4 Ibid.

5 Re Belknap, 129 Fed. 646; Remington on Bankruptcy, § 108.

6 Re Drummond, 1 N. B. R. 231; Langley v. Perry, 2 N. B. R. 596; Re Goldschmidt, 3 N. B. R. 164; Re Wilmington Hosiery Co., 120 Fed. 179, 9 Am. B. R. 581; Lansing Boiler Works v. Ryerson, C. C. A., 128 Fed. 701, 11 Am. B. R. 558; Re Belknap, 129 Fed. 646. The intent must be determined by looking at what the debtor says and does and the effect of the same. Ecford v. Greely, 6 N. B. R. 433. The fraud or innocence of the person to whom the transfer is made is immaterial. Re Rome Planing Mill, 96 Fed. 812; Re Drummond, 1 N. B. R. 231. The presumption is against fraud, Davis v. Stevens, 104 Fed. 235, 4 Am. B. R. 763; Remington on Bankruptcy, § 111; but an intent to defraud will be presumed from the commission of an act, the actual or necessary effect of which is to produce it. Bean-Chamberlain Mfg. Co. V. Standard Spoke & Nipple Co., C. C. A., 131 Fed. 215, 12 Am. B. R. 610; Remington on Bankruptcy, § 112; Re Glazier, 195 Fed. 1020. It has been held: that the intent may exist and the transfer be voidable, although full consideration was paid, Re Pease, 129 Fed. 446, 12 Am. B. R. 66; and that it is not an intent to hinder, delay or defraud creditors, when the intention is to avoid distribution in the Court of Bankruptcy and bring about its distribution in a court of a State,

It has been held that, in de

Re Wilmington Hosiery Co., 120 Fed. 179, 9 Am. B. R. 581; contra, Re Salmon & Salmon, 143 Fed. 395, 16 Am. B. R. 122; or to use the proceeds of a cash sale of all the vendor's property to pay certain creditors in preference to others, although this may be a preferential intent, Githens v. Shiffler, 112 Fed. 505, 7 Am. B. R. 453; Re Belknap, 129 Fed. 646, 12 Am. B. R. 326. It has been held: that a conveyance by a debtor of all his property, which exceeded in value all his debts, in consideration of an agreement that the grantee should pay the debts and support him for the rest of his life, was not per se fraudulent, Re Cornwall, 9 Blatchf. 114, 6 N. B. R. 305; nor a sale by an insolvent to raise money to pay off a creditor, who threatened criminal proceedings, although the creditor rejected the payment, Re Belknap, 129 Fed. 646, 12 Am. B. R. 326; and that permitting the appointment of a receiver of a corporation by a State court is not a transfer of property for the purpose of defrauding creditors, Re Baker-Ricketson Co., 97 Fed. 489. But see infra, § 625. Where the debtor gave a fictitious name and procured an attachment thereupon, for the purpose of preventing an attachment by an actual creditor; it was held that a fraud was committed, although his real object was to use the money to pay other creditors. Re Williams et al., 1 Lowell 406. Where an insolvent firm was dissolved and the assets

9

7 Johansen Bros. Shoe Co. V. Alles, C. C. A., 197 Fed. 274.

8 30 St. at L. 544, 546, § 3; quoted supra, § 620.

9 Re Pease, 129 Fed. 446, 12 Am. Br. 66; Re Larkin, 168 Fed. 100. See Lansing Boiler Works v. Ryerson, C. C. A., 128 Fed. 701, 11 Am. B. R. 558.

10 30 St. at L. 544, 546, § 3c; quoted supra, § 620.

§ 622. 130 St. at L. 544, 546, § 3. "A preference is a transfer made or seizure by legal proceedings, procured or suffered by an insolvent debtor, of some part of his property, the effect of which is to enable a creditor to obtain a greater proportion of his debt than some other creditor of the same class of priority." Remington on Bankruptcy, § 120. There must be affirmative action with intent to prefer the creditor. "As the law now is, a creditor who relies on the

commission of the second act must show affirmative action on the debtor's part and must prove that it was taken with intent to prefer the creditor. If such showing is made and the effect of what the debtor did was to give a preference, the commission of the second act of bankruptcy has been established. It may be that what is proved constituted a part of a chain of events which culminated in the commission of the third act also. They have features in common. Neither of them can be committed unless the debtor is insolvent nor unless a preference has actually resulted from it. In other respects they are radically different.'' Re Truitt, 203 Fed. 550, 553; Fulkerson v. Shaffer, C. C. A., 217 Fed. 358. A confession of judgment may constitute such an act of bankruptcy. Ibid. Re Musgrove Mining Co., 234 Fed. 99. It has been held that a transfer of property by an insolvent with intent to prefer a creditor is not an act of bankruptcy unless the transferor has then some other creditor whose claim could be proven in bankruptcy. Beers v. Hanlin, 99

