same day to release securities for sale, and was made out of the proceeds of such securities. Hotchkiss v. National City Bank, 200 Fed. 287; aff'd C. C. A., 201 Fed. 664. See Ernst v. Mechanics' & Metal Nat. Bank of N. Y., 200 Fed. 295. Contra, Vitzthus v. Large, 162 Fed. 685; Re Empire Cork Co., 193 Fed. 225. Payment to a creditor who has an inchoate lien is not a preference to the extent thereof. Re Lynn Camp Coal Co., 168 Fed. 998. See Hurley v. A. T. & S. F. R. R. Co., 213 U. S. 126, 53 L. ed. 729; Sieg v. Greene, 225 Fed. 955. Even though the amount was not ascertained or liquidated until within the four months. Johnson v. Root Mfg. Co., 241 U. S. 160. An annuity company may be required to return the consideration for an annuity bought by the bankrupt in fraud of creditors, although at the time when it received the money it has issued a contract to pay the annuity. Smith v. Mutual Life Ins. Co. of N. Y., 178 Fed. 510. A chattel mortgage, given to secure a contemporaneous loan, will not be set aside. Re Wolf, 98 Fed. 84; Martin v. Hulen & Co., 149 Fed. 982, 79 C. C. A., 492, 17 Am. B. R. 510. Nor one given to secure a previous loan if promised when the loan was made. Re Metropolitan Dairy Co., C. C. A. 224 Fed. 444. Nor one for future advances, so far as this and subse

quent advances are concerned. City Nat. Bank of Greenville v. Bruce, C. C. A., 109 Fed. 69; Stedman v. Bank of Monroe, C. C. A., 117 Fed. 237; Re Sayed, 185 Fed. 962; Chapman v. Hunt, C. C. A., 254 Fed. 768. The same rule applies to a chattel mortgage upon property to be subsequently acquired, given to secure the purchase price thereof. Re Chantler Cloak & Suit Co., 151 Fed. 952. See Meservey v. Roby, C. C. A., 198 Fed. 844; Re Thomas, 199 Fed. 214; Re Martin, C. C. A., 200 Fed. 940; Templeton v. Wollens, C. C. A., 200 Fed. 257. A release of other persons from liability is not such a present consideration as will support what would otherwise be a voidable preference. Burgoyne v. McKillip, 182 Fed. 452. It was held that in an action to recover the value of a preference, the defendant's agent had guaranteed part of the indebtedness upon which the preferential payment was applied, Plummer v. Myers, 137 Fed. 660; Ernst v. Mechanics' & Metals Nat. Bank, 201 Fed. 664; Gage Lumber Co. v. McEldowney, C. C. A., 207 Fed. 215; Hagan v. McNeil, C. C. A., 253 Fed. 716; but see Sabien v. Camp, 98 Fed. 974; Harvey v. Stowe, 219 Fed. 17; Re Opava, 235 Fed. 785; Re Star Spring Bed Co., 257 Fed. 176; Re Kerlin, C. C. A., 209 Fed. 42.

5 It has been held that to avoid a transfer of property under § 67e, the plaintiff must show actual, as distinguished from constructive, fraud. Meservey v. Roby, C. C. A., 198 Fed. 844. That property cannot be recovered by the trustee although its transfer by the bankrupt justified a denial of his discharge. Lewis v. Julius, C. C. A., 212 Fed. 225. In the absence of any State law upon the subject, it seems that a voluntary conveyance made by a debtor to his wife or children while he was insolvent, but in ignorance of that fact, may be set aside. Adams v. Riley, 122 U. S. 382, 30 L. ed. 1207; Re Steele, 98 Fed. 78. But see Vetterlein v. Barnes, 124 U. S. 169, 31 L. ed. 400; Re Smith, 9 Fed. 592. In the following cases transfers by the bankrupt to his wife were held to be invalid. Re Smith, 100 Fed. 795; Pollock v. Simon, 205 Fed. 1005 (an engagement ring); Re Snodgrass, 209 Fed. 325; Woodford v. Rice, 207 Fed. 473 (purchase in wife's name); English v. Brown, C. C. A., 219 Fed. 248; Klinger v. Hyman, C. C. A., 223 Fed. 257; Owens v. Daniel, C. C. A., 230 Fed. 101; Manders v. Wilson, C. C. A., 235 Fed. 78; Hursey v. Lane, C. C. A., 238 Fed. 913; Watson v. Adams, C. C. A., 242 Fed. 441; Re Victor, 246 Fed. 727;

Smith v. Tostevin, C. C. A., 247 Fed. 102; Re Hawkins, 243 Fed. 792.

