupt examined a claim, the allowance thereof, although sufficient and controlling as a judgment for the purpose of the bankruptcy proceeding, does not affect the running of the statute of limitations. American Woolen Co. v. Samuelsohn (N. Y. Ct. of App.), 43 Am. B. R. 530, 123 N. E. 154. 343. Matter of Menzin (C. C. A., 2d Cir.), 38 Am. B. R. 435, 238 Fed. 773, revg. 37 Am. B. R. 468, 233 Fed. 333. And see Friend v. Talcott, 228 U. S. 27, 30 Am. B. R. 31; Bay State Milling Co. v. Susman Feuer Co. (Conn. Sup. Ct. of Errors), 39 Am. B. R. 132, 100 Atl. 19. Effect on liability for torts.- The filing of a claim for goods sold to the bankrupt does not waive the liability of the bankrupt arising from deceit and false representation made in securing credit on the purchase of the goods, but the creditor still has his action for deceit after the bankrupt's discharge in bankruptcy. Sanger Bros. v. Barrett (Tex. Ct. of Civ. App.), 45 Am. B. R. 543, 221 S. W. 1087. The proof and allowance of a claim in a definite sum as a claim founded upon contract does not necessarily indicate such an election on the part of the creditor as will deprive it of the right to sue the bankrupt in a proper court and proceeding for any damages sustained by it through actionable deceit. Matter of Natou Bros, (D. C., Mich.), 49 Am. B. R. 245, 283 Fed. 522. Effect on right against third party. The proving of a claim by a school district in bankruptcy proceedings against a retiring depository for the amount of missing funds and its acceptance and retention of dividends did not estop it from proceeding against the newly designated depository which made a secret arrangement with the retiring depository giving the latter time in which to deposit funds. Teague School Dist. v. State Bank of Teague (Tex. Ct. of Civ. App.), 48 Am. B. R. 483, 241 S. W. 608. It is no defense to an action for conversion brought by a principal against his agent based on the unauthorized loan of money to one who thereafter went into bankruptcy, that the principal proved a claim on the note in the bankruptcy proceedings of the maker. Parkerson v. Borst (C. C. A., 5th Cir.), 45 Am. B. R. 531, 264 Fed. 761; petition for writ of certiorari dismissed, 254 U. S. 634, 41 S. Ct. 8, 65 L. Ed. 41. Proceedings in bankruptcy against a bankrupt tenant in which a landlord has filed a claim for rent are not a bar to an action for conversion in the State court against a purchaser from the tenant of property on which the landlord has a lien. Boles v. Missouri Valley Elevator Co. (Iowa Sup. Ct.) 41 Am. B. R. 439, 166 N. W. 1057. 344. Jasper v. Rozinski (N. Y. Ct. of App.), 45 Am. B. R. 446, 127 N. E. 189. tion, in a customer's proof of claim, of whatever rights he has against the bankrupts on account of their failure to return stock covered by a receipt, does not preclude him after discovery that his shares of stock have been returned to the trustee, from reclaiming them as his b. Waiver of lien.-A creditor's lien may be waived by the proof and allowance of his claim.346 How far a proof of debt that is not affected by a discharge amounts to a waiver has not yet been much discussed under the present law. Under former laws, proving for such a debt did not estop the creditor from asserting it against afteracquired property.34 345. Thomas v. Taggart (Sup. Ct.), 209 U. S. 385, 19 Am. B. R. 710, affg. 17 Am. B. R. 467; Matter of Berry & Co. (C. C. A., 2d Cir.), 23 Am. B. R. 27, 174 Fed. 409, holding that where a customer of a firm of stockbrokers with full knowledge of all the facts, elects to prove against their estate in bankruptcy, for the value of corporate stock hypothecated by them, he cannot subsequently claim the stock or its profits specifically. See also Matter of Kaplan v. Myers (C. C. A., 3d Cir.), 39 Am. B. R. 367, 241 Fed, 459. 