Page:Federal Reporter, 1st Series, Volume 2.djvu/178

 ANIBAL V. HEAOOOK. ���171 ���preference over other creditors were a fraudaient act. Such an act is not fraudulent. Neîther is there any legal fraud in concealing the f act that a preference bas been obtained. Ex- cept for the intervention of the bankrupt act, the legal and the moral right of a crediter to obtain payment of his juat debt and keep silent about it, although the debtor be insolvent, is unquestionable. The bankrupt act declares preferences and purchases to be invalid if consummated under certain speoi- fied conditions, and when thus consummated they are a fraud upon the act and a wrong in legal contem;^lation. Unless consummated within these conditions the bankrupt act does not attempt to deal with them. No better presentation of this view of the subject can be found than was made by the same learnedjudge in Bean v. Brookmore, i N. B. E. 196; S. G. 1 Dnion Eep. 34. After stating that there is nothing es- seutially immoral or dishonest in the preferring of onecreditor over another, and that it was not forbidden by any law in this country previous to the bankrupt act, but that it was designed by that act to frame a System of law one feature of which should secure an equal distribution of an insolvent's property among his creditors and yet protect creditors whose liens ought to be respected, he says : "In this dilemma, eongress said we cannot prescribe any rule by which a preference would be held to be morally right or wrong, and it would be fatal to the administration of the law of distribution to per- mit such a question to be raised. We will, therefore, adopt a conventional rule to determine the validity of these prefer- ences. In ail cases where an insolvent pays or seeures a crediter to the exclusion of others, and that creditor is aware that i\ is so when he received it, he shall run the risk of the debtor's continuance in business for four months. If the law which requires equal distribution is not called into action for four months, the transaction, being otherwise honest, shall stand; but if that law is invoked within four months the transaction shall not stand, but the money or property re- ceived by the party shall become a part of the common fund for distribution." �The same considerations apply to that section of the bank- ����