SEC. 57. Proof and Allowance of Claims.a Proof of claims shall consist of a statement under oath, in writing, signed by a creditor setting forth the claim, the consideration therefor, and whether any, and if so what securities are held therefore, and whether any, and if so what payments have been made thereon, and that the sum claimed is justly owing from the bankrupt to the creditor.2

of one of the partners, the value of the securities on the individual property of the partner need not be deducted in ascertaining the voting power of the creditor, but only the value of the securities on the partnership property need be deducted (In re Coe, Powers & Co. [D. C.], 1 N. B. News, 294).

1 For analogous provisions, see R. S. 85077 to 5085 inclusive; Act of 1800, 16, 37, 39; Act of 1841, 285, 7; Act of 1867. 8822 as amended by Act of July 27, 1868, 23, 24. See also 5g as to the proof of claims of a partnership estate against an individual estate, and vice versa; 20 and Rule XXI(5) as to persons before whom oaths may be taken in making the affidavit as proof of claims; 863 as to debts which may be proved; Rule XX as to the filing of papers after reference; Rule XXI as to proof of debts; Rule XXVII as to review of referee's action by the judge; and Rule XXVIII as to the redemption of property and compounding of claims.

2 All claims must be formally proved and allowed before a dividend can be paid on them (In re Bittel, 2 B. R. 391), and such proof may be made by the actual owner though another has taken a note therefor. This may be done by proving the note or the account (In re Derby [C. C. A.], 102 Fed. Rep. 808). No proof can be made of an unliquidated demand until the same has been liquidated in such manner as the court may direct (863b; in re Heinsfurter [D. C.], 97 Fed. Rep. 198). The decision of the referee on the allowance or rejection of a claim, when based upon a question of fact, will not be disturbed by the judge unless manifestly contrary to the weight of evidence (In re Rider [D. C.], 96 Fed. Rep. 811). The creditor is not entitled to have the evidence, when contested by the trustee, weighed or considered by a jury (In re Christensen [D. C.], 101 Fed Rep 243), though the court may allow a jury trial in its discretion (In re Rude [D. C.], 101 Fed. Rep. 805). In involuntary proceedings, an adjudication cannot be made without a finding by the court that the petitioners have provable claims. Still, this finding will not serve the purpose of the formal proof and allowance required (I re Cornwall, 9 Blatch. 114; S. c. 6 B. R. 305). The consideration on which a demand is based should be itemized as fully as a bill of particulars (In re Elder, 3 B. R. 670; s. c. I Saw. 73; in re Murrell Scott [D. C.], 1 N. B. News, 326; s. c. 93 Fed. Rep. 418), and if it be against a firm, that fact should be made to clearly appear by stating the firm name and the names of the individuals composing it (In re Walton, Deady, 510). The proof of a claim may be made by the creditor, his agent or attorney (1[9]; in re Watrous, 14 B. R. 258; in re Whyte, 9 B. R. 267; McKinsey v. Harding, 4 B. R. 39). Persons acting in representative capacities, as partners, assignees, guardians, executors or administrators, may make proof of the claims due them in such capacities (In re Barrett, 2 B. R_533; in re Republic Ins. Co., 3 Biss. 452; s. c. 8 B. R. 197; in re Corn Exchange Bank, 15 B. R. 216; in re Murdock, 3 B. R. 146; s. c. 1 Lowell, 362; ex p. Davenport, 1 Low. 384).

b Whenever a claim is founded upon an instrument of writing, such instrument, unless lost or destroyed, shall be filed with the proof of claim. If such instrument is lost or destroyed, a statement of such fact and of the circumstances of such loss or destruction shall be filed under oath with the claim. After the claim is allowed or disallowed, such instrument may be withdrawn by permission of the court, upon leaving a copy thereof on file with the claim.'

c Claims after being proved may, for the purpose of allowance, be filed by the claimants in the court where the proceedings are pending, or before the referee if the case has been referred.

d Claims which have been duly proved shall be allowed, upon receipt by or upon presentation to the court, unless objection to their allowance shall be made by parties in interest, or their consideration be continued for cause by the court upon its own motion.2

1Notwithstanding a copy be left on file, the trustee may require the production of the original instrument when the dividend is paid that the same may be thereon endorsed (In re Emison, 2 B. R. 595; in re McNair, 2 B. R. 219). If such instrument cannot be produced, are cord of that fact may satisfy the purpose (In re Derby [C. C. A.], 102 Fed. Rep. 808).

