Page:Federal Reporter, 1st Series, Volume 3.djvu/805

 798 FBDBBAIi BEF0BXE3. ���In THE Mattee op Eeed, Bankrupt. �(Circuit Court, 3. Massachusetts. September 30, 1880.) �1. Bankbuptcy— Pbefbbence— Fkaud. — Under the amended sections of the bankrupt act a crediter may pruve liis whole debt, even after a recovery bas been had against him for a preference, in the aosence of actual f rand. �Morse e Stone, for appellanta. �A. E. Pillsbury, for appellee. �Cliffobd, C. J. Creditors who accepted a preference from a bankrupt debtor during the operation of the provision of the Eevised Statutes, having reasonable cause to believe that the same was made or given by the debtor contrary to the pro- visions of the bankrupt act, could not prove the debt or claim on account of whioh the preference was made or given; nor could suoh a creditor receive any dividend until he had first Burrendered to the assignees ail property, money, benefit, or advantage received by him under such preference, Eev. St. § 5084. Congress subsequently amended that provision in certain important particulars. Alterations were made and new provisions adopted to facililate the prooeeding; when the requisite number of creditors do not petition, the court may grant delay, and the provision is that if at the expiration of that time they appear, then the matter of bankruptcy shall proceed, and such person shall be adjudged bankrupt. The assignees may recover back the money or property paid, conveyed, sold, assigned, or transferred in preference, con- trary to this act, provided that the person reoovering such payment or conveyance had reasonable cause to believe that the debtor was insolvent, and knew that a fraud ou the act was intended ; and such a person, if a creditor, shaU not, in cases of actual fraud on his part, be allowed to prove for more than a moiety of his debt. It appears that the bank- rupt ûled his voluntary petition in bankruptcy, and that he was adjudged bankrupt in a regular prooeeding in bankruptcy ; the appellee was a crediter of the bankrupt, holding two notes signed by him, payable on demand, and interest, to the order of the creditor, one for $2,000, and the other for $1,000; ����