“The condition of this obligation is such, that if the above-bonnden I). P». Howard and Altheda, his wife, their heirs, executors, administrators, shall and do well and truly pay or cause to be paid unto the above-named Alfred O. Lewis, his certain attorney, executors, administrators or assigns, the sum of twelve hundred dollars in the manner following, viz., the sum of fifteen dollars is to be due and payable on the first day of each and every month hereafter until the full sum of principal is paid. The party of the first part is to have the privilege of paying any larger sum of principal on the first day of July or December of any year hereafter that he desires. The said payment of $15 is to he for interest and principal and at the end of each year first party is to be credited for the sums actually paid, interest and principal, payments hereon to be made at Tfirst National Bank of Oneonta, N. Y„ without fraud or delay, then this obligation to be void, otherwise to remain in full force and virtue. And it is hereby expressly agreed, that should any default be made in the payment of the said interest, or any part thereof, on any day when the same is made payable as above expressed, and should the same remain unpaid and in arrears for the space of thirty days, then, and from thenceforth, that is to say, after the lapse of the said thirty days, the aforesaid principal sum of twelve hundred dollars, with all arrearages of interest thereon, shall at the option of the obligee, his executors, administrators, or assigns, become and be due and payable immediately although the period above limited for the payment thereof may not then have expired, anything hereinbefore contained to the contrary thereof in any wise notwithstanding.”
The payment of the money agreed to be paid by this bond was secured by a mortgage on real estate, the proceeds of the sale of which are now in court, which contained the same condition as to payment as the bond down to and including the words “payments hereon to be made at First National Bank of Oneonta, N. Y.,” and the mortgage then contains this provision:
“Now this indenture witnesseth, that the said party of the first part for the better securing the payment of the said sum of money mentioned in the condition of the said bond or obligation, with interest thereon, and also for and In consideration of one dollar paid by the party of the second part, the receipt whereof is hereby acknowledged, does hereby grant and release,” etc.
Then follows a description of the real estate mortgaged. Then follows an insurance clause, and then the following:
“Provided always, that if the said party of the first part, his heirs, executors' or administrators, shall pay unto the said party of the second part, Ills executors, administrators or assigns the said sum of money mentioned in the condition of the said bond or obligation, and the interest thereon, at the time and in the manner mentioned in the said condition, that then these presents,*406 and the estate hereby granted, shall cease, determine and be void. And the said D. B. Howard covenants with the party of the second part as follows: That the party of the first part will pay the indebtedness 'as hereinbefore provided,” etc.
This mortgage is not signed by the wife.
July 7, 1895, Lewis assigned this bond and mortgage to Marshall' Mitchell, who November 21, 1907, assigned them to George A. Howard.
On the 6th day of April, 1896, the said D. B. Howard and Altheda R. Howard executed, acknowledged, and delivered to said A. C. Lewis another bond which states that they are justly indebted to said Lewis in the sum of $1,050, which they bind themselves to pay, and then follows this condition:
“The condition of this obligation is such that if the above-bounden D. B. Howard and Altheda R. Howard, their heirs, executors, administrators, shall and do well and truly pay, or cause to be paid unto the above-named A. C. Lewis, his certain attorney, executors, administrators or assigns, the sum of five hundred and twenty-five dollars, in manner following, viz., the sum of fifteen dollars per month to be paid each and every month of the principal and interest, with privilege of first party paying any larger sum on any payment day, interest to be paid at the rate of 6% per annum. Said payments to be continued until the principal and interest is fully paid, said payments to begin April 1st, 1896, without fraud or delay, then the preceding obligation to be void, otherwise to remain in full force and virtue.”
