of the property that he may think proper." See, also, Walden's Adm'r v. Dixon, 5 T. B. Mon, 170.

In the case of Sheegog v. Perkins, 4 Baxt. 273-281, the court said: "In order to make this gift complete, it must appear absolutely and beyond doubt that the donor intended to part with his dominion over the property. If the intention to give * * be not clearly made out, it cannot be supported; and if, upon the facts, the matter be enveloped in doubt, that doubt must prevail against the hypothesis of the case."

Now, it will be observed in all of the cases cited, the principle is distinctly recognized that, so long as the donor retains control and dominion of the property, there is no gift inter vivos. In the present case the bill distinctly states that the complainant was to have the money in the event that George Volmer did not return, and hence it was within the power of George Volmer, upon his return, to revoke this gift at any time. The gift was not, therefore, complete and executed, and hence did not take effect in præsenti. The donee's dominion and control over the gift was entirely dependent upon the contingency of the nonreturn of the donor, and that matter was left in uncertainty. The donee manifestly had no complete and executed title to the gift so long as there was a contingency dependent upon the return of the donor. It is well settled that stronger, more cogent, and stringent proof is required to establish a gift causa mortis than a gift inter vivos, because the former donations amount to a revocation pro tanto of written wills, and, not being subject to the forms prescribed for nuncupative wills, are of a dangerous nature, and open the door of fraud and perjury. Sheegog v. Perkins, 4 Baxt. 273-281; Brunson v. Brunson, Meigs, 630, 641. It is not seriously contended that a gift causa mortis could be made to arise upon the facts stated in the bill, but the contention of complainant's counsel is that the facts make out a gift inter vivos.

We have carefully reviewed the elaborate extracts from authorities found in the complainant's brief to sustain his contention, but are of opinion the principle announced in those cases is in harmony with the rule herein announced, and do not sustain the position of the complainant. It results that the decree of the chancellor must be affirmed.

ey paid by the bankrupt on the note within four months of his adjudication, by reason of the fact that there are solvent indorsers on the note.

3. Section 68 of the bankrupt law (Act July 1, 1898, 30 Stat. 565, c. 541 [U. S. Comp. St. 1901, p. 3450]), which provides that, "in all cases of mutual debts or mutual credits between the estate of the bankrupt and the creditor, an account shall be stated and one debt shall be set off against the other and the balance only shall be allowed or paid," etc., does not authorize the creditor, in a suit against him by the trustee to recover an unlawful preference, to set off the debt on which the alleged preferential payment was made.

4. Section 57g of the bankrupt act (Act July 1, 1898, 30 Stat. 560, c. 541 [U. S. Comp. St. 1901, p. 3443]), which provides that "the claims of creditors who have received preferences shall not be allowed unless such creditors shall surrender their preference," applies though the preference was innocently received.

Appeal from Chancery Court, Madison County; A. G. Hawkins, Chancellor.

Action by Charles G. Harris, trustee, against the Second National Bank. Decree for complainant, and defendant appeals. Affirmed.

Hays & Biggs, for appellant. Taylor & Biggs and Caruthers & Mallory, for appellee.

MCALISTER, J. Harris, as trustee in bankruptcy of Rosa D. Prewitt, exhibited this bill against the Second National Bank of Jackson, to recover the sum of $3,100 alleged to have been paid said, bank by Mrs. Prewitt in discharge of a pre-existing debt, averring that said payment was an unlawful preference within the meaning of the bankrupt act. The chancellor pronounced a decree in favor of the complainant. Defendant appealed, and has assigned errors.

It appears from the record that prior to the 18th of September, 1900, Mrs. Rosa D. Prewitt had been conducting a dry goods business in the city of Jackson, under the firm name and style of J. J. Prewitt & Co. Mrs. Rosa D. Prewitt alone constituted the firm, although her husband, J. J. Prewitt, was her active business manager. The business had been carried on in Jackson for at least 22 years before the firm was adjudged bankrupt. Mrs. Prewitt transacted her banking business with the Second National Bank, and became indebted to said bank in the sum of $3,500 by note, of which J. T. Rushing, J. T. Jones, and R. E. Prewitt were sureties. Mrs. Prewitt was also allowed the privilege of overchecking her account to the amount of $500 at the date of these transactions, and, in addition to the note already stated, she was indebted to the bank by overcheck in the sum of about $600, and also by note for $795, indorsed by J. T. Rushing. It appears that in the summer of 1900 a payment of $1,000 was made on the $3,500 note, reducing it to $2,500. In July or August of that year Mrs. Prewitt, through her husband, made application to the bank to increase her line of overcheck to the amount of $800, which request was granted, but very

soon thereafter (in August) this concession was withdrawn, and Mrs. Prewitt was requested by the cashier of the bank not to exceed the former limit of $500. It appears at this time Mrs. Prewitt was largely indebted, and, being pressed by her creditors, was very anxious to obtain an additional line of overcheck, but the matter, after being submitted to the finance committee of the bank and investigated, was declined. Very soon thereafter Mrs. Prewitt, after consultation with Mr. Polk, cashier of the bank, sold her entire stock of merchandise, comprising her entire assets, to one R. E. McKinney, for the sum of $3,100, and this money she turned over to the Second National Bank, paying off the overcheck of $600, and the balance of $2,500 on the note. Within a few days thereafter her creditors forced her into involuntary bankruptcy, and she was duly adjudged a bankrupt. The trustee appointed under said proceedings thereupon instituted this action to recover the sum of $3,100 paid to the bank as an unlawful preference.

Section 60b of the bankrupt law (Act July 1, 1898, 30 Stat. 562, c. 541 [U. S. Comp. St. 1901, p. 3445]) provides if the bankrupt shall have given a preference within four months before the filing of the petition, or after the filing of the petition and before the adjudication, and the person receiving it or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may recover the property or its value from such person. It is insisted on behalf of the bank that there is no evidence in the record showing that the bank or any of its officers knew or had reasonable cause to believe that Prewitt & Co. were insolvent at the time the note and overcheck were made. We are constrained to believe from the proof that the cashier, at the time he received the payment, was fully aware of the insolvency of this debtor, and that the money received from the sale of the stock of merchandise constituted the entire assets belonging to the bankrupt. The record shows that the cashier had been consulted by Prewitt with reference to obtaining an extension of time from the creditors of Prewitt & Co. living in St. Louis and Louisville. The cashier was also aware that Mrs. Prewitt had asked an extension of time and additional line of overcheck with the Second National Bank, which that bank, on instruction of the finance committee, had declined to grant. The proof further shows that, after Mrs. Prewitt had failed to get an additional line of credit from the bank, she offered to sell the stock of goods to the bank, but that it declined to buy, and the cashier admits that, when the bank declined to make a further advance, he said to Mr. Prewitt: "I believe it would be best to make a general assignment and get matters settled up." Surely, in view of all these facts, the bank had, in the language

of the bankrupt act, reasonable cause to believe a preference was intended.

It is argued, however, that the bank was constrained to accept payment of the balance due on the $3,500 note, or thereby release the sureties. The argument is that, the note due the bank being amply secured by personal indorsers, the bank was not the party to be benefited within the meaning of said section, but that the trustee ought to have brought this suit against J. T. Jones, J T. Rushing, and R. E. Prewitt, the sureties on said note, as the parties who had been benefited. Section 60b of the bankrupt law provides that a recovery may be had by the trustee from the party receiving the preference or to be benefited thereby. The question now made was before the Supreme Court of the United States, under the act of 1868 (15 Stat. 227, c. 258), in the case of Bartholow v. Bean, 18 Wall. 635, 21 L Ed. 866. It was argued in that case that the bank was not benefited by the payment, because it was secured by a solvent indorser, and that it was constrained to receive the payment when tendered, else the sureties would have been discharged. Mr. Justice Miller, in delivering the opinion of the court. said, in part, as follows: "Does the fact that Wilcox, the indorser, was solvent, and was liable, change the rule as to payment as a preference? The statute in express terms forbids such preference, not only to an ordinary creditor of the bankrupt, but to any person who is under any liability for him: and it not only forbids payment, but it forbids any transfer or pledge of property as security to indemnify such persons. It is therefore very evident that the statute did not intend to place an indorser or other surety in any better position in this regard than the principal creditor, and, if the payment in the case before us had been made to the indorser, it would have been recoverable by the assignee. If the indorser had paid the note, as he was legally bound to do, when it fell due, or at any time afterwards, and then received the amount of the bankrupt, it could certainly have been recovered of him: or if the money had been paid to him directly instead of the holder of the note, it could have been recovered; or if the money or other property had been placed in his hands to meet the note or to secure him, instead of paying it to the bankers, he would have been liable. He would not, therefore, have been placed in any worse position than he already occupied, if the holders of the note had refused to receive the money of the bankrupt. It is very obvious that the statute intended, in pursuit of its policy of equal distribution, to exclude both the holder of the note and the surety or indorser from the right to re ceive payment from the insolvent bankrupt It is forbidden. It is called a fraud upon the statute in one place, and an evasion of it in another. It is made by the statute equally the duty of the holder of the note and of the

