under section 39 of the Act of 1867, he must prove that the transfer was made with intent to give a preference, and that the creditor has reasonable ground to believe his debtor to be insolvent. Mays v. Fritton, 20 Wall. 414. A debtor in Georgia conveyed property to his children. It constituted only a small part of the grantor's estate, and there was no fraud and no purpose to hinder or delay creditors. Held, that an assignee subsequently appointed in bankruptcy proceedings could not impeach the conveyance. Adams v. Collier, 122 U. S. 82.

An assignee in bankruptcy can recover from an acceptor the amount of a draft drawn by a creditor with intent to give a preference. Fox v. Gardner, 21 Wall. 475.

In this case the petition was filed at 9 a. M. on the 14th of March, 1874. It was held that a payment made on the 14th of November, 1873, was not made within four months. Warren et al. v. Garber, 1 Hughes, 367; 29 Fed. Cas. 275.

One partner of a firm died, and within four months the remaining partners, but not the firm, were individually adjudged bankrupts. Held, that the assignee cannot recover any property previously transferred by the firm to a firm creditor by way of preference or otherwise. Withrow v. Fowler, 7 N. B. R. 239; 30 Fed. Cas. 402 (1892).

Certain shares of stock were delivered to the creditor under circumstances which constituted a preference. Held, that the assignee could not retain moneys paid by the preferred creditor to increase the value of the stock, nor actual advances made by him which increased the assets of the bankrupt's estate. Swan et al. v. Robinson, 5 Fed. Rep. 287.

Until after the passage of the Bankrupt Act, nothing but fraud in obtaining a preference could invalidate it, no matter in what manner obtained. In re Wynne, Chase, 227; 4 N. B. R. 23; 30 Fed. Cas. 752 (1868). The bankrupt had conveyed certain property to his wife, through a third person, when he was insolvent. Certain money belonging to the wife's separate estate had been used in building and furnishing a house upon the land conveyed. It was held that the conveyance must be set aside, but that she was to be regarded as a preferred creditor as to the money of her own expended upon the property. In re Wheeler et al., 5 Fed. Rep. 299.

The assignee in bankruptcy brought a suit to set aside a sale, and enjoin the vendee from prosecuting an action in a state court against the attaching creditor of the bankrupt vendor for the taking of the goods sold. As it appeared that the assignee already had possession of the property, the court said: "The bare fact that the sale was void is no reason for setting it aside as long as the assignee has the property and all that he could obtain in any event by the most successful litigation." Maine v. Bromley et al., 6 Fed. Rep. 477.

A creditor lends money to a debtor believing him solvent, taking as security what may be regarded as a chattel mortgage. He takes possession of the mortgaged goods after he has reason to believe the debtor insolvent, both transactions being within four months of the adjudication

of the debtor a bankrupt. Held, that the assignee in bankruptcy could not recover the goods so taken. Sherman v. Traders' Nat. Bank, 9 Biss. 216; 21 Fed. Cas. 1282 (1879).

Held, that an assignee in bankruptcy seeking to set aside a transaction on the ground that it constitutes an illegal preference, must show by a preponderance of testimony that the debtor was insolvent, or in contemplation of insolvency; that the security was intended to give a preference, and that the creditor had reason to believe the debtor to be insolvent, and that the security was designed as a preference. Crane et al. v. Penny et al., 2 Fed. Rep. 187.

In an action by an assignee in bankruptcy to recover a payment alleged to have been a fraudulent preference, the court said: "It was necessary for the plaintiff to prove inter alia that the defendants had reasonable cause to believe that the firm of A. B. & Co. was insolvent, and also that the defendants knew that a fraud on the Bankrupt Act was intended by the payment to them. These are independent facts, and both must concur to sustain the verdict." Metcalf v. Officer et al., 2 Fed. Rep. 640.

The grantee in a conveyance made by an insolvent debtor took the title in trust for a third person, and derived no profit from the transaction, and did not share in the bankrupt's fraudulent intent. Held, that he was not liable to the grantor's assignee in bankruptcy for the value of the land. Alleman v. Kneedler, 2 Fed. Rep. 671.

Payments made by an insolvent debtor to an attorney for necessary services actually rendered cannot be recovered by the assignee in bankruptcy. Triplet v. Hanley et al., 1 Dill. 217; 24 Fed. Cas. 203.

"On a petition in bankruptcy being filed against the bankrupts, who were merchants, they consulted the defendants as attorneys and agreed to pay, or did pay them in cash, merchandise and notes over $1,500 for advice and services in opposing the petition. The bankrupts were known to the attorneys to be hopelessly insolvent and to have committed acts of bankruptcy, and they knew or must be taken to have known that it was useless to oppose proceedings or to incur expense in doing so. We held that the assignee is entitled to judgment against the defendants for the amount thus paid to them less the sum of $200, that being shown to be a fair compensation for all necessary advice and expenditure and services." Ibid.

A creditor will be compelled by proceedings in bankruptcy to return money and property received from his debtor when he knew him to be insolvent; and if he fails to surrender it, he must pay the costs of the proceedings by the assignee, and, under the Act of 1867, could not prove his claim. In re Forsyth et al., 7 N. B. R. 174; 9 Fed. Cas. 465.

In the case of a mortgage made in good faith within four months before the commencement of proceedings in bankruptcy to secure a present loan, it was held that to invalidate it there must be proof that the mortgagee knew that it was made to give him an advantage over other creditors. Campbell v. Waite et al., 9 Ben. 166; 4 Fed. Cas. 1205.

