William R. Day

“ De Witt, a jobber in glass, thinking that the Glass Company, for the purpose of making the profit itself, had wrongfully induced a person with whom he had a contract for the sale of a lot of glass bottles not to comply with the sale, thereby causing him a loss of a profit of $800, determined not to pay the Glass Company for merchandise which he had bought from it, or to buy from it merchandise and not pay for it, in order thus to be in a position to set off his claim in damages against the purchase price, and thereby make himself whole. ”

“ Whenever a composition is not confirmed, the estate shall be administered in bankruptcy as herein provided.' Composition is thus treated, even in the act, as in some respects outside of bankruptcy. In the ordinary case of distribution by a trustee, the debtor's whole property, save that which is exempt, is applicable to the payment of his debts, and belongs to his creditors, and not to him, until their claims have been satisfied. After adjudication there is no voluntary offer to pay by the bankrupt, and no bargained release by the creditor. ”

“ The creditor takes all his debtor's property, whether the debtor likes it or not. The bankrupt's rights of property arise only in the event of a payment of his creditors in full. If a creditor will not prove his claim, the bankrupt does not take that creditor's share, but it goes to swell the dividends of creditors more diligent. Section 66 of the act (30 Stat. at L. 564, chap. 541, Comp. Stat. 1913, § 9650) has the same purpose, and does not apply to composition. But if the composition is paid, the creditors have no further claim upon the debtor or his property. ”

“ Mutual debts do not, indeed, properly constitute cross claims by the civil law, for they extinguish each other ipso jure, and the party alone in whose favor the balance is has a claim which can be enforced by action, and his claim is only to the extent of such balance. ”

“ And it is to the judgment of the court below, allowing the amount of damages claimed against the company without any deduction whatever for the contract price of the goods admitted to be due in the bankruptcy proceedings, that this writ of error is prosecuted. ”

“ That the comprehensive provisions of §§ 68a and b of the bankrupt law relating to set-offs and counterclaims are coincident with the scope of the act, and therefore give the power to the bankruptcy court to determine whether or not the right of set-off exists as between all and any claims required to be surrendered as assets of the estate, on the one hand, and all debts proved against the estate, on the other, is, I submit, self-evident ”

“ In other words, treating the allowance of the composition as having, so to speak, irrevocably stereotyped the rights of the parties in conformity with the bankrupt law, and to the end that its purposes might be carried out, the bankrupt holding under the composition was treated for such purposes as but an assignee in bankrupt cy, and therefore, so far as set-off was concerned, as having no greater right under the composition than existed in the bankruptcy in favor of the estate at the time the composition was made. ”

“ If the composition is to be considered as having irrevocably excluded the right to set-off, then, of course, the consequences of the failure to ask for it must upon the amount proved,-a payment claim, and not be cast upon the one who had no duty or concern with that subject until the liquidation was accomplished ”

“ Further, 'that under and by virtue of the provisions of § 68a of said Federal bankruptcy act it was and became the duty of the referee in bankruptcy and the trustee in bankruptcy representing the bankrupt estate of said De Witt to investigate and determine the existence and validity of any claim asserted by said bankrupt against any creditor filing his claim against said estate ”