15 F. Cas. 561 | U.S. Circuit Court for the District of Eastern Missouri | 1871
Before the bankrupt act was passed, the law allowed a debt- or to prefer a creditor, and it permitted the latter to secure a preference by contract or by suit. To prevent this is one of the main purposes of the bankrupt act. Hence the many provisions in the enactment leveled against preferences, and intended to place all creditors, with few exceptions (section 27). upon a plane of perfect equality, “without any priority or preference whatever.” This cardinal purpose of the legislation in question must never be everlooked in construing the special provisions of the act.
Assuming the facts of the case to be asabove stated, it is the opinion of the court that to hold the judgment creditor to be entitled to the money in the hands of the sheriff, would be to give him a preference over other creditors under circumstances which contravene the purpose of the bankrupt law.
It is provided (section 39) that any person, who, being insolvent, shall procure or suffer his property' to be taken on legal process, with intent to give a preference to one or more of his «■editors, or with intent to defeat or delay the operation of the bankrupt act, shall be deemed to have committed an act of bankruptcy, and the assignee may recover back the money, &c., paid, &c., contrary to the act.
In this case Winter did suffer his property to be taken on legal process, and if it is not an act of bankruptcy for a merchant to have his stock of goods levied on and sold under judgments against him, the bankrupt la,w ’s much less extended in its operation than is generally supposed, and so defective in preventing preferences as to be almost ineffectual to secure the equality among creditors which is its chief purpose.
The main argument in favor of the judgment creditor is, that the law requires an actual intent on the part of the debtor to give a preference, or to defeat or delay the operation of the law; and that here there is no such intent, since the debtor did not collude with the creditor, but did what he could to prevent the latter from obtaining judgment.
In our opinion the requisite intent is to be inferred from the circumstances in which the debtor was placed, and the knowledge of the parties as to the debtor’s insolvency. The debtor was insolvent, and knew it. The creditor knew it, or had reasonable cause to believe it, and because of this he made a sacrifice of more than a year's interest on his debt to procure judgment at the first term after suit was brought. If the 14th, 23d. 29th, 35th, 39th, and 44th sections of the bankrupt act are studied, it will appear plain that to allow the creditor to get a priority by reason of a judgment thus obtained, would subvert the law and continue the system of preferences which it was designed to abolish. By the 14th section, all attachments made within four months are dissolved by the assignment, and the effect of allowing the judgment creditor to receive the money under a levy made with knowledge or belief of the debtor’s insolvency, is the same as if the money had been voluntarily paid to him by a known insolvent, or the debtor had desired
See, also, Giddings v. Dodd [Case No. 5,405]; Vanderhoof v. City Bank [Id. 16,842]; Rison v. Knapp [Id. 11,861]. And compare Wright v. Filley [Id. 18,077].