certificate within 10 days, in conformity with the practice established for this district in December, 1904, by the following rule of court:

"Unless the petition be afterwards allowed by a judge of the District Court for cause shown after notice to opposing interests, a review of any action or order of a referee must be asked for by petition presented to him before the expiration of the tenth day after such action is taken or order is made, with this exception, namely, a review of the admission or rejection of evidence, if such admission or rejection has been duly objected to at the time, may be asked for within ten days after the referee has filed his decision in the proceeding wherein the evidence was offered. Referees are instructed to disregard petitions for 'review when presented after the expiration of the period named, unless accompanied by an order of allowance from a judge of the District Court. Prompt notice of filing of decisions upon any subject shall be given by the referee to counsel interested."

The effect of this rule, taken in connection with General Order 27 (89 Fed. xi, 32 C. C. A. xxvii), was considered in Re Greek Manufacturing Co. (D. C.) 21 Am. Bankr. Rep. 111, 164 Fed. 211, and the court decided that under the rule and the General Order a decision of a referee may only be reviewed by petition, and that such petition must be presented within the period specified by the rule, or afterwards only upon special allowance by one of the judges; otherwise, the referee's order (unless, perhaps, when it is obviously beyond his jurisdiction) is no longer subject to review after the 10 days have expired. And it was also decided that an order once entered is not subject to be reviewed or altered by the referee himself.*

Within 10 days from November 18th, therefore, the petitioner should have asked the referee to certify his order of rejection for review. Instead of taking this course, however, the petitioner asked and obtained permission to take testimony in support of the claim. After the witnesses had been heard, the referee on February 9, 1910, declined to change the order of November 18th. The petitioner then goes on to say:

"The record of which proceeding was transcribed and filed on the 17th day of February, 1910."

This apparently means filed before the referee himself, for no such paper is on file in the District Court. But, whatever it means, its probable object is to furnish a plausible foundation for the argument that the petition now under consideration is in time, because it was presented to the District Court on February 21st. But the date from which the period of 10 days referred to in the rule should be counted is not February 17th, but November 18th, when the referee rejected the claim. The subsequent proceedings before him were without warrant, and should be wholly disregarded. Following In re Greek Manufacturing Co., therefore, the petition must be refused, unless it shows sufficient cause to move the discretion of the court under the first clause of the rule.

Upon this point it is only necessary to say that I find nothing in the averments of the petition that calls for the special allowance of a certificate of review. The adjudication was entered in September, 1902, and the claim was not presented until November, 1909, more than seven years afterward. Unless it is saved by some other provision of the act, it is expressly denied allowance by section 57n (Act July 1,

1898, c. 541, 30 Stat. 544 [U. S. Comp. St. 1901, p. 3444]). The claim has not been in litigation, and the only ground upon which it can possibly stand is the provision of section 68a:

"In all cases of mutual debts or mutual credits between the estate of a bankrupt and a creditor, the account shall be stated and one debt shall be set off against the other, and the balance only shall be allowed or paid."

Assuming the claim to be "provable," and not to be barred either by the statute of limitations or by section 57n-Railway Co. v. Graham (Č. C. A.) 145 Fed. 809, 76 C. C. A. 385—the further objection still remains that a situation of "mutual debts or mutual credits" was not presented when the petition in bankruptcy was filed. The claim is based on two promissory notes of T. M. Lesher as an individual, but these are to be set off against a judgment that was recovered against the petitioner on behalf of the firm of T. M. Lesher & Son by the trustee in bankruptcy in a suit for unliquidated damages ex contractu. Section 68a does not apply to such a case, the debts not being in the same right. Collier (7th Ed.) p. 796; Loveland (3d Ed.) p. 375; Brandenburg (3d Ed.) pp. 724, 725; Gray v. Rollo, 85 U. S. 629, 21 L. Ed. 927.

And this also may perhaps be said: Section 68a seems to contemplate that, if a creditor's debt against the bankrupt is greater than the bankrupt's debt against him, he shall only prove for the balance. But here (assuming the debts to be in the same right) the petitioner is seeking to prove his whole debt, and not merely the balance-if in fact the balance is in his favor. If, however, a creditor's debt against the bankrupt is less than the bankrupt's debt against him, the time for a set-off would seem to be when the creditor is sued, and the place the forum in which the suit is brought. If, therefore, the petitioner has any equitable ground on which to ask for a set-off against the trustee, his remedy would seem to be in the court which rendered and controls the judgment.