2The trustee, the bankrupt or any creditor may object to the allowance of claims (In re Patterson, 1 B. R 100; in re Jones, 2 B. R. 59). The claims should be allowed at the first meeting of the creditors (556), unless the same for good reason and for the benefit of the estate be postponed. All claims ought to be examined by the bankrupt, and the court may require him to do so (87 [3]). The allowance of a claim should not be postponed unless there exists in the mind of the court a reasonable and substantial doubt resulting from a judicial consideration (In re Jackson, 14 B R. 440; in re North'n Iron Co, 14 B. R. 356) This doubt can arise only by opposition and the introduction of evidence that destroys the effect of the creditor's prima facie case made in accordance with paragraphs a and b, the burden of establishing the claim being always with the creditor (In re Sumner [D. C.]. 101 Fed. Rep. 224). Where the claim is by a voluntary bankrupt's attorney for fees in connection with the case, the referee may suspend action thereon for a reasonable length of time after which he must decide on the evidence before him (In re Dreeben [D. C.], 101 Fed. Rep. 110). All persons proving their claims subject themselves to the jurisdiction of the court whether they reside within or without the district (In re Kyler, 2 Ben. 414) Where a claim or any part of it is tainted with fraud, the whole claim should be disallowed (In re Elder, i Saw. 73; s c. 3 B. R. 670). Whenever a judgment debt is presented for allowance, the creditors of the bankrupt estate may show by any appropriate evidence that the judgment is void or voidable because of fraud or irregularity (In re Fowler, ex p. O'Neil, 1 B. R. 677; s. c. 1 Low. 161; Downe v. Fuller, 2 Met. 135; Pierce v. Jackson, 6 Mass. 244). Under the English practice in bank

e Claims of secured creditors and those who have priority may be allowed to enable such creditors to participate in the proceedings at creditors' meetings held prior to the determination of the value of their securities or priorities, but shall be allowed for such sums only as to the courts seem to be owing over and above the value of their securities or priorities.'

f Objections to claims shall be heard and determined as soon as the convenience of the court and the best interests of the estates and the claimants will permit."

ruptcy, inquiry will be made into the consideration of any judgment sought to be proved against a bankrupt estate, but the extent of this inquiry seems only to be to re-examine judgments at law and grant new trials or restrain executions (ex p. Mudie, 3 M. D. & DeG, 66; ex p. Bryant, 1 V. & B. 211; ex p. Mason, 2 Dea. 245; ex p. Prescott, 1 M. D. & DeG. 199)