On the same day said Howard and wife executed, acknowledged,, and delivered to said Lewis a mortgage on such real' estate, which contains the following:
“Whereas, the said L>. B. Howard, justly indebted to the said party of the second part in the sum of five hundred twenty-five dollars, lawful money of the United States, secured to be paid by their certain bond or obligation, bearing even date herewith, conditioned for the payment of the said sum of five hundred twenty-five dollars, in manner following, viz., the sum of fifteen dollars per month, to be paid each & every month of the principal and interest, with privilege of first party paying any larger sum on any payment day, interest to be paid at the rate of 6% per annum. Said payments to be continued until the principal & interest is fully paid hereon. Said payments to begin April 1, 1896. It being thereby expressly agreed, that the whole of the said principal sum shall become due after default in the payment of interest, as hereinafter provided. Now this indenture witnesseth, that the said party of'the first part, for the better securing the payment of the said sum of money mentioned in the condition of the said bond or obligation, with interest thereon, and also for and in consideration of one dollar, paid by the said party of the second part, the receipt whereof is hereby acknowledged, do hereby grant and release unto the said party of the second part, and to his heirs and assigns forever.”
Alfred C. Lewis died and Edson A. Hayward was appointed administrator with the will annexed of his estate, and May 17, 1900, he sold and assigned said bond and mortgage to B. W. Hoye, who on the 16th day of December, 1907, sold and assigned same to said George A. Howard. When Hoye assigned this bond and mortgage December 16, 1907, he covenanted in the assignment “that there is due and to become due on said bond and mortgage the sum of four hundred dollars ($400), with interest thereon from Dec. 6th, 1907.” On the same day the following indorsement was made on the bond:
*407 “Keceived on the within bond $19.96 interest and $55.38 principal, Dec. 36, 1911.”
.On the same day D. B. Howard, one of the principals in the bond, signed the following statement written on the bond:
••December 16th, 1907. it is hereby stipulated and agreed the amount due and unpaid on this bond and the mortgage accompanying the same is $100, four hundred dollars. D. B. Howard.”
The indorsements on this bond, including the one mentioned, are as follows: April 14, 1898, $31.50; May 31, 1898, $10; June 21, 1899, $31; Mav 21, 1900, $16, “on account of interest”; December 22, 1900, $14.90, "bal. int. to April 1, 1900”; April 20, 1901, $30.90, “int. to April 6, 1901”; April 25, 1902, $10, “to apply on interest due April 6, 1902”; May 20, 1902, $10, “to apply on interest due April 6, 1902”; June 24, 1902, $10, “to apply on int. due April 1, 1902, bal. 90c”; July 24th, “reed. bal. of interest 90c to bal. of int. to April 6, 1902”; December 20, 1902, $10; January 23, 1903, $5; February 20, 1903, $5; March 20, 1903, S5 ; April 21, 1903, $5; May 25, 1903, $5; December 16,1908, “$24 interest and $80 payment on principal”; August 12, 1910, $11.86 “interest to Aug. 14, 1910, and $41.20 to apply on principal”; December 16, 1910, $5.37 “int. and principal $10.64 from Aug. 12 to Dec. 16, 1910”; and December 16, 1911, the said sums of $14.96 interest and $55.38 principal.
July 6, 1895, in his assignment of the bond and mortgage of that date for $1,200, Lewis covenanted that there was due on said bond and mortgage the sum of $1,200. This was a purchase-money mortgage. The indorsements on this bond and mortgage of July 6, 1895 (the first one), are as follows: August 29, 1895, $15; October 31, 1895, $30; February 25, 1897, $12; April 2, 1897, S15; August 25, 1897, $72; August 23, 1898, $60; September 23, 1898, $12; September 2, 1899, -$45; November 21, 1899, $27; July 24, 1901, $20; September 29, 1901, $40; October 23, 1901, $12; April 26, 1902, $10; May 21, 1902, $10; June 25, 1902, $10; July 24, 1902, $10; December 21, 1902, $10; January 22, 1903, $20; March 24, 1903, $15: May 29, 1903, $10; July 23, 1903, $15; November 19, 1903, $20; October 22, 1905, S30; December 14, 1905, $20; January 4, 1906, $50; February 5, 1907, $10; July 5, 1907, $20; Ausrust 7, 1907, $10; September 27, 1907, $10; November 21, 1908, “$87.06, one year’s interest on within bond”; “Nov. 21, 1909, received $87.06, one year’s interest on within”; August 12, 1910, $63.12, “interest from Nov. 21, 1909, to Aug. 12, 1910”; interest from August 12 to November 21, 1910, $23.94; “Nov. 21, 1911, received $87.06, one year’s interest on within bond.” When Lewis assigned this bond and mortgage to Marshall Mitchell, the following agreement was indorsed on the bond and signed by both D. B. Howard, one of the mortgagees, and by Mitchell viz.:
“It is agreed after a careful computation that the amount due and unpaid on tho within bond, at this date, Nov. 21, 1907, is fourteen hundred fifty-one ($1,451.00) dollars. Marshall Mitchell.