I can see no good reason for interfering with the ordinary operation of the rule already quoted.

The petition is refused.

In re A. P. WILSON & CO.

(District Court, E. D. Pennsylvania. February 12, 1910.)

No. 3,180.

BANKRUPTCY (§ 140*)-TITLE TO PROPERTY-LIENS.

Where parties who contracted to furnish and set tile for buildings in the course of erection assigned their contracts to a trust company as security for money borrowed, but did not attempt in any way to pledge the tile, the trust company is not entitled, as against the trustee in bankruptcy of the contractors, to the proceeds of sale of the tile which had been delivered at the buildings.

[Ed. Note. For other cases, see Bankruptcy, Dec. Dig. § 140.*]

•For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

In the matter of the bankruptcy of A. P. Wilson & Co. Proceeding to review order of referee. Affirmed.

Arthur G. Dickson, for Aldine Trust Co.
John J. Foulkrod, Jr., for trustee.

J. B. MCPHERSON, District Judge. The bankrupts had agreed as subcontractors to furnish and set tile for three buildings in course of erection. For one of these buildings the arrangement was rather loose, but for present purposes it may be treated as a contract, and not as a mere understanding. In order to carry out their agreements, the bankrupts had delivered some tile at each of the buildings, and these articles were on the respective premises when the creditors' petition was filed. The tile was turned into cash by agreement, and the money is in the hands of the Aldine Trust Company awaiting the decision of the controversy between that company and the trustee.

The trust company's claim is based upon several agreements with the bankrupts, which need not be set out in detail. Their effect is to assign to the trust company the bankrupts' interest in the three subcontracts as collateral security for money borrowed, and the trust company's right to the proceeds of the tile depends upon the nature of the company's right in the tile itself. It is not contended that the assignments attempted to pledge the physical property or to deal with it directly in any other way. As the brief of counsel for the trust company states, "the trust company does not claim, and never did claim, a possessory lien on the tile by virtue of a delivery to it." The assignments merely transfer the bankrupts' interest in the subcontracts, and, of course, could only be of any value to the trust company if the bankrupts should complete these contracts and earn the right to be paid for the work. No one could be sure that the contracts would ever be carried out, or that anything at all would be due the bankrupts thereon. The owners of the buildings might abandon the operations, or might for good cause refuse to permit the bankrupts to do the work, or the bankrupts might themselves abandon the contracts and otherwise dispose of the tile, or they might do the work so badly that the damages thereby occasioned might fully offset their claim to the contract price. These and other contingencies might so affect the bankrupts' interest in the subcontracts that the assignments would find nothing valuable to operate upon, and the trust company would be obliged to look to its legal remedies for such satisfaction as might be attainable. The point to be insisted upon I think is that the trust company concededly had no claim against the tile itself. The assignments gave it none; the tile was not in its possession; there was no agreement to deliver the property to it by way of pledge or for any other purpose; and therefore the possession taken by the trust company after the bankruptcy had no legal justification. The tile belonged to the bankrupts when the assignments were made. Either then or soon thereafter it was delivered at the incomplete buildings in order that it might be set in place; but the trust company had nothing to do with the buildings, either as owner or as contractor, and delivery upon these premises was in no sense delivery to the trust company. Indeed, no

such thought was in the mind of any person connected either with the building operations or with the loans.

The case of Duplan Silk Co. v. Spencer (C. C. A., Third Circuit) 115 Fed. 689, 53 Č. C. A. 321, is essentially different. There a contractor agreed to build a mill for the silk company, and delivered material upon the premises for that purpose. The company advanced him money on the credit of the material, and upon his default took possession of it under a provision of the contract that authorized such action. The contractor went into bankruptcy, and his trustee claimed the material, because, inter alia, possession had not been delivered to the company. But the Court of Appeals held-to quote from the syllabus-that:

"A provision of a building contract that the owner may in case of default by the contractor proceed to finish the building himself, and to that end may use materials brought by the contractor on the ground for the purposes of the building-being accountable to the contractor for any excess of the unpaid contract price over the cost of completion-is not one for a forfeiture, which must be strictly construed against the owner, since it does not involve the taking of any property of the contractor by way of penalty or punishment, but is in the interest of both parties, and is to be fairly construed to effect its purpose."