Fed. 695. The fact that the transfer was made under a threat of criminal prosecution or other coercion does not prevent its being an act of bankruptcy. Remington on Bankruptcy, $131, citing Clarion Bank v. Jones, 21 Wall. 325, 22 L. ed. 542; Sawyer v. Turpin, 91 U. S. 114, 23 L. ed. 235; Giddings v. 'Dodd, 1 Dillon 115; Strain v. Gourdin, 2 Woods 380; Arnold v. Maynard, 2 Story 349. Knowledge on the part of the debtor of his insolvency is essential to an intent on his part to make a preference. Re Freeman Cotting Coat Co., 212 Fed. 548; Remington on Bankruptcy, § 131. Such knowledge upon his part may be presumed, Wager v. Hall, 16 Wall. 584, 21 L. ed. 504; Re Bloch, C. C. A., 109 Fed. 790, 6 Am. B. R. 300; Re Gilbert, 112 Fed. 951, 8 Am. B. R. 101; but the presumption is rebuttable, Re Rome Planing Mill, 96 Fed. 812, 3 Am. B. R. 123; Re Bloch, C. C. A., 109 Fed. 790, 6 Am. B. R. 300; Re Gilbert, 112 Fed. 951, 8 Am. B. R. 101. And if the debtor establishes his want of knowledge and was influenced to believe that he was solvent, he rebuts the presumption. Re Rome Planing Mill, 96 Fed. 812, 3 Am. B. R. 123; Re Gilbert, 112 Fed. 951, 8 Am. B. R. 101; Merchants' Nat. Bank v. Cole, C. C. A., 149 Fed. 708, 18 Am. B. R. 44. The intent may be shown by circumstantial evidence. Traders' Bank v. Campbell, 14 Wall. 87, 20 L. ed. 832; John Naylon & Co. et al. v. Christiansen Harness Mfg. Co., C. C. A., 158 Fed. 290; Re Minard, 156 Fed. 377. The transfer of all a person's property, in order to pay a debt, creates a presumption of an intent to prefer, where there are other creditors un

provided for, Wager v. Hall, 16 Wall. 584, 21 L. ed. 504; Boyd v. Lemmon & Gale Co., C. C. A., 114 Fed. 647, 8 Am. B. R. 81; Re Hughes, 183 Fed. 872; and so may be the transfer for similar purposes of a large part of his property, Wager v. Hall, 16 Wall. 584, 21 L. ed. 504; Re Pinson & Co., 180 Fed. 787. It has been held that the payment of some creditors in full and the failure to pay others, Johnson v. Wald, C. C. A., 93 Fed. 640, 2 Am. B. R. 84; Rex Buggy Co. v. Hearick, C. C. A., 132 Fed. 310, 12 Am. B. R. 726, or the transfer of property to some creditors without leaving enough to pay others a like proportion of the amounts due them, Re McGee, 105 Fed. 895, 5 Am. B. R. 262; or to a trustee for the benefit of certain creditors, thus giving him a preference over the others, Fulkerson v. Shaffer, 217 Fed. 358; when made by a debtor with knowledge of his insolvency is conclusive proof of the intent to prefer. The intent to prefer may also be inferred from the transfer by an insolvent debtor of a large portion of his property to a single creditor, Re Rome Planing Mill, 96 Fed. 812, 3 Am. B. R. 123. It was held that a preferential payment first disclosed during the bankruptcy proceedings, nearly seven months after its occurrence, was unavailable as an act of bankruptcy. Re Perlhefter, 177 Fed. 299. The payment of small sums to some creditors in the usual course of trade, with the apparent effort to keep the business going, does not raise the presumption of an intent to prefer. Re Douglas Coal & Coke Co., 131 Fed. 769, 12 Am. B. R. 539; Macon Grocery Co. v. Beach, 156 Fed. 1009; Re Columbia Real

Estate Co., 205 Fed. 677. But see Re Foley, 140 Fed. 300; Re Stovall Grocery Co., 161 Fed. 882; Re Morgan & Williams, 184 Fed. 938; nor, it has been held, the return within one day of money advanced to a corporation to meet its pay-roll. Re Brown Commercial Car Co., C. C. A., 227 Fed. 387. The following acts have been held to be transfers with the intent to prefer creditors: A transfer in payment of a debt of personal property sufficient in value to satisfy it in full, Johnson v. Wald, C. C. A., 93 Fed. 640. Cf. Re Grant, 106 Fed. 496, 30 St. at L. 544, §1; the conveyance to a creditor of personal property of greater value than the debt, the debtor receiving the difference in cash, Ibid; the transfer of a merchant's stock in trade to a creditor, part of the consideration being payment by a creditor to a bank to meet the debtor's overdrawn account there, for which the transferee was responsible, Goldman v. Smith, 93 Fed. 182; and the payment of a debt, Re Ft. Wayne El. Co., 99 Fed. 400; Strobel & Wilken Co. v. Knost, 99 Fed. 409; First Nat. Bank v. Chicago Title & Tr. Co., 198 U. S. 280, 49 L. ed. 1051, 25 Sup. Ct. 693; or a substantial part thereof, Re Perlhefter, 177 Fed. 299; Re Condon, C. C. A., 209 Fed. 800; but not the sale of property to a person or creditor and the application of part of the proceeds to the defraying of liens upon the same, such as taxes and arrears of rent upon a leasehold and the expenses of the same, Re Pearson, 95 Fed. 425. Nor payment by an insolvent to certain creditors of 25 per cent of their claims, pursuant to an arrangement made by a creditors' committee, approved by most

