Page:Federal Reporter, 1st Series, Volume 4.djvu/640

 626 FEDERAL EBPOBTEB. �their insolvency, and made it for the purpose of giving a preference to some of their creditors, and so, as to them, it ■was fraudulent under the bankrupt law. The true course for them to pursue at the time was either to go into bankruptoy voluntarily, or to make an assignment for the beneflt of ail their creditors. The testimony of Nowlin is full of admis- sions of his knowledge of their insolvency on the first of Sep- tember, 1870. At the time Billings made this purchase ho seems to have been a man of some means. He states that he had no knowledge of the insolvency of the firm, nor of the extension that was given, and believed that their credit was very good; and the testimony of both Nowlin and McEl- wain does not show that Billings had knowledge of their con- dition at the time of the sale. �The question in controversy must, therefore, depend almost exclusively upon the true construction of the bankrupt law, as applied to the f acts of the case as heretofore stated. There is no difficulty upon any other point than this : Had Billings reasonable cause to believe or had he knowledge of the inten- tion with which the sale was made to him ? As has been stated, there ean be no doubt of the intention of the vendors. Ail the acts preceding and subsequent to the sale show that intention to have been in violation of the bankrupt law. �This was an assignment of ail the debtor's property. Sec- tion 5130, Eev. St. U. S., re-enacting a clause contained in section 36 of the original bankrupt law, declares that if an assignment is made of a debtor's property, not in the usual and ordinary course of the business of the debtor, it shall be prima fade evidence of fraud. This firm was doing a retail business in Chicago at the time, and that which ordinarily belongs to jewelers. This, having been an assignment of the whole stock of the firm, must be considered not made in the usual and ordinary course of business, and, therefore, as well prima fade evidence of fraud against the vendee as the vend- ors. In other words, that f act of itself evidenced fraud to the vendee as well as the vendors. If this is correct, then the question which was discussed by the counsel as to the effect of the amendment of 1874 on the bankrupt law, requiring ����