indorser to refuse to receive such a payment. Under these circumstances, whatever might have been the right of the indorser, in the absence of the bankrupt law, to set up a tender by the debtor, and a refusal of the note holder to receive payment, as a defense to a suit against him as indorser, no court of law or equity could sustain such a defense, while that law furnishes the paramount rule of conduct for all the parties to the transaction, and when in obeying the mandates of that law the indorser is placed in no worse position than he was before; while by receiving the money the holder of the note makes himself liable to a judgment for the amount in favor of the bankrupt's assignee, and loses his right to recover either of the indorser or of the bankrupt's estate. We are of opinion, therefore, notwithstanding the hardship of the case, which is more apparent than real, that the payment must be held to be a preference within the bankrupt law, and that the judgment of the court below, that the assignee should recover it, must be affirmed."

The third assignment of error is that the court should also have adjudged that, inasmuch as Prewitt & Co. were insolvent, the bank had the equitable right of mutual offset, and the trustee could not recover this amount from the bank while the bankrupt was indebted to it for a larger amount. This assignment of error is based upon section 68 of the bankrupt law (30 Stat. 565, c. 541 [U. S. Comp. St. 1901, p. 3450]), as follows: "(a) In all cases of mutual debts or mutual credits between the estate of the bankrupt and the creditor, an account shall be stated and one debt shall be set off against the other, and the balance only shall be allowed or paid. (b) A set off or counter claim shall not be allowed in favor of any debtor of the bankrupt which is not provable against the estate or was purchased 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." We are of opinion, however, that this record does not present a case of mutual debts and credits, within the meaning of the sections referred to. The fact is the estate of the bankrupt herein is not indebted to the bank, that indebtedness having been paid off and discharged. As said in Loveland on Bankruptcy, 127: "Under the mutual credit clause, a creditor having a preference cannot set off an individual debt in a suit by the trustee to set aside such preference. The reason is that the debts are not mutual nor in the same right. The preference which is being avoided is a debt between the preferred creditor and the general creditorsnot the bankrupt. The individual debt is between the preferred creditor and the bankrapt. The trustee holds one of the debts as the representative of the general creditors,

and the other as the representative of the bankrupt." The only set-off provided by the bankrupt law in such cases is as follows: "If a creditor has been preferred, and afterwards in good faith gives the debtor further credit without security of any kind for prop erty which has become a part of the debtor's estate, the amount of such new credit remaining unpaid at the time of the adjudication in bankruptcy may be set off against the amount which would otherwise be recoverable from him." The mutual debit and credit clause invoked by defendant's counsel herein has reference to a case where the third party is indebted to the bankrupt, and the bankrupt is indebted to that third party. Now, before the third party can be called on to account for its indebtedness to the bankrupt, a balance of mutual debits and credits must be struck, and, if there is a balance due the bankrupt, then the third party becomes liable for its payment. The cases cited, Re Little (D. C.) 110 Fed. 621, and Re Myers (D. C.) 99 Fed. 691, are not applicable in the present instance. It appeared in each case that the bankrupt, at the time the petition was filed, had money on deposit in the bank. He was also indebted to the bank. It is well settled that the relation of the bank to the depositor is that of debtor and creditor, and the bank is the debtor of the depositor. In each case, the trustee undertook to recover from the bank the amount on deposit in the bankrupt's name as a debt owing by the bank to the bankrupt's estate, and the bank claimed the right to set off against the deposit the amount the bankrupt owed it, and it was allowed. This is not a case in which there were mutual debits and credits between the bankrupt and the bank. This is simply a case in which the bankrupt made a preferential payment to the bank, whereby the bank, in contravention of the bankrupt law, received a larger percentage on its debt than other creditors. Such a preference, under the bankrupt act, is voidable at the election of the trustee. If, as contended by learned counsel for the bank, the bank is now entitled to set off against the claim of the trustee the indebtedness of the bankrupt to the bank, it would virtually wipe out the section of the bankrupt act making unlawful preferential payments, and thereby defeat the object of the bankrupt law, which is to secure an equal distribution of the assets of the failing debtor. Moreover, debts or credits, in order to be set off, must be such claims as are provable in bankruptcy. The authorities are that the claim of a creditor who has received a preference is not provable in bankruptcy unless the preference be surrendered. Section 57g of the bankrupt act (30 Stat. 560, c. 541 [U. S. Comp. St. 1961, p. 3443]) provides as follows: "The claims of creditors who have received preferences shall not be allowed unless such creditors shall surrender their preference." The rule ap

1. Objection to a bill of interpleader that it cannot be maintained because complainant asserts an interest in the fund to the extent of compensation for his services cannot be made for the first time on appeal.

