assignments, not regulated by statute, there must be notice of the assignment to prevent a set-off. But, as the proceedings in bankruptcy are public, notice of them is presumed, and affects even the purchaser of a negotiable note not due."

Whether notice of the actual insolvency of a debtor will prevent the set-off of a debt bought after the notice, if the debtor eventually becomes bankrupt, is not fully decided. The weight of authority in this country is rather against such setoff; strict reasoning seems to me in its favor. Equity, at all events, will not interfere to aid such a set-off.5

§ 286. Set-off lost or waived. The right of set-off may be lost or waived by agreement, or by conduct which would make its enforcement inequitable, as when one party having a set-off has permitted his debtor to deal with a chose in action as unincumbered."

§ 287. Set-off subject to Equities of Third Persons. The amount of the set-off may be diminished by the intervening equities or liens of third persons. Thus, in setting off judgments and decrees, the lien of the attorneys and solicitors for costs must be respected. A principal cannot, by admitting a

Bloodgood, 2 Caine's Cas. 303; Humphreys v. Blight, 1 Wash. C. C. 44, Fed. Cas. No. 6870; Finney v. Bennett, 27 Gratt. 365; Schmidt v. New Orleans, 33 La. An. 17; Bauer v. Teasdale, 25 Mo. Ap. 25; Van Dyck v. McQuade, 85 N. Y. 615; Union Bank v. Hicks, 67 Wis. 189. And see Crisp v. Dunn (N. J.) 29 Atl. Rep. 166. See Fera v. Wickham, 135 N. Y. 223, for a criticism of the New York cases.

1 Brashear v. West, 7 Pet. 608. 2 Ex parte Deey, 2 Cox, 423; Re China S. S. Co., L. R. 7 Eq. 240; Humphreys v. Blight, 1 Wash. C. C. 44, Fed. Cas. No. 6870; Smith v. Brinkerhoff, 6 N. Y. 305.

8 Smith v. Hill, 8 Gray, 572; Hitchcock v. Rollo, 3 Biss. 276, Fed. Cas. No. 6535; Rollins v. Twichell, 14 N. B. R. 201; Mattocks r. Lovering, ib. 208, note; Kennedy v. Savings Inst., 36 La. An. 1; Stone v. Dodge, 96 Mich. 514.

4 See Dickson v. Cass, 1 B. & Ad. 343; Hawkins v. Whitten, 10 B. & C. 217; Heppard v. Beylard, 1 Whart. 223; McGowan v. Budlong, 79 Penn. St. 470; Conroy v. Dunlap, 104 Cal. 133.

5 Re Receiver Mid. Dist. Bank, 1 Paige, 585; Watts v. Christie, 11 Beav. 546; Diven v. Phelps, 34 Barb. 224; Hunt v. Holmes, 16 N. B. R. 101, Fed. Cas. No. 6890. [The act of 1898 forbids this set-off, § 68 b. See infra, § 531.]

Higgs v. Assam Tea Co., L. R. 4 Ex. 387; Re Hercules Ins. Co., L. R. 19 Eq. 302; Collins v. Waddle, 4 Mo.

452.

7 The Court of Common Pleas in England formerly denied this right to the attorney, but this was corrected by rule of court, and afterwards by a statute, which adopted the rule prevailing in chancery, that the costs must have been

set-off, deprive the factor of his lien for advances. If negotiable paper has been pledged by an agent or banker to a bona fide holder, the set-off of the principal against his agent is subject to the payment of the pledgee's debt.1 In all these cases the surplus may be set off. When the husband was, at law, entitled to reduce to possession a legacy due his wife, and he became bankrupt, being debtor to the testator's estate, a moiety or other proper share of the legacy was to be settled on the wife, and the remainder could be set off. We have already seen that a preference is rather a constructive than an actual fraud, and that when security given to a creditor is voidable as to the old debt, it may be held good for the fresh advances. This rule applies, of course, when the question is one of set-off.

incurred in a separate action. The solicitor cannot set off costs of an interlocutory order in the same suit, because he takes the risk of the ultimate result of the suit. See Mitchell v. Oldfield, 4 T. R. 123; Randle v. Fuller, 6 T. R. 456; Glaister v. Hewer, 8 T. R. 69; Middleton v. Hill, 1 M. & S. 240; George v. Elston, 1 Bing. N. C. 513; Lees v. Reffitt, 3 A. & E. 707; Scott v. DeRichebourg, 11 C. B. 447; Cattell v. Simons, 6 Beav. 304; Collett v. Preston, 15 Beav. 458; Verity v. Wylde, 4 Drew.

427 Bawtree v. Watson, 2 Keen, 713; Rawson v. Samuel, Cr. & P. 161; Ex parte Cleland, L. R. 2 Ch. 808; Ex parte Smith, L. R. 3 Ch. 125; Throckmorton v. Crowley, L. R. 3 Eq. 196; Harmer v. Harris, 1 Russ. 155; Rowe v. Langley, 49 N. H. 395.

1 Jones v. Hawkins, 17 Ind. 550; Ellis v. Smith, 38 Maine, 114. 2 Ex parte Hodgkin, L. R. 20 Eq. 746. See supra note as to Traders' Bank v. Campbell, 14 Wall. 87.

CHAPTER XIL

ASSIGNEES.