“D. B. Howard.”
When Mitchell assigned to George A. Howard, this agreement was on the bond and thereafter D. B. Howard paid interest on that basis
The trustee in bankruptcy contends, as to the bond and mortgage of July 6, 1895, for $1,200, that it is payable in monthly installments, and that if the payments of $15 had been made at the end of each month, as provided in the bond, the payment would be applicable to the liquidation of that installment of principal with the interest on such installment only and not to the payment of interest on the whole principal sum; the balance of the payment going or being applied to the reduction of the principal, leaving a new principal after each payment. This construction of the provisions of the bond and mortgage claimed would involve a computation at the end of each month to determine how much of the $15 was applicable to the payment of interest and how much to the installment of principal to be paid. That is, the contention of the trustee is that at the end of the first month the sum of $15 was to be paid and applied in part, as interest for one month on some part of the $15 to be ascertained by computation; the said part of such payment to be applied in reduction of the principal. Thus the question would be: What sum placed at interest at 6 per cent, will amount to $15 in one month and that sum would be the amount to be applied as payment on thé prin-. cipal, assuming the full $15 was paid when due? This contention is-not warranted by the language of' the bond alone or of the bond and mortgage read together. It is plain, I think, that the whole principal sum draws interest from the date of the bond and that the monthly payments were intended to apply in payment of interest and the balance to the payment of principal, making a new principal each month in case the payments were kept up. It is true that the purpose is not as plainly expressed as it might have been. The condition is that the obligors will pay to Lewis or-his executors, etc., the sum of $1,200 (no mention of interest) in the manner following, viz.:
“The sum of $15 to be due and payable on the first day of each and every month hereafter until the full sum of principal is paid.”
If the parties had stopped here, no interest woqld or could be allowed, but'they did not and immediately continued and provided:
“The said payment of $15 is to be for interest and principal, and at the end of each year first party is to be credited for the sums actually paid interest and principal.”
Then follows the usual interest clause. Then the mortgage itself says:
“The said party of the first part for the better securing the payment of the said sum of money mentioned in the condition of the said bond or obligation [evidently the $1,200], with interest thereon [evidently on the $1,200],. hereby grant,” etc.
Later it is provided that if the first party shall pay “the said sum (not sums) of money mentioned in the condition of the said bond or obligation [evidently the $1,200], and the interest thereon [not inter est on the monthly installments], at the time and in the manner,-” etc., then the mortgage is to, become and be void. There is no lan
“Interest can be allowed only by virtue of some contract, express or implied, or by virtue of some statute, or on account of the default of a party liable to pay when it is allowed as damages for the default.” Woerz v. Schumacher, 161 N. Y. 530, 56 N. E. 72, affirming 37 App. Div. 374, 56 N. Y. Supp. 8; Forschirm v. Mechanics’ & Traders’ Bank, 137 App. Div. 149, 122 N. Y. Supp. 168; Morley v. Lake Shore, etc., R. Co., 146 U. S. 162, 168, 13 Sup. Ct. 54, 36 L. Ed. 925.