In the following cases such transfers were held to be valid, Stowe v. Harvey 241 U. S. 199; Getman v. Lippert, 171 Fed. 536; Re Kayser, C. C. A., 177 Fed. 383; Neumann v. Blake, C. C. A., 178 Fed. 916 (payments for household and family expenses including a set of furs); Re Simon, 197 Fed. 102 (a border case); Re Cox, 199 Fed. 952 (where a wife's claim for salary was sustained although she had kept the books and omitted reference thereto in the index which referred to other accounts against him); Johnson v. Wilson, 217 Fed. 99; English v. Brown, 219 Fed. 248; Marshall v. Nevins, C. C. A., 242 Fed. 476; Baldwin v. Kingston, 247 Fed. 163; Robertson v. Schlotzhauer, C. C. A., 243 Fed. 324; Young v. Evants, C. C. A., 251 Fed. 181. That suit to compel a stockholder to pay corporate debts, because of participation in a fraudulent over-valuation of the assets in payment for stock, does not fall within the statute and cannot be brought in a court of bankruptcy without the consent of the defendant. Re Haley, C. C. A., 158 Fed. 74. See § 643, supra.

6 See infra, § 649.

7 This invalidates such liens created when the bankrupt was insolvent, irrespective of knowledge by the lienor of such insolvency. Cook v. Robinson, C. C. A., 194 Fed. 785, 792. See Grant V. Nat. Bank of Auburn, 197 Fed. 581. The statute does not impair the vendor's right of stoppage in transitu; Re Burke & Co., 140 Fed. 971, 15 Am. B. R. 495; Re Portuondo Co., 135 Fed. 592; and to retain possession in case of the buyer's insolvency before he has shipped the goods, Re Portuondo Co., 135 Fed. 592; nor his right to rescind a sale for fraud, Re Weil, 111 Fed. 897; Re O'Connor, 114 Fed. 777; Re Patterson & Co., 125 Fed. 562. But the return of goods bought but not paid for when there is no legal ground for a rescission of the sale may be set aside as a preference. Re Connolly 204 Fed. 479. See infra, § 649a. It has been held that repayment of money paid by an agent without authority is not a preference. Field v. Hafnia, 236 Fed. 599. Where the creditor had notice that the money which he advanced was to be used in making preferential payment, his security was set aside. Re Thweatt, 199 Fed. 319; Lumpkin v. Foley, C. C. A., 204 Fed. 372; Re Anderson, 252

Fed. 272. When the mortgagee or purchaser for a present consideration had no reasonable cause to believe that the borrower was insolvent, it was not set aside because he knew that the proceeds were to be used to pay the latter's debts, Dean v. Davis, 242 U. S. 438; Van Iderstine v. National Discount Co., C. C. A., 174 Fed. 518; Re Kullberg, 176 Fed. 585. To constitute a voidable preference, it is not essential that the transfer be made directly to the creditor. It may be made to another for his benefit and, if preferential, a circuity of arrangement will not avail to save him; Nat. Bank of Newport, N. Y. v. Nat. Herkimer County Bank of Little Falls, 225 U. S. 178, 56 L. ed. 1042; Johnson v. Hanley, Hoye Co., 188 Fed. 752; Re Hawkins, 243 Fed. 792; Re Harrison Bros., 202 Fed. 343; Re Sutherland Co., 245 Fed. 663; Chapman v. Hunt, 248 Fed. 166; Smith v. Tostevin, C. C. A., 247 Fed. 102; First Nat. Bank of Scottdale v. Blackburn, C. C. A., 256 Fed. 257. Payments by a bankrupt upon a note, which its indorsers would otherwise have paid, were held to be a preference. Swarts v. Fourth Nat. Bank, C. C. A., 117 Fed. 1; Kobusch v. Hand, C. C. A., 156 Fed. 660; Huttig Mfg. Co. v. Edwards, C. C. A., 160 Fed. 619;

Smith v. Coury, 247 Fed. 168; Chapman v. Hunt, 248 Fed. 160. But not if the indorser did not advise, nor procure the payment, nor know thereof until after it had been made, Reber v. Skulman, C. C. A., 183 Fed. 564. A recovery cannot be had from one indorser because of a preference given to a prior indorser, who is financially responsible. Page v. Moore, 179 Fed. 988. It was held that, the indorser who, after the bankruptcy, pays the balance has no greater rights than the original holder of the note; but that the holder of a note partly paid by the indorser may prove the whole face of the note against the maker. Swarts v. Fourth Nat. Bank, C. C. A., 117 Fed. 1. The cases are in conflict as to whether the payee of a note, who has been compelled to surrender a payment as a fraudulent preference, can still hold sureties thereupon. That he may do so, although he has known of the debtor's insolvency, is held in Hooker v. Blount, 44 Tex. Civ. App. 162, 97 S. W. 1083. See Petty v. Cook, (L. R.) 6 Q. B. 790; Williams v. Gilchrist, 11 N. H. 535; West Phila. Nat. Bank v. Field, 140 Pa. St. 473. The safer practice for a creditor is to notify the surety of the facts and ask what he shall do; and if the latter does not advise a course to pursue, to proceed and receive the payment without prejudice, Northern Bank of Kentucky v. Cooke, 13 Bush (Ky.) 340; since if the former refuses to accept a payment tendered at maturity of the note and bankruptcy does not follow, the surety is to that extent discharged, Smith v. Old Dominion B. & L. Ass'n, 119 N. C. 257; Second Nat.