1A secured creditor includes one who has security for his debt upon the property of the bankrupt of a nature to be assignable under this act, or who owns such a debt for which some indorser, surety or other persons secondarily liable for the bankrupt has such security upon the bankrupt's assets (81 [23]). If the security held be on property of one other than that of the bankrupt, the creditor may prove his entire claim, receive his dividend, and enforce the balance out of the security (In re Anderson, 12 B. R. 502; ex p. Todd, 2 Rose, 202; ex p. Taylor, 3 Jur. N. S. 753; ex p. Burn, 2 Rose, 55; in re Dunkerson, 12 B. R. 413; in re Broich, 15 B. R. 11; ex p. Leers, 6 Ves. 644; in re Cram, 1 B. R. 504). It is of no consequence that the security may be on the individual property of the members of a firm as security for the firm debt-the rule still applies (Ex p. Graves, 2 Jur. N. S 651; exp Peacock, 2 G. & J. 67; in re Howard, Cole & Co., 4 B. R. 571; in re Bigelow & Kellogg, 2 B. R. 371; in re Farnum, 6 Law. Rep. 21. See also Borden v. Cuyler, 10 Cush. 478; Mead v Bank, 2 B. R. 178; s. c. 6 Blatch. 180; in re Stephenson, 9 B. R. 256; Emery v. Canal Bank, 7 B. R. 217; in re Bradley, 2 Biss. 515; Stevenson v. Jackson, 9 B. R. 255; in re Comstock & Co., 12 B. R 110). In proving a secured claim the fact of the security should be stated, otherwise, as a general rule, the failure will amount to a surrender of the security, the creditor being deemed to have elected to prove his claim as unsecured (In re Bloss, 4 B. R. 147; Heard v. Jones, 15 B. R. 402; ex p. Solomon, 1 G. & J. 25; Stewart v. Isidor, I B. R. 485; Hatch v. Seely, 13 B R. 380; ex p. Downs, 1 Rose, 96; in re Brand, 3 B. R. 324; in re Granger, 8 B. R. 30; ex p. Hornby, Buch. 351), though it will not of itself, without proceedings by the trustee for that purpose, operate as a discharge of a mortgage (Cook v. Farrington, 104 Mass. 212). If the failure to mention the security was inadvertent, the court will generally allow the proof made to be expunged, if no party will be thereby injured (In re Hubbard, 1 Low. 190; s. c. 1 B. R. 679), and in so doing may impose terms within its discretion (In re Parkes, 10 B. R. 82. See also in re Jaycox & Green, 8 B. R. 241; in re Clark & Bininger, 5 B. R. 255; Greigson v. Gerard, 4 T. & C. [N. Y.], 419; ex p. Davenport, M. D. & D. 313; in re McConnell, 9 B R. 387). When the security is held by an indorser or a person secondarily liable, the creditor need not prove as a secured creditor to retain his rights against the indorser (Merchants' Bank v. Comstock, 55 N. Y. 24).

"The fact that the proof of a claim was verified before the creditor's attorney is no ground for objecting to it (In re Kimball [D. C ], 100 Fed. Rep. 777).

g The claims of creditors who have received preferences shall not be allowed unless such creditors shall surrender their preferences.'

