In re Riorden, 20 F. Cas. 820

In re Riorden

20 F. Cas. 820 | S.D.N.Y. | 1876

Blatchford, J.

I think the preference was surrendered, within the meaning of the statute, it having been surrendered before there was a recovery.

That surrender was accepted and the assignee discontinued the suit voluntarily, and thereby is estopped from alleging that there was no surrender. The assignee might have refused to accept the surrender or discontinue the suit except on condition that he should have the same benefit of objecting to the proof of debt as if the money had been obtained as the result of a recovery.

But he imposed no such condition. If he had imposed it and it had been refused he might have gone on with the suit in order, in case of his recovering in it, to exclude a proof of the debt. Having waived a recovery, he thereby waived the right to exclude the proof of debt.

But it is alleged that there was in this ease actual fraud. I do not think the provision of section 12 of the act of June 22, 1874 in regard to proving a debt by a creditor, in "case of “ actual fraud ” on his part, applies to any other case than where there is a recovery. But, in addition, there was no actual fraud in this case.

*275There was only a constructive fraud, a fraud on the statute, because things forbidden by the statute were done. There was nothing done by the creditors except what was perfectly lawful and fair and honest, and was not fraudulent as to the debtor or as to other creditors, but for the inhibitions of the bankruptcy act. That was not an “ actual fraud.”

The proof of debt must be allowed to stand.