the petition and up to the time of the entry of such judgments.'

b Unliquidated claims against the bankrupt may, pursuant to application to the court, be liquidated in such manner as it shall direct, and may thereafter be proved and allowed against his estate.

2

SEC. 64. Debts which have Priority.3-a The court shall order the trustee to pay all taxes legally due and owing by the bankrupt to the United States, state, county, district, or municipality in advance of the payment of

Johns. 127; Auriol v. Mills, 4 T. R. 94; Bosler v. Kuhn, 8 Watts & S. 183). "Until the end of the term, or until the installment period when the rent is payable, not even a debt is owing" (Lansing v. Prendergast, supra, citing Perry v. Aldrich, 13 N. H. 350; Russell v. Falryar, 28 N. H. 545; Wood v. Pardridge, 11 Mass. 488; Fitchburg Factory v. Melom, 15 Mass. 268; Van Wickland v. Paulson, 14 Barb. 654; Jacques v. Short, 20 Barb. 269, 279). These cases are founded on the theory that each installment is a distinct debt, and that the contract relations existing between the landlord and tenant are not impaired by an adjudication in bankruptcy, and that the rent thereafter becoming due may be collected from the bankrupt out of after-acquired property (Lansing v. Prendergast, supra and cased cited). Under the present Act, the same conclusion is reached as to future installments, though based upon the hypothesis that the relation of landlord and tenant ceases on adjudication and that the bankrupt is absolved from all contractual relations with, and from all personal obligations to, the landlord, growing out of the lease (In re Jefferson [D. C.], 1 N. B. News, 288; s. c. 93 Fed. Rep. 948. See also in re Ells [D. C.], 98 Fed. Rep. 967, citing and approving ex p. Houghton, 1 Low. 554, Fed. Cas. No. 6,725). Foreigners stand upon the same footing as Americans so far as proving claims is concerned. They are not entitled to prove claims if they have received a preference until the same is surrendered, even though the preference was upon a debt different from that sought to be proved (In re Bugbee, 9 B. R. 258 and cases there cited; ex p. Dickson, 1 Rose, 98; ex p. Hardenburgh, 1 Rose, 204).

Where real estate is subject to a lien for taxes, paramount to a mortgage thereon, the taxes cannot be paid out of the general fund to the prejudice of the general creditors (In re Veitch et al. [D. C.], 101 Fed. Rep. 251).

An attorney's fee for serivces rendered a creditor may be allowed as a lien on the distributive share of such creditor (In re Rude [D. C.], 101 Fed. Rep. 805).

1This is a new provision. Under former Acts there was much difference of judicial opinion as to whether such debts were provable. The cases become unimportant in view of this express provision. (See in re McBryde [D. C.], 99 Fed. Rep. 686.)

2 The claims must be liquidated by the court, not by the creditor (In re Smith, 6 Ben. 187; in re Clough, 2 Ben 508), and until liquidated, are not provable (Beers v. Hanlin [D. C.], 99 Fed. Rep 695; in re Silverman [D. C.], 101 Fed. Rep. 219). An alleged claim for damages for breach of contract will not be liquidated when the purpose is to charge the bankrupt with rent to accrue under a lease for an unoccupied period (In re Arnstein et al. [D. C.], 101 Fed. Rep. 706).

For analogous provisions, see R. S. 5101; Act of 1800, 62; of 1841, 85; of 1867, 28.

dividends to creditors, and upon filing the receipts of the proper public officers for such payment he shall be credited with the amount thereof, and in case any question arises as to the amount or legality of any such tax the same shall be heard and determined by the court.'

b The debts to have priority, except as herein provided, and to be paid in full out of bankrupt estates, and the order of payment shall be (1) the actual and necessary cost of preserving the estate subsequent to filing the petition; (2) the filing fees paid by creditors in involuntary cases; (3) the cost of administration, including the fees and mileage payable to witnesses as now or hereafter provided by the laws of the United States, and one reason

3

1 Where taxes for the current year are due on merchandise at the time the same is sold by the trustee, the bankruptcy court will direct that they be paid by the trustee, though assessed in the name of the purchaser (In re Conhaim [D. C.], 100 Fed. Rep. 268).

2 Until otherwise judicially determined, it must be assumed under the existing law that all debts due to the United States upon whatever the same may be founded have priority to those specified in this paragraph. Section 3466 of the U. S. Revised Statutes provides: "Whenever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied, and the priority hereby established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof, or in which the estate and effects of an absconding, concealed, or absent debtor are attached by process of law, as to cases in which an act of bankruptcy is committed." This statute was taken from the Judiciary Act of March 3, 1797. The section has never been repealed. The courts have construed the section to be general, without qualification and paramount to bankruptcy acts (U. S. v. Lewis, 92 U. S. 618; s. c. 13 B. R. 33), the United States neither being bound by bankruptcy acts nor required to prove its claims (U. S. v. Herron, 20 Wall. 251. See also as to the construction of this section U. S. v. Fisher, Cranch, 358; U. S. v. Hooe, 3 Cranch, 73; Harrison v. Sterry, 5 Cranch, 289; Prince v. Bartlett, 8 Cranch, 431; U. S. v. Bryan, 9 Cranch, 374; Thelusson v. Smith, 2 Wheaton, 396; U. S. v. Howland, 4 Wheaton, 108; Connard v. Ins. Co., 6 Pet. 386; Hunter v. U. S., 5 Pet. 173: U. S. v State Bank, 6 Pet. 29; U. S. v. Hack, 8 Pet. 271; Brent v. Bank of Washington, 10 Pet. 596; Beaston v. Farmers' Bank, 12 Pet. 102). The priority of the United States created by this section, attaches to all claims it may have, legal or equitable (In re Rosey, 6 Ben. 507; s. c. 8 B. R. 509; Howe v. Sheppard, 2 Sumner, 133-142), even though not due but payable in the future (V. S. v. State Bank of N. C., 6. Pet. 29).

"The necessary expenses of an attaching creditor for storing the property attached after the dissolution of his lien by adjudication in bankruptcy has been held to be a provable claim, but not one entitled to priority as costs of administration (In re Hirsch [D. C.], 96 Fed. Rep. 468).

able attorney's fee, for the professional services actually rendered, irrespective of the number of attorneys employed, to the petitioning creditors in involuntary cases, to the bankrupt in involuntary cases while performing the duties herein prescribed, and to the bankrupt in voluntary cases, as the court may allow;' (4) wages due to workmen, clerks, or servants, which have been earned within three months before the date of the commencement of proceed

1The attorney fee here provided for is entitled to priority over a claim for rent against the bankrupt which had become a lien upon a bankrupt's property by law more than four months prior to the filing of the petition (In re Duncan [D. C.], I N. B News, 340), and, in fact, all costs and expenses of administration have priority over liens (In re Tebo [D. C.], 101 Fed. Rep. 419). An attorney fee will be allowed for legal services actually rendered for preservation of the property in voluntary proceedings pending the appointment of the trustee when it clearly appears that such services were beneficial to the creditors, but not when rendered for the benefit of the bankrupt himself (In re Beck [D. C.], 1 N. B. News, 338; s. c. 92 Fed. Rep. 889). The fee for legal services connected with the filing of the petition, it was held under the former Act, was not entitled to priority (In re Hirschberg, 2 Ben. 466; in re Handell, 15 B. R. 71), but under the present Act, being part of the expenses of administration, it has priority (In re Tebo [D. C.], 101 Fed. Rep. 419; in re Scott [D. C.], 1 N. B. News, 353), and must be paid though the bankrupt gets into contempt or absconds (In re Mayer [D. C.], 101 Fed. Rep. 695). The allowance of the attorney fee is not discretionary with the referee (In re Curtis et al. [C. C. A.], 100 Fed. Rep. 784), except as to amount (In re Tebo [D. C.], 101 Fed. Rep. 419). Counsel employed by the trustee may also be allowed fees to a reasonable amount as part of the costs of administration, and such fees may be determined by the referee ex parte, without notice to creditors (In re Stotts [D. C.], 1 N. B. News, 326; s. c. 93 Fed. Rep. 438; in re Little River Lumber Co. [D. C.], 101 Fed. Rep. 558), though when the assets are only sufficient to pay labor claims, they will not be allowed to an attorney engaged by the trustee, against the objection of the labor claimants, to undertake a discovery of concealed assets. The expenses incurred in such a proceeding should be borne by the creditors for whose benefit it was undertaken (In re Rozinsky et al. [D. C.], 101 Fed. Rep. 229). In involuntary proceedings, if it appears that the bankrupt performed the services required of him under the Act, the court may allow his attorney a reasonable fee, otherwise a fee will not be allowed such attorney even when recommended by the referee (In re Woodard [D. C.], 1 N. B. News, 430). If the creditors' petition be dismissed, costs are taxable under Rule XXXIV; but counsel fees in addition to costs will not be allowed defendant's attorney except where a receiver of the defendant's property was appointed before adjudication (In re Ghiglione [D. C.], 1 N. B. News, 351; s. c. 93 Fed. Rep. 186). As to the reasonableness of an attorney's fee, it has been held that a deposit fee advanced to the clerk is reasonable, but that fees for sending out notices of creditors' first meeting, for attending such meeting and resisting allowance of other claims on behalf of other creditors, or for services in inducing bidders to attend a sale of the bankrupt's property are not reasonable (In re Harrison Mercantile Co. [D. C.], 1 N. B. News, 382; s. c. 95 Fed. Rep. 123).

