After all joint debts are paid, the surplus goes to the separate estates, and after the separate estates have paid the claims of separate creditors the surplus goes to the joint assets. It is held that in determining the surplus of the respective estates joint creditors are entitled to interest but separate creditors are not.2 Under the broad powers conferred by the latter part of paragraph g this unjust and irrational distinction may be disregarded. The phrase "prevention of preferences" contained in paragraph g was probably aimed at the fraud brought about by partners agreeing just before their bankruptcy to change joint into separate assets. Thus the joint creditors were deprived of their rights and the separate creditors preferred. Many fine distinctions were made in order to prevent this fraud,* and in the United States such a transaction was held void as a preference if made within the statutory limit.5 Under the present law the court may marshal the assets so as to prevent this kind of injustice. The courts should not give a restricted meaning to the word "preferences" used in this paragraph. The clause was intended to give the courts power to transcend technical rules and distribute the assets equitably. If "preference" is construed strictly the court will be given no more power than it had under the old act which contained no such provision. Thus it should not be held that an arrangement by partners to turn joint into separate assets could not be set aside if four months had passed, or if the separate creditors did not have reasonable cause to believe a preference was intended, or if some other technical requirements of a preference were absent. It is to be hoped also that the courts will not construe the first part of paragraph g so strictly as to hold that it applies only to a case where all the partners as well as the firm are bankrupt. Its terms are broad enough to include a case where the firm and some of the partners are bankrupt, though in that case the solvent partners could not prove against the firm. 2 Ib. 1 Supra, § 135. Supra, § 137. 4 Ib. The court formerly had power to wind up the partnership affairs, but the practice was usually the same as that prescribed by paragraph h. The trustee of a bankrupt partner becomes a tenant-in-common with the other parties and under the old law he could sell his interest.2 The trustee would probably be allowed to do this now if it were for the best interests of the estate. $469. Act of 1898.— SEC. 6. EXEMPTIONS OF BANKRUPTS.a. This Act shall not affect the allowance to bankrupts of the exemptions which are prescribed by the State laws in force at the time of the filing of the petition in the State wherein they have had their domicile for the six months or the greater portion thereof immediately preceding the filing of the petition. The Act of 18673 declared certain property to be exempt, and provided that the exemption laws of a state existing at a specified time should determine the other property of the bankrupt which was to be exempt. Under these acts it was not possible for a state to change its exemption laws so as to affect proceedings in bankruptcy without an act of Congress. Under the present act the state laws as to exemptions may be changed at any time, and it will be in the power of the states to affect proceedings in bankruptcy in a serious way. The state law will determine the exemptions to be allowed to a bankrupt. Accordingly it has been held in the district court of Georgia that a partner may have an exemption out of partnership assets, provided his interest in the firm amounts to the value of the exemption. The determination of this question will differ in different districts. On principle it would seem that as the present act recognizes the firm as a separate entity distinct from the partners, no exemption should be allowed to the partners out of the assets of the firm. 1 Supra, § 127. 2 Ib. § 14, 14 Stats. 522, R. S. 5045. 4 Supra, § 4. 5 Re Camp, 91 Fed. Rep. 745, 1 N. B. N. 142. 6 See cases cited in Re Camp, supra. 7 Supra, § 468. As to whether a waiver of exemptions by a debtor operates in favor of a trustee in bankruptcy, see Re Camp1 and the cases cited therein, and Re Hopkins.2 Taxes due on exempt property must be paid by the trustee under the terms of § 64.3 When the exemption laws of a state conflict with some provision of the bankrupt act, as that in regard to policies of insurance, the latter will prevail. The exemptions of a bankrupt must be given him though he may have concealed some of his property from his trustee, and this is forbidden by the act.5 § 470. Act of 1898.-SEC. 7. DUTIES OF BANKRUPTS. -a. The bankrupt shall (1) attend the first meeting of his creditors, if directed by the court or a judge thereof to do so, and the hearing upon his application for a discharge, if filed; (2) comply with all lawful orders of the court; (3) examine the correctness of all proofs of claims filed against his estate; (4) execute and deliver such papers as shall be ordered by the court; (5) execute to his trustee transfers of all his property in foreign countries; (6) immediately inform his trustee of any attempt, by his creditors or other persons, to evade the provisions of this Act coming to his knowledge; (7) in case of any person having to his knowledge proved a false claim against his estate, disclose that fact immediately to his trustee; (8) prepare, make oath to, and file in court within ten days, unless further time is granted, after the adjudication, if an involuntary bankrupt, and with the petition if a voluntary bankrupt, a schedule of his property, showing the amount and kind 142. 1 91 Fed. Rep. 745, 1 N. B. N. 8 Re Tilden, 91 Fed. Rep. 500. 21 N. B. N. 71. See also Re Gar- N. B. N. 60. den, 1 N. B. N. 189. 5 Re Peterson, 1 N. B. N. 215. of property, the location thereof, its money value in detail, and a list of his creditors, showing their residences if known, if unknown, that fact to be stated, the amounts due each of them, the consideration thereof, the security held by them, if any, and a claim for such exemptions as he may be entitled to, all in triplicate, one copy of each for the clerk, one for the referee, and one for the trustee; and (9) when present at the first meeting of his creditors, and at such other times as the court shall order, submit to an examination concerning the conducting of his business, the cause of his bankruptcy, his dealings with his creditors and other persons, the amount, kind, and whereabouts of his property, and, in addition, all matters which may affect the administration and settlement of his estate; but no testimony given by him shall be offered in evidence against him in any criminal proceeding. Provided, however, That he shall not be required to attend a meeting of his creditors, or at or for an examination at a place more than one hundred and fifty miles distant from his home or principal place of business, or to examine claims except when presented to him, unless ordered by the court, or a judge thereof, for cause shown, and the bankrupt shall be paid his actual expenses from the estate when examined or required to attend at any place other than the city, town, or village of his residence. The word "court" may include the referee (§ 1, (7)), but in clause 1 it probably does not. By § 21 a court of bankruptcy may, upon application, order any person, including the bankrupt, to appear and be examined. "Court of bankruptcy" does not include the referee (§ 1, (8)). By construing these two provisions together, it seems that only a court of bankruptcy or a judge thereof can order a bankrupt to appear at the first meeting. This is provided for in the order of reference1 of the case to a referee, which contains a command to the bankrupt to appear before the referee on a day fixed. After that the bankrupt is subject to the orders of the referee, who shall take all proceedings except those which the act requires the judge to do.2 The proviso to § 7 enacts that the bankrupt need not examine claims unless they are presented to him. This provision qualifies clause 3. The bankrupt need not execute transfers of property situated within the United States. This property is taken from him by operation of law (§ 21 e). The provision of clause 5 is necessary, because the decree of a court of bankruptcy has no operation outside of the United States. Clause 8 contains the substance of Rev. Stats. §§ 5015, 5016, and 5017, except that it adds the exemptions which were formerly not required to be stated. Every debtor must file two schedules, A and B, the first containing a list of all his debts, and the second a list of his property.4 Schedule A comprehends several different particulars which are contained in different sheets. First, there is a list of all claims having priority; second, a list of secured creditors; third, of unsecured creditors. The fourth is a list of liabilities on bills and notes, and the fifth of liabilities on accommodation paper. The first sheet of schedule B shows the real estate of the debtor; the second, the personal estate; the third, the choses in action, comprising the debts due the bankrupt on open account, the policies of insurance, stocks and bonds, deposits in banks, and unliquidated claims of all kinds. The fourth sheet contains a list of property held in trust for the bankrupt, or to which he has a claim in reversion or remainder. This sheet must contain also a statement of all property he has conveyed for the benefit of creditors, and the sums he has paid to counsel 1 Form 14. 2 Rule XII. 1. 8 Act of 1867, § 11, 14 Stats. 521. 4 Form 1. |