They are

§ 288. Assignees or Trustees. -The persons chosen or appointed to represent the estate of a bankrupt were formerly called assignees, because an assignment of the debtor's property was made to them by the court or commissioners. now more commonly called trustees, and in some states and countries syndics. The powers and duties of executors, administrators, liquidators, and receivers under statutes for the settlement of the insolvent estates of deceased persons and of corporations are very similar to those of such trustees. Most of these names are more or less ambiguous. There may be trustees appointed by deed or will, receivers for special purposes, and assignees by act of the party, and the rights of such persons are in some respects different from those of assignees or trustees in bankruptcy. These last, by whatever name they may be called, derive their title and power from the law and the decree, and the words of the assignment are of no particular importance. Indeed the assignment is now, under many of the statutes, dispensed with, and the property is transferred by force of the decree alone.1

The receivers under certain statutes, as the National Bank Acts, are trustees who may sue in their own name.2

§ 289. Appointment of Assignee. The assignees are usually chosen by the creditors subject to the approval of the court. If two or more joint trustees were voted for, and some were

1 Act of 1898, § 70. See infra, § 533. 2 Davis v. Gray, 16 Wall. 203. As to assignees of claims against the United States, see Rev. Sts. (U. S.) § 3477:

Hobbs v. McLean, 117 U. S. 567; Goodman v. Niblack, 102 U. S. 556; Bailey v. U. S., 109 U. S. 432; Freedman's Sav. Bk. Tr. Co. v. Shepherd, 127 U. S 494.

elected and others not, or all were elected and one declined, it was the practice in England to order a new election as to all.1 Our practice is to confirm such as are elected, and to fill the vacancy by election or appointment, or to leave it unfilled, as the court, having regard to the interests and wishes of the creditors, may decide.2

§ 290. Confirmation; Qualifications. The assignees should have no interest adverse to that of the general creditors. Creditors may be trustees if their claims are not disputed; but if there is reasonable cause to doubt their validity or to suppose that a preference has been given for some part of them, the choice should not be confirmed.3

The most usual objection is that the bankrupt himself has influenced the choice by canvassing for votes. As he has no legitimate interest except to have an honest man appointed, his interference is sufficient ground for rejection, and a near relative of the bankrupt has been held ineligible. If the assignee has procured a creditor to prove for the purpose of voting for him, and there have been no other proofs, the choice will not be confirmed. It is not necessary to prove disqualification by direct evidence. The courts have full power over the subject, and may properly act in so purely personal a matter, and one which is summary, upon appearances, it being understood that they so act, and that a rejection is no imputation upon the character of the person rejected.

§ 291. Confirmation; Qualifications. It is not usual to re

fuse confirmation because some creditors have been unable to attend the meeting, or even because some debts have been

1 Ex parte Shaw, 1 Gl. & J. 124; Ex parte Wilson, 1 M. D. & DeG. 234; Ex parte Cattaral, 1 Dea. 193; Ex parte Rolls, 1 Dea. 618; Ex parte Wolverhampton Bkg. Co., 6 L. T. N. s. 207.

2 Van Valkenburgh v. Elmendorf, 13 Johns. 314.

3 Ex parte Ashmore, 3 M. D. & DeG. 461. See Re Lamb (1894), 2 Q. B. 805; Re Mardon, 2 Manson, 511.

4 Ex parte Molineux, 1 Dea. 603; Ex parte Carter, 3 DeG. & J. 116; Re Houghton, 2 Lowell, 243, Fed. Cas. No. 6729; Ex parte Morse, DeG. 478.

5 Re Stillwell, 2 N. B. R. 526, Fed. Cas. No. 13,447; Williamson v. Wilson, 1 Bland, 418; Re Zinn, 4 N. B. R. 370, Fed. Cas. No. 18,216; 4 N. B. R. 436, Fed. Cas. No. 18,215.

6 In re A. B., 3 Ben. 66, Fed. Cas.

erroneously rejected by the register. But each case depends upon its own circumstances. If a great majority of creditors have lost their votes without their fault, the election may be set aside.2

An assignee must usually be a resident within the jurisdiction, and his permanent removal will be ground for displacing him. But it is not unusual, when there are assets in different states, to appoint one or more assignees out of the jurisdiction jointly with others within it. In such case the non-resident assignees should file an irrevocable power of attorney to some person within the jurisdiction to receive service of all processes in the bankruptcy as well as the usual bond. Where there is an ancillary administration, the assignee of the principal jurisdiction may be appointed under similar safeguards.5

§ 292. Removal of Assignee. The court has power to remove an assignee for cause. An appellate court will rarely reverse the decision of the court of original jurisdiction in this matter unless upon a mistake of law."

§ 293. Additional Assignee. When a class of creditors had rights distinct from those of the electors, such as separate creditors when the election was by creditors of a partnership, it was the practice in England to appoint an "inspector" or person having powers of oversight, but not of management, to represent them. Our late law met such wants more directly and efficiently by permitting the court to appoint additional

8

1 Ex parte Kimber, 11 Ch. D. 869; Ex parte Surtees, 12 Ves. 10; Ex parte Milner, 3 Dea. & Ch. 235; Ex parte Durent, Buck, 201; Ex parte Thompson, Buck, 201 note.

2 Ex parte Edwards, Buck, 411; Ex parte Hawkins, Buck, 520; Ex parte Danby, Mont. 67; Ex parte Stallard, 2 M. D. & De G. 469; Ex parte Dechapeaurouge, Mont. & MacA. 174; Ex parte Spiller, 2 M. D. & De G. 43; Ex parte Bousfield, Mont. 128; Re Gilley, Lowell, 250 Fed. Cas. No. 5438.

3 Re Harris, 2 N. B. R. 105, Fed. Cas. No. 6112; Anon. 2 N. B. R. 68, Fed. Cas. No. 461; Ex parte Grey, 13 Ves. 274; Ex parte Daniell, 3 M. D. & De G. 612.