Here the payment of interest is plainly and repeatedly provided for and in no way is it limited to interest on the installments. I think the fair and just inference and implication from the language used and the nature of the debt and promise are that the whole principal sum was to bear interest from the date of the instruments, and that the obligors in the bond promised to pay it from month to month with the monthly payments of principal. Redfield v. Bartels, 139 U. S. 694, 701, 11 Sup. Ct. 683, 35 L. Ed. 310; Redfield v. Ystalyfera Iron Co., 110 U. S. 174, 176, 3 Sup. Ct. 570, 28 L. Ed. 109.
“Where there are several agreements' in writing, together constituting a single transaction, they should be construed together (here the bond and mortgage) to arrive at the true intent of the parties.” Joy v. St. Louis, 138 U. S. 1, 11 Sup. Ct. 243, 34 L. Ed. 843; Teal v. Walker, 111 U. S. 242, 4 Sup. Ct. 420, 28 L. Ed. 415; United States v. Bostwiek, 94 U. S. 53, 65, 24 L. Ed. 65.
Alarch 30, 1907, T. W. Stevens and Chas. F. Hills obtained a judgment against said D. 13. Howard for $143.83, which was docketed in ()tsego county clerk’s office August 23, 1907, and became and is a lien on the premises and the proceeds of sale, and with interest to July 2, 1912, amounts to $189.14. Total liens at that date, $1,744.38.
It is now contended on the one hand that this limits and controls the allowance the court can make out of the proceeds of sale, .while on the other it is contended that the court can make allowances to cover not only the actual expenses of' all the sales but of ascertaining the amount due on the liens and those incident to such contempt proceedings, and also the expenses of administration in the bankruptcy court, including the referee’s costs and expenses and commissions and the commissions of the trustee, and also an allowance to the attorney for the trustee for services in connection with the sales and ascertainment of the amounts due on such liens. By selling, free and clear of incumbrances or liens, the owner of the mortgages has been saved the expense of foreclosure and a possible allowance to the attorney for the trustee, although no defense to such mortgages is claimed. The owners of the judgment have been saved the expense of advertising and selling on execution. The expenses of selling have been more than doubled by the unjustifiable acts of the lienors at the sale referred to, making another sale necessary. The trustee delayed a sale for about a year after being authorized to make one, allowing the interest to accumulate and absorb the proceeds of sale when made, and he has made a contention as to the construction of the bonds and as to the amount due and unpaid, which is not sustained. This controversy should end. As the result shows, the trustee was justified in asserting and claiming that there was some equity in this real estate. If the parties had got together, figured up the amount due and unpaid on the mortgages, the net amount received for rents and applicable thereto, and consented to and aided a sale on the best possible terms and at the earliest possible moment, and had submitted the construction of the bonds and mortgages to the court, a vast amount of trouble, delay, bitterness, and expense might have been saved.
This court takes the case as it finds it. All parties, both lienors and the trustee, have been, more or less in the wrong, -talcing untenable positions, and I think that in view of all the facts, but briefly referred to, the allowances should cover the necessary expenses of selling the property, all the sales, and no more.
•‘The proceeds of property of a bankrupt, covered by valid liens and sold by the court of bankruptcy by request or consent of the lienholders, who subsequently filed their claims in such court, which were allowed as secured claims in an amount in excess of such proceeds, are properly chargeable with the costs of such court appropriate to the enforcement of the liens, but not with general costs of the administration of the estate, such as the general fees of the trustee and his attorney, or for the services of a receiver in carrying on the business of the bankrupt and his attorney, or for the expenses and losses of such business. * * * By coming into the bankruptcy court, therefore, the holder of a valid lien upon the estate of a bankrupt comes into an appropriate place and into a court amply able to enforce and protect his rights. By doing so the lienholder waives none of his rights. The enforcement of his lion in another court would entail upon the proceeds of the property upon which the lien exists the payment of the appropriate court costs; and so, in the enforcement of such lien in a court of bankruptcy, the proceeds of the property of the bankrupt upon which such lien exists is properly chargeable with the costs of such court appropriate to such enforcement, but with no other or further costs. They are not chargeable with the general costs of the administration of the bankrupt’s estate, such as the services of a receiver in carrying on the business of the bankrupt, the expenses and losses of such business, the fees of the attorney for such receiver, the general fees of the trustee or those of his attorney. If so, the valid lien upon the estate of the bankrupt, which the bankruptcy act expressly declares shall be unaffected by any of its provisions, might very readily be destroyed, as it would unquestionably be should such costs equal or exceed the proceeds in cases like the present, where the aggregate amount of the valid liens exceeds the proceeds of the entire estate of the bankrupt.”