2. A bill by a trustee for instructions may propound questions involving not only his duty, but also the determination as to the title of him and others.

3. An estoppel, to be available, must be pleaded.

4. The stockholders of two corporations agreed to a consolidation, one to take over all the property of the other, to issue stock and bonds in payment thereof, to assume all the debts of the other, and to issue and set aside $100,000 of bonds for the purpose of retiring $96,000 of outstanding bonds of the absorbed corporation, any surplus of the $100,000 to be divided between the then stockholders of the two corporations. Held, that there was a valuable consideration for such disposition of the surplus, incorporated in a resolution of the absorbing corporation pursuant to the agreement.

5. A disposition of property of a corporation, not objected to by any stockholder or creditor, cannot be objected to by any, unless by the state in a proper proceeding.

6. A transfer of all the stock of a corporation formed by the consolidation of two corporations pursuant to an agreement of the stockholders, embodied in a resolution of the absorbing corporation, that it should issue and set aside $100,000 of bonds to retire $96,000 of bonds of the absorbed corporation, any surplus of the $100,000 to be divided between the then stockholders of the two corporations, does not, by implication, pass the interest of the stockholders in the surplus as an incident to the stock, the right to participate in which was reserved to them as individuals.

7. The right of stockholders to a surplus under a resolution of a corporation purchasing the property of another that it should issue and set aside $100,000 of bonds to retire $96,000 of bonds of the other, any surplus of the $100,000 to be divided between the then stockholders of the two corporations, was not abandoned because the mortgage executed by the absorbing corporation to secure its bonds, and which was approved and confirmed by the stockholders of both corporations, made no mention of the surplus.

8. The term "surplus" in the resolution of a corporation, on purchasing the property of another, that it should issue and set aside $100,000 of bonds to retire $96,000 of bonds of the absorbed corporations, refers only to the excess of four bonds, and does not include the subsequent appreciation in value of the other bonds before the old bonds were retired.

Appeal from Chancery Court, Shelby County; F. H. Heiskell, Chancellor.

3. See Estoppel, vol. 19, Cent. Dig. § 300.

Bill by S. P. Read, trustee, against the Citizens' Street Railroad Company and others. From the decree, or some part of it, all parties appeal. Modified.

Carroll, McKellar & Bullington, for complainant. Turley & Turley, H. D. Minor, Geo. H. Gillham, Jno. H. Watkins, S. M. Neely, Thos. M. Scruggs, and J. L. Goodloe, for defendants.

MCALISTER, J. The questions presented upon the record relate, first, to the right of a trustee to compensation, including reasonable counsel fees, and, second, the right of ownership in a certain surplus arising under the administration of a trust-whether it goes to defendant street railroad company or to the original stockholders in its predecessor companies. The facts necessary to be stated are that in 1886 two rival street railroad companies were being operated in the city of Memphis, one known as the Memphis City Railroad Company and the other the Citizens' Street Railroad Company. A consolidation of the two companies was agreed upon by the respective stockholders; that is to say, it was agreed that the Citizens' Street Railroad Company should purchase and take over the entire property and franchises of the Memphis City Railroad Company, excepting that the latter company should retain its corporate existence. The capital stock of the Memphis City Company was $500,000, and that of the Citizens' Company $250,000. Each company at the time had an outstanding bonded indebtedness. That of the Memphis City Company amounted to $96,000, while that of the Citizens' Street Railroad Company was $200,000. The stockholders of the Citizens' Company adopted resolutions, which were accepted by the Memphis City Company, providing that the Citizens' Company should increase its capital stock from $250,000 to $1,000,000, and issue $1,000.000 of 6 per cent. bonds. One-half of the stock ($500,000) and one-half of the new bonds ($500,000) were to be given to the stockholders of the Memphis City Company in payment of the purchase price of its properties and franchises. The resolution then recited, viz.: "The remaining $500,000 of bonds will be used as follows: $200,000 will be placed in the hands of S. P. Read, of Memphis, Tennessee, as trustee, for the purpose of retiring the $200,000 of first mortgage bonds of the Citizens' Company now outstanding, and $100,000 for the purpose of retiring $96,000 of first mortgage bonds of the Memphis City Railroad Company now outstanding, any surplus of the $100,000, should there be a surplus, to be equally divided between the pres ent stockholders of the Memphis City and the Citizens' Street Railroad Companies, and $100,000 in payment of money and property advanced by the stockholders of the Citizens' Street Railroad Company, aforesaid, and $100,000 to be retained in the treasury,

