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the whole indebtedness. Re Colton Export & Import Co., 115 Fed. 158. The deposit of money by an insolvent within four months prior to his bankruptcy on an open account, subject to a check, does not constitute a preference, although the bank was at that time a creditor, and the latter may set off so much of its claim as equals the balance of such account, provided it had no reasonable cause to believe that a preference was intended. N. Y. County Nat. Bank v. Massey, 192 U. S. 138, 48 L. ed. 380; Re George M. Hill Co., C. C. A., 130 Fed. 315. Re Percy Ford Co., 199 Fed. 334; Studley v. Boylston Nat. Bank of Boston, C. C. A., 200 Fed. 249; aff'a 229 U. S. 523, 33 Sup. Ct. 806, L. ed.
-; Am. Bank of Alaska V. Johnson, C. C. A., 245 Fed. 312. See Ernst v. Mechanics' & Metals Nat. Bank of New York, 200 Fed. 295, infra, 8 648. It has been held that the payment to a bank by an insolvent, within the four months' period, of notes given to third persons, which were indorsed to and owned by the bank, constitutes a preference when the bank had reasonable ground to believe that a preference was thereby intended. Re George M. Hill Co., C. C. A., 130 Fed. 315. See Continental & Commercial Tr. & Sav. Bank v. Chicago Title & Tr. Co., C. C. A., 199 Fed. 704. See Ernst v. Mechanics' & Metals Nat. Bank, C. C. A., 201 Fed. 664. A trustee may sue a municipal corporation or the trustees of a township to recover a preferential payment, received by or on behalf of the municipal corporation or township, under such circumstances as would render an individual liable. Painter v. Napoleon Tp., 156 Fed. 289. A bankrupt is liable, in a rep
resentative capacity, for individual payments which were preferential. Clarke v. Rogers, 228 U. S. 534, affirming C. C. A., 183 Fed. 518. See, also, Block v. Rice, 167 Fed. 693; Re Dorr, C. C. A., 196 Fed. 292. Hookway v. McKnight, C. C .A., 232 Fed. 129; Watson v. Adams, C. C. A., 242 Fed. 441; Re Gottlieb & Co., 245 Fed. 139; Frederick v. People's Bank of California, C. C. A., 246 Fed. 84; Smith v. Coury, 247 Fed. 168; Donohue v. Dykstra, 247 Fed. 593; Bank of Commerce v. Brown, C. C. A., 249 Fed. 37; Re Salmon C. C. A., 249 Fed. 300; Re Cramer & Rogers Grocery Co., C. C. A., 252 Fed. 112; Bassett v. Evans, C. C. A., 253 Fed. 532; Bridgeton Nat. Bank v. Way, C. C. A., 253 Fed. 731. Contra, Re Star Spring Bed Co., 243 Fed. 957, where an unsuccessful attempt was made to stop payment of a check. The fact that the consideration of the preferential transfer was a previous conversion of property similar to that transferred will not prevent the court from setting it aside. McGill v. Commercial Credit Co., 243 Fed. 637. It has been held that an assignment for the benefit of creditors, made more than four months before the filing of the petition, is not invalidated thereby, unJess it was forbidden by the State law. Re Shinn, 185 Fed. 990. See $ 613, supra.
The statute does not invalidate a transfer to secure or pay pre-existing debts which is not voidable as a preference or otherwise contrary to law. Sargent v. Blake, C. C. A., 160 Fed. 57, an application of partnership property to the payment of an individual debt of a partner, when the firm was insolvent and the creditor had no reasonable cause to believe that a preference was thereby intended.
ruptcy had not intervened, shall have concurrent jurisdiction.” 8 f. “That all levies, judgments, attachments, or other liens, obtained through legal proceedings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the levy, judgment, attachment, or other lien shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the estate of the bankrupt, unless the court shall, on due notice, order that the right under such levy, judgment, attachment, or other lien shall be preserved for the benefit of the estate; and thereupon the same may pass to and shall be preserved by the trustee for the benefit of the estate as aforesaid. And the court may order such conveyance as shall be necessary to carry the purposes of this section into effect: Provided, That nothing herein contained shall have the effect to destroy or impair the title obtained by such levy, judgment, attachment, or other lien, of a bona fide purchaser for value who shall have acquired the same without notice or reasonable cause for inquiry.”. In so far as they
Where a general creditor brought under the West Virginia statute, within the four months' period, a suit to set aside a deed previously executed; it was held that he thereby acquired a statutory lien upon the property thereby covered, which was not affected by the bankruptcy proceedings. Moore v. Green, C. C. A., 145 Fed. 472. See Re Kavanaugh, 99 Fed. 928. The landlord's lien upon the tenant's property, given by the laws of Georgia, exists from the time of the lease, and a distress warrant to enforce the same, issued within the four months, will not be set aside. Henderson y. Mayer, 225 U. S. 631, 56 L. ed. 1233. So in Kentucky, Courtney v. Fidelity Trust Co., C. C. A., 219 Fed. 57. In Iowa by taking other security the landlord waives the lien, Re Wolf, 98 Fed. 74; In Illinois the
landlord has no lien prior to levy
8 30 St. at L. 544, § 64, § 67e.