And that:

"Under such a provision, materials brought by the contractor upon the owner's premises, and appropriated to the building contracted for, are to be considered as so far delivered into the possession of the owner as to make them a security for advances made by him on the contract, and to vest in him a qualified right of property in the same, consistent with the right of the owner to use them in the fulfillment of his contract."

There seem to be vital differences between that case and this. There the material was delivered on the premises and put into the possession of the owner of the building, who had a right to have the material used in the construction. Here the trust company had no interest in the building, and did not receive possession of the material. There the contract empowered the owner to take and use the material in certain contingencies. Here there is no such authority, for the only agreement with the bankrupts deals with a wholly different subject, namely, the money to which they may be entitled when or if they complete their contract.

Neither does Hurley v. Railway Co., 213 U. S. 126, 29 Sup. Ct. 466, 53 L. Ed. 729, seem to be in point. A coal company agreed to furnish daily supplies of coal to a railway company. The coal company became embarrassed financially, whereupon the railway company came to its relief by advancing money, but with the understanding that the loan should be repaid by the subsequent delivery of coal. Afterwards. the coal company went into bankruptcy. The District Court held that the arrangement was a separate and independent contract, and furnished no ground for a lien upon the property for its repayment. But the Court of Appeals and the Supreme Court held otherwise; the Supreme Court saying (page 134 of 213 U. S., page 469 of 29 Sup. Ct. [53 L. Ed. 729]):

"Equity looks at the substance, and not at the form. That the coal for which this money was advanced was not yet mined, but remained in the ground to be mined and delivered from day to day as required, does not change the trans

action into one of an ordinary independent loan on the credit of the coal company or upon express mortgage security. It implies a purpose that the coal as mined should be delivered, and is from an equitable standpoint to be considered as a pledge of the unmined coal to the extent of the advancement. The equitable rights of the parties were not changed by the commencement of bankruptcy proceedings. All obligations of a legal and equitable nature remained undisturbed thereby. If there had been no bankruptcy proceedings, the coal as mined was, according to the understanding of the parties, to be delivered as already paid for by the advancement."

In other words, the parties intended to make, and did make, an equitable pledge of the coal, and the pledge was not only good between themselves, but was good also against the trustee in bankruptcy. Here, however, there was neither pledge nor intent to pledge. The only agreements between the bankrupts and the trust company related to a different subject, namely, the contingent proceeds of the subcontracts. I think it is clear that the trust company had only an indirect interest in the tile, and that the trustee has the superior right to the fund. The order of the referee is affirmed.

In re KITTLER.

(District Court, M. D. Pennsylvania. February 17, 1910.)

BANKRUPTCY (§ 32*)-AMENDMENT OF SCHEDULES-TIME OF APPLICATION. An application of a bankrupt, nearly a year after adjudication of bankruptcy, to amend his schedules to bring in an omitted creditor, will be refused.

[Ed. Note.-For other cases, see Bankruptcy, Cent. Dig. §§ 31-33; Dec. Dig. § 32.*]

In the matter of an application of Joseph Kittler, bankrupt, to amend schedules by inserting the name of a creditor. Refused.

J. A. Mulhern, for bankrupt.

ARCHBALD, District Judge. The bankrupt was adjudicated March 5, 1909, on petition duly filed. And he now, within a few days of the end of the year, asks to amend his schedules so as to bring in an omitted creditor. In my judgment it is altogether too late. While the year is not yet up, it is so nearly at an end that this ought not to be allowed to be done. While it is not too late for the creditor to prove his claim, and while there may be no visible assets upon which to come in, it has been deferred so long that he has been deprived of participation in the administration of the affairs of the estate, which is equally important. Birkett v. Columbia Bank, 195 U. S. 345, 25 Sup. Ct. 38, 49 L. Ed. 231.

Application refused.

For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes