Page:Federal Reporter, 1st Series, Volume 9.djvu/511

 496 FEDERAL REPORTER. �N. Smith, receiving therefor his notes and a chattel mortgage on all the said stock and fixtures as collateral security for the payment of the notes. On the twenty-first day of August, 1875, the bankrupts filed in this court their peti- tion in voluntary bankruptcy. Ail subsequent proceedings were regularly taken. The notes and mortgages were entered on the schedules as a part of the assets of the bankrupts. ihe petition er herein was present at the meet- ings of the creditors, voted for a composition of 15 per cent, in cash, and receiyed full payment under such composition. The L. L. Brown Paper CcHnpany and the Wiiiting Paper Company were among the largest creditors of the bankrupts, and favored the composition. L. L. Brown and William Whiting were the active representatives of said companies, and they individ- ually advanced the money needed to pay the debts of the bankrupts under the composition, and received in return therefor the assets of the bankrupts. The other facts sufflciently appear in the opinion, �A. J. Taylor, for bankrupts, �Geo. H. Black, for petitioners. �Beo-wn, D. J. The sale of the stock and fixtures tO Smith, for the sum of $58,228.50, would not be disturbed on the ground of inad- equacy of priee. This sum is more than there is any probability an assignee in bankruptcy could have made ont of the property; and the evidence does not show its value was any more than that, if as much, considered as a gross sale of the whole stock in bulk, The sale is shown to have been a device merely to avoid immediate sale on execution in suits pending against the firm. On this ground it might probably have been avoided by judgment creditors, or by an assignee in bankruptcy; but it was in fact made, as the evidence shows, in the interest of the general creditors, and was, doubtless, so regarded by them, Smith was an employe of the firm. His notes, secured by mortgage on the stock, represented the whole priee, and the possession was practically unchanged. It is scarcely possible that any crediter could have been deceived or misled by this thin disguise ; and had there been any desire to disturb the arrangement <iio made, the creditors would have proceeded to ohoose an assignee in bankruptcy to set it aside. Instead of doing so they voted almost unanimously to accept a composition of 15 per cent. This was done with fall knowledge of all the easential facts. The notes represented the full value of the stock, The schedules and the chattel mortgage apprised the creditors of the main facts; and had they desired any further information they should have examined the bankrupts before accepting the composition, as the law provides they may do, and in tends they shall then do, as to any mattters concerning wbich further information is needed. Section 5103; Ex parte Walter, 34 L. T. (N, S.) YOl. ��� �