“ If it had been contemplated that the word 'surrender' should entail upon every creditor the loss of power to prove his claims if he submitted his right to retain an asserted preference to the courts for decision, such purpose could have found ready expression by qualifying the word 'surrender' so as to plainly convey such meaning. ”

“ We are of opinion that, originally considered, the surrender clause of the statute was intended simply to prevent a creditor from creating inequality in the distribution of the assets of the estate by retaining a preference, and at the same time collecting dividends from the estate by the proof of his claim against it, and consequently that whenever the preference has been abandoned or yielded up, and thereby the danger of inequality has been prevented, such creditor is entitled to stand on an equal footing with other creditors and prove his claims. ”

“ Here, as we have seen, it is found that the bank acted in good faith, without knowledge of the insolvency of its debtor and of wrongful intent on his part, and yet it is asserted that the right to prove its lawful claims against the bankrupt estate was forfeited simply because of the election to put the trustee to proof, in a court, of the existence of the facts made essential by the law to an invalidation of the preference. ”

“ The fallacy lies in assuming that courts have power to inflict penalties, although the law has not imposed them. Moreover, if the statute be interpreted as it is insisted it should be, there would be no distinction between honest and fraudulent creditors, and therefore every creditor who in good faith had acquired an advantage which the law did not permit him to retain would be subjected to the forfeiture simply because he had presumed to submit his legal rights to a court for determination. ”

“ It is argued, however, that courts of bankruptcy are guided by equitable considerations, and should not permit a creditor who has retained a fraudulent preference until compelled by a court to surrender it, to prove his debt, and thus suffer no other loss than the costs of litigation. ”

“ I think the surrender contemplated by the law is not the capitulation which comes after unsuccessful resistance, but is intended to require the creditor, who must be ppresumed to know the law, to make a prompt election and to stand or fall upon the choice made. ”

“ It may be that an army may surrender a fort after a most vigorous contest, while there is still the choice between further resistance and yielding the fortress to an enemy; but the most liberal meaning of the term could hardly describe as a surrender the occupation which a victorious army has gained of a fort after it has ejected the enemy from its walls and is securely intrenched therein without leave of those who have been forcibly driven out. ”

“ This devolves upon us the duty of interpreting the meaning of the word 'surrender,' as it is here used. And it is our opinion that a creditor who receives goods by way of fraudulent preference, and who refuses the demand therefor which the assignee is authorized to make (§ 15) , denies his liability, allows suit to be commenced by the assignee, defends it, goes to trial, is defeated, and judgment passes against him, which he satisfies on execution, cannot be said, within the meaning of the statute, to have surrendered to the assignee the property received by him under such preference. ”

“ Having thus broadened the preference clauses so as to make them include acts never before declared by Congress to be illegal, it may well be presumed that Congress, when it enacted the surrender clause in the present act, could not have contemplated that that clause should be construed as inflicting a penalty upon creditors coming within the scope of the enlarged preference clauses of the act of 1898, thereby entailing an unjust and unprecedented result. ”

“ A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class. ”

“ Section 57g provides that all preferences, whether innocent or otherwise, shall be surrendered before the creditor can prove his claim, and the right of proof is not postponed until the surrender, but claims are not to be allowed unless creditors shall surrender their preferences. The element of time is indicated in the word 'until,' which means to the time of, or up to, while the use of 'unless' more emphatically denies the right of proving the claim, save or except upon terms of relinquishing the preference. ”

“ In Collier on Bankruptcy, 3d edition, page 319, that author says:
'The question what constitutes a surrender has received much discussion. It is admitted by all that if the assignee is compelled to bring an action to invalidate a transfer, and if he recovers and enters up judgment, no subsequent payment of that judgment by the preferred creditor, and no subsequent compliance by him with its terms can be considered a surrender. By his judgment the trustee has 'recovered' the property. ”

“ The amendment clearly also was repugnant to that construction of the act of 1867 given in some of the cases to which we have referred under the third classification, wherein in the reasoning employed it was assumed that a forfeiture or penalty might to implied alone from the terms of the surrender clause, irrespective of the operation of § 39. ”

“ The practice in question was followed in the case of Ex parte Dobson, 4 Deacon & C. 69, decided in 1834, and was thus stated in the opinion of Sir G. Rose (p. 78) :
'I apprehend the practice to be settled, where a creditor applies to prove a debt, and claims a right to property to which the commissioners think he has no lien, that the commissioners admit the proof, and leave the question to be controlled merely by retention of the dividend. ”

“ We omit, therefore, further reference to these decisions, as we shall hereafter come to consider the text of the present act by the light thrown upon it by the act of 1867 and the judicial interpretation which was given to that act. ”

“ The question, under the act of 1898, came before the United States district court for the northern district of Iowa, in the case of Re Keller, 109 Fed. 118, 6 Am. Bankr. Rep. 334, where the subject is discussed by Judge Shiras. ”

“ Fourth. Cases which, without seemingly considering the incongruity of the reasoning, adopted both theories; treated §§ 23, 35, and 39 as in pari materia, and hence applied the prohibition of § 39 to the other two sections, and yet reasoned to show that the surrender clause alone prohibited a surrender after recovery by the assignee. This class of cases is illustrated by Re Richter, 1 Dill. 544, 4 Nat. Bankr. Reg. 221, Fed. Cas. No. ”