Page:Federal Reporter, 1st Series, Volume 6.djvu/610

 598 FEDERAL REPORTER. �Peckham V. COZZENS. �Smith v. Same. �{Circuit Court, D. lihode laland. March 2, 1881.) �1. Illegal Pkepebence— Knowledge op Cheditor. �The illegality of a preference depends upon the actual knowledge- of the creditor.— [Ed. �Appeals from district court. �Wm. P. Sheffield, for complainants. �Sarril. R. Honey and Francis B. Peckham, Jr,, for defend- ant. �LowELL, C. J. B. Truman Peckham was made bankrupt in this district upon a petition filed March 22, 1878, and Will- iam J. Cozzens is his assignee. On the twenty-second of January, 1878, the bankrupt had given two mortgages of land and buildings to his relatives, William J. Peckham and John Cr, Smith, to secure them for liabilities which they had in- curred for him. The land was duly sold by the assignee, free of encumbrances, and the purchase money is in court to answer in its stead. Bills and cross-bills were filed in the district court, the assignee insiating that the mortgages were fraud- ulent preferences, and the mortgagees maintaining their validity. ihe district court found the mortgages to be valid.* �The question is whether Peckham and Smith — for they stand precisely alike — had reason to believe that E. Truman Peckham was insolvent on the twenty-second of January, and knew that he intended to commit a fraud upon the act. �I agree with the district judge that the assignee has f ailed to prove the necessary facts. The evidence was unfortunately taken upon written interrogatories, and is very vague. There are suspicions circum stances, but I cannot say that it is proved that the mortgagees knew much about the affairs of the bankrupt, or had any particular reason to believe him insolvent. �*See 3 FED. Rep. 794. ��� �