346. A lien created by the commencement of a judgment creditor's action within the four months' period to set aside an alleged fraudulent transfer by a bankrupt is waived by the proof and allowance of the creditor's claim upon his judgment in the bankruptcy proceeding without a disclosure of the pendency of the action. Dunn Salmon Co. v. Pillmore, 19 Am. B. R. 172, 56 Misc. 546, 106 N. Y. Supp. 546. See Sessler v. Paducah Distilleries Co. (C. C. A., 5th Cir.), 21 Am. B. R. 723, 168 Fed. 44. 347. In re Robinson, Fed. Cas. 11,939; In re Clews, Fed. Cas. 2,891; McBean v. Fox, 1, Ill. App. 177. The opposite was true under the law of 1841. Chapman v. Forsyth, 2 How. 202. See also Clay v. Smith, 3 Pet. 411. SECTION FIFTY-EIGHT NOTICE TO CREDITORS § 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 hearings upon applications for the confirmation of compositions; (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; (8) the proposed dismissal of the proceedings and (9) there shall be thirty days' notice of all applications for the discharge of bankrupts. * 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: In U. S.: As to notices of first meeting, Act of 1867, § 11, R. S., § 5019; As to notice of filing trustee's account, Act of 1867, § 28, R. S., § 5096; As to notice of dividends, Act of 1867, § 27, R. S., § 5102; Act of 1841, § 9; Act of 1800, § 29; As to notice of application for discharge, Act of 1867, § 29; R. S., § 5109; Act of 1841, § 4; As to notice of application for confirmation of compositions, R. S., § 5103-a; As to notice of meetings in general, Act of 1867, § 17, R. S., § 5094. In Eng. Generally to different sections, to Schedule I and the General Rules; there is no corresponding single section on notices in the English act. In Can.: Act of 1919, §§ 42, 83. Amendment of 1910 in italics. - Cross-references: To the law: Examinations of bankrupts, how conducted, § 7 (9); examination of bankrupt and other persons, § 21-a. Applications for the confirmation of compositions and hearings thereon, § 12-b, c. Discharge of bankrupts, application for, and hearing, § 14-b. Meetings of creditors, first and final, § 55. Dividends, declaration and payment, § 65. Final accounts of trustees, when made, § 47-a (8). Compromise and arbitration of controversies, §§ 26, 27, 57-h. Sales of property of bankrupt by trustee, § 70-b. Dismissal of proceedings, § 59-g. Publication of notices, where made, § 28. To the General Orders: Service of notices upon attorneys of creditors, IV. Application for discharge to be heard by judge, XII (3). Notice to trustee of his appointment, XVI. Sales of property, how conducted, XVIII. Creditors may file designations of places where notices may be sent, XXI (2). To the Official Forms: (Vol. III, post.) Notice of first meeting of creditors, No. 18. Notice to trustee of his appointment, No. 24. Notice of declaration of dividend, No. 41. Petition and order for sale of perishable property, No. 46. Notice of petition for removal of trustee, No. 53. Order of notice on petition for discharge, No. 57. To the Supplementary Forms: (Vol. III, post.) Short form of notice of meeting, No. 158; Notice of special meeting, No. 175; Combined notice to creditors, No. 176; Notice of dividend and warrant, No. 195; Notice of final meeting, No. 197; Notice of meeting to elect new trustee, No. 252; Notice of sale of receiver, No. 284; Notice of sale upon sealed bids, No. 285; Notice of sale by trustee, No. 287; Notice of motion to sell free of liens, No. 294; Notice for publication of application for discharge, No. 321; Notice of meeting to consider composition before adjudication, No. 347; Notice to creditors of confirmations of composition, No. 354. SYNOPSIS OF SECTION NOTICE TO CREDITORS I. Notice to Creditors Generally, 1191. a. In general, 1191. b. Construction and scope of section, 1192. c. Rules and forms, 1192. d. Effect of notice on jurisdiction, 1193. e. Presumption that notice was given, 1193. |