In Re Utt et al., Ridgely Nat. Bank v. Matheny, 105 Fed. 754, 45 C. C. A. 32 (C. C. A. 7th Circuit), there were two mortgages. The syllabus says:
“A decree was entered in a state court foreclosing a first and second mortgage on real estate and ordering its sale. Before the time fixed for the sale, creditors filed a petition against the mortgagors, on which they were adjudicated bankrupts. Such creditors also filed a bill in the Circuit Court of the*414 United States on which they obtained an injunction restraining further proceedings for the sale of the mortgaged property by the state court. Thereafter the mortgagees joined in a petition to the court of bankruptcy asking that the property be sold by the trustee for payment of their liens, and such sale was ordered and made; the proceeds received being insufficient to pay the mortgage debts. On petition of the trustee the court ordered the first mortgage paid from the proceeds but displaced the second in favor of the costs and expenses incurred in both the bankruptcy proceedings and the injunction suit, including fees allowed to counsel for the creditors and tfustee. No other assets of the bankrupt came into the hands of the trustee. Held, that such order was erroneous, except in so far as it directed payment of the costs incurred in selling the property, including compensation to the trustee, not exceeding that to which the master in the state court would have been entitled.”
To the same effect is In re Bourlier Cornice & Roofing Co. (D. C.) 133 Fed. 958, 963.
In Re Prince & Walter (D. C.) 131 Fed. 546, 552, the court said:
“A sale of the property free of liens may undoubtedly be ordered, but, if this is done, the proceeds must be applied to their satisfaction, undiminished by anything except the costs of sale, or the expenses, if any, which have been undertaken for, and result to, their benefit. They are not concerned with the bankruptcy proceedings outside of this and cannot therefore be charged with the cost of instituting them or carrying them on.”
I have examined In re Erie Lumber Co. (D. C.) 150 Fed. 817, and In re Tebo (D. C.) 101 Fed. 419, and do not agree with the conclusions there reached.
In Re Zehner (D. C.) 193 Fed. 787, it was held:
“Where mortgaged property of a bankrupt is sold free from liens in bankruptcy proceedings, it cannot be charged with the expenses of the sale or fees of the referee in bankruptcy, but the mortgage creditor may be required to contribute to the charges and expenses of sale an amount not exceeding what he would be required to expend to foreclose his mortgage in the state courts.”