of them, for settlement of all his indebtedness on that basis, where he had secured funds to complete the settlement. Re Bloomberg, 253 Fed. 94. An adjudication that an assignment constituted a preference was held not to estop the bankrupt from proving that the property thereby covered was not acquired until thereafter and consequently did not pass to his trustee. Re Ghazal, C. C. A., 174 Fed. 809. It has been held that a mortgage of all a debtor's property to secure a few creditors is not a preference, when the equity of redemption is sufficient to provide for the remainder. Lansing Boiler & Eng. Works v. Ryerson, C. C. A., 128 Fed. 701, 1 Am. B. R. 558. "The taking of unusual steps in the transaction or the failure to take the usual steps may indicate intent." Re Edelman, C. C. A., 130 Fed. 700, 12 Am. B. R. 238. Thus, the failure to record a mortgage of real estate until several months after its execution was held to be evidence of an intent to prefer. Re Edelman, C. C. A., 130 Fed. 700, 12 Am. B. R. 238. The creditors have the burden of proving the insolvency of the debtor. Re Rome Planing Mill, 96 Fed. 812, 3 Am. B. R. 123; Troy Wagon Works v. Vastbinder, 130 Fed. 232, 12 Am. B. R. 352. See Re Donnelly, 193 Fed. 755. As to the effect of a previous verbal agreement, see Jones v. Coates, C. C. A., 196 Fed. 860, where it seems to recognize the validity of the same. Contra, Re Donnelly, 193 Fed. 755. The possession which will set the four months running must be as notorious, exclusive or continuous as the nature of the property will permit, and no more than as is usual or ordinary when unaccompanied by

acts or conduct tending to conceal the ownership. Jones v. Coates, C. C. A., 196 Fed. 860, holding that, in the case of notes or insurance policies, the notice of the transfer to the creditors of the assignor was not necessary to prevent the time running when the possession of the papers was actually transferred. See § 656, infra.

2 Re Riggs Restaurant Co., C. C. A., 130 Fed. 691.

830 St. at L. 544, 545, § 1; May v. Le Claire, 18 Fed. 164; Re Borelli & Callahan, 142 Fed. 296. Cf. Anshutz v. Hoerr, 1 Fed. 592; Re Baumann, 96 Fed. 946; Re Rome Planing Mill, 99 Fed. 937. If the members of a partnership have property worth more than the amount of the firm indebtedness, the partnership does not commit an act of bankruptcy by giving a preference, although the property is less than its debts. Washington Cotton Co. v. Morgan & Williams, C. C. A., 192 Fed. 310. But see Re Morgan & Williams, 184 Fed. 938. It has been held, that the fair market value of the assets of a corporation, for the purpose of determining its solvency, under the bankruptcy law, is the value which the company might have realized on them for itself. Re Marine Iron Works, 159 Fed. 753. It has been held that property, which is exempt from execution, is to be in

cluded in the computation. Re Baumann, 96 Fed. 946. A judgment against the bankrupt, entered more than four months before the commission of the act of bankruptcy, is admissible upon the proof of insolvency. Re McGowan, 134 Fed. 498, which considers other questions concerning the admissibility of evidence upon this issue. For the commission of this act of bankruptcy no fraudulent intent is required; Re Mingo Valley Creamery Ass'n, 100 Fed. 282, 4 Am. B. R. 67; Githens v. Shiffler, 112 Fed. 505, 7 Am. B. R. 453; Re Duffy, 118 Fed. 936, 9 Am. B. R. 358; Re Belknap, 129 Fed. 646, 12 Am. B. R. 326; Remington on Bankruptcy, § 118. The payment by an insolvent of debts previously incurred for supplies necessary for the support of his family was held to be an act of bankruptcy, although he thought that the exemptions given him by the statutes authorized the same. Re Condon, 198 Fed. 947, but there must be an intent to prefer one creditor over another. Re Rome. Planing Mill, 96 Fed. 812, 3 Am. B. R. 123; Re Gilbert, 112 Fed. 951, 8 Am. B. R. 101; Re Douglas Coal & Coke Co., 131 Fed. 769, 12 Am. B. R. 539; Remington on Bankruptcy, $129. The intent of the creditor is immaterial. Re Rome Planing Mill, 96 Fed. 812, 3 Am. B. R. 123; Re Wright Lumber Co.,