Judge Lowell used the following language: "A preference is valid at

common law and in equity, and is voidable only by an assignee in bankruptcy, and only when proceedings in bankruptcy are begun within four months, or, according to another construction of the statute, within six months, after the act is committed." In accordance with this principle, it was held that the payment of a firm debt does not become a voidable preference unless the partners both become bankrupt within the time limited by the statute. Forsaith v. Merritt et al., 1 Low. 336; 9 Fed. Cas. 464.

Under the Act of 1867, it was held necessary for the assignee to show that a preference was given within four months before the filing of the petition to enable him to recover back the money paid. Hubbard et al. v. Alaire Works, 7 Blatchf. 284; 12 Fed. Cas. 776.

Sections 35 and 39 of the Act of 1867 are to be construed together, and were held to impose a limitation of four months before the filing of the petition in bankruptcy in proceedings to avoid preferences. Collins v. Gray et al., 8 Blatchf. 483; 6 Fed. Cas. 125.

A creditor who held several notes of the bankrupt exchanged them for notes of like amount given by the firm of which the bankrupt was a partner. The court said that while this might be a fraud upon joint creditors, it could not be set aside as the bankruptcy of the firm occurred more than four months later. In re Lane et al., 2 Low. 333; 14 Fed. Cas. 1070.

One partner transferred his interest in the partnership effects to his partner who assumed all the debts of the firm. Five days later, the latter filed a petition in bankruptcy. The transfer was held to be void. In re Byrne, 1 N. B. R. 464; 4 Fed. Cas. 951.

Where the condition of insolvency exists it is not obviated by an agreement of creditors to extend the time of payment. Rison v. Knapp, 1 Dill. 187; 20 Fed. Cas. 835.

An assignee in bankruptcy brought a suit in equity to recover money fraudulently paid by the bankrupt to obtain the signatures of certain creditors to a composition. The court held that the suit could be maintained, though he might have brought an action at law. Bean v. Brookmire et al., 1 Dill. 151; 2 Fed. Cas. 1130.

On the same day that he filed his petition in bankruptcy, the bankrupt mortgaged his property to a creditor, and the creditor assigned to other parties all his interest in the property. It was held that it was immaterial whether the first grantee did or did not know that a fraudulent preference was intended, if it were actually given, and as the second grantee had notice that the grantor had failed, and received it only as collateral security for old claims, it could be recovered by the assignee in bankruptcy of the first grantor. Morse v. Godfrey et al., 3 Story, 364; 17 Fed. Cas. 854 (1844).

A fraud by a bankrupt does not operate as an estoppel upon his assignee in bankruptcy, but a fraud that he can act upon must be one injurious to creditors. Mattox v. Baker, 2 Fed. Rep. 455.

A few days after their suspension, the bankrupts, V. & B., who were

private bankers, left a draft with P. & S., who were also private bankers at the same place, for collection. P. & S. sent it to New York, and upon learning of its payment there, paid the proceeds to one of the bankrupt firm. The assignee brought suit to recover the amount of the draft from P. & S. under the second clause of section 35, Act of 1867. Held, that he could not recover. Borland et al. v. Phillips et al., 2 Dill. 283; 3 Fed. Cas. 909.

Section 39 of the Act of 1867 does not give the assignee any greater rights to recover back money than he has under section 35. Hubbard et al. v. Alaire Works, 7 Blatchf. 284; 12 Fed. Cas. 776.

In an action by an assignee in bankruptcy under section 35 of the Act of 1867 to recover property fraudulently conveyed, the assignee can only recover on the case stated in his pleading, and not on the ground that the conveyance was void at common law or under the statutes of the state. Cragin v. Carmichael et al., 2 Dill. 519; 6 Fed. Cas. 706.

[For a large number of additional notes pertinent to this section, see §§ 3, 67 and 70.]

CHAPTER VII.

ESTATES.

§ 61. Depositories for Money.-(a.) Courts of bankruptcy shall designate, by order, banking institutions as depositories for the money of bankrupt estates, as convenient as may be to the residences of trustees, and shall require bonds to the United States, subject to their approval, to be given by such banking institutions, and may from time to time, as occasion may require, by like order increase the number of depositories or the amount of any bond or change such depositories.

An assignee failing to deposit money as ordered by the court is liable for interest thereon. In re Newcomb, 32 Fed. Rep. 826.

It was held, under the Act of 1841, that assignees were chargeable with interest on money not paid into the registry of the court within sixty days after it was received. In re Thorp, 4 N. Y. Legs. Obs. 377; 23 Fed. Cas. 1153.

EXPENSES.

§ 62. Expenses of Administering Estates. (a.) The actual and necessary expenses incurred by officers in the administration of estates shall, except where other provisions are made for their payment, be reported in detail, under oath, and examined and approved or disapproved by the court. If approved, they shall be paid or allowed out of the estates in which they were incurred.

Where the assignee is an attorney-at-law, he cannot claim professional compensation for the ordinary duties of his trust. In re Cook, 17 Fed. Rep. 328.

A marshal having served notices in proceedings brought by an officer of a corporation in its name, applied to the bankrupt court for an attachment to compel such officer to pay his fees. The application was denied, and it was held that he must proceed by an action at law. In re Atlantic M. L. I. Co., 9 Ben. 337; 2 Fed. Cas. 169.

Charges for the employment of a bookkeeper will only be allowed so far as they were necessary in conducting the business of the estate. Where charges are made for a bookkeeper employed partly in the personal business of the assignee and partly in conducting the business of the bankrupt's estate no apportionment will be approved without distinct proof of the necessity and reasonable value of the services rendered to the estate. In re Barnes, 18 Fed. Rep. 158.