The opinion of the court was delivered by: BYERS
This is a motion to confirm the order of a referee in bankruptcy granting the motion of the trustees to expunge the claim of Charles H. Bruns.
The claimant, at the time of the filing of the involuntary petition (December 6, 1933) was the owner of a bond and mortgage in the sum of $30,000.00, made in 1933 by Omnis Corporation, the payment of which had been guaranteed by the bankrupts, in the following form:
"J. Lehrenkrauss & Sons, as guarantors, in consideration of the sum of One Dollar and other good and valuable considerations, do, subject to the conditions annexed hereto, guarantee to hereinafter called the mortgagee, the payment of the principal secured by the mortgage described below, and the bond to which said mortgage is collateral; and interest on said principal at the rate of per centum per annum payable .
"It is agreed that the guarantors are to retain as compensation for their guarantee all interest collected in excess of the guaranteed rate.
"It is further understood and agreed that the said mortgagee by accepting the mortgage or the assignment of the mortgage hereby guaranteed and in accepting this guarantee does agree to all of the terms and conditions* set forth and annexed hereto and further agrees that this guarantee shall supersede and render null and void any guarantee previously given.
"The bond and mortgage to which the above guarantee applies was made by and on which there is now due the sum of $ dated and covers premises
The proof of claim recites that the claimant, as trustee of an estate, makes the claim in behalf of the estate, and that the bankrupts "were, on or before the time of the filing of the petition in bankruptcy herein, and still are, justly and truly indebted to the said claimant in the sum of $30,000. That the consideration of said debt is as follows:
"(A) That for a good and valuable consideration, including the retention of a portion of the income thereon, the above bankrupts, J. Lehrenkrauss & Sons, executed and delivered to the above named claimant their guarantee in writing in and by which said bankrupts, J. Lehrenkrauss & Sons, guaranteed the payment to the claimant of the principal amount and interest of the following * * * bonds and mortgages:
"Bonds and Mortgages
or Owner Location Amount
"Omnis Northwest corner of 5th $30,000.
Corporation Ave. and 42nd Street,
"That said bankrupts have defaulted in the payment of the principal and interest guaranteed by them upon the aforementioned mortgage participation certificates now owned by the claimant herein and have defaulted in the terms and provisions of the said instruments of guarantee by omitting to pay to the claimant herein the principal and interest that has accrued upon the bonds and mortgages aforesaid, also owned by the claimant herein; and that said bankrupts are, by virtue of said instruments of guarantee, indebted to the claimant for all principal and interest not yet due that may accrue and become payable upon the bonds and mortgages aforesaid."
Then follow certain conventional matters, to the effect that no part of the claim has been paid, and that there are no offsets or counterclaims except the market value of the bond and mortgage (or the net fair market value of the property covered thereby) etc. That no security for the said debt, except as aforesaid, has been received, and that no judgment has been rendered, nor any note or evidence of the debt been received except as stated.
"Nothing herein contained shall be deemed a waiver of any rights or remedies held by the claimant against the aforesaid * * *, bonds and mortgages, * * * and the ...