It would be unjust in the extreme to permit trustees in bankruptcy to urge a sale of mortgaged premises in the bankruptcy court, there being no other property, allow him to set up and litigate all sorts of untenable claims, and then not only pay the expenses of sale but large counsel fees and the general expenses incurred from the proceeds of the mortgaged property. In this way mortgage liens could, in many cases, be annihilated. In this case it is just and proper, in view of the unlawful, improper, and unjustifiable interference with the sale, in which the. holders of the judgment lien participated, that they bear some portion of the expense of the sale finally accomplished and which demonstrates that there was an equity for the estate in this property. But for the attitude taken by these lienors there would have been a sale long before it was made, and but for the attitude of the trustee there would have been an earlier distribution. .If an appeal is taken and it is held that this court is wrong in holding that the bonds and mortgages draw interest from date on the full principal instead of on the installments only until the whole principal became due, there will of course be a readjustment of the whole matter, and it may be that in such event the trustee would be entitled to compensation for his attorney as against the lienors. In such an event there would be an es
When this bankruptcy proceeding was instituted February 5, 1910, "the amendatory act of June 25, 1910, which made changes as to the compensation of trustees, was not in force, and by express provision the amendments “shall not apply to bankruptcy cases pending when this act (1910) takes effect.” As amended in 1903, the act provided that referees should receive “from estates which have been administered before them one per centum commissions on all moneys disbursed to creditors by the trustee,” etc. Section 40a. Section 48a, relating to the compensation of trustees, provided that trustees should receive from estates which they have administered “such commissions on all moneys disbursed * * * by them, as may be allowed by the courts, not to exceed,” etc. There was a division of opinion whether or not this gave commissions to trustees on moneys received by them and disbursed by them which were derived from the sales of mortgaged property and which moneys were covered by and properly applicable to the payment of the lien. Since the amendatory act of 1910, section 48a provides that trustees shall receive “such commissions on all moneys disbursed or turned over to any person, including lienholders, by them, as may be allowed,” etc. This amendment settled the disputed questions as to the effect of the amendment of 1903, so far as trustees are concerned. See Smith, as Trustee, v. Township of Au Gres, 17 Am. Bankr. Rep. 745, 150 Fed. 257, 80 C. C. A. 145, 9 L. R. A. (N. S.) 876 (C. C. A. 6th Circuit), holding one way, and In re Cramond (D. C.) 17 Am. Bankr. Rep. 22, 145 Fed. 966, and In re Sandford Furniture Mfg. Co. (D. C.) 126 Fed. 888, 11 Am. Bankr. Rep. 414, holding the other. In 1 Fovcland on Bankruptcy, 752, § 365, it is said:
“Prior to the amendment of 1903, tile courts generally held that the trustee was not entitled to a commission on money paid to secured creditors but was limited to ‘commissions on sums to be paid as dividends’ to unsecured creditors. This rule was changed by the act of 1903, which provided for commission ‘on all moneys disbursed.’ This was held to authorize a commission on moneys derived from the sale of property subject to liens. That this construction is the true one is settled by the act of 1910 which inserts in section 48 tlie words ‘or turned over to any person, including lienholders.’ ”
In re Torchia (D. C.) 185 Fed. 576, and In re Meadows (D. C.) 199 Fed. 304, arose and were decided subsequently to the amendment of 1910. The decision in Smith v. Township of Au Gres, supra, made no reference to the other cases cited; the court saying:
“The trustee complains that the consequence of the order of the District Court is that he is thereby deprived of compensation for his services. But the proceeds of the sale have left no surplus for the bankrupt’s estate, and the township is not chargeable with ilie expenses of administering the estate. What remedy the trustee, the referee, or other officers who have rendered*416 services in the matter of the estate have against the petitioning creditors we are not called upon to inquire.”
It will be noted that, while amending section 48a so as to insure commissions to the trustee in the discretion of the court, no amendment was made to section 40, relating to the compensation of referees. It is plain that Congress has made and intended to make a distinction between the allowance and payment of commissions to trustees in the case of distributions of moneys subject to specific liens and which come into possession of the bankruptcy court by the sale of mortgaged property free and clear of' incumbrances or liens. In any event, being in a court of equity, equitable principles must be applied and govern here. The cases make a distinction between instances where the lienors consented to the sale by the court in bankruptcy and those where they did not; those where there was reasonable ground to believe there was a substantial equity for the estate and those where there was not; and those where there were honest differences and controversies over the amount due and unpaid and those where there were not. Lienors cannot equitably be required to pay expenses incurred by a trustee in an unsuccessful effort to benefit the general creditors. This subject is thoroughly discussed and was ably and intelligently considered by the Circuit Court of Appeals in the Third Circuit in Re Vulcan Foundry & Machine Co., 24 Am. Bankr. Rep. 825, 180 Fed. 671, 103 C. C. A. 637, and to an extent in Re Torchia, 26 Am. Bankr. Rep. 579, 188 Fed. 207, 110 C. C. A. 248, on appeal from the District Court. In Re Torchia, 26 Am. Bankr. Rep. 579, 188 Fed. 207, 110 C. C. A. 248, the objections to allowances were overruled as the lienors made no objection to the sale by appeal or otherwise from the order directing it, and the court said:
“To use a phrase of the Vulcan Foundry Case, they consented by necessary implication to all that was done, and their belated objections cannot now be regarded with favor.”
