Appellant insists that the decretal judgment against Holmes on his stock liability in favor of the creditors cannot be set off against the liability of the corporation on these bonds in appellant’s hands, even with notice, because the mutuality necessary to a set-off, either in law.or equity, does not exist; that the bonds in question are negotiable instruments, and as they were purchased for value by appellant before maturity he took them free from any set-off that could be urged against the liability of Holmes on his stock. We have gone over the authorities cited in the very exhaustive briefs of counsel, and would be inclined to agree with these contentions of appellant if these bonds had been assigned to him before the receiver was appointed by the circuit court for the Pacific Railway Company. Few authorities have been cited (and we have been able to find no others in our own research) which are similar, as to facts, to the case now under consideration. The cases in which the facts are most nearly similar are Ex parte Deey, 2 Coxe, 423, and Ex parte Rogers, Buck’s Bankruptcy Cas. 490. These decisions are against the contention of appellant.
Counsel argue that .the decisions in bankruptcy matters cannot be held conclusive in proceedings not under the bankruptcy laws. While it is true they may not be conclusive, still the reasoning in these cases, not being based upon the special wording of the Bankrupt act, must necessarily have great weight as to the general questions of law involved .therein.
Appellant practically admits in his brief that if Holmes had remained the owner of these bonds at the time the decretal judgment was rendered against him, then a court of chancery could compel him to pay his judgment on stockholder’s liability before it would allow him any dividend on these bonds. We have held that when a court of equity acquires jurisdiction of the assets of an insolvent corporation for the purpose of administering upon them, it will administer them upon the principle that equality is equity, and will, distribute such assets ratably among all the creditors, having in mind the legal rights and preferences existing before the jurisdiction was acquired. (Blair v. Illinois Steel Co. 159 Ill. 350.) The rights and liabilities of the creditors and debtors of the insolvent corporation are fixed and determined at the time of the appointment of the receiver. All the defenses that could have been made against the holders of these bonds at the time the receiver was appointed can certainly be made against anyone who purchased .them with notice after said receiver had been appointed. The bankruptcy cases heretofore referred to, hold that these defenses can be made in bankruptcy cases even against a bona ñde purchaser without notice. While the precise point does not seem to have been, decided by any of the courts of .this country, the following decisions, which are the most nearly in point of any called to our attention, are clearly against appellant’s position: Colt v. Brown, 78 Mass. 233; Balch v. Wilson, 25 Minn. 299; King v. Armstrong, (Ohio,) 34 N. E. Rep. 163; Richmond v. Irons, 121 U. S. 27.
To permit Holmes to dispose of these bonds of the insolvent company for full value after the receiver had been appointed and escape the payment of his stock liability, while the purchaser of the bonds, with full notice of all the facts at the time of the purchase, is permitted to collect full dividends on the bonds from the estate, would be contrary to the fundamental principles of equity that have always been invoked in the distribution of the assets of an insolvent corporation.
Finding no reversible error in the record, the judgment of the Appellate Court will be affirmed.
Judgment affirmed.