a discharge. Sometimes à bankrupt is not entitled to a discharge of any obligation.

With respect to the kinds of debts for which a discharge may be granted section 17 of the National Bankruptcy Act provides: A discharge in bankruptcy shall release a bankrupt from all of his provable debts. The act then proceeds to declare certain exceptions to the rule that all provable debts may be discharged. These exceptions are as follows: (1) A tax levied by the United States, the state, county, district, or municipality in which he (the bankrupt) resides; (2) liabilities for obtaining property by false pretenses or false representations, or for maintenance or support of wife or child or for seduction of an unmarried female, or for criminal conversation. Some of these exceptions under clause 2 are inserted out of an abundance of legislative caution, because there is little likelihood that the courts would hold that some of the obligations therein mentioned would be provable debts. Unless the obligation is a provable debt, there is no necessity for providing for it in these express exceptions. Liabilities for obtaining property by false pretenses or false representations and liabilities. for malicious injuries to property are provable debts. Were it not for this express exception, they would be subject to discharge. But liabilities for malicious injury to a person, for alimony, for maintenance of a wife or child, for seduction and for criminal conversation are probably not provable debts, and therefore could not be discharged even if this express exception were eliminated.

The third exception consists of debts which have not been duly scheduled in time for proof and allowance, with the name of the creditor if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy. With reference to the scheduling of debts, it may be remarked in passing that this act consists in the preparation and filing by the bankrupt, in the bankruptcy court, of a detailed statement of his assets and liabilities. With reference to the schedules, section 7, clause 8, provides that, the bankrupt shall prepare, make oath to and file in court within ten days, unless further time is granted, after the adjudication, of an involuntary bankrupt, and with the petition if a voluntary bankrupt, a schedule of his property, showing the amount and kind of property, the location thereof, its money value in detail and a list of his creditors, showing their residences, if known, if unknown, that fact to be stated, the amounts due each of them, the consideration thereof, the security held by them, if any, and a claim for such exemption as he may be entitled to, all in triplicate, one copy of each for the clerk, one for the referee and one for the trustee. The time within which claims against a bankrupt may be proved is fixed in section 57n as follows: Claims shall not be proved against a bankrupt subsequent to one year after the adjudication. There are a few minor exceptions not necessary to be noted here, allowing proof of claims more than a year after the date of adjudication. The fourth and last exception to the rule that all

provable debts may be discharged, consists of debts created by fraud, embezzlement, misappropriation, or defalcation while acting as an officer or in any fiduciary capacity.

Returning to the principal matter involved in this section, the question is: What kinds of debts are subject to discharge? Section 17, above quoted, provides, in legal effect, that, unless a debt. is a provable debt, it will not be discharged. What is a provable debt? The following section of the act defines what shall constitute. a provable debt, although it should here be stated that, in some respects, the section is not clear. There has been a great deal of litigation over this section and the resulting decisions of the courts have gone a long way toward removing the uncertainties, though, even yet, there remains some doubt as to certain types of claims. It may also be pointed out here, that while we are chiefly interested in the following section for the purpose of ascertaining what debts will be discharged in bankruptcy, the section and the discussion following may be looked upon purely from the standpoint of a creditor of a bankrupt who faces the question: "Do I have the privilege of filing this particular claim against my debtor, or not?" The creditor is affected in this way: If he holds a provable claim, he must prove if he expects to get anything at all from his bankrupt debtor, because the debt will be discharged. If his claim is not provable, the creditor can get nothing from the estate, but, since his claim will not be discharged, the creditor will be entitled to the full amount and may recover it in an ordinary action at law. Of course, the judgment will not be paid until the judgment debtor acquires property. Even so, that may be much better than participating with the other creditors in the bankruptcy proceedings, where the proportion of the debt paid by the estate through the trustee may be very small. Section 63 provides: (a) Debts of the bankrupt which may be proved and allowed against his estate which are (1) a fixed liability as evidenced by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date or with a rebate of interest upon such as were not then payable and did not bear interest; (2) due as costs taxable against an involuntary bankrupt who was at the time of the filing of the petition against him plaintiff in a cause of action which would pass to the trustee and which the trustee declines to prosecute after notice; (3) founded upon a claim for taxable costs incurred in good faith by a creditor before the filing of the petition in an action to recover a provable debt; (4) founded upon an open account, or upon a contract express or implied; and (5) founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of the bankrupt's application for a discharge, less costs incurred and interests accrued after the filing of 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. It will not be necessary to go into a detailed discussion of the interpretation of this section, but merely to point out some of the more important features. It will be noted that only those debts due at the time of the filing of the petition against the bankrupt will be provable. As will be seen later in some cases these debts need be but contingently due. If the bankrupt buys goods subsequent to date of the filing of the petition, the claim is not provable nor dischargeable. The bankrupt remains liable therefor. The phrase "absolutely owing, whether then payable or not" has reference to transactions which may be illustrated by the ordinary case of a claim founded upon a note given for money loaned or property sold to the maker which is not by its terms payable until a date subsequent to the date of the filing of the petition. Clause 4 is the most inclusive, since it deals with contracts express or implied and is not limited to contracts in writing, as is clause 1. While clause 5 contemplates the possibility of claims reduced to judgment after the filing of the petition, it is to be noticed that this clause does not provide for the proving of any kind of a claim not provable under the preceding clauses, because the application of clause 5 is expressly limited to judgments founded upon provable debts. Clause 5 is relied upon as the basis for proving a claim which, at the date of the filing of the petition, was unliquidated, that is, where the amount of the claim had not then been determined. The procedure for reducing unliquidated claims to judgment is provided for in clause (b). This clause, like clause 5, does not enlarge the class of claims which are provable. Clause (b) makes provision for the liquidation only of those claims which are provable under the first four clauses.

