Giddings v. Dodd

| U.S. Circuit Court for the District of Eastern Missouri | Jul 1, 1871

DILLON, Circuit Judge.

The 35th section of the bankrupt act [of 1SG7 (14 Stat. 534)] makes payments to creditors in violation of its provisions void and gives the assignee the right to recover the amount of the illegal preference. The only questions which can be now reviewed are those arising on the declaration of law above mentioned.

It correctly states the elements which must concur to invalidate a payment made with a view to give a preference. But it is objected by tlie defendants that the rule of law declared may be abstractly correct, yet it was inapplicable to the circumstances of this case, since the evidence negatived any intent on the part of Giddings to give a preference, as he was either passive on the matter, or acted only at the instance of Pendleton, and the argument is, that if Giddings had no intent to give a preference then it is not possible that the defendants could have “had reasonable cause to believe that such payment was made (by him) in fraud of the provisions of the bankrupt act.”

But it is undeniable that Giddings did eon-.sent to and did turn out the note against Pendleton to the defendants. He owed in all about $0,000, and the note he thus gave in payment to the defendants constituted the bulk of his available assets. What could he have meant but to give them a preference? By the payment to them the defendants secured a preference, — the lion’s share of his assets, and this, too, when they knew he was insolvent, and had made acts which are acts of bankruptcy grounds for their attachment against, him.

If under the circumstances these defendants can retain the advantage they sought to derive from the attachment and through that agency secured, manifestly the purpose of the bankrupt act, which is intended to prevent preferences and put all general creditors upon an equal footing, is subverted. See Linkman v. Wilcox [Case No. 8,374].

Affirmed.