1 the legal right and the equitable interest requisite to enforce the contract of insurance between himself and the insurance company and to enforce the law applicable to that contract against the trustee in bankruptcy and to secure, hold and apply the policy and its surrender value to the separate use of his wife and son as against such trustee and the creditors he represents, and the conclusion is that this petition to revise must be granted. Let this case therefore be remanded to the court below with directions to set aside and avoid that part of the order of the referce, Honorable Robert J. Gamble, made on April 18, 1922, which directed the petitioner and his attorneys, Kirby, Kirby & Kirby, to turn over to the trustee in bankruptcy the surrender value of the policy for $20,000, to set aside and avoid the order of the court below confirming that part of the order of the referee and directing the petitioner and his attorneys to turn over $1,125, the surrender value of the $20,000 policy, to the trustee, and to render and enter orders and decrees in this case in accord with the views and conclusions expressed in this opinion. KARL STEFAN, TRUSTEE OF THE ESTATE OF BRUNO RAABE, U. S. Circuit Court of Appeals, Eighth Circuit, August, 1924. No. 6527. SUITS AND ACTIONS BY AND AGAINST TRUSTEE-JURISDICTION OF BANKRUPTCY A District Court of the United States has jurisdiction to entertain a suit by a trustee in bankruptcy to set aside for fraud and conspiracy between the parties, a mortgage, a decree of foreclosure thereof entered in a state court, a judicial sale held pursuant thereto, a decree confirming such sale, and a sheriff's deed to real estate, the subject of said mortgage, delivery and sale, the last step in such line of procedure having been taken and consummated more than a month before the adjudication. (See Collier, 13th Ed., pp. 797, 1779; Am. B. R. Digest, § 656.) FRAUDULENT TRANSFERS-TRANSFEREE'S KNOWLEDGE AND GOOD FAITHSECURITY FOR PAST INDEBTEDNESS NOT FRAUDULENT WHERE TRANSFEREE ACTS IN GOOD FAITH. A creditor has the right to take a security for an existing indebtedness if actuated with the bona fide motive of securing its indebtedness, even though the debtor may have had an ulterior motive, and the validity of such security is subject only to the contingency that the debtor might be adjudicated a bankrupt within four months. (See Collier, 13th Ed., p. 1784; Am. B. R. Digest, § 560.) SAME FORM OF TRANSACTION-MORTGAGES IN GENERAL-RECORD EXAMINED AND HELD TO SHOW THAT MORTGAGE WAS NOT FRAUDULENT. In an action by a trustee in bankruptcy to set aside as fraudulent a mortgage, deed of foreclosure, judicial sale, and sheriff's deed to real estate, the record is examined and held to sustain the findings of the District Court that the allegations of fraud are not sustained. (See Collier, 13th Ed., p. 1784; Am. B. R. Digest, § 565.) An appeal from a decree of the District Court of the United States for the District of Nebraska. Affirmed. Before KENYON, Circuit Judge, and AMIDON and SCOTT, District Judges. H. T. White (W. C. Traub, on the brief), for appellant. M. H. Leamy, for appellees. SCOTT, District Judge, delivered the opinion of the Court: This is a suit in equity by Karl Stefan, as trustee in bankruptcy of the estate of Bruno Raabe, bankrupt, against Bruno Raabe, The Citizens State Bank of Plainview, Nebraska, and Martin Sorenson, defendants, to set aside a deed to the southwest quarter of Sec. 24, Township 28, Range 5, west of the 6th P. M., Antelope county, Nebraska, executed and delivered by Bruno Raabe to said Citizens State Bank, July 10, 1920, together with an instrument of defeasance executed and delivered contemporaneously therewith, a decree of the District Court of Antelope county, Nebraska, declaring said deed a mortgage and foreclosing the same, a judicial sale thereunder, a sheriff's deed and order of confirmation by said District Court of Antelope county, and also to set aside a chattel mortgage executed by said BrunoRaabe to said Citizens State Bank covering certain chattel property, executed and delivered July 23, 1920. The suit is specifically alleged to be brought under section 70 of the Act of Congress relating to bankruptcy. The plaintiff in his petition in substance alleges: That during the year 1919, Bruno Raabe executed several promissory notes for territory rights in connection with a stock food transaction. That these notes were sold to various banks before maturity, the banks purchasing them in good faith and without notice of any defenses, and that these notes commenced to fall due during June, 1920. That thereupon Bruno Raabe consulted the defendant, Citizens State Bank of Plainview, Nebraska, for the purpose of avoiding payment of these notes, and that Raabe executed and delivered to said bank a warranty deed conveying the farm hereinbefore described and owned by Raabe. Shortly thereafter Raabe on the date above stated executed and delivered to said bank the chattel mortgage referred to. That at the time of excuting said. deed, defendant bank gave Bruno Raabe a receipt stating that they received the deed as a mortgage in consideration of money loaned and to be loaned. That said attempted instruments of conveyance were made with intent to defraud the creditors of said Bruno Raabe, and that the bank received the same knowing such purpose. That said deed and instrument of defeasance were filed for record in Antelope county, Nebraska, July 12, 1920, and said chattel mortgage was filed for record on the 26th day of July, 1920. That thereafter on the 24th day of May, 1921, a petition to foreclose said pretended deed as a mortgage was filed in the District Court of Antelope