Page:Federal Reporter, 1st Series, Volume 7.djvu/678

 666 FEDBRAL BEPOB'tER. �The amount of the proceeds of a subsequent sale of the propeity by the crediter is no test of such actual value, and should not be credited as such to the bankrupt, in the absence of an agreement between the parties that the creditor was to sell the property and apply the pro- ceeds towards the satisfaction of the debt. �Where a mortgage creditor purchases an equity under such circum- stances, there should, it seems, be no absolute merger of the creditor's interest. It seems that it is inequitable that he should obtain any greater advantage over the bankrupt by his purchase than would accrue to any other bidder at the sale to whom it might have been struck down, and who would have to take the property aubject to the mortgage liens. �In Bankrnptcy. �A. C. Aubrey, for assignee. �W. W. EUis, for claimant. �Choatb, D. J. This is a review of the order of the register expunging the proof of debt of one Lynch. The proof is for money lent, secured by two chattel mortgages for $7,000 and $9,000, respeetively, on certain stable property, which, it is alleged, was sold for $6,000,, which amount is in the proof cred- ited against or deducted from the said amounts. The proof, also, is upon promissOry notes given for money lent for the further sum of $5,000. The register finds that the amount of the two chattel mortgages was due from the bankrupt to Lynch ; but he also finds that Lynch became the purchaser of the property covered by the mortgages at an execution sale against the œortgagor; that Lynch took possession of the property, and used it, and afterwards sold it, and never rendered any account either of its use or of its sale to the bankrupt. Hence, he concludes that the property was taken in satisfaction of the mortgages, and he directs the proof of claim to be expunged. He finds nothing specifically about the notes ; but it may be inferred, from the expunging of the proof of debt, that he found that the second chattel mortgage was given to secure the same debt which the notes were given to secure, �I am unable to concur in the conclusion of the register as to the notes. It is true that the bankrupt testified that the second mortgage for $9,000 covered all bis indebtedness to Lynch at that time. But this is denied by Lynch, and not ��� �