to be used for permanent improvements." It was then provided that the remainder of the new issue of stock, $250,000, should be apportioned among the original stockholders of the Citizens' Company, in order to equalize the ownership of stock among the stockholders of each company. It appears that this contract was formally carried out, and a deed executed by the Memphis City Company conveying all its properties to the Citizens' Company. The Citizens' Company increased its capital stock to $1,000,000, and issued the $1,000,000 of bonds, in accordance with the provisions of the resolution, and the stock and bonds were distributed among the stockholders as stipulated. The $200,000 of outstanding first mortgage bonds owing by the Citizens' Company were exchanged for new bonds. It appears, however, that the $96,000 of first mortgage bonds owing by the Memphis City Company were not exchanged. Only six of said bonds were funded. It appears that this series of bonds were worth more on the market than the new bonds. Besides, they were inaccessible, and for these reasons were not retired. Hence it appears that $94,000 of the new bonds were left in the hands of S. P. Read, trustee, for the purpose of funding or retiring $90,000 of Memphis Company bonds, due September 1, 1901, and said trustee continued to hold said bonds up to the bringing of this suit. It appears that in December, 1888, the stockholders of the amalgamated companies sold all their stock to Holmes, Honore & Hinckley, of Chicago, for $1,000,000, its par value. In the year 1897 the Citizens' Company (by their assignees, Holmes, Honore, & Hinckley) conveyed all its property to A. M. Billings, who organized the present company (the Memphis Street Railroad Company), for the consideration of $200,000 and the assumption of all indebtedness. It now appears that the bonds left in the hands of S. P. Read are worth a premium of 25 cents on the dollar, and are more than sufficient to liquidate and retire the $90,000 of underlying bonds of the Memphis City Company due September 1, 1901, and will leave a surplus of $25,000. principal controversy now presented is over this surplus.

The

The present bill is filed by S. P. Read, trustee, in which it is alleged that Mr. Jones, representing the Memphis Street Railway Company, the successor of the two old companies, had called upon him, and stated, in effect, that his company claimed the right, upon the maturity of the $90,000 unpaid Memphis City bonds, to pay off said bonds, and then to take from him, the trustee, the $94,000 of Citizens' bonds so held in trust; that shortly after this Mr. Napoleon Hill stated to him that, as one of the stockholders of the Citizens' Company, he (Hill) would insist upon his right to a pro rata of the surplus in the trustee's hands over and above what was required to retire the old Memphis 75 S.W.-67

City bonds; that about the same time the attorney for the executrix of Col. Frayser's estate warned him (the trustee) that the executrix would look to him for the share of said surplus belonging to her decedent's estate. The bill then averred that the bonds in his hands, of the par value of $94,000, were worth in the market a premium of about 25 per cent., so that the value of the bonds in his hands exceeded the amount necessary for the retirement of the underlying bonds by nearly $25,000; that he was advised that this excess constituted a "surplus" within the meaning of the resolution of December 29, 1886, creating the trust in him; that he was advised that he was not bound to settle and decide upon the conflicting claims to said surplus already stated, but that he was entitled to file this bill, and have the court instruct him as to his duties under said trust. Accordingly the trustee presented the history of the trust and the facts connected with it, and asked that he be instructed as to the disposition of said surplus and as to his duties under the trust. All persons having an interest in the matter were made defendants, and the bill prayed that they be required to come in and propound their claims to the surplus. The trustee also averred that he was entitled to compensation as trustee and to counsel fees, and asked that the same be fixed, and made a charge upon the funds in his hands. The various stockholders of the two old companies, who were such at the time of the resolution of December 29, 1886, answered the bill, and set up their respective claims to the surplus. The defendant railway companies filed an elaborate joint and separate answer, in which it is claimed that the surplus in question belongs to the present company, the Memphis Street Railway Company. It avers that the intention of the parties, upon the deposit of the bonds with Mr. Read, was that the bonds should be exchanged bond for bond, and that this was done in the case of six of the bonds. It avers as to the remainder of said bonds deposited with Mr. Read (amounting to $94,000 face value): "The same have never become, and are not now, outstanding obligations of the Citizens' Street Railroad Company, or of its successor, the Memphis Street Railway Company," and "that the outstanding bonds of the Memphis City Railroad Company, dated September 1, 1881, which were never retired, and which the holders thereof refused to retire by exchanging the same for a similar amount of bonds dated January 1, 1887, of the Citizens' Street Railroad Company, have become, by reason of the conveyances aforesaid and the facts in this answer set up, the obligations and indebtedness of the Memphis Street Railway Company. And this respondent, the Memphis Street Railway Company, alleges that it is ready and willing, and hereby offers, to pay said 90 bonds, aggregating the