The difficult questions arising out of the above section concern the interpretation of the term "fixed liability * absolutely owing," and the term "contract express or implied." Or, to approach the question through a different terminology: What is the status of contingent claims? To illustrate: It is held that a claim. for future rent against a bankrupt tenant is not a provable debt. On the other hand, it has been held that the claim of the holder of commercial paper against a bankrupt indorser is provable, although, at the time of the filing of the petition, the party primarily liable on the instrument has not defaulted. It has also been held that the claim of a surety against a bankrupt principal debtor for reimbursement is a provable debt, although the surety did not pay the debt to the creditor until after the petition was filed against the principal debtor. This somewhat strained interpretation is probably brought about by the feeling that the bankrupt should be discharged from contingent claims as well as non-contingent claims. It is conceivable that a bankrupt might owe relatively, few debts absolutely owing and many contingent debts. This would be true

where the bankrupt's business involves the discounting and sale of large quantities of commercial paper.

The question of the provability of contingent claims also arises over bilateral contracts. It has been held that where a bankrupt is under a contract to perform services, which contract has not yet been broken at the date of the filing of the petition, the fact of bankruptcy operates as an anticipatory breach of the contract, and the claim arising thereon is provable.1 This will not always be the case. Bankruptcy will operate as an anticipatory breach only if there is a reasonable probability that the bankruptcy will in fact render performance by the bankrupt unlikely. If the bankrupt had contracted to perform future personal services for A., with all tools and materials to be furnished by A., bankruptcy would not be a breach of such a contract. Accordingly, this claim would not be provable nor dischargeable.

Tort claims, such as for assault, trespass to land, libel, slander, malicious prosecution, etc., are not provable claims. An apparent exception exists in the case of conversion of personal property. While this act is a tort, the obligation of the converter to make restitution is also treated as a contract obligation implied in law. The claim is therefore provable under clause 4.

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It was stated above that a bankrupt would not always be entitled to a discharge. Section 14 of the act provides: Any person may, after the expiration of one month and within the next twelve months subsequent to being adjudged a bankrupt, file an application for a discharge in the court of bankruptcy in which the proceedings are pending. The judge shall hear the application for discharge and such proofs and pleas as may be made in opposition thereto and discharge the applicant unless he has (1) committed an offense punishable by imprisonment as herein provided; or (2) with intent to conceal his financial condition, destroyed, concealed or failed to keep books of account or records from which such condition might be ascertained; or (3) obtained money or property on credit upon a materially false statement in writing made by him to any person or his representative for the purpose of obtaining credit from such person; or (4) at any time subsequent to the first day of the four months immediately preceding the filing of the petition transferred, removed, destroyed, or concealed or permitted to be removed, destroyed, or concealed, any of his property, with intent to hinder, delay or defraud his creditors; or (5) in voluntary proceedings been granted a discharge in bankruptcy within six years; or (6) in the course of the proceedings in bankruptcy refused to obey any lawful order of, or to answer any material question approved by the court: Provided, That a trustee shall not interpose objections to a bankrupt's dis

1 Central Trust Co. of Illinois v. Chicago Auditorium Association, 240 U. S. 581, 36 Sup. Ct. 412, 60 L. Ed. 811, L. R. A. 1917B, 580 (1916).

charge until he shall be authorized so to do at a meeting of creditors called for that purpose.

Section 15. The judge may, upon the application of parties in interest who have not been guilty of undue laches, filed at any time within one year after a discharge shall have been granted, revoke it upon a trial if it shall be made to appear that it was obtained through the fraud of the bankrupt, and that the knowledge of the fraud has come to the petitioners since the granting of the discharge, and that the actual facts did not warrant the discharge.

SECTION 6.-EFFECT OF STATUTES OF LIMITATIONS Statutes of the states provide definite periods of time within which various actions must be brought. With respect to contracts, a period may vary from a year up to ten years; or even more is allowed, depending on the nature of the claim, whether a claim. against an estate, upon an oral or written contract, negotiable or sealed instrument, etc. The statute begins to run from the date of breach, if the breach is material and the plaintiff elects to treat the contract as abandoned. Where the contract is to pay a sum of money, this rule would be expressed by saying that the period begins to run from the day payment is due. In the case of demand notes and bills of exchange, this would mean that the statute began to run from date of issue. But with respect to bank notes and certificates of deposit payable on demand, the statute does not begin to run until demand, In case of mutual accounts, the period begins to run from the date of the last entry. Where the plaintiff is under disability at the time the cause of action arises, it is commonly provided that the statute does not begin to run until the disability is removed. The general rule also is that the departure of the defendant from the jurisdiction stops the running of the statute and the term during which he resides outside the state will not be counted in determining whether the period has elapsed. The legal effect. of the running of the statute is not, however, to discharge the debt. The debt in contemplation of law still exists, but no action can be maintained to recover it. This is shown by the fact that a right to sue may be barred in one state but not in another. If the claim is barred in state A. and the creditor obtains service of process upon his debtor in state B. on an action brought there, the statute of limitations of state B. will generally control, and not the statute of state A. The effect of the running of the statute as not constituting a discharge of the obligation is also shown by the rules that, although the debt is barred, the creditor may still resort to securities such as pledges, mortgages, and other liens to enforce payment. The circumstances may be such that the claim of a creditor against his debtor is barred when the claim against the surety is not barred. The surety, in such circumstances, remains liable.