Page:Federal Reporter, 1st Series, Volume 3.djvu/219

 212 FEDERAL REPORTER. �ITattocks and others v. Loveeing and others. �(Circuit Court, D. Massachusetts. July 24, 1880.) �1. Insolvbncy — Sale 01" Dkbt — Sbt-Off. — It is not unlawful for the creditor of an insolvent to sell liis debt to the debtor of such in- Bolvent, although it be purchased for the purpose of being used in set-ofC. �In Equity. Motion to Amend. �LowELL, C. J. ïhe complainants, assignees in bankruptcy of Norris, HuU & Oo., of Portland, brought this bill against Stoddard, Lovering & Co., of Boston, in 1875, alleging that the defendants, in February, 1874, after tbey knew of the insolvency of Norris, Hull & Co., and when one of the de- fendants was acting upon a committee of creditors of that firm to advise whether they should be made bankrupts, sold certain notes of the insolvent firm to Cady & Co., of Cleveland, Ohio, well knowing that said Cady & Co. were indebted to th« insolvents; that the Portland firm were soon after made bank- rupts ; and that the plaintiffs, as their assignees, had demanded payment of the debt due from Cady & Co., but had been met •with the defenoe of a set-oiï; that it was a fraud upon the bank- rupt law for the defendants to sell their debt under such cir- cumstances, and that they were, in equity, bound to pay to the assignees whatever sum they had received from Cady & Co. beyond the amount of the dividend which they would have received from the estate of Norris, Hull & Co. They alleged that the sale to Cady & Co. was colorable. �In April, 1876, Judge Shepley sustained a demurrer to the biU and ordered it to be dismissed, without costs. He soon after vacated the order of dismissal, and permitted the case to remain upon the docket; and the complainants now move to amend. �In his short opinion sustaining the demurrer Judge Shep- ley says that equity would not permit a set-off to be made by Cady & Co. of a debt colorably bought, or even of a debt bought after knowledge of the insolvency, and, therefore, there was no occasion to sue the defendants. The plaintiffs, ����