The syllabus in the Vulcan Foundry & Machine Co. Case, supra, is as follows:
“Property of a bankrupt, subject to two mortgages, was sold by the trustee, the order of sale providing that the second mortgage should be divested; but, if the second mortgagee became the purchaser, he should pay in $500 in cash to be applied to any expenses that might properly be charged against the fund, the balance of the mortgage to be used on the bid. The second mortgagee purchased for the amount of his mortgage. The trustee had expended certain sums for the benefit of the general creditors in preserving the estate and paying interest on the first mortgage, but ‘without the consent of the second mortgagee. These expenses, amounting to about $4,000, were charged against the purchaser. Held that, the mortgagee having purchased in compliance with and under the protection of the order of sale, the court could not afterwards change its order at the expense of the purchaser.
“The expenses having been incurred solely for the benefit of the general creditors and without the consent of the mortgagee, the lien of the mortgagee was prior thereto.”
The court said:
“It is no doubt true that the federal tribunals support the power of the District Court to sell a bankrupt’s real estate discharged of liens, and to that extent the position of a lien is undoubtedly affected, but care is always*417 taken to protect the liens by transferring them to the fund produced by Ihe sale, and their virtual ownership of the property is thus effectively admitted. It is also true that in some cases certain expenses have been c-liargod against lienholders (for example, the- expense of selling the incumbered property), and such a charge may no doubt be warranted under some conditions. *. * * But where it is sought to charge a lienholder with the cost 'of preserving and administering the incumbered property, as distinguished from the cost of its sale, it becomes necessary to consider the particular situation with great care, paying due regard to the rights of those who are in equity part owners of the property, for they cannot lie deprived of their valuable interest except in strict accordance with legal or equitable rules. Especially is this true when a lienholder stands upon his lawful rights and does not assent, expressly or by necessary implication, to the acts for which he is afterwards asked to pay. To make such charges a prior lien upon the fund produced by a sale in effect compels an owner to pay for what he has never ordered (may indeed have strenuously opposed) and, under the guise of protecting his interests, may perhaps impair them seriously. Bankruptcy proceedings take place in a court of equity, and it should always bo remembered that holders of valid liens have a statutory right to preferred treatment. If the receiver or trustee has a reasonable belief that the property is worth substantially more than the liens, it may no doubt be his duty to preserve this equity for the general creditors. But, speaking generally, since such steps as may be taken for ibis purpose are in the interest of these creditors, the cost should be paid by them and not by the lienholders, whose debts, indeed, are often perfectly secure, and receive no benefit from such effort as may be made to turn the equity into cash. We do not attempt to lay down a general rule to cover all cases. This would obviously be impracticable, but we think it is safe to say that the holders of liens are ordinarily entitled to judge for themselves what their interests may require, and that these interests cannot be affected without their consent in the effort to benefit persons whose rights are inferior to their own.”
Distribution of the proceeds of such sale will therefore be made as follows:
There will be paid, to Benjamin Baker the sum of.................$ 30 00 To Arthur H. Abell, the sum of.................................. 20 00 To Arthur H. Abell or to V. H. Multer, his attorney, the sum of.... 195 35 To Geo. A. Howard on his mortgages, the sum of.................. 1,440 01 To T. W. Stevens and Chas. E. Hills, the sum of................... 139 14 Total ......................................................$1,S25 00
If such fund has earned any interest since the sale, same will be distributed to such lienors in proportion. There will be an order accordingly.