Page:Federal Reporter, 1st Series, Volume 3.djvu/223

 216 FEDERAL REPORTER. �It may be taken as a fact in the case that the complain- ant had inowledge of the pendency of the composition pro- ceedings ; and it appears that she did not, in those proceed- ings, prove her debt, nor surrender her security, nor obtain valuation of the security, nor apply to the court to bave such valuation and proof of debt made. Upon judgment for defi- ciency being entered, execution was issued against Bassett and Beaver, and proceedings for the collection of the defi- ciency judgment were in progress, when the defendants applied to the court to have such execution and judgment set aside, or their enforcement stayed. The court granted them leave to file an answer at that stage of the case, set- ting up the bankruptcy proceedings, and a stay of execution vas ordered until the question could be submitted as to the right of complainant to proceed to enforce her judgment for deflciency. Thereupon the defendants filed an answer, set- ting up the bankruptcy proceedings, and the case has been heard upon exceptions to the sufficiency of this answer. �It appears, further, that the property covered by the trust deed was not the firm property of Bassett and Beaver, and that the indebtedness of complainant secured by the trust deed was the individual indebtedness of those parties ; and the question presented by the answer, and the exceptions thereto, is whether or not the bankruptcy proceedings consti» tute a bar to complainant's right to enforce her deflciency judgment. �It is insisted by counsel for defendants that as complainant did not surrender her security, nor obtain valuation of the same, nor apply to the bankruptcy court to have her security valued and proof of her debt made, it must be regarded that she relied wholly upon her security, and was, in legal effect, remitted to it for payment of her claim, and so that the indebtedness secured by the trust deed has been discharged by exhausfcing the security, The question, therefore, is, how was the complainant, as a secured creditor of Bassett and Beaver, affected by the composition proceedings ? Did those proceedings, in connection with the action of complainant in relation thereto, operate to release the bankrupte from any ����