930 St. at L. 544, 564, $ 67f. All levies, judgments, attachments, and other liens obtained through legal proceedings are avoided if the levy was made or the lien first came into existence within four months before
the petition was filed, although the suit in which they were made or issued was previously begun, Re Richards, C. C. A., 96 Fed. 935; Re Higgins, 97 Fed. 775; Re Burrus, 97 Fed. 926. Moore v. Smith & Sons, 205 Fed. 431; Re Leigh, 208 Fed. 486; Re Cefola, 222 Fed. 171; Dreyer v. Kicklighter 228 Fed. 744; Re Southern Arizona Smelting Co., C. C. A., 231 Fed. 87; Grant v. National Bank of Auburn, 232 Fed. 201. Contra, Re De Lue, 9 Fed. 510; Re Easley, 93 Fed. 419; Benjamin v. Chandler, 142 Fed. 217; whether or not the defendant cooperated in the obtaining of the same. Re Richards, C. C. A., 96 Fed. 935; Re Burrus,, 97 Fed. 926; or the creditor had knowledge of the debtor's insolvency, Ibid; in cases of voluntary as well as of involuntary bankruptcy, Re Vaughan, 97 Fed. 560. But see Re O'Connor, 95 Fed. 943. This rule does not apply to exempt property which can not be administered as part of the bank. rupt 's estate. Re Snyder, 216 Fed. 989. In such a case the transfer is voidable as to so much of the property as is not exempt. Sieg v. Greene, 225 Fed. 955. Where a sale has been made under such a levy prior to the adjudication of bankruptcy and within four months before the filing of the petition, the rights of a purchaser are not affected, Re Kenney, 95 Fed. 427; Weitzel, 191 Fed. 463; but the proceeds in the hands of the sheriff are
the bankrupt's estate, Clarke v. Larremore, 188 U. S. 486, 47 L. ed. 555; Re Kenney, 97 Fed. 554. It was held that the proceeds of an execution sale, which had been consummated, could not be recovered, although paid within the four months, when the proceeding was in
invitum. Nelson v. Svea Pub. Co., 178 Fed. 136; contra Golden Hill Distilling Co. v. Logue, C. C. A., 243 Fed. 342; Ordinarily the test is the date of the judgment, not the date of the execution.
Owen v. Brown, C. C. A., 120 Fed. 812. For
case where an execution issued more than four months before the bankruptcy proceeding had become dormant and was consequently invalidated by the adjudication in bankruptcy, see Re Monarch Acety. lene Co., 229 Fed. 474. The enforcement of an execution against the bankrupt's salary, issued under such a judgment, may be enjoined. Re Harrington, 200 Fed. 1010; supra, $ 633. A judgment of dispossession is not affected by this statute. Plaut v. Gorham Mfg. Co., 174 Fed. 852. Where the judgment was not a lien upon personal property until the levy of an execution, and although the judgment was previously entered the writ was not issued nor levied until within the four months; it was held that the latter should be set aside. Re Harrington, 200 Fed. 1010. A judgment entered within the four months upon a judg. ment note previously given is avoided. Re Rhoads, 98 Fed. 399. Where the lien of the judgment does not take effect until it is docketed in the county, it is avoided if not docketed there tall within the four months. Re Dunavant, 96 Fed. 542. Creditors of a bankrupt who have obtained a judgment prior to the four months' period, can maintain a judgment creditors' action, which they began previously thereto, al. though judgment enforcing their lien was not entered within the four months. Metcalf Bros. v. Barker, 187 U. $. 165, 47 L. ed. 122. A judgment entered within the four
conflict, subdivision c is nullified by subdivision f.10 A transfer may be invalid both as a preference and as fraudulent.11 A transfer which is preferential is not necessarily fraudulent.12 By "$ 60. a. A person shall be deemed to have given a preference if, being insolvent, he has within four months before the filing of a petition, or after the filing of the petition and before the adjudication, procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditor of the same class. Where the preference consists in a transfer, such period of four months shall not expire until four months after the date of the recording or registering of the transfer if by law such recording or registering is required.
months' period, to enforce an attachment prior thereto, will not be set aside in the absence of fraud. Re Beaver Coal Co., C. C. A., 113 Fed. 889. Contra, Re Lesser, 108 Fed. 201. But when the judgment
recovered within the four months' period, any liens acquired thereunder may be set aside as an unlawful preference. Clarke v. Larremore, 188 U. S. 486, 23 Sup. Ct. 363.