A creditor deeming the charges and expenses of a receiver excessive, may file exceptions thereto with the referee (In re Reliance Storage & Warehouse Co. [D. C.], 100 Fed. Rep. 619).

ings,' not to exceed three hundred dollars to each claimant;

An attorney for a creditor who successfully prosecutes a claim against the trustee's objection, is entitled to a lien for his services on his client's distributive share, and the court may fix the amount or allow a jury to do so (In re Rude [D. C.], 10I Fed. Rep. 805).

A court will not, ordinarily, in the first instance, give any direction to a trustee in the matter of the employment of an attorney. The trustee must exercise a reasonable judgment as to the necessity for securing the assistance of counsel, — such judgment as a man of ordinary prudence would use in the transaction of his own business (In re Abram [D. C.], 103 Fed. Rep. 272).

'The three months time limit prevails against a State statute which contains no time limit (In re Rouse, Hazzard & Co. [C. C. A.], 1 N. B. News, 75; s. c. 91 Fed. Rep. 96). The wages must have been earned, in order to have priority, within the three months preceding the filing of the petition in bankruptcy, notwithstanding a State statute giving priority to wages earned within a year (In re Marshall Paper Co. [D. C.], 1 N. B. News, 294; s. c. 95 Fed. Rep. 119). If a minor entitled to priority for wages be not manumitted, his father will be a creditor entitled to such priority (In re Harthorn, 4 B. R. 103). By the term used in this subdivision, "workmen, clerks or servants", it was undoubtedly intended to give priority to "wage-earners", which means individuals who work for salary, or hire, at a rate of compensation not exceeding $1500 a year (?1[27]), though as yet, there has been no judicial construction of the term. Under a similar English bankruptcy provision, it has been held that workmen who are not hired for any definite time but who work by the job are not entitled to priority (Ex p. Grelier, Mont. 264). And it has also been held that when one is entitled to priority for wages, his right thereto will not be vitiated by the fact that he is also further interested in his employer's business in a manner other than as a wage-earner (Ex p. Hicken, 3 D. & Sm. 662; ex p. Harris, DeG. 165). A somewhat similar case has arisen under the present statute where a priority claim for wages was urged by the manager of a corporation. He was a stockholder, one of the board of directors and the general manager. It was held that he did not sustain the relation of master and servant as contemplated by the statute, having no master over him, he stood in the relation of vice-principal of the corporation. The board of directors voted him a fixed monthly salary as general manager, but it was held that the same was not preferred, he not coming within that class of servants entitled to priority (In re Grubbs- Wiley Grocery Co. [D C], 1 N. B. News, 381; s. c. 96 Fed. Rep 183). A like holding was reached in another case where the president's salary was $700 a year (In re Carolina Cooperage Co. [D. C ], 96 Fed Rep. 950). The actual relation of master and servant does not seem to control, for in neither of the cases last cited did that relation exist, though in other cases the relation did exist, but the employes who were traveling salesmen were held not entitled to priority within the meaning of the Act (In re Scanlan et al. [D C.], 97 Fed Rep. 26; in re Greenewald [D. C.], 99 Fed. Rep. 705). When a State law gives priority to wages, that priority will be recognized by the bankruptcy court as outranking contract liens created upon the bankrupt's property (In re Byrne et al. [D C.], 97 Fed. Rep. 762; in re Tebo [D. C.], 101 Fed. Rep. 419). The priority of labor claims ceases if the claim be assigned and held by the assignee at the commencement of bankruptcy proceedings (In re Westlund et al. [D. C.]. 99 Fed. Rep. 399), but not if reduced to judgment before the petition in bankruptcy was filed, the judgment not being security (In re Anson [D. C.], 101 Fed. Rep. 698), or assigned after it is filed (In re Campbell [D. C.], 102 Fed Rep. 686)