Bank v. Pruett (Tenn.), 96 S. W. 334. See XVII Harv. Law Rev., 205, and cases cited. It was held that money collected through a preferential lien can be recovered in the same manner as if it had been directly paid by the bankrupt. Re Belding, 116 Fed. 1016. "A company was hiring laborers to gather ties. The insolvent was operating stores and supplying the men. For many months an inspector had sent a pay roll once in about two weeks to the company, upon which the name of each laborer, his earnings, and the amount furnished him by the insolvent appeared. The company had uniformly deducted the price of the supplies from the earnings of each man, had sent him a check for the balance, and had sent the insolvent check for the supplies furnished. The insolvent owed the company more than $20,000, when, within four months of the filing of the petition in bankruptcy, it retained the amount owing the insolvent for the supplies furnished for three months and credited him with this amount, $2,210.73, on its claim against him. Held: that this was not a preference, and could not be set off against its claim; but that it received the money thus, retained as trustee for the bankrupt and the court below had power to protect the bankrupt's estate in respect to dividends to the corporation in case it should not discharge its obligations. Western Tie & Timber Co. v. Brown, 196 U. S. 502, 49 L. ed. 571. So held of fire insurance when contemporaneous with the preferential security expressed to be for the benefit of the mortgagor, with a provision that any loss should

be payable to the mortgagee, as his interest might appear, the premium having been paid by the mortgagee. Brown City Sav. Bank v. Windsor, C. C. A., 198 Fed. 28. As regards a newspaper route, see Re Martin, C. C. A., 200 Fed. 940. A bankrupt, within four months prior to his bankruptcy, contracted to sell certain real estate and to give a clear title thereto. The property was encumbered by liens which the purchaser undertook to pay out of the purchase money, but before these payments were completed or the property was conveyed defendant, who held judgment notes of the bankrupt, entered judgment, thus obtaining a lien on the property which the purchaser paid in order to clear the title, although this payment, together with those made to remove the prior liens, exceeded the purchase price. It was held that such payment to defendant constituted a voidable preference to the full amount received. Benjamin v. Chandler, 142 Fed. 217. A payment on account of an antecedent debt, made while the bankrupt was insolvent within the four months, can be recovered by the trustee in bankruptcy, if the creditor had reasonable cause to believe that it was intended thereby to give a preference; Pirie v. Chicago Title & Trust Co., 182 U. S. 438, 45 L. ed. 1171. The burden of proof, that the creditor had reasonable cause to believe of the intention to give a preference, rests upon the trustee in bankruptcy, when he sues or objects to the allowance of a claim. Calhoun County Bank v. Cain, C. C. A., 152 Fed. 983; Re Pfaffinger, 154 Fed. 523; Re Sanger, 169 Fed. 722; Fed. Prac. Vol. III-79

Reber v. Louis Shulman & Bro., 179 Fed. 574; Alter v. Clark, 193 Fed. 153; Re F. M. & S. Q. Carlile, 199 Fed. 612. It has been held that the passive receipt of a payment on account for a loan without a request or independent action to collect the same, in the absence of notice of insolvency, does not justify the setting aside of the transaction. Wright v. Sampter, 152 Fed. 196. See Re Oppenheimer, 140 Fed. 51. The payment of a loan upon demand does not constitute a preference, when there is no proof that the creditor had reasonable cause to believe that the debtor was insolvent. Re Pfaffinger, 154 Fed. 523; but not if the payment was made upon an open account, in which the bankrupt's interest was subsequently increased by at least the amount thus paid. Jaquith v. Alden, 189 U. S. 78, 47 L. ed. 717; Re Dickson, C. C. A., 111 Fed. 726; Kimball v. E. A. Rosenham Co., C. C. A., 114 Fed. 85; C. S. Morey Mercantile Co. v. Schiffer, C. C. A., 114 Fed. 447; Re Maher, 144 Fed. 503. Cf. Wild & Co. v. Provident Life & Tr. Co., 214 U. S. 292, 53 L. ed. 1003. It was held that an increase of a bankrupt's estate as a net result of transactions between the bankrupt and a creditor within four months prior to the bankruptcy, where the last transaction was a payment on account of the indebtedness, was not sufficient to relieve the creditor from surrendering this last payment as preferential before he was permitted to prove the balance of his claim, when the account ran far back beyond the four months' period, and the transactions ended with a large payment on account of