10 Re Richard, C. C. A., 96 Fed. 935; Re Tune, 115 Fed. 906; Cook v. Robinson, C. C. A., 194 Fed. 785, 792; Folger v. Putnam, C. C. A., 194 Fed. 793.
11 Chapman v. Hunt, 248 Fed. 160.
12 Watson v. Adams, C. C. A., 242 Fed. 441. A preference and a fraudulent transfer are not the same. In & preferential transfer the fraud is technical and consists in a violation of the rule of equal distribution among all creditors. In a fraudulent transfer the fraud is acutal, in that the bankrupt has secured thereby an advantage for himself out of
what in law should belong to his creditors. Tan Iderstine V. Nat. Discount Co., C. C. A., 174 Fed. 518.
13 30 St. at L. 454, 562, § 60a, as amended by 32 St. at L. 797; 32 St. at L. 842. A guarantor is such a creditor, Stern v. Paper, 183 Fed. 228. So is a surety, United Surety Co. v. Iowa Mfg. Co., C. C. A., 179 Fed. 55; Johnson v. Wilson, 217 Fed. 99; or indorser, McAtee v. Shade, C. C. A., 185 Fed. 442; Re Harrison Bros., 202 Fed. 243; Chapman v. Hunt, 248 Fed. 160. It has been held that the transfer may be avoided if the creditor had reasonable cause to believe that a preference was intended, irrespective of the actual intent of the debtor. Hotchkiss v. Nat. City Bank, 200 Fed. 287; aff'd C. C. A., 201 Fed. 664; Alexander v. Redmond, C. C. A., 180 Fed. 92; Collett v. Bronx Nat. Bank, 200 Fed. 111; Re Harrison Bros., 202 Fed. 243; Re Gaylord, 225 Fed. 234; contra, Hardy v. Gray, C. C. A., 144 Fed. 922, 75 C. C. A., 562, 16 Am. Br. 387; Re
“b. If a bankrupt shall have procured or suffered a judgment to be entered against him in favor of any person or have made a transfer of any of his property, and if, at the time of the transfer, or of the entry of the judgment, or of the recording or registering of the transfer if by law recording or registering thereof is required, and being within four months before the filing of the petition in bankruptcy or after the filing thereof and before the adjudication, the bankrupt be insolvent and the judgment or transfer then operate as a preference, and the person receiving it or to be benefited thereby, or his agent acting therein, shall then have reasonable cause to believe that the enforcement of such judgment or transfer would effect a preference, it shall be voidable by the trustee and he may recover the property or its value from such person. And for the purpose of such recovery any court of bankruptcy, as hereinbefore defined,
First Nat. Bank of Louisville, C. C. A., 155 Fed. 100, 84 ('. C. A. 16, 18 Am. Br. 766; Debus v. Yates, 193 Fed. 427. Re The Leader, 190 Fed. 624, 629, states evidence held to be sufficient to establish the debtor's intent. Under the New York mechanic's lien law, the lien of a material is good against a bankrupt contractor, although the notice was filed within the four months' period, Re Emslie, C. C. A., 102 Fed. 291; Re Grissler, C. C. A., 136 Fed. 754; and the same may be enforced by him in the State court, Ibid. It has been held that a statutory lien for wages, Re KerbyDennis Co., C. C. A., 95 Fed. 116 (Michigan lumber law); is not avoided by the filing of the petition and the adjudication of bankruptcy, unless the lienor has taken other security within the four months, by which he waives his rights under the State statute. Rc Wolf, 98 Fed. 84; Henderson v. Mayer, 225 U. S. 631, 56 L. ed. 1233. See 8 649, infra. Upon the question of its validity as a preference, a deed is considered to
take effect from the date of its record and not from the date of its delivery. English v. Ross, 140 Fed. 630. For cases where deeds were held to be preferential because not recorded within the four months, although previously executed, see Page v. Rogers, 211 O. S. 575, 53 L. ed. 332; Ragan v. Donovan, 189 Fed. 138. For similar rulings as regards, bonds of title, see Rosenthal, 238 Fed. 597; chattel mortgages, see Mattley v. Giesler, C.: C. A., 187 Fed. 970; reversing 175 Fed. 619. The rule does not apply where the instrument was given for a present consideration, although not recorded until later. Re Jackson Brick & Tile Co., 189 Fed. 636, a deed; Goodnough Mercantile & Stock Co. v. Galloway, 171 Fed. 940, a bill of sale; Re Sturtevant, C. C. A., 188 Fed. 196, a chattel mortgage; Re Sayed, 185 Fed. 962, an assignment of a land contract; Debus v. Yates, 193 Fed. 427; a deed. See Hinchman v. Consolidated Arizona Smelting Co., 198 Fed. 907.