The amount due one for selling goods on commission is not entitled to priority as wages (In re Mayer [D. C.], 101 Fed. Rep. 227).

and (5) debts owing to any person who, by the laws of the States or the United States, is entitled to priority.'

c In the event of the confirmation of a composition being set aside, or a discharge revoked, the property acquired by the bankrupt in addition to his estate at the time the composition was confirmed or the adjudication was made shall be applied to the payment in full of the claims of creditors for property sold to him on credit, in good faith, while such composition or discharge was in force, and the residue, if any, shall be applied to the payment of the debts, which were owing at the time of the adjudication.

SEC. 65. Declaration and Payment of Dividends.3 -a Dividends of an equal per centum shall be declared and paid on all allowed claims, except such as have priority or are secured.*

When the State law gives priority of payment to the fees incident to attachment or insolvency proceeding, the same is to be recognized under this paragraph (In re Lewis [D. C ], 99 Fed. Rep 935), such priority not being excluded by the provisions of clauses 1, 2, 3 of this paragraph.

The fact that one accepts a note in payment of a debt does not discharge the debt unless the note be paid, and it will not affect the original debt so as to deprive it of priority to which it would otherwise be entitled (In re Derby [C. C. A.], 102 Fed. Rep. 808).

2See 12 as to when a bankrupt may offer terms of composition and relative to the confirmation thereof; 13 as to vacating the same; 14 as to the granting of discharges; and 15 as to their revocation. When a composition is set aside or a discharge revoked, the title to the bankrupt's property vests in the trustee (870),

For analogous provisions, see R. S. 25092, 5093, 5096, 5097; Act of 1800, 229, 30; Act of 1841, 10; Act of 1867, 27, 28.

The dividend is to be declared by the referee (839[1]), and paid by the trustee (847[9]), though not upon claims of persons contingently liable for the bankrupt except upon satisfactory proof that such payment will diminish pro tanto the original debt (Rule XXI[4]). A dividend on which commission to the referee is allowed cannot be declared or paid on secured claims (In re Ft. Wayne Elec. Corp. [D. C.], 1 N. B. News, 356; s. c. 95 Fed. Rep. 264). Only claims properly proven and allowed before declaration of dividend can participate in the distribution, and if part of the dividend be held back to pay a creditor who has asked leave to amend his proof, such portion of the dividend may be used for other purposes, the creditor having no lien thereon (In re Scott [D C.], 1 N. B. News, 353). When the estate is ready for distribution, the trustee cannot retain a sum sufficient to pay dividends on claims that are not proved, but which may be filed within a year (In re Stein [D. C.], 1 N. B. News, 339; S. C. 94 Fed. Rep 124). Where one pays a debt after the filing of a petition by another who is jointly liable thereon, and where the person so paying the joint debt is himself indebted to the