The law provides:
"SEC. 68. Set-offs and counterclaims. - (a) In all cases of mutual debts or mutual credits between the estate of a bankrupt and a creditor the account shall be stated and one debt shall be set off against the other, and the balance only shall be allowed or paid.
170. There must be good faith both on part of debtor and creditor.
"(b) A set-off or counterclaim shall not be allowed in favor of any debtor of the bankrupt which (1) is not provable against the estate; or (2) 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."
The set off of mutual debts and credits gives the creditor against whom a bankrupt has a claim an advantage. "A set-off may be described as a sort of a lawful preference." 171
Set-offs to be allowed must be mutual.
171. In re Pottier & Stymus Co., 262 Fed. 955.
172. In re Cross, 272 Fed. 39.