county, Nebraska, by defendant bank, and a decree of foreclosure by default was entered on the 15th day of July, 1921. That thereafter upon due notice and upon the 12th day of September, 1921, said real estate was sold at sheriff's sale, the defendant bank being the purchaser thereof, and a certificate of sale issued thereunder. That on the 24th day of September, A.D. 1921, by order of said state court said sale was confirmed, and that a sheriff's deed was issued and delivered to said bank. That all of the aforesaid proceedings were had and made with the intent of said defendants to defraud the creditors of Bruno Raabe. That Bruno Raabe at the time of the transfer and at all times thereafter "had insufficient property exclusive of the aforesaid to satisfy the creditors of the said Bruno Raabe, and that the creditors of the said Raabe were the same as at the present time, and that the said creditors have proven their claims in bankruptcy, and that the same have been allowed in an amount in excess of $30,000." That the defendant Bank after the execution of the sheriff's deed conveyed said land to defendant Martin Sorenson for the purpose of further endeavoring to defraud the creditors of Bruno Raabe, and that defendant Sorenson took such deed knowing such fact. Defendant Sorenson answers admitting the receipt of said conveyance on October 27, 1921, denying that the same was executed for the purpose of defrauding creditors of said Raabe, and alleging that title was conveyed to him as a matter of convenience in obtaining a real estate loan thereon, and in substance that he held the same in trust for said bank, and disclaimed all personal interest therein. Citizens State Bank of Plainview answered challenging the jurisdiction of the United States District Court for the District of Nebraska, and setting up that the District Court of Antelope county, Nebraska, had first acquired jurisdiction of the res and that said action was still pending and undetermined in the District Court of Antelope county. Denied that it had any knowledge that Raabe had signed the notes mentioned in said complaint, or that said notes had been transferred to innocent purchasers; admitted that it received the conveyance of said land and the chattel mortgage referred to, but denied that either the deed or the chattel mortgage were received for a fraudulent purpose or with a fraudulent intent, and alleged that the said deed was taken as security for said Raabe's present indebtedness to said bank and to secure any further advances that said bank might make him; alleging that the chattel mortgage was taken as an additional security under the same conditions, and that said deed and writing of defeasance were recorded at the same time as one instrument, and set out certain notes and amounts due and owing by said Raabe to said bank at the time said deed and chattel mortgage were delivered to it, and alleged that there was $17,053.48 owing said bank by said Raabe on the 24th day of May, 1921, when it commenced said foreclosure proceedings in Antelope county; set out all of the foreclosure proceedings and alleged that they were regular in all respects; alleged that after applying the proceeds of said foreclosure sale to its claim against Raabe, there was a deficiency of $1,528.58 still due the bank from Raabe; alleged that certain of the property described in said chattel mortgage was taken by said bank from Raabe in a replevin action commenced in the District Court of Antelope county, Nebraska, and alleged the filing of a supplemental petition in said foreclosure proceedings on the 29th day of April, 1922, setting out said supplemental petition, the object and prayer of which was a foreclosure of said chattel mortgage and applying the proceeds on said deficiency. The case being thus at issue plaintiff applied to the court for an order of reference and a special master to take testimony, report findings of fact and conclusions of law. To this application the defendant Citizens State Bank appeared and resisted, and on the 27th day of May, 1922, the District Court for the District of Nebraska, overruled the objection of the bank and appointed H. F. Barnhart as special master to hear the evidence and report findings of fact and conclusions of law. Defendant Citizens State: Bank thereupon filed objections to the jurisdiction of the court. and taking of testimony by the special master, which objections. were overruled, whereupon the defendant bank amended its answer still challenging the jurisdiction of the court. The testimony in the case was taken before the special master who in due time filed his report in the form of a voluminous opinion in which he found as a fact that the deed of July 10th and the chattel mortgage of July 23rd were executed and delivered with the intent and purpose of defrauding the existing creditors. of Bruno Raabe, and as a conclusion of law said instruments should be vacated and set aside. Exceptions were filed to the report of the special master, and the cause was tried and submitted to the District Court upon the evidence taken upon the report of the special master, including the evidence taken before that official. The District Court in announcing its decision said: "I am unable to concur in the conclusion of the master that the mortgage involved was given with the intent to hinder or delay creditors, or to place the property beyond the reach of creditors within the meaning of the statute concerning conveyances to defraud creditors. (Secs. 2553, 2554, 2555, 2557, Comp. Stats. Nebraska, 1922.) "It appears to me to be established by the evidence beyond doubt that security was taken by the bank from its creditors in the usual course and in |