CONGRESS. (UNIFORM SYSTEM OF BANKRUPTCY.) 



205 



the estate in excess of the amount necessary to pay 

 the debts which have priority and such claims as 

 have not been, but probably will be, allowed equals 

 5 per cent, or more of such allowed claims. Divi- 

 dends subsequent to the first shall be declared upon 

 like terms as the first and as often as the amount 

 shall equal 10 per cent, or more and upon closing 

 the estate. Dividends may be declared oftener and 

 in smaller proportions if the judge shall so order. 



"c. The rights of creditors who have received 

 dividends, or in whose favor final dividends have 

 been declared, shall not be affected by the proof 

 and allowance of claims subsequent to the date of 

 such payment or declarations of dividends ; but the 

 creditors proving and securing the allowance of 

 such claims shall be paid dividends equal in amount 

 to those already received by the other creditors if 

 the estate equals so much before- such other credit- 

 ors are paid any further dividends. 



" d. Whenever a person shall have been adjudged 

 a bankrupt by a court without the United States 

 and also by a court of bankruptcy, creditors resid- 

 ing within" the United States shall first be paid a 

 dividend equal to that received in the court without 

 the United States by other creditors before creditors 

 who have received a dividend in such court shall be 

 paid any amounts. 



"e. A claimant shall not be entitled to collect 

 from a bankrupt estate any greater amount than 

 shall accrue pursuant to the provisions of this act. 



" SEC. 66. Unclaimed dividends. a. Dividends 

 which remain unclaimed for six months after the 

 final dividend has been declared shall be paid by 

 the trustee into court. 



" b. Dividends remaining unclaimed for one year 

 shall, under the direction of the court, be distributed 

 to the creditors whose claims have been allowed but 

 not paid in full, and after such claims have been 

 paid in full the balance shall be paid to the bank- 

 rupt : Provided, That in case unclaimed dividends 

 belong to minors such minors may have one year 

 after arriving at majority to claim such dividends. 



" SEC. 67. Liens. a. Claims which for want of 

 record or for other reasons would not have been 

 valid liens as against the claims of the creditors of 

 the bankrupt shall not be liens against his estate. 



" b. Whenever a creditor is prevented from en- 

 forcing his rights as against a lien created, or at- 

 tempted to be created, by his debtor, who afterward 

 becomes a bankrupt, the trustees of the estate of 

 such bankrupt shall be subrogated to and may en- 

 force such rights of such creditor for the benefit of 

 the estate. 



" c. A lien created by or obtained in or pursuant 

 to any suit or proceeding at law or in equity, in- 

 cluding an attachment upon mesne process or a 

 judgment by confession, which was begun against a 

 person within four months before the filing of a pe- 

 tition in bankruptcy by or against such person shall 

 be dissolved by the adjudication of such person to 

 be a bankrupt if (1) it appears that said lien was ob- 

 tained and permitted while the defendant. was in- 

 solvent and that its existence and enforcement will 

 work a preference, or (2) the party or parties to be 

 benefited thereby had reasonable cause to believe 

 the defendant was insolvent and in contemplation 

 of bankruptcy, or (3) that such lien was sought and 

 permitted in fraud of the provisions of this act; or 

 if the dissolution of such lien would militate against 

 the best interests of the estate of such person the 

 same shall not be dissolved, but the trustee of the 

 estate of such person, for the benefit of the estate, 

 shall be subrogated to the rights of the holder of 

 such lien and empowered to perfect and enforce the 

 same in his name as trustee with like force and 

 effect as such holder might have done had not 

 bankruptcy proceedings intervened. 



" d. Liens given or accepted in good faith and 

 not in contemplation of or in fraud upon this act, 

 and for a present consideration, which have been 

 recorded according to law, if record thereof was 

 necessary in order to impart notice, shall not be 

 affected by this act. 



"e. That all conveyances, transfers, assignments, 

 orincumbrancesof his property, or any part thereof, 

 made or given by a person adjudged a bankrupt 

 under the provisions of this act subsequent to the 

 passage of this act and within four months prior to 

 the filing of the petition, with the intent and pur- 

 pose on his part to hinder, delay, or defraud his 

 creditors, or any of them, shall be" null and void as 

 against the creditors of such debtor, except as to 

 purchasers in good faith and for a present fair con- 

 sideration ; and all property of the debtor conveyed, 

 transferred, assigned, or encumbered as aforesaid 

 shall, if he be adjudged a bankrupt, and the same is 

 not exempt from execution and liability for debts 

 by the law of his domicile, be and remain a part of 

 the assets and estate of the bankrupt and shall pass 

 to his said trustee, whose duty it shall be to recover 

 and reclaim the same by legal proceedings or other- 

 wise for the benefit of the creditors. And all con- 

 veyances, transfers, or encumbrances of his property 

 made by a debtor at any time within four months 

 prior to the filing of the petition against him, and 

 while insolvent, which are hold null and void as 

 against the creditors of such debtor by the laws of 

 the State, Territory, or District in which such prop- 

 erty is situate, shall be deemed null and void under 

 this act against the creditors of such debtor if he 

 be adjudged a bankrupt, and such property shall 

 pass to the assignee and be by him reclaimed and re- 

 covered for the benefit of the creditors of the bank- 

 rupt. 



"/. That all levies, judgments, attachments, or 

 other liens obtained through legal proceedings 

 against a person who is insolvent, at any time 

 within four months prior to the filing of a petition 

 in bankruptcy against him, shall be deemed null- 

 and void in case he is adjudged a bankrupt; and 

 the property affected by the levy, judgment, at- 

 tachment, or the other lien shall be deemed wholly 

 discharged and released from the same and shall 

 pass to the trustee as a part of the estate of the 

 bankrupt, unless the court shall on due notice order 

 that the right under such levy, judgment, attach- 

 ment, or other lien shall be preserved for the benefit 

 of the estate ; and thereupon the same may pass to 

 and shall be preserved by the trustee for the benefit 

 of the estate as aforesaid. And the court may order 

 such conveyance as shall be necessary to carry the 

 purposes of this section into effect : Provided, That 

 nothing herein contained shall have the effect to 

 destroy or iirfpair the title obtained by such levy, 

 judgment, attachment, or other lien of a bonafide 

 purchaser for value who shall have acquired the 

 same without notice or reasonable cause for inquiry. 



" SEC. 68. Sets offs and counter-claims. a. 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 



" b. A set-off or counter-claim shall not be allowed 

 in favor of any debtor of the bankrupt which (1) is 

 not provable against the estate; or (2) was pur- 

 chased by or transferred to him after the filing of 

 the petition, or within four months before such 

 filing, with a view to such use and with knowledge 

 or notice that such bankrupt was insolvent, or had 

 committed an act of bankruptcy. 



" SEC. 69. Possession of property. a. A judge may, 

 upon satisfactory proof, by affidavit, that a bank- 

 rupt against whom an involuntary petition has been 