1See 260 as to preferred creditors. The provision of this paragraph differs materially from that of the prior Act, which provided that any person who had accepted a preference, having reasonable cause to believe that the same was made or given by the debtor contrary to the bankruptcy law, should not prove the debt or claim on account of which the preference was made or given" until he had surrendered the same (Act of 1867, §23). Under that statute, it was held that where the creditor had separate and distinct claims, he could prove as to all except that or those on which he had received a preference without surrendering (In re Richter, I Dill. 544; s c. 4 B R. 221. See also in re Jordan, 9 B. R. 416). The language of the present statute will warrant, and has been construed as requiring, a disallowance of any and all claims which a creditor who has received a preference may hold, whether the claims be separate and distinct, unless he surrender the preference (In re Conhaim [D. C.]. 97 Fed. Rep. 923; in re Rogers Milling Co. [D. C.], 102 Fed. Rep. 687). The surrender must be made before the debt will be allowed, even though the creditor contends that it is void (In re Leeman [D. C ], 1 N. B. News, 331), or claims that he did not know at the time of the transfer that it amounted to or was intended as a preference, the effect of the transfer rather than the knowledge or intention of the parties being the gist of the statute (In re Ft. Wayne Electric Corp [D C.], 96 Fed. Rep. 803; s. c. [C C. A ], 99 Fed. Rep. 400; in re Conhaim [D. C.], 97 Fed. Rep. 923; Strobel & Wilken Co. et al. v. Knost et al. [D. C.]99 Fed. Rep. 409; in re Klingman [D. C.], 101 Fed. Rep. 691; in re Sloan [D. C.], 102 Fed. Rep. 116; in re Fixen et al [C. Č. A ], 102 Fed. Rep. 295). This has been held not to be true, however, in cases where the alleged preferences were payments made on a running account in the ordinary course of business, where the evidence failed to show that the bankrupt was insolvent at the times they were so made (In re Alexander et al. [D. C.], 102 Fed. Rep. 464) The same is true when property sold to the bankrupt is taken in replevin by the vendor on the ground of fraudulent representations as to solvency (In re Heinsfurter [D. C.], 97 Fed. Rep. 198). Where a judgment creditor caused execution to be levied within two months before the filing of the petition in bankruptcy, and it was agreed between him and the petitioning creditors that the sheriff should sell the property, deduct the cost of sale and turn balance over to the trustee, the petitioning creditors were estopped from saying the judgment creditor must refund such costs before proving his claim (In re Mayer [D. C.], 97 Fed. Rep. 324). The surrender must be to the trustee, not to the bankrupt (In re Currier, 13 B. R. 68), but the courts are not in unison as to what will amount to such a surrender as will entitle the creditor thereafter to prove his claim. Some hold that it must be entirely voluntary without contesting the trustee's title thereto (In re J. Lee, 14 B. R. 89), and especially before the trustee has secured a judgment for the recovery thereof (In re Tonkin, 4 B. R. 52; in re Richter, B. R. 221; S c. 1 Dill. 544. See also in re Cramer, 13 B. R. 225; in re S Leland, 9 B. R. 209). Other courts take the position that the surrender will meet the requirement of the statute if made by the creditor and accepted without conditions by the trustee before judgment and during the pendency of a suit for the recovery thereof (In re J Riorden, 14 B. R. 332; in re Montgomery, 3 Ben. 565; s. c. 3 B. R. 137, 429; in re Kipp, 4 B. R. 593; in re Tonkin, 4 B. R. 52; in re C A Davidson, 3 B R 418; in re Scott & McCarty, 4 B. R. 414). The circuit court for the Eastern District of Wisconsin goes still further in holding that the creditor may surrender the preference even after an opinion has been given by the court on a finding of facts, though before the actual entry of judgment (Burr v. Hopkins, 12 B. R. 211). What seems to be the prac

h The value of securities held by secured creditors shall be determined by converting the same into money according to the terms of the agreement pursuant to which such securities were delivered to such creditors or by such creditors and the trustee, by agreement, arbitration, compromise, or litigation, as the court may direct, and the amount of such value shall be credited upon such claims, and a dividend shall be paid only on the unpaid balance. i Whenever a creditor, whose claim against a bankrupt estate is secured by the individual undertaking of any person, fails to prove such claim, such person may do so in the creditor's name, and if he discharge such undertaking in whole or in part he shall be subrogated to that extent to the rights of the creditor.'

j Debts owing to the United States, a State, a county, a district, or a municipality as a penalty or forfeiture shall not be allowed, except for the amount of the pecuniary loss sustained by the act, transaction, or proceeding out of which the penalty of forfeiture arose, with reasonable and actual costs occasioned thereby and such interest as may have accrued thereon according to law."

k Claims which have been allowed may be reconsidered for cause and reallowed or rejected in whole or in part, according to the equities of the case, before but not after the estate has been closed. 3

tice most in accord with the true intent of the statute and the principles of equity is laid down in Zahm v. Fry, 9 B. R. 546 and Hood v. Karper, 5 B. R. 358, where it was held that if there was no actual fraud on the part of the preferred creditor, he might pay the costs and expenses of the suit, surrender his preference and be allowed to prove his claim.

If the claim could not be proved by the creditor because of his having accepted and failed to surrender a preference, the surety cannot prove it (In re Ayers, 6 Biss. 48). And where a surety has made a partial payment on a secured claim, the right to prove the entire claim is in the creditor rather than the surety (In re Heyman [D. C.], 95 Fed. Rep. 800).

2See 817 as to debts which are not affected by a discharge, 864 as to those which have priority, and 268 as to set-offs.

3 When a re-examination of a claim is desired, the trustee or any creditor may apply by petition to the referee before whom the case is pending therefor; the referee shall order a hearing of which due notice should be given the creditor (Rule XXI[6]). If the petition for reconsideration and disallowance does not aver the essential facts with sufficient particularity, the proper method of objecting