Page:Federal Reporter, 1st Series, Volume 9.djvu/165

 150 FEDEBAIi BBPOaTEB. �other papers belonging to defendant, and credited bills receivable with the proeeeds o£ the note so charged defendant. During the business hours of the 16th the bank was kept open for business. ihe bank did not open on the morning o£ the seventeenth of JanUary, and about 9 o'clock in the morning the deed of assignment was delivered to Champion, assignee, and La was placed in possession of the bank by giying him a key, although another key was retained by the flrm, and the inventory was not completed until seveial days after. The note in question was never delivered to Champion, nor was it described in the inventory, and sonle time during the forenoon of the 17th defendant came to the bank, and, on being told what had been done in regard to the transfer of the note to him, assented to it, and took tiie note away. He bas since brought suit upon the note against the maker and col- lected the amount due thereon. �PlaintifFs do not claim that this transaction is affeeted by the pro- visions of sections 5128 and 6129, as amended by section 10 of the act of June 22, 1874, but theyinaist that this property was conveyed by the bankrupt in fraud of his creditors, and can be attached tinder the provision of section 5046 ; or, in other words, that this transfer is BO far tainted with actual fraud as to be voidable outside of the pro- visions of the bankrupt law. There can be no doubt that the title to property conveyed or converted by a bankrupt before bankruptey, with a fraudaient animm or intent, passes to his assignee uuder sec- tion 5046, and the assignee can take steps to set aside the fraudaient transfer or conveyance. But a mere preference or payment of one creditor over another is not of itself fraudulent. As was said by the supreme court of Pennsylvania, Judge Strong delivering the opinion : �• "An insolvent debtor may prefer one creditor to another, either by judg- ment, deed, or by any mode, if his motive be au honest intent to pay the iwe- ferred debt, although the unpreferred creditors be delayed or wholly prevente^ from obtaining payment. The payment of a debt to one creditor is no fraud upon another creditor." York County Bank v. Carter, 38 Pa. St. 446. �The principle which runs all through the cases is that to make a pref erential payment of an indebtedness is not fraudulent ; while if, under pretext of paying one creditor, a debtor conveys to him prop- erty of value largely in excess of the debt, with the design of thereby hindering and delaying other creditors, and securing some direct or indirect benefit to himself, the transaction may be deemed fraudulent. �Tested by this rule I can see no element of fraud in this transac- tion. There is no doubt that Patteraon & Co. owed defendant, as treasurer, more than the amount pf this note. Nor is there any doubt, from the proof, that he allowed the money to remain on deposit with t>i"^ upon the assurance that he should be secured or protected. When Patterson & Co. saw that their lailure was inevi- ��� �